The staff of the National Endowment for the Humanities has assumed too much authority and runs too much of the show, according to an investigative report released yesterday at a budget hearing on Capitol Hill.

The agency staff exercises undue leadership of grant-recommending panels, "grooms" certain applications for approval, and sometimes fails to brief its chief advisory body, the National Council on the Humanities, on questions of policy and grants.

"You have an important staff, haven't you," was the response of Rep. Sidney Yates (D-Ill.), chairman of the House Appropriations subcommittee on Interior and Related Agencies, while questioning Endowment officials. "I had the impression the panels were the bosses.

However, the report also charges that despite the assertiveness of the staff, the Endowment "has abrogated its leadership role and allowed the various protect applications submitted from the field to become a surrogate national policy."

Despite the criticisms in the report, its tone was not as harsh as that of a similar study released last week on the National Endowment for the Arts. And the Humanities Endowment scored more points over its sibling Endowment in the afternoon, when Rep. Shirley Chisholm (D-N.Y.) testified before the committee.

Chisholm said the appointment of Humanities Endowment chairman Joseph Duffey was "a boon to minority participation in the humanities area" and concluded that, "Although everything may not be perfect at NEH, one does get the impression that they are definitely trying to broaden participation."

She apparently did not get the same impression from the Arts Endowment. The Expansion Arts and Fold Arts programs of the Arts Endowment could become "dumping grounds" for minority grant applicants, Chisholm said.

She also criticized what she called "the total absence of minorities in any policy-making position" at the Arts Endowment adding, "in any game plan, you are likely to score more points as a participant rather than a spectator."

Chisholm proposed that a deputy chairman for access and equity be added to the Arts Endowment hierarchy.

The committee report on the Humanities Endowment found that the Endowment "has identified, as program policy, trends that have developed in the constituency by funding projects and ideas that are then described as needs of the field." Such ideas should be described as "wants or desires," said the report.

The report gave the Art Endowment credit for adopting a statement of policies and chastised the Humanities agency for failing to do likewise. Yates, however, noted that a statement of four goals released by the Humanities Endowment might serve the same function.

A "constant turnover" of panelists was cited at the Humanities Endowment. But Humanities officials defended their large pool of potential panelists, stored in a computer, as a guard against charges that "a closed circle" runs the Endowment.

This did not prevent the committee staff from making the "closed circle" charge, which also was leveled at the Arts Endowment. In the Humanities report, the term was used to refer to the use of the same consultants "for project planning and project review." This does not provide "the objectivity necessary for adequate project evaluation," according to the report.

The report found the Humanities Endowment "was generally in compliance with standard federal procurement practices in its contract activities," but it chided the Endowment for a failure to "provide a firm policy on termination of funding to NEH grantees." It proposed the establishment of a "sunset committee" to review organizations that had received funding for the five consecutive years.