When the National Endowment for the Arts makes a grant to a nonprofit theater -- which then puts on a play, which then becomes a hit and makes a profit (which according to the NEA is not a frequent occurrence) -- none of that profit goes back to the NEA.

"Why shouldn't some of the money come bact to NEA?" asked Rep. Sidney Yates (D.-Ill.), who chaired yesterday's House Appropriations Subcommittee hearing on the National Endowment for the Arts' budget request of $167.9 million. (The Office of Management and Budget has suggested that the request be trimmed by $7.8 million.)

"The money is being turned back to the theater," said Mary Ann Tighe, deputy chair of NEA, who was present at the hearing yesterday along with chairman Livingston Biddle and a variety of other department heads.

Arthur Ballet, head of the theater program for the Endowment, added that the NEA "doesn't fund particular projects." Instead, they generally grant money to institutions with year-round activities.

One example cited yesterday was the New York Public Theater, which was funded by the NEA when it produced "Chorus Line" -- which went on to become an overwhelming success. It also was an exception, the Endowment officials argued.

"I'd be very hard pressed to think of [another] non profit theater," said Ballet, "that came up with a hit."

That was one of several questions which came up throughout a day of Yates' long, careful but tension-free interrogation of the Endowment officials in the crowded Rayburn Office Building.

"It's only half over. We haven't gotten into the full measure of the budget," said Yates afterward, promising the audience to schedule a further hearing. Last Thursday, he had to do the same thing at the hearing on the National Endowment for the Humanities, whose budget the committee also has not finished scrutinizing.

Yates said he could not tell yet whether or not the full budget would be funded. Late in the afternoon, he complimented the Endowment officials, saying their department heads were some of the most "outstanding" he has ever seen.

What continued to "trouble" him, Yates said after the hearing, was the artists-in-schools program which places artists-in-residence at schools for varying lengths of time. "It's an educational program," said Yates. "We don't want to dictate to the Endowment, but with limited budgets and artistic programs that could use more money, you wonder about what to do."

Endowment officials said that the purpose is to place working artists in schools, not to replace art teachers but to supplement them, and work along with students.