IF THE Reagan administration's drastic budget cuts in the school lunch program are enacted, most parents with children in Montgomery, Arlington and Fairfax county schools can look forward to spending an extra $130 to $140 a year for lunch. Hundreds of children are expected to drop out of the program. At the same time, the effect of that 40-percent cut will hardly make any difference in the District. Prince George's County and Alexandria will fall somewhere in between.

School food service directors across the country say the proposed budget cuts will effectively destroy the school lunch program in at least 35,000 schools; some say as many as 50,000. Agriculture department sources estimate that about 94,000 schools participate in the program. How the proposal to slash $2 billion from all the federal child feeding programs affects a particular school district depends entirely on how many free and reduced-price lunches are served there. The greater the number of children paying full price, the more devastating the effect.

Under the Reagan proposal all subsidies for full-price lunches will be eliminated; for reduced-price lunches they will be cut back. Subsidies for free lunches will be retained. In the District, less than 20 percent of the students pay full price for lunch. The administration says the government should not be underwriting people who can afford to pay. Deputy agriculture secretary Richard Lyng told a House committee last week that the "federal subsidy . . . becomes a direct form of income supplementation, not nutrition supplementation."

In addition, the administration is seeking to raise eligibility requirements for those who qualify for free and reduced-price lunches, so some children who had been getting a free lunch would be eligible only for reduced-price lunches. Those lunches, which cost 20 cents this year, are expected to go to 60 cents next year. And some children who received reduced-price lunches would find themselves paying full price for lunch under the new plan.

Lyng said the "truly needy" will not be hurt. Others disagree.

"Those are the ones who will be hardest hit," said Joanne Styer, director of school food services for Montgomery County. "The working poor. They are getting cut out of everything. They can't afford $1.40 for lunch."

Some people within USDA have taken exception to the proposed cuts. Said one: "I think they are dismantling the program. I just think it's shivving kids. It's an easy, fast, slick way to cut a lot of money because they think people won't holler."

Based on past experience, school lunch officials expect as many as 10 million children to drop out of the program if prices for the meals go up as predicted. "Our experience five years ago," said Dorothy Pannell, Fairfax County food service director, "was that when we went up 10 cents we lost 10 percent. It took three years for us to gain all of them back. Last September we went up another 10 cents and lost three percent. I think we lost less this time because everyone expected it and everything else had gone up so much in the five years, we were still a bargain. But not a doubling in price."

In Arkansas 110,000 parents were asked what they would do if the price of the lunch, now 70 cents, went to between $1.25 to $1.50. Ninety percent said they couldn't afford it and would drop out. Surveys in other states have produced similar results.

If large numbers of the paying children drop out, the entire character of the school lunch program will change. "The administration seems to be under the impression that the subsidy they give us pays for the meals," said Mary Nix, outgoing president of the American School Food Service Association. "They don't understand the economies of scale." In testimony before the House Education and Labor Committee last week, Nix said: "In theory, the administration's proposal seems attractive. Why should the federal government continue to subsidize lunches for children from families who can afford to pay full price, especially in these times of inflation. . . The theory clashes with reality, however. The reality is that local school lunch programs are businesses which derive a major source of their income from payments by the paying child. According to the administration's own estimates, at least 5 million paying children will drop out of the program as the cost of lunch increases. This drop in participation, will, in turn, cause schools to close their federal lunch programs, thereby depriving millions of additional children, both poor and non-poor, from receiving a school lunch."

School lunch officials offer several scenarios as alternatives to no lunch at all. School districts that choose to drop out of the federal school lunch program because they won't receive enough money to make it worth their while are then under no obligation to feed needy children. They could install an a la carte program and charge full price. Those who can't afford to pay would; those who couldn't would either bring lunch or go hungry.

Or the schools might provide the so-called Type A lunch, as defined by the Department of Agriculture, for the needy children and offer a la carte items to those who could afford to pay.

Or they might offer meals only to needy children.

Under these plans, especially the last two, it would be quite visible which children were poor and which were not.

Syd Butler, formerly deputy to Carol Foreman, who was in charge of the school lunch program at USDA during the Carter administration, said the budget cuts will turn the school lunch program into "a welfare program."

Styer pointed out to the house committee that school lunch was "not designed as a welfare program. It was designed to safeguard the health and well-being of all the nation's school children. Under the administration's budget cuts, only children eligible for free and reduced-price meals will be getting lunches. Everyone will know who can't afford to buy a lunch, and the peer group pressure not to be identified as needy will be intense.

"We just cannot revert back to a time when poor kids sat around and watched other kids eat," said Nix. "It's a change in the whole philosophy. I was around in the old days when you had commodities and there wasn't enough to feed all of the kids every day. You had kids hanging around the dish return window to see what other kids returned. Kids might get fed on alternate days. Unless you have experienced hungry kids in the classroom, you don't know what it's about. Their eyes are dilated; they are drowsy. We even see a difference in the way kids behave between the beginning of school and the end of school," Nix said.

Whether such predictions are as dire as school lunch personnel claim, it is clear that the administration has no idea what the actual effect of such drastic cuts will be.

Committee Chairman Carl Perkins (D-Ky.) asked Lyng: "How many truly needy will no longer participate because schools no longer participate?"

Lyng said no one could estimate the numbers.

Lyng faced a surprisingly hostile committee at the hearing. There was almost unanimous bipartisan support to keep the program from being gutted. Rep. William Goodling (R-Pa.) told Lyng that it is "totally erroneous to say we are not going to affect the needy. Our side of the aisle knows we have to have some cuts. But please, let's not talk about not affecting the truly needy. The only way you can say that is if a school feeds 80 to 90 percent needy. When you talk about a $1.35 to $1.45 lunch you are going to force many schools out of the program."

California Democrat Augustus Hawkins described the budget cuts as "stupid, if not criminal activity."

Rep. John Erlenborn (R-Ill.) told Lyng some of the priorities would have to be rearranged instead of dropping the program.

Styer said she could live with some cuts "and still not identify the poor kids as poor." Only 16 percent of the school lunches in Montgomery County are free or reduced-price. Styer offered the committee suggestions on ways to reduce the program's costs without destroying it. Her proposals would add up to a savings of 14 to 16 cents per child. "I could live with that," Styer said, "but not the 40 cents they are proposing."

Maryland is faced with a different situation from most other states. Maryland law requires that every school offer free and reduced-price lunches, whether or not the federal government funds those meals or the full-price meals. In addition, lunches must meet current USDA meal-pattern requirements.

In order to do that without the federal subsidy for full-price meals, Styer will have to make changes. Some of them, she says, will have little or no effect on the quality of the food served; others will.

Certain reporting practices to USDA which Styer feels are unnecessary could reduce costs two cents per child. Too much food is served in some of the lunches, Styer says. If the amounts were decreased, three to six cents per meal could be saved. School lunch is required to give a child one-third of the Recommended Daily Allowances for certain nutrients. Styer suggests that requirement be dropped. "Better a nutritious meal as described above than no school lunch at all."

In Montgomery County, the frills will also have to go: total elimination of the breakfast program; fewer choices; no on-site preparation; the use of a central kitchen with the food shipped out to the school; possibly box lunches.

In Fairfax County, where 92 percent of the students pay full price, the federal subsidy would be cut 77 percent. "The school board will have to decide whether or not to stay in the program," Pannell said.