The Department of Health, Education and Welfare has withheld nearly $200,000 in grants to a Georgetown community mental health center because of continued violation of HEW rules by the city's Department of Human Resources, an HEW orficial said yesterday.

Funds have not been released on a $102,000 comprehensive mental health grant and a $90,000 grant for children's mental health services that were awarded last summer, according to Emory Johnson, mental health consultant in HEW's regional office Philadelphia.

DHR officials maintained yesterday, however, that the funding cutoff has occurred on paper. The city budget office said the records are unclear, but there is no record that the grant payments were not received.

The money is the fifth years's payment on an eight-year staffing grant to DHR's Area A community mental health center; located at 3246 P St. NW in Georgetown. DHR's two other mental health centers were included in the funds cut off, but those grants expire this year, Johnson said.

"Because of the serious nature of some of the unresolved compliance issues and the extensive period of time they have gone unresolved . . . it is the intent to suspend from payment all future mental health" grants, HEW regional health administrator George Gardner said in a letter to then-DHR director Joseph P. Yeldell last May.

"It's a threat type of thing," DHR's mental health grants manager Joseph Davitt said yesterday. He said the department has continued to correspond with HEW in an effort to comply with the regulations, and made its latest effort on Jan. 10.

"The District has always responded, but the responses have not always been to the point," Johnson said. "We have met with sheer frustration in trying to get them to come into compliance."

DHR's violations include failure to establish an inpatient unit at each of its three mental health centers, denial of sufficient autonomy to the centers' directors and lack of accountability for funds collected at the center through insurance payments for treatment, Johnson said.

"People from Georgetown have to be carted all way to D.C. General (Hospital) . . . the director doesn't even seen the result of their treatment," Johnson said.

He said withholding of funds is a last resort, but his office "cannot continue to go along year after year and shrug it off."

HEW officials generally have said they do not like withholding funds because it only aggravates problems for the city.

"I would not look at the letter of May 25 as a suspension," Davitt said. "They've invested a tremendous amount of money in us and we have conceded much to the regional office. As far as I know the money is coming in."

The District would also have lost community mental health grants to Areas B and C if those grants come up for renewal this year. The expiration of those two grants and lack of city resources to replace them will cause the dismissal of about 65 employees in the next two months. DHR acting director Albert P. Russo said this week that other positions have been identified for 12 of the employees and jobs are being sought for the others.

DHR officials have said they will seek to compensate for the grant expiration by applying for HEW "distress" grants authorized in legislation passed last year to help states continue mental health services when the eight-year grants run out.

Johnson said, however, that the District is not likely to qualify for distress grants because the law limits eligibility to states that complied with the previous legislation. "They can apply but that's all they'll be doing," he said.