The Montgomery County Council is considering funding almost all of teh $262 million budget proposed by the school board, raising the possibility that there will be an increase in the county property tax rate.

As of Tuesday, the Council had tentatively acted on three-fourths of the budget and had made about $1.7 million in cuts. The major issue unresolved was the 6 per cent cost-of-living raise for school employees, which was not expected to be determined until next week. The Council has until May 15 to complete action on the budget.

Councilman Norman Christeller, who reviewed the school budget, said Tuesday, "No question, there will be a tax increase. The only way to avoid it is to penalize the employees." The school budget traditionally commands about half of the county's expenditures.

Christeller refused to estimate the extent of the tax increase. However, county executive James P. Gleason had said that a real estate tax of 15 cents per $100 assessed valuation would be needed to fully fund the board's request.

The school board's proposed budget increase is $18.7 million, or 7.7 per cent higher than the fiscal 1977 budget. The increase includes $12 million to fund a negotiated 6 per cent cost of living increase; $4.6 million to cover inflation, including an insurance rate incraese and $791,000 for utility rate hikes. In addition, the county share of school costs must increase by $5.5 million because of reductions in state and federal aid.

Christeller has recommended that the Council approve the 6 per cent cost of living raise for school employees that the school board and employees agreed on in December.

Although the 6 per cent raise accounts for $12 million in the school budget, Council President John Menke has estimated it would eventually cost the county $20 million because the Council has always granted other county employees the same pay raise it gives school employees.

County executive James P. Gleason has recommended that the proposed budget be cut by $10 million and school employees be given a 4 per cent cost of living raise, a combination he said would make a tax increase unnecessary. Gleason said his cost of living hike would cost a total of $11 million for all employees and the $10 million cut in the budget could bw made through attrition not layoffs. The school board, however, said a $10 million cut would result in nearly 1,400 layoffs.

The Council has final say over the budget.

Christeller set the stage for Council action last week when he submitted a 33-page report recommending that about $1.5 million be cut from the budget. The report also contained several critical comments about the executives recommendations.

"The county executive has learned the lesson well from Marvin Mandel," the report said. "Every time the executive tightens his belt, it squeezes the agencies over which he has no management responsibility and for the performance of which he is not accountable to the public.

"It's a nice game, and if we ever get a County Council that is equally irresponsible, God help the school system and the planning commission and the (Montgomery) College."

The budget proposed by the school board wuld: increase average class size slightly in grades $1.12 to 26.9 pupils, an increase of 4 pupils in the average elementary class and 2 pupils in the average secondary academic class change six senior high schools from the seven-period day to six-period day; curtail summer activities including summer school and seventh grade orientation; reduce custodial services in secondary schools and eliminate the 12-month employment program for 1,800 professional staff members.

The main change that the Council has tentatively made is eliminating the seven-period day from all but four of the county's 22 high schools - Poolesvile, Damascus, Sherwood and Rockville. Currently 14 high schools have the seven-period day, which is designed to give students more course options than are available under the six-period day. The change cut $300,000 from the budget.