A proposed new contract that would allow Fairfax County to continue operating Fairfax City's seven schools was hailed as "fair" by the city's League of Women Voters at public hearings this week. A majority of residents speaking at the hearings urged the city to approve it quickly and end the dispute over schools that has divided the city for more than a year.

The recently elected mayor and City Council and the city's appointed school board were praised for their efforts to keep the city's 4,100 students within the county school system. The effort began following the election and led to a month of intensive negotiations.

Mayor Frederick W. Silverthorne and all elected council members advocated staying with the county school system. Former Mayor Nathanial Young and all defeated council candidates, several of whom spoke against the proposed contract at the hearings, had urged a separate city school system.

The proposed contract would cost the city $8.3 million, or $200,000 more than the city was due to pay the county under the existing contract that was canceled last fall by the county. Concessions have been made both by the county and the city in the new contract, League of Women Voters representative Dorothy Neumart said at the first of two nights of public hearings on the school issue, and on the whole, she said, the league felt the proposed agreement "is a fair one."

The school board will meet Monday night and the council, Thuesday night, to vote on the new agreement. Both bodies, and the county Board of Supervisors and school board, must sign the agreement. County approval is considered assured. Approval of new contracts for other county services to the city, including sewer, trash collection, libraries and health services, are expected to be negotiated quickly once the school issue is settled. The county has performed these services under contract since the city became independent of the county in 1961.

Former Mayor Nat Young led off the first of the hearings Monday night by criticizing the agreement and saying the new council was misleading the public by underestimating the amount the contract would cost the city.

Another critic, Diane Ruth said "the city received nothing of significance" in the new contract "and the county wants even more than it did Dec. 12" when it canceled the existing contract. She accused the city of "bungling" the negotiations and said she still thinks the city should establish its own school system.

Douglas B. Scott, a city resident and executive assistant to the school superintendent in Falls Church, which operates it own city school system, told the hearing that operating a school system in Fairfax City could be as much as $5 million more expensive than a recent study estimated.

The study, released last month, estimates that a separate city school system would cost $8.7 million a year in fiscal 1980 plus $1.1 million in additional "start-up" costs. Scotts called the new city-county contract "fair to both parties" and urged the city to approve it.

The issue of a separate city school system and how much it would cost came up as much as the proposed school contract. The city must establish its own school system if the contract is not approved by the council.

"There are some things a large system can do better and schools is one of them," J. Howe Brown told the hearing. He said the quality of the schools is the first thing most people look for when moving and "Fairfax County schools are among the best in the country and an asset to the city. I don't think we ought to give them up."

Steven Raleigh Jr. called the proposed contract "better than the one we had and better than we were told (by the previous council) we could get. It gives us more input, more of an opportunity to be consulted" on school issues.

Larry S. Bowen, who has two children in city schools and is chairman of the education department at George Mason University, said the agreement appears to be the best that could be generated. He said residents want a good school system and apparently are happy with Fairfax County schools. "What people could get in a separate city school system better be pretty sensational" before the city drops the good school system it has.

The separate school study also was criticized for many of its premises, such as an increasing school enrollment when present school enrollment appears to be falling, and for proposing an "equivalent" city school system that actually would have fewer teachers and staff, with less experience, and would cut programs such as driver education and services for the physically and mentally handicapped.