They call it SHACK - Services to Help Addicts Come Klean. About 10 narcotics users wander into its offices at 123 K St. SE each day seeking help. The help may take the form of job counseling, family advice, health information or legal aid. But as long as the addict's income is 65 percent of the city's average, or less, Title XX helps foot the bill.

Meanwhile, two afternoons a week, half a dozen women leave the Capitol View Service Center at 5929 East Capitol St. and fan out to nearby homes. Each home is occupied by an elderly person who needs help getting dressed, bathing or going to the grocery store. Title XX pays for that help.

If a District of Colubmia child is abused or neglected, Title XX helps pay for emergency hospital care, emergency transportation and long-term follow-up by a social worker. If a woman on welfare needs day care to look for a job or home, Title XX picks up the tab. If a child needs to get into or out of foster care, Title XX helps pay the way.

Now winding up its fourth year, Title XX of the Social Security Act is the mechanism by which the federal government helps to fund the most necessary and costly social services.

But in the District, Title XX funds are far from sufficient, city officials say. The need for social services, they add, far outstrips both Title XX funds, and the local funds added to it. Unmet needs, say officials, are so numerous that the city is on the verge of a crisis.

"What we are doing with the Title XX money is crisis and demand service," says William Barr, director of the Social Rehabilitation Administration, the city agency designated to administer Title XX funds.

"I do not do prevention. I do not do follow-up. I do not do outreach," Barr says. "It's a damned shame."

In the current fiscal year, Title XX will provide $2.9 billion in social services funds to the District and the 50 states. The District will receive about $9.1 million of that sum.

The District's allocation is based solely on its population. Under the law, the city must match every three federal Title XX dollars with one dollar from city revenues.

In the current fiscal year, the city has budgeted more than $33 million of its own money, including matching funds for Title XX, for social services. In all, the city is expected to have spent more than $42 million on social services by the time the fiscal year ends on Sept. 30.

That money is spent in the form of contracts for various services which are lent to individuals and companies. Contractors are allowed to make what is called a "predetermined profit" - usually their costs plus about 8 percent. The entire process is audited twice a year by inspectors from the U.S. Department of Health, Education and Welfare.

Eligibility for services provided by Title XX is sharply limited to the poor and near-poor.

By federal law, half the services must go to people on welfare. Almost all the rest must go to people who work but whose family income is equal to or less than 65 percent of the city's average (that 65 percent figure is now $12,381 a year for a family of four).

Members of families with incomes as high as 115 percent of the city's average may receive Title XX-type services, but they must pay a fee.

Federal law requires the city to provide nine services with its Title XX funds to whomever is eligible. These so-called "mandated services" are:

Adoption; day care; early periodic screening, diagnosis and treatment for chronic and potential illnesses; employment counseling; family planning; foster care for children; information and referral; "protective services" to abused and neglected children, and services to the elderly, disabled and blind.

Like most of the 50 states, the District will spend more than 80 percent of its current Title XX funds - and about the same percentage of its social services monies - on mandated services.

But unlike most states, the city is bunching nearly two-thirds of its Title XX money into four services: foster care, health and education services to homemakers, "chore services" to the elderly and aid to abused children.

In all, the District will provide 26 social services with Title XX funds this fiscal year. But many of the services are relatively cheap, are being run on a relatively small scale or touch relatively few people.

Thus, according to the city's Title XX administrators, this year's Title XX grant barely scratches the surface of the city's need for social service programs.

So why not apply for more Title XX funds? Because Congress placed a national ceiling of $2.5 billion on grants when it passed the Title XX authorizing law in 1975. And Congress linked Title XX allocations solely to population, not to need or to how many social service programs the city was already operating.

The result in Washington: chaos, according to Social Rehabilitation director William Barr.

Four years ago, before Title XX was approved, the city was running $35 million worth of social services programs, Barr said. More than half were paid for with federal funds. The city hoped to expand to $55 million worth of programs. More than half of that figure would have been federal dollars, too, Barr said.

But along came Title XX and its spending ceiling. Where the city had been getting social services funds under a variety of programs and from a variety of federal agencies, "Now, overnight, it (the federal share) goes down to $9.1 million," Barr said.

"I had to shave 659 employes (of approximately 2,400) from this department. That means I have halfway houses without cooks. I have four people sharing a secretary. Let me tell you, we had our Proposition 13 here before they coined the word.

"Down to the bone? Shoot, we're down to the marrow now."

Congress has nudged the original Title XX ceiling up twice in the last three years, because of inflation, to $2.9 billion. The ceiling may edge up further this summer, to $3.1 billion.A bill authorizing a $3.1 billion ceiling is expected to reach the House floor late this summer. From that extra sum, the District can expect perhaps $200,000 more.

"But in terms of the need," said a source at HEW familiar with Title XX programs, "that kind of money is peanuts."

That is no accident. When the Ford administration proposed Title XX, it strongly backed a dollar ceiling on social services programs as part of a larger attack on what it called "runaway welfare spending."

Before 1975, the United States underwrote social services programs individually, and guaranteed levels of service, not numbers of dollars. As a result, in some states, the District included, some program costs were nearly doubling each year. Thus, Title XX funds were given a ceiling not only to reduce future social services spending, but to restrict present spending, too.

But in the District, and in most large eastern states, the result of the ceiling has been to limit severely how much of the need the federal government can meet.

The District has tried to meet much more of the need out of its own funds than many jurisdictions, but a "crunch" is building. It got so serious last year that the City Council reduced social services spending by $1.2 million, even though the number of welfare recipients and elderly city residents increased.

"We're being shafted cmpared with the Sun Belt," said Barr. "I've got the people who can't afford to leave the city. The problems stay, and they get proportionately larger. The people who haven't got problems are the ones who move out to Montgomery County."

The District has moved to the verge of a "triage"; concept, according to Betty Queen, director of SRA's Bureau of Family Services. The city can treat only its most "seriously ill" residents with the Title XX money it gets. The rest of the people are either ignored or vastly underserved.

"What do you want me to do?" asks Queen. "I have no money in my budget to help all the old people in this city who need helping, for example.

"But this city is an aging city. Eighteen percent of the city is 60 years old or more. I can't close intake. So I find the money somehow. I just borrow from someplace else.

"If I closed intake, then your grandmother or my grandmother out there is going to die. It's that simple."

Who are the "Pauls" being borrowed from so social services can go to the "Peters?"

In the current fiscal year, the District's social services emphasis is on emergency mental helath services and day care more than ever before. Emergency mental health is getting $730,000 more than it got a year ago. Day care is getting $752,000 more.

But funds for protective services for adults - chiefly aid to battered spouses and to homeless elderly persons - declined by more than $332,000 from the previous year.

Also way down, although not by as many dollars, are information and referral services, protective services to abused and neglected children and prenatal aid to children of drug addicts and alcoholics.

Favoring some services over others has made many District residents extremely unhappy.

The city's proposed Title XX program for the fiscal year beginning in October contains a list of problems that citizens noticed in the current fiscal year. The list runs on for nearly two full pages.

Recurrent themes on the list include a lack of information in the community about programs, and too little aid to abused and neglected children.

The city government's desire to hear from citizens as to how they wanted Title XX money spent was another frequent focus of criticism.

The city is required by federal law to hold at least one public hearing on its Title XX plan each year. One is exactly how many meetings the city held last year.

City officials justified the decision not to hold more by pointing out that attendance was down 50 percent from the previous year's meeting. But lobbyists for children's interests were bitterly critical, as were several Advisory Neighborhood Commissioners, among them the entire delegations from Anacostia and Congress Heights.

The city government's own list of suggested improvements to its Title XX plan covers nearly a full page itself. Its chief recommendations are:

Channel more Title XX money into preventing infant mortality (a major pledge in last fall's campaign by Mayor Marion Barry).

Establish better coordination between Title XX programs and similar programs run by the private sector.

Improve management of Title XX programs, chiefly through training programs.

Monitor day care programs to assure compliance with federal standards.

"All I ask for these programs," said Barr, "is a fighting chance in the next decade. But the way it's going now, all I can conclude is that they (the federal government) really mean to phase out social services."

"All I can add," said Betty Queen, "is that maybe somebody will hear when an old person freezes to death this winter." CAPTION: Illustrations 1 and 2, no caption; By William T. Coulter for The Washington Post