Fairfax County officials have ignited a fuse on a controversial proposal that the county consider pulling its 6,880 employes out of the Social Security system and set up its own old-age, death and disability benefits program.

The escalating costs of Social Security and anxieties over the future of the program have prompted Fairfax officials to join the growing number of private and government officials who are taking a serious look at withdrawing from the system.

Across the country, about 550 nonprofit employers and state and local government agencies have filed notices with the Internal Revenue Service that they are considering leaving the Social Security system, officials said.

"Since the Ford administration, experts have said the Social Security system is going down the drain," said James P. McDonald, Fairfax's deputy county executive for budget and financial management.

Some local government agencies and private businesses say they can operate their own programs more cheaply and more efficiently than the federal government.

That possibility prodded Supervisor James M. Scott to ask the county administration recently to study the feasibility of leaving the Social Security system.

Virginia state officials, however, are warning local governments against quitting Social Security.

"It would be an unwise decision," said Glen Pond, director of the Virginia Supplemental Retirement System, which administers the state's participation in Social Security. "Nobody can replace Social Security."

McDonald acknowledged that the huge pool of federal money backing the program would make the Social Security system "awfully hard to beat."

And if the county decides to drop out of the Social Security system, under federal law it can never return.

"It is a very monumental decision," said Cornelius O'Kane, Fairfax personnel director. The county is approaching the study very cautiously, O'Kane added.

The county's administrative staff is scheduled to submit a report to the supervisors by mid-November, outlining the costs and scope of a comprehensive two-year study on the issue.

The staff has recommended that the board file documents with the state outlining the county's plan to consider withdrawing from Social Security. Federal law requires local employers to file the notice, then mandates a two-year "cooling off" period before the county can actually leave the system.

The supervisors have delayed filing the notice until the staff's preliminary report is issued in November.

"We don't even have a fix on the massiveness of the benefits offered under Social Security," O'Kane said. "But everyone on the staff is going into this with an open mind.

"We might find that the benefits (offered by Social Security) are so comprehensive that it might not be possible for the county to duplicate all of them," O'Kane said. "And we may find that those benefits most desired by employes could be improved under a local program," he added.

Administrators noted that it will be impossible to duplicate all the retirement, survivor and disability benefits offered under Social Security.

"But there may be other benefits employes would be willing to trade off," McDonald said.

The county contributed $6.4 million to the Social Security system for its employes last fiscal year. Most county workers, except those in the police department, are covered under Social Security. The police department is covered under a national police retirement benefits fund.

In addition to the Social Security program, other county employes participate in a state supplemental retirement program.

Studying the feasibility of leaving the system would cost the county thousands of dollars, McDonald said. The staff also would require substantial input from employes if the board authorizes the study, he said.

Fairfax County first initiated steps to withdraw from Social Security six years ago. But state officials stepped in and blocked the move, refusing to process the withdrawal requests unless the county agreed to provide retirement benefits comparable to those available under Social Security.

Several other local agencies, including the Lynchburg Redevelopment and Housing Authority, filed similar requests with the state retirement system, which must process the applications.

All the local governments, except the Lynchburg agency, backed off from their efforts after their applications were turned down by the state.

The Lynchburg authority discontinued Social Security payments in 1978, despite the state ruling, and took the state to court. Lynchburg won, opening the door in August for other political subdivisions to pull out of the system.

Fairfax County is the only other political subdivision in the state which officially has begun to reconsider dropping out of Social Security, according to Pond. Officials in several other political subdivisions have discussed proposals informally, however, according to state and local officials.