A dispute between the National Easter Seal Society and its Rockville-based affiliate over the distribution of scarce charity dollars has ended with the Montgomery County group dropping out of the program.

The withdrawal of The Treatment Centers Inc., which also operates a center for handicapped children in Frederick, Md., came after the failure of 11 months of negotiations between it and national Easter Seal officials over a proposed reorganization of area Easter Seal groups, said Richard J. Pavlin, the center's executive director.

National officials proposed bringing The Treatment Centers under the umbrella of the Easter Seal affiliate in the District, which, like Montgomery's, runs schools and rehabilitation programs for disabled youngsters.

They also suggested splitting annual fund raising on a 75 percent to 25 percent basis, with most of the money going to the D.C. society, Ralph D. Doubler, national director of member relations, said recently.

"We felt that this was a fair split since our Washington affiliate also oversees activities in Prince George's and the three southern Maryland counties" of Calvert, Charles and St. Mary's, Doubler said last week from the national headquarters in Chicago. "But The Treatment Centers didn't think so."

"A 75-25 split would have given us less money than we were getting under the old terms of the franchise," Pavlin said.

As an affiliate, The Treatment Centers was entitled to use the Easter Seal logo in its mailings and to a share of the proceeds from the society's annual national telethon. Last year, the Montgomery society received $71,000 from the March telethon.

"We don't expect to lose our mail support, not with the donor list we have built up over the past 33 years," Pavlin said. "But we may have to hustle harder for dollars."

Pavlin has notified longtime Treatment Center donors that their donations to Easter Seal will no longer be shared with his organization.

He acknowledged that the split with the national organization came at a particularly sensitive time: his group was scheduled this week to break ground on a $2.5 million center at the Montgomery County Medical Center in Gaithersburg.

But Pavlin said he was confident the group would be able to raise enough money to pay off the industrial revenue bond it won from the county to finance the construction.

Doubler, meanwhile, said the Washington society plans to open a facility in Montgomery County to fill the gap left by The Treatment Center's withdrawal.

Adele R. Foschia, executive director of the District affiliate, said her group would open a small Silver Spring office this week. The office will be at the center of a transportation network to carry young people throughout Montgomery County to Easter Seal programs, she said.

The Treatment Centers' withdrawal will have little impact on the D.C. affiliate, Foschia said. "I think it makes sense to have a regional organization, but The Treatment Centers really wanted to be an independent local agency," she said. "And they have every right to be that."

Foschia added that the 50-year-old District affiliate, known as the D.C. Society for Crippled Children Inc., soon will change its name to the Easter Seal Society for Disabled Children and Young Adults.

Last year, The Treatment Center served more than 3,500 children and young adults and had an operating deficit of about $40,000; its District counterpart served more than 400 persons, many of them in its pre-school program, and had to dip into its $1 million cash reserve to cover a deficit, officials said.