Her budget may be small and her staff underpaid, but Judith Schloegel has built a remarkable six-year record of finding jobs for hundreds of former felons who live in the District. Of the nearly 500 men and women who have benefited from her organization, Liberation of Ex-Offenders through Employment Opportunities, fewer than 10 percent have been convicted for new crimes.

LEEO has drawn praise from politicians, criminal justice experts and the city's business community, but Schloegel, a Catholic nun who runs the program from a church basement on E Street NW, isn't gloating. LEEO's future is clouded by a $40,000 budget shortfall that could force the layoff of the same staff members who have made the program a success, she said.

"We're like a hospital," she said recently in her basement office at First Trinity Lutheran Church. "A hospital could do without its emergency room or its blood bank, but would it be able to give quality care after that?

"We're the same way. What kind of program could we put on if we lose this money. For a felon, especially when a job is a condition for parole, employment can mean the difference between getting on his feet or being a recidivist."

LEEO's funding crunch came last fall, when the program received $100,000 from the D.C. Department of Employment Services to establish an on-the-job training for 50 people. Under the terms of the grant, which was the first ever from the city, LEEO must reimburse employers for half of the workers' salaries--some $40,000 this year, Schloegel said.

LEEO has placed former felons from Lorton reformatory, the D.C. Jail and the Federal Reformatory for Women at Alderson, W.Va., in entry-level jobs in the hotel and food industries and in construction and clerical work.

The average LEEO client has no more than an 11th-grade education and lands a job that pays little more than $4 an hour, Schloegel said. More than 170 Washington area firms have hired LEEO workers.

To defray the cost of this year's reimbursements, Schloegel has appealed to the Marriott Corp., IBM, the Chesapeake and Potomac Telephone Co., Riggs National Bank and the Washington Gas Light Co., as well as several private foundations. "The reception has been good," Schloegel said. "We're waiting for some decisions."

Schloegel, who also planned to ask the D.C. Lottery Commission for a contribution, said she was optimistic about raising the $40,000.

"Our whole future depends on a partnership with business," she said. "We've already established one. I hope it doesn't fail us now."

The fund-raising results, however, are still in doubt. Spokesmen for Marriott and IBM said earlier this month that their firms were still reviewing Schloegel's request. A gas company official said the utility rejected the request for "financial reasons."

A C&P spokesman said last week the utility soon will announce a $1,000 donation to Schloegel's group. All the spokesmen noted their companies receive as many as 100 funding requests each month from nonprofit groups.

"We are trying to ensure our solvency," Schloegel said. "If we don't get the money, we will have to cut salaries."

Four LEEO staff members--supervisors who are paid an average $10,000 annually--may be fired because of the looming deficit, said Schloegel, whose annual salary is $21,000.

LEEO officials said the four supervisors, who set up job interviews, supervise and make follow-up visits to LEEO participants, have been the key to the program's success.

"A lot of our clients don't know how to handle a job," said Tommy Cooper, a supervisor. "Many of them have problems with attendance, work habits or just getting along with people or with their family at home."

"They need our help," said Cooper, who had a caseload of 50 clients last week. "Each one has a different personality, and each one needs our special attention."