The chairman of the Senate subcommittee that oversees District of Columbia money matters said yesterday he may ask Congress to set up a merit pay system for D.C. teachers, a controversial idea being promoted nationally by President Ronald Reagan.

Sen. Arlen Specter (R-Pa.), chairman of the Senate Appropriations subcommittee on the District, said after a hearing on the city's fiscal 1984 budget that Congress could either fund the merit pay proposal as part of the city's budget or could recommend it to the D.C. Board of Education.

On another subject, Specter voiced concerns about the city's plan to transfer $12 million in street lighting costs to District residents and businesses, adding to criticisms already expressed in the House of Representatives. If Congress decides to make the city pay for the street lighting, the already strapped city would face another money dilemma.

William Simons, president of the Washington Teachers Union, testified that he could support a merit pay system "in certain circumstances." This encouraged Specter to say he might add something to the budget on the issue.

But Simons said in an interview later that he had merely meant that the idea is one "whose time has come again to be explored" and that he would oppose any legislated mandate for such a plan. If the school board wants to use such an approach, it should be an issue in the next teachers' contract, he said.

Reagan supports the idea that teachers' pay should be pegged to their performance in the classroom rather than to their college credits and seniority as a way to improve the quality of education.

The National Education Association, the nation's largest teachers' union, has adamantly opposed the concept for years.

The District tried a merit pay system in the 1930s, but abandoned it 10 years later when it was found to be unworkable, Simons noted.

Specter voiced concerns about the street lighting plan after hearing opposing testimony from Alan G. Kirk II, senior vice president and general counsel of Potomac Electric Power Co. and a former law firm colleague of the senator. Kirk argued that the plan could not be implemented for at least a year and said that Pepco plans to challenge the action in court. "I don't think the city can ignore its obligations for electricity," Specter said after the hearing. He earlier commiserated with Kirk, noting that Pepco could be "between a big rock and a very hard place", because the utility would not dare turn off street lights or traffic signals.

Last month, Specter's counterpart on the House side, Rep. Julian C. Dixon (D-Calif.), chairman of the House Appropriations subcommittee on the District, last month criticized the city's proposal and said that his committee would have to find the $12 million to put back into the city's budget.

At a press conference yesterday, Mayor Marion Barry said he would not help Congress identify budget cuts or new revenues to make up the difference.

"It's not my responsibility to find it . . . . I'll leave it to him Dixon to identify where it is," Barry said. Last month Dixon threatened to do exactly that if city officials did not give him a proposal.