During the past decade, more than 120 schools have closed in Montgomery and Prince George's counties--but not for long. Today, only 20 of the old schools remain vacant.

In that period, innovative groups have spent millions of dollars on the sometimes dilapidated and neglected buildings to reopen the red brick schoolhouses as a city hall, a police station, a private home, libraries, churches, condominiums, recreation centers and commercial offices.

The two counties have followed different policies in turning the surplus schools into moneymaking assets. Prince George's sells or leases the buildings, while Montgomery County only leases them. In this way, they can avoid expensive maintenance costs, and when the property is sold, Prince George's makes money on property taxes.

"We're overloaded with sales to churches. We don't avoid selling to them but because they're nonprofit, they're tax exempt and the county doesn't make much money from them," said Frank Geraci, a property specialist in Prince George's Property Management and Services Department.

Although selling the buildings is profitable for the county, Geraci said the county is trying to move its own offices, which are in expensive leased quarters, into the closed schools.

Of the 64 Prince George's schools closed since 1977, 19 have been sold for a total of $6 million, 33 have been retained for county use and 12 are still empty, Geraci said.

In Montgomery County, 59 schools have been closed since 1973 but none has been sold. The County Council in 1976 decided not to sell the buildings because the school system might need them in the future. However, the county does lease its surplus schools on 10-year contracts only. Of the 23 that are leased, 14 are rented to private schools, a policy the county is now reviewing.

One such leasing arrangement aroused strong controversy recently when some residents objected to the lease in July of Larchmont Elementary School in Kensington to Grace Episcopal Church, which wanted to turn it into a private school. The residents contended the private school would attract white students from public schools and cause a racial imbalance in that area's public school enrollment.

The matter was settled when Grace Episcopal agreed not to accept students of certain ages in the immediate vicinity for a period of time.

Montgomery County Executive Charles W. Gilchrist placed a moratorium on leases to private schools and formed a task force that will issue a report by Labor Day.

Most of the old schools still look like schools despite millions of dollars spent on renovation. In Prince George's, what used to be O.W. Phair Elementary and Laurel Junior High are now modern office buildings that look as if they had been originally built that way.

The two schools, which are separated by a parking lot, near I-95 and Rte. 198, are now called O.W. Phair Office Park, a creation of GDR Corp. formed by Gary Berman, his cousin Dennis Berman and Richard Dreisen.

Laurel Mayor Robert DePietro approached Gary Berman in 1980 and asked him if there was anything he could do with O.W. Phair Elementary School, which had been vacant and deteriorating for two years. Berman was skeptical at first, but GDR was later persuaded. The company bought the school for $500,000, sunk $1.4 million into renovation and now has 14 tenants, including a diet clinic, a dance studio, a health clinic and the State of Maryland.

The three developers used to own two racquetball clubs and still own the Arbitron building in Laurel. They have just begun transforming their third school, Beltsville Elementary, into offices that will be leased to Computer Science Corp. at $700,000 a year.

"We're spending $10 million to $12 million on the three projects and have no idea how much we'll make, but I know we're going to come out well," Dreisen said.

The projects are profitable not only financially, he said, but also in terms of pride for his partners and good for the community.

"What could be more productive? What could be better than taking eyesores to the community and turning them into beautiful office parks?" Dreisen said.

Dreisen and his architect, Glen Stephens, prefer renovating schools because their former playgrounds provide land for parking areas. Dreisen estimates that to build from scratch would cost 40 percent more than to gut a school and "put a new skin on it."

Tanglewood Elementary in Clinton is still a school, but it now serves a completely different kind of student. Now called Tanglewood Special Center, it serves mentally and physically handicapped children and youths 5 to 20 years old. Unlike the academic atmosphere of only a year ago, the school has been redesigned to teach job skills, rather than history and algebra, to its new students.

Tanglewood, one of three Prince George's schools being turned into special centers, has been open for one year but is still undergoing renovation costing $900,000, including the installation of a therapy tank, a small pool, that will be used not for swimming but for developing the students' motor skills.

This summer, 17 mentally retarded youths were hired at minimum wage to paint the institutional green walls with bright colors, giving the rooms and halls a rainbow effect. The students just finished their sixth and final week of work.

"I sweep and mow and sand walls," said Barney Kilbride, 18, as he wiped the perspiration from his face in the 85-degree weather. "I put my paychecks in the bank because I'm going to buy an electric guitar and weights."

Wearing blue jeans and tennis shoes, the young workers grinned happily under their yellow hard hats.

"I don't want any vacation. I want to work more," said Walter Phillips, 20, who has been digging tree stumps.

One of the most radical changes has occurred at the former Chestnut Hills Elementary School. Rather than little children running down its hallways, uniformed police and arrested suspects now walk the corridors. The building houses the Beltsville police station, including two holding cells that used to be classrooms.

"It still looks like a school, but they're in the process of putting stucco on the front," Lt. William Norris said. "We're becoming accustomed to everything now."

Fox Hill Elementary also has a different kind of tenant. Now the Bowie City Hall, it provides space for a YMCA, senior center, the Bowie Hotline and New Ventures, a group that helps women find jobs.

The City Hall has been in the old school since February 1978, but the exterior still resembles a school and some rooms still look like classrooms with blackboards. One drinking fountain in the hallway is still too low for an adult to drink from comfortably.

Assistant City Manager Leonard Fiehler said each classroom was divided into three offices, with some getting an entire wall of windows and others no windows at all. He said the echo in the building was a problem at first but the roof since has been insulated.

One of Prince George's best bargains may have been the Old Berwyn Heights kindergarten building. A buyer paid $28,000 for the one-room schoolhouse in 1981 and turned it into a home.

Montgomery County has been trying to turn two of its surplus schools into housing for low- and moderate-income senior citizens but has run into snags. The county is still waiting for federal funds for one and faces litigation on the other.

Four Corners Elementary in Silver Spring has been closed a year, but Montgomery is still waiting for an answer on funding from the Department of Housing and Urban Development to build 84 units for senior citizens housing, said Bett Lewis, a senior planner for the county's Housing and Community Development Department.

If all goes well, she said, it would be the first time the county has turned a school into apartments for the elderly.

Montgomery also is planning to renovate Pleasant View Elementary in Wheaton into 100 housing units, but the Pleasant View PTA has filed a lawsuit against the Board of Education to stop the project.

Meanwhile, Holy Cross Hospital has big plans for Forest Grove Elementary in Silver Spring, which it is leasing from the county for $35,000 a year. The building now houses the Kensington Day Care Center and an adult day-care program. Both often combine their activities, such as sing-alongs and storytelling. The hospital holds daily seminars in the old school and prenatal classes.

"The environment is ideal for it in the classroom," said the hospital's public affairs director, Thomas Burke. "The school lends itself to an educational effort."

The hospital's future projects in the old school include a wellness program, which would teach people how to avoid serious illness through such steps as weight control and a hospice with room to care for eight people. CAPTION: Picture 1, Cpl. Joseph (Scooter) Kozlowski shows a holding cell at the Beltsville police station, formerly Chestnut Hills Elementary School. Picture 2, The former Laurel Junior High School has been converted into a modern office building.Photos by Craig Herndon--The Washington Post; Map, SURPLUS SCHOOL BUILDINGS; By Dave Cook--The Washington Post; Picture 3, $900,000 in renovation is planned in conversion of Tanglewood school. Picture 4, Summer workers help cultivate the garden during renovation of the Tanglewood special center in Clinton. Photos by Ron Ceasar for The Washington Post