Arlington County has decided to stop educating District of Columbia foster children living in the county under a new policy that has forced the transfer of some children to foster homes elsewhere.

According to documents obtained by The Washington Post, Arlington officials have told a private foster care contractor that all D.C. children now receiving an education there will be "terminated" as pupils at the end of the school year and that the schools will not accept any more D.C. children. The policy also has been applied to children from other jurisdictions.

In an Oct. 11 letter to the foster care contractor, Environments for Human Services (EHS), Joseph G. Guter, director of finance for the Arlington schools, wrote that the children are an "administrative burden." He wrote in a Dec. 19 letter that state law gives local school boards authority to choose what out-of-state children will be admitted.

"We choose not to admit residents of the District of Columbia into the Arlington public schools," Guter wrote.

No explanation was given for the policy change, and county officials declined to explain. "I don't want to discuss it with you," Guter told a reporter. "It's in litigation. It's in the hands of the county attorney."

D.C. officials and foster care authorities charged yesterday that the county's policy, which has focused on a group of mentally retarded and emotionally disturbed children, violates a federal law that mandates a free and appropriate public education for all handicapped children. They noted that D.C. children have been placed in Arlington schools at city expense for more than 20 years.

D.C. social services commissioner Audrey Rowe said the move by Arlington officials could have far-reaching implications for the city's foster care program and could hinder its effort to stop sending neglected and delinquent children to facilities in faraway states and place them instead in homes closer to the city, where the city can supervise their welfare more closely.

"This whole thing is just crazy," said Rowe, adding that Arlington authorities have never officially told her agency about the policy change, but that she learned of it from EHS. "It's just illegal and they can't do that," Rowe said. "The whole issue is in violation of several laws."

Rowe said the city has seven foster children enrolled in Arlington schools, and that several others have recently been denied admission. She estimated that several dozen city wards live in facilities in other Virginia counties. They are among the more than 400 children Rowe's agency has placed in homes outside the city.

According to Rowe and others, the actions taken by Arlington officials have focused on a group of neglected and delinquent children who are in the care of EHS, but threaten to spread to dozens of other D.C. children living in individual foster homes in Arlington and other nearby Virginia counties.

"It does strike sort of a blow to bringing some of these kids from far away and monitoring what's happening with them," Rowe said. "I think there's a real threat of other counties deciding that they, too, do not want D.C. children attending their schools."

Several of the children involved are mentally retarded or emotionally disturbed and the District has been paying Arlington fees up to $9,000 a year per child for special education, in addition to a standard rate of more than $3,000 a year in tuition.

"I can't understand why, on the one hand, they say they've gotten tuition payments and have readily accepted those and on the other hand now say they don't want the kids," Rowe said.

The policy has been endorsed by Arlington School Board Chairman Gail H. Nuckols, whose signature appeared on Guter's letter to EHS. Nuckols did not return repeated phone calls to her office. Calls to other high-ranking school officials were referred to Guter.

Bern Anderson, director of clinical services for EHS, said he was not sure why the county changed its policy, but recalled that Guter told him and an associate at a meeting late last year that the Potomac River separating the District and Arlington had become "like the Rio Grande" and that Guter "didn't want them D.C. children coming over here."

"He kept saying we don't want them, they don't belong here, they belong in D.C.," Anderson said.

Guter and other Arlington officials have been under pressure from education officials in Richmond to abandon the policy, sources said. A bill passed recently by the state House of Delegates and pending before the Senate would require local jurisdictions to educate all children placed in foster facilities within their borders.

Grant Tubbs, director of special services for the Virginia state education department, said the department's position in the past has been that local school districts must provide education to all children living within their borders. Tubbs, who has been actively involved with Arlington officials in negotiations over the dispute, said yesterday he could not comment because he expects a lawsuit to be filed on behalf of the children.

According to Anderson, the problem first arose last fall with an emotionally disturbed Lynchburg youth who was receiving medication for hyperactivity. He said the boy and other children subsequently were either removed from schools or denied enrollment, including:

* An 11-year-old emotionally disturbed D.C. boy who previously attended school in Fairfax County, was admitted to an Arlington school for a day but then abruptly told he could no longer attend.

* A 17-year-old mentally retarded D.C. girl who was taken to Yorktown High School in December to begin classes. Two days later, the assistant principal ordered her removed.

* A 17-year-old emotionally disturbed D.C. boy was denied enrollment at Yorktown, where he had been scheduled to receive vocational training.

Some of the children involved have not been in school for months, Anderson said, while they await new placements.

Rowe said she first learned of Arlington's new policy last December. She said her agency decided not to intervene at the time because EHS, the private contractor, was trying to resolve the problem with Arlington officials.

"Now that it has risen to the level that they may have denied education to some of the children, we have to take a very firm and aggressive position to advocate for our kids," Rowe said.