The 3,000 federally funded housing authorities nationwide may be faced with tighter rules on the use of federal appropriations because of a recent investigation into the Annapolis Housing Authority's $76,000 expenditure for a drum and bugle corps and an anniversary celebration, federal officials said yesterday.

U.S. Housing and Urban Development officials said they are reviewing a recently drafted proposal that would allow closer monitoring of local housing authorities' expenditures of funds provided through the multimillion-dollar Section 8 program. The program, one of HUD's largest, provides rent subsidies for low-income families.

"Right now, HUD has little control over the expenditure of funds. We want to be able to set criteria for when it is okay and it is not to spend the money," said Chris Greer, an official in the auditing department at HUD. Greer added that the outline for the regulation change is being studied by Tom Demery, HUD's assistant secretary for housing.

The new regulations, if approved by Demery, would apply only to administrative funds, which account for about 6 percent of all Section 8 appropriations.

HUD last month exonerated the Annapolis Housing Authority of misspending $76,000 in Section 8 funds -- $41,000 for a drum and bugle corps, $10,000 for two videotapes about the authority and $25,000 for a 50th anniversary celebration Aug. 14 -- saying that the expenditures were valid administrative costs covered under existing HUD regulations.

However, HUD officials, moving to restrict such uses of HUD funds in the future, are seeking to implement a change within the next few weeks, Greer said.

The $76,000 expenditure prompted an outcry from local government officials, who charged that the funds should have been allocated for improvements in housing and aid for the 750 families on a waiting list for public housing.

The housing authority, which is being separately investigated by the FBI for allegations of fraud and mismanagement, has been the target of widespread criticism by Anne Arundel County officials who have charged that the agency's director, Arthur G. Strissel, acted irresponsibly in handling the $3 million annual budget.

HUD officials said they were unaware of any other authorities that had allocated Section 8 funds for such uses as musical ensembles and celebrations.

Officials at other local housing authorities said that although they were unaware of the specifics of the new proposal, they generally were opposed to more stringent HUD regulation of funding.

"I'm not in favor of the localities using the fees for whatever they want, but {the changes} . . . would cut down on our flexibility and efficiency," said Robert Polhman, acting director of the District's Department of Housing and Community Development.

Other housing agency officials said the proportion of funds spent by the Annapolis authority on promotional activities was unusually high. For example, the Richmond Housing Authority, which oversees four times as many units as Annapolis, allocates $55,000 annually for "tenant services" such as newspaper publication and summer youth games, according to an authority spokesman.

The Annapolis authority operates 1,003 units.