ANNAPOLIS, FEB. 12 -- The General Assembly's chief budget adviser told legislators today they should reject a plan devised by Gov. William Donald Schaefer to begin quarterly payments to depositors of Maryland's failed savings and loan institutions.

Under the plan, proposed by Schaefer two weeks ago, the state would begin this month to reimburse the 25,000 remaining depositors whose money has been stranded for nearly three years in First Maryland and Old Court savings and loans.

Schaefer's method would free the money -- a total of $408 million -- more quickly than previously promised by the General Assembly, which has set a December 1989 deadline for repaying the entire deposits of the failed thrifts.

But William S. Ratchford II, director of the legislature's Department of Fiscal Services, cautioned legislators today that an acceleration of the payments could prove financially unwise for the state. He told members of the House and Senate fiscal committees it would deprive Maryland of about $10 million in interest that would accrue if the money were withheld until the end of 1989.

In addition, he said it remains uncertain how much money the Maryland Deposit Insurance Fund will need for other liabilities created by the 1985 savings and loan crisis, such as those of smaller, failed S&Ls and a possible federal income tax debt.

And he argued that, at a time when Maryland enjoys an unusually large budget surplus, Schaefer should have included more than $77 million for S&L payouts in his proposed 1989 budget. By putting more money in next year's budget, Ratchford said, the state could reduce the sum -- currently estimated by Schaefer to be $59 million -- that it will have to borrow to meet the payout deadline.

"There is no question the quarterly payment plan is of extraordinary benefit to depositors," Ratchford told legislators, who would have to approve the plan before it went into effect. But, he added, "this is not the appropriate time to initiate the . . . plan."

Instead, he urged the legislators to wait until the autumn and reassess the plan then in the light of updated information about the state's financial condition and its S&L liabilities.

Ratchford's advice, however, drew jeers from a few hundred depositors, many of them senior citizens, who jammed the hearing room.