As if to underscore the challenge facing the District's new mayor, Financial World magazine has given the city government a grade of

C-minus in financial management and administration.

In fact, the District ranked 27th among 30 large cities recently surveyed by the New York-based biweekly magazine. Only El Paso, Philadelphia and Detroit were said to be doing a worse job in the management of city government.

"They didn't do very well," Douglas A. McIntyre, president of Financial World, said yesterday. "The thing that killed Washington was budgeting."

McIntyre cited the city's accumulated budget deficit of roughly $300 million and its projected deficit for fiscal 1991 of more than $300 million, out of an operating budget of $3.8 billion. He also said the city's 48,000-member payroll is "out of whack."

"It is the single most overstaffed city of any large city in the country," McIntyre said. "The only way for them to dig out of this is to pare down the size of government."

Financial World based its grades on a city's performamce in four areas: accounting, budgeting, performance evaluations and infrastructure controls. The magazine evaluated a variety of factors, including a city's bond rating and frequency of financial reporting, and how well the city funds infrastructure needs such as roads and bridges.

McIntyre said the magazine's editors tried to adjust its survey to take into account relative levels of responsibilities and assistance from the federal government. The District was not penalized in the rankings because it must carry out several functions typically picked up by states, such as running a prison system.

According to the survey, the top-ranked city was Phoenix, followed by Seattle, Portland, San Jose and Fort Worth. Baltimore was ranked sixth and given a B-plus rating.

McIntyre said he harbors hope for the District, despite its poor showing in his magazine's survey. "It has not been {well run} up to this time," he said. "We think Sharon Pratt Dixon has a hell of an opportunity to get this turned around . . . . The problems she faces are not insurmountable."

Paul Costello, Dixon's spokesman, seemed to echo McIntyre. "It reflects the past," he said of the magazine survey. "The first order of business for Mayor Dixon is getting the fiscal house in order . . . . There will be a different analysis when that magazine comes back in one year."

Financial World magazine, founded in 1902, is one of the country's oldest general business magazines, with a biweekly circulation of 500,000.

City...............GPA

1 -- Phoenix..............3.850

2 -- Seattle..............3.850

3 -- Portland, Ore........3.850

4 -- San Jose.............3.775

5 -- Fort Worth...........3.600

6 -- Baltimore............3.566

7 -- Dallas...............3.425

8 -- Oklahoma City........3.425

9 -- San Diego............3.275

10 -- Milwaukee...........3.275

11 -- Boston..............3.050

12 -- Cleveland...........3.050

13 -- San Antonio.........3.025

14 -- San Francisco.......3.025

15 -- Columbus, Ohio......3.025

16 -- Austin, Tex.........3.025

17 -- Indianapolis........2.975

18 -- Chicago.............2.950

19 -- Memphis.............2.950

20 -- Los Angeles.........2.700

21 -- Houston.............2.700

22 -- Nashville...........2.700

23 -- New York............2.635

24 -- Denver..............2.625

25 -- Jacksonville, Fla...2.600

26 -- New Orleans.........1.775

27 -- Washington, D.C.....1.700

28 -- El Paso.............1.375

29 -- Philadelphia........1.350

30 -- Detroit.............1.200

NOTE: Performance in the areas of accounting, budgeting, performance evaluations and infrastructure controls were graded on a 4.0 scale.

SOURCE: Financial World magazine