One of the hottest issues in education - the competency in basic skills of high school graduates - is being dealt with for the first time by Congress in the major elementary and secondary education bill expected to be taken up by the House today.

For the first time, the bill, which funds a variety of primary and high school education programs, contains a section providing aid to the states to help them develope minimum competency tests and remedial courses. The funding is open ended, but the Congressional Budget Office estimates that the new program would cost about $10 million in the first year and $25 million in each of the remaining four years of the five-year bill.

Rep. Ronald Mottl (D-Pa) said approximately 29 states are now considering some form of minimum competency test in basic skills of reading and arithmetic for high school seniors. Virginia is also trying to figure out how to devise a writing competency test. Five states now administer competency tests.

Mottl said that he would like to "encourage" the other states to develop programs. Mottl originally introduced a bill making minimum testing mandatory, but he said that brought a "howl" from the education community and he "backed down."

The National Assessment of Educational Progress has found that 13 percent of 17 year olds are functionally illiterate. Scholastic Aptitude Test (SAT) scores have been steadily declining in the last decade and Mottl said 25 percent of the freshment entering Ohio State University have to take remedial courses. 20 percent of the journalism seniors at Temple University fail competency tests in English.

Mottl said he blamed the decline on absenteeism, teaching methods that stress innovation and too many electives for high school students.

The new program makes clear that the federal government not specify minimum standards to be met or what kind of tests to use.

The entire bill would authorize an average of about $10 billion over the next five years for the educational programs in it.

The biggest change would be in compensatory education programs funded under title 1. President Carter proposed some $400 million in new money for concentrations of poverty areas. That combined with a committee change in the ways poverty income is determined and an allowance of a full counting for Aid for Families with Dependent Children would mean a small shift in funding to help big cities.

The South would lose about one or two percent of its ESEA money under the bill and would get less money in the future mainly because a survey of income noted a shift in poverty away from the South to the Northeast and Midwest.

Baltimore City, for example, which received $18.3 million in Title 1 money in fiscal 1978, is to get $23.8 in fiscal 1979. Cook County and Chicago are to get $80.2 million in fiscal '79, up from the $60.2 million it got this year. Los Angeles is to go from $70 million now to $91.7 in fiscal 1979.

One part of the bill that President Carter opposes would increase impact aid money, something every president in the last 20 years have tried to decrease or phase out.

Impact aid - financial assistance to school districts affected by federal activities, such as a military base - was increased by repealing a provision requiring districts to absorb a certain percentage of eligible children before receiving payments, by increasing aid to heavily impacted districts and by removing a number of restrictions on aid to low rent public housing children. The bill authorizes $1.5 billion in fiscal '79 for impact aid rising to $1.9 billion by fiscal 1983.

The District of Columbia, which gets $4.9 million now, would get $7.4 million in fiscal '79.

The bill also seeks to reduce paperwork that many educations complain about in applying for federal programs, by setting up one center for processing education paperwork and by allowing applications for three years instead of every year.

The bill, which passed the committee 36 to 0, is expected to pass the House easily without major change.