ONE OF THE MORE wrongheaded money-saving ideas to come from President Carter's Office of Management and Budget is a reported proposal to abolish the Community Relations Service -- the small and quietly effective division of the Justice Department that works to mediate in racial and ethnic disputes around the country. Not only is the amount of money peanuts -- for the service's budget is a little more than $5 million, or less than 0.5 percent of the total Justice Department budget -- but the rationale for killing the agency fails on several counts as well.

For one thing, OMB analysts are reported to be suggesting that troubled communities could hire private arbitrators to perform the sort of work done by the Community Relations Service; besides, they say, incidents of racial violence are fewer today than they were in 1964, when the Civil Rights Act established the unit. Quite aside from whether communities really would hire their own help -- or whether any loose change would be saved through a piecework arrangement -- the special neutral role and experience of the service (with fewer than 130 employees) would be lost.

The value of the Community Relations Service is in its low-profile offers of assistance, not just in cases such as the school desegregation flare-ups in Boston, Detroit and Prince George's County, the Indian occupation of Wounded Knee, S.D., and negotiations in Skokie, Ill., but also in working to prevent a host of other problems. There is nothing outmoded about civil-rights mediation. Fortunately, Attorney General Griffin Bell recognizes the importance of such work and has correctly termed the move to kill the service "unwise and unacceptable." OMB should drop the idea. And if not, President Carter should reject it. The Justice Department is not merely the prosecuting arm of the government; it is also concerned with the administration of justice, and that is where the contributions of its Community Relations Service have mattered so much over the years.