THE GOVERNORS are meeting in Shangri-La.

The fact that this exotic setting turns out to be a resort in northeastern Oklahoma may detract a bit from the romance. But Shangri-La does seem a fitting locale. For there the National Governors Association is discussing the administration's "new federalism" proposal, an attempt to revamp the American way of doing government that never was what you would call firmly moored in reality.

The governors have a fine sense of the appropriate. Last year at this time they met in Atlantic City. That was when they were still taking a high-flier on President Reagan's economic program--betting against all odds that a plan to cut federal revenues and raise defense spending wouldn't eventually end up dumping large burdens on the states. Now they are seeking refuge from the harsh reality of the huge federal deficits that the administration's program has generated.

Although the governors were slow to grasp the simple arithmetic of the Reagan program, they were quick to spot flaws in the new federalism deal that the administration offered last February. The most obvious defect from their perspective was that the programs that the governors were to assume cost a good deal more than those the federal government was to assume. That much was obvious. But the governors can also take credit for having stood firm on principle against one part of the swap that the administration believed was too good a deal for them to resist.

It was this: the administration initially proposed that it would assume the costs of Medicaid--medical aid for the needy--and give the states full control over food stamps and welfare for families. Financially that was very tempting for the states since Medicaid costs --most of which are for long-term care for the aged and disabled--are fast-growing and hard to control. By contrast--and contrary to public perception--welfare payments are relatively easy for states to control and, indeed, have actually fallen far behind inflation over the last decade.

The governors, however, have insisted that poverty is a national problem. No state acting by itself can adequately protect the poor. Downturns in local economies can shrink state revenues just as welfare needs rise, and kind-hearted states may also find themselves playing host to impoverished refugees from other less generous jurisdictions. Giving control over welfare policy to states means reducing standards to the lowest common denominator.

The administration has responded to this concern by fiddling with the deal--offering to keep food stamps if the states will keep medical aid for those who are not aged, promising better financing sources for other programs to be swapped and so on. But these adjustments miss the point. Federalism in the United States developed with the idea that there are shared national concerns not adequately addressed by regional politics. Over the last 50 years these concerns have come to include at least a basic responsibility for seeing that certain human needs --food and shelter but also access to basic education, the chance to live in a reasonably clean environment--are met wherever people happen to live.

The system of mixed federal, state and local responsibility that now puts this rough consensus into effect is, no doubt, messy and inefficient. But the notion that it can be set straight by a simple compact between one administration and the incumbent governors seems most appropriate for discussion in the floating mists of Shangri-La. EDITORIAL

Lost Horizons

THE GOVERNORS are meeting in Shangri-La.

The fact that this exotic setting turns out to be a resort in northeastern Oklahoma may detract a bit from the romance. But Shangri-La does seem a fitting locale. For there the National Governors Association is discussing the administration's "new federalism" proposal, an attempt to revamp the American way of doing government that never was what you would call firmly moored in reality.

The governors have a fine sense of the appropriate. Last year at this time they met in Atlantic City. That was when they were still taking a high-flier on President Reagan's economic program--betting against all odds that a plan to cut federal revenues and raise defense spending wouldn't eventually end up dumping large burdens on the states. Now they are seeking refuge from the harsh reality of the huge federal deficits that the administration's program has generated.

Although the governors were slow to grasp the simple arithmetic of the Reagan program, they were quick to spot flaws in the new federalism deal that the administration offered last February. The most obvious defect from their perspective was that the programs that the governors were to assume cost a good deal more than those the federal government was to assume. That much was obvious. But the governors can also take credit for having stood firm on principle against one part of the swap that the administration believed was too good a deal for them to resist.

It was this: the administration initially proposed that it would assume the costs of Medicaid--medical aid for the needy--and give the states full control over food stamps and welfare for families. Financially that was very tempting for the states since Medicaid costs --most of which are for long-term care for the aged and disabled--are fast-growing and hard to control. By contrast--and contrary to public perception--welfare payments are relatively easy for states to control and, indeed, have actually fallen far behind inflation over the last decade.

The governors, however, have insisted that poverty is a national problem. No state acting by itself can adequately protect the poor. Downturns in local economies can shrink state revenues just as welfare needs rise, and kind-hearted states may also find themselves playing host to impoverished refugees from other less generous jurisdictions. Giving control over welfare policy to states means reducing standards to the lowest common denominator.

The administration has responded to this concern by fiddling with the deal--offering to keep food stamps if the states will keep medical aid for those who are not aged, promising better financing sources for other programs to be swapped and so on. But these adjustments miss the point. Federalism in the United States developed with the idea that there are shared national concerns not adequately addressed by regional politics. Over the last 50 years these concerns have come to include at least a basic responsibility for seeing that certain human needs --food and shelter but also access to basic education, the chance to live in a reasonably clean environment--are met wherever people happen to live.

The system of mixed federal, state and local responsibility that now puts this rough consensus into effect is, no doubt, messy and inefficient. But the notion that it can be set straight by a simple compact between one administration and the incumbent governors seems most appropriate for discussion in the floating mists of Shangri-La.