Leaders of America's business community stepped into the educational reform debate yesterday, blaming falling educational standards for the decline in the nation's industrial competitiveness and offering their own proposals to improve public schools.

In a 107-page report released yesterday, the New York-based Committee for Economic Development said an alarming number of children leave school without learning discipline and work habits that are essential for success. The report also said many students leave school without a sufficient command of English.

To solve the problem, the business group recommended:

*Injecting more money into public school systems and raising teacher salaries.

*Placing more emphasis on education in the early school years.

*Giving more emphasis to a "bottom-up" strategy, including increasing the authority of officials in the schools -- such as principals, teachers and administrators -- rather than of local or state school boards.

*Emphasizing basic English and what the report called the "invisible curriculum" of teamwork, honesty and promptness.

"If schools tolerate excessive absenteeism, truancy, tardiness or misbehavior, we cannot expect students to meet standards of minimum performance or behavior either in school or as adults," it said.

The panel that prepared the report was chaired by Owen B. Butler, chairman of the board of Procter and Gamble Co. Butler said business "got into education through our concerns on productivity and the American competitive position." The Committee for Economic Development includes representatives from dozens of major U.S. corporations in such fields as oil, communications, insurance and manufacturing.

The report marked the first major statement by business leaders on the state of American education, at a time when many governors have recognized the importance of a sound public education system in attracting industry to their states.

The report immediately drew praise from such diverse quarters as the National Education Association, which hailed the call for higher teacher pay, and Education Secretary William J. Bennett, who praised the recommendation for more local control.