A federal grand jury is investigating whether officials of the D.C. Youth Services Administration improperly paid select employes unusually large amounts in overtime wages during the last three years -- in some cases nearly tripling an employe's normal salary and paying for work that wasn't done, according to sources familiar with the investigation.

The agency spent more than $6 million for overtime pay between October 1982 and October 1985 at three youth institutions, or about 20 percent of the agency's annual budget. That rate far exceeds the overtime commonly paid by District agencies, according to D.C. Controller N. Anthony Calhoun.

Investigators found instances in which employes with annual salaries of $18,000 were paid as much as $51,000 a year with overtime, the sources said. Some of the agency records reviewed by federal investigators do not show that employes were actually on the job and working to collect the overtime pay, the sources said.

"There are examples of people signing in at two places at once and people working 24 hours, five days a week," a source close to the investigation said.

In one case, an employe was paid for working 40 consecutive days of 16-hour double shifts, according to a source, despite not signing in or out on the days worked. "We're talking millions of dollars of overtime for an agency that only has 420 people," the source said.

Patricia Quann, director of the Youth Services Administration, said last week that investigators "may find some abuses and we will support prosecution."

She said, however, "The vast majority of overtime is around staff shortages."

The grand jury, the FBI and the General Accounting Office have been investigating the activities of the youth agency for eight months, focusing on overtime payments, questionable contracts and whether officials obstructed justice by failing to turn over complete and accurate copies requested by investigators.

In the course of the investigation, city officials provided time sheets with employe names that had been obliterated with white correction fluid, according to sources. The FBI crime lab was able to lift the fluid and read the names as well as determine that some time sheets had dates changed and employes' names added, the sources said.

Information about the possible abuses of overtime by the agency also surfaced recently in a class-action lawsuit brought against the agency by the Public Defender Service and the American Civil Liberties Union on behalf of juveniles in D.C. youth facilities operated by the agency.

In depositions, city officials and consultants detail the overtime abuses and the District's failure to educate, supervise and counsel youths who are serving sentences or awaiting trial. The case is set for trial July 7 in D.C. Superior Court.

Quann said she tried to reduce the need for overtime in recent years, but was thwarted by persistent staff shortages, longer detention times imposed by city courts and the failure of the District to close Cedar Knoll, its home for troubled children.

The District is now hiring 60 youth counselors and guards to correct the problem, Quann said, but the agency is continuing to pay overtime -- this time to keep up with the many demands of federal investigators.

The agency, which is part of the D.C. Department of Human Services, made the excessive overtime payments at the same time that its antiquated and overcrowded youth facilities lacked teachers, guards and maintenance.

Overtime caused "serious budget problems" within the agency, Quann said. "You end up not being able to do other things," she said. "We were able to shift some money around ourself, but in the end, the department of human services has responsibility."

Edward Mahlin, deputy superintendent of Oak Hill, the District's facility for troubled youths, estimated that overtime payments cost the agency $50,000 every two weeks, or $1.3 million yearly. Sources close to the federal investigation said overtime costs were $1.3 million in fiscal 1983, $3.4 million in fiscal 1984 and $2.5 million for 10 months of 1985.

Counselors are paid $14,000 to $18,000 a year. However, in his deposition, Mahlin said some counselors were paid $40,000 a year because of overtime. One source told of salaries of $51,669, $50,700 and $49,057 paid to employes whose pay grades averaged $18,000 to $21,000 a year.

According to court records, overtime caused employe burnout as well. At least four employes recently retired with "psychiatric disability" payments, citing the excessive overtime as the source of their emotional ailments, according to Mahlin.

James Barron, assistant house administrator for the D.C. Receiving Home and an 18-year veteran of the youth agency, said overtime demands increased over the last three years and became "tiresome."

But other employes welcomed the extra work. One guard became so incensed when his scheduled overtime was canceled that he "went off his rocker and smashed up a cottage, broke out every . . . window in the control office and turned over a desk," Mahlin said.

When asked whether employes have become dependent on overtime for the money, Mahlin responded, "There are some expensive-looking cars in the parking lot, let's put it that way."

Two security consultants, who once worked under Quann when she held a post at a Maryland correctional institute, found that the District's youth facilities had "an excessive amount of overtime hours per pay period to the extent of abuse."

The consultants, Eric Swinn and Walter Farrier, reported in a Sept. 3, 1985, memo that they found "excessive overtime being worked by certain people, overtime that was being worked without justification." Staff shortages were a "good excuse," but abuses existed, they found.

The consultants also found staff members playing basketball or watching television instead of supervising youths. "There is no supervision of the staff or residents," the consultants said in a Dec. 12, 1985, memo. "We feel that this situation borders on criminal neglect to have residents locked in housing units and no staff present."

The youths, who are taken to the facilities in leg irons and handcuffs, are locked in individual rooms without fire alarms or sprinklers. Quann said the facilities' inability to pass fire codes is typical of many correctional facilities. "We always transport in restraint," she added.

As a result of the consultants' reports, the agency installed time clocks, improved work logs and began requiring advance written requests for overtime, Quann said.

Mayor Marion Barry's proposed supplemental budget for fiscal 1986 includes $2.4 million to renovate and improve two youth facilities, Oak Hill in Laurel and the Receiving Home in Northeast Washington.

"We've had no escapes this year, no suicides, no murders," Quann said. "We may not be happy with the services we're giving these students . . . . All of the problems spin out of staff shortages and we're moving to enhance that."