A panel appointed by Virginia Gov. L. Douglas Wilder has recommended transferring as much as $85 million in state school aid from wealthier Northern Virginia districts to poorer systems downstate.

In the scenario developed, Fairfax County would lose $64.9 million in the two-year budget that begins July 1, 1992, Arlington would lose $9.3 million, Alexandria would lose $5.5 million and Loudoun County would lose $4.6 million. That would amount to 30 to nearly 50 percent of the state's contributions to those local school systems.

Prince William County would receive a $2.7 million increase in funding.

"It's just totally unacceptable," said Del. James H. Dillard II (R-Fairfax), a former schoolteacher. "It's unconscionable to take that much money from any one school district."

Such a drain on local school budgets could force either substantial tax increases or major reductions in educational programs, possibly including teacher layoffs and fewer class offerings, Northern Virginia officials said.

The recommendations, approved this week by the fiscal committee of the Governor's Commission on Educational Opportunity for All Virginians, are sure to spark a major political donnybrook between Northern Virginia legislators and their downstate colleagues.

Virginia is grappling with the same problem of educational disparity that led to lawsuits overturning school funding systems in many states in recent years, including Texas, New Jersey, Wisconsin, Montana and Kentucky. Maryland is expected to deal with the issue during its next legislative session.

In Virginia, spending per student ranges from a high of nearly $8,000 in Alexandria to a low of $3,300 in Poquoson in the southeastern part of the state.

The panel's recommendations would restructure the state's formula for distributing state aid to place more emphasis on a jurisdiction's ability to pay.

The committee that drew up the proposal structured it so that 115 of the state's 136 school districts would see an increase, and several educators from poorer districts hailed the plan.

"That would be tremendous for us," said Highland County Superintendent T.C. Dickerson III, whose 400-student school district tucked in the hills of western Virginia would receive an additional $433,000, or 37.3 percent more in state aid.

With the additional money, Highland could improve its science laboratories, offer students more foreign language and advanced placement classes and buy new audiovisual equipment, he said. "What we're using now is reaching the point where it's breaking down a lot."

In one of his first acts as governor, Wilder announced the appointment of the disparity commission to report to the legislature by February.

The six-member fiscal committee, which includes one Northern Virginian, former delegate Dorothy S. McDiarmid, approved its recommendations unanimously and will present them to the full commission on Wednesday.

McDiarmid could not be reached for comment. Wilder's education secretary, James W. Dyke Jr., said it was premature to discuss the plan. "Nothing has been decided. Nothing is firm," he said.

"This seemed to be the package that helped the most," said the fiscal committee's chairman, Thomas Gorsuch, who is also a member of the state Board of Education and mayor of Waynesboro.

"I'm sure {Northern Virginians} are going to look at it with disappointment," he added. "I would certainly share their disappointment if I were there. On the other hand, if we assume that disparity is a problem that has to be improved, I hope they would recognize that this at least is an equitable solution to the problem."

Aside from the funding change, Gorsuch's committee also urged the state to share the costs of capital construction and specialized programs such as English as a second language, both of which would aid Northern Virginia schools.

Fairfax County Superintendent Robert R. Spillane, while characterizing the proposed cuts as "almost Draconian," said he was not worried because Northern Virginia has grown in power in the legislature.

"I don't think there's any possibility of that happening," he said. "I don't see how the state could cut that much."

Dillard, who is a member of the commission but not the fiscal committee, was not so optimistic. "Enough people are taken care of in this thing . . . that the votes may not be there," he said. "That's the scary part of this whole thing."

The issue of disparity has haunted Virginia for years.

In 1988, Gov. Gerald L. Baliles and the General Assembly revamped the financing formula to deal with the problem. However, a study released by the Virginia Education Association in January concluded that, instead of reducing the spending gap, the new system has simply exacerbated it.

A group of school superintendents from Southwest Virginia have banded together under the title of Coalition for Equity and are hiring a lawyer, though they say they will wait to see what Wilder does before deciding to file a lawsuit.

Some educators in the state's poorer areas said the committee's plan is just a Band-Aid without a major infusion of new state dollars into education, something unlikely at a time of near-recession.

"This is a step in the right direction, but the disparities would still be there," said Kenneth E. Walker, superintendent of Halifax County schools and an officer in Coalition for Equity. "Our emphasis is leveling up {by increasing overall state spending} rather than just redividing the current pie."

Absent that, though, the committee's report sets the stage for a battle royal between rich and poor.

"That's the problem with any of this," said Dickerson of Highland County.

"There are winners and losers, unfortunately. You know it's awful, because some of the losers can't afford to be losers. But I can't afford not to be a winner."

SELECTED LOSERS

Jurisdiction.........Change in state aid ......% change

Alexandria..............-$5.5 million............-48.4%

Arlington County..........-$9.3 million..........-47.4%

Falls Church....................-$710,000........-43.9%

Fairfax County............-$64.9 million.........-35.4%

Loudoun County............-$4.6 million..........-30.0%

hbSELECTED WINNERS

Highland County..................+$433,000........+37.3%

Louisa County.............+$1.5 million...........+30.6%

Galax............................+$500,000........+20.0%

Emporia..........................+$430,000........+19.1%

Lancaster County.................+$529,000........+17.4%

Essex County.....................+$607,000........+16.7%

Manassas..................+$1.5 million...........+16.2%

Richmond.........................+$425,000........+13.8%

Over two years.

SOURCE: Governor's Commission on Educational Opportunity for All Virginians.