President Clinton and congressional Republicans clashed yesterday over their competing approaches to education funding, which is likely to become a hot-button issue in next year's elections.

Using an aging middle school with a leaky roof in downtown New Orleans as a backdrop, Clinton took aim at a House spending bill that would torpedo his plan to hire an additional 100,000 teachers and eliminate funds for Goals 2000, building improvements and a program to help youngsters prepare for college.

Noting that the amount approved last week by the House Appropriations labor, health and human services and education subcommittee falls $3 billion below his request, the president said, "It is wrong to blame the kids and it's wrong not to give the schools a chance."

Republicans responded that Americans were unhappy with existing programs and want a change and that the White House was more concerned about preserving control over spending by Washington bureaucrats and labor leaders than in fostering innovation.

"This isn't about education, this is about power, it's about controlling dollars for the sake of power," said Sen. Judd Gregg (R-N.H.).

However, a Senate Appropriations subcommittee headed by Arlen Specter (R-Pa.) offered a more conciliatory approach yesterday--one that would boost overall labor, health and education spending and fund some of Clinton's priorities, including Head Start, special education and the Gear Up college preparatory program.

The spending package proposed by the Senate subcommittee--including $91.7 billion of discretionary spending for labor, health and education programs in fiscal 2000--would exceed this year's levels by $4 billion, although it would be $1.4 billion less than the president's request. The Senate would add $500 million to Clinton's $34.7 billion request for education, but it reduces his proposals for hiring new teachers, adult education and several other programs.

To stay technically within the budget constraints of the 1997 balanced budget agreement, and not dip into the Social Security surplus, Specter's bill would "forward fund" or put off $16.4 billion of the spending until early fiscal 2001. This budget technique has been used before, but not on so grand a scale, and is integral as well to the House approach to the labor-health-education bill.

Even with the Senate concessions to the White House, Congress and the administration remain far apart over the labor-health-education measure, the single largest domestic spending bill and a perennial battleground for the two sides.

During yesterday's session to produce a bill, Specter said that "it's a real battle to come up with a number" that satisfies the spending restraints and has a chance of getting House and Senate majorities and the president's signature.

The fight over education is one of many disputes with the administration that make it virtually impossible for Congress to complete work on all 13 annual spending bills before the start of the new fiscal year Friday. The House is to vote today on a stopgap continuing resolution to keep government agencies operating for three weeks beyond Friday to buy time for additional negotiations.

So far, Congress has completed work on only four of the bills, although the House last night voted 327 to 87 to approve a final agreement on a $21.3 billion energy and water spending bill. House and Senate negotiators and the administration resolved differences over the weekend.

And last night House and Senate conferees reported a $13 billion foreign aid bill for floor action after agreeing to remove language that would have prohibited federal aid to groups that lobby foreign governments to reduce abortion regulations. The bill is $2 billion less than Clinton wants.

As the budget fight with Congress continued, Clinton celebrated new administration figures showing that the government will close the books on fiscal 1999 this week with a $115 billion budget surplus--the largest in history and the second surplus in two years.

The projected surplus exceeds by $16 billion the administration's prediction last summer, and is due largely to declining spending for Medicare and interest on the debt. However, the higher figure will have no practical impact on the impasse over spending.

In fact, the administration's new estimate simply moves its projection into line with forecasts by private economists and the Congressional Budget Office, which last July projected a $120 billion surplus that it trimmed to $117 billion on Sept. 14.

Clinton spent yesterday in New Orleans, renewing his call for billions in school construction dollars and keynoting two fund-raisers for a Democrat in an uphill battle to oust Republican Gov. Mike Foster this fall. The president spoke at two events--one costing participants $2,500 a person, the other $25,000 per couple--for Rep. William J. Jefferson (D-La.).

Staff writer George Hager in Washington contributed to this report. Babington reported from New Orleans.

CAPTION: Outside the aging Sophie B. Wright Middle School in New Orleans, President Clinton speaks about his education agenda and assails a House plan.