The GOP yesterday hardened its stand against President Clinton's demand to spend a full $1.4 billion to hire more teachers next year, yet both sides insisted they could still work out their differences on this and other budget issues before the end of the week.

Republican leaders believe they are playing a stronger hand by fighting for more local control of federal education money and warned the administration and their own members early in the day that the talks may drag on beyond Wednesday night--an informal leadership target for adjournment.

However, White House officials and Republican lawmakers met last night, with some indicating that a breakthrough might come soon and that talks would resume today. Even so, Republicans said they were angered by White House Chief of Staff John D. Podesta's weekend warning that the administration would not give ground on the teacher issue and accused Clinton of attempting to dictate local school policy for using the money from Washington.

"The big issue is, who controls it?" said Senate Majority Leader Trent Lott (R-Miss.) "Will Washington bureaucrats assert and control where this money is used, or will there be some discretion at the local level, based on what local needs are, whether it's books or computers or training for teachers, or for teachers themselves?

In renewing his insistence that Congress earmark new funds to help hire 100,000 teachers, Clinton cited an Education Department study concluding that students benefit from smaller class sizes.

He told reporters that the federal money for new teachers does not belong to states and local school districts. "It's not their money," he said. "If they don't want the money, they don't have to take it. If they're offended by it, they can give it to other states and other school districts."

Clinton also renewed his call for Congress to hire 50,000 new police officers, spend more money on acquiring open spaces, increase the minimum wage without enacting "special-interest tax cuts" and strengthen laws against hate crimes. He noted that the parents of Mathew Shepard--the gay Wyoming man whose beating death gained national attention--visited the Capitol and the White House today. Clinton did not meet with the couple, but Podesta did.

After a largely unproductive weekend bargaining session, the White House and congressional Republicans exchanged proposals yesterday for narrowing their differences on a range of issues.

"If tonight's meetings suggest a desire for serious and constructive resolution, things can move very quickly," said Linda Ricci, an Office of Management and Budget spokesperson. "It would take a lot of work to wrap up by Wednesday, but its not impossible."

Lawmakers said they were close to a final agreement on one of the four remaining spending bills--the bill funding the Interior Department. To assuage Clinton's concerns that their bill is underfunded, GOP lawmakers have proposed adding $385 million for land acquisition and other purposes.

Republicans have also "moderated" provisions the administration deems anti-environmental, according to Rep. Ralph Regula (R-Ohio), who oversees the spending bill. New oil royalty rules will be delayed only until April 1, rather than June 1, and individuals with grazing permits can renew them for up to three years before meeting new environmental standards instead of renewing them for a decade.

With education looming as a crucial issue in next year's election campaign, the two parties are using the budget negotiations to jockey for political advantage. The administration has made the hiring of 100,000 new teachers to reduce average class size a top priority, and last year Congress reluctantly approved funding for the first installment of that program.

Republicans say that they are as concerned about education as the Democrats, and approved more for education this year than the president requested. But they changed direction this year, arguing that while hiring teachers should be the top priority, local schools should have the option of using the money to improve teacher competency or some other purpose.

"I'm prepared to acknowledge to the president that classroom size is the first priority," said Sen. Arlen Specter (R-Pa.), a senior lawmaker with jurisdiction over education. But he said school boards should be able to use the money for other purposes if they "make a factual determination that classroom size is not a problem."

Republicans said they wanted to model the classroom-size reduction initiative on the GOP's Teacher Empowerment Act, which would limit the funding to hiring, professional development and teacher testing but not bow to Clinton's demand that it all be used for hiring.

"If classroom reduction means hiring unqualified teachers, then don't do it," said Education and the Workforce Committee Chairman William F. Goodling (R-Pa.), who has been negotiating with the White House on the issue. "Above all, we want quality teachers in the classroom."

But referring to GOP support last year for his teacher hiring program, Clinton complained that the "Republican majority has mysteriously changed its mind."

The House leadership launched a public relations offensive on education yesterday, organizing a series of after-hours floor speeches on the issue and publishing "rapid response" press releases.

House Speaker J. Dennis Hastert (R-Ill.) wrote, "As a former high school teacher, I know firsthand that students are best served when decisions about their education are made on the local level. . . . The president now acknowledges that the issue at stake here isn't funding, it's control."

Staff writer Charles Babington contributed to this report.