Last year, dozens of neighborhood groups were able to dip into the federal till for funds to revitalize their communities.

California migrant workers used the money to draw financing to build a tile factory that would give them steady jobs.

A coalition of clergy and citizens organized tenants to rehabilitate their apartment buildings near the South Bronx.

And, if all goes well, a Washington group will be able to help 400 low- to moderate-income tenants buy their own apartments.

The little-known Neighborhood Self-Help Program, administered by the Department of Housing and Urban Development, stresses flexibility, encourages self-help -- and operates on a small scale.

The program is slated to slip further into obscurity this year, however. It is targeted for elimination from the 1982 federal budget and its remaining 1981 funds will have to be rescinded because the $10 million program provides services that are duplicated elsewhere in the federal government.

The self-help program was created by the Carter administration in recognition of the key role being played by neighborhood groups in rebuilding declining areas, said Father Geno C. Baroni, the HUD assistant secretary for neighborhoods, voluntary associations and consumer protection.

The program became "the new state of the art" that said "if we wait for city hall, we won't get [anything]," Baroni said. It also evolved from hard lessons learned by social planners in the 1960s and early 1970s: that without community support, structures built with federal money won't last in distressed areas.

Planning for the new program began in 1978, but funds were not distributed until 1980. The program was designed to provide groups with a modest amount of money -- $50,000 to $20,000 -- to be used to wrest more money from public and private sources. Groups could use grants to revitalize neighborhoods in any way. To qualify, a gorup had to submit complete plans for use of funds, and a letter of approval from the local mayor. c

A total of 1,300 groups applied, suggesting the vitality of community groups, notes former program director Joe McNeely. HUD was able to distribute 125 grants in 38 states. The funds helped to build 5,000 housing units and 250,000 square feet of office space and to create 4,500 jobs, he points out.

"It's a small program that's done a lot of good," says Raul Yzaguirre, director of the National Council of La Raza and leader of a fight to retain the program. Every grant dollar was matched with $14 from other sources, he added.

Used for the funding have been limited only by the creativity of the neighborhood groups that applied for them. For example, tomato growers in Tawell, Tenn., bought a tomato-picking machine that increased their cash sales two or three times.

An Asian-American group in Los Angeles turned their temporary crew of construction workers, employed through the federal government's Comprehensive Employment Training Act (CETA), into a community-owned construction company that will carry out $1 million in housing improvements.

In Manhattan, a local minister challenged a group of young toughs to abandon acts of vandalism and to take on the challenge of building rehabilitation, instead. The group successfully remodeled two vacant industrial buildings for use by light manufacturing firms and minority businesses.

Self-Help funds are being applied in the Columbia Heights area of Northwest Washington to buy and renovate eight apartment complexes. Metropolitan Washington Planning and Housing Association received $73,000 for technical assistance to use as leverage to obtain the $2 million needed in loans to finance the project. Although private funds have yet to be committee, the association is optimistic that they will be. If enough private funds are received the buildings will be turned into cooperatives. The D.C. government already has pledged funds to give tenants down payment assistance.

Director Jim Harvey says the neighborhood was selected because it has a high renter population that is threatened with eventual displacement because of the proximity to downtown development.

With Self-Help eliminated, neighborhood groups will have to turn for assistance to HUD's Community Development Block Grant Program and the small Neighborhood Reinvestment Corporation. To obtain block grants, distributed by city halls, neighborhood groups must compete with other development interests, including downtown developers. Neighborhood organizers fear they will have little money available to them, especially because several other urban aid programs will be folded into the total block grant pot, straining its capacity. The total of $700 million is "not sufficient to help rebuild cities and barrios," says Pablo Eisenberg, director of the Center for Community Change.

The Reagan administration also expects the Neighborhood Reinvestment Corp. to take over responsibility for some neighborhood funding. The corporation provides loans to homeowners in areas threatened with decline, but has begun to shift its emphasis to the areas served by Self-Help. However, Eisenberg says lending decisions are made by a panel of citizens, lenders and local officials and not by citizen groups themselves. In addition, the corporation is less flexible than Self-Help and more prone to paperwork and delays, he says.From a practical standpoint, NRC already is limited to $15 and can't possibly absorb the needs of groups now being funded by Self-Help, he adds.

Cutting out Self-Help is only part of an effort to streamline HUD. The entire division headed by Fr. Baroni is being eliminated, with most offices moving to other parts of the department. A few neighborhood specialists will be retrained in a newly formed division of Intergovernmental Affairs, says HUD spokesman Andy Gasparich.But to some neighborhood organizers, eliminating Neighborhood Self-Help silences their voice in federal government. The program has been "the only source of continuity to the grass roots," says Milton Kotler, executive director of the National Association of Neighborhoods.

Others see a threatening reason for the proposed changes. "I think they're afraid of neighborhood groups. They philosophically like initiative, but when they come down to neighborhood groups, they're less interested," says Yzasguirre. Budget officials deny that.

Supporters of the program have been lobbying Capitol Hill to get it back in the budget, but have experienced little success so far.

However, even if the HUD program dies, "they won't kill the idea," says Baroni. "People want to be something, people want to negotiate. It won't destroy that initiative," he says.