Catholic University could remain in Division I for basketball if $50,000 can be raised outside the school's budget, CU President Edmund D. Pellegrino said yesterday.

Pellegrino will recommend at a March 29 budget meeting with the board of trustees that basketball be dropped to Division III "if alternative sources of funding outside the university budget cannot be found."

But the first-year president stressed that a final decision on the athletic program's fate, which is in the hands of the trustees, would not be made until the March 29 meeting, leaving time to raise sufficient funds.

"This whole regrettable decision comes out of the necessity to balance the budget . . . (but) I can't make that decision myself," Pellegrino said. "The board of trustees has the final say. On March 29, the board must act on the budget.The board very well might take some other action."

Pellegrino said the crunch has come about because of "a $1 million increase in energy costs over last year and a 15- to 16-percent increase in operating costs." The year's proposed budget is $40 million. CU athletics received $557,000 in 1979-80, he said.

Pellegrino also said he has been in contact with interested alumni and would actively seek their support in raising necessary athletic funds.

Robert F. Comstock, president of the national CU alumni association and the alumni representative on the board of trustees, said he did not concede the Cardinals would land in Division III.

"I don't read it as such. I think we may well accomplish this (raising the necessary funds)," said Comstock, who participated in basketball, baseball and track at CU.

"My personal judgment is there would be a very good chance that it would remain (in Division I). The trustees could just say, 'We'll spend the money,' but I don't think Catholic University would sacrifice its academic programs for athletics. But Catholic is happy to produce scholar-athletes.

"My feeling is if $50,000 is made available, the university would likely stay Division I. I think there's a strong support of staying Division I from a good number of alumni, who have called asking for the facts. I will remain in contact with them. I think everybody's jumping the gun, speculating, and not giving the guy (Pellegrino) a chance. Just because he's studying something doesn't mean he's going to do it."

Jack Kvancz, the athletic director and basketball coach, is left in an awkward situation: hoping to remain in Division I but not able to recruit players toward that goal; the athletic scholarships he would like to offer are not allowed in Division III.

Kvancz, who has been meeting with Pellegrino for a year to develop an athletic budget, said he was long aware that a move to Division III was a definite possibilty.

"That was an option, but who wants to look at a bad option?" Kvancz said. "I don't want to be Division III, but what can I do? I can pray we come up with the money to stay (Division) I."

Both Pellegrino and Comstock said even if sports are demoted to Division III, building a field house to replace the antiquated Brookland Gymnasium would remain a main priority of the university.

"We are going for an athletic center. These two matters are not related," Pellegrino said. "We need to build an athletic facility to meet the needs of our students. The decision will not be related. That might be a way we can get back into Division 1 . . . We believe intercollegiate athletics are part of the total academic program. That's why we delayed making this decision (to go to Division 3) for a year."