---

LOS ANGELES (AP) _ Five social workers in the public guardian's office here control the lives of 1,000 elderly people. The office also controls $200 million in assets and has run a hardware store, a plant nursery and an oil drilling operation owned by its wards.

It is the largest and one of the oldest public guardianship offices in the country, and its critics say it now turns away cases and favors monied wards over the indigent.

Both criticisms are true to some extent, the public guardian says. His office is swamped, and his budget is constantly under threat.

''We don't want any more. We have too many,'' said Gordon Treharne, the Los Angeles public guardian. ''Everyone thinks we should expand and we're not. We're retrenching.''

And it's happening all across the country.

Faced with a crush of elderly who either outlive their money or live far from family, states are setting up - and loading up - public guardians as a catchall for those who have no one else.

While numbers remain unclear, an Associated Press study of more than 2,200 guardianship cases around the country shows that 2.3 percent of the 300,000 to 400,000 people under guardianship may be wards of public guardians.

The public guardians take direct control of the lives of old people and make the decisions any guardian makes - where the ward will live, whether to pull the plug on life-support systems, how much money is spent on groceries.

''Public guardianship is brand-new by government definitions,'' said James Scannell, the public guardian in San Francisco. ''We're in our infancy. We're really just evolving now to meet the needs of the community.''

Meeting those needs is becoming increasingly difficult. In Phoenix, caseworkers have time to visit their wards only four times a year. Tennessee's new public guardian's office took in 37 people in the first two months and expects to reach 300 in the first year.

Thirty-two states have some form of public guardianship, and almost all are finding big problems that are getting worse.

Some public guardians have been indicted, others criticized for neglecting wards or ''warehousing'' them in nursing homes.

In California, a grand jury blamed the Santa Clara County public guardian's office for the 1985 starvation death of 79-year-old John Nagle. The office hadn't seen the ward in two years. The grand jury's report helped establish new guidelines for the office.

The public guardian for Du Page County, Ill., pleaded guilty to charges of official misconduct and theft last year after he was accused of investing wards' money for his own benefit. He was ordered to repay $12,600.

John M. Hartman, a former Bay County, Mich., public guardian, admitted in 1985 that he embezzled $129,506 from some of his 75 wards. He was sentenced to five years in prison.

Las Vegas' public guardian, Jared Shafer, has drawn fire for making real estate investments with partners in the law firm he chose to handle most of his office's business.

In North Dakota, wards are placed in the hands of part-time public administrators, appointed officials with no training, staff or money to care for their charges. In one case, a public administrator put two wards in the care of a friend who charged each estate $2,000 a month for room and board.

''When you don't have the appropriate staff, you get into these binds,'' said Verdine Dunham, president of the California Association of Public Administrators. ''Sometimes I wake up in the middle of the night ... (worried) that I haven't done something that will come back to haunt me.''

Added Phoenix public guardian Dean Trebesch: ''There's more realization now that the power that goes with guardianship is so awesome and the loss of rights so awesome that we'd better make darn sure we do it right.''

While some social service professionals hail the care and services provided by public guardians, other experts point to the problems of handling so many with so few.

In Phoenix, for example, so many are now under the umbrella of the public guardian that caseworkers handle 75 wards apiece. San Francisco has 315 wards and two caseworkers. Alameda County, Calif., which includes the city of Oakland, has frozen its caseload at 450 with just three caseworkers. Alaska's six public guardians handle 280 cases. Four guardianship officers in Kentucky have an average case load of 150 each.

In Portland, Ore., five people handle 180 wards with a $180,000 annual budget. ''We're stretched thin,'' said Jeff Brandon, deputy public guardian. ''There's probably 500 cases that are not even sent here, because they figure they'll get a 'no' from us.''

In Los Angeles, the case load breaks down to more than 200 wards per worker.

''The reality is with those case loads we're not getting out there very often,'' Treharne said.

Few guidelines exist for running public guardianship offices, but some experts have suggested limits.

''The public guardian must be adequately staffed and funded to the extent that no office is responsible for more than 500 wards, and each professional in the office is responsible for no more than 30 wards,'' said Winsor Schmidt, a guardianship expert and law professor at Memphis State University.

In its year-long investigation into guardianship of the elderly, the AP found the push to public guardianship is due in part to a lack of private guardians, including family members, willing to take on non-paying or low- paying cases.

Needing someone to authorize medical procedures, guarantee payment, sign hospital discharge papers, pay monthly bills or even recover money lost to swindlers, many agencies and social workers are looking for a place to turn.

One survey obtained by the AP in Massachusetts, where there is no public guardian, showed that 94 percent of the state's hospitals reported ''experiencing guardianship problems with patients, the largest being the lack of potential guardians.''

Without a public guardianship program the mentally ill, some of them elderly, who have been declared incompetent have no one to speak for them. In Pennsylvania, it is estimated 5,000 to 6,000 mentally ill people have been declared incompetent since 1979, and half have been released from institutions.

''It's a mess. These people are in no-man's land. No one is protecting them,'' said Edward Carey, a member of the Pennsylvania bar association's subcommittee on the elderly and infirmed.

Yet some oppose the idea of public guardianship.

Lawrence Frolik, a law professor at the University of Pittsburgh, sees it as another layer of bureaucracy. ''The last thing you want is a state office whose existence depends upon taking away the rights of others,'' Frolik said.

Terry Roth, a consultant to the Pennsylvania Association of Retarded Citizens, fears a return to institutionalization of the mentally ill.

''As soon as you create a public guardianship, you're going to have someone filing against every bag lady out there,'' he said.

In some places that do have public guardianship, officials have begun cutting budgets, asking the public guardians to become more self-sufficien t through fees charged to the wards' accounts.

In Los Angeles, income from fees was supplemented last year with $2.5 million from county tax coffers for a total budget of $9 million. This year the county commissioners cut that $2.5 million to less than $1 million.

In the last nine years, county support has fallen from 67 percent of Treharne's budget to less than 15 percent. About 85 percent of Treharne's cases are indigent.

''We do want some big cases (large estates to which fees could be charged) ourselves, but we don't hustle them,'' he said.

Treharne's office has been criticized by a public interest group claiming too many people have been moved out of their homes and routed to institutions. Of 1,000 elderly wards (the office is responsible for 2,200 people, half of them mentally ill), only 50 are maintained in their homes.

Florida, which has a huge elderly population, only this year launched pilot public guardianship programs in two counties.

Ten years ago a count by Florida's Office of Aging and Adult Services found that 2,700 people, 63 percent of them older than 60, needed guardians. About 1,000 of them had already been found incompetent in court. Today the figure is believed to have doubled.

The three-person operation in Fort Lauderdale will fill its 40 spaces by October, its 10th month of operation, public guardian Lisa Goldstein said.

''It took 10 years of resistance and I still get told all the time, 'We don't need you,''' Ms. Goldstein said. ''If we don't get an increase in staff we will not be able to accept people. To me, it would be a crime if the state opened the floodgates and closed them without fully realizing the potential of the problem.''

Public guardians agree that as the population ages, as people live longer and as hospitals and nursing homes require more guardianships, there will be even greater strains on public guardians.

''I think we provide a needed service,'' said Shafer, the Las Vegas public guardian. ''But as our senior population grows, it's gonna get worse.''

In San Francisco, the public guardian has begun diverting people from guardianship by establishing payment programs and arranging for sales contracts that allow the elderly to remain in their homes until death.

Said Scannell, ''Alternatives to conservatorship (guardianship) is really where the emphasis should be.''

---

NEXT: Entrepreneurs Get into Guardianship Business