SARAGOSA, Texas (AP) _ Isidro Casillas wept softly as he threw a fistful of dirt onto the caskets of his wife and two children, who were among the 29 killed in the tornado that crushed this town but left many determined to stay.

''It's worth it. It's our land,'' said Manuel Mondragon, one of thousands who attended Tuesday's funeral at Saragosa Cemetery for 17 victims of Friday's tornado.

The twister, which struck during a preschool graduation ceremony at a community hall, injured 162 people, according to an updated list released Tuesday. Thirty-five remained hospitalized.

President Reagan declared this west Texas farming town a federal disaster area, Gov. Bill Clements announced during his visit here Tuesday. The tornado obliterated 70 percent of Saragosa.

Casillas was in nearby Balmorhea when the tornado hit and is now the sole parent to four children.

He watched as others kicked and tossed dirt onto the coffin containing his wife, 34-year-old Juanita Casillas, and 2-year-old daughter, Elsa, and the casket holding his 16-year-old daughter, Elvira. Family members wailed, screamed and wept as a priest recited last rites.

''Today we bid farewell to men and women who loved Jesus and his church and who loved their family and would die for their children ... they will be missed,'' said El Paso Bishop Raymond Pena, who presided over the funeral Mass from the back of a trailer.

Scores of pallbearers carried 16 caskets and put them in two neat rows for the funeral Mass as the crowd pressed in for a better view.

One by one, 12 caskets were lowered into the ground in the cemetery less than a mile from town. Four were buried later in Balmorhea, and other funerals are set in surrounding towns and Mexico, where many residents of the town were from, later this week.

Pena, standing near a statue of Jesus that had withstood the tornado, reminded the mourners that while the storm destroyed their church, its foundation was intact.

''The foundation of your faith is equally intact,'' Pena said. ''On that we will build the new community of Saragosa.''

Many said they would rebuild and start over with the help of federal aid, but Mondragon and others said it was too early to decide what lies ahead.

''You see all these people?'' asked Ramon Olgin, Mondragon's cousin. ''Most of them are family. That's where the strength will come from. ... Even though you see death and destruction, you find a lot of determination to rebuild.''

The tragedy has prompted pledges of $470,000 from 12,700 people who called the American Red Cross, said Susan Clowe at the Red Cross disaster relief station in Balmorhea.

Reagan's disaster declaration cleared the way for low-interest loans, temporary housing and grants of up to $5,000 for those eligible.

Clements, asked by reporters why he had not visited Saragosa earlier, said an aide toured the town Saturday, allowing him to expedite the disaster declaration process. He accused the media of manufacturing an issue.

''While you're doing the talking, we're doing the action,'' he said.

However, resident Phillip Lopez told Clements ''people are ticked off'' by delays in aid and officials' neglect in not dispatching National Guardsmen to secure the area from looting Friday night.

Braulia Natividad, 28, complained to Clements about thievery and, near tears, said, ''He makes me sick, because he should have been out here Saturday.''

The tornado, which left more than 150 people homeless, caused an estimated $1.4 million in damage, said Reeves County Sheriff Raul Florez.

However, Clements, when asked about the disaster's economic impact, said dollar amounts shouldn't be considered.

''This is not a dollar problem,'' the governor said. ''This is a people problem. We're here to try to help and console, to extend our sympathy to the community and to the people that have had this terrible loss. We're here to reinstate a community that has just been devastated by a natural event.''