The co-chairmen of a legislative task force studying school fees say they have found a source of funding that would allow secondary schools to eliminate fees for textbooks.

But they aren't revealing that source yet."We have found a potential revenue source that involves no tax increase," said Rep. Nancy S. Lyon, R-Bountiful. "And it would be ongoing." But she and Sen. David Steele, R-Roy, who head the committee, would not share with other committee members where the money would come from.

School officials estimate that it will take $3.5 million to replace the money junior high and high schools would lose if they quit charging textbook fees. Both the legislative task force and a state Office of Education committee studying fee issues have felt that students should not be charged fees for essential items such as texts.

The legislative group had decided earlier to support a bill doing away with the textbook fees but could not agree on any way to offset the losses to schools. Several options, including taxes on beer, soda pop or video rentals or surcharges on athletic events, were considered, but the task force was reluctant to take a stand on any one of them. Sending the recommendation for eliminating textbook fees to the Legislature without a firm funding source would probably have been fatal to the effort, committee members agreed.

Wednesday, the task force will report to the Education Interim Committee, probably revealing the funding source. If the bill is passed, textbook fees would end in the 1994-95 school year.

In a Monday meeting, the task force also considered a draft bill that would have eliminated all fees charged for activities that occur during the usual school day - such as vocational or art courses, labs and other fees routinely charged to offset the costs of some classes.

Under that proposal's terms, fees still would be allowed for extracurricular activities.

But the task force did not act on that measure, which would cost another $6 million-plus. The draft attempted to define "school day" and did not specify that waivers would be granted to children who couldn't afford the fees, although it would have directed school districts to provide opportunities for every student to participate in all activities.

Jim Wilson, legislative analyst and adviser to the task force, admitted the proposed bill might fail to clarify the in-school, out-of-school problem.

"Where is the dividing line?" he asked. Many classes, such as music, cheerleading, debate and athletics, involve both during- and after-school activities, he said. The elimination of specific waiver provisions in the law also could raise another court challenge, he said.

David Challed of Utah Legal Issues agreed that the draft legislation raised the specter of another suit similar to the one that fomented the current debate on school fees. His group sued on behalf of low-income families that said their children were being denied equal access to school programs because of fees. A ruling by 3rd District Judge John Rokich demanded that school districts adhere to rules that provide waivers for students who can't afford fees.

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Challed told the committee that the current consternation about fees is the result of "an underfunded school system. . . . We have made school administrators bill collectors." Many students never become engaged in the education process because they are alienated by the fees required to participate fully in school activities, he said. The proliferation of gangs is one manifestation of this alienation.

The state has doggedly refused to raise taxes to adequately fund education, Challed said, but fees are taxes that have been raised significantly in recent years. "We're willing to spend money to build jails. Why not pay for education?" he asked.

The task force adopted intent language that would direct school districts to monitor all charges and try to put limits on such things as costumes and out-of-state-travel.

The group also will ask for reauthorization to continue the study of the many thorny issues related to fees.

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