February 23, 1982

An article in Metropolitan Report yesterday incorrectly identified the most recent Mayor of New York City to have become Governor. He was John T. Hoffman, in 1868.

The nation's governors told President Reagan today that they wanted a different and smaller swap of responsibilities than he outlined last month under the banner of ''new federalism.'' Mr. Reagan expressed a willingness to negotiate, according to Presidential aides and several Governors present at the White House meeting. The Governors told Mr. Reagan they would accept one element of his proposal, a full Federal takeover of Medicaid but would reject state assumption of food stamps and welfare in exchange. However, the language of a position paper they adopted tentatively this morning encouraged Administration officials to believe they might change their minds. They said they would be willing to take up another batch of Federal programs so that the financial balance was about the same as under Mr. Reagan's proposal. Gov. Richard A. Snelling, a Vermont Republican and chairman of the National Governors Association, said later that the governors had told Mr. Reagan they understood that ''we must take over the responsibility for comparably costly programs.''

The Pabst Brewing Company said yesterday that it had received an ''unsolicited'' cash merger proposal from an investment banking firm representing C. Schmidt & Sons Inc., a Philadelphia brewer. Analysts said Pabst was almost certain to reject the offer. In a brief statement issued late yesterday, Pabst said Schmidt proposed to buy its 8.18 million outstanding shares for $16 a share, or a total of $131 million. Paul Markovina, Pabst's spokesman, said that the Schmidt offer would be presented to the Pabst board today at its regularly scheduled meeting in Milwaukee. Pabst would have no further comment beyond that, he said.

Interest rates fell sharply yesterday, extending the declines that began late Friday following news of a larger-than-expected drop in the nation's basic money supply. Government securities dealers said that a drop in overnight interest rates to about 13 3/4 percent yesterday, combined with the lower money supply, had alleviated traders' fears that the Federal Reserve would tighten monetary policy and push up rates. However, they said that the price gains so far have resulted from buying by speculators, many of whom were heavy sellers earlier, with little activity by large institional investors. ''The institutional buyer wants to see more than just one week's good money supply numbers,'' commented George Hester, a vice president in the government securities division of Blyth Eastman Paine Webber Inc.

Transcript of Koch announcement of candidacy, page B4. By FRANK LYNN Mayor Koch, formally announcing his candidacy for the Democratic nomination for governor yesterday, declared, ''I will be fair, decide issues on the merits and be the governor of all the people.'' The 57-year-old Mayor's announcement at Gracie Mansion ended 28 days of public speculation over whether he would recant previous pledges not to run for any office but mayor. Speaking at a crowded news conference, the Mayor said several times that he would be a fair governor, as he addressed what he expects to be a leading campaign issue - that, as governor, he would be overly partial to the city.