Setting up the George Bush administration - the task of some 300 people who toil in offices above a drugstore - is being underwritten by the taxpayers to the tune of about $3.5 million.

Bush's paid transition staff has grown to 149 at last count, with about the same number of volunteers, officials say.The highest paid are top advisers James Baker III and Fred Zeder, both of whom are being paid at an annual rate of $71,377. After the transition, Baker will become secretary of state.

To meet the payroll as well as pay for copying, research, telephones, rent, supplies and the like, Bush receives a total of $3.5 million in public money.

The money is allocated under the Presidential Transition Act of 1964. The amount was increased this year from the $2 million that was allowed when President Reagan took office eight years ago.

The Bush operation, housed in three floors of an office building across the street from the hotel where Reagan was shot and wounded in 1981, is far more spare than the minibureaucracy of more than 1,000 people who worked for Reagan's transition in 1980.

And unlike Reagan, Bush is not supplementing his transition allowance with private donations.

"We just wanted to work within the money appropriated by the Congress and not make this become a big, fat, bloated operation," said transition spokesman David Pro-speri. "This is not going to be a fast-growing bureaucracy. At this point close to $800,000 has not been allocated by us to our budget, which does indicate that we could return a sizeable chunk of money to the federal Treasury."

Volunteers are being used in clerical positions and the work days for transition officials stretch into late-night hours that have provoked some grumbling about the need for more staff.

Ray Fontaine, comptroller of the General Services Administration, which is responsible for overseeing transition spending, called it a "very lean" operation.

Bush's transition staff can be smaller because, as a member of the same party and administration already in power, he will not be making the sweeping changes that Reagan made when he took over from Democratic President Jimmy Carter.

"This is what we call a friendly takeover," said Prosperi.

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The amount Reagan finally spent on his transition was never known, because he was not required to disclose the amount of private contributions his team collected, said GSA public affairs specialist Steve Guiheen.

Reagan ended up not actually spending all the public money, and returned some $250,000 of the $2 million to the Treasury, according to GSA records.

Congress this year enacted a disclosure requirement for any private money raised by the transition operations.

Prosperi said that just over a third of the transition budget is going into payroll.

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