Shalala Has a Reputation as a Savvy Manager : Nominee: The choice to head the Health and Human Services Department is no stranger to education or government.

Donna Shalala and her twin sister, Diane, were 9 years old when a tornado raged through their Cleveland neighborhood, perilously close to their home. The girls’ mother rushed Diane inside to safety but couldn’t find Donna.

Finally, a neighbor told the panic-stricken Edna Shalala where she could find her missing daughter: “She’s directing traffic up at the corner.”

If this was an early indication of Shalala’s managerial talents, then the first woman named to President-elect Bill Clinton’s Cabinet clearly will have a head start in running the federal government’s largest and probably most unwieldy department.

As health and human services secretary, she will oversee a $585-billion budget, nearly twice that of the Pentagon. She will head up 250 programs and multiple areas of responsibility, among them public health, medical research and social service programs--including Medicare, Medicaid and Social Security.

Friends and supporters say she is up to the job.

“She’s a terrific manager, she motivates people,” said Carole Bellamy, a close friend who is the former president of the New York City Council and now at Bear Stearns & Co., an investment bank in New York. “She is one of the best public-sector managers I know.”

The first woman to head a Big Ten university, Shalala (pronounced Sha-lay-la) has been chancellor of the University of Wisconsin at Madison for five years, and she served as president of New York’s Hunter College for seven years before that. She succeeded longtime friend Hillary Clinton as board chairwoman of the Children’s Defense Fund.

If there is a reason to question her credentials, it is that she has more experience in higher education issues than social welfare and public health matters. But most observers believe that the enormous scope of the Health and Human Services Department requires a skillful administrator above all, one who will find deputies with specific expertise and allow them to develop policy.

“She’s very astute in finding extraordinarily talented people and giving them a lot of independence,” said University of Wisconsin Provost David Ward. “And she generates a lot of loyalty from her staff.”

Donna Edna Shalala, who will be 52 on Valentine’s Day, is of Lebanese descent and grew up in Cleveland. Her father, James Abraham Shalala, now deceased, was a real estate salesman and a leader in Cleveland’s Syrian-Lebanese community.

In her youth, Shalala played shortstop and left field for the West Boulevard Annie Oakleys the year they won the Cleveland city championship under the coaching of a college student named George Steinbrenner--now owner of the New York Yankees.

She attributes much of her drive to her lawyer mother, a nationally ranked tennis player in her youth who attended law school at night while raising her twin daughters.

Indeed, Shalala may have a soft spot for all mothers.

University of Wisconsin colleagues recall an incident early one Sunday morning three years ago when her phone rang. It was the mother of a freshman student worried because she hadn’t heard from her son in two weeks.

“Did you try calling him?” Shalala asked.

“No,” the mother said. “I didn’t want to embarrass him.”

Shalala asked for his phone number and called him.

“Joe,” Shalala said to the sleepy voice who answered. “Call your mother.”

“Who is this?” the groggy Joe asked.

“The chancellor,” was the reply.

Joe snapped suddenly awake.

“Yes, MA’AM,” he said.

She is no stranger to Washington or government. In the 1970s, she served as secretary-treasurer of the Municipal Assistance Corporation, the bond-writing agency set up to bail out the nearly bankrupt city of New York. She also served as assistant secretary of housing and urban development in the Jimmy Carter Administration.

In 1984, while president of Hunter College, Shalala angered city leaders by declaring that the New York City school system was a “rotten barrel” that needed a major overhaul, and attributed the condition to the city government’s neglect of education.

Within a month of arriving at the Wisconsin campus, Shalala launched plans for reducing racial tensions at the school and increasing the presence of minority students and faculty. But some critics have said the university has failed to attract enough minorities, an issue she calls “a continuous problem.”

Also as chancellor, she infuriated some students by accompanying Madison police on raids of local parties where undergraduate drinking reportedly was taking place. Shalala defended her actions by saying she was not trying to discipline students but speak with them about the dangers of alcohol abuse.

Shalala graduated with honors from Western College for Women in Oxford, Ohio, and joined the Peace Corps, spending two years in Iran. Upon her return, she enrolled in graduate school at Syracuse University’s Maxwell School of Citizenship and Public Affairs.

Shalala, who is single and stands five feet tall, has hobbies that include hiking, tennis, reading, golf and mountain climbing, a sport Clinton referred to Friday by saying “all the mountains she has climbed in the past will be dwarfed” by the challenges she now faces.

Times staff writer David Lauter contributed to this story.

What They Do

A look at the agencies the new Clinton appointees will lead:

Labor Department: Administers laws guaranteeing workers’ rights. These include laws on the minimum wage, pension protections and, through the Occupational Safety and Health Administration, worker safety. Also provides for job training programs, promotes proper collective bargaining and, through the Bureau of Labor Statistics, keeps track of employment, prices and other measurements of the national economy.

Department of Health and Human Services: The federal department with the largest budget, nearly $600 billion, it touches virtually every American at some point. HHS includes services to care for the needy through welfare programs, to deliver, evaluate and research health care therapies and to approve new drugs and assure the healthy quality of foods. It also includes the huge Social Security system.

Environmental Protection Agency: Responsible for enforcing federal pollution control laws. It is an independent agency in the executive branch and also conducts a wide range of research in areas ranging from pesticide contamination in fish to whether passive smoking contributes to cancer.

Council of Economic Advisers: A three-person panel, created in 1946, that provides advice to the President on domestic and international economic policy issues. It also assists in preparing the President’s annual Economic Report to Congress and conducts analyses and studies on various economic issues.

Source: Times wire reports