Pataki loyalists saw big raises; Records show a number of appointees were given pay increases well beyond the norm by a departing governor

BYLINE: By JAMES M. ODATO Capitol bureau {FACTBOX} Pay hikes during Pataki's last days in officeSome of the recipients of big pay raises in the final months of Gov. George Pataki's administration: Keith F. Corneau: $121,500, Governor's Office of Regulatory Reform, program associate, from commerce policy analyst, Department of Economic Development, $78,000. Raise: $43,500 Susanne T. Alterio: $120,000, Medicaid Inspector General's Office, deputy MIG, from Governor's Office of Regulatory Reform, $92,566. Raise: $27,434 Richard P. Mills: $195,165, commissioner, Department of Education, from same job, $170,165. Raise: $25,000 Robert A. Regan: $95,000, (former Glens Falls mayor), counsel, Department of Economic Development, from assistant counsel, DED, $72,100. Raise: $22,900 Dawn Seibert: $52,000, secretary, Governor's Office of Regulatory Reform, from clerk, state comptroller's office, $36,077. Raise: $15,923 Charles O'Shea: $130,000, special assistant, Department of Transportation, from same job, $114,905. Raise: $15,095 Matthew Millea: $138,000, executive vice president, NYS Environmental Facilities Corp., from same job, $123,000. Raise: $15,000 Glenn Warren: $153,310, (former assemblyman, Dutchess County), executive director, Workers' Compensation Board, from deputy director, WCB, $143,310. Raise: $10,000 Jessica Scaperotti: $85,935, spokeswoman for Criminal Justice Services, from same job, $75,935. Raise: $10,000 John R. Watson: $85,000, counsel to Crime Victims Board, from former counsel to Lt. Gov. Mary Donohue, $75,661. Raise: $9,339 Kathy Wagner: $62,000, secretary, Office of Medicaid Management, from stenographer, executive chamber, $55,000. (previous incumbent made $48,863 in the post.) Raise: $7,000 Matthew Andrus: $115,541, executive deputy secretary of state, from deputy secretary of state, $110,541. Raise: $5,000 Source: Division of the Budget

ALBANY - Former Lt. Gov. Mary Donohue's chief of staff, Karin Kennett, landed a job as an executive in an agency that is one of the most important in Gov. Eliot Spitzer's war on Medicaid fraud.

As the first deputy inspector general in the Medicaid Inspector General's Office, Kennett, 34, late last year joined a line of Pataki loyalists trooping to high-paying posts just before Pataki's 12-year reign ended.

According to records provided by the Division of the Budget under the Freedom of Information Law, more than 400 appointees, or "exempts," got raises in the last six months of the Republican governor's tenure.

That's not unusual, officials say, but a closer look shows numerous appointees received double-digit percent raises, well beyond the norm. Many of those were above 40 percent. Appointees serve at the governor's pleasure.

Pataki's former appointments officer, Robert Bulman, said most of those people were given promotions, sometimes filling the jobs of bosses who departed for the private sector, and the raises and promotions were appropriate to keep government running efficiently for the new administration.

He acknowledged that some of the movement helped long-serving and worthy staffers continue their state careers.

The raises have an impact on state finances in many ways. For instance, when an employee ends state service, he cashes out unused vacation pay (up to 30 days) based on his current salary. Also, benefits involving unused sick pay and pensions are more expensive for the state if someone's pay rises.

Beyond that, Kennett is employed at an important state agency. When Spitzer on Friday named James G. Sheehan, an associate U.S. attorney, to be the new Medicaid inspector general the governor emphasized the responsibility: "New York state's health care spending is the highest in the nation and our system requires dramatic reform."

Among the last to find new posts in state government, Kennett, a former spokeswoman for the state Republican committee, got a $90,000-a-year position with the Medicaid IG on New Year's Eve. She was one of 12 Pataki administration employees who got jobs in the IG's office in the final months of 2006.

The unit is hiring dozens of people as it ramps up to meet challenges of cracking down on fraud, waste and abuse in the $47 billion Medicaid system. If it does not recover specific sums of money each year, the state will have to return federal aid sent to New York to develop the anti-fraud unit. The penalties could reach $500 million.

Further, Spitzer is counting on the unit to recover $430 million this year alone by stamping out fraud and abuse, up $130 million from last year, to help balance the budget. So every hire is important, administration officials say.

Kennett, whose pay rose marginally, switched jobs just as newly elected Lt. Gov. David Paterson brought in his own team of staffers to the office where she worked.

Her colleagues also received soft landings at the Medicaid IG's quarters in Menands at the end of December:

Diana Meier, a confidential stenographer for Pataki, on Christmas became a $60,000 executive assistant at the IG's office before Spitzer took his oath of office. She'd been making $51,958.

Erin Dahlmeyer, an executive chamber program associate, became a research associate at the IG office. Her salary rose a few dollars to $77,000, but the previous incumbent in the slot had been paid $55,000, according to the records.

Recently departed Acting Medicaid IG David R. Ross praised all the new employees and said several resumes arrived from the governor's office and he acted to fill posts at the fast-growing office. "Whenever the governor's office says, `Do you need more people?' the answer is always yes - a quality person. Everybody's happy."

Ross had been a top counsel at the Office of Alcohol and Substance Abuse Services for eight years before taking a job under the first Medicaid IG, Kimberly O'Connor, who is now a Court of Claims judge. Ross and Susanne Alterio, of the Governor's Office of Regulatory Reform, both became $120,000-per-year deputy Medicaid IGs last year and received big pay raises - nearly $18,000 for Ross and $27,400 for Alterio.

Indeed, most of the jobs at the IG provided substantial raises. Ross said that is partly because the new agency is trying to lure people from inside and outside government to a new entity.

Big raises occurred in other agencies, too. For instance, at the Governor's Office of Employee Relations, Pataki appointed the wife of one of his top aides as director. Eileen Natoli arrived in March 2006 at a salary of $130,000, after essentially being unemployed. Her pay jumped to $133,000 by April.

Natoli is a former Schodack town supervisor, and is the wife of James Natoli, who was Pataki's director of disaster preparedness and response.

Under her, a new secretary was recruited, Dawn Seibert, from the comptroller's office. She received a $16,000 increase in pay to $52,000, even though the former employee in the post made $44,349. And Keith Corneau, a $78,000 energy policy specialist at the Department of Economic Development, was brought in at $121,500 to help the Governor's Office of Regulatory Reform develop a clean coal initiative, a top priority of Pataki's. His $43,500 increase stands out among the DOB records.

Bulman said new commission ers often rearrange staff, and end-of-term vacancies are tough to fill.

"It was incredibly difficult to attract people to come in," he said, adding that Natoli was a "known commodity" needed to spearhead the new energy initiative.

An indication of her value, he said, is that she has been retained by the new director of the agency as a special assistant, but at the reduced salary of $115,000.

Bulman, whose salary jumped last April to $165,000 from $154,500, did note that it was unusual for him to authorize raises above $10,000. Yet several people received income boosts beyond that threshold.

For instance, Matthew Millea received a $15,000 raise when his pay jumped to $138,000 as executive vice president of the New York State Environmental Facilities Corp. Bulman said Millea was the No. 2 person in the agency and supervised subordinates making more than the $123,600 he was paid until his raise in September.

And Matthew Andrus, deputy secretary of state, who preceded Kennett as the lieutenant governor's top staffer, got a $15,000 raise, bringing his pay to $115,541 last August.

"As the administration was winding down, and folks were leaving to pursue other employment opportunities, it was critical that we had competent and capable people at the helm. Their salaries were on par with what their predecessors' were," said Bulman, now a business developer for a major engineering firm.

He said he tried to find good fits for people on the governor's staff who deserved state employment.

As an example, he said a secretary, Jessica Babbie, who worked in the governor's office for years, wanted to return to Plattsburgh. In October, she took a job with the Department of Economic Development's regional office there as an executive assistant at $45,000, a raise of $7,872 from her Albany job.

Other notables who got raises include former Assembly Minority Leader Charles Nesbitt. The Republican leader's pay as president of the Tax Appeals Tribunal rose last June to $142,400 from $129,952, also more than the $10,000 upper threshold.

The niece of Assemblyman Dan Burling, who tried to oust Nesbitt in a failed coup, also got a raise. Office of General Services spokeswoman Christine Burling, hired in 2002 amid Pataki's hiring freeze as a $33,000-per-year stenographer, saw her salary jump to $81,000 from $71,200.

Among other public information officers, her raise was not the most notable: Department of Health spokesman Marc Carey's pay rose to $110,000 from $93,080 in September after he was transferred from the Department of Civil Service. A few weeks earlier, the man he replaced had received a raise: Rob Kenny's pay had climbed to $100,790 from $95,790. And then he quit.

James M. Odato can be reached at 454-5083 or by e-mail at jodato@timesunion.com.