In the final line of the 1972 movie "The Candidate," the newly elected senator turns to his campaign manager and says, "Marvin, what do we do now?" California reporters who covered the rise and fall of Sen. John V. Tunney felt on familiar ground.

But the film's tag line would have served with equal measure to describe the plight of Ronald Wilson Reagan in the weeks and months after he became California's 33rd governor.

Reagan had shown during the rough-and-tumble campaign that he could stand the gaff of questioning better than his opposition believed. However, he was ignorant about state government, and most of those he brought to Sacramento knew little more than he did. Lyn Nofziger said it best, using words nearly identical to the film's fictional candidate, long before the movie was made:

"Unlike Goodie Knight or Earl Warren or other political personalities, Ronald Reagan materialized out of thin air with no political background, no political cronies and no political machine. He didn't even run his own campaign. His campaign was run by hired people who then walked away and left it.

"Therefore, when he was elected, the big question was, 'My God, what do we do now?' And really, we were so busy running that . . . no one really sat down until after the election and said, 'Where do we get our hired help? What do we do now?' We were so innocent that we tried to run government from Los Angeles during the transition and discovered that we couldn't."

Reagan had goals but no programs. He had ideas, without a practical conception of how to translate them into reality. He did not know how government functioned or the processes by which it reached its objectives.

"We can start a prairie fire that will sweep the nation and prove we are No. 1 in more than size and crime and taxes," Reagan said in a famous line at his first general election campaign speech on Sept. 9, 1966. "This is a dream, as big and golden as California itself."

They were fine words, but in the months immediately after the election Reagan seemed more a man in a trance than one possessed by a great dream. He had campaigned against Gov. Edmund G. (Pat) Brown's supposed profligacy but acted surprised that the state was in debt. Lacking any experience with government budgets, he approved across-the-board reductions which penalized the most efficient departments in state government. He did not have a tax program, for he did not then acknowledge that tax increases would be necessary. And he had little knowledge about other programs which bore the administration's stamp of approval.

On March 14, 2 1/2 months after his inauguration, a reporter asked Reagan what his legislative program was and found that the governor didn't know. Looking at his aides for assistance, Reagan said, "I could take some coaching from the sidelines, if anyone can recall my legislative program."

Reagan's most pressing problem was the state budget, which he was constitutionally required to balance. Brown had circumvented this requirement in 1966 and avoided a tax increase in an election year, by adopting the recommendation of Finance Director Hale Champion to change the state's accounting system from cash to an accrual basis.

As a result, California began counting state revenues when they became collectible instead of when they were actually collected. This changeover was never funded as good accounting practice would have required, because it really had nothing to do with accounting. Its purpose was the entirely political one of avoiding a tax increase.

When Caspar W. Weinberger, assisting the Reagan transition team, asked the finance director what he would have done if Brown had been reelected, Champion replied bluntly, "Raise taxes." Reagan explained the problem accurately in his inaugural message, calling the accounting changeover "a gimmick that solved nothing but only postponed the day of reckoning."

But Reagan behaved as if he had uncovered a mysterious plot which Brown had withheld from the public, even though the accounting changeover had been widely criticized by legislators of both parties and legislative analyst A. Alan Post at the time it was made.

Reagan faced other tests during that difficult first year of his governorship. The most troublesome of these began with recurrent rumors in the early spring of 1967 about a homosexual clique which supposedly existed on his staff. Supposedly, the center of the group's activities was a cabin on Lake Tahoe where the clique had engaged in an "orgy" while Reagan and Paul Laxalt, then governor of Nevada, were meeting to discuss the troubled future of that environmentally threatened alpine lake, which is bisected by the boundary of the two states.

Like so much else that went on in those days, the rumors did not reach Reagan. But they were picked up by Nofziger, who was most protective of his insulated, novice governor. Nofziger took them seriously.

In his attitudes toward homosexuality, Reagan is a product of his generation and his work experience. Homosexuals were regarded with fear and loathing in the pastoral, small-town world of Reagan's boyhood. There was more tolerance of divergent lifestyles in Hollywood during the 1930s, but the studios were image-conscious, and whispered rumors of homosexuality could harm an actor's career.

Reagan, who was heterosexual and athletic, was not himself a victim, but was sensitive to the undercurrents in a community which increasingly prided itself on being a reflection of American ideals.

Reagan's personal views on the subject were conventional and tolerant for his community at the time, and they have changed little over the years. He considers homosexuality a sickness. He is also respectful of the privacy of others and is not the sort of person who bothers about what people do in their own bedrooms. On occasion, he would tell jokes about homosexuals, who he referred to as people who were "that way."

As a young actor with a small part in "Dark Victory," a movie which starred Bette Davis, Humphrey Bogart and George Brent, Reagan resisted the efforts of a director who wanted him to play his role in an effeminate manner. "I had no trouble seeing him in that role," Reagan wrote of the director, "but for myself, I want to think if I stroll through where the girls are short of clothes, there would be a great scurrying about and taking to cover."

In 1980, when his son Ronald Prescott Reagan wanted to become a ballet dancer, the then-presidential nominee was worried about him entering an occupation he thought might be dominated by homosexuals. In 1981, after his election, Reagan told me he had no concern about his son, whom he knew to be "all boy."

But Reagan was concerned enough about the business that his son called his father's old friend, dancer Gene Kelly, and asked his advice. Kelly, not surprisingly, reassured Reagan about dancers, and Reagan gave his blessing to the career in which his son has since flourished.

Reagan's political record on denial of civil liberties to homosexuals is much better than that of many liberal politicians. He was repelled by the aggressive public crusades against homosexual lifestyles which became a staple of the right-wing politics of the late 1970s.

In 1978, at a time he was preparing to run for president, Reagan openly opposed an initiative that would have removed homosexual teachers from classrooms and established procedures inviting witch hunts of those suspected of advocating homosexuality. The sponsors of the initiative, which was resoundingly rejected by California voters, blamed Reagan for its defeat.

Reagan, well aware that there were those who wanted him to duck the issue, chose to state his convictions. He carefully opposed the advocacy of homosexuality in the classroom, but said that existing laws were sufficient to deal with any such problem if it arose. Working from a draft presented him by Nofziger and Edwin Meese III, Reagan assailed the civil liberties implications of the initiative and summed up its deficiences: "Innocent lives could be ruined."

Meese was legal affairs secretary to Reagan, and Nofziger the governor's communications director, during the investigation of the homosexual clique in 1967. Originally, the rumor involved two aides, with the suspicion that there might be others.

Nofziger discussed the matter first with a close friend, Arthur F. Van Court, who was Barry Goldwater's bodyguard in the 1964 presidential campaign and moved on to perform a similar service, with the title of travel secretary, for Gov. Reagan. Van Court, a former Los Angeles police officer, agreed to sound out friends in the department. He also called a private investigator of his acquaintance.

Soon, this informal background checking blossomed into a full-fledged and never officially authorized investigation which implicated another administration official, a former aide, two sons of a state legislator and a member of a California campaign management firm.

Nofziger soon became convinced that the allegations were true. Proving them was another matter. Efforts to entrap the suspects and photograph or record them in the act were unsuccessful, serving only to put the supposed homosexual aides on their guard. The clumsiness of the investigation soon became a joke even to some of those who were conducting it. On one occasion the suspects realized they were being followed and eluded their pursuers in a high-speed chase.

Nofziger was in a difficult spot. He was out of favor with Nancy Reagan, who disliked his slovenly dress and irreverent sense of humor, from which even the governor was not spared.

But Nofziger was no clown. His ready wit and constant puns masked an extraordinary capacity for hard work and a devotion to Reagan unmatched by any aide. Nofziger wanted Reagan to run for president in 1968. He recognized that any scandal involving homosexuality would damage his candidacy, perhaps fatally. He also realized that the longer Reagan took to remove the suspect aides, the more likely he was to be politically tainted.

Nofziger took others into his confidence. He went to former appointments secretary Thomas C. Reed, who also ardently supported a Reagan presidential candidacy. He sought out Meese and William P. Clark, a low-key lawyer who was Reagan's cabinet secretary. Stuart Spencer, of the Spencer-Roberts team which had managed Reagan's campaign, also was informed.

But Reagan was not. Nofziger and other aides thought that Reagan was better off not knowing what was happening. Some of the aides said afterward that they were concerned that Reagan, with his Hollywood background, would be overly tolerant. Others, aware of the gravity of the accusations, simply wanted to be sure of the facts before they presented them to the governor.

The unofficial investigators agreed to prepare a documented report of the activities of the homosexual clique with the dates and places of their suspected get-togethers.

On Sept. 7, a hot, late-summer day in Sacramento, conspirators Nofziger, Reed, Clark, Meese, Van Court and others on the Reagan staff held a secret meeting. Reagan was in San Diego, 513 miles away, and the conspirators decided to present the evidence to him without warning the following day. One by one, they slipped out of Sacramento on a variety of pretexts and assembled at the Coronado Hotel in San Diego.

Reagan had not been expecting any staff, and he was in pajamas and bathrobe when the 11 aides made their way to his suite. Wordlessly, they handed him the report. Reagan read it, his face slowly turning white. "My God, has government failed?" he said to one aide, and then remarked that the action he must take was obvious. The staff members left, some of them wondering what Reagan would do.

They didn't have to wonder long. The next day, operating through an aide, Reagan informed the chief suspect that he was demanding his resignation and the resignations of any others who were involved. The aide was told that if he resigned immediately, no announcement would be made of the reasons he was leaving.

The resignation was announced quietly, without advance notice. The press, then without clues as to what had really happened, speculated that the aides were victims of a right-wing coup sponsored by the millionaire backers of the governor.

The 10-week period which intervened between the firings of the suspected homosexuals and the public revelation of Reagan's action was a period of intense and damaging pressure within the governor's office. The surviving aides, unable to discuss their story with outsiders, lived in constant worry that the truth would become known. Many of them were distracted in their daily work.

"It was a heart transplant where one wasn't replaced and where the operation was performed with a dull knife," said one who participated in the investigation. "The trauma was so severe that the patient -- the governor's office -- went into a state of shock for four months. And the governor cut himself off from a lot of things that he shouldn't. The governorship went into receivership."

Shaken, Reagan turned to trusted millionaire backer Holmes Tuttle and the Kitchen Cabinet, who provided sympathy but not much else. The millionaires agreed among themselves that Reagan had over-delegated, but they were delegators themselves and tended to see their friend and governor as an unfortunate victim of circumstances he could not control. Many in the Kitchen Cabinet wanted Reagan as a presidential candidate and were more concerned about suppressing the scandal than correcting the conditions which led to it.

None of them grasped that the central problem was not an aide's purported homosexuality, but a governor's unwillingness or inability to make himself informed. Even if he had no suspicions, an involved governor would certainly have learned about the investigation. Reagan was as surprised as if he had been living on Mars.