On board of trustees, some have more equality

November 15, 2001|By Michael Dresser

The board of trustees of Maryland's pension system is one of the most powerful and least-understood bodies in state government - one with a political dynamic all its own.

Fourteen people, ranging from household names to unknowns, decide how to invest some $29.5 billion in pension funds - more money than the state budget.

The board includes three gubernatorial appointees, six members elected by workers and retirees, and five state officials who are trustees by virtue of the offices they hold.

This last group includes state Treasurer Richard N. Dixon, Comptroller William Donald Schaefer, Budget Secretary T. Eloise Foster, Schools Superintendent Nancy S. Grasmick and state police Superintendent David B. Mitchell.

Debates on the board are often vigorous, and several members have regularly stood up to their strong-willed chairman, Dixon. "Everybody should understand that there are 14 members of the board, and all of them are equal," said Ali A. Alemi, an elected trustee.

But in practice, some members are more equal than others.

When Howard P. Colhoun came up for renomination last year after 18 years as an adviser to the board's Investment Committee, Dixon set out to oust him.

Dixon failed to block Colhoun's approval by the pension board but had another card to play: the treasurer's seat on the three-member state Board of Public Works. The comptroller is on the public works board, too. That panel had to vote on Colhoun's reappointment, and Dixon persuaded Schaefer to join him in rejecting it. The action left many pension trustees with bitter feelings, but it also showed Dixon's power.

Colhoun said state department heads who are pension trustees tend to defer to Dixon because - as a member of the Board of Public Works - he reviews all major contracts of their agencies. "They want to be on the right side of the Board of Public Works," he said.

Grasmick said she resents the implication, saying it calls her integrity into question. "Why would I be inhibited about speaking out about anything?" she said.

Mitchell and Foster did not return phone calls seeking their comments.

Another trustee, Investment Committee Chairman Arthur N. Caple Jr., also holds a job that does not leave him fully independent of Dixon. Caple, an elected member of the pension board, is executive director of Maryland's supplemental retirement system. Dixon serves on that system's board - which hires and can fire the executive director.

"Caple is between a rock and a hard place. Dixon can push him around," Colhoun said.

Caple said his job with the supplemental retirement system has never posed a conflict. While he is generally seen as a loyal Dixon ally on the pension board, he said he has cast votes opposing the treasurer's position.

Dixon declined to be interviewed for this article. Peter Vaughn, executive director of the pension system, denied that Dixon has excessive power over board decisions.

"He does not run the fund by himself," Vaughn said. "This is a democracy."

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