Massachusetts' State Treasurer to Let Pension Fund Committee Member Go.

Jan. 28--In the first sign that Massachusetts' new state treasurer is looking to put his own stamp on the state's $24 billion pension fund, Tim Cahill has opted not to reappoint investment veteran Collette Chilton to the fund's investment committee.
Chilton, who once was investment chief for the state's Pension Reserves Investment Trust and has served on its six-member investment advisory panel for the past five years, offered her resignation as a courtesy, according to financial executives who know her. But when Cahill accepted it, he surprised other members of the panel and sparked a rush of speculation about whether he would dismiss other members of the group or top staff people at the pension fund.
The investment committee is chaired by David Grain, the former head of AT&T Broadband, and includes Harvard University endowment chief Jack Meyer and Massachusetts Institute of Technology treasurer Allan Bufferd.
Several of the members, including Chilton, who runs Lucent Asset Managment, have served since Joe Malone's tenure as treasurer. Malone, a Republican, served from 1991 to 1998. His successor, Democrat Shannon O'Brien, reappointed them because of their reputations in the investment world.
Karen Sharma, the treasurer's spokeswoman, said Cahill was meeting with investment committee members when Chilton's resignation letter arrived. "Quite frankly, we just accepted it," Sharma said. "The treasurer would have liked to meet with her. We've all heard great things about Collette."
Chilton declined to comment.
On the campaign trail, Cahill said he planned to become more personally involved in matters at the pension board and questioned the influence of Meyer, Bufferd, and others on pension decisions. But investment executives who track the fund's performance credit the investment committee, in large part, for the fund's strong long-term track record. Harvard, under Meyer's watch, has had one of the best performance records in the nation. The investment committee meets a half-dozen times a year and makes recommendations that are then considered by the fund's nine-member board.
Despite the campaign rhetoric that took former treasurer O'Brien to task for the fund's losses last year, PRIT is considered a top performer nationally among public pension funds. The fund fell 13 percent in the first three quarters of 2002, compared with a 29 percent plunge in the Standard & Poor's 500 index in that period. Over 10 years, the fund ranks in the top fifth percentile of all public portfolios in the country, according to the Trust Universe Comparison Service.
Yesterday, Sharma said the treasurer was "impressed with both Meyer and Bufferd" and has asked them to stay aboard.
But there could still be upheaval. Cahill is expected to attend the first meeting of the nine-member pension board next Tuesday. Whether Jim Hearty, the fund's executive director, will continue to serve is in question. He serves at the pleasure of the board.
The full board has four elected members. The treasurer attends or sends a designee, and appoints a second person; the governor sends a designee and appoints two other board members. Governor Mitt Romney has not said whom he will designate.