OK, let's look at his record
`I'll put my record up against anyone," Massachusetts Treasurer Tim Cahill bragged in this space this month. Let's go to the record then. Before moving into the State House, Cahill was Norfolk County's treasurer, where he oversaw the pension fund. The result: Over the past five years of Cahill's stewardship, Norfolk finished 92d out of 106 funds tracked by the Massachusetts Public Employee Retirement Administration Commission. In 2002, Cahill's last at Norfolk, the fund lost 11.9 percent, finishing 98th.
That kind of underperformance matters. In his six years as Norfolk treasurer, the county's pension fund trailed the state pension fund, whose board he now heads, by 12.26 percentage points, a significant gap. If Norfolk's performance had matched the state's, the county pension fund -- with $262 million in assets when Cahill took over -- would have been worth another $32 million. It gets worse: One of Cahill's first actions as Norfolk treasurer was to pull the county out of the state pension fund. That decision cost the fund $8 million in incentives provided by the Legislature to systems that remained in the state fund. Bottom line cost to Norfolk retirees: $40 million.
And consider this: If you applied Cahill's Norfolk performance to the state pension fund -- $26 billion when he took over -- the fund would be $3 billion smaller today.
Cahill is now chairman of the state pension fund board for real, and the warning signals are everywhere. When he moved to replace the fund's well-respected director, James Hearty, with his hand-picked choice, Steven Weddle, who once ran a tiny southern Africa venture fund with mixed results, Jack Meyer, the chief of Harvard Management's endowment, and Allan Bufferd, his counterpart at the Massachusetts Institute of Technology, resigned from the investment committee. (Aside: Harvard yesterday reported its annual investment returns, again finishing in the top 1 percent of all university endowment funds. Want to put your record up against Meyer's, Mr. Treasurer?)
In a statement, Cahill's office focuses on the two years Norfolk beat the state pension fund, but ignores altogether the four years it underperformed. If investing worked like that, we would all be retired in our million-dollar beach houses.
But ask yourself: Why would Cahill have pulled Norfolk County out of the state pension system anyway? Maybe he thought he could do better, though he certainly hasn't. But if the Norfolk County retirees lost, Cahill still won. By taking all the money inside, Cahill -- short on experience but long on ambition -- assured himself of a huge fund-raising base among money managers and assorted hangers-on. Cahill understood the game well: No money to manage, no money managers to solicit.
Lucille R. Gray of Newton just wrote me about my earlier Cahill column. She is 84, a retired social worker, and voted for Cahill because of his experience as Norfolk treasurer. "I do not expect that my small pension, which I do depend on, will be selected to be either canceled or reduced, but your column raised the following fear: What if all pensions are reduced by a certain percentage? If you knew, when Mr. Cahill was running for office, about his doubtful qualifications for the job, why did you not write about the issue then? Or, if you did, did I just happen to miss that important column?"
She didn't miss it because I didn't write it. Like the rest of the media pack, I was focused on the sexier governor's race. Cahill got a pass, and was elected on the strength of a cute TV ad featuring his 10-year-old daughter. Now we know, however, and so should the state pension fund's board. Much is made of the role of directors in this age of scandal and reform. Each would do well to look up the meaning of fiduciary. Their responsibility is to Lucille Gray, not to Tim the Treasurer.
Steve Bailey is a Globe columnist. He can be reached at 617-929-2902 or at email@example.com.
© Copyright 2003 Globe Newspaper Company.