Maryland State Pension Records 3.47% Gain In Fiscal 2003

The beleaguered state pension system notched a 3.47% gain in the fiscal year that ended June 30, its first year in the black since fiscal 2000, when it returned 11.87%.   After that, the next two years were considerably less cheery for the state’s $26.7-billion retirement plan – down 9.41% in fiscal 2001 and 7.63% lower in fiscal 2002, according to a Baltimore Sun report.

“We had some things go right for us” in fiscal 2003, Joseph M. Coale III, spokesman for the pension fund, told the newspaper.   “Our timing has been right; our asset allocation good; and our choice of [investment managers] has been good, too. Our operations here have improved during this past fiscal year. There are other things we still have to get to, but we’re feeling better about ourselves.”

Plan Changes

Many of those changes have come due to pressure from legislators, departures of top-level staffers and the fact that the agency has brought in outside consultants in an effort to improve internal policies and controls.   Earlier this month Baltimore money manager Nathan A Chapman Jr pleaded not guilty to charges of defrauding the pension system and “looting” his own companies (See  Chapman Pleads Not Guilty in Maryland Fraud Case ). Additionally, a former trustee of the pension system, Debra Humphries, was indicted on perjury charges after she allegedly lied about cash and gifts worth more than $46,000 authorities say she received from Chapman (See “Relationships” Entangle Maryland Pension Fund ).

Further, those changes became apparent in the final quarter of fiscal 2003, when the state pension system recorded an investment return of 11.96%, placing Maryland in the top quarter of all public pension plans that are part of the to the Trust Universe Comparison Service (TUCS), the Wilshire Associates’ benchmark that is widely known for public investment plans.

However, the state once again lagged behind its for the just concluded fiscal year.   Maryland’s 3.47% return fell short of the 4.02% median return of all pension funds with more than $1 billion in assets, according to TUCS.  

Maryland’s performance last year ranked the state in the 66th percentile in terms of investment returns.   Even so, the rating represented a substantial improvement over the two prior years, one of which saw Maryland ranked dead last.