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Baltimore Business Journal: Franchot calls General Assembly move to alter Md. pension system board &

A last-minute bill passed by the General Assembly involving Maryland's $50 billion pension fund has become the latest point of contention in the ongoing feud between Comptroller Peter Franchot and top Democratic lawmakers.

In a move described by Franchot as "deeply troubling" and "irresponsible," the General Assembly passed an amended bill requiring the Maryland treasurer to serve as chairman for the State Retirement and Pension System's board of trustees. Franchot has sent a letter to Gov. Larry Hogan requesting a veto, while other members of the board have called the legislature's move "bizarre" and "wacky."

The bill in question, Senate Bill 178, was originally meant to codify the way newly appointed board members take their oaths of office. But on the last day of the General Assembly's 90-day legislative session the House Appropriations committee chaired by Del. Maggie McIntosh amended the bill to alter the board.

Currently, either the state treasurer or the comptroller chairs the board depending on who has more seniority.

Treasurer Nancy Kopp is the current chairman. The amended bill designates the treasurer as the board chairman. The House passed the proposal unanimously in the session's final hours, and the Senate concurred with the amendments. Kopp and McIntosh could not be reached for comment.

The change comes as Franchot and leaders in the General Assembly — particularly Senate President Thomas V. Mike Miller Jr. and House Speaker Michael E. Busch — are engaged in a political battle.

The General Assembly didn't pass Franchot's bill aimed at reforming Maryland's brewery laws. It also removed the Board of Public Works, which Franchot is a member of, from making spending decisions about school construction. Franchot accused lawmakers of making "smoke-filled, backroom decisions" and is now campaigning to prevent Miller and Busch from getting reelected. Franchot did not learn of the change until several days after the legislative session ended on April 9. Members of the retirement system board said they didn't know about the change until a conference call on April 17.

"Having served as vice-chairman of the trustees now for more than 11 yeas, I find it offensive and deeply troubling that our legislative leaders — none of which have even bother to attend a meeting of the trustees during my tenure of service — would exercise its prerogatives in such an irresponsible manner," Franchot said in an April 16 letter to Hogan requesting a veto of the legislation.

The General Assembly adopted the bill "with absolutely no input" from the board, the system's staff or any public employees, Franchot added.

"The fact that an action of this magnitude would be introduced in such a clandestine manner illustrates a startling disregard for even the most basic principles of open and transparent government," Franchot said. "The fact that it would treat this state's pension system with such a high degree of recklessness — given the importance of a stable and well-governed pension system to the preservation of our state's AAA bond rating — reflects a startling lack of judgment from lawmakers who should be held to higher expectations."

A spokeswoman for Hogan could not be reached to find out if the governor will veto the bill.

Board members who spoke to the Business Journal generally agreed with Franchot's concerns.

"When I found out, I was disappointed and alarmed by it," said Eric Brotman, president and managing principal of Brotman Financial Group Inc..

Brotman did not know about the General Assembly's bill until a conference call with other board members on Tuesday morning. He said he has no problems with Kopp as the board chairman, but he has concerns about what will happen in the future when a new treasurer with less experience is handed the role.

"We are entrusted by the legislature and state government as trustees to manage a $50 billion portfolio, but now we are told we are not entrusted to name the chairperson of our board," Brotman said. "It's bizarre.

Brotman believes the General Assembly made its move to amend the bill because of the problems some lawmakers have with Franchot. However, Brotman said politics should not have a role in the management of Maryland's pension system.

"It's microcosmic of and illustrates the way politics work in Annapolis," said Brotman, who plans to send his own letter to Hogan requesting a veto.

Another board member who asked not be named said he wants to know why McIntosh's committee amended the bill, calling the way it happened "a goofy thing."

"I agree with the comptroller's concerns," the board member said. "If trustees do act, hopefully it be uniformly."

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