WASHINGTON - The possibility of again having Marion Barry Jr. as mayor of the District of Columbia could mean problems - and opportunities - for the district's pension fund, observers said.
"He's got his work cut out for him, there's no doubt," said the $2.6 billion District of Columbia Retirement Board's Executive Director Jeanna Cullins. "It's going to be hard."
Whoever wins the office will be strapped with difficulties surrounding the district's budget. The budget has faced a number of constraints, coupled with Congress' threat earlier this year to reduce its $660 million payment to the district. What's more, the district will owe the retirement board $460 million in fiscal year 1995, after a duel with the current Mayor Sharon Pratt Kelly, who tried to delay payments to the pension fund in order to pay for the district's budget.
Although the D.C. Retirement Board works separately from the district council, the mayor would be involved in certain aspects of the fund. Some observers were skeptical while others were confident that Mr. Barry, if elected, would do a good job working with the pension fund.
His downfall into cocaine and alcohol addiction in his last year as mayor culminated with a 1990 cocaine possession conviction. But two years later, Mr. Barry made a comeback as the Ward 8 council member and is now the Democratic candidate to the mayoral post.
A former three-term mayor during the late 1970s and '80s, Mr. Barry easily defeated Ms. Kelly and a third contender, D.C. Council Member John Ray, in the district's September primary. His next test will be in November, when voters choose either Mr. Barry or Republican Carol Schwartz.
During his earlier terms as mayor, Mr. Barry had a hands-off approach to the pension fund.
"He never got very involved with the retirement board ... The mayor, normally, as a rule, is not intimately involved in our budget process," said Ms. Cullins, who served as general counsel to the board at the time when Barry was in office. "The board takes its independence very, very seriously."
But just before Mr. Barry went to court to face cocaine possession charges, he had to replace board member Theresa Watson for allegedly violating her fiduciary duties by pumping up service fees to a Baltimore-based realty adviser to manage a $100 million real estate separate account. (Pensions & Investments, July 23, 1990).
D.C. Retirement Board Chairman James Tydings would not comment on whether Mr. Barry should have been more of a watchdog during that time. Mr. Tydings did say he hoped Mr. Barry, if elected, would appoint someone from his staff to pay attention to the retirement board.
When he was mayor, Mr. Barry's sometimes late payments to the pension fund prompted district legislation, introduced by former council member (and current pension board member) Betty Ann Kane. The legislation allowed the board to force the mayor to make the payments on time, and if the payment was late, to pay for lost earnings, Ms. Kane said.
Prior to the legislation being enacted"there was no specific provision in the law that made it clear that we were entitled to lost interest" earnings, Ms. Cullins said.
(This law was later challenged by Mayor Kelly, who tried in 1992 and 1994 to delay payments to the pension fund to make up for a shortfall in the district's budget.)
But Ms. Cullins said the Retirement Board never took then-Mayor Barry to court over payments to the pension fund.
"During his term, we never had a payment going to the next fiscal year," as the board is facing under Ms. Kelly's administration.
One of the mayor's first tasks with respect to the retirement board would be to replace board member Michael I. Gallie, whose term expires in January. Although no front runners have cropped up from the Barry campaign office, Ms. Cullins said she is not concerned, because it took six months after Ms. Kelly's election to get Marc R. Lippman's appointment to the board.
Some skeptics worry about Mr. Barry's relations with Congress. As his term was soured by drugs in 1990, so were his relations with Congress, sources said. Currently, there is legislation pending in Congress that would force the federal government to up its annual payment to the pension fund by 5 percentage points each year from 1996 to 2035.
Currently, Congress pays the fund $52.1 million annually, and is scheduled to end its payments in 2004. The legislation also would decrease the district's payment to the fund and increase participants' contribution. Both Ms. Kelly and board Chairman Mr. Tydings support the legislation.
"His election will make it more and more difficult to get the legislation through," said board member Ms. Kane. "The perception in Congress is that they're not going to give Marion Barry more money to mess up."