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Retirement chief Donoghue goes on sick leave; Absence comes amid takeover fight.

Byline: Shaun Sutner

WORCESTER - Michael J. Donoghue, chairman and CEO of the Worcester Regional Retirement Board, went on paid sick leave yesterday on the advice of his physician, a spokesman for Mr. Donoghue said.

The spokesman, lawyer Demetrios M. Moschos, declined to say what Mr. Donoghue's medical condition is, citing medical privacy laws and the Americans with Disabilities Act.

Mr. Donoghue, 62, is entitled to up to three months of leave under federal law, Mr. Moschos said.

"He's been placed on leave for up to three months," the lawyer said. "He has the right to return to duty."

Mr. Donoghue did not return calls seeking comment.

The former elected Worcester Country treasurer until county government was abolished in 1997, Mr. Donoghue administers a $400 million pension fund for more than 7,000 retired and current employees of 90 towns, school districts and housing authorities in the county.

A confidant of U.S. Sen. Edward M. Kennedy and a former Worcester City Councilor, Mr. Donoghue has been a fixture in Democratic Party circles for decades.

His 2007 salary is $133,500, with a contractual raise to $140,800 scheduled for next year. As of Nov. 30, 2006, he had accrued 138 days of unused sick time and 51 days of unused vacation time, according to this year's amendment to his six-year employment contract covering 2003 to 2008. He has received annual raises of about 5 percent over the last five years.

In Mr. Donoghue's absence, the pension fund will be run on a day-to-day basis by Pauline M. Lajoie. With 41 years experience, the $82,500-a-year acting administrator is the pension fund's longest-serving and highest-paid employee other than Mr. Donoghue.

The board has designated Roger R. Dubois of Dudley, an 11-year board member and retired Grafton and Dudley building inspector, to serve as acting chairman.

Mr. Dubois said he was unsure whether the board will continue to fight, as Mr. Donoghue has, Gov. Deval L. Patrick's move to bring the assets of the Worcester regional fund and other underperforming pension funds under the management of the state Public Reserves Investment Trust overseen by Treasurer Timothy P. Cahill.

Administration officials argue that shifting underperforming funds to the state will save municipal governments hundreds of millions of dollars that can be used to finance local services.

The Worcester County fund is one of about 25 such funds that have been targeted by the governor to be merged with the $46.7 billion state pension fund, one of the highest-performing of its kind in the country.

Mr. Donoghue, who attended a Statehouse hearing in March to oppose the governor's pension legislation, has maintained that he has consciously pursued a conservative, low-risk investment strategy to safeguard the fund's assets.

Last year, Mr. Donoghue's fund posted a return on investment of 13.05 percent, ranking it in the bottom third of the state's 104 autonomous pension funds, according to the Public Employee Retirement Administration Commission.

For the five-year period 2002-2006, the Worcester regional fund tied for sixth worst in the state, with a cumulative return of 6.74 percent, according to PERAC. The 10-year return for the fund was 10.10 percent, 22nd worst. The return since 1985 was 10.95 percent, again tying it for 22nd worst.

In addition to poor returns, the Worcester regional system and others have been targeted by the administration for not having enough assets to cover their pension liabilities.

As of 2004, the Worcester County fund was 63.5 percent funded, well below the target of 80 percent set by the administration. Under legislation filed by the governor, retirement systems that have performed worse than the state fund over the last five years by an average of 2.25 percentage points or more would be liable for takeover.

The state's return for 2006 was 16.88 percent; for the last five years, 11.67; over 10 years, 10.52; and since 1985, 11.33 percent. It was 85 percent funded as of Jan. 1.

Mr. Dubois said he is reviewing PERAC's latest analysis of funds' investment returns, and that his board will consider the proposed state takeover at its June 26 meeting.

"That's one thing we'll be discussing at the end of the month," he said.

Just before Mr. Donoghue went on leave, the pension system moved its offices to Auburn from the Worcester County courthouse on North Main Street in Worcester.

Contact Shaun Sutner by e-mail at
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Title Annotation:LOCAL NEWS
Publication:Telegram & Gazette (Worcester, MA)
Date:Jun 6, 2007
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