NYC pension rejects stake in hedge fund run by school backer

Charter schools, which are privately run but funded with taxpayer money, operate without many of the rules governing public ones. Unions say they take funding away from public institutions that need more support, and don't enroll students from the poorest families or those with special needs. They say money managers are using the charter movement to promote their ideological goals, such as breaking unions, which traditionally back Democrats.

Supporters say charters offer a better alternative to failing public programs, especially for poor students. Charters in the South Bronx, central Brooklyn and Harlem have twice the proficiency rates in math than district schools in those areas and between 7 and 14 points higher in English, according to the New York City Charter School Center, an advocacy group.

As the investment adviser to the city's five pension funds, Stringer's Bureau of Asset Management, headed by Chief Investment Officer Scott Evans, vets investment proposals and makes recommendations to the boards. The staff compiles investment meeting agendas.

"The comptroller's Bureau of Asset Management selects investments solely on the merits to safeguard the pension funds for 700,000 working men and women who rely on them," said Eric Sumberg, a spokesman for Stringer, in a Feb. 24 e-mail. Greenblatt declined to comment.

States and municipalities seeking to boost returns for their retirement funds while reducing swings in the values of their portfolios have invested billions of dollars with hedge funds since 2009. That's often drawn the ire of public-employee unions, which have become more aggressive in scrutinizing the political ties of investment managers.