(Bloomberg) — New York City’s $54 billion pension for civil employees rejected a recommendation by the comptroller’s office to invest in a hedge fund run by one of the biggest financial backers of charter schools.

The New York City Employees Retirement System, whose members include lunchroom workers and other school aides, voted against the $49 million investment with Joel Greenblatt’s Gotham Asset Management LLC, according to records obtained under a freedom-of-information request after Comptroller Scott Stringer and the pension fund declined to disclose the vote results.

Greenblatt is co-founder of Success Academy, New York’s biggest charter-school network. Its director, Eva Moskowitz, a former city councilwoman, helped block Mayor Bill de Blasio’s bid to cut aid to charter schools.

Trustees representing three unions, the Public Advocate’s Office and the borough presidents of Manhattan, Queens and the Bronx voted against the investment. Trustees representing the mayor, comptroller and the borough presidents of Brooklyn and Staten Island approved.

“We have some serious concerns in what Gotham Capital presented to us in response to some basic questions about the education of students at charter schools,” Henry Garrido, executive director of District Council 37, the city’s largest municipal employees union, said in an e-mail before the Feb. 24 vote.

Taxpayer funding

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.

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