Politics makes for strange bedfellows (and unusual decisions), and nowhere more so than the bastion of bureaucracy that is New York City. Several Big Apple media sources, including the New York Post, are reporting that the New York City Employees’ Retirement System voted against a relatively small $49 million investment in hedge fund titan Joel Greenblatt’s Gotham Asset Management.

Of note, NYC comptroller’s office had recommended investing in a hedge fund run by Greenblatt, one of the largest financial backers of charter schools in the city.

NYC Retirement System Declined Investment In Greenblatt's Gotham Hedge Fund

NYCERS trustee expressed concerns in email

“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, commented in an e-mail before the vote in late February.

More details on NYCERS deciding to not invest in Gotham hedge fund

New York city’s charter school network Success Academies, which was opposed by Mayor Bill de Blasio, was co-founded by Gotham chief Joel Greenblatt. Of note, the charter network is overseen by Eva Moskowitz, who has often been at odds with de Blasio.

A number of trustees on the 11-member board are allied with the anti-charter teachers’ union, which makes the decision smack of politics.

“It’s extremely rare for public pensions to be run like this,” noted an expert on municipal finance speaking to the Post. “The fact that we do it through these boards lends itself to decision-making that isn’t solely based on rates of returns. It can get political.”

The hedge fund investment was rejected despite making it onto the board’s agenda, which is unusual, according to a source familiar with NYCERS. The source emphasized that investment recommendations are made only after in-depth research by the comptroller’s office.

According to Pensions & Investments, trustees representing three unions, a recent FOIA request reveals the Public Advocate’s Office and the borough presidents of Manhattan, Queens and the Bronx voted all against investing in the Gotham hedge fund. Trustees representing the mayor, comptroller and the borough presidents of Brooklyn and Staten Island voted to approve.