Former chancellor of the New York City public schools, Joel Klein, details the madness in a recent Wall Street Journal op-ed.
We live in a funny world. Bernie Madoff pretended he was getting 8% returns on his clients’ investments?and he’s in jail for running a Ponzi scheme. But in the public sector that kind of make-believe is common. As former chancellor of the New York City public schools, I learned that one of the options the city pension plan offered teachers and administrators guaranteed an 8.25% return, regardless of what the investments actually earned in the market. In fact, throughout the country public-employee pension plans have been massively underfunded, often pretending, like Madoff, that they’d get 8% returns forever…
Of course, the city offered this option because a teachers union cut a deal with Klein’s predecessors.
