I'm broke.

New York's powerful teachers union receives $3 million per year in kickbacks from an investment company for recommending that its members store their hard-earned cash in rip-off funds that charge high fees and leave them with little to spend in their retirement, the L.A. Times has found.

The deal between NYSUT and ING, the Dutch investment company, takes advantage of a massive captive audience of teachers who seem to trust their union way more than they probably should. Simple math shows it is a bad deal for teachers but an extremely lucrative business opportunity for the suits who run the union.


Check out this quote from a NYSUT member in the L.A. Times: "I was under the impression that because it was from the union, it would be in my best interest — because they're in my best interest. Now, I kick myself in the butt for buying it."

Ouch.

A localized version of the story by the Associated Press is here. From the AP story:

Art Dawe, an English teacher in Middletown, told the Los Angeles Times that NYSUT's endorsement of the Opportunity Plus account was the most important thing he considered when he opted in. The account has returned just 1.6 percent a year since 1990, compared to an overall growth rate of 8.4 percent for all U.S. mutual funds.

"I could have fared better with Atlantic City slots," Dawe told the newspaper. Dawe paid ING 3.59 percent of his assets each year in fees, compared with 0.35 percent a year in fees to a 403(b) plan offered by T. Rowe Price Group that did not have an insurance feature, the Times reported.

Tom Carroll, president of the Foundation for Education Reform and Accountability has asked Attorney General Eliot Spitzer to investigate on behalf of the teacher/investors who have been caught up in the union's scheme.