Vanguard has a total US stock market fund for institutional investors, with a minimum investment of $200M, that has an expense ration of 2 basis points (.02%) The FTSE world ex US fund is 10 basis points and a $100M minimum.

At $57B and $27B invested respectively I imagine the city could negotiate an even better deal if it was going to put all the money in each category into a single fund.

That said, the author of the linked article does have a point. The expense numbers on the public market side don't look outlandish when expressed as an expense ratio rather than a ten year total number.