San Jose pension trustees approved a five‑year extension of the plans’ custodian bank contract after an investment‑committee recommendation and staff presentation.

Staff told trustees the custodial relationship began in 2020 and that portfolio growth and a large increase in the number of accounts had driven an expected fee increase. Staff recommended extending the current agreement rather than issuing a new RFP because the marketplace for full‑service custodians is small and consolidation has removed many competing bidders.

The presentation noted the combined pension portfolios had grown substantially over five years and staff forecast a roughly 5% increase in custody fees if services continued under the recommended provider. Trustee questions focused on why the fund did not hire a California‑based custodian; staff replied that the dominant national custodians are headquartered outside California (examples named in the discussion included State Street, BNY Mellon and Northern Trust) and said switching providers is operationally challenging and costly given data and account complexity.

Trustee Sander moved to approve the staff recommendation; Trustee Sunita seconded. The board voted by voice and the motion carried.

Trustees also said they wanted staff to continue documenting due diligence and to keep the Investment Committee closely involved when service scope, fees or vendor markets change. Staff indicated they had discussed the decision at the Investment Committee and presented the same recommendation there prior to the board vote.

The custodian decision will be reflected in upcoming vendor notices and in the plans’ operating budget projections for custody fees.