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Consultants: city treasury pool appropriate for HSS trust; little surplus available for higher‑risk investments
Summary
Makita Investment Group reported that the HSS trust is governed by California code and currently invested in the city treasurer pool, which meets safety and liquidity priorities; consultants said most trust assets are reserved and that only a small surplus — if any — would be available for investments outside the city pool.
Makita Investment Group presented a preliminary investment‑policy review to the Health Service Board and confirmed the trust fund is governed by California law, which prioritizes safety and liquidity ahead of yield. The firm reported the trust currently participates in the City Treasurer's investment pool and that practice is consistent with the code.
Consultant Ted Benedict said the majority of the trust's assets are already earmarked for contingency and stabilization reserves, leaving limited surplus that could be placed in alternative investments without additional oversight and cost. Benedict noted the city pool is low cost (about eight basis points in investment expense) and that potential yield gains from moving assets outside the pool must be weighed against governance complexity and added expense.
Makita proposed benchmarks and comparative analysis and will return with a formal investment policy statement and yield comparisons at the January meeting. The board asked the treasury tax collector to return annually to review pool performance and earnings.
Benedict emphasized fiduciary oversight: the board should periodically review the city pool's performance, liquidity and costs and determine whether the pool remains the appropriate home for trust assets given the trust's primary need for liquidity and preservation of capital.
