Council approves Section 115 trust investment policy and hires Shuster Advisory for cash reserves

Huntington Park’s City Council on the same night approved steps to change how the city manages retirement and operating reserves, adopting a Section 115 trust investment allocation and authorizing Shuster Advisory Group to act as investment advisor for the city’s cash operating reserve portfolio.

Finance staff introduced the Section 115 option as a flexible, customizable trust structure designed to help the city hedge future OPEB and pension liabilities. Mark Shuster of Shuster Advisory Group said the trust permits a wider, open-architecture set of managers and lower fees than the city’s current pooled options. Shuster said the firm negotiated platform fees “at one-sixteenth of one percent” for some services and that in the presented model a comparable, diversified portfolio recently returned higher net performance than a 70/30 pooled benchmark.

Council members asked about historical returns, fee comparisons and whether investment policy statements (IPS) could exclude certain industries. Shuster and staff answered that the IPS could be customized to exclude industries, that preferred managers would be selected under the council’s direction and that staff would return with specific reports and performance figures.

Council then voted unanimously to adopt the proposed investment allocation and IPS for the Section 115 trust and separately approved Shuster Advisory Group to manage the cash operating reserve portfolio under Government Code 53601, with staff noting the advisor’s work could produce incremental interest earnings and that the contract carries a reported modest flat fee.