In the 1980s, a variety of factors affected the running of the Fund. Since the board had earlier positioned the Fund’s investment portfolio in an aggressive way, the 1980s' financial market environment provided for enormous growth in the size of the portfolio. Later in the decade, it also became clear that the Fund should take advantage of global markets by investing in new asset classes like international stocks. In addition to investment growth, the complexity of managing the Fund increased dramatically due to a new tax and regulatory environment.

At the same time the Fund was growing more complex, the City of Houston’s commitment to managing the pension systems was waning. Hit by rising health care costs and a diminishing tax base, the City of Houston "downsized" almost the entire staff assigned to administering the three city pension funds. The Board of Trustees, deeply concerned over this downsizing, hired Coopers & Lybrand to conduct an audit of the city’s management of the Fund. The results of that audit were very troubling to the Board of Trustees. With the results of the audit in hand and with a commitment to providing excellent services to its members, the board decided to take over full control of the Fund. It was also determined that a staff would be needed beyond that currently in place to properly manage the Fund. Effective July 1, 1988, the board voted unanimously to exercise its full authority under Article 6243e.2 and take full control of the administration of the Fund. Although they had only one full-time professional employee in 1988, by 1995 the Fund’s staff numbered 10.

In addition to professional staffing, the board realized there was a need for a specialty bank or "custodian bank" that could handle the Fund’s complex financial activity. The stock market crash of 1987 had shown the board just how complex record-keeping for the Fund had become. The Fund’s first custodian bank, hired in 1988, was Boston Safe Deposit and Trust Company. This institution was selected because it was able to provide all of the financial services the $500,000,000 pension fund needed, including timely and accurate issuance of the Fund’s monthly benefit payments, complex tax reporting and tracking of the Fund’s worldwide investment portfolio for daily income collection. Although a few initial grumbles were heard from the membership about using an out-of-state bank, the advantages soon became clear to everyone. Boston Safe Deposit & Trust Company (now Mellon Trust) proved much more capable of handling the Fund’s burgeoning assets than the local bank.

In addition to finding a good custodian bank, the Fund also ensured that Fund investments were managed by only the best investment management companies. The Fund currently has investment managers who handle the Fund’s various investments. With its investments ranging from stocks and bonds to venture capital and timber land, the Fund’s investment portfolio performance ranks among the top of other similar-sized pension funds. Check out the Fund’s phenomenal investment results.

After the board takeover, the staff grew in number. The role of the staff is to assist the board in whatever way necessary to help the Fund. With the growth of the staff, the Fund has been able to expand its functions as well. They work with the board to handle Fund business. A benefits staff works to produce the annual summary plan description and assist Fund members with questions and pension decisions. The investment team oversees the management of the Fund’s assets and the administrative section assists the board in the overall handling of the Fund and managing the Conference Center.

The success of the board’s decision in 1988 was underscored in 1992 when, with the agreement of the city, the other two city pension funds become autonomous, as well. Until that time, it was unclear whether the city agreed with the board’s decision to take control of the Fund. With this decree, the independence of the Fund became assured.

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