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July 21, 2009
CalPERS and CalSTRS: both down 20 percent-plus

CalPERS and CalSTRS reported their investment results for the just-ended fiscal year, and the numbers weren't pretty.

The California Public Employees' Retirement System said its portfolio shrank 23.4 percent, a loss of $56.2 billion.

The California State Teachers' Retirement System said its portfolio fell 25 percent, or $43.4 billion.

The results reinforce what's been known for some time: that the two big pension funds took a beating over the last 12 months.

"This result is not a surprise; it is about what we expected given the collapse of the markets across the globe," CalPERS Chief Investment Officer Joseph Dear said in a press release.

CalPERS has said it will demand a higher contribution from state and local governments to shore up its funding position. The higher contribution from the state will start next July and from local governments in 2011, although it isn't known yet how much the fund will demand.

CalSTRS can't demand higher contributions but has begun talking to legislators about that issue.

Employer contributions to CalPERS are based in part on a "funding ratio" that compares assets with pension obligations. The ratio for CalPERS was 92 percent a year ago and has surely fallen below the 80 percent threshold that's considered comfortable. The exact figure won't be known for some time, but CalPERS previously warned that its ratio could fall to 68 percent or so.

CalPERS' investment losses have been public knowledge for months; today's announcement merely marked the end of the fiscal year June 30.

CalPERS' stock portfolio fell 28.5 percent. Its real estate holdings fell 35.8 percent and its private equity holdings dropped 31.4 percent; the real estate and private equity values have been calculated only through March 31.

 CalSTRS said its real estate fell 43 percent, private equity 27 percent and global stocks 28 percent.

Both funds said they've tweaked their portfolio allocations in recent months. Both, for instance, have said they'll put less money into the stock market.


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