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S&P raises CalSTRS outlook, cites potential funded ratio improvements: Reuters

(Reuters) – Standard & Poor’s Ratings Services on Tuesday revised its credit outlook for the California State Teachers’ Retirement System to positive, citing a potential improvement to the pension fund’s funded ratio.

State legislation passed last year would substantially boost employer and employee retirement contributions to the pension fund, S&P reported.

S&P, which previously had an outlook of stable, affirmed the credit rating at AA-minus.

“We base the outlook revision on recent legislation that we believe should improve CalSTRS’ funded ratio over the next two years, assuming CalSTRS meets its actuarially projected investment returns,” S&P credit analyst David Hitchcock said in a statement.

CalSTRS is the second largest pension fund in the United States with a portfolio valued at $191.2 billion as of March 31. The largest educator-only pension fund in the world, CalSTRS serves 879,000 California public school educators and their families.

S&P warned that if there are poor investment returns, or other changes in actuarial assumptions, “we could revise the outlook back to stable.” (Reporting by Robin Respaut; Editing by Leslie Adler)