It has been a fascinating week at CalSTRS.

On Friday, the board of directors at the massive pension fund adopted their actuarial valuation. This report stated that the pension fund’s funding gap had only increased to $56 billion, or about a $15.5 billion increase from the previous year.

This 37% increase in unfunded liability was lauded as an achievement.

Today, it was released that Christopher Ailman, CalSTRS CIO, would be receiving the Large Public Fund Manager of the Year from Institutional Investor Magazine.

So as I said, it’s been a fascinating week at CalSTRS.

The CalSTRS release regarding its new actuarial valuation mentions that the $15.5 billion increase was smaller than expected. Last year, it was assumed that this year’s gap would increase by $17 billion. However, any actualized gains were more than offset by the losses that the fund has suffered in recent years.

It wasn’t just recent years losses that affected the funding gap. This year, CalSTRS adjusted its expected rate of return (or assumption rate) from 8% to 7.75%. It was a move that could help the future funding status of the pension closer reflect reality, but critics would say that even 7.75% is dangerously optimistic.

The fund also increased its inflation assumption from 3% to 3.25%, which also impacted the gap.

It should be noted that last year, the pension fund did experience more than a 12% return on its investments, which has helped buoy their depleted accounts, but the continued shortfalls have increased the state’s contributions. According to the Bloomberg News, the actual state contributions will increase by 20% in the upcoming fiscal year, to $688 million.

Those kinds of increases and contributions would only add further fuel to the fire of the proponents of pension reform.

CalSTRS statement detailing the actuarial valuation gave a slight nod towards those calling for pension reform. In the statement CalSTRS CEO Jack Ehnes said. “While our recent gains are helpful in the short term, the larger situation underscores the need to recognize that the funding issues facing CalSTRS are primarily the result of the unprecedented collapse in the markets. It also speaks to the importance that the Legislature develop a gradual and predictable funding solution that is fair to the state’s taxpayers, its educators, and their employers.”