By Dale Kasler
dkasler@sacbee.com
Published: Wednesday, Feb. 1, 2012 – 12:00 am | Page 6B

CalSTRS is thinking of cutting its investment forecast for the second time in barely a year, a move that acknowledges the increased financial strain on the pension fund.

The teachers’ retirement board on Thursday will consider a recommendation from its actuarial consultant to cut the forecast by a quarter point, to 7.5 percent.

The consultant, Milliman Inc., told the board the current forecast “exceeds the expected long-term return.”

Pension funds are reluctant to adjust their investment forecasts. After months of hand-wringing, the California State Teachers’ Retirement System cut its forecast by a quarter point in December 2010 – the first adjustment in 15 years.

Now it might do so again, just a week after CalSTRS revealed that its earnings for calendar 2011 came to just 2.3 percent.

The timing is coincidental, pension officials said. The latest recommendation is part of a typical review that takes place every four years, said Ed Derman, CalSTRS’ deputy chief executive.

What happened in 2010 was unusual, and was a reaction to the extraordinary losses suffered in the 2008 market crash, he said.

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