There's good news for the state's retired teachers. CalSTRS' annual financial report shows investment returns well above their assumed rates.

The teacher's retirement system closed the 2013-2014 fiscal year with an 18.6 percent return on its investment.  

CalSTRS CIO Christopher Ailman says it's the second straight year they've seen double-digit returns.

"Most of that is driven by our allocation to international stocks, and specifically the fact that we have a home country bias, as it is described. We have an overweight to the U.S. at the expense of the rest of the world," Ailman said. 

Company executives call the numbers "extraordinary" and "very encouraging."  

On a long-term, portfolio-wide basis, CalSTRS returns averaged 13.7 percent over the last five years. 

The largest educator-only pension fund in the world, CalSTRS is valued at more than $189 billion.