CHARLESTON, W.Va. -- State lawmakers debated Wednesday the merits of a report released Tuesday calling West Virginia's Teachers Retirement System the most underfunded teacher pension plan in the country.

Senate President Earl Ray Tomblin, D-Logan, said the study by the Manhattan Institute for Policy Research seems to contradict evidence -- including improved credit ratings for the state -- that the pension fund is moving in the right direction.

"It's pretty apparent with what we've done over the past 15 to 18 years to fund Teachers Retirement, that we're on the right path or we wouldn't see our credit ratings increase," Tomblin told members of the legislative Joint Committee on Government and Finance.

He said that included putting more $1 billion into the fund in a 15-month period in 2007-08.

One concern raised in the report is that, nationally, teacher pension funds assume an average 8 percent annual return on investments (West Virginia's pension plans assume 7.5 percent returns). The authors of the report contend that level of earnings from stocks, bonds, and other investments is unrealistic, noting that most private-sector pension funds assume a more conservative 6 percent rate of return.

Craig Slaughter, executive director of the state Investment Management Board, said that despite losses in the stock market in 2008 and 2009, he believes the state's investments can reach 7.5 percent annual growth over the long haul.

He noted that over the past 15 years nationally, public employee investment plans have averaged 7.9 percent annual returns, and said the Investment Management Board has outperformed those averages in the 11 years since the state was authorized to invest in stocks.

"I think it's reasonable to expect us to at least be average over the long run, and I would expect to be above average," he said.

He noted that for the current budget year, which ends June 30, the board's earnings are up 16.6 percent.

Reach Phil Kabler at ph...@wvgazette.com or 304-348-1220.