Stock Dive Hurts State Pensions Across the Country

The pain on Wall Street last week also set off shockwaves in statehouses across the country.

AIG, Fannie Mae, Freddie Mac and Lehman Brothers were all favorites of big institutional investors like state pension funds because -- until this month -- they were relatively safe bets. Now they are all worth next to nothing.

Patricia Macht, assistant executive officer of the California Public Employees' Retirement System, or CalPERS, said that while the $235.9 billion fund did take a hit on some of those stocks it also has so many other investments spread out in other areas.

CalPERS, the largest public pension plan in the country, aims for a 7.75 percent return on its investments each year.

"We've rebounded from other market crises and will again," Macht said. "We're in it for the long term. One of the upsides of long term investor, we don't need to cash in soon."