The state of California has been ordered to pay its Teachers' Retirement System $500m (€365.9m) plus interest that could exceed a further $200m, after the local government withheld a payment from the fund three years ago.

An appeal court in Sacramento ruled that the state violated its contractual obligation when it withheld its contribution to the California State Teachers' Retirement System's Supplemental Benefit Maintenance Account which exists to protect beneficiaries from the impact of inflation. It funds quarterly payments to retirees when inflation erodes monthly benefits to below 80% of its original purchasing power, according to Calstrs.