"We basically are saying stay the course," said consultant Rowland Davis of Hewitt EnnisKnupp. "On a forward-looking basis we may be seeing things that would lead us to take less risk. We didn't see it, didn't see enough of it."

The major change in the new pension law is a requirement for state employees, teachers and many local government workers to contribute 3 percent of their pay to the system that taxpayers had funded entirely.

That's not expected to increase the system's funding, though, because employer contributions are being cut an equal amount.

But it'll mean refunding employee contributions to those who leave before retiring. That's a financial negative, but benefit reductions should have a positive effect on the bottom line.

They include phasing out cost-of-living adjustments and requiring new hires to work longer before retiring.

The policy approved by the board when it was chaired by then-Gov. Charlie Crist calls for increasing what are termed strategic investments including hedge funds, debt-oriented funds and infrastructure.

That change is expected to raise return on investment by $2.1 billion over 15 years without increasing risk.

"The policy as adopted could further reduce the contribution costs from both the state and participants over the life of the fund," said Rob Gidel, vice chairman of the board's Investment Advisory Council.

Fully implementing the policy would require the Legislature to raise a 10 percent cap on strategic and private equity investments to 16 percent. Lawmakers, though, didn't act on that proposal during their annual session this year.

Private equity accounts for 4 percent of the state's retirement system portfolio. The policy calls for increasing it to 5 percent. Strategic investments are at 6 percent but would go to 11 percent if the cap is lifted.

Even if that happens, adding more alternative investments is a slow process that could take years, said Ash Williams, the board's executive director. He said it has taken a year to complete investments in a small number of hedge funds.

"The priority here is to be prudent, deliberate and disciplined, not quick," Williams said. "We think it's much more important to get the right partners than it is to race to fill some percentage target. That's a fool's errand."

Williams assured Scott that alternative investments can be made with adequate transparency.

"We have a bias against black box strategies," he said. "We just don't go there."