SACRAMENTO, Calif. (AP) — The nation's largest public pension fund voted Wednesday to lower its estimate for annual investment returns, meaning it will need more money from the state, school districts and local governments to maintain its ability to fund promised retirement benefits.

The board of the California Public Employees' Retirement System voted to lower the fund's estimated rate of return from 7.75 percent to 7.5 percent.

Representatives of local agencies said they were concerned the move will further hurt their budgets at a time when many are facing deficits and have had years of cutbacks.

The move by the board will require an extra $303 million a year from the state, of which about $167 million would come from the general fund.

CalPERS' chief actuary previously recommended lowering the assumed annual investment return even more, from 7.75 percent to 7.25 percent, citing the risk to taxpayers in the future. But the fund's pension and health benefits committee on Tuesday voted 6-2 to ignore the advice and went with the higher estimate, meaning local governments will not have to contribute as much as they otherwise would have.

In many cities and counties, the rising costs of public employee pensions and retiree health care have forced cuts to basic services such as law enforcement, parks and libraries.

Last month the California State Teachers' Retirement System lowered its investment forecast for the second time in 14 months, acknowledging the prospect of lower market returns in the years ahead. The teacher pension system lowered its assumed annual investment return from 7.75 percent to 7.5 percent, increasing its projected unfunded liability by $5.9 billion.