Poor investment earnings have pushed Maryland's $37.1 billion pension system deeper into debt, which could threaten the state's platinum triple-A bond rating.

The pension system -- which covers more than 370,000 current and retired public school teachers, police and state employees -- earned 0.36 percent on its investments in fiscal 2012, according to the Maryland State Retirement and Pension System.

That's a far cry from the 7.75 percent return rate that pension officials had been counting on, and which the state had factored into its formula for paying off retiree benefits.

"The last 12 months presented a challenging environment for investors, particularly in international equity," said Melissa Moye, the retirement agency's chief investment officer.

Virginia's Retirement System has not released any information on its investment returns for fiscal 2012.

Without the expected revenue, the $19.7 billion gap between the investment portfolio's value and what the state owes to current and future retirees will widen, which concerns some credit rating agencies.

Pension officials are still calculating the exact amount that the pension debt will grow, according to Michael Golden, spokesman for the retirement agency.

"If we earn less than we were counting on, that money has to be made up somewhere," Golden said.

But he stressed that one year of bad earnings "doesn't mean that everything falls apart."

Pension investment earnings have averaged a 7.8 percent rate of return over the last 25 years and a 5.9 percent rate of return over the last decade, according to the retirement agency.

"The funded levels of Maryland's retirement system represent a credit challenge for the state," Moody's Investors Service reported in mid-July. "Failure to adhere to plans to address low pension funded ratios" could lead to a credit rating downgrade, the agency stated.

Maryland Treasurer Nancy Kopp attributed fiscal 2012's disappointing returns to global market volatility.

"Fiscal year 2012 was remarkable for its volatility, both in the U.S. and in Europe," said Kopp, who serves as chairwoman on the Board of Trustees to the Maryland State Retirement and Pension System.

Publicly traded stocks, which represent 42 percent of the investments, were down 7 percent, which dragged down the entire portfolio. Golden said the system has been reducing its public equity investments in recent years.

The board had the opportunity to lower its investment projections this month to reflect the market's recent performance but chose to keep them the same. Lowering the return rate would have required the state to pay more into the pension system next year, on top of the $1.1 billion it already owes.

"The board continues to focus on long-term performance," Kopp said. "The system has on average exceeded the assumed rate of return over the last 25 years, which is a more appropriate measure of performance."