PIERRE, S.D.(WNAX)- The South Dakota State Retirement System is facing challenges in staying fully funded and dealing with volatile markets.

State Investment Officer Matt Clark told the Retirement Board Wednesday they have seen a rebound in returns.

Clark says while their returns for last year were basically flat, the market is overvalued.

Clark says the stock market has to drop about thirty five percent to get back to fair value.

Clark and his team manage about nineteen billion dollars in state investments.