State Fund’s financial positions at December 31 are as follows:
| (In millions) | 2017 | 2016 | |
| Admitted Assets | |||
| Bonds, at amortized cost | $ | 19,048 | 18,905 |
| Common stocks | 805 | 895 | |
| Real estate | 274 | 245 | |
| Cash and short-term investments | 189 | 224 | |
| Total cash and invested assets | 20,316 | 20,269 | |
| Other assets | 463 | 462 | |
| Total admitted assets | $ | 20,779 | 20,731 |
| Liabilities and Policyholders' Surplus | |||
| Losses and loss adjustment expenses reserves | $ | 12,645 | 12,503 |
| Other liabilities | 1,443 | 1,533 | |
| Total liabilities | 14,088 | 14,036 | |
| Policyholders' surplus | 6,691 | 6,695 | |
| Total liabilities and policyholders' surplus | $ | 20,779 | 20,731 |
State Fund maintained a balanced investment portfolio that was focused on both credit quality and investment yield (94% of the $19 billion bond portfolio was rated NAIC 1, the NAIC's highest quality credit class). The weighted average credit quality of the overall bond portfolio was Aa2/AA- by Moody's and Standard & Poor's, respectively. Book yield at December 31, 2017 was 3.19%, down from 3.32% at December 31, 2016.
Management believes that its reserves are adequate, and State Fund's appointed Actuary, Guy Avagliano of Milliman, Inc., consulting actuaries, attested to the adequacy of State Fund's carried reserves as of December 31, 2017 and 2016.
State Fund operates in conformity with the California law imposed for risk-based capital (RBC). As of December 31, 2017 and 2016, policyholders' surplus exceeded the minimum RBC requirements.
State Fund engaged Milliman for actuarial consulting services to project the impact on Statutory accounting of GASB 68, Accounting and Financial Reporting for Pensions and GASB 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pension. In May 2017, State Fund increased its special surplus by $22 million and $108 million for pension and OPEB respectively as an adjustment to the 2016 year end segregation on the contingent liability related to State Contracts employees assigned to the State Contracts operations. This is a result of the change in number of employees assigned to the State Contracts operations. In December 2017, State Fund reduced $105 million and increased $104 million its special surplus for UAAL for pension and OPEB as recommended by our third party actuary, Milliman. As a result, the restricted surplus for the unfunded pension and OPEB at December 31, 2017 and 2016 was $1.2 billion. There is no significant change in Policyholders' surplus at December 31, 2017.