The Chicago Teachers' Retirement System (TRS) has announced plans to invest nearly $1bn in hedge funds over the next three years, as part of a bid to address its financial challenges, according to a report by the Chicago Tribune.

The decision comes as the $39bn pension system grapples with only 62% of the funding needed to meet its future obligations and the lingering impact of a kickback scandal.

TRS has decided to allocate 2.5% of its assets to hedge funds, a more conservative approach compared to the 10% recommended by external consultants. "TRS wanted to take it slowly and get its feet wet," said spokeswoman Eva Golterman, who also highlighted that the system currently has the internal staff needed to manage this allocation.

The investment decision follows a kickback scandal involving former TRS director Stuart Levine, who pled guilty in October to federal charges of accepting millions in bribes in exchange for steering state contracts.