Book L_S3 Copyright }!" CQBfRIGHT DEPOSm PREPARED UNDER THE DIRECTION OF FREDERICK A. CLEVELAND, PH. D. TEACHERS' PENSION SYSTEMS IN THE UNITED STATES: A CRITICAL AND DESCRIPTIVE STUDY Publications of The Institute for Government Research STUDIES IN ADMINISTRATION The System of Financial Administration of Great Britain By W. F. Willoughby, W. W. Willoughby and S. M. Lindsay The Budget By Rene Stourm (T. Plazinski, Translator; W. F. McCaleb, Editor) The Canadian Budgetary System By H. G. Villard and W. W. Willoughby The Problem of a National Budget By W. F. Willoughby The Movement for Budgetary Reform in the States By W. F. Willoughby Teachers' Pension Systems in the United States By Paul Studensky Organized Efforts for the Improvement of Methods of Administration in the United States By G. A. Weber PRINCIPLES OF ADMINISTRATION Principles Governing the Retirement of Public Em- ployees By Lewis Meriam Principles of Government Purchasing By A. G. Thomas SERVICE MONOGRAPHS OF THE UNITED STATES GOVERNMENT The U. S. Geological Survey The Reclamation Service D. APPLETON & COMPANY PUBLISHERS NEW YORK THE INSTITUTE FOR GOVERNMENT RESEARCH STUDIES IN ADMINISTRATION TEACHERS' PENSION SYSTEMS IN THE UNITED STATES A Critical and Descriptive Study BY PAUL STUDENSKY D. APPLETON AND COMPANY NEW YORK LONDON 1920 L223 3f COPYRIGHT, 1920, BY THE INSTITUTE FOR GOVERNMENT RESEARCH .b -7 1920 Printed in the United States of America A 5 5 9 (3 9 6 The Institute for Government Research Washington, D. C. The Institute for Government Research is an association of citizens for cooperating with the public officials in the scientific study of administrative methods with a view to promoting effi- ciency in government and advancing the science of administra- tion. It aims to bring into existence such information and materials as will aid in the formation of public opinion, and will assist officials, particularly those of the national govern- ment, in their efforts to put the public administration upon a more efficient basis. To this end, it seeks by the thoroughgoing study and examination of the best administrative practice, public and private, American and foreign, to formulate those principles which lie at the basis of all sound administration, and to determine their proper adaptation to the specific needs of our public administration. The accomplishment of specific reforms the Institute recog- nizes to be the task of those who are charged with the responsibility of legislation and administration ; but it seeks to assist, by scientific study and research, in laying a solid foundation of information and experience upon which such reforms may be successfully built. While some of the Institute's studies find application only in the form of practical cooperation with the administrative officers directly concerned, many are of interest to other administrators and of general educational value. The results of such studies, the Institute purposes to publish in such form as will insure for them the widest possible utilization. Robert S. Brookings Chairman Frank J. Goodnow Vice-Chairman Edwin A. Alderman Robert S. Brookings James F. Curtis, R. Fulton Cutting Raymond B. Fosdick Felix Frankfurter Frank J. Goodnow Jerome D. Greene Arthur T. Hadley OFFICERS TRUSTEES James F. Curtis Secretary Frederick Strauss Treasurer Cesar Lombardx A. Lawrence Lowell Samuel Mather Charles D. Norton Martin A. Ryerson Frederick Strauss Theodore N. Vail Robert S. Woodward DIRECTOR W. F. Willoughby EDITOR Lewis Mayers ACKNOWLEDGMENT The author is indebted to Dr. F. A. Cleveland and Dr. W. ¥. Willoughby for their invaluable direction in the preparation of this book, to Professor Howard L. McBain, Dr. I. M. Rubinow and Mr. Lewis Meriam for reading the manuscript and making helpful suggestions, and to the editors of the Bureau of Municipal Research and of the Institute for Government Research, Dr. W. F. McCaleb and Dr. Lewis Mayers. Paul Studensky. CONTENTS PART I. THE PROBLEM OF TEACHERS' PENSIONS Chapter Page I. The Evolution of Teachers' Pensions in the United States 4 Mutual Aid Associations 4 The Beginnings of Unsound Legislation, 1894-1896 i5 Development of Governmental Contributions 23 Unsoundness of Funds Demonstrated 26 Present Extent of Teachers' Pension Systems 29 Growth of State-Wide Systems 30 Conclusion: Present Tendencies and Forces 34 IL The Teachers' Pension Problem Outlined Groups of Persons to be Included 2>7 Extension of Systems to Contingencies other than Super- annuation 40 Conditions under which Benefits Should be Granted... 41 Amount of Benefits 47 Division of Cost between Employer and Employees 48 Contributions of Individual Members Si Compulsory Participation 54 Right to Management 55 Securing Enactment of the System 56 in. Superannuation Benefits Eligibility for Superannuation Benefits 57 Compulsory Retirement 63 Amount of Superannuation Benefit 63 Provisions for Minimum and Maximum Pensions 72 IV. Disability Benefits Conditions under which Disability Benefits are Provided. 79 Amount of Disability Benefits 80 Medical Examinations and Reexaminations 82 V. Death and Withdrawal Benefits Death Benefits 86 Benefits at Resignation or Dismissal 90 Withdrawal and Loan Privileges 92 VI. Determining the Cost of Benefits Growth of Pension Payments 95 Cost as Related to Method of Financing System 100 Actuarial Determination of Cost lOi The Problem of Accrued Liabilities 104 Inadequacy of Contributions in Existing Systems 107 Estimating the Liabilities of a Going System 113 Cost and Liabilities Involved under Different Benefits... 115 xi CONTENTS Chapter Page VII. The Division of Cost Between Government and Teachers The Wholly Contributory System ii8 The Non-Contributory System I19 The Joint or Partly Contributory System 120 The Division of Cost between Teachers and Govern- ment in Existing Systems 122 VIII. The Government's Contribution Various Elements Determining Amount of the Govern- ment's Contribution 125 Coordinating the Various Elements of the Contribution. 135 Unsound Methods of Financing the Government's Con- tribution: The Cash Disbursement Method 135 Unsound Methods of Financing the Government's Con- tribution: Using Special Revenues not Determined by Pension Needs 137 Unsound Methods of Financing the Government's Con- tribution: Fixing Rates not Related to Pension Needs. 140 Unsound Methods of Financing the Government's Con- tribution: Amount of Contribution Discretionary 142 IX. The Teacher's Contribution Contribution not on a Cost Basis : Uniform for all Mem- bers, Irrespective of Age, Salary, Sex and Service 145 Contribution not on a Cost Basis : Graduated According to Salary 145 Contribution not on a Cost Basis : Graduated According to Length of Service 146 Contribution not on a Cost Basis : Graduated According to Salary and Length of Service 146 Contribution of a Uniform Percentage of Salary for all Members, with Benefits Adjusted on a Cost Basis 148 Rate of Contribution Graduated According to Age and Salary : Benefits on a Cost Basis 150 Distributing the Contribution over the Period of Service. 151 Minimum Contribution as a Prerequisite to Full Benefit. 152 X. Compulsory Participation and the Right to Management Compulsion for New Appointees: Option for Teachers Already in the Service 15? Compulsion for Present Teachers 156 The Selection of the Managers of the System 157 PART IL TYPICAL TEACHERS' PENSION SYSTEMS OF TO-DAY XI. Systems without Reserves Pittsburgh Teachers' Retirement Association 166 New Jersey 35-Year Service Pension System 169 Maine School Pension Fund 173 XII. Systems with Inadequate Reserves : State Systems Illinois Teachers' Pension and Retirement Fund 176 New York State Teachers' Retirement Fund 179 xii CONTENTS ^TTAPTER "1 New Jersey Teachers' Retirement Fund •••••••• ^^^ Minnesota Teachers' Insurance and Retirement Fund... IQO Wisconsin Teachers' Insurance and Retirement Fund... I93 California Teachers' Retirement Salary Fund I95 Virginia Retired Teachers' Fund I98 Michigan Teachers' Retirement Fund 200 XIII. Systems with Inadequate Reserves: Local Systems Philadelphia Teachers' Retirement Fund 203 Cleveland Teachers' Pension Fund 207 Boston Teachers' Retirement Fund 209 Boston Teachers' Permanent Fund 212 Baltimore Teachers' Retirement Fund 214 Buffalo Teachers' Retirement Fund 21O New Orleans Teachers' Retirement Fund 2i« Denver Teachers' Retirement Fund 219 XIV. Systems with Inadequate Reserves : The Chicago Fund The Fund Wholly Contributory : 189S-1907 220 City Contribution and Compulsion for New Entrants Since 1907 .••••. ^^5 First Step towards Actuarial Reorganization in 1917 231 XV. The Massachusetts Fund, the First Scientific System ; The Connecticut Fund History of the System 234 Provisions of the System ^i*^ Connecticut Teachers' Retirement Fund 239 XVI. The New York City Fund History of the Old Fund 243 The Bill of 1916 • • 240 The Enactment of the Reorganization Law of 1917 255 Provisions of the New System 259 XVII. The Pennsylvania System Benefits 269 Teachers' Contributions 271 State Contribution 271 Reimbursement 272 Valuation ^_^ Management ^73 Relation to Local Funds 273 XVIII. The Scientific Pension Laws of 1919: New Jersey, Ohio and Vermont New Jersey ^74 Ohio 282 Vermont 287 Appendix I. Comparative Analysis of Teachers' Pension Systems 295 2 References to Laws, Statistical Reports, etc., Relative to all the Teachers' Pension Systems in the United States 307 3. Laws Providing for Sound Teachers' Pension Systems 34^ (a) Massachusetts 34^ (b) City of New York 35d xiii CONTENTS (c) Pennsylvania 374 (d) Connecticut 386 (e) New Jersey 392 (f) Ohio 410 (g) Vermont 425 4. Actuarial Tables 431 5. Bibliography 441 XIV EDITORIAL INTRODUCTION This volume constitutes one of a series of studies in the field of public administration made possible by a generous appro- priation for this purpose by the Rockefeller Foundation. With the approval of the committee to which the disposition of this fund was given and under the editorial direction of Dr. F. A. Cleveland, this study was begun, but was later transferred to the Institute for Government Research under whose direction it was completed and by which it is now published. The Institute, early in 191 8, issued a volume by Lewis Meriam, a member of its staff, dealing comprehensively with the Principles Governing the Retirement of Public Employees. That volume, as its title indicates, dealt with all classes of gov- ernment employees and was a critical and constructive, rather than a descriptive study. The present volume deals with only one class of public employees and is both critical and descrip- ive. It aims to give the provisions that have been, or should be, made with regard to the retirement of a group of public employees which, by its size and special character, makes of this problem one requiring independent consideration. The importance of this problem of efficient public adminis- tration has for years been recognized, and for the solution of it a wide variety of devices have been employed, but only in a few instances have these schemes operated satisfactorily. The extent of the reorganization that must be effected, and its great significance can be appreciated when the fact is noted, that of the nearly one hundred teachers' retirement systems now in operation in the United States, only a few can escape total collapse unless fundamentally altered. Some of these systems include ten, fifteen, or even twenty thousand teachers each. Twenty-two of them are state-wide in their operation. They apply to over three hundred thousand public school teachers, i. e., to nearly one-half of the total number of teachers in the United States and they have liabilities in the neighbor- hood of half a billion dollars for the discharge of which, in large part, there are no assured assets. Besides the necessity for putting these systems upon an equitable and sound financial basis, there is need for the establishment of retirement allow- Editorial Introduction ance systems in those states and localities which as yet have none. At present seventeen states have neither state nor local pension systems for their public school teachers, and in twelve of the remaining states there are only a few local systems. Approximately one-half of all the public school teachers in this .country are not covered by any pension provisions.^ It need not be pointed out that the making of adequate finan- cial provision for the retirement from service of teachers whose abilities have become impaired by age or otherwise is not simply a matter of equity and humanity and of signifi- cance from the standpoint of general social betterment. In several respects it is a question of direct administrative effi- ciency. For not only do proper retirement provisions make it possible to relieve the working force of relatively incom- petent members, but the teaching career is made more attrac- tive and thus draws to its service a better personnel and stimu- lates its members with a higher esprit de corps. A soundly constructed teachers' pension system is one that must meet a variety of requirements. Its financial arrange- ments must be such that permanent solvency is assured; the incidence of its burdens and benefits must be justly appor- tioned not only as between the different groups of teachers, but as between them and the public, as represented by the government; it must be so organized and administered that the greatest possible efficiency of service on the part of the teaching force will be secured; and, finally, it must make reasonably adequate provision for disabilities to the teachers concerned whether arising from old age, sickness or accident. So far as possible, too, provision should be made for satisfy- ing the equities involved when teachers are dismissed or them- selves desire to resign their posts. The present study, while not a pioneer one in the sense of being the first attempt to make a scientific investigation of teachers' pensions in the United States, is the first compre- hensive, critical, and descriptive treatment of the subject. ^An investigation made in 1917 showed that there were then ninety-four teachers' retirement systems in operation. These systems covered 332, 554 teachers. This did not include various mutual benefit associations, such as exist in St. Louis and Washington, D. C, with voluntary memberships and wholly financed by the teachers themselves. This Hst of ninety-four was made up entirely of schemes which were official and integral parts of the public school systems concerned. It should be noted, however, that this figure is obtained by including the entire teaching staffs within the jurisdictions concerned. The actual xvi Editorial Introduction In 1906, the state of Massachusetts appointed a commis- sion, with Mr. Magnus W. Alexander as chairman, to study the general problem of "old age pensions, annuities and insur- ance." Incidentally, the commission touched upon the prob- lem of pensions in the public service and published in 1910 a report which stimulated a good deal of sound thought in the country. Beginning in 1910, Mr. Herbert D. Brown pre- pared a series of reports, all of which have been published by the national government, dealing with the civil service retire- ment system of Great Britain, New Zealand and New South Wales, Australia, and the problem of establishing a retire- ment system by the national government for its employees. The New York Bureau of Municipal Research became inter- ested in the pension problem soon after its establishment. It made a thorough actuarial investigation of the New York City Police Pension Fund — the first actuarial investigation of a civil service pension fund in this country — and prepared a report, which resulted in the establishment in New York City of a commission to investigate all the nine pension funds, including the teachers' fund, in operation in New York City and led to similar actuarial investigations of funds in other cities. The sound pension thought which emanated from these three active centers, Washington, New York City and Boston, spread over the entire country and affected the teach- ers' pension movement. The first to consider the establishment of a sound pension system for teachers was the state of Massachusetts. The state board of education was directed in 191 1 to investigate the establishment of a state-wide retirement system for teach- ers and to submit its recommendations before January, 1913. The investigation, aided by Mr. C. A. Prosser and Mr. W. I. Hamilton, resulted in the estabHshment in 1913 of the first scientifically constructed teachers' retirement system in this country. New York City came next with several attempts to reor- number of persons covered must have been considerably less since many exercised the right, ordinarily granted at the outset, to decline to be en- rolled. Participation of all new appointees being made compulsory, how- ever, the proportion of non-participants has been steadily diminishing. It should further be noted that the figures stated were compiled from the report of the United States Bureau of Education for 1917 and cover only the year 1915-16. Moreover, for some of the locaHties, the number of teachers was not given in the federal reports and had to be obtained through correspondence with the local pension fund officials. Editorial Introduction ganize its insolvent retirement fund for teachers. It finally effected a sound reorganization in 19 17. In the meanwhile the Carnegie Foundation for the Advancement of Teaching became convinced of the necessity for a reorganization of its retirement system for college professors. It began a study of the problem in 19 12 and since that time has reviewed in its annual reports the pension progress in the country, thus greatly contributing to the scientific consideration of the problem. The establishment of the sound systems of Massachusetts and New York City gave considerable impetus to the move- ment of reorganization. Connecticut followed the example of Massachusetts in establishing a similar system for its teachers. The state of Pennsylvana profited from the reor- ganization experience of Massachusetts and New York City, and established a new system introducing certain novel fea- tures and improvements. Illinois and New Jersey have appointed state commissions which are now considering the question of the reorganization of their teachers' retirement systems. The reports of each of these investigating commissions, arid the other publications mentioned, presented mainly a pic- ture of one or another local situation and discussed certain aspects of the problem, but made no attempt to survey the entire field of teachers' pension systems in this country, nor to examine the whole movement and summarize the princi- ples evolved and results accomplished. As the movement pro- gressed the need for such a broad investigation has been felt, and to answer this need the preparation of the present volume was undertaken. The first step in the investigation was to make a search through the session laws and codes of various states for all the laws which had been enacted with reference to teachers'' pensions. Annual school reports of the United States Bureau of Education and of the different states, official documents, educational magazines and other publications, which had appeared on the subject during the last thirty or forty years, were scrutinized, and an exhaustive bibliography was pre- pared. At the same time letters were sent to the officials in charge of the different systems, the existence of which was ascer- tained, requesting copies of financial reports, statistics and Editorial Introduction other information necessary for determining their financial operations and present condition. These letters elicited favor- able replies and secured considerable and very valuable ma- terial. In the chapters constituting Part I of the volume now published a description of the evolution of teachers' pensions and an analysis of the general problem of providing retirement allowances to teachers is given, together with a discussion of the principles governing the establishment and maintenance of sound systems. In Part II an account is given of the move- ment in the United States and a descriptive and critical exam- ination made of the history and present condition of the more important systems now in existence. Twenty-four systems were thus selected for detailed study, the main features de- termining their selection being their age, sources of support and scope of membership. The funds of fifteen of the systems thus selected are in part provided by contributions from the teachers organized under them ; four derive their funds wholly from this source ; while five of them make no demands upon the purses of the prospective beneficiaries. In the aggregate, it is estimated that the twenty-four systems described affect over three-quarters of all the teachers embraced in the ninety- four pension systems now in operation in the United States. In general, it may thus be said that the volume, combining as it does a discussion of principles with the description of the experiences of existing systems, should be not only a substan- tial contribution to the science of administration, but an imme- diate and practical aid to teachers, school authorities, legisla- tors and all other persons interested in solving the problem of reorganizing their own systems or establishing systems, in case they already have none, upon bases that have been tested by experience and are in accordance with sound social, eco- nomic, and financial principles. Furthermore, most of the considerations and principles which apply to the educational services of the state are applicable to the other administrative branches of our federal and state governments. Mr. Studen- sky's volume, therefore, finds a very proper place in the series of "Studies in Administration" which the Institute for Gov- ernment Research is publishing. During the opening months of 19 19 while this volume was in press, three states. New Jersey, Ohio and Vermont enacted laws establishing new pension systems on approved principles. Editorial Introduction These laws have been fully discussed in a concluding chap- ter which was added to the book while in press, and the laws themselves are reproduced in full in Appendix 3. It was not found practicable, however, to amend the text at every minor point to take account of the establishment of these new systems. W. F. WiLLOUGHBY. PART I THE PROBLEM OF TEACHERS' PENSIONS CHAPTER I THE EVOLUTION OF TEACHERS' PENSIONS IN THE UNITED STATES While the problem of teachers' pensions^ may in one sense be regarded as a purely technical one, it is in reality also his- torical. Only in the light of an understanding of the way in which the problem has assumed its present form, and of the attitude toward it on the part of both teachers and legislators that has resulted, can the technical considerations developed in the subsequent chapters be successfully applied. The history of the movement for teachers' retirement pen- sions in this countr}^ may be divided into three periods. The first period opened in 1869 with the establishment of teachers' assurance and mutual aid associations. The second period began in 1894 with the securing of retirement legislation, but without due regard to sound principles. The third period is now opening with a movement toward reorganization of exist- ing retirement funds and the establishment of new funds on a sound basis. The leading role in the movement during the first two periods was played by the teachers' associations. The atti- tude of the government and the public was one of indifference. With the new period, however, the government and the public have begun to take an active part in the teachers' retirement movement, and an intelligent cooperation between them and the teachers is developing. 'The term "pension," as applied to amounts paid to employees after retirement from active service, is objected to by some as implying a pay- ment charitable in nature, that is, as a gift for which no full equivalent is returned on the part of the recipient. Therefore, viewing these pay- ments as essentially deferred payments for services actually rendered, we find employed such terms as "retirement allowances," "retirement salaries," "service annuities," or simply "annuities." In this volume, how- ever, the writer has not deemed it necessary to forego the use of the term pensions, although, when used, he does not intend to imply that a charitable element is involved. Teachers' Pension Systems in the United States Mutual Aid Associations. While sporadic organizations of teachers for social or other special purposes have no doubt existed in this country from early days, no recorded instance of a teachers' mutual aid society is found until 1869. In that year, in a certain large school in New York City, collection lists were several times circulated among the teachers with an appeal to them to contribute towards the payment of funeral expenses of a fellow teacher who had left no funds. It then occurred to Mr. Vanderbilt, a young and active teacher of one of the New York City schools, that instead of soliciting volun- tary contributions each time a death occurred, it would be far better to organize an association in which each member would pledge himself to contribute one dollar whenever called upon and would also be assured that a similar benefit would be paid upon his death by a similar assessment upon all other members. He called a meeting of teachers and they established the New York City Teachers' Mutual Life Assurance Association. The significance of the establishment of this association was the fact that besides mere philanthropy it introduced an ele- ment of self-protection — the contributor not only helped to defray the expenses of funeral to a fellow teacher but also secured a right to a like benefit for himself. Probably no one at that time thought that the estabhshment of this modest organization marked the beginning of a great mutual aid movement and later on of a pension movement among teachers. In Brooklyn, two years later, a similar organization was established. But the example of the teachers of these two cities was followed by the teachers of other cities only slowly. The Jersey City teachers founded an association in the year 1880 and Camden followed in 1885. The provisions of these associations as compiled in 1897 ^^^ shown on the following page.' 'The following data are extracted from a table published in Review of Reviews, June, 1897, p. 711. Evolution of Teachers' Pensions Name Date of Estab- lish- ment Member- ship Assess- ments on Call Annual Dues Amount of Benefits Sick Death Annual Income Capital New York City Teachers' Mu- ual Life Assur- ance Association 1869 2009 $1 None None $500 None Brooklyn Teach- ers' Life Assur- ance Association 1871 1557 $0.50 u « $300 a $556 Jersey City Life Assurance Dept. Teachers' Asso- ciation 1880 300 $1 $300 Camden Teach- ers' Insurance Benefit Associa- tion 1885 120 $1 « « $120 « The benefit provided in the association of Camden was too small to cover more than the bare funeral expenses, but in the other associations the benefits provided the dependents with a few hundred dollars above the amount necessary for a modest funeral and might therefore be properly- termed life insurance. Viewed as measures of life insurance these associations appear primitive and imperfect. They re- quired no regular annual assessment but assessed their mem- bers whenever necessary; they had no capital and they con- sidered capital unnecessary. They did not understand that insurance could be sound only if based on mortality tables, and that the number of deaths among their members would increase in the future and would make the assessments on the younger members too burdensome. Sick Benefit Associations. Next to the problem of bury- ing the teacher and helping his dependents the problem of the sick teacher and the possibility of offering him at least temporary relief attracted the attention of the leaders of the mutual aid movement. Most of the associations established Teachers' Pension Systems in the United States after 1885 provided not only death benefits but also sick benefits payable for certain limited periods. The teachers of Detroit established such an association in 1888; those of St. Paul did the same in 1890; the Chicago teachers soon followed in 1891, and were joined by the teachers of Des Moines, Lin- coln and Evansville. Meanwhile a still more rapid progress was made in the East, among the teachers of Rochester, Buffalo, Paterson, Hoboken, Trenton, New Bedford, Swarth- more, Scranton, Baltimore, Savannah and others. In the development of these sick benefit societies, impor- tant improvements in the matter of financing the benefits were introduced. Unlike the lump sum death benefits, the sick benefits, which had to be paid day after day to many bene- ficiaries, could not be financed by means of sporadic assess- ments and without capital on hand. Regular annual dues were therefore introduced and the attempt made to build up permanent capital funds. Nevertheless, these associations were just as unsound financially as the pure life assurance societies earlier discussed. The amount of dues and benefits and other information about some of these associations are shown in the table on the page opposite. Old Age and Disahility- Annuity Associations. There were, of course, numerous cases which the life assurance and sick benefit associations could not help; for example, that of a teacher becoming permanently disabled through sickness, or becoming too old to continue teaching. Encouraged by the apparent success of the life assurance and sick benefit funds, the leaders of the teachers decided to take up this difficult problem and to organize associations which would provide these teachers not merely with temporary relief but with a permanent and urgently needed one in the form of annuities payable to the end of their lives. The teachers of New York City and Brooklyn were the pioneers of this movement. They established their voluntary 6 Evolution of Teachers' Pensions ^ 3§ c ?, 85 83 y>^ o ^ o 3? S8 S 8 1-H O S2g H< 8§ o 4) 4J >^ p; 2 H o Ht; H- „4 O 4i Teachers' Pension Systems in the United States annuity associations in the year 1887. From New York this idea was carried to Boston, where it resulted in the estabHsh- ment of a similar association two years later. Philadelphia followed in 1890; Cincinnati in 1891 ; Massachusetts, Wash- ington, D. C, Connecticut, Baltimore and other cities and states during the next few years. The establishment of these and other associations of the same type met a great need among teachers. For the first time in the history of the educational system in this country, there was brought before the teachers and before the public the problem of the retirement of the aged and disabled teacher. The provisions of most of these funds were patterned after the provisions of the New York fund. In most of them annu- ities were fixed at $600, the exceptions being the associations of Cincinnati and Omaha, with annuities of $500 and $400 respectively, and the association of Brooklyn which provided annuities of one-half the fixed salary of the retiring teacher. Annuities were to be paid to those members who retired from the teaching service under either of the following condi- tions : ( I ) completion of a certain length of service, which varied from 30 to 40 years in different systems, frequently with a lower requirement by five years for women than for men; (2) a proof of disability, irrespective of the length of service. The money necessary for the payment of these benefits was to be provided by means of annual dues from the members of the association at the rate of i per cent of their salary and was to be supplemented by donations and voluntary contributions from the public. Several of the new associations combined life insurance^ sick benefits and annuities. The Philadelphia fund, estab- lished in 1890, and the Washington, D. C. fund, established in 1894, were of this type. The constitution of the Phila- delphia fund stated that : The object of this association shall be to provide for and to furnish pecuniary aid from time to time to such of its 8 Evolution of Teachers' Pensions ■■DS lab" 8S O o ■^g §3 ti IS" si 11 "s i?!« g 6u^ T T i : TT II ^ « c Zhca •S Co Q-c o U.ti.9 cqSS a,-g< ufec Sho p^hS Uo; caS< o<<: III fi Teachers' Pension Systems in the United States members as shall be incapacitated from teaching in the pub- lic schools of the city of Philadelphia by reason of sickness or advanced age — and also to receive, hold and expend dona- tions of money for aid of other teachers not hereinbefore pro- vided for in such manner as the donors may prescribe. In framing the provisions of these associations and in mak- ing their appeals for members, the promoters of this move- ment had to take into account the differences between the older and younger teachers and between the lower and higher paid individuals. In the case of the older teachers an appeal could be made on the ground of personal advantage. The older teachers were entering the associations mainly with a view to protecting themselves against becoming dependent in their old age. They realized that in return for their small contributions the associations offered them an annuity which no insurance company would offer them at the same price. If they joined the fund they could soon apply for these benefits. They had little to lose and much to gain; therefore, they cheerfully joined the associations. For this reason the major- ity of the membership of these associations consisted of older teachers. A different appeal had to be made to the younger teachers, for they did not fear the coming of old age and did not seek to protect themselves against distant risks. The time, thirty or forty years distant, when they could claim the benefits from the fund seemed so remote, the possibility of remaining so long in the service seemed so dubious, and the reasons for worrying about the dim future so slight, that they cared little whether or not they would ever receive any benefits from a fund. Besides, they wanted their entire salary for their imme- diate enjoyment and did not care to deprive themselves of even I per cent of that salary for the sake of that vague future. For this reason it was extremely difficult to make the young teachers enter the societies. And yet they constituted the greater number and it was upon their support that the success of the associations depended. The few young teachers who Evolution of Teachers' Pensions did join the associations did so mainly to help the older mem- bers of the profession. The small expense connected with membership they justified as their contribution to the welfare of the profession. Only by appealing to their idealism could the promoters of the associations succeed in soliciting their support. No serious conflict between the lower and higher paid teach- ers arose, however, in this movement. The lower grade teachers were in the majority and favored the idea that all members, regardless of their salary, should receive the same amount of benefit but should pay for it in proportion to their salary. In this way they would bear a smaller part of the burden than the higher paid teachers. The latter, expecting soon to retire, readily agreed to pay the higher rate. Brooklyn was the only fund which adopted a different principle, i. e., that members should contribute in proportion to their salary and should also receive benefits proportionate to their salaries. This principle was far less popular with the lower grades and did not, therefore, gain wide acceptance in the mutual aid movement. In fixing the rate of contributions the promoters of the as- sociations had to take into account the fact that most of the teachers would not enter the association if a high rate of contributions were required. For this reason a contribution of I per cent of salary was adopted. A very important question with regard to contributions of the teachers whose connection with the association would terminate through resignation, dismissal or death before they completed the required length of service came now to light. The principle was adopted that they should forfeit all their contributions, and that the forfeited contributions should be used to augment the fund available for the payment of bene- fits to those teachers who survived, completed the required period of service, and were thus entitled to retirement. These forfeitures were considered as one of the most important II Teachers' Pension Systems in the United States sources of revenue of the associations. This principle, as applied to the retirement problem, was borrowed from the oldest retirement funds abroad, where it is known under the name of "tontine." In some associations a teacher who re- signed or was dismissed received a refund of one-third of the amount contributed. Objections raised even to partial re- funds were to the effect that the interests of the individual who resigned or was dismissed from the profession deserved less consideration than the interests of the entire profession.^ Attitude of Government and Public. The government took no interest in the mutual aid movement among the teachers. It saw no reason for interfering in what it re- garded as a private teachers' association. Neither did the teachers seek the assistance of the government in the affairs of their organizations. At that time they were probably as reluctant as the government to admit any form of paternal- ism. In this respect both sides followed the traditions of the American government and of American public opinion. Neither the teachers nor the government officials then realized that the participation of the government in this move- ment was desirable on the ground that an unsatisfactory solu- tion of the old age and disability problem in the teaching serv- ice vitally affects the efficiency of that service and the inter- est of the schools. The idea of efficiency of service then did not occupy as prominent a position in the mind of the gov- ernment administrator, the government employee and the pub- lic at large as it does to-day. Government was managed loosely and public opinion was not as self-conscious and as effective as it is at the present time. At the same time the teachers felt that their cause deserved a sympathetic attitude from the public and that they could obtain voluntary contributions from the public without hav- ing recourse to the governmental machinery and incurring the danger of falling under its control. Realizing the need ^The inequitable features of the "tontine" are more fully discussed on pp. io8, 109. 12 Evolution of Teachers' Pensions for a larger capital and the inadequacy of their own con- tributions, they set to work arranging bazaars for the benefit of the associations, soliciting the aid of charitable ladies and collecting funds among public-spirited citizens. The public responded generously to the teachers' campaign. A most successful bazaar was arranged in Boston, by which more than $56,000 was raised. During the first twelve years of the existence of the New York City association, the teach- ers accumulated from their own contributions about $64,000 and added to this about $76,000 from bazaars and private donations. In Brooklyn, Philadelphia, Washington, D. C, and Baltimore, the associations secured more than half of their capital by means of bazaars and voluntary contributions from the public. Failure of Annuity Associations. Soon, however, certain features of the annuity associations met with criticism. In the first place the voluntary feature caused disappointment to their promoters because the teachers responded so slowly to their appeals. The promoters became tired of the continu- ous campaign to secure members, and began to favor the in- troduction of some measure which would compel all teachers to join the associations and thus increase its income. Secondly, the private character of these associations was objected to. It was urged that the retirement of old teachers benefited the schools and should, therefore, be made a matter of governmental concern. The following extract from a re- port of the Boston Mutual Benefit Association, which appeared in 1894 in the annual report of the Boston superintendent of schools, illustrates this idea: But for this beneficent institution many of these teachers would still be in the employ of the city although unable to do satisfactory work because of ill health or the infirmities of age. They have now given place to younger and more effi- cient teachers and the city secures the benefit while from the association they receive a comfortable income. Nor is this all. The nearly 1000 members feeling far less anxiety for the 13 Teachers' Pension Systems in the United States future because of membership, are daily doing better work than they could do if the shadows of coming adversities were ever resting upon them. The methods of securing the financial support of the public by appealing to individual philanthropy were also criticized because the income they provided was irregular and after all inadequate. Criticism centered on these defects. The less apparent but more fundamental defect — their actuarial unsoundness — escaped attention. To organize a sound annuity system is not an easy task. It involves the use of mortality rates, in- terest tables and mathematical formulae, by means of which an actuary can determine the cost of the annuities and the amount of premiums which should be charged at different ages. The annuity systems of every insurance company are organized upon this basis. But the mutual aid and annuity systems of the teachers were not thus organized. Their pro- moters thought that they could operate them without using mortality tables and without knowing the cost of annuities, and that they could require the same dues of all members and pay the same annuities to all, regardless of the difference in their ages. They fixed the dues at the uniform and entirely inadequate rate of i per cent of salary, and they wrongly ex- pected that the voluntary contributions from the citizens would sufficiently supplement the fund. Of course, with such serious defects these associations could not permanently exist. During the first few years when re- tirements were not numerous and the disbursements were small, their income appeared more than adequate. However, in the course of time the insufficiency of their income was bound to appear. The first association to which this happened was that of Brooklyn. New York City and other associations were next affected. The disbursements exceeded the receipts, benefits were prorated and their capital reduced. The old members 14 Evolution of Teachers' Pensions faithfully remained in the fund, because they still expected to receive some benefits from it, but the young members imme- diately lost all interest for the "lost cause" and withdrew in large numbers. These withdrawals caused a further panic among the members of the organizations and thus accelerated their collapse. The Beginnings of Unsound Legislation, 1894- 1896. The idea that soldiers and public employees should be "pen- sioned" for their public services, i. e. should receive on their retirement from the active service an annuity payable to the end of their lives either entirely or partly at the expense of the government, or, if at no expense to the government, at least under its management, and that such "pensions" should be established and governed by special laws, was imported to this country from Europe. There pension laws for the army and navy and the state and municipal employees, including teachers, had existed for many years. In the United States this idea was applied first to the army and navy, next, in 1859, to the policemen in the larger cities, and later to the firemen. But it was not at first applied to teachers. A comparison in the minds of the teachers of their status with that of the teachers abroad and the policemen and firemen in this country was, therefore, inevitable. As early as 1879 ^^^ 1 88 1 in New York City and Brooklyn, and in 1891 in New Jersey, small groups of teachers were discussing the idea of obtaining pension legislation. Two tendencies were apparent; one in favor of a straight pension payable entirely at the expense of the government, the other in favor of the establishment of a contributory retirement fund. The first made little headway, as public opinion was opposed to it. The latter made no considerable progress until a few years after the establishment of the first private annuity associa- tions. Then it began rapidly to gain in strength, scope and clearness. In the first place, the operation of these associa- tions strongly supported the contention that the retirement of 15 Teachers' Pension Systems in the United States old teachers benefited the schools and the government and should, therefore, be made to some extent a matter of govern- mental concern. In the second place, the apparent weakness of these voluntary associations offered strong support to the idea that legislation should be secured officially establishing retirement systems, compelling the teachers to enter, and mak- ing detailed provisions for their retirement. Lastly, the ob- vious insufficiency of the income of the annuity associations and the disappointment in private philanthropy as a source of income fostered the idea that the government should bear either a partial or entire responsibility for the adequacy of the retirement funds. Weak attempts to secure pension legislation were made in New York City and Brooklyn as early as 1879; and such attempts were from time to time repeated by the teachers of that city and of other cities in various parts of the country. The board of education in New York City was opposed to retirement legislation and the task of winning over the legislators and the governor was a difficult one. In 1894, after several failures, the teachers prepared a very mild measure. It provided for the establishment of a fund the resources of which were to come from deductions made from the pay of the teachers because of absence. No contributions were re- quired of the teachers. Despite the opposition of the board of education, the support of the governor was secured and thus in 1894 the first legislation creating a teachers' pension fund in this country was enacted. It is notable that this pioneer legislation should have adopted no definite principle in the matter of whether the teachers or the government, or both sides, should support the system. The form of revenue was such as to obscure its real derivation. It was generally accepted that the revenue from absence de- ductions was derived from the teachers, although as a matter of fact it really came from the public treasury.^ ^The fund was also authorized by the law to receive donations, lega- cies, etc. 16 Evolution of Teachers' Pensions Pensions of one-half of the final salary, not exceeding $i,ooo, could be granted by a two-thirds vote of the board of education to teachers mentally or physically disabled for the performance of duty, upon the recommendation of the city superintendent. The service requirement was 30 years for women teachers, and 35 years for men teachers. The board of education was given complete charge of the fund and the establishment of by-laws for its management. It was em- powered to reduce pensions to a uniform rate. The comp- troller of the city was made treasurer of the fund. The establishment of the New York City fund was the sig- nal for renewed activity on the part of the teachers in other cities; bills were prepared in some places by copying almost verbatim the New York City law, and in the two years fol- lowing no less than eight other funds were created. In 1895 funds were established in Brooklyn, Detroit, Chicago, St. Louis and San Francisco; and in 1896 in Buffalo, Cincinnati and the state of New Jersey. In every case membership in the fund involved a contribution to it. In three cases — San Francisco, St. Louis and New Jersey — membership was vol- untary; in the other five funds it was compulsory. Voluntary Funds Supported by Contributions. While the San Francisco and St. Louis funds were established in 1895, a year previous to the establishment of the New Jersey fund, the history of the latter is perhaps the most illuminating. The bill providing for the New Jersey fund was first intro- duced in the legislature in 1891, and called for a pure and simple half-pay pension, to be paid entirely by the govern- ment. The repeated defeat of this measure, which sought at a stroke to legislate in the most extreme form of govern- ment pension systems, finally caused the proponents of the measure to abandon their proposal in favor of a plan for a voluntary self-sustaining fund — in effect a mutual old age and invalidity insurance association, with the state as custo- dian and administrator of the funds. In this form the meas- ure became law in 1896. 17 Teachers' Pension Systems in the United States Under the provisions of the law, membership in the funds was purely voluntary; members were to contribute i per cent of their salary and were to receive on disability after 20 years of service an annuity of one-half of their salary, with a minimum of $250 and a maximum of $600. After the pas- sage of the law teachers had only three months in which to join. The difficulties involved in framing a pension system satis- factory to all elements were not escaped in this early attempt. Not a provision, not a clause does this law contain that has not been objected to by some teacher or by the press. Young teachers found twenty years too long; older teachers found it too short, and feared that it might operate against their tenure in office. The former thought twenty years should not be coupled with disability; the latter thought it should. Low salaried teachers said one per cent assessments were too small ; principals and superintendents said it was too large. Women thought we could not afford a maximum annuity of $600; men thought it too low. The press warned the teachers 'if you go in you cannot get out.' Teachers complained about the limited time given them for decision. Those who joined it thought all should be compelled to join and the philanthropic said the rebate clause was unnecessary. Certain principals influ- enced their teachers not to join. Others, willing to help any advance in the right direction, swung with full corps into line. Two places reported a meagre membership assigned as the reason that their teachers were from other states and did not expect to remain in New Jersey. The others were young and would probably marry.^ The table on page 19 shows the principal features of the San Francisco, St. Louis and New Jersey voluntary funds : It is of interest to note that the membership of each of these funds was less than one-half of the number of teachers eligible, and that the rates of contribution were so inadequate that after two years the larger part of their income had to be 'Article of Miss E. A. Allen in Review of Reviews, June, 1897. 18 Evolution of Teachers' Pensions lis .9 !:j .90^ s ^° Lo in en o 00 00 19 I lg ^ ^ 3 8 2 Teachers' Pension Systems in the United States used for the payment of benefits, leaving only a small portion of the income to be set aside as a reserve. The New Jersey fund was forced every few years thereafter to seek amend- ments allowing the teachers another opportunity to join the fund and offering them various inducements. Seven years later it was necessary to secure an amendment doubling and even trebling the rates of contribution and adopting the com- pulsory basis for all new teachers. Compulsory Funds Supported by Contributions. As al- ready indicated, the legislation adopted for Brooklyn, Buffalo, Cincinnati, Detroit and Chicago in the years 1895-96 was compulsory in character. The Brooklyn system differed from all the others, however, in that under it the strictly compul- sory feature covered only the new entrants. An option was given to teachers then in the service to join or not to join the fund, but once the option was exercised, the decision could not be changed. This semi-compulsory feature was a com- promise between the opponents and proponents of compulsion, and helped to overcome the opposition of some elements in the teaching force. It is interesting at this point to compare the effects of grad- ual and violent movements. Having started with a mild meas- ure the leaders of the movement in Brooklyn succeeded in their subsequent attempt to extend the compulsory feature to all teachers. On the other hand, in Chicago, the thorough- going compulsory feature created a reaction against the meas- ure and against its former leaders, resulting in legislation re- pealing the compulsory law and reverting to an entirely volun- tary provision. This extreme in turn almost wrecked the fund and led to another movement, this time, happily, for a mild compulsory law. The provisions of the early compulsory funds under dis- cussion are shown in the table on the page opposite. It is to be noted that in the case of all these funds the teach- ers contributed i per cent of their salary, whereas the govern- 20 Evolution of Teachers' Pensions 1 § § § § g CO" -n ci t> 1 CO U ^ C^] LO III 8 1 § 8 8 8 <^^ 8 00 LO" LO t-." c>r ti o 2 o CV] 8 Oi U ^£) LO ■^ CM CO >• z < t«. ii o g o 8 o i |i ■^ ^. CO '^ CO <: s. >. >. >. >. >. >> ■£| a §. a a a a iie ^ :^ :^ \N :^ ^ -oM 15 sill ^ S OLO coco i^ v2i coco LTJO i C^JCO ^s .i rt o C5 C c S5 c o ma z s, 1 :! o i - ^V. - X OJ - S a> (U-O ^ ^ ^ __; ^ ^ >.^ c'i s§ s s S s 2^ g g g g g CO 2 o 8 8 o 8 c^ a^ 2 N LO " "c i CO S Q o o ^ o o y s Ol t> zS r^ ^ I— t H Oil ^ LO LO LO CO CO a; ra c cr> en 00 00 QW^ ^ '-' '-' '-' >. o . Q Z D 3 d W) re ■s c ^ B _o 4-) to ■§ (U S iy 3 2 w o Q cq U •ti o 0> i "^ « .§ ill 21 Teachers' Pension Systems in the United States ment did not contribute at all, and that the benefits were fixed at one-half of the salary. The principle of a pension propor- tionate to salary, which a few years before was recognized only by the Brooklyn Aid Association, was thus adopted in all the five compulsory funds and was soon to become almost universal. Unsoundness of the Early Funds. The several pioneer funds, to which attention has been given, varied in matters of detail, but they were all alike in the unsoundness of the pro- vision made for their financial stability. They followed the unsound method which had been used by the mutual aid asso- ciations; pensions were paid from the annual income of the fund, and the balance of the income set aside as capital. No mortality rates were adopted and no attempts were made to determine the cost of retirement benefits, the Habilities of the fund to all its members, or the amount of income and reserve which the fund should possess if it was in the future to meet its obligations. In most of the systems a provision was adopted that in case of insuf^ciency of fund the benefits might be prorated, but it was optimistically thought that this would never happen. In some cases fair warning was given. At the establish- ment of the New Jersey retirement fund an actuary's report was published in the press, in which the progress of the fund was estimated for the next twenty years and the demonstra- tion made "in plain figures that on the most favorable esti- mates the fund must fall far behind the demands made upon it. More than half the income needed to meet obligations is provided for only by hopes." But tlie promoters of the early retirement funds scorned any suggestion that actuarial meth- ods should be invoked. In replying to an actuary's criticism of one of these annuity systems, its secretary wrote that "purely business principles would dictate that we make all restrictions as to age, health, etc. that insurance companies do" as if the entire technique of insurance companies in- Evolution of Teachers' Pensions volved nothing else but the making of a few simple restric- tions. And again, "We have hearts ready to respond to our needy ones and hands willing to work for them. Can the 'expert' credit these to the assets of his insurance company?'' The inevitable fruits of such an attitude as this were not long in showing themselves. Development of Governmental Contributions. The i per cent contribution which already proved inadequate in the ex- perience of mutual aid associations, was also bound to prove inadequate in the retirement funds. In Cincinnati this be- came clear within two years after the establishment of the fund; in other cities a longer period elapsed but the conclu- sion was equally plain. Unless the rate of teachers' contribu- tions were increased or another source of income provided, these funds could not continue to provide the promised bene- fits for any considerable length of time. In most cases the attempt was naturally made to secure aid from the govern- ment. The fact that retirement funds for teachers existed by legis- lative authority and were to some extent a governmental function, was now more or less firmly established in the minds of government officials and legislators. The wise action of the teachers in giving the government officials the adminis- tration and custody of the funds had resulted in the govern- ment becoming in a sense responsible for the sufficiency of the funds. These facts paved the way for the next logical step — that of securing legislation which would make the city contribute to the retirement funds. Here again the movement took the path of least resistance. The leaders of the teachers did not ask for a direct contribu- tion from the city budget, because this would have raised an undesirable discussion and perhaps an opposition on the part of the teachers. They looked for some special source of in- come which was lying idle or was used for miscellaneous 23 Teachers' Pension Systems in the United States contingencies and could be quietly diverted to the teachers' retirement fund. This may be illustrated by the case of New York City. When it began to be realized, in 1896, that in a year or two the income of the fund, which was derived wholly from ab- sence deductions, would be insufficient, the leaders of the movement concentrated their efforts upon securing a portion of the excise taxes. Their efforts were strengthened by two arguments : in the first place, the police pension fund had al- ready enjoyed for many years a portion of these taxes and there was no reason why the teachers' retirement fund should not also partake therefrom; in the second place, the idea of using money thus derived would find favor in the eyes of the public. The bill which they framed provided for a gov- ernmental contribution of 5 per cent of excise taxes, and they secured its passage without considerable opposition. Simi- larly, in Chicago, when the fund was found in the years 1901-07 to be on the point of wreckage, the attempt was made, with eventual success, to have the interest on the school funds turned over to the pension fund. The success of the teachers in getting the government to make in some form or other a contribution to their retire- ment fund led to further movements in the same direction. As the disbursements increased and insufficiencies of income threatened their funds, they faced the problem of either in- creasing their own contributions or else securing an increase of the government's contribution. Naturally the teachers pre- ferred the latter alternative. Under these conditions less and less emphasis was placed on the old idea that the teacher benefits by contributing to a re- tirement fund, and more and more on the newer idea that the school system receives the chief benefit. In trying to obtain an increase of the government's contribution the leaders of the movement stressed the argument that efficiency of serv- ice is secured by the operation of a retirement fund and that 24 Evolution of Teachers' Pensions the primary obligation to support the fund rests, therefore, upon the government. As a result, the governmental contribution, originally in- voked purely as a relief measure, came more and more to be regarded as properly the principal if not the sole source of income for the pension funds. In virtually all the funds the tendency was for the governmental contribution steadily to rise, while the teachers' contribution remained stationary or even diminished. The tendency is well illustrated by the expe- rience of Chicago. Up to 1907 the teachers were the only contributors to the Chicago fund. In 1907 and 1909 their leaders succeeded in obtaining a city contribution in the form of interest on school funds. Two years later they secured a city contribution equal to that of the teachers. They urged that the teachers had been "generous beyond their means," and that it was impossible for them to set aside from their salaries more than they had been contributing. Hardly three years passed after this increase of the city's contribution when the teachers secured still further legislation making it possible for the city to contribute twice as much as they themselves did. A similar process took place in Brooklyn and New York. To the Brooklyn fund, established in 1895, the teachers con- tributed I per cent of their salary. Next they got the city to contribute to their fund a portion of the excise taxes and (at the time of the consolidation of the Brooklyn with the New York City fund) the absence deductions. Believing that these two sources of income would be sufficient and that it would not be necessary for them to contribute anything, they secured at the same time the abolition of their own contributions. This resulted in a rapid decrease during the next three years of the excess income of the fund, a decrease which in 1905 threatened the fund with disaster. Realizing that they could not obtain at that time a further increase of the government's contribution, the leaders of the teachers were compelled to 25 Teachers' Pension Systems in the United States obtain the restoration of a provision for contributions from the teachers. Ten years later the increasing disbursements of the fund exceeded its receipts, and it became apparent that the rate of contributions was inadequate and would have to be increased, but so strong an opposition was shown by the teach- ers to any increase of their contributions that the unsound condition of the fund was permitted to continue. The atrophy, in the minds of the teachers, of the principles of self-help and mutual aid may be attributed in large meas- ure to two special conditions — the forfeiture of contributions at resignation and dismissal (the tontine feature) which made the young teachers lose interest in the fund, and the entirely compulsory and automatic way in which their contributions were exacted of them. The growing idea that the sole purpose of establishing a retirement system is to secure efficiency of service and that the government should, therefore, bear the entire expense thus found favor in a number of cities and states in which the establishment of a retirement system was contemplated. Between the years 1894 and 191 7, no less than six cities and five states adopted teachers' pension systems founded upon this principle. During the same years there were set up in sixty-four cities and fourteen states, systems which provided for joint contributions by the government and the teachers. Unsoundness of Funds Demonstrated. The government subsidies obtained by the unsound contributory funds en- abled them to continue for a number of years. But in the fixing of those subsidies the teachings of actuarial science were as a rule no more regarded than they had been in con- nection with the fixing of the teachers' contributions. Sooner or later the unsoundness of tlie funds and the impossibility of continuing them on the existing basis became apparent. The Chicago fund was one of the first to become insolvent. This happened in the year 1900. In response to the demand of a convention of contributors, the board of trustees employed 26 Evolution of Teachers' Pensions an actuary to examine the condition of the fund. The actuary reported that "in no ordinary case would the contribution of I per cent of salary provide an annuity much if at all exceed- ing $50 per annum," — yet the fund had been paying annuities between $400 and $600. The actuary suggested a fundamen- tal reorganization of the fund under which the contri- butions and annuities should vary according to age of the contributor. This advice however was not heeded. Instead the attempt was made to secure a contribution from the city. They seemed to think that the fund though actuarially un- sound could operate for many more years if the vast resources of the city would support it. Thus the report of the actuary was forgotten and the actuarial reorganization of the fund postponed. In New York City the fund operated for fifteen years with- out much doubt being raised as to its financial soundness. There, too, the confidence in the city's support overshadowed in the minds of the teachers any uneasiness as to the adequacy of their fund. Not until the disbursements exceeded the re- ceipts in the )'ear 1911 did the managers engage an actuary. But they did not adopt his recommendations as to putting the fund on an actuarial basis and increasing the contributions to an adequate rate because they knew that higher contributions would be solidly opposed by the teaching body. Instead, vari- ous makeshifts were proposed by the managers of the fund but were not, however, adopted by the city authorities, who ■were at that time already advised that the fund was inherently insolvent and would have to be liquidated and replaced by an altogether different system. Even where it is appreciated that the fund is not on an alto- gether sound basis, seldom is the extent of the liabilities in- curred as a result of such unsound operation adequately recog- nized. Thus, in the case of the old New York City fund, though the inadequacy of the fund had frequently been alleged, 27 Teachers' Pension Systems in the United States it required an actuarial investigation^ to demonstrate that the HabiHties incurred by the fund had exceeded its assets by the staggering total of over $54,000,000. The balance sheet of the fund, as developed by this investigation, and some of the comments of the city's commission on pensions on the facts disclosed are worthy of reproduction." BALANCE SHEET OLD NEW YORK CITY TEACHERS' RETIREMENT FUND June 30, 1914 LIABILITIES Value of 1,521 pensions already granted $11,581,210 Value of prospective pensions to teachers now in service 58,228,550 Total $69,809,760 ASSETS Funds in hand $882,715 Value of future i per cent salary contributions of teachers nov^r in service 4>i83,725 Value of future city contributions of unexcused absence de- ductions and 5 per cent of excise taxes which can be credited to teachers now in service 10,000,000 DEFICIENCY, UNPROVIDED FOR 54,743,320 Total $69,809,760 The liabilities of the fund show the discounted, or "present," value of future pension payments. In explanation, the total liability of the fund shown in the balance sheet in the sum of $69,809,760 represents the capital amount which, if invested on June 30, 1914, will be just sufficient, together with future interest accumulations at 4 per cent, compounded annually, to make future pension payments to teachers already retired and to those teachers in active service on that date who subsequently retire. * * * The total of the assets — $15,066,440 — is inadequate to equal the total liabilities of $69,809,760 by $54,743,320. The amount of this deficiency represents the capital, or reserve, which should have been on hand in the fund in addition to the $882,715 on June 30, 1914, to make the fund ^In an actuarial investigation of a fund, the actuary first ascertains the amount of future payments of the fund to all its present pensioners and active members until the death of the last present member, and the amount of contributions which the fund is expected to receive on account of its present members. Both these amounts, the liabilities and the assets respectively, are then discounted back to the date of valuation and the amount of the deficiency is obtained by subtracting the latter from the former. For further discussion of actuarial processes, see pages loi and 102. ^New York (City) Commission on Pensions, Report on the Teachers' Retirement Fund (1915), p. 30 ff. 28 Evolution of Teachers' Pensions solvent. It would have enabled the fund, together with future accumula- tions of 4 per cent compound interest, to supplement its inadequate future income. The large amount of shortage— $54,743,320— which . is a direct result of the fund's insufficient income during the 21 years of its past operation, does not give, however, an adequate idea of the seriousness of the situa- tion. It merely represents the deficiency as it existed on June 30, 1914- The fund's reorganization is made more difficult as time passes, since under the present method of operation it merely serves as a means of developing a constantly increasing deficit. The rapid increase in the deficiency, due to the absence of the reserve of $54,743,320, may be easily appreciated when it is considered that simple interest alone at 4 per cent of the above amount would have yielded to the fund $2,189,733 for the year ending June 30, 1915, The lack of in- terest accumulations therefore increased the deficiency during one year to $56,933,053- A parallel condition could be demonstrated for virtually all the pension funds of this country except those few which have recently been reorganized on an actuarial basis — Massachu- setts, New York City, Pennsylvania and Connecticut. They are insolvent in so far as they have failed to provide for ade- quate reserves with which to meet accrued liabilities as well as liabilities incurred through services rendered since the establishment of the system. It matters not that most of these systems are still able to make payments, still have unexpended cash on hand, and are and will for a few years continue to be able to meet their payments. They are no less insolvent than the systems which are already bankrupt. Only by shifting their huge deficiencies ahead year by year do they continue their existence. By doing so they increase of course these deficiencies because of the continued failure to discount future liabilities. The longer they operate, therefore, the greater are the deficiencies and the more insolvent the funds become. Present Extent of Teachers' Pension Systems. The establishment, in the years 1894- 1897, of the nine pioneer sys- tems has been treated in a preceding section. In 1898 retirement systems were established in Charleston and New- port, so that by the close of the century there were in exist- ence eleven systems, but one of which was state-wide, while the others applied in every case to large cities only. 29 Teachers' Pension Systems in the United States The next decade witnessed a steady development of the teachers' pension .movement. Three state and twenty-eight local systems were established, so that in 1910 there was a total of four s^te and thirty-eight local systems in operation. Jt is. within the present decade, however, that the move- ment has attained its fullest development. Since 1910 it has gathered increasing momentum with each succeeding year. Two large state-wide systems, those of New York and Wis- consin, as well as nine local systems, began operations in 191 1. The state system of Arizona and six local pension funds were added in 1912. The greatest activity, however, took place in 1913, 1914 and 191 5. During these years, no less than thirteen state-wide and eighteen local systems were created, directly affecting about 127,000 teachers. With the latest addition to the list in May, 1916, of the Erie Teachers' Pension Fund, and in 191 7 of the Pennsylvania and Con- necticut funds, there were twenty-two state and seventy-two local pension systems in operation affecting approximately 332,554 teachers The table on the page opposite shows for each year, from 1894 to 1916 inclusive, the several systems established. Growth of State- Wide Systems.^ Of the thirty-two states in which teachers' pension systems of whatever kind now exist, twenty-two have state-wide systems.^ In these twenty- two state-wide systems are embraced nearly four-fifths of all the teachers covered by pension systems in this country.^ Yet ^The term "state-wide" does not necessarily mean that all the teachers of the state are members of the system. In case membership is voluntary, it simply means that it is open to the teachers from any part of the state. ^In thirteen of these twenty-two states, local systems, totaling forty- two in number, are still in existence as a result of earlier legislation. 'The distribution of teachers under state and local systems in 1917 was as follows : No. of Systems No. of Systems Teachers Covered State systems 22 249,380 Local systems : In states having state systems also. . 42 • 66,604 In states having no state systems... 30 16,570 94 332,554 30 Evolution of Teachers' Pensions ft. ^.-HN-^ IN^ 3 2 I E M ^. §1 ;^^ iH d V) ^° ^ T.:^ .. 'r,-^ >c Cfl -i-i --3 ,■'-' D . 03 S '*' >. bo a-l si a w C Q, 1° 4 l"F|i| 6/> ^8S|g 1 c 4 ill < y^8JoS 3CM S 5 W gLO D.ca o go aw Slo " a • O gin era ^a 1- =^ o. c^ee- 149 Teachers' Pension Systems in the United States $1,500 the last ten years, will have to his credit $2,416^ which will purchase an annuity of about $225 at the age of 60. On the other hand, a man who enters the service at age 50 and contributes 5 per cent from a $1,000 salary for ten years will have to his credit only $579.64, which will purchase an annuity of only about $55.^ Rate of Contribution Graduated According to Age and Salary: Benefits on a Cost Basis. The new systems of New York City and Pennsylvania graduate the contributions according to age at entrance into the service and according to salary. In the case of an early entrant a small contribution paid during a long period accumulates an amount sufficient to purchase at a certain age an "annuity" which, together with the "pension" offered by the city, will provide a total of about one-half pay. In the case of later entrants a large contribu- tion, although made through a shorter period, makes it pos- sible to purchase an annuity of about the same amount, and also to provide an adequate savings benefit in case of resigna- tion, dismissal or death. This method is, therefore, much more elastic than that of the Massachusetts system. If the benefits were rigidly fixed at one-half salary, then in computing the percentage of salary required to cover the cost of that benefit, it would have been necessary to assume a certain average rate of salary advancement. A member who advances more rapidly than the average, however, may eventually receive more than he has been paying for ; whereas a member who advances more slowly may receive less than what he has been paying for. The result will, to a certain extent, be inequitable. The framers of the New York City and Pennsylvania sys- t 5 contributions at $35 $187.91 20 " "50 1,358.63 ID " "75 869.46 Total 35 $2,416.00 "Table 4 of Appendix 4 shows the annuities which can be purchased by certain sums at various ages. The Teacher's Contribution terns have sought to obviate this difficulty by the following method. They determine the percentages of salary which, if contributed on the basis of average salary advancement, will purchase at a certain age or after a certain length of service an "annuity" of a certain fraction of salary, it being assumed that the other fraction is contributed by the government; but they do not guarantee that in every case the annuity will amount exactly to that fraction of salary. Each member receives such an annuity as his contributions will purchase. In case of those who advance more rapidly than the average, the amount will be somewhat less than that fraction of salary, whereas in the case of those who advance more slowly the annuity will amount to more than that fraction. Thus, the members who advance more slowly do not pay for the annuities of those who advance more rapidly. Distributing the Contribution over the Period of Serv- ice. In some actuarial systems it has been proposed that the rate of contribution be made lower at the beginning of the service than at a later period, and that it be made to gradually increase as the service advances. The main advantage claimed for this method is that it lightens the burdens of the members at the time when they are young and least interested in retire- ment provisions, and increases the burden as they become older and more concerned in retirement. The outstanding objection to this method is that it impedes the operation of the interest factor, for it reduces to the lowest rate the first contributions which earn most interest during the long period they remain on deposit, and increases to the highest rate the last contributions which earn the least inter- est. In view of the loss in interest this form of contribution is in the aggregate much more burdensome to the employee than is a contribution of a uniform percentage of salary throughout the entire service. None of the systems which have been established on an actuarial basis either in this country or abroad have adopted this method. All have adop- 151 Teachers' Pension Systems in the United States ted the uniform percentage throughout the entire service as the most economic form of contribution. Minimum Contribution as a Prerequisite to Full Benefit. To protect their fund against being drained by the payment of pensions in respect to prior services during which no con- tributions were made, some of the unscientific systems require that a teacher who applies for retirement must have con- tributed an amount equal to at least one-half of one year's, or in some systems a year's, pension, otherwise his pension will be proportionately reduced. The table on the following page gives the requirements in this respect of the systems surveyed in this volume. In view of what has been said in previous chapters of the large size which "accrued liabilities" invariably assume in a system, it must be apparent that provisions of this type are of themselves so utterly inadequate to protect the fund and the contributions of the new entrants and of the younger "present teachers" as to be virtually useless. 152 The Teacher's Contribution Total Amount of Contributions Which a Teacher Must Pay to the Fund before Receiving Full Retirement Benefit Is Credit Allowed for Service Total Minimum Minimum Retirement Rendered Minimum Amount of Length of Retire- Systems after the Contribution Pension ment Establish- Required Service Age ment of the System? 1. Systems in which total contributions must equal at least half of one year's pension : New York Yes Yi of one year's Max. $600 25 and 60 35 and None Minnesota pension Arrears $350 to $500 20 None California " $360 $500 30 " Virginia y% salary Vi salary maximum $400 or $500 30 58 men 50women 2. Systems in which total contributions must equal at least one year's pension: Illinois Yes One year's pension $400 25 50 New Jersey Re- $250 to 20 None tirement Fund $650 Wisconsin ' * " $312.75 to $450 25 " Michigan " $300 to $500 25 " Philadelphia. . . . 1 $400 to $1,000 30 60 3. Systems in which the minimum of total contributions is higher than one year's pension: Chicago Yes $450 $400 25 None Cleveland " $600 $375 30 " Boston Retire- ment Fund.. . $540 $132 30 ^The law provides for the payment of arrears, which are fixed as follows : Ten contributions of 1 per cent and twenty of 2 per cent, or a total of 50 per cent. 153 CHAPTER X COMPULSORY PARTICIPATION AND THE RIGHT TO MANAGEMENT A number of pension systems have been established in the United States in which participation upon the part of the teachers has been optional, but these proved so weak and ineffective that most of them have had to change to a com- pulsory basis. Not one of the twenty-four systems selected for detailed examination in this volume is of the optional type. Usually, when a voluntary fund is established, very few teachers join it at the outset. These are for the most part the oldest teachers who are most interested in retirement benefits. The younger teachers remain outside knowing that they can join it whenever they choose, and postpone joining from year to year until they, too, have grown nearer to old age. The financing of a fund in which old teachers are predominant is much more difficult of course than the financing of a system to which the entire force belongs. The managers are thus forced to conduct a continuous campaign to attract new mem- bers. Frequently, too, the small number of new m.embers is offset by the loss of other members. Withdrawal, when allowed under a voluntary system, frequently has a disorganiz- ing effect upon the fund and makes a stable financial policy impossible. Leaving financial considerations aside, important social and economic considerations are involved in the question of com- pulsion. The advocates of optional features strongly object to the introduction of compulsion on the ground that it 154 Compulsory Participation amounts to a confiscation of salary and is an infringement of the rights of the individual/ The advocates of compulsion, on the other hand, object to optional membership on the ground that it fails to insure protection to the individual against the main contingencies of life, to relieve the service of the very teachers who constitute the main object of a retirement system, and to protect the society against the indi- vidual becoming a public charge. The Federation of Teachers' Associations of New York City expressed this view in the following words :' Because of narrow optimism and unwillingness to look ahead, this type of teacher (the younger teacher) remains out- side of the system and arrives at the stage of superannuation and disability without adequate resources of her own to fall back on, but with strong determination to resist retirement unless it is accompanied with financial support at public ex- pense. The city, representing society, has a right to protect itself against unjust and unwarranted claims upon its treasury arising from the failure of individual teachers to include thrift among their virtues. It has a right to expect of them as an intelligent and edu- cated class of teachers, an appreciation of the wisdom and equity of compulsion in a sound measure which ofYers them unprecedented financial advantages, and under which they can, under no conceivable circumstances, suffer financial loss. The principle of compulsion can be enforced by two methods, depending on whether compulsion is enforced on the teachers already in the service at the time of enactment of the law, or only upon those appointed thereafter. Compulsion for New Appointees; Option for Teachers Already in the Service. Under one method compulsion is enforced only on future appointees. On the day of their appointment they automatically become members of the fund. It is urged that in their case a full measure of compulsion 'See pp. 223 and 258. *Why Compulsory Participation of Teachers in Pension Fund is Un- avoidable. 1916. 155 Teachers' Pension Systems in the United States may equitably be enforced because they are informed before they accept their appointments that this will be demanded of them. On the other hand, the members of the existing force are given the option to decide, within a given time after the enactment of the law, whether or not they desire to join. Once they have made their decision, however, it may not be changed. If they enter they must remain in the system so long as they are in service. The objections to this arrangement are of course not so strong as they are to the purely voluntary system, for it may be expected that ultimately all the teachers who have elected not to enter the scheme will die or leave the service and be replaced by newly appointed teachers all of whom will, under the law, necessarily become members of the system. This process, however, may, for its completion, take as many as fifty years, and long before that period has elapsed the fund will have fallen into an intolerable condition. There is, in fact, hardly a system of this sort in operation which has not found it necessary to obtain legislation offering new oppor- tunities and new inducements to enter to those who have not availed themselves of the option offered them by the original law. But in spite of these inducements satisfactory responses have not been obtained. In Wisconsin out of 9,168 teachers only 2,168, or less than one-fourth, made application to come under the law before September i, 1912. In Ilhnois only about 1,500 of the total number of 22,500 teachers in the state elected to join the system. In Massachusetts the slow returns necessitated an extension of the time limit. The experience of Chicago was similar.^ Compulsion for Present Teachers. The application of compulsion to teachers already in the service at the time of enactment of the law, as well as to those appointed there- *A novel arrangement by which all present teachers, who do not apply for exemption, are made members of the system, was adopted in Ohio and is discussed in Chapter XVIII. Compulsory Participation after, was originally adopted in several systems. It soon met with considerable opposition on the part of the younger teachers in Chicago for the reasons already described. The New York City system succeeded, however, in maintaining it in its old system, and, furthermore, in incorporating it in its new scientific system which was recently enacted. This method greatly simplifies the matter of financing the fund and makes the system more effective as an administrative, economic and social measure. There is no doubt but that with the growing appreciation of the benefits derived from a combined pension, savings and insurance system and with the spread of the social insurance movement the teachers will look more favorably upon the compulsory feature and will readily accept it. More recently the view has taken hold that while the pay- ment of certain minimum rates of contributions and the dis- charge of certain minimum obligations should be compulsory, contributions above the minimum rates and the discharge of higher obligations should be left optional with the member. This combination of compulsory and optional features is highly desirable for it gives recognition to the mutual rights and responsibilities of the employees and the government. It has been adopted in the new systems of both New York City and Pennsylvania. The Selection of the Managers of the System. The management of a pension fund may be vested either in an already existing authority or in a body specially appointed for that purpose. The first method is adopted in a number of systems. Thus, in California and Pittsburgh the management is vested in the board of education; in Denver in the board of school directors; in Virginia in the department of pubHc instruction; in Maine in the superintendent of schools; and in New Jersey^ in the state commissioner of education. The disadvantage of this method is that the authorities cannot give the pension fund the undivided attention which it requires. 'System now discontinued. Teachers' Pension Systems in the United States In most of the systems a special retirement board is pro- vided upon which both the educational authorities and the members of the fund are represented. In some systems the representatives of the authorities have the majority in the board; in other systems the representatives of the members of the fund have a dominating voice; and in a few systems both sides are equally represented. Several objections have been raised against retirement boards in which the government representatives are in the majority. It is urged that such a board is inclined to act in the interests of the government rather than in those of the members of the fund. The board frequently fails, therefore, to secure the teachers' cooperation, and if the fund develops a deficiency the blame is placed upon the government. Seven of the twenty-four systems studied in detail have retirement boards of this nature. On the other hand, retirement boards in which the majority of trustees are elected by the members of the fund have been objected to on the ground that these boards are inclined to be too liberal to the beneficiaries of the fund and to disregard the interests of the schools. If a deficiency appears in the fund and the government is called upon to undertake the heavy expense of covering the deficiency and to save the fund from depletion, the government may refuse to give the required assistance on the ground that the members of the fund are responsible for its mismanagement and should, therefore, pro- vide for the deficiency. This type of a retirement board is found in eight of the twenty- four systems. A provision for a retirement board in which the members of the fund and the authorities are represented in equal num- bers avoids the objections raised to the foregoing plans. It assures equal representation of the interests of each party in all matters concerning the operation and development of the fund and it divides the responsibility of its safe management equally between them. The state system of Massachusetts is 158 Compulsory Participation provided with such a retirement board. It consists of seven members, three of whom represent the state. They are the commissioner of education, the insurance commissioner and the bank commissioner. The three other members are elected by the members of the fund. The seventh member is elected by the six members. The fact that the insurance and bank commissioners are on the board and that the secretary elected by the board is acquainted with actuarial problems assures to the board a technical knowledge which is essential to a sound financial management of the fund. Following is a table setting forth the organization of the retirement boards in those of the twenty-four systems studied in which both the government and the teachers are represented. 159 Teachers' Pension Systems in the United States Organization of Retirement Boards Having Representatives of Both Government and Teachers I— boards with government representatives in majority Systems Boston Retire- ment Fund New York State . Minnesota . Buffalo. . . . Philadelphia . New York City. Baltimore... Connecticut . Total Number of Members in the Retire- ment Board Members Representing the State or City Chairman of the Board of Com- missioners of the Sinking Funds; another chosen by the School Committee; and a third chosen by the Teachers' Re- tirement Fund Board Superintendent of Schools, Aca- demic Principal, elementary school teacher and two other members. (All appointed by the Commissioner of Educa- tion) 3 — State Superintendent of Schools, Auditor, Attorney- General 3 — Mayor, Superintendent of Education. Chairman of the Board of School Commissioners 4 — President of the Board of Education, 2 members of the Board of Education, 1 member of the Department of School Superintendence 4 — President of the Board of Education, Chairman of the Commission on Elementary Schools, Chairman of the Commission on High Schools, City Superintendent of Schools 4 — Superintendent of Schools, Comptroller, 2 members of the Board of Education 3 — Secretary of the Board of Education, State Insurance Commissioner, Bank Corn- Members Representing the Teachers 2 — President of Principal's As- sociation and President of Women Tea- chers' Associa- tion 1 i6o Compulsory Participation Organization of Retirement Boards Having Representatives of Both Government and Teachers II — BOARDS WITH TEACHERS' REPRESENTATIVES IN MAJORITY Total Number of Members Representing the State Members Systems Members or City Representing in the the Retire- Teachers ment Board Illinois 5 2 — SuperintendentofEducation, 3 State Treasurer Wisconsin 5 2 — SuperintendentofEducation, State Treasurer 3 Michigan 6 1 — Superintendent of Education 5 (1 woman) Cleveland 6 2— Members of the Board of Education 4 Chicago 9 3— Members of the Board of Education 6 New Jersey Re- 9 4— SuperintendentofEducation, 5 tirement Fund 3 members appointed by the Governor New Orleans 9 4 — SuperintendentofEducation , 3 members of the Board of School Directors 5 Boston Perma- 11 5 — SuperintendentofEducation, 6 (3 men and nent Fund 4 members of the School Com- mission 3 women) III — BOARDS WITH EQUAL REPRESENTATION OF THE GOVERNMENT AND THE TEACHERS Systems Total Number of Members in the Retire- ment Board Members Representing the State Members Representing the Teachera Massachusetts. . . Permsylvania.... 7 7 3— Superintendent of Education, Insurance Commissioner, Bank Commissioner; the seventh member elected by the six 3 — Superintendent of Schools, State Treasurer, one member appointed by the Governor; the seventh elected by the six 3 3 i6i PART II TYPICAL TEACHERS' PENSION SYSTEMS OF TO-DAY CHAPTER XI SYSTEMS WITHOUT RESERVES The teachers' pension systems existing in this country num- ber nearly a hundred. Yet only in the case of the Massa- chusetts system, the New York City system and the recent Pennsylvania system^ were actuarial estimates of future lia- bilities made at the time of establishment. With but few exceptions, therefore, the funds of the existing systems are found, as time goes on, to be inadequate. It will be of interest, and perhaps no little illustrative value, to outline the history of certain of these systems. In a number of these systems no reserves whatever were provided against liabilities, the government having assumed the responsibility to pay pensions as they matured by appro- priating each year the necessary amount. The characteristic features of this ''cash disbursement" plan were discussed in detail in a former chapter.' All these systems have com- mitted the grave error, to which systems operating on the cash disbursement basis are peculiarly liable, of underesti- mating the inevitable future growth of maturing pension obligations. In most cases the amount of the government's contribution to these funds has not been definitely limited by statute. This fact frequently results in a mistaken impression on the part of the members of the system, that whatever the expendi- ture of the system in the future may be, it is always assured of an unlimited backing by the government. The majority of the existing systems which belong to this type are of recent origin. They have already developed heavy ^Also the new systems of New Jersey, Ohio and Vermont enacted in April, 1 91 9. 'See p. I35f. i6s Teachers' Pension Systems in the United States disbursements, compelling the government to limit its support. Others have not had sufficient time to develop considerable disbursements, but it will not take long for them to become burdensome to the government. In a number of them the amount which the government disburses annually in pensions equals at present only i or 2 per cent of the amount it expends in salaries, but in the future it will reach 15 per cent or even more. Among the twenty-four systems selected for study the half- pay pension system of New Jersey and the systems of Maine and Pittsburgh fall in the class of systems without reserves. Pittsburgh Teachers' Retirement Association. The board of education of that city established in 1912 a retire- ment system by which a teacher who had served 25 years in schools of the United States, provided half of this time was served in the schools of Pittsburgh, would be eligible to retire- ment on a pension of $500. No contributions were required from teachers, the regulations providing that the board of education should appropriate each year the amount needed to pay the pensions of that year. In the year in which the fund was organized only thirty-five retirements were made, but during the second and third years, this number increased to seventy and eighty-five respectively. The rapid increase in the appropriation is shown below : Annual Appropriation Year for Pensions I912 $ 7,000 1913 32,500 1914 39,400 I915 49,000 This rapid increase in the cost of pensions to the city attracted the attention of the authorities and a report of the finance committee of the board of education, dated October 26, 1916, declared: "It has been recognized for some time that all hope of continuing to add new pensions under the present plan must be abandoned." The board, therefore, discontinued granting new retirements. 166 Systems Without Reserves This action aroused considerable discussion. The teachers maintained that the original regulation of the board gave them an absolute right to pensions after 25 years of service and that the board had no right to revoke this regulation. The board on the other hand asserted that when the regulation was adopted it contemplated exercising its discretion and that its intention was perfectly clear in view of the fact that the state law did not fix the provisions for the various school boards, but allowed each to establish a pension system in any manner it might choose. Realizing that any amendment of the old and defective pension regulation would not rid the financially unsound sys- tem of the danger of bankrupting the city, the board deter- mined to liquidate the old system and to try to find a new one which would be financially sound, as generous as possible to the teacher, and fair alike to the two contributors — the taxpayer and the teacher. A resolution was passed by the board on February 20, 191 7, repealing the old pension rules so far as the grant of new benefits was concerned. In submitting the report of an actuary employed by it, the finance committee wrote : The committee made numerous attempts to provide a financially safe method of retiring teachers at an age earlier than 65. In every instance, however, the cost was found to be prohibitive both for the teacher and to the public. You will note especially that the plan provides: i. That all con- tributions made by the teacher shall, in every event, be returned to his or her designated beneficiaries with interest compounded at 4 per cent. The teacher has, therefore, a guaranteed savings account in addition to provision for a pension; 2, That the plan requires all teachers to participate; 3, That the total payments made by teachers the first year would be about $108,054, and that the total budget provision to be msde by the board to cover present pensions and the installa ion of this plan the first year would be $200,000.^ The cost of retirement at age 60 would be about double each of the above. 'Including the deficiencies with respect to the present force. 167 Teachers' Pension Systems in the United States The teachers were to contribute according to their age and sex from $1.50 to $11 monthly towards their retirement on a pension of $500 at age of 65, and the city to contribute equivalent amounts. These joint contributions were to be deposited to the individual account of each teacher and to draw compound interest. The rates of contributions were to be based upon standard mortality tables and the system was to operate on an actuarial reserve basis. The teachers objected to the plan because it provided for retirement only at the age of 65 and required exceedingly high contributions. Thereupon, the committee on retirement prepared another report in which it proposed the following modifications of the original plan : first, a provision by which all teachers above 40 years of age would be required to con- tribute at the rate fixed for age 40, i. e. a limitation of the teachers' contributions to a maximum of $5.20 per month instead of $11.45 P^'' month as under the first plan, and second, an option to retire between 60 and 65 on a reduced pension. The scale of pensions was to be as follows: Age Pension 65 $500 64 440 63 395 62 355 61 320 60 300 The teachers gave no better reception to this revised plan than they had to the first plan. They objected to it "because of the age requirement of 65 years, and the small annuity at 60 years of age."^ The report of the citizens' committee stated that* "the teachers desire a pension of $500 at retire- ment age of 60, but are unwilling or unable to pay the higher rates" required for such a pension at that age. The city is willing to contribute at the rates required for a $500 pension 'Meeting of the Pittsburgh Teachers' Association, Feb. 13, 1917. Min- utes of the Pittsburgh Board of Education, Feb. 20, 1917, p. 282. ^Report on Teachers' Pensions. Published in pamphlet form Jan. 23, 1917. 168 Systems Without Reserves at 65 years of age and, furthermore, to assume the payment of that part of the teachers' contributions which is above $5.20, besides assuming the entire obligation aggregating about $600,000 on account of the no annuitants retired under the old pension system, and considers it inexpedient for the present to go any further in its liberality. Whether the proposed system is adopted in its present form, or further modified, or not adopted at all, it is clear that the old unsound system can never be revived; the city will either establish a sound system or it will join the new state-wide system of Pennsylvania. New Jersey 35-Year Service Pension System. The agita- tion for a ''service pension payable entirely at public expense, and without any contribution from the teachers," began in New Jersey in the early nineties but suffered a severe defeat at that time. Instead of a service pension a teachers' retirement fund, supported entirely by the teachers themselves, was estab- lished. The agitation for a service pension, however, con- tinued and achieved its first success in 1903 in a rather acci- dental way. Some time in 1902, or in the beginning of 1903, a certain teacher, who had taught in Jersey City for more than 40 years and had many friends in that city, met with a severe accident. It appeared that he was permanently incapacitated and would never be able to return to teaching. A group of teachers in that city attempted to obtain a pension for his benefit, as the school authorities had no power to grant one. The teachers, therefore, appealed to the legislature to give the school authorities the power. The bill framed by the teachers without providing a special fund for the purpose allowed any district board of education to pension on half pay any teacher who had served for more than 40 years consecutively in the same district, thus exactly covering the case of the particular teacher in question. The measure became a law on March 5. 1903- 169 Teachers' Pension Systems in the United States It is curious to note that after the enactment of this law, the teacher, for whose special benefit it was passed, refused to avail himself of the pension. The requirements of the law were so high, and its pro- visions so particular, that for the next three years only two other teachers could qualify for the pension offered by it. In 1905, a recommendation was made by an actuary to a special committee, which investigated the Teachers' Retirement Fund, (another retirement system in New Jersey which is dis- cussed in the following chapter) that the law be so changed as to forbid any teacher receiving a "service pension" from the board of education to receive also an "annuity" from the fund. The enactment of such an amendment would have prevented the duplication of benefits which later on developed. The recommendation was, however, disregarded and on the con- trary a resolution was adopted at the meeting of the State Teachers' Association directing its committee to secure an amendment which would broaden the scope and lower the service requirements of the law. This was attained a few months later in 1906, when an amendment was obtained lower- ing the requirements to 35 years of service of which only 20 years had to be in the same district. This opened the system to a much larger group of teachers, and during the following three months five teachers applied for retirement and received the pension. The number of pensions increased from seven to twenty-six during the following year and continued to increase rapidly from year to year as shown below : Year Ending Numbe r of Pensioners June 30 1906 on th e Retired List 7 1907 26 1908 48 1909 65 I9IO 100 191 1 125 I912 155 I913 185 I914 222 170 Systems Without Reserves Meantime, in 1907, 191 1 and 1912 three other amend- ments had been passed. The first allowed not only the local boards of education but also any other body employing teachers to grant pensions; the second lowered still further the requirements by giving credit for service rendered in any other state; and the third broadened the interpretation of the service covered to include all persons "employed in the public school work." Until 1 914 the system was entirely local in its support and control. In that year an amendment provided for the central administration of the system by the state commissioner of education, and further liberalized the retirement conditions. The requirement of 20 years of service in the district in which the teacher applied for retirement was also struck out of the law ; the only limitation was that a teacher must have served 25 of the 35 years in New Jersey.^ "Teacher-clerks and any per- son employed in any supervisory capacity," who had not pre- viously been subject to the law were now admitted to its bene- fits. The funds necessary for the payment of pensions were to be supplied from the apportionment from railroad tax devoted to the maintenance and support of schools which the comptroller distributed among the several counties. The result of the provisions of 1914 was that the number of pensioners and the total payments increased at a still more rapid rate as shown in the following table : Year Ending June 30 Pensioners on the Retired List Amount of Pension Roll I915 I916 275 348 $150,000 I r6.coo I917 I918 369 211,000 246,000 At no time either before the establishment of the system or in the course of its subsequent amendment were the ques- 'The teacher was made eligible to retirement under the following con- ditions : After 35 years of active service, 25 of which must have been per- formed in the state ; or after 70 years of age, if the last 20 years have been served in the state; or after 75 years of age, if 32 years have been served in the state; or after 35 years of service and 70 years of age, in case of disability. 171 Teachers' Pension Systems in the United States tions raised: What does the half-pay pension cost? What liabilities are assumed under the system, and what additional liabihties will accrue if the proposed amendments are enacted? In short, the system was established by chance, and was modi- fied in an off-hand way without any consideration paid to the financial obligations assumed. Since the retirement fund (described below^) offered a bene- fit of 60 per cent of salary, and the state pension offered 50 per cent of salary, a teacher who could qualify under the two systems and whose salary was below $1300 could receive in the form of the two benefits more than the amount of his salary. Such a prospect was very attractive. Teachers who had 35 years of service but were still capable of teaching, and who would not have applied for retirement if they were entitled only to half pay, were now eager to retire. On the other hand, the teachers who could no longer perform their duties efficiently, but who had not completed 35 years of serv- ice, and who, therefore, could by retiring obtain only the annuity, but not the pension, were anxious to postpone their retirement until the time when they could qualify for both. The efficiency of the service thus suffered on account of early retirement of efficient teachers as well as from the postponed retirement of invalids. In 191 7, the legislature appointed a commission to investi- gate all the pension and retirement systems operating in New Jersey. Believing that it was important that the state should know what its total liabilities were, the commission had an actuarial estimate carefully prepared. This estimate showed that the cost of the half-pay pension on a reserve basis would amount to about 4 per cent of the payroll for new entrants and that the liabilities on account of the then 400 pensioners amounted to about $2,150,000, and the total liabilities on account of present pensioners and the prospective pensioners among the present teachers amounted to about $24,350,000. If the system continued to operate without providing an ade- 'See page 183. 172 Systems Without Reserves quate reserve, the annual requirements for pensions, which now amounted to a few hundred thousand dollars and to slightly more than i^ per cent of the pay roll, would in a not distant future amount to more than a million dollars and the annual requirements would exceed lo per cent of the pay roll. It is plain that to prevent this tremendous increase of the burden, the system will have to be reorganized. It is prob- able that at the time of reorganization the question will be considered whether it will not be wise to supplant the two unsound systems, — the state pension and the retirement fund, — by one sound system supported by joint contributions of the state and the teachers and jointly controlled by them.^ Maine School Pension Fund. This is a fund in name only, for it has no capital. It is supported by a small appro- priation by the state from the school and mill tax fund. The teachers do not contribute. The plan of this system was prepared by a special com- mittee appointed for that purpose by the Maine Teachers' Association, and was revised by the members of the legisla- ture. It provided for an appropriation of $8,000 the first year and $25,000 annually thereafter with which to pay pen- sions of $150 to $250 according to length of service. One of the important changes made during the revision of the bill provided for the grant of half pensions to teachers who were retired before the enactment of the law. A provision of this kind is very rarely included in a pension system, for, aside from the question of the wisdom of a retroactive measure," it increases the immediate burdens of the system. The bill was passed on March 19, 1913." The fixed amount of the annual appropriation is one of the weakest features of the law. The experience of Maine will doubtless prove similar to that of other funds in that the amount of annual disburse- *Such a reorganization was effected by legislative enactment on April ID, 1919, as described in Chapter XVIIl. ^See page 199 for a similar provision in Virginia. 'Maine, Acts, 1913, ch. 75. Teachers' Pension Systems in the United States ments will grow from year to year. In the second year of the operation of this system thirty-five new pensions were added while only twelve were terminated and the pension roll carried $22,251, a sum dangerously near the limit allowed by law. Out of this amount over $12,000 — more than 50 per cent of the total — was expended on half pensions to 150 teachers who had retired before the enactment of the law. It became evident at the beginning of the year 191 7 that the disbursements of that year would exceed the $25,000 limit. Upon the recommendation of the state superintendent the legislature increased its appropriation to $27,500. As disbursements increase each year a larger appropriation must be requested. The state thus cannot long continue to bear the increasing burden, no part of which is borne by the teachers. The teachers too must sooner or later realize that it is to their advantage to contribute to the system in order to receive from it an additional benefit besides the small pension provided by the state. 174 CHAPTER XII SYSTEMS WITH INADEQUATE RESERVES: STATE SYSTEMS As already indicated the systems which have totally failed to recognize the necessity for a reserve are but few in number. In most systems this necessity has been appreciated but very inadequately. It has been thought of in the terms of protec- tion against some unexpected exigency and a source of supple- mentary revenue. The annual pension payments are met as they mature from the annual receipts of the system, i. e. by the "cash disbursement" method. The left-overs of the annual receipts (the so-called "surpluses") are set aside and are in- vested and form the so-called "reserve." The latter does not act as a true reserve, which is built from practically all receipts of the system and which serves as the source for meeting all pension obligations and the main basis of all its financial operations. It plays an entirely subordinate role in the operation of the system — a kind of appendix rather than the foundation of the system. Being so conceived and supported by the residues of a usually meager income it is nat- urally inadequate to protect the system against future heavy demands and assure its solvency. Of the twenty- four systems selected for study seventeen are of this type. They are as follows : States Cities I. Illinois est. in 1915 I. Chicago est. in 1896 2. New York " 1911 2. Philadelphia " " 1907 3- New Jersey Ret. F. " " 1896 3- Cleveland " " 1907 4- Minnesota " " 1915 4- Boston Ret. F. " " 1900 5. Wisconsin " " 1911 5- Boston Per. F. " " 1908 6. California " " 1913 6. Baltimore " " 1909 7- Virginia " " 1908 7. Buffalo " " 1896 8. Michigan " 1915 8. New Orleans " " 1910 9. Denver " " 1909 175 Teachers' Pension Systems in the United States In the systems of Virginia, Chicago, Buffalo, New Orleans, the two systems of Boston, in the old system of New York City, in the New Jersey Retirement Fund, altogether in eight of the seventeen systems, the disbursements have at one time or another exceeded their statutory income, which has resulted in a reduction of benefits, in the discontinuance of new retire- ments, and in the introduction of new laws to relieve the situation. The other systems, nine in number, are still very recent. This is the only reason why they have not as yet failed. The systems of Illinois, Minnesota, Michigan and California have had but a short existence, but the first two are already under investigation. The New York and Wisconsin systems were estabhshed in 191 1, those of Baltimore and Denver in 1909, of Philadelphia and Cleveland in 1907. All these are still in the accumulative stage. Their revenues still exceed their disbursements and yield balances which create an impression of apparent prosperity and financial security. But soon their growing disbursements will exceed their revenues; and then these funds, like those of Virginia, New York and Boston, and others mentioned above, will be in a critical condition and will start on a rapid decline. A better idea of the finan- cial condition of these systems may be formed if each is dis- cussed separately. A separate analysis of each fund is, there- fore, presented below, the Chicago fund being described in a separate chapter. The financial arrangements for all the other funds in this country which have inadequate reserves are similar to those of the systems which are analyzed in detail in the following pages. The bankruptcies or sudden reductions of benefits which resulted from these arrangements in Minneapolis, Mil- waukee, Providence and Newport are similar to those devel- oped in New York City and Boston. Illinois Teachers' Pension and Retirement Fund. This system became effective on July i, 191 5, and is compulsory 176 Systems With Inadequate Reserves: State on those subsequently entering the service. Teachers in the service at the time of enactment have the option until Sep- tember I, 1920, to become members. Up to June 30, 1916, only about 1,500 of the total number of about 22,500 teachers in the state elected to join. They were undoubtedly the older teachers who expected to retire immediately or in a few years. Approximately 1,600 teachers newly entering the service auto- matically became contributors. The total membership, there- fore, then numbered about 3,000 teachers. Up to June 30, 191 6, a total of 301 teachers were retired on the full annuity of $400. Of this number 225 were women and 76 were men. Twenty persons were retired because of disability on a smaller annuity in proportion to the number of years served. The majority of the retirements were granted at the close of the year. The expenditures during 1916 were, therefore, very sinall; they amounted to only about $8,500. The disbursements of 191 7, however, were considerable since the annuity roll amounted to more than $120,000. The system is managed by a board of trustees consisting of five members, the superintendent of public instruction, the state treasurer and three contributors or annuitants elected by the contributors and annuitants. An annuity of $400 is granted on retirement after 25 years of service (of which a minimum of 15 years must have been taught in the schools of Illinois), provided the applicant is at least 50 years of age. A proportionately reduced annuity is paid on disability retirement after 15 years of service. The applicant must have contributed in all $400, or else pay the deficiency with 4 per cent interest. No refunds of contribu- tions or other benefits are granted upon resignation, dismissal or death. The income of the fund is derived from two sources — the members of the fund and the state. The members contribute according to the number of years they have taught; those 177 Teachers' Pension Systems in the United States with less than lo years contribute $5 per year; those with more than 10 years but less than 15 years, $10; and, finally, those with more than 15 years of teaching experience con- tribute $30 per year. No teacher is required to contribute for more than 25 years. The state contributes an amount equal to one-tenth per mill of the assessed valuation of property. A few months after the system was established it came under the investigation of the Illinois Pension Laws Commis- sion, together with the police, firemen and other systems operating in Illinois, and the following quotation from its report which refers to the unsound condition of all the pen- sion systems in Illinois, including the state teachers' system, is interesting: The general condition of pension systems operating under the laws of Illinois may be correctly described as one of insol- vency. That is to say, viewed from the standpoint of sound finance and of having the necessary reserves to carry out the payment of pensions' as provided in the laws, there are immense deficiencies in the existing funds. In short, the financial provisions are entirely inadequate for paying the stipulated pensions when due. It may be well to emphasize here that there is nothing more erroneous than the common view that so long as the amount in a pension fund is increas- ing all is well with it. To be sure, some of these funds are increasing, but that is no indication of their sufficiency, and it is strange how completely satisfying such increase is to many participants even if the fund is certainly inadequate.^ According to the estimate of the commission the ultimate annual pension payments under the present system will amount to between 7 and 12 per cent of the annual salary payments. Yet the fund is provided with a teachers' contribution which averages only a little over i per cent of the annual salary payments, and will in the future average a lesser proportion as salaries increase. True, disbursements of from 7 to 12 per cent will not be required for a number of years. In the beginning the fund will be more than sufficient to pay the ^Illinois Pension Laws Commission Report, 1917, p. 272. 178 i Systems With Inadequate Reserves : State pensions of retiring teachers, especially in view of the fact that the membership of the fund and its disbursements are small and that the state appropriation augments the fund. Soon, however, an amendment of the law will become neces- sary which will give another oportunity for those to enter the fund who did not enter it in 191 5. So long as the teachers' contributions are fixed at an almost insignificant rate, every additional member will increase the liabilities of the fund without proportionately increasing the assets and will add a new claim against future state appropriations which are limited to a small portion of the mill tax. The disbursements will increase at a more rapid rate than the income and will eventually exceed it. It is very probable, however, that the managers of the system with the aid of an enlightened public opinion will bring about a reorganization of the system on a sound basis long before this happens. One of the officers of the fund has recently stated that the law "needs revising inas- much as there is no provision made for an actuarial investi- gation and the age for retirement is perhaps too low. It seems to me that any sound permanent retirement fund must be founded upon actuarial investigation and a thorough research, such as would lead to the cost of maintenance of the fund." New York State Teachers' Retirement Fund. In the year 1910 the State Teachers' Association of New York, the Academic Principals Association, and the Council of Super- intendents appointed a committee to get in touch with the education department in order to prepare a bill and to secure its enactment. The bill introduced passed the legislature on June 26, 191 1 and was amended in 1913 and 1914.^ The law applies to all teachers except those covered by local funds. The law provides, however, that the state fund must take over any local fund if more than two-thirds of the teachers of the respective locality vote in favor of a merger. 'New York, Acts, 1911, ch. 449; 1913, ch. 511; 1914, ch. 44. 179 Teachers' Pension Systems in the United States The following retirement funds have availed themselves of this provision and have been merged with the state fund : Poughkeepsie established in 1902 Niagara Falls. Troy Elmira and Schenectady Watervliet and Yonkers Nassau and Saratoga Counties. 1904 1906 1907 1908 1910 The following cities and county still have local funds and remain outside of the state system : New York City established in 1894 Buffalo " " 1896 Syracuse " " 1897 Rochester " " 1905 Albany " " 1907 Cohoes " " 1908 Mt. Vernon " " 1909 Westchester County (except Yonkers).... " " 1909 The board of retirement consists of five members all of whom are appointed by the commissioner of education; one of them at the time of appointment must be a superintendent of schools, one an academic principal, and one an elementary school teacher. One of the five must be a woman. An annuity of one-half of the average salary of the last five years (max. $600) is provided upon retirement after a minimum of 25 years of service, of which the last 15 must have been served in the schools in the state. Proportionately smaller annuities are paid on disability after minimum of 15 years' service. No refunds of contributions are made to those who resign or are dismissed or to the dependents of those who die. These benefits were to be paid out of a fund derived from a I per cent deduction from teachers' salaries. The unex- pended balances were to be set aside each year to build up the capital of the fund. No estimates of the cost of benefits were made. The commissioner of education stated in 191 3 that "there is not reliable data at the present time to determine accurately the number of teachers in the state who are entitled to be retired under this law or the amount required to meet 180 Systems With Inadequate Reserves: State annuities."^ It was estimated, however, that if out of 1,200 teachers, who had more than 25 years' service, 300 should re- tire, the income would exceed the disbursements by about $25,000, and that if 600 should retire a deficiency of more than $40,000 would appear. But even this indefinite computation covered only one year and did not take into account the fact that a rapid increase in the disbursements was bound to de- velop. A faint suspicion that the fund might prove insufficient to pay all annuities is evidenced in the following passage in the commissioner's report :^ It has been confidently believed by those who have been giving this matter careful attention for two or three years that sufficient endowments will be made to the fund to avoid the necessity of the legislature making appropriations to meet deficiencies. It would be a deserved compliment to the teach- ing force of the state if some of our pubHc spirited citizens should make sufficient gifts or endowments to this fund to make the income sufficient to pay all annuities. It was thus hoped that should the fund be threatened with disaster private philanthropy would come to the rescue. Had an actuarial investigation of the fund been made at that time, it would have shown that disbursements were bound to exceed the receipts from the i per cent contribution, and that annual deficiencies instead of surpluses were bound to develop and disaster result in five or six years. During the first year only ten retirements were made, the disbursements amounted to only $2,000, and the greater part of the income was unexpended and carried to investment. During the second year, however, the number of retirements jumped from 10 to 152 and the disbursements from $2,000 to over $40,000. In view of this alarming increase it became apparent that the income would soon be insufficient, and an appeal was made to the legislature to contribute to the fund an amount equal to the teachers' contributions. An act to this effect was passed in 19 14, and as a result of the new law 'Report, 1912, p. 27. 'Report, 1912, p. 28. 181 Teachers' Pension Systems in the United States the contributions in 191 5 were at once doubled. This increase has postponed for the time being the disaster which, however, is bound to happen within a few years. The following figures illustrate the rapid increase in the number of retirements and the amounts of disbursements dur- ing the last four years. The total number of retirements rose from about 150 in July, 19 13, to almost 700 in July, 191 7, and the amount of annual disbursements grew during the same period from $40,000 to almost $200,000. The retire- ment board then adopted a resolution raising the require- ments for service retirement so that an applicant who is not disabled must either have 35 years of service and be 60 years of age, or if he has less than 35 years (but more than 25), must be 65 years of age. A bill was also introduced in the legislature making dis- cretionary the acceptance by the state fund of any local fund which desires to merge with it. The point is that some of the local funds having been longer in operation are nearer collapse than is the state fund. The legislative committee, however, refused, and justly so, to endorse any measure except one which would provide for a reorganization of the insolvent system. It held that the proposed measure would merely help to postpone reorganization and result in the increase of the deficiency which the future generations will have to discharge. The officers responsible for the management of the state system have endorsed the actuarial reorganization of the New York City system. They appreciate the imperfection of their own system and contemplate placing it on an actuarial basis. The considerable actuarial data compiled by the New York City commission and the scientific pension plan which it prepared after a three-year study of the problem will un- doubtedly facilitate their difficult task. The sooner the reorganization is effected, the better it will be for the majority of the teachers who are inadequately pro- tected under the present system; for the longer it operates 182 Systems With Inadequate Reserves : State the larger will be the number of teachers with claims of "vested rights" in it. The following sets forth the principal facts relative to the New York state system in April, 19 17. Membership 24,000 Number of annuitants 669 Annuity roll $187,182 Capital 572,000 Average age at retirement 57 years Average length of service 31 years New Jersey Teachers' Retirement Fund. The New Jer- sey Teachers' Retirement Fund is the first state-wide sys- tem for the retirement of teachers to be established in this country/ It provides an annuity of 60 per cent of the average salary for the last five years (min. $250, max. $650) upon retirement after 20 or more years of service, if the teacher can prove disability. The fund operates on a tontine basis, no refunds of contributions or other benefits being provided for those who resign, or are dismissed, or who die before completing the required period of service. It is managed by a board consisting of nine members — the superintendent of public instruction, three members, not teachers, appointed by the governor, and five teachers elected by the members of the fund. The financial history of the fund during the twenty-one years of its operation may be divided into four periods. These periods were identical in their leading aspects — each began with an excess of income over disbursements only to have the latter reach or outstrip the regular income. The fund was opened on a voluntary basis in 1896 with a membership of about 2,500 teachers out of a total of about 5,000. The income was to consist of a contribution by the members of i per cent of their salaries. In addition, i per cent was deducted from the annuities granted and it was hoped to augment the regular income by obtaining donations and legacies and arranging bazaars and entertainments. No disbursements were made during the first year. Thirty-five hundred dollars were paid out the second year and almost ^The history of its establishment w^as described at length on page 38. 183 Teachers' Pension Systems in the United States $5,000 during the third year. The membership not only did not increase but even decHned, and the districts were irregular in transmitting the dues. The increase in the dis- bursements with the resulting reduction in the annual surplus is shown below ■} Year Ending Annual Suiplus June 30 Receipts Disbursements (Excess of Income Over Disbursements) 1897 $12,400 $12,400 1898 15,300 $3,500' 11,800 1899 13,300 4,700' 8,600 The decrease in the membership and the annual surplus was alarming. It was apparent that in a few years the dis- bursements would overtake the income unless membership was increased or new sources were added, or retirements restricted. Accordingly in 1899 an amendment was secured extending membership to teachers who had not become members in 1896 and who might now wish to enter, and containing certain restrictions as to retirement. A permanent organization was effected for conducting membership campaigns and soliciting funds. Through the energetic efforts of this organization the membership was increased and the income supplemented from special entertainments which were arranged and from dona- tions and legacies which were obtained. These sources yielded almost $7,000 in 1900 and over $3,000 in 1901. During the succeeding two years, however, the increase in the disburse- ments exceeded the increase in the income, with a result that the surplus decreased, as shown below, falling under the amount which was set aside at the end of the first period : It thus became apparent that the previous increase of income Year Ending Annual Surplus June 30 Receipts Disbursements^ (Excess of Income Over Disbursements) 1900 $21,100 $8,200 $12,900 1901 20,800 10,400 10,400 1902 20,300 12,600 6,700 'The figures in this and the following tables are compiled in round numbers to the nearest hundred from the figures given in the N. J. School Report, 1913 (vol. i, p. 506-7). "Includes administrative expense, $2,600 in 1898 and $1,200 in 1899. ^Includes administrative expense : $1,700 in 1900, and $1,800 annually the following two years. 184 Systems With Inadequate Reserves: State was insufficient and that a third increase was necessary. Therefore, another amendment to the law was obtained in 1902 which offered certain privileges to the teachers who would enroll during the next nine months. The contributions of all teachers who would become members after January i, 1903, and who would then have more than 10 years of serv- ice were to be increased to 2 per cent. A great membership campaign was organized and about 900 teachers were enrolled. Immediately the income rose about $8,000 and the amount added to the capital about $5,000. As the disbursements con- tinued steadily to increase during the next three years, the amounts added to the capital fell far below the already low mark set by the preceding period : ^ear Ending Annual Surplus June 30 Receipts Disbursements^ (Excess of Income Over Disbursements) 1903 $28,400 $16,900 $11,500 1904 26,400 20,900 5,500 1905 28,800 23,800 5,000 1906 34,800 29,100 5,700 The operations of the year 1905 resulted in a still smaller surplus, and those of 1906 would have resulted in a defi- ciency had not a strenuous effort been made to raise funds by means of entertainments and donations. In 1905 almost $3,000 had to be raised and in 1906 over $10,000 (the largest and practically the last collection in the history of the fund) in order to cover the deficiency. Again the fund was involved in financial difficulties and this time the difficulties were greater than before. To relieve the situation a third amendment to the law was prepared and its passage secured in 1906, which, in the first place, began a liquidation of the old i per cent fund and estab- lished in its place a new fund with higher rates of contribu- tions,^ and in the second place compelled all teachers appointed in the future (after January, 1908) to enter the new fund. ^Includes administrative expense: $1,900 in 1903; $1,600 in 1904, and $1,500 the following two years. *Those with less than 10 years of teaching experience at the time of becoming a member were made to contribute 2 per cent, of their salary, those with more than 10 but less than 15 years, 2^ per cent., and those with more than 15 years, 3 per cent. Teachers' Pension Systems in the United States During the first two years the results were very disappointing as the majority of the teachers refused the higher rates. The receipts increased because of the higher contributions of those who accepted the act, but not sufficiently to overcome the increase in the disbursements. As a result, the annual surplus continued to fall, as shown below : fear Ending Annual Surplus June 30 Receipts Disbursements^ (Excess of Income Over Disbursements) 1907 $39,600 $36,400 $3,200 1908 56,400 54,800 1,600 In the meanwhile the managers secured another amend- ment (1907) which increased the annuity to 60 per cent of salary, offered various other inducements to the teachers who would accept the new act, and postponed closing the doors of the fund for another year. But teachers were reluctant to enter it. All interest in the fund apparently died out. Then during the last four months of 1908, the managers launched a great membership campaign throughout the entire state and succeeded in enrolling almost 4,000 teachers. The large number of new contributors and the higher rate of their contributions increased the receipts for 1909 and 19 10, re- spectively, to double and triple the totals for 1908, and gave the fund the largest annual surplus ever obtained. These first two years of operation at the higher rate of contributions have almost doubled the capital accumulated during the pre- ceding twelve years : .Year Ending June 30 1909 Receipts $97,700 Disbursements $64,600 Annual Surplus (Excess of Income Over Disbursements) $33,100 I9IO 152,100 87,100 65,000 Had the fund not changed from a voluntary to a com- pulsory basis and increased its membership by the great cam- paign of 1908, it would have faced another annual deficiency in 1909, and would have been forced to draw upon its reserve,. then totaling about $95,000, which would probably have been ^Includes administrative expense : $600 in 1907 and $1,500 in 1908. 186 Systems With Inadequate Reserves : State expended in five or six years, in spite of the annual automatic increases in the compulsory membership and the emergency collections and entertainments. However, with the contribu- tions obtained from the younger teachers who were enrolled in 1908 and also from the new appointees who were compelled to contribute, the fund has been able to continue making pay- ments to its old annuitants and to grant new annuities to its old members, and, furthermore, to increase its capital almost 400 per cent. Meanwhile, the disbursements are continuing steadily to increase at a more rapid pace than the income. Each year the unexpended portion of income added to the capital becomes smaller and smaller as shown by the following table : Year Ending Annual Surplus June 30 Receipts Disbursements (Excess of Income Over Disbursements) 191 1 $174,800 $111,900 $62,900 1912 192,600 135,700 56,900 1913 196,900^ 154.400 42,500 1914 231,900^ 183,700 48,200 1915 235,400 207,200 28,700 1916 264,100 231,000 33,100 1917 277,000 258,000 19,000 1918 276,800 276,100 700 It is all too evident that soon there will be no surplus, the disbursements will again exceed the receipts, and the fund will develop an annual deficiency unless another temporary relief is obtained by again increasing the contributions, or a permanent improvement is effected by providing an adequate income actuarially determined. The fund having been criticized by the Carnegie Foundation as being unsound, the State Teachers' Association decided on an actuarial investigation and offered to defray the expense of it. The cooperation of the retirement board was secured and ^A large part of the dues (about $15,000) creditable to 1913 had not been credited when the state treasurer's books closed on June 30, 1913, and were subsequently credited to the year 1914. The receipts and surplus shown here for the year 1913, as somewhat lower than those of 1914, were therefore in reality higher. An adjustment of these figures would have shown a more gradual decline in the annual surplus. 187 Teachers' Pension Systems in the United States an actuary was engaged/ His report, submitted in November, 191 7, showed that the liabilities of the fund on account of annuities now outstanding amount to $2,324,651.77. Its total present assets are only about $485,000. The fund is, therefore, insolvent even on account of those liabilities alone. But this is only a relatively small portion of the total liabilities of the fund ; by far larger are the liabilities on account of all the members now in active service and who have been for years contributing to the fund. The total liabilities amount to many millions of dollars, and the total assets, according to all indica- tions, are insufficient to offset them. This means that the great majority of teachers are still contributing for the benefit of others. It should be added that besides the thousands of teachers whose interests are thus sacrificed as a result of the ap- parent insolvency of the fund, there are a number of others whose interests would be sacrificed even if the fund were solv- ent, namely, all who withdraw from the service before retire- ment whether through resignation, dismissal or death. Under the law governing the fund, they forfeit all their contributions and are thus penalized for the benefit of those who stay in the service. In December, 1918, the Bureau of State Research of the New Jersey State Chamber of Commerce issued a report^ present- ing the entire history of the fund and analyzing its present ^Previous to this investigation the fund was investigated in the year 1913 by a committee elected by members of the fund. The inherent weakness of the fund and the need for actuarial methods were not appreciated by the commissioners, who wrote : "The New Jersey law is the result of years of experiment and progressive legislation. The present law, while very comprehensive, is simple. It requires no actuarial knowledge to determine the amount of annuities ; it has none of the insurance intricacies of the Massachusetts law. The questions that arise are not actuarial questions, but questions of fact and the trustees are entirely competent to answer them." It optimistically reported, "Your committee rest confident in the perpetuity of the fund." Report of special investigating committee authorized at the annual convention of county delegates elected by the members of the New Jersey State Teachers' Retirement Fund, Sept. 27, 1913, submitted Sept. 26, 1914, p. 15 and 23. "Teachers' Retirement Systems in New Jersey, Their Fallacies and Evo- lution. Prepared by Paul Studensky. State Research, Consecutive Num- bers, 10 and 12, 1918, 88 p. 188 Systems With Inadequate Reserves: State condition. The report pointed out the anomaly of double bene- fits resulting from the coexistence of the retirement fund and the state pension.^ Nominally, the two systems serve different purposes — the retirement fund protects the teachers against disability, and the state pension against old age. In reality, however, both grant superannuation benefits. Since 191 1 the great majority, about two-thirds, of those who are being placed on the annuity list of the retirement fund are at the same time pensioners of the state system. Their total re- tirement benefits are, therefore, abnormally large when com- pared with the salaries they were receiving while in active serv- ice. For those whose salaries are less than $1,300, i. e. for the majority of those retiring on double benefits, the benefits are larger than the salaries, as may be seen from the following table : 10 teachers enjoying benefits of 70% to 75% of salary 78 teachers enjoying benefits of 75% to 100% of salary 86 teachers enjoying benefits of 100% to 110% of salary 189 teachers enjoying benefits of 110% of salary, and more 363 teachers enjoying benefits averaging 103% of salary There is obviously no justification for paying a teacher after retirement more than she earned while in service. Moreover, the effect upon the efficiency of the schools may prove very prejudicial, as there is a strong incentive for quitting the serv- ice as soon as the minimum requirements for retirement are met. The report of the bureau of state research shows con- clusively that no further makeshifts in financing either the fund or the state pension can improve the situation, and that a reorganization on an actuarial basis is urgently needed. This raises the question whether this reorganization should be effected separately for each system, or whether the systems should be consolidated into one. A separate reorganization would involve for the teachers the necessity of carrying all 'The New Jersey State Pension System was discussed in the preceding chapter. 189 Teachers' Pension Systems in the United States the burden of the future HabiHties of the fund and supplying the many milHons needed to cover its past deficiencies ; on the other hand, it would necessitate the appropriation by the state of perhaps as much as a million dollars annually for the support of the state pension system on a reserve basis, and the duplication of benefits would continue. If, on the con- trary, a single system were established and supported by joint contribution, the burden upon either party might be considerably less and the system could "meet the economic needs of every member of the system, effectively relieve the schools of the superannuated and disabled, insure the efficiency of the teaching staff, and benefit the public at large." After an exhaustive actuarial investigation which showed that the retirement fund had a deficiency of about $15,000,000 (liabilities of $19,000,000 against assets of $4,000,000) the pension and retirement fund commission, which, as already stated, was appointed by the legislature of 19 17 to investigate all the pension funds in New Jersey, became thoroughly con- vinced that the teachers could not by their own contributions make the fund solvent and that the situation could be effec- tively remedied only by a merger of the two systems. It, there- fore, undertook to frame a bill providing for the establishment of a new retirement plan jointly supported and administered by the teachers and by the state and founded on an actuarial re- serve basis. ^ Minnesota Teachers' Insurance and Retirement Fund. The state-wide system of Minnesota is one of the most recent systems in this country, the law for its establishment being enacted April 20, 1915.^ The system applies to all public school teachers in Minne- sota, outside of Minneapolis, St. Paul and Duluth, where separate systems exist. Teachers who enter the service after July I, 1915 automatically become members of the fund, whereas those already in the service are given until September 'The bill became a law on April 10. 1919. For the description of the new retirement plan see Chapter XVIII. ^Minnesota, Acts, 1915, ch. 199, Apr. 20. 190 Systems With Inadequate Reserves: State I, 191 7 to join it. It is managed by a board of trustees which consists of the state superintendent of education, the state auditor, the attorney general and two members of the fund association. The revenues of the fund consist of annual contributions by the state and by the teachers. The state contributes one- twentieth of a mill tax on all the taxable property in the state, excluding Minneapolis, St. Paul and Duluth. This source will yield, during the first few years, about $60,000 annually.^ The teachers are divided into two classes : Those receiving salaries under $1,500 contribute $5 annually during the first five years, $10 the second five years, $20 the next ten years and $30 the last five years ; whereas, those with salaries over $1,500 contribute during the first ten years i^^ per cent of salary (max. $20), and during the last fifteen years 2 per cent (max. $40). No contributions are required after twenty- five years. Thirty years of service, fifteen of which must have been served in the state, entitle a teacher to a pension of $350. This pension increases by $30 for each additional year of service up to a maximum of $500. At disability after fifteen years proportionate pensions are paid, and upon death one- half of the member's contributions is refunded to his depend- ents, if no annuity has been drawn. A member is allowed credit for services rendered prior to the enactment of the law provided he has paid arrearages at the above rate. In case a member retires before he has paid in the full amount of back assessments his annuity is credited until the required amount is made up. The provision of the Minnesota system granting pensions after 20 years of service, regardless of age, is almost unique in its liberality. It would never have been introduced had 'During the year ending June 30, 1917, the fund received $80,700 in back assessments from teachers, $27,500 in assessments from new entrants, and $57,000 from taxes. The disbursements on annuities aggregated $49,300. 191 Teachers' Pension Systems in the United States its real cost been ascertained. It allows retirement at as early an age as 40, although the life expectancy and the cost of retirement benefits at that age are considerable. However, this provision is not of primary importance. It merely shows how far the founders of a system may err when they do not know the cost of retirement benefits. The system would be financially unsound even if the retirement condition was increased to thirty or thirty-five years, for its contributions and benefits are not based upon mortality rates and interest tables, and it does not operate on a reserve basis. A preliminary survey of the Minnesota fund was made soon after its establishment, at the request of the board of trustees, by Mr. E. S. Cogswell, former secretary of the Massachusetts Teachers' Retirement Fund. Asked as to his conclusions concerning the financial condition of the fund, he replied with the following statement: As the time for joining the Fund x\ssociation for the teachers in service at the time the act was passed does not expire until September, 19 17, it is impossible to make a com- plete report upon the affairs of the Fund before another year has elapsed. I am convinced, however, that even under very favorable circumstances the Fund as at present constituted by law, cannot pay in the long run more than 40% of the annuities mentioned in the act. Since the investigation was made, the board of trustees voted to pay only 80% of the annuities due October i, 19 16, as the law provides that the annuities may be prorated if the trustees believe the condition of the Fund requires it. Of course, as in the case of other pension funds just start- ing, the current income is considerably in excess of current disbursements, but it will be only a few years before the disbursements will exceed the income unless the annuities are still further reduced. The management of this Fund is efficient and progressive, and will at the proper time recommend to the legislature changes in the law so that the Fund may be placed upon a more solid financial basis. 192 Systems With Inadequate Reserves : State Wisconsin Teachers' Insurance and Retirement Fund. This system was estabHshed on June 12, 1911/ at about the same time as the New York state system. It applied to all public school teachers in the state outside of Milwaukee, where a separate system exists, and it made membership compulsory for all teachers entering the service after September i, 191 1. Teachers already in the service were given until September I, 1912, to decide whether or not they would join the fund. It is interesting to note that out of 9,168 teachers, for whom the law was elective, only 2,168 made application before Sep- tember I, 191 2, whereas as many as 7,000, more than three- fourths of the total number, which represented the bulk of the younger teachers, did not elect to come under the law. The number of contributors to the fund increased rapidly during the next five years. On September i, 191 7, out of a total of 15,500 teachers outside of Milwaukee, as many as 12,100 belonged to the fund, whereas only 3,400 remained outside. Out of the latter number 10,060 contributed i per cent of their salary, and 1,390, 2 per cent. The teachers contribute i per cent of salary the first ten years (max. $15) and 2 per cent for next fifteen years (max. $30). The total of twenty-five contributions must not fall below the amount of the first year's pension nor exceed $600, The state contributes to the fund from certain school taxes^ ten cents for each person of school age. These revenues can provide for only a small part of the real cost of the benefits, which are fixed by the law as follows : A pension of $12.50 for each year of service on retirement after twenty-five years (of which eighteen must have been in the state), or upon disability after eighteen years, and a refund of one-half of the member's contribution without interest. This Wisconsin state-wide system is more or less similar to the Milwaukee system, which was established by a state law in 1907, and amended in 1909 and 191 1. The fate of the Milwaukee system is, therefore, of special significance. After ^Wisconsin, Acts, 191 1, ch. 323, June 12. 193 Teachers' Pension Systems in the United States a few years of apparent prosperity, when the fund had accum- ulated a reserve of about $100,000, the disbursements absorbed the revenues, and the board was forced to reduce the benefits from $400 to $300.^ An amendment of the law was enacted^ which restricted the retirements by increasing the service requirements to 35 years, except for persons over 65 years of age, in whose case only 25 years of service are required. It will undoubtedly be necessary soon to introduce a similar re- striction in the Wisconsin system, because the 25-year service requirement permits retirement at a very low age and thus results not only in an undue financial burden on the system, but in the premature loss of efficient teachers. That the teachers are availing themselves of the low requirements of the system may be seen from the fact that the average age of 229 women, who have retired since the law went into effect, was only 52.7, and the average age of the 44 men was 55.8 years. This indicates that a considerable number of persons are retiring before 50 years of age. The average annuity of the women was $358.91 and of the men $365.98. The cost of these annuities at these early ages is considerable. Accord- ing to the mortality experience obtained among the New York City teachers, a woman teacher retired at 53 years of age would live and draw her annuity for about 21.07 years. The cost of the average annuity of $358.91 at that age amounts to $4,791,45. The 273 annuitants have paid into the fund a total of about $91,000, yet they will receive benefits the value of which exceeds $1,000,000, or about eleven times the amount they have paid in. How long will the fund be able to pay the tremendous excess over and above the amount which it has received from the annuitants? During the first six years the fund accumulated a balance of about $500,000 which created an impression of apparent prosperity and financial security. Yet in reality this balance is insufficient even as a reserve against the liabilities ^Milwaukee Sentinel, Feb. 17, 1916. ^Wisconsin, Acts, 1917, ch. 225. 194 Systems With Inadequate Reserves: State under the existing annuity roll, let alone the reserve necessary to assure the future payments of benefits to present active members. The annuity roll has already increased from $11,193 in 1913 to $y2,y;^4. in 191 5, and to almost $90,000 in 191 7. In a few years the disbursements will catch up with and exceed the revenues, consisting of a state contribution which is almost stationary and amounts to only about $65,000, and of a teachers' contribution which amounted to about $82,700 in 191 7 (outside of $16,000 paid in arrears) and which will not increase as rapidly as the pension roll. The fund will then draw upon the reserve which it has accumu- lated during the earlier years and will expend it in a com- paratively much shorter space of time. It will then be unable to pay the same rate of benefits and to grant new retirements. Only a reorganization of the system on an adequate basis can save it from disaster. The system is being investigated by the actuary of the Wisconsin State Insurance Commis- sion and its weakness will undoubtedly be realized. California Teachers' Retirement Salary Fund. The law establishing this fund became efifective in August, 19 13, at about the same time as the law establishing the state board of education. The fund was put into operation on January i, 19 1 4, after the state board had been organized. Membership was made compulsory for all new entrants, teachers already in the service being given until the beginning of 19 14 to exercise this option. A pension of $500 is provided after 30 years of service, 15 of which must have been passed in the state. The teachers contribute at the rate of $1 per month and total contributions at date of retirement must equal at least $360. The state contributes 5 per cent of the inheritance and transfer tax.^ ^The proceeds from the inheritance tax were as follows : In 1913, $79,344; 1914, $89,775; 1915, $139,154; 1916, $157,261. The total annual receipts of the fund from all sources amounted to $346,749 in 1916. Of this about one-half came from teachers' contributions and the other half from the inheritance tax and from interest on investments. The disburse- ments that year amounted to $140,304, the surplus, $206,445, and the capital, $683,236. Teachers' Pension Systems in the United States A statement of the retirement board says that "up to the present time the income from the inheritance tax has been very satisfactory, but owing to its uncertain character may prove disappointing at any time, and the administrators of the law do not figure returns from this source as adequate for the prospective demands on the law." Experience has shown that the use of miscellaneous and fluctuating revenues has a bad effect upon a pension fund. In all probability the combined income from the two sources will soon prove utterly inadequate. The state, according to the law, may in its dis- cretion appropriate an additional sum, but it is in no way obligated to do so. The wisest policy no doubt would be to reorganize. That this is appreciated by the managers of the fund may be seen from the following extract from the report of the finance committee of the board.^ The present annual addition to the teaching force of the state is about i,ooo, and the average annual increase in revenue from this source, therefore, will not exceed $10,000 (the aver- age contribution being $10 per year). On the other hand we are placing on the retirement roll over 130 teachers annually. In the last fiscal year the in- creased expenditure on this account over the year previous was $54,619.62. To offset this annual increase we can only anticipate an increased revenue from teachers' payments of $10,000. This conclusively disproves the impression, which somehow has gained circulation among teachers, that their contributions alone are providing enough funds to support the retirement salary demands. As a matter of fact, if the present rate of retirements persists, we will, in four years, he disbursing our entire income from all sources, and it will be necessary thereafter to draw upon our surplus. It is esti- mated by the State Board of Control that by the seventy- sixth fiscal year we will be facing a serious deficit, unless some changes are made in the conditions under which salaries are now granted, or revenues provided. A study of the histories of teachers now under retirement ^Biennial Report, State Bd. Ed., 1914-16, p. 76, 196 Systems With Inadequate Reserves: State salary shows an average age at retirement of 60 (plus) years. Mortality statistics give 12 years as the life expectancy at 60 years of age. For each teacher who takes advantage of the law at present the state assumes a liability of $500 per year for 12 years, or $6,000. Towards this sum the retiring teacher during her 30 years of service contributes $360. It is fre- quently asserted that this discrepancy is in a large measure made good by payments of teachers who leave the service without qualifying for the retirement salary, thereby forfeit- ing to the state the money they have paid in under the law. An average teacher stays in the profession about three years, and therefore during her teaching period contributes about $30 to the retirement fund. It would take contributions from 118 of these short term teachers to make up the sum necessary to pay for one teacher who remains to retire on full salary. Obviously, therefore, lapsed teachers' payments will have little effect on the larger problem of retirement salary support. In bringing these matters to public attention it is not the object of the committee to sound any unnecessary alarm, but only to make clear the fact that sooner or later steps will have to be taken looking to a more sound financial basis for the public school teachers' retirement salary fund law than exists at present. The law is in the same category with an ore pocket in a gold mine; it is rich enough on the surface, but is certain to run out in the future. It is only proper that we should begin to take some stock for the morrow. Recognizing the great benefit to California schools and school teachers of the operation of the public school teachers' retirement salary fund law, the necessity for an absolutely sound financial basis becomes a matter of vital consideration in the administration of the law. If this splendid progressive educational institution is to be perpetuated, it must be safe- guarded while its administration rests in the hands of those committed to and heartily in sympathy with the principles upon which the law is based. It is not safe to let the future financial obligations of the law depend either in whole or in part upon the generosity of biennial direct legislative appro- priations. Neither is it right or just to contemplate for the state a future financial burden out of proportion to the benefits anticipated from the operation of the law. The public school teachers' retirement salary fund law 197 Teachers' Pension Systems in the United States is based upon the theory that the schools and children of the state will be benefited by the retirement of teachers who have passed the age of real efficiency, by providing for them a salary in return for their discontinuance of active teaching. But combined with this utilitarian aim is a deep sympathy for the men and women of California who have given the best period of their lives to the instruction of the young, and a desire to see their declining years made comfortable and care- free by a stipend sufficient to meet the common necessities of existence. Thus we find combined here in this law a mutual benefit which is an ideal combination of utility and personal reward. For the benefit to the schools, the state should be willing to provide generously a lasting financial stability — for the personal benefits to accrue to the aged teachers of the state, the teaching fraternity should be willing to contribute a just portion and to agree to such modifications and limita- tions as will be necessary to place the administration of the law upon a firm and lasting foundation, so that nothing will be liable to arise in future years to curtail or to jeopardize the rewards and benefits which teachers spending their life in the profession have a right to anticipate. The board proposes several things "which can be done to make the law less burdensome in its financial administration without working any appreciable hardship;" (i) fix the age limit of retirement, except under disability, at 55 or 60 years; (2) increase the years of service in California from 15 to 20 years; (3) increase teachers' payments after 15 years of service from $1 per month to $2 per month; (4) permit no retirement for disability under 20 or 25 years of service, 20 of which has been in California. The board realizes that these measures are only palliatives. Before an adequate financial reorganiza- tion of the system can be effected, the exact financial condition of the fund must be determined by means of an actuarial valu- ation of the total assets which the fund will realize on account of its present members and the total liabilities towards all prospective pensioners among them. Virginia Retired Teachers' Fund. The difficulties with which this fund has had to contend present a striking illustra- 198 Systems With Inadequate Reserves: State tion of the results of pension legislation enacted without ob- servance of actuarial principles. The law of 1908/ which established the fund, provided it with a revenue consisting of contributions by the teachers amounting to i per cent of their salaries and of a small con- tribution by the state amounting to about $5,000 annually, and fixed the benefits as follows : A pension of one-half salary, with a maximum of $400 and $500, after 30 years of service in the state, and after age 58, if a man, and 50, if a woman; and a proportionately reduced pension at disability. The law is retroactive in its application, for it provides half -pensions for those teachers who had retired between the years 1902-1908 prior to the enactment of the law. This is a very unusual provision.^ It has been held unconstitutional in several states.' However small the total of these half- pensions, it represents an additional and immediate drain on these revenues, and the framers of the bill should have known that it would precipitate a disaster. The state superintendent of schools makes the following comment about the system : The teachers pension fund in Virginia came as a result of the movement started by a very earnest body of teachers. The law had been prepared and presented to the legislature before our department was consulted about it. We suggested, however, that the only hope of avoiding a ruling against the constitutionality of the original act was to make the deduc- tion of I per cent a matter of contract with the teachers. Our suggestion was adopted. Our pension law illustrates also the dangers inherent in a good deal of modern school legislation which is designed and put through by enthusiastic, well-meaning teachers or laymen ^Virginia, Acts, 1908, ch. 313, March 14. ''Maine, in 1913, followed the example of Virginia and provided for the grant of half-pensions to teachers who had retired before the enact- ment of the law. ^In the state of New York the court has ruled that the board has no power to grant a pension to a teacher who ceased to teach before the enactment of the law. Mahon vs. Board of Educ, 171 N. Y., 263 (1902) ; People ex rel. Wooddy vs. Partridge, 172 N. Y., 305. 199 Teachers' Pension Systems in the United States without consulting those who have practical and expert know- ledge in reference to school administration and the proper financing of new school enterprises. The teachers strenuously- opposed the retroactive feature, but the members of the legis- lature insisted upon that. While Illinois, New Jersey, Wisconsin, Michigan and many- other systems require that the total of all contributions of a teacher eligible to retirement should equal at least the amount of the first year's pension, Virginia requires a minimum of only 30 per cent. If the provisions in the several states men- tioned are insufficient to make a fund solvent, how can Vir- ginia hope to escape? In view of the provisions thus calculated to supply the fund with small revenues and to charge it with large expenditures, the law provided that in the event of insufficiency of fund the board might prorate the benefits. This of course hap- pened at an early date. Two years after the plan was started the pension roll reached $41,000, exceeding the revenues, which amounted to only $38,500. Then the board of retire- ment prorated the benefits.^ No other system either in this country or abroad has failed so soon after its establishment. The state superintendent says : Our legislation for teachers' pensions has been further handicapped by reason of the fact that the teachers are divided on the primary question of such legislation; namely, whether there should be a pension system. Therefore, the member of the legislature hears from some of his constituents the expres- sion — 'Maintain it by all means,' and from others — 'Abolish it immediately.' This divided sentiment which prevails among our teachers is the real reason why the appropriations have not been more generous. Michigan Teachers' Retirement Fund. The conditions under which this fund originated were unusual. The bill originally provided that in addition to the contributions which ^Report of the Carnegie Foundation, 1912, p. 26. In 1916 there were 419 pensions on the roll. The receipts of the fund consisted of $10,000 from the state, $41,000 from teachers and $2,000 from investments. 200 Systems With Inadequate Reserves: State the teachers were to pay, the state was to contribute $6,000 for administrative expense and was also to cover any de- ficiency that might arise. The legislature, however, struck out the latter two provisions, and on May 11, 1915^ passed the bill providing for a revenue from teachers' contributions only. The teachers" contributions were fixed by the law at one- half of I per cent of salary (max. $5) during the first 5 years, I per cent (max. $10) during the next ten years and 2 per cent (max. $20) thereafter; and the total of all contributions must equal at least the amount of the first year's pension. These contributions will be insufficient to provide the bene- fits which are as follows: After 25 years of service (15 in the state) or at disability after 15 years, a pension of one-sixtieth of salary for each year of service (min. $300, max. $500) and at resignation a refund of one-half of the member's contribu- tions without interest. In the event of insufficiency of the fund the board may increase the contributions to i, 2, and 3 per cent respectively. Even a contribution so graded would equal an average con- tribution of less than 2 per cent of salary throughout the twenty-five years of contributing, since the higher contribu- tion of 3 per cent would accumulate interest during a short period only. The experience of almost all pension funds of long opera- tion tends to show that no fund can be secure with benefits as generous as this fund allows unless it has a revenue several times as great. It is evident, therefore, that the increase of contributions within the narrow limits allowed by the Michi- gan law will be insufficient to save the fund from depletion. The board of retirement may then have to prorate pensions and even to stop granting new pensions altogether unless state aid is invoked and the system is reorganized. The first of these measures is specified by the law, the second measure 'Michigan, Acts, 1915, ch. 174. 201 Teachers' Pension Systems in the United States is made possible by the provision which leaves the matter of granting or refusing of pensions entirely in the discretion of the board. The following statement made by one of the officers of the fund in April, 19 18, shows that steps looking to an actuarial reorganization of the fund are already being taken: A few changes will be made during the next year. I believe that the Retirement Fund Board agrees with me in believing that certain changes as to bettering its finances will be advis- able at the first opportunity. The Retirement Fund Board has already placed an age limit of fifty-five among the requirements for retirement. This may be raised to sixty at the next meeting of the Board. I believe there will be an effort made in this state in the near future to have the state assume the cost of the administra- tion of the law and also to provide state aid in the support of the law. In my opinion a sound and equitable retirement system must have an age limit in addition to a service requirement. 1 believe that there should be three sources of income : 1. Teachers contributions. 2. Contribution of a like amount by the local School Board. 3. Contribution directly from the state. I believe that our fund should be placed on a sound actuarial basis at the earliest possible date. During the present school year we have collected data which gives us the salary and experience distribution for the teachers of the state and during the following school year we shall procure data which will give us the age distribution of the teachers of the state. We then hope to be in shape to make such investigations of our fund as will place the exact facts in the matter before us. 202 CHAPTER XIII SYSTEMS WITH INADEQUATE RESERVES: LOCAL SYSTEMS Philadelphia Teachers' Retirement Fund. The income of this fund is derived from two sources : the teachers and the city. The teachers contribute i per cent from their salaries the first lo years and 2 per cent thereafter (max. $50). The city contributes an amount equal to that contributed by the teachers during the preceding year, provided its financial con- ditions warrant. In no case may it contribute less than $50,000. The total contribution of a teacher eligible to retire- ment must equal at least the amount of twenty-five contri- butions. If it falls short of that amount, the difference must either be paid by the teacher or it is deducted from the pension. A pension of one-half salary, minimum $400 and maximum $1,000, is provided for a teacher who retires after 60 years of age and 30 years of service. Proportionate pensions are paid at disability and a refund of the members' contributions is provided at dismissal. The fund was established in 1907. During the ten years ending December 31, 19 16, the fund accumulated a balance of about $820,000, of which over $385,000 was accumulated during the first four years. Although the income from interest increased during these ten years from about $1,600 to $36,700, and the city subsidy which amounted to only $50,000 the first six years was increased the seventh year to $60,000, next year to $70,000 and for the last two years amounted to $80,000, and the income from arrears has in- creased to about $20,000 annually, the process of accumula- 203 Teachers' Pension Systems in the United States tion has been gradually slowing down. In 1907, $107,000 and in 1908 more than $101,000 were set aside from the income and invested, whereas during the last two years only about $72,000 annually had been added to the invested capital of the fund. The main cause of this decrease in the rate of accumulating a reserve was the rapid growing of disbursements on account of annual additions of new pensions. During 1907 fifty pen- sions were granted and two were terminated during the same year on account of death. During the next seven years as many as 340 pensions were added to the original number and only fifty-two were terminated on account of deaths and fourteen from other causes. The number of pensions, there- fore, increased from 48 in 1907 to 371 in 1916. As a result of this increase the disbursements each year required a greater proportion of the annual income as shown in the following chart : Percentage oi Expended on E Income Percentage of Year Pensions Income set Aside 1907 8.5 91.5 1909 35^5 I9H 51.6 48.4 I913 58.7 41.3 I9IS 63.6 36.4 I916 69.4 30.6 The disbursements will continue to increase more rapidly than the receipts, because the number of new retirements added each year to those already granted will not be counter- balanced by terminations. It takes a retirement fund about sixty years to strike this balance. The Philadelphia fund in its present form, however, cannot survive sixty years, for its income is inadequate and the fund will soon be depleted. It will take but a few years for the growing disbursements to catch up with and exceed the income. After the fund has reached the crisis, it will rapidly expend the reserve accumulated during earlier years and will be unable to pay full benefits and grant new retirements. This danger was realized by the retirement board as evidenced by a recent 204 Systems With Inadequate Reserves: Local report in which the board says that while the fund will be able to meet its future liabilities for some years to come, its more remote future is not reassuring. "The Retirement Board has undertaken an appraisement of the fund, employ- ing for the purpose competent actuarial service." The thought that guided the board in taking this action is stated in the following words :^ In reports for preceding years the apparently rapid accumu- lation of the reserve fund has been cited as seeming to indicate the stability of the fund, and, while attention was directed to the consideration that 'a score or more years must elapse before what will constitute normal demands upon the fund may be very definitely ascertained,' the opinion was ventured that it would be able to meet its future obligations. There is no question but that it can do so for some years to come. Recent developments, however, in connection with other sys- tems analogous to our own and whose experience, therefore, furnishes us with some indication of the probable course that funds so constituted must take as the years go on are not reassuring for the more remote future. The financial and other weaknesses which have developed in a number of state and city funds and in some systems under other than public auspices have greatly stimulated study of the whole question and it has been discovered that a large number of the existing pension systems of the country are not upon a basis recognized as sound when assets and liabilities are computed in accordance with accepted actuarial principles ; and, apart from the question of solvency, that many systems are not organized so as to promote most effectively the ends for which they are designed. The findings of this report and the results of other studies that are now available clearly indicate that the question of the solvency of any fund should not be permitted to rest upon estimates which the future may prove to be wide of the mark, but should be ascertained by exact actuarial appraisement of its assets and liabilities. It is a satisfying assurance when such an appraisement results in the verdict that a fund is solvent and that its present and anticipated resources are such that it may be expected also to continue so. It is, of course, ^Annual Report of the Philadelphia Retirement Board, 1916, p. 22, 23. 205 Teachers' Pension Systems in the United States far from satisfactory, but even more important that the fact be ascertained, if the verdict be that the fund is heading toward disaster. There are possibiHties of distress attendant upon the collapse of a retirement fund that one cannot con- template with equanimity, and for this and other reasons a system found to possess elements of weakness should be revised in whatever direction and to whatever extent may be necessary in order to place it upon an unquestionably sound basis. Asked as to the changes in the system, which he would believe advisable, one of the officers of the fund said : In accordance with the probable findings of the actuarial report, it will be necessary either to scale down the benefits, increase the contributions or make revisions of the system in both directions in order to place it upon a sound financial basis. A revision of the system in my judgment should include the following : (a) Elimination of the 'service' provision of superannua- tion retirement, i. e., have the superannuation retirement determined by age only, the years of service factoring merely as determining the amount of the retiring allowance. (b) Possibly an advance of the superannuation age beyond the present requirement, age 60. (c) Provision for a minimum disability benefit. (d) The establishment of a greater difference between the disability benefits and the superannuation benefit than is now provided in the system. (e) Provision for a refund benefit. Under the present regulations the contributions of those who separate from the service (except in the case of those dismissed for cause) are forfeited. There has been little objection raised to this partly because the rate of contribution is not large. If the system were on a sound financial basis rates of contribution would be much larger and the amount forfeited would therefore be more considerable. (f) More definite provision as to the amount of contribu- tion to be made by the Board of Education. (g) The system should be established on a reserve basis instead of on the present cash disbursement basis. In November, 19 18, a report was submitted to the retirement 206 Systems With Inadequate Reserves : Local board by the actuary, which showed that the fund had a de- ficiency of approximately $9,000,000 (Habilities of $13,000,000 against assets of $4,000,000) and "will ultimately not be able to pay more than 31 cents to annuitants for every dollar ex- pected." The report showed that it would be to the best ad- vantage of the teachers and of the city if they merged their fund with the newly created state fund. Cleveland Teachers' Pension Fund. Cleveland is one of the twenty cities in Ohio which has availed itself of the state law, 1896-1911, which enabled any city to establish a pen- sion fund provided one-third of its teachers approved it. When in 1906 the proposal was made in Cleveland to estab- lish a pension fund, 797 teachers voted for and 713 against. Since the number of votes in favor of the creation of the fund was more than what the law required, the system became operative in spite of the large opposition. The teachers already in the service at the time of establishment of the fund were given an option to join or not to join. For all new entrants into the teaching force membership was made com- pulsory. The board of trustees is composed of six members ; two members elected by the board of education and four elected by the members of the fund.^ Support is derived from two sources — the teachers and the city. The teachers contribute $2 per month, and must pay a total of $20 for each year of service for which they claim credit, up to the amount of $600. In case a retiring teacher has not paid this amount, his pension is reduced 20 per cent until the required amount has been contributed. The city pays into the fund not less than i per cent or more than 2 per cent of the gross receipts of taxation raised for school purposes. A teacher may retire after 30 years of service, one-half of which period must have been served in the schools of Cuya- hoga County, and is entitled to a pension of $12.50 multiplied ^Cleveland Teachers' Pension Fund, Rules and Regulations, 1914. 16 p. 207 Teachers* Pension Systems in the United States by the number of years of service, up to a maximum of $450. In case a teacher is disabled after 20 years of service, one-half of that time having been served in Cuyahoga County, he is entitled to a pension at the above stated rate. In the event of resignation or dismissal, the teacher or his dependents are entitled to a refund of one-half of his contributions without interest. In the event of dismissal before 20 years of serv- ice, the teacher is entitled to a return of all his contributions. In the event of dismissal after 20 years of service, the teacher is entitled to a pension for the given years of service. The financial effect of the provision allowing credit for outside services is discussed in W. A. Jessup's report on "The Teaching Staff of Cleveland," which is a part of the education survey conducted by the Cleveland Foundation in 191 5. Mr. Jessup writes: There is another reason why the school system should exer- cise great care in bringing into the force teachers who are no longer young. This is the serious effect which the employ- ment of such teachers will have on the future of the pension fund. Figures for 10 recent appointments of teachers from outside of Cleveland show that their average is 43 and that they have had an average teaching experience of 16 years. With respect to the future of the pension fund, there is a great difference between the employment of such a teacher and bringing into the force a teacher who has recently gradu- ated from a normal school and had a year or two of teaching experience. Some idea of the quantities involved may be gained from a study of the actuarial tables presented in the report of the Teachers' Retirement Fund of New York City published in 191 5. A comparison of age and experience figures for the teaching forces of Cleveland and New York, shows that the lower quartile for the distribution showing the ages of the Cleveland teachers exactly corresponds with the similar figures for those of the teaching forces of New York City. Similarly the corresponding figures of the distribution showing the teaching experience of the teachers here correspond with those showing the teaching experience in New York City. Hence we may feel fairly safe in using the New York actuarial 208 Systems With Inadequate Reserves : Local tables in making a prediction concerning the teaching force in this city. On this basis we may study the probabilities con- cerning the teachers who enter the Cleveland force at about the age of 21 as compared with those of teachers brought in at about the age of 43. Such a comparison shows that only about one-third of the teachers entering at the younger age will remain in the teach- ing profession long enough to qualify for a pension. On the other hand, eight out of nine of those who come in at the age of 43 will complete their term of service and will be eligible for pension benefits. Taking into account the payments to the fund made by all of the teachers entering at the different ages, the refunds made to those who resign, the proportion of survivors who become eligible for pensions, and the expect- ancy of life after beginning to participate in the pension bene- fits, a careful computation shows that the sum involved by the pension fund for teachers employed at the age of 21 amounts to about $130 for each year of teaching service actually rendered, while the corresponding risk for teachers employed at the age of 43 amounts to about $330 for each year of teaching service actually rendered. The board may prorate the pensions if the fund proves in- sufficient. In 1 91 6 the fund had a membership of about 1,800, a capital of about $400,000 and a pension roll of about 100 beneficiaries.^ The statistical data for the years 1911-1917 are shown below ITCIVW Annual Surplus (Excess of Income Teachers' Interest on Pension Over Year Contributions Taxes Investments Disbursements Disburse- ments) 191 1 $16,150 $34,716 $6,439 $l8,Q00 $36,020 1912 24,186 34,606 8,571 22,945 46,630 I913 30,466 35,565 11.450 26,499 49,567 I914 33,212 38,526 13,521 29,755 58,367 1915 35,225 42,139 17,455 35,356 58,913 1916 37,444 43.915 20,201 39.901 58,253 1917 43.025 47,460 23,840 49,478 61,133 Boston Teachers' Retirement Fund. At the establishment of the fund in 1900- only a very inadequate attempt was 'With the enactment in May, 1919, of a sound state retirement system in Ohio (which is discussed in Chapter XVIII) an opportunity is given to the Cleveland and other local pension funds of Ohio to merge with the state system at any time. ^Massachusetts, Acts, 1900, ch. 237, April 7. 209 Teachers' Pension Systems in the United States made to ascertain whether or not the income with which the fund was provided would accumulate sufficient assets to meet its liabilities. The fund was provided with a revenue consisting of teach- ers' contributions of $i8 per year and of payments by annui- tants whose total contributions amounted to less than $540. Upon retirement after 30 years of service or at disability, an annuity was granted, if applied for, the amount of which was to be determined by the board of trustees each year, in accordance with the financial condition of the fund. At resignation of a member, one-half of his contribution was refunded, if applied for within three months. Membership in the fund was made compulsory for all new entrants into the service and optional for those already in the service. Of the latter 1,256 have elected to become members. The fund was divided into two parts : a "permanent fund" which consisted of the members' contributions, "gifts, legacies and sums set apart by the board of trustees; and a "general fund" which was formed of the contributions of the members, the interest from the "permanent fund," the moneys left by deaths and resignation of members, and the payments by the annuitants to complete $540. The board of trustees and its committee on finance were of the opinion that by dividing the income between the two funds they would always be able to determine "between what limits the fund may be safely and justly used in the payment of annuities." "By this system," the report of the finance committee of 1902 said, "it will be seen that the fund is always solvent." The actual experience of the fund, however, proved later on that through error of judgment as to the rate of annuity which could be allowed the fund failed to be solvent. The method adopted by the board of determining what annuity the fund could afford to pay was rather crude. In 1901 the board of trustees decided that "the fund would 210 Systems With Inadequate Reserves : Local allow" $150. In the year 1903 the board of trustees decided on $168. In 1904 it decided that the condition of the fund warranted the payment of $180. Since that year and up to 19 1 4, $180 was the annuity paid. During the fourteen years from 1900 to 19 14 the number of annuities increased from 7 to 249, and the annuity roll increased during the same period from $329 to over $45,000. The membership of the fund exceeded 2,600 and its balance at the end of that period amounted to about $392,000. In the year 19 14 three members of the Massachusetts Com- mission on Pensions, which was appointed "to report fully and in detail the various systems under which pensions are now paid" in Massachusetts, made an investigation of the fund. Mr. H. D. Brown, the actuary of the commission, reported that his estimate of the assets and liabilities of the fund showed a deficit in the fund of $1,312,687 and that the fund would not be able to meet its future liabilities on the basis of a $180 annuity. The board of trustees immediately engaged Mr. W. J. Montgomery, the state actuary, to investigate and report what amount of annuity the fund could afford to pay. He reported on September 14, 19 14, that the condition of the fund was such that an annuity of only $81 could be paid existing and prospective pensioners in return for the annual contributions of $18 without incurring a deficiency, and that if the payment of $180 were continued to the members already retired, then only $61 could be paid to the members who might be retired after 1914.^ Finding that the uniform contribution of $18 per year, regardless of age, was inadequate and unsound and could not safely guarante even a reduced annuity of $81, the actuary recommended that legislation should be secured by which the contributions might be increased and graded according to age and that a gradual reduction of annuities, say $25 or $30 each ^Report of the State Actuary to the Board of Trustees, 1914. 14 p. 211 Teachers' Pension Systems in the United States year, should be adopted until such time as the fund shall be on an adequate basis. Upon the receipt of this report the board of trustees decided to reduce the annuities to $132 and a year later it further reduced the annuities to $120. The annual report of the board for the year 191 7 contains the following passage : At the December meeting of the Board at which the rate of annuity for the ensuing year is annually established, the question what annuity our Fund will allow to be paid to our annuitants, year by year without affecting its solvency, which has, of late greatly interested our Board of Trustees as well as our annuitants and our contributing members, came up for consideration, some members of our Board believing that even our reduced annuity of one hundred twenty dollars was too large and that the annuity should be still further reduced. After some discussion it was finally voted to make no change, and for the year 191 7 to continue the annuity rate at one hundred twenty dollars a year' the same as in 19 16. The rate of annuity for the year 1918 will be fixed at the regular monthly meeting of the Trustees next December. Boston Teachers' Permanent Fund. An act of 1908^ provided for the creation of this fund from city revenues, and the inclusion in it of the members of the contributory retirement fund just described, which had been established in 1900. Taken together, the annuity of $180 from one fund and the pension of one-third salary from the other, the com- bined benefit amounted to half salary. The pension could be granted only after 65 years of age and 10 years of service or at disability. The fund was provided with an income consisting of a city contribution of five cents for each $1,000 of assessed valuation of taxable property. This income which had but a slow rate of increase, as compared with the rapidly increasing pension expenditure, could not remain long adequate. It took the ^The capital of the fund at that time amounted to about $486,000. 2Massachusetts, Acts, 1908, ch. 589, June 3. Receipts by Expenditure Year Tax Valuation on Pensions 1908 $63,891 $1,678 1909 65,043 8,075 I9IO 66,194 26,247 I91I 67,770 55,350 1912 70,192 64,510 I913 72,012 72,889 Systems With Inadequate Reserves : Local fund only six years to develop an excess of expenditure over income as shown in the following table/ Surplus Deficit $62,213 56,968 39,946 12,420 5,681 $876 In order to cover the deficiency, the fund was forced to draw upon its balance which amounted in 191 3 to about $189,000, and which would have been expended during the next four or five years had the fund continued to operate with the same income. At that critical stage in the development of the fund, the estimate of the condition of the fund by the Massachusetts Commission on Pensions was made. The report of Mr. H. D. Brown, the actuary of the commission, showed that the fund had a deficiency of $3,700,000, which would have to be provided for if the fund was to operate on a reserve basis. The actuary also estimated what the ultimate cost to the city would be if the fund should operate on a cash disburse- ment basis, appropriating the necessary amount directly each year as it came due. He found that for the same number of members and same size of payroll, the annual cost to the city in pensions, which in 191 3 equaled only about 2 per cent of the amount expended that year in salaries, would increase for the next sixty years, reaching as much as 12 per cent of the amount expended in salaries. Not before sixty years would the fund reach the normal level at which new pensions would be counterbalanced by terminations on account of death. The cost to the city would then normally remain at the high level of 12 per cent. The only immediate effect of the report was that a law was passed in 191 5 increasing the income of the fund from five to seven cents per $1,000 valuation. The fundamental 'Massachusetts, House Docs., 1914, No. 2450, p. 49. 213 Teachers' Pension Systems in the United States question whether the fund should be operated on a reserve or cash disbursement basis was left undecided. The increase of the fund's income could give the fund only- temporary relief. The increase amounted to about $30,000 and raised the 191 5 income to about $105,000. Out of this amount, however, as much as $90,000 had to be expended on pensions during that year, leaving an unexpended balance of only about $15,000.^ In the year 19 17 an act was passed by which the fund became subject to the reimbursement provisions of the law of 191 3. The state reimburses the city with practically the entire amount of newly granted pensions, as may be seen from the following statement: Amount of Year Ending Pensions Paid Reimbursement Balance Paid July I by the City by State by City 1915 $8,782.55 $8,637.68 $144-87 1916 16,132.59 15,684.28 448.31 It would, therefore, appear that in the course of time as the old pensioners, retired before July i, 1914, die, and are dropped from the pension roll, the city will receive from the state in reinbursements practically the entire amount it will pay for pensions, and the state will bear practically the entire burden, which, as already shown, will increase from year to year, because no reserve is provided against the future pay- ments. Baltimore Teachers' Retirement Fund. This fund is managed by a board of trustees which consists of the city comptroller, the superintendent of instruction, two members of the board of school commissioners, and three members elected by the teaching force. The fund derives its support from a contribution by the teachers and from a discretionary appropriation by the city. The teachers contribute i per cent of their salary (max. $14.40) during the first 10 years of their service, ijE/^ per cent (max. $21.50) the next 10 years ^Annual Report of the Fund, 191 5. In the Minutes of Evidence of the Boston School Committee, 1916, Feb. 21, p. 19. 214 Systems With Inadequate Reserves : Local and 2 per cent (max. $28.80) thereafter. They must con- tribute in total an amount equal to one year's pension before they can retire, otherwise their pension is reduced. After 40 years of service, 20 of which must have been served in Baltimore, a teacher is entitled to retirement (pro- vided the approval of the board of trustees of the retirement fund is secured) on a pension of one-half of the average salary of the last 5 years, minimum $260 and maximum $600. Proportional pensions are paid at disability after 20 years and a refund of one-half of the member's contributions is made at resignation, dismissal or death after any length of service. In the year 1909,^ when the fund was established, no retire- ments were made and no expenditures were incurred. That year's receipts, amounting to about $14,000, remained in the fund. The first pension expenditure made in 19 10 amounted to only $7,670 which was considerably less than the amount of the teachers' contributions. The excess of the latter over the expenditure was increased by the city's $3,000 appropria- tion. During the third year, however, the pension expendi- ture more than doubled, thereby exceeding the amount of the teachers' contributions. The total receipts, including these contributions, interest on bank balances and the city's $3,000 appropriation, resulted in only a very slight additional balance. During the fourth and fifth years the rapidly increasing dis- bursements forced the city to increase its appropriation from $3,000 to $8,200 and $9,100 respectively. Since the receipts from members' contributions increase much slower than the disbursements of the fund, as shown in the following table, it is evident that the city will be called upon to grant the fund higher and higher appropriations each year. Contributions City Year of Teachers Interest Appropriations Pension Roll 1909 $11,227 $56 $2,780 No I9IO 16,684 781 3-000 7,670 I9H 16,913 940 3.000 18,418 1912 17.844 1,082 8,200 23,046 1913 19,022 1,307 9,100 26,330 ^Maryland, Acts, 1908, ch. 78, March 12. 215 Teachers' Pension Systems in the United States The investment of the fund amounted in 19 13 to about $33»430- Buffalo Teachers' Retirement Fund. Among the teachers' retirement funds in this country, that of Buffalo is one of the oldest. The law of 1896/ by which this system was established, provided that the fund should consist of contributions from teachers, the amount of which should not exceed i per cent of their salaries. A teacher who served 40 years, if a man, and 35 years, if a woman, was entitled to retirement on a pension not exceeding one-half his final salary. The retirement board consisted of the mayor, the superin- tendent of education, the chairman of the board of school examiners, the president of the Principals Association and the president of the Women Teachers Association. After about ten years of operation, during which the fund accumulated a balance of about $72,000, the disbursements of the fund exceeded its receipts. In view of this excess of disbursements over receipts an amendment of the old law was secured in the year 1909, which increased the teachers' contributions up to 2 per cent of salary and authorized the city to contribute an amount equal to that contributed by the teachers during the preceding year.* At the same time the benefits were made more liberal by reducing the required length of service to 35 and 30 years for men and women respectively.^ The provision of the law of 1896, allowing the board to use not only the income but also the principal of the fund, and to reduce the amount of pension if necessary, re- mained in force. The increase of the teachers' contributions and the addition of a new source of revenue in the form of an annual appro- priation, which has been fixed by the city at $10,000 since 1909, have temporarily averted an exhaustion of the fund 'New York, Acts, 1896, ch. 928. 2New York, Acts, 1909, ch. 554, May 28. 'For detailed provisions of the law see table on page 303. 216 Systems With Inadequate Reserves: Local and have permitted the fund to increase its principal, which in 191 5 amounted to about $i30,cxx). As the disbursements of the fund will continue to increase (they already exceed the amount of the teachers' contributions) the city will be com- pelled either to increase its appropriation or to draw upon the principal of the fund or reduce the amount of pension. By doing so, it may prolong the existence of the fund for a short time, but ultimately it will have to be reorganized. One of the latest developments in the system is the prepara- tion of an actuarial estimate of its assets and liabilities. It showed that the total liabilities of the fund amounted to about $3,800,000, of which about $400,000 represented the liability on account of the ninety-eight pensions, which aggregated about $40,000 annually. The assets of the system amounted to only about $800,000, leaving a deficiency of $3,000,000. The actuary reached the following conclusions :^ If no change is made in the contribution, it will not be long before reductions will have to be made and the beneficiaries of these funds must either face a complete readjustment or still be in doubt as to the exact amount of their pensions, hav- ing only the very unsatisfactory knoweldge that eventually the annuity payments will be exceedingly small. We would suggest, first, that an opportunity be given to the employees to express an opinion as to whether or not they desire a continuation of these benefits. It may be that a majority would prefer to have the law revoked and then make provision for their future as individuals. It might be well to admit that the scheme was ill-conceived and all parties agree to undo as far as possible what has been done and abolish the different funds (teachers', police and firemen's funds) by having the city return to the employees the deduc- tions made in the past from salaries, while at the same time assume the responsibility of continuing the pension for those now receiving benefits. If an employee were told that the benefits called for in the law could not be paid and that consequently he was receiving ^Report on the Firemen, Police, and Teachers' Pension and Retirement Funds, March 3, 191 7. 217 Teachers' Pension Systems in the United States back his contributions, he would at least feel as though he were being treated fairly. Those who are now on pension could have no complaint, as their benefits would be continued. If it is preferred not to abolish the funds, but to make a readjustment, it ought to be on some permanent basis. Each member should receive a certificate stating that he is a member of this association and that in consideration of such and such a payment by him, accompanied by such and such a contri- bution from the city, benefits will be granted in accordance with the terms thereof. This is similar to the action of an insurance company which issues its definite guarantee to its policyholders in the form of a contract and which then places all its resources behind the contract. New Orleans Teachers' Retirement Fund. The system of New Orleans has been in operation only since 1910,^ yet it has already met with difficulties. Up to 1913 the fund was supported only by the teachers. They contributed i per cent of their salary the first 10 years of service and 2 per cent thereafter. The fund provided benefits of one-half of the average salary of last five years (min. $300 and max. $600) upon retirement at age of 65 or after 30 years of service, 10 years of which must have been served in the city, and it paid proportional pensions at disability. One-half of the teachers' contributions were refundable at death or resignation, and the full amount at dismissal. After three years of operation the disbursements of the fund exceeded by about $4,000 its receipts from teachers' contributions and from the interest on the deposits. To cover this deficiency the city appropriated $580, a donation of $180 was secured and a festival was arranged, the proceeds of which amounted to about $1,600. Still a deficiency of about $1,500 remained uncovered. The fund had to draw upon its capital, thereby reducing it from $18,000 to $16,500. Next year (1915) the disbursements, amounting to about $18,860, exceeded the regular receipts by about $5,000. This deficiency was covered by securing an appropriation of $i,ooa ^Louisiana, Acts, 1910, ch. 116. 218 Systems With Inadequate Reserves: Local and by borrowing $5,000 from the board of school directors. In 19 1 7 the pension disbursements amounted to approximately $23,000 and exceeded the regular revenue from teachers' contributions and interest by more than $10,000. The defi- ciency was covered by raising $5,000 "from proceeds of edu- cational day, farm and live stock show," $4,000 from sale of waste paper, $200 from royalties on spelling lists, and $1,900 from an appropriation by the city. The capital of the fund was still further reduced to $11,120. It is evident that the fund cannot exist long under these conditions. In 19 1 8 a bill was prepared and its passage secured by which the Orleans Parish School Board was required to appropriate at least as much as the assessment paid by teachers, and further, the rate of assessment paid by the teachers, which ranged between i and 2 per cent, was changed to 3 per cent. One of the officers of the fund says: "By the provisions of this law we will receive annually about $60,000, and as we are now paying retired annuities of about $24,000, we feel that in a short time the fund will be placed on a stable basis." Denver Teachers' Retirement Fund. This system, estab- lished in 1909,^ is supported by the city by a special levy amounting to a maximum of one-tenth mill. The teachers do not contribute. Men may be retired on a pension of $360 at age of 60, and women at the age of 55, provided they have served 25 years, 15 of which must have been served in the city, or at disability after at least 10 years of service. The granting of pensions depends entirely upon the discretion of the city, which may at any time discontinue granting new retirements. There were sixty teachers on the pension list in 191 7. The increase in the disbursements of the fund is shown below. ^ Year Ending Year Ending June 30 Disbursementi June 30 Disbursements I9IO $180 1914 10,080 I9II 3,000 I915 12,600 1912 3,660 1916 16,110 I913 7,200 1917 19,440 ^Colorado, Acts, 1909, ch. 214, May 5. ^On June 30, 1917, the fund had a cash balance of $27,700. 219 CHAPTER XIV SYSTEMS WITH INADEQUATE RESERVES: THE CHICAGO FUND The Chicago Teachers' Retirement Fund presents a history so illuminating as to warrant a treatment somewhat fuller than that accorded the other systems operating with inadequate reserves. This history may be divided into three periods. From 1895 to 1907 the fund was wholly contributory, i. e. supported by the teachers and not subsidized by the city. Part of the teachers supported it but a considerable part opposed it vigorously, and under the pressure of their opposition mem- bership was made optional. The second period started in 1907, when the increasing inadequacy of the fund resulted in a subsidy by the city. The optional feature was changed to a compulsion with certain limitations. The increased con- tributions of the city temporarily improved the condition of the fund, which, however, continued to operate on an actu- arially unsound basis. The third period is now beginning with an attempt to reorganize the system on an actuarial basis. The Fund Wholly Contributory: 1895-1907. The law which established in 1895^ ^ retirement fund for teachers and public school employees of Chicago was passed at the solicitation of teachers' associations. It provided for the establishment of a pension board composed of the board of education, the superintendent of schools and two teachers, elected by the members of the fund, thereby giving the repre- sentatives of the city the majority voice. Membership in the fund was made compulsory. The teachers and the public ^Illinois, Acts, 1895, p. 312. 220 Annual Annual Annual Surplus Receipts Disbursements (Excess of Receipts Over Disbursements) $38,500 $4,800 $33,700 40,500 19,400 21,100 45,600 32,700 12,900 54,000 46,300 7.700 Systems With Inadequate Reserves : Chicago school employees were to contribute to the fund a maximum I per cent of their salaries. This revenue was thought suffi- cient to provide pensions of half salary, maximum $600 after 25 years of service. At no time were reliable estimates made of the real cost of retirement benefits. The city was not called upon to contribute any part of the cost, the law explicitly stat- ing that "no taxes shall ever be levied or an appropriation of public money be made for said fund. * * *" During the first year of the fund, the disbursements amounted to only $4,752. They rapidly increased from year to year as shown in the following table : 1896 1897 1898 1899 The margin between the inadequate revenues and the in- creasing disbursements became so narrow after four years of operation as to make evident that within a year or two the disbursements would exceed the receipts. In February, 1900, after the proposal to employ an actuary had been defeated, the board of trustees appointed a com- mittee of five "to study the question and take it up with the teaching force with instructions to investigate and suggest what changes can be made to the pension law so that the same may be put on a sound basis. "^ A few months later the disbursements exceeded the receipts and the question as to the need for an actuarial investigation was again raised, not in the board of trustees but in the pension convention of delegates from the teaching force. The convention resolved that the investigation of the committee of delegates showed clearly "the insolvent condition of the pension fund and its utter inadequacy to meet the obligations that have already been assumed, to say nothing of the caring for future pen- ^Proceedings of the Board, Feb. 7, 1900. 221 Teachers' Pension Systems in the United States sions; and that "it is a great wrong to the contributors as well as those pensioned to continue under the present law," and that il is "the duty of the trustees of the fund to properly protect the contributors;" and requested the board "to take some action to provide funds for employing an actuary to amend the pension law." The actuary engaged, as a result of this resolution, reported in March as follows: I find that the contribution of i per cent is insufficient to provide such maximum annuity as the law prescribes. I find that in no ordinary case would the contribution of i per cent during twenty-five years of service be sufficient to provide an annuity much, if at all, exceeding $50 per annum. For a twenty years' term of contribution this amount would be considerably less, in some cases not one-half of the maximum amount just suggested. * * * Yet the fund has been paying in just such cases pensions ranging between $400 and $600.' The report showed that even if the present contributors were to forfeit all their contributions made theretofore and the capital of the fund could be set aside exclusively for the pensioners already retired, it would barely cover one-sixth of the necessary amount. This would leave contributors not yet pensioned to start anew as if they never had contributed to the fund, and would provide them with only such very small benefits as their future contributions might earn for them. The actuary pointed to some of the inequitable features of the system, stating in part that "the provision requiring equal contributions for equal benefits is inequitable between con- tributors of different conditions as to age, term of contri- bution, term of service, etc. The amount of the annuity or the rate of contributions, or both, should be varied with due regard to these conditions." He submitted recommendations for the amendment of the law and suggested that until the ^Proceedings of the Board of Trustees, April 3, 1901. 222 Systems With Inadequate Reserves: Chicago proposed amendments should be adopted all pensions be re- duced to a nominal amount of $5 or $10 per annum. Membership in the Fund Made Optional. About that time a movement was started among the teachers against the compulsory contribution. It was claimed that participation in the retirement fund was a private not a public matter and that the state had no constitutional right to compel the teachers to contribute. The compulsory principle was branded as ''dangerously socialistic."^ A persistent movement carried on by some of the more violent opponents of the plan finally secured from a majority of the teachers an expression of opinion against it, and in July, 1902, an amendment to the law was enacted, under which any contributor who filed with the board of trustees a notice of his desire to withdraw from the fund could be released." Commenting upon the effect of this law, one of its leading proponents wrote : Since that time over one-fourth of the teachers have with- drawn from all share in this sort of insurance, and more are withdrawing every day, thereby reducing the liabilities of the fund. This marks the end of any general interest in a teachers' 'pension' or retiring fund. The 'pension' is a lost cause. The recent reduction of annuities from $600 to $240 is a convincing argument against the system. While the proponents of the optional system were of course n'his attitude was well reflected in an article by Mr. Edward Manley of the Englewood High School in Chicago, which appeared in the Edu- catioJial Review of 1002, p. 156. The following comments of the writer with regard to retirement funds generally are interesting: "Only in the case of teachers and other employees of school boards has this form of socialism become law in this country. In some states there are statutes by which a part — generally one per cent. — of the salaries of all employees of school boards has been withheld and put into a 'pension fund.' Money thus obtained has been or will be used to pay annuities to those who have resigned their positions after teaching the required number of years. Such legislation is dangerously socialistic and would fail utterly if applied to a less docile and submissive class of our citizens." ^The amendment read as follows: "Any public-school teacher or public-school employee, a part of whose salary is now or may hereafter be set apart to provide for the fund herein created by this act, may be released from the necessities of making further payments to said fund by filing a written notice of his or her desire to withdraw from complying with the provisions of this act." 223 Teachers' Pension Systems in the United States wrong in thinking that they had succeeded in breaking down any general interest in a retiring fund, they had seriously crippled its development for the next few years. During the period from 1901 to 1907, when the fund operated on a voluntary basis, as many as 2,000 teachers with- drew from the fund, and very few new teachers joined it; and along with the weakening of the fund from outside, an internal destruction was going on. The resources of the fund were falling rapidly and at the same time the disbursements were rapidly increasing on account of the natural but unpro- vided-for increase in the number of retirements. Pensions were reduced again and again. The first reduction in 1901, which amounted to a sudden drop from $600 to $240, was followed by several further reductions during the next six years. The last reduction, made in 1906, cut the pension down to $135. Still the resources were insufficient. The capital of the fund had to be drawn upon, causing some of its securi- ties to be sold. All these reductions imposed a considerable hardship upon the beneficiaries of the fund and the efficiency of the schools. The loss of confidence in the fund is illus- trated by the fact that in one month about 1,000 teachers withdrew. Soon the teachers themselves realized the seriousness of the situation and started a movement to save the fund which they had so nearly destroyed, and to induce those teachers who had withdrawn to reenter and to bring in those who failed to join during the optional period. They had to secure legislation which would make membership compulsory for all new entrants, thus opposing the principle of voluntaryism for which they had fought in 1901. Through the last six- teen years they have devoted considerable time to two objects : to regaining lost membership, and to securing legislation for city contributions. But they still ignore the important fact that the financial basis of the system is itself unsound and that the remedy lies only in reorganization. 224 Systems With Inadequate Reserves : Chicago City Contribution and Compulsion for New Entrants Since 1907. During the rapid decline of the fund a move- ment was started by the teachers' association to secure legis- lation covering the following points : ( i ) the city to contribute to the fund; (2) membership to be compulsory for all new entrants; and (3) the members of the fund to have a majority representation in the board of trustees. With this movement the second period in the history of the fund began. No change in the unsound method of operation was contemplated. The recommendations made by the actuary in 1901, to put the fund on a sound basis, were forgotten. It was evident that the majority of the teachers would have opposed any such increase of their contributions as suggested by the actuary. Two bills were prepared by the teachers' associations, both of which were passed by the legislature on May 24, 1907.^ One of these provided that the city should contribute to the retirement fund the interest on all school funds. The other struck out the 1895 provision which prohibited the city from contributing to the fund. It allowed all non-contributors until the end of the year to join the fund, provided they paid their back contributions. Besides granting a city subsidy, it offered them the following inducements: (i) all services rendered outside of Chicago were to be credited for retire- ment, providing the teacher paid contributions for that period ; (2) the fund was to be managed by a board of nine, six of whom should be teachers, two members of the board of education, and one the superintendent of schools; (3) the contributions for the younger teachers were to be lower than under the old plan. The scale of contributions was arranged as follows: during the first 5 years of service, $5 annually* during the second 5 years, $10; during the third 5 years, $15, and after 15 years of service, $30. Such a scale tended to attract the younger teachers, who otherwise were not inter- ested in a retirement fund, and to keep away the older teachers ^Illinois, Acts, 1907, May 24, p. 529-34. Bills 842 and 843. 225 Teachers' Pension Systems in the United States who, being nearer retirement, would have imposed upon it much greater burdens. The provisions making membership compulsory for all new entrants assured the fund a consider- able yearly increase of membership. At about this time a considerable difficulty arose with regard to the city's contribution. Although the city comptroller was required by the new law to add to the pension fund the interest on school funds, he withheld this money on the advice of the corporation counsel that the requirement was an unconsti- tutional diversion of public money to a private purpose. The teachers' convention thereupon adopted a resolution requesting the board of trustees to institute a suit to establish the validity of the law. Immediately after its organization, the board addressed a letter to the teachers, stating that "in order to make it clear that the payment of money for teachers' pensions is for the benefit of the public and therefore for a public purpose, it will be necessary to collect data to show that in practical operation the pensioning of public employees has proved to be a public benefit."^ It urged the teachers to sign a petition requesting the board of trustees to obtain from the board of education one month leave of absence for the presi- dent of the board of trustees for the purpose of preparing material for legal proceedings, and also of securing before December 31 as many contributors as possible from among the 2,000 teachers not then contributing. The petition was signed by 3,000 contributors and the leave of absence was granted. As a result of the membership campaign about 700 teachers reentered the fund on or before December 31, 1907, and paid in arrears of $32,000 besides their regular annual contributions. The suit was started on November 19 of the same year, and was won in the lower courts. A year later the same ques- tion was raised in reference to all the pension funds in Chi- cago by an injunction proceeding against the city treasurer ^Report of the Board of Trustees, Dec. 21, 1912, p. .[3. 226 Systems With Inadequate Reserves : Chicago to enjoin the payment of any public moneys for pensions to policemen, firemen, teachers and other public employees. Judge Mack sustained the constitutionality of all the pension acts including the interest act above mentioned, in the course of his opinion saying: The court is clearly of the opinion that the use of public money for this purpose cannot be held beyond a reasonable doubt to be for a private purpose. On the contrary the court believes that the use of public money for the pension fund is an application of it to a public purpose. He further stated, however, that he did not mean to hold that pension legislation gives its beneficiaries a vested interest. In 1909 the board of trustees secured legislation which confirmed the interest law of 1907.^ A provision with regard to credit for outside service was also inserted, which required that at least three-fifths of the service must have been served in the city. The money paid by the city and the contributions and arrears paid by new members immediately improved the affairs of the fund and permitted the board to increase the maximum pension to $225, and, a few months later, to $250. Although this was still a very small pension, it represented to the bene- ficiaries a considerable increase as compared with the $135 pension of three years before. A letter addressed by the board to the teachers, dated October 22, 1910, stated that there were at the time 4,870 contributors and 1,420 teachers who did not contribute. "The 1,420 comprise those who had withdrawn from the pension law of 1895 and did not take advantage of the opportunity to become contributors under the law of 1907. Many of those who neglected that oppor- tunity wish to have another granted to them."^ No reliable actuarial investigations were made to determine whether the fund would be able to pay the increased pensions. Yet the board stated in its letter that "the policy of the ^Illinois, Acts, 1909, p. 384-88. ^Report of the Board of Trustees, Oct. 22, 1910, p. 3-4. 22J Teachers' Pension Systems in the United States trustees has been to so administer the fund that the annuities need never be reduced, and with that object in view, the inter- ests of the teachers just beginning, who may become a risk twenty-five years hence, have been preserved by increasing the invested fund. The reserve fund needs to be increased to $1,000,000. The funds from other sources than teachers' contributions should be augmented. How each is to be done is a matter for the contributors to decide." The sum consumed for annuities will increase year by year and the income should increase also. The teachers have been generous beyond their means. If the public wishes profes- sional teachers, it must assist in some way to make conditions such that teachers may feel that if they give their whole energy to teaching, they will not come to want when they can work no longer. The majority of teachers have financial responsi- bilities thrust upon them which renders it impossible to put by a competency for the years of disability, were the salaries sufficient for oneself. The occupation consumes all of the teacher's attention, and with the requirements demanded of them in these changing social conditions, no time is left for giving heed to business investments.^ As shown by these quotations the board ignored the fact that the system was fundamentally unsound. While the build- ing up of a million dollar reserve was a commendable enter- prise it would not put the fund on a solvent basis but merely prolong its uncertain existence. Encouraged by their success in the matter of legislation in 1907 and 1909, the board of trustees took steps to secure legislation which would authorize the board of education to contribute an additional amount, and to enable the teachers to join who had failed to do so in 1907. Two bills prepared by it became law on July i, 1911.^ The board of education was authorized to make an additional annual appropriation which together with the interest from school funds would equal the total amount contributed by the teachers, and the iReport of the Board of Trustees, Oct. 22, 1910, p. 4. ^Illinois, Acts, 1911, p. 511-12. 228 Systems With Inadequate Reserves : Chicago non-contributors were given one year's time to join the fund on condition that they pay their back contributions with interest. The next action of the board was to increase the pension from $250 to $300. This increase was adopted on the basis of a report of the committee on increase, dated February 17, 1912, which stated: "We are desirous of giving the whole income to the pensioners as rapidly as possible but, at the same time, do not think it wise to advance immediately to the maximum figure, $400, lest our income may not meet our outgo. "^ Some calculations were made by the members of the committee but these calculations were not reliable and no actuarial investigation or valuation of the assets and liabili- ties of the fund was made. The two acts passed in 1911 and the subsequent increases of the fund's resources and of the amount of annuity paid considerably strengthened the once shattered confidence of the teachers in the fund. Within one year more than 500 non- contributors returned to the fund and paid in about $65,000 in "lump sums" (back assessments) and about $14,000 in current contributions.^ On account of the increase in the rate of the city contribution, the income from this source more than doubled during the year 19 12, jumping from $78,000 to $185,000,^ and the excess of income over disburse- ments also about doubled, increasing from $93,000 to $182,200. During the four years 1909-1912, the capital of the fund increased 400 per cent, reaching on June i, 1913, $468,000. Desiring to find out how many teachers from among the ap- proximately 800 who, having completed 25 years of service were eligible to retirement, would retire if the pension were increased from $300 to $350, and how many more would retire if it were increased to $400, the board sent out a ques- iReport of the Board of Trustees, 1912, Feb. 17, p. 16. 2Report of the Board of Trustees, 1912, Dec. 21, p. 44. •Year ending July i, 1912. 229 Teachers' Pension Systems in the United States tionnaire. On the basis of the returns, the board decided in December, 1912, to increase the pension to $350.^ This was the second $50 increase in the same year. The great activity of the teachers in the matter of obtaining new pension legislation was continued the next year. While the law of 191 1 established the principle of equal contributions by the teachers and by the city, the bill prepared by the board of trustees in 19 13 authorized the board to contribute twice the amount of the teachers' contributions. No increase of the teachers' contributions was contem- plated, although the average salaries had steadily increased as shown in the following table :^ 1887 $641 1897 725 1904 812 1907 857 1909 911 1911 988 1913 1,054 The bill became a law on June 26, 19 13. It made manda- tory upon the city what had been permissive under the law of 1911, the contribution of an amount equal to that contributed by the teachers. It also gave another opportunity, the fourth and the most ample, to enter the fund to those who had hot theretofore entered. They were given three years time within which to do so. Meanwhile the disbursements had continued to increase more rapidly than the income, as shown in the following table, Year Ending Annual Annual Annual Surplus Dec. 31 Receipts Disbursements (Excess of Receipts Over Disbursements) 1912 $298,400 $116,200 $182,200 1913 267,200 157.400 109,800 1914 278,900 185,100 93>8oo The excess income of 1914 fell even below that of the year 19 10, when the city contributed only interest on school funds. During the following two years, however, the excess income increased on account of "lump sum" payments made by for- iReport of the Board of Trustees, Dec. 21, 1912, p. 52, 53. ^Compiled from Reports of Chicago Board of Education, 1909 (p. loi) and 191 1. The figure for 1913 was taken from Educational Survey of Cleveland Foundation, vol. on Teaching Staff, 1916, p. 20. 230 Systems With Inadequate Reserves : Chicago mer contributors who reentered the fund in large numbers before the time Hmit (July, 1916) expired, and back assess- ments paid by annuitants who were completing their pay- ments of $450. First Step towards Actuarial Reorganization in 191 7. The move for actuarial reorganization of the fund came from outside the fund. Public opinion in the state began to realize that all was not well with their pension funds. The state ap- pointed a commission in January, 1916 "to investigate the oper- ation of all pension laws heretofore enacted in the state, to gather together all available information as to the present and probable future cost of maintaining the funds created by said laws, and to collect all available information in regard to the operation of similar laws in other states and countries." The commission was authorized to employ actuarial assistance. In investigating the Chicago fund, the commission found that on account of accrued liabilities the fund had an actuarial deficiency of more than five million dollars, that "this de- ficiency will increase under the present method of operation" and that "the time is therefore at hand to put the system on a sound financial basis."^ After discussing the matter with the retirement board, the commission prepared a bill intended to provide the fund with a more adequate income. Contributions of the members were increased according to the years of teaching experience. Those with 4 years or less were to contribute $15 ; those with 4 to 8 years were to contribute $25 ; those with 8 to 12 years were to contribute $30; and those with more than 12 years were to contribute $40. The aggregate contributions of a member were raised from $450 to $800. With regard to retirement conditions a new provision was introduced requiring that the applicant be at least 50 years of age. lAt the same time the commission noted that the fund is in better financial condition than most of the funds in the state. 231 Teachers' Pension Systems in the United States There was little in these two provisions that could arouse the enthusiasm of teachers. Another provision which, how- ever, made the bill more acceptable to them was the require- ment that the city must (not merely might as heretofore) contribute twice as much as the teachers. The result of the bill would thus be that while the teachers would have con- tributed about two and a half times as much as before, the city would have contributed at least five times as much. The fact that the increase of these contributions was doubly compensated by the increase in the city's contributions was, however, little discussed by the teachers. The attitude was taken that the bill required new sacrifices of them and that they should agree to it only on the condition that another bill which they themselves prepared providing for their tenure of office (a matter then greatly discussed) was passed. A committee was appointed and the necessary funds for their work provided, to request of the legislature that the tenure of office bill should first be passed, and unless passed, to re- fuse to support the pension bill. The pension measure was not discussed on the ground of principle.^ It was viewed merely as a tool for securing another measure, the merits of which had really nothing to do with the pension issue. Several features of the old system, the change of which would be very desirable from a broad social point of view, were left unchanged in the bill. In the first place the tontine fea- ture was preserved under which the teacher who resigned or was dismissed before 15 years of service forfeited one-half of all he contributed and all the interest on that amount; the teacher who resigned or was dismissed after 15 years of service forfeited all, not merely half, of his contributions; and the dependents of the deceased teacher had no claim to his contributions. The abolition of this tontine feature and the establishment of a savings feature instead of it would have ^Reports and Circulars in the Proceedings of the Board of Trustees, Feb. and March, 1917. 232 Systems With Inadequate Reserves: Chicago required still larger contributions from teachers and would have therefore met with opposition. In the second place the composition of the board in which the public officials were in the minority, although the major part of the fund's money would have been contributed by the public, was preserved apparently because a change in it would have raised vigorous objections from the teachers. In the third place, no change was made from a "flat" to a "graded" annuity, because the latter, although highly desir- able from the point of view of efficiency of service and pubHc interest, was not popular with the majority of the teachers. Furthermore, the age limit was fixed rather low, still allowing early retirements, and the provision allowing the board to prorate benefits was maintained, thus showing evidence that even under the new bill the sound operation of the system was not altogether assured. The bill in no way provided for a sound system. It can be regarded only as an attempt to mend the affairs of an un- sound system in such a way as to meet the traditions and prej- udices which have grown up during its operations. ^ZZ CHAPTER XV THE MASSACHUSETTS FUND, THE FIRST SCIEN- TIFIC SYSTEM ; THE CONNECTICUT FUND Of all the teachers' retirement systems in this country the Massachusetts system was the first to be reorganized, at least partly, on an actuarial reserve basis. The contributions of the teachers are deposited to a reserve, v^hereas the contribu- tions of the government are immediately disbursed. The sys- tem operates, therefore, on what may be termed a "semi-re- serve" basis. History of the System. The first state-vvide teachers' pen- sion legislation enacted in Massachusetts was embodied in a law passed in 1908/ since superseded by the law of 191 3, de- scribed below. This law was effective only in cities and towns where, upon petition of not less than 5 per cent of the voters, it had been submitted at the following city or town election and accepted. Under this act the school committee of such a city or town could retire any teacher who was 60 years of age or over and had served 25 years, granting him a pension not to exceed one half of his salary (max. $500). No contri- butions were required from teachers. The system was to be operated on a purely "cash disbursement" basis, the amount needed for the payment of pensions being appropriated each year. The cities and towns of Brookline, Cambridge, Dalton, Framingham, Hardwick, Lynn, Marion, Milton, Nahant, Pittsfield, Swampscott, Wareham, Wellesley and Winchester availed themselves of this act. ^Massachusetts, Acts, 1908, ch. 498 and ch. 589. Massachusetts and Connecticut Funds In the year 1910^ a report on old age pensions, annuities and insurance was issued by a state commission which had been appointed in 1907. It contained considerable data on social insurance, annuities and pension systems in this coun- try and abroad, and gave a considerable impetus to the pension movement in Massachusetts. In accordance with a resolution of the legislature in 191 1, requesting the board of education to investigate the advisa- bility of establishing a state-wide retirement system, a report was submitted in 191 3 which stated in part:^ A careful examination of the methods and results of pro- viding retirement allowances for teachers in other states and countries and of the conditions peculiar to Massachusetts, leads the board to the conclusion that if general legislation is to be enacted providing for the payment by the state or local community of retirement allowances to superannuated teachers, such legislation should be based on the general prin- ciples of social insurance as given effect in the act providing retirement allowances for state employees (under act of 1911)- The report explained the principle of social insurance to be substantially as follows : By means of state legislation and under state administration or at least supervision, designated classes of persons are re- quired to insure themselves against loss or decrease of earning power due to age, accident, invalidity or other similar con- tingencies. The person insured is required to make contri- butions in amounts varying according to circumstances, towards meeting the cost of this insurance; and he also shares in a measure in the administration of the funds established for that purpose. That part of the cost of the insurance which is not met by the contribution of those insured is usually pro- vided by the state and by the employing authority in shares varying according to conditions existing in the employment. A bill for the establishment of a retirement system embody- iMassachusetts Commission on Old Age Pensions, Annuities and In- surance, Jan., T910. Mass. House Docs., 1910, No. 1400, 410 p. ^Massachusetts Board of Education. Special Report on Teachers' Retirement Allowances, Jan., 1913, p. 6. (In Mass. House Docs., 1913, No. 1926.) Teachers' Pension Systems in the United States ing these principles was submitted together with the report and was passed on June 19, 191 3, to go into effect on July i, 19 1 4. The law was subsequently amended in the years 1914, 1915, 1916 and 1917. Provisions of the System. The law applies to all teachers, principals, supervisors and superintendents employed in pub- lic day schools^ within the commonwealth, outside of Boston, which has a separate system. The law provides that any teacher may retire voluntarily after reaching 60 years of age and receive the retirement benefit. Membership in the fund is made compulsory for all teachers entering the service after July i, 19 14. Those already in the service may enter the fund upon application. Of the latter 6,185 joined the fund before the end of the year 19 14. The system consists of two funds: the annuity fund con- stituted by the teachers' contributions, and the pension fund consisting of state appropriations. The annuity fund is put squarely on an actuarial reserve basis, and this constitutes doubtless the most important fea- ture of the system. In this respect the first report of the board says:^ As many pension systems throughout the country have come to grief through lack of sound foundation, the Massachusetts law provides that the retirement system shall be on a strong financial and actuarial basis. By law, reports are to be made to the state insurance commissioner and the latter ex-officio is a member of the teachers' retirement board. The retire- ment system is operating upon the mortality table used by most of the life insurance companies doing business in this commonwealth. The contributions of the members are paid into the annuity fund and carried to their respective accounts. They accumu- iThis does not include industrial schools, the teachers in which come under the provisions of the law granting retirement allowances to state employees generally. ^^Massachusetts Pub. Docs. 1915, No. 109, p. 7. 236 Massachusetts and Connecticut Funds late with interest' and constitute for each member an indi- vidual reserve from which his annuity is eventually paid. The amount of the contribution is determined, as stated, according to mortality tables. The annual rate of contributions is fixed by the retirement board on July i of each year, but must neither be less than 3 per cent of salaries nor more than 7 per cent in any year and not less than $35 nor more than $100. The board adopted the 5 per cent rate in 19 14, and in 191 5 it stated that "as the 5 per cent rate seems to meet with the approval of practically all of the members of the retirement association it is probable that the 5 per cent rate will be continued indefinitely.'"' The law provides that no person shall contribute a larger sum than is necessary to purchase an annuity of $500 at age 60, or $600 at age 65, or approximately $750 at age 70.^ Teachers appointed before 1914, who have served at least 15 years in the state, receive the same pension as if they con- tributed for thirty years. The minimum retiring allowance, consisting of the annuity plus pension, is moreover fixed at $300. A disability clause, effective July i, 191 7, provides for ^The original law provided that interest should be credited at 3 per cent. An amendment adopted in 1916 provided that the interest actually earned shall be credited. Four per cent, was earned in 1916. ^Bulletin No. 2, 1915, p. 6. 3"A teacher may determine approximately what his own annuity will be by multiplying his accumulated assessments by certain per- centages at different ages of retirement. At age sixty the annuity will be approximately 9.38 per cent of the accumulated assessments ; at age sixty-one, 9.71 per cent; at age sixty-two, 10.07 PC cent; at age sixty- three, 10.45 per cent; at age sixty-four, 10.86 per cent; at age sixty-five, 11.31 per cent; at age sixty-six, 11.78 per cent; at age sixty-seven, 12.29 per cent ; at age sixty-eight, 12.84 per cent ; at age sixty-nine, 13-43 per cent ; and at age seventy, 14.07 per cent." "Examples — X joins the retirement association in 1914 at age thirty. If he contributes $35 per year for thirty years his accumulated assess- ments will amount at 3 per cent interest to $1,683.87. If he retires at age sixty his annuity, derived from his own contributions, will be 9.38 per cent of this amount, or approximately $157.95. Under the law he is entitled to a pension of equal amount from the state treasury, making the total retiring allowance approximately $315.90." — Massachu- setts Retirement Board, Bulletin 2 (1914). Teachers' Pension Systems in the United States disability retirement after 20 years of service upon a smaller retiring allowance. A refund of teacher's own contributions with interest is provided upon death, resignation or dismissal. Refunds are made in one sum if withdrawal takes place before six annual contributions have been paid; otherwise in four annual instalments. Some withdrawing teachers have left their contributions on deposit as they expect to reenter the service at some future date. Another interesting feature is that a member may select a smaller annuity for himself with the provision that any balance of his contributions with inter- est may be paid to his legal representatives in case he dies before the total amount of annuity payments received equals the amount of his contributions with interest to the time of retirement. After consulting with the insurance commissioner, the board adopted as the basis of its computation of the probable mor- tality of the members of the fund the American experience table, the standard table prescribed for life insurance companies doing business in Massachusetts. The law provides, how- ever, that the board may change the mortality table from time to time. If this table represents the true mortality rate of the members, and if the assumed rate of interest is realized by investments of the fund, the fund is absolutely solvent. It will undoubtedly be necessary for the board in the near future to change the mortality table because the recent experi- ence of England and that of the city of New York proved that the mortality of the teachers is lower than that obtain- ing among the population at large and that their annuities therefore cost more. Whereas the American experience table shows that a person 60 years of age is expected to live 13.4 years longer, the New York City experience shows that a teacher 60 years of age is expected to live only 12.7 if a man, but as many as 16.5 years if a woman. ^ Since the women teachers are greatly in the majority it is evident that the differ- ^New York City Commission on Pensions. Report on Teachers' Re- tirement Fund, 1915, p. 38. 238 Massachusetts and Connecticut Funds ence between the American experience mortality rate and the teachers' mortality rate is considerable. The management of the fund is entrusted to a board of seven members, consisting of the insurance commissioner, the bank commissioner, the commissioner of education, three representatives elected by the members of the fund, and one other person elected by the six members first mentioned. It is evident that inclusion in the board of the insurance and bank commissioners will assure the fund a proper financial manage- ment. The board has elected a secretary well acquainted with actuarial problems. The report of the retirement board, as of December 31, 191 6, states that the membership of the fund was 9,667. Of these 1,591 entered the service for the first time in 19 16. Two hundred twenty-six members were on the retired list and the annual retiring allowance for the year amounted to $85,078, of which only $837 was derived from contributions from the 115 members who paid assessments before retiring, and the balance was derived from state appropriations. The total capital of the association amounted to $824,105. State Appropriation Not On a Reserve Basis. The weak point of the Massachusetts system lies in the fact that the state appropriation for pensions is not carried on a reserve basis. The state merely appropriates each year the amount needed for the payment of pensions for that year. This will naturally result in a comparatively small cost to the state in the beginning and a considerably heavier cost in the future, as shown by the following rough and probably high estimate made in the board of education's report of January, 1913.^ Years Annual Cost to the State 1914-20. From $75,000, increasing to $120,000 1920-30. " 150,000, " " 300,000 1930-50. " 250,000, " " 400,000 Connecticut Teachers' Retirement Fund. Outside of an act incorporating the Connecticut Teachers Annuity Guild, ^Massachusetts House Docs., 1913, No. 1926, p. 17. 239 Teachers' Pension Systems in the United States which is a private association, the only retirement legislation that was placed on the Connecticut statutes up to the year 191 7 were the acts of 191 1 allowing the cities of New Haven and New London to establish a retirement fund. I In the year 191 5 an attempt was made by the teachers of Connecticut to secure retirement legislation providing for the establishment of a state-wide non-contributory retirement sys- tem. No special fund was to be provided for that purpose. The state was to appropriate each year the amount necessary for the payment of that year's pensions. The bill was passed by the legislature but vetoed by the governor on the ground of unconstitutionality. After this defeat the leaders of the pension movement dropped the idea of securing a non-contributory pension and framed a bill following very closely the retirement plan estab- lished in Massachusetts. The bill was introduced in the legis- lature of 191 7, was passed without considerable opposition and became a law on July i, 191 7. Benefits. The only important departure from the Massa- chusetts plan was with respect to eligibility for retirement. Under the Massachusetts plan, 60 years was fixed as the minimum age for retirement regardless of length of service. In Connecticut, in order to receive a retirement allowance at 60 years of age, the teacher must have completed 15 years of service. On the other hand, if the teacher has completed 35 years of service, he or she may retire regardless of age. This departure from the Massachusetts plan is rather a step backward than an improvement. Its purpose was evidently to avoid the opposition of the teachers who thought that in case of long service, retirement should be allowed at an early age. The retirement allowance consists of two benefits : an annuity and a pension. The annuity is of such amount as the teacher's contribution would purchase, and the pension paid by the state is of a similar amount as in Massachusetts; an additional pension is paid by the state to teachers who had 240 Massachusetts and Connecticut Funds been in the service prior to the establishment of the system and who had served 15 years and become eHgible to retire- ment. This pension is to be sufficient to make the total retire- ment allowance equal the amount they would have received had they contributed for thirty years instead of only since July I, 1917. Disability incurred before the age of 55 entitles the teacher merely to a refund of his or her contributions with compound interest. After reaching the age of 55, the teacher may, in case of the approval of the retirement board, be retired under the same provisions and privileges as outlined above for service pensions. The ordinary death benefit, where death occurs before retirement, is only a refund of contributions plus compound interest. Death after retirement usually results in the cessa- tion of the pension, but it may not entirely result in this way, for every teacher has the right, upon retirement, to choose a smaller pension with the provision that the balance shall be paid to his dependents or assignees on his death in the form of a lump sum or a further pension. Contributions with compound interest are refunded to teachers who resign or are dismissed before retirement. Those who have taught for 10 years have the alternate choice of leaving their contributions on deposit and drawing such an annuity as their amounts have purchased. Contributions. The maintenance of the fund is practically the same as in Massachusetts. The teacher contributes 5 per cent of salary with a maximum of $100 and a minimum of $15 per year. Payments may cease after they have become sufficient to buy an annuity of $500 at age 60 or after they have been made for thirty years. The state pays the re- mainder, including (i) administrative expense, (2) an amount large enough to pay the pensions for service prior to July i, 191 7, and (3) the state's half of the regular retirement allow- ance paid to teachers for service after the above date. 241 Teachers' Pension Systems in the United States Management. The act entrusts the management of the fund to a retirement board consisting of the following five members : 1. The state insurance commissioner. 2. The state bank commissioner. 3. The secretary of the state board of education. 4 and 5. Two members to be appointed by the governor, one to serve two years and the other four years. Thereafter, the teachers' association shall elect these two members for overlapping terms of four years. While representing a substantial advance over the majority of the existing systems, the Connecticut system, like that of Massachusetts, is not as advanced as the systems of New York City and Pennsylvania. The features which are open to criticism, and which have been pointed out in connection with the Massachusetts system, are that the contributions are not graduated according to age, so that the benefits in the cases other than those of average entrants are, therefore, inadequate, and the contributions of the state are not made on a reserve basis. The lack of adequate disability provision is also a serious defect. As this defect in the original scheme of Massachusetts has been remedied by a subsequent amend- ment it may be expected that Connecticut will soon take a similar action. 242 CHAPTER XVI THE NEW YORK CITY FUND Both on its historical and on its scientific side, the story of the New York City fund, reorganized in 191 7 after twenty years of a career apparently prosperous but actually pre- carious, is of unusual interest. History of the Old Fund. Prior to 1901 there were two separate teachers' pension funds in the city of New York : one in the boroughs of Manhattan and the Bronx, comprising the old city of New York, established in 1894;^ the other in the borough of Brooklyn, established in 1895.^ The income of the New York fund originally consisted of absence deduc- tions, donations, legacies and gifts; that of the Brooklyn fund of a contribution by the teachers of i per cent of their salaries. A new source of income was added to both funds in 1898, consisting of 5 per cent of the excise taxes. The pension provided by the New York fund was one-half of the final salary, not exceeding $1,000. It would be granted, however, only after 30 years of service in the case of a woman, and 35 years in the case of a man; and only upon the recommendation of the city superintendent that the teacher was mentally or physically disabled for the performance of duty. In addition a two-thirds vote of the board of educa- tion was required. Under the provisions of the Brooklyn fund, pensions of one-half of the final salary, not exceeding $1,200, were to be granted at the discretion of the board of education to women teachers not less than 55 years old and to men teachers not iNew York, Acts, 1894, ch. 796. 2New York, Acts, 1895, ch. 656. 243 Teachers' Pension Systems in the United States less than 60 years old, after a teaching experience of 30 years, of which 20 years must have been in Brooklyn schools. No retirement was to be made unless the teacher had paid into the fund 20 per cent of the last annual salary before retire- ment. The two funds were merged in 1901' and the provision for an income from unrefunded absence deductions, contained in the old New York scheme, was also applied to the Brooklyn teachers, while the requirement of a contribution of i per cent of salaries, which had obtained in the Brooklyn system, was dropped. The revenues of the fund were again increased in 1905 by a provision that the contribution of i per cent from salaries should apply to all teachers in New York and Brooklyn. The law consolidating the funds also enlarged their benefits. Under the new law, a disabiHty pension after 30 years of service (20 in New York City) was allowed at one-half of the salary received at the date of retirement, with a minimum of $600 and a maximum of $1,000 for teachers, $1,500 for principals and $2,000 for supervising officials. A pension of like amount was permitted at 65 years of age, after 30 years' service (20 in New York City). The granting of a disability pension required the recommendation of the city superintendent and a two-thirds vote of the board of educa- tion. There was no such requirement for the "age 65" pension. The small disbursements from the fund naturally resulted in a favorable balance during the earlier years and created an impression of prosperity. During this accumulative stage the receipts, disbursements, annual surplus and total balance of the fund were as follows : Year 1895 1900 1905 1909 iNew York, Acts, 1901, ch. 466. 244 Annual Annual Annual Surplus Receipts Disbursements (Excess of Receipts Over Disbursements) Capital $66,688 $16,425 $50,263 $75,324 469,484 277,015 192,468 817,576 738.106 664,258 73,847 1,298,215 963,840 956,905 6,984 1,626,077 The New York City Fund The fund, as thus indicated, increased steadily during the first fourteen years. On December 31, 1909, it had to its credit an accumulated reserve of more than $1,600,000. The next year, however, the fund reached its crisis. The disburse- ments overtook and exceeded the revenues, causing the first deficiency to appear. Then the fund began rapidly to decline. The annual disbursements were now running above a million dollars. The annual deficiencies became heavier ; the fund was increasingly forced to draw upon the reserve accumulated dur- ing the first fourteen years. It took just five years to exhaust it completely. The decline of the capital is shown in the fol- lowing table : Annual Annual Annua! Year Receipts Disbursements Deficiency Capital 1910 $1,078,806 $1,107,918 $29,111 $1,596,965 191I 1.099,039 1,181,600 82,561 1,514,404 I912 1.168,297 1,305,438 137,141 1.377.263 I913 1,183,598 1,465,607 282,008 1,095,255 I914 1,088,658 1.201,312 112,653 982,601 1915 1,060,679 1,214.298 153,619 828,982 Unsuccessful Attempts at Reorganisation. In order to check the rapid decline of the fund, the board of retirement adopted several measures, which, however, failed to postpone for any considerable time the day of collapse. In September, 1913, the refunding from the fund of deductions for absences subsequently excused was discontinued. When this proved ineffective, the board of retirement resolved on February i, 191 5 to cease granting new retirements. Some of the appli- cants were continued in the service, others were granted leave of absence by the board of education for a year on half pay. A serious controversy, however, arose between the board of education and the comptroller of the city of New York over the validity of this action, and much hardship ensued for those teachers whose salaries were held up. Some of those who were granted leave of absence returned to active service although they were unable to do their work.^ Another expedient resorted to in 19 13, 19 14 and 191 5 was 'Seventh Report of the Board of Retirement, 1915, p. 18. 245 Teachers' Pension Systems in the United States that of borrowing the next year's excise taxes. The fund still had a capital amounting to about $828,000, but the law allowed the use only of the interest on the permanent capital of $800,000. Finally, in April, 1916, the legislature passed a new law permitting the fund to draw on the capital until reduced to $500,000. Had not this measure been adopted the fund would have been unable to make its next monthly pay- ments. An actuarial investigation made in 1915^ showed that if the existing provisions of the fund were continued, the annual pension expenditure would continue to increase until it amounted to more than 20 per cent of the payroll; and that to be solvent on a strictly reserve basis, the fund would have to provide for a tremendous deficiency of almost fifty-five million dollars. The Bill of 19 16. As early as 19 10 there had been heard demands for a reorganization of the fund on a sound basis, and these had been enforced by an official report made in 1912;^ but it was not until 1915 that reorganization became a live question. In 19 1 3 the New York Bureau of Municipal Research had conducted for an aldermanic committee an investigation of the police pension fund, the annual deficiencies of which amounted to more than a million dollars. It published an exhaustive report in which it set forth "scientific conclusions reached that may serve as a basis for intelligent consideration of pension plans for employees in other branches of the serv- ice."^ As a result of this report a commission on pensions was appointed by the mayor to investigate all the nine pension ^New York (City) Commission on Pensions. Report on the Teachers' Retirement Fund, 1915, p. 10. -Hutcheson, W. A. Report by actuary upon the condition of the New York public school teachers' retirement fund. (In New York City Board of Education, sixth annual report of the secretary of the Board of Retirement, 1913.) ^New York Bureau of Municipal Research. Report on the Police Pension Fund of the City of New York, 1913, p. 11. 246 The New York City Fund funds of the city and to prepare a plan for the reorganiza- tion of the fund. The commission had made but Httle progress on the com- prehensive program which it had laid out when it was urged to set aside all other work and devote its attention to the teachers' retirement fund, the bankruptcy of which had now become manifest. The difficulties in the way of formulating an equitable and financially sound permanent system were, as always, many and grave. There was, however, the additional danger that such a plan might not be in accord with the gen- eral policy to be decided upon later for the city's employees generally, and might impose upon the city a larger proportion of cost for one group of employees than for the other groups. In spite of these difficulties and the lifnited time available, the commission prepared and published its report in January, 1916.^ In submitting it, the chairman of the commission wrote : In this report * * * following good practice elsewhere, and guided by past mistakes of New York City in dealing with pension problems, a proposal is made to organize a retire- ment system which will be free, on the one hand, of uncer- tainties and, on the other, will provide a means just to em- ployees and taxpayers alike for its financing. It is by no means maintained that the conclusions set forth in the report are final. They are presented with a view to complete dis- cussion and with the expectation that they will be changed in the light of fuller wisdom and possibly more mature thought which this discussion will produce. Whatever may be the judgment on the recommendations, the facts are plainly told so that there is provided a complete basis for considering the two major questions involved in the problem: First, what shall be the conditions of retirement? Second, how shall the cost of meeting these conditions be provided? * * * It is conceivable, of course, that the cost of the entire pen- sion plan may be levied upon the teachers themselves. But to do so would mean either to cut down the benefits below a ^New York (City) Commission on Pensions. Report on the Teachers' Retirement Fund, 1916, p. i. 247 Teachers' Pension Systems in the United States point where they would seem adequate to furnish a proper basis of retirement, or to impose an intolerable burden upon the teaching force. Similarly, it is conceivable that the entire cost might be laid upon the city. But if this were done, the burden on taxpayers would be so great that protest would be surely evoked, and either reduction or complete stoppage of benefits w^ould follow. The middle course of equal division of cost is suggested with the adequate safeguard of the inter- est of the teachers that in case they withdraw from the service prior to retirement their contributions shall be returned to them with compound interest. The report made the following tentative recommendations : 1. The present law should be repealed and a new law passed which will deal more exhaustively with all details of pro- visions than the present law, and will eliminate as much as possible the exercise of administrative discretion. 2. The administration and interpretation of the law should be entrusted to a board independent of the Board of Education and composed of members administratively and technically qualified for the efficient performance of their duties. In such board the Department of Education should be represented. 3. The liability to present pensioners should be reduced. (a) By a revision of the entire list. (b) By the revocation of pensions to disability pension- ers no longer disabled. (c) By the return to duty of existing disability pension- ers who are cured of their disabilities and of service pensioners who are not superannuated or otherwise disabled. (d) By a readjustment of pension benefits in accordance with the scale suggested for the retirement of future beneficiaries. 4. The fund's liability for future pensions to teachers now in the service should be reduced. A change of existing provisions by the introduction of a minimum age limit for retirement and other details discussed in this report will mate- rially reduce the fund's present liability. 5. The future contributions of teachers nozv in the service should be increased to cover : 248 The New York City Fund (a) One-half of the cost of benefits accruing for services subsequent to the reorganization of the scheme, and (b) One-half of the cost of benefits accruing for services prior to the reorganization of the scheme, except when the total annual contribution of individual teachers would exceed 8 per cent of salary. The scale of contributions will vary according to present age and number of years of past service, and should, as a matter of expediency, be limited to a maximum of 8 per cent of salaries in case of individual teachers. The contributions of teachers should be made returnable with compound interest at 4 per cent upon separation from service prior to retirement. 6. Teachers entering the service after reorganisation should be made eligible to retirement under the same pension provisions as are proposed for teachers now in the service. Their contributions should cover one-half of the cost of their benefits. Since there are no arrears to be made good, the contributions of new entrants into the system will be much smaller than those of teachers who are nearing the period of retirement. 7. The city should contribute annually a percentage of salaries of teachers sufficient to cover one-half of the cost of benefits accruing because of services subsequent to the reorganization of the scheme. Such contributions should not be available to employees leaving the service prior to retirement. 8. The city should contribute a uniform amount annually for the next 60 years to liquidate : (a) The fund's liability remaining for pensions on the roll at the time of reorganization of the scheme after the list of pensioners has been revised as recom- mended. (b) The fund's liability remaining for future pensions on account of services of present teachers prior to reorganization after change in benefit provisions has been made and the future contributions of teachers have been increased to cover back services. 9. The assets and liabilities should be appraised periodically, and necessary adjustments made in all three contributions. At about the same time that the commission published its 249 Teachers' Pension Systems in the United States report, a committee appointed by the Federation of Teachers' Associations published a pension plan which differed funda- mentally from the city plan. The rates of contributions and benefits were fixed more or less arbitrarily without actuarial calculations, the committee being of the opinion that no actuarial advice was necessary. The plan was unsound but contained features which made it popular with the teachers — low contributions, retirement after 30 years of service, and a pension of one-sixtieth of salary for each year of service. The criticism of the teachers was particularly directed against the recommendation of the report that regardless of length of service no teacher should be retired on a pension before 65 years of age, unless disabled. It was urged that a teacher who entered the service at 20 and was compelled to serve 45 years before becoming entitled to a pension would be worn out long before retirement and that such a late pension would, therefore, be of little value to the teacher or to the schools. Early in 1916 conferences were held between representa- tives of the commission and of the teachers. As a result of these conferences, the city yielded as to the age condition and the teachers as to length of service. They agreed that retire- ment should take place either after 65 years of age, regardless of length of service, or after 35 years of service, regardless of age. With respect to the amount of pension, the scale of one-seventieth of salary was agreed upon in place of the one- eightieth provided in the city plan, and one-sixtieth in the teachers' plan. An agreement was also reached on the ques- tion of dividing the cost equally, except that the city was to assume the entire burden with respect to pensioners already retired, and the major part in case of the older present teachers. A compromise bill was prepared which provided that in the event of resignation, dismissal or death, the mem- ber's contributions together with interest were to be refunded to him or to his dependents, and that the actuarial equivalent 250 The New York City Fund of the pension could be taken in the form of various optional benefits. The contributions of the teachers were to be funded on an actuarial reserve basis and were guaranteed to earn interest compounded at 4 per cent. Their amount was actu- arially calculated, expressed as a percentage of salary, and so graded according to age and sex that every teacher would contribute about one-half of the cost of his retirement benefit with such limitation, however, that his contribution could in no case exceed 8 per cent of salary. An important option was given the teachers by which they could reduce their contri- bution to 5 per cent, thereby proportionately reducing their annuity. The city was to pay — ( 1 ) the entire pension roll of all the teachers already retired (about 1,400 persons) (2) one-half of the cost of providing for retirement of the present teaching force plus the additional share in excess of the teachers' 8 per cent contributions. The payment was to be made on a cash disbursement basis, the city appropriating each year for each pension fall- ing due an amount which together with the amount purchased by the teachers' own contributions would equal one-seventieth of his average salary for each year of service. (3) yearly contributions sufficient to accumulate a reserve fund from which to pay half the pension of new entrants. In the latter case the city was to match their contributions dollar per dollar. (4) the cost of administering the fund. The history of the spirited contest which was waged around the reorganization bill will repay the close study of one inter- ested in the human and psychological factors which may so complicate the attempt to reorganize a pension system on a scientific basis. Behind the proposed bill stood the city admin- istration, represented by the pension commission, and, as already seen, the Federation of Teachers' Associations. Opposed to it were large groups of teachers, actuated by vary- ing interests in and objections to the plan, who had organized 251 Teachers' Pension Systems in the United States a Teachers' Pension Association to defeat the bill. The conflict between these two organizations, each claiming to represent the prevailing sentiment of the teachers, injected an element of bitterness into the contest and made easy the intro- duction of irrelevant and confusing issues. That the plan had provoked opposition from large numbers of teachers was not indeed surprising. Alany teachers were strongly opposed to having their contributions increased from I per cent under the old unsound system to from 4 to 8 per cent under the proposed system. The pension association argued that even "the lowest of these rates is extremely exces- sive);" and it was indeed frequently alleged, quite incorrectly, that "nowhere in the world are such high contributions re- quired."^ Out of this opposition to an increase in the contributions there were revived the familiar and time-honored arguments against compulsory participation in a pension fund ; and much was made, too, of the natural opposition of the younger teachers to those features of the plan which seemed to favor the older teachers — the assumption by the city of all contributions, in excess of 8 per cent of salary, required for making up the deficiency of the existing fund, and the grading of pensions according to salary. It was urged that teachers, principals and superintendents should all be provided with a "flat pen- sion" of $750 irrespective of their salaries; that $750 was 1 The rates of contributions in many of the teachers' pension systems abroad are even higher than those proposed, as indicated in the following table, which was published by the Federation of Teachers' Associations at the time : Percentage of Salary Contributed by Country Contributed by Teachers Government Russia 6 6 per cent of salary France 5 Balance of cost Austria 3-8 Balance of cost Italy 5 6 per cent of salary Spain 4 Balance of cost Belgium 3 5-5 per cent of salary Scotland 4 6 per cent of salary Netherlands 7 Balance of cost Greece 9 Balance of cost New Zealand S to 10 Balance of cost 252 The New York City Fund sufficient for any teacher to live upon, and that the men who were receiving large salaries ought to have saved enough to eke out whatever they received from the city. Indeed that the very basis of the whole plan was a refunding to the teacher of his or her own contributions was itself made an object of attack. The right of all citizens, including teachers, to invest their money as they saw fit was repeatedly empha- sized. The insurance features of the plan were likewise de- nounced as constituting an unjustifiable venture of the city into the insurance business. Undoubtedly, also, one of the factors of the opposition was the general discontent among the teachers because of other grievances against the city administration. Side issues were brought into the discussion which had nothing to do with pensions and which tended further to confuse the minds of the teachers. Thus, in one of the leaflets prepared by the Teachers' Pension Association, it was pointed out that "the city on the plea of economy is denying promotion to nearly i,ooo teachers and is keeping several hundred persons from appointment to the system. Why do they claim they are will- ing to pay so much for pensions?" While the bill was before the legislative committees, a referendum vote of the teachers was taken which showed that ii,ooo were opposed to the measure with 8,000 in its favor. The minority, however, urged that in a matter of such a technical character the controlling weight should be given to the opinion of the actuaries and other experts. Shortly before the bill came to a vote the president of the board of education, Mr. William G. Willcox, issued a state- ment which so admirably summarizes the situation as to war- rant reproduction here :^ Teachers who are opposing the proposed pension legislation are assuming a grave responsibility. Although the measure has been approved and endorsed by the pension commission, by ^Evening Telegram, New York, April 4, 1916. Teachers' Pension Systems in the United States the city administration, by the unanimous vote of the board of education, and by a large majority of the teaching and super- vising staff, it is quite possible that an active minority of the teachers may defeat it. If so, they will be responsible for much hardship and distress among hundreds of teachers who have been or should be retired. If the opposition were the result of careful study of the measure, it would be less open to criticism, but it is apparently based upon misunderstanding and ignorance, for as the provisions of the bill are explained the opponents rapidly become advocates. The measure does not deprive any teacher of a single dollar of salary. It does provide for the compulsory saving of about five per cent of the salary, but under no circumstances can these savings be lost to the teacher. If a teacher dies in the service or leaves the service for any cause without retirement, the accumulated deductions with four per cent are refunded. If a teacher is retired the accumulated savings are doubled by the city to provide the stipulated annuity. As the eight per cent deduction provided for the teachers nearing the retir- ing age may be reduced to five per cent with a corresponding reduction in the annuity, no teacher is really compelled to save more than five per cent. Even upon actual retirement any teacher may elect to decline the annuity and withdraw accumulated savings instead. Is it, then, unfair or unreasonable that a teacher should be obliged to put by five per cent of the annual salary as a provision for old age? Certainly everyone dependent upon a salary should save as much as five per cent each year, and even with this deduction the remaining salary for women teachers will be considerably more than they received before the equal pay law was passed. If teachers were asked to contribute five per cent to pay annuities of other teachers, they might reason- ably object, but is any teacher justified in opposing this liberal and humane provision for sick and disabled teachers and forc- ing the continuance of a situation of misery to these poor teachers and of detriment to the schools, merely to avoid sav- ing five per cent of his salary, which will be as safe as if deposited in a savings bank, and which will be refunded with four per cent interest unless he himself elects to use it for his own annuity? No plan could possibly be devised on which all would agree, 254 The New York City Fund or which would not cause some inconvenience or perhaps hardship in individual cases, but in a situation in which the teachers must apparently get together or get nothing the minority should seriously consider their position before assum- ing responsibility for the defeat of this most liberal and be- neficent measure. The bill was favorably reported from committee, but, after debates attended by much excitement and considerable dis- order, failed of passage by four votes. The Enactment of the Reorganization Law of 191 7. After the defeat of the bill of 1916 the pension commission and the teachers' federation took steps together to prepare a new bill. After a considerable study a great number of new features were added of which the most important were : ( i ) a clear distinction between the "annuity" purchased by the teachers' contributions and the ''pension" supplied by the city; (2) a provision by which a teacher might reduce his contri- butions (thereby reducing his "annuity") without reducing the "pension" supplied by the city; (3) abolition of direct relationship between annuity and salary, thereby preventing those who advance rapidly from obtaining greater benefits at the expense of those who advance slowly. To avert repetition of the accusation that the teachers had no opportunity to consider the proposed pension measure, Mr. Willcox ordered the teachers to appoint three delegates from the schools who were to constitute a central pension com- mittee. This committee, consisting of 150 teachers, was to "express to the city pension commission the views and criti- cisms of the teachers, and to convey to the teachers accurate information regarding the provisions of the proposed pension plan." The teachers' "Committee of 150" was divided between a minority which favored the measure, and a majority which urged three principal objections to it. The majority urged in the first place that the city should not be permitted to 255 Teachers' Pension Systems in the United States require from the teachers already in the service a contribution larger than 3 per cent of salary, but that it should guarantee each teacher a half salary benefit. To this the city objected on the ground that it would impose upon it an additional liability of five million dollars, that it would lead to a similar claim on the part of new entrants, and would be against the fundamental principle of cooperative division of cost. In the second place the majority opposed the city's grant- ing pensions above $2,000. This objection was rooted in the antagonistic attitude which the lower paid classes usually develop towards the higher paid officials. To this the city's representatives replied that a pension of $2,000 would not be sufficient for the superannuated superintendents, and that unless they were to receive a pension proportional to their salary, they would have to remain in the service and by so do- ing would block promotions and thus prove more harmful to the efficiency of service than the continuance of an ordinary grade teacher, and that the number of higher pensions would be so insignificant as to make almost no difference in the rest of the system. Thirdly, objection was made that the partial reserve with which the system was to begin was inadequate and that the growth of necessary budget appropriations would, therefore, become so great as to endanger the permanency of the fund. In reply to this the city asserted that since the passage of the proposed law was requested by the city (thus differing from the old law which was enacted at the request of the teachers), and since it would voluntarily assume the financial obligations involved in it, it was hardly conceivable that any future legislature would consent to repeal the law. It was also pointed out that the heavy cost of the first few years would be due entirely to the initial payments for liabilities incurred by past services and after a few years would decline rapidly and become normal. After a number of conferences, the city refused to make 256 The New York City Fund concession on any of these points or to further delay the matter, and the city's pension bill was accordingly introduced at Albany. As the work for which the committee of 150 was created was thus completed, the committee disbanded/ As soon as the committee disbanded, the majority of the committee which was opposed to the city's pension measure effected a permanent organization known as the Teachers' Interests Organization, the purpose of which for the time being was to defeat the city's pension bil- and "to secure pension legislation satisfactory to a majority of the teachers." Various com^mittees were appointed and a feverish activity started, funds were collected, mass meetings arranged, and delegations to attend the hearings at Albany appointed. The teachers were now as hopelessly divided as the year before. The same spirit and substantially the same arguments prevailed. The opponents of the bill maintained that no pension bill should be passed which did not receive the approval of the majority of the teachers. Knowing that the majority consisted of younger teachers who were not interested in pension measures, except that they were opposed to an increase of their contributions, they again demanded that an official referendum should be taken among the teachers, the results of which should be binding upon the legislature. But the legislative committee stated that the results of a teachers referendum cannot bind the legislature and that they "will ^The disbandment of the committee was precipitated by a letter from the president of the board of education in which he stated in part : "I must confess that I am greatly disappointed in the results of the committee as a whole. Not only has it shown little capacity as a whole for con- structive work or constructive criticism, but it has failed to assume and maintain the impartial and fair-minded attitude which is the first requisite for the usefulness and success of such a committee. I have devoted much time and effort to a sincere attempt to give the teaching staff fair repre- sentation in the consideration of the pension problem and to give the committee every opportunity to discharge its trust with credit To itself and benefit to the teaching stafT, but the attitude of the committee has not been such as to command confidence in its desire or purpose to promote a fair and intelligent judgment on the merits of the proposed plan and I have reluctantly been forced to the conclusion, therefore, th»t the experiment must be considered a failure." Teachers' Pension Systems in the United States consider the interests of all citizens, and not only the teachers in that matter." In view of this opinion the board of educa- tion refused to order a new referendum. In addition to the arguments already discussed a number of others were presented. It was argued that the bill substan- tially reduced salaries, as an increase of the teachers' contri- butions was tantamount to a reduction of salary; that by agreeing to meet the city on the basis of a maximum contribu- tion of 3 per cent the teachers were really doing more than they should have done, and that a higher increase of their contribution was outrageous, especially in view of the fact that the cost of living had increased tremendously; that the bill made the women contribute at a higher rate, "which is inequitable, for it cannot be true that women live longer than the men;"^ and that "the policy of arbitrarily subtracting from the pay of an employee money for this purpose is unconsti- tutional."^ At the hearings held by the legislative committees numerous associations of taxpayers appeared in opposition to the meas- ure. They maintained that it would bankrupt the real estate interests, that there was no reason for pensioning teachers, and that there was no obligation upon the city to carry even the present pension roll. They characterized the measure as socialistic. After a heated contest the bill passed both houses of the 'In a letter to the editor of the Globe (April i6, 1914) a school teacher wrote in part : "The women are nervous wrecks now (ask any doctor) owing to all the new and extra work for years that has been heaped upon their shoulders. Who says they'll live longer than better paid rnen teachers, under such crushing and overcrowded conditions? Prove it." 'The president of the Professional Elementary Teachers' Association wrote in the Globe of April 5: "The greatest and main objectionis that it is applying to an exaggerated degree a principle the constitutionality of which is beginning to be seriously questioned. That principle is the right of any legislature, civic authority or corporation deliberately to take from the salary or wage of any employee any portion of that salary or wage for annuity purposes without that employee's consent. I have the opinion of a United States senator who states that this policy of arbitrarily subtracting from the pay of an employee money for this purpose is "unconstitutional." (Globe, April 5.) 258 The New York City Fund legislature and came before the mayor of the city of New York for his acceptance on behalf of the city. He accepted it and it then went before the governor. A last desperate attempt was made by the opponents of the bill to induce the governor to veto it. In this campaign the political opposition to the mayor, of which the opponents of the bill had unfortu- nately permitted themselves to make use, showed itself more clearly than in any of the preceding stages of the contest.^ On May i, 191 7, the governor signed the measure and it became immediately effective. The opposition movement, however, was not silenced by this defeat. Its leaders urged the teachers to "allow no one on the Retiring Board who did not oppose the bill."^ The schools were to elect delegates who, in turn, would elect the three members of the retirement board. The opponents suc- ceeded in the election of twenty-four of their delegates as against twenty-two of the supporters of the act. This slight majority was sufficient to give the opponents all three seats in the retirement board and to leave the advocates of the meas- ure without any representation in the management of the system. Provisions of the New System. The new system of New York City is thus the result of protracted and searching dis- ^This is well illustrated by the instructions which 200 district dele- gates of the Teachers' Interests Organization took to their schools after a meeting in the High School of Commerce (April 19th) : "i. Do all in your power to prevent the governor's signature from being placed upon the bill by means of letters, not only from the teachers but from citizens and taxpayers. In these letters state three or four specific reasons for opposing the bill. Don't write long letters. "2. Members and their friends should call on every politician, every person in power that they think can have any weight with the governor. "3. Kindly get a petition signed by every teacher, if possible, in your school, by every parent or citizen in the neighborhood or in your ac- quaintance and send it to the governor. State at the head of this peti- tion why you are opposed to the bill, giving five or six definite reasons. Chief among these are that the proposed deductions are a reduction in salary; that the teachers are given but three of the seven members on the board of retirement, and that the bill is an administration measur* of the city authorities." 'Brooklyn Daily Eagle, May 3, 1917. Teachers' Pension Systems in the United States cussion and of the greatest possible accommodation, through necessity, of the conflicting interests involved. But it is the fruit also of perhaps the most thorough and painstaking study that has yet been applied to the teachers' retirement problem in this country. A detailed examination of its provisions, therefore, seems desirable. Benefits Provided. Membership in the system is com- pulsory for all teachers (present teachers and new entrants) having a permanent license. Teachers without a permanent license may also join the system. Retirement is made dependent either upon age (voluntary at 65, compulsory at 70) or length of service (35 years) or disability. The retirement allowance consists of two parts — an "annuity" purchased by the teachers' contributions, and a "pension" supplied by the city — and amounts at the full rate of contributions to about one-half of the average salary for the last ten years. The amount of the allowance varies accord- ing to the rate of advancement as determined by different methods in the cases of new entrants and of the present teachers. In case of new entrants, contributions are so graded accord- ing to the age and the sex of the contributor as to purchase an annuity of about one- fourth of his average salary for the last ten years, if he advances at the average rate; slightly less, in case of rapid advancement; or slightly more, if he advances slowly. The "pension" amounts strictly to one- fourth of the average salary. In the case of the present teachers, the method of comput- ing the annuity is different in that it amounts to less than one- fourth of salary, because they have not contributed at the new rate during their previous service and cannot, therefore, purchase the same annuity as the new entrants. The differ- ence is supplied by the city in the form of an additional pen- sion of one thirty-fifth of one quarter of the average salary for each year of previous service not exceeding 35 years. Thus, in 260 The New York City Fund their case, too, the total benefit consisting of the annuity, one- fourth salary pension and additional one-thirty-fifth pension, amounts to about one-half salary in case of the average ad- vancement and the full rate of contributions. In the event of disability after lo years of service a retire- ment benefit is provided v/hich consists of : ( i ) the "annuity" purchased by the teachers' contributions; (2) a "pension" of one-fifth of the average salary and (3) an additional "pen- sion" of one-thirty-fifth of one quarter of the average salary for each year of previous service. Upon resignation, dismissal or death, all contributions, together with compound interest at 4 per cent, are refunded to the teacher or to his assigns. If the teacher dies in active service after becoming eligible to retirement, a death benefit of one-half of the preceding year's salary is paid by the city in a lump sum to his estate. Among the many excellent features of the system, the pro- visions for optional benefits deserve attention, for they make it flexible and adaptable to the varying needs of the indi- vidual teacher. After becoming eligible for retirement on half pay, a teacher still continuing in the service may with- draw the annual interest on his accumulations or such part of the principal as will not be required to provide him an allowance of half -pay on account of a more advanced age and consequent reduction in the cost of his annuity. It is further provided that any contributor may, upon retirement, elect to receive the actuarial equivalent of his pension and annuity in any one of the follownig forms : 1. His regular annuity and pension, or 2. A reduced benefit with a provision that in case he dies before he has received the total value of his annuity and pension, the balance shall be paid to his heirs, or assigns, or 3. Reduced benefits covering two lives with a provision that upon the death of the teacher the same benefits or one- half of such benefits shall be continued throughout the 261 Teachers' Pension Systems in the United States life of such person as the teacher shall have designated, or 4. Such other form of actuarial equivalent as may be certi- fied by the actuary and approved by the retirement board. Financing Benefits for New Entrants. In order that the system shall operate strictly on a reserve basis, both the city and the teachers set aside each year certain percentages of salary to special reserve funds, from which the annuities and the pensions of the new entrants are eventually to be paid. Each teacher has practically an individual savings account in the "annuity savings fund" to which his contributions are credited. The city on the other hand contributes to a separate reserve fund (called "contingent reserve fund") on account of those contributors who may retire on superannuation or disability. It discounts the number of those among the new entrants who will drop out because of resignation, dismissal or death before retirement, and it does not contribute on their account. The rate of contributions of the teachers is not definitely fixed by the law. Each new entrant is to contribute (the pro- vision being mandatory) such percentage of his salary as may be computed by the actuary to be sufficient to purchase an annuity of one-fourth average salary. The rates are, there- fore, different at each entrance age. The following rates taken for certain ages may serve as an illustration : Percentage of Salary Percentage of Salary Age at Entrance Contributed by Men Contributed by Women For Retirement For Retirement at the Age of 65 at the Age of 65 25 2.85 3.23 30 3-32 3.79 35 4-05 4.66 Contributions required for retirement at an earlier age than 65 are considerably higher. Thus a man teacher entering at 25, who would elect to contribute towards his half pay pension to be payable on the completion of 35 years of service, i. e. at the age of 60, will have to contribute at the rate of 4.24 per cent instead of 2.85 per cent required for the age of 65. 262 The New York City Fund Financing Benefits of Present Teachers. The contribu- tions of the teachers who were in service at the estabHsh- •ment of the system are funded in a similar manner and in the same reserve fund ("savings and annuity fund") as the contributions of new entrants. An entirely different method is, however, provided for the city's contribution. The law provides that the city shall : 1. Appropriate each year on a cash disbursement basis the amount needed for the payment of pensions of the retir- ing present teachers, and 2. In addition set aside each year one million dollars as a partial reserve against future pension payments to pres- ent teachers until the fund as created is equivalent to all accumulations of present teachers. This partial reserve considerably reduces the future pay- ments of the city and thus prevents an excessive growth of the burdens of the future generation of taxpayers and safeguards the system against sudden attack. Funds. Several funds are set up each of which performs a distinct function. The "annuity savings fund," in which the contributions of the members remain until retirement, per- forms the functions of a savings fund, the contributions being returned with 4 per cent compound interest to those who resign, die or are dismissed. On the date of retirement the contributions are transferred to the "annuity reserve fund" in which they acquire insurance features, being used to pur- chase the annuities of the new entrants. The contributions of the city are paid into the so-called "contingent reserve fund." From this fund are paid the death benefits for "new entrants" provided by the system. On the retirement of a teacher, the purchase price of a pen- sion, if he or she be a "new entrant," or an amount equal to the accumulated contributions paid by him or her, if he or she be a "present teacher," is transferred to the so-called "Pension Reserve Fund No. i ;" and from this fund the annual pensions are paid. 263 Teachers' Pension Systems in the United States A so-called "Pension Reserve Fund No. 2" is also set up. Into this fund were paid, at the establishment of the system, all moneys remaining in the old retirement fund. To this fund the city adds, as it becomes necessary, the moneys needed to pay the pensions to those already on the pension roll at the time of the establishment of the system, and also such part of the pensions of "present teachers" as are not paid out of "Pension Reserve Fund No. i," The payment of death- benefits to "present teachers," and the refund to such teachers, in case of dismissal, of the contributions made by them under the old system, are also paid out of this fund. Except for the comparatively minor amount received from the old fund, this "Pension Reserve Fund No. 2" is not in reality a reserve fund so much as an appropriation account. Under the head of "Expense Fund" account is kept of the moneys annually appropriated by the cit}^ to defray the expenses of the administration of the fund. Management. The management of the system is in a board of seven members, of whom three are elected by the teachers, three (the comptroller and two members appointed by the mayor) represent the city, and the seventh is the presi- dent of the board of education. All these members serve without compensation. They may employ a secretary, an actuary and such medical, clerical and other staff as is neces- sary, and fix their compensation. Actuarial Valuations. The law provides that the first actuarial investigation of the mortality and service experience and the first valuation of the fund shall be made in 1919, two years after the establishment of the system; the second, three years after the first, and that investigation be made every five years thereafter. On the basis of these investigations the retirement board shall (i) adopt such mortality and other tables as shall be necessary; (2) certify the rates of con- tributions necessary to pay the annuities provided in the bill, and (3) certify the rates of the city's contributions with respect to new entrants. 264 CHAPTER XVII THE PENNSYLVANIA SYSTEM Soon after the years 1894-1896, when retirement laws for teachers were passed by the legislatures of New York, New Jersey, Illinois and Ohio, a movement developed among the teachers of Pennsylvania in favor of obtaining retirement legislation. The teachers of Philadelphia took the leading part in this movement. The result was that in the year 1905 a provision was added to the school law allowing any city of the first class (in reality only the city of Philadelphia) to establish a retirement fund. The wording of this provision was very brief and indefinite. The fund was to consist *'of all funds available for like purposes at the time of enactment of this law, together with such additions thereto as the Board may from time to time prescribe, and such money as may be donated or bequeathed for such purposes." No rules were set as to the conditions under which retire- ment could take place and the amount of annuity which should be granted. It was simply provided that "any teacher, principal or supervising official retired by the Board of Public Education shall receive from the Board such an annuity as the Board of Education shall prescribe." Under this law the Philadelphia fund, the first teachers' retirement fund in Pennsylvania, was established. Its rules and by-laws were formulated and approved by the local board of education. As the teachers in other cities of the state were anxious to have a similar retirement fund, the law was amended in 1907 extending the permission to establish retirement funds 265 Teachers' Pension Systems in the United States to the cities of second and third classes. The wording of the law remained substantially the same. Under this amendment Harrisburg established a retirement fund in 1908, and Wilkes-Barre in 19 10. In 191 1 a further amendment was enacted extending the application of the law to "any school district" and specifically providing that any board of education might contribute to the fund and also "provide in the contract with its teachers that they shall contribute a reasonable sum from their salaries each year" and that "where the teachers contribute to any retirement fund they shall be represented in making the regu- lations governing it, and its control and management." During the five years following the passage of this act the following seven cities established retirement funds : Scranton in 191 1 Pittsburgh Altoona . . Chester . . Reading . . Lancaster Erie 1912 1913 1913 1913 1914 1916 To many leaders of the pension movement the results of the permissive legislation seemed disappointing. They real- ized that the hundreds of small localities might never take any action in the matter of making retirement provisions for their teachers, and they urged that the state step in, take the retire- ment question out of the jurisdiction of the localities and estab- lish one state-wide and state-administered system covering all the teachers in the state. There was, however, wide disagreement as to the extent to which the state should go into the matter. The State Teachers' League took the extreme position that the state should bear the entire cost of the system and relieve the teachers of any obligation to save towards their future; and that the entire control of the system be vested in the state superintendent of schools. The league accordingly framed a bill in 1907 providing that any teacher who had taught for 266 The Pennsylvania System 30 years, 20 years of which had been in Pennsylvania schools, should receive from the state an annuity of one-half of his average salary for the last five years, with a minimum of $200 and a maximum of $600. No special fund was to be set aside for this purpose. Each year an appropriation was to be made of the sum necessary to meet the annuity requirements of that year. The bill met with strong opposition and failed to pass. The State Educational Association went to the other ex- treme and supported the principle that the teachers should bear the entire cost of the system. It prepared a bill provid- ing for the establishment of a retirement fund supported by teachers' contributions and administered by a board consisting of five members appointed by the state superintendent of schools, of whom one was to be a classroom teacher, one a county or district superintendent and two not teachers. The contributions were to diminish with longer service from 4 per cent of salary at the outset to i per cent during the final period. Any teacher who reached the age of 60 and completed 30 years of service could retire on a pension of one-sixth of the average monthly salary of the teacher, multiplied by the number of years he had served. Disability pensions were provided and the contributions were to be returned in cases of resignation. The bill was introduced in the legislature in 191 5 and was widely discussed. Objection was made that it imposed upon the teacher a disproportionately heavy charge during the beginning of her career when she was the least able and willing to make provisions for the future and reduced her burdens during later periods when her salary and foresight have usually increased. The rate of contributions was not based on any actuarial calculations and was inadequate. The tenth annual report of the Carnegie Foundation of Teaching said about the bill : The bill encountered much opposition; the teachers in the small systems objected to the burden of the contribution, 267 Teachers' Pension Systems in the United States which was not offset by contributions from the state; the teachers in the larger systems were opposed to a scheme that would deprive them of the benefits of existing arrangements in which the contributions were not so high, the employing authority supported the fund, and some assets had already been accumulated. The chief weakness of the measure was the inadequate financing, since no teacher would have been required to contribute more than $592 on a basis of eight contributions per year, — a deficiency which no amount of complicated regulations could set right. The measure might perhaps have been assured of earlier success if its advocates had come forward with a definite and straightforward request for state aid instead of urging a scheme which could have been saved from early insolvency only by a subsequent appeal to the state. Too much is at the stake when upwards of 40,000 teachers are involved, to indulge in experiments, even iif they are intended merely as entering wedges for proving the need of state support. The bill failed to pass. There then developed a tendency to find some middle ground between the two extreme ideas which had been defeated. The two associations which had hitherto disagreed so sharply came to agreement. A joint commiittee was appointed which entrusted to the actuary of the New York City Commission on Pensions the work of pre- paring an actuarial system. The fact that the new system was to be introduced where there was no system before, permitted its framers to include in it many progressive features, the inclusion of which in the New York City system had been successfully opposed by those who claimed to have "vested rights" in the unsound .provisions which had been previously enacted. The work was completed in the course of a few months and the bill was presented to the legislature early in the ses- sion of 19 1 7. An able propaganda explaining the funda- mental principles of the bill was conducted by the committee of the two associations and an intelligent public discussion of the bill was obtained with the result that the support of the majority of the teachers and legislators was secured. The 268 The Pennsylvania System school employees, to whom the bill originally did not apply, addressed a petition that they be included in it. Their request was granted and the name of the proposed fund was changed from Teachers Retirement Association, to School Employees Retirement Association. The bill passed both houses, meet- ing very little opposition, was signed by the governor and became a law on July i8, 1917.^ Benefits. Membership in the new system is compulsory for all persons entering the service after the date of enactment. Teachers already in the service are given until July i, 19 19 to elect whether or not to enter. Retirement takes place on the basis of age, not length of service. Any person who has reached 62 years of age may retire regardless of his or her length of service. This feature of the system prevents the early retirements which are possible under the provision of the New York City system, which allows retirement after 35 years of service, regardless of age, and which, as has been shown, was there adopted for the sole purpose of effecting a compromise with the teachers who otherwise would have blocked the passage of the bill. Retirement is made compulsory at 70. The superannua- tion benefit is fixed at the rate of one-eightieth of the average salary for the last ten years for each year of service (with a maximum of 50 per cent of the final salary), whereas in the New York City system it is fixed at one-seventieth. The lower scale of benefits reduces the cost to the teachers as well as to the state. The benefit consists of two parts : one for "subsequent serv- ice" rendered after the establishment of the system, and the other for "prior service." The first divides itself into two equal parts, one purchased by the employee's contribu- tions, and called "employee's annuity" and the other provided by the state's contribution and called "state annuity." Each ^Pennsylvania, Acts, 1917. No. 343. July 18, 1917. 269 Teachers' Pension Systems in the United States is fixed at one one-hundred-sixtieth of the average salary multipHed by the number of years of subsequent service. The benefit for "prior service" is provided entirely at the expense of the state and is called "additional state annuity." It is fixed at the rate of one-eightieth of the average salary for the last ten years multiplied by the number of years of prior service. Disability Benefit. Any person who, after lo or more years of service and before reaching the age of 62, has become disabled, receives a disability allowance of one-nine- tieth of his average salary for the last ten years multiplied by the number of years of service. The benefit must be neither less than 30 per cent of salary nor more than eight-ninths of the benefit to which the person would have been entitled had he or she continued in the service until the age of 62. Once each year the retirement board may require the disability annuitant to submit to a medical reexamination. Should the annuitant while under the age of 62 refuse to be reexamined or should it be found that he is no longer disabled, the board may discontinue his state annuity. In case the disability annuitant is engaged in another gainful occupation the board may refuse his state annuity. Should a disability annuitant recover and be restored to school service, his retirement allow- ance ceases and his rate of contribution is the same as before disability. Death Benefit. In the case of death before retirement the dependents of the deceased received the employee's con- tributions with compound interest at 4 per cent. With regard to death after retirement the provisions are similar to those in New York. The employee may at the time of his retire- ment choose a smaller allowance with the agreement that the balance shall be paid to his dependent or assignee in the form of either a lump sum or further annuity. Any employee who resigns or is dismissed before retire- ment receives back all his contributions together with 4 per cent compound interest. The Pennsylvania System Teachers' Contributions. Each teacher contributes a cer- tain percentage of his salary according to his age at the time of becoming a member of the system. The rate of contribu- tion is so fixed as to provide at the age of 62 an annuity of one one-hundred-sixtieth of the average salary for each year of subsequent service. In view of the fact that all contributions are calculated to the same retirement age instead of as in New York to different ages according to length of service. the sam:€ contribution obtains for all teachers of the same age irrespective of whether they have previous service to their credit or have just entered the service. The scale of con- tributions, which is shown on the following page, contains, therefore, only about eighty-six different rates (two for each age, one being for men and the other for women), whereas the New York City scale of contributions contains about 2,000 different rates. The difficulties which the members of the New York City systems frequently experience in having to select be- tween a number of different rates, the arrangement of which they do not understand, is hereby avoided, and the task of keeping records is simplified. Contributions are never required on any portion of a salary in excess of $2,000. The older entrants whose regular rate of contribution exceeds 5 per cent may lower it to 5 per cent, thereby either reducing their annuity or postponing the date of their retirement. Such a lowering of their rate does not affect their state annuity. In this respect the Pennsylvania system is also in advance of the New York City system which allows the members to reduce their contributions as low as 3 per cent and thereby greatly reduce their future benefits. State Contribution. The state contributes on a full re- serve basis on account of all past and future services of all its members, whereas in New York the city contributes on a full reserve basis only on account of new entrants, the partial reserve basis being adopted for present teachers. It con- tributes semi-annually 2.8 per cent of the annual salaries, and 271 r I; t: \ Teachers' Pension Systems in the United States each semi-annual payment must be at least 3 per cent higher than the second preceding semi-annual payment. This con- tribution will create a sufficient reserve in less than forty years, Scale of Employees' Contributions in the Pennsylvania Fund Percentage OF Salary Percentage of Salary Required I N Case Of Required In Case Of Age Age Men Women Men Women 18 3.33 3.69 40 3.74 4.45 19 3.33 3.71 41 3.79 4.52 20 3.33 3.74 42 3.84 4.59 21 3.33 3.75 43 3.89 4.67 22 3.34 3.78 44 3.95 4.75 23 3.34 3.79 45 4.01 4.83 24 3.34 3.81 46 4.07 4.92 25 3.35 3.83 47 4.14 5.01 26 3.36 3.85 48 4.20 5.10 27 3.37 3.88 49 4.27 5.20 28 3.38 3.90 50 4.34 5.29 29 3.40 3.93 51 4.41 5.40 30 3.42 3.96 52 4.49 5.50 31 3.44 4.00 53 4.57 5.61 32 3.46 4.03 54 4.64 5.72 33 3.49 4.07 55 4.73 5.83 34 3.51 4.11 56 4.81 5.94 35 3.55 4.16 57 4.90 6.07 36 3.58 4.21 58 4.98 6.18 37 3.62 4.27 59 5.08 . 6.31 38 3.65 4.32 60 5.16 6.42 39 3.70 4.38 61 5.30 6.59 and can then be discontinued. It will liquidate the accrued liabilities in a much shorter space of time than will the partial reserve contribution of New York City. Reimbursement. The state is reimbursed by the localities to the extent of one-half of the contribution which it makes on account of the teachers that they employ. The purpose of this arrangement is to interest the local employing body in the welfare of their employees and to equitably distribute the cost. The reimbursement is deducted from the funds which it apportions for school purposes. Valuation. It is estimated that the total liabilities on 272 The Pennsylvania System account of present employees amount to about $61,000,000, of which $23,000,000 will be contributed by the teachers and $38,000,000 by the state and by the localities. The annual appropriation on account of present employees now amounts to about $1,500,000. The appropriation on account of new entrants, which is fixed at 2.75 per cent of salaries, during the first year amounts to about $25,000 and will increase each year thereafter at least by that amount. Actuarial valuations are to be made in 1919, 1921, 1924 and every fifth year there- after. Management. The system is managed by a retirement board of seven members. The superintendent of public instruction, the state treasurer and one member appointed by the governor represent the state. Three members are elected by the teachers, and the seventh member is elected by the six. The system is subject to the supervision of the state depart- ment of insurance. Relation to Local Funds. The law allows any existing local retirement fund to merge with the state fund if two- thirds of the members of the local fund apply for member- ship in the state fund "by a petition duly signed, verified and approved by their employer." In that case the local system is discontinued and dissolved as follows : The members cease to contribute to the old system and begin to contribute to the state fund in accordance with their age; all the assets of the fund are held by the locality as a trust fund and are applied to the payment of the benefits to the teachers already retired, which payment becomes an obligation of the locality. In case the contributor upon his transfer does not receive back the contributions which he or she has made to the discontinued system, the amount of such contributions is to be contributed by the state at the time of his retirement and to purchase for him an additional annuity or such other benefit as he may elect, over and above the benefits provided by the act. 273 CHAPTER XVIII THE SCIENTIFIC PENSION LAWS OF 1919: NEW JERSEY, OHIO AND VERMONT During the year 19 19 three new scientifically constructed pension laws were placed on the statute books, thus bringing the total number of scientific pension laws to seven. These were : New Jersey, Ohio and Vermont. They differ in several respects from the systems of Massachusetts, Connecticut, New- York City and Pennsylvania and deserve to be studied in de- tail. The text of these laws will be found in Appendix 3. New Jersey. The investigation of the teachers' retirement situation in New Jersey conducted by the Pierson Commis- sion with the assistance of the Bureau of State Research and described in chapter XII, culminated in the preparation and introduction in the legislature of three bills providing for a complete reorganization of the old retirement systems. They were passed by the legislature and enacted on April 10, 19 19. The most important of the three new laws (ch. 80) estab- lished a new retirement system, with joint contributions on an actuarial basis, which will gradually supersede the old double system. The second law (ch. 81) amended the teach- ers' retirement fund act by allowing the members of the fund to withdraw from it and absolving future teachers from any obligation to belong to it, in view of its insolvency. The third law (ch. 82) repealed the 35 year service pension act. The reorganization effected under these laws is very dif- ferent from the reorganization effected in New York City. Instead of liquidating the old system at one stroke and taking over at once all its assets and liabilities and its entire member- ship by means of compulsion as New York City did, New Jer- 274 New Jersey, Ohio and Vermont sey allowed its old fund to continue to exist, only in a greatly reduced scope and under the condition that it gradually wind up its affairs, and it made withdrawal from it and entrance into the new fund entirely optional. This gradual liquidation was dictated by considerations of expediency rather than scientific preference. Membership in the new system is compulsory for all new appointees but optional for teachers now in the service. The benefits provided by the system are as follows : 1. A superannuation allowance on or after the attainment of the age of 62 of approximately i/70th of the average salary of the last five years multiplied by the number of years of teaching service (up to 10 years of service in public schools of other states included) minimum $400. The allowance consists of a pension of i/i40th of the average salary of last 5 years preceding retirement for each year of subsequent service and i/70th for each year of prior service; and of an annuity of such amount as the contributions of the member will provide at the time of his retirement, on the basis of a mortality experience similar to that obtained in New York City and interest compounded at 4 per cent. 2. A disability allowance at any time before the attainment of the age of 62, provided the teacher has served 10 years in the state, of i/70th of the average salary multiplied by the number of years of service (including up to 10 years service rendered in public schools of other states), minimum 30 per cent of salary, or $300. 3. An additional annuity to the former members of the re- tirement fund of such amount as their contributions to the old fund without interest will provide. 4. In case of resignation or dismissal before retirement, a refund to the teacher of all contributions together with interest at 3>4 per cent. 5. In case of death before r.etirement, a return to the teacher's legal representatives of all his contributions together with interest at 3^ per cent. 6. Optional benefits as follows : a teacher may select at the time of retirement to convert the total reserve placed to his account into a smaller annual allowance with the provision 275 Teachers' Pension Systems in the United States that the balance shall be paid on his death to any person whom he may designate, in the form of a lump sum or a life annuity. The state will cover the total cost of the benefits for a prior service of present entrants (the accrued liabilities) and half of the cost of their benefits for future service. The annual con- tribution on that account will amount to 5.02 per cent of the total payroll of all members. It will have to be made for ap- proximately 30 years when the entire obligation on account of the present members will be liquidated. On account of all new entrants the state will contribute a certain percentage of salary graduated according to the age of the entrant from 2 per cent up. The number of withdrawals from the service have been discounted so that the state contributes only on account of that number of members which will actually remain in the service and no part of its contributions will re- vert to it in cases of withdrawal. In addition to this obligation, the state has assumed consid- erable liabilities in connection with the two old retirement systems. It took over the entire pension roll and such part of the annuity roll, (i. e. at least 80 per cent of it), as the re- tirement fund will be unable to pay. The liability thus taken over on account of the teachers already retired was estimated as of June 30, 1918 — at $4,300,000. It was greater on Sep- tember of the following year when the new system became effective. The state assumed the entire cost of the guarantee of the rate of interest at 4 per cent and of the minimum allowance, and practically the entire cost of administration. In cases of withdrawal the difference between interest at 3 ^ per cent and the guaranteed rate of 4 per cent is applied to meet part of the cost of administration. The part so covered will be more or less insignificant. The total obligations assumed by the state under the new system amount to approximately $24,000,000, which is to be divided as between different benefits approximately as follows : 276 New Jersey, Ohio and Vermont Pensions and annuities already outstanding $ 4,000,000 Superannuation allowances ($8,800,000 for prior service and $5,300,000, for future service) . . . 14,100,000 Disability allowances 5,300,ot)0 Additional annuities in compensation of contribu- tions made to the old retirement fund 300,000 The members contribute, according to their age, such a per- centage of their salaries as will provide them at the age of 62 (assuming average advancement of salary) with an annuity of one one-hundred- fortieth of their average salary of the last 5 years preceding retirement. Any teacher who has reached 62 years of age and has completed 35 years of service may cease to contribute. The rates of contributions are as fol- lows: AGE MEN WOMEN T ENTRANCE INTO (percentage (percentage THE NEW FUND OF salary) OF salary) 20 3.60 391 21 3-60 3-93 22. 3.60 3-95 23 3.61 3-98 24 3-62 4.01 25 3-62 4-05 26 3-64 4.09 27 3.66 4.13 28 3-69 4.18 29 372 4-25 30 376 4-32 31 3.80 4-39 32 3-84 4.46 33 3-89 4-53 34 3-93 4.60 35 3-97 4.68 36 4.01 475 37 4.07 4.84 38 4-13 4-94 39 4.19 5-04 277 Teachers' Pension Systems in the United States WOMEN (percentage OF salary) 5-13 5.22 5-32 542 5-53 5-63 5-73 5-83 5-93 6.04 6.16 6.27 6.38 6.49 6.60 671 6.83 6.94 705 7.17 7.29 The average contribution of the member will be 4 per cent. The state will contribute approximately 8^ per cent of the salaries (including the accrued liabilities and the existing re- tired roll) i. e., more than twice the amount contributed by the teachers. It will have to increase its annual contribution from approximately $230,000 (the amount of the pension roll) to about $1,250,000 i. e. to more than five times the previous amount. Of the total contributions which the present teachers will pay into the fund in the future only $6,300,000, will be applied to the purchase of superannuation and disabiHty an- nuities. The major part of their contributions will never be anything but mere savings accounts which will be with- drawn before retirement. Every five years actuarial valuations are provided at which 278 AGE men t entrance into (percentage THE NEW FUND OF salary) 40 4.26 41 4-33 42 4.40 43 4-47 44 4-54 45 4.61 46 4.68 47 4.76 48 4.84 49 4.92 50 5.01 51 5.10 52 5-19 53 5.28 54 5-37 55 546 56 5-56 57 5-67 58 578 59 5-89 60 6.00 New Jersey, Ohio and Vermont the rates of contributions of the state as well as of the mem- bers can be either increased or reduced according to the results of the investigations of the mortality, service, and salary ex- perience. The system consists of six funds : the annuity savings fund and the annuity reserve fund for the members' contributions : the pension fund for the state's contribution for present active and retired teachers; the pension accumulation fund and the pension reserve fund for the state's contribution on account of new entrants; and the expense fund. The pension accumula- tion fund corresponds to the contingent reserve fund of the New York City and Pennsylvania systems. The term is more explicit, as it indicates that in this fund the reserves for the payment of pensions are accumulated. The board of trustees consists of seven members : the com- missioner of education, the state treasurer, one member ap- pointed by the governor, three members elected by the members of the fund, and the seventh member elected by the six. Noteworthy is the fact that in preparing this legislative measure the commission carefully sounded the opinions of the teachers. It gave a wide publicity to its proposals, carefully examined all the criticisms which they evoked and incorpor- ated in the bill any reasonable suggestion that was advanced. Originally the bill based retirement allowances on the av- erage salary of the last ten-year period preceding retirement, as the latter afforded a more stable basis for the financing of the system and a more equitable one than an average taken throughout a shorter period. But the teachers urged the five- year basis in order that the pension of the teachers about to retire should not be smaller than the one provided under the old pension law. The commission yielded on this point, al- though it considerably increased the cost to the state. The disability allowances were originally fixed at the one- seventy-fifth rate, but the commission changed it to the one- seventieth rate, same as superannuation allowances because the 2/9 Teachers' Pension Systems in the United States superannuation age was fixed rather high and under such conditions disability benefits would naturally assume a con- siderable importance. In this way a teacher who became dis- abled at 57 after 35 years of service could retire on half pay. Credit for outside service up to 10 years was incorporated in response to the demand of some teachers. In the case of present teachers the credit is provided entirely at the expense of the state. In the case of new entrants the cost of it was to be divided between the teacher and the state on a 50-50 basis; the teacher was allowed to pay the contributions for the years of outside service for which he claimed credit, either in a lump sum (which he could easily do if he transferred from a system which refunded to him his contributions) or by means of annual instalments. The interest rate in case of withdrawals was fixed at 3^ per cent as a compromise between the 3 per cent rate ori- ginally provided in the bill and the 4 per cent urged by the teachers. The prior service credit was made renewable in case a teacher left the service and subsequently returned. The minimum of $400 for superannuation and $300 for disability was included because the teachers asked that some minimum be fixed. It was important in view of the small salaries in rural districts. The guarantee of all benefits already granted was added when the bill was before the legislature. It was strongly urged by the teachers. Originally the bill guaranteed all pensions, but the annuities only in case of those who did not receive the pension; double beneficiaries would have suffered a reduction in their total benefit. Now they were guaran- teed all that they received theretofore, even though the com- bined benefit often exceeded 100 per cent of their salary. The only point urged by the teachers which the commission refused to concede was that the present teachers should be allowed to retire on half-pay after 35 years of service, irre- 280 New Jersey, Ohio and Vermont spective of age. The teachers argued that they had this right under the existing law, and that it was not fair to take it away from them, and that it would not cost much as com- paratively few would avail themselves of it. The commission replied that this right of the old law was against public policy as it allowed efficient teachers who were but 51 years of age to retire, and that it would add approximately $3,000,000 to the burdens of the state. There was considerable agitation on this point among the teachers and efforts were made to amend the bill in spite of the commission, but these efforts failed. The bill passed both houses without this amendment and was signed by the governor. The enactment of this law closed, with a comparatively happy solution, the pension controversy which raged for more than 20 years in this state. The new law compares very favorably with the laws gov- erning other scientific systems. It provides larger benefits and adjusts the problem of the lower paid teachers in a more satisfactory way than some of the others do. It also presents a considerable advance so far as legislative drafting is con- cerned. It is built in accord with the real anatomy of a pen- sion system. It consists of large divisions arranged in logical order. Each division consists of sections, which are grouped under proper subheads and each of which presents a complete thought and can be easily referred to and, if necessary, amended without disturbing the other parts of the structure. The skeleton of the law is as follows: 1. Definitions. 2. Establishment of System. 3. Membership. 4. Service Creditable. 5. Benefits. Superannuations. Disability. Withdrawal and Death Benefits. Optional Benefits. Benefits of Teachers now Retired. 281 Teachers' Pension Systems in the United States 6. Actuarial Basis. 7. Funds Created. Contributions Thereto and Payments Therefrom. Funds Derived from Members' Contributions. Funds Derived from Employers' Contributions. 8. Collection of Contributions. Collection of Members' Contributions. Collection of Employers' Contributions. 9. Administration. ' Board of Trustees. Administrative Staff and Procedure. Management of Funds. 10. Other Provisions. State Supervision. Exemption from Taxation. Protection against Fraud. Repealer. Ohio. As early as 1896 a pension law for teachers was en- acted in Ohio. It applied only to first class cities. Subsequent amendments (1900, 1902, 1904 and 191 1) extended it to other cities, increased the salary deductions to $2 monthly and al- lowed the cities to contribute up to 2 per cent of the school taxes. All these laws were of permissive character. Only the larger cities and a few of the smaller ones availed themselves of the permission to establish retirement funds. The revenues provided were insufficient to finance the funds on a permanent basis. The collapse of pension funds in other states and their reorganization on a sound basis helped to call the attention of the leading teachers of Ohio to the shortcomings of their own system and the need of its reorganization. A movement was started and an organization formed which, with the assistance of experts, framed a bill providing for the establishment of a new state-wide pension system on an actuarial basis. The bill passed the legislature and became a law in May, 19 19. The new system differs in several respects from the New York City, Pennsylvania and other recently enacted systems. All present teachers, who do not belong to a local pension fund, 282 New Jersey^ Ohio and Vermont who do not notify their employing board that they desire to be exempted from membership in it, become members of it. This feature is different from the compulsory feature of the New York City system which allows no one to stay out of the system as well as from the optional feature of systems which admit only those present teachers who apply for membership. Under the latter arrangement many teachers remain outside of the system not because they do not want to join but because they cannot make up their mind and take a definite action. Under the Ohio arrangement a large proportion of them would drift into the system, not because they would desire to join but be- cause they would hesitate or otherwise fail to apply for exemp- tion. As a further measure designed to increase the member- ship of the system it is provided, that "each teacher shall be deemed to be a member of the retirement system and shall have the right to vote" at the first election of the members of the board of trustees and "any teacher in a local district pension system who exercises such right to vote shall be deemed to have petitioned for a merger with the state teachers' retirement system." A teacher may retire at the age of 60. Power is given to the board to retire him on the request of his employing board, as in other systems. On retirement he is entitled to : (a) Such an annuity as his contribution of 4 per cent of salary (all members contribute at the same rate irrespective of their age or sex) will provide; (b) a pension from the state of an amount equal to the annuity and (c) an additional pension, if the teacher is a present teacher, of i 1/3 per cent of his average salary of last 10 years multiplied by the number of years of prior service. Optional retirement is provided after 36 years of service irrespective of age, but only on an actuarial equivalent of his benefit at that time, i.e. usually on a greatly reduced benefit. In order that the retirement allowances in rural districts 283 Teachers' Pension Systems in the United States might not fall below the level of subsistence, it is provided that no teacher retiring after 36 or more years of service shall re- ceive less than $25 per month and that in no case shall the re- tirement allowance of a teacher who was a member of a local pension fund at the time of the enactment of the new law be less than the amount which he would have received under the provisions of the local fund. The retirement allowances produced are, especially in the case of new entrants, smaller than 'the retirement allowances of either the New York City or New Jersey systems. In the case of women teachers and especially those entering the service at a late age the allowances reach a rather low level, (even lower than in Pennsylvania) as may be seen from the follow- ing table. The system would have been much more equitable and efficient had the rates of contributions been graduated ac- cording to age and sex, instead of being fixed at the same flat rate for all, irrespective of their different status. Retirement allowances expressed as percentages of the average salary of last 10 years in case of new en- trants entering at various ages and retiring at 60 (the allowance consists of an annuity provided by a con- tribution OF 4 per cent of salary and of a pension of an equivalent amount). Percentage Allowable to Age of Entrance 20 21 22 23 24 25 26 27 28 29 30 Men Teachers Women Teachers Per Cent Per Cent 59-94 50.33 57-65 48.80 56.20 47.00 54-65 45-70 53-25 44.20 51-72 42.82 50.00 41.20 48.25 39-75 46.55 38.35 44.80 36.85 42.81 35-09 284 New Jersey, Ohio and Vermont Retirement Allowances (Continued) 31 41-00 33.55 32 39-35 32-00 33 37-50 30.50 34 35-85 29.00 35 33-76 27.50 36 32.20 26.00 Z7 30.45 24.75 38 28.55 23.25 39 26.90 21.95 40 25.17 20.41 41 23.50 19.20 42 21.90 17-90 43 20.30 16.50 44 18.75 15-30 45 17-38 14-07 It must be noted that the contributioins are made on the basis of a salary not exceeding $2,000. The higher paid teachers and school officials will therefore receive allowances of smaller proportion to their salary than others. In case of disability after 10 years of service, the teacher is entitled to a retirement allowance, including his annuity and pension of 1/5 per cent of his average salary of the last 10 years for each year of service, with a minimum of 30 per cent of salary, and a maximum of 90 per cent of the retirement allowance to which he would have been entitled at 60. A teacher retiring at 50 or 55 years of age after 30 years of ser- vice will be entitled to a disability allowance of 36 per cent of his salary. On retiring after 35 years of service he will re- ceive 42 per cent. A credit for service rendered in public schools of other states is allowed only to present teachers and only on condition that the teacher cover the entire cost of such credit. When a present teacher leaves the service, his prior-service certificate becomes void and not renewable. Both of these features are open to criticism. The provisions of the New Jersey systems are more satisfactory in this respect. 285 Teachers' Pension Systems in the United States In cases of resignation or dismissal the teacher or his repre- sentatives are to receive all his contributions with interest at 4 per cent ten years after the resignation or dismissal. This deferred refund is a novel feature. In the absence of any ex- perience with this feature it is difficult to say whether or not it is practicable and will satisfy the teachers. In cases of death before retirement the teachers' contribu- tions with interest are paid to his legal representatives at any time. Optional benefits similar to those of other systems are provided. The body employing the teacher pays each year on account of each teacher a certain "normal contribution" which is fixed at such a percentage of salary as will provide the teacher with a pension equal to his annuity, and a certain "deficiency con- tribution" also expressed as a percentage of salary to cover on a reserve basis the accrued liabilities of the system. The immediate cost to the employers will be approximately 5.6 per cent of salary (2.8 per cent normal contribution and 2.77 per cent deficiency contribution). The total assets and liabilities of the system are as follows. liabilities assets Superannuation Teachers' Contri- Allowances for butions $13,360,924 future service. .$14,750,336 Employers' Con- Additional Allow- tributions .... 25,296,805 ances 11,536,085 Disability Allow- Total $38,657,729 ances 8,492,001 Refund 3,879,307 Total $38,657,729 The system is managed by a retirement board consisting of five members : the state superintendent of public instruction, 286 New Jersey, Ohio and Vermont the state auditor and three teacher members elected by the members of the system. Tlie teachers have therefore a ma- jority voice in the board — a feature which can hardly be ap- proved in view of the fact that the major part of the moneys of the system are government funds and the system vitally affects public interest and is largely a government function. The provisions regarding the merger of local funds with the state system is somewhat different than in Pennsylvania. If a majority of the members of a local pension fund vote in favor of a merger with the state system and the board of ed- ucation approves it, then the fund is merged under the follow- ing conditions: an actuarial valuation of the fund is made and its accrued liabilities and the deficiency contribution necessary to cover the latter in case of a merger are determined; all the assets and the entire membership of the fund are transferred to the state which then assumes the payment of all benefits already outstanding or maturing under the new law in the future, but the locality must pay to it the deficiency contribu- tion determined by the valuation. The system consists of the following funds : the teachers' savings fund; the employers' accumulation fund, in which all contributions of the localities are accumulated ; the annuity and pension reserve fund, to which the reserves are transferred on retirement and from which annuities and pensions are paid; the guarantee fund for the purpose of maintaining uniform in- terest and for special requirements; and the expense fund. Vermont. In the year 191 3 a law was passed in Vermont establishing there a teachers' retirement fund. The funds for its financing were to be raised by the Teachers' Retirement Fund Association. The state was to contribute an amount equal to that raised by the teachers, not exceeding, however, $10,000 annually. Annuities of half pay, maximum $500, were to be paid to members who retire after attaining 65 years of age. In cases of premature disability the retirement board 287 Teachers' Pension Systems in the United States was to grant such an amount as it saw fit. The board was authorized to pay no annuities until in its judgment the fund was sufficient, or to pay only reduced annuities, or to give preference to certain classes. Approximately only fifty teach- ers out of a total of almost two thousand joined the fund. No annuities were paid. It was evident that the law was entirely inadequate to solve the teachers' retirement problem. Efforts were, therefore, made to secure more satisfactory legislation. The assistance of the Carnegie Foundation was invoked and a new retirement plan was evolved and incorpor- ated in a bill (Senate 63) which was introduced in the legisla- ture of 19 19. After being amended in several respects it was passed and became a law on April 8, 1919. The new law authorized the establishment of a new retire- ment fund. It did not make its establishment mandatory as the original bill did. Neither did it make membership in it compulsory for future teachers, as provided in the original draft, but made it voluntary for all. The system was intended to operate on a permanent and stable basis. Unfortunately the bill was amended by the in- sertion of a clause that "the total amount appropriated by the state in any one year to carry out the provisions of this act shall not exceed the sum of $25,000." This sum will, of course, be insufficient to finance the system permanently. If the majority of the teachers join it, it will be insufficient at the very outset. The system would, therefore, be placed in the same position as other systems had been, which made greater promises than they could fulfill but expected to secure amendments that would provide them with additional rev- enues when the time of stress would come. All members will contribute the same percentage of salary. The exact rate will be determined each year by the retirement board. The law merely provides that the rate shall not be over 5 per cent. The minimum contribution is $16 and the maximum $100. After contributing for thirty years a mem- 288 New Jersey, Ohio and Vermont ber may exercise his option as to whether or not to continue contributing. In adopting the uniform rate rather than one graduated according to age the framers of the system followed the example of Massachusetts rather than that of the New York City, Pennsylvania or New Jersey systems. The rigid- ity of the uniform rate which produces excessive benefits in case of early entrants and inadequate benefits in case of late entrants, and especially in case of women, has been pointed out in chapter IX and in the preceding section on the Ohio law and needs no further comment. The law does not make it mandatory upon the state to con- tribute, as other pension laws do. It says that besides the members' contributions, the annuity fund "shall also consist of such amounts as may [not shall, as in other laws] be appro- priated from time to time by the general assembly on estimates submitted by the retirement board." These estimates shall call for an appropriation "sufficient to enable the board to credit annually to each member ... a sum equal to his contributions to the annuity fund and the additional allow- ance. . . . Provided, however, that the state shall not be called upon to pay into said annuity fund more than $ioo in any year on account of the contributions of any member . . . nor shall the total amount appropriated by the state in any one year to carry out the provisions of this act exceed the sum of $25,000." The state can therefore at any time disregard the estimates of the retirement board, reduce its contributions or even altogether cease to contribute. Tlie system can never be sure of its income. Any member who has reached the age of 60, if a man, and 65, if a woman, and who has served for 30 years in the public schools, 20 of which must have been in the state, may retire on his own request or may be retired upon the request of his employer "without forfeiting any of the benefits of the retire- ment system." The latter sentence is rather queer, for it is hard to conceive how the benefits of a retirement system could 289 Teachers' Pension Systems in the United States be forfeited on retirement. The wisdom of such a combined old age and long service requirement, as here provided, may- be questioned. Experienced and leading teachers invited from another state may hesitate to enter the \"ermont service after they have passed the 40 or 45 year mark if they know that because of the service requirement they would have to serve there beyond the superannuation age. It would not be ad- vantageous for the state to force late-comers to serve beyond the time of their usefulness. The tendency of today reflected in most of the recent systems is to encourage desirable migra- tion of teachers and take age as the basis for superannuation, without regard to length of service. The retiring member receives an annuity of such amount as his and the state's contributions will provide on the basis of the McClintock 3>4 per cent table. To provide against the inadequacy of the annuities in case of present old teachers, the law allows those of them who have entered after 45 years of age "such an additional allowance from the state as may be provided by the retirement board" provided that "the total annuity shall not exceed one half of his average salary." Present teachers entering at the age of 42, 43 or 44 would not be entitled to additional allowances when they retire, al- though their regular annuity especially in the case of the women retiring at 60 would be far below half pay. It may be more advantageous for them to postpone joining the system until they reach the age of 45 — a point which may undoubted- ly raise some confusion. No provision is made for future teachers entering at a late age, although their regular annui- ties would also be inadequate. The entire method of selecting the present teachers above 45 for the enjoyment of the addi- tional allowance appears rather arbitrary. The broad discre- tion left to the board to determine in their case the amount of the additional allowance and the uncertainty in which in the meanwhile this class of members may be left as to the amount of their benefit is hardly a good feature. 290 Xew Jersey, Ohio and Vermont Retirement for disability may take place any time after 6 years of service. But the disability is required to be ''total and permanent." The permanency of disability for teaching is very difficult to determine. For this reason most of the scientific systems do not make such requirements but provide for periodical examinations, and reduction or discontinuance of the allowance, in case the disabihty decreases or altogether ceases and the teacher is partly or entirely reinstated. As the annuity of the retired member, purchased by the contributions accumulated to his credit, would frequently be insufficient, the law provides for him such additional annual allowance from the state ''as the retirement board in the exercise of sound discretion, shall deem equitable, the same being limited bv his earning capacity in other occupations." This additional allowance is to be continued "so long and in such amount as the retirement board may determine, but in no event shall the total sum received annually by such member exceed half of the average annual salar>- throughout his entire period of service." Xo other board of any other system is known to exercise as wide a discretion in this matter. It is generally con- ceded that rules ought to take place of discretion. In the ab- sence of such rules, in this instance, even.- applicant would claim the maximum disability benefit of half pay (exceeding, perhaps, the superannuation benefit to which he might have entitled had he stayed in the service) on the ground that some one else has received it and the board may be greatly inconven- ienced by such claims, especially as refusals would lead to accusations of imfairness. In case of resignation, dismissal or death before retirement the original draft of the bill provided a refund of the mem- ber's contributions with interest, if the withdrawal or death occurred before 6 years of ser^-ice, and of both the member's and the state's contributions with interest, if withdrawal or death occurred after 6 years of service. The intention was to go further than any other system along this line, as the furthest 291 Teachers' Pension Systems in the United States that the other systems have gone is to refund the member's contributions with interest. The intention was excellent but was apparently not fully thought out. The feature was pro- posed and incorporated in the original plan without any care- ful actuarial estimate of its cost, although it was evident that the cost would be considerable. Its great cost was bound to affect unfavorably the retirement benefits, the adequacy and sound financing of which it is exceedingly difficult to realize in the beginning of the operation of a system, when the accrued liabilities are tremendous. The program was partially thwarted as an amendment of the bill struck the interest out. The result is precarious. As the largest proportion of withdrawals occur before 6 years of service, the largest proportion of withdrawing teachers would receive only their contributions without interest, i.e. less than the members of the New York City, Pennsylvania, New Jersey, Massachusetts and Connecticut systems, which started with a less ambitious program, would receive under similar circum- stances. Those withdrawing between 6 and 30 years of service would receive more than a refund of their contributions with interest would have provided them. Finally, in case of those withdrawing after 30 years, the combined member's and state's contributions without interest would approximately equal or even amount to less than the member's contributions with interest would have amounted to, because interest doubles a deposit in approximately 30 years. At the time of retirement the member may elect to receive a smaller annuity with the provision that if he dies before re- ceiving payments equal to the sum of his and the state's contri- butions accumulated on his account, the difference shall be paid as annuity to his legal representatives. In case of death of a disability beneficiary who receives in the form of an annuity less than the total accumulations of his and the state's contributions on his account, the difference is paid to his legal representatives. 292 New Jersey, Ohio and Vermont The system is administered by the retirement board consist- ing of the commissioner of education, the state treasurer, the insurance commissioner and two members elected by the mem- bers of the retirement system. The system consists of the following funds : 1. An annuity fund in which the contributions of the mem- bers and like contributions of the state together with interest shall be deposited and from which the annuities and the re- funds shall be paid. 2. A reserve fund, consisting of gifts, returns to the state of its contributions to the annuity fund, and balances accruing from interest, etc., and which shall be used in the discretion of the board for unforseen contingencies, expenses of admin- istration or other purposes. -3. Accrued liabilities fund, consisting of the moneys re- maining from the old retirement fund, of such parts of reserve fund as the board may transfer thereto and such other funds as the board may receive for the purposes of meeting accrued liabilities. This fund shall be drawn upon from time to time as needed to make up the contributions of the state to the re- tirement allowances. Actuarial revaluations are provided every three years and the board is empowered to change rates of members' contribu- tions, except that such changes could not affect teachers who are members at that time, unless they assent to such changes. It is to be regretted that no actuarial valuations of the obli- gations of the system were made when the bill was framed. The total cost of the scheme was practically unknown. The systems of New York City, Pennsylvania, New Jersey and Ohio at the time they were proposed were accompanied by valuations which clearly set before all the parties concerned the cost of the benefits involved. It is a sound practice and should have been followed. Unfortunately, too many factors were left uncertain. The rate of additional allowances, the rate of normal contributions of the members and of the state, 293 Teachers' Pension Systems in the United States the rate of interest, and the mode of discharging accrued Habil- ities — all this was left for later determination, instead of being agreed upon before enactment, and made a valuation of assets and liabilities impossible. It was not surprising, therefore, that acting more or less bhndly in this matter the legislators introduced in the bill an arbitrary limitation of the annual appropriation which would provide the system with an inade- quate contribution. The old law was repealed and provision was made that the old fund shall be merged into the new fund if its members vote in favor of it. It is to be hoped that the defects mentioned herein will be corrected in the course of time and the new system will come into accord with the best precedents of scientific pension legis- lation. 294 APPENDICES APPENDIX I COMPARATIVE ANALYSIS OF TEACHERS' PENSION SYSTEMS Teachers' Pension Systems in the United States U At Resignation or Dismissal Before Retirement ■S, Refund of tea- chers' contri- butions with compound in- terest; teachers who have con- tributed for more than ten yearsmay leave their contribu- tions on deposit and receive such annuity as they would purchase & ■z. Upon death be- fore retirement: Refund of tea- chers' contribu- tions with in- terest at com- pound scale Optional bene- fits: upon death after retu-e- ment: The tea- cher may at the time of retire- ment choose a smaller annuity and pension, with the pro- vision that the balance should be paid to his dependent or assignee on his death in a lump sum or should purchase an an- nuity for such person .1 Q I'es; pension af- ter 15 years' service in the state; 1/30 of $500 for each year of service Yes; if 55 years of age and re- tirement h ap- proved by Re- tirementBoard; same provision as for superan- nuation; If dis- abled before 55 years of age, re- fund of contri- butions with compound in- terest 2 § 2 1 2 g § z P ' Retirement al- lowanceconsist- ing of two.bene- fits:annuityand pension. Annu- ity of such amount as tea- chers' contribu- tions would purchase and pension paid by the state equal to the amount of annuity. Also additional pension for em- ployees who had been in the the establishment of the system who had served 15 years and are eligible to retire- ment; this pension to be such as to make the total retu-ement allowance equal the amount which they would have received had they contributed for 30 years -§■■ iJ 1 § Minimum Length Service (Years) 41 .r 1 1 3 S z; "'is OS i t> 1 .2 5 Appropriation if necessary. 5% inheritance taxes An appropriation eachyearof the amount needed to pay the "pen- sions" of that year and the total adminis- trative expense s. ! 1 1 Jl monthly (Total contribu- tions at date of retirement min. $300) 5% of salary, min. $25; max. $100. No pay- ments need be made either af- ter they are suificient to purchase an an- nuity of $500 at age 60, or after they have been paid for 30 years § ■5 r 3 t 1 1 z Teach- ers (1915- 1916) 2" n 1 1 1 ill Connecticut Tea- chers' Retire- ment Fund. Est. 1917. (Com- pulsory; option- al at ena^tmeut) 1 296 Appendices i 1 °- -s Yes; at resigna- tion before 15 years; one-half own contribu- S5 Yes; refund of contributions with interest at resignation or dismissal after six years' contribution* optional for a deferred annu- ity 1 1 Z ^ Yes; refund of contributions with interest (according to the kind of!.- - nuity selected by the teacher) 1 Yes; pension af- ter 15 years. (2/5 in the state) ; same as col. "Pension scale" ^ §8-1^ mi i i en i i s g 1 a 1 11! $150 after 25 years' service; $200 after 30 years and $250 after 35 years. (Those who re- tired or were re- tired before 1913 receive one -half pen- sion) Annuity accord- ing to accumu- lated contribu- tions. Maxi- mum $750; in addition a state pension equal to the annuity^ II : im 50 and 25 (15 in state) axable property of the cities and districts not act. id 25 (20 in state) o Z a g St- i t5 i When necessary not exceeding 1/10 of a mill upon each dol- lar of assessed valuation of all state, exclusive o coming under thi $8,000 from school and mill fund for the first year $25, 000 yearly thereafter Amount noces- sary for the payment of pensions deduc- t-d by the state from the an- nual apportion- me.it. Total administrative expense 1 1 >> $5 yearly first 10 years; $10 next 5 years; $30 yearly after 15 years (Minimum total contributions $400) 1 Fixed by Retire- ment Board, min. 3%, max. 7% of sal.; now, 5%; min. 835, max. $100. No contrib. req. af- ter 30 yrs.' con- tributing. Max. con'ri.purchases $500 annuity at aee 60. No. of Teach- ers (1915) 1916) S ^ i 2" 1 ; Illinoisi Teachers' Pension and Re- tirement F;ind 1915 Compulsory (Op- tional for pres- ent force up to Sept. I, 1915) i iji Massachusetts' Teachers' Re- tirement Sys- tem Est. 1913 Compulsory (op- tional at enact- ment) IE s Is •11 § :l I .||J 1 I'll o S-8 fe --g a 297 Teachers' Pension Systems in the United States z^ i 1 At Resignation or Dismissal Before Retirement Yes; at resigna- tion one-half of own contribu- tions without interest Yes; at resigna- tion refund one - half own contributions without inter- est ■s i 1 Yes; refund one- half own con- tributions without inter- est, if no an- nuity has been drawn 1 Yes; pension af- ter 15 years service; 1/30 of full annuity for each year of service Yes; pension af- ter 15 years (10 in state); 1/20 of $350 foreach year of service 2 B 1 § g 2 o 1 1 13 One-half salary; min., $300, max., $500 re- duced by 1/30 of full pension for each year of service below 30 Board of Retire- ment may pro- rate pensions in case of insuf- ficiency of fund $350 for 20 years of service in- creased by $30 for each year of service after 20 and up to 25 years" service; max. $500 Board may pro- rate pensions in case of insuffi- ciency of fund iJ Slil Minimum Length Service (Years) 25 (15 in state) Discre- tionary with the Retire- ment Board g|| Z ^ s O 1 1 z al contributions: ension.) In case of fund. Board ntributions from om 1% to 2%, 1/20 of a m.ll of alltaxableprop- ery outside of cities of first class 1 J^% salary (max. $5) first 5 yrs.; 1% (max. $10) next 10 years; 2% (max^ $20) thereafter. (To min. 1 year's f of insufficiency may incre> 1 Z i > 1 u i 1 a a!"^ . i li ^ Jill il|l 1 IHI -5 g ^^ T3-T1 IKS i 1 illi li^ll ^ .E5|a liitll 1 ll:i|i|5i plilliil! i No. of Teach- ers (1915) 1916) S l« |||5l Z "^"cj 5r' lis 6 g 111 « s " HQE- 299 Teachers' Pension Systems in the United States in s i Resignation or Dismissal Before Retirement 1.ISI 1 1 Upon death be- fore retirement: Refund of em- ployees' contri- butions with compound in- terest at 4% Upon death af- ter retirement: The employee may at the time of his re- tirement choose a smaller an- nuity and pen- sion with the proviaion that the balance should be paid to his depend- ent or assignee on his death in a lump sum or shouldpurchase an annuity for such person >> ^ An "employees' annuity" of such amount as his contribu- tions will pur- chase and a "stateannuity" which, together with "employ- ees' annuity," will provide a retirement al- lowance of 1/90 of his final sal- ary for each year of service; Min. 30% of final salary, ex- cept where the minimum ex- ceeds 8/9 of the retirement al- lowance which the employee would have re- ceived had he deferred his re- tirement until age 62 1 1 g 1 tn i 1^ The pension con- sists of 2 bene- fits: an "em- ployees' annui- ty"and a "state annuity;" an annuity of such amount as em- ployees' con- tributions will purchase. A "state pension" of 1/160 of the final salary for each year of service prior to age 62 and an additional pen- sion of 1/160 of saliry for each year of service prior to the establishment of the system. Maximum 50% of salary II II Minimum Length Service Years) § ■z g CO i 1 2 .8 ^0 of salary paid semi-an- nually (about 5.6% annually) in respect to appointees ap- pointed pre- vious to estab- li.shment of sy.stem. Such percenta-^es of salary as will be ne.^e.ssa-y, to.;ether with interest, to ac- cumulate a re- serve from which "pen- sions" of all new entrants could be paid' Total adminis- trative expense H 1 .Such percentages of .salary as will purchasa at age 62 a pension of one - half the final salary. Rates vary from 3.33% to 5.30% for men and from 3.69% to 6.39% for women. An em- ployee may re- duce his con- tribution but not below 5%. Contributions are caljulatad on salaries up to $2,000; above that they are optional^ No. of Teach- ers (1915- 1916) 1 1 PennsyUania Public School Teachers' and Employees' Re- tirement Sy:s- temi Eat. 1917 Coinpulsory (op- tional at enac- ment) : 2- ja 2 III .S So 111 1^-2 ^ *-0 o rt * III ^ V S sfa-d *■' § S c > C3 6. u ft 10 cents for each person of school age in the state set aside from certain school taxes H pa 1% salary'. To- tal contribu- tions min. 30% of last 5 years' average salary (deducted from first year's pen- sion if less than 30%) 1% salary first 10 years (max. $15). 2% next 15 years (max. $30). (Total contributions min. 1 year's pension; max. 25 contribu- tions $600) ^ of Teach- ers (1915- 1916) ■: s II llil Wisconsin' Tea- chers' Insurance and Reitrement Fund, 1911 Compulsory (op- tional at enact- ment) •si o-o. Z4$ 30] Appendices i 1 a 1 g 1 ■^„l III Yes; at resigna- tion after two years; on&-half of own con- tributions Z S 1 1 II 111 sTs o 2 z •S2 S'S I'll Iliillll 2 1 1 i s III ItJiSl 1 II fill = O pi •og ill! II it .82 §•3 -It Hi ^; z BS " Pi z 1 1 22 > u 1 1 1 6 03 11 s lit id i m :iiii 1 1 liiii 2g " -ill •A Z. 44i 1 c > ■1 a II ill 1 iii5 IJ s- S^ ~-a 5.2S2S 302 Teachers' Pension Systems in the United States II .2-55 PQ(£ .We ^Zst^aJ ^^.s| 11 Ci>^>,-K5^«» avv'^so. j"sl"s- g._^ 2 ao- g8 q3 ^ ^ g-r-Q -ii .:^--«*2 IS-B a gji 303 Teachers' Pension Systems in the United States z o 1 1 At Resignation or Dismissal Before Retirement Yes; at resigna- tion one-half of own contribu- tions; at dis- missal before 20 years all own contribu- tions; at dis- missal after 20 years' pension. o Yes; one-half of own contribu- tions at resig- nation. Full amount without interest at dis- missal. 1 1 l-ii z Yes; refund one- half own con- tributions without inter- est >> 1 Yes; pension af- ter 20 years (one - half in county) at the discretion of the Board of Education lis Yes; pension af- ter5yoar3:l/43 of one-half sal- ary for each year of service 1 § z i 1 § 1 ■a; |l $12.50 for each year of service max. $450 (pen- sion may be prorated in case of insufficiency of fund) 8 09 ft "Sg . Minimum Length Service Years) ^i! ^i| )r 30 (10 in city) on demand; 40 in the dbcretion of the Board a| III §1 z 60 for men and 55 women g § J C5 Minimum 1%; maximum 2% gross receipts of taxation raised by School Board; absence and tardiness deductions lili •? i^° 1 $2 monthly. (To- tal contribu- tions min. $20 for each year of service; deduct- ed from pension if less; max. to- tal contribu- tions $600) 1% salary fir.st 10 years, l>i% next 10 years, 2% thereafter. Total contri- butions min. 1 year's pen- sion (deducted from first 5 years'^ pension No. of Teach- ers (1915- 1916) m 1 5 I 1 ^ ilii llHii! Denver Teachers' Retirement Fund Est. 1999 New Orleans Teachers' Re- tirement Fund Est. 1910; 1914 Compulsory (op- tional at enact- ment) 304 Appendices 1 At Resignation Dismissal Before Retirement ill Mil 1 Upon death be- fore retirement: Refund of tea- chers 'contribu- tions with in- terest at 4%; and an addi- tional lump sura benefit of one-half of the last year's sal- ary if the teacher was eligible to re- tirement Optional bene- fits: upon death after retire- ment: the tea- cher may at the time of retire- ment choose a smaller annuity and pension with the pro- vision that the balance should be paid to his dependent or assignee on his death in a lump sum or should purchase an an- nuity for such Person < After 10 years of service, such annuity as the teachers' con- tributions would purchase. A pension paid by the city of 1/5 of the av- erage salary plus additional pe:i?ion of 1/35 of one-quart r of average sal- ary for each year of serv.ce prior to Sept. 16, 1917 (not exceeding 35 years) Before 10 years of service, re- fund of teach- ers own con- tributions with compound in- terest at 4% i i S 1 b O g <1 p Retirement al- lowanceconsist- ing of two bene- fits:annuity:ind pension .amount of annuity such as the teach- ers' contribu- tionswouldpur- chase; pe-ision paid by the city of one-quarter of average sal- ary and also additional pen- sion of 1/35 of one-quarter of salary for each year of service prior to Sept. 16, 1917 (not exceeding 35 years of service) *s g II Average salary of last 10 years of service Minimum Length Service (Years) J? 11' c3l i g a ployees; 11,- ally to the R-j- serve Fund to- gjtherwithsuch appropriations as will be neces- sary to pay the For New En- trants: Same amount as paid by teachers. Total admims- trative expense J 1 o Preseat employ- ees: Sjoh per- ccntum of sal- ary as shall be sufficient to purchase at age 65 an annuity which, together with pension, will amount t.T one-half aver- age salary. Teacher may reduce contri- bution but not below 3%. A greater per- centum if it is desired to pur- chase a larger annaitv. New entrants: Such percen- tum of salary as shall be sufficient to provide at the minimum age an annuity of one - quarter average salary ^>Mi |l s 1 New York City Teachers' Re- tirement Fund Est. 1894 Amended 1895, 1917 Compulsory 305 Teachers' Pension Systems in the United States z;s o o < I i ll i I!. Z 1 1 is ^ ^ 5 1 Yes; pension in the discretion of the Board after 5 years' service; 1/30 of fu'l pension for each year of servicei ^ i i 1 1 z g & 1 1 Ji One-half salary min. 5400; max $1,000; pension may be pro- rated in case of insufficiency of fund i .2-3; Sg ll Minimum Length of Se^^^ce (Years) .^0 alwith It age 60 years' vice city) Il3 S.a-° S g 60 Option teachers with 3( ser (20 in z i s 1 1 >> Appropriation of an amount equal if possible to teachers' contributionsof the preceding year Annual appro- priation for the amount necessary to pay pensions. J 1 1% salary first 10 years, 2%there- after. max. $50 (Total must equal min. 25 contributions) (deducted from pension if less) i No. of Teach- ers (1915) 1916) l"^ .2 1 Philadelphia Tea- chers' Retire ment Fund, 1907 Compulsory (op- tional at enact- ment) Pittsburgh! Tea- chers' Retire- ment Associa- tion Est. 1912 Compulsory C3 ^ ^"O Sill ^f^° '"i 1 o 2 •||il Hil s g.= £ S 2 o I go if 306 APPENDIX REFERENCES TO LAWS, STATISTICAL REPORTS, ETC., RELATIVE TO ALL THE TEACHERS' PENSION SYSTEMS IN THE UNITED STATES Note : The following contains, with respect to every teachers' pension system now in operation in the United States (May, 1918) a list of the laws (including laws no longer in force) and statistical reports bearing on the system, as well as of all published accounts descriptive of it. In a few cases defeated bills bearing on the system have been listed because of some special significance. The arrangement is alphabetical, by states, local systems being listed alphabetically under the several states. Where not otherwise indicated, the figures giving the num- ber of teachers embraced in the several systems are for the year 19 15-19 16, and are taken from the report of the United States Commissioner of Education for 191 7. Valuable synoptic information relative to the provisions of most of the systems is contained in analytical tables and charts which have been published in various reports and monographs on this subject. Nine of these tables are listed below, and a Roman number assigned to each. References are made in the body of the appendix to these charts by these numbers, such references being in every case given under the heading — "Analyzed in Comparative Charts." List of Comparative Charts I. Review of Reviews. June, 1897. v. 15, p. 710-11. II. U. S. Bureau of Education. Teachers pensions. 1908. p. 13-15. (60th Cong., 2d sess. Senate. Doc. 585. Serial no. 5407) III. U. S. Bureau of Labor. Pension funds for municipal employees, etc. 1910. p. 14-35. (6ist Cong., 2d sess. Senate Doc. 427. Serial no. 5658) 307 Teachers' Pension Systems in the United States IV. Massachusetts. Board of Education. Special report on teachers retirement allowances. 1913. p. 33-41. (House. Doc. 1913, no. 1926) V. Journal of Education. June, 1913. v. 'jy, p. 705; July, 1913. V. 78, p. 20. VI. Prosser, C. A. The teacher and old age. 191 3. p. 120. Appendix B. VII. National Education Association of the U. S. Committee on teachers' salaries and cost of living. Report. 1913. p. 272-81. VIII. Massachusetts. Commission on Pensions. Report. 1914. p. 312-31. (House. Doc. 1914, no. 2450.) IX. Carnegie Foundation for the Advancement pf Teach- ing. Annual report, v. 10, 1915, p. 86-99. Abbreviations used to indicate books referred to frequently and library reference marks : Bur. Ed. Bull. 1908. Bureau of Education (U. S.) Bul- letin 1908, No. 7. N. Y. Libr. Bur. Ed. Bull. 1916. Bureau of Education (U. S.) Bul- letin 1916, No. 14, State pension systems for public school teachers. Prepared for the Natl. Educ. Assn. by Carson Ryan and Roberta King. 37 p. Bur. Lab. Bureau of Labor (U. S.) Report on Pension Funds for Municipal employees and railroad pension systems. In the U. S. Senate, Doc. No. 427, 61 st Cong., 2d Sess., 1910. Carn. Found. Carnegie Foundation for the Advancement of Teaching. Annual reports (1906-1915) v. I-X. Com. Ed. Commissioner of Education (U. S.) Washing- ton, D. C. Annual Reports, in 2 volumes. Ed. Rev. Educational Review. Monthly ed. by N. M. Butler, New York. Jour. Ed. Journal of Education, Boston. Mass. Bd. Ed. Massachusetts Board of Education. Spe- cial report on teachers' retirement allowances, Jan., 19 13, 47 p. In Mass. House Docs. 1913, No. 1926. Mass. Com. — Old Age Pens. Mass. Commission on Old Age Pensions, Annuities and Insurance, Jan., 1910. In Mass. House Docs. 19 10, No. 1400. Mass. Com. Pens. Massachusetts Commission on Pensions, Report 1914, March 16. In Mass. House Docs. 1914, No. 2450. 308 Appendices N. Ed. Assn. National Education Association. Report of the Committee on teachers' salaries and cost of living, Jan., 1913, 326 p. N. Ed. Assn., 1905. National Education Association. Re- port of the Committee on salaries, tenure and pensions, July, 1905, 465 p. N. Ed. Assn. Proc. National Education Association. Journal of Proceedings and addresses of annual meetings. N. Y. Libr.— SSA. N. Y. Com. Pens. Teach. Ret. N. Y. Commission on Pen- sions. Report on the Teachers' Retirement Fund, N. Y. 191 5. N. Y. Libr. Sen. Doc. 585. Senate Document (U. S.) 585, 60th Cong. 2d sess., 1908-09. Teachers' Pensions. N. Y. Libr. Prosser. C. Prosser. The teacher and old age, Riverside Educational Monographs, 19 13, 139 p. N. Y. Libr. SIW. Rev. of Rev. Review of Reviews, (New York) Monthly ed. by Albert Shaw. N. Y. Libr. DA. ARIZONA Arizona Teachers' Retirement System. Established 1912. Number of Teachers, 1,539. Non-contributory. Laws Sess. Laws 1912, ch. 95. Establishing a non-contributory state-wide system, repr. in Ar. Sch. L., 191 3, ch. XVI, p. 63-4 and in N. Ed. Assn., p. 282. Descriptions Comm. Ed. 1912, v. i, p. 65. Describes merits of the 19 12 scheme. Analyzed in comparative charts (Act. 1912), VII, VIII, IX. CALIFORNIA California Teachers' Retirement Salary Fund. Established 1913. Number of Teachers, 15,702. Contributory. Laws Sess. Laws 1895, ch. 166, March 26. Establishing voluntary system; repr. in Comm. Ed. 1894-95, p. 1100-02. Amendments: 1897 March 29; 1901 March 31; 1903 March 20; 1909 March 11; 1911 March i. 309 Teachers' Pension Systems in the United States Law 1895 reprinted in amended form in Cal. Sch. L, 191 1, p. 285-302 and in N. Ed. Assn., p. 282. 1913, ch. 694, March 26 (establ. state-wide system). Assembly Bill, No. 1263, ch. 694, 7 p. (text of the law 1913) Reports and statistics Biennial Reports, 1913-14, 1915-16. Contains financial statement and list of annuitants. Descriptions Lange, A. A., A proposal for a state retirement system. In Sierra Educational News (San Francisco) Dec, 1909, p. 22-26. Comm. Ed., 1909, v. i, p. 117. (Describes amendm. 1909) 1913, V. I. p. 914. (Describes law, 1913). Carn. Found., 1912, p. 34. (Description of pens, bill) 19 14, p. 30. (Brief description of new system). Analysed in comparative charts (Act 1913) ; IV, VI, VII, VIII, IX. For a history and criticism of this fund, see p. 195. San Francisco Retirement Fund. Established 1897. Number of Teachers, 1,621. Contributory. Laws See under California; laws 1895-1911. Descriptions Comm. Ed., 1903-04, v. 2. p. 2281-82. N. Ed. Assn., 1905, p. 183. Analysed in comparative charts III, IV. COLORADO Denver Teachers' Retirement Fund. EstabHshed 1909. Number of Teachers, 1,095. Non-contributory. Laws Sess. Laws 1909, ch. 214, May 5. Permissive for ist class district to establish retirem. fund; repr. in N. Ed. Assn., p. 291; also in Colo. School Law, 1915, p. 191-92. Reports and statistics Report of the School District, No. i, 1913-1914, p. 22-23. Statement of receipts and disbursements. Analysed in comparative charts (Act 1909) ; IV, VII, VIII, IX. For a history and criticism of this fund, see p. 219. 310 Appendices CONNECTICUT Connecticut Teachers' Retirement Fund. Established 1917 Number of Teachers, 5,525. Contributory. Laws Spec. Sess. Laws 1899, ch. 123, May 17. Incorporating the Conn. Teachers' Annuity Guild. Publ. Sess. Acts 1907, ch. 373, July 11. Appropr. $10,000 for the Conn. Teachers' Annuity Guild for two years. Also see under New Haven and New London. Senate Bill No. 61, 191 5. In Conn. School Document, No. 4, 1915, p. 58-61. Proposed a state-wide, non-contributory system;; was passed by the legislature, but vetoed by the governor on the ground of being unconstitutional. Acts 191 7, ch. 411, estabHshing a state-wide system. For a history and criticism of this fund, see p. 239. New Haven Teachers' Pension Fund. Established 1911. Number of Teachers, 779. Contributory. Laws Spec. Sess. Acts, 1911: July 18. Special act amending charter and establishing fund in New Haven. Analyzed in comparative charts (Act 191 1) : IV, VH, VIII, ix. New London Teachers' Pension Fund. Established 1911. Number of Teachers, 119. Contributory. Laws Publ. Sess. Acts, 191 1, No. 461. (Establ. fund in New London. ) Analysed in comparative charts; VII, VIII. DELAWARE Wilmington Teachers' Retirement Fund. Established 1911. Number of Teachers, 2,77- Contributory. Laws Sess. Laws, 191 1, ch. 208. (Establ. fund in Wilming- ton) 1913, ch. 210, amending law, 191 1. 311 Teachers' Pension Systems in the United States Descriptions Comm. Ed. 191 1, v. i, p. 99. (Describes law 191 1.) Analysed in comparatice charts (Act 1911): VII, VIII, IX. DISTRICT OF COLUMBIA Laws A Bill to Establish a P.S. Teachers' Retirement Fund in the District of Columbia. H.R. 18295, ^i Cong., 2nd Sess. 1910 May 21, 12 p. (Bill has not passed.) Constitution and By-Laws of the Teachers' Annuity and Aid Association, Jan. 191 5, 40 p. (Private fund.) Reports and statistics Teachers' Retirement Fund, Report No. 1379, H.R. 61 st Cong., 1910, 4 p. Submjitted in support of the bill H.R. 18295, 61 st Cong., 2nd sess. Teachers' Annuity and Aid Association of the District of Columbia. 21st and 22nd annual meeting, Jan. 191 5 and 19 16, 8-page folders. Report of the treasurer. Receipts and Disbursements. Membership. Descriptions Comm. Ed. 1909, v. i, p. 120. (Describes pension bill.) Carn Found. 191 2, p. 34. (Describes pension bill of the Bd. of Ed.) GEORGIA Atlanta Teachers' Retirement System. Established 1910. Number of Teachers, 795. Non-contributory. Laws Atlanta Charter and Ordinances, City Code 1910, s. 495- 500. Establ. retir. system in Atlanta. Sess. Laws, 1912, Part III, title i. No. 619, act amend- ing sect. 26 of city charter. Analysed in comparative charts. VIII. Columbus Teachers' Retirement System. EstabHshed 1913- Number of Teachers, 113. Non-contributory. 312 Appendices Laws Sess. Laws, 1913, No. 92, Aug. 11. Also printed in the Public School Laws of Columbus, Ga. 1914, p. 8-9 (B.M.R. Collection); amendm. of city charter providing for pensions to be granted in the discretion of the authorities after 25 years of serv- ice; max, $25 monthly. ILLINOIS Illinois Teachers' Pension and Retirement Fund. Established 191 5. Number of Teachers, 24,947. Contributory. Laws Sess. Laws 1895, May 31, p. 312-15. Permissive act for cities over 100,000 pop. (Chicago) repr. In Comm. Ed. 1894-95, p. 1081-82. 1901 May II, p. 300-01. (Withdrawing compulsory feature. ) 1907 May 24, p. 529-34. Mandatory act for cities over 100,000 pop. (Chicago) new section added; repr. In. Bur. Ed. Bull, p. 147-50. 1911 June 6, p. 513-16. Permissive for cities of 1,000 to 100,000 pop.; repr. In. N. Ed. Assn., p. 292-94. 191 3 June 27, p. 598-603. Special act for cities of 10,000 to 100,000 pop. (Peoria.) 191 5 June 29, p. 648. (Amending 1913 act for Peoria.) 1915 May 27, p. 649-657. (Establ. state-wide system.) Also see under Chicago and Peoria laws 1909, 1911, 1913 and 1915. State Teachers' Pension and Retirement Fund, 19 15, lo-p. pamphlet. Contains text of the laws of 191 5. Bur. Ed. Bull., p. 150. Court decisions regarding compulsion and other fea- tures of the Chicago system, 1901-07. Attorney General. Opinions re Teachers' Pension Fund. In Educational Press Bulletin (monthly of the Dept. of Publ. Instruction) May, 1916, p. 2-3. Descriptions and digests Carn. Found. 191 5, p. 52. (Describing law 191 5.) 313 Teachers' Pension Systems in the United States Comm. Ed. 1903-04, V. 2, p. 2282. (Extr. from law 1901.) 1907 V. I, p. 454. (Extr. from law 1907.) 191 1 V. I, p. 98. (Describing law 191 1.) Analyzed in comparative charts IV (1911); VII, VIII (i9i3);IX (1915). For a history and criticism of this fund, see p. 176. Chicago Teachers' Pension and Retirement Fund. Established 1896. Laws Number of Teachers, 7,992. Contributory. Sess. Laws 1895, May 31, p. 312-15. Act for cities over 100,000 pop. ; repr. in Comm. Ed. 1894-95, V. I, p. 1081. 1901 May II, p. 300-01 amend. (Withdrawing the compulsory clause.) 1907 May 24, p. 529-34 amend. (New sections added.) 1909 June 12, s. 152-165, p. 384-388 substituting all previous laws. Providing that interest on the deposits of school moneys should be devoted to the retir. fund. Sess. Laws 191 1, June 5 and 6, p. 51 1-5 12; 512 amend. ■ L. 1909. (Requiring Bd. of Ed. to contribute an amount equal to teachers' contributions.) 191 3 June 26, p. 594-595 amend. L. 1909. (Increasing contributions.) Board of Trustees of the P. S. Teachers' Pensions and Retirement Fund. Rules and regulations as amended in 191 1, 27-p. pamphlet. Board of Trustees. Rules and regulations in force on April 17, 19 14, 59 p. Also contains the text of the law as amended in 191 3. Reports and statistics Comm. Ed. 1898-99, v. 2, p. 1478-79. Contains a report of the teachers' committee regarding the conditions of the fund at that time; statistical tables. Board of Trustees of the P. S. Teachers' Pension and Retirement Fund. Official reports of regular and spe- cial meetings, 1909-14, 2-p. leaflets. 314 Appendices Descriptions Comm. Ed. 191 1, v. i, p. 98. Brief description of the development of legislation governing the Chicago fund. Ed. Rev. 1902, Feb. p. 156. Describes the campaign against compulsion to join the fund. Analysed in comparative charts III, IV, VII, VIII, IX. For a history and criticism of this fund, see p. 220'. Peoria Teachers' Pension and Retirement Fund. Estab- hshed 191 1. Number of Teachers, 425. Contributory. Laws Sess. Laws, 1913, June 2y (Approving the establishing of a fund in Peoria). 191 5, June 29, p. 649, amending law 1913. Board of Management .... Rules and regulations adopted Oct. 30, 191 3. 21-p. booklet. Contains also the law 191 3 and by-laws. Reports and statistics Board of Management for the Teachers' Pension and Retirement Fund Proceedings 1911-14. 32-p. booklet. Proceedings of the meetings and financial reports. INDIANA Indiana State Teachers' Retirement Fund. EstabHshed 1915- Number of Teachers, 17,706. Contributory. Laws Sess. Act. 1907, ch. 170, March 9. (Permissive for cities over 100,000 pop. [Indian- apoHs] to establ. p. funds; repr. in B. Ed. Bull., p. 153-155-) 1913, ch. yy. (Permissive for cities of 55.000 to 60,000 pop. [Terra Haute] to establish p. fund.) 1913, ch. 334, March 15. Permissive for cities of 20,000 to 1000,000 pop. 1915, ch. 182. Establ. a State Teachers' Retir. Fund which any dis- trict may join if majority of teachers favor it. See also under Indianapolis, law 19 15. 315 Teachers' Pension Systems in the United States Joint Committee, Indiana .... A bill to provide for an Indiana State Teachers' disability and retirement law. In Educator Journal (Indianapolis), 1910, p. 163-70. State Teachers' Retirement Law 191 5, 22-p. booklet. Text of the law and notes. Descriptions Carn. Found. (1912) p. 34 (Describes pension bill). 19 14, p. 37 (Describ. laws 1907-1913). 191 5» P- 50 (Describ. law 1915). Comm. Ed. 1907, v. i, p. 454-56. (Describes law 1907.) Analyzed in comparative charts: VIII (1913), IX (1915). Evansville (Established 1913; now merged with the state fund). Laws See under Indiana; laws 1913 and 191 5. Indianapolis Teachers' Pension Fund. Established 1907. Number of Teachers, 1,201. Contributory. Laws Sess. Laws, 1907, ch. 170, March 9. Permissive for cities over 100,000 pop. to establish pension funds; repr. in B. Ed. Bull. p. 153-155, in Ind. Sch. L. 191 1, p. 202-211, in N. Ed. Assn. p. 294-298. 191 5, ch. 66, Maich 5. (Increasing city's contribution.) Indianapolis P. S. Teachers' Pension and Disability Law. 1 1 -p. booklet. Reports Indianapolis P. S. Teachers' Pension Fund. Detailed re- port for the seven-year period, 1907-14, annual reports. 7 typewritten pages. Statistics of receipts and disbursements. Analyzed in comparative charts: III, IV, VII, VIII (1907) ; IX (1915). South Bend Teachers' Retirement Fund. Established 1914. Number of Teachers, 340. Contributory. 316 Appendices Laws See under Indiana; law 1913. Terre Haute Teachers' Retirement Fund. Established 1913- Number of Teachers, 401. Contributory, Laws Sess. Laws, 1913, ch. yy. Permissive for cities of 55,000 to 60,000 pop. to estab- lish pens, funds. Teachers' Retirem. Fund Law and By-Laws. — issued by the Board of Commissioners, 1913, 20-p. booklet. Contains also a table of assessments and annuities. Analyzed in comparative charts : VIII, IX. IOWA Reports State Teachers' Association. — Committee of the Educa- tional Council. Pensions and Tenure of Office of Teachers. In its Proceedings, 1908, p. 30-34. Descriptions Carn. Found. 1914, p. 35-36. Describes defeated pension bill. KANSAS Laws See under Topeka, Kans. ; law 1911. ToPEKA. Established 191 1. Number of Teachers, 262. Contributory. Laws Sess. Laws, 191 1, ch. 280. Permissive for ist class cities; repr. in N. Ed. Assn., p. 298. Descriptions Comm. Ed. v. i, p. 99 (describes law 1911). Analysed in comparative charts: VII, VIII, IX. KENTUCKY Laivs Sess. Laws, 1912 ch. 129, March 19 (permissive for ist class cities) 1914 ch. 17, March 14 (establ. Ins. & Annuity Fund for 2nd class cities). Analyzed in comparative charts: IX. Louisville Teachers' Insurance and Annuity Fund. Established 19 12. 317 Teachers' Pension Systems in the United States Number of Teachers, 883. Entirely contributory. Laws Sess. Laws, 1912, ch, 129, March 19 (permissive for ist class cities). Analyzed in comparative charts: (Act 1912) IV, VII, VIII, IX. LOUISIANA New Orleans Teachers' Retirement Fund. Established 1910. Number of Teachers, i ,294. Entirely contributory. Laws Sess. Laws 1910, ch. 116. Establ. Teachers' Retir. Fund for the parish of N. Orl. 1914, ch. 263. Lowering requirements from 40 years' service to 30 years' service or age 65. Act No. 116 creating the Bd. of Trustees of the Teachers' Retire. Fund, 1910, i6-p. booklet. Act No. 263 of the year 1914 amending act No. 116 of the year 1910 . . . . 8-p. booklet. Reports and Statistics Board of Trustees .... Annual reports of 1914, 191 5, 4-p. booklet. Statement of receipts, disburse- ments, membership and pension roll. Analyned in comparative charts III, VII, VIII, IX. For a history and criticism of this fund, see p. 218. MAINE Maine School Pension Fund. Established 1913. Number of Teachers, 6,965. Non-contributory. Laws Sess. Laws, 19 13, ch, 75, March 19. Establ. state-wide system ; repr. in State Supt.'s Report 1914, p. 103-107. Application for Teachers' Pensions. Text of the law 19 13. Rules and regulations. d-D. leaflet. Descriptions Comm. Ed. 1913, v. i, p. 915. (Extract from law 1913.) Carn. Found. 1912, p. 33. (Describes pension bill.) State Supt. Report 1914, p. 103-107. (Describes the establishment, operation and effects of the law.) 318 Appendices Analysed in comparative charts (Act 1913) V, VI, VIII, IX. Pot a history and criticism of this fund, see p. 173. MARYLAND Maryland Retirement System. Established 1902. Number of Teachers, 4,277. Non-contributory. Laws Sess. Laws, 1902, ch. 196, April 8. Establ. state-wide discretionary system. 1904, ch. 584, sec. 58. Increasing appropriation from $10,000 to $25,000. 1908, ch. 605, April 6, p. 226 amendment. 1912, ch. 13, April 8 amendment. Increasing administr. discretion repr. in N. Ed. Assn. p. 304. Also see under Allegheny Co., L. 1912; Baltimore 1908, Baltimore County 19 12. Descriptions Carn. Found. 1912, p. 26. (Describes law 1908.) 1914, p. 25 and 31. Describes the unsatisfactory condition of the fund and amendm. 191 2. Analyzed in comparative charts: III, IV, VI (1902) ; VIII, IX (1912). Allegheny County Teachers' Retirement Fund, Estab- lished 1912. Laws Sess. Laws, 1912, ch. 463, April 8. Establ. Teachers' Retirm. Fund in Allegheny County. Board of Trustees, Teachers' Retirem. Fund of the Alle- gheny County, 4-p. leafi. Text of act 1912. Reports Statement on the condition of the teachers' retirem. fund 1915, 191 6. Four mimeogr. pages. (Receipts and disbursements.) Analyzed in comparative charts: VIII. Baltimore Teachers' Retirement Fund. Established 1909. Number of Teachers 2,183. Contributory, 319 Teachers' Pension Systems in the United States Laws Sess. Laws 1908, ch. 78, March 12, p. 595-603." Established Retirement Fund for Baltimore City. Teachers' Retirement Bill, as passed by the Maryland Legislature, 1908- 8p. Analyzed in comparative charts III, VII, VIII. For a history and criticism of this fund, see p. 214. Baltimore County Teachers' Retirement Fund. Estab- lished 1912. Laws Sess. Laws, 191 2, ch. 83, April i. Establ. Retirem. Fund for Baltimore Co. MASSACHUSETTS Massachusetts Teachers' Retirement System. Estab- lished 1913. Number of Teachers, 14,237. Contributory. Laws Sess. Acts and Resolves 1908 ch. 498, April 30, and ch. 589. Permissive for any city to establish pension sys- tem; reprint. In Sch. Laws 191 1, p. 78; N. Ed. Assn. p. 305; Bur. Ed. Bull. p. 155. 19 1 3, ch. 832, June 19 (Establ. state-wide system). 1914, ch. 494. 191 5, ch. 198. Reducing service requirements for re- fund benefits.) 1916, ch. 54, 60, 238, 257, 152. (Resolves). 1917, ch. 233, introducing a disability provision. Also see under Boston, Mass. Reports and statistics Teachers' Retirement Board : First, second and third annual reports, Dec. 31, 1914. 191 5, 19 1 6. Review of the provisions and condition of the fund. Bulletin No. i, 1913 and No. 2, 1915, 30 p. Description and text of the law 19 13. Descriptions Angier, E. M. New plan of teachers' annuities; savings bank insurance in Massachusetts. In Education (Bos- ton) Dec. 1909, p. 229-233. Bur. of Ed. Bui. p. 155-158. (Describ. law 1908.) 320 Appendices Carn. Found. 1913, p. 46. (Describes law 1913.) 1914, p. 28 and 29. Discusses the good features of the act 1913. Comm. Ed. 1907, v. i, p. 449. Describ. insufficiency of income of the Teachers' Annuity Guild; extracted from 70th report ^i the Mass. Bd. of Ed. p. 323-325. 1908, V. I, p. 104. (Describ. law 1908.) .;fj; 1913, V. I, p. 914. (Describ. law 1913.) ' Bd. Ed. 70th report p. 323-325. Describes unsatisfactory condition of the Mass. Annuity Guild; its appeal for support. Bd. Ed. p. 11-30. (Proposed pension bill.) Russel. Eugene D. The teachers' annuity guild. In Jo. of Ed. (Mass.) Dec. 17, 1908, p. 659-663. Description of the annuity guild, which is a private fund. Analysed in comparative charts: III, IV, VII (1908) ; VI, VIII, IX (1913). For a history and criticism of this fund, see p. 234. Boston Teachers' Retirement Fund. Established 1000. Number of Teachers, 3,054. Contributory. Laws Sess. Acts and Resolves 1900, ch. 237, Apr. 17. Establ. Teach. Retire. Fd. 1902 ch. 233 (Amend. Teach. Retirem. Fd.) 1908 ch. 589, June 3. Establ. Permanent Fund; reprint, in Bur. Ed. Bull., p. 156-8. 1910 ch. 617. (Amending Permanent Fund, increasing the pension and extending it to sixty annuitants of the Retirement Fund. ) 1912 ch. 569. Boston Teachers' Retirement Fund Association. Con- stitution and By-Laws 191 2. Reports and statistics Committee on Finance. Report to the Bd. of Trustees of the Boston P. S. Teachers' Retirement Fund, 1902, 6 p. Recommending the amount of annuity in 1903 to be $168. 321 Teachers' Pension Systems in the United States Comm. Ed. 1907, v. i, p. 448-49. Report of the retirem. fund, reprinted from Mass. Bd. Ed. 70th report, p. 320-23. Montgomery, W. ]., State Actuary. Report to the Bd. of Trustees of the Boston Teachers Retirement Fund, Sept. 16, 1914, 14 p. Analyzes the unsatisfactory condition of the fund, de- fines the amount of annuity it can sustain and proposes certain recommendations to strengthen the fund. Secretary of the Teachers' Retirement Fund, Annual Re- ports, 1900-1914. (4-page leaflets.) Permanent Pension Fund, Annual report for the year 1916. In the Minutes of the Boston School Committee, Feb. 21, 1916, page 19. Descriptions Carn. Found. 1912, p. 41. (Description of the Retirem. Fund. ) Comm. Ed. 1894-95, v. i, p. 1079-81. Description of the establishment of the Mut. Ben. Assn. ; extract from Supt's report. 1903-4, V. 2, p. 2282. (Describes act 1900.) Mass. Bd. Ed. 70th report, p. 320-23. Describes Retir. Fund and Mutual Benefit Association; receipts and disbursements. N. Ed. Assn. 1905, p. 183. (Describes retir. fund.) Mass. Com. Old Age Pens., p. 278. Description of the Retirement and Permanent Fund. Mass. Com. Pens., p. 31-63. Actuarial rept. showing a deficiency in the Retirement Fund of $1,312,687. p. 149-153 (history and legislation). p. 205-207 (proposed ligislation). Boston School Committee. Circular of information, 191 5, p. 38. Brief description of provisions of the Permanent Fund. Analysed in comparative charts III.. (Benev. Assn. 1889; funds 1900-08) ; IV, VII, VIII, IX (1900-12). For a history and criticism of this fund, see p. 209. Boston Teachers' Permanent Fund. Established 1908. See Laws under Boston Teachers' Retirement Fund above For a history and criticism of this fund, see p. 212. 322 Appendices Brookline Number of Teachers, 196. Non-contributory. Laws: See under Mass. Act. 1908. MICHIGAN Michigan Teachers' Retirement Fund. Established 191 5. Number of Teachers, 18,583. Entirely contributory. Laws Publ. Acts, 191 5, ch. 174, May 11. Establishing state-wide system. Also see under Detroit Laws 1895 and 1907. Descriptions Carn. Found. 191 5, p. 53. (Describes law 191 5.) Analyzed in comparative charts: IX. For a history and criticism of this fund, see p. 200. Detroit Teachers' Retirement Fund. Established 1895. Number of Teachers, 2,396. Contributory. Laws Loc. Sess. Acts 1895, ch. 431, May 22. Establ. Retir. Fund in Detroit; printed together with by-laws in Comm. Ed. 1894-95, p. 1082. 1907, ch. 536, May 14. (Amendment making mem- bership compulsory.) Board of Trustees of the P. S. Teachers' Retirement Fund. i2-p. booklet. (Text of law 1907, constitu- tion and by-laws.) Reports and statistics Board of Trustees .... Regular meeting, May 20, i9i5;Sept.20, 1915. Receipts, disbursements, list of annuitants. Descriptions Comm. Ed. 1903-04, v. 2, p. 2283. N. Ed. Assn. 1905, p. 182-183. Analyzed in comparative charts: (Act 1907) : III, IV, VII, VIII, IX. MINNESOTA Minnesota Teachers' Insurance and Retirement Fund. Established 19 15. Number of Teachers, 14,759. Contributory. Laws Gen. Sess. Laws 1909, ch. 343, Apr. 21. Teachers' Pension Systems in the United States Permissive for cities over 50,000 pop. to establish pension system; repr. in Minn. Sch. L. 191 1, p. 106; In N. Ed. Assn. Gen. Sess. Laws 1911, ch. 383, Apr. 20. Extending L. 1909 over cities exceeding 10,000 pop.; repr. In Sch. L. 191 1, p. 106; In N. Ed. Assn., p. 305. 191 5, ch, 199, Apr. 20. Establ. state-wide system : Teachers' Insurance and Re- tirement Fund. Department of Education, Minn. Law, 191 5, ch. 199, 6-page booklet. Descriptions Comm. Ed. 1909, v. i, p. 118. (Describes law 1909.) 191 1, V. I, p. 99. (Describes amendm. 191 1.) Carn. Found. 191 5, p. 51-52. (Describes law 191 5.) Teachers' Insurance and Retirement Fund. Circular of information, July, 191 5, 4-page leaflet. Explaining the law. Analysed in comparative charts VII, VIII (1911); IX (1915)- For a history and criticism of this fund, see p. 190. DuLUTH Teachers' Retirement Fund Association. Established 191 1. Number of Teachers, 469. Contributory. Laws: See under Minnesota; law 1911. Descriptions Carn. Found. 1912, p. 36. Analysed in comparative charts: IV, VIII, IX. Minneapolis Teachers' Retirement Fund Association. Established 1909. Number of Teachers, 1,606. Contributory. Laws: See under Minnesota, Laws 1909 and 191 1. Reports and statistics: Minneapolis Teachers' Retirem. Fund Assn. Sixth Annual Report 1914-15. 16 p. Contains a statement of receipts and disbursements,, balance sheet and secretary's report. Analysed in comparative charts: III (1909) ; IV, VIII, IX (1911). St. Paul Teachers' Retirement Fund Association. Established 1909. Number of Teachers, 959. Contributory. 324 Appendices Laws: See under Minnesota, Session laws 1909 and 191 1. Teachers' Retirement Fund Association, articles of in- corporation and by-laws, 18 p. Analyzed in comparative charts: III (1909); VIII, IX (1911). MONTANA Montana Public School Teachers' Retirement Salary Fund. Established 191 5. Number of Teachers, 4,731. Contributory. Laws Sess. Laws 191 5, ch. 95, March 8. Establishing state-wide system. Retirement Salary Fund Board. P. S. Teachers' Retire- ment Salary Fund. 8-p. booklet. (Text of the law.) Descriptions. Carn. Found. 1915, p. 52. (Describes law 1915.) Analysed in comparative charts: IX. NEBRASKA Descriptions Carn. Found. 19 12, p. 52. (Describes Recommendations of the committee, 191 5; listed by error as a law). Neb. Supt. Ed. 23rd Report, p. 342-44. Describes recommendations of the special committee as to the establishment of a state-wide system. Analysed in comparative charts: IX. Recommendations of Special Committee; listed by error as a law. Omaha Teachers' Retirement Fund Association. Estab- lished 1909. Teachers' Annuity and Aid Association (private fund) establ. in 1897. Number of Teachers, 947. Contributory. Laws Sess. Laws 1909, ch. 132, March 24. Permissive for mietropol. cities repr. in N. Ed. Assn. p. 306-307. Teachers' Annuity and Aid Association. Articles of in- corporation and By-laws, 33-p. booklet. Descriptions Carn. Found. 1914, p. 37. Comm. Ed. 1909, v. i, p. 115. 325 Teachers' Pension Systems in the United States NEVADA Nevada Teachers' Retirement Salary Fund. Established 1915- Number of Teachers, 657. Contributory. Laws Sess. Statutes 191 5, ch. 198, March 23. Establ. state-wide system. Descriptions Carn. Found. 1915, p. 54. (Describes law 1915) Analyzed in comparative charts: IX. NEW HAMPSHIRE New Hampshire Teachers' Retirement System. Estab- lished 1915. Number of Teachers, 3,083. Non-contributory. Laws Sess. Laws 1915, ch. 165, April 21. Establ. state-wide system. Dept. of Public Instruction. Division of statistics and accounts. Rules and regulations relating to Teachers' Pensions. 7-p booklet. Text of the law and regulations. Descriptions Carn. Found. 1915, p. 55. (Brief description of Act 1915-) Analyzed in comparative charts: IX. NEW JERSEY New Jersey Teachers' Retirement Fund. EstabHshed 1896. New Jersey Teachers' 35-YEAR Service Half Pay Pen- sion System. Established 1903. Number of Teachers, 16,^41. Contributory. Laws Publ. Sess. Laws 1896, ch. 32, March 11. Establ. Retir. Fund; i per cent sal. deduction. L. 1899 ch, 178 (amend. Ret. F.). L. 1900 ch. 96 (making Ret. F. Law a part of the school law). Spec. Sess. Laws 1903, ch. i, art. XXV, Oct. 19. L. 1905 ch. 95 (appropriation for administ. expense of Ret. F.). 326 Appendices Sess. Laws, 1906, ch, 314, June 13. (Increasing salary deductions.) Sess. Laws, 1917, ch. 139, May 7. Sess. Laws, 1903, ch. 16, March 5 (estabhshing service pension system of the Bd. of Education). Sess. Laws 1906, ch. 103. Reducing length of service from 40 to 35 years. 1907, ch. 121, May 7 and 1912, ch. 58 amendment. Reprint, in N. Ed. Assn. 191 1, ch. 276 and 1912, ch. 58 amendment. 1914, ch. 268, Supplem. to Gen. School Law, Pension to be paid by the state and not by local authori- ties; new section added. Reports and statistics State Teachers' Retirement Fund Association. Report of the Retirement Fund Department. In Annual Re- ports and Proceedings of the N. J. Teachers' Associa- tion, 1910, p. 160-75. Report .... Sept. 25, 1915..15 P- Contains a statement of receipts and disbursements; comparison between N. J. and the N. Y. and Mass. funds; defense of its soundness; note reactuarial study; answer to criticism. New Jersey Woman Teachers' Alliance. Compendium of Facts. 19 18. Contains the report of D. P. Fackler. actuary, on the condition of the Teachers' Retirement Fund; introduction by Miss E. A. Allen; synoptical tables. Bureau of State Research of the New Jersey State Chamber of Commerce. Teachers' Reirement Sys- tems in New Jersey, Their Fallacies and Evolution. Prepared by Paul Studensky, 19 18. 88 p. Analysis of the history of the systems, their present condition and practical remedies. Pension and Retirement Fund Commission of the State of New Jersey. Preliminary report. January, 1918. State Research Consecutive number 9. 20 p. Con- tains in chapter iv a discussion of teachers' systems. Pension and Retirement Fund Commission of the State of New Jersey. Reorganization of New Jersey Teachers' Pension and Retirement Systems, January, 19 19. State Teachers' Pension "Systems in the United States Research Consecutive number 13, 28 p. Contains criti- cal and constructive conclusions, outline of proposed legislation and actuarial estimates. Descriptions Allen, Elizabeth A. The story of a woman's campaign. In Review of Reviews (N.Y.) 1897, v. 15, p. 701-11. Writer describes the campaign which resulted in the establishment of the N. J. Teachers' Retirement Fund; surveys the existing pension funds in the U. S. ; pre- sents a comparative table of annuity and aid associa- tions and retirement funds in the U. S. Board of Trustees of the Teachers' Retirement Fund. 1907, 23 p. Contents: Preface, text of the law 1907, explanation synopsis and appeal to join. Carn. Found. 1912, p. 27-30. (History of the fund.) — — 191 5> P- 62. (Warning the fund against the approaching disaster.) Comm. Ed. 1894-95, v. i, p. 1108-1113. Description of a plan for a Newark Teachers' Retire- ment Fund ; criticism and discussion. 1903-4, V. 2, p. 2283-84. (Extracts from the law and report of the fund.) 1907, V. I, p. 452. (Report of the fund.) 1911, V. I, p. 99. (Description of amendm. 1911.) 1912, V. I, p. 67. Description of amendm. 1912 ; comment on coexistence of two systems. Crater, Georgia Beers. Teachers' Pensions. In N. J. State Teachers' Association. Annual Report and Pro- ceedings 1900, p. 147-58. State Teachers' Association. Tenure Retirement Fund and Pensions in peril. 9-p. pamphlet. Contains an appeal to defeat the bill No. 375 merging the retir. fund with the state half -pay pension. Analysed in comparative charts III-IX. In VII and VIII, the two systems are confused. For a history and criticism of the two systems, see pp. 169 and 183." ^See also Chapter XVIII and Appendix 3 (e) regarding three new- laws (Ch. 80, 81 and 82) enacted in April, 1919. 328 Appendices NEW YORK New York State Teachers' Retirement Fund. Estab- lished 191 1, Number of Teachers, 24,102. Contributory. Laws Sess. Laws, 1895, ch. y6y, May 2y. Permissive for any town to establ. pension funds; re- print in N. Ed. Assn. p. 308-12. 191 1, ch. 449, June 26. (Establ. state-wide system.) 1913, ch. 511, Sec. 1100-1108. (Superintendent to par- ticipate.) 1914, ch. 44, Mar. .17. Providing for a state-contribution of i per cent of sal. Also see under: Albany, Buffalo, Cohoes, Elmira, Mt. Vernon, N. Y. City, Nassau, Rochester, Saratoga, Schenectady, Syracuse, Troy, Yonkers, Watervliet, Westchester. Also see N. Y. L. 19 10 ch. 441, June 8. Retirem. Fund for teachers in state institutions. State Teachers' Retirement Fund Board, Documents 1-3. Doc. No. 2 contains the text of the law as amended in 1914; No. 3 contains portions of the law, by-laws, explanatory notes as to retirement, age, etc. ; instruc- tions to teachers. Descriptions Carn. Found. 1912, p. 30-33. (Describes law 1911.) Comm. Ed. 191 1, v. i, p. 96. (Describes law 191 1.) 1912, V. I, p. 67. (Describes am. 1912.) Analysed in comparative charts: III-VIII (1911) ; IX (also 1913-14). For a history and criticism of this fund, see p. 179. Albany Teachers' Retirement Fund. Established 1908. Number of Teachers, 440. Contributory. Laws Sess. Laws 1907, ch. 414, June 4. (Establ. Retir. Fund.) 1910, ch. 451, June 9. (Increasing excise money con- tribution from 3 per cent to 5 per cent.) Reports and statistics Comptroller's report of the teachers' retirement fund for the years 1913-1915. (Two-page mimeographed leaf- lets.) B. M. R. Collection. 329 Teachers' Pension Systems in the United States Analysed hi comparative charts: III, IV, VII. Buffalo Teachers' Retirement Fund. Established 1896. Number of Teachers, 2,136. Contributory. Laws Sess. Laws 1891, ch. 105. (Permissive for Buffalo to establish Retir. Fd.) 1896, ch. 928 (establishing Retir. Fund in Buffalo; entirely contributory). 1909, ch. 554, May 28. Increasing salary deductions and making city to con- tribute an equal amount. 1914, ch. 217, Apr. 7, sec. 294-304, city charter. No material changes. Analysed in comparative charts III, IV, VII-IX. For a history and criticism of this fund, see p. 216. Cohoes Teachers' Retirement Fund. Established, 1908. Number of Teachers, 69. Contributory. Laws Sess. Laws 1908, ch. 332, May 19. Establishing Retir. Fund in Cohoes. Analyzed in comparative charts: IX. Elmira Teachers' Pension Fund. Established 1907; now merged with the State Teachers' Retirement Fund. Laws Sess. Laws 1907, ch. 86, March 27. Establ. Pens. Fund; reprint, in Bur. Ed. Bull., p. 159-160. Analyzed in comparative charts: III, IV. Green County Teachers' Retirement Fund. Established 1910; abolished in 191 1. Laws Sess. Laws 19 10, ch. 444. (Establishing retir. fund in Green County.) 1911, ch. 146. Abolishing retir. fund teachers contribute to the state fund. Mt. Vernon Teachers' Retirement Fund. Estabhshed 1909. Number of Teachers, 246. Contributory. Laws Sess. Laws 1909, ch. 92, Mar. 17. 330 Appendices Establ. retir. fund in Mt. Vernon. 191 3, ch. 44, Feb. 27 (Compulsory membership). Analysed in comparative charts: IX. Nassau County Teachers' Retirement Fund. Estab- lished 1910; now merged with the State Teachers' Retire- ment Fund. Laws Sess. Laws 19 10, ch. 407, June 7. Establ. retir. fund in Nassau County. 191 1, ch. 692. (Amending law 1910.) New York City Teachers' Retirement Fund. Estab- lished 1894. Number of Teachers, 23,905. Contributory. Laws Sess. Laws 1894, ch. 296. Establ. N.' Y. fund; repr. in Comm. Ed. 1894-5, p. 1095'. 1895, ch. 656. (Establishing Brooklyn fund.) 1898, ch. 91. (Providing the fund with a portion of excise taxes.) 1901, ch. 186 and 466. (Merging the two funds.) 1902, ch,'530. 1903, ch, 177. 1905. ch. 661. (Introducing the i per cent. sal. deduc- tion.) 1907, ch. 167. (Reprint, in Bur. Ed. Bull. p. 160-3.) 191 7. (Reorganizing the old fund on a scientific basis.) By-Laws of Bd. of Ed. 191 1, Jan. 18. Descriptions Carn. Found. 1912, p. 39-41. (Description of the his- tory and condition of the fund.) I9I3» P- 53"55- (Alarming condition of the fund.) 1914, p. 39. (Collapse of the fund.) 191 5' P- 59-60. (Investigation of the N. Y. Pension Commission.) Comm. Ed. 1894-95, v. i, p. 1095. Text of the law 1894; constitution of Mut. Ben. Assn. 1903-4, V. 2, p. 228. (Brief description.) N. Ed. Assn. 1905, p. 183. (Brief description.) See also under Reports. Pension Points No. 1-5 and Circulars. 331 Teachers' Pension Systems in the United States Issued during the pension campaign of Jan. -April 191 6; explain provisions of the Lockwood-Ellenbogen bill and urge to support it. Scrap-Book on the N. Y. Teachers' Retirement Fund. Contains newspaper clippings for the period 1 912-16; campaign in favor of the Lockwood-Ellenbogen bill. Federation of Teachers' Associations, N. Y. City. The A. B.C. of teachers' pensions. Memorandum submitted to the Senate Committee on Affairs of cities. In favor of the Lockwood-Ellenbogen bill. 19 16, 20 p. Describes the advantages of the proposed bill. Paul Studensky. New York City Teachers' Retirement Fund. In National Municipal Review, July, 1916, p. 520-22. Review of the report of the Commission on Pensions. Unsoundness of using miscellaneous revenues. In- adequacy of contributions. Purposes of pension funds. Harmful benefits. Plan of reorganization. Reports and statistics Commission on Pensions. Report on the Teacher's' Retirement Fund, City of N. Y. Prepared by Robert von Reutlinger, letter of transmittal by Henry Bruere, vice-chairman and secretary of the commission. Present pens, system. Its cost. A tenta- tive reorganization plan. History of the fund and its administration. Actuarial report. Statistical tables. Commission on Pensions. Report on the Pension Funds of the City of New York, Part I. Operation of nine pension funds, 1916, 171 p. Prepared by Robert von Reutlinger, letter of transmittal by Henry Bruere, vice-chairman and secretary of the commission. A critical analysis; includes among the nine funds the teachers' fund. Part II. An actuarial investigation of the mortality and service experience of the Special and General Service Funds for Municipal employees, 1916, 422 p. Prepared by George B. Buck, actuary. Letter of trans- mittal by Henry Bruere, vice-chairman and secretary of the commission. Contains an introduction describ- ing forces which determine cost; methods of computing rates. Includes tables and diagrams on family history and a valuation of assets and liabilities. 332 Appendices Secretary of the Board of Retirement of the Teachers' Retirement Fund. Annual reports 1908 to date. 191 1 (contains a description of the efforts to amend the law). 1912 (contains a description of the condition of the fund; British and N. Zealand pens, systems). 191 3 (contains the report of actuary Hutchinson, re- printed by the Globe in separate pamphlet. Actuary describes past and present systems; income and dis- bursements; teachers' service experience; mortality rates ; valuation of liabilities ; unsatisfactory conditions of the fund; constructive recommendations of the actuary. ) Analyzed in comparative charts: III, IV, VII-IX; also In N. Y. Com. Pens. Teach. Ret. p. 90-91. Showing the changes in legislation from 1891 to 191 1. For history and criticism of this fund, see p. 243. Rochester Teachers' Retirement Fund. Established 1906. Number of Teachers, 1,178. Contributory. Laws Sess. Laws 1905, ch. 608, May 25. (Establ. Retirem. Fund in Rochester.) 1907, ch. 755, sec. 405. Section of city charter amending law 1905. Analysed in comparative charts: III, IV VII-IX. Saratoga County Teachers' Retirement Fund. Estab- lished 19 10, now merged with the State Teachers Retire- ment Fund. Laws Sess. Laws 1910, ch. 191, Apr. 29. Establ. Retirem. Fund in Saratoga County. Schenectady Teachers' Retirement Fund. Established 1907, now merged with the State Teachers' Retirement Fund. Lazvs Sess. Laws 1907, ch. 306, May 6 (Establ. Ret. Fd. in Schenectady) 1908, ch. 116, Apr. 13 (Making city contribution equal teachers' contribution). Analyzed in comparative charts: III, IV. Syracuse Teachers' Retirement Fund. Established 1897. Number of Teachers, 667. Contributory. 333 Teachers' Pension Systems in the United States Laws Sess. laws 1897, ch. 750, May 22. Establ. RetirCxn. Fund in Syracuse; entirely contribu- tory; reprint in a separate booklet. Analysed in comparative charts: III, IV, IX. Troy Teachers' Pension Fund. Established 1906. Number of Teachers, 327. Contributory. Laws Sess. Laws 1906, ch. 305, April 24. (Establ. Pens. Fund in Troy.) Analyzed in comparative charts: III, IV, IX. Watervliet Teachers' Retirement Fund. Established 1908, now merged with the state Teachers' Retirement Fund. Laws Sess. Laws 1908, ch. 140, April 16. Establishing Retir. Fund in Watervliet. Westchester County Teachers' Retirement Fund. Established 1909. Laws Sess .Laws 1909, ch. 431, May 22. Establishing Retirement Fund in Westchester County. 1911, ch. 23, March 16 am. City's contribution to equal i per cent of sal. YoNKERS Teachers' Retirement Fund. Established 1908; now merged with the State Teachers' Retirement Fund. Laws Sess. Laws 1908, ch. 452, May 21, city charter, article IX, sec. 18-20. Establ. Retir. Fund in Yonkers. Analysed in comparative charts: III, IV, IX. NORTH DAKOTA North Dakota Teachers' Insurance and Retirement Fund. Established 1913. Number of Teachers, 8,093.^ Contributory. Laws Sess. Laws 191 3, ch. 251, March 11. (Establ. state-wide system.) Descriptions (Act 191 3) Carn. Found. 1914, p. 31. ^Statistics of 1915. 334 Appendices Comm. Ed. 1913, v. i, p. 915. Analysed in comparative charts: VIII, IX. OHIO Note: Uniform laws (1911 at present) govern all the twenty cities which have availed themselves of the au- thority given under these laws. The references to leg- islation and to analysis of legislation in comparative charts are, therefore, given under the state and are not repeated under each of these pension funds : Bellefont- aine (1912) No. of Teachers, 49; Canton (1913) No. of Teachers, 290; Chillicothe (191 3) No. of Teachers, 80; Cincinnati (1897) No. of Teachers, 1,807; Cleve- land ( 1906) No. of Teachers, 3,693 ; Columbus (1909) No. of Teachers, 996 ; Dayton ( 191 1 ) No. of Teachers, 557; Fremont (1914) No. of Teachers, 64; Hamilton (1908) No. of Teachers, 164; Lakewood (1914) No. of Teachers, 152; Massillon (1914) Norwalk (1913) No. of Teachers, 51; Norwood (1912) No. of Teachers, 114; Piqua (1913) No. of Teachers, 72; Sandusky (19 10) No. of Teachers, 104; Springfield (1907) No. of Teachers. 238; Tiffen (1911) No. of Teachers, 51; Toledo (1910) No. of Teachers, 983; Youngstown (1905) No. of Teachers, 536; Zanesville (1914) No. of Teachers, 121. All these systems are contributory.^ Laws Sess. Laws 1896, Apr. 14,' p.- 152-55, sec. 3897 of Rev. St. Permissive for cities of ist grade ist class. 1900, Apr. 16, 'p. 305. (Increasing sal. deductions to $2 monthly.} 1902, May 12, p. 609-14. (Permissive for all school dis- tricts.) 1904, Apr. 2'5, p. 340. (Providing for city contribu- tion up to 2* per cent of school taxes. ) 191 1, June '1 3, p. 445-56. (Making membership com- pulsory; reprint, in Sch. L. 1912, p. 167, sec. 7875- 7896 of Gen. Code; N. Ed. Assn., p. 313-315.) Descriptions Bur. Ed. Bui. p. 163-64. 'See Chapter XVIII and Appendix 3 (f) regarding a new state-wide pension law enacted in April, 1919. 335 Teachers' Pension Systems in the United States Court decisions as to compulsory membership, etc. Comm. Ed. 1903-4, v. 2, p. 2284-85 (describes law 1902). 191 1, V. I, p. 97 (describes law 1911). Jones, E. A. A state-wide pension system. In Ohio Educational Monthly, July, 19 10, p. 317-24. Analysed in comparative charts: III, IV, VII-IX. Canton — (See note under Ohio) Reports and pamphlets Report of Teachers' Pension Fund, 19 13-15. Two mime- ographed pages. Receipts and disbursements, annuity list. Cincinnati — (See note under Ohio) Reports and statistics Board of Trustees of the Cincinnati Teachers' Pens. Fund. Annual report. In Com. Ed. (U. S.) 1907, V. I, p. 452. Receipts and disbursements, etc. Board of Trustees of the School Teachers' Pension Fund. Eighteenth Annual Report, Aug. 31, 191 5. 8-page pamphlet. Receipts, disbursements, pension list, amounts con- tributed by pensioners and amounts drawn by them. Descriptions Comm. Ed. 1898-99, v. 2, p. 148 1. Describes new law increasing contributions to save the fund from depletion. Cleveland Teachers' Pension Fund. Established 1907. (See note under Ohio.) Laws School Teachers' Pension Law as amended May 31, 1911. Rules and Regulations, Cleveland, 1914. 16- page pamphlet. Reports and statistics Annual Reports of the Treasurer of the Teachers' Pen- sion Fund, 1912, 1913, 1914 and 1915. (4-page leaf- lets.) For a history and criticism of this fund, see p. 207. Dayton — (See note under Ohio) Reports and pamphlets Annual Report of the Secretary of the Board of Trustees of the Fund. 4-page leaflet, receipts and disbursements for the years 1913 and 1914. 336 Appendices Norwood — (See note under Ohio) Reports and statistics School Teachers' Pension Fund. In Report of the Publ. School of Norwood, 19 14. p. 56-57 (Reports of re- ceipts and disbursements for the years 1913-1914). Springfield — (See note under Ohio) Reports and statistics Pension Trustees. Reports 1909-19 15. 2-p. leaflets. Receipts and disbursements, list of contributors. Toledo — (See note under Ohio) Laws School Teachers' Pension Law. Rules and regulations as amended in 1910, 16 p. Reports and statistics Board of Trustees of the School Teachers' Pension Fund. Statement, October i, 1914, 3 p. OREGON '; Laws Gen. Sess. Laws 1911, ch, 280. Permissive for districts having more than 10,000 chil- dren of school age to establ. retir. funds; reprint, in School Laws 191 1, p. 114. 1913, ch. 58. Increasing contribution of the District Bd. of Ed. from I per cent to 3 per cent of school taxes. See under Portland, Oregon. Portland Teachers' Retirement Fund Association. Established 1912. Number of Teachers, 525. Contributory. Lows: See under Oregon. Articles of Incorporation and By-Laws. Teachers' Re- tirement Fund Association, District No. i, Multnomah Count3^ March 12, 1914, 21 p. Reports and statistics Statement of Retir. Fund. Assn. 1912-1916. 2 type- written pages. Receipts and disbursements. Descriptions Comm. Ed. v. i, p. 99. (Describes law 191 1.) Analysed in comparative charts: VII (1911); VIII and ix (1913). 337 Teachers' Pension Systems in the United States PENNSYLVANIA Pennsylvania Public School Teachers' and Em- ployees'^ Retirement System. Established 191 7. Number of Teachers, 31,740. Contributory. Laws Sess. Laws 1905, ch. 186, sec. 6, April 22. Permissive for ist class districts; reprint, in N. Ed. Assn. p. 314. 1907, ch. 169, May 23. Permissive for 2d class and 3d class districts. 191 1, ch. 191, Art. XXIV, May 18. Permissive for any district reprint, in Sch. L. 19 11. Art. XXIV, p. 114; in N. Ed. Assn. p. 317. 19 1 7 (setablishing a state-wide system). Descriptions Carn. Found. 1915, p. 47-48. (Describes and criticises bill 191 5.) Comm. Ed. 1907, v. i, p. 451-456. Describes law 1909 and pens, bill of teachers' assn. Herrick, Cheesman A. Teachers' Retirement Fund. In Penn. School Jo. 191 1, p. 305-8. Jones, Adison L. Need of retirement fund for teachers. In Penn. School Jo. May 1908, p. 529-532. Analyzed in comparative charts: (1911) VII, VIII. For a history and criticism of this fund, see p. 265. Altoona Teachers' Retirement Fund. Established 1913. Number of Teachers, 260. Contributory. Laws: See Under Pennsylvania, Law 191 1. Chester Teachers' Retirement Fund. Established 1913. Number of Teachers, 189. Contributory. Laws and reports Manual of Public Schools of Chester, Pa. 191 5-16, p. 129-132, 13, 15. Text of law and by-laws; financial report. Erie Teachers' Retirement System, under approval of the Bd. in 1916. Number of Teachers, 365. Contributory. Laws Rules of the Teachers' Retirement System of Erie, June 1916. Galley proof. ^Employees included teachers and other employees. Appendices Harrisburg Teachers' Retirement Fund. Established 1908. Number of Teachers, 335. Contributory. Laws Retirem. Fund Plan and By-Laws. 1908, 10 p. Descriptions Comm. Ed. 1909, v. i, p. 119. (Brief description). Analyzed in comparative charts: III, IV, IX. Lancaster Teachers' Retirement" Fund Association. Established 1914. Number of Teachers, 171. Contributory. Laws By-Laws and Retirement Fund Plan. 1912, ii-p. book- let. Contains also amendments. Philadelphia Teachers' Retirement Fund. Established 1907. _ Number of Teachers, 5,895. Contributory. Laws Retirement Plan and By-Laws, ist District of Pennsyl- vania. 1907, 16 p. Laws and By-Laws. In Retirement Board, 9th annual report, 191 5. Reports and statistics Retirement Board. Annual report for the years 191 5 and 1916, 30 p. Contains a description of the benefits, development and condition of the fund ; statistical and graphic charts showing the increase of expenditures. — Actuary's report on the condition of the fund June, 1918. 51 p. (estimate of assets and liabilities, and rates of contributions required on a solvent basis). — Series of Questions and Answers. November, 1918. 28 p. (a discussion of changes necessary to insure the solvency of the systems). Descriptions Comm. Ed. 1894-95, v. i, p. 1086-92. Report of the T. Annuity Aid Assn. (private fund) est. in 1890; its constitution and amendments. Analyzed in comparative charts III, IV, VIII, IX. For a history and criticism of this fund, see p. 203. 339 Teachers' Pension Systems in the United States Pittsburgh Teachers' Retirement Association.^ Estab- lished 1912. Number of Teachers, 2,405. Non-contributory. Descriptions Board of Educ. of Pittsburgh, ist annual report 1912, p. 142-44. Briefly describes pens, system; justifies it on the ground of underpaid work. Analysed in comparative charts III, IV, IX. For a history and criticism of this association, see p. 166. Reading Teachers' Retirement Fund. EstabHshed 191 3. Number of Teachers, 389. Contributory . Laws Rules and Regulations of the Teachers' Retirement Fund. School District of Reading, 4 p. Reports and statistics Teachers' Retirement Board of Reading, ist and 2nd annual reports 1914-1915. Two lo-page pamphlets. Receipts and disbursements; annuity list; the report claims that "the fund is in sound condition." Scranton Teachers' Retirement Fund. Estabhshed 19 11. Number of Teachers, 664. Contributory. Laws Retirement Plan and By-Laws. Scranton, Pa. 1912, 8 p. Analysed in comparative charts: IX. Wilkes-Barre Teachers' Retirement Fund. Established 1910. Number of Teachers, 314. Contributory, Lazvs Retirement Law and By-Laws. In Report of the Public Schools of the Wilkes-Barre City School District, 1915, p. 48-52. RHODE ISLAND Rhode Island Teachers' Pension System. Established 1907. 1 A bill for a contributory pension system for the teachers of Pittsburgh is now under consideration of the legislature. The basis of the proposed system is as follows : Contributions by teachers i per cent, to 3 per cent, sal. total contributions max. $1,500. City contributions min. i^ of the teachers' contributions or as much as is necessary to pay pensions. Pen- sions after 30 years' service on superintendent's recommendation, after 40 years automatically (min. 15 years in city), or after 20 years on dis- ability. Amount $600 after 40 years, $500 after 30 years, proportionately less below 30 years. Refund all own contributions at dismissal; no refund at resignation or upon death (see Carnegie Report, IQIS)- 340 Appendices Number of Teachers, 2,'jyT^. Non-contributory. Laws Acts and Res. 1907, ch. 1468, Apr. 23. Establ. state-wide system; reprint, in Com. Ed. 1907, p. 450; in Bur. Ed. Bull, p. 164. 1909, ch. 401, Apr. 29, -amendm. Age requirement repealed, reprint, in School Laws 1910. p. 27 and 94;. in N. Ed, Assn. p. 317. 19 14, ch. 1090,'May 6 (adding disability provision). 1915, ch. i2i4,Apr.. 22. (No material changes.) Reports and statistics Statement of Teachers' Pensions for Quarter, ended Dec. 31, 191 5. I page typewritten leaflet. Number of pensions, average pension, total expendi- ture, etc. Descriptions Comm. Ed. 1909, v. i, p. 119. (Describes amendm. 1909.) Cam. Eound. 19 12, p. 27. Describes act 1907; disbursements. Analyzed in comparative charts: III-VI, VII (1910); IX (1914). Bristol Teachers' Retirement Fund. Established 1914. Number of Teachers, 52.^ Contributory. Laws ' Gen. Assembly Acts 1914, April 13. Establ. Retirement Fund in Bristol, reprinted by the Bd. of Ed. of Bristol, 3 mimeogr. pages. Newport Teachers' Retirement Fund. Established 1898. Number of Teachers, 155.^ Contributory. Laws 1898, May 6. In the R. I. Supt. of Schools, Report 1912 (?) p. 85-86 (incorporating the fund). Reports and statistics Teachers' Retirement Fund. In R. I. Supt. of Schools Report 1912 (?) p. 81-85. Report on the receipts and disbursements; benefits re- duced from Yz to y4 sal. Providence Teachers' Retirement Fund.^ Established 1897. *The teachers of Bristol, Newport and Providence are also covered by provisions of the Rhode Island systems. Teachers' Pension Systems in the United States Number of Teachers, 1,082. Contributory. Laws Pub. Sess. Acts. 1897, ch. 485, May 21. Establ. Retir. Fund in Providence. Reports and statistics The Publ. School Teachers Retirement Fund in Provi- dence. Extract from report of R. J. Condon. 19 10, II -p. pamphlet. Describing the development of the fund, its unsatis- factory financial condition and the prorating of pen- sions. Analyzed in comparative charts: IV, VII-IX. SOUTH CAROLINA Laws: See under Charleston. Charleston Teachers' Retirement Fund. Established 1898. Number of Teachers, 157. Non-contributory. Laws Acts 1898, No. 544, Jan. 29. Permissive for Charleston to establish a retirement fund. Descriptions Comm. Ed. 1898-99, v. 2, p. 1480 (describing law 1898). 1903-04, V. 2, p. 2285 (brief note). Analyzed in comparative charts: III, IV, VII-IX. UTAH Utah Teachers' Retirement Fund. Established 19 13. Number of Teachers, 2,511. Contributory. Laws Sess. LawS'1907^ ch. II, Mar. 14. Permissive for cities of ist and 2nd cl. or any country to establish pens. assn. ; reprint, in Sch. Laws, 191 1, p. 113; in Bur. Ed. Bull. p. 165-67; in N. Ed. Assn., p. 317-320. 1913, ch. 91; Mar. 20. Establ. a state fund consisting of a current and a per- manent fund, which any city or district may join if the majority of teachers favor it; amending the pens, law regarding ist class cities. 342 Appendices Descriptions Carn. Found. 1912, p. 36 (describes law 1907). 1914, p. 32 (describes law 1913). Analysed in comparative charts: IV, VII (1907); VIII, IX (1913)- ^ ^ Salt Lake City Teachers' Retirement Fund. Estab- lished IQ09. Number of Teachers, 694. Contributory. Laws: See under Utah; laws 1907 and "1913. Analyzed in comparative charts: III, IV, IX. VERMONT Vermont Teachers' Retirement Fund Association. Established 1913.^ Number of Teachers, 2,992. Contributory. Laws Sess. Laws 1910, No. 66," Jan. 26. Permissive" for any town or district to pay pension, repr. in N. Ed. Assn., p. 320. 191 2, No. 70, Jan. 29. Establ. a state-wide system. Descriptions > Comm. Ed. 191 1, v. i, p. 98 (describes law 1910). Carn. Found., 19 14, p. 32 (describes law 1912). Reports and statistics Vermont Teachers' Retirement Fund Association, 2-p. leaflet. 19 16. Appeal to the teachers to raise money for the fund. Carnegie Found. Bulletin 12, 1918. p. 30-35. Suggested System of Retirement Allowances (outline of the pro- posed plan, its theory and statistical basis). Analyzed in comparative charts: IV, IX. VIRGINIA Virginia Retired Teachers' Fund. Established 1908. Number of Teachers, 13,120. Contributory. Laws Sess. Acts 1908, ch. 313, Mar. 14. State-wide, reprint, in Bd. Ed. Bull. p. 167-169. 1910, ch. 97, Mar. 9 (amending law 1908). 1912, ch. 329, Mar. 15. iSee Chapter XVIII and Appendix 3 (g) regarding a new law enacted in April, 1919. 343 Teachers' Pension Systems in the United States Supplem. L. re disability and reentering the service; reprint, in N. Ed. Assn., p. 320-324." State Bd. of Educ, Teachers' Retir, Fund, 7 p. Acts 1908, 1910, 1912. Reports and statistics Binford, J. H. Some facts concerning the retired teach- ers' fund; an article in the Virginia Journal of Educa- tion, June 1911, p. 593-95. Receipts and disbursements, July 1914-15, i mimeogr. page. Descriptions Comm. Ed. 1908, v. i, p. 104 (describes L. 1908). 1909, V. I, p. 119 (explanatory note). 1912, V. I, p. 66 (describes amend. 1912). Carn. Found. 1912, p. 26 (describes fund's condition). Analyzed in comparative charts: III, IV, VI-IX. For a history and criticism of this fund, see p. 198. WASHINGTON Senate Bill, 131, ch. 48, acts 19 13 (defeated). Descriptions Cam. Found. 1914, p. 33. Describes defeated pens. bill. Analyzed in comparative charts: VIII (Pens. bill). WISCONSIN Wisconsin TeachersMnsurance and Retirement Fund. Established 191 1. Number of Teachers, 14,597. Contributory. Laws For laws prior to 1911, see under Milwaukee. Sess. Laws, 191 1, ch. 323, June 10. State-wide, repr. in N. Ed. Assn.. p, 324-328. 191 1, ch. 664, amendment. Rules and Regulations, Law 19X5, p6-p. booklet. Reports and statistics Statement of the Teachers' Insur. and Retir. Fund. 5-p. mimeographed copy (Receipts and disbursements for the years 1912-1915). Reports of the Secretary of the Bd. of Trustees, 1914, 5-p. mimeographed copies (membership, pension roll^ average annuities, etc.) Descriptions Carn. Found. 1912, p. 27. (Describes law 191 1.) 344 Appendices Borden, J. B., The problem of teachers' pensions in Wis- consin. In Wise. Jo. of Educ. Feb and Mar. 191 1, p. 35-37. 64-66. Comm. Ed. 1907, v. i, p. 451 (describes law 1907). 191 1, V. I, p. 97 (describes law 191 1). Herfurth, Elizabeth M. The teachers' fund movement. In Wise. Teachers' Assn. Proceedings 1909, 19 10, p. 204-17. Analyzed in comparative charts III, VII-IX. See also under Milwaukee. For a history and criticism of this fund, see p. 193. Milwaukee Teachers' Retirement Fund. Estabhshed 1907. Number of Teachers, 1,691. Contributory. Laws Sess. Laws 1907, ch. iii. Mar. 14, creating sec. 925-XX of the statute. Establ. in pension fund, in Milwaukee;; reprint, in Bur. Ed. Bull. p. 169-71. 1909, ch. 510, June 16. Abolishing city's contribution of i per cent of school tax; substituting new law for the old law. Sess. Laws 191 1, ch. 189, May 25 amending L. 1909. Authorizing a city contribution of i per cent of school tax, max. amount equal to teachers' contributions. Descriptions Comm. Ed. 1907, v. i, p. 451. Describes law 1907; question of compulsion. 1909, V. I, p. 120 (describes law 1909). Analysed in comparative charts: IV, VII (1909); VIII, ix (1911). Reports and statistics Law 1909-1911. Retirement fund in cities of ist class. (A two-page leaflet.) Secretary of the Board of Trustees. Report for the year 1915- Five-page mimeographed copy. Membership, pension roll, average annuity, etc. WYOMING Descriptions Carn. Found. 1914, p. 34. Agitation for pens, legislation. 345 APPENDIX 3 LAWS PROVIDING FOR SOUND TEACHERS' PENSION SYSTEMS (a) Massachusetts Acts of 1913, Chapter 832.— An Act to EstabUsh a Retirement System for Public School Teachers CONSTRUCTION Section i. The following words and phrases as used in this act, un- less a different meaning is plainly required by the context, shall have the following meanings : (i) "Retirement system" shall mean the arrangement provided in this act for payment of annuities and pensions to teachers. (2) "Annuities" shall mean payments for life derived from con- tributions from teachers. "Annuities-certain" shall mean payments for a definite number of years only, derived from contributions from teachers, and the number of years during which the payments shall be made shall be determined by the retirement board. {As amended by chapter 233, General Acts of 1917.) (3) "Pensions" shall mean payments for life derived from contribu- tions from the commonwealth. (4) "Teacher" shall mean any teacher, principal, supervisor or super- intendent employed by a school committee, or board of trustees, in a public day school within the commonwealth. (5) "Public school" shall mean any day school conducted within this commonwealth under the order and superintendence of a duly- elected school committee and also any day school conducted under tht provisions of chapter four hundred and seventy-one of the acts of th» year nineteen hundred and eleven. (6) "Regular interest" shall mean interest at the rate determined by the retirement board and shall be substantially that which is actually earned, which shall be compounded annually on the last day of December of each year. {As amended by clmpter 23/, General Acts of ip7(5.) (7) "Retirement board" shall mean the teachers' retirement board, as provided in section four of this act. (8) "Retirement association" shall mean the teachers' retirement association, as provided in section three of this act. (9) "Expense fund" shall mean the fund provided for in paragraph numbered one in section five of this act. (10) "Annuity fund" shall mean the fund provided for in paragraph numbered two in section five of this act. (11) "Pension fund" shall mean the fund provided for in paragraph numbered three in section five of this act. (12) "School year" shall mean the twelves months from the first day of July of any year to the thirtieth day of June next succeeding. (13) "Assessments" shall mean the annual payments to the annuity fund by members of the association. Appendices ESTABLISHMENT OF A TEACHERS RETIREMENT SYSTEM. Section 2. A teachers' retirement system shall be established on the first day of July, nineteen hundred and fourteen. teachers' RETIREMENT ASSOCIATION Section 3. A teachers' retirement association shall be organized among the teachers in the public schools as follows : (i) All teachers, except those specified in paragraph (3) of this section, who enter the service of the public schools for the first time on or before July first, nineteen hundred and fourteen, shall become thereby members of the association. (2) All teachers, except those specified in paragraph (3) of this section, who shall have entered the service of the public schools before June thirtieth, nineteen hundred and fourteen, may at any time between July first, nineteen hundred and fourteen, and September thirtieth, nine- teen hundred and fourteen, upon application in writing to the commis- sioner of education, become members of the retirement association. Any teacher failing to do so may thereafter become a member of the retirement board by paying an amount equal to the total assessments, together with regular interest thereon, that he would have paid if he had joined the retirement association on September thirtieth, nineteen hundred and fourteen. (3) Teachers in the service of the public schools of the city of Boston shall not be included as members of the retirement association.' STATE teachers' RETIREMENT BOARD Section 4. (i) The management of the retirement system is hereby vested in the teachers' retirement board, consisting of seven members: the insurance commissioner for the commonwealth, the bank commis- sioner for the commonwealth, the commissioner of education for the commonwealth, three members of the retirement association and one other person. Upon organization of the retirement association the members thereof shall elect from among their number in a manner to be approved by the insurance commissioner, the bank commissioner and the commis- sioner of education, three persons to serve upon the retirement board, one member to serve for one year, one for two years and one for three years, and thereafter the members of the retirement association shall elect annually from among their number in a manner to be approved by the retirement board one person to serve upon the retirement board for the term of three years. The seventh member of the reitrement board shall be elected annually by the other six to serve for the term of one year. On a vacancy occurring on the board, a successor of such person whose place has become vacant shall be chosen in the same manner as his predecessor to serve until the next annual election. Until the organization of the retirement association and the election of three representatives therefrom, the insurance commissioner, the bank com- missioner and the commissioner of education shall be empowered to perform the duties of the retirement board. (2) The members of the retirement board shall serve without com- pensation, but they shall be reimbursed from the expense fund of the retirement association for any expenditures or loss of salary or wages which they may incur through serving on the board. All claims for ^Modified for industrial and continuation school teachers, by chapter 494, Acts of 1914. 347 Teachers' Pension Systems in the United States reimbursement on this account shall be subject to the approval of tht governor and council. (3) The retirement board shall have power to make by-laws and regulations not inconsistent with the provisions of this act; and to employ a secretary who shall give a bond in such amount as the board shall approve and clerical and other assistance as may be necessary. The salaries shall be fixed by the board, with the approavl of th« governor and council. (4) The retirement board shall provide for the payment of retirement allowances and such other expenditures as are required by the provisioni of this act. (5) The retirement board shall adopt for the retirement system one or more mortality tables, and shall determine what rates of interest shall be established in connection with such tables, and may later modify such tables or prescribe other tables to represent more accurately the expense of the retirement system or may change such rates of interest, and may determine the application of the changes made. (6) The retirement board shall perform such other functions as art required for the execution of the provisions of this act. CREATION OF FUNDS Section 5. The funds of the retirement system shall consist of an expense fund, an annuity fund and a pension fund. (i) The expense fund shall consist of such amounts as shall be appro- priated by the general court from year to year on estimates submitted by the retirement board to defray the expense of the administration of thii act, exclusive of the payment of retirement allowances. (2) The annuity fund shall consist of assessments paid by members of the retirement association, and interest derived from investments of the annuity fund. Each member of the retirement association shall pay into the annuity fund, by deduction from his salary in the manner provided in section nine, paragraph five, of this act, such assessments upon his salary as may be determined by the retirement board. The rate of assessment shall be established by the retirement board on the first day of July of each year after a prior notice of at least three months, and shall at any given time be uniform for all members of the retirement association, and shall not be less than three per cent nor more than seven per cent of the member's salary : provided, however, that when the total sum of assessments on the salary of any member at the rate established by the retirement board would amount to more than one hundred dollar* or less than thirty-five dollars for any school year, such member shall in lieu of assessments at the regular rate be assessed one hundred doUarj a year or thirty-five dollars a year as the case may be, payable in equal instalments to be assessed for the number of months during which the schools of the community in which such member is employed are com- monly in session. Any member of the retirement association who shall for thirty years have paid regular assessments to the annuity fund as provided herein, shall be exempt from further assessments ; but such member may thereafter, if he so elects, continue to pay his assessments to the fund. No member so electing shall pay further assessments after the total sum of assessments paid by him shall at any time have amounted, with regular interest, to a sum sufficient to purchase an annuity of five hundred dollars at age sixty; and interest thereafter accruing shall be paid to the member at the time of his retirement. (3) The pension fund shall consist of such amounts as shall be appropriated by the general court from time to time on estimates sub- 348 Appendices mitted by the retirement board for the purpose of paying the pcnsiont provided for in this act. (4) ^Members of the retirement association,^ established by chapter five hundred and thirty-two of the acts of the year nineteen hundred and eleven, as amended, who enter the service of the public schools shall have the full amount of their contributions, together with such interest as shall have been earned thereon, transferred by the treasurer of the commonwealth to the annuity fund established by paragraph (2) of this section, and these amounts shall thereby become a part of their assess- ments. PAYMENT OF RETIREMENT ALLOWANCES Section 6 (i) Any member of the retirement association may retire from service in the public schools on attaining the age of sixty years, or at any time thereafter, if incapable of rendering satisfactory service as a teacher, may, with the approval of the retirement board, be retired by the employing school committee. (2) Any member of the retirement association, on attaining the age of seventy years, shall be retired from service in the public schools. (3) A member of the retirement association after his retirement under the provisions of paragraphs numbered (i) or (2) of this section, shall be entitled to receive from the annuity fund, as he shall elect at the time of his retirement, on the basis of tables adopted by the retire- ment board: — (a) an annuity, payable in quarterly payments, to which the sum of his assessments under section five, paragraph (2), with regular interest thereon, shall entitle him; or, (b) an annuity of less amount, as determined by the retirement board for the annuitants electing such option, payable in quarterly payments, with the provision that if the annu- itant dies before receiving payments equal to the sum of his assessments under section five, paragraph (2), with regular interest, at the time of his retirement, the difference between the total amount of said payments and the amount of his contributions with regular interest shall be paid to his legal representatives. (4) Any member of the retirement association receiving payments of an annuity as provided in paragraph numbered (3) of this section shall, if not rendered ineligible therefor by the provisions of section twelve of this act, receive with each quarterly payment of his annuity an equal amount to be paid from the pension fund as directed by the retirement board. (5) Any teacher who shall have become a member of the retirement association under the provisions of paragraph numbered (2) of section three, and who shall have served fifteen years or more in the public schools of the commonwealth, not less than five of which shall imme- diately precede retirement, shall, on retiring as provided in paragraphs (l) and (2) of this section, be entitled to receive a retirement allowance as follows: (a) such annuity and pension as may be due under the pro- visions of paragraphs numbered (3) and (4) of this section; (b) an additional pension to such an amount that the sum of this additional pen- sion and the pension provided in paragraph (4) of this section shall equal the pension to which he would have been entitled under the pro- visions of this act if he had paid thirty assessments on his average yearly wage for the fifteen years preceding his retirement and at the rate in effect at the time of his retirement: provided, (i) that if his term of service in the commonwealth shall have been over thirty years the thirty assessments shall be reckoned as havmg begun at the time of his ^As amended by chapter 197, General Acts of 1915. '^The Retirement System established for State employees. 349 Teachers' Pension Systems in the United States entering service and as drawing three per cent interest compounded annually until the time of retirement; and further provided, (2) that if the sum of such additional pension together with the annuity and pension provided for by paragraphs numbered (3) and (4) of this section is less than three hundred dollars in any one year, an additional sum suffi- cient to make an annual retirement allowance of three hundred dollars shall be paid from the pension fund. {As amended by chapter 257, Gen- eral Acts of 1916.) (6) If at any time it is impossible or impracticable to consult the original records as to wages received by a member during any period, the retirement board shall determine the pension to be paid under para- graph numbered (5) (b) of this section in accordance with the evidence they may be able to obtain. (7) ^In determining the retiring allowance of a member of the teachers' retirement association who prior to the first day of June, nineteen hundred and twelve, had been regularly employed by the commonwealth, credit shall be given in the manner provided for by paragraph (5) of this section, for all such periods of employment rendered prior to the first day of June, nineteen hundred and twelve : provided, hozvever, that this paragraph shall not apply to any person becoming a member of the teachers' retirement association, after the first day of July, nineteen hundred and fifteen, who, at the time of entering the service of the public schools, was not a member of the retirement association established by chapter five hundred and thirty-two of the acts of the year nineteen hundred and eleven. (8) Any member of the retirement association who has served twenty or more years in the public schools of the commonwealth and who, before attaining the age of sixty, by reason of physical or mental dis- ability, becomes permanently incapable of rendering satisfactory service as a teacher, may, with the approval of the retirement board, be retired by the employing school committee : provided, that he has served in the public schools of the commonwealth for the five consecutive years imme- diately preceding the date of his retirement. Periods of leave of absence or sickness shall not be considered as breaking the continuity of the five consecutive years of service required by the provisions of this paragraph, but such periods of absence or sickness shall not be counted as service. (Added by chapter 233, General Acts of 1917.) (9) Any member of the retirement association shall, upon retirement under the provisions of paragraph (8) of this section, and during the continuance of disability, be entitled to receive from the annuity fund, in quarterly payments, a sum computed in accordance with the pro- visions of paragraph (3) of this section: provided, that upon the approval of the retirement board, an annuity-certain based upon the tables of the board may be substituted for either of the plans provided for in said paragraph, and in case of the death of the annuitant before all the instalments-certain have been paid, the value at that time of the unpaid instalments, as determined on the basis of the tables adopted by the retirement board, shall be paid to the legal representatives of the deceased member's estate; and further provided, that if no executor or adminis- trator of the estate of such deceased member is appointed within three months after his death, all sums due under this paragraph, not exceeding one hundred dollars in any one case, may be paid to such person or persons as appear in the judgment of the retirement board to be entitled to the proceeds of the estate, and such payment shall be a bar to recovery by any other person. (Added by chapter 233, General Acts of 1917.) (10) Any member of the retirement association receiving a payment ^As amended by chapter 197, General Acts of 1915- Appendices as provided in paragraph (9) of this section, shall, if not rendered ineligible therefor by the provisions of section tvi^elve of this act, be entitled to receive from the pension fund for each year of service a pension equal to one-thirtieth of the pension vi?hich would have been due him under the provisions of this act if he had retired at the age of sixty, having paid thirty annual assessments to the annuity fund, and received an annuity computed in accordance with the provisions of para- graph (3), option (a) of this section; provided, hozweer, that the mini- mum annual amount to be paid from the pension fund shall be such that a member shall receive from this fund, for each year of his service, one- thirtieth of two hundred and fifty dollars; and further provided, that the total retiring allowance shall in no case be greater than the amount which the said member would receive if he were to continue in service until the age of sixty, contributing annual assessments based on the average salary received during the five years of service immediately preceding retirement, at the rate of assessment in effect at the time of retirement. {Added by chapter 233, General Acts of 1917.) (11) If a member is granted an annuity-certain by the retirement board, his total retiring allowance shall not be limited to the total retiring allowance which he would have received at the age of sixty, as provided in paragraph (10) of this section, but the amount to be paid from the pension fund shall be the amount which would have been paid from that fund if an annuity-certain had not been granted. (Added by chapter 233, General Acts of 1917.) (12) In computing the amount to be paid from the pension fund under the provisions of paragraph (10) of this section, the assumed assessments necessary to complete the thirty annual assessments shall be based on the average salary received during the five years of service immediately preceding retirement, and shall be at the rate of assessment in efi^ect at the time of retirement. Interest on the amount to the mem- ber's credit at the time of retirement and on the assumed assessments shall be figured at the rate of three per cent. (Added by chapter 233, General Acts of 1917.) (13) No member of the retirement association shall be retired under the provisions of paragraph (8) of this section until the fact of his disability has been certified to under oath by an examining physician selected by the employing school committee and approved by the retire- ment board, and until any further evidence of his disability which the retirement board may require shall have been furnished. (Added by chapter 233, General Acts of 1917.) (14) At intervals of not less than one year, any member of the retirement association receiving a retiring allowance under the provisions of this section, who has not attained the age of sixty, shall, if so re- quested by the retirement board, be re-examined by a physician selected by the retirement board. If the retirement board finds that disability which prevents satisfactory service as a teacher no longer exists, the retiring allowance shall cease. Refusal to submit to re-examination shall be cause for discontinuing the retiring allowance. (Added by chapter 233, General Acts of 1917.) (15) If a teacher ceases to receive a retiring allowance under the provisions of paragraph (14) of this section, the amount of his credit at that time in the annuity fund shall be determined on the basis of tables adopted by the retirement board, and the said amount shall be considered for the purposes of this act to constitute the sum of his assessments, with the regular interest allowed thereon, to the time when his retiring allow- ance ceased. (Added by chapter 233. General Acts of 1917. (16) Any member of the retirement association who shall cease to Teachers' Pension Systems in the United States receive a retiring allowance under the provisions of paragraph (14) of this section, who does not reenter the service of the public schools, and who does not withdraw the amount to his credit in the annuity fund, may, upon attaining the age of sixty, receive a retiring allowance com- puted in accordance with the provisions of paragraphs (3) and (4) of this section, or may before attaining the age of sixty, under conditions to be determined by the retirement board, upon request and after an interval of one year, be entitled to further re-examination by a physician selected by the retirement board, and if disability contracted during service as a public school teacher is found to exist, shall again be entitled to receive a retiring allowance under the provisions of paragraphs (9) and (10) of this section. (Added by chapter 233, General Acts of 1917.) WITHDRAWAL AND REINSTATEMENT Section 7.^ (i) Any member of the retirement association withdraw- ing from service in the public schools, except for the purpose of entering the service of the commonwealth, before becoming eligible to retirement shall be entitled to receive from the annuity fund all amounts contributed as assessments, together with regular interest thereon, in the manner hereinafter provided. (2) If such withdrawal shall take place before six annual assessments have been paid, the total amount to which such member is entitled as determined by the retirement board under the provisions of this act may be paid to him in one sum. (As amended by chapter 60, General Acts' of 1916.) (3) If such withdrawal shall take place after six annual assessments have been paid the amount so refunded shall be in the form of such annuity for life based on the contributions of such member, together with regular interest thereon, as may be determined by the retirement board according to its annuity tables, or in four annual instalments, as such member may elect. (As aviendcd by chapter 60, General Acts of 1916.) (4) If a member of the association withdrawing and receiving pay- ments in accordance with paragraphs numbered (2) and (3) of this section, shall die before the amount of such payments equals the amount of his contributions to the annuity fund with regular interest, the differ- ence between the amount of such payments and the amount of his con- tributions with regular interest shall be paid to his legal representatives. (5) Any member of the retirement association who shall have with- drawn from service in the public schools shall, on being re-employed in the public schools, be reinstated in the retirement association in accord- ance with such plans for reinstatement as the retirement board shall adopt. (6) If a member of the retirement association shall die before retire- ment, the full amount of his contributions to the annuity fund with regu- lar interest to the day of his death shall be paid to his legal repre- sentatives; if, however, there is no executor or administrator of the estate of such deceased member, all sums due under this paragraph, not exceeding one hundred dollars in any one case, may be_ paid to such person or persons as appear in the judgment of the retirement board to be entitled to the proceeds of the estate, and such payment shall be a bar to recovery by any other person. (As amended by chapter 238, Gen- eral Acts of 1916.) TAXATION, ATTACHMENTS AND ASSIGNMENTS Section 8. That portion of the salary or wages of a member deducted or to be deducted under this act, the right of a member to an annuity or ^As amended by chapter 198, General Acts of 1915. Appendices pension, and all his rights in the funds of the retirement sysetm shall be exempt from taxation, and from the operation of any laws relating to bankruptcy or insolvency, and shall not be attached or taken upon execu- tion or other process of any court. No assignment of any right in, or to, said funds shall be valid. The funds of the retirement system, so far as invested in personal property, shall be exempt from taxation.^ DUTIES OF THE SCHOOL COMMITTEE Section 9. (i) The school committee of each town and city in the commonwealth shall, before employing in any teaching position any person to whom this act may apply, notify such person of his duties and obli- gations under this act as a condition of his employment. (2) On or before October first of each year the school committee of each town and city in the commonwealth shall certify to the retirement board the names of all teachers to whom this act shall apply. (3) The school committee of each town and city in the common- wealth shall, on the first day of each calendar month, notify the retire- ment board of the employment of new teachers, removals, withdrawals, changes in salary of teachers, that shall have occurred during the month preceding. (4) Under the direction of the retirement board the school committee of each town or city in the commonwealth shall furnish such other infor- mation as the board may require relevant to the discharge of the duties of the board. (5) The school committee of each town and city in the commonwealth shall, as directed by the retirement board, deduct from the amount of the salary due each teacher employed in the public schools of such city or town such amounts as are due as contributions to the annuity fund as prescribed in this act, shall send to the treasurer of said town or city a statement as voucher for such deductions, and shall send a duplicate statement to the secretary of the retirement board. (6) The school committee of each town and city in the common- wealth shall keep such records as the retirement board may require. DUTIES OF BOARDS OF TRUSTEES Section 10. In administering this act for the benefit of teachers in schools conducted in accordance with chapter four hundred and seventy- one of the acts of the year nineteen hundred and eleven, the boards of trustees of said schools are hereby authorized and required to perform all the duties prescribed for school committees under this act. CUSTODY AND INVESTMENT OF FUNDS Section 11. (i) The treasurer of each town or city in the common- wealth on receipt from the school committee or board of trustees of the ^Any pledge, mortgage, sale, assignment, or transfer hereafter made of any right, claim, or interest in any pension which has been, or may hereafter be granted by the commonwealth or by any county, city or town, shall be void and of no effect, and any person who shall be a party to such pledge, mortgage, sale, assignment or transfer of any right, claim, or interest in any pension, or pension certificate, which has been or may hereafter be granted or issued by the commonwealth or by any county, city or town, or who shall hold the same as collateral security for any debt or promise, or upon any pretext of such security or promise, shall be guilty of a misdemeanor, and upon conviction thereof shall be punished by a fine not exceeding one hundred dollars. (Chapter 75, General Acts of 1916.) 353 Teachers' Pension Systems in the United States voucher for deductions from the teachers' salaries provided for in section nine shall transmit, monthly, the amounts specified in such voucher to the secretary of the retirement board. (2) The secretary of the retirement board shall monthly pay to the treasurer of the commonwealth all sums collected by him under the provisions of paragraph (i). (3) All funds of the retirement system shall be in custody and charge of the treasurer of the commonwealth and the treasurer shall invest such funds as are not required for current disbursements in accordance with the laws of the commonwealth governing the investment of sinking funds. He may, whenever he sells securities, deliver the securities so sold upon receiving the proceeds thereof, and may execute any or all documents necessary to transfer the title thereto. (4) The treasurer of the commonwealth shall make such payments to members of the retirement association from the annuity fund and pension fund as the retirement board shall order to be paid in accordance with sections six and seven of this act. (5) On, or before, the third Wednesday in January, the treasurer of the commonwealth shall file with the insurance commissioner for the com- monwealth, and with the secretary of the retirement board, a sworn state- ment exhibiting the financial condition of the retirement system on the thirty-first day of the preceding December and its financial transactions for the year ending at such date. Such statement shall be in the form prescribed by the retirement board and approved by the insurance com- missioner. MEMBERSHIP IN OTHER RETIREMENT ASSOCIATIONS Section 12. (i) No person required to become a member of the association under the provisions of paragraph (i) of section three of this act shall be entitled to participate in the benefits of any other teachers' retirement system, supported in whole or in part by funds raised by taxation, or to a pension under the provisions of chapter four hundred and ninety-eight of the acts of the year nineteen hundred and eight, or chapter five hundred and eighty-nine of the acts of the year nineteen hundred and eight, as amended by chapter six hundred and seventeen of the acts of the year nineteen hundred and ten. (2) No member of the retirement association shall be eligible to receive any pension as described in section six of this act, who is at the time in receipt of a pension paid from funds raised in whole or in part from taxation under the provisions of chapter four hundred and ninety- eight of the acts of the year nineteen hundred and eight, or chapter five hundred and eighty-nine of the acts of the year nineteen hundred and eight, as amended by chapter six hundred and seventeen of the acts of the year nineteen hundred and ten, or of any other act providing pensions for teachers, providing that this paragraph shall not be con- strued as applying to the Boston Teachers' Retirement Fund Association. REIMBURSEMENT OF CITIES AND TOWNS Section 13. (i) Whenever, after the first day of July, nineteen hun- dred and fourteen, a town or city retires a teacher who is not eligible to a pension under the provisions of section six, paragraph (4) of this act, and pays to such teacher a pension in accordance with chapter four hundred and ninety-eight of the acts of the year nineteen hundred and eight, or chapter five hundred and eighty-nine of the acts of the year nineteen hundred and eight, as amended by chapter six hundred and seventeen of the acts- of the year nineteen hundred and ten, and the 354 Appendices school committee of said town or city certifies under oath to the retire- ment board to the amount of said pension, said town or city shall be reimbursed therefor annually by the commonwealth : provided, that no such reimbursement shall be in excess of the amount, as determined by the retirement board, to which said teacher would have been entitled as a pension, had he become a member of the retirement association under the provisions of section three, paragraph (2) of this act. (2) On or before the first Wednesday of January of each year, the retirement board shall present to the general court a statement of the amount expended previous to the preceding first day of July by cities and towns in the payment of pensions under the provisions of the pre- ceding paragraph, for which such cities and towns should receive reim- bursement. On the basis of such a statement, the general court may make an appropriation for the reimbursement of such cities and towns up to such first day of July. JURISDICTION OF COURT Section 14. The superior court shall have jurisdiction in equity upon petition of the insurance commissioner or of any interested party to compel the observance and restrain the violation of this act, and of the rules and regulations established by the retirement board hereunder. REFERENDUM AND REPEAL Section 15. Upon the petition of not less than five per cent of the legal voters of any city or town that has adopted chapter four hundred and ninety-eight of the acts of the year nineteen hundred and eight, this question shall be submitted, in case of a city, to the voters of such city at the next city election, and, in case of a town, to the voters of such town at the next annual town meeting, and the vote shall be in answer to the question to be placed upon the ballot : "Shall an act passed by the general court in the year nineteen hundred and eight, entitled, 'An Act to authorize cities and towns to establish pension funds for teachers in the public schools,' be repealed?" and if a majority of the voters voting thereon at such election or meeting shall vote in the affirmative said act shall be repealed in such city or town. Section 16. So much of chapter four hundred and ninety-eight of the acts of the year nineteen hundred and eight as authorizes its sub- mission to the voters of a city or town for acceptance after the passage of this act is hereby repealed. Section 17. This act shall take effect upon its passage. (b) City of New York Laws of 1917, Chapter 303.— An Act to Amend the Greater New York Charter and to Repeal Sections Ten Hundred and Ninety-Two-a, Ten Hundred and Ninety-Two-b. and Ten Hundred and Ninety-Two-c thereof, in relation to Teachers' Retirement Fund The People of the State of New York, represented in Senate and Assembly, do enact as follows : Section i. Section ten hundred and ninety-two of the Greater New York charter, as re-enacted by chapter four hundred and sixty-six of the laws of nineteen hundred and one, and amended by chapter five hundred and thirty of the laws of nineteen hundred and two, chapter one hundred and seventy-seven of the laws of nineteen hundred and three, chapter six hundred and sixty-one of the laws of nineteen hundred and five, chapter 355 Teachers' Pension Systems in the United States one hundred and sixty-seven of the laws of nineteen hundred and seven and chapter four hundred and seventy-six of the laws of nineteen hun- dred and fourteen, is hereby amended to read as follows : § 1092. The following words and phrases as used in this act, unless a different meaning is plainly required by the context, shall have the following meanings : (i) "Retirement system" shall mean the arrangement for the payment of retirement allowances, under the provisions of this act. (2) "Retirement association" shall mean the teachers' retirement asso- ciation provided for in subdivision B of this act. (3) "Retirement board" shall mean the teachers' retirement board provided for in subdivision C of this act. (4) "Medical board" shall mean the board of physicians provided for in subdivision T of this act. (5) "Board of education" shall mean the board of education of the city of New York. (6) "Public school" shall mean any class, school, high school, normal school, training school, vocational school, truant school, parental school, and all schools or classes conducted under the order and superintendence of the board of education, and the schools or classes maintained by the department of public charities or by the department of correction in pursuance of the rules established or to be established by the board of education, or by the commissioner of public charities or by the commis- sioner of correction for schools or classes maintained by such commis- sioners, respectively. "{7) "Teacher" shall mean the city superintendent of schools, the associate city superintendents, the district superintendents, the director and the assistant director of the division of reference and research, the director and the assistant directors of the bureau of compulsory education, school census and child welfare, the members of the board of examiners, the directors and the assistant directors of special branches, the supervisor and the assistant supervisors of lectures, all principals, vice-principals, assistants-to-principals, heads of departments, and all regular and special teachers of the public day schools of the city of New York, and all em- ployees of the board of education appointed to regular positions in the service of the public schools at annual salaries and whose appointments were made or shall hereafter be made from eligible lists prepared as the result of examinations held by the board of examiners of the department of education. (8) "Present-teacher" shall mean any teacher employed in the public schools as a teacher on the first day of August, nineteen hundred and seventeen, or on leave of absence on said date. (9) "New-entrant" shall mean any teacher appointed to serve in the public schools after the first day of August, nineteen hundred and seventeen. (10) "Contributor" shall mean any member of the retirement asso- ciation. (11) "Transferred-contributor" shall mean a contributor as defined in subdivision I of this act. (12) "Beneficiary" shall mean any person in receipt of a pension, an annuity, a retirement allowance, or other benefit as provided in this act. (13) "City-service" shall mean any service as an employee of the city of New York or of any department, bureau, board or corporation created under the provisions of the Greater New York charter, or as an employee of any of the municipalities, counties or parts thereof which are included within the boundaries of the city of New York or which have been incorporated into said city. Appendices (14) "Prior-service" shall mean all city-service and all teaching or supervisory service in schools or colleges not maintained by the city of New York computed to and including the sixteenth day of September, nineteen hundred and seventeen, in the case of a present-teacher and in the case of a new-entrant to the date of his appointment as a teacher, subject to the limitations and restrictions imposed by subdivision H of this act. (15) "Total-service" shall mean all prior-service together with all sub- sequent service as a teacher or contributor as provided in this act. (16) "Service retirement" shall mean retirement as defined in sub- division K of this act. (17) "Disability retirement" shall mean retirement as defined in sub- division L of this act. (18) "Average salary" shall mean the average annual salary earnable by a contributor for the ten years immeditely preceding retirement except that in case a contributor shall retire prior to the first day of January, nineteen hundred and twenty-two, average salary shall mean the average annual salary earnable by the contributor since the first day of January, nineteen hundred and twelve. (19) "Minimum contribution" shall mean (a) the amount realized by deducting from the salary of a contributor three per centum of his earnable salary or (b) such per centum thereof, if less than three per centum, as shall be computed to be sufficient, with regular interest, when paid until age sixty-five, to provide for him on retirement at that age an annuity which, when added to his pension provided for in this act, will provide a retirement allowance of fifty per centum of his average salary. (20) "Minimum accumulation" shall mean the amount created by the accumulation of the minimum contributions, together with the regular interest thereon. (21) "Accumulated deductions" shall mean the total of the amounts deducted from the salary of a contributor and standing to the credit of his individual account in the annuity savings fund, together with the regular interest thereon. (22) "Regular interest" shall mean interest at four per centum per annum, compounded annually. (23) "Pension" shall mean payments for life derived from appropria- tions made by the city of New York and from any ether sources of revenue of the pension reserve funds as provided in this act. (24) "Annuity" shall mean payments for life derived from contribu- tions made by a contributor as provided in this act. (25) "Retirement allowance" shall mean the pension plus the annuity. (26) "Pension reserve" shall mean the present value computed on the basis of such mortality tables as shall be adopted by the retirement board, with regular interest, of the future payments to be made on account of any pension granted under the provisions of this act. (27) "Annuity reserve" shall mean the present value computed on the basis of such mortality tables as shall be adopted by the retirement board, with regular interest, of the future payments to be made on account of any annuity or benefit granted and based on the accumulated deduc- tions of the contributor. (28) "Expense fund" shall mean the fund provided for in paragraph numbered one in subdivision F of this act. (29) "Contingent reserve fund" shall mean the fund provided for in paragraph numbered two in subdivision F of this act. (30) "Pension reserve fund number one" shall mean the fund pro- vided for in paragraph numbered three in subdivision F of this act. 357 Teachers' Pension Systems in the United States (31) "Pension reserve fund number two" shall mean the fund pro- vided for in paragraph numbered four in subdivision F of this act. (32) "Annuity savings fund" shall mean the fund provided for in paragraph numbered five in subdivision F of this act. (33) "Annuit}' reserve fund" shall mean the fund provided for in paragraph numbered six in subdivision F of this act. (34) "Fiscal year" shall mean the year commencing with January first and ending with December thirty-first next following. A. The retirement system shall be established on the first day of August, nineteen hundred and seventeen. B. A teachers' retirement association is hereby organized among the teachers of the public schools ; its membership shall consist of the following: 1. All teachers who have been granted or shall hereafter be granted permanent licenses pursuant to section ten hundred and eighty-nine. 2. All teachers, without a permanent license, who shall file a state- ment in writing with the retirement board consenting to membership in the retirement association and to the deductions for annuity purposes prescribed in this act. 3. All transferred-contributors. C. I. A retirement board of seven members is hereby constituted which shall consist of the following: (a) The president of the board of education. (b) The comptroller of the city of New York. (c) Two members appointed by the mayor of the city of New York, one of whom shall be a member of the board of education ; they shall serve until their successors are appointed. Should the board-of-edu- cation member of the retirement board cease to be a member of the board of education he shall thereupon cease to be a member of the retire- ment board. (d) Three members of the retirement association elected from the contributors as follows : On the first Thursday of May, nineteen hundred and seventeen, and in each year thereafter, the contributors in each public school shall meet in their respective schools at three o'clock in the afternoon, or if the administrative conditions in any school are such that the meeting ought to be held at some other hour, then at such hour in said school as shall be designated by the city superintendent of schools after consultation with the principal of said school ; the principal of the school, and in his absence the acting principal, shall call the meeting to order, and the contributors present at the meeting shall proceed to elect from their number by ballot a chairman and a secretary, and shall then elect from their number by ballot one delegate for each ten contributors and major fraction thereof in said school; each school shall have at least one delegate. At the close of the meeting the secretary thereof shall transmit to the district superintendent in charge of the school the names of the delegates so elected. On the second Thursday of May, nineteen hundred and seventeen, and in each year thereafter, said delegates shall meet at three o'clock in the afternoon in one of the schools in the district designated by the district superintendent ; said designation shall be made and mailed by the district superintendent to each delegate at least three days before the second Thursday of May. For the purpose of attending the meeting each delegate shall leave his school not later than two-thirty o'clock in the afternoon on said second Thursday of May. No delegate shall suffer loss of pay by reason of attendance at said meeting. Said delegates shall be called to order by the, principal of the school, and in his absence by the acting principal of the school, in which the meeting is held. Two-thirds of the delegates Appendices elected in a district shall constitute a quorum for that district. The delegates present at the meeting shall proceed to elect from their number by ballot a chairman and a secretary, and shall then elect from their number by ballot a representative and an alternate for said representative. Immediately after the meeting, the secretary thereof shall transmit to the secretary of the board of education the name of the representative and the name of the alternate so elected. The representatives shall meet at three o'clock in the afternoon of the third Thursday of May in each year at the hall of the board of education; for the purpose of attending said meeting, the representatives shall leave their respective schools at two o'clock in the afternoon on said third Thursday of May. No representative shall suffer loss of pay by reason of attendance at said meeting. Said meeting shall be called to order by the city superintendent of schools or, in his absence, by the acting city superintendent of schools ; two-thirds of the said representatives shall constitute a quorum ; said representatives shall elect from their number by ballot a chairman and a secretary, and shall then elect by ballot a contributor to serve as a member of the retire- ment board for three j'ears. At the first meeting of the representatives after this act takes effect, said representatives shall elect by ballot three contributors to serve as members of the retirement board ; the three so elected shall determine by lot their terms of office as one, two, and three years, respectively. Should a vacancy occur among the members of the retirement board elected by the representatives, said representatives shall meet within ten days thereafter at a special meeting at the call of the president of the board of education, and they shall proceed to elect by ballot a contributor to serve on said retirement board for the unexpired term. The proceedings at this special meeting shall be in all respects the same as the proceedings at the regular meeting held on the third Thursday of May. Should a vacancy occur among the representatives, or should any representative be unable to attend any meeting, his place shall be taken at said meeting by his alternate. (e) For the purpose of voting for delegates on the first Thursday of May, nineteen hundred and seventeen, all teachers shall be considered to be contributors. (f) For the purpose of voting for delegates, teachers and contributors, not appointed as regular teachers to any public school, shall be considered to be teachers regularly appointed to teach in such schools as the board of education by its by-laws shall prescribe. 2. The members of the retirement board shall serve as such without compensation but shall be reimbursed from the expense fund for any necessary expenditures and no contributor shall suffer loss of salary or wages through serving on the retirement board. 3. The retirement board shall elect from its membership a chairman, and shall appoint a secretary, an actuary, and such medical, clerical and other employees as may be necessary. 4. The compensation of all employees of the retirement board shall be fixed by said retirement board subject to the approval of the board of estimate and apportionment. 5. Subject to the limitations of this act and of law, the retirement boaVd shall from time to time establish rules and regulations for the administration of the funds created by this act and for the transaction of its business. 6. The retirement board shall keep in convenient form such data as shall be necessary for actuarial valuation of the various funds created by this act. 7. In the years nineteen hundred and nineteen and nineteen hundred and twenty-two, and in every fifth year thereafter, the actuary of the 359 Teachers' Pension Systems in the United States retirement board shall make an actuarial investigation into the mortality and service experience of the cantributors and beneficiaries as defined in this act, and shall make a valuation of the various funds created by this act, and on the basis of such investigation and valuation the retire- ment board shall (a) Adopt for the retirement system one or more mortality tables and such other tables as shall be deemed necessary. (b) Certify the rates of deduction from salary necessary to pay the annuities authorized under the provisions of this act ; and (c) Certify the rates of contribution, expressed as a percentage of salary of new entrants at various ages, which shall be made by the city of New York to the contingent reserve fund. 8. Immediately after the passage of this act the actuary of the retirement board shall make such investigation of the mortality, service, and salary experience of the teachers as the retirement board shall author- ize. On the basis of such investigation and upon the recommendation of the actuary the retirement board shall adopt such tables and certify such rates as are required in sub-sections a, b, and c of paragraph seven immediately preceding. On the basis of such tables the actuary of the retirement board shall as soon as practicable after the first day of August, nineteen hundred and seventeen, make a valuation of the various funds created by this act. 9. The retirement board shall publish annually a report certified to by each member showing the condition of the various funds created by this act, and setting forth such other facts, recommendations, and data, as may be of use in the advancement of knowledge concerning teachers' pensions and annuities ; and said retirement board shall submit said report to the mayor of the city of New York and shall file at least fifty copies thereof with the board of education for the use of said board and of its members ; and at least one copy in each school for the use of the teachers thereof. It shall also file one copy in the office of the city superin- tendent of schools, and of each associate city superintendent of schools, and of each district superintendent of schools. ID. Each member of the retirement board shall take an oath of office that he will, so far as it devolves upon him, diligently and honestly administer the affairs of said retirement board and that he will not knowingly violate or wilfully permit to be violated any of the provisions of law applicable to this act. Such oath shall be subscribed by the member making it, and certified by the officer before whom it is taken, and shall be immediately filed in the office of the clerk of the county of New York. 11. The concurrence of the comptroller or of one member appointed by the mayor, of a member elected by the retirement association, and of at least two other members shall be necessary for a decision of the retirement board. 12. The retirement board shall keep a record of all its proceeding* open to public inspection. 13. The retirement board shall perform such other functions as are required for the execution of the provisions of this act. D. For the purposes of this act, the retirement board shall possess the powers and privileges of a corporation, and as such may sue and be sued. The corporation counsel of the city of New York shall be the legal adviser of said retirement board. E. The funds created by this act shall be managed as follows: I. The members of the retirement board shall be the trustees of the several funds created by this act, and shall have exclusive control and management of said funds, and shall have full power to invest the same, 360 Appendices subject, however, to all the terms, conditions, limitations, and restrictions imposed by this act upon the making of investments and subject also to the terms, conditions, limitations, and restrictions imposed by law upon savings banks in the making and disposing of investments by savings banks; and, subject to like terms, conditions, limitations, and restrictions, said trustees shall have full power to hold, purchase, sell, assign, transfer, or dispose of any of the securities and investments in which any of the funds created by this act shall have been invested as well as of the proceeds of said investments, and of any moneys belonging to said funds. The retirement board shall annually allow regular interest on each of the funds as provided for in this act with the exception of the expense fund and pension reserve fund number two. The amount so allowed shall be due and payable to said funds and shall be annually credited thereto by the retirement board. 2. The comptroller of the city of New York shall be the custodian of the several funds created by this act. 3. Payments from the funds created by this act shall be made by the comptroller of the city of New York upon warrant signed by the chair- man and countersigned by the secretary of the retirement board ; and no warrant shall be drawn except by order of the retirement board duly entered in the record of its proceedings. 4. For the purpose of meeting disbursements for pensions, annuities and other payments in excess of the receipts, there may be kept an available fund, not exceeding ten per centum of the total amount in the several funds created by this act, on deposit in any bank in this State, organized under the laws thereof or under the laws of the United States, or with any trust company incorporated by any law of this State, pro- vided said bank or trust company shall furnish adequate security for said funds and provided that the sum so deposited in any one bank or trust company shall not exceed twenty-five per centum of the paid-up capital and surplus of said bank or trust company. 5. Except as herein provided no member and no employee of the retirement board shall have any interest, direct or indirect, in the gains or profits of any investment made by the retirement board, nor as such, directly or indirectly, receive any pay or emolument for his serivces. And no member or employee of said retirement board, directly or indi- rectly, for himself or as an agent or partner of others, shall borrow any of its funds or deposits, or in any manner use the same except to make such current and necessary payments as are authorized by the retirement board • nor shall any member or employee of said retirement board become an endorser or surety or become in any manner an obligor for moneys loaned by or borrowed of said retirement board. F. The funds hereby created are the expense fund, the contingent reserve fund, pension reserve fund number one, pension reserve fund number two, the annuity savings fund and the annuity reserve fund. 1. The expense fund shall consist of such amounts as shall be appropriated by the board of estimate and apportionment, on estimates submitted by the retirement board, to defray the expenses of the admin- istration of this act, exclusive of the payment of pensions, of annuities, of retirement allowances, and of the other benefits provided for in this act. 2. Beginning in the month of August, nineteen hundred and seventeen, the city of New York shall pay each month into a fund to be known as the contingent reserve fund, on account of each new-entrant who is a contributor, such amount as shall be certified by the retirement board as necessary to provide during the prospective active service of such new- entrant for the death benefit and for the pension reserve required at the 361 Teachers' Pension Systems in the United States time of retirement to pay the disability or service pension allowable by the city under the provisions of this act. The amount so certified by the retirement board shall be computed to bear a constant ratio to the salary of such new-entrant during his entire period of prospective active service and shall be based on such mortality and other tables as shall be adopted by the retirement board, and on regular interest. Beginning in the year nineteen hundred and eighteen the city of New York shall further pay each year into the said contingent reserve fund one million dollars on account of present-teachers, which payment shall continue until the present value of such amounts so paid into the contingent reserve fund, together with the amounts restored to the contingent reserve fund from pension reserve fund number one on account of present-teachers restored to active service, shall equal the present value of all amounts which have been transferred from the contingent reserve fund to pension reserve fund number one on account of present-teachers plus the present value of all amounts thereafter to be transferred from the contingent reserve fund to said pension reserve fund number one on account of present-teachers; said amounts shall be computed on the basis of such mortality and other tables as shall be adopted by the retirement board, and on regular interest. 3. Upon the retirement of a new-entrant, an amount equal to his pension reserve shall be transferred from the contingent reserve fund into a fund to be known as pension reserve fund number one; his pension shall be paid from said pension reserve fund number one. Should said new-entrant be subsequently restored to active service his pension reserve shall thereupon be transferred from pension reserve fund number one to the contingent reserve fund. Upon the retirement of a present-teacher, an amount equal to the amount of his accumulated deductions not ex- ceeding the amount of his pension reserve shall be transferred from the contingent reserve fund into pension reserve fund number one ; a pension which shall be the actuarial equivalent of the amount so transferred shall be paid to said retired present-teacher from pension reserve fund number one. Should said present-teacher be subsequently restored to active service the pension reserve on such pension shall thereupon be transferred from pension reserve fund number one to the contingent reserve fund. 4. Pension reserve fund number two shall consist of the following: (a) The balance remaining in the permanent fund of the retirement fund of the board of education of the city of New York on the thirty-first day of July, nineteen hundred and seventeen. (b) The balance remaining in the retirement fund of the board of education of the city of New York on the thirty-first day of July, nineteen hundred and seventeen. (c) Five per centum of all excise moneys or license fees belonging to the city of New York, and derived or received by any commissioner of excise or public officer from the granting of licenses or permission during the year nineteen hundred and seventeen to sell strong or spirituous liquors, ale, wine, or beer in the city of New York under the provisions of any law of this State authorizing the granting of such license or permission. (d) The donations, legacies, and gifts which may be made to the retirement system. (e) The sums now due and which hereafter may become due to the retirement fund of the board of education of the city of New York. (f) The amounts contributed by the city of New York to pay the pensions of the teachers retired on or before the thirty-first day of July, nineteen hundred and seventeen, and to pay that part of the pensions and 362 Appendices the other benefits of present-teachers who shall be retired or who shall become eligible for retirement after the thirty-first day of July, nineteen hundred and seventeen, which are not payable from any other fund created by this act. Pensions and other benefits, or such part thereof allowable to present-teachers and to present pensioners, provision for the payment of which out of any other fund created by this act is not specifically made, shall be paid out of pension reserve fund number two. 5. The annuity savings fund shall consist of the accumulated deduc- tions from the salaries of contributors made, under such rules and regu- lations as the retirement board shall prescribe, as follows : (a) From the salary of each present-teacher who is a contributor there shall be deducted such per centum of his earnable salary as he shall elect, provided, however, that such contributor shall be limited in his choice to one of the following rates : (i) Three per centum of his earnable salary. (2) Such per centum of his earnable salary as shall be computed to be sufficient, with regular interest, when paid until age sixty-five, to provide for him on retirement at that age an annuity which, when added to his pension, provided for in this act, will provide a retirement allow- ance of fifty per centum of his average salary. (3) A per centum of his earnable salary greater than three per centum thereof. Should any present-teacher, on becoming a contributor, fail to make such an election, he shall be deemed to have elected a deduction from his salary at the rate of three per centum of his earnable salary. (b) From the salary of each new-entrant who is a contributor, there shall be deducted such per centum of his earnable salary as shall be computed to be sufficient, with regular interest, to procure for him on service retirement an annuity equal to twenty-five per centum of his average salary ; the rate per centum of said deduction from salary shall be based on such mortality and other tables as the retirement board shall adopt, together with regular interest, and shall be computed to remain constant during his prospective teaching service prior to eligibility for service retirement; but no beneficiary restored to duty shall be required to contribute a per centum of his earnable salary greater than the per centum thereof which he was required to contribute prior to his retire- ment (c) And the head of each department shall deduct on each and every payroll of a contributor for each and every payroll period subsequent to July thirty-first, nineteen hundred and seventeen, such per centum of the total amount of salary earnable by the contributor in such payroll period as shall be certified to said head of department by the retirement board as proper in accordance with the provisions of this act. In determining the amount earnable by a contributor in a payroll period the retirement board shall consider the rate of salary payable to such contributor on the first day of each regular payroll period as continuing throughout such payroll period and it may omit salary deductions for any period less than a full payroll period in cases where the teacher was not a contributor on the first day of the regular payroll period ; and to facilitate the making of the deductions it may modify the deduction required of any contributor by such amount as shall not exceed one-tenth of one per centum of the salary upon the basis of which the deduction is to be made ; the deductions provided herein shall be made notwithstanding that the minimum salaries provided for by section ten hundred and ninet}^-one shall be reduced thereby; and said head of each department shall certify to the comptroller on each and every payroll the amounts to be deducted ; and each of said amounts so deducted shall be paid into said annuity savings fund, and Teachers' Pension Systems in the United States shall be credited together with regular interest to an individual account of the contributor from whose salary the deduction was made. 6. Upon the retirement of a contributor, his accumulated deductions shall be transferred from the annuity savings fund to a fund to be known as the annuity reserve fund; his annuity shall be paid out of said annuity reserve fund. Should such a beneficiary be restored to active service his annuity reserve shall thereupon be transferred from the annuity reserve fund to the annuity savings fund. 7. No contributor shall be required to continue to contribute to the annuity savings fund after he shall have become eligible for service retire- ment; all contributions made thereafter to said fund shall be voluntary. G. Regular interest charges payable, the creation and maintenance of reserves in the contingent reserve fund and the maintenance of annuity reserves and pension reserves as provided for in this act and the payment of all pensions, annuities, retirement allowances, refunds, death benefits and any other benefits granted under the provisions of this act are hereby made obligations of the city of New York. All income, interest, and divi- dends derived from deposits and investments authorized by this act shall be used for the payment of the said obligations of the city of New York. Upon the basis of each actuarial determination and appraisal provided for in this act, the retirement board shall prepare and submit to the board of estimate and apportionment on or before the fifteenth day of September in each year an itemized estimate of the amounts necessary to be appro- priated by the city to the various funds to complete the payment of the said obligations of said city accrumg during the ensuing fiscal year. The board of estimate and apportionment and the board of aldermen shall make an appropriation which shall be sufficient to provide for such obligations of the city of New York and the amounts so appropriated shall be included in the tax levy and shall be paid by the comptroller into the various funds created by this act. H. In computing the length of service of a contributor for retire- ment purposes under the provisions of this act, full credit up to the nearest number of years and months shall be given each contributor by the retirement board (a) for all city-service; and (b) in the case of present-teachers for all teaching or supervisory services in schools and colleges not maintained by the city of New York ; and (c) in the case of new-entrants for all teaching or supervisory service not exceeding fifteen years, in schools and colleges not maintained by the city of New York. Under such rules and regulations as the retirement board shall adopt, each teacher shall file with the retirement board a detail state- ment of all such service rendered by him. As soon as practicable there- after, the retirement board shall verify such statement as to prior-service and shall issue to each teacher a certificate certifying to the aggregate length of his prior-service. Such certificate shall be final and conclusive as to his prior-service unless thereafter modified by (a) the retirement toard upon application by the teacher; or (b) by the board of education upon application by the teacher or by the retirement board, provided such application for modification be made to said board of education within one year after the issuance of a certificate or a modified certificate by the retirement board. A certificate for prior-service issued to a present- teacher shall certify the total length of prior-service allowance for said present-teacher through the sixteenth day of September, nineteen hundred and seventeen. The time during which a contributor was absent on leave of absence without pay shall not be counted in computing the prior-service or the total-service of a contributor, unless allowed both by the head of the department in which the said contributor was employed at the time said leave of absence was granted and by the retirement board; the time 364 Appendices during which a contributor was absent on leave of absence on full pay or part pay from city-service shall be counted in computing the prior-service and the total-service of said contributor. For the purpose of computing prior-service the retirement board shall fix and determine by appropriate rules and regulations how much service rendered on the basis of the hour, day or session, or any other than a per annum basis shall be the equivalent of a year of service. No allowance shall be made for such service as a substitute teacher, night school teacher, vocational school teacher, or for any service rendered in a position to which the con- tributor was not regularly appointed and served on a per annum salary unless such service was city-service. But all service allowed by the board of examiners of the board of education pursuant to section ten hundred and ninety-one shall be allowed by the retirement board. I. Any contributor who resigns his position to accept and who, within sixty days thereafter, does accept another position in the city-service shall continue to be a contributor while in said city-service and shall be known as a transferred-contributor provided he executes and files with the retirement board a statement in writing that he elects to leave with the annuity savings fund his accumulated deductions and to continue to con- tribute to said fund at a rale of salary deduction not less than the rate of deduction theretofore required from his salary, and further pro- vided that he shall waive and renounce any present or prospective benefit from any other retirement system or association supported wholly or in part by the city of New York. J. Withdrawals from the retirement association shall be by resigna- tion, by transfer, or by dismissal. 1. Should a contributor resign frorh the position by virtue of which he is a contributor under the provisions of this act, or should he, upon trans- ferring from such a position to another position in the city-service, fail to become a transferred-contributor as provided in subdivision I of this act, his membership in the said retirement association shall cease and he shall be paid forthwith the full amount of the accumulated deductions standing to the credit of his individual account in the annuity savings fund. 2. Should a contributor be dismissed from the position by virtue of which he is a contributor under the provisions of this act, his membership in the retirement association shall cease and there shall be paid him forth- with : (a) Out of the annuity savings fund the full amount of the accumulated deductions standing to the credit of his individual account; and (b) In addition thereto, out of pension reserve fund number two, an amount equal to the contributions made by him to the teachers' retire- ment fund of the board of education of the city of New York as it existed prior to the first day of August, nineteen hundred and seventeen. K. Retirement for service shall be as follows : 1. Any contributor may retire for service upon written application to the retirement board setting forth at what time subsequent to the execu- tion of said application he desires to be retired. Said application shall retire said contributor at the time so specified, provided (a) He has reached or passed the age of sixty-five years or (b) If a present-teacher, he has a total-service of thirty-five years or more; or (c) If a new-entrant, he has a total-service of thirty-five years or more, at least twenty of which shall have been city-service. 2. Each and every contributor who has attained or shall attain the age of seventy years shall be retired by the retirement board for service forth- with or at the end of the school term in vv^hich said age of seventy years is attained. Teachers' Pension Systems in the United States L. Retirement for disability shall be made and discontinued as follows : 1. Upon the application of the head of the department in which a contributor is employed, or upon the application of said contributor or of one acting in his behalf, the retirement board shall retire said con- tributor for disability, provided the medical board after a medical examina- tion of said contributor made at the place of residence of said con- tributor or at a place mutually agreed upon shall certify to the retire- ment board that said contributor is physically or mentally incapacitated for the performance of duty and that said contributor ought to be retired and provided further that said contributor has had ten or more years of city-service. 2. Once each year, the retirement board may require any disability pen- sioner while still under the age of sixty-five years to undergo medical ex- amination by a physician or physicians designated by the medical board, said examination to be made at the place of residence of said beneficiary or other place mutually agreed upon. Should the medical board, as the result of such examination, report and certify to the retirement board that such disability beneficiary is no longer physically or mentally in- capacitated for the performance of duty, the head of the department in which said beneficiary was employed at the time of his retirement shall, upon notification by the retirement board of such report of the medical board, reappoint said beneficiary to such a position as was held by, and at such a rate of salary as was paid to, said beneficiary at the time of his retirement ; but after the expiration of ten years subsequent to the retirement of such beneficiary, his restoration to duty, notwithstanding the recommendation of the medical board, shall be optional with said head of the department. 3. Should any disability beneficiary while under the age of sixty-five years refuse to submit to at least one medical examination in any year by a physician or physicians designated by the medical board, his pension shall be discontinued until the withdrawal of such refusal and should such refusal continue for one year, all his rights in and to the pension constituted by this act shall be forfeited. 4. Upon application of any beneficiary under the age of sixty-five years drawing a pension or a retirement allowance under the pro- visions of this act, approved by the retirement board, said beneficiary may be restored to active service by the head of the department in which said beneficiary was employed at the time of his retirement. Upon the restoration of a beneficiary to active service his retirement allowance shall cease. M. A contributor, on retirement, shall receive a retirement allowance which shall consist of : 1. A pension calculated as follows : (a) For disability retirement twenty per centum of his average salary. (b) For service retirement, or for disability retirement after he becomes eligible for service retirement, twenty-five per centum of his average salary. (c) If the contributor retiring is a present-teacher, he shall receive, in addition to the pension prescribed in subdivisions (a) or (b) a pension computed at the rate of one-thirty-fifth of twenty-five per centum of his average salary for each year of prior-service as certified to said present- teacher in the certificate issued to him by the retirement board under the provisions of subdivision H of this act, but in no event shall the total pension exceed fifty per centum of his average salary. 2. An annuity, in addition to the pension, which shall be the actuarial equivalent of his accumulated deductions at the time of his retirement, provided that in no case shall such annuity be less for each one hundred 366 Appendices dollars of accumulated deductions of a present-teacher at the time of retirement than is shown in the following schedule: Annuity in case of Annuity in case of Age at retirement men teachers women teachers 48 $7-20 $6.52 49 7-34 6.64 50 7-49 6.77 51 7-65 ■ 6.90 52 7-82 7-04 53 8.00 7-19 54 8.19 7.35 55 8.39 7.52 56 8.61 7-70 57 8.84 7.89 58 909 8.10 59 9-35 8.31 60 9-63 8.54 61 9-93 8.79 62 10.25 9.05 63 10.60 9-33 64 10.96 9.63 65 11.36 9-95 66 11.78 10.30 67 12.24 10.67 68 T2.72 11.06 69 1325 11.48 70 13.81 11.94 N. Upon the death of a contributor before retirement there shall be paid to his estate or to such person as he shall have nominated by written designation duly executed and filed with the retirement board (a) his accumulated deductions; and in addition thereto (b) an amount equal to the salary earnable by him during the six months immediately preceding his death, provided that at the time of his death he had attained the age of sixty-five years or had a total service of thirty-five years and was eligible for service retirement; said amount to be paid out of the contin- gent reserve fund in the case of a new-entrant, and out of pension reserve fund number two in the case of a present-teacher. O. At the time of his retirement any contributor may elect to receive his benefits in a retirement allowance payable throughout life or he may on retirement elect to receive the actuarial equivalent at that time of his annuity, his pension, or his retirement allowance in a lesser annuity, or a lesser pension, or a lesser retirement allowance, payable throughout life, with the provision that : Option I. If he die before he has received in payments the present value of his annuity, his pension, or his retirement allowance, as it was at the time of his retirement, the balance shall be paid to his legal repre- sentatives or to such person, having an insurable interest in his life, as he shall nominate by written designation duly acknowledged and filed with the retirement board at the time of his retirement. Option II. Upon his death, his annuity, his pension, or his retirement allowance, shall be continued throughout the life of and paid to such person, having an insurable interest in his life, as he shall nominate by written designation duly acknowledged and filed with the retirement board at the time of his retirement. Option III. Upon his death, one-half of his annuity, his pension, or Z^7 Teachers' Pension Systems in the United States his retirement allowance, shall be continued throughout the life of and paid to such person, having an insurable interest in his life, as he shall nominate by written designation duly acknowledged and filed with the retiremenit board at the time of his retirement. Option IV. Som.e other benefit or benefits shall be paid either to the contributor or to such other person or persons as he shall nominate, provided such other benefit or benefits together with such lesser annuity, or lesser pension, or lesser retirement allowance shall be certified by the actuary of the retirement board to be of equivalent actuarial value and shall be approved by the retirement board. P. The pensions of all persons who are now receiving a pension paid out of the teachers' retirement fund of the board of education of the city of New York shall not be increased or decreased, and all such pensions now due shall be paid forthwith and those hereafter becoming due shall be paid as they become due out of pension reserve fund num- ber two. Q. A pension, an annuity or a retirement allowance, granted under the provisions of this act, shall be paid in equal monthly instalments, and shall not be decreased, increased, revoked or repealed except as otherwise provided in subdivision L of this act. R. Subject to such terms and conditions and to such rules and regulations as the retirement board may adopt, any contributor from time to time may: (a) Increase or decrease his rate of contribution to the annuity savings fund, but in no event shall the contribution of a present-teacher be less than the minimum contribution, nor shall the contribution of a new- entrant be at a rate less than the per centum rate provided for said new- entrant in subdivision F-five-b of this act; (b) If a present-teacher, withdraw from his individual account in the annuity savings fund the amount in excess of his minimum accumulation; (c) Withdraw, after having become eligible for service retirement, such part of his accumulated deductions as shall be in excess of the amount necessary to procure for him an annuity which if added to his pros- pective pension, will yield a retirement allowance of fifty per centum of his average salary; (d) Borrow from the retirement board, if a present-teacher and if the application is made prior to July first, nineteen hundred and twenty, on a policy of life insurance, a sum of money not exceeding the loan value of said policy as set forth in the body thereof, and at a rate of interest not exceeding five per centum per annum, provided that : 1. The applicant has a policy of life insurance in which he is designated as the assured and said policy is issued by a life insurance company permitted to transact business in the state of New York, and said policy is free from any liens or claims and is in full force and effect at the time of the making of the loan. 2. The applicant on securing the loan shall deposit said life insurance policy with the retirement board accompanied with an assignment of said policy to the retirement board ; said assignment shall be executed by the applicant and by all adult beneficiaries named in said policy. Should any of the beneficiaries named in said policy be infants, said retirement board shall not grant the loan until after it has made a careful investi- gation into the merits thereof and an order has been made and entered by the supreme court directing such loan after due notice to such insur- ance company. If, thereafter, the retirement board shall grant the loan, its action shall be binding on said infant beneficiaries with the same force and effect as if they were adult beneficiaries and had executed the assign- ment required herein. 368 Appendices 3. After said policy has been assigned to and deposited with the retirement board for the purposes herein stated, said policy shall not be assigned, transferred, or disposed of, or changed in any of its terms with- out the written consent of the retirement board. 4. The retirement board shall notify the life insurance company carry- ing said policy of the assignment thereof and said assignment shall be binding on said company. (e) If a present-teacher, retire upon written application to the retire- ment board after he has completed thirty years of service upon retirement allowance consisting of (i) An annuity which shall be the actuarial equivalent of his accumu- lated deductions ; and, in addition thereto, (2) Such pension as shall be certified by the actuary of the retire- ment board to have an actuarial value equivalent to the reserve which would be in the contingent reserve fund had the city contributed on account of such present-teacher from the date of his entrance into service, in such manner as is provided for the city's contributions on behalf of new-entrants in subdivision F, paragraph two, of this act, the amount determined by the actuary of the retirement board to be necessary to provide for the death benefit and for the pension reserve required at the time of retirement to pay the pension allowable by the city as provided in this act. In determining the amount of the reserve the actuary of the retirement board shall base his calculations on the tables then in use as the basis for determining the rates of contribution required of the city on account of new-entrants. 5. Teachers, hereafter appointed in the schools or classes maintained in the institutions controlled by the department of public charities or by the department of correction, shall be appointed by the commissioner of the appropriate department upon the nomination of the city superintendent of schools and shall be licensed by the board of examiners of the depart- ment of education. The department of education through such repre- sentatives as it may designate shall maintain an effective visitation and inspection of all sucli schools and classes. T. There shall be a medical board of three physicians constituted as follows : (a) One physician appointed to serve to August first, nineteen hun- dred and twenty-two, who shall be appointed by the members of the retirement board who are contributors. (b) One physician appointed to serve to August first, nineteen hundred and twenty-one, who shall be appointed by the members of the retirement board who are not contributors. (c) One physician appointed to serve to August first, nineteen hun- dred and twenty, who shall be appointed by the retirement board. Said physician shall be an expert in women's diseases and in diseases of the nervous system. Their successors shall be appointed to serve for a term of three years ; vacancies shall be filled for the unexpired term. All appointments for a full term or for an unexpired term shall be made in the manner provided in this section for the original appointment. U. The retirement system created by this act shall be subject to the supervision of the department of insurance in accordance with the provisions of sections thirty-nine and forty-five of the insurance law, so far as the same are applicable thereto and are not inconsistent with the provisions of this act. V. If, after August first, nineteen hundred and seventeen, any present- teacher shall recover a judgment for arrears of salary covering in whole or in part any period prior to said date, the comptroller of the city 369 Teachers' Pension Systems in the United States of New York before paying said judgment shall deduct therefrom the per centum of salary theretofore contributed by said teacher to the retirement fund of the board of education, as it existed prior to said date, and said deduction shall be paid into pension reserve fund number two. W. The right of a person to a pension, an annuity, or a retirement allowance, to the return of contributions, the pension, annuity, or retire- ment allowance itself, any optional benefit, any other right accrued or accruing to any person under the provisions of this act, and the moneys in the various funds created under this act, are hereby exempt from any state or municipal tax, and exempt from levy and sale, garnishment, attachment, or any other process whatsoever, and shall be unassignable except as in this act specifically otherwise provided. The general care and management of the public school teachers' retire- ment fund created for the former city of New York by chapter two hundred and ninety-six of the laws of eighteen hundred and ninety-four, and of the public school teachers' retirement fund created for the former city of Brooklyn, by chapter six hundred and fifty-six of the laws of eighteen hundred and ninety-five, is hereby given to the board of educa- tion, and the said funds are hereby made parts of the retirement fund of the board of education of the city of New York created by this act. The board of education shall from time to time establish such rules and regulations for the administration of said fund as it may deem best, which rules and regulations shall preserve all rights inhering in the teachers of the city of New York and the city of Brooklyn as constituted prior to the passage of this act ; and said board shall make payments from said fund of annuities granted in pursuance of this act. The comptroller of the city of New York shall hold and invest all money belonging to said fund, and by direction of said board of education, shall pay out the same; and he shall report in detail to the board of education of the city of New York, annually, in the month of January, the condition of said fund and the items of receipts and disbursements on account of the same. The said retirement fund shall consist of the following, with the interest and income thereof: (i) All money, pay, compensation or salary, or any income thereof forfeited, deducted, reserved, or withheld for any cause from any member or members of the teaching or supervising staflf of the public day schools of the city of New York or of the normal college and training department of the normal college of the city of New York, or of schools or classes maintained in institutions controlled by the depart- ment of public charities or by the department of correction, in pursuance of rules established or to be established by the board of education, or by the board of trustees of the normal college of the city of New York, or by the commissioner of public charities, or by the commissioner of correction for schools or classes maintained by such commissioners re- spectively. The auditor of the board of education, the auditor of the board of trustees of the normal college, the commissioner of public charities, and the commissioner of correction shall certify monthly to the comptroller the amounts so forfeited, deducted, reserved or withheld during the preceding month. Said amounts shall be turned into the said retirement fund. (2) All moneys received from donations, legacies, gifts, bequests, or otherwise for or on account of such fund. (3) Five per centum annually of all excise moneys or license fees belonging to the city of New York, and derived or received by any commissioner of ex- cise or public officer from the granting of licenses or permission to sell strong or spirituous liquors, ale, wine, or beer in the city of New York, under the provisions of any law of this State authorizing the granting of such license or permission. (4) One per centum of the salaries of all members of the teaching and supervising staff of the public day Appendices schools of the city of New York, and of the normal college and training department of the normal college of the city of New York, and of schools or classes maintained in institutions controlled by the department of public charities or by the department of correction of the city of New York, except that the amount deducted from the salary of any teacher or principal of the public day schools of the city of New York or of schools or classes maintained in institutions controlled by the depart- ment of public charities or by the department of correction of the city of New York, in this manner, shall not exceed thirty dollars in any one year, and the amount deducted from the salary of any supervising official, in this manner, shall not exceed forty dollars in any one year. And the board of education, the board of trustees of the normal college, the commissioner of public charities, and the commissioner of correction shall, after the passage of this act, deduct on each and every payroll of the said teaching and supervising staff said one per centum from each and every amount earnable in the period covered by the said payroll, notwithstanding the minimum salaries provided for by section ten hundred and ninety-one of the charter shall be thereby reduced, and shall certify monthly to the comptroller, the amounts so deducted ; and said amounts shall be turned into the said retirement fund. All deductions made under the provisions of this clause from the salary of any person who may be dismissed from the service for cause, before said person shall have become eligible for retirement, under the provisions of this act, shall be refunded to said person upon such dismissal. (5) All such other methods of increment as may be duly and legally devised for the increase of said fund. The moneys standing to the credit of the retirement fund on the thirty-first day of December, nineteen hundred and four, after sub- tracting therefrom any amounts forfeited, deducted, reserved or with- held from salaries for absences prior to that date, which may, on excuse of absence, be refunded after that date, all excise moneys of nineteen hun- dred and four which may have been credited to said fund on or before that date, and all interest for nineteen hundred and four on said fund, which may have been credited to said fund on or before said date, shall be set apart by the comptroller as a permanent fund. The unexpended bal- ances of the income of the teachers' retirement fund for the year nineteen hundred and five, and for all subsequent years shall be added to the said permanent fund. The comptroller shall invest the said permanent fund, and the income thereof may be used for the payment of annuities, but if necessary, in order to carry out the provisions of this act, the board of education may use any portion of the permanent fund in excess of eight hundred thousand dollars in the same manner as the income thereof. The president of the board of education, the chairman of the committee on elementary schools of said board, the chairman of the committee on high schools of said board, the city superintendent of schools, and three members to be selected from the principals, assistants to principals and teachers of the public day schools shall constitute a board of retirement. The three last-named members shall be chosen as follows : On the sec- ond Thursday of May in each year the principals, assistants to principals and teachers in each district shall meet at the call of the district super- intendent, which call he shall issue at least one week before said meet- ing, and at a place within the district designated by him, to select by ballot one of their number as district representative to serve for one year. At the close of said meeting, the presiding officer shall transmit to the secretary of the board of education the name and address of the district representative so chosen. The district representatives shall meet at 4 o'clock in the afternoon on the third Thursday of May at the hall of the board of education and choose by ballot one of Teachers' Pension Systems in the United States their number to serve on the board of retirement for three years from the first day of the following June. At the first meeting of the district representatives after this lavir takes effect, they shall choose by ballot three of their number to serve on the board of retirement, and the three so chosen shall by lot fix and determine their terms of office as one, two and three years respectively. Should a vacancy occur among the members of the board of retirement so chosen, the district representatives shall meet and choose by ballot one of their number to serve on the board of retirement for the unexpired term. On the recommendation of the board of retirement, said board of education shall have power, by a two-thirds vote of all its members, to retire any member of the teaching or super- vising staff of the public day schools of the city of New York, or of schools or classes maintained in institutions controlled by the department of public charities or by the department of correction who is mentally or physically incapacitated for the performance of duty, and who has been engaged in the work of teaching or of school or college supervision, or of examination of teachers for licenses, or any two or more of these several kinds of work, for a period aggregating twenty years, fifteen of which shall have been in the public day schools in the city of New York, or in schools or classes maintained in institutions controlled by the depart- ment of public charities or by the department of correction. And the board of education may retire from active service any member of the said teaching or supervising staff who shall have attained the age of sixty- five years and shall have been engaged in the work of teaching or school supervision for a period aggregating thirty years. On the recommendation of the board of retirement, the board of education shall have power, by a two-thirds vote of all its members, to retire upon his or her own appli- cation any member of the teaching or supervising staff of the public day schools of the city of New York, or of schools or classes maintained in institutions controlled by the dapartment of public charities or by the department of correction who has been engaged in the work of teaching or of school or college supervision, or of examination of teachers for licenses, or any two or more of these several kinds of work, for a period aggregating thirty years, fifteen of which shall have been in any of the said institutions. The said board of education shall also have power, by a two-thirds vote of all its members, and after recommendation to that effect shall have been made by the board of trustees of the normal col- lege stating that the member of the supervising or teaching force is mentally or physically incapacitated for the performance of duty, to re- tire any member of the teaching or supervising force of the normal col- lege or of the training department of the normal college who shall have been engaged in said normal college or training department or elsewhere in the public school system of the city of New York for ten years and shall have been engaged in the work of teaching or of school or college supervision or of examination of teachers for licenses, or any two or more of said several kinds of work, during a period aggregating twenty years. The said board of education, upon the recommendation of the trustees of the normal colleg? may also, in its discretion retire any member of the teaching or supervising force upon his or her own application who shall have been engaged in the work of teaching or school or college supervision or examination of teachers for licenses, or any two or more such occupations, for a period aggregating thirty years. _ Upon such re- tirement, whether voluntary or otherwise, the person retired shall be en- titled to receive an annuity out of the teachers' retirement fund of not less than one-half of the annual salary paid to such person at the period of retirement, and in case of the president or of a professor to such an additional sum per annum as will increase such one-half of the salary 2>7^ Appendices previously paid if not an even multiple of one thousand dollars to an even multiple of one thousand dollars. Any person retired under the provisions of this act after thirty years of service, except as hereinbefore in this sec- tion provided in the case of the president or of a professor of the normal college, shall receive as an annuity one-half of the annual salary paid to said person at the date of said retirement, not to exceed, however, in the case of a teacher or principal, the sum of fifteen hundred dollars per annum, and in the case of a supervising official, two thousand dol- lars per annum. And in no case shall the annuity of any person already retired or hereafter to be retired after thirty years of service be less than six hundred dollars. Any person retired after twenty years of service, but with less than thirt}- years of service, shall receive an an- nuity which bears the same ratio to the annuity provided for on retire- ment after thirty years of service as the total number of years of service of said person bears to thirty years. The annuities provided for by this act shall be payable in monthly installments. All retirements made under the provisions of this act shall take effect either on the first day of February or on the first day of September. The number of persons re- tired in any one year shall be so limited that the entire amount of the annuities to be paid for that year shall not be in excess of the estimated amount of the retirement fund applicable to the payment of annuities for that year. The words "teaching and supervising staff of the public day schools of the city of New York" as used in this section, shall include the city superintendent of schools, the associate city superintendents, the district superintendents, the director and assistant director of the division of reference and research, the members of the board of examiners, direc- tors and assistant directors of special branches, the supervisor and as- sistant supervisor of lectures, all principals, vice-principals, assistants to principals, heads of departments, and all regular and special teachers of the public day schools of the city of New York. Nothing in this act shall be construed as prohibiting the reappointment to active service, on his or her own application, of any person who has been retired under the pro- visions of this act. Upon the reappointment of any such person the pay- ment of the annuity of said person shall be discontinued. Teachers here- after appointed in schools or classes maintained in the institutions con- trolled by the department of public charities or by the department of cor- rection, shall be appointed by the commissioner of the appropriate depart- ment upon the nomination of the city superintendent of schools and shall be licensed by the board of examiners of the department of education. The department of education through such representatives as it may desig- nate shall maintain an eflfective visitation and inspection of all such schools and classes. § 2. Section ten hundred and ninety-two-a, as amended by chapter one hundred and seven of the laws of nineteen hundred and five, section ten hundred and ninety-two-b, as amended by chapter five hundred and five of the laws of nineteen hundred and nine, and section ten hundred and ninety- two-c, as amended by chapter six hundred and thirteen of the laws of nineteen hundred and sixteen, are hereby repealed. § 3. This act shall take effect on August first, nineteen hundred and seventeen, except as to subdivisions B, C, D. E, paragraph 5 ; subdivision F, paragraph one, and the provision of subdivision F, paragraph 5, part (a), which provides for the election of a rate of salary deduction by any person entitled to make such election and the further provision of the same part which provides that if any person entitled to make such elec- tion fails so to do he shall be deemed to have elected a deduction from his salary at the rate of three per centum of his earnable salary; sub- divisions H, T, and U, and as to provisions of such subdivisions, para- 373 Teachers' Pension Systems in the United States graphs and parts of paragraphs this act shall take effect imme- diately. (c) Pennsylvania Lav/s of 1917, No. 343.— An Act.— Establishing a public school, employes' retirement system, and creating a retirement board for the administration thereof; establishing certain funds from contributions by the Commonwealth and contributing employes, defining the uses and purposes thereof and the manner of pay- ments therefrom, and providing for the guaranty by the Com- monwealth of certain of said funds; imposing powers and duties upon boards having the employment of public school employes; exempting annuities, allowances, returns, benefits, and rights from taxation and judicial process; and providing penalties. DEFINITIONS Section i. Be it enacted, etc., that the following words and phrases as used in this act, unless a different meaning is plainly required by the context, shall have the following meanings : (i) "Retirement System" shall mean the arrangement for the pay- ment of retirement allowances under the provisions of this act. (2) "Retirement Association" shall mean the employes' retirement asso- ciation provided for in section three of this act. (3) "Retirement Board" shall mean the employes' retirement board provided for in section four of this act. (4) "Superintendent of Public Instruction" shall mean the Superin- tendent of Public Instruction of the Commonwealth of Pennsylvania. (5) "Public School" shall mean any class, school, high school, normal school, training school, vocational school, truant school, parental school, and any or all classes or schools, within tlie State of Pennsylvania, con- ducted under the order and superintendence of the Department of Public Instruction of the Commonwealth of Pennsylvania and of a duly elected or appointed board of public education, board of school directors, or board of trustees, of the Commonwealth, or of any school district or normal school disrtict thereof, and shall include the officers of the State Depart- ment of Public Instruction and the State Board of Education. (6) "Employer" shall mean the Commonwealth, school district, normal school district, board, or other committee by which the employe is paid. (7) "Employe" shall mean any teacher, principal, supervisor, super- vising principal, county superintendent, district superintendent, assistant superintendent, any member of the staff of the State normal schools, or of the staff of the State Department of Public Instruction, or of the staff of the State Board of Education, or any clerk, stenographer, janitor, attendance officer, or other person engaged in any work concerning or relating to the public schools of this Commonwealth, or in connection therewith, or under contract or engagement to perform one or more of these functions : Provided, That no person shall be deemed an employe, within the meaning of this act, who is not regularly engaged in perform- ing one or more of these functions as a full-time occupation, outside of vacation periods. In all cases of doubt the retirement board shall deter- mine whether any person is an employe as defined in this act. (8) "Present Employe" shall mean any employe, as defined in para- graph seven of this section, employed in any capacity in connection with the public schools at the time this bill becomes a In.w, and any employe who was employed prior to such time and who shall become a contributor within three years from the date of expiration of such employment. (9) "New entrant" shall mean any employe, as defined in paragraph 374 Appendices seven of this section, appointed or elected, or contracting or otherwise legally engaging, to serve in any capacity in connection with the public schools after this bill becomes a law. (lo) "Contributor" shall mean any person who has an account in the annuity savings fund. (li) "Beneficiary" shall mean any person in receipt of a retirement allowance or other benefit as provided in this act. (12) "School Service" shall mean any service as an employe as defined by paragraph seven of this section. (13) "Prior Service" shall mean all school service completed not later than the thirtieth day of June, nineteen hundred and nineteen. (14) "School Year" shall mean the official school year of the school district in which an employe is employed. (15) "Disability Retirement" shall mean retirement as defined in section twelve of this act. (16) "Superannuation Retirement" shall mean retirement as defined in section thirteen of this act. (17) "Final Salary" shall mean the average annual salary, not exceed- ing $2,000, earnable by a contributor as an employe for the ten years of service immediately preceding retirement. (18) "Accumulated Deductions" shall mean the total of the amounts deducted from the salary of a contributor and credited to his or her in- dividual account in the annuity savings fund, together with the regular interest thereon. (19) "Regular Interest" shall mean interest at four per cent, per an- num, compounded annually. (20) "State Annuity" shall mean payments for life, derived from con- tributions made by the Commonwealth of Pennsylvania as provided in this act. (21) "Employe's Annuity" shall mean payments for life, derived from contributions made by a contributor as provided in this act. (22) "Retirement Allowance" shall mean the State annuity plus the em- ploye's annuity. {23) "State Annuity Reserve" shall mean the present value, computed on the basis of such mortality tables as shall be adopted by the retire- ment board, with regular interest, of the future payments to be made on account of any State annuity granted, and based on contributions made by the Commonwealth of Pennsylvania. (24) "Employe's Annuity Reserve shall mean the present value, com- puted on the basis of such mortality tables as shall bs adopted by the retirement board, with regular interest, of the future payments to be made on account of any employe's annuity granted, and based on the accumulated deductions of the contributor. (25) "Expense Fund" shall mean the fund provided for in paragraph number two in section eight of this act. (26) "Contingent Reserve Fund" shall mean the fund provided for in paragraph number three in section eight of this act. (27) "State Annuity Reserve Fund" shall mean the fund provided for in paragraph number four in section eight of this act. (28) "State Annuity Reserve Fund Number Two" shall mean the fund provided for in paragraph number five in section eight of this act. (29) "Employes' Annuity Savings Fund" shall mean the fund pro- vided for in paragraph number six in section eight of this act. (30) "Employes' Annuity Reserve Fund" shall mean the fund pro- vided for in paragraph number seven in section eight of this act. 375 Teachers' Pension Systems in the United States RETIREMENT SYSTEM Section 2. The retirement system shall be established on the first day of July, nineteen hundred and nineteen. employes' retirement association Section 3. An employes' retirement association is hereby organized, the membership of which shall consist of the following: 1. All present employes, except those specifically excluded by para- graph three of this section, who by written application to the Superin- tendent of Public Instruction shall elect, before the first day of July, nineteen hundred and nineteen, to be covered by the retirement system. 2. All new entrants, except those specifically excluded by paragraph three of this section. 3. Present employes who are members, and new entrants who become members, of a retirement system, maintained under the laws of the Com- monwealth from appropriations or contributions made wholly or in part by any employer, and existing at the time this bill becomes a law, shall be excluded from membership in this retirement association. But should two-thirds of all the members participating in any such retirement system apply for membership in the retirement association, by a petition duly signed and verified, approved by their employer, and filed with the re- tirement board, all the persons included in the membership of such retire- ment system shall become members of the retirement association at such time, within three months after the filing of such petition, as the retire- ment board shall designate. Thereupon the retirement system of which they were members at the time they were included in the retirement asso- ciation provided by this act shall be dissolved and discontinued as follows : The payment of retirement allowances or other benefits which were in eflFect at the time of such discontinuance shall become an obligation of the employer, shall be continued as formerly provided by such retirement system, and shall be paid out of such moneys, excepting further contribu- tions of members, as were formerly available for such payment, and the employer shall appropriate for such purpose such other moneys as shall be required. All present assets of such retirement system at the time of its dis- continuance shall be transferred to the employer, to be held and invested as a trust fund and disbursed only in payment to the before-mentioned retired members, except that if the aniount of such present assets exceed the present value of the future retirement allowances or other benefits of such retired members, computed on the basis of such tables as the retirement board shall have adopted for similar classes of annuitants, and of regular interest, the amount of the excess shall thereupon be trans- ferred to State annuity reserve fund number two. Upon the retirement of any contributor of the retirement association established by this act, who has not received back any contributions which he or she made to such discontinued retirement system, there shall be paid from State an- nuity reserve fund number two into employes' annuity reserve fund the amount of such contributions, and he or she shall receive therefor such annuity or other benefit purchasable therewith as he or she may elect, in addition to the other benefits provided by this act. the retirement board Section 4. A retirement board of seven members is hereby constituted, which shall consist of the following: (a) The Superintendent of Public Instruction. (b) The Treasurer of the Commonwealth of Pennsylvania. 376 Appendices (c) One member who shall be appointed by the Governor of the Com- monwealth of Pennsylvania, who shall serve until his successor is ap- pointed. (d) Three members of the retirement association, elected from among their number in a manner to be approved by the Superintendent of Public Instruction, the State Treasurer, and the member of the retirement board appointed by the Governor, — one to serve for one year, one for two years, and one for three years; and whose successors shall be elected, for a term of three years, from among the members of the retirement association, in a manner to be approved by the retirement board. (e) One member, not an employe nor officer or employe of the State, who shall be elected annually by the board, to serve for a term of one year. A vacancy occurring during a term shall be filled for the unexpired term by the appointment of a successor in the same manner as his or her predecessor. Until the organization of the retirement association, and the election of three representatives therefrom, the Superintendent of Public Instruction, the State Treasurer, and the member appointed by the Governor, are empowered to perform the duties of the retirement board. 2. The members of the retirement board shall serve without compensa- tion, but shall be reimbursed from the expense fund for any necessary expenditures, and no contributor shall suffer loss of salary or wages through serving on the retirement board. 3. The retirement board shall elect, from its membership, a chairman, and shall appoint a secretary, an actuary, and such medical, clerical, and other employes as may be necessary. 4. The compensation of all persons employed by the retirement board shall be fixed by said retirement board. 5. Subject to the limitations of this act and of law, the retirement board shall, from time to time, establish rules and regulations for the administration of the funds created by this act and for the transaction of its business. 6. The retirement board shall keep, in convenient form, such data as shall be necessary for actuarial valuation of the various funds created by this act. 7. In the years nineteen hundred and twenty-one and nineteen hundred and twenty-four, and in every fifth year thereafter, the actuary of the retirement board shall make an actuarial investigation into the mortality and service experience of the contributors and beneficiaries- as defined in this act, and shall make a valuation of the various funds created by this act ; and, on the basis of such investigation and valuation, the retire- ment board shall — (a) Adopt for the retirement system one or more mortality tables, and such other tables as shall be deemed necessary; (b) Certify the rates of deduction from salary necessary to pay the annuities authorized under the provisions of this act; and (c) Certify the rates of contribution, expressed as a percentage of salary of new entrants at various ages, which shall be made by the Commonwealth to the contingent reserve fund. 8. Immediately after the passage of this act, the actuary of the retire- ment board shall make such investigation of the mortality service and salary experience of the employes of the public schools as he shall recom- mend and the retirement board shall authorize, for the purpose of de- termining upon the proper tables to be prepared and submitted to the retirement board for adoption. On the basis of such investigation and recommendation the retirement board shall adopt such tables and certify 377 Teachers' Pension Systems in the United States such rates as are required in subsections a, b, and c of paragraph seven, immediately preceding. On the basis of such tables the actuary of the retirement board shall, immediately after the first day of July, nineteen hundred and ninteen, make a valuation of the various funds created by this act. 9. The retirement board shall publish annually a report show^nig the condition of the various funds created by this act, and setting forth such other facts, recommendations, and data as may be of use in the advance- ment of knowledge concerning employes' pensions and annuities, and said retirement board shall submit said report to the Governor of the Commonw^ealth of Pennsylvania ; and shall file copies thereof in the offices of the State Department of Public Instruction, of the State In- surance Department, and of each employer, for use of the employes and the public. ID. Each member of the retirement board shall take an oath of office that he or she w^ill, so far as it devolves upon him, diligently and hon- estly administer the affairs of said retirement board, and that he or she will not knowingly violate or wilfully permit to be violated any of the provisions of law applicable to this act. Such oath shall be subscribed by the member making it, and certified by the officer before whom it is taken, and shall be immediately filed in the office of the Secretary of State. 11. The retirement board shall keep a record of all of its proceedings, which shall be open to inspection by the public. 12. The retirement board shall perform such other functions as are required for the execution of the provisions of this act. CORPORATE POWERS Section 5. For the purposes of this act the retirement board shall pos- sess the powers and privileges of a corporation. The Attorney General of the Commonwealth of Pennsylvania shall be the legal adviser of said retirement board. MANAGEMENT OF THE FUNDS Section 6. The funds created by this act shall be managed as follows: 1. The members of the retirement board shall be the trustees of the several funds created by this act, and shall have exclusive control and management of the said funds and full power to invest the same; subject, however, to all the terms, conditions, limitations and restrictions im- posed by this act upon the making of investments; and subject, also, to the terms, conditions, limitations, and restrictions imposed by law upon savings banks, in the making and disposing of their investments ; and, subject to like terms, conditions, limitations, and restrictions, said trustees shall have full power to hold, purchase, sell, assign, transfer, or dispose of any of the securities and investments in which any of the funds created by this act shall have been invested, as well as of the proceeds of said investments and of any moneys belonging to said funds. 2. The retirement board shall annually allow regular interest on the mean amount for the preceding year in each of the funds created in accordance with the provisions of this act, with the exception of the expense fund. The amount so allowed shall be due and payable to such funds, and shall be annually credited thereto by the retirement board. 3. The treasurer of this Commonwealth shall be the custodian of the several funds created by this act. 4. All payments from the funds created by this act shall be made by the State Treasurer only, upon warrants signed by the chairman of the retirement board and countersigned by the secretary of the retirement 378 Appendices board; and no warrant shall be drawn except by order of the retirement board, duly entered in the record of its proceedings. 5. For the purpose of meeting disbursements for annuities and other payments in excess of the receipts, there may be kept as available fund, not exceeding ten per centum of the total amount in the several funds created by this act, on deposit in any bank in this Commonwealth organ- ized under the laws thereof or under the laws of the United States, or with any trust company incorporated by any law of this Common- wealth, provided said bank or trust company shall furnish adequate security for said funds; and provided that the sum so deposited in any one bank or trust company shall not exceed twenty-five per centum of the paid-up capital and surplus of said bank or trust company. 6. Except as herein provided, no trustee or any person connected with the retirement board shall have any interest, direct or indirect, in the gains or profits of any investment made by the retirement board; nor, as such, directly or indirectl3^ receive any pay or emoluments for his or her services. And no trustee or person connected with said retirement board, directly or indirectly, for himself or herself, or as an agent or partner of others, shall borrow any of its funds or deposits, or in any manner use the same, except to make such current and necessary pay- ments as are authorized by the board of trustees ; nor shall any trustee or person connected with said retirement board become an endorser or surety, or become in any manner an obligor, for moneys loaned by or borrowed of said retirement board. DUTIES OF THE EMPLOYER Section 7. Each employer shall, before employing any person to whom this act may apply, notify such person of his or her duties and obligations under this act, as a condition of his or her employment. 2. During September of each year each employer shall certify to the retirement board the name of all employees to whom this act applies. 3. Each employer shall, on the first day of each calendar month, notify the retirement board of the employment of new employes, removals, withdrawals, and changes in salary of employes, that shall have occurred during the month preceding. 4. Under the direction of the retirement board, each employer shall furnish such other information as the board may require in the dis- charge of its duties. 5. Each employer shall cause to be deducted on each and every payroll of a contributor, for each and every payroll period subsequent to June thirtieth, nineteen hundred nineteen, such per centum of the total amount of salary earnable by the contributor in such payroll period as shall be certified to said employer by the retirement board as proper, in accordance with the provisions of this act. No deductions shall be made from that part of the salary earnable by any contributor which is at a rate in excess of two thousand dollars per annum. In determining the amount earnable by a contributor in a payroll period, the retirement board may consider the rate of salary payable to such contributor on the first day of each regular payroll period as continuing throughout such payroll period, and it may omit salary deductions for any period less than a full payroll period in cases where the employe was not a contributor on the first day of the regular payroll period ; and, to facilitate the making of the deductions, it may modify the deductions required of any contributor by such amount as shall not exceed one-tenth of one per centum of the salary upon the basis of which the deduction is to be made. The deductions provided herein shall be made, notwithstanding that minimum salaries provided for by the 379 Teachers' Pension Systems in tpie United States laws, ordinances, resolutions, or other acts of the Commonwealth, or of any other employer, shall be reduced thereby. Each employer shall certify to the treasurer of said employer, on each and every payroll, a statement as voucher for the amounts so deducted, and shall send a duplicate of such statement to the secretary of the retirement board. 6. The treasurer of each employer, on receipt from the employer of the voucher for deductions from the salaries of employes, provided in para- graph five of this section, shall transmit monthly, or at such times as the retirement board shall designate, the amounts specified in such voucher to the secretary of the retirement board. The secretary of the retirement board, after making a record of all such receipts, shall pay them to the treasurer of the Commonwealth, for use according to the provisions of this act. 7. Each employer shall keep such records as the retirement board may require. FUNDS Section 8. The funds hereby created are, — the expense fund, the con- tingent reserve fund, State annuity reserve fund, State annuity reserve fund number two, the employes' annuity savings fund, and the employes' annuity reserve fund. 2. The expense fund shall consist of such amounts as shall be paid by the Commonwealth, on the basis of estimates submitted by the retire- ment board, to defray the expenses of the administration of this act, ex- clusive of the payment of retirement allowances and of the other benefits provided for in this act. 3. In the month of July, 1920, for a period covering the twelve months next preceding, and semiannually thereafter, covering the six months next preceding, the Commonwealth of Pennsylvania shall pay into a fund to be known as the contingent reserve fund, on account of each new entrant who was a contributor for one or more months of such respective periods, such amount as shall be certified by the retirement board as necessary to provide by such method of payment, during the prospective active service of such new entrant, the State annuity reserve required at the time of re- tirement for the disability or superannuation State annuity allowable by the said Commonwealth, under the provisions of this act. The amount so certified by the retirement board shall be computed to bear a ratio to the salary earnable by such new entrant during the period for which the amount is certified, which shall remain constant during his or her entire period of prospective active service, and shall be based on such mortality and other tables as shall be adopted by the retirement board, and on regular interest. 4. Upon the retirement of a new entrant an amount equal to his or her State annuity reserve shall be transferred from the contingent reserve fund into a fund to be known as State annuity reserve fund. His or her State annuity shall be paid from said State annuity reserve fund. Should said new entrant be subsequently restored to active service, his or her State annuity reserve shall thereupon be transferred from State annuity reserve fund to the contingent reserve fund. Should the State annuity of any such new entrant be otherwise reduced or discontinued, in accordance with the provisions of this act, his or her State annuity reserve, or such proportionate part of his or her State annuity reserve as corresponds to the amount of the reduction in his or her State annuity, shall be trans- ferred from State annuity reserve fund to the contingent reserve fund. 5. Beginning with the month of July, nineteen hundred nineteen, and continuing until the accumulated reserve equals the present value, as computed by the actuary of the retirement board and approved by the 380 Appendices retirement board, of all State annuity payments thereafter payable by the Commonwealth on account of present employes, then retired or to be retired on State annuities as provided in this act, the said Commonwealth shall pay semi-annually into a fund, to be known as State annuity reserve fund number two, an amount equal to two and eight-tenths (28) per centum of the total compensation paid to all contributors for service during the preceding school year, and in every case an amount at least three per centum greater than the second preceding semi-annual payment : Provided, That in every case the amount shall be sufficient, when combined with that in the fund, to provide the pensions payable by the Common- wealth during the half-year then current to present employes, then retired or to be retired as provided in this act. Upon the retirement of a present employe his or her State annuity shall be paid from State annuity reserve fund number two. 6. The employes' annuity savings fund shall consist of the accumulated deductions from the salaries of contributors, made under such rules and regulations as the retirement board shall prescribe, as follows : From the salary of each employe who is a contributor there shall be deducted such per centum of his or her earnable salary, not exceeding two thousand dollars per annum, as shall be computed to be sufficient, with regular interest, to procure for him or her, on superannuation retirement at age sixty-two, an employe's annuity equal to one one-hundred-sixtieth (1-160) of his or her final salary for each year of service after the thirtieth day of June, nineteen hundred nineteen, except that, if the deduction so computed shall exceed five per centum of his or her earnable salary, and the employe shall so elect, there shall be deducted five per centum of his or her earnable salary : And further provided, That a beneficiary restored to school service shall not be required to contribute at a per centum rate of his or her earnable salary which is greater than the per centum thereof which he or she was required to contribute prior to his or her retirement. The rate per centum of said deduction from salary shall be based on such mortality and other tables as the retirement board shall adopt, together with regular interest, and shall be computed to remain constant during the prospective school service of the contributor. 7. Upon the retirement of a contributor his or her accumulated deduc- tions shall be transferred from the employes' annuity savings fund to a fund to be known as the employes' annuity reserve fund. His or her em- ployes' annuity shall be paid out of said employes' annuity reserve fund. Should said contributor be subsequently restored to active service, his or her employes' annuity reserve shall thereupon be transferred from the em- ployes' reserve fund to the employes' annuity savings fund. 8. No contributor shall be required to continue to contribute to the employes' annuity savings fund after he or she shall have become eligible for superannuation retirement; all contributions made thereafetr to said fund shall be voluntary. Section 9. The Commonwealth of Pennsylvania shall be reimbursed to the extent of one-half of the amount paid Idv the Commonwealth into the contingent reserve fund and the State annuity reserve fund number two on account of employes of each other employer, by payments into its treasury made directly by such employer, or indirectly from moneys other- wise belonging to such employer. To facilitate the payment of amounts due from the treasurer of any employer to the treasurer of the Common- wealth, on account of the retirement system, and to permit the exchange of credits between the treasurer of the Commonwealth and the treasurer of any employer, the State Superintendent of Public Instruction and the State Treasurer are hereby authorized and empowered to cause to be deducted, and paid into or retained in the State Treasury, from the 381 Teachers' Pension Systems in the United States amount of any moneys due to any employer on account of any appropria- tion for schools or other purposes, the amount due to the State Treasury from such employer, in accordance with the provisions of this act. Cor- responding amounts, which would be otherwise transferred to the treasury of the Commonwealth from the treasurer of such employer, may be cred- ited to the accounts of the employer to which the moneys withheld by the Commonwealth were payable. STATE GUARANTY Section lo. Regular interest charges payable, the creation and main- tenance of reserves in the contingent reserve fund, and the maintenance of employes' annuity reserves and State annuity reserves as provided for in this act, and the payment of all retirement allowances and other bene- fits granted by the retirement board under the provisions of this act, are hereby made obligations of the Commonwealth of Pennsylvania. All income, interest, and dividends derived from deposits and investments authorized by this act shall be used for the payment of the said obliga- tions of the Commonwealth. The retirement board shall prepare, and submit to the Legislature, on or before the thirty-first day of January in each odd-numbered year, an itemized estimate of the amounts neces- sary to be appropriated by the Commonwealth to the various funds to complete the payment of the said obligations of said Commonwealth accru- ing during the biennium beginning July first of the same year ; and it shall be the duty of said Legislature to make an appropriation sufficient to provide for such obligations of the Commonwealth ; and the amounts so appropriated shall be included in the general appropriation bill, and shall be paid by the Treasurer of the Commonwealth into the various funds created by this act. For the biennium beginning July first, nineteen hun- dred seventeen, there is hereby appropriated to the expense fund created by section eight, paragraph two of this act, such sum, not to exceed twenty thousand dollars, as shall be certified to the Treasurer of the Commonwealth by the retirement board as necessary to meet the ex- penses of establishing the retirement system constituted by the provisions of this act. For said biennium there is hereby appropriated, and the Treasurer of the Commonwealth of Pennsylvania is hereby authorized and directed to pay into State annuity reserve fund number two, the amounts which shall become due in such period from the Commonwealth of Pennsylvania to such fund under the provisions of section eight, para- graph five of this act. SERVICE ALLOWANCE Section ii. In computing the length of service of a contributor for retirement purposes, under the provisions of this act, full credit shall be given to each contributor by the retirement board for each school year of service as an employee, as defined in section one, paragraph seven, of the act. Under such rules and regulations as the retirement board shall adopt, each employe shall file with the retirement board a detailed statement of all such service rendered by him or her. As soon as prac- ticable thereafter the retirement board shall verify such statement as to prior service, and shall issue to each employee a certificate certifying to the aggregate length of his or her prior service. Such certificate shall be final and conclusive as to his or her prior service, unless there- after modified: (a) by the retirement board, upon application by employe; or (b) by the State Superintendent of Public Instruction, upon applica- tion by the employee or by the retirement board; provided such appli- cation for modification be made to said State Superintendent of Public 38^ Appendices Instruction within one year after the issuance of a certificate or a modified certificate by the retirement board. A certificate for prior service issue to a present employe shall certify the total number of completed years of prior service allowance for said present employe to and including the thirtieth day of June, nineteen hundred nineteen. The time during which an employe is abs€nt without pay shall not be counted in computing the prior service, the total service or the average salary of a contributor, unless allowed by the employer by whom said con- tributor was employed at the time said leave of absence was granted, and, further, unless said allowance is approved by the retirement board. WITHDRAWAL Section 12. Should a contributor, by resignation or dismissal, or in any other way than by death or retirement, separate from the school service, he or she shall be paid on demand : (a) the full amount of the accumulated deductions standing to the credit of his or her individual account in the annuity savings fund, or, in lieu thereof, should he or she so elect, (b) an annuity or a deferred annuity, which shall be the actuarial equivalent of said accumulated deductions. His or her membership in the retirement association shall thereupon cease. 2. Should an employe so separated from the school service, return within three years, and restore to the annuity savings fund his or her accumulated deductions, as they were at the time of his or her separation, the annuity rights forfeited by him or her at that time shall be restored. 3. Should a contributor die before retirement, his or her accumulated deductions shall be paid to his or her estate, or to such person as he or she shall have nominated by written designation duly executed and filed with the retirement board. DISABILITY RETIREMENT Section 13. Retirement upon disability shall be made and discontinued as follows : — 1. Upon the application of a contributor who is an employe, or of one acting in his or her behalf, or upon the application of the employer of a contributor, the retirement board shall retire said contributor on a disability allowance if he or she is under the age of sixty-two years, and on a superannuation allowance if he or she has attained or passed such age ; provided the physician or physicians designated by said board, after a medical examination of said contributor made at the place of residence of said contributor, or at a place mutually agreed upon, shall certify to the retirement board that said contributor is physically or mentally incapacitated for the performance of duty, and that said con- tributor ought to be retired; and provided further, that said contributor has had ten or more school years of school service. 2. Once each year the retirement board may require any disability annuitant, while still under the age of sixty-two years, to undergo medical examination by a physician or physicians designated by the retirement board, said examination to be made at the place of residence of said beneficiary, or other place mutually agreed upon. Should such physician or physicians thereupon report and certify to the retirement board that such disability beneficiary is no longer physically or mentlaly incapacitated, for the performance of duty, or that such disability beneficiary is able to engage in a gainful occupation, and should the retirement board concur in such report, then the amount of the State annuity shall be dis- continued, or reduced to an amount that shall be not in excess of the amount by which the amount of the last year's salary of the beneficiary, 383 Teachers' Pension Systems in the United States as an employe, exceeds the present earning capacity of the contributor. 3. Should any disability annuitant, while under the age of sixty-two years, refuse to submit to at least one medical examination in any year by a physician or physicians designated by the retirement board, his or her State annuity shall be discontinued until the withdrawal of such refusal, and, should such refusal continue for one year, all his or her rights in and to the State annuity constituted by this act shall be forfeited. 4. Upon application of any beneficiary under the age of sixty-two years, drawing a retirement allowance under the provisions of this act, said beneficiary may be restored to active service by the employer by whom he or she was employed at the time of his or her retirement. Upon the restoration of a beneficiary to active service, his or her retirement allow- ance shall cease. ALLOV^ANCE ON DISABILITY RETIREMENT 5. On retirement for disability, a contributor who is an employe shall receive a retirement allowance which shall consist of — (a) An employe's annuity, which shall be the actuarial equivalent of his or her accumulated deductions; and (b) A State annuity which, together with the employe's annuity, shall be sufficient to produce a retirement allowance of one-ninetieth of his or her final salary multiplied by the number of his or her years of service; but, in any case not less than thirty per centum of said final salary, ex- cept that in case thirty per centum of said final salary shall exceed eight- ninths of the rate of retirement allowance to which the employe might have been entitled had retirement been deferred until age sixty-two, then the State annuity granted shall be such as to make the rate of the total retirement allowance equal to eight-ninths of the rate of allowance to which the employe might have been entitled had retirement been deferred until age sixty-two. SUPERANNUATION RETIREMENT Section 14. Retirement for superannuation shall be as follows : 1. Any contributor who is an employe sixty-two years of age or older may retire for superannuation by filing with the retirement board a written statement, duly attested, setting forth at what time, subsequent to the execution of said application, he or she desires to be retired. Said application shall retire said contributor at the time so specified, or, in the discretion of the retirement board, at the end of the school term in which the time so specified occurs. 2. Each and every contributor who has attained or shall attain the age of seventy years shall be retired by the retirement board, for superannua- tion, forthwith, or at the end of the school term in which said age of seventy years is attained. ALLOWANCE ON SUPERANNUATION RETIREMENT 3. On retirement for superannuation, a contributor who is an employe shall receive a retirement allowance which shall consist of — (a) A teacher's annuity, which shall be the actuarial equivalent of his or her accumulated deductions ; and (b) A State annuity of one one-hundred-sixtieth (1-160) of his or her final salary for each year of service prior to the age of sixty-two years; and (c) In addition thereto, if a present employe, a further State annuity of one one-hundred-sixtieth (1-160) of his or her final salary for each year of prior service, as certified to said present employe in the certificate 384 Appendices issued to him or her by thei retirement board under the provisions of section ten of this act; but in no event shall the total State annuity exceed fifty per centum of his or her final salary. Section 15. At the time of his or her retirement any contributor may elect to receive his or her benefits in a retirement allowance, payable throughout life ; or he or she may, on retirement, elect to receive the actuarial equivalent at that time of his employe's annuity, his or her State annuity, or his retirement allowance, in a lesser employe's annuity, or a lesser State annuity, or a lesser retirement allowance, payable throughout Hfe ; with the provisions that : — Option I. — If he or she die before he has received in payments the present value of his or her employe's annuity, his State annuity, or his or her retirement allowance as it was at the time of his retirement, the balance shall be paid to his or her legal representatives, or to such person having an insurable interest in his or her life, as he or she shall nominate by written designation, duly acknowledged, and filed with the retirement board, at the time of his or her retirement. Option 2. — Upon his or her death, his employe's annuity, his State an- nuity, or his or her retirement allowance shall be continued throughout the life of and paid to such person, having an insurable interest in his or her life, as he or she shall nominate by written designation, duly acknowl- edged, and filed with the retirement board, at the time of his or her retirement. Option 3. — Upon his or her death, one-half of his or her employe's annuity, his or her State annuity, or his or her retirement allowance shall be continued throughout the life of and paid to such person, having an insurable interest in his or her life, as he or she shall nominate by v.-ritten designation, duly acknowledged, and filed with the retirement board, at the time of his or her retirement. Option 4. — Some other benefit or benefits shall be paid to either the contributor or such other person or persons as he or she shall nominate; provided such other benefit or benefits shall, together with such lesser employe's annuity, or lesser State annuity, or lesser retirement allowance, be certified by the actuary of the retirement board to be of equivalent actuarial value, and shall be approved by the retirement board. MONTHLY PAYMENTS Section 16. An employe's annuity, a State annuity, or a retirement al- lowance, granted under the provisions of this act, shall be paid in equal monthly instalments, and shall not be increased, decreased, revoked, or repealed except as otherwise provided in this act. STATE SUPERVISION Section 17. The various funds created by this act shall be subject to the supervision of the State Department of Insurance. EXEMPTIONS FROM EXECUTION Section 18. The right of a person to an employe's annuity, a State an- nuity, or retirement allowance, to the return of contributions, any benefit or right accrued or accruing to any person under the provisions of this act, and the moneys in the various funds created under this act, are hereby exempt from any State or municipal tax, and exempt from levy and sale, garnishment, attachment, or any other process whatsoever, and 585 Teachers' Pension Systems in the United States shall be unassignable except as in this act specifically otherwise provided. Section 19. Any person who shall knowingly make any false statement, or shall falsify or permit to be falsified any record or records of this retirement system, in any attempt to defraud such system as a result of such act, shall be guilty of a misdemeanor, and shall be punishable for such under the laws of the Commonwealth of Pennsylvania. Should any such change in records or any mistake in records result in any employe or beneficiary receiving from the retirement system more or less than he or she would have been entitled to receive had the records been cor- rect, then, on the discovery of any such error, the retirement board, shall correct such error, and, so far as practicable, shall adjust the payments which may be made for and to such person in such a manner that the actuarial equivalent of the benefit to which he or she was correctly entitled shall be paid. Section 20. This act shall take effect immediately. Approved, the i8th day of July, A. D. 1917. (d) Connecticut Laws of 1917, Chapter 411 — An Act to Establish a Retirement System for Public School Teachers CONSTRUCTION Section i. The following words and phrases as used in this act, unless a different meaning is plainly required by the context, shall have the following meanings : (i) "Retirement system" shall mean the arrangement provided in this act for payment of annuities and pensions to teachers. (2) "Annuities" shall mean payments for life derived from contribu- tions from teachers. (3) "Pensions" shall mean payments for Hfe derived from contribu- tions from the State. (4) "Teacher" shall mean any teacher, principal, supervisor, or superin- tendent engaged in the service of the public schools. (5) "Public school" shall mean any day school conducted within this State under the order and superintendence of a duly elected school com- mittee or board of education, including the state board of education. (6) "Regular interest" shall mean interest, at the rate determined by the retirement board, and shall be substantially that which is actually earned by the funds of the retirement association, compounded annually on the last day of December of each year. (7) "Retirement board" shall mean the teachers' retirement board, as provided in section four of this act. (8) "Retirement association" shall mean the teachers' retirement asso- ciation, as provided in section three of this act. (9) "Expense fund" shall mean the fund provided for in paragraph numbered one in section five of this act. (10) "Annuity fund" shall mean the fund provided for in paragraph numbered two in section five of this act. (11) "Pension fund" shall mean the fund provided for in paragraph numbered three in section five of this act. (12) "School year" shall mean the twelve months from the first day of July of any year to the thirtieth day of June next succeeding. (13) "Assessments" shall mean the annual payments to the annuity fund by members of the association. (14) The masculine pronoun shall be held to refer to either sex or both sexes as the context may require. 386 Appendices ESTABLISHMENT OF A TEACHERS RETIREMENT SYSTEM Section 2. A teachers retirement system shall be established on the first day of July, nineteen hundred and seventeen. TEACHERS' RETIREMENT ASSOCIATION Section 3. A teachers' retirement association shall be organized among the teachers in the public schools as follows : (i) All teachers who enter the service of the public schools for the first time on or after July first, nineteen hundred and seventeen, shall become thereby members of the association. (2) All teachers, who shall have entered the service of the public schools before June thirtieth, nineteen hundred and seventeen, may at any time between July first, nineteen hundred and seventeen, and Sep- tember thirtieth, nineteen hundred and seventeen, upon application in writing to the secretary of the state board of education, become members of the retirement association. Any such teacher failing to do so may thereafter become a member of the retirement association by paying an amount equal to the total assessments, together with regular interest thereon, that he would have paid if he had joined the retirement associa- tion on September thirtieth, nineteen hundred and seventeen. STATE teachers' RETIREMENT BOARD Section 4. (i) The management of the retirement system is hereby vested in the teachers' retirement board, which shall consist of five members. (2) The insurance commissioner for the state, the bank commissioner for the state and the secretary of the state board of education shall be members of this board. (3) As soon as possible after the passage of this act and not later than July first, nineteen hundred and seventeen, the governor shall appoint as members of the retirement board two persons from the teacliing force of the state, one to serve until July first, nineteen hundred and nineteen, and one to serve until July first, nineteen hundred and twenty-one. (4) On or before July first, nineteen hundred and nineteen and bi- ennially thereafter the members of the retirement association shall elect from among their number in a manner to be prescribed by the retirement board one person to serve upon the retirement board for a term of four years. (5) If a vacancy should occur in the positions filled by members of the retirement association, the retirement board shall elect a member of the retirement association to fill the unexpired term. (6) The members of the retirement board shall serve without com- pensation, but they shall be reimbursed from the expense fund of the retirement association for any expenditures or loss of salary or wages which they may incur through serving on this board. All claims for reimbursement on this account shall be subject to the approval of the governor. (7) The retirement board shall have power to make by-laws and regu- lations not inconsistent with the provisions of this act ; and to employ a secretary, who shall give a surety bond in such amount as the board shall approve, and clerical and other assistance as may be necessary. The salaries shall be paid by the board with the approval of the governor. (8) The retirement board shall provide for the payment of retirement allowances and such other expenditures as are required by the provisions of this act. 387 Teachers' Pension Systems in the United States (9) The retirement board shall adopt for the retirement system one or more mortality tables, and may from time to time modify such tables or prescribe other tables to represent more accurately the expense of the retirement system. (10) The retirement board shall perform such other functions as are required for the execution of the provisions of this act. CREATION OF FUNDS Section 5. The funds of the retirement system shall consist of an ex- pense fund, an annuity fund, and a pension fund. (i) The expense fund shall consist of such amounts as shall be appro- priated by the general assembly from year to year on estimates submitted by the retirement board to defray the expenses of the administration of this act, exclusive of the payment of retirement allowances. (2) The annuity fund shall consist of assessments paid by members of the retirement association, and interest derived from investments of the annuity fund. Each member of the retirement association shall pay into the annuity fund in the manner provided in section nine, paragraph five, of this act five per cent of his annual salary : provided, however, that when the total sum of assessments on the salary of any member at the rate of five per cent would amount to more than one hundred dollars or less than twenty-five dollars for any school year such member shall in lieu of assessments at the regular rate be assessed one hundred dollars a year or twenty-five dollars a year, as the case may be, payable in equal instalments to be assessed for the number of months during which the schools of the community in which such member is employed are com- monly in session. Any member of the retirement association who shall for thirty years have paid regular assessments to the annuity fund as herein provided, shall be exempt from further assessments ; but such member may thereafter if he so elects, continue to pay his assessments to the fund. No member so electing shall pay further assessments after the total sum of assessments paid by him shall at any time have amounted with regular interest, to a sum sufficient to purchase an annuity of five hundred dollars at age sixty; and interest thereafter accumulating shall be paid to the member at the time of his retirement. (3) The pension fund shall consist of such amounts as shall be appro- priated by the general assembly from time to time on estimates submitted by the retirement board, for the purpose of paying the pensions provided for in this act. PAYMENT OF RETIREMENT ALLOWANCES Section 6. (i) Any member of the retirement association may retire from service in the public schools on attaining the age of sixty years or on the completion of thirty-five years of service in the public schools of the state. (2) Any member of the retirement association, if incapable of render- ing satisfactory service as a teacher, may, with the approval of the retire- ment board, be retired by the employing school board on attaining the age of fifty-five years or at any time thereafter. (3) Any member of the retirement association on attaining the age of seventy years, shall be retired from service in the public schools ; provided, however, that if the employing committee shall so request in writing, the retirement board may permit the employment of such member beyond the age of seventy years ; and provided further, that on the retirement of such member he shall receive from the state the pension to which he would have been entitled at age seventy. 388 Appendices (4) A member of the retirement association after his retirement under the provisions' of paragraphs one, two and three of this section, shall be entitled to receive from the annuity fund, as he shall elect at the time of his retirement, on the basis of tables adopted by the retirement board: (a) an annuity, payable in quarterly payments, to which the sum of his assess-- ments under section five, paragraph two, with regular interest thereon, shall entitle him; or (b) an annuity of less amount, as determined by the retirement board for the annuitants electing such option, payable in quarterly payments, with the provision that on the death of the annuitant, the annuity shall be continued to and throughout the life of such person as he shall nominate by written designation duly acknowledged and filed with the retirement board at the time of his retirement. (5) The retirement board may ofifer other benefits of equal value with the benefits herein provided and the contributor retiring may accept either the benefits herein provided or one of said alternative benefits in lieu thereof. (6) Any member of the retirement association receiving payments of an annuity as provided in paragraphs four and five of this section shall, if not rendered ineligible therefor by the provisions of section eleven of this act, receive with each quarterly payment of his annuity an equal amount to be paid from the pension fund as directed by the retirement board. (7) Any teacher who shall have become a member of the retirement association under the provisions of paragraph numbered two of section three, and who shall have served fifteen years or more in the public schools of the state, not less than five of which shall immediately precede retire- ment, shall on retiring as provided in paragraphs one, two and three of this section, be entitled to receive a retirement allowance as follows : (a) such annuity and pension as may be due under the provisions of para- graphs, four, five and six of this section; (b) an additional pension to such an amount that the sum of this additional pension and the pension provided in paragraph six of this section shall equal the pension to which he would have been entitled under the provisions of this act if he had paid thirty assessments on his average yearly wage for the five years preced- ing his retirement with interest thereon at three percent compounded annually; provided (i) that if his term of service in the state shall have been over thirty years the thirty assessments shall be reckoned as having begun at the time of his entering service and as drawing interest at three percent compounded annually until the time of retirement; and further provided, (2) that if the sum of such additional pension together with the annuity and pension provided for by paragraphs four, five and six of this section is less than three hundred dollars in any one year, an additional sum sufficient to make an annual retirement allowance of three hundred dollars shall be paid from the pension fund. (8) If at any time it is impossible or impracticable to consult the original records as to wages received by a member during any period, the retirement board shall determine the pension to be paid under paragraph (7) (b) of this section in accordance with the evidence they may be able to obtain. WITHDRAWAL AND REINSTATEMENT Section 7 (i) Any member of the retirement association withdrawing from service in the public schools before becoming eligible to retirement shall be entitled to receive from the annuity fund all amounts contributed as assessments, together with regular interest thereon, in the manner here- inafter provided. (2) If such withdrawal shall take place before ten annual assessments 389 Teachers' Pension Systems in the United States have been paid, such member shall receive the total amount to which he is entitled as determined by the retirement board under the provisions of this act in one sum or in four quarterly payments as the retirement board may elect. (3) If such withdrawal shall take place after ten annual assessments have been paid, the amount so refunded shall be in the form of such annuity for life based on the contributions of such member, together with regular interest thereon, as may be determined by the retirement board according to its annuity tables, or in four annual instalments, as such member may elect. (4) If a member of the association withdrawing and receiving pay- ments in accordance with paragraphs two and three of this section, shall die before the amount of such payments equals the amount of his con- tributions to the annuity fund with regular interest, the difference between the amount of such payments and the amount of his contributions with regular interest shall be paid to his legal representatives ; if, however, no demand shall be made on the retirement board within six months fol- lowing the death of such member for the payment of the sums due under this paragraph, such sums, not exceeding one hundred dollars in any case may then be paid to such person or persons as are apparently entitled to the estate, and such payment shall be a bar to recovery by any other person. (5) Any member of the retirement association who shall have with- drawn from service in the public schools shall, on being re-employed in the public schools, be reinstated in the retirement association in accord- ance with such plans for reinstatement as the retirement board shall adopt. (6) If a member of the retirement association shall die before retire- ment, the full amount of his contributions to the annunity fund with regular interest to the day of his death shall be paid to his legal repre- sentatives ; if, however, no demand shall be made on the retirement board within six months following the death of such member, for the payment of the sums due under this paragraph such sums not exceeding one hun- dred dollars in any case, may then be paid to such person or persons as are apparently entitled to the estate, and such payment shall be a bar to recovery by any other person. TAXATION, ATTACHMENTS AND ASSIGNMENTS Section 8. That portion of the salary or wages of a member deducted or to be deducted under this act. the right of a member to an annuity or pension, and all his rights in the funds of the retirement system, shall be exempt from taxation, and from the operation of any laws relating to bankruptcy or insolvency, and shall not be attached or taken upon execution or other process of any court. No assignment of any right in, or to said funds shall be valid. The funds of the retirement system, so far as invested in personal property, shall be exempt from taxation. DUTIES OF THE SCHOOL COMMITTEE Section 9. (i) The school committee or hoard of education of each town, city, or district in the state shall, before employing in any teaching position any person to whom this act may apply, notify such person of his duties and obligations under this act as a condition of his employment. (2) On or before October first of each year the school committee or board of education of each town, city and district in the state shall certify to the retirement board the names of all teachers to whom this act shall apply. (3) The school committee or board of education of each town, city, and Appendices district in the state shall, on the first dav of each calendar month, notify the retirement board of the employment of new teachers, removals, withdrawals, and changes in salary of teachers that shall have occurred during the month preceding. (4) Under the direction of the retirement board the school committee or board of education of each town, city and district in the state shall furnish such other information as the board may require relevant to the discharge of the duties of the lioard. (5) The school committee or board of education of each town, city and district in the state shall, as directed by the retirement board, deduct from the amount of the salary due each teacher employed in the public schools of such town, city or district, such amounts as are due as contri- butions to the annuity fund as prescribed in this act, shall send to the treasurer of said town, city or district a statement as voucher for such deductions and shall send a duplicate statement to the secretary of the retirement board. (6) The school committee or board of education of each town, city and district in the state shall keep such records as the retirement board may require. CUSTODY AND INVESTMENT OF 'FUNDS Section 10. (i) The treasurer of each town, city and district in the state on receipt from the school committee or board of education of the voucher for deductions from the teachers' salaries provided for in sec- tion nine shall transmit, monthly, the amounts specified in such voucher to the secretary of the retirement board. (2) The secretary of the retirement board shall monthly pay to the treasurer of the state all sums collected by him under the provisions of paragraph one of this section. (3) All funds of the retirement system shall be in custody and charge of the treasurer of the state and the treasurer shall invest such funds as are not required for current disbursements in accordance with the laws of the state governing the investment of savings banks funds. He may, whenever he sells securities, deliver the securities so sold upon receiving the proceeds thereof, and may execute any or all documents necessary to transfer the title thereto. (4) The treasurer of the state shall make such payments to members of the retirement association from the annuity fund and pension fund as the retirement board shall order to be paid in accordance with sections six and seven of this act. (5) On or before the third Wednesday in January, the treasurer of the state shall file with the insurance commissioner for the state, and with the secretary of the retirement board, a sworn statement exhibiting the financial condition of the retirement system on the thirty-first day of the preceding December and its financial transactions for the year ending at such date. Such statement shall be in the form prescribed by the retirement board and approved by the insurance commissioner. MEMBERSHIP IN OTHER RETIREMENT ASSOCIATIONS Section 11. (i) No person required to become a member of the asso- ciation under the provisions of paragraph numbered one of section three of this act shall be entitled to participate in the benefits of any other teachers' retirement system, supported in whole or in part by funds raised by taxation. (2) No member of the retirement association shall be eligible to receive Teachers' Pension Systems in the United States any pension as described in section six of this act, who is at the time in receipt of a pension paid from funds raised in whole or part by taxation. REIMBURSEMENT OF CITIES AND TOWNS Section 12. (i) Whenever, after the first day of July, nineteen hundred and seventeen, a town, city or district retires a teacher who is not eligible to a pension under the provisions of paragraph numbered six in section six of this act, and pays to such teacher a pension and the school committee or board of education of said town, city or district certifies under oath to the retirement board to the amount of said pension, said town or city shall be reimbursed therefor biennially by the state : provided, that no such reimbursement shall be in excess of the amount as determined by the retirement board, to which said teacher would have been entitled as a pension, had he become a member of the retirement association under the provisions of paragraph numbered two in section three of this act. (2) On or before the first Wednesday of January, nineteen hundred and nineteen and biennially thereafter the retirement board shall present to the general assembly, a statement of the amount expended during the two years ending on the preceding first day of July by cities and towns in the payment of pensions under the provisions of the preceding para- graph, for which such cities and towns should receive reimbursement. On the basis of such a statement, the general assembly may make an appropriation for the reimbursement of such cities and towns up to such first day of July. New Jersey Laws of 1919. Chapter 80 (e), an Act to amend "An act to establish a thorough and efficient system of free public schools, and to provide for the maintenance, support and management thereof," approved October nineteenth, one thousand nine hundred and three. Be IT ENACTED by the Senate and General Assembly of the State of New Jersey. PREAMBLE Whereas, In the advancement of public policy there has been established in this State a retirement fund to which public school teachers are re- quired to contribute and which was designed to provide an annuity to any member disabled after twenty or more years of service, and the State has provided a non-contributory pension for any teacher who teaches thirty-five years ; and Whereas After two years of investigation conducted with the assistance of pension experts and actuaries employed by it, the Pension and Re- tirement Fund Commission created by the act of the Legislature, J. R. II, P. L. 1917, and J. R. 3, P. L., 1918, has found that the two retirement systems conflict with each other in their operation and thereby create embarrassment in the administration of school affairs, and in many in- stances give double retirement benefits to the teachers, amounting on an average to more than the salary received by the teachers when in active service; and Whereas, The actuary employed by the State Teachers' Association and the actuary of the commission both report that the liabilities of the Teachers' Retirement Fund are far in excess of its present and pros- pective assets, which indicates that the contributions of present teachers are being used for the payment of annuities to teachers now retired. Appendices thereb}^ exhausting the funds which should be kept in reserve for the benefit of present teachers, with the result that a majority of those now contributing will be unable to receive the benefits promised under the fund ; and Whereas, Inasmuch as the State of New Jersey by legislative enactment has compelled its teachers to contribute to this fund which is in an un- sound financial condition, it is the duty of the Legislature to correct as far as possible the injustice and embarrassment occasioned by such conditions, which are detrimental to the welfare of the teachers and the school system ; and Whereas, It is recognized as an established State policy that the teachers of our public schools should be given protection against disability and old age and that such protection should be provided by a retirement system established on a scientific basis that will truly advance the best interests of our educational system and protect the future well being of the teachers ; therefore, I. The act to which this act is an amendment is hereby amended by the addition of a new article, which shall be known as Article XXVIII, and which shall contain sections 247 to 256, inclusive. ARTICLE XXVIII teachers' pension and annuity fund definitions 247. (i) The following words and phrases used in this act shall ha"e the following meanings unless a different meaning is plainly required by the context : (2) "Retirement System," shall mean the "Teachers' Pension and Annuity Fund," created by section two hundred and forty-eight of this article. (3) "Teachers' Retirement Fund" shall mean the Teachers' Retirement Fund of the State of New Jersey as created by chapter 32, P. L. 1896; chapter 178, P. L. 1899; chapter 96, P. L. 1900; chapter 36, P. L. 1902; chapter i, Second Special Session P. L. 1903; chapter 95, P. L. 1905; chapter 314, P. L. 1906; chapter 139, P. L. 1907, and amendments thereto and supplements thereof. (4) "Board of Trustees" shall mean the board provided for in section two hundred and fifty-five of this article. (5) "Commissioner of Education" shall mean the Commissioner of Education of the State of New Jersey. (6) "Employer" shall mean the State of New Jersey, or the school district, normal school district, board or other agency of and within the State by which the teacher is paid. (7) "Teacher" shall mean any regular teacher, special teacher, helping teacher, teacher-clerk, principal, vice-principal, supervisor, supervising principal, director, superintendent, city superintendent, assistant city super- intendent, county superintendent. State commissioner or assistant com- missioner of education and other member of the teaching or professional staff of any class, public school, high school, normal school, model school, training school, vocational school, truant reformatory school, or parental school, and of any and all classes or schools within the State of New Jersey conducted under the order and superintendence, and wholly or partly at the expense of the State Board of Education, of a duly elected or appointed board of education, board of school directors, or board of trustees of the State or of any school district or normal school district thereof, and any such person under contract or engagement to perform one 393 Teachers' Pension Systems in the United States or more of these functions; provided, that no person shall be deemed a teacher within the meaning of this article who is a substitute teacher or is a teacher not regularly engaged in performing one or more of these functions as a full-time occupation outside of vacation periods. In all cases of doubt the board of trustees shall determine whether any person is a teacher as defined in this article. (8) "Present-entrant" shall mean any teacher who is a member of the retirement system under the provisions of class B, C, D and E under sub-section (2) of section two hundred and forty-nine of this article. (9) "New-entrant" shall mean any teacher who is a member of the retirement system, except a present entrant. (10) "Contributor" shall mean any person who has an account in the annuity savings fund. (11) "Beneficiary" shall mean any person in receipt of a retirement allowance or other benefit as provided in this article. (12) "School Service" shall mean any service as a teacher as defined by sub-section (7) of this section. (13) "School Year" shall mean the official school year of the school district or the institution in which a teacher is employed. (14) "Regular Interest" shall mean interest at four per centum per annum, compounded annually. (15) "Accumulated Deductions" shall mean the total of the amounts deducted from the salary of a contributor and credited to his individual account in the annuity savings fund together with the interest thereon. Regular interest shall be computed and allowed on such total or part thereof when used for the purchase from the retirement system of a re- tirement annuity. Interest at the rate of three and one-half per centum per annum, compounded annually, shall be computed and paid on such total amounts or part thereof when withdrawn for any other purpose. (16) "School Apportionment Fund" shall mean the moneys retained in the State Treasury to be apportioned to the several counties of the State by the Comptroller for school purposes, as defined in chapter 146, P. L. 1906, and chapter 65, P. L. 1909. (17) "Average Salary" shall mean the average annual salary earnable by and as a teacher for the last five years preceding retirement. (18) "Pension" shall mean annual payments for life derived from the pension fund or from the pension reserve fund as provided in this article. All pensions shall be paid in monthly installments. (19) "Annuity" shall mean payments for life derived from contribu- tions made by a contributor as provided in this article. All annuities shall be paid in monthly installments. (20) "Retirement Allowance" shall mean the pension plus the annuity. (21) "Pension Reserve" shall mean the present value computed on the basis of such mortality tables as shall be adopted by the board of trustees, with regular interest of the future payments to be made on account of any pension granted to a member. (22) "Annuity Reserve" shall mean the present value commuted on the basis of such mortality tables as shall be adopted by the board of trustees with regular interest of the future payments to be made on account of any annuity granted to a member. ESTABLISHMENT OF SYSTEM 248. (i) A retirement system for public school teachers is hereby created and established to be known as the "Teachers' Pension and Annuity Fund," and shall include the several funds created and placed 394 Appendices under the management of the board of trustees as provided by this article for the purpose of paying retirement allowances and other benefits here- inafter provided to or on account of the teachers who become members of said system. (2) The retirement system so created shall have the powers and privileges of a corporation, and under its corporate name all its business shall be transacted, all funds invested, all warrants for money drawn and payments made, and all cash and securities and other property shall be held. MEMBERSHIP 249. (i) Membership in the retirement system shall begin not earlier than the first day of September, nineteen hundred and nineteen. (2) The membership of the retirement system shall consist of the following classes of teachers : Class A. All persons who become teachers after the first day of Sep(tember, nineteen hundred and nineteen, and whose appointment is made subsequent to the passage of this act, shall become members of the retirement system by virtue of their appointment as teacher; provided, that any person who may become a teacher after September first, nineteen hundred and nineteen, who before the passage of this act shall have made an agreement to teach in the schools of this State as a consideration for the instruction received in any normal school of the Stale shall not be compelled during the life of such agreement to become a member of the retirement system when he shall enter the service as a teacher, but shall, however, become a member after the expiration of such agreement by virtue of any subsequent appointment as teacher, but he may become a member at any time by filing an application as hereinafter described; provided, further, that any person who shall have signed a contract for the position of a teacher prior to the passage of this act, whose services thus contracted for shall extend beyond the first day of September, nine- teen hundred and nineteen, shall not be compelled to become a member of the retirement system when he shall enter the service under such contract as a teacher, but he may do so by filing an application as herein- after described. Class B. All teachers in the service on September first, nineteen hun- dred and nineteen, who are not members of the Teachers' Retirement Fund at the time of the passage of this act, who, during their service as a teacher on or before the first day of September, nineteen hundred and twenty, shall file with the board of trustees an application for membership. Class C. All teachers in the service on September first, nineteen hun- dred and nineteen, who became members of the Teachers' Retirement Fund by virtue of their appointment as teacher since January first, nine- teen hundred and eight, who during their service as a teacher on or before the first day of September, nineteen hundred and twenty, shall file with the board of trustees an application for membership. Class D. All teachers in the service on September first, nineteen hundred and nineteen, who became members of the Teachers' Retirement Fund before the first day of January, nineteen hundred and eight, and who during their service as a teacher on or before the first day of Septem- ber, nineteen hundred and twenty, shall file with the board of trustees an application for membership. Class E. All teachers, who do not come under the provisions of class A, B. C or P, who within a year after their appointment or after the passage of this act, shall file with the board of trustees an application for membership. 395 Teachers' Pension Systems in the United States (3) Application for membership under class B, C, D and E, and the certificate of enrollment in case of class A member, shall be in such form and contain such information as the board of trustees shall designate, and furthermore, the application for membership in case of class C, D and E shall contain a waiver of all rights and privileges as a member or prospective beneficiary of the Teachers' Retirement Fund. The board of trustees shall file one copy of the application for member- ship or certificate of enrollment in the retirement system as a permanent record in its office, and one copy with the employer of the applicant, which shall constitute a notice to such employer to deduct the percentage of salary as defined by this article. (4) The board of trustees may, in its discretion, extend the period for filing any application for membership provided for herein, but no extension shall carry the date beyond the year nineteen hundred and twenty three. (5) Any teacher who does not elect to become a member while eligible to membership under the provisions as to class B, C, D or E, and who is not eligible to membership under the provisions as to class A, may become a member thereafter upon application in accordance with the rules and regulations of the board of trustees, but with a limited allowance for prior service as hereinafter provided for new-entrants. (6) This board of trustees may, in its discretion, deny the right to become members to any class of teachers whose compensation is only partly paid by the State, or who are serving on a temporary or any other than a per annum basis, and it may also, in its discretion, make optional with members in any such class their individual entrance into membership. (7) The membership of any person in the retirement system shall cease if he shall be continuously absent without pay for a period of more than two years, or if in any five-year period after he last became a member, he shall render less than two years of school-service, or upon the withdrawal by a contributor of his accumulated deductions as provided in this article or upon retirement on a pension, or at death but not otherwise, ex- cept as provided in this article. SERVICE CREDITABLE 250. (i) In addition to the application required in subsection (3) of section two hundred and forty-nine of this article each present-entrant shall file a detailed statement under oath of all school-service and service in a similar capacity in other States rendered by him prior to the first day of September, nineteen hundred and nineteen, for which he claims credit, and of such other facts as the board of trustees may require for the proper operation of the retirement system. (2) Each new-entrant shall file a detailed statement of school-service and service in a similar capacity in other States rendered by him prior to so becoming a member for which he desires credit and on account of which he desires to contribute and of such other facts as the board of trustees may require for the proper operation of the system. (3) The board of trustees shall fix and determine by appropriate rules and regulations how much service in any year is the equivalent of a year of service, but in computing such service, or in computing average compensation, it shall credit no time during which a member was absent without pay for a period of more than a month's duration, nor shall more than one year of service be credited for all service in any calendar year. 396 Appendices (4) Subject to the above restrictions and to such other rules and regulations as the board of trustees shall adopt, said board shall verify as soon as practicable the statement of service submitted, and shall issue to the member a prior- service certificate certifying to the aggregate length of such prior service. (5) In such prior-service certificate, a present-entrant shall be credited up to the nearest number of years and months with all service not exceeding thirty-five years, which he rendered as a teacher prior to September first, nineteen hundred and nineteen, including not more than ten years of service in a similar capacity in other States. (6) In his prior-service certificate, a new-entrant shall be credited in full up to the nearest number of years and months, but not e.xceeding ten years, with all service rendered by him as a teacher in public schools in or outside of New Jersey prior to becoming a member, for which he desires credit and on account of which he desires to contibute. (7) So long as membership continues, a prior-service certificate shall be final and conclusive for retirement purpose as to such service, unless thereafter modified by the board of trustees upon the application made by the member within one year after the date of issuance or modification of a prior-service certificate or upon the discovery by the board of trustees of an error or fraud. When membership ceases, such certificate shall be void, but upon membership being resumed the prior-service certificate shall be restored for the same number of years of prior service as were previously credited less a deduction of one year for each year during which the teacher was not a member of the retirement system since the issuance of the initial prior-service certificate. (8) At retirement the total service credited a member shall consist of the service rendered by him during his membership, and if he has a prior-service certificate which is in full force and effect, for all service certified on such certificate. BENEFITS Superannuation Retirement. 251. (i) A member who has attained the age of sixty-two (62) may retire upon his request or, upon the request of his employer, shall be re- tired from the service if a written statement duly attested is filed by him or by his emploj'er with the board of trustees setting forth at what time subsequent to the execution and filing thereof he or his employer desires such retirement. The board of trustees shall retire said member at the time specified or at such other time within thirty days after the date so specified as the board of trustees may find advisable. Any present-entrant who is not covered by the tenure of ofiice law who prior to the first day of November, one thousand nine hundred and nineteen, shall become a member of the retirement system, and who shall be credited in his prior- service certificate with thirty-five or more years of service, who shall lose his position before attaining the age of sixty-two (62) years, shall be retired on a total retirement allowance of one-half of his average salary. (2) After the first day of January of the year nineteen hundred and twenty-six, each and every member who has attained or shall attain the age of seventy (70) shall be retired by the board of trustees from the service forthwith, or at such time within a year thereafter as it shall deem advisble. (3) Upon superannuation retirement a present-entrant shall receive a retirement allowance which shall consist of: (a) An annuity which shall be the actuarial equivalent of his ac- cumulated deductions at the time of his retirement. 397 Teachers' Pension Systems in the United States (b) A pension in addition to the annuity, of one one-hundred and fortieth (i/i40th) of his average salary multiphed by the number of years of service he has rendered since he became a member. (c) A further pension of one seventieth (i/7oth) of his average salary multiplied by the number of years of service certified on his prior- service certificate. (d) And if such person shall have been a member of the Teachers' Retirement Fund prior to his becoming a member of the retirement sys- tem, a further additional pension which shall be the actuarial equivalent of the contributions without interest, which he paid to the Teachers' Retirement Fund prior to the first day of September, nineteen hundred and nineteen, which he has not otherwise received. (4) Upon superannuation retirement a new-entrant shall receive a retirement allowance which shall consist of : (a) An annuity which shall be the actuarial equivalent of his ac- cumulated deductions at the time of his retirement, and (b) A pension, in addition to the annuity, of one one hundred and fortieth (i/i40th) of his average salary multiplied by the number of years of his total service. (5) The total retirement allowance granted to a person with twenty or more years of service who has attained the age of sixty-two (62) shall in no case be less than four hundred dollars per annum. Disability Retirement. (6) Retirement for disability of a teacher who is a member shall be made by the board of trustees upon the application of his employer or upon his own application or that of a, person acting in his behalf, on a disability allowance if he is under the age of sixty-two (62) years, pro- vided the board of trustees, after a medical examination of said member, made at the place of his residence within the State or other place mutually agreed upon, by a physician or physicians designated by said board, shall determine upon the basis of a report submitted by said physician or physicians that the said member is physically or mentally incapacitated for the performance of duty and that said member ought to be retired; and further provided, that the said member has rendered ten years of service as a teacher in New Jersey, and if he is a new-entrant, has also been a member of the retirement system for ten years. Should the applicant for a disability retirement be dissatisfied with the decision of the board of trustees, appeal may be made to the State Board of Education and the decision of the latter shall be final and binding upon all parties. (7) On retirement for disability, a teacher who is a member shall receive a retirement allowance which shall consist of : (a) An annuity which shall be the actuarial equivalent of his accumu- lated deductions at the time of his retirement : (b) A pension which together with his annuity provided under the paragraph immediately preceding shall be sufficient to produce a retire- ment allowance of one-seventieth of his average salary multiplied by the number of years of his total service but not less than three hundred dollars per annum or thirty per centum of said average salary, with the exception that in no case shall the allowance exceed nine-tenths of the rate of retirement allowance to which he might have been entitled had retirement been deferred until the age of sixty-tv/o (62). (c) And if such person shall have been a member of the Teachers* Retirement Fund prior to his becoming a member of the retirement sys- Appendices tern, a further additional pension, which shall be the actuarial equivalent of the contributions without interest, which he paid to the Teachers' Retirement Fund prior to the first day of September, nineteen hundred and nineteen, which he has not otherwise received. (8) Once each year during the first five years following the retire- ment of the teacher on a disability allowance and once in every three- year period thereafter, the board of trustees may, and upon his application shall, require any disability beneficiary who is under the age of sixty-two (62) years to undergo medical examination by a physician or physicians designated by the board of trustees, said examination to be made at the place of residence of said beneficiary or other place mutually agreed upon. Should such physician or physicians thereupon report and certify to the board of trustees that such disability beneficiary is not totally incapacitated either physically or mentally for the performance of duty and that such disability beneficiary is engaged in or is able to engage in a gainful occu- pation and should the board of trustees concur in such report, then the amount of his retirement allowance shall be reduced to an amount which, when added to the amount then earned by him shall not exceed the amount of his average salary. Should his earning capacity be later changed, then the amount of his retirement allowance may be further altered : provided, that the new retirement allowance shall not exceed the amount of the retirement allowance originally granted or an amount which when added to the amount earned by the beneficiary, exceeds the amount of his average salary. Should a disability beneficiary who is under the age of sixty-two (62) years refuse to engage in a gainful occupation when qualified so to do and further refuses a position in the public schools offered to him, the board of trustees may reduce his re- tirement allowance to half of its former rate. (9) Should any disability beneficiary, under the age of sixty-two (62) years, refuse to submit to a medical examination as provided under the subsection immediately preceding, his retirement allowance may be dis- continued until his withdrawal of such refusal, and should such refusal continue for one year, all his rights in and to such retirement allowance may be forfeited. (10) Should a disability beneficiary be restored to active service at a salary equal to that formerly received, his retirement allowance shall cease and he shall again become a member of the retirement system, and his annuity reserve shall be transferred from the annuity reserve fund to the annuity savings fund and credited to his individual account as a part of his accumulated deductions in the latter fund, and he shall contribute to the said fund thereafter in the same manner and at the same rate as he paid upon his disability. Upon his restoration to active service his pension reserve in the pension reserve fund shall be trans- ferred to the pension accumulation fund. His prior-service certificate on the basis of which his service was computed at the time of his re- tirement shall be renewed and shall again be in full force and effect, and in addition upon his subsequent retirement he shall be credited with all his service as a member subsequent to the period covered by his prior- service certificate, anything to the contrary in this act notwithstanding. Withdrawal and Death Benefits. (11) A contributor who withdraws from service or ceases to be a teacher for any cause other than death or retirement, shall be paid on demand the accumulated deductions standing to the credit of his indi- vidual account in the annuity savings fund. 399 Teachers' Pension Systems in the United States (12) The board of trustees may, in. its discretion, withhold for not more than one year after a member last rendered school-service all or part of his accumulated deductions, if, before he last became a member, he withdrew from the annuity savings fund all or part of his accumu- lated deductions and failed to redeposit such withdrawn amount to the credit of his individual account in such fund. (13) Should a contributor die before retirement his accumulated de- ductions shall be paid to his estate or to such person having an insurable interest in his life as he shall have nominated by written designation duly executed and filed with the board of trustees. Optional Benefits. (14) At the time of his retirement, any contributor may elect to re- ceive his benefits in a retirement allowance payable througout life, or he may on retirement elect to receive the actuarial equivalent at that time of his annuity, his pension or his retirement allowance in a lesser annuity, or a lesser pension, or a lesser retirement allowance, payable throughout life with the provision that : Option I. If he dies before he has received in payments the present value of his annuity, his pension or his retirement allowance as it was at the time of his retirement, the balance shall be paid to his legal repre- sentatives or to such person having an insurable interest in his life as he shall nominate by written designation duly acknowledged and filed with the board of trustees. Option 2. Upon his death, his annuity, his pension or his retirement allowance shall be continued throughout the life of and paid to such person having an insurable interest in his life as he shall nominate by written designation duly acknowledged and filed with the board of trustees at the time of his retirement. Option 3. Upon his death, one-half of his annuity, his pension or his retirement allowance shall be continued throughout the life of and paid to such person having an insurable interest in his life as he shall nominate by written designation duly acknowledged and filed with the board of trustees at the time of his retirement. Option 4. Some other benefit or benefits shall be paid either to the member or to such person or persons as he shall nominate, provided such other benefit or benefits, together with the lesser annuity or lesser pension or lesser retirement allowance, shall be certified by the actuary to be of equivalent actuarial value to his annuity, his pension or his retire- ment allowance and shall be approved by the board of trustees. Benefits of Teachers Now Retired. (15) All pensions payable prior to the month of September, nineteen hundred and nineteen, by the State under the provisions of chapter 268, P. L. 1914, shall, beginning with said month, be paid from the pension fund created by this article and all such pensions as are below four hundred dollars shall be increased to and be paid at the rate of four hundred dollars. (16) Should the Teachers' Retirement Fund by reason of insolvency or liquidation cease to pay in full the annuities granted and therefore paid by said fund, there shall be paid out of the pension fund created by this article to persons who shall have been annuitants of said Teachers' Retire- ment Fund from a date prior to the ficst day of September, nineteen hundred and nineteen, such part or all of such annuities as the said Teachers' Retirement Fund shall have ceased to pay; provided, that neither all nor any part of the amount of any reduction in the annuity therefore payable by the said Teachers' Retirement Fund shall be paid 400 Appendices out of the said pension fund, unless there is in effect a corresponding and proportionate reduction by the said Teachers' Retirement Fund in the annuity of, and payment thereof to, each and every person retired by the Retirement Fund ; provided, further, that the board of trustees shall be the sole judge as to whether the amount of any allowance which would thereby become payable out of the pension fund corresponds to the amount of a reduction by the Teachers' Retirement Fund in the allowance of the same person due to the insolvency or liquidation of said fund. ACTUARIAL BASIS 252. (i) Immediately after the establishment of the retirement system, the actuary of the board of trustees shall make such investigation of the mortality service and compensation experience of the teachers of the State of New Jersey as he shall recommend, and the board of trustees shall authorize, for the purpose of determining the proper tables for the purposes of the system. On the basis of such investigation and recom- mendation the board of trustees shall adopt such tables and certify such rates as are required in paragraphs (a), (b), and (c) of sub-section (2) of this section. On the basis of such tables as the board of trustees shall adopt, the actuary, as soon as practicable, shall make a valuation of the assets and liabilities of the funds created by this article. (2) In the years nineteen hundred twenty-one and nineteen hundred and twenty-four, and once in every five-year period thereafter, the said actuary shall make an actuarial investiagtion into the mortality, service and compensation or salary experience of the members and beneficiaries of the retirement system, and shall make a valuation of the assets and liabili- ties of the various funds thereof, and upon the basis of such investigation and valuation the board of trustees shall : ''a) adopt for the retirement system such mortality, service and other tables as shall be deemed necessary; (b) certify the rates of deduction from compensation computed to be necessary to pay the annuities authorized under the provisions of this article; and (c) certify the rates of contribution, expressed as a proportion of the compensation of members at various ages, which shall be made to the pension accumulation fund. FUNDS CREATED, CONTRIBUTIONS THERETO AND PAYMENTS THEREFROM 253. d) The funds created are: (a) the annuity savings fund; (b) the annuity reserve fund; (c) the pension fund; (d) the pension accumula- tion fund; (e) the pension reserve fund; (f) the expense fund. Funds Derived from Members' Contributions. (2) The annuity savings fund shall be the fund in which shall be accumulated deductions from the compensation of contributors. (3) Upon the basis of such tables as the board of trustees shall adopt, and regular interest, the actuary of the board of trustees shall determine for each contributor the proportion of compensation, which when deducted from each payment of his prospective earnable compensation prior to his eligibility for service retirement and accumulated at regular interest until his attainment of the age of sixty-two (62) shall be computed to be sufficient to provide at that time an annuity equal to the pension then allowable under the provisions of this article for service rendered during his membership, and in case the said member is a new-entrant for such prior service as he both claimed and was allowed. The pro- 401 Teachers' Pension Systems in the United States portion of compensation shall be computed to remain constant until the member attains the age of sixty-two (62) years. The proportion com- puted for a contributor entering at the age of sixty-one (61) shall be applied to any contributor who has attained a greater age at the time of entrance into the retirement system. (4) The board of trustees shall certify to each employer and the said employer shall deduct from the compensation of each member on each and every payroll for each and every payroll period subsequent to the date upon which such certification becomes effective, the per centum of his earnable compensation so computed. But the board of trustees shall not certify, nor shall any employer make, any deduction for annuity purposes from the compensation of a member who has attained the age of sixty-two (62) and completed thirty-five (35) years of service, if such member elects not to contribute. (5) In determining the amount earnable by a contributor in a pay- roll period, the board of trustees may consider the rate of compensation payable to such member on the first day of the payroll period as continu- ing throughout such payroll period, and it may omit deductions from compensation for any period less than full payroll period if a teacher was not a contributor on the first day of the payroll period, and to facilitate the making of deductions it may modify the deduction required of any contributor by such an amount as shall not exceed one-tenth of one per centum of the compensation upon the basis of which said deduction is to be made. (6) In lieu of any part of the deduction from compensation herein- before required, any new-entrant may deposit in the annuity savings fund by a single payment such an amount as will be sufficient to permit him to contribute the rate of contributions applicable to an earlier entrance age. In addition to the deductions from compensation hereinbefore re- quired any contributor may redeposit in a single payment an amount equal to the total amount which he withdrew therefrom as provided in this article, or he may deposit therein by a single payment an amount computed to be suflficient together with the retirement allowance other- wise provided, to provide for him a total retirement allowance of one- half of his final salary at the age of sixty-two (62). Such additional amounts so deposited shall become a part of his accumulated deductions. (7) The accumulated deductions of a contributor withdrawn, as pro- vided in this article, shall be paid out of the annuity savings fund. In the case of a withdrawal, an amount equivalent to the difference between the amount of the accumulated deductions calculated at regular interest and the amount of the accumulated deductions calculated by use of interest at the rate of three and one-half per centum per annum com- pounded annually shall be transferred to the expense fund. (8) The annuity reserve fund shall be the fund from which shall be paid all annuities and all benefits in lieu of annuities. Upon the retire- ment of a contributor his accumulated deductions shall be transferred from the annuity savings fund to said annuity reserve fund FUNDS DF.RIVICD FROM CONTRIBUTIONS FROM SCHOOL APPORTIONMENT FUND PENSION FUND (9) The pension fund shall be the fund in which shall be accumulated the reserves for the payment of pensions to present-entrants ; into which the moneys necessary for the payment of all other pensions with the exception of those payable to new-entrants shall be paid ; and from which all pensions with the exception of those payable to new-entrants shall be paid. 402 Appendices (lo) The actuary, after making the first valuation required, shall determine the present value of the liability on account of pensions to present-entrants then retired or to be retired. He shall then determine the percentage of the total compensation paid to all members for service during the preceding school year, which is equivalent to one- twenty-fifth of the said liability. (ii) The State Comptroller shall pay annually, beginning with the year nineteen hundred and twenty, from the school apportionment fund into the pension fund the amount as certified to him by the board of trustees, which shall be equal to the per centum, determined in accordance with this subsection and the subsection immediately preceding, of the total compensation paid to all members for service during the preceding school year. Each annual payment shall be at least three per centum greater than the preceding annual payment. In every case, the amount shall be suf- ficient, when combined with that in the fund to provide the pensions payable out of this fund during the year then current, and shall be equal to at least one-twenty-fifth of the liability on account of present- entrants now retired or to be retired. The State Comptroller shall con- tinue such payments until the accumulated reserve in the pension fund equals the present value, as computed by the actuary and aDoroved by the board of trustees, of all pension payments thereafter payable on account of present-entrants, then retired or to be retired on a pension as provided in this article. (12) To pay the pensions provided under subsections (15) and (16) of section two hundred and fifty-one, the board of trustees shall annually prepare an estimate of the amounts required therefor and the State Comptroller shall pay from the school apportionment fund into the pension fund for this purpose the amounts required. (13) All moneys appropriated for the payment of pensions to public- school teachers under chapter 268, P. L. 1914, for the fiscal year beginning July, nineteen hundred and nineteen, less the amount disbursed for said pensions during the months of July and August, shall, on the first day of September, one thousand nine hundred and nineteen, be paid by the State Treasurer into the pension fund. PENSION ACCUMULATION FUND (14) The pension accumulation fund shall be the fund in which shall be accumulated the reserves necessary to pay all pensions to be granted to new-entrants. (15) In the month of July, nineteen hundred and twenty, for a period covering the ten months next preceding, and annually thereafter, covering the year next preceding the State Comptroller shall pay from the school apportionment fund into the pension accumulation fund on account of all new-entrants who were contributors for one or more months of such period immediately preceding, such amount as shall be certified by the board of trustees as necessary to provide thereby during their prospective active service the pension reserve required at the time of retirement for the disability or superannuation pension herein provided. The amount for each teacher included in the aggregate amount so certified shall be computed to bear a ratio to the salary earnable by such teacher during the period for which the amount is certified, which shall remain constant during his entire period of prospective active service and shall be based on such mortality and other tables as shall be adopted by the board of trustees and on regular interest. 403 Teachers' Pension Systems in the United States PENSION RESERVE FUND (i6) The pension reserve fund shall be the fund from which shall be paid all pensions, and all benefits, in lieu of pensions, granted to new- entrants. Upon the retirement of a new-entrant an amount equal to his pension reserve fund shall be transferred to said fund from the pension accumulation fund. (17) Should any disabiHty pension payable from said fund be can- celled, the pension reserve thereon shall thereupon be transferred from the pension reserve fund to the pension accumulation fund. Should the pension of a disability beneficiary be reduced as a result of an increase in his earning capacity, the amount of the annual reduction in his pension shall be paid annually into the pension accumulation fund during the period of such reduction. EXPENSE FUND (18) The expense fund shall be the fund from which the expense of the administration of the retirement system shall be paid exclusive of amounts payable as retirement allowances and as other benefits provided herein. (19) The board of trustees shall certify annually to the State Comp- troller the amount required to defray such expense in the ensuing fiscal year after making allowance for the estimated amounts to be received by the expense fund from the annuity savings fund, and the State Comp- troller shall pay from the school apportionment fund into the expense fund the amount so determined. COLLECTION OF CONTRIBUTIONS Collection of Members' Contributions : 254. (i) Each employer shall keep such records, and from time to time, furnish such information as the board of trustees in the discharge of its duties may require. (2) Upon the employment of any teacher to whom this article may apply, he shall be informed by his employer of his duties and obligations in connection with the retirement system as a condition of his employ- ment. Every teacher accepting employment shall be deemed to consent and agree to any deductions from his compensation required herein and to all other provisions of this article. (3) Notwithstanding any other law, rule or regulation affecting the salary, pay, compensation, other perquisites or tenure of any teacher to whom this article applies, or shall apply, and notwithstanding that the niinimum salary, pay, compensation or other perquisites, provided by law for any such teacher shall be reduced thereby, payment less said deductions shall be a full and complete discharge and acquittance of all claims and demands whatsoever for service rendered by such member during the period covered by such payment. (4) When a teacher is employed by a school district, the custodian of school moneys and, in other cases, his employer shall notify the board of trustees within ten days after the appointment of a teacher of such appointment and shall deduct the proportion of salary as certified by the board of trustees from the salary of such teacher as herein directed, and shall certify to the Treasurer of the State of New Jersey on account of each and every payroll a statement as voucher for the amounts deducted 404 Appendices for annuity purposes at the rate certified by the board of trustees, shall send a duplicate of such statement to the board of trustees, and shall trans- mit or credit to the said State Treasurer the amount thereof. Any failure on the part of the custodian of school moneys of any school district to comply with the provisions of the subsection shall constitute a default, and the State Board of Education may withhold school moneys from such school district until such default is made good. (5) The State Treasurer shall credit the annuity savings fund with each amount transmitted or credited as provided in the subsection im- mediately preceding, and he shall transmit to the board of trustees monthly, or at such less frequent intervals as the board of trustees shall designate, a detailed statement of all amounts so paid in and credited by him to the annuity savings fund. The board of trustees shall cause each of such amounts so deducted to be credited in the annuity savings fund to an individual account of the member from whose compensation the deduction was made. Collection of Employers' Contributions : (6) Upon the basis of each actuarial determination and appraisal pro- vided herein, the board of trustees shall annually prepare and certify to the State Comptroller an estimate of the amounts necessary to be paid from school apportionment fund to the various funds for ensuing fiscal year. (7) The State Comptroller, prior to the apportionment, on or before the first day of February, among the several counties of the State of the funds devoted to the maintenance and support of a thorough and efficient system of free public schools, as provided in and by an act entitled "A supplement to an act entitled 'An act to establish a thorough and efficient system of free public schools, and to provide for the maintenance, support and management thereof,' approved October nineteenth, one thousand nine hundred and three," approved April twentieth, one thousand nine hundred and six, shall deduct from the moneys so to be apportioned, in addition to any other sums to be deducted from said fund by virtue of the provisions contained in any law of this State, the amount certified to him by the board of trustees as necessary to make the payments to the various funds of the retirement system from the School Apportionment Fund as provided herein for the then ensuing school year, and he shall pay such amounts into the various funds of the retirement system, on the first day of July following the certification. (8) If at any time no deductions shall have been made as required by the subsection immediately preceding, or if at any time the amount deducted shall not be sufficient to make the payments provided for herein, such payments shall be provided for by the Comptroller of the Treasury in making the then next deductions as required herein, and shall be in ad- dition to the sum certified to him by the board of trustees as necessary for the payments for the then ensuing school year. (9) To meet the expense of establishing and administering the retire- ment system created herein there is hereby appropriated from the school apportionment fund the sum of twenty-five thousand dollars ($25,000). (10) To meet the cost of pensions granted under chapter two hundred and sixty-eight, Laws of nineteen hundred and fourteen, assumed herein, and the cost of such annuities granted by the Teachers' Retirement Fund which are assumed herein, and shall be payable on or after the first day of July, nineteen hundred and nineteen, there is hereby appropriated from the school apportionment fund the sum of two hundred and fifty thousand dollars. The State Comptroller shall deduct such sum from the 405 Teachers' Pension Systems in the United States school apportionment fund in the same manner as provided by chapter sixty-five of the Laws of nineteen hundred and nine, and shall pay said sum into the pension fund created herein. ADMINISTRATION Board of Trustees. 255. (i) The general administration and responsibility for the proper operation of the retirement system and for making effective the pro- visions of this article is hereby vested in a board of trustees, which shall be organized immediately after the passage of this act. The said board shall from time to time establish rules and regulations for the administra- tion and transaction of its business and for the control of the funds created herein, and shall perform such other functions as are required for the execution of the provisions of the retirement system. (2) The membership of the board of trustees shall consist of the following : (a) The Commissioner of Education of the State of New Jersey; Pro- vided, that the commissioner may appoint the assistant commissioner, who acts in his place during his absence, to serve in his stead. (b) The Treasurer of the State of New Jersey. (c) One trustee appointed by the Governor of the State of New Jersey to serve until the first day of September, nineteen hundred and twenty-one. His successor shall be appointed each for a term of three years. (d) Three trustees elected from among the mernbers of the retire- ment system, one to serve for one year, one to serve for two years and one to serve for three years from the first day of November follow- ing their election. One of such trustees shall be a resident of and em- ployed in either the county of Hudson, Essex or Bergen; one a resident of and employed in either the county oif Passaic, Sussex, Warren, Morris, Union, Hunterdon, Somerset, Middlesex, Mercer or Monmouth; and the third a resident of and employed in either the county of Ocean, Burling- ton, Camden, Gloucester, Salem, Cumberland, Atlantic or Cape May. Their successors shall be elected for a term of three years from among the members of the retirement system. (e) One trustee, not a teacher nor an officer of the State, elected by the other trustees, to serve until the first day of January, nineteen hundred and twenty-one, whose successor shall be elected in the same manner for a term of three years. A vacancy occurring in the board of trustees shall be filled for the un- expired term in the same manner as herein provided for regular appoint- ment or election. (3) Until the election of the three trustees from among the members of the retirement system the Commissioner of Education, the State Treasurer and the trustee appointed by the Governor, are empowered to perform the duties of the board of trustees. All rules and regulations adopted by them shall be subject to change by the entire board when the membership of such board shall be completely filled. (4) An annual convention of the retirement system shall be held at the State House in Trenton, at twelve o'clock, noon, on the second Saturday ill October each year, beginning with the year nineteen hundred and nineteen, for the purpose of electing members of the board of trustees of the retirement system, and receiving the report of said board of trustees and for the transaction of such other business as may properly be within its jurisdiction. Such convention shall be composed of delegates from each county in the State, selected as hereinafter provided. Said convention shall be called to order by a member of the board of trustees, 406 Appendices designated by said board, and shall organize by the election of a chairman and a secretary. Each county shall be entitled to be represented in such convention by one delegate for each two hundred members of the retire- ment system in said county and one delegate for any fraction over one hundred, provided, that each county shall be entitled to at least one delegate. Said delegate shall be elected by the vote of a majority of the members of the retirement system voting at a meeting held for the purpose of electing such delegates. Said meeting for the election of delegates shall be held at such convenient place as shall be selected by the county superintendent of schools. Notice of the time and place of said meeting shall be issued by said county superintendent at least ten days before the date of said meeting. Said meeting shall organize by the election of a chairman and secretary. Said secretary shall, within five days after said meeting, forward to the board of trustees of the retirement system a cer- tificate containing the names and addresses of the delegates elected to the annual convention, and shall furnish the delegates elected with a certificate of their election. In case of a vacancy in the delegation from any county, the remaining delegates from such county may fill such vacancy by appointing a member in said county, who shall possess the quahfications hereinbefore prescribed for delegates to such convention. A majority of all of the delegates entitled to seats in said convention shall constitute a quorum for the transaction of business. Administrative St?ff and Procedure. (5) Each member of the board of trustees shall, upon his appoint- ment or election, take an oath of office that, so far as it devolves upon him, he will diligently and honestly administer the affairs of the said board, and that he will not knowingly violate or willingly permit to be violated any of the provisions of law applicable to the retirement system. Such oath shall be subscribed to by the member making it, and certified by the officer before whom it is taken, and shall be immediately filed in the office of the Secretary of State. (6) Each trustees shall be entitled to one vote in the board. Four votes shall be necessary for a decision by the trustees at the meeting of said board. The board of trustees shall keep a record of all of its proceedings, which record shall be open to public inspection. (7) The board of trustees shall elect from its membership a chairman, shall engage such actuarial and other technical service, and shall ap- point such employees as may be necessary to transact the business of the retirement system. The actuary shall be the technical advisor of the board of trustees on matters regarding the operation of the funds created by the provisions of this article, and shall perform such other duties as are required in connection therewith. The Attorney- General of the State of Nevi^ Jersey shall be the legal advisor of the board of trustees. (8) The actuary of the board shall recommend and the board of trustees shall keep in convenient form such data as shall be necessary for actuarial valuation of the various funds of the retirement system. (9) The board of trustees shall publish annually a report showing a valuation of the assets and liabilities of the funds, certifying as to the accumulated cash and securities of the funds and giving an ac- count of the operation of the system. The said board shall submit said report to the Governor and shall furnish copies thereof to the office of the State Department of Education, the State Treasurer and to each employer for the use of the members and the public. (10) The members of the board of trustees shall serve without compensation, but shall be reimbursed from the expense fund for any necessary expenditures. No teacher shall suffer loss of salary 407 Teachers' Pension Systems in the United States or wages through serving on the board of trustees. Compensation for all other personal service to the retirement system shall be fixed by the board. (ii) The board of trustees shall establish itself in an office for the administration of the retirement system in such city as it shall consider most suitable for the transaction of its business. Management of Funds. (12) The board of trustees shall be the trustees of the several funds created by this article and shall have full power to invest the same, subject to all the terms, conditions, limitations and restrictions imposed by law upon investment of sinking funds in the making and disposing of their investments; and, subject to like terms, conditions, limitations and restrictions, said trustees shall have full power to hold, purchase, sell, assign, transfer or dispose of any of the securities and invest- ments in which any of the funds created herein shall have been in- vested, as well as of the proceeds of said investments and any moneys belonging to said funds. (13) The board of trustees shall annually allow regular interest on the mean amount for the preceding year in each of the funds, with the exception of the expense fund. The amount so allowed shall be due and payable to said funds, and shall be annually credited thereto by the board of trustees, from the interest and other earnings on the moneys of the retirement system. Any additional amount required to meet the interest on the funds of the retirement system shall be included in the amount certified to the State Comptroller as necessary to make the payments to the various funds of the retirement system from the school apportionment fund for the ensuing school year. (14) The Treasurer of the State of New Jersey shall be the cus- todian of the several funds. All payments from said funds shall be made by him only upon voucher signed by the chairman and counter- signed by such other person as may be designated by the board of trustees. (is) For the purpose of meeting disbursements for pensions, annuities, and other payments there may be kept an available fund not ex- ceeding ten per centum of the total amount in the several funds of the retirement system, on deposit in any bank in this State, organized under the laws thereof, or under the laws of the United States or in any trust company incorporated by any law of this State; provided, that the sum deposited in any one bank or trust company shall not exceed twenty-five per centum of the paid-up capital and surplus of said bank or trust company. (16) Except as herein provided, no trustee and no employee of the board shall have any interest, direct or indirect, in the gains or profits of any investment made by the board of trustees, nor as such directly or indirectly receive any pay or emolument for his services. And no trustee or employee of the board shall, directly or indirectly, for himself or as an agent in any manner use the same, except to make such current and necessary payments as are authorized by the board of trustees; nor shall any trustee or employee of the board become an endorser or surety or become in any manner an obliger for moneys loaned by or borrowed of the board of trustees. OTHER PROVISIONS State Supervision. 256. (i) The various funds of the retirement system shall be sub- ject to the supervision of the State Department of Insurance. 408 Appendices Exemption from Taxation. (2) The riglit of a teacher to a pension, an annuity, or a retire- ment allowance, to the return of contributions, any benefit or right accrued or accruing to any person under the provisions of this article, and the moneys in the various funds created hereunder, are hereby exempt from any State or municipal tax, and shall not be subject to execution garnishment, attachment or any other process v^^hatsoever, and shall be unassignable except as in this act specifically provided. Protection Against Fraud. (3) Any person who shall knowingly make any false statement, or shall falsify or permit to be falsified any record or records of this retirement system in any attempt to defraud such system as a result of such act, shall be guilty of a misdemeanor, and shall be punishable therefor under the laws of the State of New Jersey. Should any change or error in records result in any employee or beneficiary re- ceiving from the retirement system more or less than he would have been entitled to receive had the records been correct, then, on the discovery of any such error, the board of trustees shall correct such error, and, so far as practicable, shall adjust the payments in such a manner that the actuarial equivalent of the benefit to which he was correctly entitled shall be paid. 2. All acts and parts of acts inconsistent with the provisions of this act or any portion of the act to which this act is an amendment, which are inconsistent with the provisions of this act are hereby repealed. If any section, clause or part of this act shall be declared unconstitutional by the decision of any court of competent jurisdiction, such decision shall not invalidate or destroy the force or purpose of the remainder thereof. 3. This act shall take effect immediately. Approved April 10, 1919. Laws of 1919, Chapter 81. An Act to amend "An act to amend an act entitled 'An act to establish a thorough and efficient system of free public schools, and to provide for the maintenance, support and management thereof,' approved October nineteenth, one thousand nine hundred and three," approved May seventh, one thousand nine hun- dred and seven. Be it enacted by the Senate and General Assembly for the State of New Jersey : I. Section two hundred and twenty-one of Article XXV of the act to which this act is an amendment is hereby amended to read as follows : 221. I. Any member of the now existing Teachers' Retirement Fund shall be released from membership in said fund and from any obligation for the payment of dues or deduction from salary for the support of said fund, and the board or body by which he or she is employed shall cease to deduct the percentages as heretofore deducted from his or her salary; provided, such member shall, at any time after the passage of this act, give written notice duly witnessed declaring his or her withdrawal from membership in the Teachers' Retirement Fund, and waiving all his or her rights, benefits and privileges thereunder in triplicate, and in sub- stantially the following form : NOTICE OF WITHDRAWAL To the Board of Trustees of the Teachers' Retirement Fund. This shall serve as a notice that I hereby withdraw from membership in the Teachers' Retirement Fund, and that I hereby waive all my rights, benefits and privileges in and to said fund by virtue of my mem- bership in and contributions to the Teachers' Retirement Fund. 409 Teachers' Pension Systems in the United States Date Signed Witnessed by Address Address School One copy of such notice shall be delivered to the board of trustees of the Teachers' Retirement Fund, at the office of the Teachers' Retirement Fund, and one copy to the board of trustees of the Teachers' Pension and Annuity Fund, and the other copy of the board or body by which he or she is employed. In case such delivery is not made in person or by agent, it shall be deemed to have been made when said notice is mailed properly addressed to the party to which such dehvery should be made postpaid and by registered mail. Such notice shall become effective and member- ship in the Teachers' Retirement Fund shall cease on the first day of the month next following such delivery of such notice. II. No person appointed as a teacher in this State after the passage of this act shall be required to become a member of the Teachers' Retire- ment Fund, but such person may do so if he or she so elects. 2. This act shall take effect immediately. Approved April lo, 1919. (f) Ohio An Act to provide a state-wide retirement system for teachers in. schools supported wholly or in part by public funds. Be it enacted by the General Assembly of the State of Ohio : Section i. That the following words and phrases as used in this act, unless a different meaning is plainly required by the context, shall have the follovv'mg meanings : "Retirement System" shall mean the "State Teachers' Retirement Sys- tem" provided for in this act. "Retirement Board" shall mean the board provided for in this act to administer said Retirement System. "Employer" shall mean the board of education, school district or other agency within the State of Ohio by which a teacher is employed or paid. "Teacher" shall mean any teacher or other person regularly employed in the public schools of the State of Ohio, who is required by law to have a teachers' certificate ; and any teacher in any school or college or other institution wholly controlled and managed, and wholly or partly supported by the state or any subdivision thereof, the board of trustees or other managing body of which shall accept the requirements and obligations of this act. "Present-teachers" shall mean any person who was a teacher, as de- fined by this act, before the first day of September, nineteen hundred and twenty; whose membership in the retirement system has been continuous; and, (a) who became a member on said date, or on the date of his first service as a teacher after said date and within one year after his last day of service previous to said first day of September, nineteen hundred and twenty ; or, (b) who was a teacher of a school or college or other institution on said date, or on a subsequent date within one year after his last day of service as such teacher previous to said first day of September, nineteen hundred and twenty, and who continued thereafter to be a teacher thereof until he^ with the teaching staff of such school or college or other institution, became a member of the retirement system as provided in this act; or, (c) who was a member of a local district pension system on said date, or on the date of his first eligibility to such membership after said date 410 Appendices and within one year after his last day of membership therein previous to said first day of September, nineteen hundred and twenty, and who continued thereafter to be a member until he, with the membership of such local district pension system, became a member of the retirement system. "New-entrant" shall mean any teacher who is a member except a present- teacher. "Prior-service" shall mean all service as a teacher, as defined by this act, rendered before the first day of September, nineteen hundred and twenty, by a present-teacher and similar service in another state credit for which was procured by a present-teacher as provided by this act. "Total-service" shall mean all service of a member of the retirement system since last becoming a member and, in addition thereto, all his prior-service computed as provided in this act. "Member" shall mean any person included in the membership of the retirement system as provided in this act. "Contributor" shall mean any person who has an account in the teachers' savings fund. "Beneficiary" shall mean any person in receipt of a retirement allowance or other benefit provided by this act. "Regular interest" shall mean interest at four per centum per annum, compounded annually. "Accumulated contributions" shall mean the sum of all the amounts de- ducted from the compensation of a member and credited to his individual account in the teachers' savings fund together with regular interest thereon. "Final average salary" shall mean the average annual compensation, not exceeding two thousand dollars, earnable as a teacher by a member during the ten years immediately preceding his date of retirement. "Annuity" shall mean payments for life derived from contributions made by a contributor and paid from the annuity and pension reserve fund as provided in this act. All annuities shall be paid in twelve equal monthly installments. "Pension" shall mean annual payments for life derived from appropria- tions made by an employer and paid from the employers' accumulation fund or the annuity and pension reserve fund as provided in this act. All pensions shall be paid in twelve equal monthly installments. "Retirement allowance" shall mean the pension plus the annuity. "Annuity reserve" shall mean the present value, computed upon the basis of such mortality tables as shall be adopted by the retirement board with regular interest, of all payments to be made on account of any annuity or benefit in lieu of any annuity, granted to a member under the provisions of this act. "Pension reserve" shall mean the present value computed upon the basis of such mortality tables as shall be adopted by the retirement board with regular interest, of all payments to be made on account of any pension, or benefit in lieu of any pension, granted to a member under the provisions of this act. The year for the administration of this act shall mean the school year and shall begin September first and end with August thirty-first next following. "Local district pension system" shall mean any school teachers' pension fund created in any school district of the State of Ohio in accordance with the laws of such state prior to the first day of September, nineteen hundred and twenty. Section 2. A state teachers* retirement system is hereby established for the teachers of the public schools of the State of Ohio which shall 411 Teachers' Pension Systems in the United States include the several funds created and placed under the management of a "Retirement Board" for the payment of retirement allowances and other benefits under the provisions of this act. The retirement board herein created shall have the right to sue and be sued, plead and be impleaded, contract and be contracted with and do all things necessary to carry out the provisions of this act and by such name all of its business shall be transacted, all of its funds invested, all warrants for money drawn and payments made, and all of its cash and securities and other property shall be held. Section 3. The general administration and the management of the state teachers' retirement system and the making effective the provisions of this act are hereby vested in the retirement board which shall have authority to make all necessary rules and regulations, not inconsistent with the provisions of this act to carry into effect the provisions thereof. Section 4. The retirement board shall consist of five members as follows: (a) the superintendent of public instruction; (b) the auditor of state; (c) the attorney general; and (d) two other members known as teacher members, who shall be members of the retirement system and who shall be elected by ballot by the members of the retirement system. Section 5. The first election of teacher members of the retirement board shall be conducted by and under the supervision of the superintendent of public instruction within sixty days after the first day of September next succeeding the passage of this act. At the first election each teacher shall be deemed to be a member of the retirement system and shall have the right to vote for two candidates for membership in the retire- ment board, provided, that any teacher in a local district pension system who exercises such right to vote shall be deemed to have petitioned for a merger with the state teachers' retirement system as provided in this act and his name shall be deemed to have been duly signed to any such petition subsequently circulated in such local district pension system. The candidate receiving the highest number of votes shall be elected to serve for a period ending on the second thirty-first of August following the election; the candidate receiving the second highest number of votes shall be elected to serve for a period ending on the thirty-first of August following the election. Section 6. Annually after the first election a member of the retire- ment system shall be elected by ballot to membership in the retirement board to serve for a term of two years beginning on the first day of September following the election. Vacancies occurring in the terms of teacher members of the board shall be filled by the remaining members of the board by election for the unexpired terms. Teacher members of the retirement board who fail to attend the meetings of the board for four months or longer, without being excused, shall be considered as having resigned and successors shall be elected for their unexpired terms. Section 7. All elections for members of the retirement board after the first election shall be held on the first Monday of May of each year under the direction of the retirement board. Any member of the retire- ment system shall be eligible for election as a member of the retirement board and the name of any member who shall be nominated by a petition signed by at least one hundred members of the retirement system shall be placed upon the ballots by the retirement board as a regular candidate. Other names of eligible candidates may at any election be substituted for the regular candidates by writing such names upon the ballots. The candidates receiving the highest number of votes for any term as member of the retirement board shall be elected a member of the retirement board for such term. Section 8. Until the first election shall have been held and the teacher- 412 Appendices members elected thereat duly installed, the ex officio members of the retirement board shall constitute an acting retirement board. Section 9. Each member of the retirement board created by this act upon appointment or election shall take an oath of office that he will support the constitution of the United States, the constitution of the State of Ohio, and that he will diligently and honestly administer the affairs of the said board and that he will not knowingly violate or wilfully permit to be violated any of the provisions of law applicable to this act. Such oath shall be subscribed to by the member making it, and certified by the officer before whom it is taken, and shall be immediately filed in the office of the secretary of state. Section 10. A majority of the members of the retirement board shall constitute a quorum for the transaction of any business. Section ii. The members of the retirement board shall serve without compensation, but they shall be reimbursed from the expense fund for all actual necessary expenses and for any loss of salary or wages they may suffer through serving on the retirement board. Section 12. The retirement board shall elect from its membership a chairman. Section 13. The treasurer of the state of Ohio shall be the custodian of the funds of the retirement system, and all disbursements therefrom shall be paid by him only upon vouchers duly authorized by the retirement board and bearing the signatures of said board; or, such vouchers may bear the fac-simile signatures of the board members printed thereon and the signatures of the president and secretary of said board. The treasurer of state shall give a separate and additional bond in such amount as may be fixed by the governor, but not less than the amount of money in all of the funds of the retirement system at the time such bond is fixed and with sureties to the approval of the governor, conditioned for the faithful performance of the duties of such treasurer as custodian of the funds of the retirement system provided for herein. Such bond shall be deposited with the secretary of state and kept in his office. The governor may from time to time require the treasurer of state to give other and additional bonds, as the funds of said retirement system in- crease, in such amounts and at such times as may be fixed by the governor which additional bonds shall be conditioned and filed as is provided for the original bond of the state treasurer covering the funds of the retirement system. The treasurer of state is hereby authorized and directed to deposit any portion of the funds of the retirement system not needed for im- mediate use in the same manner and subject to all the provisions of law with respect to the deposit of state funds by such treasurer, and all interest earned by such portion of the said retirement funds as may be deposited by the state treasurer in pursuance of authority herewith given shall be collected by him and placed to the credit of such fund or funds. Section 14. The attorney general of the state of Ohio shall be the legal advisor of the retirement board. Section 15. The retirement board shall have power to employ a secretary and to secure the service of such technical and administrative em- ployees as may be necessary for the transaction of the business of the retirement system. The compensation of all persons engaged by the retirement board and all other expenses of the board necessary for the proper operation of the retirement system shall be paid at such rates and in such amounts as the retirement board shall approve. The retire- ment board shall receive and act upon all applications for retirement under the provisions of this act and shall provide for the payment of all retire- ment allowances and other benefits and shall make such other necessary Teachers' Pension Systems in the United States expenditures as are required or authorized by the provisions of this act. Section i6. The members of the retirement board shall be the trustees of the several funds created by this act and said board shall have full power to invest same in bonds of the United States, the state of Ohio or of any county, city, village or school district of the state of Ohio at current market prices for such bonds ; provided that such pur- chase be authorized by a resolution adopted by the board ; and all such bonds so purchased, forthwith, shall be placed in the hands of the treasurer of state, who is hereby designated as custodian thereof, and it shall be his duty to collect the interest thereon as the same becomes due and payable and also the principal thereof and place the same when so col- lected into the retirement funds herein provided for. The treasurer of state shall honor and pay all vouchers drawn on the retirement funds for the payment of such bonds upon delivery of said bonds to him when there is attached to such vouchers a certified copy of such resolution of the board authorizing the purchase of such bonds ; and the board may sell any of said bonds upon like resolution, and the proceeds thereof shall be paid by the purchaser to the treasurer of state upon delivery to him of said bonds by the treasurer. Section 17. All interest earned upon the entire amount of money be- longing to said retirement system shall be divided among the various funds thereof proportionately, except that no interest shall be credited to the guarantee and expense funds herein provided for. Section 18. Except as herein provided, no trustee and no employee of the retirement board shall have any interest direct or indirect in the gains or profits of any investment made by the board nor as such directly or indirectly receive any pay or emolument for his services. And no trustee or employee of the said board directly or indirectly, for himself or as an agent or partner of others, shall borrow any of its funds or deposits or in any manner use the same except to make such current and necessary payments as are authorized by the board; nor shall any member or employee of said board become an endorser or surety or be- come in any manner an obliger for moneys loaned by or borrowed of the board. Section 19. The retirement board shall provide for the maintenance of an individual account with each member showing the amount of the member's contributions and the interest accumulations thereon. It shall collect and keep in convenient form such data as shall be necessary for the preparation of the required mortality and service table, and for the compilation of such other information as shall be required for the actuarial valuation of the assets and liabilities of the various funds cre- ated by this act. Upon the basis of the mortality and service experience of the members and beneficiaries of the system, the retirement board from time to time shall adopt the tables to be used for valuation purposes and for determining the amount of annuities to be allowed on the basis of the contributions of members. Section 20. At such times as the retirement board may deem it necessary and at least once within the first three years of the operation of this act, and once in each quinquennial period thereafter the retire- ment board shall have prepared by a competent actuary familiar with re- tirement systems, a report showing a complete valuation of the present and prospective assets and liabilities of the various funds created by this act with the exception of the guarantee fund and the expense fund. The actuary shall make an investigation of the mortality and service experience of the members of the system and shall report fully upon the condition of the retirement system together with such recommendations as he shall deem 414 Appendices advisable for the information of the retirement board in the proper operation of the retirement system. Section 21. The custodian shall furnish annually to the retirement board a sworn statement of the amount of the funds in his custody belong- ing to the retirement system. The records of the retirement board shall be open to public inspection and any member of the retirement system shall be furnished with a statement of the amount to the credit of his individual account upon written request by such member, provided that the retirement board shall not be required to answer more than one such request of a member in any one year. Section 22. The membership of the retirement system shall consist of the following: (a) All teachers in service on the first day of September, nineteen hun- dred and twenty, except teachers who shall have filed with their ern- ployer a statement in writing requesting exemption from membership or teachers who are excluded by the provisions of this act. (b) All teachers who became teachers or who were reappointed as teachers after the first day of September, nineteen hundred and twenty, except teachers who are excluded by the provisions of this act. (c) The teachers in any school or college or other institution supported in whole or in part by the state or any subdivision thereof and wholly controlled or managed by the state or any subdivision thereof shall be- come members on the same terms and conditions as the teachers in the public schools, provided that the board of trustees or other managing body of such school, college or other institution, if such institution is novv_ in existence or if in existence on said date, shall agree by formal resolution adopted before September first, nineteen hundred twenty-one, to accept all the requirements and obligations imposed by this act upon employers of members. Any institution which comes into existence as such thereafter shall have ninety days in which to accept said requirements and obliga- tions. A certified copy of said resolution shall be filed with the retirement board. When such resolution shall have been adopted and a copy of it filed with the retirement board, it shall not later be subject to rescindment or abrogation. Service in such schools, colleges or other institutions shall be then considered in every way the same as service in the public schools so far as the purposes of this act are concerned, and (d) All other teachers who become contributors under the provisions of this act. Section 23. Members of a local district pension system maintained under the laws of the state of Ohio from appropriations or contributions made wholly or in part by any employer and existing at the time this bill becomes a law are hereby excluded from membership in this retirement system. But should a majority of all the teachers participating in any such local district pension system apply for membership in the retirement system created by this act by a petition duly signed and verified, approved by their employer, and filed with the retirement board, all the teachers included in the membership of such local district oension system shall be- come members of the retirement system created by this act at such time within three months after the filing of such petition and the compliance with the other provisions of this act relative to the dissolution and dis- continuance of such local district pension system as the retirement board shall designate. Section 24. The retirement board, notwithstanding the foregoing pro- visions, may deny the right to become members to any class of teachers, whose compensation is only partly paid by the state, or who are not serving on a per annum basis, or who are on a temporary basis, or who are not re- quired to have a teacher's certificate, and it may also in its discretion, make Teachers' Pension Systems in the United States optional with teachers in any such class their individual entrance into membership. Section 25. The membership of any person in the retirement system shall cease if he withdraw his accumulated deductions or if he retire on a pension as provided in this act, or if he die, or if, in any four-year period after he last became a member, he shall render less than two years of service as a teacher. Section 26. Each teacher, upon becoming a member, shall file a detailed statement of all his previous service as a teacher and shall fur- nish such other facts as the retirement board may require for the proper operation of the retirement system. Section 27. To the extent to which it is used in determining the liability of any fund created by this act, the retirement board shall verify such statement by the best evidence it shall be able to obtain. If official records are not available as to the length of service, salary or other information required for the administration of this act, the board is hereby empowered to use its discretion as to the evidence to be accepted. Section 28. The retirement board shall credit a year of service to any teacher who is employed in a school district for the number of months the regular day school of such district were or shall be in session in said district within any year beginning on or about the first day of September and ending on or about the thirty-first day of August following, and shall fix and determine by appropriate rules and regulations how much credit shall be given for parts thereof, but in computing such service, or in computing final compensation, it shall credit no time during which a member was absent without pay, and it shall credit not more than one year for all service rendered in any school year. Section 29. Subject to the above restrictions, and to such other rules and regulations as the retirement board shall adopt, said board shall issue to each present-teacher a certificate certifying to the aggregate length of all his prior-service as a teacher as defined in this act. Section 30. Any present-teacher or new entrant, in addition to service as a teacher as defined in this act, may claim credit for similar service as a teacher in the public day schools of another state of the United States or of any territory or possession of the United States and such service shall be treated by the retirement board and included in his prior-service certificates as if it were service in the state of Ohio pro- vided the teacher shall pay into the employer's accumulation fund an amount equal to the additional liability assumed by such fund on account of the crediting of such years of service rendered outside of the state. The retirement board shall have final authority to determine and fix the amount that any teacher shall pay on account of such service outside of the state in the case of any present-teacher or new entrant, who desires to claim outside service and make such payment. Section 31. So long as membership continues, a prior-service certificate shall be final and conclusive for retirement purposes as to such service, unless modified by the retirement board upon application made by the member or upon its own initiative within one year after the date of its issuance or modification, or in case a mistake is found therein v/ithin one year of the time such mistake is so found. Section 32. When a present-teacher ceases to be a rnember his prior- service certificate shall be void and not renewable. Section 33. At retirement the total service credited a teacher shall consist of all his service as teacher since he last became a member and, if he has a prior-service certificate which is in full force and effect, all service certified on such prior-service certificate. Section 34. Any teacher, except a new-entrant with less than five years 416 Appendices of service, who has attained sixty years of age may retire, if a member, by filing with the retirement board an application for retirement. The filing of such application shall retire such member as of the end of the school year then current. At the end of the school year in which they become members, the retirement board shall retire all teachers who were over seventy years of age at the time they become members and shall automatically retire all other teachers who are members at the end of the school year in which age seventy is attained. Section 35. Upon superannuation retirement, a teacher shall be granted a retirement allowance consisting of : (a) An annuity having a reserve equal to the amount of the teacher's accumulated contributions at that time ; and (b) A pension of equivalent amount; and (c) An additional pension, if such teacher is a present-teacher, equal to one and one-third per centum of his average final salary multiplied by the number of years of service certified in his prior-service certificate Section 36. Any teacher who has completed thirty-six years of total service may retire, if a member, on a commuted superannuation allowance by filing with the retirement board an application for such form of allowance. The filing of such application shall retire such member as of the end of the school year then current. Upon retirement on a com- muted superannuation allowance, a teacher shall be granted a retirement allowance consisting of : (a) an annuity having a reserve equal to the amount of the teacher's accumulated contributions at that time ; and (b) a pension, having a reserve equal to the amount of the total liability of the employers' accumulation fund for the payment upon superannuation retirement of a pension equal to the annuity which the teacher's accumulations would purchase provided such teacher made no further payments ; and (c) an additional pension, if such teacher is a present-teacher, having a reserve equal to the amount of the total liability of the employer's accumulation fund for the payment of the pension allowable on super- annuation retirement by reason of prior-service as certified in such teacher's prior-service certificate. Provided, however, that no teacher retiring after thirty-six years of service shall receive less than twenty-five dollars per month as a total retirement allowance. Section 37. Medical examination of a member for disability shall be made upon the application of the employer or upon the application of the member or of a person acting in his behalf, stating that said member is physically or mentally incapacitated for the performance of duty and ought to be retired, provided that the said member was a teacher as de- fined in this act for not less than ten years preceding his retirement and was a member in each of such ten years which were subsequent to the year nineteen hundred and twenty. If such medical examination, con- ducted by a competent disinterested physician, or physicians, selected by the retirement board shows that the said member is physically or mentally incapacitated for the performance of duty and ought to be retired, the examining physician, or physicians, shall so report and the retirement board shall retire the said member for disability forthwith. Section 38. Upon disability retirement, a member shall receive a re- tirement allowance which shall consist of : (a) An annuity having a reserve equal to the amount of the teacher's accumulated contributions at that time ; and (b) A pension which, together with his annuity shall provide a retire- ment allowance of one and one-fifth per centum of his final average salary multiplied by the number of years of total service, but not less Teachers' Pension Systems in the United States than thirty per centum of said final average salary, with the exception that in no case shall the rate per centum of final average salary to which said retirement allowance amounts exceed nine-tenths of the rate per centum of final average salary to which he probably would have been entitled had retirement been deferred to the age of sixty. Section 39. A disability beneficiary, notwithstanding the provisions of this act, shall be considered on leave of absence during his first five years on the retired list and shall retain his membership in the retirement system. Once each year during said period, the retirement board shall require any disability beneficiary under the minimum age for superannua- tion retirement to undergo medical examination, said examination to be made at the place of residence of said beneficiary or other place mutually agreed upon. Upon completion of such examination by an examining physician, or physicians, selected by the retirement board, the examiner shall report and certify to the board whether said beneficiary is physically and mentally capable of resuming service similar to that from which he was retired. If the retirement board concur in a report by the examining physi- cian or physicians that the said disability beneficiary is capable of resuming service similar to that from which he was retired, the board shall so certify to his last employer before retirement and said employer by the first day of the next succeeding school year shall restore said beneficiary to his previous position and salary or to a position and salary similar thereto. Should any disability beneficiary die during such leave of absence aforesaid his estate shall be paid the balance which remains to his credit in the retirement fund at his death. Should a disability beneficiary be restored to active service his retirement allowance shall cease and the annuity and pen- sion reserves on his allowance at that time in the annuity and pension reserve fund shall be transferred from the annuity and pension reserve fund to the teachers' savings fund and the employers' accumulation fund respectively. Should any disability beneficiary, during his first five years on the retired list and while under the age of sixty, refuse to subm.it to a medical examination as required by this act, his retirement allowance shall be discontinued until his withdrawal of such refusal, and should such refusal continue for one year, all his rights in and to such retire- ment allowance shall be forfeited. After a disability beneficiary has been on the retired list for a period of five years he shall not be required to submit to further disability examination. Section 40. A contributor who ceases to be a teacher for any cause other than death or retirement, upon demand, vi^ithin ten years after such cessation of service, shall be paid the accumulated contributions standing to the credit of his indiv-idual account in the teachers' savings fund. Ten years after such cessation of service if no previous demand has been made, any accumulated contributions of a contributor shall be returned to him or to his legal representatives. If the contributor or his legal representatives can not then be found, his accumulated contributions shall be forfeited to the retirement system and credited to the guarantee fund. Section 41. Should a contributor die before retirement, his ac- cumulated contributions shall be paid to his estate or to such person as he shall have nominated by written designation duly executed and filed with the retirement board. If no legal representatives can be found, his accumulated contributions shall be forfeited to the retirement system and credited to the guarantee fund. Section 42. Until the first payment on account of any benefit is made, the beneficiary may elect to receive such benefit in a retirement allowance payable throughout life, or the beneficiary may then elect to receive the actuarial equivalent at that time of his annuity, his pension, or his re- tirement allowance, in a lesser annuity, or a lesser pension, or a lesser re- 418 Appendices tirement allowance, payable throughout life with the provision that, Option I— If he die before he has received in payments the present value of his annuity, his pension, or his retirement allowance, as it was at the time of his retirement, the balance shall be paid to his legal represen- tatives or to such person, having an insurable interest in his life, as he shall nominate by written designation duly acknowledged and filed with the retirement board. Option 2 — Upon his death, his annuity, his pension, or his retirement allowance, shall be continued throughout the life of and paid to such person having an insurable interest in his life, as he shall nominate by written designation duly acknowledged and filed with the retirement board at the time of his retirement. Option 3 — Upon his death, one-half of his annuity, his pension, or his retirement allowance, shall ^e continued throughout the life of such per- son, having an insurable interest in his life as he shall nominate by written designation duly acknowledged and filed with the retirement board at the time of his retirement. Option 4 — Some other benefit or benefits shall be paid to the beneficiary or to such other person or persons as he shall nominate provided such other benefit or benefits, together with such lesser annuity, or lesser pension, or lesser retirement allowance, shall be certified by the actuary engaged by the retirement board to be of equivalent actuarial value to his annuity, his pension or his retirement allowance, and shall be approved by the retirement board. Section 43. Each teacher who is a member of the retirement system shall contribute four per centum of his earnable compensation not exceed- ing two thousand dollars per annum, to the teachers' savings fund. Each employer shall deduct from the compensation of each contributor on each and every payroll of such contributor for each and every payroll period subsequent to the date upon which such contributor became a member an amount equal to four per centum of such contributor's earnable com- pensation provided that the amount of a contributor's earnable com- pensation in excess of two thousand dollars per annum shall not be con- sidered. In determining the amount earnable by a contribution in a pay- roll period, the retirement board and the employer may consider the rate of compensation payable to such contributor on the first day of the pay- roll period as continuing throughout such payroll period and deductions may be omitted from compensation for any period less than a full payroll period, if a teacher was not a contributor on the first day of the payroll period ; and to facilitate the making of deductions, the deduction required of any contributor may be modified in any payroll period by an amount not exceeding ten cents. The deductions provided herein shall be made not- withstanding that the minimum compensation provided for by law for any member shall be reduced thereby. Every member shall be deemed to con- sent and agree to the deductions made and provided for herein and shall receipt in full for his salary or compensation, and payment less said de- ductions shall be a full and complete discharge and acquittance of all claims and demands whatsoever for the services rendered by such person during the period covered by such payment. Each teacher shall pay with the first payment to the teachers' savings fund each year, and in addi- tion thereto a sum to be determined by the retirement board, but not to exceed one dollar, which amount shall be credited to the expense fund. Said payments for the expense fund shall be made to the retirement board in the same way as payments to the teachers' savings fund shall be made. Section 44. Each employer of a teacher who is a member of the re- tirement system shall pay to the employers' accumulation fund a certain 419 Teachers' Pension Systems in the United States per centum of the earnable compensation of each such teacher to be known as the "normal contribution" and a further per centum of the earnable compensation of each such teacher to be known as the "deficiency contribu- tion." The rates per centum of such contributions shall be fixed on the basis of the liabilities of the retirement system and shall be certified to the employers by the retirement board after each actuarial valuation. Until the first such certification, the normal contribution shall be two and eight- tenths per centum of the members' salaries and the deficiency contributions shall be two and seventy-seven hundredths per centum of the members' salaries. Section 45. On the basis of regular interest and of such mortality and other tables as shall be adopted by the retirement board the actuary engaged by the retirement board to make each valuation required by this act during the period over which the deficiency contribution is payable, immediately after making such valuation, shall determine the uniform and constant percentage of the earnable compensation of the average new en- trant, who is a contributor which, if contributed on the basis of the com- pensation of such contributor throughout his entire period of active service, would be sufficient to provide at the time of his retirement the total amount of his pension reserve. The rate per centum so determined shall be known as the "Normal contribution" rate. After the deficiency contribution has ceased to be payable, the normal contribution shall be the rate per centum of the earnable salary of all contributors obtained by de- ducting from the total liabilities of the employers' accumulation fund of the amount of the funds in hand to the credit of that fund and dividing the remainder by one per centum of the present value of the prospective future salary of all contributors as computed on the basis of the mortality and service tables adopted by the retirement board and on regular interest. The normal rate of contribution shall be determined by the actuary after each valuation, and shall be certified to the employers by the retirement board and shall continue in force until a new valuation and certification. Section 46. Immediately succeeding the first valuation, the actuary engaged by the retirement board shall compute the percentage of the total compensation of all contributors during the preceding school year which is equivalent to four per centum of the amount of the total pension liability to all contributors not dischargeable during the remainder of the active service of all contributors by the aforesaid normal contribution. The contribution derived by deductions at the rate per centum so determined shall be known as the "deficiency contribution." Section 47. Each employer shall pay annually into the employers' ac- cumulation fund, in such monthly or less frequent installments as the retirement board shall require, an amount certified by the retirement board which shall equal the per centum of the total compensation, earnable by all contributors during the preceding school year, which is the sum of the two rates per centum hereinbefore described and required to be computed, to-wit, the sum of the normal contribution rate plus the de- ficiency contribution rate. The aggregate of all such payments by em- ployers shall be sufficient, when combined with the amounts in the em- ployers' accummulation fund, to provide the pensions payable out of the fund during the year then current, and if not, the additional amount so re- quired shall be collected by means of an increased rate per centum of the deficiency contribution which shall be certified to the employers by the retirement board and shall continue in force for the period of one year. Section 48. The beforementioned deficiency contribution contributable by the employers shall be discontinued as soon as the accumulated reserve in the employers' accumulation fund shall equal the present value, as ac- 420 Appendices tuarily computed, and approved by the retirement board, of the total liability of such funds for the payment of pensions less the present value, computed on the basis of the normal contribution rate then in force, of the normal contributions to be received on account of teachers who are at that time contributors. Sfxtion 49. Each employer, before employing any teacher to whom this act may apply, shall notify such person of his duties and obligations under this act as a condition of his employment. Any such appointment or reappointment of any teacher in the public day schools of the state on or before the first day of September, nineteen hundred and twenty, or service upon indefinite tenure after that date shall be conditioned upon the teacher's acceptance of the provisions of this act as a part of the contract. Section 50. During September of each year, or at such other time as the retirement board shall approve, each employer shall certify to the retirement board the names of all teachers to whom this act applies. Section 51. Each employer shall on the first day of each calendar month, or at such less frequent intervals as the retirement board many approve, notify the retirement board of the employment of new teachers, removals, withdrawals and changes in salary of teachers that shall have occurred dur- ing the month preceding or the period since the period covered by the last notification. Section 52. Each employer shall cause to be deducted on each and every payroll of a contributor or each and every payroll period, subse- quent to the first day of September, nineteen hundred and twenty, the contribution payable by such contributor as provided in this act. Each employer shall certify to the treasurer of said employer on each and every payroll a statement as voucher for the amounts so deducted and for the amount of the normal contribution and the deficiency contribution pay- able by the employer as provided in this act. Each employer shall send a duplicate of such statement to the secretary of the retirement board. Section 53. The treasurer of each employer on receipt from the employer of the voucher for deductions from the salaries of teachers and for the contributions of the employer as provided in this act shall transmit monthly or at such times as the retirement board shall designate the amounts specified in such voucher to the secretary of the retirement board. The secretary of the retirement board after making a record of all such receipts shall pay them to the treasurer of the State of Ohio for use according to the provisions of this act. Section 54. Each employer shall keep such records and shall furnish such information and assistance to the retirement board as it may require in the discharge of its duties. Section 55. — Employers who obtain funds directly by taxation are hereby authorized and directed to levy annually such additional taxes as are required to provide the additional funds necessary to meet the financial requirements imposed upon them by this act, and said tax shall be placed before and in preference to all other items except for sinking fund or interest purposes. Section 56. The funds hereby created are the teachers' savings fund, the employers' accumulation fund, the annuity and pension reserve fund, the guarantee fund and the expense fund. (a) The teachers' savings fund shall be the fund in which shall be accumulated contributions from the compensation of contributors for the purchase of annuities. The accumulated contributions of a contributor returned to him upon his withdrawal, or paid to his estate or designated beneficiary in the event of his death as provided in this act shall be paid from the teachers' savings 421 Teachers' Pension Systems in the United States fund. Any accumulated contributions forfeited by a failure of a teacher or his estate to claim the same as provided in this act shall be trans- ferred from the teachers' savings fund to the guarantee fund. The accumulated contributions of a contributor shall be transferred from the teachers' savings fund to the annuity and pension reserve fund in the event of his retirement. (b) The employers' accumulation fund shall be the fund in which shall be accumulated the reserves for the payment of all pensions payable as provided by this act. The amounts paid by employers on account of their normal contributions and their deficiency contributions shall be credited to the employers' accumulation fund. Until the deficiency contribution shall have been discontinued, upon the retirement of a contributor, an amount equal to this annuity reserve shall be transferred from the employers' accumulation fund to the annuity and pen- sion reserve fund and a pension equal to his annuity shall be paid therefrom. The remainder of any pension granted to him shall be paid directly from the employers' accumulation fund until the pension reserve thereon shall have been fully accumulated and the deficiency contribution shall have been discontinued. Thereupon, the full reserve on all pensions thereto- fore payable from the employers' accumulation fund shall be transferred from said fund to the annuity and pension reserve fund and said pensions shall thereafter be paid from the annuity and pension reserve fund. Upon the retirement of a contributor thereafter, the full amount of his pension reserve shall be transferred from the employers' accumulation fund to the annuity and pension reserve fund. (c) The annuity and pension reserve fund shall be the fund from which shall be paid all pensions and annuities, or benefits in lieu thereof, on account of which reserves have been transferred from the teachers' savings fund or the employers' accumulation fund as provided in this act. When the deficiency contributions have ceased to be payable, the full amount of the pension reserves on the pensions then directly payable from the employers' accumulation fund shall be transferred from said fund to the annuity and pension reserve fund. The annuity and pension reserve fund then and thereafter shall be the fund from which shall be paid all annuities and all pensions, and all benefits in lieu thereof, which are payable as provided in this act. Upon the retirement of a contributor, then and thereafter, his accumulated deductions shall be transferred from the teachers' savings fund to the annuity and pension reserve fund, and an amount equal to his full pension reserve shall be transferred from the employers' accumulation-fund to the annuity and pension reserve fund. Any teacher at the time of retirement shall be permitted to deposit in the annuity and pension reserve fund such amount in multiples of one hundred dollars as such teacher shall desire and such teacher shall receive in return therefor an annuity having a reserve equal to the amount deposited, pro- vided, that in no case shall a teacher have the right to purchase an annuity, which together with the retirement allowance otherwise provided under the provisions of this act shall exceed such teacher's final average salary. (d) A guarantee fund is hereby created to facilitate the crediting of uniform interest on the amounts in the various other funds with the exception of the expense fund, and to provide a contingent fund out of which special requirements of any of the other funds may be covered. All income, interest and dividends derived from the deposits and invest- ments authorized by this act shall be paid into the guarantee fund. The retirement board is hereby authorized to accept gifts and be- quests. Any funds that may come into possession of the retirement system in this manner or which may be transferred from the teachers' savings fund by reason of lack of claimant or because of a surplus in any 422 Appendices fund created by this act or any other moneys whose disposition is not otherwise provided for herein shall be credited to the guarantee fund. The interest allowed by the retirement board to each of the funds as provided in this act shall be paid to such funds from the guarantee fund. Any deficit occurring in any fund which would be not automatically covered by the payment to that fund as otherwise provided by this act shall be met by payments from the guarantee fund to such fund. Should the amount in this fund in any year be insufficient to meet the amounts pay- able therefrom the amount of such deficiency with regular interest added thereto, shall be assessed by the retirement board in the succeeding years among the employers on the basis of the amount of the normal contribu- tions paid by them, and the amounts so assesed shall be payable by such employers in the same manner and out of the same funds as their normal contributions are made and shall be credited to the guarantee fund. (e) The expense fund shall be the fund from which shall be paid the expense of the administration of this act, exclusive of amounts pay- able as retirement allowances and as other benefits as provided in this act. Section 57. The retirement board shall estimate annually the amount required to defray such expense in the ensuing year. The retirement board shall apportion the amount of the expense so estimated in equal amounts among the contributors, provided that the amount so apportioned in any year shall not exceed one dollar per contributor. If the amount estimated to be required to meet the expenses of the retirement board is in excess of one dollar per contributor for the year, the amount of such excess shall be paid from the guarantee fund. If in the judgment of the retirement board, as evidenced by a resolution of that board recorded in its minutes, the amount in the guarantee fund exceeds the amount necessary to cover the ordinary requirement of that fund for a period of five years in the future, the board may transfer to the expense fund such excess amount not exceeding the entire amount required to cover the expenses as estimated for the year and the retirement board may then apportion the remaining amount required for the expense fund, if any, among the contributors as before mentioned. Section 58. The sum of ten thousand dollars is hereby appropriated from the moneys in the general revenue fund of the State of Ohio, not otherwise appropriated, for the expense of establishing, organizing and starting the operations of the retirement system and of establishing an office therefor. This sum shall be credited to the expense fund and ex- pended only on order of the retirement board. Section 59. If a local district pension system votes to merge with the retirement system as provided in this act, the retirement board created by this act shall employ an actuary to value the assets and liabilities which will be taken over by the retirement system hereby created in the event of such merger. The actuary so employed shall be an actuary also approved by the employer in whose district the local district pension system is operated, and the expense of the valuation shall be paid by such em- ployer. The actuary shall compute the present value of the liabilities on account of teachers in service in the local district pension system and on account of pensioners on the rolls of such local district pension system. He shall also compute the present value of the prospective amount to he received by reason of the payment of the normal contributions by the employer on behalf of the active teachers of such local system in the event of the contemplated merger. From the present value of the total liability for pensions on account of teachers in service in the local district pension system as previously determined, the actuary shall deduct the present value of the normal contributions. The amount remaining, together with the excess, if any, of the present value of all payments, necessary to 423 Teachers' Pension Systems in the United States. continue the pensions of the pensioners of the local district pension system^ over and above the amount of the moneys and securities of such system, shall be known as the "accrued liability." Provided that no teacher, a member of a local district pension system at the time of the passage of this act, shall receive a lesser total retirement allowance upon retirement after merger of the local system with the state system than said teacher would have received upon retirement under the provisions of the local system. Section 6o. The actuary shall then determine the amount of a de- ficiency contribution which payable annually without regard to the payroll of contributors and increasing by three per centum of itself each year, until the year in which the deficiency contribution payable by other employers who had no local pension system may be expected to be dis- continued, shall have a present value equal to this accrued liability. Section 6i. The increasing contribution so determined by the actuary shall be paid by the employer instead of the deficiency contribution com- puted as otherwise provided by this act, anything to the contrary notwith- standing. In the event of merger, the moneys and securities to the credit of the local district pension system, not exceeding an aggregate amount equal to the present value of the payments to be made on account of all pensions to the pensions on the rolls of the local district pension system, shall be transferred to the employers' accumulation fund and the pensions then payable by the local district pension system shall thereafter be paid from the employers' accumulation fund until the reserves on these pensions with the other pensions payable from the employers' accumulation fund shall have been accumulated and shall be transferred to the annuity and pension reserve fund, from which fund they shall thereafter be pay- able. The pensions of the active members of the local district pension system and of the new entrants shall thereafter be payable as are the pen- sions of other members of the retirement system hereby created. The amount of the excess of the moneys and securities of the local district pension system over and above the present value of the payments to be made on account of all pensions to the pensioners of the rolls of the local district pension system shall be transferred to the teachers' savings fund and shall be credited pro rata to the active teachers of such local district pension system on the basis of the amounts of their previous contributions to the local district pension system, provided, however, that in case such method of distribution shall not be found practicable by the retirement board, the board may use such other method of appor- tionment as may seem fair and equitable to such board. The amount so credited in any case shall be considered as a part of the teacher's accumulated contributions for all purposes except in the case of retire- ment in which it shall be considered as an amount in excess of the teacher's accumulated contributions and shall be used in purchasing from the annuity and pensions reserve fund an annuity, in addition to any other annuity or pension benefit otherwise provided by this act. After the moneys and securities of any local district pension system shall have been transferred to the employers' accumulation fund or to the teachers' savings fund as hereinbefore provided, such local district pen- sion system shall cease to exist. Section 62. The right of a person to a pension, an annuity, or retire- ment allowance itself, any optional benefit, any other right accrued or accru- ing to any person under the provisions of this act, the various funds created by this act and all moneys and investments and income thereof, are hereby exempt from any state, county, municipal or other local tax, and shall not be subject to execution, garnishment, attachment, the operation of bankruptcy or insolvency laws or any other process of law whatsoever, and shall be unassignable except as in this act specifically provided. 424 Appendices Section 63. Any person who shall knowingly make any false statement or shall falsify or permit to be falsified any record or records of this retirement system in any attempt to defraud such system as a result of such act, shall be guilty of a misdemeanor and shall upon conviction thereof be fined not less than ten nor more than one thousand dollars. (g) Vermont Laws of 1919, Chapter 57 — An Act to Establish the Vermont Teachers' Retirement System. It is hereby enacted by the General Assembly of the State of Vermont: Section i. Definitions. The following words and phrases as used in this act shall have the following meanings : (i) "Teacher" shall mean any teacher, principal, supervisor or superintendent employed in a public day school within the state. (2) "Public school" shall mean any day school conducted within the state under the authority and supervision of a duly elected board of school directors. (3) "Year" as used in this act referring to the term of school service of a teacher shall mean the same as "school year," as defined in t!ie .general laws of the state at the time when the school service in question was rendered, provided, however, that the retirement board may in special cases determine what school service shall constitute the equivalent of a specified period of service under this act. (4) "Interest," unless herein otherwise provided, shall mean com- pound interest at such rate as shall be determined by the retirement board. (5) Wherever the word "he" appears it shall be taken to apply to females as well as males. Section 2. Teachers' Retirement System. The Vermont teachers' re- tirement system, hereinafter called the retirement system, is hereby estab- lished, to become effective on July first nineteen hundred and nineteen. Section 3. Teachers Retirement Association. An association to be known as the Vermont teachers' retirement association, hereinafter called the retirement association, may be organized by and among the teachers in the public schools of the state. Membership in said association may be acquired under the following conditions: All teachers who shall serve in the public schools on or after July first, nineteen hundred and nineteen, may become members of the association, upon application to and approval by a majority of the retirement board and under such rules and regulations as it may prescribe. Section 4. Organization. The teachers who desire to become members of the retirement association shall, as soon as may be after July first, nine- teen hundred and nineteen, adopt such form of organization for said association as shall be prescribed by the commissioner of education, the state treasurer and the insurance commissioner; and thereafter such organization shall be maintained for the purposes herein contemplated, with such modifications thereof as may be adopted from time to time by the members of the association with the approval of the retirement board. Section 5. Teachers' Retirement Board. The administration of the retirement system hereby established is hereby vested in a board to be known as the teachers' retirement board, herein called the retirement board, consisting of five members, as follows: The commissioner of education, the state treasurer, the insurance commissioner and two mem- bers of the retirement association. Upon the organization of said asso- 425 Teachers' Pension Systems in the United States ciation the members thereof shall elect from among their number, in a manner to be approved by the commissioner of education, the state treasurer and the insurance commissioner two persons to serve upon the retirement board, one member to serve for one year and one for two years; and thereafter the members of the retirement association shall elect annually fom among their number, in a manner to be approved by the retirement board, one person to serve on said board for the term of two years. Until the organization of the retirement association and the election of two representatives therefrom to membership on the retirement board, the commissioner of education, the state treasurer and the insurance commissioner shall be empowered to perform all the duties of said board. When a vacancy occurs in the retirement board by reason of the death, resignation or inability to serve of one of the members chosen by the retirement association such vacancy shall be filled for the un- expired term by the election of a new member of said association, at a meeting duly called for that purpose. The members of the retirement board shall serve without compensa- tion, but they shall be reimbursed for all necessary expenses which they may sustain through their service on the board. All claims for such reimbursement shall be subject to the approval of the auditor of accounts. Section 6. General Duties. The retirement board shall provide for the payment of retirement allowances and such other expenditures as are prescribed by this act, and shall perform such other functions as are required for the execution of the provisions hereof ; and to that end said board shall make by-laws and regulations not inconsistent with the pro- visions of this act, shall employ a secretary, whose duty it shall be to keep a record of all its proceedings, and shall provide such other clerical assistance as may be necessary for the discharge of the duties prescribed hereunder. Section 7. Administrative Duties. The retirement board shall adopt mortality tables for the retirement system hereby created, and, except as herein otherwise provided, shall determine what rates of interest shall be established in connection with such tables or otherwise under the provisions hereof. Said board may modify such mortality tables or adopt others, and may change rates of interest once established, unless otherwise provided herein, but not so as to impair the vested rights hereunder of any member of the retirement association, unless such modifications or changes shall be assented to by such member. Said board shall establish and mainrain, under competent actuarial advice, a complete system of records and accounting. Section 8. Creation of Annuity Fund. The annuities hereinafter pro- vided shall be paid out of a fund to be known as the annuity fund, which shall be constituted as follows : (i) Each member of the retirement association shall pay into the annuity fund, under regulations to be prescribed by the retirement board, such percentage of his salary as may be determined by said board within the limits hereinafter prescribed. The rate of assessm.ent for each school year, which shall not be more than five per cent of each member's salary, shall be established by the retirement board on or before the 1st day of April in each year, and notice thereof shall be given all members of the retirement association in such manner as the retirement board shall prescribe. Such rate of assessment shall be uniform, at any given time, for all members of the retirement association; provided, how- 426 Appendices ever, that no member shall in any one year pay into said fund less than sixteen dollars nor more than one hundred dollars. (2) Any member of the retirement association, who for thirty years shall have paid into said fund his regular assessments, as above provided, shall be exempt from further assessments ; but such member may there- after, if he so elects, continue to pay his assessments into said fund. (3) The annuity fund shall also consist of such amounts as may be appropriated from time to time by the general assembly on estimates sub- mitted by the retirement board, subject to approval by the board of control, as hereinafter provided. Such estimates shall provide for an ap- propriation sufficient to enable the board to credit annually to each member of the retirement association a sum equal to his contribution to the annuity fund and the additional allowance provided in section thirteen of this act. Provided, however, that the state shall not be called upon to pay into said annuity fund more than one hundred dollars in any year on account of the contribution of any one member of said retirement association ; nor shall the total amount appropriated by the state in any one year to carry out the provisions of this act exceed the sum of twenty-five thousand dollars. Section 9. Contributions. How Credited. The contributions made by the members of the retirement association to the annuity fund hereinbefore created, shall be credited as made to such members severally in individual accounts up to the time of retirement, and at the same time each member so contributing shall be credited individually with a like amount as the contribution of the state. Contributing members shall also be credited with the interest earned by their several contributions and by the equal contributions made by the state as aforesaid. Section 10. Retirement. Any member of the retirement association, who shall have served as a public school teacher for a period of thirty years, of which twenty years, and the last five preceding retirement, shall have been in this state, may retire from service in the public schools on or after attaining the age of sixty years, if a woman, and of sixty-five years, if a man, without forfeiting any of the benefits of the retirement system; and at any time thereafter, if incapable of rendering satisfactory service, such member may be so retired, with the approval of the retire- ment board. Si;cTioN II. Reinstatement of Member. Any member of the retirement association, who shall have withdrawn from service in the public schools of the state, shall, on being re-employed therein, be reinstated in the retirement association uponi such terms and conditions as shall be prescribed by the retirement board. Section 12. Retirement Allowances. Except as hereinafter provided. a member of the retirement association, who shall have retired from service in the public schools of the state, and who shall have complied with all the provisions of this act and with the rules and regulations of the retirement board hereby authorized, shall be entitled to receive from the annuity fund hereinbefore established, (i) such annuity as his con- tributions to said fund, with interest thereon, together with the like contributions made thereto by the state, and the interest thereon, will purchase on the basis of McClintock's table of mortality among annuitants, and an interest rate of three and a half per cent annum; or, (2) at his option, he shall be entitled to receive an annuity of less amount, as may be determined by the retirement board for annuitants electing such option, with the provision that if the annuitant dies before receiving payments equal to the sum of hir. assessments hereunder and the contributions equal thereto made by the state, as hereinbefore provided, with interest, the difference between the total amount of said payments and the total amount 427 Teachers' Pension Systems in the United States of such assessments and contributions, with interest, shall be paid as an annuity to a surviving husband, or wife, as the case may be, or to his or her legal representatives as such member may elect, subject to such reason- able rules and regulations as the retirement board may prescribe. Section 13. Teachers Already in Service. Any teacher already in the service of the state when this act takes effect, who shall become a mem- ber of the retirement association when forty-five years of age or older, shall on retiring as hereinbefore provided, be entitled to receive the allow- ance prescribed in the preceding section for members entering the service of the state as teachers after the passage of this act, and such additional allowance from the state as may be determined by the retirement board, the same to be paid as provided in the preceding section ; but his total annuity hereunder shall not exceed one half his average annual salary throughout his entire period of active service in the state. Section 14. Allowance in Case of Death or Disability. A member of the retirement association, who shall have been a teacher in the public schools of the state at least six years, and who shall become totally and permanently disabled to teach, as determined upon examination by physicians approved by the retirement board, shall receive an annuity based upon the accumulated sum of his contributions and the equal contributions of the state, with interest, calculated on the basis of McClintock's table of mortality among annuitants and three and a half per cent interest, with such additional annual allowance from the state as the retirement board, in the exercise of sound discretion, shall deem equitable, the same being limited by his earning capacity in other occupations, such additional allowance to be continued so long, and in such amount, as the retirement board may determine; provided, however, that in no event shall the total sum received annually by such member, under this section, including his annuity and the additional allowance above provided for, exceed half of his average annual salary throughout his entire period of service as de- termined by the retirement board. If such retiring member should die before receiving in the form of an annuity all of the accumulations up to the time of his disability from his own and the state's annual contributions on his account, the balance shall he paid to his or her legal representatives, as he or she may elect, subject to such rules and regulations as may be prescribed by the retirement board. Section 15. Allowance in Case of Resignation or Dismisal. (i) Any member of the retirement association withdrawing from service in the public schools of the state, by resignation or dismissal, before becoming eligible to retirement under the provisions of this act, shall be entitled to receive from the annuity fund all amounts contributed thereto as assess- ments and, if at the time of such withdrawal, such member shall have served in the public schools of the state six years or more, he shall be entitled to receive, in addition, the contributions made by the state on his account as hereinbefore provided. (2) In case of the death of such member under the circumstances above set forth, the several amounts to which he would be entitled, if living, shall he paid to a surviving husband or wife, or to the legal representatives of such deceased member, as may be elected, subject to the rules and regula- tions of the retirement board. (3) In the case of the death or withdrawal from service of such member before the completion of six years of service in the public schools of the state the contributions made by the state on his account, as herein- before provided, shall be placed in the reserve fund hereinafter established, for the general purposes of the retirement system. (4) Contributions returned as above provided shall be paid in lump sums or in installments as the member may elect, subject, however, to such 428 Appendices reasonable rules and regulations as may be prescribed by the retirement board. Section i6. Exemptions. That portion of the salary or wages of a member deducted or to be deducted under this act, the right of a member to an annuity or allowance hereunder, and all his rights in the funds of the retirement system, shall be exempt from taxation, and from the operation of any laws relating to bankruptcy or insolvency, and shall not be attached or taken upon execution or other process of any court. No assignment by a member of any part of such funds to which he is or may be entitled, or of any right to or interest in such funds, shall be valid. Section 17. Administration of Funds. (i) All funds of the retirement system shall be in the custody and charge of the state treasurer, who shall invest and reinvest such funds as are not required for current disbursements in accordance with the laws of the state governing the investment of the assets of savings institutions. (2) The state treasurer shall make such payments to the members of the retirement association from the annuity fund as the retirement board shall order to be paid in accordance with the provisions hereof. (3) On or before the first day of August in each year, the state treasurer shall file with the insurance commissioner and with the secretary of the retirement board a sworn statement exhibiting the financial condition of the retirement system on the thirtieth day of June in each year, and its financial transactions for the year ending on such date. Such statement shall be in the form prescribed by the retirement board, and shall be published with the report of the state treasurer. Section 18. Reserve Fund. A reserve fund is hereby created, to con- sist of gifts and receipts from sources other than those herein specified, returns to the state of its contributions to the annuity fund as herein- before provided, and balances that may accrue on account of interest, sav- ings or otherwise, which fund shall be maintained and used, in the discretion of the retirement board, for unforeseen contingencies, expenses of administration, or any other purpose within the scope of the retirement system. Section 19. Accrued Liabilities Fund. An accrued liabilities fund is hereby created, to consist of the Vermont state teachers' retirement fund, now in the custody of the state treasurer under the provisions of sections 1220 to 1231, inclusive, of the General Laws, of such part of the reserve fund as the retirement board may from time to time transfer thereto, and of such other funds as may be received by the retirement board for the purposes contemplated in this section. Provided, however, that said Vermont teachers' retirement fund shall not become part of the funds of the retirement system as contemplated in this section except upon a vote to that effect of the Vermont state teachers' retirement fund association, duly certified to the retirement board by the president of said association. The accrued liabilities fund shall be drawn upon from time to time by the retirement board as needed to make up the contributions of the state to the retiring and disability allowances provided hereunder. Said funds shall be in all respects subject to the provisions of this act, and to the rules and regulations of the retirement board hereby authorized in respect to custody, investment, audit and disbursement. Section 20. Supervision of Retirement System. The retirement board shall cause the system hereby established to be thoroughly examined by a competent actuary or actuaries, once in every three years, and oftener if deemed necessary, and many call an actuary in consultation at any time; and such board is hereby empowered to change the scale of con- tributions required of teachers, if deemed advisable as the result of ac- tuarial experience hereunder; but such changes shall not be effective 429 Teachers' Pension Systems in the United States as to teachers becoming members of the retirement association before the same shall have been made, unless assented to by such members. Section 21. The accounts of the retirement board and the books and accounts of the state treasurer as custodian of the funds of the retirement system, and the cash and securities in his hands representing such funds, shall be examined and audited annually at the time and in the manner prescribed for the annual audit of the accounts of the trustees of the permanent school fund and the accounts of the state treasurer in con- nection therewith. Section 22. Appropriation. The sum of twenty-five thousand dollars per annum is hereby appropriated to carry out the provisions of this act for the biennial period beginning July i, 1919. Section 23. Changes in Rules and Regulations. The rules and regula- tions hereby prescribed for the administration of the retirement system hereby created, shall be subject to change by the retirement board whenever deemed to be for the best interests of the entire body of teachers in the service of the state. The benefits of the retirement system shall be enjoyed by each member of the retirement association so long as he meets all the requirements of this act and complies with all the rules and regulations of the retirement board. Section 24. Sections of General Laws Repealed. Sections one thou- sand two hundred and twenty to one thousand two hundred and thirty- one, inclusive, of the General Laws are hereby repealed; provided, how- ever, that those provisions of said sections relating to the custody and control of the Vermont state teachers' retirement fund referred to in section twenty of this act shall continue in force until the transfer of said fund to the retirement system as hereinbefore provided. Section 25. This act shall take efifect from its passage. Approved April 8, 1919. 430 APPENDIX 4 ACTUARIAL TABLES The tables shown below present part of the foundation upon which some of the recent actuarial systems operate. They may help the reader to understand the elements of actuarial computations. The first three tables may enable him to calculate how much a certain annual contribu- tion will accumulate in the course of years and what annuity it will provide. The American Experience Tables upon which Massachusetts system operates is based upon the mortality experience of the population at large and makes no distinction between the two sexes as to mortality. The McClintock Experience adopted by Vermont presents the experience of the annuitants of the Home Life Insurance Company. The New York City Teachers' Experience and the New Jersey Teachers' Adopted Experience, which were prepared by Mr. Geo. B. Buck, ac- tuary, probably represent the real mortality of the teachers better than any other table. In comparing the reserves and annuities under the different tables it must be noted that in the American Experience and McClintock Experience Tables here shown interest was assumed at 3J^ per cent as the latter is the interest adopted by Massachusetts and Vermont, whereas the New York City and New Jersey tables are computed at 4 per cent, as 4 per cent is the interest adopted by the New York City and New Jersey systems. 43] Teachers' Pension Systems in the United States Table 1 Compound Interest The amount accumulated by a deposit of SI paid at the beginning of each year, at various rates of interest after a certain number of years Year 3% 3H% 4% 1 $ 1.0300 S 1.0350 $ 1.0400 2 2.0909 2.1062 2.1216 3 3.1836 3.2149 3.2465 4 4.3091 4.3625 4.4163 5 5.4684 5.5502 5.6330 6 6.6625 6.7794 6.8983 7 7.S923 8.0517 8.2142 8 9.1591 9.3685 9.5828 9 10.4639 10.7314 11.0061 10 11.8078 12.1420 12.4864 11 13.1920 13.6020 14.0258 12 14.6178 15.1130 15.6268 13 16.0863 16.6770 17.2919 14 17.5989 18.2957 19.0236 15 19.1569 19.9710 20.8245 16 20.7616 21 . 7050 22.6975 17 22.4144 23.4997 24.6454 18 24.1169 25.3572 26.6712 19 25.8704 27.2797 28.7781 20 27.6765 29.2695 30.9692 21 29.5368 31.3289 33.2480 22 31.4529 33.4604 35.6179 23 33.4265 35.6665 38.0826 24 35.4593 37.9499 40.6459 25 37.5550 40.3131 43.3117 26 39.7096 42.7591 46.0842 27 41.9309 45.2906 48.9676 28 44.2189 47.9108 51.9663 29 46.5754 50.6227 55.0849 30 49.0027 53.4295 58.3283 31 51.5028 56.3345 61.7015 32 54.0778 59.3412 65.2095 33 56.7302 62.4532 68.8579 34 59,4621 65.6740 72.6522 35 62.2759 69.0076 76.5983 36 65.1742 72.4579 80.7022 37 68.1594 76.0289 84.9703 38 71.2342 79.7249 89.4091 39 74.4013 83.5503 94.0255 40 77.6633 87.5095 98,8265 41 81.0232 91 . 6074 103.8196 42 84.4839 95.8436 109.0124 43 88.0484 100.2383 114.4129 44 91.7199 104.7817 120.0294 45 95.5015 109.4840 125.8706 46 99.3965 114.3510 131.9454 47 103.4084 119.3883 138.2632 48 107.5406 124.6018 144.8337 49 111.7969 129.9979 151.6671 50 115.1808 135.5828 158.7738 432 Appendices Table 2 Annuity Values Amount of reserve necessary to provide an annuity of $1.00 at a certain age Age American Experience 3M% Interest (adopted by Massachusetts System) New York City Teachers' Experience 4 % Interest New Jersey Teachers' Adopted Experience 4 % Interest McClintock Experience 3yi% Interest (adopted by Vermont System) 4% Interest 55 $10.23 $10,332 $11,915 56 10.05 10.125 11.615 57 9.86 9.914 11.312 58 9.66 9.697 11.005 59 9.45 9.476 10.696 60 $10.66 9.23 9.250 10.384 61 10.29 9.01 9.020 10.070 62 9.93 8.77 8.786 9.754 63 9.57 8.54 8.549 9.438 64 9.20 8.29 8.309 9.121 65 8.84 8.04 8.066 $9.C 986 8.804 66 8.49 7.79 7.820 8.7 617 8.488 67 8.14 7.54 7.573 8,^ 269 8.173 68 7.79 7.28 7.324 8.0 946 7.859 69 7.44 7.02 7.7 654 7.548 70 7.10 6.76 7.4 400 7.239 55 $12.83 $12,823 $13,296 56 12.56 12.537 12.985 57 12.28 12,246 12.671 58 11.99 11.950 12,352 59 11.70 11.650 12.030 60 $10.66 11.39 11,347 $12,2198 11,705 61 10.29 11.08 11,040 11,8630 11.377 62 9.93 10.76 10,731 11,5045 11,046 63 9.57 10.43 10,419 11.1450 10,714 64 9.20 10.10 10.105 10,7850 10,381 65 8.84 9.76 9,789 10,4245 10,046 66 8.49 9,42 9,472 10,0647 9,711 67 8.14 9.08 9,155 9,7060 9,376 68 7.79 8,73 8,838 9,3489 9,042 69 7.44 8.39 8,9943 8,709 70 7.10 8,04 8,6424 8,378 433 Teachers' Pension Systems in the United States Table 3 Annuities Purchased by Accumulated Contributions of Certain Amounts at Certain Ages According to the New Jersey Teachers' Adopted Experience and on the Basis OF Interest at 4 Per cent Accumulated Contributions of Age $100 $150 1 $200 $250 1 $300 1 $350 1 $400 1 $450 $500 55 $9.68 $14.52 $19.36 $24.20 lEN $29.04 $33.88 $38.72 $43.56 $48.40 56 9.88 14.82 19.76 24.70 29.64 34.58 39.52 44.46 49.40 57 10.08 15.12 20.16 25.20 30.24 35.28 40.32 45.36 50.40 58 10.32 15.48 20.64 25.80 30.96 36.12 41.28 46.44 51.60 59 10.56 15.84 21.12 26.40 31.68 36.96 42.24 47.52 52.80 60 10.82 16.23 21.64 27.05 32.46 37.87 43.28 48.69 54.10 61 11.08 16.62 22.16 27.70 33.24 38.78 44.32 49.86 55.40 62 11.38 17.07 22.76 28.45 34.14 39.83 45.52 51.21 56.90 63 11.70 17.55 23.40 29.25 35.10 40.95 46.80 52.65 58.50 64 12.04 18.06 24.08 30.10 36.12 42.14 48.16 54.18 60.20 65 12.40 18.60 24.80 31.00 37.20 43.40 49.60 55.80 62.00 66 12.78 19.17 25.56 31.95 38.34 44.73 51.12 57.51 63.90 67 13.20 19.80 26.40 33.00 39.60 46.20 52.80 59.40 66.00 68 13.66 20.49 27.32 34.15 40.98 47.81 54.64 61.47 68.30 69 14.14 21.21 28.28 35.35 42.42 49.49 56.56 63.63 70.70 70 14.66 21.99 29.32 36.65 43.98 51.31 58.64 65.97 73.30 WOMEN 55 $7.80 $11.70 $15.60 $19.50 $23.40 $27.30 $31.20 $35.10 $39.00 56 7.98 11.97 15.96 19.95 23.94 27.93 31.92 35.91 39.90 57 8.16 12.24 16.32 20.40 24.48 28.56 32.64 36.72 40.80 58 8.36 12.54 16.72 20.90 25.08 29.26 33.44 37.62 41.80 59 8.58 12.87 17.16 21.45 25.74 30.03 34.32 38.61 42.90 60 8.82 13.23 17.64 22.05 26.46 30.87 35.28 39.69 44.10 61 9.06 13.59 18.12 22.65 27.18 31.71 36.24 40.77 45.30 62 9.32 13.98 18.64 23.30 27.96 32.62 37.28 41.94 46.60 63 9.60 14.40 19.20 24.00 28.80 33.60 38.40 43.20 48.00 64 9.90 14.85 19.80 24.75 29.70 34.65 39.60 44.55 49.50 65 10.22 15.33 20.44 25.55 30.66 35.77 40.88 45.99 51.10 66 10..56 15.84 21.12 26.40 31.68 36.96 42.24 47.52 52.80 67 10.92 16.38 21.84 27.30 32.76 38.22 43.68 49.14 54.60 68 11.32 16.98 22.64 28.30 33.96 39.62 45.28 50.94 56.60 69 11.74 17.61 23.48 29.35 35.22 41.09 46.96 52.83 58.70 70 12.18 18.27 24.36 30.45 36.54 42.63 48.72 54.81 60.90 434 Appendices Table 3— (Continued) Annuities Purchased by Accumulated Contributions of Certain Amounts at Certain Ages According to the New Jersey Teachers' Adopted Experience and on the Basis OF Interest at 4 Per Cent Accumulated Contributions of Age I $650 I $750 $800 I $900 I MEN 55 $53.24 $58.08 56 54.34 59.28 57 55.44 60.48 58 56.76 61.92 59 58.08 63.36 60 59.51 64.92 61 60.94 66.48 62 62.59 68.28 63 64.35 70.20 64 66.22 72.24 65 68.20 74.40 66 70.29 76.68 67 72.60 79.20 68 75.13 81.96 69 77.77 84.84 70 80.63 87.96 $62.92 64.22 65.52 67.08 68.64 70.33 72.02 73.97 76.05 78.26 80.60 83.07 85.80 88.79 91.91 95.29 $67.76 69.16 70.56 72.24 73.92 75.74 77.56 79.66 81.90 84.28 86.80 89.46 92.40 95.62 98.98 102.62 $72.60 74.10 75.60 77.40 79.20 81.15 83.10 85.35 87.75 90.30 93.00 95.85 99.00 102.45 106.05 109.95 $77.44 79.04 80.64 82.56 84.48 86.56 88.64 91.04 93.60 96.32 99.20 102.24 105.60 109.28 113.12 117.28 $82.28 83.98 85.68 87.72 89.76 91.97 94.18 96.73 99.45 102.34 105.40 108.63 112.20 116.11 120.19 124.61 $87.12 88.92 90.72 92.88 95.04 97.38 99.72 102.42 105.30 108.36 111.60 115.02 118.80 122.94 127.26 131.94 $91.96 93.86 95.76 98.04 100.32 102.79 105.26 108.11 111.15 114.38 117.80 121.41 125.40 129.77 134.33 139.27 55 $42.90 $46.80 $50.70 $54.60 $58.50 $62.40 $66.30 $70.20 $74.10 56 43.89 47.88 51.87 55.86 59.85 63.84 67.83 71.82 75.81 57 44.88 48.96 53.04 57.12 61.20 65.28 69.36 73.44 77.52 58 45.98 50.16 54.34 58.52 62.70 66.88 71.06 75.24 79.24 59 47.19 51.48 55.77 60.06 64.35 68.64 72.93 77.22 81.51 60 48.51 52.92 57.33 61.74 66.15 70.56 74.97 79.38 83.79 61 49.83 54.36 58.89 63.42 67.95 72.48 77.01 81.54 86.07 62 51.26 55.92 60.58 65.24 69.90 74.56 79.22 83.88 88.54 63 52.80 57.60 62.40 67.20 72.00 76.80 81.60 86.40 91.20 64 54.45 59.40 64.35 69.30 74.25 79.20 84.15 89.10 94.05 65 56.21 61.32 66.43 71.54 76.65 81.76 86.87 91.98 97.09 66 58.08 63.36 68.64 73.92 79.20 84.48 89.76 95.04 100.32 67 60.06 65.52 70.98 76.44 81.90 87.36 92.82 98.28 103.74 68 62.26 67.92 73.58 79.24 84.90 90.56 96.22 101.88 107.54 69 64.57 70.44 76.31 82.18 88.05 93.92 99.79 105.66 111.53 70 66.99 73.08 79.17 85.26 91.35 97.44 103.53 109.62 115.71 435 Teachers' Pension Systems in the United States Table 4 Expectation of Life (Number of years persons of certain age would on the average live thereafter) American Experience (adopted by Massa- chusetts System) New York City Teachers' Experience McChntock Exp)erience 55 17.40 14.76 17.79 56 16.72 14.37 17.14 57 16.05 13.96 16.50 58 15.39 13.55 15.88 59 14.74 13.13 15.26 60 14.10 12.70 14.65 61 13.47 12.28 14.05 62 12.86 11.84 13.46 63 12.26 11.41 12.88 64 11.67 10.98 12.31 65 11.10 10.55 11.76 66 10.54 10.12 11.22 67 10.00 9.70 10.69 68 9.47 9.28 10.17 69 8.97 8.86 9.67 70 8.48 8.45 9.18 55 17.40 19.78 20.77 56 16.72 19.13 20.04 57 16.05 18.49 19.32 58 15.39 17.84 18.61 59 14.74 17.20 17.91 60 14.10 16.55 17.22 61 13.47 15.91 16.54 62 12.86 15.27 15.87 63 12.26 14.64 15.22 64 11.67 14.01 14.57 65 11.10 13.38 13.94 66 10.54 12.77 13.33 67 10.00 12.16 12.72 68 9.47 11.57 12.14 69 8.97 10.99 11.56 70 8.48 10.43 11.00 436 Appendices Table 5 Rate of Mortality Age American Experience (adopted in the Massachusetts System) New York City Teachers' Experience New Jersey Teachers' Adopted Experience McClintock Experience (adopted by the Vermont System) MEN ANNUITANTS 55 .0186 .0407 .0377 .0201 56 .0199 .0411 .0387 .0213 57 .0213 .0418 .0399 .0227 58 .0229 .0426 .0412 .0241 59 .0247 .0436 .0426 .0258 60 .0267 .0448 .0441 .0275 61 .0289 .0460 .0458 .0294 62 .0313 ,0476 .0477 .0315 63 .0339 .0494 .0497 .0338 64 .0369 .0516 .0519 .0364 65 .0401 .0538 .0543 .0391 66 .0437 .0566 .0569 .0421 67 .0476 .0593 .0599 .0454 68 .0520 .0626 .0630 .0490 69 .0568 .0660 .0665 .0529 70 .0620 .0698 .0702 .0572 WOMEN ANNUITANTS 55 .0186 .0181 .0169 .0132 56 .0199 .0187 .0178 .0141 57 .0213 .0194 .0188 .0151 58 .0229 .0201 .0199 .0163 59 .0247 .0209 .0212 .0175 60 .0267 .0218 .0225 .0188 61 .0289 .0229 .0239 .0203 62 .0313 .0240 .0255 .0219 63 .0339 .0255 .0273 .0237 64 .0369 .0271 .0292 .0256 65 .0401 .0290 .0313 .0277 66 .0437 .0312 .0335 .0300 67 .0476 .0337 .0361 .0326 68 .0520 .0366 .0388 .0353 69 .0568 .0399 .0418 .0384 70 .0620 .0436 .0450 .0417 437 Teachers' Pension Systems in the United States Table 6 New Jersey Teachers' Adopted Active Service Experience Showing how many from an initial number of 100,000 teachers entering the service at the age of 18 would withdraw through resignation or dismissal, become disabled or die each year, and how their salaries would advance on the average each year. MEN Age Living Withd rawing Disabled Dead Salary Scale 18 100,000 2,C 80 50 240 530 19 97,630 2,] 48 49 244 615 20 95,189 2,3 61 48 247 694 21 92,533 2,1 78 46 259 772 22 89,850 2,2 63 45 261 849 23 87,181 2,2 10 43 262 920 24 84,566 2,2 24 42 271 990 25 82,029 2,1 14 41 273 1,060 26 79,601 l.c 94 39 275 1,130 27 77,293 1,^ 61 41 278 1,200 28 75,113 1,7 12 43 281 1.270 29 73,077 1,£ 72 44 284 1,330 30 71,177 1,4 42 45 285 1,390 31 69,405 1,2 07 46 285 1,450 32 67,767 1,1 70 47 281 1.510 33 66,269 1,C 57 48 280 1,560 34 64,884 c 52 49 277 1,605 35 63,606 8 59 50 274 1,650 36 62,423 7 58 51 271 1,695 37 61,343 6 72 52 270 1.735 38 60,349 £ 82 53 270 1,775 39 59,444 £ 08 54 270 1,812 40 58,612 4 35 58 269 1,845 41 57,850 2 66 59 269 1,875 42 57,156 2 09 62 269 1,905 43 56,516 2 54 68 271 1,935 44 55,923 2 13 78 274 1.965 45 55,358 1 77 83 277 1,990 46 54,821 1 48 93 285 2,015 47 54.295 1 19 98 288 2,040 48 53,790 97 107 296 2,065 49 53,290 80 117 304 2,085 50 52,789 58 132 317 2,105 51 52,282 42 147 324 2,125 52 51,769 26 160 336 2,145 53 51,247 15 179 354 2,165 54 50,699 198 370 2.180 55 50,131 221 391 2,195 56 49,519 243 411 2,205 57 48,865 274 435 2,215 58 48,156 304 462 2,225 59 47.390 341 493 2,235 60 46,556 382 521 2,245 61 45.653 438 549 2.2.50 62 44.666 491 581 2,255 438 Appendices Table 6— (Continued) WOMEN Age Living Withdrawing Disabled Dead Salary Scale 18 100,000 260 50 110 513 19 99.580 628 50 119 528 20 98,783 1.216 49 128 543 21 97,390 2,084 49 136 566 22 95,121 3,025 48 152 592 23 91,896 5,182 47 165 622 24 86,502 6,233 47 173 659 25 80,049 6,086 46 184 699 26 73,733 5,678 44 184 740 27 67,827 5,098 44 190 780 28 62,495 4,481 44 187 815 29 57.783 3,862 44 185 845 30 53,692 3,302 43 177 870 31 50,170 2,749 40 171 890 32 47,210 2,224 42 165 910 33 44,779 1.760 45 161 930 34 42,813 1,364 45 154 950 35 41.250 1,081 45 149 970 36 39,975 863 48 148 990 37 38,916 688 51 152 1,000 38 38,025 605 61 152 1,010 39 37,207 495 108 156 1,020 40 36,448 405 164 160 1,030 41 35,719 321 229 164 1,040 42 35,005 256 308 168 1,050 43 34,273 189 353 171 1,055 44 33,560 144 369 178 1,060 45 32,869 112 371 184 1,065 46 32,202 90 367 190 1.070 47 31.555 72 360 196 1,080 48 30,927 59 352 204 1.085 49 30.312 54 346 212 1,090 50 29,700 47 339 223 1.095 51 29,091 43 332 233 1.100 52 28.483 40 325 242 1,110 53 27,876 36 318 254 1,115 54 27,268 35 311 265 1.120 55 26,657 29 304 277 1.130 56 26.047 26 297 292 1.140 57 25,432 23 290 305 1.145 58 24.814 22 283 320 1,150 59 24,189 19 276 336 1.160 60 23,558 14 269 353 1.165 61 22.922 11 262 371 1,175 62 22.278 9 254 390 1,180 439 Teachers' Pension Systems in the United States Table 7 New Jersey Teachers' Adopted Retirement Experience Number of teachers among those eUgible to retirement who would die or retire during the year and the number among them who would be Uving at the beginning of the next year Age Living Dead Retirements 60 52,295 593 3,906 61 47,796 642 3,828 62 43,326 673 3,744 63 38,909 700 3,623 64 34,586 719 3,462 65 30.405 711 3,299 66 26,395 677 3,141 67 22,577 643 3,003 68 18,931 602 3,114 69 15.215 514 3,652 70 11,049 398 10,651 60 24,270 364 3,174 61 20,732 335 2,944 62 17,453 305 2,740 63 14,403 272 2,550 64 11,586 237 2.317 65 9,032 200 2,068 66 6,764 162 1,826 67 4,776 124 1,567 68 3,085 87 1,333 69 1,665 51 1.091 70 523 17 505 440 APPENDIX 5 BIBLIOGRAPHY teachers' pension systems in the united state? Contents items Bibliographies 1-4 Discussions of pension principles 5-56 General descriptions of pension systems in the United States 57-75 Note. — References to laws, reports and descriptive accounts of indi- vidual systems are listed in Appendix 2. BIBLIOGRAPHIES Note. — Many of the references on pensions given in the Bibliographies listed below have been incorporated in the present one. Publications of special importance are indicated by an asterisk. I' Nelson, C. A. comp. Bibliography of teachers' salaries and pensions. Educational review, Jan., 1907, v. 33: 24-35- [A list containing 27 references on teachers' pensions together with an extended reference list on teachers' salaries.] 2 Prosser, C. A. Bibliography (In his The teacher and old age. Boston, 1913. p. 121-34). [A list of 48 references on teachers' pensions, social insurance and the economic condition of the teaching profession.] 3 U, S. Bureau of education. Library. List of references on teachers' pensions. June 19 14. 7 p. [Contains 51 references on U. S. pensions, 21 refer- ences on college professors' pensions and 35 references on foreign pensions.] 4 Library of Congress. Divsion of bibliography. Select list of references on teachers' pensions. 6 numb. 1 (typewritten). [Contains 60 references on teachers' pensions.] 441 Teachers' Pension Systems in the United States DISCUSSION OF pension PRINCIPLES 5 Allen, Elizabeth A. Birth of the teachers' pension move- ment in the United States. Address before the Con- necticut teachers' association. (In Connecticut. Board of education. Report. Hartford, 1903. p. 291-303. Pub. doc. no. 8.) [Contains a history of the New Jersey retirement fund; discussion of purposes of pensions; objections of old and young teachers ; fund not a charity ; appeal to the Connecticut teachers.] 6 Teachers' pensions — the story of a woman's cam- paign. Review of reviews (N. Y.) June, 1897, v. 15: 700-11. [Describes the campaign which resulted in the estab- lishment of the New Jersey teachers' retirement fund; surveys the existing pension funds in the United States ; presents a comparative table of annuity and aid asso- ciations and retirement funds in the United States.] 7 Ames, Charles L. Pensions for public school teachers [Hartford ? 1912] 16 p. [Address before the Connecticut Women's council of education at Hartford, May 4, 1912.] 8 Association of American universities. The best means of introducing the pension system into American uni- versities. Discussion. (In its Journal of proceedings and addresses of eighth annual conference, 1907, p. 64-71-) 9 Best, Lyman A. Teachers' retirement fund. Address given at Washington, January 16, 1909, before the College women's club. [Washington, Govt, print, off., 1910] 9 p. ([U. S.] 6ist Cong., 2d sess. Senate. Doc. 541.) [Contains a discussion of the purposes of teachers* pensions and a history of the New York City Teachers* retirement fund.] 10 Bradford, Mary D. Teachers' pensions and insurance. Journal of education, May 11, 1905, v. 61; 512-13. [Describes the origin and development of pension and insurance movement among the teachers in the United States.] 442 Appendices 11 Carnegie foundation for the advancement of teaching. Annual reports. [Articles on pensions.] I, 1906, p. 33-36. (Consideration of general policy. What is the value of a pension system? right, not charity.) III, 1908, p. 50-51. (Cost of maintaining a retire- ment allowance system.) IV, 1909, p. 57-80. (The working of the rules for retirement ; why college teachers retire ; age and service; obHgations in life insurance.) VI, 191 1, p. 22-23. (The moral influence of a pension system; favors contributory systems; obliga- tions of colleges.) VII, 1912, p. 59-87. (Contributory and non-contribu- tory pension systems. Subsistence and sti- pendiary pensions. A feasible pension system — six years of experience.) 12 * A comprehensive plan of insurance and annuities for college teachers, by H. S. Pritchett, 1916. 67 p. (Its Bulletin no. 9.) Contents: Pensions and annuities. The origin and social philosophy of pension systems. Justification for college teachers. Life hazards. Responsibility. Functions and possibilities of life insurance. Are pen- sions wages. Accrued liabilities. Risk of disability. The teachers' cooperation. The desires of teachers. 12a * Pensions for public school teachers. By Clyde Furst and I. L. Kandel. Bulletin no. 12, 1918. 85 p. Contents : The social philosophy of pensions. Funda- mental principles, present status. A system sug- gested for Vermont. Tabular statement. Summary. Brief bibliography. 13 Cattell, J. McKeen. The Carnegie foundation for the advancement of teaching. Science, April 2, 1909, n.s. V. 29: 532-9. [Writer objects to the age condition and to the cen- tralized fund; advocates disability and widows' pen- sions; predicts insufficiency of income.] 14 Clark. John E. Shall teachers be pensioned? (In National education association. Journal of proceed- ings and addresses, 1896. p. 988-96.) 443 Teachers' Pension Systems in the United States [Urges teachers to establish retirement funds and take part in the movementi; states examples of foreign pension systems.] 15 Federation of teachers' associations, city of New York. The A. B.C. of teachers' pensions. [Memorandum submitted to the Senate committee of cities in favor of the Lock wood Ellenbogen bill] 19 16. 20 p, [Contains a discussion of the compulsory feature; contributions; objections to flat pensions; contributions of younger teachers not to be used for pensions of older teachers.] 16 Gray, Ernest. Teachers' pensions. Contemporary re- view, March, 1894. v. 65; 453-6. [Defends the new pension system in England; state system better than local; reply to W. A. Hunter's article.] 17 "Great Britain. Departmental committee on the super- annuation of teachers. Report of the Committee on the 2nd reference. London, 19 14. 42 p. Parlia- mentary Doc. 1914, V. 25. Cd. 7365. Contents : Conditions to which a system ought to con- form, p. 16; main recommendations, p. 19-22; notes of dissent by Lord Farrer favoring a minimum subsist- ence pension and by Mr. H. Fitzherbert Wright, M. P. favoring the Scottish teachers' pension fund plan, p. 39-42. _ 18 * Parliament. House of commons. Select com- mittee on school hoard for London {superannuation) hill. Report, together with proceedings of the Com- mittee, minutes of evidence and appendices. London, 1 89 1. 167 p. (Parliamentary doc. 1890-91, v. 17.) [P. VII-XI contain criticism of various pension pro- visions; p. 77-102, testimony of actuary Sutton re financial soundness of pension system.] 19 * Select committee on the elementary education {teachers' superannuation) bill. Report, proceedings of the Committee, minutes of evidence and appendices. London, 1892. 142 p. (Parli- mentary doc. 1892, v. 12). [Of marked importance in considering pension princi- ples are pages i to XXVII which contain the con- 444 Appendices elusions of the commission and a summary of testi- mony. ] 20 Grote, Koll. Ein Soziales Pensionssystem. Padago- gische Zeitung, May 29, 1913, v. 42: 415-17. [Discussion of the question of married teachers receiv- ing pensions different in amount from the unmarried.] 21 Gunther, A. Staatshilfe and Selbsthilfe in der hinter- bhebenenversorgung der d^utschen lehret. In Padagogische Zeitung, Nov. 24 and Dec. i, 1910, v. 39: 1 109-13; 1133-37. I* . ,- TDiscusses, from a social point of view, the basic prin- ' ciples of widows' pensions.] 22 Harris, W. T. Shall teachers be pensioned? A sympo- sium. Journal of education, April 2, 1891, v. 33: 211-14. 23 Hendrick, Burton J. "The superannuated man." Labor pensions and the Carnegie Foundation. McClure's magazine, December, 1908, v. 32: 115-27. 24 Hunter, W. A. Superannuation of elementary teachers. Contemporary review, Jan. 1894, v. 65 : 84-95. the arguments in favor of teachers pensions; annuities should be smaller; local authorities, not state, should pay pensions.] 25 *Hutcheson, Wm. A. Report by actuary upon the con- dition of the New York public school teachers' retire- ment fund. (In New York (City) Board of Educa- tion. Sixth annual report of the secretary of the Board of retirement. 1913). Reprinted by the Globe in a separate pamphlet entitled "The Teachers' pension law." Oct. i, 19 13. 40 p. [Describes principles underlying actuarial scheme, actuarial methods of calculating contribution and con- structing mortality tables.] 26 Jastrow, Joseph. Advancement of teaching. North American review, October, 1907, v. 186: 213-24. [Exclusion of state universities from the benefits of the Carnegie foundation.] 27 Carnegie foundation and its service pensions. Science, March 11, 1910, n.s. v. 31: 370-6. 28 Keyes, Charles H. Teachers' pensions. (In National 445 Teachers' Pension Systems in the United States educational association of the United States. Journal of proceedings and addresses, 1907, p. 103-8.) [Discusses five reasons why pensions should be pro- vided for teachers.] 29 Krueger, H. Pensioning of teachers. Journal of educa- tion (Boston) March 2, 1905, v. 61 : 230. [A brief address reviewing pension systems in the United States.] 30 Lovejoy, Arthur O. The metamorphosis of the Carnegie foundation. Science, April 11, 1913, n.s. v. 37: 546-52. [Criticizes the Carnegie foundation's pension t ->lic}''" 31 Macnamara, T. J. The superannuation of state ?cho ' teachers. Westminster review, June, 1893, v. 139. 623-35- [Contains a history of teachers' pensions in England; criticizes the new system because of absence of bene- fits for those who die.] 32 Manley, Edward. Compulsory insurance for teachers. Educational review, Feb., 1902, v. 23: 152-7. [Writer objects to compulsory insurance and deduc- tions from salary; condemns annuities on the ground that they are secured at the expense of those who re- sign or die.] 33 Massachusetts. Board of education. Special report on teachers' retirement allowances [Boston] 191 3. 48 p. [House Doc. 1913, no. 1926.] [Discussion in first eleven pages of the essential prin- ciples of a sound pension system.] 34 * Commission on old age pensions, annuities and insurance. Report. Boston, 1910. 409 p. (House Doc. no. 1400.) [Pages 77-79 and Chapters V, VIH and IX contain a discussion of old-age pension principles; origin of the problem; contributory vs. non-contributory pensions; voluntary vs. compulsory insurance; universal vs. par- tial schemes; relation to wages and poor relief.] 35 * Commission on pensions. Report. Boston, 19 14. 345 p. (House Doc. no. 2450.) [Chapters H and V contain a discussion of the pension problem ; the m.erits of assisted insurance and com- pulsory savings vs. gratuities and free pensions.] 446 Appendices 36 *Meriam, Lewis. Principles governing the retirement of public employees. New York, D. Appleton and company, 19 18. 476 p. (Institute for government research. Principles of administration.) ["In this book the author deals with the whole sub- ject of public policy governing the establishment of pension systems. The social, economic, administrative and financial problems involved are considered and much attention is given to the specific objections that have been urged against retirement legislation.] ^'^a. *New Jersey Bureau of state research of the state chamber of commerce. Teachers' retirement systems in New Jersey, their fallacies and evolution. Re- port prepared by Paul Studensky, Supervisor of the pension staff. December, 19 18. 88 p. Contents: Evolution of the systems. Present condi- tion and practical remedies [Contains aslo chapters on the fundamental fallacies common to most of the retire- ment systems in this country and on the fundamental principles of a sound retirement system]. 36b New Jersey pension and retirement fund commission. Preliminary report. State research. Consecutive no. 9, 19 18. 20 p. [A brief analysis of the unsound fea- tures of the teachers' and other retirement systems in New Jersey. A discussion of the principles of sound pension financing.] 36c * Reorganization of the New Jersey Teachers' Re- tirement Systems. State Research, Consecutive no. 13. 1919. 28 p. Contents: Present systems and their reorganization — A critical and constructive study. Contents of pro- posed legislation — An act providing for the establish- ment of a new fund on an actuarial basis. Actuarial estimates — Cost of existing systems and of proposed plan. ^y *'New York (City) Commission on pcmiom. Report on the teachers' retirement fund, city of New York. 1915. [New York, The Trow press, 1916.] 177 p. [Letter of submittal and chapters II and VI contain ' critical and constructive discussions of the principles of various pension provisions and questions of cost.] 447 Teachers' Pension Systems in the United States 38 * Report on the pension funds of the city of New- York. Part I. Operation of the nine existing pension funds. [New York, J. J. Little and Ives co.] 1916. 171 p. [Chapters II and IV contain criticism of benefits, prin- ciples to be considered in reorganization plan, and summary of conclusions.] 38a * Report on the pension funds of the city of New York, Part III, 1918. 151 p. [Contains the pro- posed retirement plan covering all branches of munici- pal service, and a discussion of its underlying .r^^inci pals.] ^^' 39 Patten, S. N. Are pensions for college teachers a form of socialism? Science, May 22, 1908, n.s. v. 27; 822-4. 40 Pensions and the learned professions. Science, Nov. 24, 1911, V. 34; 715-17. [Criticizes the pension policy of the Carnegie founda- tion.] 41 Peters, Michael. The mischief of pensions. Gentlemen's magazine (London) Aug., 1907, v. 303: 113-19. [Writer attacks pensions on the ground that they "in- flict certain moral injury on the character of the indi- vidual as well as a very practical injury on the business."] 42 Pritchett, Henry S. Moral influence of a university pension system. Popular science monthly, Nov., 1911, V. 79: 502-13. 42a The pension problem and its solution. Atlantic monthly. December, 1918. p. 737-43. (A brief dis- cussion of the principles underlying the new Carnegie pension plan. ) 43 A pension system for public schools. Independent, March 20, 1913, v. 74: 617-21. [The director of the Carnegie foundation discusses the justification of teachers' pensions. Who ought to pay them ? What form of pension system would it be fair to adopt? What will a feasible pension system cost?] 44 Ten years of college pensions. Independent, Sept. 13, 1915, V. 83:361-3. 45 Prosser, C. A. Teachers' annuities and retirement allow- 448 Appendices ances. Journal of education (Boston) Dec. 28, 191 1, V. 74; 683-84; Jan. 4, 1912, V. 75: 6-8. [Writer discusses the justification of teachers' annui- ties on the ground of heaUh risk, financial risk and inadequacy of wages; should the teachers contribute? How will they benefit ? Will their wages be depressed ? Should the public contribute? Should refunds be pro- vided? Against what risks of life should compulsory insurance be provided?] 46 The teacher and old age. Boston, Houghton Mif- flin company, 191 3. 139 p. (Riverside educational monographs. ) [Chapters H, HI and IV contain a discussion of teach- ers' pensions in the light of social insurance principles; a part of the expense of the retirement allowance should be borne by the beneficiary; withdrawal equity; questions of cost; characteristics of a model retirement law] 47 Reichenbach. The superannuation of teachers. Educa- tion, March, 1896, v. 16: 385-95. 48 Shall teachers be pensioned? A symposium. Journal of education (Boston) April 2, 1891, v. 33: 211-14. 49 *Sies, R. W. Teachers' pension systems in Great Britain. Washington, Govt, print, off., 1913. 88p. (U. S. Buieau of education. Bulletin 1913, no. 34) [Writer regards pensions as deferred pay, favors non- contributory pension systems, and direct relation of pension to salary, and considers accumulation of re- serve fund unnecessary. See p. 70-84] 50 Smith, Anna Tolman. Teachers' salaries and pensions. Educational review, Nov., 1891, v. 2 : 335-46. [Urges the establishment of teachers' pension systems in the United States) : describes pension systems in va- rious countries] 51 *Studensky, Paul. The pension problem and the philoso- phy of contributions. New York, 191 7. 16 p. May be obtained from the Bureau of Municipal Research, 261 Broadway, New York City. [Shall the employer, the employee, or both, bear the cost of the system?] 449 Teachers' Pension Systems in the United States 51a A sound municipal pension act and central supervision of all pension funds in New Jersey. 'New Jersey' Vol. VI, no, i, October, 1918. 8 p. [An outline and discussion of the features of the bill proposed by the New Jersey pension and retirement fund commission.] ; also Legisl. Index 1919 nos. 8 and 10. 51b *Teachers' retirement systems in New Jersey, their fallacies and evolution (see under item 36a). 51c Scientific reorganization of the New Jersey teachers' pension systems. Legislative index, 1919, nos. 2, 6 and 9. 5 id New York City teachers' retirement fund. Na- tional municipal review, July, 1916, p. 520-22. 52 Teachers' pensions. Gunton's magazine, June, 1898, v. 14 •393-6. [Discusses purposes of pensions and argues against sal- ary deductions] 53 Temple, Richard. Superannuation of elementary teach- ers. Fortnightly review, April, 1893, n.s. v. 53: 477- 89. [Describes history of the English system; two-fold purposes of pensions; joint contributions; age and dis- ability; future charges] 54 Tews, J. Ein soziales pensionssystem. Padagogische zeitung, June 12, 191 3, v. 42 : 455-6. [Writer argues that married teachers should receive pensions different in amount from the unmarried] 55 Tupper, Frederick A. A retirement fund for teachers. Boston, New England publishing co., 1906. 54 p. 56 Winship, A. E. Teachers' pensions and annuities. Jour- nal of education, Sept. 23, 1909, v. 70: 283-4. [Urges the establishment of pension systems ; discusses the thrift argument and the inadequacy of teachers' salary; public must help] General Descriptions of Pension Systems In The United States Note : for material on individual pension systems, see Appendix I. 450 Appendices 57 Carnegie foundation for the advancement of teaching. Annual reports. [Articles on pensions] I, 1906. History of teachers' pensions, p. 31-38; Pen- sions for widows of professors, p. 50-51. Ill, 1908. Cost of maintaining a retirement allow- ance system in a college, p. 50-53. Administra- tion of the retiring allowance system in tax-sup- ported institutions, p. 64-73. V, 1910. The establishment of retiring allowance systems by Haverford College and Brown Uni- versity, p. 32-34. VII, 1912. Pension systems, p. 23-44. VIII, 1913. Supplementary pension systems main- tained by associated colleges; new pension sys- tems, p. 33-47. IX, 1914. Pensions for public school teachers; state and local systems, p. 21-44. X, 1 91 5. Pensions for pubhc school teachers; state systems, p. 49-63 ; pensions for university profes- sors, p. 63-65 ; tabular statement of teachers' pen- sion systems, p. 86-99; summary of teachers' pen- sion funds, p. 100-102. XI, 1916. Pensions for public school teachers, p. 109-17. XII, 191 7. Pension systems, p. 87-100. 58 Chicago. Board of trustees of the public school teachers' retirement fund. A synopsis of the pension laws of states and cities of the United States. Dec. 26, 1910. 15 p. [Contains brief descriptions of pension sys- tems of three states and twenty cities; data now ob- solete.] 59 Eliot, C. W. and others. The best means of introduc- ing the pension system into American universities. {In Association of American universities. Journal of pro- ceedings and addresses, 1906. p. 64-71.) 60 Hamilton, W. I. Comparative table of state insurance systems for teachers in the United States. Journal of education, June 19, 1913, v. yy; 705; July 3, 1913, V. 78 : 20. 451 Teachers' Pension Systems in the United States 6i Henderson, C. R. Pensions for public school teachers. American journal of sociology, May 1908, v. 13: 846-54. [Brief description of several systems existing in United States in 1908.] 62 Hood, William R. Teachers' pension laws in the United States. {In National education association of the United States. Committee on teachers' salaries and cost of living, 1913. Report. Ann. Arbor, 1913. p. 266-328.) 63 Keyes, C. H. "Teachers' pensions." {In National edu- cation association of the United States. Journal of pro- ceedings and addresses, July, 1907. p. 103-108.) 64 Massachusetts. Board of education. Pensions for teachers. {In its 70th annual report, 1905-1906. Bos- ton, 1907. p. 13-14 and 325-26.) [A description of pensions in Harvard university, Bos- ton, and Massachusetts; arguments in favor of pen- sions.] 65 Special report on teachers' retirement allow- ances. [Boston] 191 3. 48 p. (House. Doc. 191 3, no. 1926.) [Comparative table of teachers' pension systems in the United States, p. 33-41.] 66 Commission on pensions. Report, March 16, 19 14. Boston, 1914. 345 p. (House Doc. 1914, no. 2450.) [An investigation of all pension systems existing in Massachusetts and constructive recommendations; comparative tables describing pension systems for policemen, firemen, teachers and judges in the states and cities of the United States.] Gy National education association of the United States. Re- port of Committee on salaries, tenure and pensions of public school teachers in the United States. {In its Report, July, 1905. p. 177-84.) [Brief description of pension laws in force in 1905.] 68 New Jersey. Alliance of women teachers. Public school teachers' retirement systems in the United States. September, 1918. no p. [A synopsis of re- tirement laws.] 452 Appendices 69 Prosser, C. A. The teacher and old age. Boston, Houghton Mifflin company, 1913. 139 p. (Riverside educational monographs. ) [Chapter II and appendices contain a statement of the present extent of teachers' pensions and annuities in the United States; comparative table of state com- pulsory insurance systems for teachers in the United States.] 70 Sies, R. W. and Elliott, E. C. Teachers' pensions. (In Cyclopedia of education, ed. by Paul Monroe. New York, 191 3. p. 635-40.) [Classification of the systems in the United States into private voluntary, quasi public, semi-public, public] 71 Smith, A. Tolman. Teachers' salaries and pensions. Educational review, Nov., 1891, v. 2: 335-46. [Urges the establishment of teachers' pension systems in the United Statet^; describes the pension systems of several countries.] 72 The teachers' retirement fund. Journal of education, Feb. 21, 1907, V. 65: 202-3. [A brief description of pension funds in Philadelphia and other cities.] 73 U. S. Bureau of education. Annual reports. [Articles on pensions.] 1895, V. I, p. 1079-1102. (Description of early mutual benefit associations in Boston and other places. Full text of laws and constitutions govern- ing pension funds of California, Chicago, Detroit, Philadelphia, New York.) 1899, V. 2, p. 1478-81. (Extracts from Chicago and Cincinnati reports.) 1902, V. 2, p. 2369-74. 1903, V. 2, p. 2449-52. 1904, V. 2, p. 2281-85. 1906, V. I, p. 215-20. 1907, V. I, p. 448-56. (Reports of Boston, New Jersey and Cincinnati funds.) 1908, V. I, p. 104-105. (Brief description of 1908 laws of Massachusetts and Virginia.) 1909, V. I, p. 117-121. (Brief description of the 1909 laws of Minnesota and Nebraska, the pension sys- 453 Teachers' Pension Systems in the United States terns of Harrisburg and Virginia, and the pension bill for the District of Columbia.) 1911, V. I, p. 96-100. (Brief description of pension laws of 191 1, of New York, Ohio, Pennsylvania, Illinois and Kansas.) 1912, V. I, p. 65-68, 151-52. (Brief description of pension systems of Arizona, Virginia, Maryland, New Jersey, New York; list of states having pension systems in 191 2.) 1913, V. I, p. 913-916. (Brief description of new pension laws of Massachusetts, California, New Jersey and Maine. ) 74 Bulletins of the Bureau of education. [Articles on teachers' pensions.] 191 3, no. 55. Teachers' pensions, p. 137-54. (Con- tains a digest of pension laws in force in 1913.) 191 5, no. 47. Teachers' pensions, p. 447-65. (Con- tains a digest of pension laws in force Jan. i, 1915; dates of laws not given.) 1916, no. 14. State pension systems for public school teachers, prepared for the Committee on teachers' salaries, pensions and tenure of the National educa- tion association, by W. Carson Ryan, Jr. and Roberta King. 46 p. (Contains a comparative chart, ex- tracts from letters of secretaries of retirement funds, and texts of laws.) 75 Teachers' pensions. (From Current Topics, Com- missioner of Education's report, 1905 and 1906.) Washington, Govt, print, off., 1910. 21 p. (60th Cong., 2d sess. Senate. Doc. no. 585. Serial no. 5407-) 76 Bureau of labor. Pension funds for municipal employees and railroad pension systems in the United States. Washington, Govt, print, off., 1910. 89 p. (6ist Cong., 2d sess. Senate Doc. 427. Serial 5658.) [Contains a comparative chart of teachers' pensions in the United States.] 454 INDEX Accrued liabilities, 104-106, 127. Actuarial tables, 431-440. Actuary, determination of cost of benefits by, 101-104. Administrative expense, contribution towards, 133. Age and salary, contributions gradu- ated according to, 150. Albany Teachers' Retirement Fund, laws, etc., 329. Allegheny County (Md.) Teachers' Retirement Fund, laws, etc., 319. Altoona (Pa.) Teachers' Retirement Fund, laws, etc., 338. Annuity associations, 6-12 ; failure of, 13-15. Annuity benefits, requirements for, 18. Arizona, State and local funds, 30. Arizona Teachers' Retirement Sys- tem, laws, etc., 309. Army and Navy, pensions in United States, 15. Atlanta Teachers' Retirement System, laws, etc., 312. Baltimore, sick benefit association, 6; annuity association, 8, 13. Baltimore County Teachers' Retire- ment Fund, laws, etc., 320. Baltimore Teachers' Retirement Fund, eligibility to retirement, 60; pension determined by salary, 68; death benefit, 87 ; growth of pen- sion payments, 97 ; financing gov- ernment's contribution, 142; con- tributions graduated, 149; history of, 214-216; analyzed, 302; laws, etc., 319. Benefits, conditions under which granted, 41-47; amount of, 47; di- vision of cost of, 48-53 ; determin- ing cost of, 95-115; differences in cost of, 115-116. Boston, annuity association, 8, 13. Boston Mutual Benefit Association, eflfects of operation, 13. Boston Teachers' Permanent Fund, graduated pensions, 69; inadequacy of contributions, 113; division of cost of benefits, 123 ; financing government's contribution, 140 ; con- tribution uniform throughout, 145 ; history of, 212-214; analyzed, 302; laws, etc., 322. Boston Teachers' Retirement Fund, eligibility to retirement, 60; inade- quacy of contributions, 113; divi- sion of cost of benefits, 123; history of, 209-212; analyzed, 302; laws, etc., 321. Bristol (R. I.) Teachers' Retirement Fund, laws, etc., 341. British Civil Service, growth of pen- sion payments, 99; non-contribu- tory system, 120. Brooklyn, mutual aid association, 4; annuity association, 6, 8, 11, 13, 14; pension legislation, 15; retirement fund, 17; compulsory fund, 21; re- tirement fund contributions, 25. Bruere, Henry, comment on joint contributory system, 121. Buflfalo, sick benefit association, 6. Buffalo Teachers' Retirement Fund, 17; compulsory fund, 20; eligibil- ity to retirement, 60; pension deter- mined by salary, 68; amount of dis- ability benefit, 81 ; financing govern- ment's contribution, 142; history of, 216-218; analyzed, 303; laws, etc., 330. California Teachers' Retirement Sal- ary Fund, eligibility to retirement, 60 ; flat pension system, 66 ; disa- bility examinations, 85; inadequacy of contributions, 107; financing government's contribution, 138 ; contribution uniform throughout, 145; management of system, 157; history of, 195-198; analyzed, 296; laws, etc., 309. Camden, mutual aid association, 4. Canton, fund under uniform Ohio law, 336. Cash disbursement fund, operation of system on, 100, 103. Cash disbursement method, 135. Charleston Teachers' Retirement Fund, established, 29; laws, etc., 342. Chester (Pa.) Teachers' Retirement Fund, laws, etc., 338. Chicago, sick benefit association, 6. Chicago Teachers' Pension and Re- 455 Index tirement Fund, established, 17; compulsory fund, 20; retirement fund contributions, 24-25; retire- ment fund insolvency, 26; eligibil- ity to retirement, 60; flat pension system, 66; disability examinations, 85 ; inadequacy of contributions, 107; financing government's contri- bution, 141 ; contributions gradu- ated, 147 ; compulsory participa- tion, 156; history of, 220-233; ana- lyzed, 303; laws, etc., 314. Cincinnati, annuity association, 8; retirement fund, 17; compulsory fund, 20; retirement fund contri- butions, 23; fund under uniform Ohio law, 336. Civil Service of Austria, growth of pension payments, 100. Cleveland Teachers' Pension Fund, eligibility to retirement, 60; length of service pension, 67; death bene- fit, 87; inadequacy of contributions, 107; financing government's contri- bution, 138, 140; contribution uni- form throughout, 145; history of, 207-209; analyzed, 304; laws, etc., 336. Cogswell, E. S., statement regarding financial condition of Minnesota fund, 192. Cohoes (N. Y.) Teachers' Retire- ment Fund, laws, etc., 330. Columbus (Ga.) Teachers' Retire- ment System, laws etc., 312. Combined benefit, 70-72. Compulsory funds, 20. Compulsory participation, 154-157. Compulsory retirement, 63. Connecticut, annuity association, 8. Connecticut Teachers' Retirement Fund, established, 30; benefits granted, 41 ; eligibility to retire- ment, 60; compulsory retirement, 63 ; combined benefit, 70 ; death benefit, 87 ; scientifically construct- ed system, 108-109; liquidating ac- crued liabilities in, 128, 131 ; rate of government contribution, 130; new entrants' benefits, 133 ; rate of in- terest guarantee, 134; contributions graduated, 148 ; history of, 239-242 ; analyzed, 296; laws, etc., 311; laws providing for sound pension sys- tem, 386-392. Contributions, of members of sys- tem, 53; inadequacy of, 107-113; graduated, 145-151 ; distribution of, over period of service, 151 ; mini- mum, 171. Dayton, fund under uniform Ohio law, 336. Death benefits, early, 4, 41, 44, 86-90. Denver Teachers' Retirement Fund, eligibility to retirement, 60 ; length of service pension, 67; inadequacy of contributions, 107; non-contrib- utory system, 123-124; financing government's contribution, I40n; management of system, 157; history of, 219; analyzed, 304; laws, etc., 310. Des Moines, sick benefit association, 6. Detroit, sick benefit association, 6. Detroit Teachers' Retirement Fund, established, 17; compulsory fund, 20; laws, etc., 323. Disability benefit, 40, 43, 78-85. Dismissal, benefits at, 90. District of Columbia, laws, etc., 312. Division of cost, between government and teachers, 1 17-124. Duluth Teachers' Retirement Fund Association, laws, etc., 324. Elmira (N. Y.) Teachers' Pension Fund, laws, etc., 330. Erie Teachers' Retirement System, established, 30; laws, etc., 338. Evansville, sick benefit association, 6. Federation of Teachers' Associations, New York City, views on compul- sory participation, 155. Firemen, pensions in U. S., 15. "Flat" pension systems, 65. Governmental contributions, 23-26. Government's contribution, 125-142. Great Britain, pension cost, 59. Greene County (N. Y.) Teachers' Re- tirement Fund, laws, etc., 330. Harrisburg (Pa.) Teachers' Retire- ment Fund, laws, etc., 339. Hoboken, sick benefit association, 6. Illinois Teachers' Pension and Re- tirement Fund, eligibility to retire- ment, 60; flat pension system, 66; disability examinations, 85 ; inad- equacy of contributions, 107; financing government's contribu- tion, 140 n; contributions gradu- 456 Index ated, 147 ; compulsory participation, 156; history of, 176-179; analyzed, 297; laws, etc., 313. Indiana, State and local funds, 32. Indiana State Teachers' Retirement Fund, laws, etc., 315. Indianapolis Teachers' Pension Fund, laws, etc., 316. Iowa, proposed system, 317. Jersey City, mutual aid association, 4. Jessup, W. A., report on financial condition of Cleveland fund, 208. Joint or partly contributory system, 120-122. Lancaster (Pa.) Teachers' Retirement Fund Association, laws, etc., 339. Laws, references to, 307-345 ; provid- ing for sound pension systems in Massachusetts, 346-354; in New York City, 355-373; in Pennsyl- vania, 374-385 ; in Connecticut, 386-302; in New Jersey, 393-409; in Ohio, 410-424; in Vermont, 425- 430. Length of service, pension deter- mined by, 66; contribution gradu- ated according to, 165. Length of service and salary, pension determined by, 69-70. Liabilities, of a going system, 113- 115; under different benefits, 115- 116. Life insurance, in early associations, 5. Lincoln, sick benefit association, 6. Liverpool, liquidating accrued liabili- ties, 129, 131. Local funds, 31. London, liquidating accrued liabili- ties in, 128. London Metropolitan Police Pension Fund, growth of pension payments, 99- Louisville Teachers' Insurance and Annuity Fund, laws, etc., 317. Maine School Pension Fund, super- annuation benefit, 40; eligibility to retirement, 60; length of service pension, d"] ; disability benefit dis- regarded, 79; growth of pension payments, 97 ; non-contributory system, 123-124; financing govern- ment's contribution, 142 ; manage- ment of system, 157; history of, '^Ti, 174; analyzed, 297; laws, etc., 318. Management of systems, 55, 157-161. Maryland Retirement System, laws, etc., 319- Massachusetts, annuity association, 8. Massachusetts Teachers' Retirement System, State and local funds, 2>Z \ benefits granted, 41 ; eligibility to retirement, 59 ; compulsory retire- ment, 63; combined benefit, 70; dis- ability examinations, 85 ; death ben- efit, 87 ; scientifically constructed system, 108-112; joint contributory system, 124; liquidating accrued lia- bilities in, 128, 131 ; rate of govern- ment's contribution, 130; new en- trants' benefits, 133 ; rate of inter- est guarantee, 134; contributions graduated, 148; compulsory par- ticipation, 156; management of sys- tem, 158; actuarial estimate of lia- bilities, 165; history of, 234-239; analyzed, 297; laws, etc., 320; laws providing for sound pension system, 346-354- Maximum pension, provisions for, 72-76. Medical examinations, 82-85. Michigan Teachers' Retirement Fund, eligibilty to retirement, 60; gradu- ated pensions, 69; wholly contribu- tory system, 123-124; contributions graduated, 149; history of, 200-202; analyzed, 298; laws, etc., z^Z- Milwaukee Teachers' Retirement Fund, laws, etc., 345. Minimum pension, provisions for, 72-74. Minneapolis Teachers' Retirem.ent Fund Association, laws, etc., 324. Minnesota Teachers' Insurance and Retirement Fund, eligibility to re- tirement, 60; length of service pen- sion, 66 ; disability examinations, 85; death benefit, 87; growth of pension payments, 97 ; inadequacy of contributions, 107; financing government's contribution, I40n contributions graduated, 147; his tory of, 190-192; analyzed, 298 laws, etc., 323. Montana Public School Teachers' Re- tirement Salary Fund, laws, etc., 325. Mt. Vernon (N. Y.) Teachers' Retire- ment Fund, laws, etc., 330. Mutual aid associations, early, 4-15. 457 Index Nassau County (N. Y.) Teachers Retirement Fund, laws, etc., 331. National Civil Service of France, growth of pension payments, 99. Nevada Teachers' Retirement Salary Fund, laws, etc., 326. New Bedford, sick benefit associ- ation, 6. New entrants' benefits, contribution towards, 132. New Hampshire Teachers' Retirement System, laws, etc., 326. New Haven Teachers' Pension Fund, laws, etc., 311. New Jersey, reorganization of retire- rnent systems, 274-281 ; laws pro- viding for sound pension systems, 393-409. New Jersey Teachers' Retirement Fund, pension legislation, 15; es- tablishment of fund, 17; pension extension, 38; proof of incapacity, 57; pension determined by salary, 68; disability benefit, 81; disability examinations, 85; division of cost of benefits, 123 ; contributions grad- uated, 146; history of, 183-190; analyzed, 299; laws, etc., 319. New Jersey 35-Year Service Pension System, superannuation benefit, 40; eligibility to retirement, 60; pen- sion determined by salary, 68; divi- sion of cost of benefits, 123 ; cash disbursement method, 136 ; manage- ment of system, 157; history of, 169-173; analyzed, 299; laws, etc., 326. New London Teachers' Pension Fund, laws, etc., 311. New Orleans Teachers' Retirement Fund, eligibility to retirement, 60; pension determined by salary, 68 ; disability examinations, 85 ; death benefit, 87; wholly contributory system, 123-124; contributions graduated, 149; history of, 218-219; analyzed, 304; laws, etc., 318. Newport (R. I.) Teachers' Retire- ment Fund, established, 29; laws, etc., 341. New York City, annunity association, 6. 13, 14. New York City Teachers' Retirement Fund, pension legislation, 15; es- tablished, 17 ; compulsory fund, 21 ; retirement fund contributions, 24, 25; unsoundness of fund, 27; fund on actuarial basis, 33 ; pension ex- tension, 38; benefits granted, 41; eligibility to retirement, 60; com- pulsory retirement, 63 ; combined benefit, 72 ; disability examinations, 85; death benefit, 87; growth of pension payments in old fund, 97; scientifically constructed system, 108-109; inadequacy of contribu- tions in old fund, 113; liquidating accrued liabilities in, 128, 131 ; sub- sequent service pension liabilities, 129; rate of government contribu- tion, 130; new entrants' benefits, 133 ; rate of interest guarantee, 134; coordinating elements of con- tribution, 135 ; financing govern- ment's contribution, 138; contribu- tions graduated, 150; compulsory participation, 157; actuarial esti- mate of liabilities, 165 ; history of, 243-264; analyzed, 305; laws, etc., 331 ; laws providing for sound pen- sion system, 355-373- New York City Teachers' Mutual Life Assurance Association, estab- lishment of, 4. New York Commission on Pensions, investigation of mortality among teachers, 96. New York Teachers' Retirement Fund, established, 30; eligibility to retirement, 60; pension determined by salary, 68; financing govern- ment's contribution, 138; contribu- tions graduated, 146; history of, 179-182; analyzed, 299; laws, etc., 329. Non-contributory system, 119. North Dakota Teachers' Insurance and Retirement Fund, laws, etc., 334- Norwood, fund under uniform Ohio law, 337- Ohio, establishment of retirement system, 282-286; laws providing for sound pension system, 410-424; uniform laws governing cities, 335. Omaha, annuity association, 8. Omaha Teachers' Retirement Fund Association, laws, etc., 325. Outside service, credit for, 58. Paris Police Pension Fund, growth of pension {payments, 99. Participation, compulsory vs. volun- tary, 54. 458 Index Paterson. sick benefit association, 6. Pennsylvania Public School Teach- ers' and Employees' Retirement System, established, 30; State and local funds, 33 ; pension extension, 39 ; benefits granted, 41 ; eligibility to retirement, 59; compulsory re- tirement, 63 ; combined benefit, 72 ; disability examinations, 85 ; death benefit, 87 ; scientifically constructed system, 108-109; liquidating ac- crued liabilities, 129, 131 ; rate of government contribution, 131 ; new entrants' benefits, 133; coordinating elements of contribution, 135; con- tributions graduated, 150; compul- sory participation, 157; actuarial estimate of liabilities, 165 ; history of, 265-273 ; analyzed, 300 ; laws etc., 338; laws providing for sound pension system, 374-385- Pension, meaning of term, 3n. Pension legislation, unsound, 15-23. Pension payments, growth of, 95-100. Pension systems, pioneer, 17; actu- arial process in investigation of, 27n ; present extent of, 29 ; outlined, 35-56; credit for outside service in, 58. Peoria Teachers' Pension and Retire- ment Fund, laws, etc., 315. Philadelphia, annuity association, 8, 13- Philadelphia Teachers' Retirement Fund, reorganization of, 33 ; eligi- bility to retirement, 60 ; pension de- termined by salary, 68; disability examinations, 85 ; financing govern- ment's contribution, 142; contribu- tions graduated, 149; history of, 203-207; analyzed, 306; laws, etc., 339. Pittsburgh Teachers' Retirement As- sociation, superannuation benefit, 40; eligibility to retirement, 60; fiat pension system, 66; disability benefit disregarded, 79; non-con- tributory system, 123-124; financ- ing government's contribution, 142; management of system, 157; history of, 166-169; analyzed, 306; laws, etc., 340. Policemen, pensions in U. S., 15. Portland (Ore.) Teachers' Retirement Fund Association, laws, etc., 337. Premature retirement, danger of, 61. Prior service pensions, contributions for, 126-129. Providence (R. I.) Teachers' Retire- ment Fund, laws, etc., 341. Rate of interest, contribution toward guarantee of, 134. Reading (Pa.) Teachers' Retirement Fund, laws, etc., 340. Reserve fund, operation of system on, 100-103. Reserves, systems without, 165-174; inadequate, in States, 175-202; in- adequate in local systems, 203-219. Resignation, benefits at, 90. Retirement benefit, eligibility to, in State funds, 60; eligibility to, in city funds, 60. Retirement pensions, three periods in movement for, 3. Rhode Island Teachers' Pension Sys- tem, division of cost of benefits, 123; laws, etc., 340. Rochester, N. Y., sick benefit associ- ation, 6. Rochester (N. Y.) Teachers' Retire- ment Fund, laws, etc., 333. S^ Touis, retirement fund, 17. St. Paul, sick benefit asso^'-^.t-O'^, ^. St. Paul Teachers' Retirement Fund Association, laws, etc., 324. Salary, pension determined by, 67 ; contribution graduated according to, 145- Salary and length of service, contri- bution graduated according to, 146. Salt Lake City Teachers' Retirement Fund, laws, etc., 343. San Francisco Retirement Fund, es- tablished, 17; laws, etc., 310. Saratoga County (N. Y.) Teachers' Retirement Fund, laws, etc., 333. Savannah, sick benefit association, 6. "Savings or thrift" systems, 65. Schenectady Teachers' Retirement Fund, laws, etc., 333. Scotland, liquidating accrued liabili- ties in, 128. Scranton, Pa., sick benefit associ- ation, 6. Scranton (Pa.) Teachers' Retirement Fund, laws, etc., 340. Sick benefit associations, 5. Solvency of system, guarantee of, 134- South Bend (Ind.) Teachers' Retire- ment Fund, laws, etc., 316. 459 Index Springfield, fund under uniform Ohio law, 337. State-wide funds, growth of, 30-34 Statistical reports, preferences to 307-345- Subsequent service pensions, contri- butions for, 129-132. Superannuation benefit, 40, 42; eli- gibility for, 57; conditions for, 62; amount of, 63-72. Swarthmore, sick benefit association, 6. Syracuse Teachers Retirement Fund, laws, etc., 333. Teachers' contributions, 143-153. Teachers' pensions, evolution of, in United States, 3-34. Terre Haute Teachers' Retirement Fund, laws, etc., 317. Toledo, fund under uniform Ohio law, 337. Tontine, forfeiture principle abroad known as, 12, 90, 91. Trenton, sick benefit association, 6. Troy Teachers Pension Fund, laws, etc., 334. Utah Teachers' ,Re'..rreiu^;nL Itund, laws, etc., 342. Vermont, establishment of new re- tirement system, 287-294; laws pro- viding for sound pension system, 425-430. Vermont Teachers Retirement Fund Association, laws, etc., 343. Virginia Retired Teachers' Fund, eli- gibility to retirement, 60; pension determined by salary, 68; disability benefit, 81 ; inadequacy of contri- butions in, 113; financing govern- ment's contribution, 142; contribu- tions graduated, 146; management of system, 157; history of, 198-200; analyzed, 301 ; laws, etc., 343. Voluntary funds, 19. Washington, proposed system, 344. Washington, D. C, annuity associ- ation, 8, 13. Watervliet (N. Y.) Teachers' Retire- ment Fund, laws, etc., 334. Westchester County (N. Y.) Teach- ers' Retirement Fund, laws, etc., 334- Wholly contributory system, 118. Wilkes-Barre Teachers' Retirement Fund, laws, etc., 340. Wilmington Teachers' Retirement Fund, laws, etc., 311. Wisconsin Teachers' Insurance and Retirement Fund, established, 30; eligibility to retirement, 60; length of service pension, 66; inadequacy of contributions, 107; financing government's contribution, 141 ; contributions graduated, 149; com- pulsory participation, 156; history of, 193-195 ; analyzed, 301 ; laws, etc., 344. Withdrawal benefits, 45, 90-94. Yonkers Teachers' Retirement Fund, laws, etc., 334. 460 .NiE"^^ °^ CONGRESS i"^.™.,!, ,,1,1,1111, III „l,„ 1,1 « 019 758 391 5 ■Mm Uv~ 'if'' III 1 11 I ill II 11