RESEARCH BULLETIN OF THE NATIONAL VOL. XV - No. 3 EDUCATION MAY - - 1937 ASSOCIATION Teacher Retirement Systems and Social Security Published by the RESEARCH DIVISION of the NATIONAL EDUCATION ASSOCIATION 1201 Sixteenth Street, N. W., Washington, D. C. RESEARCH BULLETIN or me Published five times each year in January, March, May, September, and November President, ORVILLE C. PRATT NATIONAL EDUCATION ASSOCIATION Executive Secretary, WILLARD E. GIVENS Director of Research: William G. Carr; Associate Director: Frank W. Hubbard Assistant Directors: Richard R. Foster, lvan A. Booker, Hazel Davis Research Assistants and Section Heads: Frances G. Bradley, Louise B. Sease, Helen H. Cox, Anna Haddow, Madaline K. Remmlein, and Ruth Shirley Executive and Editorial Offices 1201 Sixteenth Street, N. W., Washington, D. C. Copyright, 1937, by the National Education Association Entered as second-class matter February 10, 1923, at the Post Office at Washington, D. C., under Act of August 24, 1912. 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Address communications to the Research Division, National Education As- sociation, 1201 Sixteenth Street, N. W., Washington, D. C. TABLE OF CONTENTS Page SSDS Cn near Vee Ege og ero mn sant 2 oon Pea Bere at eR rs ee ee 92 CT os 90 os eR A Pe ans PE Lo oa ac aeny Oe pS 93 98 I. STATE AND LOCAL TEACHER RETIREMENT SYSTEMS.............0000- II. TEACHER RETIREMENT AND RETIREMENT PROVISIONS FOR OTHER OccuPATIONS.. 128 III. TEAcHERS IN RELATION TO THE SoctAL Security ACT........... PeLeee Eee 139 SELECTED REFERENCES 144 Date OF Reports oF TEACHER RETIREMENT SYSTEMS 145 INquiIRY Forms 146 LIST OF TABLES Page 1. Certain Features of Statewide Teacher Retirement Systems.............. 100 2. Principal Features of Forty-Six Local Teacher Retirement Systems......... . 107 3. Analysis of Eight Large Local Teacher Retirement Systems............ 108 4. Membership Statistics of State Teacher Retirement Systems............. 110 5. Membership Statistics of Local Teacher Retirement Systems................... 111 6. Number Retired and Allowances Paid by State Teacher Retirement Systems.......... . 116 7. Number Retired and Allowances Paid by Local Teacher Retirement Systems...... > BY 8. Financial Statistics of State Teacher Retirement Systems....... iat aed hats acc 118 9. Financial Statistics of Local Teacher Retirement Systems........ 119 10. Administration of State and Local Teacher Retirement Systems.......... 120 11. Administrative Expenses during Last Fiscal Year of Certain State Teacher Retirement Systems... 123 12. Administrative Expenses during Last Fiscal Year of Certain Local Teacher Retirement Systems... 123 13. Financial Management of State and Local Teacher Retirement Systems........... 124 14. Miscellaneous Financial Data for State Teacher Retirement Systems.............. 126 15. Miscellaneous Financial Data for Local Teacher Retirement Systems...............-...505: 126 16. Number and Salary of Workers Covered by Trade Union Old-Age Benefit Plans; Conditions for EE Ge SEY ED PUM UN, oe kadai ccc ces cde ndacSeeectbbeaeteresKee we sber ewe 128 17. Percent of Pension Plans and Employees Grouped by Ages Specified for Compulsory, Voluntary, and Discretionary Superannuation Retirement, Classified by Industry, 1929.................5-. 129 18. Number and Percent of Industrial Pension Plans Setting Maximum and Minimum Benefits....... 130 19. Average Number of Pensioners and Average Annual Per Capita Pension, 212 Companies, Lert oti tee Re bW Cad s.0 Fara eda dd er hnadivlnees o4st-s Kode ; i. 2 20. Number and Average Salary of Certain Professional Groups, 1935..........6. 0600 eccueeueeues 132 21. General Retirement Systems for State Employees.................0e cece seeeevece 134 22. Institutions Using the Various Plans for Retirement of College Faculty Members............... 137 23. Certain Groups of the General Public Which Receive Retirement Allowances from Governmental 138 I eee AY SU's v's sip OREN Wise ba 64 a be Bb 0d Vea Re P< pee ee te eee, FOREWORD this law the federal government provided old-age security for a large proportion of our citizens. The Act reflected a definite break with the past. For years our American point of view reflected the agrarian conditions prevalent in this country until the beginning of the twentieth century. It was generally believed that everyone, by his own effort and savings, could provide for himself and his dependents. With the development of industrialism, forces appeared which made it impossible for many successfully to combat the hazards of old age and unemployment. At first these diffi- culties were met with public and private charity. Then came the blow of 1929 and with it a reversal of public opinion. Social sécurity was recognized as a problem for society as a whole, working thru its government. ik 1935 the Seventy-fourth Congress passed the Social Security Act. By means of More than forty-five years ago leaders of the National Education Association foresaw that adequate retirement provisions were necessary for the proper development of public education. Teachers were not then, and are not now, adequately protected against old age and unemployment. Salaries have not been large enough in many cases to permit the accumulation of reserves thru private initiative. In 1933-34 the average salary of all teachers, principals, and supervisors was $1227. During the depression period, salaries dropped to much lower levels, and in many communities were paid in scrip, if at all. While today conditions have improved in the larger cities, the salaries of thousands of rural teachers are below those paid to factory workers. Obviously this situation has damaging effects upon professional morale and upon the instruction of children. No national effort to provide economic security for all citizens should neglect the economic problem faced by the teaching profession. Fortunately, as shown by the pres- ent Research Bulletin, progress has been made in the establishment of teacher retire- ment systems. Twenty-three states, Hawaii, Puerto Rico, and the Canal Zone have statewide systems actually in operation. Several other states have recently joined, or are about to join, this forward movement. At least fifty-six cities and counties have local plans. But some of these systems, from the point of view of soundness and adequacy, leave much to be desired. Often no provisions have been made in state plans for the staffs of state colleges or universities, or for non-certificated employees. Many teachers of advanced age have been unable to take advantage of the opportunities available to those who are young. Retirement allowances are often far from adequate. The Social Security Act may cause some to reduce their efforts and their vigilance for sound teacher retirement systems. The opposite should be true. Because of existing legal barriers it may be years before the provisions under the federal law will be available to teachers. Meanwhile let us go forward. This bulletin of the Research Division will be an invaluable aid to all who are earnestly seeking to improve existing systems and to advance the movement toward sound teacher retirement programs. Wittarp E. Givens, Executive Secretary, National Education Association. [92] Introduction A teacher retirement system is a_business- like plan, enacted into state law to improve schools by helping aged or disabled teachers to retire from active service with a modest, but assured, income for life. This presentday defi- nition represents considerable advance in social theory over that prevailing in 1870 when organ- ized teacher welfare plans had their beginnings. Evolution of Teacher Retirement Systems There have been three periods in the history of teacher retirement plans in this country.! Assurance and mutual-aid associations char- acterized the first period beginning in 1869. About 1894 began a period of legislative ac- tivity wherein too frequently sound retirement principles were disregarded. The third period, from 1920 to the present, has been character- ized by legislation designed to improve existing systems and to establish each new plan upon a sound fiscal basis. The first teachers protective associations were of the mutual-aid type; the funds were given voluntarily by the teachers for the as- sistance of their co-workers and with an as- surance of like aid in their own time of need. At first, funds were collected when there was a particular need; later, in advance of the necessity. The teachers hoped that their small capital would be augmented by private philan- thropy and thus a real pension fund could be established. This source proved to be uncertain and inadequate. The New York City Teachers’ Mutual Life Assurance Association, founded in 1869, was the first organization to be estab- lished. In 1885, sick benefits, for certain limited periods of time, were added to the advantages of membership. Also, by 1885, regular annual dues were being collected, indicating greater interest in the attitude of the beneficiaries to- ward the association, as well as providing a greater degree of permanence thru increased funds. New York and Brooklyn led in the next step of development by organizing the Old Age and Disability Annuity Association, in 1887. This association forcefully brought the problem of the retirement of aged and disabled teachers before the profession and the public. Within the next few years Boston, Philadel- phia, Cincinnati, Baltimore, and Washington, D. C., and several states followed in the estab- lishment of similar associations. The majority of the early organizations were local, as interest could be aroused more easily in a small group; then, as the idea gained ac- ceptance, the systems expanded, covering larger areas. New Jersey capped the expansion in 1896 by establishing the first voluntary statewide plan. With the enlargement of group associa- tions, complications arose. Small local organi- zations were fairly easily administered and, altho many were not financially sound, they had generally been able to maintain themselves as the inadequacy of their funds had not yet become a problem. Moreover, the teachers had not solicited governmental assistance; instead they had had a sort of pride in their self-sufh- ciency in establishing, organizing, and admin- istering these associations. The members con- tinued to advocate this laissez faire policy until the organizations became so large that the small contributions and the money raised from bazaars and philanthropic contributions were too meager to take care of the demand. Failure of the mutual-aid associations was attributed, however, to the voluntary feature of member- ship and the private character of the orzaniza- tions; the actuarial unsoundness escaped at- tention. The beginning of state legislative enactments marks the close of the first period and the entrance of a new factor in the development of retirement systems. Here again, New York City teachers were the forerunners. In 1894 they secured legislation to the effect that de- ductions from the pay of teachers because of absence should be the basis of the fund and that the board of education should have com- plete charge of the administration of the sys- tem. The period of active service necessary for retirement was set at thirty years for women and thirty-five years for men. Other states fol- lowed New York’s lead — some permitting voluntary membership, others requiring com- pulsory membership. The teachers’ contribu- tions were generally set at 1 percent of their 1 This section is based upen Chapter I of Pau! Studensky’s Teachers’ Pension Systems in th: United States, prepared in 1920 for the Institute for Government Research and published by D. Appleton-Century Co., New York. [93] salaries, which followed the practise of the mutual-aid associations and which, as in the previous organizations, even with increased membership, proved inadequate. The govern- ment’s contributions were considered first as a relief measure, then more and more as the prin- cipal, if not the sole, source of income for the pension funds. Between 1894 and 1920 both local and statewide systems were being estab- lished, but from 1904 on, statewide systems were, comparatively speaking, on the ascen- dency. Expansion led to the present period which emphasizes the reorganization of funds of the existing systems and the establishment of funds of new systems on a sound financial basis. Re- tirement systems have taken on increased mo- mentum since 1910, with the greatest activity in the years 1913, 1914, and 1915, resulting in the organization of thirteen statewide sys- tems and eighteen local systems. According to Table 1, column 2, of the present bulletin, eighteen new statewide systems have established since 1915. Today about 65 p: of the teachers in the United States ar tected by some kind of state or local (Figure I). However, the soundness and quacy of these systems vary greatly as show, by the statistical material presented in Part || The National Education Association and the Teacher Retirement Movement Forty-six years ago the Department of Sy perintendence of the National Education Asso- ciation adopted the following resolution: “Justice as well as the best public service re. quires the retirement and pensioning of teach ers after a service of thirty years, and upo; carefully devised conditions. We recommend the enactment of laws in the several states : permit and to regulate the retirement and pe: sioning of professional teachers.” * This resolution was the first step by a : tional professional group in the long campaiy: 2 Marble, A. P., chairman. “Report of the Committee on Resolutions.’’ Proceedings, 1891. Washington, D. C.: N Education Association. p. 391. FIGURE I PROPORTION OF TEACHERS WITHOUT OLD-AGE PROTECTION AND THOSE UNDER VARIOUS TYPES OF RETIREMENT PLANS Percent et TL Teachers protected by joint-contributory retirement plans Teachers under non-contributory pension plans 45 Teachers maintaining own system without public funds 34.3 | Teachers with no protection | Research Division, National Education Association [ 94] the Fx ten and sho oth son: foll defi posi I and repr city of p PJ. R Yor Ten ; no whic cour retir ties | the | New Smun Bsion Be show —. 8 Nation 4 W ashi a ea eee on behalf of teacher retirement systems. In 1900, nine years later, the National Education Association itself approved the following reso- 1 lution: Proper standards—both general and professional _for entrance upon the work of instruction, security of tenure, decent salaries, and an adequate pension system are indispensable if the schools are to attract and to hold the service of the best men and women of the United States; and the nation can afford to lace its children in the care of none but the best. ple Meanwhile, between the dates of these two resolutions, the schoolboard members in their Department of School Administration had be- come interested in the problem of teachers’ pen- sions. In 1896 John E. Clark, ex-president of the Detroit Board of Education, urged that “by adopting the plan of a retirement fund we not only secure a better, more thoughtful class of beginners, but we retain those teachers when their experience has doubly qualified them for the work. . . . They will learn the art of con- tentment. They will be willing to stay with us, and to make teaching their life work as they should, and not make it a stepping stone to other professions. . . .”” Of the thirteen per- sons who participated in the discussion which followed, six were favorably inclined, four definitely opposed, and three did not make their positions clear. In 1904 the Committee on Salaries, Tenure, and Pensions of Teachers issued a preliminary report summarizing the status of salaries in city school systems, but neglecting the question of pensions. At the 1905 convention, Howard J. Rogers, first assistant commissioner of New York state, quoted the Committee on Salaries, Tenure, and Pensions as stating that there was } ‘no commonwealth in the United States in which public school teachers in all cities and counties are by provision of law pensioned, upon retirement, out of public funds. Local authori- ties have taken some notice of the subject within the last few years, but, with the exception of New York, Detroit, and San Francisco, no municipality can be said to have a public pen- sion system.” Between 1905 and 1911 the official records show no committee reports or speeches on the * Butler, Nicholas Murray, chairman. “Report of the Committee on Resolutions.” National Education Association. p. 32. subject of pensions. In 1911 a Committee on Salaries and Cost of Living was appointed. A part of the Committee’s report in 1913 ana lyzes existing pension systems under three types: non-contributory, compulsory contribu- tory, and voluntary contributory. By 1916 the Committee's title had been restored to include ‘““Teachers’ Salaries, ‘Tenure, and Pensions.” The Committee reported that it had arranged for a study of pensions by the federal Bureau of Education * and by the Carnegie Founda tion for the Advancement of Teaching.’ In a preliminary report of the latter study, Clyde Furst of the Carnegie Foundation made the statement: A pension system on the reserve plan, sustained by joint contributions of employer and employe, is not only the fairest and most equitable form of pen- sion system, but it is the only one in which the cost can be ascertained in advance and in which the question of pension is separated from the question of pay. It is the only form of pension which can be permanently secure. In 1918 the Committee issued another report on salaries, tenure, and pensions which in- cluded the following statement : The only way in which absolute security can be obtained is for the contribution of the public as well as the teacher to be paid annually, credited to the individual teacher, and set aside to accumulate until the time of his retirement. This also is the only eco- nomical method. According to the report of the Committee in 1919, its reports had “led to numerous in- quiries and a number of states have been stimu- lated either to inaugurate or to reorganize pen- sion systems in accordance with the sound prin- ciples there involved.” In 1923 the Association appointed the Com- mittee on Retirement Allowances. In coopera- tion with the Research Division of the Na- Association and the National Council of Teachers’ Retirement Systems, the tional Education Committee has done much to inform teachers about retirement plans and to promote the ap- plication of sound retirement principles. In February 1937 the Committee and the Na- tional Council of Teachers’ Retirement Sys- tems were merged into a new organization Proceedings, 1900. Washington, D. C.: *U. S. Department of the Interior, Bureau of Education. Pension Systems for Public School Teachers. Bulletin, 1916, No. 14. Washington, D. C.: Government Printing Office, 1916. 46 p 5 Carnegie Foundation for the Advancement of Teaching. Pensions for Public School Teachers. Bulletin No. 12 the Foundation, 1918. 85 p. New York [95 ] known as the National Council on Teacher Retirement of the National Education Associa- tion. Leaders of this National Council have been helpful in preparing and completing the questionnaires required for the present study. While taking this opportunity to express its appreciation for assistance, the Research Di- vision also assumes responsibility for the bulletin in its present form. Principles of a Sound Retirement System The general nature of a teacher retirement system established upon a scientific basis has been described ® as follows: In a teacher retirement system, the state and the teacher are contracting parties. According to rates agreed upon, after scientific investigation of the composition of the teaching staff, and after decision on the kind and value of the benefits to be received, the teacher makes a regular contribution to a fund. These contributions, made during the period of the teacher’s service, are credited to the individual teacher with interest. At the time of retirement the sum of these contributions, plus the interest accumu- lated thereon, is used to purchase an annuity which makes up approximately one-half the total retire- ment allowance received. The teacher’s contribu- tions, with the interest thereon, are subject to refund in case of the teacher’s death, resignation, or with- drawal from the teaching profession prior to the time of retirement. To make up its share of the retirement allowance. the state concurrently during the teacher’s period of service makes appropriations to a reserve fund sufh- cient to finance at the teacher’s retirement a pension equal to the annuity purchased by the teacher’s ac- cumulated contributions. The total retirement allowance, composed of the annuity and pension described above, is available in the form in which the teacher desires to receive it, upon the fulfilment of certain minimum age or service conditions, or both, at which time retirement is optional. A compulsory age of retirement may be set up. Provision is also made for the retirement of teachers who become disabled prior to the age for regular retirement and who have been in service for a reasonable period. In order to establish and maintain a retirement system such as described above certain fundamental principles must be observed. 1. Membership required of new teachers; op- tional for those in service Membership should be compulsory for teachers entering the service after the enactment of the retirement law; optional for teachers already in service. ® Adapted from a statement by the Committee on Retirement Allowances of the National Education Association, in coopera!" with the National Council of Teachers’ Retirement Systems, in ‘Current Issues in Teacher Retirement.” Research Bulletin 5° 2° November 1930. Washington, D. C.: Research Division, National Education Association. [96 ] 2. Guaranties to both teacher and publi Retirement ages and rules should be and administered so as to retain teachers Z efficient service and provide for their reti when old age or disability makes satis! service no longer possible. The retirement ance should be sufficient to enable the teacher to live in reasonable comfort, removing the temptation to remain in the clas room beyond the period of efficient servi 3. Costs shared by teachers and publi. The sums deposited by the teachers and public during the period of service sh approximately equal. 4. Amount of deposits and payments sta The deposit by the teacher and the paymen by the public should be stated by the organic ac creating a retirement system, subject to st ment in accordance with future actuaria! tigation. 5. Deposits of teacher and payments |; concurrent with service The teacher’s contributions and _ the payments to the retirement fund should b: regularly and concurrently during the teacher’ period of service. 6. Individual accounts kept The retirement board should open an acco with each individual teacher. Sums deposited i: that account by the teacher should be held i: trust for that teacher. 7. Retirement system on a reserve basis An adequate and actuarially sound resery fund should be created to guarantee that necessary money to pay the benefits promised will be on hand at the time of retirement 8. Periodic actuarial investigations Periodic actuarial investigations should be made of every retirement system to insure its financial soundness. 9. Disability provided for A retirement allowance should be pro. for disabled teachers after a reasonable perio of service. 10. Teachers’ accumulated deposits returnable in case of withdrawal from service, or deal! prior to retirement Teachers leaving the service before the lar retirement age should retain rights to 4 monies accumulated in their accounts. Teachers accumulated deposits should be returnable upor withdrawal from teaching service, or death prior to retirement. 11. Choice of options offered upon retirement The teacher should have the opportunity © elect the manner in which he will receive th benefits represented by the accumulated value 0! his deposits and the state’s payments. egu- State s ye made e regu- to al sachers le upoR death ment nity to ive the ralue ot operation a 5 + Abt aie Credit should be allowed for past service i Upon the adoption of a retirement plan, teach- ers should be given credit for their service prior to the establishment of the system. Funds for this rpose should be provided by the public. 13 Rights under previous retirement systems safeguarded The public should guarantee active teachers all the benefits which they had a right to expect under the old system. It should guarantee teachers retired under a previous sys- tem the allowance promised at the time of their retirement. reasonable 14. Reciprocal relations between states Provision should be made for cooperative or reciprocal relations between the retirement sys- tems of the different states. 15. Retirement board in control The administration of the retirement system should be in the hands of a retirement board whose make-up is carefully prescribed in the re tirement law, and which represents both the pub lic and the teachers. How the Bulletin Is Organized This report is planned primarily to set forth the status and conditions of teacher retirement in the United States, and secondarily to com pare the old-age future of teachers with the expectancy of workers in other fields. Part | shows the results of a questionnaire study of state and local teacher retirement systems.’ Part I] compares teacher retirement benefits with those provided by retirement plans in other fields, private as well as the public bene fits of the federal Social Security Act. Part III summarizes certain provisions of the federal Social Security Act, and suggests some of the possible advantages and disadvantages if teach ers were to be included under the act. Inquiry forms were mailed in January 1937 to all state retirement systems and to all known local systems. Unless otherwise ioted, information is for the period July 1, 1935, to June 30, 1936. The questionnaire was prepared with the cordial assistance of the officers of the now disbanded National Council of Teachers’ [97] Retirement Systems I. State and Local Teacher Retirement Systems On May 1, 1937, state teacher retirement laws had been enacted in the following 30 states and territories. The date of enactment is given after each state in the list: Arizona (1912) Arkansas (1937) California (1913) Canal Zone (1926) Connecticut (1917) Hawaii (1926) Illinois (1915) Indiana (1921) Kentucky (1928) Louisiana (1936) Maine (1924) Maryland (1927) Massachusetts (1914) Montana (1915-37) Nevada (1937) New Jersey (1919) New Mexico (1933-37) New York (1921) North Dakota (1913) Ohio (1920) Pennsylvania (1919) Puerto Rico (1928) Rhode Island (1908) Utah (1935-37) Vermont (1919) Virginia (1908) Washington (1923-37) Wisconsin (1921) Michigan (1915) Minnesota (1915) The Kentucky law enacted in 1928 is still inoperative. The dormant 1933 law in New Mexico has recently been replaced by a new enactment. The Utah law of 1935, which was also inoperative because of lack of funds, was replaced by the 1937 legislature. Florida has a closely limited retirement pro- vision, enacted in 1931, enabling retirement on an allowance of $40 a month of any teacher after 35 years’ service in the state, provided such teacher is without other means of support and unable to earn a living. New Mexico had a similar provision passed in 1935 which has been repealed by the more comprehensive law of 1937. This new law authorizes any local district to provide for the retirement of its teachers. Missouri and Texas passed, in 1936, consti- tutional amendments making teacher retire- ment legislation possible. The progress toward retirement in these two states may be followed in the state educational journals.* Statewide systems are contemplated in a number of other states. In each legislative year, retirement bills are considered. Four of the nine states holding regular legislative sessions, in 1936 enacted some laws improving the teach- er’s prospects for old age. At least eleven states are working toward retirement legislation in 1937. Efforts are being made to establish new existing systems so that they will be in with accepted fundamental principles. The basic list of local given below was compiled by the Research [) vision in 1933. Changes reported to the |) vision since that time have been included, no special investigation has been made to retirement tain if all new local systems are include: The retirement system of Washington, |).( is authorized by legislative act of Congrex Other local teacher retirement systems may classified into three types. One type operates within but independently of, a statewide s tem. Another type is based on a state law p; viding for teacher retirement in a certair of community. The third is a local system on general permissive legislation. The below are classified according to these three types. 1. Operating within, but independently of a statewide system: California New York San Francisco” New York Connecticut Rhode Island New Haven Bristol * Illinois Newport” Chicago Providence Peoria Utah Louisiana Salt Lake Cit; New Orleans Washington Maryland Everett Baltimore Seattle Massachusetts Spokane Boston Tacoma Michigan Wisconsin Detroit Milwaukee Minnesota Duluth Minneapolis St. Paul 2. Based on a state law providing for teacher retirement in a certain class of community: Georgia Atlanta Delaware Wilmington Nebraska Omaha 3. Based on state permissive legislatio authorizing the establishment of teacher retire systems and to modify or reorganize certainment systems: 1 For example, School and Community 23: 101, 139; March and April 1937. § Also Texas Outlook 21: 6, 49; March a April 1937. As this issue of the Research Bulletin goes to press, word is received that the teacher retirement bill has been pas in Texas. 2 Teachers are enrolled also in the state system. [98] eile tod ng test ee ee ail legis! slation retire Alabama Kentucky General Features of Teacher Retirement Mobile County * Bowling Green : Systems Montgomery Frankfort y Colorado Lexington ; a . ee ae ie’ State lable 1 shows certain features of Colorado Springs Louisville Denver Newport state teacher retirement systems. The year in Grand Junction Mississippi which each system was established is given in Greeley Meridian lumn 2. TI ; < kemaienl ne oo . : ‘0 ya lis IS an important consideration Pueblo (Dists. New Hampshire : I ee Nos. 1 and 20) Concord inasmuch as the reports of membership and Georgia Manchester financial transactions (Tables 4+ to 13) have sus Nashua "ge ri eeg . some bearing upon the length of time the sys- Macon (Bibb Oregon ‘ Ty County) Portland tem Nas been In operation. lese dates are of Iowa Tennessee interest also, in comparing various features of Cedar Rapids Chattanooga the systems to determine if the newer plans Davenport Knox County Ps oes have deviated greatly from the conditions gen Des Moines Memphis ; Sioux City Nashville erally found in the systems established in the Kansas Texas early days of teacher retirement. Of course, “his c- : e : Atchison San Antonio most of these older systems have been revised Leavenworth Parsons Topeka ciples. from time to time to adjust to changing prin Plan maintained thru the teachers association, not connected with the school official FIGURE II.—STATE AND LOCAL RETIREMENT SYSTEMS * / ears | #4 | fi f 12 <4 an) ncord Renee Aistol / es lewHaven { / \ San Francisco \ \ “ a ee | See retirement provisions Permissive legislation or provisions of limited cpplication No retirement provisions. (Measures needy teachers not considered) AY ° ~ > * aN v ORes. Div, Nat. Educ. Assn ? [\, Gungy =) eCity aes Jocal retirement gystems "This map represents conditions prevailing May 1, 1937. Just before releasing pages for printing, word came that the legislature in Texas had passed a new statewide retirement law [99 ] AIINUUE aes jo Ajredoid jO uoTIeEN[eA posses puny juaw OOL$ 30 L/% Sapa “SB JO IeIJOp yous uodN [Iw suo -s1Nje1 pue OTs aO1Atas 07 Bul 01d 3381S *s}isodap JO OI/T jenba oy “puny jooyss -ued (siesyoea} -pios0oe pepeis ssyovay Ssayove} wor Ayinuuy os ; SI Sz Ajjenuuy woOUrWwod woOlj apise jas JuNOUTy = 33e78 sjoul]] unoure why —3181S SI6l sjounT] 40q -ul9aut aUTedaq JaYyoRa 1eaA BZurpsceid ul QUIS BDIAIVS JO SIB|aA AQ uBy} JaIeII3 WE wea] ye oq OF peydnjnu sivaA OT 3k] ‘sIoquisaul [je jO uoMesueduI0S Zuunp Areres jenuue Ajjenuuy yenuue [e}0} jo jusoJed a3ey “q postmoid aBeIDAe OFI/T syenbe queiqUs Mou aBe Siigauaq Aq uolsuadg *s}1sodap -J9AB JO UOT}BSUIdWIOD afqeuleS punj uoneynu peurusajep Are s3yIRa] S49udee} WoIy AlInuUYy OL 09 Ajjenuuy jo quaosed Juesuo0d ‘wuOsIUA “Be «-ND0e «6UOIsUag «=-[es JO WwWadIEg -—718IS 9761 Teme Ayimuue 03 jenba sjuawAed 3343s “ ¢ 0z S¢€) Aljenuue Ajye , A[quies OOT$ Whurrew wi01j UOTsUag =*S}1sOdap -nsN ‘aull} 0} +-se ye1suas ay} Aq pazedoid ‘sz7$ ownutulm Jayovay Ssayora} wo1y Aynuuy OL 09 ce 0z Oz) ew Woy -de aq [[eYys se s}uNOUIe YoNg,, punjuojsusg ‘Arejes jo %¢ 3181S LI6I jnNoHIUUOy ull} 0} 91NZISIBa] wiry suOT? eu wo1g = -eudoidde aAreoe1 0} Osfe puny 000'0T$ eseerDU! 0} Ajyenuue puny jusueuwsad sia -YoBa} [OOYIS SQN “37878 3yI puny jueu JO SME] XB} JosueI} JO sDUEIEY -BUlIed S1ayIeA) sayoray oos$ - ol st or Ayjenuuy -u} Japun pazoajjoo sexe} jo %g jooyss somqNd qunowle iif -878IS FLO BIUIOSIE) paeoq Ayinuue 0} jenbe a3e3s jo won wo1j uoIsuag “s}1sodap “3181p 78 Mel Aq puny juaw Jayovay {S4ayoee} Wor AyInuUuy 09 uy 09 s ol SZ peyioeds JON yjo1Aed [e302 jo %peé -sine1 sJsyoway Areyes jo %yp 3781S LE6I sesueqiy iq woneudoiddy SJUaUITeIs yeisues) Ul pezZlOYy Ne ‘uoTIeD -ul A[yjuOUL -npy JO preog 37e1S 10) uOT}eLUd ult plegq -oidde pue puny jeieues) wo “pequeiZ uoIs ~apeUul sjuaWIAegG "OO9$ JO UTS pezee19 Ajuo 009 09 " SI Of -ued [enuuy -ued pojJUEIZ Siayoee} pamey puny yemeds ON 3783S ZI6I euozuy val eI ZI Il or 6 8 Z 9 s ¥ £ Z if (S}Ipes2 queues} eo1ases Jold wol1y juew qyuewr 4-03 Bulpes 8}youeq Burpnyour JON) -omes ~02902 03d joys w93shs B2U24 frogind TUCNdO -tpeuTMT [HO] [eo] pred pred juourhed yuour Aymuuy “a aan eo ueqmh yunoury Bura1edes asodep spuny 9 -esNeJ 103 o8y unur 93838 Ul pung ,830q289} jo jo eo 82183 -rA jo wi0g sa0In0g yWwouUTysT 9914308 JO SIBVOX -qujse jo eq SIUBMOTIE JUSWIOINOY JWeUIeINE] JO SUOTIIPUOD JUSUIEINE] Bd14J08 JO UONBNUUBIEdNS yueurfed $,3381S SWALSAS LNANAAILAY AAHOVAL ACIMALVLS AO SAANLVAdA NIVLYAD—! 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In three of older California, and Indiana, a flat amount is set by law for teach .-;’ contributions. In all other state joint contributory plans, the teacher contributes a vercent of his salary. In six systems the law provides for a definite percent of the teacher’s salary to be contributed by members. Some does systems, Illinois, systems set a minimum and maximum amount; thers grade the percent according to service ; till others determine the percent by the bene- fits promised. Column 6, Table 1, indicates variations in the provisions for state support. In some cases in element of uncertainty may exist where the law merely stipulates that the state shall con- tribute “such amounts as shall be appropriated y the general assembly,” or “such amounts as shall be appropriated by the general court.” [hese payments are usually made by the state nnually or biennially. However, in several state teacher retirement laws no regular time has been set for payment of the state’s contri- yution. Service requirements for retirement from none to forty years. In some states all of the required service must be in the state from which the teacher expects to draw a retirement ilowance. In other states, part of the service requirement may be met by years taught in other states. Most systems including a service requirement in their conditions for retirement stipulate that at least a part of this service be n the state. Sixty years of age is usually set as the date tor optional retirement. This age limit may be in addition to the service requirement, altho in ; vary ive systems teachers may retire at sixty with- out fulfilling service requirements. Eleven sys- tems set seventy as the age for compulsory retirement. No other state systems have set any compulsory retirement age, but Arkansas’ new \937 retirement law provides for employment atter sixty at the discretion of the schoolboard. Only two systems pay a flat sum to all re- tired teachers. These are the $600 allowance paid by the Arizona pension system and the $500 allowance paid by California’s joint-con- | tributory system. Three other state systems { pay a flat benefit rather than an annuity, but in Indiana and Minnesota the flat benetit is graded according to service, and in New Mexico and Utah it is graded according to salary. All other state systems pay annuities to retired teachers; allowances usually consist of an annuity based on the teacher’s deposits and of a pension from the state contributions Accidents and illness make it necessary some times for teachers to withdraw from active work prior to the time of regular retirement The practise in a number of statewide systems is to provide such disabled teachers with (1) an annuity representing the actuarial equiva lent of the teacher’s accumulated deposits, and (2) a pension from the state to bring the total disability allowance up to an amount propor tional to the length of service, but not exceed ing the allowance provided for regular supe annuation retirement. Other states provide a disability allowance calculated in terms of serv ice but with little relation to the teacher’s de posits or the state’s payments under the pension plan. Certain conditions are usually set up to sate guard the granting of disability benefits. ‘These conditions are in the nature of a minimum period of service to be rendered and proof of disability by medical examination. ‘The grant ing of a disability allowance is usually preceded by a careful examination of the applicant and followed by periodic reexaminations to test continuance of disability. Applicants for disability benefits from state wide retirement systems are usually required to have given a certain period of service, most often 10 or 15 years. In general this service must have been rendered in the state wherein the applicant was teaching at the time the dis- ability occurred. A number of states require the teacher to be under a certain age, generally the minimum age for superannuation retirement. A few systems require that the teacher have deposited certain amounts into the retirement fund before he is eligible for retirement for disability. The extent of the disability prerequisite to retirement varies among the statewide systems. Many specify that a teacher is eligible for re tirement if he is incapable of further school service or efficient performance of duty. Wis consin specifies retirement for disability when the individual is prevented from doing any occupation or work for compensation of finan cial value. Indiana does not mention any limi [ 105 ] tation upon the extent of disability. Minne- sota, North Dakota, and Rhode Island do not specify any occupational limitations, altho they mention that the teacher must be mentally or physically incapacitated. Local—Table 2 shows the general trend in the characteristics of local retirement systems. From this table may be drawn generalizations as to the “typical” city and county teacher re- tirement system. The majority of the local plans follow the same lines as the typical state- wide system. Most local systems are joint con- tributory. Teachers’ deposits are usually based upon percent of salary. The source of city or county payments appears to be rather evenly divided between appropriations by the city and tax sources earmarked for the retirement fund. Sixty is the usual age specified for optional re- tirement, altho 20 systems specify no age. Most local systems require 25 or 30 years’ service and only 7 systems set no service requirements. Less than one-third of the local systems set minimum amounts of deposits before optional retirement is permitted. Most local systems do not set any age for compulsory retirement ; 5 of the 10 which do, specify sixty-five as the age for compulsory retirement. Half the local systems pay teachers a flat sum, and half pay in an annuity of one kind or another. Two local systems do not provide for disability retirement. Of those systems which do permit retirements for disability, several specify that disabled teachers, in order to be eligible for disability retirement, must be under a certain age. Serv- ice requirements ranging from 5 to 30 years are set by differing local systems as a prerequi- site for disability retirement. The allowances in such cases are usually a sum or annuity pro- portionate to the superannuation or service re- tirement allowances. Table 3 provides a brief comparison of local retirement plans in eight large cities. All are joint-contributory plans. In six of the eight systems the teachers’ contributions are based on a percent of salary. Conditions for retire- ment vary, as do the retirement allowances. Five of these eight city systems participated in the present study of the status quo of teacher retirement. Reference to Tables 5, 7, 9, 12, and 15 will provide evidence as to the opera- tions of the systems in Detroit, New Orleans, New York, Baltimore, and Washington, |). ( Chicago, Milwaukee, and Minneapolis did n,; = cooperate in the present study. Membership in Teacher Retirement Systems Data on the membership of teacher ment systems were assembled by means 0 form which called for the total numb, enrolments in the retirement system up ¢ close of the last completed membership yea; : It also requested the segregation of total en ments into two principal groups: those w! i were still members of the system at the end o; : the year, and those whose membershi terminated. The “terminated memberships’ ‘ were subdivided according to cause of termi: H tion: (1) withdrawal, resignation, or « ty sal; (2) death prior to retirement; and (3 . retirement. The terminations due to retiremen: were segregated into retirements for sup: I annuation or service, and retirements for d ability. Total enrolments—A question of first in portance concerning retirement systems is thi number of persons enrolled by the systems since their establishment. A few have been in & operation since the latter part of the nin B teenth century and the first decade of the twentieth. Others have been inaugurated as recently as 1937. While the rules with respect to participation vary, the general practise is make it compulsory for newly employed teac! ers, but to allow those already in service a ( option as to membership. Some systems app!) only to the administrative and instructional staff of the public schools. Other systems in clude all public school employees, as well! a the staffs of certain state institutions. ‘hes : factors should be remembered in considering data on total enrolments. Tables 4 and 5 show the total enrolments from date of establishment to the end of the last completed membership year in state sys tems and in city and county systems. \lor tana advised that its system, being reorganized in 1937, could not be included in the statistica! Ba: tabulations of this bulletin. Illinois is the on} other statewide retirement system not included Total enrolments for state systems range fron Compul. ‘ For a definition of the term “terminated memberships’? and other technical phrases consult the inquiry form reproduced # the end of this bulletin. [ 106 ] sh ll as P hese uded tron iced at TABLE 2.—PRINCIPAL FEATURES OF FORTY-SIX LOCAL TEACHER RETIREMENT SYSTEMS Number of local systems Features ? Supe j funds ity or county and teachers City or county alone Teachers alone State and teachers schers’ deposits \. Flat amount B. Percent of salary Percent of salary graded according to service Flat amount graded according to service Amount based on and age at service Percent of salary graded according to and/or age at entering service or me! ship G. Indefinite percent of salary H. No deposits from teachers sex, entering ity or county payments (no record for one system) \. Tax sources earmarked for retirement fund 3. Board of education appropriation City appropriation Board of education pays part; city pays State appropriation f F. No payments from public funds nditions of optional superannuation retirement \. Minimum age:® 55 57 60 62 65 55 for women; 60 for men No age specified B. Years of service required: 10 20 25 30 35 40 30 for women; 35 for men No service requirement specified Amount deposited required before optional re- tirement permitted: $200 300 400 720 Amount= 4 first annual pension Amount= 1 year's pension Graded.... Amount }4 last year’s salary 1% of salary for 30 years A. No such requirement B. Compulsory retirement age:” Cc 75 D 70 68 65 No compulsory age Superannuation retirement allowances: A. Flat amount: $ 25 mo... 50 mo... 360 yr..... 400 yr. 480 yr. 500 yr.. 600 yr.. 900 yr..... Flat amount graded according to salary and/or length of service * Includes double entry for two systems with optional conditions. ’ One system requires compulsory retirement also after 40 years’ service. Conditions for provide D Number of local systems Features ? rannuation retirement allowances (cont.) B. Annuity representing actuarial equivalent o deposits with regular interest purchased by city’s or Annuity teacher ind ty s representing actuarial equivalent iccumulated depo with interest Annuity graded length of service according to salary and with varying provisions Uniform annuity Percent of salary (usually not to exceed stated maximum disability retirement (two local systems for disability retirement) \. Age limitation Under 60 Under 55 Under 50 Over 50 No such | No such requirement her years’ serv system: Amount of total nun to be in city ice required 3/5 5 vrs 6 vrs 10 yrs 15 yrs 20 yrs 25 yrs No such requirenient Sum of before disability retirement Deposits for 5 years $300 400 1 % of salary Graded service retirement. At least minimum dues No such requirement required deposits same as for superannuation or Disability retirement allowances: Flat sum as for superannuation retirement Flat sum proportionate to service Percent of salary, not exceeding maximum set Indefinite amount not exceeding superannua tion or service retirement allowance Annuity as for superannuation retirement Annuity proportionate to service and to regu lar superannuation annuity Annuity plus pension proportionate to service and to regular superannuation annuity and pension Annuity representing actuarial equivalent of teacher's accumulated deposits with interest Annuity representing actuarial equivalent of teacher's accumulated deposits with inter est, advanced to 50 years At discretion of board Monthly amount equal to difference between $75 and monthly annuity purchasable by member's deposits ‘yyauaq = yIBap ~ auoN auON 006$ ‘WNwixeu ‘¢] 0} dn ‘¢z 1aA0 Qo1AJas JO 1eaA YORa 10} [BUOTIIPpe O7$ YUM ‘WIA B QOO$ ‘BlAJWS sIBaA CZ Jaijy :Aiyiqesip pue uonenuuesedng aoANeM[y Ul SI ‘a0l4s08 sIveaA 67 -AqIqesiq “soANeallWw ul Usveq sAeYy JsnU ‘ATIAI} -vadsai ‘OZ pue gT yor JO ‘aotAres suvad g¢ Jaze ave Aue je pue ‘ddlAles S1vaA $7 Jae ‘G9 aBe je jeuondg ‘:uonenuueisedng S9UIOOU! 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INnotHNnRO Orns OO Awnnm Ww el ral Il ol L s P £ I juew sjemeip sdiys queuW s|emeip sdiys Ay1q uonjenu -a1Hey Weed “UUM -lequisw Aypq uoyjenu -31104 Weed “UM -Jequieul pate " -Bsiq -uviedng - —- - : pojeu -esiq -uviedng + - —-- - pozeu 0 i wa :esnes Aq -Tu1J9} JO - - —- :esneo Aq pe}nqiysip ure} ~TurJ93 jo jo -1equew JO} Peljel JequUINNY pejNqisjsip iveA |wosy yse] sdiys Jequinu JO} peiyje1 Joqunyy -SAS jo JU@UIYS!|qQe}Se ooUIS SdiIys JoquInu sequin 9atjo8 wie}shs JUSMIOINGY -139qWieW pe}EUlUIIE} Jo Joquinyny [eI0] -1J9qW9Ul Pe}VUIULIG} Jo Jequinyy [e30] jo JeaX [eoSy 3S¥] 10} SOINTIA “g WI9}SAS JO JUSUTYSI|GUISe dOUIS SoINSy [BIO] “Vy sequin SWALSAS LNAUWAAILAA AAHHOVAL TVOOT AO SOILSILVLS dIHSHYAANAN—'S AIAVL 873 in Vermont to 165,364 in Pennsylvania; for local systems, from 15 in Parsons, Kansas, to 50,458 in New York City. ‘Total enrolments include reentrants—persons who have joined the system more than once. Active memberships—Tables + and 5 also show the number of persons who are active members. These systems report as many as 73,404 active members in Pennsylvania, 46,498 in California, 48,000 in Ohio, and 45,921 in New York. In some states, where statewide retirement provisions are in effect, separate city systems also have large active memberships: for example, Boston reports an active membership of 13,732; New York City reports 35,789. In lowa, where there exist no statewide provisions, retirement systems in Cedar Rapids, Daven- port, and Des Moines have active memberships of 388, 331, and 891 respectively. In Nebraska, where there is no statewide retirement pro- vision, there are over 1000 active members in the local system of Omaha. When statewide plans are first adopted, members of existing local funds must be taken into consideration. In Louisiana, where a statewide plan has just been inaugurated, New Orleans already had an active membership of 1890. Reorganization of the state system in Washington, just passed by the 1937 legislature, must take account of the system operating in Seattle with an active mem- bership of 1693, and as well the smaller sys- tems in Everett, Spokane, and Tacoma, with active memberships of about 500 each. Terminated memberships—Active member- ship in a retirement system may be terminated for any one of three causes: (1) withdrawal, resignation, or dismissal; (2) death prior to retirement; (3) retirement. ‘The factors which control the ratio of termi- nated memberships to total enrolments cannot be determined entirely from data presented here. However, the period of tenure among teachers in service will affect the number of withdrawals prior to retirement. Age and serv- ice requirements for voluntary or compulsory retirement have a direct bearing on the propor- tion of terminated memberships. Varying re- quirements concerning the nature and proof of incapacity presumably would affect the propor- tion of disability retirements. In Tables 4 and 5 are given the total ber of terminated memberships. ‘These t: nated memberships range, in the state sys: from 446 in Vermont to 91,960 in Pe: vania; in the local systems, from 2 in Bow Green, Kentucky, and 3 in Parsons, Ka to 14,669 in New York City. Perhaps the most striking fact revealed Tables 4 and 5 is the large proportion of t: nations, in most systems, due to withdrawal! prior to retirement. With the exceptio: Nevada, which reports about one-third system among either states or cities rep: fewer than half of all terminations due to wit! drawal.’ In many systems the proportio: proached or exceeded 90 percent. These facts reflect to some extent the gern ally short tenure of position in teaching. ‘|’! is, however, no reason to assume that tly number of withdrawals should be as sma or smaller than, the number of retirement or deaths prior to retirement. Many persons who withdraw from a system do so, not cause they are leaving the teaching professiv: but because they are leaving the state o1 to teach elsewhere. Moreover, a larger portion of withdrawals might be expected be cause withdrawals are spread over the entir range of ages up to the minimum age for supe: annuation retirement, while most retirements occur within a relatively narrow range of ayes Retirements—Fifty systems included in the present study of annuitants report a total of 45,427 members retired up to June 30, 1°30 All except 12,855 of these retirements were granted by state systems. Approximate], percent of the total superannuation or sery\ retirements and 16 percent of the total ability retirements were granted by local sys tems. More than two-thirds of the total retir ments (69.5 percent) were granted for supe: annuation or service. Tables 4+ and 5, in co! umns 7, 8, and 9, divide total retirements to: each system into two groups—superannuation or service retirements, and disability retire ments. In most of the systems a large majorit) of the retirements were for superannuation 0! service, but the proportion of retirements to disability and for superannuation or service varies among systems. Probably one major tac tor in these variations is the rate of withdraw! 5 In California and New York City the records available do not separate the terminations due to withdrawal from those death prior to retirement. { 112] ition tire prity nm OF ; Tor awal from the system prior to retirement. Obviously, if relatively few teachers remain in service long enough to qualify for superannuation or service retirement, the percent of all retire- ments due to disability is likely to be relatively large. Another factor which would naturally exert considerable influence is the nature of the various regulations governing retirement for disability and for superannuation or service.® It has been asserted that the granting of dis- ability benefits because of incapacity as a teacher would result in a larger proportion of disability retirements than if retirement were granted only in case of unfitness to pursue any gainful occupation. It might be assumed, also, that an early minimum age for superannuation retire- ment would result in a larger proportion of such retirements than if the minimum age re- quirement were higher. The length of service required would be of some influence. A study of the provisions covering these points in the state retirement laws, however, does not en- tirely explain the variations found in Table 4. It is true that Wisconsin, which has retired a relatively large number of teachers for super- annuation and relatively few for disability, sets the low age of fifty as the minimum for super- annuation retirement, and retires members for disability only if they are incapacitated for “‘any occupation or work for compensation of finan- cial value.” But all the other state systems listed, except California and Indiana, have a minimum age of sixty for superannuation or service retirement, and specify that disability retirement is to be granted in case of incapacity to perform further efficient service in the schools. In spite of these facts, Connecticut and Massachusetts reported a large proportion of their total retirements as due to superannua- tion and relatively few as due to disability— figures which approximate those for Wiscon- sin. Some systems have made special provision for certain groups of members, allowing them to retire upon fifteen to forty years’ service, regardless of age. This may account for the high proportion of superannuation or service ® For regulations governing retirement from state systems, see: National Education Association, Research Division retirements in Connecticut, Indiana, Massa chusetts, and Spokane, Washington. On the other hand, California, which requires only thirty years of service for superannuation re tirement, has granted a lesser proportion of its retirements on account of superannuation and a greater proportion on account of disability, than have other state systems. A clearer picture of the operation of the systems in any one year is shown by columns 10-15 of Table 4. This part of the table com pares the number of terminations during the last completed membership year for the various causes, with the number of persons who were active members during that year. Only a few of the active members of state or local systems terminated their membership during the year for which reports were made. Terminations on account of withdrawal ex ceeded terminations from any other cause dur ing the last completed membership year. Deaths prior to retirement were not numerous. Retire ments accounted for terminations among a small proportion of the active members, and disability caused but few of these retirements. Retirement Allowances It has been stated previously that ‘‘the re tirement allowances should be sufficient to enable the retiring teacher to live in reasonable comfort, thereby removing the temptation to remain in the classroom beyond the period of efficient service.” * Previous studies have shown that many teachers retired by existing retire ment systems are entirely dependent upon the allowances granted.* Many persons will not be anxious to exchange their accustomed active salaries for a retirement allowance that is con- siderably smaller. Since one of the major pur poses of retirement systems is to encourage retirement as soon as efficiency begins to de cline, it is obvious that the amount paid retired teachers is a matter of first importance. Conclusions should not be drawn concerning the soundness or usefulness of any retirement system solely on the basis of allowances paid. In the long run such amounts depend on the Current Issues in Teacher Retirement.” Research Bulletin 8: 221-88; November 1930. Tables 9, 10, 13, and 15, p. 249-50, 258-59. See also Tables 1 and 2, p. 100 and 107 of this report. 7 National Education Association, Research Division. “Current Issues in Teacher Retirement.” November 1930. Washington, D. C.: the Association. Research Bulletin &: 226: 5See: (1) Shaw, Reuben T. A Study of the Adequacy and Effectiveness of the Pennsylvania School Employes’ Retirement System. Philadelphia: Pennsylvania State Education Association, 1926. p. 96, 99, 106. (2) Eaves, Lucile, director. Old-Age Support of Women Teachers. Boston: Research Department, Women’s Educational and Industrial Union, 1921. p. 53-58 { 113 ] amounts paid in. If a system pays out larger sums than its income warrants, the system is not on a sound basis. The only way materially to increase the size of the allowances paid is: (1) to increase the revenue, which means larger deposits by teachers or increased payments from the state, or both; or (2) to increase the age or service requirements for retirement. Further- more, since most retirement systems have been in effect for a relatively brief period the allow- ances being granted to teachers now retiring are smaller than the allowances that can be paid at a later period. This is because teachers now retiring have had a long period of service prior to the establishment of the retirement system and have not had time to accumulate funds for their retirement. The average retirement allowance paid in any given retirement system may be considered from two different points of view. First, it is possible to consider the average amount being paid to all persons in retirement status at the close of the last fiscal year. Second, the con- sideration might be limited to those persons who entered upon retirement status during any given year. In some cases the figures are further subdivided according to whether the allowance is granted for superannuation or service, or for disability. The average allowance is made more meaningful by inclusion of data wherever avail- able as to the smallest and largest allowance paid. Allowances paid persons in superannuation or service retirement—Columns 3, 4, and 5 of Tables 6 and 7 show the smallest, largest, and average annual retirement allowance granted by state and local retirement systems to all persons who were in retirement status on ac- count of superannuation or service. Figures for the last fiscal year are tabulated separately in columns 7, 8, and 9. The highest average superannuation or serv- ice payments are being paid by the state of New Jersey (Table 6) ; New York City; De- troit, Michigan; Washington, D. C.; and Du- luth, Minnesota (Table 7). These five systems are the only ones paying an average allowance of more than $1000. Five other systems pay average allowances of between $800 and $1000. The lowest average annual allowances are re- ported from Vermont, Wisconsin, and Bristol, Rhode Island, each of which pays less than $400 a year. Bristol reports an average of $250. Wisconsin permits teachers who withdraw from active service prior to retirement, to convert their deposits into an annuity. Many of these annuities are, of course, very simal! since they are based on a brief period of sery This fact possibly accounts for the relativel, low average retirement allowances paid by the Wisconsin system. Similar consideration of the laws and regulations controlling each of the other systems would be necessary for a prope: appreciation and interpretation of the averave retirement figures reported. Comparison of the smallest and larves: allowances reported in Table 6 shows that great variation exists. Four states pay a un form amount to all retirants. Seven report allowances under $100 a year. Connecticut reported its smallest allowance to be $50): New York state reported its smallest allow ance to be $400. Table 7 indicates that the local systems often pay uniform amounts. Pro\ idence, Rhode Island, is the only local system which pays less than $100 a year to any teacher retired for superannuation or service. Detroit Michigan, pays a uniform allowance of $1200) a year to all persons. This is the most uniforml) generous allowance reported by any system. * Other systems pay more to some retirants and a great deal less to some. For instance, Penn sylvania reports allowances as high as $500) and at the same time pays as low as $50. Obyi ously, service and age conditions help to pro duce these variations. The smallest and largest allowances paid should be studied with regard for the average; so, too, the average should be considered in a study of the extreme cases. New Jersey reported $83 as its smallest retirement allowance and $5103 as its largest; but the average of $1413 is high. Pennsylvania and New Jersey are the only two states paying an allowance of $5000 or over and Maryland and Wisconsin are the only others paying more than $2000. Four other states pay more than $1000. The remaining six states report thei highest allowance to be under $800; none talls below $500. Among the local systems in Table 7 the highest allowance reported was paid by the New York City system, an allowance of ove: $9000. This amount is higher than any re- ported by a state in Table 6. Boston’s largest allowance of $3600 ranks second. Boston’s smallest allowance is higher than New York City’s smallest allowance, but the New York [114] raw » to lany mall Vice, vely the t the the oper ave ryest that uni port ticut S00: low- the rov : stem cher roit, | 200 rmly tem. and enn- 5000 )bvi- pro rgest gard d be New ment the and g an and more than their falls ~ the the over > Te- rgest ton’s Y ork Y ork City average allowance is about twice that of Boston. In columns 7-9 of Tables 6 and 7 are reported the allowances granted during the last fiscal year ending June 30, 1936. The largest allowances reported are not as large as some that have been paid previously. However, the smallest allowances reported are in many cases higher than the lowest allowances re- ported during the entire history of the system. Disability allowances — Several which grant flat pensions pay the same average allowance for disability as for superannuation or service retirement. Most of the plans, how- ever, are paying a higher average allowance to persons retired for superannuation. The system in Bibb County, Georgia, is unique in that it pays for disability only. One or two other small local systems include in their retirement provisions the stipulation that, after certain age or service requirements have been met, teachers may be retired if they are incapable of further efficient service in the classroom. ‘This really amounts to disability retirement. The average disability allowance ranges from $203 in Vermont to $835 in New Jersey among state systems; from $375 in New Or- leans, Louisiana, to $950 in Washington, D. C., among !ocal systems. ‘The smallest dis- systems ability allowance among state systems was paid in Pennsylvania, $84; the largest in New Jersey, $4594. Among local systems, the small- est disability allowance reported was $192 in Des Moines; the largest was $2151 in New York City. Four other local systems and three state systems have paid disability allow- ances of over $1000. Comparison of retirement allowances with salaries in active service—In New Jersey, North Dakota, and Pennsylvania, the average retirement allowances are over one-half the present average salary in those states. In North Dakota the retirement allowance is low, even tho it is about 70 percent of the average salary. In most systems the average retirement allow- ance is about one-third of the present average salary. The severe reduction in income at the time of retirement means that teachers must supplement the retirement allowance by sav- ings or other forms of income, or restrict their standard of living. * National Education Association, Department of Classroom Teachers. ‘‘The Economic Welfare of Teachers.” Washington, D. C.: the Association, 1931. p. 123. On the other hand, a retirement system has the advantage that it grants a definite sum of money which can be estimated rather accu rately prior to retirement and which will continue to be paid as long as the retirant lives. Several of the existing state systems are planned so that they can grant approximately one-half of the final active salary upon retire ment for superannuation or service. If this proportion is to be increased significantly it can be done only by increasing the rate of contri bution. Retirement provisions should be looked upon as one element in planning for the economic security of members of the teaching profession. The assumption that all future financial needs can be met merely by membership in a retire- ment system is unwise. The important position of a retirement system in a total program for financial security is well expressed in the fol- lowing quotation: The movement to establish a sound teacher retire- ment system in every state deserves the active sup port of every member of the teaching profession. Such systems constitute one of the surest and best means of protecting teachers against economic dis tress in old age and in the event of permanent dis ability at any age. There are, to be sure, othe meritorious methods of obtaining such protection. Personal savings, commercial insurance, relief funds, and homes for aged or disabled teachers all] have important parts to play in meeting this need. Each of these measures, however, is either more un certain, more expensive, or less adequate to meet the needs of the teaching body as a whole than is a sound statewide retirement system.° Financial Transactions of Retirement Systems The inquiry blank used in assembling the material for this section called for a report of the ledger assets of each system at the begin- ning of the last completed fiscal year, the income and disbursements during that year, and the ledger assets at the close of the year. The total income was subdivided according to sources: from public sources; from members’ deposits; from interest; from donations and bequests ; and from profit on securities bought, sold, and matured. 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In addition, some miscellaneous information as to total liabilities, amount spent for investments, and amount received from sale and maturity of securities was requested. For definitions of terms used, the reader should consult the instructions accompanying the report blanks, as reproduced at the end of this bulletin. General financial statistics—Tables 8 and 9 summarize the financial operations and status of the several systems for the last completed fiscal year.'® They show the ledger assets at the beginning of the year, the total income and total disbursements during the year, and the ledger assets at the close of the year. The 18 states reporting had a combined income for the year of sixty-four million dollars, while the income of 20 city systems added another thirty-three million dollars to the total. The disbursements of all these systems totaled about thirty-six million dollars for the year. In most of the larger systems the ledger assets at the end of the year were somewhat greater than those at the beginning of the year. Altho Tables 8 and 9 do not include figures for all teacher retirement systems, the mere statement of the sums involved in the business of these systems represented is decidedly im- pressive. In most of the state systems and many of the city systems, the accumulation of reserves is controlled by actuarial investigations which seek to maintain the systems on a sound finan- cial basis, and yet to avoid an unnecessarily large accumulation of money. Sources of income—Tables 8 and 9 show income received from the public, from mem- bers, from interest, from donations and other miscellaneous sources, and from profits on securities. Among the joint-contributory sys- tems, Connecticut, Minnesota, North Dakota, and Virginia depend to a much greater extent on members’ contributions than on_ public funds. In Massachusetts, Vermont, and Wis- consin the contributions from members and from the state are about equal. In all other state systems the income from public funds is greater than that from members. Arizona and Rhode Island and a few local systems are straight pension systems, receiving no support from teachers. In most systems the bulk of the income was obtained from public funds and members’ deposits. Interest was an important item several instances, but donations and profits o; securities rarely constituted a very significant proportion of the total. Massachusetts, New Jersey, New York, Ohio, Pennsylvania, and Wisconsin each received more than a million dollars in interest; Pennsylvania’s interest receipts were over five million. Analysis of disbursements—Tables 8 and 9 show how retirement systems spent thei; money during the last completed fiscal year. The principal purposes for which funds are paid are as follows: retirement allowances refunds of deposits to teachers who withdraw from active service prior to retirement; pay ment of teachers’ deposits to their heirs in event of death; administrative costs of the system: and reimbursement for any losses incurred o: securities bought and sold. The previous statistics on membership, tirements, withdrawals, and deaths prior to retirement (Tables 4-5) account for varia tions in the disbursements for each of these purposes. All the state systems devoted at least one-third, and some more than one-half, of their total disbursements to superannuation o: service retirement allowances. Disability allow ances, on the other hand, used up a small part of all disbursements. Since in most cases where teachers terminate their active memberships they may withdraw their total deposits with or without interest, retirement systems take on some of the features of a savings bank. In fact this “savings bank” feature of retirement systems accounts for a considerable proportion of their financial trans actions. Withdrawals account for one-third of all disbursements in many systems, and _ in Maine, where no members have as yet been retired, the amount disbursed for withdrawals was more than 98 percent of the total. Also, in many systems the heirs of a deceased teache: are entitled to the return of the teacher's deposits from the retirement fund.'! This feature of some retirement laws explains the payment of relatively small sums of money to the heirs of deceased teachers. In no state retirement system did the disbursements for this feature amount to any large proportion of the total disbursements. 1 In all but a few systems the data reported were for the period July 1, 1935, to June 30, 1936. The exceptions are given in the footnotes of the tables. 11 See Issue Fourteen, page 258, “Current Issues in Teacher Retirement,” Research Bulletin. November 1930. [ 122 ] Similar comments may be made concerning the city systems represented in Table 9, altho wider variations occur in these systems than in the state systems. These wider variations are presumably due, at least in part, to the smaller number of individuals concerned in any given year. Administration of Teacher Retirement Systems Table 10 shows the composition of the ad- ministrative body of 22 state and 14 local retirement systems. Most members of the re- tirement board are persons with other duties than the management of the retirement system. The operation of a system, therefore, usually necessitates the setting up of an office with a paid staff to keep records. The expenses for such purpose are classified as administrative expenditures. Tables 11 and 12 show the total disbursements for administrative expenses. TABLE 11—ADMINISTRATIVE EX- PENSES DURING LAST FISCAL YEAR OF CERTAIN STATE TEACHER RE- TIREMENT SYSTEMS Admunis- ‘ trative Total dis- Admin- expense istrative bursements aaa per eas active Retirement system 1 2 3 $1,158,697 $34,390 46,498¢ 662,990 15,821 9,280 962,300 25,500 20,750 California. ... Connecticut Indiana Louisiana ¢ Maine. . Maryland Massachusetts Michigan... . Minnesota Nevada. ... New Jersey. . New York... North Dakota Pennsylvania ee Rhode Island Vermont Washington Wisconsin 18,284 1,200% 2,171 354,527" 10,858 5,337 2,133,670 16,868 20,408 535,386 13,900 ,000° 221,209 9,894 034 ; 22,799 1,123 531 3,780,530 55,418 27,377 4,438,314 72,261 45,921 102,542 2,505 . 4,406,567 65,039 73,404 3,514,938 77,227 , 000 « 217,941 I ; ; 27,290 1,246 434 249,091 6,822 ,602 961,595 53,521 ,5139 * Teaching positions, number of teachers not counted. > Includes administrative expenses paid thru a separate fund. ¢ First fiscal year not complete until August 1937. “Estimated cost of administration which is not included in total disbursements, nor paid by special fund. Administration of system conducted by office staff with other duties *Estimated by secretary of the state teacher retirement System. ‘ Data not reported. * Includes 12,934 teachers who have terminated their service but retain an equity in the state retirement system thru reten- tion of their state deposit accumulations. TABLE 12—ADMINISTRATIVE ExX- PENSES DURING LAST FISCAL YEAR OF CERTAIN LOCAL TEACHER RE- TIREMENT SYSTEMS Adminis trative expense per active member Num- ber of active mem- bers Admin- istrative expenses Total dis- bursements Retirement system l 3 5 Denver, Colo Washington, D. C. Bibb County, Ga Cedar Rapids, Iowa Davenport, Iowa Des Moines, lowa Topeka, Kans Bowling Green, Ky New Orleans, La Boston, Mass Detroit, Mich Omaha, Nebr New York, N. Y. Bristol, R. I Salt Lake City, Utah Seattle, Wash Spokane, Wash Tacoma, Wash $1,523 “ Data not reported Altho accounts are not always separately kept, it is obvious that the mere operation of a retirement involves some ex pense. Blanks records must be installed and kept up to date, teacher system and forms must be printed, and various supplies must be purchased. In the larger systems it is necessary to have a full-time executive secretary with a staff of assistants. These administrative expenses, as reported by 17 state and by 11 local systems, are brought together in Tables 11 and 12 to show the rela tion between the administrative expenses and total The tables also indicate the administrative expenses disbursements for all purposes. per active member in each system. ‘The term “administrative expenses” was carefully de fined in the inquiry blank. If directions were followed in reporting, the figures of ‘Table 11 and of Table 12 should be fairly comparable for the various retirement systems. The outstanding conclusion concerning ad ministrative expense is the fact that it consti tutes a very small proportion of the total cost in nearly all retirement systems. Among the state systems, administrative costs ranged from about | percent to 6 percent of the annual disbursements. In some of the city systems, expenditures for administration slightly larger percents of the total disburse ments than was true of any state system. represented [123 ] (1009) SWALSAS frooy Aq suoponpePp [1044Pd LNAWAAILAA AAHIVAL As of December 31, 1926. ¢ Data not reported. 4 First fiscal year not yet completed. * Includes $350,000 in bonds issued to the system by the state as part of the appropriation. f Includes present and future liabilities for members and beneficiaries. # Estimated by secretary of the teacher retirement system. TABLE 15.—MISCELLANEOUS FINAN. CIAL DATA FOR LOCAL TEACHER RETIREMENT SYSTEMS Amount re Amount ceived from Retirement Total _ Spent for sale and system liabilities investments maturit during last = securities fiscal year during las; fiscal year 1 2 3 $ Washington, D. C $11,997,8492 $631,060 $2 Bibb County, Ga.... © 13,000 Cedar Rapids, Iowa.. e 8,311 ¥ Des Moines, Iowa... 2,508 ,916 0 1 Om Topeka, Kans....... € 5,000 New Orleans, La.... 181,027 16,000 Baltimore, Md...... 22,865,242 1,516,900 1,248 , 39 Boston, Mass....... 7,970,943 5,156,615 3, 406 008 Detroit, Mich....... « 325,216 211, 00 Duluth, Minn....... 4,007,571 1,423,352 1,226,375 New York, N. Y..... 344,449,429 17,300,000 2,820 05) Providence, R. I.°... 10,288 615,000 188,20 Salt Lake City, Utah. e 88,619 566 Seattle, Wash....... 0 27,000 Spokane, Wash...... 0 6,366 10, 3 Tacoma, Wash...... 0 11,523 14,634 * As of July 1, 1926. > For entire city system; data not segregated for teac! ¢ Data not reported. in Bristol to almost four dollars in New Orleans. Table 13 shows details of the financial management of state and local systems. The machinery for collecting, safeguarding, an disbursing funds, varies from the most simp| to a most complex set-up. In almost eve: state joint-contributory system, the teachers deposits are collected by payroll deductions made by the local administrative offices. Th: investment of funds is usually in the hands ot more than one person; for example, the retire ment board acts as a group or appoints committee. In a few systems the state or cit) treasurer is alone responsible for supervising investments. Miscellaneous financial data—Tables |4 and 15 bring together information concerning total liabilities, expenditures for investment during the year, and amounts received fron the sale and maturity of securities held Thirty-two systems, state and local, gave figures for at least one of these three items. Altho the number of systems reporting is rela tively small, the tables give impressive evidence of the real magnitude of the annual invest ments for which retirement systems are respon sible. Fourteen state systems invested a total [ 126 ] NAN. ~HER a unt re. d from e and irity of urities ng last il year New ancial . The simple ever\ chers’ ctions The ids of retire- nts a r city vising rning fment from held. gave items. rela- dence ivest- spon total of $78,581,252 during the year, while fifteen local systems invested an additional $27,143,- 062. New York City alone invested more than $17,000,000. The importance of skilful man- agement in the investment of these sums is clear: first, because interest accumulations are mportant factors in building up the reserves from which the promised benefits are to be paid; and second, because the safety of the funds depends on the soundness of the investments. Summary The material presented in Part I emphasizes the fact that teacher retirement legislation is still in an early stage of development. ‘The final result of many legal provisions and ad- ministrative regulations with regard to retire- ment cannot be determined until years after they become effective. Conclusions concerning the systems now in operation, therefore, should not be drawn too quickly. However, certain observations as to the status of the systems can be made with some assurance. During recent years, when increasing atten tion has been given to the general problem of old-age security, thousands of teachers have enrolled in some retirement system. Over forty-five thousand school employees had been granted benefits up to June 30, 1936. Teacher retirement systems have increased slowly, hav- ing in common with systems for other employ- ees, their experimental stages. More than half of the states and at least 56 local communities have already made some progress in providing security for aged and disabled public school employees. At present, retirement systems must be planned and operated with full recognition of the extraordinarily high turnover among active teachers. The fact that a large percent of the 2 National Education Association, Research Division November 1930. Washington, D. C.: the Association. members will never apply for retirement profoundly aftects both the administration of the systems and the attitude of teachers toward participation in retirement plans. ‘The large proportion of early withdrawals makes provi- sion for refunds especially necessary. Some forfeiture of funds accumulated for retirement purposes is inevitable until reciprocity becomes practicable and funds can be transferred be tween sound state systems. One of the fundamental principles formu lated by the Committee on Retirement Allow ances states that “retirement ages and rules should be defined and administered so as to retain teachers during efficient service and provide for their retirement when old age o1 disability makes satisfactory service no longet possible.””’? The effectiveness of retirement systems will be determined to a large extent by the amount of the allowances promised. As time goes on, the economic status of the retired personnel, other things being equal, will prob ably improve, as the number of teachers with prior service decreases and the retired personnel is composed entirely of persons who began thei: service after the retirement systems were adopted. If teachers are unable or unwilling to make other provisions, the present retirement systems do assure them an income during old age. On the other hand, the retirement allowances granted amount to but a fraction of present active salaries. The public funds available and the salaries paid to teachers put limits on the annuities and pensions that may be granted. A number of financial problems faced by the indi- vidual teachers are met inadequately by many existing systems. The welfare of the schools requires that attention be directed also to a broad view of the means of assuring teachers’ financial security. “Current Issues in Teacher Retirement.’’ Research Bulletin 8 II. Teacher Retirement and Retirement Provisions for Other Occupations The future of teachers may be compared with the future expectancy of workers in various other occupations, included and ex- cluded from the Social Security Act. Industrial Workers On the assumption that a large majority of those covered by the Social Security Act are in non-professional occupations, examination will be made of the provisions for these workers before the act was passed by Congress. Trade union benefit plans—Over 80) workers were provided old-age protectic trade union benefit plans before the s Security Act was passed. These plans four general types: ' 1. Lump-sum payments upon _ retirement active work on account of age or disability tive plasterers, quarry workers, street and e|; railway employees and motor-bus operators 2. Monthly pensions paid out of general o cial funds to which the recipient has made only . contribution as is essential to membership i: union (bricklayers and masons, bridge and «: 1U. S. Department of Labor. Monthly Labor Review. ‘Social Security: Trade Union Benefit System.’ Wowt/ Review 42: 40; January 1936. TABLE. 16.—NUMBER AND SALARY OF WORKERS COVERED BY TRADE UNION OLD-AGE BENEFIT PLANS; CONDITIONS FOR PAYMENT OF BENEFITS AND AMOUNT PAID Trade union Bridge and Structural Iron Work- ers, International Association Carpenters and Joiners of Amer- ica, United Brotherhood ot Electrical Workers of America, International Brotherhood Fur Workers’ Union of United States and Canada, International Printing Pressmen's and Assist- ants’ Union of North America, International Quarry Workers International Union of North America Railway Employees of America, Amalgamated Association of Street and Electric Sheep Shearers’ Union of North America Stereotypers’ and Electrotypers’ Union of North America, Inter- national Typographical tional Brotherhood of Locomotive Fire- men and Enginemen Brotherhood of Railroad Train- men Union, Interna- Total num- ber active members * 2 180,000 « American Federation of Labor. Report of the Proceedings of the Fifty-Sixth Annual Convention. Washington, D Federation, 1936. p. 60-64. * Adapted Approximate average salary* 3 $1.25 hour 40-hour week ($50 week) $1.10 hour 40-hour week ($44 week) $1.10 hour 40-hour week ($44 week) $45 week $41.50 week $.55 hour 35-hour week ($19.25 week) $3.50 day 7-day week ($24.50 week) $44.73 week Total paid f annuities last fiscal yea Amount average annuity ” Service require- ment? Age for optional! retirement ° 4 5 6 $25 month to $1,000, then dropped ¢ 60 20 years 30 years 20 years $40 month 20 years $7 week 25 years $60 year 20 years $800 lump sum 2 years 2 years $65-$70 month? ( from “Social Security: Trade Union Benefit Systems.”” Monthly Labor Review: 42: 40; January 1936. ¢ Bridge and structural iron workers require that income from other sources be less than $60.00 a month; pension is fo: in months when other income is more than $60.00. ¢ Return to active work causes forfeiture of pension paid by railroad trainmen. [ 128 } VION FITS — aid for es last year il-iron workers, carpenters and joiners, sheep shearers, electrical workers, granite cutters, printers, ind printing pressmen). 3, Monthly pensions under an annuity system, ,avable only to annuitants who have made contribu- tions during their years of active membership in the ynion (locomotive engineers, locomotive firemen and enginemen, railroad trainmen). 4, Admission to the home for aged and disabled members owned and maintained by the international organizations] (carpenters, printers, printing pressmen, railway conductors, and, jointly, the three railroad brotherhoods), and temporary admission, for treatment, to tuberculosis sanatoriums (printers, printing pressmen, and stereotypers and electro tvpers). Certain provisions and qualifications for old se benefits provided by the trade union plans ire set forth in Table 16. However, workers » these and other occupations are not depend- ent entirely upon trade union benefit plans; in many industries there are company pension ] plans. Industrial pension plans—Such pension plans may be joint contributory, non-contribu- tory (no payments by employee), or composite. The first two types are self-explanatory. In the composite pension plan, the company pays a small minimum pension to employees without cost to them, but the employee has the oppor- tunity to increase his benefits individually by paying into the fund in which case the company may increase its share of the employee’s pension. Companies operating non-contributory sys- tems are usually much larger than those operating joint-contributory or composite plans. Latimer made a complete analysis of several hundred industrial pension plans.2 He found that 87 of the 200 companies with the largest zross assets have pension plans, and 43 of the i26 smaller companies (with less than $250,- 000,000 gross assets) have plans; yet only one in seven persons engaged in industry is covered by any kind of a company pension plan. Table 17 gives the age requirements for retirement by industries. Most of the plans regardless of industry provide for compulsory retirement at 65 or 70; most provide for optional or voluntary retirement at 60 or 65. Most industrial plans set minimum and maximum benefits receivable under their pro- visions. Table 18 gives the number and percent ot a group of industrial plans setting specific amounts for minimum and maximum benefits. TABLE 17.—PERCENT OF PENSION PLANS AND EMPLOYEES GROUPED BY AGES SPECIFIED FOR COM- PULSORY, VOLUNTARY, AND DIS- CRETIONARY SUPERANNUATION RETIREMENT, CLASSIFIED BY IN- DUSTRY, 1929 Discretionary retirement Voluntary retirement Compulsory retirement : Industry and age Per- Per- Per qualifications Per- cent Per- cent Per cent for retirement cent of cent of cent of ofall em- ofall em- of all em- plans’ ploy- plans” ploy- plans” ploy- ees” ees ees * 3 4 5 ontributory plan Railroads Age 70 a5 11 Age 65 79 Age 60 , Public utilities Age 70 Age 65 Age 60 Age 50-55 Service only Manufacturing Age 70 Age 65 Age 60 Age 50-55 Service only Banking and insur- ance Age 70 Age 65 Age 60 Age 50-55 Service only All industries Age 70 9 Age 65 2 54 Age 60 28 Age 50-55 8 Service only f 1 ontributory plan All industries Age 70 Age 65 Age 60 Age 50-55 Service only A b 50 Source: Adapted from Latimer, Murray Webb. /ndustrial Pension Systems in the United States and Canada. New York Industrial Relations Counselors, 1932. Table 13, p. 84-85 * Figures in this column do not represent number of em- ployees covered by all plans in the preceding column, but only employees of companies which reported the number of employees >No plan established contained the retirement provision specified ¢ Includes one plan established in the period 1911-15 call- ing for compulsory retirement at age 75 4Includes not only railroad, public utility, manufacturing, and banking and insurance company plans which contained one or more of the three types of superannuation provision, but also plans in the ‘‘all other industries’? group which had such pro- visions, too few in number to classify separately ¢ Less than 0.1 percent were under a plan which specified only service as a retirement qualification. f Includes one plan established in the period 1911-15 per- mitting discretionary retirement at age 68. 9 The one plan which specified only service as a retirement qualification did not report number of employees * Includes one plan established in the period 1926-29 per- mitting voluntary retirement at age 68. _ *Latimer, Murray Webb. /ndustrial Pension Systems in the United States and Canada. New York: Industrial Relations Counselors, 1932. Vol. I, 569 p [129 ] Altho these minimum benefits are low, the maximum benefits are high. The actual benefits paid in the year 1927 are set forth in Table 19. Among 79 manufacturing company plans, the average benefit paid 17,853 workers was $602. The average benefits paid in banking and insurance company plans are much higher, $1218 for banking and $1189 for insurance company plans. These were all non-contribu- tory plans. Among the 23 contributory plans included in the analysis reported in Table 19, the average benefit was higher than the average for all non-contributory plans. The average benefit paid in non-contributory industrial plans was $599; in contributory industrial plans the average benefit was $860. Latimer has estimated that the average industrial pension paid in 1930 was $700-710. TABLE 18—NUMBER AND PERCENT OF INDUSTRIAL PENSION PLANS SETTING MAXIMUM AND MINIMUM BENEFITS Maximum Minimum Num- Per- ber of cent of plans plans Num- Per- ber of cent of plans plans 2 3 4 Amount Amount No minimum. Percent of No maximum. 95 Percent of salary.... 50 Flat amount Flat amount ’ 37 $1500-—3000. 45 $1000—1300. 47 Under $1000 41. 28 ‘ 16. Under $100. 1 100.0 Total.... 307 Total.... 100.0 Source: Adapted from Table 22, p. 117, of Jndustrial Pen- sion Systems in the United States and Canada, by Murray Webb Latimer. New York: Industrial Relations Counselors, 1932. Railroad employees’ retirement plans—In- cluded among industrial plans but deserving of separate attention are pension plans for railroad employees. Of the 1,716,217 railroad employees, 82.4 percent were covered by pension plans in 1927. Only one of these plans is a joint-contributory system. In this, the employee contributes 1.5 percent of his salary and the railroad at least matches this amount. The pension allowance is 1.5 percent of the average monthly pay for eight years preceding retirement times the number of years in service. Benefits are paid at age 60 or 70 after 10 or }5 years of service. Disability benefits are | after 15 years’ service. All other railroad pension plans have be, non-contributory. In a few cases the employees organization maintains a mutual benefit pla; by which the company’s non-contributory | sion may be supplemented. Railroad employees were given addi pension provision thru the Railroad Employees Retirement Act passed in June of 1934. 1) act proposed a pension system for al! ployees of railroad carriers subject t Interstate Commerce Act, but the law declared unconstitutional by the United Sta Supreme Court on May 6, 1935. A new was passed in August 1935 to become eff: March 1, 1936. In the new plan, emp): and railroads each contribute 3.5 percent . salary to create a fund out of which benefits are to be paid to employees 65 years old or att: 30 years’ service. Altho retirement is compu sory at this age, the employer and employe may agree in individual cases to extend time until the employee is 70 years of The maximum benefit is $120 a month, th amount to be determined by a graded percent of salary per year of service not to exceed thirty. The new act provides for approximate) one and a quarter million workers who are excluded from the Social Security Act because they have been provided for by their own act Professional Workers The twenty-six million workers registered under the Social Security Act (and some ot these have additional provisions under trade union or private industrial systems) plus the one and a quarter million railroad employees still leave many unprovided for among the fifty million workers of the United States Some of these workers, in occupations excluded from the act, have other opportunities fo safeguarding their old age. In certain occups tions wherein the worker is not employed | the strict sense of the word but acts as an individual contractor, no plan covering occupation would be feasible. Lawyers, physicians, and dentists fall int this classification. Members of these protes- sions are dependent upon their earnings during activity and whatever personal savings are [ 130] tates luded ; for cupa otes- iring are possible before retirement. However, the aver age income of members of these professions is high enough to make private, personal retire ment plans possible. Table 20 shows the number and average salary of members of certain professions. From this table evidence may be gathered as to the relative ability of members of various occupa- tions to care for their own individual future. The average teacher in a large city earns about the same as the average clergyman. The average rural teacher earns about the same as the average nurse. Provisions for old age in these two professions will be reviewed briefly for comparison with teachers. Clergymen—Seventy-four of the 148,848 by retirement plans at the time the Social percent Protestant clergymen were covered Security Act was passed. The clergy is not included in the provisions of the act. This professional group is well cared for by the plans maintained by twenty-two denomina tions. Some of the retirement systems estab lished for Protestant ministers are old and well organized. In most of these plans the age for voluntary retirement is 65; in some plans retirement is compulsory at 70. The clergyman usually contributes 2.5 percent of his salary, while the church pays from 6 to 10 percent of the salary, thus building up a reserve fund TABLE 19.—AVERAGE NUMBER OF PENSIONERS AND AVERAGE ANNUAL PER CAPITA PENSION, 212 COMPANIES,’ CLASSIFIED BY INDUSTRY, 1927 Industry Non-contributory plans Manufacturing Food products..... ; Textiles and their products Iron and steel and their products Wood products Rubber products. . . Paper and printing Explosives Paints and varnishes Petroleum... Other chemicals. . . Stone, clay, and glass Silverware Other metals... . ; Agricultural implements Fibcata Electrical machinery, apparatus, and supplies Other machinery........ Musical instruments and Transportation equipment, air, land, and water Total manufacturing Banking Insurance Railroads. ... Public utilities Mining... , Miscellaneous. . Total non-contributory plans Contributory plans. . Grand total, all plans. Average annual per capita pension Average number of pensioners Com- panies Super- Super- annua-_ Inca- Total’ annua-_ Inca- tion’ pacity’ tion pacity Total? 5 ~ $583 $12 489 620 395 387 761 ,096 , 394 600 358 604 376 506 523 37 548 31 520 86 418 5 2 2 3 2 2 5 NUASwWS & OS NN 813 ,822 $602 49 1,218 137 1,189 584 ,665 630 198 519 453 45 498 27 733 ,907 . $599 $632 $560 303 860 748 368 210 33, $605 $638 $542 Source: Adapted from Table 44, p. 223, of Industrial Pension Systems in the United States and Canada, by Murray Webb Latimer. New York: Industrial Relations Counselors, 1932. “None of the other 185 companies which operated pension plans in 1927 reported both number of pensioners and amount of pension payments. > Not all companies included in the table were able to report separately for superannuation and incapacity pensioners. The figures given, therefore, represent, for the “total” column, all pensioners; for the ‘“‘superannuation”’ and ‘“‘incapacity’’ columns, the reports only of those companies which were able to make the separation. [ 131 ] TABLE 20.—NUMBER AND AVERAGE SALARY OF CERTAIN PROFES- SIONAL GROUPS, 1935 Estimated Estimated average salary number or professional earnings Professional groups 2 3 Lawyers ae 131,834 $4,439 Consulting engineers 8, 836 3,857 Physicians ‘ 127,427 3,786 Dentists 65 , 368 , 871 Professional legal employees 31,377 , 893 University teachers F 80,001 , 733 Clergymen ‘ 146, 207 , 567 Professional engineering employees. 21,011 , 457 Private hospital employees ee 307,731 , 006 Physicians’ employees... 106,210 964 Dentists’ employees g 48 901 840 Nurses ; 178,825 814 Source: Advance data from the U. S. Department of Com- merce, Bureau of Foreign and Domestic Commerce, Division of Economic Research, National Income Section. which in 1935 amounted to $83,350,000. Assets have mounted to $155,000,000. Nine million dollars are paid annually to 32,000 beneficiaries representing an average annuity payment of $1000. This amount about equals the maximum possible under the Social Secu- rity Act. It appears that many clergymen prefer their pension plans to the provisions of the federal law. In fact, representatives of the Church Pensions Conference appeared before the Congressional committee during the hear- ings on the act to ask that ministers be excluded.* ; Nurses—There are approximately 8500 nurses * who may be included in the provisions of the Social Security Act because of their being employed in hospitals operated for profit. These 8500 nurses earning an average monthly salary of $90 will not likely receive more than $40 a month in annuity benefits from the Social Security Act. Nurses employed privately or in non-profit making hospitals are not included under the Social Security Act. However, all registered nurses can retire on as much as $200 a month if they take advantage of the opportunity. The American Nurses’ Association, the National League of Nursing Education, and the National Organi- zation for Public Health Nursing join: January 14, 1929, for the purpose of end. a group annuity system for registered : The Harmon Association for the Advance: of Nursing administers the retirement Membership in the Harmon Associat) open to all registered nurses, and the Ha Plan for group annuity is open to all me of the Harmon Association. Monthly payments of $5 (or any mu of $5) may be made to the association \ forwards payments to one of the large ance companies. The retirement date be the membership anniversary neares sixtieth or the sixty-fifth birthday. The a: income may begin at any age between fift seventy. The earlier the annuity begin smaller the income payments. There is a | mum annuity purchasable under the pla: member may pay monthly more than w if continued, purchase an annuity incor $200 a month. This plan has been taken up by only nurses, twenty-nine of whom have ave: approximately $440 in annual annuity be: since their retirement. Altho this numbe: very small percent of the 294,000 nurses | United States, the fact remains that the | is available to all who care to and are ab join it. Public Service Employees Workers, regardless of occupation, wh paid by funds collected from public source- in a situation peculiar to their group so f: retirement on public funds is concerned. Sp: legislation is necessary to make possible thi of public funds for retirement of public se employees. Federal employees—The Federal Em; ees’ Retirement Act, creating a retirement »\- tem of general application to federal emplo\ «r: was passed in 1920. After several revision: new law was enacted in 1926. The systen compulsory joint-contributory plan cov civil service employees, certain other speci! classes of employees in the federal governmen' and regular employees of the District of * Huggens, George A., representing the Church Pensions Conference. Hearings before the Committee on Financ: States Senate, Seventy-Fourth Congress, First Session, on S. 1130. Economic Security Act. Washington, D. C.: Gove: Printing Office, 1935. p. 482. * Data regarding retirement plans for nurses were secured from the Harmon Association for the Advancement of Nurs« York City. 5 The school employees of the Canal Zone are included in the provisions of the Federal Employees’ Retirement Act [ 132 ] ijumbia government.® The active membership in 1935 included 407,200 employees represent- ing a total payroll of $873,252,000.' Employees contribute 3.5 percent of their basic salaries; the government pays the differ® ence between the amount contributed by em- ployees and the benefit promised. In the fiscal vear ending June 30, 1935, the government contributed 2.71 percent of the annual payroll and later made a deficiency contribution of 5.58 percent—a total of $72,392,000. The sys tem is administered by the Commissioner of Pensions under the direction of the Secretary of the Interior. After fifteen years’ service, seventy years is the compulsory retiring age for most em- ployees; letter carriers, post-office and sea-post clerks, laborers and mechanics may retire at 65; railway postal clerks, employees in extra- hazardous occupations, and those employed in the tropics may retire at 62. Altho retirement at these ages is compulsory, extensions not ex- ceeding four years are permitted in special cases. To receive disability retirement annuity the employee must have had fifteen years’ serv- ice and be totally disabled for service by reason of disease or injury. The annuicy for superannuation and for disability retirement is computed by multiply- ing the average annual basic salary (not ex- ceeding $1500) for the last ten years of service by the number of years of service (not exceed- ing 30), and dividing by 45. The maximum allowance is $1000, according to the law. In the fiscal year ending June 30, 1935, the fol- lowing annuities were paid: Number Total amount annuitants Class of annuitants Voluntary retirement and involuntary separation exclusive of those whose involuntary separation occurred after 30 years’ service Involuntary separations after 30 years’ service. . Disability annuitants 30,170 $30,023,959 8,609 9,886 9,929,402 8,129,035 48,665 $48,082,396 These 48,665 employees retired during the fiscal year ending June 30, 1935, with an aver age annuity of $988. -Many states have retire teachers, State employees- ment plans for certain groups, as judges, or war veterans. Only seven states have legislation providing for the general retire ment of all state employees.* ‘These states are Connecticut, Maine, Massachusetts, New Jer- sey, New York, Ohio, and Pennsylvania. The principal features of these plans, Ohio excepted, are given in Table 21. The Maine and Connecticut plans are non contributory ; the others are joint contributory. Maine has retired 44 employees on an average annuity of $1230, but when 4 judges are elimi nated from the calculations because of thei: exceptionally high pension, the average allow ance paid the 40 other annuitants is $725. New Jersey is paying an average of $645 to 202 annuitants. The average annuity paid to Penn sylvania’s 1300 retirants is $720. These ave ages are similar to the average allowances paid teachers, as shown in Table 23. Librarians retire ment of state employees include librarians: the Several state plans for federal retirement system covers librarians em ployed by the federal government. A few othe: librarians are included in educational retire ment plans, especially in those colleges and uni versities which include librarians as faculty members. A few more are covered by the retire- ment plans for teachers in those states or com munities maintaining retirement plans for pub lic school employees. These are isolated cases, however, included in their various retirement systems by virtue of their employment rather than by virtue of their occupation. As an occupational group, librarians have the opportunity of joining a plan sponsored in 1932 by the American Library Association. Libraries have the option of choosing a contributory or a non-contribu- tory plan. In the contributory systems, where the library pays a part of the premiums, em- ployees pay a flat sum graded to salary. The amount of retirement annuity provided by the library for any member depends upon the em * Teachers of the District of Columbia are covered by a retirement system entirely independent of the federal employees’ retirement plan. 7 From the Fifteenth Annual Report of the Board of Actuaries of the Civil Service Retirement and Disability Fund. Senate Document No. 196. Washington, D. C.: Government Printing Office, March, 1936 * Retirement systems for teachers and other special groups are maintained separately. 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In 1927 the average for all wars was calculated by Epstein to be $403.82. (See: Epstein by th Abraham. The Challenge of the Aged. New York: Macy-Masius, Vanguard Press, 1928. p. 182.) - Sas ¢ Latimer estimated for all companies that on January 1, 1932, “pensioners certainly numbered over 120,000 and may we! P viding have been as many as 140,000; payments in 1931 were probably $85,000,000 and may have reached $97,000,000.”’ E sixtv- 4 Average for 460 companies. — Bee ¢ The Encyclopaedia of the Social Sciences, Vol. 11, reports on page 457 that in 1930 eleven unions paid $3,500,000 t 150 [JF hands pensioners. Epstein states that the total number of workers receiving trade union old-age benefits at present is not over |). S guirer Latimer states that the average pension in 1931 was a little less than $300. 4 | f Represents 36 states or local communities reporting data on both allowances and persons in retirement status. > excluc # Total retirements since establishment of system, less total number of separations from retirement status over the same peti! on * Sum of average allowances multiplied by number of persons in retirement status in each system. age oO * Average annual allowances multiplied by number of persons receiving allowances for superannuation or service and disal age at totaled and divided by total number of persons receiving allowances. : law 4 J Cities over 400,000 in population that maintained all-inclusive systems for their employees. In 1926 twelve cities of ‘> mabe same population had over 12,000 police pensioners; 13 cities had about 7,500 retired firemen. Social * Calculated by Research Division from data in columns 4 and 5. Data on average allowances not available. S bl ' Persons receiving allowances from Carnegie Foundation for the Advancement of Teaching, according to the terms of i's 10 Ble to contributory retirement plan. Free allowances are no longer paid to teachers who entered service of associated institutions sin ) been ; November 17, 1915. Annuity contracts are sold thru the Teachers Insurance and Annuity Association of America, the Foundatw Distr; paying overhead and managerial costs. By December 31, 1931, there were 10,136 teachers holding contracts for old-age annuities } Istri representing altogether an annual income of $16,540,162 at maturity. 3 Ta Explanat [ 138 ] \ A, Bp ene Fh 2 le cal eioht ment 936 inted dol- pach ‘OUDs > an- SOrs bout nent tired pen- IVE ES — age ment ance ». 84 O08 » 02 ) 00 ) 3R* search pstein s since dation puities ——— III. Teachers in Relation to the Social Security Act According to inquiries received by the Re- earch Division many teachers would like to know the answers to two questions: (1) What is the possibility that teachers will be included under the federal Social Security Act? and (2) What would be the benefits? The Social Security Act has been so recently put into effect that necessarily there will be a period of experimentation and adjustment. However, it is possible to give tentative an- sewers to the two questions raised in the first paragraph. Before doing so, it will be neces- sary to summarize those sections of the act which have a direct bearing on the economic future of teachers. For those interested in fur- ther details, the Social Security Board has pre- pared numerous pamphlets which may be ob- tained free of charge from its Bureau of Information, Washington, D. C. Certain Provisions of the Social Security Act ' In the act are found provisions relating to: (1) grants to states for old-age assistance, (2) federal old-age benefits, (3) grants to states for unemployment compensation administra- tion, (4) grants to states for aid to dependent children, (5) grants to states for maternal and child welfare, (6) public health work, and (7) grants to states for aid to the blind. Only the first two parts will be reviewed briefly at this point, altho teachers are also deeply interested in the provisons for health, child welfare, and the care of the handicapped. Grants to states for old-age assistanre—The Social Security Act authorizes grants to states for a cooperative public welfare system where- by the federal government joins states in pro- viding financial aid to needy persons over sixty-five. Administration of the plans is in the hands of the states, which determine the re- quirements for old-age assistance, but may not exclude any citizen of the United States by an age or residence requirement who meets the age and residence requirements of the federal law. State plans must be approved by the Social Security Board before the state is eligi- ble to receive the federal grant. Plans have been approved in forty-two states (including District of Columbia and Hawaii) ; to date, all states except Arizona, Georgia, Kansas, Nev- ada, North Carolina, South Carolina, Ten- nessee, and Virginia. Of these eight states, old- age assistance laws have recently been passed in Arizona, Georgia, Nevada, North Carolina, Kansas, and ‘Tennessee which have not as yet been approved by the Social Security Board; and a bill is pending in the South Carolina legislature. In summation, then, needy old people may now receive financial assistance in forty-seven states; in forty-two states the assistance is already partly supplied from federal funds. The amounts will vary with the states, the fed- eral government contributing half up to, but not exceeding, a monthly federal-state total payment of $30 to each individual. If a state pays more than $30, the federal contribution will be $15. These payments are made on the basis of need. Teachers as individuals, if they meet the requirements, are entitled to the bene- fits which have been provided under this part of the act. Federal old-age benefits—The benefits pro- vided by this feature of the Social Security Act differ from the old-age assistance just de- scribed, in that the benefits are not dependent upon the need of the individual, and they are paid directly to individuals rather than thru a state grant. The amount of the payment of monthly benefits varies from a minimum of $10 a month to a maximum of $85 a month and depends upon the individual’s wages and type of employment before reaching sixty-five years of age. The first monthly federal old-age re- tirement benefit will be payable January 1, 1942. Wages from agricultural labor, domestic service in a private home, government employ- ment, most marine service, and employment in most non-profit religious, educational, or philanthropic organizations are not counted toward these benefits. The funds for payment of these benefits are appropriated annually by Congress. Into the general revenues go taxes collected from em- ployees and employers. The employees’ salaries are assessed by a small percent; the employer matches this amount and turns the total over to the United States Treasury. When an in- dividual has received $3000 of his annual sal- 1 This explanation is based upon various circulars of information published by the Social Security Board, for example: A Brief Explanation’ of the Social Security Act. Circular No. 1, 1936. Washington, D. C.: Government Printing Office, 1936. 15 p. [139 ] ary, no further tax deduction is made for any excess his employer pays him for the year. That is, an individual earning more than $3000 will pay his proportion on $3000 only, the excess being non-taxable. For the first three years the tax deductible from the employee’s pay is at the rate of 1 percent, rising gradually each three-year period until 1949, when the tax will be 3 percent of the salary. This is the highest percent which may be collected under the act. Teachers are among the twenty million gain- fully employed workers of the country who are not usually covered by this part of the act. Where a teacher is employed by the state, a school district, or any other subdivision, or by the ordinary private, non-profit, educational institution, salary so earned is not counted toward benefits. However, salary as a teacher for other than the above types of employer, as well as from many of the covered services in industry and commerce, may result in a teacher becoming entitled to old-age benefits. The total wages from such employment must be not less than $2000 spread over a period of at least five calendar years before reaching the age of sixty- five. Thus, a teacher who may earn in store, factory, or office, as much as $200 each sum- mer for ten years (not necessarily in consecu- tive summers), or $100 a summer for twenty years, or even $400 a summer for five years (not necessarily consecutive summers) will be entitled to $10 a month for life after sixty- five years of age. The benefits increase as the amount earned increases over the minimum of $2000, but the wages counting toward the benefits must be earned in at least five different calendar years between December 31, 1936, and the age of sixty-five. If the wages meet some, but not all, of the requirements for the monthly benefits, a lump-sum payment is made equal to 3.5 percent of the earnings. If one dies before reaching sixty-five years of age, the estate receives 3.5 percent of the earnings. If one dies after the benefits have begun, the estate receives the difference between 3.5 per- cent of the earnings and the amount already paid in monthly benefits; no death benefits are paid to the estate if before death the an- nuitant has been paid 3.5 percent or more of the total earnings in monthly benefits. 2 Governmental Research Association. Chicago: the Association (850 E. S8th St.). * Public Administration Clearing House. News Bulletin, February 1, 1937. Chicago: the Clearing House (850 E. 58th St) [140] “Retirement—Public Employes.” Governmental Research Bulletin §: 2; February 19)’ Proposed Amendments to the Socia! Security Act Since there is little likelihood, at the presen; time, that the federal government could app\; Social Security taxes to essential government, functions of the states without their conser: the suggestion has been made that the Soci,! Security Act should be amended. The Goy. ernmental Research Association has include; in one of its bulletins the following statemen:: It is generally assumed that it would be impossi)), for the federal government to establish a compulso;, old-age retirement plan covering employees of sta: municipal, and other local governments. It is quiy, generally realized, however, that the present situ, tion with reference to the retirement of state ani local government employees is highly chaoti: With the passage of the federal Social Securir Act, consideration is being given to the possibili; of enacting legislation which would permit eac state to provide for the inclusion of state and loca government employees under some federally ad. ministered old-age pension system. It might be pos sible for the state government to impose payro taxes equivalent to the federal payroll taxes now being levied for old-age annuities and to use this money to purchase thru the federal governmen annuities and benefits equal to those which are now available to employees of private employers The American Municipal Association ha: appointed a committee to study the possible in. clusion of state and municipal employees unde: the Social Security Act. The committee ha announced the following points: 1. That it was not now feasible to seek an amend ment to the federal Constitution, necessary in orde: to make the inclusion of all state and loca! en- ployees compulsory, and to enable the federa! gov- ernment to levy unemployment compensation or o/d- age security taxes in line with the present taxes provide for employees in non-public activities 2. That unemployment of government employee: is or can be taken care of in the state unemployment programs. Therefore, it is inadvisable to attempt to include the unemployment features in any pres ently considered amendments. 3. That the inclusion of state and local employees should be on an optional statewide basis. [t ap pears feasible to allow each individual state to determine whether or not employees should be in- cluded within the provisions—on a statewide basis not on the basis of smaller units. 4. That if the Social Security Act could b& amended to allow such optional inclusion, the Social Security Board might determine the minimum stand- ard for compliance by the “state optional act.” * ope cla am sta tow tho ar tior Urg Inc W the ploy stitu to th form W unen Re other clude of ne ploye Re. suppe Secu! Is ] In A Fo hypot cial | woul empl what a pla Te protec natior so the 100 p Such to sta sound the te: protec no te the So place « * An tion, 193 The federal Social Security Board is co- operating with the American Municipal Asso- ciation in its attempt to draft an acceptable OCial a amendment to the act making provisions for apply state and municipal employees. : i That there is some trend of public opinion social toward inclusion in the Social Security Act of re those now excluded may be demonstrated by luded a resolution adopted by the American Federa- tet: tion of Labor: »sSible Urging Amendment of Social Security Act To ulsory Include Employes of Non-Profit Institutions pe Wuereas, The benefits accruing to employes from situa- the present Social Security Act are denied to em- e and ployes of charitable, religious, and non-profit in- stitutions who receive low wages and in particular curity to the nurses and other hospital workers who per- ibility form tasks injurious to health; and each Wuereas, This group is in need of old-age and local unemployment benefit, so therefore, be it Resolved, That Title 2, Title 8, Title 9, and all ave! other Titles of the Social Security Act which ex- ios clude by definition of “employment” all employes © this of non-profit institutions be amended to include em- stains ployes of non-profit institutions; and be it further > now Resolved, That the American Federation of La!or support and approve this amendment to the Social Security Act.‘ | ha le in indet Is It Desirable for Teachers To Be has Included under the Social Security Act? nend- For the sake of theoretical discussion, a yi hypothetical and valid amendment to the So- pra cial Security Act may be considered which r old- would make it possible to include government ces to employees. The question would then arise as to . what benefits teachers might expect under such oyees a plan, yment re e ° one Teacher retirement systems now existent pres- protect about 65 percent of the teachers of the nation. If the Social Security Act were amended oyees so that all states could provide benefits, then t ap: 100 percent of the teachers would be protected. “ be Such an amendment might be an advantage ny to states which, to date, have not established sound teacher retirement systems. But would d be the teachers as individuals be more adequately “ protected? Obviously, in those states having tand- no teacher retirement system, the benefits of the Social Security Act would be something in place of nothing. tion, 1936. p. 475. There is nothing in the Social Security Act to prevent the continuation of benefit systems previously existent, or even the inauguration of systems after the inception of the Social Secur- ity Act. That is to say, the state teacher retire- ment systems could, and might, continue inde pendently of the application of the Social Se- curity system to teachers. There are, however, probably few, if any, states that would be will- ing to assume the financial obligations to teach- ers under the Social Security Act and to con- tinue their contributions to independent state teacher retirement systems. This question is at the present time wholly a matter of conjecture. What specific benefits might be available to teachers in states where retirement plans do not exist ?—Social Security benefits for teachers of several states contemplating teacher retirement plans have been computed as an illustration of what these teachers might expect were they in- cluded under the provisions of the Social Se- curity Act. Examples are given from the rec ords of age and salary of teachers in Alabama, Missouri, Oklahoma, and Texas. These esti mated Social Security benefits may be com pared with the benefits provided by teacher re tirement systems as shown in Table 6 of the present bulletin. 1. Alabama—In 1934-35 in Alabama the average age of public school teachers was twenty-nine years ; the average salary was $672 per year. Should an individual’s salary afte: 1936, and prior to his attaining age sixty-five, average $672 for thirty-six years so as to total $24,192 (and this sum were the basis of his old-age benefit) then he would receive $32.66 a month. In 1934-35 the teachers were thirty-seven years of age or older. They received annual salaries of $918 or more in 1934-35. A teacher, under similar assump- tions to those above, earning an average salary of $918 per year for 28 years, totaling $25,704 in wages, would receive $33.92 monthly in old-age benefits. This teacher would be able to earn a total amount before he reached sixty- five very little more than the “average” teacher (see paragraph immediately above) who earned less annually but being younger had more time to accumulate the total upon which the Social Secufity benefit would be computed. The one-fourth of Alabama * American Federation of Labor. Report of the Proceedings of the Fifty-Sixth Annual Convention. Washington, D. C.: the Federa- [141] ee lS ent eingnee ine naman a ne eager at | younger teachers in the state would have the longest earning period before reaching retire- ment age, but if their salaries continued at this low figure there would not be much difference between the benefits which might be received by all groups of Alabama teachers under the Social Security Act. To illustrate this point further, benefits have been computed for a teacher representing the lower quartile in age and salary. Twenty-five percent of the Ala- bama teachers are twenty-four years of age or younger, and earn an annual salary of $481 or less. A teacher twenty-four years old earning $481 annually to age sixty-five would receive $28.93 monthly under the federal pension plan. 2. Missouri—Data are available in such form as to permit of calculations for rural and urban teachers of Missouri segregated by sex. The following tabulation, assuming in each case that the coverage starts at the indicated age, and that the average salary would be re- ceived each year until attainment of age sixty- five, shows the benefits which might accrue to teachers on retirement if their salaries were counted toward federal old-age benefits. Monthly Social Present Security Average average benefits age salary atage65 Rural men teachers.... 29 $ 550 $29.00 Rural women teachers. 27 501 28.36 Urban men teachers®.. 34 1,222 44.07 Urban women teachers® 34 871 35.00 3. Oklahoma—The 1928 actuarial study in Oklahoma reported 19,026 teachers whose average salary was $1060. The median age of these teachers was a little less than twenty- eight years. From these figures it is estimated that a teacher just attaining age twenty-eight, and maintaining such a salary to age sixty-five, and retiring then, would receive $45.19 monthly if teachers were included in the Social Security Act. 4. Texas—Under similar assumptions to those above, a teacher in Texas, at the median age of thirty-two years, would receive $41 under present Social Security provisions. The youngest quarter of Texas teachers would have time to accumulate earnings before they are sixty-five which would entitle them to $35 5 Including teachers in first-class high-school districts, but excluding St. Louis, Kansas City, and St. Joseph. [ 142] monthly benefits under the federal Socia! Se. curity Act. The oldest quarter of the ‘Tex. group, forty years old or older, would receiv. Social Security benefits of about $44 monthly. These teachers, being older, have fewer \ea;: before retirement age in which to accumulate the total upon which Social Security benef: are calculated, yet their salaries are higher that they can accumulate a larger tota! ;; fewer years. Conclusion These illustrations are very rough and ¢ not show the range in probable benefits, by; they do indicate that teachers (without futur salary increases) are not likely to accumulate enough to constitute a large total earning and consequently a large benefit under the Soci! Security Act were the teachers as a group in cluded under the act. Furthermore, the max mum benefit under the act is $85 a month Referring to the reports of existing retire. ment funds for teachers, it may be seen tron Tables 6 and 7 that 18 out of 50 teacher retirement funds are paying benefits averaying higher than the maximum under the Socia! Se. curity Act. From the illustrations cited in this section it is evident that relatively few teach ers would reach total earnings sufficient to ob- tain a $50 monthly benefit under the federa pension plan. As mentioned at the beginning of this sec tion, it is not highly probable that the Social Security Act will be soon amended to include public employees. Meanwhile, teachers should give thought to the fact that their benefits under the Social Security Act would be les: than under many teacher retirement systems. Since the average teacher’s salary is so low that teachers seem unable to provide personally tor old age, it is reasonable that they should sup- port measures providing for sound teacher re- tirement systems. The benefits accruing fron provisions for their own professional group are likely to be more generous than provisions made by the federal government for workers in general. At the same time thought should be given to the conditions under the Social Security Ac which might be considered advantages by some teachers. As mentioned earlier in this section. SOC me! in | obt it V ott be | pre Soc TE. prov Exp Social Security benefits in states where retire- ment systems do not exist would be something in place of nothing. Also, it may be easier to obtain an amendment to the federal law than it will be to convince legislatures in nearly half of the states that the old age of teachers should be properly safeguarded. Perhaps others would preter the smaller wage deductions under the Social Security Act, as compared with those required by most teacher retirement systems. even while recognizing that the ultimate bene fits will also be smaller. It is conceivable too that the federal government ‘would appeal to some as the safest agency that could be en trusted with the administration of a public re tirement plan. All such arguments should be recognized in the period of discussion which lies immediately ahead. FIGURE III TEACHERS AND ECONOMIC SECURITY No retirement provisions Expected retire- ment allowance —$50 or less per month i ee ae {> oie — $51-$100 per month {> xt» x 3 int ini ininidi igi Each symbol represents 25,000 teachers [ 143 ] {> Based om date from 50 state and local {> +> Ao» {I> Ee {I> +> i xe {iI Ae Dp Do etirement systems Selected References Teacher Retirement 1. Cuambers, M. M., editor. The Yearbooks of School Law. Washington, D. C.: the Editor (744 Jackson Place, N. W.), 1933 to date. See chapters which report court decisions in- terpreting teacher retirement laws effective in certain states and cities. 2. Cooke, Dennis H., and WITHERINGTON, A. M. “Teacher Personnel: Pensions and Retirement Pay.” Review of Educational Research 4: 319- 25; 351-52; June 1934. $1.00. Summarizes findings of thirty-eight studies published since 1930, pertaining to the theo- retical background and actual operation of teacher retirement systems. Includes data re- ported concerning state systems effective in Illinois, Michigan, Minnesota, Pennsylvania, Virginia, Washington, and Wisconsin. 3. FLANAGAN, SHERMAN E. Insurance and Annuity Plans for College Staffs. U. S. Department of the Interior, Office of Education, Bulletin No. 5. Washington, D. C.: Government Printing Office, 1937. (In press) This publication promises to be useful for its information on various kinds of group in- surance in addition to its description of their application to college faculty staffs. 4. Keesecker, Warp W. Teacher-Retirement Sys- tems. U. S. Department of the Interior, Office of Education, Bulletin, 1934. No. 6. Washing- ton, D. C.: Government Printing Office, 1934. 46 p. 5¢. An analysis of the principal provisions of state teacher retirement systems, with supple- mentary discussion of special problems. Ap- pendix presents the text of the state teacher retirement laws now effective in Minnesota and Montana. : 5. NATIONAL EpUCATION ASSOCIATION, DEPARTMENT oF CLASsROOM TEACHERS. The Economic W el- fare of Teachers. Sixth Yearbook. Washing- ton, D. C.: the Association, 1931. $1.50. Chapter 6, “Retirement and Pension Sys- tems,” p. 102-23, is of particular interest. 6. NATIONAL EpucCATION ASSOCIATION, RESEARCH Division. “Current Issues in Teacher Retire- ment.” Research Bulletin 8: 221-88; November 1930. 25¢. States the five fundamental principles of a teacher retirement system. Discusses sixteen issues in teacher retirement, illustrating with tabulations of practise in state retirement systems. 7. NATIONAL EpucaTION ASSOCIATION, RESEARCH Division. Flat-Rate and Percent-of-Salary Re- tirement Systems. Studies in State Educational Administration, No. 7. Washington, D. C.: the Association, January 1931. 12 p. 25¢. Compares theoretical efficiency, history, and status of these two plans. 8. NATIONAL EpucATION ASSOCIATION, COMMITTEE on RETIREMENT ALLOWANCES. Report. Wash- ington, D. C.: the Association, June 1932. 80 p. Contains discussion and statistical analysis of 17 state, 2 territorial, and 27 local teache, retirement systems. 9. Prircnitt, Henry S. The Social Philosop)y ,; Pensions. Bulletin No. 25. New York: Carnegie Foundation for the Advancement of Teaching 1930. 85 p. Social and economic principles unde+r|ying a sound pension system are given, tovethe; with a review of existing pension system, for professional groups. “Free” pensions ay scored, contributory systems advocated 10. SruDENSKY, PAUL. Teachers’ Pension Systems in the United States. New York: D. Appleton and Co., 1920. 460 p. Contains valuable material on historica development of teacher retirement. Public Service Retirement 11. Eccer, RoLanp Awnprews. The Retirement Public Employees in Virginia. Studies in |) lic Administration No. 1. New York: )P Appleton-Century Co., 1934. 269 p. The legal aspects of the pension systems Virginia and the characteristics of plans «& veloped are discussed in the early pages . this monogaph, which was prepared by thy University of Virginia Institute for Resear! in the Social Sciences at the request of the League of Virginia Municipalities. The report is designed as a manual to assist local authori ties in the formulation of provisions for th: retirement of public employees which are adapted to local necessities and at the same time consonant with sound pension practis: The comparisons between pension systems in Virginia and in other states make a valu able contribution to the literature in the field. The appendixes are especially pertinent inas- much as the chief characteristics of municipal retirement systems are presented in concise tabular form. A full bibliography is ap- pended. 12. MosHer, W. E., and Kinosiey, J. D. Publi Personnel Administration. New York: Harper and Bros., 1936. Chapter 22, “Superannua- tion and Retirement Systems,” p. 444-67. The discussion begins with a_ historical development of municipal pension systems purpose, philosophy, and chief characteris. tics of pension plans; comparison of cash disbursement and actuarial reserve plans comparison of contributory and non-contribu- tory plans; determination of contributions and annuities; and the various benefit fea- tures. At the end of the chapter are listed ten principles of a sound retirement system. 13. U. S. DEPARTMENT OF LABOR, BUREAU OF LABOR Sratistics. Public Service Retirement S)s- tems. Bulletin No. 477. Washington, D. C:: Government Printing Office. 223 p. January 1929. Information on retirement systems for gov- ernment employees in United States, Hawaii, Canada, and Europe. Chapter 5 deals with state and city teacher retirement systems. [ 144] Ariz Calif Conn India Louis Main Mary Mass: Michi Minn Mont: Neva New New North Ohio. Penns Rhode Verm Virgit Wash Wisco Monts Colo. Denve Gran Greel 7. House oF REPRESENTATIVES. Hearings before the Committee on Ways and Means. Seventy- Fourth Congress, First Session, on H. R 4120. Economic Security Act. Washington _ Industrial Retirement 14, EpsTEIN, ABRAHAM. The Challenge of the Aged New York: Vanguard Press, 1928. 435 p. Ss Altho this book was written almost ten fe ; — years ago, the philosophy underlying prob- D. C.: Government Printing Office, 1935 a lems of old-age security persists. 18. SENATE. Hearings before the Committee on Fi 15. LATIMER, Murray Wess. Industrial Pension nance. Seventy-Fourth Congress, First Session ying Systems in the United States and Canada. on S. 1130. Economic Security Act. Washing ther New York: Industrial Relations Counselors, ton, D. C.: Government Printing Office, 1935 ems 1932. Volume I, 561 p.; Volume II, 1195 p. 19. SoctaL Security Boarp. First Annual Report 7 Volume I is divided into two parts. Part I Washington, D. C.: Government Printing ; describes the development and terms of in- Office, 1937. 131 p. 15¢. ates dustrial pension plans; Part il deals with Report of the Social Security Board on the : financial, actuarial, and administrative as- establishment of its program and the first | pects. Volume II includes a number of refer- : f its admini ; ic seed rT , * ‘ vear o its administration, le appendix ences to technical actuarial treatises espe- contains statistics regarding the Board’s a cially those published by the Institute of Ac- i yg Rega ? Ra , tuaries and the Actuarial Society of America. tivities and a list of its pubticatiens. 16. DoucLas, PAUL H. Social Security in the United 20. Socta Security Boarp. Selected List of Publi- of States. New York: McGraw-Hill Book Co., cations. Publication No. 12. Washington, ub Inc., 1936. 384 p. D. C.: Government Printing Office, March D Provisions of the federal Social Security 1937. 15 p. Act are explained as well as its legislative Lists publications of the Social Security sul history and problems it will meet in the Board and provides an order blank for the de future. various releases of the Informational Service the irch the port the are i Date of Reports of Teacher Retirement Systems ems alu lo Se ae ee eee not reported Pueblo, Dist. 21, Colo.... not reported eld. ee Aare June 30, 1936 Washington, D. C....... June 30, 1936 1as- COMDORNNE sac sires oye shpat waas Bibb County, Ga..... es r. ipal Fn ee ee July 1, 1936 Cedar Rapids, Iowa. cise Pn | Ske ee first fiscal year, Aug. 1, Davenport, Iowa..... ap- 1937 Des Moines, Iowa. Ben ae ee ee June 30, 1936 Parsons, Kansas. bli ge ee July 31, 1936 Topeka, Kansas... ..Dec. 31, 1936 (financial) ; per Massachusetts........... Dec. 31, 1936 June 30, 1936 (mem- ua- a eae Sept. 30, 1936 bership) MORON tacit hes ca June 30, 1936 Bowling Green, Ky...... Dec. 31, 1936 ica MomeeRinient Sekae bn vie present system ends Aug. New Orleans, La........ Aug. 31, 1936 ms 31, 1937 Baltimore, Md........... June 30, 1936 (member- ris- a ee June 30, 1936 ship); Dec. 31, 1936 ash New SO aa eicciiives ws ase a (financial ) ns Mew, Te i cs teccs sine ea = Boston, Mass..... ... Dec. 31, 1936 bu- North Dakota........... oe Detroit, Mich... . ....-Aug. 31, 1936 ons eR e Aug. 31, 1936 Duluth, Minn............July 31, 1936 ea- Pennsylvania............ June 30, 1936 Meridian, Miss..........not reported ted Rhode Island............ = ’ OS Aug. 31, 1936 em. io ee = Manchester, N. H....... June 30, 1936 BOR Viegas andes k ds. c ccs wt et New York, N. Y........ uate . Sys- Wes i os cc scus.. a g SS eee so “ (member- Cs WO goes ca ae an ship); Jan. 31, 1937 ary Montgomery, eee not reported (financial) Colo. Springs, Colo...... Dec. 31, 1936 Providence, R. I......... June 30, 1936 ov- Denver, Tie.<........ oe o (member- Salt Lake City, Utah..... “ “ : aii, ship); June 30, 1936 Seattle, Wash........... vith (financial) Spokane, Wash.......... Grand Junction, Colo.... June 30, 1937 Tacoma, Wash...... Greeley, Colo............ an - [145] INQUIRY FORMS USED IN OBTAINING DATA FROM STATE AND LOCAL TEACHER RETIREMENT SYSTEMS Form 1—Membership in Retirement System (Please read the notes below before filling out Form 1.) Instructions General purpose of Form 1. This form requests the total number of enrolments in your present retirement <\sten since its establishment and up to the close of the last completed membership year, that is, the membership year end 1936. It also requests the segregation of this total number of enrolments into two principal groups: namely, those were still active members at the close of the last membership year, and those whose active membership had terminated prior to that date. Finally, the form calls for the further segregation of terminated memberships into (A) withdray a (B) deaths prior to retirement, and (C) retirements for superannuation or service and retirements for disability. Ea these items should be reported in two parts: (1) the number occurring during the last completed membership year, and (2) the number occurring prior to the last membership year. ; Report to cover present system only. Data are desired in Form 1 only upon persons who now are, or who have be: at some time, active members of the retirement system now in effect. How to report re-entrants. Count each re-entrant as a separate new enrolment each time he was enroled in your retire ment system. In giving the total number of enrolments, therefore, members enroled in your retirement system but onc will count as oneenrolment. Those who have joined the system more than once will count as two or more enrolments, accord ing to the number of times they have joined. How to report retirements. When a given employee is granted a separate retirement on two or more occasions with 2 period of active service intermitting, count each occasion as one retirement. In reporting retirements it is not necessary distinguish between service and superannuation, but retirements for disability should be recorded separately, if possible How to check your reply. The entry after I, entered in column 2, should equal the sum of the entries after II and ||! in column 3. The entry after III, in column 3, should equal the sum of entries after III-A, B, and C, in column 4. The entry after III-A, in column 4, should equal the sum of entries after III-A-1 and III-A-2, in column 5. Proceed similar! with respect to items III-B and’ III-C, arid the sub-items under each of these. If the totals and sub-totals of your report do not check in this way at any point, please state the reason. : Definitions of Terms (1) An enrolment (Items I and III) represents an entry into the retirement system, regardless of membership at an) previous date. (2) Active members (Item II) include all living persons enroled in the system at the close of the last membership year, who were not receiving an allowance therefrom. This includes those who held an equity in the retirement system, but whe were neither employed nor retired. (3) A re-entrant (see above) is a person who enroled in the retirement system after having previously been separated from active membership by withdrawal or retirement. (4) Withdrawal (Item III-A) refers to the severing of connections between an active member and the retirement sys- tem. This does not necessarily occur when a member ceases to be employed. An employee on leave of absence, for example is not a withdrawal unless he withdraws his equity in the retirement fund. (5) Superannuation or service retirement (Item III-C-1) involves the receipt of an allowance from the retirement fund on the basis of attaining a specified age or completing a stated period of service. (6) Disability retirement (Item III-C-2) involves receipt of an allowance from the retirement fund on account of dis ability prior to the age or date for superannuation or service retirement. [ 146 ] Form 1—Membership in Retirement System (Please read Instructions and Definitions on opposite page before filling out Form 1.) Membership classes {. Total enrolments from establishment of pres- ent system to close of the last completed nembership year (Column 2) Il. Number of active members at close of last ympleted membership year (Column 3) III. Number of enrolments whose active mem- berships in the present system had termi- nated up to close of last completed member- ship year (Column 3) : ; A. Due to withdrawal, resignation, or dis missal (Column 4) 1. During the last completed member ship year (Columa 5) 2. Prior to the last completed member ship year (Column 5) , B. Due to death before retirement (Column 4) : 1. During the last completed member- ship year (Column 5) 2. Prior to the last completed member- ship year (Column 5) C. Due to retirement (Column 4) 1. For superannuation or service (Column 5) year (Column 6) b. Prior to last completed member- ship year (Column 6) ‘ 2. For disability (Column 5) year (Column 6) ship year (Column 6) a. During last completed membership | } a. During last completed membership | b. Prior to last completed member- Number of members The above report extends to the close of the membership year ending - Use the space below to record any necessary or desirable explanations of your figures. 147 Form 2—Financial Transactions of Retirement System (Please read the notes below before filling out Form 2.) Instructions General purpose of Form 2. This form requests primarily a statement of the financial transactions of your retirement system during the last completed fiscal year, that is, the fiscal year ending in 1936. It asks what the ledger asset system were at the beginning of the fiscal year, how these assets were increased by income and decreased by disbursemen; during the year, and what these assets were at the close of the year. Certain miscellaneous items of financial information of special interest are also requested if you can supply them. Form 2 also calls for an analysis of income and disbursements For example, it requests that income be segregated as to whether it is received from public sources, from members’ deposits or contributions, from interest, from bequests and donations, or from profit on sale or maturity of securities. How to report disbursements. Include in disbursements all payments made from your office to members or beneficiaries whether involving public funds or members’ deposits, or both. Report the total for administrative expenses, Item |\-F. paid for out of the retirement fund in your system. Do not include administrative expenses in Form 2 if paid for by special appropriations apart from the retirement fund. How to report profit and loss on investments. The profit realized on sale, purchase, and maturity of securities is called for as a part of total income under Item II-E. Report here the income received because of appreciation in value of securities held by you or because of purchase of securities at a price below their book value. The loss sustained on sale, purc! and maturity of securities is called for as a part of total disbursements under Item IV-F. Report here the loss involved because of depreciation in value of securities held by you or because of the purchase of securities at a price above their book value. How to check your reply. The total entries for II-A, B, C, D, and E should equal the entry for II. The entries for IV-A, B, C, D, E, and F should equal the entry for IV. The entry for III should equal the sum of the entries under | and } II. The entry for V should equal the difference between III and IV. If the totals and sub-totals of your report do not check in this way at any point, please state the reason. Definitions of Terms (1) Ledger assets (Item I and above) are those assets which are carried on the books of the retirement system—assets in hand—such as cash in office and on deposit and the book value of securities. Such assets as receivables and accruals are not to be included here as ledger assets. (2) Income (Item II and above) refers to amounts added to the retirement fund from the specified sources. It includes under II-C interest on investments, and under II-E appreciation in the value of securities purchased. It does not include either (a) the return of the principal invested in bonds or other securities, or (b) the balances brought forward from the preceding year. (3) Disbursements (Item IV and above) include amounts paid in the form of benefits and refunds, from whatever sources derived, and administrative expenses if the latter are paid out of the retirement fund. They also include |osses on securities bought, sold, or matured, but do not include expenditures for the original purchase of securities. (4) Superannuation and service retirement. (Item IV-A). See definition number 5, in connection with Form | (5) Disability retirement. (Item IV-B.) See definition number 6, in connection with Form 1. (6) Administrative expense (Item IV-E and above) refers to the cost of operating the system, such as payments for office rent, equipment, salaries and expenses of the retirement board, and so on. It does not include payments for retire- ment benefits or refunds. [ 148 ] Form 2—Financial Transactions of Retirement System (Please read Instructions and Definitions on opposite page before filling out Form 2.) I Ledger assets | 4. From public sources. B. From members’ deposits or contributions C. From interest E. From profit on securities bought, sold, and matured III. Assets plus income, as given above. . IV. Disbursements during last completed fiscal year A. For superannuation and service retirement allowances B. For disabi C. Upon withdrawal prior to retirement. D. Upon death prior to or following retirement E. For administrative expenses of the retirement fund F. On account of losses on securities bought, sold, or matured \. Ledger assets \I. Total liabilities, on account of service rendered to date of last actuarial evalu ation... j er VI VIIL. Amount received from sale and maturity of securities during last completed fiscal year Income during last completed fiscal year | | D. From donations and bequests Amount spent for investments during last completed fiscal year Classification Amounts : } 1 2 Income and Disbursements | | at beginning of last completed fiscal year lity retirement allowances at close of last completed fiscal year (II] minus IV, as given above) Miscellaneous Information The above report is for the fiscal year ending ____ (Please fill in date) yy Use the space below to record necessary or desirable explanations of your figures. [149] Form 3—Retirement Allowances Granted (Please read the notes below before filling out Form 3.) Instructions General purpose of Form 3. This form requests data concerning the smallest, average, and largest annual retirement allowances granted to superannuation or service retirants, and to disability retirants. It also asks that these figures be reported separately for all persons in retirement status at the close of the last completed fiscal year, and for persons who entered the retirement status during the last fiscal year. Year covered. Please report for the last completed fiscal year of your retirement system. What to report. Include data only upon persons who at some time have been active members of the retirement sys- tem now in effect. Do not include allowances to teachers retired under any former system now merged with your present system. Include (Columns 2, 3, and 4) the total annual amounts payable to the retired employees, whether from public funds or from employees’ deposits, or from both. Definitions of Terms (1) Superannuation and service retirement. (Items I and II.) See definition number 5, in connection with Form 1. (2) Disability retirement. (Items III and IV.) See definition number 6, in connection with Form 1. Form 3—Retirement Allowances Granted (Please read Instructions and Definitions before filling out Form 3.) 2 ee gran ‘ol. 1) Items of information desired . on rele of ond of last Smallest] Average | Largest fiscal year 1 2 3 4 s I. Annual superannuation and service retirement allowance hes all persons who were in retirement status at the close of the last completed fiscal year.......... II. Annual nnuation and service reti 1 ie to persons who upon retirement status during the last completed fiscal year............ IIL. Annual disability retirement allowance payable to all persons who were in retire- ment status at the close of the last completed fiscal year. ..... 0... .- 06sec eee eeeee IV. Annual disability reti I ted to persons who entered u retirement stat pony bmg oy A f ~ A bate oWSe ones ete cee'd a3 The above report is for the fiscal year endi 6 (Please fill in date) Use the space below to record necessary or desirable explanations of your figures. | 150 J Form 4—Special Section The Federal Social Security Board has asked the assistance of the National Education Association in securing the additional information indicated below. We are glad to cooperate in this way. Please supply this information as far as your available records will permit. I. On page 5 of this form (Item II, A) you reported the income received ‘from public sources” during the last fiscal year. Would it be possible to indicate the specific sources? Amounts (1) Total sum received from public sources (Form 2, Item II, A). KeeRERRE RES ‘ eesanens $ ° (a) Appropriations from public general funds........ ; ar pases * oe $ (b) Appropriations or transfers from public special funds (Please specify the funds and the amounts received) ee Sn $ a = : catchall aasmaa eae $ (c) Revenues derived directly from tax sources earmarked for your fund (Please specify the tax and the amounts received) Lei gchciteiteanntanaiciemgideaee $ idea nesiiniatieiiaspnitiedaigaaee $_ = II. General administration of retirement system (1) Title of administrative board or body: (2) List the positions held by ex officio members of this body: (a) pc:eniiinideisianenmpenatgamalinstanle (b). oie ate (c) si rieecnniinemmtiaapaiaremnimaiicindeaiiia tad (3) By whom are the ex officio members elected or appointed: (4) Number of members of the administrative body who are not ex officio members:_____ (5) By whom are these members elected or appointed: III. Financial management of retirement system (1) What official or officials are charged with the custody of retirement system funds?___ (2) Who supervises investments of retirement system funds? (3) Who authorizes disbursements of retirement system funds and thru what agency are disburse- ments made (a) td siine (b). (4) Who supervises or directs the collection of members’ contributions? ____ aS a (5) What method of collection is used? (Check below) (a) Payroll deductions by local school administrative offices (b) Remittances direct to retirement board by individual teachers____ SS (c) Other (describe briefly) —o (6) Remarks: eS ee re ee Deaian Retirement system ee ee — : Name, title, and address of person reporting — sashariememnantiiensiabaniniodideepindiapianianinianediiie _ [151] UBLIC ECONOMY is not the hoarding of public funds. It means the intelligent investment, as contrasted with waste, of money collected from taxpayers. The ques- tion of a teachers’ retirement system we do not approach primarily from the viewpoint of the needs of the immediate beneficiaries. We think, first of all, of the return that will ultimately be secured by the taxpayer himself .... We ap- proach this question from the angle of the community’s obligation to itself, rather than the community’s debt to the teacher .... Whatever contributes adequately to the effici- ency of our school system is a good investment.—Will H. Hays, speaking before the National Council of Teachers’ Retire- ment Systems, February 26, 1920. Qe