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those cities and the teachers elsewhere in the
state. There is always the fear on the part of
many taxpayers that they may be doubly taxed
for the support of both local and state plans.
This opposition can be disposed of by a proper
system of reimbursement.

Participation in a state system and abandon-
ment of local systems should not be insisted upon
to the detriment of other important interests,
but if in the preliminary period we can clear the
ground by unanimous agreement that all new
teachers must come into a state system, and all
local plans must then gradually be abandoned,
we have greatly simphfied the difficulties in
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GETTING LEGISLATION

getting satisfactory legislation. We should go
further wherever possible and open the way for
teachers already in service anywhere in the state
to enter the state system, because any pension
system based upon sound insurance principles
succeeds in proportion to the number of people
in it.

Furthermore, without such a provision there
will always be the question of the status of teach-
ers who begin teaching under the provision of the
state system and then at a later period go to some
city supporting a local system. Such a situation
is now found in the State of Massachusetts, where
Boston teachers are, at their desire, excluded from
the state system. It is not clear what will be the
status of a teacher who serves fifteen or twenty
years outside of that city and then enters the
service of the Boston pubUc schools.

It would seem that there is no sound argument
for the permanent exclusion of any group of
teachers from the operation of a state law. No
municipal pension law is so hberal that its finan-
cial benefits should not be duplicated by the state
law, when the municipal plan is sound. Some of
them are not. Even so good a system as that
of New York City has been supposed to be has
reached a point where the secretary says, in his

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THE TEACHER AND OLD AGE

latest annual report, "It is time our pension law
was rewritten on sound actuarial lines." With
proper care there is every likelihood that the
state system will be sound and permanent;
whereas many local systems are temporary and
expedient, and up to date have been looked upon
as a method for relieving the schools of certain
outworn teachers rather than as a large problem
of social insurance.

Approaching the whole problem broadly, how-
ever, after an organization has been effected and
a public sentiment developed that will support a
state teachers' pension system, it would seem
advisable for a commission to be appointed that
will study the problem scientifically and in the
light of all available information. In all prob-
ability, such a commission, if given sufficient
time, could work out, in states where there are
local pension systems, a merger scheme that
would be satisfactory to the local communities
on the side of taxation and provide justly for all
teachers concerned.

It would be well for such a commission to re-
port in advance of bringing the pension bill be-
fore the legislature; but if such a procedure is
not followed, definite provision for such scientific
study should be made in the proposed law. It
96



GETTING LEGISLATION

might be possible to provide for a state board of
retirement, having power to make such adjust-
ments as are necessary, subject to the approval
of the governor. While such provision could not
pass in many states because of local prejudices,
there is a growing tendency to legislate with more
care and more accurate knowledge than hereto-
fore. Wisconsin has given us splendid examples
of this tendency. There is the further tendency
to legislate in broad general terms, leaving the
working-out of details to responsible boards and
commissions.

It is inexpedient, and probably in the end it will
prove impossible, to have two kinds of pension
systems for teachers in operation simultaneously
in any state. Doubtless for some time we shall
continue to have the attempt made. It cannot
be too strongly urged, however, that a beginning
should be made in any legislation hereafter by in-
sisting that all new teachers entering the service
must enter the state retirement system regard-
less of the operation of any local system. With
this provision insisted upon, we might then have
a number of local systems in process of merging;
that is to say, some teachers in any town or city
will be prospective beneficiaries of the local sys-
tem and others of the state system. The teachers

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THE TEACHER AND OLD AGE

under local systems will gradually work out of
the service by resignation, death, and retirement,
and at the close of say thirty years we can expect,
in any state where this sort of adjustment is
made, the full operation of a complete state sys-
tem.

While the merging process thus indicated is
going on under the system of taxation prevailing
in most states, no town or city should be ex-
empted from taxation to maintain the state sys-
tem, inasmuch as some of the teachers in every
town and city in the state would be prospective
beneficiaries of the plan. It should be borne in
mind, however, that since many teachers for
some years will be under a local system, some
method of equitable reimbursement therefor
must be worked out, and up to date it would
seem that the Massachusetts system (see section
13) proposes the most satisfactory method.



APPENDIX A

State teachers' pension systems are sure to become
the rule rather than the exception in this country.
Nine complete state systems are now in existence,
four of which were set up during the legislative year
191 2-13. In Connecticut a law was put through the
legislature but vetoed by the governor. In Michi-
gan a law was defeated by a narrow margin in the
senate. In these states, and in at least four others,
campaigns are now under way looking toward the
passage of laws at the next session of the legislatures.
In view of these facts, and also because sufficient
experience has already accumulated to render cer-
tain general statements possible and safe, the writer
considers that this discussion would be incomplete
without the presentation of the draft of an act for
the establishment of a teachers' retirement system
actually in existence. For this purpose the Massa-
chusetts Act (1913) has been selected. President
Pritchett, of the Carnegie Foundation, has pro-
nounced this " the best and most carefully considered
law for teachers' pensions yet proposed in this coun-
try." It conforms more clearly than any other to
the principles heretofore discussed in this study, and
on the whole marks a step forward in this sort of
legislation. There are, however, certain defects and
"danger points" in the law. These, as well as some

99



APPENDIX

points of excellence, are briefly discussed in the
footnotes to the text of the law.

It is to be hoped that this old-age measure may be
supplemented by an equally good measure providing
for retirement for disability before age sixty years.
The legislature of 191 1 directed the Massachusetts
Board of Education to investigate the matter of
teachers' pensions and report on the same, but failed
to provide any funds for the research work neces-
sary before any adequate report could be made on
the health risk, or disability risk, of the teacher. The
board wisely confined its efforts to the field of an old-
age pension, in which there are sufficient data and
experience to justify the enactment of a law.



[Chap. 832]

An Act to establish a retirement system
for public school teachers

Be it enacted, etc., as follows: —

Section i. The following words and phrases as
used in this act, unless a different meaning is plainly
required by the context, shall have the following
meanings: —

(i) " Retirement system " shall mean the arrange-
ment provided in this act for payment of annuities
and pensions to teachers.

(2) "Annuities" shall mean payments for life de-
rived from contributions from teachers.
100



APPENDIX

(3) "Pensions" shall mean payments for life de-
rived from contributions from the commonwealth.

(4) "Teacher" shall mean any teacher, principal,
supervisor or superintendent employed by a school
committee, or board of trustees, in a public day
school within the commonwealth.

(5) "Public school" shall mean any day school
conducted within this commonwealth under the
order and superintendence of a duly elected school
committee and also any day school conducted under
the provisions of chapter four hundred and seventy-
one of the acts of the year nineteen hundred and
eleven.

(6) "Regular interest" shall mean interest at
three per cent per annum, compounded annually on
the last day of December of each year.

(7) "Retirement board" shall mean the teachers'
retirement board, as provided in section four of this
act.

(8) "Retirement association" shall mean the
teachers' retirement association, as provided in sec-
tion three of this act.

(9) " Expense fund " shall mean the fund provided
for in paragraph numbered one in section five of
this act.

(10) "Annuity fund" shall mean the fund pro-
vided for in paragraph numbered two in section five
of this act.

(11) "Pension fund" shall mean the fund pro-
vided for in paragraph numbered three in section five
of this act.

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APPENDIX

(12) "School year" shall mean the twelve months
from the first day of July of any year to the thirtieth
of June next succeeding.

(13) ''Assessments" shall mean the annual pay-
ments to the annuity fund by members of the asso-
ciation.

ESTABLISHMENT OF A TEACHERS* RETIREMENT
SYSTEM

Section 2. A teachers' retirement system shall be
established on the first day of July, nineteen hun-
dred and fourteen,

teachers' RETIREMENT ASSOCIATION

Section 3. A teachers' retirement association shall
be organized among the teachers in the public schools
as follows: —

(i) All teachers, except those specified in para-
graph (3) of this section, who enter the service of
the public schools for the first time on or after July
first, nineteen hundred and fourteen, shall become
thereby members of the association.

(2) All teachers, except those specified in para-
graph (3) of this section, who shall have entered the
service of the public schools before June thirtieth,
nineteen hundred and fourteen, may at any time be-
tween July first, nineteen hundred and fourteen, and
September thirtieth, nineteen hundred and four-
teen, upon application in writing to the commis-
sioner of education, become members of the retirement
102



APPENDIX

association. Any teacher failing to do so may there-
after become a member of the retirement board ^ by
paying an amount equal to the total assessments,
together with regular interest thereon, that he would
have paid if he had joined the retirement associa-
tion on September thirtieth, nineteen hundred and
fourteen.

(3) Teachers in the service of the public schools of
the city of Boston shall not be included as members
of the retirement association.^



STATE TEACHERS RETIREMENT BOARD

Section 4. (i) The management of the retirement
system is hereby vested in the teachers' retirement
board, consisting of seven members: the insurance
commissioner for the commonwealth, the bank com-
missioner for the commonwealth, the commissioner
of education for the commonwealth, three members
of the retirement association and one other person.
Upon organization of the retirement association the
members thereof shall elect from among their num-

1 This is obviously an error, the context requires "associa-
tion" instead of "board."

* This violates the principle heretofore laid down (iii, page
76, also page 95) that all local pension systems should ulti-
mately be absorbed into a state system. The Boston act gives
part pension for disability prior to age sixty-five years; the
state act does not recognize disability before age sixty years as
cause for retirement. The Boston teachers were unwilling to
surrender this right, and in order to get any legislation, this
provision was necessary.

103



APPENDIX

ber in a manner to be approved by the insurance
commissioner, the bank commissioner and the com-
missioner of education, three persons to serve upon
the retirement board, one member to serve for one
year, one for two years and one for three years, and
thereafter the members of the retirement association
shall elect annually from among their number in a
manner to be approved by the retirement board one
person to serve upon the retirement board for the
term of three years. The seventh member of the re-
tirement board shall be elected annually by the other
six to serve for the term of one year.^ On a vacancy
occurring on the board, a successor of such person
whose place has become vacant shall be chosen in
the same manner as his predecessor to serve until the
next annual election. Until the organization of the
retirement association and the election of three rep-
resentatives therefrom, the insurance commissioner,
the bank commissioner and the commissioner of edu-
cation shall be empowered to perform the duties of
the retirement board.

(2) The members of the retirement board shall
serve without compensation, but they shall be reim-
bursed from the expense fund of the retirement asso-
ciation for any expenditures or loss of salary or wages
which they may incur through serving on the board.
All claims for reimbursement on this account shall be
subject to the approval of the governor and council.

' This would have been stronger if provision had been made
for appointment of the seventh member by the governor, in
case of failure to elect after a reasonable time.
104



APPENDIX

(3) The retirement board shall have power to
make by-laws and regulations not inconsistent with
the provisions of this act ; and to employ a secretary
who shall give a bond in such amount as the board
shall approve, and clerical and other assistance as
may be necessary.^ The salaries shall be fixed by the
board, with the approval of the governor and council.

(4) The retirement board shall provide for the
payment of retirement allowances and such other
expenditures as are required by the provisions of
this act.

(5) The retirement board shall adopt for the re-
tirement system one or more mortality tables, and
shall determine what rates of interest shall be estab-
lished in connection with such tables, and may later
modify such tables or prescribe other tables to repre-
sent more accurately the expense of the retirement
system, or may change such rates of interest, and
may determine the application of the changes made.

(6) The retirement board shall perform such
other functions as are required for the execution of
the provisions of this act.

CREATION OF FUNDS

Section 5. The funds of the retirement system
shall consist of an expense fund, an annuity fund and
a pension fund.

(i) The expense fund shall consist of such amounts

* This is an awkward construction, although the meaning is
probably clear.



APPENDIX

as shall be appropriated by the general court from
year to year on estimates submitted by the retire-
ment board to defray the expense of the administra-
tion of this act, exclusive of the payment of retire-
ment allowances.

(2) The annuity fund shall consist of assessments
paid by members of the retirement association, and
interest derived from investments of the annuity
fund. Each member of the retirement association
shall pay into the annuity fund, by deduction from
his salary in the manner provided in section nine,
paragraph five, of this act, such assessments upon
his salary as may be determined by the retirement
board. The rate of assessment shall be established
by the retirement board on the first day of July of
each year after a prior notice of at least three months,
and shall at any given time be uniform for all mem-
bers of the retirement association, and shall not be
less than three per cent nor more than seven per
cent of the members' salary : ^ provided, however, that
when the total sum of assessments on the salary of
any member at the rate established by the retire-
ment board would amount to more than one hun-
dred dollars or less than thirty-five dollars^ for any

' Objection has been raised to this provision. The claim is
made that the power to fix the assessment rate should not be
vested in the retirement board. Inasmuch as the beneficiaries
have a fair representation on the board, there is small danger
of any unjust or arbitrary misuse of authority.

^ Thirty payments of thirty-five dollars each will produce
an annuity of one hundred and fifty dollars at age sixty
years. Since the pension equals the annuity, every teacher
106



APPENDIX

school year, such member shall in lieu of assessments
at the regular rate be assessed one hundred dollars
a year or thirty-five dollars a year as the case may be,
payable in equal instalments to be assessed for the
number of months during which the schools of the
community in which such member is employed are
commonly in session. Any member of the retire-
ment association who shall for thirty years have paid
regular assessments to the annuity fund as provided
herein, shall be exempt from further assessments;
but such member may thereafter, if he so elects, con-
tinue to pay his assessments to the fund. No mem-
ber so electing shall pay further assessments after the
total sum of assessments paid by him shall at any
time have amounted, with regular interest, to a sum
sufi6cient to purchase an annuity of five hundred dol-
lars at age sixty ;^ and interest thereafter accruing
shall be paid to the member at the time of his retire-
ment.

(3) The pension fund shall consist of such amounts

retiring under the terms of the act is practically guaranteed a
minimum retirement allowance of three hundred dollars. See
also Section 6, (5).

^ The amount necessary to yield an annuity of five hundred
dollars at age sixty years will yield very nearly seven hundred
and fifty dollars at age seventy years. Hence it will be possible
for teachers paying the maximum assessments (one hundred
dollars per annum) for a long term of years to retire on an al-
lowance of fifteen hundred dollars if they continue in service
until age seventy years. As an offset to the possible tempta-
tion to remain in service too long for the sake of building up a
larger equity, provision is made in Section 6, (i), for retirement
after age sixty years by the school committee.
107



APPENDIX

as shall be appropriated by the general court from
time to time on estimates submitted by the retire-
ment board for the purpose of paying the pensions
provided for in this act.



PAYMENT OF RETIREMENT ALLOWANCES

Section 6. (i) Any member of the retirement as-
sociation may retire from service in the public schools
on attaining the age of sixty years, or, at any time
thereafter, if incapable of rendering satisfactory serv-
ice as a teacher, may, with the approval of the re-
tirement board, be retired by the employing school
committee.

(2) Any member of the retirement association, on
attaining the age of seventy years, shall be retired
from service in the public schools.

(3) A member of the retirement association after
his retirement under the provisions of paragraphs
numbered (i) or (2) of this section, shall be entitled
to receive from the annuity fund, as he shall elect at
the time of his retirement, on the basis of tables
adopted by the retirement board: — (a) an annuity
payable in quarterly payments, to which the sura
of his assessments under section five, paragraph (2),
with regular interest thereon, shall entitle him; or,^

* This option is an important feature from an insurance
standpoint. While it cannot be stated accurately in dollars
and cents, since it is not known what tables the retirement
board will adopt, this smaller annuity amounts to about 78-108
of the full annuity due. The remainder is retained as a pre-
108



APPENDIX

(b) an annuity of less amount, as determined by the
retirement board for the annuitants electing such
option, payable in quarterly payments, with the pro-
vision that if the annuitant dies before receiving
payments equal to the sum of his assessments under
section five, paragraph (2), with regular interest, at
the time of his retirement, the difference between the
total amount of said payments and the amount of his
contributions with regular interest shall be paid to
his legal representatives.

(4) Any member of the retirement association re-
ceiving payments of an annuity as provided in para-
graph numbered (3) of this section shall, if not ren-
dered ineligible therefor by the provisions of section
twelve of this act, receive with each quarterly pay-
ment of his annuity an equal amount to be paid
from the pension fund as directed by the retirement
board.

(s)^ Any teacher who shall have become a mem-

mium, insuring to the heirs the unpaid balances in the annu-
ity fund. The objectionable feature in this option is the cut-
ting down of the pension, since the law provides a pension
equal to the annuity received, paragraph (4). This should be
amended.

' This paragraph dealing with teachers now in service is on
first reading particularly complicated, but careful study will
show that it fits into the other provisions of the law in a con-
cise but effective manner. Briefly, it means that a teacher's
retirement allowance may be made up of four parts: —

(a) The annuity yielded by his contributions.

(b) A pension equal to (a).

(c) A prior service pension based on what he would have
received had the act been in force when ^he entered service.

109



APPENDIX

ber of the retirement association under the provi-
sions of paragraph numbered (2) of section three,
and who shall have served fifteen years or more in
the public schools of the commonwealth, not less
than five of which shall immediately precede retire-
ment, shall, on retiring as provided in paragraph (i)
and (2) of this section, be entitled to receive a retire-
ment allowance as follows: — (a) such annuity and
pension as may be due under the provisions of para-
graphs numbered (3) and (4) of this section; (b) an
additional pension to such an amount that the sum
of this additional pension and the pension provided
in paragraph (4) of this section shall equal the pen-
sion to which he would have been entitled under the
provisions of this act if he had paid thirty assess-
ments on his average yearly wage for the fifteen years
preceding his retirement and at the rate in effect at
the time of his retirement: provided, (i), that if his
term of service in the commonwealth shall have been
over thirty years the thirty assessments shall be reck-
oned as having begun at the time of his entering serv-
ice and as drawing regular interest until the time of
retirement; and further provided, (2) that if the sum
of such additional pension together with the annuity
and pension provided for by paragraphs numbered
(3) and (4) of this section is less than three hundred

{d) If (a), (b), and (c) will not yield three hundred dollars,
an additional sum up to three hundred dollars.

In short, teachers in service when the act takes effect are
guaranteed a pension on the same basis as teachers entering
the service thereafter, and possibly under (d) a little more.
IIO



APPENDIX

dollars in any one year, an additional sum suffi-
cient to make an annual retirement allowance of
three hundred dollars shall be paid from the pension
fund.

(6) If at any time it is impossible or impracticable
to consult the original records as to wages received
by a member during any period, the retirement
board shall determine the pension to be paid under
paragraph numbered (5) (b) of this section in accord-
ance with the evidence they may be able to obtain.

WITHDRAWAL AND REINSTATEMENT*"

Section 7. (i) Any member of the retirement
association withdrawing from service in the public
schools before becoming eligible to retirement shall be
entitled to receive from the annuity fund all amounts
contributed as assessments, together with regular
interest thereon, in the manner hereinafter provided.

(2) If such withdrawal shall take place before ten
annual assessments have been paid, the total amount
to which such member is entitled as determined by
the retirement board under the provisions of this act
shall be paid to him in four annual instalments.

1° The withdrawal equities provided for in this section are
thoroughly sound. Teaching is a short-lived profession. The
average teaching life in this country is about seven years. Re-


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Online LibraryCharles A. (Charles Allen) ProsserThe teacher and old age → online text (page 6 of 8)