of the applicant for a pension, whether sworn or unsworn, shall not be considered as proof of any fact necessary to determine the eligibility of the applicant to receive such pension.

SEC. 8. The State superintendent of public instruction shall investigate all applications received for a pension under the provisions of this act and shall, on or before the 30th day of November, 1915, and quarterly thereafter, certify to the governor and council the names of the persons who are entitled to pensions under the provisions of this act, and the governor, with the advice and consent of the council, shall draw warrants on the State treasurer for payment of the pensions in favor of said persons. Such payments shall be made in quarterly installments. In case one-quarter of the appropriation herein made, less expense of administration, shall be insufficient to pay the quarterly installments of all of the persons certified to the governor and council as entitled thereto, the governor, with the advice and consent of the council, shall draw warrants to the amount of only one-quarter of the appropriation, less expenses of administration, preference being given to those certified as entitled in the order of their

age.

SEC. 9. Every pension shall terminate upon the death of the recipient, and the proportional part of the pension due at the time of such death shall be paid to the legal representative of the deceased.

SEC. 10. All pensions granted or payable under the provisions of this act shall be and are hereby made exempt from levy upon execution and from attachment upon

trustee process.

SEC. 11. The sum of $10,000 is hereby appropriated for the fiscal year ending August 31, 1916, to carry out the provisions of this act.

SEC. 12. This act shall take effect upon its passage.

Approved April 21, 1915.

APPENDIX B.

TEACHERS' PENSIONS.1

By CLYDE FURST,

Secretary Carnegie Foundation for the Advancement of Teaching.

The fundamental principles of a pension system may be stated briefly. Only those, however, who have studied the great mass of pension literature are likely to give full acceptance to them at once. It is not easy to understand, for example, that a noncontributory pension is the most costly to the beneficiary-that free pensions, paid by a government or other agency, are in the long run so expensive that the individual can not afford to trust his future to them.

Among those, however, who have given thorough study to pensions, from the standpoint of the needs of those whom the systems are intended to serve, and who have followed the history of the breakdown of one system after another, there is practical agreement that the following fundamental principles are applicable to all pension systems which involve large groups.

I. A pension is but one feature of the relief system needed by any given group. Only a minority of those who become teachers, or government employees, or machinists, will live to enjoy a pension, however provided. A relief system must be planned with special reference to the group it is intended to serve. Among railroad employees the risk of accident is greater than among teachers. Sickness is a risk common to teachers and railroad employees, but teachers are better able to deal with it as individuals. In general, a relief system will undertake only those capital risks of life which can best be met by cooperative effort. In the case of teachers death, dependence in old age, and disability are such risks.

II. A pension system can be operated successfully only in a fairly homogeneous group; that is to say, when the members of the group live under like conditions, are subject to similar risks, and have rates of pay which are comparable.

III. A relief system, to accomplish its purpose, must include practically all members of the group. Otherwise those who most need its benefits are least likely to enjoy them.

IV. Two plans have been followed in the establishment of pension systems for large groups:

The Reserve Plan, under which the necessary reserve for each beneficiary is set aside year by year. This, with the accumulated interest, will provide the pension when it may become due.

The Cash Disbursement Plan, under which pensions are simply paid out of current funds such as those provided by government appropriations or from an endowment.

1 Read before the National Education Association, New York, July 6. Reprinted here from "School and Society," Vol. IV, No. 83, pp. 154-159, July 29, 1916.

The same pension benefits may be paid under both plans, but the cost under the reserve plan is measured by the percentage of the pay roll necessary to accumulate future pensions, while the cost under the cash disbursement plan is measured by the percentage of the annual pay roll required for the full pension benefits. The cost under the reserve plan is a constant factor, which in the case of a college teacher would entail a payment of from 4 to 5 per cent of his pay by the teacher and by the college. The cost under the cash disbursement plan is a changing and constantly increasing factor which may eventually amount to 20 per cent of the active pay roll or more. The reserve plan adapts itself to a contributory pension, the cash disbursement plan to a free pension paid without the participation of the beneficiary.

V. Systems offering a free pension upon the cash disbursement plan have repeatedly broken down through their great cost, unless upheld by the resources of a government. Even in governmental pensions the cost has mounted to such proportions as to endanger the permanency of the system. Under a free pension system every tendency is toward increase. No actuarial computation can take account of the charitable, political, and social influences which tend to increase the load. Experi ence shows also that the beneficiaries of a free pension system in time become dissatisfied, and claim that such pensions are merely deferred pay and that they benefit the few at the expense of the many.

VI. The employee entering his vocation and looking forward over a span of 30 to 40 years to the protection of a pension is most of all concerned in its security. If he is to plan his life upon the use of a pension at an agreed age, he desires above all absolute certainty that the pension will be ready at the date named. There is no way in which this can be assured except by setting aside year by year the reserve necessary to provide it. Nothing short of a contract providing this reserve will give him such security, and this he can get only by a participation in the accumulation of the

reserve.

VII. A pension system on the reserve plan, sustained by joint contributions of employer and employee, is therefore not only the fairest and most equitable form of pension system, but it is the only one in which the cost can be ascertained in advance, in which the question of pension is separated from the question of pay, and it is the only form of pension which can be permanently secure. The man of 30, whether he be teacher, Government clerk, or industrial worker, can be sure of the pension promised 35 years in advance only when it rests upon this economic basis. The justification of pensions for teachers, in particular, is economic, social, and educational. Economically the work of an organization is not effective unless there is a satisfactory method of retiring aged or infirm workers. Only a satisfactory pension system can prevent either the dismissal of aged or infirm teachers without resources or the sacrifice of the welfare of the pupils in order to continue the employment of teachers who are no longer capable of good work. Socially, men and women of character, intelligence, and devotion are willing to perform difficult social services that are poorly paid; but it is too much to expect them also to face old age and disability without the prospect of some protection. Educationally, there is great need to secure and retain able teachers in the schools. At present only about 5 per cent of the men and 15 per cent of the women who enter teaching make it a permanent

career.

For all of these reasons the development of pension systems for teachers has been rapid and widespread in the United States. Ten were founded between 1890 and 1900; 25 between 1900 and 1910; and 31 between 1910 and 1915. More than half of our States now have some form of pensions for teachers.

The cost of a pension system for teachers may be borne by the teacher alone, by the public alone, or by the teacher and the public together. If the cost is borne by the teacher alone, he can scarcely afford, out of a small salary, to set aside enough money to purchase adequate protection, and the public fails to fulfill a plain obliga

tion. If the cost is borne by the public alone, the money is really taken from the teachers' salaries without their agreement, cooperation is weakened, and the teachers suffer in independence and lose an incentive to personal thrift. When the cost is borne by the teachers and the public together, the teacher receives appropriate reward and protection, and both the teacher and the public meet an economic, social, and educational obligation. The principle of cooperation between the teacher and the public is recognized by most of the pension systems that are now in operation. The application of the principle of cooperation, however, is not so satisfactory. Only a dozen systems relate the amount of the public contribution to that of the teacher. In these cases it ranges from one-half to three times that of the teacher, being usually an equal amount. Frequently public money is expected from sources which bear no relation to the amount of money needed for pensions. Excise, inheritance, license or transfer receipts, or deductions, fines, or forfeitures from teachers' salaries for absence or illness, or from tuitions of nonresident students, do not furnish a reliable basis for pensions. Equally unsatisfactory is the expectation of paying pensions, when they fall due, from current school or other funds, without any assurance that these funds will be adequate, or from special or general appropriations, without any certainty that such appropriations will be made. Indeed, it is not uncommon to limit in advance the sums that may be taken from such sources, thus reducing the proportion of the pension that can be paid, or leaving the whole question of payment largely to accident. Because of these facts, no teacher can be certain that any pension system now in existence will or can pay any pension that has been promised.

The only way in which security can be obtained is for the contribution of the public, as well as that of the teacher, to be paid in annually and set aside to accumulate against the time when it will be needed. This also is the only economical method. Any system which agrees to pay a pension from current funds after the teacher retires, plans to spend two or three times as much money for that pension as would be required if sums were set aside each year to accumulate it during the teacher's period of service. Pension systems for teachers in the United States, moreover, are so organized at present that it is impossible for anybody to estimate the cost of any one of them. The probable length of life of a teacher in service or after retirement may be estimated with a fair degree of safety from the tables of mortality that have been developed by the life-insurance companies, although it begins to appear that teachers live longer than other people. Estimates of the likelihood of disability, however, and the probable length of life after retirement because of disability are still without an adequate basis. It will be a long while before reliable estimates can be made of the probability of being dismissed, or of resigning, or of the age at which one will choose to retire. It is quite certain that no one can predict what any teacher's salary will be 30, or 40, or 50 years hence, and yet practically all pensions are based to some extent upon the salary at the time of retirement.

The fact that no one of our existing pension systems is satisfactory is explained by their history. These systems are, for the most part, very new, and they have in the main imitated government systems, the great resources of which have caused the question of cost to be neglected. The difficulties of the English civil-service pensions in 1909, and the failure and the reorganization of those of New South Wales in 1912, however, proved that even a government can not afford a careless pension system. These difficulties and those of Porto Rico, New Jersey, Maryland, and Virginia, and of New York City, Indianapolis, Cincinnati, and Philadelphia, have greatly stimulated the study of pensions, with the result that we may hope to enter upon a sounder era. There is, of course, a definite relation between pension benefits and pension costs. At present both teacher and public desire benefits that are impossibly expensive in return for contributions that are too small to provide even modest benefits. Some systems, for example, promise retirement after 20 years of service, or at the age of 50; in others teachers contribute only one-half of 1 per cent of their salaries; in yet others the public contributes only one-half as much as the teachers.

Such mistakes may easily be corrected by a very simple pension system, based upon the tables of mortality that are used by the life-insurance companies, and upon a safe rate of interest, with the provision that the teacher receives the benefit of all of his accumulations. We can tell in this way what certain desired benefits will cost, or what benefits can be had for whatever definite sum of money is available. It is very simple to estimate what any annual contribution, beginning at any age, and accumulating at a given percentage, will amount to after any number of years. If all of the money is deposited in a central fund each contributor can be guaranteed a definite annuity for life, since the lives of all are averaged in the standard mortality tables. Thus, an annual contribution of $100 a year beginning at the age of 25 and accumulated at 3 per cent interest will provide a man with an annuity for life, according to the McClintock table of mortality, of $894 a year beginning at the age of 60, or of $1,550 a year beginning at 65, or of $2,959 a year beginning at 70. The annuities from such a contribution for women, who live longer than men, would be about three-fourths of the sums that have been mentioned.

If it is desired, for the sake of family protection, there may be, also, a return of the accumulations of the teacher who dies before retirement, and a return of the balance of the accumulations of the teacher who retires but dies before he has drawn all of his accumulations. This also can be calculated from the standard mortality and interest tables.

If, further, protection is desired against disability, this can be similarly provided, by the use of the best tables that we have, with the proviso that the rates for those who enter into the system in the future may be modified according to future experience. Should it be desired finally to return part or all of the accumulations of those who withdraw from the system for any reason, this also can be provided for on the basis of the very limited withdrawal tables that are available, with the proviso that the rates for new entrants be adjusted periodically on the basis of accumulated experience. The cost of each of these additional benefits has never been calculated separately, but it has been roughly estimated that the cost of an annuity alone is about doubled by adding the benefits of a proportionate annuity for life beginning with permanent disability at whatever age; and a guarantee of the return of all of the teacher's accumulations in case of withdrawal from the service, in case of death before retirement, or in case of death after retirement before all of his accumulations have been used.

A pension system of the kind that has been mentioned would be just and fair to all concerned, giving the teacher secure and adequate protection at a reasonable cost to himself and to the public. It would not be necessary to change the present form of administration, which is generally through a special board of five or seven persons, upon which the teachers and the public are about equally represented. It will be important, however, to have the actual work done by competent, full-time experts, under the supervision of the state banking and insurance departments.

According to such a plan all systems will provide for retirement on the basis of age, although only two-fifths of them do so at present. The age of retirement, which is now usually fixed, can be left to the teacher and the administration. If the need is great, retirement may be earlier, in spite of the fact that the smaller accumulations would then make the pension smaller. In general, retirement will, in all probability, be later than at present, because of the larger pension provided by the longer accumulation and the educational desirability of keeping the able teacher in service as long as possible.

Disability can be provided for by using whatever money has been accumulated at the time when retirement becomes unavoidable. Retirement on the basis of service alone is a luxury which neither the teacher nor the public appears to be willing or able to pay for. It is, moreover, educationally unfortunate in encouraging the withdrawal from service of experienced teachers at the time when they are doing their best work.