GIFT 
 WAY -.67 1918 
 
 THE CARNEGIE FOUNDATION 
 FOR THE ADVANCEMENT OF TEACHING 
 
 A STATEMENT TO THE 
 
 TEACHERS IN THE ASSOCIATED 
 
 COLLEGES AND UNIVERSITIES 
 
I C> J. i >J T— 
 
 D. I). I'PDIKK. • TIIF. MKIIRYMOITKT PRK.SS • BOSTON 
 
THE CARNEGIE FOUNDATION 
 FOR THE ADVANCEMENT OF TEACHING 
 
 A STATEMENT TO THE TEACHERS IN THE ASSOCIATED 
 COLLEGES AND UNIVERSITIES 
 
 During the twelve years of its existence, the officers and trustees of 
 the Carnegie Foundation have been engaged in a study of the whole 
 problem of the protection of teachers against the hazards incident to 
 the Ufe of the professional man living upon modest fixed salary. This 
 study resolved itself into three practical questions : 
 
 First, Is the free pension system as originally adopted by the Foun- 
 dation in the interest of the teacher and can it be made permanent? 
 
 Second, If the free pension is not a permanent solution, what are the 
 terms upon which an adequate and enduring system of protection for 
 college teachers should be based? 
 
 Third, In any substitution of a new plan for the old, what is a reason- 
 able and fair fulfilment of the expectations of the teachers in the asso- 
 ciated institutions? 
 
 The first two of these questions were, by a vote of the trustees of 
 the Carnegie Foundation in November, 1916, referred for report to a 
 commission upon which were trustees of the Foundation, college presi- 
 dents, university teachers, and others directly interested in the solution 
 of these questions. An expert actuary was at the service of the com- 
 mission and the pension experience of the world was available for its use. 
 This commission reached definite conclusions, which are printed in full 
 in the Twelfth Annual Report. In the place of the free pension, the 
 commission recommended certain fundamental principles which should 
 underlie any pension system. It pointed out that insurance during the 
 productive period of life must supplement an annuity in old age; that the 
 former was purely the concern of the individual, while the latter was a 
 joint obligation of the teacher and his employer, the college, and should 
 rest upon their joint contributions. As a conclusion of its labors the 
 commission presented a practical plan adapted to the needs of teachers, 
 in which the individual may obtain both his insurance and his annuity 
 
 37,3727 
 
2 STATEMENT TO THE TEACHERS IN 
 
 under definite, contractual terms, at minimum cost and subject to the 
 scrutiny of the state departments of insurance. 
 
 The method of the fulfihnent of the expectsitions of the teachers in 
 the associated colleges and uni\ ersities was not referred to this commis- 
 sion. The determination of that (juestion is a responsibility which rests 
 upon the trustees of the Foundation. The commission very properly, 
 however, took occasion to express its opinion to the trustees in the fol- 
 lowing resolutions: 
 
 Voted : Referring to the resolution of the Board of Trustees of the Carnegie Founda- 
 tion, adopted in Novemlier, 1915, tliat "whatever plan is finally adopted will be 
 devised with scrupulous regard to the privileges and expectations which have been 
 created under existing ndes,'' this Commission expresses the opinion that the exten- 
 sion to all teachers at present in the associated institutions of the privilege of con- 
 tinuing in the present system would completely meet all their reasonable expecta- 
 tions. Tiie Commission assumes that the Trustees of the Carnegie Foundation will 
 in due time announce a date after which the privileges and expectations of the 
 present system will not be available to those newly entering upon the profession of 
 teaching. 
 
 Voted: That the Trustees of the Carnegie Foundation be requested to give all possible 
 consideration to the needs of the older teac-hers in institutions which are not yet, 
 but may later be, associated with tiie Foundation. 
 
 Voted : The Commission docs not know the extent to which assistance can \ye obtained 
 outside the present funds of the Foundation, but it is acting on the expectation 
 of substantial jussistance in carrying a large but limited load, and with the further 
 understanding that adequate assistance cannot be obtained to carr\' the ever increas- 
 ing pension burden without calling upon institutions and individual teachers to bear 
 a share. 
 
 The report of this commission was considered by the tnistees of the 
 Carnegie Foundation at a special meeting held in May, 1917. At that 
 meeting the trustees took up and accepted the statement of funda- 
 mental principles of a pension system as framed by this commission. 
 The trustees also accepted the form of machinery recommended bv the 
 commission to carry out these ])rinciplos as it is embodied in the pro- 
 posed Teachers Insurance and ^Vnnuity Association, and voted to ask 
 of the trustees of the Carnegie Corporation one million dollars to estab- 
 lish this agency. 
 
ASSOCIATED COLLEGES AND UNIVERSITIES 3 
 
 To fulfil the expectations of teachers in the associated institutions in 
 the manner suggested by the commission was beyond the power of the 
 trustees because the funds at their disposal were inadequate. 
 
 There were in active service in these institutions on November 17, 
 1915,' some 6600 teachers, including professors, associate and assistant 
 professors, and instructors. These teachers were distributed in age as 
 follows: 
 
 Affe Number of 
 
 Teachers 
 
 20-24 34 
 
 25-29 559 
 
 30-34 1149 
 
 35-39 1235 
 
 40-44 1124 
 
 45-49 925 
 
 50-54 675 
 
 55-59 440 
 
 60-64 247 
 
 65-86 238 
 
 6626 
 
 This number must of course decrease year by year since teachers en- 
 tering these institutions, after the date named, come under the new plan. 
 
 The conditions under which expectations have been created are the 
 following: 
 
 Seventy-four colleges and universities have been admitted to the 
 pension benefits of the Foundation. The teachers of these institutions 
 have the privilege of retiring under the following rules : 
 
 1. An old age retiring allowance is granted at the minimum age of 
 sixty-five, after fifteen years of professorial service. 
 
 2. A disability allowance is granted after twenty-five years of service 
 in case of complete disability. 
 
 3. Widows of teachers qualified under provision 1 or 2, or widows of 
 teachers who die before retirement after twenty-five years of service, 
 receive one-half of the pensions accredited to their husbands. 
 
 4. The Carnegie Foundation retains the power to alter these rules in 
 
 ' On this date the trustees passed resolutions looking toward the adoption of a contributory pension plan. These reso- 
 lutions accompanied the President's report on the new plan, which was sent to the trustees, officers, and teachers 
 of all of the associated institutions. 
 
4 STATEMENT TO THE TEACHERS IN 
 
 such manner as experience may indicate as desirable for the benefit of 
 the whole body of teachers. 
 
 An actuarial estimate of the load likely to accrue year by year from 
 the retirement of these teachers underthe present rules involves assump- 
 tions of great uncertainty. The actuaries have little information to guide 
 them in determining the rate of separation, the age at which men will 
 choose to retire, or the average salary thirty years hence. The records 
 of the Foundation show that there is a large drift from the associated 
 colleges to the hundreds of other colleges and universities in the United 
 States and Canada, and these records show also that a large proportion 
 of younger men go out of teaching. But how large these factors are is 
 unknown. Further, it is evident that the war will have a marked effect 
 on this situation. Already a large number of teachers under forty have 
 given up their positions. Some of these will return to their places, but 
 many will enter other callings, or be distributed among other colleges. 
 
 The only assimiptions that can be made are that men will withdraw 
 in somewhat the same proportion as during the past five years, and that 
 teachers will avail themselves of the privilege of retirement as soon as 
 it is open to them. 
 
 Under these jissumptions the computations of the actuaries show 
 that the load arising from the pensions of these teachers will steadily in- 
 crease, reaching its maximum about thirty years hence, then diminishing, 
 until about the forty-fifth year the annual cost will approach the present 
 income of the Foundation. CompuUitions on this bjisis indicate that tlie 
 total sum necessary to be paid out during the forty-five years to carry 
 out the present rules completely in the cases of these teachers will be 
 $69,000,000, in addition to the sums, now amounting to about .^700.000 
 annually, which the Foundation pays to teachers already retired and to 
 widows of such teachers. 
 
 During the same period the income of the Foundation available for 
 such pensions will be approximately $;{+. 000,000. To carry out the pres- 
 ent rules unchanged would require twice as much money as the trus- 
 tees have at their disposal. In the light of these figures the expectiitions 
 of the teachers, as formulated by the connnission, were obviously not 
 justified by the facts of the situation. 
 
ASSOCIATED COLLEGES AND UNIVERSITIES 5 
 
 In making and announcing the present rules, the trustees of the 
 Carnegie Foundation took pains not to bind themselves by promises 
 which they might be unable to fulfil. In connection with their original 
 announcement, and as part of the same memorandum, they expUcitly 
 reserved the right to make such changes in the rules of retirement as 
 experience may indicate as desirable for the benefit of the whole body 
 of teachers. This right has been twice exercised: once in the year 1908, 
 by the extension of the privileges of the Foundation to instructors and 
 to widows, and again in 1910 by the elimination of the pension hitherto 
 granted on the basis of service alone. These facts were fully known to 
 the teachers in associated institutions. But so great was the desire of the 
 trustees to meet every expectation that had been created, whether fully 
 justified or not, and so serious was their reluctance to curtail privileges 
 which had been mistakenly regarded as promises, that after full delibera- 
 tion the trustees of the Foundation decided to ask the aid of the Carnegie 
 Corporation in carrying out the present rules upon the exact terms sug- 
 gested by the commission — even tho they knew that the demands made 
 upon the trustees of the Carnegie Corporation were so great as to make 
 it doubtful whether this request could be granted in its entirety. This 
 request, forwarded in the latter part of May, 1917, was conveyed in the 
 following resolutions : 
 
 Voted: That the Carnegie Corporation of New York be asked to cooperate with the 
 Carnegie Foundation for the Advancement of Teaching in carrying out the recom- 
 mendations of the Commission in the following matters: 
 
 1. By enabling the Foundation to fulfil the expectations of teachers in the associated 
 colleges and universities prior to the seventeenth of November, 1915. This will 
 involve a large but limited liability extending over a numberof years, the extent of 
 which will be clearly indicated by the actuarial reports which accompany this record. 
 
 2. By enabling the Foundation to afford some assistance during the transition period 
 of the next twenty years toward the retiring allowances of old teachers in institu- 
 tions which are not now, but may later be, associated with the Foundation. At the 
 present time the Foundation is devoting the income of more than $2,000,000 of its 
 endowment to the payment of pensions to teachers not in the associated institu- 
 tions. 
 
 8. By supplying the capital necessary to establish the Teachers Insurance and Annu- 
 ity Association. The sum necessary to establish the Teachers Insurance and Annuity 
 Association is $1,000,000. 
 
6 STATEMENT TO THE TEACHERS IN 
 
 In reply to these resolutions, the trustees of the Corporation an- 
 swered, in November last, that they had given earnest study to the 
 requests of the Foundation; they expressed their appreciation of the 
 diflicult questions with which the trustees of the Foundation have had 
 to deal, and indicated their desire to aid toward a wise and just solution 
 of its problems. In extending such aid, however, the trustees of the Cor- 
 poration stilted that they were ol)liged to tiike into account not alone 
 the expectations of the Foundation, but tiie needs of other causes as 
 well ; that as a sound principle for their guidance they must assume that 
 such obligations as the Corporation undertakes, whether on behalf of 
 the institutions bearing Mr. Carnegie's name or for other agencies, shall 
 be determinate. The present trustees of the Corporation did not feel jus- 
 tified in mortgaging any large part of its income for an indefinite num- 
 ber of years. In the light of these general principles, the trustees of the 
 Corporation stated that such aid as they could extend in enabling the 
 Foundation to fulfil the expectations of teachers must be expressed in 
 terms which are definite, both as to amount and as to duration. Bearing 
 in mind these limitations, the trustees of the Corporation have agreed 
 to supply, in answer to tlie request of the Foundation, thirteen millions 
 of dollars, of which one million is to provide capital and surplus for 
 the Teachers Insurance and Aiuuiity Association, one miUion is to be 
 devoted to the assistance of teachers and colleges not now associated 
 with the Foundation, while eleven milhons shall go to the creation of a 
 reserve under the following conditions: 
 
 l.The Foundation shall begin at once the accumulation of a i"e.sen'e fund for the 
 liquidation of jKMision obligations to lu-cruc from teachers in the associated institu- 
 tions. Into this reserve fund the Fomulation shall place its present suqiius amount- 
 ing to approximately one million dollars. To this reserve fund tlic Corporation sliall 
 contribute ?.'j,0()(),000 par value of honds, any deferred payments at the conven- 
 ience of the Cor|)oration to l)e made as of .lanuarv 1, 191S, with interest at four 
 percent. This reserve is to Ik- pl(U'e<l in a spi-cial account by the Foimdation, and 
 the income from it added to the reserve from yciir to year for a period of ten years. 
 
 2. The CoqM)ration shall pay into the tn-asury of the Foundation for the same period 
 of ten years SlUHl.OOO aiuiuallv, at the convenience of the Coqioration. T\w entire 
 annual income of the Foundation not requii-od in the judgment of the trustees for 
 the payment of pensions is to be carried at the end of each year to the reserve fund. 
 
 J 
 
ASSOCIATED COLLEGES AND UNIVERSITIES 7 
 
 3. The reserve thus created shall be available at the end of ten years for the discharge 
 of the obligations of the Foundation as they may accrue thereafter. Should the expe- 
 rience of the next fifteen years prove that some further adjustment is necessary at 
 the period of maximum load, thirty years hence, the responsibility for such atljust- 
 ment rests with the Foundation. Should the reserve prove greater than is demanded 
 for this purpose, the residuum shall be added to the permanent endowment of the 
 Foundation to be used for its corporate purposes. 
 
 This generous addition to the resources of the Foundation will pro- 
 vide, at the end of ten years, a large reserve, available, principal and 
 interest, for the payment of pensions. This reserve, together with the 
 income of the Foundation, will enable the trustees to expend during the 
 next forty-five years in meeting the expectations of the teachers in the 
 associated institutions over fifty millions of dollars. 
 
 Even this large sum is not sufficient to cany out the present rules 
 without some modifications, and as a part of the agreement to this joint 
 arrangement, the trustees of the Corporation attached the following 
 condition : 
 
 "The trustees of the Carnegie Foundation shall now and hereafter, 
 from time to time as may prove necessary, revise their rules so that the 
 pensions provided for shall not exceed the financial resources of the 
 Foundation." 
 
 The trustees of the Carnegie Foundation have now a definite sum 
 with which to deal, and the revision of the rules in accordance with the 
 agreement with the Corporation is now their first duty. 
 
 The general principles upon which this revision should be based seem 
 clear. Men within measurable distance of the retiring age have expec- 
 tations of a very definite character. To some extent their plans for the 
 future are founded upon a retiring allowance at sixty-five. On the other 
 hand, teachers who are many years from retirement have no such defi- 
 niteness of expectation, and have not altered their life plans in the 
 prospect of a pension many years hence. Furthermore, younger teachers 
 will obtain thru the new Insurance and Annuity Association far greater 
 advantages in the way of cheap insurance and annuities than older men. 
 From every consideration of equity, therefore, it is desirable that such 
 revision as is necessary shall be so planned as to affect the retirement of 
 older men as little as possible and to apportion changes in the retiring 
 
8 STATEMENT TO THE TEACHERS IN 
 
 allowances of younger men with a view to the benefits they will enjoy 
 from the Teachers Insurance and Annuity Association. 
 
 The nature and extent of the readjustment that must be made will 
 be more clearly understood if the resources and expectations are stated 
 in terms of "present values'" ' rather than in estimated gross amounts 
 payable thru a long term of years. Stated in present values, as of De- 
 cember 31, 1917, the situation is as follows: 
 
 Resources available for allowances in associated institutions $26,000,000 
 
 Amount required to pay pensions now in force 5,700.000 
 
 Available for allowances to those now in active service $20,300,000 
 
 Estimated present value of expectations under the existing rules $28,000,000 
 
 Reduced to its simplest terms, the problem confronting the trustees is 
 to devise a plan of retirement for those now in service in the associated 
 institutions which will reduce tlieir obligations by approximately eight 
 million dollars (present value), while meeting reasonable expectiitions in 
 the fullest possible measure. Furthermore, it is the duty of tlie trustees 
 to propose now such measure of retrenchment as nearly tis it can be ascer- 
 tained in order that equal justice be done, otherwise the drastic reduc- 
 tions that may be necessary fifteen or twenty years hence will be entirely 
 at the expense of men whose pensions fall in at a later date. AVith the 
 aid of expert actuaries the executive committee has examined every 
 feasible assumption for bringing the cost of the future pension load within 
 thehmitofits known resources. It has tiikcn into consideration all tlie 
 suggestions of the sissociated institutions' and of the .Vmerican Asso- 
 ciation of University I'rofessors.' l^ike all problems in which pensions 
 are concerned, it is only partly actuarial. The underlying assumptions 
 which touch the questions of equity and of availability to teachers are 
 matters of general judgment. 
 
 There are only three feasible methods of reducing tiie future cost of 
 the estimated load: (1) to cut off entirely tiie expectiitions of a large 
 
 ' Prrnrnt viiliie la thnt mim which, if In hand December SI. 1917. and invested In «uch i\ vrny n.« to renllie Interest at 
 the aMume<l mte. will exnctly niimcv to meet all oblicatlnnn iw they mature, and will be entirely exhaiuted. both 
 principal and intere»t. in Ihc procew. if the BMumptloni repinlinK mortality, aire of retirement, amount of annul- 
 tien, etc.. arc realiie<l In exporience. 
 ■ Publiahed in full in the Elrtynth Annual Rrporl. 
 
 • " If It »houUI be found that the financial resources of the Foundation and the fund» which may lie availed of by 
 it are iniutncient for lhl» purpon*' Uien. of the variouiiunceitiona which have been made for reducinx the l>eneflta 
 of the exUtinc lyatero. we regard a gradual clunie In the minimum ace of retirement aj pcrlupa the leaat objec- 
 tionable."— l«l(l Report of the Committee on Penaloaa of the American Aaaorlallon of L'niveraity ProfcMor*. 
 
ASSOCIATED COLLEGES AND UNIVERSITIES 9 
 
 number of teachers, (2) to raise the minimum age of retirement, or 
 (3) to cut down the value of the average pension. 
 
 The first method has been rejected as inequitable. It is recognized 
 that the financial value of the expectation of a teacher at age 30 is very 
 different from that of another teacher at age 60, but the equity of the 
 expectation, whatever its cash value, is the same. It would be entirely 
 feasible to make a solution of the problem thru either one or the other 
 forms of reduction. If the minimum age of retirement is at once raised 
 to 70 years, the problem would be solved. On the other hand, the same 
 result can be effected by cutting down all retiring allowances about one- 
 third. 
 
 The objection to the adoption of either of these measures, to the ex- 
 clusion of the other, is so weighty that some compromise plan is inev- 
 itable. If the minimum age of retirement were arbitrarily raised to 70, 
 not only would such a radical change produce much hardship and dis- 
 appointment to teachers, but the plans of institutions which have 
 fixed an earlier date of retirement would be upset. While the date at 
 which a teacher ought to retire varies with the individual, to compel 
 all teachers to wait to 70 years of age for retirement would go far to 
 destroy the value of the retiring system both to the teachers and to 
 the colleges. 
 
 On the other hand, if a sweeping reduction of allowances were under- 
 taken, the burden would fall with most distressing effect upon those who 
 have the greatest claim to consideration — those who will retire in the 
 near future. 
 
 It has been found possible to devise a plan under which the teacher 
 may either have retirement at 65 or the full pension, or such adjustment 
 between the two as may best suit his individual needs. 
 
 The moment the matter is closely examined it becomes evident that 
 the question of minimum age at which retirement may be had cannot 
 be separated from that of the amount of the average pension. For ex- 
 ample, a retiring allowance of $1500 for man and wife available at age 
 65, one of $1980 available at age 67, and one of $2370 available at age 
 70 are actuarially equivalent. The two questions cannot be separately 
 handled : as soon as the amount of money available is definitely limited, 
 a teacher who retires at the age of 70 is equitably entitled to a larger 
 
10 STATEMENT TO THE TEACHERS IN 
 
 pension than he would have received had he retired at 65. He cannot 
 equitably claim the same pension at do that he could at 70. One other 
 consideration must be recognized. The man within measurable disUuice 
 of retirement has expectations of a very definite character. To a consid- 
 erable extent his future is planned upon a stated retiring allowance. He 
 is too old to avail of the advantages of the Teachers Insurance and An- 
 nuity Association to provide an annuity to supplement his pension. Men 
 further away from retirement have not framed their life plans upon a 
 definite retiring allowance years lience. and in addition tliey can by verj' 
 moderate payment secure annuities supplementing their pensions. Thus 
 a man of 45 by payment of §04 a year could provide a $1000 annuity 
 available between the ages 05 and 68, or a man of 30 by pa^niient of §34 
 a year could obtiiin a one thousand dollar annuity contract available 
 between 05 :md 70.* 
 
 A teacher in an associated institution will, of course, be able to make 
 such provision for insurance or annuity as he sees fit thru the Insurance 
 Association, witiiout prejudice to his expectation of a retiring allowance 
 from the Foundation. 
 
 Careful actuarial analysis of tlie problem indicates that the resources 
 available will suffice to support a system of retiring allowances for the 
 teachers who were in associated institutions on November 17, 1915, 
 upon the following rules: 
 
 I. The minimum age at whicli allowances will be granted (except on 
 the basis of disability) sliall remain at 0.3. 
 
 II. The maximum allowance available to a tcaclier shall contimie 
 to be computed upon the present formula. Allowance eipials one-half 
 active pay plus §400. 
 
 III. The maximum allowance shallbe available upon the present basis 
 to all teachers reaching the age of 65 on or before June 30, l'.)23. 
 
 IV. The maximum allowance shall be available after .Tunc 30, r.)'23, 
 on the following terms: 
 
 Ik'twit'ii .Iiilv 1, l!)y:5, and June 80, 1925, niaximum allowance at 66 
 Ik'twecn .lulv 1, 19ii5, and .Tuml- 30, 192(5, maximum allowanc-e at 67 
 Bi'twitMi Julv 1, 1926, an<l .lime 30, 1927, maximum allowantx- at 68 
 Betwwn July 1, 1927, and Juno 30, 1928, maximum allowance at 69 
 
 'The»e fi»iiri-< nrc on llir iiMumptlon Uint In ciuh- of dentil In the Intennl Ihc accumulnllon la not rcturnnl. An 
 option on the Inniii or rolurn to tho rstjitc of the ilit-edent will ulioi he ofTered. 
 
ASSOCIATED COLLEGES AND UNIVERSITIES 11 
 
 V. After June 30, 1928, the maximum allowance shall be available 
 at age 70. 
 
 VI. For those whose allowances begin below the age at which the 
 maximum allowance is available according to Rules IV and V the actual 
 allowance shall be the maximum allowance diminished at the rate of 
 one-fifteenth for each year by which the age at which the maximum is 
 available, is anticipated, due allowance being made for fractions of a 
 year. 
 
 VII. For those reaching 65 after June 30, 1923, the allowance of a 
 teacher who is unmarried, or whose wife is not living, shall be two-thirds 
 of the allowance as fixed by the preceding rules. In the cases of teachers 
 retiring on a salary of Si 800 or less this reduction shall be 15 per cent. 
 
 The rules framed above are definite and simple. Any teacher can at 
 once determine from them his retiring allowance. He needs to know only 
 his age and his active pay at the time of retirement. 
 
 To illustrate. A teacher aged 57 in ISIay, 1918, will be 65 years old 
 in 1926. Assume that he is married and that his salary is such as to give 
 him a retiring allowance of $3000 under the present rules. Under the 
 proposed plan, $3000 would be his maximum allowance, which he could 
 receive when he became 70 in 1931. If he elected to retire at G5, 66, 67, 
 or 68, in 1926, 1927, 1928, or 1929, he would in each case anticipate the 
 maximum by two years, and his allowance would be $2600 ; if he retired 
 at 69, his allowance would be $2800. If he were unmarried, his allowance 
 would be two-thirds of these respective amounts at the corresponding 
 ages. 
 
 To illustrate again. A teacher aged 50 in May, 1918, will be 65 in 1933. 
 Assume him married and entitled to a maximum retiring allowance of 
 $3000, available at 70. If he elected to retire at 65, his allowance would 
 be $2000; at 66, $2200; at 67, $2400; at 68, $2600; at 69, $2800. If un- 
 married, or after the death of his wife, he would receive two-thirds of 
 the respective sums at the corresponding ages. 
 
 It goes without saying that these rules are not adopted with the ex- 
 pectation that the age 68, 69, or 70 is suitable to the great body of teach- 
 ers as a time of retirement. Nor is it assumed that the outcome of this 
 action will result in the retention of any large proportion of men to 
 
IJ STATEMENT TO THE TEACHERS IN 
 
 such age. Any teaclier who desires to do so may retire at 65. For those 
 within ten years of retirement the rules are so framed that they may 
 retire with small changes in their expected allowances. The question 
 how long a teacher shall remain in service is one between him and his 
 college. 
 
 These measures have been framed upon the basis of exhaustive actu- 
 arial computations. Such estimates necessarily involve many sissump- 
 tions, and the stiitement of the result in dollars gives a fallacious im- 
 pression of accuracy. It is impossible to forecast absolutely the rate of 
 interest over long periods, the rate of separation, the result of changes 
 brought about by the war, — all weighty factors. The estimates are be- 
 lieved to be conservative in the sense that they have taken into account 
 all sources of expense. The next five years may show a situation that 
 may make possible a more liberal scale for the future. 
 
 It must be clearly understood that the trustees of the Foundation have 
 a stated amount with which to deal, and if the experience of the next 
 five or ten years shows a wide variation from the assumed conditions, 
 they may be compelled to make such changes as may bring the expendi- 
 tures within their resources. 
 
 While the income of the Foundation will thus be devoted for many 
 years to come to the payment of pensions to teachers in the associated 
 colleges, the endowment itself, consisting of fifteen millions of dollars, 
 will remain intact. It will devolve upon the trustees of the Carnegie 
 Foundation of the next generation to determine how they can, at that 
 time, best use the income of this endowment in carrying out the objects 
 designated by Mr. Carnegie in his letter of gitl and embodied in the 
 Act of Congress incorporating the Foundation. 
 
 The gifl of the Founder of this institution was conceived in the most 
 generous spirit. It has enabled hundreds of college teachers grown old 
 in service to retire in comfort and security. As a permanent solution of 
 the problem of the protection of teachers from tlie risk of dependence, 
 the plan originally adopted by Mr. Carnegie and by the trustees of the 
 Foundation was insulHcicnL It iuis serveil its purpose. The real gain to 
 colleges, both of the associated list of institutions and of those not so 
 related, lies in the fact that the pension problem has been worked out 
 and its solution provided for upon a basis that is reasonable, sound, and 
 
ASSOCIATED COLLEGES AND UNIVERSITIES 18 
 
 enduring. For fifty years to come the Foundation will devote its income 
 and its accumulated reserve to the fulfilment of the expectations of 
 the teachers admitted to the benefits provided under the old plan. The 
 solution of this question that has finally been reached is made possible 
 by the generous aid of the Carnegie Corporation. It is regarded by high- 
 minded and thoughtful men looking at the matter from a detached 
 and disinterested point of view as a fair and generous fulfilment of the 
 expectations of these teachers. It is believed that it will be so regarded 
 by the teachers themselves. The obligations in this matter do not lie 
 whoUy with the trustees of the Carnegie Foundation. There are also obli- 
 gations upon the teachers and the colleges who have been for twelve 
 years, and who will continue to be for seventy-five years to come, the 
 chief beneficiaries of the trust. The common obligations of trustees and 
 beneficiaries have perhaps been nowhere better stated than in the fol- 
 lowing words from the President of the American Association of Uni- 
 versity Professors in his presidential address of last year : 
 
 "The founder's idea was a noble and unique one; himself and his 
 trustees are entitled to our heartiest gratitude and cordial sym- 
 pathy. The grumbling and even hostile attitude sometimes ex- 
 hibited is not justifiable. All parties can and should approach the 
 subject in a spirit of desire for frank exchange of views and of mu- 
 tual support. . . . The situation at the outset was novel ; the enter- 
 prise was in some degree inevitably experimental and alterable. The 
 trustees were and are morally entitled to make such changes as may 
 seem absolutely necessary; the propriety of fulfilling natural ex- 
 pectations of beneficiaries being as obvious to the trustees as to 
 others. AVhatever change of plan is proposed will properly rest for 
 its adoption upon the just and enlightened judgment of the trus- 
 tees after full deliberation." 
 
 The present memorandum aims to set before the teachers of the as- 
 sociated colleges the principles upon which the trustees of the Carnegie 
 Foundation and of the Carnegie Corporation have acted, and to make 
 clear to teachers of all ages the exact nature of the security underlying 
 their expectations. It is not intended to answer in detail the questions 
 pertaining to each individual. The Teachers Insurance and Annuity As- 
 sociation will be incorporated as soon as the committees appointed by 
 the actuarial societies have made their suggestions available. Teachers 
 
14 STATEMENT TO THE TEACHERS 
 
 in the colleges of the United States and Canada can then obtain from 
 the actuary of the Association full detiiils as to insurance and annuities, 
 as well as any advice they may desire as to the policies suited to indi- 
 vidual circumstances. In the Twelfth Annual Report of the Foundation, 
 now going thru the press, the plan of the Teachers Insurance and An- 
 nuity Association is fully explained. The trustees of the Carnegie Foun- 
 dation meet in the latter part of April to restate their rules for the future 
 admission of institutions to the associated list as affected by the estab- 
 lishment of the Teachers Insurance and Annuity Association. It will be 
 understood that the Carnegie Foundation and the Teachers Insurance 
 and Annuity Association of America are entirely distinct organizations 
 under separate boards of trustees, — the former in the eyes of the law a 
 charitable institution operating under a charter issued by the Congress 
 of the United States; the latter in the eyes of the law an insurance com- 
 pany operating under a charter granted by the State of New York and 
 subject to the scrutiny of the State Department of Insurance in exactly 
 the same manner as any other insurance company. 
 
 liy direction of the Trustees of the Carnegie Foundation: 
 
 Nicholas Mihray Butler 
 Robert A. Franks 
 Arthur T. Hadley 
 Alexander C. Humphreys 
 Henry S. Pritchett 
 Jacob Gouli) SrnrRMAN 
 Frank A. Vaxderlip 
 
 Ejrenit'ive Committee. 
 
 April 2^, 1!)I8. , 
 
Gaylord Bros. 
 
 Mak*r« 
 Syracus*. N V. 
 
 'u c:^a4b 
 
 
 UBR^^^^^ 
 
 373727 
 
 UNIVERSITY OF CAUFORNIA UBRARY 
 
 UNIVERSITY OF CALIFORNIA LIBRARY 
 BERKELEY 
 
 THIS BOOK IS DUE ON THE LAST DATE 
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 MAY 6 IS^S 
 
 B 5 19^ 
 
 JUi2 5i987 
 
 miTSDisc JUL 011^7