The Retirement Association at the University of Washington

A History

Neal O. Hines

• Publisher: University of Washington Press
• Year: 2016
• ISBN:
  9780295807010
• Topic: History
• Subtopic: North American History
• Index: History

The Retirement Association at the University of Washington

Chapter One
Notes from the Prehistory:
1937-1947

THE 1937 REPORT to the legislature by the University of Washington regents—the biennial report required by law—presented as its introduction a summary outline of institutional problems and needs prepared by Lee Paul Sieg, then in his third year as president. In concluding his letter Sieg wrote:

The problem of taking care of the aged is very much in the minds of all of us today. This is a real problem at the University. The stipends of our staff members are not sufficiently ample to insure a competence after the upper age of useful service has been reached. Most American colleges have provided a plan of building up annuities whereby the institution contributes 5 percent of the annual salary and the individual teacher an equal percent. At the present time the University of Washington has no such plan. We are, therefore, extremely desirous of having the coming Legislature enact a law making such a plan possible. The cost to the state on the basis of our present salary rolls will be about $60,000 per year.¹

Students of the years of the Great Depression and of the Roosevelt New Deal will know why "taking care of the aged" was very much in mind. The new Social Security program—the Old Age and Survivors Insurance system—had been in place since August 1935, but it was neither conceived nor designed as a retirement program. It was a recognition, for the first time in the United States, that society had some minimum responsibility to offer security to the elderly and the indigent. But Social Security offered no security to university faculty members or other professionals. On many campuses, in fact, the idea of a formalized retirement system, especially one requiring financial participation during the working years, was not widely popular, and was regarded by some as almost unprofessional. A program designed particularly for college faculties had been available since 1918: the Teachers Insurance and Annuity Association (TIAA) program created under the auspices of the Carnegie Foundation for the Advancement of Teaching. But after twenty years this avenue had not been explored by institutions in the state of Washington. Now, in 1937, the retirement question was asking to be faced. Hence Sieg's statement. And the legislature did, in fact, soon approve authorizing legislation. In Chapter 223, Laws of 1937, Old Age Annuities for Teachers and Employees of State Educational Institutions, the general terms were set. The shape of an institution's retirement plan was left up to the regents or trustees, but the institution should pay no more than half of any annual premium and no more than 5 percent of the participant's salary, and it could not "render any assistance" to a "teacher or employee" with less than two years of service. Participation would be open not to faculty members alone but to nonacademic staff members in designated categories.

IT WAS not until 1939 that the University retirement system was established. The prospect had been discussed repeatedly by members of the Board of Regents, and there had been further—and far more intensive—examinations of the proposition within the University of Washington Instructors' Association (later the University Senate). A retirement system would be open to both faculty and nonfaculty personnel, of course, but it is remembered that there was some vocal opposition on the faculty side from persons who felt themselves capable of making their own retirement arrangements and from others who simply disliked the idea of putting aside 5 percent of their very skimpy salaries each year. But who, in those years of economic distress, could be indifferent to such considerations? The University was, in fact, suffering through its own Great Depression and one that had a singular twist.

University people of later generations have difficulty visualizing a time when the salary of a senior professor was rarely over $4,000 and the stipend of the "associate," who occupied the lowest academic rung, about $1,800 or less. It was not until 1936 that the University had required retirement at age 70, inspiring some to recall sardonically that the old rule had been, "Teach 'til you die." In requiring retirement at age 70, the regents of 1936 also sought to erase any potential hardships by specifying that persons reaching retirement age might receive "partial or full retirement" upon recommendation of the president "with due consideration for the personal circumstances of the individual to be retired" (University Faculty Handbook, 1946). Sieg had left a triple deanship at the University of Pittsburgh to accept the presidency of a University that had its share of fine teachers. But the challenge he faced was to complete the healing necessary after the "politicization" of the institution following the bitter 1926 confrontation between a hard-line governor, Roland Hartley, and the distinguished Henry Suzzallo. Thus the healing was taking place in a time of unusual stress, with faculty morale at ebb and the state's financial support exceedingly low. The University's budget request for the 1937-39 biennium was just $5,306,000, with $4,571,000 for salaries, wages, and operations. To the University Building Fund, then at $735,000, were going the $80,000-a-year rental payments slowly accumulating from the Metropolitan Building Company's lease of "the old University grounds," the University's first campus in downtown Seattle. Healing was by reconciliation with the hard facts of hard times. The academic wheels turned, but student enrollment was down—to something below 10,000—and buildings suffered from lack of maintenance, the grounds scarcely tended.

THE REGENTS who would make the decision regarding a retirement system were a strong group, deep in experience. President of the board in 1937 was Philip D. Macbride, Seattle business leader and a regent since 1933, who had been instrumental in persuading Sieg to accept the University presidency.* His associates were Alfred Shemanski, another Seattle businessman, the board's vice president, and Winlock Miller, Werner Rupp, Edward P. Ryan, and Thomas Balmer. (There was a vacancy occasioned by the death of Robert Montgomery, Puyallup publisher, his successor not yet appointed.) Ryan was a Spokane investment banker widely known for his public service activities, and Balmer, counsel for the Great Northern Railway, was early in what would become a twenty-five year career as a regent. But Miller and Rupp, who had returned to the board after the Hartley years, were the true veterans. Miller, a Yale law graduate who managed family properties, had served his first terms between 1913 and 1926. Rupp, publisher of the Aberdeen World, had begun his service in 1921. Thus the six sitting regents had not only depth of experience in business and in public service but dedication to the University as an institution and a common desire to see it prosper. Secretary of the board was the much-loved Herbert T. Condon, who was himself becoming something of an institution.

The movement toward establishing a retirement system was appropriately deliberate. Early in 1938 the Instructors' Association had asked its Insurance Committee to make a comparative study of the plans offered by various underwriting companies. Chairman of the committee was Arthur N. Lorig, Accounting. The members included others whose names were familiar on campus—James K. Hall, Harry E. Smith, Elizabeth A. Soule, A. H. Taub, and Francis G. Wilson, who also was chairman of the Association.* By April 1938 the committee had submitted its findings to the Association board, and the study—a paper of seven closely typed pages—was published in the Association newsletter, circulated to the faculty, and discussed at a meeting in Condon Hall on May 8. The committee had selected TIAA. "After examining and comparing annuity plans submitted by various insurance companies," the committee said, "it was decided to recommend that of the Teachers Insurance and Annuity Association of America. Its plan seems most advantageous, considering all factors involved."²

The Instructors' Association had recommended a carrier, and the report went to the regents. But approval of a system still lay ahead. The basic principles nevertheless had been established—mandatory participation after two years of employment, 5 percent contributions by the participant and the University, acceptance of benefits at age 70. In April 1939 there was a campus vote on whether the University should install a retirement system, and when the regents met on May 6 President Sieg reported overwhelming approval—by the faculty, 318 to 24 (12 not voting), and by nonacademic staff, 294 to 11 (5 not voting). When the regents met again July 21, 1939, the major item of business was the retirement question, but this time the subject was the carrier. Upon Miller's motion, seconded by Macbride, the board approved the Teachers Insurance and Annuity Association as underwriter of the University annuity contracts. The regents' resolution stated: "Under the provisions of Chapter 223, Laws of 1937, a retirement plan is hereby established which shall apply to all full-time members of the faculty and non-academic staff who by law receive $100.00 per month or more, whether engaged on a nine, ten, eleven or twelve months basis."³

The TIAA program undoubtedly was the readiest, and best, solution. The contracts were designed for academic communities, and were portable in the sense that transfer could be made from one institution to another when a faculty member moved. An "Amendment" paragraph in the regents' resolution nevertheless seemed to keep open the University's options: "The University . . . reserves the right to discontinue or reduce its contributions toward retirement annuity premiums at any time." But this, doubtless, was a provision born of Depression. The program would go into effect September 1, 1939.

THE TIAA PROGRAM to which the University now subscribed was an evolutionary product of Andrew Carnegie's long and passionate interest in support of education. As early as 1890, when Carnegie became a trustee of Cornell, he had been shocked, he later said, "to find how small were the salaries of the professors." He concluded that it was unlikely a professor could save for his old age. Knowing that even his millions could not help improve academic salaries, he turned to thoughts of an endowment that might provide relief, at retirement, for professors at "leading" institutions. By 1905 Carnegie had allocated $10,000,000 to create the Carnegie Foundation for the Advancement of Teaching, its major objective "to provide retiring pensions for the teachers of Universities, Colleges, and. Technical Schools" in the United States, Canada, and Newfoundland. Carnegie was of course thinking of the private institutions like Cornell, and the teachers' pensions were to be free. But a decade of trial proved that no endowment could carry the burden of free pensions, and although the Foundation at one point established a list of private institutions considered "leading" in stature, it was realized that public institutions also deserved places among the select. Carnegie accordingly supplemented his original $10,000,000 gift with another of $5,000,000. Additional allowances came from time to time from the Carnegie Corporation of New York, the broadest of Carnegie's endowments, organized in 1911. This total experience with pensions led to the appointment in 1916 of a Commission on Insurance and Annuities representing the American Association of University Professors (AAUP), the Association of American Universities, the National Association of State Universities, and the Association of American Colleges. From the commission studies came TIAA, incorporated in New York in 1918 with an initial grant of $1,000,000 from the Carnegie Corporation.* It was organized as a nonprofit insurance company, its offices with those of the Foundation, its stock voted by the Corporation in trust for the colleges, and its expenses paid by the Corporation and the Foundation. After 1935 the Corporation made additional grants to TIAA to increase the reserves on annuity contracts issued after 1918, the support for reserves and expenses ultimately exceeding $17,000,000. In 1938 the Corporation transferred TIAA stock to an independent board, the Trustees of TIAA Stock, a membership corporation created by act of the New York State legislature, and this seven-member body was the sole "stockholder." TIAA was served, at the management-policy level, by a twenty-member board, four members of which were elected by the policyholders.⁴

This was the decades-long history of the retirement plan that the University of Washington, quite logically, had chosen. Recent developments in New York may have made many institutions more aware, by 1939, of the advantages inherent in a program created for the academic community. But there was yet no rush to enroll. By the time the United States entered World War II in 1941, just 209 institutions had moved into the TIAA retirement program.

Washington State College, not yet a university, did not establish its retirement system until 1942, when the Aetna Life Insurance Company became the underwriter. The state colleges of education belonged to the Washington State Teachers Retirement System.⁵

IN THE ERA of worldwide revolutionary change following World War II the University of Washington went through a cycle of pell-mell expansion followed by a decade of retrenchment or, at best, adjustment to the new realities. Campus building needs that had accumulated during the war years were being met as quickly as could be managed while the campus was flooded by students of a new kind, the war veterans entering higher education under the G.I. Bill. The 1944 enrollment of 4,500 had risen by 1947 to 16,700, and classes were being held on Saturdays and Sundays. The largest project of all was the creation of a new Division of Health Sciences, joining the Schools of Medicine and Dentistry with the College of Pharmacy and the School of Nursing. The health sciences development was the particular concern of Raymond B. Allen, who succeeded Sieg as president in 1946. Allen brought unusual academic preparation as holder of both M.D. and Ph.D. degrees and a record of experience in medical practice and medical administration. In those years a sense of newness and change was everywhere. New deans and department heads were being joined by new faculty members, many staffing the new programs of federally sponsored research, particularly in the sciences. The University, totting up the millions of dollars now coming from Washington, D.C., for research support, began to swagger just a little when it found itself high among the institutions at which the faculties and research staffs were inspiring such confidence. President Allen, in his relatively brief tenure, was an indefatigable spokesman among federal agencies for the University and its new Health Sciences Division.

A leveling-off was inevitable, of course, and by the 1950s it had begun. Allen, resigning in 1951, went briefly to a federal post, then back to higher education at UCLA. Professor H. P. Everest and a committee of deans ran an interim administration until the new president, Henry Schmitz, took over in 1952. He was the first alumnus to occupy the chair. And by 1952 retrenchment in the realm of state support was in the air. Charles E. Odegaard, coming on from Michigan with a vision of the University's future and a determination to fight for it, was encountering the state's financial chill when he succeeded Schmitz as president in 1958.

HOW CAN these events possibly have meaning in a history of a retirement association? The answer is that certain prime conditions for later action were being created. Basically, the campus climate was not one favorable to financial adjustments. Yet faculty members who had survived the Depression were reaching the peaks of their careers after World War II, and even if their retirement years were far ahead, it was becoming increasingly apparent that their retirement benefits, accumulating slowly, would be insufficient without special accommodations.

The accommodations, approved by the regents, simply illustrated the levels of contemporary expectations for retirement. President Sieg, who had headed the University in Depression years and had led the move into TIAA, retired at $300 a month. Faculty retirees of that postwar era, whose stipends usually were below the $300-a-month level, included some of the University's most distinguished representatives. Among them were Professor Trevor Kincaid, Zoology, and Dean Elizabeth Soule, Nursing, each of whom had received the University's Alumnus Summa Laude Dignatus award, its highest honor. Men and women of scholarly distinction were having to supplement their retirement allowances from savings accounts or by engaging in consulting activities. Whatever the motivation—and certainly it was not entirely financial—by 1953 a group of sixteen retired deans and professors had banded together in a Retired Staff Association to offer their whole range of professional experience to industry, business, government, and education. The idea came from Professor Henry Benson, Chemical Engineering, and the chairman of the panel was Professor H. B. Densmore, General Studies. The group soon became known as "Brains, Inc.," and for a time it received wide attention in the national press. Kincaid and Soule were members.

Thus it was by the 1950s. The postwar retirees were making do. To newer faculty members retirement seemed too remote to require immediate attention. Changes in retirement policy would come, but slowly, some in response to legislative action, some as a result of internal and interinstitutional pressures. In any event, the decade of the 1960s would set the stage for the 1970s and the organization of the UWRA.

* Macbride was the son of a former president of the University of Iowa. Graduated from Iowa and admitted to the bar in Montana in 1908, Macbride had come to Seattle to build a career in Puget Sound ferry and other transportation business enterprises. Sieg had been a student at Iowa when Macbride's father was president there.

* A member of the Instructors' Association board was Vernon A. Mund, a young member of the Economics faculty, who in the 1960s would become a major figure in the retirement system development story.

* As early as 1908 the University regents, learning that Carnegie funds now would cover "superannuated professors" at public institutions, asked President Kane to investigate (Regents Minutes, April 25). Nothing happened. By 1919 the regents were sufficiently concerned with "tea...