Laws cut school employee benefits
Less Security for Teachers
Each year, thousands of Texas teachers heading for retirement get an unpleasant surprise: provisions in federal Social Security law that reduce the amount of benefits they can receive.
The Government Pension Offset (GPO) and Windfall Elimination Provision (WEP) cost many retired Texas teachers thousands of dollars each year--money that can mean the difference between a comfortable retirement and financial difficulties.
Federal legislation that would repeal both provisions has languished in Congress for more than a year, but its supporters believe that support for the repeal is building.
In or out
Texas school employees are vulnerable to the GPO and WEP provisions because of the way Social Security and state programs have evolved.
The Social Security Administration (SSA) reports that 96 percent of all U.S. workers are covered by Social Security. Many of those excluded, however, participate in state and local government pension plans.
The federal government did not allow state and local employees covered by a retirement system to participate in Social Security until 1954. In the following decades, public employers across the nation weighed the question of whether to participate.
According to the National Education Association (NEA), state and local governments in 36 states opted to place their work forces under Social Security. Many governments in the other states, including Texas, chose not to join.
In Texas, state agency employees are covered by Social Security, but most teachers are not. According to the Texas Classroom Teachers Association, just 67 of Texas' more than 1,000 school districts participate in Social Security, and of those that participate, many cover only certain categories of employees.
Slicing the spousal benefit
Social Security provides benefits to the spouses and widows or widowers of persons who worked in jobs covered by the system. Initially, these benefits were established to compensate stay-at-home spouses. The GPO, however, can drastically reduce the income of married and widowed teachers.
Federal law prohibits "dual entitlement" to Social Security benefits. A person cannot receive both full Social Security benefits and full spousal or survivor benefits at the same time. Such persons' spousal or survivor benefits are offset by the amount of their own benefits.
When the federal government enacted the GPO in 1977, SSA began counting government pensions as Social Security benefits, even if the government in question did not participate in the program. This invoked the dual-entitlement ban.
The GPO now automatically reduces spousal or survivor benefits for persons who receive such pensions by two-thirds. SSA estimates that about 399,000 Americans had their benefits reduced due to the GPO in 2004.
Until June 30, 2004, many Texas teachers avoided the two-thirds cut in benefits by taking advantage of a "loophole" in federal law that allowed them to receive full spousal benefits simply by working in a position that participates in Social Security for as little as a single day. The employee had to retire from the position covered by Social Security to take advantage of the loophole. The closing of this loophole caused a sharp spike in Texas teacher retirements in the midst of an ongoing teacher shortage.
"Many teachers retired earlier than they wanted to," said Joyce Roberta Miller-Alper, a 35-year veteran educator who teaches government and economics at Spring Branch Independent School District's School of Choice. "They were good teachers, dedicated to children, and they wanted to continue, but they had to leave the profession [to protect their benefits]."
Your own money, a "windfall"
A 1983 amendment to the Social Security Act further limited benefits for many persons entitled to government pensions. The Windfall Elimination Provision was designed to prevent those who have worked in both Social Security-participating and nonparticipating jobs from receiving an unfair advantage under the formulas used to determine benefits.
Those formulas are weighted to ensure that workers retiring from relatively low-wage jobs receive benefits equal to a greater share of their average earnings than benefits received by those who earned substantially more money over their careers.
Prior to adoption of the WEP, persons who worked briefly in low-paying jobs covered by Social Security and then moved into careers not covered were reflected in the formula as low-wage workers, even if their earnings were high in their later jobs.
WEP revises the benefit calculation for such persons, reducing their monthly Social Security benefit by a maximum of $313.50 in 2005. The American Federation of State, County and Municipal Employees estimates that about 635,000 retirees have been affected by WEP, with 60,000 more losing benefits each year.
exas teachers have been hit particularly hard by this provision because so many of them come to the profession after other careers. Texas schools have aggressively recruited candidates produced by alternative certification programs rather than colleges of education. Many of these teachers have extensive work histories covered by Social Security.
"The world's changed now," said Miller-Alper. "You've got people coming in later in life."
Such persons stand to lose thousands each year due to WEP. Miller-Alper previously taught in Florida, with Social Security coverage.
"That is your money that you put into the system," she said. "But because I've come to Texas, I'm only going to receive 40 percent of what I'm entitled to. There's no rationale for how that's fair."
Toss WEP and GPO?
Opposition to WEP and GPO has increased significantly, due in part to educational efforts by the NEA and other teacher advocates. In Texas, the closing of the spousal loophole added new impetus to the effort.
"It is unfair for people who have spent their time in public service to be so adversely affected," said Donna New Haschke, president of the Texas State Teachers Association. "We've got such a teacher shortage, and when [prospective teachers] find out they will be penalized, [they ask] 'Why would I want to do this?'"
Doug Rogers, executive director of the Association of Texas Professional Educators (ATPE), agreed.
"ATPE believes the offsets have a negative impact on the shortage of certified teachers in Texas," said Rogers. "Repealing them would be an effective way to attract new teachers to the profession and retain experienced educators who may be considering leaving."
Repeal supporters favor House Resolution 147 and the Senate companion bill, S.B. 619, the Social Security Fairness Act, originally introduced in January 2005. The Fairness Act, which would repeal both provisions, has attracted 305 cosponsors in the U.S. House of Representatives and 24 in the U.S. Senate.
Even so, the bill has remained locked in the House Ways and Means Committee, almost certainly due to its hefty price tag. In June 2005, an assistant deputy commissioner of SSA reported that eliminating both provisions would cost the federal government about $61.9 billion over 10 years.
But the election of Rep. John Boehner of Ohio as majority leader of the House and the subsequent appointment of Rep. Buck McKeon of California, a primary sponsor of the Fairness Act, as head of the Education and Workforce Committee, may have changed the outlook for the bill.
"Now we have a new committee chair who's been very, very favorable about the repeal of these two provisions," said Haschke.
NEA has described McKeon as a member of Boehner's "inner circle," and educators have high hopes for new action on the bill.