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Testimony to Congress by the NEA on Social Security Offsets

January 16, 2008

Mr. Chairman and Members of the Subcommittee:


On behalf of the National Education Association's (NEA) 3.2 million members, we would like to thank you for the opportunity to submit comments on the Government Pension Offset (GPO) and Windfall Elimination Provision (WEP). We commend the Subcommittee for holding this important hearing on a matter of great concern to educators and other public employees.

NEA strongly supports complete repeal of the Government Pension Offset and the Windfall Elimination Provision, which unfairly reduce the Social Security and Social Security survivor benefits certain public employees may receive. 

The Government Pension Offset: A Devastating Loss of Benefits for Widows and Widowers

The Government Pension Offset reduces Social Security spousal or survivor benefits by two-thirds of the individual's public pension. Thus, a teacher who receives a public pension for a job not covered by Social Security will lose much or all of any spousal survivor benefits she would expect to collect based on her husband's private sector earnings. 

Congress and the President agreed in 1983 to reduce the spousal benefits reduction from a dollar-for-dollar reduction to a reduction based on two-thirds of a public employee's retirement system benefits. This remedial step, however, falls well short of addressing the continuing devastating impact of the GPO. 

The GPO penalizes individuals who have dedicated their lives to public service. Nationwide, more than one-third of teachers and education employees, and more than one-fifth of other public employees, are not covered by Social Security, and are, therefore, subject to the Government Pension Offset.

Estimates indicate that 9 out of 10 public employees affected by the GPO lose their entire spousal benefit, even though their deceased spouse paid Social Security taxes for many years. Moreover, these estimates do not include those public employees or retirees who never applied for spousal benefits because they were informed they were ineligible. The offset has the harshest impact on those who can least afford the loss: lower-income women. Ironically, those impacted have less money to spend in their local economy, and sometimes have to turn to expensive government programs like food stamps to make ends meet.

NEA receives hundreds of phone calls and letters each month from educators impacted by the GPO. Many are struggling to survive on incomes close to poverty, fearing they will be unable to cover their housing, medical, and food expenses on their meager incomes. For example, consider the following stories:

From NEA member Cecilia in Texas:

"My husband died 3 years ago. The Government Pension Offset will leave me with my small Texas Retirement System pension of $216.00 a month and only $500.00 a month from my husband's survivor benefit, totaling to $716.00 a month. I would have received $1400.00 a month from both sources. I am too old to find another job. If I had known this, I would have never taken this low-paying job."

From NEA member Joyce in Rhode Island:

"I am a 69-year-old widow whose life is greatly affected by the Government Pension Offset Law. I am unable to collect my deceased husband's Social Security benefits. I worked under Social Security for 18 years, and he also paid into the plan for 32 years.... I am now experiencing a financial crisis because of the rising prescription drug costs. They average about $379.00 per month. I receive my pension and $100.00 per month from Social Security. My health insurance is $114.00 per month. I have gone back to work 15-20 hours per week as an associate in the Stop and Shop grocery chain bagging groceries. It seems so unfair."

The Windfall Elimination Provision: A Shocking Loss of Earned Benefits

The Windfall Elimination Provision reduces the earned Social Security benefits of an individual who also receives a public pension from a job not covered by Social Security. Congress enacted the WEP ostensibly to remove an advantage for short-term, higher-paid workers under the original Social Security formula. Yet, instead of protecting low-earning retirees, the WEP has unfairly impacted lower-paid retirees such as educators.

The WEP penalizes individuals who move into teaching from private sector employment, or who seek to supplement their often insufficient public wages by working part-time or in the summer months in jobs covered by Social Security. Educators enter the profession often at considerable financial sacrifice because of their commitment to our nation's children and their belief in the importance of ensuring every child the opportunity to excel. Yet, many of these dedicated individuals are unaware that their choice to educate America's children comes at a price -- the loss of benefits they earned in other jobs. 

While the amount of reduction depends on when the person retires and how many years of earnings he or she has accumulated, many public employees can lose a significant portion of the Social Security benefits they earned in other jobs. Like the GPO, the WEP can have a devastating impact on educators' retirement security. For example:

From NEA member Lee in Nevada:

"I was employed in private industry for 18 years, paying into the Social Security system. When I decided to become an educator, I did so knowingly taking an almost 50% reduction in pay, but felt that financially I could do this based on my investments, Social Security, and other retirement options that I had paid into and earned. Now I learn that the Government Pension Offset and Windfall Elimination Provision state that I am not entitled to my full investment in Social Security, or my spouse's investment. This is criminal! Public employees like educators, police officers, and firefighters should not suffer a penalty for dedicating their lives to public service."

From NEA Member Judith in Massachusetts:

"I am a special education teacher who began teaching in public schools at the age of 49. Before that I worked in the private sector in children's services and paid into the Social Security system for 28 years…. I assumed that with my earned Social Security I would be able to manage. Imagine my surprise to find that under the current Windfall Elimination Provision law, I'm being penalized for working in the public sector with some of its most challenged children, and will lose most of my Social Security benefit. Although I find teaching in public schools to be the most rewarding work I've done, as a single woman in my mid-fifties trying to prepare for retirement, I find that I may need to leave the profession. Is this what these laws intend?"

From NEA member Russell in Maine:

"After returning from Vietnam, I worked a couple of jobs, but decided I want to be a teacher. I went to the University of Maine. My wife and 4 children moved to Orono, Maine, while I earned my degree. With 4 children, I always worked at least one job and went to school. When I graduated, I was hired as a Physical Education teacher. I coached several sports to supplement my teaching salary. I also worked as a bartender, hunting safety instructor, pumped gas and finally as a club manager, all while teaching and coaching. As a club manager, I left home at 4:30 am, worked in my office until 7:30 am and then went to school. After school (and after practice or games) I went to my office at the club and worked until 8 or 9 at night. On weekends I worked 8- or 10-hour days at the club. Needless to say, I missed many dinners and activities with my family. My wife also worked a full-time job. But all 4 of our children graduated from college, are doing very well, and we are proud of them. After 25 years of teaching, I retire from education, but I am still working full-time in club management. Now when I am preparing to retire, I find it very unfair to be penalized because I am receiving Maine State Retirement. I worked hard for many years, both as a teacher and at other jobs. My wife and family sacrificed a lot, but we needed the money and never imagined that when retirement time came that I would not get back the money I contributed to Social Security. The Government Pension Offset and Windfall Elimination Provision are an insult and injustice to those of us who dedicated our lives to teaching."

The "Double Whammy": Educators Impacted by Both the GPO and WEP

Many NEA members report that they are subject to double penalties -- losing both their own benefits and spousal benefits due to the combined impact of the GPO and WEP. For example:

From NEA member Donna in Kentucky:

"I am a public school teacher with 19 years of experience. I worked and paid Social Security for 10 years prior to becoming a teacher. My husband also paid into Social Security for over 30 years before quitting his job due to being diagnosed with cancer. We are in debt due to his early retirement, and depend on two incomes. If he happens to die before me, I would lose my home because I would not be able to pay for it!"

From NEA member Alan in Illinois:

"My experience with the Government Pension Offset and the Windfall Elimination Provision is much like other teachers with one exception; it's a double "whammy" for me and my wife. Like most teachers who were the main family wage earners, I worked part-time jobs most (actually 15 of 27) of the years I taught. I have worked during the summers for a seed corn company, and Friday nights and weekends in a retail store. Along with the supplemental work while I was a teacher, I worked four and a half years in the business world before I entered teaching. I easily qualified for the necessary quarters for Social Security benefits. At retirement time you can imagine my chagrin to see the reduced amount I was to receive due to my teacher's retirement pension. That $300 or so per month would go a long way to help my meager teacher's retirement pay, which is constantly being eroded by increased medical plan costs. Then part two -- my wife, also a teacher, will not be able to draw any spousal/survivor benefits due to her teacher retirement should I precede her in death. The law is a penalty for public servants. These inequities must be corrected."

The National Impact of the GPO and WEP: Undermining Teacher Recruitment Efforts

The GPO and WEP have an impact far beyond those states in which public employees like educators are not covered by Social Security. Because people move from state to state, there are affected individuals everywhere. The number of people impacted across the country is growing every day as more and more people reach retirement age.

Perhaps most alarming, the GPO and WEP are impacting the recruitment of quality teachers to meet urgent national shortages. Record enrollments in public schools and the projected retirements of thousands of veteran teachers are driving an urgent need for teacher recruitment. 

At the same time that policymakers are encouraging experienced people to change careers and enter the teaching profession, individuals who have worked in other careers are less likely to want to become teachers if doing so will mean a loss of Social Security benefits they have earned. Some states seeking to entice retired teachers to return to the classroom have found them reluctant to return to teaching because of the impact of the GPO and WEP. In addition, current teachers are increasingly likely to leave the profession to reduce the penalty they will incur upon retirement, and students are likely to choose other courses of study and avoid the teaching profession.

For example,

From NEA member Margaret in Connecticut:

"After years of working at a university and then a non-profit organization I decided that my skills would be well-suited to become a science teacher. The first opportunity that was available, I returned to school to complete my certification. As a dedicated and passionate person who taught national science to children at my nature center, I was excited to be able to reach more students through the teaching profession. Now after these years of teaching and coming into the profession later in life, I feel BETRAYED. After much hard work and determination passing many tests and leaping through and over hurdles to become a teacher, I quickly find out how out world really feels about teachers and the important job they perform. I am using my expertise and skills from other professional work and all the Social Security contributions I have made during those years are lost!  In no way is the Government Pension Offset and Windfall Elimination a windfall for me…. Good people who would make excellent teachers later in their career will think twice about such a change. Had I known, I would have seriously reconsidered using my skills in the teaching profession. What sort of message are we sending to students who may think about the teaching profession? What kind of treatment for hard work and dedication is this?" 

From NEA member Patti in California:

"I began teaching in 1998, after holding a federal job and later a corporate job. When I found out that I would not be able to collect all of my money I paid into Social Security and part of my husband's Social Security, if I collected a teacher's retirement, I decided to leave teaching. I feel this is very unfair to educators, policemen, and firefighters. It is no wonder that California can not attract more corporate people into the teaching field."

The GPO/WEP Solution: Total Repeal

Representatives Berman and McKeon have introduced the Social Security Fairness Act (H.R. 82). This bipartisan legislation boasts well over 300 cosponsors. The bill would eliminate the GPO and WEP, thereby allowing public employees, like all other employees, to collect the benefits they earned and need. NEA urges the Subcommittee, and the entire House, to take immediate steps toward passage of the Social Security Fairness Act. 

Mandatory Coverage: An Unwise and Unnecessary Approach

NEA's position on repeal of the Government Pension Offset and Windfall Elimination Provision should not in any way be interpreted as support for requiring public employees to participate in Social Security. NEA strongly opposes mandatory coverage. Instead, NEA simply believes that educators should be able to receive the benefits they or their spouse earned by working in covered employment, without jeopardizing their public pension. 

Many existing public employee programs are tailored to meet the needs of specific employee groups. Forcing educators into Social Security would jeopardize these state and local plans. In addition, Social Security trust funds can be invested only in U.S. Treasury bonds. State and local governments permit a greater diversity of investment options, thereby potentially achieving a greater rate of return.

Mandatory coverage of educators would also increase the tax burden on public-sector employers. Ultimately, these increased tax obligations would lead to difficult choices, including reducing the number of new hires, limiting employee wage increases, reducing cost-of-living increases for retirees, and reducing other benefits such as health care. 

Finally, mandating coverage of educators will not solve the Social Security system's financial difficulties. The amount of money gained by mandating coverage would be relatively small and would not solve the long-term Social Security crisis. Requiring new state and local employees to pay into Social Security would enable the federal government to continue borrowing money from Social Security trust funds, and, therefore, could exacerbate financing problems.

We thank you for your consideration of these comments.