Statement to Congress on H.R. 4391
July 20, 2004
Chairman Shaw and Members of the Subcommittee:
On behalf of the National Education Association's (NEA) 2.7 million members, I would like to thank you for the opportunity to speak with you today about the Public Servant Retirement Protection Act (H.R. 4391).
My name is Terry Hickman and I am a high school counselor and the president of the Nevada State Education Association (NSEA). I am here today on behalf of myself, the more than 22,000 members of NSEA, and the 2.7 million members of the National Education Association.
I am pleased to speak today in support of the Public Servant Retirement Protection Act. NEA believes this legislation represents a critical first step toward addressing the harsh impacts of the Windfall Elimination Provision (WEP) as well as the Government Pension Offset (GPO).
The Windfall Elimination Provision: An unfair penalty for public service
As you know, the WEP 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.
I am a prime example of the impact of the WEP. Years ago, when my wife and I were just starting out, I began teaching in Lake Tahoe, Nevada. I loved teaching, and was passionate about working with children. I was equally passionate about building and supporting my family.
In my second year of teaching, my wife and I decided we needed some additional income in order to buy our first home and to fulfill her dream of going to college. Rather than incurring large debt, we decided that I would take a second job. For ten years, I worked two jobs — teaching every day until 2:30 p.m. and managing a health and fitness center at a casino until 10 p.m. four days a week. The hours were tough, but the rewards were well worth the sacrifice. Not only were my wife and I able to purchase a home in which to raise our family, but my wife was able to graduate from college and become a teacher herself. I was never more proud than the day I watched my wife receive her diploma, because I knew how hard she had worked, and how we had pulled together as a family to make her dream come true.
I was also proud because I believed that by working two jobs for so long, I had made a real contribution to our family's long-term security. My job at the casino was covered by Social Security, and I had earned the 40 quarters necessary to qualify for benefits. So, I was quite surprised to learn that my eventual receipt of a public teaching pension from Nevada would result in the loss of a significant portion of my hard-earned Social Security. I was further shocked to hear some policymakers justify this offset by referring to my Social Security benefits as a "windfall" or "double dipping."
It is unfathomable that Congress considers the benefits I earned at two separate jobs to be double dipping. It seems only fair that if I work two jobs, I should be able to collect the benefits I earned. It is even more unbelievable that Congress would penalize me for my values of hard work and dedication to my family, my community, and my country.
Sadly, my story is not unique in Nevada or in many other states across the nation. As president of NSEA, I get phone calls every week from members devastated by the news that they will lose Social Security benefits they had counted on for their retirement. Like me, these educators entered the profession because of their desire to have an impact on our nation's children, often at considerable financial sacrifice. They often ask me to do everything I can to get the WEP and GPO repealed.
The national impact: Undermining teacher recruitment efforts
The WEP has an impact far beyond the individuals losing benefits. Perhaps most alarming, the offset is impacting the recruitment of quality teachers. Like many states, Nevada is facing a shortage of qualified teachers and is looking for ways to attract the best and the brightest to teach in Nevada. Yet, while 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.
I see the impact on Nevada firsthand. In addition to the calls I receive from NSEA members impacted by the WEP and GPO, I receive many calls from teachers looking to move to Nevada and from individuals looking to enter teaching from the military or other professions. I now advise these callers to think long and hard before making such a move, because of the negative impact of the offsets on any Social Security benefits they have earned.
In addition, our state retirement system has just mandated that anyone new to the system be informed of the penalties that may result from the Social Security offsets by taking a public service job in Nevada. NSEA has formed a strong coalition with the state retirement system and, together, we regularly publicize the fact that public service in Nevada can lead to a loss of a significant portion of one's Social Security benefits.
The Government Pension Offset: Another unfair penalty
Although the bill under consideration today does not address the GPO, a discussion of the offsets must include a mention of this other unfair penalty. The GPO 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 GPO.
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. In Nevada, I also am contacted by many widows and widowers struggling to survive on incomes close to poverty and fearing they will be unable to cover their housing, medical, and food expenses on their meager incomes.
The Public Servant Retirement Protection Act: An important step
Given the unacceptable impact of the WEP and GPO on so many of our nation's teachers, the National Education Association supports the Public Servant Retirement Protection Act as a critical first step toward repeal of both offsets. NEA is very pleased to see such strong bipartisan support for this important legislation, and we thank the chair and committee member Congressman Kevin Brady for their efforts in bringing this legislation forward.
H.R. 4391 would eliminate the current WEP offset formula and would apply the same formula currently used to calculate non-impacted individuals' benefits. It would then reduce the benefit by the percentage of indexed earnings that came from work not covered by Social Security. The bill includes a "hold harmless" provision guaranteeing that no person who already has earnings from any non-Social Security employment will receive less in benefits than they would under the current system.
NEA supports the Public Servant Retirement Protection Act as a first step toward full repeal of both the GPO and the WEP. We believe it will result in a significant benefit increase for many educators and other public employees.
We do, however, believe that several issues must be addressed as the bill moves forward. First, we look forward to working with the committee to resolve issues regarding the availability of earnings information from jobs not covered by Social Security. It is critical that the legislation address how the Social Security Administration will determine earnings from non-covered work in calculating benefit levels.
Second, we urge the committee to pay for the WEP fix in a manner that does not further exacerbate the unfair impact of the WEP and GPO. We would strongly oppose any effort to pay for this legislation through additional enforcement of these discriminatory offsets.
On behalf of NEA, NSEA, and my family, I thank you for the opportunity to share my thoughts with you today. I urge the committee to move quickly to mark up the Public Servant Retirement Protection Act and move it swiftly to final passage and enactment. Furthermore, I ask that you please look for ways to repeal completely both the WEP and the GPO as Congress continues to explore these issues.