TFT ACTION ALERT

Social Security Offsets Target Texas School Employees
The vast majority of Texas teachers and other school employees work in school districts that do not participate in the Social Security system. A nasty surprise awaits many of these teachers and other education employees when they retire.

These education employees may think that they have qualified for full Social Security benefits, based on their own work for other employers who did take part in Social Security, or based on their spouse's work at a job covered by Social Security.

However, when they retire these educators find out that their Social Security benefits are cut--in some cases even eliminated--because federal law deems their TRS pension a "windfall" that justifies cutting their Social Security benefits.

Government Pension Offset
Consider the case of a widow eligible to receive a survivor's benefit of $600 a month from Social Security. Suppose she retires from a school district that does not take part in the Social Security system and in her own right has earned a TRS pension of $900 a month. Federal law imposes a so-called "governmental pension offset" that reduces her Social Security survivor's benefit by two-thirds of the amount she receives from TRS. That happens in this case to be a $600 offset--which means her survivor's benefit is reduced to zero!

Windfall Elimination Provision
Consider another case. This time, suppose the teacher qualified for Social Security benefits by working for another employer before she went to work for the school district. Or suppose she worked at Wal-Mart evenings and weekends and summers to qualify for Social Security. What happens when she retires from her job with a school district that doesn't take part in Social Security? She faces a severe cut in her Social Security benefits, because federal law contains a so-called "windfall elimination provision." Under federal law, instead of receiving 90 percent of the first $612 of average pre-retirement earnings, she receives only 40 percent. That's a $306 cut in her expected Social Security benefit!

What Were They Thinking!?
What possessed Congress to pass these laws? Ironically, they were seen as the solution to a problem: a situation in which well-to-do individuals who had earned high incomes while paying no Social Security taxes would nonetheless qualify for substantial Social Security benefits based on a very limited history of employment in another job where they did pay Social Security taxes. Unfortunately, Congress misfired, hitting a lot of innocent people while aiming at a few individuals who tried to game the system.

The results have been disastrous. According to a resolution (HCR 63) introduced by Rep. Melissa Noriega, Democrat of Houston, in the Texas legislature on February 10, these offsets “severely and unfairly penalize recipients of public pensions,” including Texas teachers and other school employees as well as police officers, firefighters, and other public servants. The offsets especially harm lower-income employees, notes Noriega’s resolution. And they discourage qualified individuals from entering the teaching profession in Texas lest they lose their earned Social Security benefits.

The hundreds of thousands of public employees adversely affected by these Social Security benefit offsets are concentrated in Texas and 12 other so-called "non-Social-Security" states ( Alaska , California , Colorado , Connecticut , Illinois , Louisiana , Maine , Massachusetts , Missouri , Nevada , Ohio , Rhode Island ).

How Do We Get Congress To Undo The Damage?
A piece of legislation called the Social Security Fairness Act would end this unfairness. The bill would repeal both the "Governmental Pension Offset" and the "Windfall Elimination Provision." The author of the House version of the Social Security Fairness Act, H.R. 147, is U.S. Rep. Howard McKeon, a California Republican. The bill, introduced on January 4, already has 290 cosponsors [as of October 3]. The Senate version, S. 619, was filed on March 14 by Sen. Dianne Feinstein, Democrat of California, and coauthor Sen. Susan Collins, Republican of Maine.  A total of 24 U.S. senators already have signed onto the bill.  

In order to contact your member of Congress and your two U.S. senators, Republicans Kay Bailey Hutchison and John Cornyn, you can use the new TFT toll-free line to the U.S. Capitol switchboard: 1-866-327-8670. The message: “Cosponsor the Fairness Act, H.R. 147/S. 619, and support a prompt vote on the bill”! You also can send a letter on this topic to your member of the U.S. House and your two U.S. senators from the TFT Web site via the Internet. Just go to www.tft.org and click on the link to our letter headed “Repeal Unjust Social Security Provisions.”

As your efforts prompt more of these Texans to sign up, we’ll keep you up to date on our tally of Texas cosponsors and on our overall quest for strong majority support of the Fairness Act in the new Congress. We also will update this Social Security information page with analysis of the legislative outlook as our momentum builds.