Testimony to the U.S. House Ways and Means Committee
- Subcommittee on Social Security
June 8, 2005
The Association of Texas Professional
Educators (ATPE) is the largest professional educators’ association in Texas. With more than
100,000 members, we are also the largest non-union educators’ association in the nation. ATPE is
committed to advocating for better benefits for all educators; promoting a collaborative work
environment; the right of educators’ to choose membership in the association they feel best
represents their interests; and providing the best education possible for Texas children. We
thank you for the opportunity to provide input to the Subcommittee on reforming the Social
Security system.
RECOMMENDATIONS
- ATPE recommends that Texas public school
employees not be mandated into Social Security coverage because of the damage doing so could
cause to the Teacher Retirement System (TRS). (See attached correspondence from former TRS
Executive Director Charles Dunlap.) Furthermore, mandating Social Security coverage would not
solve the problems caused for some Texas educators by the Government Pension Offset (GPO) and
the Windfall Elimination Provision (WEP).
- ATPE recommends passage of HR 1714, the
Public Servant Retirement Protection Act (PSRPA), which would reduce the negative effects of
the WEP on Texas public school employees.
- ATPE recommends passage of HR 147, the
Social Security Fairness Act, which would repeal both the WEP and the GPO.
- ATPE recommends that any comprehensive
Social Security legislation passed by Congress address the WEP and the GPO without damaging
the TRS pension fund through mandated Social Security coverage for public school employees.
ATPE opposes mandatory Social
Security coverage for all public school employees
ATPE opposes mandatory Social Security coverage because it would require significant financial
contributions from both employees and employers. The additional payroll taxes needed to support
mandated Social Security coverage would inevitably reduce the state’s ability to contribute to
TRS. ATPE believes the additional fiscal demands would ultimately be reconciled through
larger TRS contributions from active and retired educators. This would produce additional strain
on those who are already overworked in an under-appreciated profession and could have a
devastating effect on the actuarial soundness of the TRS fund. Attached to this testimony is a
letter from former TRS Executive Director Charles Dunlap outlining the effect mandatory Social
Security coverage would have on the TRS. The letter was written in 1998 but ATPE believes the
conclusions are still relevant today.
TRS is a far superior system to Social
Security. Its monthly benefits are, on the whole, substantially greater than those distributed
by Social Security. Plus, TRS offers retirees health insurance, return-to-work benefits and life
insurance. ATPE believes mandating Social Security would only serve to compromise TRS and reduce
benefits for retired educators.
Some believe that mandatory Social
Security coverage would solve the problems some educators experience due to the GPO. The GPO is
an offset provision in Social Security law that reduces spousal Social Security benefits for
public employees (such as public educators) who are eligible for government pensions (such as
those provided by the Teacher Retirement System [TRS]).
In reality, mandating that educators
pay into Social Security would not lessen the effects of the GPO. And, in the long run,
mandatory coverage would compromise TRS—a system that provides far better retirement benefits
than does Social Security. Educators currently can gain GPO
exemption by working their last five years before retirement in positions covered by both Social
Security and TRS. Because very few Texas school districts participate in Social Security, most
educators must transfer to other districts to become exempt from the GPO. Some believe mandatory
Social Security coverage would allow educators to gain GPO exemption without having to relocate.
However, in the history of Social
Security, changes to the system have applied only to employees hired after the enactment date.
Most likely, a switch to mandated coverage would follow the same rule, so mandated coverage
would apply only to educators hired after the date of passage. Current employees would not be
covered by Social Security and would still have to relocate to new positions for the last five
years before retirement in order to gain GPO exemption.
Even if mandated coverage applied
immediately to all employees, it would not alleviate the effects of the GPO. The GPO exists to
mirror the effects of “dual entitlement rules” that apply to employees who pay into Social
Security. These rules state that a person may not collect both a spousal Social Security benefit
and his own benefit. If Social Security coverage were mandated and public school employees
paid into Social Security, they would simply be subject to dual entitlement rules instead of the
GPO. Both exist to limit the collection of spousal benefits by individuals eligible for
their own retirement benefits, a practice known as double dipping.
The other offset provision that concerns educators is the Windfall
Elimination Provision (WEP), which reduces Social Security payouts to government employees who
are eligible for both Social Security and government pensions such as those provided by TRS. The
WEP applies to those employees who have worked for less than 30 years in positions that pay into
Social Security.
It's true that mandated coverage would
cause educators to pay into Social Security longer and therefore could potentially lessen the
WEP’s effects on some people’s benefits. However, this benefit would be insignificant compared
to the great damage mandatory coverage would do to TRS.
ATPE supports the PSRPA
The Windfall Elimination Provision (WEP) reduces the Social Security benefits of persons who
have worked in jobs that pay into the Social Security system and in jobs that do not. The WEP
was meant to account for a windfall in the formula used to figure Social Security benefits that
is designed to provide low-income workers with a larger percentage of their pre-retirement
earnings than that provided to high-income workers. The WEP modifies the formula to prevent
providing employees (such as Texas educators) who haven’t paid into Social Security with higher
percentages of their pre-retirement earnings than that given to employees who have paid into
Social Security for their entire careers. However, the WEP imposes an arbitrary formula on these
individuals that is based partially on the number of years they paid into Social Security rather
than the amount they will receive from their government pensions. That means that a person who
worked in a Social Security-covered job for 20 years but who is also eligible for a government
pension benefit of $500 per month will have his Social Security benefit reduced by the same
amount as a person who paid into Social Security for 20 years but receives a government pension
benefit of $1,200 per month.
ATPE believes the WEP in its current form acts as a deterrent to talented, private-sector
employees who are vested in Social Security and are interested in teaching as a second career,
as well as to professional educators who are thinking about moving to Texas to teach from states
that pay into Social Security. Texas is facing a teacher shortage approaching 50,000; the state
recently cut benefits for active and retired educators due to state budget cuts and retirements
are at an all-time high. ATPE believes we must take steps to recruit and retain the brightest
individuals in the teaching profession in order to ensure that every Texas student receives an
exemplary education. ATPE believes the PSRPA to be such a step.
The PSRPA would repeal the WEP’s arbitrary formula and replace it with a formula that uses the
complete earnings history of a worker in both Social Security covered employment and non-covered
employment when determining average monthly earnings over a worker’s lifetime. This would
eliminate the windfall in the current formula used for figuring Social Security benefits and
would mean greater benefits for most public educators qualified for Social Security benefits.
The new formula under the PSRPA is a fair
compromise between the arbitrary WEP and total repeal and will help the state of Texas recruit
and retain qualified public educators from other professions and from other states. ATPE thanks
Rep. Brady and the cosponsors of HR 1714 for working with our organization toward ending the
inequities of the WEP.
ATPE supports repealing the GPO for Texas
educators
Because the PSRPA does not address the GPO, we urge your support for an amendment to the
bill that will address the harsh effects of the GPO on public educators. By reducing the spousal
or widow Social Security benefits of persons eligible for government pensions by two-thirds of
the amount of the pension, the GPO eliminates spousal or widow benefits for most retired Texas
public educators. The GPO has caused an enormous strain on the morale of public educators in
Texas; TRS reports that it resulted in a doubling of the teacher retirement rate in 2004. Many
experienced educators recently retired to meet the July 1, 2004, deadline in HR 743 from the 108th
Congress. By retiring by that date and working their last days in districts that pay into both
TRS and Social Security, they avoided the GPO. Many other educators are leaving the profession
early and cashing in their TRS accounts to avoid the GPO.
ATPE urges this Subcommittee to amend HR 1714
to lessen the effects of the GPO on public educators. ATPE’s suggestions include total repeal of
the GPO, an exemption for public educators or a partial repeal that would exempt widows and
those with combined pension and spousal benefits that fall below a certain level.
HR 147, the Social Security Fairness Act, is
legislation that would repeal both the WEP and the GPO. That bill now has 260 bipartisan
cosponsors, including several of the cosponsors of HR 1714, but the bill has yet to be marked up
by this Committee and debated on the House floor. ATPE is hopeful that both the PSRPA and
legislation to address the GPO will pass the 109th Congress and become law. This will
bolster teacher morale and encourage qualified public educators to remain in the classroom.
ATPE thanks the members of this Subcommittee for the opportunity to
participate in this hearing and for your willingness to receive our input
on this critical issue that affects so many public educators. Educators are
the most important resource in providing children with the knowledge they
will need to succeed in life, and your efforts to protect their retirement
benefits will have a lasting impact on the quality of the education
received by students in the public school system.
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