You can send your representative and senators a letter today urging them to take immediate action to repeal the Government Pension Offset and Windfall Elimination Provision. You also can contact them on the Texas AFT toll-free line to the U.S. Capitol switchboard: 1-866-327-8670.

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 another job 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 provisio n." Under federal law, instead of receiving 90 percent of the first $744 of average pre-retirement earnings, she receives only 40 percent. That ' s a $372 cut in her expected monthly 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. As a resolution filed in the Texas legislature noted, 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. And they discourage qualified individuals from entering the teaching profession in Texas lest they lose their earned Social Security benefits.More than a million public servants are adversely affected by these Social Security benefit offsets. The victims 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). The American Federation of Teachers, Texas AFT's national affiliate, is part of a nationwide coalition seeking the repeal of these offsets, and Texas AFT works with AFT counterparts in other states to build support for the Fairness Act.

How Do We Get Congress To Undo The Damage?
The Social Security Fairness Act would end this unfairness. As noted above, the outlook for action on the fairness agenda has improved in Congress and the White House.

What the Fairness Act would do
The Social Security Fairness Act would repeal these offsets completely, but not retroactively, so that current and future retirees would no longer be subject to the offsets from the date of enactment of the legislation forward. The Social Security Administration recently estimated a ten-year cost of the repeal at $80 billion plus.

Obstacles:  Defenders of the offsets justify them as a protection against “windfalls” that are out of proportion to an individual’s lifetime contributions, but the unjust result is that individuals with substantial Social Security earnings coverage, comparable to the earnings of other beneficiaries who are not subject to offsets, are singled out for substantial reduction of Social Security benefits because they are public servants. The impact of these offsets is disproportionately suffered by low-income school employees and women. (Average retirement benefits for Texas school employees are $1,800 a month; included in this average are all employees from superintendents to custodians. Texas TRS pensioners do not receive an automatic COLA. The average TRS retiree receives only 58 percent of final average pay in retirement.) The reality is that the GPO and WEP do serious damage to the retirement security of millions of current and future school retirees and make recruitment and retention of qualified staff even harder for our schools.

The main argument against the Fairness Act is cost. But let’s put that cost in perspective. The annual cost of the Fairness Act would be equal at most to 2 or 3 percent of the “tax gap”–the revenue owed but not paid to the IRS each year, primarily by business entities. Thus, the annual cost of the Fairness Act could be fully covered by even marginally more effective enforcement of existing tax laws. Or it could be fully covered by closing tax loopholes on income squirreled away abroad by American-based multinational corporations. These are just two possibilities. There is a way to fund the Fairness Act, if there’s a will.

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