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• Testimony on Social Security Offsets by the NEA November 6, 2007
  

  Statement of the National Education Association
  

  Submitted to the Finance Committee
  U.S. Senate

  November 6, 2007

  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 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 reti