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Social Security Benefit Offset

BASIC FACTS

    • Texas is one of 14 states that do not require education employees to participate in Social Security.
    • Fewer than 100 Texas school districts are currently participating in Social Security.
    • Therefore, the vast majority of Texas school employees are subject to the offsets.
    • Spouse’s benefits for private sector employees who DO contribute to Social Security are subject to an offset (see below for more details), and the Government Pension Offset (GPO) that affects school employees was designed to mimic it. The GPO was enacted by Congress in 1977.
    • The Windfall Elimination Provision affects school employees who are entitled to Social Security benefits through previous employment with an entity participating in Social Security. This provision was enacted in 1983.

EXPLANATION OF PRIVATE SECTOR OFFSET

Since 1940, federal law (the "dual entitlement provision") has required that Social Security benefits payable to a spouse or surviving spouse be reduced by the amount of the employee’s own Social Security benefit. The intent of this law was to ensure that benefit payments would be restricted to family members who were actually dependent on the worker.

Example: Assume Mary has earned a Social Security benefit of $600 per month through her own employment. Her husband’s benefit is $1,400 per month, so Mary’s spouse’s benefit would normally be $700 per month. However, because of the offset she does not receive both, and the $700 spouse’s benefit is offset by her $600 benefit. She only receives $100 of the spouse’s benefit, for a total Social Security benefit of $700.

EXPLANATION OF OFFSETS AFFECTING TEXAS SCHOOL EMPLOYEES

In 1977, similar provisions were enacted to apply to employees who did not participate in Social Security. Again, the intent was to ensure that persons receiving Social Security benefits as dependents were actually dependent on the worker for financial support.

The Government Pension Offset applies to spouse’s benefits. The benefits are reduced by 2/3 of the amount of the government pension.

Example: Assume Mary did not participate in Social Security, but receives a government pension of $600. Her husband’s Social Security benefit is $1,400, so again, the spouse’s benefit would be $700. The Government Pension Offset calculation reduces the spouse’s benefit to $300.

Loophole: There is a loophole that allows some people to receive their full benefit. The offset does not apply to a person who, on the last day of employment, is working for an entity that participates in both Social Security and TRS. Technically, this means that you can work for a district that participates in both for one day (your last day), and be exempt from the offset.

The Windfall Elimination Provision applies to benefits earned through previous employment. The calculations are more complex, and employees subject to this provision should contact the Social Security office for assistance. The loophole mentioned above does not apply to this type of offset.

FEDERAL LEGISLATION

There are currently several bills in Congress that would affect the offsets.

H.R. 2638 was filed by Howard "Buck" McKeon of California on July 25, 2001. This bill would completely eliminate both offsets. The bill has 126 co-sponsors, including 11 from Texas (Representatives Sandlin, Frost, Paul, Hall, Turner, Edwards, Lampson, Hinojosa, Green, Rodriguez, and Reyes). H.R. 2638 was referred to the Subcommittee on Social Security on July 31, and has not been scheduled for a hearing.

S 1523 by Sen. Dianne Feinstein of California would also repeal both offsets. The bill was filed October 10, 2001, and referred to the Senate Committee on Finance. It has not been scheduled for a hearing. Neither Texas senator is a co-sponsor of the bill.

S. 611, by Sen. Barbara Mikulski of Maryland would reduce the amount of the offset affecting spouse’s benefits. At this time, neither of Texas’ senators has signed on as a co-sponsor. The bill was filed on March 26, 2001, and referred to the Senate Finance committee, but has not received a hearing.

H.R. 1073, by Rep. Barney Frank of Massachusetts would restrict the windfall elimination provision to individuals whose combined benefits exceed $2,000, and would gradually implement the provision on amounts over $2,000. It has 224 co-sponsors, including 14 from Texas (Representatives Bentsen, Edwards, Frost, Green, Hinojosa, Jackson-Lee, Lampson, Johnson, Paul, Ortiz, Reyes, Rodriguez, Sandlin, and Turner). The bill was filed on March 15, 2001, referred to the Subcommittee on Social Security on March 22, and has not been scheduled for a hearing.

H.R. 3497 was filed on December 13, 2001, by Rep. E. Clay Shaw, Jr., of Florida and referred to the House Ways and Means Committee. It includes a provision that would reduce the spousal benefits offset from 2/3 to 1/3. The bill does not have any Texas co-sponsors at this time.

 

WHAT YOU CAN DO

Because this is federal legislation, school employees need to contact their U.S. Congressman, rather than their state legislators. Phone calls, letters and e-mails encouraging your U.S. Representatives and Senators to co-sponsor the bill and to press for a committee hearing would be valuable.

IMPORTANT RESOURCES

To determine who your U.S. Representative is, and for contact information for the congressional delegation, visit the VoteSmart Web site. There is a place on the main page to enter your ZIP Code and see a listing of your elected officials. The information should also be available through

the reference desk at your local library.

A flyer published by the Social Security Administration providing more details on the Government Pension Offset is available online, or by calling or e-mailing TCTA Headquarters (1-888-879-8282).

A flyer on the Windfall Elimination Provision is available on the Social Security Web site, or by calling or e-mailing TCTA Headquarters.

TCTA has compiled an unofficial list of Texas school districts participating in Social Security.