Home ::
Background
The Government Pension Offset (GPO) is a federal law that reduces spousal benefits for public employees who did not pay into Social Security through their government job. A teacher, for example, who did not pay into Social Security through her school district but who would otherwise be eligible for spousal benefits would have those spousal Social Security benefits reduced by two-thirds of her Teacher Retirement System (TRS) pension. (In many cases the reduction is enough to completely eliminate the Social Security benefit.)
The Windfall Elimination Provision (WEP) is a separate federal law that reduces (but never eliminates) benefits that an employee has earned through his/her own participation in Social Security. An individual who worked at a business for 10 years, for example, who subsequently moved to a Texas school district not paying into Social Security would see a reduction in his earned Social Security benefit because of the WEP (unless he paid into Social Security for 30 or more years).
Several bills in the current Congress would repeal or modify the GPO and/or WEP. None of these bills has been scheduled for a committee hearing, despite considerable support in Congress (339 co-sponsors to the primary House bill, HR 82, that would repeal the provisions). However, both the House and Senate committees dealing with Social Security issues have held hearings in the last few months to receive input on the problems experienced by those affected by the GPO and WEP.
The Senate Finance Committee’s Subcommittee on Social Security, Pensions and Family Policy held its hearing in November 2007, led by subcommittee chair Sen. John Kerry (D- MA). Massachusetts is one of the states in which not all government employees are participating in Social Security, and is thus, like Texas, affected by the GPO and WEP. Kerry and other senators expressed concern over the harmful impact of these offsets and support for their full repeal.
Of interest at the January meeting of the House Ways and Means Subcommittee on Social Security were comments by subcommittee chair Michael McNulty (D-NY) at the end of the hearing regarding surplus Social Security funds that are not currently being reserved for Social Security. Currently, Social Security is taking in more money through employee/employer contributions than it is paying out in benefits. (It is projected that this situation will be reversed beginning in 2017, and a deficit of over $4 trillion is estimated over the next 75 years.)
These surplus funds are not kept in reserve for Social Security, but are instead borrowed by the U.S. Treasury for general budget spending. The Treasury issues bonds that earn a modest amount of interest. Some policymakers support a “lockbox” approach, under which the surplus funds are held in reserve for Social Security. Others, though, maintain that the lockbox concept does not avoid the need for significant reform of the system.
Lawmakers at both hearings appeared very supportive of educators and the other government employees (including law enforcement and firefighters) in the affected states. They heard from employees directly and negatively impacted by the Social Security offsets. Social Security Administration and congressional research staff presented information to committee members to explain why the provisions were adopted decades ago and to lay out the costs involved in repealing the GPO and WEP – estimated at more than $80 billion over a ten-year period.
Committee members also discussed options, such as a bill by Texas Rep. Kevin Brady, that would stop short of repealing the GPO and WEP but might provide some relief. Rep. Brady’s HR 2772 would revise the WEP formula to be less arbitrary than the current formula by better reflecting an employee’s actual work/salary experience. His bill would not address spousal benefits.
Outlook for change
Congress is now wrestling with how to proceed through this election year given the shaky financial forecast. The potential recession that some experts predict is making it increasingly difficult for lawmakers to pursue legislation such as the Social Security offset repeal that would take a large bite out of the budget, in the absences of corresponding revenue-raising measures (which would not be popular while lawmakers are campaigning for re-election). Also, given the shortened session this election year, Washington insiders predict that there will be little new business in the current session. Appropriations bills are expected to dominate the agenda beginning in April, with adjournment anticipated in early October and seven weeks of Congressional recess during that period.
Some insiders predict that the best hope for relief for educators will come as part of more comprehensive Social Security reform/restructure. Still, TCTA will continue to push for action on HR 82/S 206 this session, before more educators are denied their earned Social Security benefits, and we encourage our members to keep up the pressure on your own elected congressional representatives.
Web posted: 04/01/08 from The Classroom Teacher, Spring 2008
