Social Security

NEA's current focus is on eliminating two little known amendments to the Social Security Act. These are "offset" provisions that remain on the books even though they have the unintended consequence of unjustifiably lowering retirement benefits for tens of thousands of school employees and other public employees.

NEA and others successfully turned back an aggressive campaign by the Bush administration to partially privatize Social Security and reduce benefits for future generations, which proved to be very unpopular politically. The privatization effort is on a distant back burner, but has not been laid to rest so NEA remains vigilant and will oppose it if it resurfaces.

Currently, the "offsets" top the list of three major issues that concern NEA members:

• The elimination of "offset" provisions that unfairly reduce benefits for many school and other public employees
• The move to partially privatize Social Security and cut future benefits
• Proposals to make Social Security coverage mandatory for all public and private employees

NEA opposes partially privatizing Social Security because it would subject benefits to the risks of the financial markets. In the short term,  transition costs -- estimates ranges from $1 trillion to $2 trillion -- would threaten the benefits of all beneficiaries. Visit the NEA Legislative Action Center for more information and to urge your elected representatives to oppose Social Security privatization.

The Association opposes mandatory coverage  for all employees because of its likely adverse impact on existing public employee pension systems.

Social Security Reform Effort May Be Revived

The entire discussion of broad Social Security reform has been dormant since a lopsided majority of Americans decisively rejected the Bush Administration's "private accounts" scheme two years ago. That doesn't mean the need for reform is any less urgent for the long-term health of the system.

Since the 2006 general election, there has been some speculation in Washington that the administration and Congress, now controlled by Democratic majorities in both houses, may revive the Social Security reform debate - without private accounts in the equation.

While this is mere speculation at this point, NEA will be monitoring the situation carefully and guarding against harmful proposals that have been offered previously in the name of "reform," such as mandatory Social Security coverage for all employees.

About a million NEA members currently work in uncovered states and would be adversely impacted by mandatory coverage, which would increase the tax burden on public-sector employers. Ultimately, these increased tax obligations would lead to difficult choices, including reducing the number of new hires, limiting employee wage increases, reducing cost-of-living increases for retirees, and reducing other benefits such as health care.

With many states and local school districts already struggling financially, the additional burden of mandatory coverage would be likely to have an adverse impact on state pension plans that now offer benefits superior to those of Social Security.

NEA Seeks Repeal of Offset Provisions

In the meantime, NEA will continue its effort to repeal two little known amendments to the Social Security Act that are dramatically and unfairly slashing the retirement benefits of tens of thousands of Americans -- teachers and other public school employees, firefighters, police, social workers, and other civil servants -- who are being penalized for their public service. It's just plain wrong and the NEA is committed to working for an end to the injustices of these two provisions.

For NEA members, the hurt is massive. The Government Pension Offset (GPO) and Windfall Elimination Provision (WEP) affect at least one-third of America's education workforce, concentrated in 15 "non-Social Security" states, literally from Maine to Alaska. The list also includes highly populated states like California, Massachusetts, Ohio and Texas. But, because people move from state to state, there are affected individuals everywhere.

The Congressional Budget Office estimates that the Government Pension Offset alone reduces benefits for some 300,000 individuals by more than $3,600 a year.

A small victory came in 2005 with enactment of an NEA-supported law  that requires the Social Security Administration and employers to warn employees in jobs not covered by Social Security that their benefits will be reduced. 

In the past, because the provisions are not widely known, the pension reductions they mandate usually came as a surprise when affected individuals applied for the benefits they had anticipated in their retirement planning.

Unintended Consequences Victimize the Most Vulnerable

The Government Pension Offset and Windfall Elimination Provision aren't simple to explain. Congress adopted them in 1977 and 1983, respectively, out of congressional zeal to reduce federal budget deficits at the time and as a quick solution to pension "double dipping" abuses.

Their unintended consequences have been victimizing relatively low-paid public servants ever since.

In brief, here's how these provisions work. Social Security law prevents "dual entitlement"-or receipt of full Social Security and spousal benefits at the same time. In 1977, Congress began treating government pensions, such as those earned by educators, as Social Security benefits. The effect of this change was a dollar for dollar reduction in Social Security survivor benefits for anyone also earning a public pension.

In 1983, Congress amended the law to a two-thirds offset. The WEP was enacted in 1983 to prevent people with relatively high-compensated government service and relatively low-paying Social Security-covered employment from having their Social Security benefits determined under the more favorable formula used for retirees with the lowest Social Security earnings.

In practice, however, both provisions are hurting those who can afford it least and are now exacerbating what is widely acknowledged as a national teacher shortage growing to crisis proportions.

Record enrollments in public schools and the projected retirements of thousands of veteran teachers are driving an urgent need for teacher recruitment. Critical efforts to reduce class sizes also necessitate hiring additional teachers. Estimates for the number of new teachers needed range from 2.2 to 2.7 million by 2009.

The GPO and WEP are impacting the recruitment of quality teachers to meet these urgent shortages. At the same time that policymakers are encouraging experienced people to change careers and enter the teaching profession, individuals who have worked in other careers are less likely to want to become teachers if doing so will mean a loss of Social Security benefits they have earned. Some states seeking to entice retired teachers to return to the classroom have found them reluctant to return to teaching because of the impact of the GPO and WEP. In addition, current teachers are increasingly likely to leave the profession to reduce the penalty they will incur upon retirement.

What Can Be Done to Address the GPO and WEP?

NEA, working closely with members of Congress, has secured the re-introduction of legislation to completely repeal both the Government Pension Offset and the Windfall Elimination Provision. H.R. 82 has been introduced in the House  and already has more than 100 bipartisan cosponsors!

U.S. Sen. Dianne Feinstein (D-CA) and Sen. Susan Collins (R-ME) have introduced S. 206 in the Senate, where Sen. Olympia Snowe (R-ME) and Sen. Frank Lautenberg (D-NJ) also are cosponsors.

Congress can fix the problem. The NEA urges everyone to join in the effort by urging their representatives in Congress to sign on to the new bill as cosponsors.