```

[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]

 
                   FOURTH IN A SERIES OF SUBCOMMITTEE
                       HEARINGS ON PROTECTING AND
                     STRENGTHENING SOCIAL SECURITY

=======================================================================

                                HEARING

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 9, 2005

                               __________

                           Serial No. 109-20

                               __________

         Printed for the use of the Committee on Ways and Means

                                 _____

                 U.S. GOVERNMENT PRINTING OFFICE

26-415                 WASHINGTON : 2006
_________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government 
Printing  Office Internet: bookstore.gpo.gov  Phone: toll free 
(866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2250 Mail:
Stop SSOP, Washington, DC 20402-0001

                      COMMITTEE ON WAYS AND MEANS

                   BILL THOMAS, California, Chairman

E. CLAY SHAW, JR., Florida           CHARLES B. RANGEL, New York
NANCY L. JOHNSON, Connecticut        FORTNEY PETE STARK, California
WALLY HERGER, California             SANDER M. LEVIN, Michigan
JIM MCCRERY, Louisiana               BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan                  JIM MCDERMOTT, Washington
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. MCNULTY, New York
PHIL ENGLISH, Pennsylvania           WILLIAM J. JEFFERSON, Louisiana
J.D. HAYWORTH, Arizona               JOHN S. TANNER, Tennessee
JERRY WELLER, Illinois               XAVIER BECERRA, California
KENNY C. HULSHOF, Missouri           LLOYD DOGGETT, Texas
RON LEWIS, Kentucky                  EARL POMEROY, North Dakota
MARK FOLEY, Florida                  STEPHANIE TUBBS JONES, Ohio
KEVIN BRADY, Texas                   MIKE THOMPSON, California
PAUL RYAN, Wisconsin                 JOHN B. LARSON, Connecticut
ERIC CANTOR, Virginia                RAHM EMANUEL, Illinois
JOHN LINDER, Georgia
BOB BEAUPREZ, Colorado
MELISSA A. HART, Pennsylvania
CHRIS CHOCOLA, Indiana
DEVIN NUNES, California

                                 ______

                    SUBCOMMITTEE ON SOCIAL SECURITY

                    JIM MCCRERY, Louisiana, Chairman

E. CLAY SHAW, JR., Florida           SANDER M. LEVIN, Michigan
SAM JOHNSON, Texas                   EARL POMEROY, North Dakota
J.D. HAYWORTH, Arizona               XAVIER BECERRA, California
KENNY C. HULSHOF, Missouri           STEPHANIE TUBBS JONES, Ohio
RON LEWIS, Kentucky                  RICHARD E. NEAL, Massachusetts
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin

                    Allison H. Giles, Chief of Staff
                  Janice Mays, Minority Chief Counsel

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.

                            C O N T E N T S

                               __________

                                                                   Page

Advisory of June 2, 2005 and related advisory of June 7, 2005 
  announcing the hearing.........................................     2

                               WITNESSES

U.S Government Accountability Office, Barbara D. Bovbjerg, 
  Director, Education, Workforce, and Income Security............     6
Social Security Administration, Frederick G. Streckewald, 
  Assistant Deputy Commissioner, Disability and Income Security 
  Programs.......................................................    13

                                 ______

Georgia General Assembly and the National Conference of State 
  Legislatures, the Honorable Nan Grogan Orrock..................    30
Coalition to Preserve Retirement Security, Teresa Bierdeman......    37
Grand Lodge, Fraternal Order of Police, Chuck Canterbury.........    43
Association of Texas Professional Educators, Randall Iglehart....    48
Federally Employed Women, Patricia Wolfe.........................    52
American Federation of State, County, and Municipal Employees, 
  Charles M. Loveless............................................    56

                       SUBMISSIONS FOR THE RECORD

Ahearn, Catherine L., Massachusetts Teacher Association, Peabody, 
  MA, statement..................................................    68
Aiken, Margaret, Atlanta, GA, statement..........................    68
Alberti, Jeanne M., Harvard, MA, statement.......................    69
Ambrosius, Barbara, Cincinnati, OH, letter.......................    69
Anderson, Debra, Lincoln Parish Schools/Ruston Junior High, 
  Ruston, LA, letter.............................................    70
Arner, John, Rim of the World High School, Lake Arrowhead, CA, 
  letter.........................................................    70
Association of Americans Resident Overseas, statement............    71
Atwell, Kathleen, Sun City, CA, letter...........................    73
Bartholomew, John, Lewisville, TX, statement.....................    73
Billings, Sheila, Salem, MA, statement...........................    73
Blank, Janet, Hamilton County, Cincinnati, OH, letter............    74
Bonn, Kathleen, Newbury Park, CA, statement......................    74
Brand, Sharon, Arlington Heights, IL, letter.....................    74
Braun, Valerie, Woody Creek, CO, letter..........................    75
Brown, Penny, Los Angeles Unified School District, Cypress, CA, 
  statement......................................................    75
Brubaker, Barbara, Cma, Pine Bluff Chemical Activity, Redfield, 
  AR, letter.....................................................    75
Buford, Gracie, Nacogdoches, TX, statement.......................    76
Carlson, Beverly, CTA/NEA-Retired, Marysville, CA, letter........    76
Carpenter, Ellen, Hingham Public Schools--South Elementary 
  School, Hanover, MA, statement.................................    77
Clark, Ida, Montgomery, AL, letter...............................    77
Clark, Judith, Retired Employees Association of Orange County, 
  Huntington Beach, CA, statement................................    78
Crowley, Lisa, South Portland, ME, statement.....................    81
Daniels, Margaret, Hurst, TX, statement..........................    82
Dannenberg, Jennifer, Skyline High School, Berkeley, CA, 
  statement......................................................    82
Davis, Robert, Rockwall, TX, statement...........................    82
Delaney, Lynn, Skyline High School Oakland Unified School 
  District, Oakland, CA, letter..................................    82
Derman, Edward, California State Teachers' Retirement System, 
  Sacramento, CA, statement......................................    83
Desmarais, Therese K., Rockport, MA, letter......................    85
Dixon, Jerry, Seward, AK, statement..............................    86
Elam, Carl and Naomi, Graham, WA, joint statement................    86
Elia, Joyce, Mission Viejo, CA, statement........................    87
Fallis, Charles, National Association of Retired Federal 
  Employees, Alexandria, VA, statement...........................    88
Flynn, Judith, Federally Employed Women, Corvallis, OR, statement    90
Fowler, Cheryl, Brownsville, TX, letter..........................    90
Fransen, Marilyn, Rapid City, SD, letter.........................    90
Frost, Janet, San Francisco, CA, statement.......................    92
Galvin, Cecile, Orange County (CA) Employees Association, Laguna 
  Niguel, CA, letter.............................................    92
Gillispie, Helen, Longview, TX, letter...........................    93
Goodwin, Jae, Framingham, MA, letter.............................    94
Gray, Rob, Colorado Public Employees' Retirement Association, 
  Denver, CO, statement..........................................    94
Griffin, Brian, Merced, CA, letter...............................    96
Guild, Donna, San Luis Coastal Unified School District, Pismo 
  Beach, CA, letter..............................................    97
Guild, Thomas, Santa Maria Joint Union High School District, 
  Pismo Beach, CA, letter........................................    97
Harlan, Mary, Maine Teachers Association, Nea, Staunton, VA, 
  statement......................................................    97
Harpham, Lynn, Sugar Land, TX, letter............................    98
Hatford, Wayne V., Palm Springs, CA, letter......................    99
Hedstrom, Patricia, Sacramento, CA, letter.......................   100
Johnson, Joan, Santa Ana, CA, statement..........................   102
Keegan, James, Belmont, MA, statement............................   102
Kelley, Colleen, National Treasury Employees Union, statement....   102
Kifer, Deborah, Rowlett, TX, statement...........................   104
Lacks, Cecilia, St. Louis, MO, letter............................   104
LaFrana, William K., Versailles, KY, letter......................   104
Lawrence, Ara, Brandenburg, KY, letter...........................   105
Levine, Mark, Littleton Educators Association, Littleton, MA, 
  letter.........................................................   105
Lichtman, Valerie, San Bernardino, CA, statement.................   106
Lovison Smith, Ruth, Escondido, CA, letter.......................   106
Lucier, Richard, Baypath Regional Vocational Technical High 
  School, Holland, MA, statement.................................   107
Marks, Carole, Marietta, GA, statement...........................   107
Marvin, Mary, Fed Govt & Private Industry Retiree, Punta Gorda, 
  FL, letter.....................................................   108
Mason, Patricia, Syracuse St, CO, statement......................   108
Masters, Sally, Hampshire Regional High School, Easthampton, MA, 
  statement......................................................   109
Millen, George, Warrensburg, MO, statement.......................   109
Miller, Merle, Broomfield, CO, letter............................   110
Morrissey, Natalie, Mass. Retired State, County and Municipal 
  Employees Association, Naples, FL, letter......................   110
National Conference of State Legislatures, joint statement.......   111
National Education Association, statement........................   113
Nelson, Patricia, Cleveland, TX, letter..........................   116
Nesbitt, Frederick, National Conference on Public Employee 
  Retirement Systems, statement..................................   116
Ratto, Anne, Gavilan College, Corralitos, CA, statement..........   118
Reddington, John, Lawrenceburg, IN, statement....................   118
Reed, Amy, Newbury Park High School, Newbury Park, CA, statement.   118
Richard, Sharon, Hardin-Jefferson Isd, Sour Lake, TX, statement..   118
Sallee, Andrew, Lexington, KY, statement.........................   120
Sapienza, Marilyn, Cheshire, CT, letter..........................   121
Saunders, Linda, South Hamilton, MA, letter......................   121
Saxman, Rosalie, Culver City, CA, letter.........................   121
Shaughnessy-Harding, Barbara, Rimforest, CA, statement...........   122
Shaw, Suzanne, Penobscot, ME, statement..........................   122
Shultz, Marna, Pembroke High School, Plympton, MA, statement.....   127
Spehek, Paulette, Mentor, OH, letter.............................   127
Stefancik, Dan, Mogadore, OH, statement..........................   128
Stenlund, Connie, Vancouver, WA, statement.......................   129
Sterrett, Frank, Lakeville, MA, letter...........................   129
Swain, Bonnie, Beaumont, TX, letter..............................   130
Terrell, Juanita, Mont Belvieu, TX, statement....................   131
Wakefield, Carol, Homer, IL, letter..............................   131
Walczewski, Sharyn, Stow, MA, letter.............................   131
Wetzel, David, Baton Rouge, LA, statement........................   132
White, Ralph, Retired State, County and Municipal Employees 
  Association of Massachusetts, Plymouth, MA, letter.............   132
Zimmerman, Pete, Mission Viejo, CA, statement....................   133

                   FOURTH IN A SERIES OF SUBCOMMITTEE

                       HEARINGS ON PROTECTING AND

                     STRENGTHENING SOCIAL SECURITY

                              ----------                              

                         THURSDAY, JUNE 9, 2005

             U.S. House of Representatives,
                       Committee on Ways and Means,
                            Subcommittee on Social Security
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 1:15 p.m., in 
room B-318, Rayburn House Office Building, Hon. Jim McCrery 
(Chairman of the Subcommittee) presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                                CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
June 9, 2005
No. SS-4

                McCrery Announces Fourth in a Series of

                Subcommittee Hearings on Protecting and

                     Strengthening Social Security

    Congressman Jim McCrery (R-LA), Chairman, Subcommittee on Social 
Security of the Committee on Ways and Means, today announced that the 
Subcommittee will hold the fourth in a series of Subcommittee hearings 
on protecting and strengthening Social Security. This hearing will 
examine Social Security provisions affecting certain public employees. 
The hearing will take place on Thursday, June 9, 2005, in room B-318 
Rayburn House Office Building, beginning at 2:00 p.m.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. However, 
any individual or organization not scheduled for an oral appearance may 
submit a written statement for consideration by the Subcommittee and 
for inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    Social Security benefits paid to Federal, State, and local 
government employees who contribute to a government pension plan 
instead of Social Security are affected by two benefit adjustment 
provisions in current law, the Government Pension Offset (GPO) and the 
Windfall Elimination Provision (WEP). While these provisions were 
intended to help equalize, not penalize, the treatment of workers, many 
of the approximately one million individuals whose benefits are 
affected by these provisions believe the GPO and WEP are unfair. 
Legislative proposals have been introduced in the 109th Congress and 
previous Congresses to modify or repeal the GPO and WEP.
      
    Alternatively, some have suggested that requiring newly-hired 
government employees to pay Social Security taxes would ensure equal 
treatment of both government and private-sector employees, would 
eventually eliminate the need for the GPO and WEP, and would reduce 
Social Security's long-term deficit by an estimated 11 percent. 
However, such mandatory coverage could adversely affect the financing 
and benefits of State and local government pension plans.
      
    In announcing the hearing, Chairman McCrery stated, ``As we work to 
strengthen Social Security for the future, we should examine proposals 
to ensure teachers, police officers, firefighters, and other public 
employees are treated fairly under the program.''
      

FOCUS OF THE HEARING:

      
    The Subcommittee will examine the history and policy rationales for 
the GPO, WEP, and exempting certain public employees from Social 
Security coverage. The effects of these policies on beneficiaries and 
the distributional and financial effects of options for their 
modification will also be considered.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
for the hearing record must follow the appropriate link on the hearing 
page of the Committee website and complete the informational forms. 
From the Committee homepage, http://waysandmeans.house.gov, select 
``109th Congress'' from the menu entitled, ``Hearing Archives'' (http:/
/waysandmeans.house.gov/Hearings.asp?congress=17). Select the hearing 
for which you would like to submit, and click on the link entitled, 
``Click here to provide a submission for the record.'' Once you have 
followed the online instructions, completing all informational forms 
and clicking ``submit'' on the final page, an email will be sent to the 
address which you supply confirming your interest in providing a 
submission for the record. You MUST REPLY to the email and ATTACH your 
submission as a Word or WordPerfect document, in compliance with the 
formatting requirements listed below, by close of business Thursday, 
June 23, 2005. Finally, please note that due to the change in House 
mail policy, the U.S. Capitol Police will refuse sealed-package 
deliveries to all House Office Buildings. For questions, or if you 
encounter technical problems, please call (202) 225-1721.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
record according to the discretion of the Committee. The Committee will 
not alter the content of your submission, but we reserve the right to 
format it according to our guidelines. Any submission provided to the 
Committee by a witness, any supplementary materials submitted for the 
printed record, and any written comments in response to a request for 
written comments must conform to the guidelines listed below. Any 
submission or supplementary item not in compliance with these 
guidelines will not be printed, but will be maintained in the Committee 
files for review and use by the Committee.
      
    1. All submissions and supplementary materials must be provided in 
Word or WordPerfect format and MUST NOT exceed a total of 10 pages, 
including attachments. Witnesses and submitters are advised that the 
Committee relies on electronic submissions for printing the official 
hearing record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. All submissions must include a list of all clients, persons, 
and/or organizations on whose behalf the witness appears. A 
supplemental sheet must accompany each submission listing the name, 
company, address, telephone and fax numbers of each witness.
      
    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://waysandmeans.house.gov.
      
    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                                CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
June 7, 2005

                Change in Time for Fourth in a Series of

                Subcommittee Hearings on Protecting and

                     Strengthening Social Security

    Congressman Jim McCrery (R-LA), Chairman, Subcommittee on Social 
Security of the Committee on Ways and Means, today announced that the 
fourth in a series of Subcommittee hearings on protecting and 
strengthening Social Security, examining Social Security provisions 
affecting certain public employees, previously scheduled for 2:00 p.m. 
on Thursday, June 9, 2005, in room B-318 Rayburn House Office Building, 
will now be held at 1:00 p.m.
      
    All other details for the hearing remain the same. (See 
Subcommittee Advisory No. SS-4, dated June 2, 2005).

                                 

    Chairman MCCRERY. Meeting will come to order. Welcome to 
the fourth Subcommittee hearing in our series on protecting and 
strengthening Social Security. Today, we will examine program 
provisions that affect certain government employees. Many 
Americans are surprised to learn that some State and local 
government employees, as well as some Federal employees hired 
before 1984 do not pay Social Security taxes on their earnings. 
Some believe it is only fair for those employees to pay the 
same Social Security taxes the other 96 percent of American 
workers pay since they, their parents or other family members 
very likely would benefit from the Social Security program.
    In addition, requiring these government employees to pay 
Social Security taxes could modestly improve the program's 
long-term finances. Yet, requiring Social Security coverage of 
teachers, fire fighters, police officers, and other public 
employees could harm the long-term financing of their 
respective retirement plans. These workers educate our 
children, ensure our safety, and provide essential public 
service. Their views are very important to this Subcommittee, 
and we will listen carefully to what they have to say today.
    Two other provisions that affect Federal, State and local 
government employees are known as the government Pension Offset 
(GPO), and the Windfall Elimination Provision (WEP). Congress 
enacted these provisions to help ensure that workers who pay 
into a government pension system instead of Social Security are 
treated similarly to all other workers. Although the GPO and 
WEP were intended to equalize and not penalize treatment of 
workers, these complex provisions are often misunderstood. This 
hearing will examine why these provisions exist, how 
effectively they serve their intended purpose, their impact on 
beneficiaries' lives and options to modify or repeal these 
provisions. I look forward to hearing the views of our 
witnesses today in making progress to identify ways to improve 
Social Security's fairness for all Americans. With that, I 
would ask the Ranking Member of the Subcommittee, Mr. Levin, 
for any opening remarks he may have.
    Mr. LEVIN. Thank you very much. I am glad you called this 
hearing in a series of hearings. By the way, our schedule has 
changed somewhat. That isn't the first time. I think you will 
find Members moving in and out a bit, including myself, but I 
will be back and other Members may have to leave. In no way 
should anyone think there isn't a strong interest in this 
subject. The schedule for today is quite different from what we 
expected in terms of its duration.
    Today's hearing focuses on Social Security issues affecting 
public employees, as the Chairman has said. As you know, a 
small but significant number of public employees are enrolled 
in a State pension system and others in place of Social 
Security, and they are understandably concerned about the 
disruption that would be caused if States were required to 
change their pension systems to enroll them in Social Security. 
We will hear from them today and appropriately. However, the 
majority of the witnesses today are here because, for a variety 
of reasons, they are unable to fully access Social Security's 
guaranteed benefits. Although their specific barriers vary, 
they share one thing with each other and all of us: They 
understand how valuable Social Security is, and they want and 
need its guaranteed benefits now and in the future.
    In the State of the Union Address, as we know, President 
Bush launched a national campaign to privatize Social Security. 
Proposals he has laid out over the past five months would 
dramatically cut Social Security benefits and, over time, 
replace them with what I think are risky private accounts. In 
recent months, I, along with other Democrats, have spent a lot 
of time talking with our constituents and with Americans across 
the country about the President's approach; and one thing is 
quite consistent, the more people learn about privatization, 
the less they like it. It is that insistence on private 
accounts that continues to stand in the way of what we truly 
need, a truly bipartisan consideration of the way to address 
Social Security's shortfall.
    Mr. NEAL. Could I ask permission or offer a statement for 
the record?
    Chairman MCCRERY. You may, without objection.
    [The opening statement of Mr. Neal follows:]
Opening Statement of The Honorable Richard E. Neal, a Representative in 
                Congress from the State of Massachusetts
    Thank you Mr. Chairman, for holding this important hearing today. 
Social Security reform as it applies to public employees is very 
important to me. The threat of mandatory coverage for these employees 
and the repeal of both the Government Pension Offset (GPO) and the 
Windfall Elimination Provision (WEP) are of critical interest to the 
public employees and retirees in the Commonwealth of Massachusetts.
    As we consider Social Security reform today, I agree that it is 
essential that we examine all aspects of the current system and make 
choices that are informed and in the interest of everyone. I look 
forward to hearing the testimony presented this afternoon.
    As we meet as a Subcommittee and conduct this series of hearings, 
we will hear many proposals aimed at shoring up the Trust Fund. Some 
will come before the Congress and this committee saying that mandatory 
Social Security coverage for the public employees in California, 
Colorado, Illinois, Louisiana, Massachusetts, Ohio and Texas should be 
required for newly hired public employees. They believe that mandatory 
coverage and this influx of new contributions will improve the Social 
Security Trust Fund.
    Let me join the chorus of many in reiterating what a bad idea this 
is. According to a study conducted by the Congressional Budget Office, 
the long-term impact of including non-Social Security states into the 
Social Security system would be expensive to initiate and would create 
a drain on the Trust Fund over time.
    The Segal Company issued a report estimating that the cost to the 
non-covered state and local governments if they were to be forced into 
Social Security would be a staggering $44 billion over five years. 
According to the Massachusetts Retirees Association, Massachusetts' 
officials have recently estimated the cost within the state to reach as 
high as $3 billion over 10 years. Though alluring as a distance, 
including public employees in mandatory Social Security coverage is 
expensive and does not help with the solvency of the Trust Fund. In 
fact, once these employees begin to collect their Social Security, they 
will negatively impact the system.
    The two issues I hear most often from my constituents on are the 
repeal of the Government Pension Offset and the Windfall Elimination 
Provision. The GPO has already affected approximately 335,000 retired 
federal, state and local employees. For the majority, the GPO totally 
eliminates the Social Security spousal/widow benefit. For others it is 
a dramatic benefit reduction.
    The Windfall Elimination Provision applies to individuals who 
receive a pension from a public-service job that is not covered by 
Social Security. If a public employee also worked in a Social Security 
covered job for the required 40 quarters, the WEP creates a pension 
offset that greatly reduces the person's earned Social Security 
benefit. More than 635,000 retired federal, state and local employees 
are currently affected by the WEP.
    Both the GPO and the WEP are unfair provisions that negatively 
impact the public employees I represent. They dramatically and severely 
impact the retirement of thousands of the seniors I represent, and I 
support the repeal of both. I look forward to hearing detailed 
testimony from groups today that share my concern.
    Mr. Chairman, in closing, thank you again for conducting this 
hearing today. These are complicated issues that deserve to have 
proper, discerning attention paid to them. As we consider reforming our 
Social Security system, I am pleased that the committee is paying 
attention to the issues of concern to public employees in my home 
state. The public employees I represent reject any attempt to include 
them under mandatory Social Security coverage, and oppose private 
accounts and any other reform efforts to Social Security that will 
result in reduced benefits to retirees in the future.

                                 

    Today, we have two panels of witnesses. Our first panel is 
Ms. Barbara D. Bovbjerg, Director of Education, Workforce, and 
Income Security with the U.S. government Accountability Office 
(GAO); and Frederick G. Streckewald, Assistant Deputy 
Commissioner, Disability and Income Security Programs with the 
Social Security Administration (SSA). Welcome, both of you. Ms. 
Bovbjerg, if you will summarize your testimony in about five 
minutes, we would appreciate it.

    STATEMENT OF BARBARA D. BOVBJERG, DIRECTOR, EDUCATION, 
WORKFORCE, AND INCOME SECURITY, U.S. GOVERNMENT ACCOUNTABILITY 
                             OFFICE

    Ms. BOVBJERG. Thank you, Mr. Chairman and Members of the 
Subcommittee. It is a pleasure to be before you today to talk 
about Social Security coverage of public employees. Social 
Security is designed to be a universal social insurance system 
and indeed covers about 96 percent of American workers. The 
noncovered status of the other 4 percent, who are nearly all 
public employees, poses issues of fairness in the program. 
Proposals to bring these employees under Social Security have 
been made as part of the program's potential reforms.
    My testimony is in three parts: first, a discussion of 
Social Security's coverage of public employees; second, a 
description of Social Security's special provisions affecting 
noncovered public employees; and third, the potential 
implications of reform proposals affecting such employees. My 
statement is based on the body of work we have published on 
these topics in the past.
    First, public employee coverage. Approximately one-fourth 
of the Nation's public employees are not covered by Social 
Security, which means they don't pay Social Security taxes on 
their earnings from government employment. At its inception, 
Social Security did not cover government employees because they 
had their own retirement systems and there was a concern over 
Federal authority to impose a tax on State governments. Since 
then, many State and local governments have elected Social 
Security coverage, and Congress has covered all Federal workers 
hired after 1983. However, about five million State and local 
government workers today remain outside the Social Security 
system. Even though noncovered employees may have many years of 
earnings on which they did not pay Social Security taxes, they 
can still become eligible for benefits. Their Social Security 
earnings records would show low or no covered earnings, under 
Social Security benefit formulas, and these workers would be 
treated like low earners and would benefit from the program's 
progressive benefit formula.
    To avoid paying windfall benefits to such workers, Congress 
enacted provisions designed to recognize these special 
circumstances. Let me turn to those provisions, two in 
particular. The GPO and the WEP are intended to prevent 
awarding such windfall benefits to those who worked in 
noncovered employment. The GPO, enacted in 1977, reduces Social 
Security spousal benefits for those receiving noncovered 
government pensions. The reduction is equal to two-thirds of 
the noncovered pension. The WEP, which was enacted in 1983, 
employs a modified benefit calculation formula for those with 
careers in noncovered employment.
    The administration of these provisions has been 
problematic. The SSA needs to know whether beneficiaries 
receive noncovered pensions. However, work we did in 1998 found 
that SSA is often unable to obtain this information, 
particularly for State and local workers. To address this 
problem, we have suggested that Congress direct the Internal 
Revenue Service (IRS) to collect and report this information. 
Doing so would save millions of dollars for the trust funds and 
reduce uneven and inequitable enforcement of these provisions. 
Although language requiring this change was indeed included in 
the Social Security Protection Act (P.L. 108-203) last year, 
the bill was signed into law without it. We still believe this 
approach would be beneficial to the program, but let me now 
turn to reform proposals affecting these employees.
    Some proposals specifically seek to reduce or repeal the 
GPO and the WEP. These provisions are viewed by many as 
confusing and unfair, but eliminating them would cost about $60 
billion over 10 years and would increase the long-range trust 
fund deficit by about 6 percent. Further, repeal would, in 
fact, redistribute income from those who have contributed to 
Social Security for a working lifetime to those who have not, 
which creates other issues of fairness. Other proposals would 
make Social Security mandatory for all. Mandating coverage for 
public employees would reduce the long-term trust fund deficit 
by about 11 percent, and it could also enhance benefits for 
many employees who would remain outside the Social Security 
system, but such a mandate could also increase costs for the 
affected State and local governments. Or if the governments 
decided to keep their costs level, employees could experience 
benefits lower than those promised today.
    Finally, mandatory coverage would not immediately address 
the issues and concerns regarding the GPO and the WEP, although 
ultimately these provisions would become obsolete. In 
conclusion, there are no easy answers to the difficulties of 
equalizing Social Security's treatment of covered and 
noncovered workers. Any reductions in the GPO or the WEP would 
ultimately come at the expense of other Social Security 
beneficiaries and taxpayers. Mandating universal coverage would 
promise eventual elimination of the GPO and the WEP, but at a 
potentially significant cost to affected State and local 
governments. Whatever the decision, it is important to 
administer all elements of the Social Security program 
effectively and equitably. To do so, I urge you to give IRS the 
authority it needs to identify recipients of noncovered 
pensions and to help the SSA maintain the integrity of its 
programs. That concludes my statement, Mr. Chairman.
    [The prepared statement of Ms. Bovbjerg follows:]
 Statement of Barbara D. Bovbjerg, Director, Education, Workforce, and 
         Income Security, U.S. Government Accountability Office
Mr. Chairman and Members of the Subcommittee:

    I am pleased to be here today to discuss how Social Security 
affects public employees and how reforms may change those effects. 
Social Security covers about 96 percent of all U.S. workers; the vast 
majority of the rest are state, local, and federal government 
employees. One option for Social Security reform is extending coverage 
to all state and local government employees who are not currently 
covered. While these non-covered workers do not pay Social Security 
taxes on their government earnings, they may still be eligible for 
Social Security benefits. This poses difficult issues of fairness, and 
Social Security has provisions that attempt to address those issues. 
Still, these provisions have been difficult to administer. They have 
also been a source of confusion and frustration for the workers they 
affect.
    I hope I can help clarify and provide some perspective on the 
complex relationship between Social Security and public employees. 
Today, I will discuss Social Security's coverage of public employees, 
Social Security's current provisions affecting non-covered public 
employees, and proposals to modify those provisions or make coverage 
mandatory for all public employees. My testimony is based on a body of 
work we have published over the past several years.\1\
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    \1\ See the list of related GAO products at the end of this 
statement.
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    In summary, Social Security does not cover about one-fourth of 
public employees, for various historical reasons. As a result, these 
employees do not pay Social Security taxes on earnings from their non-
covered jobs. Nevertheless, they can still be eligible for Social 
Security benefits based on their spouses' or their own earnings in 
covered employment. Currently, Social Security has two provisions to 
address the resulting fairness issues. The Government Pension Offset 
(GPO) affects spouse and survivor benefits, and the Windfall 
Elimination Provision (WEP) affects retired worker benefits. Both 
provisions reduce Social Security benefits for those who receive non-
covered pension benefits. However, the Social Security Administration 
(SSA) cannot effectively and fairly apply these provisions because it 
does not have access to complete and accurate information on receipt of 
such non-covered pension benefits. Implementation of some of our 
recommendations has improved the availability and tracking of key 
information for federal retirees, which we estimate will save hundreds 
of millions of dollars. However, Congressional action is still needed 
to improve access to information on state and local government 
pensions.
    In recent years, various Social Security reform proposals that 
would affect public employees have been offered. Some proposals 
specifically address the GPO and the WEP and would either revise or 
eliminate them. While we have not analyzed these proposals, we believe 
it is important to consider both the costs and the fairness issues they 
raise. Still other proposals would make coverage mandatory for all 
state and local government employees. According to Social Security 
actuaries, doing so for all newly hired state and local government 
employees would reduce the 75-year actuarial deficit by about 11 
percent. It could also enhance inflation protection, pension 
portability, and dependent benefits for the affected beneficiaries, in 
many cases. However, to provide for the same level of retirement 
income, it could increase costs for the state and local governments 
that would sponsor the plans. Moreover, the GPO and the WEP would 
continue to apply for many years to come, even though they would become 
obsolete in the long run.
Background
    Social Security provides retirement, disability, and survivor 
benefits to insured workers and their dependents. Insured workers are 
eligible for reduced benefits at age 62 and full retirement benefits 
between age 65 and 67, depending on their year of birth.\2\ Social 
Security retirement benefits are based on the worker's age and career 
earnings, are fully indexed for inflation after retirement, and replace 
a relatively higher proportion of wages for career low-wage earners. 
Social Security's primary source of revenue is the Old Age, Survivors, 
and Disability Insurance (OASDI) portion of the payroll tax paid by 
employers and employees. The OASDI payroll tax is 6.2 percent of 
earnings each for employers and employees, up to an established 
maximum.
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    \2\ Beginning with those born in 1938, the age at which full 
benefits are payable will increase in gradual steps from age 65 to age 
67.
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    One of Social Security's most fundamental principles is that 
benefits reflect the earnings on which workers have paid taxes. Social 
Security provides benefits that workers have earned to some degree 
because of their contributions and those of their employers. At the 
same time, Social Security helps ensure that its beneficiaries have 
adequate incomes and do not have to depend on welfare. Toward this end, 
Social Security's benefit provisions redistribute income in a variety 
of ways--from those with higher lifetime earnings to those with lower 
ones, from those without dependents to those with dependents, from 
single earners and two-earner couples to one-earner couples, and from 
those who don't live very long to those who do. These effects result 
from the program's focus on helping ensure adequate incomes. Such 
effects depend to a great degree on the universal and compulsory nature 
of the program.
    According to the Social Security Trustees' 2005 intermediate, or 
best-estimate, assumptions, Social Security's cash flow is expected to 
turn negative in 2017. In addition, all of the accumulated Treasury 
obligations held by the trust funds are expected to be exhausted by 
2041. Social Security's long-term financing shortfall stems primarily 
from the fact that people are living longer and having fewer children. 
As a result, the number of workers paying into the system for each 
beneficiary has been falling and is projected to decline from 3.3 today 
to about 2 by 2030. Reductions in promised benefits and/or increases in 
program revenues will be needed to restore the long-term solvency and 
sustainability of the program.
About One-Fourth of Public Employees Are Not Covered by Social Security
    About one-fourth of public employees do not pay Social Security 
taxes on the earnings from their government jobs. Historically, Social 
Security did not require coverage of government employment because 
there was concern over the question of the federal government's right 
to impose a tax on state governments, and some had their own retirement 
systems. However, virtually all other workers are now covered, 
including the remaining three-fourths of public employees.
    The 1935 Social Security Act mandated coverage for most workers in 
commerce and industry, which at that time comprised about 60 percent of 
the workforce. Subsequently, the Congress extended mandatory Social 
Security coverage to most of the excluded groups, including state and 
local employees not covered by a public pension plan. The Congress also 
extended voluntary coverage to state and local employees covered by 
public pension plans. Since 1983, however, public employers have not 
been permitted to withdraw from the program once they are covered. Also 
in 1983, amendments to the Social Security Act extended mandatory 
coverage to newly hired federal workers and to all members of the 
Congress.
    SSA estimates that in 2004 nearly 5 million state and local 
government employees, excluding students and election workers, are not 
covered by Social Security. In addition, about three-quarters of a 
million federal employees hired before 1984 are also not covered. Seven 
states--California, Colorado, Illinois, Louisiana, Massachusetts, Ohio, 
and Texas--account for 71 percent of the non-covered payroll.
    Most full-time public employees participate in defined benefit 
pension plans. Minimum retirement ages for full benefits vary. However, 
many state and local employees can retire with full benefits at age 55 
with 30 years of service. Retirement benefits also vary, but they are 
usually based on a specified benefit rate for each year of service and 
the member's final average salary over a specified time period, usually 
3 years. For example, plans with a 2 percent rate replace 60 percent of 
a member's final average salary after 30 years of service. In addition 
to retirement benefits, members generally have a survivor annuity 
option and disability benefits, and many receive some cost-of-living 
increases after retirement. In addition, in recent years, the number of 
defined contribution plans, such as 401(k) plans and the Thrift Savings 
Plan for federal employees, has been growing, and such plans are 
becoming a relatively more common way for employers to offer pension 
plans; public employers are no exception to this trend.
    Even though non-covered employees may have many years of earnings 
on which they do not pay Social Security taxes, they can still be 
eligible for Social Security benefits based on their spouses' or their 
own earnings in covered employment. SSA estimates that nearly all non-
covered state and local employees become entitled to Social Security as 
workers, spouses, or dependents. However, their non-covered status 
complicates the program's ability to target benefits in the ways it is 
intended to do.
Current Provisions Seek Fairness but Pose Administrative Challenges
    To address the fairness issues that arise with non-covered public 
employees, Social Security has two provisions--the Government Pension 
Offset, to address spouse and survivor benefits, and the Windfall 
Elimination Provision, to address retired worker benefits. Both 
provisions depend on having complete and accurate information that has 
proven difficult to get. Also, both provisions are a source of 
confusion and frustration for public employees and retirees.
    Under the GPO provision, enacted in 1977, SSA must reduce Social 
Security benefits for those receiving noncovered government pensions 
when their entitlement to Social Security is based on another person's 
(usually a spouse's) Social Security coverage. Their Social Security 
benefits are to be reduced by two-thirds of the amount of their 
government pension. Under the WEP, enacted in 1983, SSA must use a 
modified formula to calculate the Social Security benefits people earn 
when they have had a limited career in covered employment. This formula 
reduces the amount of payable benefits.
    Regarding the GPO, spouse and survivor benefits were intended to 
provide some Social Security protection to spouses with limited working 
careers. The GPO provision reduces spouse and survivor benefits to 
persons who do not meet this limited working career criterion because 
they worked long enough in non-covered employment to earn their own 
pension.
    Regarding the WEP, the Congress was concerned that the design of 
the Social Security benefit formula provided unintended windfall 
benefits to workers who had spent most of their careers in non-covered 
employment. The formula replaces a higher portion of pre-retirement 
Social Security covered earnings when people have low average lifetime 
earnings than it does when people have higher average lifetime 
earnings. People who work exclusively, or have lengthy careers, in non-
covered employment appear on SSA's earnings records as having no 
covered earnings or a low average of covered lifetime earnings. As a 
result, people with this type of earnings history benefit from the 
advantage given to people with low average lifetime earnings when in 
fact their total (covered plus non-covered) lifetime earnings were 
higher than they appear to be for purposes of calculating Social 
Security benefits.
    Both the GPO and the WEP apply only to those beneficiaries who 
receive pensions from non-covered employment. To administer these 
provisions, SSA needs to know whether beneficiaries receive such non-
covered pensions. However, SSA cannot apply these provisions 
effectively and fairly because it lacks this information, according to 
our past work.\3\ In response to our recommendation, SSA performed 
additional computer matches with the Office of Personnel Management to 
get non-covered pension data for federal retirees. These computer 
matches detected payment errors; we estimate that correcting these 
errors will generate hundreds of millions of dollars in savings.\4\ 
However, SSA still lacks the information it needs for state and local 
governments and therefore it cannot apply the GPO and the WEP for state 
and local government employees to the same degree that it does for 
federal employees. The resulting disparity in the application of these 
two provisions is yet another source of unfairness in the final 
outcome.
---------------------------------------------------------------------------
    \3\ See GAO, Social Security: Better Payment Controls for Benefit 
Reduction Provisions Could Save Millions, GAO/HEHS-98-76 (Washington, 
D.C.: Apr. 30, 1998).
    \4\ SSA performed the first such match in 1999 and advised that it 
will be done on a recurring basis in the future. SSA identified about 
14,600 people whose benefits should have been calculated using WEP's 
modified formula. We estimate that detecting these payment errors will 
generate $207.9 million in lifetime benefit reduction for this cohort. 
We further estimate each year's match will generate about $57 million 
in lifetime benefit reductions for each new cohort.
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    In our testimony before this committee in May 2003,\5\ we 
recommended that the Congress consider giving the Internal Revenue 
Service (IRS) the authority to collect the information that SSA needs 
on government pension income, which could perhaps be accomplished 
through a simple modification to a single form. Earlier versions of the 
Social Security Protection Act of 2004 \6\ contained such a provision, 
but this provision was not included when the final version of the bill, 
was approved and signed into law.
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    \5\ GAO, Social Security: Issues Relating to Non-coverage of Public 
Employees, GAO-03-710T (Washington, D.C.: May 1, 2003).
    \6\ Pub. L. No. 108-203.
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Some Reform Proposals Would Affect Public Employees
    In recent years, various Social Security reform proposals that 
would affect public employees have been offered. Some proposals 
specifically address the GPO and the WEP and would either revise or 
eliminate them. Still other proposals would make coverage mandatory for 
all state and local government employees.
Some Proposals Focus on the GPO or the WEP
    The GPO and the WEP have been a source of confusion and frustration 
for the more than 6 million workers and 1.1 million beneficiaries they 
affect. Critics of the measures contend that they are basically 
inaccurate and often unfair. For example, some opponents of the WEP 
argue that the formula adjustment is an arbitrary and inaccurate way to 
estimate the value of the windfall and causes a relatively larger 
benefit reduction for lower-paid workers. In the case of the GPO, 
critics contend that the two-thirds reduction is imprecise and could be 
based on a more rigorous formula. A variety of proposals have been 
offered to either revise or eliminate the GPO or the WEP. While we have 
not studied these proposals in detail, I would like to offer a few 
observations to keep in mind as you consider them.
    First, repealing these provisions would be costly in an environment 
where the Social Security trust funds already face long-term solvency 
issues. According to the most recent estimates from SSA eliminating the 
GPO entirely would cost $32 billion over 10 years and cost 0.06 percent 
of taxable payroll, which would increase the long-range deficit by 
about 3 percent. Similarly, eliminating the WEP would cost nearly $30 
billion and increase Social Security's long-range deficit by 3 percent.
    Second, in thinking about the fairness of the provisions and 
whether or not to repeal them, it is important to consider both the 
affected public employees and all other workers and beneficiaries who 
pay Social Security taxes. For example, SSA has described the GPO as a 
way to treat spouses with non-covered pensions in a fashion similar to 
how it treats dually entitled spouses, who qualify for Social Security 
benefits on both their own work records and their spouses'. In such 
cases, spouses may not receive both the benefits earned as a worker and 
the full spousal benefit; rather they receive the higher amount of the 
two. If the GPO were eliminated or reduced for spouses who had paid 
little or no Social Security taxes on their lifetime earnings, it might 
be reasonable to ask whether the same should be done for dually 
entitled spouses who have paid Social Security on all their earnings. 
Otherwise, such couples would be worse off than couples that were no 
longer subject to the GPO. And far more spouses are subject to the dual 
entitlement offset than to the GPO; as a result, the costs of 
eliminating the dual entitlement offset would be commensurately 
greater.
Mandatory Coverage Has Been Proposed
    Making coverage mandatory for all state and local government 
employees has been proposed to help address the program's financing 
problems. According to Social Security actuaries, doing so for all 
newly hired state and local government employees would reduce the 75-
year actuarial deficit by about 11 percent.\7\ Covering all the 
remaining workers increases revenues relatively quickly and improves 
solvency for some time, since most of the newly covered workers would 
not receive benefits for many years. In the long run, however, benefit 
payments would increase as the newly covered workers started to collect 
benefits. Overall, this change would still represent a net gain for 
solvency, although it would be small.
---------------------------------------------------------------------------
    \7\ SSA uses a period of 75 years for evaluating the program's 
long-term actuarial status to obtain the full range of financial 
commitments that will be incurred on behalf of current program 
participants.
---------------------------------------------------------------------------
    In addition to considering solvency effects, the inclusion of 
mandatory coverage in a comprehensive reform package would need to be 
grounded in other considerations. In recommending that mandatory 
coverage be included in the reform proposals, the 1994-1996 Social 
Security Advisory Council stated that mandatory coverage is basically 
``an issue of fairness.'' Its report noted that ``an effective Social 
Security program helps to reduce public costs for relief and 
assistance, which, in turn, means lower general taxes. There is an 
element of unfairness in a situation where practically all contribute 
to Social Security, while a few benefit both directly and indirectly 
but are excused from contributing to the program.''
    Moreover, mandatory coverage could improve benefits for the 
affected beneficiaries, but it could also increase pension costs for 
the state and local governments that would sponsor the plans. The 
effects on public employees and employers would depend on how states 
and localities changed their non-covered pension plans to conform with 
mandatory coverage. For example, Social Security offers automatic 
inflation protection, full benefit portability, and dependent benefits, 
which are not available in many public pension plans. Creating new 
pension plans that kept all the existing benefit provisions but added 
these new ones would increase the cost of the total package. Under this 
scenario, costs could increase by as much as 11 percent of payroll, 
depending on the benefit packages of the new plans. Alternatively, 
states and localities that wanted to maintain level spending for 
retirement would likely need to reduce some pension benefits. 
Additionally, states and localities could require several years to 
design, legislate, and implement changes to current pension plans. 
Mandating Social Security coverage for state and local employees could 
also elicit a constitutional challenge. Finally, mandatory coverage 
would not immediately address the issues and concerns regarding the GPO 
and the WEP. If left unchanged, these provisions would continue to 
apply for many years to come for existing employees and beneficiaries. 
Still, in the long run, mandatory coverage would make these provisions 
obsolete.
Conclusions
    In conclusion, there are no easy answers to the difficulties of 
equalizing Social Security's treatment of covered and non-covered 
workers. Any reductions in the GPO or the WEP would ultimately come at 
the expense of other Social Security beneficiaries and taxpayers. 
Mandating universal coverage would promise eventual elimination of the 
GPO and the WEP but at potentially significant cost to affected state 
and local governments, and even so the GPO and the WEP would continue 
to apply for some years to come, unless they were repealed.
    Whatever the decision, it will be important to administer the 
program effectively and equitably. The GPO and the WEP have proven 
difficult to administer because they depend on complete and accurate 
reporting of government pension income, which is not currently 
achieved. The resulting disparity in the application of these two 
provisions is yet another source of unfairness in the final outcome. We 
therefore take this opportunity to bring the matter back to your 
attention for further consideration.
Matter for Congressional Consideration
    To facilitate complete and accurate reporting of government pension 
income, the Congress should consider giving IRS the authority to 
collect this information, which could perhaps be accomplished through a 
simple modification to a single form.
    Mr. Chairman, this concludes my statement, I would be happy to 
respond to any questions you or other members of the subcommittee may 
have.
GAO Contributions and Acknowledgments
    For information regarding this testimony, please contact Barbara D. 
Bovbjerg, Director, Education, Workforce, and Income Security Issues, 
on (202) 512-7215. Individuals who made key contributions to this 
testimony include Daniel Bertoni, Ken Stockbridge, and Michael Collins.
Related GAO Products
    Social Security Reform: Answers to Key Questions. GAO-05-193SP. 
Washington, D.C.: May 2005.
    Social Security: Issues Relating to Non-coverage of Public 
Employees. GAO-03-710T. Washington, D.C.: May 1, 2003.
    Social Security: Congress Should Consider Revising the Government 
Pension Offset ``Loophole.'' GAO-03-498T. Washington, D.C.: Feb. 27, 
2003.
    Social Security Administration: Revision to the Government Pension 
Offset Exemption Should Be Considered. GAO-02-950. Washington, D.C.: 
Aug. 15, 2002.
    Social Security Reform: Experience of the Alternate Plans in Texas. 
GAO/HEHS-99-31, Washington, D.C.: Feb. 26, 1999.
    Social Security: Implications of Extending Mandatory Coverage to 
State and Local Employees. GAO/HEHS-98-196. Washington, D.C.: Aug. 18, 
1998.
    Social Security: Better Payment Controls for Benefit Reduction 
Provisions Could Save Millions. GAO/HEHS-98-76. Washington, D.C.: April 
30, 1998.
    Federal Workforce: Effects of Public Pension Offset on Social 
Security Benefits of Federal Retirees. GAO/GGD-88-73. Washington, D.C.: 
April 27, 1988.

                                 

    Chairman MCCRERY. Thank you, Ms. Bovbjerg. Mr. Streckewald?

    STATEMENT OF FREDERICK G. STRECKEWALD, ASSISTANT DEPUTY 
 COMMISSIONER, DISABILITY AND INCOME SECURITY PROGRAMS, SOCIAL 
                    SECURITY ADMINISTRATION

    Mr. STRECKEWALD. Mr. Chairman and Members of the 
Subcommittee, thank you for inviting me here today to discuss 
mandatory Social Security coverage for State and local 
government employees, as well as the WEP and the GPO. Let me 
begin by discussing mandatory Social Security coverage. State 
and local government employees were excluded from Social 
Security coverage until 1951 because of a constitutional 
question about the Federal Government's authority to tax State 
and local governments. Legislation enacted in 1950 provided 
that States could enter into voluntary agreements to provide 
Social Security coverage to public employees not under a 
retirement system. After the 1950 legislation, coverage of 
State and local government employees was further expanded. 
Today, only about 28 percent of State and local public 
employees are not covered by Social Security.
    Extending Social Security coverage to all newly hired State 
and local government employees would favorably affect the long-
range solvency of Social Security, addressing about 11 percent 
of the 75-year program deficit. Supporters of this change note 
that it would improve the protection of those that have jobs in 
covered employment before or after their government employment. 
However, critics note it would adversely affect the funding of 
some State and local government defined benefit plans.
    Let me turn now to GPO and WEP. The GPO affects government 
retirees who are eligible for both a pension based on their own 
work in a Federal, State or local government job that was 
noncovered by Social Security and a Social Security spouse's or 
surviving spouse's, benefit based upon their husband's or 
wife's work in covered employment. Under the GPO, a Social 
Security spouse's benefit is reduced by an amount equal to two-
thirds of the worker's government pension. As of June 2004, 
about 399,000 beneficiaries had benefits fully or partially 
offset by GPO. Before GPO, a person who worked in a government 
job not covered under Social Security could receive a 
government pension and a full Social Security spouse's benefit. 
Of course, a worker covered under Social Security is subject to 
an offset under the dual entitlement provision, which means 
that Social Security benefits payable to a person as a spouse 
are offset by the amount of that person's own Social Security 
benefit. Thus, the GPO acts as a surrogate for the dual 
entitlement offset. Several bills have been introduced to 
address the GPO. A bill that would completely eliminate GPO 
over 10 years would cost an estimated $32.2 billion. Other 
bills that would alter the GOP are estimated to cost between 
$9.6 to $21.4 billion over 10 years.
    I would now like to discuss the WEP, which primarily 
affects government workers. Before the WEP, some workers were 
treated as low-income earners for Social Security benefit 
purposes and received the advantage of the ``weighted'' Social 
Security benefit formula in addition to their own government 
pension. The WEP was intended to eliminate this advantage by 
using a different, less heavily weighted, Social Security 
benefit formula. The maximum reduction under WEP is $313.50 per 
month. Unlike the GPO, the WEP can never eliminate a person's 
entire Social Security benefit. A number of bills have been 
introduced that would change WEP. These proposals include: 
eliminating it entirely; providing higher Social Security 
benefits for government workers whose pensions from noncovered 
employment and Social Security benefits are below certain 
levels; and replacing the WEP benefit formula with an alternate 
computation. This last approach is embodied in Representative 
Brady's bill, H.R. 1714, the ``Public Servant Retirement 
Protection Act.''
    Under this bill, a hypothetical primary benefit would first 
be computed based on all the worker's available covered and 
noncovered earnings after 1950. This hypothetical benefit would 
then be multiplied by the proportion of the worker's total 
earnings that were covered under Social Security to obtain the 
primary benefit payable to the worker. The bill also includes a 
guarantee to ensure that a worker whose government pension is 
based on noncovered earnings in the year of enactment or 
earlier would receive no less than the present law WEP benefit. 
The bill would apply to both current and future beneficiaries.
    Let me commend Representative Brady for his efforts to find 
ways to replace the current WEP with an approach that is 
intended to more accurately reflect an individual's complete 
earning history. We have appreciated the opportunity to work 
with his and other congressional offices on legislation 
affecting the WEP. However, we continue to be concerned about 
some aspects of the bill. The primary issue is that the 
computation would count noncovered earnings after 1950, but SSA 
only has records of noncovered earnings beginning in 1978, when 
it began receiving W-2 information from employers. Also, 
because the bill would affect those on the rolls, SSA would 
have to review benefits of more than 738,000 retired and 
disabled workers; and I would note, the workloads generated by 
passage of such legislation would be tremendous for Social 
Security and would take us several years.
    In conclusion, I want to thank the Chairman and the 
Subcommittee for giving us this opportunity to discuss these 
complex and important issues. The SSA welcomes the opportunity 
to work with you to provide additional information, and I would 
be glad to answer any questions.
    [The prepared statement of Mr. Streckewald follows:]
 Statement of Frederick G. Streckewald, Assistant Deputy Commissioner, 
Disability and Income Security Programs, Social Security Administration
    Thank you for inviting me to discuss the idea of mandatory Social 
Security coverage for State and Local government employees as well as 
the Windfall Elimination Provision, or WEP, and the Government Pension 
Offset, or GPO.
Mandatory Social Security Coverage
    State and local government employees were excluded from Social 
Security coverage from 1935 until 1951 because there was a 
constitutional question of the Federal government's authority to tax 
State and local governments. Legislation enacted in 1950 provided that, 
beginning in 1951, States were allowed to enter into voluntary 
agreements with SSA to provide Social Security coverage to public 
employees not under a retirement system. This authority is in section 
218 of the Social Security Act; thus, the agreements are referred to as 
section 218 agreements.
    After the 1950 legislation, there were a number of changes that 
expanded coverage of State and local government employees. The major 
changes were:

      The 1954 amendments made coverage available to State and 
local employees covered under a retirement system, at the election of 
the employer and employees.
      In 1983, Congress repealed a provision that allowed 
States to rescind earlier decisions to elect coverage of their 
employees.
      Legislation enacted in 1986 provided mandatory coverage 
under Medicare for all State and local employees hired after March 31, 
1986.
      Legislation enacted in 1990 made Social Security 
mandatory for State and local employees who are not under a retirement 
system.

    Currently, all 50 States, Puerto Rico, and the Virgin Islands have 
a section 218 agreement with SSA. Because the coverage is voluntary, 
the extent of Social Security coverage varies from State to State. It 
is estimated that 28 percent of State and local public employees are 
not covered by Social Security. Most of the public employees not 
covered are police, firefighters, and teachers.
    Extending Social Security coverage to newly hired State and local 
government employees favorably affects the long-range (75 year) 
solvency of Social Security. This change, if it were applied to new 
employees hired in 2005 and later, would reduce the long-range OASDI 
deficit by about 0.21 percent of taxable payroll. This would address 
about 11 percent of the 75 year program deficit. This change would 
initially bring in payroll tax revenue with little effect on benefit 
payments. However, in the longer term, because of benefit payments to 
these workers, the estimated improvement in the annual balance (cash 
flow) in the 75th year is only 0.01 percent of taxable payroll.
    More than seventy percent of the people who would be affected by 
mandatory coverage work in seven States (California, Ohio, Texas, 
Massachusetts, Illinois, Colorado, and Louisiana). There are over 700 
State and locally administered retirement plans in these seven States.
    Supporters of this change note that extending Social Security 
coverage to newly hired State and local government employees would 
improve the protection of those who have jobs in covered employment 
before or after their government employment. Thus, this change would 
improve the portability of their pension coverage.
    Further, Social Security includes a number of features that may not 
be found in some State and local retirement plans, such as annual cost-
of-living increases, benefits for disabled workers and benefits for 
spouses and children of retired, disabled, and deceased workers.
    However, critics of such a change note that extending mandatory 
Social Security coverage would adversely affect the funding of some 
State and local government defined benefit pension plans. This would be 
particularly true if the retirement plan was already underfunded (had 
insufficient assets to pay promised benefits) and/or relied on new 
employee's contributions to fund current retirees' benefits. (A 1998 
GAO report found that many public pension plans have unfunded 
liabilities.
    State and local governments could be expected to oppose mandatory 
Social Security coverage of newly hired employees, especially on the 
grounds of cost. Concerns have been expressed that many public 
employers would not be able to absorb the higher costs. If that 
happened, State and local governments would need to raise taxes or cut 
spending on other services.
GPO Provision
    I would like to begin by drawing a distinction between the GPO 
provision and the WEP. Like the WEP, the GPO affects workers who 
receive pensions based on employment not covered by Social Security. 
GPO is often confused with the WEP. For ease of discussion, when 
referring to government employment, I am referring to all levels of 
Federal or State government employment that are not covered by Social 
Security.
    The GPO affects government retirees who are eligible for both:

      A pension based on their own work in a Federal, State, or 
local government job that was not covered by Social Security, and
      A Social Security spouse's or surviving spouse's benefit 
based on their husband's or wife's work in covered employment.

    Under the GPO, a person's Social Security spouse's or surviving 
spouse's benefit is reduced by an amount equal to two-thirds of the 
amount of the person's government pension based on work not covered by 
Social Security. As of June 2004, about 399,000 beneficiaries had their 
benefits fully or partially offset due to the GPO.
    The GPO provision removed an advantage that some government workers 
had before the GPO was enacted. Before GPO, a person who worked in a 
government job that was not covered under Social Security could 
receive, in addition to a government pension based on his or her own 
earnings, a full Social Security spouse's or surviving spouse's 
benefit.
    However, a person who works in a job that is covered under Social 
Security is subject to an offset under the dual entitlement provision. 
This provision, which has applied since 1940 when benefits were first 
payable to a worker's family members, requires that Social Security 
benefits payable to a person as a spouse or surviving spouse be offset 
by the amount of that person's own Social Security benefit. Thus, 
dually entitled beneficiaries receive the equivalent of their own 
worker's benefit or the spouse's/surviving spouse's benefit, whichever 
is higher.
    The GPO acts as a surrogate for the dual-entitlement offset for 
workers receiving a government pension based on work not covered under 
Social Security because, if that work had been covered, any spouse's or 
surviving spouse's benefit would have been reduced by the person's own 
Social Security worker's benefit.
Legislation Affecting GPO
    Several bills have been introduced that address the GPO. A bill 
introduced by Representative McKeon (H.R. 147) includes a provision 
that would completely eliminate the GPO. Over five years, this proposal 
would cost nearly $11.6 billion; over 10 years, the estimated cost 
increases to $32.2 billion. The long-range cost is estimated to be 
significant--0.06 percent of taxable payroll.
    Representative Shaw has included, as part of the Social Security 
Guarantee Act of 2005, a provision that would reduce the offset from 
two-thirds of the amount of the person's government pension to one-
third. The proposal would cost about $3.5 billion over 5 years and $9.6 
billion over 10 years. This change is estimated to increase the long-
range cost of the program by 0.02 percent of taxable payroll.
    In the last session of Congress, Representative Jefferson 
introduced H.R. 887, which would have exempted an individual from GPO 
if his or her combined non-covered pension and Social Security benefits 
were less than or equal to $2,000 per month (indexed). A dollar-for-
dollar offset would have applied only to the amount of combined 
benefits in excess of $2,000 per month, with the proviso that the 
offset could not be more than two-thirds of the amount of the non-
covered pension. The cost of this proposal was estimated at $7.8 
billion over five years, and $21.4 billion over 10 years. The long-
range cost was estimated to be 0.02 percent of taxable payroll.
Windfall Elimination Provision
    I would now like to discuss the WEP provision. The Social Security 
Amendments of 1983 (P.L. 98-21) included the WEP provision as a means 
to eliminate ``windfall'' Social Security benefits for retired and 
disabled workers receiving pensions from employment not covered by 
Social Security. Generally, while the WEP applies to any pension based 
on non-covered employment, it primarily affects government workers. 
(The WEP does not affect the Social Security benefits payable to 
survivors of workers who received pensions based on non-covered 
employment.)
    The purpose of the WEP was to remove an advantage that the 
weighting in the regular Social Security benefit formula would 
otherwise provide for persons who have substantial pensions from non-
covered employment. This weighting is intended to help workers who 
spent their lives in low-paying jobs by providing them with a benefit 
that is relatively higher in relation to their prior earnings than the 
benefit that is provided for higher-paid workers.
    However, benefits are based on average earnings in employment 
covered by Social Security over a working lifetime (35 years for 
retired workers). In determining average earnings for Social Security 
benefit purposes, years with no covered earnings are counted as years 
of zero earnings, as if the person had not worked at all. Without the 
WEP, a worker who spent a substantial part of his or her career in 
employment not covered by Social Security would be treated as a low-
lifetime earner for Social Security benefit purposes and receive the 
advantage of the weighted benefit formula. The WEP provides for a 
different, less heavily weighted benefit formula to compute benefits 
for such persons.
    Under the regular (non-WEP) benefit computation rules, a three-step 
weighted benefit formula is applied to a worker's average indexed 
monthly earnings (AIME) to determine his or her primary insurance 
amount (PIA). The PIA is the monthly benefit amount payable to a 
retired worker first entitled at the full retirement age or a disabled 
worker. The PIA formula applicable to workers who reach age 62 or 
become disabled in 2005 is:

        90 percent of the first $627 of AIME, plus
        32 percent of the next $3,152 of AIME, plus
        15 percent of AIME above $3,779.

    Under the WEP computation, a worker who is receiving a pension from 
non-covered earnings generally receives 40 percent of the first $627 
instead of the 90 percent provided to workers whose entire careers were 
in covered employment. The 32 and 15 percent factors are the same for 
workers affected by the WEP and those that are not.
    For a worker first eligible in 2005, the maximum WEP reduction is 
$313.50 per month--or the difference between 90 percent and 40 percent 
of $627. Unlike the GPO, the WEP can never eliminate a person's Social 
Security benefit.
    WEP does not apply at all to workers who have 30 or more years of 
substantial earnings under Social Security. For workers who have 21 to 
29 years of substantial covered earnings under Social Security, the 
reduction under the WEP is phased out gradually.
    The WEP provision includes a guarantee designed to help protect 
workers with relatively low pensions based on non-covered employment. 
This guarantee provides that the reduction in Social Security benefits 
can never exceed one-half the amount of the pension based on non-
covered work.
Educating the Public
    As you can see, the WEP and GPO provisions are complicated and, 
consequently, there have been misunderstandings about who is affected. 
You may recall from last year's testimony that SSA has made revisions 
to the Social Security Statement highlighting and making clearer the 
potential impact of WEP and GPO on a worker's Social Security benefit 
if he or she receives a pension based on non-covered employment. The 
Statement refers individuals to SSA publications that explain how 
benefits can be affected by the WEP and GPO. It also refers individuals 
to an SSA website, which was recently revised to make sure that there 
is ample information and links to fact sheets that explain the impact 
of the GPO and WEP. The website includes benefit calculators that allow 
individuals to estimate the effects that WEP or GPO may have on their 
monthly benefit.
    Additionally, SSA offices nationwide provide pre-retirement 
seminars to government employees who request them. If government 
employees request the seminar, we inform them of the potential impact 
that WEP and GPO may have on their monthly Social Security benefit.
    As you know, the Social Security Protection Act of 2004 (SSPA) 
required SSA to make a disclosure form available for State and local 
government employers to use to notify new non-covered employees of the 
potential effect of this work on their Social Security benefits. This 
provision was effective January 1, 2005. As we considered our 
implementation strategy for this provision, I met with representatives 
of several interested groups (some of them are here today as witnesses) 
to get their input and hear their concerns.
    SSPA also required that Social Security Statements issued after 
December 31, 2006 contain language to explain the maximum potential 
effects of the WEP and GPO to any person whose records indicate that 
they may be subject to those provisions. We are currently examining 
ways to use our administrative records of non-covered earnings to 
identify individuals whose benefits are likely to be affected by the 
GPO or WEP.
Legislation Affecting WEP
    A number of bills have been introduced that would change the WEP. 
These proposals include:

      eliminating the WEP entirely;
      providing less of a WEP reduction (or no reduction) for 
government workers whose pensions from non-covered employment, in 
combination with their Social Security benefits, are below certain 
levels; and
      replacing the WEP benefit formula with an alternative 
computation.

    Let me start with the elimination of the WEP. If the WEP were 
eliminated, approximately 738,000 retired and disabled workers would 
see their benefits increase. It is estimated that elimination of the 
WEP would have a 5-year cost of $10.8 billion and a 10-year cost of 
$29.7 billion. The long-range cost would be significant--estimated to 
be 0.06 percent of taxable payroll.
    The second type of proposal that has been introduced would provide 
less of a WEP reduction, or no WEP reduction, if the combined amount of 
the worker's non-covered pension and Social Security benefits is below 
a certain threshold. Representative Frank has introduced such a bill 
(H.R. 1690). This bill would exempt an individual from WEP if his or 
her combined benefits were less than $2,500 per month (indexed) when he 
or she is first eligible for both Social Security and a non-covered 
pension. The legislation provides for graduated implementation of this 
provision on amounts above $2,500 monthly. Such a proposal would cost 
$20.4 billion over the next 10 years and increase long-range costs by 
0.03 percent of taxable payroll.
    The third type of bill that has been introduced would replace the 
current WEP formula with an alternative computation. This is the 
approach embodied in H.R. 1714, as introduced by Representative Brady. 
Under this bill, a hypothetical primary benefit would first be computed 
based on all of the worker's available covered and non-covered earnings 
after 1950. This hypothetical benefit would then be multiplied by the 
proportion of the worker's total earnings that were covered under 
Social Security to obtain the primary benefit payable to the worker.
    The bill also includes a guarantee provision that would ensure that 
workers whose government pension is based on non-covered earnings in 
the year of enactment or earlier would receive no less than the benefit 
under the present law WEP provision. The bill would apply to 
beneficiaries already on the rolls, as well as to future beneficiaries.
    SSA's Office of the Chief Actuary estimates that enactment of H.R. 
1714 would increase program costs by $2.7 billion over the first 5 
years; the 10-year cost would be $7.0 billion. The long-range cost of 
the program would increase by 0.01 percent of taxable payroll. These 
cost estimates assume that only the available non-covered earnings data 
on SSA's records, for years 1978 and later, would be used in 
calculating the proposed benefit. The actuaries used this assumption 
because they believed that the availability of non-covered data for 
years before 1978 would be problematic for many non-covered workers. To 
the extent that workers' pre-1978 non-covered earnings are available 
and could be included in the proposed benefit computation, the cost of 
the bill would be somewhat lower.
    Let me first commend Rep. Brady for his efforts to find ways to 
replace the current WEP with an approach that is intended to more 
accurately reflect an individual's complete earnings history. And we 
have appreciated the opportunity to work with his and other 
congressional offices on legislation affecting the WEP. However, we 
continue to be concerned about some aspects of this bill. The primary 
issue is that the computation would count non-covered earnings after 
1950, but SSA only has records of non-covered earnings beginning in 
1978, when it began receiving Form W-2 information from employers, and 
some of these records are incomplete--particularly for the years soon 
after SSA began collecting this earnings information.
    We are concerned about the availability of records documenting pre-
1978 earnings. Unfortunately, the data needed for these calculations--
much of it wages paid to individuals as many as 30 or more years ago--
will not be available for many cases, making it difficult for SSA to 
equitably administer the provisions of the bill. While the bill 
includes provisions for ``deeming'' non-covered earnings when such 
earnings are not available, these provisions would be complex to 
administer, and would result in a benefit not based on the individual's 
true earnings. Because the bill would apply to those on the rolls as of 
the effective date, SSA would be required to review the benefits of 
more than 738,000 retired and disabled workers affected by the WEP to 
determine if their monthly benefits should be adjusted. In addition, 
the workloads that would be generated by passage of such legislation 
would be tremendous and take years for SSA to complete.
    We are also concerned about willingness to cooperate on the part of 
individuals who would be affected by this provision, because we would 
be seeking evidence of earnings that would only serve to lower the 
benefit amount payable under the bill. A worker whose non-covered 
earnings were entirely before 1978 would fully avoid the WEP reduction 
under the proposed computation if those earnings were not disclosed by 
the worker or otherwise determined by SSA.
    Because of the large volume of recomputations required and 
associated manual actions, the workload impact on SSA would be 
substantial--and would create delays in other workloads.
    While we have raised a number of concerns with this bill, we look 
forward to working with the committee on these issues.
Conclusion
    I want to again thank the Chairman and the Subcommittee for giving 
me this opportunity to discuss the Social Security coverage for State 
and local government employees and the related topics of WEP and GPO. 
As always, SSA welcomes the opportunity to work with you to provide any 
additional information you need as you continue to look at these 
complex and important issues. I would be glad to answer any questions 
you might have.

                                 

    Chairman MCCRERY. Thank you, Mr. Streckewald. We have been 
joined in the Subcommittee by the distinguished Ranking Member 
of the full Committee on Ways and Means. Welcome, Mr. Rangel; 
nice to have you with us.
    Mr. BECERRA. Mr. Chairman, we are pleased to have another 
gentleman on that side of the aisle, who we hope will do some 
good questioning from your side of the aisle.
    Chairman MCCRERY. We know him to be an able advocate. I 
would like to take you through a couple of examples, because 
these can be confusing to someone who is just trying to 
understand the concept here. So, I want to take you through a 
couple of examples to illustrate the GPO and the WEP and try to 
get, as I am walking through these examples, a sense for 
fairness/unfairness of the provisions.
    Let us assume we have two teachers, Mary and Jane. Both of 
them make the same salary, but Mary paid into Social Security 
and Jane didn't. They were in two different systems. One system 
paid Social Security; the other system had its own retirement 
system and didn't pay into Social Security. Mary paid in, Jane 
didn't. Mary will receive her pension benefit if she was under 
a teacher's pension plan, and she will also receive her Social 
Security benefit because she paid into both. Jane on the other 
hand, will receive her teacher's pension benefit, but obviously 
won't receive any Social Security benefits since she didn't pay 
into the system. Is that correct?
    Ms. BOVBJERG. It would depend on her marital status.
    Chairman MCCRERY. Let us just assume right now they are 
single. So, that is correct; that makes sense, doesn't it.
    Ms. BOVBJERG. Yes.
    Chairman MCCRERY. Mary gets both. Jane didn't, so, she just 
gets her pension. Now let us assume that they are both married 
and they are married to workers who paid into Social Security. 
Both husbands earn spousal benefits for their wives, right?
    Ms. BOVBJERG. They paid in?
    Chairman MCCRERY. Both husbands paid into Social Security. 
They earned spousal benefits. However, Mary, the teacher who 
paid into both, her spousal benefit will be reduced $1 for 
every dollar of her own worker benefit under Social Security; 
is that right?
    Ms. BOVBJERG. Correct.
    Chairman MCCRERY. So, basically she gets to take the higher 
of her own earned benefit or her husband's?
    Ms. BOVBJERG. That is right.
    Chairman MCCRERY. Now, Jane, when she gets a spousal 
benefit, hers will be offset $2 for every $3 of her husband's 
benefit; is that right?
    Ms. BOVBJERG. That is right.
    Chairman MCCRERY. You have two teachers in identical 
situations, the only difference being that one paid into Social 
Security and the other didn't. The higher spousal benefit goes 
to the teacher that paid into Social Security--actually, I am 
wrong. It goes to the teacher who did not pay into Social 
Security. Would you say that unfairly treats the spouse who did 
not pay into Social Security?
    Ms. BOVBJERG. I think it is more than fair. The fundamental 
principle behind Social Security is that it is a contributory 
program. The situation that you describe is designed to be 
comparable, that if you have two working spouses and you are 
offsetting the working spouse's benefit, even though she paid 
into Social Security, you certainly should not treat a spouse 
that did not pay into Social Security, but also worked, as if 
they have no other resources. They are not dependents, and that 
is the key reason that you need to compare them to working 
spouses.
    Chairman MCCRERY. For those who say the GPO is unfair, if 
it is unfair to reduce spousal benefits for workers who don't 
pay Social Security, it should also be fair to reduce spousal 
benefits for workers who do pay Social Security taxes, since 
those workers, husbands and wives, earn spousal benefits just 
like the husbands and wives of public employees.
    Ms. BOVBJERG. That is right. I think the people who are 
concerned about fairness often don't know about this provision 
until they get very close to retirement and find that it is a 
complete surprise, a very unpleasant surprise. It just does not 
meet their expectation. I think some of the provisions in the 
Social Security Protection Act from last year that require 
State and local governments with noncovered employment to 
notify participants in their plans of their status with Social 
Security will help.
    Chairman MCCRERY. I think that is right. When you look at 
it in the context of how Social Security treats other spouses 
who have both a pension and a Social Security benefit, I think 
certainly it becomes clearer that there is some justification 
for that reduction.
    Ms. BOVBJERG. It is designed to be equitable.
    Chairman MCCRERY. Now let us do the same thing with the 
WEP. Let us take two public employees, two men this time, Ray 
and Jack. Both of them make the same salary, but Ray's 
employment is covered under Social Security and Jack's is not. 
Both of them also have private sector jobs at night to 
supplement their public income, their public jobs' income, and 
they earn exactly the same amount at night.
    Now, Ray's average earnings subject to Social Security 
taxes were $58,000, while Jack's equaled only $16,000. Oviously 
one of them is whole--his public job salary was subject to 
Social Security and his moonlighting job, whereas Jack's, only 
the moonlighting job was subject to Social Security. So, in the 
eyes of Social Security, Ray's earnings were $58,000 while 
Jack's were only $16,000. The Social Security benefit formula 
only recognizes earnings that are only subject to Social 
Security taxes and replaces a greater percentage of earnings 
with those with low wages, so, if we were to repeal the WEP, 
Ray's Social Security benefits would replace 36 percent of his 
Social Security earnings while Jack's Social Security benefits 
would replace 58 percent of his Social Security taxed earnings. 
So, is it fair for Jack to be paid relatively more generous 
benefits than Ray if they had identical earnings?
    Ms. BOVBJERG. That is why they call it the Windfall 
Elimination Provision. It would be a windfall to Jack.
    Chairman MCCRERY. So, is this the situation that the WEP 
was designed to avoid?
    Ms. BOVBJERG. Absolutely, the double-dipping situation.
    Chairman MCCRERY. Okay. I just wanted to get that out there 
for everybody, so we all understand the context of these 
provisions. You shouldn't look at them in isolation. You should 
look at them in the context of Social Security, the goals of 
Social Security, and how similarly situated people with the 
same earnings are treated in these situations. I know I took a 
lot of time to do that. So, I am going to stop and go to Mr. 
Becerra.
    Mr. BECERRA. Thank you, Mr. Chairman, and I appreciate your 
efforts to try to clarify. I know most people, like Ms. 
Bovbjerg said, don't realize they fall within the GPO or within 
the WEP exceptions until they get there; and it can be somewhat 
startling to find out this news when you are close to retiring. 
We appreciate that. Mr. Chairman, thank you for holding this 
particular hearing. I think it is important to get this 
information out there. Let me see if I can ask--and, Mr. 
Streckewald, you are probably more appropriate since you work 
directly for the Administration. The President has been talking 
since the beginning of the year about changes to Social 
Security, privatization as part of his proposal or the idea--
although we don't have a specific proposal, but so far the 
ideas he has included privatization--by changing the indexing 
formula that is used to determine benefits. He is talking about 
reducing the benefits that middle-class Americans who retire 
would receive. Has the Administration put forward any proposals 
to address these longstanding concerns of public employees that 
we are addressing today, the GPO and the WEP, within Social 
Security?
    Mr. STRECKEWALD. Let me make sure I understand the 
question. Has the SSA put forth any proposals to address the 
GPO or the WEP provisions?
    Mr. BECERRA. Either the SSA or the President, since the 
President has been going around the country and talking about 
changing or replacing Social Security.
    Mr. STRECKEWALD. I am not aware of any proposals or 
suggestions that have been put out there. The Administration is 
looking at all options and, I think, considering everything in 
the broader context of the Social Security solvency discussion.
    Mr. BECERRA. Do you know if the Administration, through SSA 
or otherwise, has taken a position on these issues of the GPO 
and the WEP?
    Mr. STRECKEWALD. I don't know that. I don't know if they 
have a position one way or the other. Most of what I have heard 
has been a discussion of putting all the issues on the table 
and sorting through them.
    Mr. BECERRA. Do you know if the Administration has any 
plans to address these concerns being raised by public 
employees with regard to the GPO and the WEP?
    Mr. STRECKEWALD. I don't know whether they do or not. I 
came more prepared to talk about the issues related to just 
those two provisions outside of the solvency issue. The general 
issue on solvency is that the SSA works with the Administration 
to try to staff out some of the proposals. Again, I think the 
Administration looks to see if everything is on the table.
    Mr. BECERRA. If everything is on the table, that means GPO 
and WEP are on the table?
    Mr. STRECKEWALD. Most of what I am hearing is yes.
    Mr. BECERRA. If it is on the table, what does the President 
put on the table with regard to GPO and WEP?
    Mr. STRECKEWALD. I don't know.
    Mr. BECERRA. Have you had any discussions within Health and 
Human Services or--I am sorry, Social Security or within the 
White House to address or at least discuss the issue of GPO and 
WEP?
    Mr. STRECKEWALD. In relation to the broader solvency 
discussion?
    Mr. BECERRA. Right.
    Mr. STRECKEWALD. I am a career civil servant, so, I haven't 
been invited to those meetings.
    Mr. BECERRA. I am just trying to get information to find 
out what the thinking might be, because we have, piecemeal, 
some ideas from the President about how he believes we could 
address Social Security, making it stronger and so forth. It is 
unclear where he would want to go, as President, on GPO or WEP, 
and I was hoping maybe you would have some information.
    Mr. STRECKEWALD. I don't have any insight to offer other 
than what I said before. My understanding is that the President 
believes everything is on the table and should be looked at and 
all ideas should be sorted through for the right combination.
    Mr. BECERRA. I suspect after your testimony, a whole bunch 
of public employees are going to say that it is time to write 
to the President to ask him to articulate what he might be 
thinking of doing with GPO and WEP. I yield back the balance of 
my time.
    Chairman MCCRERY. I would just say that I don't know of any 
proposal that the President has made with respect to these two 
provisions, but I do know that the entire Social Security law 
is written by Congress, not by any President; and it is our job 
to explore this, and that is what we are doing today. We may 
indeed recommend changes in the legislation which we hope the 
President would sign if we could ever give him a bill. Mr. 
Johnson.
    Mr. JOHNSON. Thank you, Mr. Chairman. Mr. Streckewald, last 
time the SSA was before this Committee on this issue, we heard 
you thought it would be both expensive and difficult to 
administer the Public Service Retirement Protection Act because 
of old recordkeeping problems. Have your views changed at all?
    Mr. STRECKEWALD. I couldn't quite hear. To administer the 
change in the WEP?
    Mr. JOHNSON. Yes.
    Mr. STRECKEWALD. Yes. We have looked at it since the last 
hearing. We have concluded that basically the same problem 
exists now that existed last year. We don't have any noncovered 
earnings information before 1978 because we did not receive any 
W-2s from IRS before then. For the period 1978 to 1983, we have 
some, but not fully complete, information. So, if we were to 
try to look at some of the changes that have been suggested in 
relationship to the WEP and going back and looking at the 
entire noncovered earnings and covered earnings, and then 
taking a proportion of them, and then applying a reduction 
based on that, we would have a hard time finding those pre-1978 
earnings. We would have to have people in our offices contact 
these entities within the State and local governments, figure 
out what the average employment was for that position during 
that timeframe and try to extrapolate some sort of an estimated 
cost. That would be one way of doing it.
    If the person had their pay stubs from back then, that 
would be great. Most people don't save them that long. So, we 
have estimated it would take nearly 2200 work-years over a 5-
year period to try to go back and look at everybody's WEP 
computation to see if we could change it based upon pre-1978 
earnings, and to do the rest of the change in the computation 
as well.
    Mr. JOHNSON. Ms. Bovbjerg, have you updated your computers 
yet? We gave you money many years ago to do that, and you still 
can't tell people whether their Social Security card is current 
or not.
    Ms. BOVBJERG. That we can't tell people what? I am sorry, I 
didn't hear your question.
    Mr. JOHNSON. You still can't tell whether people have a 
good Social Security card or not.
    Mr. STRECKEWALD. We have managed to put a number of 
upgrades in place on a lot of different program areas, and the 
enumeration which is the Social Security card, we have systems 
in place that an employer who hires a new worker--through a 
Web-based system, can actually verify that name and number with 
us and make sure we have the same name and number.
    Mr. JOHNSON. I understand, but you don't know if it is a 
real guy or not.
    Mr. STRECKEWALD. If it is not a real guy, we won't say that 
we can verify that name and number. You mean if it is a 
deceased person?
    Mr. JOHNSON. Some guy who has three or four cards. You were 
in the habit of replacing cards just on a phone call. I don't 
think you do that anymore. All I am saying is, are your 
computers upgraded enough to handle the situation? If they 
can't handle that, they can't handle this program either.
    Ms. BOVBJERG. I am from the GAO, not SSA.
    Mr. STRECKEWALD. I would say that our computers are set up 
to verify the name and the number in a very sophisticated way, 
but the card itself is not an identity document. Employers are 
supposed to verify the person's identity separately and then 
verify the name and number on the card with us.
    Mr. JOHNSON. I understand what is supposed to happen.
    Ms. BOVBJERG. Could I jump in? We have done a report for 
this Subcommittee fairly recently on the earnings suspense file 
at the SSA, and it is quite clear that employers do not check 
and do not use the verification available to them.
    Mr. JOHNSON. Can you tell me or give us an estimate of how 
many State and local public sector employees would receive 
higher benefits if this legislation were passed?
    Mr. STRECKEWALD. Would this be the Brady type of 
legislation?
    Mr. JOHNSON. Yes.
    Mr. STRECKEWALD. I think about 88 percent of the workers, 
if they were to retire in 1999, 88 percent of the workers would 
receive increased benefits if we instituted H.R. 1714, which is 
often called the Brady bill. If you carried that a little 
further out to people that retired in 2018, it would be a 
little bit less, but still 61 percent of the people would do 
better under that computation. It would be under current law 
computation; a significant number would see increased benefits.
    Mr. JOHNSON. Thank you, Mr. Chairman.
    Chairman MCCRERY. Ms. Tubbs Jones.
    Mrs. JONES. Thank you, Mr. Chairman. Good afternoon. On our 
panels coming up, we are going to hear from representatives of 
some of the government employee unions, but if I were someone 
walking up to you and saying, What is the detriment for me as a 
noncovered worker to have my funds placed into Social Security, 
what would your answer be?
    Ms. BOVBJERG. What would the detriment be? I would say it 
is an advantage, because you would be assured of a lifetime 
annuity with a cost-of-living adjustment. That is not something 
that everyone in State government has.
    Ms. TUBBS JONES. Those that do have it would not get a 
benefit?
    Ms. BOVBJERG. It would depend on how the State coordinated 
the matching together of Social Security and their plan. 
Depending on the State's plan, it could in fact cost more for 
the State and potentially for the employee.
    Ms. TUBBS JONES. What has been proposed, that you are 
familiar with? You say, how it matches it or--what are States 
proposing to match?
    Ms. BOVBJERG. States have merely told us what actions they 
thought they would have to consider if the Congress required 
all State and local employees to be covered by Social Security.
    Ms. TUBBS JONES. What have they told you that Congress 
would require them to consider?
    Ms. BOVBJERG. They told us that if there is what we call 
the State and local mandate, if everybody was brought in to 
Social Security, that they would have to consider that, to 
provide both Social Security and their current pension plan, 
would clearly cost them more. So, what would they do? Would 
they simply pay more? Or would they reduce something in the 
current pension plan? Clearly, this would not happen right away 
because it would only apply to people newly hired after the law 
took effect. State and local governments would have to consider 
how to integrate the two plans.
    Ms. TUBBS JONES. The costs would be borne by the State or 
the costs by the Feds?
    Ms. BOVBJERG. By the State.
    Ms. TUBBS JONES. Not many States are going to run up to do 
that, are they? That is just a commentary. Let me ask about 
employees who end up in disability for a period of time and 
then they come back into the workforce under Social Security, 
how are they treated in terms of what their retirement income 
would be, Mr. Streckewald?
    Mr. STRECKEWALD. The disability provisions for the WEP, I 
believe you are talking about, are very similar to those for 
retirees. There is a very small percentage of people who are 
affected by the WEP.
    Ms. TUBBS JONES. I wasn't talking about the WEP. I was just 
talking in general. It is something I don't know, and I was 
interested in getting a response.
    Mr. STRECKEWALD. What happens if you are disabled and come 
back to work? We have changed a lot of our return-to-work 
policies, and we are looking at changing more. We are trying to 
encourage people to try to go back to work. If they have a 
successful working experience and manage to stay with that job 
for quite awhile and go back in the workforce permanently, then 
basically their wages get on their earnings record. When they 
retire, we do a computation that looks at their wages while 
they were not disabled, but doesn't include those years for 
which they were disabled. That is the computation.
    Ms. TUBBS JONES. What is the work requirement? If we say 40 
quarters to be eligible for Social Security, is it 40 other 
than the disability, or 40 including the time I have been out 
on disability?
    Mr. STRECKEWALD. I believe I do not want to hazard a guess. 
I will take it for the record. I think most people have the 40 
quarters with or without the disability, but if I could submit 
that for the record.
    [The information follows:]

    Generally, an individual has disability insured status if he or she 
has at least 20 quarters of coverage (QC) during the 40-quarter period 
ending with the quarter in which the disability waiting period begins, 
and is fully insured in that quarter. In determining the 40-quarter 
period, we do not count any quarter or part of which is in a prior 
period of disability except the beginning or ending quarter if they are 
QC's. To be fully insured, the individual must have the number of QC's 
that he or she would have required to be fully insured had he or she 
filed an application for retirement insurance benefits and attained age 
62 in the first month of the waiting period.
    The five month waiting period begins with the first full month in 
which an individual is both insured for disability and disabled. No 
waiting period is required for individuals who were previously entitled 
to disability benefits, or a period of disability at any time within 5 
years of the month the individual again became disabled.

                                   

    Ms. TUBBS JONES. I would love for you to submit it for the 
record. I yield back the balance of my time, Mr. Chairman.
    Chairman MCCRERY. Mr. Brady.
    Mr. BRADY. Thank you, Mr. Chairman. Ms. Bovbjerg. Mr. 
Streckewald. First let me say, Sam, your effort to limit the 
number of repeat cards is already having an effect. For some 
reason, we have lost our 3-year-old's Social Security card at 
least twice a year. I told my wife, I don't want to end up on 
Sam Johnson's bad list of repeat offenders. I always appreciate 
Ms. Bovbjerg's policy laying out the issues, especially on 
issues like mandatory coverage being one of them. I understand 
the policy of it. For whatever it is worth, I strongly oppose 
pursuing mandatory coverage.
    I watch our teachers, fire fighters, and police, that 4 
percent of the workforce that are in substitutes for Social 
Security. They put real money in real accounts and invest in 
real assets, and their retirees have stronger retirement 
systems than our own. My belief is that our teachers and fire 
fighters and police retirement systems shouldn't look more like 
Social Security; Social Security should look more like them. I 
think they have a stronger underpinning and do more for workers 
in the long term. I understand the policy of trying to simplify 
and move away from some of these confusing terms, but I watch 
what they do and wonder how we can make our own Social Security 
system better.
    For Mr. Streckewald, last May, Martin Gerry testified there 
would be significant administrative burdens on the Public 
Servant Retirement Protection Act, which a number of us are 
working together on. I thank the team over at the SSA for 
working with us this past year on this issue. The bill, this 
year, was rewritten with the guidance of the SSA to find a way 
to better formulate the wage histories so that we can have a 
system that is tailored to the worker and their work history 
rather than an arbitrary formula. The goal is equal treatment 
for those who have earned two pensions, one in Social Security 
and one in a substitute where they received the full benefits 
for the years and the contributions they put in, not that they 
work 10 years in Social Security and get all 10 years, full 
benefit--15 years.
    We have rewritten it to deal--at your urging--with the 
administrative burden. To ease it by giving the SSA the 
authority to either extrapolate those wage earnings or use 
average wage rates when attempts to create the full work 
history have been exhausted. Aren't we creating a far more 
workable solution for the agency with the new bill, because I 
think we significantly have reduced that burden, have given you 
some real common-sense tools. Especially when the gaps aren't 
large or they stay in the same profession, it is fairly easy to 
move that up, and especially with default, that they always 
have the existing revenue underneath them no matter what.
    Mr. STRECKEWALD. I would like to thank you and your staff 
for working with us, because this is a very complicated issue 
and it takes some pretty thorough analysis. I think for one of 
the points you make, it would very much depend upon each 
individual. There are some circumstances that we don't have any 
problem at all doing the new computation, looking at the 
proportion of covered wages and noncovered wages and figuring 
what reductions should be based upon that. If a person has 
noncovered wages back into the period before 1978, and for some 
people between 1978 and 1983, we will have some significant 
work to be done. We have estimated it would take an hour-and-a-
half to get the information, contact the employer and figure 
out what the average wage should have been in that profession 
at that time of year and in that county, because different 
counties pay different rates for teachers.
    We would have to do the computation. We would either have 
to build a pretty big computer system to make that computation 
or we would build a system where we could manually compute it--
a little less than Martin Gerry's testimony last year, but 
still about 2,200 work-years over a 5-year period. So, it is 
about 400 work years per year that we would put onto this 
workload and it would take us about five years to get through 
it.
    Mr. BRADY. I am surprised it hasn't changed, because in our 
meetings with the SSA, we basically incorporated the agency's 
solutions on how we can do this easier and better. Frankly, I 
can't think at this point of a better way to really tailor this 
solution than to try to get us as close to the actual wages as 
possible and give you some easy tools.
    Mr. STRECKEWALD. This would change as we got into it, of 
course, because one of the tools that you did put into your 
bill would allow us to have an attestation that if the person 
could corroborate their attestation with the person who has 
knowledge, that is a lot quicker for us than having to go 
contact an employer. If we have a large proportion of people 
that can do that, then some of the costs would go down.
    Mr. BRADY. For the Committee, that is a key point, because 
there are a number of workers and substitutes who come very 
close, very quickly to their wage histories, and stayed in the 
same profession--teaching, fire fighting, and police--and can 
recreate those fairly soon; and the ability to corroborate that 
with someone who has knowledge, I think, is going to be a 
better tool than we think at the outset. I appreciate the 
Chairman bringing this issue up. One of the frustrations is the 
issue of dependency. Apples to apples are two workers where 
both spouses work, so, dual entitlement, two workers, and the 
GPO really tries to match at least. The issue of dependency 
where they see someone who has a wife who hasn't worked, the 
Ozzie and Harriet model from a generation ago, that almost 
doesn't exist today, can you explain the issue of dependency? I 
know it is a confusing issue for a lot of our public servants.
    Mr. STRECKEWALD. When Social Security first started, the 
model that you talked about, the working husband and stay-at-
home wife, was a common model. So, the spousal benefits were 
set up with the assumption that a lot of women would be 
dependent upon their husband. When the husband retired, died, 
or became disabled, there would be a spousal benefit because 
she was dependent upon him. As the workforce changed and more 
and more women came into the workforce after World War II and 
beyond, the fifties and sixties, it really started changing. 
Women became insured for Social Security under their own 
earnings, so, they were no longer dependent as much on the 
earnings of their husband as somebody who had never worked and 
stayed at home to work.
    So, I think the dual entitlement provision that Congress 
has put into law recognized that, that someone who has stayed 
at home and not worked will get a full spousal benefit because 
they are totally dependent on the husband in this case; but 
someone who has gone out and worked on their own and received 
their own retirement benefit from Social Security, we want to 
offset that against the spouse's. They can't get both, in other 
words, and that seems to be Congress' intent there, not to give 
them both. A full spousal benefit was based upon full 
dependency and their own, which was originally dependent upon 
their own lost wages.
    Mr. BRADY. Just to conclude, and I would ask the agency one 
time to identify just how many people fit that past mold, never 
having worked ever in their lifetime or at least not qualified. 
The response to that was that at this point, the amount is too 
small to measure, because people work after school before they 
have children; even if they are able to stay home, go back to 
help pay for college costs. It is just rare these days to have 
people who are completely dependent on their whole lifetime of 
earnings, and that ought to be our factor as we go forward.
    Chairman MCCRERY. I hate to do two people in a row on the 
majority side, but Mr. Rangel, do you have any questions.
    Mr. BECERRA. We won't object.
    Mr. RANGEL. Thank you, Ms. Bovbjerg, for the good work that 
the GAO always does in a very bipartisan and professional way. 
Mr. Streckewald, at some point, in answer to a question, you 
had pointed out that you were a civil servant, as distinguished 
between what?
    Mr. STRECKEWALD. I am career civil servant. I started my 
career in 1974 in the SSA and worked my way up to the position 
I hold now. I am not politically appointed into this position.
    Mr. RANGEL. Having said that, would there be any difference 
in the competency or the accuracy of the testimony of a person 
who was politically appointed?
    Mr. STRECKEWALD. No. I think that some of the political 
appointees in our agency deal with different issues than some 
of us career executives. I generally deal with the current 
program as it exists now. If there are discussions of a 
political nature on proposed changes in the future, then it is 
more of a political appointee's role to get involved in that 
and get involved with the Administration and interact with the 
Hill.
    Mr. RANGEL. Would it be included in the responsibilities of 
a career civil servant, explanations as to the fiscal condition 
of the Social Security system as it exists now?
    Mr. STRECKEWALD. I think, in general, most of the career 
civil servants at my level, if their job requires them to work 
on that, they can articulate some of the basic solvency points 
in terms of when the trust fund will run out of money, that 
type of thing. Again, most of my work in the last several years 
has trying to administer the current Old-Age Survivors and 
Disability Insurance (OASDI) and Supplemental Security Income 
(SSI) programs.
    Mr. RANGEL. They are civil servants that give this 
information to the general public as to the solvency of the 
Social Security system?
    Mr. STRECKEWALD. Yes.
    Mr. RANGEL. Do they do this in response to questions or do 
they volunteer?
    Mr. STRECKEWALD. I think both. Out in our field offices and 
regional offices, we have public affairs people.
    Mr. RANGEL. How long have you worked with the Federal 
government?
    Mr. STRECKEWALD. Thirty-one years.
    Mr. RANGEL. Have you known in any other agency where civil 
servants offer information to the beneficiary as to the 
solvency of a particular program?
    Mr. STRECKEWALD. I am not aware that they have or they 
haven't.
    Mr. RANGEL. Let us get back to Social Security. How would 
you think this fits within the responsibility of a civil 
servant, non policy Member of the Social Security system to 
volunteer what they believe is the solvency of a Social 
Security system? Have you ever heard of anything like this 
before?
    Mr. STRECKEWALD. We do have some official kind of 
publications that we use to educate our own people on, so if 
they are in a situation, either under official business where 
we try to go out and inform.
    Mr. RANGEL. I understand that. I have come to find out what 
my Social Security benefits are now, and I am talking to a 
civil servant and not a political appointee. Can you explain 
how it is conceivable that that person could go beyond my 
request and tell me how long the Social Security system was 
going to be solvent. I am 75, and they will be telling me what 
is going to happen in the next 20 years.
    Mr. STRECKEWALD. I can't explain that. That is certainly 
not a role that we ask our field office people who have contact 
with the public to take on.
    Mr. RANGEL. When the political appointees are advising the 
President as to policy, do they sometimes talk with the career 
civil servants to find out what their ideas are?
    Mr. STRECKEWALD. Sometimes, yes.
    Mr. RANGEL. Has anyone ever come to you, based on your 
three decades of service, to ask you your advice as to how we 
can make the Social Security system operate better?
    Mr. STRECKEWALD. Actually, no they haven't. Certainly my 
relatives constantly ask me, but my superiors and my colleagues 
at work, they know that is not my area of expertise, so, I have 
not been asked my opinion of that officially.
    Mr. RANGEL. So, I would not ask the question as to whether 
or not this is a political proposal or one that is based on the 
experience of Social Security, you being a civil servant. They 
would never come to someone who knows what they are talking 
about. Thank you, Mr. Chairman.
    Chairman MCCRERY. Thank you, Mr. Rangel. I would ask of 
each of you, if we submit some questions in writing, would you 
respond to those? Thank you very much. We probably will do 
that. Thank you for your testimony and for answering our 
questions. Now we call up the second panel. Second panel, come 
forward. As they are coming forward, I will announce the names 
of the second panel: The Honorable Nan Grogan Orrock, State 
Representative, Georgia General Assembly, Atlanta, Georgia, and 
Chair of the Labor and Workforce Development Standing 
Committee, National Conference of State Legislatures (NCSL); 
Teresa Bierdeman, Chairman, Coalition to Preserve Retirement 
Security in Alexandria, Virginia; Chuck Canterbury, President, 
Grand Fraternal Order of Police; Randall Iglehart, President, 
Association of Texas Professional Educators; Patricia Wolfe, 
President of federally Employed Women; Charles Loveless, 
Director of Legislation, American Federation of State, County 
and Municipal Employees. Thank you all for coming today. You 
have submitted written testimony, which will be included in its 
entirety in the record. We would ask each of you to summarize 
your testimony in about five minutes each. We will begin with 
Ms. Orrock. Thank you for joining us today, and we look forward 
to hearing your testimony.

      STATEMENT OF THE HONORABLE NAN GROGAN ORROCK, STATE 
REPRESENTATIVE, GEORGIA GENERAL ASSEMBLY, AND CHAIR, LABOR AND 
 WORKFORCE DEVELOPMENT STANDING COMMITTEE, NATIONAL CONFERENCE 
                     OF STATE LEGISLATURES

    Ms. ORROCK. Chairman McCrery, Ranking Member Levin and 
distinguished Members of the Committee, thank you for the 
opportunity to share the positions of the National Conference 
of State Legislatures on the issue of mandating Social Security 
for State and local government employees and the GPO and WEP 
that reduces Social Security benefits of State and local 
government retirees. I am State Representative Nan Grogan 
Orrock, a Member of the Georgia General Assembly, and I 
currently serve as Chair of NCSL's Standing Committee on Labor 
and Workforce Development. That is the Committee tasked with 
articulating NCSL's positions on public pensions and Social 
Security.
    The NCSL's opposition to mandateory coverage for State and 
local government employees is one of our longest-held policy 
positions. We oppose mandatory coverage because it impinges on 
the ability of State and local employers to create and maintain 
retirement systems that address the unique needs of State and 
local governments. We oppose mandatory coverage because 
compliance would impose serious costs and disruption to State 
and local governments and their programs, while providing 
minimal short-term value and adding long-term liabilities to 
Social Security. Further, we oppose mandatory coverage because 
it unfairly penalizes those State and local governments that 
structured and funded benefits outside the Social Security 
system while destabilizing State and local programs that are 
effectively providing retirement security to a large number of 
Americans.
    State and local governments today provide pensions to 
roughly 15 million employees. Of these employees, approximately 
28 percent receive a pension that does not include Social 
Security coverage. Approximately 40 percent of teachers receive 
pensions not covered by Social Security, and roughly 75 percent 
of the Nation's State and local first responders receive 
uncovered pensions. These pensions take into account early 
retirement ages, higher incidence of disability and death in 
these occupations and survivor benefits. The tax increase on 
States, localities, and our employees that would result from 
mandatory coverage, even if only new hires were forced into 
Social Security, would amount to a very large unfunded mandate 
on States and it would have a substantial negative effect on 
our State budgets and on the financing of our retirement 
systems. The cost of mandatory coverage is $44 billion over the 
first 5 years for new hires alone. Every State has some public 
employees who do not pay into the Social Security system; thus, 
every State would feel the impact of mandatory coverage.
    Now, my own State of Georgia has over 180,000 State and 
local employees outside of Social Security according to 
estimates prepared by the SSA. The cost to Georgia, if 
mandatory coverage is imposed, is over a billion dollars in the 
first 5 years alone, and this is an expense, I will tell you, 
that my State simply cannot shoulder. State retirement systems 
that don't include Social Security have evolved over time to 
meet the unique needs of State and local government employers 
and the retirement savings needs of our workforce. To impose 
mandatory coverage on these systems now would require vast 
alteration of contributions and distribution of benefits in 
order to provide funding for this Federal tax increase.
    I caution you to strongly oppose including mandatory 
coverage in any plan to protect and strengthen Social Security. 
The reduction or loss of contributions coming from new hires to 
the plans will hamper the ability of plans to reduce their 
unfunded liability over time, leaving of course the plans more 
vulnerable to underfunding. In the aggregate, public pension 
plans currently are funded at around 88 percent. In terms of 
benefits paid, 62 percent of State and local pension funding 
comes from investment income, 26 percent comes from employer 
contributions and 12 percent from employees' contributions. 
Reducing contributions today in order to comply with mandatory 
Social Security will lower investment earnings to the detriment 
of planned participants, employers and taxpayers. Mandatory 
coverage fails to strengthen Social Security or to improve its 
solvency. While mandatory coverage will extend solvency for 
roughly two years in the short run, ultimately these State and 
local government employees will become future beneficiaries. In 
the end, mandatory coverage will merely move liabilities 
forward at the expense of existing stable and well-funded 
retirement systems in the States.
    The NCSL also supports reform of the GPO and the WEP, which 
reduce the Social Security benefits of State and local 
government employees who earned government pensions through 
work not covered by Social Security. The NCSL is concerned that 
the GPO and the WEP unfairly and imprecisely reduce Social 
Security benefits. These reductions have unintentionally harmed 
a disproportionate number of women and moderate and lower 
income State and local government retirees.
    The NCSL supports efforts to reduce or eliminate the impact 
of the GPO and the WEP on State and local government retirees, 
particularly those who have earned lower or partial pension 
benefits. The NCSL does not, however, support reform of the GPO 
and the WEP at the expense of mandatory coverage on State and 
local government. Finally, the NCSL endorses increasing the 
rate of return on Social Security's assets and supports efforts 
to restore long-term solvency to the system because it is the 
primary source of retirement income for millions of Americans 
and a system that over 70 percent of State and local government 
employers and employees pay into and coordinate retirement 
benefits with. For the vast majority of State and local 
government retirees, their employer-provided pension benefit is 
linked to their Social Security benefit and as such, State 
government employers have a vested interest in strengthening 
this program. The NCSL supports a broad range of policies 
designed to restore solvency to the program which we attached 
to our written testimony.
    Finally, the NCSL trusts that you will continue to 
encourage private savings and employer-provided pension plans 
as important components of retirement savings. You face a 
difficult choice as you consider the options available to you 
to strengthen and preserve Social Security. I say to you that 
State legislatures stand ready to assist you in these efforts, 
and I thank you again for the opportunity to share the 
positions of the NCSL, and we look forward to answering any 
questions you may have, any remarks or our written statements. 
Thank you, Mr. Chairman.
    [The prepared statement of Ms. Orrock follows:]
  Statement of The Honorable Nan Grogan Orrock, State Representative, 
   Georgia General Assembly, Atlanta, Georgia, and Chair, Labor and 
Workforce Development Standing Committee, National Conference of State 
                              Legislatures
    Chairman McCrery, Ranking Member Levin and distinguished members of 
the Committee, thank you for the opportunity to share the positions of 
the National Conference of State Legislatures on the issue of mandating 
Social Security for state and local government employees and the 
Government Pension Offset (GPO) and the Windfall Elimination Provision 
(WEP) that reduce the Social Security benefits of state and local 
government retirees.
    The National Conference of State Legislatures was founded in 1975 
with the conviction that legislative service is one of democracy's 
worthiest pursuits. NCSL is a bipartisan organization that serves the 
legislators and staffs of the nation's 50 states, its commonwealths and 
territories. NCSL provides research, technical assistance and 
opportunities for policymakers to exchange ideas on the most pressing 
state issues and provides a voice for the interests of state 
governments before Congress and federal agencies.
    NCSL's opposition to mandatory coverage for state and local 
government employees is one of our longest held policy positions. The 
basis for our opposition to mandated Social Security is three-fold. We 
oppose mandatory coverage because it impinges on the ability of state 
and local employers to create and maintain retirement systems that 
address the unique needs of state and local governments; we oppose 
mandatory coverage because compliance would impose serious costs and 
disruption to state and local governments and their programs, while 
providing minimal short-term value and added long-term liabilities to 
Social Security; and further, we oppose mandatory coverage because it 
unfairly penalizes those state and local governments that structured 
and funded benefits outside the Social Security system while 
destabilizing state and local programs that are effectively providing 
retirement security to a large number of Americans.
    State and local governments provide pensions to roughly 15 million 
government employees; of these employees approximately 28 percent 
receive a pension that does not include Social Security coverage. The 
largest percentage of employees receiving pensions who do not include 
Social Security coverage are in the public safety professions and 
teaching. Approximately 40 percent of teachers receive pensions not 
covered by Social Security and roughly 75 percent of the nation's state 
and local first responders, police and firefighters, receive uncovered 
pensions. These pensions provide a higher level of retirement earnings 
than pensions that coordinate with Social Security, taking into account 
early retirement ages, higher incidence of disability and death and 
survivor benefits.
    The costs to states that would be imposed from mandatory coverage, 
even if only new hires were forced into Social Security, far exceed the 
limits on unfunded federal mandates set in the Unfunded Mandates Reform 
Act of 1994 and would have a substantial negative effect on state and 
local budgets and on financing of retirement benefit systems. The 
estimated cost of the compliance for mandatory coverage of all state 
and local employees is $44 billion dollars over the first five years. 
While the majority of uncovered employees are employed in a dozen or so 
states, every state in the country has some public employees who do not 
pay into the Social Security system. Thus, every state would feel the 
impact of mandatory Social Security coverage.
    Congress has long recognized that state and local pension systems 
are creatures of state law and while the federal tax code governs the 
tax treatment of contributions and distributions to and from these 
plans, a comprehensive set of state laws provide the primary 
legislative and legal frameworks for the administration of these 
systems. Many of the state systems that would be most affected by the 
imposition of mandatory coverage actually predate the creation of 
Social Security or were created during a time when state and local 
governments were prohibited from contributing to Social Security. These 
systems have grown up, so to speak, apart from the Social Security 
systems and have evolved to meet the unique needs of state and local 
government employers and the retirement savings needs of our workforce. 
To impose mandatory coverage on these systems now would require vast 
alteration of contributions and distribution of benefits in order to 
provide funding for this federal tax increase. The diversion of 
contributions on the part of employers and employees away from existing 
plans to pay for Social Security coverage would destabilize existing 
benefits and would reduce asset accumulation over time.
    Many of the proposals to strengthen Social Security would do so by 
increasing the rate of return on Social Security's assets. This is a 
concept that NCSL wholeheartedly endorses, in great part because state 
and local pension systems are creatures of the markets. Both state 
defined benefit systems and defined contribution system assets are 
invested in the markets. The largest percentage of benefits received by 
our retirees and their beneficiaries comes from investment earnings, 
not contributions from state and local employers or our employees, 
making these systems a good deal for plan participants, state 
governments and taxpayers. Recent estimates by the National Association 
of State Retirement Administrators found that 62 percent of state and 
local pension funding comes from investment income, 26 percent comes 
from employer contributions and 12 percent comes from employee 
contributions.
    Some in Washington have argued that if Congress only imposes 
mandatory coverage for new hires then the impact on state pension 
systems will be minimized. This is simply not true. Because state and 
local systems are funded systems and not pay-as-you-go (PAYGO) systems 
any reduction in payments to the system today will have a dramatic 
impact on future benefits. Unlike PAYGO systems, state and local 
systems rely on compound interest and asset accumulation to pay the 
majority of benefits to our retires. Because all of these plans 
maintain some level of unfunded liability, the reduction or loss of 
contributions coming from new hires to the plans will hamper the 
ability of plans to reduce their unfunded liability over time, leaving 
the plans more vulnerable to under funding. At present, state pension 
systems are approximately 90 percent funded, a true testament to our 
long-term investment strategy of professional money management, pooled 
assets and pooled risk.
    The tax increase on employers and employees associated with 
mandatory coverage cannot be borne by our existing pension systems. 
Thus state and local governments will be forced to reduce existing 
benefits or increase contributions to the plans in order to make the 
required payments to Social Security. The cost of these contributions 
as well as the foregone interest income will destabilize existing state 
retirement systems and the retirement security of future employees. 
This is not to say that state retirement systems are immovable archaic 
systems. On the contrary state and local pension systems continue to 
evolve, but we would argue that these changes are made best at the 
state and local level as a response to the evolving needs of government 
employers and in recognition of our needs to remain competitive 
employers.
    NCSL further opposes mandatory coverage because it fails to 
strengthen Social Security and increase the solvency of the program. 
While mandatory coverage will extend solvency for roughly two years in 
the short run, or close ten percent of the solvency gap, ultimately 
state and local government employees forced into the system will become 
future beneficiaries. In the end, mandatory coverage will merely move 
liabilities forward at the expense of existing stable and well-funded 
retirement systems in the states.
    NCSL supports efforts to restore long-term solvency to the Social 
Security system because it is the primary source of retirement income 
for millions of Americans, and a system that over 70 percent of state 
and local government employers pay into and coordinate retirement 
benefits with. For the vast majority of state and local government 
retirees, their employer-provided pension benefit is linked to their 
Social Security benefit, as such state government employers have a 
vested interest in strengthening the program. NCSL supports a broad 
range of policies designed to restore solvency to the program as 
illustrated in our current policy ``Maintaining the Solvency of Social 
Security,'' which is attached to this testimony.
    The National Conference of State Legislatures also supports reform 
of the Government Pension Offset and the Windfall Elimination 
Provision, which reduce the Social Security benefits of state and local 
government employees who earned government pensions through work not 
covered by Social Security. While these employees do not contribute to 
Social Security through their state or local government work, they 
often earn Social Security benefits through other employment covered by 
Social Security or may also earn a Social Security benefit as the 
spouse of a beneficiary who paid into the Social Security program. NCSL 
is concerned that the GPO and WEP unfairly and imprecisely reduce the 
Social Security benefits of government employees. These reductions have 
unintentionally harmed a disproportionate number of women and moderate 
and lower-income state and local government retirees. Thus, NCSL 
supports efforts to address the inequities and unintended consequences 
to state and local government retirees caused by the GPO and WEP. NCSL 
supports reducing or eliminating the impact of the GPO and WEP on state 
and local government retirees, particularly those who have earned lower 
uncovered government pension benefits or partial benefits. NCSL does 
not however support reform of the GPO and WEP at the expense of 
mandatory coverage on state and local governments.
    The National Conference of State Legislatures strongly believes 
that the federal government must preserve the financial integrity of 
the Social Security system and assure the long-term solvency of the 
program. NCSL believes that efforts to assure solvency should 
strengthen the existing programs upon which so many Americans rely. 
NCSL further maintains that solvency efforts must continue to encourage 
private savings and employer-provided pension plans as important 
components of retirement savings. Congress and the President face 
difficult choices and state legislatures stand ready to assist our 
federal partners in your efforts to strengthen and protect Social 
Security.
Official Policy
Maintaining the Solvency of Social Security
Joint policy of the NCSL Human Services & Welfare and Labor & Workforce 
        Development Standing Committees
    The National Conference of State Legislatures (NCSL) strongly 
believes that the federal government must preserve the financial 
integrity of the Social Security system and assure the long-term 
solvency of the program. State legislatures believe that Social 
Security must ensure a safety net for low-income older retirees as well 
as provide survivor benefits and disability insurance. It is critical 
that all workers paying into the system have confidence that Social 
Security will continue to be available to them at retirement or to 
provide for their survivors after their death. NCSL believes that 
efforts to assure solvency should strengthen the existing program upon 
which so many beneficiaries and their families rely. Social Security 
reform should continue to encourage private savings and employer-
provided pension plans as important components of retirement savings.
    The Administration and Congress face difficult choices in 
maintaining the solvency of Social Security. State legislatures stand 
ready to assist our federal partners in this effort. NCSL believes that 
state and local retirement systems provide valuable models for 
consideration in the Social Security debate.
    While Social Security currently has a surplus, the Social Security 
Actuaries 2005 report predicts that in 2020 trust fund expenditures 
will begin to exceed payroll tax revenues and interest on accumulated 
assets will need to be drawn down to pay benefits. By 2041, current 
payroll tax rates will be sufficient to pay only 73 percent of benefit 
obligations. To avoid this shortfall, members of Congress and the 
Administration have put forth a variety of reform proposals.
    There are serious implications for the states in these reform 
proposals. As Congress considers alternatives to maintain Social 
Security solvency, it must analyze and understand the impact of these 
proposals on states, taxpayers, state budgets, and state laws. These 
proposals for Social Security reform have major impacts on state 
employees, teachers, local government, private employers and taxpayers. 
As employers and policymakers, state legislators oppose reform 
proposals that finance this shortfall by shifting federal costs to 
state budgets. If Social Security does not continue to provide a stable 
form of assistance to the elderly, state low-income programs and state 
budgets would be severely impacted. NCSL strongly opposes any efforts 
to reform Social Security that create unfunded mandates for the states 
or preempt state laws and authority.
    NCSL encourages federal policymakers to consider the following 
concerns when deliberating Social Security reform proposals:
Mandatory Social Security Coverage of State and Local Government 
        Employees
    NCSL has long opposed further involvement of the federal government 
in the administration of public retirement plans including the 
expansion of mandated Social Security coverage to state and local 
employees not currently covered under the system. NCSL maintains that 
state and local governments should be allowed to affiliate their 
retirement plans voluntarily with Social Security, as was the case 
before passage of the Omnibus Budget Reconciliation Act of 1990. The 
imposition of mandatory coverage on state and local employees who are 
not currently required to contribute to the system constitutes a direct 
cost shift to states and will have a detrimental effect on state 
budgets, state retirement plans and the retirement savings of state and 
local employees. The extension of mandatory coverage to new categories 
of state and local employees does not solve the insolvency problem and 
creates new obligations for the system. NCSL's policy, ``Mandatory 
Social Security Coverage of State and Local Government Employees,'' 
continues to oppose this mandate.
Increasing the Return on Social Security Investments
    States and local retirement system choices provide models for 
federal reform of Social Security. We encourage Congress and the 
Administration to review state laws, funding choices and programs, 
whether they choose to create individual private accounts, authorize 
public investment in private markets, or pursue other options for 
reform. The return on Social Security has historically been far below 
the return on public and private pension plan investments in the 
market. NCSL believes that Congress and the Administration must act to 
increase the return on Social Security investments. NCSL believes that 
the best means to increase the return on Social Security investments is 
through some level of investment in the private markets. NCSL maintains 
that this investment must:

      Be administered through an independent board well 
insulated from political interference;
      Include Social Security beneficiaries on the board;
      Be invested for the exclusive benefit of Social Security 
beneficiaries as in state pension law;
      Guarantee the current level of Social Security benefits;
      Be protected from steep administrative costs;
      Be used solely for retirement, survivor benefits and 
disability; and
      Not preempt state laws governing securities fraud;
      General revenue from sources other than FICA should not 
be used to finance changes to the existing system that would allow 
market investment or private accounts and changes to the existing 
system should not increase the federal deficit, compromise funding of 
state-federal partnerships or require more borrowing that would add to 
the federal debt.

    A strong public education program must accompany reform that would 
create individual accounts or provide for market investment so that 
beneficiaries will have the knowledge necessary to make good investment 
decisions.
Guarding Against Fraud and Abuse
    NCSL strongly opposes any proposal that would preempt state 
authority to regulate securities or give sole authority to regulate 
investment fraud to the Securities and Exchange Commission (SEC). 
States traditionally have been the protectors of individual and small 
investors and should maintain this role without federal intervention or 
preemption.
    Many states have created special laws and consumer protection 
programs to prevent white-collar crimes, particularly against the 
elderly. These laws are critical to the protection of senior citizens. 
NCSL strongly opposes any effort to preempt state authority to regulate 
crimes against the elderly. Individuals must be protected from fraud 
through the strong enforcement of laws governing securities fraud.
Raising the Retirement Age
    Prior Social Security reform efforts, to adjust for longer life 
expectancies, included a gradual increase in the ``full retirement 
age''. In 2002, the full retirement age, the age at which beneficiaries 
are eligible to receive unreduced Social Security benefits, began to 
rise gradually from 65 to 67. Contemporary solvency proposals that 
would increase the full retirement age even higher raise serious 
concerns for beneficiaries. While Americans are living longer, many 
workers are choosing to retire earlier than before. Conversely, some 
workers may be unable to continue working due to physical limitations, 
age discrimination or other limitations. Still other workers with 
shorter than average life expectancies, particularly African Americans, 
may experience little return from Social Security for themselves and 
their survivors if the full retirement age is increased.
    Currently, public safety employees of state and local government 
are exempt from actuarial reductions to their public pension benefits. 
Efforts to raise the full retirement age disproportionately harm both 
private sector employees and non-public safety state and local 
employees who do not contribute to Social Security. Under current law, 
the age at which a more highly paid beneficiary may receive an 
unreduced private pension benefit is tied to the Social Security full 
retirement age. Due to this coupling, relatively highly compensated 
long-term private pension beneficiaries who choose to retire before age 
65 receive an actuarially reduced benefit for life even if their 
employer deems them eligible to receive a full private pension benefit 
prior to age 65. The age at which public employees, excluding public 
safety employees, may receive an unreduced public pension benefit is 
not tied to the Social Security full retirement age but is instead 
defined in federal Internal Revenue Code policy, which sets the age at 
62. In recognition of public safety concerns, public safety workers, 
like police and fire, are exempt from these actuarial reductions. More 
highly-compensated long-term non-public safety state and local 
employees who do not contribute to Social Security rely on their public 
pensions for the bulk of their retirement security. Actuarial 
reductions to public pension benefits disproportionately burden these 
employees. NCSL believes that public employers should be allowed to 
provide full pension benefits to all of their employees without the 
imposition of these Internal Revenue Code limits. Further, for purposes 
of consistency, NCSL supports the uncoupling of private sector benefit 
limits from the Social Security full retirement age.
    NCSL encourages Congress and the Administration to consider the 
impact that raising the retirement age may have on various groups of 
workers. NCSL opposes further increases of the full retirement age.
Raising the Payroll Tax Rate
    Raising the payroll tax rate constitutes a direct cost shift to 
employers and employees for the cost of Social Security solvency. 
States, as employers, would bear increased costs if the payroll tax 
rate were increased. As well, the payroll tax is regressive and an 
increase would disproportionately affect workers making less than the 
wage base. An increase in the payroll tax rate may also provide 
disincentives to employer-provided pension benefits. NCSL opposes an 
increase in the payroll tax rate.
Maintaining Benefits for the Poor Elderly and Survivors
    Social Security provides 90% or more of the total income for 44% of 
all nonmarried women 65 or older; 74% of nonmarried African American 
women 65 or older; 66% of nonmarried Hispanic women 65 or older; and 
35% of all nonmarried men 65 or older. Social Security prevents massive 
poverty among the elderly. Without Social Security, over half of all 
women 65 or older (married and nonmarried) and 40% of all older men 
would be poor.
    Similarly, Social Security replaces lost income for workers and 
their spouses and children when a worker becomes disabled, dies or 
retires. For a young family, Social Security provides the equivalent of 
a $400,000 life insurance policy and a $350,000 disability insurance 
policy. Just half of all Social Security beneficiaries receive benefits 
solely as retired workers. Roughly 37% of beneficiaries re disabled 
workers and survivors and 13% of beneficiaries are dual eligible--
receiving both retired worker and survivor benefits).
    8% of beneficiaries are children of deceased or disabled workers. 
About 5.4 million children under the age of 18 receive part of their 
family income from Social Security. In contrast, about 4 million 
children receive family income through TANF. The role Social Security 
benefits play in alleviating and preventing childhood poverty should 
not be lost in efforts to restore solvency or reform Social Security. 
Similarly, Social security provides lifetime income support to about 
750,000 disabled adult children based on a parent's work record.
Modification of the Earnings Limit
    NCSL has long supported increasing the earnings test for older 
workers, especially those who provide essential child care services. 
NCSL acknowledges the federal government for responding to state 
concerns by repealing the earnings limitation for workers aged 65 to 
69. Under current law, beneficiaries under the full retirement age may 
earn up to $12,000 annually without reducing the amount of benefits 
they receive from Social Security, after that amount Social Security 
benefits are reduced by $1 for every $2 of earnings. Beneficiaries who 
retire at their full retirement age may earn up to $31,800 in the year 
that they retire without receiving a reduced benefit. In the year that 
beneficiaries reach full retirement age earnings above the annual limit 
reduce benefits by $1 for every $3 of earnings.
    The earnings penalty under age 65 severely hampers the ability of 
seniors to continue working once they begin to receive Social Security. 
NCSL supports the elimination of or an increase in the earnings limit 
on wages earned by Social Security beneficiaries. As the worker-to-
beneficiary ratio continues to fall, older workers may become 
increasingly important to productivity. This penalty severely inhibits 
seniors who would prefer to and continue to be able to work.
Means-Testing of Beneficiaries
    Social Security benefits are calculated based on earnings and time 
in the workforce. Although workers contribute the same percentage of 
payroll taxes to the system, a combined employer-employee contribution 
of 12.4% of payroll up to $90,000, lower-income workers receive a 
higher proportion of their contributions in benefits than to higher-
income workers. NCSL opposes proposals to means-test eligibility to 
receive Social Security. Such proposals may reduce overall public 
support for Social Security and are not necessary to achieve Social 
Security solvency.
    Adopted: 2005 NCSL Spring Forum, April 13-16, 200, Washington, D.C.

                                 

    Chairman MCCRERY. Thank you, Representative Orrock. Ms. 
Bierdeman.

STATEMENT OF TERESA BIERDEMAN, CHAIRMAN, COALITION TO PRESERVE 
           RETIREMENT SECURITY, ALEXANDRIA, VIRGINIA

    Ms. BIERDEMAN. Chairman McCrery, Ranking Member Levin, 
distinguished Members of the Subcommittee, my name is Terri 
Bierdeman. I am Director of governmental Relations for the 
State Teacher's Retirement System in Ohio, and am testifying 
today in my capacity as Chairman of the Coalition to Preserve 
Retirement Security. On behalf of that coalition, I thank you 
for the opportunity to appear before the Subcommittee to 
discuss mandatory coverage of State and local workers. The 
Coalition to Preserve Retirement Security is a nonprofit 
organization composed of members representing State and local 
governments, public employee unions, and public pension systems 
throughout the United States.
    The purpose of our organization is to assure the continued 
financial integrity of our members' public retirement systems 
opposing efforts for mandate Social Security coverage on these 
employees. We have 47 members from States across the country. 
They administer retirement benefits for about 12,000 public 
employers and represent more than four million public employees 
and retirees. In addition to our members, we have national 
associations and public pension unions representing more than 
15 million public workers, about a third of whom are outside of 
Social Security.
    The problem has been clearly stated by the previous 
witness, so, I will skip some of my background comments, but to 
give you a flavor of some real life situation, I want to talk a 
little bit about my own State. I come from Ohio, the State 
Teacher's Retirement System predates Social Security. The 
system was begun in 1920 and has been paying benefits for over 
85 years now. The system is a reserve funded defined benefit 
plan, although we do offer hybrid plans and defined 
contribution plans as alternatives, but it is prefunded. The 
members, when they get to retirement, expect the benefit, which 
is guaranteed, to be there. Forcing newly hired State and local 
public workers outside of Social Security into the program to 
participate is attractive to the system as generating 
additional revenue, but that revenue is short term, and we 
believe the position is flawed for the following reasons. What 
has been talked about most recently and in most recent years is 
limiting it to new hires only, but new hire application has an 
impact on everyone in the system, not just those new hires or 
future hires, but also current employees and retirees who are 
already in collection status.
    Public sector benefits, defined pension benefits depend on 
a constant and reliable stream of revenue in order to meet 
their actuarial goals. A constant stream of revenue keeps the 
contributions level so, for the employers and the employees the 
contributions do not bounce up and down year to year depending 
on investment performance. Without that continuing stream of 
revenue with a closed plan, it leaves the funding of the system 
for both the normal cost and any unfunded benefits that might 
exist to be funded by a shrinking pool of workers, hence, 
increasing the individual employee's cost.
    The normal cost varies across the country, but on average, 
employees contribute about 9 to 10 percent of their salary, and 
it is a mandated contribution. With States and localities under 
extreme budget pressures for a variety of reasons, finding more 
revenue to fund mandatory Social Security benefits is highly 
unlikely. My retirement board requested that their consulting 
actuary do a study of the impact of mandating new hiring be 
included in Social Security and what would that mean for just 
my system.
    They came back with essentially two choices for the board. 
One if they wanted to maintain the current existing benefit 
structure for all current employees retirees and an adequate 
benefit for new hires, it would require additional 
contributions by the State of Ohio and the employees amounting 
to about $103 million annually. That is highly unlikely in 
Ohio. The other alternative if there is no more revenue would 
be to cut the benefits and it would not be benefits just for 
the new hires. Obviously, those future employees would have 
Social Security as their basis and the State could probably 
afford to wrap around some very small benefit from the State. 
It also affects current employees. Those people who are already 
in the system counting on a benefit in retirement. For example 
a mid career teacher today would be expecting about 66 percent 
of their salary average when they retired at the end of a 
career. Mandating coverage would require benefit cut of about 
25 percent to that current employee. It would also cut back 
their disability and survivor benefits for current employees.
    For retirees, those who are already collecting a guaranteed 
benefit which cannot be reduced under law, it would eliminate 
future cost of living adjustments which they do receive in Ohio 
and health care, which they also receive in Ohio. The funding 
for health care, as you know, across the country for everyone 
is exorbitant. We have reserves take us out 10 to 12 years. 
Those reserves would have to be put into funding pension so, it 
would impact everyone, not just the new hires to the system. We 
believe that funding mandatory coverage in order to shore up 
the Social Security system for a very short period of time, the 
GAO report has said about two years, would cause essentially 
very major disruption to the systems that are already existing, 
both the funding and the benefits that are being provided.
    We think the 44 billion over the first 5 years that was 
mentioned by the previous witness which is the cost in all 50 
States is a very large price to pay for not a solution to the 
Social Security funding problem. In the written testimony, I 
have supplied, the coalition has given a breakdown for you from 
a recent study by the Segal Company on the cost of the 
individual States for the Members of the Committee and what 
that impact would be on your own constituents. There would be 
tough choices involved for States and localities. Benefit 
reductions could also expand, as the previous witness 
mentioned, to other services that the State would have to 
provide. In Ohio, like many States, education funding is a 
problem and employers and education are looking at cutting back 
left and right, putting levy on the ballot every year. To have 
more money going toward pension funding and let alone going out 
of State means they have to look at other areas to cut as well.
    Hidden impacts of the differences in some of the structure 
of some of the public benefits. Since we represent specialized 
employee groups such as safety forces in particular, there are 
varieties in the benefit structures of those systems geared to 
the needs of special workforces. Especially for the safety 
forces, early retirement is an option in the States under the 
public plans. They do not have to work until age 62 or 65 or 
whatever. It allows variety based on the needs of that 
particular profession.
    In conclusion, the coalition believes that mandating Social 
Security coverage for all public sector workers would also 
create huge costs and burdens for public employers without 
contributing significantly to the solvency of the program. We 
all understand the importance of the Social Security system, 
even those of us who participate and contribute to public 
pension funds have spouses, family, friends, and neighbors who 
are relying on the support of Social Security and the future of 
that program. We do also believe though that mandating coverage 
does not solve the problem of Social Security, it causes 
significant disruption and decreased security for well 
established public systems that have been in existence for 
decades providing benefits for decades. This is a time when we 
are all trying to find solutions to the same larger problem, 
retirement security for all Americans. Thank you very much for 
your time today.
    [The prepared statement of Ms. Bierdeman follows:]
Statement of Teresa Bierdeman, Chair, Coalition to Preserve Retirement 
                     Security, Alexandria, Virginia
    Chairman McCrery, Ranking Member Levin and distinguished members of 
the subcommittee, my name is Terri Bierdeman and I am the director of 
government relations for the State Teachers Retirement System of Ohio. 
I am testifying today in my capacity as chairman of the Coalition to 
Preserve Retirement Security. On behalf of the Coalition, I thank you 
for the opportunity to appear before the subcommittee to discuss the 
issue of mandating Social Security coverage for public sector workers.
    The Coalition to Preserve Retirement Security (CPRS) is a non-
profit organization composed of members representing state and local 
governments, public employee unions, and public pension systems 
throughout the United States. The purpose of our organization is to 
assure the continued financial integrity of our members' public 
retirement systems. By successfully opposing efforts to mandate Social 
Security coverage for all newly hired public employees we achieve the 
principle goal of our coalition.
    Our 47 members are found in Alaska, California, Colorado, 
Connecticut, Florida, Illinois, Kentucky, Louisiana, Massachusetts, 
Missouri, Nevada, Ohio, and Texas and represent more than 4 million 
public employees and retirees. They administer retirement benefits for 
about 12,000 public employers in these states.
    In addition, our national associations and public pension unions 
represent more than 15 million public workers, about one-third of whom 
are outside of Social Security.
The Problem
    Over the years, some have recommended bringing all public workers 
into the Social Security program. However, mandating that all newly 
hired public workers must participate in the Social Security system 
would create significant new cost pressures for the affected state and 
local government jurisdictions while providing only minimal benefit to 
the program.
    These jurisdictions, with their own long-standing defined benefit 
retirement plans, would have to make difficult choices. Adding an 
additional 6.2 percent payroll tax per worker to the benefit costs of 
public employers could result in cutbacks to their existing defined 
benefit plans, cuts in government services, or even increases in taxes 
or fees to absorb the added costs. The disruption that would likely 
occur for these public jurisdictions and their workers seems a high 
price to pay for adding an estimated two years of solvency to the 
Social Security program. It is estimated that mandatory Social Security 
coverage would cost the affected states and localities $44 billion over 
5 years. This additional financial burden on affected states could be 
an insurmountable budgetary hurdle particularly during these very 
difficult days of huge revenue shortfalls hitting virtually every 
state.
Background
    When the Social Security system was created in 1935, state and 
local government employees were not allowed to participate in the 
system. Beginning in the 1950s, state and local government employers 
could elect to have their employees covered by the Social Security 
program and were allowed to opt-in or -out of the system.
    In 1983, there was a major revision of the Social Security and 
Medicare laws, triggered primarily by a concern about the long-term 
solvency of these two trust funds. Congress decided not to require 
state and local employees who were outside the system to be covered, 
but did end the opt-out for public employees who had chosen to be 
covered.
    In 1986, as part of the Consolidated Omnibus Budget Reconciliation 
Act of 1985 (``COBRA''), Congress required universal participation in 
the Medicare system on a ``new hires'' basis, but chose to leave public 
employee retirement plans in place, and did not change the law with 
respect to Social Security.
    In 1990, Congress enacted a law requiring that all public 
employees, not covered by a state or local retirement plan meeting 
specified standards, must be covered by Social Security. That law, 
adopted as part of the Omnibus Budget Reconciliation Act of 1990 (the 
``1990 Act''), ensures that all public employees will be covered either 
under Social Security or under a public retirement plan that provides 
comparable benefits. Today, about one-third of all state and local 
government employees, 6.6 million public servants, are outside the 
Social Security system because they are covered by their employer's 
public retirement plan. In addition, millions of current retirees from 
non-Social Security public pension plans depend on those plans for a 
significant share of their retirement income.
    From 1994 to 1996, the Advisory Council on Social Security examined 
the mid-term and long-term solvency of Social Security and the Social 
Security Trust Fund. The panel submitted its report in January 1997 but 
there was no majority on the council for any single set of 
recommendations. Three proposals were put forth by different groups of 
members. However, a majority of the Advisory Council recommended 
mandatory Social Security coverage of public employees, although the 
three labor members of the council opposed this proposal ``because of 
the financial burden that would be placed on workers and employers who 
are already contributing to other public pension systems.''
    In 2001, the President's Commission to Strengthen Social Security 
made history by being the first commission to not recommend mandatory 
Social Security coverage in its proposals for Social Security reform. 
This is particularly remarkable, since the late New York Senator Daniel 
Patrick Moynihan, a vociferous proponent of forced coverage, co-chaired 
the Commission.
    Based upon the assumptions in the 2005 Social Security trustees' 
annual report, if left unchanged, the program will be insolvent--that 
is unable to pay all benefits owed--beginning in 2041. However, some 
experts warn that Social Security reform is needed soon. As so-called 
baby boomers begin retiring over the next decade, there will be 
increased pressure on the solvency of the program and by 2017 costs 
will exceed revenues, according to the trustees' report.
    Accordingly, forcing newly hired state and local public workers 
outside of the Social Security program to participate is seen by some 
as an attractive way of generating additional revenues for the program 
in the short term. This position is flawed and, for the reasons 
discussed below, mandatory coverage should not be included in any 
Social Security reform package.
The Myth of Covering Just New-Hires: Covering Only New-Hires is Still 
        Harmful
    Proponents of mandatory coverage contend that applying the mandate 
only to newly-hired workers would make it less onerous for public 
employers--nothing could be further from the truth. Public sector 
defined benefit plans rely on a constant and reliable revenue stream in 
order to meet actuarial goals and provide a retirement benefit for plan 
participants at affordable contribution levels.
    Proponents of this solution fail to understand that the normal cost 
of the existing retirement plan will increase as a percentage of 
payroll as younger members are eliminated from the plan. Thus, 
employers and new workers will not only have to add an additional 6.2 
percent for the new payroll tax, but employers may also have to 
increase contributions to the existing plan or cut benefits. When 
states and localities are under extreme fiscal stress as they are 
currently, this added expense will create enormous burdens with 
negligible, if any, positive outcomes.
    Mandatory Social Security Coverage Will Only Extend Social 
Security's Solvency by Two Years, But Could Destabilize Public Pension 
Systems Nationwide
    The Government Accountability Office acknowledged in a May 6, 2005, 
letter to House Ways and Means Committee Chairman Bill Thomas that 
mandatory coverage would produce a ``small reduction in [the] actuarial 
deficit'' and would ``increase long-term benefit levels,'' since the 
new workers paying into the system would eventually become retirees 
drawing on it. (The GAO had projected in a 1999 report, ``Social 
Security: Implications of Extending Mandatory Coverage to State and 
Local Employees,'' that bringing newly hired non-federal public workers 
in the program would only ``reduce the program's long-term actuarial 
deficit by about 10 percent and would extend the trust funds' solvency 
by about 2 years.'')
    According to a 1999 study by The Segal Company that was updated 
this month, mandatory Social Security coverage could cause a reduction 
in employee and employer contributions to existing defined benefit 
plans, ``which are an essential part of their actuarial funding. This 
could destabilize the existing plans on which current workers and 
retirees depend.'' The report continued, ``Lower funding would not only 
have an impact on retirement benefits, but could affect disability and 
survivor benefits as well,'' which are often more generous than those 
offered by Social Security.
The Costs of Mandatory Coverage Greatly Outweigh the Benefits
    As noted above, mandatory coverage would only add two years of 
solvency to the 75-year projection for the Social Security program. 
But, it would cost public employees, their employers and ultimately 
taxpayers nationwide more than $44 billion over the first five years, 
according to the Segal report. Mandatory Social Security would be felt 
in all 50 states and over time would add new beneficiaries to the 
program who would draw down benefits like other Social Security 
recipients, increasing financial pressures on the system.
    The chart below illustrates how mandatory coverage would affect the 
home state of each member of the Ways and Means Social Security 
Subcommittee.

------------------------------------------------------------------------
                                                         5-Year Cost to
                                            Employees      Employees,
     Congressman           Home State       Affected     Employers and
                                                           Taxpayers
------------------------------------------------------------------------
Jim McCrery (Chair)   La.                     261,000     $1,384,711,000
------------------------------------------------------------------------
Clay Shaw             Fla.                    173,000     $1,170,240,000
------------------------------------------------------------------------
Sam Johnson           Texas                   836,000     $5,277,097,000
------------------------------------------------------------------------
J.D. Hayworth         Ariz.                    41,000       $301,697,000
------------------------------------------------------------------------
Kenny Hulshof         Mo.                     128,000       $806,807,000
------------------------------------------------------------------------
Ron Lewis             Ky.                      89,000       $614,272,000
------------------------------------------------------------------------
Kevin Brady           Texas                   836,000     $5,277,097,000
------------------------------------------------------------------------
Paul Ryan             Wis.                     62,000       $507,016,000
------------------------------------------------------------------------
Sander Levin          Mich.                    94,000       $852,099,000
 (Ranking Dem.)
------------------------------------------------------------------------
Earl Pomeroy          N.D.                     10,000        $65,397,000
------------------------------------------------------------------------
Xavier Becerra        Calif.                1,468,000     $8,205,240,000
------------------------------------------------------------------------
Stephanie Tubbs       Ohio                    820,000     $4,350,432,000
 Jones
------------------------------------------------------------------------
Richard Neal          Mass.                   442,000     $3,644,093,000
------------------------------------------------------------------------
Subcommittee Totals   ...................   4,424,000    $27,179,101,000
 \1\
------------------------------------------------------------------------
National Totals                             6,617,000    $44,242,670,000
------------------------------------------------------------------------
\1\ Source: ``State-by-State Cost Analysis of Mandatory Social
  Security,'' The Segal Company, 2005.

Mandatory Coverage: Tough Choices for States and Localities
    If all newly hired state and local employees are forced to 
participate in the Social Security program, their employers--state and 
local government entities--and policy makers will have to make 
difficult decisions on how to offset these new taxes.
    According to the Segal report, these taxes would likely be absorbed 
through ``tax increases, cuts in existing benefits and/or reductions in 
workforce and services,'' none of which are particularly popular and 
all of which would be met with strong resistance by the affected 
constituencies. Many states and localities are already facing large 
financial challenges. Mandating Social Security coverage would only 
exacerbate already troubled financial landscapes for jurisdictions 
across the country.
Hidden Impacts
    Mandatory coverage could also undermine other benefits of public 
pension plans. These plans, in addition to offering sound and secure 
retirement benefits for public workers also provide valuable benefits 
that reduce pressure on federal government programs. These benefits are 
overlooked by mandatory coverage proponents.
    For instance, certain classes of public sector workers have special 
needs that would not be met by the Social Security program. Safety 
workers, like police and fire, because of working conditions and job 
qualifications, retire earlier than other workers, often before age 62, 
the earliest age at which one can collect Social Security. 
Consequently, if these workers no longer had their traditional defined 
benefit public retirement, they could be forced to retire from their 
public safety jobs but have little or no retirement benefits until 
reaching 62.
    Public retirement plans also offer partial disability benefits, 
unlike Social Security. These disability benefits go a long way toward 
providing an income stream so partially disabled workers do not have to 
depend on public assistance programs.
    Most plans provide pre-retirement survivor benefits. For children, 
Social Security's survivor benefits end at age 18. Many public plans 
provide benefits after that age has been reached if the child is a 
full-time student.
    Early retirement, partial disability and survivor benefits are 
among the benefits specifically tailored to meet the needs of public 
workers that would be threatened by mandatory coverage.
Conclusion
    Mandating Social Security coverage for all public sector workers 
would only create huge costs and burdens for public employers without 
contributing significantly to the solvency of the Social Security 
program. The least disruptive and most cost-effective solution would be 
to allow the well-established public sector retirement system to 
continue in its current form. It has proved to be a stable and 
financially sound system that ensures the retirement security of 
millions of public sector workers.

                                 
    Chairman MCCRERY. Thank you, Mrs. Bierdeman. Mr. 
Canterbury.

STATEMENT OF CHUCK CANTERBURY, PRESIDENT, GRAND FRATERNAL ORDER 
                           OF POLICE

    Mr. CANTERBURY. Thank you, Mr. Chairman. I would like to 
thank all the distinguished Members of this panel for allowing 
me to be here today. I am Chuck Canterbury, the national 
president of the Grand Lodge of the Fraternal Order of Police 
(FOP), representing 321,000 of the rank and file police 
officers of the United States. We are the largest law 
enforcement labor organization in the country. I am pleased to 
be here for the third time testifying on this very important 
issue, and especially to offer our membership's view on the WEP 
and the GPO. The membership of the FOP has designated the 
repeal of the WEP and the GPO as our top legislative issue with 
respects to Social Security. We obviously are in opposition to 
mandatory inclusion, as is everyone on this second panel today. 
Our members, the rank and file officers that patrol our streets 
and neighborhoods every day, understand what is at stake, and 
they appreciate that this Committee is looking at this issue.
    I wanted to begin by urging this Subcommittee to consider 
H.R. 147, the ``Social Security Fairness Act,'' either as a 
stand-alone bill or part of the larger Social Security reform 
package. This bill, which has been the subject of past hearings 
in previous Congresses, would repeal both the WEP and the GPO. 
The bill already has 260 cosponsors in the House, only 30 
cosponsors short of the two-thirds majority. Any legislation 
with that kind of support deserves legislative action.
    The WEP has a disparate impact on law enforcement officers 
because we retire earlier than employees in other professions 
in part because of the physical demands of the job. 
Unfortunately many law enforcement officers are then forced to 
begin second careers after their retirement or to hold second 
or third jobs throughout the entirety of their careers. This 
creates an unjust situation for many of our members when they 
find themselves at retirement age. They are entitled to a State 
or local retirement benefit because they worked 20 or more 
years keeping the streets and neighborhoods safe, but they 
also, many times, worked jobs that paid into Social Security 
during their careers, entitling them to that benefit as well. 
Due to the WEP, if their second career resulted in less than 20 
years of substantial earnings upon reaching the age they are 
eligible to collect Social Security, they will discover that 
they lose 60 percent of the benefit for which they were taxed.
    Actuarially speaking, I doubt many officers will live long 
enough to break even; that is to collect the money they paid 
into the system, let alone receive any windfall. These men and 
women earned their State and local retirement benefit as public 
employees, and they paid Social Security taxes while employed 
in the private sector. How is this a windfall? Bluntly put, 
this provision has not eliminated a windfall for those who did 
not earn it, but has created

a windfall for the Federal government at the expense of public 
employees.
    The GPO is an arbitrary formula with a similarly disparate 
impact on law enforcement families. The GPO reduces the 
surviving spousal benefit from Social Security by two-thirds of 
the monthly amount received by the government pension. In 9 out 
of 10 cases, this completely eliminates the spousal benefit, 
even though the covered spouse paid Social Security taxes for 
many years, thereby earning the right to this benefit and the 
right to bequeath this benefit to the surviving spouse. It is 
estimated that approximately 340,000, and I heard this morning 
399,000, surviving spouses of State and local employees, have 
been unfairly impacted by the GPO. According to the 
Congressional Budget Office (CBO), the GPO reduces benefits for 
some 200,000 individuals by $3,600 a year.
    Mr. Chairman, according to the SSA, there are 5.25 million 
governmental employees not covered by Social Security and the 
Public Pension Coordinating Council estimates that 76 percent 
of these are public safety personnel, far more than any other 
category. Forcing State and local employees and employers to 
participate in the Social Security system would be devastating 
to these existing retirement plans. The employee and employer 
would be required to pay 6.2 percent of their salary into the 
Social Security Trust Fund, which may affect the ability of 
both the employers the employees to contribute to the existing 
retirement system. In addition, this new tax means less take 
home pay for the employee and cutbacks on services and 
equipment and other expenditures on the part of local 
governments. Police departments and other law enforcement 
agencies stretch every dollar to the limit now. These huge 
costs will devastate their budgets and impact their ability to 
function as first responders at a time when we need to improve 
our homeland security.
    The most recent estimate of cost to public employers is, as 
you heard from the other speakers today, is $44 billion. What 
benefit does this enormous cost have on the overall health of 
the Social Security Trust Fund? According to the SSA, just two 
years. Mr. Chairman, I thank you and the other Members of this 
distinguished Subcommittee for a chance to appear before you 
today, and I will be happy to stay for any of your questions.
    [The prepared statement of Mr. Canterbury follows:]
    Statement of Chuck Canterbury, National President, Grand Lodge, 
                       Fraternal Order of Police
    Good morning, Mr. Chairman, Ranking Member Levin, and distinguished 
Members of the House Subcommittee on Social Security. My name is Chuck 
Canterbury, National President of the Fraternal Order of Police. I am 
the elected spokesperson of more than 321,000 rank-and-file police 
officers--the largest law enforcement labor organization in the United 
States.
    I am very pleased to have this opportunity to come before you once 
again and would like to thank the Chairman for inviting me to testify. 
I am here this morning to share with you the views of the members of 
the F.O.P. on several aspects of Social Security reform being 
considered by Congress--the Windfall Elimination Provision (WEP), the 
Government Pension Offset (GPO), and a proposal to require that all 
future public employees be forced into the Social Security system.
    The Fraternal Order of Police has been active on these issues for 
several Congresses. In 1997, an overwhelming majority of the delegates 
in attendance at the Fifty-Third National Biennial Conference voted to 
designate the repeal of the WEP and GPO as one of the F.O.P.'s top 
legislative priorities. Two years later, another overwhelming majority 
of delegates adopted a resolution directing the F.O.P. to ``oppose any 
legislative effort to require the participation of any public employee 
in Social Security.''
    I mention these facts to underscore both the length of time and 
energy that the F.O.P. has invested in educating Members of Congress 
about these issues, and to make Congress aware that our position is not 
one adopted by F.O.P. leaders alone. Our members--the rank-and-file 
officers that patrol our streets and neighborhoods every day--
understand what is at stake here, namely, their retirement security.
    I want to begin by urging this Subcommittee to consider and pass 
H.R. 147, the ``Social Security Fairness Act.'' This bill, which has 
been designated as a ``top legislative priority'' by the F.O.P. 
membership, would repeal both the WEP and GPO. The bill already has two 
hundred and sixty (260) cosponsors--more than a House majority and only 
thirty (30) cosponsors short of a two-thirds majority. Any legislation 
with this kind of support deserves legislative action.
    Ultimately, H.R. 147 is about fairness to the State and local 
employees who paid for and ought to receive their Social Security 
benefits. It is our hope that when this Subcommittee begins its work on 
drafting legislation to reform the Social Security system, it will take 
note of the manifest unfairness of the WEP and GPO and repeal them 
both.
    Let me begin by explaining the impact the WEP has on retired police 
officers. Simply put, law enforcement officers who served communities 
which are not included in the Social Security system may lose up to 
sixty percent (60%) of the Social Security benefit to which they are 
entitled by virtue of secondary or post-retirement employment which 
required them to pay into the Social Security system. This sixty 
percent (60%) is a lot of money, especially when you consider that the 
officer and his family were likely counting on that benefit when they 
planned for retirement.
    The F.O.P. contends that this provision has a disparate impact on 
law enforcement officers for several reasons. First of all, law 
enforcement officers retire earlier than employees in many other 
professions. Owing to the physical demands of the job, a law 
enforcement officer is likely to retire between the ages of 45 and 60. 
Secondly, after 20 or 25 years on the job, many law enforcement 
officers are likely to begin second careers and hold jobs that do pay 
into the Social Security system. Even more officers are likely to 
``moonlight,'' that is, hold second or even third jobs throughout their 
law enforcement career in order to augment their income. This creates 
an unjust situation that too many of our members find themselves in: 
they are entitled to a State or local retirement benefit because they 
worked 20 or more years keeping their streets and neighborhoods safe, 
and also worked at a job or jobs in which they paid into Social 
Security, entitling them to that benefit as well. However, because of 
the WEP, if their second career resulted in less than twenty (20) years 
of substantial earnings, upon reaching the age they are eligible to 
collect Social Security, they will discover that they lose sixty 
percent (60%) of the benefit for which they were taxed! Actuarially 
speaking, I doubt many officers will live long enough to ``break 
even''--that is collect the money they paid into the system, let alone 
receive any ``windfall.'' These men and women earned their State or 
local retirement benefit as public employees and they paid Social 
Security taxes while employed in the private sector. How is this a 
windfall?
    I think it is clear that Congress did not intend to reduce the 
benefits of hard-working Americans who chose to serve their States and 
communities as public employees and then went on to have second careers 
or worked second jobs to make ends meet. After all, when Social 
Security was established in 1935, it intentionally excluded State and 
local employees. And though most public employees are now in the Social 
Security system, all States have ``pockets'' of State and local 
employees that are not covered by Social Security. In fifteen (15) 
States--Alaska, California, Colorado, Connecticut, Georgia (certain 
local governments), Illinois, Louisiana, Kentucky (certain local 
governments), Maine, Massachusetts, Missouri, Nevada, Ohio, Rhode 
Island, and Texas--significant percentages of State and local employees 
are outside the Social Security system. It is these public employees 
that need the help of Congress.
    When the WEP was enacted in 1983, it was part of a large reform 
package designed to shore up the financing of the Social Security 
system. Its ostensible purpose was to remove a ``windfall'' for persons 
who spent some time in jobs not covered by Social Security (like public 
employees) and also worked other jobs where they paid Social Security 
taxes long enough to qualify for retirement benefits. However, we can 
now clearly see that the WEP was a benefit cut designed to squeeze a 
few more dollars out of a system facing fiscal crisis. The fallout of 
this effort has had a profoundly negative impact on low-paid public 
employees outside the Social Security system, like law enforcement 
officers.
    To the F.O.P., which represents these rank-and-file officers, this 
is a matter of fairness. The WEP substantially reduces a benefit that 
employees had included and counted on when planning their retirement. 
The arbitrary formula in current law, when applied, does not eliminate 
``windfalls'' because of its regressive nature--the reduction is only 
applied to the first bracket of the benefit formula and causes a 
relatively larger reduction in benefits to low-paid workers. It also 
over penalizes lower paid workers with short careers or, like many 
retired law enforcement officers, those whose careers are split inside 
and outside the Social Security system. Bluntly put, this provision has 
not eliminated a windfall for individuals who did not earn it, but it 
has resulted in a windfall for the Federal government at the expense of 
public employees.
    Let me now discuss the other aspect of H.R. 147, which would repeal 
the Government Pension Offset. In 1977, Federal legislation was enacted 
that required a dollar-for-dollar reduction of Social Security spousal 
benefits to public employees and retired public employees who received 
earned benefits from a Federal, State, or local retirement system. 
Following a major campaign to repeal the provisions in 1983, Congress, 
which was looking for ways to reduce the fiscal pressure on the Social 
Security system, adopted instead the Government Pension Offset, which 
limits the spousal benefits reduction to two-thirds of a public 
employee's retirement system benefits. This remedial step falls far 
short of addressing the inequity of Social Security benefits between 
public and private employees. This ``offset'' provision should have 
been repealed in 1983 and might have been were it not for the fiscal 
condition of the Social Security system at that time.
    The new GPO formula reduces the spouse's or widow(er)'s benefit 
from Social Security by two-thirds of the monthly amount received by 
the government pension. For example, the spouse of a retired law 
enforcement officer who, at the time of his or her death, was 
collecting a government pension of $1,200, would be ineligible to 
collect the surviving spousal benefit of $600 from Social Security. 
Two-thirds of $1,200 is $800, which is greater than the spousal benefit 
of $600 and thus, under this law, the spouse is unable to collect it. 
If the spouse's benefit were $900, only $100 could be collected, 
because $800 would be ``offset'' by the officer's government pension.
    In nine out of ten cases, this completely eliminates the spousal 
benefit even though the covered spouse paid Social Security taxes for 
many years, thereby earning the right to this benefit and the right to 
bequeath the benefits to their surviving spouse. It is estimated that 
approximately 349,000 spouses and widow(er)s of State and local 
employees have been unfairly affected by the Government Pension Offset. 
It should also be noted that these estimates do not capture those 
public employees or retirees who never applied for spousal benefits 
because they wrongly believed themselves ineligible. According to the 
Congressional Budget Office, the GPO reduces benefits for some 200,000 
individuals by more than $3,600 a year. Ironically, the loss of these 
benefits may cause these men and women to become eligible for more 
costly Federal assistance, such as food stamps.
    The WEP and GPO create a tremendous inequity in the distribution of 
Social Security benefits. The standard for this narrow class of 
individuals--retired public employees who are surviving spouses of 
retirees covered by Social Security--is inconsistent with the overall 
provisions of the Social Security Act and does not apply to persons 
receiving private pension benefits. This imbalance exists even though 
Congress, through ERISA standards and tax code provisions, has more 
direct influence over private employers than public employers. Clearly, 
this is an issue that Congress must address.
    I also want to mention the F.O.P.'s support for H.R. 1714, the 
``Public Servant Retirement Protection Act.'' This legislation, 
introduced by Subcommittee member Representative Kevin Brady, would 
repeal the Windfall Elimination Provision (WEP) and replace it with an 
individualized calculation of Social Security worker benefits based on 
an individual's entire work history.
    While the passage of H.R. 1714 is not a top priority of the F.O.P., 
we do regard it as an excellent first step in correcting the inequity 
of current law. The repeal of the Windfall Elimination Provision has 
triggered no organized opposition, allowing us to conclude that the 
overwhelming majority of Members of Congress agree with the position of 
the Fraternal Order of Police, which is that the current law is unfair 
to public employees. Yet despite this agreement, the estimated costs 
for a full repeal of the WEP are considerable, which leads me to I 
believe that this is the primary reason that such proposals garner a 
great deal of support, but little attention. The bill introduced by 
Representative Brady, while it does not fully address the problem in 
the estimation of the F.O.P., does represent a commendable compromise 
between those who justly believe that public employees are being 
treated unfairly and those who are concerned about the potential fiscal 
consequences of repealing the WEP in its entirety.
    I now want to address an issue that the F.O.P. and many other 
public employee organizations thought was wholly discredited--mandatory 
participation in Social Security, which was considered and rejected by 
the President's Commission to Strengthen Social Security (CSSS) in its 
final report issued on 21 December 2001. And for good reason--according 
to the Social Security Administration (SSA), there are 5.25 million 
governmental employees not covered by Social Security, and the Public 
Pension Coordinating Council (PPCC) estimates that seventy-six percent 
(76%) of this total are public safety personnel, far more than any 
other category of public employee. State and local government employers 
carefully designed pension plans and retirement systems to fit the 
unique needs of law enforcement officers, public safety officials and 
other public employees. These pension plans, which exist in every State 
in the union, better serve State and local government employees and 
deliver a greater benefit than participation in Social Security. As 
just one example, State and local plans take into consideration the 
significantly earlier retirement age of law enforcement officers and 
other public safety officers as compared to other, more typical 
government employees. Social Security does not.
    Additionally, the cost to States, localities, and the individual 
employees would be immense. The employee would be required to pay 6.2% 
of his or her salary into the Social Security trust fund. This amount 
would be in addition to the contribution already paid by the employee 
into the State or local retirement system. The employer would have to 
match the employees contribution--another 6.2% cost to the employing 
agency for each employee. And that, too, would be in addition to 
whatever matching contribution must be made by the employer into the 
existing State or local retirement system, which would severely 
compromise the financial solvency of the existing pension and 
retirement plans into which public employees outside the Social 
Security system currently contribute.
    The result of this is obvious: less take home pay for the employee 
and cut backs in services, equipment and other expenditures on the part 
of State and local governments. Police departments and other law 
enforcement agencies stretch every dollar to the limit now--these huge 
new costs will devastate their budgets and certainly impact on their 
ability to function as first responders at a time when we need to be 
improving our homeland security.
    Clearly, the damage that would be done to State and local 
governments and the families of the employees cannot be overstated if 
the Federal government forces them to pay a new tax of 12.4%. Collected 
data shows that the first year cost to employers--local and State 
governments--to cover only newly hired employees only would be over 
$771 million. The most recent estimated cost to public employers and 
employees for the first five years of mandatory participation in Social 
Security is enormous--$44 billion. And what benefit does this enormous 
cost have on the overall health of the Social Security trust fund? 
According to the SSA, requiring newly hired employees to be covered by 
Social Security will extend the solvency of the Social Security Trust 
Fund for two years. Just two years--and this projection does not take 
into account the effect of increasing Social Security's unfunded 
obligations by adding this huge new influx of participants.
    The Fraternal Order of Police understands that reforms in the 
Social Security system are necessary and that certain steps need to be 
taken if we are to avoid the expected shortfall in 2042. Sometimes 
proposals sound good on the surface, but after careful examination are 
revealed to be unsound policies with damaging consequences. We believe 
that mandating the inclusion of all public sector employees into the 
Social Security system falls into this category. It is wrong to change 
the rules almost seventy years later because the Federal government is 
looking for an easy way to fund Social Security without making hard 
choices. It is also wrong to impose a $44 billion cost on State and 
local governments and their employees just to extend the solvency of 
Social Security for two years.
    Ultimately, this is about fairness to them men and women that have 
sworn to serve and protect our communities. The State and local 
governments which employ these officers chose not to participate in 
Social Security, but they did not create this problem, nor did their 
5.25 million employees who do not pay into the system. But if 
participation in Social Security is mandated by the Federal government, 
all of them would be paying a hefty price for contributing into their 
own retirement plans. Destroying the retirement programs of these hard-
working Americans and raiding the budgets of State and local 
governments should not be part of the Federal government's solution, 
and I urge Congress to reject any proposal requiring public employees 
to participate in Social Security.
    Similarly, the foundation of the F.O.P.'s position on the repeal of 
the WEP and GPO is also about fairness. It is not unreasonable to ask 
that the men and women who spent their careers putting their lives on 
the line for their fellow citizens be treated fairly after they retire. 
But because of the WEP and the GPO, they are treated differently and 
are subject to arbitrary formulas which reduce benefits for which they 
have been taxed and to which they are entitled. Both of these 
provisions should be repealed, and I urge the Subcommittee to consider 
and favorably report H.R. 147.
    Mr. Chairman, I want to thank you and the other Members of this 
distinguished Subcommittee for the chance to appear before you today. I 
would be happy to answer any questions you have.

                                 

    Chairman MCCRERY. Thank you, Mr. Canterbury. Is it 
Iglehart?
    Mr. IGLEHART. It is Iglehart.
    Chairman MCCRERY. Mr. Iglehart, please proceed.

STATEMENT OF RANDALL IGLEHART, PRESIDENT, ASSOCIATION OF TEXAS 
             PROFESSIONAL EDUCATORS, AUSTIN, TEXAS

    Mr. IGLEHART. Thank you. Good afternoon, I am Randall 
Iglehart. I am the past State president of the Association of 
Texas Professional Educators (ATPE). The ATPE represents over 
105,000 public school employees. We are the largest 
professional education association in Texas. We are also the 
largest independent nonunion education association in the 
United States. I am honored to be here today to address the 
Subcommittee on Social Security and the concerns of Texas 
educators. Specifically, I will discuss our concerns on the 
possibility of mandating all public school employees into 
Social Security and the negative impact of the GPO and the WEP 
on the recruitment and retention potential for Texas public 
schools. You should have our written testimony in front of you 
so, let me start by giving you our recommendations on these 
issues and our concerns on each.
    The ATPE recommends that Texas public school employees not 
be mandated into Social Security coverage because of the damage 
doing so would cause to the teacher retirement system. Attached 
to this testimony is a letter from the former Texas Retirement 
System (TRS) Executive Director outlining how the additional 
payroll taxes needed to support mandated Social Security 
coverage would reduce the State's ability to contribute to TRS. 
Although the letter is several years old, the conclusions are 
still relevant. Furthermore, it was written when the system was 
in its best financial shape of his history. This is not the 
case today. In fact, our State legislature chose to cut pension 
benefits this past session to help stave off actuarial 
uncertainties in the future so, our concerns about diverting 
future funding to Social Security are even more relevant. Even 
with the cuts, monthly benefits paid by our State system are, 
on the whole, substantially greater than those distributed by 
Social Security. This as well as the other benefits that 
teacher retirement system offers retirees like health insurance 
and life insurance are a major reason Texas teachers stay in 
the classroom for a full career. The ATPE believes mandating 
Social Security would only serve to compromise TRS. It would 
reduce benefits for retired educators and drive even more 
experienced educators out of the profession.
    Next, I would like to talk about the WEP. ATPE recommends 
passage of H.R. 1714, the ``Public Servant Retirement 
Protection Act,'' to address the inequities of the WEP, and 
reduce its negative offsets on Texas public schools. The WEP 
was meant to account for a windfall in the formula used to 
figure Social Security benefits; however, the WEP uses an 
arbitrary formula that is based partially on the number of 
years paid into Social Security rather than the amount received 
from a government pension. The Public Servant Retirement 
Protection Act would repeal the WEP's arbitrary formula and 
replace it with a formula that accurately figures the windfall 
amount a government employee would have received allowing for a 
proper adjustment in benefits. This would mean greater benefits 
for most public educators qualified for Social Security 
benefits and would remove some of the disincentive for talented 
candidates to enter the profession. The ATPE thanks 
Representative Brady and the cosponsors of H.R. 1714 for 
working with our organization toward ending the inequities of 
the WEP.
    Although the Public Servant Retirement Protection Act takes 
important steps toward addressing our concerns on the WEP, it 
does not address the GPO. The GPO eliminates spousal or widow 
benefits for most retired Texas public educators and has caused 
an enormous strain on the morale of public educators in Texas. 
The TRS reports that GPO-related issues resulted in a doubling 
of the teacher retirement rate in 2004. The ATPE is hopeful, 
both the Public Servant Retirement Protection Act and 
legislation to lessen the effects of GPO on public educators 
will pass the 109th Congress and become law. It is our hope 
that this will bolster teacher morale and encourage qualified 
public educators to remain in the classroom.
    The ATPE understands the tremendous pressure you face and 
the awesome complicated task before you. We ask that any 
comprehensive Social Security legislation passed by Congress 
address the problems of the WEP and the GPO. We want to make 
sure that Congress does not cause our public school employees 
undue problems and we want to make sure that they do not 
jeopardize their State pension fund through mandated Social 
Security coverage. The ATPE thanks the Members of the 
Subcommittee for this opportunity to participate in this 
hearing and for your willingness to receive our input on this 
critical issue that affects so many public educators.
    [The prepared statement of Mr. Iglehart follows:]
    Statement of Randall Iglehart, President, Association of Texas 
                 Professional Educators, Austin, Texas
    The Association of Texas Professional Educators (ATPE) is the 
largest professional educators' association in Texas. With more than 
100,000 members, we are also the largest non-union educators' 
association in the nation. ATPE is committed to advocating for better 
benefits for all educators; promoting a collaborative work environment; 
the right of educators' to choose membership in the association they 
feel best represents their interests; and providing the best education 
possible for Texas children. We thank you for the opportunity to 
provide input to the Subcommittee on reforming the Social Security 
system.
RECOMMENDATIONS
      ATPE recommends that Texas public school employees not be 
mandated into Social Security coverage because of the damage doing so 
could cause to the Teacher Retirement System (TRS). (See attached 
correspondence from former TRS Executive Director Charles Dunlap.) 
Furthermore, mandating Social Security coverage would not solve the 
problems caused for some Texas educators by the Government Pension 
Offset (GPO) and the Windfall Elimination Provision (WEP).
      ATPE recommends passage of HR 1714, the Public Servant 
Retirement Protection Act (PSRPA), which would reduce the negative 
effects of the WEP on Texas public school employees.
      ATPE recommends passage of HR 147, the Social Security 
Fairness Act, which would repeal both the WEP and the GPO.
      ATPE recommends that any comprehensive Social Security 
legislation passed by Congress address the WEP and the GPO without 
damaging the TRS pension fund through mandated Social Security coverage 
for public school employees.
ATPE opposes mandatory Social Security coverage for all public school 
        employees
    ATPE opposes mandatory Social Security coverage because it would 
require significant financial contributions from both employees and 
employers. The additional payroll taxes needed to support mandated 
Social Security coverage would inevitably reduce the state's ability to 
contribute to TRS. ATPE believes the additional fiscal demands would 
ultimately be reconciled through larger TRS contributions from active 
and retired educators. This would produce additional strain on those 
who are already overworked in an under-appreciated profession and could 
have a devastating effect on the actuarial soundness of the TRS fund. 
Attached to this testimony is a letter from former TRS Executive 
Director Charles Dunlap outlining the effect mandatory Social Security 
coverage would have on the TRS. The letter was written in 1998 but ATPE 
believes the conclusions are still relevant today.
    TRS is a far superior system to Social Security. Its monthly 
benefits are, on the whole, substantially greater than those 
distributed by Social Security. Plus, TRS offers retirees health 
insurance, return-to-work benefits and life insurance. ATPE believes 
mandating Social Security would only serve to compromise TRS and reduce 
benefits for retired educators.
    Some believe that mandatory Social Security coverage would solve 
the problems some educators experience due to the GPO. The GPO is an 
offset provision in Social Security law that reduces spousal Social 
Security benefits for public employees (such as public educators) who 
are eligible for government pensions (such as those provided by the 
Teacher Retirement System [TRS]).
    In reality, mandating that educators pay into Social Security would 
not lessen the effects of the GPO. And, in the long run, mandatory 
coverage would compromise TRS--a system that provides far better 
retirement benefits than does Social Security.Educators currently can 
gain GPO exemption by working their last five years before retirement 
in positions covered by both Social Security and TRS. Because very few 
Texas school districts participate in Social Security, most educators 
must transfer to other districts to become exempt from the GPO. Some 
believe mandatory Social Security coverage would allow educators to 
gain GPO exemption without having to relocate.
    However, in the history of Social Security, changes to the system 
have applied only to employees hired after the enactment date. Most 
likely, a switch to mandated coverage would follow the same rule, so 
mandated coverage would apply only to educators hired after the date of 
passage. Current employees would not be covered by Social Security and 
would still have to relocate to new positions for the last five years 
before retirement in order to gain GPO exemption.
    Even if mandated coverage applied immediately to all employees, it 
would not alleviate the effects of the GPO. The GPO exists to mirror 
the effects of ``dual entitlement rules'' that apply to employees who 
pay into Social Security. These rules state that a person may not 
collect both a spousal Social Security benefit and his own benefit. If 
Social Security coverage were mandated and public school employees paid 
into Social Security, they would simply be subject to dual entitlement 
rules instead of the GPO. Both exist to limit the collection of spousal 
benefits by individuals eligible for their own retirement benefits, a 
practice known as double dipping.   The other offset provision that 
concerns educators is the Windfall Elimination Provision (WEP), which 
reduces Social Security payouts to government employees who are 
eligible for both Social Security and government pensions such as those 
provided by TRS. The WEP applies to those employees who have worked for 
less than 30 years in positions that pay into Social Security.
    It's true that mandated coverage would cause educators to pay into 
Social Security longer and therefore could potentially lessen the WEP's 
effects on some people's benefits. However, this benefit would be 
insignificant compared to the great damage mandatory coverage would do 
to TRS.
ATPE supports the PSRPA
    The Windfall Elimination Provision (WEP) reduces the Social 
Security benefits of persons who have worked in jobs that pay into the 
Social Security system and in jobs that do not. The WEP was meant to 
account for a windfall in the formula used to figure Social Security 
benefits that is designed to provide low-income workers with a larger 
percentage of their pre-retirement earnings than that provided to high-
income workers. The WEP modifies the formula to prevent providing 
employees (such as Texas educators) who haven't paid into Social 
Security with higher percentages of their pre-retirement earnings than 
that given to employees who have paid into Social Security for their 
entire careers. However, the WEP imposes an arbitrary formula on these 
individuals that is based partially on the number of years they paid 
into Social Security rather than the amount they will receive from 
their government pensions. That means that a person who worked in a 
Social Security-covered job for 20 years but who is also eligible for a 
government pension benefit of $500 per month will have his Social 
Security benefit reduced by the same amount as a person who paid into 
Social Security for 20 years but receives a government pension benefit 
of $1,200 per month. ATPE believes the WEP in its current form acts as 
a deterrent to talented, private-sector employees who are vested in 
Social Security and are interested in teaching as a second career, as 
well as to professional educators who are thinking about moving to 
Texas to teach from states that pay into Social Security. Texas is 
facing a teacher shortage approaching 50,000; the state recently cut 
benefits for active and retired educators due to state budget cuts and 
retirements are at an all-time high. ATPE believes we must take steps 
to recruit and retain the brightest individuals in the teaching 
profession in order to ensure that every Texas student receives an 
exemplary education. ATPE believes the PSRPA to be such a step. The 
PSRPA would repeal the WEP's arbitrary formula and replace it with a 
formula that uses the complete earnings history of a worker in both 
Social Security covered employment and non-covered employment when 
determining average monthly earnings over a worker's lifetime. This 
would eliminate the windfall in the current formula used for figuring 
Social Security benefits and would mean greater benefits for most 
public educators qualified for Social Security benefits.
    The new formula under the PSRPA is a fair compromise between the 
arbitrary WEP and total repeal and will help the state of Texas recruit 
and retain qualified public educators from other professions and from 
other states. ATPE thanks Rep. Brady and the cosponsors of HR 1714 for 
working with our organization toward ending the inequities of the WEP.
ATPE supports repealing the GPO for Texas educators
    Because the PSRPA does not address the GPO, we urge your support 
for an amendment to the bill that will address the harsh effects of the 
GPO on public educators. By reducing the spousal or widow Social 
Security benefits of persons eligible for government pensions by two-
thirds of the amount of the pension, the GPO eliminates spousal or 
widow benefits for most retired Texas public educators. The GPO has 
caused an enormous strain on the morale of public educators in Texas; 
TRS reports that it resulted in a doubling of the teacher retirement 
rate in 2004. Many experienced educators recently retired to meet the 
July 1, 2004, deadline in HR 743 from the 108th Congress. By retiring 
by that date and working their last days in districts that pay into 
both TRS and Social Security, they avoided the GPO. Many other 
educators are leaving the profession early and cashing in their TRS 
accounts to avoid the GPO.
    ATPE urges this Subcommittee to amend HR 1714 to lessen the effects 
of the GPO on public educators. ATPE's suggestions include total repeal 
of the GPO, an exemption for public educators or a partial repeal that 
would exempt widows and those with combined pension and spousal 
benefits that fall below a certain level.
    HR 147, the Social Security Fairness Act, is legislation that would 
repeal both the WEP and the GPO. That bill now has 260 bipartisan 
cosponsors, including several of the cosponsors of HR 1714, but the 
bill has yet to be marked up by this Committee and debated on the House 
floor. ATPE is hopeful that both the PSRPA and legislation to address 
the GPO will pass the 109th Congress and become law. This will bolster 
teacher morale and encourage qualified public educators to remain in 
the classroom.
    ATPE thanks the members of this Subcommittee for the opportunity to 
participate in this hearing and for your willingness to receive our 
input on this critical issue that affects so many public educators. 
Educators are the most important resource in providing children with 
the knowledge they will need to succeed in life, and your efforts to 
protect their retirement benefits will have a lasting impact on the 
quality of the education received by students in the public school 
system.

                                 

    Chairman MCCRERY. Thank you, Mr. Iglehart. Ms. Wolfe.

  STATEMENT OF PATRICIA WOLFE, PRESIDENT, FEDERALLY EMPLOYED 
                             WOMEN

    Ms. WOLFE. Thank you, Mr. Chairman, I am Patricia Wolfe, 
the national president of federally Employed Women (FEW), and I 
am testifying here today in that role, and not in my capacity 
as an employee of the U.S. Department of Homeland Security. The 
FEW appreciates the opportunity to appear before this 
Subcommittee and testify about the GPO and the WEP and their 
adverse and unfair impact on FEW.
    On behalf of the one million women employed in the Federal 
government and military, we thank Chairman McCrery and other 
distinguished legislators serving on this Subcommittee for 
conducting this important meeting. We continue to call on 
Congress to repeal these provisions and allow Federal workers 
to receive their rightful and well-deserved Social Security 
benefits. As the Subcommittee Members are already aware and as 
we have heard today, the WEP greatly reduces the Social 
Security benefits of a retired Federal worker who has paid into 
Social Security and is eligible for a Federal government 
pension under the Civil Service Retirement System. The national 
active and retired Federal employees association (NARFE), has 
estimated that approximately 635,000 beneficiaries are 
receiving fewer benefits than they deserve due to the WEP, and 
this provision negatively impacts women much more than men.
    Of equal importance to members of FEW is the GPO. The 
victims of GPO are largely elderly women who have retired from 
the civil service retirement system or are about ready to 
retire, and are widows of private sector employees. The GPO 
penalizes about 335,000 beneficiaries and this number rises by 
about 15,000 per year. Of those affected by the GPO, 73 percent 
are women. According to the CBO, the GPO reduces benefits for 
more than 200,000 of these individuals by more than $3,600 a 
year.
    FEW supports the repeal of both these unfair provisions as 
outlined in H.R. 147 introduced by Representative McKeon. 
Another bill, H.R. 1714, sponsored by Subcommittee Member 
Brady, and we thank you, would also repeal the WEP and replace 
it with a more fair formula. The FEW supports both of these 
bills. Both the GPO and the WEP affect women much more harshly 
than men, and I ask you to consider the following: women are 
likely to spend time out of the workforce, about 12 years, to 
tend to family care giving responsibilities and that is time 
she is not earning a pension or contributing to Social 
Security. Four in 10 elderly widows rely on Social Security for 
90 percent of their income. The majority of women Social 
Security benefits are based on their husband's earnings while 
less than 5 percent of male Social Security beneficiaries 
depend on their wife's earnings. Women, on a whole, live longer 
than men and are more likely to run out of personal savings.
    Many members from across the country tell me they can never 
afford to retire because of the impact of these provisions. One 
71-year-old women from North Dakota says she is still driving 
on icy roads to go to her job on Minot Air Force Base. As a 
young wife, this woman worked to help her husband pay for 
medical school. Her spouse paid the maximum into the Social 
Security system but died unexpectedly at a young age. However 
this women's spousal benefit is now being cut by two-thirds 
because she has worked for the Federal government. Despite the 
fact that it was because she worked to fund her husband's 
education that then allowed him to make subsequent 
contributions to Social Security, she will not be receiving 
these full spousal benefits. This is simply not right. Another 
member from Washington State told me that she has worked for 
the Federal government for 25 years but had to also work a 
part-time job as a single mom. Now she is 65 years old and is 
eligible for approximately $500 in Social Security, but she 
will only be receiving $200. This Federal employee will have to 
continue working as long as health will allow and then will 
likely have to live with her children.
    FEW finds it particularly egregious that spousal and 
retirement benefits are reduced for Americans simply because 
they work for the Federal government. Quite frankly, public 
servants who have dedicated their entire careers to serving the 
American people through their work should not be punished in 
their retirement benefits. After their long career with the 
government, they should be enjoying their retirement years, 
their families, and their free time as economically healthy 
retirees. Again, Mr. Chairman, we thank you for holding this 
hearing. We thank you for your support of Federal employees in 
the past. We look forward to working with you and Members of 
your Committee to repeal these unfair provisions.
    [The prepared statement of Ms. Wolfe follows:]
    Statement of Patricia Wolfe, President, Federally Employed Women

                              INTRODUCTION

    Federally Employed Women (FEW) appreciates the opportunity to 
appear before this Subcommittee and testify about the Government 
Pension Offset (GPO) and Windfall Elimination Provision (WEP) Social 
Security provisions, and their adverse and unfair impact on federally 
employed women. On behalf of the one million women employed in the 
federal government and military, we thank Chairman Jim McCrery and the 
other legislators serving on this Subcommittee for conducting this 
important hearing. We continue to call on Congress to repeal these 
provisions and allow federal workers to receive their rightful and 
well-deserved social security benefits.
BACKGROUND
    As a private organization, FEW works as a constructive pressure 
group to improve the status of women employed by the Federal 
government. This includes contact with Congress to encourage 
progressive legislation. FEW national officers also meet with agency 
officials at all levels to demonstrate support of the Federal Women's 
Program (FWP), encourage officials to support the program and to obtain 
insight on the effectiveness of the FWP at agency and local levels.
    For 37 years, FEW has been working to end sexual discrimination and 
enhance opportunities for the advancement of women in government. Every 
day, nationwide, FEW members work together to bring about an awareness 
of the issues facing women throughout the federal government and 
achieve positive reforms and equality for women in the federal 
workplace.
    In addition, FEW members support all efforts within the government 
to improve operations and efficiencies in the federal workforce.

                  WINDFALL ELIMINATION PROVISION (WEP)

    As the Subcommittee members are already aware, the Windfall 
Elimination Provision (WEP) greatly reduces the Social Security 
benefits of a retired federal worker who has paid into Social Security 
and is eligible for a Federal Government pension under the Civil 
Service Retirement System (CSRS). Further, the WEP negatively impacts 
women much more than men.
    Private sector retirees receive monthly Social Security checks 
equal to 90% of their first $627 in average monthly career earnings, 
32% of monthly earnings between $627 and $3,779, and 15% of earnings 
above $3,779. However, federal retirees are only allowed to receive 40% 
of the first $627 in career monthly earnings, a penalty of $313.50 per 
month simply for working for the federal government.
    The National Active and Retired Federal Employees Association 
(NARFE) has estimated that approximately 635,000 beneficiaries are 
receiving fewer benefits than they deserve due to the WEP. This number 
continues to grow by 60,000 annually.

                    GOVERNMENT PENSION OFFSET (GPO)

    Of equal importance to FEW members is the Government Pension Offset 
(GPO). This provision was enacted in 1977 to prevent government 
retirees from collecting both a government annuity based on their own 
work and Social Security benefits based on their spouse's 
contributions. This law decreases by two-thirds whatever social 
security spousal benefits for which a retired government worker might 
be eligible.
    The GPO, in effect, prohibits federal retirees from collecting both 
a full Civil Service Retirement System (CSRS) annuity based upon his or 
her own government employment and full Social Security benefits based 
upon a spouse's employment. The victims of GPO are largely elderly 
women who are both CSRS annuitants and widows of private sector 
employees. Many of these women worked in lower grade/salaried positions 
and the loss of the Social Security benefit causes a major financial 
hardship. Had these women spent their careers anywhere but the federal 
government, they would be entitled to full, unreduced Social Security 
spousal or survivor benefits. But because they earned their pensions 
through federal service under CSRS, their Social Security benefit is 
``offset'' by their own earned retirement benefits.
    The GPO penalizes about 335,000 beneficiaries, and this number 
rises by about 15,000 per year. Of those affected by the GPO, 73% are 
women. According to the Congressional Budget Office, the GPO reduces 
benefits for more than 200,000 of these individuals by more than $3,600 
a year.

                               OUR VIEWS

    FEW supports the repeal of both of these unfair provisions. Both 
the GPO and WEP lower the retirement income of federal employees by 
altering the Social Security benefit formula for certain groups. What 
is particularly egregious is that spousal and retirement benefits are 
reduced for Americans simply because they worked for the federal 
government, and could have a serious negative impact on morale at 
federal agencies. The end result is to penalize workers who trusted in 
good faith that they would be treated fairly, not penalized, for public 
service. This message regarding trust is a disincentive for new 
government workers.
    During these times of an aging workforce, we need to do what is 
right for our public servants. Americans who choose to serve their 
country by working for the federal government should not then be 
penalized during their retirement years. These provisions need to be 
repealed as soon as possible.
    Additionally both the GPO and WEP affect women much more harshly 
than men. Consider the following:

      Women are more likely to spend time out of the workforce 
(about 12 years) to tend to family care giving responsibilities. That 
is time she is not earning a pension, vesting in a pension, or 
contributing to Social Security. This absence from the paid workforce 
translates into inadequate retirement income and an increased financial 
dependency on their spouses.
      Eighty percent of male beneficiaries get Social Security 
benefits solely as retired workers. Only 33% of women receive benefits 
solely as retired workers, but 55% of women receive benefits, at least 
in part, as a spouse or former spouse of a retired, disabled or 
deceased worker.
      Four in ten elderly widows rely on Social Security for 
90% of their income.
      Women make up 60% of all Social Security beneficiaries, 
and 70% of beneficiaries 85 and older. The system is the only source of 
income for one-fourth of elderly women living alone.
      Even though Social Security is gender neutral, often 
times a woman's benefit ends up being less than 50% of her spouse's 
because women's salaries are still often lower than men, and certainly 
were lower when many women entered the workforce. The majority of 
women's Social Security benefits are based on their husband's earnings, 
while less than 5% of male Social Security beneficiaries depend on 
their wife's earnings.
      Women, on the whole, live longer than men and are more 
likely to run out of personal savings before men.
      Over the course of a career, the wage disparity (76 cents 
to every dollar earned by a man) between men and women really adds up. 
For example, women between the ages of 25 and 34 earning $30,000 a year 
will lose over $815,000 over the course of their careers because of 
this wage disparity. Lower earnings throughout their careers mean women 
rely more heavily on Social Security in their retirement, and their 
retirement incomes are lower. According to the National Association for 
Female Executives, women over 65 earned 43% less income than men in 
1999. Median Social Security benefits are $7,750 for women over 65 
years of age, and $11,040 for men of the same age. Median pension 
benefits are $5,600 for women over 65 years of age, and $10,340 for 
men.
FEW MEMBERS
    Many FEW members have told me that they can never afford to retire 
because of the impact of these provisions on their benefits. One 71-
year old woman from North Dakota is still waking up before 5:00 am, 
driving on icy roads in snow storms to go to her job at Minot Air Force 
Base. As a young wife, this woman worked to help her husband go through 
and pay for medical school. Her spouse paid the maximum into the Social 
Security system, but died unexpectedly at a young age. However, this 
woman's spousal benefit is now being cut by two-thirds because she 
worked, and has to continue to work, for the federal government.
    Despite the fact that it was because she worked to fund her 
husband's education that then allowed him to make subsequent 
contributions to the Social Security system, she is not receiving these 
full spousal benefits, and cannot afford to retire. This is simply not 
right.
    Another member from Washington state told me that she had worked 
for the federal government for 25 years, but also had to work a part-
time job to make ends meet during which time she was a single Mom. Now 
that she is 65 years old, she has learned that, while she is eligible 
for about $500 in Social Security monthly benefits, she will only be 
receiving $200. Unfortunately her retirement from the government (about 
$1,300 monthly) is simply not enough to live on. Her condo rent 
payments alone are approximately $2,000 a month. This federal employee 
cannot afford to retire, and will have to continue working as long as 
health will allow, and then will likely have to live with her children.
    On a more personal note, I too will be impacted by the GPO when I 
retire. Although I have 37 years of Federal service and I am now 
eligible for retirement, I am planning to work several more years in 
order to ensure that my annuity will cover my expenses. This is because 
my Social Security spousal benefit will be reduced so much.

                             IN CONCLUSION

    Quite frankly, public servants who have dedicated their entire 
careers to serving the American people through federal government work 
should not be punished in their retirement benefits simply for working 
for the federal government. After a long career with the government, 
they should be enjoying their retirement years, their families and 
their free time as economically healthy retirees.
    Again, we very much appreciate the Subcommittee and Chairman's 
interest in this issue and all the support you have given federal 
workers in the past. I, and the thousands of other FEW members, am 
proud of the work we do for the federal government, and simply want to 
receive those retirement benefits to which we are entitled.
    We look forward to working with the Subcommittee members and their 
staffs to repeal these unfair provisions.
            Sincerely,
                                                  Patricia M. Wolfe

                                 

    Chairman MCCRERY. Thank you, Ms. Wolfe. Mr. Loveless.

  STATEMENT OF CHARLES M. LOVELESS, DIRECTOR OF LEGISLATION, 
  AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES

    Mr. LOVELESS. Mr. Chairman, Ranking Member Mr. Levin, 
distinguished Members of the Subcommittee, my name is Charles 
Loveless, I am Director of Legislation for the American 
Federation of State County and Municipal Employees (AFSCME). 
The AFSCME has 1.4 million members who primarily work for State 
and local governments across the Nation. I am also testifying 
today on behalf of the Coalition to Assure Retirement Equity, 
which is a coalition that was formed about a decade and a half 
ago of 50 national and State and local organizations which was 
formed to support repeal or reform of the GPO and WEP. One 
thing, Mr. Chairman, that I have learned in my career in 
Washington is not to stand in the way of Members of Congress in 
their rush to get their planes back to their districts at the 
end of the Washington portion of the work week, so, I will be 
mercifully brief.
    First, I would like to associate my union with the remarks 
that were made by previous witnesses on this panel in 
opposition to mandatory coverage and on the need for repeal or 
relief from the GPO and the WEP. If I could just go ahead and 
make the following additional comments. I want to make it very 
clear that my union is a strong supporter of Social Security 
and its current benefit structure. As with most workers, the 
great majority of AFSCME members, approximately 75 percent, 
participate in Social Security and depend on it to protect 
themselves and their families.
    I want to emphasize that my union's opposition to mandatory 
coverage is not based on a belief that Social Security does not 
work. On the contrary, we think it does an extraordinary job of 
providing basic income security and shielding participants from 
poverty. We oppose mandatory coverage because of the adverse 
consequences for those workers and retirees and their State and 
local government employers, who, through no fault of their own, 
were precluded from participating in Social Security, and also 
out of our concern regarding the negative consequences for our 
pension plans.
    My union recently commissioned a report by the actuarial 
consulting firm, The Segal Company, a summary which I have 
attached to our statement, which graphically shows the high 
costs associated with mandating coverage for newly hired State 
and local government workers. The 5-year cumulative costs for 
both public employers and employees having to pay the 6.2 
percent payroll tax would be a staggering $44 billion. While 
all States would be affected, interestingly, the States that 
are represented by Members of this Subcommittee, Ohio, 
California, Michigan, Louisiana, and Texas, bear, I think, an 
even higher burden as you can see from the chart that I have 
attached to my statement. Many of these same States are still 
suffer from the lingering effects of a major fiscal crisis that 
began earlier in this decade.
    For the reasons that have already been stated by others on 
this panel, my union believes it is extremely important to take 
action to eliminate the serious inequities and the unintended 
consequence of the application of the GPO and WEP. I want to 
emphasize that there are tens of thousands of lower wage 
people, people who are receiving very small benefits in 
retirement, particularly women, who have lost their spousal 
benefits as a result of the GPO, and also have been adversely 
affected by the WEP. As others have stated, we are supportive 
of legislative efforts to either repeal or to provide relief 
from these unfair statutory provisions. I will stop here and I 
remain open for any questions that you may have.
    [The prepared statement of Mr. Loveless follows:]
  Statement of Charles M. Loveless, Director of Legislation, American 
          Federation of State, County and Municipal Employees
    Good morning, Mr. Chairman and members of the Subcommittee. I am 
Charles M. Loveless, Legislative Director of the American Federation of 
State, County and Municipal Employees (AFSCME). I appreciate the 
opportunity to be here today. We are also testifying on behalf of the 
Coalition to Assure Retirement Equity (CARE), which is a coalition of 
50 national, state and local organizations established in 1991 to 
reform or repeal the Social Security Government Pension Offset and the 
Windfall Elimination Provision (WEP). The combined membership of these 
organizations represents millions of federal, state and local 
government workers and retirees affected by these two provisions.
    AFSCME is a labor union that represents 1.4 million employees who 
work for federal, state, and local governments, health care 
institutions and non-profit agencies, as well as over 200,000 retiree 
members. AFSCME and its members are strong supporters of the Social 
Security system. As with most workers, the great majority of AFSCME 
members depend on Social Security to protect themselves and their 
families. One of our principal goals in the current debate over Social 
Security is to ensure that future generations of workers will be able 
to rely on the crucial protections that Social Security offers to 
workers at their retirement and to their families in the event of a 
breadwinner's death, disability or retirement.
    Social Security is not in crisis although there will come a time--
about four decades into the future according to the Social Security 
Trustees and the Congressional Budget Office (CBO)--when Social 
Security, if left unchanged, will only be able to pay between 70 and 80 
percent of the currently guaranteed level of benefits. Therefore, the 
challenge facing Congress is to strengthen the Social Security program 
so that it can continue to pay 100 percent of guaranteed benefits for 
the next 75 years in a manner that will not deepen the projected 
shortfall and saddle our children and grandchildren with mountains of 
additional debt. At the same time, we should not reduce currently 
guaranteed benefit levels; raise the retirement age beyond that 
currently mandated; or destabilize the pension plans of those state and 
local government workers not covered by the Social Security system. In 
our view, a plan can be developed that would meet all these goals 
without altering the basic structure of the Social Security program.
Mandatory Coverage
    We hope that the Subcommittee would agree that any solution to the 
very manageable shortfall in the Social Security Trust Fund should in 
no way jeopardize the retirement security of any worker. This should 
include the 25 percent of state and local government employees, and 
even higher percentages of teachers, police, fire and public safety 
officers, who do not participate in Social Security and would be 
adversely affected if their employers were forced to join the program.
    When Social Security was established, states, cities, counties and 
other public entities were excluded from participation, and today, 
approximately 6.6 million state and local government employees do not 
participate in the Social Security system. These workers are presently 
covered under public pension plans that were designed to replace Social 
Security's basic retirement and disability protections as well as 
provide a basic pension benefit. The vast majority of these plans are 
well funded and actuarially sound. Furthermore, the Omnibus Budget 
Reconciliation Act (OBRA) of 1990 has already ensured that any 
temporary, part-time or seasonal employee not covered by one of these 
public plans be included in Social Security. As a result, basic pension 
protections are in place for all American workers--private and public 
sectors. And there is no need to mandate Social Security coverage in an 
effort to protect workers' interests.
    On the contrary, mandated Social Security coverage would have 
serious negative implications for public employees, their employers, 
and their pension plans, and this is true even if the coverage applies 
only to future hires. Among the adverse consequences are the huge 
expenses that would be involved for workers and employers whose 
combined current pension plan contributions total, in many cases, 21--
23 percent of payroll; the possible establishment of new tiers of 
pension benefits, with lower benefits for the newly hired; 
destabilizing pension plan finances for current participants; and 
raising taxes to fund additional payroll contributions. Raising taxes 
or cutting services would of course also negatively impact the general 
public in a major way. And while mandatory coverage creates much 
hardship, it still doesn't begin to address Social Security's long-term 
solvency issues. Mandated coverage adds only two years to the solvency 
of the trust fund, and in the long run, it could actually cost the 
system more, as new participants become eligible for Social Security 
benefits.
    Any short-term financial gains for Social Security must be weighed 
against the effect it would have on the retirement security of others. 
AFSCME has studied this issue very carefully, and we recently 
commissioned a report by the actuarial consulting firm, the Segal 
Company, that outlines the costs and other problems associated with 
mandatory Social Security coverage for all public employees. According 
to a preliminary, updated analysis by the Segal Company, the five-year, 
employer-employee cost of mandatory Social Security coverage for newly 
hired employees is a staggering cumulative $44 billion over five years. 
This reflects a substantial increase from the previous estimate of $26 
billion by Segal in large part due to the improved efforts of the 
Social Security Administration to report the number of uncovered 
employees. A copy of the firm's state-by-state breakdown of the costs 
is attached to my testimony.
    Simply stated, mandatory coverage would negatively affect the 
financing of many state and local government pension plans and would 
adversely affect the retirement security of hundreds of thousands of 
public sector workers.
Government Pension Offset
    I also appreciate the opportunity to be here today to share our 
views and experiences with the Government Pension Offset (GPO), a 
federal law that's had a devastating effect on many Americans. The GPO 
applies to nearly everyone receiving a public pension from work not 
covered by Social Security. If the public pensioner is also eligible 
for a Social Security spousal or widow's benefit, this law requires 
that the benefit be offset by an amount equal to two-thirds of the 
public pension.
    Approximately 335,000 retired federal, state and local government 
employees have already been affected by the GPO. For the great 
majority, the GPO totally eliminates the Social Security spousal/widow 
benefit. The remainder experience a dramatic benefit reduction. 
Thousands more will be affected in the future.
    Currently, the average pension for many affected retirees is less 
than $500 a month. These relatively modest pensions are especially 
common for lower-paying occupational positions, such as school district 
employees. Our members in these positions include school cafeteria 
workers, crossing guards, bus drivers and custodians. Many of these 
employees retire after a full-length career, but may have worked only a 
30-hour week. Others may have had less than a full career--say 15 or 20 
years following divorce or child rearing. Most of those adversely 
affected are women who began their careers expecting to retire with 
both a public pension and a Social Security spousal benefit. It's a 
shock when they realize that they will not receive a much-needed 
portion of their expected retirement income.
    According to current law, retirees cannot receive a Social Security 
benefit based on their own work record and a full spouse/widow benefit. 
They receive the larger of the two. This is known as the ``dual 
entitlement'' rule. For the purpose of the GPO provision, Congress made 
a determination in 1983 to equate two-thirds of a public pension (from 
work not covered by Social Security) with a Social Security earned 
benefit. The GPO essentially applies the dual entitlement rule to this 
portion of the pension and assumes that the remaining 1/3 portion of 
the public pension is equivalent to a private pension benefit. However, 
we believe the reasoning behind this assumption is faulty because it 
ignores the generally large contributions made to public pensions by 
workers and employers. In non-covered jurisdictions, the average total 
contribution can amount to 21% of pay or more, compared to a much lower 
total of only 12.4% under Social Security. Furthermore, private sector 
pensions have no such offset. Retirees can receive a full pension and a 
full spousal benefit under Social Security. In addition, a retiree's 
entire public pension is subject to federal income tax--including the 
part that's deemed equivalent to Social Security. However most Social 
Security benefits are tax-free. So, the public retiree is in effect hit 
twice--once with taxes and again with the GPO. It's simply not fair.
    To show how the GPO can adversely affect average Americans, let's 
take a look at two of our Union's own members. One example is Shirley 
Milburn of Windsor, Ohio, who worked for 26 years as a teacher's aide 
and library technician. Her Ohio School Employees Retirement System 
pension check is $405 per month. Her husband's monthly Social Security 
benefit is $786.30. Normally, she could expect to receive a spousal 
benefit equal to half his benefit, or $393.15. Instead, the GPO reduces 
it to only $121.80, giving her a total retirement benefit--pension plus 
Social Security--of only $526.80 a month.
    Another example is Annette Williams from Los Angeles, California. 
She retired in 2003 at the age of 58 from her job as a clerical worker 
employed by the City of Los Angeles. She never knew about the GPO, and 
while she thought she would be able to collect a widow's benefit when 
she reached the age of eligibility, she found out that two-thirds of 
her $1,300 pension would completely eliminate her widow's benefit of 
$812 a month. She simply cannot understand why this is the case, since 
as a city employee she contributed the same amount into her pension as 
a private sector worker contributes to Social Security, and her 
employer's contribution was substantial--as high as 16 and half percent 
of payroll.
    When the GPO was first enacted, it was meant to target retirees 
receiving multiple government pensions, some of whom had higher incomes 
in retirement than they had while working. I don't think Annette 
Williams and Shirley Milburn fit the image of these so-called ``double 
and triple dippers.'' Clearly, Congress did not have them in mind when 
the GPO was passed.
    It is for these reasons that AFSCME strongly supports efforts to 
repeal or to significantly modify the impact of this unfair law.
Windfall Elimination Provision (WEP)
    The Windfall Elimination Provision (WEP) is another federal 
statutory provision that applies to individuals who receive a pension 
from a public-service job that is not covered by Social Security. If 
the public pensioner also worked in a Social Security-covered job for 
at least a decade, the WEP creates a public pension offset that can 
greatly reduce that person's earned Social Security benefit. The 
maximum reduction in 2005 was $313.50 a month. Approximately 635,000 
retired federal, state and local government employees are currently 
affected by the WEP. That number grows by about 60,000 retirees each 
year.
    Under the WEP, part of a retiree's public pension (from non-covered 
employment) is considered equivalent to a Social Security benefit. And, 
Social Security won't let retirees collect two full benefits. So, 
instead of Social Security's normal benefit formula, which is weighted 
in favor of lower-wage workers, WEP retirees' benefits are calculated 
using a modified benefit formula for higher-wage earners.
    The WEP was created in 1983 by Congress to distinguish between two 
types of retirees--those who receive good pensions from primary jobs in 
non-covered employment, but whose low-wages or short work records from 
secondary jobs make them appear to have had low-wage careers; and 
others who actually spent their entire work lives in low-wage jobs. 
Congressional supporters of WEP believed that those with secondary jobs 
were getting an unfair advantage from a Social Security benefit formula 
designed to give low-wage workers a decent income upon retirement. 
However, the Social Security Administration does not determine what a 
public employee has earned in total wages but treats him/her as a high 
wage earner under WEP. This is especially unfair when you consider that 
these workers pay the same percentage in payroll contributions on their 
Social Security-covered earnings as all others, yet they are being 
penalized by this unfair statutory provision.
    For the foregoing reasons, AFSCME strongly supports legislation to 
repeal or reform the WEP. Recognizing the unfairness of both the GPO 
and WEP, Representatives McKeon and Berman, along with 260 cosponsors, 
introduced H.R. 147 which would repeal these unfair statutory 
provisions.
Conclusion
    In conclusion, we again want to emphasize AFSCME's strong support 
for strengthening Social Security--our nation's great system of income 
protection that touches the lives of most American workers, including 
75% of AFSCME members.
    AFSCME opposition to mandatory coverage is not based on a belief 
that Social Security doesn't work. We think it does a remarkable job of 
providing basic security and shielding participants from potential 
poverty. Rather, we oppose mandatory coverage because it will cause 
serious problems for a discrete group of workers and retirees who have 
been precluded through no fault of their own from being a part of that 
system. For the majority who do participate in Social Security, we 
advocate maintaining the system's current social insurance structure, 
while making the moderate changes necessary to ensure the system's 
long-term solvency.
    At the same time, we think it is imperative that Congress take 
swift action to eliminate the serious inequities and unintended 
consequences of the application of the GPO and WEP laws. Their original 
purposes have been subverted under their current application, and the 
widespread bipartisan support that exists in Congress for making 
changes in these laws is due to the gross injustices that have been 
created by their misapplication. Congress should act immediately to 
correct both these unfair laws.

                                 

    Chairman MCCRERY. Thank you, Mr. Loveless. Well, I 
appreciate all of you coming to the Capitol today and sharing 
with us your views. For whatever reason, a number of States 
chose to not opt into Social Security. Most States have. Most 
States participate in Social Security and the vast majority of 
public employees participate in Social Security. They pay taxes 
and they receive benefits. So, I guess the question that keeps 
coming back to me is why shouldn't everybody contribute to a 
system like Social Security that is supposed to be a universal 
system providing benefits, including disability benefits, 
spousal benefits, survivor's benefits? Undoubtedly, families of 
employees in Louisiana who are not covered by Social Security 
benefit from Social Security. Some of their family members, 
some of their relatives benefit from various elements of Social 
Security. So, is the big reason that you are opposed to 
participating just because of the adverse impact it would have 
on your existing retirement systems? Is that the crux of your 
opposition to this? You all seem to speak favorably about 
Social Security. Mr. Loveless went out of his way to say we 
like Social Security. We support Social Security. Yet, you do 
not want to participate in it, you do not want to contribute to 
it. So did Ms. Bierdeman.
    Ms. BIERDEMAN. I will volunteer to respond to this. I am 
Terri Bierdeman with the Coalition to Preserve Retirement 
Security. I think the issue is if you were creating a brandnew 
system today from scratch and looking at all the options out 
there, whether it was Social Security, private plans, DB, DC, 
et cetera, you might well design some combination plan that 
involved pieces of many of these issues. I would think that 
most of us at this table, and in the room, do not have any 
problem with the Social Security program or any opposition to 
it. I think the issue is primarily some of these systems, many 
of these public systems, have existed for decades and were 
created in a way that to now layer on a new mandate of Social 
Security would have devastating financial impacts on those 
programs and not just for the future hires, but for current 
employees as well as retirees. I think, speaking personally 
from my own State, that would be our primary problem. If we 
were creating a brandnew system from scratch, it would be a 
different situation, but we have an 80-some year old system 
that is funded in a certain way and to now layer on a new 
mandate would have significant detrimental effect financially.
    Chairman MCCRERY. Anyone have a different thing?
    Mr. LOVELESS. If I could add to that, there is, first of 
all, the issue of the impact on our pension plans, but also, 
the impact on the States which are a vital part of our Federal 
system of government. We all know the States have been going 
through some very hard economic times. This Congress saw fit to 
provide $20 billion in aid to the States just a couple of years 
ago because of the fiscal crisis facing the States. This would 
be an enormous additional financial burden on the States at a 
time had they are just not equipped to deal with it.
    Chairman MCCRERY. At least those States that are in that 
situation.
    Mr. LOVELESS. Yes.
    Chairman MCCRERY. How many? Is it 17 States?
    Mr. LOVELESS. Well, interestingly enough, Mr. Chairman, 
there are at least some public employees in every State that 
are not covered, particularly public safety officers, by Social 
Security. There are a certain number of States, 15 or 17, that 
are going to be most heavily impacted by this. Yes.
    Ms. ORROCK. Mr. Chairman, a couple of points and to 
underscore Mr. Loveless's point, we have been, as State 
governments, going through the worst fiscal crisis in the 
memory of most of us still walking around and standing up.
    Chairman MCCRERY. It is turning around, though.
    Ms. ORROCK. Education is underfunded close to a billion 
dollars in Georgia because we had to cut in order to survive 
that fiscal crisis. So, a proposal that has implications for 
State budgets such as we have documented here and as the study 
shows in Georgia over a billion dollars alone, we are taking 
people off, we are looking at reducing access to Medicaid. We 
have already short listed the number of children covered by our 
health insurance plan. We are in a posture now with zero 
reserves in Georgia, and this is not atypical of States. We 
have been one of the States that has had a healthier economy, 
generally speaking. It hit us later and did not hit us as hard 
as some other places we have been in that sunbelt level. But we 
have--our reserves are depleted down to zero. We have gone 
through all of our reserves. We have put children off of our 
PeachCare for kids. We have--through no fault of their own. We 
are now looking at retooling Medicaid and some very serious and 
drastic ways shifting all of that population over into a 
different arrangement with HMOs. I could go on and on, as I 
said almost a billion dollars of underfunding in education. We 
are delaying reducing our classroom sizes in Georgia. So, when 
you talk dollars to State governments, the implications are 
just monumental.
    I would add the weight of history brought us where we are 
today. For the proposition that for a 24-month fix, the States 
go down this road of $44, $45, $50 billion, it is very 
difficult on the face of things to make an argument that that 
is a sound public policy approach to the issues we are trying 
to address here. That is just difficult, that is hard for that 
to survive scrutiny. 24 months, 45 billion to States that are 
down bumping along the bottom and hoping that we can begin to 
rebuild.
    We hope to start putting some money in the reserve this 
year. That is--and I think the other thing that you have to 
look at is the tremendous destabilizing effect potentially all 
of these funds that are invested through the public pension 
plans on the market and on the economy. This isn't small 
potatoes here. The implications when you start tackling 
California's system, huge and tremendous. I would finally say, 
and I think we heard a compelling statement over here, there 
are funds that were set up and are working for first responders 
addressing a whole different type of needs of the workforce 
that are not typical all across our workforce. We are living 
with what we have and this tremendously expensive fix is a 24-
month fix.
    Chairman MCCRERY. Well, I certainly appreciate your 
viewpoint. Try to put yourself in our place. We are looking for 
pieces here and there and everywhere which, taken together, 
would add up to 75 years solution. In fact, maybe even a 
permanent solution to Social Security. Yes, in isolation, you 
say that does not fix much of the problem but you put 10 of 
those together and you have a pretty big chunk of the problem 
fixed. So, try to understand what we are up against too in 
trying to fix this problem.
    Ms. ORROCK. The challenge is there is no question. I do 
think the serious study of the impact on these funds on the 
economy would be an essential component.
    Chairman MCCRERY. That is why you are here today to tell us 
about that, and I appreciate the testimony you have given us. 
Let me move on. You mentioned a number of things like education 
are underfunded. What about pension systems in the States? How 
many State pension systems are underfunded today? Does anybody 
have an idea?
    Mr. LOVELESS. There was a recent study done by the National 
Association of State Retirement Administrators, and we would be 
happy to provide it for the record, which indicates that the 
great majority of State and government pension plans are 
extremely well funded, somewhere in the neighborhood of having 
88 to 90 percent of the funds at this point that are going to 
be necessary to meet their liabilities. They are professionally 
managed. We have made tremendous strides in this area. Years 
ago, my union really took the lead in advocating for Federal 
ERISA-type standards for State and local plans. That did not go 
anywhere. There has been a tremendous improvement on how these 
plans run and are operated.
    Chairman MCCRERY. If we were to include all public 
employees in Social Security, would that, in and of itself, 
have an impact on the funding of those pension systems?
    Mr. LOVELESS. Our concern is that it will destabilize these 
plans. Inevitably, you are not going to be able to pay the 
entire Social Security payroll tax, the employer and employee 
portions, and then maintain the current level of plan benefits. 
There will have to be major adjustments, and we are concerned 
about how this will play out in various States.
    Chairman MCCRERY. Okay. Thank you very much. Mr. 
Canterbury, are you just itching to say something?
    Mr. CANTERBURY. I will wait.
    Chairman MCCRERY. Mr. Levin?
    Mr. LEVIN. I will yield.
    Mr. CANTERBURY. Mr. Chairman, I think the one thing that 
you are not taking into consideration, especially in my career 
field and other first responders is that, for instance, I have 
a very close friend on the St. Charles Parish sheriff's office. 
He works three full-time jobs and has, since he started on that 
police department. Substantial earnings will not equal what he 
makes with the sheriff's office in a 20-year career, but he 
will have paid a tremendous amount of money into Social 
Security. In this example, St. Charles does pay Social 
Security. I know in your State and many, especially southern, 
States, the base salary of a police officer--and I just 
finished a 26-year career. My wife was a schoolteacher before 
she passed away, and we both worked second jobs our entire 
careers and both paid into Social Security on those side jobs 
the entire time. So, there is an assumption, and I think Mr. 
Brady's bill takes that more into consideration than Congress 
did when they passed the WEP and the GPO. We are not talking 
about freeloaders. We are talking about people who do pay into 
the Social Security system.
    Chairman MCCRERY. I understand with respect to those 
provisions. I was mainly addressing issue of bringing everybody 
into the system, but those are good points. Mr. Levin.
    Mr. LEVIN. You asked some very cogent question us and I 
think you got some very cogent answers. Maybe too cogent in 
some respects. Just one last question to the elected official 
at the table. You mentioned in your testimony about that in 
some cases the benefits, State benefits retirement benefits are 
coordinated with Social Security benefits? Is that true in any 
substantial number of cases?
    Ms. ORROCK. In any substantial number of States?
    Mr. LEVIN. Yes.
    Ms. ORROCK. I believe that it is. My depth on that would 
benefit more from some professional staff data gathered and 
would be happy to get that for you. That is not the rarity. I 
think that is typical.
    Mr. LEVIN. Okay. Thank you. Thanks to all of you. Thank 
you.
    Chairman MCCRERY. Mr. Becerra.
    Mr. BECERRA. Mr. Chairman, let me first begin by asking 
that we introduce a letter that was submitted by the American 
Federation of Teachers which represents about 1,300,000 
educators in this country. A letter that they have drafted 
dated June 9, 2005 on this issue and rather than read it all, 
if I could introduce it. It does say that the AFT strongly 
supports repeal of the WEP and the GPO. It goes on to say, to 
this end if Social Security legislation is proposed that 
couples the favorable repeal of WEP and GPO with the addition 
of private accounts and massive benefit decreases to future 
Social Security beneficiaries, the AFT would strongly oppose 
its enactment. We believe that the solvency of the Social 
Security system should be addressed on its own merits and we 
offer assistance in drafting an equitable solution. I would 
like to introduce this statement and letter into the record.
    Chairman MCCRERY. Without objection.
    [The information follows:]

                                                       June 8, 2005

Hon. Jim McCrery
Chairman
House Committee on Ways and Means
Subcommittee on Social Security
B-316 Rayburn House Office Building
Washington, D.C. 20515-6353

Dear Chairman McCrery:

    The 1.3 million members of the American Federation of Teachers, 
like many Americans, are concerned about the long-term financing 
problems facing the Social Security system.
    However, we strongly oppose the establishment of private accounts 
and do not believe that using Social Security taxes will solve this 
problem. In fact, it would lead to huge cuts in benefits for workers 
and do nothing to help reach solvency. Privatizing the system would add 
at least $4 trillion over the next 20 years to the already runaway 
Federal deficit, and our children and grandchildren would be saddled 
with the bill. Further, exclusive reliance on massive benefit cuts to 
future generations would undermine a tremendously successful program 
that for decades has helped hundreds of millions of Americans live with 
dignity and security. Such cuts would also harm older and disabled 
Americans as well as surviving spouses and children of workers who have 
died. Overall, one in six families receives Social Security benefits.
    The AFT strongly supports repeal of the Windfall Elimination 
Provisions (WEP) and the government Pension Offset (GPO) because both 
adversely affect many of our members who are in retirement systems not 
covered by Social Security. But we believe such repeal should be 
developed in separate legislation and not be coupled with proposed 
Social Security legislation.
    To this end, if Social Security legislation is proposed that 
couples the favorable repeal of WEP-GPO with the addition of private 
accounts and massive benefit decreases to future Social Security 
beneficiaries, the AFT would strongly oppose its enactment. We believe 
that the future solvency of the Social Security system should be 
addressed on its own merits, and we offer assistance in crafting an 
equitable solution.
    Thank you for your consideration of our views on this important 
issue.
            Sincerely,
                                                      Kristor Cowan
                                   Director, Legislation Department
KWC:gd
cc: Members of the Social Security Subcommittee

                                     ----------

    Mr. BECERRA. Let me first thank you all for your testimony, 
and thank you for the consistency in your testimony. I think 
you all are trying to point out to us what Washington might 
neglect, and that is what happens at the local level and the 
State level by our actions. Thank you very much for the 
testimony. This is something we will have to reckon with. The 
more and more we talk about Social Security, the more we see 
that everything is on the table, as I believe you may have 
heard the previous witnesses say. The President has said that 
everything is on the table, and rightfully so. Let me ask you 
this, so, as the President goes around talking about his 
proposal to privatize Social Security, he has talked about the 
need to reduce benefits. Part of his plan calls for a 
reindexing as a way to calculate benefits which would, for some 
folks, middle income retirees lead to about a 30--to 40-percent 
cut in benefits.
    If we have to find moneys to try to offset the money that 
is taken out by privatizing Social Security, and some people 
say we collect money if we actually mandate that all State and 
local government employees are included in Social Security, 
tell me if you think there is going to be a great deal of 
incentive on the part of those who want to privatize Social 
Security to include all State and local employees in their 
Social Security system to have revenues to offset the moneys 
that will be lost through the privatization proposal that the 
President has.
    Mr. LOVELESS. If I could, we are very concerned about a 
possible tradeoff on that issue. We understand that there are 
people from the left side of the spectrum and on the right side 
of the spectrum who believe as a matter of equity that State 
and local workers should be brought into the system. The 
reality is this is going to have a negative impact on hundreds 
of thousands of lower and middle-income people who rely upon 
their pension systems for their retirement, so we would 
certainly oppose such a tradeoff under any scenario.
    Mr. BECERRA. Do any of you favor any proposals to reform, 
strengthen Social Security that would take any money out of the 
existing Social Security system? I know this goes beyond GPO 
and WEP, but I ask again, because there are some who say that 
if you incorporate all State and local employees into Social 
Security, that actually brings moneys into the Social Security 
system, which, again, you might need if you are taking money 
out through another door for other programs like privatization. 
So, does anyone here, would anyone here support removing some 
of the existing income that the Social Security system receives 
through workers's pay their Federal Insurance Contribution Act 
(FICA) tax contribution, does anyone support that?
    Mr. LOVELESS. If you are asking would we support diverting 
part of the FICA payroll tax into private accounts, absolutely 
not.
    Mr. BECERRA. Do any of you support diverting any of the 
FICA tax for any purpose whether privatization or otherwise? I 
will take your silence as indicating you are not----
    Mr. CANTERBURY. I would think that most of us would have to 
say that is not an issue that we have addressed yet. I don't 
think there is enough information on the table for me as 
president of my organization to say. We are open to looking at 
any change that will make the system better. We obviously are 
going to do so with the same jaded look that anybody does when 
you talk about Social Security. We haven't taken a position.
    Mr. BECERRA. If any of this reform calls for carving out 
some of the money that currently goes into the system and 
therefore makes the shortfall that comes in about 40 to 50 
years bigger and therefore there is a need to find money to 
plug the hole, and if including State and local employees is 
seen as a way to try to bring in moneys to help make up for 
that, would that concern you?
    Mr. CANTERBURY. Yes, it would.
    Mr. BECERRA. Time has expired. I appreciate you all being 
here and testifying, thank you very much.
    Chairman MCCRERY. Ms. Tubbs Jones.
    Ms. TUBBS JONES. Thank you, Mr. Chairman. Good afternoon 
ladies and gentlemen. Thank you very much for coming. Buck eye, 
it is always good to see a buck eye. I think I could go down 
the row and have some relationship with all of you, having been 
an elected official in Ohio and a former District Attorney (DA) 
in Ohio, a lot of FOP friends and on and on and on down the 
list. I don't know what my other colleagues have said, I have 
been running in and out. Seems like today is the day that 
everybody wants to visit Capitol Hill, so, I have had a lot of 
visitors. I am personally on record in opposition to taking 
public employee systems and putting them into Social Security. 
I am worried about proposals for private accounts that divert 
money from Social Security into private funds. Although I am 
encouraging all the young people in my congressional district 
to invest their own dollars. That they should not solely rely 
upon any system for their retirement.
    I am curious--and add another thing to the table, my 
father, my sister, my brother-in-law are employees of United 
Airlines and what is going on with those private retirement 
funds. Let me ask each one of you, Representative Orrock, in 
Georgia, what is happening with private pensions in Georgia to 
your knowledge? Another example in Ohio, lots of loss of steel 
jobs, companies gone belly up, bankrupt, and so forth. What is 
happening in your State?
    Ms. ORROCK. Of course, we are concerned when we look at our 
economy that has Delta Airlines based there. The airlines 
industry, we are all aware of, they are out on thin ice and it 
is not a good time for the industry and traditionally all large 
carriers, and they have a significant liability contract with 
their retirees. So, we are quite concerned when we look at the 
situation with United to think what might be the next hammer to 
fall as Delta is struggling to stabilize and stay in the game. 
It is a huge employer. Its headquarters are there. Our airport 
is a huge driver of our economy. The pensions of Delta 
employees is something when you hear the United story, it is 
cause for great concern. No question about the impact it would 
have on our economy as a State and the region, the southeast.
    Ms. TUBBS JONES. Mr. Iglehart, what about dollars for 
education as opposed to dollars that might be required to come 
from the State of Texas to shore up Social Security if your 
accounts were placed into Social Security? What is the 
education status in your State?
    Mr. IGLEHART. Well, we are concerned about many of the 
school districts in our State. We have over a thousand school 
districts and many of them are having financial difficulties. 
When you start talking about mandating Social Security, then 
you are talking about taking away programs, you are talking 
about perhaps personnel being laid off, overcrowded classrooms, 
and jeopardizing the education of the students in Texas.
    Ms. TUBBS JONES. Mr. Canterbury, recount for me, if you 
would, an example of, say, for example, someone you know in law 
enforcement who did 20 years or 25 or 30 years, what his or her 
retirement is like.
    Mr. CANTERBURY. Well, obviously it varies from State to 
State.
    Ms. JONES. Give me an example from your community.
    Mr. CANTERBURY. In my community, 26 years law enforcement 
would bring an employee about 54 percent of salary. Most in my 
State would not have health insurance benefits, so that would 
be coming out of retirement. In my State, almost everybody 
participates in Social Security, but for those that do not, you 
would have to add the 6.2 percent.
    Ms. TUBBS JONES. Ohio.
    Mr. CANTERBURY. For instance, your State, the 6.2 percent 
is spend able income that underpaid police officers, you can't 
compare the entire State of Ohio to Columbus or Cleveland or 
Cincinnati with the 5,000 townships in the State of Ohio with 
less than 35 employees, are talking about salaries that are not 
commensurate with the big cities so the percent at retirement 
is about the same, but the amount of wage that they retired on, 
the salaries they retired against, it is just--and again, as I 
said before, they are all second and third employers. In the 
public sector, none of us just work one job.
    Ms. TUBBS JONES. Have FEW--I guess I am out of time, Mr. 
Chairman, can I have a little squeeze? Thank you--thought about 
or made any proposals to any Members of Congress with regard to 
the GPO as it affects women who have worked and their husband 
retired, have you made any proposals that would, for lack of a 
better term, sensitize Social Security to women's issues?
    Ms. WOLFE. This has been a top legislative priority for 
federally Employed Women for about 10 years. So, first off, we 
are just delighted that it has come this far. I don't know that 
we have specifically made a proposal to Congress, although we 
have certainly written letters. Our Washington representative 
has visited many offices. Our Washington representative also 
worked with a working group last year, from Senator Mikulski's 
office. She has worked with a number of people on the House 
side as well. So, yes, to the degree that we could. I would 
just say, most of the conversation today has been about the 
mandatory coverage. The FEW has not taken a position on this, 
because as Federal employees know, and as you are probably 
aware, it is a mixed system under the new FERS system. New 
employees are paying into Social Security and our remarks are 
more focused on those older employees such as myself, who were 
in the older civil service retirement system.
    Ms. TUBBS JONES. I understood that and I was taking another 
step. When you are at the end of the line, everybody asked the 
question, so, you have to come with something else. Mr. 
Chairman, thank you very much. Good to see you.
    Chairman MCCRERY. Thank you, Ms. Tubbs Jones. I would like 
to just ask a couple more questions, this time getting onto the 
GPO and WEP issue. Do you disagree with me that if we were to 
repeal the GPO we should also repeal the provisions for dual 
entitlement for spouses, because surely you wouldn't treat two 
people, one of whom did not ever contribute to Social Security, 
better than you treat two people both of whom contribute to 
Social Security, would you?
    Ms. WOLFE. I will take a stab at that, in view of all the 
silence. Patricia Wolfe, FEW. Certainly, our focus has been 
entirely on the GPO and the WEP. We have not really addressed 
as an organization the points that you have raised. I 
certainly, in sitting here today and in learning more about 
this, I see the difficulties that you are facing with all of 
these choices. Now, again, our focus is on Federal employees 
and that is where my expertise would lie. I don't feel really 
qualified to speak to the other issues. If there are other 
inequities, certainly your job is to be as equitable as 
possible to everyone and I would urge you to address those as 
you can.
    Chairman MCCRERY. Anybody else.
    Mr. IGLEHART. Representing educators in Texas, we are 
concerned about the number of people who are retiring. We need 
to replace them with qualified people that can educate our 
students. We are looking at the GPO and WEP. If people are 
aware, and many are not when they go into education, many are 
not aware of these two provisions. If people are aware of these 
provisions, they may well not come into education and we are 
going to be desperately needing these people to educate our 
students over the next decade, and that is pretty important in 
Texas.
    Chairman MCCRERY. I understand that, but I asked the 
question. Surely you wouldn't want a couple, one of whom who 
paid into Social Security and the other who didn't, to be 
treated better under the law than a couple who both paid Social 
Security taxes. Surely that is not a fair outcome, is it?
    Mr. CANTERBURY. That was my point earlier. I think the 
cases where the scenario would be exactly as you described 
would be very, very small. We are talking about in a 
profession, most of these professions, where we do pay, both 
parties pay in, maybe not part of the substantial part of that 
career field, but thank goodness through a lot of good quality 
work by many of the groups sitting here we do go on to second 
careers. I know a lot of police officers that go on to teach 
school. I know don't see it too much the other way around, but 
I do know a lot of public employees that work their 20 years 
and then go into other career fields where they do pay into 
Social Security for a substantial period of time. In the 
scenario you described, I think that would--there is a fairness 
issue that doesn't apply to what we are talking about. We are 
talking about the majority of these people have paid it and it 
is just more arbitrary and capricious the reduction, especially 
with the GPO and the WEP where our members do pay and are 
subjected to a different penalty.
    Chairman MCCRERY. Here is the reason I asked the question, 
because I want you to understand some of the things we are 
faced with in grappling with Social Security. We already know 
if we make no changes, about 2017, we start to have a cash flow 
deficit, not enough coming in through the payroll tax to pay 
benefits. Then 2042 or so, the trust fund balances are 
extinguished. If we were to repeal GPO, WEP and the dual 
entitlement provisions to try to treat everybody the same, next 
year, we would have a cash flow deficit in Social Security and 
the trust fund would be extinguished in 2025 rather than 2042. 
That is the enormity of what you are suggesting if we take it 
to its logical conclusion and treat everybody the same. I 
wanted to give you some sense of what we are dealing with. I 
appreciate very much your testimony today. You have made some 
excellent points and brought us some good material. We would 
ask if we still have some lingering questions, we would like to 
present those to you in writing and we would appreciate a 
written response. Thank you very much, and the hearing is 
adjourned.
    [Whereupon, at 3:21 p.m., the hearing was adjourned.]
    [Submissions for the record follow:]
 Statement of Catherine L. Ahearn, Massachusetts Teacher Association, 
                         Peabody, Massachusetts
    I am in favor of eliminating Government Pension Offset and Welfare 
Elimination. As a young widow I have been hurt by this.

                                 

             Statement of Margaret Aiken, Atlanta, Georgia
    Just by chance I found out that my social security benefits have 
been reduced by half because I work for a school system that does not 
pay into social security. I just completed my seventh year as a 
librarian in a DeKalb County high school and love my work with 
students. Previously I worked eighteen years in the private sector. I 
am counting on the money I contributed over those years to help me in 
retirement. I will be forced both to change jobs and work long past my 
66th birthday-normal retirement age. I implore you to repeal both the 
GPO and WEP that so adversely penalize workers in my position.

                                 

         Statement of Jeanne M. Alberti, Harvard, Massachusetts
    I am writing to explain my concerns regarding the WEP and the GPO, 
and to urge you both to pass H.R. 4391, the Public Servant Retirement 
Protection Act, and to work toward repealing both the WEP and the GPO.
    Both my husband and I worked for many years in the private sector, 
each of us earning enough quarters to be eligible for Social Security 
benefits upon retirement. When we started our family and bought a 
house, I continued to work by writing the local newspaper, and selling 
Avon products, which I could do from home while raising our children. 
My husband continued his education, getting his doctorate, and went 
into teaching at Northeastern, a private university.
    In order to help out financially, I finished my degree, and taught 
at a Catholic high school for two years before entering the public 
education system. Eventually we both decided to spend the largest part 
of our career years teaching in public education, myself at the high 
school level, and my husband at the university level. My husband, now 
deceased, had a gift for teaching and connecting with university-age 
students. I myself have loved teaching, and though I retired this past 
year, will miss it greatly.
    Since my husband's death I have been receiving a small pension from 
the Commonwealth of Massachusetts, as he died before retiring, just 
after reaching his 50th birthday. His Social Security benefits, half of 
which I am eligible for as his widow, are currently approximately $600 
per month. However, I believe according to Social Security regulations, 
they will reduce the benefit to me by an amount more than equal to what 
I might be eligible for. Therefore, I will receive no widow benefits 
from Social Security.
    Having retired this year due to health concerns, and as I didn't 
start public school teaching until the age of 40, I will am receiving a 
pension of only 36% of my annual salary. At age 62, when I might be 
able to begin collecting on my own Social Security benefits (which are 
approximately $350 per month at the moment), my benefits will 
ostensibly be cut in half due to the pension I am receiving from the 
Commonwealth of Massachusetts.
    Together, my husband's annuity and my pension total barely enough 
to cover my present living expenses. I foresee future possible medical 
expenses, and worry how I will cover them when the time comes. Although 
retired, I will be looking for ways to find additional income in the 
next few years, while I am still healthy and can do so. To have to pay 
more into Social Security in the next few years will be a very unfair 
situation considering my expectation of receiving little in return.
    I fail to see how either my public school teaching pension or my 
Social Security benefits could be construed as a ``windfall'' or 
``double dipping.'' If I have worked at separate jobs, why am I 
penalized, and not able to collect benefits from each job worked?
    Teaching is hard work, and though my first inclination was that it 
would give me time with my family, I came to love the opportunities I 
was given through teaching to work with and be inspired by the 
teenagers I taught. I find it incomprehensible that I am now struggling 
to make ends meet because I changed careers from the private sector to 
committing myself to the community and our nation through public 
education.
    I respectfully urge the committee to act quickly to move the Public 
Servant Retirement Protection Act swiftly to final passage and 
enactment. In addition, I ask you please to look for ways to repeal 
completely both the WEP and the GPO as Congress continues to explore 
these issues.

                                 

                                             Cincinnati, Ohio 45239
                                                 September 13, 2005
House Ways and Means Committee
Social Security Hearing on Repeal of GPO/WEP

    I am 68 years old and have been retired for four years. I have 
worked full and part time for 42 years. Because I worked 14 years for 
an Ohio Public School District, Social Security offsets my pension by 
$300.00 a month. Social Security gives me credit for 20 ``substantial 
earning years''. Both pensions net me less than $1,000.00 a month.
    I am currently paying $280.00 a month for Medicare and a 
supplemental medical coverage. This supplemental medical coverage has a 
$750.00 annual deductible. Doing the math, you can see that I am ``out 
of pocket'' almost $3,000.00 a year, before getting any medical 
coverage. The medical premium will increase in 2006 to $367.00 per 
month. I will no longer be able to afford coverage of my current 
policy. Unfortunately I do not qualify under the ``low income'' 
guidelines.
    I sincerely feel I have worked and paid into Social Security, along 
with my employers, and should be receiving full benefits without an 
offset.
    I feel many people are receiving more Social Security benefits, 
disability payments, child support payments, etc., that have not paid 
into the system as many years as I.
    This Offset/Windfall legislation has created hardships on many 
individuals in retirement. This legislation has not ``shored-up'' 
Social Security as originally planned and should be repealed.
    Thank you for your attention to this statement.
            Sincerely,
                                                  Barbara Ambrosius

                                 

             Statement of Debra Anderson, Ruston, Louisiana
    I am writing to express my opinion that GPO is unfair. It mainly 
affects women (widows). Those of us who work for the state of Louisiana 
should not be panelized because we were married to people enrolled in 
Social Security. Death benefits for those of us enrolled in teacher 
retirement will be 1/3 of what other widows receive.
    I have been married for over 25 years, but have only been teaching 
for six years. My husband, age 62 is 13 years older than I am and odds 
are I will be a widow at some point. Why should I not be able to 
collect his full SS death benefit when that happens? When I am retired 
from teaching school for 20 years my retirement will not be a whole 
lot--.approx. $1,500 a month at best. I am going to need to be 
supplemented by my widows benefits just like other widows in the other 
36 states of the union.
    I have spent much of my married life being a homemaker and a 
mother. I feel that this enabled my husband to work all these years. We 
are a team and my work at home was of value and now I find that because 
I am enrolled in teacher retirement (as of 1999) I will not be able to 
receive his full death benefits after my retirement. How can this be 
and why is it not this way in all states if it is so prudent. Logic can 
only tell a person that this makes no sense. I have never explained 
this to anyone that was not appalled. I know several retired teachers 
that are widows and had no idea their benefits would be cut back so 
drastically. They were unaware of this unfair GPO and they are 
suffering because of it. It needs to stop.
    Please repeal this absurd rule. I also believe that I should be 
able to receive SS from the other jobs I had before being enrolled in 
our state teacher retirement plan. There are many teachers who work in 
the private sector during summer months and contribute the full amount 
to SS from their pay checks and when they retire they will never see 
most of that. How is this fair?! Again, please repeal this GPO.

                                 

                                       Rim of the World High School
                                   Lake Arrowhead, California 92352
                                                      June 20, 2005
To Whom It May Concern:

    When I was twenty-nine I was an engineer in the aerospace industry. 
At that time, and it continues today, our society was crying out for 
better math and science instruction. I decided to leave my engineering 
career to answer the call for more qualified math and science teachers.
    Some sixteen years later I still teach and love my job. There is no 
other job where you have as much control over your success or failure, 
happiness or despair, and creativity or lack there of. The intrinsic 
rewards of teaching, and doing it well, surpass any other job to my 
knowledge.
    As anyone who reads the papers is aware, our educational system is 
not perfect. Some contend that it is failing, but I'll not address that 
issue in this letter. I will say that having well qualified individuals 
teaching is an important part of improving the educational system. 
Unfortunately, the intrinsic rewards of teaching are not compelling 
enough to attract the qualified individuals we need. Our society needs 
to encourage, as opposed to discourage, competent people to pursue this 
profession.
    In California, teachers are obligated to contribute to a state 
retirement system instead of social security. I have no choice, but to 
contribute to this system. I have also, during the course of my life, 
made more than the necessary minimum contributions to social security. 
However, as the current law is written, the money I would receive from 
Social Security is reduced by whatever retirement benefits I receive 
from the state of California. In my case, this means that I will 
receive none of the social security benefits due me as a result of my 
contributions over my lifetime.
    I fail to see how such a policy rewards someone for selfless 
dedication to serving America. Rather, it seems to be more of a 
penalty. If your object is to encourage qualified individuals to become 
teachers, I fail to see the logic behind the current law.
            Sincerely,
                                                         John Arner
                                                    Physics Teacher
                                       Education Astronaut Finalist

                                 

      Statement of the Association of Americans Resident Overseas
    Thank you, Mr. Chairman, for the opportunity to state the case for 
Americans who have worked abroad and who are thus subject to the 
Windfall Elimination Provision's offset (hereafter, the `WEP'). 
Although the Association of Americans Resident Overseas (AARO) has 
submitted representations on the WEP in the past, this is the first 
time we have been invited to address the issue by your Committee. 
Regrettably we are unable to be physically present at this hearing as 
we just recently left Washington after our Overseas Americans Week May 
8-13 2005 in the capital a few weeks ago.
    Since this issue is a complicated one and one that has foreign 
aspects which may not be familiar to the Members of your Committee, let 
us walk you through the steps of our position as carefully as we can.
    1. Americans who go abroad to work are a disparate group. Some go 
at the invitation of their companies. They rarely stay more than five 
years and will not today encounter the WEP. Others go abroad on their 
own initiative or stay beyond the five year period during which they 
can remain on U.S. Social Security rolls. In this case, their employer 
will be forced to enroll them in the host country's social security 
program and they will accumulate points under that system toward a 
foreign country's old-age retirement pension. Although only the rare 
individual will know this, the points earned under the foreign system 
brings them within the jeopardy of the WEP.
    2. To put a human face on the WEP's impact, let me cite the case of 
Barbara K. She worked in the USA before and in the early years of her 
marriage to a journalist. He was posted abroad. She and the kids 
followed him. They grew up and she started teaching at an 
AmericanSchool in Europe. Divorce broke up her marriage but she 
remained at her job. Her children married. One works in the USA; the 
other in Europe.
    Her employer, the AmericanSchool, contributed to her U.S. social 
security until forced to enroll her in the host country's social 
security pursuant to the terms of a Totalization Convention. She 
acquired rights to a very modest pension from that system. In 1996 
before retiring she received a notice from U.S. Social Security 
advising that her U.S. pension would be $73O monthly. In fact, because 
of her foreign pension, she was surprised to learn on retirement that 
her U.S. pension would be substantially lower. Her contributions to 
U.S. Social Security were interrupted in 1988 because of the 
Totalization Convention, thus limiting her U.S. pension. And that 
pension was further reduced by the WEP because of an insignificant 
French pension.
    3. The Windfall Elimination Provision was enacted in 1983 to 
prevent U.S. government employees, who had contributed to and earned 
generous local, state or federal pensions, from benefiting from the 
`windfall effects' of U.S. social security computation when they 
subsequently worked and contributed to a U.S. social security old-age 
pension. These `double-dippers' would otherwise have enjoyed the 
beneficial (more highly geared) U.S. social security pension 
calculation intended to favor short-term contributors, while also 
enjoying the benefits of a second, ``substantial'' non-U.S. social 
security retirement pension.
    While the 1983 Social Security Amendments producing the WEP labels 
the nuisance it was seeking to correct as ``non-covered work'' i.e. 
work not covered by U.S. Social Security, it does not include or refer 
to work for a foreign employer as belonging to that category. Indeed 
Congress has no power to establish social security policy for work in a 
foreign country, even if performed by a U.S. citizen. Despite this, the 
Social Security Administration (the ``Administration'') has applied the 
logic of the WEP, and its offset, to U.S. citizen's U.S. old-age 
pension, when they have also earned and benefited from a foreign old-
age pension. AARO has seen no reference in the legislative record 
suggesting that the WEP was intended to apply when a U.S. citizen 
enjoyed a foreign pension from work abroad. It believes that WEP has 
been misapplied to a U.S. citizen's U.S. pension, when the 
justification for doing so is the earning of a foreign old-age pension.
    4. The Administration took an initiative to coordinate social 
security regimes in the 1980s, when it began negotiating Totalization 
Conventions with several countries with which there were exchanges of 
workers. These Conventions (now twenty) provide for coordination of the 
social security laws of the two High Contracting Parties by authorizing 
workers from one country laboring in the other to remain on the social 
security rolls of his country of nationality for five years, thus 
exempting him from participating in his host country's system for that 
period.
    This effort of coordination and comity works to the mutual benefit 
of employees of both countries.
    A further `integration' of social security systems promoted by the 
Conventions is the principle of ``totalization'', which envisages the 
limited application of work credits earned in one participating country 
toward requirements of the other country's old-age pension system. For 
an American working abroad, this `recognition' of credits typically 
involves using work-quarters performed in his host country (having a 
Totalization Convention with the USA) to qualify for the vesting of a 
pension under U.S. rules, which demand forty quarters of contribution 
to the U.S. Social Security Fund. Although calculation of his pension 
will recognize only those quarters earned in the USA, foreign quarters 
may be taken into account to meet the requirement of vesting, thus 
assuring that the worker earns a minimum U.S. pension instead of 
forfeiting his work credits entirely.
    This modest reciprocity might be considered an advance toward 
limited `integration' of two countries' social security programs; 
however, it rapidly ran into the countervailing negative impact of the 
WEP.
    The WEP, it will be recalled, applies whenever the U.S. worker 
enjoys two old-age pensions, one American, the other foreign. 
Accordingly, if the WEP were to apply without qualification, the 
advantage accorded by Totalization Agreements would be neutralized by 
the offset of the WEP, which substantially reduces the pension just 
vested. The combination of effects of a Totalization Convention and the 
WEP thus produces the unintended result of one hand taking away what 
the other has just given. The natural antagonism between the virtuous 
effect of Totalization Conventions and the WEP required a 
reconciliation, and in 1993 Congress acted to provide the solution. It 
decided that when a pension right has been obtained through application 
of a Totalization Agreement, the WEP off-set would be set aside.
    Let us stand back for a moment from the complicated and abstract 
world of WEP and Totalization. What Congress decided in 1993 was that 
when a U.S. worker could avail himself of the benefit of a Totalization 
Convention under the national rules of one Signatory country or the 
other, the policy of the WEP should not apply. Since Totalization 
Conventions only affect U.S. workers who have worked in foreign fields, 
does this not prove that whatever the intention of Congress in 1983 
when the WEP was adopted, Congress clearly saw the conflict between the 
two principles and decided that foreign work should not be the basis 
for applying the WEP penalty? In a global world with fast integrating 
economies, the mobility of labor is an asset for any country. We 
believe that Congress recognized this in 1993 and sought to remove an 
important disincentive to working abroad by severely limiting the 
effect of the WEP.
    Of course, not every country has a Totalization Convention with the 
USA. Should U.S. exports of goods and services, requiring U.S. 
personnel to work abroad, be based on the fortuitous existence of a 
social security convention?
    We believe that crucial incentives to foreign trade should not 
depend on the rate and success of negotiation of Totalization 
Conventions. Congress has already recognized the value of foreign work 
for U.S. citizens in Convention countries and the inappropriate and 
punitive effect of the WEP as applied to it. AARO strongly urges your 
Committee to finish the work it initiated in 1993 when it protected 
foreign work from the WEP in the context of Totalization. We 
respectfully request your Committee to take the final step by repealing 
the WEP or limiting its effect to +substantial ; combined pensions so 
that U.S. workers can go abroad to work without the disincentive the 
WEP imposes.

                                     ----------

    AARO is a non-partisan, not-for-profit association serving the 
interests of Americans living and working overseas.

                                 

                                         Sun City, California 92586
                                                      June 11, 2005
Dear Committee Members,

    I am writing to ask your support repeal the Government Pension 
Offset (GPO) and the Windfall Elimination Provision (WEP).
     I worked in the private sector for 13 years before taking a 
position in the County Government. During those thirteen years, I paid 
into the Social Security Fund. Once I started working for the County, I 
paid into the County retirement fund.
    At age 62 I began collecting a small Social Security benefit but my 
check is reduced by a ``special formula'' because of my pension. In 
addition, the Social Security office advised me that although I am 
eligible for benefits under my husband's Social Security, they couldn't 
pay me because two-third the amount of my government pension is equal 
to or larger than the monthly Social Security benefit. Why am I denied 
benefits that I accrued just because later in life I became a ``public 
employee''?
    My husband is now terminally ill and I soon face the situation of 
not only losing him but his income. In this day of rising fuel, food 
and medical costs, those of us on a fix income are hard pressed to 
cover even our basic needs. As a single woman this becomes more 
difficult. God help us if we need long term care.
    Please give this your utmost consideration. We need to have our 
voices heard.
            Yours truly,
                                                 Kathleen A. Atwell

                                 

            Statement of John Bartholomew, Lewisville, Texas
    My wife and I were both teachers in the Texas Public School system. 
The Offset/Windfall law is unfair. We are both penalized for being a 
member of the Texas Teacher's Retirement System. I contributed to the 
SS system for years when I was employed as a teacher in the NYState 
system, and as an employee of a firm in Texas. I decided to return to 
teaching in 1990, and was shocked to see I would be penalized for 
returning. Why did the schools quit the system ``en mass'' in prior 
years? Who was responsible for selling out the SS system to teachers? 
My wife also taught in NYState and was eligible for SS benefits. Not 
only was she a victim of the Offset/Windfall of her contributions, but 
also her benefits based on my contributions were reduced based on my 
Offset/Windfall amount. What an absolute disgrace. If my wife never 
returned to teaching in Texas, she would have received a significant 
higher amount of money based on her past employment, and mine. That is 
a terrible injustice. Not only is this unfair, but if we had continued 
teaching in NYState, or other states, we would have been entitled to 
the full amount. Since the payment of SS is based on salary and 
contributions to the system, then that is what I should be entitled to 
. . . return of my, and my wife's investment, just as other's in our 
society are entitled to. I urge you to consider repealing this 
injustice to us. Thank you for your consideration.

                                 

       Statement of Sheila Farren Billings, Salem, Massachusetts
    The way that Social Security is currently set up is unfair to 
public school teachers who have also worked for a significant time in 
other professions which pay into Social Security. My husband worked for 
sixteen years as a teacher in private schools, and contributed to 
Social Security all that time. Later, as a public school teacher with 
three growing children, he supplemented his low teacher's pay with 
other part-time work which deducted payments for Social Security. This 
extra work was a necessity; with just the teacher's pay, our children 
would have been eligible for reduced lunch prices at school. Now, he is 
a professor at a public college, and plans to continue to work there 
until he retires. Because he worked sixteen years in private schools, 
my husband will never be able to reach the maximum retirement benefits 
for Massachusetts teachers by the time he is 65 or even 70. I believe 
he should be able to supplement that lower public pension with the 
Social Security he made contributions to for sixteen years.
    Current Social Security laws penalize my husband and I for our 
dedication to public education. Public schools are the bedrock of our 
democracy, and both of us feel strongly that public school teachers 
help insure a strong future for America. We have accepted that we shall 
never become wealthy in this profession; but it is wrong that we should 
be required to forfeit our Social Security contributions and the safety 
net they would provide us in our old age.

                                 

                                             Cincinnati, Ohio 45211
                                                       June 8, 2005
Representative Jim McCrery
Chairman,
Ways and Means Subcommittee on Social Secuirty

Dear Committee Members:

    I am writing this letter to request that the committee allows the 
release of Representative McKeon's repeal bill HR 147 and Senator 
Feinstein's Companion Bill S.619 (the Offset/Windfall Elimination on 
Social Security) to the House for a vote.
    I am a divorced woman, 64 years of age. I worked, and contributed 
to Social Security for 26 years and in l983 went to work for Hamilton 
County. Only after I had been working for the County, did I read about 
the reduction of social security benefits for individuals working for a 
government office. My social security will be dramatically reduced. All 
I am asking is that I, along with so many other individuals, be allowed 
to collect the full amount we paid into social security so that we are 
able to grow old without worrying about how to pay our medical bills, 
gas and electric, etc.
    I have read, with interest, President Bush's idea to sign a 
totalization agreement with Mexico, allowing Mexican citizens, who work 
in this county, be allowed to collect from our social security system, 
even though they are not American citizens. How can our President and 
others care more about non-citizens of this Country than true American 
citizens?
    I, as a voting/tax paying American citizen, am entitled to the full 
amount deducted from my paychecks for Social Security just as I am 
entitled to all the money I would deposit in a savings account in a 
bank in this country.
    Please, do the right thing for the people of this country.
            Sincerely,
                                                     Janet A. Blank

                                 

          Statement of Kathleen Bonn, Newbury Park, California
    The Government Pension Offset and Windfall Elimination are two 
badly conceived provisions that are unfair to teachers and others. They 
discriminate against people who have legitimately earned social 
security benefits, simply because they chose to become teachers. In 
addition, they discourage those who might choose teaching as a second 
career by not allowing them to collect the social security benefits 
they've earned, in spite of the fact that their ability to earn an 
adequate pension from teaching would be severely limited. We need to 
work to keep the teachers we have and to encourage experienced people 
to become teachers. These bad provisions interfere with these efforts. 
Beyond that, they are patently unfair. Please act to repeal them now!

                                 

                                  Arlington Heights, Illinois 60004
                                                      June 16, 2005
Dear Members of the House:

    My work years are the following: 15 years in industry and 20 years 
as a teacher.
    I am now 66 years old and retired. Because I live in Illinois, I am 
not entitled to my ``full social security benefit.'' As of this date, I 
have earned a small pension from my school district as well as 
$164.00(net) monthly from social security. With my husband's social 
security and my pension, we are just able to make ends meet. According 
to my social security office, I could be receiving approximately 
$700.00 more each month. This money, which I had contributed for 15 
years, would greatly relieve financial stresses. Furthermore, if my 
husband were to pass away before me, I would not receive any of his 
social security, putting me at the poverty level. I feel I am being 
punished for choosing the ``higher'' calling of teaching. I believe the 
GPO and WEP are biased against teachers who have previously worked in 
private industry. Please repeal these grossly unfair laws. I know I 
speak for so many educators who have contributed honestly to social 
security. Repeal the GPO and WEP.
            Sincerely,
                                                    Sharon M. Brand

                                 

                                        Woody Creek, Colorado 81656
                                                 September 14, 2005
Ways and Means Committee

Dear Representatives,

    My concern regarding the GPO and WEP legislation is the position it 
puts someone like me into. I came to teaching at age 38 after raising 
my family. I have worked since the age of sixteen, contributing to FICA 
and paying income taxes. My husband and I have worked together for 32 
years running a landscaping business. Now that I am a member of a 
public employee pension fund I can no longer receive, or will be 
greatly penalized, with regard to future social security benefits. Not 
only will my personal benefits be effected by any survivor benefits 
from my husband will also be severely effected. There is no way I can 
accrue a lifetime of work benefit in Colorado's PERA since I started 
teaching so late. This will severely effect my retirement income.
    I am not a lazy person. I teach school full time and have second 
job. I am pleading with you do away with these penalties and allow 
working, contributing people the opportunity receive their earned 
benefits through social security and public retirement funds.
    Thank you.
                                                      Valerie Braun

                                 

             Statement of Penny Brown, Cypress, California
    I am a library Media Teacher at a PreK-12 school which is part of 
the Los Angeles Unified School System. California has its own State 
Teachers Retirement System in lieu of Social Security. But, I have not 
always taught in California and I have paid into Social Security in 
other states and through other positions. I think it is unfair that my 
contributions will never be of benefit to me. Please vote to rectify 
this unfair situation and allow teachers and others who are eligible 
for both a teacher's pension and Social Security to receive both, in 
fair proportion to the amount contributed. Thank you.

                                 

 Pine Bluff Chemical Activity, Chemical Materials Agency, U.S. Army
                                           Redfield, Arkansas 72132
                                                       June 9, 2005

    I very much appreciate the opportunity to submit this written 
testimony on the Government Pension Offset (GPO) and Windfall 
Elimination Provision (WEP) Social Security provisions, and their 
adverse and unfair impact on me--a federal retiree. Thank you Mr. 
Chairman and the other legislators serving on this Subcommittee for 
conducting this important hearing. As a retired federal worker being 
adversely impacted by these provisions, I urge all Subcommittee 
members, and lawmakers, to repeal them as soon as possible and allow me 
to receive my full social security benefits.
    I retired from the Federal Government in July 2004. In September 
2004, my husband died after working in the banking business for over 30 
years. He was 61 years old and did not get to collect his hard earned 
Social Security.
    As his widow, I was entitled to almost $1,200 per month of his 
Social Security benefits. However, because I worked for almost 24 years 
in the federal service in the Department of the Army as a Civilian 
employee, I am only qualified to receive $466 per month of his Social 
Security because of this unfair law. Not only did I lose his income, 
but most of his Social Security.
    I receive a government retirement annuity from OPM of $1,400 per 
month which I earned as a civilian employee, and with the reduced 
spousal Social Security benefit, I have to greatly lower my lifestyle. 
The GPO causes me to lose $734 per month. This is the difference 
between getting by and comfort in my retirement years. Why would the 
government I gave so many years of my life to, take this away from me.
    In addition to the penalty of not getting my deceased spouse's full 
Social Security, I had to give up $277 per month of a Social Security 
benefit of $519, which I earned before I entered the federal government 
at age 45. That is a total of $1,011 that the government takes away 
from me because of the WEP/GPO provisions.
    I served my country with honor and dedication, only to be penalized 
because of it. Please repeal these unfair GPO and WEP provisions that 
affect the way Social Security is calculated, for me and for many other 
women and men in my circumstance.
            Sincerely,
                                                   Barbara Brubaker
                                       Retired GS-7 Secretary/Steno

                                 

             Statement of Gracie Buford, Nacogdoches, Texas
Support the Social Security Fairness Act
    I want to ask for your help in repealing two unjust Social Security 
provisions that hurt hundreds of thousands of teachers, school support 
personnel, police officers, firefighters, and other public servants. 
They reduce or eliminate Social Security benefits for retirees who 
receive pensions for non-Social Security-covered employment. They apply 
only to public pensions--recipients of private pensions are not subject 
to such penalties.
    While these Social Security benefit reductions may have been 
intended to curtail payments of windfall benefits to highly paid 
individuals, in practice they have had devastating consequences for 
low--and middle-income public employees. These provisions are the 
Government Pension Offset (GPO) and the Windfall Elimination Provision 
(WEP). Each of these provisions can reduce monthly Social Security 
benefits drastically.
     The GPO reduces a Social Security survivor's benefit by two-thirds 
of his or her public pension that is not covered by Social Security--
wiping out the survivor's benefit entirely for many workers. The WEP 
currently can take away up to $306 a month of Social Security benefits 
earned by a state or local public employee who has contributed to 
Social Security for as many as 20 years, and the WEP does not phase out 
completely until a worker has 30 years of covered Social Security 
employment.
    Besides being unfair to those who have paid into Social Security 
but are being denied its full benefits, these provisions have perverse 
effects. By targeting pensions of teachers and other school employees, 
these Social Security benefit cuts discourage qualified individuals 
from entering the classroom--at exactly the time when our nation faces 
a severe shortage of such people.
    Bipartisan legislation introduced in the 109th Congress would 
repeal these two provisions. The House version of the bill, H.R. 147, 
was introduced on January 4 by Rep. Howard McKeon, Republican of 
California. The House bill already has 273 cosponsors. A Senate 
companion version, S. 619, was filed March 14 by Sen. Dianne Feinstein, 
Democrat of California, and Sen. Susan Collins, Republican of Maine. S. 
619 already has 22 Senate cosponsors. I urge you not only to cosponsor 
this vital legislation but also to help bring it to the floor for a 
prompt vote.

                                 

                                       Marysville, California 95901
                                                      June 23, 2005
    The GPO/WEP adversely affects over one-third of America's 
educators. Many have had more than one career--in some cases there have 
been concerted efforts to encourage workers in other careers to join 
the teaching force. First Lady Laura Bush promoted this as a sort of 
``Peace Corps'' idea to attract new teachers. What was never stated was 
the effect of the offsets in the non--Social Security states. At least 
now the law requires notification of this to new hires who might be 
affected.
    Other teachers adversely affected are teachers who worked summer 
jobs to support their families. In California many of our young male 
teachers worked in agriculture. Little did they know the effect these 
summer jobs would have when they retired from teaching.
    As a high school student I worked at Woolworth's during the summer 
to earn money for college. (I was going to become a teacher.) As a 
musician I earned Social Security credits giving lessons and playing 
professionally. 40 years ago most teachers worked more than one job to 
make ends meet, especially those who were supporting families on a 
single income.
    For all of these reasons I urge repeal of the GPO/WEP.
                                                    Beverly Carlson
                                                    CTA/NEA-Retired

                                 

    Statement of Ellen M. Carpenter, Hingham Public Schools--South 
               Elementary School, Hingham, Massachusetts
    I am a 58 year-old fifth grade teacher in Hingham, MA with over 25 
years teaching experience in Massachusetts public schools. I plan to 
retire in approximately 5 years with a pension from the Massachusetts 
Teachers Retirement Board (MTRB.) I also have 10 quarters credit under 
the U.S. Social Security Administration (SSA), obtained early in my 
career. I have made the easy financial decision to take my pension 
under the MTRB retirement system.
    My husband of some 34 years is 61 years old and has paid into the 
SSA at the top rate for his entire business career. He is a 60%-
disabled Army veteran of the Vietnam Era. He and I have raised three 
children who are now financially and emotionally on their own. He will 
take his SSA retirement sometime in the near future.
    Under the Government Pension Offset and Windfall Elimination 
Provision (GPO/WEP), should my husband predecease me, I will be 
ineligible to receive a widow's benefit. I am precluded from this 
benefit, along with teachers from a handful of other states, because I 
teach in Massachusetts and have not contributed to SSA during my 
teaching career. It should be noted again that I have 10 quarters under 
SSA.
    Under my MTRB plan, should I predecease my husband, he will receive 
a widower's benefit. I believe that most plans have such a benefit. In 
this regard, I feel strongly that the GPO/WEP is highly inequitable and 
that the Provision should be eliminated.

                                 

                                               Montgomery, AL 36117
                                                       June 8, 2005

    I very much appreciate the opportunity to submit this written 
testimony on the Government Pension Offset (GPO) and Windfall 
Elimination Provision (WEP) Social Security provisions, and their 
adverse and unfair impact on me--a federal retiree. First I want to 
thank Chairman Jim McCrery and the other legislators serving on this 
Subcommittee for conducting this important hearing. As a federal worker 
being adversely impacted by these provisions, I urge all Subcommittee 
members, and lawmakers, to repeal them as soon as possible and allow me 
to receive my full social security benefits.
    My husband served 22\1/2\ years in the military. I chose to work 
for the federal government, and served as a civilian employee at 
Maxwell Air Force Base for 26 years. I had a break in service after 
five\1/2\ years under CSRS, and therefore will retire as CSRS offset 
retiree.
    I am now a widow drawing my husband's Social Security--however only 
as long as continue working. When I retire, my retirement will be 
offset. It is scary to think about retiring and having to draw on my 
savings constantly to supplement my retirement because the spousal 
benefit to which I am entitled will be cut by two-thirds. I will be 
drawing approximately $1,600 plus a third of the $1,331 social security 
I currently draw. I have a house payment of $685 a month plus insurance 
on vehicle and other normal expenses of owning a home. The house 
payment is for a handicapped son who will never be able to qualify for 
a loan to purchase a home.
    Thank you for conducting debate on GPO and WEP, and please repeal 
these unfair Social Security provisions that have a great adverse 
impact on lower income women retirees and widows.
            Sincerely,
                                                          Ida Clark

                                 

 Statement of Judith M. Clark, Retired Employees Association of Orange 
                  County, Huntington Beach, California
Chairman McCrery, Ranking Member Levin and Distinguished Members of the 
    Subcommittee:

    Thank you for providing the opportunity to comment on specific 
Social Security legislation--H.R. 146, ``The Social Security Fairness 
Act of 2005,'' that should be evaluated as you consider other proposals 
in a comprehensive plan of reforms that are meant to strengthen and 
protect Social Security.
    This legislation, which would repeal the Government Pension Offset 
(GPO) and the Windfall Elimination Provision (WEP), would repair a 
major inequity toward government retirees--federal, state, and local--
since these laws were enacted in 1983.
    The following paragraphs explaining the GPO, WEP, and ``dual-
entitlement'' rule were provided in written testimony, to the Social 
Security Sub-Committee on June 27, 2000 by Jane L. Ross, Deputy 
Commissioner for Policy, Social Security Administration.

                                     ----------

    Ms. Ross: ``The GPO, enacted by Congress in 1977 and amended in 
1983, affects Social Security beneficiaries who receive pensions based 
on work not covered under Social Security. The GPO reduces or 
eliminates the Social Security benefit payable to a person as the 
spouse or surviving spouse of a worker. For such a retiree, the GPO 
requires that the Social Security spouse's benefit be reduced--or 
``offset''--by two-thirds of the amount of the non-covered pension.''
    Ms. Ross: ``The WEP was enacted in 1983 as part of major amendments 
to shore up the financing of the Social Security program. It greatly 
reduces the Social Security benefit of a retired or disabled worker, 
who also receives a government annuity based on his/her own earnings. 
The maximum Social Security benefit reduction cannot be more than one-
half the amount of a public retirement benefit. The maximum amount for 
2005 is $313/mo. Simply stated, if a person's own Social Security is 
reduced, it's WEP; if the benefit being reduced is based on a husband 
or wife's Social Security benefit, it's GPO.''
    The following statements by Ms. Ross will be rebutted/refuted by 
me:
    Ms. Ross: ``The GPO provision is designed to replicate the ``dual-
entitlement'' rule of the Social Security program for workers receiving 
a pension from non-covered government employment. This provision, 
applied since 1940, requires that Social Security benefits, payable to 
a person as a spouse or surviving spouse, be reduced by the amount of 
that person's own Social Security worker's benefit.''
    Rebuttal: Social Security's ``dual-entitlement'' rule is unfairly 
applied to non-covered government employee pensions. Historically, from 
the 1940's to 1983, until Social Security was in financial straits and 
more revenue was needed to secure the future for the next 75 years, it 
had been perfectly acceptable to award Social Security benefits to non-
covered spouses and widows.
    Ms. Ross: ``The dual-entitlement provision was intended to restrict 
the payment of benefits to those family members who were actually 
dependent on the worker. As a result, nearly 6 million (6.5 million 
now) beneficiaries receive reduced benefits as spouses--they receive 
the equivalent of the worker's benefit or the spouse's benefit, 
whichever is higher.''
    Rebuttal: Many government employees, especially women, who retired 
from public service, have small pensions. They may or may not qualify 
for minimum Social Security benefits on their own record. These women 
are more dependent on receiving their spousal or widow's Social 
Security benefits. As a non-covered government retiree, they lose not 
only their deceased spouse's pension, either totally eliminated or 
greatly cut back, but also the Social Security benefits he had received 
while alive. Thus, they are reduced from living on three retirement 
income sources to only one--theirs.
    Ms. Ross: ``The GPO acts as a surrogate for the ``dual-
entitlement'' provision for workers receiving a government pension 
based on work not covered under Social Security. Government pensions 
are, to a large extent, a substitute for Social Security benefits.''
    Rebuttal: Our government pensions are not the equivalent of a 
private pension. Our government pensions are neither a surrogate nor a 
substitute for Social Security. Social Security is a tax. Our pensions 
are not taxes. Congress spends surplus Social Security funds. State and 
local governments, by law, may not spend the pension funds of public 
employee retirement systems.
    Rebuttal: A government employee has an ownership right to their 
pension contributions. They may receive 100% of their contribution if 
they choose to leave government employment without taking/receiving a 
pension. There are no ownership rights to Social Security taxes.
    ``Many people are unaware that the United States Supreme Court 
ruled in Fleming vs. Nestor, (1960), that Social Security contributions 
are clearly a tax and individuals have no right to any benefits. 
Moreover, the Court affirmed that Social Security taxes are paid 
directly into the United States Treasury and are not placed into 
separate accounts. Congress can reduce Social Security benefits at any 
time in the name of Social Security reform.'' (The Heritage Foundation, 
``Executive Memorandum,'' June 10, 2000)
    The interim report of the President's Commission to strengthen 
Social Security, ``Social Security in Financial Trouble,'' was issued 
July 19, 2001. ``The system is broken,'' wrote former Senator Daniel P. 
Moynihan and Richard Parsons, co-chairs. The report said workers and 
retirees do not own their benefits and have no legal claim to them. 
``What they have is a political promise that can be changed at any 
time, by any amount, for any reason.''
    Ms. Ross: ``The GPO replicates the ``dual-entitlement'' rule by 
assuming that two-thirds of a government pension is approximately 
equivalent to a Social Security retirement benefit the worker would 
receive if his-her job had been covered by Social Security. The other 
third of the government pension is considered as the equivalent of a 
private pension and is not used to offset Social Security benefits.''
    Rebuttal: The GPO is based on a false premise--that two-thirds of a 
government worker's pension is the equivalent of Social Security. How 
is the pension of a Federal, State, or Local non-covered government 
retiree different that the pension of a covered government retiree? A 
pension is a pension is a pension, regardless if it comes from the 
public or private sector.
    Pension--A sum of money paid regularly as a retirement benefit or 
by way of patronage.
    Social Security--Measures by which the United States Government 
provides economic assistance to persons faced with unemployment, 
disability, or old age, financed by assessment of employers and 
employees. (The American Heritage Dictionary of the English Language, 
1970, Houghton Mifflin Co.)
    As for the percentage, in 1977, the ``replication'' was 100%--a 
dollar for dollar offset. In 1983, the Social Security ``replication'' 
was changed to two-thirds and one third was the equivalent of a private 
pension. What will the ``replication'' be in 2005:

      (a) 50% = Social Security; 50% = Private Pension?
      (b) 25% = Social Security; 75% = Private Pension?
      (c) 0% = Social Security; 100% = Private Pension?

    Congress may choose any ``replication'' formula it wants, but all, 
except c, are fallacious.
    Ms. Ross: ``The GPO affects government workers in the way that 
``dual-entitlement'' affects non-government workers: both groups of 
workers can receive a private pension without having it ``offset'' 
against their Social Security spouse's benefit.''
    Rebuttal: The statement is inaccurate, to say the least. The Social 
Security Administration considers only one-third of a non-covered 
government pension as ``private'' compared to non-government worker's 
pensions that are 100% ``private.'' If her statement were true, then 
all non-covered government pension retirees would not be affected by 
the GPO and would be eligible to receive 50% of their spouse's Social 
Security benefits and 100% if they were widows.
    The Women's Institute for a Secure Retirement lists the ``Top 5 
reasons why retirement is a challenge for women workers.''

      Nearly three out of four working women earn less than 
$30,000 per year.
      Nearly nine out of ten working women earn less than 
$45,000.
      Half of all women work in traditionally female, 
relatively low-paid jobs without pensions.
      Women retirees receive only half the average pension 
benefits that men receive.
      Women's earnings average $0.72 for every $1 earned by 
men--a lifetime loss of over $250,000.
      Today's Social Security, although very important, is a 
bad deal, especially for women.
      The negative impacts of the ``dual-entitlement'' rule are 
as follows:
      ``In most cases, women receive little benefit from their 
husband's Social Security after his death.
      Social Security pays survivors benefits only if his widow 
receives lower benefits than her husband did.
      If a wife receives either the same or larger monthly 
Social Security retirement benefit as her husband, all she gets is a 
$255 death benefit.A
      A married woman, with a good job, whose husband dies 
before his retirement could receive a paltry $255 death benefit from 
Social Security and nothing more.
      Today's Social Security is not fair to divorced women. 
The Social Security Act requires that a marriage must last for at least 
ten years before a divorced woman is eligible to share her former 
husband's Social Security retirement benefits. The average marriage 
today lasts 7 years.'' (Heritage Foundation)

    Social Security, particularly the ``dual-entitlement'' rule, has a 
disparate impact on women because they typically earn less, work fewer 
years, and live longer than do men. The Social Security Administration 
reports that 24% of married and widowed women have their benefits 
slashed by the ``dual-entitlement'' rule. By 2040, it will be 39%. The 
GPO only exacerbates this inequity!
    Ms. Jo Anne B. Barnhart, Commissioner of Social Security, in 
remarks made after her written testimony on the GPO/WEP before the 
Senate Committee on Governmental Affairs, September 24, 2003, commented 
that the ``dual-entitlement'' rule was also an ``equity issue.'' She 
stated that the cost to repeal the GPO/WEP would be $61.9 billion over 
10 years and $500 billion to repeal the ``dual-entitlement'' rule. She 
also said that ``it may not be feasible this year (2003) or next to 
repeal the GPO/WEP'' and suggested waiting as part of the Social 
Security reform.
    President George W. Bush, in his April 28, 2005 Press Conference on 
energy and Social Security said the following: ``One other point on 
Social Security that people have got to understand is that it's--the 
system of today is not fair for a person whose spouse has died early. 
In other words, if you're a two-working family like families are here 
in America, and--two people working in your family, and the spouse dies 
early--before 62, for example--all of the money that the spouse has put 
into the system is held there, and then when the other spouse retires, 
he or she gets to choose the benefits from his or her own work, or the 
other spouse's benefits, which is ever higher but not both. See what 
I'm saying? Somebody has worked all their life, the money they put into 
the system just goes away. It seems unfair to me. I've talked to too 
many people whose lives were turned upside down when the spouse died 
early and all they got was a burial benefit.'' He was talking about the 
``dual-entitlement'' rule.
    Other comments on current or proposed laws for your consideration 
regarding the GPO/WEP and the ``dual-entitlement'' rule are:
Private Retirement Accounts (PRA's)
    Social Security taxes paid into the Social Security ``Trust'' Fund 
are not legally ours and our families have no inheritance rights. The 
6.2% proposal (H.R. 530) that will be divided between Social Security 
and PRA's is the exact same tax, except for one major difference--one 
we own (PRA's), and one we don't (Social Security) due to two different 
laws. How logical is that?
Medicare and Social Security
    I have never paid into Medicare while working, yet am eligible for 
it on my spouse's record. I have never paid into Social Security while 
working, yet am eligible on my spouse's record only if I didn't work. 
What is the difference if I worked and never paid into Social Security 
or never worked and never paid into Social Security? Why am I eligible 
for Medicare benefits (based on my spouse) and not Social Security 
benefits (also based on my spouse)? I didn't pay into either one. The 
eligibility for either one is based solely on my spouse. How logical is 
that?
``Dual-Entitlement'' Rule
    This is an unjust and unfair law for 6.5 million people. Using 
specious reasoning as the basis for justifying the GPO only compounded 
an already poorly conceived law. How logical is that?
Widow's Plight
    A widow may receive her own or deceased spouse's full Social 
Security while still working in non-covered employment. When she 
retires and needs her Social Security the most, her own Social Security 
is reduced (WEP) and she completely loses her widow's Social Security 
benefits (GPO). How logical is that?
Social Security Harassment
    The Social Security Administration expects non-covered retirees to 
report their annual COLA to Social Security. The Social Security 
Administration will then reduce their already severely limited Social 
Security benefits. Their COLA's are wiped out by their Social Security 
decrease so they can never get ahead to pay for such things as 
increased medical premiums or bills. How logical is that?
    Chairman McCrery, the fairest, most honorable solution is to repeal 
the GWO/WEP. The GPO/WEP issue is non-partisan. It goes beyond 
politics. It affects voters of all parties. It is not a ``structural'' 
part of Social Security and, therefore, can be voted on separately. It 
is a situation similar to H.R. 5, the ``Earnings Limitation Act,'' a 
poorly written public policy and injurious law that was repealed on 
April 7, 2000. It received complete and total support from Congress. If 
poorly conceived laws, with negative unintended consequences, have been 
repealed by Congress before, it can be done again. It's never too late 
to make amends. I urge you and the entire Sub-Committee on Social 
Security to support H.R. 147, ``The Social Security Fairness Act of 
2005.'' I think the title says it all.

                                 

                                        South Portland, Maine 04116
                                                       June 23,2005
Dear Committee Members,

    I am writing to offer my concerns regarding my loss of social 
security benefits as a result of taking a job in public education. I 
believe may fall under the ``windfall provision''.
    I am 42 years old and a special education teacher. I started paying 
into social security as a teenager and have continued until five years 
ago. Five years ago I took a job as a kindergarten special education 
teacher in a public school. Prior to this I had worked in places such 
as day treatment schools, residential treatment schools, and even the 
preschool component of public school special education (Child 
Development Services); all the time paying into social security.
    After I took the position in the public school, I learned that I 
would no longer be paying into social security, but would need to pay 
into Maine State Teachers Retirement.
    I was stunned to later learn that if I stayed to retire, I would be 
losing a large portion of my twenty years of social security benefits.
    Because I moved to a public school position at a later age, I am in 
a bleak position for retirement. I love my job in the public school and 
hope to stay, but I worry that if something is not done to restore my 
social security benefits I may not be able to do that. I do have some 
small retirement savings and I work hard to save every penny I can. 
However, if my years of social security investments are taken from me, 
I know that I will be in serious trouble for retirement. That really 
scares me.
    I just don't understand why I am being, what feels like, 
``punished'' for moving to serve in a public school. I believe that I 
would not have taken a public school teaching position had I known of 
this punitive consequence. We need good people in public education. I 
feel that this is a disincentive for good experienced people to move 
into public school jobs.
    There are several other teachers, here, that are in the same 
position. We moved into public education later in our careers, and are 
extremely concerned about our loss of social security. We love teaching 
in the public school. We want to stay in public education. We need our 
social security in order to live when we retire.
    I don't think that this loss happens to people in similar positions 
in all states, but it does happen here in Maine. That just does not 
seem right.
    I just keep hoping that people like you, who work hard to represent 
us, will recognize the unfairness of this provision and the 
consequences it presents for individuals like me and for public 
education and will work to fix it.
    Thank you for considering my letter and for your work on the 
committee.
                                                       Lisa Crowley

                                 

              Statement of Margaret Daniels, Hurst, Texas
    I am a retired elementary school secretary for the Hurst-Euless-
Bedford School district in Bedford, Texas. I became a secretary for the 
school district while my children were in secondary school to have my 
working hours more in accord with theirs. I previously worked in banks 
under Social Security. I began drawing my own Social Security when I 
was 62 years old. I have been affected by the WEP offset for my own 
pension. However, that does not affect me as much as the GOP offset 
will should my husband pass away before I do. I would like to be able 
to draw the portion of his Social Security benefits that I would even 
if I had never worked during our marriage. I know this is a hard 
decision for you to make at this time. I believe Texas is one of the 
last sixteen states to not have repealed this. My daughter-in-law is a 
teacher in Louisiana and I believe will also be affected. Your 
consideration of this matter in your committee will be greatly 
appreciated.

                                 

    Statement of Jennifer Dannenberg, Skyline High School, Berkley, 
                               California
    I am a public school teacher at Skyline High School in Oakland. I 
have taught for 10 years; before that, I worked in administrative jobs 
with nonprofit organizations that helped families who have children 
with disabilities.
    Since I am already 55, I will not have a very large STRS benefit by 
the time I retire in 8 years, and I will need my entire Social Security 
benefit to live. It is unfair that teachers and other state employees 
are not able to draw the full Social Security benefit. Why are we 
penalized in this way? I qualify for a full benefit, and yet I cannot 
collect it.
    A teacher shortage currently exists in this state and threatens to 
become more serious as new teachers enter the profession at a rate 
slower than the retirement rate. We need to attract teachers who, like 
me, are interested in changing careers mid-life. Continuing to disallow 
the enjoyment of one's accrued Social Security benefit if one is also 
collecting STRS will discourage qualified people from joining the ranks 
of California public school teachers.

                                 

               Statement of Robert Davis, Rockwall, Texas
    I thank you for this opportunity and would like to commend you for 
making the needed repairs to our Social Security system. My area of 
concern is the WEP and GPO. I recognize the need for adequate funding, 
but it was not the intent of adequate funding to punish the underpaid 
government workers such as the teachers. Texas retired teachers have 
not had an annuity raise since 2001 and the GPO and WEP prohibit raises 
from Social Security. The second reason is that the payment of Social 
Security with the penalty amounts to an extra Income Tax. This request 
is in behalf of all the retired government workers that have paid the 
required 40 quarters. I implore to follow your beliefs and continue 
your excellent record of service by repealing the provisions.
    Thanks

                                 

                                                Skyline High School
                                          Oakland, California 94618
                                                      June 17, 2005
To Whom It May Concern:

    I teach in an inner city school and, living in the Bay Area as a 
single person am unable to purchase property. I fear in the future an 
extremely low standard of living despite the hard work I will have done 
for this country.
    Please consider that we who are in need of full compensation for 
the security benefits we have earned are all diligent servants of the 
people.
            Sincerely,
                                                       Lynn Delaney
                                                            Teacher

                                 
   Statement of Edward Derman, California State Teachers' Retirement 
                     System, Sacramento, California
    The California State Teachers' Retirement System (CalSTRS) provides 
retirement benefits to more than 754,000 active and retired public 
school teachers and their beneficiaries. California public school 
teachers are the largest single group of State and local government 
employees in the country who do not participate in the Social Security 
system.
    On behalf of the 1,200 local school districts of the California 
public school system that educate California's children, CalSTRS wishes 
to express its very grave concern over any proposal to impose on these 
school district employers mandatory Social Security coverage with 
respect to newly-hired teachers.
    CalSTRS was established by State law in 1913 to provide a defined 
benefit pension for the State's public school teachers. Thus, CalSTRS 
was in operation some 22 years before Social Security even was created. 
At the time Social Security was established, California's teachers and 
all other State and local government workers were barred by Federal law 
from participating. Accordingly, forced by the Federal Government to go 
its own way, CalSTRS has successfully provided retirement benefits to 
generations of retired teachers in California.
    Through sound management over nine decades, CalSTRS has developed 
into the third largest pension system in the United States, with 
754,000 active and retired members and assets of more than $125 
billion. CalSTRS currently pays out more than $5.6 billion a year in 
retirement, disability and survivor benefits. Unlike the pay-as-you-go 
Social Security system, the State of California has pre-funded its 
future retirement liabilities.
    We recently had our independent actuaries, Milliman, analyze the 
impact of a mandatory coverage proposal on CalSTRS. (See Milliman 
Letter dated March 30, 2005, attached). A proposal to mandate Social 
Security coverage for all newly-hired State and local government 
workers would impose a major new Social Security payroll tax burden of 
12.4 percent of payroll on local school district employers and 
employees in California. The 12.4 percent of payroll tax cost of 
mandatory Social Security coverage would result in an average 
additional cost of about $4,300 with respect to each new teacher, based 
on an average starting salary of about $35,000. This new 12.4 percent 
of payroll Social Security tax cost would be imposed on top of the 
16.25 percent of payroll cost that is paid by employers and their 
employees to fund the current CalSTRS retirement plan. California's 
school districts simply could not shoulder such an enormous overall 
retirement cost burden.
    To accommodate this heavy new Social Security payroll tax burden, 
employer contributions to the CalSTRS retirement plan would have to be 
pared back significantly under a new plan coordinated with Social 
Security. However, the school districts would be left with sharply 
higher total costs to deliver a combined Social Security and CalSTRS 
retirement benefit on a par with the current CalSTRS benefit. The 
current CalSTRS plan produces a much greater retirement benefit than a 
plan coordinated with Social Security for the same level of 
contribution. This is because State and local government retirement 
plans such as CalSTRS--whose assets are invested in the private capital 
markets--produce a substantially higher investment return than is 
credited under the Social Security system--even if a portion of the 
Social Security payroll tax were to be invested in private accounts.
    Thus, the cost of benefits provided under Social Security is 
significantly greater than the cost of equivalent benefits provided 
under the current CalSTRS plan. Accordingly, if Social Security 
coverage were to be substituted for a significant portion of the 
current State pension plan benefit, the employer's overall retirement 
costs would have to increase sharply in order to fund the same level of 
retirement benefits as currently provided to California's retired 
teachers under the CalSTRS plan.
    Milliman calculated that mandatory Social Security coverage for new 
teachers would drive up total retirement costs for California school 
districts by an additional 7.487 percent of payroll simply to fund the 
same level of retirement benefits as currently provided to California's 
teachers under the CalSTRS plan. The 1,200 local school districts in 
California have a combined annual payroll for teachers of almost $24 
billion annually. Therefore, a proposal to impose mandatory Social 
Security coverage for new teachers will increase local school costs by 
as much as $1.5 billion annually, cutting into the budgets they 
establish to educate our children.
    Simply cutting current retirement benefits for California's 
teachers would not be a viable way to absorb the harsh new cost burden 
of mandatory Social Security coverage. CalSTRS's independent actuaries 
have calculated that the current CalSTRS

retirement benefit would have to be cut by about 75 percent in order to 
keep the overall cost of a new CalSTRS plan coordinated with Social 
Security on a par with the current cost of the CalSTRS plan.
    State and local governments have only two responses available when 
confronted by such a heavy cost burden imposed by the Federal 
government: raising taxes or cutting spending on other essential 
government services. School district administrators have indicated to 
CalSTRS that a serious reduction in education services would be 
necessary in order to address the increased costs of mandatory Social 
Security coverage.  
    A case in point is the Hemet Unified School District, located in 
Riverside County, California. Attached is a copy of an analysis that 
the then-Hemet District's Superintendent prepared several years ago 
regarding the cost impact of a mandatory Social Security proposal on 
his district. (See statement on behalf of the Hemet School District by 
its Superintendent, Stephen C. Teele, Ph.D., dated September 7, 2001). 
His analysis of impact is equally applicable today. According to 
Superintendent Teele, the Hemet School District serves 18,000 students 
in 20 schools throughout rural and suburban communities within a 730 
square mile area. Sixty-seven percent of the students reside in 
families that qualify for the Free and Reduced Lunch program. Student 
enrollment continues to grow at the rate of 2-5 percent annually.
    Superintendent Teele's detailed budget breakdown underscores the 
heavy cost burden that mandatory Social Security coverage would impose 
on a local school district struggling on a budget already stretched 
thin to meet the fiscal demands of educating California's children. 
According to Superintendent Teele's analysis, after taking into account 
current salary and facility costs, increased power costs, the cost of 
operating a new school, the cost of recently-expanded special education 
programs, and the cost of employing new teachers and staff to respond 
to student body growth as well as class-size reduction and other State 
educational reform initiatives, there would be no resources left to 
absorb the harsh cost burden of mandatory Social Security, a cost 
burden which will only grow over time as more new teachers are hired.
    Accordingly, Superintendent Teele indicates, ``The proposal to 
include new certificated personnel into the Social Security system will 
have a significant negative impact on the District's ability to offer 
quality educational programs and services at a time of increasing 
demands from California's Education Reform and Accountability 
Initiatives.'' (p. 2). Superintendent Teele concludes: ``[T]he Hemet 
Unified School District is representative of school districts in 
California that are maximizing all available resources to implement 
successful programs and services in response to California's 
Educational Reform and Accountability initiatives. This proposal not 
only will have a detrimental impact on those efforts but also goes 
contrary to President Bush's goal of improving public schools.'' (p. 
3).
Conclusion
    CalSTRS, its 754,000 members, and the 1,200 local school districts 
in California strongly oppose any proposal to impose mandatory Social 
Security coverage.
    The members of CalSTRS--which predates Social Security--were barred 
from participating in Social Security. CalSTRS was forced by the 
Federal Government to go its own way and through sound management has 
developed into a retirement plan that is capable of paying out over 
$5.6 billion annually in benefits and shouldering all of its future 
retirement liabilities on a fully funded basis.
    Mandating Social Security on future California educators will have 
a major impact on employees and school districts, limiting the ability 
of districts to respond to efforts to improve the quality of public 
education. Moreover, it likely bring about a significant reduction of 
retirement benefits paid to future educators who perform a lifetime of 
service to California schoolchildren, and undermine the financial 
security of those educators in their retirement.
    In essence, CalSTRS would be asked to cast aside decades of 
successfully providing retirement benefits to generations of teachers, 
in order to force new teachers into a retirement scheme coordinated 
with Social Security that would provide reduced benefits at higher 
cost. It is unfair at this late hour to destroy the CalSTRS retirement 
plan--and indeed destroy the very success of private investment that 
the Administration's personal accounts proposal evidently seeks to 
emulate--by mandating participation to solve a longstanding solvency 
problem in Social Security that the State and its school districts had 
no hand in creating.

                                     ----------

Supplemental Sheet
California State Teachers' Retirement System contact:
Edward Derman
Deputy Chief Executive Officer
Plan Design and Communication
California State Teachers' Retirement System

                                 

                                      Rockport, Massachusetts 01966
                                                  September 8, 2005
To whom it may concern:

    My name is Therese K. Desmarais. I am the only child of first 
generation Polish parents, the first girl in my extended families to go 
to college. I paid my own way through a state college in order to earn 
my Bachelor's Degree in Elementary Education, and then attend a private 
university to complete my Master's Degree in Education. I was married 
in 1965, and continued to teach full time, attend graduate school part 
time and summers and raise two children.
    When the children were born, I was not allowed to be in the public 
schools beyond my seventh month of pregnancy. My husband was laid off 
from a computer-based company and we moved to Massachusetts in 1970. 
Since I was 100 miles away from both sets of grandparents and extended 
family, I stayed at home to raise my two children until the youngest 
was able to attend nursery school.
    I returned to the public school on August 24, 1975 and worked for 
two public school systems until my retirement at age 60, on August 24, 
2002.
    During that period of time, my parents began having age related 
health problems. I cared for my mother until 1996 when I was forced to 
turn to a nursing home to ensure her safety and medical attention. My 
father began decline due to colon cancer. My husband, Richard, had a 
serious heart attack in 1997, and I had to continue working because he 
was self-employed and our medical insurance was available through my 
employment.
    In that same year, I was diagnosed with the same type of breast 
cancer that my mother was recovering from in 1994. After two surgeries 
and radiation, I could not longer continue to keep up with two round 
trips from Sherborn, MA to Hartford, CT to care for my parents. I 
managed my father's household affairs, bills and health related issues. 
My father wished to remain in his home of fifty years, which he had 
built. He wished to remain in his community, near his church and 
familiar surroundings. I incurred many expenses caring for him, as he 
had only his social security by which to pay many, many bills.
    I incurred many bills while caring for them, as they were both 
receiving Social Security. My mother's Social Security went toward 
payment of the nursing home. My mother died in February of 2001. My 
father died on Father's Day in June, 2001.
    Both of our children attended college. Our daughter did a mid-
career change from finance to teaching, attending Harvard University, 
Graduate School of Education in order to comply with certification in 
Massachusetts for Math and Science teachers. She taught for two years, 
and is presently on maternity leave with her second child.
    My husband, Richard James Desmarais, died on February 12, 2004 
after living in our retirement home for nine months. Our second 
grandchild, Talia Therese was born on February 5, 2003. Those nine days 
were filled with the most intense joy one could ever imagine.
    Our son and his new wife were visiting us to meet the new baby when 
Rich had his final heart attack here at home, and he died in my arms, 
with my son and new daughter-in-law at my side. I can never forget the 
sadness of the ensuing weeks and months. Richard's death caused his 
ninety-one-year-old mother to be hospitalized with grief, in shock, 
over the loss of her son.
    I then began making all the arrangements for his funeral, tried to 
sort out his company and our finances. It was at that time that I 
realized that I was not eligible for his social security benefits as 
his widow because I was receiving my teacher's pension from a private 
retirement board.
    Because of Rich's history of heart disease, (his father died of a 
heart attack, his mother has had a triple by-pass, twice), he was only 
able to get minimal life insurance. Since he was self-employed, he not 
only paid his share of social security taxes, but twice that amount for 
30 years.
    Richard began working on tobacco in 1954 at the age of 14. He 
worked very hard, providing all the necessities to both his children, 
my parents, his mother who is still alive. He contributed to Social 
Security for 50 years, expecting it would help us financially, along 
with my retirement to allow us to live in our home, as independently as 
our health would allow.
    The Government Pension Offset (GPO) and Windfall Elimination (WEP) 
are causing me the loose my home, my independence, my simple but 
quality life style of caring for family and community members.
    I have been receiving the social security benefit notices that 
everyone else receives not knowing that I would loose them upon my 
husband's death, when I needed it the most. I was not trying to cheat 
or double dip, as the writers of the amended bill project. I needed it 
to pay my mortgage, and now my rent, my taxes, my car insurance, my 
food, clothing and fuel.
    I urge you to consider the impact this is having on my family.
    I urge you to consider my situation when you meet to discuss the 
bill addressing the GPO and WEP. Richard paid into social security for 
fifty years, so that he and his family would have financial security. I 
do not have him to help me through this difficult time. Please consider 
my situation, and know there may be many others who are depending on 
your support of this action.
            With sincere respect,
                                               Therese K. Desmarais

                                 

                                               Seward, Alaska 99664
                                                       June 8, 2005
Dear Committee Members:

    Twenty three years ago I got a call from a professor at UAF who 
said they wanted to interview me for a position there. My answer was, 
``I have a job, I am a smokejumper.''
    What she said next changed my life, ``Alaska is building the 
greatest educational system in the world. With all your degrees/
endorsements and the languages you speak this would be perfect for 
you.''
    I am glad I took that challenge. Nonetheless, because I recently 
terminated and then later retired I will have the super majority of my 
SS garnished because I had the temerity to teach in Alaska. Alaska is 
one of the few states where those of us who had a career teaching in a 
public school are penalized by having the majority of our SS payments 
denied.
    As a USFS and BLM smokejumper I parachuted to fires across the 
west. As an EMT I participated in numerous rescue jumps. On more than 
one occasion I put my life on the line performing my duties as a 
jumper. The Smithsonian just accepted a video/DVD I did titled, 
``Twenty seconds over Birch Hill.'' It describes my freefall when both 
my main and reserve chutes malfunctioned. I was fortunate to get an 
opening 100 feet off the ground at almost 200 mph ie. one second from 
impact. All of my jump buddies in the plane and on the ground thought I 
had died. Better jumpers than I have died at Birch Hill when they had a 
double malfunction and could not get either parachute to open.
     For the U.S. government to tell me that I do not qualify for SS 
because I was so unfortunate to retire in Alaska is like telling my 
father, an 83 year old decorated WWII veteran, that he gets no benefits 
because he retired in Utah.
    During my career as an educator I have taught 22 different subjects 
K through university. My students have gone on to careers in almost 
every field imaginable. Yet I always was thrilled when one of them 
became a teacher, and always encouraged them. How many of them know 
that their SS will be denied if they teach in Alaska?
            Sincerely,
                                                     Jerry S. Dixon
                                    Biologist/Teacher of the Gifted

                                 

    Statement of Carl L. Elam and Naomi J. Elam, Graham, Washington
    The House Ways and Means Committee, Subcommittee on Social Security 
Hearings on Protecting and Strengthening Social Security is of interest 
to me because both my wife and I have had our Social Security benefits 
reduced as a result of the Windfall Elimination Provision and my wife's 
survivor benefits are essentially eliminated by the Government Pension 
Offset.
    Both of us were public school teachers and receive pensions from 
those jobs that were not covered by Social Security. I also receive a 
small pension from seasonal federal employment covered by CSRS and 
FERS. My Social Security benefits were reduced by approximately fifty 
percent by the WEP, and my wife's benefits were reduced even more.
    My wife was not employed for over 15 years, caring for our 
children, so her pension is small. Although she had several years of 
significant earnings covered by Social Security, due to the WEP her 
Social Security benefit amounts to only $2400 per year. To add insult 
to injury, The Government Pension Offset essentially eliminates any 
survivor benefits to which she might have otherwise been entitled from 
my reduced Social Security.
    The pensions received by retired state and local government 
retirees are not noted for being lavish. To discriminate against 
government workers and their survivors, who have participated to the 
same extent as their counterparts in the private sector, by restricting 
their Social Security benefits just because they are public employees 
instead of private is unfair, and in fact, penalizes them for their 
service. I urge the members of the Committee to do all within their 
power to rectify this injustice.

                                 

         Statement of Joyce R. Elia, Mission Viejo, California
    As the Committee reviews the multitude of issues associated with 
Social Security, I ask members to consider correcting a ``fix'' that 
was initiated in 1983, and, to also not make similar mistakes this time 
around (such as privatization which will line the pockets of Wall 
Street and cost billions of dollars to implement). Congress has made 
the same mistake as many corporations recently in the news--they have 
``spent'' the hard-earned pension funds of workers during the stock 
market's heyday and have now been ``caught short''. Workers in this 
country have had enough of the corporate greed and fiscal 
irresponsibility of government. We are tired of ``paying'' for 
everyone's mistakes, while the corporate CEOs continue to live the 
``good life'' with no understanding, and with a complete lack of 
conscience, of how the ``real'' people in this country live.
    The private sector continues to follow the government's lead in 
cheating employees out of their retirement benefits (United Airlines, 
possibly General Motors, to name a few), with the government's 
blessing. At the same time, like Congress, the retirements for the 
``chosen few'' are preserved. The hardworking, tax-paying individuals 
of this country deserve better and we expect you to act responsibly. 
President Bush espouses a Christian ethic. There is absolutely nothing 
``Christian'' about defrauding American workers with high taxes and 
erosion of their pensions.
    As a current government (court) employee and former private sector 
employee, I am seeking your support of HR 147, ``Social Security 
Fairness Act,'' to eliminate the Government Pension Offset (GPO) and 
Windfall Elimination Provision (WEP) to Social Security. This 
legislation was enacted in 1983, during a period when Congress was 
looking for ways to reduce the cost of Social Security. Their decision 
to place that burden on the backs of government workers and teachers 
has created a fraudulent and discriminatory solution which wrecks 
financial havoc on the lives of affected individuals.
    The GPO and WEP will greatly affect mine and millions of other 
Americans' ability to collect the full Social Security benefits that 
they have earned and to which they are entitled. This is a non-partisan 
issue that transcends politics and affects voters of all parties.
    Three years ago, a co-worker returned from her ``retirement 
planning session'' crestfallen to learn that the small pension which 
she had earned working for the Orange County Superior Court was going 
to dramatically impact the receipt of her earned (as well as her 
ability to collect her husband's earned) social security benefits. Her 
situation will become worse, should her spouse predecease her. She will 
not be eligible for any spousal benefits, which he worked a lifetime to 
earn in his effort to provide for his wife. At the time, I was totally 
unaware of these two laws and their impacts. I had worked in the 
private sector for many years before ``retiring'' to raise a family.
    When I returned to the workforce in 1994, to work as a Senior 
Administrative Assistant to the CEO of the South Orange County 
Municipal Court (unified to Superior Court in 1998), I was not informed 
by the County/Court that paying into the County retirement system would 
negatively impact my ability to collect mine and/or my husband's hard-
earned Social Security benefits. The County retirement plan is 
predominantly self-funded by employees, with only a small portion of 
the contribution coming from LOCAL (not Federal) taxes. I erroneously 
assumed that any pension I earned would supplement my earned Social 
Security benefits. These laws force me to either leave my job, friends 
and an important part of my life prior to ten years of service 
(vesting) or relinquish my own and my spousal rights to Social 
Security. It punishes me for doing what the government told me to do--
plan for the future. (I would have been better off staying at home and 
letting the government subsidize me.) The outcome is discriminatory and 
dishonest, as well as disheartening, to a loyal hard-working employee.
    The laws are arbitrary and selective--being particularly 
discriminatory to women. Women receive only half the average pension 
benefits received by men and these laws further reduce that small sum.
    Please preserve teachers' and government workers' retirement 
benefits that they have paid for and deserve by passing HR147, which 
will repeal legislation which in actuality is ``legalized fraud,'' 
(i.e., the government has taken, or in many cases, continues to take 
monies via social security taxation, which it has no intention of 
returning by way of future benefits). Numerous teachers and public 
workers (many of whom are single Moms), have part-time employment to 
make ends meet. From those private-sector checks, social security is 
being deducted . . . when under current laws, that money will never be 
returned. If private companies acted in such a manner, they would be 
charged with FRAUD.
    I have included a briefing paper which expands on the legislation's 
impacts.
    I urge Congress' support and passage of this important legislation. 
I also urge Congress to look into other areas for savings: reduction/
restructuring of Congressional retirement benefits; reduction in 
foreign national benefits, fairer taxation, to name but a few.
    I do not support private accounts OR melding government/teacher 
pensions into Social Security. This practice would place yet another 
undue burden on this class of individuals. Their pensions should be 
treated in the same manner as private sector retirement plans--separate 
and apart from Social Security.
    Additionally, Congress makes it increasingly difficult for 
individuals and families to save for their retirement, especially when 
the interest on SAVINGS accounts are taxed.

                                 

 Statement of Charles Fallis, National Association of Retired Federal 
                    Employees, Alexandria, Virginia
    Mr. Chairman and members of the Committee, I am Charles L. Fallis, 
President of NARFE (the National Active and Retired Federal Employees 
Association). I am submitting testimony today, for the record, on 
behalf of the more than 4.6 million federal annuitants and workers.
    The Government Pension Offset (GPO) and the Windfall Elimination 
Provision (WEP) are two Social Security provisions that continuously 
have an adverse affect on the quality of life of a significant number 
of our members. We have been told, many times over the years, these 
provisions should not be addressed until Congress considered ``the full 
context of Social Security reform''. Finally, that day is here. We know 
that you, Mr. Chairman, fully understand that we cannot afford to wait 
any longer to address changes to these onerous offsets--changes which 
have considerable support both here in the House and in the Senate for 
repeal or reform. You and your colleagues in the state of Louisiana, 
have a significant number of constituents that are among the most 
adversely affected beneficiaries in the country by these offsets.
    In 1935, when the Social Security Act was originally enacted, it 
provided the same benefits to workers, with and without spouses, and 
provided no survivors' benefits. The Social Security Act Amendments of 
1939 added spousal and survivor benefits to provide extra protection to 
workers with families. But in the past two decades, some spouses and 
survivors have been shortchanged on this ``extra protection''.
    The GPO Social Security Act amendment, originally enacted in 1977, 
went into effect in 1983, and since then has affected over 350,000 
federal, state, and local retirees. This figure grows by approximately 
15,000 each year. The GPO reduces or eliminates the Social Security 
spousal or survivor benefit to which an affected retiree may be 
eligible. Two-thirds of the amount of the monthly government annuity 
that a public servant has earned, is applied as an offset against 
whatever Social Security spouse/survivor benefit might be payable. By 
all accounts, the use of two-thirds of the public retirement income as 
offset against the Social Security income is an arbitrary percentage. 
As such, we believe it can and should be reexamined and changed.
    Current WEP law greatly reduces the Social Security benefit of a 
retired or disabled worker who also receives a government annuity based 
on his/her own earnings. It applies to anyone who becomes 62 (or 
disabled) after 1985 and becomes eligible for her/his government 
annuity after 1985. The Social Security WEP has already affected over 
695,000 retired federal, state and local government employees. 
Thousands more will be affected in the future because that number grows 
about 60,000 annually. This so-called windfall reduction can reduce the 
worker's monthly earned Social Security benefit by as much as 60 
percent or up to approximately $313.
    NARFE has worked for over twenty-eight (28) years to repeal or 
reform the GPO and approximately twenty-three (23) years to do the same 
to the WEP. Both offsets have denied many of our older members, 
particularly women, the economic dignity they had been led to expect in 
retirement. Indeed, the elimination and reduction of these benefits 
have forced thousands of elderly government retirees back into the 
workforce--not by choice--but by economic necessity. I, therefore, urge 
this Committee to include the repeal or reform of the GPO and the WEP 
provisions as you develop your plan for Social Security Reform in this 
109th Congress. This would restore earned benefits for women and other 
retirees.
    Mr. Chairman, and members of this committee, I previously testified 
that the harshness of the GPO and WEP, as they exist today, cause both 
fears and tears among thousands of older retirees. Fears for their 
financial futures, and tears of frustration that Congress has not acted 
sooner to reform this provision despite widespread support for doing 
so. I hope the tears of frustration are about to be wiped away as you 
include corrective measures within your plan for Social Security Reform 
to repeal or reform the GPO and the WEP offsets.
    There are several GPO and WEP bills pending before the Senate today 
which would offer relief to the hundreds of thousands of current and 
former teachers, school cafeteria workers, postal workers, VA nurses, 
social security employees, and others who worked long and hard to help 
support their families. In fact, many Representatives of this 109th 
Congress, and several members of this committee, including you, Mr. 
Chairman, have already acknowledged the need for changes in Social 
Security to include some means of reforming the GPO and the WEP.
    Chairman McCrery, during the past three decades members of Congress 
have received many letters and phone calls from NARFE members who are 
constituents, not just in Louisiana, but throughout the country. All 
describe in detail the anguish and economic hardships they experience 
every day because of the GPO and/or the WEP. I reiterate that for 
hundreds of thousands of federal, state, and local government retirees, 
the repeal of both of these offsets would diminish, and in some cases 
eliminate, the devastating financial hardships they endure because of 
the effects of these onerous laws.
    The Social Security system has endured and will continue to endure 
some serious challenges and concerns over the next century. None of us 
can predict what this program or our economy will be like seventy-five 
years from now, even though we try. And unfortunately, none of us here 
today will be around to know. One thing is certain; reform is needed 
and some form of change is inevitable.
    Social Security Administration actuaries have determined that the 
repeal of the GPO and the WEP would increase the size of the OASDI 
actuarial deficit by an amount estimated at 0.11 percent of taxable 
payroll. This amount is not negligible but when included in a total 
Social Security reform package, it will help significantly to alleviate 
the hardships that retired government employees have to endure with the 
current GPO and WEP. The cost, I am sure, will be deemed negligible 
when included in the overall cost to maintain the solvency of our 
Social Security system over the next fifty years or more. Moreover, 
repealing or reforming the GPO and WEP would have a substantially lower 
affect on the system than Congress' decision to repeal the Social 
Security earnings test in March 2000.
    The President has stated in the past that, ``. . . America's 
greatest economic strength is the pride, the skill, and the 
productivity of American workers.'' Mr. Chairman and members of this 
subcommittee, he is absolutely right. NARFE members, along with the 
other federal, state, and local government employees and retirees in 
this country are the proud, skilled, and productive American workers of 
yesterday, today and tomorrow. They continue to support and strengthen 
our nation's economy, and serve our country, to the best of their 
ability, as they continue to work, even though these heinous offsets 
debilitate their efforts to significantly contribute. Please allow them 
to significantly increase their financial efforts in support of this 
country's economy by returning to them that which they have earned. If 
they are ever to feel vindicated, these punitive offsets must be 
repealed or reformed now.
    I commit to you today that, on behalf of NARFE's 400,000 members, 
we stand ready to work with you and the members of the House Social 
Security Subcommittee to expeditiously resolve these issues ``in the 
context of full Social Security reform''.

                                 

 Statement of Judith Flynn, Federally Employed Women, Corvallis, Oregon
    I very much appreciate the opportunity to submit this written 
testimony on the impact of the Government Pension Offset (GPO) and 
Windfall Elimination Provision (WEP) Social Security provisions, and 
their adverse and unfair impact on me--a federal retiree. First I want 
to thank Chairman Jim McCrery and the other legislators serving on this 
Subcommittee for conducting this important hearing. As a retiree being 
adversely impacted by these provisions, I urge all Subcommittee 
members, and lawmakers, to repeal them as soon as possible and allow me 
to receive my full social security benefits.
    I am a CSRS offset retiree because I temporarily left government 
employment to finish my college education. At that time (working for 
Oregon State University, Corvallis, OR) and previously (employed by 
Harcourt, Brace publishers, New York, NY), I worked in the private 
sector in excess of the required quarters to have earned the rights to 
my Social Security payments. I also worked 24 years for the Federal 
Government (USDA-Agricultural Research Service) in order to obtain my 
entire earned annuity from the government.
    I should not be penalized at all in my earned benefits simply 
because I worked as a public servant. Yet am losing 12.5% of my Federal 
Annuity each month due to these provisions.
    GPO and WEP are truly unfair to federal workers, and need to be 
repealed. Thank you for your help and consideration in fixing this 
problem.

                                 

                                           Brownsville, Texas 78521
                                                 September 12, 2005
Committee on Ways and Means
Social Security Issues
GPO and WEP

Dear Sir or Madam:

    I would like to plead to you to eliminate the above provisions from 
Social Security.
    I am a retired teacher and my husband is a retired police officer. 
I do not necessarily care if I receive a benefit, as I have not worked 
the required 40 quarters under Social Security.
    Nor do I care if I receive a spousal benefit.
    However, my husband HAS. He took any number of off-duty jobs in an 
effort to support his family at a time when pay for police officers was 
very low. He is now retired with a total service connected disability, 
which requires an inordinate amount of medication every month. If he 
had his Social Security benefit, even though it is less than $400 per 
month, it would go a long, long way toward alleviating his expenses. 
But even if he did not need the money, the fact is that he EARNED that 
benefit and the rules were changed toward the end of his career. This 
does not seem quite fair to me.
    Again, I am not particularly asking for repeal so that I can 
collect a spousal benefit but because my husband EARNED his benefit and 
is being denied that benefit.
            Yours truly,
                                                      Cheryl Fowler

                                 

     Statement of Marilyn Sprang Fransen, Rapid City, South Dakota
    I was a music teacher in Colorado from 1963 to 1975. When I quit 
teaching I went into business and took out in cash what had been put 
into the retirement association. I was married with two children and 
felt ``burned out'' by the demands of teaching.
    In 1981 I returned to the school district but in the capacity of an 
elementary office manager or secretary. I felt that my work was every 
bit as important to the edu-

cation of the children of this school as my teaching had been, perhaps 
more so, because I knew the demands upon teachers and I aided them in 
every way I could. I also became nurse: surrogate Mommy; liaison 
between teachers, administrators, parents, and other community; and 
believed that I accomplished much toward making the school run smoothly 
and efficiently. I stayed happily in that position for sixteen years 
and bought back some of the teaching years' retirement benefits so that 
I could retire in 1998.
    Because I retired as a classified employee and not a certified 
employee my retirement is only adequate and just above poverty level. I 
was never informed about the GPO/WEP laws that came into effect in 
1983. I had realized that no Social Security had been taken from my 
salary those years but I also knew that as a married spouse and later 
as a divorced spouse I would be eventually eligible for half of my ex-
husband's benefits as a supplement. I realize now that my divorce 
lawyer was not aware of the laws either. Also, because of the animosity 
of my ex-husband I was driven into bankruptcy, and I truthfully believe 
my lawyer for that process was not aware, also, of the laws. I finally 
learned about my predicament when I applied for my benefits after 
turning 62 in July 2002!
    It came as a complete shock. I contacted friends and co-workers in 
the school district where I was employed and learned that they, also, 
were in ignorance about the effects these laws would have on their 
lives. They didn't and still don't believe me. The laws are so 
complicated to understand. I've had three years to try to verbalize 
what I believe has happened to me and it is still hard to make sense of 
it. I am weary of this problem and worried about how I will be able to 
live out my senior years on such a limited budget.
    Because of the loss of much needed Social Security supplemental 
benefits I am forced to work again despite health issues. I try to make 
enough each year to put money into an IRA. How unfortunate for me that 
I wasn't aware of this problem when I was working those years 1983 
to1998 in the schools. I could have been investing money in other ways 
then for this time in my life.
    I have been actively trying to contact Senators, Congressmen, the 
White House, AARP, NEA, and anyone who will listen to my plight and, 
always it seems, it falls on deaf ears. I have given up hope that the 
GPO will ever be repealed but, to me, the most unfair law is the WEP. 
Now that I have been forced back to work I am contributing to Social 
Security with the knowledge that I will never get back the benefits in 
total that people in the other 35 states of the U.S. not affected by 
WEP will get. My retirement from the school district which I served is 
so little how could anyone believe it is ``a protection against double 
dipping by highly paid State Employees'' to deny me my full benefit?
    I am convinced that the WEP arm of the SS Pension Offset Law is 
unconstitutional. I am abeing denied, after the fact, the right to 
pursue happiness in being able to provide ably for myself in my 
declining years!
    It is too late for me to make up the loss of several hundreds of 
dollars a month for the rest of my life. What difference should it make 
upon my eligibility for complete benefits that I worked at very low pay 
for 20+ years as a school secretary? It is absurd that this badly 
written law should have not had a floor on it so that people in my 
salary range wouldn't be victimized in this way. I am also convinced 
that this law discriminates against women who are in lower wage slots 
in the states that are affected. Most of my co-workers in classified 
positions--cooks, kitchen managers, office clerks, bus drivers, 
custodians, nurses, teacher instructional aides, and etc.--were women 
by a large percentage as they are in most every school. We all know 
very well that statistics bear out the fact that these women live 
longer than their spouses and will suffer either widow-hood or divorce 
in their later years when supplementary benefits will be critical to 
them!
    Classified personnel have no one to lobby for them, no national 
associations that I have been able to find; and, frankly, do not 
comprehend what is being done to them. As I stated before I am having 
great difficulty convincing them that this law even exists. It is not 
particularly humorous to me that one senator in one of the affected 
states admitted to an acquaintance that he didn't even understand the 
law when he signed for it's legislation in 1983!
    I am praying that the wrong will be made right. I am praying that 
my country's governmental representatives will see the injustice I am 
seeing. And I am praying that when I reach my own 40 credits in a year 
or so I will be able to receive my full benefits and not something 
lowered by a complicated formula thought out erroneously in 1983!
    Please consider my situation and do the right thing.

                                 
          Statement of Janet Frost, San Francisco, California
    Thank you for the opportunity to submit a statement. I am a 
Licensed Clinical Social Worker in the State of California. I have 
worked for the San Francisco Unified School District for the last 16 
years, and became an employee about 5 years ago. Before that, I had 22 
years of substantial earnings and paid social security during all those 
year.
    I came to work at a school district because I have a strong 
commitment to the youth of our country. There is a tremendous need for 
resources in our public schools, and I have done my best to leverage my 
skills, knowledge and license to develop a program to assist school 
sites in dealing with student mental health issues. I have developed an 
internship program for our district which provides placements at school 
sites for graduate students in clinical psychology, social work and 
marriage and family counseling. These graduate students provide 
individual and group counseling to our students and in return receive 
clinical supervision towards their own licensure, or university credit. 
It is a win-win situation, giving graduate students an opportunity to 
practice their skills and providing the kind of attention and support 
that many, many of our students desperately need.
    I tell you this because it is clear to me that there are many 
people in the private sector who would happily work for and make a 
contribution to our school system, but do not want to risk losing the 
retirement funds for which they have worked so hard. Our schools are 
desperate to create new programs that will provide for our student's 
needs. We need more help with math and science as well as mental 
health. We are asking retired scientists and mathematicians to come to 
our schools and teach. But, would you risk losing 50% to 60% of you 
Social Security to do so?
    Now that I am vested in CALSTRS I will only receive 50% of my 
social security due to the windfall elimination provision. While this 
may not be a great sum of money, I am appalled that I feel like I had 
to chose between providing for the future of our society and providing 
for my own later years.
    Please do your best to understand this problem for those of us who 
have had other careers before coming to work for our schools. We are no 
longer a society where on career lasts a lifetime. We want the best and 
the brightest to work with our children. Let's try not to punish those 
who decide they want to offer something to our future, rather than just 
earn a dollar for themselves.

                                 

      Statement of Cecile M. Galvin, Orange County (CA) Employees 
                 Association, Laguna Niguel, California
    Thank you for giving me this opportunity to write to you.
    When I married in 1957, as a wife of a brand new Ensign in the U.S. 
Navy I did not work. Most wives did not work at that time because of 
our life long commitment to our marriage and the anticipation of having 
children. By 1965, we were the proud parents of six children. It took 
every ounce of our income and loans to raise them and put them through 
private schools and private universities and we would not have it 
otherwise. Today, because of our ultimate sacrifice, we do not own a 
home, we do not have any savings and we live from month to month. This 
is our life and I will continue to work because my paycheck is not 
enough to cover our expenses and we are both in our 70's. Since I am 
still working, I am collecting S.S. and we need every bit of that along 
with my paycheck to make ends meet.
    I am writing you concerning the above penalizing social security 
laws that were passed some years ago. I will be affected by these laws 
twofold. First, I have been a judicial secretary in the court system 
for over 21 years. Prior to these years, I worked as a secretary and 
paid into social security and am eligible to receive social security 
benefits. Had I known that I would lose two thirds of my SS when I 
joined our court system, I would not have joined as this was never 
communicated to us. I am now faced with a dismal future with regards to 
my retirement since I will turn 72 on August 17, 2005.
    I want to retire but I cannot afford to lose the SS checks I am 
receiving now. I need them to live without begging otherwise I will 
have to find another job. I don't look forward to that. With age comes 
a time when you feel you aren't doing your job as well as you did in 
earlier years. Maybe the decision will be made for me in the form of 
letting me go. It's not comforting.
    Secondly, when I retire, why should I lose my husband's portion of 
SS if he qualified for it? Thirdly, if he should die before me, I would 
get nothing. Is that fair? Would you leave your wife/husband in the 
same predicament? How about your mother? Working wives should have the 
same rights to a spouse's full benefits as non-working wives. That is 
only fair.
    This is not double dipping for us; it is double dipping for the 
U.S. Government which puts us in the poverty arena and so I will have 
to continue working until my demise or until I am unable. I would like 
your views on this topic. Have they approached you regarding these 
specific laws? This is a non-partisan issue and goes beyond politics 
because everyone has a relative, relatives or friends that will retire 
some day. What will you say to them when they find out that they are no 
longer entitled to the benefits of the SS system that they paid into?
    The cost of implementation should NOT be cited as a reason for not 
acting, especially after reading this article in our local paper.
    As one example of government waste but it sure points out the truth 
about unnecessary and unbelievable overspending which we as taxpayers 
are paying for. On June 9, 2004, this article appeared In the Orange 
County Register.

                                     ----------

$100 million in plane tickets wasted
    WASHINGTON  The Defense Department spent an estimated $100 million 
for airline tickets that were not used over a six-year period and 
failed to seek refunds even though the tickets were reimbursable, 
congressional investigators say.
    The department compounded the problem by reimbursing employee 
claims for tickets bought by the Pentagon, the investigators said.
    To demonstrate how easy it was to have the Pentagon pay for airline 
travel, the investigators posed as Defense employees, had the 
department generate a ticket and showed up at the ticket counter to 
pick up a boarding pass.
    Congress' General Accounting Office issued the findings in two 
reports on the Pentagon's lack of control over airline travel. A prior 
report found that the Pentagon bought 68,000 first-class or business-
class airline seats for employees who should have flown coach.
    Our government is currently spending billions of dollars on a war 
in Iraq, rebuilding Afghanistan, returning to the Moon and Mars, 
starting a temporary worker program for illegal immigrants, enhancing 
Congress' pay annually, providing benefits to people who have NEVER 
contributed to the system AND providing benefits to foreign born 
nationals.
    The government workers and teachers of this country who have 
contributed to Social Security throughout their lives deserve better 
treatment. We are watching our elected officials and our votes will 
reflect the response we receive from Congress on this issue of grave 
importance.
    Hopefully, I will be guaranteed the retirement benefits paid for 
and deserved. Please, please support the Social Security Fairness Act 
HR 147. Thank you for your attention to this matter that so greatly 
affects the quality of life for seniors in this country.

                                 

                                              Longview, Texas 75605
                                                      June 11, 2005

    I am a third grade teacher in Longview, TX. I have taught for 17 
years because I believe that our children are important and deserve our 
best efforts to provide a decent education.
    When I began teaching, no one told me that I was giving away all 
the money I had already paid into our social security system. I was 41 
years old when I began to teach and had been working in the general 
workforce since I was 15 years old. My husband was killed in an 
accident at work before I began teaching and again no one told me that 
I would be ineligible to draw widow's benefits. I have taught from a 
wheelchair for 13 of my 17 years and recently discovered that I am not 
eligible for SS disability if I can not continue due to my health. I 
had polio when I was 3 and have always been a productive member of our 
society even though I am handicapped. I have not asked to be allowed to 
just lay down and let someone else pay my way.
    Many of the teachers I work with have worked second jobs most of 
their teaching careers. They have paid into social security (no 
choice), but are not allowed the benefits of the general public (some 
of which have never paid in to the system).
    Widows that have never worked outside their homes are entitled to 
their spouse's social security. Teachers, who are public servants, are 
not allowed to draw from that same fund. I must admit to being confused 
by the logic.
    Texas teachers are not given the choice as to whether or not to pay 
into social security system. Given a choice, I would have had a private 
pension and social security--as is given to most employees. Many 
government employees have extremely good retirement--don't they.
    Teachers are not drawing huge retirements. After 20 years, I will 
draw about $1300. a month. Out of this, I must cover health insurance 
and prescriptions, maintain a home, car, and food. Not exactly the lap 
of luxury. If I could draw my own social security or widow's benefits 
from my husband's social security, I could possibly have a fairly 
decent lifestyle after giving so much to our society. $2,000 a month 
only translates to $24,000 a year. Could you maintain your lifestyle on 
this amount?
    We need and are entitled to the social security benefits that we 
paid in good faith.
            Thank you,
                                                Helen Sue Gillispie

                                 

                                    Framingham, Massachusetts 01701
                                                      June 20, 2005
To whom it may concern:

    Two years ago after just a one-week battle, my husband Thomas H. 
Goodwin died of leukemia. He was only fifty years old. We have two 
children who at the time were fourteen and sixteen years old and I was 
employed as a fifth grade teacher in Framingham, Massachusetts.
    When our first child was born I stopped working to stay home and 
care for her and I did not return to work until my younger son was in 
first grade. At that time I returned to work as an aide in his 
elementary school. Later I returned to school to obtain a teaching 
certificate and master's degree in education and six years ago I began 
to teach fifth grade in Framingham.
    Being out of the workforce for eight years, I of course did not pay 
into social security and my income before was insignificant in today's 
economy . . . In addition, my husband earned more than six times my 
salary when I went back to work and always earned much more than I did 
before our children were born paying into social security every year.
    When suddenly my husband died without warning our income dropped 
incredibly and it was then that I learned upon retirement I would not 
be able to access all of his social security and if that wasn't enough 
I could not collect my social security either because I had not paid in 
enough in consecutive years and I was an employee of the state of 
Massachusetts, paying into a separate retirement account.
    Being 52 now and thinking towards my own retirement it is 
incomprehensible to me that I will not be able to access benefits my 
husband worked so hard to earn while he was alive. This bill is a turn 
off to people who may be thinking of changing professions later in life 
and entering teaching as I did because they are penalized 
significantly. We will not have enough working years to pay into our 
state retirement plans to support ourselves and then we cannot access 
our social security earned from previous employment or social security 
benefits earned by our spouses hard work if we are widows like I am.
    I am sure this was not what was intended when this law was passed 
but it is the reality. If I knew this was true I may never have gone 
into teaching (a field that I love) since I would be better able to 
provide for myself.
    Please think about young widows like myself when you vote to repeal 
this law. It is just not fair. I am not asking for anything I did not 
earn, I am just asking to receive what is fair and what my husband 
would have received had he been alive. Do not make his death felt even 
worse for my family and me.
                                                  Jae Karen Goodwin

                                 

    Statement of Robert Gray, Colorado Public Employees' Retirement 
                     Association, Denver, Colorado
    I would like to thank you for having the hearing on June 9 which 
examined Social Security provisions affecting public employees.
    The Colorado Public Employees' Retirement Association (PERA) covers 
180,000 active state, school, local government, and judicial employees 
in Colorado. PERA also pays monthly lifetime benefits to 68,000 retired 
public employees and survivor beneficiaries. Except for a few of the 
local government members, PERA members are not covered by Social 
Security from their public employment with a PERA employer.
    Colorado PERA opposes any effort to mandate Social Security 
coverage for state and local workers, even on a ``new hire'' basis. 
Mandatory coverage under Social Security is not needed for the 
employees, and has not been requested by the employees themselves. In 
addition, forcing new employees hired after a certain date to be 
covered under Social Security would cause great problems for employers 
and employees in Colorado, as well as their retirement system.
    PERA members have a strong defined benefit plan that provides 
comprehensive benefits in lieu of Social Security coverage. Benefits 
included in the PERA plan are:

      Lifetime retirement benefits with an annual increase 
after retirement
      Disability benefits payable in case of disability after 5 
years of service
      Survivor benefits payable in case of death after 1 year 
of service
      Strong portability features that provide for vesting 
after 5 years of service, the ability to purchase service credit for 
prior employment outside PERA, and the ability upon terminating 
employment to refund or rollover all employee contributions with 
interest, plus a 50 percent matching amount
      A retiree health care program, and An optional 401(k) 
plan.

    Even as applied only to new hires, the cost of mandating Social 
Security coverage would come at a time when Colorado state government 
faces serious budget restrictions. Contributions would have to be 
increased by about 5 percent of pay in order to provide benefits from a 
Social Security and supplemental retirement package that would equal 
the benefits that PERA currently provides for state, school, and local 
government workers.
    For new hires, the benefit from PERA that would supplement Social 
Security would be much smaller than the current PERA benefit program. 
For current employees, the current benefit structure would have to be 
preserved and continued throughout their future service and retirement 
years, out of fairness to these 180,000 employees and because of the 
contractual nature of their benefits. The cost to the State of Colorado 
and other PERA governmental employers would have to increase to 
continue this system, because new hires would have separate plan 
benefits, and contributions by new hires and employers could not be 
used to help fund the ``closed'' system. PERA's actuary has determined 
that the employer contribution rate, which is currently scheduled to be 
13.15 percent of salary by 2012, would have to reach 20 percent of 
salary if all pension liabilities for the ``closed'' (pre-mandatory 
Social Security) group of employees and retirees were to be fully 
funded over the next 40 years.
    Requiring state and local workers to join Social Security against 
their wishes would not help provide a permanent solution to Social 
Security's financial problems. It would provide a short-term infusion 
of funds, but the Social Security benefits earned by public employees 
would put an additional burden on the OASDI funds when they retired. 
The absence of mandatory coverage has not caused Social Security's 
financial problems. Federal employees hired after 1983 were required to 
be covered by Social Security, but that has not solved the long-term 
problem.
    Colorado PERA also believes that a mandate from the federal 
government that state and school districts cover their workers under 
Social Security probably would violate the Tenth Amendment to the U.S. 
Constitution.
    Regarding the WEP and GPO provisions of Social Security, PERA 
recognizes that complete repeal of these provisions would have a 
significant cost impact on Social Security and would not promote equity 
between private sector and public sector workers. However, both the WEP 
and GPO use fairly arbitrary formulae for reducing Social Security 
benefits, and PERA urges Congress to pass reasonable legislation to 
improve the equity of the reduction.
    In particular, PERA supports H.R. 1714, the proposed Public Servant 
Retirement Protection Act (PSRPA). PSRPA would affect thousands of 
state, school, and local workers who will receive or who already are 
receiving benefits from public employee retirement systems from their 
employment not covered by Social Security.
    The original purpose of the WEP is to ensure that public employees 
who work a part of their career in Social Security-covered employment 
and the other part of their career in public employment outside Social 
Security, do not receive an unfair advantage from the weighting in 
Social Security's regular benefit formula. Social Security is a social 
insurance program in which benefits paid to low-income workers replace 
a higher percentage of pre-retirement earnings than for higher-income 
workers. For example, in 2005 Social Security replaces 90 percent of 
the first $627 of a worker's AIME (Average Indexed Monthly Earnings), 
and replaces 32 percent of the next $3,152 of AIME.
    Because weighting occurs in all Social Security benefit 
calculations, it makes sense that public employees who have pensions 
from employment not covered by Social Security should be treated for 
Social Security benefits in some manner that takes into account their 
entire career earnings. Public employees who also have other employment 
in their careers that was covered by Social Security should not be 
accorded the advantage normally given only to low-income career workers 
in the calculation of their Social Security benefits.
    PSRPA would accomplish this goal better than WEP. PSRPA would use a 
sounder concept for calculating the Social Security benefit. It 
compares the average indexed earnings covered by Social Security to the 
average indexed earnings during the worker's entire career, and bases 
the Social Security benefit on this ratio.
    PSRPA would apply to public employees' Social Security benefits the 
same earnings-based weighting that is currently used in Social Security 
benefit calculations. According to examples prepared by the 
Subcommittee, the Social Security benefit under PSRPA to a low-wage 
career earner would replace a higher percentage of his average SS-
covered indexed monthly wages than would be replaced for a medium-wage 
earner or a high-wage earner.
    The WEP calculation, on the other hand, uses fairly arbitrary 
percentages in order to calculate the ``windfall'' reduction. Employees 
who meet other fairly arbitrary thresholds of income earned and years 
worked are exempt from WEP.
    The cost to the Social Security trust funds is far less for H.R. 
1714 (PSRPA), at $7 billion over the next 10 years, than the cost of 
full repeal.
    Thank you for the opportunity to submit this statement. I would be 
glad to provide further information or answer any questions the 
Subcommittee may have.
INFORMATION ON WITNESS SUBMITTING THIS STATEMENT
    This statement is submitted by Rob Gray, Director, Government 
Relations, Colorado Public Employees' Retirement Association (PERA), on 
behalf of PERA and for no other client or party.

                                 

                                           Merced, California 95340
                                                       June 9, 2005
House Sub Committee on Social Security

    I am a 61 year old retired California Highway Patrol Sergeant. I 
have devoted my entire life to public service beginning with service in 
the U.S. Air Force during the Vietnam War, then 28 years with the CHP, 
then 8 years as a congressional staff person and now I work part-time 
as a Disaster Assistance Employee for FEMA.
    My service to the CHP did not pay into Social Security and I now 
receive a pension from the State of California. I have also worked and 
paid into Social Security for about 18 years so far. My SS statements 
show that I would be entitled to a small Social Security pension based 
on my earnings for those 18 years. My understanding is that the small 
amount that I earned will be cut up to 60% because I also earned a CHP 
pension. I don't want or deserve the same pension that someone earned 
by working in the SS system for 40 years but I do deserve what I earned 
for the years worked.
    I think it is terrible that the people who are penalized are the 
teachers, police and other public servants like retired military. At 
the same time there are so many people that don't even depend on SS 
because they had such lucrative jobs and they don't have to worry about 
getting their SS offset. Then there are the millions who make over $90K 
a year and don't pay SS on the amounts over that. It is wrong that the 
wealthy keep getting richer and the public servants have to scrape and 
fight for every benefit they earn. If you want to make SS healthy, make 
it so people pay SS on all that they make, not just the first $90K.
    Each time a bill to repeal the WEP/GOP is introduced it gets 
tremendous bi-partisan support because the members know it is the right 
thing to do but it never gets to the floor for a vote. We expect you to 
strengthen SS but not on the backs of teachers, policeman and other 
public servants. We served the people now give us what we earned. 
Please repeal the WEP/GPO.
                                                      Brian Griffin

                                 

                           San Luis Coastal Unified School District
                                      Pismo Beach, California 93449
                                                      June 22, 2005

    I, Donna Hoaster Guild, have worked in education for 32 years. I 
began teaching elementary school in 1966 in Virginia, and spent several 
years teaching there and in New Jersey, where I accompanied my husband 
on his U.S. Navy assignments. We then spent four years in Japan, after 
which we returned to California, where my husband completed his Naval 
obligation. When our sons reached school age, and after completing the 
studies necessary to obtain a California Teaching Credential, I 
returned to teaching. I had no idea that my Social Security earnings 
from my previous years of teaching on the east coast, as well as from 
my earnings from numerous summer jobs, were in jeopardy. It never 
occurred to me that when I retired I would not receive a full 
distribution from Social Security based upon the monies I had already 
paid into the system. It wasn't until last year, when I spoke with a 
local retirement counselor, that I was told about the Windfall 
Elimination Provision.
    While I understand why I will not receive Social Security benefits 
from my last 25 years of California employment, during which time I 
have contributed to our California State Retirement System instead of 
Social Security, I do not understand why the distribution based on my 
previous Social Security earnings should be reduced. How is this 
justified? Why should someone who has worked faithfully and diligently 
through all these years be penalized in such a way?
    The Windfall Elimination Provision is terribly unfair, and punishes 
many of us who have contributed so much, to so many of our children. 
Please repeal the Windfall Elimination Provision.
    Thank you for taking the time to consider my comments.
            Sincerely,

                                                Donna Hoaster Guild

                                 

                                      Pismo Beach, California 93449
                                                      June 22, 2005
To the Ways and Means Committee, in the matter of
The Social Security Windfall Elimination Provision (WEP)

    From the middle of 1965 to the middle of 1975 I was on active 
military duty with the United States Navy, serving afloat on the east 
coast of the United States, at sea in southern European waters, and for 
four years in the far east. During these years my military pay was 
``garnished'' in anticipation of entitlement to future social security 
benefits.
    From 1975 to 1985 I was employed by private industry and 
contributed fully to Social Security in anticipation of an entitlement 
to full benefits upon my retirement or disability.
    From 1985 to the present (and into the future) I have been employed 
as a high school mathematics teacher in both the San Francisco Bay Area 
and in the Central Coast of California. Contributions from my pay, 
earned 10 to 20 years earlier are being mitigated, reducing my full 
entitlement to benefits that I have already earned through Social 
Security.
    Because I am a teacher and have already contributed thousands into 
the California State Teachers Retirement System (STRS) (as well as 
thousands into Social Security) in anticipation of retirement, I find 
that now I am being penalized for being forced to contribute into both 
systems over the years. My Social Security benefits will be reduced 
because I am a ``public employee.''
    This reduction of earned benefits is ludicrously unfair. I am about 
to be punished during my retirement for contributing a majority of my 
adult life to the service of my country.
    PLEASE REPEAL THE WINDFALL ELIMINATION PROVISION.
                                                    Thomas A. Guild

                                 

              Statement of Mary Harlan, Staunton, Virginia
    My situation is a classic example of the negative result of the 
GPO/WEP laws on the retired population.
    I am a member of the population which changed direction at mid-
life. When I began teaching at age 35 in 1965, I had already spent 15 
years working under Social Security. The year I began teaching, the 
community in which I lived, Caribou, Maine, was desperate for teachers. 
Twenty teaching positions were still vacant a week before school 
opened. I continued to teach for 19 years and when I left teaching, I 
again worked under Social Security for another 13 years. I was given no 
information about the passage of the GPO/WEP laws and their affect on 
my retirement income.
    Nineteen years of teaching did not provide a sizable pension; 
therefore I counted on the addition of Social Security to give me a 
comfortable retirement income. Since the GPO/WEP laws did not go into 
effect until January 1, 1986, I had no idea when I began teaching that 
upon retirement the pension due me from Social Security would be more 
than cut in half.
    To make matters worse, if my husband pre-deceases me, my spousal 
benefits which he earned will be reduced by my GPO formula. In other 
words, this law is Grandfathering back to benefits earned as early as 
1942, when my husband began working for the U.S. Government, and will 
reduce them according to a law which took effect in 1986 and which 
never applied to him and his earnings.
    I estimate that at a minimum, I have lost $14,000 to the WEP, an 
amount that is increasing every month I receive Social Security. It is 
totally unfair, that we who have worked under Social Security are 
penalized for spending part of our employment career at public service 
occupations.
    I urge the passage of H.R. 147 which will repeal these unfair laws.

                                 

                                            Sugar Land, Texas 77478
                                                      June 16, 2005
Dear Honorable Members of Congress:

    Thank you for the opportunity to submit my comments for 
consideration during your discussion of House Bill 147.
    I am a 46 year old wife and mother living outside of Houston, TX. A 
number of years ago, I decided to put my career in high-tech on hold 
while I stayed home with my children, who are now ages 13 and 9. At the 
time, I intended to resume my career after my children were a bit 
older. As is often said, ``A funny thing happened on the way . . .''
    After my first child entered school, I began volunteering at his 
school. In doing so, I came to understand the world of children's 
education in a way that I had not before--the good and the bad. The 
early years of children's schooling sets the tone and pace for the rest 
of their education. It is when a child often decides whether school is 
for them or not, when a child's success or failure in learning to read 
begins to color all of their school work. Eventually I made up my mind 
that I had something positive to contribute to this world, and that my 
second career would be as a teacher. I have spent the last two years 
earning my teaching certificate. During my time as a student teacher, I 
found that my instinct to teach was right, and that I loved being with 
the children, and they in turn were extremely eager to succeed under my 
tutelage. I could not be more excited about this second career.
    Unfortunately, I discovered that if in fact I accept a teaching job 
in the public school district here, I will have to give up my 
previously earned Social Security. Since I have contributed for more 
than twenty years, and since my husband has paid the maximum Social 
Security for years and years, this seems hugely unfair. I am willing to 
accept a much lower salary as a teacher than I could earn by returning 
to high tech, because I want to do work that I love and value. But it 
is too much to ask me to also give up my Social Security pension.
    I've been to a town hall meeting here in Sugar Land, TX hosted by 
Congressman DeLay, who insists that I will recoup in my teacher's 
pension all that is offset in my Social Security benefits. But he is 
wrong--he misses the point that everything I recoup from a teacher's 
pension is money I will have contributed myself--it's not a gift from 
the government in lieu of Social Security! And it still misses the 
point of why I should give up all my previous Social Security 
contributions, as well as those of my husband, as his spouse. If I had 
been a teacher all along and had never paid into Social Security, I 
wouldn't expect to receive Social Security retirement benefits, but 
this is clearly not the case.
    If I remain at home, or take any other private sector job, I don't 
jeopardize my Social Security, but if I teach in the public school 
sector, I do--it is that simple. For now, I have decided to do 
substitute teaching, so that I can at least be in the classroom doing 
the work I love, on a part-time basis, without jeopardizing my Social 
Security. But I would LOVE to be a full-time teacher in one of my local 
public schools. I would LOVE to make a real difference in the education 
of the children in this city. What I want to do is to make children 
crave books because they crave adventure, to teach them math games that 
they beg to play, to convince them that they are a huge, important part 
of America's future and we need their contributions. I can do that in 
the classroom. And I don't mind making a financial sacrifice in my 
weekly paycheck to do this. But it is too much to also ask me to give 
up the Social Security retirement benefits that my husband and I have 
earned.
    Thank you again for the opportunity to submit my comments for your 
consideration.
            Best regards,
                                                       Lynn Harpham

                                 

                                     Palm Springs, California 92264
                                                 September 14, 2005
House Ways and Means Committee

Dear Sirs,

    I am writing to request that my thoughts on this subject be 
included in the record of the meeting held on June 9, 2005.
    As one of the huge number of U.S. citizens/former public service 
employees that are subject to the WEP provision of Social Security law, 
it seems to me that we are the forgotten people. This law has been in 
effect since 1983 and there has been no real effort by Congress in the 
meantime to address the basic discriminatory nature of this law, either 
by amendment or repeal. I sincerely hope that fact will be remedied by 
the current Congress given that it seems that you now have the green 
light to examine all portions of current Social Security law.
    The intent of this law was, according to some, to prevent so-called 
``double-dipping'', a ludricrous idea when people's earned public 
pension and social security benefits are very low to start with. If the 
Congress feels that the WEP law is crucial to maintaining SS solvency 
(it isn't because there are also many other logical solutions for that 
issue) but let's say that you do feel that it is necessary, then why do 
you not exempt those with low public pensions from being subject to the 
WEP??? Rep. Barney Frank of MA has sponsored bills (with many co-
sponsors) for several years that are designed to do just that but so 
far they have never come to the floor for a vote.
    This is the approach that I would advocate rather than full repeal 
because it is a fair compromise and it makes practical sense.
    This is an issue of fairness. When I took a teaching job in MA in 
1967, I never dreamed that I would ultimately be penalized on my SS 
benefits when it came time to receive them. My earned benefits have 
been cut by one half for the simple fact that I chose to teach in MA. 
There are eight or nine other states where teachers and other public 
employees are similarly punished by the Federal Government for having 
worked in the ``wrong'' states--Texas and Illinois, to name two. I 
taught for 24 yrs then I worked in other professions. I contributed to 
SS for a total of 30 yrs, some years smaller, some years greater 
amounts. Imagine my surprise when I found out that my earned benefit 
was to be cut by 50% because I had taught in MA public schools where SS 
is not deducted from paychecks.
    At the very least, SS needs to inform people of the existence of 
the WEP/GPO laws which they do not now do rather than say, ``oh by the 
way, you will now be penalized'' when you go in to meet with SS Reps''. 
When I had my appointment with a SS Rep to start the process of 
receiving SS benefits, she attempted to make light of the fact that I 
was going to be penalized, saying ``oh, that's not so bad'' when she 
did the calculations in her computer.
    If the public really knew about this law, they could make better 
decisions earlier on about which states to teach in and which to avoid. 
An unintended consequence of this law, however, is that certain states 
may have a harder time attracting public employees because of the 
negative effect on their earned SS benefits.
    My earned SS benefits were low to start with. A fifty percent 
reduction was horrible news!
    SS needs to put a disclaimer on their yearly account statements to 
citizens--ie: ``your SS benefits will be subject to the WEP/GPO laws if 
you were a public employee in the following states and SS was not 
withheld from your paychecks''
    Please, SS Subcommittee Members, it is time to remedy this unfair 
law! At the very least, please exempt public pension recipients whose 
pensions are under $20K a year, like myself, from being subject the the 
WEP! Help keep us out of poverty!
    Thank you in advance for your careful consideration of my comments.
            Yours Truly,
                                                   Wayne V. Hatford

                                 

                                       Sacramento, California 95816
                                                      June 15, 2005
Dear House of Representatives Subcommittee on Social Security;

Summary of Statement

     1.  I am a public school teacher who was a stay-at-home mother 
while my four children were of pre-school age.
     2.  Severe medical problems on the part of my children required 
that I stay at home full time to prepare special diets due to extensive 
food allergies.
     3.  Prolonged stress, exhausting work and poverty over a number of 
years caused my own immune system to break down so that I became 
disabled with multiple chemical sensitivities, and allergies to 
inhalants and foods.
     4.  After about ten years of being completely disabled, and with 
the help of a world-class clinical ecologists, I was able to return to 
work full-time, although still having a disability that limited the 
type of jobs I could hold.
     5.  Vocational Rehabilitation in Wyoming helped me to retrain so 
that I could work in an environment free from perfume and other petro-
chemicals.
     6.  I experienced quite a bit of discrimination from different 
school districts when they found out that I had a disability that was 
not simple to deal with.
     7.  Due to circumstances beyond my control, I was not able to hold 
a job for more than one or two years. I could not prove discrimination 
because schools can let teachers go for no reason until they are 
tenured.
     8.  Because of my spotty employment record, I was not ever to 
become vested into a retirement system with any one state.
     9.  I was able to work fairly well in the clean air in Montana, 
but due to very low pay I could not make a living and moved to 
California to find work.
    10.  Because of the ``Windfall Elimination Act'' I lost the vast 
majority of my social security representing my twelve years of teaching 
experience from 1962 through 1996. I did not have 40 quarters. I was a 
full-time Mother for a number of years.
    11.  Child support obligations and low-paying jobs prevented me 
from purchasing a home.
    12.  I am facing retirement without a home paid off to cushion 
inflation. I need all my social security; I don't have any windfall.
The Windfall Elimination Act Discriminates Against Women

      Women interrupt their careers to have children.
      Women make less money those men although they work longer 
hours.
      In cases of divorce, the women's income is severely 
reduced while their expenses increase due to child care which can take 
50% of some women's paycheck.
      Women don't make enough to save extra money for 
retirement.
      Women follow their husbands around the country and 
therefore have to put their own careers and financial best interests on 
hold.
      Women are not in a position to choose careers that result 
in a comfortable retirement because they are dependent on their 
husbands.
      Women whose husbands abandon them are often forced late 
in life to scramble for retirement.
The Windfall Elimination Act Violates People's Civil Rights

      People need the right to move around the country to find 
work; this act would eliminate several states from the places people 
could find work.
      It was considered unconstitutional to prohibit welfare 
people from moving to states that paid higher welfare benefits; workers 
should not be penalized for moving to a non-social security state.
      I earned my social security; the government made a social 
contract; I was counting on that money so that I could provide for 
myself in my old age.
      This act robs the poor who often are not politically 
powerful enough to fight back.

    Please see that justice is done.
The Windfall Elimination Act Discriminates Against Poor People

      The Act does not exempt from reduction a decent amount of 
retirement money that the people have earned.
      Poor people are more mobile due the need to find jobs and 
are more likely to have to cross boarders into one of the states that 
does not collect social security.
      Most of the nation's poor and women and children.
The Windfall Elimination Act Robs Me of What is Rightfully Mine

      I started teaching in 1962 and contributed to social 
security for two decades before the act was passed.
      The U.S. Government made a contract with its citizens, 
and well into my career it broke that contract.
      The Windfall Elimination Act limits workers' freedom to 
move among the various states of the U.S.

    I taught in the public schools in NJ and NY, 4 years, before I 
began a family. Severe allergies on the part of two of my four children 
necessitated that I stay at home as a full-time mom to prepare from 
scratch the special rotational diets required to stop uncontrollable 
diarrhea and allow the children to begin growing again in height and 
teething normally. The stress of all the work, up to a 16 hour day in 
many cases, the poverty, the medical expenses, caused my own health to 
collapse within a few years. I became disabled for a number of years 
due to multiple chemical sensitivities caused by extreme prolonged 
stress and chemical exposures. We found a very talented clinical 
ecologists who got me well enough to go back to work after I had been 
disabled for about 10 years. However, during those years of complete 
disability when I could not hold a job, I did not contribute to Social 
Security and there are therefore gaps in my work record that were 
beyond my control.
    The stress of the medical problems led to a divorce, and I raised 4 
kids alone. As a single parent stay-at-home Mom, I am proud of the fact 
that all my children were highly regarded by their teachers and have 
become good highly intelligent productive citizens. My efforts 
medically kept my two younger children off social security disability. 
With the help of Vocational Rehabilitation in Wyoming, I retrained for 
a job where I would not encounter perfumes, after shaves, and petro-
chemicals--a school librarian. I have been continuously employed since 
1986.
    My work history is full of interruptions as I ran into 
discrimination by schools when they found out they would have to 
accommodate my allergies to tobacco, petro-chemicals, and perfumes. 
They would not let me get tenure. I could not hide my disability. 
However, I have taught over 12 years in states where I contributed to 
Social Security. I found a clean place to live and work in Montana, but 
could not make a living there because of low pay. I moved to California 
in 1997 and got a job paying about 50% more that I had been making. I 
did not know about the ``Windfall Elimination Act.''
    The Windfall Elimination Act reduces my social security from over 
$950./month to approximately $240.00, I believe. Since I was married 
for 15 years and have never remarried, I'm told I can get social 
security based on my ex-husband's contributions. However, I'm told that 
this source of social security is also subject to the windfall 
elimination act also.
    So I am 65 years of age, as of this month. I cannot afford to 
retire on the income I would receive from just teaching in California 
since 1997. I am borrowing money to buy back service credit from my 
teaching experience in other states. This costs me over $2,500. Per 
month. I cannot afford to rent an apartment so I rent a room and keep 
my stuff in storage. I have no washing machine, hardly any furniture, 
do not eat out, or spend much money except on my special diet, medical 
expenses (very high), and contributions to my retirement.
    I expect in my case that my medical expenses above and beyond 
insurance will amount to several hundred a month. I do not drink. I 
have never smoked nor done drugs. I exercise and keep my weight down. I 
am all I have and I do not want to lose control over my life. It is all 
I can do to get medical help for myself because my medical costs are 
preventative health care. I use homeopathy, acupuncture, Chinese herbal 
medicine, organic food, good diet with lots of vegetables, exercise, 
weight-lifting to prevent bone loss, etc.
    I have done well to get back to work after 10 years of being 
totally disabled. I know many people in my situation who are on social 
security disability, but I had the help of a world-class clinical 
ecologists who treated me with non-standard treatment that worked, and 
who put my medical bill ``on the back burner'' until I could pay.
    This so-called ``Windfall Elimination Act is unfair to women 
because they make less than men and have interrupted careers to raise a 
family.
    This so-called ``Windfall Elimination Act'' is unfair to mothers 
who stay home with their kids when they are preschoolers.
    It is unfair to people who don't make much money, because it takes 
away what little we get.
    It's unfair to teachers, who don't make that much anyway.
    Right now I can't afford to retire in the foreseeable future.
    If this act were repealed, I could retire when I'm 70, and with my 
precarious health, and multiple chemical sensitivities, I could leave 
the state and find a cheaper place to live.
                                                  Patricia Hedstrom

                                 

                                        Santa Ana, California 92705
                                                      June 13, 2005
Gentlemen:

    My husband passed away last month. He was a WW II veteran having 
served in the Navy from 1941-1945. He served his country and, as his 
surviving spouse, I am penalized.
    I desperately need my Spouse Portion of his Social Security. GPO 
takes away $965 (spouse's Social Security) of my monthly income. This 
is one half of my monthly income.
    He paid into Social Security since it began.
    PLEASE, PLEASE HELP ME. Do whatever you can. Do not discriminate 
against me because I worked for a governmental office. I retired from 
the County of Orange, Santa Ana, California. Do not penalize me because 
I am a woman; a woman in desperate need of my SPOUSE PORTION of my 
deceased husband's Social Security.

GOVERNMENT PENSION OFFSET must be repealed. NOW.

            Sincerely,
                                                    Joan B. Johnson

                                 

       Statement of James H. Keegan, Jr., Belmont, Massachusetts
    I am a retired Massachusetts public employee who also worked in the 
private sector. For over 43 years (both full-time and part-time) I paid 
into the Social Security System. However, my benefit has been reduced 
by nearly one-half. I had counted on this money as part of my total 
retirement plan.
    I respectively request that the Committee revisit the ``Windfall 
Elimination Provision'' and examine its fairness.
    Thank you.

                                 

   Statement of Colleen M. Kelley, National Treasury Employees Union
Chairman McCrery, Members of the Subcommittee:

    I am Colleen M. Kelley, the National President of the National 
Treasury Employees Union (NTEU). NTEU represents more than 150,000 
federal employees across 30 agencies and departments of the federal 
government. Thank you very much for holding this important hearing 
today on the Government Pension Offset (GPO) and Windfall Elimination 
Provisions (WEP).
    As you may know, NTEU has presented testimony before this and other 
Committees of Congress on numerous occasions in support of legislation 
to either repeal or reform the Government Pension Offset and Windfall 
Elimination Provisions. These two Social Security provisions negatively 
impact thousands of federal employees and retirees and NTEU has sought 
Congressional assistance on these issues for many years. Action to 
address these offsets is long overdue.
    The Government Pension Offset unfairly penalizes recipients of 
government pensions who are also eligible for Social Security based on 
a spouse's work record. The GPO reduces the spousal Social Security 
benefit by two-thirds of the amount of the government pension, in many 
cases entirely eliminating the Social Security benefit that a federal 
retiree is otherwise eligible for.
    The Government Pension Offset has a particularly devastating effect 
on female federal retirees who frequently are eligible for smaller 
federal pensions than their male counterparts. This stems from a number 
of reasons, including interruptions they may have had in their careers 
while raising their families or working at lower paid positions for the 
bulk of their federal careers.
    A good example of the effects of the Government Pension Offset is 
the elderly widow who is eligible for a monthly pension of $600 based 
on her federal government service. Two-thirds of her pension, or $400 
must be used to offset any Social Security spouse's or widow's benefit 
for which she is also eligible. Assuming she is eligible for a monthly 
spousal Social Security benefit of $500, the application of the 
Government Pension Offset results in her receiving only $100 in Social 
Security each month. The Government Pension Offset has effectively 
slashed this individual's retirement income from $1100 monthly to only 
$700 each month.
    More often that not, the Government Pension Offset 
disproportionately affects those who can least afford to forgo this 
retirement income. Had individuals such as the widow in the above 
example not dedicated their careers to public service, they would 
remain fully eligible to collect their spousal Social Security 
benefits. As you know, Mr. Chairman, the Government Pension Offset does 
not apply to individuals who collect private pension benefits and are 
also eligible for Social Security.
    As of December, 1999, according to the Social Security 
Administration, more than 300,000 former federal employees had their 
Social Security benefits reduced as a result of the Government Pension 
Offset. It is estimated that the number of affected individuals grows 
by about 15,000 each year. Moreover, it is particularly troubling that 
69% of these individuals are women and the average offset applied to 
their Social Security benefits is $391 each month. These numbers do not 
even account for those federal retirees who are eligible for Social 
Security but do not bother to apply because of the GPO.
    The Windfall Elimination Provision (WEP) also unfairly reduces the 
retirement income of many federal retirees by reducing their own, 
earned Social Security benefit by as much as 50%. Under current law, an 
employee eligible for both Social Security and a pension from work not 
covered by Social Security (such as under the Civil Service Retirement 
System) finds that a lower benefit formula is applied when calculating 
the Social Security benefit to which he or she should be entitled.
    It is my understanding that more than 600,000 individuals currently 
have their Social Security benefits reduced as a result of the WEP. 
And, the number of individuals subject to this offset is estimated to 
increase by 60,000 each year.
    Here is an example of how the Windfall Elimination Provision works. 
A private sector worker with average monthly earnings of $500 would be 
eligible for a Social Security benefit of $450 each month (90% of $500) 
at age 65. Using the same earnings as the private sector worker, at age 
65, a former federal employee affected by the WEP would be eligible to 
receive only $200 in monthly Social Security benefits (40% of $500). 
The WEP requires that instead of using the 90% formula, workers with 
non-Social Security covered employment have a 40% formula applied 
instead.
    The use of this lower formula--simply because the individual chose 
to spend his or her career in public service--has a devastating and 
unfair effect on the retirement plans of many federal employees. 
Federal employees who have 30 or more years of substantial Social 
Security covered employment are exempt from the WEP, however, it is a 
rare federal employee that can complete a public service career and 
also have 30 years of Social Security covered employment.
    In recognition of the financially devastating effects both the 
Government Pension Offset and Windfall Elimination Provision have on 
federal employees and retirees, bipartisan legislation has been 
introduced in the House and Senate again in the 109th Congress. 
Congressman McKeon (R-CA) has introduced H.R.147, which would repeal 
both the Government Pension Offset and the Windfall Elimination 
Provision. This bipartisan bill already has gathered 260 cosponsors. In 
addition, Senator Feinstein (D-CA) has introduced S.619, legislation 
that would also repeal both the Government Pension Offset and the 
Windfall Elimination Provision. Her bill, which has also received 
strong bipartisan support, currently has 18 cosponsors. NTEU also 
supports H.R.1690, legislation introduced by Congressman Frank (D-MA) 
that would restrict the application of the Windfall Elimination 
Provision to individuals whose combined monthly pension income exceeds 
$2500 each month. This bill currently has 18 cosponsors.
    Thank you again Chairman McCrery for scheduling this important 
hearing today. NTEU strongly supports legislation either reforming or 
repealing the Government Pension Offset and the Windfall Elimination 
Provision. On behalf of all of our members, I hope that you will act on 
the bills referred to your Committee without delay.

                                 
               Statement of Deborah Kifer, Rowlett, Texas
    I am a Texas teacher with 20 years experience and have never had an 
option of contributing to Social Security through my school district. 
However, I have worked in other jobs and contributed to Social Security 
on my own behalf. After my husband died last fall, I discovered that I 
was entitled to a $255 ``lump sum benefit'' under Social Security and 
nothing more--ever! It seems that because I will retire under the 
Teacher Retirement System I cannot claim any surviving spouse benefits 
from my husband of 32 years. His last Social Security statement 
estimates that taxes he paid amounted to $87,000 throughout his life, 
and yet I nor anyone in our family is able to claim any of that. Please 
change the law to be more equitable. If I had never worked, I would be 
able to claim part of his benefits as a surviving spouse. However, 
because I have dedicated my life to education, I am being penalized.

                                 

                                        Saint Louis, Missouri 63130
                                                  September 8, 2005
For Members of Congress:

    I am a single woman. I don't have any duplicate anything to collect 
upon someone's death. I only have the benefits from what I earned and 
what I contributed to plans.
    The problem that I see is that if social security didn't want to 
include me in the benefits, then they shouldn't be taking my 
contributions.
    And in the government pension offset, no one seems to have taken 
into account that partial retirements are not the same as full 
retirements. Someone who has worked as a teacher for part of her career 
gets a reduced teacher retirement. That reduced retirement is treated 
no differently than a full retirement in the offset plan. Also, people 
could put thousands of dollars into social security, either before or 
after their teaching, and they are penalized greatly with no regard for 
their contributions.
    Also, it's interesting to see who has been penalized and who 
hasn't. I believe that people in the army and in the government can get 
their pension plans (not social security & for which they made no 
contributions) and still get teacher retirement if they go into 
teaching.
    It seems very simple to me: If you put the money into social 
security, then you should get the same benefits as anyone else who put 
in the same amount of money. I find it difficult to see that I am 
somehow claiming a benefit I didn't earn. I'm only asking social 
security to give me what I earned because of my contributions to social 
security.
    I appreciate your time and effort to think about your position and 
the harm it might be doing to people like me . . . single wage-earners 
who have worked as teachers and have worked outside the teaching 
profession. And who are very concerned about their retirement needs and 
how they are going to be met.
            Respectfully,
                                                      Cecilia Lacks

                                 

                                         Versailles, Kentucky 40383
                                                  September 8, 2005
Ways and Means Committee
United States Senate
Washington, DC

Dear Senators:

    I am a victim of both the Government Pension Offset, and the 
Windfall Elimination Provision of the Social Security Act. When my wife 
died, I was unable to draw on her Social Security because of my pension 
from the United States Postal Service. Now that I am eligible for 
Social Security on my own record, I am penalized (taxed) approximately 
50% of the amount for which I am eligible for the same reason.
    During the years when I was earning credits toward Social Security, 
I was working 2 jobs. After working 8 hours at the U. S Postal Service, 
I worked many 8-hour

shifts at another job, and, I worked many 7-day weeks, also. I also 
paid the requisite contribution into the Civil Service Retirement 
System for my 4 years of active duty military time, so that my Postal 
Service Pension would not be reduced when I started receiving my Social 
Security checks. When I started receiving Social Security, my benefit 
was reduced by 50% because of the WEP. In two years I will be eligible 
for Medicare, and my health insurance plan will require me to enroll in 
Medicare Part B. At current levels, the Part B Medicare premium will 
take more than half my Social Security check. It remains to be seen if 
I will be required to enroll in the Part D Medicare Drug Benefit. If 
so, my Social Security check will be reduced to virtually nothing.
    The GPO and WEP are an unfair burden on Postal and Civil Service 
retirees and should be eliminated completely. The means of fixing 
Social Security does not lie in privatization. Allowing workers to put 
a portion of their FICA tax into private investment accounts will only 
enrich the Wall Street moneychangers. Given the state of the stock 
market the last 5 years, the returns upon which privatization is 
predicated will not be there. I know several Postal or Federal workers 
and retirees who have lost money in their Thrift Savings Plans. And I 
know a number of retirees in the private sector whose 401-Ks have left 
them with meager income and who have had to go back to work. Social 
Security should be fixed by raising the cap on income subject to the 
FICA tax. And Social Security would be in far better shape if more 
workers were paid a living wage on which to pay the FICA tax. Far too 
many executives have managed corporations badly, or driven them into 
bankruptcy, and then walked away with an obscene retirement package.
    In all fairness, please support repeal of the GPO and WEP and fix 
Social Security by raising the cap on wages subject to the FICA tax. 
Privatization of Social Security is a bad idea that must be scrapped.
            Sincerely,
                                                  William K LaFrana

                                 

            Statement of Ara Lawrence, Brandenberg, Kentucky
    As a retiree of a public school district in Ohio and eligible to 
receive widow's benefits, I am adversely affected by the Social 
Security Offset.
    My late husband worked his entire life from the age of 15 paying 
into social security. During the last 25 years of his life he was a 
self-employed real estate broker, paying both employer and employee 
shares into the Social Security System. He retired in December of 1995 
and died in January of 1996, after having received only one Social 
Security check.
    When I retired in 1999, I was only eligible to receive a small 
portion of the widow's benefit because I worked and paid into a state 
retirement fund (the School Employees Retirement Fund of Ohio). If I 
were totally dependent upon that pension and the small amount of social 
security I receive, I would be below the poverty level and unable to 
take care of myself.
    I feel that I am entitled to the full amount of widow's benefit 
from Social Security whether I receive a pension or not. The monies 
paid into the fund by my late husband were his funds and should not go 
to those who have never paid into the system.
    I am being penalized for working and helping to support our family, 
which included raising and educating twin sons on a modest salary.

                                 

                                    Littleton Educators Association
                                     Littleton, Massachusetts 01460
                                                      June 22, 2005

    I began my professional life as a waiter and a cook way back in 
1981. I was content working as a chef until I found that I was going to 
be a father. I that point, I felt that I needed to do more for society 
than just feeding people. I struck a deal with the owner of the 
restaurant at which I was chef and went without a raise so that I could 
change my hours and go back to school to earn my degree in English and 
Secondary Ed. I worked very hard, working 60 hours per week in the 
restaurant while going to school full time and graduating Magna cum 
Laude from the University of Massachusetts, Boston.
    In time I found a school looking for a half time Culinary Arts 
teacher and a half time English teacher, kismet. I worked there for two 
years, driving 124 miles per day round trip. I had to work on campus 
one night per week and one weekend per month. My salary was about half 
of what is was when I left cooking and all of my pay went to cover our 
childcare expenses after the birth of my son in 1996. I loved it and 
never complained because it was a joy working there. I moved to the 
Leominster Public Schools in 1997 and taught there for four years until 
returning to my home town, Littleton, to teach eighth grade English in 
the building in which I attended High School.
    After teaching for 10 years, my salary is about what it would have 
been six years ago, had I continued to work as a chef. I can't complain 
about the money. I get to have an enormous impact on the lives of my 
own children, as I teach where we live and my daughter this past year 
was in my building, Littleton Middle School. I also get to influence a 
generation of their peers and my neighbors. As the President of the 
Littleton Educators Association, elected in my first year in Littleton, 
I get to participate in the discussions about education in my town, not 
just in my grade of in my class. Now, I get to do more than feed 
people; I get to teach Shakespeare and poetry to kids and thankfully, 
the kids like my class.
    So it was quite a shock to learn that while I have done everything 
right, under the Government Pension Offset and Windfall Elimination 
Provision, I don't get any benefit from my actions. I worked hard as a 
chef and as a waiter. I paid into the Social Security system and 
expected that would get something, not a lot but something, back. It 
turns out that if I had chosen to stay cooking, I would get the 
benefits to which I am entitled but since I decided to change careers, 
I'll get nothing. In order to earn a good pension, I'll need to teach 
well into my late 60s. (I don't envision a time when I'll stop working, 
so the time isn't the issue. I'm concerned about my ability to reach 
kids when I'm that old.) And the bottom line for me, personally, is 
that I've paid into the fund. I've done what I was supposed to do. So 
why am I getting penalized for choosing to teach?
    Professionally, not personally, what are we telling all of the 
career changers like me? They can choose to take a pay cut, enter a 
profession that is consistently disrespected, be overworked as funding 
for education is cut and give up a substantial portion of their 
retirement benefits. Why would they make that choice? We need to 
support teachers, help them do the good work that we do. This provision 
just doesn't make any sense. Please change the Government Pension 
Offset and Windfall Elimination Provision.
                                                      Mark J Levine
                                                          President

                                 

       Statement of Valerie Lichtman, San Bernardino, California
    I am responding to the Social Security Offset and Windfall 
provisions in the Social Security Act. My husband paid into social 
security for over 50 years. He retired when he was 71 and collected 
social security for one year. He died at age 72. I am still working but 
have reached the age that allows me to collect his benefit. However, 
since I am a teacher in California, I will not be able to continue to 
collect my full benefit as his widow once I begin collecting my own 
state teacher's retirement pension. I, too, paid into social security 
when I taught in the state of Washington and prior to that when I held 
various other jobs. It is extremely unfair that I am being denied full 
benefits because I moved to California and worked as a teacher here. I 
could not continue paying into social security as a teacher in 
California. If social security is just a welfare system, and not a 
pension system, then every worker in this country should pay into it. 
Otherwise, the offset and windfall should be eliminated.

                                 

                                        Escondido, California 92029
                                                       June 7, 2005
Gentlemen:

    Please consider allotting me my full social security benefits. I 
worked over 30 years until the age of 50 as a single mom and paid 
social security. Now I receive $330.00 because I also worked for the 
City of Vista and receive a pension.
    I was a single mom and felt social security and my pension upon 
retiring would be enough to live on. It would have totaled 
approximately $2000.00 per month. Then upon retiring I find that my 
social security is cut and the amount I receive for both is not a 
living income, approximately $1300.00. I would have been happy to pay 
social security while working for the City for 13 years but none was 
taken out. If I didn't go to work, went on welfare, my social security 
would be almost as much as I receive now.
    Please reconsider changing this law so that the many dedicated 
employees can receive their retirement and the social security they 
expected to get. Nothing was ever said that we could not work for 
cities and have our Social Security cut.
            Thank you
                                                 Ruth Lovison Smith

                                 

                                       Holland, Massachusetts 01521
                                                      June 23, 2005
Dear Sir or Madame,

    I would like to provide a submission for the record for the 
Committee on Ways and Means Fourth in a Series of Subcommittee Hearings 
on Protecting and Strengthening Social Security.
    My name is Richard A. Lucier and I live in Holland, Massachusetts. 
I have been a vocational instructor at Baybath Vocational Technical 
High School in Charlton, MA for the past 21 years. Before becoming a 
teacher I had worked for 10 years in the private sector as a licensed 
electrician for various electrical contracting companies. After 
attaining my Master electricians license I planned on running my own 
electrical contracting business. I was asked to try substitute teaching 
at Baypath and found I enjoyed teaching and I enjoyed the students. The 
following year I became a full time teacher and I have never regretted 
my decision.
     I continue to do small contracting jobs after school and on 
Saturdays as well as school vacation time. As you know, teachers do not 
make incredibly high salaries, yet I have managed to build my own home 
and raise three children. One has graduated from college, one is still 
attending and the third will graduate from High School next year. I 
have worked extremely hard my whole life and my wife and I hope to 
someday have a secure and happy retirement.
    I feel it is extremely unfair that I have continued to contribute 
to the social security system yet I am unable to draw from it when I 
retire. This has not been a minimal contribution and I continue to 
contribute, on a full time basis, all summer and every school vacation 
for 21 years. If I cannot draw from social security, why must I 
contribute to the system? Please don't let those of us who have chosen 
to work hard, and supplement our teacher's salaries with second jobs, 
be penalized for our strong work ethic.
    I am very proud to be a teacher and to be helping kids learn a 
good, honest trade. I only hope that when I retire, there will be new 
young people stepping up to the plate, who will have the same level of 
pride in what they do as I have. They will most likely need a second 
job as well, and if they continue to contribute to social security I 
hope you will reward them and give them what they deserve. If not, the 
state of Massachusetts is going to have a very difficult time finding 
dedicated professionals who can afford to make the same kind of 
sacrifice.
    Your time and consideration given to this matter is greatly 
appreciated.
            Respectfully yours,
                                                  Richard A. Lucier

                                 

              Statement of Carole Marks, Marietta, Georgia
    I very much appreciate the opportunity to submit this written 
testimony on the Government Pension Offset (GPO) and Windfall 
Elimination Provision (WEP) Social Security provisions, and their 
adverse and unfair impact on me--a federal retiree. First I want to 
thank Chairman Jim McCrery and the other legislators serving on this 
Subcommittee for conducting this important hearing. As a federal worker 
being adversely impacted by these provisions, I urge all Subcommittee 
members, and lawmakers, to repeal them as soon as possible and allow me 
to receive my full social security benefits.
    In 1964, while not yet a high school graduate, I took a civil 
service exam, scored high and patiently waited for my 18th birthday so 
that I could begin a career with the federal government. With the 
exception of five years when my children were young, I continue to 
enjoy a proud and dedicated career in civil service. I recently 
celebrated by 35th Anniversary with the Federal government.
    Unfortunately I was divorced in 1980 during a five year lapse of 
service, and I had to return to work to support my two young daughters. 
We received no child support from their father who basically abandoned 
us. At the time of our divorce, we had been legally married 13 years, 
and I have never remarried.
    Being a single mom with no child support, I was forced to often 
work two (and at a time three) jobs. Considering that he never helped 
financially while I was raising my children, there was not a lot of 
money left over for me to adequately invest and save for my own 
retirement. Because I never remarried, I should be entitled to receive 
a partial benefit from my ex-husband's wages. These spousal benefits, 
however, are cut by two-thirds simply because I spent my career working 
for the federal government. Further, the benefits to which I am 
entitled from my contributions to Social Security when I had to work 
two and three jobs are cut by 60%.
    It is very disheartening to know that I spent my whole life working 
as a dedicated employee of the federal government, raised two children 
on my own while working, and I still cannot receive adequate spousal 
benefits or my own earned Social Security benefit to be able to retire 
and enjoy these years.
    Although my health is failing, I simply cannot afford to retire 
because of the GPO and WEP Social Security provisions. Had I chosen a 
career outside of the government, I would be receiving my full 
benefits. This is not fair. My thanks to all of you who recognize this 
travesty.

                                 

                                         Punta Gorda, Florida 33950
                                                       June 9, 2005

    I very much appreciate the opportunity to submit this written 
testimony on the Government Pension Offset (GPO) and Windfall 
Elimination Provision (WEP) Social Security provisions, and their 
adverse and unfair impact on me--a federal retiree. First I want to 
thank Chairman Jim McCrery and the other legislators serving on this 
Subcommittee for conducting this important hearing. As a federal worker 
being adversely impacted by these provisions, I urge all Subcommittee 
members, and lawmakers, to repeal them as soon as possible and allow me 
to receive my full social security benefits.
    I took an early Civil Service Retirement in 1989, and then worked 
for private employers from 1991 to 2004. My Social Security earnings 
statement led me to believe that I would get about $400 per month in 
Social Security benefits.
    However, when I actually retired in 2004, I only received $171 per 
month of my earned Social Security benefits because I was also covered 
under the CSRS retirement system. If I had worked in the private sector 
for my whole career, then I would be receiving all my earned Social 
Security benefits with no penalties.
    I had purchased a retirement home with the assumption that I would 
have $400 each month from Social Security. Now that I am receiving only 
$175 per month (with the 2005 COLA increase), I am having trouble 
making ends meet and am considering selling my retirement home. 
Receiving that extra few hundred dollars each month would enable me to 
keep my home.
    Please fix this inequitable problem. Don't punish Americans for 
working for the federal government.
            Sincerely,
                                                  Mary Ellen Marvin

                                 

           Statement of Patricia Mason, Syracuse St, Colorado
    My name is Patricia Mason. I am writing to give you information on 
the misinterpretation of the Government Offset Pension and Windfall 
Elimination Provision. I started paying into Social Security in 1959. I 
stopped paying in 1962 when I married, had 3 children and did not work-
outside my home. My husband paid social security for both of us-or so 
he thought. I worked occasionally over the next 20 years. In 1988 I 
began to work full time again and paid into Social Security til 1994 
when I moved from Florida to Colorado. At that time I began paying into 
the State system. I am retiring from high school counseling in this 
year-2005. I was never informed that the Social Security monies I and 
my husband had paid into the system would not be paid to me at the time 
of my retirement, or reaching age 65 and 5 months. I am now 67 years 
old. My story is similar to many older women who had children and never 
had the opportunity to work as long as their male counterparts. This 
law is unfair to women and all people who paid into social security and 
were never told of the penalty for moving to a non-SS state for 
educators, policemen, firemen,etc. I understand that there is a lot of 
discussion about changing social security in its entirety. Judging by 
the length of time it has taken to get the House Ways and Means 
Committee to hold hearings so people like me can tell their stories I 
don't think the big picture will change any time soon. I represent 
women in all the 14 states who made a decision to move from a state 
where social security was withdrawn from their paychecks, as well as 
pension monies. I did not know I would lose most of that social 
security benefit because of that move. When I try and explain why I 
won't have the pension in retirement I had planned because my 
government is reducing my social security my family and friends don't 
believe it! Please support the members of Congress who do think this 
law is unfair-and repeal it! Those of us who worked as educators never 
thought we would be penalized for moving. We all know something needs 
to be changed in the overall plan of SS. However if we need to be paid 
less shouldn't it go across the board, according to what you put in? 
Many retired people receive private pensions while receiving their full 
social Security benefits. We are just asking to be treated fairly in 
the eyes of the Congress and our fellow citizens.

                                 

        Statement of Sally Masters, East Hampton, Massachusetts
To Whom It May Concern:

    As a guidance counselor in the Massachusetts schools, I am writing 
to ask that you repeal the Government Pension Offset and Windfall 
Elimination Provision. I understand that a hearing will be held on this 
topic today.
    I worked in other occupations outside of Massachusetts since 1975 
and moved to Massachusetts in 1999 to change careers. I was unaware of 
the Government Pension Offset and Windfall Elimination Provision before 
moving here and am quite concerned about losing all of the money that I 
have put into Social Security for more than 24 years! In addition, I am 
single and do not have someone else in my life on whom I might depend 
for retirement. This is a travesty! Please repeal these laws. Thank 
you.

                                 

       Statement of George and Jean Millen, Warrensburg, Missouri
    In 1972, my wife Jean Millen, who holds a Masters Degree in Library 
Science, took the only library job open to her at the time. Thus after 
spending six years as an academic librarian, she became a school 
librarian for the next 27 years, 20 of which were full time. When she 
took this school library position, she did not realize that Missouri 
was one of those states in which school districts were not required to 
contribute to Social Security.
    At this juncture, the Government Offset Provision was passed in 
1977 and in 1983 the Windfall Elimination Provision was added. Jean and 
I did not realize at the time that these modifications to the social 
security law would Jean's benefits later. Indeed, we did not know 
anything about these provisions until the mid 1990's when I attended a 
pre--retirement seminar.
    Of course, Jean and I are not happy. Jean's social security 
statement dated April 2004 projected her monthly benefit at $779 a 
month when she turns 65 plus 6 months. A year later when she signed up 
Medicare, we discovered that her monthly benefit is being projected at 
$476.80 a month due to the Windfall Elimination Provision. While one 
might think her teacher's pension is substantial, it is not. Jean only 
grosses about $1,250 a month for her 20 years at full time.
    If Jean had never worked outside the home a day in her life, she 
would have received half of mine which would be about $800 a month. 
However because of the Government Offset Provision, she would get 
nothing if she attempted to draw benefits under my name rather than 
hers.
    But permit me to return the problem caused by the Windfall 
Elimination Provision. Even those folks in education who have 40 
quarters of substantial earnings are still affected by the W.E.P. While 
my wife has 49 quarters that qualify if figured correctly and is 
projected to have as many 65 quarters by the time she retires, she is 
still going to receive only a little more than $477 a month unless the 
Windfall Elimination Provision is modified or repealed.
    Jean and I urge the House Ways and Means Committee to include WEP 
and GOP repeal provisions in the Social Security legislation now being 
considered and thanks for listening.

                                 

                                         Broomfield, Colorado 80020
                                                       June 8, 2005
Dear Representative:

    I would like to urge congress to act on the repeal of the 
Government Pension Offset (GPO) and the Windfall Elimination Provision 
(WEP).
    The GPO and WEP unfairly cut the retirement benefits of public 
employees. Many of the individuals who are or will be impacted by these 
two programs have never even heard of the issue until they find that 
they are receiving much less of a benefit than they expected. It forces 
some people into poverty or some other form of government assistance.
    I for one worked for many years in the private sector, paying 
social security on a much lower salary due to the number of years ago 
that this work took place. I did however contribute enough to qualify 
for a small benefit.
    I changed careers 15 years ago and went into teaching. I learn that 
this change will cause me to lose about 2/3's of my $700.00+ benefit. I 
wonder why we penalize those who have such impact in the well being of 
our children.
    I realize this is not a great deal but it would make a difference 
to me and my wife.
    The GPO and WEP further impact our nation at a time when there is a 
growing teacher shortage. They tend to discourage people from entering 
the profession when we need more dedicated people to teach our future 
resources, our children. The offsets also impact police, firefighters 
and other public service professions.
    Congress should take immediate action to address this unfair 
situation. I appreciate your support on legislation that would 
recognize the sacrifices made by public employees by repealing these 
discriminatory offsets.
    Thank you for your consideration of my views on this important 
issue.
            Sincerely,
                                                       Merle Miller

                                 

                                              Naples, Florida 34119
                                                       June 9, 2005
To the Committee on Ways and Means:

    I am a 70 year old retiree from Massachusetts. I worked 10 years 
under Social Security and then worked 15 years under the Commonwealth 
of Massachusetts Retirement System. During that time, the Commonwealth 
of Massachusetts did not deduct Social Security from my pay. There was 
no way that I could pay into Social Security on my own. Because of 
this, I am being penalized approximately $500.00 per month from 
benefits to which I should be entitled. I receive a Social Security 
check of $124.00 per month. If I had never worked anywhere, I would be 
entitled to $615.00 per month from my spousal benefits from my husband. 
I think it is very unjust that I am being denied benefits from my 
husband's Social Security pension. In my retirement years, since I have 
turned 65, I have been denied approximately $25,000.00 in benefits.
    Please overturn this very unjust law.
    Thank you for your consideration.
                                                  Natalie Morrissey

                                 

      Joint Statement of National Conference of State Legislatures
    Retirement legislation soon to come before the House Committee on 
Ways and Means may encompass expansive reforms to Social Security and 
the federal tax treatment of retirement and savings vehicles. As you 
consider changes to national retirement and savings policies, the 
diverse group of signatories on this testimony--including national 
organizations representing state and local governments, public employee 
unions, public retirement systems, and nearly 20 million public 
employees, retirees, and beneficiaries--urge your strong opposition to 
proposals that would undermine the financing of public sector benefits, 
impose unfunded mandates on state and local governments and their 
taxpayers, and/or impose a tax increase on the savings of first 
responders, teachers and other public employees throughout the country.
    State and local government retirement systems comprise a 
substantial segment of national pension assets and membership. More 
than 14 million workers--ten percent of the national workforce--and six 
million retirees, disabilitants and their beneficiaries are covered by 
these programs. The over $2 trillion in assets held in trust are an 
important source of liquidity and stability for our financial markets. 
Further, state and local retirement systems currently distribute over 
$120 billion annually in pension and other benefits, a volume that 
exceeds the entire economic output of 22 States and the District of 
Columbia and is vitally important to the future growth of our economy. 
Thus, efforts to strengthen our national retirement savings policies 
should ensure these valuable programs are not disrupted. We, therefore, 
strongly urge your assistance with the following:
    Do not destabilize State and local government finances or the 
retirement security of public workers by mandating coverage on those 
who designed and funded their retirement programs outside of Social 
Security.

      The sharp payroll cost inherent in mandating Social 
Security coverage will have a devastating fiscal impact on State and 
local governments that do not participate in Social Security. This 
impact will be felt in virtually every state. An updated preliminary 
analysis done by the Segal Company shows the cost to be $44 billion in 
the first five years alone, simply for newly-hired employees.
      Conversely, the significant turmoil on those State and 
local governments and workers currently outside the system would have 
very little impact on the solvency of Social Security. Mandatory 
coverage raises modest revenue in the short-term, but ultimately only 
increases Social Security's future liabilities.
      It is important to remember that at the time Social 
Security was established, State and local governments and their workers 
were not permitted to participate in the program. These governments 
designed their own retirement plans in reliance on that exclusion. In 
the 1950's, when Congress allowed State and local governments to 
voluntarily affiliate with the Social Security System, some chose to do 
so while others continued to structure and fund benefits outside of the 
system. It is unjustified to now change the rules--imposing significant 
costs on these State and local governments and undermining the 
retirement security of their employees--for such a negligible change to 
Social Security's long-term solvency. 

    Maintain Congress' long-standing policy of supporting employer-
sponsored retirement plans, including those provided by State and local 
governments.

      Proposals to completely restructure all or part of the 
federal tax system should retain incentives for retirement savings, 
including pension systems sponsored by state and local governments. 
Such incentives are not only important to assist individuals attain a 
secure retirement, but are vital to our nation's future economic well-
being.
      Similarly, any modifications to tax laws should 
strengthen, not weaken, retirement savings in state and local 
government retirement programs. Provisions that would have a 
significant negative impact on such savings were recently outlined in a 
staff report of the Joint Committee on Taxation to ``further 
consistency in the tax system.'' For example, options in the report 
affecting state and local government employee benefits programs (see 
attached) include the proposed repeal of pick-up arrangements under 
Code Section 414(h)(2), imposing an immediate tax increase on first 
responders, teachers and other public employees around the country. 
While tax simplification can produce great benefits, a one size fits 
all approach may not address the needs of the public sector's diverse 
workforce and legal framework, or have any positive effects on 
retirement savings.
      Congress has worked over the years to make refinements to 
the Code to address the unique policy issues affecting public plans. It 
would be counterproductive to abandon longstanding and effective 
provisions, impose immense burdens on state and local workers and their 
employers, and undercut successful State and local retirement policies 
in attempts to ``simplify'' the federal tax code. We strongly urge your 
opposition to any tax proposals that are detrimental to public sector 
retirement savings.

    Our organizations support efforts to strengthen the solvency of the 
Social Security system and retirement savings. We believe this is best 
accomplished by protecting the retirement security of millions of 
workers and retirees in state and local government retirement systems. 
We look forward to working with you and your staff as legislation is 
considered.
    If you have any questions or need additional information, please 
feel free to contact our legislative representatives:Options Outlined 
in JCT Staff Report Affecting State and Local Government Employee 
Retirement Plans
Options Outlined in JCT Staff Report Affecting State and Local 
        Government Employee Retirement Plans
    While tax simplification can produce great benefits, a one size 
fits all approach may not address the needs of the public sector's 
diverse workforce and legal framework, or have a positive effect on 
national retirement savings. A Joint Committee on Taxation (JCT) staff 
report, Options to Improve Tax Compliance and Reform Tax Expenditure s 
(JCS-02-05 (2005)), is largely aimed at individuals, corporations, and 
tax-exempt organizations. Nevertheless, a handful of the options 
outlined within the report would impose extreme disruptions and costs 
on state and local government retirement plans, subject public employee 
retirement savings to immediate taxation, and/or undermine state and 
local government retirement policies:

      Impose Immediate Taxation of Contributions to State and 
Local Retirement Plans by Repealing ``Pick-Up'' Rules (pp. 140-144). 
This proposal would repeal the current ``pick-up'' rules contained in 
IRC section 414(h)(2), thereby prohibiting employee contributions to 
State or local government retirement plans to be made on a tax-deferred 
basis. Currently, such contributions are not tax-exempt, but instead 
are taxed when taken as retirement income--analogous to the tax 
treatment of employee contributions under 401(k)-type vehicles. If 
enacted, this JCT proposal would require federal taxes to be paid today 
on income that will not be received until retirement, imposing an 
immediate tax increase on first responders, teachers and other public 
employees throughout the country, overturning a policy established by 
Congress to equalize the tax treatment of public plan contributions, 
and imposing substantial costs on States and localities to restructure 
benefits and/or compensation.
      Subject Grandfathered State and Local Government 
Employees to Medicare Payroll Tax (pp. 80-82). This proposal would 
overturn a long-standing agreement to transition all state and local 
government employees into the Medicare system, whereby only employees 
hired after March 31, 1986 were mandated into Medicare. Those State and 
local government employees hired on or before March 31, 1986, who were 
not already covered by Medicare, were grandfathered from mandatory 
participation. This proposal would now force these employees, most 
nearing the end of their career, as well as their employers, to pay the 
Medicare payroll tax.
      Apply 10% Early Withdrawal Penalty Tax to State and Local 
Government 457 Plans (pp. 130-132). At present, the 10% early 
withdrawal penalty tax is not applicable to participants in section 457 
governmental deferred compensation plans. This proposal would now 
impose this penalty on the 457 plans of state and local government 
employees, rendering distributions made before age 59\1/2\, as well as 
for death or disability, generally subject to both income tax and an 
additional 10% penalty tax. This provision will fall particularly hard 
on police, firefighters and other public employees with mandatory 
retirement ages or early retirement incentives who had planned on 
relying on their 457 savings for a larger portion of their early 
retirement income.
      Impose FICA Taxes on all Salary Reduction Amounts (pp. 
71-73). At present, contributions to cafeteria plans in both the public 
and private sectors are excluded from wages for FICA purposes. This 
proposal would require all employees and their employers to now pay 
FICA on these amounts, imposing more costs on an already strained 
benefits system and eliminating a significant incentive for 
participating in and maintaining these plans.
      Eliminate 403(b) Catch-up Contribution Rules (pp. 122-
129). This proposal would eliminate rules permitting 403(b) 
participants to make contributions for up to five years after 
termination of employment and permitting employees who have completed 
15 years of service with certain employers to make additional elective 
deferrals. Employees of educational institutions have historically 
relied on these special rules to make up contributions they may have 
missed early in their career.

                                     ----------

National Conference of State Legislatures
National Association of State Auditors Comptrollers and Treasurers
National Association of Counties
United States Conference of Mayors
National League of Cities
International Association of Fire Fighters
Fraternal Order of Police
National Association of Police Organizations
International Union of Police Associations, AFL-CIO
International Brotherhood of Police Officers
International Brotherhood of Correctional Officers
International Association of EMTs and Paramedics
American Federation of Teachers
National Education Association
American Federation of StateCounty and Municipal Employees
Communications Workers of America
Service Employees International Union
National Association of Government Employees
National Association of Nurses
National Association of State Retirement Administrators
National Conference on Public Employee Retirement Systems
National Council on Teacher Retirement
National Association of Government Defined Contribution Administrators
Government Finance Officers Association
International Public Management Association for Human Resources
National Public Employer Labor Relations Association

                                 

            Statement of the National Education Association
Mr. Chairman and Members of the Subcommittee:

    On behalf of the National Education Association's (NEA) 2.7 million 
members, we would like to thank you for the opportunity to submit 
comments ontheGovernment Pension Offset (GPO) and Windfall Elimination 
Provision (WEP), and on the issue of mandatory Social Security 
coverage. 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. We oppose requiring public employees to 
participate in Social Security. Our testimony will cover both of these 
issues.
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 Frances in Louisiana:

    ``My husband, a Baptist minister, passed away [in 2001] after 
paying Social Security for 42 years. At times we had to take a second 
loan on our home to pay the Social Security. Now, I had to pay back the 
loan, but discovered that I will not get benefits because I receive a 
small teacher retirement''
From NEA member Stella in Colorado:

    ``I am a 72-year old widow . . . I was happily married to the same 
man for 39 1/2 years. My husband was a World War II disabled veteran 
who worked and paid into Social Security for 50 years--He passed away 
11 years ago thinking I would be able to receive his Social Security 
and Veterans Widow pension . . . But now I'm living in poverty.''
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 Carolyn in Kentucky:

    ``I started direct sales business from my home at nights and 
weekends to supplement my teacher retirement. I earned my necessary 
quarters, reached my 62nd birthday, and then learned of the Windfall 
Elimination Provision. I was told that I was eligible to receive 
approximately $158 monthly; however, because of the WEP, this reduce be 
reduced to $78 a month. By the age of 65, my payments had risen to $84, 
but after paying $66.00 for Part B of Medicare, I now have $18 to 
deposit. I have been forced because of the economics of the day to 
return to the classroom to substitute teach for a paltry sum of $61 a 
day . . . This is certainly not the American dream I had in 1956 to 
become a teacher!''
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 NEA member Martha from Texas 
reports:
    ``By 1978, when I started my teaching career, I had already earned 
my forty quarters of Social Security and over the years depended on 
these benefits as part of my retirement. I should be entitled to $415 a 
month at the age of 62. However, because of the Windfall Elimination 
Provision, I will now be entitled to $206 a month, and this reduction 
in my earned retirement is a big loss. [In addition,], according to the 
Social Security Administration, I should be entitled to approximately 
$970 a month for widow's benefits. However, because of the Government 
Pension Offset, I can only receive $21 a month. Both the Government 
Pension Offset and Windfall Elimination Provision are devastating to 
teacher retirees and me.''
The National Impact of the GPO and WEP: Undermining Teacher Recruitment 
        Efforts
    The GPO and WEP have an impact far beyond those states in which 
public employees like educators are not covered by Social Security. 
Because people move from state to state, there are affected individuals 
everywhere. The number of people impacted across the country is growing 
every day as more and more people reach retirement age.
    Perhaps most alarming, the GPO and WEP are impacting the 
recruitment of quality teachers to meet urgent national shortages. 
Record enrollments in public schools and the projected retirements of 
thousands of veteran teachers are driving an urgent need for teacher 
recruitment. Estimates for the number of new teachers needed range from 
2.2 to 2.7 million by 2009.
    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, currentteachers 
are increasingly likely to leave the profession to reduce the penalty 
they will incur upon retirement, and students are likely to choose 
other course of study and avoid the teaching profession.
    The GPO and WEP also impact other critical public services fields, 
including police and firefighters. Our nation can ill-afford to allow 
the very real fear of poverty in retirement to force talented, 
dedicated individuals out of these professions.
The GPO/WEP Solution: Total Repeal
    Representatives McKeon (R-CA) and Berman (D-CA) have introduced the 
Social Security Fairness Act of 2005 (H.R.147). This bipartisan 
legislation, which already has over 260 cosponsors, would eliminate the 
GPO and WEP, thereby allowing public employees, like all other 
employees, to collect the benefits they earned and need. NEA urges the 
Subcommittee, and the entire House of Representatives, to take 
immediate steps toward passage of the McKeon-Berman bill.
Mandatory Coverage: An Unwise and Unnecessary Approach
    NEA's position on repeal of the Government Pension Offset and 
Windfall Elimination Provision should not in any way be interpreted as 
support for requiring public employees to participate in Social 
Security. NEA strongly opposes mandatory coverage. Instead, NEA simply 
believes that educators should be able to receive the benefits they or 
their spouse earned by working in covered employment, without 
jeopardizing their public pension.
    Many existing public employee programs are tailored to meet the 
needs of specific employee groups. Forcing educators into Social 
Security would jeopardize these state and local plans. In addition, 
Social Security trust funds can be invested only in U.S. Treasury 
bonds. State and local governments permit a greater diversity of 
investment options, thereby potentially achieving a greater rate of 
return.
    Mandatory coverage of educators would also 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.
    Finally, mandating coverage of educators will not solve the Social 
Security system's financial difficulties. The amount of money gained by 
mandating coverage would be relatively small and would not solve the 
long-term Social Security crisis. Requiring new state and local 
employees to pay into Social Security would enable the federal 
government to continue borrowing money from Social Security trust 
funds, and, therefore, could exacerbate financing problems.
    We thank you for your consideration of these comments.

                                 

                                             Cleveland, Texas 77327
                                                      June 23, 2005

    Thank you for the opportunity to write to you. I am a retired Texas 
public school teacher asking you to eliminate the Government Pension 
Offset and Windfall Elimination Provision (GPO/WEP).
    In planning my retirement I followed Social Security suggested 
formula or pension, savings and social security. Imagine my surprise 
when at age 65 I discovered that because of my chosen profession I 
would be heavily penalized by having my spousal/widows benefits 
reduced. I can receive a reduced pension and allocate a portion of my 
pension be paid to my husband upon my death. He can receive both my 
pension and his Social Security with no penalty or reduction in 
benefits. I am penalized and he is not. This is not equitable.
    We are impacted twice because he is included in the ``Notch'' group 
and initially had his Social Security benefits cut by Congressional 
action. ``Notch'' causes his Social Security to be lowered and my 
spousal/widow benefits are reduced. During my working years I have paid 
into Social Security through second jobs. My husband has paid into the 
system from 1940-2001 except for 3\1/2\ years he served in World War 
II.
    Our income is impacted by governmental action that can be remedied 
by your committee. Your committee recommendation to the House to 
eliminate GPO/WEP will positively affect thousands of households hurt 
by this unfair legislation.
    Please consider the welfare of voting American citizens penalized 
by the GPO/WEP legislation whose only ``crime'' was being a public 
employee where one or both paid Social Security during their working 
years.
    Thank you for considering my request.
                                               Patricia Jane Nelson

                                 

Statement of Frederick Nesbitt, National Conference on Public Employee 
                           Retirement Systems
    The National Conference on Public Employee Retirement Systems 
(NCPERS) represents over 500 public sector pension funds that cover 
firefighters, police officers, teachers, and state and local government 
employees. NCPERS is the largest national, nonprofit public pension 
advocate. Since 1941, we have protected the pensions of public 
employees.
    We appreciate the opportunity to share our views with the 
Subcommittee on Social Security on the issue of mandatory Social 
Security coverage of non-covered state and local government employees. 
NCPERS was founded 64 years ago to stop the federal government from 
disrupting and dismantling public sector pension funds by requiring 
them to be part of Social Security. That remains one of our primary 
goals today.
    The Social Security system provides coverage for virtually all 
segments of American society including most, but not all, state and 
local government employees. When the system was established in 1935, 
state and local government employees were initially excluded. Some of 
these employees subsequently made a decision not to be included, 
instead developing their own retirement and benefit programs tailored 
to their occupational needs. In many instances, these retirement 
programs predate the Social Security system. These state and local 
government retirement systems are solvent and require a contribution by 
both the employer and employee, in most cases.
    In the 1950s, state and local governments were given the voluntary 
option of joining Social Security. In 1950, 1954, and 1956, legislation 
was adopted to allow states to enter into voluntary agreements with 
Social Security to elect to cover their employees. States were also 
given the option to withdraw from Social Security coverage. In 1983, 
the option for states within Social Security to withdraw was repealed. 
In 1990, Congress mandated Social Security coverage for all state and 
local government employees not covered by a qualified public pension 
plan or have benefits comparable to the retirement, disability, and 
survivors' benefits provided by Social Security. Approximately 70 
percent of state and local government employees are covered by Social 
Security; those not covered are primarily public safety officers and 
teachers. The states with the most non-covered employees are: Alaska, 
California, Colorado, Illinois, Louisiana, Maine, Massachusetts, 
Nevada, Ohio, and Texas. Those state and local governments not 
participating in Social Security rely on their own retirement and 
benefit programs tailored to their occupational needs of their 
employees and retirees. These state and local government retirement 
systems are solvent and require a contribution by both the employer and 
employee, in most cases, with nearly 75 percent of the pension benefit 
payouts coming from the plan's investment returns.
    NCPERS opposes expanding Social Security coverage to non-covered 
state and local government employees. Requiring Social Security 
coverage would undermine these plans and place unnecessary financial 
burdens on state and local government employers and employees. These 
public sector funds designed their retirement benefits to meet the 
needs of their employees, including such unique characteristics as 
retirement ages, disability benefits, survivor benefits and death 
benefits. Because of the unique makeup of the public sector workforce, 
many employees, such as public safety officers, have earlier retirement 
ages or mandatory retirement, higher disability rates, earlier deaths 
and earlier disability retirements. All these factors are accounted for 
and provided by the public sector plans.
    In most cases, Social Security would not provide these employees 
with coverage because of the age at which these employment events 
occur. Public safety officers, for example, do not work until age 65 
(or 67 when the age is finally raised), but retire at an earlier age 
because of the stress and hazards associated with the job. Likewise, 
the public sector plans have been designed to recognize the fact that 
the employer must be prepared to provide disability retirements, 
sometimes at an early age before an individual would qualify for Social 
Security benefits.
    Making Social Security mandatory would have little impact on the 
projected funding shortfalls of Social Security system. However, such a 
move would greatly affect public employees. Public employees not 
covered would be required to pay an additional 6.2% in payroll taxes in 
addition to what they are now required to contribute to their public 
pension plan. Unlike most private sector employees who do not 
contribute to their employer-sponsored pension plan, public employees, 
for the most part, make an employee contribution which is combined with 
the employer contribution. These contributions are then invested in 
securities, with the investment returns paying a large portion of the 
pension obligations during the lifetime of the employees and survivors.
    Mandatory coverage would be costly to states and localities. As 
employers, states and localities would also be required to pay an 
additional 6.2% in payroll taxes on top of what they already contribute 
to the pension fund. These employers are currently facing severe budget 
shortfalls. These governments must balance their budgets, therefore, 
adding such a financial burden would require them to either increase 
taxes or reduce government services. For example, this would cost 
California over $2.3 billion in additional expenditures annually, Ohio 
$1 billion annually, and hundreds of millions to Texas, Illinois, 
Colorado, Massachusetts and Louisiana.
    Mandatory coverage would be disruptive to existing retirement 
programs. Many public employers would be unable to absorb the higher 
costs. Either they would be required to continue funding their 
respective retirement plans, in addition to the Social Security tax, or 
severely reduce or eliminate current retirement benefits. The loss of 
the investment returns on these pension funds, which averages over 8 
percent per year, would add an additional burden to the employers. A 
situation would be created whereby no new funds would be going into the 
pension assets, but retiree benefits would continue to be paid. 
Eventually, the funds would run out of money, thus placing the 
retirement benefits of millions of employees in jeopardy. Many of these 
plans are established constitutionally and to make such a change would 
require legislative action and/or constitutional amendments.
    It is a given that mandating coverage of non-covered state and 
local government employees does not improve the financial stability of 
the Social Security system. It some short-term benefits, but adds to 
the long-term benefits payments, thus placing greater financial demand 
on the system. NCPERS believes that the Congress should solve the long-
term financial needs of the system and ensure that Social Security is 
funded to guarantee and protect the benefits of all those who are 
covered.
    Mandating Social Security coverage of non-covered state and local 
government employees is not the way to ensure Social Security's future 
and it will destroy existing public sector plans that are well funded 
and provide secure retirement benefits to millions of state and local 
government employees.
    We thank you for the opportunity to express our position on 
mandatory Social Security coverage to the Subcommittee.

                                 

            Statement of Anne Ratto, Corralitos, California
    I am submitting this testimony to as a private citizen who is 
urging you to repeal the Social Security Offset Law. I have worked in 
education for the majority of my 20 year career. From 1986-1999 I 
worked in Alternative Education with high school students who were at 
risk of dropping out, ending up in the prison system or homeless. My 
faculty position as Vocational Education Coordinator was to provide 
jobs and job training for students so they could become self-sufficient 
adults. I was a member of STRS in this position and did not pay into 
Social Security. Since 1999, I have been an administrator at a local 
community college, where I manage a program for low-income adults so 
that they have the support services necessary to succeed in college. In 
this position, I am a member of PERS and pay into Social Security. I 
plan to retire in this position in the next decade.
    As I plan for my retirement, I am deeply disturbed that part of the 
retirement that I earned will be reduced due to an antiquated and 
unfair law. I deserve to receive all the benefits that I have paid 
into. In addition, as we see the baby boomers retire, people in the 
private sector who may want to transition into an education position 
are deterred as they will have their Social Security reduced.
    I urge you to do what is fair and repeal the Social Security offset 
law. Many deserving educators who have devoted their lives to serving 
young people deserve to be treated with respect and dignity in their 
retirement years.

                                 

             Statement of John Reddington, Bright, Indiana
    I worked for and retired from the City of Cincinnati. I also worked 
under Social Security and was eligible to receive about $600. per 
month, but thanks to the GPO/WEP provision, I am PENALIZED and receive 
only \1/3\--about $200. per month. Reduced by 60%. I followed the 
RULES, but then you CHANGED THEM. Please REPEAL the GPO/WEP. Thank you.

                                 

   Statement of Amy L. Reed, Newbury Park High School, Newbury Park, 
                               California
    The Government Pension Offset and Windfall Elimination are two 
badly conceived provisions that are unfair to teachers and others. They 
discriminate against people who have legitimately earned social 
security benefits, simply because they chose to become teachers. In 
addition, they discourage those who might choose teaching as a second 
career by not allowing them to collect the social security benefits 
they've earned, in spite of the fact that their ability to earn an 
adequate pension from teaching would be severely limited. We need to 
work to keep the teachers we have and to encourage experienced people 
to become teachers. These bad provisions interfere with these efforts. 
Beyond that, they are patently unfair. Please act to repeal them now!

                                 

             Statement of Sharon Richard, Sour Lake, Texas
    Thank you for giving me this opportunity to submit this statement.
    I recently completed my seventh year as a Texas schoolteacher. I 
teach American history, including the American Revolution, the 
Constitution, and the Bill of Rights, to eighth grade students at 
Henderson Middle School in Hardin-Jefferson Independent School 
District. I absolutely love what I teach. As I strive to share with my 
students the ideas of the Founders and Framers and the many reasons why 
they fought, deliberated, perspired, and worked on the noble experiment 
known fondly as the United States of America, I constantly urge my 
students to undertake a life-long participation in their government. I 
do my best to instill the belief that the founders' idea of popular 
sovereignty is still true in this democratic republic, and they must 
always think of themselves as part of ``We the People.''
    Before my teaching career began, however, for over twenty-five 
years my husband and I owned and operated a small independent community 
pharmacy. Both my husband and I have paid significantly into social 
security over the course of our lifetimes. He began paying into social 
security at the age of sixteen. I first paid into social security at 
the age of twenty-one. Also, since we owned our business, we MATCHED 
the social security paid in by our employees and ourselves. Therefore, 
we consider that for more than twenty-five years, we paid DOUBLE 
amounts into social security.
    Three years into my teaching career, I found out about the 
Government Pension Offset and the Windfall Elimination Provision. Of 
course, at first I could not believe that my government would really 
take away EARNED social security at retirement. But in the course of 
the last few years, I have learned that, indeed, my government really 
will do that.
    Yes, my government, the government ``of the people, by the people, 
and for the people,'' really will literally deny our hard earned and 
previously paid benefits because of two obscure and misunderstood laws 
called the Government Pension Offset and Windfall Elimination 
Provision.
    I have learned that if I retire through the Texas Teacher 
Retirement System, and draw a pension, I may lose my spousal benefits 
because of the Government Pension Offset. My husband simply cannot 
comprehend that he has spent more than thirty years as a conscientious 
community pharmacist, often serving the public around the clock, and 
that his wife of over thirty years will be denied benefits based on the 
social security he has paid in!
    Further, because of the Windfall Elimination Provision, I will also 
be denied much of my OWN paid-in social security, because I have only 
twenty-six ``substantial'' years of social security. I will not receive 
the amount of money per month that is quoted on my quarterly social 
security earnings statement. Meanwhile, of course, I have no choice but 
to pay into the TRS. I will lose hundreds of dollars each month when I 
retire, dollars that will make a significant difference in our 
retirement years. These are my earned benefits that I will be denied! 
And I also paid matching amounts through my business! Unconscionable. 
Unjust. Unfair. Unbelievable. Incomprehensible.
    My salary is slightly more than $30,000 per year. I am in my mid-
fifties, and plan to teach only a few more years. With a meager salary 
like this, my pension will hardly be a ``windfall.'' And although many 
people consider pharmacy to be lucrative, on the contrary, small-town 
independent pharmacies have taken severe financial hits with the advent 
of insurance-driven HMO's, PPO's, drug formularies, and the like. 
Accordingly, our business retirement plan was minimal. Because of these 
factors, we have since sold our little independent pharmacy. Therefore, 
we had certainly counted on our fully earned social security benefits, 
along with my small teacher pension, to help with our retirement.
    As badly as the WEP and GPO are affecting public servants at 
present, the future of education is also being severely undermined by 
these laws. We need quality individuals to enter education, and we need 
them now more than ever. As a measure to recruit these quality 
individuals, plans such as Troops to Teachers and Careers to Classroom 
have tried to lure past military and professionals into the classrooms 
of America. However, as prospective teachers are made aware of these 
unjust social security laws, many are giving up the idea of going into 
the classrooms of Texas and the other 14 impacted states, and rightly 
so. How wrong it is, for example, to recruit retired military, praise 
them for excellence in the classroom, and then deny them the social 
security benefits they earned while serving their country! These laws 
are such an injustice to hard-working public servants. And to be told 
that we are ``double dipping'' is unjustified and quite untrue.
    We know the reasons these laws were implemented, to prevent the 
``double dipping.'' But the effect is negligible on those who get large 
pensions. Those who are hurt are the lowest paid public servants in 
America. To allow the Government Pension Offset and Windfall 
Elimination Provision to continue to force custodians and cafeteria 
workers, bus drivers and school nurses into virtual and unexpected 
poverty is simply immoral. It is beyond unjust to allow these dedicated 
and conscientious, but lowest paid personnel on Texas campuses to be 
treated in such a manner by their government. To let these laws stand, 
to postpone the elimination of these unfair laws through yet another 
Congress, is a travesty. Two decades of this injustice is long enough.
    There is much talk of mandatory Social Security among those who do 
not currently pay into the system. That would be fine, but school 
districts in Texas, for example, can barely make ends meet now, with 
escalating expectations from both the state and federal governments. 
How can they suddenly fund matching Social Security for all employees? 
The funds simply are not there.
     ``America's heroes,'' the firemen and policemen, along with the 
millions of others who are affected by these unbelievably unjust laws 
are also having a hard time understanding why this issue appears to be 
so partisan. This is not a Republican vs. Democrat issue; this is a 
simple issue of fairness to multitudes of public servants in this great 
country.
    As one of those public servants, I respectfully request immediate 
elimination of the Government Pension Offset and Windfall Elimination 
Provision.
    On May 19, 2005, when Congress began the effort to address the 
long-term solvency of Social Security, the Honorable Hal Daub, Chairman 
of the Social Security Advisory Board and former Member of Congress, 
testified before Ways and Means:
    While restoring the solvency of Social Security is a pressing need 
that presents significant challenges, it also give us the opportunity 
to examine whether some aspects of the program could be better targeted 
to the 21st century population it now serves. The basic construct of 
the program is sound, with a benefit formula that recognizes the need 
to replace a greater portion of the pre-retirement earnings at the 
lower end of the scale in order to maintain an adequate standard of 
living. Over the last third of a century, largely because of Social 
Security, the poverty rate among the aged has been cut from nearly 25 
percent to a little over 10 percent. That is a remarkable achievement, 
but in changing the program we should look for the opportunity to do 
even better, and we need to look for aspects of the program that have 
not done so well. For example, older women, particularly those who are 
widowed, divorced, or single still have poverty rates approaching or 
exceeding 20 percent.
    Mr. Daub is quite correct when he says that aspects of the program 
have not done so well. It is truly hard to maintain an adequate 
standard of living, especially for older women who are generally living 
alone in their later years. The GPO and WEP absolutely do contribute to 
the poverty level in which many public servants find themselves. The 
Honorable Mrs. Nancy Johnson, R-Connecticut of Ways and Means, also 
asserted at the May 19th hearing that these laws unjustly affect her 
constituents and need review and change.
     Yes, some changes must be made to Social Security (simply removing 
the cap would be a fine start), but as you determine the future of the 
system, I urge you to take into consideration the words you have read 
and heard from the real working men and women of the United States who 
are being hurt by the GPO or WEP. Many pertinent statements were 
delivered also to the May 1, 2003 Subcommittee hearing of the 108th 
Congress. These men and women continue to count on their Congressional 
representatives to make a difference in their lives. Now is the time 
for Congress ``to do even better'' by ``the population it now serves.''
    The GAO has not taken into consideration that the cost of repeal of 
these laws must be measured by more than dollars, cents, and the effect 
on the long-range deficit. Indeed, the cost of repeal of the GPO and 
WEP is negligible compared with the overwhelming cost of implementing 
personal retirement accounts. Unquestionably, the cost must also be 
measured by the life of each American public servant and the respect 
each deserves for a lifetime of commitment.
    Again, I respectfully request immediate elimination of the 
Government Pension Offset and Windfall Elimination Provision.

                                 

          Statement of Andrew Sallee III, Lexington, Kentucky
     I am a former USPS employee and retired with 36.5 years of 
service. I worked previously at a number of jobs prior to 1959 when I 
joined the Government and also during my employment with the USPS.
    I looked forward to the time when I would enjoy both my retirement 
through the Government and also with an additional paycheck from the 
Social Security. Then came the passing of the double dipping bill which 
stripped me of 60% of my already small Social Security check.
    I CAN recognize if I had earned both of these retirements using the 
same employment that I would be penalized, this makes sense!! But to 
just LUMP everyone into the same bill without any thought as to where 
they were employed is senseless and shows how much it LOOKS like our 
representatives don t really know on what they are voting.
    It is unfair to penalize civil servants for extra work outside of 
their regular workplace and anyone to whom I relate this experience 
cannot believe me unless they too have become a victim of this terrible 
bill.
    I urge you to repeal the original bill with all due haste!!! I know 
we have the backers for WINDFALL REPEAL, Congressmen Bunning, McConnell 
and Chandler all back the repeal, please help to get it out of 
committee!!!

                                 
          Statement of Marilyn Sapienza, Cheshire, Connecticut
    I worked for 12 years for a publishing company. During that time, I 
contributed to Social Security. Then, I became a public school teacher.
    For 22 years, I taught in Connecticut public schools. I taught 
Grades K, 1, 2, 3, 5, and 6. I taught reading intervention and remedial 
reading to elementary children. During these 22 years, I contributed to 
Teacher's Retirement.
    Now, with my retirement within sight, I learn that I am not 
eligible for my full Social Security benefits. And why? Simply because 
I have been a teacher in the public schools. This knowledge deeply 
saddens me. I feel as if I am being punished for having become a public 
servant. I feel as if I am being discriminated against just for having 
instructed a generation of school children.
    My 12 years of Social Security benefits exist only because I have 
worked for them. Getting Social Security benefits at the time of my 
retirement is not a gift. Rather, it is, in my opinion, a right, a 
right earned from hard work. Had I worked for 12 years in industry 
only, I would have been eligible for my Social Security benefits in 
full. So why should I be penalized just because I continued to work as 
a public servant?
    I ask that you support paying full Social Security benefits to 
teachers who have earned them. To do otherwise is to penalize teachers 
and act prejudicially toward them. I appeal to your sense of justice 
for people like me who have had two careers--one in industry and one as 
a devoted, public servant educating our young citizens.

                                 

                                South Hamilton, Massachusetts 01982
                                                       June 9, 2005
To Whom It May Concern:

    The GOP/WEP is not a fair system and penalizes one for working hard 
and trying to provide for retirement. As a widow, and a school teacher 
with limited years of teaching (stayed home to take of children, one 
being a Spina Bifida), I was looking forward to my late husband's 
social security. He worked hard for his money and never had the 
opportunity to collect it since he died of cancer at a young age. It is 
not fair for the government to keep my social security and reduce his 
by 2/3 of my teacher pension. Without his social security, I will never 
be able to fully retire. Please repeal the GOP/WEP so individuals can 
have a better life. Thank you.
                                                  Linda A. Saunders

                                 

                                      Culver City, California 90230
                                                      June 23, 2005
To Whom It May Concern:

    My name is Rosalie Saxman. I started working when I was 16 years 
old, holding various jobs from childcare to being a waitress at a 
family resort and then at a restaurant as I put myself through college. 
After graduation, I became a teacher of the deaf. I taught in a public 
school for two years, and then moved to a private school, where they 
had us pay into social security, for the next ten years.
    While teaching I decided to become an Audiologist and worked at 
Childrens Hospital for three years. I then decided to start a family 
and so I began working in a public school as an educational 
audiologist. I have now held this position for the past 21 years.
    Having worked for a total of 33 years in an educational setting, I 
think it is in very poor taste for my social security to be deducted 
from my teacher's pension, when I have been working in the same field 
of education but under the two systems. Because I came in from a 
private school I never received credit for my years experience when 
joining the public schools. This means I will have to keep working 
until I am 63 years old just to have 25 years experience. This already 
eliminates me from any longevity increment that my retirement might 
give me. Then to have money taken away, because I worked at a school 
that did not contribute to the state pension plan is penalizing me for 
working in the education field for more than 35 years.
    I would strongly urge this committee to look at what this ruling 
does to people who have paid in to both systems. It is an unfair 
treatment.
    Thank you for your time.
                                                     Rosalie Saxman

                                 

    Statement of Barbara Shaughnessy-Harding, Rimforest, California
    I know the majority of you have been supportive in the past, please 
be proactive now regarding the Government Pension Offset and the 
Windfall Elimination Provision.
    My husband and I would be affected by both of these unfair offsets. 
He has worked, on his feet as a barber, for over 35 years and social 
security is his pension plan. I have also worked all of my adult life, 
primarily with companies that were part of the social security system 
and consequently, both my employers and I have paid enough into the 
system that I have the quarters required to qualify for the same 
pension as others.
    Twelve years ago I started working for a school district and began 
paying into the state teachers' retirement system. Imagine my surprise 
when I realized about a year ago that both my husband and I would now 
be discriminated against for trying to take care of ourselves in our 
old age. Apparently I would have been better off if I had stayed at 
home and not worked at all. It's just not fair.
    Please do what you can do to help us.

                                 

              Statement of Suzanne Shaw, Penobscot, Maine
    Thank you for giving me this opportunity to write to you.
    My name is Sue Shaw and I am writing to you today as a retired 
teacher.
    Privatization and a reduced Social Security benefit are NOT 
acceptable. I should know--my SS benefit has already been reduced by 
60% due to the Windfall Elimination Provision.
    I taught for 37 years--both under Social Security and non-Social 
Security retirement systems. Because of this straddling of retirement 
systems, when I reached the age to receive the Social Security (SS) 
benefit that the government collected the taxes for and promised to me, 
I saw that benefit either severely reduced (WEP) or totally eliminated 
(GPO). Because I have not only worked under SS for the required 40 
quarters but also have a spouse who contributed to SS for almost 50 
years, I will be subject to both the Government Pension Offset (GPO) 
and the Windfall Elimination Provision (WEP). I fully realize that 
everyone is limited to one SS benefit. However, since I chose to be a 
teacher for 28 years in Maine, I will not receive a complete benefit 
under either situation--personal or spousal. I will be eligible to 
receive not a penny of my husband's earned benefit (GPO) and only 40% 
of my own (WEP).
    One of the arguments I hear is that SS is slanted toward the low 
wage earners. As I say in the following paragraphs, that is what I 
thought I was! That is why I was working two jobs and during vacations 
from school! When you are young and poor, that is what you do--you work 
extra jobs! When you are old and the benefits that you supposedly 
earned when you were doing that extra work are denied to you--what do 
you do then?
Just like Everyone Else . . .
    I am so tired of people acting as though we who are fighting the 
Social Security Offset of The Windfall Elimination Provision are trying 
to steal something. I am tired of hearing people tell me that Social 
Security (SS) needs to be preserved for current recipients and for 
those who will be retiring in the future, as though we are some type of 
an unfunded liability. As though we are asking for something that has 
not been paid for.
    I am tired of people who do not understand anything except that 
they are afraid someone is trying to steal SS retirement money. I am 
tired of being told that the government cannot afford to pay us 100% of 
our earned SS benefits. And hundreds of thousands of workers are tired 
of being forced to pay into a system from which they will not be able 
to realize fair benefits.
    People who are penalized by the Windfall Elimination Provision 
(WEP) have paid into the SS system exactly the same as everyone else. 
Exactly the same formula was used for withholding SS tax from our 
private sector work. For every penny we earned, we paid a portion of 
that penny into SS, just like everyone else.
    Social Security says that in order for an individual to receive a 
benefit, they must first earn ``40 quarters'' which means a minimum of 
10 years working time. Just like everyone else, those of us who are 
trapped by the WEP have earned those forty quarters--and in many cases 
well over that number. We are NOT asking for benefits for non-covered 
work--we simply want the same SS benefits for the same quarters and 
contributions as everyone else!
    The government tells us that SS is meant to be a safety net for 
those at the low end of the income scale. Those of us who worked full 
time at one job and evenings and weekends at another thought we fit 
that description!
    We were low paid--so we worked an extra job. We climbed the ladder 
of advancement and crossed private/public sector lines. We relocated to 
follow family or opportunity. We opened a small business on the side. 
We worked--and now we will have to continue to work, because the 
retirement benefits we were promised for the payments we made will not 
be forthcoming due to the WEP.
    Just like everyone else, we paid 100% of the required tax into SS. 
But--UNLIKE everyone else, we will NOT receive a 100% benefit! Because 
we receive a ``public pension'' for part of our work history, our 
benefit for work under SS is offset. UNLIKE everyone else, our earned 
SS benefit could be well less than half of what was promised by the 
government.
    Unlike those with a 401K, our public pension will cause our SS 
benefit to be slashed.
    Unlike a private sector pension from an employer, our public 
pension will cause our SS benefit to be reduced by thousands of 
dollars.
    Public pensions and SS are different systems--different forms of 
government (state/federal) oversee them, different taxes and 
contributions support them, and they have different vesting and 
benefits schedules. To receive both SS and a public pension is NOT 
double dipping--it is receiving different benefits for different paid 
taxes for different work under different employers. It is paying in 
twice--and working twice. Benefits should be paid twice--once from each 
employer--both at the 100% level!
    All we are asking for is the SS benefit we earned. The SS benefit 
promised when we paid SS taxes on every penny earned for year after 
year after year . . . just like everyone else.
The Widows of America . . .
    Imagine this--you are recently retired. While your children were 
young, you worked part time occasionally, but spent a lot of time at 
home, raising your family. When they were through with school, you took 
your turn at college, and at mid-life began the career you had always 
dreamed of--teaching school. You worked for 20 more years, and now, you 
and your spouse are looking toward a well-deserved retirement. A 
relatively common, uncomplicated scenario.
    But then, as happens all too often, tragedy strikes and your 
beloved spouse unexpectedly dies. Your world collapses, and things turn 
upside down as you bury your life-partner. As time passes, there is 
business that needs to be seen to, and you begin to deal with the paper 
work that death creates. You go down to the Social Security offices, 
and a bleak picture becomes even more so, and the future becomes not 
only lonely, but also frightening, because you find that there will not 
be enough money to live on. Social Security says you can not have any 
of your deceased spouse's benefit. You will be living on only your 
public pension from your relatively short career.
    Every day, all across the country, widows (and, of course, 
widowers) find that, when they go to SS after the death of their 
spouses, there will be either severely reduced survivor benefits, or 
none at all. These surviving spouses find that they are denied the 
benefits earned for them by the work record of the deceased simply 
because they (the survivors) have a public pension.
    This law that devastates the income of so many of America's elderly 
widows is the Government Pension Offset (GPO). Passed in the early 
80's, it was designed to keep those with high incomes from doing what 
was perceived as ``double dipping'' or getting two top-level government 
retirement benefits. As conceived, the law had good points. In 
practice, however, it is extremely flawed. What the GPO does is give a 
secure retirement the kiss of death for low and middle income public 
employees who, along with their spouses, have worked, paid their bills, 
and paid their taxes for many long years. What the GPO does, in fact, 
is put the income of many of these retirees at the poverty level upon 
the death of a spouse. What the GPO does is see to it that all too 
often, when the spouse dies, the benefit dies also.
    These retired public employees--postal workers, clerical staff in 
the state offices, police, firefighters, Department of Transportation 
workers, secretaries, teachers, guidance counselors, bus drivers, game 
wardens, public utility workers, federal employees, custodians, state 
health workers, prison employees, air traffic controllers, and many 
more, have retirement income stolen by the GPO. The loss of this 
income, which had been earned for them by their spouses, makes many of 
these dedicated individuals eligible for public assistance programs. 
They become eligible for heating assistance, housing assistance, food 
stamps, and health care. Programs that, in fact, end up costing the 
government more money than it would to simply give the workers their 
earned benefits in the first place.
    These people do not WANT assistance--they want the money from the 
benefits that SS promised when SS taxes were taken from paychecks. As 
one worker put it--''It's all tax money--.it's just how you get it! It 
would be cheaper for the government to keep me off of the `dole' if it 
can!'' These widows can find themselves living on less than $25 a day--
many times much less, simply because they had the misfortune to chose 
to work in the public sector. As Marti Flint said in the January 8th 
2003 CBS Evening News ``Eye on America'' segment on SS--``the only 
thing I did wrong was to go to work in a school!''
The encouraging of workers to embrace ``2nd careers'' . . .
    President Bush encourages the military to turn to a 2nd career in 
the classroom in his ``Troops to Teachers'' program. One has to wonder 
if the military personnel who walk into classrooms after 20 years in 
uniform realize that they could possibly, with the opening of that 
classroom door be closing another! They could easily be closing a door 
on a large portion of their SS benefits. Military pensions and SS paid 
while in the military are exempt from the Windfall Elimination 
Provision (WEP). But the WEP says a public pension from non-SS-covered 
work cancels out that exemption when a state pension from non-covered 
work is thrown into the formula!
    People from the private sector are urged to step to the front of 
the classroom and ``make a difference'' as a public servant. Public 
workers begin small businesses on the side, or in the case of teachers 
or other school personnel, work summers and vacations to help make ends 
meet. Whatever the scenario, when an individual's work history 
straddles the public sector/private sector line, it is like having one 
foot on the boat and one foot on the dock. If their public sector work 
is in non-SS-covered employment, these individuals are going to take a 
soaking!
    Unlike the person with one foot on the dock and one on the boat, 
however, the vast majority of those affected by the WEP do not even 
suspect that disaster is imminent! They think they have planned ahead! 
They had paid in good faith into one system for retirement, and then 
into another! They had paid the taxes and expected the benefits. They 
expected promises made by the government to be kept! What a nasty shock 
to discover, often not until the very edge of retirement, that 100% of 
that promised benefit will not be forthcoming.
    It has been said that elimination of the Offsets would cost too 
much and would cause depletion of the SS account that much sooner. 
Whose money is being held so tightly in the governmental fist? Don't 
forget--we paid in for years and years! If a state worker knows that 
they are only going to receive 40% of their SS from other jobs, will 
the government let them only pay in 40% of the tax rate? Definitely 
not.
    So--here is the public worker, retired and needing more income 
because the WEP has significantly reduced planned on retirement 
benefits. Being a cheerful, energetic soul, a post-retirement job is 
decided on as being the answer, and off to Wal-Mart our retiree goes. 
Unfortunately, that happy little retiree is now paying even more money 
into the Social Security system. Money that is, of course, at some 
point in the future going to be denied as a benefit. Our retiree is 
caught between a rock and a hard place by the WEP.
    Most retirement plans tout the Social Security Administration's 
``three-legged stool of retirement''--pension, SS and savings. The 
public workers affected by the Offsets had earned their SS 
``quarters'', had a public pension, and had saved. They had, in fact, 
planned for their future. Unfortunately for them, however, the WEP cut 
off one of the legs and the stool fell over!
Heroes need a hand . . .
    These laws, The Government Pension Offset and the Windfall 
Elimination Provision, are undermining the financial quality of life 
for America's Heroes. The very people who dedicate their lives to 
serving the public from one side of the country to the other, the 
firefighters, the police, the teachers and the other public workers are 
finding that their reward for that life of service is a slap in the 
face from the federal government. Over 75% of the nation's emergency 
responders will be affected by these laws, almost half of the teachers, 
and one third of the public employees, for a total of approximately 4% 
of the workforce.
    They are finding that they cannot collect benefits earned for them 
on a spousal work record under SS (the GPO), and they are finding that 
benefits from work that they did with their own hands is denied them 
also (WEP).
    These laws, the GPO and the WEP, have been like dirty little 
secrets that no one talked about in polite company. No one discovered 
them until the day they went down to SS to begin collecting a benefit . 
. . and what could be done then? No one explained to people changing 
careers that if they crossed the line between covered and non-covered 
SS work that they were putting their retirement income at risk. No one 
pointed out the fine print on the SS form that gives approximated 
retirement income, which warns . . . ``income from non-covered work may 
affect benefits''. No one today is telling the young people who are 
becoming the teachers of tomorrow that they need to consider these laws 
when deciding where to teach. The GPO and the WEP were virtually 
unknown just a few short years ago. But as with any secret, tell a few 
people, and soon everyone knows! We have been saying in loud voices all 
across the country . . . ``HEY_LISTEN UP_THESE LAWS APPLY TO YOU!''
What a ``Thank You''. . .
    When America is in crisis, we turn our eyes and hopes to our heroes 
. . . to the armed services and the emergency responders who dedicate 
their lives to serving the public. In our memories live times of Iraq, 
Desert Storm, Vietnam, Korea, WWII and of course the devastation of 9-
11.
    We revere these men and women. We build memorials, dedicate parks, 
and hold parades in their honor. And then--when they decide to move on 
and re-dedicate their lives to the people of America by becoming 
workers in the public sector in certain geographical areas, the federal 
government pays them back by stealing the Social Security (SS) benefits 
that they bought and paid for in their military or ER careers!
    If these brave men and women who have put their lives on the line 
as policemen, firemen and soldiers decide in their 2nd public service 
career to settle in certain areas, they will find that they will lose 
over \1/2\ of the SS they already earned. The Windfall Elimination 
Provision (WEP), a federal law enacted in the late 70's, causes anyone 
who accepts a pension from ``non-covered'' work (work that does not pay 
into SS) to lose a substantial portion of their earned SS. Those who 
have already dedicated their lives once to the public should not be 
cheated out of their SS benefits just because they chose to live in 
certain geographical areas as they re-dedicate their lives to public 
service. These thousands of American heroes are going to lose SS that 
they earned in time dedicated to the safety of America.
    The WEP changes the formula that is used to figure SS benefits for 
those who also earn a pension from non-covered work. This changed 
formula costs those with a SS pension up to $6,000 an amount equal to 
60% of their benefit. For those with larger SS pensions, the price tops 
out at $3,600 a year.
    For anyone to lose a retirement benefit that has been earned and 
paid for, to lose a benefit that is expected, is devastating. For the 
government to break the promise that was made when the taxes were paid 
is unfair. To steal SS benefits in a manner that is completely 
unfounded is criminal.
    But . . . to cut the benefits of those who have dedicated and re-
dedicated their lives to the service of the American public is even 
worse than devastating, unfair and criminal . . . it is an unpatriotic 
practice of the lowest order!
    What a governmental payback for America's heroes!
A new twist . . .
    There is an argument in favor of elimination of these laws from the 
state budget point of view. State budgets are in big trouble. There is 
not enough money coming in, to simplify the matter. But--there is a 
simple solution that would increase the cash flow into some of these 
economically strapped states, and that would, as President Bush says, 
``stimulate the economy''. This stimulation would, in turn, help the 
state budgets because people would be spending this money and then 
paying sales tax on what they buy. More business would mean a need for 
more employees, which means more jobs.
    If a one-time tax break payment of several hundred dollars is 
supposed to help the economy, how much more help could be given by 
allowing these earned benefits to be paid month after month? If 
``stimulation of the economy'' is the desired result, how much better 
it would be to eliminate the Social Security Offset laws than to simply 
give a one time tax reduction of a few hundred dollars!
    I am a retired Physical Education teacher, and over the 37 years 
that I taught, one of the things that was crystal clear was ``you do 
NOT change the rules in the middle of the game''. Back in the early 
`80s, a well-meaning Congress changed the rules in the middle of our 
game. As a result, we are in a 7th inning slump. But we have high hopes 
for a comeback.
There is no `right way to do the wrong thing' . . .
    Now, with hope in our hearts, we ask that Congress realize the 
unfairness of these laws and the necessity of voting to eliminate them 
by passing HR147 and S619. We ask that Congress not settle for less 
than ``the Social Security Fairness Act of 2005''. We ask that Congress 
do this because it is simply the right thing to do. And, as the title 
itself says, ``the fair thing to do ''. Because . . . there is no right 
way to do the wrong thing, and the Social Security Offsets are wrong.
    Next, I would like to address totalization and the future of Social 
Security.
    I just received a packet of information from Congressman Mike 
Michaud's office. It consists of a report from the Government 
Accounting Office on totalization with Mexico, a Congressional Research 
Service report on totalization with Mexico, and a few background sheets 
concerning totalization laws from the ``Congressional Quarterly'' of 
1977. I read it with mounting horror at the thought of what such an 
agreement could do to the future of SSA! While I realize that 
totalization is a good thing for some people (both U.S. citizens and 
others) whose work records straddle international boundary lines, such 
an agreement with Mexico would be a disaster!
    Those who compare such an agreement with the one now in place with 
Canada do not have a realistic grasp of the differences between the 
borders, the relationships at those borders, the ethnic groups 
involved, the numbers involved, and the unreliability of the necessary 
records and spastics involved. To compare the two is to compare an 
apple and--not even a slightly similar orange--but an apple and a 
watermelon!
    As a citizen of this country, I had to work at least 10 years or 40 
quarters to receive a SSA benefit. Now that I am over 62 and receiving 
of that benefit, I am told that because of a law called the ``Windfall 
Elimination Provision'', I cannot have 100% of that benefit. My husband 
has worked under SS for 45 years. Should he die, I will get not one 
cent from his SS survivor benefit due to a law called the Government 
Pension Offset''.
    Yet--totalization with Mexico would allow SS benefits to be paid to 
ILLEGAL ALIENS AND THEIR DEPENDENTS AND SURVIVORS. To make matters 
worse, these illegal workers could qualify on a work record that could 
be as small as 6 quarters or 1\1/2\ years! I do realize that these 
benefits would be reduced. That fact does NOT make me feel better!
    People in favor of totalization point to agreements with other 
countries and say that the illegal alien issue is not a problem. Those 
other countries do not mirror the situations at the USA/Mexico border. 
Those countries, unlike Mexico, do not have vast numbers of illegal 
workers in the United States. The projected payments as a result of a 
totalization agreement with Mexico would be $78 million a year and 
would grow to $650 million a year by 2050. But--the GOA fears that the 
$78 million figure is horrifically low due to unrealistic projected 
numbers of recipients and dependents/survivors! Under current 
agreements with other countries, $15 million is paid each month to 
about 94,000 recipients. Even if the projected $78 million is correct, 
it would represent an amount equal to two-fifths--well over one-third--
of the amount currently being paid to ALL countries per year!
    An extremely important point is that, through all of the pro/con 
arguments it must be kept in mind that record-keeping dealing with 
illegal aliens and their dependents and survivors must, by the very 
insertion of the word illegal, be extremely suspect! It would be 
criminal for totalization with Mexico to be allowed, only to have it be 
the straw on the camel of SSA's back. It would be criminal to allow 
benefits that are prefaced with the word illegal to drain the SSA trust 
fund so that benefits of U.S. citizens would be placed in jeopardy.
    It would be criminal to allow illegal, undocumented workers and 
their dependents and survivors to have SSA benefits while the Social 
Security Offset Laws of the Government Pension Offset and the Windfall 
Elimination Provision still prevent public servant citizens of the 
United States from receiving their own earned SS benefits.
    I strongly urge you, at every opportunity, to speak out against 
totalization with Mexico, and to vote against such an agreement when 
the time comes! I offer as an example of the insanity of this 
agreement, the following news story:
Government to pay for illegal alien's care
    WASHINGTON: Health care providers can charge the government for 
emergency care provided to illegal aliens beginning on Tuesday (5-10-
05).
    The Centers for Medicare and Medicaid Services issued final 
guidance Monday that sets up a system for reimbursement. Lawmakers set 
aside $1 billion over four years for the program, created by Medicare 
legislation passed in 2003.
    Two-thirds of the money will be distributed to health care 
providers based on a state's percentage of undocumented aliens. The 
remaining third will go to providers with the largest number of arrests 
of undocumented aliens.
    The states receiving the highest amounts are CA = $70.8M, TX = 
$46M, AZ = $45M, and NY = $12.25M.

                                     ----------

    I have to wonder about a government that does something like that! 
To create a system that relies on a percentage of something that is 
undocumented makes even someone who is mathematically challenged raise 
an eyebrow . . . and then to give the rest of the $ to the places with 
the largest number of arrests . . . whew!
    I have to repeat . . . what isn't understood about illegal? I 
wonder how much of the ``emergency care'' is made up of illegal aliens 
getting to the hospital just in time to have their child delivered . . 
. which, to my understanding, makes it a citizen of the U.S.? And then, 
of course, eligible for all sorts of aid, including Social Security . . 

    Totalization with Mexico would rely too often on things that are 
``undocumented'', creating havoc with the system, and placing an unfair 
drain on its resources.
I implore you--keep the Security in the Social Security system--using 
        methods that are just and fair . . . not simply politically 
        expedient.

                                 

      Statement of Marna Shultz, Pembroke High School, Pembroke, 
                             Massachusetts
    Many teachers work during the summer and hold part-time positions. 
If we pay into the social security system, it seems only fair that we 
should be able to collect the benefits.
    Today most people are not able to retire but continue working in 
positions that will require them to pay into a benefit system they will 
never be able to benefit from!!
    I have a friend that retired from teaching and became a lawyer. He 
is now a lawyer paying a tremendous amount of social security for which 
he will never reap any benefit. At least give the person a choice 
whether or not to pay the social security tax!
    It seems to be an unfair and senseless punishment for a profession 
that has already been hit with extra regulations. (The teachers in my 
system received a 1% raise this year. Will that kind of raise allow for 
much saving to be done?)
    Please help. Just be fair. Thank you.

                                 

                                                 Mentor, Ohio 44060
                                                      June 16, 2005

    I am writing to you regarding the Government Pension Offset (GPO), 
the Windfall Elimination Provision (WEP), S-349 and the issue of the 
Social Security Fairness Act of 2003.
    I have worked in private industry for 17 years and then elected to 
be a stay at home Mom when my two children were born. In 1991 I started 
my employment with Mentor Public Schools as a secretary and have worked 
here for 12 years. I am 59 years old and, of course, am starting to 
think about my retirement in the future. Six years ago, my husband 
passed away unexpectedly. I was left with two children in college and 
that has been tough on my salary.
    I am not a teacher--I am a classified employee. It has come to my 
attention that since I worked in private industry and have paid into 
the PERS that my social security benefits and that of my deceased 
husband's will be sorely reduced once I elect to retire. I certainly 
find this unfair. I have worked, and continue to work, to take care of 
me and my children. Why is it that because I have chosen to work, that 
I am punished with a drastic reduction in benefits when I retire?
    I need your help--please help me.
    Thank you.
                                                    Paulette Spehek

                                 

               Statement of Dan Stefancik, Mogadore, Ohio
    Please consider the following thoughts regarding Social Security 
and Public System pensions:

       Trying to be both fair and honest, I can see how a person who 
made a ``good living'' as a public employee after private employment 
may not warrant a full Social Security pension too. However, as in most 
economic cases, a one-size-fits-all approach is not practical, or 
reasonable, in determining how a retiring wage earner spends his or her 
``golden years'' of independent living.

    Many Baby Boomers, like myself, worked for years at relatively low 
paying jobs covered by Social Security before we moved to jobs covered 
by one of the public employee pension systems.
    Many of us never became the teachers, police officers, or 
bureaucrats that many people symbolize as the ``public employees''. 
Thousands of us are service workers, custodians, clericals, and school 
bus drivers who never made it out of the lower paying jobs in the 
public service areas. Sure, there are `civil service fat cats' who make 
a six-figure salary, but there are a lot more of us who don't!

      Most of us in the Ohio School Employees Retirement System 
(OSERS) are service workers who did not ever make $30K in our highest 
earning years. That means the MAXIMUM PENSION for working 30 years 
AFTER we left SS covered jobs would be about $1,650 per month BEFORE 
any deductions or contributions for health care (now $125-$500 per 
month).

    Most of us will face the following, or at least a similar financial 
situation in retirement:

      A conservative estimate of TYPICAL FIXED MONTHLY EXPENSES 
will often include:
        $150 property taxes for a small residence in an older 
neighborhood
        $ 50 for minimal homeowner property insurance.
        $125 for electric service if not using electric heat.
        $125 for natural gas service if using it to heat a 
small home.
        $25 for basic wired telephone service.
        $25 for basic television service.
        $50 for trash collection, water, and sewer service in 
an urban area.
        $100 for basic full coverage auto insurance.

    Totaling at least $650 per month for the most basic fixed expenses.

      That would leave less than $33 per day for food, 
medicines, clothing, housing costs, transportation costs, routine 
repairs, personal hygiene, cleaning products; and ``luxuries'' such as 
newspapers, magazines, postage stamps, pet care, and an occasional trip 
to the movies.

    In much of our country, the above pension and expense amounts do 
not even meet the minimum levels of the cost of living for middle-class 
Americans trying to make ends meet each month.
    The above figures are lower than average estimates meant to show 
you that THOUSANDS OF WORKING CLASS ``PUBLIC EMPLOYEES'' DID NOT MAKE 
ENOUGH DURING THEIR NON-SOCIAL SECURITY-CONTRIBUTING CAREERS TO WARRANT 
A REDUCTION OF SOCIAL SECURITY PENSION BENEFITS THEY WOULD RECEIVE FOR 
THEIR YEARS WORKED WHILE CONTRIBUTING TO SOCIAL SECURITY.
    A logical solution could be a sliding scale in the offset rule that 
would limit Social Security pensions for higher earning public 
employees without penalizing lower paid workers.
    Thank you for considering the above thoughts during your 
deliberations.
    --Delivery Worker under OSERS and eligible for a small S.S. pension 
too.

                                 

          Statement of Connie Stenlund, Vancouver, Washington
    I appreciate the opportunity to submit this written testimony on 
the Government Pension Offset (GPO) and Windfall Elimination Provision 
(WEP) Social Security provisions, and their adverse and unfair impact 
on me--a federal government retiree. First I want to thank Chairman Jim 
McCrery and the other legislators serving on this Subcommittee for 
having this important hearing. As a retiree that will be adversely 
impacted by these provisions, I urge all Subcommittee members, and 
lawmakers, to repeal them as soon as possible and allow me to receive 
my full social security benefits.
    I worked for the federal government with the U.S. Coast Guard, 
Department of Transportation, for 25 years and retired from the Civil 
Service Retirement System. However, because I am a single Mom and 
employed in a lower grade, I also had to work a part-time job to make 
ends meet. I paid into Social Security for about 28 years, long enough 
to receive benefits. I also worked long enough for the Federal 
Government to earn a government retirement.
    When I become eligible for my full benefits at 65 and 10 months, I 
will lose about $300 per month in my earned Social Security benefits. 
However, my earned government pension is not enough to continue to live 
in my condo and pay all my bills. Receiving my full $550 in earned 
Social Security benefits would greatly help me continue to be 
independent, and not a burden to my children or the federal government.
    Because of the 60% cut due to WEP, I must work for the rest of my 
life, or for as long as my health will allow. If I do not work, I will 
have to sell my condo and live with my children because I will not be 
earning enough money to support even my basic needs like rent, 
utilities, health care, and food. Earned benefits are what I need to 
keep me independent during the time of my life when I am supposed to be 
volunteering to help my community, instead of working.
    I am not sure how this will all shake out, but I do know that I 
should be receiving my full $550 in earned Social Security benefits. I 
ask all lawmakers in the Congress, and specifically those serving on 
this Subcommittee, to correct this wrong. Please do not let my 60% 
Social Security reduction continue simply because I served my country 
by working for the federal government.
    Thank you.
            Sincerely,
                                                 Connie M. Stenlund

                                 

                                     Lakeville, Massachusetts 02347
                                                       June 6, 2005
Dear Representative;

    I will be 60 years of age this July. In 1984, I left the private 
sector for full-time employment as a faculty member for the State of 
Massachusetts at Bridgewater State College. I am still currently 
employed as a member of the faculty on a full-time basis in the School 
of Management.
    After meeting with members of the Social Security Office in nearby 
Brockton Massachusetts, I was shocked to find that my and my wife's 
social security will be cut almost 40% due to GPO/WEP laws. I was told 
that this is because I am a mandatory member of the Massachusetts 
State's Teacher Retirement System.
    I started working under the Social Security in 1963 after high 
school graduation. I graduated from college in 1967 and made 
significant earnings under Social Security until 2003 as my attached 
Earnings Record indicates with a few exceptions (zero dollars income) 
noting periods when I returned to school or was between jobs.
    I continue to pay taxes and make contributions to Social Security 
because I often work a second job under social security to compensate 
for the low public college faculty wages in Massachusetts which run 
some 17% below the national average.
    Why does a law-abiding, tax paying citizen with many years of 
contributing to Social Security outside the Massachusett's Teacher's 
Retirement System get penalized for being forced to join a State 
Retirement System?
    In my years of employment prior to becoming a college professor, I 
worked hard and wanted to live the American dream of retirement at the 
proper time. How could I possibly know that my significant 
contributions to social security would sometime in the future become 
off-set by future contributions in a different state run retirement 
system?
    I ask that the House revise or repeal the current law of the WEP/
GPO and eliminate the unfair WEP/GPO penalties for workers in America 
who contributed to Social Security in good faith. Those, who like 
myself, should receive the retirement benefits that echo the amounts 
they paid in over the years. Thank you.
                                        Professor Frank W. Sterrett

                                     ----------

 Earnings Records (from March 28, 2005 Social Security Statement mailed
                             to F. Sterrett)
------------------------------------------------------------------------
                          S.S.
         Year           Earnings           Year            S.S. Earnings
------------------------------------------------------------------------
1963                     $ 377    1986                           $ 0
1964                       912    1987                           500
1965                       305    1988                          6400
1966                       727    1989                          6400
1967                      2584    1990                             0
1968                      6421    1991                          7800
1969                      7330    1992                         17400
1970                      7800    1993                         13399
1971                      4975    1994                          1500
1972                      8546    1995                         56072
1973                     10800    1996                         62700
1974                     13140    1997                         65400
1975                     12761    1998                         68400
1976                     15300    1999                         72600
1977                     16500    2000                         76200
1978                     17700    2001                         64212
1979                     16754    2002                         21700
1980                     19426    2003                         34897
1981                     26983    2004                          6747
1982                     30500
1983                     35700
1984                       833
1985                         0
------------------------------------------------------------------------

                                 

                                              Beaumont, Texas 77706
                                                      June 23, 2005
    Thank you for giving me the opportunity to make this statement.
    Millions of Americans are counting on you to do the right thing. My 
name is Bonnie Swain and I have worked as a Texas schoolteacher in the 
recent past. I had proudly returned to the university setting in my 
late forties to obtain both elementary and secondary teaching 
certifications. After more than twenty-five years in the public sector 
(mostly as a registered nurse), like many professionals, I felt 
unfulfilled in my profession, and was drawn to the field of teaching to 
make a difference in children's lives. Not long after entering the 
classroom, I was made aware of the Government Pension Offset and 
Windfall Elimination Provision that affect social security retirement 
benefits. As a single person, I could not afford the massive reduction 
to my own personal social security and the PENALTY for switching 
careers! How sad for the children who could benefit from educators 
entering teaching for the betterment of society! Persons who leave 
relatively lucrative professions to teach are certainly not doing this 
for monetary gain. But this unfair system continues to drive out some 
of the best educators.
    The GPO and WEP have been heartbreaking in every respect, as this 
also affects many of our first responders--such as policemen, 
firefighters. Remember 9/11? At its very core, this country depends on 
these professions of CAREGIVERS and CIVIL SERVANTS. It is absolutely 
unconscionable to PENALIZE these sacrificing professions. As I stated, 
millions of Americans are counting on you to do the right thing. I am 
confident that justice will prevail, and the GPO and WEP will be 
repealed.
            Respectfully submitted,
                                                       Bonnie Swain
    Former elementary and secondary teacher, Port Arthur ISD, Port 
                                             Arthur, TX (2001-2004)

                                 

          Statement of Juanita J. Terrell, Mont Belvieu, Texas
    Thank you for allowing me to wrote to you. I am a retired Texas 
school secretary.
    The Social Security Offset has deprived me of duly earned benefits. 
The WEP cuts benefits directly earned through a job covered by Social 
Security. In my case, I paid into the Social Security system while 
working at other jobs before becoming a school secretary.
     I have paid in enough quarters to receive my benefits but cannot 
get my full benefits because of the sentence that says ``must have been 
paying social security on the last day of employment prior to 
retirement'' I receive $88.00 per month (after Medicare) when I could 
be receiving another $300. (or more).
    I also know widows who are really hurting because of the GPO.
    I am asking you to pass HR147 and S619, known as the Social 
Security Fairness Act, to eliminate the Government Pension Offset and 
the Windfall Elimination Provision. In each case, receiving a public 
pension based on employment not covered by Social Security is all it 
takes to trigger the offset.
    Thank you for your consideration.

                                 

                                              Homer, Illinois 61849
                                                 September 12, 2005
Ways and Means Committee--

    My letter is to plead with you to repeal Social Security's GPO and 
WEP. Being penalized by both these actions is grossly unfair.
    My brief history--I was married for 28 years, then, sadly, 
divorced. I worked just less than five years in my local public school, 
then ten years with my husband, who was self-employed. Around the time 
of my divorce I began work as a secretary at the University of 
Illinois. I worked sixteen years, and then retired. However, because 
sixteen years is not enough to live on, I currently work part-time.
    My former husband passed away almost five years ago. I was told by 
SSA that I am entitled to $1,400/month from him. However, because of 
the GPO and WEP, I am only drawing $383 in widow benefits.
    Please do not write to me to explain why these two acts were made 
years ago. I am being penalized for having worked in two systems, an 
extremely unfair and unjust act. Please--let me draw all of my 
husband's social security, to which I am legally entitled, so that I 
may completely retire.
    Because I have written a number of letters to legislatures, even 
President Bush, I will now watch to see who actively works to repeal 
the GPO and WEP. I will cross party lines to vote at the next election, 
which I have never done before. Also, I will begin e-mailing a number 
of media to investigate all this, in particular what this country is 
doing to assist Mexican immigrants with social security benefits.
    Please, repeal the GPO and WEP. I look forward to the news in the 
weeks ahead that this has been done. Thank you for listening to my 
situation.
            Sincerely,
                                                 Carol A. Wakefield

                                 

                                          Stow, Massachusetts 01775
                                                  September 9, 2005
Dear committee members,

    I am writing this letter to ask for your help in repealing the GPO 
and WEP. I am a school teacher who when retiring will lose \2/3\ of my 
retirement from my husband's social security pension! My husband and I 
have worked hard for 30 years and retirement is nowhere in sight. If I 
retire in the next 5 years my pension from the teacher's retirement 
will be about $2000.00 per month. If my husband dies before me, I will 
only stand to collect \1/3\ of his social security pension due to the 
penalties in the present laws. I cannot live on this poverty level 
amount of income. I don't know of anyone else in all the people I know 
and work with who will be treated so badly as myself. Even the 
presenter from the social security office told a whole auditorium full 
of people (1000) that my particular situation is the most unfair of 
all. I was told that it is inhumane what is being done to me and my 
family. Furthermore, if social security benefits are modified and cut 
further for my age ( 52 yrs old) I will stand to loose more. How can 
this happen and nobody cares about me? I have given to my country my 
whole life as a teacher. Why am I being treated so badly??? Please help 
my cause and repeal the GPO and WEP. Mass is only 1 out of 10 states in 
the whole country that does this to its teachers! 40 out of 50 states 
treat their teachers with more compassion . . . Many thanks for 
listening to my plight . . . ( I hope)
            Sincerely,
                                                  Sharyn Walczewski

                                 

          Statement of David M. Wetzel, Baton Rogue, Louisiana
    Thank you for giving me an opportunity to write to you concerning 
Social Security.
    Let me first state where I personally stand with respect to the 
current social security system. I am 66 years old. I have worked part 
of my life under social security: part time jobs in high school, summer 
jobs in college, as an engineer for Gulf Research, and as a faculty 
member at the Catholic University of America. I currently work for the 
State of Louisiana as a faculty member at Louisiana State University. I 
have also made private investments in TIAA, IRA's and 403b's.
    My work under social security totals many more than 40 quarters, 
and I have 26 years in the Louisiana retirement system.
     I am in a bind. I can not afford to retire.
    Many of the dollars I put in Social Security were painful. One year 
our raise at Catholic U. was insultingly small. The president explained 
that social security taxes had gone up and taken most of the raise 
money he and managed to put together for us. Now I find I will get 
little or no benefit from those social security taxes.
    I have a concern about changes in the social security system. It is 
that changing the system will have a severe negative effect on some 
people, as the 1983 changes did on me. In 1983 the social security law 
was changed to say that people can not draw two government pensions. 
Thus, my social security benefits will be severely cut. Because I did 
not work at LSU for all or most all of my career, my state pension will 
not be large. My BS, MS, and PhD meant that there were nine years of my 
career during which I did not have an income or any retirement plan 
benefits. By the way, my private investments have not done well. The 
only one to make any money is TIAA. That is why I must keep working.
    What if the proposed ``private accounts'' do not make much money? 
What if the investments take a temporary drop at the point of 
retirement? In principle they would have been good for me. At least 
social security would not be able to cancel that part of my benefits. 
But the uncertainty remains.
    The best thing you can do for me and many others with split careers 
is to undo the reforms of the 1983 law. Please pass HR 147 and S619, 
the Social Security Fairness Act and the Windfall Elimination 
Provision. Let us receive the benefits we paid for.
    My submission is on my own behalf only, however I work for 
Louisiana State University.

                                 

      Retired State, County and Municipal Employees Association of 
                                                      Massachusetts
                                      Plymouth, Massachusetts 02360
                                                       June 9, 2005
Honorable James McCrery, Chairman
House Subcommittee on Social Security
2104 Rayburn House Office Bldg.
Washington, D.C. 20515

Dear Mr. Chairman:

    Our Association appreciates this opportunity to offer our comments 
on Social Security's Government Pension Offset (GPO) and Windfall 
Elimination Provision (WEP), as well as mandatory Social Security 
coverage. We thank you for including our statement in the June 9, 2005 
hearing record of the Subcommittee on Social Security.
    For over 37 years, our Association has been the leading advocate 
for public retirees and their survivors in Massachusetts. Currently, 
our membership totals over 62,000, of which approximately 11,000 reside 
outside of Massachusetts.
    While our primary focus has been, and remains, at the state and 
local levels, we have also involved ourselves in federal issues, 
particularly those related to Social Security and Medicare. Foremost, 
in connection with Social Security, are the GPO, WEP and mandatory 
Social Security coverage.
    Among our members are widows, who, in addition to being homemakers, 
worked at relatively modest public sector jobs that supplemented their 
family income and enabled them to earn, by today's standards, a 
relatively small public pension. These members, and their husbands, 
believed that if they became widows, they would hopefully have an 
adequate retirement income because they would also receive their 
husband's full Social Security benefits.
    Unfortunately, when their husbands died, they discovered, to their 
shock and dismay, that because of their small pensions, they were not 
eligible for their deceased husband's full Social Security. Instead, 
they were told by the Social Security Administration (SSA) that because 
of the GPO, they would receive far less than they anticipated, in many 
cases almost nothing.
    Our membership also includes those who worked two jobs--one in the 
public sector and another with a private employer--in order to support 
their families. Through their private sector employment, they 
contributed to Social Security, earning a benefit on their own. 
Naturally they expected that their hard work in the private sector 
entitled them to the same Social Security benefits as their co-workers.
    However, the expectations for many of these members failed to be 
realized when they received their first Social Security check. That's 
because the WEP reduced their Social Security benefits by as much as 
sixty percent.
    Over the years, the number of members contacting the Association 
over the GPO/WEP's devastating effect on their lives has steadily 
increased. Everyday, we receive calls, emails and letters from members 
pleading with us to do all we can to relieve their hardship. Their 
calls for help have become, tragically, all too commonplace. As a 
result, our Association committed itself to resolving their problem.
    At this time, we call upon the Subcommittee to report out a bill 
for action by the House. We believe that such legislation should repeal 
both the GPO and WEP.
    We also believe that any bill should not include mandating that 
newly hired public employees in Massachusetts, and other non-Social 
Security states, be covered under Social Security. Analyses have shown 
that the short-term infusion of Social Security taxes from new hires 
will have a relatively insignificant effect upon the system's future 
solvency. Moreover, the revenues, generated by these taxes, will be 
offset in the long term when those employees receive their Social 
Security benefits.
    More important is the overwhelming tax increase upon the 
Commonwealth and its political subdivisions. State agencies have placed 
the cost at nearly $3.9 billion over the first 10 years under mandatory 
Social Security. As a result, state and local officials would have to 
increase taxes, cut essential services in areas, such as education or 
public safety, or both. Simply put, the end does not justify the means 
in this particular case.
    In the 1950s, state and local governments were given the option to 
join the Social Security system. While many states and localities did 
enroll in the system, Massachusetts and its political subdivisions 
chose to maintain their own comprehensive retirement system, 
specifically developed for their own retirees and employees, because it 
provides superior benefits for those who chose a career in public 
service at lesser pay.
    If one considers how mandatory Social Security will disrupt the 
well-established system and cause new long-term fiscal problems at the 
state and local levels, then only one conclusion can be reached. Social 
Security should not be mandated for newly hired public employees in 
Massachusetts and similarly situated states.
    In conclusion, we again appreciate this opportunity to voice our 
opinion on the GPO, WEP and mandatory Social Security and urge the 
Subcommittee to act promptly on needed legislation repealing both the 
GPO and WEP. There is no question that it will bring a deserved measure 
of dignity to the lives of those currently being severely hurt by these 
laws.
    Thank you.
            Sincerely yours,
                                                        Ralph White
                                                          President

                                 

         Statement of Pete Zimmerman, Mission Viejo, California
    This statement from a public servant is written primarily to urge 
the House Subcommittee on Social Security NOT to try to partially fix 
the WEP by supporting the PSRPA (H.R. 1714). At the same time, it is 
hoped that the Social Security Subcommittee will instead take the next 
step and support total elimination of both the WEP and the GPO 
provisions. I also wish to express my thanks to Chairman McCrery for 
conducting a series of open subcommittee hearings with the general goal 
of ``strengthening Social Security for the future'' and, in the 
specific case of this June 9 hearing, ``to examine proposals to ensure 
teachers, police officers, firefighters, and other public employees are 
treated fairly under the program.''
    Below are specific concerns/flaws relating to the proposed PSRPA 
whether it might remain as a ``stand alone'' bill or might eventually 
become a part of a broad, omnibus bill crafted to protect older, 
retired people in a variety of ways. This may be one of the few times 
that you will hear any negative arguments about the PSRPA, other than 
the most obvious one which generally asserts that Congress should 
eliminate the WEP as well as the GPO in their entirety and not spend 
money or time on a bill which might only significantly help a small 
minority of public servants. In addition, I have included at the end of 
this statement, for your review, excerpts from previously written 
letters in which I specify various proposals/options/alternative 
solutions to the PSRPA as it is written in its present form.
    Although the PSRPA is supposed to modify the WEP in a way that it 
will be more ``fair'' to public servants (it is in fact named the 
Public Servant Retirement Protection Act), I would argue that this bill 
would do little (if anything at all) in the way of protecting a decided 
majority of public servants.  Many of its sponsors make it sound as if 
the PSRPA will do something significant for most all of the public 
servants who are affected by the WEP. However, it could be argued that 
it is mainly a way to better recruit teachers (starting in their mid 
30's) in states like Texas, California, Ohio, etc. (which are the home 
states of most of the original sponsors of H.R. 1714 as well as Sen. 
Hutchison who has just re-introduced a companion PSRPA in the U.S. 
Senate). Its supporters should come right out and clearly admit that 
this bill would tend to benefit most significantly a minority of public 
servants who have worked in two 10+ year, back-to-back careers (one 
covered by Social Security and one not covered), such as those teachers 
recruited in states wherein they pay into a retirement system separate 
from Social Security. But to argue mostly that this is a bill designed 
primarily to significantly benefit most public servants who are 
affected by the WEP, is misleading and inaccurate; and, if passed, it 
could lead to problems (for the SSA and members of Congress) in the 
future as public servants retire and discover just how limited this 
bill really is.
    Over the past weeks I have provided some members of Congress, as 
well as leaders of various public servant organizations, with 
calculations of my Social Security benefits under the presently written 
PSRPA (H.R. 1714). These calculations using 4 different work scenarios 
were done using the PSRPA worksheet provided on the NEA website. The 
first scenario showed me working two jobs (one, a career job as a 
teacher, not paying into Social Security and the other, a part time job 
wherein I did pay into Social Security) during the same time over a 35-
year period. The second scenario showed a person who worked a 
``covered'' (by Social Security) career job for 17 years followed by a 
``non covered'' career job (teacher?) for 18 years. Scenarios 3 and 4 
were similar except they were over a 20-year period (rather than 35).
    The scenarios wherein one is working two separate, back-to-back 
jobs (neither of which is a part time job) comes out with higher SSA 
benefits under the PSRPA ($711/month as compared to $395 for me as 
calculated in the first scenario). At this point, it seems very 
important to be aware that the key part of the PSRPA formula, or 
regular Social Security formula/P.I.A., is that one has to divide the 
total average Social Security indexed earnings over 35 years by one's 
total combined (``covered'' and ``non-covered'') indexed earnings in 
order to arrive at the all-important percentage (line 10 of the PSRPA 
worksheet); this percentage is then used in the final step to determine 
one's actual benefit. Simple math would demonstrate that in order for 
everything to be equal, those public servants, working two jobs at the 
same time over their work career, would have to consistently earn on 
their part time, ``covered'', second job at least half of what they 
make on their main, ``not covered'' public servant job_and that would 
be very unlikely for a teacher to keep up unless he/she devoted little 
time to his/her family and/or devoted little time to grading papers, 
class preparation, or extra curricular activities related to school.
    (Please note that the presence of a ``hold harmless'' clause to 
protect a large number of public servants from receiving even lower 
Social Security benefits than un der the present WEP does not rectify 
the wrong that most of these same public servants do not have a 
mathematical chance under the PSRPA formula to improve their benefits 
to a degree which is even close to being as significant as those who 
may work two separate career jobs, back-to-back. So does the inclusion 
of a ``hold harmless'' clause really fit into the argument that the 
PSRPA is designed to ensure fairness and equal treatment?)
    Furthermore, if calculations were done on a public servant affected 
by the WEP who earns half as much as me in both jobs (``low income'' 
category which Social Security was intended to help the most), I submit 
that it will show that there is little substantial difference between 
the calculated benefits under the present WEP and those calculated 
benefits under the PSRPA. Anyway, if Congress really wanted to 
concentrate on helping the low income public servants, it probably 
should be looking to modify the GPO (which affects a lot of older women 
who are at or below the poverty level) before they spend so much money 
and time trying to partially fix the WEP (a provision which affects 
relatively few at or below the poverty level). 
    Again, then who does the PSRPA significantly help and to what 
degree? Do the billions of dollars set aside for it go to substantially 
benefiting onlyh a small minority of public employees over the next 10 
years? It would be very helpful if the Social Security Subcommittee 
could provide some statistical analysis that would answer these 
question, making sure to include calculations using the most common 
scenarios_those that include a public servant working a ``covered'' 
part time job at the same time as a ``non covered'' main job. Although 
it is true that the Congress had a statistical study done (by the CRS) 
last year on the probable results of the PSRPA, this study (I would 
argue) dealt mainly with the scenarios of those working 2 separate, 
career jobs, one after the other over a period of time (and NOT 
scenarios of those working a career job and a part time job 
simultaneously over a period of time). Obviously, there are far more 
affected public servants, especially teachers, in the latter scenario.
    It should also be emphasized here that NOT ONE of the persons or 
organizations to whom I have submitted my views and calculations has 
been able to show my arguments and/or calculations to be wrong_and I 
have provided them with all of the necessary information to do the 
calculations. (To be more specific, all have either failed to complete 
the calculations or have not responded to letters requesting that they 
check over my own calculations, which are in reality a valid 
representation of how the vast majority of public servants would be 
affected by the PSRPA.) If it could have been shown that my 
calculations were wrong, thus demonstrating that the bill was really 
fair to a sizable majority of affected public servants (as touted), it 
would be easier for one to accept the PSRPA as written and the SSA and 
Congress would not have to worry so much about the resultant problems 
that I foresee--from the administration of such a provision to the many 
questions/complaints from public servants with whom the SSA and members 
of Congress (and their staffs) could very well have to deal for many 
years.
    Also you should be aware that there seems to be only ONE actual 
example of a person's PSRPA calculations on the internet or in any 
other documentation; and that lone example deals with the scenario of 
working two career jobs, back-to-back. Furthermore, when public 
servants are being advised to do their own calculations OR to contact a 
Social Security office if they want to know how it will affect them 
individually, those giving this advice have to know that it is not that 
simple to do--and that many will just give up, assuming (hoping??) that 
their Social Security benefits will increase significantly under the 
PSRPA as they have been assured. When they get ready to retire in the 
upcoming years, only then will many discover that the PSRPA's real 
effect on their benefits might be minimal at most.
    I wish to emphasize that I have offered alternative solutions 
(options) to the presently written PSRPA which clearly would be MUCH 
simpler AND MUCH less costly to administer AND would seem to benefit 
more public servants, although over the long run it might cost a little 
more than that estimated for the PSRPA. These options (see below) 
include simply adjusting the ``substantial earnings'' table of the 
present WEP. A major objection to these solutions by the proponents of 
the PSRPA has been that by only adjusting the ``substantial earnings'' 
table of the present WEP would be just continuing the use of a ``band-
aide'' approach. However, if one does argue that such changes would be 
a ``band aide'' approach, how can he ignore the fact that a ``hold 
harmless'' clause (the biggest ``band aide'' of all) had to be included 
in the PSRPA. Furthermore, note that there is even a key difference 
between these two ``band aides''--the ``substantial earnings'' idea in 
the WEP is not limited, whereas the PSRPA's ``hold harmless'' ``band 
aide'' was established to give protection only to present or already 
retired public servants. What happens in the future with those having 
to see their benefits reduced to an amount which could be much lower 
than what it would have been under the present WEP?
     The other argument that proponents of the PSRPA use to try to 
discount my proposed solution(s) is that it would continue using the 
(so-called) ``arbitrary'' formula utilized by the WEP; this wrongly 
implies that the original (and present) Social Security formula (the 
P.I.A.) never was, nor is now, an ``arbitrary'' formula. Some might get 
the impression that using the words such as ``band aide'', 
``arbitrary'', ``fair'', ``equal'', etc. will help to convince people 
that this new bill is so much better than anything else. Instead of 
using that tactic, if a partial fix of the WEP is to be passed, 
shouldn't it come down to deciding what actual results will be better 
for the affected public servants and for the government--those under 
the PSRPA or those under a proposal like mine? Again I repeat that the 
main arguments of the PSRPA proponents have been centered all along on 
the questionable contention that the PSRPA does not contain the use of 
a ``band aide approach'' nor does it make use of an ``arbitrary'' 
formula in its calculations.
    Thank you in advance for your consideration. Please review the 
attached excerpts which contain an explanation of alternative 
solutions/options to the presently submitted PSRPA (H.R. 1714).
    NOTE: The following are excerpts from two of my letters written in 
2004 explaining the necessity for questioning the PSRPA as well as 
explaining the workings and benefits of some alternative solutions/
options to the PSRPA which had been considered during the 108th 
Congress (referred to as H.R. 4391 or the Brady-Hutchison bill).
From a letter written on July 30, 2004
    ``It would seem fair to include a ``Substantial Earnings'' concept 
in the final version of H.R. 4391. This concept was included by 
Congress in 1983 as one of a number of ``exclusions'' from the WEP--
obviously inserted to protect a significant number from unfair 
treatment. If H.R. 4391 is to be more fair to all of those who had 
different jobs (one of which required paying into Social Security and 
one of which required paying into another government pension), the 
following table should be a part of the Brady-Hutchison bill (and be 
coupled with the current SSA table wherein the Social Security 
Administration identifies the amount necessary to have ``substantial 
earnings'' for each year, starting in 1937--attached). By the way, the 
following table was designed to ensure that no one under the present 
WEP system (with their existing tables) would be penalized any more; 
and thus there would be no need for a ``hold harmless'' clause.

 
------------------------------------------------------------------------
Number of Years of Percentage    Substantial Earnings Reduction Factor
------------------------------------------------------------------------
          30 or more                                                90%
          29                                                        88%
          28                                                        86%
          27                                                        84%
          26                                                        82%
          25                                                        80%
          24                                                        78%
          23                                                        76%
          22                                                        74%
          21                                                        72%
          20                                                        70%
          19                                                        68%
          18                                                        66%
          17                                                        64%
          16                                                        62%
          15                                                        60%
          14                                                        58%
          13                                                        56%
          12                                                        54%
          11                                                        52%
          10                                                        50%
           9 or fewer                         No effect on calculations
------------------------------------------------------------------------

    This would affect those with Social Security ``covered'' work which 
was of a significant amount; i.e. it would not penalize those working a 
good paying part time, covered job over a 30+ year period of time. And 
it would set a specific floor on the reduction of Social Security 
benefits for those transferring from a ``covered'' job into a ``non-
covered'' job after 10 years. In general, those going into teaching in 
their 30's might seem to be a more effective / more energetic teacher 
than those in their 40's or 50's.) Obviously, this would thus help the 
recruitment of teachers (both quantity and quality) mainly in those 
states impacted by the WEP to some degree, including Texas, California, 
Ohio, Louisiana, Illinois, Connecticut, Missouri, Georgia, Florida, 
Colorado, Maine, Alaska, Kentucky, Rhode Island, Nevada, and 
Massachusetts (whose teachers pay into a separate government pension 
rather than into Social Security).
    Wouldn't it be a much simpler procedure to modify the existing 
table (see attached) showing the ``new'' reduction factors and 
respective number of years of ``substantial earnings'' while keeping 
the other SSA table (see attached) which identifies the amount of 
earnings each year necessary to qualify for ``substantial earnings''? 
Anyway, it seems as if these tables would have to continue to exist 
anyway, since the SSA under Brady-Hutchison will be comparing the new 
final benefit figure with the old in order to arrive at the highest 
figure for each individual. Inclusion of this provision would seem to 
not only make it fairer but also make it much easier, and thus cheaper, 
to calculate the benefits of those who have had a decent paying second 
job at the same time as they have a full time, career job.
    In addition, the total cost born by the federal government would 
not seem to be substantially more than what the original H.R. 4391 
would cost, in the end; and it will probably benefit many of those 
transferring from a lengthy ``covered'' career to a ``non-covered'' 
government career at about the same level as the formula in the 
original H.R. 4391. For example, a person retiring with 15 years of 
``substantial earnings'' would calculate his Social Security benefits 
after using a 60% (rather than a 40%) ``front'' factor--this 20% 
difference would amount to roughly $122 ($612 x 20%) when using the 
SSA's formula (90%-32%-15%) for calculating one's entire benefits. 
Although this $122 amount is only about 1/3 of the benefit if the WEP 
would be completely eliminated, it could be considered a truer ``first 
step towards the eventual elimination of the WEP''.
    Incorporation of the above table in the final version of Brady-
Hutchinson would ensure that someone contributing fluctuating amounts 
to Social Security over a period of many years in a second job (wherein 
even zeros would have to be averaged in), would be treated fairly. 
According to some of its proponents, the intent of the Brady-Hutchison 
bill is ``to create a fair and equitable formula that allows 
individuals to get back what they have paid into Social Security''; or, 
it is ``to treat all workers fairly''.
From a letter written on August 5, 2004
    ``First of all, I realize there are many in Congress who prefer 
hearing and supporting arguments stating that ``this approach would pay 
people exactly what they earned in both systems--no more, no less''. 
``Equal treatment for all Americans seems to me like the best 
approach''. Or ``getting people the benefits they earned for themselves 
''. Or ``in further researching the unfairness of the current arbitrary 
formula, I decided to go with a fair approach--I don't see anything 
more fair than equal treatment.''
    However, two things seem to bother me about these arguments--(1) 
the PSRPA does not seem fair to public servants, such as in my case, 
who worked a second job which was covered by Social Security during 
many of the same years they were working a full time job which was not 
covered by Social Security. And (2) if the PSRPA is passed and 
eventually approved by the President, could it no longer be looked upon 
as a first step toward beginning to address the problem of the WEP--but 
rather the last step in addressing the WEP? And if the PSRPA were to be 
passed, could it not be argued in the future that because ``all 
Americans are now treated equal'' (as many refer to the Government 
Pension Offset (GPO) today as an equalizer), why should we treat any 
group (teachers, firefighters, police officers, etc. whose one job is 
not ``covered'' work) better than other Americans in paying Social 
Security benefits? I fear then that it might take a long time to ever 
get to take a further ``step'' in dealing with certain inequities. So 
that is why I am trying to eliminate any obvious inequities in the 
proposal NOW during the discussion stage rather than later after it has 
gone into effect as a law.
    To my point above about how PSRPA would appear to discriminate 
unfairly against many who worked a second, part time job covered by 
Social Security during the same years they are working a full time job 
not covered by Social Security, I add the following. Accordingly to my 
calculations (please correct me if I'm wrong after reviewing the 
attached information), under the pre-1983 system when I retire at age 
65 I would have collected about $970 (according to the SSA online 
calculator); under the present WEP formula I would be collecting about 
$660 (according to the SSA online calculator); and under the Brady-
Hutchison formula (if not for the ``hold harmless'' provision) I would 
be collecting about $450. This doesn't seem fair to me.
    Again, while arriving at the $10 to $11 billion approximate cost of 
the bill, did someone try using different work scenarios so that it can 
be shown how different groups in the future would be affected by PSRPA? 
Roughly what percentage of the public employees subject to the WEP 
would fall into the scenario of working two separate, consecutive 
careers (one ``covered'' and one ``not covered'') over their 35 work 
years whether the ``covered'' job is first or last? And then, roughly 
what percentage of public employees would fall into the scenario of 
working a part time ``covered'' job during the years that they were 
working a full time, public service job which was ``not covered''? (My 
guess would be that the second scenario would be significantly larger.) 
Because PSRPA is described as a way to allow individuals ``to get back 
what they have paid into Social Security'' shouldn't at least those in 
the latter scenario who had good paying, part time jobs be benefited 
significantly by this proposal? (Roughly what percentage of teachers 
within this scenario would be benefited?)
    The NEA website uses only one example/scenario to explain the 
effects of PSRPA (and various other websites refer to the same one). It 
is of a person working 10 years in a ``covered'' job (with indexed 
earnings of $200,000) and after that career, teaching for 25 years 
(with ``non covered'', indexed earnings of $300,000). In this example 
PSRPA would result in a total benefit of about $294 (about $100 more 
than under the present WEP). Sounds good for this type of work 
scenario. BUT it's not too fair when you compare my indexed earnings 
covered by Social Security to that of the examples. I had about 
$525,000 in indexed earnings in Social Security covered work over this 
same 35 year period--2.625 times as much as the person in the NEA 
example. However, under the PSRPA formula my Social Security benefits 
would be only 1.514 times as much as the example. Is that really ``fair 
and equitable'' and/or does it allow for individuals ``to get back what 
they have paid into Social Security''? (By the way, 2.625 times the 
example's $294 benefits equals about $780 in SSA benefits to me which 
would be about $120 over the $660 that I would receive under the 
present WEP formula and about $200 less than what I would have received 
had the WEP not been put in effect in the 1980's.
    Now I return to the idea of simply modifying the present 
``substantial years'' table to correct the inequities of the WEP. 
Again, I can't help but wonder if just modifying this table isn't the 
best way to go. Hopefully, you will continue to hear me out; and if you 
can see any obvious flaws/weak points in my thinking and proposal, 
please don't hesitate to spell them out to me.
    First of all, I realize that it might be very hard to say 
(especially for two people named Brady and Hutchison) that just maybe 
the PSRPA as it is written is not the best answer to trying to at least 
partially fix the unfair WEP. Maybe we should consider other 
possibilities that might be even more fair, would be much simpler to 
calculate and thus less confusing to the retiree, would be far less 
costly to administer, would take a lot less time to set the system up, 
and might cost about the same ($11 billion over 10 years). I would hope 
that both Republicans and Democrats, would agree that if there could, 
in fact, be a fairer, simpler, and not too costly way to do it, it 
should at least be looked into--and especially if this alternative 
would fit the requirement (of some) that any change to the present WEP 
should result in paying out Social Security benefits based on what was 
put in by the individual (at about the same ratio as PSRPA would). Up 
to this point, have any of the affected teacher, firefighter, or police 
officer groups brought this up as a possible alternative--especially 
after listening to the less-than-positive testimony from the SSA 
representative at the recent Social Security Subcommittee hearing on 
H.R. 4391?
    If Congress decided on a temporary fix of the WEP, rather than its 
entire elimination, adoption of a table such as Table #1 below would 
seem to remove a lot of the headaches, the delays, the potential 
inaccuracies, and the high costs associated with implementing/
administering the PSRPA. It would only require the SSA to change one of 
their own tables (keeping the table that defines what a ``substantial 
year of earnings'' is for each year starting in 1937 when Social 
Security went into effect). (Refer to the SSA tables at the back.) It 
would be very simple to calculate new benefits, even for those who 
retired long ago and/or whose work as a public servant went back many 
years. This table would also be less expensive than one in which it 
would take only 20 years for the 90 percent factor not to be reduced. 
This approach would gradually and uniformly reduce the 90 percent 
factor down to a low of a 50 percent factor proportionately to one's 
number ``substantial earnings'' years decreasing on a scale from 30 to 
10. And I don't see it benefiting fewer individuals than would PSRPA 
(even those transferring into a ``non covered'' teaching job from a 
``covered'' job). Furthermore, resulting benefits would not be less 
than under the present WEP, eliminating any need for a ``hold 
harmless'' clause. Finally, it would benefit more of those public 
servants working a good paying, part time job while also working a full 
time, ``non covered'' job (i.e., it doesn't distinctly favor the 
minority of those public servants who have worked in two consecutive 
full time careers--one ``covered'' and one ``not covered'').

                                Table #1
------------------------------------------------------------------------
                   (Same as in my July 30, 2004 letter
-------------------------------------------------------------------------
Number of Years of Percentage    Substantial Earnings Reduction Factor
------------------------------------------------------------------------
          30 or more                                                90%
          29                                                        88%
          28                                                        86%
          27                                                        84%
          26                                                        82%
          25                                                        80%
          24                                                        78%
          23                                                        76%
          22                                                        74%
          21                                                        72%
          20                                                        70%
          19                                                        68%
          18                                                        66%
          17                                                        64%
          16                                                        62%
          15                                                        60%
          14                                                        58%
          13                                                        56%
          12                                                        54%
          11                                                        52%
          10                                                        50%
           9 or fewer                         No effect on calculations
------------------------------------------------------------------------

    An alternative table (such as Table #2 below) could be used if one 
of the primary aims for members of Congress (especially those 
representing states affected by the present WEP) was to create a 
solution that would not penalize people so much who transfer from a 
``covered'' job into a ``non-covered'' teaching job while they are 
still relatively young. However, such a system would obviously cost 
more over 10 years.

                                Table #2
------------------------------------------------------------------------
Number of Years of Percentage    Substantial Earnings Reduction Factor
------------------------------------------------------------------------
          30 or more                                                90%
          29                                                        89%
          28                                                        88%
          27                                                        87%
          26                                                        86%
          25                                                        85%
          24                                                        84%
          23                                                        83%
          22                                                        82%
          21                                                        81%
          20                                                        80%
          19                                                        79%
          18                                                        78%
          17                                                        77%
          16                                                        76%
          15                                                        75%
          14                                                        74%
          13                                                        73%
          12                                                        72%
          11                                                        71%
          10                                                        70%
           9 or fewer                         No effect on calculations
------------------------------------------------------------------------

    Finally, in some future year, if Congress could see a way to afford 
it and felt that the many public servants who did not receive a very 
significant change in benefits (if any at all) by ``a law going into 
effect in 2004 or 2005'', there would still be a WEP (and GPO) to 
eliminate completely. In the meantime, at least some public servants 
will have received some improvement in their Social Security benefits 
by ``a law going into effect in 2004 or 2005'' which was designed and 
supported by both Republicans and Democrats as well as the major 
organizations representing public servants. AND Congressmen could go 
back to their public servant constituents and tell them that they are 
behind a bill that is both a substantial and fair first step towards 
possibly eliminating the WEP and GPO entirely in some future year when 
it is felt that the nation's finances are more able to afford it.

END OF LETTERS

                                 

```