Social Security and the States NCSL Presentation August 2006 Context: Congressional Make-Up House: 231 Republicans 201 Democrats 1 Independent Senate: 55 Republicans 44 Democrats 1 Independent 1 2 House Leadership Changes Rep. Boehner (R-OH) beat Rep. Blunt (R-MO) in an upset victory in the race for House Majority Leader. Boehner was Chair of Education and Workforce Committee. New Chair is Rep. McKeon (R-CA), NEA s chief ally on GPO/WEP repeal. NEA Priority Issues Fight any Social Security privatization Oppose mandatory Social Security coverage Repeal Social Security offsets 3 4 Social Security Privatization In the Beginning At start of 109 th Congress, Social Security was on the front-burner. President was pushing privatization and the issue appeared on the fast track. NEA strongly opposed privatization. But, hoped focus on Social Security would provide opportunity to move GPO/WEP legislation. 5 6
Why Did NEA Oppose Privatization? Social Security is the cornerstone of the social safety net for America s retired workers and the most successful anti-poverty program in our nation s history. Privatization would jeopardize secure retirement of many Americans. Would take money needed to pay current retirees. The cost could have reached over $1 trillion in ten years. Would subject retirees financial security to the unpredictable ups and downs of the market. 7 NEA s Campaign Against Privatization Educated members and mobilized grassroots. Campaign message: don t gamble with our future (delivery of fuzzy dice to Members of Congress). Coordinated with Americans United to Preserve Social Security (NEA Governance, affiliates, members participated in events. 8 NEA s Campaign (Continued) NEA grassroots toolkit: Event ideas rallies, meetings with Members of Congress, press conferences Talking points Sample letters to the editor Fact sheets addressing impact on specific populations -- women, African Americans, Hispanics, public employees, ESPs. NEA s Campaign (Continued) NEA website a resources for talking points, fact sheets etc. Collected over 100,000 petitions to Congress and President opposing privatization. Lobbied, lobbied, lobbied! 9 10 Where Are We Now? VICTORY!!! Strong opposition from NEA and others stopped privatization proposals from moving. Social Security moved to the back-burner. Senate Finance Committee Chairman Grassley (R-IA) says no action likely until 2009 (after presidential election). But President has new Social Security proposal: Diverts up to 1/3 of workers Social Security payroll tax into private accounts. Allows SSA to independently verify pension income from non-covered employment. Eliminates one-time $255 lump sum death benefit. Requires full-time attendance at educational institution as condition for receiving children s benefits at age 16. Have uniform offset that affects all future beneficiaries receiving Worker s Compensation and Disability Income payments. 11 12
Social Security Offsets What is the Government Pension Offset? 13 14 WHOM DOES IT AFFECT? Reduces some public employees Social Security spousal or survivor benefits by two-thirds of their public pension. Any public employee who does not pay into Social Security but whose spouse does/did. (public employee expects to collect Social Security benefits based on the earnings of a deceased spouse). Mostly women, many low-income. Many ESPs. 15 16 Example Retired educator receives $600/month from state retirement plan. Husband worked in the private sector. If he dies, she expects to get full teaching pension plus $850 from his Social Security benefits: She Expects A total of $1450 a month. ($600 + $850 = $1450) 17 But, With GPO GPO cuts $850 survivor benefits by twothirds of her pension. $600 public pension X 2/3 = $400. $850 survivor benefit -$400 = $450. Instead of $1450 a month, she only gets $1050 ($600 + $450=$1050) She loses $400 a month! 18
What is the Windfall Elimination Provision? Changes Social Security formula to reduce EARNED benefits of persons who also earn a public pension. Some public employees can lose up to $328 per month in Social Security. 19 20 WHOM DOES IT AFFECT? Any public employee who does not pay into Social Security in public sector job, but expects to collect Social Security from: Earnings in prior career; Earnings in another state where public employees pay into Social Security; or Earnings from part-time or summer jobs. 21 WEP FORMULA Regular Social Security Formula: Monthly benefit is: 90% of the first $656 of average indexed monthly earnings (AIME), plus 32% of next $3,955 of AIME, plus 15% of remainder AIME But, under WEP, 90% factor is reduced to 40%. 22 Under the regular formula, a worker receives $590 of the 1 st $656 of AIME. Impact on Educators and Education Under WEP, a worker receives only $262 of the first $656 of AIME a reduction of $328/month. 23 24
States Where Educators Do Not Pay Into Social Security Overall Impact Alaska California Colorado Connecticut Georgia (some districts) Illinois Kentucky Louisiana Maine Massachusetts Missouri Nevada Ohio Rhode Island (some districts) Texas (some districts) Nine out of 10 affected public employees lose entire spousal benefit because of GPO. GPO partially or fully reduces benefits of 367,000 people. Over 70 percent are women many low-income. This number, and number affected by WEP, will only continue to grow as more people reach retirement age. 25 26 Impact on the Education Profession People in other careers less likely to become teachers if they will lose earned Social Security. Current teachers are leaving the profession. New teachers won t go to impacted states. New Notice Required NEA worked with Congress to require notice to new employees in non-social Security states about potential impacts of the offsets. Requirement went into effect for employees hired after January 1, 2005. Social Security Administration provides notice form to employers. 27 28 Where did these Laws Come From?? 1960s --state and local employees given opportunity to participate in Social Security. 36 states opted to enroll; remaining chose to maintain/enhance existing systems. 1980 s -- Budget deficits meant Congress was looking for money. Perceived double-dipping led Congress to enact GPO/ WEP. Legislative Status: Social Security Fairness Act Introduced in House (H.R. 147) and Senate (S. 619). As of print time House bill has 322 cosponsors. Senate has 27. Would completely repeal both GPO and WEP. Anyone currently impacted would be helped prospectively. Not retroactive to cover benefits already lost. 29 30
Legislative Action Hearing held June 2005 in House Social Security Subcommittee. No other movement on either House or Senate bill since that time. Why is it Taking So Long??? Legislation takes on average 7-8 years to move through Congress. Opposition from congressional leaders who control what bills move due to: Cost (ten year cost of full repeal is over $60 billion) and Philosophical disagreement (arguments about double dipping ) Victory in stopping privatization meant less focus on Social Security as a whole and less opportunity to move GPO/WEP repeal. 31 32 Congressional Targets House Ways and Means Chairman Bill Thomas (R-CA) the key player on all Social Security issues. Bill won t move without his consent. Thomas doesn t support GPO/WEP repeal at this time. Wants privatization. Thomas has announced he will retire at the end of this Congress. Other Targets House Speaker Hastert (R-IL) Senate Finance Chairman Grassley (R-IA) New House Majority Leader John Boehner (R-OH) House Social Security Subcommittee Chairman McCrery (R-LA) 33 34 NEA s Campaign to Repeal the Offsets 35 Goal: Complete Repeal Of the GPO and WEP 36
NEA Activities Grassroots cadre 2 per state. Active in approximately 30 states. Members conduct trainings, hold forums, generate grassroots activity, lobby Members of Congress, etc. Federal lobbying continued top priority of NEA lobbyists and of governance who make Hill visits. Materials advocacy packets with new stories CD-ROM available. Can be used to conduct trainings at state and local level. Media continued outreach to the press. 37 Talking Points GPO and WEP take away benefits folks have EARNED by working for many years. This is a national problem --there are affected people in all states. 38 Economic Impact: Loss of income forces some people into poverty and onto expensive government programs like food stamps. Impacted people have less $ to spend -- hurts local economies. GPO and WEP discourage people from entering/staying in the profession. GPO and WEP don t only impact educators -- other public employees like police and firefighters are hurt. People rely on inaccurate Social Security benefit statements that don t take GPO/WEP into account. These issues are important to voters!! 39 40 Double Dipping? WEP affects benefits earned by impacted individuals not double dipping, double working! GPO takes survivor benefits from widows. (In homes with two Soc. Sec. earners, survivor can collect higher of spouse or own earnings AND any other private pension). What Have We Achieved? More awareness than ever on Capitol Hill: More cosponsors than ever Issue has enough significance that it plays a role in overall negotiations. Increased awareness among NEA membership and others affected. 41 42
What Can You Do? Write/call/visit Members of Congress urging support for H.R. 147/S.619. Concentrate on targets in leadership positions. Write letters-to-the-editor and opinion pieces for placement in local newspapers. Tell your personal story to local reporters. Link up with your state cadre and help spread the word in your state. Connect with other affected public employees, like police and firefighters, at the local level. Make sure your local district knows about the new notice requirement. 43 44 Nationwide Call to Action: April 10-21!!! Watch the NEA website for the latest news: www.nea.org/lac/socsec Watch for alerts about national call-in days and other actions. Members of Congress were in home districts/states Idea for Call to Action: locally-planned events across the country to call attention to the issue: Rallies at congressional district offices Meetings with Members of Congress Press conferences Call-in activities (use local meeting to have everyone call on cell phones to Members of Congress) Postcard writing events Etc! 45 46 Remember: The Battle is Not Over!!! We Must Keep Fighting!! Mandatory Coverage 47 48
The Issue Some Social Security reform proponents suggest requiring Social Security participation for all public employees. NEA opposes because: Would weaken state and local plans. Increase state and local financial burdens. Won t solve Social Security s financial concerns. Mandatory Coverage: Status NEA built strong bipartisan coalition in Congress opposed to mandatory coverage. Senators Feinstein (D-CA) and Voinovich (R-OH) signed a letter saying they would oppose any reform that includes mandatory coverage. Issue off table until Social Security reform resurfaces. 49 50?? QUESTIONS?? 51