The CalSTRS board voted this month to “watch” a new cost-neutral bill in Congress that would reduce what has been an unpleasant surprise for some teachers and a shock to others — joining CalSTRS can cut Social Security benefits.
Two federal laws enacted to avoid Social Security overpayment and inequity are mainly aimed at government employees who receive a pension but no Social Security. In California, that includes nearly all teachers and many police and firefighters.
A long-standing CalSTRS policy seeks the repeal of the Government Pension Offset enacted in 1977, which cuts Social Security survivor benefits, and the Windfall Elimination Provision enacted in 1983, a cut in Social Security monthly payments.
The two federal laws are unfair, CalSTRS argues, and harm teacher recruitment. Among those often hit are teachers who earn Social Security before entering the profession or who earn Social Security on non-teaching summer jobs.
“CalSTRS members (873,329) represent the single largest group of state and local government employees in the country who do not participate in Social Security, and the offsets particularly impact educators who begin their career at a later date,” Mary Anne Ashley, CalSTRS governmental affairs director, told the board.
A survey done for the California State Teachers Retirement System in 2013 found that 63 percent of retired CalSTRS members earn a Social Security benefit, and 41 percent were affected by the Windfall Elimination Provision.
Offset repeal legislation, costly and unneeded in many states with full Social Security participation, has been routinely rejected in Congress. A few years ago the estimated cost of repeal to Social Security was $61 billion to $80 billion over 10 years. Only 15 states do not provide Social Security for teachers.
This year, a cost-neutral bill was introduced. But it only partially reduces the Windfall offset and leaves the Pension survivor offset untouched. Part of the cost of allowing workers to keep more of their Social Security earnings is reduced by recovering Social Security overpayments.
Another part of HR 711 by Rep. Kevin Brady, R-Texas, that helps reduce its cost was criticized by CalSTRS board members. The Windfall offset would be expanded to cover another large group: those who teach less than the five years needed to vest and receive a pension.
“So is it correct, then, that this is a bill that would basically help some of our members and hurt other of our members, and if that’s the case is there a rationale?” asked board member Paul Rosenstiel.
The CalSTRS fiduciary counsel, Harvey Leiderman, compared the bill to “Sophie’s Choice,” the mother in a William Styron novel and movie forced in Nazi Germany to choose a labor camp for one child and the gas chamber for the other.
Last year CalSTRS had 146,471 inactive non-vested members who could be hit by the Windfall offset under the bill. If these members do not remove their interest-earning pension contributions from CalSTRS by age 70½, they face a tax penalty.
Ed Foglia of the Retired Employees Association of the California Teachers Association said the bill is not supported by its affiliate, the National Education Association.
The bill would fix “half of the problem” for some at the expense of others, he told the CalSTRS board, and Congress might think passage of the bill solved the problem, so there is no need to repeal the offsets.
“What we are asking you to do is at the very least have a ‘no position’ on this and see if you can mitigate the problem so no one is hurt,” Foglia said.
The CalSTRS board voted to “watch” HR 711 and “engage” the author about board concerns. The board voted to support the current bill to repeal the two Social Security offsets, HR 973 by Rep. Rodney Davis, R-Illinois.
CalSTRS examples of Social Security offsets
What’s eliminated by the Windfall Elimination Provision? Social Security is designed to replace a much larger part of the income of low-wage earners than of higher-wage earners.
A worker whose primary job provides a pension but not Social Security could get the “windfall” of being treated like a low-wage earner while working on another job covered by Social Security.
So, instead of getting the usual 90 percent of the first $826 of average monthly earnings, a worker covered by the Windfall Elimination Provision only gets 40 percent of the first $826. (See chart above)
What’s offset by the Government Pension Offset? The Social Security spousal payment was established in the 1930s when spouses who stayed home to raise families often were dependent on the working spouse.
As it became common for both husband and wife to work, the Social Security spousal payment to a widow or widower was reduced dollar-for-dollar by the amount of their own Social Security benefit.
So, to give workers who receive a government pension but no Social Security a similar “offset,” their Social Security spousal payment was reduced by two-thirds of their government pension.
In the past CalSTRS has given Congress a detailed analysis showing why the two Social Security offsets are unfair and arbitrary, emphasizing the impact of the spousal offset on its membership that is 70 percent female with longer expected life spans.
“There are discrepancies between the theoretical policy of the offset provisions and the actual consequences of the offsets,” board member Dana Dillon told a Senate subcommittee in 2007.
Leading politicians have urged repeal of the offsets. Sen. Dianne Feinstein carried repeal legislation for a decade, followed by former Sen. John Kerry. President Obama, while campaigning in 2008, said he would work to repeal the offsets.
The California Retired Teachers Association makes lobbying trips to Washington, D.C., each congressional session. A grass-roots group, the Committee for Social Security Fairness, has an educational and organization campaign to reform the offsets.
The California Legislature routinely passes resolutions urging Congress to repeal the offsets. This year it’s SJR 1 by Sen. Jim Beall, D-San Jose. While in the Assembly in 2009, Superintendent of Public Instruction Tom Torlakson carried the resolution.
At an Assembly hearing, Torlakson gave specific examples of teachers hurt by the offsets. “This comes under a couple of possible labels,” he said. “It would be a ‘Catch 22’ or it would be a massive rip-off.”
A law in 2005 requires employers not in Social Security to tell new hires about the offsets. In a 2008 survey of CalSTRS members, 29 percent with Social Security credits were unaware of the income offset, and 44 percent of active members were unaware of the spousal benefit offset.
Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at Calpensions.com. Posted 22 Jun 15
Calpensions 
June 22, 2015 at 2:15 pm
I noticed there are fresh comments to CalPension’s Social Security’s “massive rip-off”, which is six-years old. The principles underlying the WEP and GPO are sound, even if their implementation is being done unevenly. Government employees not in Social Security, on average well-paid, get a windfall just by not being taxed for a system that redistributes from higher lifetime earners to lower lifetime earners. They would be net contributors, on average, by being in Social Security, which they should be. Without WEP and GOP, many well-off government employees would effective become Social Security welfare recipients, getting redistributions the system intends for those with less. Corrupt politicians like Feinstein, Kerry and Torkalson, who are government employee shills, know this but don’t care.
June 22, 2015 at 3:31 pm
Only 80 billion dollars cost to SS over 10 years? That’s a “minor” increase CalSTRS wants to put on an overburdened system to further enrich their members? These CalSTRS hustlers must be shopping at the green cross stores. What the heck are they smoking? They should be glad they have the generous pensions that they do rather than trying to accelerate the collapse of Social Security.
June 24, 2015 at 2:32 am
My husband and I paid into Social Security or years. Yet, we never got a cent toward our pension due to being teachers.At the same time we paid into Cal State Teachers Pension Fund. I would prefer to just have my money back plus lost interest from Social Security. Since I don’t benefit from it, it is a tax. Thank you very much.
June 25, 2015 at 7:11 am
Berryessa Chillin’:
I make less then $2000.00 per month from CalSTRS and can’t have my social security. I earned social security before I taught. I am paying in again since I work now that I am a retired teacher. I must work to have enough to live on and in order to make ends meet.
My best friend husband passed. She gets $2000.00 per month from CalStrs and cannot have her survivor benefits. She is now teaching again at a community college even though retired. She too must work to have enough to live on and make ends meet.
We have generous pensions???
You call us CalSTRS hustlers?? What are we supposed to live on when we can no longer hold an “after-retirement” job??
Quit chillin’ by the lake and research before you call names and accuse us of trying to accelerate the collapse of Social Security.
We’d love to see you live on what we make! What the heck or you smoking?
You obviously have no clue!!
June 25, 2015 at 10:41 pm
I called the CalSTRS leadership hustlers. They know, like everybody else, that SS is dead man walking. Trying to siphon another $80 billion out of the system is simply a con. I make no judgment of individuals paid pensions by the CalSTRS system.
Dr. Streeter: SS has been nothing but a tax from its beginnings in the New Deal. This “insurance” terminology has been nothing but a con from the start. I’m of an age (late 40s) where I know I’ll never get back anything close to what my employers (when I had them) and I (self-employed) will contribute over my working life, so you and I are in the same boat. On the other hand we, as a voting public, have refused to vote in politicians who were willing to tackle SS’s systematic problem, and therefore we will all suffer the consequences of fiscal inaction.
July 7, 2015 at 7:09 pm
I did not even need to see your age. I know it by what you posted.
July 17, 2015 at 4:13 am
The best and only proper solution is to require California teachers to participate in the Social Security system. WEP does not go far enough, The skewed Social Security benefit formula is nothing more than statistical welfare. Those that paid the least into the system are considered likely to need extra assistance. Higher income Social Security members are effectively taxed to provide this help. It is unfair that Calstrs employees are not also taxed to help. In fairness to those that do work under Social Security, the federal government should never repeal WEP. It is selfish and elitist to ask for this.
Moving teachers into Social Security will also help attract new and better teachers by increasing and improving the labor pool. As it is, if you start a teaching career in Calpers but must move to another state or change careers after vesting your Calpers pension can be expected to have little value due to inflation. Not true with Social Security. Bringing teachers into Social Security will encourage more young graduates to try teaching and more mobile teachers to be willing to teach in CA public schools.
March 24, 2016 at 11:28 am
I would have loved to have participated in Social Security as a teacher for the financial security that it would have provided to me. However, the contributions would not have just come from me if I had participated. My employer saved a considerable amount of money because my colleagues and I did not participate. I believe it would be extremely difficult to bring teachers and other state and municipal workers into Social Security…not because the employees think they are getting a deal and don’t want it…but because their employers won’t want to contribute. It will cost taxpayers a good deal of money.
April 14, 2018 at 9:22 pm
I worked more than 10 years in high tech and paid SS before I heard and responded to the call of teacher shortage and became a teacher. I will retire next year after 15 years of teaching in a public high school. Sadly, I will probably not get any money from what I paid into the SS system. And my teacher pension of 15 years is not enough to pay bills. I don’t regret teaching the young mind though.