[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



 
                  SOCIAL SECURITY PROVISIONS AFFECTING
                            PUBLIC EMPLOYEES

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

                                HEARING

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                 of the

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

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 1, 2003

                               __________

                           Serial No. 108-36

                               __________

         Printed for the use of the Committee on Ways and Means
















                 U.S. GOVERNMENT PRINTING OFFICE

93-600                 WASHINGTON : 2004
_________________________________________________________________
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

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
E. CLAY SHAW, JR., Florida           FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut        ROBERT T. MATSUI, California
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM MCCRERY, Louisiana               JIM MCDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. MCNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHIL ENGLISH, Pennsylvania           LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona               EARL POMEROY, North Dakota
JERRY WELLER, Illinois               MAX SANDLIN, Texas
KENNY C. HULSHOF, Missouri           STEPHANIE TUBBS JONES, Ohio
SCOTT MCINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
ERIC CANTOR, Virginia

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

                                 ______

                    SUBCOMMITTEE ON SOCIAL SECURITY

                  E. CLAY SHAW, JR., Florida, Chairman

SAM JOHNSON, Texas                   ROBERT T. MATSUI, California
MAC COLLINS, Georgia                 BENJAMIN L. CARDIN, Maryland
J.D. HAYWORTH, Arizona               EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri           XAVIER BECERRA, California
RON LEWIS, Kentucky                  STEPHANIE TUBBS JONES, Ohio
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin

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 April 23, 2003, announcing the hearing...............     2

                               WITNESSES

Social Security Administration, Robert M. Wilson, Deputy 
  Commissioner, Legislation and Congressional Affairs; 
  accompanied by Timothy J. Kelley, Director of Benefits Staff...    15
U.S. General Accounting Office, Barbara D. Bovbjerg, Director, 
  Education, Workforce, and Income Security Issues...............    21

                                 ______

American Federation of State, County and Municipal Employees, 
  American Federation of Labor-Congress of Industrial 
  Organizations, Annette Williams................................    51
Berman, Hon. Howard L., a Representative in Congress from the 
  State of California............................................    12
Coalition to Preserve Retirement Security, and State Teachers 
  Retirement System of Ohio, Teresa Harrison.....................    68
Frank, Hon. Barney, a Representative in Congress from the State 
  of Massachusetts...............................................     8
Jefferson, Hon. William J., a Representative in Congress from the 
  State of Louisiana.............................................    43
McKeon, Hon. Howard P. ``Buck,'' a Representative in Congress 
  from the State of California...................................    14
Fraternal Order of Police, Chuck Canterbury......................    63
National Association of Police Organizations, William J. Johnson.    59
National Association of Retired Federal Employees, Charles L. 
  Fallis.........................................................    48
National Education Association, and Texas State Teachers 
  Association, Donna Haschke.....................................    54

                       SUBMISSIONS FOR THE RECORD

Adams, Paula, The Woodlands, TX, statement.......................    82
Allebach, Anna, Houston, TX, statement...........................    82
Almond, Judith Faith, Spring, TX, statement......................    82
Anderson, Thomas R., School Employees Retirement System of Ohio, 
  Columbus, OH, statement........................................   145
Andrews, Andrea, Houston, TX, statement..........................    82
Apsey, Diana, Houston, TX, statement.............................    83
Arduini, Karen, Rock Falls, IL, statement........................    84
Arvey, Harriet, Houston, TX, statement...........................    84
Association of California School Administrators, Sacramento, CA, 
  Karen Stapf Walters, letter and attachment.....................    85
Association of Texas Professional Educators, Austin, TX, Sheila 
  Fields, statement..............................................    87
Aupperle, Eldon R., Toulon, IL, statement........................    88
Baiardi, Liz, Trumbull, CT, statement............................    88
Balzer, James P., Quincy, IL, statement..........................    89
Bauman, Patricia, Sun City Center, FL, statement.................    89
Beckner, Azel Hill, Bowling Green, KY, statement.................    89
Benore, Mary Kathleen, Sylvania, OH, statement...................    89
Bertolini, Mary, Sebring, OH, letter.............................    90
Bird, Patricia L., Johnston City, IL, letter.....................    90
Blackburn, Mary, Houston, TX, statement..........................    91
Boatwright, Kandice, Sour Lake, TX, statement....................    91
Bond, Carolyn, Mendota, IL, statement............................    92
Bowen, Charlotte F., Houston, TX, statement......................    92
Bruner, Janice, Cambridge, OH, statement.........................    92
Bunger, Patricia H., Prosper, TX, statement......................    93
Burns, Hon. Max, a Representative in Congress from the State of 
  Georgia, statement.............................................    93
Bush, Mary Ann, Cincinnati, OH, letter...........................    95
California Federation of Teachers, Sacramento, CA, Judith 
  Michaels, statement............................................    95
California State Teachers' Retirement System, Sacramento, CA, 
  Gary Lynes, statement..........................................    96
Cantara, Virginia, Cape Elizabeth, ME, statement.................    98
Chen, Wai-Kai, Chicago, IL, statement............................    98
Chisum, Martha, Beaumont, TX, statement..........................    99
Christophersen, Irene, Rockton, IL, letter.......................    99
Clark, Judith M., Huntington Beach, CA, letter...................   100
Colorado Public Employees' Retirement Association, Denver, CO, 
  Robert Gray, statement.........................................   101
Conkrite, Jan, Woosung, IL, statement............................   102
Corradetti, John, Joliet, IL, statement..........................   103
Cotten, Ellen, Carbondale, IL, statement.........................   103
David, Janice A., Washington, IL, statement......................   103
Davis, Catherine, San Anselmo, CA, statement.....................   103
Doose, Paul R., Santa Monica, CA, statement......................   104
Doutt, Johnine, Houston, TX, statement...........................   104
Drisko, Hugh E., Orrington, ME, statement........................   105
Emery, David C., York, ME, statement.............................   105
Empen, Ferol, Polo, IL, statement................................   106
Engers, Carolyn T., Joliet, IL, letter...........................   106
Evans, Diane C., Katy, TX, statement.............................   107
Ferguson, Mike, Carrollton, TX, statement........................   108
Fields, Sheila, Association of Texas Professional Educators, 
  Austin, TX, statement..........................................    87
Fink, Rodney J., Macomb, IL, statement...........................   108
Fitzgerald, Christine, Houston, TX, statement....................   108
Folkerth, Mary Jane, Springfield, OH, statement..................   109
Foster, Donald J., Ironwood, MI, statement.......................   109
Fox, Hollis K., Pagosa Springs, CO, statement....................   111
Fuchs, Jeanne, Houston, TX, statement............................   112
Gallagher, Barb, Elmhurst, IL, statement.........................   112
Gardner, Keren Eula, Murrieta, CA, statement.....................   112
Gebhardt, John H., John Wood Community College Annuitants 
  Association, Quincy, IL, statement.............................   115
Gordon, Betty, Skokie, IL, statement.............................   112
Gray, Robert, Colorado Public Employees' Retirement Association, 
  Denver, CO, statement..........................................   101
Hacking, Laurie Fiori, Ohio Public Employee's Retirement System, 
  Columbus, OH, statement........................................   133
Hammond, Helene, Harrington, ME, statement.......................   113
Harper, Robert A., State University Annuitants Association, 
  Chicago, IL, joint letter......................................   150
Hari, Carol J., Roberts, IL, letter..............................   113
Hendersen, Arlene, Roseville, CA, statement......................   114
Hoffman, Roslyn, State University Annuitants Association, 
  Chicago, IL, joint letter......................................   150
Hopper, Sandra, Joliet, IL, statement............................   114
Ichniowski, Thaddeus C., Normal, IL, letter and attachment.......   114
John Wood Community College Annuitants Association, Quincy, IL, 
  John H. Gebhardt, statement....................................   115
Johnson, Virginia B., Hawthorn Woods, IL, statement..............   116
Jones, Cathey, Houston, TX, statement............................   116
Kahn, Ellen, Homewood, IL, statement.............................   117
Karlovetz, Martha, Lake Sherwood, MO, statement..................   118
Kazmerski, Stanley M., Dixon, IL, statement......................   119
Keene, Hugh, Auburn, ME, statement...............................   119
Kelly, William J., Visalia, CA, statement........................   119
Kirkpatrick, Wanda, Flower Mound, TX, statement..................   120
Knepp, Mary, Moline, IL, statement...............................   120
Koesler, Don, Mount Morris, IL, statement........................   120
Kopel, James, Moline, IL, statement..............................   121
Kratzer, Dorothea H., Midland, OH, statement.....................   121
Ladwig, Larry, Moline, IL, statement.............................   121
Lattz, Myril, New Lenox, IL, letter..............................   122
Layton, Gary C., Quartz Hill, CA, letter and attachment..........   122
Lewis, Carol, Salem, OH, statement...............................   123
Lewisville Area Retired School Personnel Association, Lewisville, 
  TX, Sharron Pearson, statement.................................   123
Linz, Mary, Bangor, ME, statement................................   123
Lundstedt, Joanne, Brecksville, OH, letter.......................   124
Lynch, Jacalyn J., South Paris, ME, statement....................   124
Lynch, Judy, Roseville, CA, statement............................   125
Lynes, Gary, California State Teachers' Retirement System, 
  Sacramento, CA, statement......................................    96
Mathis, Darlene, DeLeon, TX, letter..............................   126
Mayhew, Loretta and Carl, Cherryfield, ME, statement.............   126
McCall, Perry, Houston, TX, statement............................   127
McCormick, Carolyn, Beaumont, TX, statement......................   128
Means, Melissa, Nome, TX, statement..............................   128
Meyerson, Jonathan P., Chevy Chase, MD, statement................   129
Michaels, Judith, California Federation of Teachers, Sacramento, 
  CA, statement..................................................    95
Montague, Sally, Bridge City, TX, letter.........................   130
Monto, Gary L., Police and Fire Retirees of Ohio, Columbus, OH, 
  joint letter (see listing under Public Employee Retirees 
  Incorporated)..................................................   136
National Association of Postmasters of the United States, 
  Alexandria, VA, Walter Olihovik, statement.....................   130
National Conference of Public Employee Retirement Systems, 
  Frederic H. Nesbitt, statement.................................   131
National Conference of State Legislatures, Hon. Felix Ortiz, 
  letter.........................................................   132
Nesbitt, Frederick H., National Conference on Public Employee 
  Retirement Systems, statement..................................   131
Ohio Public Employee's Retirement System, Columbus, OH, Laurie 
  Fiori Hacking, statement.......................................   133
Ohio Retired Teachers Association, Columbus, OH, David Travis, 
  joint letter (see listing under Public Employee Retirees 
  Incorporated)..................................................   136
Oakes, Rodney, San Pedro, CA, statement..........................   134
Olihovik, Walter, National Association of Postmasters of the 
  United States, Alexandria, VA, statement.......................   130
Ortiz, Hon. Felix, National Conference of State Legislatures, 
  letter.........................................................   132
Parker, S., Nuiqsut, AK, statement...............................   135
Patterson, Bill, Roseville, CA, statement........................   135
Pearson, Sharron, Lewisville Area Retired School Personnel 
  Association, Lewisville, TX, statement.........................   123
Petta, Norma, Sacramento, CA, statement..........................   136
Pincson, Stephanie, San Francisco, CA, statement.................   136
Police and Fire Retirees of Ohio, Columbus, OH, Gary L. Monto, 
  joint letter (see listing under Public Employee Retirees 
  Incorporated)..................................................   136
Pritchard, Tom, Texas Retired Teachers Association, Austin, TX, 
  statement......................................................   153
Public Employee Retirees Incorporated, Columbus, OH, William I. 
  Winegarner; Police and Fire Retirees of Ohio, Columbus, OH, 
  Gary L. Monto; Ohio Retired Teachers Association, Columbus, OH, 
  David Travis; and School Employee Retirees of Ohio, Columbus, 
  OH, Valerie Rodgers; joint letter..............................   136
Reddington, John, Bright, IN, statement..........................   137
Reed, Laura J., Canfield, OH, statement..........................   137
Resnick, Zwi, Fresno, CA, statement..............................   138
Retired, County, and Municipal Employees Association of 
  Massachusetts, Boston, MA, Ralph White, letter and attachment..   138
Rice, Daniel, Pewee Valley, KY, statement........................   141
Richard, Sharon, Sour Lake, TX, statement........................   141
Rodgers, Valerie, School Employee Retirees of Ohio, Columbus, OH, 
  joint letter, (see listing under Public Employee Retirees 
  Incorporated)..................................................   136
Root, Thomas W., Moline, IL, statement...........................   142
Rothschild, Paula, Marion, IL, letter............................   142
Ryan, Mary A. Gazda, Charlestown, RI, statement..................   143
Sandlin, Hon. Max, a Representative in Congress from the State of 
  Texas, statement...............................................   143
Sanford, Karen, Bartlesville, OK, statement......................   144
Schiermeyer, Barton, Orion, IL, statement........................   145
School Employee Retirees of Ohio, Columbus, OH, Valerie Rodgers, 
  joint letter (see listing under Public Employee Retirees 
  Incorporated)..................................................   136
School Employees Retirement System of Ohio, Columbus, OH, Thomas 
  R. Anderson, statement.........................................   145
Schwab, Joyce, Cincinnati, OH, statement.........................   146
Shaw, Suzanne, Penobscot, ME, statement..........................   146
Sillings, Don, Huntington Beach, CA, statement...................   149
Smith, June Burlingame, San Pedro, CA, statement.................   149
State University Annuitants Association, Chicago, IL, Robert A. 
  Harper and Roslyn Hoffman, joint letter........................   150
Sullivan, Denise, West Frankfort, IL, statement..................   151
Sutera, James, Chicago, IL, statement............................   151
Szakatits, Dana, Sterling, IL, statement.........................   152
Taniashvili, Patricia Hall, Surry, ME, statement.................   152
Taylor, Larry, Dixon, IL, statement..............................   153
Texas Retired Teachers Association, Austin, TX, Tom Pritchard, 
  statement......................................................   153
Thompson, Bettye D., Macomb, IL, statement.......................   154
Travis, David, Ohio Retired Teachers Association, Columbus, OH, 
  joint letter (see listing under Public Employee Retirees 
  Incorporated)..................................................   136
Tucker, Deborah, Boynton Beach, FL, letter.......................   154
Tully, Roy, Twin County Retired School Personnel Association, 
  Winnie, TX, statement..........................................   156
Turco, Nancy M., Westerly, RI, statement.........................   156
Twin County Retired School Personnel Association, Winnie, TX, Roy 
  Tully, statement...............................................   156
Urbanski, Theresa ``Bianca,'' Crest Hill, IL, statement..........   157
Vincent, Margaret Ann, Santa Ana, CA, statement..................   157
Walters, Karen Stapf, Association of California School 
  Administrators, Sacramento, CA, letter and attachment..........    85
Walters, Lynne, Auburn, ME, statement............................   158
Ward, Crystal, Lewiston, ME, statement...........................   159
Wasneski, Donna, Grand Junction, CO, statement...................   159
Weidkamp, Keith L., Granite Bay, CA, statement...................   159
Whitcomb, Helga N. and Richard O., South Burlington, VT, letter..   160
White, Ralph, Retired, County, and Municipal Employees 
  Association of Massachusetts, Boston, MA, letter and attachment   138
Williamson, Emma J., Joliet, IL, letter..........................   161
Willis, Beatrice D., Winnie, TX, statement.......................   161
Winegarner, William I., Public Employee Retirees Incorporated, 
  Columbus, OH, joint letter (see listing under Public Employee 
  Retirees Incorporated).........................................   136
Wolf, Martin C., Bishop, CA, statement...........................   162
Wright, Ralph E., Rocklin, CA, letter............................   162
Wyatt, Claude M., Santa Anna, TX, statement......................   163
























         SOCIAL SECURITY PROVISIONS AFFECTING PUBLIC EMPLOYEES

                              ----------                              


                         THURSDAY, MAY 1, 2003

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

    The Subcommittee met, pursuant to notice, 
at 10:05 a.m., in room B-318 Rayburn House Office Building, 
Hon. E. Clay Shaw, Jr. (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
April 23, 2003
SS-2

               Shaw Announces Hearing on Social Security

                 Provisions Affecting Public Employees

    Congressman E. Clay Shaw, Jr. (R-FL), Chairman, Subcommittee on 
Social Security of the Committee on Ways and Means, today announced 
that the Subcommittee will hold a hearing on Social Security provisions 
affecting public employees. The hearing will take place on Thursday, 
May 1, 2003, in room B-318 Rayburn House Office Building, beginning at 
10:00 a.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 Committee and for 
inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    Two Social Security provisions, the Government Pension Offset (GPO) 
and the Windfall Elimination Provision (WEP), affect potentially about 
6 million Federal, State, and local government employees. While these 
provisions were intended to help equalize, not penalize, the treatment 
of workers, many of those affected believe the provisions are unfair. 
Alternatively, some have suggested that requiring all government 
employees to pay Social Security taxes would ensure equal treatment of 
both government and private-sector employees, and would eventually 
eliminate the need for the GPO and WEP. Legislative proposals have been 
introduced in the 108th Congress and previous Congresses to modify or 
repeal the GPO and WEP.
      

Government Pension Offset

      
    Social Security pays retirement and disability benefits to workers 
who worked long enough in jobs subject to Social Security taxes. It 
also pays spouse or widow(er) benefits to their wives and husbands. 
Thus, married workers potentially qualify for two types of benefits: 
(1) a benefit based on their own work, and (2) a spouse/widow(er) 
benefit based on their spouse's work.
      
    Spouse/widow(er) benefits were intended to help ensure that spouses 
who earned a relatively small amount have a floor of income. Therefore, 
spouse/widow(er) benefits are reduced dollar-for-dollar by any Social 
Security benefit a person receives based on his or her own work under 
what is called the ``dual-entitlement rule.''
      
    Prior to the GPO's enactment in 1977, government workers who paid 
into a public pension instead of Social Security could receive a full 
public pension plus a full spouse/widow(er) benefit from Social 
Security. In contrast, government and private sector workers who paid 
Social Security taxes their whole careers had their spouse/widow(er) 
benefits reduced or eliminated under the dual-entitlement rule. The GPO 
was created to address this situation. Under the GPO, a worker's 
spouse/widow(er) benefit is reduced by $2 for every $3 of public 
pension resulting from a government job not subject to Social Security 
taxes.
      

Windfall Elimination Provision

      
    Social Security's benefit formula is designed to help keep people 
out of poverty by replacing more of a low-wage worker's pre-retirement 
wages than a high-wage worker's. However, the benefit formula only uses 
wages subject to Social Security taxes and records ``zero'' earnings 
for time spent in government employment not subject to Social Security 
taxes. If a person has many years of ``zero'' earnings, he or she may 
appear to have low wages on average over his or her career when that 
was not the case.
      
    Before the WEP was created, workers who spent some of their careers 
in government jobs not subject to Social Security taxes benefited from 
the ``weighting'' of Social Security's benefit formula toward lower-
wage workers, and received a ``windfall'' relative to workers who paid 
Social Security taxes on their total earnings. Many people felt that 
middle and high-income workers should not be given a benefit intended 
for low-wage earners. The WEP was created in 1983 to address this 
situation.
      

Mandatory Social Security Coverage of State and Local Government

Employees

      
    Some research has suggested that requiring all newly hired 
government employees to pay Social Security taxes would ultimately 
eliminate the need for the GPO and WEP, simplify program administration 
and modestly improve Social Security's long-term financial outlook. 
Already, Federal employees hired after 1983 are required to pay into 
Social Security. However, as was reported in a 1998 General Accounting 
Office study (GAO-HEHS-98-196), States and localities with non-covered 
workers would likely face higher costs to provide pension benefits 
that, when combined with Social Security benefits, approximate benefits 
provided to their current workers. At the same time, the Social 
Security-covered workers would also receive additional benefits through 
Social Security that are not part of the existing public pension plan.
      
    In announcing the hearing, Chairman Shaw stated, ``The hard work 
and dedication of teachers, police officers, firefighters, other public 
employees, and all workers is deeply appreciated by our nation. 
Everyone, public and private sector workers alike, deserves fair 
treatment under Social Security. This hearing provides an opportunity 
to get the facts straight and carefully examine all options in 
addressing how Social Security's provisions affect public workers.''
      

FOCUS OF THE HEARING:

      
    The Subcommittee will examine why the GPO and the WEP were enacted, 
how they work and options for their modification or repeal. 
Implications of mandatory coverage of such employees will also be 
examined. Finally, the Subcommittee will determine how modifications to 
current law would affect beneficiaries, the budget and solvency of the 
Social Security Trust Funds.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Due to the change in House mail policy, any person or 
organization wishing to submit a written statement for the printed 
record of the hearing should send it electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, by the close of business, Thursday, May 15, 2003. Those 
filing written statements who wish to have their statements distributed 
to the press and interested public at the hearing should deliver their 
200 copies to the Subcommittee on Social Security in room B-316 Rayburn 
House Office Building, in an open and searchable package 48 hours 
before the hearing. The U.S. Capitol Police will refuse sealed-packaged 
deliveries to all House Office Buildings.
      

FORMATTING REQUIREMENTS:

      
    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit 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. Due to the change in House mail policy, all statements and any 
accompanying exhibits for printing must be submitted electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, in WordPerfect or MS Word format and MUST NOT exceed a 
total of 10 pages including attachments. Witnesses are advised that the 
Committee will rely 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. Any statements must include a list of all clients, persons, or 
organizations on whose behalf the witness appears. A supplemental sheet 
must accompany each statement 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.

                                 

    Chairman SHAW. I think we have a problem with seating this 
morning, but if we will all be patient with each other, we will 
get through this and have the hearing that we promised a few 
weeks ago. Social Security has been an enormously successful 
program. It has been providing essential income replacement for 
families when a breadwinner retires, dies, or becomes disabled. 
It is based on a simple principle: workers pay a portion of 
their hard-earned wages into Social Security in return for 
promised benefits. In addition, Social Security promotes social 
goals, such as poverty reduction, through its family benefits, 
and a benefit formula that provides more generous earnings 
replacement for low-wage workers. Policy makers have aimed over 
the last 70 years to make Social Security fair to all workers. 
One of the greatest challenges in achieving fairness is 
balancing the program's social goals with the principle of 
benefits as an earned right. Two examples of how Congress has 
struggled to find that balance are the Government Pension 
Offset (GPO) and the Windfall Elimination Provisions (WEP). 
Although their jobs may be exempt from Social Security taxes, 
hard-working and dedicated teachers, police officers, 
firefighters, and other public officials and public servants 
may still qualify for Social Security benefits based on 
marriage to another worker. While planning for retirement, many 
of these workers count on receiving both their government 
pension and full spouse benefits. Many are shocked to learn 
when they apply for Social Security benefits that their spousal 
benefits may be reduced or eliminated because of a provision 
called the GPO.
    Many people wonder how such provisions ever made it into 
law. The reason is because Social Security spousal benefits 
were created to help homemakers who have little or no earned 
pension of their own. Consequently, every working wife or 
husband, regardless of their job, has their Social Security 
spouse and widow benefits reduced--everyone--reduced based on 
retirement benefits that they earn, even though their spouse 
paid into Social Security and earned that spousal benefit. In 
fact, if you compare two workers who have earned equal 
retirement benefits during their lifetime, the government 
worker who does not pay Social Security tax will receive a 
higher spouse or widow benefit than the worker who does pay 
Social Security taxes. That is because workers who pay into 
Social Security have their spouse benefits offset by their 
worker benefit dollar dollar-for-dollar. Workers who did not 
pay Social Security have their spouse benefit reduced by $2 for 
every $3 in pension. Let me repeat that: workers who pay into 
Social Security have their spouse benefits offset by their 
worker benefits dollar-for-dollar. Workers who did not pay 
Social Security taxes have their spouse benefits reduced by $2 
for every $3 of the pension. The WEP help ensure certain public 
employees who did not pay Social Security taxes on their 
government wages, but earn a benefit through other jobs, do not 
inadvertently receive more than their fair share of benefits. 
Social Security's benefits formula is designed to help people 
out of poverty by replacing more of low-wage workers' pre-
retirement wages. However, if a worker does not pay Social 
Security payroll taxes for his or her job, the benefit formula 
records $0 of earnings for that job.
    If a person has many years where zero earnings are recorded 
for his job, he or she may appear to have low average wages 
when that was actually not the case. As a result, the benefit 
formula will treat him or her as a low-wage worker and replace 
more of their pre-retirement wages, giving an unintended, so-
called windfall. Here again, many public servants are unaware 
of these provisions and are stunned to learn that they will 
receive less than planned. We have found this through our 
hearings, and we have also found that the notice that is being 
sent out sometimes does not reflect that, and people are indeed 
unable to really plan for their retirement reasonably. Some 
have suggested newly-hired State and local workers should be 
required to pay Social Security taxes. Such a change would have 
several positive effects: family benefits and cost-of-living 
adjustment for public servants, elimination of both the GPO and 
the WEP, improved program finances, and simplified program 
administration. However, State and local governments might have 
to reduce or eliminate their current pension plans to pay the 
employer's share of the Social Security taxes.
    Although these provisions were intended to equalize, not 
penalize, public servants, these complex provisions and 
proposals for change are often misunderstood. Through today's 
hearing, I hope we can clear the air and examine the facts on 
why these provisions exist, how efficiently they serve their 
intended purpose, as well as their effect on beneficiaries' 
lives. We will also examine legislative proposals to modify or 
repeal the WEPs and the GPO. As we move forward, we must 
carefully consider their short-term and long-term costs and 
their effects on benefits. Since Social Security benefits are 
paid out of current taxes, benefit increases for one group 
would have to be offset by benefit reductions for others, tax 
increases, or cutting back on other budget priorities. Clearly, 
any change potentially affects both today's workers and the 
taxpayers and everybody who will depend on Social Security in 
the future, so we must proceed very prudently. I look forward 
to hearing the views of all of our witnesses, and we are making 
progress to identify ways to improve Social Security's fairness 
to all American workers. Mr. Matsui?
    [The opening statement of Chairman Shaw follows:]
 Opening Statement of the Honorable E. Clay Shaw, Jr., Chairman, and a 
          Representative in Congress from the State of Florida
    Social Security has been an enormously successful program, 
providing essential income replacement to families when a breadwinner 
retires, dies, or becomes disabled. It is based on a simple principle--
workers pay a portion of their hard-earned wages into Social Security 
in return for promised benefits.
    In addition, Social Security promotes social goals, such as poverty 
reduction, through its family benefits and a benefit formula that 
provides more generous earnings replacement for low-wage workers.
    Policymakers have aimed over the last 70 years to make Social 
Security fair to all workers. One of the greatest challenges in 
achieving fairness is balancing the program's social goals with the 
principle of benefits as an earned right. Two examples of how Congress 
has struggled to find that balance are the Government Pension Offset 
and the Windfall Elimination Provision.
    Although their jobs may be exempt from Social Security taxes, hard-
working and dedicated teachers, police officers, firefighters, and 
other public servants may still qualify for Social Security benefits 
based on marriage to another worker. While planning for retirement, 
many of these workers count on receiving both their government pensions 
and full spouse benefits. They are shocked to learn when they apply for 
Social Security benefits that their spousal benefits may be reduced or 
eliminated because of a provision called the Government Pension Offset.
    Many people wonder how such a provision ever made it into law. The 
reason is because Social Security spousal benefits were created to help 
homemakers who have little or no earned pension of their own. 
Consequently, every working wife or husband, regardless of their job 
has their Social Security spouse and widow benefits reduced based on 
the retirement benefits they earn, even though their spouse paid into 
Social Security and earned that spouse benefit.
    In fact, if you compare two workers who have earned equal 
retirement benefits during their lifetime, the government worker who 
does NOT pay Social Security taxes will receive a higher spouse or 
widow benefit than the worker who DOES pay Social Security taxes. 
That's because workers who pay into Social Security have their spouse 
benefit offset by their worker benefit dollar for dollar. Workers who 
did not pay Social Security taxes have their spouse benefit reduced by 
$2 for every $3 of the pension.
    The Windfall Elimination Provision helps ensure certain public 
employees who do not pay Social Security taxes on their government 
wages, but earn a benefit through other jobs, do not inadvertently 
receive more than their fair share of benefits. Social Security's 
benefit formula is designed to help keep people out of poverty by 
replacing more of low-wage workers' pre-retirement wages. However, if a 
worker does not pay Social Security payroll taxes for his or her job, 
the benefit formula records ``zero'' earnings for that job.
    If a person has many years where ``zero'' earnings are recorded for 
his job, he may appear to have low average wages when that was not the 
case. As a result, the benefit formula would treat him as a low-wage 
worker and replace more of his pre-retirement wages, giving an 
unintended so-called ``windfall.'' Here again many public servants are 
unaware of these provisions and are stunned to learn they will receive 
less than planned.
    Some have suggested newly hired state and local workers should be 
required to pay Social Security taxes. Such a change would have several 
positive effects: family benefits and cost-of-living adjustments for 
public servants, elimination of both the Government Pension Offset and 
the Windfall Elimination Provision, improved program finances, and 
simplified program administration. However, state and local governments 
might have to reduce or eliminate their current pension plans to pay 
the employer's share of Social Security taxes.
    Although these provisions were intended to equalize, not penalize 
public servants, these complex provisions and proposals for change are 
often misunderstood. Through today's hearing, I hope we can clear the 
air and examine the facts on why these provisions exist, how 
effectively they serve their intended purpose, as well as their effect 
on beneficiaries' lives.
    We will also examine legislative proposals to modify or repeal the 
Windfall Elimination Provision and the Government Pension Offset. As we 
move forward, we must carefully consider their short-term and long-term 
costs and their effects on benefits. Since Social Security benefits are 
paid out of current taxes, benefit increases for one group would have 
to be offset by benefit reductions for others, tax increases, or 
cutting back on other budget priorities. Clearly, any change 
potentially affects both today's workers and taxpayers, and everybody 
who will depend on Social Security in the future, so we must proceed 
prudently.
    I look forward to hearing the views of all our witnesses and our 
making progress to identify ways to improve Social Security's fairness 
for all workers.

                                 

    Mr. MATSUI. Thank you very much, Mr. Chairman. I want to 
particularly thank you for calling this hearing and also 
suggesting that we might move expeditiously to perhaps markup 
legislation. I realized that this issue had become very, very 
critical a few months ago when we had an issue in Texas, in 
terms of the Texas teachers' pension fund, and the fact that 
there was a way for the Texans to get around, so to speak, the 
GPO. There is a lot of pressure on us to take action on the 
broader issue, so I appreciate again the hearing, and also the 
possibility of a markup. Last year or the year before, I had 
suggested that we pull back on the reform of these two 
provisions, mainly because I had expected that we would be 
reforming the Social Security system. The President, as all of 
us know, in 2000, during the presidential race, had suggested 
that he wanted to privatize Social Security and so I had 
expected that by 2001, 2002, or perhaps 2003, we would raise 
this issue in the context of a larger Social Security reform 
package--particularly after the President's Commission came out 
with its recommendations, in December 2001.
    Unfortunately, I believe the President will not raise the 
issue of reforming Social Security in 2003 or 2004. He probably 
will wait until the year 2005, after the election is over, 
because obviously, the issue of privatization has become very, 
very critical. It could obviously result in significant cuts in 
benefits for those current retirees. That being the case, I 
think we need to address this issue today, because 
unfortunately, about 400,000 people a year are affected by 
these provisions. Second, I think as the Chair had indicated, 
most people, almost all people, are not aware of the fact that 
these provisions exist in law. For example, the GPO was enacted 
in 1977, and we did not phase it fully in until 1983, mainly 
because of the impact on individual families. Because of the 
lack of awareness, people are really caught off-guard, 
particularly the surviving spouse but, in many cases, the 
entire family. In addition, to this, Federal property 
guidelines indicate that the surviving spouse in America today 
needs about 80 percent of what they were living on when two 
spouses were alive. The GPO causes a significant reduction in 
Social Security benefits--in many cases eliminating them 
altogether. We cannot allow widows particularly, and others to 
be put in this position.
    The Chair has mentioned that this will cost money, and 
there is no question about that. We have calculated, based on 
estimates by the Social Security actuaries, that the costs of 
eliminating both the WEP and the GPO over a 75-year period 
would be one-tenth of 1 percent of the total gross domestic 
product (GDP) of this country. If, in fact, we reform Social 
Security completely for 75 years and make it whole and not have 
a reduction in the benefit levels, it would cost about seven-
tenths of 1 percent of total GDP. So, it is an expensive 
proposition to eliminate these two provisions. However, because 
next week, we are going to be marking up a tax bill in 
Committee, and probably be on the floor of the House, I might 
just point out that the President's entire tax proposal since 
he has been in office costs 2.7 percent of GDP. That is three 
times the actual cost of reforming the entire Social Security 
system for the next 75 years. I think the public ought to know 
that, because the trade-off is do we want to take care of the 
WEP and the GPO, or do we want to give a tax cut, such as 
eliminating the double-taxation of dividends, which we all know 
helps wealthy people? So, these are the trade-offs that we are 
really talking about. It is my hope that through this 
testimony, through my colleagues, through those witnesses, that 
will be talking about this issue, that we really define this 
issue, because the question is one of values. Do we want to 
really help widows and widowers, people who are really hurting, 
or do we want to help those that are wealthy in America? So, 
Mr. Chairman, I thank you for this hearing, and I also thank 
you for the possibility of perhaps marking up this legislation. 
Thank you.
    [Applause.]
    Chairman SHAW. We have several Members of Congress who have 
voiced interest in testifying before us this morning: a 
classmate of mine, Mr. Barney Frank, who came to Congress with 
me back in 1981; Mr. Berman of California; and Mr. McKeon of 
California. If we can proceed in that order, Barney?

 STATEMENT OF THE HONORABLE BARNEY FRANK, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF MASSACHUSETTS

    Mr. FRANK. Thank you, Mr. Chairman, and I appreciate your 
having this hearing. I think we have a moral obligation to make 
some changes here. I know we play games with words, but I must 
say, to begin calling this the windfall elimination is really 
quite offensive. We have people who are being told that they 
cannot fully collect money that, when they earned it, they were 
legally entitled to. This is an after-the-fact change for a lot 
of people. Nobody told people that it was a windfall when they 
worked both jobs, and we should not be telling them after the 
fact that it was a windfall to get what they had legally 
earned. I think the whole idea was a bad one, and if we can 
find the resources to repeal it, I think we should do that. I 
have a lesser proposal, and I must say I can think of no 
morally acceptable or economically good reason why we would not 
do it.
    The proposal I have on the windfall elimination, which, as 
you know, was cosponsored by more than a majority of the House 
last year thanks to the active energies of a lot of people, 
would say that for people whose total income is less than 
$24,000, this does not apply at all, and between $24,000 and 
$36,000, it would phase it down. In other words, people who 
were making more than $36,000 would not get any relief. I am a 
little embarrassed that it is so modest, but I think it is 
important to try to do something. To take people whose total 
income from these two programs would be $24,000 a year or less, 
and to penalize them and reduce money they earned seems to me 
outrageous. I will be submitting, if I have the consent of the 
Subcommittee, a memorandum from the Social Security chief 
actuary, and what they told us in July 2002 was after the bill 
is enacted, where at the rate of $2,000 a month, you are 
exempt, and up to $3,000, phased-in, the total cost in the year 
2003, unfortunately, since the Committee did not act on it last 
year, and the House did not get to that, but it would have been 
$1 billion. For the 10 years that they estimated, the total 
cost was $17 billion. That is $1.7 billion a year.
    [The information follows:]

                            SOCIAL SECURITY
MEMORANDUM

                                                          Refer To: TCB
Date:
          July 9, 2002

From:
          Tim Zayatz
          Office of the Chief Actuary

Subject:

Revised Estimates for a Proposal to Limit the Windfall Elimination 
Provision (WEP) to Workers with Combined Social Security (OASDI) 
Benefits and Non-Covered Pensions in Excess of $2,000 per Month--
INFORMATION

    Under present law, the Windfall Elimination Provision (WEP) may 
reduce benefits for workers who first become eligible after 1985 for 
OASDI benefits and at the same time are eligible for a pension based on 
non-covered employment. Auxiliary benefits are affected only through 
the reduction in the worker benefit.
    The subject proposal, introduced as H.R. 1073, would eliminate WEP 
for workers with combined OASDI Primary Insurance Amount (PIA) and 
monthly non-covered pension of $2,000 or less; keep the current-law WEP 
for combined amounts above $3,000; and provide for a phase-in, in 
steps, for combined amounts between the thresholds. Under the proposal, 
these thresholds remain fixed over time. Estimates for this proposal 
were provided in my earlier memorandum dated May 8, 2002, but are 
restated here to correct for a problem discovered with those previous 
estimates.
    Threshold amounts apply to benefits in current-payment status as of 
the effective date, which we assume to be January 1, 2003, as well as 
to benefits awarded in that year and later. The table below provides 
10-year estimates for the proposal, in terms of the number of worker 
and auxiliary beneficiaries affected and the additional benefits that 
would be payable. Estimates are based on the 2002 OASDI Trustees Report 
intermediate set of assumptions.


----------------------------------------------------------------------------------------------------------------
                                                            Beneficiaries affected   Additional benefit payments
                      Calendar year                             (In thousands)              (In millions)
----------------------------------------------------------------------------------------------------------------
   2003                                                                       583                        $1,033
----------------------------------------------------------------------------------------------------------------
   2004                                                                       658                         1,187
----------------------------------------------------------------------------------------------------------------
   2005                                                                       741                         1,347
----------------------------------------------------------------------------------------------------------------
   2006                                                                       823                         1,508
----------------------------------------------------------------------------------------------------------------
   2007                                                                       904                         1,667
----------------------------------------------------------------------------------------------------------------
   2008                                                                       981                         1,821
----------------------------------------------------------------------------------------------------------------
   2009                                                                     1,053                         1,965
----------------------------------------------------------------------------------------------------------------
   2010                                                                     1,118                         2,099
----------------------------------------------------------------------------------------------------------------
   2011                                                                     1,177                         2,219
----------------------------------------------------------------------------------------------------------------
   2012                                                                     1,226                         2,323
----------------------------------------------------------------------------------------------------------------
   Totals:
----------------------------------------------------------------------------------------------------------------
2003-2007                                                                      --                         6,743
----------------------------------------------------------------------------------------------------------------
2003-2012                                                                      --                        17,170
----------------------------------------------------------------------------------------------------------------


    Note that language from bill H.R. 1073 was not specific as to how 
thresholds would be applied to beneficiaries in current-payment status 
as of the effective date (1/1/03). We assume that the combined PIA and 
non-covered pension amounts received in 2003 will be compared to the 
thresholds, which is consistent with previous estimates provided by our 
office. Alternatively, we could compare thresholds to the combined PIA 
and non-covered pension amounts at the time they are first concurrently 
received. This would result in markedly different estimates. We also 
assume threshold comparisons are done one time, as opposed to an 
ongoing annual basis.

                                                                /S/
                                                 Tim Zayatz, A.S.A.
                                                            Actuary

                                 

    Now, I realize $17 billion is a considerable sum, but let 
me put that in perspective. President Bush said that a tax cut 
of $350 billion over a 10-year period was, to use the technical 
economic term he used, an itty-bitty tax cut.
    [Laughter.]
    Well, if $350 billion is itty-bitty, I am asking for 5 
percent of an itty-bitty.
    [Laughter.]
    It would seem to me that to compensate people who worked 
hard at two jobs and who would otherwise be getting less than 
$24,000 a year, we could afford 5 percent of an itty-bitty. I 
think that may be a new method of counting here: one itty-
bitty; two itty-bitties.
    [Laughter.]
    As Everett Dirksen said, an itty-bitty here and an itty-
bitty there, and pretty soon, you are talking about a very 
large national deficit.
    [Laughter.]
    So, equity clearly argues for that, but also, efficiency 
does. I would also like to submit a letter from the 
Massachusetts Association of School Committees. I was visited 
by a group of people who run vocational schools in my district. 
They are regionalized in Massachusetts. We all agree that it is 
very important for us to train people in various fields of 
work. It has now become a major problem in the recruitment of 
vocational education teachers with experience in these trades, 
because they are told that they would run into this. People did 
not know this.
    [The information follows:]

               Massachusetts Association of School Committees, Inc.
                                        Boston, Massachusetts 02109
                                                   January 21, 2003

Representative Barney Frank
United States House of Representatives
Room 2252 Russell House Office Building
Washington, DC 20515

Dear Congressman Frank:

    Our Massachusetts delegation was delighted to have met with you to 
discuss critical federal legislation for public schools. We are very 
grateful, once again, for your willingness to give us time and to share 
your thoughts on several important bills pending before Congress and 
the newly enacted No Child Left Behind Statute.
    We are particularly pleased to respond to your request for an 
explanation of how the Social Security Windfall Elimination Provision 
(WEP) and the Government Pension Offset (GPO) works to the specific 
disadvantage of our Massachusetts School districts and to our regional 
vocational technical schools in particular. Since you are a long time 
champion of Social Security beneficiaries and you and your staff 
understand the pension reduction mechanism well, I will not go into 
detail about the pension calculation process. Suffice to say 
Massachusetts teachers are victims of the WEP and GPO. I would like to 
focus, however, on the unique problems for our public school districts 
trying to recruit teachers in vocational subjects and other 
disciplines.
    Vocational Technical Schools attract many able teachers who bring 
years of private experience in the trades with them to the classroom. 
They are among our finest teachers because they share years of expert 
on-the-job training and skills with young students aspiring to enter 
their trades. Because Massachusetts public school employees have their 
own public pension system and do not participate as faculty in the 
Social Security retirement system under which many of them worked prior 
to teaching, many of our vocational teachers find their Social Security 
pension benefits reduced under WEP. Unfortunately, many did not 
anticipate this impact when they entered the teaching profession. Their 
successors, however, are much more mindful of the impact.
    In the past we have always been able to recruit excellent teachers 
for vocational technical schools from the ranks of skilled 
tradespersons who were willing to retrain as educators. However, now, 
as we recruit craftspersons of all ages, but particularly among those 
who are doing life and retirement planning, we find they are unwilling 
to risk the loss of their hard earned Social Security pension benefits 
to enter a public retirement system. Tradespersons who might consider 
entering teaching in their mid 40s or 50s will, at best earn a public 
pension equal to 30 or 40% of their pre-retirement wage. Many will earn 
less. They would consider this career change seriously if they knew 
they could count on the full Social Security benefit to which they 
would be entitled had they not earned a separate Massachusetts public 
pension in their second careers.
    When they confront having to sacrifice a significant share of their 
Social Security benefit to earn a public pension, they are reluctant to 
make a career switch to work with young students.
    In the same situation are highly skilled workers in other 
professions, including those skilled in mathematics and sciences and 
other transferable subject matters who are also reluctant to give up 
Social Security to enter public employment when it means a meaningful 
reduction to their benefits.
    We also note the impact of the Government Pension Offset for 
spouses establishes a similar disincentive for people to change careers 
to work in public schools. By offsetting the spouse's Social Security 
benefit based on that spouse's public pension earnings a two tiered 
system is created. Workers in identical jobs covered by Social Security 
might generate substantially different pensions for their spouses based 
solely on where those spouses worked or did not work.
    We thank you again for your interest in this matter and for 
requesting our explanation of the impact of the WEP and GPO upon 
Massachusetts public school districts. We look forward to working with 
you and thank you most sincerely for your efforts on behalf of Social 
Security beneficiaries.

            Yours truly,
                                                    Kenneth Pereira
                                                     Vice President

                                 

    Let me, if I may, read a statement from this letter from 
the Massachusetts Association of School Committees. ``In the 
past, we have always been able to recruit excellent teachers 
for vocational-technical schools from the ranks of skilled 
tradespersons who were willing to be trained as educators. 
However, now, as we recruit craftspersons of all ages but 
particularly among those who are doing life and retirement 
planning, we find they are unwilling to risk the loss of their 
hard-earned Social Security pension benefits to enter a public 
retirement system. Tradespersons who might consider entering 
teaching in their mid-40s or 50s will at best earn a public 
pension equal to 30 or 40 percent of their pre-retirement age; 
many will earn less. They would consider this career change 
seriously if they knew they could count on the full Social 
Security benefits.'' I cannot understand why the richest 
country in the world has to impose on these people that kind of 
penalty. So, I believe that the cost is very reasonable. I 
would hope that we could even do more, but at the very minimum, 
it seems to me, what we are talking about is, and people talk 
about rewarding work, et cetera, we are talking about people 
who worked. They are only asking that they be allowed to 
collect, in their retirement years, the amount of money that 
they earned by their work. What we did with those earlier 
amendments was to take away from some of them who retroactively 
worked at the time, and now, we are imposing this kind of 
disincentive. So, I hope we will act this year.
    Chairman SHAW. Thank you, Barney, and thank you for staying 
within the 5 minutes. I want to ask all the witnesses to stay 
within the 5-minute limit. The only problem is, you are not 
going to be able to get as many words in as Barney did in 5 
minutes.
    [Laughter.]
    I am sure you can work on it. Howard, would you grab that 
microphone and pull it over to you? Howard Berman.

 STATEMENT OF THE HONORABLE HOWARD L. BERMAN, A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. BERMAN. Yes, I am going to try to just do an itty-bitty 
number of the words that----
    [Laughter.]
    I do appreciate very much, Mr. Chairman, your holding this 
hearing. This is an important issue, and it gives us a chance 
to highlight the unfairness public employees face when they 
retire. I became aware of this issue--I just did not quite know 
about it until a few years ago, when my friend, Bill Lambert, 
who represents the Los Angeles teachers, shared with me the 
plight that public school districts encounter in recruiting 
teachers. It turns out that one of the main deterrents to 
convincing professionals to teach in California is that 
teachers, in addition to agreeing to what I think are somewhat 
inadequate wages and overcrowded classrooms, lose most of the 
Social Security benefits they accrued working in other jobs. In 
fact, in some cases, retired teachers can lose up to two-thirds 
of their benefits because of the GPO and the WEP. This is quite 
unfair, since these teachers or their spouses paid into Social 
Security in former jobs, and now, they are penalized for 
becoming State employees. It is ironic: the whole essence of 
the Social Security system; it does not matter how much wealth 
Bill Gates has, how much income they have, what private pension 
programs they have. Nothing can affect their Social Security 
benefit. If you are a government employee who is entitled to a 
benefit in another pension system, you start dramatically 
losing your Social Security benefits. It is a real penalty on 
people who work in the public sector, and it has a very 
negative public policy implication in that it prevents what has 
become essential.
    We have a desperate, desperate shortage of teachers in Los 
Angeles. We very much are interested in recruiting mid-career 
people, men and women who want to become teachers after 
spending time in other industries. Why taking that teaching job 
should ruin and cut into their ultimate Social Security benefit 
that they earned in that other job is inexplicable to me. It is 
not just a California problem. Alaska, Colorado, Connecticut, 
Illinois, Kentucky, Louisiana, Maine, Massachusetts, Ohio, 
Nevada, Texas, and Washington all face this very same 
challenge.
    I think we should do something to help our States and our 
counties and municipalities in recruiting these employees, and 
getting rid of the GPO and the WEP are two ways to do this. I 
really hope that by conducting this hearing, you are showing 
that the Committee considers this to be a serious issue, and I 
hope we can go from here into action on this matter and would 
ask permission--someone has given me a group of letters of 
people far from my district--Texas seems to be the State of 
origin--that they would like as part of this record, and I do 
not know what happens to this record, but I would like to see 
if I can get these letters into it.
    [The prepared statement of Mr. Berman follows:]
   Statement of the Honorable Howard L. Berman, a Representative in 
                 Congress from the State of California
    Thank you, Chairman Shaw, Ranking Member Matsui and Members of this 
Committee for holding this hearing to highlight the unfairness some 
public employees face when they retire.
    I became aware of this issue some years ago when my good friend 
Bill Lambert, who represents the teachers in Los Angeles, shared with 
me the plight school districts encounter in recruiting teachers. He 
told me that one of the main deterrents to convincing professionals to 
teach in California is that teachers--in addition to agreeing to 
inadequate wages and overcrowded classrooms--lose most of the Social 
Security benefits they accrued working in other jobs.
    In fact, in some cases, retired teachers can lose up to two-thirds 
of their benefits because of the Government Pension Offset (GPO) and 
the Windfall Elimination Provision (WEP). This is unfair since these 
teachers--or their spouses--paid into Social Security in former jobs 
and now they are penalized for becoming state employees.
    The two provisions were created under the false assumption that 
government pensions are the result of substantial careers in public 
service. All too often, this is not the case. For example, many of the 
teachers in the Los Angeles Unified School District are ``mid-career'' 
teachers--men and women who became teachers after spending time in 
other industries.
    Los Angeles, in particular, has an extreme shortage of teachers, 
which is why teacher recruitment is so critical for them. But the 
provisions affect not only teachers, but also the majority of public 
employees: police officers, fire fighters, school bus drivers, and so 
on. In addition, this problem is not unique to California. Alaska, 
Colorado, Connecticut, Illinois, Kentucky, Louisiana, Maine, 
Massachusetts, Ohio, Nevada, Texas and Washington face the same 
challenge.
    We are all familiar with the critical need our need for dedicated 
public employees. We must help our states, counties and municipalities 
in recruiting these employees. We can do this by eliminating the GPO 
and WEP.
    Thank you again for holding this hearing. I hope this is the first 
of many conversations that will lead to the elimination of this 
unfairness in Social Security.

                                 

    Chairman SHAW. Without objection----
    Mr. BERMAN. Thank you.
    Chairman SHAW. Whatever happens to this record, those 
letters will be with it.
    Mr. FRANK. Excuse me, but I neglected to ask for permission 
to submit a couple of documents.
    Chairman SHAW. All witnesses will be able to submit the 
full statement or extraneous material as they see fit. Mr. 
McKeon, who has been very, very persistent and stubborn about 
wanting this hearing--now, you have it. You have your own 
microphone, so you may proceed.

    STATEMENT OF THE HONORABLE HOWARD P. ``BUCK'' MCKEON, A 
    REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. MCKEON. Thank you, Chairman Shaw, Ranking Member 
Matsui, and Members of the Subcommittee on Social Security for 
allowing me the opportunity to testify before you today on the 
GPO and WEP. I would like to express my gratitude to you for 
your willingness to hold an open dialogue on the problems that 
these provisions pose to the retirement of millions of 
dedicated public workers. I would also like to take this 
opportunity to welcome my fellow colleagues and other 
distinguished guests for their support and testimony on this 
important issue. Two years ago, along with my colleague, 
Congressman Howard Berman--he has already talked a little bit 
about how Mr. Lambert approached us and made us aware of how 
important this was to teachers in our area of California--
together, we introduced the Social Security Fairness Act (H.R. 
594), which would have brought a complete repeal of the GPO and 
WEP. These portions of Social Security law reduce Social 
Security benefits for people who have invested money into both 
a State pension plan and Social Security. Specifically, the GPO 
cuts spousal benefits by two-thirds, and the WEP uses a formula 
to determine the precise amount of benefit loss, which could 
turn into a complete loss of one's Social Security. In the 
107th Congress, this bill garnered the bipartisan support of 
186 cosponsors. Shortly thereafter, we had to divert our 
attention to national security and the impending war on terror 
in the shadows of the September 11th tragedy.
    As our great country has risen out of the tragic events of 
2001 to proclaim victory against al-Qaeda, and most recently 
freedom for the people of Iraq, Congressman Berman and I 
reintroduced the Social Security Fairness Act and look forward 
to working with our colleagues this year to pass this important 
piece of Social Security legislation, which already has 188 
bipartisan cosponsors. As the post-9/11 world has shown us the 
beginning of a new chapter in our history, it has also 
illustrated the utter importance our first responders, 
firefighters, and peace officers, play in our national defense 
and protection. I feel that this repeal would take large 
strides in showing our appreciation to these selfless public 
servants. They risk their lives every day for our safety. It is 
imperative that we change these laws to encourage people to 
make the personal sacrifices associated with this line of work. 
This encouragement, however, must expand to other professions 
in the public sector as well, as our educational system is 
experiencing a severe shortage of teachers. That was the thing 
that I think really caught my attention. In California alone at 
the time, we were suffering from a shortage of over 30,000 
qualified teachers, and that problem is only going to get 
worse. Our children's educators play a vital role in the 
development of our Nation's youth. Education is the cornerstone 
upon which our country is built, and anything we can do to 
improve it enhances these United States.
    Nevertheless, it has become increasingly difficult to 
recruit people to teach due to the knowledge that Social 
Security benefits will be reduced if he or she has past or 
present employment where they paid into Social Security. I 
talked to a lady the other night who happens to be a lobbyist 
in town. She enjoys a good living and a good job. She said, in 
my later years, I would like to do something that I would get a 
little more satisfaction out of, and I would like to teach. She 
said I know of the windfall provision problem, and because of 
that, I do not want to take the risk. We have many people who 
could add a great deal to the teaching profession in their 
later lives and join teaching, but they are deterred by this. 
Mr. Chairman, we must alleviate the financial pressures our 
teachers will face once they reach the age of retirement and 
repeal these provisions to thank them for their dedicated 
efforts in the instruction of our children. Our legislation 
will improve and grant more incentives for teaching and bring 
more qualified people into this profession for the future. 
Again, I would like to thank you, Mr. Chairman, for your 
attention to this problem and your leadership in addressing 
this issue today, and I also have a few letters that I would 
like to enter, with your permission, into the record.
    Chairman SHAW. It is going to be a very fat record, but 
without objection.
    Mr. MCKEON. Thank you.
    Chairman SHAW. Do any of the Members have any questions of 
these witnesses? If not, we thank you very much for taking the 
time to be here, and your effort. You have all delivered very 
powerful testimony.
    Mr. MCKEON. Thank you very much.
    [Applause.]
    Chairman SHAW. We do have an additional Member who does 
wish to testify, and that is Mr. Jefferson. We will take him 
immediately after the next panel, which is made up of Robert 
Wilson, who is the Deputy Commissioner of Legislation and 
Congressional Affairs at the Social Security Administration 
(SSA). He will be accompanied by Timothy Kelley, Director of 
Benefits Staff, Legislation and Congressional Affairs at the 
SSA. Barbara Bovbjerg, who is the Director of Education, 
Workforce, and Income Security at the U.S. General Accounting 
Office (GAO). We thank all of you for being here. Your full 
testimony will be made a part of the record, and you may 
proceed in any way you wish. We will ask you to try to confine 
your remarks to 5 minutes. Mr. Wilson?

STATEMENT OF ROBERT M. WILSON, DEPUTY COMMISSIONER, LEGISLATION 
  AND CONGRESSIONAL AFFAIRS, SOCIAL SECURITY ADMINISTRATION; 
  ACCOMPANIED BY TIMOTHY J. KELLEY, DIRECTOR OF BENEFITS STAFF

    Mr. WILSON. Thank you, Mr. Chairman. I do have a written 
statement.
    Chairman SHAW. It will be made a part of the record.
    Mr. WILSON. Mr. Chairman and Members of the Subcommittee, I 
am accompanied today----
    Chairman SHAW. Oh, you do not have a mike. Excuse me; Mr. 
Kelley, would you pull your mike over for Mr. Wilson?
    Mr. WILSON. Thank you. Good morning, Mr. Chairman, Members 
of the Subcommittee. As you have pointed out, I am accompanied 
today by Mr. Tim Kelley--still cannot hear me? Sorry.
    Chairman SHAW. Pull it a little closer to you.
    Mr. WILSON. Okay.
    Chairman SHAW. That should do it.
    Mr. WILSON. All right; thank you. I am accompanied today by 
Mr. Tim Kelley, Director of the Benefits Staff of the Office of 
Legislation. Thank you for the opportunity to discuss two 
Social Security provisions that are not well understood: the 
GPO, and the WEP. Today, I want to briefly describe how they 
work and also discuss issues that we should bear in mind when 
considering legislative changes to these provisions. First, the 
GPO provision was enacted in 1977. It affects government 
retirees who are eligible for two retirement benefits: a 
pension based on their own work in a Federal, State or local 
government job not covered by Social Security and a spouse's or 
surviving spouse's benefit based on their husband or wife's 
work in jobs covered by Social Security. The GPO reduces a 
person's Social Security benefit entitlement as the spouse or 
surviving spouse by an amount equal to two-thirds of their 
government pension. Before GPO, a person who worked in a 
government job not covered under Social Security could receive, 
in addition to a government pension, a full Social Security 
spouse's or surviving spouse's benefit. Today, about 376,000 
beneficiaries have benefits fully or partially offset by the 
GPO, and of these, 73 percent are women. It is important to 
note that a person who works in a job covered under Social 
Security has always been subject to an offset under what is 
commonly known as the dual entitlement provision. This means 
that Social Security benefits payable to a spouse or a 
surviving spouse are reduced by the amount of that person's own 
Social Security benefit; thus, today, 6 million so-called 
dually-entitled beneficiaries receive the equivalent of the 
worker's benefit or the spouse's or surviving spouse's benefit, 
whichever is higher.
    The GPO provision is intended to accomplish the same 
purpose as the dual entitlement provision, but the amount of 
the reduction is different. Under the dual entitlement offset, 
there is a dollar-for-dollar reduction. Under GPO, there is a 
two-thirds reduction. Because the reduction is less under the 
GPO than the dual entitlement offset, the government worker is 
somewhat better off even with GPO. Let me now turn to the WEP 
provision, which dates from the Social Security Amendments of 
1983 (P.L. 98-21). It was intended to eliminate windfall Social 
Security benefits for retired and disabled workers who receive 
pensions from employment, again, not covered by Social 
Security. Without the WEP, high-income workers who spent part 
of their careers in jobs not covered by Social Security could 
be treated as low-lifetime earners for Social Security 
purposes, and they would inappropriately receive the advantage 
of a heavily-weighted benefit formula intended to provide 
workers who spent their whole lives in low-paying jobs with a 
relatively higher benefit in relation to their prior earnings. 
The WEP provision eliminates this potential windfall through a 
different, less-heavily weighted benefit formula, but unlike 
the GPO, the WEP can never eliminate a person's Social Security 
benefit. The WEP now reduces Social Security benefits for about 
635,000 retired and disabled workers. Of those affected, about 
two-thirds are men.
    The President's fiscal year 2004 budget includes a proposal 
to improve the administration of WEP and GPO provisions. By 
obtaining information from State and local government pension 
administrators, it would allow the SSA to independently verify 
whether beneficiaries have pension income from employment not 
covered by Social Security. This change would improve our 
program stewardship and reduce program costs by an additional 
$2.2 billion over the first 10 years. In conclusion, let me say 
that Congress established the WEP and GPO provisions for good 
reason: to provide fair and equitable benefits under Social 
Security for workers in both covered and non-covered 
employment. A number of proposals have been made to change WEP 
or GPO provisions. Some proposals would eliminate the 
provisions entirely. Other proposals would provide higher 
Social Security benefits for government workers whose pensions 
from non-covered employment, in combination with their Social 
Security benefits, are below certain levels. However, as has 
been pointed out, these proposals would restore the favorable 
treatment many workers in non-government jobs had before 
enactment of the GPO and the WEP provisions, and these 
proposals, as has been previously pointed out, all share a 
common element: they would significantly increase the cost of 
the Social Security program. Finally, let me say that I believe 
that at this time, any significant changes should be considered 
in a broader context of addressing the financing of the Social 
Security program in the long-term. I want to thank you, Mr. 
Chairman and the Subcommittee, for giving me the opportunity to 
discuss the GPO and the WEP provisions. We would be glad to 
answer any questions you may have.
    [The prepared statement of Mr. Wilson follows:]
  Statement of Robert M. Wilson, Deputy Commissioner, Legislation and 
 Congressional Affairs, Social Security Administration; accompanied by 
             Timothy J. Kelley, Director of Benefits Staff
    Mr. Chairman, Members of the Subcommittee:
    Thank you for the opportunity to discuss the Government Pension 
Offset provision, or GPO, and the Windfall Elimination Provision, also 
known as WEP. These provisions are not well understood, so today, I 
would like to take some time to describe the purpose of these 
provisions, how they work, and issues that should be evaluated when 
considering legislative changes to them.
GPO Background
    I would first like to describe the GPO provision and discuss why it 
was enacted in 1977. For ease of discussion, when referring to 
government employment, I am referring to employment at all levels of 
Federal or State government that is not covered by Social Security.
    The GPO affects government retirees who are eligible for two 
retirement benefits:

      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.

    If the GPO applies, the 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 December 2002, about 376,000 
beneficiaries had their benefits fully or partially offset due to the 
GPO. Of those, 27 percent were men and 73 percent were women.
    The intent of Congress when the GPO was enacted, was to assure that 
when determining the amount of a spousal benefit (e.g., wife's, 
husband's, widow's, widower's), individuals working in non-covered 
employment would be treated in the same manner as those who work in 
covered employment. The GPO provision removed an advantage that some 
government workers had before the GPO was enacted. Until then, 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 the 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 the 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. The result of enactment of the GPO is 
that spouses and surviving spouses are treated similarly, regardless of 
whether their jobs are covered under Social Security or not.
Two-Thirds GPO Reduction
    As noted previously, although the GPO provision is intended to 
accomplish the same purpose as the offset under the dual entitlement 
provision, the amount of the reduction under the GPO is different:

      Under the dual entitlement provision, there is a dollar-
for-dollar reduction--if a person gets a Social Security retirement 
benefit of $600 based on his or her own work, then $600 is subtracted 
from any Social Security benefit the person would get as a spouse.
      Under the GPO, there is a two-thirds reduction. If a 
person gets a pension of $600 based on her own work in government, then 
two-thirds of it ($400) is subtracted from any Social Security benefit 
he or she would get as a spouse.

    I would like to use an example that may help to clarify how the 
dual-entitlement offset applies to a widow and compare that to a 
similarly situated widow who is also entitled to a government pension. 
Ms. Jones is receiving a Social Security retirement benefit of $900 per 
month based on her own work. The amount she is potentially eligible for 
as a widow is also $900. The amount of her Social Security retirement 
benefit is subtracted from her widow's benefit, resulting in her 
widow's benefit being fully offset under the dual entitlement 
provision; she receives only her own Social Security retirement benefit 
of $900.
    The other widow, Ms. Smith, is in a comparable situation, but Ms. 
Smith worked for the government, and her pension is $900. Potentially, 
she too, is eligible for a Social Security widow's benefit of $900. 
However, the GPO provision reduces the $900 widow's benefit by two-
thirds of the $900 pension (i.e., $600). After subtracting the $600 
offset, the $300 result is the amount of the Social Security widow's 
benefit payable in addition to her $900 government pension.
    In this case, Ms. Jones, who worked only in covered employment, 
receives a total of $900, and Ms. Smith, who worked in government 
employment, receives a total of $1,200. As you can see, because the 
reduction under the GPO is not as large as under the dual entitlement 
provision, the government worker is better off than the person who 
worked in employment covered only by Social Security.


--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Dual Entitlement--Ms. Jones                      GPO--Ms. Smith
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Social Security Worker's Benefit =        Worker's Government pension = $ 900
                                                                                                      $900        Social Security Widow's benefit = $
                                                                    Social Security Widow's Benefit = $900                                        900
                                                                   ----------------------------------------
                                                                      Total Widow's Benefit Payable = $  0

                                                                      Total Social Security Payable = $900
                                                                                                                        (before offset)
                                                                                                               GPO formula        2/3 of $900 = $ 600

                                                                                                                  Worker's Government pension = $ 900
                                                                                                                Widow's Benefit ($900 - $600) = $ 300
                                                                                                              ----------------------------------------
                                                                                                                    Total Pension & Social Security =
                                                                                                                                                $1200
                                                                                                                       (after offset)
--------------------------------------------------------------------------------------------------------------------------------------------------------


``Last Day Test'' Legislation
    I would also like to discuss an issue that has received much 
attention in the last couple of months--the so-called ``last day test'' 
used in the GPO provision. The criterion used in the law to determine 
whether the government pension is based on work not covered by Social 
Security is to determine the coverage status on the last day of 
government employment. If the last day is not covered by Social 
Security, then the GPO reduction applies.
    The present ``last day test'' allows certain workers eligible for a 
government pension based on non-covered State and/or local government 
employment to also receive full Social Security spouse's and/or 
surviving spouse's benefits by working only one day in covered 
employment. As GAO has testified before this Subcommittee, in these 
situations, Social Security contributions of less than $5 can result in 
lifetime benefits of nearly $100,000. As you know, section 418 of H.R. 
743 (the ``Social Security Protection Act of 2003,'' which passed the 
House of Representatives on April 2, 2003) would require that State and 
local government workers be covered by Social Security throughout their 
last 60 months of employment with the government entity in order to be 
exempt from the government pension offset provision.
    The Social Security Administration supports this provision in H.R. 
743 as a way to improve the equity of the application of the GPO 
provision. Essentially the same proposal is included in President 
Bush's Fiscal Year 2004 Budget. Under present law, the vast majority of 
government employees affected by the GPO are not able to use the last 
day test because of the structure of the States' retirement systems. By 
replacing the last day test with a requirement that an individual's 
last 60 months of government employment must be covered, the provision 
would more equitably apply the GPO to all non-covered workers in a 
uniform and consistent manner. It would also provide more equitable and 
consistent treatment between workers in covered and non-covered 
employment for eligibility to Social Security spouse's and surviving 
spouse's benefits.
Purpose of the WEP
    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. (The provision does not affect the Social Security 
benefits payable to survivors of workers who received pensions based on 
non-covered employment.)
    The purpose of the provision was to remove an unintended 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 whole 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, because benefits are based on average earnings in 
employment covered by Social Security over a working lifetime (35 
years), a worker who has spent part of his or her career in employment 
not covered by Social Security appears to have lower average lifetime 
earnings than he or she actually had. (Years with no covered earnings 
are counted as years of zero earnings for purposes of determining 
average earnings for Social Security benefit purposes.) Without the 
WEP, such a worker would be treated as a low-lifetime earner for Social 
Security benefit purposes and inappropriately receive the advantage of 
the weighted benefit formula. The WEP provision eliminates the 
potential ``windfall'' by providing for a different, less heavily 
weighted benefit formula to compute benefits for such persons.
Computation of the WEP Reduction
    Let me explain how the reduction under the WEP is computed. To do 
this, I first need to explain how the regular (non-WEP) benefit formula 
works. Under the regular 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 2003 is:

      90 percent of the first $606 of AIME, plus
      32 percent of the next $3,047 of AIME, plus
      15 percent of AIME above $3,653.

    Under the WEP computation, the 90-percent factor applied to a 
worker's average earnings in the first band of the Social Security 
benefit formula generally is replaced by a factor of 40 percent for 
workers who are receiving a pension from non-covered employment.

      Under the regular Social Security benefit formula, a 
worker would receive 90 percent, or $545, of the first $606 of his or 
her average indexed monthly earnings.
      Under the WEP formula, that worker would generally 
receive 40 percent--$242--of the first $606 of AIME.
      Under both scenarios, the 32 and 15 percent factors are 
the same.

    For a worker first eligible in 2003, the maximum WEP reduction is 
$303 per month. Unlike the GPO, the WEP can never eliminate a person's 
Social Security benefit.
    For workers who have 30 or more years of substantial earnings, the 
WEP does not apply at all. The reduction under the WEP is phased out 
gradually for workers who have 21-29 years of substantial covered 
earnings under Social Security.
    However, 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.
    As of December 2002, the WEP reduced the Social Security benefits 
of about 635,000 retired and disabled workers. Of those workers 
affected, 66 percent are men and 34 percent are women.
Proposal to Improve Administration of the WEP and GPO
    The President's FY 2004 Budget includes a proposal that would 
improve the administration of the WEP and GPO by improving the 
coordination of reports of pension payments based on employment not 
covered by Social Security. This change would give SSA the ability to 
independently verify whether beneficiaries have pension income from 
employment not covered by Social Security. When a person applies for 
Social Security benefits, he/she is required to tell SSA if they are 
receiving a pension based upon non-covered employment. SSA then obtains 
verification of the pension and applies the WEP and/or GPO accordingly. 
SSA largely relies on the applicant to correctly inform us that he/she 
is entitled to a non-covered pension.
    SSA has an ongoing computer-matching program with the Office of 
Personnel Management (OPM) that matches persons receiving Social 
Security benefits with persons receiving a pension from OPM based on 
non-covered employment. However, SSA does not have any similar program 
to identify Social Security beneficiaries who are also receiving 
pensions based on non-covered work for a State or local government.
    A past study of SSA's administration of the WEP and GPO provisions 
by the General Accounting Office (GAO) found that there are many 
beneficiaries who are not subjected to the WEP and GPO because SSA does 
not know they are receiving pensions based on non-covered employment.
    With respect to the issue of Social Security coverage for State and 
local government employees, approximately 6.3 million such employees 
are not covered by Social Security. This group represents 28 percent of 
the 22.6 million employees who work for State and local governments. 
There is much variation in the extent of Social Security coverage--both 
within States and between States. For example, about 70 percent of all 
non-covered State and local government employees work in seven States.
    With this change, SSA would be able to obtain data on pensions 
based on non-covered work in a more timely and consistent manner. The 
proposal would thereby improve SSA's stewardship over the program and 
the Social Security trust funds. SSA's Office of the Chief Actuary 
estimates that this change would reduce program costs by $2.2 billion 
over the first 10 years.
Conclusion
    In conclusion, let me note that Congress established the WEP and 
GPO provisions to prevent workers who spent a portion of their careers 
in employment not covered by Social Security from receiving more 
favorable treatment under Social Security than comparable workers who 
had worked a lifetime in covered employment. Congress' intention was to 
provide fair and equitable benefits under Social Security for workers 
in both covered and non-covered employment.
    A number of proposals have been advanced to change the WEP or GPO 
provisions. Some proposals would eliminate the provisions entirely. 
Other proposals would provide higher Social Security benefits for 
government workers whose pensions from non-covered employment, in 
combination with their Social Security benefits, are below certain 
levels. These latter proposals focus on providing higher Social 
Security benefits to public sector retirees, who were not covered by 
Social Security during their years in government work, simply because 
their combined public pension and Social Security benefits are deemed 
to be ``too low.'' However, in doing so, these proposals would 
reinstate the favored treatment afforded many workers in non-covered 
employment prior to enactment of the GPO and the WEP. Further, these 
proposals all share a common element--all would significantly increase 
the cost of the OASDI program.
    Finally, because changes to the GPO and the WEP would be costly, we 
believe that at this time, any significant changes in the GPO or WEP 
should only be considered as part of the broader context of 
comprehensive reform of the Social Security program. Given that the 
program is not in actuarial balance, it seems appropriate that 
significant changes should be evaluated only when considering other 
elements in the future modernization of Social Security.
    I want to again thank the Chairman and the Subcommittee for giving 
me this opportunity to discuss the GPO and WEP and to share SSA's 
analysis on the legislation before this Subcommittee. As always, I 
would be more than happy to provide assistance to the Members and more 
than willing to work with you to provide any additional information you 
request. I would be glad to answer any questions you might have 
concerning the WEP and GPO provisions.

                                 

    Chairman SHAW. Thank you, Mr. Wilson. Ms. Bovbjerg?

    STATEMENT OF BARBARA D. BOVBJERG, DIRECTOR, EDUCATION, 
WORKFORCE, AND INCOME SECURITY ISSUES, U.S. GENERAL ACCOUNTING 
                             OFFICE

    Ms. BOVBJERG. Thank you, Mr. Chairman, Mr. Matsui, Members 
of the Subcommittee. I appreciate your inviting me here today 
to discuss Social Security provisions affecting public 
employees. Social Security is designed to be a universal social 
insurance system and indeed covers 96 percent of American 
workers. The non-covered status of the other 4 percent, who are 
nearly all public employees, poses issues of fairness in the 
program, and you have asked me to focus on how these issues are 
addressed. 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 
non-covered public employees; and third, the potential 
implications of mandating coverage for such employees. My 
statement is based on a body of work we have published on these 
topics in recent years. First, public employee coverage: 
approximately one-fourth of the nation's public employees are 
not covered by Social Security, which means they do not 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 concern over Federal authority to impose 
tax on State governments. Since then, many State and local 
governments have elected Social Security coverage, and Congress 
has covered all Federal Government workers hired after 1983. 
However, about 6 million State and local government workers 
today remain outside the Social Security system.
    Even though non-covered employees may have many years of 
earnings on which they did not pay Social Security taxes, they 
can still become eligible for benefits. Because their Social 
Security earnings records would show low- or no-covered 
earnings, under Social Security benefit formulas, these workers 
would be treated like low earners and would benefit from the 
program's progressive benefit structure. To avoid paying 
windfall benefits to such workers, Congress enacted provisions 
designed to recognize non-covered workers' special 
circumstances. Let me turn now to those provisions, and in the 
interest of time, I will not repeat Mr. Wilson's explanation of 
the GPO and the WEP. Let me move to the administration of these 
provisions, which we have found to be problematic. The SSA 
needs to know whether beneficiaries receive non-covered 
pensions. However, work we did in 1998 found that SSA is often 
unable to obtain this information, particularly for State and 
local workers. At that time, we recommended that the Internal 
Revenue Service (IRS) revise the reporting of pension 
information on the form 1099-R, but the IRS has concluded it 
does not have the authority to make that change. We are today 
asking the Congress to direct the IRS to collect and report 
this information. Doing so would save millions of dollars for 
the trust funds and would reduce uneven and inequitable 
enforcement of these provisions.
    These provisions are also viewed by many as confusing and 
unfair, and indeed, there are a variety of proposals to reduce 
or repeal these benefit reductions. Such actions, while they 
would reduce the confusion some retirees express when these 
benefit reductions are applied, would also be costly to the 
trust funds. Eliminating both provisions would cost about $40 
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. Finally, let me turn to the 
question of mandatory coverage. Making Social Security coverage 
mandatory for all has been proposed in the past to help address 
the program's financing problems and would ultimately eliminate 
the impetus for GPO and WEP provisions. Mandating coverage for 
public employees would reduce the long-term trust fund deficit 
by 10 percent. However, such a mandate could also increase 
costs for the affected State and local governments, and even 
then, because current uncovered employees would be 
grandfathered at their own option, the GPO and WEP would still 
be applied, although they would eventually, of course, become 
obsolete. 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 
WEP would ultimately come at the expense of other Social 
Security beneficiaries and of taxpayers. Mandating universal 
coverage would promise eventual elimination of the GPO and WEP, 
but at potentially significant cost to the affected State and 
local governments. Whatever the decision, it is important to 
administer all elements of the Social Security program 
effectively and equitably. To that end, I urge you to give IRS 
the authority it needs to identify recipients of non-covered 
pensions and help SSA maintain the integrity of its programs. 
That concludes my statement, Mr. Chairman. I am here for 
questions.
    [The prepared statement of Ms. Bovbjerg follows:]
 Statement of Barbara D. Bovbjerg, Director, Education, Workforce, and 
         Income Security Issues, U.S. General Accounting Office
    Mr. Chairman and Members of the Subcommittee:
    I am pleased to be here today to discuss Social Security provisions 
affecting public employees. Social Security covers about 96 percent of 
all U.S. workers; the vast majority of the rest are state, local, and 
federal government employees. While these noncovered 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. However, 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 provisions affecting noncovered public employees, and 
the potential implications of mandatory coverage of public employees. 
My testimony is based on a body of work we have published over the past 
several years.\1\
---------------------------------------------------------------------------
    \1\ See the list of related GAO products at the end of this 
statement.
---------------------------------------------------------------------------
    In summary, Social Security's provisions regarding public employees 
are rooted in the fact that about one-fourth of them do not pay Social 
Security taxes on the earnings from their government jobs, for various 
historical reasons. Even though noncovered 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. To address the 
fairness issues that arise with noncovered public employees, Social 
Security has two provisions--the Government Pension Offset (GPO), which 
affects spouse and survivor benefits, and the Windfall Elimination 
Provision (WEP), which affects retired worker benefits. Both provisions 
reduce Social Security benefits for those who receive noncovered 
pension benefits, and both provisions also depend on having complete 
and accurate information on receipt of such noncovered pension 
benefits. However, such information is not available for many state and 
local pension plans, even though it is for federal pension benefits. As 
a result, GPO and WEP are not applied consistently for all noncovered 
pension recipients. We have made recommendations to improve the 
availability and tracking of key information, and in the federal case, 
the implementation of our recommendations has saved hundreds of 
millions of dollars. However, congressional action appears to be needed 
in this area with respect to state and local government pensions. At 
the same time, a number of proposals have been offered to either revise 
or eliminate GPO and WEP. While we have not analyzed such proposals, we 
believe it is important to consider both the costs and fairness issues 
they raise.
    Aside from the issues surrounding GPO and WEP, another aspect of 
the relationship between Social Security and public employees is the 
question of mandatory coverage. Making coverage mandatory has been 
proposed to help address the program's financing problems. According to 
Social Security actuaries, doing so would reduce the 75-year actuarial 
deficit by 10 percent. Mandatory coverage 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, mandatory coverage could increase costs for 
the state and local governments that would sponsor the plans. Moreover, 
the GPO and 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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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 do not 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' 2003 intermediate, or 
best-estimate, assumptions, Social Security's cash flow is expected to 
turn negative in 2018. In addition, all of the accumulated Treasury 
obligations held by the trust funds are expected to be exhausted by 
2042. Social Security's long-term financing shortfall stems primarily 
from the fact that people are living longer. 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 employees because they 
had their own retirement systems, and there was concern over the 
question of the federal government's right to impose a tax on state 
governments. 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, the Congress extended mandatory coverage to newly hired 
federal workers.
    The Social Security Administration (SSA) estimates that 5.25 
million state and local government employees, excluding students and 
election workers, are not covered by Social Security. SSA also 
estimates that annual wages for these noncovered employees totaled 
about $171 billion in 2002. In addition, 1 million federal employees 
hired before 1984 are also not covered. Seven states--California, 
Colorado, Illinois, Louisiana, Massachusetts, Ohio, and Texas--account 
for more than 75 percent of the noncovered 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, a 1994 U.S. Department of Labor survey found 
that all members have a survivor annuity option, 91 percent have 
disability benefits, and 62 percent 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 becoming a relatively 
more common way for employers to offer pension plans; public employers 
are no exception to this trend.
    Even though noncovered 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 95 percent of 
noncovered state and local employees become entitled to Social Security 
as workers, spouses, or dependents. Their noncovered status complicates 
the program's ability to target benefits in the ways it is intended to 
do.
Provisions Seek Fairness but Pose Administrative Challenges
    To address the fairness issues that arise with noncovered public 
employees, Social Security has two provisions--GPO, which addresses 
spouse and survivor benefits and WEP, which addresses 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. As a result, proposals have been offered to revise or 
eliminate both provisions.
    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 their 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 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 noncovered employment to earn their own 
pension.
    Regarding WEP, the Congress was concerned that the design of the 
Social Security benefit formula provided unintended windfall benefits 
to workers who spent most of their careers in noncovered employment. 
The formula replaces a higher portion of preretirement 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 noncovered 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 noncovered) lifetime earnings were higher than they appear to be 
for purposes of calculating Social Security benefits.
    Both GPO and WEP apply only to those beneficiaries who receive 
pensions from noncovered employment. To administer these provisions, 
SSA needs to know whether beneficiaries receive such noncovered 
pensions. However, our prior work found that SSA lacks payment controls 
and is often unable to determine whether applicants should be subject 
to GPO or WEP because it has not developed any independent source of 
noncovered pension information.\3\ In that report, we estimated that 
failure to reduce benefits for federal, state, and local employees 
caused $160 million to $355 million in overpayments between 1978 and 
1995. In response to our recommendation, SSA performed additional 
computer matches with the Office of Personnel Management to get 
noncovered pension data for federal retirees in order to ensure that 
these provisions are applied. These computer matches detected payment 
errors; correcting these errors will generate hundreds of millions of 
dollars in savings, according to our estimates.\4\
---------------------------------------------------------------------------
    \3\ See U.S. General Accounting Office, 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.
---------------------------------------------------------------------------
    Also, in that report, we recommended that SSA work with the 
Internal Revenue Service (IRS) to revise the reporting of pension 
information on IRS Form 1099R, so that SSA would be able to identify 
people receiving a pension from noncovered employment, especially in 
state and local governments. However, IRS does not believe it can make 
the recommended change without new legislative authority. Given that 
one of our recommendations was implemented but not the other, SSA now 
has better access to information for federal employees but not for 
state and local employees. As a result, SSA cannot apply GPO and WEP 
for state and local government employees to the same degree that it 
does for federal employees. To address issues such as these, the 
President's budget proposes ``to increase Social Security payment 
accuracy by giving SSA the ability to independently verify whether 
beneficiaries have pension income from employment not covered by Social 
Security.''
    In addition to facing administrative challenges, GPO and WEP have 
also faced criticism regarding their design in the law. For example, 
GPO does not apply if an individual's last day of state/local 
employment is in a position that is covered by Social Security.\5\ This 
GPO ``loophole'' raises fairness and equity concerns.\6\ In the states 
we visited for a previous report, individuals with a relatively minimal 
investment of work time and Social Security contributions gained access 
to potentially many years of full Social Security spousal benefits. To 
address this issue, the House recently passed legislation that provides 
for a longer minimum time period in covered employment.
---------------------------------------------------------------------------
    \5\ Exemption due to ``The Last Day of Employment'' Covered Under 
Social Security--State/Local or Military Service Pensions (SSA's 
Program Operations Manual System, GN 02608.102).
    \6\ See U.S. General Accounting Office, Social Security 
Administration: Revision to the Government Pension Offset Exemption 
Should Be Considered, GAO-02-950 (Washington, D.C.: Aug. 15, 2002).
---------------------------------------------------------------------------
    At the same time, GPO and WEP have been a source of confusion and 
frustration for the roughly 6 million workers and nearly 1 million 
beneficiaries they affect. Critics of the measures contend that they 
are basically inaccurate and often unfair. For example, some opponents 
of 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. A variety of proposals 
have been offered to either revise or eliminate them. 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 SSA and the Congressional Budget Office (CBO), 
proposals to reduce the number of beneficiaries subject to GPO would 
cost $5 billion or more over the next 10 years and increase Social 
Security's long-range deficit by up to 1 percent. Eliminating GPO 
entirely would cost $21 billion over 10 years and increase the long-
range deficit by about 3 percent. Similarly, a proposal that would 
reduce the number of beneficiaries subject to WEP would cost $19 
billion over 10 years, and eliminating WEP would 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 GPO as a way 
to treat spouses with noncovered pensions in a fashion similar to how 
it treats dually entitled spouses, who qualify for Social Security 
benefits both on their own work records and their spouses'. In such 
cases, each spouse may not receive both the benefits earned as a worker 
and the full spousal benefit; rather the worker receives the higher 
amount of the two. If 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. Far more spouses are subject to the dual-entitlement offset 
than to GPO; as a result, the costs of eliminating the dual-entitlement 
offset would be commensurately greater.
Mandatory Coverage Has Been Proposed
    Aside from the issues surrounding GPO and WEP, another aspect of 
the relationship between Social Security and public employees is the 
question of mandatory coverage. Making coverage mandatory has been 
proposed in the past to help address the program's financing problems. 
According to Social Security actuaries, doing so would reduce the 75-
year actuarial deficit by 10 percent.\7\ Mandatory coverage could also 
enhance inflation-protection for the affected beneficiaries, improve 
portability, and add dependent benefits in many cases. However, to 
provide for the same level of retirement income, mandatory coverage 
could increase costs for the state and local governments that would 
sponsor the plans. Moreover, if coverage were extended primarily to new 
state and local employees, GPO and WEP would continue to apply for many 
years to come for existing employees and beneficiaries even though they 
would become obsolete in the long run.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    While Social Security's solvency problems have triggered an 
analysis of the impact of mandatory coverage on program revenues and 
expenditures, the inclusion of such 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.'' The Advisory 
Council's 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.''
    The impact on public employers, employees, and pension plans would 
depend on how states and localities with noncovered employees would 
react to mandatory coverage. Many public pension plans currently offer 
a lower retirement age and higher retirement income benefit than Social 
Security. For example, many public employees, especially police and 
firefighters, retire before they are eligible for full Social Security 
benefits; new plans that include Social Security coverage might provide 
special supplemental benefits for those who retire before they could 
receive Social Security benefits. Social Security, on the other hand, 
offers automatic inflation protection, full benefit portability, and 
dependent benefits, which are not available in many public pension 
plans. Costs could increase by as much as 11 percent of payroll for 
those states and localities, depending on the benefit package of the 
new plans that would include Social Security coverage. 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. 
Finally, mandating Social Security coverage for state and local 
employees could elicit a constitutional challenge.
Conclusions
    There are no easy answers to the difficulties of equalizing Social 
Security's treatment of covered and noncovered workers. Any reductions 
in GPO or WEP would ultimately come at the expense of other Social 
Security beneficiaries and taxpayers. Mandating universal coverage 
would promise the eventual elimination of GPO and WEP but at 
potentially significant cost to affected state and local governments, 
and even so GPO and WEP would continue to apply for some years to come, 
unless they were repealed. Whatever the decision, it will be important 
to administer all elements of the Social Security program effectively 
and equitably.
    GPO and 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 disparities in the application 
of these two provisions is yet another source of unfairness in the 
final outcome. We have made recommendations to the Internal Revenue 
Service to provide for complete and accurate reporting, but it has 
responded that it lacks the necessary authority from the Congress. We 
therefore take this opportunity to bring the matter to the 
Subcommittee's attention for 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 and Ken Stockbridge.
Related GAO Products
    Social Security: Congress Should Consider Revising the Government 
Pension Offset ``Loophole.'' GAO-03-498T. Washington, D.C.: February 
27, 2003.

    Social Security Administration: Revision to the Government Pension 
Offset Exemption Should Be Considered. GAO-02-950. Washington, D.C.: 
August 15, 2002.

    Social Security Reform: Experience of the Alternate Plans in Texas. 
GAO/HEHS-99-31, Washington, D.C.: February 26, 1999.

    Social Security: Implications of Extending Mandatory Coverage to 
State and Local Employees. GAO/HEHS-98-196. Washington, D.C.: August 
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 SHAW. Thank you. Mr. Matsui?
    Mr. MATSUI. Thank you very much, Mr. Chairman. Mr. Wilson, 
you indicated in your testimony verbally and also in your 
written testimony that we should not really be addressing these 
issues until there is a broader context of Social Security 
reform. When do you think the President is going to have his 
Social Security reform package before us? In this Congress? In 
2003-2004?
    Mr. WILSON. Mr. Matsui, I cannot address that question.
    Mr. MATSUI. You do not know?
    Mr. WILSON. No, I do not know.
    Mr. MATSUI. Do you know whether, at any time in the near 
future, he will bring it up, or is it just speculation at this 
time as to when he may come forward with a proposal?
    Mr. WILSON. Again, I do not know.
    Mr. MATSUI. Right; my understanding is that he is not going 
to do so, but I understand where you think he may or may not, 
but we really do not know. So, you are basically saying let us 
just put this off?
    Mr. WILSON. Well, no, Mr. Matsui, that is not really my 
intent. My intent is to indicate that changes in the WEP and 
GPO involve costs, particularly proposals eliminating them----
    Mr. MATSUI. I understand what you are saying, and I do not 
mean to interrupt, but I am on a 5-minute rule here.
    Mr. WILSON. Okay.
    Mr. MATSUI. So, let me just say this, then. You are saying 
that we really do not need to make changes? Because your 
testimony really kind of said that, though it did not really 
say that. So, you are saying that basically, we do not need to 
make changes; the current situation with the WEP and the GPO 
are fine? Or are you trying to have it both ways? I just want 
to know, because I just want to know what we are up against.
    Chairman SHAW. If I might interrupt you, I believe that 
whether it is changed is our job and not Mr. Wilson's.
    Mr. MATSUI. I understand that, but you do have a President, 
and he makes a lot of recommendations. I assume that he will 
not want to duck this one.
    Mr. WILSON. On the WEP and GPO?
    Mr. MATSUI. So, I was wondering what the position might be.
    Mr. WILSON. The Administration has no position on whether 
or not----
    Mr. MATSUI. So, you are here today to tell us that you have 
no position on whether or not there should be a reform of the 
GPO or WEP, one; and then, second, you are here to say whatever 
you do, do not do it until we do Social Security reform; and 
three, last, that I do not know when this Social Security 
reform is coming up? So, I would like some help. What are you 
telling me? What did we waste our time here talking about this 
for?
    Mr. WILSON. Well, I do not think it is a waste of time, Mr. 
Matsui, with all due respect.
    Mr. MATSUI. Well, what is the President's position on this? 
What is your position on this?
    Mr. WILSON. Again, we do not have an Administration 
position on any particular bill at this point with respect to 
WEP and GPO. The Commissioner's position on this is that, the 
SSA is here and willing to work with the Committee on 
addressing whatever issues it thinks it needs to address with 
respect to these programs.
    Mr. MATSUI. I would like to move over to another area. You 
are suggesting, I think, and GAO is suggesting as well, that no 
general fund moneys go into this. Is that right? At least your 
testimony kind of indicated or at least ruled out general fund 
moneys going into solving this problem; is that correct?
    Mr. WILSON. I believe that is correct.
    Mr. MATSUI. Right, but I am sure you have, because you are 
obviously second in command at the SSA you have had an 
opportunity to review the Commission's recommendations to the 
President on his Social Security privatization proposal. I am 
sure you have; is that correct?
    Mr. WILSON. I have----
    Mr. MATSUI. Yes, you are familiar with the three proposals.
    Mr. WILSON. Generally, yes.
    Mr. MATSUI. In two of those proposals, there is a 
recommendation of general fund moneys at least for a temporary 
period of time to go to pay for the private accounts; is that 
correct?
    Mr. WILSON. Yes.
    Mr. MATSUI. Yes. So, you are willing to do it for private 
accounts and privatizing Social Security, but you are not 
willing to do it to help widows. I do not understand that. 
Where are the values there? You cannot answer that. So, I 
understand; I just want to--let me finish. You are willing to 
use general fund monies to pay for private accounts, for 
privatizing Social Security, but you are not willing to do it 
for first responders like firefighter families, police 
officers' families, and teachers' families. Is that correct, 
Mr. Wilson?
    Mr. WILSON. No, I would not put it that way.
    [Laughter.]
    Mr. MATSUI. How would you put it, then, if you could tell 
me? I would like to get to the bottom of this.
    Mr. WILSON. Well, not to be argumentative, Mr. Matsui, but 
the provisions here that we are talking about, while they 
affect government employees, they are not really targeted 
necessarily to those whom you have identified. They apply to 
government employees across the board. Again, we are here to 
work with the Committee in any way that we can to assist in 
addressing these concerns----
    Mr. MATSUI. Thank you.
    Mr. WILSON. About WEP and GPO.
    Mr. MATSUI. Thank you.
    Chairman SHAW. I would like to mention at this point that 
two of the recommendations did increase a widow's benefit as 
does my particular reform of Social Security, and I would be 
very happy to entertain the gentleman from California's 
proposal should you put one on the table.
    Mr. MATSUI. Will the gentleman allow me to respond?
    Chairman SHAW. Yes.
    Mr. MATSUI. I think what you should do is bring your Social 
Security privatization proposal before the House so that we 
could vote on it, because I know that provision is in there, 
but we would love to have a vote on your proposal, because your 
proposal borrows about $11 trillion----
    Chairman SHAW. Which pays every bit of it back----
    Mr. MATSUI. Yes, in the year 2067.
    Chairman SHAW. Preserves benefits and creates a $5 
trillion----
    Mr. MATSUI. If I might just respond to the gentleman and 
his first question, you do not pay it back until the year 2067.
    [Laughter.]
    Chairman SHAW. Well, it pays it back, and it does not 
decrease benefits. We are looking at some huge problems, but we 
have got our plate full on this particular subject, and we need 
to go forward on it. I would be glad to put my proposal next to 
the gentleman's proposal, should he have one.
    Mr. MATSUI. I think we should just vote on your proposal.
    Chairman SHAW. Yes, well--Mr. Ryan?
    Mr. RYAN. No questions.
    Chairman SHAW. Mr. Brady.
    Mr. BRADY. Thank you, Mr. Chairman. I appreciate the 
testimony so far and know this is an important issue. I think 
Social Security is confusing, and I think there are some myths 
associated with the dealing with GPO that we need to discuss 
today. What I really wanted to do was go from the abstract to 
the real. This is a comparison for GPO. This is when you have 
identical families who have worked the same amount of time; who 
have got identical retirement benefits, and we chose basically 
the average family in America. What happens when the husband's 
Social Security retirement is about $1,000 a month, and the 
average wife's is about $700 a month. It varies a little by 
State-to-State as you would guess. This is what happens when 
the husband passes away, because that is where we are really, I 
think, concerned the most is when the widow is on her own. The 
way it works today is that the Social Security family, when the 
husband deceases, would have a month's retirement of $1,000. 
That is because there is a dual entitlement offset. I think 
that is one of the myths you talk about today: people do not 
know; every working family in America has an offset. It is 100 
percent if you are in Social Security, but for GPO families, 
the reduction is less. Their spouses' benefits are reduced by 
two-thirds. So, they keep more than the Social Security 
families.
    If we were to repeal GPO, the gap between all the rest of 
America, 96 percent who are Social Security families and the 4 
percent that are not, would increase dramatically, because when 
you repeal GPO, you, in effect, treat those families like they 
have never worked at all; they are completely dependent, and 
so, we give them all of their husband's benefits. In this, the 
gap is pretty dramatic between the rest of America with an 
offset and the $1,700 if we repeal GPO. My question to our 
panelists today is sort of to verify this formula: if we were 
to repeal GPO, does that make the treatment between Social 
Security families and GPO families more equal, or does it make 
it less equal? Does it increase or decrease the gap between 
Social Security families and GPO families? Barbara, if you 
would like to start or Robert----
    Ms. BOVBJERG. Well, in fact, this is one of the issues of 
fairness that we have raised. One of the things that I think 
Congress would have to consider in assessing these bills is 
that the GPO was designed to create a rough equivalence between 
people who have not been covered by Social Security and so have 
not been making contributions to the system and couples who 
have both been working and contributing--dually-entitled, we 
call them. Those latter folks are offset. So, that is the 
source of the GPO. If you were to repeal the GPO without 
consideration of the dually-entitled couples, you would restore 
that inherent inequity.
    Mr. BRADY. Thank you. Sir?
    Mr. WILSON. Yes, I would concur with that, Mr. Brady.
    Mr. BRADY. That you increase the gap between identical 
families? They would be treated much differently if GPO was 
repealed--identical families?
    Mr. WILSON. I believe that would be the case, as I 
understand your question. You are referring to a family where 
both a husband and spouse were covered by Social Security; when 
the husband or one of the spouses dies, then, the surviving 
spouse has an option of getting either her own benefit or the 
spousal benefit. In the circumstance where the spouse in this 
family was covered, and the spouse in the other family was 
working in a non-covered situation, the latter would get a full 
spousal benefit absent the GPO.
    Mr. BRADY. This type of----
    Mr. WILSON. Without the GPO, the spouse in the latter 
situation would get the full benefit of their pension, as well 
as, the full spousal benefit.
    Mr. BRADY. So, this chart is essentially correct for the 
average Social Security and GPO family in America as far as 
treatment of how their retirement and spousal benefits would 
work?
    Mr. WILSON. I believe it is.
    Mr. BRADY. Thank you. Any other comments? Let me just make 
a point, and David, if you could change this real quickly; real 
quickly, Mr. Chairman, I think we have got three myths 
surrounding Social Security that are being discussed today that 
I think are real important. Just so you know, I have put these 
charts together trying to wade through the complications of 
Social Security and find out how this affected my families; the 
more work I did, the more I realized that these myths really, I 
think, are hurting the debate. The first is, back home, I hear 
this all the time: only teachers and government workers have 
their spouses' benefits offset. In a recent town hall meeting 
with 350 of my best teachers there, I asked the question how 
many of you know, how many of you realize that every other 
working family in America has an offset, too, has their 
spouses' benefits reduced? Not a single hand went up. No one 
was aware, and no one had been told that everyone else in 
America has an offset. In fact, GPO workers are treated a 
little better--I say a little better, not worse--than other 
families in America.
    [The charts follow:]





    The second, private pensions are not offset, just 
government pensions. That is not correct, either. Government 
pension plans that do not pay into Social Security are not 
private retirement plans. They are legal substitutes for Social 
Security. So, they are treated like Social Security plans. 
Again, while Social Security plans for most of Americans are 
offset 100 percent, the GPO offset is only two-thirds, which I 
think again most people do not understand. Then, the third 
comment I get at home all the time is when my spouse dies, I 
will not see a penny of their Social Security, but if I stayed 
home all my life, I could keep all of it. Well, I did the 
research through the SSA. I asked the simple questions: how 
many stay-at-home moms are there? How many people really never 
work throughout their life, and get all of their husband's 
benefits? The bottom line is that today, it just does not 
happen much. About 6 percent of Social Security people today 
getting benefits are what you and I would describe as stay-at-
home moms. It is getting rarer and rarer and rarer, because 
most people work after school, before they have kids. Many of 
them go back--even if they can stay home, go back and work 
again. So, sort of the traditional American family from 40 
years ago, where only one works their whole life, just does not 
happen anymore. So, that has become a false argument. Mr. 
Chairman, I know I took way too much of my time, but maybe if 
any of the other panelists have comments later on, we can 
tackle this.
    Chairman SHAW. Mr. Cardin?
    Mr. CARDIN. Thank you, Mr. Chairman. Mr. Wilson, I am 
disappointed that you do not have recommendations before us in 
dealing with this issue. It seems like you are trying to defend 
these offsets knowing full well that they add complexity to the 
system; that they are not well-understood, as you pointed out, 
and a lot of our constituents are confused by this. It does 
create inequities. There are inequities created based upon the 
length of service you have in the private sector or covered 
employment or non-covered employment. We have inequities in the 
Social Security system when you die. If you die early, you are 
not going to get as much benefit as if you lived longer. So, 
there are inequities in the system. There are certainly 
inequities on the offsets. I guess I would have hoped that we 
would have had at least some comment of how we could reform the 
system to deal with that. On affordability, Mr. Matsui made 
this point, but let me just underscore it if I might. We have a 
proposal by Mr. Jefferson; we have a proposal by Mr. Frank, the 
total cost of which, I believe is somewhere around 0.03 percent 
of payroll. The current Social Security 75-year projected 
deficit is 1.92 percent of payroll, so that would take it from 
1.92 percent to 1.95 percent, not very much change at all.
    So, when you say defer until we look at a comprehensive 
proposal, I think it is unfair to the people who are adversely 
impacted by our current system of inequities. So, I just would 
have hoped that we would have had some discussion here at this 
hearing by SSA on what type of changes should be made in these 
offsets in order to deal with legitimate problems that are out 
there. Unfortunately, we have not seen that, and I would hope 
as we move forward, we would get some concrete suggestions, 
because I can tell you, as Members of Congress, we cannot 
defend how these offsets are being applied in certain 
circumstances in our community, and we are looking for 
reasonable suggested changes in the system. Let me, if I 
might--I saw some inconsistency, I thought, between the 
testimonies of our witnesses on what is happening on need of 
information. Mr. Wilson, you get me a little bit nervous when 
you say that you are getting to be getting direct information 
from local government pension administrators, which seems to 
indicate to me that we perhaps are going to have a lot larger 
number of people who are going to be affected by the offset, or 
the dollar amounts of the offsets are likely to be adjusted. 
From GAO's testimony, I got the feeling that that cannot be 
done unless there was Congressional authority given to obtain 
that information. Can I get some clarification as to what we 
might expect on administrative changes that are taken by SSA; 
the number of people who may be affected by it and whether, in 
fact, Congressional authority is needed?
    Mr. WILSON. I am sorry; I did not mean to suggest to you 
that we have definitely decided what approach to take. In fact, 
that is something that is under current discussion among SSA, 
the IRS, and the Office of Management and Budget. There are a 
number of ways that it could be approached. One option that Ms. 
Bovbjerg points out in her testimony is one approach which 
would require legislation, and as----
    Mr. CARDIN. Sir, in your testimony you said that it will 
reduce program costs by an estimated $2.2 billion over the 
first 10 years.
    Mr. WILSON. Yes.
    Mr. CARDIN. How is that $2.2 billion arrived at if you do 
not have a specific proposal or specific change in 
administration?
    Mr. WILSON. Well, I think it is based on an estimation of 
the number of people receiving income from non-covered 
pensions, non-covered work, and the amount that benefits would 
be reduced by the SSA having better information on the numbers 
of people potentially affected. Right now, the situation is 
that the SSA finds out if someone is receiving a pension from 
non-covered work based on their statement at the time that they 
apply. We have very little other sources of information. Your 
question earlier about going out to all the State and local 
governments, that is certainly one approach. Ms. Bovbjerg also 
suggested----
    Mr. CARDIN. To obtain this extra $2.2 billion, do you know 
how many additional people will be subject to the offsets and 
how much the offsets would be increased?
    Mr. WILSON. We estimate that 9 percent of the beneficiaries 
whose benefits should be affected by WEP or GPO.
    Mr. CARDIN. How many are affected today? Maybe you should 
make this available for the record, because I know that my time 
is running forward, but there is a second point I want you to 
address also, and whether you can do that without Congressional 
authority. The GAO indicates that Congressional authority is 
needed. You are indicating you are going to do this on your 
own.
    Mr. WILSON. I did not mean to suggest that we could do it 
on our own.
    Mr. CARDIN. Well, I thought you did. I thought you said 
that the budget would implement these changes, and Mr. 
Chairman, I would hope that we could get for our record how 
many people would be affected by this new policy. We know the 
number of people currently subject to the offset. I think we 
should know how many people SSA or GAO believe are out there 
that are not being subject to the offset today that you believe 
should be or if the dollar amount is wrong would be increased, 
because obviously, $2.2 billion over 10 years is a lot of 
money, and it would affect a lot of people. We have a right to 
know who is out there that you think are not currently--who are 
subject to it who are not getting the offsets today.
    Mr. WILSON. If I could, I would like to supply that to you 
for the record, Mr. Cardin.
    [The information follows:]

    Based on a small sample from GAO's work in the State of Illinois, 
SSA's Office of the Chief Actuary (OCACT) estimates that, if SSA had 
perfect knowledge, the number of prior State and local government 
employees whose Social Security benefits are affected by the WEP or GPO 
would increase by 9 percent. OCACT assumes that about 80 percent of 
these potentially affected beneficiaries would be detected by 
enforcement with ``reliable'' data, which then represents a 7.2 percent 
increase, rather than 9 percent. The cost estimates are based on these 
assumptions.
    With respect to beneficiaries who receive pensions from State and 
local government employment not covered by Social Security, there were 
235,708 beneficiaries (including auxiliaries) affected by WEP and 
239,267 beneficiaries subject to GPO as of December 2002. Thus, a 7.2 
percent increase would raise the number of beneficiaries subject to WEP 
and GPO by about 17,000 beneficiaries for each--for a total of about 
34,000 additional beneficiaries impacted by the WEP and GPO provisions.
    The proposal would just impact prior State and local government 
employees because, for the Federal government sector, SSA already has 
in place a computerized record match with the Office of Personnel 
Management to inform SSA of pension receipt.

                                 

    Ms. BOVBJERG. Could I jump in for a moment?
    Mr. CARDIN. Yes, please do.
    Ms. BOVBJERG. In 1998, when we did the work on the GPO and 
WEP, what we discovered is no one really knew for sure how many 
people should have been subject to these provisions who were 
not being offset because SSA did not know that they were 
receiving pensions from non-covered employment. We had 
recommended two things. One, which SSA did fairly quickly, was 
to go back to the Office of Personnel Management and do not 
only a pre-entitlement match on Federal retirees but also a 
post-entitlement match. They are identifying everybody on the 
Federal side now who receives a non-covered pension and 
applying these provisions. They are not able to do that with 
State and local retirees, and I do not think that anyone really 
knows to what extent SSA is making overpayments there.
    Mr. CARDIN. Mr. Chairman, if I could just make one point to 
the Committee: if we are contemplating a change in the offset, 
it seems to me we should do that before you go out and change 
the way that the current program is being administered. I would 
think that you would want to get some direction from Congress.
    Chairman SHAW. Yes, I understand what you are saying, but I 
think what I am hearing from the witnesses is that there are a 
lot of people who are not getting the offset who under the law 
should be getting the offset, but we do not have the data in 
which to catch them. I think that is what you are saying.
    Mr. CARDIN. That is correct.
    Chairman SHAW. I think what Mr. Wilson is saying is that if 
we treated everybody equally, that is where he came up with his 
figure. So, many of these are estimates, at best.
    Mr. CARDIN. My point is that rather than getting a lot of 
people all upset, if we are going to change the policy, it 
would be good for Congress to state its position before----
    Chairman SHAW. I think that is absolutely right, but I 
think that our instructions to the SSA from Congress is that 
until the law is changed, enforce it. I think that has to be 
the message.
    Mr. Collins?
    Mr. COLLINS. No questions.
    Chairman SHAW. Mr. Pomeroy?
    Mr. POMEROY. I thank the Chairman. I must begin by a 
statement of surprise that the hearing where we are really 
learning a good bit about people on Social Security in poverty 
and some of them in poverty by application of a government-
imposed formula that reduces benefits, the concern from the 
majority apparently is that we are not reducing the benefits 
enough and that we have got to catch some more and reduce the 
benefits further on a larger number of clients.
    Chairman SHAW. If the gentleman will yield----
    Mr. POMEROY. I yield.
    Chairman SHAW. These laws were passed in a Democratic 
Congress, so let us not go there.
    Mr. POMEROY. Reclaiming my time, Mr. Chairman, we are in 
this Congress, and you have advanced no proposal, and in the 
middle of this hearing, you talk about we have got to reduce 
the pensions for some others. I find that absolutely stunning, 
and I also find stunning the fact that we have--I have the time 
now, Mr. Chairman. I have the time, and I am going to keep the 
time.
    Chairman SHAW. You are misstating the facts.
    Mr. POMEROY. Mr. Chairman, I have not yielded to you, and I 
do not intend to. We have the Administration talking about--I 
beg your pardon? We have the Administration here indicating no 
plan, no proposal. We know that 11 percent of Social Security 
recipients are living in poverty. The proposals before us at 
least address some of that 11 percent. We have people on fixed 
incomes in Social Security living in poverty. No plan; no broad 
proposal; no little proposal; nothing. I just wish some of the 
zeal, some of the planning, some of the effort and some of the 
President's time and attention on corporate dividend taxation 
which disproportionately benefits the richest 1 percent of the 
people in this country, was directed to the people who are the 
bottom levels of income in this country.
    [Applause.]
    Do not do that. Do not do that.
    Chairman SHAW. I would--excuse me, I will give you this 
time back. I would say to our guests that any type of clapping, 
cheering, jeering or anything of this nature is not provided 
for under the rules. I know that there are a lot of people 
here, and emotions are high, and I can understand it, and I 
appreciate it. I would ask you to take your enthusiasm out into 
the hall if you feel that you have to have some type of an 
outburst.
    Mr. POMEROY. The issue is not simple, and I think the GAO 
has done an interesting job of trying to put before us how all 
of these things interrelate. It sharpens, in my opinion, the 
need to look at the broader issue of people on Social Security 
in poverty, especially widows, especially widows of very old 
age. We need to do something about that. I think a place to 
start is to at least modify the impact of this government-
imposed offset that is driving some of these widows into 
poverty, and so, the Jefferson bill, which would at least have 
some kind of income floor, so that when you impose this 
government-imposed offset, you at least leave them enough money 
to live on with some basic dignity would be a good place to 
start. Now, as we move from that to the broader issue of the 
consideration, there are all kinds of cost consequences that 
relate to the long-term funding of the program. I do note that 
the GAO states as fact on page 3 of their testimony reductions 
in promised benefits and/or increases in program revenues will 
be needed to restore the long-term solvency and sustainability 
of the program. That does not seem to contemplate the prospect 
of infusion of general fund resources into Social Security so 
that you could avoid benefit reductions. If we were in a 
position next decade to make a general fund contribution to 
Social Security, we could get along without either raising 
taxes or cutting benefits. Would that not be correct?
    Ms. BOVBJERG. It would depend on how much of a contribution 
you made and how stable the system became as a consequence, 
what other things we did to----
    Mr. POMEROY. I will accept that, but you acknowledge that 
if the general fund was in a position to move some money into 
Social Security, you could avoid benefit cuts. That is one of 
the reasons why I am so very concerned about the tax cut 
proposals we are considering which blow up the budget next 
decade and make it absolutely certain that we will not be able 
to move money into Social Security or avoid a benefit cut. As 
people look at structural deficits in our budget, they should 
also be forewarned that this is putting us right on a train 
track down to benefit cuts in the future, and the poverty in 
Social Security problems we have today could even get worse. I 
thank the Chairman.
    Chairman SHAW. Ms. Tubbs Jones?
    Ms. TUBBS JONES. Mr. Chairman, thank you very much. I have 
a couple of questions, because I am concerned, too, about this 
whole issue of seniors being placed in greater poverty. Is 
there a cost-of-living increase with Social Security for 
seniors?
    Mr. WILSON. Yes.
    Ms. TUBBS JONES. What is that cost-of-living.
    Ms. BOVBJERG. It rises with the consumer price index.
    Ms. TUBBS JONES. What is it currently?
    Mr. WILSON. It is 1.4 percent.
    Ms. TUBBS JONES. Can you tell me what the inflation rate is 
right now? You can answer, Mr. Kelley. Do not write notes. 
Answer the question. Why are you here?
    Mr. KELLEY. The consumer price index is used to adjust 
Social Security benefits. The measuring period is the third 
quarter of one year to the third quarter of the next year, and 
the full consumer price index increase is used to adjust Social 
Security benefits the following December.
    Ms. TUBBS JONES. So, it is 1.4 percent? Once again, what is 
the inflation rate right now?
    Mr. KELLEY. Well, if the inflation rate is defined as equal 
to the consumer price index, at least from the third quarter of 
last year to the third quarter of last year----
    Ms. TUBBS JONES. You say if it is. I am asking you. Is it?
    Mr. KELLEY. I believe that is what the consumer price index 
is supposed to measure the inflation rate.
    Ms. TUBBS JONES. Okay; so 1.4 percent. So, you are saying 
to me that when the inflation rate was greater than 1.4 
percent, maybe 2 years ago, that Social Security benefits 
increased by that amount?
    Mr. KELLEY. Yes, I believe the previous year, it was 2.6 
percent.
    Ms. TUBBS JONES. It was 2.6 percent? What was it before 
that?
    Mr. KELLEY. I cannot recall.
    Ms. TUBBS JONES. Okay; now, the way this operates is, for 
example, if we use the numbers that my colleague put up there, 
is--let me back up. What is poverty-level income?
    Mr. KELLEY. Well, the poverty level for a person who is age 
65 in 2002, is $8,628.
    Ms. TUBBS JONES. Now, if I am 25, what is the poverty level 
rate?
    Mr. KELLEY. I do not have that figure with me.
    Ms. TUBBS JONES. It is different if I am 65 or 25?
    Mr. KELLEY. It is based on the standards that the U.S. 
Census Bureau uses.
    Ms. TUBBS JONES. So, if I am 25, and I am paying $2.50 for 
a gallon of gasoline, and I am 65 and paying $2.50 for a gallon 
of gasoline, there is no adjustment there.
    Mr. KELLEY. Well, I am not sure why the poverty level is 
different, but I am pretty sure it is different for the 25-
year-old versus the 65-year-old.
    Ms. TUBBS JONES. Perhaps that is something that we need to 
look at, as well, as we start to talk about retirement and the 
benefit or the dilemma in putting people in retirement--if I am 
considered at 65 not to have the same value. Let me ask you--I 
am still a little confused on this. Let me, for the record, 
before I go there, say that I am adamantly opposed to mandatory 
participation in Social Security for those who choose not to 
participate in Social Security, and they are in a plan for 
whatever that is worth. Let us look again at this $1,000 chart 
here, assuming $1,000. Even if there were a repeal of the GPO, 
and I got $1,700 a month, let us multiply that by 12. Where 
would I be in the poverty level or what we consider poverty 
level in government?
    Mr. KELLEY. You would certainly be above it.
    Ms. TUBBS JONES. How much?
    Mr. KELLEY. Well, I can do the math here. It is about 
$18,000 or so and----
    Ms. TUBBS JONES. Poverty level, again, is how much?
    Mr. KELLEY. It is $8,000.
    Ms. TUBBS JONES. Okay, $8,000. Out of that $8,000, I have 
to pay my rent, do whatever else I have to do. Are you 
considering in all of this process, in this change of Social 
Security, the fact that there are senior citizens on a Medicare 
government program that does not provide prescription drug 
benefit; are in an even greater dilemma after their spouse 
dies? It does not mean they need any less prescriptions because 
their spouse died, right?
    Mr. KELLEY. Right.
    Ms. TUBBS JONES. So, the spousal income helped to pay some 
of that prescription drug benefit; fair? Mr. Wilson, you are 
looking kind of confused. What I am trying to say is that we as 
a government need to have policies that work together, meaning 
that if I am in a retirement income, and you are not giving me 
any prescription drug benefit, then I ought to have the money 
from the money I made; you ought to give me all of my money 
that I made so I can perhaps cover the prescription drug 
benefit that I did not get. Are you with me, Mr. Wilson?
    Mr. WILSON. I was following you.
    Ms. TUBBS JONES. Okay; you had a bit of a confusing look on 
your face, so I just wanted to make sure we were staying 
together. The bottom line is that I am with my colleagues that, 
in fact, we need to study the impact any changes are going to 
have on people before we make a change. We need to look at, 
perhaps, that we are not even giving people with the Social 
Security that they are getting the ability to survive in the 
current economic environment. We need to take a look at--let me 
ask this question: where do the dollars--say I am in a private 
Social Security fund--am I out of time? I guess I am out of 
time. I really wanted to ask this question. If you can give 
me----
    Chairman SHAW. You are on a roll. I will give you another 
minute.
    Ms. TUBBS JONES. Thank you, Mr. Chairman.
    [Laughter.]
    I appreciate it. I am in a private pension plan, right? 
Additionally, I have dual entitlement, okay? If I am in a 
private pension plan, and I have a spouse who is in Social 
Security; I have dual entitlement, right?
    Ms. BOVBJERG. You are in Social Security, too? Because you 
are in a private plan.
    Ms. TUBBS JONES. I am in Social Security, too, right. When 
I do not get the money that I paid into the plan, it goes to 
other people to keep the fund going. Is that a fair statement 
with the offset--with the dual entitlement; I am sorry.
    Ms. BOVBJERG. Yes; Social Security is essentially an 
intergenerational transfer. So, anything that you are 
contributing today as a worker is immediately being used to pay 
for benefits of current retirees.
    Ms. TUBBS JONES. So, in essence, then, I do not have a pot 
that I have been paying into that over time is there that is 
mine?
    Ms. BOVBJERG. You are earning credits as a participant in 
Social Security. It is not like a 401(k), though, where you 
make contributions, and they accumulate in a fund.
    Ms. TUBBS JONES. You know what, Mr. Chairman, I would like 
to pursue this line of questioning, but it is probably going to 
take too long for me to get an answer. I thank you for giving 
me an opportunity to answer these questions, and I will submit 
some written questions to you to get an answer, and I thank you 
for coming. Also, Mr. Chairman, one last thing, if you will 
allow me. There is going to be a witness from Ohio in the next 
panel. I do not know that I am going to get a chance to hear 
all of her testimony, but I would like to welcome her to our 
Committee and thank her for coming.
    Chairman SHAW. It is done. I am going to yield 2 minutes of 
my time to Mr. Brady, and then, I have one line of questions 
for the witness.
    Mr. BRADY. Thank you, Mr. Chairman, for holding this 
hearing. I know GPO and WEP have been around for almost a 
quarter of a century, and I appreciate your taking a leadership 
role in a first step here today. I agree with Congresswoman 
Tubbs Jones that Social Security does not pay enough. A lot of 
people are struggling. I think one of the bipartisan goals of 
this Committee should be to increase the Social Security and 
retirement rate for everybody. We had another myth that just 
got perpetuated, and the myth is that there are more people on 
government retirement pension in poverty than are affected by 
Social Security. It is just the opposite. According to the 
written testimony that both of you provided us today, nearly 15 
percent of those on Social Security and in Social Security 
families are below the poverty level, but in government 
pension, only 5 percent are below that poverty level. So, if we 
increase the gap between Social Security families and identical 
government pension families, we have helped a small number on 
poverty, but we have left behind the greatest number of 
Americans who are struggling on Social Security. So, it seems 
to me--I actually agree with Stephanie on this as well--
government pension plans should not look more like Social 
Security. Social Security should look more like government 
pension plans so that we could increase the rate of return for 
all of the people in their retirement age. Mr. Chairman?
    Chairman SHAW. Thank you, and I think you make a good point 
here. My final question is that most of those testifying on the 
next panel, and some of the questioning occurring here, raises 
another interesting question, because they are urging the 
repeal of the GPO, saying it is unfair. If it is unfair to 
reduce spouse benefits for those who do not pay Social 
Security, then I think logic--and I think everyone else in this 
room--would have to say that it is also unfair to reduce 
spousal benefits for workers who do pay Social Security taxes, 
since these workers--husbands and wives--earn spousal benefits 
just like the husbands and wives of public employees. What 
would be the effect of Social Security's longstanding term 
deficit and the trust funds if what they were asking for was 
applied to the entire population, including people who have 
paid Social Security? Mr. Wilson?
    Mr. WILSON. Yes, Mr. Chairman; the estimated 5-year cost 
would be about $500 billion to eliminate the dual entitlement.
    Chairman SHAW. It would be $500 billion for how long?
    Mr. WILSON. Over 5 years.
    Chairman SHAW. Do you have anything to add to that?
    Ms. BOVBJERG. I do not have numbers on that with me. That 
is a large number; it reflects 6 million people who are dually-
entitled now, and when you go out further into the future, that 
number continues to grow.
    Chairman SHAW. The problem becomes very, very clear. If it 
is unfair for one group, it is unfair for another group. When 
we look at Mr. Brady's chart down there, we see that the people 
who are not in the Social Security program--and I think it is 
important to note here that the offset does not apply to 
general public employees. It applies to general public 
employees who are not part of the Social Security system and 
who do not pay into Social Security. So, I think that is very 
important to realize, because when we talk about workers who 
are affected by this, they are not being singled out because 
they are public employees or school teachers or police 
officers. They are being treated the way they are being treated 
because they have not paid into the system. Mr. Collins, did 
you have something? You did not ask any questions.
    Mr. COLLINS. Just one comment, Mr. Chairman. I think there 
is another myth here, too, and that is that Social Security is 
a retirement program. Social Security is an insurance program 
to supplement the income of those who reach retirement. That is 
the only supplement that I have, because I do not participate 
in the Congressional pension plan, nor do I work for or have 
formed a company that I participate in. I am very much 
interested in Social Security, and I want to see it treated 
fair, the recipients treated fair. It is a pay-as-you-go 
system. The workers who are providing the benefits, the tax for 
the benefits, should be treated fairly, and I do think we have 
to find out exactly how many people this does pertain to before 
you can begin a process to determine what is fair for all. We 
are not talking about something that you just go out and pick 
up out of the field or off of a tree. You are talking about 
money that comes from the earnings of every worker in this 
country. As far as this tax bill that people keep throwing up, 
this tax bill is to help 92 million working Americans with the 
income tax that they pay. It is a very worthwhile tax bill. The 
provision dealing with the double-taxation of stock dividends, 
again, is a fairness issue, and it is a way that we can help 
make our work force and this Nation more competitive in the 
world market with industrialized nations who do not double-tax 
the stock dividends; who treat investors far different which 
also pertains to their competitiveness as far as their work 
force versus our work force. If we do not concentrate and work 
toward the workers in this country and the benefits that they 
pay, the costs that they pay, the benefits that they receive, 
we are not doing a just cause. Thank you, Mr. Chairman.
    [Question submitted from Chairman Shaw to Ms. Bovbjerg, and 
her response follows:]

Question: When GAO examined the websites of various organizations for 
your report on the GPO last-day-rule (also known as the GPO 
``loophole''), did you find information provided on the GPO and WEP to 
be accurate? If not, what kind of misinformation was prevalent?

    Answer: Pursuant to your May 14, 2003, request, here is additional 
information on the Web sites that we reviewed in the course of our work 
for you on the Government Pension Offset ``loophole.'' Generally, the 
limited number of teaching association, retirement plan, and financial 
planning Web sites that we reviewed presented a mix of accurate, 
inaccurate, and/or incomplete information on the Government Pension 
Offset (GPO) and Windfall Elimination Provision (WEP). Some Web sites 
contained information that did not present the GPO and WEP in their 
full context, which allowed them to dramatize and misconstrue their 
effects. Such Web sites' presentation of specific guidance on using the 
``last-day'' GPO exemption was generally accurate, however. Examples 
and excerpts from selected Web sites follow below.
    Sites that presented inaccurate and/or incomplete information on 
the GPO and WEP sometimes dramatized the effects of these offset 
provisions. For example, a teaching association's site referred to the 
GPO and WEP as ``a nasty surprise'' awaiting many retiring teachers and 
other education employees. This particular site said

          ``. . . instead of honoring public service, both of these 
        provisions [GPO and WEP] harshly and unjustifiably punish 
        individuals such as Texas school employees who have earned 
        public-sector pensions . . .'' and that ``. . . recipients of 
        private pensions [who also paid into Social Security] are not 
        subject to the same penalty.'' Moreover, the site stated, ``. . 
        . this punitive and inequitable provision targets hundreds of 
        teachers, police officers, firefighters, and other public 
        servants . . .'' and ``These folks . . . are thus pushed to 
        live at or even below the poverty level.''

    As you know, the GPO and WEP exist because of concerns about unfair 
benefit advantages that accrued to non-covered government workers. 
Therefore, generalized ``blanket'' comparisons of offsets applicable to 
employees in covered and non-covered employment, as made in the above 
site, are inaccurate. Social Security benefits are generally payable to 
the spouses of retired, disabled, or deceased workers covered by Social 
Security. The above statement does not take into account the ``dual 
entitlement'' rule that affects individuals who worked in the private 
sector and also paid into Social Security. In these cases, if both 
spouses worked and are eligible for Social Security, the Social 
Security benefits earned as a worker are subtracted from the Social 
Security spousal benefit.
    Web sites that presented ``how-to'' guidance to individuals on use 
of the GPO last-day exemption appeared to provide this limited 
information accurately. For example, a teaching association's site 
contained an explanation of the GPO ``loophole'' and listed the names 
and telephone numbers of school officials in counties covered by Social 
Security.
    This particular site stated

          ``[We have] received many inquiries about the loophole that 
        allows some school employees to receive the full amount of both 
        their TRS [Teacher Retirement System of Texas] pension and 
        their Social Security benefit. Most Texas school employees do 
        not participate in Social Security, so according to federal 
        law, the amount of any Social Security benefit to which they 
        are entitled is reduced or eliminated by the amount of their 
        TRS benefit. . . . [We have] become aware of some school 
        districts that participate in both TRS and Social Security 
        facilitating the use of this loophole by agreeing to hire 
        employees for one day to allow the employee to become exempt 
        from the Social Security offset. A list of Texas school 
        districts participating in Social Security is available on 
        [our] website.''

    Although the method to use the GPO ``loophole'' is presented 
accurately in the above excerpt, its phrase ``. . . the amount of any 
Social Security benefit to which they are entitled is reduced or 
eliminated [emphasis added] by the amount of their TRS benefit . . .'' 
does not recognize that the GPO is a two-thirds and not a full offset.

                                 

    Chairman SHAW. Thank you. Ms. Bovbjerg, Mr. Wilson, we 
thank you for your testimony, and I also thank the audience for 
limiting their participation.
    [Laughter.]
    Mr. WILSON. Thank you, Mr. Chairman.
    Chairman SHAW. We now have our next panel. Excuse me. We 
have Mr. Jefferson. Mr. Jefferson from Louisiana has been a 
long fighter in this area, and I might say that in my Social 
Security Reform Act, I have adopted some of his views with 
regard to the GPO. Your full statement will be made a part of 
the record, and you may proceed.

      STATEMENT OF THE HONORABLE WILLIAM J. JEFFERSON, A 
     REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA

    Mr. JEFFERSON. Thank you, Mr. Chairman, Mr. Matsui and 
other Members of the Committee. I appreciate the opportunity to 
speak to you briefly about the GPO. The efforts that I have 
made in this arena do not have to do with repealing the GPO in 
its entirety. It has to do more properly with reforming the GPO 
so that it is not so harsh in its effect on the lower income 
workers in the country, public income workers who do not make a 
lot of money. There are lots of presumptions that are made with 
respect to the GPO which justifies its inclusion in the law. 
You remember how this whole thing came up. The Social Security 
system was established as it was with the offsets that have 
been talked about by Mr. Brady and others for folks who have 
two persons in their family, both who receive Social Security 
benefits. The system made a judgment early on that it did not 
see the need to have a spouse eligible for the benefits of his 
or her deceased spouse; therefore, the system made that 
judgment. It also provided that people could opt out of the 
system if they decide to, and they would not, therefore, be 
affected by the rules of the Social Security system, so people 
made that decision in some cases and opted out. In that event, 
there was no offset provided for people who were in the other 
systems.
    That was because there was a rule of dependency in the law 
back then that required that in the case of a man who was a 
recipient, he had to prove dependency. In the case of a woman, 
she did not and could receive the benefits. That is how the 
system was put together back at its inception. The U.S. Supreme 
Court ruled that it was improper to require that a man prove 
dependency, not a woman, and therefore, it brought up this new 
issue about what to do about people who had opted out, as the 
system rules provided, and who found themselves now able to 
receive their wife's benefits. So, the system worried that it 
would be too expensive, that men who are working in highly-
paying jobs in the government would receive windfalls, if you 
will, that they did not deserve and therefore result in some 
unfairnesses. What it did not really take into account was that 
the pension systems outside of the Federal Government were 
fairly modest and that women were working at jobs that were 
very low-paying jobs outside of the Federal Government system.
    What we have now is a system that has an unfairness built 
into it by the nature of the work force that it affects. For 
someone who makes a high income, for two people who make high 
incomes, there is hardly--while it is somewhat arguably unfair 
for them to have an offset in the Social Security system 
dollar-for-dollar, the effect of what we do here is much more 
harsh when you have people who work as firemen and policemen 
and teachers and teachers' aides and librarians and cafeteria 
workers when they find out that after their husbands pass away 
that they will have that benefit they expected reduced by two-
thirds, and they have very little expecting to come in to them. 
The object is not to repeal the offset altogether but to take 
care of those workers who are the most distressed and who are 
treated the most harshly under these provisions. There is no 
large pension involved for these people. There is no large 
windfall that the government is going to give up for them if 
they are able to receive their benefits. These are just 
questions of survival for these people.
    I have examples. I will just read you one, if I could, from 
a lady who works at the sheriff's office down in Jefferson 
Parish, which is a part of the State that I represent in 
addition to New Orleans. She writes: I get a small pension from 
the Jefferson Parish Sheriff's Office, $473 a month. Because my 
Social Security check is offset by half, I should receive close 
to $500 a month that I put in many years of my life for, and it 
is cut to $243 a month. I would appreciate whatever you can do 
about this, and I hope that someone will change the other 
offset also. When I paid my personal Social Security, they 
grabbed it, she says. When it comes to getting it back, it is 
another story. That is the problem ordinary people have with 
this. Here is a lady who, because of the offset, is going to 
get, instead of $973 is going to get some figure that is around 
$500, which is extremely hurtful to her. So, as we talk about 
all of these great expansive notions here, it is important to 
think about the people who are affected. Our objective here is 
not to take care of the high-paid government workers and to put 
money in their pockets; it is to take care of people who are in 
the worst conditions, I think, who are suffering the most. It 
is not to means-test Social Security at all. It is no more than 
to work a different reform than was worked earlier. You will 
remember that after Goldfarb, there was a dollar-for-dollar 
offset just like for Social Security, but when the results came 
in, those who were in the Congress then considered the results 
too harsh and changed it to a two-thirds offset.
    So, if that were not the case, it would be dollar-for-
dollar. Now, we are looking at it again, and we are saying two-
thirds is too harsh. Let us do something different about it. 
So, we are proposing a reform that takes care of some of the 
harsh results that no one intended but which nonetheless befall 
the low income workers. My statement goes into more detail, Mr. 
Chairman, but that is the essence of what we are trying to do 
here: not to means-test but to make sure that the people who 
are at the lowest end of the totem pole here get some help, get 
some relief, and are not so harshly affected by the rules.
    [The prepared statement of Mr. Jefferson follows:]
 Statement of the Honorable William J. Jefferson, a Representative in 
                  Congress from the State of Louisiana
    Mr. Chairman, I am pleased to testify on my GPO reform legislation, 
H.R. 887. As you know, my approach is not to repeal the GPO, but to 
lessen the harsh impact it currently has on low-income seniors.
    Pension Offset is an important issue to me and to many of my 
Democratic and Republican colleagues. It is an important issue for my 
constituents in Louisiana and it is an important issue for many state 
and local government employees across the nation.
    As you are aware, state and local government employees were 
excluded from Social Security coverage when the Social Security System 
was first established in 1935. These employees were later given the 
option to enroll in the Social Security System and in the 1960's and 
1970's many public employees opted to join in.
    Some local governments chose to remain out of the system. Their 
employees and spouses planned for retirement according to the rules in 
effect. It is estimated that about 4.9 million state and local 
government employees are not covered by Social Security. Seven states 
(California, Colorado, Illinois, Louisiana, Massachusetts, Ohio and 
Texas) account for over 75 percent of non-covered payroll.
    The Pension Offset will unfairly affect many of the state and local 
government employees that are covered by government pension.
    As you may be aware, the Pension Offset was originally enacted in 
response to the perceived abuses to the Social Security system 
resulting from the Goldfarb decision.
    The Social Security System provides that if a spouse who worked and 
paid into Social Security died, the benefits were to be paid to the 
surviving spouse as a survivor benefit. Men were required to prove 
dependency on their spouses before they became eligible for Social 
Security survivor benefits. There was no such requirement for women.
    The Goldfarb decision eliminated the different treatment of men and 
women. The court instead required Social Security to treat men and 
women equally by paying benefits to either spouse without regard to 
dependency.
    Many of the men who would benefit from the Goldfarb decision were 
also receiving large government pensions. It was believed that these 
retirees would bankrupt the system, receiving large government and 
private pensions in addition to survivor benefits.
    To combat this perceived problem, Pension Offset legislation was 
enacted in 1977. The legislation provided for a dollar for dollar 
reduction of Social Security benefits to spouses or retiring spouses 
who received earned benefits from a federal, state or local retirement 
system. The Pension Offset provisions can affect any retiree who 
receives a civil service pension and Social Security but primarily 
affects widows or widowers eligible for survivor benefits.
    In 1983, the Pension Offset was reduced to two-thirds of the public 
employer survivor benefit. It was believed that the impact of the 
Pension Offset was too harsh and that one-third of the pension was 
equivalent to the pension available in the private sector.
    The Pension Offset aimed at high paid government employees also 
applies to public service employees who generally receive lower pension 
benefits. These public service employees include secretaries, school 
cafeteria workers, teachers' aides and other low wage government 
employees. The Pension Offset as applied to this group is punitive, 
unfairly harsh and bad policy.
    Government pensions were tailored to produce benefits that were 
equal to many combined private pension-Social Security benefits in the 
private sector for upper level government workers. However, this was 
not true for lower income workers such as employees who worked as 
secretaries, school cafeteria workers, teachers' aides and others who 
generally receive lower pension benefits.
    To illustrate the harsh impact of the Pension Offset, consider a 
widow who retired from the federal government and receives a civil 
service annuity of $550 monthly. The full widow's benefit is $385. The 
current Pension Offset law reduces the widow's benefit to $19 a month 
(2/3 of the $550 civil service annuity is $367, which is then 
subtracted from the $385 widow's benefit, leaving only $19). The 
retired worker receives $569 ($550 + $19) per month.
    Proponents of the Pension Offset claim that the offset is justified 
because Survivor benefits were intended to be in lieu of pensions. 
However, were this logic followed across the board, then people with 
private pension benefits would also be subject to the offset. But that 
is not the case.
    While Social Security benefits of spouses or surviving spouses 
earning government pensions are reduced by $2 for every $3 earned, 
Social Security benefits of spouses or surviving spouses earning 
private pensions are not subject to offset at all.
    If retirees on private pensions do not have Social Security 
benefits subject to offset, why should retirees who worked in the 
public service?
    The Pension Offset has created a problem that cries out for reform. 
It will cause tens of thousands of retired government employees, 
including many former para-professionals, custodians or lunch room 
workers, to live their retirement years at or near the poverty level.
    My office has received numerous calls, all from widows, who are 
just getting by and desperately need some relief from the Pension 
Offset. For example: (Attach testimony)
    The following is a letter we received from Helen J. Emery from Fair 
Oaks, California.
    I am a 68 year old and worked 27 years for the Government. My 
government retirement monthly after deductions is a ``very'' modest 
$988.69. I am sure you know this is just a fraction above poverty 
level. The ``windfall'' benefits law reduced my Social Security 
benefits and only allows me an additional $116.00 per month even though 
I alone paid into this Social Security prior to working for the 
Government.
    Effective January 1998, I became a divorced widow and the 
``offset'' affecting my $724.80 widows Social Security benefits brings 
my widow's benefits to zero.
    I am hoping and praying that you will continue to fight this very 
unjust ``offset'' law.
    Millard J. Downing from stWallingford, PA wrote:
    I am retired from the Agency for International Development with a 
$12,000.00 a year annuity and through employment outside of federal 
service have become eligible for Social Security, age 62. Upon visiting 
my local Social Security Office I was advised that normally I would be 
eligible for $425.00 month. However, due to the present Pension Offset 
and being a federal annuitant, my Social Security annuity will be 
reduced to approximately $207.00 month. I do not consider this 
reduction as being a fair game when all deductions for above were made 
while being employed outside of federal service.
    Patricia C. Cook from Metaire, LA wrote.
    I get a small pension from the Jefferson Parish Sheriff's Office 
($473.00) and because of this my Soc. Sec. Check is offset by half. I 
should receive close to $500.00 a month that I put in many years of my 
life for and it is cut to $243.00. I would appreciate whatever you can 
do about this and I hope someone will change the other offset also. 
When I paid my personal Soc. Sec. they grabbed; but when it comes to 
getting it back, its another story.
    During the 107th Congress, I introduced the Government Pension 
Offset Repeal Bill, H.R. 1217. I have re-introduced this important 
legislation in the 108th Congress as H.R. 887.
    The legislation, does not completely repeal the Pension Offset, but 
provides a modification to a complete repeal. It will allow pensioners 
and widows affected by Pension Offset provisions to receive a minimum 
$2,000 per month before offset provisions could be imposed. The bill 
has 109-recorded cosponsors.
    Mr. Chairman, I urge my colleagues to adopt this important 
legislation.

                                 

    Chairman SHAW. There is certainly precedent for that in the 
Social Security law right now, as low-income people do get a 
better return. Any questions?
    Ms. TUBBS JONES. Mr. Chairman, very briefly: Mr. Jefferson, 
thank you for your leadership on this issue. When Mr. Kelley 
walked out the door, this is the question I should have asked 
him. I asked him in order to get a $1,000 monthly benefit from 
Social Security, how much money did you have to make annually? 
His response was $36,000. So, many workers out in our world are 
not even making $36,000. So, even if they were taking the woman 
that wrote in to you, her example, even if she worked a job 
that should have kept her above the poverty level during her 
lifetime, if you take her example with the $600, the reduction, 
she is getting $7,200 a year, which is below poverty level, or 
even without the GPO, she is only about 20 percent above 
poverty level with all the money she is getting. So, I clearly 
think your leadership on this issue is a wonderful, wonderful 
thing, and I thank you for testifying before the Committee.
    Chairman SHAW. Mr. Matsui?
    Mr. MATSUI. Thank you very much, Mr. Chairman. I want to 
thank you, Bill, for your work on all this over the years. It 
has been tremendous, and we really appreciate the fact that we 
are at this point now in this whole discussion. You were here 
when the Administration testified. The impression I had was 
that they are going to ratchet up the enforcement of this 
issue, so instead of trying to work something out, they are 
going to probably add another 100,000 people that will be 
subject to the GPO and WEP. What are your thoughts on that?
    Mr. JEFFERSON. Well, that will just exacerbate the problem 
that we are talking about here. I suppose most folks have 
already been discovered by them. There are lots of folks out 
there who talk to me who do not think that the government is 
letting them get away with anything and who, frankly, are very 
depressed over the situation, and many of them did not expect 
it. Now that we have talked a lot about this legislation, 
people are becoming more and more aware of it, and they are 
calling in and talking about it. This is not designed to 
inspire the SSA to go out and do an even better job of making 
it difficult for people. We are hoping that what they will do 
is be spurred on to reform the system, given that people out 
there are suffering who we did not intend to have them suffer. 
I think that the important message here is that when the 
Congress put this in place, they were looking at the high-
income people. They never thought, I do not believe, that they 
would have this kind of bad effect on people who do not make 
much money. These people happen to be public servants, in most 
cases, who are low-paid public servants. These are the folks--
this is aimed at trying to fix the problem for them, and I hope 
that Congress will have the heart to correct it for these 
people. I know that it costs a lot of money to correct the 
whole system. We are not asking for that. We are trying to do 
something that will affect about 400,000 people across the 
country who are in dire need of this result. I want to thank 
the Chairman for holding the hearing, and I also want to thank 
him for including at least a skeletal beginning of some of the 
things that we have talked about here, and I hope that we will 
build on that skeleton to actually put some real meat on it to 
help us reach the result we are looking for. I do appreciate 
the chance to have this matter aired, and I do hope that we 
will make some progress on it.
    Chairman SHAW. Thank you, Mr. Jefferson. It is always a 
pleasure to work with you. You are always intelligent, and you 
are always a gentleman. Thank you.
    Mr. JEFFERSON. Thank you, Mr. Chairman. Thank you, Mr. 
Matsui.
    Chairman SHAW. Our final panel is made up of several 
witnesses: Charles Fallis, who is the President of the National 
Association of Retired Federal Employees (NARFE); Annette 
Williams, who is a retiree of the City of Los Angeles, 
California, a member of the American Federation of State, 
County and Municipal Employees; Donna Haschke, who is President 
of the Texas State Teachers Association on behalf of the 
National Education Association; William Johnson, the Executive 
Director of the National Association of Police Organizations; 
Chuck Canterbury, who is the National President of the 
Fraternal Order of Police; and Terri Harrison, who is the 
Chairman of the Coalition to Preserve Retirement Security from 
Columbus, Ohio. Welcome to all of you. We do have your 
statements that will be made a part of the record, and you may 
proceed as you see fit. I will do my best to enforce the 5-
minute rule. Mr. Fallis? We are going to have to pull these 
microphones down. We are going from my left to right or your 
right to your left, so if we could get this down here, we can 
proceed. Mr. Fallis, please? Welcome.

 STATEMENT OF CHARLES L. FALLIS, NATIONAL PRESIDENT, NATIONAL 
 ASSOCIATION OF RETIRED FEDERAL EMPLOYEES, ALEXANDRIA, VIRGINIA

    Mr. FALLIS. Mr. Chairman, Members of the Subcommittee, I am 
Charles Fallis, President of NARFE, and I am here today 
testifying for our 400,000 members. Let me commend you, Mr. 
Chairman, for once again stepping up to the challenge by 
holding hearings on Social Security provisions affecting public 
employees. For NARFE, it is the offsets that affect them--GPO 
and WEP. For years, NARFE has worked for the revision of GPO 
and WEP, because these insidious laws have denied many of our 
retired members, particularly women, the economic dignity that 
they were led to expect would be theirs when they retired. Mr. 
Chairman and Members of this Committee, I know as I am sure 
most of you do that the harshness of GPO and WEP causes both 
fears and tears among hundreds of thousands of older Americans. 
They fear for their financial future, and they shed bitter 
tears of frustration that Congress has not acted to reform 
these provisions despite widespread support for doing so. 
Today, over 300 Members of this 108th Congress have already 
indicated their support for changes in GPO and WEP by 
cosponsoring one or more of the pending bills. Mr. Chairman, 
your own Social Security reform bill proposes to reduce the 
current two-thirds offset to one-third. Almost 3 years ago at a 
hearing on GPO before this Subcommittee, Ms. Ruth Pickard, a 
long-time NARFE member and a constituent of yours, Mr. 
Chairman, testified as an affected witness. Before her 
retirement, she had worked 24 years in the U.S. Postal Service 
and 24 years in the private sector while raising children and 
trying to make ends meet.
    Because of GPO and WEP, Ruth had to go back to work. Today, 
at age 76, she is still working, because she cannot afford to 
stop. To add insult to injury, she pays Social Security taxes 
on the wages she earns despite the fact that she will never 
reap the benefits of those payments because of WEP. The GPO 
prevents her from getting any spousal benefit, because two-
thirds of her civil service annuity totally eliminates that 
benefit. She is eligible for her own Social Security benefit, 
but even that earned benefit is slashed because she is also 
affected by WEP. Since its enactment during the Great 
Depression, the Social Security system has been modified time 
and time again to respond to specific economic and social needs 
of the Nation, and I believe it is imperative that we make 
additional changes now. Restoring earned income to victim 
retirees would bring them the dignity of self-support and, at 
the same time, strengthen this country's economy. Is this not 
consistent with the tax break proposals the President is now 
requesting of Congress? In his radio address last Saturday, the 
President eloquently stated, and I quote, ``America's greatest 
economic strength is the pride, the skill and the productivity 
of American workers.'' Mr. Chairman, he is absolutely right. 
Our workers certainly do continue to support and strengthen our 
Nation's economy just as does 76-year-old Ruth Pickard. Ruth 
continues to work, even though these heinous offsets debilitate 
her efforts to contribute significantly. If she and others like 
her are ever to feel vindicated, these punitive offsets must be 
repealed.
    Mr. Chairman, you stated in your hearing advisory, and I 
quote, ``the hard work and dedication of teachers, police 
officers, firefighters and other public employees and all 
workers is deeply appreciated by our Nation. Everyone, public 
and private sector workers alike, deserves fair treatment under 
Social Security.'' I could not agree more. I firmly believe 
that fair treatment can only be assured through changes in GPO 
and WEP. The NARFE stands ready to work with you and the 
Members of this Committee, this Subcommittee, to find an 
acceptable solution to this growing dilemma. Please, let us 
solve the problem, and let us solve it this year. Thank you, 
Mr. Chairman.
    [The prepared statement of Mr. Fallis follows:]
     Statement of Charles L. Fallis, National President, National 
     Association of Retired Federal Employees, Alexandria, Virginia
    Mr. Chairman and Members of the Subcommittee, I am Charles L. 
Fallis, President of NARFE, the National Association of Retired Federal 
Employees. I am testifying today on behalf of our 400,000 members.
    Let me commend you, Chairman Shaw, for once again stepping up to 
the challenge, by holding hearings on ``Social Security Provisions 
Affecting Public Employees.'' For NARFE, it is the Social Security 
offsets which affect our members, the Government Pension Offset (GPO) 
and the Windfall Elimination Provision (WEP). Each year, more and more 
individuals are finding themselves affected by these onerous offsets. 
And each year, more and more Members of Congress have recognized the 
need for changing them. And now is the time to do it. I hope that 
today's hearings lead to enactment of change before the end of this 
year.
    For years, NARFE has worked for revision of the GPO and the WEP, 
which have denied many of our retired members, particularly women, the 
economic dignity they were led to expect in retirement. So I appreciate 
your invitation to appear here today to reiterate NARFE's call for 
change and to urge this panel's immediate action for repeal of these 
insidious laws.
    Present GPO law prevents government retirees who were first 
eligible to retire in December 1982 and later from collecting both a 
government annuity based on their own work and Social Security benefits 
based on their spouse's work record.
    This law provides that two-thirds of the government annuity offsets 
whatever Social Security benefits would be payable to the retired 
government worker as a spouse (wife, husband, widow, widower, etc.).
    By the Social Security Administration's own account, the use of 
two-thirds of the public retirement income, as offset against the 
Social Security income, was an arbitrary decision. As such, we believe 
it can and should be reexamined and repealed.
    Of the approximately 335,000 GPO-affected beneficiaries, about 80 
percent are fully offset, which means they receive no spousal or 
survivor benefit at all. It is worth noting that about 40 percent of 
the total number of affected beneficiaries are widowed individuals, and 
roughly seventy percent of that number are fully offset. And, I think 
it is crucial to recognize that almost 70 percent of the victims are 
poor women.
    The current WEP 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. This windfall reduction can diminish a worker's 
earned Social Security benefit by as much as 60 percent. Today that is 
a loss of up to $303 per month.
    Mr. Chairman, and Members of this Committee, I know--as I'm sure 
most of you do--that the harshness of the GPO and the WEP, as they 
exist today, causes both fears and tears among hundreds of thousands of 
older Americans. They fear for their financial future, and they shed 
bitter tears of frustration that Congress has not acted to reform these 
provisions despite widespread support for doing so.
    There are several bills pending before this Congress which would 
offer relief to the hundreds of thousands of former teachers, cafeteria 
workers, postal workers, VA nurses, Social Security employees, and 
others who worked long and hard to help support their families. Over 
300 Members of this 108th Congress have already indicated their support 
for change in the GPO and the WEP by cosponsoring one or more of the 
pending bills. Mr. Chairman, your own Social Security reform bill 
proposes to reduce the current two-thirds GPO offset to one-third. 
Obviously, you are well aware of the need for change, and I believe a 
majority of your colleagues now agree with you.
    Almost three years ago, at a hearing on the GPO before this 
Subcommittee, Mrs. Ruth Pickard, a longtime NARFE member and a 
constituent of yours, Chairman Shaw, testified as an affected witness. 
She spoke of working twenty-four (24) years in the U.S. Postal Service 
and twenty-four (24) years in the private sector while raising her 
children and trying to make ends meet. Because of the GPO, Ruth had to 
go back to work. Today, at age 76, she is still working because she 
cannot afford to stop. And, to add insult to injury, she has to pay 
Social Security taxes on the wages she is earning, although she stands 
no chance of reaping any benefit from those tax payments.
    The current GPO prevents her from getting any spousal benefit 
because two-thirds (2/3) of the amount of her civil service annuity 
totally eliminates that Social Security benefit. She is eligible for 
her own Social Security benefit, but even that earned benefit is 
slashed, because of the WEP which also affects her.
    Mr. Chairman, not long before the Easter/Passover recess, the House 
adopted a bill from this Subcommittee which, among other things, 
effectively closed a loophole in the GPO which had allowed some 
individuals to legitimately escape the loss of Social Security spousal 
benefits by working just one last day of their careers under Social 
Security covered employment. I contend that had this unfair offset been 
reviewed and revised earlier, the machinations of the ``last-day rule'' 
would not have been necessary. If the law had been fair in the first 
place, the loophole would not have been needed.
    Since its enactment during the Great Depression, the Social 
Security system has been modified time and again to respond to specific 
economic and social needs of the nation. Surely, it will continue to 
face and endure serious changes and challenges in the years ahead. None 
of us can predict today what changes will be necessary to keep this 
program fiscally sound for the next seventy-five years. And, we will 
not be around to share the benefit or the blame. But we are here right 
now, and we know that some change is needed. I believe that it is 
imperative that we make additional changes now.
    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 returning this income to 
these victimized retirees would provide them with increased purchasing 
power. It would allow them the dignity to support themselves and at the 
same time strengthen this country's economy. Isn't this consistent with 
tax breaks the President now is requesting of Congress?
    In his radio address to the Nation this past Saturday, the 
President eloquently stated, ``. . . America's greatest economic 
strength is the pride, the skill, and the productivity of American 
workers.'' Mr. Chairman, he is absolutely right. NARFE members, along 
with other federal, state, and local government retirees and employees 
in this country are the proud, skilled, and productive American workers 
of yesterday and today. They continue to support and strengthen our 
nation's economy just as does 76-year-old Ruth Pickard, who continues 
to work, even though these heinous offsets debilitate her efforts to 
significantly contribute. If Ruth and others like her are ever to feel 
vindicated, these punitive offsets must be repealed.
    Mr. Chairman, you stated in your hearing advisory ``The hard work 
and dedication of teachers, police officers, firefighters, other public 
employees and all workers is deeply appreciated by our nation. 
Everyone, public and private sector workers alike, deserves fair 
treatment under Social Security.'' I couldn't agree more. And I firmly 
believe that fair treatment can only be assured through changes in the 
GPO and the WEP. I contend that repeal of these offsets would be ideal. 
But change is essential and can no longer be put off. We must get 
legislation reported out and onto the floor of the House to allow 
Members of Congress to debate and decide this issue.
    NARFE stands ready to work with you and the Members of this 
Subcommittee to find an acceptable solution to this growing dilemma of 
the Social Security System. Please, let's solve the problem this year.

                                 

    Chairman SHAW. Ms. Williams?

STATEMENT OF ANNETTE WILLIAMS, ON BEHALF OF AMERICAN FEDERATION 
 OF STATE, COUNTY AND MUNICIPAL EMPLOYEES, AMERICAN FEDERATION 
         OF LABOR-CONGRESS OF INDUSTRIAL ORGANIZATIONS

    Ms. WILLIAMS. Mr. Chairman and Members of the Subcommittee, 
good morning. My name is Annette Williams, and I retired only a 
few weeks ago at age 58 from my job as a clerical worker 
employed by the City of Los Angeles. I am here today 
representing my union, American Federation of State, County, 
and Municipal Employees (AFSCME), and the thousands of AFSCME 
members who work in jobs not covered by Social Security. I 
would like to begin by saying that I think Social Security is a 
wonderful insurance program. My husband was covered by Social 
Security when he passed away over 20 years ago. At the time I 
was widowed, three of my four children were minors and still 
living at home. All three received Social Security benefits 
based on my husband's work record. Those benefits helped our 
family maintain a decent standard of living despite the loss of 
our primary breadwinner. Only now has Social Security let us 
down. I never knew about the GPO until recently, when I began 
to explore my retirement options. I always thought I would be 
able to collect a widow's benefit when I reached the eligible 
age. I am sure my husband believed that too. With every 
contribution from his paycheck, I know he felt he was providing 
for my future. Clearly, that is not the case. Instead, I will 
be forced to offset my city pension against my Social Security 
widow's benefit. Two-thirds of my $1,300 pension will 
completely eliminate my widow's benefit of $812 a month.
    I know that Social Security's dual entitlement rule is 
often cited as justification for the GPO. The dual entitlement 
rule says that a person can receive their own earned Social 
Security benefit or a spousal benefit, whichever is higher, but 
not both. The GPO law essentially applies this rule to two-
thirds of my pension, which is considered to be equivalent to a 
Social Security benefit. This logic seems questionable, 
however. Here is why. As a city employee, I contributed the 
same amount to my pension as private sector workers contribute 
to Social Security. My employer's contribution was substantial, 
as high as 16.5 percent of payroll. In the private sector, 
however, most workers do not contribute to their pension plans. 
Those plans are financed entirely by the employers. The workers 
contribute only to Social Security. When those workers retire, 
they not only collect their full pension but also full Social 
Security benefits, which are based on their own record or that 
of their spouse. These retirees are not subject to any penalty 
or offset based on their pension amount, even though they 
contributed no more to their combined Social Security and 
pension than I did. To add insult to injury, not only am I 
penalized by the GPO, but I am also affected by the so-called 
WEP. From 1966 to 1983, I worked as a checker at Safeway market 
and had other jobs that required me to pay into Social 
Security. Since I also worked in public employment, however, I 
will not get the full benefit to which I am entitled. To get a 
full benefit, I will have to work many more years in covered 
employment. Until I discovered the GPO and the WEP, retirement 
seemed like such a nice idea.
    [Laughter.]
    Now, faced with a double-whammy, my real retirement is on 
hold. I will be forced to keep working for the foreseeable 
future, and it hardly seems fair. These laws need to be 
changed. The most aggrieved victims are women like me: average 
people with relatively small pensions. We tend to live longer 
than men and often outlive our resources. Far too many of us 
end life in poverty. The GPO and the WEP are contributing to 
this catastrophe. So, I am urging the Subcommittee to take a 
serious look at legislation that will reform the GPO and the 
WEP and help make Social Security fair to public employees like 
me. Please, do not think you can solve this problem by 
requiring all public jurisdictions to join the Social Security 
system. The AFSCME's research shows how costly this would be 
for States and cities and how dangerous for public pension 
plans. The AFSCME is a member of the Coalition to Preserve 
Retirement Security (CPRS), which is also providing testimony 
today. The Coalition's views on mandatory coverage reflect 
AFSCME's views, so I will leave it to CPRS to make our case. 
Please note, however, that AFSCME has supplied written 
testimony to the Subcommittee that explains our opposition to 
mandatory Social Security coverage in the public sector. In 
closing, I would like to thank the Subcommittee for inviting me 
here today and once again urge you to take action on the GPO 
and WEP. Thousands of public retirees all across the country 
are counting on your support. Thank you.
    [The prepared statement of Ms. Williams follows:]
  Statement of Annette Williams, on behalf of American Federation of 
  State, County and Municipal Employees, American Federation of Labor-
                  Congress of Industrial Organizations
    Good morning Mr. Chairman and Members of the Subcommittee. My name 
is Annette Williams and I retired only a few weeks ago, at age 58, from 
my job as a clerical worker employed by the City of Los Angeles. I'm 
here today representing my union, the American Federation of State, 
County and Municipal Employees (AFSCME), and the thousands of AFSCME 
members who work in jobs that are not covered by Social Security.
    I'd like to begin by saying that I think Social Security is a 
wonderful insurance program. My husband was covered by Social Security 
when he passed away over twenty years ago. At the time I was widowed, 
three of my four children were minors and still living at home. All 
three received Social Security benefits based on my husband's work 
record. Those benefits helped our family hold on to a decent standard 
of living, despite the loss of our primary breadwinner.
    Only now has Social Security let us down.
    I never knew about the Government Pension Offset (GPO) until 
recently, when I began to explore my retirement options. I had always 
thought that I would be able to collect a widow's benefit when I 
reached the eligible age. I'm sure my husband believed the same thing. 
With every contribution from his paycheck, I know he felt that he was 
providing for my future.
    Clearly, that was not the case. Instead, I will be forced to offset 
my city pension against my Social Security widow's benefit. Two-thirds 
of my $1,300-a-month pension will completely eliminate my widow's 
benefit of $812.
    I know that Social Security's dual entitlement rule is often cited 
as justification for the GPO. The dual entitlement rule says that a 
person can receive their own earned Social Security benefit or a 
spousal benefit--whichever is higher--but not both. The GPO law 
essentially applies this rule to two-thirds of my pension, which is 
considered to be the equivalent of a Social Security benefit. However, 
I find this logic to be questionable. Here's why:
    As a city employee, I contributed the same amount to my pension as 
private sector workers contribute to Social Security. My employer's 
contributions have been as high as 16\1/2\ percent of payroll. In the 
private sector, however, most workers don't contribute to their pension 
plans. Those plans are financed entirely by the employers and the 
workers contribute only to Social Security.
    But when those workers retire, they not only collect their full 
pension, but full Social Security benefits too--based on their own work 
record or that of a spouse. These retirees aren't subject to any 
penalty or offset based on their pension amount, even though they've 
contributed no more to their combined Social Security and pension than 
I have.
    To add insult to injury, not only am I penalized by the GPO, but 
I'm also affected by the so-called ``Windfall Elimination Provision.'' 
From 1966 to 1983, I worked as a checker at Safeway and at other jobs 
that required me to pay into Social Security. Since I also worked in 
public employment, however, I won't get the full benefit to which I'm 
entitled. To get a full benefit, I would have to work many more years 
in covered employment.
    So I'm being hit with a double whammy: the GPO and the WEP. 
Retirement seemed like a nice idea, but I'm forced to put it on hold 
and continue working. It's just not fair.
    These laws need to be changed. The most aggrieved victims are women 
like me--average people with relatively small pensions. We tend to live 
longer than men, and often outlive our resources. Far too many of us 
end life in poverty. The GPO and WEP are contributing to this 
catastrophe.
    So, I would urge the Subcommittee to take a serious look at 
legislation that will reform the GPO and WEP and make Social Security 
fair for public employees like me. But please, don't treat this plea as 
a reason to require all public jurisdictions to join the Social 
Security system. AFSCME's research shows how costly this would be for 
non-participating states and localities, most of which are currently 
struggling with enormous budget problems. At the same time, forced 
participation could destabilize dozens of public pension plans and 
jeopardize future benefits.
    AFSCME is a member of the Coalition to Preserve Retirement 
Security, which is also providing testimony today. We support the 
Coalition's views on mandatory coverage.
    While AFSCME is a strong supporter of Social Security and 
recognizes its profound importance to the majority of our members, we 
also understand that mandatory coverage could be a serious problem for 
the 25 percent of AFSCME members in non-covered jurisdictions.
    It needs to be strongly emphasized that these individuals do not 
lack pension coverage. Nearly all are covered by state or local defined 
benefit pension plans. Furthermore, the Omnibus Reconciliation Act 
(OBRA) of 1990 has already ensured that any temporary, part-time or 
seasonal employee not covered by one of these public plans is covered 
under Social Security.
    So, already there is basic pension protection for all American 
workers--private and public sector. There is no need to mandate Social 
Security coverage in an effort to protect workers' interests.
    Public employees and their employers have been given ample 
opportunity to come under Social Security. Most have voluntarily done 
so. Those still outside the system clearly prefer their own state or 
local pension plans. The vast majority of these plans are actuarially 
sound. Most of them have been in existence longer than Social Security 
and were designed to function without it. They have excellent records 
for providing disability protection and retirement security to their 
participants.
    Mandated Social Security coverage could have serious implications 
for public employees, their employers and their pension plans, even if 
the coverage applies only to future hires.
    Employees would be required to pay 6.2 percent of their paychecks 
in FICA tax, even though most already make substantial contributions to 
their public employee pension plans. Unlike the private sector--where 
plans are usually financed entirely by employers--contributions by 
public workers in non-Social Security jurisdictions typically range 
from 8 to 10 percent of pay. Adding the Social Security payroll tax 
would create an unaffordable burden for millions of these workers, most 
of whom have lower- to middle-incomes.
    Employers would also be required to contribute 6.2 percent of 
payroll to Social Security, on top of the contributions they now make 
to their own pension plans. These contributions are typically 13 to 15 
percent of payroll. Public employers simply cannot afford to meet the 
additional expense of Social Security--particularly in light of the 
serious fiscal crises that most state and local governments now face. 
If forced to participate, the result could be a catastrophic loss of 
public services and jobs.
    Faced with a requirement to pay FICA tax on behalf of employees, 
governments would most likely try to create new pension plan tiers for 
new hires that would integrate Social Security with a supplemental 
public pension. This could result in reduced benefits, higher employee 
contributions, and changes in retirement ages. Benefit structures for 
future retirees could be drastically altered.
    It could also destabilize public pension funds for today's workers 
and retirees. Benefits in existing public pension plans rely heavily on 
a fund's investment earnings. If some of these investments are cut off 
and the proceeds diverted to new plans, it could spell serious trouble 
for AFSCME members and other public employees.
    The result could be the inability of pension plans to pay promised 
benefits to current participants, unless taxes are raised to fund much 
higher employer contributions. Employers might also look at cutting 
post-retirement cost-of-living-adjustments and retiree health 
coverage--a disastrous consequence for vulnerable pensioners.
    At the same time that it would create havoc for public employees 
and retirees, mandatory coverage would provide only limited relief for 
Social Security--extending trust fund solvency by only 2 years. 
Eventually, new participants would be eligible to collect benefits, 
placing new burdens on the system.
    So, mandatory coverage is not an answer to Social Security's long-
range shortfall, nor is it an answer to the GPO or WEP. Rather than 
create new financial dilemmas and benefit inequities, Congress needs to 
seek real solutions to the problems that confront Social Security now 
and in the future.
    In closing, I would like to thank you for inviting me to testify on 
these important issues. Thousands of public employees and retirees are 
counting on your support.

                                 

    Chairman SHAW. Thank you, Ms. Williams. Ms. Haschke?

  STATEMENT OF DONNA HASCHKE, PRESIDENT, TEXAS STATE TEACHERS 
ASSOCIATION, AUSTIN, TEXAS, ON BEHALF OF THE NATIONAL EDUCATION 
                          ASSOCIATION

    Ms. HASCHKE. Mr. Chairman, Mr. Matsui, and fellow Texan, 
Mr. Johnson, I am Donna Haschke. I have been a teacher for 25 
years, and I am currently serving as the President of the Texas 
State Teachers Association (TSTA), and I am here representing 
TSTA and the National Education Association (NEA) today. Both 
TSTA and NEA strongly support complete repeal of the GPO and 
the WEP. These offsets are hurting our members, sometimes 
leaving them facing poverty in retirement and convincing some 
to leave the teaching profession. So, I am here today to put a 
human face on the problem. I brought about 500 letters, and Mr. 
Berman already had some of those, that people have written. 
They have e-mailed; they have faxed; they have written on 
notebook paper, typing paper. You probably will find a couple 
of first grade teacher letters in here written on Big Chief 
tablet paper.
    [Laughter.]
    Because any opportunity that teachers and school employees 
have to share their views, they take that opportunity. We are 
very, very concerned about this issue. The GPO penalizes 
individuals who have dedicated their lives to public service. 
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 programs such as food stamps to make 
ends meet. The NEA and TSTA receive hundreds of phone calls and 
letters each months 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, Laurie Trapp 
from Paris, Texas--that is deep East Texas--writes, ``I am a 
widow at age 43. My husband worked and paid into Social 
Security for over 25 years. I have found out that I am not 
eligible to receive his Social Security benefits at this time, 
because my salary is more than the allowed amount. Both of my 
children will be in college at the time of my retirement. I 
will not be able to support myself and put them through college 
on just my retirement income.'' We are equally concerned about 
the WEP. 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. Like the GPO, the WEP can 
have a devastating impact on educators' retirement security. 
For example, Lucinda Trusdale, from the Alief School District 
near Houston, says I did not start teaching until I was 33. I 
worked in the private sector from the time I was 17 until I 
graduated and began teaching.
    If they take Social Security away from those with teacher 
retirement, I will not be able to afford to retire until well 
after the age of 65. As it is, I am a single mom aged 47 with 
an 8-year-old and a 5-year-old. Financially, we have a very 
hard time. I know it is not as bad as others, but I surely 
thought at 47 with a teaching degree, I would not have to 
struggle to make ends meet every month. John Duncan, who is a 
teacher in Odessa: ``I worked and paid into Social Security for 
17 years. I wanted to do something in my life to help someone 
else. I needed to do this, so I left a good-paying job to go 
back to school, receive my certification, and teach. I am now 
68 years old, and I have taught for 28 years. I am approaching 
retirement and have counted on my Social Security to help me. 
Now, because of the WEP, I will lose approximately $5,700 a 
year of my Social Security. My wife will lose another $2,400 in 
spousal benefits. That is a total of $7,100 that we counted on 
for our retirement. This might not mean much to a lot of 
people, but to a teacher, this is a lot of money.'' We have 
some members who are penalized twice because they are affected 
by both the GPO and the WEP. I have a letter here from Mary 
Hall, but let me just tell you a little bit about Mary. She 
teaches at Memorial High School in Spring Branch Independent 
School District (ISD), near Houston. She is 86 years old. She 
has been teaching for 55 years, over half of those in Texas. 
Her husband is deceased, and she has been collecting $1,200 a 
month on his spousal benefits. She thinks that she cannot 
retire, because she would lose that benefit, and she would 
revert back to her benefit that she acquired from other school 
districts, which was $500, and that would be offset to about 
$300.
    Mary is sharp as a tack. She has very, very good teaching 
skills. She is a wonderful teacher. Unfortunately, she is 
disabled; she teaches from a walker; she had a hip replacement 
that did not take; and her body is slowly deteriorating.
    So, you would think of someone age 86 with 55 years of 
teaching experience, that she certainly should be looking 
forward to a good retirement. In Texas, as in other States, we 
are very worried about our ability to attract and retain 
quality teachers if they know about the GPO and the WEP. We are 
finding it harder and harder to convince people to enter the 
teaching profession, and we are seeing teachers leave the 
profession or the State because of the impact of the offsets. 
Linda Whitner from Richardson ISD at Lake Highlands High School 
says, ``I am a Texas teacher that is retiring in about a month. 
I have 20 years in Texas, 16 years before that in other States. 
I would like to show you my budget and let it speak for 
itself.'' Here, she has written out all of her monthly expenses 
and her annuity, and she says as you can see, ``I will have 
$141 a month for food, household supplies, clothes, 20 percent 
of doctors' appointments, auto care and all of the little 
things that make life possible.'' The last word she says here 
is, ``help.'' We are very pleased that Representatives McKeon 
and Berman have introduced the Social Security Fairness Act of 
2003. We are gratified that this legislation already has over 
190 cosponsors, and now, we urge Congress to take action and 
move this important legislation, and thank you for allowing me 
to address you today.
    [The prepared statement of Ms. Haschke follows:]
      Statement of Donna Haschke, President, Texas State Teachers 
    Association, Austin, Texas, on behalf 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 on the Government 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 Dorothea in Ohio:

          ``When my husband and I were planning our retirement, we knew 
        that I would not be able to receive full retirement credit from 
        the years I was able to teach. However, with my share of his 
        Social Security, and a small annuity, we felt that we were 
        adequately covered. [A]fter I started teaching, the Offset 
        Penalty was voted into effect and the Social Security he 
        contributed to for over 35 years is not available to me. 
        Currently I receive $203 a month as my share of his Social 
        Security. It just is not fair--if he could rise from the grave 
        in protest, I'm sure he would. One goes to college, marries, 
        raises a family, and, in this country, expects to be able to 
        retire in a comfortable situation. I'm only asking for benefits 
        which my husband and I have earned--it's time to correct this 
        injustice.''

    From NEA member Patricia in Texas:

          ``I am a retired teacher . . . who chose to say at home and 
        be with my four children during those most important early 
        development years. I did not begin teaching until I was 40 
        years old and left at 55 because my husband had retired. . . . 
        My retired pay is $517 per month. Next year when I am 65 and 
        the GPO is used to calculate my Social Security benefits, I 
        will be lucky if I can get enough to pay for my Medicare 
        costs.''
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:
    NEA member Lytell from California reports:

          ``This offset makes my life a financially insecure one. Down 
        the road, I will be desperate. I had always wanted to be a 
        teacher. . . . I worked as a medical secretary for 10 years. As 
        I matured, I decided to go back and fulfill my earlier dream. 
        It took 4 years of financial hardship and other lifestyle 
        sacrifices but I persevered. . . . Finally, I was able to get a 
        job in a remote Idaho town, leaving my family, friends and worn 
        out car behind. And so began a wonderful and rewarding career. 
        . . . As the second half of my working life [in California] 
        came to a halt, I learned that I would be financially penalized 
        for teaching here in California. . . . I have to work to 
        supplement my retirement, having experienced a 50% penalty in 
        my Social Security benefits. . . . When I can no longer work, I 
        am afraid that I will lose my home. . . . It's a very 
        frightening thought.''

    From NEA member Marilyn in Ohio:

          ``In June of 1956 I graduated from high school and began 
        working as secretary to the president of Dime Bank in Akron, 
        Ohio. . . . I worked there for a little over seven years, 
        leaving to raise three children. I worked [in retail] during 
        the hours the children were in school (still paying into SS). 
        In February of 1985 I took a part-time position at the 
        University of Akron, which later turned to full-time. In March 
        of 2000, I reported to my Social Security Office in Akron, Ohio 
        to make plans for my retirement. . . . I was retiring with 15 
        years of service. For several years prior, I had been receiving 
        information by mail from the Social Security Office that I 
        would be receiving $1,022 a month in Social Security benefits 
        upon retirement. [However, I was told] `since you retired from 
        the University of Akron, you will only receive $220 per month.' 
        I was angry, astonished, upset and I cried. I . . . was 
        absolutely amazed that I had been put into such a position. 
        Consequently, I am still working through a temporary job 
        placement company, pouring my money into Social Security 
        coffers, for which I will only receive $220 a month until the 
        day I die. Is this fair?''

    From NEA member Theresa in Illinois:

          ``Currently, I am a Guidance Counselor at Lockport Township 
        High School. I also have experience teaching special education 
        in low income and inner city high schools. Prior to entering 
        the education field, I was working in the business world and 
        paying into Social Security. I am a single person with no other 
        income. I decided to leave the business world and teach. I 
        never realized this move would jeopardize my Social Security 
        money when I retired. . . . [B]ecause I did work in the 
        business world for years I do not have an opportunity to put in 
        the full amount of years to receive a full teachers pension. I 
        will not receive a full teachers pension either. Since I have 
        never married, I will not receive any spouse benefits. . . . I 
        find it appalling that teachers are bearing this burden. 
        Teachers who changed careers should not be penalized from 
        receiving full Social Security benefits.''
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 Mary from Ohio 
reports:

          ``I became a teacher at the age of 41 after working at 
        various jobs under Social Security for 20+ years. I'm 64 years 
        old and retired now. Little did I know the financial impact my 
        decision to become a teacher at midlife would have on my 
        retirement. I can only collect 40% of the Social Security I 
        worked for and paid into for many years--a whopping $189.00 a 
        month. Worse yet, if my husband dies before me, I will collect 
        NONE of the Social Security benefits he paid into for 30 years. 
        I didn't teach long enough to receive a full teacher's 
        pension--silly me, I always thought Social Security would help 
        fill the gap. After all, I worked for it, didn't I? Wrong! . . 
        . I feel betrayed. What a terrible way to treat someone who 
        dedicated half her work life to the education of children. I 
        know the $250 (approximately) a month I'm missing due to the 
        WEP is small change to [Congress] but it would help me 
        tremendously to get through the month, especially with the cost 
        of health care for my husband and me through the State 
        Teachers' Retirement System. I don't know how much I will lose 
        in Social Security benefits if my husband dies first, but I'm 
        sure however much it is, I will miss it dreadfully.''
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, current teachers 
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 2003 (H.R. 594). This bipartisan 
legislation, which already has over 180 cosponsors, would eliminate the 
GPO and WEP, thereby allowing public employees, like all other 
employees, to collect the benefits they earned and need.
    While other proposals would address the GPO and WEP by making 
changes to the formulas or setting minimum benefit levels, NEA strongly 
believes that total repeal is the best solution. The change in the GPO 
formula enacted in 1983 has still left thousands of retired educators 
in desperate financial circumstances. Only a complete repeal will 
ensure the financial security our nation's public servants deserve.
    Therefore, 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 workers should be able to receive the benefits they or 
their spouse earned by working in covered employment, without 
jeopardizing their public pension.
    Social Security is a ``one-size-fits-all'' program. Many existing 
public employee programs are tailored to meet the needs of specific 
employee groups. Forcing public employees 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 public employees 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. Mandating coverage of certain categories of workers in 
high-risk professions, such as police and firefighters, might also 
increase program costs since these workers are more likely than the 
general population to receive Survivors and Disability Insurance.
    Finally, mandating coverage of public employees 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.
Conclusion
    NEA strongly urges Congress to:
    1. Take immediate action to pass the Social Security Fairness Act 
of 2003, repealing both the Government Pension Offset and Windfall 
Elimination Provision.
    2. Reject proposals to require public employees in uncovered states 
to participate in Social Security.
    We thank you for your consideration of these comments.

                                 

    Chairman SHAW. Thank you. Mr. Johnson?

 STATEMENT OF WILLIAM J. JOHNSON, EXECUTIVE DIRECTOR, NATIONAL 
              ASSOCIATION OF POLICE ORGANIZATIONS

    Mr. JOHNSON. Mr. Chairman, Representative Matsui and 
Members of the Subcommittee, my name is William Johnson, and I 
serve as the Executive Director of the National Association of 
Police Organizations (NAPO). On behalf of 230,000 rank-and-file 
police officers from across the United States, I would like to 
thank you for this opportunity to testify today on the future 
of Social Security and the impact of the GPO and the WEP 
provision. The Social Security program is an important source 
of future retirement security for millions of Americans, and 
NAPO realizes that the program needs to be put on a sound 
footing for future generations of retirees. We commend Congress 
and this Subcommittee for their efforts to consider various 
reforms but wish to stress that mandating Social Security 
coverage for State and local governmental employees will 
neither assist solvency nor assure proper and fitting coverage 
for the law enforcement community. Forcing State and local 
governments and employees to pay a combined 12.4 percent tax 
would have major consequences; specifically, mandating Social 
Security taxes on the 70 percent of public safety officers now 
not covered would have a dramatic and negative impact on the 
recruitment and retention of well-qualified public safety 
officers. In addition, it would constitute an unfunded mandate 
on public safety agencies, amounting to over $25 billion in the 
first 5 years alone according to one recent study.
    Under a mandatory Social Security system, police officers 
and firefighters would pay more taxes for inadequate benefits 
as compared to their current pension plans. Fourteen States, 
many represented on this Subcommittee, cover substantial 
numbers of their public employees under independent plans which 
will be jeopardized by mandatory Social Security. Those States 
are Texas, Louisiana, Missouri, California, Ohio, Colorado, 
Illinois, Massachusetts, Kentucky, Minnesota, Nevada, 
Connecticut, Maine, and Alaska. Firefighters and police 
officers in nearly every State are covered by independent plans 
rather than Social Security and nationwide, about 5 million 
public employees are covered by State or local plans in lieu of 
Social Security. State and local governments were excluded from 
the Social Security Act of 1935 (P.L. 74-271) for two reasons: 
first, there were and still are questions as to whether and the 
extent to which the Federal Government could properly tax State 
and local governments. Second, many State and local governments 
have their own adequate and already existing pension systems. 
It makes no sense whatsoever to do away with a system of 
pension plans that is working well and paying needed benefits 
to those who serve and protect the public. Tampering with the 
current system would most assuredly result in some of our 
better candidates and current officers going into other 
professions.
    Social Security benefits do not provide anywhere near the 
same level of benefits of current public safety pension plans 
and provide no disability benefits unless one generally is 
unable to perform any work, not just public safety work. To 
meet the new mandated costs, a majority of government entities 
would be forced to pay both their new 6.2 percent tax share and 
retain their current pension systems, because they are required 
by law or collective bargaining agreement to do so. Imposing 
Social Security taxes on these State and local governments 
would strain their already tight budgets and would have serious 
consequences on the pay and working conditions of public safety 
officers. State and local governments would likely consider the 
following actions to try to address that situation: decreasing 
the number of public safety officers; reducing the pay of law 
enforcement officers; freezing future cost of living increases; 
paying the 6.2 percent tax share by reducing proportionately 
their contributions to the current pension systems; or saving 
funds by not providing public safety officers with the 
essential equipment and technology needed to perform their 
duties.
    Over time, the increasing transfer of contributions of both 
employers and employees from existing pension plans to Social 
Security would severely reduce the plans' assets and investment 
income as more grandfathered employees in the current systems 
retire and new employees covered by Social Security are hired 
to replace them. This would threaten the financial viability of 
sound, secure and longstanding retirement systems. Existing 
pension plans would become underfunded and place at serious 
risk the future benefits paid to retirees. In a 1998 report to 
this Subcommittee, the GAO stated that the SSA estimates that 
extending mandatory Social Security coverage to all newly-hired 
State and local government employees would reduce the program's 
long-term actuarial deficit by about 10 percent and would 
extend the trust solvency by about 2 years. Fundamentally 
changing and jeopardizing the pension systems of over 5 million 
Americans is not worth the minimal gains such actions would 
produce.
    A second concern NAPO has regarding Social Security 
concerns those provisions that have been discussed here today, 
the GPO and the WEP provisions. I know that my written remarks 
are already in the record, and I thank you for that, and I know 
those provisions have been discussed in detail. If I could 
depart briefly in the time I have remaining, it just seems 
fundamentally that when we talk about the GPO in particular, we 
are talking about spousal benefits. We are talking about 
benefits earned by the person who worked, knowing and believing 
that his or her spouse would be covered when they die. It seems 
fundamentally unfair to deprive the widow, in most cases, of 
those benefits that had already been earned and paid for by the 
worker who is already deceased. If we could focus on the 
promise made to that worker while he was still alive and honor 
that promise that we have made as a country, I think that we 
would do an honor both to the person who worked, the surviving 
widows and to this Congress. Thank you.
    [The prepared statement of Mr. Johnson follows:]
     Statement of William J. Johnson, Executive Director, National 
                  Association of Police Organizations
    Mr. Chairman, Representative Matsui, Members of the House 
Subcommittee, my name is William Johnson and I am the Executive 
Director of the National Association of Police Organizations. NAPO is a 
coalition of police unions and associations from across the United 
States that serves here in Washington D.C. to advance the interests of 
America's law enforcement through legislative and legal advocacy.
    On behalf of 230,000 rank-and-file police officers from across the 
United States, I would like to thank you for this opportunity to 
testify today on the future of Social Security and the impact of the 
Government Pension Offset and Windfall Elimination Provisions.
    Today, I will discuss our paramount concerns regarding Social 
Security reform and how they impact America's law enforcement 
community. First, the incorrect theory that mandating Social Security 
coverage for state and local governmental employees will ensure future 
solvency and second, the unfortunate effects of Government Pension 
Offset and Windfall Elimination Provisions on the survivors of those 
who, by professional need, are allowed to opt out of Social Security 
coverage.
    The Social Security program is an important source of future 
retirement security for millions of Americans and NAPO realizes that 
the program needs to be put on a sound footing for future generations 
of retirees. We commend Congress and this Subcommittee for their 
efforts to consider various reforms but wish to stress that mandating 
Social Security coverage for state and local governmental employees 
will neither assist solvency nor ensure proper and fitting coverage for 
the law enforcement community.
    Forcing state and local governments and employees to pay a combined 
12.4 percent tax would have major consequences. Specifically, mandating 
Social Security taxes on the 70 percent of public safety officers now 
not covered would have a dramatic and negative impact on the 
recruitment and retention of well-qualified public safety officers. In 
addition, it would constitute an unfunded mandate on public safety 
agencies, amounting to over $25 billion in the first five years alone 
according a 1999 study done by the Segal Company. Under a mandatory 
Social Security system, police officers and firefighters would pay more 
taxes for inadequate benefits, as compared to their current pension 
plans.
    Fourteen states, many represented on this Committee, cover 
substantial numbers of their public employees under independent plans 
which will be jeopardized by mandatory Social Security. They are: 
Texas, Louisiana, Missouri, California, Ohio, Colorado, Illinois, 
Massachusetts, Kentucky, Minnesota, Nevada, Connecticut, Maine, and 
Alaska. Firefighters and police officers in nearly every state are 
covered by independent plans rather than Social Security and nationwide 
about 5 million public employees are covered by state or local plans in 
lieu of Social Security.
    State and local governments were excluded from the Social Security 
Act of 1935 for two reasons. First, there were and may still be 
questions as to whether and the extent to which the Federal government 
could tax state and local governments. Second, many state and local 
governments had their own adequate pre-existing pension systems.
    It makes no sense whatsoever to do away with a system of pension 
plans that is working well and paying needed benefits to those who 
serve and protect the public. Tampering with the current system would 
most assuredly result in some of our better candidates and current 
officers going into other professions, in view of the fierce 
competition among public safety agencies and the private sector.
    Social Security benefits do not provide anywhere near the same 
level of benefits of current public safety pension plans and provide no 
disability benefits unless one is unable to perform any work, not just 
public safety work.
    To meet the new mandated costs, a majority of government entities 
would be forced to both pay the newly imposed 6.2 percent tax share and 
retain their current pension systems, because they are required by law 
or collective bargaining agreement to do so. Imposing Social Security 
taxes on these state and local governments would strain their already 
tight budgets and would have serious consequences on the pay and 
working conditions of their public safety officers.
    Because raising taxes to make up the difference is not politically 
feasible, state and local governments would likely consider the 
following actions: decreasing the number of public safety officers to 
retain current pay levels and benefits; reducing the pay of law 
enforcement officers; freezing future cost-of-living increases; paying 
the 6.2 percent tax share by reducing proportionally their 
contributions to current pension systems; or saving funds by not 
providing public safety officers with the essential equipment and 
technology needed to effectively perform their duties.
    Over time, the increasing transfer of significant contributions, of 
both employers and employees, from existing pension plans to Social 
Security would severely reduce the plans' assets and investment income, 
as more grandfathered employees in the current systems retire and new 
employees covered by Social Security are hired to replace them. This 
would threaten the financial viability of sound, secure and long-
standing retirement systems. Existing pension plans would become under-
funded and place at serious risk the future benefits paid to retirees.
    In a 1998 report to this Subcommittee, the General Accounting 
Office stated that, ``the Social Security Administration estimates that 
extending mandatory Social Security coverage to all newly hired state 
and local governmental employees would reduce the program's long-term 
actuarial deficit by about 10 percent and would extend the trust's 
solvency by about 2 years.'' Fundamentally changing and jeopardizing 
the pension systems of over 5 million Americans is not worth the 
minimal gains such actions would produce.
    A second concern NAPO has regarding Social Security coverage 
concerns provisions which disproportionately and unfairly penalize 
those officers and their families who opt out of Social Security 
coverage because of professional need. The Social Security system is 
not appropriate for public safety officers who normally retire prior to 
or around 50 to 55 years of age, due to the stresses and dangers they 
face every day. Unlike current pension plans where officers may retire 
after 20 or more years of service, Social Security will not pay these 
individuals until they reach 62 to 67 years of age.
    Many retire from public safety careers in their early to mid 
fifties and look for new opportunities to serve their community though 
they will be penalized by the Windfall Elimination Provision if they 
retire from a non-Social Security paying job and move to one that does.
    The Windfall Elimination Provision (WEP) was adopted as part of the 
Social Security Amendments of 1983 and affects an individual's Social 
Security if that person became eligible for a federal, State or local 
government pension after 1985 based on work not covered by Social 
Security.
    The regular formula for computing a Social Security benefit is 
based on Average Indexed Monthly Earning (AIME). The benefit is figured 
by taking 90 percent of the first $606 of the AIME; 32 percent of the 
next AIME to $3,653; and 15 percent of $3,653 and over. These figures 
are indexed each year.
    In contrast, the WEP formula unfairly overpenalizes lower paid 
government employees who have had a career in both the public and 
private sector by taking only 40 percent of the first $606 of the AIME. 
While the other percentages remain the same, this reduces the benefit 
by more than half.
    Another penalty that survivors, of these officers see is the 
Government Pension Offset which unfairly affects the survivor's own 
Social Security payment.
    As an example, if a man collects a Social Security benefit of $800 
a month and his wife collects a government pension from a job outside 
Social Security of $900 a month, the wife would, in the absence of GPO, 
be eligible for a spousal benefit of half her husband's retirement 
benefit, or $400 a month. GPO, however, requires that this amount be 
offset by two-thirds of her pension--or $600--so, as a result, she 
receives nothing. In contrast, had she never worked at all, she would 
receive the $400 spousal benefit.
    NAPO supports legislation that has been introduced in this Congress 
to eliminate the Government Pension Offset for combined monthly 
benefits of $1,200 or $2,000 or less depending on the legislation and 
further legislation that will reform the Windfall Elimination 
Provision. The Offset and Windfall figures were arbitrarily picked and 
NAPO hopes that the Congress will correct them to properly assist those 
Americans who survive a public safety officer or public employee.
    Mr. Chairman, Representatives, our concerns are twofold. One, 
mandating Social Security coverage for state and local governmental 
employees will neither significantly assist solvency of the program nor 
ensure proper and fitting coverage for the law enforcement community. 
And second, that the officers and their families should not be unfairly 
penalized for their service to their communities who opt out of Social 
Security coverage because of professional need. I want to thank the 
Committee and Chairman Shaw for this opportunity to speak to you all 
today and I ask that my testimony be added to the official record. I 
would be happy to answer any questions you may have.

                                 

    Chairman SHAW. Thank you, Mr. Johnson. Mr. Canterbury?

 STATEMENT OF CHUCK CANTERBURY, NATIONAL PRESIDENT, FRATERNAL 
             ORDER OF POLICE, NASHVILLE, TENNESSEE

    Mr. CANTERBURY. Good morning, Mr. Chairman, Ranking Member 
Matsui, and distinguished Members of this Subcommittee. I am 
the National President of the National Fraternal Order of 
Police (FOP), and I am the elected spokesperson of 305,000 
rank-and-file police officers. The FOP has designated the 
repeal of the WEP and the GPO as one of our top legislative 
priorities, and we strongly urge this Committee to consider 
passing H.R. 594. The FOP had the privilege of testifying 
before this Subcommittee in May 1998, and we did so again in 
June 2000 when past National President Gilbert Gallegos 
testified on this same issue. It is our hope that the third 
time is going to be the charm. The Social Security Fairness 
Act, which was introduced by Mr. McKeon, would repeal both the 
WEP and the GPO. With 190 cosponsors, and strong support from 
both sides of the aisle, we hope to see this pass in this 
Congress. Ultimately, this legislation is about fairness to 
State and local employees who paid for and ought to receive 
their Social Security benefits. Let me begin by explaining the 
impact of the WEP on retired police officers.
    Simply put, law enforcement officers who serve communities 
that are not included in the Social Security system may lose up 
to 60 percent of their benefits to which they were entitled by 
virtue of secondary or post-retirement employment which 
required them to pay into the Social Security system. This 60 
percent 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 their retirement. The FOP contends that 
this provision has a disparate impact on law enforcement 
officers for several reasons. First of all, we retire earlier 
than 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. Second, 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 throughout 
their entire career and hold second or even third jobs after 
their law enforcement career to make ends meet.
    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 for 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 a benefit as well. However, because 
of 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 discover they lose 60 
percent of the benefit for which they were taxed. I doubt many 
officers will live long enough to break even; that is, to 
collect money they paid into the system, let alone receive any 
windfall. These men and women earned their State and local 
retirement benefits as public employees, and they paid Social 
Security taxes while employed in the public sector. How is that 
a windfall? I think it is clear that Congress did not intend to 
reduce the benefits of hardworking Americans who chose to serve 
their States and communities as public employees and then went 
on to have second careers or work second jobs to make ends 
meet. When the WEP was enacted in 1983, it was part of a large 
reform package designed to shore up the Social Security system, 
and its 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.
    However, we can now clearly see that the WEP was a benefit 
cut and designed to squeeze a few more dollars out of a system 
facing financial crisis. The fallout of this effort has had a 
profoundly negative impact on low-paid public employees outside 
of the Social Security system like police officers. To us, this 
is a matter of fairness. 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 of benefits to low-paid workers. It also 
overpenalizes lower-paid workers with short careers or, like 
many retired law enforcement officers, whose careers are split 
inside and outside of the Social Security system. Simply put, 
this provision has not eliminated a windfall for individuals 
who have not earned it. It has resulted in a windfall for the 
Federal Government at the expense of public employees. Like the 
WEP, the GPO was adopted in 1983 to shore up the finances of 
the Social Security Trust Fund. The provision reduces a 
surviving spouse's benefit. For example, the spouse of a 
retired law enforcement officer who, at the time of his death, 
was collecting a pension of $1,200 would be ineligible to 
collect the surviving spouse benefit of $600 from Social 
Security. Two-thirds of $1,200 is $800, which is greater than 
the spousal benefit, and under the law, the spouse is unable to 
collect a single dime of it. In 9 out of 10 cases, this 
completely eliminates the spousal benefit even though the 
covered spouse paid Social Security taxes for many years. Mr. 
Chairman, we would like to urge this Committee to pass this 
legislation, and we thank you for your time today.
    [The prepared statement of Mr. Canterbury follows:]
 Statement of Chuck Canterbury, National President, Fraternal Order of 
                      Police, Nashville, Tennessee
    Good morning, Mr. Chairman, Ranking Member Matsui, 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 305,000 rank-and-
file police officers--the largest law enforcement labor organization in 
the United States. I am here this morning to share with you the views 
of the members of the F.O.P. on the Windfall Elimination Provision 
(WEP) and the Government Pension Offset (GPO) provisions in current 
Social Security law.
    The Fraternal Order of Police, by a vote of its delegates at our 
National Biennial Conference in 1997, has designated the repeal of the 
WEP and GPO as one of its top legislative priorities and we strongly 
urge this Subcommittee to consider and pass H.R. 594, the ``Social 
Security Fairness Act.'' The F.O.P. had the privilege of testifying 
before this Subcommittee in May 1998. We did so again in June 2000, 
when Past National President Gilbert G. Gallegos testified on this same 
issue. It is our hope that the third time is the charm.
    The ``Social Security Fairness Act,'' introduced by Representative 
Howard L. ``Buck'' McKeon (R-CA), would repeal both the WEP and GPO. 
The bill already has one hundred and eighty-three (183) cosponsors, 
drawing strong support from both sides of the aisle. It is our hope 
that Congress will take a serious look at the manifest unfairness of 
the WEP and GPO and act to correct them by passing this bill. 
Ultimately, this legislation is about fairness to the State and local 
employees who paid for and ought to receive their Social Security 
benefits.
    Let me begin by explaining the impact of the WEP 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. 
Second, 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, 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--remain 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.
    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 overpenalizes 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. This provision has 
not eliminated a windfall for individuals who did not earn it, it has 
resulted in a windfall for the Federal government at the expense of 
public employees.
    Let me now discuss the other aspect of the McKeon bill, which would 
repeal the Government Pension Offset (GPO). 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.
    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 these benefits. 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. Moreover, 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 present system creates 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.
    The need to repeal the WEP and GPO is related to an issue recently 
debated on the floor of the House. On 2 April, the House considered 
H.R. 743, the ``Social Security Protection Act,'' for the second time. 
The legislation had previously been considered by the House on 5 March, 
but failed to obtain the two-thirds majority necessary to pass under a 
suspension of the rules. The crux of the legislation aimed to crack 
down on fraud and abuse in Social Security programs by strengthening 
protections for vulnerable recipients dependent on representative 
payees to manage their financial affairs. The bill would prohibit 
fugitive felons and probation/parole violators from receiving Social 
Security disability benefits and enhance the ability of the Inspector 
General to fight fraud. The bill also contained the text of the F.O.P.-
backed H.R. 134, legislation authored by Representative Ron Lewis (R-
KY), a Member of this Subcommittee, which would add Kentucky to the 
list of States permitted to operate a separate retirement system for 
certain public employees. We strongly supported this language and the 
overall intent of the legislation.
    However, the F.O.P. did object to Section 418 of the bill which 
would close a ``loophole'' in the Government Pension Offset (GPO) that 
enables some public employees, mostly teachers, to spend their last day 
of employment in a position in which they would pay into Social 
Security. Despite having worked their entire career in non-covered 
position, a single day in a covered position is sufficient for them to 
avoid the benefit cuts which would have otherwise been incurred under 
the GPO. This practice is very recent and I do not know if law 
enforcement officers are making use of this loophole, or even if it is 
possible for them to do so in any jurisdiction in the country.
    Representative Gene Green (D-TX) offered an amendment in the nature 
of a substitute which would have stripped out Section 418 of the bill. 
The F.O.P. supported this amendment, but it was ultimately defeated on 
a 196-228 vote (Roll Call Vote No. 100). In our view, the GPO is unfair 
to begin with, thus there is no margin on ``fixing'' any loophole in 
that provision.
    I am concerned that Congress continues to look for ways to save 
money for the Social Security system by cutting benefits earned by 
State and local employees. This is not right and it is not fair. The 
Federal government has a commitment to these men and women that must be 
honored.
    I also want to speak to the advocates of mandatory participation in 
the Social Security system by all State and local employees. This is 
not the way to solve the inherent unfairness of the WEP or GPO, nor is 
it a sound fiscal or retirement policy for those States and localities 
which are better off outside the Social Security system. Mandatory 
inclusion in Social Security must be seen for what it is--a scheme to 
require participation for all employees currently outside the system--
thus covering the expected shortfall with a huge influx of new tax 
dollars.
    If the Federal government imposes mandatory Social Security 
participation, it severely compromises the financial solvency of 
existing pension and retirement plans into which these employees 
contribute. These plans, which are often designed and tailored with the 
public safety employee in mind, deliver a greater benefit to their 
participants than does Social Security.
    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.
    Clearly, the damage that would be done to State and local 
governments and the families of the employees cannot be overestimated 
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 newly hired employees only would be over 
$771 million. The newly hired employees would be responsible for an 
equal amount, making the cost of the first year of coverage over $1.5 
billion. The total annual cost to employers for covering employees not 
currently in the Social Security system would be $8.5 billion. When the 
employees' share is counted, that amount rises to over $17 billion per 
year.
    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 already stretch every dollar to the limit to meet 
homeland security burdens. Mandatory participation would mean huge new 
costs that will devastate their budgets.
    Federally mandated participation in Social Security is not a minor 
issue. Such a mandate would adversely affect millions of employees and 
impose billions of dollars in additional costs to State and local 
governments. Many retirement and pension plans for public sector 
employees have been specifically designed and refined on the assumption 
that local governments would not be required to participate in the 
Social Security system. This was a reasonable assumption since local 
governments have never been required to pay into the system. An 
important consideration for law enforcement and other public safety 
officers is a much earlier retirement age than other, more typical, 
government employees. Local and State retirement plans take this early 
retirement into consideration, Social Security does not.
    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 sixty-eight (68) years later 
because the Federal government is looking for an easy way to fund 
Social Security without making hard choices. The State and local 
governments who chose not to participate in Social Security did not 
create this problem, nor did the nearly four million employees who do 
not pay into the system. But those States and localities would be 
paying a hefty price for their previous decision to create 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.
    The President's Commission to Strengthen Social Security (CSSS) 
rejected the mandatory participation scheme in its final report issue 
on 21 December 2001. Congress should do likewise.
    Mr. Chairman, I want to thank you and the other Members of this 
distinguished Subcommittee for the chance to appear before you today. 
It is my hope that you will call on the Fraternal Order of Police for 
its help and support when you consider H.R. 594, the ``Social Security 
Fairness Act.''

                                 

    Chairman SHAW. Thank you, Mr. Canterbury. Ms. Harrison?

STATEMENT OF TERESA HARRISON, DIRECTOR OF GOVERNMENT RELATIONS, 
 STATE TEACHERS RETIREMENT SYSTEM OF OHIO, COLUMBUS, OHIO, AND 
      CHAIRMAN, COALITION TO PRESERVE RETIREMENT SECURITY

    Ms. HARRISON. Good afternoon, Chairman Shaw, and Ranking 
Member Matsui. My name is Terri Harrison. I am the Director of 
Government Relations for the State Teachers Retirement System 
of Ohio. I am testifying today, however, in my capacity as 
Chairman of the Coalition to Preserve Retirement Security. I 
also realize I am the only thing that stands between you and 
lunch, so I will keep this short.
    [Laughter.]
    On behalf of the Coalition, thank you for this opportunity 
to appear before you today to discuss the issue of mandatory 
Social Security coverage for public sector workers. Our 
coalition includes members from public pension plans, public 
employee and retiree groups, public employer organizations. The 
purpose of our coalition is to keep Social Security coverage 
optional for the over 5 million public workers outside of the 
program. We oppose forced Social Security coverage due to the 
immense cost to public employers and workers and the few if any 
pension improvement benefits deriving from that. While this 
issue has been around for decades, most recently, we were very 
pleased that the President's Commission to Strengthen Social 
Security made history by being the first commission to not 
recommend mandatory Social Security coverage in their report 
for Social Security reform. When the Social Security system was 
established in 1935, State and local government employees were 
not allowed to participate in the system. Beginning in the 
1950s, they could elect to have their employees covered, and 
they were allowed to opt in or opt out. That opt out ended in 
1983. As a result, many State and local government entities set 
up their own pension plans. For my own system in Ohio, the 
teachers, we were established 15 years prior to Social 
Security. So, the programs were up and established and funded 
prior to Social Security even being available as an option.
    As fellow testimony here has reported, the cost of Social 
Security on public sector employers, taxpayers, workers, is 
projected to be over $26 billion in the first 5 years, yet it 
only extends Social Security solvency by 2 years. Because of 
the significant impact on the States and locals, we are opposed 
to mandatory coverage. It would, in many cases, either reduce 
benefits, increase taxes or put in jeopardy the existing 
structure of those pension plans. Mandatory Social Security, as 
also has been said, would be felt in all 50 States, not just 
the large States such as Ohio, California, et cetera. There are 
pockets of public employees in every State that are not covered 
by Social Security. Some of the larger States such as Chairman 
Shaw's Florida would have a $340 million price tag in those 
first 5 years. For California, it would be $4.1 billion; for my 
own State of Ohio, it would be $4 billion in just the first 5 
years.
    Proponents of mandatory coverage have contended that 
applying the mandate only to newly hired workers would make it 
less of a hardship. This is not the case. Because of the way 
many of the systems are funded, as defined benefit plans, they 
rely on actuarial funding and a continuing revenue stream for 
new hires. So, as those new hires would be eliminated, the 
revenue stream from the new hires would be eliminated as well, 
increasing the cost on those already in the system. Given the 
state of budgets around the country, including my own State of 
Ohio, it is highly unlikely that our General Assembly members 
would be able to find additional contributions to maintain the 
benefit structure as it is. What would be more likely would be 
a reduction in benefits for public employees in those systems. 
Based on these facts, we strongly urge that forced Social 
Security coverage not be included in future reform packages. We 
understand that Social Security is an important program. All of 
us have family members and friends who collect from Social 
Security, but we urge, due to the impact on those State and 
local systems, the benefit to the long-term solvency of Social 
Security is really not enough to warrant the destruction of 
many systems that have existed for many years. I thank you for 
your time and would be happy to answer any questions.
    [The prepared statement of Ms. Harrison follows:]
 Statement of Teresa Harrison, Director of Government Relations, State 
   Teachers Retirement System of Ohio, Columbus, Ohio, and Chairman, 
               Coalition to Preserve Retirement Security
    Chairman Shaw, Ranking Member Matsui and distinguished Members of 
the Subcommittee, my name is Terri Harrison 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.
    While this issue has been around for decades, most recently, the 
President's Commission to Strengthen Social Security made history by 
being the first commission to not recommend mandatory Social Security 
coverage in their report for Social Security reform.
    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 39 members are found in Alaska, California, Colorado, Florida, 
Illinois, Kentucky, Louisiana, Massachusetts, Missouri, Nevada, Ohio, 
and Texas and represent about 4.1 million public employees and 
retirees. They administer retirement benefits for nearly 12,000 public 
employers in these states.
    In addition, our national associations and public pension unions 
represent more than 15 million public workers, five million 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 $26 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, about five 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.''
    There is some evidence that the 1994-1996 Advisory Council had not 
fully considered the ramifications of such a dramatic change on state 
and local workers. In an April 1997 speech before the National 
Conference of Public Employee Retirement Systems, Edith Fierst, a 
member of the Advisory Council, said of the mandatory coverage 
proposal, ``We did it primarily because it would be good for Social 
Security, not because it would be good for the employees. Our interest 
was that if people came into Social Security and began to pay the 
Social Security tax, that helps the Social Security's trust fund, and 
they won't start to draw benefits based on those contributions for some 
years.''
    In 2001, as mentioned earlier, the President's Commission to 
Strengthen Social Security decided not to include mandatory coverage in 
its final report. 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 2003 Social Security trustees' 
annual report, if left unchanged, the program will be insolvent--that 
is unable to pay all benefits owed--beginning in 2042. 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 2018 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
    According to a 1998 report by the General Accounting Office, 
``Social Security: Implications of Extending Mandatory Coverage to 
State and Local Employees,'' 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, 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 $26 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.


----------------------------------------------------------------------------------------------------------------
                                                            Home       Employees      5-Year Cost to Employees,
                       Congressman                         State       Affected        Employers and Taxpayers
----------------------------------------------------------------------------------------------------------------
Clay Shaw (Chair)                                            Fla.          61,817                  $340,002,664
----------------------------------------------------------------------------------------------------------------
Sam Johnson                                                 Texas         515,751                $2,647,073,158
----------------------------------------------------------------------------------------------------------------
Mac Collins                                                   Ga.         102,120                  $512,375,928
----------------------------------------------------------------------------------------------------------------
J.D. Hayworth                                               Ariz.          11,908                   $71,247,564
----------------------------------------------------------------------------------------------------------------
Kenny Hulshof                                                 Mo.          59,992                  $307,459,512
----------------------------------------------------------------------------------------------------------------
Ron Lewis                                                     Ky.          64,120                  $359,832,512
----------------------------------------------------------------------------------------------------------------
Kevin Brady                                                 Texas         515,751                $2,647,073,158
----------------------------------------------------------------------------------------------------------------
Paul Ryan                                                    Wis.          46,579                  $309,713,918
----------------------------------------------------------------------------------------------------------------
Robert Matsui (Ranking Dem.)                                     Calif.   903,027                $4,103,961,329
----------------------------------------------------------------------------------------------------------------
Ben Cardin                                                    Md.          28,126                  $194,296,602
----------------------------------------------------------------------------------------------------------------
Earl Pomeroy                                                 N.D.           7,831                   $41,640,094
----------------------------------------------------------------------------------------------------------------
Xavier Becerra                                                   Calif.   903,027                $4,103,961,329
----------------------------------------------------------------------------------------------------------------
Stephanie Tubbs Jones                                        Ohio         921,404                $3,974,734,068
----------------------------------------------------------------------------------------------------------------
    Subcommittee Totals \1\                                             2,722,675               $12,862,337,349
----------------------------------------------------------------------------------------------------------------
      National Totals                                                   4,803,876               $26,021,562,331
----------------------------------------------------------------------------------------------------------------
\1\ Duplicate figures not included.
Source: ``The Cost Impact of Mandating Social Security for State and Local Governments,'' The Segal Company,
  1999.


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 
which would be met with strong resistance by the affected 
constituencies. In light of the recent downturn in the economy, states 
and localities are already facing huge deficits. Mandating Social 
Security coverage would severely 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 to receive a Social Security benefit. Consequently, if 
these workers no longer had their traditional defined benefit public 
retirement, they could be forced to retire from their public safety job 
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 towards 
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 cease when the child turns 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 SHAW. Ms. Harrison, I will preface this by saying 
that Congress has to pay into both. Members of Congress have to 
pay both into Social Security and into a pension plan, and 
then, we are penalized even though we pay full Social Security 
like any American worker. That used to not be the case, and a 
lot of people do not realize that we did vote ourselves into it 
and did not get rid of the penalty either. What would be your 
thoughts with regard to allowing in those areas which have 
opted out of Social Security and have opted for their own 
pension, the people in those programs to continue to pay into 
Social Security if they wished?
    Ms. HARRISON. Usually, it is an employer decision and----
    Chairman SHAW. What if we made it an employee decision?
    Ms. HARRISON. An employee decision? Well, that would still 
have a significant impact on the funding of the State systems, 
because most of them are defined benefit, so they are 
actuarially funded. It is very similar to the argument for 
defined contribution plans that has become quite common around 
the country.
    Chairman SHAW. So, it sounds like you are making the same 
argument that I would make: if they, say, let people opt out of 
Social Security, we would have a huge problem.
    Ms. HARRISON. I understand.
    Chairman SHAW. Maintaining benefits, and you are saying 
that if we allow people to opt out of the pension, that the 
pension plan would have trouble maintaining benefits--of 
course, I would assume that in Ohio, anyway, that the employee 
benefit plan is much more attractive to the employee than 
Social Security would be.
    Ms. HARRISON. Chairman Shaw, that has been the case in the 
years since 1920.
    Chairman SHAW. What would be your thought if we allowed the 
employee to voluntarily pay into the Social Security plan 
without opting out of the State pension plan?
    Ms. HARRISON. Chairman Shaw, if it were possible for 
employees to elect on an individual basis to pay an additional 
tax in order to participate in Social Security, but it would 
not have an impact on the contributions funding the State 
plans, I do not know that the system would have a position 
opposed to that, as long as it was a voluntary position by the 
member, that it would be out of their own pocket. Our only 
problem would be a mandate on employers.
    Chairman SHAW. I see; I understand what you are saying. To 
all the panel members, the GPO and the WEP have been law for 
roughly 20 years, yet many are shocked to learn of their 
existence when they are ready to collect benefits. I might say 
that this is largely because of the problem of communication 
between the SSA and the employee. When you get your statement 
each year saying what you are eligible for, then, when they 
really get down to figures, I would say, whoops, we have got a 
huge problem here. Are you educating all of your members as to 
these provisions? I think that is tremendously important. Well, 
I know in Texas, you are. Good grief!
    [Laughter.]
    Ms. HASCHKE. Guilty as charged.
    [Laughter.]
    Chairman SHAW. Is the information complete and accurate? I 
ask this, because there is a statement on the NEA website this 
morning that said--and listen to this; this is a direct quote: 
``while retired public employees have their Social Security or 
survivor benefits reduced, non-public employees with private 
pension plans get to keep their entire pension and receive 
their entire Social Security or survivor benefits,'' end of 
quote; which SSA's testimony clearly shows that this is 
inaccurate, and it is misleading. I would simply say that we 
can have a good debate, but we need to be sure that the 
information that we are giving out is accurate and complete. 
This Congress, you know, we do work, and Mr. Matsui and I, 
occasionally, we do work together. We try to do what is fair 
and maintain fairness, and I think this has been a good 
hearing. If we could keep our testimony, and the testimony of 
this panel of witnesses, I think, has been excellent, and I 
complement all of you for keeping it that way, but we need to 
be sure that all of the facts are out there. If somebody is in 
a private pension plan, they still are paying into the Social 
Security Trust Fund, and they are Social Security workers, and 
they are classified as such. It is important to realize that 
the public employees in some areas have opted out of the system 
and have their own pension plan. So, there is a difference if 
you paid into Social Security and have not paid into Social 
Security. Basic fairness has to be part of what we are talking 
about. So, someday, but not too soon, I hope, I will be joining 
my friends at NARFE and probably be up here asking for more 
money, too.
    [Laughter.]
    Maybe we can, and as you, Mr. Fallis, correctly pointed 
out, I have addressed that in legislation, but it is very broad 
legislation which pays for itself, even though Mr. Matsui says 
I am going to borrow money until 2060-something. We do pay it 
back. We do maintain benefits, and we do increase benefits in 
particular for many of the retired employees. Mr. Matsui?
    Mr. MATSUI. Mr. Chairman, I just want to take this 
opportunity to thank you very much for holding this hearing. I 
really appreciate it. A lot came out of the hearing. A lot of 
folks contributed, and certainly, the issues are fairly well 
laid on the table. So, I want to thank you very much. I want to 
mention to the panelists here, first of all, thank you for your 
testimony; but second, I think it is important that you know 
this, and I learned this today myself; I was not aware of it, 
but both the GAO individual and also Mr. Wilson on behalf of 
the SSA spoke of it. In the President's budget, which he 
offered to us in February of this year, there is an increase in 
revenues that will be projected over the next 10 years of $2.2 
billion; in fact, in Mr. Wilson's testimony on page 2, in 
paragraph 7, he said this change will improve our program 
stewardship and reduce program costs by an estimated $2.2 
billion over the first 10 years. Bear in mind what he means by 
that: he means that they are going to have greater enforcement 
of the WEP and the GPO; and so, as Mr. Pomeroy and Mr. Cardin 
have said, this means that they are going to actually expand 
the number of people that they are going to be hitting on your 
behalf, so you need to tell your membership that not only has 
Mr. Shaw mentioned that this is alive and well but also that 
there is going to be greater enforcement of the provision. So, 
you came here with the idea of getting some relief. You may be 
leaving, having found that actually, if the Administration gets 
its way, they are going to raise $2 billion more from your 
constituency group. You just need to let them know that if you 
want to solve this problem. Any comments on that? If there are, 
fine, but I just wanted to let you know that this is not an 
issue that is just going to fade away. You are going to find 
more of your members hit by this.
    Chairman SHAW. Okay; well, to follow Ms. Harrison's lead, 
we are going to lunch. Thank you. Oh, I am sorry, Mr. Brady. I 
did not see you come in. Go ahead. I apologize.
    Mr. BRADY. No, no, I will be brief. Thanks, Mr. Chairman, 
very much. I apologize. I had to step out for a moment. I agree 
that Social Security and retirement pensions just are not 
enough. Unfortunately, Social Security was not designed as a 
retirement plan but to lift seniors out of poverty. 
Unfortunately, over the years, it still stayed that way, and I 
think these issues really beg the need for reforming Social 
Security, and I think of teachers and other government workers 
who if they could have put their money aside in a retirement 
plan way back when and let that money grow for them each year 
and have their own nest egg today that they can control, how 
much better off we all would be. I want to make a point. I do 
have, Mr. Chairman, a number of letters and e-mails from my 
constituents, especially focused on WEP and the need to 
modernize that. Just for the record, I need to let you know 
that I oppose repealing GPO because when we really look at 
identical families in America, we cannot justify treating those 
with government pensions so much better than families with 
Social Security when they have worked as hard, when they have 
made the same contributions, when they have the same 
retirement.
    We are just not going to have two classes of citizens in 
Social Security. I do support your comments and approach on the 
WEP. I know why it was put in place. It makes perfect sense. I 
think the times have changed. I think if you have earned two 
retirements, you should get two retirements. When I look at 
especially our teachers in Texas, those coming into the State 
who we are glad to have in our education system really get 
hurt. Those who have held summer jobs or second jobs throughout 
their careers, which many teachers do, because we do not pay 
them enough, they get hurt by it. I think that really makes it 
harder--would you not agree?--to recruit new people into the 
education system, because it is becoming more and more 
understood just what kind of approach this is. Mr. Chairman, 
all I would, I think, ask is that I took a look back almost 30 
years ago to a report that many of our teacher groups were 
making then about asking Congress to find a way to make teacher 
retirements more portable, so in a mobile society, teachers and 
others would not have to worry about losing parts of their 
retirement. I think whether we repeal WEP, or we modernize the 
formula, or we take a look at trying to differentiate those on 
very low incomes whom we bump the formula for versus those who 
have a second job and are in a different situation, perhaps 
trying to differentiate from that, I actually see two or three 
approaches that the Committee might want to pursue to try to 
modernize WEP for today's society. With that, that was the only 
comment I wanted to make other than to thank the testifiers for 
being here today.
    Chairman SHAW. I think we have learned a lot today, and I 
think that, the pension offset, whether people believe it is 
because of private pensions or it is because of Social Security 
itself, I had an awful lot of mail from people on Social 
Security who have found that the survivor benefits were not 
there, and that is all they had, and found that that was not 
there, and it came as a real shock. I would like to solve it 
for everybody, but you saw the price tag that was given by Mr. 
Wilson. I think he said half a trillion or $500 billion. We 
cannot do anything that is going to expedite the demise of the 
Social Security system. The Social Security system, and I will 
say that now that Mr. Matsui is out of the room, and I can do 
it without his coming in chiming in, but we are going to run 
short of cash. There will not be enough cash paid in to pay 
benefits beginning in 2017. We have to be very much aware of 
that.
    Sure, we are not going to run out of Treasury bills until 
2040-something, but the Congress is struggling to maintain 
these benefits, and we need to really start talking about it 
and working on it. There are some things that will address some 
of the concerns that have been raised here today, and we can do 
it by legislation. I do not want anybody to leave here thinking 
that we have the resources with which to grant everything that 
has been complained about and that people are concerned about; 
you see testimony such as Ms. Williams or Ms. Haschke, as she 
has read certain letters. We all want to do a better job, and 
our hearts go out to everybody, but we also have to be fiscally 
responsible. My job as Chairman is to be the gatekeeper on some 
of this legislation. I whispered to Mr. Matsui, I said what are 
you going to do if you became Chairman of this Committee. I 
will not tell you what his answer was.
    [Laughter.]
    It would not be fair. Being the Chairman of a Committee or 
a Subcommittee in the Congress is a great honor, but it is also 
a huge responsibility. Sometimes, you have to act differently 
than if you were just a Member of the Committee or if you were 
in the Minority. So, it is a tough job, but nobody makes us do 
it. We like the public service that we are in also, as you and 
your Members have enjoyed the public service that you are in. 
We will continue to work with you. I think that we have 
certainly today displayed our sensitivity to the issue, our 
openness to suggestions, and I thank all of you; you were a 
very fine panel. I appreciate your kindness and civility in 
addressing this Committee, too. Thank you very much. Hearing 
adjourned.
    [Whereupon, at 12:22 p.m., the hearing was adjourned.]
    [Questions submitted from Chairman Shaw to Mr. Fallis, Ms. 
Williams, Ms. Haschke, Mr. Johnson, Mr. Canterbury, and Ms. 
Harrison, and their responses follow:]
    [The information from Ms. Williams was not received at the 
time of printing.]

Question from Chairman E. Clay Shaw, Jr. to Mr. Charles L. Fallis, Ms. 
 Donna Haschke, Mr. William J. Johnson, Mr. Chuck Canterbury, and Ms. 
                            Teresa Harrison

Question: The GPO and WEP have been law for roughly 20 years, yet many 
are shocked to learn of their existence when they are ready to collect 
benefits. Please describe the efforts of your organization to educate 
members on these provisions. If your organization is not engaging in 
widespread member education campaigns, why not? How would you explain 
why so many members are unaware of these provisions until retirement?
Mr. Fallis's response:
    NARFE has been advertising the existence of these two provisions 
and advocating their repeal or reform for more than two decades. We 
began educating our members when the omnibus Social Security 
refinancing and reform bills were originally introduced in Congress, in 
1977 and 1983, respectively. We have published numerous informational 
articles in NARFE magazine (formerly Retirement Life), including 
specific examples of how and by how much the provisions could impact 
one's planned retirement income. We have developed, and continue to 
distribute, publications and pamphlets to our own NARFE members, urging 
them to share the information with others who may be affected now or in 
the future. We sometimes conduct, and often provide pertinent 
information for, federal pre-retirement seminars. We always highlight 
the adverse impact many workers nearing retirement may expect from the 
GPO and the WEP. NARFE representatives often staff a booth at federal 
and postal organization conferences, local senior fairs across the 
country, specifically targeting seniors and federal employees to warn 
them about these offsets. The GPO and the WEP are two of three 
legislative priority issues for NARFE.
    In 1991, NARFE organized the Coalition to Assure Retirement Equity 
(CARE) to both inform individuals about the GPO and work to reform it. 
Today, CARE consists of fifty organizations that represent millions of 
public service members who are or will be affected by the GPO and/or 
the WEP.
    There is such a significant number of affected retirees who are not 
aware of the GPO and/or the WEP until after they retire, or even until 
they apply for Social Security benefits, because their personnel 
officers or agencies neglected to inform them of the offsets. The pre-
retirement seminars they may have attended were either not providing 
them with the necessary warnings or information, or they were provided 
it too late to make a change in their retirement planning.
Ms. Haschke's response:
    The NEA has and will continue to alert members about the adverse 
impacts to them from the GPO and WEP. NEA has conducted briefings 
throughout the nation to inform affiliate members of this issue. In 
addition, NEA maintains a dedicated section on its Web site that 
informs members of GPO and WEP as well as latest legislative news 
concerning this issue. NEA has a dedicated cadre of members devoted to 
disseminating information and supporting legislative efforts addressing 
the GPO and WEP. NEA also dedicates time at its representative assembly 
to inform all members about the negative consequences associated with 
the GPO and WEP.
    TSTA has had many opportunities to educate our members about the 
GPO and WEP over the last several years and we have done so and will 
continue to do so. Twice yearly at all member conferences we have 
presented workshops that are very well attended by members from all 
areas of the state. We regularly publish articles in our all-member 
publications, especially the Advocate which reaches all members five 
times yearly. We have information on our Web site with a link to the 
NEA Web site, as well as on our Briefing that is sent automatically to 
all members whose e-mail addresses we have acquired. We recently helped 
sponsor a Social Security forum in Houston that drew over 500 school 
employees from that area. Rep. Kevin Brady's staff attended the forum. 
Additionally, our Governmental Relations staff person, Jack Kelly, has 
presented regular workshops at our yearly NEA Western Region conference 
that includes members from nine states.
    As to why many people are unaware of the existence of the GPO and 
WEP before they retire, we believe that young people, eager to be 
hired, do not know the questions to ask when they are interviewed. Too 
often the school district does not provide the information unless it is 
specifically requested.
Mr. Johnson's response:
    Each of the past 15 years, NAPO hosts an annual pension and benefit 
seminar for public employees. Social Security, WEP and GPO are almost 
always on the agenda. This seminar is heavily advertised in the police 
community, and we welcome employees, employers, managers, pension 
trustees and administrators. Attendance is usually several hundred 
persons. NAPO also participates in several coalitions in Washington, 
including the Coalition to Preserve Retirement Security, where we hold 
the public safety employees' seat on the executive committee. We also 
make an effort to reach out to our members on this issue by including 
information on our website, in our quarterly meetings, and in our 
newsletter.
    Part of it is human nature, employees in all walks of life put off 
worrying about retirement issues because it often seems not to be an 
issue of immediacy. Part of it is that these particular provisions are 
complicated and are not intuitive or commonsensical, they fly in the 
face of what most people understand Social Security to be, and how 
Social Security works.
Mr. Canterbury's response:
    Members of the Fraternal Order of Police are aware of these 
provisions and the National F.O.P. continues to educate its members 
about the potential negative impact that these benefits cuts can have 
on their retirement plans.
    In August 1997, the delegates at the 53rd Biennial National 
Conference, adopted a resolution making the repeal of the Government 
Pension Offset (GPO) and Windfall Elimination Provision (WEP) a top 
legislative priority of the F.O.P.'s National Legislative Program. This 
was due in large part because of the success we have had in making our 
members aware of the reductions they face when they become eligible to 
apply for Social Security benefits. Since that time, the F.O.P. has 
been very involved in supporting various pieces of legislation in an 
effort to correct the unfairness of the current law and regularly 
update our membership as to our efforts. Our organization has also 
testified on this issue before the Subcommittee on Social Security in 
three of the last four Congresses: May 1998, June 2000 (submitted 
written testimony), and May 2003.
Ms. Harrison's response:
    As a coalition, our primary focus has been on the possibility of 
mandatory coverage of state and local government employees. Only 
recently has CPRS expanded its mission to include advocacy of GPO 
reform. To that end, we have produced a brochure explaining the issue, 
its history and the possible reform options. Frequent mention of GPO 
has also been made in the CPRS newsletter and on the coalition website. 
Mandatory coverage, however, remains our primary focus.
    Individual members of the coalition have handled education of their 
members in various ways. As an example, my own employer, the State 
Teachers Retirement System (STRS) of Ohio, has tried to educate Ohio's 
teachers about both GPO and WEP using an assortment of tools. STRS Ohio 
publishes quarterly newsletters for both active members and retirees. 
Explanations of GPO and WEP appear in these publications quite often. 
The system also provides a number of educational seminars and workshops 
for members to assist them in planning for their financial future. Both 
GPO and WEP are included in the curriculum. In individual counseling 
sessions and correspondence with our members, we provide the GPO and 
WEP explanatory sheets produced by the Social Security Administration.
    I have been with STRS Ohio for 21 years. It seems to me we have 
been talking about GPO and WEP with members for all of that time and 
longer. I think the problem of lack of awareness by workers is one of 
human nature. Until something affects us directly, we tend not to pay 
attention to it or read the information provided about it.
Question from Chairman E. Clay Shaw, Jr. to Mr. Charles L. Fallis, Ms. 
 Donna Haschke, Mr. William J. Johnson, Mr. Chuck Canterbury, and Ms. 
                            Teresa Harrison

Question: Do you believe the Social Security Statement misleads many 
public employees? If so, what changes to the Social Security Statement 
would you recommend?
Mr. Fallis's response:
    While the Social Security Statement may not intentionally mislead 
future beneficiaries, the two minor references (page 2 and page 4) to 
the offsets and who is affected by them are general at best, and, I 
believe, easily overlooked by the vast majority of individuals who look 
first and foremost for the ``estimated benefits'' amounts cited. 
Nowhere does this statement issue a warning to public service 
employees, nor does it provide them with an estimate of the amount of 
their expected Social Security income they stand to lose if affected by 
the GPO or WEP. When they visit their Social Security district offices 
to enroll or get further information, they often encounter 
representatives who do not have enough information to be of assistance. 
I recommend specific training of the Social Security managers and 
representatives on the offsets; their effect on one's Social Security 
benefit and how they can assist individuals in calculating their 
expected income. There should be an exchange of information between the 
Office of Personnel Management (OPM) and the Social Security 
Administration (SSA) in order to alert beneficiaries on this income 
reduction years before the scheduled retirement date. Agency human 
resource offices should take a more active role in informing employees 
early in their careers about the possible effects of the GPO and the 
WEP.
Ms. Haschke's response:
    Yes, the statement is misleading. One recommendation is that a 
disclaimer should be added alerting employees in GPO and WEP states 
that their benefits could be adversely affected. This is especially 
true for second career teachers and public employees who have worked in 
the private sector, paid into Social Security, and do not know the 
impact the GPO and WEP may have on their retirement benefits.
Mr. Johnson's response:
    I do not think the statement is deliberately misleading, however, 
specific attention perhaps ought to be drawn to the potential impact of 
these provisions on the recipients.
Mr. Canterbury's response:
    The Social Security Statement is not misleading, but it is not 
entirely clear as to the individual impact of the GPO and WEP benefit 
cuts, nor does it indicate if the individual is affected by them. The 
language on the sample Social Security Statement on the website of the 
Social Security Administration related to this point is as follows:
    ``(3) Your benefit amount may be affected by military service, 
railroad employment, or pensions earned through work on which you did 
not pay Social Security tax. Visit www.socialsecurity.gov/mystatement 
to see whether your Social Security benefit amount will be affected.''
    The affected employee must research how his benefits will be 
affected, and he may not do this until he begins to plan his retirement 
at the end of his working career.
    The F.O.P. would advise making the information on the Social 
Security Statement more clear by emphasizing that State and local 
employees face a reduction in Social Security benefits. Perhaps a 
supplemental Statement, similar to the special insert provided to those 
aged fifty-five (55) and older, could be provided to all State and 
local employees, explaining how the WEP and GPO will affect them and 
their families.
Ms. Harrison's response:
    The coalition has heard anecdotal evidence of public employees 
being misled by the Social Security Statement. State and local 
government workers who will be affected by GPO and WEP receive benefit 
projections in the statement that do not reflect their special 
situation and are, thus, inflated. The only hint in a four-page 
document that the estimates may be inaccurate is a cryptic sentence 
that cautions that, ``Your benefit amount may be affected by . . . 
pensions earned through work on which you did not pay Social Security 
tax'' and an instruction that the reader log on to the Social Security 
Administration Web site. This simply is not enough. People look at the 
dollar projections, not the 2,500-plus words of fine print.
    While it is probably not possible for SSA to account for the 
effects of GPO and WEP in the benefit projections sent to workers who 
will be affected by these measures, it should provide the caveat about 
possible benefit reductions more clearly on all statements. At the very 
least, the sentence quoted above should be recast to reflect that 
government workers may experience sharp decreases in benefits and it 
should be prominently displayed directly above or below the benefit 
projections, not buried in text, as is now the case.
    It is worth noting that SSA does provide good information about GPO 
and WEP on its Web site. This, however, is unlikely to have the same 
impact as information that is mailed directly to people's homes.
Question from Chairman E. Clay Shaw, Jr. to Mr. Charles L. Fallis, Ms. 
 Donna Haschke, Mr. William J. Johnson, Mr. Chuck Canterbury, and Ms. 
                            Teresa Harrison

Question: Most of the organizations testifying at the hearing advocated 
repeal of the GPO and WEP. However, this would be extremely costly and 
would cause Social Security to run cash flow deficits and exhaust the 
trust funds more quickly. Given Social Security's and the government's 
financial pressures, are there other options for reform that you could 
support?
Mr. Fallis's response:
    As stated in my testimony, NARFE supports repeal of these offsets. 
However, we are cognizant of the political and fiscal cost of repeal. 
That is why I concluded my statement by stating, ``But change is 
essential and can no longer be put off. We must get legislation 
reported out and onto the floor of the House to allow Members of 
Congress to debate and decide this issue.'' Toward this end, I 
reiterate my pledge that ``NARFE stands ready to work with you and the 
Members of this Subcommittee to find an acceptable solution to this 
growing dilemma in the Social Security system.'' Several years ago 
Congress elected to repeal the Social Security earnings test for those 
65 and over, in consideration of a changing society and workplace 
needs, despite the considerable cost to the System. Today, Congress 
should review the relevance and hardships imposed by the admittedly 
arbitrary offsets of the GPO and the WEP, recognizing that fairness is 
not always free.
Ms. Haschke's response:
    NEA and the TSTA support full repeal of the GPO and WEP. The reason 
most organizations testified for the repeal of the GPO is because of 
the inequity of benefits being denied to the spouses of public 
employees. Part of the reason Social Security will have cash flow 
problems in the future is because the federal government has repeatedly 
used Social Security funds for other programs and to balance the budget 
rather than allow them to accrue the necessary benefits that will need 
to be paid.
Mr. Johnson's response:
    NAPO recognizes the difficult decisions to be made. As our written 
testimony indicated, we have supported (and do support) efforts to 
modify the GPO and WEP, lessening the severity of their impact, while 
we look forward to a day when both provisions may be entirely done away 
with.
Mr. Canterbury's response:
    The Fraternal Order of Police appreciates the complexity of this 
issue and the financial pressures faced by the Social Security trust 
fund. However, we do not see any compelling reason why State and local 
employees should have their benefits cut because a Federally mandated 
program is managed into periodic solvency crises. Nor do we agree that 
restoring fairness to the system spells fiscal doom for the Social 
Security trust fund.
    It is not right or fair to perpetuate inequitable reductions on 
benefits earned by public employees in order to extend the life of the 
trust fund for a few extra years. After all, the State and local 
governments who chose not to participate in Social Security did not 
create this problem, nor did the employees who do not pay into the 
system. Penalizing them is not a solution in the long or short term.
    Any Social Security reform considered by Congress must include a 
repeal of the GPO and WEP and must reject any scheme to mandate 
participation in Social Security by those local and State government 
employees currently outside the system.
Ms. Harrison's response:
    As an organization, CPRS remains concerned first and foremost about 
the far greater impact on state and local governments and public 
employees from mandatory coverage. That being said, we also understand 
the detrimental impact that GPO, in particular, has on retirees, 
especially women, at the lower end of the income scale. CPRS would 
support some adjustment to the GPO formula that would lessen the offset 
for those lower-income retirees. We fully understand that this is an 
issue for both public and private sector workers.
Question from Chairman E. Clay Shaw, Jr. to Mr. Charles L. Fallis, Ms. 
 Donna Haschke, Mr. William J. Johnson, Mr. Chuck Canterbury, and Ms. 
                            Teresa Harrison

Question: Public servants feel they are treated unfairly under Social 
Security because they are paying into a public pension instead of 
Social Security. However, your organization, and others that testified, 
opposed mandatory Social Security coverage for newly-hired State and 
local workers for several reasons, such as the government pension plan 
meets employees' special needs, especially with regard to early 
retirement, and mandatory coverage could jeopardize the pension plan's 
funding. What would your organization think about allowing State and 
local workers in jobs not covered by Social Security to voluntarily 
choose Social Security coverage on an individual basis, where employees 
would pay both the employer and employee portion of the payroll tax?
Mr. Fallis's response:
    NARFE does not have a position on mandatory Social Security 
coverage and did not reference this non-applicable issue in our 
testimony.
Ms. Haschke's response:
    NEA's support of full repeal of the GPO and WEP should not in any 
way be interpreted as support for requiring public employees to 
participate in Social Security. NEA strongly opposes mandatory or 
voluntary coverage. Mandatory or voluntary coverage of public employees 
would also increase the tax burden on public-sector employers. 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. Mandating or allowing voluntary coverage 
of public employees will not solve the Social Security system's 
financial difficulties. The amount of money gained by mandating or 
allowing voluntary coverage would be relatively small and would not 
solve the long-term Social Security crisis.
Mr. Johnson's response:
    In general, we would oppose this idea. We believe that many 
employers would exert pressure on employees to opt in, believing that 
this would save the employer money. For the vast majority of our 
members, it would also be a foolish choice, frankly, to forego the 
benefits of the average police retirement system in exchange for Social 
Security coverage.
Mr. Canterbury's response:
    Public employees feel they are treated unfairly, not because they 
participate in a public pension plan, but because Federal law cuts 
their benefits significantly if they worked or choose to work in a 
second job or career in which they were forced to pay a Social Security 
tax on that income. It should be no surprise that public employees are 
angry when they discover they cannot receive the full amount of the 
benefit for which they were taxed.
    The Fraternal Order of Police does indeed oppose mandating 
participation in Social Security for those currently outside the 
system. The President's Commission to Strengthen Social Security (CSSS) 
rejected the mandatory participation scheme in its final report issued 
on 21 December 2001, and we believe Congress should do likewise.
    To answer the last part of your question, I do not understand how 
allowing State and local employees the option to pay both the employee 
and employer portion of the payroll tax, which amounts to an additional 
12.4%, in order to participate in Social Security solves the problem 
for those employees who elect to remain outside the system. These 
employees would still be penalized if they worked in a second job or 
had a second career in which they were forced to pay into Social 
Security because the WEP and GPO would still apply.
    I am concerned that Congress continues to look for ways to save 
money for the Social Security system by cutting benefits earned by 
State and local employees and to increase the amount of revenue they 
can generate from these employees. State and local employees are not a 
cash cow to be milked for the Social Security trust fund. The Federal 
government must find a way to honor their commitment to these men and 
women, not find a loophole to accrue ``savings'' at their expense.
Ms. Harrison's response:
    CPRS has not considered a situation where it would be possible for 
employees to elect, on an individual basis, to pay the 12.4 percent tax 
in order to participate in Social Security while continuing to make 
their full contribution to their state or local pension system. The 
critical issues would be 1) that there be no obligation on the part of 
the employer or the public pension system to fund any of the employee's 
Social Security contribution; 2) that the employee not be permitted to 
opt out of the public pension system; and 3) that individual employees' 
participation in Social Security not have a negative impact in any way 
on the funding of state and local pension plans or on the other members 
of the plans. We would have a major concern that individual 
participation could be the first step toward mandating coverage in the 
future for all public employees. Given this concern, together with the 
inability of the vast majority of public employees and employers to 
accept this additional financial obligation, CPRS may well oppose 
voluntary participation on an individual basis.

                                 

    [Submissions for the record follow:]
             Statement of Paula Adams, The Woodlands, Texas
    Thank you for giving those of us who have worked both in the 
private sector and in public service a chance to voice our objections 
to the WEP, which for me totally eliminates any Social Security I have 
earned in the 21 years of working full and part time (mainly teaching) 
outside the public school arena. I feel that it is an injustice to me 
to have paid into both systems only to find out that I cannot collect 
from Social Security. The way I have split up my employment between 
public and private sectors, I will not have enough money to even 
subsist on only my teacher retirement (20 years service credit in TRS). 
I feel that I have been misled and treated unfairly, considering the 
fact that I have not made enough money during my career to have a 
substantial saving upon which to draw upon for retirement. Those of us 
who have gladly given up a great deal in order to work in a public 
service capacity should not be penalized for doing so. Thank you again 
for looking into this injustice.

                                 
               Statement of Anna Allebach, Houston, Texas
    I am a school librarian at the Spring Branch Education Center in 
Spring Branch ISD. This is my 17th year in education and I have 
completed my 40 quarters in the private sector. I sincerely request 
that you help me as I have been a productive, contributing member to 
our society.
    Presently I qualify to receive social security benefits two ways. 
As mentioned above, I have completed 40 quarters of work in the private 
sector. I also am a widow of nine years who has raised a child by 
myself. This has been no small task as my child has been diagnosed with 
Attention Deficit Disorder and mental illness. I have worked hard to 
take care of her and to provide for her future so that she will not be 
a burden on society. I have also prepared for my retirement by securing 
income from both social security and teacher retirement. Now, there is 
legislation to remove the income I am depending on for my future 
retirement.
    If you had told me that I would not be allowed to collect both when 
I retired, I would say that I had selected that option and I must face 
the consequences of my actions. But, that was not the case. I worked 
all those years preparing for my retirement, and now the government is 
trying to rob me of my hard-earned benefits. When I ran a company, I 
led by example. Are the representatives and senators willing to be good 
leaders and reduce their retirement benefits by at least one-third?
    If the government decides to remove my benefits, it should at least 
return all the assessed money plus interest it has deducted from my 
paychecks. I had no option in contributing and that is my money. I will 
gladly invest it so that I can have additional income when I retire.
    Also, if I use all my savings, there will be no money left for the 
care of my child when I am deceased. The government will have a 
penniless person to support in an institution. Is that effective money 
management?
    I think our government needs to think twice about the long-term 
consequences of its actions regarding the GPO and the WEP. Today's 
quick fix may be tomorrow's horrendous headache.

                                 
            Statement of Judith Faith Almond, Spring, Texas
    I have taught in Spring ISD for 25 years. I have worked hard enough 
to earn teacher of the year recognition in my school and at the 
district level. I have loved my work. I will retire in 3 years.
    After retirement, I have to get a job so I can eventually have 
Medicare coverage because, after all of these years teaching in Texas, 
I will retire without any.
    I have two questions. What is wrong with this picture? What can we 
do to fix it?

                                 
              Statement of Andrea Andrews, Houston, Texas
    Thank you for giving me this opportunity to write to you. I am a 47 
year old single mother of two children. Teaching is my second career. 
This is my 18th year with my school district. I work at a high school 
for at risk youth. Prior to working for my school district I worked in 
private industry, paying my Social Security taxes. I chose to become a 
teacher when my children were in elementary school. I maintained my 
full time job while taking the necessary classes to earn my teaching 
certificate.
    I have never had a time in my life, since the age of 15, that I was 
not working and paying taxes (including Social Security). As the oldest 
of five children (my mother was a single parent and a teacher), I often 
worked two and sometimes three jobs in order to pay my way through 
college (while paying my taxes including Social Security). I worked up 
to the time of delivery of each of my children and returned to work as 
soon as my doctor released me (while paying my taxes including my 
Social Security). As a divorced parent I have always had to maintain a 
second income. I have worked nights, sometimes until 4:00 a.m. taking 
inventory (paying my Social Security tax); I have taught GED classes 
for court appointed chemically dependent youth (Social Security was 
deducted from my paycheck), and I have worked for a private company 
tutoring adults for their GED (Social Security was deducted from my 
paycheck).
    I make these points because I have paid my taxes to Social 
Security. According to an email that I received from Kay Bailey 
Hutchison, ``The Windfall Elimination Provision (WEP) was enacted in 
1983 to remove an unintended advantage that workers would receive if 
they earned full benefits from both their non-Social Security-covered 
employment and from Social Security.'' Windfall is a noun that means 
unexpected. I paid into my Social Security and I expected to receive 
it. ``I did not win the lottery!'' People who work in private industry 
receive both their retirement money from their companies as well as 
their Social Security! The difference is that our retirement money goes 
into TRS (we do not have a choice) instead of a 401K plan, and we earn 
much less interest on our TRS than in a 401K. For your Committee to 
take away my Social Security benefit, that I have earned, is STEALING!
    Why have you targeted teachers, civil servants, who can least 
afford to retire at any age, to hurt financially? (Our retirement is 
certainly less than members of Congress.) Where in private industry 
does a person have to work until their age plus their years of service 
have to equal 80 before they can retire at full benefit? Additionally, 
our salaries are so low, that most of us cannot afford to invest in 
other types of retirement accounts. Most of us will never retire; we 
will gradually be reclassified into undesirable positions until our 
positions are eliminated. Welfare has never been a part of my 
vocabulary and I certainly don't want it to become a word in my 
vocabulary in my retiring years.
    This May will be the last time I receive a child support check 
($300.00). My oldest child is my daughter who is in her second year of 
college. Her career plan was to become an elementary school teacher. 
Because you have chosen to treat teachers like second class citizens, 
she has changed her career choice. Additionally, she has made it her 
business to keep her many friends (many of whom intended to become 
teachers) informed as to the latest developments in the attack on the 
teaching career. She has been working since the day she turned 16 
(paying her taxes including her Social Security tax). Because I am a 
single parent, she must maintain employment in order to pay her way 
through college. She must live at home and commute. My teaching salary 
does not allow her to enjoy the benefit and experience of living on 
campus. On the other hand, it is my same teaching salary that prevents 
her from receiving the same financial aid that the children that I 
teach receive (because most of them are on welfare!). My second child 
is my son who is a senior in high school and thinks that I am already 
selling myself short by being a teacher. My purpose in telling you 
these things is to point out that we are already sacrificing 
financially in order to teach. This financial sacrifice has a trickle 
down effect. Our children are making alternative career choices. We 
teach because we have chosen to teach. We did not choose to be 
financially whipped. We should have chosen another career or should now 
choose to leave teaching? We should look for another state to teach in?
    The state of Texas wants exemplary schools. You can't have 
exemplary schools if you do not have exemplary teachers. Private 
industry pays their best and their brightest, they do not use them as 
pawns to balance their budget!
    Please do not vote for anything that will interfere with my ability 
to receive the Social Security benefits that I have paid into and am 
entitled to.

                                 
                Statement of Diana Apsey, Houston, Texas
    I am finishing my 27th year of teaching, 22 of which have been in 
Texas. Because I will retire from teaching here in Texas, I will lose a 
major portion of my social security benefits. Before coming to Texas, I 
taught for 5 years in Indiana where I paid social security taxes. While 
here in Texas, during the summer, I taught at Rice University where I 
paid social security taxes. I have plenty of quarters to qualify for 
social security benefits--that's not the problem. Rather, simply 
because I teach in Texas, my benefits will be reduced because of 
something called ``windfall.'' As if teachers ever are part of 
windfall!
    My teacher friends in other states have both teacher pensions and 
full social security benefits. My aunt, who was a full-time homemaker, 
now gets half of her husband's benefit even though she didn't pay in at 
all! And yet, my benefits are going to be reduced because I'm going to 
retire in Texas! This bill is most unfair and should be repealed!
    Thank you for listening. Please repeal this law so that teachers, 
police and firefighters across the country who are affected can enjoy 
the same benefits as their colleagues.

                                 
            Statement of Karen Arduini, Rock Falls, Illinois
    I have been teaching in Illinois for 11 years, but began my career 
in education later in life. I had a 20 year career in industry prior to 
switching to education and paid my fair share into Social Security. I 
have all my quarters paid and qualify for Social Security benefits when 
I retire. But, due to the Windfall Exclusion, my benefits will be 
drastically affected if not completely taken from me. I will, also, not 
be able to work all of the years required to receive full TRS benefits 
at retirement, due to starting teaching at an older age. I am really in 
fear of my position at retirement. Please, readdress this issue and 
realize the unfairness of depriving people of earned and paid for 
Social Security benefits simply because they are teachers. If a teacher 
never paid in to S.S., I can understand not qualifying, but the 
reasoning does not hold up for those of us who are paid up.
    Other government employees receive both their retirement and S.S. 
benefits, such as military personnel and those under IMRF.
    Thank you for your attention to this issue and for giving me a 
place to voice my serious concerns.

                                 
               Statement of Harriet Arvey, Houston, Texas
    Thank you for giving me this opportunity to write to you concerning 
the Social Security issues currently before you. I am a veteran 
educator of 27 years. I have dedicated the majority of my career in 
public service to working in schools with at-risk populations and have 
faced a variety of challenges.
    I am eligible to draw from my ex-husband's social security in 
retirement and through my additional work, I have accrued enough 
quarters to qualify for Medicare benefit when I retire in a few years, 
but the Social Security offset will penalize these earnings. I never 
fully realized what this meant until a close friend retired from a 
career in education several years ago.
    My friend spent many years working in the private sector and earned 
many quarters of credit with Social Security. She stayed home to raise 
her children for almost 20 years. When she returned to the working 
world after they were grown and she was divorced, she returned to a 
career working for the public schools. Since my friend entered the 
teacher retirement system so late in her career, she could not begin to 
have enough money for a comfortable retirement without working well 
into her 70's. Imagine her horror when she was told that she would 
receive far less due to the Social Security offset. She worked hard for 
every penny of both funds and foresaw a monthly income which would make 
every month a struggle. Just as she was set to retire, she had a 
catastrophic stroke and her family had to find a way to pay for a care 
facility and medicine as well as her other needs. Medicare funds were 
available because she had opted for the offset to ensure this. In the 
alternative scenario, she would qualify for Medicaid only after her 
modest savings were spent down.
    Many of our newest recruits to education are people who have many 
years of Social Security income saved. In times when there are critical 
teacher shortages and we are trying to attract seasoned professionals 
with a diversity of experience to a career in the classroom we must 
make this choice attractive. How attractive is a second career in 
education, which forfeits these hard-earned funds?
    In the next few years, many baby boom educators will retire. We do 
not feel that we are asking for funds that we have not earned. Our 
retirement income, modest at best, along with Social Security will 
simply make it possible for us to keep up with rising costs without 
penalizing us for many years of additional work. We are proud of our 
years of service and want to remain self-sufficient. It is in the 
interest of Congress to help us in that goal. Please repeal the laws 
governing the GPO and WEP and consider real reform for Social Security.

                                 

                    Association of California School Administrators
                                       Sacramento, California 95814
                                                       May 12, 2003

The Honorable E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security
U.S. House of Representatives
Rayburn House Office Building, B-316
Independence Ave. & S. Capitol St., SW
Washington, DC 20515

Dear Mr. Shaw:

    The Association of California School Administrators (ACSA) is 
pleased to submit the attached information for the May 1 hearing of the 
House Ways and Means Subcommittee on Social Security. We are submitting 
the attached testimony for consideration by the Subcommittee on the 
issue of mandatory Social Security and its affects on schools.
    In the fall of 2001 the Hemet Unified School District in Riverside 
County, California submitted the attached testimony to the President's 
Social Security Reform Commission. This school district of 18,000 
students estimated that requiring mandatory participation of new 
teachers and principals in the Social Security system would have an 
ongoing impact to the school district budget of over $2 million. This 
would be money that would otherwise be used to support direct classroom 
instruction and services.
    The Association of California School Administrators opposes any 
reforms to Social Security that would require mandatory participation 
by California educators.
    We appreciate the opportunity to submit this testimony to your 
Subcommittee on this important issue. If we can provide any further 
information, please contact us.

            Sincerely,
                                                Karen Stapf Walters
                                                 Assistant Director
                                             Governmental Relations

                               __________
A California School District's Response to the Proposal to Include the 
 California State Teachers Retirement System into the Social Security 
   System Being Considered by the President's Social Security Reform 
                               Commission
    The Hemet Unified School District located in Riverside County 
serves 18,000 students in 20 schools throughout the rural and suburban 
communities within boundaries of approximately 730 square miles. 
Student enrollment reflects the ethnicity of the communities served by 
the District with 30 percent Hispanic, 3.5 percent African-American, 3 
percent other minorities, and 63.5 percent White. 67 percent of the 
students reside in families that qualify for the Free and Reduced Lunch 
program. The District is growing at an annual 2 to 5 percent growth 
rate in student enrollment. During the past five years, over 60 percent 
of the current certificated personnel have been employed. During the 
1999-2000 school year, the following chart describes certificated 
staffing and a higher than average state pupil, ratio.


                                      Chart 1 Certificated Staff--1999/2000
----------------------------------------------------------------------------------------------------------------
                                                         District                          Statewide
         Full Time Equivalent Staff          -------------------------------------------------------------------
                                               FTE *    Pupils per FTE Staff      FTE       Pupils per FTE Staff
----------------------------------------------------------------------------------------------------------------
Administrators                                  41.5                  405.1     21,652.9                  274.9
Pupil Services                                  45.5                  369.5     19,886.7                  299.3
Teachers                                       774.1                   21.7    284,628.2                   20.9
----------------------------------------------------------------------------------------------------------------
* FTE: Full Time Equivalent
Source: California Department of Education, Educational Demographics Unit--CBEDS


    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.
    During this past year, the District's general fund budget reached 
$113,366,574, as presented in Chart 2. Prior to California's Education 
Reform and Accountability initiatives, the District received revenues 
with greater local discretion. This has changed significantly with 
funding being restricted to specific purposes.


                                            Chart 2 Historical Budget
----------------------------------------------------------------------------------------------------------------
                                                    Historic     Historic
                                                     Budget      Percent    Budget 2001    Percent    Difference
----------------------------------------------------------------------------------------------------------------
Revenue Limit Sources                             $ 87,743,607     77.4%   $ 76,013,481     67.1%   $11,730,126


Federal Revenues                                     6,304,463      5.6%      6,519,660      5.8%      (215,197)
Other State Revenues                                17,453,291     15.4%     23,551,883     20.8%    (6,098,592)
Other Local Revenue                                  1,865,213      1.6%      7,281,550      6.4%    (5,416,337)
  Total Revenues                                  $113,366,574    100.0%   $113,366,574    100.0%
----------------------------------------------------------------------------------------------------------------


    The District's unrestricted budget reflects 82.9 percent for 
personnel salaries and health and welfare benefits. All other 
expenditures represent 17.1 percent of the budget.
    The projected benefit cost increase for new certificated personnel 
to participate in the Social Security System is projected within eight 
years to have an ongoing impact of over $2 million in lost unrestricted 
revenues to support educational programs, services, and to maintain 
competitive personnel compensation programs.
    The Governing Board at their September 4, 2001 meeting approved the 
2001/2002, adjusted District Budget. The District expects to receive an 
increase of $4.8 million unrestricted revenue. However, anticipated 
increases in expenditures to fund the cost of utilities which has risen 
due to the ``energy crisis''; the cost of the operation of a new 
school; additional cost of special education programs and services; and 
the cost of employing new teachers, and staff leaves only $364,000 
available for unrestricted uses.


               Chart3 UnrestrictedSalariesandBenefitCosts
------------------------------------------------------------------------


------------------------------------------------------------------------
      Salaries and Benefits:                                      82.9%
      All Other Expenditures:                                     17.1%
------------------------------------------------------------------------



    Chart 4 Projected Impact of Social Security System Participation
------------------------------------------------------------------------

------------------------------------------------------------------------
        2002:                                       $   198,216
        2003:                                       $   404,361
        2004:                                       $   618,751
        2005:                                       $   841,717
        2006:                                        $1,073,602
        2007:                                        $1,314,762
        2008:                                        $1,565,569
        2009:                                        $1,826,408
        2010:                                        $1,097,680
------------------------------------------------------------------------



    Chart 5 2001/2002 Adopted Budget Revenue and Expenditure Summary
------------------------------------------------------------------------

------------------------------------------------------------------------
Unrestricted Revenue Increase--COLA                           $2,890,000
Growth Revenue Increase                                        1,950,000
Total Projected Unrestricted Revenue Increase                 $4,840,000
H&W Cost Increase                                             $1,380,000
Step and Column & Professional Growth                          1,130,000
Energy Cost Increase                                             836,000
Growth Teachers and Staff                                        700,000
New School Startup                                               350,000
Special Education                                                 80,000
Total Projected Expenditures                                  $4,476,000
Net Available for Salary Settlement                          $   364,000
------------------------------------------------------------------------


    A public school district is a human organization. To be successful, 
it must have the ability to attract and retain well-qualified teachers 
and other certificated personnel. In light of the teacher shortage, 
this proposal will exacerbate this problem by reducing our ability to 
attract teachers from outside California as well as within the state.
    In closing, the 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. Succinctly, this proposal ``drills a hole in the educational 
boat'' with the potential to sink our efforts to provide quality 
programs and services that graduate young adults who possess the 
knowledge and skills to be responsible, contributing members of our 
society.
    Thank you for taking this testimony into consideration as you 
develop your recommendations for the President's consideration to 
reform the Social Security System.

                                 
     Statement of Sheila Fields, Association of Texas Professional 
                        Educators, Austin, Texas
    The Association of Texas Professional Educators (ATPE) represents 
more than 100,000 educators in Texas. We have been advocating for 
educators for 23 years and are currently the largest professional 
educators' association in Texas and 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 individuals to choose the association they feel represents 
educators' interests; and providing the best education possible for the 
children of Texas. We encourage you, committee members, to consider the 
following issues as you determine the future of the Government Pension 
Offset (GPO) and Windfall Elimination Provision (WEP).
    ATPE supports amending the GPO, which reduces spousal and widow/er 
Social Security benefits for public employees that participate in 
public pension systems. We recommend that public school employees be 
excluded from the GPO. ATPE also supports amending the Windfall 
Elimination Provision, which arbitrarily reduces Social Security 
benefits for Texas educators vested in Social Security to exclude 
public school employees. ATPE also opposes mandating Social Security 
coverage for public school employees not currently covered as a means 
to address the controversy on these offset rules.
    It is mandatory for Texas public school employees to participate in 
the state Teacher Retirement System (TRS) and contribute 6.4 percent of 
their pay to the system. Currently, only 45 of Texas' public school 
districts participate in Social Security. Therefore, the large majority 
of Texas educators do not work in jobs covered by Social Security and 
are affected by the GPO.
    The state of Texas faces a teacher shortage approaching 40,000 and 
a drastic budget deficit projected for the next biennium. Several 
proposals being made at the state level to reduce benefits and 
compensation for both active and retired teachers coupled with almost 
50,000 educators becoming eligible for retirement during the next 
decade will increase the number of vacancies in Texas classrooms 
exponentially.
    ATPE believes that amending the GPO to exclude public educators 
will bolster teacher morale and encourage qualified educators to remain 
in the classroom. ATPE also believes that such an exemption could be 
touted as a benefit used to attract new educators to the profession. It 
is for these reasons ATPE supports any amendments to the Social 
Security code that lessen the effect the GPO has on public school 
employees, including the complete repeal of the GPO.
    Similarly, the WEP arbitrarily reduces Social Security benefits for 
individuals who are fully vested in Social Security and are also 
eligible for a government pension such as TRS. The WEP was enacted to 
address inequities for individuals who worked in positions not covered 
by Social Security who benefited from the weighted formula used to 
provide low-income workers with a higher percentage of their pre-
retirement earnings.
    However, the WEP uses an amended formula to figure Social Security 
benefits based on the number of years a person paid into Social 
Security rather than the amount the person will receive from his 
government pension. That means that a person who worked in a Social 
Security covered job for 20 years and is 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 will receive a government pension benefit of $1,200 
per year. Under this formula, a person who merely meets the minimum 
eligibility requirements for a government pension could face the full 
effect of the WEP.
    ATPE believes this provision acts as a deterrent to talented, 
private sector employees who are vested in Social Security and are 
interested in pursuing teaching as a second career. Furthermore it 
arbitrarily punishes those who have worked to become vested in both 
Social Security and a government pension. ATPE believes that amending 
the WEP to more accurately accomplish its original intent, or exempting 
public school employees altogether would also serve as a useful tool to 
address the teacher shortage.
    Finally, it has been suggested that mandating all public school 
employees to participate in Social Security would be an effective 
solution to the controversy surrounding the GPO and WEP. ATPE 
emphatically disagrees and opposes mandating Texas educators into the 
Social Security system. As previously stated Texas is facing a $10 
billion budget deficit for the next biennium, and already several 
proposals are being considered at the state level to reduce benefits 
and compensation for both active and retired teachers. Texas is one of 
13 states where Social Security participation is not required of all 
public school employees. In the 13 states where school employees are 
not covered by Social Security, contribution rates, retirement formula 
multipliers, and cost-of-living adjustments (COLAs) are higher than in 
Social Security states. These higher rates are established by state 
legislatures to make up for the lack of this important federal 
retirement benefit.
    ATPE believes the additional fiscal demands that mandatory Social 
Security coverage would require of the state would ultimately be 
reconciled through smaller state contributions to the TRS and larger 
contributions from both active and retired educators. This would 
produce additional strain on an already overworked and under-
appreciated profession and could have a devastating effect on the 
actuarial soundness of the TRS fund, reducing benefits for TRS members.
    The impact your work could have within the teaching profession is 
phenomenal. Educators provide our future leaders with the tools 
necessary to become successful and independent. Please support 
amendments to the GPO and WEP that lessen the effect on our teachers 
while protecting the retirement benefits they worked so hard to secure 
and assist our districts in recruiting and retaining the best and 
brightest individuals to teach our children.
    Thank you for the opportunity to provide this input.

                                 
            Statement of Eldon R. Aupperle, Toulon, Illinois
    I am a victim of the work discrimination in the fact that I am 
eligible for social security and have my benefits cut at least 50%. 
I've paid my Social Security taxes and deserve what I have earned--not 
50%.
    I support the passage of H.R. 349--Social Security Offset/Windfall. 
Please bring an end to this unfair and discriminatory policy that 
exists today. We worked hard for our retirement and deserve it the same 
as others.

                                 
            Statement of Liz Baiardi, Trumbull, Connecticut
    I've worked as a Ct. teacher for 17 years and as I approach my 
retirement, I realize that the money I earned by working a second job 
to put 2 children through college (and to which I paid many thousands 
of dollars--for social security) will not accrue to me due to the 
social security offset.
    I will not receive a full Ct. teacher's pension and the social 
security offset will cut my social security to mere change! What has 
happened to the money I invested in social security, I ask.
    This has been a lose-lose situation for me.
    Please pass H.R. 594 or my hard lifelong labor will amount to a 
pittance.
    Thank you.

                                 
             Statement of James P. Balzer, Quincy, Illinois
    I am writing concerning the discrimination experienced by retired 
teachers regarding Social Security Benefits. I worked as a Farmer and 
my wife as a nurse along with my experiencing a 30 year career in 
Education at the High School and Community College Level. My wife Pat 
and I worked in production agriculture, nursing and teaching, all of 
which are relatively low income services but these services are 
probably more important to a healthy society than a very high 
percentage of wage earners. We would appreciate receiving the benefits 
of Social Security earned from these services.

                                 
         Statement of Patricia Bauman, Sun City Center, Florida
    I taught school in Ohio for 34 years and then retired to Florida. 
It is very difficult to make it on my pension alone. I thought I would 
be able to collect social security from my husband. After all I was 
contributing through him as I was helping to pay our monthly bills. My 
sister who never worked a day in her life can collect social security. 
My neighbor who was raised in Germany and never contributed to our 
country can collect social security through her husband. I guess I 
shouldn't have devoted all those years to hundreds of children. I 
didn't encourage my own two children to be teachers as there is little 
money in it and no respect for what you do and give. It's a good thing 
I love children.
    Think of the amount of money social security would bring into the 
state of Florida if those other 15 states could collect?
    Please repeal the WEP offset.

                                 
        Statement of Azel Hill Beckner, Bowling Green, Kentucky
    We must protect the retirement pensions of all the people. The 
government workers deserve the same protection as the people in the 
private sector.

                                 
           Statement of Mary Kathleen Benore, Sylvania, Ohio
    I am writing in regarding the offset/pension situation. In November 
I received a letter from Social Security that they needed an update on 
my state pension which is $636.00 per month. I took it in to make sure 
everything was alright. When I applied for SS at age 65, I informed the 
lady taking my application that I was being divorced from the second 
husband in four months and that I had only been married to him for five 
years. She said not to worry because I could file on the first husband 
who had left me after 36 years for another woman. I always thought that 
I was collecting on the first husband, but found out when I went in to 
update that I was collecting on the second husband. I INFORMED THEM 
THEY WERE PAYING ME ON THE WRONG HUSBAND. They subsequently sent me a 
letter telling me I owed them $12,239.00. When I explained that I had 
told the original person taking the application they just held up their 
hands and said, ``you can't prove we told you that, and we do not want 
to hear `fair,' or `whose fault.' '' As a result my social security has 
been suspended for five years, and I will receive a bill for medicare 
quarterly. They explained that if I was poor they would not make me pay 
it back. I cannot just pay the difference in the two husbands' amount 
because they can only go back six months. THIS MEANS THAT FOR TEN YEARS 
I HAVE BEEN DENIED SOCIAL SECURITY ON EITHER HUSBAND. The important 
thing here is that they were already taking two/thirds of my social 
security because of the offset. It seems that abandoned wives who went 
to work instead of collecting welfare are being deprived simply because 
they chose to go to work and make their own way. I finally got a job 
after standing in the unemployment line for two years (sometimes all 
day and sometimes outside in the cold because they couldn't get us all 
in the building) with the county, then the state and lastly, the City 
of Toledo. PLEASE SIR, THIS IS NOT RIGHT. WE NEED THIS OFFSET CHANGED, 
ESPECIALLY IN A CASE LIKE MINE WHERE MY CITY PENSION IS ONLY $636.00 
and I will not even be getting medicare except for paying it myself. I 
will be 76 years old in September. I was trying to get a job in the 
early 80's when Toledo and Detroit was virtually shut down. PLEASE 
HELP. My social security is only $146.00 per month to begin with, but I 
need it. Thank you.

                                 

                                                Sebring, Ohio 44672
                                                     April 24, 2003

Representative E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security
1102 Longworth House Office Building
Washington, DC 20515

Dear Representative Shaw:

    I am writing to you concerning the Windfall Elimination Provision 
(WEP) and the Government Pension Offset (GPO) because I am a victim of 
both--now the WEP and if my husband predeceases me, the GPO. I became a 
teacher at the age of 41 after working at various jobs under Social 
Security for 20+ years. I'm 64 years old and retired now. Little did I 
know the financial impact my decision to become a teacher at midlife 
would have on my retirement. I can only collect 40% of the Social 
Security I worked for and paid into for many years--a whopping $189.00 
a month. Worse yet, if my husband dies before me, I will collect NONE 
of the social security benefits he paid into for 30 years. I didn't 
teach long enough to receive a full teacher's pension--silly me, I 
always thought social security would help fill the gap. After all, I 
worked for it, didn't I? Wrong!
    I first found out about the WEP and the GPO when I talked to a 
Social Security representative on the phone. The statement of earnings 
I received in the mail led me to believe I would get the full amount 
shown. Wrong again! I wonder how many people get the big surprise when 
they receive their first Social Security check?
    I feel betrayed. What a terrible way to treat someone who dedicated 
half her work life to the education of children. I know the $250 
(approximately) a month I'm missing due to the WEP is small change to 
you but it would help me tremendously to get through the month, 
especially with the cost of health care for my husband and me through 
the State Teachers' Retirement System. I don't know how much I will 
lose in Social Security benefits if my husband dies first but I'm sure 
however much it is, I will miss it dreadfully.
    I know why both provisions were enacted--to prevent ``fat cats'' 
from double dipping but I wonder how many suffering little people there 
are for every one of them. These provisions particularly hurt single 
women but men are hurt by them, too.
    I know, too, that should these provisions be repealed (and they 
should be) it would be costly to the struggling social security system. 
But let's not save social security at the expense of dedicated public 
servants whose only mistake was to take a job outside the Social 
Security system for part of their work lives? Think of it as a boon to 
the economy--just like a tax cut.
    I am writing not only for myself but for all the people in the 
country who can tell similar stories. You will no doubt hear from many 
of them. It's time to right this terrible wrong that has been 
unwittingly done to people who have worked so hard serving the public. 
We are not double dippers, we are double workers and I emphasize the 
word WORKERS. We have given to the system. All we ask is to receive 
what is rightfully ours. Please listen to the many members of congress 
who have already signed on as co-sponsors of S. 349 and H.R. 594.
    Thank you.

            Sincerely,
                                                     Mary Bertolini

                                 

                                      Johnston City, Illinois 62951
                                                     April 28, 2003

The Honorable E. Clay Shaw, Jr.
2408 Rayburn House Office Building
Washington, D.C. 20515

Dear Congressman Shaw:


    I am writing in hopes that I can draw some attention to amending 
the Social Security act to repeal the Government pension offset and 
windfall provisions.
    I understand you are the Chairman of the Subcommittee which will be 
holding hearings. I would like to tell you my situation so you can see 
how important this change is for me and a very large majority of my co-
workers.
    I had worked under social security guidelines for thirty-five 
years. But just two months shy of my fiftieth birthday I found myself 
without a job due to downsizing. I was fortunate enough to secure a job 
a month later with Southern Illinois University, Carbondale, IL. The 
University does not pay into social security. I have contacted our 
local social security office and found that because I no longer pay 
into social security that when I retire the amount I receive from 
social security will be offset 2/3. So now I can not work long enough 
to get a sizable retirement from the university and will not get the 
amount of social security I once thought I would. Before taking the 
university job my social security statement indicated that I would 
receive full benefits, around $1,200.00. As it looks right now between 
both I might get $600.00 a month. I am very concerned for my future and 
many other people who do not even realize this situation exists.
    Please take this small example of the average person and the 
devastating affects the offset and windfall provisions are having. Any 
help you can be would greatly be appreciated. Thank you for your time.

            Sincerely,
                                                   Patricia L. Bird

                                 
              Statement of Mary Blackburn, Houston, Texas
    There are many of us women who have worked for a school district 
all of our lives. Some of us even have worked under social security and 
have our quarters on our own benefit. My own work record shows that my 
quarters are complete for social security. I also have 29 years in 
education. My husband was collecting a disability social security 
benefit up until this year. He died in September. He had been ill for 
11 years. He worked until 5 years ago before he was on disability. When 
my husband knew he had not long to live, he asked that I do whatever I 
could to get his benefit for which he had worked and struggled all of 
his life to ensure I receive. I only ask that other women like myself 
not be penalized because the state in which they may reside does not 
have the proper laws in place to ensure that fairness be there for 
people like me. If I had not worked in a Texas school district but 
somewhere else, and received a pension my social security would not be 
affected. Our state pensions should not be treated as a ``windfall.'' 
They are what we have ``EARNED.'' And, our husbands have earned the 
right to ensure we receive their hard-earned social security benefits. 
There should be no ``OFFSET'' involved.
    Thank you for the right to be heard on this very important matter.

                                 
           Statement of Kandice Boatwright, Sour Lake, Texas
    Thank you for giving me this opportunity to write to you. My name 
is Kandice Boatwright, and I have been an educator for 25 years. Of 
those 25 years, 12 years were spent teaching reading to middle school 
children in the state of Louisiana. For the last 13 years I have been 
teaching developmental reading and study skills to college students at 
Lamar University.
    For my first 12 years of teaching, I did not contribute to social 
security. Rather, my retirement went into the Louisiana Teachers 
Retirement fund. When I left Louisiana to move to Texas, I left my 
money in the retirement system there. After all, I was vested in the 
system, and I knew that one day I would get a small pension from it. 
For the past 13 years I have been contributing to social security as an 
employee of Lamar University. Even though I am on the low end of the 
pay scale at LU, I always thought I would be able to add my social 
security earnings to my small retirement from Louisiana and also what I 
have accumulated in a retirement fund while at LU. Now, at 52 years of 
age, I find that my social security will be reduced by 60% of my 
earnings in retirement from Louisiana.
    This seems grossly unfair to me that I should be denied my full 
social security benefit--something which I have contributed to for the 
past 13 years. No one ever asked me if I would like to proportionally 
reduce my social security contribution by the amount it will be cut 
under the present law. Needless to say, I feel cheated.
    It has always been my plan to return to public school teaching when 
my son reached high school. That will be next year. As a certified 
teacher of reading (as well as other disciplines) with a vast amount of 
experience, I feel I have much to offer to the youth of today--many of 
whom struggle with reading and comprehension problems. However, knowing 
how the social security system will penalize me for past earnings 
invested in a teacher's retirement fund as well as any future earnings 
from future employment in a state teacher's retirement fund, I am 
definitely rethinking my future.
    Furthermore, with the shortage of certified and experienced 
teachers today, I think it would be to society's advantage to recruit 
those individuals who have valuable skills that can be used in the 
classroom. How many of those individuals who have spent years working 
in the private sector will decide to join the teaching ranks when they 
realize their social security benefits will be slashed? I think most of 
these individuals will decide ``no.''
    Why should hardworking educators be forced to give up those social 
security benefits for which we have worked for and contributed to for 
so many years? I do not see any justice in this present system. I do 
not feel that I am ``double-dipping'' when I simply ask that I receive 
those benefits for which I have worked hard and contributed.
    I respectfully ask that members of the U.S. Congress repeal the 
GPO/WEP which is grossly unfair to schoolteachers, policemen, firemen, 
and other hardworking public servants.
    Thank you for your consideration in this very important matter.

                                 
              Statement of Carolyn Bond, Mendota, Illinois
    I am an Illinois teacher soon to retire from a small school 
district and am concerned that I will not be able to make ends meet 
unless I have the spousal share of my husband's social security. Please 
repeal this unfair provision of the social security law.

                                 
            Statement of Charlotte F. Bowen, Houston, Texas
    Thank you for giving me the opportunity to express my feelings on 
the effect of GPO and WEP. I am a grade level secretary at Northbrook 
High School in Houston, Texas. I entered the workforce in the school 
system 17 years ago after my husband lost his job and was unemployed 
for 2 years due to the collapse of the oil industry in 1986. I am still 
working at age 68 and my husband is working at age 70 as we attempt to 
recover from the financial damage of unemployment in 1986 and again 
with the recent stock market crash decimating our funds saved for 
retirement.
    My husband has paid the maximum social security taxes since he was 
22 years old except for the two years he was unemployed. Now as, we 
contemplate a modest retirement; we face this inequitable law that will 
take 2/3 of my Social Security Spousal Benefit away because of the 
modest Teacher Retirement System pension I have earned.
    Certainly, Congress could not have intended in 1983 to penalize the 
average worker in America with these pension offsets. Perhaps there are 
some highly paid government employees who will receive substantial 
government pensions and should rightly be the target of these 
``windfall'' laws. But do you really want to confiscate my Spousal 
Social Security benefit because I have worked 17 years out of necessity 
and earned a modest $600/month pension from the state.
    Please, demonstrate the sense of fairness for which America is 
famous and do not penalize the average person because they chose to 
work. If I had not been forced to enter the workforce after raising my 
children, I would be entitled to the Spousal benefit. Does it make 
sense that I now actually draw Social Security payments while I am 
employed in the School System, but I must sacrifice them when I retire 
and need them the most? This prevents me from retiring.

                                 
              Statement of Janice Bruner, Cambridge, Ohio
    I am a retired school secretary. My retirement is $625 per month 
from SERS. My social security check is $118 per month. I should be 
receiving half of my husband's social security check of approx. $525. 
Every year I receive a 3% increase which is a whopping $18. Social 
Security deducts $12 of $18 from my check. That leaves me with an 
increase of $6 or 1%. Considering the cost of living I am going 
backwards. Is this fair? Please consider eliminating the social 
security offset. The federal or state government does not pay into my 
retirement so why should it affect my social security.
    As you can see, my total pension is a small amount as compared to 
some of the large government pensions. There are numerous other people 
like me who are hurt by the offset penalty. Thank you for your 
consideration and hearings on the offset problem.

                                 
            Statement of Patricia H. Bunger, Prosper, Texas
    Three cheers for your efforts to examine the Windfall Elimination 
Provision and Government Pension Offset aspects of Social Security in a 
public forum! I am against eliminating the Social Security spousal 
benefit for Texas teachers and others employed by non-profits. 
Elimination of this benefit discriminates against older women and those 
non-profit workers who received low wages and scanty benefits during 
their careers. In my case, I am a TSTA/NEA member and Special Education 
teacher, Plano I.S.D., for 22 years. Before that I was employed in 
positions covered by Social Security and have 30 qtrs. of credit. For 
the past 5 years, I've worked part time in a local college library for 
Medicare credits. I understand I could have gotten Medicare under my 
husband Ronald's account, but I do NOT trust Medicare and wanted my own 
credits in case the rules changed. I believe I should have the spousal 
benefit available because:

      I paid into Social Security for 30 quarters.
      My SS covered employment ceased when our handicapped son 
was born. I stayed home 5 years to care for him and no public monies 
supported him. How does society recognize such sacrifice?
      I supported Ronald through 2 degrees so he could earn 
higher wages (and subsequently pay higher SS taxes.)
      Ronald was laid-off at age 50 as a Comptroller at Texas 
Instruments 10 years ago and has not held substantive employment since. 
I am the primary breadwinner and support him.
      Our IRA's and small investments have suffered substantial 
losses in recent years. We counted on the supplementary SS monies in 
retirement. Now we can both count on the necessity of continuing to 
work during retirement due to rising medical costs, food, gasoline and 
taxes. Congressmen do not face this because of the separate retirement 
system they voted for themselves which is very generous!

    Again, please accept my heartfelt thanks for your efforts to 
examine these Social Security issues and the impact on teachers and 
other non-profit workers. TSTA/NEA members are watching this hearing 
closely. It is vitally important to those of us who dedicated our lives 
to educate children in return for small wages and benefits.

                                 
Statement of the Honorable Max Burns, a Representative in Congress from 
                          the State of Georgia
    Chairman Shaw and members of the Subcommittee on Social Security:
    As the representative for the newly-created Twelfth District of 
Georgia, I have a particular interest in the Government Pension Offset 
(GPO) and its application. Thank you for the opportunity to present my 
views on behalf of the citizens of the Twelfth District.
    The GPO affects nearly twenty-five percent of public employees 
nationwide, especially public educators. As a member of the Committee 
on Education and the Workforce, I am particularly sensitive to the 
rapidly expanding problem of qualified public teacher shortages. To 
attract new, young, committed professional teachers, incentives such as 
generous retirement benefits are necessary. The GPO is a severe 
impediment to attracting new, committed educators in Georgia and must 
be overhauled to reflect changes in circumstances surrounding its 
administration.
    Currently, there are fifteen states in which public teachers are 
affected by the GPO. Of those, Georgia is one of three in which the GPO 
affects teachers only enrolled in certain local government pension 
plans. I must credit a retired teacher from my district, Ms. Glenda 
Reddick, for bringing this issue to my attention and for providing me 
with vital information on the current situation affecting certain 
dedicated Georgia teachers. She has doggedly researched this issue not 
only because she has personally been subject to the limitations of GPO, 
but because many of her fellow teachers in Bulloch, Screven, Bryan, 
Evans, and Jenkins counties are adversely affected by this unfair 
restriction on retirement income.
    As members of the Social Security are well aware, the General 
Accounting Office (GAO) issued results of its evaluation of the GPO in 
August of 2002.\1\ GAO reviewed those affected by the GPO in Texas and 
Georgia and concluded that certain changes to the system should be 
made. In particular, GAO examined the use of a little-known exemption 
to the GPO, called the ``last-day'' rule. Through this rule, public 
employees working in jobs not required to contribute to Social Security 
could receive full spousal or survivor benefits (a full exemption from 
GPO) as long as their last day of employment was in a position that was 
covered by Social Security. GAO's contention was that public employees, 
particularly teachers, were taking advantage of the ``last-day'' rule 
by transferring to a covered position only for a single day, thus 
receiving a spousal or survivor benefit without paying into the system. 
The report noted, however, that in Georgia only twenty-four educators 
had taken advantage of the GPO exemption and the average educator 
stayed in that position for a full year. Georgia teachers affected by 
the GPO utilize the ``last-day'' rule because they have planned for 
retirement based on expected benefits from Social Security. Many 
educators and other public employees affected by GPO, like Ms. Reddick, 
are not well-informed of the implications the offset carries for their 
retirement planning.
---------------------------------------------------------------------------
    \1\ GAO-02-950, Revision to the Government Pension Offset Exemption 
Should Be Considered.
---------------------------------------------------------------------------
    Recently, the House of Representatives passed H.R. 743, the Social 
Security Protection Act of 2003, a bill on which this subcommittee held 
a hearing in February. This legislation held particular significance 
for Georgia educators because section 418 modified the ``last-day'' 
exemption from GPO for public employees in non-covered jobs to the last 
five years of employment. The motives of the provision were clearly to 
protect the Social Security trust fund from distributing funds to those 
who have not contributed to the fund. GAO estimates that the Social 
Security Administration distributes more than $400 million in benefits 
to former public employees who transfer from non-covered to covered 
jobs but contribute considerably less to Social Security than they 
receive in spousal or survivor benefits. I believe, however, that while 
the extension of a single day of work for exemption from the GPO to 
five years is fair, the limitation on when public employees can become 
exempt from the GPO is not.
    In its report on GPO, GAO states, ``the intent of the `last day' 
exemption is unclear in the legislation.'' \2\ Whether congressional 
intent was clear within the legislation, the Social Security 
Administration provides a reasonable explanation for the ``last day'' 
rule, stating that some state and local governments did not opt for 
Social Security coverage originally but enter at a later date.\3\ 
Therefore the ``last day'' rule equalizes treatment for employees whose 
coverage status changes due to the state or local government's pension 
plan conversion into a Social Security-eligible system. My concern with 
various proposals is that they only allow for exemption from the GPO on 
the last day or last five years, as under the H.R. 743. Under current 
law, the GPO still applies if the public employee entered his or her 
non-covered position after five years of covered employment in a 
private-sector job, for example. The GPO and ``last-day'' provision 
have been law for twenty years, and hard-working Georgians are still 
grappling with them. If the 108th Congress imposes any fix, I believe 
that the least it can do is provide those adversely affected by the 
``last-day'' exemption with a provision that applies the exemption for 
a certain period of time worked; for instance, H.R. 743 could be 
improved by modifying the five-year work requirement to apply at any 
point in that public employee's career rather than the last five years 
of his or her career. This modification, while not fixing the 
underlying problem of the GPO, would grant relief to teachers and other 
public employees, particularly those in Georgia.
---------------------------------------------------------------------------
    \2\ Ibid, p. 1.
    \3\ www.ssa.gov/pubs/10007.html.
---------------------------------------------------------------------------
    In short, Mr. Chairman, I believe that Social Security reform is 
the only true way to equitably solve the challenges we face with the 
Government Pension Offset. While we continue to work toward that goal, 
however, we should not lose sight of simple short-term relief that we 
can provide the teachers, fireman, police officers, and other public 
employees who are adversely affected by this unfairly administered 
offset. Thank you for including these views on behalf of the 
constituents of the Twelfth District of Georgia.

                                 

                                             Cincinnati, Ohio 45247
                                                     April 29, 2003

Representative E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security
Committee on Ways and Means
United States House of Representatives
Room B-316 Rayburn House Office Building
Washington, D.C. 20515-6100

Dear Representative E. Clay Shaw, Jr.

    Maybe it is a windfall for congressmen but not for clerical staff. 
I was married for almost 25 years during which time I sacrificed to 
help my former husband received his college degree, which helped him 
get a good paying job. I stayed at home and raised four children, which 
are now law abiding and tax paying citizens. Now, when I retire I won't 
be able to collect anything or very, very, little of my ex-husband's 
social security because of the windfall law. I will only be able to 
receive the pension that I will receive from my work years at UC, which 
will not be much because I was out of the work force so many years 
raising the children. I don't consider receiving his portion of social 
security a windfall. When employees work at businesses that give 
employees a pension, they can receive the business pension as well as 
the social security. There is no penalty. When women never work outside 
of the home they can receive their husbands pension while their living 
husband also receives his pension. They don't have to wait until the 
husband dies to receive his pension. Isn't this double dipping?

            Sincerely,
                                                      Mary Ann Bush

                                 
   Statement of Judith Michaels, California Federation of Teachers, 
                         Sacramento, California
    My name is Judith Michaels and I am the Legislative Director for 
the California Federation of Teachers, American Federation of Teachers, 
AFL-CIO. I submit this testimony because of the serious affect the 
offset and windfall provisions of the Social Security Act have not only 
upon our members but upon those considering leaving employment covered 
under Social Security to begin a second career as a teacher. The 
``Offset'' and ``Windfall'' amendments to the Social Security Act will 
negatively affect the retirement pensions of many of the 100,000 active 
members of the California Federation of Teachers, specifically those 
who are members of the California State Teachers Retirement System 
(STRS). The consequences for some current retirees in California are 
even more severe.
    The GPO and the WEP have had devastating consequences for more than 
800,000 low- and middle-income public employees who have seen their 
Social Security benefits reduced or eliminated because they receive 
pensions for non-Social Security-covered employment. Our teachers, 
former teachers, and prospective teachers cannot count upon a full 
Social Security benefit, either as a benefit from work they may have 
done under Social Security or from benefits earned by a spouse.
    When Congress created Social Security in 1935, it expressly 
excluded government employees, and it was not until the 1950s that 
state and local government agencies could join the system. Meanwhile 
those agencies developed their own retirement systems, which tend to 
offer higher benefits at lower cost than Social Security. The 
California State Teachers Retirement System falls into that category.
    The Government Pension Offset (1977) and the Windfall Elimination 
Provision (1983) were Congressional efforts to contain the costs of the 
Social Security program in the context of long-term solvency. They were 
intended to curtail extraordinary benefits for highly paid individuals, 
but applied only to public pensions. The Government Pension Offset 
(GPO), reduces an individual's Social Security survivor benefits 
(available to a person whose deceased spouse had earned Social Security 
benefits) by an amount equal to two-thirds of his/her public pension. 
The Windfall Elimination Provision (WEP) changes the formula used to 
calculate benefit amounts, reducing an individual's own Social Security 
benefits (earned while working in a job covered by Social Security).
    For example, a STRS retiree can lose her entire spousal benefit 
even though her deceased spouse paid Social Security taxes for many 
years. Furthermore, some STRS retirees who survive their spouses face a 
pension offset that deducts approximately two-thirds of their own 
public pension benefits from their Social Security survivor benefits. 
Additionally, the offset detrimentally affects widowed lower-income 
career teachers, and part-time faculty who have accrued minimal 
pensions from a number of sources.
    We urge you to take steps to make sure that public employees will 
not have to worry about their retirement due to these unfair provisions 
that reduce Social Security spousal and worker benefits.

                                 
Statement of Gary Lynes, California State Teachers' Retirement System, 
                         Sacramento, California

Introduction

    The California State Teachers' Retirement System (CalSTRS) provides 
retirement, disability and survivor benefits to more than 715,000 
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 was even 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 public 
pension system in the United States, with over 715,000 active and 
retired members and assets of about $90 billion. CalSTRS currently pays 
out $4.5 billion a year in retirement benefits. Unlike the pay-as-you-
go Social Security system, the State of California has funded an 
educator's future retirement liabilities throughout his or her career.

Mandatory Coverage Imposes a Tax Increase on Local School Districts

    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 their employees in California.

This Tax Increase Will Have a Devastating Fiscal Impact on
Public Education in California

    The 12.4 percent of payroll tax cost of mandatory Social Security 
coverage would impose an average additional cost of at least $4,200 
with respect to each new teacher, equally shared between the employer 
and the teacher.
    This new 12.4 percent of payroll Social Security tax cost would be 
imposed on top of the over 16 percent of payroll cost that is necessary 
to fund the current CalSTRS retirement plan. California's school 
districts simply could not shoulder their share of this 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.
    In 2001, Milliman USA, the independent actuaries for CalSTRS, 
calculated that mandatory Social Security coverage for new teachers 
would drive up total retirement costs for California school districts 
by an additional 7.389 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 in excess of $20 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.
    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 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.
    Accordingly, the State Superintendent of Public Instruction, the 
chief educator for the State of California, has indicated that any 
proposal to impose mandatory Social Security coverage on new teachers 
would have ``a devastating fiscal impact on the California school 
system.'' (See letter from Jack O'Connell, State Superintendent of 
Public Instruction to the Chairman of Subcommittee on Social Security 
of the Committee on Ways and Means, dated May 12, 2003).
    Superintendent O'Connell elaborated:

    ``We currently have over 96,000 teachers and administrators in our 
system who are 55 years of age or older, and the average age of 
retirement is about 61. As a result, we will have to be replacing tens 
of thousands of teachers over the next few years, as well as hiring 
additional teachers to accommodate expansion of class size reduction in 
our state. Mandatory Social Security coverage would dramatically 
increase the cost of hiring these teachers, and will significantly 
reduce the ability of our schools to maintain this important program. . 
. .

    Superintendent O'Connell concludes: ``Mandatory Social Security 
coverage will only exacerbate these fiscal difficulties with which the 
California school system already is grappling and could well even push 
some of the weaker school districts into bankruptcy.''
    State and local governments have only two responses available when 
confronted by such an onerous cost burden imposed by the Federal 
government: raising taxes or cutting spending on other essential 
government services. School district administrators already have 
indicated to CalSTRS that a reduction in education services would be 
necessary in order to address the increased costs of mandatory Social 
Security coverage. This could mean a cut in funds for libraries, 
athletics, and other education programs and decreases in employer-
provided benefits for current teachers such as health care premium 
coverage.
    A case in point is the Hemet Unified School District, located in 
Riverside County, California. (A statement on behalf of the Hemet 
School District by its Superintendent, Stephen C. Teele, Ph.D., dated 
September 7, 2001 was submitted directly to the committee). 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. Over 60 percent of the current teacher 
workforce has been hired within the last five years.
    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. In 
the Hemet School District's budget, 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.'' 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.''

Conclusion

    For all of these reasons, CalSTRS, its 715,000 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 $4.5 
billion annually in benefits and shouldering all of its future 
retirement liabilities on a fully funded basis. 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 Commission 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 and create an ``education tax'' on the over 8.5 
million public school K-14 students in the state of California.

                                 
          Statement of Virginia Cantara, Cape Elizabeth, Maine
    My name is Virginia Cantara, and I live in Cape Elizabeth, ME. I am 
age 70, and have been widowed for over 31 years. I have been a full-
time teacher, and for the past several years a part-time teacher. As I 
have taught in public school, I am a recipient of the state pension, 
which is considered a government pension. Consequently, I cannot 
receive widow's benefits. Social Security, a few years ago, forwarded 
me a check for back widow's benefits, totaling over $5,000. I was 
elated, and immediately had a new heating system installed in my home . 
. . a home that I had only had a few years, as I had to sell homes to 
educate and raise two children. The system cost $3,000. Social Security 
then proceeded to tell me it was an error and I had to repay the amount 
sent me. I sent them the unused portion of $2,000, and have been paying 
them monthly ever since. If I am late, or skip a month, the 
administration harasses me in writing . . . for an error that was 
theirs. I am working to supplement my income, so that I may keep my 
home. Because I am working, and receive a pension from the state 
($2,000) a month, I cannot collect a penny. Now, can your members live 
on that? I have SS quarters of my own, as does my husband, who became 
ill at age 28 and died at age 37. I plead with you to eliminate the 
offsetting law, so I can keep my home, and not face devastation should 
I become unable to work. I applied for a waiver on the overpayment, but 
the paperwork, and demands were overwhelming, and I caved in. My state 
senator did not help. All I have is what I earn. PLEASE help with the 
elimination of this unfair, outdated law.
    Thank you.

                                 
              Statement of Wai-Kai Chen, Chicago, Illinois
    I am writing to you in support of passage of H.R. 594 that amends 
the Social Security Act that repeals the Government Pension Offset and 
Windfall Elimination Provisions. I believe the offset and windfall 
penalties are a form of work discrimination. First of all, I have both 
public and private sector work experiences. Second, my work on a nine-
month contract at an institution of higher education and thus have 
summers available for other employment. I too pay social security taxes 
on wages earned. In short, I have been employed 40 years, contributed 
to retirement funds and then are penalized for hard work.
    I believe this is unfair and discriminatory, and strongly urge you 
to pass H.R. 594.

                                 
              Statement of Martha Chisum, Beaumont, Texas
    I am requesting that the GOP and WEP be repealed. I feel this is a 
terrible injustice to thousands of hard-working citizens who have 
served in the public arena and, now at retirement, are being 
discriminated against and harmed by the very government we have worked 
for.
    I, personally, have worked since the age of 15 and paid into Social 
Security. At the time, it was minimal contributions because it was 
part-time through school and then clerical work for many years. I have 
all my own quarters needed for retirement in Social Security.
    Additionally, I now have 5 years with ERS of Texas and 16 years 
with Teacher Retirement System of Texas. I have given 100% Plus to 
every job I have ever had. I have worked so hard, especially as a 
teacher, that many nights each week, I go home totally exhausted! The 
monies that have been held from my paycheck are MINE. I do not feel 
like any of it should be ``reduced'' by any formula! I have EARNED it. 
Even the portion that was paid by employers is mine. Thus the WEP is a 
joke and should be repealed! This certainly does not amount to a 
``windfall!''
    Now, I have the most wonderful husband God allowed. We have been 
married over 31 years. We started with absolutely nothing and we have 
both worked long and hard to make a comfortable living and provide for 
ourselves in retirement. If, God forbid, something should happen to 
him, I feel I should be able to collect, in addition to my own TRS, his 
full SS benefits, without reduction. A wife who chose to never work and 
contribute to the system would be entitled to the same. To cut my 
portion of his benefits at a time when I would need them most would be 
simple discrimination just because I chose to work and be a productive 
member of our economic system.
    I appreciate your help in making right a wrong that has been in 
place far too long. It never should have passed in the first place. I 
realize this will cost millions of dollars. Alternative sources of 
funding will have to be found. Start by eliminating SS payments to 
felons/criminals, non-U.S. citizens, and I am sorry, but, even those 
who have never contributed to SS (past the age of WWII veteran wives). 
Most importantly, make the government pay back to the SS fund monies 
that have been ``borrowed'' from it over the years to fund other 
programs.
    Again, thank you for your service to our great nation and for your 
help in this very personal matter.

                                 

                                            Rockton, Illinois 61072
                                                     April 29, 2003

Representative E. Clay Shaw, Jr., Chair
Subcommittee on Social Security of
House Ways and Means Committee
Rayburn House Office Building, Room B-316
Washington, D.C. 20525-6100

Re: Call to Action--Social Security Office/Windfall--H.R. 349

Dear Representative Shaw:

    I am writing to you in support of passage of H.R. 594 that amends 
the Social Security Act that repeal the Government Pension Offset and 
Windfall Elimination Provisions. This issue has been a priority for our 
member for four years now. We are very pleased that 12 Illinois 
Congressmen currently support passage of this bill. We continue to work 
with the remaining Illinois Congressmen about sponsorship. We have 
bipartisan support for this issue.
    We believe the offset and windfall penalties are a form of work 
discrimination. First of all, many of our members have public and 
private sector work experiences. They plan on receiving partial 
retirement benefits from both work sectors. These folks that actually 
worked and paid social security taxes and made contributions to Social 
Security the public system they are members of. Second, many members 
work on a nine-month contract at an institution of higher education and 
thus have summers available for other employment. Many hold a summer 
job within the private sector. They too, pay social security taxes on 
wages earned. Third, many members have to hold a part-time job to make 
all ends meet. They also pay Social Security taxes on wages earned. In 
short, these members have been employed 30-40 years, contributed to 
retirement funds and then are penalized for hard work.
    We believe this in unfair and discriminatory These penalties are 
directed toward windows, lower income men and women that have worked 
hard to build the educational system in Illinois.
    SUAA represents more than 120,000 members of the State Universities 
Retirement System, a public retirement system for 12 state universities 
and 50 community colleges in Illinois.

            Sincerely,
                                               Irene Christophersen

                                 

                                 Huntington Beach, California 92646
                                                       May 15, 2003

Representative E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security
Committee on Ways and Means
United States House of Representatives
Room B-316 Rayburn House Office Bldg.
Washington, D.C. 20515-6100

Mr. Chairman, Members of the Subcommittee:

    My name is Judith M. Clark. I'm a 65 yr. old retired Library 
Director, having worked in the public sector--both County and City--for 
18 years. I was a stay-at-home mom before my career began and a stay-
at-home Long and Short-Term Caregiver after I was ``retired'' at age 
48, due to politics on my Library Board.
    My husband (Lt. Col. USMC, retired) was a corporate pilot at the 
time and earned considerably more than I, even though I was a 
Department Head in a wealthy, but fiscally conservative city. The fact 
that there were only 10 peer positions as a Library Director in Orange 
County severely limited my career options.
    I first learned about the GPO while researching information for our 
retirement plans. I contacted the Retired Officers Assoc. and filled 
out a form that asked if I received a government pension. I wondered 
what my retirement pension had to do with receiving survivor benefits 
as a military widow. Well, I soon learned. Not only did I learn about 
the Social Security Offset of the Survivor Benefit Plan for military 
widows, I learned about the GPO and WEP offsets for government 
employees. Either offset obviously made a huge dent in our future 
retirement plans and income.
    When my husband paid into Social Security all his working life, he 
did it not only for himself, but also for me. He expected benefits not 
only for himself, but also for me. His benefits are my benefits. He 
continues to pay a monthly annuity--until he's paid in 30 yrs.--for me 
to receive 55% of his military retirement pay. He has since we married 
in 1981. Not only do I receive nothing in Social Security benefits as a 
spouse, I will receive reduced benefits (35%) as a military widow and 
as a plain, white, vanilla widow, unless the law is changed. Since then 
(finding out about the GPO/WEP), I have become an activist in support 
of women, working to repeal legislation harmful to our financial well-
being.
    As you, Mr. Chairman, state in your Social Security Guarantee Plus 
Plan--Increasing Protection for Today's Women--``Several features of 
the Social Security program are important to women: lifetime benefits, 
inflation protection, a progressive benefit formula. . . .'' But, when 
Social Security `lifetime benefits' are denied to us as spouses or 
widows due to the GPO/WEP, what financial security do we have in 
retirement? When those benefits that we so heavily depend on are taken 
away, many women are thrust into poverty or near-poverty. I have heard 
many stories from women who have lost some to all of their Social 
Security benefits, up to over $1,000.00/month! ``In Dec. 2001, 72% of 
persons affected by the GPO were women.'' (Official web-site of Cong. 
E. Clay Shaw, Jr.--Social Security Information).
    I became eligible to receive my first retirement check from CalPERS 
in September 1987. In May 2000, I received an increase of $8.07/month 
or $96.84/year--less than $100.00/year after twelve (12) years of 
receiving a small pension!! This is `inflation protection' on a 
government pension from the largest state pension fund in the U.S. I 
believe this example illustrates the urgent need to repeal the GPO/WEP, 
which will benefit women the most.
    Chairman Shaw, I think your bill, H.R. 75 has excellent ideas that 
will benefit women. I will urge my Congressman to support your bill 
when it's time for a vote. The one exception is in reference to 
government employees and the GPO. Although it is an improvement over 
what we now have, the cleanest, fairest, most honorable solution is 
simply to repeal it. 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--
like your bill. 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 
Subcommittee on Social Security to support H.R. 594, ``The Social 
Security Fairness Act of 2003.'' I think the title says it all.

            Sincerely,
                                                    Judith M. Clark

                                 
    Statement of Robert Gray, Colorado Public Employees' Retirement 
                     Association, Denver, Colorado
    Chairman Shaw, Ranking Member Matsui, members of the subcommittee, 
I am Robert Gray, Director of Government Relations for the Colorado 
Public Employees' Retirement Association (PERA). PERA covers 175,000 
active state, school, local government, and judicial employees in 
Colorado. PERA also pays monthly lifetime benefits to 60,000 retirees 
and survivor beneficiaries.
    I would like to thank you for having the hearing on May 1 and 
receiving written testimony on the important subject of mandatory 
coverage under Social Security for state and local workers. PERA 
members, benefit recipients and the Board of Trustees of PERA have 
worked hard for many years to maintain the ability to provide 
retirement benefits pursuant to the state law governing PERA, free from 
any mandate to cover employees under Social Security. The Colorado 
General Assembly has stated several times that it also believes that 
its employees are already well-served by existing retirement plans that 
do not include Social Security.
    Requiring public employees to be covered by Social Security would 
increase costs to taxpayers and employees. Even if applied only to new 
hires, as proposed, the cost would come after Colorado state government 
has made severe cuts to balance its budget. State employees will 
receive no salary survey increases in the coming budget year, and some 
will be laid off or furloughed. If Social Security coverage were 
mandated, total contributions for retirement 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. This cost could be split between 
employees and their employers, but neither is in a position to pay it.
    The alternative is to maintain current contribution levels, even 
though that would provide a much smaller retirement benefit. This would 
be strongly opposed by employees and employers, who see no benefit to 
mandatory Social Security compared to the current PERA plan.
    Social Security needs a longer-term solution than mandatory 
coverage. The absence of mandatory coverage has not caused the long-
term financial problems that face Social Security. Federal employees 
hired after 1983 were mandatorily covered by Social Security, but that 
has not solved the long-term problem. Coverage of new hire state, 
school and local workers would increase revenues to the Social Security 
fund for several years, but those workers would become entitled to 
Social Security benefits beginning around 2020.
    PERA provides very comprehensive benefits as a substitute for 
Social Security. PERA members have excellent survivor benefit and 
disability coverage. Retirement benefits are paid for the life of the 
retiree and his or her designated cobeneficiary, and the benefits have 
a guaranteed annual increase. PERA benefits have been structured to 
meet the needs of employees in a variety of circumstances. A career 
employee who retires at age 62 with 30 years of service receives 75 
percent of his highest 3-year average salary. Vesting occurs at five 
years of service, but employees who leave with as little as one month 
of service may leave their account in PERA until age 65 and begin 
receiving a lifetime benefit. PERA benefit recipients may obtain group 
health care coverage through a program administered by PERA.
    Congress confirmed in 1990 that coverage outside Social Security 
was appropriate. The OBRA law of 1990 required that all state, school 
and local workers be covered under a public plan or Social Security. 
Most state and local employees in Colorado, and k-12 employees, are 
covered under PERA, The Denver Public Schools Retirement System, The 
Fire and Police Pension Association, or other pensions in lieu of 
Social Security.
    State and local pensions are portable. PERA, like most public 
plans, is a defined benefit plan that allows members to purchase credit 
for in-state or out-of-state public service. To the extent permitted by 
federal law, PERA allows members to purchase credit for prior 
employment in the private sector as well, as long as such employment is 
not vested in a company retirement plan. Employees who leave school, 
state, or local government can rollover their account to a tax-deferred 
retirement plan. The amount rolled over includes their own 
contributions, 7 percent annual interest, plus a 50% or 100% match.
    State and local pensions are soundly funded. At the end of 2000 
many public retirement systems, including PERA, were overfunded for the 
first time in their history. The sharp decline in stock prices has 
caused PERA to have an unfunded liability once again. As of December 
31, 2002, the actuarial value of PERA assets equals 88 percent of 
actuarial accrued liabilities. This poses no challenge over the short-
term, since annual benefits paid equal about 7 percent of total assets, 
and members and employers continue to contribute to the system. 
Contribution rates include an amount to amortize liabilities that have 
not been fully funded, and over the longer-term, contribution rates may 
have to increase to fully accomplish this. In spite of the market's 
decline and the negative impact on PERA, many local governments in 
Colorado are exploring joining PERA so that their employees can have 
the guaranteed, comprehensive benefits that thousands of current PERA 
members have. The sound funding of PERA and its good long-term 
investment returns are an attraction.
    Mandating Social Security coverage would make it more challenging 
for PERA to fulfill its existing benefit promises. The unfunded 
liabilities of PERA would take longer to amortize if the payroll 
covered by PERA contributions is decreased. Requiring Social Security 
wouldn't reduce PERA's accrued benefit obligations, but contributions 
paid to PERA would be reduced as a result of mandatory Social Security. 
Also, the investment of PERA's assets may have to be altered and made 
more conservative than it would otherwise be, resulting in a lower 
investment return.
    In conclusion, PERA does not believe Social Security coverage 
should be required for state and local workers. The current retirement 
system has worked well in the eyes of employees and employers. 
Mandatory Social Security would challenge the soundness of the current 
plan without benefiting employees, and in the long run it would not 
benefit Social Security either.
    Thank you for the opportunity to submit this testimony. I would be 
glad to provide further information or answer any questions the 
subcommittee members or staff may have.

                                 
              Statement of Jan Conkrite, Woosung, Illinois
    It has come to my attention that if a person retires and has paid 
into Social Security for many years and has enough quarters that their 
social security pension will be reduced in the amount that they will 
receive as a pension through the state of Illinois. I also understand 
that only certain states in our nation have this provision. It is both 
unfair and unequal to have this law enacted in some states and not all 
states.
    I also understand that not all pension funds have their pensions 
penalized even if they pay into Social Security. No one is going to get 
rich on the government by collecting from Social Security and their 
pension. We had a teacher in our district that was able to collect 
Social Security from her husband because he had died many years ago and 
she was at an age where she could collect Social Security. When she 
retired from teaching she could no longer collect her husband's Social 
Security. This was approximately $10,000 less a year that she had to 
live on after she retired.
    If a husband dies where does all the money go that he paid into 
Social Security? It should go to his wife or vice versa. As the system 
is set up now, if a person works as a public servant and works at a 
much lower salary than if they had worked in industry, they are 
penalized by not being able to collect their pension that they paid 
into, plus Social Security which they also paid into.
    When students are in college deciding on their career for life, one 
thing they look at is their benefits. If they have the choice of 
working as a chemist and starting at a salary of 40 to 50 thousand 
dollars or a teacher and starting at 25 thousand dollars they need to 
look beyond the salary. The people that could be chemists but opt for 
teaching because they love kids and want to share their knowledge are 
the type of people that we want in education. If that same person sees 
that they will be starting their salary at half of what they would be 
starting in industry, plus their retirement will be penalized because 
they are a public servant might just get mad and say, ``No way!'' Our 
country is built on equality and fairness to all, and this law is not 
fair to educators and public servants.
    Please use your influence to change this law, so that educators and 
public servants will be able to retire and collect all the moneys that 
they are entitled to collect.
    Thank you for representing the people of our country.

                                 
             Statement of John Corradetti, Joliet, Illinois
    I think it is ludicrous that I should be penalized on my Soc. Sec. 
because I was a school teacher in the state of Illinois and receive a 
pension that I have paid dearly for. Please eliminate both offsets.

                                 
            Statement of Ellen Cotten, Carbondale, Illinois
    Hi, I am one of the many who will be affected by the offset. I am 
eligible for social security from an ex-husband and am STILL affected 
when I retire from Southern Illinois University Carbondale.
    NO one has ever been able to explain the reasoning in this 
circumstance. I cannot understand how/why I should be affected by 
something I am entitled to receive.
    Hoping something will change in this ruling soon.

                                 
           Statement of Janice A. David, Washington, Illinois
    This letter is in support of H.R. 594/349 that will amend the 
Social Security Act and repeal the Government Pension Offset and 
Windfall Elimination Provisions.
    These penalties are a form of work discrimination. The penalties 
seriously affect widows and lower income men and women. I personally 
know two women (widows) who cannot retire because the day they draw 
their first pension check they will lose Social Security benefits, and 
the pension alone will not be enough to cover their living expenses.
    Please do what you can to assure that this inequity will be 
resolved. Thank you for your help in securing the passage of H.R. 349/
594.

                                 
         Statement of Catherine Davis, San Anselmo, California
                         SOCIAL SECURITY FIASCO
    I retired from the County of Marin, California in 1988. I have work 
for 40 years.
    My Social Security was from employment prior to working for the 
County, except for seven years when the County no longer contributed to 
Social Security.
    My Social Security was reduced from $360.00 to $160.00 because of 
my County Pension.
    My husband died on January 22, 1998 and when I applied for his 
Social Security benefits, I was told again I was not eligible because 
of my County Pension which is $1,080.00 per month.
    I have friends who receive Social Security benefits because of 
their deceased husbands. One receives $1,000.00 per month and the other 
receives $850.00 per month; neither of whom has ever contributed to 
Social Security.
    My husband and I have worked hard all our lives and tried to secure 
our old age without financial distress.
    I know you have been pilfering from the Social Security fund for 
years; do you not consider yourselves thieves?
    The straw the broke the camels back was when I discovered that my 
husband's death policy was taxable.
    Now at age 70 I feel I'm being penalized. Is it any wonder we 
become cynical about our Representatives in Washington.
May 1, 2003 UPDATE
    My situation now is more serious. Due to the stock market fiasco, 
my IRA retirement is 75% less then it was in 2001. This was to pay for 
any long term care I might need. I now must pay $280.00 a month for 
Long Term Care Insurance.

                                 
      Statement of Paul R. Doose, Ph.D., Santa Monica, California
    Please accept my testimony for the hearing before the Subcommittee 
on Social Security, May 1, 2003.
    I am testifying on behalf of myself, Dr. Paul R. Doose, 625 Pier 
Avenue, #1, Santa Monica, CA 90405. My employer is the Los Angeles 
Community College District, 770 Wilshire Blvd., Los Angeles, CA 90017.
    I am 58 years old. When I graduated from UCLA with my Ph.D. I went 
to work for Hughes Aircraft Company. At the time Hughes required 15 
years of service to be vested in their retirement plan. I received two 
patents for which I was paid a $500 bonus, each, but receive none of 
the royalties. I left the company after 8\1/2\ years and have no 
retirement benefits from the service other than the credit earned 
towards Social Security.
    I then worked 7\1/2\ years for Windridge, Inc., a wind energy 
development company. It was a small company struggling for existence. 
Although the wind farm I designed and helped supervise the construction 
of is still generating electricity, I gained no retirement benefits 
from the service other than the credit earned towards Social Security.
    Next, I worked for Southern California Edison Company. Edison 
required 5 years of service to be vested in their retirement plan. The 
first step in California's shift to energy deregulation was to 
eliminate public funded research at public utilities. I was working in 
Edison's Environmental Research Group and with only 4\1/2\ years of 
service was ``severed'' from the company without any retirement 
benefits for the service other than the credit earned towards Social 
Security.
    For several years worked part time as an instructor for the Los 
Angeles Community College District, earning some partial retirement 
credit and 3 years ago was hired full time. I have met the 5 years 
service to be vested in California's State Teachers Retirement System 
(STRS). I currently have 6.6 years of service credit.
    If I were to retire at age 66 my earned Social Security benefit is 
estimated to be $1,247 a month and my STRS benefit is estimated to be 
$2,176 a month. But the dollar for dollar reduction of the Government 
Pension Offset would eliminate my Social Security benefit. I have no 
savings or retirement investment plan so my total annual retirement 
income would be $26,112 per year (just the STRS) in the year 2011. My 
college district also pays half of the cost of our health benefit plan 
in retirement. This sounds good, but if health care costs go up by only 
5% per year in 2011 my half will be $6,500 per year. By then the 
property tax on my home will be roughly $8,000 per year. That would 
leave only $11,612 for all other expenses for a whole year. Although 
the Social Security benefit is not much, to have $26,576 left for a 
years expenses might be doable.
    Please do away with the Government Pension Offset. It is so unfair. 
It would have me receive zero retirement for over 20 years of hard work 
and allow the Social Security System to keep all of the contributions 
made on my behalf while I get zero. If this does not change I will not 
be able to retire until my late 70's.

                                 
               Statement of Johnine Doutt, Houston, Texas
    Thank you for giving me this opportunity to write to you.
    Thank you for this opportunity to comment on the proposed 
legislation to remove the grossly unfair GPO/WEP provisions of Social 
Security.
    I have been a counselor in an inner-city school of Houston ISD for 
the last thirteen (13) years. I am also the wife of a Korean and 
Vietnam veteran, a First Sergeant in the U.S. Army (now retired from 
the Army and working for the Aldine ISD (adjacent to Houston ISD) as a 
JROTC Instructor).
    Although I have worked in this district under the Texas Teacher 
Retirement System, I have worked before that and for seventeen years 
under the Social Security system.
    I hope to retire sometime within the next two years but find that 
my expectations of even reasonably comfortable retirement harshly to be 
modified because of the GPO/WEP rules that single out teachers, 
firemen, policemen and other public servants (and who, before such 
service, have paid handsomely and for years into Social Security) pay 
dearly for economies in the Social Security System.
    In my case, my Social Security benefits, which would have given me 
some $680 a month for my seventeen (17) years of SS coverage, will, 
because of my Texas Teacher Retirement (TRS) System involvement and the 
conditions prescribed by the Windfall Elimination Provision, be reduced 
to about $380.
    Further, in the event my husband predeceases me, I will be allowed 
virtually nothing of his social security benefits, although his own 
benefits during his life will certainly have been an important part of 
our common budget for expenses that will not significantly lessen 
because of his death. (In addition to my loss of spousal benefit, my 
husband's military retirement ($1,600/mo) will terminate with his 
death.) On the other hand--and incomprehensibly--a ``regular'' pension 
plan from an employer such as a bank reduces SS benefits not at all, 
and a SS worker whose TRS spouse dies, can collect both the survivor 
benefits set up from a TRS pension and their own SS with no penalty!
    Quite beyond the financial inequities that make the present GPO and 
WEP conditions unacceptable in the extreme, the message they deliver to 
public servants rings out depressingly loud and clear: ``You alone will 
pay for the SS economies provided by the GPO and WEP; your public 
service as teachers, firemen, policemen is of negligible value to our 
society.'' And that this message should have been announced by a 
Congress that has pledged to serve the public good (but whose members, 
in cavalier dismissal of that, have then so handsomely secured their 
own retirement and their spouses' welfare after their death) is 
depressing beyond the screaming of it; it is strikingly reminiscent of 
the recent shameful conduct of Enron and American Airlines executives, 
who so generously and outrageously took care of themselves at the 
expense of those who depended on them for their livelihood.
    As a person serving in our schools, as the wife of a military man 
who has served his country in war and in peace for twenty-three (23) 
years (and whom I and my children have supported with many, many 
changes of residence and sacrifices of companionship), I protest this 
gross inequity which so promises to make our hopes of a comfortable, 
well-deserved retirement a virtual impossibility.
    The GPO and WEP are simply and profoundly wrong. They must removed 
as conditions for anyone's retirement. I urge that you act to effect 
that removal.

                                 
             Statement of Hugh E. Drisko, Orrington, Maine
    Thank you for giving me the opportunity to write to you.
    My name is Hugh Drisko and I am a retired teacher of 28 years and 
the president of Drisko Farms, a small blueberry farming business, 
which I have owned for 30 years.
    I live in Orrington, Maine. I am 60 years old. I have a wife who 
has been teaching in public schools for 33 years.
    I am writing today in support of the need for complete repeal of 
the Government Pension Offset (GPO) and the Windfall Elimination 
Provision (WEP).
    As a self-employed farmer, I have found the self-employment tax to 
be particularly oppressive. I have paid approximately 15% of my self-
employment net income to the social security system in addition to the 
normal income taxes. Because I receive a small pension from the Maine 
Retirement System, my Social Security benefits will be reduced by 
roughly two-thirds.
    It seems that I and many other public employees are being forced to 
subsidize the Social Security System with little hope of living long 
enough to recoup my contributions, not to mention any increase in value 
over time.
    The GPO and WEP penalize that segment of the population who 
contributes substantially to society, yet is generally underpaid and is 
in greatest need of additional retirement funds for themselves and 
their spouses.
    Any system that discriminates against a small segment of the 
population based on work experience and age is broken, unfair and must 
be fixed.
    After all, are Congressional pensions similarly affected?
    Thank you.

                                 
                Statement of David C. Emery, York, Maine
    Thank you for giving me this opportunity to write to you.
    My name is David C. Emery and my job was eliminated in November 
2001. As I as an Engineering Manager for a printing press manufacturer 
it has become very difficult to find a job in the engineering community 
within our local area. Thus, I started to review the possibilities of 
entering the teaching profession and wanted to give back to the young 
children and adults the knowledge and practical experiences that I have 
gained from my professional experience.
    However, it was brought to my attention that if I did pursue the 
above change in my career path I would be losing all my Social Security 
benefits. Therefore, I have since continued to look for an other job 
opportunities that will not penalize my Social Security Benefits.
    Additionally, I can also relay the same message to you about my 
married daughter who has been working as an accountant in Portland, 
Maine. She also wanted to enter into the educational field so that she 
would have the summers off in order to spend the time with her daughter 
when school is out as well as all school vacations. She also has 
elected to not enter into the educational field as a teacher duo to the 
loss of her Social Security benefits.
    With the average age of teachers increasing and then retiring, what 
does the future hold for out children entering the public schools when 
no one will want to enter the educational field due to the loss of 
there Social Security benefits. This issues has to be addressed and 
corrected ASAP for the future of our children and future leaders of the 
country.

                                 
                Statement of Ferol Empen, Polo, Illinois
    As a teacher who will soon be retiring, but not with full 
retirement benefits because I did not start my teaching career until 
the age of 38, I will only have 24 years of teaching in. I am now 63 
and would like to think about retirement soon will not have a very high 
retirement pension as I have not put in the 35 years for full Illinois 
teaching pension benefits. Therefore, it would greatly help if I could 
also be able to collect on my social security. It does not seem fair 
that Illinois residents are not able to collect social security if they 
have the Illinois teacher pension. I would greatly appreciate it if the 
laws could be changed so I could collect what I have put in social 
security before my teaching career. As I am divorced and the sole 
supporter of myself, I would welcome the additional social security 
benefits and would ask that you support legislation so that Illinois 
teachers could also receive them upon retirement age. This would 
greatly help my income so I could retire from teaching and just enjoy 
part time work with social security benefits.

                                 

                                             Joliet, Illinois 60435
                                                     April 29, 2003

The Honorable E. Clay Shaw, Jr., Chairman
Subcommittee on Social Security of U.S. House
Ways and Means Committee
Room B-316, Rayburn Bldg.,
Washington, D.C. 20515-6100

Dear Representative Shaw:

    I am writing to express concerns and opinions about the existing 
WEP and GPO Social Security Offsets, so as to provide you with 
information for the scheduled May 1, 2003 hearing on the Offsets.

My Personal Experience with the WEP:

    I worked as a Medical Technologist, MT (ASCP), full-time for ten 
years, and part-time for a few years. During that time, I earned my 40 
Social Security quarters. There was a teacher shortage, and I had a 
desire to teach, so I went back to college to complete courses that 
would qualify me for an Illinois teacher's certificate for secondary 
schools. Later I earned a Master's degree in Education-Guidance and 
Counseling. I both taught at and coordinated a local hospital school of 
medical technology prior to taking a teaching position in the Joliet 
Township High School system, and later, a Counseling position at Joliet 
Jr. College. I retired from Joliet Jr. College as Dean of Counseling 
and Advising almost three years ago. I earned a state pension for my 
high school and college employment. Had I not stayed 30 years, my state 
pension would have been reduced. In this day and age, with schools 
encouraging early retirement, it will be less likely that second-career 
teachers and other school employees, who had prior jobs in which they 
had paid into Social Security, will work 30 years in education.
    I learned about the offsets back in the 80's, and wrote to then 
Senator Paul Simon about the issue. The President's Commission on 
Social Security, with chairman, Dr. Alan Greenspan, appointed by 
President Reagan, apparently thought that those on State pensions, who 
also qualified for Social Security benefits were double-dipping, and 
should be penalized.
    I lost around 60% of my earned Social Security benefits as a result 
of application of the WEP Offset. I still do not understand why I was 
singled out for such a cut, and feel I was penalized for entering the 
teaching profession. Today, we have another teacher shortage. How many 
will be willing to leave other careers or to begin a teaching career 
when they learn their earned Social Security benefits from other 
positions will be drastically cut once they begin receiving a teacher's 
pension in one of the states affected by the Offsets? The WEP seems to 
especially penalize those who worked 15-20 years in the private sector 
and 15-20 years in the public sector.

Experience of Members of State (Illinois) Universities Annuitants 
        Association:

    After retiring, I became chair of the Ad Hoc Committee on Social 
Security Offset/Equity for the State (Illinois) Universities Annuitants 
Association, (SUAA), which represents more than 120,000 members of the 
State Universities Retirement System, a public retirement system for 
Illinois' 50 public community colleges and 12 state universities. It 
didn't take me long to form a committee of those who had lost their own 
and/or their spouses earned Social Security benefits. Many were widows 
who had retired from a variety of positions in Illinois public 
colleges, from cafeteria worker to secretary to teacher, and had 
counted on obtaining spousal survivor Social Security benefits, only to 
be shocked to learn that because of the GPO they would receive no 
survivor Social Security benefits. Yet, in order to have Medicare 
coverage, they were expected to pay the Medicare B monthly supplement. 
A few of these women, who are in their 70's and are fortunate to be in 
good health are still working or have returned to work because of the 
Offset cuts. Others are trying to make ends meet on small state 
pensions.
    Social Security has a tendency to inform benefit recipients of 
Offset cuts way after the fact. Often, the Social Security letter 
indicating an overpayment and need to reimburse Social Security is the 
retiree's first knowledge of the offsets. Some of our members received 
this letter nearly a year after their Social Security benefits had 
begun and been spent. This Social Security letter neither presents a 
full explanation of the Offsets nor the calculation used in determining 
the exact amount of the cut. One of our SUAA members appealed her case, 
but lost, and had to reimburse Social Security. It is my opinion that 
these procedures are not good business practices, and lack a customer 
service component. These women, as well as thousands of others, have 
suffered hardship as a result of such practices.
    Believing that the Offsets are discriminatory and harmful at best, 
SUAA, along with some thirty or more other retiree groups is supporting 
H.R. 594 and S. 349 for total elimination of the WEP and GPO Offsets. 
We have been trying to make prospective retirees aware of the Offsets, 
for more realistic retirement planning purposes, and thus, to relieve 
the shock most face now when experiencing Offset cuts in their earned 
Social Security benefits. SUAA members have been writing their stories 
of how they were affected by the Offsets, and sending them to their 
Congressional leaders.
    It is my hope that the Offsets issue and Social Security practices 
will be seriously reviewed, and changes made to help, not hinder 
retirees of public positions. Closing the GPO loophole is not the only 
answer to the Offsets problem.

            Sincerely yours,
                                                  Carolyn T. Engers

                                 
                Statement of Diane C. Evans, Katy, Texas
    This is my 11th year teaching in Texas. I worked for 3 years before 
starting college. I went to college for 3 years and stopped, intending 
to work about 2 years to get out of debt. A couple of years working in 
industry stretched into 11 years before I returned to University of 
Houston to finish my degree in Business and also get certified to 
teach. I started my teaching career at age 42. It was my intension to 
teach for 20 years and then retire.
    I paid into social security for 14 years before becoming a Texas 
teacher. My husband worked for Monsanto for 30 years before retiring 
from there. He went to night school for 12 years to earn his degree 
while working full time at Monsanto. Then he worked another 7 years at 
Clayton Library in Houston. As you can see, between myself and my 
husband, we have paid social security taxes for an accumulation of 51 
years.
    Teachers work hard, long hours. I arrive at my school every morning 
at 6:30 and sometimes stay as late as 5:30--preparing, grading, 
tutoring. It doesn't stop there, because many times I continue grading 
and preparing at night and on weekends. I am a computer applications 
teacher and spend summers updating my knowledge by working through new 
programs and texts and sometimes will even take a college class to help 
learn new programs I would like to use in my classes. I teach Microsoft 
Word, Excel, Access, PowerPoint and Adobe's Photoshop and InDesign and 
Macromedia's Flash and Dreamweaver.
    I say these things to try to help you to understand that teachers 
are not slouches and we do not want anything that we do not fully 
deserve. I love teaching. It is one of the most satisfying professions 
in the world and I can not imagine myself doing anything else. But, I 
am scared--here is why. . . .
    My husband had open heart surgery 14 years ago which made him 
uninsurable. Upon his death I will receive a small insurance settlement 
from Monsanto, enough for burial and funeral fees, leaving little else. 
I have always saved money, putting into Mutual Funds. The stock market 
has not been kind and my proceeds there are disappointing. The 
projection is bleak. I will retire with a take-home pension of about 
$1,000 a month. I will have to sell my home even if I am able to pay it 
off, because I won't be able to afford the upkeep and maintenance. All 
of this, because I chose to be a teacher.
    I wonder what my future would have been if I had not gone back to 
school, finished my college degree, and become a teacher. If I would 
have continued working in industry, I would have had a pension, 
savings, and been eligible for social security. I am beginning to 
regret becoming a teacher because every time I look, there is a 
politician trying to pass a bill taking away what little security I 
have. Why?? Do you think we don't deserve a decent life after we 
retire? Am I not working hard enough to suit you? I would like for 
someone to explain to me what I have done wrong, because, at the time I 
was preparing to become a teacher, I thought I was doing a good thing. 
Why am I being penalized for choosing to become a teacher?

                                 
             Statement of Mike Ferguson, Carrollton, Texas
    I worked in the private sector long enough to amass the necessary 
quarters to qualify for Social Security. Since that time I decided to 
go into the public sector as a teacher. I am now being penalized for 
this altruistic move, because my social security has been taken away 
from due to my Texas Teachers Retirement pension. Even though I paid 
all that money into Social Security I will get none of it back. 
Additionally, since I entered the teaching field late, my TRS pension 
is significantly reduced. As you know, America is experiencing a 
significant teacher shortage. The inequities of the Windfall 
Elimination Provision is one major reason more people have to choose 
not to enter the teaching field.

                                 
             Statement of Rodney J. Fink, Macomb, Illinois
    I am pleased to know that a hearing is underway with the 
Subcommittee of Social Security on Ways and Means regarding the 
Government Pension Offset and Windfall Profits Provisions. I am writing 
to urge your support of passage of H.R. 594 that amends the Social 
Security Act and repeals these provisions.
    I believe that the offset and windfall penalties are a form of work 
discrimination. Government pension offset is very discriminatory to 
spouses who may have entered the work force after raising a family who 
thus had reduced time to create a pension. Such examples are of a 
divorcee who is entitled to a portion of the social security pension 
due her husband (after his death) which may be partially or totally 
eliminated due to the offset.
    In my own case, I held several jobs from which I paid into social 
security, expecting this to be a part of my retirement. To my surprise 
when I retired, my annual pension from social security is reduced by 
over $3,200.00 each year. I believe this to be discriminatory and urge 
your support of the legislation to correct this injustice. In addition, 
should I die before my spouse, my pension as a result of military 
service will likewise be offset for my spouse--another level of 
discrimination to my spouse.
    I am pleased to know that 12 Illinois Congressmen currently support 
passage of this bill and am also pleased that the issue has bipartisan 
support.
    Your consideration is appreciated.

                                 
           Statement of Christine Fitzgerald, Houston, Texas
    Thank you for giving me this opportunity to write to you concerning 
the Social Security issues currently before you. I am a veteran teacher 
of 27 years. I have dedicated the majority of my career in public 
service to teaching in schools with at-risk populations and have faced 
a variety of challenges.
    My career choice and marital status have presented their own 
challenges; in Houston in 1975, a beginning teacher received a salary 
of less than $9,000 a year. This meant that if I wanted a winter coat, 
a trip to see family, a car or any other major purchase, I had to take 
additional jobs. For all the early years of my career I worked nights, 
weekends and summers to meet these basic expenses.
    As a single woman on a teacher's salary, I have had to be frugal. 
It has been imperative that I plan for my retirement. I was fortunate 
enough to purchase a small home and I want to be able to stay there 
after I retire. Any retiree wants to relax or travel rather than take 
another job. My retirement will be modest by some standards, but my 
expectations are not extravagant.
    Through my additional work, I have accrued enough quarters to draw 
a small amount of Social Security income when I retire in a few years, 
but the Social Security offset will penalize these earnings. I never 
fully realized what this meant until my own mother retired from a 
career in education several years ago.
    My late mother spent many years working in the private sector and 
earned many quarters of credit with Social Security. She stayed home to 
raise us for almost 20 years. When she returned to the working world 
after we were grown and she was divorced, she returned to a career 
working for the public schools. Since mom entered the teacher 
retirement system so late in her career, she could not begin to have 
enough money for a comfortable retirement without working well into her 
70's. Imagine her horror when she was told that she would receive far 
less due to the Social Security offset. She worked hard for every penny 
of both funds and foresaw a monthly income which would make every month 
a struggle. Just as she was set to retire, she had a catastrophic 
stroke and I had to find a way to pay for a care facility and medicine 
as well as her other needs. Medicare funds were available because she 
had opted for the offset to ensure this. In the alternative scenario, 
she would qualify for Medicaid only after her modest savings were spent 
down.
    Many of our newest recruits to education are people who, like my 
mother, have many year of Social Security income saved. In times when 
there are critical teacher shortages and we are trying to attract 
seasoned professionals with a diversity of experience to a career in 
the classroom we must make this choice attractive. How attractive is a 
second career in education, which forfeits these hard-earned funds?
    In the next few years, many baby boom educators will retire. We do 
not feel that we are asking for funds that we have not earned. Our 
retirement income, modest at best, along with Social Security will 
simply make it possible for us to keep up with rising costs without 
penalizing us for many years of additional work. We are proud of our 
years of service and want to remain self-sufficient. It is in the 
interest of Congress to help us in that goal. Please repeal the laws 
governing the GPO and WEP and consider real reform for Social Security.

                                 
           Statement of Mary Jane Folkerth, Springfield, Ohio
    I have just received word that Rep. Clay Shaw, Chairman of Ways and 
Means is holding hearings regarding the Offset Provision that so many 
of us have gotten caught with. Please let Rep. Clay Shaw know that much 
attention is being given to this legislation and many retirees feel 
strongly that they have been dealt with unfairly and are relying of him 
and others to correct a wrong. . . .
    As a retiree from Clark State Community College in Springfield, 
Ohio where I paid for something that is being withheld, I ask 
Representative Shaw's support.
    Thank you for forwarding my reply to the proper channels.

                                 
           Statement of Donald J. Foster, Ironwood, Michigan
    As a retired Illinois educator, currently working in Michigan, I 
hereby respectfully submit these four (4) pages in support of the 
Social Security Fairness Act of 2003, which seeks to repeal the 
Government Pension Offset and the Windfall Elimination Provision of the 
Social Security Act:

I. TESTIMONY OF PERSONAL INJUSTICE BECAUSE OF GPO/WEP

    Following graduation from high school, I farmed for several years 
with my father in northern Illinois. After serving in the U.S. Army for 
two years, I then worked at several jobs to put myself through college 
and became a teacher. By the time I left Illinois in 1995, I had earned 
over 40 quarters of Social Security credit--which is the required 
amount of qualifying-credits for my age group.
    I plan to retire from Michigan in 2005 and will have earned an 
additional 40 quarters of Social Security credit, based upon full-time 
employment--for a total of over 80 quarters. During these last 10 years 
of employment I will have paid more than $70,000 into Social Security 
($7,000+ x 10 years).
    As I approach retirement, I feel betrayed. While my retirement 
situation won't be a matter of ``poverty'' without the full Social 
Security benefits; it is a matter of ``injustice'' and broken promises 
from my government. I have worked in occupations that benefited my 
country: farming, the military, and education. While paying Social 
Security taxes throughout my working years, I never suspected that the 
S.S. credits I earned would be treated differently than the credits of 
the people with whom I worked side-by-side while earning those credits. 
In addition, I thought I was also providing for my wife; however, 
because of the GPO/WEP provisions, she will not receive the full 
spousal-benefits that other workers are allowed to provide their 
spouses by way of their earned Social Security credit.
HOW CAN THIS BE FAIR?
    I am angry and disappointed about this unfair treatment. I ask 
Members of this Congress to put an end to the discriminatory GPO/WEP 
provisions of the Social Security Act.
ELIMINATE THE GPO/WEP PROVISION OF THE SOCIAL SECURITY ACT
II. STATEMENT OF THE ISSUE

    A. GPO/WEP is discriminatory because it denies equal treatment of 
Social Security credits to a select group of U.S. citizens; this 
discrimination involves:

    1.  citizens who are public-sector workers; of these,
    2.  citizens who are public-sector workers in certain 15 states; of 
these,
    3.  citizens who are public-sector workers in certain 15 states; 
and who are not Federal legislators.

    B. The underlying rationale for GPO/WEP is flawed because it 
incorrectly presupposes that all Social Security credits earned by the 
above-defined citizens are credits based entirely on part-time/
supplemental work; and would, thus, grant these public-sector workers 
an advantage because of the Social Security formula that gives lower-
paid workers a higher percentage return than their more highly-
compensated counterparts.
    Public-sector employees--including first-responders--who relocate 
to a GPO/WEP state; or people who have worked in both the private and 
public sectors; or military personnel who become teachers in a GPO/WEP 
state are just a few examples of full-time workers who unfairly lose 
their full Social Security benefits because of the flawed assumptions 
of the GPO/WEP provisions.

III. EXAMPLE OF HOW GPO/WEP WORK

    If a senior citizen receives a monthly public-sector pension of 
$600 and qualifies for a Social Security benefit before Offset of $450, 
two-thirds (2/3) of the $600 (or $400) is subtracted from the Social 
Security $450--resulting in a monthly Social Security benefit of $50 . 
. . instead of $450. (Spousal-benefits are similarly affected, also.)
    Yet, the above senior citizen has paid the same Social Security 
taxes for the required number of years--exactly as a private-sector 
citizen has done.
HOW CAN THIS BE FAIR?
IV. LIST OF STATES AFFECTED BY GPO/WEP (15 states = 30% of U.S.)





Alaska                                       Connecticut                 LouisiaMassachusetts              Ohio
California                                       Georgia         Kentucky            Missouri      Rhode Island
Colorado                                        Illinois            Maine              Nevada             Texas


V. ADDITIONAL COMMENTS

      WHAT IF 9-11 HAD HAPPENED IN A GPO/WEP STATE? The 
benefits of the surviving spouses and dependents of many of those 
killed would have been severely affected--not only the people working 
in the damaged buildings; but also the first-responders who came to 
their rescue, some of whom lost their own lives attempting to help 
others.

         Because first-responders put their lives in danger every day, 
it is unconscionable that they and their families would be treated 
unfairly by Social Security.

      It is fair to note that Federal legislators, who are also 
public-sector employees, exempted themselves from the loss of Social 
Security retirement benefits when the GPO/WEP provisions were passed. 
Many of our lawmakers come from public-sector backgrounds. Notable 
among these is Speaker-of-the-House, Mr. Dennis Hastert of Yorkville, 
Illinois, who taught at Yorkville High School. Mr. Hastert and his 
wife, also a teacher at Yorkville High School, will not have to suffer 
the inequities of GPO/WEP as will many of their teacher-colleagues.
      It is ESPECIALLY EGREGIOUS that military personnel--many 
of whom have been put in harm's way by their Government--would also 
have their Social Security retirement benefits reduced only because 
they later became a teacher, or a policeman, or some other public-
sector employee in a GPO/WEP state.

         Pvt. Jessica Lynch, the young lady who was recently rescued 
from Iraq, wants to become a teacher. What if she happens to move to a 
GPO/WEP state? The Social Security credits she earned as a POW will be 
``discounted'' under GPO/WEP upon her retirement.

      Mrs. Laura Bush has made an admirable, national plea for 
more citizens to join the teaching profession because there is a 
shortage of teachers in many states, including some of the GPO/WEP 
states. However, GPO/WEP often discourages interested people from 
entering education as a second career because most folks can not afford 
to jeopardize their Social Security retirement benefits.

         At a time in our country when we desperately need the services 
of public-sector workers: teachers, police, firemen, etc., we should 
not discourage people from joining these critical professions by 
continuing the unfair practice of taxing their wages and, then upon 
retirement, treating their Social Security benefits differently than 
other workers' benefits.

      GPO/WEP does not take into account the realities of the 
modern-day workforce. Denying full Social Security retirement benefits 
to workers in certain states is especially discriminatory because the 
current workforce is not place-bound--people move from state-to-state 
during the course of their working lives. Workers also are healthier 
and are able to work longer, often changing careers between private- 
and public-sector employment.
      We are not asking something from Social Security without 
having contributed to that system. For those of us affected by GPO/WEP, 
we qualify for Social Security benefits because we have paid Social 
Security taxes for the required length of time. Under GPO/WEP, however, 
the Social Security taxes that we have been forced to pay go into the 
``general pot'' to pay for other workers' S.S. benefits; and, we and 
our spouses/dependents are not allowed to receive our full benefits.

         In all fairness, if we have paid into two pension plans during 
our working years, we have the right to expect full retirement benefits 
from both systems.

      GPO/WEP has punished too many citizens for too long! We 
should not allow a situation to continue whereby all citizens are 
forced to pay Social Security taxes and, then, discriminate against 
some of those citizens upon retirement.

TREAT ALL SOCIAL SECURITY CREDITS EQUALLY FOR ALL CITIZENS

                                 
          Statement of Hollis K. Fox, Pagosa Springs, Colorado
    I thank you for the opportunity to share my testimony.
    I am a retired Air Force fighter pilot/career officer. I have a 
sincere desire to pursue the Troops to Teach program, as I have a deep 
love for children. I must tell you that the provisions of the WEP/GPO 
have made me think twice about this. Here in Colorado, a teaching 
career retirement is through the Public Employees Retirement 
Association. While in the Air Force for 20+ years, I paid into Social 
Security. My wife, who is a teacher in Colorado, has a similar problem 
in that while we were in the Service, she moved around with me all over 
the globe, and had jobs in which she paid into Social Security. I 
understand the intentions of WEP/GPO as they were implemented, but they 
have a drastic negative affect on those of us who live in states, like 
Colorado, Texas and others. We have contributed into the Social 
Security system, and are not getting ``something for nothing.'' It is 
grossly unfair to penalize those of us with a heart for service, by 
having our retirement reduced because of an unconsidered consequence of 
WEP/GPO. I sincerely hope you will correct this injustice.

                                 
               Statement of Jeanne Fuchs, Houston, Texas
    I am a seasoned teacher, 13 years, in Texas and I would like to 
share with you some of my reasons why teachers should receive social 
security. During my teaching career, I have had to work 2 and 3 jobs 
just to make ends meet. I work every summer, never giving myself any 
time off. The pay scale for teachers goes up every year, but it is not 
enough to keep up with inflation. I am always working during the school 
week after teaching and on Saturdays to earn extra money. Last year 
teachers finally were given some help with their insurance, but some of 
that money has already been taken away. The 401 provided by the 
district will be cancelled this year also.
    It is very frightening for teachers to realize that after all the 
years of dedicated service to students to learn that retirement will 
not support you. Many teachers have taught for years and years, but not 
all teachers can say that. Yes, you say, what about husbands. Well, 
many husbands are dead by their retirement age and all teachers have at 
this point is teacher retirement. At one point in my life, I was 
looking forward to retirement, but now I stay awake at night worrying 
about how I am going to make ends meet!
    Please realize all the detrimental issues that are hurting 
teachers, new and old. No one will want to enter the field of education 
if they can't earn a decent salary, have affordable insurance, and a 
retirement that one can live with without worrying. That said teachers 
should be able to collect the social security from their husbands or 
the social security they earned through the years of working when they 
had to supplement their teachers salary.
    Thank you for your time and please consider this request very 
carefully. It is so very important that teachers can collect their 
retirement and social security.

                                 
            Statement of Barb Gallagher, Elmhurst, Illinois
    Please eliminate the GPO and WEP. I speak for many teachers in this 
country. We all have similar stories. Thanks very much.

                                 
         Statement of Keren Eula Gardner, Murrieta, California
    Thank you for giving me this opportunity to write to you.
    My name is Keren Eula Gardner, age 55, and I am currently a high 
school teacher in California. I am concerned that I will have very 
little to retire on. My husband was in business for 21 years, paying 
into social security. When the recession hit California in the 90's, we 
were forced to close down our business, and we entered the teaching 
profession. We have found this to be a very rewarding experience. We 
had no idea that upon his retirement, (he is now 67 and still 
teaching), he would lose one-half of his social security benefits; I 
just found out at a teacher retirement meeting this week that when he 
dies, I will not be able to receive any of his social security, just 
STRS.
    I plan to teach at least until I am 65 years of age. However, this 
will only give me 17 years paid into California retirement, (STRS), on 
which to survive.
    I have heard the term, ``double-dipping,'' but how can this be when 
all my husband and I have tried to do all our lives is to support 
ourselves, asking nothing from our government? When citizens are forced 
to make career changes, they should not be financially punished.
    I am requesting that you, as a committee, vote to abolish the 
Social Security Offset.

                                 
              Statement of Betty Gordon, Skokie, Illinois
    I am writing to you in support of passage of H.R. 594 that amends 
the Social Security Act that repeal the Government Pension Offset and 
Windfall Elimination Provisions. This issue has been a priority me 
personally for many years now. I am very pleased that 12 Illinois 
Congressmen currently support passage of this bill.
    I believe the offset and windfall penalties are a form of work 
discrimination. First of all, many people such as myself have public 
and private sector work experiences. We planned on receiving partial 
retirement benefits from both work sectors. I actually worked and paid 
social security taxes and made contributions to Social Security. Many 
people have to hold a part-time job to make ends meet and they also pay 
Social Security taxes on wages earned. In short, these people have been 
employed 30-40 years, contributed to retirement funds and then are 
penalized for hard work. I believe this is unfair and discriminatory.

                                 
             Statement of Helene Hammond, Harrington, Maine
    Thank you for giving me the opportunity to write to you.
    My name is Helene Hammond, and I am here today as a teacher who is 
being heavily impacted by the Social Security Offset that has been 
levied on all state employees from the state of Maine, as well as many 
other states in our country.
    My husband worked for years under the Social Security System during 
the summers when he was in high school and college. He then taught 
school for fourteen years, again working a full quarter each summer 
under Social Security, since a teacher in our area does not earn enough 
during the school year to support a family. Since he left teaching, my 
husband has worked in his own business.
    I have also worked a number of summers during my school years, as 
well as many summers in the blueberry industry while I stayed home with 
my five children. I have now taught a total of fifteen years, and since 
I am already 57 years old, I do not have many years left to contribute 
to the state retirement system.
    As you can see, we are a couple who will really be penalized by the 
Social Security Offset, since neither of us has worked long enough as a 
teacher to qualify for a livable retirement benefit. Had we been aware 
of this situation when I was ready to return to work after my children 
went to school, I would probably have worked in the private sector 
where I could have received a larger Social Security benefit upon my 
retirement.
    I love my job and feel that I have made a significant impact on the 
lives of the children in Narraguagus High School. My rewards from 
within are fulfilling, but the compensation from without has been less 
then adequate, since we are some of the lowest paid teachers in the 
country. Now to discover that we will also be penalized for the rest of 
our lives for our dedication to the young people in our area is 
distressing. In fact, it is almost a panicky situation when we think 
ahead to retirement years, as I have in just the last month.
    Thank you for your consideration of this issue and for the time and 
dedication that you also give as you serve us in our country.

                                 

                                            Roberts, Illinois 60962
                                                        May 2, 2003

Representative E. Clay Shaw, Jr., Chair
Subcommittee on Social Security
House Ways and Means Committee
Rayburn House Office Building, Room B-316
Washington, D.C. 20515-6100

Dear Representative Shaw:

    I am writing to you in support of passage of H.R. 594 that amends 
the Social Security Act that repeal the Government Pension Offset and 
Windfall Elimination Provisions. This issue has been a priority for our 
members for four years now.
    I believe the offset and windfall penalties are a form of work 
discrimination. I am allowed $58.00 of my deceased husband's social 
security just simply because I receive another retirement income. My 
husband paid into Social Security for many, many years and yet I am 
only allowed $58.00. This along with my retirement income is way below 
the $2,000.00 per month that is a reasonable income.. . . as told to me 
by my Congressmen.
    I believe this to be unfair and discriminatory. These penalties are 
directed toward widows, lower income men and women who have worked hard 
to build the educational system in Illinois.
    I appreciate any support and action you may give to eliminate the 
Government Pension Offset and Windfall Elimination Provision.

            Thank you,
                                                      Carol J. Hari

                                 
          Statement of Arlene Hendersen, Roseville, California
    Thank you for giving me the opportunity to write to you.
    I am a teacher who has not always been a teacher. I teach 8th grade 
one of the more challenging jobs a teacher can have, but not only do I 
teach 8th grade but I teach algebra to all my students. I work hard to 
be sure all levels of students can learn. I do not believe I would be 
as successful as I am if I had not had other outside experiences.
    Teaching is a calling that some people receive later than others. 
At 18 I was not sure what I wanted to do with my life, so I majored in 
business and graduated from California Polytechnic State University San 
Luis Obispo. I worked several jobs using my business degree, but still 
wanted to do something else more important. I finally decided that I 
really do like other people's children after being the neighborhood mom 
who taught all the kids how to swim in my backyard pool. I also spend 
time working at the school in my daughter's classroom. I looked into 
teaching.
    Now I am a teacher, but I spent several years gaining valuable 
experience doing other jobs, cashier, waitress, retail manager, payroll 
accounting and countless summer jobs earning money for college.
    I am starting to think if I will have enough money to support 
myself when I retire, but I find out my Social Security will be cut, 
because I became a great teacher who cares. Wow what a slap in the 
face. I work hard and I am totally underpaid, but that is not good 
enough the federal government want my Social Security I earned too. I 
started teaching late in my life which makes it impossible for me to 
get in enough teaching years in and because of the low pay I will never 
even begin to retire on enough money to get by on, I should be rewarded 
for not selling out for a higher paying job with less stress. Teachers 
should be honored, but instead get blamed because parents are lacking 
in skill to raise children.
    Please give me back the little Social Security I will get, because 
I worked for it and do not deserve to have it taken away because of a 
career change.

                                 
              Statement of Sandra Hopper, Joliet, Illinois
    Many of my family members and I have participated in long careers 
in teaching and counseling in the public school system in Illinois. We 
feel we have made a strong contribution to future generations with our 
efforts. Since the education field is still underfunded, we have also 
worked in the private sector during summers and taken part-time jobs 
during the years. We have contributed to the Social Security system in 
good faith. While other social security contributors also collect their 
full pensions from other systems, we are being unfairly penalized when 
we retire. I urge Representative Shaw and his committee to vote for a 
full repeal of the GOP/WEP. It's the right thing to do! Thank you for 
your consideration.

                                 

                                             Normal, Illinois 61761
                                                  February 23, 2001

The Honorable Peter Fitzgerald
555 Senate Dirksen Office Building
Washington, DC 20510

Dear Senator Fitzgerald:

    For the tax year 1999, I paid $2,154 ($485 in income taxes, $1,123 
in self-employment Social Security tax, and $546 in Medicare premiums), 
to receive $1,842 in Social Security (SS) benefits; in other words, I 
paid more than the SS benefits that I received. (Please see attached 
worksheet.) The reason for this is that my SS benefits are reduced by 
approximately 60% as a result of a law passed by Congress in the 1980s 
that reduces SS benefits of individuals who receive a pension from a 
governmental agency.
    For 35 years I was employed by the State of Illinois at Illinois 
State University and am presently a retiree under the State University 
Retirement System, SURS. The State of Illinois did not make any 
contribution to SS on my behalf during those 35 years. The majority of 
my accumulated credits for SS came from work for private companies and/
or self-employment. (There are several credits because of my military 
service in the mid 1950s.) My wife currently receives SS benefits based 
entirely on her work, primarily as a self-employed contractor.
    My firm conviction is that this law is grossly unfair. (I believe 
that this law affects many individuals who are/were employees at 
universities in Illinois.) I can understand the concept of ``windfall'' 
when an employer makes contributions to multiple retirement funds for 
an individual, e.g., if the State of Illinois had made contributions to 
both SS and SURS. But the State of Illinois contributed only to SURS; 
the majority of the contributions to SS were made by me because of 
self-employment and/or by private employers. I continue to contribute 
to Social Security based entirely on self-employment income; any 
additional SS benefit that I might earn will be reduced by 60% because 
of the federal law.
    In addition, we have just learned that when I die and my wife 
becomes the ``survivor'' of retirement benefits from SURS, with a 
reduction of 50% of the current income, her SS benefits will be reduced 
by the 60% offset even though no contribution to SS came from any 
governmental agency! In our original financial planning for retirement, 
we assumed that my wife would continue to receive the entire SS 
benefits that she had earned. This reduction in SS benefits will reduce 
the standard of living that we had planned for my wife and retarded 
daughter.
    This unfair practice needs to be repealed and/or modified quickly. 
I will be happy to discuss my individual situation with you at any 
time. I am anxious to learn your reaction to this practice.

            Confused and angry,
                                      Thaddeus C. Ichniowski, Ph.D.
                               __________

        WORKSHEET SOCIALSECURITYBENEFITSFORT.C.ICHNIOWSKIFOR1999
------------------------------------------------------------------------

------------------------------------------------------------------------
TOTAL SOCIAL SECURITY BENEFIT RECEIVED IN 1999 *                ($1,842)
------------------------------------------------------------------------
FEDERAL AND STATE INCOME TAXES ON SS BENEFITS                     ($485)
------------------------------------------------------------------------
SELF EMPLOYMENT SS TAX ON EARNINGS IN 1999 **                   ($1,123)
------------------------------------------------------------------------
NET AMOUNT RECEIVED                                               ($234)
------------------------------------------------------------------------
MEDICARE PREMIUMS                                                 ($546)
------------------------------------------------------------------------
ACTUAL SS BENEFITS RECEIVED IN 1999 ***                           ($312)
------------------------------------------------------------------------
* Note this is the benefit received after the so-called ``off-set.''
** The increase in benefits for 2000, based on the 1999 earnings, is
  still being processed by the Social Security Administration.
*** This does not include payments made by Medicare for my benefit.


                                 
 Statement of John H. Gebhardt, John Wood Community College Annuitants 
                     Association, Quincy, Illinois
    I am writing to you in support of passage of H.R. 594 that amends 
the Social Security Act that repeal the Government Pension Offset and 
Windfall Elimination Provisions. This issue has been a priority for me 
ever since I heard about how this affects my situation. I stand to 
loose over $200/month in Social Security benefits--just because I moved 
to Illinois. I believe this is unfair. Had I known about it before, I 
would not have taken a job in Illinois or I would have moved as soon as 
I could have found other employment to a state which did not have this. 
I would be more inclined to agree to this had every state been required 
to do this. The idea that my educational pension is adequate may 
apply--if I spent my whole working career in it. The premise of this 
original act was to eliminate ``Windfall Profits.'' I can tell you, I 
am not making windfall profits as a retiree of the educational system. 
I have devoted my life to serving my country as a military reservist (a 
31 year career) and as an educator (13 years in Illinois, 3 in 
Nebraska, and 7 in Iowa). I did not think I was taking a ``vow of 
poverty'' to do so. Is that the way we want to treat those who have 
worked to serve the public? It is not unusual for educators to move 
from state to state. Why should I be penalized because I came to work 
at one of the only 13 states that have this situation? I paid social 
security taxes and made contributions to Social Security thinking I 
would receive the benefits when I retired to make up for working in the 
public sector.
    As President of our local chapter of the John Wood Community 
College Annuitants Association, I know of several members who are being 
hit harder than I am. Some are loosing over $800 in benefits and their 
surviving spouses are even hurt more. My fellow retirees and I believe 
this legislation is unfair and discriminatory. These penalties are 
directed toward widows, lower income men and women that have worked 
hard to build the educational system in Illinois.
    We'd appreciate your sponsorship and support in getting this 
discriminatory legislation changed.

                                 
       Statement of Virginia B. Johnson, Hawthorn Woods, Illinois
    I have been a public school teacher for 33 years with the intent to 
retire at the end of my 34th year. I have also over the years worked 
summers and evenings to either further my education or earn 
supplementary funds. I'm sure you have heard the arguments over the 
years about how teachers have the whole summer off and can make up for 
low teaching salaries by working summers. Well, I did. And now, I find 
out that the Social Security payments I made were essentially in vain. 
I don't think that is right. Although my earnings for Social Security 
were not great, the proportion removed from my earnings was the same as 
full time workers. Each year when I receive a statement of earnings 
from Social Security it states what I am eligible for and never a 
mention of being offset by my teacher's pension. What a cruel treatment 
of a public servant.
    To add to my desire to have the GPO/WEP repealed is that my husband 
is also a public servant. He has been a firefighter/paramedic for 25 
years and has worked another job for over 28 years. Between his two 
jobs he worked nearly 80 hours per week. There were weeks he worked 7 
days. He has paid plenty into Social Security, is fully vested, and to 
now learn that those funds will not benefit our retirement is 
devastating.
    While I would never change the emotional rewards I've had from my 
career in teaching I have to question our country's procedures, which 
penalize me for choosing it.
    I am begging you to repeal the GPO/WEP and help insure that people 
who dedicated their lives to serving the government and not forsaken by 
it. I thank you for reading this letter and hope you act positively on 
this matter.

                                 
               Statement of Cathey Jones, Houston, Texas
    Thank you for giving me this opportunity to share my concerns with 
you.
    I am a 26-year veteran high-school teacher. I am married to an 
administrator in the same district. We do not currently qualify for 
social security benefits because of the time period in which we started 
teaching, but we do have a few quarters of social security because of 
jobs we held during high school and college. We had hoped to work after 
retiring from public schools to complete our number of quarters 
necessary to qualify for at least minimal benefits from Social Security 
and Medicare since we have willingly worked for less money than our 
similarly-educated friends in the private sector and have put up with 
the vagaries of the public schools because we love teenagers and love 
seeing the light go on in a child's eyes. Those who are not cut out for 
this job may not see that as enough reward for dealing with the 
hormones, tantrums, and the plethora of requirements heaped upon the 
schools by society. It is trying, to say the least, but I would not 
change professions unless forced to by health problems.
    I see no reason that because we chose to do this difficult job we 
should be kept from collecting Social Security since there are people 
who retire from the military and collect pensions from other sources 
also. My father gets Social Security and his retirement from Chevron. 
That is from working at one job for which he gets money from two 
sources. A fellow teacher worked as an airline stewardess for twelve 
years and then became a teacher. She will teach until she is sixty-
three to get her whole pension, but why should she not be able to get 
those benefits from Medicare and Social Security she legitimately 
earned? I have another friend who is in a similar situation who cannot 
get enough years to get her full teacher pension since she worked for 
18 years in the private sector before going back to school to become a 
teacher. One teacher in my department is teaching a citizenship 
Government course for Harris County to get Social Security because her 
husband is self-employed and they will need every penny they can get 
when they retire. Another teacher with a critically ill husband is 
worried she will not get her husband's social security if he should die 
because of her TRS status.
    An additional concern I have now is for my daughter who wants to be 
a teacher also. She is quite aware of the financial sacrifice she will 
be making, but I do not want her to have to take up the slack for us 
which may occur since our mutual funds are going south like everyone 
else's. I also do not want her to face lessened retirement earning 
potential since she has three chronic illnesses, and it is her medical 
expenses out of pocket right now that are killing us financially since 
she can see only a narrowed field of doctors given the rareness and 
specificity of her conditions. Only one of them is on our medical plan 
despite the fact that we pay the highest premium possible to get the 
most extensive care available to employees in our district. She will 
probably find her earnings eaten up by these expenses when she is out 
of college and employed as a teacher, so her retirement will be even 
more affected than ours since she will have less available to save and 
invest than we have had.
    It seems to me that this is a case not of closing a loophole, but 
of reducing opportunity to one segment of the population that is 
engaged in important work. If all others were to be prohibited from 
this sort of ``double dipping,'' it would be different. Teachers are 
repeatedly singled out and taken to task by one group or another for 
whatever it is politically profitable for that person in that position 
to bash. All people feel they are authorities on schools since everyone 
has been at school as a student; this leads to the feeling that it is 
not necessary to consult professionals who are actively teaching or 
administrating in order to make statements about what is needed to fix 
problems in school districts. That seems a bit foolhardy to me, but 
nonetheless this tendency to feel everyone is an authority on schools 
seems to lead people to think there should be huge disincentives 
imposed on the teaching profession so we can weed out the bad ones. I 
think you are weeding out a large number of potential new teachers and 
discouraging many of the veterans like me when you try to pass 
legislation that prohibits teachers from making their best effort to 
climb out of that precarious financial position that the profession 
puts us in.
    Please consider the case of the old teachers like me who have 
worked forever and have only the TRS to keep us from the poorhouse 
since investments are losing so much, the teachers who have taught only 
half their career and have roughly equal time in Social Security, and 
the case of those who are now teaching for Harris County for a pittance 
one night a week to get that meager minimum SS eligibility to be able 
to avail themselves of Medicare. We are not money-grubbers! We have 
worked long and hard with little respect because we love the children 
and what we teach. Should we be denied the opportunity others still 
have? Have we not paid in many ways for those benefits?

                                 
              Statement of Ellen Kahn, Homewood, Illinois
    I am writing to you in support of passage of H.R. 594 that amends 
the Social Security Act that repeals the Government Pension Offset and 
Windfall Elimination Provisions.
    The offset and windfall penalties are a form of work 
discrimination. As someone who has worked in both the public and 
private sectors and made retirement contributions to both, I am being 
punished by having a significant reduction on my benefits while others 
get their full retirement benefits.
    At age 65, when I would like to retire or work part time, I have to 
work full time in order to meet expenses.
    I believe the GPO and WEP are unfair and discriminatory. These 
penalize widows, lower income men and women that have worked hard to 
build the educational system in Illinois.

                                 
         Statement of Martha Karlovetz, Lake Sherwood, Missouri
    Thank you for providing the opportunity to write to you regarding 
the personal impact that the Windfall Elimination Provision (WEP) and 
the Government Pension Offset (GPO) have on me.
    I retired in 1995 after a working career that spanned 35 years. For 
15 years I worked full-time in jobs covered by social security. The 
first six of these years were my lowest earning years. I worked as a 
clerk-typist for a small manufacturing company in St. Louis while I 
finished my teaching degree in night school at Washington University. 
The last nine of these years (and the years immediately preceding my 
retirement) were my highest earning years. In each of these nine years 
I contributed the maximum F.I.C.A. required by social security.
    For 17 years I was a teacher, contributing 9\1/2\ to 10\1/2\ 
percent of my salary to the Public School Retirement System of Missouri 
(PSRS). My school districts, Ladue and Parkway, also contributed to my 
pension. These are monies that I would have been paid in salary. I also 
worked part-time during my teaching years as a consultant, teaching 
summer school and teaching at the graduate level. For these jobs, 
however, a F.I.C.A. contribution was automatically deducted. I did not 
have a choice.
    Although I tried several times, beginning in 1986 or 1987, to find 
out what the impact of the Windfall Elimination Provision would have on 
my social security benefit, I had difficulty getting any accurate 
information. The local social security offices that I contacted, and 
yes, I did contact several hoping that someone would have the answers, 
would refer me back to the Public School Retirement System. PSRS would 
refer me back to the social security offices. Written estimates of 
benefits I requested from social security were also vague.
    In 1995 I retired. Yes, I was only 55 at the time and took 
advantage of an early retirement program offered by the Parkway School 
District. Since I was vested but did not have 25 years in the 
retirement system, I needed to wait until age 60 to start collecting 
any pension and I also knew that I would be age 62 before I could start 
drawing social security. I knew my social security benefit would be 
reduced but still did not have an accurate estimate of how much.
    But my husband and I were not worried about our financial security 
at the time. We had saved and invested wisely over a period of many 
years. We built our own home, literally, had no mortgage and no car 
payments--and no debt. Our ``nest egg'' would be more than adequate to 
support us through our retirement years.
    In 2000 I began to collect my public pension, which now amounts to 
about $1,300 a month, less federal and state taxes for a net of $1,151 
per month. In 2002, at age 62, I applied for social security for which 
I now receive $655 per month. Of course this is subject to income taxes 
and is a $300 month deduction based on my average lifetime earnings, 
just because I have a public pension. This is not a lot of money after 
a 35-40 year career in the workforce!
    When the Government Pension Offset was passed by Congress, I'm not 
sure that I was even aware of it. And even if I had been, retirement 
and the possibility of my spouse predeceasing me was something that was 
so far in the future that I probably wouldn't have given it much 
thought. My husband is now 67 and has a history of heart attacks in his 
family. I am 62 and have a family history of longevity. Our future is 
here. The probability that my spouse will predecease me is quite real.
    My husband retired from McDonnell-Douglas/Boeing in September 1997, 
after more than thirty years with that company and another ten years of 
employment elsewhere. He was not a manager or an executive, but an 
electrician. His pension from McDonnell now nets him $947 per month 
after taxes and over $250 per month for health care and Medicare 
supplemental coverage is deducted. He receives $1,047 per month for 
social security, also subject to taxes. Even if you add our pensions 
and social security benefits together, we are far from being wealthy.
    In the last two years our financial situation has changed 
significantly, making the repeal of the Windfall Elimination Provision 
and the Government Pension Offset imperative. Because of the economy, 
assumptions we made when we retired are no longer accurate even though 
we did careful planning, invested wisely and met with all sorts of 
financial advisors over the years.
    Like many others in this country, our nest egg, the money we 
counted on during retirement, has shriveled to less than 50% of its 
value two years ago. We also aren't making the money on our investments 
that were predicted at the time of our retirement. We have two older 
model cars, both of which need to be replaced. We hate to take out an 
automobile loan but may be forced to do so. We haven't had a mortgage 
in 12 years, but may be forced to take a home equity loan to make ends 
meet. And I am very concerned that my husband may predecease me for I 
know I will receive absolutely no spousal survivor benefit from social 
security because of the Government Pension Offset--unless you call $45 
a month a benefit from 45 years of employment.
    Ironically, both of us have continued to work since retirement and 
are still contributing to social security--money that we will never see 
and which will not increase our benefit.
    The Windfall Elimination Provision and the Government Pension 
Offset are bad public policy and were passed under false assumptions. 
We're not talking about wealthy individuals. We're talking about 
teachers in 15 states and public employees--policeman, firefighters and 
federal employees--in all 50.
    It's time to repeal the Windfall Elimination Provision and the 
Government Pension Offset.

                                 
           Statement of Stanley M. Kazmerski, Dixon, Illinois
    I am a recently retired State of Illinois employee. In addition to 
my public job I worked as a self employed consultant for 14 years part 
time and then the last 11 years full time. So after paying into Social 
Security for 25 years (both employers and employees portions) I was 
very upset when my social security, I paid for, was reduced by 60% 
because I had been a public employee.

                                 
                 Statement of Hugh Keene, Auburn, Maine
    Thank you for giving me the this opportunity to write to you. I am 
a retired teacher as is my wife. My wife is 4 years older than me, and 
when she went to the Social Security office on turning 65 she was told 
she did not have enough credits to receive social security. I retired 
at age 60 and at the time I did not have enough credits for social 
security. However, I worked part time after retiring, and by age 65 I 
had enough credits. This meant we both went on Medicare. However 
because she did not sign up for part B of Medicare until three years 
after turning 65 she was penalized 30% for signing up late even though 
at the time neither of us could qualify for social security or 
Medicare! My wife had stayed home several years to raise the children, 
and so her pension from the state is very small. However, because she 
has a small state pension, she cannot get half of my social security 
and must pay for Medicare part B at a rate 30% higher than others. Our 
friends down the street worked for a private company and got a pension 
from the company. He also has social security and she gets half of his 
benefit even though her pension is much greater than my wife's. 
Certainly is most unfair to penalize someone simply because her pension 
is from one of the states that is affected by the Social Security 
Government Pension Offset. All we ask is fairness. My wife worked 
several years under social security, but did not earn enough credits to 
get social security on her own. Now she is punished again for having a 
small state pension and cannot get half of my benefits. Why does the 
national government allow this unfair practice to take place. Please 
repeal this most unfair law.

                                 
           Statement of William J. Kelly, Visalia, California
    After serving four years active duty with the United States Air 
Force and 31 years as a California law enforcement officer at both the 
local and state level I discovered, upon applying for my Social 
Security benefits at age 65, that I will only be entitled to receive 
approximately 40% of what I normally would be entitled to receive due 
to the Social Security Offset.
    Additionally, I received my Masters degree and teaching credential, 
and taught at two local Community Colleges and one private Junior 
College. I also taught lecture classes and facilitated small groups for 
court-mandated participants as part of the first offender DUI program.
    So, after paying into Social Security since 1953 by working before, 
during, and after my law enforcement career I find I am somehow a 
``second class'' citizen when it comes to obtaining my ``full'' Social 
Security benefits. Let's correct this unfair and unjust system. 
Immediately. And I am reading there is consideration of letting Mexican 
nationals into our system??

                                 
          Statement of Wanda Kirkpatrick, Flower Mound, Texas
    It is not fair for men and women to pay social security and then be 
told that they do not qualify for any benefits. As a widow I would 
never have to rely on my family if I were to get my social security 
benefits. There are many widows who are near poverty level who had an 
upstanding job all their lives. Then to retire and realize that those 
benefits are not here for them. The GPO is an unfair law that should be 
repealed because it is not said that your spouse is a public servant 
and therefore is not eligible for benefits. Thanks.

                                 
               Statement of Mary Knepp, Moline, Illinois
    I am strongly in favor of H.R. 349. This bill will provide fairness 
to many retirees who contributed to Social Security.

                                 
            Statement of Don Koesler, Mount Morris, Illinois
    We urge the House Ways and Means Subcommittee on Social Security to 
repeal the WEP and GPO laws initiated in 1979 and 1983 that impact 
workers in 15 out of the 50 states in the USA.
    Teachers and other public sector employees are all being 
discriminated against and robbed of benefits they paid for, earned, and 
deserve. These two laws, GPO and WEP do both of these things. Congress, 
as many of us recall, passed these two laws in 1979 and in 1983 because 
Congress had steadily robbed the Social Security Trust Fund for years. 
So, they decided to help the Social Security Trust Fund out by 
withholding benefits that had been honestly earned and counted on by 
the people that now get reduced or totally denied benefits in the 15 
states that have state pension plans. Congress pours all kinds of money 
into questionable things! Now Congress is stealing from its own 
citizens to help deal with the problem created with the Social Security 
Trust Fund.
    Playing games with the Social Security Trust Fund like Congress has 
been doing is political suicide, so stop doing it!
    Some say these laws are double dipping. What a laugh! Private 
sector people get both a pension and Social Security from the same job. 
If anything is double dipping, that is. The rest of us that paid Social 
Security while doing one job and paid the state pension on another 
completely different job are the ones said to be ``double dipping.'' 
What an insult!
    U.S. citizens do not like being robbed by anyone, let alone their 
elected representatives like has been done to hundreds of thousands of 
us. We have earned our Social Security and pension benefits with our 
hard work and the money we have paid into it. We want our money. It is 
ours--completely ours--earned and paid to both Social Security and the 
pension plan. Give us our money--stop stealing it!!!!
    We all hear how important it not to discriminate against others for 
any reason, yet here our own Federal Government is doing exactly that. 
We are not supposed to, but you can, because we are just ordinary 
working class people and you are in a position of power.
    We are tired of being treated as second class citizens. And yet all 
we hear is how highly teachers, policemen, firemen, postal carriers, 
etc., are valued. Actions by the U.S. Congress speak much louder and 
more clearly than any words. When the word gets out, who would want to 
be a public employee. Who??

      Personal Stories:

       Both my wife and I have worked part of our years as teachers and 
in the private sector C she as an administrative assistant and myself 
as a carpenter. There is no way anyone can support a family on what one 
earns when they start as a teacher C no way! Our new teacher's children 
qualify for free lunches at school.

    My wife began her career as a teacher and taught for seven years 
before taking time off to raise our two children. She went back after 
eleven years as a part time Reading Improvement Teacher and eventually 
as half time Reading Improvement Director. She always applied for full 
time positions where she was always told that she was too over educated 
and qualified to be considered. She had twelve years of teaching 
experience and a Bachelors Degree plus 28 hours. After the final 
rejection in the district where she had taught for 12 years, the 
Superintendent, told her that she was the candidate of choice, but the 
school board would not hire her because she was ``in today's market, 
overeducated and over experienced'' and hence, too expensive for them 
to hire. She saw that she had no future in her chosen profession of 
education after all the time she had spent in it.
    She went on to have career counseling and took classes and has 
become an administrative assistant. She has worked at this position for 
9 years. However, it comes to our attention as we plan for retirement, 
that she will not be able to receive both her teacher's pension (12 
years) and her Social Security benefits. She was displaced from her 
career of choice (teacher) and was forced to find other employment, the 
teaching profession no longer wanted her.
    I have been a teacher for 36 years in the same school district. My 
concern is much like my wife's. I worked for many years during the 
summers as a union carpenter and received many Social Security credits 
towards retirement, but now I find out that my Social Security benefits 
will be heavily reduced. What is going on here???

      Bottom Line:

       My wife will be getting more in Social Security than me, but 
will get nothing of my Social Security if I die--and she will get 
beaten up on her Social Security even though the years she worked under 
Social Security were greater than the years she worked as a teacher.

    I will get nothing if my wife dies from Social Security, and will 
only get a small part of her teacher's pension--if anything.
    I have worked 10 years under Social Security and will get a 
severely reduced amount even though I worked \1/4\ of my life as a 
carpenter.
    Please consider bringing the 5 bills that are presently tied up in 
congressional committees to the floor of Congress for serious 
consideration of repeal. It is only right that people earn what they 
have been paying into all their working lives.

                                 
               Statement of James Kopel, Moline, Illinois
    I am asking for your support of the above bill. This bill would 
amend the Social Security Act to negate the Government Pension Offset 
and Windfall Elimination Provisions. Currently, our retirees within the 
State University Retirement System of Illinois who have paid into the 
Social Security System DO NOT receive the full Social Security Pension 
to which they are entitled simply because they have worked both in the 
private and public sector. That is NOT FAIR. It is hurting those of us 
who need all of the money from both systems to make ends meet. We 
worked in both systems so we could provide for ourselves and our 
spouses at retirement and then discover that we are penalized because 
we were ambitious enough to work many extra hours to provide for our 
needs.

                                 
            Statement of Dorothea H. Kratzer, Midland, Ohio
    When my husband and I were planning our retirement, we knew that I 
would not be able to receive full retirement credit from the years I 
was able to teach. However, with my share of his Social Security, and a 
small annuity, we felt that we were adequately covered. However, after 
I started teaching, the Offset Penalty was voted into effect and the 
Social Security he contributed to for over 35 years is not available to 
me. Currently I receive $203 a month as my share of his Social 
Security. It just is not fair--if he could rise from the grave in 
protest, I'm sure he would. One goes to college, marries, raises a 
family, and, in this country, expects to be able to retire in a 
comfortable situation. I'm only asking for benefits which my husband 
and I have earned--it's time to correct this injustice.

                                 
              Statement of Larry Ladwig, Moline, Illinois
    I am in support of H.R. 349 which would restore fairness for all 
Social Security recipients. If someone has worked enough to earn 
benefits, they should be entitled to all of the benefits.

                                 

                                          New Lenox, Illinois 60451
                                                     April 25, 2003

Representative E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security
Committee on Ways and Means
United States House of Representatives
Room B-316 Rayburn House Office Building
Washington, D.C. 20515-6100

Dear Representative Shaw,

    I am a high school teacher with OVER FORTY-QUARTER hours for social 
security. After college and the Army, I worked for two different 
companies for nine years in which I contributed to social security. 
Because of those years in private business I will not receive the 
maximum retirement benefits from my teachers' retirement program. I am 
65 years old and just received my Medicare card. I will be retiring 
from teaching this school year with 31 years of service. You need 38 
years for full benefits in Illinois. I will get two extra years credit 
for 340 days of un-used sick leave, but still short of the full 
benefits. Because of this, I think it is fair to give teachers their 
full social security benefits earned.
    I teach in the business education department. In Illinois, all 
teachers in this department need at least 2,000 hours of private work. 
Of course, I far exceeded that requirement.

            Sincerely,
                                                        Myril Lattz

                                 

                                 Quartz Hill, California 93536-3175
                                                     April 11, 2003

Congressman E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security
Committee on Ways and Means
United States House of Representatives
Room B-316 Rayburn House Office Building
Washington, D.C. 20515-6100

Dear Congressman Shaw,

    Below is a copy of a letter I sent to Mr. McKeon on August 18, 
2002. I have since retired.

            Sincerely,
                                                     Gary C. Layton
                               __________
                                 Quartz Hill, California 93536-3175
                                                    August 18, 2002

The Honorable Howard ``Buck'' McKeon
2242 Rayburn HOB
Washington, DC 20515

Dear Representative McKeon:

    I would like to inquire as to the status of H.R. 2638.
    I paid into the Social Security system for 33 years and accumulated 
94-quarter units during that time. This is over twice the required 
number of quarter units required to qualify for Social Security 
benefits.
    The last 12 years I decided to dedicate my life to public service 
by working for the County of Los Angeles Fire Department.
    Because I was a low wage earner for many years while working under 
the Social Security program I only accumulated 22 ``substantial 
years.'' This action will cause me to lose 45% of my monthly Social 
Security benefits when I retire.
    This seems extremely unfair to punish me for dedicating the 
remainder of my working years to public service.
    I am going to have to retire soon because of physical limitations. 
I hope H.R. 638 is resolved in the near future, as it would be a 
blessing to me to receive the entire Social Security benefit that I 
have earned.
    I will be anxiously awaiting your action on this pending 
legislation.

            Sincerely yours,
                                                     Gary C. Layton

                                 
                 Statement of Carol Lewis, Salem, Ohio
    I am one of the people affected by the offset which prevents me 
from collecting any social security benefits.
    My husband passed away in August of 2001. I should be entitled to 
benefits as his widow. Because of the offset, I do not receive 
anything. I filed for Medicare under his account (as directed by Social 
Security office), but I still have to pay the premium.
    My State Teacher's Retirement benefits are not sufficient for me to 
live on. I have to take a monthly draw from my investments to subsidize 
my income. If I could receive my entitled benefits from Social 
Security, I wouldn't have to withdraw from my investments so heavily. 
At this point, I'm not sure that my nest egg will last. I have 
considered returning to work, so that my investments are not depleted 
so quickly.
    Whether I do go back to work or not, I feel that receiving my 
widow's benefits is more than fair. From what I understand only a small 
number of states penalize teachers and other public employees by 
refusing full Social Security benefits.
    I wish to add my full support to eliminating the offset.

                                 
Statement of Sharron Pearson, Lewisville Area Retired School Personnel 
                     Association, Lewisville, Texas
    As the president of the Retired Teacher's Association in 
Lewisville, Texas, I would like to encourage you to repeal the 
Government Pension Offset and Windfall Elimination Provision.
    Many of our members have had their Social Security Benefits 
unfairly reduced, or eliminated entirely. Because many of our members 
retired 10 or more years ago, their pensions are not large. Several 
have lost their spouses and expected to get at least a portion of their 
Social Security benefits. This has not happened because of GPO and WEP.
    These people have dedicated their lives to the service of the 
children of Texas, and they need your support. Repeal the Government 
Pension Offset and Windfall Elimination Provision, and send the message 
that their hard work is appreciated.

                                 
                 Statement of Mary Linz, Bangor, Maine
    Thank you for giving me this opportunity to write to you.
    My name is Mary Linz. I am a teacher and taught 19 years in Maine. 
I taught 3 years in NY before moving to Maine. (I get no retirement 
benefits from NY.) I also took 10 years off to raise our two sons to 
school age. Consequently my Maine retirement is quite low. I get about 
$750.00 a month after health insurance and taxes. I also pay $58.70 a 
month for Medicare. (That's going up to $65.70 next year.)
    My husband is also a retired teacher, but built up 18 years SS in 
NY and at other jobs. He, of course, is subject to the WEP. He gets 
$344.00 a month after Medicare. Because his SS is so low, my pension 
completely cancels any survivor benefits. Fortunately, we knew this 
when he retired.
    Because I will probably outlive him by several years, he is only 
taking 80% of his Maine retirement so that I may continue to collect 
after he is gone. Otherwise I would have barely enough to survive on. 
This means that he does not get his full SS, and does not get 20% of 
his earned pension. This causes us to have a considerably lower 
retirement income than has been earned.
    Even if the SS offsets were repealed, he would not be able to 
collect his full Maine retirement because once the choice has been made 
at retirement, it can not be changed. This is just another example of 
how the SS Offsets affect the retirements of those subject to the GPO 
and WEP.

                                 

                                       Brecksville, Ohio 44141-2729
                                                     April 28, 2003

The Honorable E. Clay Shaw;
Chairman, Subcommittee on Social Security
Committee on Ways and Means
United States House of Representatives
Room B-316 Rayburn House Office Building
Washington, D.C. 20515-6100

Dear Congressman Shaw,

    As retired secretary to the Business Manager of Brecksville-
Broadview Heights City Schools, Brecksville, Ohio, I am writing about 
the two unjust Social Security provisions that affect hundreds of 
thousands of educators and other public employees across the country. 
These provisions are known as the Government Pension Offset (GPO) and 
the Windfall Elimination Provision (WEP). I urge Congress to enact 
legislation repealing these two Social Security provisions.
    The GPO eliminates or reduces the spousal benefit by two-thirds the 
value of a person's retirement benefit. The WEP reduces, but does not 
eliminate, a portion of an individual's Social Security earned from 
work outside public employment.
    After 11 years working and paying into the Ohio State ``School 
Employees Retirement System'' (SERS), my husband and I are affected by 
both the GPO and the WEP. Of my SERS benefit of $243.22 I actually only 
receive $68.92. Very little benefit for 11 years of work.


------------------------------------------------------------------------

------------------------------------------------------------------------
My School Employees Retirees System pension:          $243.22 per month
------------------------------------------------------------------------
Social Security benefit from previous employment
 and
  spousal benefit:                                    $732.50 per month
------------------------------------------------------------------------
TOTAL BENEFIT PLANNED FOR RETIREMENT:                           $975.72
------------------------------------------------------------------------
Affect of GPO/WEP:                                        minus $174.30
------------------------------------------------------------------------
ACTUAL RETIREMENT BENEFIT:                                      $801.42
------------------------------------------------------------------------


    Persons working in other occupations can receive multiple pensions 
with no reduction in Social Security. Even immigrants who never paid 
into Social Security are entitled to receive benefits under Social 
Security SSI.
    Thank you for taking this matter into consideration.

            Sincerely,
                                                   Joanne Lundstedt

                                 

           Statement of Jacalyn J. Lynch, South Paris, Maine
    Thank you for giving me this opportunity to write to you.
    My name is Jacalyn Lynch, I am writing you today to ask you 
consideration of amendment of the GPO/WEP rules governing Social 
Security benefits.
    I live in South Paris, Maine where my husband and I lived for the 
past 24 years. We have raised our three children here and we both have 
worked hard to maintain a standard of living that we feel has provided 
our children and ourselves with a good life style. My husband has 
worked over the past 32 years for a local machine shop that is a leader 
in manufacturing of precision machine parts. I stayed home or worked 
part time under Social Security for many years while raising our three 
children. Over the past 15 years or so I have worked full time as a 
medical secretary or receptionist. This was all under the Social 
Security system until 3\1/2\ years ago when I decided to take a 
position as Medical Records Clerk at the Maine Veterans' Home here in 
South Paris. Maine Veterans' Homes have a wonderful reputation of 
serving elderly and infirmed Veterans of Maine with the highest 
standards of care found anywhere in the United States. I enjoy my job 
and I love the opportunity to give back something, all be it in a small 
way to the men and women who laid their lives on the line for our 
freedoms.
    The Maine Veterans' Homes organization is under the Maine State 
Retirement System. It was not until after I took this position with the 
Maine Veterans' Homes that I realized that I would not be able to 
receive full benefits from my contributions to Social Security if I 
continue to work there.
    Now at age 54 with my husband aged 59 I am faced with the dilemma 
of either staying at the Maine Veterans' Home, which I truly want to do 
until retirement, or being forced to leave this position for another 
under the Social Security system in order not to loose my full Social 
Security benefits upon retirement.
    I understand why the GPO/WEP programs were instituted. However, 
somewhere there was a deviation from what I think the Subcommittee on 
Social Security meant to do when they passed this amendment. I do not 
``double dip.'' I do not hold another job under Social Security at the 
same time I hold a job under Maine State Retirement. I do not plan to 
do so. I do not understand why I am being penalized from receiving full 
Social Security benefits upon retirement if I will also be receiving 
some Maine State Retirement System benefits. I worked hard under Social 
Security, and did not double dip then. I work hard under the Maine 
State Retirement System and I do not double dip now.
    One more factor I wish you to consider. Even though both my husband 
and I have worked hard over the 36 years of our marriage, never taken a 
hand out, never asked for help, raised 3 children, 2 of whom are 
contributing to society with their respective spouses, working hard and 
raising their families and the youngest who is just completing her 
junior year at Emmanuel College in Boston, (most of her tuition is paid 
by a scholarship from the college, because she has such a strong work 
ethic and the grades to match), she wants to come back to Maine to live 
and work after graduation. We, my husband, my children and myself are 
one family of many who ``make America work.'' We take pride in our 
contributions to our work and our community. I especially take pride in 
serving Maine Veterans.
    Now all that said, why is it that I face an uncertain future in 
retirement? I have never made a lot of money, never had a lot of 
benefits that would be channeled into funds to supplement my 
retirement. When I do retire it will not be to live some dream life in 
a fancy home with paid help if I need it, not much travel will be 
affordable. But just to be able to hold on to our home for a longer 
period of time, to be able to take our grandchildren out for a day at 
the amusement park, not much to ask is it? My husband and I both have 
contributed to 401K's and now I have to contribute to a 403B plan. A 
few years ago we thought we would be ok after retirement. We have lost 
most of what we had in the recent economic environment. Not because we 
were foolish, not because we took risks, just because we went along 
with the advice from our financial advisors.
    Now you are telling me that because I choose to work to be a small 
part of an organization that makes life better and nicer for Maine 
Veterans I will have to be penalized! That is just not right. I know I 
am not alone; some of our homes have lost good employees because of 
this very same factor.
    I ask each and every one of you on the House Ways and Means 
Committee, Social Security Subcommittee to think twice about what kind 
of an impact this is going to have on the future of this country. Those 
of us who only want to change our jobs in order to better serve the 
community and the country and in my case the Veterans of Maine will be 
the next generation of poor elderly in this country. And I am sure each 
of you knows that if there is one thing that says a lot about a 
community, a state or a nation it is how the elderly population is 
treated, cared for and respected.
    I am sure you will each give this your most careful consideration. 
Yes there may be double dipping in some segments of the Social Security 
system. However, those who choose to serve our community by taking a 
job that is not under the Social Security system should not be 
penalized!
    Thank you for your time and consideration.

                                 
             Statement of Judy Lynch, Roseville, California
    Imagine my shock to find out that I may lose 60% of the Social 
Security benefits I have worked so hard to earn. I ask your help so 
that this does not happen.
    I am a 1st grade teacher and Reading Specialist at Madison School 
near Sacramento, California. Early in my career, I took a break of 9 
years to raise 3 terrific children (just a mom bragging!). I will never 
regret those years on a tight budget, driving my husband to his high 
school teaching job in a used van, because we could only afford 1 car 
on his salary. I knew I was missing years towards retirement but vowed 
to make it up when our children were older.
    That's what I did. After returning to full time teaching in 1984, I 
looked for ways to supplement our income for the kids' college tuition 
funds and build my Social Security credits. After school, and during 
the summers, I worked to build a small business as a Language Arts 
Consultant. I worked for districts around my area training teachers in 
the latest reading strategies. I am still doing that, now nationally, 
to help implement the No Child Left Behind Act. I also became a 
published author--writing books on weekends and in any spare moment. 
Scholastic in New York published my two professional books for teachers 
in 1998 and 2002. All the extra income earned Social Security credits 
towards my retirement through my small business.
    Now, I am told, that because I am a teacher and a member of the 
State Teachers Retirement System in California that my Social Security 
benefits will be reduced by 60%. Is this fair to a mom who stayed home 
to raise her children and then worked twice as hard to make up for it? 
My Social Security income should not be considered ``double dipping'' 
because I did it all on my own time: weekends, after school, and my 
vacations!
    Committee members, I will be retiring from teaching in 6 years. I 
love teaching little kids to read--it is my passion. I also love 
training teachers to do the same--especially teachers of Title 1 
students in areas of high poverty. I also have been a successful mom to 
Michael, Shannon and Kevin. Please do not penalize me in the retirement 
benefits I have worked for and earned 100%.

                                 

                                                DeLeon, Texas 76444
                                                       May 13, 2003

The Committee on Ways and Means
United States House of Representatives
1102 Longworth House Office Building
Washington, D.C. 20515

To Whom It May Concern:

    I have been in education for fifteen years. Prior to teaching I was 
a stay at home Mom for twenty years. I helped my husband on the family 
farm and raised my two boys. Now I am aware that if something happens 
to my husband I cannot collect his social security. If I had never gone 
to work I could have received his benefits but since I went into 
education I am being penalized. To add insult to injury if I died he 
could collect my teacher retirement and his social security!!!! Where 
is the fairness in the scenario? This is the thanks that teachers get 
for working with the future leaders of our country?
    For elected officials there is no limit on the retirement options 
available to them. They can collect from private employment and 
government retirement. Why should they get both? We as teachers only 
want what we and our spouses have paid into all our working lives. What 
we have earned and paid taxes on, its ours!!!!

            Thank you for your consideration in this matter,
                                                     Darlene Mathis

                                 
        Statement of Loretta and Carl Mayhew, Cherryfield, Maine
    Thank you for giving this opportunity to talk to you regarding the 
GPO and WEP offsets.
    Our names are Carl and Loretta Mayhew, and we are both members of 
the Maine State Retirement System. We live in Cherryfield, ME. I, 
(Loretta) am retiring at the end of the current school year after 22 
years as a teacher. Before that I worked as a secretary, a blueberry 
factory worker, and other types of low wage jobs. I have my required 40 
quarters paid in to social security with minimal income levels. The 
application of the 60% or more offset will give me about $50 for social 
security benefits. I will not receive anything from my husband's social 
security benefits if he predeceases me! I will have only my MSRS 
pension which will be approximately $15,000 minus health insurance of 
which we have to pay all but 35% of the premiums and any other 
deductions that are taken out.
    Carl, my husband, has 18 years as a teacher in the public school 
system. He got done in 1993 from Cherryfield Elementary School and went 
into full-time self-employment as a land surveyor. We pay in regularly 
for self employment taxes. Therefore, his MSR pension will also mean 
that his social security pension will be offset as well. By the time 
health insurance and the offsets are done with us, we will be receiving 
close to poverty level income. This means that one or both of us will 
have to continue working for several more years.
    I truly believe that our social security benefits are being stolen 
from us when we earned and paid in good faith for many years! I also 
believe that we as citizens of the United States should be placed at 
the front of the line for social security benefits before these 
benefits ($345 billion?) are paid to illegal immigrants from Mexico and 
other people from other countries as well receiving benefits. I am 
totally against building a S.S. Administration office in Mexico and 
doling out to the Mexicans what should be rightly ours. (I have nothing 
against them personally).
    As a teacher of career preparation classes, I have not been able to 
recommend to my students who have perhaps been interested in going into 
the teaching profession that they do so because of all the inequities 
which teachers are faced with. All other state workers receive 100% 
health benefits during their retirement years. We receive 35%. We are 
considered state employees but we are not treated the same.
    We urge you to vote for the total repeal of the Government Pension 
Offset and the Windfall Elimination Provision.
    We have as much right to our social security benefits as any other 
employees who have worked under the social security system.

                                 
               Statement of Perry McCall, Houston, Texas
    I have always wanted to teach; to make a difference in students' 
lives and to help them make connections from the past to the present. 
My undergraduate and graduate studies and my year of study abroad 
helped to expand my knowledge and life experiences so that I could do 
my best to share the underlying causes both human and physical that 
shape history. With a MA in history, my first year of teaching I made 
the magnificent sum of $8,000 in 1972. Texas Retirement got a portion 
of even that. I had no option to get Social Security.
    After my son was born, I returned to teaching in 1976, but found 
that my then $9,000 salary barely covered child care and the 
``deducts.'' So I retired from teaching, did lots of volunteer work, 
had twins, raised them, carpooled them, did all the non-compensated 
``Mom Stuff'' and occasionally did some part time work for which I 
earned Social Security.
    When my twins were in the 8th grade, I began to substitute teach to 
see if I had what it took to teach in the computer age. I was called on 
continuously. (It is not often school districts have substitute 
certified teachers with masters' degrees.) As a sub I earned about 
$7.50 an hour . . . less than my yardman. But still, if I worked very 
hard 90/180 days, Texas Retirement would ``let'' me pay for a year of 
Retirement. So I did for 3 years. The district took advantage of me and 
called me for long term subbing (which was really full teaching but at 
sub rates). Eventually my twins moved on to college and I ended my 21-
year baby leave and worked full time. In 1996 @ $28,000. Again I paid 
into TRS (retirement). I had no option. (They do not give a choice of 
SS).
    Then in 1998, 2 things happened, the State of Texas gave us a long 
overdue raise and Houston Community College hired me as an adjunct 
teacher. Students taking my Advanced Placement American History class 
were eligible for Dual credit. They can earn both high school and 
college credit. (My masters in U.S. history was finally valuable to 
someone.) Oddly I pay into Social Security for the small stipend I 
receive from HCC. But now I am paying more into TRS because of my raise 
as a high school teacher.
    Meanwhile all this time I have been married to Michael M. McCall 
who served 4 years in the army (Vietnam era). He has been working (and 
paying into Social Security ever since 1971). We have been told that 
because of the supposed ``windfall'' tax, I am not eligible to receive 
my TRS benefits because it will reduce either or both mine and my 
husband's benefits (in the event of his death). This seems remarkably 
unfair. We are the silent majority working hard. I put in 12-hour days 
at school, and then go home and grade! When I face a stack of essays, 
quizzes, and maps and think that I am paying money into TRS that I will 
never see because Social Security will penalize me for working, I feel 
very discouraged. I think why am I doing this? Although being selected 
for Who's Who of America's Most Outstanding Teachers is nice, it won't 
pay the bills in my old age.
    Can you please help us receive what we earned and paid into Social 
Security and TRS without being penalized for working. This unfair 
windfall tax is a disincentive to work. I have students now at Harvard, 
Princeton, U of Penn, Cal Tech, Stanford, Vanderbilt, BU, Yale, 
Dartmouth, Rice, Duke, University of Virginia, W&L, Hollins, NYU, LSU, 
and all the Texas schools among others. My students do very well on the 
U.S. History AP exam. I am a really good dedicated teacher . . . I am 
also one of the many thousands of teachers, who are approaching 
retirement, full of knowledge, but wondering who will care for us. Our 
pensions are at risk. Tell me; with the windfall tax on the books . . . 
explain to me why I should not just retire early. If we do (there are 
many of us), the teacher shortage will be increased. But worse, will be 
the loss of so many excellent dedicated teachers.
    Hoping that you will change this punitive tax so I can continue 
doing what I love. Teaching.
    I remain hopeful and serving America's future.

                                 
            Statement of Carolyn McCormick, Beaumont, Texas
    The United States House of Representatives has done to me and other 
school/public servants what ENRON did to their employees in reducing or 
eliminating earned retirement benefits. For 19 years, I paid into 
Social Security through private sector jobs before working as a 
secretary for school districts in Houston, Dallas, and presently for 
the Texas Education Agency (TEA), Region V in Beaumont, Texas. For my 
prior earned Social Security benefits to be reduced because I will now 
retire from TEA that does not withhold Social Security singles me (and 
thousands of other public servants) out unfairly for reduced benefits 
that I earned by paying into Social Security for 19 years. This is 
unconscionable.
    My pension will not be a windfall because I have paid into the 
Texas Teacher Retirement System (TRS) for fewer years than I paid into 
Social Security. At 56 years of age with 13 years of TRS credit, my 
pension is estimated at $367 per month. My earned Social Security 
benefit is estimated at $643 per month before being reduced 
approximately $300 per month by the WEP requirements. Where is the 
windfall?
    For me to also be denied full spousal Social Security benefits due 
to the GPO as a widow from my husband who paid into Social Security for 
40 years is just as unconscionable. I am part of a group being singled 
out unfairly.
    This is the first time I have ever written to a member of Congress 
asking for support. No issue you have worked on or ever will work on in 
the future will be as important to me and thousands of other public 
servants as this. PLEASE ENDORSE AND SUPPORT THE SOCIAL SECURITY 
FAIRNESS ACT, H.R. 594 and repeal these grossly unfair and unjust laws.

                                 
                Statement of Melissa Means, Nome, Texas
    Thank-you for giving me the opportunity to give my testimony. I am 
36 years old and began teaching 4 years ago. Previous to my career as a 
teacher I worked in the ``corporate world'' where I didn't work nearly 
as hard and received much better benefits and salaries. Now I work much 
harder, receive less money and poor benefits, but the job satisfaction 
and rewards are excellent. I also have paid into social security for 
over 15 years.
    Before I decided to become a teacher, my husband and I contemplated 
our financial situation to make sure we could continue to lead a 
comfortable lifestyle with the cut in pay I would endure as a teacher. 
We also researched the information we had for our retirement. Because 
neither of us are vested in a retirement program and my husband is 
self-employed, we obviously used social security benefits as planning 
for part of our retirement. This was obviously before I was aware of 
the GPO and WEP. We knew that we would have to put extra money aside 
because my husband is self-employed. We also knew that between the 
money we put aside and the social security benefits we thought we would 
receive would suffice us for our golden years. Now that we are aware of 
the unjust laws in the GPO and WEP, we are extremely concerned about 
our retirement. This is a greater concern if something were to happen 
to my husband first. The facts are that I only bring home $1,200 a 
month after taxes, retirement and health insurance premiums are 
deducted. Yes, that is NOT a typo, it is $1,200 per month. This is 
poverty level. My husband is also 13 years older than I am and has been 
paying maximum social security and matching it for 10 years assuming 
that we (or one of us) would be able to benefit from his hard work one 
day. Please explain to the committee why I should be punished and 
forced into poverty if something were to happen to my husband because I 
made a decision to teach our future leaders. The facts are very clear 
to me and I am second-guessing my decision to become a teacher. I teach 
7th grade math and do a very good job. I enjoy my job and would love to 
continue to teach. I feel that I am teaching while gambling with my 
family's livelihood due to the unfair laws that you can fix.
    I am aware that these unfair laws do not single out teachers and 
they affect other government workers. However, you need to realize that 
most government workers do have much better benefits than teachers. For 
example, they can retire with full benefits after 20 years. Teachers 
cannot do this. This allows those government employees to subsidize 
their retirement with other careers. Teachers have to subsidize their 
income as opposed to retirement by working on their vacation (summer). 
This again only helps the government because it forces teachers to pay 
even more social security that they will not be able to receive. That 
is unless you do something to change that. Other government workers 
also receive excellent health benefits without paying extreme amounts 
for them. Teachers do NOT receive this. Any extra money teachers could 
be putting away to help subsidize their retirement usually has to be 
used for the high cost in health insurance premiums. I am currently 
paying $650 per month for family health insurance. I had to decline 
family dental coverage due to affordability. So, in a way, yes we are 
singled out. The way I perceive it is we are treated as ``government'' 
employees when it benefits the government (i.e., social security) and 
we are NOT treated as government employees when it comes to benefits 
other government employees receive (i.e., years to retirement, low cost 
health and dental insurance, vacation days). If we have to follow 
``government'' employee rules on any issue I feel we should be treated 
as government employees on ALL issues. Currently we just receive the 
ones that benefit the government.
    PLEASE eliminate the unfair GPO and WEP. You hold the key to giving 
teachers what they rightfully deserve and have earned. I have paid into 
social security for over 15 years and my husband has paid the maximum 
for 10 years. We should not be punished because I teach.
    Again, I thank-you for the opportunity to have my voice heard. I am 
very proud to live in a Democratic country where my freedom is 
preserved.
    PLEASE ELIMINATE THE UNFAIR GPO AND WEP BY VOTING FOR H.R. 594.

                                 
        Statement of Jonathan P. Meyerson, Chevy Chase, Maryland
    As a retired employee of the Federal Government who has been 
impacted by the Windfall Elimination Provision, I wish to express my 
satisfaction at how well the provision works for taxpayers and for 
myself.
    I worked for 32 years for the Federal Government, primarily in 
various offices of budget and legislation, in OMB and other agencies 
and departments. During that time I realized how important it is to use 
Federal funds only when it is appropriate and worthwhile for society. 
The Social Security retirement system provides additional funds for 
those poor people who worked a short time and at low wages, so they 
would be able to provide enough income for necessities of life.
    The Windfall Elimination Provision was enacted to cut this bonus 
for individuals, such as myself, who have earned large pensions from 
the Federal Government and do not deserve this bonus.
    Both the Government Pension Offset and WEP make a lot of sense and 
I strongly believe there is no reason to make any changes--even though 
I would benefit if the Windfall Elimination Provision was revoked. I 
would be happy to testify in person, if you believe that would be 
useful to the Committee.

                                 

                                           Bridge City, Texas 77611
                                                     April 25, 2003

The Honorable E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security
Committee on Ways and Means
United States House of Representatives
Room B-316 Rayburn House Office Building
Washington, D.C. 20515-6100

Dear Sir:

    This letter is concerning how the GPO/WEP offsets affect me 
personally.
    My name is Sally Montague and I retired from Jasper ISD in Jasper, 
Texas. At the time I retired in 1997, the Jasper School District did 
not pay into Social Security. However, I had worked in the Port Arthur 
ISD that did deduct my salary for SS benefits and I had worked in some 
other businesses where I earned over 40 quarters of Social Security. 
Since I had a SS work record, I did not think that this GPO/WEP law 
would keep me from getting my own benefits. One year later my husband 
passed away and when I reached the age of sixty I tried to get the 
widow benefits from SS. Our Port Arthur SS office said that because I 
retired from a school district that did not pay into Social Security at 
the time of retirement, I would neither get the widow's benefit nor any 
of my husband's benefits. He had been a minister for many years and I 
helped him pay into SS quarterly. This did not seem too fair. Also, the 
SS office said that I would only get one-third of my own SS benefit 
payments when I applied. They encouraged me to wait until I was 65 so I 
could get more of the one-third amount. Needless to say, I was a very 
upset widowed teacher.
    Since finding out this information and having a house, insurance, 
car, groceries, utility bills, and other living expenses I went back to 
work at a private school. I have worked four out of the five years 
after my husband died. My mother is still living with Social Security 
as her only income. Since she has high medicine bills, I am helping her 
to maintain her living expenses. This is another added expense that I 
have.
    Please repeal the GPO/WEP that is so very unfair to widowed Texas 
teachers and other public service workers. It may mean just a few 
hundred dollars a month, but that will help greatly.
    Thank you for reading my testimony.

            Sincerely,
                                                     Sally Montague

                                 
 Statement of Walter Olihovik, National Association of Postmasters of 
                the United States, Alexandria, Virginia
    Chairman Shaw, Congressman Matsui, and Members of the Subcommittee 
I am Wally Olihovik, President of the 42,000 member National 
Association of Postmasters of the United States (NAPUS). NAPUS 
represents the approximately 27,000 postmasters in the United States, 
as well as retired postmasters.
    It is a privilege to share with you my thoughts about how current 
social security provisions adversely affect a large number of public 
employees. Specifically, I would like to address the unfair financial 
burden that many NAPUS members must endure as the result of the 
``government pension offset'' (GPO) and ``windfall elimination 
provision'' (WEP). Pending before your Committee are three different 
ways to address the social security penalty imposed on retirees, such 
as retired postmasters. One strategy would be to do nothing; another 
strategy, as proposed by Representative William Jefferson and 
Representative Barney Frank, would be to reform the way in which the 
GPO and WEP are to be calculated; and the final method, as offered by 
Representative Buck McKeon and Representative Howard Berman, would be 
to repeal totally the GPO and WEP. As the Meatloaf song goes: ``two out 
of three ain't bad!'' Clearly, the Subcommittee should pursue 
legislation that reduces, if not eliminates, the unfair burden 
shouldered by many former public employees.
    The GPO unjustly taxes government annuitants, including retired 
postmasters, who are also eligible for Social Security survivor 
benefits. The offset provision slashes the social security benefit by 
two-thirds of the amount of their federal annuity. It is possible for a 
retired postmaster to receive no social security survivor benefit to 
which they would otherwise be entitled. Postmasters do not qualify for 
a large pension. Many have managed small post offices for which their 
salary history yields a subsistence CSRS annuity. Moreover, a large 
number of retired postmasters happen to be female, who may have 
interrupted careers that compound their limited CSRS benefit. These are 
the NAPUS members who are most injured by the GPO.
    Many NAPUS members suffer from the WEP, which dates back to the 
mid-1980s. This social security provision also unfairly punishes many 
public employees. The WEP cuts the earned social security benefit by up 
to 50 percent, for the sole reason that an individual chose a career 
path in the public service. Public employees should get full credit for 
their employment no matter if they pursue public or private employment.
    Mr. Chairman, there exists a fundamental misunderstanding of the 
Civil Service Retirement System. This misunderstanding has bred the 
present unacceptable and financially harmful situation for countless 
postal and federal retirees. The CSRS is not a social insurance 
program, like the social security system. It is an employer-sponsored 
defined-benefit pension plan, similar to private sector plans. Its 
interaction with social security should resemble the interaction 
between private plans and the social security system. In this way, 
public employees including postmasters will be treated with the respect 
and fairness they deserve.
    Mr. Chairman, thank you for conducting this hearing and providing 
NAPUS with opportunity to share our views. We encourage you to 
expeditiously report legislation to correct the unfair financial plight 
suffered by so many who are committed to public service.

                                 
   Statement of Frederick H. Nesbitt, National Conference on Public 
                      Employee Retirement Systems
    Good morning. My name is Frederick H. Nesbitt, Executive Director 
and Legislative Counsel of the National Conference on Public Employee 
Retirement Systems (NCPERS). My organization 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 represent pensions 
on Capitol Hill, provide trustee education, and deliver essential 
pension information to trustees, administrators and public officials.
    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 62 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 NCPERS opposes expanding 
Social Security coverage to non-covered state and local government 
employees. Public sector employers were required to create separate 
pension plans for their employees when they were excluded from Social 
Security. 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. These states are already in a 
financial crisis and do not need an additional burden. In addition, the 
current economic climate in the states and local governments has forced 
some employers to layoff firefighters, police officers and teachers, 
thus making those remaining do the same job, but with fewer resources.
    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 solves approximately 10 percent of the 
funding shortfall in the short run, 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. We would be 
happy to answer any questions you may have.

                                 

                          National Conference of State Legislatures
                                               Washington, DC 20001
                                                        May 1, 2003

The Honorable E. Clay Shaw, Jr., Chair
Subcommittee on Social Security
U.S. House Ways and Means Committee
Room B-316 Rayburn House Office Building
Washington, DC 20515

Dear Chairman Shaw:

    On behalf of the National Conference of State Legislatures (NCSL) I 
want to thank you for holding today's hearing and for the opportunity 
to share our concerns regarding mandatory Social Security coverage and 
offsets to Social Security experienced by state and local government 
employees. NCSL has opposed mandatory Social Security coverage for 
state and local employees since the law was enacted. Similarly, NCSL 
supports reform of the Government Pension Offset (GPO) and the Windfall 
Elimination Provision (WEP) as they apply to Social Security benefits 
paid to public employees whose incomes were earned in part or in full 
through uncovered public employment.
    NCSL has consistently maintained policy in opposition to mandatory 
coverage of state and local government employees. Roughly twenty-five 
percent of state and local government employees, working in all 50 
states are not covered by Social Security. These public employees are 
predominately teachers and public safety officers, whose primary 
retirement benefits are provided by their state and local government 
employers in accordance with federal law. Federal law requires these 
benefits to meet a minimum standard for contributions and benefit 
levels.
    The application of mandatory coverage to all newly hired state and 
local employees would constitute a massive unfunded federal mandate on 
state and local governments. It would do little to extend the solvency 
of the Social Security system. Recent estimates of its cost exceed $25 
billion over 10 years. NCSL supports federal efforts to reform Social 
Security and extend the solvency of the program. However, the nation's 
state legislatures do not support exporting the program's long-term 
insolvency to state and local governments.
    While many state and local government 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. These benefits are subject to the Windfall Elimination 
Provision (WEP). Similarly, state and local employees may also earn a 
Social Security benefit as the spouse of a beneficiary who paid into 
the Social Security program. These benefits are subject to reduction by 
the Government Pension Offset (GPO).
    NCSL supports efforts to lessen the impact of these reductions to 
the retirement income of state and local government retirees. NCSL 
maintains that the reductions imprecisely and unfairly reduce the 
Social Security benefits of government retirees. These reductions have 
unintentionally harmed a disproportionate number of women and moderate 
and lower-income state and local government retirees. As such, NCSL 
supports efforts to reform or repeal these reductions. This includes 
support for H.R. 887, S. 363, H.R. 594, S. 349, and section 207 of your 
own bill, H.R. 75, which would reduce the impact of the government 
pension offset by half.
    NCSL supports reform of the Government Pension Offset and the 
Windfall Elimination Provision but questions the appropriateness of 
linking reform or repeal of these provisions to the extension of 
mandatory coverage. NCSL believes linking these provisions increases 
the burdens imposed on government employees and employers while doing 
little to solve Social Security's long-term financing concerns. 
Similarly, joining the provisions does little to strengthen Social 
Security's mandate to provide an adequate safety net for the system's 
beneficiaries.
    We appreciate your consideration of the views of the National 
Conference of State Legislatures on this issue.

            Sincerely,
                                          The Honorable Felix Ortiz
                                 New York State Assembly, and Chair
                 Labor and Workforce Development Standing Committee

                                 

                            Ohio Public Employees Retirement System
                                               Columbus, Ohio 43215
                                                     April 28, 2003

The Honorable E. Clay Shaw, Jr.
Chairman
Subcommittee on Social Security
Committee on Ways and Means
U.S. House of Representatives
B-316 Rayburn House Office Building
Washington, DC 20515

Dear Congressman Shaw:

    Thank you for the opportunity to submit a written statement for the 
May 1, 2003 Hearing on Social Security Provisions Affecting Public 
Employees. The provisions that you plan to address at the hearing are 
very important to us.
    On behalf of the Ohio Public Employee's Retirement System Board of 
Trustees and the more than one-half million active members and retirees 
served by our system, I am writing to express our firm opposition to 
mandating social security coverage on exempt public employees. There 
are a number of large states that would be severely impacted by 
mandatory coverage. In addition to Ohio, other large states that would 
be affected include Alaska, California, Colorado, Connecticut, 
Illinois, Kentucky, Louisiana, Maine, Massachusetts, Missouri, Nevada, 
and Texas. In addition to these states, however, all 50 states have 
significant subgroups of non-covered employees since the vast majority 
of police and firefighters are also exempt from social security.
    A GAO study reported in 1998 that mandating social security 
coverage of public workers would extend the solvency of the social 
security trust fund by only two years. Interestingly, the GAO study did 
not detail the increased social security liabilities that would be 
incurred by bringing in currently exempt public employees. In 1999, the 
Segal Company did an independent study that reported extending 
mandatory coverage would cost public employers over $26 billion for the 
first five years. Since then the costs have gone up and, even worse, 
most states are now facing budget crises.
    Some proponents of mandatory coverage assert that bringing in ``new 
hires'' only would cause no financial damage to our systems or to our 
current members. That assertion is wrong. The fiscal impact of 
excluding new hires from our systems would be financially devastating 
to our pension funds over time. Our defined benefit plans operate under 
the critical actuarial assumption that employer and employee 
contributions and subsequent investment income will continue to flow 
into our systems at rates projected by the actuaries. Directing new 
hires to social security would lower employer and employee 
contributions coming into our systems and consequently lower investment 
income upon which our systems depend for nearly two-thirds of total 
income. As a consequence, mandatory coverage will over time 
dramatically undermine our financial ability to maintain benefits for 
current members and retirees. Mandatory coverage would thus force 
benefit reductions for both new hires and previous hires.
    We understand that the hearing on May 1st will also address 
Government Pension Offset (GPO) and Windfall Elimination Provision 
(WEP). There is no question that GPO has had a very harmful impact on 
many public employees, particularly women who entered the work force in 
later years and who worked in relatively low paying jobs. It is 
difficult to believe that the Congress ever intended that GPO should 
have the damaging impact that it has had on so many lower-income 
people. We urge the Committee to carefully consider changes and reforms 
in the GPO and WEP in order to moderate the unintended detrimental 
effects those provisions are having on public employees. Mandatory 
coverage would be no solution to this issue because, as described 
above, mandatory coverage would financially undermine our systems and 
result in significant benefit reductions for public employees.
    I want to be clear in stating that we believe that social security 
should be preserved and strengthened so that it can continue to provide 
its very valuable benefits. Social Security needs a long term solution.
    Finally, I cannot put into words the sense of betrayal that would 
be felt by the millions of non-covered workers who have placed their 
faith and confidence in our systems and who have planned their 
retirement years accordingly. It is absolutely critical for the 
Congress to maintain the sense of stability, confidence, and security 
for our employees who have served their communities, states, and the 
nation so well.

            Sincerely,
                                               Laurie Fiori Hacking
                                                 Executive Director
                                                  Board of Trustees

                                 
            Statement of Rodney Oakes, San Pedro, California
    In 1951, at the age of 14, I worked five nights a week after school 
in the Aura Bowling Alley in New Hartford, New York. I did this because 
my family was poor. My father worked on construction, and when the 
weather was good, and work was available, he made a modest living. In 
the winter, construction employment was rare in the Snow Belt. My 
mother worked part time cleaning the homes of the wealthy. With my 
younger sister, the four of us lived in a trailer park. The income I 
earned went to the family pot and was used to support the whole family. 
I really needed the job, even though setting pins was very difficult 
for a 14 year old! I also received my Social Security card. I was 
thrilled! The United States government had entered into an agreement 
with me, and I would receive a retirement income when I reached the age 
of 65.
    I did manage to work and maintain decent grades in school. 
Eventually, the family moved to California where my father was able to 
earn a better income in construction. I worked part time through high 
school. My grades were good enough so that I could attend college. It 
took me five years as I had to work 20 plus hours a week at various 
jobs: dishwashing, waiter, construction, truck driver, musician, and 
any other job that would help me reach my goal of a BA degree.
    By 1961 I was ready to begin my final career. I made a huge 
mistake. I decided to become a public school educator in the state of 
California. I continued with my education, earning a Masters degree and 
eventually a Doctor of Musical Arts Degree. I completed my career 
teaching at the community college level. I also worked all this time as 
a part time musician.
    I lived to reach the age of 65 and I retired. I have a decent 
retirement income from the STRS. I also have enough Social Security 
credit to receive $450 a month and Parts A and B of Medicare. But, 
because I chose to teach in California, I only collect $150 a month of 
my allowance!
    I feel as if the United States government has broken the agreement 
that it made with that 14 year old junior high pin setter! I will be 
able to survive without the additional $300 a month, but it seems as if 
I am being punished because I chose a career in the California public 
education system. It would be very easy to correct this injustice.

                                 
                Statement of S. Parker, Nuiqsut, Alaska
    When I recently learned that the social security I have been paying 
into for many years in the lower forty-eight states will not be 
available to me when I retire in Alaska I was outraged. I only started 
my teaching career in 1999, after having spent many years employed in 
other facets of the workforce. I had planned on having the money I had 
put into social security as part of retirement. I understand that the 
money I have deposited is not waiting for me to use, that it has been 
spent on those who have retired before me, but still I had been losing 
a good portion of my check every payday to that fund. Now, I am 
teaching in Alaska and being advised that I will have to work for 
thirty years before I can retire and have full medical coverage. I 
won't be allowed to teach that many years! I moved to Alaska because of 
many reasons that are near and dear to me, but I had no idea that I 
would be losing my social security benefits by doing so.
    It is true that we do not go into the field of teaching to ``make 
money.'' However, it would be nice if all hours we spent at jobs to get 
ourselves through school were recognized. Many of us worked two or 
three part time jobs to get through every semester of college. We 
didn't indebt ourselves with student loans or require financial aide. 
We made it by working to pay for the classes and the labs we took. Now 
it seems as though that was a waste of our time and resources. We are 
not going to reap the benefits of those dollars taken through FICA for 
all those years. We should have gone on welfare or accepted financial 
aide and spent the time studying or with our families instead of going 
to work.
    I hope that you will consider the impact that social security 
benefits will bring to those above the age of 45, who have gone into 
teaching as a ``new'' career after leaving another behind. We can't 
retire in the state of Alaska and survive without our social security 
benefits waiting for us at the end of the trail.
    Thank you for your time.

                                 
           Statement of Bill Patterson, Roseville, California
    Thank you for giving me this opportunity to write to you.
    My name is Bill Patterson, and I am writing you today to let you 
know about my story concerning Social Security and my decisions to be a 
public school teacher.
    I live in Roseville California. I'm 46 years old. I have a wife and 
four children, two daughters, one 13-years-old and another, 19. Our two 
boys are 22-years-old and 17.
    I have paid into Social Security for 24 years. I am a teacher in 
California who loves my job. I have been teaching for ten years. I have 
been out of college for 22 years. For twelve years I worked in private 
business. I enjoyed my different jobs, but felt there was more I could 
do to help others. So, I returned to school to become a teacher. I am 
glad I changed careers, but now I see a financial issue with my career 
change that I did not see ten years ago.
    Being in California, I am a member of the State Teacher Retirement 
System (STRS), as are all public teachers. We have a good retirement 
system, that will help in years to come. I, like many other teachers, 
have a part time job to help make ends meet. Because I also have a part 
time job, I also pay into Social Security. As I have been planning for 
retirement, I was recently informed that when I do retire, because I 
get STRS, my Social Security Benefit will be much less than what I 
would have received had I not been a member of STRS.
    Each of the ten years that I have been teaching, I have worked 
second and third part time jobs to help make ends meet. Each of these 
jobs pay into Social Security. I have earned well over the forty 
quarters needed to qualify for Social Security.
    This is a non-political issue, it is an issue that needs to be 
fixed, to help teachers of today, as well as to help recruit more 
teachers from the private industry.
    Thank you.

                                 
            Statement of Norma Petta, Sacramento, California
    I thank you for making our plight public.
    I am referring to the laws which would mandate that teachers in 
certain states lose up to 60% of Social Security benefits because they 
would receive a state pension. I worked 20 years in a private high 
school during which time I paid into Social Security (in fact, I've 
been working since I was 16 years old and paying into Social Security) 
and have now been in a State Retirement System for only 11 years. I'm 
54 years old. If I retire in 10 years, I'll get only 40% of my pay and 
my Social Security will be reduced. I will have to pay for health 
benefits at that time also. Is this how this nation should treat a 
teacher who will have taught for over 40 years and really dedicated his 
or her students? It's shameful!

                                 
       Statement of Stephanie Pincson, San Francisco, California
    When I became a teacher in San Francisco in 1973, after more than 
20 years employment in other fields covered by Social Security, I never 
realized that I would lose most of the Social Security benefits I 
earned in those 20 years. Had I known, I might have thought twice about 
becoming a teacher.
    When I reached the age of 65, I applied for my Social Security 
benefits and received $680 a month, not much, but then I worked only 20 
years under Social Security. I continued to work until age 69 when I 
retired. I was told that, despite the fact that I was already getting 
benefits I had legally earned, those benefits would be cut to $340 due 
to the ``offset.'' To cut the pittance I do receive is unconscionable.
    I hope that finally something might be done to right this wrong 
that was never intended to affect those of us who had worked under 
Social Security before making a career change. I don't know any 
business where employees' benefits are similar cut if they had worked a 
previous job covered by Social Security.

                                 

                                               Columbus, Ohio 43215
                                                     April 29, 2003

Rep. E. Clay Shaw, Jr.
Chairman of the Subcommittee on Social Security
2408 Rayburn House Office Building
Washington, D.C. 20515

Dear Rep. Shaw,

    The Public Retirees of Ohio represented by the following 
Associations welcome the opportunity to submit a ``Statement for the 
Record.'' The associations joining voices are Police and Fire Retirees 
of Ohio, School Employee Retirees of Ohio, Public Employee Retirees 
Incorporated and The Ohio Retired Teachers Association.
    The GPO/WEP is viewed by the Ohio retirees as an unfair law. The 
test of time has rendered hostility among the residents of Ohio due to 
these unfair practices of reduction and in some cases elimination of 
rightfully earned social security.
    The repeal of the GPO/WEP would enable retirees to receive their 
full social security and would reduce the impact of the rising costs of 
health care.
    Petitions were signed in massive numbers in 2002 from across the 
state for the repeal of WEP/GPO. This issue continues to be a topic for 
the Committees in Washington. Now is the time to repeal these unfair 
practices.

            Sincerely,
                                              William I. Winegarner
                                                      Administrator
                                                    Public Employee
                                              Retirees Incorporated

                                                      Gary L. Monto
                                                          President
                                                    Police and Fire
                                                   Retirees of Ohio

                                                       David Travis
                                                 Executive Director
                                  Ohio Retired Teachers Association

                                                    Valerie Rodgers
                                                 Executive Director
                                                    School Employee
                                                   Retirees of Ohio

                                 
             Statement of John Reddington, Bright, Indiana
    Please help to REPEAL the GPO/WEP--Simply stated it has reduced my 
Social Security by 60%--to only $142. Per month. WHY ARE YOU PENALIZING 
ME?????

                                 
               Statement of Laura J. Reed, Canfield, Ohio
    I retired in 1999. In 2001, by mistake, Social Security began 
direct depositing $600 a month into my husband's account as my spousal 
benefit. They did not notify us of this action. When we caught the 
mistake S.S. had also deposited $2,000. And a few months later they 
deposited $1,200. I was told (8 times by phone) that I wasn't titled to 
receive spousal benefits. I told each Social Security contact that I 
was a retired teacher from Ohio and was not to receive the money. 
However, it took 4 letters, 8 calls and 4 personal visits to convince 
them that they were in error. I repaid $12,600. This is the money which 
I would receive if I had stayed at home or had worked in a low paying 
job. I was punished because I attended school (at my own expense). I 
retired with 28.8 years of experience, with a Masters Degree and 40 
additional hours of credit. I worked two years at the Pine Bluff 
Arsenal, Arkansas under the Federal Government. I worked, or attended 
school from the age of 17. The Federal Government promised me from 1953 
(when I married) until 1985 that I would receive the protection of 
Social Security. My husband worked 40 years to give me additional 
income on which to live. Should he pass away my household income will 
be reduced by $1,000 a month plus the services that he can provide 
(repairs around the house, etc.). With the additional income which 
Social Security should be paying me I could be assured of taking care 
of myself if something should happen to him and not become a burden to 
my government. Since we are both living and active at this time, the 
$600 due to me at this time would be spent and help the economy. Or I 
could save the money. It could mean that my grandchildren would have a 
college education (without help from the government). The government is 
``penny wise and pound foolish'' on this issue. Please support the 
complete repeal of the Offset and Windfall Provisions. I feel these 
laws are unlawful because the ``contract'' between the government and 
Federal/State employees was broken without giving people the chance to 
do anything about it. You are elected to represent the people of the 
United States--hard working Americans--how can you not vote to repeal 
these two unfair laws? I have submitted 2,200 signatures on my petition 
and I have over 200 more to send in--just from my surrounding area.

                                 
              Statement of Zwi Resnick, Fresno, California
    I would like to begin by noting my appreciation for the opportunity 
to describe to you the consequences of the Social Security offset on 
those of us who have chosen to make mid-life career changes.
    My first professional career was as an Exploration Geophysicist in 
the Oil and Gas Industry. In 1986 I became an instant consultant. 
That's a nice way of saying that I, along with 400,000 others in the 
Oil and Gas business, was laid off. I had made a sufficient number of 
contacts over the previous twelve years that I started getting 
consulting work almost immediately. Despite that I had this urge to 
start looking at other work that I could do.
    In the Fall of 1986 I started to teach part time. My degrees are in 
Mathematics. In Denver, where I lived at the time, Metropolitan State 
College and the University of Colorado-Denver use many adjunct faculty 
in Mathematics. So I started to teach one or two courses a semester in 
addition to my oil and gas exploration consulting work. As I continued 
with this dual occupation I found that teaching became increasingly 
attractive to me as a profession. Rather than continue with my 
consulting work I decided to pursue a career as a teacher. Therefore, 
in late 1989 I began actively looking for a full time teaching 
position. It soon became apparent to me that the only way a career 
change was possible would be by restricting my search to systems that 
offered decent salary and benefits structures. I found that in the 
California Community College system. In August 1990 I joined the 
Mathematics faculty at Fresno City College. I was aware that any 
pension I would earn would be based on a limited length of service 
since I was starting my new profession at the age of 42. However, I 
also knew that I had been paying Social Security taxes since 1964 and 
would have my earned benefit to augment my STRS pension.
    I was, of course, quite mistaken. The most recent statement I 
received from the Social Security Administration indicates that I have 
earned a benefit that could be as much as $1,337. I am advised in this 
statement that this benefit has been computed assuming no further 
Social Security taxable earnings. Because of the existing law I will be 
deprived of most of this. I will lose the benefit I am being told I 
have already earned!
    As the President of my union--the State Center Federation of 
Teachers, AFT local #1533--my colleagues frequently ask me questions 
about earned STRS benefits. I answer these questions knowing full well 
that I will not retire with anything approaching the level of benefit 
that my colleagues have earned. By the time I retire my total 
professional career as an Exploration Geophysicist and as a Mathematics 
professor will easily match the length of service of any of my 
colleagues. However, because of the Social Security offset I will not 
receive the full benefit I believe I have earned.
    Since I first began teaching part time in 1986, and full time in 
1990, I have felt that my Mathematics students have benefited from the 
experience in the private sector that I bring to the classroom. I like 
to think that people with backgrounds like mine should be encouraged to 
enter teaching. I do benefit from the priceless luxury of knowing that 
my work is inherently valuable. However, why should I be financially 
penalized for having found my true vocation later in life?

                                 

           Retired, County, and Municipal Employees Association of 
                                                      Massachusetts
                                        Boston, Massachusetts 02108
                                                       May 15, 2003

Congressman E. Clay Shaw
Chairman, Subcommittee on Social Security
United States House of Representatives
Rayburn House Office Building, Room B-316
Washington, D.C. 20515

Dear Chairman Shaw:

    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 May 1, 2003 
hearing record of the Subcommittee on Social Security.
    For the past 35 years, our Association has been the leading 
advocate for public retirees and their survivors in Massachusetts. 
Currently, our membership totals over 53,000, of which approximately 
5,000 reside in.
    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 
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.
    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. Naturally they expected that their hard work in the 
private sector entitled them to the same Social Security benefits as 
their co-workers.
    However, these 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 past years, the number of members contacting the 
Association over the GPO/WEP's devastating effect on their lives has 
steadily increased. They rose to such a level that our Association 
committed itself to resolving their problem.
    Attached to our letter is a copy of an article that we published in 
our March 2003 edition of the Voice of the Retired Public Employee. It 
tells how some of our members in Florida have been devastated by the 
GPO and/or WEP. Similar personal stories can be found on our website 
(http://www.massretirees.com).
    These members are representative of the many who have described to 
us their plight. Their calls for help have become, tragically, all too 
commonplace.
    It is because of this that 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 in 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 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

                               __________
Association Enlists Florida Members In Fight Against GPO And WEP Relief 
                      Bills Introduced In Congress
    When it comes to relief from Social Security's Government Pension 
Offset (GPO) and Windfall Elimination Provision (WEP), the Association 
will do whatever it can to push this much needed legislation through 
the Congress. Last year, we enlisted the help of our Maine and Vermont 
members, and now we've turned to our Florida membership.
    Earlier this year, several hundred members, living in the Ft. 
Lauderdale/Pompano Beach area, met with Association officials. Ft. 
Lauderdale is also represented by Congressman Clay Shaw, Jr. who has 
served as chairman of the Social Security Subcommittee--a critical 
committee to any earlier success toward relief.
    One of the hot topics at the Florida meeting was the GPO and WEP. 
``To be successful, we need to enlist the grassroots support of our 
members living outside the Commonwealth,'' according to Legislative 
Chairman Bill Hill. ``This meeting was an excellent opportunity to do 
just that, and it appears to have been successful.''
    It provided our members, who are hurt by the GPO and WEP, with a 
forum to express their dissatisfaction with these laws and demand 
change. ``It's not right that after I paid into Social Security all 
those years, I should be treated (by the WEP) as if I'm trying to get 
something for nothing,'' claims Gloria Bernier who worked at 
Framingham's Cushing Memorial Hospital and now lives in Pompano Beach.
    ``Gloria is right on point,'' added friend and former coworker Joan 
Anderson, now of Boyington, who is hurt by both laws as a widow. ``I 
wish the politicians, who pushed through these laws so many years ago, 
could see the harm they're causing today.''
    ``When I worked at the retirement board, I saw firsthand how 
retirees were hurt and here I'm witnessing it again,'' according to 
Florence of West Palm Beach, who was the former executive director of 
the Fall River Retirement Board and receives nothing because of the 
GPO. ``They can't wait any longer; the President and Congress must help 
now.''
    These comments are representative of the many heard by Association 
officials at the meeting. Members not only had a chance to voice their 
criticism but also join together and take action.
    ``Since moving here (Florida), I've been frustrated because I can't 
have the direct impact that I had when I lived and voted in Mass,'' 
says Harold Greene of Pompano Beach. ``Now I can do my part for my 
fellow members, who are being hurt by Social Security, and contact my 
congressman, Clay Shaw, to correct the problem.''
    ``We'll be writing to him also,'' vowed both Bernier and Anderson. 
``It's time for us to act.''
                      Continue Work With Coalition
    ``Our work with our members is part of the Association's activities 
in conjunction with CARE (Coalition to Assure Retirement Equity),'' 
reports Hill. ``By way of explanation for our newer members, our 
Association has belonged, for several years, to CARE which is dedicated 
to eliminating the GPO and WEP.
    ``Several national unions and organizations have coordinated their 
efforts to abolish the GPO and WEP through the coalition. NARFE 
(National Association of Retired Federal Employees) spearheads CARE.''
    It's important to note that even though the Congress has the same 
two-year session as the Mass. Legislature, the Congress takes somewhat 
longer to file bills for the current (108th) session. For example, 
while the Association's 2003-2004 legislative was filed last December 
in the State House, congressmen and senators began to introduce bills 
in the U.S. Capitol after they convened in January.
    In February (after we went to press), CARE met at NARFE's 
headquarters to map out strategy for this year. Legislative Liaison 
Shawn Duhamel has been representing the Association at these important 
coalition meetings.
    Just before the CARE meeting, the lead sponsors for the GPO relief 
legislation, which the coalition has supported over the years, filed 
their bills again for the 108th Session. Representative William 
Jefferson (D-LA) and Senator Barbara Milkulsky (D-MD) have reintroduced 
legislation that will exempt $2,000 of a public retiree's monthly 
pension and Social Security benefits from the GPO.
    Members should note that the sponsors have upped the monthly 
amount--from $1,200 in last year's bill to $2,000 in the current 
version. ``While the bills still do not eliminate the GPO, the number 
of affected public retirees, who could benefit, has been obviously 
expanded by raising the dollar amount,'' says Hill. ``Legislation, 
repealing both the WEP and GPO, will also be before this Congress as it 
has in prior sessions.''
    Senator Dianne Feinstein (D-CA) and Representative Howard (Buck) 
McKeon (D-CA) have reintroduced their bills to eliminate both the GPO 
and WEP. A summary of the major relief legislation in the Congress, 
including bill numbers, will be included in the May Voice.
    On the home front, Senator John Kerry and Representative Barney 
Frank are filing, once again, bills in the 108th Congress that will 
offer WEP relief to those members with moderate retirement income 
(i.e., pension and social security benefits totaling less than $3,000 
monthly or $36,000 annually). While the Kerry and Frank bills do not 
repeal the WEP entirely, they represent a major step in the relief 
effort. Both had introduced WEP relief legislation in the previous 
(107th) session, with Frank's bill sponsored by well over a majority of 
that Congress.

                                 
            Statement of Daniel Rice, Pewee Valley, Kentucky
    I am a 60 yr old retired special education schoolteacher and must 
continue to pay into Social Security but am penalized by being able to 
draw only 30% of what I deserve. Please do the right thing and rectify 
this unfairness. I am a former member of Jefferson Co Teachers Assn 
(KY), Kentucky Education Association, and the National Education 
Association.

                                 
             Statement of Sharon Richard, Sour Lake, Texas
    Thank you for giving me this opportunity to write to you.
    I am a fifth-year 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 Founding Fathers 
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 Randy and I owned and operated Sour Lake Drug, Inc., 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 two 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 when I retire through the Texas Teacher 
Retirement System, and draw a pension, I will likely lose ALL of my 
spousal benefits because of the Government Pension Offset. My husband 
simply cannot comprehend that he has spent thirty years as a diligent 
independent 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 ONLY have 
24 ``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 as a fifth-year Texas social studies teacher is slightly 
more than $28,000 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 HMOs, 
PPOs, 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. 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, they are foregoing 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 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.
    The General Accounting Office may not have taken into consideration 
that the cost of repeal of these laws must be measured by more than 
dollars and cents. The cost must also be measured by the life of each 
American public servant and the respect each deserves for a lifetime of 
commitment.
    ``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.

                                 
             Statement of Thomas W. Root, Moline, Illinois
    I support H.R. 349. Please restore fairness which is the intent of 
this bill.

                                 

                                             Marion, Illinois 62959
                                                     April 28, 2003

The Honorable E. Clay Shaw, Jr.
2408 Rayburn House Office Building
Washington, D.C. 20515

Dear Congressman Shaw:

    I am writing to you as the Chairman of the Subcommittee which will 
be holding hearings on the Social Security act to repeal the Government 
pension offset and windfall provisions.
    I, and many others, would appreciate so much if we could draw our 
full Social Security along with a small retirement from Southern 
Illinois University in Carbondale, Illinois. When you work and pay into 
Social Security, but you lose your job for reasons beyond your control 
(my employer passed away) and then I was so fortunate to get a job at 
the university but I had no idea what would happen at retirement.
    Since I only have a few years under Social Security and a few years 
at the university, I would not draw a lot from either one but with the 
2/3's offset I will get very little to live on. I am 65 now but cannot 
retire because if I work I can get my full Social Security and when I 
retire they take most of it. We are talking about the difference of 
about $800 verses about $1,300. Lower income employees really need your 
help! Please help make our retirement years easier.
    Thanking you in advance.

            Sincerely,
                                                   Paula Rothschild

                                 
       Statement of Mary A. Gazda Ryan, Charlestown, Rhode Island
    Thank you for giving me this opportunity to write to you. My job as 
a school teacher makes my presence at the hearings impossible.
    My name is Mary Gazda Ryan. I am a 48 year old public school 
teacher.
    I believe in the American Dream and consider myself to be a 
fortunate person. I am a third generation American, first generation of 
college graduates. I started working the day I turned sixteen to save 
for my college education.
    My entire life I had been told, I would go to college. Thankfully, 
I took it to heart. I studied hard in order to receive the best grades 
and it was exciting to reach an age where I could actively contribute 
to my college fund. I remember my first day of waitressing with great 
pride. When my father died during my senior year of high school, my 
commitment to my dream grew in importance. I would hear him in the back 
of my mind saying, as he often did, ``You're not getting married until 
you graduate from college.'' Not that there were any prospects of 
marriage, but a father's love believed me to be irresistible as a 
father's love drove me to improve my lot in life.
    I was accepted into my state university, the University of Rhode 
Island. I did not receive any scholarships, and my mother did not 
believe in loans. Consequently, I worked all my years of college while 
carrying a full load of courses. I took as many as I was allowed, 
seven, because I knew the value of my education having earned every 
dollar for it. I had to take a semester off during my junior year to 
work full time in order to continue my education. With all of my extra 
credits, I am proud to say I earned my degree the summer of my expected 
graduation in May.
    Teaching was not an easy field to get into at the time. I continued 
to work in food service and took extra courses. I purposely took my 
first teaching job in a poor section of a city, not because I would 
help pay off my loans, remember I did not have any, but rather to give 
back and help other children understand the dream. The pay was not 
enough to live on, so I continued to work part time. Throughout my work 
history, including my first two teaching jobs, Social Security was 
taken out of my paycheck. For the last thirteen years I have worked in 
a school system that does not participate in Social Security.
    I am disheartened to believe my country would penalize me for this 
omission in which I had no part. Paying into Social Security was not an 
option. Proudly following in the footsteps of my parents, a mill worker 
and a construction worker, I continue to work hard looking forward to 
the day when I can retire with the expectation of living 
``comfortably.''
    It is beyond my comprehension that my government would penalize me 
for putting money into a retirement fund. My mother would not survive, 
if not for the extra monies my brother, sister and I prove monthly. I 
began saving so that I would not find myself in a similar position one 
day with no children to provide additional support. I am sure there are 
many more people like myself. I feel sympathy for retirees who are 
presently being penalized.
    I believe in the American Dream. I ask you today to help me see it 
in action. Right this wrong. Thank you.

                                 
 Statement of the Honorable Max Sandlin, a Representative in Congress 
                        from the State of Texas
    Thank you Mr. Chairman and Ranking Member Matsui, for the 
opportunity to testify today on the impact of the Government Pension 
Offset and Windfall Elimination Provision on the Social Security 
benefits of retired government employees. I am pleased that the 
committee has called a hearing on how these two provisions affect 
nearly six million federal, state and local government employees.
    As a member of the House Ways and Means Committee, I am proud to 
help lead the fight for our public employees. As my colleagues know, I 
have introduced legislation in the past to eliminate the Windfall 
Elimination Provision. Today, I come to re-iterate my support for two 
bills I am proud to co-sponsor, H.R. 594, the Social Security Fairness 
Act, introduced by Mr. McKeon, and H.R. 887, introduced by Mr. 
Jefferson. I am hopeful that our public debate today on the importance 
of restoring equity to the Social Security benefits of our retired 
government employees will result in these bills being brought to the 
floor of the House for a vote.
    Mr. Chairman, when I am not voting in Congress, I travel through my 
district visiting with my constituents. Last week, during Spring 
District work period, I hosted a series of town hall meetings in 
Texarkana, Mt. Pleasant and Marshall, Texas on Social Security and 
Medicare. As I have heard for years from every corner of the 19 
counties in the First Congressional District of Texas, many of my 
constituents, who are former local, state and federal government 
employees, asked me why their Social Security benefits continue to be 
penalized by the GPO and WEP provisions.
    One of these constituents happens to be my mother, Margie Sandlin, 
whose suggestions and advice I have learned over many years not to 
ignore. My mother was proud to spend nearly 30 years serving society as 
a public school teacher, a job which simultaneously challenged and 
fulfilled her. However, she never expected that her reward for these 
years of service would be a significant reduction in her Social 
Security benefits due to the Government Pension Offset. She never 
expected that our government would penalize someone who dedicated her 
life to public service. My mother rightly feels like the federal 
government has turned its back on her when she needs its help the 
most--during her retirement years.
    The work our teachers, firemen, policemen, and other government 
employees do strengthens the foundation of our nation every single day. 
More often than not, these people accept lower pay checks in order to 
serve their communities. I don't think anyone in this room believes we 
should now penalize these teachers, firemen, and policemen again with 
Social Security benefits that fail to meet their expectations and fail 
to provide them with a basic standard of living.
    Some claim the GPO and WEP provisions are not particularly onerous 
to many of the affected retirees because the provision generally 
affects only those who are well off and have a generous government 
pension. I assure the members of this committee that my mother knows 
from personal experience how false this assumption is. She spent much 
of her life in public service and planned her retirement carefully. To 
have had her Social Security benefits arbitrarily and unexpectedly 
reduced was more than just an insult--it was also a lowering of her 
standard of living in her retirement years.
    We need to put the federal government back in the business of 
providing our retired government employees with the retirement security 
they deserve. I recognize that full repeal of the Windfall Elimination 
Provision and Government Pension Offset would be expensive, and we need 
to debate a reasonable way to pay for this legislation. Mr. Chairman, 
as Congress moves forward with reform of the Social Security system, I 
urge you and the members of this committee to remember our retired 
federal, state, and local government employees. They deserve much 
better from us. They have earned that much.
    Thank you Mr. Chairman, Ranking Member Matsui, and members of this 
subcommittee.

                                 
           Statement of Karen Sanford, Bartlesville, Oklahoma
    I was reinstated into the Postal Service in 1995, as a Civil 
Service Offset. I have been contributing to both Civil Service and 
Social Security since that time.
    When I retire, and start getting Social Security, my Civil Service 
Retirement will be reduced by the same amount that I receive from 
Social Security. I will not be getting any more money. It will just be 
coming from a different place. How can you call this a windfall? I feel 
as though I have been robbed of the $20,000 that I have in Social 
Security. This is a lot of money to me, which I need, being a widow.
    If you paid for both Social Security and Civil Service Retirement, 
you should get them both without penalizing the Civil Service 
Retirement. If you did not pay for both then you should not get both.

                                 
            Statement of Barton Schiermeyer, Orion, Illinois
    I support H.R. 349. Please restore fairness which is the intent of 
this bill.

                                 
Statement of Thomas R. Anderson, School Employees Retirement System of 
                          Ohio, Columbus, Ohio
    Mr. Chairman and members of the Subcommittee, thank you for the 
opportunity to present comments for the record on the harmful effects 
of the Social Security Government Pension Offset (GPO).
    My testimony reflects the opinion of the School Employees 
Retirement System of Ohio (SERS), which is the statewide public pension 
plan for Ohio's non-teaching public school employees. SERS serves 
120,000 currently contributing members, and 60,000 retirees and 
beneficiaries. Members include school bus drivers, cafeteria workers, 
custodians, teacher's aides, secretaries, administrative support staff, 
business managers, treasurers, and school board members. All members 
are exempt from Social Security.
    Demographically, 73% of SERS' members are women. They enter the 
workforce later in life, commonly to support their families, and often 
after the loss of the family breadwinner. As a result of their shorter 
public careers and lower wages paid due to the nature of the work, the 
average SERS retiree receives a monthly pension of $639. As you can 
imagine, the impact of the GPO on individuals who earn such a modest 
pension can be devastating. The following examples demonstrate the 
negative impact of the GPO upon actual SERS retirees:

       Retiree #1

       A disabled widow retired on SERS disability retirement in 1986. 
She receives $403.41 in monthly disability benefits. She was originally 
entitled to $216.30 per month in Social Security as a disabled widow. 
Due to the GPO, she receives no Social Security, as two-thirds of her 
SERS pension is larger than the widow's benefit. Her total pension 
income remains $403.41 per month from SERS.

       Retiree #2

       A widow who retired from SERS as a school cleaner in 1989 with 
15 years of service and a final average salary of $6,983 receives a 
$214.91 monthly pension from SERS. Her Social Security widow's pension 
was $361 a month, which would have provided a combined income of nearly 
$576. However, due to the GPO, her Social Security was reduced by $143, 
which means her total income is just $432 per month.

       Retiree #3

       A school employee retired in 1989 with nearly 15 years of 
service and a final average salary of $6,389. She receives a gross SERS 
pension of $241.88, and due to the offset, only $87 from her husband's 
Social Security. Her combined monthly income is just $328.88. The 
retiree writes, ``I don't know what they think people live on.''

       Retiree #4

       A school secretary retired in 1996 with 15 years of service and 
a final average salary of $27,600. Because she draws $734.39 a month 
from SERS, two-thirds of her pension completely offsets her spousal 
Social Security benefit. ``I think this law is terrible,'' she writes. 
``I have a hard time living on $700 a month. Try it. It's hard.''

    For the first three retirees, an unreduced Social Security spousal 
benefit would have provided each with a combined monthly income of less 
than $700, an amount that is still below the federal poverty guidelines 
for an individual.
    The examples clearly illustrate that the GPO results in an 
inequitable distribution of Social Security benefits and is 
inconsistent with the overall provisions and intent of the Social 
Security Act. The GPO most harshly impacts those lower-income women 
whose combined public pensions and unreduced Social Security benefits 
would still fall below the federal poverty guidelines.
    Application of the GPO pushes these retirees more deeply into 
poverty, and ironically renders them eligible for federal- and state-
sponsored assistance programs, merely shifting the liability from 
Social Security to other taxpayer-financed budgets.
    On behalf of SERS' 180,000 members and retirees, and the hundreds 
of thousands of other public pension plan members and retirees 
nationally, I urge the members of this Subcommittee to recommend that 
the GPO be repealed or modified as soon as possible.
    Thank you for the opportunity to be a voice for so many hard-
working public school employees in Ohio who have lost, or will lose, 
critical purchasing power in retirement through application of the GPO. 
I would be pleased to provide any further information or testimony as 
members consider reform in this area.

                                 
              Statement of Joyce Schwab, Cincinnati, Ohio
    I worked to hard for my SS. I have for 28 years paid into it, and I 
only have been working for the state for 15 years. I need both to live 
on when I retire which, if I get both, will still only be about 
1,500.00 a month before taxes. Excuse me, where is the windfall?

                                 
              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. A retired teacher who, in 4 years when I reach the age to 
receive the Social Security (SS) benefit that the government has 
collected the taxes for and has to promised me, will see that benefit 
either severely reduced or totally eliminated. 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--
instead a complete benefit however, since I chose to be a teacher for 
37 years in Maine, 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 a recently retired state health care 
professional. 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. You worked for 
20 more years, and now, you and your husband are looking toward a well-
deserved retirement. A relatively common, uncomplicated scenario.
    But then, as happens all too often, tragedy strikes and your 
beloved husband 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 husband's benefit. You will be living on 
only your public pension from your relatively short career.
    Melodramatic? Overdone? No--commonplace. 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 choose 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? 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? Because the government is going to be operating at a deficit, 
do congressional workers refuse their paychecks? Probably 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 are affected by these laws, and almost half of the teachers.
    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!''
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 H.R. 594 and S. 349. We ask that Congress not settle for 
less than ``the Social Security Fairness Act of 2003.'' We ask that 
Congress do this because it is simply the right thing to do.

                                 
        Statement of Don Sillings, Huntington Beach, California
    While I'm not retired, I do have a horror story about the Windfall 
provisions of social security. Currently, I teach part-time at two 
schools, the California State University, Long Beach--American Language 
Institute and at Santa Ana College--School of Continuing Education. I 
do not qualify for retirement benefits in either position. However, I 
am not paying into Social Security either. This is after working about 
30 years in non-teaching positions in which I did contribute to social 
security. When I became aware of the situation (one year after I 
started these jobs), I visited the social security office for 
information. As it turns out, under current law, I will have about 10 
years of zero contributions averaged into my earnings calculations 
(greatly reducing my monthly benefit). At the same time, I will not 
receive any retirement benefit from these two retirement systems (CAL 
STRS and CAL PERS). Instead, I will have what comes from a pretax 
payroll deduction that is being ``invested'' in my behalf (I have no 
control over the deduction or the investments).
    I am terribly frightened for my future. Because I am working part-
time (full-time positions being rare in my specialty), I receive a 
lower wage (about half as much) than a full-time employee does. 
Therefore, I am not able to invest privately toward my retirement.

                                 
       Statement of June Burlingame Smith, San Pedro, California
    I strongly support legislation to eliminate both the Government 
Pension Offset and Windfall Elimination Provisions of the Social 
Security Act.
    My name is June Burlingame Smith, and I am a professor of English 
at Harbor College in Wilmington, California. I have been employed full 
time by the college since 1989, so I only have sixteen years credit 
towards my own state pension. In another month, I will be 68 years old. 
I would like to retire, but find myself in a financial bind because of 
both the GPO and WEP provisions of the social security changes several 
years ago, long after my husband and I both started paying into social 
security. Here is my dilemma.
    I turned 65 on June 1, 2000, and because I am a widow whose husband 
was eligible for social security benefits, and because my benefits as a 
widow are greater than from my own social security contributions, I 
chose to receive my stipend as a widow. Currently, I receive a regular 
monthly social security check based on my husband's income. I am 
working full time; however, when I retire and start taking my own 
government pension, I will lose a substantial portion of the check I am 
now receiving under the WEP and the GPO. Switching to my own social 
security fund will not solve the problem because it is substantially 
smaller to begin with, and it, too, will be decimated under the GPO 
regulations. So, I am greatly harmed by these two social security 
provisions.
    When the children were in junior and senior high schools, I 
returned to college and earned a second masters degree so that I could 
teach in the community college system. I worked as a teacher's 
assistant during graduate school and also worked full time for the 
California State University Chancellor's Office for one year. I had 
become a regularly employed ``re-entry woman'' and eventually was 
offered a full time position teaching in a community college.
    I had worked in private industry as well as in a school district 
and had contributed systematically to social security before my 
children were born. While I was home raising the children, I did 
independent contract work with the Los Angeles Unified School District 
and CSU Dominguez Hills Conservatory and taught privately in our home. 
My contributions to social security during this time were vastly 
reduced, but I contributed whenever and whatever I was allowed.
    By accepting the position with the Los Angeles Community Colleges, 
I automatically became a part of the State Teachers Retirement System 
which does not allow me to contribute to Social Security. I had no 
choice in these options. At the time of my employment, I was not aware 
of the GPO or WEP provisions of Social Security; they were not in 
effect at the time my husband and I planned our retirement strategy. 
But when my husband died very suddenly several years ago, I immediately 
became aware of both the GPO and WEP constrictions, and at this late 
stage in life, I could not do very much about choosing another pension 
strategy.
    Today, as long as I don't take my own retirement under STRS, I can 
also collect my full social security. However, when I retire, the 
social security benefits now given to me as a widow will be reduced 
under the WEP and GPO. I will lose more than half of my current social 
security. The dollar amount will vary according to what the benefits 
and my pension are at the time, but the reduction is very substantial. 
The irony of all this is that for twenty-five years, my husband paid 
into social security, at times strapping us for badly needed income 
during the children's early years, so that we could count those 
benefits as a part of our overall retirement. We made that decision 
objectively, based on the rules of social security at the time. Now, 
however, that plan for an orderly retirement has been seriously eroded 
because the social security rules have changed. Such fickleness makes 
it extremely difficult for conscientious families to plan for a 
meaningful retirement. And because the state of California is a 
community property state, I have also contributed to social security 
through my husband's paycheck for twenty-five years.
    The offset rules for STRS also punish those of us who choose to 
teach or work in the public sector after working in the private sector 
earlier in life but there is not such restriction on people receiving 
private pensions. If I had ordered my career so as to end up working in 
the private sector instead of the other way around, I wouldn't have 
this dilemma. At the very least, workers should be able to contribute, 
or continue to contribute, towards social security if they so wish. If 
a public agency proscribes that choice, then the individual should not 
be punished for having contributed in the past. And certainly, those of 
us who began their retirement plans many years ago under another set of 
rules, should not be punished for following those rules. Otherwise, 
people like me may opt not to join the public sector in mid-life.
    Thank you for considering my predicament. I know there are many 
thousands of other conscientious people who are also caught in this 
same conundrum. At some point, I figure when I'm 76 years old, I'll be 
able to retire without social security as an important factor. For the 
foreseeable future, however, I will continue to teach as long as my 
health and mind allow.

                                 

                            State University Annuitants Association
                                            Chicago, Illinois 60607
                                                       May 12, 2003

Subcommittee on Social Security
Ways and Means Committee
1102 LHOB
Washington, DC 20515

Dear Representative Shaw,

    I am writing to you in support of passage of H.R. 594 that amends 
the Social Security Act that repeal the Government Pension Offset and 
Windfall Elimination Provisions. This issue has been a priority for our 
members for four years now. We are very pleased that 12 Illinois 
Congressmen currently support passage of this bill. We continue to work 
with the remaining Illinois Congressmen about sponsorship. We have 
bipartisan support for this issue.
    We believe the offset and windfall penalties are a form of work 
discrimination. First of all, many of our members have public and 
private sector work experiences. They plan on receiving partial 
retirement benefits from both work sectors. These are folks that 
actually worked and paid social security taxes and made contributions 
to Social Security the public system they are members of. Second, many 
members work on a nine-month contract at an institution of higher 
education and thus have summers available for other employment. Many 
hold a summer job within the private sector. They too, pay social 
security taxes on wages earned. Third, many members have to hold a 
part-time job to make all of the ends meet. They also pay Social 
Security taxes on wages earned. In short, these members have been 
employed 30-40 years, contributed to retirement funds and then are 
penalized for hard work.
    We believe this is unfair and discriminatory. These penalties are 
directed toward widows, lower income men and women that have worked 
hard to build the educational system in Illinois. SUAA represents more 
than 120,000 members of the State Universities Retirement System, a 
public retirement system for 12 state universities and 50 community 
colleges in Illinois.

            Sincerely,
                                                   Robert A. Harper
                                                          President
                          University of Illinois at Chicago Chapter

                                                     Roslyn Hoffman
                                 Associate Vice Chancellor, Retired
                          University of Illinois at Chicago Chapter

                                 
         Statement of Denise Sullivan, West Frankfort, Illinois
    Would you consider people like myself in the position of working 
for (just enough money to make ends meet for the family, not enough to 
have a savings acct, CD's or even any investments) because of simple 
living expenses many years paying in social security, then at age 49 or 
older get a state job for 11.20 per hour and a chance to get a small 
pension at retirement because we did not have the job at an earlier age 
with many years to work up to get a good pension, ours will be smaller 
that many social security checks. So, please tell us why can't we get 
our social security that we worked for like everyone else?
    Thank you.

                                 
              Statement of James Sutera, Chicago, Illinois
    Thank you for giving me this opportunity to write to you.
    My name is James Sutera and I have a situation to explain that I 
have a problem with. First, I would like you to know that my 
nationality is Italian and Croatian and I have learned from my 
grandparents that hard work is the only way to get ahead. When they 
came to this country with nothing, they didn't have the so-called 
politically correct system that is in place now. In other words, when 
they made any phone calls looking for any type of service, there was no 
punch 2 for Italian and punch 3 for Croatian. Like all immigrants that 
came back then, that built our country, they learned the language and 
became citizens because they where proud of their new life here and 
wanted to do everything the American way. During the depression, they 
had a thing called ``script,'' which we call welfare now, but the only 
difference is that you had to perform some type of work to earn it. 
Things have certainly changed! Now when I go to the grocery store, I 
see people with there using ``script,'' with shopping carts loaded, 
dressed better than me and driving away in a better vehicle than I 
have. Illegals may, in the future have more opportunity than me, from 
what I am hearing. What is happening to the American Way of doing 
things? Well, let me get on with my real story.
    I joined the Army in 1969 because I thought it was the right thing 
to do with Vietnam going on. I didn't go there, but my intentions were 
patriotic and I did my tour of duty and was honorably discharged in 
1971. I went to work driving a truck when I came home and did that 
until 1986 when I got called to be a Chicago Firefighter. When I got 
out of the fire academy, which was about 3 months, I went back to my 
old job and asked if I could work there on all my days off and they 
agreed to take me back. Between the firefighter job and the truck 
driving job I was only off about 5 to 6 days a month. It was hard but I 
did it because of what my grandparents told me years before. I drove 
that truck until March 1998 and then I had 25 years vested in the truck 
drivers union so I qualified for a pension. After that I worked as a 
carpenter when I could find work and right now I am looking to do 
something else on the side to earn extra money. All along I am proud of 
myself and what I have accomplished. Thinking, well--here I am with 2 
pensions when I retire and social security, all that I worked for and 
earned, the American Way.
    Nobody gave me nothing and I paid my taxes and social security just 
like any good citizen would but now here I am--going to be penalized 
for doing the right thing and I can't believe it.
    I just don't think it is fair at all.
    I live in Chicago and it has always been a political city so you 
are more apt to pay attention to the goings on of politics than the 
average person. I read about the multiple pensions politicians get 
often and I don't favor that, but that's politics. If that's how it is 
and they earned it, well who am I to say they shouldn't receive it.
    Now I think I have earned what I worked for and they want to take 
it away and it just isn't fair. I only hope that the politicians think 
of the many people like me who did the right thing and worked hard. We 
only want a fair shake and the retirement we deserve.
    IT'S THE AMERICAN WAY!

                                 
            Statement of Dana Szakatits, Sterling, Illinois
    I am very concerned that my SS will be reduced or eliminated. I 
chose to stay home with my children when they were young, however, I 
did work some part-time teaching jobs in IN and paid into SS. I have 
been teaching full time in IL for 14 years now. To be able to receive 
full teacher retirement I would have to teach until I am 74 years old!! 
I do not qualify for a great deal of SS, but I need this to supplement 
the partial retirement I will receive. I paid into SS, therefore, I 
should receive the money for which I ``qualify.''

                                 
          Statement of Patricia Hall Taniashvili, Surry, Maine
    Thank you for giving me this opportunity to write to you.
    My name is Patricia Hall Taniashvili. I am presently a teacher at 
Ellsworth High School in Ellsworth, Maine; I am sixty years old, and 
cannot even consider retirement due to the financial constraints 
imposed upon me by the GPO/WEP laws. Because of these laws, I am not 
permitted to collect the full Social Security pension to which I am 
entitled, having paid into the system for my entire working life.
    I got my first job in the summer of 1960, working as a proofreader 
in a newspaper office in coastal North Carolina. Social Security taxes 
were deducted from my paycheck at that time.
    After I received my B.A. degree in 1964, I taught Freshman 
Composition at Valparaiso University in Valparaiso, Indiana for a year. 
Social Security taxes were deducted from my paycheck at that time.
    From the fall of 1965 until the spring of 1968, I taught English 
(to all students) at Washington County High School in Valparaiso. 
Social Security taxes were deducted from my paycheck at that time.
    After my two children were born, I returned to teaching at Hobart 
Junior High School in Hobart, Indiana, where I taught English and 
French from 1974-1979. Social Security taxes were deducted from my 
paycheck at that time.
    In 1980 I moved to Maine, and taught English and French at Calais 
High School in Calais until the spring of 1989. In order to supplement 
my low salary, I worked during the summers at the tourist information 
office there. Social Security taxes were deducted from that paycheck at 
that time.
    In 1989 I moved to Lamoine, Maine, and taught English for a year 
and a half at Sumner High School in Gouldsboro.
    I spent 1991 teaching English as a foreign language in Tbilisi, 
Republic of Georgia; at that time Georgia was a member of the U.S.S.R.
    In early 1992 I returned to Maine, and began teaching French and 
Spanish at Ellsworth High School in Ellsworth, Maine, where I am still 
employed. Once again, in order to supplement my inadequate teaching 
salary, I started working during the summers at Kneisel Hall (a chamber 
music school and concert series) in Blue Hill. Social Security taxes 
were deducted from that paycheck during that time.
    I don't know when I will be able to retire. My Maine State Teachers 
Retirement pension will not cover my living expenses, especially since 
I do not own a house and must pay rent every month. I estimate that my 
Maine State Teachers Retirement pension will be approximately $20,640 a 
year. Our health insurance cost will be well over $700 a month out of 
my $1,720 a month. This leaves me with $1,000 or less per month BEFORE 
taxes. Thanks to the Windfall Elimination provision, my full Social 
Security pension to which I am entitled will be reduced to only 
approximately $178 a month at age 62, approximately $293 at 65 and 10 
months, or $495 at age 70. My small Maine State Teachers Pension and my 
truncated Social Security pension together are simply not enough for me 
to live on.
    If I had stayed in Indiana to teach, I would have my Indiana 
teachers' retirement pension plus the full Social Security pension to 
which I am entitled. Why am I being discriminated against because I 
moved to Maine? What have I done to have my Social Security pension 
cut?
    The final insult and irony is that after I retire from teaching, I 
will have to once again supplement my income by working at a part-time 
job--from which Social Security taxes will be deducted. I will never be 
permitted to collect the full benefit to which I am entitled from this 
work.
    For all of my working life, I have accepted the low pay given to 
teachers because I love teaching and I love the kids I work with. Now I 
am faced with the fear that I will have to keep working for an 
indefinite time, because I can't afford to retire, even though I'd like 
to plan on it. Another fear that I have is that I will get sick and not 
be able to work, yet not be able to afford not to.
    The GPO/WEP has put me in an untenable position financially and 
personally. The elimination of a portion of my Social Security pension 
is unfair and immoral. The repeal of this law would make a huge 
difference to me.

                                 
               Statement of Larry Taylor, Dixon, Illinois
    I am writing regarding a testimony for the House Ways and Means 
subcommittee on Social Security. I'm one of those citizens very upset 
with the social security regulation that does not allow one to collect 
full benefits because of the ``so called'' two government agency 
restriction. I have been in education for the past forty-five years and 
I am still teaching part time. I worked as summer school director in 
our school system so that I could contribute to social security for 
over twenty-five years (and qualify for full benefits). My intention 
was to collect social security benefits when I retired so I could pay 
for my health insurance benefits. Bad news. Even though I planned ahead 
the following happened. In President Ronald Reagan's tenure, a new law 
was passed prohibiting an individual from getting full benefits from 
social security if they worked for another government agency. I had 
saved and planned ahead for my retirement and was counting on social 
security funds as part of my retirement. Guess what? I am now forced to 
work part time to take care of my health care expenses. Currently, I 
only get one fourth the money I am entitled to under the current 
regulation (cannot collect full benefits if employed by another 
government agency). The one fourth amount is $91 per month, and since I 
am sixty five, social security takes out $55 per month for Medicare. 
This gives me a net $36 per month from social security. Does this sound 
right???? It is time someone took time to look at the government 
regulation controlling social security and made this fair for the 
working people of the United States of America.
    Thank you for your valuable time in reading my testimony.

                                 
Statement of Tom Pritchard, Texas Retired Teachers Association, Austin, 
                                 Texas
    The Texas Retired Teachers Association is calling for the repeal of 
both the Government Pension Offset (GPO) and Windfall Elimination 
Provision (WEP) of the Social Security Law. These Social Security 
provisions reduce or eliminate income for individuals who have chosen 
to serve their communities, state or country in public jobs. A non-
public employee with a private pension will keep his/her full Social 
Security benefit.
    The GPO and WEP also impact individuals who make mid-life changes 
from the private sector and the public sector--i.e., military retirees. 
In Texas there is a shortage of 40,000 certified teachers. If the GPO 
and WEP provisions were repealed, individuals who make career changes 
in mid-life could be attracted to the teaching profession. Individuals 
who make mid-career changes and choose to become teachers are 
desperately needed to solve the current teacher shortage. Under the 
current law (WEP) individuals will be better off financially in their 
retirement years if they work as a greeter at Wal-Mart or flip 
hamburgers at McDonald's.
    There are many women impacted by the GPO who entered the teaching 
profession, then stopped to raise a family, and later in their lives 
returned to teaching. These individuals generally accumulate 15 to 20 
years in a teacher retirement fund. Upon their retirement from a 
teacher retirement system they generally forfeit their spousal Social 
Security benefits. The spouses of these individuals probably had 
contributed to Social Security their whole adult lives and probably the 
maximum amount; and anticipated that their spouses would benefit from 
their contributions to Social Security. These individuals cannot 
survive on a half teacher retirement; therefore, retirement is 
something they will never experience.
    The repeal of the GPO and WEP would greatly benefit thousands of 
public servants now being penalized for their lives' work. These are 
hard times for seniors living on fixed incomes. The cost of health 
insurance, prescription drugs and general cost-of-living expenses 
continue to increase.
    Thank you for taking the time to conduct the hearing on May 1.

                                 
           Statement of Bettye D. Thompson, Macomb, Illinois
    I am writing to you in support of passage of H.R. 594 that amends 
the Social Security Act that repeal the Government Pension Offset and 
Windfall Elimination Provisions. When I retired, I was told that since 
I had a state pension, I could not collect from my former husband's SS 
benefits. We were married for 29 years and I had counted on those 
benefits in my retirement planning.
    Primarily, I worked very few years under SS in my own name. 
Basically, I was a homemaker and cared for my husband and 4 children. 
Our marriage ended in divorce. When I was nearing age 50, I was hired 
to teach at Western IL University. We were not given the choice of 
paying into SS nor did I have the opportunity to work enough years to 
qualify for an adequate pension. I have lost out on approximately 
$1,060.00 per month from my former husband's SS benefit since I retired 
on Jan. 1, l996. This seems unjust and discriminatory to penalize 
teachers under this law. Receiving the above benefits would greatly 
enhance the quality of my life. I urge your committee eliminate the 
penalties in this law.
    Thank you for your consideration.

                                 

                                       Boynton Beach, Florida 33437
                                                     April 27, 2003

Representative E. Clay Shaw
Chairman, Subcommittee on Social Security
Committee on Ways & Means
United States House of Representatives
Room B-316 Rayburn House Office Building
Washington, DC 20515-6100

Dear Representative Shaw:

    I am writing to urgently ask for your support in repealing two very 
unjust social security provisions affecting retired educators and other 
public employees in only fourteen states. I was married to a man who 
had served in the army overseas for about five years and was awarded 
the Bronze Star. We were married for twenty eight years during which 
social security payments were made religiously in the same way as those 
made by couples who, upon reaching retirement age, receive all earned 
benefits. Our payments were made just as those made by couples in which 
a spouse died and the widow, who may have never worked, receives full 
benefits. Many proponents of this current plan see these individuals as 
deserving dependent survivors. I was in the same ``dependent'' position 
as these individuals for those twenty eight years while raising a 
family. To what should I be entitled for those years of both payments 
and a ``dependent'' lifestyle, as the others who are seen as being 
deserving? My husband became ill and died at a relatively early age and 
was not able to obtain any (other than a small G.I. policy) life 
insurance because of his dire diagnosis.
    Because I went to work for a school system later in life I have 
been penalized by having all of my marital earned benefits offset. What 
were the twenty eight years of payment for? And what about the promises 
of our government and social security? It should be apparent that 
entering the school system later in life did not allow me to build up a 
substantial amount to be received from the teacher's retirement pension 
as did those who put in all or most of their work years in that system. 
Many of these individuals may never have contributed to social 
security, and so, are not affected. But those of us who have, are not 
being treated in a just manner. My husband and I counted on my social 
security benefits as a significant part of my retirement plan. (I 
received no benefits from social security for my children because of 
their ages.) Gwendolyn King and others have identified the ``three 
legged stool'' to be considered for retirement planning (social 
security; pensions; and savings). One of my ``legs'' has been knocked 
away. I don't know many American citizens who would feel fairly treated 
when having paid for something for years, with a clear promise of later 
benefits, having those benefits eliminated because of other benefits 
earned through additional, and often very hard work. Saying that it is 
too expensive is not an adequate answer in terms of fairness and our 
nation's ideals.
    How do Congressmen and women receive both? And how do persons 
employed in private settings receive both? Although some individuals in 
public service may never have contributed to social security, I 
contributed to both (marital, and on my own work). I was employed for 
some time before the school job, and there were significant time 
periods when I worked both for the school and in other part time 
positions (which had me paying into social security as well as into the 
teacher's retirement system at the same time). Is this to be considered 
a windfall? The full amount of required social security payments were 
made on my own work record, and was collected by the government. When I 
retired, I received an added punishment for working in a public school. 
I would now only receive forty percent of what my own social security 
earnings should have been because I worked and earned benefits through 
the school system. Social Security (Old Age and Survivors INSURANCE) 
was an agreement between the United States government and employees. 
People would establish eligibility by work and contributions (i.e. 
F.I.C.A. FEDERAL INSURANCE CONTRIBUTIONS ACT). It was an earned right. 
Daniel Patrick Moynihan had said that social security is not an 
entitlement because one was able to survive until age 65-62 . . . this 
is not the idea behind social security . . . it was envisioned from the 
beginning as a social insurance program. As Bill Archer noted that 
social security has never been an entitlement program but an ``earned 
right'' program and it is Congress's job to do whatever is necessary to 
deliver it. Carolyn Weaver (1999) said that social security presently 
pays the largest benefits to the highest income workers and it is both 
fair and appropriate that people who work and earn more get more under 
a retirement savings program. In AARP (1999) ``Social Security is 
designed to be the foundation on which to build a secure retirement . . 
. is most likely an important part of your retirement plan . . . and 
you can count on that benefit amount regardless of what happens to 
you.'' . . . And Robert Ball said . . . those who are eligible should 
get it, regardless of other income.
    I can't understand either the rationale or the ethicacy involved in 
the fourteen state only social security offset and windfall provisions; 
and neither can anyone with whom I have spoken. All have been 
incredulous and quite obviously thrilled not to find themselves in such 
a situation. Most friends can't face me and avoid eye contact because 
they are aware that each is benefiting, and I, who most likely have 
contributed as much or more, am being handled in a discriminatory 
manner. I know tremendously wealthy individuals receiving full benefits 
which are used for little ``extras.'' I retired in 2000 at age 70 and 
had, as prescribed by the school district, notified them two years 
before retirement. It was in 2000 that the law changed allowing 
individuals to work and earn whatever they could and still receive 
social security benefits if age eligible. There was no grandfathering 
in as there was grandfathering in on the offset provision. (Therefore I 
never received the payments from age 65-70 as people have done since I 
retired). Many individuals receive generous tax benefits for charitable 
contributions. At least, why wouldn't I and others in my position, be 
entitled to credits for this forced support of the social security 
system?
    I am not a greedy person, but find myself periodically, but 
continually, depressed and enraged about the treatment I am receiving 
from my country. Please support fairness and repeal these unreasonable 
laws.

            Sincerely,
                                                     Deborah Tucker

                                 
          Statement of Nancy M. Turco, Westerly, Rhode Island
    Thank you for giving me this opportunity to write to you.
    My name is Nancy Turco and I am writing to you as a member of the 
National Education Association, and as someone who will be affected by 
the Government Pension Offset (GPO) and the Windfall Elimination 
Provision (WEP).
    I live in Westerly, Rhode Island and have lived here all my life. I 
am married 42 years this coming September. We have three daughters 
living in Virginia, Texas, and New York and all three are employed as 
professional women. My husband has recently retired and will be working 
part time. I had hoped to retire after this current school year because 
I will be 65 at the end of August. However, I have decided to continue 
working because my social security retirement income will be 
considerably reduced because of the Windfall Elimination Provision.
    I started my work life, as many others do, during high school 
summers. My four years of college required summer time hospital 
educational experience. In 1960 I graduated from Salve Regina 
University with a BS degree, and I have always maintained my RN in the 
State of Rhode Island since that time.
    My nursing career has been varied and offered many opportunities. I 
have always sought to expand, learn, and keep abreast of all nursing 
and medical knowledge. I obtained a variety of nursing certifications 
including intravenous therapy, defibrillation, intensive care, and 
infection control. Throughout my career I worked all shifts: evenings, 
nights, and daytime. Nursing also requires work on weekends and 
holidays. This is not done easily when a person is married and has 
children. That is what the profession requires, so it was done. Two 
career positions I especially enjoyed were Head Nurse of a Medical Unit 
in the hospital and Director of Nursing in a newly opened Nursing Home. 
During all these years of employment at nursing homes and hospitals 
social security was deducted from my salary. I have paid Social 
Security 27 years.
    In 1989 I began employment with the school department. This was a 
career change and a challenge for me to meet the health needs of high 
school students, teach prevention of illness and injury, and promote 
fitness and a healthy lifestyle. I completed the State of Rhode Island 
teacher certification process and also graduated from Rhode Island 
College with a Master of Education in Health. When I was hired, I was 
aware that I would not be employed with the school system for a 
sufficient number of years to earn a full teacher pension, which would 
require my working to about age 78. Although I am in good health, 
working to age 78 would be a challenge in a large school with over 
1,200+ students and staff. I don't think I can do this. I had planned 
that for retirement I would have earned some teacher pension plus my 
years of social security payment and my retirement would be on a solid 
base. About two years ago I became aware of the unbelievable 
information about the GPO and WEP amendments to the Social Security 
Act. I can not understand why people who have never been employed or 
contributed to the social security system are able to collect social 
security. Yet, I will be unable to collect the amount that I have 
rightly earned by diligent work in my community as a registered nurse 
and a school nurse teacher and by my years of payroll contribution to 
this social security system.
    Approval of the Social Security Fairness Act will help to stimulate 
the economy, which is what President George Bush is trying to do. 
People who have earned and worked for these funds would receive those 
needed dollars. It would be a great help to the economy and to the 
living standards of people affected by the GPO and the WEP.
    Approval of the Social Security Fairness Act will also assist First 
Lady Laura Bush with her endeavor to promote Troops to Teachers. The 
GPO and WEP are presently having a negative affect on the Troops to 
Teachers program in many states at a time when teachers are desperately 
needed.
    Please support the Social Security Fairness Act and repeal the GPO 
and WEP, and support H.R. 594.

                                 
     Statement of Roy Tully, Twin County Retired School Personnel 
                       Association, Winnie, Texas
    The Government Pension Offset (GPO) and Windfall Elimination 
Provision (WEP) unfairly reduces the retirement benefits of public 
school employees in Texas and many other states.
    I am contacting you on behalf of Twin County Retired School 
Personnel Association; an organization of retired educators in Texas. 
As a retired school administrator and president of this group, I 
represent 137 retired school personnel in Southeast Texas. Many of our 
members have lost retirement benefits, which they and/or their spouse 
had counted on for security in their retirement years, due to these 
provisions.
    We urge you to support legislation (H.R. 594) that totally repeals 
unfair limitations of benefits earned by these public employees. They 
have worked hard, paying into the system, and cannot afford this loss 
of benefits.
    Your consideration in this matter would be greatly appreciated.

                                 
     Statement of Theresa ``Bianca'' Urbanski, Crest Hill, Illinois
    Currently, I am a Guidance Counselor at Lockport Township High 
School. I also have experience teaching special education in low income 
and inner city high schools.
    Prior to entering the education field, I was working in the 
business world and paying into social security. I am a single person 
with no other income. I decided to leave the business world and teach. 
I never realized this move would jeopardize my social security money 
when I retired.
    What is bad is because I did work in the business world for years I 
do not have an opportunity to put in the full amount of years to 
receive a full teachers pension. I will not receive a full teachers 
pension either. Since I have never married, I will not receive any 
spouse benefits.
    I am not someone who only worked a few hours after school or a few 
summers here or there. I believe that I should receive full social 
security benefits. I find it appalling that teachers are bearing this 
burden. Teachers who changed careers should not be penalized from 
receiving full social security benefits.
    If you need any further information from me please do not hesitate 
to contact me.

                                 
        Statement of Margaret Ann Vincent, Santa Ana, California
    Thank you for giving me this opportunity to write to you. I would 
like to relate how the GPO and WEP affect me as it now stands.
    I began teaching in the state of Minnesota at the age of eighteen 
in 1956 on a two-year provisional. At that time I did not pay into 
social security or a state retirement fund as these programs were not 
in effect for teachers. I then moved to California in 1957 and 
proceeded to teach and work in a drug store for minimum wages, another 
thirty-six hours a week, in addition to a full time teaching position 
and raising three children. This allowed me to earn about thirty 
quarters in the Social Security system. My husband decides that in 1972 
we should go back to Minnesota and he persuaded me to take out my 
California retirement, which amounted to $6,000.00. In 1979, after a 
long separation I was divorced from my first husband. I was able to 
continue teaching as my only source of income.
    In 1981 I was introduced to my future husband and married in 1983. 
At that time I continued teaching and worked for a company to complete 
my forty quarters of social security in my own name. The amount that I 
would receive from my account before GPO and WEP is $150.00 per month 
according to my current statements.
    Realizing that my new husband and myself did not have a lot of time 
to build our life together we decided to open a business. In order to 
facilitate this in the most expedient way, he moved into my home, using 
a room for an office and my garage as a storage area while we opened a 
warehouse and machine shop and built a business dealing in electrical 
parts for DC current used in basic metal production. My stable income 
generated the basis of this new venture. As in all business there were 
periods of success and very slow months where again my salary held it 
all together. Since my husband was self-employed he paid the max on 
Social Security.
    March 3, 1995, after complaining about a stomach pain since 
December 1994 and being told he had an ulcer, he was diagnosed with 
pancreatic cancer. He died March 18, 1995. He did not leave a will as 
he was told that he had about six months to live and being in total 
shock from the diagnosis he did not accept the fact and did not 
complete any legal business. I was left with all bills for the business 
plus cars and other medical, burial and probate costs. I could not 
continue the business as I have no knowledge of all the parts, where 
they go and what they are for. His skill is similar to a dentist or a 
doctor. He was the source of the knowledge and what was needed.
    I mortgaged my home for $100,000 to pay off his debts. My 
California STRS would give me $1,500.00 a month to live on if I taught 
to 65. Since that would not be adequate, I have replaced the $6,000.00 
that I so foolishly allowed my first husband into talking me to take 
out to the replacement cost of $60,000. I also went back to school to 
get my Masters to continue teaching to support myself.
    I just turned 65 and am able to receive my husband's social 
security as long as I work. My current debt for his business bills and 
my education has put me into long-term debt that I am struggling with. 
I am not asking for a handout. I just want the money that has been paid 
in by my husband and myself. This is only fair.
    Therefore I am petitioning you to lobby to change this most unfair 
act of the GPO and WEP. I also feel that this information needs to be 
presented to the public, and all parties who are interested into going 
into public education in the states that their social security payments 
are in jeopardy because of these blatant laws of injustice.

                                 
               Statement of Lynne Walters, Auburn, Maine
    Thank you for giving me this opportunity to write to you. My name 
is Lynne Walters. I live and work in the state of Maine.
    As a teacher who is currently teaching in Maine and formerly taught 
for years in Pennsylvania, I will, in retirement, not be receiving any 
pension for my years in PA from Pennsylvania State Retirement System. I 
will also be losing most of my earned Social Security from those years 
as well because of the Windfall Elimination Provision (WEP). As a 
recent widow, I will be receiving NONE of my late husband's Social 
Security benefits because of the Government Pension Offset (GPO). I'm 
being penalized in several different ways.
    My husband started working at the age of 15 in PA where we both 
paid into Social Security. After a number of years, we moved to ME; my 
husband continued to pay into Social Security for a total of 50 years 
until he passed away in March of 2001. We found out shortly before his 
death that I would not be able to receive any benefits at my retirement 
based upon his contributions.
    We have always heard that retirement is a three-legged stool 
comprised of savings, pensions and Social Security. Now we find that 
one of these legs is being taken away from us.
    One of the arguments I have heard is that we would be ``double-
dipping'' if we received our earned Social Security. There are people 
who have been in the military, had second and even third careers, 
receive pensions for all, plus full Social Security. Since they earned 
their pensions and Social Security, this is never referred to as 
``double-dipping.''
    I had an opportunity to speak with a congressional aide from 
another state who told me it wouldn't be fair for me, as a widow, to 
receive my husband's benefits. I would then be getting more than a 
widow who has never worked outside her home. I do not understand why 
widows who have worked outside the home should be penalized because 
they chose to work (for the state of ME). How can legislators determine 
whether or not I need the safety net of Social Security along with 
whatever 
pension I have earned in Maine? Everyone's needs are different. 
There should be no 
discrimination against those who made a decision to work and bring in ex
tra income.
    This same congressional aide seemed to feel that if the GPO and the 
WEP were repealed, the social security system would become bankrupt. 
The implication was that paying the public employees their full 
benefits would destroy the Social Security system. I don't feel that 
this is an appropriate response to men and women who have worked in the 
public sector for much of their careers (and often at very low wages).
    This situation is one that shows great inequity among people who 
live and work in various states. Why should public workers be penalized 
when they move and work in a state in which they are not allowed to 
contribute to Social Security? Why should public employees be penalized 
when they work at a second job to earn additional money for their 
families, pay full Social Security on those wages, then be denied full 
benefits based on those same wages? How about people who change to 
teaching, for example, in mid-career and work in an affected state? 
(Laura Bush has made a concerted effort to encourage career changes in 
order to get many more teachers, yet they will lose a great deal of 
their financial security.) Why are public employees who have paid into 
Social Security not able to realize the full benefits of those 
contributions? With the offsets in place, the people who will benefit 
from 
our contributions are other current and future Social Security recipient
s. Is that fair?
    As teachers, we have paid our taxes and paid into Social Security. 
The offsets are an insult to people who have worked hard all of their 
lives in public service. We have had low-paying jobs, and since our 
salaries determine the amount of our pension, we therefore have low 
pensions. Then, we are further penalized by the offsets to our Social 
Security (WEP) or our spouse's (GPO). We have earned the right to 
retire and expect the same treatment that others in our nation receive.
    Please help all of us who are caught in this terrible predicament. 
Please eliminate the WEP and the GPO by voting for H.R. 594.

                                 
               Statement of Crystal Ward, Lewiston, Maine
    Thank you for giving me the opportunity to write to you on the GPO/
WEP issue. My name is Crystal Ward and I am from Lewiston, Maine. Maine 
is one of the States that is adversely effected by the current laws. As 
the Social Studies Department Head at Lewiston High School I have a 
teacher who is retiring this year at age 74--yes it is 74!!.
    This wonderful woman had to continue working long after the death 
of her husband because of the GPO/WEP. She had started her career after 
her children were raised. She worked several different jobs paying 
Social Security and worked hard to earn her Masters Degree in 
Education. With 20 years into the Maine Retirement System she tried to 
retire but found out she would lose $600.00/month she had been 
receiving at the death of her husband and she would lose another $200/
month in her own Social Security benefit. The amount left would put her 
at the poverty level!!!!!!!!.
    The current laws are totally inequitable to the hard working 
Americans who paid into a retirement system and are told they will not 
be allowed to draw out the full amount they deserve. For some reason it 
is believed these people are ``double dipping'' and that they should 
not be allowed to do that. But many other people pay into two or three 
different kinds of retirement systems and the government does not take 
away money from them, only people who pay into two GOVERNMENT systems 
must pay a penalty. WHY??? IF YOU PAY INTO TWO SYSTEMS YOU SHOULD BE 
ABLE TO DRAW YOUR FAIR SHARE FROM BOTH SYSTEMS.
    If the USA can afford to pay $80 billion to bring freedom to Iraq--
they can afford to pay for the hard working AMERICAN education 
employees, firefighters, policemen who have paid into Social Security. 
If you can afford to cut $350 billion you can afford to pay to get rid 
of the GPO/WEP. We have the money!!!!

                                 
         Statement of Donna Wasneski, Grand Junction, Colorado
    I am very disappointed that just because I chose to be a teacher I 
will not be able to collect as much of the social security widow's 
benefit as I would have in a private sector job. The fact that only 
certain jobs suffer this fate is awful. Please allow me to collect the 
funds my late husband had planned for me in full.

                                 
        Statement of Keith L. Weidkamp, Granite Bay, California
    In my high school and college I worked both full and part-time 
social security jobs to get myself through college. After graduating I 
started what is currently a 40-year teaching career in 1963 in 
California. In 1983 I began part-time and full-time summer work as an 
author for two national publishing companies. We have become involved 
in writing material for use in the study of accounting principles. This 
employment is considered self-employment income and while the amounts 
that I earned were modest, the tax consequences including 15+ percent 
of social security took more than half of every dollar that I was able 
to make. This year as an example I will contribute an additional $3,000 
to my social security account.
    As a result of the current social security tax law, I will qualify, 
if I continue to do this work for another two years, for a social 
security benefit of about $500.00 per month.
    My wife will also qualify for a similar benefit in 4 years. Coupled 
with my teacher retirement, we will be able to maintain most of our 
modest standard of living we have enjoyed during my working years. 
However, the law will allow me only about 40 percent of my benefit, or 
$200.00 per month, and when I die, my social security will stop 
entirely, and my wife will have her benefit reduced significantly. With 
this happening and with any modest inflation over the next 20 years she 
and possibly myself will have outlived the benefits that we have worked 
for. While it has been difficult to pay the heavy self-employment tax 
over the last 20 years, why the law would take away what my wife has 
worked for makes no sense to me. My real worry is what might happen 
financially for my wife after I am gone.
    It is my sincere hope that the committee will see fit to right the 
wrong that was created when the law was changed back in the 80's. Allow 
those of us who paid for our retirement years, not be robbed of what we 
worked for. We have earned the right to finish out our lives without 
fear or anxiety about our financial future.
    I appreciate the opportunity to present this statement to the 
committee. If every teacher had 50 years of service to use to calculate 
their teacher retirement, they would have no financial problem to deal 
with. However, most teachers have 25-35 years of modest income and 
retire at about 50 to 60 percent of that annual income. There are many 
teachers that I know who are really hurting financially trying to 
survive with their small retirement income.

                                 

                                    South Burlington, Vermont 05403
                                                        May 6, 2003

The Honorable E. Clay Shaw, Jr., Chairman
Subcommittee on Social Security
Committee on Ways and Means
United States House of Representatives
Room B-316 Rayburn House Office Building
Washington, D.C. 20515-6100

Dear Representative Shaw:

    I realize I should have written to you in a more timely fashion, 
but both my husband and I have been experiencing health problems, which 
now are hopefully resolved.
    For 21 years, we lived in Normal, Illinois, and for 17 of those 
years, my husband was first a department chairman and then a professor 
at Illinois State University, while for 11 years, I was a Civil Service 
employee at ISU's Milner Library. In 1996, several years into our 
retirements, we moved to Vermont, where I have a lot of family.
    When my husband was hired by ISU in 1974, he was not allowed to 
continue paying Social Security but was told that the state retirement 
system would take care of him. I believe that starting in 1984 or 1985 
hirees could make the decision, whether they wanted SS or not. I began 
at Milner in 1979. I did not have a choice either. Because my husband 
had taught at various private and public colleges and universities on 
his way up the academic ladder, he had quite a bit invested in SS, but 
as you know, he gets the minimum amount in retirement. He should be 
getting the total amount, as he earned it outside of Illinois. There is 
no double-dipping in his case. What is of interest is that the public 
institutions for which my husband taught did indeed allow SS, while ISU 
did not.
    Because I only worked 11 years at Milner Library at ISU until 
retirement (I am 8 years younger than my husband), I did not have 
enough quarters in SS to qualify for even the minimum benefits. At age 
65, I hitched onto my husband's SS in order to receive Medicare 
benefits. To my great surprise, after visiting the local SS office and 
also receiving a letter with the details of my benefits, one year I 
received a letter that I owed SS for over-paid benefits. Because the 
State of Illinois has a built-in 3% pension increase each year, so far, 
that impacts on the SS I receive. SS will not accept my figure each 
year--and I have gotten it from the State of Illinois--as it is not 
official, and that figure doesn't come in the mail until well into 
February. Each year the amount goes down (I am at $56 per month at the 
moment), and if I live long enough, I will not receive anything and 
will have to pay Medicare out of my own pocket. I also am not sure what 
I will receive, should my husband predecease me, although our son feels 
that it would be about $200 per month because of the WEP and GPO 
offsets, if I am lucky.
    Why Congress is allowed to double-dip is very curious indeed, but 
as the local SS office told us, Congress wrote the laws to suit 
themselves and not to help their constituents. Nobody told us what was 
ahead for us, when we were hired by ISU. We simply would not have left 
his previous university. It's as simple as that. I have written to the 
Vermont Congressional delegation but have had no replies to date. (They 
were in recess at the time and perhaps have not had a chance to 
respond, although all three are very good about keeping in touch. Also 
their local offices are very sympathetic and helpful.)
    We are affected by both the WEP and GPO Social Security offsets. I 
do not hold out much hope that H.R. 594 will be given more than the 
hearing I saw on television, but I would like these offsets ELIMINATED, 
totally. Too many of us had no idea what they were and how they would 
affect us in our later years after retirement. Please do what you can 
to help. I would like to add that we are intelligent people from whom 
the bitter truth was hidden for hiring reasons, we are sure.

            Sincerely yours,
                                                  Helga N. Whitcomb

                                                Richard O. Whitcomb

                                 

                                             Joliet, Illinois 60432
                                                     April 24, 2003

Representative E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security
United States House of Representatives
Room B-316 Rayburn House Office Building
Washington, DC 20515-6100

Dear Representative Shaw:

    I am a high school business education teacher who worked her way 
through college. I worked many different, and sometimes unpleasant, 
menial jobs putting myself through college. When I finished college, I 
had enough quarters to qualify for Social Security. From time to time 
throughout my teaching career, I have worked in the private sector 
during summer breaks to earn extra income.
    The Government Pension Offset (GOP) and the Windfall Elimination 
Provision (WEP) reduce or eliminate Social Security benefits. I am a 
single person and I need all the benefits I can get. I have been 
working since I was 13 years old. I would like to be able to retire at 
57 years of age with 34 years of public service as a teacher. Whenever 
I do retire, I would like to be able to support myself comfortably with 
my retirement benefits.
    I, like everyone else in this situation, only want what is due me 
from Social Security and from the Teachers' Retirement System. I'm not 
asking for a freebie or a handout. I am not asking for more than what I 
actually earned. I am asking specifically to be granted all the 
retirement benefits that are rightfully mine.
    Thank you for doing all that you can to support retirees who 
receive pensions for non-Social Security covered employment to fully 
receive ALL that is due us from both Social Security and our public 
service employment.

            Blessings,
                                                 Emma J. Williamson

                                 
             Statement of Beatrice D. Willis, Winnie, Texas
    I was a public school employee in Texas as a teachers' aide and 
secretary for twenty years. I paid into a Teacher Retirement Fund but 
was not required to contribute to Social Security. I am seventy-one 
years of age. When I was sixty-seven, I retired from my last position 
with a Texas State Agency after working twelve years there. During my 
working years my employers and I both contributed for sixteen years to 
the Social Security tax fund for my benefits.
    When I was ready to retire and went to register for Medicare and 
Social Security, I was devastated to learn that my Social Security 
benefits would be reduced by forty percent because I received a small 
teachers' retirement check. This was due to the WINDFALL ELIMINATION 
PROVISION (WEP) in the Social Security Laws.
    The forty percent I was penalized is money I earned and worked hard 
for. I was not a high-wage earner at the school system. I receive a 
small annuity from the Teacher Retirement System because of what I 
contributed there. I worked other places to supplement my retirement 
and am not being treated fairly.
    PLEASE consider how this law is penalizing people for working to 
make a living and help us. So many people who have been hurt by this 
unfair law need your help.
    Thank you for your consideration.

                                 
            Statement of Martin C. Wolf, Bishop, California
    When I retired in 1995, from Los Angeles College West, after 28 
years of instructing, I thought I was entitled to full Social Security 
benefits, if my spouse passed away. Well she did, and I was wrong. I 
should have been entitled to a major percentage of hers, or mine 
whichever was more. To my surprise I was told by Social Security that 
the benefits were a ``windfall,'' part of hers was not an option, and 
my social security is minimal. In our family with five children, we 
needed two incomes, and we both sacrificed with contributions to Social 
Security. It is only fair that I should receive, and should have 
received that benefit like other taxpayers. This policy, however 
formulated, is wrong and should be changed.
    Educators are not highly paid. They are dedicated professionals who 
have a passion for teaching. Quite frankly the concept that I would 
receive a ``windfall'' is total nonsense. The policy that is now in 
effect regarding WEP & GPO penalizes and discourages educators.
    I cannot fathom how my teaching retirement and Social Security 
amount to a windfall. It's time these policies were rectified for 
myself and for all teachers past and present.
    Thank you for your kind and careful consideration.

                                 

                                          Rocklin, California 95765
                                                     April 28, 2003

Representative E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security
The Committee on Ways and Means
United States House of Representatives
Room B-316 Rayburn House Office Building
Washington, DC 20515-6100

    Thank you for giving me this opportunity to write to you concerning 
the Social Security Windfall Elimination and Pension Offset provisions.
    My name is Ralph Wright, and I am a teacher at Granite Bay High 
School, Granite Bay, California 95746. I have been a teacher for 17 
years, entering the profession mid-career. Because of the number of 
years, when I retire, the California State Retirement system will only 
pay me approximately $1,300 (before taxes) every month. This amount of 
money does not even come close to covering my house and utility 
payments, and I will have to depend on Social Security to make up the 
difference so that my wife and I can live. I paid all my quarters 
before I returned to teaching in 1987.
    A normal Social Security payment would be enough for my needs. But 
to have my SS benefit cut by 60 percent will place an undue hardship on 
my life. We may be forced to sell our home. The ``golden years'' which 
we should be able to enjoy will not be there, and I may have to have a 
part-time job to make up the difference.
    Had I been in the California retirement system for a full teaching 
career, I would have received enough retirement money to meet my needs. 
But the present law is severely penalizing me and all others like me 
who do not have that many years in teaching. I have paid into the SS 
system; I should be able to enjoy the fruits of this money.
    And since my wife only draws $141.00 a month in the teacher's 
retirement system (for teaching many years ago), she can plan on losing 
most of her Social Security when she makes her first SS claim. If I 
die, she, as my widow, can plan on receiving none of my Social 
Security. That is not fair at all.
    I urge the committee to recommend that H.R. 594 be passed by both 
houses of Congress and sent to the President for his signature. To not 
do this is to condemn a huge number of people to poverty--something 
that the original authors of the present law never dreamed would happen 
nor, I am sure, planned for. Please help us. The repeal of the Windfall 
and Offset Provisions is just as important as any other piece of 
legislation this year, including tax cuts!

            Sincerely,
                                                    Ralph E. Wright

                                 
            Statement of Claude M. Wyatt, Santa Anna, Texas
    Sir, I wish to comment on the GPO/WEP hearings that were conducted 
on May 1, 2003. The GPO/WEP penalizes the surviving spouse of a worker 
that did not work in a situation that paid into a ``government'' 
pension plan. Since a married couple is considered to be ``one'' in 
income and has to pay taxes as such, they should be considered as one 
in retirement. It is very unfair to penalize the surviving spouse due 
to the fact that the survivor paid into a government pension plan, 
without choice in most situations. That tells American citizens that 
the work that they perform during their life will not help to insure 
that their surviving spouse will be able to have some of the rewards 
that they worked for to insure that their survivor will be able to live 
with some modem of security and dignity in their retirement years. I 
urge you to please vote to repeal the unfair, unjust GPO/WEP and allow 
retiring Americans the benefits that their spouses worked for and allow 
them the full benefits that they are entitled to as an American. Thank 
you.

                                 
