Imagine you’re a recently retired teacher in Texas. You spent your career earning a lower salary than most of your fellow teachers across the nation. You spent more than $700 from your own pocket each year on school supplies, while Texas spent less per student each year than all but eight states. The last time you received a cost-of-living increase to your benefits was 18 years ago.
But through that hardship, you’ve earned a healthy pension and Social Security benefits. Only when your first Social Security check comes in the mail, it’s about half the amount you thought it would be. So much for a nest egg.
The retirement security of more than 200,000 Texans is being affected by the residue of a Social Security overhaul deal struck by Ronald Reagan and Tip O’Neill nearly 40 years ago. As part of this bipartisan compromise, the federal government instituted the Windfall Elimination Provision and the Government Pension Offset, two rules that reduce Social Security payments retirees receive if they also get a public pension from a job that didn’t pay into Social Security. For public sector workers such as teachers, firefighters and police officers, the windfall deduction can take as much as $512 a month from their Social Security payouts, and the pension offset can sometimes eliminate Social Security benefits entirely.
The intent behind the Windfall Elimination Provision was to prevent workers who collect pensions from double-dipping and receiving an unintended advantage – a “windfall” – in Social Security benefits. The thinking goes that public sector workers, such as teachers, who earn a pension and thus contribute far less to the Social Security program, don’t need as much of a Social Security payout when they retire. It also saves the federal government billions of dollars, though the Social Security Trust fund still runs an annual deficit of $56.3 billion.
Yet for retired educators in Texas, where retirement benefits rank among the worst in the nation, their pensions are not large enough to cover the reduction in their Social Security checks.
The Legislature hasn’t approved a cost-of-living increase for retired teachers in nearly a decade, affecting every teacher who has retired since 2004. If a cost-of-living adjustment had been in effect for retired teacher pension payments, a Texas retiree would now be getting almost $3,000 per month. Instead, they’ve seen their buying power dwindle: $2,000 in 2022 is equal to $1,350.89 in 2004.
Rather than approving increases to their monthly pension checks, the Legislature has opted for one-time bonuses. Last year, the Legislature spent $701 million to send “13th checks” to more than 400,000 Texas Retirement System members, equal to retirees’ monthly annuity or $2,400, whichever was less.
Well, now that the state is apparently flush in cash, it’s time for the Legislature to do right by our retired educators. With an extra $27 billion in the coffers thanks to robust sales tax revenues, lawmakers should use a chunk of that money to give retirees’ pensions a long overdue cost-of-living boost.
Yet while raises for retirees would at least somewhat blunt the impact of their smaller Social Security checks, the onus is on Congress go a step further and reform the windfall elimination and government pension penalties for good.
In Washington, Social Security is commonly known as the Third Rail of the federal government – don’t touch it, don’t think about it, and certainly don’t even breathe the words “reform” unless you want every senior citizen in the nation to rise up in protest.
However, as the federal government inches towards the 2035 deadline when Social Security trust fund reserves are projected to become exhausted, some lawmakers are beginning to take their stewardship seriously. Chief among them are U.S. Reps. Kevin Brady (R-The Woodlands) and Richard Neal (D-MA), the top Republican and Democrat on the powerful House Ways and Means Committee, who have voiced support for bipartisan reforms to Social Security.
A bill to fully repeal both the Windfall Elimination Provision and the Government Pension Offset has more than 300 co-sponsors in the House. Yet that measure would also increase the Social Security Administration’s costs by $146 billion over the next ten years and would deplete the trust fund’s reserves one year earlier than projected.
Both Neal and Brady have proposed narrower reforms. They favor a proportional change to windfall elimination that would tailor the amount of Social Security deductions to an individual’s career path and how many years they did and did not pay into the system. Neal’s proposal would also include rebate payments for retired and disabled-worker beneficiaries affected by the current Windfall Elimination Provision of up to $150 per month, which would increase with cost-of-living adjustments. Neither bill would affect Social Security’s long-term outlook.
We urge Congress to swiftly put these bills on the floor for a vote in the lame duck session. Brady is retiring at year’s end and come January, the new Republican House majority will likely be far less interested in reforming Social Security.
It’s long past time that Texas teachers’ Social Security checks rewarded their years of service.
Houston Chronicle
