Legislature(2003 - 2004)
02/23/2004 02:49 PM Senate HES
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HJR 30-ELIMINATE SOCIAL SECURITY OFFSET
VICE CHAIR LYDA GREEN announced that there would be a work
session until a quorum was present. Chair Dyson was not in
Juneau due to travel difficulties and Senator Davis was excused.
Present were Senator Wilken and Vice Chair Green when the Senate
Health, Education and Social Services Standing Committee work
session convened at 2:49 p.m.
REPRESENTATIVE CARL GATTO, sponsor of HJR 30, explained that
this legislation deals with two provisions from the Social
Security Act, the Government Pension Offset and the Windfall
Elimination Provision. Historically, he said he was old enough
to have earned Social Security in his younger days and he had
completed all of the requirements to qualify for Social Security
before becoming a state worker. After becoming a state worker,
Social Security was able to reduce the benefit amount owed to
him because of the state not being part of the Social Security
system. He told members that a lot of people will face this
situation and will be just as surprised that these two
provisions exist.
REPRESENTATIVE GATTO provided the following testimony:
Briefly the first provision, the Government Pension
Offset really deals mostly with the death of a spouse.
What Social Security has done pretty much in these
provisions is to say that your survivor benefit will
be reduced by two thirds of your government pension.
In other words, the money that I earned in my
government pension, which has almost nothing to do
with Social Security Administration, is somehow going
to be used in the calculation of my Social Security
benefit. What they will do then, in the event of a
death of a spouse, is reduce the Social Security
benefit by two thirds of my government pension. So by
example, if I was a real good government worker
earning a lot of money and got a good pension, it's
very possible that my spouse would get zero of my
Social Security benefit. In fact it's likely my
spouse would get zero. If my government pension was
$3,000 they're going to say '$2,000 of that will
offset your Social Security benefit.' If my Social
Security benefit was less than $2,000, my spouse gets
nothing. She gets to keep my $3,000 government
pension, but she gets zero from Social Security. And
it works, of course, in the reverse.
REPRESENTATIVE GATTO continued:
The other one is the Windfall Profit Provision and
that essentially says the same thing in a different
way ... when I retire, my Social Security benefit is
reduced by a certain amount of money up to sixty
percent, based on what I earned in my government
pension. Madam Chair, this came as quite a surprise
to me. I currently get a Social Security benefit. My
benefit is in the order of $111 a month. I'm glad I
am not banking on my Social Security benefit. But
there are many people, many people in a situation
where they absolutely depended upon a Social Security
benefit. And so, what we have here in [HJR 30] is to
ask our team in Washington D.C. to support the repeal
of these two [provisions]. There is overwhelming
support right now in Washington D.C. and we'd like to
simply ask our representatives there to join in that
support so that we, as one of - I think fifteen or
sixteen states that are under this situation - will
not have some of the older people who are retiring
looking and banking on this benefit and then
discovering that at any moment, at the last second,
that it really will not be there.
VICE CHAIR GREEN commented that she was similarly surprised when
she recently came across this same issue. Before taking public
testimony, she said she presumed witnesses were testifying in
support of the HJR 30, and heard no response to the contrary.
MR. JERRY PATTERSON, NEA-Alaska Retired, reported that the
problem was extensive. There are about 7,000 retirees between
the ages of 65 and 75, who are potentially affected by this;
there are approximately 6,000 federal workers in the state, and
about 11,000 people between the ages of 55 and 65. The coming
generation will be more affected as the problem grows, so it
would be prudent for Alaska to have this repealed. There is a
recruiting problem concerning people recruited from outside the
state; the trigger is to be vested - which is five years for
state workers and eight years for teachers - and the trigger is
a small amount of service, yet the penalty is large.
MR. SAM TRIVETTE, President of Retired Public Employees of
Alaska, representing people who have retired from both state and
municipal employment in Alaska, related that prior to
retirement, he had received a calculation indicating how much he
would receive upon retirement; however, since retirement that
amount is reduced by $500 per month. He said there are over
20,000 retirees from state or municipal government, who are not
teachers and who will be similarly affected. The loss of that
income translates into a large amount of money that won't be
spent in Alaska's economy. In questioning why this bill was
passed, he said it was tied to a reappropriation bill at the
last moment, and "people, I don't think, frankly knew what they
were getting into at the time."
MR. TRIVETTE reported that he spoke with a Social Security
expert and presented the scenario of paying into Social Security
for over 25 years, before the state went out - part of that time
was with the private sector and part was as a state employee -
and of paying the full amount during that whole time (payments
had not been reduced). If he had simply quit working when he
had paid all he had to, and didn't continue working for the
state, he would not be getting this reduction; he would have
received that $500 per month. He said he had been a manager for
the state for many years and it was difficult to recruit
employees. The state informs new employees that Social Security
will be reduced and this is "certainly no incentive." Many
people now getting ready to retire don't even know that they are
going to be hit by this.
VICE CHAIR GREEN announced that with the arrival of Senator
Guess there was a quorum, and she called the Senate Health,
Education and Social Services Standing Committee meeting to
official order at 3:00 p.m. Present were Senators Guess,
Wilken, and Vice Chair Green.
MS. MARIE DARLIN, legislative chairman for the National
Association of Retired Federal Employees (NARFE), testified that
the association has worked for repeal of these offsets since the
early 90s. Many of those hurt the most by this are elderly,
widowed women who are not even receiving much from federal
checks. Many federal retirees have not paid Social Security but
have paid into the civil service retirement system over those
years; now the new retirement system does not include Social
Security since the federal government has changed that option.
Those who did pay Social Security for whatever other jobs they
may have had over their lifetime, now find that it means nothing
regarding their pension. NARFE wants this to be done away with
as soon as possible because the number of people hurt by this is
growing, and what was planned for is not going to be there.
MS. JOANNE COTTLE, a retired state and federal employee [with
NARFE} draws Social Security and said she called the Social
Security Administration's "800" number this morning and asked
how much the monthly benefit would be if she was not a retired
federal and state employee; it would be $590 a month. She told
members that she currently gets $204 a month because of this
bill.
VICE CHAIR GREEN asked for the will of the committee.
SENATOR GARY WILKEN moved to report HJR 30 [CSHJR 30(STA) am]
from committee with individual recommendations.
VICE CHAIR GREEN acknowledged there being no objection, it was
so ordered.
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