Legislature(2021 - 2022)BUTROVICH 205
05/04/2021 03:30 PM Senate STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| SB126 | |
| HB3 | |
| SB39 | |
| SB118 | |
| SB31 | |
| SB120 | |
| SJR12 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 39 | TELECONFERENCED | |
| += | SB 118 | TELECONFERENCED | |
| += | SB 120 | TELECONFERENCED | |
| += | SB 31 | TELECONFERENCED | |
| *+ | HB 3 | TELECONFERENCED | |
| *+ | SB 126 | TELECONFERENCED | |
| *+ | SJR 12 | TELECONFERENCED | |
| *+ | SB 108 | TELECONFERENCED | |
| *+ | SB 109 | TELECONFERENCED | |
| + | TELECONFERENCED |
SJR 12-SOCIAL SECURITY BENEFIT REDUCTION REPEAL
5:03:28 PM
CHAIR SHOWER announced the consideration of SENATE JOINT
RESOLUTION NO. 12 Urging the United States Congress to repeal
the Windfall Elimination Provision and Government Pension Offset
of the Social Security Act.
5:03:48 PM
SENATOR WIELECHOWSKI, Alaska State Legislature, Juneau, Alaska,
sponsor of SJR 12, introduced the resolution paraphrasing the
following sponsor statement:
SJR 12 urges Congress to repeal the Windfall
Elimination Provision (WEP) and Government Pension
Offset (GPO) of the Social Security Act. The WEP cuts
the Social Security benefits of public employees in
Alaska if they plan to switch between the public
sector and private sector or military. In 2021, this
loss could be as much as $498 per month, or about
$6,000 a year. The GPO cuts spousal or widows'
benefits for public employees for no reason other than
their work in the public sector. This cut could amount
to as much as 2/3rds the value of the individual's
government pension.
Because Alaska is one of few states that does not
offer a defined benefit plan or coverage for social
security, the WEP and GPO affect more Alaskans per
capita than any other state. Public employees in
Alaska are being punished for choosing to work in
public service.
The WEP and GPO negatively impact recruitment and
retention of Alaska public employees such as
firefighters, police officers and especially teachers.
Those who do not want to be subject to these
provisions will simply look elsewhere for employment.
Punishing individuals for choosing public service runs
counter to retaining dedicated Alaskan workers and
recruiting the best of the best to Alaska.
Passage of SJR 12 will demonstrate that the Alaska
Legislature opposes arbitrary and unfair cuts to the
rightfully earned Social Security benefits of
Alaskans. Alaskans deserve to retire with dignity.
I urge your support of SJR 12.
5:06:16 PM
At ease
5:07:03 PM
CHAIR SHOWER reconvened the meeting.
5:07:20 PM
TREVOR BAILEY, Staff, Senator Tom Begich and former Intern to
Senator Bill Wielechowski, Alaska State Legislature, Juneau,
Alaska, delivered a PowerPoint presentation to explain the
Windfall Elimination Provision (WEP) and the Government Pension
Offset (GPO). He began with an explanation of how Social
Security benefits are calculated. First, an individual must have
40 quarters or 10 years paid into Social Security. The Social
Security Administration adds the highest 35 years of earnings
adjusted for inflation. The total is divided by 420 (the number
of months in 35 years) to arrive at the average index monthly
earnings (AIME). A progressive scale is used to calculate
earnings from the AIME. An individual keeps 90 percent of the
first $996 of earnings. Between $996 and $6,002, the individual
keeps 32 percent. For earnings over $6,002, the individual keeps
15 percent.
5:08:21 PM
MR. BAILEY explained that the Windfall Elimination Provision is
a reduction to a qualified individual's Social Security benefits
because they also worked in job(s) not covered by Social
Security. These individuals are primarily public employees. In
Alaska, public employees, teachers, firefighters, police
officers, and legislators are not covered by Social Security. He
said the WEP can reduce the factor in the first step to
calculate the AIME from 90 percent to anywhere from 85 to 40
percent depending on the number of years paid into Social
Security. In 2021 that factor can be as much as $498 per month.
In 2019, the offset affected about 11.5 of all Social Security
recipients. This was 2 million Americans, 12,050 of whom were
Alaskans, which is the highest number of any state.
MR. BAILEY explained that the Government Pension Offset affects
spousal or widower benefits of Social Security recipients. The
reduction is based on the individual receiving a government
pension in a job that did not pay into Social Security. The
reduction is two-thirds of the value of the government pension.
He highlighted that Alaska's Tier IV defined contribution plan
is considered a government pension. If the value of the spousal
or widower benefit is less than two-thirds of the value of the
government pension, the benefit is zero. This offset affected
717,000 Americans in 2020; 3,320 beneficiaries were Alaskans,
2,419 of whom received zero benefit. He pointed out that a
spouse or widow affected by GPO would receive no help with
funeral costs and no financial help surviving without their
spouse.
5:11:11 PM
CHAIR SHOWER asked how the military is affected.
MR. BAILEY offered his understanding that the military pays into
Social Security so members who work in public sector jobs not
covered by Social Security would be affected by the WEP.
CHAIR SHOWER asked if they might be affected by both WEP and
GPO.
MR. BAILEY replied it depends on the number of years the
individual worked in a job covered by Social Security. Somebody
with 20 or fewer years in a job covered by Social Security who
then moves into a public sector job that does not pay into
Social Security, would see the number drop to 40 percent. The
percentage increases 5 percent up to 90 percent for anything
between 21 and 30 years. Somebody who works 30 years in a job
covered by Social Security and then works in a job that is not
covered would not be affected by the WEP.
5:13:05 PM
SENATOR WIELECHOWSKI pointed out that somebody who leaves the
military after 20 years and then becomes a legislator would see
their Social Security benefit reduced.
5:14:04 PM
At ease
5:14:40 PM
CHAIR SHOWER reconvened the meeting and moved to invited
testimony.
5:15:36 PM
TOM KLAAMEYER, President, NEA Alaska, stated that while he is
not an expert on the WEP and GPO, he has had to become educated
on the topic because it is such an important issue for NEA
members, Alaska PERS or TRS members, legislators and staff. They
are all potentially subject to the GPO/WEP penalties.
He agreed with Mr. Bailey that the GPO/WEP can negatively affect
Social Security benefits of certain state employees simply
because they collect a PERS or TRS retirement. Public employees
and educators hired after PERS and TRS changed from a defined
benefit system to a defined contribution system in 2006 are
particularly vulnerable because they do not receive a PERS or
TRS pension. Nevertheless, they are subject to the GPO/WEP
penalties on their earned Social Security benefits.
5:17:52 PM
MR. KLAAMEYER said the committee members should know that Alaska
TRS members are in an even more difficult situation. About 60
percent of certificated Alaska TRS members hired after 2006 do
not receive a pension and are not able to participate in Social
Security even if they want to. He said they have the dubious
distinction of having the least secure, worst retirement system
in the country. If teaching is a second career or if they had to
work a second job to make ends meet they get no pension and
their Social Security safety net is shredded by GPO/WEP.
MR. KLAAMEYER said the reason for PERS to opt out of Social
Security may have made sense in 1951 when there was just Tier I
but he would like to think that state leaders at the time would
have made different choices had they known the precarious
situation it placed future educators. On a more positive note,
he said there is a process by which individual school districts
or the state as a whole can reenter the Social Security System.
This might provide more retirement security but it would require
a cost benefit analysis because of the GPO/WEP problem. He said
NEA is doing its best to educate members on this topic, but it
is complex. He thanked the sponsor for introducing the
resolution and noted that NEA had been working with the
congressional delegation on this topic for years. He expressed
hope that this resolution would raise the profile of this
problem and give the delegation the support it needs to more
effectively advocate for this change.
SENATOR REINBOLD recognized Mr. Klaameyer as a constituent and
said she would not make a commitment because she was such a
fiscal conservative.
5:24:16 PM
CHAIR SHOWER opened public testimony on SJR 12.
5:24:23 PM
RICHARD SEWELL representing self, Anchorage Alaska, testified in
support of SJR 12. He explained that he paid into Social
Security on an off over 50 years. He moved to Alaska in 1981,
worked for the Municipality of Anchorage, and is a Tier I member
of PERS. The municipality pays into Social Security but because
of the WEP, his Social Security benefit is reduced by 40
percent.
5:25:51 PM
CARMEN RUSSO, representing self, Anderson, Alaska, testified in
support of SJR 12. She stated that she paid into Social Security
for 30 years and would have received a full Social Security
benefit but she became a teacher and the WEP reduced her benefit
by two-thirds.
5:26:59 PM
MITCHELL ROTH, Retiree, University of Alaska, Girdwood, Alaska,
testified in support of SJR 12. He stated that he was hired by
UAF in 1983 and before that worked in the private sector. Two
things happened the year he started at UAF that he did not know
about. First, his prior work qualified him for Social Security
benefits. Second, the Social Security Act of 1983 included the
WEP provision. As a result he has forfeited 50 percent of his
previously earned Social Security benefits. He has lost over
$48,000 in retirement benefits that he earned prior his work in
Alaska.
5:28:55 PM
SUSAN FREEL, representing self, Fairbanks, Alaska, testified in
support of SJR 12. She stated that she is a UAA retiree and
while she has 16 years of substantial earnings, seven of the
years overlapped with her tenure at the university. She earned
the full Social Security benefit but she receives just 64
percent.
5:29:51 PM
CATHY MCDORQUODALE, representing self, Fairbanks, Alaska,
testified in support of SJR 12. She said she has the same issue
the previous speakers mentioned. Social Security sent annual
reports telling her what her benefit would be on retirement but
it was not that amount. She said "windfall elimination" is a
perfect description for a contradiction and unfairness.
5:30:40 PM
ROBERT SEWARD, representing self, Newark, Delaware, testified in
support of SJR 12. He said he worked for the State of Alaska for
28 years and he learned about the WEP in the Social Security
office. He paid into Social Security and he does not think his
benefit should be reduced. "When I heard you were considering
this resolution, my heart leapt."
5:31:27 PM
NADINE LEFEBVRE, representing self, Juneau, Alaska, testified in
support of SJR 12. She stated that she is a PERS retiree. She
reported that about 19 percent of the Alaska population are
seniors and 10,000 receive some combination of earned Social
Security benefit and retirement pension benefits. She said
eliminating the unfair reductions to earned Social Security
benefits will help ensure that the growing senior demographic
can age in place and continue to support their community. She
pointed out that seniors contribute over $1.5 billion to the
Alaska economy annually. Present and future retired Alaskans
will benefit by the repeal of the WEP and GPO. She advised that
she would send her full comments in an email.
SENATOR HOLLAND advised that he had stepped in to chair the
meeting.
5:33:46 PM
CAROL WATERS, representing self, Anchorage, Alaska, testified in
support of SJR 12. She stated that she and her husband have been
retired for 20 years and they began receiving Social Security 10
years ago. Their benefits were decreased $491 per month per
person and they estimate that between the GPO and WEP they have
lost $320,000. She said the federal government has taken that
money from her family and that is wrong.
5:34:47 PM
KIMBERLY METCALFE, representing self, Juneau, Alaska, testified
in support of SJR 12. She stated that she was close to age 66
when she decided to retire and was concerned that her Social
Security benefit might be affected by the GPO or WEP. She worked
for the state for 8 years and had a small state pension. The
Social Security representative said her benefit would not be
affected because she had worked in the private sector for 30
years. She understood that if she waited to collect Social
Security until age 70 she would get a larger benefit and until
then she could collect a $1,400 per month widow's pension on her
late husband's benefit. He died before he received a benefit but
had paid in his entire life. However, she was told there would
be an offset when she filled out the paperwork. She learned that
her pension counted against her husband's benefit.
5:36:49 PM
STEVEN CLICK, representing self, testified in support of SJR 12.
He stated that he retired from teaching in 1987 as a Tier I
retiree. He paid into Social Security for 40 quarters and he
estimates that his benefit was cut by 40 percent. He will
receive almost nothing from his husband's Social Security
benefit even though he paid Social Security throughout his life.
He related that his son who is a teacher in Barrow will be a
Tier III TRS retiree and he is part of the worst type of
retirement system in the nation. He noted that he lives in
California now and public employees in that state also are
affected by the WEP and/or the GPO.
5:38:49 PM
JOHN DART, representing self, North Pole, Alaska, testified in
support of SJR 12. He stated that he spent half his career in
the private sector and half in the public sector and he cannot
understand why the WEP and GPO is still affecting the lives of
retirees throughout the nation. This needs to change because it
is affecting people's lives. Many people do not find out about
the penalty until it is too late to do anything about it.
5:40:35 PM
BARBARA MCNINCH, representing self, Soldotna, Alaska, testified
in support of SJR 12. She stated that she moved to Alaska in
1975 and she worked in the private sector until she was in her
40s and thereafter worked in Alaska public schools. She is
affected by both the WEP and the GPO.
5:41:35 PM
JOY GREEN, representing self, Kona, HI, testified in support of
SJR 12. She stated that as a retired teacher from Alaska, her
Social Security benefits are affected by both the WEP and the
GPO. She is unable to receive the full benefits she earned
before becoming a teacher and she is denied the spousal benefits
her late husband earned. She feels she is being penalized for
choosing a teaching career.
5:42:46 PM
LADAWN DRUCE, Staff, Sterling, Alaska, testified in support of
SJR 12. She stated that her husband retired as a Tier I teacher
nine years ago and the WEP and the GPO reduced his benefit $400
per month, which is a little over $43,000 over the last nine
years. She pointed out that recruiting educators and public
employees in Alaska is more difficult now because of the defined
contribution retirement system and the GPO/WEP.
5:44:09 PM
JAN CAROLYN HARDY, representing self, Anchorage, Alaska,
testified in support of SJR 12. She stated that when the GPO and
the WEP were devised, the reasoning was that public employees
were double dipping, although there was no such claim about
private sector employees who receive multiple retirement from
various companies. It was a policy of the ages to take from the
poor and give to the rich. She said she paid into both Social
Security and Medicare and was taxed like everyone else who
receives the full benefit.
5:45:42 PM
ACTING CHAIR HOLLAND closed public testimony on SJR 12.
SENATOR WIELECHOWSKI thanked the committee for staying late on
this critical issue that affects many thousands of Alaskans. It
will not cost the state anything, but it will bring money into
Alaska and change the lives of many Alaskans, he said.
ACTING CHAIR HOLLAND held SJR 12 in committee.