Legislature(2021 - 2022)BARNES 124
03/21/2022 03:15 PM House LABOR & COMMERCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| SJR12 | |
| Presentation: Professional Licensing Processing | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SJR 12 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
SJR 12-SOCIAL SECURITY BENEFIT REDUCTION REPEAL
3:20:22 PM
CO-CHAIR SPOHNHOLZ announced that the first order of business
would be 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.
3:21:11 PM
SENATOR BILL WIELECHOWSKI, Alaska State Legislature, as the
prime sponsor, introduced SJR 12. He explained that the
resolution urges Congress to repeal the Windfall Elimination
Provision (WEP) and Government Pension Offset (GPO) of the
Social Security Act. He paraphrased from the written sponsor
statement [included in the committee packet], which read
[original punctuation provided]:
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.
SENATOR WIELECHOWSKI added that this affects about 16,000
Alaskans, and that Alaska is the most impacted of all the states
with over 15 percent of retirees in Alaska impacted by this. He
reported that several bills in Congress have widespread
bipartisan support, one of which is cosponsored by Alaskas US
Senator Lisa Murkowski. He said this is a nationwide effort,
with people across the US cheering on SJR 12.
3:23:15 PM
KEEGAN FARONE, Intern, Senator Wielechowski, Alaska State
Legislature, on behalf of Senator Wielechowski, prime sponsor of
SJR 12, provided a PowerPoint presentation titled Senate Joint
Resolution 12. He displayed the title slide and stated that
SJR 12 urges the US Congress to repeal the Windfall Elimination
Provision (WEP) and the Government Pension Offset (GPO) of the
Social Security Act. He moved to slide 2, Windfall Elimination
Provision, and explained that the WEP affects workers whose
work histories include both [Social Security]-covered and
noncovered employment, with the noncovered employment also
providing a pension.
MR. FARONE proceeded to slide 3, "Windfall Elimination
Provision," and stated that through what is called the "first
bend" a worker's first $996 of Social Security is reduced from
90 percent to as low as 40 percent depending on the quantity of
recorded years considered to be of substantial earnings. The
hree bend formula" constitutes what is known as the primary
insurance amount (PIA), which is the amount of Social Security
benefits paid to a retiree at full retirement age. The
reduction is based on the years of substantial earnings
accumulated throughout the worker's lifetime, which is reduced
in 5 percent increments for years less than 30. So, a worker
with fewer than 21 years of substantial earnings will receive a
50 percent reduction to the first bend of the average index
monthly earnings (AIME).
MR. FARONE presented slide 4, Windfall Elimination Provision,
and related that the WEP affects more Alaskans per capita than
any other state. In 2020, over 12,000 retired Alaskan workers,
60 disabled workers, and 478 spouses and children were subject
to WEP reductions. Of all Social Security beneficiaries in
Alaska, 11.6 percent had their benefits reduced by the WEP.
MR. FARONE continued to slide 5, Government Pension Offset,
and explained that the GPO affects Alaskans the second most per
capita of all US states. However, unlike the WEP which can
apply to any noncovered employment, the GPO applies specifically
to government workers retirement benefits.
MR. FARONE showed slide 6, Government Pension Offset, and
reported that the GPO may equate to two-thirds of the pension
that a Social Security beneficiary is set to receive from
noncovered employment. In what is known as a partial offset,
GPO refers to a reduction in which the GPO is smaller than the
benefit, so the remainder of Social Security benefits are paid.
In full offset, the GPO is larger than the spousal benefit, so
no Social Security benefit is paid.
MR. FARONE displayed slide 7, Government Pension Offset, and
specified that of the 3,322 Alaskans subject to GPO reductions
in 2020, nearly 73 percent were fully offset, meaning those
affected received no Social Security spousal or widowers
benefit because the reduction was greater than the benefit
itself. He further specified that 43 percent of those affected
were widows or widowers.
MR. FARONE continued to slide 8, Conclusion, and stated that
although the WEP and GPO were created to address the inequality
with double-dipping principle, another was inadvertently
created. He said Alaskans should not suffer cuts to their
rightfully earned Social Security benefits due to their
dedication to public service.
3:27:04 PM
CO-CHAIR SPOHNHOLZ observed the statement [on slide 4], In
2020, over 12,000 Alaskans had Social Security benefits reduced
by the WEP. She then observed the statement [on slide 7] that
3,322 Alaskans were affected by the GPO. She asked what the
difference is between the two.
MR. FARONE replied that the WEP and GPO are separate provisions.
The WEP is a provision that affects the individuals Social
Security [benefits], and the GPO applies specifically to spouses
and widowers benefits.
CO-CHAIR SPOHNHOLZ asked whether some folks have both provisions
layering on top of each other.
MR. FARONE responded that is correct.
3:28:09 PM
REPRESENTATIVE MCCARTY surmised that this pertains only to state
employees, not non-state employees.
SENATOR WIELECHOWSKI answered that it could apply to anyone who
does not pay into Social Security. It would apply to anyone who
works in the state of Alaska for an employer that does not pay
into Social Security, which typically is all state employees,
municipal employees, and school district employees.
REPRESENTATIVE MCCARTY inquired whether this pertains in any way
to non-government employees.
SENATOR WIELECHOWSKI replied that it would not, unless they had
a job that didnt pay into Social Security, which he doesnt
know that there are any in Alaska.
REPRESENTATIVE MCCARTY posed a scenario of someone working a
government job and then going to a non-government job, or vice
versa. He offered his understanding that right now this person
would have a reduction on his or her Social Security portion
because of the government job.
SENATOR WIELECHOWSKI responded yes, that is the way it works.
This would not apply, he explained, to someone who has worked a
full 30 years with Social Security contributions being made on
his or her behalf. This would only apply if the person has
worked less than 30 years, which is many people. For example,
if prior to retiring, someone works 25 years as a legislator,
firefighter, or military member, his or her Social Security
benefits will be reduced significantly. A person who has worked
20 or fewer years, will have his or her Social Security cut by
up to $498 per month or almost $6,000 a year. Every year from
20 to 30 years there is a 5 percent increase. So, a person who
has worked 21 years with Social Security benefits and who has
also worked for a public employer, would have a maximum cut of
$448 [per month]. It drops 5 percent for every year between 20
and 30 years.
3:31:06 PM
REPRESENTATIVE MCCARTY posed a scenario in which he has worked
for one entity for 20 years and then another entity for an
additional 20 years, and he now receives retirement from each
one. In this scenario, he is not double dipping, he just has
two different retirement plans. However, he continued, if he
works for a government entity for 20 years and then works in
another job in which he pays into Social Security, he will not
be able to get a full expectation from that. This resolution
would fix it so that he could have a double retirement.
SENATOR WIELECHOWSKI answered that is correct.
REPRESENTATIVE MCCARTY remarked, "This is a great idea."
SENATOR WIELECHOWSKI posed a scenario in which a person works 20
years for a government employer and then 20 years for a private
employer. He said this person would have his or her Social
Security cut by $498 [a month]. This is penalizing people for
working for a public employer. If a person worked for a private
employer there would be no cut. The person has paid in and is
getting cut because Congress made this bizarre bill decades ago,
for which the ramifications were not thought out.
3:33:11 PM
CO-CHAIR SPOHNHOLZ suggested that providing a sectional analysis
would not be necessary, to which no one objected.
3:33:18 PM
CO-CHAIR SPOHNHOLZ opened invited testimony on SJR 12.
3:33:31 PM
TOM KLAAMEYER, President, National Education Association-Alaska
(NEA-Alaska), provided invited testimony in support of SJR 12.
He shared that he arrived in Alaska in 1989 courtesy of the US
Air Force. He said he used his GI bill to attend the University
of Alaska Anchorage and is now in his twenty-sixth year as an
educator in the Anchorage School District. He stated that this
is an obscure topic to many people, but of incredible importance
to members of NEA-Alaska, members of Alaskas Teachers
Retirement System (TRS) and Public Employees Retirement System
(PERS), and every legislator and staff member, all of whom are
subject to GPO/WEP penalties. The GPO/WEP is a series of
penalties that can negatively impact the Social Security
benefits that were earned by certain former federal and state
employees by virtue of these employees collecting a PERS or TRS
retirement.
MR. KLAAMEYER noted that Alaska educators and public employees
hired after 2006 are particularly vulnerable to both provisions.
In 2006, he explained, PERS/TRS changed from a pension (defined
benefit program) to a defined contribution retirement system for
all subsequent employees. The GPO/WEP were designed to reduce
the Social Security benefits of former state and federal
employees who held government pensions. Certificated Alaska
educators hired after 2006, now numbering about 60 percent of
all teachers in Alaska, have no pension. Yet, they are subject
to GPO/WEP if they have previous Social Security earnings, and
they arent eligible to participate in Social Security as
educators even if they wanted to. When talking about teachers,
he explained, he is including all certificated educators,
counselors, nurses, principals, and superintendents. Alaska
certificated educators have the dubious distinction of having
the absolute worst, least secure retirement system in the US
without a pension or Social Security. A person entering
teaching as a second career or working another job to make ends
meet has paid into the system with their taxes, but because of
the GPO/WEP this person gets a double whammy of having no
pension and a reduced Social Security benefit.
MR. KLAAMEYER specified that the decision for TRS to opt out of
the Social Security system was made in 1951 during Alaskas
territorial days, so knowing the reasoning is difficult. From
his research through NEAs history, he said it may have been
thought that belonging to Social Security wasn't necessary
because at the time the TRS Tier I benefits provided security in
retirement. But those days are long gone, he stated. The
GPO/WEP provisions were added in 1983, and he would like to
think that a different decision would have been made by Alaskas
state leaders had they known then what a precarious situation
they would be placing on future educators.
MR. KLAAMEYER said it was learned in the last few years that
there is a process by which individual districts, or the state,
could once again reenter the Social Security system, which might
provide some help in providing retirement security. However, he
continued, because of the GPO/WEP problem that issue becomes
muddled and quickly problematic as the costs and benefits of
such a move are weighed. To be clear, one of the solutions
suggested is to go ahead and get back into the Social Security
system to give that security in retirement, which could be done,
but then NEA-Alaskas members would lose up to half of their
Social Security benefits because they are still receiving a TRS
or PERS pension. So, it becomes a dubious choice an educator
would be paying the same as everybody else to get into Social
Security but not be able to collect the full benefit unless the
person had more than 30 years when he or she would no longer be
subject to GPO/WEP.
3:39:40 PM
MR. KLAAMEYER related that he's heard of people who retired not
knowing of GPO/WEP or that they were impacted until they went to
Social Security and were told that their benefits were reduced
by hundreds of dollars. Even worse, some educators have lost
their eligibility entirely for the survivor benefits from the
spouse or parent. This money for retirement may have been
counted on for their entire working careers and it is simply
gone. He said NEA-Alaska is doing its best to inform its
members about this problem and is advocating for fixing it, but
the complexity of the topic makes for an uphill battle. Arming
NEA-Alaskas members with the details does not mitigate the harm
that they will receive from GPO/WEP, he pointed out, they just
know its coming. It may seem obscure or minimal to some, but
to a senior on a fixed retirement income after a lifetime of
public service, several hundred dollars a month can have real
consequences.
MR. KLAAMEYER thanked the sponsor for bringing forth SJR 12 and
the committee for hearing the resolution. He said NEA-Alaska
has been working for years with the Alaska Congressional
Delegation, which speaks to the length of time of working on
this and the complexity of the problem. Perhaps SJR 12 will
raise the profile of the problem, he continued, and give the
Alaska Congressional Delegation the support needed to advocate
for Alaska's state workers and retirees more effectively.
3:42:02 PM
REPRESENTATIVE MCCARTY asked why [the GPO/WEP] exists.
MR. KLAAMEYER replied that that is the point, it has no logic to
it, it is an unfair penalty. He shared that he is a TRS Tier II
beneficiary with a pension, so maybe there is some logic to
that. He said he has had other jobs through which he paid into
Social Security, and if he were to earn 40 quarters by working a
job outside of education he would then receive a benefit, but it
would be offset. Because he has spent the bulk of his career in
education not paying into Social Security he likely would not be
as impacted as some. For people who worked in other careers
before becoming an educator, all their retirement benefits
become subject, even though it isnt a pension. In the TRS
system the employer and the employee each pay greater than the
6.2 percent that employers and employees each pay into Social
Security; by that definition the Social Security Administration
still counts it as a pension even though it is a defined
contribution plan. He said NEA-Alaska has asked the Social
Security Administration to waive Alaska from consideration for
GPO/WEP, but was told it couldnt be done administratively, it
must be done in statute. He concurred it makes no sense that
one retirement benefit earned in one job cancels out a
retirement benefit earned in another job. It is ludicrous and
unfair and impacts NEA-Alaska members more than most.
3:45:21 PM
KATHLEEN YERBICH, Teacher, Matanuska-Susitna Education
Association (MSEA), provided invited testimony in support of SJR
12. She explained that the WEP and GPO were put in place in
1983 with the main justification being that teachers and other
public employees had earned a generous pension, so they didnt
the Social Security piece. But, she continued, this is no
longer the case. She does not have a generous retirement as she
is Tier III - after working 20 years as a teacher, she will
receive $900 per month retirement. Financial analysts say
Alaskas Tier III system doesnt fit the requirements to even be
called a retirement. Even if she worked for 30 years, the money
that she will receive will not be enough to retire.
MS. YERBICH stated she has a Social Security account from monies
earned during her teen years, her military years, and her years
of a part-time job as an adult. However, she continued, she
will only receive a fraction from this account. Her husband
worked 40 years in Alaska construction and is now retired and
receiving a Social Security check. If he passes away before
her, she will only receive a fraction of his check. The rest of
his money and her money will get absorbed into the system - this
is what the WEP and GPO mean.
MS. YERBICH related that when she explains the WEP and GPO to
other people, the common response is that it must be illegal.
And it does seem illegal because it is so unjust. While
educating people she has had many widowers share their struggle
with her. They worked for 20 or more years, their husband
worked 20 or more years, and together they made ends meet, until
their husband passed away. They only receive a fraction of this
money, and it is heartbreaking. The committee has the power to
help them by urging repeal of the WEP and GPO. Both pieces were
designed so teachers and public employees were not given too
much of the pie, but they are now barely at the table.
3:47:37 PM
REPRESENTATIVE MCCARTY observed that if the GPO/WEP were
repealed it would become retroactive. He inquired about how far
it would go and how much money would be available to do a
retroactive capture to take care of these retirement pieces.
MS. YERBICH responded that if it is repealed she will get all
her Social Security monies when she retires and will not be
penalized. She will get all her husband's Social Security money
if he passes away before her because it would not be penalized.
Repeal of both the GPO and WEP gets rid of the penalization.
3:48:52 PM
CO-CHAIR SPOHNHOLZ opined that it's wrong that people who have
worked in the public sector and the private sector are penalized
in this way. When the GPO and WEP were created, she continued,
it was based on the rich retirement pensions that were had in
those days, but those days are long gone and havent existed for
[most of] her life. She was about eight years old when the
State of Alaska chose to opt out of Social Security. The
states programs are no longer as rich as they used to be, and
it is problematic that now people who worked in both the public
and private sectors are penalized.
[SJR 12 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| SJR 12 GPO Explanation SSA.pdf |
HL&C 3/21/2022 3:15:00 PM SSTA 5/4/2021 3:30:00 PM |
SJR 12 |
| SJR 12 Sponsor Statement.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM SSTA 5/4/2021 3:30:00 PM |
SJR 12 |
| SJR 12 v.B.PDF |
HL&C 3/21/2022 3:15:00 PM SSTA 5/4/2021 3:30:00 PM |
SJR 12 |
| SJR 12 WEP and GPO numbers 2018.pdf |
HL&C 3/21/2022 3:15:00 PM SSTA 5/4/2021 3:30:00 PM |
SJR 12 |
| SJR 12 WEP Explanation SSA.pdf |
HL&C 3/21/2022 3:15:00 PM SSTA 5/4/2021 3:30:00 PM |
SJR 12 |
| SJR 12 GPO Explainer 2.8.21.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM |
SJR 12 |
| SJR 12 Letter of Support 2.9.22.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM |
SJR 12 |
| SJR 12 Letter of Support 5.5.21.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM |
SJR 12 |
| SJR 12 Presentation.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM |
SJR 12 |
| SJR 12 WEP GPO Key Points 2.9.22.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM |
SJR 12 |
| SJR 12 WEP Explainer 11.16.21.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM |
SJR 12 |
| DCCED CBPL HLC Presentation 3.21.22 FINAL.pdf |
HL&C 3/21/2022 3:15:00 PM |
Professional Licensing Processing |
| 2021 Professional Licensing Statistics.pdf |
HL&C 3/21/2022 3:15:00 PM |
Professional Licensing Processing |