Wednesday, July 7, 2004
Page 7
AFFAIRS OF STATE (Column)
Teachers Give a Lesson on Exploiting Taxpayers
By DAVID KLINE
With the Social Security program already headed for eventual bankruptcy unless major changes are made, the last thing we need is for people to game the system.
But that’s exactly what a large number of teachers in Texas have been doing.
Teachers in the Lone Star State are not covered by the Social Security system, because many years ago the state decided its teachers would continue to have their own pension system instead.
Prior to 1983, state and local governments had that option, and Texas was one of the states that exercised it.
So the teachers have been paying into their own pension plan, not into Social Security. When they retire, they receive benefits from their own plan, not from Social Security.
But if the teacher is married to someone who is covered by Social Security, there is a twist.
Under Social Security’s rules, the spouse or widow of a Social Security recipient is entitled to benefits, even if he or she has not paid into the system. These benefits are lower than those of spouses and widows who have paid into Social Security, but they’re better than nothing.
The rule recognizes two things: benefits for stay-at-home spouses and widows are important for keeping people out of the poorhouse, but people who pay into the system deserve better benefits than those who do not.
This is where the loophole comes in. Under the Social Security law, a person’s last day of work determines whether he or she is considered to have worked in a job which paid Social Security taxes.
Teachers in Texas exploited this loophole mightily. Many of them worked for decades at their jobs, not paying into Social Security, then worked their last day in a position covered by Social Security.
This was accomplished through a conspiracy with school districts that hired about-to-retire teachers for janitorial jobs and other positions covered by Social Security.
“Hired” is probably the wrong word, since the teachers would actually pay the school district for the honor of working that last day. One school district made $700,000 from teachers through this scam.
For that one day of pay-to-play labor, the teachers qualified for a lifetime of Social Security benefits—in the neighborhood of $200 to $400 a month, depending on their spouses’ earning history—to which they otherwise would not be entitled.
That money comes on top of their teachers’ pensions and in addition to the legitimate Social Security benefits that their spouses are collecting. It’s a textbook case of double-dipping.
The General Accounting Office found that some of these Texas teachers will collect about $96,000 in benefits after paying just $3 in Social Security payroll taxes. Insolvency 101, anyone?
All totaled, the use of the loophole is projected to cost $450 million over the lifetimes of the perpetrators.
Tom Margenau, a Social Security employee and syndicated columnist, said Wednesday that the loophole “was potentially available to anyone working at a job not covered by Social Security.”
“But only teachers in Texas seemed to be aware of it,” Margenau said.
That’s not entirely true. Members of Congress also became aware of it, and earlier this year they and President Bush enacted legislation to close the loophole effective July 1.
Right before the deadline, teachers in Texas made a mad rush for the fake last-day jobs. An Associated Press story reported that more than 16,000 school employees had paid fees ranging from $350 to $700 for the privilege of working menial jobs to qualify for benefits.
It is shameful that the teachers would abuse the system so badly, and equally abhorrent that Social Security apparently is going to pay the benefits even though the one-day positions don’t meet the basic definition of a job. If you’re paying the employer, it’s not a job!
If a Texas teacher saw an elderly woman drop $20 in the street, would he pocket the cash even though he knows it rightfully belongs to her? That’s the moral equivalent of what these teachers have been doing by robbing from Social Security beneficiaries.
Thankfully, the federal government closed this loophole before more people found out about it and enriched themselves at the expense of the common good.
The question is, have the taxpayers learned their lesson? This situation involved a venerated, well-intentioned program being abused by a respected and supposedly upright class of government employees. Think what must be happening elsewhere in the government bureaucracy where temptations for abuse surely exist.
— Capitol News Service
Copyright 2004, Metropolitan News Company