Eight Solid Reasons

Why Illinois Public Employees Oppose Mandatory Social Security

Most proposals to put Social Security on a sound financial basis include a requirement that school, state, and local government employees hired after the year 2001 be covered under Social Security. The reasons Social Security should not be required for states, local governments, school districts, and their employees are:

1. Requiring public employees to be covered by Social Security will increase payroll taxes. This will mean less money to spend on salaries, equipment, supplies, maintenance, and other essential needs. Increased taxes or reduced services by other public employees may also be a result. Retirement benefits/improvements for current and retired public employees will be much harder to achieve.

2. Social Security needs a long-term solution, not a quick fix. Voluntary coverage has not caused Social Security's financial problems. Federal employees hired after 1983 were forced into Social Security, but that has not solved the long-term problem. Coverage of new state, school, and local workers will increase revenues to the Social Security fund for several years after 2001, but those workers will become entitled to Social Security benefits beginning around 2020. This sequence could cause the balance of the Social Security funds to drop at the worst possible time.

3. The federal government confirmed 10 years ago that coverage outside Social Security was appropriate. A 1990 federal law requiring that all state, school, and local workers be covered under a public plan comparable to Social Security or in Social Security confirms the merits of voluntary coverage.

4. School, state, and local employee retirement benefits provide solid, secure retirement benefits. These plans have been actuarially funded and invest in stocks, bonds, and other investments that provide a high return. These retirement plans provide good benefits at a reasonable cost to public employees and employers.

5. School, state, and local government employees don't believe they need Social Security coverage. The employee groups outside of Social Security did not cause Social Security's problems. Public employees as groups can opt into Social Security if they want. Most public employees have good survivor, disability, and other coverage through their own state and local plans.

6. School, state, and local government employees are not receiving any unfair benefits from Social Security. Public employees in non-Social Security states do not receive a free ride. If they receive Social Security benefits from non-covered employment, Social Security benefits are reduced.

7. Pension portability for these public employees has improved. Most public plans have provisions for purchase of out-of-state service. Employees who leave school, state, or local government can rollover their account to an IRA or other tax-deferred retirement plan.

8. Mandatory Social Security probably violates the U.S. Constitution. A mandate from the federal government that states, local governments, and school districts cover their workers under Social Security probably violates the Tenth Amendment to the U.S. Constitution. If necessary, employees and retirement systems will ask the courts to rule mandatory Social Security unconstitutional.

Action Needed