Kitsap Caucus

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Seriously? Public employees don’t have to pay into Social Security?

July 5th, 2013 by brynn grimley

Brynn writes:

That was my reaction last week when I learned that our state doesn’t require public employees to pay into Social Security if they participate in the Public Employees’ Retirement System.

I wrote about this in Monday’s paper as it relates to the employees of Housing Kitsap, who voted in April to remove themselves from paying Social Security.

It’s a bit convoluted, but in 1955 Washington voluntarily entered into an agreement with the federal government to offer Social Security to public employees who weren’t covered by a state-authorized retirement plan. By 1991 it was mandatory that all public agencies offer either Social Security or a state-authorized retirement plan for employees.

This mandatory requirement meant that if agencies like housing authorities had a state-authorized retirement plan in place for employees and those employees were also paying into Social Security, the state needed documentation that said the agency had voluntarily agreed to pay into Social Security.

The state’s Employment Security Department managed these agreements from 1951 to 2009. When the state’s Department of Retirement Services took them over it realized some public agencies were paying into Social Security erroneously.

Housing Kitsap was one of those agencies. I filed a records request with the state retirement services department to see the files related to the housing agency and why it didn’t vote in 1989 to continue to pay into Social Security. (1989 is when the agency authorized its state-approved retirement plan for employees, called PERS).

Emails and files show the housing board was told in 1993 it needed to allow staff to vote on whether to continue to pay into Social Security, but the board never took action.

A file from April 16, 1993 shows the employment security department sent letters to the housing authority board and began the process of holding a vote, but a hand-written note on the file explains why the vote was never held:

“11-18-93 Rob says board won’t approve.”

Rob, I think is in reference to Rob Joseph, the account supervisor named on the document. The document never says why the board halted the process, but for employees to vote the board had to approve it first. As a result the authority and its employees have paid into Social Security for 24 years when they potentially should not have.

“All of these years that the housing authority was participating in PERS they were at the same time erroneously taking Social Security out of the PERS people’s pay and they should not have been,” said Melanie Piccin, state Social Security coordinator with the Department of Retirement Systems.

Employees finally took the vote in April and voted 34 to 18  to withdraw from Social Security. Now they’re asking the housing board to reconsider its plan to pay down the agency’s debt with the money it would have paid into Social Security on their behalf. Instead they’d like to see the money go into a deferred compensation program.

So what other public employees have the option not to pay into Social Security? According to Piccin, all of the state’s agencies have the voluntary coverage in place, which means these employees pay Social Security. The only state agency that doesn’t pay is the Washington State Patrol, she said.

All school districts and the state’s higher education institutions, like public universities and colleges, pay into Social Security. But the retirement services department is learning many of the state’s smaller political subdivisions like cities and housing authorities are paying into the federal system without an agreement on hand.

Beyond Kitsap’s housing authority Piccin has also contacted the city of Sea-Tac and Port of Seattle (including its firefighters and police) to notify them of the discrepancy.

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7 Responses to “Seriously? Public employees don’t have to pay into Social Security?”

  1. Reggie64 Says:

    So if someone works for the county, they should also have the option of paying in the social security?

  2. brynn grimley Says:

    Yes, although it all depends on whether the county has an agreement in place with the state to voluntarily pay into Social Security. If the county already has that in place, then employees don’t have the option not to pay. The only way they could no longer pay would be for them to take a vote — which would require county commissioner approval first.

  3. Michael Says:

    And here I was a public employee for over 30 years and paid into social security the whole time. And you know what? I’m glad I did. I think if you canvass all the public districts in Kitsap County you will find very few that don’t pay into social security. Better check your facts here.

  4. John Says:

    Is the reverse true then? I know the Bremerton Police officers don’t pay into social security and I’ve always been told there was a window in the 80′s where departments could opt out. Could they “opt back in”? And are other departments offering pensions able to simply take a vote to opt out? Thanks.

  5. mw Says:

    Many people of retirement age who did not pay into social security are now regretting that they didn’t. It will be very hard for those who are retiring in the years to come to survive without receiving at least some social security retirement.

  6. Jane_Rebelowski Says:

    I have worked for three public agencies in Washington State. Long term employees at the city of Bellevue (I think if they were hired pre 1990) had the option of opting out of Social Security. As they got closer to retirement age they realized they had insufficient credits for Medicare coverage. I am not sure how that has changed in the past decade plus since I left employment with the city of Bellevue. Bremerton employees pay, as do city of Seattle. I think the employees of Housing Kitsap were extremely short sighted in leaving Social Security. Also a bit selfish.

  7. brynn grimley Says:

    Hi John,

    Sorry it took me so long to respond, I was on vacation. It’s my understanding that you can “opt back in” but it would have to be by a vote of the employees, and the city would first have to allow the vote to happen. To pay into SS the majority of employees plus one (so 50 percent of eligible voters plus one) would have to approve it.

    Visit the Department of Retirement Services website (http://www.drs.wa.gov/) for more information or to possibly find a contact to get more information.

    Hope that helps.

    Brynn

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