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

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.