Teachers thwart closure of retirement loophole; House vote allows Texas educators to draw both pension, Social Security

By Todd J. Gillman
Staff Writer

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WASHINGTON – Texas teachers rounded up enough friends Wednesday to stop Congress from closing a loophole that lets them change jobs for one day in order to collect both Social Security and a teacher’s pension.

Texans covered by the state’s teacher retirement system generally can’t collect Social Security. But thousands have found a way to do so by taking advantage of the “last-day loophole,” spending their final working day as a janitor or clerk at one of the handful of school districts that collect Social Security tax.

The General Accounting Office reported last fall that almost 4,800 Texas teachers took advantage of the loophole in the previous year – boosting their annual pensions by nearly $5,000. The agency called the practice abusive and says it is costing taxpayers $450 million.

But educators call it unfair to deprive them of benefits they would have gotten if they hadn’t gone into teaching.

The House voted, 249-180, to approve a Social Security bill that included the provision closing the loophole. But that was 35 votes short of the two-thirds needed because of how the bill came to a vote. The bill’s sponsor acknowledged the measure failed because of objections raised by Texas teachers. He said he’ll try again to pass the legislation.

Most Texas lawmakers voted against the bill.


“This was a very mean-spirited, petty and bureaucratic response to a benefit for deserving individuals,” said John Cole, president of the Texas Federation of Teachers. “We don’t claim that people who haven’t paid into the system should receive benefits. But those who have shouldn’t be stopped from receiving them just because they’re teachers.”

Olan Hankins is one of the loophole’s beneficiaries. The Oak Cliff resident paid into Social Security for 35 years but would have collected nothing because he spent his final five years teaching in Garland. To requalify for benefits, he spent a week as a University of North Texas janitor, a job covered by Social Security. Now 66, he collects about $860 extra each month. He was happy to hear of the House vote.

“Someone should point out to Congress that they should start their economy drive with someone other than schoolteachers,” he said.

Rep. Clay Shaw, R-Fla., sponsor of the bill, gave no timetable for when he’ll bring the bill back up. “It is my job to stay focused on the needs of all workers, not just appease the few who believe it’s their right to cheat their way into Social Security,” he said.

Apart from closing the loophole, the bill would have denied Social Security benefits to felons and fugitives, and Mr. Shaw and other key supporters accused Democrats of blocking a crackdown on waste, fraud and abuse at the behest of “union bosses” representing teachers.

“Democrats betrayed Social Security and America’s seniors by obeying the orders of big special interest groups,” said House Ways and Means Committee Chairman Bill Thomas, R-Calif.

Texans vote against bill

Although the vote did fall mostly along party lines – just 13 Republicans voted against the bill – nine of 15 Texas Republicans sided with teachers. The Texas Republicans who opposed the bill were Jeb Hensarling of Dallas, Michael Burgess of Highland Village, Kay Granger of Fort Worth, Henry Bonilla of San Antonio, John Carter of Round Rock, John Culberson of Houston, Mac Thornberry of Clarendon, Larry Combest of Lubbock and Ron Paul of Surfside. All of the state’s Democrats opposed the bill.

The new rules would have taken 90 days to become effective, prompting a warning from Rep. Nick Lampson, D-Beaumont, that the bill would create a “mass exodus” from public schools. He said 40,000 Texas teachers would be affected.

Staff writer Joshua Benton in Dallas contributed to this report.