Coalition

Rep. Richard Neal (3rd from left) with members of the CPRS Executive Committee at the coalition's annual dinner on Feb. 8

to Preserve Retirement Security leaders had good news and bad news for members atttending the group's annual meeting in Washington, D.C., on Feb. 9.

The bad news, delivered by Executive Committee member Sheri Steisel of the National Conference of State Legislatures, was that Senate Democrats who are crafting Social Security reform legislation are expected to consider requiring state and local employees to participate in Social Security, according to Senate aides.

"It's one of the issues they're going to discuss," Steisel said. "We're a very attractive target."

Most Democrats oppose President Bush's plan to create personal investment accounts within Social Security and some are looking for a package of measures that would improve the program's financing without changing its basic structure. One of those measures could be forcing coverage on the roughly 5 million state and local employees not now covered by the program. This would solve about one-tenth of Social Security's $3.1 trillion 75-year deficit but, according to public pension representatives, would be a financial burden on state and local employees and taxpayers that could threaten the stability of public retirement systems.

"I'm not feeling reassured at the moment that we're not in peril as far as the Democratic alternative goes," Steisel said. "This is not happy news but it should be a wake-up call for all of us."

The good news, however, according to coalition Chair Terri Bierdman, is that officials with AARP, one of the groups that has pushed the hardest for mandatory coverage, have indicated that they plan to ease up on the issue.

Representatives of the seniors group in recent years have presented the same three-pronged approach to Social Security reform in public statements and articles: 1.) expand the wage base subject to Social Security taxation; 2.) diversify the Social Security trust fund's investments; and 3.) expand coverage to all newly-hired state and local employees.

Now, though, Bierdeman said, AARP officials have agreed not to have anyone within the organization bring up mandatory coverage in public forums, although, if asked about it, they will say that it is still an option, just not one they are pushing at this time. In addition, AARP's newly-watered down endorsement of mandatory coverage is to include a stipulation that, if the measure is implemented, state and local governments should be compensated by the federal government for the cost. This new approach may explain why, at a Jan. 28 congressional hearing on Social Security, Douglas Holbrook, the AARP's vice president-secretary/treasurer, mentioned only proposals to expand the wage base and diversify trust fund investments during his testimony but said mandatory coverage "is still on our agenda" when asked about it after the hearing.

"I think we've made progress with AARP but we still need to be working with them," said Bierdeman, who, with other coalition officials, has sought for several years to convince AARP officials of the negative effects of mandatory coverage.

In the business portion of the meeting, meanwhile, coalition members voted to retain the current Executive Committee with the understanding that the panel would meet in about six months to discuss a new structure intended to give the group more of a national reach.

The night before the meeting, Rep. Richard Neal, D-Mass., delivered an address at the coalition's annual dinner, telling the group that, in the House, "I don't see [mandatory coverage] really being on the table." He also indicated that the prospects for reform of Social Security's government pension offset (GOP) and windfall elimination provision (WEP) are slim.

"At the moment, that's not even in front of us," he said. "It's something we have to monitor."