House passes Social Security fraud bill

WASHINGTON -- The House passed legislation Wednesday to end a Social Security practice that allowed some government workers to receive increased retirement benefits. Texas Democrats claimed the bill was a hardship for their state's teachers.

The bill, approved 396-28, also would deny Social Security benefits to fugitive felons and to people who violated probation or parole. Voting against the measure were 25 Democrats and three Republicans.

Last month, Democrats, after intense lobbying by teachers unions, joined their Texas colleagues in opposition to the bill, and it failed under a special procedure requiring two-thirds approval. But many lawmakers changed their position.

Spouses of retired, disabled or deceased workers usually receive Social Security benefits. A 1977 law reduces those benefits for employees of some governments who do not pay into Social Security and do not collect benefits, and are covered by their own retirement systems.

But a provision allows those workers to avoid the reduction if they are covered by both Social Security and their government pension during their last day on the job.

Congressional investigators found that 4,795 teachers in Texas and 24 in Georgia had taken advantage as of June 2002, transferring briefly to other jobs before retiring. For as little as about $3 paid to Social Security, those teachers will receive on average an extra $4,800 a year.

Some school districts also started charging processing fees ranging from $100 to $500 to make the switch. One district collected an additional $283,000 in revenue from the fees.

The provision is costing the federal government about $450 million. Social Security officials say the practice could grow as more people become aware of it.

"No single group of workers should have an unfair advantage over workers in other school districts, in other pension systems, or across the nation," said Rep. Clay Shaw, R-Fla., the bill's sponsor.

The bill would require state and local government workers to pay into Social Security for a minimum of five years to be exempt from the offset.

"This is no way to treat hardworking people who have dedicated their entire lives to serving their communities and this nation," said Rep. Martin Frost, D-Texas. "It hurts real people -- especially women and lower-income individuals."

Most Democrats voted to support a measure that would repeal the offset altogether, but those attempts failed.

Rep. Nick Lampson, D-Texas, warned of a "mass exodus of good teachers from our schools."

The bill also tightens controls on people who serve as legal financial representatives for about 7.6 million Social Security recipients who are minors or have physical and mental impairments.