When Social Security began in 1935, state and local governments were left out. They were later allowed to join, and most did, but some systems chose to keep their own pension in place of Social Security. The result is that about 40% of public school teachers, and many police officers and firefighters, work in jobs where no Social Security tax is withheld.
The states
In the states below, all or most teachers are outside Social Security. In a few, coverage depends on the district.
| Coverage | States |
|---|---|
| All or nearly all teachers not covered | Alaska, California, Colorado, Connecticut, Illinois, Kentucky, Louisiana, Maine, Massachusetts, Missouri, Nevada, Ohio |
| Most teachers not covered | Texas |
| Some districts not covered | Georgia, Rhode Island |
Coverage can differ for other public jobs in the same state. In California, for example, CalSTRS teachers do not pay into Social Security, while most state workers in CalPERS do. In Texas, a small number of districts pay in while most do not.
How the pension makes up for it
Non-covered plans usually pay more. Their multipliers tend to run from 2.2% to 2.5% per year of service, compared with around 1.6% to 2% in plans whose members also earn Social Security. Members also pay more in. Teachers in STRS Ohio contribute 14% of pay and Illinois TRS members 9%, compared with the 6.2% Social Security tax a covered worker pays.
Whether this is a good trade depends on how long you stay. A full career in one system usually produces a pension larger than Social Security plus a smaller pension would. A short stay usually does not, because the pension rewards long service and Social Security follows you from job to job.
Medicare is different
Almost every teacher hired after March 31, 1986 pays the Medicare part of payroll tax, even in a non-covered job. That means most non-covered public workers still qualify for premium-free Medicare Part A at 65. If you were hired before April 1986 and never changed employers, check your record, because you may need a spouse’s work history to qualify.
Do you still get Social Security?
You can, if you earned 40 credits from covered work, which is about ten years. Many teachers worked before teaching, during summers, or in a second job. Since the Social Security Fairness Act took effect, those benefits are no longer reduced by WEP, and spousal and survivor benefits are no longer cut by GPO. If you are a few credits short, a part-time covered job late in your career can be enough to qualify.
Planning tips
Check your Social Security statement for covered years, even if you think you have none. Look at your spouse’s record too, because spousal and survivor benefits are now paid in full. Then add the two incomes together in the pension and Social Security calculator to see what you would actually live on at each claiming age.