Texas School System Employees Loophole Could Cost Billions

Here is an excerpt from a Fort Worth Star-Telegram article about an audit report by Social Security's Office of Inspector General:

The hiring of one-day employees by seven Texas school districts may cost the Social Security Administration $110 million annually in spousal benefits, according to an audit by the agency's inspector general.

The inspector general's report estimated that 19,212 people could receive $2.2 billion in spousal benefits over their lifetimes.

The seven school districts -- Lindale, Kilgore, West, Coleman, Hudson, Premont, and Sweeny -- raised more than $7 million by charging fees to the one-day workers.

The audit dealt with workers who retired before July 1, 2004, when the law was changed.

Before the loophole was closed, retiring teachers and administrators could work one day at another school district that participated in Social Security to obtain spousal benefits.

Most Texas school districts do not participate in Social Security.

The inspector general also urged the agency to review eight other unnamed Texas school districts, which weren't audited but hired 3,285 one-day workers. ...

Joe Fried, who runs the Public Program Testing Organization, a Social Security watchdog group, alerted the inspector general to the one-day worker situation at Texas school districts.

"This was bogus for three different reasons: First, they didn't have the authority to give Social Security; secondly, they wouldn't have the wages to pay them unless they collected the fees; thirdly, they weren't actually needed or didn't have work for them to do," Fried said.

Larry Shaw, executive director of the United Educators Association, a teachers association in Tarrant County, stressed that the practice was legal until 2004.

"I don't know about these individual districts, but I don't think any of these individuals did anything wrong," Shaw said. "I don't think you can take advantage of anything that was legal at the time."

Teachers unions are lobbying Congress to change the law in hopes of making it easier for teachers to receive spousal benefits.