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States not allowed to quit Social Security system.

States not allowed to quit Social Security System

A recent decision of the Supreme Court held that States may not pull their employees out of the Social Security system. The case was initiated by the State of California, several State agencies, taxpayers, and a group called Public Agencies Opposed to Social Security Entrapment, which challenged a 1983 law prohibiting a State or any of its agencies from withdrawing from the system. The parties contended that the amendment to the Social Security Act violated a 1951 amendment that gave them the right to stay outside the system and, if they joined, to withdraw after 10 years' participation, after giving 2 years' notice. The amendment negated notices California had filed on behalf of about 70 political units for 34,000 employees.

In the unanimous opinion, written by Justice Lewis F. Powell, Jr., the Court said the 1983 law "simply was part of a regulatory program over which Congress retained authority to amend in the exercise of its power to provide for the general welfare.'

In seeking a review of a Federal district judge's finding that the amendment was unconstitutional, the Federal Government had argued that the benefit rights of 9 million State and local government employees would be threatened if such withdrawals were permitted, and that the entire system would be threatened if such withdrawals were permitted to continue. Government entities that have withdrawn or attempted to withdraw have contended they could obtain better benefits at lower costs by other means, such as Statebacked pension plans.

The decision in the case, Bowen, Secretary of Health and Human Services et al vs. Public Agencies Opposed to Social Security Entrapment et al, does not apply to political units not now in the system, unless they choose to join.
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Title Annotation:Supreme Court ruling
Publication:Monthly Labor Review
Date:Sep 1, 1986
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