When the Social Security Act (Act) was enacted in 1935, State and local government
employees were excluded from Social Security coverage because there was a legal question
regarding the Federal government’s authority to tax State and local governments.
Because many governmental employees did not have their own retirement system, the
1950 Social Security Amendments added Section 218 to the Act to make Social Security
coverage for State and local government employees possible.
Beginning in 1951, States were allowed to enter into voluntary agreements with the
Federal government to provide Social Security coverage to State and local government
employees who were not covered by a retirement system. These voluntary agreements
are called Section 218 Agreements because they are authorized by Section 218 of the
The Social Security Amendments of 1954 expanded the Act to allow States to extend
Social Security coverage to State and local government employees who were members
of public retirement system (except police officers and firefighters) provided coverage
was authorized by the State and approved through a voluntary referendum of all retirement
In 1956, the Act was amended to authorize certain States to divide retirement systems
into two separate groups: those who desired coverage and those who did not. The 1956
Act also authorized certain States to extend Social Security coverage to police officers
and firefighters covered by a retirement system.
Before 1983, States could terminate Social Security coverage for employees covered
under the State’s Section 218 Agreement. The 1983 Social Security Amendments rescinded
this provision of the Act and prohibited States from terminating coverage beginning
April 20, 1983.
All 50 States, Puerto Rico, the Virgin Islands, and approximately 60 interstate instrumentalities
have a Section 218 Agreement with SSA. Because of the voluntary nature of Section
218 Agreements, the extent of Social Security coverage varies from State to State.