Instead of asking for a federal bailout, Maine is considering shifting part of its underfunded pension plan liabilities to Social Security. Without the proposed fix, the pension liability the state currently faces is “going to rip the guts out of our budget,” according to Peter Mills, the state Senator who initially suggested the plan.
Most states provide their workers with a state pension plan as well as support their participation in Social Security. But several states such as Maine opted out of Social Security based on projections that monies invested in the state-run plan would provide more generous benefits to its beneficiaries. As the economy turned down and revenues declined, states like Maine are finding it increasingly difficult to make the contributions necessary to keep their pension plans solvent.