Attorney General urges flexibility for securities fund, warns of funding gaps and child-victims litigation exposure

Attorney General Brown and a Department of Legislative Services analyst outlined the Office of the Attorney General's proposed fiscal 2026 budget and warned of funding gaps tied to special-fund reliance and ongoing litigation.

The budget analysis presented by Jacob Polikoff of the Department of Legislative Services showed a fiscal 2026 allowance of $90,100,000 for the Office of the Attorney General (OAG), an increase of $9,800,000 (12.3%) over the fiscal 2025 working appropriation after accounting for proposed deficiencies and contingent reductions. Polikoff said the allowance includes creation of 31 new regular positions, including five new assistant attorneys general and positions supporting the office's consumer protection and opioids units.

The nut graf: the office is asking for changes in how special funds can be spent and for the General Assembly to consider restoring or otherwise addressing general fund reductions, while the department faces potentially large liabilities from Child Victims Act litigation that currently has no designated settlement funding.

Polikoff briefed members that the fiscal 2026 allowance reflects three proposed fiscal 2025 deficiencies and contingent reductions tied to provisions of the Budget Reconciliation and Financing Act (BRFAA). Two BRFAA provisions would alter the allowable uses of the securities act registration fund to let the office use those special funds for broader agency operations and would authorize the governor to transfer up to $5,000,000 from the securities registration fund to the general fund before June 30. Polikoff said those changes are tied to contingent special-fund reductions in fiscal 2025 and fiscal 2026 totaling $1,690,000 that would replace general fund appropriation with special funds if the legislation enacting the changes becomes law.

Attorney General Brown told the committee the OAG faces “significant challenges, fiscal challenges that threaten our ability to meet these critical responsibilities,” and asked legislators to support BRFAA provisions that would allow greater flexibility in using the securities registration fund. He characterized the requested changes as moving existing authority between special funds rather than creating new general fund cost, and said the office relies on special funds that are projected to decline in the coming years, jeopardizing functions including consumer protection, securities regulation and opioid enforcement. He also urged lawmakers to clarify allowable uses for the opioid restitution fund so the OAG’s opioid enforcement unit can be funded from the restitution it helps recover.

Polikoff and Brown discussed the Access to Counsel and Evictions (ACE) program, established by chapter 746 of 2021 and administered by the Maryland Legal Services Corporation (MLSC). Polikoff said the ACE rollout is scheduled to complete October 1, 2025, and that MLSC reported about 8,745 tenants received counsel in fiscal 2024, more than double the prior year, but the program “does not appear to be fully funded” and could cost an estimated $25,000,000 per year when fully rolled out. Polikoff recommended committee narrative requesting a report from MLSC on final implementation and estimated fiscal 2027 costs; Michelle Siri of MLSC, testifying virtually, said the program “is working” and urged continued support.

Polikoff flagged a separate fiscal exposure: the Child Victims Act (chapter 5 of 2023). He said about 3,500 lawsuits were lodged against state agencies alleging historical abuse; the statute sets a maximum state liability of $890,000 for a single claimant for injuries arising from an incident or occurrence, and the term "occurrence" is not defined in statute. Polikoff noted there were no settlement funds in the fiscal 2025 working appropriation or the fiscal 2026 allowance and recommended that OAG comment on timelines and options should a settlement be reached before the close of the legislative session. Attorney General Brown said negotiations are active and that both sides have a sense of urgency but declined to provide a timeline for completion.

Polikoff also reported on recoveries from the Medicaid Fraud Control Unit: fiscal 2024 recoveries were $10,500,000, up by about $8,400,000 from the prior year, driven by two long-running criminal fraud cases that produced roughly $9,500,000 in restitution. Without those cases, recoveries would have been approximately $1,000,000, the lowest in the past decade, Polikoff said.

Policof and the Attorney General discussed personnel and vacancy matters: the allowance adds 31 regular positions, converts many contractual staff to regular status, and the OAG had 13 vacancies as of December 2024, below the budgeted turnover assumption. Brown said the office’s vacancy rate is now “under 3%,” creating higher-than-expected personnel expenses compared with prior years when the vacancy rate was higher.

Ending: The committee took no formal votes during the presentation. Members asked no follow-up questions at the close of the OAG segment; DLS and OAG staff said they would supply requested reports and details in follow-up materials.