MDH defends local health funding approach as DLS questions formula, match and staffing shortfalls

The Department of Health told the Health and Social Services Subcommittee that it disagrees with legislative analyst recommendations to alter how core public health services funding and salary adjustments are budgeted for local health departments, even as analysts flagged high vacancy rates and asked for clearer, separate accounting of salary increases.

Naomi Kimura, the DLS budget analyst for the Department of Health’s Public Health Administration, said the fiscal 2026 PHA budget rises about $31 million to $320.6 million. She identified three concerns: how the statutory growth formula is being applied, that local health departments’ increases in fiscal 2025–26 rely mainly on the number of state employees they employ, and that salary adjustments and COLAs are not budgeted separately from the lump-sum core public health grants.

Why it matters: Core public health services funding and matching rules shape local health department operations across Maryland. Separating recurring salary adjustments from the formula-driven core allocation could materially change county match obligations and grant distributions.

DLS recommended budget‑bill language requiring that, beginning in fiscal 2027, COLAs and salary adjustments be budgeted separately and that the statutory growth formula apply only to the core base amount. The analysis also recommended a $2 million reduction in the fiscal 2026 allowance and a $250,000 restriction contingent on the fiscal 2027 submission showing the new program structure.

MDH Deputy Secretary Nilesh Kalyanaraman told the committee the department accepts the core‑only growth recommendation but disagrees with removing salary adjustments from the base for purposes of the local match. "We will continue to apply the local match to the entire appropriated amount, base plus salaries," Kalyanaraman said, explaining that the state contribution and local match calculations historically reference the total appropriated funding.

Staffing and operations: DLS told the committee the PHA had 105.5 vacant positions as of Dec. 31, 2024, an 18.65% vacancy rate, and asked MDH to explain effects on operations. Kalyanaraman acknowledged gaps but said MDH has prioritized hiring and defended the need for the salary adjustments included in the FY26 allowance, stating that a recommended $2.3 million reduction would underfund local health departments for salary increases already authorized in FY25.

Inspection and reporting issues: Subcommittee members asked about other operational matters raised in DLS’ appendices, including a finding that required biennial controlled‑dangerous‑substance inspections for some provider types had not been completed. Kalyanaraman said the shortfall stemmed from staffing and record‑keeping problems, that a new tracking system has been implemented and that MDH was working to complete outstanding inspections.

The Office of the Chief Medical Examiner (OCME): MDH said OCME has improved operations and is meeting national case‑processing standards. Kalyanaraman told the subcommittee the office is completing over 90% of autopsy reports within 90 days and that the workload per medical examiner is near the national standard.

DLS also requested detailed breakdowns of COLA funding for state employees at local health departments and more jurisdiction‑level detail for fiscal 2025 enhancements; MDH said it would work with DBM to provide the requested information.

Ending: No instantaneous budget vote followed the public health administration testimony. The department and DLS will exchange follow‑up information about the recommended separate salary program accounting, the requested COLA breakdowns, and steps MDH has taken to address inspection and vacancy shortcomings.