State health department and analysts dispute local health department funding mechanics and matching rules

Department of Legislative Services analysts and Maryland Department of Health officials debated the fiscal 2026 public health administration budget at a Feb. 12 subcommittee hearing, focusing on how the state budgets core funding for local health departments and how salary adjustments affect local match requirements.

DLS presentation and recommendations: Naomi Kimura of the Department of Legislative Services told the subcommittee the PHA fiscal 2026 allowance totals about $320.6 million and that core public health services funding is governed by state statute and a formula that, by design, sets minimums in the near term ($70 million in fiscal 2025 and $80 million in fiscal 2026 per the statute referenced in the analysis). DLS identified a $9.7 million increase in the fiscal 2026 allowance that was not clearly explained by COLAs and salary adjustments and recommended cutting $2.3 million of unexplained funding. DLS also recommended that beginning in fiscal 2027 the General Assembly require that COLAs and salary adjustments be budgeted in a separate program from the core public health services funding and that the statutory growth factor be applied only to the core base, excluding salary adjustments.

Why it matters: Local health departments rely on state core funding for programs and for matching, and the way salary adjustments are treated affects the amount counties must contribute. DLS said current practice can increase local match obligations in ways that may not reflect jurisdictional ability to pay.

MDH response: Dr. Nilesh Kalyanaraman, deputy secretary for public health at the Maryland Department of Health, said the department agrees that the growth formula should be applied to the base funding and explained why MDH continues to apply the local match to the appropriated amount (base plus salary adjustments). Kalyanaraman said the state’s appropriated amount represents the state contribution and that the local match calculation is correctly applied to that total. He asked the panel to retain the $2.3 million allowance the analysts recommended cutting, saying the amount represents full annualization of FY25 salary enhancements that local health departments expect in FY26.

Vacancies and operations: DLS noted a 18.65% vacancy rate (105.5 positions) across PHA as of Dec. 31, 2024. Committee members asked how vacancies affect operations. MDH acknowledged the vacancies and described steps to address staff shortages; the agency said it will provide additional detail in follow‑up requests.

Inspections and Office of the Chief Medical Examiner: Delegates raised audit findings cited by DLS. One audit found the Office of Provider Engagement and Regulation had fallen behind on required biennial inspections for facilities dispensing controlled dangerous substances; MDH told the committee staff constraints contributed to the lapse, that a new tracking system was implemented and that it believes inspections are now current. On the Office of the Chief Medical Examiner (OCME), MDH said performance has improved; the agency reported it is exceeding a 90‑day national standard for completion of autopsy reports and that current workload per medical examiner is below the occupational workload standard (roughly under 300 cases per examiner).

Other items: The committee asked about the Maryland Loan Repayment Assistance Program for nurses; MDH confirmed a $2 million one‑time supplement in the prior year reverted to a $1 million base appropriation for the program in FY26.

Ending: The committee did not adopt immediate reductions. Members requested additional follow‑up documentation: a breakdown of COLA funding that went to local health departments, confirmation on the status of biennial inspections, and further detail on vacancy reductions and their operational impacts.