Department of Disabilities secures surcharge increase to stabilize Universal Service Trust Fund and plans new office for disability employment

The Maryland Department of Disabilities (MDOD) testified Feb. 5 before the Appropriation Subcommittee on Health and Social Services about its fiscal 2026 allowance and key initiatives, including an immediate plan to stabilize the Universal Service Trust Fund (USTF) and a proposal to create a new office focused on disability employment.

DLS analyst Natalia Andrade told the subcommittee MDOD’s FY26 operating budget is projected to rise by about $4.1 million (32.6%) to $16.5 million, driven by new federal grants for inclusion and children’s assistance demonstrations and by increased demand for accessible telecommunications equipment. Andrade’s analysis warned that, at the current 5¢ surcharge per communications service bill, USTF projections showed a deficit beginning in FY26 and a shortfall growing to an estimated $5.0 million by FY29 unless adjustments were made.

Secretary Carol Beatty told the subcommittee MDOD acted to stabilize the fund and obtain earlier relief: “In an effort to do just that, we requested and received a surcharge increase to 9¢ from 5¢ beginning fiscal year 26 from the Public Service Commission.” She said the surcharge adjustment, together with a FY25 budget amendment that increased spending authority for Maryland Relay and the Maryland Accessible Telecommunications (MAT) program, would address the earlier-than-expected depletion.

MDOD also said it is implementing cost-savings measures and will continue to monitor USTF balances. DLS noted USTF expenditures rose substantially between FY19 and FY24 — driven by growth in Maryland Relay, MAT program equipment purchases and new initiatives such as senior call check and the communication facilitator program.

Office of Disability Employment Advancement and Policy

Secretary Beatty described a governor-requested bill creating an Office of Disability Employment Advancement and Policy, sometimes called the “State as a Model Employer” (SAME) initiative. The office is intended to coordinate state agency efforts to recruit, retain and advance workers with disabilities, working with the Department of Budget and Management, Department of Labor, Division of Rehabilitation Services (DORS) and other partners. Beatty said the FY26 costs are intended to be absorbed within MDOD’s existing workforce and that FY26 will be used as a planning year.

Federal grants and programs

Andrade’s analysis highlighted two new federal grant awards that account for the projected FY26 federal-fund increase; MDOD said those are demonstration grants to improve inclusive futures and children’s assistance programs and that contractual hires are planned to manage the awards. MDOD emphasized that demonstration grants are time-limited and that the department will coordinate with state partners to integrate lessons into ongoing programs.

What the subcommittee asked and what’s next

Members pressed MDOD on the timing of surcharge changes and on contingency plans if federal demonstration funding is disrupted. MDOD said the Public Service Commission-approved surcharge increase to 9¢ and the FY25 budget amendment will stabilize the fund in the near term; the department said it participates in cross-agency contingency planning and monitoring with the governor’s office.

Ending: The subcommittee did not take votes during the hearing. MDOD asked the panel to concur with the governor’s allowance and said it would follow up with requested detail on contractual-service increases and equipment spending.