Labor secretary seeks resources as UI backlog, audits and a proposed delay to paid family leave draw scrutiny

Maryland Department of Labor leaders told the Education and Economic Development Subcommittee in Annapolis that the department needs additional staff and funding to address a backlog of unemployment insurance claims, unresolved audit findings, and to implement workforce investments — while advocates and labor unions urged the committee not to delay the state’s Family and Medical Leave Insurance (FAMLI) program.

Scott Benson, the DLS analyst presenting the department overview, said the fiscal 2026 operating allowance increases by $102,900,000 (16.6%) to $722,300,000 and that the Office of Unemployment Insurance (OUI) allowance rises by $21,800,000 to $136,500,000, in part to add 125 regular positions to transition call center work in‑house as a contract with Accenture ends. Benson also flagged unresolved fiscal compliance issues from an Office of Legislative Audits (OLA) review, including $204,700,000 in federal fund accrual entries the department could not fully support, and a repeat audit finding that kept $100,000 of general funds restricted in fiscal 2024.

Benson summarized performance measures and the programmatic outlook: COVID‑era claim volumes peaked and continue to affect operations (calendar 2024 saw 1,200,000 claims), the federal timeliness standard is that 87% of claimants receive benefits within three weeks of filing, and appeals processing has lagged system targets though DLS reported some improvement in fiscal 2024.

The department’s fiscal 2026 allowance anticipates special funds for the family program if contributions begin as scheduled; DLS noted the department and the administration have proposed an 18‑month delay in implementation (Labor announced an 18‑month proposed delay on February 14, 2025) so that contributions would begin January 1, 2027 and benefits would begin January 1, 2028. Benson told the committee that if contributions do not begin in fiscal 2026, the family fund special funds included in the fiscal 2026 appropriation would be eliminated and Labor could require $34,000,000 in general funds to support planned operations.

Secretary Portia Wu told the committee: “Maryland is at a pivotal moment. Now more than ever our state needs to prioritize economic growth, diversification, and resilience.” Wu described four budget imperatives: growing Maryland’s skilled workforce in sectors such as cybersecurity and biotechnology; expanding apprenticeship and training programs; supporting individuals with barriers to work including people exiting the criminal justice system; and maintaining social safety nets such as unemployment insurance. Wu asked the committees to support a BRFAA provision establishing an administrative fee on taxable wages to fund UI administrative expenses and noted the proposal is designed to be revenue‑neutral for employers because employer payroll tax contributions to the trust fund would be adjusted correspondingly.

Labor also described the Family and Medical Leave Insurance program timeline, its estimated cost and administrative needs, and the department’s public statement proposing a delay. Lisa Klingenmeier, deputy director of policy at Maryland Family Network and campaign manager for the Time to Care Coalition, testified in opposition to an additional 18‑month delay. “This program does not rely on any federal funding for it to be able to be realized,” Klingenmeier said, and she warned the delay would postpone benefits for an estimated 247,000 Marylanders who would otherwise be eligible under the state’s actuarial study.

Union witnesses at the hearing endorsed increases in in‑house staff and resources. Adam Stoddard, an investigator in Labor’s prevailing wage unit and AFSCME trustee, praised the administration’s decision to add regular positions to OUI and said, “And if you're like me, you believe in protecting workers and creating opportunities.” Christian Goble of AFSCME Maryland Council 3 urged investment in Maryland Occupational Safety and Health (MOSHA) and asked lawmakers to reject any pause in enforcement of Maryland’s heat stress standard.

DLS recommended six budget actions for Labor, including restricting $250,000 until a report on repeat audit findings is submitted; changing PDA (purse dedication account) special fund appropriations contingent on legislation; making $33,000,000 of a new Unemployment Insurance Administrative Expense Fund contingent on BRFAA enactment of the administrative fee; and contingent changes to the family program special fund pending enactment of legislation delaying implementation. The department generally concurred with measures that depend on enacted legislation but objected to proposed PDA reductions and raised concern that some audit recommendations cannot be implemented because of federal privacy or FERPA constraints.

Committee members recorded no votes on DLS recommendations during the hearing; legislators asked for additional information and documentation. The hearing concluded with public testimony urging continued implementation of the family program and additional resources for MOSHA and in‑house UI staffing.