Maryland’s local health departments are the frontline of public health, but an outdated funding formula and rising costs are straining their ability to meet modern challenges. Last session, the Department of Legislative Services (DLS) requested a joint report to clarify funding streams that is now available.
Local health department (LHD) funding is a vital responsibility shared by Maryland’s state and local governments. These departments provide essential health services, addressing unique community needs with agility and care that state resources alone can’t match. However, the current funding formula has been overdue for an update for over a decade. This need became even more apparent in the aftermath of the COVID-19 pandemic, which put immense strain on local health departments. Combined with the ongoing opioid crisis, LHDs continue to face unprecedented demands on limited resources.
Last session, DLS requested a report from the Maryland Department of Health (MDH) and the Department of Budget and Management (DBM) to clarify funding streams in the local health department formula and how they affect the local match formula. The report was due to legislators on October 1, 2024, and has since been released. View the report here. Legislators have 45 days to respond to the report. MACo has met with legislators and requested that county feedback be included, and legislators have been receptive to ensuring MACo’s voice is included in the response.
The Call for a Modernized Funding Formula
The existing LHD funding formula has not been updated since 1997. While MACo has long advocated for reform, there is strong consensus for a change among all parties. However, the urgency for change was underscored during recent fiscal years. In 2024, some counties were notified—after their budgets had closed—that their required local match for state funds had increased, creating confusion and financial strain. These sudden increases in local matching funds, tied to non-core salary adjustments for state employees, led to questions about how the formula works, why it hasn’t changed, and why counties were caught off guard.
Overall, the formula has been described as outdated, confusing, and misaligned with modern public health realities. Core funding for LHDs is intended to “keep the lights on” by providing the necessary baseline for essential health services. The funding methodology factors in inflation and population growth each year, but it does not account for evolving public health challenges or unexpected cost increases.
How We Got Here
The current funding system stems from the 1995 passage of Senate Bill 624, which established the formula that has dictated local health funding since 1997. This formula calculates each jurisdiction’s funding based on population, with subsequent annual adjustments tied to inflation and state population growth. While the intent was to ensure funding kept pace with need, significant cuts between 2008 and 2010 reduced public health funding to below even the minimum level set in 1997. This left Maryland’s public health infrastructure underfunded heading into the COVID-19 pandemic, a crisis that laid bare the inadequacy of a 25-year-old funding model.
MACo has been vocal about the need for legislative intervention. MACo testified last session urging the House Appropriations Committee to consider adding BRFA language to stave off dramatic increases in local matching requirements through an administrative interpretation until the issue is further studied.
“MACo urges the Committee to amend its current study language regarding State core/discretionary funding to Local Health Departments to address the appropriate range of funds subject to the longstanding matching funds requirements. For fiscal 2025, BRFA language should clarify the matching fund calculation, to avoid a major fiscal shock to local health funding.”
In 2024, counties were unexpectedly hit with higher match obligations due to non-core salary increases for state employees, which were included in the formula despite not being part of the traditional core funding base. These late changes forced some counties to scramble to meet budget shortfalls, with one county seeing its match requirement nearly triple. The result of this oddly timed exchange was a series of questions and eventual waivers – leading in part to the DLS requested report to sort out these various funding streams more clearly.
In the 2024 legislative session, MACo’s advocated for budget language that would clarify thar the matching fund requirement for local health department funds should not apply to salary-related or similar discretionary funding.
Where We Are Now
The DLS requested joint report seeks clarity on the funding formula from the Maryland Department of Health (MDH) and the Department of Budget and Management (DBM).
Currently, the core funding formula remains tied to inflation and population growth. The state uses data from the Bureau of Labor Statistics and the US Census Bureau to calculate annual increases. This formula has historically not applied to salary adjustments, which are legislatively appropriated separately. From the report:
“Per statute1, the total amount of State Core funding budgeted for the LHDs is adjusted annually using a formula that factors inflation and state population growth. These data points are retrieved from the Bureau of Labor Statistics and US Census Bureau. The inflation and state population figures are added together, and that combined percentage is multiplied by the LHD Core baseline total from the prior year to calculate the formula increase. The formula is not applied to any salary adjustments included in the legislative appropriation.”
Initially established through the traditional Case formula, the local match requirement requires each county to contribute a set percentage based on their revenue-raising ability. While local match percentages have remained relatively stable, recent years have seen increases in match obligations due to state employee salary hikes, which were not previously included in the formula. From the report:
“For each of the fiscal years 2021 through 2025, the local share match requirement was applied to the total legislative appropriation for each jurisdiction, including the Core Base, growth formula, salary adjustments from prior fiscal years, and any other funding provided by the legislature in the appropriation, with the following exceptions.”
The Departments recommend that when legislative appropriations increase by more than 10%, the annual growth of the Local Share Match Requirement should be capped at the annual growth formula plus 10% of the prior year’s match amount.
Local governments should be able to rely on a formula that is transparent and predictable. Still, concerns remain about its complexity and the lack of transparency in how matching funds are calculated. The current formula does not address community based needs across different jurisdictions.
What’s Next:
Following the report suggested by DLS, legislators have 45 days to submit comments, which MACo has requested to legislators to be a part of. Please review the report and submit comments to Karrington Anderson at Kanderson@mdcounties.org. Legislators may introduce potential refinements or clarifications in upcoming legislative sessions, especially if the Department of Health (MDH) seeks to establish new statutory matching obligations based on other funding streams.
However, Maryland’s Commission on Public Health, established in 2023, has established a Funding Workgroup that is identifying challenges and finding solutions for the future of the match and public health funding generally. The funding workgroup is scheduled to have a full report released in December of 2025 with recommendations coming in 2026. Some legislators have indicated wanting to review the joint report from MDH and DBM as well as the recommendations from the Funding Workgroup before bringing legislation.
MACo continues to advocate for a funding model that aligns with current public health challenges and does not place undue financial strain on counties. Moving forward, MACo will work with state and county partners to ensure that any proposed changes to the funding formula are equitable, transparent, and responsive to local needs. Counties must be actively involved in this process to provide insights and feedback that will help shape the future of health services in Maryland.
This article is part of MACo’s Deep Dive series, where expert analysts explore and explain the top county issues of the day. A new article is added each week – read all of MACo’s Deep Dives.
