Maryland’s unemployment insurance trust fund is currently stable. However, the system could fall below federal solvency standards within the next two years.
As reported in a Maryland Matters article, Maryland Labor Secretary Portia Wu warned lawmakers that the state’s $2 billion unemployment insurance trust fund is under increasing pressure at a recent Joint Committee on Unemployment Oversight hearing. While it currently meets federal solvency standards, that could change if unemployment rises or large-scale layoffs occur. The minimum solvency level refers to the ability of the trust funds to pay 100 percent of currently scheduled benefits. Although current claim levels are low due to Maryland’s low unemployment rate of 3.2%, more workers are now qualifying for the maximum benefit ($430/week). Employers currently contribute $26 per worker, based on a taxable wage base of $8,500.
From the article:
Even if anticipated economic downturns do not occur, Wu said the growing number of workers who are becoming eligible for the maximum weekly benefit is stressing the system to the point where the fund could fall below federal guidelines sometime between 2026 and 2027.
Previously covered by MACo, like every state, Maryland experienced a surge in unemployment claims during the COVID-19 pandemic, which heavily burdened the UI trust fund. Maryland has repaid its loans and met the recommended solvency level as of 2024. The recommended solvency level is 1.0; Maryland successfully met this level in 2024, with a balance of 1.09, reflecting a recovery from the 2023 level of 0.92.
The General Assembly has proposed legislation that has failed to pass in recent years to modernize the State’s unemployment trust fund by increasing employer contributions and raising the taxable wage base. MACo opposed a similar proposal in 2024, which sought to double the minimum and maximum weekly benefits range used to determine weekly benefit amounts. While counties do not contribute directly to the Unemployment Insurance Trust Fund, the proposal would have significantly increased the benefits counties are required to pay, creating a substantial fiscal burden. The legislation is anticipated to be proposed again in 2026.
Key Takeaways for Counties:
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The fund could dip below federal standards by 2026–2027, even without a recession.
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Mass layoffs, particularly among federal workers, could accelerate insolvency.
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Legislative proposals may include updated employer contributions and a larger wage base.
Read MACo’s deep dive on the state of Maryland’s unemployment insurance system.
