UMD Report Quantifies Impact of Federal Spending in State

A joint report from the Maryland Office of the Comptroller and the University of Maryland’s Robert H. Smith School of Business finds the federal government spent $150 billion in the state in the last federal fiscal year, including on wages and retirement income, contracts, grants and direct payments.

The report produced by eight Master of Finance students and two candidates in the Ph.D. program was part of an effort to establish a baseline from which to measure and understand the scope of the impact of federal decisions—such as workforce reductions, cuts to research funding, and changes to veterans' benefits—on Maryland's economy, families and institutions, Comptroller Brooke Lierman said in a statement.

"Through this partnership with the University of Maryland, we are gaining the data and insight needed to assess the risks of federal dependency and to chart a more resilient economic path for Maryland's future,” she said.

The federal government is a major economic engine in Maryland, which is home to 14 major military installations and more than 60 federal agency offices. The students compiled and analyzed publicly accessible data to identify critical patterns in federal spending in the state over the past 10 years. They found that Maryland had the third-highest number of federal jobs in the nation (229,000) in the federal year ending Sept. 30, 2024, and that federal jobs in Maryland represented 6% of the state's overall employment and 10% of overall wages.

In addition, Marylanders employed by the federal government earned significantly more than state residents working in the private sector. The students’ rigorous analyses, which utilized historical trends and detailed patterns, also led to the finding that, until this year, federal employment had been expanding in Maryland.

The experiential learning project was guided by Liu Yang, associate professor of finance and founding executive director of UMD’s Federal Statistical Research Data Center, and Vojislav Maksimovic, finance professor and William A. Longbrake Chair in Finance. Research Professor Kislaya Prasad, who is academic director of Smith’s Center for Global Business helped organize the joint effort.

“This is a high-profile project and they’re seeing what state agencies need—how to present it given the data and modeling tools available, and how to use those tools to deliver useful information to state officials,” said Maksimovic.

The next steps in this collaboration with the Office of the Maryland Comptroller involve examining the ripple effects associated with the drastic reduction in federal spending in Maryland. A digital interface designed for policymakers and public stakeholders will allow them to better predict and understand the consequences that come with changes in federal funding and federal job availability. “This tool could be rolled out across the whole country,” Maksimovic said.