What the Federal Government Can Learn From Maryland’s New Apprenticeship Funding

Earlier this month, the US Department of Labor (DOL) made a splashy funding announcement when it released a forecasted funding opportunity for a $145 million Pay-for-Performance Incentive Payments Program. Pay-for-performance (P4P)—an outcomes-based public funding model in which the government reimburses programs for achieving specific milestones—has not historically been a popular way to fund apprenticeship at the federal level. But with this new opportunity, that may be changing.

We don’t yet have enough information about this new DOL program to know if it will deliver quality experiences for apprentices. Our analysis noted that while P4P models have shown promise in some states and international apprenticeship systems, the devil really is in the details—and the DOL forecast did not include many of those. How well the new opportunity works will depend on whether DOL builds in guardrails to ensure equity and quality for apprentices.

The good news is that the feds now have a brand new P4P program to look to for guidance. At the end of January, the Maryland Department of Labor released details about the Maryland Apprenticeship Incentive Program, a P4P funding stream for apprenticeship authorized in 2025. The Maryland program includes several design elements that address many of our concerns with DOL’s P4P model—and that DOL leadership can learn from as they finalize the details of their own funding opportunity.

What is the Maryland Apprenticeship Incentive Program?

The Maryland Apprenticeship Incentive Program will award funding to sponsors or employers for each Registered Apprentice hired. Sponsors/employers will receive up to $3,000 for each new adult Registered Apprentice and up to $7,500 for each apprentice in the High School Level of Registered Apprenticeship, which is the state’s term for a Registered Apprenticeship that a student begins in high school. The state has invested $5 million in the program for FY2026.

To receive the funding, sponsors/employers applicants will have to submit a request for reimbursement within 30 days of the apprentice’s registration. Once the apprentice has completed seven months of their apprenticeship, the state will disburse funds to the sponsor/employer. Each sponsor/employer may receive no more than 10 awards annually for adult apprentices. There is no such cap on the number of annual awards for high school level apprentices.

Sponsor/employers can put the funding towards training and recruitment costs and costs associated with providing disability accommodations or supportive services for apprentices.

What is promising about this funding?

Rewarding retention, not just recruitment. First and foremost, the Maryland program features a more substantive measure of “performance.” Unlike the DOL program, which, as currently written, will pay employers for simply hiring an apprentice, the Maryland program will reward retention. Sponsors/employers won’t receive their payments until apprentices have been on the job for seven months. This benchmark can help ensure funding supports employers who succeed at training and retaining apprentices, not just those who are good recruiters.

Ideally, P4P programs would use performance measures like completion, as California’s P4P model does, to help bolster the less-than-stellar completion rates in the Registered Apprenticeship system. P4P models that use longer-term outcomes—including sustained employment, attainment of additional stackable credentials, and earnings growth—could further ensure public money is directed towards the highest quality programs.

Serving underrepresented and vulnerable populations. The Maryland Apprenticeship Incentive Program sends a clear message to employers: The state wants them to hire youth apprentices. Under the new program, employers will receive more than twice as much funding for each high school level apprentice as they will for each adult apprentice.

To prevent P4P models from creating perverse incentives to exclude participants with high barriers to employment, including youth, they need to build in additional incentives to ensure employers hire apprentices from vulnerable and underrepresented groups. The youth-specific incentive in this program does exactly that—and aligns with the state’s goal to have 45% of high school graduates completing an apprenticeship by the 2030–31 school year. The federal government should emulate this approach to target populations currently underrepresented in the Registered Apprenticeship system.

Supporting supports. Employers/sponsors will be able to use their Maryland Apprenticeship Incentive Program funding to cover costs associated with training, recruitment, disability accommodations, and supportive services for apprentices. These program elements are crucial to apprentice success, but sometimes employers are concerned they lack the capacity or resources to fund them, especially when working with youth and other vulnerable groups. By encouraging funding to be spent on these particular areas, Maryland’s P4P model helps bolster programs that provide holistic support to apprentices.

What’s next?

One thing P4P funding cannot do is prop up an entire apprenticeship system. The 2026 funding for Maryland Apprenticeship Incentive Program would, at most, support about 1,600 apprentices—one-third of the 5,000 new apprentices goal the state set for itself, and exceeded, in 2025. Fortunately, Maryland workforce and education leaders have recognized this. They are making available new funding to strengthen the state’s apprenticeship infrastructure through its Registered Apprenticeship Qualified Intermediary Program to expand apprenticeship in non-traditional sectors. The program will fund intermediaries to recruit and provide technical assistance to employers over a three-year period, with preference given to applicants focused on expanding high school level apprenticeships.

It will be some time before we have data from Maryland Apprenticeship Incentive Program to understand how well it works at expanding apprenticeships and supporting quality programs. What we do know is that its design is thoughtful and intentional—constructed not only to complement existing state goals around youth participation in apprenticeship, but to ensure the program avoids some common pitfalls of P4P programs. As DOL leaders develop the details of the Pay-for-Performance Incentive Payments Program, they should take a close look at Maryland’s program for an example of a P4P program designed with apprentice success in mind.