Delaware’s Annual Comprehensive Financial Report comes with a few updates on the First State’s finances. The report is a lengthy document that examines the state’s finances comprehensively, including the context of where public money is held and spent.
First of all, Delaware’s Unemployment Insurance Fund remains unauditable as the state works to modernize its reporting system.
The state’s Auditor’s Office staff were not surprised to see the unemployment fund is still unauditable.
Its Director of Policy and Communications Sam Barry said the Auditor’s Office wrote several special reports on the fund where staff located the problems in the system.
“And at this point, the conclusion that we've come to with the Department of Labor is essentially that that fund will continue to be disclaimed, and it will continue to basically be shown as unauditable because they are in the middle of the modernization process,” Barry said.
In April 2025, the Department of Labor expected to complete the modernization by late 2026 or early 2027. Barry said there are aggressive deadlines in place to get the new protocols in place.
But over the last couple years, state auditors have disclaimed the unemployment fund because they were not able to obtain enough evidence to put an audit together.
The current mainframe system is very outdated, Barry said.
“They're transitioning to a modern system, and our expectation is that when their new system is up and running and they've migrated their data into it, that we will then be able to audit the fund as usual. But that process is ongoing.”
The unemployment fund is a separately presented fund, Barry added, meaning it isn’t paid from Delaware’s General Fund. Most of the money comes directly from employers paying unemployment taxes and federal grants.
The ACFR – which is composed by state and third party auditors – also reported concerns about the effects of the One Big Beautiful Bill Act.
State lawmakers voted to decouple portions of federal and state tax law in November to counteract the effect of One Big Beautiful Bill Act changes on Delaware revenue.
Barry said broad federal policy changes like those present in the One Big Beautiful Bill Act will have downstream impacts on the First State.
“We are constitutionally mandated to keep a balanced budget,” Barry said. “So if a bill like the one big, beautiful bill, has impacts on our revenues that make them go down, that's going to force hard decisions in the budget process about potentially making cuts.”
The ACFR also reports an influx of federal funds into Delaware that went toward building new schools and the unemployment rate remained stagnant.
But if there are contractions moving forward due to things like tariffs and federal fiscal policy, state officials may have to slow down some upgrades, Barry said.
“That's something that changes, right?” Barry said. “The impact of things like tariffs and fiscal policy and national trends are going to change that.”
It’s the state legislature that will make the bulk of the decisions on the state’s budget and any changes made throughout the year.
