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Labor Department requests steady budget; highlights UI modernization and hiring challenges
Summary
Commissioner Michael Parentson told the Senate Appropriations Committee the Department of Labor’s FY26 request contains no major increases beyond a 3% general fund adjustment, and that modernization projects (unemployment insurance, workers' comp, workforce development and financial systems) and frontline staffing remain priorities.
Michael Parentson, Commissioner of the Vermont Department of Labor, briefed the Senate Appropriations Committee on Feb. 21 and said the department’s FY26 budget shows no major ups or downs beyond a standard 3% increase applied to general‑fund lines. He said the department employs roughly 250 people, operates 11 job centers and is about 59% federally funded in the current fiscal structure.
Parentson highlighted four ongoing modernization projects: unemployment insurance, workers’ compensation modernization, workforce development systems and the department’s financial accounting system. He said the unemployment insurance vendor chosen (Fast Enterprises) is an experienced vendor that modernized other state systems such as tax and DMV in other states, and that the department expects a user‑interface modernization deployment in spring–summer 2026.
Commissioner Parentson described hiring and retention challenges, especially for front‑line unemployment insurance call‑center agents and job‑center staff in regional offices. He said overall vacancy sits at roughly 12%, with higher turnover in some frontline units; turnover and training dynamics affect service continuity because of training and overlap requirements.
On funding composition, Parentson said the department is largely federally funded but noted the addition of state workforce training funds and other state allocations to base budget lines since 2019. He also reported operational impacts from prior floods and ongoing remediation of some building mechanical systems; rehabilitation work was expected to finish in the coming months.
Parentson said retained federal grants (for injured workers returning to work and other programs) had been exhausted in FY25 and some carryover had been spent, which explains some year‑to‑year differences in spending authority. He told the committee the department will return with further updates as modernization milestones approach and welcomed follow‑up questions about specific programs.
