House Finance hears Labor Department FY26 budget overview, AVTEC expansion and licensing changes among priorities

The Alaska Department of Labor and Workforce Development on Tuesday presented its proposed FY26 budget to the House Finance Committee, outlining funding for workforce training, licensing reforms and continued deployment of the newly opened Office of Citizenship Assistance.

Commissioner Kathy Munoz told the committee the department's operations "go from Southern Southeast all the way up to the Arctic," including 14 job centers and the Alaska Vocational Technical Center in Seward. "We support Alaskans through state and federal training funds," Munoz said, summarizing the department's footprint and services.

The presentation centered on several programmatic and capital asks built around the department's workforce-development mission. The Alaska Vocational Technical Center (AVTEC) seeks one-time capital funding to double capacity in its industrial electrical lab and an ongoing personnel increment to support expansion of apprenticeship-style training. Dan DeBartolo, the department's administrative services director, described an FY25 supplemental capital request and an FY26 personnel increment that together are intended to increase AVTEC's industrial electrical seats from 15 toward a larger pipeline of trained electricians.

Why it matters

Committee members pressed for details on how the department's budget choices address statewide workforce gaps in health care, construction and education, and how one-time versus ongoing funding would be used to create lasting training capacity. Several representatives cited rural workforce shortages and the need to retain trainees in home communities.

Key points from the presentation

- AVTEC expansion and supplemental ask: The department described a capital supplemental (presented in testimony as $888,000 UGF) to buy and barge industrial electrical training equipment to Seward (shipping cited at about $85,000), plus one-time contract support to install equipment before fall classes. The FY26 increment discussed would fund an ongoing instructor position; Representative Hannon characterized the continuing cost as about $182,000 annually. The department said the capital amount is one-time and the smaller increment is the ongoing base request.

- Office of Citizenship Assistance: Munoz said the Office of Citizenship Assistance (OCA), established in statute in 2006 but recently stood up, opened an Anchorage office in late 2024 to help legal immigrants with employment referrals, English-language services and credential translation. The department is actively hiring OCA staff.

- Licensing and certificate-of-fitness changes: The department is pursuing regulatory and statutory tools to ease workforce entry for electricians and plumbers, including military credit toward exam hours, broader reciprocity with other states (currently reciprocal with approximately 13 states, with a projection to accept licensure from up to 40 states), and a provisional licensure provision enacted by the legislature last session that allows a one-year provisional work period while applicants complete certification.

- OSHA diversionary program: Munoz highlighted a new diversionary approach under the Alaska Occupational Safety and Health state plan that can waive financial penalties for qualifying first-time workplace violations if employers complete safety training. The department said the program has forgiven more than $600,000 in penalties while providing training.

- Grants and federal guidance: Committee members asked about potential impacts from recent federal guidance and OMB direction affecting diversity, equity and inclusion language in federal grants. DeBartolo said the department reviewed grant language and paused certain coordination activities tied to an AWIB (Alaska Workforce Investment Board) grant while awaiting additional federal guidance expected within about 60 days. He said, "we had to look at grants and the language that was in them," and that, as of the hearing, no federal funds have been withheld from the department but staff continue to monitor risks.

- Employment and training workload and funding mix: DeBartolo walked the committee through the department's budget structure: roughly half of total funding is federal, with UGF and designated funds making up the remainder. A TVAP/TVET program reauthorization in prior years increased designated funds available to training recipients. The department reported that training support increased about 58% from FY23 to FY24 after outreach and changes to income-eligibility rules for some federal training funds.

- Workers'comp and inspector staffing: The workers'compensation division reported internal restructuring that improved notification and fines collection. Tanya Keith, director of the labor standards and safety division, told the committee "we have currently 1 electrical and 1 plumbing inspector position open," and she named the locations for those vacancies as Fairbanks and Ketchikan (reported in testimony).

- Unemployment insurance trust fund: Committee members asked broadly about benefit levels and the role of UI funds. The department said the UI trust fund balance stood at about $740 million and had been as low as roughly $250 million at the pandemic low point. The department framed UI trust financing as structured to absorb economic shocks and support benefit payments while also enabling some training investments funded from UI-related receipts.

Additional details and context

The department described other ongoing efforts: a teacher apprenticeship program in partnership with the Department of Education designed to train paraeducators in rural districts through paid on-the-job training and related instruction; SkillBridge participation that lets the state advertise jobs on a Department of Defense portal and, if a candidate is hired, draws DoD wage support for up to six months during transition from active duty; and steps to expand reciprocity for trade licensure.

The committee asked for follow-up materials on several items, including a more detailed breakdown of which department grants could be affected by federal DEI-related guidance and the exact dollar amounts at potential risk. DeBartolo told members he would provide grant-level detail.

What the committee decided

No formal votes occurred during the presentation. Members asked questions and requested follow-up information; the committee scheduled its next meeting and closed the session.

Ending

Committee co-chair Josephson thanked Commissioner Munoz and Director DeBartolo for the presentation and closed the meeting at 11:31 a.m. The committee's next scheduled hearing will consider House Bill 78 on retirement systems and defined benefits at 1:30 p.m.