Hawaii Labor Department seeks $2.9M for electronic case system, more investigators and immigrant services in 2026 budget requests

The Department of Labor and Industrial Relations on Tuesday told the House Committee on Finance it is seeking $2.9 million in fiscal 2026 to fund maintenance and operations of a new electronic case management system for the Disability Compensation Division and related cloud licenses and support.

That request was among several budget and staffing proposals DLIR Director (name not specified in testimony), presenting to the committee, said are needed to support worker benefits, enforcement and immigrant services statewide. “The system went live in December 2022, with project enhancements completed in December 2024,” the director said, adding the request is intended to “ensure that the state's secured infrastructure environment is properly maintained and licensed.”

Why it matters: DLIR administers unemployment insurance, workers’ compensation, wage standards, enforcement and workforce programs across the islands. Committee members pressed the department about inspection capacity on Kauai, backlog in prevailing-wage and wage-and-hour claims, and how reduced federal funding would be covered.

DLIR officials said automation and a modernized records system are already improving access. Anne Pereira Eustaquio, DLIR’s Unemployment Insurance administrator, told lawmakers the state’s Unemployment Compensation Trust Fund had a balance of about $711,500,000 as of Nov. 30, 2024, and that the UI program expects to receive “a little over $15,000,000 for total UI operations in Hawaii” in the federal fiscal year. Pereira Eustaquio said the department maintains a Special Unemployment Insurance Administration Fund that currently holds “in the upwards of $10,000,000,” which the department expects to tap if federal above‑base funds decline.

Key requests and staffing shortfalls

- Electronic case management (Disability Compensation Division): DLIR requested $2,900,000 for fiscal 2026 operations and licenses; the department said it has invested $16,700,000 in the system to date.

- Enforcement staffing: DLIR asked to restore two enforcement specialist positions (one Oʻahu, one Hilo) to support investigation and enforcement of workers’ compensation, temporary disability and prepaid health care laws. The department said investigative staffing fell from 11 investigators to six since 2009 — about a 45% decline — and now processes roughly 4,200 Hawaii Compliance Express (HCE) requests per month.

- Labor enforcement specialists: DLIR requested two additional labor enforcement specialists for the Standards Division to address a backlog of prevailing-wage cases and to focus on minimum-wage, overtime and unpaid-wage investigations.

- Human resources specialists: Two HR specialists were requested to help implement delegated hiring under Act 186 and to address a large backlog in recruitment and examination work.

- Office of Community Services (immigrant services): DLIR requested two positions to expand immigrant resource centers and direct client assistance. The department said Act 207 (SLH 2024) provided two FTEs to OCS and appropriated $12,000 in operations and $300,000 in program funds, but that the appropriation is non‑recurring and OCS wants recurring funding to meet statutory mandates.

Backlogs and enforcement data

Joanne Pidenharsha, identified as administrator for the Disability Compensation Division (DCD), told the committee compliance on the Big Island has risen from about 20% to as high as 40% in recent measures; she reported a statewide average compliance rate near 33%. In response to questions from Representative Sayama and others, DLIR staff said the labor law complaint backlog includes 65 cases older than 360 days, 3 cases older than 180 days and 8 cases under 90 days.

Federal grants, disaster work and workforce programs

DLIR described a National Dislocated Worker Grant (NDWG) that can provide up to $21,000,000 in Workforce Innovation and Opportunity Act funds for disaster relief employment and training. The department said it contracted with Maui Economic Opportunity to provide 300 jobs under the grant, which the department expects to spend by Sept. 30, 2025 unless extensions are approved by USDOL.

DLIR also described the Helei Moa internship program. The department said it placed 516 Helei Moa interns since the program’s inception, with 62 hired into permanent executive-branch positions statewide and 17 hires at DLIR (including placements on Hawaiʻi Island and Maui). DLIR said it tracks placements and encourages interns to apply through standard civil‑service hiring when vacancies exist.

Questions from lawmakers and department follow-ups

Representative Evan Morikawa, Representative Lamosau and Chair Sayama pressed DLIR on staffing for Kauai inspections, the size and causes of backlogs, the possible impact of federal funding reductions on program delivery, and whether the state’s special UI administration fund would be sufficient in the near term. Pereira Eustaquio said the department would “get back” to the committee with more specific figures on annual caseload volumes for certain divisions and on amounts covered previously when federal funds were reduced.

The department told the committee it plans to use a mix of tools — telework policy, hiring differentials, career ladders and recruitment outreach — to reduce vacancies and retain staff. DLIR also is requesting positions in multiple divisions to reduce backlogs and increase enforcement capacity.

What’s next

DLIR presented these items as budget requests for the fiscal biennium 2025–2027; the committee did not vote on any request during the briefing. Several lawmakers asked for written follow‑ups on specific numbers (annual case counts, federal funding replacement scenarios and the dollar amount DLIR previously covered when federal grants were reduced). DLIR agreed to supply those figures.

The department emphasized that some budget items are funded by special funds or federal grants while others would require recurring state appropriations or restoration of prior positions. Lawmakers signaled attention to enforcement backlogs, immigrant service expansion and the robustness of the UI trust fund as they evaluate DLIR’s requests.