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Department of Labor says training funds expanded; actuarial shows unemployment trust fund ‘overcapitalized’
Summary
A Department of Labor official told the task force that recent legislation expanded technical-vocational training providers and raised education tax-credit caps, while the department’s actuarial data show employers are currently contributing far more to the unemployment insurance trust fund than benefits paid out.
Paloma Harbor, with the Alaska Department of Labor and Workforce Development, told the Joint Legislative Task Force on Jan. 10 that late-session changes to state law broadened education tax-credit eligibility for fisheries businesses and removed the sunset on the state technical-vocational education program (TVEP), increasing annual funding for local training providers by about $7.4 million.
“For this meeting, wanted to focus on that,” Harbor said, noting TVEP recipients expanded to include providers in new areas and that the law raised the education tax-credit cap from $1 million to $3 million so fisheries employers can more readily participate.
Harbor walked the task force through how unemployment insurance contributions are structured and highlighted two potentially high-impact levers: the TVEP/STEP funding percentages and a statutory minimum employer tax rate of 1 percent. She said the contribution that funds TVEP is set at 0.25 percent of taxable wages and the State Training and Employment Program (STEP) at 0.1 percent. She noted legislators and employers can influence program design and that the department awards competitive grants for high‑demand training under STEP.
Harbor also summarized recent actuarial findings: the department is currently collecting about $157 million a year in employer unemployment contributions while benefit payments in the last two years totaled roughly $45 million annually. “We are collecting three times as much as we’re sending out,” she said, and as a result all employers were paying the statutory 1 percent minimum rate in calendar year 2025. Harbor said one legislative alternative would be to remove the statutory minimum so experience-rated employers with historically low turnover could see lower rates.
Task force members asked for written charts and additional actuarial analysis to understand the scale and timing of potential rate changes. Senator Stedman and others asked whether a shift in classification of workers from independent contractors to W‑2 employees could reduce trust-fund receipts; Harbor said moving workers into W‑2 status would increase employer contributions because employers pay the UI tax on wages.
Harbor also urged the task force to share information about recent changes — including broader employer eligibility for the education tax credit and the permanent TVEP expansion — with seafood employers and training providers, and she said she would email the task-force staff a list of TVEP recipients and the flowchart showing how UI and training contributions are distributed.
