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Labor department highlights training expansions and flags unemployment trust fund overcapitalization
Summary
Department of Labor staff briefed the task force on expanded technical‑vocational funding and education tax‑credit changes, and reported Alaska’s unemployment insurance trust fund is collecting far more than benefits paid, prompting discussion of tax‑rate adjustments for employers.
Paloma Harbor of the Alaska Department of Labor and Workforce Development briefed the Joint Legislative Task Force on Jan. 10 about workforce policy actions and funding changes relevant to seafood communities, and highlighted legislative changes from the prior session that affect training and employer incentives.
Harbor told the task force that House Bill 148 (passed in the last session) expanded eligible recipients for education tax credits to include fisheries businesses and raised the program cap from $1 million to $3 million. She also reported that the Technical Vocational Education Program (TVEP) was extended without a sunset and that its funding allocation increased — she cited an increase of about $7.4 million for training providers statewide and said the list of funded training providers was expanded to include new recipients (examples she named: Southwest Alaska Vocational Education Center, Prince of Wales, Alaska Heritage, Fairbanks Pipeline Training Center). Harbor offered to provide the task force with the list and flowchart she showed.
On employer tax and unemployment insurance (UI) matters, Harbor told the group that Alaska’s UI trust fund was substantially overcapitalized: the state is collecting about $157 million per year in UI contributions while paying roughly $45 million a year in benefits. She said statute currently imposes a 1% minimum employer UI tax rate that prevents rates from falling further even when the trust fund is healthy. Removing that statutory minimum was presented as one legislative option to reduce employer tax burden; raising the allocations for competitive workforce training grants (STEP) from trust fund contributions was listed as another option. Harbor also described the state’s TVEP and STEP mechanics: TVEP currently receives 0.25% of taxable wages and STEP 0.1% (percentages cited in testimony), and STEP is the competitive grant program that the department uses to fund new training programs in high‑demand occupations.
Task force members asked for documentation and follow‑up. Several members requested an emailed copy of the TVEP/STEP training provider list and the fund flowchart; Harbor agreed to provide those materials and to work with the Office of UI actuarial staff to provide more detail on the trust fund projections and possible options.
No formal policy vote occurred at the meeting, but members discussed next steps including embedding the department’s information in the task force strategic plan and potential legislative remedies to reduce UI overcollection or to repurpose some trust fund flows toward workforce development in seafood communities.
