Department of Labor briefs appropriations committee on federal funding uncertainty and UI modernization
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Summary
The Department of Labor told the committee it is about 50% federally funded, flagged possible small federal reductions (including a $10 million national WIOA adult cut), and said launching a $30 million unemployment insurance modernization this spring is its top priority.
The Department of Labor told the House Appropriations Committee on Feb. 9 that federal funding uncertainty and administrative reversions have changed program flexibility for workforce programs, while the department is prioritizing a planned unemployment insurance (UI) system modernization.
Commissioner Kendall Smith said DoL is approximately 50% federally funded, with about 25% general fund and 25% special funds. She warned the committee that the federal continuing resolution means the federal numbers in the packet reflect last year’s allocations and that final FY allocations remain pending. Smith called the department’s top priority the launch of a new UI system this spring or summer and said the project has about $30,000,000 in implementation funding.
On workforce programs, Smith noted a $10,000,000 reduction nationwide in the Workforce Innovation and Opportunity Act (WIOA) adult line item; she said Vermont’s formulaic share is unlikely to be catastrophic but the department is watching allocations closely. She also listed several reversions of one‑time funds that were swept back to the general fund — including $37,000 for a returnship program and $70,000 for postsecondary/New American supports — and described reasons such as no bids on RFPs and staffing turnover.
Smith said the UI trust fund balance was around $310,000,000 at the start of calendar 2025 and that Vermont’s overpayment/fraud rates compare favorably to national peers. She described UI modernization testing with vendors and stakeholders, including Vermont Legal Aid, and said the department will communicate cutover timing and training to employers and claimants.
Sabina Haskell, executive director of the Office of Workforce Strategy and Development (OWSD), described OWSD’s statutory creation under Act 146 of 2024, its two‑person staffing model and four strategic goals: priority sectors, bringing adults back to work/upskilling, growing and retaining businesses, and retaining more young people in Vermont. Haskell said the state workforce development board was reorganized and the office expects to publish metrics and supporting materials as subcommittees start meeting.
Committee members asked for follow-up materials on regional service delivery, summer youth employment planning and the status of funds that were swept; DoL agreed to provide documents and to update the committee once federal allocations are finalized.
