Labor briefs Appropriations on FY27 spending, federal funding uncertainty and imminent UI modernization launch

Kendall Smith, commissioner of the Vermont Department of Labor, told the Senate Appropriations Committee on March 31 that the department’s FY27 budget mirrors the governor’s recommendation and includes a roughly 3% general‑fund increase (about 4.7% after ISF/SLA adjustments). Smith said the department is operating with continuing‑resolution assumptions for several federal funding streams and called final federal allocations an important outstanding variable for FY27 planning.

Commissioner Smith summarized Labor’s footprint (central office in Montpelier and 11 regional workforce offices), staffing (263 authorized positions, ~12.6% vacancy) and service volumes (the department reported interacting with about 25,000 UI claimants and ~10,500 case‑managed clients in calendar year 2025). Smith said roughly half of the department’s budget is federally funded and that some national line‑item reductions (for example a $10 million reduction cited for the national WIOA adult line) are pending distribution by formula; he does not expect those national changes to be catastrophic for Vermont but flagged uncertainty until allocations are final.

On workforce development, the department highlighted registered apprenticeship expansion and federal competitive grant opportunities and encouraged employers to apply for tax credits and federal supports. Smith also explained a number of small prior‑year one‑time appropriations that were reverted as unspent (examples include a $75,000 returnship appropriation and a $70,000 postsecondary/new Americans appropriation where agency staff could not locate implementing policy language) and noted other one‑time funds that were spent as intended.

The department spent substantial time on Unemployment Insurance (UI). Smith said the UI division has about 81 staff and a ~15% vacancy rate and that UI administrative funding is primarily federal. Deputy Commissioner Chris Winters and Smith described the UI modernization project as the department’s single biggest priority. They identified FAST as the vendor and said the implementation project—referred to in testimony as 'Fuse'—is on budget to date and expected to launch in roughly 60–90 days, though the department will not announce a public date until staff are confident the system and training are ready.

Commissioner Smith emphasized the modernization goal: to reduce constituent outreach and call‑center volumes caused by the old mainframe system, which the department described as about 55 years old and difficult to maintain. Smith said the department set aside implementation funding previously and that future licensing and out‑year base costs are under negotiation with the vendor.

On education and workforce pathways, Smith expressed support for early college and related programs (the testimony referenced the 'McLar Promise' by name in the transcript) and said flexible pathways, pre‑apprenticeship and accelerated associates‑degree programs are important tools for retaining young Vermonters and feeding sectors that report widespread hiring shortages.

Next steps: the department will return with any revised numbers once federal allocations are finalized and will brief the committee on UI modernization readiness and licensing cost estimates before a public launch date is set.