Minnesota nearly out of money to help retrain laid-off workers

Faced with a doubling of the number of laid-off Minnesota workers seeking help from state job retraining programs, the state's dislocated worker program is running out of money.

While state officials remain confident of their ability to continue retraining workers, the state has committed all but about $400,000 of its $56 million annual retraining budget, even though its fiscal year doesn't end until June 30.

Yet there is a 1,900-worker waiting list for state job retraining programs, and the state has applied for millions of dollars in federal funds to catch up on funding the training. About 24,000 laid-off workers are currently being retrained.

"We absolutely saw the problem coming," said Anthony Alongi, director of the state's dislocated worker program, in an interview Friday. The program is within the Department of Employment and Economic Development. "But when you take on 5,000 new retraining customers every quarter, you're just going to run out of money."

For three of the last four quarters, the number of people seeking help from state job retraining programs has hit 5,000, while in the most recent quarter it was 4,000, Alongi said. The normal level is 2,200 to 2,300 a quarter, he said.

Another surprise has been unexpected declines in state tax revenue that partially funds the dislocated worker fund. The state tax money comes from unemployment insurance paid for by Minnesota employers.

"In just three months we lost more than 10 percent of our revenue, and a budget we had projected to be well into the black was projected to be moving toward the red," Alongi said.

As a result, the state has applied for millions of dollars in emergency funds from the U.S. Department of Labor, and hopes to receive the money well before its own retraining fund runs dry.

The state is now seeking $11.2 million in federal money to replenish a state fund that provides retraining for workers from small layoffs, Alongi said. Minnesota is the first state to apply for the grant under a new federal program, and hopes it will get the money in about two months, he said. The grant would pay for retraining 2,700 workers, but because of the backlog of 1,900 people it will cover only 800 additional laid-off workers.

If the state gets the $11.2 million, it will next apply for about $3 million in federal retraining funds for former Delta-Northwest Airlines employees, Alongi said.

Steve Alexander • 612-673-4553