Workforce Development: Fewer Dollars, More Choices

Written By Marc Casale

June 18, 2025 | Written by Marc Casale

A New Era in Workforce Policy

We’ve explored how entry-level hiring is collapsing and why healthcare might be the next big bet. This week, we look at the policy infrastructure that could either accelerate these shifts — or get in their way.

What We See

While the situation evolves on a daily (hourly?) basis, it is clear that the Federal Government is making moves that could reshape the workforce development system.

In President Trump’s April 23rd Executive Order on Apprenticeships, he states:

“My Administration will also consolidate and streamline fragmented Federal workforce development programs that are too disconnected from propelling workers into secure, well-paying, and high-need American jobs.”

And later in the same order –  

“Sec. 3.  Comprehensive Worker Investment and Development Strategy. Within 90 days of the date of this order, the Secretary of Labor, the Secretary of Commerce, and the Secretary of Education shall review all Federal workforce development programs and submit to the Assistant to the President for Domestic Policy and the Director of the Office of Management and Budget a report setting forth strategies to help the American worker.  That report shall identify the following:

(a)  Opportunities to integrate systems and realign resources to address critical workforce needs and in-demand skills of emerging industries and companies investing in the United States as determined, to the extent permissible by law, by prospective employers.  The report shall include:

(i)    administrative reforms to agency policies and programmatic requirements;

(ii)   process improvements to better the experience for program participants; and

(iii)  recommendations to further restructure and consolidate programs.

(b)  Federal workforce development and education programs, or related spending within these programs, that are ineffective or otherwise fail to achieve their desired outcomes.  Each identified program should be accompanied by a proposal to reform the program, redirect its funding, or eliminate it.”

Reading between the lines, this looks like a move to consolidate federal workforce training funds that flow to States.

This is reinforced in the White House’s Fiscal Year 2026 budget request released on May 30 (See ACTE breakdown of implications for CTE and workforce funding). Proposals within the released budget include:

  • Bundling 18 formula and competitive block grant programs into the “K-12 Simplified Funding Program” while also cutting 69% of total funding;

  • Shifting Perkins funds to “exclusively support middle and high school students,” not postsecondary;

  • Reducing funding for the Department of Labor by 35% while calling for a consolidation of 11 programs into a ~$3B “Make America Skilled Again” (MASA) block grant. This consolidation includes many staple programs including all WIOA programs (adults, youth, dislocated workers), YouthBuild, Strengthening Community Colleges, Apprenticeship, National Farmworking, Indian and Native American programs, and the Workforce Data Quality Initiative. Critically, this block grant represents a 24% cut from current funding levels.  

WIOA reauthorization, which has been moving in fits and starts, will also have something to say about the policy obligations related to workforce funding.

What It Could Mean

In short, states are going to have fewer resources but more choices.

Governors and other state leaders are likely to have more flexibility to distribute workforce funds than they’ve had since WIOA was passed. If the proposed federal changes go through, they’ll be able to direct workforce funds toward their own priorities with fewer federal constraints.

That also opens the door to bigger structural changes like consolidating workforce boards or reshaping governance inside the Governor’s office or key state agencies. Many governors are already headed in that direction, according to a recent report from the National Governors Association.

The same report cites many Governor’s long-standing frustrations with the limits of WIOA: too many eligibility restrictions, too few allowable uses, and too little flexibility to serve targeted populations or test new models.

Many of those restrictions may go away with WIOA reauthorization or new block grant structures.

There will be a downstream effect. Less money flowing to states will mean less money flowing to Local Workforce Development Boards (LWDBs).  

We already see major variation in the number of LWDBs state by state. Consolidation may follow, especially if states want to streamline or stretch shrinking funds.

Governors will face a choice. They could use this opportunity to rethink and restructure their workforce system, or they could just run the same playbook with fewer resources as a form of protest against the cuts.

We don’t have to like the politics behind this shift to recognize the opening it creates. This is a chance to make the system better – for states, for employers, and for the people who rely on these systems most.

Room to Act

The next few months could redraw the map for workforce development — and states that act decisively could come out ahead. We’ll be tracking how these changes unfold, and how leaders are stepping up.

Marc Casale
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Workforce Development: Tech receding, healthcare rising?