Meeting workforce needs was a frequent theme Tuesday during a state budget hearing for the Department of Labor and Industry.

Secretary Nancy Walker fielded questions about the workforce and other topics for two hours from members of the House Appropriations Committee.

At the hearing’s end, Committee Minority Chair James Struzzi, R-Indiana, said he’s concerned about the state’s readiness to turn out building trades jobs to meet the needs for building data centers.

“Are we doing enough?” Struzzi asked.

Walker said her agency is steering a $2 million grant to the Northeast region specifically to address issues with data center construction.

Gov. Josh Shapiro proposed doubling funding to $7 million from $3.5 million for the new The Schools-to-Work program under L&I’s umbrella.

The extra money will help provide more state grants to help students enter the workforce while in high school. They can prepare for apprenticeships, post-secondary education or jobs this way.

“These are wonderful opportunities to get young people into career pipelines,” said Walker.

More than $13 million in competitive grants under the program went to 59 partnerships involving schools, employers and workforce organizations last year.

The goal is to align the grants with identified workforce needs and in-demands industries in a specific region, officials said.

In an exchange with state Rep. Joshua Kail, R-Beaver, Walker said her agency is part of a state study to determine the impact of artificial intelligence on the workforce and prepare workers for changes.

Kail said he’s concerned Pennsylvania won’t be prepared to meet the AI challenge to the workforce.

Walker said AI is already making an impact on jobs, but she doesn’t know when the big change will be.

Shapiro proposed a $103 million total budget, or 6.7% increase, for the department in Fiscal Year 2026-27.

The Office of Vocational Rehabilitation (OVR) which helps individuals with disabilities find jobs faces uncertain federal funding under the Trump administration, said Walker. This is a problem because more than three-quarters of the office’s funding comes from federal grants provided by the Department of Education, she added.

Labor and Industry moved to deal with the potential loss of federal funds and elimination of the education department, Walker said.

These steps include restricting hiring and drawing on a combination of state and other federal funds to maintain the program, she said.

Woes with the state Unemployment Compensation Fund dominated talk at the agency’s budget hearings as recently as four years ago.

The agency has reduced a backlog of UC claims from 19,000 to 7,000, said Walker.

The wait times for unemployment compensation calls declined dramatically and claimants now encounter fewer call delays in reaching an agency employee, said Walker.

Continuing the improvement in customer service depends upon lawmakers providing $115 million for the Service and Infrastructure Improvement Fund, said Walker. Not doing so will lead UC claimants to start contacting lawmakers again for help with claims, she added.