Update on FY 2026 Federal Funding Proposals for Workforce Information Grants, National Tools, and WDQI

As Congress advances its appropriations process for Fiscal Year 2026, state Labor Market Information (LMI) offices should be aware of notable proposed changes to funding levels that directly affect core data programs and national infrastructure. Both the House and Senate have released their FY 2026 Departments of Labor, Health and Human Services, Education, and Related Agencies Appropriations bills, with reductions proposed for key workforce information programs.

Comparative Funding Levels: FY 2025 vs. FY 2026

 Workforce Information and National Tools Face Funding Declines

Both chambers propose reductions to the “Workforce Information, National Electronic Tools, and One-Stop System Building” budget line, which represents the primary federal funding source for:

• State Workforce Information Grants (WIGs)
• National tools such as:
  • O*NET
  • CareerOneStop
  • Projections Suite

The House proposes the steepest cut, reducing the allocation by nearly $15 million from FY 2025 levels, while the Senate proposes a cut of $10 million. Either scenario would represent a significant pullback in federal investment in labor market information infrastructure. 

WDQI Maintains Level Funding

In contrast, the Workforce Data Quality Initiative (WDQI) is flat-funded at $6 million in both the House and Senate bills. This indicates continuing support for maintaining longitudinal state workforce data systems and linking education and employment outcomes. For states engaged in cross-agency data integration and performance tracking, continued WDQI funding provides some certainty amidst broader fiscal tightening.

Next Steps: Appropriations Process and Conference Negotiations

These figures represent the proposed funding levels in each chamber’s appropriations bill. Final allocations will depend on the outcome of House-Senate negotiations over the coming weeks. It is important to note that the FY 2025 funding levels reflect a continuation of FY 2024 levels, due to a year-long continuing resolution passed in March 2025.

 What to Watch

State LMI directors and stakeholders should closely monitor the appropriations process for final congressional decisions and prepare for potential FY 2026 operational impacts if WIG or national tool funding is reduced. Engagement with key stakeholders, including congressional delegations and critical state LMI data users, underscore the value of high-quality labor market information in workforce development, economic planning, and educational alignment.

The LMI Institute will keep you posted on continuing developments.