Title
Arizona Department of Economic Security Industry-Driven Skills Training Fund Grant and Advanced Manufacturing Employer Contracts - Citywide
Description
Request the Economic Development and the Arts Subcommittee to recommend City Council approval to enter into an Intergovernmental Agreement (IGA) with the Arizona Department of Economic Security (DES) and accept up to $5 million in grant funding for Industry-Driven Skills Training Fund Programs and further request authorization to enter into agreements with employers to implement the Industry-Driven Skills Training program.
THIS ITEM IS FOR CONSENT ACTION.
Report
Summary
In August 2025, the U.S. Department of Labor launched the Industry-Driven Skills Training Fund Grant (Industry Skills Grant) through Training and Employment Guidance Letter No. 02-25, establishing a new national initiative under the Workforce Innovation and Opportunity Act to support employer-led, outcomes-based workforce training. The program is designed to ensure local employers define and drive training that meets critical workforce needs, strengthens talent pipelines, and up-skills workers using industry-recognized standards. DES applied for this competitive funding opportunity and was awarded $5 million for a three-year project beginning in September 2025. The City of Phoenix Community and Economic Development Department, on behalf of the Phoenix Business and Workforce Development Board, has been designated as a subrecipient of the state award. DES's initial allocation to the City is $1,630,647, which represents the City's guaranteed allocation under the Grant. DES is expected to make additional grant funding available, which Phoenix maybe eligible for in the near future.
The Industry Skills Grant will provide targeted support to Phoenix advanced manufacturing employers seeking to strengthen and upskill their existing workforces. This funding is designed to address critical skill gaps within the sector by supporting training that enhances employee capabilities, improves company competitiveness, and helps businesses retain experienced talent. The grant will also support workers in gaining industry-recognized skills needed to remain competitive in a rapidly evolving labor market.
To be eligible, employees must have at least six months of tenure with an employer and all training must result in measurable skills advancement. The grant enables employers to prepare their workforces for emerging technologies and evolving industry demands by funding industry recognized credentials, certifications, and technical training programs, as well as other employer-driven upskilling activities. Through this grant, employers are eligible to receive up to 80 percent reimbursement for approved training costs, with the required 20 percent employer match that can be met through financial contributions or in-kind support. In-kind contributions may include wages paid to employees while attending training, or other non-cash resources such as facility access, equipment, or staff time dedicated to implementing or supporting training.
Financial Impact
There is no impact to the General Fund. Funding will be provided by the DES Industry Skills Grant.
Concurrence/Previous Council Action
- The Phoenix Business and Workforce Development Board approved entering into an IGA with DES to administer the Industry Skills Grant on January 8, 2026.
Department
Responsible Department
This item is submitted by Assistant City Manager Ginger Spencer and the Community and Economic Development Department.