SB3170

SECTION 1. The legislature finds that the State's long‑term economic competitiveness depends on a skilled, adaptable, and locally-trained workforce aligned with the needs of the State's priority growth industries. Employer-led, demand-driven sector partnerships have been nationally recognized as an effective strategy for aligning education, training, and workforce systems with real-time industry needs and strengthening workforce readiness.

The legislature further finds that the State's sector partnerships program began in 2017, when The Chamber of Commerce of Hawaii, in partnership with the university of Hawaii and philanthropic funders, launched an employer-driven sector partnership model to address persistent skills gaps, workforce shortages, and misalignment between employers and education and training systems. Since its inception, the program's sector partnerships have grown and matured into six active, employer‑led industry sectors, each driven and governed by employers and industry leaders within their respective fields. Sector partnerships have continuously convened businesses, industry associations, education and training providers, workforce agencies, and community partners to identify real‑time skill needs, define in-demand occupations, and advance industry‑informed workforce solutions aligned with employer demand.

The legislature also finds that the State has recently made significant investments in jobseeker-facing workforce development programs, including internship and workforce placement initiatives designed to help individuals gain work experience and employment. These programs play an important role in supporting jobseekers and facilitating labor market entry.

The legislature recognizes, however, that employer-led, demand-driven sector partnerships are structurally distinct from, and complementary to, jobseeker-facing workforce programs. While internship and workforce placement programs primarily focus on individual participants and short-term employment outcomes, sector partnerships function as employer-led collaboratives that convene businesses, industry associations, education and training providers, and workforce agencies to identify real-time skill needs, recruit and organize employer participation, and align education and training systems with actual labor market demand.

The legislature additionally finds that sector partnerships serve as a coordination and alignment mechanism within the workforce ecosystem and can increase the effectiveness and return on investment of existing state workforce investments by improving employer participation, ensuring programs reflect industry needs, and supporting worker retention and advancement beyond initial job placement.

The legislature also finds that effective sector partnerships generate fiscal and economic benefits for the State by:

(1) Reducing reliance on out-of-state recruitment and imported talent;

(2) Improving retention and advancement of local workers within priority industries;

(3) Leveraging private-sector and federal workforce and economic development funding; and

(4) Reducing the outflow of state dollars by strengthening local talent pipelines aligned with employer demand.

Furthermore, the legislature notes that these coordination and alignment activities are ongoing in nature and cannot be effectively supported through one-time or episodic general fund appropriations alone.

Accordingly, the purpose of this Act is to establish a Hawaii employer-led sector partnerships special fund to be administered by the department of business, economic development, and tourism to provide stable and diversified funding for employer-led, demand-driven sector partnerships aligned with the State's economic priorities.

SECTION 2. Chapter 201, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§201- Hawaii employer-led sector partnerships special fund; established. (a) There is established in the state treasury the Hawaii employer-led sector partnerships special fund to be administered by the department, into which shall be deposited:

(1) Moneys appropriated by the legislature;

(2) Federal funds and reimbursements;

(3) Grants, gifts, donations, and private distributions;

(4) All interest earned on moneys deposited into the fund; and

(5) Any other moneys received for the purposes of this section.

(b) Moneys in the special fund shall be expended to support employer-led, demand-driven sector partnerships, including but not limited to:

(1) Funding employer-led sector partnership activities and workforce pipeline development;

(2) Supporting curriculum development, credentialing, internships, apprenticeships, and other work-based learning aligned with industry demand;

(3) Providing technical assistance, convening support, and promoting capacity building for industry-driven partnerships and intermediaries;

(4) Data collection, labor market analysis, performance measurement, and evaluation;

(5) Leveraging federal or private matching funds; and

(6) Supporting industry and employer partners that assist in convening sector partnerships, including through stipends, coordination support, meeting facilitation, or other modest resources necessary to engage employers and advance sector-specific workforce initiatives.

(c) The department shall coordinate its sector partnership activities with the workforce development council to ensure alignment with the Hawaii state workforce development unified plan and avoid duplication of workforce training and employment services.

(d) The department may coordinate its sector partnership activities with the department of education, department of labor and industrial relations, university of Hawaii system, and other state agencies to ensure alignment with statewide plans and avoid duplication of workforce service delivery.

(e) The department may enter into memoranda of understanding, contracts, or grant agreements with public or private entities, including chambers of commerce, industry associations, nonprofit organizations, labor organizations, and educational institutions, to carry out the purposes of this section.

(f) The department shall submit an annual report on the Hawaii employer-led sector partnerships special fund to the legislature no later than twenty days prior to the convening of each regular session. The report shall include:

(1) An accounting of the receipts and expenditures of the special fund;

(2) Outcomes of sector partnership activities; and

(3) Performance measures demonstrating progress in workforce alignment with priority industries.

(g) For the purposes of this section, "sector partnership" has the same meaning as the term "industry or sector partnership" is defined in title 29 United States Code section 3102(26)."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2026-2027 to be deposited into the Hawaii employer-led sector partnerships special fund.

SECTION 4. There is appropriated out of the Hawaii employer-led sector partnerships special fund the sum of $ or so much thereof as may be necessary for fiscal year 2026-2027 to support employer-led, demand-driven sector partnerships in the State.

The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2026.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	3170
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII