Arizona Department of Economic Security is laying off 5% of its workforce because of federal cuts

Arizona’s Department of Economic Security told staff on Tuesday that they would be reducing the agency’s workforce by 5%.

In a statement to KJZZ, the agency said that the cuts are the result of the elimination of federal grants supporting Unemployment Insurance and shifting costs to the states. Affected employees were provided with two and a half weeks’ notice, with their final day being July 4.

DES Director Michael Wisehart said that despite efforts to avoid staffing reductions, the agency “cannot compensate for millions in funding cuts without significant impacts to clients.” He added that “substantial adjustments will need to be made as DES moves forward with anticipated leaner budgets.” KAT

He added that “substantial adjustments will need to be made as DES moves forward with anticipated leaner budgets.”

DES statemment

"Due to the elimination of federal grants supporting Unemployment Insurance and the federal government shifting costs to the states, the Department of Economic Security (DES) has eliminated positions, affecting approximately 5% of its workforce. Employees impacted by this decision were informed on June 17, 2025, providing two and a half weeks’ notice, with their final day being July 4.

'Implementing a reduction was not what we wanted, but it was necessary considering the current federal budget cuts,'stated DES Director Michael Wisehart. 'Our agency is navigating a complex financial landscape shaped by unexpected federal funding reductions and threatened cost shifts to states. We have been closely monitoring our fiscal situation with a strong commitment to avoiding staff reductions. Despite implementing cost-saving measures to maintain workforce stability while addressing budget constraints, the financial challenges have persisted, making it impossible to sustain our current staffing levels. We cannot compensate for millions in funding cuts without significant impacts to clients.'

The Department remains committed to providing essential services, such as basic needs assistance, employment services, child and family services, and support for individuals with disabilities. As one of the largest state agencies, DES programs and services support the health, safety, and economic well-being of Arizonans. Director Wisehart emphasized that “our teams may require reorganization, and substantial adjustments will need to be made as we move forward with anticipated leaner budgets. Our commitment to delivering critical human services remains, and we are determined to tackle this situation with both resilience and resourcefulness.”