The economy is improving and the unemployment rate is dropping, which isn’t such great news for employees at the Department of Labor.

The amount of federal funding the agency receives dropped $28 million this year and is expected to drop another $4 million next year.

Labor Department Spokeswoman Nancy Steffens said Wednesday that the agency is exploring ways to reduce staff reductions, but the significant reductions in federal funding make it impossible to make cuts without layoffs.

Steffens said the agency is working with existing resources to mitigate as many layoffs as possible, and they also are working with union leadership and the Office of Labor Relations.

However, the reduction in funding is “too great to resolve with the current staffing levels,” Steffens said.

There is no definite time or number of employees who could get pink slips.

Approximately 90 percent of the agency is funded with federal dollars — currently there are about 800 employees, with about 700 of those federally funded. Over the past several years the department has downsized its federally funded employee count by several hundred.

The state has told the union that as many as 95 employees could be laid off on Oct. 1 when the federal budget year begins.