Topeka ? The state agency that handles unemployment claims announced Wednesday it may be creating some of its own.

Officials with the Kansas Department of Labor, which is considering laying off employees, blamed the belt-tightening on the improving economy. With the jobless rate decreasing, the federal government will reduce the amount of money it sends to administer unemployment compensation benefits.

“Unfortunately, to operate within the budget we have for this year, we may have to lay off some staff,” Labor Secretary Jim Garner said in an e-mail distributed to the agency’s workers.

Kansas’ preliminary unemployment rate for August is 4.6 percent, down from 5.2 percent in August 2003.

Garner said the Labor Department expected to receive $17.5 million in unemployment administration funds, $1.7 million less than the funding amount in the current fiscal year.

To bridge the funding gap, Garner has ordered that three areas — support services, labor market information services and unemployment insurance — cut their budgets by 10 percent.

Beth Martino, a spokeswoman for the Labor Department, said the 650-employee agency would try to avoid making any layoffs, and said she couldn’t estimate how many could occur.

In his e-mail, Garner defended the agency’s hiring in some areas while considering layoffs. He said there were key, highly skilled positions that must be filled.

The announcement about budget problems comes after the agency recently announced it was spending about $20 million to overhaul its computer system.

The Labor Department also recently transferred 240 employees to the Kansas Department of Commerce in a move touted by Gov. Kathleen Sebelius as a way to improve job-training programs in the state.

Betty Vines, president of the Kansas Association of Public Employees, said she was concerned about the possibility of layoffs.

“Supposedly, the break-up of the agency was to be an improvement,” she said.

If there are layoffs at the Labor Department, they would occur before the end of the year, Martino said.