IDWD spokesman Joe Frank says the state has gained nearly 14,000 manufacturing jobs and 50,000 total private sector jobs in the past two years.
The federal government benefits up to 63 weeks have not been renewed for 2014.
The $5 million will be used for job training and a program offering free career certifications and high school equivalency degrees.
Officials are working on guidelines to spot those students while they are still in high school.
Indiana Department of Workforce Development says it must stop distributing federal unemployment benefits because of uncertainty surrounding sequestration.