Department of Human Resources seeks 9% budget increase; requests $1.575M for classification overhaul

Beth Fastigi, Commissioner of the Department of Human Resources, told the House Appropriations Committee on Feb. 12 that the department is requesting a 9% budget increase for fiscal 2026 and that three-quarters of that increase is attributable to salary and benefit costs.

The request includes a $1,575,000 appropriation in the governor's Big Bill to fund a multi-year modernization of the state's classification system, which Fastigi said was built in the 1980s and produces unpredictable annual reclassification costs. "Our system now mostly looks at jobs individually," Fastigi said, "and it's time to kind of relook at everything, and that's why we need to have a consultant to come in and assist us." The department reported that reclassification-related costs have ranged between $2.1 million and $7.1 million in the past five years and that it completed 1,124 class reviews affecting 1,187 employees over the past year.

Fastigi presented the department's workforce report and budget materials, describing the Department of Human Resources (DHR) as primarily funded through internal service funds with a roughly 10% general-fund share and small special funds. DHR employs six exempt and 104 classified staff, and more than 70% of its budget is personnel costs. "You would want to follow along the Department of Human Resources," Fastigi said, "our vision is to provide a professional human resources team ... our most important asset, which is our people." She told the committee the personnel cost drivers include average salary increases, rising health insurance premiums and higher retirement contributions.

Fastigi reviewed three major projects: the paid family medical leave program, an enterprise resource planning (ERP) replacement of the state's human capital management system (VTHR), and the classification modernization effort. Fastigi said the paid family medical leave insurance program launched for state employees in July 2023, and that vendor The Hartford rolled out an employer-purchase option effective July 1, 2024. She estimated about 50 private employers have purchased coverage, covering roughly "405 plus" employees in addition to state employees, and said the state's premium cost for its employees is about $2,000,000 per year. "It is a voluntary program" for private employers, Fastigi said, adding that the state pays the premium for its employees: "We pay the cost."

On the ERP project, Fastigi said the state's human capital management replacement is beginning and is expected to be a two-year implementation, with the state's human-resources portion starting first. The classification modernization effort would fund consultants to recommend a modern, consistent approach that DHR and the administration can implement; Fastigi stressed that any compensation changes that affect pay would be subject to collective bargaining.

Committee members pressed DHR on turnover and vacancy metrics. Fastigi said DHR's internal vacancy rate is about 3.6% while the statewide vacancy rate is about 9.8%. She cited a statewide turnover rate of 11.5% for fiscal year 2024, with voluntary turnover at 7.8% and retirements at 2.5%. Fastigi pointed to the workforce report for more detail: nearly 9% of separations occur within 30 days of hire and 22% occur within the first six months, and 74% of voluntary separations happen within the first five years of service. The report shows an average time to fill positions of about 76 days and, in the committee materials Fastigi cited, 2,589 job openings, 713 promotions and 1,126 new hires for the reporting period.

The committee also discussed the state's position pool and the mechanics for repurposing or adding positions. Fastigi explained that positions vacant for six months or more may be moved into a statewide pool by the secretary of administration and then authorized to another agency if approved by the position-pool committee. She said the pool committee typically meets monthly and includes the commissioner referenced in the hearing and the director of operations in the Agency of Administration, Nick Kramer; the committee makes recommendations to the secretary of administration, who must approve position reallocations. Fastigi described the pool as a way to repurpose existing position slots without raising the position cap through statute.

Fastigi said misconduct-investigation throughput is a focus: DHR completed 79% of misconduct investigations within an 80-day goal during the reporting period, but the number of investigations has increased without a commensurate increase in investigators. She also highlighted CAPS, the department's training center, and the VTHR payroll and human-capital systems that DHR operates for the executive and judicial branches.

Fastigi closed by urging committee members to consider the classification modernization appropriation. She said the governor included the request in the Big Bill and asked for committee support, while reiterating that any pay implications identified by the modernization will require collective bargaining before implementation.

The committee did not take a formal vote during this presentation; members asked follow-up questions and were directed to tables and figures in the workforce report for additional detail.