Analysts recommend $100,000 restriction, question vacancy and salary assumptions in DBM personnel budget

For the record, my name is Jacob Cash. I'm a budget analyst for the Department of Legislative Services, and I'll be presenting the budget for the Department of Budget and Management Office of Personnel Services and Benefits, including the transition of retiree prescription drug coverage to Medicare Part D.

The Department of Legislative Services (DLS) told the Appropriations Committee that the fiscal 2026 allowance for the Department of Budget and Management (DBM) personnel program is $326,500,000 and that much of that funding will be transferred out to support statewide salary actions. DLS flagged multiple issues in the personnel budget: rapid growth in prescription drug spending driven by specialty medications, timing gaps in agency reporting, an ongoing high number of vacant positions relative to budget assumptions, and potential differences between agency-requested funding for health insurance and the amounts shown in agency appendices.

DLS highlighted prescription drug spending as a major driver of cost growth. "Diabetes is a big driver of both healthcare and prescription costs, with antidiabetic drugs being the largest share of prescription drug costs for some time," Jacob Cash said, noting large growth in antidiabetic medication costs in fiscal 2023 and 2024 and changes in utilization after a rule limiting GLP-1 coverage in quarter 3 of fiscal 2024. DLS reported overall prescription drug costs up 13.6% from a year earlier and said three quarterly reports required by annual committee narrative were submitted late, limiting DLS's ability to estimate costs ahead of the fiscal 2026 budget cycle.

On the basis of those timing and data concerns, DLS recommended "adding budget bill language, restricting $100,000 pending receipt of future quarterly medical, dental, and prescription drug cost reports." That recommendation was included in DLS's list of recommended actions presented to the committee.

DLS also recommended reductions linked to salary funding and vacancy assumptions. The analysis showed executive-branch vacancies peaked near 6,500 in October 2022, fell to about 4,730 in April 2024, rebounded to 5,346 in October 2024 and then to 5,222 in the second quarter of fiscal 2025. DLS estimated roughly $140,000,000 in salary funding will not be needed because of vacancy trends and recommended reducing funding for salary actions by $85,200,000 in total funds to reflect a higher budgeted turnover rate (8.6%).

DLS asked DBM to explain a discrepancy it found in agency health insurance appendices: DLS identified a difference of at least $60,000,000 in fiscal 2026 that could require additional funding; DBM told DLS that nonbudgeted funds are available to fill that gap, and DBM and DLS agreed to follow up on the data discrepancy.

DLS also summarized the state's transition of retiree prescription drug coverage to Medicare Part D. Jacob Cash said about 56,595 retirees and dependents were on the state plan and that outreach identified roughly 1,933 additional Medicare-eligible retirees not previously covered by the state drug plan. DLS reported that about 84% of the total group enrolled through the state's vendor and that the transition is estimated to generate approximately $50,000,000 in first-year savings and $100,000,000 in future annualized savings.

Secretary Helene Grady, testifying for DBM, acknowledged the late report submissions and accepted the DLS recommendation on the quarterly reports. "DBM accepts this recommendation. I personally apologize for the late submissions over the past year," Grady said. Grady disputed several DLS budget-cut recommendations, saying negotiated collective bargaining agreements produced the fiscal 2026 1% COLA and that DBM did not concur with deleting that funding. "DBM feels strongly that our negotiated agreement should be honored," she said.

Grady also disputed the DLS vacancy-reduction recommendation, saying the governor's allowance already budgets for statewide reversion and turnover, and that general fund turnover is budgeted at 9.22% for the executive branch (excluding higher education), which she said is close to current trends. DBM described steps to reduce vacancies, including converting contractual positions to regular status and an initiative to recruit separating federal employees for state vacancies.

DLS recommended multiple specific budget actions in its write-up, summarized by the analyst as: restricting $100,000 pending quarterly reports; requesting annual narrative and agency closeout health insurance information; reducing funding for the 1% general salary increase and fiscal 2026 increments; requesting a funding breakdown for the supplemental retirement match; and reducing funds for vacancy savings. Jacob Cash closed by recommending the restricted $100,000 be released at the conclusion of the fiscal 2026 budget hearings if reports satisfy the committee's requirements.

Why this matters: The committee must reconcile DLS technical recommendations, DBM's negotiated labor commitments, and uncertainties in health and prescription cost forecasting as it finalizes fiscal 2026 appropriations. Prescription drug trends, vacancy-driven salary savings and the timing of agency reporting each affect near-term budget choices and the state's projected operating balance.

Recommended follow-ups and outstanding items noted by DLS and DBM include: clearer reconciliation of Appendix O health insurance figures across years, confirmation of the accounting for the supplemental retirement match funding, and timely submission of the quarterly medical, dental and prescription drug reports that DLS cited as late.

Provenance: Transcript testimony introducing the DLS presentation and the analyst's close were used to assemble this article. Topic introduction: Jacob Cash, Department of Legislative Services presentation (transcript segment beginning "For the record my name is Jacob Cash..." ). Topic finish: Jacob Cash concluding "That concludes my presentation and I'm happy to answer any questions you might have."