DHRM tells Senate panel state workforce steady but health‑plan costs climb, driven by GLP‑1 and specialty drugs

Department of Human Resource Management officials briefed the Senate General Government Subcommittee on workforce statistics and the condition of the state health plan, highlighting stable headcounts but rising health‑plan costs driven by recent increases in GLP‑1 and specialty drug use.

"Attracting and retaining our talent is is our number 1 focus," DHRM presenter Janet Lawson told senators at the hearing, opening an overview of fiscal‑year‑25 workforce data and plan trends. Lawson said the Commonwealth had just over 142,000 full‑time‑equivalent positions as of June 30, 2025, with roughly 58,000 classified staff and a statewide vacancy rate that dropped to about 12.97% after data cleanup related to the Cardinal HCM transition.

Lawson said turnover fell to 12.8% in FY25 and average time to hire decreased from about 78 to 68 days. She attributed earlier spikes in vacancy and turnover data to discrepancies created during the migration from the legacy PMIS system to Cardinal HCM and described a July–August data‑cleanup effort that adjusted reported vacancy figures.

On compensation, Lawson summarized the 2025 biennial compensation study (conducted with Deloitte), reporting that base salaries in the Commonwealth lag private‑sector benchmarks by about 16% and public peers by about 5% on average. The presentation recommended revisiting the statewide adjustment process, pursuing compensation modernization to address 25‑year‑old classification structures and targeting compression problems in lower pay bands.

Lawson turned to health benefits and said the state plan covers roughly 207,000 members and costs about $2.7 billion a year; DHRM projects costs may exceed $3 billion by FY27. She warned the Health Insurance Fund floor had been raised from $250 million to $282 million to ensure claim‑paying capacity and said the fund balance could fall as low as about $47 million by the end of FY26 if current trends continue. "We have been subsidizing premiums from the HIF, but at some point we're gonna have to pass that on to our employees," she said.

Pharmacy costs are the primary driver of the increase, Lawson said. DHRM showed that GLP‑1 drugs — used both for type‑2 diabetes and for weight loss — rose from roughly $30 million a year to about $200 million in aggregate spend between 2020 and 2024 (plan figures); for weight‑loss claims alone, the agency reported roughly 5,500 claims and $37 million in FY21 versus more than 107,000 claims and about $129 million in FY25. She added that specialty drugs account for roughly half of the drug spend while representing about 2% of plan users; top specialty drugs named included Humira and Dupixent.

Lawson said the Governor’s proposed budget includes plan changes and rate adjustments — noting an actuary recommendation near 19.9% but a more moderate budget proposal in the 13% range tied to plan‑design changes. DHRM is also exploring targeted plan design options such as a pharmacy deductible, encouraging biosimilars and pursuing partnerships (Lawson said discussions with Eli Lilly about GLP‑1 costs were ongoing).

Senators pressed DHRM for additional data. Several members asked for historical comparisons of pay‑gap figures and for recruitment acceptance metrics (offers accepted vs. rejected), and requested cost estimates for targeted raises to address high turnover roles such as security officers and LPNs. Lawson said she would coordinate with agencies (including corrections) to provide follow‑up data.

DHRM concluded by listing near‑term priorities: compensation modernization, an updated classification structure, expanded safety committees and a statewide employee engagement survey. "We will work with agencies to gather the data and share recommendations," Lawson said. The subcommittee adjourned after her testimony.