Hi Sikha,
You can use the selectable object property in the reference selector, and constraint the date to be displayed in the dropdown you can either use microflow or xpath query to show the data in dropdown.
Thanks
U need to put the whole thing inside a data view[of a dummyobject may be]
then on change of department refresh this dummy entity[add it as param of on change microflow].
Once you refresh the dummy entity the selectable object microflow would be retriggered [make sure that dummy object is a param to this selectable object microflow]in this microflow fetch the department and then from the department fetch users and return them.
In principle if a parameter object of a Datasource Microflow is changed[and change is published] the microflow would be retriggered and data will refresh.