Senate Bill No. 1547 establishes a framework for annual inflationary increases in payment rates for nonprofit human services providers that contract with the state. The bill defines "nonprofit human services provider" to include organizations that offer services for individuals with physical, intellectual, or developmental disabilities, as well as behavioral health services. It mandates that state agencies increase salary or payment rates for employees of these providers by July 1 each year, based on the percentage increase in the consumer price index (CPI) for urban wage earners and clerical workers from the previous calendar year. Additionally, the Commissioner of Social Services is required to adjust Medicaid rates for these providers in accordance with the same CPI increase, unless restricted by federal law.

Furthermore, the bill requires the Secretary of the Office of Policy and Management to submit a report every two years, starting January 1, 2026, detailing the appropriations necessary to support these increases. The fiscal impact of the bill is significant, with estimated costs of approximately $60 million in FY 26 and FY 27, including $45 million specifically for Medicaid expenditures. The bill is expected to generate an additional $17.2 million in federal grants revenue due to the increased Medicaid expenditures. Overall, the legislation aims to ensure that nonprofit human services providers can maintain competitive compensation for their employees in light of inflation.