A pay-raise provision buried in Kansas's budget bill will reshape your labor market starting next fiscal year.
Most health services owners in Kansas don't realize that HB2513—a sprawling appropriations bill signed into law—contains a provision that will directly affect their payroll decisions and hiring competition.
Here's what's happening: Kansas is mandating a 1% across-the-board pay increase for all state employees, effective with the first payroll period chargeable to fiscal year 2027. That means the increase kicks in on or after July 1, 2026. The state is funding this with a $13.2 million general fund appropriation.
If you contract with the state to provide staffing or bill services at state wage rates, your costs will rise immediately. But the ripple effect goes deeper.
State wages set a market signal. When Kansas raises what it pays employees, private employers in the same labor market—including health services providers—typically must match or come close to those rates to retain workers and attract new hires. A 1% increase may sound modest, but across your workforce it compounds quickly. For a health services organization with 50 employees at an average salary of $45,000, a 1% raise costs roughly $22,500 annually.
The timing matters too. July 2026 is less than a year away. If you're planning your 2026 budget, you should already be factoring in competitive wage pressure from this state increase.
This is especially relevant for health services providers who compete for nurses, therapists, home health aides, and administrative staff. State agencies—including the Kansas Department of Health and Environment and state hospitals—are major employers in the health sector. When they raise wages, private clinics, home care agencies, and small hospital systems feel the pressure immediately.
The provision doesn't require private employers to match the state increase. But market forces do. If a state-employed nurse gets a raise and a private clinic nurse doesn't, the clinic loses talent. Turnover costs in health services are steep: recruiting, training, and lost productivity often exceed 50% of an annual salary.
Review any state contracts you hold to understand how wage rate changes flow through your pricing. If you bill the state at prevailing wage rates, clarify whether those rates will adjust upward on July 1, 2026. If you don't have that language locked in, negotiate it now.
For your own workforce planning, assume you'll need to raise wages competitively sometime in the second half of 2026, even if you don't contract with the state. Benchmark your current salaries against state rates in your region and your sector. If you're already below state wages, the gap will widen.
The legal citation for this provision is Section 149(g)(1) on page 264 of HB2513.
For a detailed breakdown of how this affects specific health services sectors and contract types, consult your trade association or a business advisor familiar with Kansas state contracting.