THE SENATE	S.B. NO.	2668
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII

A BILL FOR AN ACT

relating to human services.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that community-based organizations across the State provide essential support services on behalf of the department of human services, including housing assistance, child and adult protective services, food security programs, vocational rehabilitation, and care for individuals facing homelessness or crisis. Some of these services are mandated by federal law, such as making home visits to foster children once a month. Others, such as outreach services to the homeless, are top priorities for the State.

Many of these state-contracted service providers have struggled to sustain programs because existing contract rates have remained stagnant for years and do not reflect the true cost of delivering care. Organizations have attempted to absorb these gaps through fundraising and reserves, but the widening mismatch between funding levels and community need threatens the long-term stability of these critical services.

Since 2010, rising costs have placed a significant financial burden on community-based organizations. In the last fifteen years, Hawaii's minimum wage almost doubled, and social worker salaries have increased by forty-five per cent. Premiums for state-required liability insurance have more than doubled due to higher claim costs and legal settlements. Additionally, rising fuel costs have increased transportation costs for workers or clients and the cost of commercial office space has also continued to rise.

The legislature further finds that some state contracts have been cut. The office of youth services has had to cut contracts with service providers by ten per cent, and has since only been able to restore these contracts by five per cent. Legislative budget cuts and non-recurring appropriations have also left the office of youth services with contract commitments exceeding their budget. Service providers have indicated they might be forced to end their contracts, which would leave the State's youth without safe housing and emergency services.

A 2022 survey of nonprofits with government human service contracts found that ninety-one per cent had contracts that did not cover the full operating costs required to provide the contracted services, with seventy-nine per cent having to cut administrative costs to maintain services. These community-based organizations also report trouble attracting and keeping experienced staff due to being unable to offer competitive wages. This situation is unsustainable and threatens the stability of Hawaii's social services infrastructure.

Accordingly, the purpose of this Act is to appropriate funds to the department of human services to issue supplemental contracts to community-based organizations to address increases in costs related to labor, insurance, utilities, rent, and gas.

SECTION 2. There is appropriated out of the general revenues of the State of Hawaii the sum of $           or so much thereof as may be necessary for fiscal year 2026-2027 for the department of human services to issue supplemental contracts to community-based organizations to address increases in costs related to labor, insurance, utilities, rent, and gas; provided that the funds shall be equitably distributed and allocated as follows:

(1) $           for child protective services (HMS 301);

(2) $           for adult protective and community care services (HMS 601);

(3) $           for vocational rehabilitation (HMS 802);

(4) $           for homeless services (HMS 224);

(5) $           for general support for child care (HMS 302);

(6) $           for general support for self-sufficiency services (HMS 903);

(7) $           for general support for health care payments (HMS 902); and

(8) $           for in-community youth programs (HMS 501).

The sum appropriated shall be expended by the department of human services for the purposes of this Act.

SECTION 3. This Act shall take effect on July 1, 2026.

INTRODUCED BY:

_____________________________

Report Title:

Community-based Organizations; Program Costs; Department of Human Services; Appropriation

Description:

Appropriates funds to the Department of Human Services to issue supplemental contracts to community-based organizations to address increases in costs related to labor, insurance, utilities, rent, and gas.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.