AN ACT CONCERNING RESIDENTIAL CARE HOME RATES, FAIR RENT AND ADMINISTRATOR SALARIES.

House of Representatives
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General Assembly File No. 415
February Session, 2026 Substitute House Bill No. 5357

House of Representatives, April 7, 2026

The Committee on Human Services reported through REP.
GILCHREST of the 18th Dist., Chairperson of the Committee on
the part of the House, that the substitute bill ought to pass.

AN ACT CONCERNING RESIDENTIAL CARE HOME RATES, FAIR
RENT AND ADMINISTRATOR SALARIES.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:

Section 1. Subsection (i) of section 17b-340 of the 2026 supplement to 1
the general statutes is repealed and the following is substituted in lieu 2
thereof (Effective July 1, 2026): 3
(i) For the fiscal year ending June 30, 1993, any residential care home 4
with an operating cost component of its rate in excess of one hundred 5
thirty per cent of the median of operating cost components of rates in 6
effect January 1, 1992, shall not receive an operating cost component 7
increase. For the fiscal year ending June 30, 1993, any residential care 8
home with an operating cost component of its rate that is less than one 9
hundred thirty per cent of the median of operating cost components of 10
rates in effect January 1, 1992, shall have an allowance for real wage 11
growth equal to sixty -five per cent of the increase determined in 12
accordance with subsection (q) of section 17-311-52 of the regulations of 13
Connecticut state agencies, provided such operating cost component 14
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shall not exceed one hundred thirty per cent of the median of operating 15
cost components in effect January 1, 1992. Beginning with the fiscal year 16
ending June 30, 1993, for the purpose of determining allowable fair rent, 17
a residential care home with allowable fair rent less than the twenty -18
fifth percentile of the state-wide allowable fair rent shall be reimbursed 19
as having allowable fair rent equal to the twenty -fifth percentile of the 20
state-wide allowable fair rent. Beginning with the fiscal year ending 21
June 30, 1997, a residential care home with allowable fair rent less than 22
three dollars and ten cents per day shall be reimbursed as having 23
allowable fair rent equal to three dollars and ten cents per day. Property 24
additions placed in service during the cost year ending September 30, 25
1996, or any succeeding cost year shall receive a fair rent allowance for 26
such additions as an addition to three dollars and ten cents per day if 27
the fair rent for the facility for property placed in service prior to 28
September 30, 1995, is less than or equal to three dollars and ten cents 29
per day. Beginning with the fiscal year ending June 30, 2016, a 30
residential care home shall be reimbursed the greater of the allowable 31
accumulated fair rent reimbursement associated with real property 32
additions and land as calculated on a per day basis or three dollars and 33
ten cents per day if the allowable reimbursement associated with real 34
property additions and land is less than three dollars and ten cents per 35
day. For the fiscal year ending June 30, 1996, and any succeeding fiscal 36
year, the allowance for real wage growth, as determined in accordance 37
with subsection (q) of section 17-311-52 of the regulations of Connecticut 38
state agencies, shall not be applied. For the fiscal year ending June 30, 39
1996, and any succeeding fiscal year, the inflation adjustment made in 40
accordance with subsection (p) of section 17-311-52 of the regulations of 41
Connecticut state agencies shall not be applied to real property costs. 42
Beginning with the fiscal year ending June 30, 1997, minimum allowable 43
patient days for rate computation purposes for a residential care home 44
with twenty-five beds or less shall be eighty -five per cent of licensed 45
capacity. Beginning with the fiscal year ending June 30, 2002, for the 46
purposes of determining the allowable salary of an administrator of a 47
residential care home with sixty beds or less the department shall revise 48
the allowable base salary to thirty-seven thousand dollars to be annually 49
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inflated thereafter in accordance with section 17 -311-52 of the 50
regulations of Connecticut state agencies. The rates for the fiscal year 51
ending June 30, 2002, shall be based upon the increased allowable salary 52
of an administrator, regardless of whether such amount was expended 53
in the 2000 cost report period upon which the rates are based. Beginning 54
with the cost report year commencing on October 1, 2025, for the 55
purposes of determining the allowable salary of an administrator of a 56
residential care home with sixty beds or less, the department shall revise 57
the allowable base salary to seventy-five thousand dollars to be annually 58
inflated thereafter in accordance with section 17 -311-52 of the 59
regulations of Connecticut state agencies. Beginning with the fiscal year 60
ending [June 30, 2000, and until the fiscal year ending June 30, 2009, 61
inclusive, the inflation adjustment for rates made in accordance with 62
subsection (p) of section 17-311-52 of the regulations of Connecticut state 63
agencies shall be increased by two per cent, and beginning with the 64
fiscal year ending] June 30, 2002, the inflation adjustment for rates made 65
in accordance with subsection (c) of [said] section 17-311-52 of the 66
regulations of Connecticut state agencies shall be increased by one per 67
cent. Beginning with the fiscal year ending June 30, 1999, for the purpose 68
of determining the allowable salary of a related party, the department 69
shall revise the maximum salary to twenty -seven thousand eight 70
hundred fifty-six dollars to be annually inflated thereafter in accordance 71
with section 17 -311-52 of the regulations of Connecticut state agencies 72
and beginning with the fiscal year ending June 30, 2001, such allowable 73
salary shall be computed on an hourly basis and the maximum number 74
of hours allowed for a related party other than the proprietor shall be 75
increased from forty hours to forty -eight hours per work week. For the 76
fiscal year ending June 30, 2005, each facility shall receive a rate that is 77
two and one-quarter per cent more than the rate the facility received in 78
the prior fiscal year, except any facility that would have been issued a 79
lower rate effective July 1, 2004, than for the fiscal year ending June 30, 80
2004, due to interim rate status or agreement with the department shall 81
be issued such lower rate effective July 1, 2004. Effective upon receipt of 82
all the necessary federal approvals to secure federal financial 83
participation matching funds associated with the rate increase provided 84
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in subdivision (4) of subsection (f) of this section, but in no event earlier 85
than October 1, 2005, and provided the user fee imposed under section 86
17b-320 is required to be collected, each facility shall receive a rate that 87
is determined in accordance with applicable law and subject to 88
appropriations, except any facility that would have been issued a lower 89
rate effective October 1, 2005, than for the fiscal year ending June 30, 90
2005, due to interim rate status or agreement with the department, shall 91
be issued such lower rate effective October 1, 2005. Such rate increase 92
shall remain in effect unless: (1) The federal financial participation 93
matching funds associated with the rate increase are no longer available; 94
or (2) the user fee created pursuant to section 17b-320 is not in effect. For 95
the fiscal year ending June 30, 2007, rates in effect for the period ending 96
June 30, 2006, shall remain in effect until September 30, 2006, except any 97
facility that would have been issued a lower rate effective July 1, 2006, 98
than for the fiscal year ending June 30, 2006, due to interim rate status 99
or agreement with the department, shall be issued such lower rate 100
effective July 1, 2006. Effective October 1, 2006, no facility shall receive 101
a rate that is more than four per cent greater than the rate in effect for 102
the facility on September 30, 2006, except for any facility that would 103
have been issued a lower rate effective October 1, 2006, due to interim 104
rate status or agreement with the department, shall be issued such lower 105
rate effective October 1, 2006. For the fiscal years ending June 30, 2010, 106
and June 30, 2011, rates in effect for the period ending June 30, 2009, 107
shall remain in effect until June 30, 2011, except any facility that would 108
have been issued a lower rate for the fiscal year ending June 30, 2010, or 109
the fiscal year ending June 30, 2011, due to interim rate status or 110
agreement with the department, shall be issued such lower rate, except 111
(A) any facility that would have been issued a lower rate for the fiscal 112
year ending June 30, 2010, or the fiscal year ending June 30, 2011, due to 113
interim rate status or agreement with the Commissioner of Social 114
Services shall be issued such lower rate; and (B) the commissioner may 115
increase a facility's rate for reasonable costs associated with such 116
facility's compliance with the provisions of section 19a-495a concerning 117
the administration of medication by unlicensed personnel. For the fiscal 118
year ending June 30, 2012, rates in effect for the period ending June 30, 119
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2011, shall remain in effect until June 30, 2012, except that (i) any facility 120
that would have been issued a lower rate for the fiscal year ending June 121
30, 2012, due to interim rate status or agreement with the Commissioner 122
of Social Services shall be issued such lower rate; and (ii) the 123
commissioner may increase a facility's rate for reasonable costs 124
associated with such facility's compliance with the provisions of section 125
19a-495a concerning the administration of medication by unlicensed 126
personnel. For the fiscal year ending June 30, 2013, the Commissioner of 127
Social Services may, within available appropriations, provide a rate 128
increase to a residential care home. Any facility that would have been 129
issued a lower rate for the fiscal year ending June 30, 2013, due to interim 130
rate status or agreement with the Commissioner of Social Services shall 131
be issued such lower rate. For the fiscal years ending June 30, 2012, and 132
June 30, 2013, the Commissioner of Social Services may provide fair rent 133
increases to any facility that has undergone a material change in 134
circumstances related to fair rent and has an approved certificate of need 135
pursuant to section 17b -352, 17b-353, 17b-354 or 17b -355. For the fiscal 136
years ending June 30, 2014, and June 30, 2015, for those facilities that 137
have a calculated rate greater than the rate in effect for the fiscal year 138
ending June 30, 2013, the commissioner may increase facility rates based 139
upon available appropriations up to a stop gain as determined by the 140
commissioner. No facility shall be issued a rate that is lower than the 141
rate in effect on June 30, 2013, except that any facility that would have 142
been issued a lower rate for the fiscal year ending June 30, 2014, or the 143
fiscal year ending June 30, 2015, due to interim rate status or agreement 144
with the commissioner, shall be issued such lower rate. For the fiscal 145
year ending June 30, 2014, and each fiscal year thereafter, a residential 146
care home shall receive a rate increase for any capital improvement 147
made during the fiscal year for the health and safety of residents and 148
approved by the Department of Social Services, provided such rate 149
increase is within available appropriations. For the fiscal year ending 150
June 30, 2015, and each succeeding fiscal year thereafter, costs of less 151
than ten thousand dollars that are incurred by a facility and are 152
associated with any land, building or nonmovable equipment repair or 153
improvement that are reported in the cost year used to establish the 154
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facility's rate shall not be capitalized for a period of more than five years 155
for rate-setting purposes. For the fiscal year ending June 30, 2015, subject 156
to available appropriations, the commissioner may, at the 157
commissioner's discretion: Increase the inflation cost limitation under 158
subsection (c) of section 17-311-52 of the regulations of Connecticut state 159
agencies, provided such inflation allowance factor does not exceed a 160
maximum of five per cent; establish a minimum rate of return applied 161
to real property of five per cent inclusive of assets placed in service 162
during cost year 2013; waive the standard rate of return under 163
subsection (f) of section 17-311-52 of the regulations of Connecticut state 164
agencies for ownership changes or health and safety improvements that 165
exceed one hundred thousand dollars and that are required under a 166
consent order from the Department of Public Health; and waive the rate 167
of return adjustment under subsection (f) of section 17 -311-52 of the 168
regulations of Connecticut state agencies to avoid financial hardship. 169
For the fiscal years ending June 30, 2016, and June 30, 2017, rates shall 170
not exceed those in effect for the period ending June 30, 2015, except the 171
commissioner may, in the commissioner's discretion and within 172
available appropriations, provide pro rata fair rent increases to facilities 173
which have documented fair rent additions placed in service in cost 174
report years ending September 30, 2014, and September 30, 2015, that 175
are not otherwise included in rates issued. For the fiscal years ending 176
June 30, 2016, and June 30, 2017, and each succeeding fiscal year, any 177
facility that would have been issued a lower rate, due to interim rate 178
status, a change in allowable fair rent or agreement with the department, 179
shall be issued such lower rate. For the fiscal year ending June 30, 2018, 180
rates shall not exceed those in effect for the period ending June 30, 2017, 181
except the commissioner may, in the commissioner's discretion and 182
within available appropriations, provide pro rata fair rent increases to 183
facilities which have documented fair rent additions placed in service in 184
the cost report year ending September 30, 2016, that are not otherwise 185
included in rates issued. For the fiscal year ending June 30, 2019, rates 186
shall not exceed those in effect for the period ending June 30, 2018, 187
except the commissioner may, in the commissioner's discretion and 188
within available appropriations, provide pro rata fair rent increases to 189
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facilities which have documented fair rent additions placed in service in 190
the cost report year ending September 30, 2017, that are not otherwise 191
included in rates issued. For the fiscal year ending June 30, 2020, rates 192
shall not exceed those in effect for the fiscal year ending June 30, 2019, 193
except the commissioner may, in the commissioner's discretion and 194
within available appropriations, provide pro rata fair rent increases to 195
facilities which have documented fair rent additions placed in service in 196
the cost report year ending September 30, 2018, that are not otherwise 197
included in rates issued. For the fiscal year ending June 30, 2021, rates 198
shall not exceed those in effect for the fiscal year ending June 30, 2020, 199
except the commissioner may, in the commissioner's discretion and 200
within available appropriations, provide pro rata fair rent increases to 201
facilities which have documented fair rent additions placed in service in 202
the cost report year ending September 30, 2019, that are not otherwise 203
included in rates issued. For the fiscal year ending June 30, 2022, the 204
commissioner may, in the commissioner's discretion and within 205
available appropriations, provide pro rata fair rent increases to facilities 206
that have documented fair rent additions placed in service in the cost 207
report year ending September 30, 2020, that are not otherwise included 208
in rates issued. For the fiscal year ending June 30, 2023, the 209
commissioner may, in the commissioner's discretion and within 210
available appropriations, provide pro rata fair rent increases to facilities 211
which have documented fair rent additions placed in service in the cost 212
report year ending September 30, 2021, that are not otherwise included 213
in rates issued. For the fiscal years ending June 30, 2022, and June 30, 214
2023, a facility may receive a rate increase for a capital improvement 215
approved by the Department of Social Services, for the health or safety 216
of the residents during the fiscal year ending June 30, 2022, or June 30, 217
2023, only to the extent such rate increases are within available 218
appropriations. For the fiscal year ending June 30, 2022, and June 30, 219
2023, rates shall be based upon rates in effect for the fiscal year ending 220
June 30, 2021, inflated by the gross domestic product deflator applicable 221
to each rate year, except the commissioner may, in the commissioner's 222
discretion and within available appropriations, provide pro rata fair 223
rent increases to facilities which have documented fair rent additions 224
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placed in service in the cost report years ending September 30, 2020, and 225
September 30, 2021, that are not otherwise included in rates issued. For 226
the fiscal years ending June 30, 2024, and June 30, 2025, a facility may 227
receive a rate increase for a capital improvement approved by the 228
Department of Social Services, for the health or safety of the residents 229
during the fiscal year ending June 30, 2024, or June 30, 2025, only to the 230
extent such rate increases are within available appropriations. For the 231
fiscal year ending June 30, 2024, the department shall determine facility 232
rates based upon 2022 cost report filings subject to the provisions of this 233
section, adjusted to reflect any rate increases provided after the cost 234
report year ending September 30, 2022. There shall be no increase to 235
rates based on any inflationary factor for the fiscal year ending June 30, 236
2024. For the fiscal years ending June 30, 2026, and June 30, 2027, a 237
facility may receive a rate increase for a capital improvement approved 238
by the Department of Social Services, for the health or safety of the 239
residents during the fiscal year ending June 30, 2025, June 30, 2026, or 240
June 30, 2027, only to the extent such rate increases are within available 241
appropriations. Notwithstanding any other provisions of this chapter, 242
[any subsequent increase to allowable operating costs, excluding fair 243
rent, shall be inflated by the gross domestic product deflator when 244
funding is specifically appropriated for such purposes in the enacted 245
budget. The rate of inflation shall be computed by comparing the most 246
recent rate year to the average of the gross domestic product deflator for 247
the previous four fiscal quarters ending March thirty-first] for the fiscal 248
year beginning July 1, 2026, and each fiscal year thereafter, the inflation 249
index shall be computed to reflect inflation between the midpoint of the 250
cost year through the midpoint of the rate year. Any rebasing of rates 251
shall include a stop loss so that no provider's rate is reduced as a result 252
of the rebasing. The commissioner shall determine whether and to what 253
extent a change in ownership of a facility shall occasion the rebasing of 254
the facility's costs. For the fiscal year ending June 30, 2027, an 255
inflationary adjustment of three per cent shall be added to the base rate 256
for all residential care homes . Any increase to rates based on inflation 257
shall be applied prior to the application of any other budget adjustment 258
factors that may impact such rates. [The commissioner shall determine 259
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whether and to what extent a change in ownership of a facility shall 260
occasion the rebasing of the facility's costs. There shall be no inflation 261
adjustment during a year in which a facility's rates are rebased.] For the 262
fiscal year ending June 30, 2024, the commissioner may, in the 263
commissioner's discretion and within available appropriations, provide 264
pro rata fair rent increases to facilities that have documented fair rent 265
additions placed in service in the cost report year ending September 30, 266
2022, that are not otherwise included in rates issued. For the fiscal year 267
ending June 30, 2025, the commissioner may, in the commissioner's 268
discretion and within available appropriations, provide pro rata fair 269
rent increases to facilities that have documented fair rent additions 270
placed in service in the cost report year ending September 30, 2023, that 271
are not otherwise included in rates issued. For the fiscal year ending 272
June 30, 2026, the commissioner may, in the commissioner's discretion 273
and within available appropriations, provide pro rata fair rent increases 274
to facilities that have documented fair rent additions placed in service 275
in the cost report year ending September 30, 2024, that are not otherwise 276
included in rates issued. For the fiscal year ending June 30, 2027, [the 277
commissioner may, in the commissioner's discretion and within 278
available appropriations, provide pro rata fair rent increases to facilities 279
that have documented fair rent additions placed in service in the cost 280
report year ending September 30, 2025, that are not otherwise included 281
in rates issued] a residential care home with allowable fair rent less than 282
five dollars per day shall be reimbursed as having allowable fair rent 283
equal to five dollars per day. Any new fair rent additions placed in 284
service on or after October 1, 2023, shall be added to the rate currently 285
in effect. For the fiscal year ending June 30, 2027, and each fiscal year 286
thereafter, allowable fair rent shall be based on those documented fair 287
rent additions placed in service and reported in the immediately 288
preceding cost report year ending on September thirtieth. 289
This act shall take effect as follows and shall amend the following
sections:

Section 1 July 1, 2026 17b-340(i)

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Statement of Legislative Commissioners:
The title was changed; and "Beginning on October 1, 2025," was changed
to "Beginning with the cost report year commencing on October 1, 2025,"
for clarity.

HS Joint Favorable Subst. -LCO

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The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of
the General Assembly, solely for purposes of information, summarization and explanation and do not
represent the intent of the General Assembly or either chamber thereof for any purpose. In general,
fiscal impacts are based upon a variety of informational sources, including the analyst’s professional
knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final
products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note

State Impact:
Agency Affected Fund-Effect FY 27 $ FY 28 $
Social Services, Dept. GF - Cost up to $3
million
up to $3
million
Social Services, Dept. GF - Cost See Below See Below
Note: GF=General Fund

Municipal Impact: None
Explanation
The bill results in a cost to the Department of Social Services (DSS)
associated with adjusting rates for residential care homes (RCHs).
The bill applies a 3% inflationary adjustment to RCH rates in FY 27
and increases the allowable base salary for administrators in homes with
up to 60 beds, resulting in a cost of up to $3 million in FY 27 and FY 28.
DSS will incur additional costs associated with (1) including a stop loss
so that no provider's rate is reduced as a result of rebasing, and (2)
increasing reimbursements related to fair rent.
The bill also changes the basis for the calculation of annual inflation
rates by requiring an unspecified inflation index be computed to reflect
inflation between the midpoint of the cost year through the midpoint of
the rate year. Under current law, the rate of inflation is calculated by
comparing the most recent rate year to the average of the gross domestic
product deflator for the previous four fiscal quarters ending 3/31. The
impact of this change is unclear.
The Out Years
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The annualized ongoing fiscal impact identified above would
continue into the future subject to inflation.

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OLR Bill Analysis
sHB 5357

AN ACT CONCERNING RESIDENTIAL CARE HOME RATES, FAIR
RENT AND ADMINISTRATOR SALARIES.

SUMMARY
This bill makes various changes affecting residential care home
(RCH) rates.
It increases state financial support to RCHs through adjustments in
their State Supplement Program rates. For the cost report year starting
on October 1, 2025, the bill increases the allowable base salary for
administrators in homes with up to 60 beds from $63,407 to $75,000
(subject to future annual inflationary adjustments). By law, DSS
generally sets new rates for RCHs effective each July 1 based on the
home’s allowable costs, including administrator salaries, it reports
(from the prior October to September). The bill also requires DSS, for FY
27, to increase each RCH’s base rate by 3%.
Current law requires DSS to calculate annual inflation rates for RCHs
by comparing the most recent rate year to the average gross domestic
product (GDP) deflator for the four fiscal quarters ending March 31.
Current law requires this calculation (1) for allowable operating costs,
excluding fair rent, and (2) when funding is specifically appropriated
for this purpose. Starting in FY 27, the bill instead requires DSS to
calculate inflation rates using an index (the bill does not specify which
one) that reflects inflation between the midpoint of the cost year through
the midpoint of the rate year. In doing so, the bill appears to give RCHs
a nine-month period of inflation adjustments rather than 12 months as
under current law.
Additionally, the bill requires DSS to include a stop loss when
rebasing an RCH’s rate so that the home’s rate is not reduced because of
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it. It also allows DSS to adjust a home’s rate for inflation during a year
it is rebased, which current law prohibits.
Lastly, the bill increases the minimum allowable fair rent increase
from $3.10 to $5.00 per day for FY 27 . It requires DSS to give fair rent
increases to RCH’s current rates for any new fair rent additions placed
in service on or after October 1, 2023. It also allows RCHs to receive rate
increases for FYs 26 and 27 based on FY 25 capital improvements
approved by DSS for resident health or safety.
Current law allows the DSS commissioner, in her discretion and
within available appropriations, to give prorated fair rent increases to
facilities for FY 27 for these additions placed in service in the 2025 cost
report year. The bill instead requires DSS, starting in FY 27, to base
allowable fair rent increases on additions placed in service in the prior
cost report year.
EFFECTIVE DATE: July 1, 2026
COMMITTEE ACTION
Human Services Committee
Joint Favorable
Yea 23 Nay 0 (03/19/2026)