House Agriculture Committee Proposal Would Worsen Hunger, Hit State Budgets Hard

The House Agriculture Committee reconciliation bill would radically alter the structure of Supplemental Nutrition Assistance Program (SNAP) benefits by requiring states to pay a portion of food benefit costs for the first time.

For the almost 50-year history of the modern SNAP program, the program’s food benefits have been 100 percent federally funded. This was a policy choice reflecting a nationwide commitment to address hunger and ensure that all eligible low-income households receive a food benefit that allows them to afford an adequate diet, no matter which state they live in. This proposal walks away from that national commitment.

State officials across the country have been clear that this cut to federal funding will result in significant harm to low-income people: cuts to food benefits, eligibility restrictions that cut people off SNAP entirely, or both.^[1] Because SNAP is an optional program for states, these deep federal funding cuts may result in some states opting to end SNAP entirely if they are unable to come up with the state funds required to fill the hole left by deep federal cuts.

All States Would Face Significant Cost-Shift, Many Would Face Far Worse Penalties

The House Agriculture Committee proposal would require all states to pay a minimum of 5 percent of food benefit costs starting in 2028. (See Table 1 for estimates of state-by-state impacts.) This requirement alone would substantially strain state budgets and likely lead to deep cuts to food assistance.

If every state had needed to pay 5 percent of food benefit costs last year, states would have needed to collectively pay about $4.7 billion. As just one example, 5 percent of food benefit costs in Pennsylvania last year would have totaled about $210 million — roughly three-quarters of what the state spent on community colleges.

But every state would be at risk of owing far more — potentially up to 5 times that amount — based on its combined payment error rate, a measure of the under- and over-payments states made in their SNAP programs. Errors largely reflect unintentional mistakes by state workers and households, and the vast majority of households that receive overpayments were indeed eligible for food assistance — they just received an incorrect allotment.^[2]

States with an error rate of 6 to 8 percent would owe 15 percent of food benefit costs; states with an error rate of 8 to 10 percent would owe 20 percent, and states with an error rate exceeding 10 percent would owe 25 percent.

Over the last two decades, every state except one — South Dakota — has had an error rate exceeding 6 percent for at least one year. Put another way, virtually every state is at risk of paying for 15 percent of food benefits or more under the proposal in at least some years.

These cost-shift penalties would be extreme and disproportionate. (See Table 2.) Because the penalties are based on a state’s combined error rate, a state with an overpayment rate of 5 percent and an underpayment rate of 1 percent would subsequently owe 15 percent of food benefit costs — three times what the state overpaid to households. The bill also maintains the current penalty structure for states with persistently high error rates on top of requiring states to pay a large share of benefit costs.

It is important to note that state error rates vary from year to year. From one year to the next, a state would not know with any certainty whether it would be required to pay 5 percent of benefit costs, 15 percent, or even more. A state whose error rate rises from 5.6 percent to 6.0 percent would see the amount it is required to pay increase 300 percent.

Other Bill Provisions Increase Likelihood that States Will Owe Higher Cost-Shift Penalties

Other changes in this bill would substantially increase the risk that a state must pay these substantially higher amounts. First, the bill cuts in half the federal funding states receive for program administration — including eligibility determinations, quality control reviews, and fraud investigations — immediately upon enactment. This alone would leave a $27 billion hole in state budgets from 2026 to 2034, the Congressional Budget Office (CBO) estimates.^[3] States that have been making progress to improve payment accuracy by investing in staff, training, and technology upgrades may be forced to pull back on those investments given the sharp and immediate cut in federal program administration funding.

Second, the bill also expands what counts as an error, increasing the payment error rate for every state and potentially tipping a state over the threshold to owe substantially more.

Finally, other provisions in the bill would substantially increase the administrative burden on states and increase the risk of errors. These include dramatically expanding SNAP’s harsh and complex work requirement to an estimated 6 million additional low-income adults and eliminating an administrative simplification in calculating utility costs for many households.^[4]

This combination — policy changes that make errors more likely, slashing federal resources for states to reduce errors, and adding unprecedented and disproportionate error rate penalties — would align states’ incentives in one direction: to erect barriers that make it much harder for low-income people who are eligible for food assistance to access it. Such barriers could fall disproportionately on working families, who are more likely to have volatile income due to the unstable nature of low-paying work.

In Table 1 below, we estimate the range of what each state would owe in 2028 under this cost-shift proposal, though these estimates do not fully account for other provisions of the bill that would directly cut food benefits and terminate eligibility for many SNAP participants, reducing each state’s obligation. Table 2 lists states’ most recent (fiscal year 2023) payment error rates — which were higher than usual due to issues that arose during and in the aftermath of the pandemic — as well as the lowest and highest level each state’s combined payment error rate has been since 2003 to illustrate that all states are at risk of these extreme penalties.