Possible End to SNAP Program in Some States within Next Few Years

Experts warn that tens of millions of Americans could once again face the loss of their Supplemental Nutrition Assistance Program (SNAP) benefits if a new cost-sharing rule takes effect in the federal governments 2028 fiscal year, beginning in October 2027. While many people are aware of the updated work requirements approved in the large tax-and-spending legislation passed on July 4, analysts say the true upheaval lies in the newly introduced cost-sharing mandate.

For the first time, states will be required to fund part of SNAP benefits starting in FY28, with their share tied to payment error ratesfigures that reflect how accurately states determine eligibility and benefit levels, including both overpayments and underpayments. Although states will not owe money until FY28, their required contributions will be based on error rates from FY25 and FY26. Early data indicates most states may face obligations running into hundreds of millions of dollarsmoney they simply do not have.

According to Lauren Bauer of the Brookings Institution, this shift will almost certainly force some states to dramatically reduce the number of people receiving SNAP and may drive others to withdraw from the program entirely.

The cost-sharing formula increases state obligations as error rates rise, except for states whose rates exceed 13.32%, which may receive up to two additional years of exemption. States with error rates below 6% will not owe any share of benefit costs.

The Congressional Budget Office has noted that states are expected to respond differently: some will try to maintain existing eligibility and benefit levels, while others may scale back or exit the program altogether if they cannot control error rates or afford their required contributions.

In June, 23 governors warned congressional leaders that the policy change could force them to dismantle their SNAP programs, putting millions at risk. Roughly 42 million Americansmore than 12% of the populationrely on SNAP, receiving around $6 per day on average. Nearly 40% of recipients are children. The recent 43-day government shutdown showed how difficult it became for families to afford food after missing a single month of benefits.

Economists caution that the impact will not be limited to SNAP households. States might slash funding in other budget areas or raise taxes to remain in the program. Persistently high error rates could also lead the U.S. Department of Agriculture (USDA) to suspend SNAP in a state by withholding federal funds until compliance is restored.

To prevent such outcomes, the National Governors Association has discussed strategies to reduce error rates, such as improving worker training, identifying where mistakes originate, and expanding the use of automation and AI. Two-thirds of states may still face penalties exceeding $100 million.

In FY24, the national average error rate reached 10.93%. Only South Dakota has kept its rate below 6% since 2003, according to Bauer. Meanwhile, states will soon shoulder another financial burden: beginning in FY27, their share of administrative costs will climb from 50% to 75%, leaving even fewer resources to manage error rates or absorb penalties.

As a result, states are expected to devote two to three times more of their budgets to SNAP, with a median increase of roughly 202%, according to Georgetown Laws Center on Poverty and Inequality. Federal savings would be substantial; for example, ending SNAP in Illinois alone could reduce federal spending by $56 billion annually.

Despite the potential savings, Bauer calls the new law a tremendously bad idea, expressing deep concern that Congress may have unintentionally jeopardized the entire program. The administration has shown no interest in delaying or relaxing enforcement, stressing its efforts to curb fraud. Reversing the policy would require Congress to pass new legislation.

Author: Zoe Harrison