Overview
- The U.S. Department of Agriculture’s FY2025 payment-error report, released on June 24, showed a national improper payment total of $10.1 billion and a 10.62% error rate, which sets the baseline for the new state cost-sharing rules.
- Under the One Big Beautiful Bill Act, states with payment error rates above 6% will face tiered matches on SNAP benefit costs ranging from 5% to 15%, and the FY2025 results put 41 states plus Washington, D.C. at risk of owing money.
- Several states have already estimated large liabilities from the report, with Minnesota projecting roughly $250 million over two years, Arizona and Montana forecasting multi‑million exposures, and Ohio and others budgeting tens to hundreds of millions.
- States are responding by funding modernization, hiring and verification changes to lower error rates, while food banks, advocates and affected families warn that tighter rules and administrative strain have already removed tens of thousands from benefits and could deepen food insecurity.
- The law also shifts more administrative costs to states, includes an Alaska carveout that temporarily shields very high‑error states, and creates incentives that may change how agencies count and correct errors as they race to avoid October 2027 penalties.