On Tuesday we shared about the big decisions Arkansas lawmakers need to make this spring to shore up the state’s SNAP program due to provisions from the One Big Beautiful Bill Act (H.R. 1) taking effect in the near future. Today, we’ll dig a little deeper into why it’s so important for our state to plan for SNAP cost shifts and understand the impact of SNAP payment error rates, and why we may regret not planning for these investments sooner rather than later.  

Let’s start with the impending SNAP administrative cost shifts. Beginning in October 2026, all states must cover 75% of SNAP administrative costs, a 50% increase from the past state share of administrative costs. This increase translates to at least an additional $18 million for Arkansas simply to run the program at its current capacity during state fiscal year 2027 (that amount will increase to approximately $25 million annually in the years thereafter). It is essential to make this investment so that technology is kept up to date and that there are enough staff at the Arkansas Department of Human Services (DHS) with sufficient training to continue processing SNAP applications and renewals accurately as well as calculate SNAP payment error rates.

In short, if we don’t set aside the $18 million to make up for what Congress shifted to Arkansas, we may owe more later because short-changing SNAP administration funding could lead to higher error rates later. As a quick refresher, the SNAP payment error rate is one piece of the program’s quality control system. It measures administrative inaccuracies, specifically, any over- and underpayments that a state makes when it issues SNAP benefits to families. For the majority of these errors, the family was eligible for SNAP but simply received an incorrect amount of SNAP benefits based on their circumstances. For any overpayments, families are required to pay the overage back to the state. Likewise, the state must make up the difference to families for any underpayments.

DHS must have enough funding to support the staffing and other operating costs to enhance the likelihood for the agency to correctly determine benefit amounts and conduct corresponding quality control processes like the payment error rate determinations. This administrative funding is crucial for a multitude of reasons, including the fact that the SNAP payment error rate will determine how much we owe for our portion of actual SNAP benefits paid to participants beginning in October 2027, as required by H.R. 1.

Using Arkansas’s most recent official SNAP payment error rate of 9.56% in Federal Fiscal Year (FFY) 2024, our state would have a 10% cost share, meaning we would need to invest approximately $55 million to absorb that initial benefit cost shift. Since H.R. 1 was signed into law, Arkansas DHS has increased its efforts to reduce its payment error rate as DHS officials testified at a recent legislative committee meeting, and they are seeing improvements. This is great news that will likely help us down the road. However, the unfortunate reality of H.R. 1 is that, while the SNAP benefit cost shift is still almost two years away, much of the data used to calculate the SNAP payment error rate for that first benefit shift is either already locked in or may have significant challenges.  

Why? For the initial SNAP benefit cost shift in October 2027, states will have the option to use either the FFY25 or FFY26 payment error rate to determine the state match. If Arkansas elects to use its FFY25 payment error rate, it will be released by the United States Department of Agriculture (USDA) in June 2026. That data is drawn from October 1, 2024-September 30, 2025. Keep in mind H.R. 1 became law in July 2025, so the state essentially had two months’ notice of this significant change and attached penalties.  

If Arkansas chooses to use its FFY26 payment error rate, that data set will be pulled from the period covering October 1, 2025-September 30, 2026. The state was well aware of the forthcoming implications of the SNAP payment error rate by October 1, 2025. However, the state will face additional challenges with FFY26 error rates given that a portion of this time period coincides with: 

• The 43-day federal government shutdown during which SNAP benefits were suspended and state SNAP agencies were forced to contend with rapidly shifting federal directives and a need to redirect staff and system capacity toward benefit issuance outside regular timeframes when the shutdown ended; and, 
• The implementation of the new H.R. 1 work requirements on November 1, 2025. Any time there are new program rules that staff must learn, the likelihood for errors increases during the initial roll-out, particularly considering that USDA did not issue final guidance on the new work requirements until October 2025.

Another challenge with using the FFY26 payment error rate: The USDA will not issue that rate until June 2027, barely four months before the SNAP benefit cost shifts take place. This leaves little to no time for the state to plan and make budget changes. As such, lawmakers must make a contingency plan sooner rather than later to ensure we have adequate funding appropriated for that initial cost shift in October 2027. If they do not, SNAP benefits could be reduced, SNAP eligibility requirements could be further restricted (Arkansas already has some of the most restrictive SNAP eligibility requirements in the nation), or — worst case scenario — the state could opt out of SNAP altogether.

After 2027, the state match for SNAP benefits will be based on the error rate from three years prior to the applicable year. You have that right. Each year we will find ourselves with a new payment error rate and potential corresponding state match. This creates a budgeting nightmare (particularly given Arkansas’s two-year budget cycle) but also a stronger argument for ensuring there is some level of annual appropriation made for SNAP benefit costs. This foresight will ensure that the approximately 240,000 Arkansans who rely on our most effective anti-hunger program are not suddenly without that food assistance and that local economies that benefit from SNAP are not upended.

Of note, DHS has consistently monitored and diligently worked to reduce its SNAP payment error rate even before the passage of H.R.1. The agency has also achieved payment error rates below 6% in some years prior to the COVID-19 pandemic (as discussed in Tuesday’s blog, states that achieve an error rate below 6% are not required to provide a match for SNAP benefits). As such, it is possible that DHS’s efforts to lower error rates prior to the law’s passage, combined with historical knowledge of lower payment error rates, may result in a state match less than $55 million, or even avoid a benefit cost shift altogether. But, once again, that is still to be determined, and state leaders have the responsibility to plan accordingly for potential benefit cost shifts so that families do not suddenly find themselves without SNAP benefits when the shifts take place.  

In the meantime, the success of DHS’s intensified efforts to reduce future SNAP payment error rates hinge, in part, on a consistently and fully funded agency. We cannot miss the opportunity during the upcoming fiscal legislative session to make the smart investment of $18 million in SNAP administrative costs. It is the right thing to do for kids, families, and our broader communities that depend on SNAP to keep food on the table, grocery prices affordable, and local businesses running.