Why It Matters
Alabama could owe between $174 million and $261 million to cover a portion of food assistance benefits under new federal rules that penalize states with high administrative error rates. The state currently lacks the funds to absorb the cost, forcing officials to scramble for policy fixes or face cuts to other services.
The penalty stems from the One Big Beautiful Bill Act, which requires states with error rates above 8% to pay between 10% and 15% of SNAP benefits starting in fiscal year 2028. Alabama’s current error rate hovers around 10%, placing it in the higher penalty tier.
What Happened
Brandon Hardin, director of Alabama’s SNAP program, told the state Department of Human Resources on Thursday that federal changes will impose significant new costs on the state. The penalty takes effect Oct. 1, 2027, and will be based on Alabama’s error rate at the end of fiscal year 2026.
Errors in the SNAP program typically involve clients overpaying or underpaying for benefits because they failed to report changes in household circumstances. The errors are not necessarily fraud, Hardin said, noting that 75% of errors in October stemmed from client mistakes rather than county agency missteps.
State officials sought a federal waiver to exclude county agency errors from the calculation, but the request was denied. Commissioner Nancy Buckner confirmed the rejection at the quarterly meeting.
By the Numbers
Alabama currently serves 678,278 residents through SNAP, down about 44,200 from October following federal eligibility changes. The state’s error rate in fiscal year 2024 was 8.32%, below the national average of 10.93%.
The Legislature appropriated $148.4 million in contingency funding, but the money will only be released if the state lowers its error rate to 6% by Oct. 1 or develops a plan to cover the federal funding cuts. Lawmakers say the state does not have the additional $174 million to $261 million required if the error rate remains high.
For every meal provided by food banks, SNAP provides nine, Hardin said, underscoring the program’s importance in the state’s safety net.
Zoom Out
Alabama is not alone in confronting the new federal penalty structure. Hardin said other states have reached out to Alabama with questions about error rates, and Alabama has done the same with peer states.
The penalty comes as states face tighter budgets following the expiration of pandemic-era relief funds. Kirk Fulford, Alabama’s legislative fiscal officer, told lawmakers in January to be conservative with spending and warned that 2028 will be a difficult budget year.
What’s Next
Alabama officials say they have already made more than 15 significant policy changes to reduce the error rate. The state will not receive its final error rate for fiscal year 2025 until June, making planning difficult because quality control data runs six months behind real-time activity.
Senate Finance and Taxation General Fund budget chair Greg Albritton said the state does not have surplus funds to cover the penalty. If the error rate does not drop, the Department of Human Resources will need to find alternative ways to serve recipients or face reductions in other areas.
Albritton said lawmakers remain focused on funding agencies and delivering services, but warned that the approach may need to change as revenue declines.