Federal Budget Changes to SNAP Could Cost Alabama Up to $261 Million
Why It Matters
Alabama faces a potential fiscal crisis in its Supplemental Nutrition Assistance Program (SNAP) after federal budget legislation introduced new cost-sharing penalties tied to state error rates. The changes could force Alabama to absorb between $174 million and $261 million in program costs it has never before been required to cover — straining a state budget already facing tighter revenue projections heading into 2028.
With more than 678,000 Alabamians currently enrolled in SNAP, the stakes extend well beyond government accounting. State lawmakers say there are no surplus funds available to cover the gap if the program’s error rate is not reduced in time.
What Happened
At a quarterly meeting of the Alabama Department of Human Resources (DHR) held on April 23, 2026, at the Gordon Persons Building in Montgomery, SNAP Director Brandon Hardin outlined the financial exposure created by the One Big Beautiful Bill Act (OBBBA). The federal legislation establishes a penalty structure for states that maintain high error rates in their SNAP programs.
Alabama’s current SNAP error rate stands at approximately 10%, placing it at the upper threshold of the penalty tiers. Under the new framework, states with error rates between 8% and 9.99% will be responsible for 10% of SNAP benefit costs, while states at 10% or above must cover 15%. The cost-sharing penalty takes effect on October 1, 2027, based on the state’s error rate at the close of fiscal year 2026.
Hardin noted that most errors stem from clients failing to report household changes that result in overpayments or underpayments — not fraud. DHR Commissioner Nancy Buckner said the agency submitted a waiver to the federal government requesting that only client errors — not county agency errors — be counted toward the rate, but that waiver was denied.
By the Numbers
Key figures from the DHR quarterly meeting:
- $174M–$261M — estimated additional annual cost to Alabama under the OBBBA penalty structure
- 10% — Alabama’s current SNAP error rate, at or above the highest penalty threshold
- 678,278 — Alabamians currently enrolled in SNAP, down roughly 44,200 from October 2025
- $148.4 million — amount appropriated by the Alabama Legislature, contingent on DHR reducing the error rate to 6% by October 1 or presenting a viable cost-coverage plan
- 8.32% — Alabama’s error rate for fiscal year 2024, which was below the national average of 10.93% at that time
Zoom Out
Alabama is not alone in facing this challenge. Hardin noted that officials from multiple other states have contacted Alabama to compare notes on managing error rates under the new federal framework. The OBBBA’s cost-sharing provisions represent a significant shift in how Washington structures SNAP accountability — pushing more financial responsibility onto states that fail to meet performance benchmarks.
The decline in SNAP enrollment is also connected to federal eligibility changes, including a requirement that able-bodied adults without dependents must document at least 80 hours per month of work or volunteer activity to remain eligible. The new work requirements align with longstanding conservative arguments that government assistance programs should incentivize self-sufficiency. As President Trump has signaled broader fiscal discipline across federal programs, states are being asked to absorb a larger share of social program costs.
State legislative fiscal officer Kirk Fulford warned lawmakers in January that 2028 is expected to be a “rock fight” for state budgets, as pandemic-era federal relief funds have expired. Senate Finance and Taxation General Fund budget chair Greg Albritton, R-Atmore, said plainly: “We don’t have the extra funds to fund it.”
The pressure on state budgets comes at a time when households are already navigating elevated costs. Gas prices have topped $4 per gallon in 18 states, adding economic strain that policymakers say complicates decisions about social program funding.
What’s Next
DHR has already implemented more than 15 policy changes aimed at driving down the error rate, according to Hardin. The state will not receive its official fiscal year 2025 error rate until June 2026, at which point officials will have a clearer picture of where Alabama stands relative to the penalty thresholds.
The critical benchmark is the error rate at the close of fiscal year 2026, which will determine Alabama’s penalty tier when cost-sharing begins on October 1, 2027. Lawmakers say DHR must either reduce the error rate to 6% or present a concrete plan to cover the funding shortfall before the Legislature releases the $148.4 million it has conditionally appropriated.
Albritton expressed cautious optimism, saying: “I remain optimistic that we’re gonna be OK. We’re not the only state facing this brick wall. Most states are.” State officials say they will continue working toward error-rate reduction while monitoring federal guidance on program implementation.