The Funding Cliff Nobody Is Talking About

On July 4, 2025, the president signed Public Law 119-21, commonly known as the One Big Beautiful Bill. The law made sweeping changes to the federal budget, including major revisions to the Supplemental Nutrition Assistance Program (SNAP).

The bill called for $186 billion in SNAP spending reductions over 10 years. Those savings were expected to come from expanded work requirements for families with teenage children and adults ages 55 to 64, a cap on future benefit increases like those seen during COVID, and new state cost-sharing requirements tied to payment error rates.

Much of the debate over the recent federal budget law has focused on work requirements, taxes, and other headline issues. But buried in the legislation is a change to SNAP funding that could have major consequences for millions of low-income families, independent grocers, and state governments.

This is not a fraud issue. It is not a waste issue.

It is about something called the SNAP payment error rate.

Each year, the USDA evaluates how accurately states administer SNAP. It reviews thousands of cases and calculates what is known as the payment error rate.

The term can be misleading. A payment error rate does not measure fraud. It reflects administrative mistakes in how states run SNAP, most of them honest errors by agency staff or applicants trying to navigate a complicated system.

Examples include miscalculating a household’s income or using outdated information to determine benefits. In most cases, SNAP payment errors are simply the result of paperwork being handled incorrectly.

State error rates vary widely, with some below 5% and others above 20%. My home state of Georgia is among the worst, along with Texas, Florida, and Alaska. Under the new law, states with payment error rates above 5% must begin covering part of SNAP benefit costs by October 2027. States with higher error rates will face larger financial obligations.

Strangely, the law includes a twist: states with the very highest error rates — above 10% — received a temporary extension that delays these new cost-sharing requirements.

In other words, some of the worst-performing states were given more time to improve, while states with more moderate error rates may have to start paying by the end of next year. And unlike the federal government, most states must balance their budgets and cannot simply run larger deficits to absorb the cost.

That means every additional dollar devoted to SNAP must come from somewhere else. The potential shortfalls are enormous. Estimates published after passage of the bill projected additional annual state SNAP obligations beginning in FY 2028 of roughly:

• Texas: about $1.18 billion
• Alabama: about $293 million
• Georgia: about $871 million
• Florida: about $1.72 billion

Those figures could force painful budget choices in many state capitals, especially in states with balanced-budget requirements. For grocers, the concern is not just the fiscal strain on states. It is also the possibility that states will respond by tightening administration, increasing verification requirements, or otherwise making it harder for eligible families to receive benefits.

Take Alabama as an example. Its recent error rate was 8.32%, and the state would need to significantly overhaul how it administers SNAP. Internally, the team running the program does not believe it can meet the deadline. Even a modest cost-sharing requirement could force the state to find tens or hundreds of millions of dollars elsewhere in its budget.

That is real money competing with priorities such as education, public safety, transportation, and health care.

This debate is often framed as a conflict between Washington, D.C. and the states, but that misses the real issue. If states cannot fix these problems in time and cannot afford to replace the lost federal support, millions of families could lose access to food assistance. As usual, the poorest Americans would suffer most.

If states cannot absorb the new costs, they will likely look for ways to cut administrative expenses and improve compliance, which may mean serving fewer eligible families.

That is especially troubling at a time when many households are still struggling with high food prices, housing costs, and economic uncertainty.

For independent grocers, SNAP is not just a government program. It is a vital source of food purchasing power in thousands of communities across the country.

When SNAP funding is stable, families eat better and local grocery stores stay stronger. When that funding becomes uncertain, entire communities feel the effects. With hundreds of millions of dollars in potential cuts across dozens of states, many local grocery stores could be forced to close.

I support efficiency and accountability. States should improve their systems, technology, and processes, and if they do, taxpayers, retailers, and families all benefit. But if they fail, the consequences will extend far beyond state budgets.

Imagine a classroom where the student who turned in homework late gets no extra time, but the students who never turned it in at all receive extensions. Does that seem fair? Does it make any sense?

That’s what we are doing, punishing the states with modest error rates and letting the worst offenders get extra time

That is effectively what this law does, especially to states with moderate error rates. I believe it should be changed so that all states have the same two-year window to reduce SNAP error rates — the same timeline given to Alaska, Georgia, and other states with the worst performance.

Give states time to fix their systems. Let them invest in better software and stronger programs, then hold them accountable for results. Treat every state fairly, apply the full 24-month extension more broadly, and give them a real chance to succeed.