Texas budget writers just got a nasty preview of 2027: state officials told lawmakers this week that new federal rules for the Supplemental Nutrition Assistance Program, or SNAP, could saddle Texas with roughly $700 million in penalties and push total added taxpayer costs to about $826 million. The hit combines steep penalties tied to payment errors with a much larger state share of program administration, and senators made it clear they want a plan to bring those error rates down before federal deadlines make the bill stick.
Texas Health and Human Services laid out the numbers in a presentation circulated ahead of an April 8 Senate Health and Human Services Committee hearing, according to The Texas Tribune. The agency projected about $709 million in payment-error penalties in 2027, on top of roughly $117 million in additional administrative costs under the federal changes, for a total of about $826 million. Agency leaders told lawmakers they intend to walk through how they currently detect fraud, curb overpayments, and where they believe the system is breaking down.
How The New Federal Rules Work
The looming penalties trace back to H.R. 1, the One Big Beautiful Bill Act, which rewired how SNAP is funded and policed. Congress.gov explains that starting in federal fiscal year 2027, the federal government will only reimburse 25% of SNAP administrative costs, leaving states to cover the remaining 75%. Then, beginning in FY 2028, any state with payment error rates above specific thresholds must start chipping in 5% to 15% of benefit costs as well.
Policy analysts at the Center on Budget and Policy Priorities argue that pairing a lower federal match for administration with new error penalties amounts to an unprecedented cost shift from Washington to state capitols. For Texas, which administers one of the largest SNAP caseloads in the country, that shift translates into hundreds of millions that will have to be found somewhere in the state budget.
Where Texas Stands On Payment Errors
USDA quality-control data show Texas recorded a combined SNAP payment error rate of 8.32% for fiscal year 2024, above the 6% cutoff that would shield the state from penalty matches and below the national average, according to the USDA’s FY 2024 payment-error table. These errors typically involve things like missing paperwork, delayed reporting, or swings in a household’s income rather than deliberate fraud, but under the new law those bureaucratic mistakes now come with a direct price tag.
The task in front of Austin is straightforward on paper and tough in practice: Texas will have to drag that 8.32% rate significantly closer to, or below, 6% if it wants to avoid being assessed a share of benefit costs starting in FY 2028. That likely means more staff time on verifications and redeterminations, better technology, or both, all while keeping benefits flowing to millions of eligible Texans without creating new bottlenecks.
What It Could Mean For Texans
The additional costs do not automatically cut off current benefits for eligible households, at least not right away. But Texas Health and Human Services figures cited by The Texas Tribune show just how many people are in the balance: SNAP currently serves about 3.5 million Texans, including roughly 1.7 million children, with households receiving on average nearly $400 per month on their Lone Star EBT cards.
To cover the new obligations, analysts say the state’s options are all politically sensitive. Lawmakers could shift money away from other programs, look for new revenue, narrow who can qualify for assistance, or pour money into systems and staff aimed at driving down error rates so the future penalties shrink. None of those choices is an especially easy sell, especially with a caseload this large and many families relying on those monthly food benefits.
Next Steps For Lawmakers
State officials are expected to outline specific corrective steps in committee hearings and follow-up briefings, including potential requests for more funding for caseworkers, call centers, and IT upgrades that could prevent overpayments before they happen. The Center on Budget and Policy Priorities notes that federal officials will rely on error data from FY 2025 or FY 2026 to set many of the later penalties, leaving Texas with only a short window to show measurable improvement.
That timeline gives lawmakers in Austin a clear, if uncomfortable, choice in the near term: find the money to fix the system now, try to secure waivers or flexibility from Washington, or brace to write some very large checks in 2027 and beyond.
