Chairman Nelson and members of the committee: North Dakota could face a new, recurring state cost for food assistance benefits if the state's SNAP payment error rate remains above federal thresholds, Human Services Division staff told the Legislative interim committee.

Jessica Thomason, Human Services Division, said H.R.1 and subsequent USDA guidance make a state's payment error rate the basis for a partial state share of SNAP benefits starting in federal fiscal year 2028 if the state's rate exceeds 6 percent. "Our federal fiscal year '24 rate was 7.91%," Thomason said, citing the most-recent federal calculation. "That would put us in the 5% bucket. That would mean just over $5,900,000 per year would be the state's share of food assistance benefits."

The change reverses a long-standing structure under which 100 percent of SNAP benefits have been federally funded; under the new formula states with higher error rates pay a portion of benefits on a 0/5/10/15 percent tiered scale determined by the federal payment error rate. Thomason said USDA required states to implement program changes brought by H.R.1 immediately (the law was signed July 4), but temporarily will not count implementation errors for 120 days; North Dakota is working toward an internal November 1 implementation target.

Why it matters: SNAP is the largest federal nutrition program for low-income households. A state payment obligation would be new and could exceed several million dollars annually, depending on benefit volume and the state's error rate. Thomason told lawmakers the state's FY2024 payment error rate (7.91%) would place North Dakota in the 5% cost-share tier if that rate were the basis for an FY2028 calculation.

What officials said they will do: Thomason outlined a two-track strategy to lower errors during the "period of influence" that begins the week after the committee meeting: near-term, non-technology steps that start immediately (process changes, peer review and "quality at the source" checks that intercept errors before authorization), and longer-term systems fixes to the eligibility software. She said the quality-assurance checks will initially sample roughly 5 percent of cases and will flag cases immediately after a worker authorizes them so a reviewer can send back corrections before benefits are finalized.

The department also plans outreach to neighboring states and to USDA for technical exchange; Thomason said North Dakota is contacting peers such as South Dakota and Wyoming to compare approaches that yielded lower error rates. Lawmakers pressed for case-level follow-up after a committee member described a constituent whose household lost benefits while documentation was reviewed.

Background details: Average monthly SNAP distribution in the state is about $9.98 million to roughly 25,000 households (about 51,000 people), the department said. Payment error rate calculations compare a federal sample of reviewed cases against benefits issued; a higher rate reflects overpayments or underpayments arising from worker-processing errors, client reporting errors, or increasingly complex income and self-employment reporting.

Officials cautioned that significant progress will require both improved frontline processing and software support. "There is no magic solution to this," Thomason said. "It's the hard work of making sure you have quality at the source and supporting workers while we deploy systems changes."