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Oregon warns HR1 will require large IT and staffing investments to avoid SNAP/Medicaid penalties
Summary
ODHS and OHA told the subcommittee HR1 (the Federal Reconciliation Act) tightens SNAP and Medicaid rules, increases state administrative and cost‑share obligations, and will likely cost the state hundreds of millions in IT, staffing and operational investments unless early mitigation reduces SNAP payment errors and churn.
Agency leaders from the Oregon Department of Human Services and Oregon Health Authority told the subcommittee that HR1 (the Federal Reconciliation Act, effective July 4, 2025) creates significant immediate and multi‑year operational demands on state eligibility systems and staffing.
Nathan (Nate) Singer, Oregon Eligibility Partnership director, said HR1 raises the stakes for SNAP payment accuracy and Medicaid administration. "For Oregon and federal fiscal year 2024, a payment error rate was 14.06%," Singer noted, warning that states above federal thresholds can be assessed a share of SNAP benefit costs. The agencies told legislators Oregon’s current exposure if error rates hold could be roughly $250,000,000 a year in SNAP cost‑sharing at higher thresholds; agencies said targeted investments could materially reduce that exposure.
ODHS asked the committee to consider near‑term investments to update eligibility systems, expand staffing (they modeled up to ~400 additional positions across agencies for implementation and ongoing operations), upgrade call and EBT security systems, and deploy AI and analytics tools to reduce manual workloads and payment errors. Rob Koduri said the agencies collectively had a general‑fund implementation request near $339,000,000 in the current presentation, and noted the number is being refined.
Agencies emphasized many costs are one‑time modernization investments but warned recurring staffing and maintenance needs will roll into future biennia. They urged early legislative action to avoid compounding liabilities: "This is a cost avoidance strategy, not an expansion," Nathan Singer said. The Legislative Fiscal Office recommended deferring action until the 2026 session to allow LFO and agencies to refine estimates; the subcommittee approved the recommendation to defer.
