County finance warns HR 1 could add $10.7M in ongoing costs, flags up to $128M CalFresh penalty exposure

San Bernardino County officials on March 24 laid out a conservative 2026–27 budget forecast and warned about a federal law change — HR 1 — that will alter how the state, counties and federal government share CalFresh administration costs and could expose the county to new penalties.

Chief Financial Officer Matthew Erickson told the Board of Supervisors the county’s projected assessed‑valuation growth for 2026–27 is about 2.23%, well below the 10‑year average of roughly 6.8%, creating downward pressure on discretionary revenue. Erickson and department staff warned that slow home‑sales activity and higher industrial vacancy rates are further constraining growth.

At the center of the board briefing was HR 1, signed by Congress in July 2025, which staff said changes the prior 50/50 federal/state sharing of administrative costs to a 25/75 federal/state split and, under existing law formulas, increases the counties’ share of the state portion. Human Services Assistant Executive Officer Gilbert Ramos told the board that San Bernardino’s net county share for CalFresh administration is expected to rise from 15% to about 22.5%, which county staff estimate will create roughly $10.7 million in ongoing net county costs once the change is fully effective.

Ramos also outlined a new federal penalty tied to state payment error rates (PER). Under HR 1’s tiered structure, states with PERs above certain thresholds could be required to pay a share of benefit costs; California’s PER was discussed as being over 10 percent in current estimates. If the state were held fully responsible and passed costs down, San Bernardino County staff estimated a theoretical exposure up to $128 million, though they stressed the range depends on how the state chooses to absorb or allocate penalties and on future PER calculations.

Deputy Executive Officer Robert Saldana and Erickson said the county has incorporated the $10.7 million figure into its five‑year forecast and conservatively added another $10 million to reflect uncertainty while staff and statewide partners press for mitigation at the state level. CEO Luther Snoke told the board the county is actively advocating through state associations to limit county exposure and that the county’s immediate battleground is at the state level.

Erickson also highlighted pension‑related sensitivities (a 1% shortfall in investment returns can represent roughly $4 million in five‑year costs to the general fund) and said roughly 60% of the county’s workforce will be in negotiations next year, a factor that could affect employee‑cost projections.

Erickson said the county plans a budget workshop May 5, intent to publish full budget documents on May 19, and a June 9 budget hearing and potential adoption. Board members thanked staff for the conservative approach and for elevating HR 1 as a state‑advocacy priority.

Provenance: County staff presentations and Q&A (topic introduced SEG 1696; discussion continued through SEG 2460).