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Federal SNAP cost-share changes could expose Texas to up to $2 billion in state liability, HHSC warns
Summary
HHSC officials told the Senate Finance Committee that federal changes in HR1 shift administrative costs to states and tie future SNAP benefit shares to payment error rates; Texas' FY25 error rate puts the state at risk of a notable GR liability unless error rates fall.
The Health and Human Services Commission told the Senate Committee on Finance that new federal rules in HR1 fundamentally change the way administrative and (potentially) benefit costs for SNAP are shared, placing a significantly larger burden on states. Emily Zalkovsky, HHSC—s Medicaid and CHIP director, summarized the change: "Starting on October 1... the federal government will pay 25% of administrative costs with the state picking up 75%" and warned that the new benefit cost-share formula tied to payment error rates could create a state liability measured in the hundreds of millions to billions.
HHSC presented data showing Texas— 2025 payment error rate (9.34%) and early FY26 sampling that placed the state near the 10% tier that would trigger a material state benefit share. HHSC estimated a GR exposure of roughly $770 million (10% tier) up to $1.2 billion (15% tier) in a future year and summarized a range of total estimated additional GR needs of $1.7 billion to $2.1 billion for the coming biennium under current assumptions. "The combination of the cost share changes... is a need for an additional 1.7 to 2,100,000,000 in GR to continue SNAP in the next biennium," HHSC said.
HHSC told senators it is pursuing multiple avenues to reduce the payment error rate—better data sources, automation, frontline pre‑certification review, training and federal waivers (for robotic data capture and some automated case actions) —but cautioned that many changes take months to impact a retrospective federal quality-control sample. Members asked whether there are short-term flexibilities from USDA; HHSC said some waivers are pending and that CMS/USDA timing limits how much can be done before the next federal baseline is determined.
Why it matters: shifting federal cost responsibilities mean state budgets are now exposed to program accuracy (payment error rate) and HHSC told the committee that even modest error-rate changes translate into very large dollars owed by the state. The committee asked HHSC for follow-up on waiver status and for more granular analysis of the state funding exposure.
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