Federal error-rate data, state budget records and legislative testimony show how a 2025 law is already shifting CalFresh costs to Sacramento and the counties, why California would pay sooner than several states with worse records, and what the state is doing to bring its rate down.
By Staff Reporter
For six decades, Washington has paid the full cost of the food benefits that low-income Americans receive through the Supplemental Nutrition Assistance Program. Beginning in October 2027, under the budget law President Trump signed in July 2025, it will stop doing so for most states, and the share each state pays will depend on a single number: how often it miscalculates benefits.
For California, the stakes are about $2 billion a year, according to the Legislative Analyst’s Office. The federal fiscal year that will most likely determine the state’s first bill ended on Sept. 30. Its results will not be published until next summer.
Meanwhile, the first part of the cost shift has already arrived. On Oct. 1, the federal share of the cost of administering the program fell to 25 percent from 50 percent, leaving California and its 58 counties to cover the rest of the cost of running CalFresh, as the state calls the program, at a time when they are also putting in place new work requirements under the same law.
An Inquirer review of the federal government’s newest state-by-state error rates, the analyst’s office reports and testimony prepared for the Legislature shows how the new rules will reach California, why the state is likely to pay earlier than several states with higher error rates, and how much of the outcome now depends on county eligibility offices.
The number that sets the bill
The law, known as H.R. 1 or the One Big Beautiful Bill Act and enacted as Public Law 119-21, requires states with a payment error rate of 6 percent or more to pay part of the cost of SNAP benefits. States with rates from 6 percent to under 8 percent pay 5 percent of benefit costs; from 8 to under 10 percent, they pay 10 percent; at 10 percent or above, they pay 15 percent, according to a Congressional Research Service summary of the enacted law.
The payment error rate is a federal measure of accuracy. Each year, the Agriculture Department reviews a sample of cases to determine how often states paid households more or less than they were due. It is not a measure of fraud. The analyst’s office notes that most errors “result from administrative errors or inadvertent omissions of needed information,” driven in part by the complexity of the rules. Errors below a dollar threshold, set at $57 for the 2025 fiscal year, are not counted.
For the 2028 fiscal year, which begins Oct. 1, 2027, states may choose whether their share is based on their error rate from the 2025 or the 2026 fiscal year. After that, the department must use the rate from three years earlier: the 2026 rate for fiscal 2029, and the 2027 rate, being measured now, for fiscal 2030.
On June 24, the department released the 2025 rates. California’s was 10.93 percent: 10.06 percent in overpayments and 0.87 percent in underpayments, according to the department’s table. That is slightly above the national rate of 10.62 percent and, if it held, would place the state in the top tier.
“These payment error rates are further proof that state accountability is severely lacking in SNAP,” the agriculture secretary, Brooke L. Rollins, said in announcing the figures, which the department said represented $10.1 billion in improper payments nationwide.
What 15 percent means for California
CalFresh is projected to deliver $11.6 billion in benefits this fiscal year to about three million households, according to the analyst’s office’s review of the 2026-27 state spending plan, published Oct. 8. The office estimates the state’s cost at about $650 million a year at the 5 percent tier, $1.3 billion at 10 percent and $2 billion at 15 percent.
That means the difference between California’s 2025 rate and a rate just under 10 percent, less than one percentage point, is worth roughly $700 million a year to the state’s general fund. Bringing the rate below 6 percent would eliminate the obligation entirely.
The office has said it expects the state to face structural budget deficits beginning in the 2027-28 fiscal year even before the effects of the federal law, and wrote in March that backfilling lost federal benefits “would require billions of dollars in additional budget solutions.”
Why California would pay sooner
The law contains a provision that delays the cost-sharing requirement for states whose error rate, multiplied by 1.5, equals or exceeds 20 percent, in effect a rate of about 13.33 percent or more. States that meet that test with their 2025 rate do not begin paying until fiscal 2029; states that meet it with their 2026 rate are delayed until fiscal 2030, according to the research service.
An Inquirer analysis of the 2025 rates for the 50 states and the District of Columbia found that 20 had rates of 10 percent or more, placing them in the 15 percent tier. Seven of those 20 appear to meet the delay test: Alaska, at 23.15 percent; the District of Columbia, at 18.66 percent; New Mexico, at 16.81 percent; Delaware, at 16 percent; Georgia, at 15.21 percent; Illinois, at 14.67 percent; and Oregon, at 14.14 percent. California, at 10.93 percent, ranked 16th highest. The list reflects the statutory arithmetic; the department’s own determinations could differ.
The result is that California’s northern neighbor, whose error rate is about three points higher, would not owe a share of benefits until a year later than California on the 2025 figures. Washington State, at 6.98 percent, and Nevada, at 6.22 percent, would be in the 5 percent tier. Arizona, at 10.80 percent, would be in the top tier with California. Nine states, among them Idaho, Utah and Wisconsin, had rates below 6 percent and would owe nothing.
The provision drew criticism when the bill was being written, including an analysis in The New York Times’s Upshot section published under the headline “Republicans Want States to Cut Food Aid Errors. Their Bill Could Do the Opposite.” The Congressional Budget Office estimated that the benefit-sharing requirement as enacted would reduce federal spending by $40.8 billion over 10 years, and the administrative cost shift by $24.7 billion, according to the research service.
The cost that has already arrived
The administrative change took effect Oct. 1. Under state law, counties pay 30 percent of the nonfederal share of CalFresh administration, so the county share rose to 22.5 percent from 15 percent and the state’s share to 52.5 percent from 35 percent, the analyst’s office said.
The state spending plan reflects $345 million in added state costs and $165 million in added county costs in the current fiscal year because of the change, and about $460 million a year for the state and $220 million for counties on an ongoing basis, the office said in its October review. Federal support for administration is projected to fall 31 percent this year, to $865 million.
The structure magnifies any county shortfall. After October 2026, every dollar a county spends on CalFresh administration draws down $2.33 in state funds and $1.11 in federal funds, the office said; each dollar a county does not spend forfeits $3.44. To limit that effect, the Legislature allowed counties to receive their full state allocation without meeting the higher match, so long as they spend at least what they spent in 2024-25. The office estimated that the waiver, available through the 2028-29 fiscal year, lets counties collectively spend up to $252 million less this year without losing state money.
The state also set aside $14 million to replace federal outreach money lost by community organizations and added $110 million in one-time funding for CalFood, which supplies food banks, to help meet expected demand as people leave the program.
Fewer people, smaller benefits
The same law is shrinking the program. The analyst’s office projects 2.96 million CalFresh households this year, down 6 percent, and benefits down $817 million. An expanded work requirement for able-bodied adults without dependents took effect in June, and the first terminations and benefit reductions for people who are not exempt and do not meet it began this month. The office estimates that 562,000 people are at risk of losing benefits, worth $544 million this year. Restrictions on eligibility for some legally present noncitizens and on a utility allowance that had raised benefits account for $419 million more in reductions.
Those changes interact with the error rate. Verifying work hours and exemptions adds steps for county workers and recipients, and the analyst’s office has warned that eligible people are likely to lose benefits through paperwork, a pattern researchers call administrative burden. The Legislature added a one-time $460 million in combined funds, available through June 2029, to help counties carry out the work requirement.
What the state says is driving errors
California officials have described the causes of the state’s errors in testimony and budget documents. According to an agenda prepared for a March 19 hearing of a State Senate budget subcommittee, the Department of Social Services found that households not reporting a change in income account for 27 percent of payment error dollars, and that eliminating those errors could lower the rate by up to 3.5 percentage points. The department also found that nearly 50 percent of errors involve counties not acting correctly or on time on information already available in the case record through existing data systems.
To address those causes, the department has selected an income-verification tool called TRUV, which applicants can authorize to report income and work hours; signed a $3.39 million consulting contract with McKinsey to help carry out its accuracy initiatives; and hired the research firm Westat under a $1.1 million contract for case reviews, county site visits and client surveys, the Senate document said. The 2025 state budget provided $39.9 million, including $20.1 million from the general fund, for data, technology and outreach aimed at the error rate. This year’s budget adds $1.7 million a year to monitor county performance on access, timeliness and accuracy.
The analyst’s office has recommended that the Legislature require the administration and counties to report on what drives errors, whether some counties have markedly higher or lower rates and why, and how the higher county cost share will affect efforts to reduce errors. Earlier this year, before the federal figures were released, the office wrote that the state’s 2025 rate “likely is not significantly lower” than its 2024 rate of about 11 percent, which proved accurate, and that the state’s chance to reduce its costs “likely depends” on the 2026 rate.
What comes next
The Agriculture Department’s 2026 error rates, covering October 2025 through September 2026, are expected next summer; this year’s were released in late June. California will then choose whether its first year of payments is based on the 2025 rate or the 2026 rate. Because the 2026 rate will also set the state’s share for fiscal 2029, it will shape the state’s costs for at least two years either way.
The first budget proposal of the governor elected next month, due in January, and the budget the Legislature passes in June will be the first to account for a benefit payment that begins three months into the 2027-28 fiscal year. The error rate for the year that began Oct. 1, which will set the bill for fiscal 2030, depends in large part on how county eligibility offices perform under the new work rules.
