Texas faces a potential $708 million federal penalty unless the state reduces errors in its food assistance program by October 2027, officials warned state lawmakers this week during discussions about welfare program integrity.

The Error Rate Problem

Texas Health and Human Services officials told the Senate Health and Human Services Committee that the state’s current error rate stands just under 9 percent for Supplemental Nutrition Assistance Program payments. When new federal rules take effect in October 2027, that error level will make Texas liable for 10 percent of federal SNAP costs. With total national spending around $700 billion, Texas would owe more than $708 million. The errors include both overpayments and underpayments, often triggered when recipients’ monthly income changes affect their eligibility without proper documentation updates.

Texas ranked 25th nationally for SNAP errors in 2025, officials reported. The errors do not necessarily indicate fraud but represent administrative problems in tracking recipient eligibility as circumstances change. State officials have 18 months to implement systems and procedures to bring the error rate down below the federal threshold before facing financial penalties.

Rising Administrative Costs

Beyond the potential penalty, Texas officials revealed another financial burden coming this October. States currently pay 50 percent of SNAP administrative costs, but that requirement jumps to 75 percent in October 2026. Texas paid approximately $470.5 million in administrative fees during 2024. Under the new requirements, state officials project costs will climb to nearly $600 million, representing an increase of more than $117 million annually that taxpayers must cover.

New Restrictions Already In Effect

Texas implemented additional SNAP changes in April following passage of Senate Bill 379 last year. The law restricts purchases of sweetened beverages containing five grams or more of added sugar, candy bars, gum, and similar items. Recipients can still buy milk products, drinks with at least 50 percent fruit or vegetable juice, and beverages with natural sweeteners under five grams of added sugar. Monthly benefits remain unchanged, ranging from just under $300 for single recipients to almost $1,800 for families of eight. Work requirements apply to able-bodied recipients aged 16 to 59, with exceptions for caregivers.