Published July 31, 2026
State governments entered their 2027 fiscal years facing an increasingly difficult fiscal landscape. Legislatures across the country sought to address rising costs of housing, food, child care, utilities, and health care while managing slowing revenue growth, structural budget gaps, and declining fiscal flexibility. Although many states entered the budget cycle with stronger reserve balances than before the pandemic, those reserves are shrinking, ending balances have declined for three consecutive years, and policymakers are increasingly relying on one-time solutions to balance budgets rather than sustainable revenue growth.
States Are Being Asked to Do More With Less
States are preparing for a major overhaul of Supplemental Nutrition Assistance Program (SNAP) funding. The budget reconciliation law, H.R.1, included changes to both administrative and benefit costs, transferring nearly $14 billion annually to states.1 While benefit shifts depend on payment error rates and will not affect all states, the new administrative cost-sharing, starting in federal fiscal year 2027 (October 2026), will require all states to cover 75 percent of SNAP administrative expenses as the federal government will reduce its reimbursement to 25 percent. Over five years, this administrative cost shift alone will result in about a $17 billion shift to states. This marks a significant change from the longstanding 50-year federal-state partnership, where costs were shared equally and benefits were fully federally funded.
This administrative cost shift does not aim to motivate states to reduce payment error rates. Instead, it intentionally makes lowering these rates more difficult by reducing state resources; making improvements becomes a Sisyphean task. The cost shift reflects a large transfer of federal responsibility to states, who are also being asked to implement some of the most significant and complex policy changes in SNAP’s history.
Mounting Fiscal Pressures
Across the country, governors and legislatures have spent the past year attempting to make everyday life more affordable. Some states enacted tax relief, while others invested in child care, education, housing, or utility assistance. Yet these policy choices occurred against a backdrop of slowing revenue growth, structural deficits, declining ending balances, and increasing demands on state budgets.
States’ rainy day fund capacity declined in fiscal year 2025 for the first time since the Great Recession. Ending balances have now fallen for three consecutive years, reducing states’ ability to respond to emerging fiscal challenges. While reserves remain relatively strong in many states, fiscal experts consistently caution that rainy day funds are intended to address temporary shocks, not permanently finance ongoing structural obligations.
States’ increased fiscal responsibility for SNAP does not stand alone. The federal government is simultaneously transferring additional costs to states through changes to Medicaid and disaster response. These cumulative pressures significantly reduce the flexibility states have traditionally relied upon to invest in public priorities.
If states are to cover the extra administrative costs transferred from the federal government, their legislatures will need to allocate more funds for SNAP operations in their budgets (in addition to the upcoming benefit cost share). Some states will do so, possibly reducing funding for other programs, while others, as we are starting to observe, may choose not to.
No state is immune from this reduction in federal support. The additional state responsibility ranges from $3 million in Wyoming to $168 million in California.
The Administrative Cost Shift Comes During the Largest SNAP Operational Transition in Decades
The reduction in federal administrative funding for SNAP arrives at the worst possible time.
State SNAP agencies are in the process of implementing significant operational changes in decades due to H.R. 1. These changes require states to redesign eligibility systems, rewrite policy manuals, retrain staff, conduct extensive public education, update technology, modify notices, expand quality assurance oversight, intensify quality control processes, strengthen customer service operations, revise in-process demonstration projects, implement new work participation and time-limit requirements, and introduce new secure Electronic Benefit Transfer (EBT) systems to prevent SNAP benefit theft.
Each of these activities requires administrative funding, not reductions in federal support.
Fewer Resources and H.R.1 Are Responsible for a Huge Decline in SNAP Participation
Millions of eligible individuals have lost benefits since the implementation of H.R. 1. Much of this decline is due to expanded work documentation requirements for Able-Bodied Adults Without Dependents, increased administrative burdens at application and recertification, procedural barriers, staffing constraints, and more complex eligibility rules, not reduced need. These factors are causing staff to touch cases multiple times and leaving them with limited time to answer phones and process cases in a timely manner.
The consequences extend well beyond participating households.
When families lose access to SNAP, food insecurity worsens. As a result, households reduce their spending at local grocery stores, leading to higher health care costs. Schools may struggle to offer free meals to every student. Meanwhile, food banks face heightened demand that exceeds their capacity. Local governments also encounter increased pressure to address the growing hardships.
The urgent affordability crisis affects families due to persistent high food prices, rising utility bills, increasing fuel costs, and slow labor market growth. Cooling costs alone are projected to reach their highest levels in years, with one in six households already struggling to pay energy bills. Food costs continue to rise, and many workers with low income — who often juggle multiple jobs, irregular hours, caregiving responsibilities, and unstable income — have little financial cushion. Access to SNAP remains vital, yet it is shrinking. Recent surveys indicate that more Americans are experiencing hunger now than during the pandemic.
Take Action
The central challenge created by the administrative cost shift is straightforward: States are being asked to administer a more complicated program with fewer federal resources. That is not an efficiency strategy. It is a fiscal transfer.
Ultimately, this policy does not simply affect state agencies. It affects every family waiting for an application to be processed, every community experiencing rising food insecurity, and every state budget attempting to balance growing needs with fewer available resources.
Funding is a policy choice. When Congress decides that something matters, it finds the resources to act. Just months ago, lawmakers approved $70 billion for immigration enforcement and are now considering additional funding for other priorities through another reconciliation package. For context, a two-year delay in the cost shift would only cost about 17 billion.
Food assistance must be part of every major legislative conversation, whether through the Farm Bill, reconciliation, appropriations, or another legislative vehicle. Hunger is rising, grocery prices remain out of reach for many families, and recent polling found that 66 percent of Americans say groceries are unaffordable, including majorities across all income levels.
As Members of Congress return home, show them how these policies affect their communities, what SNAP cuts look like on the ground. Show them the families losing SNAP, the growing strain on food banks, and the difficult choices households are making between food and other necessities.
At a minimum, Congress should delay both the SNAP administrative cost shift and the new benefit cost-sharing requirements. But it should go further by reversing the harmful SNAP cuts enacted in H.R. 1 and restoring the federal commitment to fighting hunger.
Ending hunger in America is not a question of resources; it is a matter of political will.