As lawmakers prepare Kentucky's biennial budget for the 2026 legislative session, the state budget director says the commonwealth will need to set aside over $115 million more than in previous years to keep giving its residents in need food stamps and – because of the federal reconciliation bill passed earlier this summer – potentially potentially hundreds of millions of dollars on top of that.
Kentucky and other states are all looking at higher costs on their end to pay for the Supplemental Nutrition Assistance Program (SNAP) and other federally-administered programs after that bill passed earlier this summer.
John Hicks, Kentucky's state budget director, said the commonwealth and other states will have to pay 75% of the administrative costs for SNAP effective October 2026 – up from the 50% overhead cost share states currently pay.
For fiscal years 2027 and 2028, Hicks told lawmakers Wednesday at the interim joint Appropriations and Revenue committee meeting that administrative costs for the program alone will set the commonwealth back over a combined $115 million more from Kentucky's General Fund than in previous years.
"That's a have-to, right?" Hicks said. "Assuming that we can't reduce the [SNAP] administrative costs by substantial amounts, it's going to be an incremental hit on the general fund."
What is more up in the air – and what Hicks called the "bigger issue" – is how much the commonwealth should set aside for SNAP state share costs that the federal government will start imposing in fiscal year 2028.
Currently, the federal government funds all of the SNAP food benefits. However, under the "One Big Beautiful Bill," states may have to pay a share of the benefits cost if they have higher error rates – which look at how many incorrect payments states send to SNAP recipients.
"I've talked to my peers who've been around for 40 years in other states and in D.C. We can't think of another analogy where the federal government, who is providing 100% of a federally funded program, started to shift the cost to a state. And that's what happened in the Reconciliation Act [with SNAP]," Hicks told Kentucky lawmakers during that meeting.
Under SNAP's quality control systems, the federally calculated error rates measure how many households receive either more or less benefits than what they are legally entitled. These can result either from mistakes on the state agency's end – like if workers miscalculate a household's expenses – or can be made by SNAP recipients – such as forgetting to update their income with the state. Either way, these mistakes can count toward the SNAP payment error rate.
Starting in fiscal year 2028, those error rates will determine how much states owe the federal government for SNAP benefits. States with error rates under 6% will pay nothing. Beyond that, states will have to pay between 5 and 15% of the cost for benefits depending on how high their error rate is. For Kentucky, which received over $1.2 billion for SNAP benefits in FY 2024, that could mean hundreds of millions of dollars each year if the error rate is too high – or zero dollars if the error rate is kept at federally-acceptable levels.
That stark difference drew some concern from Kentucky lawmakers, who will be tasked with deciding how much – if anything – Kentucky will have to budget for future SNAP benefits costs.
When the state share cost does go into effect, Hicks said the SNAP benefits payment will be determined by either the 2025 or 2026 error rates. Every year after that, the payment share cost will be determined by the error rate from three years prior (for example, FY 2029's cost would depend on the error rate from 2026).
State Sen. Chris McDaniel chairs the joint Appropriations and Revenue Committee. During the meeting, he asked if there was anything the Department for Community Based Services, which oversees SNAP in the commonwealth, can do to keep error rates down – and whether the department could estimate the 2025 error rate by the time the state legislature reconvenes in January.
"It's hard for us to say that," Lesa Dennis, commissioner for the DCBS, said Wednesday. "We are working diligently, again, around ways to improve some of our policies and work with working with our staff and through system enhancements, etcetera, but it's difficult to answer that question."
For fiscal year 2024, the latest full year the USDA has on record, Kentucky's error rate was 9.1%. While that comes in under the national average of 10.9%, if the state share benefits policy were in effect today, Kentucky would owe 10% of the benefits cost – or over $125 million – to the federal government.
Following the outbreak of COVID-19, waivers and policies were put in place that allowed more people to stay on SNAP. Dennis said those temporary changes contributed to higher error rates across the country.
"We were coming out of the pandemic and there [were] flexibilities in place that impacted our payment error rate. We had temporary federal policies that again contributed to an increase in SNAP error rates, not just in Kentucky, but nationally as well," Dennis said.
So far, based on six months of available data from the state budget director's office, Kentucky's KY 2025 SNAP payment error rate is around 3.7%. If that rate stays below 6% for the rest of the 2025 fiscal year, Kentucky would wind up paying nothing for the first year of the benefit cost sharing policy.
However, the state will still have to pay an increased share of the administrative costs associated with operating SNAP in the commonwealth in the near future – one that Kentucky legislators will have to plan for when crafting the next biennial budget.
Rep. Jason Petrie chairs the House Appropriations and Revenue Committee that the state budget bill must pass out of before advancing to the chamber floor. He asked Dennis if DCBS is taking steps to lower administrative costs to ease the burden on the state's increased cost share starting in October 2026.
"I hope that you say we're working on things now to bring down admin costs, because, as you've explained, that share is changing," Petrie said. "So if those admin costs stay the same, we know we have an increased share that we pay for if those admin costs come down, then we can mitigate that increase."
The next legislative session starts on Jan. 1. House Speaker David Osbourne said last month that he expects a budget bill to be introduced in the first week of the session.
Copyright 2025 WKMS
