What to know about USDA’s new SNAP payment error rate for Arizona

PHOENIX —  The U.S. Department of Agriculture today released states’ fiscal year 2025 Supplemental Nutrition Assistance Program payment error rates. Arizona’s new payment error rate is 10.80%.

The new rate could have major implications for Arizona’s budget and for families who rely on SNAP to afford groceries. But it is important to understand what the number does — and does not — measure. 

The SNAP payment error rate is not a fraud rate 

The payment error rate measures whether a state accurately calculated SNAP eligibility and benefit amounts. It includes both overpayments and underpayments. 

Arizona’s fiscal year 2025 rate comprises an 8.63% overpayment rate and a 2.16% underpayment rate. These errors can include cases in which an eligible family received slightly too much or too little assistance because of a processing delay, a mistake by an eligibility worker, incomplete information or problems with a computer system. 

For example, an eligible family could be underpaid after having a baby if the change is not processed promptly. A household that tries to report that a new dependent has moved into the home but cannot reach an overwhelmed call center could also receive an incorrect benefit amount. Both situations may count toward the payment error rate, even though neither necessarily involves fraud. 

Why the new rate matters for Arizona 

Under H.R. 1, the federal budget law enacted last year, states with payment error rates of 6% or higher will be required to pay a portion of SNAP benefit costs beginning in federal fiscal year 2028. The federal government previously covered the full cost of SNAP food benefits. 

The percentage Arizona must pay will generally be determined using the lower of its fiscal year 2025 or fiscal year 2026 payment error rate: 

• Below 6%: No state payment toward benefit costs 
• 6% to below 8%: 5% state payment 
• 8% to below 10%: 10% state payment 
• 10% or higher: 15% state payment 

Arizona’s newly released rate of 10.80% places the state in the 15% cost-sharing tier based on its fiscal year 2025 performance. Arizona could instead use its fiscal year 2026 rate to determine its obligation if that rate is lower. 

According to projections from the Arizona Joint Legislative Budget Committee, Arizona could be required to pay approximately $208 million in fiscal year 2028 if the state is responsible for 15% of SNAP benefit costs. 

If Arizona reduces its fiscal year 2026 rate to between 8% and 10%, its projected obligation would fall to approximately $139 million, based on the committee’s estimates. To avoid paying any portion of SNAP benefit costs, Arizona would need to reduce the rate below 6%. 

These costs would come on top of a separate federal cost shift that increases Arizona’s responsibility for administering SNAP. State analysts estimate the administrative change will cost Arizona approximately $33 million in fiscal year 2027 and $44 million annually beginning in fiscal year 2028. 

Arizona’s new budget begins preparing for the problem — but does not resolve it 

Arizona’s recently enacted $18.3 billion state budget includes $10.8 million in one-time funding for 146 positions at the Department of Economic Security intended to reduce the state’s SNAP payment error rate. 

That investment recognizes the administrative strain facing the state. But one-time staffing funds do not remove the underlying federal cost shift or guarantee that Arizona will reach the error rate needed to avoid paying part of SNAP benefit costs. 

The state also faces a difficult timeline. Arizona can use its fiscal year 2026 error rate to determine its fiscal year 2028 obligation, but that final rate will likely not be released until June 30, 2027 — after much of the work on Arizona’s fiscal year 2028 budget will already be underway. 

State lawmakers could therefore be forced to plan for a substantial and uncertain new expense. Without additional federal action, Arizona may ultimately have to identify new revenue, reduce spending elsewhere or make it harder for eligible families to receive food assistance. 

Pressure to reduce errors could lead to more eligible Arizonans losing assistance 

Reducing administrative errors is a reasonable goal. But the federal policy creates a troubling incentive: An incorrect benefit amount counts as an error, while delaying or denying assistance to an eligible person generally does not. 

States facing large financial penalties may respond by adding more verification requirements, processing cases more cautiously or creating additional bureaucratic hurdles. Those choices can reduce measured errors while also preventing eligible parents, children, older adults, veterans and people with disabilities from receiving food assistance. 

That risk is particularly serious in Arizona, where SNAP participation has already fallen sharply. Since July 2025: 

• 457,225 fewer Arizonans are receiving SNAP benefits; and 
• The decline includes 195,799 children. 

A decline in SNAP participation would ordinarily suggest that fewer families need assistance. But Arizona’s losses have occurred amid new administrative barriers, eligibility restrictions and federal penalties — not because nearly half a million Arizonans suddenly no longer need help affording groceries. 

The central question is who will bear the cost 

A potential shift of hundreds of millions of dollars in food-assistance costs from the federal government onto Arizona would place even greater strain on a state already losing revenue to tax cuts for the wealthy few and profitable corporations while underfunding programs Arizonans rely on. 

Arizona families are already facing high costs for groceries, housing, utilities, health care and child care. The state must now determine how it would absorb a potentially significant new federal cost while protecting access to food assistance and funding other public priorities. 

Congress can prevent this manufactured budget crisis by delaying the SNAP benefit-cost shift and giving states the time and resources needed to improve administration without taking food assistance away from eligible families. 

Additional Arizona background and reporting resources 

• What SNAP’s Payment Error Rate Really Means — and Why It Matters for Arizona 
• SNAP Policy Changes Are Still Unfolding in Arizona — Here’s What to Know 
• SNAP Losses Are Rippling Across Arizona — and the Economic Damage Is Growing 
• New Research: Stricter SNAP Eligibility Rules Don’t Increase Employment — but Do Increase Hardship 

Arizona Center for Economic Progress experts are available to provide additional background, explain the payment error rate and discuss the potential effects on Arizona families and the state budget.