Texas taxpayers could face an additional $826 million in annual costs by 2027 under new Trump administration rules aimed at reducing waste in the nation's food stamp program, state officials told lawmakers Wednesday.
Officials from the Texas Health and Human Services Commission disclosed the projected costs during a Senate Health and Human Services Committee hearing focused on fraud prevention in welfare programs, reports The Texas Tribune.
The federal changes, approved last year under the One Big Beautiful Bill Act, require states to reduce error rates in the Supplemental Nutrition Assistance Program, or SNAP. States must lower the frequency of overpayments and underpayments or face financial penalties starting in 2027.
Texas currently has an error rate of nearly 9%, lower than the national average of 11%, but still above the new federal threshold of 6%. If the state fails to meet that benchmark by October 2027, it could incur about $709 million in penalties annually.
In addition, the federal government will require Texas to cover 75% of SNAP administrative costs, up from the current 50% share. That change is expected to add about $117 million in yearly expenses beginning next year.
Combined, the administrative increase and potential penalties would total roughly $826 million annually.
Because the compliance deadline falls after the Legislature finalizes its next budget, lawmakers may need to set aside funds in advance.
SNAP provides food assistance to about 3.1 million Texans, including roughly 1.5 million children. The average household benefit is nearly $400 per month, distributed through a debit-style Lone Star Card.
Benefits can roll over month to month, though recent rule changes prohibit purchases of candy and sugary drinks. Undocumented immigrants are not eligible for the program.
With about 24% of Texans receiving some form of assistance from HHS, lawmakers said improving oversight has become more urgent.
The hearing followed Lt. Gov. Dan Patrick naming fraud prevention as a legislative priority. Gov. Greg Abbott has also directed agencies to strengthen fraud detection efforts.
"We are dealing today with a healthcare epidemic, but not from a disease or virus," said state Sen. Lois Kolkhorst, R-Brenham.
"With scandals in place like Minnesota and California drawing national attention, we, as Texans, must examine our own system and see how we measure up to other states," she added.
State officials pointed to existing enforcement efforts as evidence of progress.
In fiscal 2025, the Health and Human Services Office of Inspector General recouped $465 million in overpayments, while the attorney general's Medicaid Fraud Control Unit recovered $125 million and secured 123 arrests and 180 indictments.
Officials warned that fraud remains widespread. The National Health Care Anti-Fraud Association estimates up to 10% of healthcare spending is lost to fraud, waste, and abuse. Texas spends about $53 billion annually on welfare programs.
Emerging concerns include a surge in hospice providers and fraudulent billing in personal attendant services.
In one case, investigators said a correctional officer billed for services while on duty. In another, a family continued collecting payments for an elderly relative who had died.
Sandy Fitzgerald ✉
Sandy Fitzgerald has more than three decades in journalism and serves as a general assignment writer for Newsmax covering news, media, and politics.
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