Legislative and Policy Analysis
Section 10105: Matching funds requirements
Executive Summary
Section 10105 changes SNAP’s benefit-financing structure by requiring states with SNAP payment error rates of 6 percent or higher to pay part of the cost of SNAP benefit allotments beginning in fiscal year 2028.[1] Before this change, SNAP household benefits were federally funded, while states shared administrative costs.[2]
The section ties a state’s new benefit-cost share to its SNAP payment error rate. States below 6 percent pay no benefit-cost share. States at or above 6 percent pay 5 percent, 10 percent, or 15 percent of benefit costs depending on the error-rate tier.[1] The Congressional Budget Office estimated that Section 10105 will reduce federal direct spending by $41 billion over fiscal years 2028 through 2034, with about $35 billion of that reduction coming from states paying a portion of SNAP benefits.[3]
This is not a direct benefit cut written into the statutory formula for every household. It is a fiscal-pressure mechanism. It makes SNAP accuracy systems, state budgeting, eligibility administration, and quality-control performance much more consequential for households because states may respond by increasing administrative scrutiny, restricting optional choices where available, seeking new state appropriations, or, in extreme cases, reconsidering program participation.[3]
What Section 10105 Actually Does
Section 10105 amends Section 4(a) of the Food and Nutrition Act of 2008 to create a “State quality control incentive” for SNAP benefit allotments.[1] The mechanism is based on each state’s SNAP payment error rate, which measures the accuracy of eligibility determinations and benefit payments and includes both overpayments and underpayments.[3]
CBO estimated that Section 10105 reduces federal direct spending by $41 billion over fiscal years 2028 through 2034.[3] About $35 billion of that reduction comes from states paying a portion of SNAP benefit costs, while about $7 billion comes from expected state responses that reduce or eliminate SNAP benefits for about 300,000 people in an average month over the 2028 through 2034 period.[3] CBO also estimated a related $170 million reduction in child nutrition program spending over the 2028 through 2034 period, affecting about 96,000 children in an average month.[3]
| Program or activity | Amount | What the money supports or changes |
|---|---|---|
| SNAP benefit cost shift to states | About $35 billion in reduced federal spending over FY2028-FY2034 | States with payment error rates of 6 percent or higher must pay part of SNAP benefit allotment costs instead of the federal government paying the full amount.[3] |
| Total Section 10105 federal direct spending reduction | $41 billion over FY2028-FY2034 | Net federal savings from the new state benefit-cost share and expected state responses.[3] |
| SNAP participation and benefit changes from state responses | About $7 billion in reduced federal spending over FY2028-FY2034 | CBO expects some states may modify benefits or eligibility or leave the program, reducing or eliminating SNAP benefits for about 300,000 people in an average month.[3] |
| Child nutrition interaction | $170 million in reduced federal spending over FY2028-FY2034 | CBO estimates lower child nutrition program subsidies for about 96,000 children in an average month as a related effect.[3] |
The state share is determined by error-rate tiers:
| State SNAP payment error rate | Federal share of SNAP allotment costs | State share of SNAP allotment costs |
|---|---|---|
| Less than 6 percent | 100 percent | 0 percent |
| At least 6 percent but less than 8 percent | 95 percent | 5 percent |
| At least 8 percent but less than 10 percent | 90 percent | 10 percent |
| 10 percent or higher | 85 percent | 15 percent |
For fiscal year 2028, a state may elect to use its fiscal year 2025 or fiscal year 2026 payment error rate to determine the applicable state share.[1] For fiscal year 2029 and later years, the statute uses the applicable prior-year framework established in the amended Food and Nutrition Act.[1]
The section also includes a delay rule for comparatively high-error states. If a state’s fiscal year 2025 or fiscal year 2026 payment error rate, multiplied by 1.5, exceeds 20 percent, the state may avoid paying the benefit-cost share until fiscal year 2029 or fiscal year 2030, respectively.[3] In practical terms, that means some states with very high error rates may receive a temporary delay before the new state cost-share obligation begins.
USDA’s fiscal year 2024 SNAP payment error data reported a national payment error rate of 10.93 percent, consisting of a 9.26 percent overpayment rate and a 1.67 percent underpayment rate.[4] That national rate is above the 10 percent statutory threshold that would place a state in the highest 15 percent cost-share tier if the same rate applied to an individual state under the Section 10105 framework.
Legislative Mechanism
Section 10105 works by changing the federal-state financing rule for SNAP allotments. It does not create a new grant program, a new tax credit, or a new discretionary appropriation. Instead, it amends the underlying SNAP authorization so that USDA may not pay more than the applicable federal share of benefit costs for states whose payment error rates trigger a state share.[1]
The mechanism has four core parts:
- Error-rate trigger. The state’s SNAP payment error rate determines whether the state owes a share of benefit costs.
- Tiered state contribution. The state contribution rises from 0 percent to 5 percent, 10 percent, or 15 percent as the payment error rate crosses the statutory thresholds.
- Federal payment cap. USDA’s federal payment obligation is capped at the applicable federal share.
- Delayed application for certain high-error states. Some states with very high error rates in fiscal year 2025 or fiscal year 2026 receive delayed implementation under the special rule described by CBO.[3]
This structure changes SNAP from a system in which the federal government financed household food benefits nationally to a system in which state quality-control performance can directly affect state fiscal exposure.[2]
Expenditure Tracking and Reporting Protocol
Section 10105 involves federal financial flows because it changes who pays SNAP benefit allotment costs. The likely tracking chain runs through USDA Food and Nutrition Administration budget execution, Treasury outlay records, state SNAP agency financing, SNAP Quality Control reporting, and CBO or congressional oversight estimates.
The most relevant tracking sources are likely to include:
| Tracking source | What it is likely to show | Visibility limits |
|---|---|---|
| USDA SNAP Quality Control payment error rate data | State payment error rates used to determine cost-share tiers | Publicly visible, but the rate is statistical and may not explain every underlying administrative cause |
| USDA budget execution and financial reporting | Federal SNAP benefit outlays after state shares are applied | Likely aggregated by account and program, not always easy to isolate by Section 10105 alone |
| Treasury and OMB budget materials | Federal outlay changes and mandatory spending effects | Usually aggregated at account or program level |
| State budgets and appropriations documents | State funds used to pay SNAP benefit-cost shares | Visibility depends on each state’s budget structure |
| CBO cost estimates | Estimated federal savings and participation effects | Estimates are national and model-based, not a live spending tracker |
| GAO, USDA Inspector General, and congressional oversight | Audits or reviews of implementation, payment accuracy, and state compliance | Delayed and periodic rather than real-time |
Because Section 10105 changes the federal share of existing SNAP allotment payments, section-specific public tracking may be difficult to isolate in standard federal datasets. USAspending.gov may show SNAP assistance obligations at a broad program level, but it may not cleanly separate “savings caused by Section 10105” from other SNAP eligibility, participation, benefit, or administrative changes enacted in the same law.
flowchart TD
Law[Section 10105] --> USDA[USDA FNA]
USDA --> QC[Quality control rates]
QC --> Tier[State share tier]
Tier --> Federal[Federal benefit share]
Tier --> State[State budget share]
Federal --> EBT[SNAP EBT benefits]
State --> EBT
Federal --> Treasury[Treasury outlays]
State --> StateReports[State budget reports]
QC --> PublicData[USDA public data]
Treasury --> OMB[OMB and CBO review]
StateReports --> Oversight[GAO and IG oversight]
PublicData --> Oversight
The reporting protocol is likely to work as follows: state SNAP agencies continue to conduct and submit quality-control case review information; USDA validates or calculates payment error rates; those rates determine each state’s cost-share tier; USDA limits federal benefit funding to the applicable federal share; states finance the remaining state share through state budget mechanisms; federal outlays are reported through Treasury, USDA, OMB, and CBO channels; and oversight may occur through USDA, GAO, Inspector General reviews, and congressional hearings.[4]
Public visibility is likely to be mixed. Payment error rates are public and relatively clear. State fiscal exposure may be visible in state budgets. But household-level effects, state policy responses, and the exact portion of SNAP outlay changes attributable only to Section 10105 may be delayed, aggregated, or difficult to isolate.
Day-to-Day Government Process Changes
For USDA and state SNAP agencies, Section 10105 turns payment accuracy into a direct state budget issue. SNAP quality-control work already mattered for program integrity, but this section makes the financial stakes much larger because the error rate can determine whether a state owes 0 percent, 5 percent, 10 percent, or 15 percent of benefit costs.[1]
Day-to-day state operations may change in several ways:
| Operational area | Likely change |
|---|---|
| Eligibility interviews and verification | States may tighten verification procedures to reduce overpayments and underpayments. |
| Caseworker training | States may invest more heavily in accuracy training, supervisory review, and corrective action plans. |
| Quality-control sampling | QC results may receive higher attention from governors, legislatures, budget offices, and agency leadership. |
| State budgeting | Legislatures may need to appropriate state funds for SNAP benefit costs beginning in FY2028 if the state triggers a cost-share tier. |
| Applicant experience | Applicants and participants may face more documentation requests, longer processing times, or more frequent case checks if states prioritize error reduction. |
| Interagency coordination | State SNAP agencies may coordinate more closely with Medicaid, TANF, wage databases, unemployment insurance systems, and identity-verification tools. |
USDA’s SNAP Quality Control materials explain that payment error rates measure the accuracy of state eligibility and benefit determinations, and USDA requires corrective action when state agencies have a payment error rate of 6 percent or more or fail to review at least 98 percent of the required sample size.[5] Section 10105 adds a major fiscal consequence to that same 6 percent threshold.
Effects on Consumers
Section 10105 does not directly rewrite the household benefit formula for every SNAP recipient. However, it can still affect consumers because states may respond to new state costs by changing administrative practices, tightening eligibility operations, seeking additional documentation, or making policy choices that reduce enrollment or benefits where legally available.
CBO estimated that state responses to the new benefit-cost share may reduce or eliminate SNAP benefits for about 300,000 people in an average month over fiscal years 2028 through 2034.[3] Consumers most likely to feel the effect are households in states with higher payment error rates, households with unstable income or housing, households with complicated deductions, and households that struggle to produce paperwork quickly.
Potential consumer impacts include:
| Consumer group | Possible impact |
|---|---|
| Current SNAP households | More verification, more case reviews, or higher risk of benefit disruption if states tighten administration |
| Eligible nonparticipants | More complicated application processes may discourage participation |
| Low-income families with children | Possible indirect effects through lower SNAP participation and related child nutrition interactions |
| Older adults and disabled people | Greater paperwork burdens may be especially difficult if states increase verification intensity |
| Grocery shoppers using SNAP | Benefit disruption can reduce food purchasing power and increase reliance on food banks or local charities |
CBO’s estimate that 96,000 children may see reduced child nutrition subsidies in an average month over 2028 through 2034 underscores that the effects may extend beyond SNAP households alone.[3]
Effects on Businesses
The most direct business impact falls on food retailers, EBT processors, eligibility-system contractors, call-center vendors, document-management vendors, data-matching vendors, and consulting firms that support state SNAP administration.
For grocery stores, farmers markets, superstores, corner stores, and other SNAP-authorized retailers, the key risk is reduced purchasing power if state responses lead to lower participation or benefit disruptions. SNAP benefits are spent quickly and locally, so reductions can affect food retailers in lower-income communities.
For contractors and technology vendors, the effect may run in the opposite direction. States facing new fiscal penalties may purchase more eligibility automation, data-matching tools, identity proofing, quality-control analytics, case-management upgrades, and training services. Businesses that sell administrative technology to state human-service agencies may see new demand.
| Business type | Likely effect |
|---|---|
| Grocery and food retailers | Possible lower SNAP-funded sales if participation or benefits fall |
| EBT processors | Potential systems changes to account for altered federal-state financing flows |
| State eligibility-system vendors | Increased demand for accuracy, verification, data matching, and reporting tools |
| Compliance consultants | Increased demand from states seeking to reduce payment error rates |
| Food banks and charitable food providers | Increased demand if households lose or experience interruptions in SNAP benefits |
Environmental and Climate Impact
Section 10105 has no direct environmental permitting, emissions, land-use, energy, or climate provision. Its environmental and climate impact is therefore indirect.
The most plausible indirect effects come from changes in food purchasing and food insecurity. If SNAP participation or benefit access declines in some states, households may shift toward cheaper, less flexible food options, rely more heavily on emergency food systems, or make fewer grocery trips. Food banks and charitable distribution networks may face higher demand, which can increase logistics needs such as storage, refrigeration, and transportation.
At the same time, these effects are too indirect and state-dependent to quantify from the statutory text alone. The section does not itself fund climate projects, rescind climate funds, change agricultural conservation policy, alter energy rules, or regulate emissions.
Impact Summary
Section 10105 is one of the most structurally significant SNAP financing changes in Public Law 119-21. It converts SNAP benefit funding from a fully federal benefit obligation into a conditional federal-state cost-sharing system tied to state payment error rates.
The major fiscal effect is a $41 billion federal direct spending reduction over FY2028-FY2034, with about $35 billion shifted to states and about $7 billion associated with expected reductions or eliminations of benefits for some participants.[3] The practical effect is that state quality-control performance, state budget capacity, and state administrative choices become central to whether households experience stable food assistance.
The policy’s supporters are likely to describe it as a payment-accuracy incentive. Its critics are likely to describe it as a federal cost shift that may punish households for state administrative errors and pressure states to reduce access. Both interpretations flow from the same core mechanism: Section 10105 makes state SNAP error rates financially consequential.
Key References and Sourcing
| Source | Relevance |
|---|---|
| Public Law 119-21, One Big Beautiful Bill Act | Primary statutory source for Section 10105 and the amendments to SNAP benefit cost-sharing. |
| Congressional Budget Office, Estimated Effects of Public Law 119-21 on Participation and Benefits Under SNAP | Provides CBO’s estimates for Section 10105, including the $41 billion federal spending reduction, $35 billion state-payment component, participation effects, and child nutrition interaction. |
| Congressional Research Service, Supplemental Nutrition Assistance Program and Related Nutrition Programs in P.L. 119-21: An Overview | Provides statutory overview, comparison to prior law, CBO estimate summaries, and implementation context for SNAP provisions in P.L. 119-21. |
| USDA SNAP Payment Error Rates | Official USDA source for SNAP payment error rate data and explanation of payment errors. |
| USDA SNAP Quality Control | Explains the SNAP Quality Control system, payment error-rate calculations, corrective action plans, and state agency responsibilities. |
| Senate Agriculture, Nutrition, and Forestry Committee Section-by-Section Summary | Committee summary describing Section 10105’s state contribution tiers and FY2028 start. |
[1] U.S. Government Publishing Office, “Public Law 119-21, One Big Beautiful Bill Act,” Section 10105, https://www.govinfo.gov/link/plaw/119/public/21.
[2] Congressional Research Service, “Supplemental Nutrition Assistance Program (SNAP) and Related Nutrition Programs in P.L. 119-21: An Overview,” background on prior SNAP financing and enacted Section 10105, https://www.everycrsreport.com/reports/R48552.html.
[3] Congressional Budget Office, “Estimated Effects of Public Law 119-21 on Participation and Benefits Under the Supplemental Nutrition Assistance Program,” August 11, 2025, Section 10105 estimates, https://www.cbo.gov/system/files/2025-08/61367-SNAP.pdf.
[4] USDA Food and Nutrition Service, “SNAP Payment Error Rates,” FY2024 payment error-rate data and explanation, https://www.fns.usda.gov/snap/qc/per.
[5] USDA Food and Nutrition Service, “SNAP Quality Control,” explanation of payment error rates, weighted national rate, and corrective action expectations, https://www.fns.usda.gov/snap/qc.
[6] Senate Committee on Agriculture, Nutrition, and Forestry, “Section-by-Section,” Section 10105 summary, https://www.agriculture.senate.gov/imo/media/doc/senate_anf_section_by_section_final.pdf.
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