Legislative and Policy Analysis
Section 10106: Administrative cost sharing
Executive Summary
Section 10106 changes who pays to administer the Supplemental Nutrition Assistance Program (SNAP). It amends the Food and Nutrition Act of 2008 so that, beginning in fiscal year 2027, the federal government reimburses states for 25 percent of most approved SNAP administrative costs instead of 50 percent.[1] That means the non-federal share rises from 50 percent to 75 percent for ordinary SNAP administration.
This does not directly reduce the statutory SNAP benefit formula for households. Instead, it shifts the cost of running SNAP eligibility, issuance, customer service, hearings, systems, outreach, investigations, and related administrative functions onto states and, in county-administered states, potentially onto counties.[2] The practical risk is that states facing higher administrative costs may cut staffing, delay technology upgrades, reduce outreach, tighten operating procedures, or seek state budget offsets elsewhere.
CBO’s enacted-law budget materials estimate that the administrative cost-sharing provision reduces federal budget authority by roughly $24.7 billion over fiscal years 2025 through 2034, with no federal savings in fiscal years 2025 or 2026 and savings beginning in fiscal year 2027.[3] The policy is therefore best understood as a federal savings provision achieved through a state and local cost shift, not as a direct benefit-cut provision.
What Section 10106 Actually Does
Section 10106 amends the SNAP administrative cost-sharing rule in 7 U.S.C. § 2025(a). Under the amended statute, the Secretary of Agriculture is authorized to pay state agencies 50 percent of covered administrative costs through fiscal year 2026, and 25 percent for fiscal year 2027 and each fiscal year thereafter.[1]
| Program or activity | Amount | What the money supports |
|---|---|---|
| SNAP state administrative cost reimbursement through FY 2026 | Federal share remains 50 percent | Certification of applicant households, issuance and accounting of benefits, fair hearings, information activities, automated data systems, investigations, prosecutions, immigration status verification, and related administrative operations.[1] |
| SNAP state administrative cost reimbursement beginning FY 2027 | Federal share falls to 25 percent | The same general administrative activities continue, but states must cover the remaining 75 percent unless another exception applies.[1] |
| State and local non-federal administrative share beginning FY 2027 | Non-federal share rises to 75 percent | State budgets, and in some states county budgets, must absorb the larger share of SNAP operating costs.[2] |
| Estimated federal budget effect, FY 2025–2034 | About $24.7 billion in reduced federal spending | Federal savings from paying a smaller share of SNAP administrative costs.[3] |
| SNAP Employment and Training administrative costs | No change to 50 percent federal reimbursement | USDA guidance states Section 10106 does not amend the separate E&T funding rule in Section 16(h) of the Food and Nutrition Act.[4] |
| SNAP administration by certain Tribal or reservation agencies | No change to 75 percent federal reimbursement authority | USDA guidance states agencies administering SNAP on reservations may continue under the separate Section 16(a) and 7 CFR 281.9 treatment.[4] |
| SNAP outreach | Federal reimbursement falls to 25 percent | USDA guidance states outreach costs authorized under Section 16(a) are included in the reduced administrative cost share.[4] |
| SUN Bucks or Summer EBT | No change under Section 10106 | USDA guidance states Summer EBT is separately authorized and has separate funding authority.[4] |
The section does not create a new grant program, new benefit category, new tax credit, or new federal appropriation. Its financial effect comes from changing the reimbursement percentage for an existing open-ended administrative reimbursement stream.
The provision also matters because SNAP administration is not optional infrastructure. States must process applications, verify eligibility, issue benefits, maintain electronic systems, conduct hearings, operate quality-control procedures, manage fraud investigations, and communicate program rules. Reducing the federal reimbursement rate changes the budget math for every one of those functions.
Legislative Mechanism
The mechanism is a targeted statutory amendment to the Food and Nutrition Act’s administrative cost-sharing provision. Before this change, ordinary state SNAP administrative costs were generally reimbursed at 50 percent by the federal government. Section 10106 replaces that single reimbursement rule with a time-based rule: 50 percent through fiscal year 2026 and 25 percent from fiscal year 2027 forward.[1]
This is a cost-shift mechanism. The federal government does not need to deny individual benefits to generate savings under this section. Instead, it pays a smaller share of the administrative bills submitted by state SNAP agencies. States must then either appropriate more state funds, shift costs to counties where county administration is used, reduce administrative capacity, redesign operations, or use a combination of those responses.
The mechanism also interacts with other OBBBA SNAP provisions. For example, expanded work requirements, payment-error cost sharing, changes to utility allowance rules, and immigration eligibility restrictions can increase operational complexity at the same time that Section 10106 reduces the federal share of ordinary administrative funding. That combination may make the administrative cost shift more consequential than the reimbursement percentage alone suggests.
Expenditure Tracking and Reporting Protocol
The spending affected by Section 10106 is likely to be tracked through USDA Food and Nutrition Administration budget execution and SNAP financial reporting, state agency accounting systems, Treasury outlay data, OMB budget materials, state budget documents, single audits, and federal award reporting systems. The current administering agency for federal nutrition programs is USDA’s Food and Nutrition Administration, formerly the Food and Nutrition Service as of June 1, 2026.[5]
The relevant federal program is SNAP, authorized under the Food and Nutrition Act of 2008 and commonly associated with Assistance Listing 10.551 for SNAP benefits and administration. State SNAP agencies will continue to incur allowable administrative costs and claim reimbursement from USDA. The change is that the federal reimbursement percentage for most ordinary administrative costs falls to 25 percent beginning in FY 2027.
Public visibility will likely be partly clear but not section-specific. The reduced federal reimbursement should appear in federal SNAP budget execution and CBO/OMB estimates, and states may show higher state-share costs in state budget documents. However, a member of the public may not be able to isolate “Section 10106 dollars” in USAspending.gov or Treasury data because the provision changes a reimbursement rate inside a broader SNAP account rather than creating a new standalone account.
flowchart TD
A[Section 10106 authority] --> B[USDA nutrition agency]
B --> C[State SNAP agency]
C --> D[Eligibility and issuance]
C --> E[Systems and hearings]
C --> F[Outreach and operations]
D --> G[State cost claims]
E --> G
F --> G
G --> H[Federal reimbursement at 25 percent]
G --> I[State share at 75 percent]
H --> J[Treasury and OMB tracking]
H --> K[USDA budget execution]
I --> L[State budget tracking]
I --> M[County budgets where applicable]
J --> N[Aggregated public visibility]
K --> N
L --> O[State level visibility]
M --> O
N --> P[GAO audits and Congress]
O --> P
Likely reporting pathway:
| Tracking point | What is tracked | Public visibility |
|---|---|---|
| USDA Food and Nutrition Administration budget execution | Federal SNAP administrative reimbursements and obligations | Aggregated and delayed; section-specific isolation may be difficult |
| Treasury and OMB | Federal outlays and budget authority by account and program | Clear at high level, not necessarily by Section 10106 |
| State SNAP agency accounting | Administrative claims, state match, county pass-throughs where applicable | Varies by state budget transparency |
| USAspending.gov and federal award systems | Some federal assistance and award data | Useful but may not isolate the reimbursement-rate change |
| Federal Audit Clearinghouse and single audits | Compliance with federal program requirements for state and local recipients | Delayed and audit-focused |
| GAO, USDA Inspector General, and congressional oversight | Implementation, state fiscal impacts, payment accuracy, program integrity | Episodic and report-based |
If the section creates fiscal pressure but does not establish a dedicated public report, the most important limitation is that public datasets may show lower federal administrative reimbursement without clearly labeling the reduction as “Section 10106.” State budget documents may be more useful than federal award databases for understanding the real-world fiscal impact on a particular state or county.
Day-to-Day Government Process Changes
For state SNAP agencies, the change is operationally significant. The same eligibility and benefit-administration tasks remain, but federal reimbursement covers a smaller portion of those costs. Agencies will need to revise budget requests, update cost-allocation plans, adjust reimbursement assumptions, and revisit contracts or staffing models tied to SNAP operations.
State budget offices may have to identify additional general fund, special fund, or county contributions to maintain the same service level. County-administered states face an additional governance issue because state law determines whether counties absorb part of the higher non-federal share. The National Association of Counties has warned that in 9 of the 10 county-administered SNAP states, counties may have to contribute more or fully cover the administrative cost shift.[2]
Technology planning is also affected. USDA guidance states that recently approved Advanced Planning Document Updates must be adjusted to reflect the new 25 percent federal reimbursement rate beginning in FY 2027, and applicable updates must be submitted for review or approval at least 90 days before the start of FY 2027.[4] That matters for eligibility systems, call centers, verification tools, data matching, notices, and other automated processes.
For frontline workers and applicants, the practical changes may include longer processing queues, slower call-center response times, fewer outreach partnerships, more restrictive documentation workflows, or delayed system improvements if states do not replace the lost federal administrative funding.
Effects on Consumers
Section 10106 does not directly change SNAP benefit amounts, eligibility categories, or household allotment formulas. A household’s monthly SNAP benefit is not reduced by this section alone.
However, consumers can still be affected indirectly. SNAP recipients and applicants rely on administrative capacity to apply, recertify, report changes, resolve notices, attend fair hearings, correct errors, and receive timely benefits. If a state responds to the lower federal reimbursement rate by cutting staff, reducing outreach, delaying technology projects, or tightening call-center operations, eligible households may face more friction even when their legal eligibility has not changed.
The consumer impact is likely to be greatest for people who already have difficulty navigating administrative systems: older adults, people with disabilities, rural households, people without reliable internet access, people with limited English proficiency, working families with unstable schedules, and households that need help resolving notices or documentation problems.
Effects on Businesses
The most direct business effects fall on vendors, contractors, nonprofits, and technology providers that support SNAP administration. These may include eligibility-system contractors, call-center vendors, document-management firms, data-matching vendors, community-based outreach partners, legal aid organizations, and county service providers.
If states reduce administrative spending, some vendors may see smaller contracts, delayed procurements, or more pressure to lower prices. If states instead invest in automation to offset staffing costs, some technology vendors may see increased demand for eligibility modernization, identity verification, document processing, data analytics, and quality-control tools.
Retail food businesses are not directly regulated by Section 10106. But if administrative underfunding reduces participation among eligible households or slows benefit access, grocers, farmers markets, corner stores, and other SNAP-authorized retailers could see reduced SNAP purchasing activity in affected communities. Those effects would be indirect and would vary by state implementation choices.
Environmental and Climate Impact
Section 10106 has no direct environmental permitting, emissions, land-use, energy, transportation, or climate provision. Its statutory object is SNAP administrative financing.
Any environmental or climate impact would be indirect. For example, reduced outreach or administrative capacity could affect participation in food assistance, which may in turn affect household food purchasing patterns, emergency food demand, and local food distribution systems. But those effects are too attenuated to attribute a direct climate impact to this section alone.
The more concrete environmental-administration issue is digital and operational infrastructure. If states delay system modernization or reduce field operations, the environmental effect is likely negligible compared with the fiscal and service-delivery effects. This section should therefore be classified as having no direct environmental or climate impact, with only speculative indirect effects.
Impact Summary
Section 10106 is a major SNAP governance and fiscal federalism change. It leaves the basic federal SNAP benefit structure in place but sharply reduces the federal government’s contribution to the cost of administering the program. Beginning in FY 2027, states must finance 75 percent of most ordinary SNAP administrative costs instead of 50 percent.
The core impact is not a direct benefit cut; it is a cost shift. But cost shifts can still affect access. SNAP depends on state and local administrative machinery. If that machinery is underfunded, eligible households can experience delays, confusion, wrongful denials, reduced outreach, or difficulty maintaining benefits.
For oversight purposes, this section should be tracked through federal SNAP budget execution, state budget documents, county budget materials where relevant, single audits, USDA guidance, and future GAO or Inspector General reviews. Public tracking will likely be fragmented because the provision changes a reimbursement rate inside an existing program rather than creating a separate, clearly labeled account.
Key References and Sourcing
| Source | Relevance |
|---|---|
| 7 U.S.C. § 2025, Administrative cost-sharing and quality control | Codified statutory text showing the amended reimbursement rule and the administrative activities covered by SNAP cost sharing. |
| USDA, SNAP Section 10106 Administrative Cost Share Q&A Memo | Primary agency guidance on implementation, effective timing, exceptions, outreach, E&T, APD updates, and Summer EBT. |
| CBO, Estimated Budgetary Effects of Public Law 119-21 | Official enacted-law budget estimate for Public Law 119-21, including the federal fiscal effects of reconciliation provisions. |
| USDA, SNAP Provisions of the One Big Beautiful Bill Act of 2025 | USDA implementation page for OBBBA SNAP provisions and related policy memoranda. |
| National Association of Counties, H.R. 1 and SNAP: What Counties Should Know | Explains implications for county-administered SNAP states and local administrative cost exposure. |
| USDA, Reorganization of Food and Nutrition Service | Supports use of the current Food and Nutrition Administration name after USDA reorganization. |
| Georgetown Center on Poverty and Inequality, SNAP Changes Will Upend State Budgets | Secondary analysis of state budget pressures from OBBBA SNAP cost shifts. |
[1] Legal Information Institute, “7 U.S.C. § 2025 — Administrative cost-sharing and quality control,” codified Food and Nutrition Act reimbursement language and amendment note, https://www.law.cornell.edu/uscode/text/7/2025.
[2] National Association of Counties, “H.R. 1 and the Supplemental Nutrition Assistance Program (SNAP): What Counties Should Know,” county-administered state and local fiscal impact discussion, https://www.naco.org/resource/hr-1-and-supplemental-nutrition-assistance-program-snap-what-counties-should-know.
[3] Congressional Budget Office, “Estimated Budgetary Effects of Public Law 119-21, to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14, Relative to CBO’s January 2025 Baseline,” enacted-law budget estimate, https://www.cbo.gov/publication/61570.
[4] USDA Food and Nutrition Service, “Supplemental Nutrition Assistance Program Provisions of the Big Beautiful Bill Act of 2025, Section 10106 Administrative Cost Sharing: Questions and Answers,” May 21, 2026, https://www.usda.gov/sites/default/files/guidance-documents/fns.snap-obbb-section10106-adminCostSharing-qas.pdf.
[5] USDA Food and Nutrition Administration, “Reorganization,” current agency naming and reorganization notice, https://www.fns.usda.gov/about/reorganization.
[6] Georgetown Center on Poverty and Inequality, “SNAP Changes Will Upend State Budgets,” state budget impact analysis, https://www.georgetownpoverty.org/issues/snap-changes-will-upend-state-budgets/.
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