South Carolina and Nutrition Assistance: The Impact of New Federal Policy

What the One Big Beautiful Bill Act Did to SNAP 

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, made several significant changes to the Supplemental Nutrition Assistance Program (SNAP).  

Two of these reforms directly impact state budgets: states will soon be responsible for a greater share of SNAP administrative expenses, and, for the first time, states with sufficiently high payment error rates will also be required to pay a portion of SNAP benefits themselves. 

Federal-State Administrative Cost Sharing: Begins October 1, 2026 

Historically, SNAP benefits have been funded entirely by the federal government, while the federal government and states have split the cost of administering the program equally at 50% each. 

Beginning October 1, 2026, that administrative split changes, to now have the federal government pay 25%, and states 75%. 

• This provision concerns the cost of administering SNAP, not the benefits distributed to SNAP households. 

• The change is not tied to a state’s payment error rate. Every state faces the higher administrative share. 

For South Carolina, DSS estimates that this 25% makeup will require approximately $22.63 million in additional state general funds each year: 

• $16,742,930 for the additional state share of personnel costs. 

• $5,882,650 for the additional state share of operating costs. 

• Total: $22,625,580. 

States Begin Sharing SNAP Benefit Costs: Begins October 1, 2027 (Under Current Law) 

The second cost shift is potentially much larger, and a huge shift away from traditional SNAP cost structure. 

Historically, the federal government has paid 100% of SNAP benefit costs. Beginning in federal FY 2028, which starts October 1, 2027, most states with SNAP payment error rates of 6% or higher will be required to pay a portion of the actual benefits distributed in their states. 

Under current law: 

• Below 6% error rate: 0% state share; federal government continues paying 100%. 

• 6%–7.99%: 5% state share. 

• 8%–9.99%: 10% state share. 

• 10% or higher: 15% state share. 

For the first year of the requirement, FY2028, states may elect to use their FY2025 or FY2026 payment error rate to determine the applicable cost share. 

Additional Delays for States With the Highest Error Rates 

The OBBB also includes additional implementation time for states with particularly high payment error rates. 

• If a state’s FY2025 payment error rate multiplied by 1.5 is at least 20%, equivalent to a rate of approximately 13.33% or higher, implementation is delayed until FY2029. If a state’s FY2026 rate meets that same threshold, implementation can be delayed until FY2030. 

• This creates an unusual feature within the new system: some states with the highest error rates can receive more time before paying a share of benefits than states with lower, but still above-6%, rates. 

Timeline of Implementation 

October 1, 2026: 

The state share of SNAP administrative expenses increases from 50% to 75%. 

For South Carolina, DSS estimates the additional state administrative obligation at approximately $22.6 million annually. 

October 1, 2027:

Under current law, state SNAP benefit cost sharing begins for most states. 

A state’s applicable share ranges from 0% to 15% depending on its payment error rate. For FY2028, states can elect to use their FY2025 or FY2026 payment error rate. 

October 1, 2028 or October 1, 2029: 

States meeting the OBBBA’s high-error threshold can qualify for delayed implementation based on their FY2025 or FY2026 payment error rates. 

The Timeline Could Change: Farm Bill 2.0: 

Although October 1, 2027 remains the effective date under current law, Congress is already considering giving states more time. 

• In July 2026, Senate Agriculture Committee Chairman John Boozman (R-Arkansas) released an updated “Farm Bill 2.0” that includes a one-year delay in the general SNAP benefit cost-sharing requirement, moving implementation from FY2028 to FY2029 (from October 1, 2027 to October 1, 2028). 

• This proposal only delays the benefit cost-sharing requirement, not the separate administrative cost-sharing increase scheduled for October 1, 2026. States could therefore still begin paying 75% of SNAP administrative costs in 2026 while receiving another year before becoming responsible for a portion of SNAP benefits. 

Where South Carolina Stands 

South Carolina’s FY2025 SNAP payment error rate is 8.80%, consisting of: 

• 7.83% overpayments 

• 0.97% underpayments 

That represents an improvement from South Carolina’s 9.25% FY2024 rate, a top five level of improvement. Still, at 8.80%, South Carolina currently falls within the 10% state cost-sharing tier. 

Under OBBB reform, DSS estimates the following benefit cost-share amounts, depending on PER: 

• If SC gets below 6% → $0 state benefit share. 

• 6%–7.99% → approximately $70 million/year. 

• 8%–9.99% → approximately $140 million/year. 

• 10%+ → approximately $210 million/year. 

Thus, if South Carolina’s FY2025 rate were used to determine its obligation, its current 8.80% rate would correspond to roughly $140 million annually in new state SNAP benefit costs, according to DSS estimates. 

What South Carolina Is Doing to Reduce Errors 

DSS’s 2026-2027 budget request includes $34.06 million in state general funds in response to new SNAP requirements and payment-accuracy investments. 

The request includes: 

• $22,625,580 to cover the increased state share of existing SNAP administrative expenditures. 

• $2,415,420 in general funds for additional quality-assurance staff, call-center monitors and special agents. 

• $9,018,000 in general funds for employment and earnings verification services. 

DSS identified the state’s three leading contributors to its payment error rate as: 

1. wages and salaries; 
2. shelter deductions; and 
3. household composition.

The additional reviewers would conduct reviews on a portion of cases shortly after approval to identify and correct discrepancies in these areas. DSS also requested additional call-center monitoring staff and special agents, as well as an electronic employment and earnings verification service that eligibility workers could use to access wage and employment information during applications and recertifications. 

Looking Forward: What Are Other States Doing? 

States across the country are also beginning to respond to the new federal cost-sharing structure. Their approaches provide several potential models for South Carolina. 

Ohio — HB 434 

• Ohio took an early legislative approach through House Bill 434, which became effective November 25, 2025. 

• The law requires the Ohio Department of Job and Family Services to develop a methodology and technical system for determining SNAP payment error rates at the county level.  

• Ohio also requires quarterly reporting that includes: 

• individual payment errors; 

• county-level payment error rates; and 

• the statewide SNAP payment error rate. 

• Ohio subsequently established a county review process under which counties at or above a 6% cumulative error rate must enter corrective action plans. Those corrective actions can include mandatory training, root-cause analysis, and ongoing technical assistance. 

• Ohio also appropriated $10.55 million in FY2026 for updates to the Ohio Benefits system intended to help reduce county and statewide SNAP error rates. 

Florida — SB 1758 / HB 1453 

• Florida lawmakers have pursued a broader SNAP payment-accuracy strategy. 

• SB 1758 calls for a comprehensive statewide payment-accuracy improvement plan specifically designed to reduce Florida’s error rate below 6%. The proposal requires the plan to address the root causes of errors through data analysis and includes enhanced employee training and quality assurance. 

• The legislation also requires regular reporting on: 

• the state’s most recent official and preliminary error rate; 

• the most frequent and highest-dollar errors; 

• whether errors resulted from agency or client actions; 

• whether errors produced overpayments or underpayments; 

• actions taken to address errors; and 

• plans for correcting newly identified deficiencies. 

North Carolina — State Appropriations and County Accountability 

• North Carolina has taken another approach, particularly because SNAP administration involves county departments. 

• The state’s 2026 budget includes new personnel focused specifically on payment accuracy, including 10 County Reform and Quality Leads tasked with assessing county SNAP practices, identifying procedural deficiencies and developing corrective actions. It also funds quality-assurance and data-analysis positions to conduct root-cause reviews of county payment errors. 

• North Carolina has also developed a mechanism for allocating portions of the future federal SNAP benefit cost obligation among counties. The calculation combines a flat component with a proportional component linked to a county’s share of payment-error dollars. 

• This creates a more direct connection between where payment errors occur and where part of the resulting fiscal responsibility falls. 

Another Possibility: Delay Administrative Cost Sharing Instead 

Rather than delaying the payment-error-based benefit requirement in the Senate Farm Bill, Congress could consider delaying the separate increase in states’ administrative cost share from 50% to 75%. 

The distinction matters because the two requirements create different incentives. The proposed Farm Bill delay would postpone the potentially much larger financial consequence associated with a state’s payment error rate, while still requiring states to absorb a greater share of the administrative costs associated with running SNAP. 

An alternative structure could maintain the payment-error-based benefit cost sharing on its existing schedule while temporarily preserving the 50/50 federal-state administrative split. Doing so would maintain the incentive for states to lower their error rates while providing greater federal support for the staff, technology, quality assurance and verification systems states are using to achieve those reductions. 

For South Carolina, the difference can be illustrated with DSS’s own estimates: 

• Increased administrative share: approximately $22.63 million annually in additional state costs. 

• Current 8.80% PER: places South Carolina in the 10% benefit cost-sharing tier. 

• Estimated benefit obligation at that tier: approximately $140 million annually. 

A one-year delay of the administrative shift would therefore leave South Carolina with roughly $22.6 million less in additional state administrative costs for that year, based on DSS’s current estimate. 

By comparison, a one-year delay of benefit cost sharing could postpone approximately $140 million in state benefit costs if South Carolina remained in its current 10% tier. These figures measure different obligations, and the eventual benefit obligation is not fixed. South Carolina could lower it considerably by improving its payment error rate before the applicable measurement year. 

That distinction also illustrates what is at stake in South Carolina’s current efforts. At 8.80%, South Carolina is: 

• 0.81 percentage points away from getting below 8%, which would cut its state benefit share from 10% to 5%. 

• 2.81 percentage points away from getting below 6%, which would eliminate the state benefit share entirely. 

The federal One Big Beautiful Bill Act (OBBA) has changed the federal-state nutrition benefit partnership significantly. South Carolina is in an above average status compared to other states, but cost shifts for both administration and benefits will have a significant impact on the state budget, a General Fund budget that already spends $3.19 billion on health and social services.