Food Stamp Waste, Fraud, and Abuse Could Cost States Billions. Program Integrity Measures Will Fix That.
Key Findings
- Food stamp spending should be reserved for the truly needy, yet billions are lost to waste, fraud, and abuse.
- Recorded food stamp error rates are severely understated.
- To reduce their financial burden, states must maintain low error rates.
- States can lower their payment error rates by enforcing commonsense program integrity measures.
Overview
The food stamp program has grown dramatically. Enrollment skyrocketed from 17.2 million in 2000 to 42.4 million in 2025.1 Spending increased more than 500 percent over the same period, with federal costs now topping $100 billion.2
Deliberate policy decisions at the federal and state levels are responsible for much of the program’s growth. Broad-Based Categorical Eligibility, work requirement waivers, self-attestation, and lengthy certification periods contribute to enrollment growth.
The food stamp program is jointly administered by states and the federal government. States pay a share of the administrative costs, while the federal government covers the remaining administrative costs and the full cost of benefits.3 Benefits account for 95 percent of federal food stamp spending.4 Historically, states have not been responsible for any of the cost of food stamp benefits.5
Waste, fraud, and abuse are rampant in the food stamp program. States’ food stamp error rates are exorbitant. What’s worse, policy gimmicks result in artificially low error rates. The published error rates are severely understated.
Fortunately, the One Big Beautiful Bill Act now requires states to manage their excessive error rates or pay for a portion of benefit costs.6 With reform, states can take back control of their food stamp programs. If states implement program integrity measures, they will pay less or continue to pay nothing for the benefit amount.
Food stamp spending should be reserved for the truly needy, yet billions are lost to waste, fraud, and abuse
As food stamp spending has ballooned, the amount of misspent dollars has increased. In fiscal year 2025, more than $10 billion in food stamp spending was improper.7
Improper payments do not include retailer trafficking, and some fraud and scams. There is no single measure that captures all waste, fraud, and abuse in the program. The official measurement for food stamp improper payments, the National Payment Error Rate, measures states’ improper issuance of benefits such as some recipient fraud, recipient errors, and state agency errors.8 Improper payments are driven by states not fully verifying enrollees’ eligibility for the program.9 State agencies are responsible for certifying households and administering food stamps.
The most recent national payment error rate is 10.62 percent for fiscal year 2025.10 As recently as fiscal year 2014, the national average error rate was 3.66 percent.11 In that year, only six states had error rates at or above six percent.12 In 2025, 41 states had error rates at or above six percent.13 Error rates now range from 2.47 percent in South Dakota to 23.15 percent in Alaska.14
The lack of incentive for states to properly administer their programs has contributed to sustained high error rates, and program integrity has taken a back seat. The One Big Beautiful Bill Act addresses troublesome error rates and implements a cost-sharing requirement for states with high error rates. With the new enforcement mechanism, states will have to assume accountability over their programs and take action. The new law creates accountability and gives states the tools to rein in waste, fraud, and abuse.
Recorded food stamp error rates are severely understated
Reported food stamp error rates are high, showing one in every 10 dollars is misspent.15 Yet even these high error rates grossly understate the problem.
The U.S. Department of Agriculture (USDA) intentionally excludes many errors from the error rate.16 When a payment error is less than or equal to a tolerance threshold, the error is excluded entirely.17 In fiscal year 2026, this threshold is $58, meaning payment errors up to and including $58 are intentionally not reported.18 This allows a significant portion of errors to be ignored. The Government Accountability Office analyzed data from 2013 and found that errors below the tolerance threshold totaled 38 percent of misspent food stamp dollars.19
Worse, USDA has waived error reporting altogether in some years. In fiscal years 2015 and 2016, USDA reported “data quality issues” that prevented it from reporting a national error rate.20-21 In fiscal years 2020 and 2021, USDA suspended reporting requirements, citing the public health emergency as the reason for suspension.22 Moreover, state agencies have actively falsified their data, hiding errors rather than reporting them.23 In 2017, the Department of Justice found that at least three states, including Alaska, Virginia, and Wisconsin, hid error data.24
Another way states artificially understate their error rates is through the use of no-good-cause exemptions. With no-good-cause exemptions, states may exempt able-bodied adults without dependents (ABAWDs) from work requirements for any reason whatsoever.25 States can use these exemptions to excuse up to eight percent of ABAWDs from work requirements.26 Left unused, these exemptions can be carried over, allowing even more of the population to be exempted from work requirements.27 Bureaucrats are also able to apply these no-good-cause exemptions retroactively. Some states apply all of them retroactively, meaning states can use them to cover up mistakes, like failing to assign a work requirement.28 This allows states to avoid an error that would count toward their overall error rate.29
Efforts by states to maximize enrollment are driving up program spending and improper payments. In addition to able-bodied adults, the food stamp program is flooded with individuals receiving benefits in multiple states at the same time, foreign fraudsters, and otherwise ineligible enrollees.30-31 Loopholes like Broad-Based Categorical Eligibility allow nearly six million individuals into the program who do not meet eligibility requirements.32
Before the recent welfare reform law, states had little incentive to clean up their food stamp programs. Now, states must keep their error rates low. And by ensuring only eligible enrollees are receiving benefits, states can preserve program dollars for the truly needy.
To reduce their financial burden, states must maintain low error rates
Historically, states have not been responsible for food stamp benefit costs, the lion’s share of the total cost. States have only had to pay for a portion of administrative costs.
The new law now requires states with high error rates to pay for a portion of their food stamp benefit costs.33 The state’s share depends on its payment error rate.34 For error rates at or below six percent, states will continue to pay nothing for food stamp benefits.35 States with error rates between six and eight percent will be on the hook for five percent of the benefit costs.36 For error rates from eight to 10 percent, states will pay 10 percent of the benefit costs.37 And for error rates of 10 percent or higher, states will pay 15 percent of the benefit costs.38
The potential financial cost to states is consequential. Without taking steps to fight waste and enforce program integrity, Illinois, for example, with its error rate above 14 percent, would be on the hook for $668 million of its food stamp benefit costs.39 Arizona could be required to pay $293 million in food stamp benefit costs.40 Texas would need to pay $756 million if the state does not lower its payment error rate.41 Without change, Florida would owe nearly $913 million.42
Implementation of the cost-sharing requirement is delayed for states with egregiously high error rates.43 Still, the current payment error rates are important. Penalties will not be imposed until fiscal year 2028, but for that year, states may choose the error rate from either fiscal year 2025 or fiscal year 2026 to calculate their state’s penalty.44 Starting in fiscal year 2029 and each year after that, states will base their penalty on the payment error rate of the third preceding fiscal year.45 Given the high error rates of most states, states should begin implementing program integrity measures now to curb error rates and reduce their cost-sharing burden.
States can lower their payment error rates by enforcing commonsense program integrity measures
Recent history has seen a massive expansion of the food stamp program. Efforts by state and federal bureaucrats to maximize enrollment have resulted in increased fraud. States flush with federal cash for food stamps are incentivized to keep enrollees on welfare for as long as possible. But the best way to prevent fraud and to preserve resources for the truly needy is to move able-bodied adults from welfare to work and to remove all ineligible enrollees from the program.
States should adopt commonsense program integrity measures, including requiring frequent cross-checks of available data and tighter certification periods, prohibiting agencies from waiving work requirements without legislative approval, and closing the Broad-Based Categorical Eligibility loophole.
Some states are already taking action. Idaho codified many food stamp program integrity measures, such as cross-checking death, tax, and lottery records, and banning the use of Broad-Based Categorical Eligibility for program eligibility.46 Indiana codified the federal food stamp work requirements and eliminated Broad-Based Categorical Eligibility.47 Kansas prohibited the use of self-attestation for food stamp eligibility.48 Other states should take similar steps to enforce program integrity and protect food stamps for the truly needy.
The Bottom Line:
States must implement program integrity measures to protect the truly needy on food stamps.
Every dollar lost to errors, fraud, or ineligible enrollees is a dollar unavailable for families truly in need. States receive substantial federal food stamp funding and have incentives to keep participants on welfare longer. The One Big Beautiful Bill Act changes that calculus by holding states accountable for program accuracy and strengthening incentives to reduce dependency.
The new law’s program integrity reforms give states a financial stake in getting food stamps right. States that act now will lower their error rates, reduce their future costs, and preserve program resources for the truly needy.
