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Legislative report: New Mexico's high SNAP error rate could cost state up to $173 million per year
Top state health official says plan in place to reduce impact of cost-sharing in federal budget bill
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New Mexico could be on the hook for up to $173 million in additional annual spending due to persistently high error rates in a federal food assistance program, a new legislative report found.
The report, presented at a Tuesday meeting of the Legislative Finance Committee in Ruidoso, found the state鈥檚 Supplemental Nutrition Assistance Program (SNAP) error rate has risen from 3.7% in 2012 to a projected 16.6% in fiscal year 2025 鈥� one of the highest rates in the country.
The findings prompted some lawmakers to criticize Gov. Michelle Lujan Grisham鈥檚 administration for not doing more to reduce benefit overpayments and investigate SNAP fraud.
鈥淚 see trouble here that we鈥檙e reluctant to fix,鈥� said Senate Minority Whip Pat Woods, R-Broadview, who said he is concerned the administration will 鈥渄ump鈥� the issue on New Mexico鈥檚 next governor.
However, Health Care Authority Secretary Kari Armijo insisted that鈥檚 not the case, while citing recent steps such as the replacement of electronic cards for SNAP recipients with chip cards. That move was intended to reduce card 鈥渟kimming,鈥� or the theft of benefits.
She also said state officials are trying to improve data verification of SNAP applications, while at the same time ensuring New Mexico does not face a budget hit until 2030 under a complicated cost-sharing formula.
鈥淲e really are being as strategic as we can around timing,鈥� Armijo told legislators.
In addition, Amijo said New Mexico currently has a lower rate of SNAP case workers than many other states, even after a $51 million budgetary infusion intended to bolster the agency鈥檚 staffing and technology.
The Health Care Authority still has fewer case workers than before the COVID-19 pandemic, she added, while saying the agency struggled to process a 鈥渢sunami鈥� of pandemic-era benefit applications.
New Mexico has also faced compliance issues under a long-running lawsuit first filed in 1989 that alleged families were being improperly denied food benefits. That lawsuit remains open, though a federal court in 2024.
High stakes for states
A federal budget bill passed last year and signed by President Donald Trump requires states with elevated SNAP error rates 鈥� primarily due to overpayments 鈥� to pay a share of the program鈥檚 cost.
That鈥檚 marks a big policy shift, as the federal government in previous years paid for all SNAP benefits while states administered the program.
鈥淚mproving our accuracy is no longer just an administrative issue 鈥� it鈥檚 now become a financial issue for our state,鈥� LFC evaluator Alma Kassim explained during Tuesday鈥檚 hearing.
New Mexico has the nation鈥檚 highest percentage of residents covered by the program, with about 20% of its residents receiving food assistance, nearly double the national average. SNAP transactions make up roughly half of all food spending in Mora County, while Cibola, Torrance and Luna Counties also have elevated use rates, according to the LFC report.
Statewide, there were more than 433,000 SNAP recipients as of May, according to HCA data. As of last year, that amounted to a cost of between $80 million and $90 million per month.
At least for the short-term, New Mexico could be able to foot the cost-sharing bill for SNAP benefits due to an ongoing state revenue windfall that鈥檚 accelerated due to rising oil prices connected to the Iran War.
But the price tag could prove more onerous in future years, especially if the state鈥檚 SNAP error rate remains high.
Under the federal bill, states with an error rate of above 10% must shoulder 15% of SNAP benefits鈥� cost. That percentage drops for states with a lower error rate, and the federal government will continue paying 100% of the cost for states with error rates below 6%.
The SNAP error rate includes both overpayments and underpayments of benefits, but does not include fraud. The errors are due to a mix of incorrect information provided by applicants and calculation mistakes by case workers in regional field offices.
Simmering fraud concerns
During Tuesday鈥檚 hearing, some legislators expressed concern the HCA might be underreporting SNAP fraud, in addition to the agency鈥檚 elevated error rate.
LFC evaluators said only 91 people have been disqualified from the food assistance program over the past eight years, while an even smaller number have faced criminal charges.
The legislative report also flagged some smoke shops in New Mexico with "unusually high鈥� SNAP transaction volumes, despite their largely non-food inventory. A federal agency authorizes retailers to be reimbursed with federal SNAP funds for purchases made, though such retailers must typically meet certain eligibility criteria.
In response to those findings, Armijo acknowledged a need to improve the efficiency of the process the agency uses to investigate potential fraud, saying, 鈥淚 think this is an area that has a clear need for improvement.鈥�
However, she also pointed out it鈥檚 not illegal to use SNAP cards in other states and said many state residents rely on food assistance benefits to afford basic grocery items.
That sentiment was echoed by Rep. Nathan Small, D-Las Cruces, who said the program is especially vital given high gas and food prices nationwide.
鈥淲e should probably be very skeptical about reducing eligibly for New Mexicans at a time when assistance is needed,鈥� Small said during Tuesday鈥檚 hearing.
Meanwhile, the LFC report stems from a $50,000 earmark in a special session budget bill approved last fall. The money was added to the bill by Republican lawmakers in order to pay for the review of the Lujan Grisham鈥檚 administration of the SNAP program.
Dan Boyd covers state government and politics for the Journal in Santa Fe. Follow him on X at @DanBoydNM or reach him via email at dboyd@abqjournal.com.
