Minnesota could be forced to pay $130 million per year in SNAP benefits starting in October 2027 due to the state's high distribution error rate, according to a report published June 26, 2026, by the Center of the American Experiment. The hefty price tag comes from new federal rules that require states to shoulder a portion of food stamp costs if their error rates exceed certain thresholds. For the first time since the program's creation in 1964, states won't just pay administrative costs — they'll pay for the benefits themselves if they can't keep errors in check.
According to data from the U.S. Department of Agriculture cited in the report, Minnesota's SNAP error rate hit 12.6 percent in 2025, up sharply from 9 percent in 2024. The national average error rate in 2025 was 10.2 percent, putting Minnesota well above the norm. Among all 50 states, Minnesota ranked 11th-highest for errors. The state's error rate was more than twice that of neighboring Wisconsin and Iowa, and over five times that of South Dakota. With Minnesota's SNAP benefits averaging $72 million a month in early 2026, the state's share under the new penalty structure would reach $10.8 million per month.
The report explains that the new cost-sharing system stems from the One Big Beautiful Bill Act, signed into law in July 2025. Under the tiered penalty structure, states with error rates below 6 percent face no penalty — the federal government continues to cover 100 percent of benefits. But for error rates above 10 percent, states must pay 15 percent of total benefit costs. The report notes that "high error rates are not evidence of fraud" and aren't entirely a reflection of administrative mistakes, since "even unintentional misrepresentation by recipients drives up these numbers." Still, the report emphasizes that the $130 million annual cost would leave "fewer resources available for other state priorities."
The mechanism behind the new rules is designed to pressure states into tightening their oversight. Error rates include both overpayments and underpayments compared to what recipients are legally entitled to receive. The report argues that "by forcing states to share the cost of lax administration, the legislation ensures that states finally implement stronger checks and balances." The wide variation in error rates across states — with Minnesota's 12.6 percent dwarfing South Dakota's rate by a factor of five — suggests that administrative improvements are possible. The law's architects appear to be betting that financial penalties will accomplish what federal guidance alone hasn't: state-level reforms to reduce improper payments.
Minnesota taxpayers aren't entirely out of luck, though. The report points out that the One Big Beautiful Bill Act allows states to use either their 2025 or 2026 error rates to determine cost-sharing. That gives Minnesota "a vital — albeit small — window of time to act and slash improper payments" before the penalties kick in next October. Whether the state can drop its error rate by more than two percentage points in a single year remains to be seen, but the alternative is writing a nine-figure check that won't feed a single additional person.