The recent congressional budget reconciliation law has significant financial implications for Illinois, with government officials warning of steep costs due to mandated changes in food assistance programs.
Governor JB Pritzker and state legislators are facing a pressing challenge, and while time remains for the state to prepare, potential shifts in congressional power after the upcoming midterm elections may offer some hope for reversing or reducing the impending budget cuts that could impact food security and healthcare services.
Currently, if Illinois adheres to the new federal law without making substantive changes, it could find itself liable for an additional $788 million annually in costs related to the Supplemental Nutrition Assistance Program (SNAP).
The governor previously estimated that the law would cost the state approximately $1.2 billion per year based on earlier proposals from the U.S. House, but recent adjustments in the Senate version have lowered this estimation.
Importantly, these reductions will not take effect until the 2028 federal fiscal year, beginning on October 1, 2027, giving the state time to explore administrative strategies that could ease the burden.
However, if the current trends do not change, Illinois will find itself responsible for 15% of the overall SNAP benefit costs, translating into a staggering $705 million annually, according to the governor’s office.
This requirement stems from Illinois’ high SNAP payment error rate, which stood at 11.56% for the fiscal year 2024, identified by the U.S. Department of Agriculture.
While the state has recorded a low underpayment rate of less than 1%, the overpayment error rate at 10.6% has put Illinois in a precarious situation.
Under the new federal guidelines, states with SNAP payment error rates of 10% or higher are compelled to shoulder 15% of benefit costs, placing a considerable strain on state finances and threatening food assistance for many residents.
Interestingly, out of the eleven states with higher error rates than Illinois, which include notable states like New York and New Jersey, 38 states demonstrated more effective management with lower error rates.
If Illinois could bring its error rate down to between 8% and 10%, akin to states such as Michigan, Ohio, and Texas, the state’s liability could taper to 10% of benefit costs, approximately $470 million each year.
Further improvements could yield even more favorable financial outcomes; a reduction to the 15-year average error rate of 7.1% could cut the state’s costs to only $235 million annually, representing a significant alleviation.
Moreover, if Illinois can achieve an error rate below 6%, it would completely eliminate additional penalties.
This challenge is not insurmountable; Illinois has previously maintained lower error rates multiple times between 2011 and 2017.
Eight smaller states, such as Wisconsin, have successfully achieved an error rate below 6% in the fiscal year 2024, lending further evidence that such targets are attainable.
The urgency to rectify the error rate is paramount, as failing to do so could result in severe financial repercussions for the state, alongside widespread issues in food assistance access for vulnerable populations.
Governor Pritzker has often highlighted his administrative capabilities, and this scenario presents a crucial opportunity for his administration to demonstrate tangible improvements in the system.
However, action is imperative, as the first increased SNAP payment, influenced by the state’s performance during the federal fiscal year 2026, begins in October of this year.
It will require a concerted effort from the state administration to tackle this issue effectively.
In addition to the challenges posed by error rates, the new federal law now imposes a requirement for states to cover 75% of SNAP administrative costs, resulting in an extra burden of approximately $83 million annually for Illinois.
Previously, states were only responsible for half of these expenses.
Regardless of the state’s error rates, Illinois’ overall SNAP costs could shrink below $708 million due to anticipated reductions in the number of recipients stemming from new work requirements.
Historical data suggests that as much as a quarter of recipients might lose benefits without a connected increase in employment opportunities, presenting yet another hurdle for state officials.
Going forward, Illinois must prioritize safeguarding against administrative oversights that could disqualify individuals from receiving crucial assistance, while simultaneously working to manage the financial repercussions effectively.
image source from：chicago
