Colorado faces at least $43.9 million more in annual SNAP administrative costs under new law
A federal law taking effect Oct. 1 will shift more SNAP administrative costs to states. Colorado’s current payment error rate could later trigger an additional share of food-benefit costs that outside analyses estimate in the hundreds of millions.
Colorado is poised to take on at least $43.9 million in additional annual costs to run the Supplemental Nutrition Assistance Program when a new federal law cuts the federal administrative match this fall, according to Colorado Fiscal Institute estimates and federal guidance.
The change comes from Public Law 119-21, the One Big Beautiful Bill Act of 2025, which reduces the federal share of SNAP administrative costs from 50% to 25% starting in federal fiscal year 2027, which begins Oct. 1, 2026. Colorado’s share would rise from 50% to 75%.
Colorado could face much larger costs a year later if its payment error rate stays high enough to trigger the law’s new state match for SNAP food benefits.
USDA’s FY 2025 payment error table puts Colorado’s total SNAP payment error rate at 10.09%. Under the new law, USDA says states with error rates of 6% or higher must cover 5%, 10% or 15% of SNAP food-benefit costs beginning Oct. 1, 2027.
Because Colorado is just above 10%, it falls into the highest tier under the law as written. Using about $1.3 billion in Colorado SNAP food benefits in fiscal year 2024, a Feeding America Action analysis estimated a 15% state share at about $194 million a year. If Colorado drops below 10% but remains at 8% or higher, the state share would be 10%, or about $130 million by the same estimate.
At a June 25 hearing of the legislature’s Water Resources and Agriculture Review Committee, staff told lawmakers the higher administrative share could mean roughly $50 million to $60 million in new annual state spending beginning in October 2026, with benefit cost sharing potentially adding another $140 million to $210 million annually depending on the error rate.
A Joint Budget Committee staff narrative for the 2026-27 budget says the state budget includes additional cash funds from the Healthy School Meals for All Program Fund to offset lost federal SNAP administration money. But the public record reviewed for this story does not show a final dedicated appropriation covering the full new cost before Oct. 1.
That leaves Colorado facing two deadlines: higher administrative costs on Oct. 1, 2026, and possible food-benefit cost sharing on Oct. 1, 2027, if the state’s error rate remains above the federal thresholds.
Congressional Research Service says states may use either their fiscal 2025 or fiscal 2026 payment error rate to calculate the first year of required benefit matching, giving Colorado a window to reduce its exposure.
For Colorado, the immediate shift is from paying half of SNAP administrative costs and none of the food benefits to paying three-quarters of administrative costs starting this fall, with a possible far larger benefit-cost obligation next year if error rates do not improve.