Arizona's food stamp error rate could threaten federal funding

The U.S. Agriculture Department says Arizona’s error rate for food stamp applications was 10.8%; that’s higher than the national rate of 10.6%.

If that number doesn’t come down, it’ll cost the state in penalties, thanks to provisions in the "Big Beautiful Bill Act."

Howard Fischer of Capitol Media Services joined The Show to talk about it.

Full conversation

MARK BRODIE: Howie, let’s start with Arizona’s 10.8% error rate — what is the significance of that number?

HOWARD FISCHER: Well, it’s significant because one would expect, first of all, that not one out of every 10 cases would not be screwed up. Now, remember, this is overpayments and this is underpayments. It deals with eligibility, deals with everything else.

What’s significant about it financially is that as part of the great HR 1, Congress said any state with error rates above 6% would pay a penalty. So, for example, the penalty hits 5% for error rates up to 8%, 10% when it goes up to 10%, and 15% for rates higher than that.

For Arizona, Arizona had a 10.8% error rate for FY 25. That means the year, the calendar year or the fiscal year 2024 to 2025, which hits us at the rate of 208 million. Now, this again, the error rate is up against what’s normally paid in benefits. Now, remember, benefits are normally paid for by the federal government.

Now, there’s some changes in HR 1 about who pays for some of the administrative costs, and that’s not an issue here. The federal government is saying, if you can’t get your show in order, we’re going to go ahead and say, you’re going to pay for some of these problems, and that’s where we are right now.

Now, the other half of that is the way HR 1 is structured, it says you can choose the lower of two rates for FY 25, which is a 10.8%, and FY 26, which is the year we are in, which the federal fiscal year ends Sep. 30.

We don’t know where we are. The governor insists that she’s done things to cut down the error rate, she’s added more people to go ahead and go through the applications. But in terms of will we be any better off, I don’t know that we’re going to get it down below 6%, but we may do somewhat better, and that may save us a couple of million dollars.

MARK BRODIE: Well, and whatever the error rate is, Howie, the number of cases presumably that caseworkers are dealing with will be lower because a lot of people in Arizona, more than any other state in the country, have been removed from this program.

HOWARD FISCHER: Well, that’s sort of chicken and egg. A lot of them have been removed from the program because of the fact that the state, in anticipation of HR 1 and what HR 1 did, started going through these things with more of a finer-tooth comb.

You know, we had, I think at one point, 920,000 people on food stamps in February of 2025. What’s happened since then is some of them have fallen off because of some additional requirements in terms of legal status and everything else, because there are some exceptions to the whole issue of who gets what.

Howard Fischer

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Capitol Media Services

But what’s also happened is that Michael Wisehart, who is director of DES, has essentially said, look, you know, we need to get the error rate down, so we’re not going to take — for example, it used to be you could people could self-attest, “I have a job,” or other things like that. Now they want the documents. A lot of people don’t come with the documents.

There’s a whole bunch of ways that you can fail to get qualified in this. So, it isn’t a question that there are fewer people applying, it’s a simply a question there are fewer people who actually have jumped through all the hoops, who are getting what they need.

Now, what happens if they, in fact, get everything up to speed? You know, that’s an interesting question. Part of the reason that there’s been more failure is sometimes it’s harder to get in. You know, they we dropped something like two-thirds of our people who were doing the applications, not only for that, but also for unemployment. And so, again, more hoops to jump through. Some people, I think, gave up, some people are keep going back, they say they can’t get through on the phone lines.

So, it’s not a question that there are fewer people getting them, and have to go through the annual reviews and stuff, but a question of people saying, “We’ve been sent home, we need this document, we need that document, we need this proof of of whatever, whether it’s citizenship or name or anything else.”

And so, what they’ve done is they’ve put in, in the budget this year, I think it was $10.8 million for additional people. The governor had put in some COVID money last year to go ahead and hire more people. That’s part of the problem.

The other part of the problem, according to Mr. Wisehart, is they’re working essentially with this legacy system of computers. Now, I mean, that would be basically be like doing your, your homework on a Windows 2.0, DOS 2.0 system here. It just doesn’t work, and they’d like to get the money for the upgrade. Now, I don’t know that there’s the money there in the budget to do that. I think they’re telling them you got to kind of limp along for a little while, but I think they also recognize that if you’re going to have a system that works, you need a system that is current and up-to-date and easy to go ahead and work with.

MARK BRODIE: Howie, you mentioned that there are financial penalties for states that don’t get their error rates below a certain level. Does Arizona, like, did they budget money for that potentially in the new state budget if the error rate is not where it needs to be?

HOWARD FISCHER: Well, no, but there’s also a reason for that. The penalties kick in in FY 2028, in other words, the 2027-2028 budget year. So, for the moment, there’s nothing for them to budget for. Now, you and I talking a year from now, where they’re trying to figure out, OK, how do we have the money, what is the error rate, has there been any relief granted?

You know, perhaps Congress is having second thoughts and saying, “Well, you know, there are a lot of red states, perhaps, that can’t get their error rates down.” And if you still have a Republican-controlled Congress, or who knows, after this November, we may have a Democrat-controlled Congress, and they may change things and say, "Look, we’re not going to be so much of a pain, and that we’re going to hurt states in ways that the only people who end up being hurt are the people we’re trying to help.” And so that becomes the unknown unknowns, as Rumsfeld would have said, in terms of figuring out how does this all work out. But again, we have we have sort of a year there.

Now, what’s being done in the interim to get that error rate down? Again, we don’t have a lot of time between now and Sept. 30 to do a lot for that. And here’s the other piece of it. The FY 26 error rate, the official USDA FY 26 error rate won’t be available until July of 2027. So, who knows what we’re going to be seeing then.

MARK BRODIE: Well, and even as you say, you know, a year is not a ton of time, it sounds like Arizona has a lot of work to do to get from almost 11% to 6% or less.

HOWARD FISCHER: Oh, there’s no question about that. And I think you could do a lot more probably with a lot more eligibility workers. You could do a lot more with a better computer system, you could do a lot more with the issue of having folks not being able to get those appointments that they need.

Is that the total issue? No. I mean, there are Republican lawmakers who are insisting this is all about fraud. The reason we went from 920,000 down to 455,000 was, “Oh, those are just people who bounced off because of fraud.” I don’t think that that’s a realistic expectation.

Is there always fraud in some systems? Are there always people trying to game a system? Sure, but I don’t think you could say that 50% of the people who were collecting food stamps were there fraudulently.

MARK BRODIE: Interesting. All right, that is Howie Fischer with Capitol Media Services. Howie, thanks as always.

HOWARD FISCHER: Have a great morning.