Arizona’s SNAP Numbers Way Down. It’s Not Because of Fraud

Arizona’s massive drop in SNAP numbers isn’t because the state is catching fraud. The numbers point to the changed payment error calculation.

In January 2025, roughly 925,000 Arizonans received food assistance through Supplemental Nutrition Assistance Program (SNAP). By April 2026, that number had fallen to 435,196 – a drop of nearly 490,000 people, including 213,000 children.

Across the country, SNAP recipients declined by 9% between July 2025 and February 2026. Louisiana, the state with the second-largest decline, dropped 20%, less than half the percentage decrease of Arizona.

So, what happened?

It starts with the “One Big Beautiful Bill” (H.R. 1) that President Trump signed into law on July 4, 2025. The bill expanded SNAP work requirements, changed eligibility rules, shifted more administrative costs onto states and tied future state costs to payment error rates.

But every state faced the same law. Arizona still became the outlier.

Is fraud behind Arizona’s drop in SNAP benefits?

An easy hypothesis is fraud. State Sen. John Kavanagh claimed “our massive decrease is caused by the fact that we had massive fraud in the system.”

But the idea that Arizona suddenly uncovered fraud in one out of every two beneficiaries doesn’t pass the smell test. SNAP’s Arizona administrator, the Department of Economic Security (DES), isn’t claiming any massive uncovering of fraud.

DES Director Michael Wisehart offered another possibility: Arizona simply moved faster than other states in implementing the new federal rules. Wisehart claims that in the coming months, other states will see a similarly steep drop in SNAP beneficiaries.

Maybe.

How do payment errors affect SNAP payments?

A less discussed hypothesis is that H.R. 1 changed the financial incentives of states in a way that exposed Arizona’s historic underinvestment in SNAP administration.

Prior to H.R. 1, the federal government covered 100% of SNAP food benefits and 50% of SNAP administrative costs. H.R. 1 reduced the federal administrative contribution from 50% to 25%, and it put a strict 6% threshold for payment error rates.

Importantly, “payment errors” aren’t a measure of fraudulent applications. Payment error rates are overpayments and underpayments issued by the state. Administrative mistakes and paperwork errors all contribute to the calculation.

Who pays when the SNAP error rate is above 6%?

Under the new rules, if a state is above the 6% mistake ceiling, the financial burden shifts from the federal government to the state. If Arizona fails to meet this new standard, it could result in annual liabilities between $100 million and $300 million. Unfortunately, we’ve only been below 6% twice in the last 10 years (2018, 5.99% and 2019, 5.24%). DES currently estimates an error rate of 10.45% for fiscal year 2025.

That means we’re facing a financial cliff. And that in turn might explain the drop in SNAP benefits. To steer clear of a huge financial liability, the state must reduce its error rate. That means proceeding very cautiously. It means proceeding slowly. Very slowly.

Compounding the problem is Arizona’s lean SNAP administrative operation. That’s a challenge that has only become more challenging because between July 2024 and July 2025, DES ran out of specially allocated federal grant, and the number of DES employees reviewing SNAP applications fell from 1,370 to 880.

What other factors affect SNAP application processing?

The final result of a system with a reduced staff that proceeds slowly and cautiously? Fewer SNAP applications processed. In December 2025, DES reported 54,000 pending new and renewal applications, including 18,000 older than 30 days. The Arizona ombudsman’s office received more complaints in the last six months of 2025 than it did in all of 2024.

And that could be how we ended up with far fewer SNAP recipients.

One way to address this problem is to simply throw more state money at the system. Gov. Katie Hobbs’s proposed budget includes roughly $61 million new dollars to DES. That’s unlikely to be the endpoint. The state legislature’s budget purposes going the opposite way – a 5% cut. But even if Hobbs’s proposal is accepted, it largely just makes up for the federal government’s impending cut to its administration contribution and does little to fix any large problem.

Another option is to spend more now to save money in the future by avoiding federal penalties. Specifically, invest in improved DES technology to administer SNAP (and other state-administered security programs). Arizona’s SNAP payment system currently runs on 45-year-old technology. That seems… suboptimal. Neither of us were born 45 years ago.

How can AI improve SNAP error rates?

And now might be an especially ripe time to invest in a new technology given recent breakthrough in artificial intelligence technology. Gov. Hobbs recently announced a “first-of-its-kind” artificial intelligence program for the state’s Medicaid program. Perhaps SNAP is another good candidate for AI innovation.

This might sound like an overly simplistic fix – a “deus ex machina,” like pulling a rabbit out of a hat. But with federal requirements going up, and an already lean budget running flat, the only way we forestall the complete evisceration of the state’s SNAP system is through planning, innovation, and perhaps … a little magic.

Of course, none of this answers the bigger policy and moral questions: Are we OK with 12% of Arizonans receiving SNAP assistance? 6%? And are we OK as a state with the removal of 213,000 children from SNAP in a matter of months? For analysts, this is often a discussion of large numbers and administrative procedures. But behind every number, and behind every policy decision, there’s a real human being.