Editor’s note: An article in last week’s The Smoky Mountain News titled “ What $144 million looks like” examined how President Donald Trump’s One Big Beautiful Bill impacted SNAP and Medicaid recipients. This week, SMN examines how the legislation impacts county governments in Western North Carolina.

Somewhere inside the U.S. Department of Agriculture (USDA), the feds are crunching numbers to determine how accurately North Carolina distributed Supplemental Nutrition Assistance Program (SNAP) payments to its eligible residents in Fiscal Year 2026.

Those number-crunchers are analyzing data from state and federal agencies for quality control purposes. They want to make sure the right people were paid the right amount of money for food and nutrition assistance.

The USDA’s website states, “Through quality control, USDA helps state agencies identify the root causes of their payment errors and assist them in developing a corrective action plan to improve the accuracy of their eligibility and benefit determinations.”

According to the agency, payment errors are largely unintentional. An error could happen when a state agency incorrectly calculates a household’s expenses or a client forgets to provide the state with an update on their income. A calculation error of $59 or more (which includes under and overpayments) is what is counted as an error against the state.

Now, due to changes in the Trump Administration’s One Big Beautiful Bill (also known as HR 1), come October 2027, the federal government will impose heavy consequences on states that fail to calculate payments properly. If those error rates don’t come in under 6% from Sept. 30, 2025, to Sept. 30, 2026, states will be on the hook for hundreds of millions of dollars in penalties.

In FY 2025, North Carolina’s state error rate came in at 7.36% — down significantly from FY 2024, which come in at 10.21%. Preliminary estimates on the how much state lowered the rate in most recent fiscal year don’t look so good.

The USDA will release its FY 2026 error rate calculations in the summer. Until then, North Carolinians must patiently wait to see if they will have to foot the bill for 5%, 10%, or even 15% of SNAP benefit costs for the first time in the program’s history.

If North Carolina’s error rate stays over 6%, the state will be on the hook for 5% of the state’s SNAP benefit costs — costs that were previously covered by the federal government — and total about $150 million.

“North Carolina has been working feverishly to decrease its error rate, trying to get below 6%,” said North Carolina Department of Health and Human Services (NCDHHS) Secretary Dev Sangvai. “We’re continuing to see if we can drive that lower … If we can’t, and we stay in that 6.5% range that we’re currently in, it’ll mean North Carolina will have to find about $150 million a year in funding to cover that food benefit.”

At the county level, these new federal mandates, legacy software systems, and persistent vacancies are driving up the workload for DSS staff across Western North Carolina.

Compounding the strain is the shift in SNAP administrative costs, effective October 2026, which required local budgets in the SMN coverage area to absorb anywhere from $144,000 (Swain County) to $411,000 (Haywood County).

As DSS agencies in Jackson, Macon, Swain, and Haywood counties adjust to the new mandates, local managers and state health officials say caseworkers are being asked to implement these complex verification rules while using outdated IT infrastructure and going without additional state operational funding.

Increased workloads and administrative processing

SMN recently outlined new Medicaid work requirements and eligibility redeterminations which will increase the paperwork and time spent on each case. While SNAP redeterminations occur every six months, Medicaid redeterminations for impacted people ages 19 to 64 have doubled in frequency, shifting from annual to biannual reviews.

In Haywood County, HHS Director Ira Dove told The Mountaineer that new Medicaid rules will double the department’s workload volume, equating to nearly five full-time caseworkers dedicated solely to those extra reviews. Jackson County DSS Director Cris Weatherford said he expects the changes to also nearly double his department’s workload. 

“There’s not any slack to give,” Weatherford said. “As far as the workforce goes, as far as positions go, and how the caseloads are managed, it’s tight all the way around.”

The added reviews could leave DSS workers with less time for personal conversations with clients and put more pressure on the county to meet timeliness and accuracy requirements.

In Swain County, DSS has established multi-agency partnerships, including placing NCWorks staff inside the office to assist applicants facing employment barriers.

System processing is conducted through NC FAST (North Carolina Families Accessing Services Through Technology), a legacy software platform that local staff identify as a primary operational bottleneck during policy updates.

Policy analysts have said that increased documentation requirements within understaffed offices correlate with higher administrative error rates.

Dr. Marianne Hedrick Weant, director of programs at the North Carolina Alliance for Health, explained that processing delays and high staff turnover directly influence error rates.

“We’re overtaxing a small number of employees to do more intensive paperwork,” Weant said. “That mistake is a mistake that will happen because we’re overtaxing staff.” 

Sangvai stated that NCDHHS is examining potential technological updates, including automation and artificial intelligence applications, to streamline intake procedures. However, full system upgrades remain constrained by timeline and capital requirements. Updating the state’s technology infrastructure will take time, Sangvai said. State officials must address immediate operational needs while long-term fixes are developed.

“At the same time, there’s work that needs to be done immediately, and we can’t wait for the fix,” Sangvai said, noting that agencies must apply temporary adjustments to existing software without delaying overall system modernization.

“But all of those changes require time, people, money, and effort, and in the absence of funding, you’re trying to do that with the resources you have. It can be a bit of a challenge,” he added.

At the county level, leaders are also adapting to new constraints.

In Haywood County, commissioners budgeted an additional $1.7 million in expenses for Medicaid and food stamp programs, which includes funding to hire at least nine new staff members across both programs. 

Swain County DSS Medicaid program manager Sonia Peavyhouse said the agency has worked hard to get ahead of HR 1 changes, spreading the word through the community and notifying people who will be impacted about the changes’ effects.

Still, Peavyhouse said staffing has been an issue across North Carolina’s 100 counties. 

“These jobs are not easy jobs; they’re thankless jobs,” she said.

The experience and education requirements for the positions are extensive, and training processes are lengthy, meaning even if a county finds a great candidate to fill a position, getting an employee up to speed takes time.

Error rate penalties

Administrative errors carry measurable financial consequences under federal guidelines.

Research from economic groups like The Hamilton Project warns that tying big financial penalties to SNAP error rates leaves local budgets at the mercy of statistical luck.

Due to quality control sampling variability and the luck of the draw, a state’s measured error rate can fluctuate significantly from year to year regardless of performance, making it difficult for local and state officials to reliably plan budgets or avoid penalty tiers.

State officials and policy researchers also emphasize that the payment error rate measures administrative processing discrepancies, which include both overpayments and underpayments, rather than fraud.

“Mathematically, it’s an error, but it’s not an error in the sense of someone not doing what they need to do or [not] paying attention,” Sangvai said.

Additionally, North Carolina is one of 10 states operating a county-administered DSS system. This framework means the state passes potential SNAP benefit cost-sharing obligations down to individual county budgets through withheld local sales tax distributions.

If the FY 2026 statewide error rate remains above 6%, the state will withhold a portion of each county’s sales tax distributions to pay for the additional costs.

Each county will be penalized a flat rate, and then for counties with a high error rate, the state will withhold an additional percent of the county’s sales tax distributions using a complicated mathematical formula.

This can lead to unfairness, as across North Carolina, quality control sampling conducted for federal reporting does not sample every county in a given audit year. If a county isn’t chosen as a part of the random quality control sample, their sample rate is calculated as 0%, regardless of the county’s actual error rate.

Furthermore, if a county’s error rate truly is low, it would still have to pay the flat rate applied across all of North Carolina’s 100 counties.

“That is a very unfair approach to determining county-to-county who has to pay what,” said Kate Hanson, executive director of Meals4Families.

Swain County Manager Tommy Dills pointed out how this outlines a big issue for largely compliant counties.

“If we had a 0% error rate, and we did it 100% correct here locally, we’re still going to have to pay a benefit cost-share … to pay for the ones that are doing it wrong,” Dills said.

Because federal rules control who qualifies and how much aid people receive, state and county governments can’t cut benefit amounts to save money. If added costs and state penalties push county budgets past their breaking point, state leaders may struggle to keep running the program.

NCDHHS has taken a statewide, all-hands-on-deck approach to help counties adhere to HR 1 mandates. Sangvai said NCDHHS is providing targeted technical support to help county offices align intake procedures and lower localized error rates. He also urged benefit recipients to monitor communication from county offices.

As counties wait to see what will happen with the state error rate, county leadership must find a way to pay for these potential incoming costs.

“It’s another unfunded mandate, which is always frustrating,” Dills said. “Whenever somebody tells you you’re going to do something, but they’re not going to tell you how to fund it, we’re going to have to be creative.”