Alabama DHR Commissioner “Stunned” by Looming $208 Million Budget Hole After Federal Cuts

Montgomery, AL (BuzzReport) – Alabama’s Department of Human Resources (DHR) is bracing for a monumental financial challenge, facing a projected $208 million budget shortfall by Fiscal Year 2028. The gaping hole, revealed by Commissioner Nancy Buckner during a budget hearing this week, stems primarily from federal funding cuts under the “One Big Beautiful Act” and the state’s significant error rate in its Supplemental Nutrition Assistance Program (SNAP).

Commissioner Buckner told lawmakers she was “stunned” by the scale of the financial obligation that will be shifted onto state taxpayers. The total projected increase in state funding needed for DHR is $35 million in Fiscal Year (FY) 2027 to cover rising administrative costs, followed by an estimated $173 million in FY2028 for SNAP benefits.

The “One Big Beautiful Act,” signed into law as part of President Donald Trump’s tax bill, initiates a precipitous drop in federal contributions to SNAP. Previously, the federal government covered 50% of administrative costs; this will now be slashed to 25%, leaving states to shoulder 75% of the burden. This change alone will necessitate the $35 million increase in state funding for administration in FY2027, though Buckner did not request additional funds for FY2026.

Beyond the administrative burden, the law introduces a new requirement for states to cover a portion of food benefits beginning in FY2028. This cost-sharing is directly tied to a state’s payment error rate (PER). States with a PER under 6% will continue to have their SNAP benefits fully federally funded. However, those with error rates between 6% and 7.99% will be responsible for 5% of their benefits cost, a share that escalates to 15% for states with error rates of 10% or greater.

Alabama’s current payment error rate stands at 8.32%. Under the new federal guidelines, this rate translates into a 10% penalty, forcing the state to cover a substantial portion of its SNAP benefits. Commissioner Buckner estimated this penalty would amount to $173 million in FY2028 if the current error rate persists. “It could go up, it could go down,” she cautioned, highlighting the volatility of the projection.

The implications are significant for a state where more than 750,000 people received food assistance last budget year, at a cost of $1.77 billion—a sum previously funded entirely by the federal government.

Buckner acknowledged the critical need to lower the state’s error rate and indicated DHR is in the “discussion stages now” to address the issue. She broke down the causes of errors, attributing 52% to clients (including reporting issues) and 48% to DHR staff (such as filing or administrative errors).

Finding a solution, however, presents a Catch-22. One potential strategy discussed involves adjusting the certification periods for programs like the Alabama Elderly Simplified Application Project (AESAP), which extends certification for adults 60 and older with no earned income from 6 months to 36 months to streamline the process.

“We can take those 100,000 AESAP people and put them on 6-month certifications,” Buckner explained, “but then I am going to have to hire a couple hundred more staff, which is going to make those [administrative] costs go up.” This scenario underscores the difficult choices ahead for lawmakers as they grapple with how to absorb this unprecedented financial impact while continuing to provide critical services to Alabama’s most vulnerable populations.