The Oregon Department of Human Services and the Oregon Health Authority say they need $340 million more in state funding and 475 more workers between now and June 2027 to comply with new demands from Republicans’ far-reaching 2025 tax and budget-cutting bill.

That is primarily because the state needs more workers to enforce onerous-to-track work requirements for Oregonians ages 18 to 64 who get federal food benefits, known as SNAP, or coverage from the Oregon Health Plan, according to Dave Baden, deputy director of the state human services agency, and others.

It is also because Oregon needs to greatly improve its eligibility accuracy rates to avoid a nearly half billion dollar federal penalty in 2027-29 and potential additional large penalties after that. Oregon also risks breaking federal Medicaid timelines and requirements if it doesn’t upgrade its computer systems to match new eligibility rules, officials said. Also under the federal bill, Oregon will have to pick up $54 million in program administration costs the feds previously agreed to cover.

In addition, the state needs to come up with $105 million to leverage the full Medicaid reimbursement it is counting on for the current two-year state budget, legislative budget specialists said. OHSU Hospital had agreed to pay the state that money because it would in turn get even more money back from the state. But the Trump administration-crafted bill, known as H.R. 1, limited how much Oregon could reimburse OHSU.

For context, the full $340 million request for additional expenditures is nearly as large as the $370 million state budget shortfall that economists projected last August in the wake of Trump tax cuts – but that state economists subsequently rescinded, estimating by November the shortfall across Oregon’s government would be a more manageable $63 million.

The $370 million projection – just $30 million more than what legislative budget analysts now say DHS and the Health Authority need to stave off financial disaster – led state officials to say they would have to slash budgets, raise taxes, raid reserves or do some combination of those.

New workers are needed because H.R. 1 made eligibility checks more frequent and more complicated, human services and health authority leaders told lawmakers last week. Previously, households were asked to prove they qualified for SNAP once every two years, for example, but now that has to happen four times as often, every six months. And documenting how many hours hundreds of thousands of Oregonians work, volunteer or undergo job training will be a huge lift, leaders say.

Lawmakers on the state’s Joint Subcommittee on Human Services responded somberly to the news. But none disputed the magnitude of the costs that will likely be needed for the spate of new hiring and training, along with IT upgrades.

Rep. Cyrus Javadi, a Democrat from Tillamook, noted the half-billion per biennium penalties if Oregon doesn’t improve the accuracy of its eligibility determinations would be crushing.

Oregon’s most recent error rate for awarding SNAP benefits was about 14%. To be penalty free, the state would have to reduce that below 6%, officials said. Even with the new spending, training and technology, state officials say they can’t promise to reduce errors to that level.

But they are gunning to get below 10% this year, which would lessen the financial hit, or even below 8%, which would decrease the penalty even more, said Nate Singer, director of the Oregon Eligibility Partnership, which checks Oregonians’ qualifications for multiple means-tested programs including SNAP and the Oregon Health Plan.

He stressed that most cases in which the state and a household receiving benefits make errors are not instances of fraud or intentional misreporting by a person needing food aid or Medicaid benefits. Rather, he said, “the federal rules are very complex” and household circumstances can fluctuate in unexpected ways, including a person picking up occasional gig work or having hours at their jobs rise or fall from week to week.

The federal government calculates states’ SNAP payment error rates based on careful checks of a very small sample of households who receive the food aid. In Oregon, about 400,000 households receive federal food aid at any given time, Singer said. Under federal rules, the state looks in depth at a random sampling of 100 households a month, he said.

Oregon has one of the highest error rates in the nation, in part because its posture has been to award food benefits to everyone who is eligible, he said. The federal government estimates many states give SNAP benefits to 85% or so of eligible households; it estimates Oregon reaches 100%, he said. “We try to make sure every person who could possibly be eligible gets help to eat,” Singer said.

Only about eight states currently fall below the 6% error rate that Republicans decided would qualify a state to be penalty free, he said.

Still, Oregon agrees that low error rates are desirable and will strive for them, he said. Better technology, worker training and use of AI to detect which types of household situations are most rife for error will all be part of the state’s super-charged effort to do better, he said.

But he said “the complexities of real life means I can’t guarantee zero errors.”

He told lawmakers about one case that caused Oregon’s payment error rate to shoot sky-high.

One of the households that was randomly selected last year turned out to have a member who won a lottery prize worth tens of thousands of dollars in the very month for which the household was sampled. That large windfall meant the household was not eligible for any SNAP benefits that month, so it registered as a 100% error rate, helping drive the sample-based statewide overpayment rate for that month to 20%, Singer said. The Oregon Lottery sends his eligibility unit a file with information about all lottery winners every month, Singer said, but somehow the match was not made. And, he said, that one miss shows “a single case (of error) can have an outsized impact.”

This article was originally published by The Oregonian/OregonLive and is reprinted with permission.

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