Standing Strong: Navigating H.R.1's Impact on the Department of Economic Security (DES) with Resilience and Commitment

Major federal legislation can feel distant from day-to-day life. Still, for DES, Arizona’s state human services agency, changes made in Washington have immediate and lasting effects. H.R.1 proposes sweeping federal policy shifts that reshape how we administer critical programs. DES plays a central role in administering programs that support economic stability, child and family well-being, and protection for vulnerable populations, and the implications on our services–and the communities we serve–are significant. The information shared in this post is based on the data available at this time and is subject to change.

Funding and Cost Sharing Impacts

One of the most immediate considerations for Arizona is how H.R.1 alters federal funding formulas for the Supplemental Nutrition Assistance Program (SNAP also known as Nutrition Assistance or NA in Arizona). Prior to H.R. 1, the federal government funded 100% of the cost of SNAP benefits provided to households. Under H.R. 1, if a state has a SNAP payment error rate (PER) of 6% or higher, the state will be required to pay for a portion of SNAP benefit costs from state/non-federal funds. This means Arizona taxpayers may have to pay between $100 to $300 million for SNAP benefits when cost-sharing begins if our state PER is over 6% as outlined in Table 1 below. The official Federal Fiscal Year (FFY) 2025, PER will not be made available until June 2026. However, based on our early estimates, we believe our rate for FFY 2025, which ended on September 30, 2025, will be approximately 10.45%. This is not final and is subject to additional review from USDA. Note, the benefit cost share becomes effective with FFY 2028, using a state’s FFY 2025 or 2026 PER. One of DES’ main priorities this year is to bring the PER for FFY 2026, which ends on September 30, 2026, under 6%. 

A state’s PER, in general terms, is the percentage of total SNAP benefit dollars issued in error as a share of all dollars issued in the quality control sample during a federal fiscal year. This includes overpayments and underpayments as well as errors caused by SNAP applicants and participants, as well as agency staff. PER is not a measurement of fraud, although fraud can infrequently contribute to errors. Fraud must be intentional, such as knowingly submitting false information. Errors are most often unintentional mistakes.

SNAP administrative costs are the costs states incur to administer SNAP, such as application intake and processing; eligibility review and oversight; appeals processing; benefits distribution; and fraud, waste, and abuse prevention and response. Prior to H.R. 1, the federal government paid 50% of SNAP administrative costs. H.R. 1 reduced the federal contribution to 25%; states will pay 75% of SNAP administrative costs. This change begins in FFY 2027, which starts on October 1, 2026. Based on Arizona’s FFY 2024 administrative expenditures of $140 million, Arizona will be responsible for paying approximately $105 million out of state/non-federal funds, an increase of $35 million each year. H.R.1 shifts this cost from the federal to the state government in all cases; DES is unable to take any action to reduce this new burden on Arizona taxpayers. 

Changes to ABAWD Exemptions 

Although the work requirements for SNAP participants remain the same as they were before H.R. 1, there are changes to certain exemptions from the able-bodied adults without dependents (ABAWD) work requirement, as well as the age range for clients who need to meet the requirement. These changes were effective with the passage of H.R. 1 on July 4, 2025 as illustrated in Table 2 below.

In FY 2025, Arizona’s geographic waiver covered all Tribal reservation areas and all counties except Maricopa, using the “insufficient jobs” criteria. For FY 2026, only Yuma County and certain Tribal reservation areas are potentially eligible for a geographic waiver under the 10 percent unemployment criteria. Arizona requested a geographic waiver for these areas on September 26, 2025; as of the date of this blog post, the request is still pending USDA approval. 

Changes to Non-US Citizen Eligibility 

SNAP eligibility is limited by federal law to U.S. citizens, U.S. nationals, and qualified non-U.S. citizens. H.R. 1 changed the categories of qualified non-U.S. citizens who could be eligible for SNAP, limited to lawful permanent residents (LPRs), Cuban and Haitian Entrants, and Compact of Free Association citizens. 

This means that asylees, refugees, parolees, individuals withheld from deportation, conditional entrants, non-citizens or the parents or children of non-citizens who had been battered or subject to extreme cruelty and had certain pending immigration actions, certain survivors of human trafficking, certain American Indians born abroad, certain Hmong or Highland Laotian tribal members, Iraqi and Afghan Special Immigrants, and certain Afghan and Ukrainian parolees are no longer eligible for SNAP. Individuals who entered the U.S. under one of these categories may become eligible for SNAP after adjusting to a new, SNAP-qualifying immigration status.

H.R. 1 did not make changes to the 5-year waiting period requirement and exceptions. Certain groups are exempt from the 5-year waiting period for SNAP once they adjust to LPR status. These are refugees; asylees; individuals withheld from deportation; Cuban and Haitian Entrants (CHE); Amerasians; American Indians Born Abroad; Hmong or Highland Laotian Tribal Members; Iraqi and Afghan Special Immigrants; Certain Afghan Nationals Granted Parole Between July 31, 2021, and Sept. 30, 2023; Certain Ukrainian Nationals Granted Parole Between Feb. 24, 2022, and Sept. 30, 2024; and Victims of Severe Trafficking.

Other H.R.1 Changes to SNAP and Medicaid

H.R. 1 also changes how maximum benefit amounts are calculated for SNAP, as well as income deductions used to determine eligibility. For DES, this could mean reassessing program capacity, prioritizing services differently, or seeking new efficiencies to maintain support for those who rely on assistance.

H.R. 1 does impact Medicaid (also known as Medical Assistance or MA in Arizona). This includes the introduction of a “community engagement” requirement (similar to a work requirement), redeterminations for Medicaid every six months, and changes to non-U.S. citizen eligibility. 

The Arizona Health Care Cost Containment System (AHCCCS) administers Medicaid in Arizona. DES is working closely with AHCCCS to align SNAP, Medicaid, and Temporary Assistance for Needy Families (TANF or Cash Assistance in Arizona) requirements where possible and ensure clients receive clear information. Please visit https://www.azahcccs.gov/ for more information about how H.R. 1 may impact Medicaid.

The Importance of Agency Resilience and Commitment

In the wake of H.R. 1's passage, DES launched a comprehensive strategy to bring Arizona’s SNAP PER below six percent. This initiative involves:

• Root Cause Analysis: By examining patterns in high-dollar and frequent errors, we were able to identify underlying issues. This analysis is enhanced through process mapping and insights from frontline staff to pinpoint systemic problems.
• Quality Assurance Reviews: Experienced staff are conducting targeted reviews of active cases. This proactive approach helps catch and correct errors before benefits are authorized or subjected to quality control reviews.
• Staffing and Training: DES is optimizing staff roles to ensure accuracy, manage workloads, and retain seasoned employees. Continuous training on error-prone areas and overall staff development are prioritized.
• Eligibility Process Improvements: The SNAP eligibility process is under review to boost both efficiency and accuracy.
• Data Systems and Technology: Investments are being made in systems and technology, such as automated discrepancy flags, alerts, and system task automation, to streamline operations.
• Policy Option Review: DES is exploring policy flexibilities and requesting SNAP rule waivers from USDA to enhance program efficacy.

Additionally, our teams immediately began to work on identifying clients who were impacted by the changes to the ABAWD exemption criteria, and applied alternative exemptions using system data when applicable (for example, a client may have been both a veteran and an Indian, and would still be eligible for an ABAWD exemption when the veteran exemption was removed).

When we were unable to identify an alternative exemption for a client, the client was sent a notice of the H.R. 1 changes and the need to comply with the ABAWD work requirement. The notice gave clients an opportunity to identify a different, remaining exemption for which they were eligible or to report compliance with the work requirement. For those who were unable to identify a current exemption or meet the work requirement, DES is able to assist through Arizona’s voluntary SNAP employment and training program, SNAP Career Advancement Network (SNAP CAN) or by making a referral to ARIZONA@WORK. However, when exemptions or work requirements are not met and after a review for good cause is completed and unfounded, the case will be closed, and benefits will stop.

While the full impact of H.R.1 will not be fully realized until implementation is finalized, its potential reach into state-level human services underscores a familiar reality: federal policy decisions do not stop at state lines. We continue to balance preparation and flexibility by monitoring federal developments, engaging state leaders, and communicating effectively to ensure continuity of care and minimize disruption. DES is taking every effort to prioritize Arizonans, and we value and appreciate the efforts of our community partners, stakeholders, and the media that support human services work in Arizona.

Michael