VDSS warns HR 1 threatens SNAP funding and outlines child‑welfare transformation costs

Department of Social Services Commissioner Duke Storen told a Senate subcommittee that HR 1 will change SNAP financing and pose significant fiscal risk to the Commonwealth.

Storen said the federal share of SNAP administrative reimbursements will fall from roughly 50% to 25% beginning Oct. 1, 2026, creating an estimated $94,000,000 general‑fund increase. He also warned of a new penalty that could require states to share SNAP benefit costs beginning Oct. 1, 2027, if a state’s payment‑error rate exceeds 6 percent. “Our error rate going into this year was 11.5,” Storen said, noting Virginia would likely face a financial penalty unless the rate declines.

Why it matters: SNAP touches hundreds of thousands of residents and injects roughly $1.8 billion into Virginia’s economy annually, Storen said; the combination of increased administrative costs and exposure to benefit‑share penalties could drive large state budget needs.

Key SNAP details

- Administrative reimbursement shift: Storen said the federal match on SNAP administrative costs will fall to 25% as of 10/01/2026; VDSS calculated a roughly $94,000,000 general‑fund increase over the affected years and said the governor’s introduced budget did not fully cover that gap (VDSS flagged $27,000,000 short in FY27 and $36,000,000 short in FY28 in the proposal).

- Payment‑error penalties: Storen explained the new penalty model and said Virginia’s most recent audited payment‑error rate entering the penalty calculation period is 11.5%, above the new 6% threshold that would trigger shared benefit costs beginning in federal FY 2027.

VDSS proposals and child‑welfare transformation

Storen presented the Safe Kids Strong Families child‑welfare transformation with six pillars including workforce stabilization, improved permanency and centralized CPS intake. He described centralized intake as a means to reduce local workload variation and improve consistency: VDSS estimates the centralized intake would need about 130 full‑time staff plus 67 part‑time staff, with a first‑year budgetary cost Storen estimated at roughly $14,600,000 and an overall general‑fund investment near $18,000,000.

Quality assurance and technology

Storen described the agency’s "find and fix" quality‑assurance work, use of data analytics and targeted audits assisted by KPMG to identify high‑impact error cases. He said VDSS is seeking a technology investment (roughly $15,000,000) to add automation and artificial‑intelligence‑assisted capabilities to reduce errors and improve processing; he also warned of a printing and mailing contract shortfall tied to mandatory mailings (contract ~$7,000,000/year; the budget included about $1,200,000).

Quote: “HR 1 really threatens the SNAP program,” Storen said, adding that both the food security of Virginians and the economic multiplier of SNAP benefits are at stake.

What happens next: VDSS said it will continue targeted audits, operational fixes and discussions with the General Assembly about funding priorities; Storen promised intensive work to reduce the error rate over the next 18 months but said a penalty is likely if performance metrics do not improve before the federal penalty window closes.

Ending: After questioning on implementation details — including verification for gig‑economy income and workforce drivers of local DSS turnover — the committee concluded the VDSS briefing and adjourned.