(The Center Square) – A Michigan House oversight subcommittee report is warning that weaknesses in the state’s food assistance system could cost taxpayers hundreds of millions of dollars in federal penalties unless reforms are implemented.
The report from the Michigan House Oversight Subcommittee on State and Local Assistance Programs examined how the state administers the Supplemental Nutrition Assistance Program, commonly known as food stamps. It identified gaps in verification, security and administration which open it up to fraud.
Subcommittee Chairman Rep. Jason Woolford, R-Howell, said the investigation was intended to evaluate whether Michigan’s public assistance programs are operating effectively and protecting taxpayer funds.
“Oversight in government is a critical check for the people, because it ensures they are well-served by transparent and efficient government services and programs,” Woolford said in a statement. “We need to root out any waste, fraud and abuse in these systems to help benefits get to those who truly need them.”
About 1 in 7 Michigan residents receives food assistance, and the state spent more than $3.2 billion on the program in fiscal year 2024, according to the report.
It also found that the state’s application system for welfare, MiBridges, relies heavily on self-attestation and back-end verification rather than requiring documentation upfront.
“The problem is not just fraud, it is also systemic error,” the report stated.
In addition to SNAP, that system manages:
• The Family Independence Program: a cash assistance program for low-income families.
• Medicaid.
• The Women, Infants, and Children Benefits Programs.
• The Child Development & Care Benefits Programs.
• State Emergency Relief Programs.
During a committee hearing last year, Woolford walked through the application process with a Michigan Department of Health and Human Services official to highlight the limited information required to submit an application for welfare benefits. According to the report, the only required information for a food assistance application includes a first and last name, address and phone number, along with a number if an applicant self-identifies as a noncitizen.
The report also noted the MiBridges application portal cost more than $16.8 million to develop.
While state investigators prevented more than $300 million in attempted fraud in fiscal year 2024, the report said more needs to be done to prevent fraud: namely adding more security features such as chip-enabled MiBridge cards.
Fraud and incorrect payments are only part of the potential cost to taxpayers, as Michigan’s high SNAP payment error rate could also trigger additional federal penalties.
Under federal changes to SNAP funding in the One Big Beautiful Bill Act, states with higher payment error rates will be required to cover a larger share of benefit overpayments and administrative cost.
Michigan’s error rate averaged above 10% under Gov. Gretchen Whitmer’s administration, according to the report. The rate must fall below 6% to avoid all federal penalties, while anything above 6% is based on a sliding scale. That means states with higher error rates will receive a higher penalty.
“When the October 1, 2027, implementation date kicks in, federal law will allow states to choose between the FY24 and FY25 error rates for use in determining the state match requirement,” the report said.
If the state’s fiscal year 2024 error rate of 9.53% is used for federal calculations, Michigan could face a penalty of roughly $320 million. The fiscal year 2025 error rate has not yet been released.
“We are coming up on a very expensive reckoning, and it’s going to cost taxpayers,” Woolford said. “If this is the best Michigan can do as far as error rate, the state will pay a $320 million penalty.”
The subcommittee recommended several policy changes, including requiring more upfront information from applicants, converting Bridge cards to chip-enabled cards, requiring photo identification and signatures on cards, and requiring the state to participate in a federal data-sharing program designed to prevent individuals from receiving benefits in multiple states.
Lawmakers also recommended prohibiting out-of-state purchases with Michigan Bridge cards and requiring the Michigan Department of Health and Human Services to provide monthly quality-control reports to the Legislature when error rates exceed federal thresholds.
Several bills have already been introduced in the Michigan Legislature to implement some of the recommendations.
