Understanding Maryland SNAP Audit Findings: A Comprehensive Guide

Maryland SNAP Audit Findings: Complete Guide to Improper Payments and Federal Penalties

Quick Answer

A July 2026 Maryland legislative audit found the state improperly paid SNAP benefits to ineligible recipients, including someone who won a $2 million lottery prize and 1,858 incarcerated individuals . The audit identified systemic failures in eligibility verification, costing Maryland $28 million in federal penalties for high payment error rates . The state’s SNAP error rate was 13.08% in fiscal year 2025, down from 35.6% in 2022 but still among the nation’s highest . Under new federal rules in the “One Big Beautiful Bill Act” (OBBBA), Maryland faces potential penalties exceeding $240 million if it cannot reduce its error rate below 6% .

Quick Facts

What Is the Maryland SNAP Audit?

The Maryland SNAP audit is a comprehensive review conducted by the state’s Office of Legislative Audits (OLA), examining the performance of the Department of Human Services’ Family Investment Administration from June 1, 2021, to February 28, 2025 . The audit identified nine findings total, revealing significant weaknesses in how Maryland determines eligibility for SNAP and other public assistance programs <span class=””>.

The audit is critical because SNAP serves over 680,000 Marylanders monthly, with $1.6 billion in benefits distributed annually. More than 59% of recipients are in families with children, and over 32% are in households with elderly or disabled members .

What the Audit Found

The audit documented several major problems:

Improper Payments to Ineligible Recipients

• A $2 million lottery winner received $9,000 in SNAP benefits after winning the prize in July 2023, continuing through February 2026 

• 1,858 instances of incarcerated individuals receiving SNAP or Temporary Cash Assistance while ineligible 

• Approximately $115,000 in benefits paid to lottery winners and deceased individuals that should have been terminated 

Systemic Failures

• Local social services departments lacked comprehensive procedures to properly determine eligibility 

• Required documentation for income, employment, and immigration status was frequently missing 

• Computer eligibility alerts were not promptly acted upon 

Repeated Issues

• Four findings from the previous audit were repeated 

• Problems with monitoring computer alerts have been cited since at least 2019 

• One contract monitoring finding has appeared in five consecutive audits dating back to 2007 

Why Is Maryland Facing Federal Penalties?

Maryland is facing significant federal penalties because its SNAP payment error rate has consistently exceeded the national average. The U.S. Department of Agriculture calculates state error rates annually, measuring both overpayments and underpayments .

Maryland’s SNAP Error Rate History

Error rate breakdown for FY2025:

• Overpayment rate: 10.89% (increased from 8.85% in 2024) 

• Underpayment rate: 2.19% (decreased from 4.79% in 2024) 

Federal Penalties Already Assessed

The federal government assessed penalties against Maryland for exceeding the national average for two consecutive years:

• $16.6 million penalty for 2022-2023 

• $11.4 million penalty for 2024 

• Total: $28 million in federal penalties 

What Are the New OBBBA Penalties?

The “One Big Beautiful Bill Act” (OBBBA), signed into law on July 4, 2025, implemented new financial penalties for states with high SNAP error rates .

How the New Penalty System Works

Maryland’s situation: The state’s FY2025 error rate of 13.08% places it in the penalty range requiring a 15% benefit cost-share, which could exceed $240 million annually . Had the error rate been 13.34% or higher, Maryland would have received a one-year grace period .

Allegations of Error Rate Manipulation

The audit revealed that a fraud, waste, and abuse hotline complaint alleged DHS management “may have intentionally manipulated the error rate to enable the State to defer the increased State contribution for SNAP costs imposed by the One Big Beautiful Bill Act” <span class=””>. However, the Office of Legislative Audits was unable to substantiate this allegation and did not identify matters warranting referral to the Attorney General’s Criminal Division .

Key Audit Findings in Detail

1. Lottery Winner Case

A Maryland resident won a $2 million lottery prize in July 2023. Under federal law, SNAP recipients must notify the agency within 10 days of receiving a “substantial” lottery prize, and benefits must be terminated . However, this individual continued receiving SNAP benefits until February 2026, totaling **$9,000 in improper payments** .

Who qualifies? SNAP recipients must report any significant change in income or resources. Lottery winnings are considered income that may disqualify households .

Who does NOT qualify? Households with substantial lottery winnings immediately become ineligible for SNAP benefits.

2. Incarcerated Individuals

Between June 2021 and February 2025, Maryland paid SNAP and Temporary Cash Assistance benefits to 1,858 incarcerated individuals . Under federal law, individuals incarcerated for more than 30 days are not eligible for benefits <span class=””>.

Who qualifies? SNAP benefits are for individuals living in the community who meet income and resource limits.

Who does NOT qualify? Anyone incarcerated for more than 30 days is ineligible .

Why did this happen? The audit found that data from the Department of Public Safety and Correctional Services was incomplete, and FIA did not properly act on the matches it did identify . DHS is now working to automate systems and close cases once ineligible individuals are identified .

3. Repeat Audit Findings

The audit noted that several problems have persisted across multiple reviews:

• Computer alert monitoring failures: Cited since at least 2019 

• Contract monitoring issues: Appeared in five consecutive audits dating back to 2007 

• Documentation errors: Local departments lacked required documentation to evaluate program eligibility 

DHS officials noted this is the “fewest number of repeat audit findings for the department since 2011,” but critics point out that repeated issues indicate a lack of follow-through .

What Is Maryland Doing to Fix These Problems?

DHS Response and Corrective Actions

The Department of Human Services has acknowledged the audit findings and is taking several corrective steps :

1. Hiring: Nearly 200 new caseworkers and supervisors hired since early 2023 

2. Staffing improvement: Vacancy rates reduced from nearly 20% in 2022 to just over 4% by early 2026 

3. Automation: Expanding automated eligibility verification and closing cases automatically when ineligibility is identified 

4. Fraud prevention: Strengthening fraud prevention measures 

5. Data sharing: Working with the Department of Public Safety and Correctional Services to identify discrepancies 

6. Training: Increasing staff training sessions and bolstering employee training 

What DHS Officials Say

“Addressing audit findings is a top priority and a shared responsibility across the agency,” said DHS Assistant Secretary for Programs Larry Handerhan. “DHS has successfully resolved a significant number of findings from our previous audit while aggressively pursuing data-driven modernization that protects taxpayer dollars. We are committed to ensuring findings are fully resolved and are used to strengthen program integrity and performance” .

The department noted it has reduced its SNAP payment error rate by more than 60% since 2022 and believes many improvements occurred after the audit period ended .

Implementation of Chip-and-Tap EBT Cards

Maryland recently rolled out a new “chip-and-tap” Electronic Benefits Transfer card system designed to reduce benefit theft and fraud . However, the audit also identified issues with the EBT contract procurement process, noting that the original winning vendor’s bid omitted necessary pricing information that allowed it to come in $11.1 million lower than the other bidder . The contract was ultimately terminated and the losing bidder appealed .

How Does This Affect SNAP Recipients?

For Current SNAP Recipients

• Benefits continue for eligible households meeting income and work requirements

• The state is implementing more rigorous eligibility verification

• Overpayments may be recovered through repayment plans

• Underpayments (where eligible recipients receive less than entitled) are being addressed

For Those Applying

• Documentation requirements are being enforced more strictly

• Income, employment, and immigration status verification may take longer

• The state is hiring more staff to process applications and verify eligibility 

For Low-Income Families

The SNAP program feeds more than 680,000 Marylanders monthly . Proper administration ensures eligible families receive the correct benefit amount and prevents delays in food assistance.

Related Government Benefits

Official Government Resources

• Maryland Department of Human Services: dhs.maryland.gov

• Maryland SNAP: dhs.maryland.gov/snap

• Office of Legislative Audits: ola.maryland.gov

• USDA Food and Nutrition Service (SNAP): fns.usda.gov/snap

• Benefits.gov: benefits.gov

• USA.gov: usa.gov

Common Questions

1. What did the Maryland SNAP audit find?

The audit found Maryland improperly paid SNAP benefits to a $2 million lottery winner, 1,858 incarcerated individuals, and deceased recipients. The state lacked procedures to verify eligibility, resulting in $28 million in federal penalties. The audit also found repeated management failures dating back years .

2. How much did Maryland overpay in SNAP benefits?

The audit documented at least $9,000 paid to one lottery winner and $115,000 in total benefits to lottery winners and deceased individuals. The larger issue is the $28 million in federal penalties for the state’s high payment error rate .

3. What is Maryland’s SNAP error rate?

Maryland’s SNAP payment error rate was 13.08% in fiscal year 2025, 9th highest among states. The overpayment rate was 10.89% and underpayment rate was 2.19%. The rate has improved from 35.6% in 2022 but remains above the national average .

4. Why does a high error rate cost Maryland money?

Under federal rules, states with error rates above the national average for two consecutive years must repay federal funds. Maryland has paid $28 million in penalties for fiscal years 2022-2024. New OBBBA rules will impose even larger penalties starting in 2027 .

5. What is the OBBBA penalty for Maryland?

Under the “One Big Beautiful Bill Act,” Maryland’s 13.08% error rate triggers a 15% cost-share of SNAP benefits, potentially costing the state over $240 million annually. If the rate were below 6%, Maryland would pay nothing .

6. Is Maryland doing anything to fix these problems?

Yes. DHS has hired nearly 200 new caseworkers, expanded automated eligibility verification, strengthened fraud prevention, and reduced staff vacancies from 20% to 4%. The department reduced the error rate by over 60% since 2022 .

7. What are the most common SNAP eligibility errors?

The audit found errors involving lottery winners, incarcerated individuals, and deceased recipients. Local social services offices also lacked proper documentation for income, employment, and immigration status verification in dozens of cases .

8. How many Marylanders receive SNAP benefits?

Over 680,000 Marylanders, or 11% of the state’s population, receive SNAP benefits monthly. More than 59% are in families with children, and over 32% are in households with elderly or disabled members .

9. Are these problems new or ongoing?

Many issues are ongoing. The audit noted four findings repeated from the previous audit, problems with computer alerts cited since 2019, and a contract monitoring issue appearing in five consecutive audits since 2007 .

10. What happens if Maryland doesn’t fix its error rate?

If the error rate doesn’t drop below 6%, Maryland faces penalties up to 15% of SNAP benefit costs (potentially over $240 million). The state also faces increased administrative cost burden—states will pay 75% of SNAP administrative costs starting October 2026 .

Key Takeaways

• A July 2026 audit found Maryland improperly paid SNAP benefits to a $2 million lottery winner and 1,858 incarcerated individuals 

• Maryland’s SNAP error rate was 13.08% in FY2025, improved from 35.6% in 2022 but still among the nation’s highest 

• Federal penalties have cost Maryland $28 million for error rates above the national average 

• New OBBBA rules could cost Maryland over $240 million annually starting in 2027 unless the error rate drops below 6% 

• The audit found repeated issues including computer alert monitoring failures cited since 2019 

• DHS is taking corrective action by hiring nearly 200 new workers, automating verification, and implementing chip-and-tap EBT cards 

• Over 680,000 Marylanders receive SNAP benefits monthly 

• The state reduced its error rate by over 60% since 2022, the largest relative decline among states 

• Questions remain about whether Maryland can meet the 6% target to avoid massive new penalties

• SNAP remains vital for Maryland families, with 59% of recipients in households with children