2026-2027; human services.

HB4147 - 572R - H Ver

House Engrossed

2026-2027; human
services.

State of Arizona

House of Representatives

Fifty-seventh Legislature

Second Regular Session

2026

HOUSE BILL 4147

AN
ACT

Amending title 46, chapter 2, article 2,
Arizona Revised Statutes, by adding sections 46-232, 46-233, 46-234
and 46-235; Repealing section 46-235, Arizona Revised Statutes;
amending section 46-297.01, Arizona Revised Statutes; relating to human
services.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it
enacted by the Legislature of the State of Arizona:

Section 1. Title 46, chapter 2, article 2,
Arizona Revised Statutes, is amended by adding sections 46-232, 46-233,
46-234 and 46-235, to read:

START_STATUTE
46-232.

Supplemental nutrition assistance program fund; expenditure
authority

The supplemental nutrition assistance program
fund is established consisting of monies collected by the department of
economic security from federal deposits as authorized by 7 Code of Federal
Regulations parts 271 through 285. The department of economic
security shall administer the fund.� Monies in the fund are continuously
appropriated. The department of economic security shall deposit all
federal monies received under the supplemental nutrition assistance program,
including the federal administrative share and the federal benefit share, in
the fund before expenditure.
END_STATUTE

START_STATUTE
46-233.

Supplemental nutrition assistance program; categorical
eligibility; gross income limit

The department of economic security may not
establish a gross income limit of more than one hundred eighty-five
percent of the federal poverty level for supplemental nutrition assistance
program recipients who are categorically eligible pursuant to 7 Code of Federal
Regulations section 273.2(
j
)(2).
END_STATUTE

START_STATUTE
46-234.

Supplemental nutrition assistance program; eligibility
evaluations; public posting; definitions

A. To determine or evaluate SNAP
eligibility, the department of economic security shall:

1. Enter into a data matching
agreement with the department of
Revenue to identify
households with lottery or gambling winnings of $3,000 or more and, to the
extent permissible under federal law, to treat the data obtained as verified on
receipt. To the extent the data may not be verified on receipt, the
department of economic security shall refer those households with lottery or
gambling winnings that are equal to or greater than the resource limit for
elderly or disabled households as defined in 7 Code of Federal Regulations
section 273.8(
b
) to the department of
economic security for further investigation.

2. On at least a monthly basis,
review information that is provided by the department of health services and
that identifies individuals who have had a change in circumstances that may
affect SNAP eligibility.

3. On at least a quarterly basis,
review
the department'S information that identifies
individuals who have had a change in circumstances that may affect SNAP
eligibility, including a CHANGE in unemployment benefits, employment status or
wages.

4. On
at least a monthly basis, review the
department's information
that identifies individuals who have had a change in circumstances that may
affect SNAP eligibility, including potential changes in residency as identified
by out-of-state electronic benefit transfer card transactions.

5. On at least a monthly basis,
review information that is provided by the state DEPARTMENT of corrections and
that identifies individuals who have had a change in circumstances that may
affect SNAP eligibility.

6. On at least a quarterly basis,
review information that is provided by the department of revenue and that
identifies households that have had a change in circumstances that may affect
SNAP eligibility, including potential changes in income, wages or residency as
identified by tax records.

7. On at least a quarterly basis,
post on the department's public website the following aggregated amounts that
were obtained from noncompliance and fraud investigations related to SNAP,
excluding confidential and personally identifiable information:

(
a
) The number
of SNAP cases that were investigated for intentional program violations or
fraud.

(
b
) The number
of SNAP cases that were referred to the attorney general's office for
prosecution.

(
c
) The amount
of Improper payments and expenditures.

(
d
) The amount
of monies recovered.

(
e
) The amount
of monies spent for improper payments and ineligible RECIPIENTS as a percentage
of cases that were investigated and reviewed.

(
f
) The amount
of monies spent by electronic benefit card transactions that occurred outside
of this state, categorized by state.

B. On at least a monthly basis, the
department of health services and the department of
economic
security shall review the following information from federal sources to assess
a recipient's continued eligibility for SNAP:

1. Earned income information, death
register information, incarceration records, supplemental security income
information, beneficiary records, earnings information and pension information
that is maintained by the United States social security administration.

2. Income and employment information
that is maintained in the national directory of new hires database and child
support enforcement data that is maintained by the united states department of
health and human services.

3. Payment and earnings information
that is maintained by the united states department of housing and urban
development.

4. National
fleeing felon information that is maintained by the United States federal
bureau of investigation.

C. If
the department receives information that identifies an individual who is
enrolled in SNAP and that indicates a change in circumstances that may affect
that individual's SNAP eligibility, the department shall review that
individual's case.

D. For the purposes of this section:

1. "Department" means the
department of economic security.

2. "SNAP" means the
supplemental nutrition assistance program.
END_STATUTE

START_STATUTE
46-235.

Payment error rate; reduction; quarterly reports; requirements;
auditor general

A. On or before December 30, 2030,
the department of economic security shall reduce the supplemental nutrition
assistance program's payment error rate as reported by the United States
department of agriculture to not more than three percent.

B. Beginning in fiscal year
2026-2027 and each fiscal year thereafter, the department shall
submit
a quarterly report to the legislature
within thirty days after the end of the quarter that details the
department's
monthly progress towards reducing the
payment error rate and that includes strategies and barriers that may be
present in reducing the payment error rate.

C. If the department fails to meet
annual interim targets established by rule or the final target as prescribed in
subsection A of this section, the department shall:

1. Submit a corrective action plan to
the legislature within sixty days that includes an analysis of why the targets
were not met and timelines for correcting the payment error rate.

2. Pay fifty percent of any federal
liabilities that may be imposed due to the excess payment error
rates. The remaining federal liabilities shall be paid from the
state general fund.

3. Implement a corrective
plan. If the department fails to comply with the corrective plan,
the department's administrative funding shall be reduced by ten percent until
resolved.

D. On or before
November 15, 2027, The auditor general shall complete a
special audit. the
special audit
shall determine what factors contributed to the payment error rate and shall
include recommendations to reduce the payment error rate. The
department shall implement the recommendations within twelve months after
receiving the recommendations from the auditor general unless the
recommendations are waived by the joint legislative audit committee.�
The auditor general may request that the department submit a written
status report on the department's implementation of the special audit
recommendations.

E. If
the department corrects the payment error rate ahead of schedule, the
legislature may allocate additional funding for program improvements.

END_STATUTE

Sec. 2.
Delayed repeal

Section 46-235, Arizona Revised
Statutes, as added by this act, is repealed from and after December 31, 2032.

Sec. 3. Section 46-297.01, Arizona Revised
Statutes, is amended to read:

START_STATUTE
46-297.01.

Electronic benefit transfer cards; replacements; out-of-state
spending; fraud investigation

A. The
department shall send each recipient who requests two replacement cards within
a twelve-month period a letter informing the recipient that another
request will initiate an investigation by the department to determine whether
there is fraud. If a third-party vendor is administering
replacement cards directly to recipients, the vendor shall notify the
department after a recipient requests a second replacement card in a twelve-month
period and makes any subsequent request thereafter.

B. After
a recipient's request for a third replacement card within any twelve-month
period, and any subsequent request thereafter, the department shall schedule an
interview with the recipient and, if the department has been granted a waiver,
determine whether there is fraud before issuing a new card. The
recipient's request for a fourth replacement card requires the department to
schedule an interview with the recipient to determine whether there is fraud
before issuing a new card.� The department shall request any necessary federal
waivers to comply with this section.

C. If a recipient uses more than ten percent of the
recipient's electronic benefit transfer card balance in a six-month
period on out-of-state purchases, the department shall schedule an
interview with the recipient to determine whether there is fraud.

D. On at least a monthly basis, the
department shall use the data from an electronic benefit transfer card to
identify any individual who has made purchases exclusively out-of-state
over a ninety-day period.� The department shall contact the individual
who is identified within thirty days to determine whether that individual
resides in this state.� If the individual does not reside in this state, the
department shall terminate assistance, including supplemental nutrition
assistance program benefits, to the individual within thirty days after
contacting the individual.� Within fifteen days after the individual's
assistance has been terminated, the department shall refer the individual to
the United States attorney's office for the district
of
arizona.

END_STATUTE

Sec. 4.
Department of economic security; drug testing; TANF cash
benefits recipients

During
fiscal year 2026-2027, the department of economic security shall screen
and test each adult recipient who is otherwise eligible for temporary
assistance for needy families cash benefits and who the department has
reasonable cause to believe engages in the illegal use of controlled
substances. Any recipient who tests positive for the use of a
controlled substance that was not prescribed for the recipient by a licensed
health care provider is ineligible to receive benefits for a period of one
year.