News broke last week that someone in California bought the winning ticket for a $1.7 billion Powerball jackpot. Yet while the winner isn’t known, taxpayers may soon be the losers.
Tens of thousands of substantial lottery winners are receiving food stamps, through a combination of state negligence and federally created loopholes. Congress should get lottery winners off this low-income program when passing the Farm Bill later this fall.
The Foundation for Government Accountability submitted Freedom of Information Act requests to all 50 states, requesting information on the number of substantial lottery winners on the food stamp program since 2019. We aren’t talking about the proud owners of $20 prizes from scratchers. We’re talking about those who won at least $4,250, which under federal law, makes a person ineligible for the taxpayer’s help.
Thirteen states responded, indicating that more than 66,000 substantial lottery winners continued receiving food stamps. (Across all 50 states, the number is likely in the hundreds of thousands.) Yet those 13 states have only removed about 400 lottery winners. Illinois is the worst offender, removing a mere 99 substantial winners out of the more than 50,000 on food stamps.
We asked states for the highest winners on their food stamp programs. In South Dakota, the winner of a $2 million jackpot is still being subsidized by taxpayers. In other states, people with tens or hundreds of thousands of dollars in winnings may still be on the dole. That’s obviously inappropriate, yet it’s also wrong for someone who won $4,250.
Food stamps have an “asset test” to ensure that recipients are truly needy. Cars, homes, retirement accounts and many other assets are exempt, so that asset tests only apply to liquid cash and the like. When you add thousands or tens of thousands of dollars to someone’s bank account, on top of whatever they make in income, it’s clear that people can pay for groceries without taxpayers footing the bill. If a lottery winner’s assets drop back below the threshold, they would qualify again for food stamps.
Why have so few been removed? Two reasons.
The first is state ineptitude. Eight states, mostly in the South and Midwest, have legally mandated robust data cross-checks that compare lottery winning records to food-stamp records on a weekly or regular basis. That’s basic good government, but more than 40 states either have a bad system or no system. If that $1.7 billion lottery winner is on food stamps, there’s no guarantee his or her state lottery department and health and human services department will talk to each other, potentially leaving that person on the rolls.
The second reason is a federal loophole. Congress has allowed states to ignore the food stamp asset limit test under a policy known as “broad-based categorical eligibility.” Basically, states can automatically sign up someone for food stamps if they receive another taxpayer-funded benefit. The assumption is that if you’re getting the taxpayers’ help in one area, you probably qualify for help in other areas. But states have found ways to blatantly abuse this policy.
States have adopted extreme definitions of “taxpayer-funded benefit.” In one common trick, they use federal funding for other welfare programs to print brochures about food stamps. The brochure is therefore a “taxpayer-funded benefit,” enabling you to bypass any asset limits for food stamps. Substantial lottery winners can use this loophole, yet so can essentially anyone, including millionaires. Some 41 states and Washington, D.C., use this trick to get far more people on food stamps.”
Congress cannot let this madness continue. The best chance to end it is in the Farm Bill, which lawmakers are negotiating this fall.
They should permanently end broad-based categorical eligibility, ensuring that every food stamp recipient meets the federal asset test. They should also mandate that every state implement robust data checks between food stamp rolls and lottery winning records, as well as other key data such as death records and employment and wage records.
States should be forced to police their own food stamp program, weeding out waste, fraud and abuse.
These modest reforms are the bare minimum for reining in out-of-control food stamp spending. A staggering 41.8 million people are on the program, an increase of about five million since just before the pandemic. Food stamp spending has also doubled from $60 billion in 2019 to $120 billion last year.
Amid this explosion of welfare spending, surely Congress can agree that jackpot winners don’t need the taxpayers’ generosity.