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Original article URL: http://bridgemi.com/2011/09/how-15000-lost-a-lottery-they-didnt-even-play/

Public sector/Safety net

How 15,000 lost a lottery they didn’t even play

Did one man’s luck turn into a financial catastrophe for Michigan’s poor?

Mention the name Leroy Fick in a room of social service agency directors, and the temperature drops. Heads shake. Shoulders slump. Curses are mumbled.

Fick won the lottery — and 15,000 people will lose their food assistance, as of Oct. 1. That’s the too-simple, but easily digestible, story of Michigan’s welfare reform.

The Auburn man, who continued to receive food stamps after winning about $850,000 in a Michigan Lottery game show in 2010, was held up as an example of abuses of Michigan’s welfare system. Come October, an estimated 15,000 families will lose food stamps when the Department of Human Services changes its eligibility guidelines to exclude Fick — and anyone else with assets greater than $5,000.

Thousands more will lose cash assistance the same week as a result of a new 48-month lifetime limit on aid — and heat assistance after a state-run program lost its source of cash this summer.

Rightly or wrongly, Fisk was cast as the catalyst for the impending catastrophe for the poor. How much is he actually to blame? It depends on who you talk to, but the most likely answer is very little. Yet Fick has become the unlikely villain for both the political right and the left — held up as the symbol of welfare excess by fiscal conservatives and used as a scapegoat for changes to the system by social liberals.

Fick may be the most notorious lucky man in Michigan. After the 59-year-old Auburn resident won $2 million in the lottery game show “Make Me Rich” in June 2010, he continued to collect food stamps, which are financed with federal dollars. He didn’t cheat. He didn’t lie. In fact, he called his Department of Human Services caseworker within a week to say he’d won the lottery and that he figured he needed to turn in his Bridge Card, a state-issued debit card for food and cash assistance.

But Fick still qualified for food stamps, the DHS worker told the lottery winner. Food assistance is based only on income; because Fick had chosen to take a lump-sum payment of about $850,000, instead of monthly payments spread over 20 years, his winnings were considered an asset, not income.

Feeling that luck was continuing to shine on him, Fick kept using food assistance for the next 10 months, driving his newly purchased 2008 Audi TT sports car to and from the grocery store.

The food stamps hit the fan in May, though, when a disgruntled neighbor tattled to a local TV station. Fick didn’t help his cause with his first TV interview. “If you’re going to try to make me feel bad” about using food stamps after winning the lottery, Fick said defiantly, “you’re not going to do it.”

Within days, the story of the food stamp millionaire had spanned the globe. Michigan legislators jumped into action, introducing bills to force lottery winners’ names to be cross-checked with DHS assistance recipients.

“I am not going to sit and debate the ethics of this,” Fick’s attorney, John Wilson, said earlier this year, “but from his standpoint, he did what he was supposed to do. The problem is with the state.”

State officials jumped to fix the Fick problem, and, in the process, they are knocking another estimated 15,000 families off food stamps.

Fresh off serving on a task force examining the underground cash economy in Michigan, DHS Director Maura Corrigan believed some Michiganians were gaming the system, collecting food stamps on a low level of reported income, while figuratively stuffing their mattresses with cash.

Gilda Jacobs, president of the Michigan League of Human Services, scoffs at the notion of a state filled with undocumented cash. “Maybe people are in an underground economy because they can’t make enough money because they can’t find a regular job,” Jacobs said. “They’re not reporting their baby-sitting dollars? Come on! There’s this myth that everyone is out there trying to defraud the system.”

While food stamps are a federal program, each state has some leeway in setting guidelines. Corrigan changed the state’s eligibility guidelines to take into account not only a person’s income, but their assets as well.

(DHS document details eligibility requirements)

A person with $5,000 in assets no longer would receive food stamps. Here’s how it will work:

*A person’s home doesn’t count toward the asset limit, as long as the person lives there; a second house, such as an Up North cottage or rental home, does count.

* The total value of all family vehicles, including cars, trucks, boats, all-terrain vehicles and recreational vehicles, cannot exceed $15,000. Every dollar over $15,000 counts against the $5,000 limit.

For example, a family that owned a beat-up 2001 Chrysler Town & Country minivan ($3,500), a decent 2004 GMC Sierra truck  ($14,000) and a 15-year-old snowmobile ($950), could have a total vehicle value of $18,400, according to Kelly Blue Book, the same vehicle valuation system the state plans to use (snowmobile value was taken from eBay). The $3,400 in excess of the $15,000 vehicle limit would count against the family’s asset limit – meaning they could have only $1,600 in non-vehicle assets and still qualify for public assistance.

* Certificates of deposit, money market accounts, bank account balances and cash on hand count as assets; retirement accounts are excluded.

“The director wanted to go back to the integrity of the program,” said Colleen Rosso, DHS director of communications. “These are federal dollars, but I’m a federal taxpayer and so are you. We need to keep those dollars for people who really need it.”

DHS sent out about 5,000 letters this month to food stamp recipients telling them they were being removed from the program because their assets were believed to be higher than $5,000; Another 80,000 letters were sent to food stamp recipients who the state isn’t sure about; those recipients must provide proof of assets by Sept. 30 (letters were sent Sept. 20) or be cut off, too.

The state estimates 15,000 families will lose benefits immediately, with more families cut off as recipients undergo their annual case reviews over the next 12 months.

Brian Rooney, director of policy and compliance for DHS, said Michigan crafted its asset-based guidelines off of those of Texas. The Lone Star State has a lower unemployment rate than Michigan, but also has a higher poverty rate. Michigan has the third-highest unemployment rate in the nation, 11.2 percent, and has a poverty rate of 17 percent.

Currently, 33 states do not have an asset test for food assistance, and 15 of the remaining states exclude one family vehicle from assets, according to the Michigan League of Human Services.

MLHS’ Jacobs said she expects the recently unemployed will be impacted the most by the asset test, because they may still have a fairly new car and other niceties of a middle-class life.

Forcing the unemployed to trade in newer cars for older ones in order to get food stamps is counterproductive, Jacobs argues, because older, less reliable cars add another hurdle to finding work.

“It’s going to be a couple of months until we see the real impact,” Jacobs said. “We are going to have a lot of hungry people in this state. We already know a lot of food banks are experiencing way higher usage than they used to …”

Meanwhile, another 11,000 families are expected to lose their cash assistance beginning next week, because of the state’s new 48-month lifetime limit on cash assistance. Social service agencies have been gearing up for an expected flood of phone calls next week from people who don’t understand why their Bridge Cards are empty.

At the same time, a program that helps pay heating bills for 95,000 needy families is on the blink.

In July, the Michigan Court of Appeals struck down the financing system used by Michigan’s Low Income and Energy Efficiency Fund. The Legislature hasn’t created a new funding mechanism.

“The timing (of assistance cuts) couldn’t be worse,” Jacobs said. “You have to look at layer after layer of erosion.

“DHS is operating under these crazy expectations that there is going to be a safety net out there for a soft landing for these people,” Jacobs said, “and it doesn’t exist.”

18 comments from Bridge readers.Add mine!

  1. Kathy Dennis

    Sure hope the church’s have plenty of food for the family’s in need. Wonder if the money in the collection plates will go up?

  2. Larry Lewis

    Let me get this correct, because one man won a lotto and failed to stop his food stamps. We should punish everyone else. Fairness does not begain to cover this. How about the multi-millionaires who collect social security and complain when their checks come late. How about our politicians who are covered by the best health care that our tax payer dollars will cover but want to deny coverage for Michigan children who live in poverty.
    Which by the way has increased 60% for our youth in this last decade. Maybe we should start looking to Canada for the answers in what is wrong with this government.

    1. Joe

      I wouldn’t mind Canadian citizenship. They’re not drinking the right-wing Kool-aid. Like George Bush’s tax cuts, I’m sure Synder’s corporate cuts will send companies scrambling to Michigan. Has anyone told them yet that a new form of slavery and destitution is now popular in Michigan? How about free labor? Who can beat that!

  3. Matt Howell

    How many years is it reasonable for someone to be on public support before we say, clearly Detroit, Lake County or Michigan isn’t working for you and it’s time to stop digging your hole deeper and seek opportunities elsewhere? Or are we supposed to allow this situation to go on year after year generation after generation? The “War on Poverty” has been going on for over 50 years, unfortunately for large segments there’s been little improvement.

    1. Joan Reyes

      If everyone whose life wasn’t going their way in Michigan left, how many people would be left in this state? Think about it for a moment. Tens of thousands lost their jobs when the Big Three started laying off people and there weren’t other industries around to catch all of these people and put them to work. As a result of the bad economy in this state, we have lost enough people that we will have a smaller congressional delegation, which means we lose in trying to get federal assistance in this state for projects that are needed and could put people to work.

      Who would be left in Michigan if everyone just up and left? How would the cities and towns that depend on property taxes being paid deal with the loss of revenue? How much more could these places cut before it would be detrimental to the people who live in these towns and cities and, ultimately, the state?

      The problem with your thinking and the Governor’s is that you think in black and white. Unfortunately, life is varying shades of grey. Think about that.

      1. Matt Howell

        People have been moving to areas which presented better opportunities for hundreds.. no make that thousands of years. That’s why everyone who is here is here and not sitting on the savanna of Africa. Why is it unrealistic to expect that part of human experience not to continue? Like it or not most things in life are really just that simple.

  4. Allan Blackburn

    The cold and heartless, who have limited to no critical thinking skills always come up with the overly simplistic answer of; “Go get a job”, not realizing that we have some of the highest unemployment in the nation. We also have the lowest amount of weeks that you can collect unemployment benefits in the nation. Other states that have become Republican dominated are looking at doing the same thing. We also have some of the highest rates of poverty in the nation in Michigan as well. When you squeeze people to the point of desperation at least we have some of the highest prison costs in the nation as well so that we can incarcerate them when they commit crimes to get buy. We are providing employment to corrections workers while the Department of Corrections budget is $2 billion per year. Pay me now or pay me later is my motto. We always pay for these short sighted policies. Our local hospital just experienced $10 million dollars of losses from covering uninsured people and we have people screaming about mandating that people have health care insurance. The Affordable Care Act will subsidize people that cannot afford to pay or will place them in the ranks of being Medicaid eligible. Our health care expenses are the costliest worldwide and is a broken system. Even if the Affordable Care Act loses in the Supreme Court, the health care system in the United States is broken, way too costly compared to anyplace in the world that has universal health care and, the quality is less than many other countries that provide universal coverage. Insurance premiums have been going up by double digits, every year, for over a decade. It is far outpacing the cost of inflation and is totally unsustainable. So ultimately we cannot keep driving people beyond our safety net. Our country was not founded upon the idea of only making sure that the wealthy get taken care of. Migrant farm workers make very low pay yet it’s hard to say that they do not work hard for their money. It’s pretty sad when Walmart pays it’s workers so low and works many of them part time so that they do not have benefits and they qualify for food stamps and Medicaid. Now we are going to cut them off from that along with food stamps and cash assistance. Something is wrong when we make sure businesses are taken care of prior to people.

  5. Grumpy Old Man

    Hey, it doesn’t matter these Repug politicians are only doing what they have been instructed to do by their corporate masters thru their mouthpiece, ALEC. It doesn’t matter who or how many people suffer, whether or not someone is “gaming” the system, the Repugs are lumping everyone into the same dirty pot. The reason being because fascist corporate AmeriKa wants to reduce everyone’s income and standard of living, that is except themselves and the obscenely wealthy 1% of the population that now controls 90% of our nation’s wealth. The Repuglican Party is aiding and abetting the take over of our federal and state gov’ts by multinational corporations.

  6. Al

    Another example of the arrogance and the lack of ability of out state leaders to do anything in a sensable manner. To all of you who have no need for assistance it is a laughing matter when the cut benefits to those in need. Everyone why this state is in the shape it is. Why wonder, Just go look in the mirrow. What do you care about the ones that have nothing and no ability to help themselves. Jobs that pay enough for them to support themselves or their families. Who has lost their homes and who are making the money off those. This could have been done in a much more decent way. How many young people are we taking away their means for an education. Our young people without parents that can afford their education are just out of luck. If you think Michigan is at the bottom. Think again. Arrogance of government isn’t only in washington.

  7. binny

    What I do not agree with is the exclusion of IRA’s and other retirement assets. So think about it, you can have 200k sitting there in cash in a 401k and you can get food stamps. Everyone says, but its for retirement. Well if your living off welfare now maybe you shoudl worry about now instead of retirement. Oh well the program will never be perfect.

  8. Joshua Arritt

    I’m completely fine with this. If you have $5000 in assets then you don’t need food stamps. Your house doesn’t count and you can have up to $15K in automobiles that doesn’t count. If you have more than $5000 in other things (cash, electronics, whatever) then you simply don’t need food stamps. End of story.

    1. Joe

      That’s the way I feel about retirees. What should a stay-at-home spouse collect 50% of a partner’s SSI at the same time the spouse is collecting when they never paid in? Why should a retiree receive hundred’s of thousands of dollars of medical benefits they never paid for? Cut them off after they used up what they paid in, then collect the balance and leave them with only their house and car if necessary.

      Thousands of working families paid their taxes until they lost their jobs. Food stamps is part of the insurance safety net, like SSI that should support them while they look for living-wage work with medical.

  9. Matt

    I’m a bit puzzled by the snowmobile example in this story. Am I supposed to be concerned that a snowmobile or ATV owner might be denied state welfare benefits? I agree that some of the welfare reforms are misguided, but I certainly don’t think it’s too much to ask that the recipients part with pricey toys before asking for a handout.

    Overall, while I do think that some aspects of Michigan’s human services and welfare system were due for an update, I only wish our legislators were as diligent about eliminating fraud in our corporate welfare programs as well. I can only imagine how much the business community would howl if the state imposed lifetime limits and asset restrictions on them.

  10. KG-1

    Okay, so let me get this straight:

    Those of us still working have money taken from our paychecks every week by a benevolent government, just so that they can turn around to give to someone else?

    Sorry, but I don’t have any sympathy for any of these people.

  11. kim

    I guess what we were told to do was to save at least 6 months of income(would put most people over 5000) to make sure to keep afloat, Keep a roof over are heads, heat, gas to look for work, and all your other bills (can’t drive a car without insurance can u?)…WHO NEEDS TO EAT! You think anyone will put that money in the bank now? Most people who are on it need it…I am not proud that I have had to ask for help. You think it makes me HAPPY. I have always worked and paid my way including putting my daughter thru college. Now that I am facing hard times I am penalized for doing the right thing.Not to mention most people have student loans and I am no exception…..DO THE RIGHT THING YOU PAY….I feel sorry for the people who have such an attitude of I DON’T CARE…Soon you will be there and don’t be surprised if no one gives a dam about U!

  12. Kevin

    This fiasco has NOTHING to do with the lottery and EVERYTHING to do with mismanagement of funds by DHS. If anything, THANK the lottery winner for brining this mismanagement of funds into the light. Then, a knee-jerk reaction to drop foodstamps for people with $5,000 in assets is ludicrous. Five Thousand Dollars is nothing. The ignorance of DHS officials and legislators to pass such rules is a pretty clear indication why we need business people managing money in government and NOT social workers and full-time politicians who have never managed money or a business.
    I have a friend in Texas who came under the same kind of ludicrous rules. He lives on $400/month and virtually no assets. His dad died and left his son, Bill – a one-legged, 58 year old man – with about $200,000. Immediately, all his social benefits were cut off. Tell me, how much will a 58-year-old man have to pay for medical insurance? With Bill’s preexisting conditions, he probably will not be able to get any normal health insurance. So, now, if any health problems befall him, Bill’s $200k will be gone in short order.
    Government workers, I’m sure, are overworked with the financial tumult occuring throughout the country. However, a little reasoning should indicate that someone with $5,000 of assets or even $100,000 of assets tied up in a home with NO INCOME may STILL need food stamps. Use some common sense and don’t set unbending guidelines that hurt those people who are truly in need of assistance.
    Thanks to the lottery winner, the lax unenforcement of duties by the DHS was called into play. The social workers were NOT doing their jobs and the winner should never have been allowed to continue getting his food stamps. The DHS are just as much at fault for allowing this to occur as the lottery winner, who should be required to pay back all of the government assistance he received following his windfall.
    This is seems to be a case of lax enforcement and money management by a government agency, along with a knee-jerk reaction by legislators to over-react to an internal problem. Unbelieveable!

  13. leeann

    They cut me off and I am low income. I am on disability with co pays. If I don’t pay my car insurance I can’t go to my doctors. So it’s food or car insurance? But thank God I have a baby sitting job starting tomorrow. I also won 10,000 in the lottery last night. My grandson gave me a scratch off ticket.

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