Government Pays Dead Farmers $1.1 Billion

By Pamela Mortimer

A Senate Finance Committee hearing is expected to take place Tuesday to address a report that subsidy payments were consistently made to deceased farmers or their estates. The total payout is approximately a whopping $1.1 billion.

According to a report issued by the Government Accountability Office, The U.S. Department of Agriculture distributed $1.1 billion over a period of seven years, 1995-2005, to deceased farmers, their companies, and/or estates. Referring to 181 individual cases, the GAO has proved that 40 percent of the payments were approved without follow-ups or periodic reviews.

A farmer’s estate is permitted to collect subsidy payments for a period of two years after the owner’s death. This allows the heirs to reorganize the business and probate the will. Beyond that, local USDA officials must supply an annual certification that the estate is still engaged in farming and is not open for business simply to collect the payments.

The report shows that the USDA relies on the heirs or estate executors to notify authorities of a death or significant change in the ownership of the business. The agency does not use alternate sources, such as Social Security, to confirm ongoing eligibility. The GAO stated that making database checks against a list of reportedly deceased recipients would take minimal effort. The USDA stated that it has asked all field offices to review eligibility of estates and plans to begin using available databases to confirm status.

According to the report, a 1,900 acre soybean and corn farm in Illinois collected $400,000 on behalf of a major shareholder who resided in Florida until his death in 1995. The company continued to certify that the dead owner, who owned 40 percent of the company, was "actively engaged" in farm operations.

An individually owned Indiana corporation failed to notify the government of the owner's death in 1993 and continued to collect payments for a decade. Red flags went up when the new owners filed for farm benefits.

An Alabama estate received payments totaling $567,000 on behalf of an owner who died in 1981. Also mentioned was another uncertified estate that continued to receive unspecified payments on behalf of the owner who died in 1973. The estate was never investigated.

The report claims that five estate executors informed the government that they wanted to keep the estates open but gave no further explanation. In one fell swoop, local officials in Georgia approved payments for 107 people who had been dead for over two years. There had been no prior investigation. The GAO also listed 10 additional cases in which subsidies were "approved for payments without any indication that even a cursory review had been conducted."

In its defense, the USDA stated that the payments were not necessarily examples of fraud and GAO auditors did not prove any specific cases of cheating or abuse. USDA field offices defended their actions of routinely paying subsidies without investigation, saying that they had other priorities and were understaffed. The USDA also stated that the overpayments would amount to less than 1 percent of farm subsidies paid between 1999 and 2005.

In addition to the 40 percent of cases not reviewed, GAO auditors found another 38 percent that contained "weaknesses" including "nonexistent or vague" documentation. The GAO has stated that it is unable to determine from its investigation whether the government improperly overpaid the estates or, if so, what the excess might be.