There are rules surrounding welfare and food stamp programs but people ignore them for the most part because they think they "deserve" to do what they want or whatever. It is other people's tax money providing, but whatever. My DH has family who has been on welfare their entire lives. And they are by no means ashamed. They think they deserve it because we're "lucky". Lots of reasons they're where they are and luck isnt' one of them. You aren't supposed to have pets (at least that was the rule) if you are receiving assistance, (welfare, food stamps) because it's meant to support the people in the household not animals. DH's family has had cats and dogs the entire time. So, we choose not to have pets but we are supporting those that do. I've also seen his family (cousin) buying lots of junk, alcohol and cigarettes (all necessities, right?). And, all for the 4 kids she chose to have when we decided we could afford two. The fact is the system is broken and always has been. Tons of abuse, and before the debit card, lots of illegal activity being funded by the programs.
I think it's great that OP is trying to teach her children something about budgeting which is really what this assignment was.