Despite nearly a five-year battle, Wisconsin will now have to repay the federal government $15 million in excess it received in part from the accidental overpayment of benefits to welfare recipients.
According to David Schmiedicke, budget director for Gov. Jim Doyle, the overpayments were a result of contradictory advice regarding welfare from the federal government to the state during the late 1990s.
The overpayment was found in 2002 by a federal audit and recommended the state repay the money to the federal government right away. The federal government officially ordered the repayment in 2005.
Since the federal government caused the confusion, the state argued it did not have to repay the funds, bringing the case through a series of appeals.
Members of the Department of Workforce Development also argued they should not have to repay the money because they spent the money on a welfare-to-work program, allowed by the federal government in 1999 but withdrawn in 2000.
A federal panel rejected the appeal in December 2007, requiring the state to repay the money, Schmiedicke added. In addition, the panel denied Wisconsin’s request to waive the interest, leaving the state with no other options to appeal the case.
Similar situations occurred in Texas and Iowa as well. Pennsylvania is still in the process of appealing the repayment of over $20 million.
As a result, Wisconsin will have to pay a total of $15.6 million to the U.S. Department of Health and Human Services, including $5 million for interest payments. According to Schmiedicke, the federal government charged an interest rate of 12 percent.
The state has agreed to make monthly payments to the federal government, and will continue until June, Schmiedicke said. After that, $13.1 million will still need to be paid during the next two-year budget cycle beginning in July.
As part of his budget proposal last month, Doyle included funds to cover the payment. State lawmakers will likely have to approve the request, despite the state’s projected budget shortfall of $5.9 billion over the next two years.
“It’s unfortunate that Governor Doyle attempted to fight it so long that we have huge amounts of interest we have to pay,” Rep. Robin Vos, R-Racine, told the Associated Press. “I’ve got people in my office everyday looking for increase for very worthwhile programs. At the same time, we have to pay this out because of a mistake Doyle has taken six years to admit.”
Sen. Roberta Darling, R-River Hills, told the Associated Press it is hard to know where to place the blame since the dispute goes so far back.
“We may just be stuck paying the bill,” Darling said.
