State on hook for $11.2 million bill from feds

New system cited in overpayments

Lynn Bartels, Rocky Mountain News

Thursday, April 12, 2007

Colorado must repay $11.2 million to the federal government because a flawed state computer system resulted in overpayments in the food stamp program.

Rep. Bernie Buescher, D-Grand Junction, said the state learned Wednesday it had lost its federal appeal.

The ruling is the latest headache with the Colorado Benefits Management System. The $223 million centralized network came under fire shortly after it went online in September 2004 during former Gov. Bill Owens' administration.

Some welfare recipients didn't get their payments on time, and others applying for assistance were left in limbo.

Buescher said the state has been bracing for the ruling, as have counties, who fear they also are on the hook for overpayments.

Buescher said the problem in Colorado stems from welfare reform in 1997, where counties were allowed to set their own eligibility requirements.

"No other state has the level of decentralization that we have. Counties can change their eligibility requirements, and we're trying to keep track of all this with a statewide system," Buescher said.

"That's why we should have been more careful in rolling out this system than the Owens administration was."

Several counties had warned the state they weren't ready to go live and tests showed enormous glitches, but the director of the Department of Human Services at the time ordered them to proceed.

State officials told lawmakers in January that substantial progress has been made in processing most claims accurately and reducing the case backlog.