AUGUSTA (AP) – Baldacci administration officials, scheduled to meet with the Appropriations Committee next week, have informed ranking lawmakers of a potential $12 million Medicaid shortfall.

“It’s still kind of cleaning up some of the old practices. … I told the Appropriations Committee it was full disclosure,” Human Services Commissioner John Nicholas said Thursday.

Officials said the problem stems from an accounting error akin to a duplicate entry.

Nicholas said a reconciliation was anticipated in the new fiscal year, which begins on July 1. He said department officials would look for financial options to bridge the looming budget gap.

Officials said the problem, dating to the first quarter of fiscal 2004, had been pinpointed within the last month to month-and-a-half.

“This is one transaction that was done that should have been reversed,” Commissioner of Finance and Administration Rebecca Wyke said Thursday.

State and federal officials have been in consultation, she said.

“Basically almost all bills will be paid for 04 on a timely basis,” Wyke said.

Ranking members of the Appropriations Committee, which is scheduled to convene next Wednesday to hear about a variety of issues, were briefed by Nicholas last week.

Last August, Gov. John Baldacci released a critical report from a private accounting firm that reviewed financial practices within the Maine Department of Human Services. He said the administration would beef up the human services agency’s fiscal management staff.

In recent times, the Human Services Department has administered more than 80 programs that receive about $1.2 billion annually in federal funds.

The Medicaid program is a state-federal partnership created to provide medical care to low-income people.

In fiscal years 2002 and 2003, according to an auditor’s report, the state appropriated $959 million to Medicaid-related expenditures – 18.7 percent of all General Fund appropriations.

Shortly before Maine lawmakers adjourned at the end of April, a supplemental budget bill on which Democrats and Republicans parted ways was enacted and sent to Baldacci, who signed it almost immediately.

The measure was designed in large part to close a $128 million Medicaid shortfall. Built in were around $60 million in reductions in the state Medicaid program.

A month ago, Baldacci signed a bill to merge the departments of human services and mental health. Baldacci had already chosen Nicholas, a veteran state finance expert, to head the new super agency.

AP-ES-06-10-04 1543EDT

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