An unsuccessful experiment designed to change Indiana’s welfare system ended with a court ruling today.  A Marion County judge blamed both the state and IBM for problems that led to the cancellation of a billion dollar contract.

When that billion dollar contract between the state and IBM was terminated, IBM sued the state seeking $100 million dollars.  The state sued IBM, in turn, seeking $170 million.  In his ruling Judge David Dreyer said neither party deserves to win this case.

Governor Mitch Daniels didn’t like the ruling.  It’s a political defeat that amounts to one of his bigger losses.  “There will be an appeal,” said Daniels, “and we frequently win those, so let’s see what happens.”

Judge Dreyer considered the testimony of 96 witnesses along with a million pages worth of documents before deciding that the state owed IBM the relatively small amount of $12.5 million.  “Most of which is equipment, cost of equipment,” said Dreyer, “that’s been retained by the state since the contract was terminated.”

Dreyer’s ruling says it was a case of misguided government policy and overzealous corporate ambition.  House Minority Leader Pat Bauer thinks the ruling provides Democrats with a campaign issue.  “Privatizing poor relief,” said Bauer, “I mean that’s the kind of issues we need to dwell on.”

The governor, however, wants voters to believe this is a story with a happy ending.  “The goal is to fix what we found,” said Daniels, “which was an unacceptably fraud ridden, error ridden, overexpensive, paper driven welfare system, probably the worst in the country.”  He says the goal was accomplished with a contractor that was hired after IBM was fired.

Judge Dreyer previously ordered the state to pay IBM $40 million for subcontractor fees making the total judgement against the state $52 million.  The governor says the money will come out of a fund maintained for such purposes.
He said the ruling will have no effect on the state surplus.