A spokesman for the church in Milwaukee said the payments, some as high as $20,000, were made to encourage priests to resign and not challenge the decision to remove them from the priesthood, The New York Times reported Thursday.
"It was a way to provide an incentive to go the voluntary route and make it happen quickly, and ultimately cost less," Jerry Topczewski said Wednesday. "Their cooperation made the process a lot more expeditious."
Dolan served as archbishop of Milwaukee from 2002 to 2009, when Pope Benedict XVI named him head of the New York archdiocese, the highest-profile position in the U.S. Catholic Church. He became a cardinal in 2012.
Milwaukee has been especially hard-hit by allegations of past sexual abuse by priests, with the scandal erupting while Dolan was head of the diocese. While still in Milwaukee, he called the allegation that the church had made a "payoff" to an abusive priest "false, preposterous and unjust."
The minutes of a 2003 finance council meeting Dolan attended, a document uncovered after the Milwaukee archdiocese filed for bankruptcy, shows church officials discussing "unassignable priests" who were still being paid. The council discussed paying $10,000 to priests who agreed to laicization and another $10,000 once the process was concluded, the Times reported.