Dolan, who became a cardinal in February and serves as the head of the United States Conference of Catholic Bishops, is recorded discussing the payments in the minutes of financial committee meetings in 2003, documents released as the Milwaukee archdioecese goes through bankruptcy court in Wisconsin.
The archdiocese of Milwaukee confirmed to the Associated Press Wednesday that the church paid the priests money to voluntarily sign papers to leave the priesthood because it was cheaper and faster than removing them by other administrative routes, which would have included going through the Vatican.
"In 2002, the Church affirmed that priest offenders should no longer be functioning as priests in any capacity and having someone seek laicization voluntarily is faster and less expensive and it made sense to try and move these men out of the priesthood as quickly as possible," Archdiocese spokeswoman Julie Wolf told local news station WTMJ-TV.
The Milwaukee diocese did not return calls from ABC News today seeking comment.
Dolan declined to comment on the matter, but the archdiocese of New York told ABC News today that Dolan "has read and supports the statements that came out of Milwaukee."
Isely said that up until at least 2010, priests accused of pedophilia were still being paid the money, typically divided into two payments of $10,000 - one when they began the process of laicization, and one when they completed it.
Dolan left the Milwaukee archdiocese in 2009 to become archbishop of New York, the second largest diocese in the country, and in 2010 became the head of the conference of bishops, the most visible Catholic role in the country. Isely, of SNAP, wondered if Dolan now presided over similar arrangements in other dioceses.
"Is this a nationwide policy by U.S. bishops to pay off priests? To dump them quietly into the community, and when they do this, they don't tell people who these individuals are," Isely said.
Months after Dolan left Milwaukee, the archdiocese there filed for bankruptcy, after more than 570 alleged victims came forward claiming abuse by priests.