Thought Leadership Thursday
Protecting Unclaimed Property for the People of Louisiana
Thought Leadership Thursday Article
Earlier this summer, the Louisiana Legislature passed legislation allowing the people of Louisiana to decide whether Unclaimed Property should be protected in a constitutional trust fund. It’s a relief to finally see this proposal go before the voters after years of fighting for it.
The trust fund will accomplish two things. First, it will ensure Unclaimed Property is there when people and businesses come to claim it. Second, it will generate money for the state budget through the interest earnings without raising taxes. That’s a win for everyone.
As Treasurer, I have worked tirelessly to protect Unclaimed Property. For too long, the state has come in at the end of the year and taken whatever Unclaimed Property money wasn’t returned. This money is then spent in the state budget. I firmly believe Unclaimed Property isn’t the state’s money. We should not put people and businesses on a deadline to claim what rightfully belongs to them.
Spending Unclaimed Property in the state budget has created problems for my office. A year ago, we didn’t have enough money to pay claims. The problem resolved itself fairly quickly when additional money came in, but we still had to delay payment to people.
I know I am not alone in the fight to protect Unclaimed Property owners’ rights. States should not look to Unclaimed Property balances as a revenue source. Doing so just creates yet another unfunded liability.
In Louisiana, we’re short $900 million of the money it would take to pay every Unclaimed Property item. We know all owners won’t come forward at the same time, but we’re returning more and more money every year because of technological advances.
We’re now better able to find people and return their Unclaimed Property. We used to return money to 31,000 people and businesses a year. Now we are returning to more than 200,000 people and businesses. We went from paying out around 35-40% of the money received in a year to paying out over 68%.
The legislation passed this summer helps us keep an important promise to the people and businesses of Louisiana. Unclaimed Property should always be available to claim. In November, the people of Louisiana will go to the polls and decide whether to place Unclaimed Property in a trust fund that can’t be raided to plug holes in the state budget.
If passed, monies left at the end of each fiscal year after payment of claims and certain expenses, will be placed in a trust fund. Funds will only be removed from the trust fund to cover current claims. The trust fund will grow until the balance is sufficient to cover the amount owed to owners.
Investment earnings on the trust fund, outside of interest payable to claimants as provided by statute, will flow to the state budget, but the principal will be secure.
The trust fund is a fair compromise. In addition to protecting the integrity of the Unclaimed Property Program, the trust fund is expected to generate more than $40 million in investment earnings for the state budget within 20 years. That means we’re protecting people’s money in two ways. We’re protecting their Unclaimed Property by placing it in a trust fund. And we’re protecting their pocketbooks by creating a revenue stream that doesn’t increase their tax burden.
I look forward to updating you later this year on the outcome of the constitutional amendment.
John M. Schroder
Louisiana State Treasurer