On the ballot in Louisiana this November is Amendment 7, a proposal to set aside and protect money from the state's Unclaimed Property Fund.
When companies have an account, a check, deposit, or other funds that belong to somebody who they can't track down, the money is eventually handed over to the state treasurer. In recent years, Treasurer John Schroder has boosted the state's efforts to get that money-- called "unclaimed property" --back to its rightful owners.
What to do with the extra money that's not claimed has been a point of contention between Gov. John Bel Edwards and Treasurer Schroder. Traditionally, that money has been swept into the state general fund. In recent years, the general fund has been enriched to the tune of $12 million to $40 million in unclaimed property each year.
This proposed constitutional amendment aspires to fix a problem involving a temporary unavailability of money to pay claims from at the end of the fiscal year, which has occurred twice in recent years as those funds are swept into the state general fund.
ADAM:
Treasurer Schroder, could you tell us a little bit about what unclaimed property is and your efforts to get it back to its rightful owners.
SCHRODER:
Unclaimed property is really not property; it's money, it's cash. And it comes in a lot of different forms... insurance policies, utility deposits, certificates of deposit, or old checking accounts. And these companies lose you and it's called unclaimed property. It's turned over to the state. Every state in the country has a program.
ADAM:
Treasurer Schroder, since taking office in 2017, you've made a big push to get unclaimed property back to its owners, creating a website, hiring additional staff. And that's created a little bit of an issue at the end of the fiscal year with having money to pay those refunds to people after sending money to the state general fund.
SCHRODER:
Two times now we haven't been able to pay all our claims because we don't have enough money in the account. Because at the end of each fiscal year, the money would get swept, whatever's left over, to the state general fund. Well, our output has increased incredibly. We've gone from doing 30,000 claims per year to 200,000 two years in a row now.
So one of the ways we've come up to fix that is to create the unclaimed property trust fund. It would be constitutionally protected, where the principal would be put into a fund. The department of treasury would invest it, like we do now with the other $9 billion in trust funds that raise funds for different parts of state government. This would be very similar to that. If we ran amok of that, 20 years from now, if we were just patient and let the money build up, we'd be kickin' off over $40 million dollars in interest every year, and that money would go into the state general fund to use on general government.
ADAM:
Over the last seven years, the treasurer's office has transferred between just under $12 million and just under $40 million dollars in excess unclaimed property each year to the state general fund. How long would it take to ramp back up to those levels of contribution to the state general fund?
SCHRODER:
This year we turned over $11 million dollars to the state general fund. So it would take about seven to eight years to get to that level. It just depends on how much money that we collect and how much goes into the fund.
ADAM:
So investment into equities is a big part of this plan. How risky is it to rely upon those investments to make returns in order to put money into the state general fund?
SCHRODER:
No, these are all conservative investments. We don't typically lose money. We don't lose principal. So that's not a concern of mine. But one of the reasons we want to do it constitutionally is I have a better ability to invest these moneys to get a better return for the state of Louisiana.
ADAM:
From 1972 to 2019, the treasurer's office has collected $1.3 billion dollars in unclaimed property and returned $463 million dollars to people claiming that money. The rest has gone to the state general fund. Do you expect that this protected trust fund will have the potential to balloon quite a bit in size over the years as you add money to it that may or may not be claimed.
SCHRODER:
Yeah, we ran a model that says in 20 years it could be $40 million dollars. I don't think they've ever gotten $40 million dollars (for the state general fund). If everybody supports this amendment, it would allow to raise money significant revenues for the state without raising taxes.
All the trust fund money we have right now-- the $9 billion dollars --raises money to help run government without raising your taxes. Most of that is all dedicated to some cause, whether that be higher education, K-12 education, coastal erosion. It's all dedicated to something. This (the Unclaimed Property Permanent Trust Fund) will be the only trust fund money that isn't just dedicated to a subject matter, so to speak. It will go to the state general fund and they will utilize any way the state deems needed.
Copyright 2020 WRKF
