Nearly 50 years ago, the state of Louisiana started accepting lost money with the promise of finding the owners or heirs and returning it. It didn’t take long for a bad habit to develop.
What is described as lost money is what’s formally known as Unclaimed Property. It includes abandoned bank accounts, uncashed checks, unspent gift certificates, old stocks, life insurance policies and royalties. If businesses can’t find you, they turn this money over to the state. That way, you can go to one central location and search for lost money.
We do a great job of returning Unclaimed Property even as we get more and more money in. Unfortunately, that pile of money is tempting to state officials looking to balance the budget. To them, Unclaimed Property is a piggy bank. Over the years, they’ve turned that piggy bank upside down and shaken out more than $500 million. Is it any wonder people don’t trust government?
Here’s the problem. Treasury does a great job of returning Unclaimed Property; it’s not an exaggeration. It used to be a great year when we returned $20 million. This past year, we returned a record amount of $62 million. Yet, the state still wants to raid the piggy bank.
Two out of the last three years, we had to halt the payment of Unclaimed Property claims until new Unclaimed Property money was received. There was not enough money in the bank to pay the claims. It’s like taking a check to the bank, but the bank asks you to come back in five weeks when they have more money. You should not have to wait on your money because government spent it.
Think about why Unclaimed Property exists. You spent part of your paycheck on company stock to create a nest egg. You opened up a savings account for your grandchildren and they lost the paperwork. You paid for a life insurance policy to ensure the financial stability of your wife and children. You didn’t sacrifice hard-earned dollars to create a piggy bank for state government. You were investing in your family’s future.
Here’s a little secret about life insurance. When someone dies, not all insurance companies work very hard to find the beneficiaries and pay out the policies. We audit their records and collect the money that should have been paid to widows, children and grandchildren. We put it into Unclaimed Property so your heirs can find it.
Unclaimed Property isn’t government’s money. It belongs to the people of Louisiana.
Constitutional Amendment No. 7 would resolve this problem by putting Unclaimed Property into a constitutional trust fund that protects it. This amendment tells government “keep your hands off.”
John Schroder is Louisiana’s state treasurer.