Abandoned Property Is Good News for Deficits
California Controller John Chiang has $20 for Warren Buffett. He also has a little over a grand for Charlie Sheen. The money is part of a $6.1 billion cache of abandoned property—dormant savings accounts, store credits, forsaken royalty payments, and the like—that companies are required by law to turn over to the state after three years. The task of returning the property to its 13.1 million rightful owners, who often aren’t aware they’re owed money, falls to Chiang. “It just keeps coming in,” says Hallye Jordan, a spokeswoman for Chiang, who herself has $66.58 in abandoned property she hasn’t had time to claim.
Right now there is $33 billion in unclaimed property across the U.S., according to Kevin Johnson, a spokesman for the Lexington (Ky.)-based National Association of Unclaimed Property Administrators. States get to use the cash while it idles. In California the stray money is deposited into the general fund and used as a sort of no-interest loan to pay salaries and expenses—a cushion that has helped keep the financially troubled state afloat. North Carolina uses the interest on its $500 million for college scholarships. Ohio, with $1.4 billion, spends it on low-income housing programs.
As budget woes mount, some states have taken steps to increase the abandoned property in their possession. New York and Texas both passed laws this year reducing the amount of time before businesses must turn over unclaimed funds. “It’s supposed to be a consumer-protection law,” says Valerie Jundt, a managing director at Keane, a consulting firm that helps companies comply with unclaimed property regulations. “It becomes dangerous territory when states and legislators are using this to balance their budgets.”
Chiang has taken steps to return more unclaimed property to owners since assuming office in 2007. The controller sponsored a bill passed in 2007 requiring his office to reach out to would-be beneficiaries. He also created the position of property owner advocate to help people with complicated claims. A website, www.claimit.ca.gov, is searchable by name and updated weekly. Chiang sent out 1.39 million notices to owners of abandoned property last year, up from 22,000 in 2000.
Not all sums are minor. Someone named Steven A. Aranoff, whom the state has been trying to find, has $1.6 million coming to him. “Some people are just too wealthy,” Chiang says. “It’s all relative.”