PD Editorial: State cashes in on forgotten accounts

Is the state playing hide and seek with your money?

California rakes in $400 million a year from bank accounts, insurance policies, stocks and other assets deemed abandoned by their owners. Unclaimed property is the state’s fifth largest source of general fund revenue, according to a new report from the nonpartisan legislative analyst.

The state is obligated to return the money to its rightful owners, but it isn’t very successful.

Over the past 20 years, about 40 cents has been returned for every dollar taken - or escheated, to use legal terminology. “This reunification rate is better than in decades past,” according to the report, which says the state has accumulated 28.4 million properties worth $7.2 billion since the 1950s and returned less than $1 billion.

Unclaimed assets include more than $33 million and 1,100 safe deposit boxes belonging to Sonoma County residents, Staff Writer Paul Payne reported Tuesday.

People may have forgotten the accounts, or their heirs may not know they exist. And, the legislative analyst reported, the state is more aggressive about collecting money than looking for its owners.

Banks and other financial institutions can be fined for failing to report abandoned accounts if the holder can’t be contacted or doesn’t respond to a notice. At times, the state has employed bounty hunters to ensure that banks are complying with the rules.

Over time, the reporting threshold has been tightened considerably. Before 1976, a checking account left dormant - no deposits or withdrawals - for 15 years had to be reported to the state. Since then, the time frame has been ratcheted down to seven, then five and now three years.

Three years is the standard for most other accounts, too.

Once accounts are turned over to the state, cash goes to the general fund. Stocks and other securities are sold, with the proceeds deposited in the general fund. Jewelry and keepsakes are warehoused by the state treasurer and eventually sold at auction.

The state’s effort to locate owners consist of a website and occasional ads. For many years, newspaper ads listed the names of people with unclaimed assets, which routinely produced news coverage about celebrities (Brad Pitt), athletes (Willie Mays) and politicians (former Los Angeles Mayor Antonio Villaraigosa) whose assets had been turned over to the state. Now, the ads highlight a website - www.claimit.ca.gov - maintained by the state controller.

The state budget typically limits the controller to spending $50,000 a year to inform the public about the unclaimed property program, though Gov. Jerry Brown included $60,000 in his proposed budget for 2015-16. (A search of the controller’s database found a bank account with $61.26 and 18 shares of US Bancorp stock in Brown’s name at his former address in Oakland. Found money if you want it, governor.)

Controller Betty Yee and her predecessor, Treasurer John Chiang, assured newspaper publishers at a recent meeting that they want to return people’s money. But they said they aren’t sure of the best approach, while showing little enthusiasm for the ads that have proven successful in the past. So you better check for yourself. The state may be holding on to your money.