Every state in the country has an unclaimed-property fund, which is perhaps best described as a giant couch that collects all the loose change and lost checks that fall through the administrative cracks.
Maybe a renter moves out and forgets to provide the landlord a forwarding address. The uncollected deposit ends up in the unclaimed-property fund. Or, say, a customer pays for an item with a cashier's check, but somehow the check is lost on the way to the bank. That, too, will find its way into the unclaimed-property fund.
But hundreds of thousands of dollars belonging to local governments has also trickled into unclaimed property.
In California, the unclaimed-property sofa rests in the State Controller's office. It contains 11.6 million accounts, totaling $5.6 billion in unclaimed monies. Last week, Controller John Chiang launched an outreach effort, starting with 58 counties across the state, urging them to collect their cash.
The Controller's instructions aren't exactly simple: The letters explain that an agency needs to run all possible permutations of its name through the unclaimed-property database, online at scoweb.sco.ca.gov/UCP. For example, the San Diego County Treasurer's Office would need to search for “San Diego County Treasurer,” “County of San Diego Treasurer,” “Treasurer of San Diego County” and all those again using “SD,” “SD Co.” and “SD Cty.”
CityBeat ran as many searches as we could think up. We found:
• San Diego County has 317 unclaimed-property accounts worth almost $138,000. The largest account is for $23,857.50, which was filed by Washington Mutual Bank (now defunct) in the name of the San Diego County Bail Fund. Among the other unclaimed property: Cingular (now AT&T) filed $9,175 in rebates owed to the county. Hometown Buffet reported $237 in vendor payments owed to the District Attorney's office. The smallest claim is a 20-cent check reported by Wawanesa General Insurance in the name of the San Diego County Sheriff's Department.
• The city of San Diego has 583 unclaimed-property accounts worth almost $69,000. The largest account is for $12,376, filed by FedEx Office and Print Services as belonging to the City Treasurer. The unclaimed property also includes $1,560 in refunds from The San Diego Union-Tribune. The smallest is a 10-cent overpayment refund reported by Ikon Office Solutions.
• The San Diego judicial system—including the municipal and superior courts—has a combined 135 accounts, worth almost $33,000. The largest is $5,650 reported by State Farm Fire and Casualty Company as belonging to the Superior Court clerk.
• The San Diego Convention Center has 11 accounts worth more than $18,000, including one filed by Walt Disney Co. for $15,955.
Controller spokesperson Hayle Jordan said her office recently hired a liaison to connect local governments to unclaimed cash. Between Feb. 18 and 25, the Controller's office returned 86 properties worth $32,734 to government agencies across the state.
“We hope to see an uptick due to this roll-out reminder to check our website,” Jordan says. Jordan, herself, has $74 in unclaimed property left over from when she worked for the San Jose Mercury News. However, since the Collector doesn't investigate property ownership until a claim is made, many accounts may be incorrectly listed as belonging to local government (as was the case with a $1,077 escrow-account reported by Security Title Agency that CityBeat asked about because it was listed as owed to the city).
San Diego County Treasurer-Tax Collector Dan McAllister says that on Jan. 25, he personally waited in line at the Controller's office in Sacramento to demand $79,000 in unclaimed county property. The Controller paid out $30,000 immediately, but the County Counsel's office is still working on the remaining $49,000.
“How does this happen? How do [these checks] end up where they are? Sometimes people use a bad address when they send a refund back,” McAllister says. “You might ask, ‘How could they screw up sending it to the county?' Believe it or not, people do. Sometimes they get lost in the mail, sometimes they get displaced. There's a whole gamut of reasons.”
CityBeat contacted two-dozen businesses that reported unclaimed property belonging to local government; most either didn't respond or said they wouldn't provide property details to anyone other than a government representative. Of the three that did respond:
• In 2006, Chevron owed the City Treasurer $5,178.39 but accidentally sent two checks. Chevron requested a refund, while simultaneously having its bank stop the check. Consequently, the city refunded, anyway. Chevron unsuccessfully attempted to return the money to the treasurer. Three years later, the money became unclaimed property.
• Sodexo Inc. sent the county a $37.50 wage garnishment from one of its employees. The check went uncashed and was handed over to unclaimed property last year.
• A San Diego Credit Union customer took out a cashier's check in 2006 for $127.14, payable to the County Treasurer. The credit union reported the unclaimed check to the Controller.
“People make mistakes and, inevitably, there are going to be checks that might be lost,” says Lani Lutar, president and CEO of the San Diego County Taxpayers Association. “The question is, how prevalent is it, and if there is a trend, has the government agency taken the steps to rectify the situation and mitigate future occurrences from happening? I think that's true with any business, not just the government.”
Some agencies—such as the San Diego Convention Center and the County Auditor—outlined their procedures to CityBeat, which usually involves quarterly searches of the database. But, Lutar says, taxpayers should expect that some money just isn't worth collecting.
“There's no question in my mind, with the smaller amounts, they have to take into account the value of the time spent on collections,” Lutar says.
That's good for the state budget: Jordan says the state calculates the $5.6 billion in unclaimed property in the general fund. In other words, if everyone claimed their property at once, California's $20-billion projected deficit would increase by 25 percent.
That may explain why the Legislature in 2003 repealed a law allowing the state to pay interest on unclaimed properties and the governor vetoed a bill to reinstate the interest in 2007. Today, Jordan says, the interest rate would be .17 percent.
That's another $440 local taxpayers can't collect.
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