Constitutional Amendment Would Create Unclaimed Property Trust Fund to Pay Claims
You may not have heard, but this year is an election year. In addition to contests at the federal, state, and local level there is a constitutional amendment on the ballot in Louisiana relating specifically to unclaimed property. Louisiana Amendment 7 would create a permanent trust fund expressly earmarked to pay unclaimed property claims. The proposed amendment would require the State Treasurer to annually deposit, into a dedicated fund, net unclaimed property receipts (after deductions for certain expenses and statutory allocations) until such time all of the state’s potential unclaimed property liabilities are funded.
The specific language on the ballot is as follows:
Do you support an amendment to create the Louisiana Unclaimed Property Permanent Trust Fund to preserve the money that remains unclaimed by its owner or owners?2020 Louisiana Act 38, Section 4.
This amendment results from the settlement of a lawsuit between Louisiana Governor John Bel Edwards and State Treasurer John Schroeder over the use of unclaimed property as general treasury funds. Historically, Louisiana (like most states) has used unclaimed property receipts in excess of claims to fund state expenditures. After a reserve for claims, unclaimed property revenue is transferred from the unclaimed property fund to the state’s general treasury.
In 2019, Treasurer Schroeder refused to make the transfer, arguing that the funds did not belong to the government, but rather to the owners of those funds. The Treasurer also claimed that transfers to the general fund rendered the state unclaimed property program to be temporarily unable to pay claims. (A shortfall that happened again this year). The Governor disagreed, arguing that the use of these funds was expressly authorized by the state legislature. A lawsuit followed, in which the court ruled in favor of the Governor. Shortly thereafter, the two sides reached a deal that provided Edwards with additional funds now in exchange for the creation of a trust to fund future claims.
If it passes, the amendment will go into effect on July 1, 2021.