For the second year in a row, Connecticut lawmakers are considering sweeping changes to the state’s unclaimed property program, which serves as a repository for uncashed checks, misplaced refunds, forgotten savings accounts and long-ignored insurance policies.
On Monday, legislators on the Government Administration and Election Committee advanced a bill that could dramatically increase the amount of money that the program returns to Connecticut residents every year.
Democratic and Republican lawmakers on the committee voted unanimously to push forward the legislation despite opposition from the state Treasurer’s office, which manages the more than $1.4 billion in financial assets that is in the program.
The pending legislation would require the treasurer’s office to list more specific details about the unclaimed property than it lists on its website, known as the CT Big List.
It would give the treasurer’s staff access to other government data, such as tax information, so they can find current addresses for individuals with unclaimed property. It would then allow the treasurer to use that information to automatically return any asset that is valued at $5,000 or less.
The legislation would also require the treasurer’s office to determine if the owner of unclaimed property owes child support or back taxes prior to paying out any claim above $500. And it seeks to require the treasurer to return all of the money that is purportedly owed to towns and cities once a year.
“As you can see, this is an attempt to find a variety of different ways to get unclaimed property back to its rightful owner,” Sen. Mae Flexer, D-Windham, explained before the committee voted.
“I’m glad to be doing this bill. I think it’s going to be beneficial for many people across the state,” added Rob Sampson, R-Wolcott.
Connecticut’s unclaimed property program has been around for nearly a century at this point. It serves as a type of lost-and-found in the financial world.
Banks, utilities, insurance companies and other businesses are required to turn over a variety of assets to the program, if those companies lose contact with the owners of the property.
Lawmakers have sought to reform the program over the past two years, however, because of its recent performance history.
The Connecticut Mirror published a story in January 2022 that noted how the unclaimed property program returned less than 37% of the money that it swept up between 2000 and 2021. That story also highlighted how the treasurer’s office failed to list all of the financial assets that were valued at less than $50 on its website, known as the CT Big List.
In response, former Democratic Treasurer Shawn Wooden initiated a number of changes to the program. He dropped the requirement that every claim be notarized. He also added all of the assets valued at less than $50 to the CT Big List for the first time.
Lawmakers followed up on those reforms by passing a bill in May 2022 that required the treasurer’s office to mail notices to anyone who owns unclaimed property that was seized by the state within the past year.
That legislation also gave the treasurer’s office the ability to automatically return to individuals any financial assets valued at less than $2,500, if the state could verify the current address of the owner of that property.
That change did little in practice, however, since lawmakers stripped out the language that granted the treasurer’s office access to state tax information and other government data.
Since then, the unclaimed property program has continued to struggle under the mountain of claims it receives from individuals, nonprofits and local governments.
Erick Russell, the newly elected Democratic Treasurer, recently announced that the unclaimed property program set a new record during the 2021-2022 fiscal year for the amount of money that was returned to its rightful owners. Nearly $71 million was paid out through the claims process.
But that number does not really capture the full picture of the program.
Information provided to the CT Mirror shows that many claims are still being held up because the treasurer’s office doesn’t have the capacity to process all of those requests in a timely manner.
The $71 million that was returned during the 2021-2022 fiscal year came from roughly 24,468 claims. But the treasurer’s office received more than 264,000 individual claims during that time.
Lawmakers hope this year’s legislation will help to break through that backlog by allowing the treasurer to automatically return unclaimed property to individuals and other groups, as many other states do.
Russell told the CT Mirror this week that he appreciates what lawmakers are trying to achieve with the new legislation, but he asked lawmakers not to make any additional changes to the program at the moment.
The treasurer’s office, Russell said, has not even had a chance to implement all of the changes to the program that lawmakers passed last session. For instance, the treasurer’s office is still trying to figure out how to mail notices to anyone who had checks, insurance deposits or investments seized by the state in the past year.
He also said the staff members within the unclaimed property division were currently working on technological upgrades to reduce the manual work that is required to process a claim.
“It would be wiser to allow the measures put in place last year to be fully implemented and analyzed before making additional changes to the law,” Russell said.
Russell agreed with lawmakers that giving his office access to other government data in order to verify people’s personal information could be beneficial, but he argued that his office doesn’t have enough employees or resources to manage that large amount of data, which would change every month as the state swept up more unclaimed property.
“Access to additional information to confirm identifying information for claimants would be welcome but would require significant time and resources, as the office would need to build a system to allow the data to be uploaded and cross-referenced,” he said.
One of the broader concerns that Russell and his staff have with the new legislation, however, is the increased risk of fraud.
Russell told lawmakers that adding more detailed information about each piece of unclaimed property on the CT Big List could prompt more people to try to defraud the program by claiming money that isn’t theirs.
“Unfortunately, those with ill intent often search unclaimed property databases in hopes of posing as a rightful owner and stealing what is not theirs,” Russell wrote. “Posting these details publicly will increase the incidents of fraud, which is already on the rise throughout the country.”
The risk of fraud, Russell argued, would also be heightened even further by lawmakers’ attempts to eliminate some of the hoops that the treasurer’s office makes claimants jump through. He said some of the paperwork that lawmakers want to skip over is a necessary step to confirming someone’s ownership of misplaced bank accounts, security deposits or other financial assets.
“Many of the goals sought in the proposed legislation are good aspirations for the Unclaimed Property program, and I appreciate the Committee’s bipartisan commitment to improving the original proposal,” Russell told the CT Mirror. “However, we believe portions of the bill do not adequately protect rightful owners from fraud and stretch available resources.”
Lawmakers could consider those points in the coming weeks. The bill will soon head to the full House and Senate for debate.