Even as Republican legislators are advancing bills that would give the state treasurer the ability to move left over monies from the unclaimed property program into a restricted account, a state district judge Thursday ordered the money to be used to cover government operating expenses.
Nineteenth Judicial District Court Judge Richard "Chip" Moore III, of Baton Rouge, ruled that state Treasurer John Schroder, improperly withheld the leftover dollars and ordered him to transfer more than $32 million from the past two fiscal years to the state general fund.
Schroder, a Republican, argued that legally the money doesn’t belong to the state and needs to be set aside in case someone comes forward. Democratic Gov. John Bel Edwards argued that the money, which nobody has claimed, has been transferred into the state general fund for more than four decades.
Moore, a Republican, found that Schroder’s interpretation "leads to absurd consequences." The judge ordered Schroder to immediately transfer $7.3 million of the unclaimed property dollars into the state's general fund for the last budget year and another $25 million for the current budget year that ends June 30.
Judge Moore's opinion unclaimed property dispute between governor and treasurer
“Yeah, the court did a decision today, but we got a long way to go,” Schroder told the Senate Finance committee that was hearing one of the bills creating a trust fund for the unused unclaimed property. He plans to appeal Moore's decision.
Schroder, a Republican, said he was insulted because Democratic Gov. John Bel Edwards never spoke to him about the issue, just went to court. “This is not tax money,” Schroder said.
“He’s trying to put into law what he says he can already do,” said Matthew Block, the governor’s executive counsel.
“All of you knew this litigation was going on,” Block told the committee, adding that the court found Schroder violated the law by not making the leftover money available for legislators to spend on state services.
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“Unclaimed property” comes in annually from brokers, banks, and other financial institutions out of accounts that haven’t been accessed for years. The companies aren’t legally allowed to keep it, but when they cannot find the owners or heirs after a period of time, the funds are turned over to the state. Most of the money usually arrives over a two- or three-month period.
Over the years $1.3 billion has been collected by Louisiana as “unclaimed property.” But the state has only been able to find owners and heirs enough to pay back only about $463 million. The state is on the hook to pay, should a claimant ever come forward. But Louisiana and other states have never paid out as much as was collected and legally are allowed to use the leftovers for everyday expenses.
Schroder refused to turn over the money, as has been done since 1973, arguing the excess should stay in an escrow account. He said when he became treasurer in September 2018 the unclaimed property program had 82,000 checks worth about $15 million but no money to send out. Eventually, more than enough money arrived to pay the checks and have some left over, but that was months later, Schroder said.
Without objection the Senate Finance advanced to the full Senate House Bill 445, which would create the Louisiana Unclaimed Property Permanent Trust Fund under Schroder’s control.
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