CLEVELAND — As Ohio lawmakers weigh dipping into unclaimed funds to pay for pro sports facilities, national experts are raising red flags about one key aspect of the proposal – a provision that would transfer ownership of the money to the state if claimants don’t act fast enough.
Representatives of national unclaimed-property groups say that part of the plan risks violating the Ohio and U.S. constitutions.
They’re not challenging the state’s ability to tap unclaimed funds to help pay for a wide variety of things, including a $600 million grant for a new Cleveland Browns stadium in Brook Park.
But they’re urging lawmakers to rethink the way the proposal – part of the Senate’s version of the state budget bill – is designed.
“My daddy was a pastor, and I learned ‘thou shalt not steal,’” said G. Allen Mayer, the chairman of the legal committee for the National Association of Unclaimed Property Administrators, a group comprised of public-sector members from all 50 states.
Mayer said the issue comes down to something called “escheatment.” That’s an old French word to describe how abandoned property can become owned by the government.
In this case, state lawmakers want to take money that belongs to current and former Ohioans – money the state is holding from old bank accounts, life insurance policies, utility deposits, last paychecks and even stocks and retirement savings accounts.
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The Senate Republican proposal centers on money the state's been stewarding for at least a decade. Lawmakers want to pull $1.7 billion from the state’s $4.8 billion pool of unclaimed property to create a special fund for sports and culture facilities.
The Senate’s proposal doesn’t include a plan to replace the unclaimed funds. It would give people whose money gets taken a decade-long grace period – through Jan. 1, 2036 – to still make claims and be made whole.
“We’ve done a lot of legal work prior to announcing this to make sure that we’re on solid ground,” Senate Finance Chair Jerry Cirino, a Kirtland Republican, told News 5 this week. “We believe we are. Doesn’t mean there won’t be a challenge here or there.”
'Escheatment is a dirty word'
Mayer said a few other states do take ownership of unclaimed funds after a certain point. But they wait much longer than a decade – or focus on accounts with very small unclaimed balances.
Generally, though, severing a person's ability to get their unclaimed money is frowned upon in the industry.
“Escheatment is a dirty word,” said Mayer, who is also the chief of staff in the Illinois state treasurer’s office. “We do not like to use it. I know of one state where they actually had a swear jar. Anytime someone used the word escheat, people had to put money in.”
And he said the risk in Ohio is particularly high.
He pointed to an Ohio Supreme Court decision in a case that sounds like something out of a superhero movie: Sogg v. Zurz.
In that case, filed by a Northeast Ohio lawyer who was handling his mother’s estate, the Supreme Court said the state must pay interest to people on their unclaimed funds. As part of its rationale, the court noted that unclaimed funds are not abandoned – and cited the protections for private property rights in the U.S. and state constitutions.
Cirino believes the General Assembly’s proposed changes to state law will survive any challenge. “We think we are within our rights as a legislature to be able to do what we’re talking about here,” he said.
He acknowledged that taking legal ownership of unclaimed funds – instead of just using them while waiting for claims to trickle in – is something that Ohio has never done before.
But he shrugged off any criticisms of the plan.
“I’ve only heard some things from people who really aren’t experts at this sort of thing – and perhaps they think they are,” Cirino said.
Mayer said unclaimed-property experts are reaching out to Ohio lawmakers.
“If we had been consulted about this, we could have advised folks in the legislature. … We’re trying to get in touch with them to let them know ‘You don’t need to do it. Please amend this. And you will save yourself a considerable headache down the line,’” he said.
'Look at the guardrails'
The state has tapped into unclaimed funds before, while waiting for owners to come forward.
The Ohio Housing Finance Agency uses unclaimed funds to provide short-term, low-interest loans to affordable housing developers. Some unclaimed cash from law firms goes toward legal aid services.
And a 2023 legislative brief prepared by a nonpartisan research agency shows that the General Assembly has periodically moved cash from unclaimed funds to Ohio’s general revenue fund – more than $700 million since 2010.
Experts say it’s common for states to put unclaimed funds to work, just like banks keep a certain amount of cash on hand and use the rest of their deposits to make loans. That's a matter of accounting, though – not a change in ownership.
“Every state can do what they see fit,” said Jennifer Borden, an unclaimed property lawyer based in Massachusetts. “I’ve seen some states that it goes to the education fund. I have seen other states where it just goes to the general fund. So in theory, it’s reducing the tax burden across the board and not just focused on one pet project.”
She’s never heard of unclaimed funds being used for pro sports facilities. But she’s not surprised to see lawmakers take the path for an economic-development project.
Borden is a member of the Unclaimed Property Professionals Organization, which represents businesses and professionals across the United States and Canada.
She said Ohio would be bucking the trend by putting limits on how long people have to file claims. And that could lead to problems down the road.
“If Ohio were to switch from a custodial state to a pure taking statute, that will raise additional constitutional issues, in my mind,” she said, adding that there would need to be more significant efforts to reunite people with their money.
The Senate’s proposal allocates $1 million more a year to the Ohio Department of Commerce’s efforts to reach owners of unclaimed funds.
“All of a sudden, you have to look at the guardrails that are in place,” said Borden, stressing that private property rights should be everyone’s top priority.
“Are we doing everything we can to give it back to rightful owners, instead of hoping that we have a surplus that our special interests can keep dipping into? … I can understand the thought process that, after a certain period of time, it is highly unlikely that funds will be reunited with their owners," she said. “Highly unlikely does not mean will not ever be.”
'Finders keepers'
Time is tight, with Ohio lawmakers hashing out a compromise version of their state budget proposal. The General Assembly aims to pass a final budget bill next week, so it can go to Gov. Mike DeWine for his signature – and any vetoes – by the end of this month.
The unclaimed-funds plan is the latest way lawmakers have looked at putting $600 million into a new Browns stadium, a $2.4 billion complex that would be the linchpin for a new mixed-use entertainment district in Brook Park. The idea is getting plenty of attention – including from other pro sports teams.
Representatives of 15 other teams, including the Cleveland Guardians and the Cleveland Cavaliers, recently signed onto a letter to DeWine and legislative leaders endorsing the idea of using unclaimed funds to help pay for sports facilities. They’re asking the state to go beyond mixed-use projects like what the Browns are proposing to include stadiums, arenas and ballparks – for major- and minor-league teams.
Mayer said the uses aren’t the problem. It’s the way lawmakers are going about this.
“It’s as though the legislature has tried to make finders keepers the law of the land,” he said, “when we all learn from a young age – if you have something that belongs to someone else, you have to give it back.”
In Illinois, he's seen small payouts, where people get back just a few dollars – "maybe a rounding error on a utility bill." But the state treasurer's office also has paid out $12 million to one estate.
Borden said one in seven people has unclaimed funds out there and might not realize it. You can check to see if you're one of them by visiting Ohio's unclaimed funds website, at https://unclaimedfunds.ohio.gov/, or https://missingmoney.com/, which covers almost every state.
News 5 statehouse reporter Morgan Trau contributed to this story.
