PARMA, Ohio — More critics are raising red flags about an Ohio Senate proposal for the state to take permanent ownership of unclaimed funds – imposing limits, for the first time, on how much time you have to track down your missing money.
Industry experts say the proposal risks clashing with private property-rights protections in the Ohio and U.S. constitutions. Since News 5 first aired a story about those concerns, more unclaimed property professionals and lawmakers have spoken up, echoing concerns about a plan that would make Ohio a national outlier.
Rep. Sean Patrick Brennan, a Parma Democrat, is urging his colleagues to spike that provision from the state budget bill, which lawmakers are expected to vote on this week. A former history and government teacher, he also foresees a constitutional clash.
“I’ve spoken to lawyers about this who feel this is gonna be challenged in the courts if it’s done,” he said during an interview Monday afternoon. “And that concerns me, because now that’s gonna cost the taxpayers even more money defending very expensive lawsuits.”
Senate Republicans recently proposed dipping into unclaimed funds – a $4.8 billion pool the state is holding on the public’s behalf – to help pay for sports facilities, including a suburban stadium for the Cleveland Browns. That money comes from many sources, ranging from old bank accounts and insurance policies to stocks, bonds and even retirement savings accounts.
The Senate’s proposal calls for transferring $1.7 billion to the state for a new sports and culture fund. The first $600 million would go to a grant for the Browns, who want to build a $2.4 billion enclosed stadium in Brook Park, surrounded by mixed-use development.
RELATED: Ohio Senate GOP budget increases school funding, gives Browns $600 million grant, creates flat tax
States often use the unclaimed funds they're holding, while keeping enough cash handy to pay anticipated claims. Ohio has used the money for everything from short-term loans for affordable housing developers to filling gaps in the general revenue fund, which pays for day-to-day government operations and services.
Experts say stadium grants would be an unusual application for unclaimed funds – but the use isn’t what they’re objecting to. They’re focused on language that would allow the state to take ownership of the money – for good – if claimants don’t act fast enough.
“No objective review of the proposal can result in any conclusion other than that the state would be seizing title to property that belongs to individuals. The notion of doing so should be repugnant to Ohioans,” Shaun Snyder, the chief executive officer of the National Association of State Treasurers, wrote in a recent letter to lawmakers.
“It is constitutionally questionable … represents bad public policy and is contrary to how the vast majority of states manage unclaimed property,” Snyder wrote, “and it is totally unnecessary to achieve the bill’s funding goals.”
'One of those 50-cent words'
The debate here centers on one word: Escheatment, a process by which the state takes control of unclaimed assets.
Senate Republicans are talking about permanent escheatment, involving money the state’s been holding for at least a decade.
The Senate's version of the budget includes a decade-long grace period, allowing people whose money gets taken to file claims and still get paid through Jan. 1, 2036. Lawmakers also proposed setting aside $1 million a year to help the Ohio Department of Commerce try to reunite people with their unclaimed funds.
Sen. Jerry Cirino, a Kirtland Republican who leads the chamber's finance committee, told News 5 that he and his colleagues believe they’re on firm ground. “We think we are within our rights as a legislature to be able to do what we’re talking about doing here,” he said last week.
Brennan isn’t so sure – and he believes major policy changes shouldn’t be late-stage additions to the huge budget bill.
“This proposal, again, has not been vetted enough,” he said. “There are too many questions. And, again, I think we need to take our time and look at it more closely.”
He’s protesting the permanent escheatment language as both an unconstitutional cash-grab and a violation of the Ohio Constitution’s single-subject rule, which is designed to keep unrelated topics from being thrown together in a single bill.
He described escheatment as “one of those 50-cent words,” but said the proposal here is pretty simple: “This is where I use the word ‘cheat,’” Brennan said. “We’re cheating people out of the money that was escheated by the state of Ohio.”
Ohio House and Senate leaders could release their final budget plan on Tuesday – and vote on it as soon as Wednesday. Then the bill will head to Gov. Mike DeWine for his signature, and any vetoes. The budget must be signed by June 30 to take effect July 1.
During a gathering with reporters in Columbus on Monday, DeWine acknowledged there’s potential for a legal challenge.
“I’m sure that will be tested in court, if that’s what we end up doing – if that’s what the legislature ends up doing,” he said of taking state ownership of long-sitting unclaimed funds. “So I’m sure that will be tested. But that’s nothing. A lot of things get tested in court.”
Two states – Hawaii and Rhode Island – take unclaimed funds after a decade without letting people know or going through a court process. In those cases, though, the amount of money at stake is small. Hawaii takes unclaimed property worth less than $100. Rhode Island limits itself to accounts with a balance of less than $50.
Arizona and Indiana both impose time limits on claims – after at least 25 years. But they don’t actually take legal ownership of the unclaimed funds, so there are still ways that people can seek payment, according to the Unclaimed Property Professionals Organization.
Shannon Wild, the group’s executive director, described the Ohio proposal as “very much outside the norm for modern unclaimed property.” In an email, she said the Senate plan flies in the face of consumer protections.
Snyder, from the National Association of State Treasurers, wrote that Ohio is at risk of eroding trust not only with the public but also with banks and other businesses that turn over unclaimed property to the state. And that’s an unnecessary risk, he added, since the state can use the money to pay for stadiums without cutting off people’s ability to file claims.
“Ohio can have great, publicly funded cultural and sports facilities, paid for through unclaimed property,” Snyder wrote in his letter to lawmakers. “It can also have a world-class unclaimed property program, which fully protects the rights of missing owners. The two are not mutually exclusive.”
To see if you or someone in your family has unclaimed funds in Ohio, you can visit unclaimedfunds.ohio.gov. To search nationwide, visit missingmoney.com.
