BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 1712 (Gomez) - Unclaimed property.
Amended: June 16, 2014 Policy Vote: Judiciary 7-0
Urgency: No Mandate: No
Hearing Date: June 30, 2014
Consultant: Jolie Onodera
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 1712 would expand the definition of "owner" in
the Unclaimed Property Law (UPL) to include a nonprofit civic,
charitable, or educational organization that granted a charter,
sponsorship, or approval for the existence of an organization
that is dissolved or no longer in existence, if governing
documents provide that unclaimed or surplus property shall be
conveyed to the granting organization upon dissolution or
cessation to exist as a distinct legal entity.
Fiscal Impact:
Unknown annual loss of General Fund revenues potentially in
the range of $65,000 to $130,000 assuming five to 10 percent
of unclaimed properties belonging to nonprofit entities no
longer in existence are claimed and paid each year. The
fiscal impact would be dependent on the number and value of
additional valid claims paid out as a result of the expanded
eligibility to nonprofit parent organizations.
Minor ongoing administrative costs of less than $20,000
(General Fund) to the State Controller's Office (SCO)
associated with processing additional claims.
Background: Under existing law, the UPL, enacted in 1958,
establishes procedures for the escheat of unclaimed personal
property. The UPL seeks to protect unknown owners by locating
them and restoring their property to them, and to give the
state, rather than the holders of unclaimed property, the
benefit of its retention, since experience shows that most
abandoned property will never be claimed.
Existing law authorizes the Controller to administer property
that has escheated to the state and sets forth procedures
whereby a person may file a claim to the property or to the net
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proceeds from its sale. Existing law specifies that only a
person who claims to have been an owner of the property, as
defined, may file a claim with the Controller.
The SCO receives approximately $600 million annually as
escheated property. Existing law requires all but $50,000 of
these funds be transferred to the General Fund on a monthly
basis. The SCO reports maintaining current accounts of
approximately $7.1 billion for monies that have been remitted to
the SCO and transferred to the General Fund. As of 2012-13,
there were approximately 27.9 million owner accounts
(individuals and organizations) in the SCO database, with $205
million in cash disbursed and an average claim payment of $701.
Existing law defines an "owner" as the person who had legal
right to the property prior to its escheat, his or her heirs or
estate representative, his or her guardian or conservator, or a
public administrator, as specified.
Currently, when a chartered, sponsored, or approved organization
of a nonprofit organization is dissolved, the parent
organization is unable to reclaim the property left by their
chartered, sponsored, or approved organizations. This bill seeks
to address this issue.
Proposed Law: This bill would expand the definition of "owner"
with regard to eligibility to file a claim with the Controller
for escheated property to also mean a nonprofit civic,
charitable, or educational organization that granted a charter,
sponsorship, or approval for the existence of the organization
that had the legal right to the property prior to its escheat
but that has dissolved or is no longer in existence, if the
charter, sponsorship, approval, organization bylaws, or other
governing documents provide that surplus funds or property may
be turned over to the granting organization.
Staff Comments: To the extent parent organizations are able to
reclaim property through the SCO that otherwise would have
reverted to the General Fund, this bill will result in an
unknown level of General Fund revenue losses. The annual fiscal
impact is dependent on various factors, but could potentially be
in the range of $65,000 to $130,000 assuming five to 10 percent
of unclaimed properties identified as tied to nonprofit entities
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that are dissolved or no longer in existence have claims filed
and paid to parent organizations. Actual costs would be
dependent on the number and value of additional valid claims
paid as a result of the expanded eligibility to nonprofit parent
organizations.
The ongoing administrative cost to the SCO to process the
additional claims is estimated to be minor and absorbable within
existing resources.