How CT, politicians keep unclaimed money from the public
Every year, the state of Connecticut sweeps up millions of dollars in uncashed checks, forgotten insurance policies and long-ignored investments with the promise of seeing those assets safely returned to their owners.
But a state program that was created to return so-called unclaimed property is operating in ways that can make it nearly impossible for people to learn the government owes them money.
From the 2000 to 2021 fiscal years, the Connecticut Treasurer’s office collected more than $2.3 billion through that program. Yet it returned less than 37 percent of that amount to its owners, according to an analysis by the CT Mirror.
There are clear incentives for politicians to keep the money: Most of the unclaimed cash goes into the general fund, making it easier to balance the state budget. And part of it also goes to the Citizens’ Election Fund, the public financing apparatus for political campaigns.
While other states such as Rhode Island take a more aggressive approach to returning taxpayers’ money, the Connecticut Treasurer’s office barely markets its program.
As a result, the burden falls to individuals and organizations to seek out their own cash. That task is made even more difficult by the fact that the state effectively hides any unclaimed assets valued at less than $50.
The Mirror requested data through the state’s Freedom of Information Act in an effort to understand how much unclaimed property the state accumulated in recent decades and how much of that money remains shielded from the public. But simply obtaining an up-to-date list of all the people, businesses and groups that are owed money through the program was a challenge.
The treasurer’s office said its computer system generates a full list only once every two years, and it charged the CT Mirror $200 for a 300,000-page PDF file that contained data that was more than five years old. That format makes it nearly impossible for an average citizen to search all of the unclaimed property on their own, and it took The Mirror months to convert the data into a searchable list.
After analyzing the data, The Mirror found that more than $40 million of unclaimed property collected through 2015 was valued at less than $50. All of that money is currently concealed from public view when people search ctbiglist.com. The CT Mirror is making it available for the first time here.
The amount collected and returned to citizens varies by year. Between July 2020 and June 2021, for example, the state acquired more than $151 million from various financial assets, but the treasurer’s office returned less than a quarter of that amount to its owners. It was the worst return rate in more than a decade for the program, which effectively serves as a giant lost-and-found department for the financial world.
The rest of the money commandeered by the treasurer was quickly spent. Every penny that isn’t immediately returned to its owner is either funneled into the state budget or redirected to the Citizens Election Fund, a special account that politicians can tap to pay for their election campaigns.
But that doesn’t absolve the state of those debts. And, according to the treasurer’s most recent estimate, the state now owes more than $1.1 billion to nearly 2 million residents, businesses and other groups.
Shielding money from the public
Connecticut’s unclaimed property program enables the state treasurer to seize cash, checks, bonds, stocks, deposits, dividends and insurance proceeds.
Banks, utilities, insurance companies and other businesses are all required to turn over those assets to the state if they lose track of the individual or entity the money belongs to for more than three to five years.
That happens often. People move and forget to update their contact information with a bank, or they are unaware they are listed as a beneficiary on an insurance policy.
Every state in the country has a similar system that collects the remnants of people’s financial lives. Those programs were set up in the 1900s — including Connecticut’s, which got its start in the 1930s.
The Connecticut treasurer’s office is largely operating the way it did in past decades, when it advertised its list of unclaimed property intermittently in local newspapers.
The treasurer currently relies on an online tool called the CT Big List, where people can search their names for free to find out if the state swept up any of their assets. But even that has a major loophole built into the system by state law.
Anyone with an uncashed check, forgotten savings account or uncollected security deposit worth less than $50 won’t find their money listed there. Yet nowhere on the state website is that fact mentioned.
It’s obstacles like that, critics argue, that have contributed to the program’s record over the past two decades.
Rep. Vincent Candelora, the Republican Minority Leader the Connecticut House, said he wrongly assumed that all of the assets the state swept up were viewable on the treasurer’s website. The fact that they aren’t, he said, is problematic and raises questions about whether the unclaimed property program is being operated primarily as a public service or a revenue generator for the state.
“I think we need to have openness and transparency,” he said. “I assumed the CT Big list included all of the money in the state’s possession.”
Technological upgrades
Connecticut Treasurer Shawn Wooden, who was elected to office in 2018, declined through his spokesman to be interviewed for this story. Instead, his staff answered a long list of questions via email about how the program currently operates.
The reason the treasurer’s office returned so little money in the most recent fiscal year, they said, was because of the “unprecedented conditions” brought on by the COVID-19 pandemic.
At that time, the program still required paperwork for everything. People seeking to retrieve their money submitted claims using hand-written forms. And they had to mail in paper copies of their driver’s license, social security numbers and other personal information to prove they were the rightful owner of the missing assets.
That made it difficult for the two dozen state employees who regularly manage the unclaimed property program to do their job last year. Not all of them could be in the office at once because of the public health restrictions during the pandemic. And they couldn’t take the paperwork — and the sensitive information it contained — home with them.
That meant anyone who attempted to reclaim their missing money last year was stuck in line.
The treasurer’s office said those problems were fixed following upgrades to its computer systems and public website in early 2021.
Those improvements now enable people, for the first time, to file a claim online, submit the necessary paperwork over the internet and check on their request through the website. Those upgrades, the treasurer’s office said, are expected to make the process more “user-friendly” and should increase the amount of money that is returned each year.
But the changes won’t fix other fundamental issues with the program, like the millions of dollars in smaller assets that are still not listed on the state website.
The treasurer’s office said state law requires it to hide all of the unclaimed property valued at less than $50 from public view. They argued that other states do the same thing by only advertising assets above a set price, and they emphasized that Connecticut residents can still claim those smalldollar assets by calling a phone number maintained by the treasurer’s office.
But there is no way for residents to know if the state owes them such a small sum.
The treasurer’s office claims it doesn’t have the power to close the loophole on its own. To do that, it would require the Connecticut legislature to pass a new law.
That could be a difficult sell. There is a big incentive for the state’s leaders to embrace the status quo.
A ‘record of accomplishments’
Anyone who is listed as the owner of unclaimed property can ask for their money back at any point, even if the state took control of their assets years or decades ago.
But the cash that remains in the state’s possession doesn’t just sit idle, waiting for people to come and collect. It’s redirected for other purposes.
Connecticut legislators use some of that money to help pad the state’s general fund each year. Over the past two decades, state lawmakers redirected more than $1 billion from the unclaimed property program to help supplement that annual budget. It provided a $98 million cushion for lawmakers during the last legislative session alone.
That use of the money could make it difficult to rally political support behind reforms to the program. The more people who are able to recover their checks, deposits and insurance payouts from the treasurer, the less money state lawmakers will have to spend each year.
The treasurer’s office said it is proud of its record when it comes to reuniting people and businesses with their unclaimed property, but that’s not the statistic it chose to highlight in its most recent annual reports. On the treasurer’s single-page “record of accomplishments,” the only mention of the unclaimed property program is the millions of dollars it provided to state lawmakers.
The money the treasurer’s office spends to operate the unclaimed property program raises questions about its priorities, as well.
Over the past five years, the treasurer spent roughly $4.9 million to audit banks, utilities, insurance companies and other financial institutions in order to force them to turn over an additional $50 million in unclaimed property to the state.