EDITOR'S NOTE: The following is the text of the cover story in the latest edition of the Oklahoma Economic Report, issued monthly by the State Treasurer's Office and available for download at www.treasurer.ok.gov
The Oklahoma State Treasurer’s office is launching a significant enhancement in the operation of its unclaimed property program, entering uncharted territory as it works to set the standard in reuniting owners with their lost money and valuables.
When businesses holding money or other valuable items lose track of the owners, those items are turned over to the state to hold and return to the rightful owner.
Without such programs, the businesses would retain billions in forgotten deposits, overpayments, royalties, rebates, stocks, bonds, unpaid wages and safe deposit box contents.
With the state as the safe-keeper of the assets, the rightful owners or heirs always have the opportunity to reclaim what’s theirs. And if they don’t, the proceeds will eventually be used for the common good.
The amount of property turned over to the state every year is significant; Oklahoma’s unclaimed property program is currently holding nearly $500 million for 825,000 Oklahomans, meaning about one in five Oklahomans has something to claim.
The program was started in 1967, and as in all states, history demonstrates that far more property will be received than what is ever claimed. With better compliance, holder reporting has grown from $125 million in 2001 to the half a billion today.
While other states secure these funds as a major revenue source, Oklahoma law specifies that the program’s cash holdings remain designated for payment of claims and for administration, with state use of the funds secondary to claims being paid.
Property owners always retain their rights; at no time does ownership convert to the state.
Every year the Legislature submits its request for use of unclaimed property funds. The treasurer then determines if that requested amount will allow sufficient reserves to meet claims initiated in the coming year.
Should the fund ever dip below what is needed to pay claims – which has never occurred – the state is obligated to replace the necessary funding.
More public outreach
Oklahoma has worked hard to protect the function of its unclaimed property program as a public service.
Treasurer Miller has consistently urged the Legislature to be judicious with the funds, and to use them only for non-recurring budget items.
Oklahoma law also requires outreach efforts, something not all states encourage due to their dependence on the revenue.
Oklahoma requires the names and last known addresses of people with unclaimed property be published in state newspapers. The names published are only for newly reported property but can still number in the tens of thousands in large counties. A searchable list of names is always available on a website, which the office is also required to publicize.
While the mandatory advertising consistently brings strong results, a more aggressive outreach effort is set for the new fiscal year as part of a comprehensive upgrade of the unclaimed property program.
Prior to the state receiving abandoned property, businesses are required by law to make a good faith effort to notify the owners.
The information sent to the state includes the name and last known address of the owner, which presumably is incorrect or the business would have been able to locate them before sending it to the state, the holder of last resort.
Unclaimed property programs – in Oklahoma and across the nation – are not investigative programs to track down owners. Rather, they serve as “lost and found” boxes, with the misplaced items always waiting for the owners to retrieve them.
Looking to the private sector for new ideas, the treasurer’s office will now be working with other state and local agencies to share data that may help identify correct addresses, and going directly into communities to increase awareness of the program and conduct on-the-spot searches for the public.
Recognizing the ever increasing value of the internet, the treasurer’s office is expanding marketing efforts beyond the minimum publishing requirements into this growing medium. These efforts include a new web address for the online property search page, www.yourmoney.ok.gov. Online banner ads will also be used to drive the public to the easy-to-search website.
The office will also add to the required print advertising while expanding messaging with radio advertisements.
Funding for the current and enhanced advertising efforts is provided entirely from money remitted as unclaimed property. No tax dollars are used to pay for any of the outreach or other costs related to administering the program.
The treasurer’s office operates the unclaimed property division well below national cost guidelines and routinely transfers to the general fund money set aside for the program’s operation.
Oklahoma’s unclaimed property program returns assets to tens of thousands of Oklahomans every year. Some have become millionaires overnight, while others have seen the return of a sentimental piece of family history. But most people receive a relatively small payout.
Many people choose to not claim their property upon learning the amount. Even if the state is reasonably sure of an owner’s identity, the owner can’t be forced to make a claim.
States’ unclaimed property programs are responsible for returning items to the rightfulowner. Proof of identity is required before any claim is paid. However, in 2007 Oklahoma began offering a paperless “fast track” claims service for lower-value claims when identification of owners could be electronically verified through tax or other public records.
Initially used for claims of $1,500 or less, the state now offers the service for claims up to $5,000. These paperless claims are processed immediately and paid within five business days.
The greatest benefit of this option is that more Oklahomans are getting their money faster. Additional benefits include savings on postage, paper and printing costs, and more efficient use of staff time.
For fiscal years 2012 and 2013, the treasury set record highs for total funds returned to owners. It’s also taking less time for people to get what belongs to them. State law requires claims be processed within 90 days. The office currently averages 80 days amongst all properties from the time a claim is filed until the property is recovered, and is working to reduce that number to 60 days or less.
While many claims are paid quicker than the average, more complicated claims take longer, especially those with deceased owners and large dollar amounts, which require probate and attorneys to ensure proper distribution to heirs.
With the enhanced marketing and outreach, the treasurer’s office expects an increase in the volume of claims submitted to the office.
So, the challenge became how to handle the increased workload: add more employees and expand the office or keep the same staff but ask them to work more hours and increase the budget for overtime? The treasurer had another idea: rather than grow government, borrow best business practices from the private sector.
With the division just completing another record year, the treasurer set the bar even higher for the coming year. To incentivize employees to reach or exceed that goal, he launched a first-in-the-nation pilot program using performance-based pay for unclaimed property staff.
Employees handling claims will have the opportunity to earn additional pay for achieving results above current record levels of returns.
With the new incentive structure, the office expects to far surpass the records set in each of the past two years.
A true public service
The state’s unclaimed property program isn’t the only way for the public to have forgotten assets returned, but it is the only option that is free to the user.
State statutes prohibit publication of a property’s value due to security precautions against fraudulent claims and privacy protection for owners and heirs.
However, the names of property owners are public records and a cottage industry of heir finders developed to try and match those names with property – for a fee.
In states without caps, finder fees can be as much as 50 percent of the claim’s value. In Oklahoma, finders can retain up to 25 percent of the value of recovered assets.
Several other states, such as Nevada, Louisiana and Massachusetts, have capped finder fees at 10 percent. The tightest cap appears to be in Washington state, where finders are limited to no more than five percent of asset’s value.
Under such an arrangement, the finder will ask a potential owner to sign a contract. The majority of firms that provide these services work within the law, but there are also many unclaimed property scams across the United States.
The best advice for anyone contacted by a finder is to first check the state’s free, searchable website.
Across all areas of its operations, the treasurer’s office is implementing changes to continually enhance service and performance for the public while keeping costs down.
Uncharted territory lies ahead with the reboot of the state’s unclaimed property program. When a best practice model doesn’t exist, sometimes a new one must be created.
Being the first in the nation to try new approaches comes with challenges. Business-as-usual would have been to do only what state law required.
Instead, the coming year will be spent charting a new course to inform the public of this service and hopefully reuniting more citizens with their belongings.
The results could be to position Oklahoma’s unclaimed property program as a model for the nation to follow.
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For more information contact:
Tim Allen, Deputy Treasurer for Communications & Program Administration, (405) 522-4212