Louisiana Gov. John Bel Edwards’ administration on Friday filed a lawsuit against state Treasurer John Schroder, continuing a dispute over whether state government should be allowed to spend money from the state’s unclaimed property fund.
The fund consists of abandoned financial assets turned over to the state treasury by organizations that can’t find the owner. While the owners can claim the money from the state, the entire fund is never claimed at the same time, and historically the legislature has appropriated some of it for government operations.
But Schroder is refusing to continue the practice, saying it isn’t the state’s money to spend.
He touts his office’s efforts to return as much money as possible to the rightful owners, but he worries about what will happen if he runs out of money to pay claims.
But the administration says Schroder is attempting to usurp the legislature’s constitutional spending authority.
“So far, the treasurer has simply refused to transfer the money, completely ignoring the will of the people’s elected representatives, their governor and the letter of the law,” Executive Counsel Matthew Block said. “The law is clear: excess revenues in the Unclaimed Property Fund are to benefit the public.”
The state has never failed to pay a rightful claim, Block added, though Schroder says he had to delay paying about $20 million in 2018.
At Friday’s meeting of the legislature’s joint budget committee, Edwards’ Commissioner of Administration, Jay Dardenne echoed Block’s argument, saying the Louisiana Supreme Court has affirmed the practice and noting that some of the money is committed to bonds that pay for a highway project. The administration’s budget proposal counts on $25 million from the unclaimed property fund.
In an interview Friday, Schroder said he hadn’t yet had a chance to read the lawsuit.
“I believe the money belongs to the citizens,” he said. “Nowhere in the law does it say we should be spending it. Whether we did it for 20 years or not doesn’t make it right.”
Schroder has supported legislation the past two years to lock up the principal of the unclaimed money but allow the state to earn interest that could be used for small loans to local government. He said he expects to work with legislators again on similar legislation.
“I think it’s silly to file suit,” Schroder said.