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HomeMy WebLinkAboutE-09 Staff Report - Unclaimed Funds Policy and ProceduresCONSENT ITEM E-9 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: SERGIO GONZALEZ, CITY MANAGER FROM: TALIKA M. JOHNSON, DIRECTOR OF FINANCE DATE: AUGUST 20, 2018 SUBJECT: ADOPTION OF UNCLAIMED FUNDS POLICY AND PROCEDURES BACKGROUND: Under the provisions California Government Code Sections 50050-50057 money that is not the property of a local agency that remains unclaimed in its treasury or in the official custody of its officers for three years is the property of the local agency after notice if not claimed or if no verified complaint is filed and served. RECOMMENDATION: Staff recommends the City Council take the following action: 1) Adopt and file the attached Unclaimed Funds Policy and Procedures. ANALYSIS: Each year the City accumulates outstanding checks that remain unclaimed, even though attempts are made to contact the payees and reissue the checks. Normally these unclaimed funds consist of checks issued through Accounts Payable or Payroll. State law allows for uncashed checks which are more than one year old and less than $15.00, or greater than $15.00 and more than three years old, to become the property of the City following publication on its website or in the local newspaper. Staff recommends that the City Council adopt a formal policy regarding the proper handling of unclaimed money. Adoption of this policy will set up a procedure to escheat these funds to the City after proper notices has been satisfied. The attached policy is in accordance with Government Code Sections 50050-50057 and has been reviewed and approved by our City Attorney. APPROVED CITY COUNCIL 8/20/2018 Unclaimed Funds Policy and Procedure August 20, 2018 Page 2 FISCAL IMPACT: Implementation of the Unclaimed Funds Policy may result in a small amount of additional revenues from unclaimed checks, the exact amount of which would not be known until any claims for re-issue of checks are processed. The increased revenues will be offset by publication expenses. Prepared by: Reviewed and Approved: Michelle Honis Talika M. Johnson Assistant Director of Finance Director of Finance Reviewed and Approved: Sergio Gonzalez City Manager Attachment: 1. Unclaimed Funds Policy and Procedures 1 Drafted 07/30/2018 UNCLAIMED FUNDS POLICY AND PROCEDURES Effective: August 21, 2018 I.PURPOSE This policy is intended to establish proper disposition and account for unclaimed funds in accordance with government statutes. II. POLICY The City is required to retain any monies which have been deposited with the City for a period of less than three (3) years for possible return to the person(s) who made the deposit. The City is also required to retain any unclaimed accounts payable, expense reimbursement, and customer refund checks for a period of less than three (3) years for possible return to the payee. Funds held by the City which have been there for three (3) or more years may, subject to certain exceptions, be transferred to the City’s general fund provided that the City first publishes a notice setting forth particular identifying information, described below. This unclaimed funds policy applies to all unpresented general checks abandoned three years after the issue date common sources include; a.Accounts Payable b. Deposits c.Customer Refunds and payroll checks abandoned one year after the issue date. Unclaimed money will not include individual items of less than $15.00, or any amounts in which the depositor’s name is unknown. These funds will become the property of the City Azusa after being unclaimed for a period of at least 12 months. III.PROCEDURES A.Deposits 1.Any deposit that has been unclaimed for three (3) years will be identified. Every means available will be made, by the Finance Department, to locate the depositor. After all efforts have been exhausted, the unclaimed deposit will be added to the Unclaimed Deposit Listing and the funds will be set aside in the City’s Unclaimed Property cost center within the General Fund. 2.After three years from the deposit date, if the deposit remains unclaimed, the funds may become property of the City, after notice is given to the potential claimants (Gov. Code Section 50050). Any time after three years, the City’s Treasurer may publish a notice once a week for two (2) consecutive weeks in a local Azusa newspaper of general circulation. Notice must state the amount of money, the fund in which it is held, and that it is proposed that the money will become property of the City on a designated date Attachment 1 2 Drafted 07/30/2018 between forty five (45) and sixty (60) days after the first publication of the notice (Gov. Code Section 50051). B. Accounts Payable, Expense, and Customer Refund Checks 1. Any check that has been unclaimed for ninety (90) days will be identified. For the outstanding warrants ninety (90) days and older, a letter and affidavit form for replacement checks will be mailed to the address on record for the issued warrant. Every means available will be made, by the Finance Department, to locate the payee. After all efforts have been exhausted, the unclaimed check will be added to the Unclaimed Check Listing and the funds will be set aside in the City’s Unclaimed Property cost center within the General Fund. 2. After three years from the check date, if the check remains unclaimed, the funds may become property of the City, after notice is given to the potential claimants (Gov. Code Section 50050). Any time after three years, the City’s Treasurer may publish a notice once a week for two (2) consecutive weeks in a local Azusa newspaper of general circulation. Notice must state the amount of money, the fund in which it is held, and that it is proposed that the money will become property of the City on a designated date between forty five (45) and sixty (60) days after the first publication of the notice (Gov. Code Section 50051). C. Payroll Checks 1. Unclaimed wages and unpresented payroll checks are abandoned one year from the date payable to the employee. Unclaimed payroll reportable after one year includes these types: regular paychecks, employee commissions, returnable garnishments, deferred compensation, worker’s compensation payments and bonuses. Quarterly during the bank reconciliation process, the outstanding payroll warrants will be reviewed for items ninety (90) days or greater. For the warrants ninety (90) days and older, a letter and affidavit form for replacement checks will be mailed to the address on record for the issued warrant. Every means available will be made, by the Finance Department, to locate the payee. After all efforts have been exhausted, the unclaimed check will be added to the Unclaimed Check Listing and the funds will be set aside in the City’s Unclaimed Property cost center within the General Fund. Replacement checks will be issued through accounts payable. 2. After three years from the check date, if the check remains unclaimed, the funds may become property of the City, after notice is given to the potential claimants (Gov. Code Section 50050). Any time after three years, the City’s Treasurer may publish a notice once a week for two (2) consecutive weeks in a local Azusa newspaper of general circulation. Notice must state the amount of money, the fund in which it is held, and that it is proposed that the money will become property of the City on a designated date between forty five (45) and sixty (60) days after the first publication of the notice (Gov. Code Section 50051). D. Claims 1. Before or after the notice, and before the date the unclaimed money becomes the City’s property, any interested party may file a claim for the money with the City’s Treasurer (Gov. Code Section 50052). The claim must include the claimant’s name, address, 3 Drafted 07/30/2018 amount of the claim, the grounds on which the claim is founded, and any other information that the Treasurer requires. 2. The Treasurer may either accept or reject the claim. However, even if the procedures listed above are not followed, the Treasurer has the discretion, upon submission of satisfactory proof to the Treasurer, to release unclaimed money to the depositor of the unclaimed money or their heirs, beneficiaries, or duly appointed representatives, if the money is claimed before it becomes the City’s property (Gov. Code Section 50052.5). 3. If the Treasurer rejects the claim, the claimant may file a verified complaint in a Los Angeles County Court seeking to recover all or a dedicated part of the money (Gov. Code Section 50052). A copy of that complaint must be served on the City Treasurer within thirty (30) days of receiving notice that the claim was rejected. When a complaint has been filed, the Treasurer must withhold the release of the portion of unclaimed money until a court renders its decision. 4. If the money is located in a special fund, the City Council may transfer the money to the General Fund (Gov. Code Section 50053). 5. Although it is not required by statue, the City may elect to notice a public hearing before the City Council before acquiring the unclaimed deposits or checks. This will give the owners of the funds one final opportunity to be heard before the City acquires the funds.