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 Going to the Escheats Well Too Often
by Tom Campbell
December 3, 2009
What should you do when the well upon which you depend appears to be drying up? Most of us would immediately institute conservation efforts to preserve a valued resource, but that doesn’t appear to be the course our state is taking. North Carolina continues drawing more and more from the rapidly depleting Escheats Funds.
Following the centuries-old custom unclaimed property reverted to the manor lord (later the government) if no claimant or heir was identified. In the modern scenario any money, real estate or other property that is unclaimed reverts to the State Treasurer of North Carolina, where a genuine effort is made to find the rightful owner. If unsuccessful, the property is sold and the proceeds are turned over to the Escheats Fund in perpetuity in the name of the rightful owner.
Our Constitution dictates these funds can be spent to provide scholarships to needy and worthy resident students at public colleges and universities in our state. Until recently only the earnings from investments in the Escheats Fund have been allocated to The State Education Assistance Authority to make scholarship grants, but due to increased unemployment, a poor economy, lower investment returns and rising education costs, our legislators decided to begin tapping into the principal in a major way. Scholarships in fiscal year-end 2006 amounted to around 50 million dollars, but last year that sum nearly tripled, amounting to 169 million dollars, with much of it coming from the corpus or principal in the Escheats Fund. Withdrawals are projected to be more than 185 million this year and the fund balance will be no more than 200 million by the 2011fiscal year end. If continued this well of funds will dry up to have slightly more than 50 million the following year.
We applaud our lawmakers’ desire to help our students and we certainly have compassion for the students needing help for higher education at this time, but at the rate we are going there won’t be any funds left for future generations. This is both poor stewardship and public policy. It is an easy decision to give money from a fund where few are watching and where the taking doesn’t rob other state programs, but this draining must stop. We’ve gone to the Escheats well too often and it is almost dry. If our legislators wish to continue to give large scholarship sums to students they should figure some other ways to fund them. A dry well benefits no one. |
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