That’s the conclusion of a new report by Legislative Analyst Mac Taylor. He reviewed the state program for returning unclaimed property to its rightful owners. At the end of 2014, the state held more than 28.4 million unclaimed properties worth an estimated $7.2 billion. Ninety-five percent of unclaimed property held by the state is cash assets.

Taylor said the state could do a better job of finding owners, instead of passively waiting for the cash to be claimed. His report also raised the question of whether the state has a conflict of interest in managing the program.

“In particular, because property not reunited with owners becomes state General Fund revenue, the unclaimed property law creates an incentive for the state to reunite less property with owners,” according to the report. “Now generating over $400 million in annual revenue, unclaimed property is the state General Fund’s fifth-largest revenue source. This has created tension between two opposing program identities — unclaimed property as a consumer protection program and as a source of General Fund revenue.”

Public unaware

Under state law, when there’s been no activity on an account for three years, financial institutions are obliged to report this unclaimed property to the California Controller’s Office. In turn, the controller holds the funds, commonly money from a forgotten bank account or insurance settlement, until it is claimed by the owner.

Controller Betty Yee has a special web page to help find lost property. It urges, “You may be one of millions of Californians owed money by the State!” The search engine is here.

Among the biggest problems facing the state’s unclaimed property program is a lack of public awareness about where people can find their old property.

“To begin with, the name itself — unclaimed property — is not very user-friendly,” the report said. “It likely prevents potential claimants from quickly understanding the program. The poor branding is likely made worse by limited state efforts to increase public awareness of the program.”

Even state leaders aware of the program’s existence, such as former controller candidate and Fresno Mayor Ashley Swearengin, don’t bother to routinely check and then collect small sums held by the state.

A search by CalWatchdog.com of the unclaimed property database showed prominent state political leaders with unclaimed property.

Gov. Jerry Brown has $61.26 in cash from the sale of shares formerly held by US Bancorp. The address for Brown in the database matches an Oakland address for his “We The People” organization.

There are also unclaimed cashier’s checks for “Kamala Harris” and “Gavin Newsom.” But, without any addresses listed, it’s unclear whether the $200 and $40, respectively, are owed to the attorney general and lieutenant governor by the same names.

Database problems

Missing addresses are only the beginning of the problems with the state’s unclaimed property database. Inaccurate information, such as misspelled city names, can prevent owners from finding their properties in the database. For example, the city of “San Bernardino” has at least 18 different spelling variations.

In addition to allowing the controller’s office the authority to clean the database, the Legislative Analyst’s office recommends the Legislature approve an upgrade to enhance search capabilities. Other states’ databases, such as Virginia’s unclaimed property database, include an address suggestion feature.

“Virginia’s database seems more effective than California’s, particularly for users living in large cities, who have common names, or who have lived at many addresses,” the report noted.

Other website upgrades could include an automated email, similar to a Google Alert, to notify Californians when new property is reported to the state.

Other recommendations for improving the program include:

• Maintaining communication with users by performing database searches on behalf of users;
• Publicizing a list of top unclaimed properties by region;
• Increasing the incentives for third-party investigators beyond the current maximum fee of 10 percent of the claim.

Praise for Chiang’s eClaim feature

Although the report dished out plenty of criticism, it also praised the controller’s office for its new eClaim feature. The new streamlined process for accounts valued at less than $500 was the product of John Chiang when he was controller from 2007 to 2015. He now is the state treasurer.

Roughly 90 percent of the 28.4 million properties held by the state are valued at less than $500.

In a statement, Chiang welcomed the report’s recommendations:

“The LAO has detailed many of the innovations and reforms which fueled an 8-year revival that wrestled away from past lawmakers a program that was hijacked to pay for their own spending priorities and, importantly, restored its original purpose of reuniting property with their rightful owners,” Chiang said. “I strongly support the LAO’s overarching message urging lawmakers to fight the instinct to oppose changes and investments which benefit consumers, even if those changes reduce money from California’s 5th largest revenue source.”

Yee, who has only been on the job a few weeks, hasn’t neglected the unclaimed property program. Earlier this month, she announced a new agreement with Charles Schwab & Company Inc. to return accounts to Californians via the unclaimed property program.

In a new report on the spending plan, the Legislative Analyst’s Office said Jerry Brown’s proposal to use cap-and-trade funds for high-speed rail is unlikely to maximize greenhouse gas emission reductions, which was the entire stated purpose of AB 32 and the cap-and-trade program.

Under AB 32, the California Air Resources Board created a regulation that establishes
 a cap-and-trade program, to help lower carbon emissions in California. AB 32 is the Global Warming Solutions Act, passed in 2006 by the state Legislature and signed into law by Gov. Arnold Schwarzenegger. The goal is to reduce greenhouse gas emissions in the state to 1990 levels by 2020.

Cap-and-trade was established to help achieve this goal. The regulation places a “cap” on aggregate greenhouse gas emissions from businesses and entities responsible for approximately 85 percent of the state’s emissions.

In the implementation the cap-and-trade program, the California Air Resources Board allocates a certain number of carbon allowances to the businesses. According to the CARB, each allowance equals one ton of carbon dioxide equivalent. The CARB provides some allowances for free to designated businesses. Other businesses are required to purchase allowances at auctions. Once the allowances have been allocated, entities can then “trade,” buy and sell the allowances, in order to obtain enough to cover their total emissions for a given period of time.

From the LAO report:

In order to minimize the economic impact of cap-and-trade, it is important that auction revenues be invested in a way that maximizes GHG emission reductions. Maximizing emission reductions (specifically in the capped sectors) reduces competition for allowances, thereby putting downward pressure on the price of allowances. This, in turn, reduces the overall cost for covered entities to comply with AB 32 and the potential negative economic impacts of the program on consumers, businesses, and ratepayers. It is, however, unclear to what extent the complement of activities proposed by the Governor maximizes GHG emission reductions.

college essays writing servicesThe LAO warns the Legislature there are legal risks with Brown’s plan to use cap-and-trade auction funds for funding high-speed rail:

Based on an opinion that we received from Legislative Counsel, the revenues generated from ARB’s cap–and–trade auctions are considered “mitigation fee” revenues. Thus, the use of these revenues are subject to certain legal criteria. Specifically, we are advised that their use is subject to the so–called Sinclair nexus test. This test requires that a clear nexus must exist between an activity for which a mitigation fee is used and the adverse effects related to the activity on which that fee is levied. Given this legal requirement, the administration’s proposal to fund activities (such as high–speed rail) could be legally risky. While the high–speed rail project could eventually help reduce GHG emissions somewhat in the very long run, it would not help achieve AB 32’s primary goal of reducing GHG emissions by 2020.

High-speed rail will not reduce carbon emissions

The Legislative Analyst’s Office warned in 2008 that the high-speed rail project would initially increase greenhouse gas (GHG) emissions for many years.

Following up, a greenhouse gas emission analysis done by the High Speed Rail Authority in 2013 indicates that once the high-speed rail system is completed and operational in 2022, it would contribute a relatively minor amount of GHG emission reductions.

The bullet-train project was touted as a way to dramatically reduce these emissions. Yet even after contrary reports, the governor still insists the project is green. “The high-speed rail is a reducer of greenhouse gases, an enhancement of the quality of California life and a bringing together of our various communities around the state,” Brown said at his budget press conference Thursday. He said because the state's population will grow by millions of residents, “we need alternatives.”

But as the LAO has consistently warned since 2008, and has does again with its new report, the construction of the project would actually produce additional emissions:

Despite these findings, roughly 30 percent of the funding in the Governor’s proposal goes to the high–speed rail project. Compared to a different mix of investments that could be made with the cap–and–trade revenue, the governor’s proposal is unlikely to maximize GHG emission reductions. Therefore, the Legislature will need to consider the most effective use of the cap–and–trade auction revenue.

By Michael Poliakoff and Andrew Gillen

From coast to coast, discontent rocks the great flagship universities. State funding is declining and institutions are responding with ever rising tuitions. But the response is far from inevitable. Remedies are already in hand, but for the will to take them.

California’s public universities are holding out for a tax increase, which, if approved, would spare them a further quarter-billion dollar funding cut, threatening even greater tuition increases should the ballot initiative fail.  Meanwhile, University of Virginia faculty and alumni are pushing back as the governing board raises concerns about whether the university president is controlling costs.

Strangely absent is any discussion of the basic mathematics of college finance.  We spend more than twice the average of any industrialized nation, but are trailing in terms of results.

University of California President Mark Yudof blames state disinvestment in higher education for tuition increases and claimed in the Wall Street Journal that UC has “laser focus on efficiencies.”  But the inconvenient truth is that higher education in the United States is not underfunded.  Rather, it uses its ample resources badly.

One crucial — and neglected — solution involves greater teaching loads and efficient use of classroom space.

In 1988, the average professor at major research universities taught 2.9 classes each term. By 2004, that number fell to 1.8. Surely, the teaching capabilities of California’s distinguished professorate didn’t decrease in that short time. Consider the impact of a small change in the beleaguered University of California system, with more than 8,700 tenure or tenure-track faculty. If the 10 campuses of the UC system increased the average teaching load of the faculty by just 10 percent, it would be the equivalent, cost-free, of another 870 full-time faculty at work in the classroom, generating substantial additional tuition revenue.

Is this an unreasonable expectation?  In 2003, the University of Maryland System, under budgetary pressure, took this proactive course. It worked.

Capacity

But what about capacity; would there be space for all these new students?  Here is another unpleasant truth about higher education.  It loves to build buildings — digital age be damned.  What it doesn’t do very well is use those classrooms and labs, especially not on Friday afternoons or during the summer.

The California Legislative Analyst’s Office observed that the University of California’s summer enrollments were only 23 percent of their fall enrollments. Flagship institutions, moreover, have been notoriously slow to embrace online instruction, with its vast potential for high-quality, lower-cost delivery, despite the huge investments they make in technology.  The University of California’s degree-granting online offerings number only a few dozen.

The conclusions are unavoidable.  There is space and there is expert, human capital to educate the students of this nation — without an infusion of dollars drawn from new taxes or increased tuition.  We need university governing boards willing to demand that the institutions for which they have fiduciary responsibility put students first, in reality, not just rhetoric.  They must change the reward system to recognize that dedicated, effective teaching is as important as published research. A modest increase in faculty productivity in the classroom will not unduly harm higher education research: rather, it will cause institutions to be more discerning about how they invest dollars in faculty research projects.

College leadership regularly claims that America has the finest higher education system in the world.  That boast will no longer hold water if we don’t have dramatic changes, and soon.

Andrew Gillen, Ph.D. is Senior Researcher at the American Council of Trustees and Alumni

Michael Poliakoff, Ph.D. is Vice President of Policy at the American Council of Trustees and Alumni