COLUMBUS, Ohio—Two Democratic former state officials have challenged the constitutionality of a newly passed plan to raid $1.7 billion from the state’s unclaimed property fund to help build a new Cleveland Browns stadium, among other projects.
A class-action lawsuit filed Monday in Franklin County Common Pleas Court seeks to block the new state budget measure from confiscating money from the $4.8 billion held by the Ohio Department of Commerce from things like inactive bank accounts, old safe deposit box holdings, and uncashed checks and insurance policies.
Going forward, Ohio will be able to seize any unclaimed money that isn’t collected by its owners within 10 years of it entering the fund. The state can then use the money for stadium projects and cultural facilities, under the new budget.
The suit claims that having the state take ownership of such money – a policy called “escheatment” -- violates the U.S. Constitution’s guarantees of due process and against taking private property without just compensation.
The lawsuit also asserts the scheme goes against the Ohio Constitution’s guarantees against seizure of private property, breaches the state’s fiduciary duty to protect people’s unclaimed funds, and violates the state constitution’s requirement that every bill can only address one subject.
The legal challenge was filed by former Ohio Attorney General Marc Dann of Cleveland and ex-state Rep. Jeff Crossman of Parma in the name of Cuyahoga County residents Mary Bleick, Todd Butler, and Allen Skierski.
Of the $1.7 billion being taken by the state, $600 million is going to cover one-fourth of the cost of an estimated $2.4 billion new Browns stadium in suburban Brook Park. The rest can be used to help fund other, to-be-determined stadium and cultural facility projects around the state.
Senate Republicans, who authored the unclaimed-funds proposal, have defended its constitutionality, calling it a creative solution to help the Browns stadium project using money that otherwise would just be sitting around.
Senate Finance Committee Chair Jerry Cirino, a Lake County Republican, has questioned whether plaintiffs in a lawsuit challenging the scheme would have standing to sue, as anyone with unclaimed funds still has a decade to collect them.
“We think we are within our rights as a legislature to be able to do what we’re talking about doing here,” Cirino said last month, according to WEWS-TV.
Senate GOP spokesman John Fortney reaffirmed that on Monday, noting that the unclaimed property fund “has been sitting idle for decades” and that “anyone who needs to file a claim for recovery has at least another decade to do so.”
Fortney added that “Marc Dann doesn’t have the best track record when it comes to protecting public funds,” a dig referring to Dann pleading guilty in 2010 to giving improper payments to staff members using campaign and office transition funds.
This isn’t the first time Ohio lawmakers have taken money from the state’s unclaimed property fund. Since the fund was created in 1967, state lawmakers diverted about $1.3 billion in total prior to the passage of the new budget, according to a memo from the nonpartisan Legislative Service Commission.
Most of that money went to the state’s general revenue fund, according to the memo, but some of it was used for things like job development, helping local governments after the state’s sales tax on Medicaid managed care organizations was abolished, and special projects.
The memo stated that no Ohio courts have previously ruled on the constitutionality of taking unclaimed funds in the way the current budget bill calls for.
In 2009, the Ohio Supreme Court held that owners of unclaimed funds are entitled to interest that the state earned while holding onto the money. However, the court’s ruling at the time stated that the Ohio General Assembly “has not plainly legislated” whether unclaimed funds are considered abandoned property.
The LSC memo also pointed out that at least four other states – Arizona, Hawaii, Indiana, and Rhode Island -- have laws that turn unclaimed funds over to the state after a certain period of time, the LSC said.
So far, those laws have not been overturned, the memo noted, though it added that “it is not clear whether a court would consider other states’ laws when evaluating the law in Ohio.”
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