Yes, states do make substantial money from unclaimed property, and they’re increasingly using interest earned on these funds to balance their general budgets. California demonstrates the scale of this practice: the state generates approximately $1 billion annually from unclaimed property and treats it as its fifth-largest source of General Fund revenue. This isn’t an incidental benefit—it’s a deliberate practice deeply embedded in state budget planning. The state currently holds approximately $15 billion in total abandoned property and unclaimed funds, making it the most prominent example of how states have come to rely on this revenue stream. Across the country, an estimated $70 billion in unclaimed property sits in state treasuries.
In 2024 alone, only $4.49 billion was returned to rightful owners, leaving the vast majority of these funds in state coffers. Arizona provides another stark example: in fiscal year 2024, the state added $211 million from unclaimed property to its general fund, and by 2025, that figure jumped to $331 million—a 56.9% increase year-over-year. This growth demonstrates how states are increasingly capitalizing on unclaimed property, and it’s raising concerns among both citizens and federal lawmakers. The practice works like this: when property is deemed abandoned—forgotten bank accounts, uncashed checks, security deposits—states take custody of those funds. While states are technically obligated to return the money when claimed, they’re allowed to use unclaimed property as a temporary revenue source. This means states earn interest on the funds while holding them, creating a powerful financial incentive to hold onto the money rather than aggressively pursue the rightful owners.
Table of Contents
- How Do States Actually Use Unclaimed Property Interest to Fund Government Services?
- The Scale of the Problem: How Much Money Are States Holding?
- Real-World Examples of States Profiting From Your Abandoned Accounts
- Why This Matters When You’re Trying to Claim Your Own Money
- The Controversy and Federal Legislative Response
- What States Are Required to Do With Unclaimed Property
- The Future of Unclaimed Property and Potential Changes
- Conclusion
How Do States Actually Use Unclaimed Property Interest to Fund Government Services?
The mechanics are straightforward but consequential. States don’t merely hold unclaimed property in a vault; they invest it in securities, bonds, and other income-generating instruments. The interest and returns earned on these investments are then swept into the state’s general fund or directed to specific programs. This is where unclaimed property transforms from a custodial responsibility into a revenue source that funds schools, transportation, emergency services, and other essential programs. New York demonstrates this in action. The state directs interest earned on unclaimed property balances directly to its General Fund, with proceeds supporting transit systems and emergency services.
Massachusetts takes a similar approach but explicitly allocates unclaimed property revenue to transportation improvements and public health programs. These aren’t hidden budget tricks—these allocations are documented in state budgets—but most citizens have no idea their abandoned accounts are funding their community’s infrastructure. Florida and North Carolina show variations on this model. Florida directs a portion of unclaimed property proceeds to the State School Trust Fund, effectively using abandoned accounts to supplement education funding. North Carolina directs interest earnings specifically to the State Educational Assistance Authority, which provides student grants and loans. The pattern is consistent: states have identified unclaimed property as a reliable revenue source and integrated it into core budget planning. The limitation here is that when economic conditions change and investment returns decline, states face budget pressures that might otherwise force them to prioritize returning unclaimed funds or raising taxes on citizens.
The Scale of the Problem: How Much Money Are States Holding?
The national scope reveals the true magnitude of this issue. Approximately $70 billion in unclaimed property is currently held by state treasuries nationwide. To put this in perspective, that’s more than many state budgets. Yet the return rate remains dismal: in 2024, only $4.49 billion was returned to rightful owners. This means roughly 94% of all unclaimed property remained in state hands, generating investment income that states used for their own purposes. California’s situation underscores why this matters. With $15 billion in unclaimed property, the state is essentially running a massive interest-bearing fund from other people‘s money.
The Legislative Analyst’s Office has documented that unclaimed property revenue is no longer marginal—it’s a cornerstone of the state budget. When a state becomes dependent on a revenue source, its incentive structure shifts. Rather than aggressively helping citizens locate and claim their money, states have a financial interest in keeping it lost. The variation between states is significant. Arizona’s explosive growth in unclaimed property contributions—from $211 million to $331 million in just one year—suggests that states are becoming increasingly sophisticated at monetizing these funds. Some states may be benefiting from market volatility, but the trend also indicates a growing dependency on this revenue. A limitation worth considering: if more people begin successfully claiming their unclaimed property, or if federal legislation limits state access to these funds, state budgets could face unexpected shortfalls. This creates a perverse incentive where states might inadvertently benefit from low claim rates.
Real-World Examples of States Profiting From Your Abandoned Accounts
California’s $1 billion annual contribution to the General Fund illustrates how unclaimed property has become central to state finances. This isn’t old money that occasionally trickles in—it’s a recurring, anticipated revenue source. The state budgets for it. State officials plan around it. For perspective, the California Legislative Analyst’s Office includes unclaimed property revenue in its revenue forecasts alongside income taxes and sales taxes. When unclaimed property revenue comes in higher than expected, it’s treated as a budget surplus. When it’s lower, it creates a shortfall. The state’s residents, who have no knowledge that their abandoned bank accounts and forgotten security deposits are funding government operations, are essentially making an unwilling contribution to the state budget. Arizona’s case is more recent but equally telling. The jump from $211 million to $331 million in a single year wasn’t the result of a legislative change or new initiative.
It reflects the state’s growing ability to generate returns on unclaimed property. This money directly funds state operations—government salaries, infrastructure, services. Arizona residents claiming unclaimed property are essentially retrieving funds that were previously supporting the state budget. The state faces a real fiscal impact when claims are processed successfully. Massachusetts and New York show that this practice is bipartisan and nationwide. Both states have explicitly incorporated unclaimed property revenue into their budget planning. In Massachusetts, transportation improvements and public health programs depend on this revenue stream. In New York, the connection is even more direct, with transit systems relying on the fund. The practical implication: when someone finally claims their abandoned property in these states, it’s not a simple transfer. The state has already spent the interest income, and processing the claim requires liquidating investments or finding alternative revenue sources.
Why This Matters When You’re Trying to Claim Your Own Money
The financial incentive structure creates real obstacles for claim seekers. States that depend on unclaimed property revenue have little motivation to make the claims process easy or to aggressively publicize that unclaimed property can be claimed. If the goal were returning money to owners, states would invest heavily in notification campaigns and streamlined claims processes. Instead, most states maintain relatively passive approaches to unclaimed property administration. Consider the friction involved in claiming unclaimed property. Owners must know the property exists, know where it was deposited, locate the correct state agency, complete sometimes-burdensome forms, and provide documentation proving their identity and claim. Meanwhile, the state continues earning interest on the unresolved balance. From the state’s perspective, the status quo is financially beneficial.
Every unclaimed account that remains unclaimed is an interest-bearing asset. There’s an inherent conflict of interest when the state holding your money is also the entity determining how hard to try to locate you. The comparison with other countries is instructive. Some nations with unclaimed property laws have implemented centralized, online-searchable databases that make it easy for owners to locate their money. Other countries require states to actively pursue owners and return unclaimed property much more quickly. The United States lags in both areas, partly because state budgets have become accustomed to this revenue stream. The limitation: improving the claims process would require states to invest in technology, marketing, and staff—expenses that would reduce their bottom line. That’s why most states operate with minimal infrastructure for claims processing.
The Controversy and Federal Legislative Response
The practice has increasingly attracted scrutiny from federal lawmakers who argue it’s fundamentally unfair. In 2025, Rep. Sam Liccardo (D-California) and Rep. Mike Lawler (R-New York) introduced the SAFER Act (Safeguarding Americans’ Fairly Earned Retirement) to limit states’ ability to seize and use securities, digital assets, and investment accounts as unclaimed property. The bipartisan support is notable—this issue has transcended normal partisan lines because it affects citizens across the political spectrum. The federal argument is straightforward: unclaimed property should be held in trust for the rightful owners, not used as a profit center. States argue that they need the revenue and that unclaimed property holders have had ample opportunity to claim their funds.
This creates a classic policy tension between states’ fiscal needs and citizens’ rights to their own money. The SAFER Act doesn’t eliminate unclaimed property claims entirely, but it would restrict what types of property states can claim and would likely require faster return of funds to owners. A critical warning: if the SAFER Act or similar legislation passes, states that have become dependent on unclaimed property revenue will face real budget pressures. Arizona’s $331 million contribution would need to be replaced by either tax increases or spending cuts. California’s $1 billion annual revenue would require significant budget restructuring. This is why there’s been muted resistance from state officials despite public support for returning money to rightful owners. The limitation is clear: solving the unclaimed property problem requires states to accept a revenue loss, and state budgets are already stretched. Federal legislation may be necessary because state incentives are fundamentally misaligned with return of funds to owners.
What States Are Required to Do With Unclaimed Property
Legally, states are required to hold unclaimed property in trust and return it to rightful owners who file claims. However, most states have no time limit for holding unclaimed property—it remains with the state indefinitely. Some states have attempted to address the problem by establishing stricter notification requirements, especially for larger amounts. North Carolina’s direction of unclaimed property revenue to educational programs is partially an acknowledgment that the funds should serve public good, though it doesn’t solve the fundamental problem that it’s not the owner’s money.
Florida’s allocation to the State School Trust Fund represents one approach to addressing the controversy: using the funds for education arguably serves the broader public interest. However, this doesn’t solve the core issue—the funds still belong to the original owners, not the state. A practical example: someone who left $10,000 in a dormant bank account in Florida decades ago might find that not only has the state held their money, but it’s been used to fund school programs. The state might argue this served a public good, but it’s still spending someone else’s money without their permission.
The Future of Unclaimed Property and Potential Changes
The momentum toward reform is building. The SAFER Act, along with growing media attention to state unclaimed property practices, suggests that significant changes may be coming. State treasurers are aware that the status quo is becoming politically untenable. Some states are beginning to implement improvements—better online databases, more aggressive notification campaigns, and faster processing of claims. These changes will likely accelerate if federal legislation passes.
The forward-looking reality is that states will need to transition away from unclaimed property as a revenue source. This might happen through federal mandate, or it might happen gradually as states implement better practices that make the process easier for owners to claim their funds. In either case, the era of states casually treating unclaimed property as discretionary revenue is likely ending. For citizens, this suggests that the best time to search for unclaimed property may be now, while states still hold large balances and before any legislation could complicate the landscape. The window for easy recovery of abandoned funds may not remain open indefinitely.
Conclusion
States do make substantial money from unclaimed property, and the practice is more widespread and consequential than most citizens realize. From California’s $1 billion annual contribution to Arizona’s rapid growth in unclaimed property revenue to smaller but significant contributions from states nationwide, unclaimed property has become a material part of state budgets. Approximately $70 billion sits in state treasuries, with only a fraction returned to owners each year. This isn’t accidental—states have integrated unclaimed property revenue into their fiscal planning, creating a financial incentive structure that discourages aggressive efforts to locate and return funds to rightful owners. The good news is that change may be coming.
Federal lawmakers have introduced legislation to restrict state access to unclaimed property, and public awareness is growing. If you believe you have unclaimed property, the current environment suggests you should search for it now and file a claim. Visit your state’s unclaimed property office—typically administered by the state treasurer or comptroller—and search for funds in your name. Most searches are free and accessible online. The growing pressure on states to return unclaimed property means that now is likely the best time to recover funds that have been sitting in state custody, generating interest for government budgets rather than returning to their rightful owners.
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