Amendment K: Lawmakers ask voters to approve investing unclaimed property proceeds in a trust fund

South Dakota has received more than $1 billion worth of unclaimed property over the years from an array of sources, including cash, insurance policy proceeds and even gold teeth. Amendment K, a question on the Nov. 3 ballot, asks voters to allow the state Investment Council to manage a trust fund consisting of unclaimed property proceeds.

Annual unclaimed property receipts have risen in recent years and hit a record $308 million recently, the result of factors including people leaving assets behind during pandemic-motivated relocations and Bancorp’s relocation of its national headquarters to Sioux Falls. The holders of unclaimed property, such as abandoned bank accounts, spend three years looking for the rightful owners before the property reverts to the state.

The state also tries to find the rightful owners, but many of them never claim their property, and the state has typically spent much of the unclaimed money while setting aside only a portion of it in case people come forward. Rightful owners can claim their assets from the state at any time.

The ballot question is part of a package passed during the last legislative session to bring more predictability to the volatile revenue source, and to protect the state if claims increase. A law passed last year limits the amount of unclaimed property funds that can be used in the state’s budget, and transitions all unclaimed property money into a cash flow fund. Only the interest from the fund is treated as revenue for the state’s annual budget.

“We had just been spending the money as it came in, even though we are perpetually liable to pay out those funds if an heir were to ever come forward,” said state Sen. Taffy Howard, R-Rapid City. “So, it is technically an unfunded liability on our books.”

To put the money in a trust fund managed by the state Investment Council earning higher returns, lawmakers need South Dakota voters to amend the state constitution. The Investment Council manages other state trust funds and the state’s retirement fund for public employees.

Howard sponsored a bill last year that state lawmakers unanimously approved to send the question to voters, with the support of the state’s Bureau of Finance and Management and the State Treasurer’s Office.

Now, “we need your approval,” said State Treasurer Josh Haeder.

“So we can protect those dollars forever until the rightful owner comes forward,” Haeder said. “And we can earn a maximum amount of interest that can be used for the betterment of the state of South Dakota.”

A “yes” vote on Amendment K will create a trust fund for unclaimed property managed by the Investment Council. A “no” vote will leave unclaimed property as it is.

No organized opposition to the amendment has surfaced. The general election is Nov. 3 and early voting is underway. The voter registration deadline is Monday.