Senate Judiciary Committee
January 29, 2025
Senator Alan Clark [00:00:03] Chair sees a quorum. First up on the agenda is SB 5. I spoke to Senator King this morning and he is not running SB 5or SB 6 today. So according to rule, both those will go on the deferred list. I've been corrected. First, it goes to the bottom of the list. And then the next time it will go to the deferred list. So those bills will drop to the bottom of the agenda. So we are to SB 14. Senator Wallace. Senator Wallace, you are recognized to present your bill.
Senator Dave Wallace [00:01:10] Thank you, Mr. Chair. Senator Dave Wallace, District 19. Fellow Senators, Mr. Chair, this is a really good bill. Is an agency bill brought to me. It is a bill that will give money back to the citizens to whom the money is owed. The ask is for enabling language to automatically mail unclaimed property checks valued between $50 and $5,000. This is a best practice bill. It's currently used by 24 other states, including Louisiana, Texas, Mississippi and North Carolina. 359,796 citizens of Arkansas are eligible for a property valued at roughly 83.5 million. 59 million of these claims are less than 1,000.
In fact, over 90% of the claims in Arkansas are under 90,000. And what the auditor's team is wanting to do is to return that money to the people it belongs to. They've been very careful in how they're looking at this, how they're orchestrating this. The fraud prevention methods include, but are not limited to the LexisNexis, the IRS tax identification verification, national change of address, and is only released if they claim it can be identified through multiple ID matches to include Social Security number.
What it includes is only individuals, one owner claims and only claimed property that will be included. And again, it will be run through the fraud system. Here's what it does not include: claims with incomplete owner information, securities or tangible property, property owned by somebody who is deceased, open claims or claims already started, and claims started by anybody outside the US. Members, it's a good bill and I stand by for your questions.
Senator Alan Clark [00:03:27] Senator Rice, you're recognized.
Senator Terry Rice [00:03:30] Thank you. Good morning. Senator Wallace, thank you for bringing this bill. Auditor Milligan, appreciate your work and your office for improving this. My question is, when I heard about this, I heard Auditor Milligan on the radio this morning and I had not read the bill. The only interaction I've had with this program, I guess when Charlie Daniels first started, I believe, and it's an improvement. It was back an administration ago, my mother, and I can't remember at that time if she had had a stroke, and she passed since, but was disabled for four and a half years. And it wasn't a large amount of money alone, less than $200.
But I had somebody text me that knew me, not that well, but he knew me and said, I saw on the website your mother got some money. I said, Really? I said, There's another lady's got her first name and last name. Three people checked. Sure enough, it was. I thought we was pretty good at keeping up with her money. But as you know, these things come in. So it was like, I think $285 or something. And we went through the process.
I question this for a larger amount of money to be concerned with. And I understand the security stuff we have. But in real life, how does this work? Dysfunctional families. Sometimes you've got a niece taking care of somebody that's more responsible than maybe a mother's own child. Give us some real life circumstance, how that works to get it, to make sure that person gets the money. That's just basically.
TJ Fowler [00:05:25] Senator Rice, I'm T.J. Fowler. I'm legal counsel for the auditor's office. And so as I understood your question, there are sort of two components. Your first component was what happens when you have maybe deceased owners?
Senator Terry Rice [00:05:39] I'm talking about a living owner.
TJ Fowler [00:05:41] Okay.
Senator Terry Rice [00:05:43] That has something coming back. But if they contact that and somebody gets-- I don't know if you're going to contact them by mail, how are you going to contact them. They may have personal information on them, but they may not have the best interest of the person that should be getting the money.
TJ Fowler [00:06:02] So under this program, it's going to use what we call PII, personal identification information. It's going to be run through multiple databases. So if you've got a living owner, this only operates for sole owner property. So it's not a property that is owned by multiple people or has been divided. So the person that owns it is going to be the only person receiving communication.
Senator Terry Rice [00:06:28] How is that communication going to be sent to that person?
TJ Fowler [00:06:31] Right now, there will be an initial notice that is sent to anyone who will be receiving --
Senator Terry Rice [00:06:37] Okay, let's go back. My mother-- let's go back a few years. My mother's in a nursing home with a stroke. Can talk, can be verbal, paralyzed on one side. And she gets a letter. And maybe a sibling or something-- we had no family problem. But say in a family that has a problem, that doesn't have the best interests, has a drug problem or something, happens to be there and gets that mail. Can they interact with this office and get that money?
TJ Fowler [00:07:16] Not unless they have a durable power of attorney or medical power of attorney.
Senator Terry Rice [00:07:20] You're going to require a power of attorney?
TJ Fowler [00:07:21] If this is only going to operate and the check will only be cut to the named owner. So the only way another family member could cash the check or use the check is if they had some legal document. I couldn't go to the bank and cash a check that was made out to my father or mother unless I had some durable power of attorney. So if you had someone who was incapacitated and someone else in the family was living with them, could they intercept the check? Yes. There's nothing we can do about someone grabbing someone else's mail. But the check will only be made out to the owner. And there would have to be some other legal instrument in order for someone else to use that negotiable instrument.
Senator Terry Rice [00:07:59] I appreciate your answer. And again, somebody gets $185 check and somebody signs it over and takes it to some businesses, they go ahead and cash it, they're not going to do that for a $5,000 check. I don't think. There's safeguards in there. And again, I appreciate the program. I'm just trying to get some real world stuff. Thank you.
Senator Alan Clark [00:08:27] I'm going to do this twice this session. And the first time early. Senator Clark, you're recognized. Now, this is actually Senator Tucker. But since everybody else does it, I thought I would do it. He has a very special first name, but it's his first name. Senator Tucker, you're recognized.
Senator Clarke Tucker [00:08:56] I've always said Representative Johnny Rye is the only one who calls me Senator Clark on purpose.
Senator Alan Clark [00:09:04] Well, he calls me Senator Alan so that's understood.
Senator Clarke Tucker [00:09:06] That's right. That's right. So thank you, gentlemen. And I get Senator Rice's concern, but if the person is deceased, it would only go to the estate, correct? And then a family member couldn't claim that unless it goes through the estate and there's an executor of the estate and all that.
TJ Fowler [00:09:25] That's correct, Senator Tucker. And in fact, if someone is deceased and this is passed on to multiple heirs, then it wouldn't be eligible for this program. It's only for single owner property.
Senator Clarke Tucker [00:09:35] Yeah. And if they're living, the only way they can cash the check is if they're the guardian or have durable power of attorney. So my question is, I understand what you're doing here. I just have one point of confusion. And if you explained this when you opened for the bill and I missed it, I apologize. But in the bill on E3, I just see where it says the property has a value of less than $5,000. But on this summary sheet here passed out, it says unclaimed property checks value between 50-- I just clarified it. I just answered my question. My apologies. Thank you.
Senator Alan Clark [00:10:09] Senator Dees, you're recognized.
Senator Tyler Dees [00:10:12] Thank you, Mr. Chair. I think my question is just why do we need statute for this? First, maybe a rule. And I love the heart. I want us to do this. But in your information sheet, it does appear that there's $59 million in lower end smaller amounts for multiple citizens. But why can't we just do this without statute today?
TJ Fowler [00:10:42] The statute currently requires that anyone who wants to receive money from the unclaimed property program has to file a claim. So they have to know that the program exists, go affirmatively look for their money, and then start a claim with the program. And frankly, despite our best efforts at outreach, some people don't know the program exists and they don't know they have money. And so this statutory change allows us on these low value amounts where the PII is very certain to just send the check unilaterally without these people ever knowing. They're just going to receive a notice, Hey, you're going to receive a check pretty soon, and then within 90 days they're going to get a check in the mail without ever having to file a claim.
Senator Tyler Dees [00:11:24] That's helpful in clarity. So this, you can be a little more proactive. You don't wait for a claim. And then I guess the last follow up question would be, is there a time line of a check has been sent out but has not been cash or received? What happens to those funds at that point?
TJ Fowler [00:11:41] Already in the system, the checks have a void date. So if they sit dormant for so long, those checks are automatically voided on our end. And the auditor issues, as you know, all state warrants. So we issue these checks and can control the voiding.
Senator Tyler Dees [00:11:54] Thank you.
Senator Alan Clark [00:11:59] Senator Gilmore and then Senator Johnson.
Senator Ben Gilmore [00:12:04] Thank you, Mr. Chair. Thank you, gentlemen. Thank you for bringing this bill. I think it's a good bill. I think it's a good idea. Just a question. A couple of questions, actually. So first, how many people? So I know that there's 350 some odd thousand people that are in the program. How many are eligible to receive a check between the 50 and 5,000 range. Any idea?
TJ Fowler [00:12:27] I don't know off the top of my head on the 50 and 5,000. I can tell you in more incremental and smaller increments, because I think the plan is to do this in smaller increments. We're not going to send out every single check in the first month. We just don't have the manpower and the ability. For the lower, focusing on people that are in Arkansas at first, and then we'll roll it out slowly over time.
Auditor Milligan [00:12:53] And Senator, I'd like to add that 24 other states are actively doing this. A lot of the kinks have been worked out. So many of the questions that are being asked this morning really we're satisfied in our minds that the security's there. And we're just kind of stepping up into the cold water a toe at a time, if you will, to get this implemented.
Senator Ben Gilmore [00:13:19] Well, and to be clear, I support this and I think it's a great idea. At the end of the day, it's their money. We need to get back to them. So I understand when you maybe, when you start talking larger dollar figures, things get a little more interesting in people's minds. Maybe they want to try to figure out a way to game the system or whatever. But why stop at 5,000?
TJ Fowler [00:13:45] So when this program has been rolled out in other states, the 5,000 is sort of seen as a consumer protection security issue, just keeping a lower dollar figure for now. You are sending checks out.
Senator Ben Gilmore [00:13:58] That's sort of what I wanted to hear. No, that's helpful. Thank you.
Senator Alan Clark [00:14:03] Senator Johnson, you're recognized.
Senator Blake Johnson [00:14:06] To address, these are individuals in a circumstance, in a death and there's a trust involved. I mean, the individual gets a check, there's a trustee. Can they put that into the estate?
TJ Fowler [00:14:29] So for this program, again, it's only for single owner claims. So if the owner or the original owner has died and we have some information that tells us that, and it is now part of a trust that has multiple beneficiaries in the trust, then that property wouldn't be eligible. Now, if your question is more general as to whether or not unclaimed property operates that way, where it goes into a trust and make sure it's distributed, yes, that happens often. A big part of my job as legal counsel is when you have claims that are now the owner is deceased and it has moved through some sort of intestate or testator's succession, I help figure that out to make sure the money goes to the right place, i.e. the trust for the heirs.
Senator Blake Johnson [00:15:17] So the trustee can't act on that?
TJ Fowler [00:15:21] The trustee would have trust documentation saying I am now the trustee. I am the one who should receive property that belonged to this now deceased owner. And we accept that and then send money to trustees. We do that with some regularity.
Senator Blake Johnson [00:15:35] Thank you.
Senator Alan Clark [00:15:37] Senator Tucker.
Senator Clarke Tucker [00:15:40] Thank you, Mr. Chairman. So I'm curious now about communication with the public about this and maybe the issue is-- what do you all do for communication now?
TJ Fowler [00:15:53] We have an outreach department. And in fact, our outreach department is here today. And their sole job is to get out and spread the word about the unclaimed property program, the great Arkansas treasure hunt. They travel all over the state. They go to different meetings and clubs and events. We'll set up kiosks where people can actually look up their unclaimed property when they're at these events with our outreach department and start their claim right there.
So the Milligan administration has done a really good job of trying to get the word out that this exists. And this program that y'all are voting on today is just one more step in that direction to try and get more money back to Arkansas citizens.
Senator Clarke Tucker [00:16:32] I guess one notion for doing this is as as hard as you all have tried to get the word out, some people still haven't got the word and you're just going to send them the money, whether they apply for it or not, make a claim for it or not.
TJ Fowler [00:16:43] 100%.
Senator Dave Wallace [00:16:45] You know, the key point here, members and Mr. Chair, this is just one more tool in their tool belt. They already do a good job of trying to get information out. I personally received a letter about a year ago saying that I had $200 that I didn't know about in this system. So they're already doing a lot of it. This is just another tool that lets him get it out to folks that may not have good access to the Internet or might not be getting their mail or whatever. They're just one more tool to help get money that belongs to the citizens back to the citizens.
Senator Alan Clark [00:17:26] Senator Wallace, Mr. Auditor, we've discussed these things at length of your office and Senator Wallace and me. Well, I'll just start with this. Everything requires money to do. How is this going to be funded?
TJ Fowler [00:17:53] So just from background. The entire unclaimed property program is already self-funded. You all appropriate as a budget every year. But the entire set of line items that pay for the unclaimed property program come out of state central services at the beginning of the year. And then at the end of the year, we take money out of interest generated from the unclaimed property Proceeds Trust, which is just a fancy word for the pool of money where all these private citizens' money sits.
Interest is generated and we repay state central services at the end of every year. Now, I know that Senator Wallace had asked that question about a week ago. Are we going to make sure that this portion is also self-funded? And I believe that there has been some language drafted. I don't know if the plan is to add it or not, but to just say one more time that it is only the interest from the program that will pay for these items. But whether or not that language exists, the program is self-funded.
Senator Alan Clark [00:18:52] Just wanted to get that on record. Any other questions from the committee? Seeing none, there is no one signed up to speak on the bill. Senator Wallace, would you like to close for your bill?
Senator Dave Wallace [00:19:05] Mr. Chair, I am closed.
Senator Alan Clark [00:19:09] Senator Tucker, you're recognized for a motion. Second from Senator Gilmore. Any discussion? All for the motion, signify by saying aye. Opposed. Motion carried. Congratulations, Senator Wallace, you have passed your bill.
Senator Dave Wallace [00:19:26] Thank you, Senators.
Senator Alan Clark [00:19:33] Next on the agenda, we have House Bill 1006. Is Senator Flippo here? Go ahead to the end of the table. Go ahead. You're recognized, Senator Gilmore.
Senator Ben Gilmore [00:19:48] Well, I just had a great concern that the Senator wasn't here. And I don't know if we wanted to wait, if the House sponsor wanted to wait for him to arrive.
Senator Alan Clark [00:19:58] It's sometimes alarming when a senator doesn't show up for his bill. So Representative Painter, you are recognized to present your bill.
Representative Stetson Painter [00:20:09] Thank you, Mr. Chair. And with your permission, I would like to have the 14th judicial prosecuting attorney join me at the table, if that's all right with you.
Senator Alan Clark [00:20:15] Yes, sir. If you will both introduce yourselves.
Representative Stetson Painter [00:20:21] Stetson Painter, House District number 3.
David Etheridge [00:20:23] I'm David Etheridge. I'm the prosecuting attorney for the 14th Judicial District.
Senator Alan Clark [00:20:28] You may proceed.
Representative Stetson Painter [00:20:29] Thank you, Mr. Chair. Senators, let me just say it's a privilege to be in front of you, because this is the first time that I have presented in front of a Senate committee. So it's pretty interesting. And of all committees to pick the Judiciary Committee. So, great. This is House Bill 1006. All this is doing, there's only three judicial districts left in the state that are tier B. And this is just moving it, the 14th Judicial district, to a tier A, making it full time. The other two districts are the 9th and the 15th. And so the fiscal on this change is going to be coming out of other revenues, which is already in the constitutional officers. It's $40,796 starting at FY 26, and that is due because of the independent commission on November passed that 6% raise. And so that's what it's included. Other than that, I'd be glad to take any questions.
Senator Alan Clark [00:21:31] Senator Johnson, you're recognized.
Senator Blake Johnson [00:21:37] Other revenues. Can you be more specific than that?
Representative Stetson Painter [00:21:42] All I know is it's just coming out of the constitutional officers stuff, not out of general.
Senator Blake Johnson [00:21:59] Okay.
Senator Alan Clark [00:22:03] Any other questions from the committee? Good. So, Representative, this court is already full time, the court itself? Or it's not?
David Etheridge [00:22:20] The 14th judicial district, the way it was set up several years ago was a tier B, which allowed the prosecutor in that district to have a limited private practice. I don't think that, at least in my situation, that makes any sense based on the volume of caseload that I have in that district across four counties. And so it's just reached a point where it makes the most sense for the people I represent. And I would note is not part time. It's just this is the way it needs to be is tier a where I am there and that's my only responsibility is to be the prosecutor for those folks in that district.
Senator Alan Clark [00:22:53] Okay. How long have you been a prosecutor there?
David Etheridge [00:22:58] This is my 11th year, sir.
Senator Alan Clark [00:23:00] Okay, so you've been there some time. And up to now, you've been part time.
David Etheridge [00:23:05] I don't want to say this in a weird way, it's never part time. It's just you're doing two jobs because I'm in that office majority of the time. It's just I still have a private practice, which I do not think makes sense because it creates conflicts. People that I can't do the things I need to with. And I think that's another reason you don't need in my district to be a tier B prosecutor. I don't need to have the conflicts that arise. And like I said, I have a very, very limited practice at this time.
Senator Alan Clark [00:23:34] It occurs to me and, again, it's not that I don't think that you're on the up and up and everything square, but it occurs to me that as you're testifying for this, you have a conflict of interest. Is there anyone else from AOC or elsewhere to tell us about whether this position ought to be part time, full time? The gentlemen coming may have a conflict of interest, too.
Bob McMahon [00:24:13] Chairman Bob McMahon, Prosecutor Coordinator. This is this bill is certainly supported by the Arkansas Prosecuting Attorney's Association. The statutes that are in place allow the individual district and the individual elected prosecutor to come before you and make this request. Some districts have gone back and forth through the years, but the way the statute is set up, it's up to the elected prosecuting attorney to come before you and make this pitch. And Mr. Etheridge and Representative are following the statutory authority to come before you to do that. So it's a decision that's, again, historically been left up to each individual prosecutor to come forward with the assistance of the local officials. And that has been done.
Senator Alan Clark [00:24:54] So if the prosecutor supported it, is your belief that the workload is there or are you just supporting a fellow prosecutor?
Bob McMahon [00:24:59] No, sir. The workload is certainly there. We, again, the elected prosecutor and the deputies, they know about the workload and they come before us and tell us that they're going to make this switch. So it is my opinion that the caseload certainly supports this change.
Senator Alan Clark [00:25:14] Thank you. I appreciate that testimony. Other questions? Senator Gilmore. Senator Tucker.
Senator Clarke Tucker [00:25:24] Thank you, Mr. Chair. I see that it has an emergency clause, Representative Painter, and I was curious why you put that on there.
Representative Stetson Painter [00:25:31] I put that on there, Senator, due to talking with the prosecuting attorney and with the caseload and everything else and going with his advice that he requested. And so I was just following that suit.
Senator Clarke Tucker [00:25:42] In my view, the reason why in the state constitution we have to take separate votes on the emergency clause is because we are denying the people the ability to put a referendum on it if we pass a law they don't like. So you think this is important enough to deny the people their opportunity for a referendum?
Representative Stetson Painter [00:25:59] I have had zero calls for or against this bill. And I believe at the end of the day, if we put an emergency clause, we're actually going to do the good will of the people for Boone, Baxter, Marion and Newton counties.
Senator Clarke Tucker [00:26:12] All right. Thank you, sir.
Senator Alan Clark [00:26:13] Senator Gilmore, you're recognized.
Senator Ben Gilmore [00:26:16] Perhaps I missed this. And so I apologize. Because I did have a motion at the proper time. And I still will. So the fiscal impact states a little over $40,000. Did we identify where that's coming out of? Clearly I wasn't paying attention.
David Etheridge [00:26:31] It comes out, as all the elected prosecutors, whether they're A or B, are paid out of the constitutional officers fund. The 40,000 includes the match money. The actual increase in salary is not quite that much, but that includes match.
Senator Ben Gilmore [00:26:44] Okay. Thank you.
Senator Alan Clark [00:26:46] Senator Dees, you're recognized.
Senator Tyler Dees [00:26:48] Thank you, Mr. Chair. Can you educate me on our other judicial districts? How many are part time and how many are full time?
Bob McMahon [00:26:56] Again, there are 28 elected prosecutors. We have 25 right now prior to this bill that are Division A and three are Division B. The prosecutors are prosecutors full time. They just, like David, I think, called it Tier A, Tier B. We don't refer to them as part time there. They're never part time prosecutors. But it's 25 division A at this point and three Division B.
David Etheridge [00:27:16] And if I can add on a little bit of that, Senator, it's the ninth Judicial District in the 15th, if I remember correctly.
Senator Alan Clark [00:27:24] Senator Johnson.
Senator Blake Johnson [00:27:27] Should we question the help from the local officials if the Senator won't show up?
Senator Ben Gilmore [00:27:33] The senator is here, actually.Mr. Chairman, can we get the senator to the end of the table?
Representative Stetson Painter [00:27:45] Perfect timing, Senator.
Senator Alan Clark [00:27:48] So you said they're all full time, but obviously there's a difference. So, Tier A are full time and not working in a private practice, etc. it's tier B, you're allowed to have a private practice and do whatever work you may want to do there.
Bob McMahon [00:28:08] That is correct. Division A, by statute, is prohibited from having a private practice. What I mean by full time is I mean, if there's a homicide at 2:00 in the morning and the prosecuting attorney gets called out, you're not going to have any of the prosecutors never say, I don't have to go to that because I'm not a full time prosecutor. That's incorrect. So but the statutory distinction specifically says Division A is prohibited from having a private practice.
Senator Alan Clark [00:28:32] Senator Gilmore. You're recognized.
Senator Ben Gilmore [00:28:34] Thank you, Mr. Chair. And I'm really happy the senator showed up for his bill. Senator Flippo, have you read this bill?
Senator Scott Flippo [00:28:42] I have not yet, Senator Gilmore. But I do support Mr. Etheridge, in his quest to be the lone prosecutor to finally have a full time position.
Senator Ben Gilmore [00:28:53] Hey, I'm very supportive of our prosecutors and the great work they do, including the prosecutor.
Senator Scott Flippo [00:28:58] I appreciate that, Senator Gilmore. And I appreciate our relationship that's built on honesty.
Senator Ben Gilmore [00:29:03] I mean, I was just interested in the fact that most of this is an emergency clause. So I'm a little shocked that you hadn't read it. But thank you.
Senator Scott Flippo [00:29:10] No, you're not.
Senator Alan Clark [00:29:13] Representative Painter, you're aware that if this bill passes this committee, it'll still have to pass the Senate floor?
Representative Stetson Painter [00:29:19] I'm very aware, Senator.
Senator Alan Clark [00:29:21] And you're aware that you've chosen Senator Flippo to represent you on the Senate floor.
Representative Stetson Painter [00:29:26] After facing my first committee on the Senate side, I will rethink my priorities.
Senator Scott Flippo [00:29:33] There's nobody that's better at getting 18 votes on that Senate floor than this guy right here.
Senator Alan Clark [00:29:38] We'll see. Senator Rice, you're recognized.
Senator Terry Rice [00:29:48] Senator Flippo, my seatmate, good friend. But just for clarity, this will not get anything from Senator Flippo's past, going to get him out of trouble?
David Etheridge [00:30:00] We made a conscious decision to avoid such happenings in our district.
Senator Terry Rice [00:30:03] Thank you.
Senator Alan Clark [00:30:05] Any other questions from the committee? I don't believe we have anyone signed up to testify on the bill. Representative Painter and Senator Flippo, would you like to close for your bill?
Representative Stetson Painter [00:30:22] I just think the committee. Appreciate it very much and appreciate a good vote.
Senator Alan Clark [00:30:28] What's the will of the committee? Do pass from Senator Gilmore, second from Senator Johnson. Any discussion? All for the motion signify by saying aye. All opposed. Motion carried. Congratulations, Representative Painter, you have passed your bill. Thank you. Anybody see Representative Richardson or Senator Bryant out in the hallway? If not, do we have any other business before the committee? Seeing none, we are adjourned.
