CS FOR SENATE BILL NO. 231(STA) "An Act relating to unclaimed property; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. TOM BOUTIN, Deputy Commissioner, Department of Revenue, testified this bill would change the Alaska Uniform Unclaimed Property Act to generally comply with other regulations in the nation governing unclaimed property. He specified that this bill would shorten time periods after which ownership of unclaimed property would be transferred to the State. RACHEL LEWIS, Unclaimed Property Administrator, Treasury Division, Department of Revenue, testified this bill would reduce the "dormancy periods" of unclaimed property. She overviewed that the amount of time before which unclaimed property would transfer to State ownership would change from either five years to three years or seven years to five years. She surmised this legislation would improve chances of locating the owners of unclaimed property, would permit businesses to remove the liabilities from accounts, and would transfer unclaimed property to the State general fund sooner "where it could be used for everyone in the state of Alaska." She qualified this legislation does not specifically address demutualization, which is a new practice began the release of the Uniform Law Commissioners Draft of 1995, which this legislation is based upon. Senator Bunde asked for further definition of the demutualization matter. Ms. Lewis deferred to industry representatives. Senator Olson asked the percentage of property currently claimed after the third year and before five to seven years. Ms. Lewis replied the incidence of claims is greatly reduced over time. She predicted an increase of claimed property in the first two years due to the compressed timeframe. Senator Hoffman asked what additional measures would be undertaken to identify, locate and notify owners of unclaimed property. Ms. Lewis replied that currently the Division is required to advertise in newspapers unclaimed property notices annually. She stated this is expensive, and that the Division has found other more cost-effective methods, including maintaining an Internet website, national television programs and commercials, and booths at conferences and fairs. She stressed that funding for these efforts is limited to the $30,000 budget and that this legislation would allow the Division to identify and implement the most efficient and successful methods. Senator Hoffman asked if the Internet is the most effective method for Alaska. Ms. Lewis reiterated that currently, the Division is required to advertise through newspapers, although more effective methods have been identified. This legislation would allow the Division to evaluate different methods. She listed 300 claims resulting from a $30,000 newspaper advertising campaign the previous year, compared to 1,600 claims resulting from an Internet posting at no cost to the State. Senator Olson challenged that many rural residents are not "property minded" and unlikely to surf the Internet. Ms. Lewis replied that many people tend to surf the Internet, and notify neighbors, friends and relatives if information is found. Senator Olson countered that rural areas have limited computer access and therefore Internet surfing is not possible. Ms. Lewis responded that this legislation would permit the Division to determine the best way to address the issue of notifying owners of unclaimed property. She surmised that if the newspaper advertising were not required, the funds could be utilized in a more effective manner. Amendment #1: This amendment replaces the language in Section 5 on page 3 of the committee substitute to read as follows. Sec. 5. AS 34.45 is amended by adding a new section to read: Sec. 34.45.175. Certain property distributed in insurance company reorganizations. Property distributable in the course of a demutualization or related reorganization of an insurance company shall be deemed abandoned as follows: (A) any funds, two years after the date of the demutualization or reorganization, if the funds remain unclaimed, and the owner has not otherwise communicated with the holder or its agent regarding the property as evidenced by a memorandum or other record on file with the holder or its agent; (B) any stock or other equity interest, two years after the date of the demutualization or reorganization if instruments or statements reflecting the distribution are either mailed to the owner and returned by the post office as undeliverable, or not mailed to the owner because of an address on the books and records of the holder that is known to be incorrect, and the owner has not otherwise communicated with the holder or its agent regarding the property as evidenced by a memorandum or other record on file with the holder or its agent. (C) property not subject to (A) or (B) above within two years of the distribution shall remain reportable under other sections of this chapter. Senator Bunde moved for adoption and objected for discussion purposes. Mr. Boutin indicated he has read the amendment and agreed with the concept. He deferred to Ms. Lewis and the Department of Law to explain the provisions. Ms. Lewis remarked that the Division agrees "wholeheartedly" with the amendment, which was suggested by industry and she noted that the National Association of Unclaimed Property Administrators also supports the amendment. MARY ELLEN BEARDSLEY, Assistant Attorney General, Commercial/Fair Business Section, Civil Division, Department of Law, testified via teleconference from Anchorage that she has not had an opportunity to adequately review the amendment. She indicated the Department agrees with the concept of the proposed changes. Senator Bunde directed attention to a memorandum from the legislative Division of Legal and Research Services [copy on file], which also raises concerns with the amendment. No further action was taken on the amendment or the bill.