09 - September 25, 2025 - Findings on Unclaimed Funds and Corrective Action
CITY COUNCIL INFORMATIONAL MEMORANDUM
September 25, 2025
To: Cupertino City Council
From: Kristina Alfaro, Director of Administrative Services
Re: Findings on Unclaimed Funds and Corrective Action
Background
During a recent review of administrative policies, Vice Mayor Kitty Moore questioned the
City’s process for handling unclaimed funds, noting that no requests for transfers had
come to Council in recent years. This prompted Finance to examine the City’s approach
and compare it against State law.
California Government Code Sections 50050–50057 govern how local agencies may take
possession of unclaimed property, such as stale-dated checks and deposits. The Code
provides flexibility, allowing funds unclaimed for three or more years to be returned to
their originating fund after proper notice requirements, or alternatively transferred to the
General Fund with Council approval.
The City created an administrative policy intended to formalize procedures for handling
unclaimed funds. However, the language of the policy required that all non-General Fund
unclaimed funds be transferred to the General Fund and brought to Council for approval.
This inadvertently removed the flexibility provided under State law to leave funds in their
originating account after the three-year period.
Findings
During Finance’s review of unclaimed fund activity, staff identified a misalignment
between the City’s Administrative Policy and Government Code requirements.
Specifically:
- Since 2018, there were three instances where $9,461.84 was transferred to the
General Fund without Council approval, a step required by the City’s
Administrative Policy.
- While the City noticed and cleared unclaimed funds with Council action in 2018,
subsequent actions followed Government Code Section 50050 procedures without
reconciling with the City’s more restrictive policy language.
- This created a misalignment between the City’s policy and State law, limiting the
City’s flexibility and leading to inconsistent practices.
Corrective Action
To resolve these issues and prevent recurrence, staff will take the following steps:
- Return of Funds: The $9,461.84 previously transferred to the General Fund will be
reclassified back to their respective originating funds.
- Policy Update: Finance will revise the Administrative Unclaimed Funds Policy to
bring it into alignment with Government Code Section 50050. The revised policy
will allow staff to process unclaimed funds within their originating fund after the
three-year period and notice requirements, eliminating the need for separate
Council approval unless required by law.
- Process Improvements: Additional internal controls have been implemented to
ensure consistent application of the revised policy and compliance with State
requirements.
Next Steps
Once the administrative policy update is finalized, staff will implement it going forward.
In the interim, unclaimed funds will be managed under Government Code Section 50050.
Sustainability Impact
No sustainability impact.
Fiscal Impact
No fiscal impact.
_____________________________________
Prepared by: Jonathan Orozco, Finance Manager
Reviewed by: Kristina Alfaro, Director of Administrative Services
Approved for Submission by: Tina Kapoor, Interim City Manager
Attachments: