No, the state didn't do anything with the money. The cash value remains the same.
What happened is that the advertised jackpot reflected the annuity rates that were available at that time. Since the winner didn't claim the prize, the annuity hadn't been purchased yet.
Interest rates have dropped in the past year (30 year fixed mortgage rates are under 4%). So, the annuity that can be purchased with the cash value yield less, over the long term.
Makes sense but the state will make it difficult to claim. The states clearly wants it.