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Texas Payroll/Personnel Resource

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General Provisions
Electronic Funds Transfer – Direct Deposit

Applicability

The information in this statement applies to state agencies and institutions of higher education that submit payrolls through the Standardized Payroll/Personnel Reporting System (SPRS) or the Centralized Accounting and Payroll/Personnel System (CAPPS) for payment by the Comptroller’s office.

Please note that this statement does not apply to those institutions of higher education that initially process their payroll payments from locally held funds and then submit reimbursement documents to the Comptroller’s office to claim appropriated funds.

Warrants and Direct Deposit

State employees are paid by warrant, direct deposit or pay card.

Employees who choose direct deposit will have their funds deposited into an account of their choice through the electronic funds transfer (EFT) process. To choose direct deposit, employees may either complete a Direct Deposit Authorization form (74-176) or establish direct deposit through employee self-service access in CAPPS.

Employees can also choose to receive their payroll and travel reimbursement payments on a pay card. The pay card is issued to the employee by the state’s pay card bank and works as a debit card. To select this method of payment, employees need to complete the Pay Card Enrollment Authorization form (74-224) and submit it to their payroll office. Agencies must access the enrollment form via the Pay Card Program Terms page.

The EFT process allows payments to be issued by transmitting the information directly to a specific financial institution. State agencies set up and transmit payment information, such as account number and payment amounts, through the Comptroller’s payroll systems.

Exempting From Direct Deposit

Direct deposit transactions are strongly encouraged. However, state law currently allows employees to exempt themselves from direct deposit by notifying the Comptroller’s office that:

  • Receiving the payment by electronic funds transfer would be impractical.
    – or –
  • Receiving the payment by electronic funds transfer would be more costly than receiving a payment by warrant.
    – or –
  • They are unable to establish a qualifying account at a financial institution to receive electronic funds transfer.
    – or –
  • The employee simply chooses to receive the payment by warrant.

Direct Deposit to One or Two Accounts

Direct deposit payments must be made to checking or savings accounts.

At the discretion of the employing agency, the EFT process may be used to make deposits into more than one account at one or more financial institutions, including credit unions; however, no more than two accounts may be authorized.

Note: Employees of agencies using CAPPS Central may only authorize direct deposit to one account.

Prenote Period

Any new setups or changes to direct deposit information will start a prenotification (prenote) period of three banking days. This prenote period allows the financial institution to test the information provided.

When a payment is generated while the employee is in the three banking days prenote period, a payroll warrant is issued. After the financial information has been verified, all payments made after the effective date for direct deposit (when the prenote period has ended) are paid by direct deposit.

Notification of Change (NOC)

When a financial institution finds invalid direct deposit information on a file, either during the prenote period or during any transmission, a notification of change (NOC) is sent to the Comptroller’s office.

If the correct information is known and provided by the financial institution, it is noted on the NOC and the Comptroller’s office makes the corrections and resubmits the file within 24 hours. Based on this change, a new prenote period begins.

If the financial institution does not provide the correct information, the Comptroller’s office cannot make any changes and must cancel the direct deposit instructions. The agency must then contact the employee so a corrected Direct Deposit Authorization form can be completed, or the information submitted in CAPPS can be corrected. Once the information is received, the agency must enter the revised direct deposit instructions, and a new prenote period begins.

To learn more about the direct deposit program, see the Direct Deposit tab of TexPayment Resource.

Sources

Texas Government Code, Section 403.016; 34 Texas Administrative Code Section 5.13.