Electronic Funds Transfer – Direct Deposit
Note: The pay card program is currently on hold. Agencies may no longer accept applications for pay cards. The Comptroller’s office will notify agencies if the pay card program will continue with a new vendor or be discontinued.
The information in this statement applies to state agencies and institutions of higher education that submit payrolls through the Uniform Statewide Payroll/Personnel System (USPS), 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.
State employees are paid by warrant, direct deposit or electronic pay card.
If an employee chooses to receive a paper warrant, a check against reserved funds is created by the state that guarantees or “warrants” a payment.
An employee who chooses direct deposit will have his or her funds deposited into the bank account of choice through the electronic funds transfer (EFT) process.
An employee who wishes to receive his or her net pay by electronic means but is unable to obtain a personal checking account can choose to receive net pay on an electronic pay card. The TexPay card is issued to the employee by Bank of America and works as both a debit card and a Visa credit card. To select this method of payment, an employee needs to complete the Employee Pay Card Authorization form (74-224) and submit it to his or her payroll office.
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.
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.
Employees who are classified under the state’s position classification system below a pay group 8, or non-classified employees earning a gross salary below the equivalent of a pay group 8, are specifically exempted from direct deposit payments by law. However, these employees may choose to be paid through direct deposit by completing the Direct Deposit Authorization form (74-176) (login required) .
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.
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.
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. 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.
Texas Government Code, Section 403.016; 34 Texas Administrative Code Section 5.13.