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Texas Payroll/Personnel Resource

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Voluntary Deductions
Credit Union Deductions

Background

Each pay period, state employees may authorize deductions from their salary or wage payment for a payment to a participating credit union.

To participate, a credit union must:

  • Submit forms to the Comptroller’s office agreeing to the provisions of Administrative Rule 5.47.
  • Develop an authorization form that complies with the Comptroller’s rules.

View the list of approved participating credit unions (login required).

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Deduction Authorization

An employee may authorize up to three deductions per month, but no more than one deduction may be made to a particular credit union.

An employee authorizes a deduction to a credit union by:

  1. Completing the authorization form provided by the credit union
  2. Returning the form to the credit union

The credit union then forwards the form to the employing state agency.

The employing state agency must process the authorization and establish the deduction no later than the first workday of the second month following the month in which the agency receives the notification.

Example:

The agency receives the authorization form on the fifth day of March. The deduction must be in effect for the payroll the employee will receive on the first workday of May.

State agencies receiving an authorization form that does not appear to follow the Comptroller-approved format should contact the Statewide Systems Operations & Payroll Policy USPS, SPRS, HRIS Help Desk (512) 463-4008.

CAPPS agencies should contact the CAPPS Authorized Support Staff Help Desk (512) 463-CAPP (2277)

Agencies can also select a contact from these lists: USPS; SPRS; HRIS; CAPPS Agency Support

Note: Neither the Comptroller’s office nor any other state agency is liable for any damages or other consequences resulting from a state employee authorizing an incorrect amount for a deduction.

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Deduction Change, Cancellation, Enrollment Upon Transfer and Refunds

Change requests and cancellations

An employee may change or cancel a deduction for a payment to a participating credit union at any time by completing a revised authorization form.

A change request must be submitted by the employee to the participating credit union. The credit union must then submit the request to the employing state agency.

A cancellation may be submitted to the credit union or the employing state agency.

State agencies must complete the employee’s change or cancellation request no later than the first workday of the second month following the month in which the agency receives the notification.

Interagency transfers

When an employee transfers between state agencies, the employee must complete a new authorization form at the new agency to participate in the credit union deduction. The authorization does not transfer from the prior agency.

Refunds

Agencies may receive refunds from the credit union for an employee’s account only if an amount more than the elected amount was deducted. Agencies may deduct the amount of the refund from the subsequent payment to the credit union or request in writing to receive a check for the amount of the refund.

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Wages to Support Deductions

State employees are solely responsible for ensuring that salary or wages are sufficient to support a deduction. If a state employee's salary or wages support only part of a deduction, then none of the deduction may be taken.

If there is more than one deduction and the employee’s salary or wages do not support all of the deductions, then none of the deductions may be taken.

If an employee’s salary payment is cancelled or reduced after the credit union has received but not distributed the funds, the credit union must return the funds to the agency. If the funds have been distributed, the credit union must take whatever steps are legally available to them to collect the over-deducted funds.

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Payments to Credit Unions by the Comptroller’s Office or Institutions of Higher Education

The Comptroller’s office is required to pay deducted amounts to participating credit unions by Electronic Funds Transfer (EFT) or warrant (check). If institution of higher education (institution) employee salary and wages are not paid directly to the employee by the Comptroller’s office, institutions must pay the employee’s deducted amount to participating credit unions by EFT or check.

The deduction payment must be delivered to the credit union no later than the third workday after the date printed on the check. Regardless how the funds are received, EFT or check, the credit union must then distribute the funds to the employee’s account.

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Detail Reports

State agencies must submit a monthly detail report to each participating credit union to which they send deductions on behalf of their employees. The monthly detail report may cover only the deductions from salary or wages paid on the first workday of the month.

For payrolls paid other than the first workday of the month, state agencies must submit an additional detail report to participating credit unions.

Detail reports must include:

  • Name and Social Security number of each state employee from whose salary or wages a deduction was made for payment to a credit union for that month
  • Deduction amount for each employee

The agency must deliver the report no later than the third workday after the deducted amounts are paid to the credit union.

Credit unions must report any discrepancies between the detail report and the actual deductions received no later than the 60th day after the detail report was mailed.

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Other Considerations

Report to an entity other than the participating credit union

If a participating credit union has notified the Comptroller’s office in writing that the report should be submitted to an entity other than the participating credit union, the report must be submitted to that entity.

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Report to Southwest Corporate Federal Credit Union

Many credit unions are members of Southwest Corporate Federal Credit Union (Southwest Corporate) and use its data processing services for internal processing. Arrangements have been made for state agencies and institutions of higher education to provide one detail report to Southwest Corporate for their members. The participating credit unions will indicate if the credit union is a Southwest Corporate member and if their report should go to Southwest Corporate.

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Canceled Payments of Salary or Wages

State agencies must notify a participating credit union when the agency cancels a payment of salary or wages to a state employee. The notification must be by facsimile (fax) and must be provided not later than the day the agency processes the cancellation. The credit union may not distribute the deducted amounts to the employee’s account if the credit union receives the notice before the distribution occurs.

If the credit union receives the notice after distributing the deducted amounts, the credit union must withdraw the deducted amounts from the employee’s account, unless the credit union determines the withdrawal would violate federal or state law or the amount of funds in the account is insufficient for withdrawal of the full amount.

If the withdrawal is not allowed under the preceding criteria, the agency that employs the employee must collect the amount of the distribution directly from the employee.

The credit union shall notify the employing state agency of whether or not the deducted amounts have been distributed to the employee’s account. If the distribution has occurred, the credit union shall also notify the agency on whether the credit union has withdrawn the deducted amounts from the employee’s account. These notifications must be done by fax.

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Administrative Fee

The state may withhold an administrative fee from an employee’s salary or wage payment for making this deduction. The Comptroller has determined the incremental cost of the deduction is insignificant and the cost to withhold the fee could be more than the fee itself. Therefore, the Comptroller has decided not to withhold the fee from payrolls processed through the Comptroller’s office.

This determination does not affect the payroll system of an institution of higher education (institution) that is reimbursable from the State Treasury. The system may withhold an administrative fee from a salary or wage payment for making this deduction.

If an institution withholds a fee from the employee, they must periodically recalculate the fee to ensure it equals the cost of making the deduction. Each employee participating in credit union deduction, and participating credit unions with employee deductions, must be notified whenever the fee is recalculated. The amount of the fee may not exceed the lesser of:

  • The actual administrative cost of making the deduction
  • The highest fee charged by the institution for making another similar deduction

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Additional Resources

To learn more about this payroll deduction, see Chapter 9 “Deductions” of the USPS Process Guide or the SPRS Deduction Code Table and Chapter 2 “Personnel” of the SPRS User Guide.

Sources

Texas Government Code Annotated, Sections 659.101, 659.103(a), 659.106 – 659.108 (Vernon 2004); 34 Texas Administrative Code, Section 5.47(a)(2), (5) – (7), (9), (11) – (12), (14) – (17), (19), (b)(2)(A) – (B), (6)(A), (c)(1) – (3), (e)(1) – (2), (g), (j), (l)(2) – (3) (1999).