Expenditures Related to State Officers and Employees
Surety Bonds

The purchase of a surety bond may help a state agency offset the cost of a dishonest act by an employee or an employee’s failure to perform duties of their position. A state agency* may only purchase a surety bond for a state officer or employee if it is:

• Required by the Texas Constitution or federal law or regulation, or
• Required by court order, or
• Approved by the State Office of Risk Management (SORM).

SORM may approve the purchase of a surety bond if it determines the surety bond is needed due to a substantial or unusual risk of loss, or is necessary to protect the interest of the State.

SORM will determine the amount of bond coverage needed for a state agency*, unless the amount is determined by the state constitution or federal law or regulation, or court order.

A surety bond must be on a form approved by the Commissioner of Insurance and purchased from an insurance company authorized to issue surety bonds in Texas.

Bonds must be written in triplicate originals with:

• One original filed with the secretary of state,
• One original filed with the Comptroller's office, and
• One original kept by the agency covered by the bond.

An annual report must be submitted by the state agency† to the governor, the Comptroller’s office, the state auditor, the Legislative Reference Library and the Legislative Budget Board that includes the following for each bonded employee:

• Name
• Job title
• Surety bond amount
• Name of the surety company

Definitions:

State agency*

A state department, commission, board, institution, court or institution of higher education. (Texas Government Code Sections 653.003(3))

State agency†

Has the meaning assigned by Texas Government Code Section 403.013(a):

• Any department, commission, board, office, or other agency in the executive or legislative branch of state government created by the constitution or a statute of this state.
• The Supreme Court, the Court of Criminal Appeals, a court of appeals, the Texas Civil Judicial Council, the Office of Court Administration of the Texas Judicial System, the State Bar of Texas, or another state judicial agency created by the constitution or a statute of this state.
• A university system or an institution of higher education as defined by Section 61.003, Education Code.
• Another governmental organization the Comptroller's office determines to be a component unit of state government for purposes of financial reporting under the provisions of this section. (Texas Government Code Section 2101.001 (2))

Surety bond

Any bond, including a bond for a notary public under Texas Government Code Section 406.010, that obligates a surety to pay within certain limits a loss caused by:

• A dishonest act of an officer or employee of a state agency, or
• Failure of an officer or employee of a state agency to faithfully perform a duty of the officer’s or employee’s office or position. (Texas Government Code Sections 653.003(1))

Sources [+]

Documentation Requirements [+]