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Glenn Hegar  ·  Texas Comptroller of Public Accounts

Settlement and Judgment Processing Guidelines

FPP E.041

Settlements and Judgments Quick Reference

Overview

The Legislature authorized state agencies to make settlement and judgment payments out of their agency appropriations for causes brought against the state in a federal or state court.

Parties Involved

  • The state agency
  • Office of the Attorney General (OAG) of Texas
  • Office of the Governor of Texas
  • Texas Comptroller of Public Accounts

Limitations

Settlement and judgment payments are limited by the provisions in the General Appropriations Act (GAA), Article IX Section 16.04 and the riders associated with the Judgment and Settlement line item strategy.

Article IX Limitations:

  • The payment of a settlement or judgment may not exceed $250,000 from agency funds.
  • The total amount of payments made by an agency for a fiscal year may not exceed 10 percent of the total amount of funds available for expenditure by that agency for that fiscal year.

Article I Limitations:

When a claim exceeds $250,000, the agency pays the first $250,000 and the Comptroller’s office pays the balance — if the claim falls within the appropriation in Article I, Judgments and Settlements.

Claims that do not fall within the settlement and judgment processing guidelines are:

  • Inverse condemnation lawsuits (Texas Department of Transportation Refund and Lawsuit Cost rider)
  • Tax lawsuits (Agencies should work with their internal legal counsel to determine whether they have authority to process tax refunds)
  • All pre-litigation settlements (state agencies not represented by OAG)

State agencies should refer to Article IX of the GAA for more details.

Sequence of Events

  1. Plaintiff, plaintiff’s attorney, plaintiff’s insurance company or the OAG may notify a state agency of a claim.
  2. OAG sends a letter with examples to the agency advising them to prepare a warrant distribution memo, agency authorization letter and purchase document for inclusion in the settlement or judgment package. These instructions and examples are part of the Comptroller’s office payment process.
  3. Agency submits the warrant distribution memo, agency authorization letter and purchase document to the OAG within 10 days of notification.
  4. OAG prepares and approves the settlement agreement or judgment.
  5. OAG prepares a transmittal letter addressed to the Comptroller’s office.
  6. OAG submits the settlement package to the Office of the Governor for approval.
  7. The governor approves and sends the settlement or judgment package back to the OAG.
  8. OAG forwards the package to the Comptroller’s office for payment.
  9. Comptroller’s office reviews and approves the settlement or judgment package for payment.
  10. Warrants are issued and returned to attorney general by OAG courier.
  11. Total processing time from the time the agency is notified by the OAG to prepare necessary documents until a warrant is issued is approximately six to eight weeks.

Documents Required

Settlement or Judgment Package

  • Agency authorization letter
  • Warrant distribution memo
  • Purchase document
  • Settlement agreement or judgment
  • Release of claims prepared by OAG attorney
  • Transmittal letter from the OAG to the Comptroller’s office

Approvals & Signatures

  • State agency representative
  • Attorney General
  • Governor
  • Comptroller’s office auditor

USAS Processing Requirements

  • The purchase document should be entered by the paying agency in the Uniform Statewide Accounting System (USAS) as Doc Type 9 before forwarding to the OAG.
  • Applicable 1099 coding should be entered in the appropriate box in USAS for Internal Revenue Service reporting requirements.
  • Y, S or N should be entered in the CONFIDENTIAL INDICATOR (CONF) field in USAS (Y for yes-confidential, S for some-confidential and N for not-confidential).
  • The paying agency balances and releases batch for USAS processing.
  • R should be entered in the PAYMENT DISTRIBUTION TYPE (PDT) field to ensure a paper warrant is generated.
  • The agency representative who signs the purchase document must be listed on the voucher signature card on file with the Comptroller’s office.
  • The settlement or judgment must be approved by the OAG, and the governor must sign the purchase document before the Comptroller’s office can issue payment.
  • One or more of the following comptroller objects may be used: 7221, 7225, 7226, 7229, 7241.

Note: Although descriptive legal text is no longer required in USAS, please include the appropriate legal citation for making the payment on the hard copy of the purchase document.

Tracking Your Document

The Unapproved Documents Report (DAFR 7700) is monitored daily by an auditor in the Comptroller’s office Expenditure Assistance section of the Fiscal Management Division and is updated with the appropriate action code to identify any problems with the document.

To monitor your document’s progress:

  • Refer to the USAS (37) Document Tracking screen to determine the status of a document.
  • Refer to the Action Code Profile (D44) screen in USAS for definitions of the settlement and judgment action codes 430-550.
  • Monitor USAS documents for the action codes and for any error messages that may occur and need correcting.

The Fiscal Management division auditor will enter a 550 approval code in USAS when:

  • The settlement or judgment package is received by the Comptroller’s office.
  • Required agencies have approved the settlement or judgment package.
  • USAS entry is error-free and properly coded.

Contact

Fiscal Management Division
Expenditure Assistance section
(512) 475-0966
Fax: (512) 475-0588
Email: claimssettlements-judgements@cpa.texas.gov

Glenn Hegar
Texas Comptroller of Public Accounts
Questions? Contact statewide.accounting@cpa.texas.gov
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