FMX Home
Susan Combs  •  Texas Comptroller of Public Accounts

General Provisions
Electronic Funds Transfer – Direct Deposit

Applicability

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

Warrants and Direct Deposit

State employees are paid by warrant, direct deposit or electronic paycard.

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 paycard. 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 PayCard Authorization PDF 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.

back to top

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.

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)  PDF.

back to top

Direct Deposit to One or More 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.

back to top

Prenote Period

Any new setups or changes to direct deposit information will start a prenotification (prenote) period of six 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 six 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.

back to top

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. 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, visit Texas Direct Deposit: Bank on it.

back to top

Sources

Texas Government Code Annotated, Section 403.016 (Vernon 2004); 34 Texas Administrative Code Section 5.13.

Printer Friendly

Susan Combs
Texas Comptroller of Public Accounts
Questions? Contact statewide.accounting@cpa.state.tx.us
Window on State Government | FMX
FMX Sitemap | Contact FM
Accessibility Policy | Privacy and Security Policy