Restricted Expenditures — Early and Late Payments
A state agency may not pay for goods or services before their delivery to the agency, unless the advance payment is necessary and serves a proper public purpose. Specific exceptions to this prohibition are:
- Books – An institution of higher education may pay for books and other published library materials before receiving them if reasonably necessary for the efficient operation of the institution’s libraries. Books and published library materials are the only items that may be paid for in advance with higher education assistance (HEA) funds.
- Cost Savings – A state agency may make an advance payment if significant cost savings would result from making the payment in advance. For help in determining cost savings, please utilize the Discount Cost Effectiveness Calculator on the Fiscal Management Extranet (FMX) website of the Comptroller’s office.
- Expedite Delivery – A state agency may make an advance payment to a federal agency or another state agency for goods purchased from the agency, if the advance payment will expedite delivery of the goods.
- Lease Costs – An advance payment of annual lease costs for office or building space can be made by the Texas Facilities Commission (TFC) acting on behalf of a state agency, if an early payment discount can be obtained.
- Leased Space – A state agency may pay rent for leased space no more than seven days before the payment due date.
- Maintenance Contracts – A state agency may pay in advance the entire cost of a maintenance contract.
- Purchase of Real Property – The Comptroller’s office will process a purchase voucher for the purchase of real property anytime during the seven days before the closing date, if the agency submitting the voucher agrees to not deliver the warrant to the seller until the closing date.
- Rent – The TFC may make an advance payment of rent for a distribution center, an office space or another facility required to accomplish TFC’s functions.
- Specialized Goods/Services – A state agency may make an advance payment to a vendor selling specialized or proprietary goods or services to the agency if the vendor requires the payment to be made in advance. See also Proprietary Purchases in the State of Texas Procurement Manual.
- Subscriptions – A state agency may pay the cost of a periodical subscription a maximum of six weeks before it begins.
- Tuition – A state agency may pay tuition directly to an institution of higher education not earlier than six weeks before the class begins. However, a state agency may not reimburse a state employee for tuition before the class begins.
The Comptroller’s office may request additional information to justify any advance payment, including an advance payment that would be made under the circumstances listed above.
A state agency that makes an advance payment to a vendor is responsible for:
- Ensuring that the vendor provides the good or service to the agency.
- Pursuing appropriate legal remedies to recover the payment if the vendor fails to provide the good or service.
Texas Education Code Section 62.021(a); Texas Government Code Section 2113.001(2); State Purchasing and General Services Act, Texas Government Code Sections 2151.003(1), 2155.383, 2155.386, 2175.001(1-a), 2175.368(2); Article IX, Part 11 of the General Appropriations Act. Opinion of the Texas Attorney General No. MW-55 (1979), Texas Government Code Sections 656.041–656.049.
A state agency must retain documentation in its files explaining the necessity and proper public purpose of an advance payment.