TITLE 34. PUBLIC FINANCE

PART 1. COMPTROLLER OF PUBLIC ACCOUNTS

CHAPTER 5. FUNDS MANAGEMENT (FISCAL AFFAIRS)

SUBCHAPTER L. CLAIMS PROCESSING--REPLACEMENT PAYMENTS

34 TAC §5.140

The Comptroller of Public Accounts proposes amendments to §5.140, concerning replacement warrants and an amendment to the title of Subchapter L. The amendments clarify that if a payment is issued to replace an original warrant, it may be issued either in the form of a paper warrant or as an electronic funds transfer.

The amendment to the title of Subchapter L changes the title from "Claims Processing--Duplicate Warrants" to "Claims Processing--Replacement Payments" to more accurately describe the content of the subchapter.

The amendment to the title of §5.140 changes the title from "Replacement Warrants" to "Replacement Payments" to more accurately describe the content of the section.

The amendments to subsection (a) move the definitions of "appropriation year" and "fiscal year" to place them in alphabetical order in the list of definitions in this subsection, while simplifying the language of the definition of "appropriation year" and keeping the current definition of "fiscal year", and renumber the subsequent paragraphs accordingly; change "of" to "for" in current paragraph (2) to make the definition of comptroller in this paragraph consistent with other definitions of comptroller in this chapter; change "warrant" to "payment" in this subsection to indicate that the term includes not only a payment issued in paper form, but also one made by initiating an electronic funds transfer; delete the definition of "person" in current paragraph (6) and add the contents of that definition to the definition of "payee" in current paragraph (4) to make the definition of "payee" more readable; delete "paper" from the definition of "payment cancellation voucher" in current paragraph (5) to clarify that the term includes not only a payment issued in paper form, but also one made by initiating an electronic funds transfer; define "replacement payment" in current paragraph (7) so that it includes a payment issued in paper form and one made by initiating an electronic funds transfer; change "statewide accounting systems" in current paragraph (9) to "statewide accounting system" to reflect the way the term is used in the text of the section; clarify in current paragraph (9) that the Centralized Accounting and Payroll/Personnel System is a statewide accounting system; and clarify in current paragraph (12) that a warrant may be issued to a payee by either a state agency or the comptroller on behalf of a state agency.

The amendments to subsection (b) clarify that the requestor must be the payee of the original warrant and that the request must be sent to the agency that initiated the original warrant; change "warrant" to "payment" in this subsection to indicate that the term includes not only a payment issued in paper form, but also one made by initiating an electronic funds transfer; and move the issues an agency must determine upon receipt of a request from this subsection to current subsections (c)(1) and (d)(3) because this language is more relevant to the content of current subsections (c)(1) and (d)(3) than it is to the content of this subsection.

The amendments to subsection (c) change "warrant" to "payment" in this subsection to indicate that the term includes not only a payment issued in paper form, but also one made by initiating an electronic funds transfer; add the language from current subsection (b) to current paragraph (1); clarify in paragraph (1) that an agency must receive a request for issuance of a replacement payment from the payee of the original warrant and that a replacement payment must replace an original warrant previously issued by the agency; and remove the comma from current paragraph (3) to correct the grammar in that paragraph.

The amendments to subsection (d) change "warrant" to "payment" in this subsection to indicate that the term includes not only a payment issued in paper form, but also one made by initiating an electronic funds transfer; revise the language in paragraph (1) to more closely reflect the language of Government Code, §403.060 regarding the printing and issuance of warrants; add the language from current subsection (b) to current paragraph (3); and remove the comma from paragraph (4) to correct the grammar in that paragraph.

The amendments to subsection (e) change "warrant" to "payment" in this subsection to indicate that the term includes not only a payment issued in paper form, but also one made by initiating an electronic funds transfer; remove the comma from current paragraphs (1) and (2) to correct the grammar in those paragraphs; clarify in current paragraphs (1) and (2) that current paragraph (2) applies only to specified financial assistance warrants and back pay award warrants and that current paragraph (1) applies to all other warrants; and simplify the language in current paragraph (3) to make it more readable without changing its meaning.

The amendments to subsection (f) change "warrant" to "payment" in this subsection to indicate that the term includes not only a payment issued in paper form, but also one made by initiating an electronic funds transfer.

The amendments to subsection (g) change "warrant" to "payment" in this subsection to indicate that the term includes not only a payment issued in paper form, but also one made by initiating an electronic funds transfer; delete redundant language in current paragraph (4) and add language to that paragraph to clarify that an electronic funds transfer may not be issued to replace a state employee payroll warrant; and clarify in current paragraph (5) that the agency that issues a replacement payment determines the form of the payment and must follow appropriate comptroller procedures.

Tom Currah, Chief Revenue Estimator, has determined that during the first five years that the proposal is in effect, the rule: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rules' applicability; and will not positively or adversely affect this state's economy. This proposal amends an existing rule.

Mr. Currah also has determined that the proposal would have no significant fiscal impact on small businesses or rural communities. The rule would have no significant fiscal impact on the state government, units of local government, or individuals. The proposed amendment would benefit the public by reducing the state's costs for providing replacement payments through the use, when possible, of electronic funds transfer. There would be no anticipated significant economic cost to the public.

Comments on the proposal may be submitted to Rob Coleman, Director, Fiscal Management Division, at rob.coleman@cpa.texas.gov or at P.O. Box 13528 Austin, Texas 78711. Comments must be received no later than 30 days from the date of publication of the proposal in the Texas Register.

The amendment is proposed under Government Code, §403.016(j) and §403.054(h), which require the comptroller to adopt rules regarding electronic funds transfer and the issuance of replacement warrants.

This section implements Government Code, §403.016 and §403.054, regarding electronic funds transfer and replacement warrant.

§5.140.Replacement Payments [Warrants].

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Appropriation year--The year for which legal authorization for the charge was granted by the legislature. Multiple appropriation year activity may occur within a single fiscal year.

(2) [(1)] Comptroller--The Comptroller of Public Accounts for [of] the State of Texas.

(3) Fiscal year--The accounting period for the state government which begins on September 1 and ends on August 31.

(4) [(2)] Include--A term of enlargement and not of limitation or exclusive enumeration. The use of the term does not create a presumption that components not expressed are excluded.

(5) [(3)] May not--A prohibition. The term does not mean "might not" or its equivalents.

(6) [(4)] Payee--A person to whom a payment [warrant] is made payable. A payee may include an individual, a corporation, an organization, a government or governmental subdivision or agency, a business trust, an estate, a trust, a partnership, an association, and any other legal entity.

(7) [(5)] Payment cancellation voucher--The [paper] form prescribed by the comptroller that a state agency completes when requesting cancellation of a warrant by the comptroller.

[(6) Person--Includes an individual, a corporation, an organization, a government or governmental subdivision or agency, a business trust, an estate, a trust, a partnership, an association, and any other legal entity.]

(8) [(7)] Replacement payment [warrant]--A payment [warrant] issued to replace an original warrant, either by issuing a replacement warrant or initiating an electronic funds transfer.

(9) [(8)] State agency--

(A) a board, commission, department, or other agency in the executive branch of state government that is created by the constitution or a statute of this state, including the comptroller of public accounts and an institution of higher education as defined by Education Code, §61.003, other than a public junior college;

(B) the legislature or a legislative agency; or

(C) the supreme court, the court of criminal appeals, a court of appeals, or a state judicial agency.

(10) [(9)] Statewide accounting system [systems]--Includes the Uniform Statewide Accounting System, the Uniform Statewide Payroll/Personnel System, [and] the Statewide Payroll/Personnel Reporting System and the Centralized Accounting and Payroll/Personnel System.

[(10) Appropriation year--The year that the legal authorization for the charge was granted by the legislature. Multiple appropriation year activity may occur within a single fiscal year.]

[(11) Fiscal year--The accounting period for the state government which begins on September 1 and ends on August 31.]

(11) [(12)] Warrant--A state payment in the form of paper issued to a payee by or [the comptroller] on behalf of a state agency.

(b) Request for issuance. The payee of an original warrant [A person] may request issuance of a replacement payment [warrant if the person is the payee of the original warrant]. The request must be directed to the state agency that initiated [on whose behalf] the original warrant [was issued] and must be accompanied by any statements or documentation required by the agency. [Upon receipt of the request, the agency must determine whether:]

[(1) the original warrant was lost, destroyed, or stolen;]

[(2) the person did not receive the original warrant; or]

[(3) the person's endorsement on the original warrant was forged.]

(c) Issuance by comptroller. The comptroller may issue a replacement payment [warrant] only if:

(1) the state agency that initiated the original warrant provides to the comptroller [receives] proper notification that: [of the existence of at least one of the conditions listed in subsection (b) of this section, concerning the original warrant;]

(A) the agency has received a request for issuance of a replacement payment from the payee of the original warrant;

(B) the replacement payment would replace an original warrant previously issued by the agency; and

(C) the agency has determined that:

(i) the original warrant was lost, destroyed, or stolen;

(ii) the payee did not receive the original warrant; or

(iii) the payee's endorsement on the original warrant was forged; and

[(2) the state agency on whose behalf the original warrant was issued provides the notification; and]

(2) [(3)] subsection (f) of this section[,] does not prohibit issuance of the replacement payment [warrant].

(d) Issuance by other agency. A state agency other than the comptroller may issue a replacement payment only [warrant] if:

(1) the comptroller has delegated to the agency [under Government Code, §403.060] the authority to print and deliver [issue original and replacement] warrants under Government Code, §403.060;

(2) the replacement payment [warrant] would replace an original warrant previously issued by the agency;

(3) the agency has determined that: [at least one of the conditions listed in subsection (b) of this section, exists concerning the original warrant; and]

(A) the original warrant was lost, destroyed, or stolen;

(B) the payee did not receive the original warrant; or

(C) the payee's endorsement on the original warrant was forged; and

(4) subsection (f) of this section[,] does not prohibit issuance of the replacement payment [warrant].

(e) Notification.

(1) For [This paragraph applies to] all warrants except [the] financial assistance warrants governed by Human Resources Code, §31.038 and back pay award warrants governed by Labor Code, Chapter 210, Subchapter B, notification[. Notification] to the comptroller under subsection (c)(1) of this section[,] is proper only if the agency:

(A) submits the information directly to the comptroller's Web cancellation system in accordance with the comptroller's requirements, if the agency's documentation is retained in the agency's files for audit by the comptroller; or

(B) complies with the comptroller's requirement to submit a payment cancellation voucher to the comptroller for cancellation of warrants that are not eligible to be canceled on the comptroller's Web cancellation system.

(i) The agency must complete and submit the payment cancellation voucher to the comptroller.

(ii) The agency may substitute the comptroller's payment cancellation voucher with an agency payment cancellation voucher only upon approval by the comptroller.

(2) For [This paragraph applies only to the] financial assistance warrants governed by Human Resources Code, §31.038 and back pay award warrants governed by Labor Code, Chapter 210, Subchapter B, notification[. Notification] to the comptroller under subsection (c)(1) of this section[,] is proper only if the agency [Texas Department of Health and Human Services] completes and submits the appropriate documentation to the comptroller.

(3) After a warrant is canceled, the state agency that requested its cancellation may request issuance of a replacement payment [warrant] in accordance with the procedures adopted by the comptroller. The request for a replacement payment [warrant] must be submitted to the appropriate statewide accounting system [from which the original warrant was issued].

(f) Prohibition on issuance. A replacement payment [warrant] may not be issued if:

(1) the original warrant has been paid, unless a refund of the payment has been obtained by the state;

(2) the period during which the comptroller may pay the original warrant has expired under Government Code, §404.046, or other applicable law;

(3) the payee of the replacement payment [warrant] is not the same as the payee of the original warrant; or

(4) state or federal law prohibits the issuance of a payment [warrant] to the payee of the replacement payment [warrant].

(g) Limitations and exceptions.

(1) A replacement warrant must reflect the same appropriation year as the original warrant and may not be paid unless presented to the comptroller or a financial institution before the expiration of two years after the close of the fiscal year in which the original warrant was issued.

(2) Except as provided by paragraph (1) of this subsection, a replacement payment [warrant] for a federal guaranteed student loan identified by the Texas Higher Education Coordinating Board must be issued within 120 calendar days from its original date of issuance and may not be paid unless presented to the comptroller or a financial institution before its expiration date.

(3) Except as provided by this paragraph, the Texas Workforce Commission shall comply with this section when issuing a replacement payment [warrant]. The deadline for issuance of the replacement payment [warrant] is the deadline specified in Labor Code, Chapter 210, Subchapter B.

(4) A[This section applies to the cancellation of a warrant or the issuance of a] replacement payment [warrant by a state agency other than the comptroller only if the agency] issued to replace a state employee payroll [the original] warrant may not be issued [under authority delegated to the agency] by initiating an electronic funds transfer. Such replacement payment may be issued only in the form of a replacement warrant. [the comptroller under Government Code, §403.060.]

(5) The state agency that issues a replacement payment under subsection (c) or (d) of this section is authorized to determine whether the replacement payment is issued in the form of a replacement warrant or an electronic funds transfer. The state agency must follow the appropriate comptroller procedures for issuing a replacement payment.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on April 17, 2018.

TRD-201801655

Victoria North

Chief Counsel, Fiscal and Agency Affairs Legal Services Division

Comptroller of Public Accounts

Earliest possible date of adoption: June 3, 2018

For further information, please call: (512) 475-0387