WSR 05-24-062

PERMANENT RULES

OFFICE OF

FINANCIAL MANAGEMENT

[ Filed December 2, 2005, 3:25 p.m. , effective January 3, 2006 ]


Purpose: The current rules were last updated in 1982. Since implementation, related statutory changes have been enacted. The proposed changes are intended to update the rules to ensure consistency with the current banking and agency practices, informational systems availability and current state and federal statutory requirements, as well as to make technical adjustments and clarifications as needed.

Citation of Existing Rules Affected by this Order: Repealing WAC 82-20-020, 82-20-030, 82-20-040, 82-20-060 and 82-20-070; and amending WAC 82-20-010 and 82-20-050.

Statutory Authority for Adoption: RCW 43.41.180 and 43.41.110(14).

Adopted under notice filed as WSR 05-21-078 on October 17, 2005.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 3, Amended 2, Repealed 5.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 3, Amended 2, Repealed 5.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 3, Amended 2, Repealed 5.

Date Adopted: December 1, 2005.

Roselyn Marcus

Director of Legal Affairs

Rule Making Coordinator

OTS-8431.2

Chapter 82-20 WAC

ELECTRONIC ((DEPOSIT OF SALARIES AND STATE FUNDED BENEFITS)) ACCEPTANCE AND DISBURSEMENT OF FUNDS


AMENDATORY SECTION(Amending Order 53, filed 2/11/82)

WAC 82-20-010   Purpose.   (((1) RCW 43.08.085, as amended, makes provisions for the electronic deposit of salaries and state funded benefit payments into financial institutions subject to regulations adopted by)) The rules adopted in chapter 82-20 WAC further define and clarify the application of RCW 43.41.180, which authorizes the office of financial management to approve the use of electronic and other technological means to transfer funds whenever economically feasible.

(((2) The policies and procedures contained in chapter 82-20 WAC for the deposit of salaries are consistent with the statutory authority cited in WAC 82-20-010(1).

(3) The term "recipient" means any state employee or any person to whom state funded public employees' retirement benefits, industrial insurance benefits, or state public assistance benefits are being paid)).

[Statutory Authority: RCW 43.08.085. 82-05-030 (Order 53), 82-20-010, filed 2/11/82.]


NEW SECTION
WAC 82-20-025   Definitions.   The following definitions apply throughout this chapter unless the context clearly indicates other meaning:

(1) "Agency" means and includes every state agency, office, board, commission, department, state institution, or state institution of higher education, which includes all state universities, regional universities, and community and technical colleges.

(2) An "economic feasibility study" is a package of information that includes a cover letter, a business case and analytical information. It documents the cost/benefit analysis of an agency's proposed electronic payment project and demonstrates the net benefit of the proposed project.

(3) "Economic feasibility" and "economically feasible" mean that over a reasonable period of time, an application's cumulative benefits outweigh or are equivalent to the application's cumulative costs.

(4) "Electronic and other technological means" and "electronic payments" include, but are not limited to, credit cards, debit cards, electronic fund transfers utilizing the automated clearing house network, electronic benefit transfers, wire transfers, lock boxes, electronic checks, smart cards, and stored value cards.

(5) "Financial institution" means any state or federally chartered commercial bank, trust company, mutual savings bank, savings and loan association, or credit union.

(6) "Funds" means any moneys either received or disbursed by a state agency, and applies to all cash types including treasury funds, treasury trust funds, and local funds.

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NEW SECTION
WAC 82-20-035   Is an economic feasibility study required?   In order for the office of financial management to determine whether or not an application is economically feasible, agencies are required to prepare and submit an economic feasibility study for approval. Agencies must file an economic feasibility study for all new applications to accept or disburse funds by electronic and other technological means and the application must be approved by the office of financial management prior to implementation. This applies to both pilot and permanent applications, and includes, but is not limited to, internet and retail applications. An economic feasibility study is also required for expansions to existing applications. The office of financial management can grant exceptions to the requirement to file an economic feasibility study, for example:

(1) Very small applications and limited expansions to existing approved electronic payment processes may only require a cover letter that incorporates the business case and analytical information. The office of financial management should be contacted to determine if this is an option for a particular application.

(2) Electronic funds transfers into treasury or treasury trust accounts through the automated clearing house network may only require a cover letter to be submitted to the office of financial management that incorporates the business case and analytical information. The office of financial management and the office of the state treasurer should be contacted to determine if this is an option for a particular application.

(3) Applications involving electronic transfers that are limited to information only do not require an economic feasibility study to be submitted. These would include, but are not limited to, bill presentment, employee earnings statements, and remittance advices.

(4) Wire transfers are usually needed immediately and are singular in nature, therefore they do not require an economic feasibility study. However, the agency must work with the office of the state treasurer to ensure that there is not a less expensive alternative available.

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NEW SECTION
WAC 82-20-045   Agency requirements.   (1) The agency is to establish controls to prevent loss of funds. Controls are to include a positive system of validating the amounts to be transferred and verifying that the amounts to be transferred for a recipient are actually due for goods or services received, work performed, benefits due or other purpose as authorized by law.

(2) The agency is to comply with state administrative and accounting policies established by the office of financial management.

(3) The agency is to work with the office of the state treasurer regarding the banking arrangements related to accepting or disbursing funds via electronic and other technological means.

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AMENDATORY SECTION(Amending Order 53, filed 2/11/82)

WAC 82-20-050   Financial institution requirements.   (((1))) Each participating financial institution ((must be a member of an automated clearinghouse, and observe all automated clearinghouse rules and regulations)) is responsible for adherence to federal and state statutes and regulations related to the transfer of funds via electronic and other technological means. The state reserves the right to refuse to do business with any financial institution that fails to comply with federal and state statutes and regulations related to the transfer of funds via electronic and other technological means.

(((2) Each participating financial institution must observe the requirements of Regulation E of the Federal Reserve System.

(3) Each participating financial institution must provide, when requested by the participating payroll system, positive confirmations on all prenotification requests transmitted for verification of a recipient's account number. If a positive means of confirmation is not required, the financial institution must provide a means by which the payroll system is notified of discrepancies on a timely basis. Deposits are not to be processed without a valid account number.

(4) Each participating financial institution is to complete the lower portion of the standard authorization form SF 6952, "Electronic funds transfer of salary authorization," or other form approved by the office of financial management when presented by a recipient. The form is to be returned to the recipient or agency payroll office upon completion.

(5) If a financial institution is presented an SF 6952 "Electronic funds transfer of salary authorization," or other form approved by the office of financial management by a recipient for processing, and the institution is not a member of an automated clearinghouse or is otherwise ineligible to participate in this program, it is the responsibility of the financial institution to notify the recipient of this fact.

(6) Subject to the approval of the office of financial management, a financial institution may reproduce form SF 6952, "Electronic funds transfer of salary authorization" for the sole purpose of preprinting the institution's name, address, and transit routing indicator. Any other alterations to the format or content of the form are not allowed and will not be honored by state agencies.

(7) Each participating financial institution is responsible for adherence to the applicable federal and state statutes and regulations regarding the electronic transfer of funds.

(8) Financial institutions serving as a "payable through" bank will be considered the receiving institution for electronic fund transfers of the recipient's salaries or benefits if their American Bankers Association-Transit Routing Indicator is used as part of the recipient's account code.

(9) Financial institutions are to provide each participating recipient with a notice of initial disclosure as required by Regulation E. This notice is to include the mechanism to be used by the recipient for verification that the deposit by electronic funds transfer has been made.))

[Statutory Authority: RCW 43.08.085. 82-05-030 (Order 53), 82-20-050, filed 2/11/82.]


REPEALER

     The following sections of the Washington Administrative Code are repealed:
WAC 82-20-020 Payroll system requirements.
WAC 82-20-030 Agency requirements.
WAC 82-20-040 Recipient requirements.
WAC 82-20-060 Subsequent transactions.
WAC 82-20-070 Failure to comply.