Treasury provides agencies with a means to place items of value in safekeeping. These items are held for various reasons related to an agency's activities. They usually are some form of security being held to insure performance, cover a liability, or provide some other means of financial protection. Treasury keeps these items in one of its two vaults, under dual control. Quarterly, agencies are provided with a computer listing of items held in safekeeping for them. There is no charge for this service. It is the responsibility of the agency to determine the value of the instrument being held, and that value is entered on the safekeeping receipt. In most cases, it is also the responsibility of the agency to determine the types of instruments that are acceptable. If the responsibility for determining the types of acceptable instruments falls with Treasury, assigned time certificates of deposit and bearer bonds
are currently listed as acceptable. This list is subject to amendment at any time. For a current list, agencies may call the Administrative Accountant in the Banking Section.
If the item being held in safekeeping is a bearer instrument, Treasury will not clip matured coupons to deliver to the instrument's owner. This is the responsibility of the agency. Requests for release of items held in safekeeping must be in writing from an authorized person of the applicable agency. Agency personnel picking up the items should also be authorized and must sign off on the original safekeeping receipt.
Pursuant to ORS 293.450, on August 1 of each year, State agencies are required to provide certification to the Division of State Lands summarizing all outstanding checks/warrants that were two years old as of July 1 of the current year. The detail listings of outstanding checks/warrants must include all information required by State Lands and are to be mailed directly to them according to their instructions. State Lands can be contacted at (503) 378-3805. State Lands will notify Treasury of the appropriate transfer of funds to be made.
The Local Government Investment Pool (LGIP) is an open-ended, no-load diversified portfolio offered to eligible participants, which include—but are not limited to—any municipality, political subdivision, or public corporation of Oregon that by law is made the custodian of, or has control of, any public funds. The pool is commingled with state funds in the Oregon Short Term Fund (OSTF).
State agencies must receive formal authorization from the local government involved prior to sending payment to the local government’s pool account. State agencies can make payments to pool accounts via Automated Clearing House (ACH)
transfer, or by a balanced transfer through the Statewide Financial Management Application (SFMA). State agencies need to work directly with the receiving local government to determine the best option for making payment to the local government.
Agencies using SFMA to transfer funds to pool accounts should review the list of SFMS Distribution Document Numbers
to determine whether there is an appropriate distribution document number/description combination for the funds being transferred to the pool account. If there is not an appropriate identifier already listed, the state agency should contact Treasury’s Banking Operations Manager at (503) 378-2457 to request that a new distribution document number be set up. The distribution document number is essential because it helps the receiving local government identify how to apply the funds.
In addition to using a distribution document number, the agency will also need to ensure that the Vendor Mail Code Profile is set up appropriately within SFMA. Treasury’s Banking Operations Manager can verify the pool account number to be used in the mail code setup. Please refer to the SFMS Desk Manual
or contact your SFMS Analyst for additional information on how to correctly set up a new mail code for a pool account.
Local Government Investment Pool contact information click here
Funds Disbursement by State Government
One of the primary functions of many government agencies is disbursement of funds to its customers or clients. As discussed in Section V
of this Cash Management Manual, there are two basic ways to disburse funds to those clients: by paper (check or warrant) or by electronic funds transfer. In recent years, calls to gain efficiencies, streamline processes, increase security measures, and cut costs, both to the state and to customers, have resulted in several agencies making decisions to move towards electronic disbursement methods.
Advantages of Electronic Payments for the State and Program Recipients
As outlined in detail in Section VI
, of this Cash Management Manual, an electronic funds transfer (EFT) is any movement of funds by non-paper means. EFT’s offer a number of advantages over paper-based systems. Among these are the security features. An EFT system generally has various levels of security, which may include encryption of data, authentication of transaction accuracy, and secured access to facilities. There is not a paper item to be lost in the mail or stolen from a mailbox.
The state also saves money from utilizing electronic funds transfer methods instead of manually processing checks. This cost savings to the state is a result of movement to electronic payments and away from paper checks; it includes savings from prepaid card programs, but is not limited to those programs.
If a customer has a checking account, savings account or other deposit account, they are able to have funds deposited directly into that account and save time by not going to their bank to deposit their check. Additionally, the money is generally available for investment sooner, thereby increasing interest earnings. However, if the customer has limited or no access to mainstream financial services or chooses at their own discretion NOT to use an existing deposit account, the availability of a prepaid card program often times saves these customers from experiencing check cashing fees that can range from 2 to 7 percent of the check amount. For instance, on a $200 check, the recipient could pay $4 to $14 at a check cashing location to have access to their funds.
Determining Disbursement Methods for State Agencies
The State Treasury works with state agencies to determine the most cost effective method to handle funds whether it be receipting or disbursing. It is ultimately the agency’s decision on how funds are disbursed. Some agencies provide electronic funds transfer as an option for distribution of funds. Others have mandated electronic methods. When an agency mandates electronic methods of disbursing funds, the customer has the option of using their own electronic deposit solution, such as a checking account, savings account, or any one of a number of reloadable prepaid cards that are available in the marketplace. Where the customer is unable or unwilling to provide their own alternative, the state aims to meet the needs of unbanked or underbanked citizens of Oregon by offering a prepaid card program to offer an electronic deposit alternative for these unbanked customers.
Mandating Electronic Payments
Electronic payment mandates are business decisions that are legislatively authorized and made at the discretion of the agencies responsible for disbursing payments. Any questions or concerns regarding the mandate of payment options, or related exemption processes, should be addressed to the mandating agency. It is important to understand that where a mandate exists, it is NOT the use of the state offered prepaid card program itself or any other prepaid card that is mandated; it is simply the use of an electronic funds transfer option.
Current Prepaid Card Program Offered by the State
Where electronic payments are mandated and a customer is unable to provide their own deposit alternative, the state currently contracts with U.S. Bank to provide a prepaid card solution for state agencies. U.S. Bank was selected through a competitive RFP process in late 2004, resulting in an executed contract in May 2005. Performance related to the contract is reviewed formally on at least an annual basis and ongoing operational issues are addressed throughout the year. Please call Treasury Management Services
to inquire about the current status of this or any successor contracts.
Determining Fees Charged to Cardholders
There are no fees to state agencies for use of the card program.
Fees for certain services under the prepaid card program are negotiated by the State Treasury. These fees are outlined in the prepaid card contract and disclosed to the cardholder when they receive their card. Importantly, all point-of-sale transactions, including those with “cash back” option is free of charge. Because cardholders served by the prepaid card program are located throughout Oregon, in both rural and metropolitan areas, it is the state’s intent to ensure that all cardholders have the greatest opportunity to obtain access to their funds in a number of different ways. The current contract balances that access with the various demographics for each of the participating programs in order to ensure the best “least-cost” access for the most cardholders. As detailed in this document, access to funds via ATM, teller and point-of-sale give the cardholder a variety of methods to access funds regardless of their physical location around the state. Importantly, all, U.S. Bank ATM withdrawals, teller withdrawals at participating financial institution that accepts Visa at their teller window and all point-of-sale transactions, including cash back options are unlimited and free.
Treasury believes that it is important for agencies to make information available regarding the current prepaid card contract including the general fee structure and options for accessing funds free of charge. Some highlights are included below. Please contact Treasury for any questions or for additional details:
Using Prepaid Cards Free of Charge
Again, it is important to understand that the prepaid card solution is just one option that is offered to customers. Treasury encourages the use of direct deposit into customer’s bank accounts. However, for the unbanked, underbanked or those simply choosing, at their own discretion, not to have funds deposited into their existing account, the card program can offer a more cost effective and secure way to receive funds than a check or warrant. There are a number of ways that cardholders can access their funds for free through ATM access, teller withdrawals and unlimited point-of-sale transactions with cash back options.
Accessing Cash Free of Charge
The state has negotiated a number of different ways for customers to access funds free of charge. Importantly all point-of-sale transactions are free. Cardholders can also select the cash back option at merchants that offer point-of-sale PIN transactions. U.S. Bank will not charge the cardholder for ATM cash withdrawals at any U.S. Bank ATM or for the first two transactions at any non-U.S. Bank ATM. As with all traditional bank customers, if you request an ATM withdrawal from an ATM owner other than your own bank, in this case U.S. Bank, you may also be charged a fee from the ATM owner that U.S. Bank has no control over.
Cardholder also have unlimited free cash withdrawals from a teller, at any participating financial institution that accepts Visa at their teller window. This teller option is in addition to the always UNLIMITED point-of-sale and cash back options.
Using the Card to Purchase Goods at a Store
These transactions are called Point-of-Sale (POS) transactions. If you are using the card to purchase something at a merchant, there is no fee associated with it. It will work just like any other Visa, except that it is paying the merchant from the amount stored on your card, not using credit. With participating merchants, you can also request cash back without paying a fee.
Overdraft Protection on Prepaid Cards
Prior to January 2012, cardholders that received government benefits were given the choice to opt-in to overdraft coverage. As a result of congressional action, these cardholders will no longer be afforded overdraft protection. Simply put, the cardholder will be denied at the time of the transaction, since U.S. Bank will typically not authorize and pay ATM or everyday prepaid card transactions if you do not have sufficient funds in your account. In the rare circumstance that a transaction was to cause an overdraft you will NOT be assessed an overdraft fee.
Programs Currently Utilizing Prepaid Card Programs
Oregon Employment Department – Unemployment Insurance Benefit (ReliaCard)
Oregon Department of Justice – Child Support Benefits (ReliaCard)
Oregon Department of Administrative Services – State Payroll (Focus Card)
State Accident Insurance Fund – Worker’s Compensation Payout (ReliaCard)
ABA Number - A unique identifying transit number assigned to each bank by the American Bankers' Association National Numeric System. The transit number has three parts. The first indicates the federal reserve district and city where the bank is located. The second part indicates the assigned bank number. The third part is a check digit. The transit number appears in the upper right corner of checks as a numerical portion of a fraction.
Account Transfer (formerly Suspense Transfer) - The transfer of monies from one Treasury account to another or from a Treasury account to an Agency account or General Fund account.
Agency Account (formerly Receipted Account) - An account established with the State Controller's Division, Department of Administrative Services. These accounts may have warrant-writing authority. Agency accounts require statutory authority to be opened, and all budgetary and cash controls for these accounts exist with the State Controller's Division.
Agency Account Number - The ten-digit account number designated by the Department of Administrative Services.
Appropriation - Monies considered and construed as constituting a credit in favor of the agency for the amount stated in the law making the appropriation, subject to the allotment as provided in Oregon Revised Statute 291.234.
Authorized Signer - An individual who has the legal right to issue instructions.
Automated Clearing House (ACH) - A computerized facility that performs the clearing of paperless entries between member depository institutions. It is a batch process system that is destined for future settlement of transactions. The ACH will take the transaction information and store it until necessary for payment to occur on the settlement date.
Bearer Bonds - Bonds issued with attachable coupons that must be presented to a paying agent or the Oregon State Treasury for semiannual interest payments. Federal law has prohibited the issuance of bearer bonds since 1982.
Check - A demand draft drawn on the Oregon State Treasury and payable through the Treasury items-processing bank.
Commercial Bank - A full-service institution that offers deposit, payment, and credit services to all types of customers, in addition to other financial services.
Counterfeit Check/Warrant - A copy of a check/warrant cashed as an original. It could be in the form of a photocopy, a newly created check created using the Treasurer's and agency's account number, or a scanned, altered and color print of an original.
Debt Service - Cash required at a given point in time for payments of interest and current maturity of principal of outstanding debt.
Discount Fee - A fee quoted as a percentage of the transaction amount.
Dual Control - The segregation of responsibilities to increase internal controls. This procedure requires that two members of the staff be involved in a transaction.
Electronic Funds Transfer (EFT) - Any movement of funds by non-paper means. EFTs provide various levels of security and the funds are generally available for investment sooner.
Encryption - Encoding transactions at transmission and decoding upon receipt. Encryption is particularly important for applications involving sensitive data such as a wire transfer system.
Endorsement - Signature of the payee made for the purpose of negotiating a check/warrant.
Federal Reserve - The organization created by the 1913 Federal Reserve Act. The system includes the twelve Federal Reserve banks and their branches, plus the member banks which are its legal owners. The Board of Governors, headquartered in Washington, exercises overall control over the nationwide operation of the Federal Reserve System.
Fedwire System - A system whereby debits or credits are processed through the accounts of member institutions at the Federal Reserve. Transfers between banks may be made in federal funds, or excess reserves may be borrowed or loaned.
Forged Check/Warrant - A check/warrant with an endorsement made without the express, implied, or apparent authority of the person whose name is signed.
General Fund Account - An account established with the State Controller's Division that exists within the General Fund. These accounts may have warrant-writing authority. General Fund Accounts require statutory authority to be opened, and all budgetary and cash controls for these accounts exist with the State Controller's Division.
Handwriting Exemplar - A form used in the forgery process to analyze the signature of a claimant to verify that the claimant's signature was indeed forged on the disputed item.
Imaging - A process which allows paper documents to be scanned, converted to a digital image, and stored for subsequent handling and processing.
Limitation - Authorization from the Legislature to expend monies up to the lesser of the amount of cash on deposit or the amount of a limitation.
Lockbox - A cash management system whereby an agency's customers mail payments to a post office box near the State's bank. The bank collects checks from the lockbox several times a day, deposits them to the Treasury's account, and informs the agency of the deposit.
Merchant Bank Card Services - The ability of an agency to accept a credit or debit card for payment of goods or services.
Midnight Deadline - The time for which Treasury's presentment bank has to return counterfeit checks/warrants. It is midnight on the next banking day following the banking day on which it receives the item.
MICR - Magnetic Ink Character Recognition. The American Bankers' Association program that provides for encoding of checks and documents with standard characters in magnetic ink so that they can be electronically "read" and processed.
Night Depository - A small vault located on the inside of a bank but accessible to customers outside the bank for depository purposes. It is a convenient service offered to agencies wishing to deposit receipts after regular banking hours.
Pre-encode - To encode the dollar amount of a check on the MICR line prior to depositing the item with a bank.
Prenote - A zero dollar ACH transaction that is used to verify that information contained in the ACH record is correct.
Procurement Card - A bank card used to purchase goods or services.
Repetitive Transaction - Where the sender expects to send funds to a recipient on more than one occasion in the future, and where the only information expected to change in the record is the amount of money sent.
Returned Item - Checks, drafts, or notes that have been dishonored by the drawee or maker and are sent back to the presenting party.
Settlement Date - Date by which a security order must be settled, either by a buyer paying for the securities with cash or by a seller delivering the securities and receiving the proceeds of the sale.
Sorting Services - Services provided utilizing electronic equipment having the ability to read, sort, and process MICR-encoded checks.
Stale-Dated Check/Warrant - A State check/warrant that is past the expiration period stated on the face of the check/warrant.
State Treasury ACH Network (STAN) - Software application for State agencies, used for the centralization of Automated Clearing House (ACH) transactions through the Oregon State Treasury.
Third Party Check - A check that is signed over by the original payee (the person to whom the check is made payable) to a different person who then negotiates (cashes or deposits) the check.
Time Certificate of Deposit - Monies held in a financial institution for a fixed term or with the understanding that the depositor can withdraw only by giving adequate notice.
Treasury Account (formerly Suspense Account) - An account established with Treasury. These accounts may have check writing authority, if approved by both Treasury and the Department of Administrative Services. Treasury accounts require statutory authority to be opened, and are outside the purview of the Budget and Management Division of the Department of Administrative Services.
Truncation - A process whereby the items processing bank microfilms redeemed checks/warrants and then destroys the originals. Copies are available for up to seven years from the redeemed date.
Trust Fund - A fund established separate and distinct from the General Fund with either a constitutionally or statutorily dedicated purpose.
Warrant - A formal certification of the validity of a debt with authorization or direction to the State's items processing bank to pay the debt upon presentment.
Wire Transfer - A transaction by which funds are moved electronically from one bank to another upon a customer's instructions through bookkeeping entries at the two banks.
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