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ARIZONA STATE SENATE
Fifty-Fourth Legislature, First Regular Session
AMENDED
state warrants; substitute checks
Purpose
Updates statutory banking practices for the processing of payments.
Background
The federal Check Clearing for the 21st Century Act (Check 21) is a 2003 law enacted to increase the efficiency of the U.S. check clearing system to make check processing faster (12 U.S.C. § 5001). Among its provisions, Check 21 allows banks to create substitute checks to present to other banks, instead of transporting the original checks, thereby reducing inefficiency and cost in favor of electronic check collection and processing. A substitute check is a high-quality paper reproduction of both sides of the original check and is the original check's legal equivalent. As such, it can be used as proof of payment in place of the original (The Federal Reserve Board).
As chief banker for Arizona, the State Treasurer is responsible for selecting Arizona's servicing bank to process all state financial transactions, and for procuring services to meet each state agency's specific banking needs.
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Updates statutory banking practices for the processing of payments.
2. Adds checks and electronic funds transfer vouchers, in addition to warrants, to the items that the Arizona Department of Administration may draw against the available balances of appropriations.
3. Adds checks and substitute checks to the items processed in the statewide accounting system.
4. Adds checks, substitute checks and electronic funds transfer vouchers to bookkeeping procedures of the State Treasurer.
5. Prohibits a state or local public official, employee or agent from being held personally liable for illegal payments made by check, substitute check or electronic funds transfer voucher, in addition to warrants, unless that person should have known that the claim would result in an illegal payment of public monies.
6. Stipulates that a person who knowingly refuses or omits to pay public monies on presentation of a check, substitute check or electronic funds transfer voucher, in addition to a warrant, is guilty of a class 4 felony.
7. Requires the State Treasurer to pay from the proceeds of the sale of bonds all checks, substitute checks and electronic funds transfer vouchers, in addition to state warrants, that are registered and accumulated.
8. Defines substitute check.
9. Makes numerous technical and conforming changes.
10. Becomes effective on the general effective date.
Amendments Adopted by Committee
1. Defines substitute check.
2. Makes additional changes regarding particular documents and processes.
Senate Action
FIN 2/6/19 DPA 9-0-1
Prepared by Senate Research
February 7, 2019
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