Bill
SB 1387
Requires all State recurring vendor payments to be made by direct deposit, shifting compliance to agencies and phasing out paper warrants to cut costs.
Status & Procedural Notes
- Introduced Jan. 29, 2025 (Illinois, sponsor: Sen. Mike Simmons). First reading and referral followed; added Co‑Sponsor Sen. Ram Villivalam on Apr. 4, 2025. Companion bills: HB 5574 and HB 1068.
- Amends Section 9.03 of the State Comptroller Act (15 ILCS 405/9.03).
- Provision is effective immediately upon enactment.
Purpose
- To require that State recurring payments to vendors be made by electronic direct deposit rather than paper warrants, reduce use of paper payments, and place compliance responsibility on the paying State agency.
Key Provisions
- Direct‑deposit mandate: All State payments that are "recurring payments" to a vendor must be made through direct deposit.
- Definition: A "recurring payment" is defined as any payment with a fixed deadline that occurs more than once. The bill explicitly cites examples including utility payments, payments for internet services, and payments for construction services (but is not limited to those).
- Agency responsibility: The paying State agency is responsible for ensuring compliance with the direct‑deposit requirement.
- Processing fees for noncompliance:
- The Comptroller may charge a $2.50 processing fee per paper warrant when payments that should have been direct‑deposited are issued as paper warrants. The fee may be withheld from the payee and deposited into the Comptroller’s Administrative Fund.
- Similar $2.50 fees are referenced for vendors/entities receiving payroll or retirement voluntary deduction payments when not receiving direct deposit; the Comptroller must give reasonable notice to impacted entities.
- Related electronic payment rules: The bill retains and clarifies existing authority for the Comptroller (with the State Treasurer) to adopt rules for electronic deposits and outlines related programmatic details (e.g., account types, pilot programs).
- Exceptions and implementation details:
- Existing provisions requiring direct deposit for employee payroll and benefit payments remain; some narrow exceptions exist (collective bargaining agreements that do not require direct deposit; secure check accounts for employees who opt for them).
- The bill references administrative rulemaking/implementation by the Comptroller and State Treasurer (e.g., allowable paper‑warrant limits, notice requirements).
- The Comptroller may charge up to $25 for mailed payment detail information where an entity requests mailed detail instead of retrieving it electronically.
Who is Affected
- Primary: vendors and service providers receiving recurring State payments (utilities, internet, construction contractors, etc.).
- Secondary: State agencies (must ensure vendors are enrolled for direct deposit), the Comptroller’s office (implementation/enforcement), and entities receiving payroll/retirement deduction payments.
- Employees and entities covered by collective bargaining terms or secure‑check arrangements may be exempt as provided.
Potential Impacts
- Administrative: Agencies must establish processes to enroll vendors in electronic payment and track compliance; Comptroller implements notice and possible fee collections.
- Financial: Reduced volume of paper warrants can lower statewide payment processing costs; vendors may face setup or banking‑related requirements but will receive electronic payments faster.
- Compliance costs: Agencies and some vendors may incur upfront administrative effort to transition to ACH/direct deposit systems; noncompliance can trigger modest processing fees.
Limitations / Open Items
- The precise operational definitions, allowable paper‑warrant thresholds, and implementation timelines will be clarified through rules adopted by the Comptroller (with the Treasurer) after enactment.
- The bill text includes references to related measures and prior subsections; final administrative details depend on rulemaking and Comptroller guidance.
Compiled from official sources — confirm details with the bill’s official record.
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