A new law changes the claims declaration process for charter cities and allows charter cities to make payments by electronic funds transfer. The procedure now more closely resembles what statutory cities have been authorized to do for several years. Prior to the new law, whenever a claim (a request for payment) against a second, third, or fourth-class home rule charter city could be itemized, it had to be made in writing. It also was required to contain a declaration, signed by the vendor, that the claim is just and correct and that no part of it has been paid. It was then presented to the council for approval.
Electronic Funds Transfer (EFTs)
Section 1 also amends Minnesota Statutes, section 471.38, subdivision 3 to authorize use of a new procedure (electronic funds transfer) formerly only authorized for use by school districts. If the proper controls are in place, any county, town, local social services agency, school district, park district, or home rule charter city of the second, third, or fourth class may make electronic funds transfers for various types of claims, including payment of contributions to pension or retirement funds and vendor payments.
To make electronic funds transfers for the types of payments permitted, the city council must annually delegate its authority to a business administrator, chief financial officer or the officer’s designee. In addition, the city must have enacted an internal control policy that requires all of the following:
- The bank must keep a certified copy of the delegation of authority on file.
- The person initiating the electronic funds transfer must be identified.
- The person initiating the electronic funds transfer must be required to get approval from the designated business administrator, chief financial officer, or officer’s designee before initiating the transfer.
- Written confirmation of the transaction must be made no later than one business day after the transaction.
- A list of all transactions made by electronic funds transfer must be submitted to the city council at its next regular meeting after the transaction.
This amended law should ease the process for claims declaration and payment approval with written checks for home rule charter cities of the second, third, or fourth class. While the law’s change on electronic funds transfers applies only to home rule charter cities, it is also a good reminder to all cities (home rule charter and statutory) that they should have internal control policies for paying claims.
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