Citizens of Iowa count on their public body treasurers to safeguard public funds. This duty is becoming more challenging as new electronic methods are created to move funds and make payments.
Many third parties, such as PayPal, will offer to facilitate the collection of money through special payment services. By researching how these payment services work, we discovered that while they collect money on behalf of the public body, the funds are first deposited into a commingled checking account belonging to them, the third party, often in a bank outside the state of Iowa. Public funds held in the commingled account would not be collateralized or protected by the state sinking fund. Nor are Iowa public funds held in an account outside of this state.
If you decide to use a third-party to process receipts and make deposits, it is important you require that your collections be deposited directly into an account in the name of your public body at an Iowa financial institution. This is the only way your funds will be protected by Iowa’s state sinking fund. For more information, please see Iowa Code Chapter 12C or contact Deputy Treasurer Randi McLaughlin at 515.281.6093.