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.
For example, recently a state agency began using a service called “Dwolla” to facilitate the collection of money. My office reviewed Dwolla’s normal flow of funds and noted that all the money associated with Dwolla’s members is held in a commingled checking account at Veridian Credit Union. We determined that public funds held in the commingled account would not be collateralized or protected by the state sinking fund. As a result, for the state agency contract, we asked that Dwolla make changes to the flow of funds so that no state funds are ever held in the commingled account. Now, when a citizen makes a payment to the state using Dwolla, the funds are transferred directly to the state’s account at another financial institution.
If you decide to use a third-party, like Dwolla, to process receipts and make deposits, you should require that your collections be deposited directly into an account in the name of the public body at an Iowa financial institution. Public money deposited into a vendor’s account will not be covered by the state sinking fund. It is imperative that your money be deposited directly into your public funds account to ensure protection under Chapter 12C of the Iowa Code.
Please contact Deputy Treasurer Stefanie Devin, Stefanie.Devin@tos.iowa.gov, with questions.