(a) Except as provided in (b) of this section, unless federal law requires otherwise, a state agency may not disburse money unless the disbursement is made

(1) by an electronic funds transfer to an account in a financial institution; or

(2) from an account established by the state agency by contract with a financial institution under which a person uses an electronic payment card issued by the financial institution to access the money.

(b) A state agency is not required to use the disbursement methods described in (a) of the section if

(1) another state law or federal law requires that disbursement be made by another disbursement method;

(2) use of the disbursement methods would cause substantial hardship to the recipient of the disbursement;

(3) not more than five disbursements will be made to a recipient, or, on average, to each recipient entitled to disbursement under the program for which the disbursements are made;

(4) a vendor or grantee elects not to be paid by the disbursement methods;

(5) the disbursement is to a state employee and

(A) is the only disbursement that the state agency will make to the employee for the employment; or

(B) it is in the best interests of the state agency or the employee to use another disbursement method to pay the employee; or

(6) use of another disbursement method is in the best interests of the state agency.

(c) The commissioner of administration shall adopt regulations to implement (b) of this section.

(d) A state agency is not liable to pay a fee imposed by a recipient's financial institution for a disbursement made under (a) of this section.

(e) In this section,

(1) “disbursement” includes wages and other employment benefits;

(2) “state agency” means a department, institution, board, commission, division, authority, public corporation, committee, or other administrative unit of the executive branch of state government, including the University of Alaska.