Introduced Version
SENATE BILL No. 5
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 4-12; IC 4-13-2-18; IC 4-15-2.2-26;
IC 5-14-3.5; IC 5-35.7.
Synopsis: State fiscal and contracting matters. Allows a state agency
to use artificial intelligence software to prepare information and
projections for the state budget. Requires a state agency to: (1) report
to the budget committee certain information before submitting a new
federal funds request or application to participate in a new federal
program; and (2) obtain the budget committee's review if the new
federal funds request or application to participate in a new federal
program would require a transfer in funds between state accounts for
a state match. Requires that permanent full-time positions which have
been vacant for 90 days or more be reviewed and either: (1)
reauthorized; or (2) eliminated; by the budget director. Requires the
budget director to provide a quarterly report to the governor's office
regarding those positions that were reauthorized or eliminated by the
budget director in the preceding three months. Requires a state agency
to provide the state comptroller with a contract for inclusion in the
Indiana transparency website not later than 30 days after the contract
is fully executed. Requires a state agency to provide quarterly reports
to the budget committee regarding the state agency's active contracts.
Requires the department of administration (department) to develop a
process for state agencies to submit complaints about contractors.
Allows the department to disqualify a contractor with one or more
complaints from entering into state contracts. Provides for the reversion
of funds appropriated to a state agency for expenses related to a
contract that are unused after the end of the contract term. Requires the
department to develop certain contract language to be included in state
contracts of $500,000 or more. Requires the budget committee to
(Continued next page)
Effective: July 1, 2025.
Baldwin
January 14, 2025, read first time and referred to Committee on Appropriations.
2025 IN 5—LS 7508/DI 137 Digest Continued
review a proposed amendment to a contract that: (1) increases the
maximum contract amount by not less than $500,000; or (2) for a
contract with an initial maximum contract amount of not less than
$500,000, extends the term of the contract by not less than six months.
2025 IN 5—LS 7508/DI 1372025 IN 5—LS 7508/DI 137 Introduced
First Regular Session of the 124th General Assembly (2025)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2024 Regular Session of the General Assembly.
SENATE BILL No. 5
A BILL FOR AN ACT to amend the Indiana Code concerning state
and local administration.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 4-12-1-7.5 IS ADDED TO THE INDIANA CODE
2 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
3 1, 2025]: Sec. 7.5. A state agency may use artificial intelligence
4 software to prepare a statement required under section 7 of this
5 chapter or any budget projections for the state agency.
6 SECTION 2. IC 4-12-19 IS ADDED TO THE INDIANA CODE AS
7 A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY
8 1, 2025]:
9 Chapter 19. Federal Funds Requests
10 Sec. 1. As used in this chapter, "new federal funds" means
11 federal assistance or other funds that are available from:
12 (1) the federal government, which the state is not currently
13 receiving; or
14 (2) a federal assistance program or other federal program, in
15 which the state is not currently participating.
2025 IN 5—LS 7508/DI 137 2
1 Sec. 2. As used in this chapter, "new federal funds request"
2 means a formal submission from a state agency to the federal
3 government applying for or otherwise seeking to obtain new
4 federal funds or to participate in a new federal program that will
5 result in federal funds being transferred to the state.
6 Sec. 3. As used in this chapter, "new state money" means money
7 that the federal government requires the state to expend in any
8 fiscal year as a condition for receiving federal funds or
9 participating in a federal program.
10 Sec. 4. (a) As used in this chapter, "state agency" means an
11 authority, branch, commission, committee, division, office, or other
12 instrumentality of the executive branch of state government.
13 (b) The term does not include:
14 (1) the legislative branch of state government;
15 (2) the judicial branch of state government; or
16 (3) a state educational institution.
17 Sec. 5. (a) Subject to subsection (b), before submitting a new
18 federal funds request or applying to participate in a new federal
19 program, the state agency must submit a report to the budget
20 committee containing:
21 (1) a federal funds request summary; and
22 (2) the state agency's application for the new federal funds or
23 to participate in the new federal program.
24 (b) If a state agency's new federal funds request or application
25 to participate in a new federal program would require the state
26 agency to transfer funds between state accounts for a state match
27 as a condition to receive the funds or to participate in the program,
28 the state agency must obtain the budget committee's review of the
29 materials required under subsection (a)(1) and (a)(2).
30 (c) A federal funds request summary must contain, at a
31 minimum:
32 (1) the date by which the application is due to the federal
33 government;
34 (2) the amount of money that is being requested or is available
35 to be received by the state from the federal government from
36 the new federal funds request;
37 (3) the amount of new state money, if any, that will be
38 required to receive the new federal funds or to participate in
39 the new federal program;
40 (4) the number of additional permanent full-time employees
41 and additional permanent part time employees, if any, the
42 state agency estimates are necessary to receive the new
2025 IN 5—LS 7508/DI 137 3
1 federal funds or to participate in the new federal program;
2 and
3 (5) any requirements the state must meet as a condition for
4 receiving the new federal funds or participating in the new
5 federal program.
6 Sec. 6. A state agency may not submit a new federal funds
7 request or an application to participate in a new federal program
8 until the state agency has complied with the requirements of
9 section 5 of this chapter. If the budget committee has not received
10 a report or conducted a review, as applicable, the state agency may
11 not submit the application to any federal agency.
12 SECTION 3. IC 4-13-2-18, AS AMENDED BY P.L.9-2024,
13 SECTION 89, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
14 JULY 1, 2025]: Sec. 18. (a) For the purpose of the administration of the
15 allotment system provided by this section, each fiscal year shall be
16 divided into four (4) quarterly allotment periods, beginning
17 respectively on the first day of July, October, January, and April. In any
18 case where the quarterly allotment period is impracticable, the budget
19 director may prescribe a different period suited to the circumstances
20 but not extending beyond the end of any fiscal year.
21 (b) Except as otherwise expressly provided in this section, the
22 provisions of this chapter relating to the allotment system and to the
23 encumbering of funds shall apply to appropriations and funds of all
24 kinds, including standing or annual appropriations and dedicated funds,
25 from which expenditures are to be made from time to time by or under
26 the authority of any state agency. The provisions relating to the
27 allotment system shall not apply to money made available for the
28 purpose of conducting a post-audit of financial transactions of any state
29 agency. Likewise, appropriations for construction or for the acquisition
30 of real estate for public purposes may be exempted from the allotment
31 system by the budget director. The budget director shall prescribe
32 regulations as will ensure the proper application and encumbering of
33 those funds.
34 (c) No appropriation to any state agency shall become available for
35 expenditure until:
36 (1) the state agency shall have submitted to the budget agency a
37 request for allotment, the request for allotment to consist of an
38 estimate of the amount required for each activity and each
39 purpose for which money is to be expended during the applicable
40 allotment period; and
41 (2) the estimate contained in the request for allotment shall have
42 been approved, increased, or decreased by the budget director and
2025 IN 5—LS 7508/DI 137 4
1 funds allotted as provided.
2 The form of a request for allotment, including a request by hand, mail,
3 facsimile transmission, or other electronic transmission, shall be
4 prescribed by the budget agency with the approval of the state
5 comptroller and shall be submitted to them at least twenty-five (25)
6 days prior to the beginning of the allotment period.
7 (d) Each request for allotment shall be reviewed by the budget
8 agency and respective amounts shall be allotted for expenditure if:
9 (1) the estimate is within the terms of the appropriation as to
10 amount and purpose, having due regard for the probable future
11 needs of the state agency for the remainder of the fiscal year or
12 other term for which the appropriation was made; and
13 (2) the agency contemplates expenditure of the allotment during
14 the period.
15 Otherwise the budget agency shall modify the estimate to conform with
16 the terms of the appropriation and the prospective needs of the state
17 agency, and shall reduce the amount to be allotted accordingly. The
18 budget agency shall act promptly upon all requests for allotment and
19 shall notify every state agency of its allotments at least five (5) days
20 before the beginning of each allotment period. The total amount
21 allotted to any agency for the fiscal year or other term for which the
22 appropriation was made shall not exceed the amount appropriated for
23 the year or term.
24 (e) The budget director shall also have authority at any time to
25 modify or amend any allotment previously made by the budget director.
26 (f) In case the budget director shall discover at any time that:
27 (1) the probable receipts from taxes or other sources for any fund
28 will be less than were anticipated; and
29 (2) as a consequence the amount available for the remainder of
30 the term of the appropriation or for any allotment period will be
31 less than the amount estimated or allotted;
32 the budget director shall, with the approval of the governor, and after
33 notice to the state agency or agencies concerned, reduce the amount or
34 amounts allotted or to be allotted to prevent a deficit.
35 (g) The budget agency shall promptly transmit records of all
36 allotments and modifications to the state comptroller.
37 (h) The state comptroller shall maintain as a part of the central
38 accounting system for the state, as provided, records showing at all
39 times, by funds, accounts, and other pertinent classifications, the
40 amounts appropriated, the estimated revenues, the actual revenues or
41 receipts; the amounts allotted and available for expenditure, the total
42 expenditures, the unliquidated obligations, actual balances on hand,
2025 IN 5—LS 7508/DI 137 5
1 and the unencumbered balances of the allotments for each state agency.
2 (i) No payment shall be made from any fund, allotment, or
3 appropriation unless the state comptroller shall first certify that there
4 is a sufficient unencumbered balance in the fund, allotment, or
5 appropriation, after taking into consideration all previous expenditures
6 to meet the same. In the case of an obligation to be paid from federal
7 funds, a notice of a federal grant award shall be considered an
8 appropriation against which obligations may be incurred, funds may be
9 allotted, and encumbrances may be made.
10 (j) Every expenditure or obligation authorized or incurred in
11 violation of the provisions of this chapter shall be void. Every payment
12 made in violation of the provisions of this chapter shall be illegal, and
13 every official authorizing or making a void payment, or taking part in
14 a void payment, and every person receiving a void payment, or any part
15 of a void payment, shall be jointly and severally liable to the state for
16 the full amount paid or received. If any appointive officer or employee
17 of the state shall knowingly incur any obligation or shall authorize or
18 make any expenditure in violation of the provisions of this chapter, or
19 take any part, it shall be ground for removal of the appointive officer
20 or employee of the state by the officer appointing the appointive officer
21 or employee of the state. If the appointing officer is a person other than
22 the governor and fails to remove the officer or employee, the governor
23 may exercise the power of removal after giving notice of the charges
24 and opportunity for hearing to the accused officer or employee and to
25 the officer appointing the accused officer or employee.
26 (k) The budget director shall be responsible for the
27 authorization of employee positions. Such authorizations shall be
28 based on the following:
29 (1) A requirement that permanent full-time positions which
30 have been vacant for ninety (90) days or more be reviewed
31 and reauthorized prior to being filled. If requested by the
32 budget director, the state personnel director shall review such
33 vacant positions to determine the proper classification for the
34 position.
35 (2) Other relevant criteria as determined by the budget
36 director.
37 (l) The budget director shall provide a report to the governor
38 not later than January 1, April 1, July 1, and October 1 of each
39 year that lists the permanent full-time positions that were subject
40 to the budget director's review under subsection (k)(1) during the
41 preceding three (3) months.
42 SECTION 4. IC 4-15-2.2-26, AS ADDED BY P.L.229-2011,
2025 IN 5—LS 7508/DI 137 6
1 SECTION 56, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
2 JULY 1, 2025]: Sec. 26. (a) The director, after consulting with
3 appointing authorities and other qualified authorities, shall determine,
4 or cause to be determined, the authority, duties, and responsibilities of
5 all positions in the state civil service.
6 (b) The director shall prepare a classification plan that groups all
7 positions in the state civil service in classes, based on the authority,
8 duties, and responsibilities of each position. The classification plan
9 must set forth, for each class of positions, the class title and a statement
10 of the authority, duties, and responsibilities of the class. Each class of
11 positions may be subdivided, and classes may be grouped and ranked
12 in such manner as the director considers appropriate.
13 (c) New, reclassified, or reallocated positions must be classified,
14 reclassified, or reallocated in the same manner as positions were
15 initially classified or allocated.
16 (d) (c) The director periodically shall:
17 (1) review the positions in state civil service; and
18 (2) reallocate the positions to the proper classes based on the
19 duties and responsibilities of the positions at the time of the
20 review under subdivision (1).
21 (d) Upon request by the budget director under IC 4-13-2-18(k),
22 the director shall:
23 (1) review permanent full-time positions which have been
24 vacant for ninety (90) days; and
25 (2) either:
26 (A) reallocate a vacant position to the proper class based
27 on the duties and responsibilities of the position at the time
28 of the review under subdivision (1); or
29 (B) eliminate the position from state civil service.
30 SECTION 5. IC 5-14-3.5-2, AS AMENDED BY P.L.9-2024,
31 SECTION 148, IS AMENDED TO READ AS FOLLOWS
32 [EFFECTIVE JULY 1, 2025]: Sec. 2. (a) The state comptroller,
33 working with the office of technology established by IC 4-13.1-2-1, or
34 another organization that is part of a state educational institution, and
35 the office of management and budget established by IC 4-3-22-3, shall
36 post on the Indiana transparency website the following data:
37 (1) A listing of state expenditures and fund balances, including
38 expenditures for contracts, grants, and leases.
39 (2) A listing of state owned real and personal property that has a
40 value of more than twenty thousand dollars ($20,000).
41 (3) A listing of contractors who are currently disqualified
42 from participating in state contracts under IC 5-35.7-3-3.
2025 IN 5—LS 7508/DI 137 7
1 (4) Every contract provided by a state agency as required
2 under section 6(b) of this chapter.
3 The website must be electronically searchable by the public and must
4 be intuitive to users of the website.
5 (b) The data base must include for each state agency:
6 (1) the amount, date, payer, and payee of expenditures;
7 (2) a listing of state expenditures by:
8 (A) personal services;
9 (B) other operating expenses; or
10 (C) total operating expenses;
11 to reflect how the funds were appropriated in the state budget act;
12 (3) a listing of state fund balances;
13 (4) a listing of property owned by the state; and
14 (5) the information report required under IC 4-12-1-21(c).
15 (c) The data base must include for each state educational institution
16 a listing of the annual salaries for employees of the state educational
17 institution.
18 SECTION 6. IC 5-14-3.5-6, AS AMENDED BY P.L.9-2024,
19 SECTION 151, IS AMENDED TO READ AS FOLLOWS
20 [EFFECTIVE JULY 1, 2025]: Sec. 6. (a) To the extent any information
21 required to be in the data base is collected or maintained by a state
22 agency or state educational institution, the state agency or state
23 educational institution shall provide that information to the state
24 comptroller for inclusion in the data base.
25 (b) To the extent a contract entered into by a state agency is
26 required to be included in the data base, the state agency shall
27 provide the contract to the state comptroller for inclusion in the
28 data base not later than thirty (30) days after the contract is fully
29 executed.
30 SECTION 7. IC 5-35.7 IS ADDED TO THE INDIANA CODE AS
31 A NEW ARTICLE TO READ AS FOLLOWS [EFFECTIVE JULY 1,
32 2025]:
33 ARTICLE 35.7. FISCAL INTEGRITY AND CONTRACT
34 ACCOUNTABILITY
35 Chapter 1. Definitions
36 Sec. 1. As used in this article, "active contract" means a
37 contract for which the term of the contract has not expired.
38 Sec. 2. (a) As used in this article, "contract" means a contract,
39 agreement, or similar arrangement by any other name, and
40 includes any amendments, addendums, or extensions.
41 (b) The term includes contracts entered into for state public
42 works projects by the public works division within the department.
2025 IN 5—LS 7508/DI 137 8
1 (c) The term does not include:
2 (1) A contract between state agencies.
3 (2) A contract between a state agency and an employee of the
4 state agency concerning employment.
5 Sec. 3. As used in this article, "contractor" means a person who
6 has entered into a contract with a state agency.
7 Sec. 4. As used in this article, "department" means the Indiana
8 department of administration created by IC 4-13-1-2.
9 Sec. 5. As used in this article, "initial contract" means the first
10 agreement between a state agency and a contractor concerning the
11 provision of specified goods or services, which may be later
12 amended.
13 Sec. 6. As used in this article, "maximum contract amount"
14 means the amount in a contract that total remuneration is not to
15 exceed.
16 Sec. 7. (a) As used in this article, "state agency" means an
17 authority, branch, commission, committee, division, office, or other
18 instrumentality of the executive branch of state government,
19 including the department.
20 (b) The term does not include:
21 (1) the legislative branch of state government;
22 (2) the judicial branch of state government; or
23 (3) a state educational institution.
24 Chapter 2. Reporting Requirements
25 Sec. 1. This chapter applies to a contract with a maximum
26 contract amount of not less than five hundred thousand dollars
27 ($500,000).
28 Sec. 2. Not later than January 1, 2026, and not later than each
29 January 1, April 1, July 1, and October 1 thereafter, a state agency
30 must submit a report to the budget committee that provides
31 information regarding the following contracts of the state agency:
32 (1) For a report due January 1, active contracts as of
33 December 1 of the prior year.
34 (2) For a report due April 1, active contracts as of March 1 of
35 that year.
36 (3) For a report due July 1, active contracts as of June 1 of
37 that year.
38 (4) For a report due October 1, active contracts as of
39 September 1 of that year.
40 Sec. 3. A report submitted by a state agency under section 2 of
41 this chapter must include, at a minimum, the following
42 information:
2025 IN 5—LS 7508/DI 137 9
1 (1) The current contract expenditures compared with the
2 maximum contract amount of the contract.
3 (2) Any changes made to the terms of the initial contract since
4 the prior report, including amendments or change orders,
5 with an explanation of necessity.
6 (3) The metrics used by the state agency to assess the success
7 and performance of the contract.
8 Sec. 4. A report submitted under section 2 of this chapter must
9 be in an electronic format.
10 Chapter 3. Disqualification of Contractors
11 Sec. 1. Not later than July 1, 2026, the department shall develop
12 and implement the following:
13 (1) A process for a state agency to submit a complaint about
14 a contractor under section 2 of this chapter.
15 (2) A process for the department to review and investigate
16 complaints submitted about a contractor under subdivision
17 (1).
18 (3) A process for a contractor to appeal a disqualification
19 under section 3 of this chapter.
20 Sec. 2. (a) A state agency must submit a complaint about a
21 contractor to the department if the contractor engages in any of
22 the following behavior:
23 (1) Exceeding the costs to the state agreed upon in a contract.
24 (2) Failing to perform by deadlines agreed upon in a contract.
25 (3) Failing to perform under the terms agreed upon in a
26 contract.
27 (4) Any additional behavior or criteria determined by the
28 department.
29 (b) Complaints received by the department under subsection (a)
30 are confidential and are not subject to disclosure under IC 5-14-3.
31 Sec. 3. (a) The department shall review and investigate a
32 complaint submitted by a state agency under section 2 of this
33 chapter.
34 (b) After reviewing and investigating one (1) or more complaints
35 about a contractor, the department may disqualify the contractor
36 from entering into state contracts for a period of three (3) to five
37 (5) years, subject to the appeals process developed by the
38 department as required under section 1 of this chapter.
39 Sec. 4. The department shall provide the state comptroller with
40 the name of a contractor disqualified under section 3 of this
41 chapter. The state comptroller shall post the list of disqualified
42 contractors to the state transparency portal under IC 5-14-3.5-2.
2025 IN 5—LS 7508/DI 137 10
1 Sec. 5. The department shall adopt rules under IC 4-22-2 to
2 implement this chapter.
3 Chapter 4. Reversion of Appropriations
4 Sec. 1. This chapter applies to a state fiscal year that begins on
5 or after July 1, 2025.
6 Sec. 2. Unless otherwise provided by law, any funds
7 appropriated by the general assembly to a state agency for an
8 expense related to a contract that remain unused sixty (60) days
9 after the end of the term of the contract:
10 (1) must be unallotted by the budget agency and no longer
11 available for the state agency's use; and
12 (2) on the June 30 after the funds are unallotted, revert to the
13 fund from which they were appropriated.
14 Chapter 5. Mandatory Contract Terms
15 Sec. 1. This chapter applies to a contract between a state agency
16 and a contractor that:
17 (1) is entered into, renewed, or amended after June 30, 2026;
18 and
19 (2) has a maximum contract amount of not less than five
20 hundred thousand dollars ($500,000) in the initial contract.
21 Sec. 2. A contract between a state agency and a contractor must
22 contain the following provisions:
23 (1) Clearly defined scopes and success metrics.
24 (2) Liquidated damages for missed deadlines or overages.
25 (3) Provisions for independent verification and validation of
26 contract terms before payments are made.
27 Sec. 3. Not later than March 1, 2026, the department shall
28 provide contract language in its contract templates for state
29 agencies to include the provisions required under section 2 of this
30 chapter.
31 Chapter 6. Review of Amendments
32 Sec. 1. This chapter applies to a contract between a state agency
33 and a contractor that is entered into, renewed, or amended after
34 June 30, 2025.
35 Sec. 2. (a) A state agency must provide to the budget committee
36 for its review, in the form and manner designated by the budget
37 committee, a contract amendment that would do at least one (1) of
38 the following:
39 (1) For any contract, increase the maximum contract amount
40 by an amount that is not less than five hundred thousand
41 dollars ($500,000).
42 (2) For an initial contract with a maximum contract amount
2025 IN 5—LS 7508/DI 137 11
1 of not less than five hundred thousand dollars ($500,000),
2 extend the term of the initial contract for a period of not less
3 than six (6) months.
4 (b) A state agency may not enter into a contract amendment to
5 which subsection (a) applies if the contract amendment has not
6 been reviewed by the budget committee.
7 Sec. 3. A contract amendment subject to review in section
8 2(a)(1) of this chapter must be paid from funds already
9 appropriated to the state agency.
2025 IN 5—LS 7508/DI 137