LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7508 NOTE PREPARED: Jan 9, 2025
BILL NUMBER: SB 5 BILL AMENDED:
SUBJECT: State Fiscal and Contracting Matters.
FIRST AUTHOR: Sen. Baldwin BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State
XDEDICATED
FEDERAL
Summary of Legislation: Artificial Intelligence: This bill allows a state agency to use artificial intelligence
software to prepare information and projections for the state budget.
Federal Funds Application Review: The bill 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.
Vacant Positions: The bill 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. The bill also
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.
Contract Accountability: The bill requires the Indiana Department of Administration (IDOA) to develop a
process for state agencies to submit complaints about contractors. It allows the IDOA to disqualify a
contractor with one or more complaints from entering into state contracts.
The bill also 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. It requires a state
agency to provide quarterly reports to the Budget Committee regarding the state agency's active contracts.
Unexpended Contract Amounts: The bill also 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.
Contract Language: The bill requires the IDOA to develop certain contract language to be included in state
contracts of $500,000 or more.
Contract Amendments: The bill also requires the Budget Committee to review a proposed amendment to a
SB 5 1 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.
Effective Date: July 1, 2025.
Explanation of State Expenditures: Summary - The bill would increase the workload of the State Budget
Director to review permanent full-time positions that have been vacant for longer than 90 days. To the extent
the State Budget Director elects to eliminate these positions, state expenditures could decrease. Any decrease
in state expenditures would depend on if the impacted agency has its appropriation reduced by an amount
to reflect elimination of vacant positions. The State Personnel Department (SPD) could also experience an
increase in workload, if requested by the Budget Director, to review vacant positions to determine the proper
classification for those positions.
This bill is also expected to increase the workload of the IDOA to administer the Contract Accountability
program created by the bill. Additionally, the bill will increase the workload of the State Comptroller and
Indiana Office of Technology (IOT) to satisfy requirements in the bill concerning state contracting. The bill
will also impact the State Budget Committee to review required reports in the bill. Lastly, the bill would
increase the workload of all state agencies to provide required information to the IDOA as well as the State
Budget Committee. All increases in workload are expected to be accomplished within existing resource and
funding levels.
Additional Information -
Vacant Positions: Under the bill, permanent full-time positions that have been vacant for longer than 90 days
would be evaluated and either reauthorized or eliminated by the Budget Director. According to state staffing
data, about 71% to 79% of all vacant positions have been vacant for 90 days or more.
Unexpended Contract Amounts: The bill allows unexpended funds for state contracts to be reverted to the
state agency to which they were appropriated. This could reduce state expenditures on agency operating costs
or potentially increase General Fund reversions at fiscal year closeout.
Artificial Intelligence: Allowing state agencies to utilize artificial intelligence (AI) in order to prepare budget
projections could decrease state agency workload. There is currently no prohibition on agencies utilizing AI
to reduce agency workload. To the extent this bill increases the utilization of AI by state agencies, the bill
could decrease state agency workload.
Federal Funds Application Review: The bill requires all state agencies to submit a report to the State Budget
Committee before making a new application for federal funds. The bill does not require State Budget
Committee approval as a condition of submitting the application to the federal government. This requirement
will increase the workload of all state agencies, as well as the State Budget Committee to review submitted
requests.
Contract Accountability: Administering the required program for contract accountability is expected to
increase the workload of the Indiana Department of Administration (IDOA). Most of the workload will be
performed by state agencies that are required to submit quarterly reports to the IDOA concerning contracts
in excess of $500,000 beginning January 1, 2026. The IDOA would be charged with compiling this
information into a single quarterly report to the State Budget Committee. These quarterly reports are to
SB 5 2 contain information concerning the current contract expenditures compared with the maximum contract
amount, changes to contract terms, success metrics utilized by the state agency, as well as disqualified
contractors.
Any complaints concerning contractors would require a report from the affected state agency as well as
review and investigation by the IDOA. If a contractor is disqualified after review, the contractor’s
information is required to be submitted to the State Comptroller for publishing on the IOT’s Transparency
Portal. Publishing a list of contractors who have been disqualified from contracting with the state on the
IOT’s Transparency Portal is expected to increase the workload of the IOT as well as the State Comptroller.
Additionally, the bill requires all contracts entered into by a state agency to be included on the IOT
Transparency Portal. This provision is not expected to have a fiscal impact as it is current practice.
Contract Language: Requiring IDOA to provide contract templates to state agencies by March 1, 2026, is
expected to be accomplished within existing resource and funding levels.
Contract Amendments: The bill will increase state agency workload to provide contract amendments to the
State Budget Committee for review. The bill does not require State Budget Committee approval as a
condition of accepting the amended contract. This requirement will increase the workload of all state
agencies, as well as the State Budget Committee to review submitted requests.
Explanation of State Revenues:
Explanation of Local Expenditures:
Explanation of Local Revenues:
State Agencies Affected: All.
Local Agencies Affected:
Information Sources: State Staffing Report, December 2024; https://secure.in.gov/apps/idoa/contractsearch/
Fiscal Analyst: Bill Brumbach, 317-232-9559.
SB 5 3