LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7508 NOTE PREPARED: Jan 28, 2025
BILL NUMBER: SB 5 BILL AMENDED: Jan 23, 2025
SUBJECT: State Fiscal and Contracting Matters.
FIRST AUTHOR: Sen. Baldwin BILL STATUS: As Passed Senate
FIRST SPONSOR: Rep. Lehman
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
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.
Nonpublic Contracts: The bill prohibits any entity that receives state appropriations from entering into a
nonpublic contract. It defines "nonpublic contract”. It also requires all contracts of any entity that receives
state appropriations to be competitively procured. It provides that the following apply to nonpublic contracts
of a state entity that have not been competitively procured and that are in existence on June 30, 2025: (1) The
nonpublic contract shall terminate December 31, 2025. (2) On or before July 1, 2025, the state entity shall
submit a competitive procurement through a public process for any new contract to replace a contract. It
requires all contract opportunities of state entities to be posted in the form of a Request for Qualifications
"RFQ" on the state entity's website prior to the contract being awarded.
OMPP: The bill requires the Office of the Secretary of Family and Social Services Administration (FSSA)
and the Office of Medicaid Policy and Planning (OMPP) to do the following: (1) Establish a reporting work
group to review inputs and overall financials validation. (2) Establish a steering committee to develop
accompanying commentary. (3) Review monthly reports on the Medicaid program service utilization to
identify trends and risks within the state Medicaid program. (4) Post publicly on the FSSA’s website monthly
financial reports or expenditures and revenues for each state Medicaid program and commentary providing
context for each monthly financial report. (5) Submit a quarterly report to the Budget Committee.
Effective Date: Upon passage; 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, State
Budget Agency, 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.
SB 5 2 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
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 in an electronic, spreadsheet format. Most of this work is expected to be performed by
state agencies that report contracts to the IDOA.
The bill would also require all public agencies (including political subdivisions) that receive state or federal
funds for contracts to report these contracts to the State Budget Agency and the State Comptroller within 30
days of the contract being entered into. This information would be included in the state’s transparency portal
and the State Budget Agency would annually report this information to the State Budget Committee
beginning June 1, 2026. Increases in state agency workload to satisfy these requirements is expected to be
accomplished within existing resource and funding levels.
Nonpublic Contracts: The bill prohibits state entities from entering into nonpublic contracts beginning in FY
2026. The bill would also nullify any nonpublic contract that is in effect on January 1, 2026. Any state
agency with nonpublic contracts in effect would have to enter the request for proposal process beginning July
1, 2025 to replace these contracts. Any impact on state expenditures from this prohibition is indeterminable.
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
SB 5 3 agencies, as well as the State Budget Committee to review submitted requests.
OMPP: The bill codifies requirements for the Office of Medicaid Policy and Planning (OMPP) that are
currently performed. These requirements are expected to have no fiscal impact.
Explanation of State Revenues:
Explanation of Local Expenditures: The bill would require political subdivisions to report certain
information to the State Budget Agency if the subdivision receives state funds for contracts. Increases in
local workload to satisfy reporting requirements is expected to be accomplished under existing resource and
funding levels.
Explanation of Local Revenues:
State Agencies Affected: All.
Local Agencies Affected: All.
Information Sources: State Staffing Report, December 2024; https://secure.in.gov/apps/idoa/contractsearch/
Fiscal Analyst: Bill Brumbach, 317-232-9559.
SB 5 4