LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7508 NOTE PREPARED: Mar 27, 2025
BILL NUMBER: SB 5 BILL AMENDED: Mar 27, 2025
SUBJECT: State Fiscal and Contracting Matters.
FIRST AUTHOR: Sen. Baldwin BILL STATUS: CR Adopted - 2
nd
House
FIRST SPONSOR: Rep. Lehman
FUNDS AFFECTED:XGENERAL IMPACT: State
XDEDICATED
FEDERAL
Summary of Legislation: (Amended) 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 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 a state agency to provide a report to the Budget Committee
concerning amendments to a contract that: (1) increase 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, extend
the term of the contract by not less than six months.
SB 5 1 Nonpublic Contracts: The bill prohibits a state agency from entering into a nonpublic contract. It also defines
"nonpublic contract”. It requires all contract opportunities of state agencies to be posted in the form of a
request for proposals or a request for qualifications 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) Review monthly reports
on the Medicaid program service utilization to identify trends and risks within the state Medicaid program.
(2) 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. (3) Submit a
quarterly report to the Budget Committee.
Effective Date: Upon passage; July 1, 2025.
Explanation of State Expenditures: (Revised) 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.
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.
(Revised) Unexpended Contract Amounts: Beginning in FY 2026, the bill allows unexpended funds for state
contracts to revert if 90 days have elapsed from the end of the term of the contract. Currently, unexpended
funds would revert at the end of the fiscal year. Depending on the terms of the contract entered into by state
agencies and the source of contract funds, this change is expected to have no fiscal impact.
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.
(Revised) Federal Funds Application Review: The bill requires all state agencies to report requests for new
federal funds that require a transfer of state agency funds to meet the state’s federal match requirements to
the State Budget Committee, except in instances where a nondisclosure agreement is required. The bill does
SB 5 2 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.
(Revised) Contract Accountability: The bill will increase state agency workload to meet the reporting
requirements in the bill concerning contracts in excess of $500,000. The increases in workload are expected
to be accomplished within agency resource and funding levels. 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.
(Revised) Nonpublic Contracts: The bill prohibits state entities from entering into nonpublic contracts
beginning in FY 2026. 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
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:
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