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 ENROLLED ACT No. 5
AN ACT to amend the Indiana Code concerning state and local
administration.
Be it enacted by the General Assembly of the State of Indiana:
SECTION 1. IC 4-12-1-7.5 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2025]: Sec. 7.5. A state agency may use artificial intelligence
software to prepare a statement required under section 7 of this
chapter or any budget projections for the state agency.
SECTION 2. IC 4-12-19 IS ADDED TO THE INDIANA CODE AS
A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2025]:
Chapter 19. Federal Funds Requests
Sec. 1. This chapter does not apply to a request for new federal
funds that is subject to a nondisclosure agreement to prevent the
disclosure of confidential or proprietary business information.
Sec. 2. As used in this chapter, "new federal funds" means
federal assistance or other funds that are available from:
(1) the federal government, which the state is not currently
receiving; or
(2) a federal assistance program or other federal program, in
which the state is not currently participating.
Sec. 3. (a) As used in this chapter, "state agency" means:
(1) a department or office of the executive, including the
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administrative, branch of state government; and
(2) separately elected state officers and any department or
office of separately elected state officers.
(b) The term does not include:
(1) the legislative branch of state government;
(2) the judicial branch of state government; or
(3) a state educational institution.
Sec. 4. (a) A state agency shall provide a report to the budget
committee not later than January 1, April 1, July 1, and October
1 of each year that details the requests for new federal funds or to
participate in a new federal program submitted by the state agency
since the date of the state agency's last report under this
subsection.
(b) A state agency may not:
(1) accept an award of new federal funds if acceptance of the
federal funds:
(A) requires a state match of funding;
(B) would require additional permanent full-time
employees related to the funding; or
(C) would mandate new requirements that must be met by
the state of Indiana; or
(2) participate in a new federal program;
before the report under subsection (c) has been reviewed by the
budget committee. However, budget committee review under
subsection (c) is not required before the acceptance of an award of
new federal funds if the acceptance does not entail any of the
requirements described in subdivision (1)(A) through (1)(C), but
the request for new federal funds must nevertheless be included in
the report to the budget committee under subsection (a).
(c) To obtain budget committee review, a state agency shall
submit a report containing:
(1) the amount of money that is being requested or is available
to be received by the state from the federal government for
the new federal funds request;
(2) the amount of new state money, if any, that will be
required to receive the new federal funds or to participate in
the new federal program;
(3) the number of additional permanent full-time employees,
if any, the state agency estimates are necessary to receive the
new federal funds or to participate in the new federal
program;
(4) any requirement the state must meet as a condition for
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receiving the new federal funds or participating in the new
federal program; and
(5) the state agency's application for the new federal funds or
the new federal program.
(d) A state agency shall submit a report under subsections (a)
and (c) in the form and manner designated by the budget
committee.
SECTION 3. IC 4-13-1-29 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2025]: Sec. 29. (a) To the extent a contract entered into by a state
agency is required to be posted on the Indiana transparency
website, the state agency shall provide the contract to the
department for inclusion on the Indiana transparency website not
later than thirty (30) days after the contract is fully executed.
(b) All contracts provided to the department for inclusion on the
Indiana transparency website must be electronically downloadable.
The information contained in a search of the contracts on the
Indiana transparency website must be available to download in an
accessible spreadsheet format regardless of the maximum number
of rows.
SECTION 4. IC 4-13-2-18, AS AMENDED BY P.L.9-2024,
SECTION 89, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2025]: Sec. 18. (a) For the purpose of the administration of the
allotment system provided by this section, each fiscal year shall be
divided into four (4) quarterly allotment periods, beginning
respectively on the first day of July, October, January, and April. In any
case where the quarterly allotment period is impracticable, the budget
director may prescribe a different period suited to the circumstances
but not extending beyond the end of any fiscal year.
(b) Except as otherwise expressly provided in this section, the
provisions of this chapter relating to the allotment system and to the
encumbering of funds shall apply to appropriations and funds of all
kinds, including standing or annual appropriations and dedicated funds,
from which expenditures are to be made from time to time by or under
the authority of any state agency. The provisions relating to the
allotment system shall not apply to money made available for the
purpose of conducting a post-audit of financial transactions of any state
agency. Likewise, appropriations for construction or for the acquisition
of real estate for public purposes may be exempted from the allotment
system by the budget director. The budget director shall prescribe
regulations as will ensure the proper application and encumbering of
those funds.
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(c) No appropriation to any state agency shall become available for
expenditure until:
(1) the state agency shall have submitted to the budget agency a
request for allotment, the request for allotment to consist of an
estimate of the amount required for each activity and each
purpose for which money is to be expended during the applicable
allotment period; and
(2) the estimate contained in the request for allotment shall have
been approved, increased, or decreased by the budget director and
funds allotted as provided.
The form of a request for allotment, including a request by hand, mail,
facsimile transmission, or other electronic transmission, shall be
prescribed by the budget agency with the approval of the state
comptroller and shall be submitted to them at least twenty-five (25)
days prior to the beginning of the allotment period.
(d) Each request for allotment shall be reviewed by the budget
agency and respective amounts shall be allotted for expenditure if:
(1) the estimate is within the terms of the appropriation as to
amount and purpose, having due regard for the probable future
needs of the state agency for the remainder of the fiscal year or
other term for which the appropriation was made; and
(2) the agency contemplates expenditure of the allotment during
the period.
Otherwise the budget agency shall modify the estimate to conform with
the terms of the appropriation and the prospective needs of the state
agency, and shall reduce the amount to be allotted accordingly. The
budget agency shall act promptly upon all requests for allotment and
shall notify every state agency of its allotments at least five (5) days
before the beginning of each allotment period. The total amount
allotted to any agency for the fiscal year or other term for which the
appropriation was made shall not exceed the amount appropriated for
the year or term.
(e) The budget director shall also have authority at any time to
modify or amend any allotment previously made by the budget director.
(f) In case the budget director shall discover at any time that:
(1) the probable receipts from taxes or other sources for any fund
will be less than were anticipated; and
(2) as a consequence the amount available for the remainder of
the term of the appropriation or for any allotment period will be
less than the amount estimated or allotted;
the budget director shall, with the approval of the governor, and after
notice to the state agency or agencies concerned, reduce the amount or
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amounts allotted or to be allotted to prevent a deficit.
(g) The budget agency shall promptly transmit records of all
allotments and modifications to the state comptroller.
(h) The state comptroller shall maintain as a part of the central
accounting system for the state, as provided, records showing at all
times, by funds, accounts, and other pertinent classifications, the
amounts appropriated, the estimated revenues, the actual revenues or
receipts; the amounts allotted and available for expenditure, the total
expenditures, the unliquidated obligations, actual balances on hand,
and the unencumbered balances of the allotments for each state agency.
(i) No payment shall be made from any fund, allotment, or
appropriation unless the state comptroller shall first certify that there
is a sufficient unencumbered balance in the fund, allotment, or
appropriation, after taking into consideration all previous expenditures
to meet the same. In the case of an obligation to be paid from federal
funds, a notice of a federal grant award shall be considered an
appropriation against which obligations may be incurred, funds may be
allotted, and encumbrances may be made.
(j) Every expenditure or obligation authorized or incurred in
violation of the provisions of this chapter shall be void. Every payment
made in violation of the provisions of this chapter shall be illegal, and
every official authorizing or making a void payment, or taking part in
a void payment, and every person receiving a void payment, or any part
of a void payment, shall be jointly and severally liable to the state for
the full amount paid or received. If any appointive officer or employee
of the state shall knowingly incur any obligation or shall authorize or
make any expenditure in violation of the provisions of this chapter, or
take any part, it shall be ground for removal of the appointive officer
or employee of the state by the officer appointing the appointive officer
or employee of the state. If the appointing officer is a person other than
the governor and fails to remove the officer or employee, the governor
may exercise the power of removal after giving notice of the charges
and opportunity for hearing to the accused officer or employee and to
the officer appointing the accused officer or employee.
(k) The budget director shall be responsible for the
authorization of employee positions. Such authorizations shall be
based on the following:
(1) A requirement that permanent full-time positions which
have been vacant for ninety (90) days or more be reviewed
and reauthorized prior to being filled. If requested by the
budget director, the state personnel director shall review such
vacant positions to determine the proper classification for the
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position.
(2) Other relevant criteria as determined by the budget
director.
(l) The budget director shall provide a report to the governor
not later than January 1, April 1, July 1, and October 1 of each
year that lists the permanent full-time positions that were subject
to the budget director's review under subsection (k)(1) during the
preceding three (3) months.
SECTION 5. IC 4-15-2.2-26, AS ADDED BY P.L.229-2011,
SECTION 56, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2025]: Sec. 26. (a) The director, after consulting with
appointing authorities and other qualified authorities, shall determine,
or cause to be determined, the authority, duties, and responsibilities of
all positions in the state civil service.
(b) The director shall prepare a classification plan that groups all
positions in the state civil service in classes, based on the authority,
duties, and responsibilities of each position. The classification plan
must set forth, for each class of positions, the class title and a statement
of the authority, duties, and responsibilities of the class. Each class of
positions may be subdivided, and classes may be grouped and ranked
in such manner as the director considers appropriate.
(c) New, reclassified, or reallocated positions must be classified,
reclassified, or reallocated in the same manner as positions were
initially classified or allocated.
(d) (c) The director periodically shall:
(1) review the positions in state civil service; and
(2) reallocate the positions to the proper classes based on the
duties and responsibilities of the positions at the time of the
review under subdivision (1).
(d) Upon request by the budget director under IC 4-13-2-18(k),
the director shall:
(1) review permanent full-time positions which have been
vacant for ninety (90) days; and
(2) either:
(A) reallocate a vacant position to the proper class based
on the duties and responsibilities of the position at the time
of the review under subdivision (1); or
(B) eliminate the position from state civil service.
SECTION 6. IC 5-35.7 IS ADDED TO THE INDIANA CODE AS
A NEW ARTICLE TO READ AS FOLLOWS [EFFECTIVE UPON
PASSAGE]:
ARTICLE 35.7. FISCAL INTEGRITY AND CONTRACT
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ACCOUNTABILITY
Chapter 1. Definitions
Sec. 1. As used in this article, "active contract" means a
contract for which the term of the contract has not expired.
Sec. 2. (a) As used in this article, "contract" means a contract,
agreement, or similar arrangement by any other name, and
includes any amendments, addendums, or extensions.
(b) The term includes contracts entered into for state public
works projects by the public works division within the department.
(c) The term does not include the following:
(1) A contract between state agencies.
(2) A contract between a state agency and an employee of the
state agency concerning employment.
(3) A contract that is required to be kept confidential under
state or federal law to prevent the disclosure of confidential or
proprietary business information.
(4) A contract for legal services to aid in the performance of
the rights, powers, and duties conferred by IC 4-6.
(5) A contract entered into with a program established under
IC 11-10-7-2.
(6) An agreement or contract described in IC 31-25-4-13.1.
Sec. 3. As used in this article, "contractor" means a person who
has entered into a contract with a state agency.
Sec. 4. As used in this article, "department" means the Indiana
department of administration created by IC 4-13-1-2.
Sec. 5. As used in this article, "initial contract" means the first
agreement between a state agency and a contractor concerning the
provision of specified goods or services, which may be later
amended.
Sec. 6. As used in this article, "maximum contract amount"
means the amount in a contract that total remuneration is not to
exceed.
Sec. 7. (a) As used in this article, "state agency" means:
(1) a department or office of the executive, including the
administrative, branch of state government; and
(2) separately elected state officers and any department or
office of separately elected state officers.
(b) The term does not include:
(1) the legislative branch of state government;
(2) the judicial branch of state government; or
(3) a state educational institution.
Chapter 2. Reporting Requirements
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Sec. 1. (a) This chapter applies to a contract with a maximum
contract amount of not less than five hundred thousand dollars
($500,000).
(b) This chapter does not apply to a contract entered into by the
Indiana department of transportation for the construction, repair,
or maintenance of a highway, street, road, or bridge.
Sec. 2. Not later than January 1, 2026, and not later than each
January 1, April 1, July 1, and October 1 thereafter, a state agency
must submit a report to the budget committee that provides
information regarding the following contracts of the state agency:
(1) For a report due January 1, active contracts as of
December 1 of the prior year.
(2) For a report due April 1, active contracts as of March 1 of
that year.
(3) For a report due July 1, active contracts as of June 1 of
that year.
(4) For a report due October 1, active contracts as of
September 1 of that year.
Sec. 3. A report submitted by a state agency under section 2 of
this chapter must include, at a minimum, the following
information:
(1) The current contract expenditures compared with the
maximum contract amount of the contract.
(2) Any changes made to the terms of the initial contract since
the prior report, including amendments or change orders,
with an explanation of necessity.
(3) The metrics used by the state agency to assess the success
and performance of the contract.
Sec. 4. A report submitted under section 2 of this chapter must
be in an electronic format.
Chapter 3. Reversion of Appropriations
Sec. 1. This chapter applies to a state fiscal year that begins on
or after July 1, 2025.
Sec. 2. Unless otherwise provided by law, any funds
appropriated by the general assembly to a state agency for an
expense related to a contract that remain unused ninety (90) days
after the end of the term of the contract:
(1) must be unallotted by the budget agency and no longer
available for the state agency's use; and
(2) on the June 30 after the funds are unallotted, revert to the
fund from which they were appropriated.
Chapter 4. Mandatory Contract Terms
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Sec. 1. (a) This chapter applies to a contract between a state
agency and a contractor that:
(1) is entered into, renewed, or amended after June 30, 2026;
and
(2) has a maximum contract amount of not less than five
hundred thousand dollars ($500,000) in the initial contract.
(b) This chapter does not apply to a contract entered into by the
Indiana department of transportation for the construction, repair,
or maintenance of a highway, street, road, or bridge.
(c) This chapter does not apply to a contract for legal services
to aid in the performance of the rights, powers, and duties
conferred by IC 4-6.
Sec. 2. A contract between a state agency and a contractor must
contain the following provisions:
(1) To the extent practicable, clearly defined scopes and
success metrics.
(2) Liquidated damages or other remedies for missed
deadlines or overages.
(3) A requirement for either of the following:
(A) An independent third party review verifying that the
parties to the contract performed their obligations under
the contract in compliance with the terms of the contract.
(B) Other appropriate methods or means for verification
and validation of the terms of the contract.
Sec. 3. Not later than March 1, 2026, the department shall
provide contract language in its contract templates for state
agencies to include the provisions required under section 2 of this
chapter.
Chapter 5. Review of Amendments
Sec. 1. This chapter applies to a contract between a state agency
and a contractor that is entered into, renewed, or amended after
June 30, 2025.
Sec. 2. A state agency shall provide a report to the budget
committee not later than January 1, April 1, July 1, and October
1 of each year, in the form and manner designated by the budget
committee, that details the contract amendments entered into by
the state agency since the date of the last report under this section
to which at least one (1) of the following applies:
(1) For any contract, increase the maximum contract amount
by an amount that is not less than five hundred thousand
dollars ($500,000).
(2) For an initial contract with a maximum contract amount
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of not less than five hundred thousand dollars ($500,000),
extend the term of the initial contract for a period of not less
than six (6) months.
Chapter 6. Contract Reporting and Requirements
Sec. 1. (a) This chapter applies to contracts entered into between
a state agency and a contractor.
(b) This chapter does not apply to a contract solely entered into
for licensed legal counsel.
Sec. 2. (a) All active contracts that are funded in part or in full
by state appropriated funds, including state, federal, and dedicated
funds, shall within thirty (30) days of entering into the contract be
submitted to the state budget agency and the department for
inclusion on the state transparency portal under IC 5-14-3.5-2.
(b) The state budget agency shall on or before June 1, 2026, and
June 1 each year thereafter compile a report of all contracts
submitted under subsection (a) for the immediately preceding
calendar year and submit the report to the state budget committee.
Chapter 7. Prohibition of Nonpublic Contracts
Sec. 1. This chapter does not apply to the following:
(1) A contract solely entered into for licensed legal counsel.
(2) A purchase subject to the small purchase policies
established by a state agency under IC 5-22-8.
(3) A contract for services provided by a bank holding
company or its subsidiaries or for investments, investment
services, or financial services entered into by the treasurer of
state under IC 4-8.1, IC 5-13, or IC 10-12.
(4) A contract entered into with a program established under
IC 11-10-7-2.
Sec. 2. As used in this chapter, "nonpublic contract" means a
contract that is entered into without solicitation of proposals or
competitive procurement. However, the term does not include a
contract entered into under the following:
(1) IC 5-22-10.
(2) IC 4-13.6-5-5 (Emergency conditions).
(3) An agreement or contract described in IC 31-25-4-13.1.
Sec. 3. All contract opportunities of state agencies must be
posted in the form of a request for proposals or a request for
quotations on the department's website at least thirty (30) days
prior to the contract being awarded.
Sec. 4. Except as otherwise required by law, a state agency shall
not enter into a nonpublic contract.
SECTION 7. IC 12-8-6.5-16 IS ADDED TO THE INDIANA CODE
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AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 16. The secretary and the office of
Medicaid policy and planning shall do each of the following as it
pertains to the state Medicaid program:
(1) Review monthly reports on the Medicaid program service
utilization to identify trends and risks within the state
Medicaid program.
(2) Complete and post publicly on the office of the secretary's
website:
(A) monthly financial reports or expenditures and
revenues for each state Medicaid program; and
(B) commentary providing context for each monthly
financial report.
(3) Submit a quarterly report to the budget committee and the
Medicaid oversight committee established by IC 2-5-54-2
containing each report required under subdivision (2) and a
summary of the overall financial trends for the entire quarter.
SECTION 8. An emergency is declared for this act.
SEA 5 — CC 1 President of the Senate
President Pro Tempore
Speaker of the House of Representatives
Governor of the State of Indiana
Date: Time:
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