For the second year in a row, Indiana’s state employees will receive no pay raises.

The contingency fund that usually covers salary adjustments was reduced by 90% in the current state budget.

After the budget was implemented in July 2025, a new revenue forecast showed the state could take in more money and accumulate nearby $5 billion in surplus by mid-2027.

While no memo was sent to all state employees, a state personnel department email verified earlier this month that no raises would be provided.

State Budget Director Chad Ranney told the Indiana Capital Chronicle in January that he was examining whether other options were available. But word has now reached employees that there will be no raises coming.

“The executive branch’s ability to give raises depends on having room within existing, appropriated budgets, not the forecast. Despite the rosy forecast, appropriated budgets haven’t changed,” Ranney said.

For 2025, then-Gov. Eric Holcomb gave a one-time bonus to all state employees but no pay raises. That one-time stipend cost coffers more than $20 million.

Since Gov. Mike Braun took over last year he also ordered almost all employees back into state offices, voiding thousands of hybrid remote work agreements.

Indiana Capital Chronicle is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Indiana Capital Chronicle maintains editorial independence. Contact Editor Niki Kelly for questions: info@indianacapitalchronicle.com.