INDIANA — For the second consecutive year, Indiana’s state workforce will receive no base pay increases, a decision confirmed by state officials despite a massive projected budget surplus that has sparked frustration among public employees.
The pay freeze, verified earlier this month through an internal email from the State Personnel Department, follows a pattern of stagnant wages for state workers. While a formal memo was never issued to the entire workforce, the confirmation ends months of speculation following a “rosy” revenue forecast that suggested the state was in a position of extreme financial strength.
In July 2025, a new revenue forecast revealed that Indiana is on track to accumulate a nearly $5 billion surplus by mid-2027. This figure is significantly higher than previous estimates, yet officials maintain that these funds are technically “off-limits” for recurring costs like salaries.
State Budget Director Chad Ranney explained that the executive branch is bound by the specific appropriations set during the legislative session, regardless of how much extra cash flows into state coffers afterward.
“The executive branch’s ability to give raises depends on having room within existing, appropriated budgets, not the forecast,” Ranney told the Indiana Capital Chronicle. “Despite the rosy forecast, appropriated budgets haven’t changed.”
A major hurdle for any potential raise was the 90% reduction of the state’s contingency fund—the account typically used to bridge the gap for salary adjustments—within the current biennial budget.
The lack of a raise for 2026 is particularly sharp for employees who remember the one-time “stipend” strategy used by former Governor Eric Holcomb. In 2025, Holcomb authorized a one-time bonus for all employees, costing the state roughly $20 million, but opted against a permanent raise. Under the current administration, even that one-time relief has not materialized.
Beyond the paycheck, state employees are also navigating a stark change in work-life balance. Since taking office, Gov. Mike Braun has taken an aggressive “back-to-office” stance:
- Remote Work Voided: Thousands of hybrid and remote work agreements have been rescinded.
- Mandatory Presence: Almost all employees were ordered back into state offices full-time.
- Employee Attrition: Recent reports suggest state headcount dropped by nearly 1,000 workers following the return-to-office mandate.
As the 2026 legislative session progresses, employee advocacy groups have pointed to rising health insurance premiums and inflation as evidence that a 0% raise is effectively a “pay cut.” For now, however, the state’s fiscal leaders remain firm: the surplus is for the “rainy day,” and the budget for the workers remains locked.
