The Associated Press

INDIANAPOLIS (AP) -Legislative leaders have appointed the powerful State Budget Committee to investigate whether IBM Corp. and its partners are fulfilling their obligations under a more than $1 billion contract to privatize welfare intake in Indiana.

The Legislative Council consisting of the four caucus leaders, including Senate President Pro Tem David Long and House Speaker Patrick Bauer, passed a resolution Monday assigning the review of the IBM contract to the Budget Committee and other topics to various interim study committees.

Some legislative leaders have harshly criticized the performance of IBM and its partners, saying they've lost clients' documents, missed telephone appointments and denied benefits to eligible applicants.

However, it was uncertain how closely the Budget Committee will scrutinize the contract or whether the panel will call for any changes. Republicans, the party of Gov. Mitch Daniels, control the five-member committee, and already Anne Murphy, secretary of the Family and Social Services Administration, got IBM to commit to a 362-page corrective action plan this month.

The budget committee is chaired by Sen. Luke Kenley, R-Noblesville, who also chairs the state Senate Appropriations Committee. Other members include Gov. Mitch Daniels' budget director, Christopher Ruhl, Reps. Dennis Avery, D-Evansville, and Jeff Espick, R-Uniondale, and Sen. John Broden, D-South Bend.

Daniels in December 2006 signed a 10-year, $1.16 billion contract with a team of vendors led by Armonk, N.Y.-based IBM to privatize and introduce automation to the state's eligibility system for food stamps, Medicaid and other welfare benefits received by 1.2 million Indiana residents.

About 1,500 former state welfare case workers were turned over to IBM partner Affiliated Computer Services Inc., based in Dallas.

Welfare eligibility now is automated in 59 of Indiana's 92 counties that have about one-third of the state's caseload. Murphy has paused any further rollout of the automation until this fall at the earliest.

Murphy has said the state wants IBM and its contract partners to succeed with their corrective action plan, but the state might resort to canceling the contract if there is not enough improvement by this fall.