The U.S. Attorney General's proposal seeks to reduce sentences for low-level drug offenses and place people in rehabilitation facilities instead of prisons.
A criminal code bill passed last session, but legislators say there's still work to be done.
A summer study committee will attempt to project how much the Department of Corrections will save once the new system is implemented.
The legislation aims to make sentences for the worst criminal offenses more severe while reducing the penalties for low-level crimes.
Legislators are still trying to determine how much a shift toward more rehabilitation will cost local governments.
A public defenders group says the overhaul of the state's criminal code system does not provide an adequate rewrite of its sentencing structure.
The Indiana legislature considered measures on casinos and veterans benefits, and Governor Mike Pence announced his concerns with the criminal code bill.
Gov. Mike Pence says the bill that revises the state's criminal code is too lenient with low-level offenders.
Some criminals receive social or drug rehabilitation services in county jails, but many others are referred to outside facilities during their incarceration.
The Indiana Senate is considering this week legislation overhauling the state's criminal code after the House passed the bill.