Proponents of the criminal code overhaul say more resources need to be allocated to lower recidivism rates.
Sen. Joe Donnelly (D-Indiana) voted for the legislation Thursday, but Sen. Dan Coats (R-Indiana) voted against it.
A summer study committee will attempt to project how much the Department of Corrections will save once the new system is implemented.
The Indiana Senate is considering this week legislation overhauling the state's criminal code after the House passed the bill.
The legislation requires offenders to serve more jail time but also reduces penalties for lower-level felonies.