FSSA spokesman Dennis Rosebrough said Rhoad's resignation was not connected to this spring's controversy, which he described as "not always a pleasant experience."
Instead, Rosebrough said Friday's announcement was timed to the start of the state's two-year budgeting process. Indiana's new fiscal year began Saturday.
"We knew that Dick was not going to be here for the full four years," Rosebrough said. "I think, far and away the deciding factor was the logic of the timing and just looking at the way state government operates and the whole budgeting process."
A spokesman for the American Federation of State, County and Municipal Employees Council 62, which represents FSSA workers, said he was skeptical of the explanation of Rhoad's departure.
"I think today's announcement makes it clear that Dick Rhoad's decision to withdraw the sweetheart deal he made with the Daniels' administration to outsource his own job was only to help the governor save face from the ethical questions that the deal raised," said AFSCME spokesman David Patterson.
"I think Rhoad's resignation now, less than two months after this sweetheart deal soured, gives the appearance of sour grapes," he said. "And it hurts public confidence that this administration is performing its responsibilities on the up and up."
The agency has also been the center of controversy because of a privatization plan it is proposing for many of its welfare-related services. One of the two competing vendors, ACS, is FSSA Secretary Mitch Roob's former employer prior to joining FSSA.