Budget Footnotes  
A NEWSLETTER OF THE OHIO LEGISLATIVE SERVICE COMMISSION  
MARCH 2016  
VOLUME 39, NUMBER 7  
STATUS OF THE GRF  
STATUS OF THE GRF  
Highlights...................................1  
Revenues ..................................2  
Expenditures............................12  
HIGHLIGHTS  
Ross Miller, Chief Economist, 614-644-7768  
ISSUE UPDATES  
February GRF tax receipts continued the recent pattern  
Higher Education  
Remediation Report .............20  
Campus Sexual Assault  
Grants ..................................21  
of tracking the Office of Budget and Management's (OBM's)  
estimate closely, despite personal income tax revenue  
falling short of estimate. Year-to-date GRF state source Human Trafficking  
Prevention............................22  
Ohio Benefits Development.....23  
revenues (which include tax receipts) were just $82,000  
below estimate at the end of February, a variance of less Homemaker/Personal Care  
Rate Increase.......................23  
than 0.1%. The spending side of the budget also followed its  
Public Housing Grants.............24  
recent pattern of larger negative variances, providing some Liquor Sales.............................25  
School District Report Cards ...25  
AG Settlements .......................26  
fiscal cushion for the remaining four months of FY 2016.  
Ohio's January unemployment rate was 4.9%, slightly  
higher than December's rate but equal to the January  
national rate. Ohio's payroll employment was essentially  
TRACKING THE ECONOMY  
The National Economy ............28  
The Ohio Economy..................32  
flat in January, with job gains in private sector services,  
construction, and manufacturing mostly offset by job losses  
in government (most of which were in local government).  
Through February 2016, GRF sources totaled $22.98 billion:  
Revenue from the personal income tax was  
130.0 million below estimate;  
$
Sales and use tax receipts were $42.4 million above  
estimate.  
Through February 2016, GRF uses totaled $24.49 billion:  
Legislative Service Commission  
7
7 South High Street, 9th Floor  
Columbus, Ohio 43215  
Program expenditures were $658.8 million below  
estimate, due primarily to Medicaid ($487.7 million)  
and Health and Human Services ($84.1 million).  
Telephone: 614-466-3615  
AVAILABLE ON OUR WEBSITE: WWW.LSC.OHIO.GOV  
CLICK ON 'PUBLICATIONS/BUDGET FOOTNOTES'  
Ohio Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of February 2016  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on March 2, 2016)  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
TAX REVENUE  
Auto Sales  
$87,136  
$88,500  
-$1,364  
-1.5%  
Nonauto Sales and Use  
$620,478  
$655,000  
-$34,522  
-5.3%  
Total Sales and Use Taxes  
$707,614  
$743,500  
-$35,886  
-4.8%  
Personal Income  
$181,580  
-$568  
$195,000  
$0  
-$13,420  
-$568  
$10,331  
-$356  
-$5,766  
-$219  
$2,793  
$0  
-6.9%  
---  
Corporate Franchise  
Financial Institution  
Public Utility  
$50,781  
$21,844  
$29,234  
$12,081  
$287,493  
$0  
$40,450  
$22,200  
$35,000  
$12,300  
$284,700  
$0  
25.5%  
-1.6%  
-16.5%  
-1.8%  
1.0%  
---  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
$61,372  
$8  
$21,500  
$0  
$39,872  
$8  
185.5%  
---  
$44  
$0  
$44  
---  
$70,385  
$2,846  
$3,234  
-$12  
$69,000  
$3,300  
$3,200  
$0  
$1,385  
-$454  
$34  
2.0%  
-13.8%  
1.1%  
---  
Alcoholic Beverage  
Liquor Gallonage  
Estate  
-$12  
Total Tax Revenue  
$1,427,935  
$1,430,150  
-$2,215  
-0.2%  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$3  
$7,473  
$1,760  
$9,236  
$0  
$3,593  
$365  
$3  
$3,880  
$1,396  
$5,279  
---  
108.0%  
382.8%  
133.4%  
Total Nontax Revenue  
$3,957  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$337  
$337  
$0  
$4,900  
$4,900  
$0  
-$4,563  
-$4,563  
---  
-93.1%  
-93.1%  
TOTAL STATE SOURCES  
Federal Grants  
$1,437,509  
$983,519  
$1,439,007  
$1,074,390  
$2,513,397  
-$1,498  
-$90,870  
-$92,368  
-0.1%  
-8.5%  
-3.7%  
TOTAL GRF SOURCES  
$2,421,028  
*Estimates of the Office of Budget and Management as of September 2015, including revisions in February 2016.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
2
March 2016  
Ohio Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate  
FY 2016 as of February 29, 2016  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on March 2, 2016)  
Percent  
Change  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
FY 2015  
TAX REVENUE  
Auto Sales  
$859,238  
$830,500  
$28,738  
3.5%  
$829,330  
3.6%  
Nonauto Sales and Use  
$6,043,445  
$6,029,800  
$13,645  
0.2%  
$5,789,787  
4.4%  
Total Sales and Use Taxes  
$6,902,683  
$6,860,300  
$42,383  
0.6%  
$6,619,117  
4.3%  
Personal Income  
$5,307,617  
$29,906  
$86,093  
$73,142  
$227,778  
$30,646  
$944,625  
$3,362  
$5,437,600  
$0  
-$129,983  
$29,906  
$13,493  
$42  
-2.4%  
---  
$5,438,672  
-$24,685  
$61,922  
$60,634  
$198,180  
$36,409  
$644,061  
$1,944  
-2.4%  
221.2%  
39.0%  
20.6%  
14.9%  
-15.8%  
46.7%  
73.0%  
20.1%  
-95.2%  
127.3%  
26.5%  
-6.7%  
Corporate Franchise  
Financial Institution  
Public Utility  
$72,600  
$73,100  
$234,100  
$31,300  
$966,200  
$3,000  
18.6%  
0.1%  
-2.7%  
-2.1%  
-2.2%  
12.1%  
16.9%  
-92.5%  
---  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
-$6,322  
-$654  
-$21,575  
$362  
$207,538  
$353  
$177,600  
$4,700  
$29,938  
-$4,347  
$86  
$172,780  
$7,415  
$86  
$0  
$38  
$609,534  
$34,833  
$30,396  
$905  
$586,700  
$35,300  
$29,700  
$0  
$22,834  
-$467  
3.9%  
-1.3%  
2.3%  
---  
$481,958  
$37,350  
$29,387  
$2,357  
Alcoholic Beverage  
Liquor Gallonage  
$696  
3.4%  
Estate  
$905  
-61.6%  
5.2%  
Total Tax Revenue  
$14,489,496  
$14,512,200  
-$22,704  
-0.2%  
$13,767,538  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$16,603  
$20,304  
$44,602  
$81,509  
$11,000  
$20,787  
$35,098  
$66,885  
$5,603  
-$483  
50.9%  
-2.3%  
27.1%  
21.9%  
$11,413  
$17,579  
$23,316  
$52,309  
45.5%  
15.5%  
91.3%  
55.8%  
$9,504  
$14,624  
Total Nontax Revenue  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$190,197  
$190,197  
$0  
$182,200  
$182,200  
$0  
$7,997  
$7,997  
---  
4.4%  
4.4%  
$0  
$17,774  
$17,774  
---  
970.1%  
970.1%  
TOTAL STATE SOURCES  
Federal Grants  
$14,761,203  
$8,214,915  
$22,976,118  
$14,761,285  
$8,529,177  
$23,290,462  
-$82  
-$314,263  
-$314,346  
0.0%  
-3.7%  
-1.3%  
$13,837,621  
$6,398,496  
$20,236,117  
6.7%  
28.4%  
13.5%  
TOTAL GRF SOURCES  
*Estimates of the Office of Budget and Management as of September 2015, including revisions in February 2016.  
Detail may not sum to total due to rounding.  
March 2016  
3
Budget Footnotes  
Ohio Legislative Service Commission  
REVENUES  
Jean J. Botomogno, Principal Economist, 614-644-7758  
Overview  
GRF sources1 of $23.0 billion through February in FY 2016 were  
314.3 million (1.3%) below updated estimates released by OBM in  
$
FY 2016 state  
sources were  
on target  
2
January 2016. Essentially the entire shortfall was due to a negative  
variance in federal grants, primarily related to the level of spending in  
3
the Medicaid program. (See the Expenditures section of this  
publication.) Though GRF state-source receipts were on target, GRF tax  
revenue was below estimate by $22.7 million for the fiscal year to date.  
That negative variance was almost entirely offset by positive variances of  
through  
February.  
$
14.6 million and $8.0 million for nontax revenue and transfers in,  
respectively. Tables 1 and 2, above, show GRF sources for February and  
for FY 2016 through February, respectively.  
For the month of February, GRF sources of $2.42 billion were  
$
92.4 million below estimate. Similarly to the fiscal year through  
February, this underperformance was almost entirely due to a negative  
variance of $90.9 million in federal grants. For state-source receipts,  
negative variances of $2.2 million for GRF tax revenue and $4.6 million  
for transfers in were partially offset by a positive variance of $5.3 million  
in nontax revenue.  
Regarding GRF tax sources, the two largest performed poorly in  
February: the sales and use tax fell below expectations by $35.9 million,  
while the personal income tax, continuing a FY 2016 trend, came in short  
of anticipated revenues by $13.4 million. Also, the kilowatt-hour tax had  
a noticeable shortfall of $5.8 million. On the other hand, the foreign  
insurance tax and the financial institutions tax (FIT) had positive  
variances of $39.9 million and $10.3 million, respectively. The positive  
variance for the foreign insurance tax was probably primarily due to  
timing. The January-February period reflects the first fiscal year FIT  
payment, due January 31, which produced a combined positive variance  
FY 2016 GRF  
tax revenue  
was  
$
22.7 million  
below  
estimate.  
1 GRF sources consist of state-source receipts, which include tax revenue,  
nontax revenue, and transfers in, together with federal grants, which are  
typically federal reimbursements for Medicaid and other programs.  
2
OBM reduced estimated GRF tax revenues by $69.9 million in the  
second half of FY 2016 due to the enactment of S.B. 208 and H.B. 340 of the  
1
31st General Assembly.  
3 GRF Medicaid expenditures were $487.7 million below estimate through  
February 2016, including a negative variance of $99.3 million in February.  
Budget Footnotes  
4
March 2016  
Ohio Legislative Service Commission  
of $8.5 million. In addition to positive results from the foreign insurance  
tax and the FIT, receipts from the commercial activity tax (CAT) and the  
cigarette tax were larger than expected by $2.8 million and $1.4 million,  
respectively.  
The chart below shows the cumulative variances against estimates  
for tax revenue, federal grants, and total GRF sources through each month  
of the fiscal year. As noted previously, through February, state-source  
receipts nearly matched the estimate, while the year-to-date deficit in  
federal grants increased in the latest month. The sales and use tax, the  
cigarette tax, the FIT, the corporation franchise tax, and the foreign  
insurance tax were above estimates; taxes short of estimates included the  
personal income tax, the CAT, the kilowatt-hour tax, and the domestic  
insurance tax.  
Chart 1: Cumulative Variances of GRF Sources in FY 2016  
(
Variance from Estimates, in millions)  
$
$
$
$
$
$
600  
500  
400  
300  
200  
100  
FY 2016 federal  
grants were  
$
314.3 million  
$
0
below  
Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16  
-
-
-
-
$100  
$200  
$300  
$400  
estimate.  
Federal Grants  
Tax Revenue  
Total GRF Sources  
Compared to the same period in FY 2015, FY 2016 sources through  
February were $2.7 billion (13.5%) higher. Receipts of all GRF categories  
were higher than those in the previous year. Much of the increase is due to  
an accounting change related to Medicaid expenditures which pushed  
federal grants higher in FY 2016 by $1.8 billion (28.4%). In the current  
fiscal year, expenditures for individuals who became eligible for Medicaid  
through the Affordable Care Act are made from the GRF, but in the past,  
such expenditures were debited from the Health Care Federal Fund (Fund  
3
F00), a non-GRF fund.  
March 2016  
5
Budget Footnotes  
Ohio Legislative Service Commission  
GRF tax receipts grew by $722.0 million (5.2%) from the  
corresponding period in FY 2015. The taxes that contributed the most to  
year-over-year revenue growth were the sales and use tax, the CAT, and  
the cigarette tax. Sales and use tax revenue growth is largely reflective of  
an expanding state economy and higher consumer taxable spending,  
while the growth in the CAT and cigarette tax revenue are more the  
result of policy changes. H.B. 64, the main operating budget act for the  
current biennium, increased the share of CAT receipts credited to the  
GRF from 50% to 75% and raised the cigarette tax rate from $1.25 per  
pack of 20 cigarettes to $1.60 per pack. Despite healthy employment  
gains in the state during FY 2016, personal income tax revenue has fallen  
by $131.1 million from the same period in FY 2015, also due primarily to  
tax changes enacted in H.B. 64.  
Personal Income Tax  
Despite a brief respite in December, the personal income tax  
resumed its FY 2016 trend in February by coming in below estimate. It  
was the fifth revenue shortfall out of the last six months and in all but  
two months this fiscal year. February GRF revenue from the personal  
income tax of $181.6 million was $13.4 million (6.9%) below the estimate  
recently revised by OBM. It was the largest monthly shortfall (in  
percentage terms) for the personal income tax in FY 2016, followed by a  
shortfall of 5.6% in September. January's negative variance was  
Personal  
income tax  
revenue was  
$
130.0 million  
below estimate  
through  
$
37.0 million (3.9%).  
Personal income tax revenue is comprised of gross collections,  
minus refunds and distributions to the Local Government Fund (LGF).  
Gross collections consist of employer withholdings, quarterly estimated  
payments, trust payments, payments associated with annual returns,  
February.  
4
and other miscellaneous payments. The performance of the tax in  
February was driven by a shortfall of $23.8 million in employer  
withholdings and $3.4 million lower than expected payments from  
annual returns. On the other hand, quarterly estimated payments were  
$
2.4 million higher than expected and refunds were $12.1 million below  
anticipated levels for the month.  
4 Quarterly estimated payments are made by taxpayers who expect to be  
underwithheld by more than $500. Payments are due in April, June, and  
September of an individual's tax year and February of the following year. Most  
estimated payments are made by high-income taxpayers.  
Budget Footnotes  
6
March 2016  
Ohio Legislative Service Commission  
For FY 2016, personal income tax revenues to the GRF totaled  
$
$
5.31 billion through February, $130.0 million (2.4%) below estimate and  
131.1 million (2.4%) less than the corresponding period in FY 2015. All  
components of gross collections have contributed to the fiscal-year-to-date  
shortfall, with the exception of trust payments. Employer withholding and  
payments from annual returns were the largest contributors to a negative  
variance of $80.7 million in gross collections. Refunds, which were  
$
51.8 million higher than estimated, also contributed to the total deficit.  
The table below summarizes year-to-date FY 2016 income tax revenue  
variances from estimates and annual changes by components.  
FY 2016 Year-to-Date Income Tax Revenue  
Variances and Changes by Component  
Year-to-Date Variance  
from Estimate  
Year-to-Date Changes  
from FY 2015  
Withholding  
was  
Category  
Amount  
Percentage  
Amount  
Percentage  
(
$ in millions)  
(%)  
($ in millions)  
(%)  
$
58.2 million  
Withholding  
-$58.2  
-$2.8  
-1.1%  
-0.4%  
9.4%  
$67.6  
-$24.6  
$7.1  
1.3%  
-3.3%  
28.6%  
-6.0%  
-12.6%  
0.5%  
below estimate  
through  
Quarterly Estimated Payments  
Trust Payments  
$2.7  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
-$13.7  
-$8.7  
-9.7%  
-13.4%  
-1.2%  
6.9%  
-$8.2  
February.  
-$8.1  
-$80.7  
$51.8  
-$2.5  
$33.9  
$151.2  
$13.7  
-$131.1  
Less Refunds  
23.0%  
5.7%  
Less LGF Distribution  
Income Tax Revenue  
-1.0%  
-2.4%  
-$130.0  
-2.4%  
H.B. 64, the budget act, reduced income tax rates for all brackets by  
.3%, for taxable years beginning in 2015. The Department of Taxation  
6
issued new withholding tables, reflecting a 3.1% reduction in withholding  
rates previously in effect for 2014, to be used for payrolls that end on or  
after August 1, 2015. The effects of these changes enacted in H.B. 64 and  
S.B. 208 are responsible for the anemic rate of revenue growth from the  
5
tax. The chart below illustrates the slowing growth of monthly employer  
withholdings. (Figures in the chart are not adjusted for the August change  
in withholding rates).  
5 Ohio payroll employment grew by about 1.5% during the year ending in  
January 2016, somewhat faster than revenue growth. Monthly employer  
withholding data, after adjusting for the withholding rate reduction, imply that  
Ohio payrolls grew by 3.6% from the period December 2014 through February  
2
015 to the corresponding three months of FY 2016.  
March 2016  
7
Budget Footnotes  
Ohio Legislative Service Commission  
Chart 2: Monthly Withholding Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
6
5
4
3
2
1
0
%
%
%
%
%
%
%
-1%  
Sales and use  
tax revenue  
was  
$
42.4 million  
Sales and Use Tax  
above estimate  
through  
For the first time in FY 2016, monthly GRF revenue from the sales  
and use tax was significantly below estimate. Total receipts for the month  
were $707.6 million, $35.9 million (4.8%) below estimate, mostly from the  
nonauto portion of the tax. However, for the fiscal year through  
February, sales and use tax revenue was still $42.4 million (0.6%) above  
estimate and $283.6 million (4.3%) higher than revenues through the  
same period in FY 2015.  
February.  
For analysis and forecasting, the sales and use tax is separated into  
two parts: auto and nonauto. Auto sales and use tax collections generally  
arise from the sale of motor vehicles, but auto taxes arising from leases  
are paid at the lease signing and are mostly recorded under the nonauto  
Nonauto sales  
and use tax  
6
tax instead of the auto tax.  
Nonauto Sales and Use Tax  
revenues were  
The GRF received $620.5 million from the nonauto sales and use  
tax in February, an amount that was $34.5 million (5.3%) below estimate,  
and also $7.7 million (1.2%) below revenue in the corresponding month  
in 2015. The negative variance in February was only the second time this  
fiscal year the tax fell below estimate by more than 1%; in December  
$
13.6 million  
above estimate  
through  
February.  
2
015, revenue missed the estimate by $10.6 million (1.3%). For FY 2016  
6 Taxes arising from leases are paid immediately upon the lease signing.  
The clerks of court generally make auto sales and use tax payments on Mondays  
for taxes collected during the preceding week on motor vehicles, watercraft, and  
outboard motors titled. Therefore, auto sales and use tax receipts mostly, but not  
perfectly, reflect vehicles sold and titled during the month.  
Budget Footnotes  
8
March 2016  
Ohio Legislative Service Commission  
through February, however, nonauto sales and use tax revenue remained  
above estimate by $13.6 million (0.2%). Year-to-date revenue was also  
$
253.7 million (4.4%) above such revenue a year ago.  
A portion of the nonauto sales and use tax receipts is paid by  
Medicaid health insuring corporations, and is generally related to  
Medicaid spending. This portion generally makes up a small share of the  
revenue from this tax source and is not correlated with the remainder of  
nonauto sales and use taxes. In the past, this portion of the revenues grew  
at a faster pace than the rest of the category; however, this year, sales tax  
collections from the health insuring corporations has seen little growth, up  
1
.1% through February, as Medicaid spending has been below estimates  
throughout the fiscal year.  
The chart below shows year-over-year changes in nonauto sales and  
use tax monthly revenues on a three-month moving average. The chart  
illustrates revenues growing but generally at a slower pace than at the start  
of FY 2016. Average growth over the most recent three months was 3.6%.  
Chart 3: Nonauto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
1
1
2%  
0%  
Auto sales and  
use tax  
8
6
4
2
0
%
%
%
%
%
revenue was  
$
28.7 million  
above estimate  
through  
February.  
Auto Sales and Use Tax  
The GRF received $87.1 million in revenue from the auto sales and  
use tax in February, an amount $1.4 million (1.5%) below estimate. The  
auto sales tax had generally been above estimate this fiscal year. For the  
fiscal year through February, revenue was $28.7 million (3.5%) above  
estimate and $29.9 million (3.6%) higher than in the corresponding period  
in FY 2015. The chart below shows year-over-year changes in auto sales  
and use tax monthly revenues on a three-month moving average. The  
chart illustrates revenues growing at an uneven pace in FY 2016 but with  
the growth rate generally trending downward. Average growth over the  
most recent three months was 3.1%.  
March 2016  
9
Budget Footnotes  
Ohio Legislative Service Commission  
Chart 4: Auto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
1
1
2%  
0%  
8
6
4
2
0
%
%
%
%
%
Sales of U.S. light vehicles (autos and light trucks) maintained a  
sturdy pace in February 2016. They were 17.4 million units at a  
seasonally adjusted annual rate, slightly below January's level of  
1
7.5 million units and about 6.7% above sales in February 2015. Cheap  
credit and low gas prices continue to push sales of light trucks, which  
jumped about 9.3% in the first two months of calendar year (CY) 2016,  
when compared to the corresponding period in 2015. On the other hand,  
sales of autos declined about 4.2%.  
Commercial Activity and Petroleum Activity Taxes  
The third CAT payment for calendar quarter taxpayers in FY 2016  
provided GRF receipts of $287.5 million in February. This revenue was  
FY 2016 GRF  
CAT receipts  
were  
$2.8 million (1.0%) above estimate and $97.8 million (51.5%) above  
revenue in the same month last year. For the fiscal year through February,  
CAT revenues to the GRF totaled $944.6 million, $21.6 million (2.2%)  
below estimate. CAT revenue credited to the School District Tangible  
Property Tax Replacement Fund (Fund 7047) through February was  
$21.6 million  
below  
$251.9 million. The Local Government Tangible Property Tax Replacement  
estimate.  
Fund (Fund 7081) received $63.0 million. This weakness in CAT revenue  
this fiscal year has been due, in part, to increased credit claims against the  
tax but also reflects an economic slowdown in the second half of CY 2015.  
Refunds totaled $78.4 million, about $26.0 million more than in FY 2015  
7
through February, and GRF receipts from the CAT were $300.6 million  
(46.7%) above receipts in the corresponding period of FY 2015 because of  
the increase in the GRF share of CAT receipts enacted in H.B. 64.  
7 This increase in refunds occurred in the first half of FY 2016.  
Budget Footnotes  
10  
March 2016  
Ohio Legislative Service Commission  
Beginning July 1, 2014, the CAT as applied to receipts from the sale  
or exchange of motor fuel was replaced by the petroleum activity tax  
PAT). No receipts were expected or received from the PAT in February.  
In the first eight months of FY 2016, total revenue from the PAT was  
39.1 million, of which $3.4 million was deposited in the GRF. That GRF  
(
$
amount was $0.4 million (12.1%) above estimate and $1.4 million (73.0%)  
above revenue in the corresponding period in FY 2015.  
Cigarette and Other Tobacco Products Tax  
GRF receipts from the cigarette and other tobacco products tax  
were $70.4 million in February, an amount $1.4 million (2.0%) above  
estimate and $17.1 million (32.1%) above revenue in February 2015. Cigarette tax  
Through February, total FY 2016 tax receipts of $609.5 million were  
revenue was  
$
22.8 million (3.9%) above OBM estimates and $127.6 million (26.5%)  
$
22.8 million  
above revenue from the same period in FY 2015. Generally, cigarette tax  
receipts have experienced a long-term downward trend; however, H.B. 64  
increased the cigarette tax from $1.25 to $1.60 per pack of 20 cigarettes, a  
above estimate  
through  
2
8% increase, which has led to a predictable increase in tax revenues. Of February.  
total receipts for the fiscal year, $551.5 million was from cigarette sales, an  
increase of $111.8 million compared to FY 2015; $16.6 million of FY 2016  
8
revenue was from the "floor tax" ; and $41.4 million was from sales of  
other tobacco products. Compared to the corresponding period last year,  
FY 2016 revenue from the sales of other tobacco products has been flat.  
8 The "floor tax" is the additional $0.35 tax paid by tobacco dealers for  
cigarettes in inventory (for which the old tax rate had been paid) when the new  
tax rate went into effect on July 1, 2015.  
March 2016  
11  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of February 2016  
(
$ in thousands)  
(
Actual based on OAKS reports run March 7, 2016)  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
Primary and Secondary Education  
Higher Education  
$723,249  
$722,901  
$348  
0.0%  
$196,252  
$3,623  
$202,608  
$3,216  
-$6,356  
$407  
-3.1%  
12.7%  
-0.6%  
Other Education  
Total Education  
$923,124  
$928,726  
-$5,601  
Medicaid  
$1,573,429  
$90,358  
$1,672,700  
$92,299  
-$99,271  
-$1,942  
-5.9%  
-2.1%  
-5.7%  
Health and Human Services  
Total Welfare and Human Services  
$1,663,787  
$1,765,000  
-$101,213  
Justice and Public Protection  
General Government  
$129,436  
$25,638  
$135,777  
$25,104  
-$6,341  
$534  
-4.7%  
2.1%  
Total Government Operations  
$155,074  
$160,881  
-$5,807  
-3.6%  
Property Tax Reimbursements  
Capital Outlay  
-$642  
$0  
$41  
$0  
-$684  
$0  
-1648.1%  
---  
Debt Service  
$53,221  
$52,579  
$56,021  
$56,063  
-$2,800  
-$3,484  
-5.0%  
-6.2%  
Total Other Expenditures  
Total Program Expenditures  
$2,794,564  
$2,910,669  
-$116,105  
-4.0%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$0  
$12,964  
$12,964  
$0  
$0  
$0  
$0  
$12,964  
$12,964  
---  
---  
---  
TOTAL GRF USES  
$2,807,528  
$2,910,669  
-$103,141  
-3.5%  
*
October 2015 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
12  
March 2016  
Ohio Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2016 as of February 29, 2016  
(
$ in thousands)  
(
Actual based on OAKS reports run March 7, 2016)  
Percent  
Change  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
FY 2015  
Primary and Secondary Education  
Higher Education  
$5,471,584  
$1,490,713  
$52,409  
$5,499,039  
-$27,455  
-0.5%  
-1.1%  
6.6%  
$4,982,901  
$1,439,608  
$40,896  
9.8%  
$1,506,544  
$49,166  
-$15,832  
$3,243  
3.5%  
28.2%  
8.5%  
Other Education  
Total Education  
$7,014,706  
$7,054,750  
-$40,043  
-0.6%  
$6,463,405  
Medicaid  
$12,201,920  
$895,379  
$12,689,573  
$979,471  
-$487,653  
-$84,092  
-$571,745  
-3.8%  
-8.6%  
-4.2%  
$10,457,542  
$936,874  
16.7%  
-4.4%  
14.9%  
Health and Human Services  
Total Welfare and Human Services  
$13,097,299  
$13,669,044  
$11,394,416  
Justice and Public Protection  
General Government  
$1,370,847  
$248,929  
$1,375,844  
$270,115  
-$4,997  
-$21,186  
-$26,183  
-0.4%  
-7.8%  
-1.6%  
$1,298,795  
$240,832  
5.5%  
3.4%  
5.2%  
Total Government Operations  
$1,619,776  
$1,645,960  
$1,539,627  
Property Tax Reimbursements  
Capital Outlay  
$896,539  
$0  
$905,028  
$0  
-$8,489  
$0  
-0.9%  
---  
$908,134  
$0  
-1.3%  
---  
Debt Service  
$1,030,890  
$1,927,428  
$1,043,210  
$1,948,238  
-$12,320  
-$20,810  
-1.2%  
-1.1%  
$993,355  
$1,901,489  
3.8%  
1.4%  
Total Other Expenditures  
Total Program Expenditures  
$23,659,210  
$24,317,991  
-$658,781  
-2.7%  
$21,298,937  
11.1%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$425,500  
$401,224  
$826,724  
$425,500  
$375,031  
$800,531  
$0  
$26,193  
$26,193  
0.0%  
7.0%  
3.3%  
$0  
$582,835  
$582,835  
---  
-31.2%  
41.8%  
TOTAL GRF USES  
$24,485,934  
$25,118,522  
-$632,588  
-2.5%  
$21,881,772  
11.9%  
*
October 2015 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
March 2016  
13  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on March 7, 2016)  
Month of February 2016  
Year to Date Through February 2016  
Department  
Medicaid  
Actual  
Estimate*  
Variance  
Percent  
Actual  
Estimate*  
Variance  
Percent  
$1,782,545  
$1,526,074  
$256,471  
$2,194,444  
$1,628,284  
$566,160  
-$411,899  
-$102,209  
-$309,689  
-18.8%  
-6.3%  
$14,498,115  
$11,805,493  
$2,692,622  
$15,547,976 -$1,049,861  
-6.8%  
GRF  
$12,298,799  
$3,249,177  
-$493,306  
-4.0%  
Non-GRF  
-54.7%  
-$556,555 -17.1%  
Developmental Disabilities  
$250,282  
$41,563  
$230,772  
$40,130  
$19,509  
$1,433  
8.5%  
3.6%  
9.5%  
$1,595,167  
$337,343  
$1,675,001  
$332,233  
-$79,834  
$5,110  
-4.8%  
1.5%  
GRF  
Non-GRF  
$208,719  
$190,643  
$18,076  
$1,257,824  
$1,342,768  
-$84,944  
-6.3%  
Job and Family Services  
$12,965  
$5,137  
$7,828  
$10,543  
$3,677  
$6,866  
$2,423  
$1,460  
$963  
23.0%  
39.7%  
14.0%  
$141,641  
$52,777  
$88,865  
$133,612  
$52,483  
$81,129  
$8,029  
$293  
6.0%  
0.6%  
9.5%  
GRF  
Non-GRF  
$7,736  
Health  
GRF  
$455  
$250  
$205  
$500  
$263  
$238  
-$45  
-$13  
-$33  
-9.0%  
-4.8%  
$4,195  
$2,319  
$1,876  
$4,942  
$2,335  
$2,607  
-$747 -15.1%  
-$15 -0.7%  
Non-GRF  
-13.7%  
-$732 -28.1%  
Aging  
$1,469  
$307  
$2,233  
$282  
-$764  
$25  
-34.2%  
8.8%  
$15,537  
$2,626  
$17,550  
$2,246  
-$2,014 -11.5%  
GRF  
$380  
16.9%  
Non-GRF  
$1,163  
$1,951  
-$789  
-40.4%  
$12,911  
$15,304  
-$2,394 -15.6%  
Mental Health and Addiction  
$280  
$98  
$365  
$65  
-$85  
$33  
-23.2%  
51.2%  
-39.3%  
$3,205  
$1,361  
$1,843  
$3,951  
$1,477  
$2,474  
-$746 -18.9%  
GRF  
-$115 -7.8%  
-$631 -25.5%  
Non-GRF  
$182  
$300  
-$118  
Total GRF  
$1,573,429  
$474,568  
$1,672,700  
$766,158  
-$99,271  
-5.9%  
$12,201,920  
$4,055,940  
$12,689,573  
$4,693,460  
-$487,653  
-3.8%  
Total Non-GRF  
-$291,590  
-38.1%  
-$637,520 -13.6%  
Total All Funds  
$2,047,997  
$2,438,858  
-$390,861  
-16.0%  
$16,257,860  
$17,383,033 -$1,125,174  
-6.5%  
*Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
14  
March 2016  
Ohio Legislative Service Commission  
Table 6: All-Funds Medicaid Expenditures by Payment Category  
Actual vs. Estimate  
(
$ in thousands)  
Actuals based on OAKS report run on March 7, 2016)  
February Year to Date Through February 2016  
Variance  
(
Payment Category  
Managed Care  
Nursing Facilities  
DDD Services  
Hospitals  
Actual  
Estimate*  
$897,972  
$120,240  
$219,088  
$429,642  
$105,984  
$78,147  
$30,720  
$44,366  
$37,729  
$23,237  
$27,368  
$15,865  
$303,940  
$104,560  
Percent  
-10.4%  
4.6%  
Actual  
Estimate*  
$7,042,768  
$950,450  
$1,615,830  
$1,828,897  
$757,060  
$792,595  
$220,379  
$316,100  
$295,781  
$195,539  
$198,224  
$112,796  
$2,307,537  
$749,078  
Variance  
-$326,997  
-$21,514  
-$61,869  
Percent  
-4.6%  
$804,158  
$125,756  
$246,132  
$106,305  
$106,763  
$57,157  
$27,008  
$43,775  
$41,986  
$35,882  
$26,871  
$12,238  
$317,734  
$96,233  
-$93,814  
$5,516  
$6,715,771  
$928,936  
$1,553,961  
$1,307,241  
$710,546  
$518,136  
$210,890  
$313,363  
$303,674  
$187,245  
$196,612  
$85,611  
-2.3%  
$27,043  
-$323,338  
$779  
12.3%  
-75.3%  
0.7%  
-3.8%  
-$521,656 -28.5%  
-$46,514 -6.1%  
-$274,459 -34.6%  
Behavioral Health  
Administration  
Aging Waivers  
Prescription Drugs  
Medicare Buy-In  
Physicians  
-$20,989  
-$3,712  
-$591  
-26.9%  
-12.1%  
-1.3%  
11.3%  
54.4%  
-1.8%  
-22.9%  
4.5%  
-$9,489  
-$2,738  
$7,893  
-$8,294  
-$1,612  
-4.3%  
-0.9%  
2.7%  
$4,257  
$12,645  
-$497  
-4.2%  
-0.8%  
Medicare Part D  
Home Care Waivers  
ACA Expansion  
All Other  
-$3,627  
$13,794  
-$8,327  
-$390,861  
-$27,185 -24.1%  
$2,515,988  
$709,887  
$208,451  
-$39,191  
9.0%  
-5.2%  
-6.5%  
-8.0%  
-16.0%  
Total All Funds  
$2,047,997 $2,438,858  
$16,257,860 $17,383,033 -$1,125,174  
*
Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
March 2016  
15  
Budget Footnotes  
Ohio Legislative Service Commission  
EXPENDITURES  
Russ Keller, Senior Economist, 614-644-1751  
Nicholas J. Blaine, Budget Analyst, 614-387-5418  
Overview  
GRF uses for the month of February were $2.81 billion,  
103.1 million (3.5%) below the estimate released by OBM in October  
015. Medicaid accounted for $99.3 million of the monthly variance total.  
$
2
GRF uses mainly consist of program expenditures but also include  
transfers out. Through February, FY 2016 GRF program expenditures  
were $23.66 billion, $658.8 million (2.7%) below estimate. Year‐to‐date  
transfers out were $826.7 million, $26.2 million (3.3%) above estimate.  
This positive variance is nearly double that of the prior month and is  
described in the last section of this report. GRF uses as a whole totaled  
$24.49 billion, $632.6 million (2.5%) below estimate. Tables 3 and 4 show  
GRF uses for the month of February and for FY 2016 through February,  
respectively.  
For the first  
eight months  
of FY 2016, GRF  
uses totaled  
$
$
24.49 billion,  
632.6 million  
(2.5%) below  
Medicaid accounted for 77% of the total negative year-to-date  
variance in GRF uses. For the first eight months of FY 2016, GRF  
Medicaid expenditures were $487.7 million (3.8%) below estimate. As  
indicated earlier, Medicaid spending for February was below OBM's  
monthly estimate by $99.3 million, which increased the year-to-date  
variance. Details on Medicaid expenditures are provided below.  
estimate.  
Medicaid  
accounted for  
7
7% of this  
negative  
variance.  
Elsewhere, Health and Human Services had the second largest  
negative year-to-date variance after Medicaid at $84.1 million, of which  
$
1.9 million occurred in the month of February. Expenditures from the  
Primary and Secondary Education category were on target with  
February's estimate, so the category's negative year-to-date variance  
remained unchanged at $27.5 million. As detailed in previous issues of  
Budget Footnotes, the variances in these two program categories are  
largely timing driven.  
Medicaid  
Medicaid is primarily funded by the GRF although it also receives  
funding from various non-GRF funds. As a joint federal-state program,  
both GRF and non-GRF Medicaid expenditures contain federal and state  
moneys. Overall, the federal and state shares of Medicaid expenditures  
are about 64% and 36%, respectively.  
For the month of February, GRF Medicaid expenditures of  
$
1.57 billion were $99.3 million (5.9%) below estimate while non-GRF  
Medicaid expenditures of $474.6 million were $291.6 million (38.1%)  
Budget Footnotes  
16  
March 2016  
Ohio Legislative Service Commission  
below estimate. Across all funds, Medicaid expenditures of $2.05 billion in  
February were below estimate by $390.9 million (16.0%). The majority of  
this monthly variance was related to Hospital Care Assurance Program  
The majority of  
the all-funds  
negative  
(HCAP) payment timing issues. The anticipated HCAP payment totaling  
$
305.2 million for February will now likely be made near the end of the  
fiscal year. Under HCAP, Ohio makes subsidy payments to hospitals that  
provide uncompensated care to low income and uninsured individuals at  
or below 100% of the federal poverty level.  
variance in  
February  
For the first eight months of FY 2016, GRF Medicaid expenditures  
were $12.20 billion, $487.7 million (3.8%) below estimate, while non-GRF  
Medicaid expenditures were $4.06 billion, $637.5 million (13.6%) below  
estimate. Across all funds, Medicaid expenditures totaled $16.26 billion,  
(
$390.9 million)  
was due to a  
delay in a  
$
1.13 billion (6.5%) below their year-to-date estimate.  
$
305.2 million  
The Ohio Department of Medicaid (ODM) is primarily responsible  
for administering Medicaid, with the assistance of five other state agencies  
HCAP payment.  
Developmental Disabilities, Job and Family Services, Health, Aging, and  
Mental Health and Addiction Services. Table 5 details the GRF and  
non-GRF portions of Medicaid expenditures from each of the six agencies  
that take part in administering Ohio Medicaid. As seen from the table,  
ODM, the largest agency within this program category, also had the  
largest year-to-date variance. For the first eight months of FY 2016, ODM's  
GRF expenditures totaled $11.81 billion, which was $493.3 million (4.0%) Through  
below estimate, and its non-GRF expenditures totaled $2.69 billion, which  
was $556.6 million (17.1%) below estimate. Across all funds, ODM's February, GRF  
expenditures were $1.05 billion (6.8%) below their year-to-date estimate. Medicaid  
GRF and non-GRF Medicaid expenditures from the Department of expenditures  
Developmental Disabilities (DDD), the second largest agency within this were  
program category, totaled $1.60 billion for the first eight months of  
FY 2016, which was $79.8 million (4.8%) below estimate. Together, ODM $  
487.7 million  
and DDD account for about 99% of the Medicaid expenditure total.  
below estimate;  
Table 6 details all-funds Medicaid expenditures by payment non-GRF  
category. As seen from the table, Hospitals had the largest negative Medicaid  
year-to-date variance at $521.7 million (28.5%), of which $323.3 million expenditures  
occurred in the month of February. As indicated earlier, the originally  
scheduled HCAP payment totaling $305.2 million for February will not be were  
made until the end of FY 2016. All HCAP payments are made with non- $637.5 million  
GRF funds. The other major factor behind the negative variance for below estimate.  
Hospitals was lower than forecasted costs for Aged, Blind, and Disabled  
(ABD) recipients in fee-for-service; these costs have consistently been  
lower than those used in the estimate.  
March 2016  
17  
Budget Footnotes  
Ohio Legislative Service Commission  
Two other payment categories that had significant negative year-  
to-date variances were Managed Care ($327.0 million, 4.6%) and  
Administration ($274.5 million, 34.6%). The negative variance for  
Managed Care is mainly due to new Managed Care rates, effective  
January 1, that were lower than projected. In addition, there have been  
lower than estimated ABD caseloads in Managed Care. As a result, the  
variance in the Managed Care category is expected to grow through the  
end of the fiscal year. The negative variance for Administration  
continues, in part, due to the underspending of federal grants for  
electronic medical records. Additionally, a number of ODM information  
technology contracts have not been completed. Payments for these  
contracts will likely be made before the end of the fiscal year.  
Through  
February, all-  
funds Medicaid  
expenditures  
were  
The Medicare Buy-In category experienced a positive variance of  
$
4.3 million in February. All funds expenditures in the Medicare Buy-In  
$
1.13 billion  
category for the first eight months of FY 2016 totaled $303.7 million,  
which was $7.9 million (2.7%) above estimate. This positive variance is  
driven by a larger than anticipated increase in Medicare Part B premiums  
for 2016 and is therefore expected to grow through the end of the fiscal  
year. The Medicare Buy-in Program pays Medicare premiums,  
deductibles, and co-insurance for certain low-income Ohioans.  
below  
estimate.  
The ACA Expansion category continues to have a positive  
year-to-date variance. All-funds expenditures from ACA Expansion  
totaled $2.52 billion for the first eight months of FY 2016, which was  
$
208.5 million (9.0%) above estimate. This positive variance is driven by  
caseloads that are 5% higher than anticipated. However, the caseload  
driven positive variance will be offset to some extent due to the lower  
Managed Care rates described above that are also applicable to  
individuals enrolled in the ACA expansion. Also worth noting, some  
individuals currently enrolled into the ACA Expansion category may  
later be determined to be eligible under another category of coverage  
instead. If those individuals are recategorized, their costs would shift in  
future months.  
Medicaid Related Transfers Out  
GRF transfers out in February partially offset the negative  
variance in program expenditures. GRF transfers out totaled  
$
positive monthly variance nearly doubled the category's year-to-date  
variance from a positive $13.2 million at the end of January to  
13.0 million in February while the OBM estimate anticipated none. This  
$
26.2 million at the end of February. The entirety of February transfers  
out was related to Medicaid. Specifically, cash was transferred from the  
Budget Footnotes  
18  
March 2016  
Ohio Legislative Service Commission  
GRF to the Managed Care Performance Payment Fund (Fund 5KW0) 9  
pursuant to Section 327.80 of H.B. 64, which requires ODM to provide  
performance payments to Medicaid managed care organizations  
providing care and services to participants of MyCare Ohio, a program  
that is designed to improve access to and quality of care and services for  
individuals who are eligible for both Medicare and Medicaid. ODM is to  
withhold a percentage of each premium payment it pays to a managed  
care organization for a program participant. The withheld funds are then  
transferred from the GRF to Fund 5KW0 for performance payments. The  
appropriation for GRF appropriation item 615525, Medicaid/Health Care  
Services, is reduced by the transferred amount.  
9 Prior to the February transfers, $13.1 million cash was transferred from  
the GRF to Fund 5KW0 in November and another $13.5 million cash was  
transferred in July, which brings the year-to-date GRF cash transfer to Fund  
5
KW0 to $39.5 million.  
March 2016  
19  
Budget Footnotes  
Ohio Legislative Service Commission  
ISSUE UPDATES  
Annual Report Shows Decline in Remediation Rates and Increase  
in High School Graduates Enrolling in Public Higher Education  
Edward Millane, Senior Budget Analyst, 614-995-9991  
In late January, the Department of Higher Education (DHE) and the Ohio  
Department of Education (ODE) released their annual report on remediation  
coursework.10 The 2015 Ohio Remediation Report shows a continued decline in the  
number of first-time public university and community college students requiring  
remedial coursework in mathematics and English. The table below illustrates the drop  
in the percentage of such students between academic year 2012-2013, the year before  
such rates began to decline in earnest, and academic year 2014-2015.  
Remediation Rates of First-time Ohio Public College or University  
Students by Subject Area and Academic Year  
Subject Area  
Remedial Mathematics or English  
Remedial Mathematics Only  
Remedial English Only  
2012-2013  
40%  
2014-2015  
32%  
34%  
28%  
20%  
13%  
Remedial Mathematics and English  
14%  
10%  
While the rate of enrollment in remedial coursework continued to decline in  
academic year 2014-2015, the report also adds that the number of Ohio high school  
graduates attending a state institution increased for the first time in six years.  
Approximately 48,750 high school graduates attended a state institution for the first  
time in academic year 2014-2015, an increase of 5.6% over the 46,150 graduates that  
attended in the previous academic year.  
Finally, the report recommends three strategies to continue the trend of  
decreased enrollment in college remediation coursework: (1) improve student success in  
entry-level courses by aligning mathematics to academic programs of study,  
(2) develop, implement, and evaluate co-requisite strategies (under which a student  
enrolls in both remedial and credit-bearing courses in the same subject at the same time)  
to support underprepared students, and (3) strengthen advising and faculty support for  
all students.  
10 The full report can be viewed at: https://www.ohiohighered.org/data-reports/college-  
readiness.  
Budget Footnotes  
20  
March 2016  
Ohio Legislative Service Commission  
Attorney General Awards Grants for  
Campus Sexual Assault Victim Services  
Jessica Murphy, LSC Fellow, 614-466-9108  
On December 29, 2015, Ohio's Attorney General announced the award of  
3 grants totaling more than $1.2 million to support sexual assault victim services at the  
1
campuses of 15 Ohio colleges and universities. The recipients include nine colleges and  
universities and four nonprofit, community-based service providers, with the latter  
partnering with one or more campuses (see table below). The funding will be used to  
provide direct services to victims of campus sexual assault, including crisis response  
and advocacy.  
The grants are part of $3 million that the Attorney General set aside from federal  
Victims of Crime Act (VOCA) funding to help Ohio's colleges and universities better  
respond to sexual assaults. It was part of a larger campus sexual assault initiative that  
the Attorney General announced last June that also included (1) resources for schools to  
develop agreements with law enforcement, prosecutors, and victim service providers  
and (2) campus sexual assault investigation training for law enforcement personnel. The  
Attorney General may award additional campus sexual assault victim services grants in  
the future.  
Campus Sexual Assault Victim Services Grants  
Recipient  
Grant Amount  
$233,634  
Recipient  
Grant Amount  
$69,235  
1
1
12  
The Rape Crisis Center  
University of Toledo  
Crime Victim Services  
1
3
$214,000  
The Domestic Violence Shelter, Inc.  
Urbana University  
$50,671  
The Ohio State University  
Columbus State Community College  
Wilmington College  
$196,791  
$148,093  
$114,218  
$90,565  
$82,835  
$18,420  
$14,566  
Miami University  
University of Cincinnati  
$12,400  
1
4
Kent State University  
Compass, Inc.  
$10,363  
Bowling Green State University  
TOTAL  
$1,255,791  
11 Partnership with the University of Akron.  
12 Partnership with Bluffton University, the Ohio State University at Lima, the University  
of Northwestern Ohio, and Rhodes State College.  
13 Partnership with the Ohio State University at Mansfield and North Central State  
College.  
14 Partnership with Kent State University at Tuscarawas.  
March 2016  
21  
Budget Footnotes  
Ohio Legislative Service Commission  
$
90,000 in Grants for Human Trafficking Prevention Awarded  
Nicholas J. Blaine, Budget Analyst, 614-387-5418  
On January 14, 2016, in conjunction with Human Trafficking Awareness Month,  
the Ohio Children's Trust Fund (OCTF) and the Ohio Human Trafficking Task Force  
announced $90,000 in grant funding to support nine trafficking prevention programs  
across 25 Ohio counties. The grant funding was awarded by the OCTF through a  
competitive process. Each project will identify and assist at-risk youth populations and  
provide them with information and resources to prevent human trafficking.  
Human Trafficking Prevention Grants  
Recipient Organization  
Counties Served  
Jefferson, Harrison  
Funding  
A Caring Place Child Advocacy Center  
$8,380  
Cuyahoga, Franklin, Hamilton,  
Summit  
Asian American Community Services  
$15,000  
$5,200  
Defiance, Fulton, Henry, Paulding,  
Putnam, Williams  
Children’s Lantern  
Delaware County Against Human Trafficking Coalition  
Ethiopian Tewahedo Social Services  
Delaware, Morrow  
Franklin  
$3,346  
$13,516  
$8,827  
First Step Family Violence Intervention Services, Inc.  
Montgomery County Sheriff’s Office – RANGE Task Force  
Shelby High School, Zoetic Zinnias Student Organization  
Coshocton  
Montgomery  
Richland  
$15,000  
$5,731  
Crawford, Defiance, Fulton, Hancock,  
Henry, Huron, Ottawa, Paulding,  
Putnam, Sandusky, Seneca,  
Williams, Wood, Wyandot  
Sisters in Shelter  
$15,000  
The OCTF is governed by a 15-member board which consists of state agency  
administrators, gubernatorial appointees, and legislators. Board members are  
responsible for overall child abuse and neglect prevention policy, program direction,  
and the monitoring of expenditures from the OCTF. The Ohio Human Trafficking Task  
Force, which consists of representatives from ten state agencies, was created in 2012 by  
an executive order. The Task Force coordinates efforts to identify and rescue victims,  
creates a coordinated law enforcement system to investigate and prosecute human  
trafficking crimes, and provides the services and treatment necessary for victims to  
regain control of their lives.  
Budget Footnotes  
22  
March 2016  
Ohio Legislative Service Commission  
Controlling Board Approves an Additional  
234.0 million to Support the Ohio Benefits Project  
$
Tom Wert, Budget Analyst, 614-466-0520  
On January 25, 2016, the Controlling Board approved a request by the  
Department of Administrative Services (DAS) to increase funding by approximately  
$
96.9 million in FY 2016 and $137.1 million in FY 2017 to support ongoing development  
of the state's integrated health and human services benefits eligibility system,  
commonly known as Ohio Benefits. The system supports multiple health and human  
service programs at both the state and county level and provides Ohio residents with an  
online self-service portal that can be used to check eligibility for a variety of public  
benefits programs. Once fully operational, the system will replace the state's current  
benefits eligibility system, the Client Registry Information System-Enhanced (CRIS-E).  
Approximately 90% of the funding for the Ohio Benefits project is being provided by a  
federal grant to the Ohio Department of Job and Family Services (ODJFS). DAS in turn  
bills ODJFS for the costs as they are incurred and deposits the amounts collected into  
the Major IT Purchases Fund (Fund 4N60) to pay costs of the project.  
Implementation of the Ohio Benefits system is taking place in three phases.  
Phase one, implemented in October 2013, provides Medicaid applications and eligibility  
determinations for Ohio residents based on Medicaid's modified adjusted gross income  
eligibility rules. The additional funding approved by the Controlling Board will support  
the second and third phases of the Ohio Benefits project. Phase two, scheduled for  
implementation in July 2016, will support eligibility determination for Medicaid's Aged,  
Blind, and Disabled Program. Two additional programs, the Supplemental Nutrition  
Assistance Program (SNAP) and the Temporary Assistance for Needy Families (TANF)  
Program, will be supported by Ohio Benefits upon implementation of phase three in  
January 2017. The system will also support Enterprise Document Management and  
Shared Services capabilities for all 88 counties upon implementation of phase three.  
6
% Rate Increase for Homemaker/Personal Care Services  
Jacquelyn Schroeder, Budget Analyst, 614-466-3279  
On January 1, 2016, a 6% rate increase went into effect for providers of  
Homemaker/Personal Care services for individuals with developmental disabilities  
enrolled on the Individual Options (IO) or Level 1 Medicaid waivers. The rate increase  
includes both the wage component for direct support professionals and administrative  
expenses for agencies that provide these services. The wage component of the rate  
increase will apply to all the direct care workers employed by the 1,672 agency  
providers, as well as the 5,129 independent service providers. The estimated cost is  
$
30.6 million ($11.5 million state share) in FY 2016 and $61.2 million ($23.0 million state  
March 2016  
23  
Budget Footnotes  
Ohio Legislative Service Commission  
share) in FY 2017. Homemaker/Personal Care services provided to individuals enrolled  
in IO or Level 1 Medicaid waivers include bathing, hair care, and help with dressing;  
medication assistance; light cleaning, laundry, and changing of bed linens; grocery  
shopping and meal preparation; and certain other errands including going to  
medical appointments or taking short walks.  
Ohio Public Housing Authorities Receive Nearly  
$
74 million in Federal Capital Fund Program Grants  
Terry Steele, Senior Budget Analyst, 614-387-3319  
On February 12, 2016, the U.S. Department of Housing and Urban Development  
announced the allocation of nearly $1.8 billion under the federal Capital Fund Program  
to public housing authorities (PHAs) in all 50 states, including $73.6 million for the  
5
1 PHAs in the state of Ohio. The table below shows the 14 PHAs in Ohio that received  
a grant award exceeding $1.0 million, making up nearly $64.4 million (87.4%) of Ohio's  
total grant award.  
Capital Fund Program Grant Awards Greater Than $1.0 million,  
by Public Housing Authority  
Public Housing Authority  
Cuyahoga Metropolitan Housing Authority  
Cincinnati Metropolitan Housing Authority  
Akron Metropolitan Housing Authority  
Dayton Metropolitan Housing Authority  
Columbus Metropolitan Housing Authority  
Lucas Metropolitan Housing Authority  
Stark Metropolitan Housing Authority  
Lorain Metropolitan Housing Authority  
Youngstown Metropolitan Housing Authority  
Trumbull Metropolitan Housing Authority  
Butler Metropolitan Housing Authority  
Portsmouth Metropolitan Housing Authority  
Jefferson Metropolitan Housing Authority  
Springfield Metropolitan Housing Authority  
TOTAL  
Grant Award Amount  
$19,509,993  
$9,336,384  
$6,850,386  
$5,123,489  
$4,800,315  
$4,200,668  
$3,588,335  
$2,119,685  
$2,030,627  
$1,793,840  
$1,689,978  
$1,190,441  
$1,064,869  
$1,057,982  
$64,356,992  
The funding PHAs receive under the Capital Fund Program is awarded annually  
by formula and may be used to build, repair, renovate, and modernize public housing,  
including large-scale improvements and energy-efficient upgrades. Awards may also be  
used for certain management activities and project financing.  
Budget Footnotes  
24  
March 2016  
Ohio Legislative Service Commission  
Total Liquor Sales Surpassed $1 billion in Calendar Year 2015  
Tom Middleton, Budget Analyst, 614-728-4813  
On January 26, 2016, the Department of Commerce announced that spirituous  
liquor sales in Ohio during calendar year (CY) 2015 exceeded $1 billion, a new record.  
Total dollar sales for the year were just under $1.02 billion, about 7.4% over the  
$
3
948.5 million tallied in CY 2014. The total gallonage sold was approximately 13 million,  
.9% over the volume sold in CY 2014. Sizeable gains were posted on both the retail and  
wholesale level, with consumers buying greater amounts of higher-priced products. As  
has been the case in recent years, retail sales made by contract liquor agencies directly  
to consumers led the way, accounting for $731 million (71.8%) of total liquor sales in  
CY 2015, approximately 8% over the CY 2014 amount. On the wholesale level, sales to  
restaurants, bars, and clubs rose by 5.5% in CY 2015 to $287.1 million.  
Beginning in 2013, JobsOhio, the state's nonprofit economic development  
corporation, leased the state's exclusive right to manage and control spirituous liquor  
distribution and sales and to sell spirituous liquor for 25 years. Under this arrangement,  
JobsOhio contracts with the Division of Liquor Control within the Department of  
Commerce to run the liquor merchandising operation. Consequently, the Division  
continues to manage the spirituous liquor inventory and to oversee the distribution of  
liquor to the contract liquor agencies, while the profits from spirituous liquor sales fund  
JobsOhio's efforts to spur job creation and capital investment in the state.  
ODE Releases Report Card Results for 2014-2015 School Year  
Anthony Kremer, Budget Analyst, 614-466-5654  
On February 25, 2016, ODE released report cards for public schools and districts  
for the 2014-2015 school year. These report cards represent the third year that A-F letter  
grades have been used to gauge academic performance on a variety of measures.  
Overall letter grades will be issued on the report cards beginning with the 2017-2018  
school year. Due to recent changes to state tests, the General Assembly has suspended  
many sanctions related to state test results for the 2014-2015, 2015-2016, and 2016-2017  
school years. The table below summarizes how the 609 school districts receiving report  
cards fared this past school year on the ten performance measures with letter grades. As  
the "No Rating" column indicates, some districts did not have enough qualifying  
students to receive a letter grade for some performance measures. In the case of the  
K-3 Literacy Improvement measure, districts had to have at least 5% of kindergarten  
students identified as reading below grade level on diagnostic assessments in order to  
receive a grade.  
March 2016  
25  
Budget Footnotes  
Ohio Legislative Service Commission  
School District Report Card Results, 2014-2015 School Year  
No  
Component  
Performance Indicators  
A
B
C
D
F
Rating  
35%  
1%  
16%  
29%  
22%  
34%  
28%  
4%  
12%  
56%  
15%  
12%  
17%  
11%  
21%  
20%  
23%  
28%  
20%  
14%  
4%  
17%  
0%  
0%  
0%  
Performance Index  
Four-Year Cohort Graduation Rate  
Five-Year Cohort Graduation Rate  
Annual Measurable Objectives  
55%  
49%  
2%  
4%  
0%  
3%  
3%  
0%  
18%  
4%  
34%  
44%  
22%  
41%  
37%  
5%  
0%  
Value-Added Progress Dimension - Overall  
Value-Added Progress Dimension - Gifted  
Value-Added Progress Dimension - Disabled  
Value-Added Progress Dimension - Lowest 20%  
K-3 Literacy Improvement  
36%  
25%  
18%  
17%  
2%  
0%  
8%  
14%  
10%  
11%  
29%  
10%  
4%  
8%  
9%  
3%  
11%  
26%  
The percentage of schools earning As or Bs on the performance index measure  
decreased from 77% in 2013-2014 to 30% in 2014-2015. This drop is due in part to the use  
of new, more rigorous state assessments. As measured by the total percentage of As and  
Bs, school districts fared the best on graduation rates. Based on the percentage of Ds  
and Fs, school districts struggled most with meeting annual measurable objectives for  
closing achievement gaps between certain federally designated groups and all students  
and the value-added dimensions designed to measure progress for certain groups.  
For the 2014-2015 school year report cards, ODE also released data on what it  
refers to as the modified achievement measure, which is similar to the performance  
index but excludes students who did not participate in state tests. These students are  
counted as zero for the performance index, so not counting them results in higher  
ratings for the modified achievement measure. These higher ratings result in higher  
letter grades in 52 (8.5%) districts, many of which are rural or in small town areas. Of  
these, three improved by two letter grades (all from Ds to Bs). Most districts moved  
from a C to a B.  
Ohio to Receive Portion of Multi-jurisdictional  
Settlement Agreements with HSBC and MoneyGram  
Robert Meeker, Budget Analyst, 614-466-3839  
In February 2016, the Ohio Attorney General's Office announced that the state  
will receive a portion of the multi-jurisdictional settlement agreements with HSBC (a  
mortgage lending and servicing business) and MoneyGram (a money transfer business).  
The settlements resolve the investigation and allegations that HSBC's past mortgage  
servicing and foreclosure practices and MoneyGram's anti-wire transfer fraud practices  
violated various state and federal consumer protection laws.  
Budget Footnotes  
26  
March 2016  
Ohio Legislative Service Commission  
The HSBC settlement, announced on February 8, totaled $470 million and will be  
distributed between the attorneys general of 49 participating states (including Ohio),  
the District of Columbia, the U.S. Department of Justice, the U.S. Department of  
Housing and Urban Development, and the federal Consumer Financial Protection  
Bureau. Of this total, $370 million is designated as relief to consumers to remediate  
harm caused by HSBC's alleged unlawful conduct; $59.5 million is designated for  
payments to foreclosed borrowers nationwide, including approximately 1,574 Ohio  
borrowers; and the remaining $40.5 million is to be paid to the federal government.  
The MoneyGram settlement, announced on February 11, totaled $13 million and  
will be distributed between the attorneys general of 49 participating states (including  
Ohio) and the District of Columbia. Ohio will use its share of the settlement for a  
consumer restitution program. As part of the settlement, MoneyGram also agreed to  
reform its practices to more actively protect customers against wire transfer fraud.  
March 2016  
27  
Budget Footnotes  
Ohio Legislative Service Commission  
TRACKING THE ECONOMY  
Thomas Kilbane, Economist, 614-728-3218  
Overview  
The economy continues to grow in Ohio and at the national level.  
The pace of national employment growth picked up in February after a  
dip in January. Nationwide industrial production increased in January  
after contracting in three straight months prior. Consumer spending  
remains strong. Energy prices fell again in January, but other data show  
consumer prices picking up elsewhere, with core CPI (consumer price  
index less food and energy) reaching its highest year-over-year growth  
since 2012.  
Ohio gained  
1,000 jobs in  
5
October  
through  
January.  
Ohio employment was virtually flat in January but was up  
5
1,000 in the last four months. Ohio home sales continued a strong  
winter season in January, with sales 11% higher than January 2015. New  
data showed that Ohio's economic growth during the third quarter of  
2
015 was ranked 21st among U.S. states.  
The National Economy  
Employment and Unemployment  
In February, nonfarm payroll employment nationwide increased  
2
42,000 according to initial estimates from the Bureau of Labor Statistics  
The national  
(BLS). BLS also revised job growth estimates from December and January  
upward by a total of 30,000. The unemployment rate stayed at 4.9%,  
sustaining a post-recession low. Average private, nonfarm hourly  
earnings dropped a bit from January but remain 2.2% higher than one  
year ago. Overall, the report was a signal that employment continues to  
grow at a healthy rate, after slowed growth in January had some  
concerned that softening in other areas of the economy had begun to  
spread to the labor market.  
unemployment  
rate stayed at  
4
.9% in  
February.  
Other encouraging data include big growth in the nation's labor  
force,15 which has increased substantially each of the last five months.  
Through February, the nationwide labor force increased by more  
workers during the prior 12 months than in any other 12-month period  
since the end of the recession in 2009. The labor force participation rate  
15 The labor force is the number of U.S. civilians age 16 and over who are  
either currently employed or unemployed but looked for work in the last four  
weeks.  
Budget Footnotes  
28  
March 2016  
Ohio Legislative Service Commission  
(the percent of civilian population included in the labor force) has  
received attention recently due to long-term declines since the turn of the  
century, an issue that economists have had a hard time explaining in full.  
A large portion of the decline is a result of the U.S.'s aging population.  
Some portion is still due to cyclical effects of the Great Recession, which  
we would expect to continue to shrink with time. Yet, there is still an  
additional portion of the participation rate decline that remains  
unexplained by demographic and historical business cycle factors.  
The chart below was included in the annual report from the  
President's Council of Economic Advisors (CEA) in February and visually  
represents these three portions of the labor force participation rate  
decline. CEA called the unexplained portion "residual," estimated it  
accounts for approximately 40% of the decline, and described it as likely  
reflecting "the longstanding downward trend in participation among  
prime-age workers and other cyclical factors such as the high levels of  
long-term unemployment . . . that are not fully captured in the  
unemployment rate." Allocation between the three portions of the  
The President's  
Council of  
Economic  
Advisors  
3
.1 percentage point decline in labor force participation rate since 2009 is  
depicted in the right margin of the chart. The 40% attributed to "residual"  
corresponds to 1.3 percentage points of decline  
estimates 40%  
of the decline  
in labor force  
participation  
rate since 2009  
is unexplained.  
The labor force participation rate increased from 62.4% in October  
to 62.9% in February. Given that aging trends have not changed much  
during that time, the increase likely represents decreases in some  
combination of cyclical and "residual" effects.  
March 2016  
29  
Budget Footnotes  
Ohio Legislative Service Commission  
Inflation  
Energy prices were down again in January. It was the fourth out  
of the last six months that prices dropped significantly. The Bureau of  
Economic Analysis' (BEA's) index for consumer prices of energy goods  
and services dropped 5.2% over the last 12 months ending in January, a  
much smaller year over year drop than in recent months, illustrating that  
it has been just over a year now since the energy markets completed a  
steep and shocking tumble. Since then, consumer energy prices briefly  
found some support in the first half of 2015 before falling further in late  
summer and again in December and January.  
Large price declines in the energy industry during the last  
1
8 months have dominated inflation news. As the Federal Reserve has  
wrestled with appropriate monetary policy, much has been made of  
stubbornly low inflation, and whether it can still be expected to return to  
the Federal Reserve's goal of 2% in the medium term. Price indices that  
exclude food and energy are often thought of as a more reliable indicator  
of underlying inflation. One such index, the personal consumption  
expenditures price index less food and energy, increased more in January  
than in any prior month since the energy markets began tumbling.  
Another index, the CPI less food and energy, rose by 0.3% in January,  
and is now up 2.2% over the previous 12 months (chart below). Price  
increases have been driven by the service sector. The CPI for services  
excluding energy was up 3.0% year over year. These data are likely to be  
a hot topic at the Federal Reserve's next policy meeting on March 15-16.  
Chart 5: U.S. Consumer Price Index Less Food and Energy  
3
3
2
2
1
1
0
0
.5%  
.0%  
.5%  
.0%  
.5%  
.0%  
.5%  
.0%  
2
000  
2002  
2004  
2006  
2008  
2010  
2012  
2014  
2016  
Production  
New reports in the last 30 days on U.S. production were generally  
very positive. The Institute for Supply Management's (ISM's)  
manufacturing index improved in February as a result of production  
Budget Footnotes  
30  
March 2016  
Ohio Legislative Service Commission  
increases and a slowdown in employment contraction. The BEA revised  
its estimate of U.S. fourth quarter inflation-adjusted gross domestic  
product (real GDP) growth upward to 1.0% (from an initial estimate of  
0
.7%) at a seasonally adjusted annual rate, improving the picture of  
production at the end of 2015 (slightly). Encouragingly, the Federal  
Reserve's measure of total industrial production rose 0.9% from December  
to January due in part to a jump in utility output held down through  
December by mild weather. It was the largest monthly increase since  
November 2014.  
Even with the good news, there is still some reason for caution. The  
increase in the Federal Reserve's measure of industrial production ended a  
streak of three straight months of declines. November and December had  
been the biggest two-month decline since the end of the recession in 2009.  
While the ISM's manufacturing index was up from January to February, it  
still indicated an overall contraction of economic activity during the month.  
Finally, while fourth quarter GDP was revised upward, growth was still low  
overall and private nonresidential fixed investment was particularly poor.  
Consumer Spending  
Strong consumer spending continued unabated through January.  
After recording its strongest year in 2015 in a decade (3.1% growth),  
inflation-adjusted consumer spending grew more in January (4.9% annual  
Personal  
rate) than in any month since May. Real (inflation-adjusted) personal spending has  
spending has increased in 24 straight months. The University of Michigan  
Consumer Sentiment Index, a widely reported measure of consumer  
confidence, remained healthy through February, similar to levels seen  
prior to the Great Recession.  
increased in  
4 straight  
months  
adjusted for  
2
(
Approximately 17.4 million cars and light trucks sold in 2015, an  
all-time record. Seasonally adjusted sales in the first two months of 2016 inflation).  
have maintained that pace according to the BEA. While the pace of car  
sales has slowed slightly in 2016, light truck sales remain particularly high.  
Real Estate  
Housing starts and sales of new homes slowed in January, but sales  
of existing homes, which are the bulk of the market, were strong when  
adjusted for the season. Sales of existing homes were up by 11.0% compared  
to last January. Year-over-year sales growth in the winter months was led  
by the Northeast and Midwest regions of the country, suggesting the mild  
winter temperatures as a significant factor driving the market.  
Supply of existing homes for sale has dipped according to the  
National Association of Realtors, which could create a tough market for  
buyers in the coming months. However, mortgage rates, which have  
March 2016  
31  
Budget Footnotes  
Ohio Legislative Service Commission  
fallen since the beginning of 2016, may help to offset that. The average  
0-year fixed mortgage rate was 3.64% the week of March 3, according to  
3
Freddie Mac's Primary Mortgage Market Survey.  
The Ohio Economy  
Employment and Unemployment  
Ohio's nonfarm payroll employment had virtually no change in  
January, gaining just 100 jobs from December. This comes on the heels of  
a three-month stretch at the end of 2015 that saw Ohio add over 50,000  
jobs. Ohio's unemployment rate was 4.9% in January. The new data  
included annual revisions made by the BLS to account for updated  
population estimates, seasonal adjustments and their annual  
benchmarking process. The results of the revisions included nonfarm  
employment 24,000 higher than previously thought but also the  
unemployment rate a tick higher as well.  
Overall, the revisions did not change the core narrative of  
sustained job growth in Ohio. The chart below shows Ohio's year-over-  
year nonfarm employment change going back to 2001, to provide some  
historical context to the current period of growth. The figures are  
presented as a percent of total employment to allow for comparison to  
the U.S. over the same period. While Ohio has trailed the U.S. since the  
beginning of 2013, the same period also exhibits higher sustained rates of  
job growth than Ohio has experienced at any point since the turn of the  
century.  
Chart 6: 12-month Nonfarm Employment Change  
3
2
1
0
.00%  
.00%  
.00%  
.00%  
Ohio has  
-1.00%  
-2.00%  
-3.00%  
-4.00%  
-5.00%  
-6.00%  
-7.00%  
sustained job  
growth since  
2010.  
2
001  
2003  
2005  
2007  
Ohio  
2009  
2011  
2013  
2015  
United States  
Budget Footnotes  
32  
March 2016  
Ohio Legislative Service Commission  
In the 12 months ended January 2016, Ohio's private industry jobs  
grew at a rate of 1.7%, while government jobs grew only 0.2%. The chart  
below illustrates the makeup of job growth in Ohio between public and  
private industry during the sustained period of growth since 2010. From  
January 2010 to January 2016, Ohio private industry jobs increased by  
4
87,000, while government jobs decreased by 20,000.  
Chart 7: Ohio Job Growth, Public vs. Private  
6
5
4
3
2
1
,000,000  
,000,000  
,000,000  
,000,000  
,000,000  
,000,000  
0
5
,475,500  
5
,008,500  
Private Industry  
7
87,800  
768,000  
Government  
2013  
2
010  
2011  
2012  
2014  
2015  
2016  
State Production  
Ohio's real GDP grew at a seasonally adjusted annual rate of 2.3%  
in the third quarter of 2015. Growth was only about half as fast as in the  
second quarter (4.5%), a drop very similar to that of the national average Ohio's 2015  
during the same period, according to the BEA. Ohio's third quarter GDP  
growth was 21st among the states but behind neighbors Indiana (3.7%),  
Michigan (2.9%), and Pennsylvania (2.5%). Industries that contributed the  
most to Ohio's production growth during the third quarter were health  
third quarter  
GDP growth  
was 21st  
care and social assistance, nondurable goods manufacturing, and retail among states.  
trade. Ohio failed to match Indiana and Michigan's growth during the  
period in the industries of finance and insurance, and, especially, durable  
goods manufacturing.  
Home Sales  
Ohio home sales remained hot in January, hitting a new record  
number of sales for the month. During the historically slow month for real  
estate, 8,013 homes sold, 11.2% more than in January 2015. Sales prices  
during the month were strong as well, averaging $143,562, up 4.4% from  
January 2015. It was the highest average sales price during January since  
2
006. Between January and the prior month of December, which saw  
similarly strong year-over-year growth, Ohio's real estate market is  
shaping up to post a strong winter season.  
March 2016  
33  
Budget Footnotes