Budget Footnotes  
A NEWSLETTER OF THE OHIO LEGISLATIVE SERVICE COMMISSION  
APRIL 2016  
VOLUME 39, NUMBER 8  
STATUS OF THE GRF  
STATUS OF THE GRF  
Highlights...................................1  
Revenues ..................................2  
Expenditures............................11  
HIGHLIGHTS  
Jean J. Botomogno, Principal Economist, 614-644-7758  
ISSUE UPDATES  
Personal income tax receipts came in $38 million above  
Mosquito Traps .......................20  
estimate in March, bouncing back from disappointing BWC Premium Rate  
Reduction.............................20  
Whole Child Matters ................21  
results in the first two months of 2016. Additionally, GRF  
tax sources as a whole did well, reversing a year-to-date Straight A Fund Grant  
Awards .................................23  
shortfall of nearly $23 million last month, and ending with  
a positive variance of about $9 million through March. On  
the other ledger of the budget, GRF uses continued a trend  
Regional Workforce Training  
Grants ..................................23  
Affordable Housing and  
Homelessness Initiatives......24  
of large negative variances for the fiscal year, totaling Community-based Treatment  
Program for Prisoners ..........25  
Municipal Derivative  
$
563 million through March.  
Transaction Settlement ........26  
Ohio's economy added 12,400 jobs in February. Though  
the unemployment rate was unchanged at 4.9% from the  
previous month, it was lower than the rate of 5.1% in  
February 2015.  
TRACKING THE ECONOMY  
The National Economy ............27  
The Ohio Economy..................31  
Through March 2016, GRF sources totaled $25.61 billion:  
Revenue from the personal income tax was  
92.0 million below estimate;  
$
Sales and use tax receipts were $46.0 million above  
estimate.  
Through March 2016, GRF uses totaled $27.07 billion:  
Medicaid expenditures were $550.9 million below  
estimate and accounted for almost 98% of the total  
negative year-to-date variance in GRF uses;  
Legislative Service Commission  
7
7 South High Street, 9th Floor  
Columbus, Ohio 43215  
Including Medicaid, program expenditures as a  
whole were $591.1 million below estimate.  
Telephone: 614-466-3615  
AVAILABLE ON OUR WEBSITE: WWW.LSC.OHIO.GOV  
CLICK ON 'PUBLICATIONS/BUDGET FOOTNOTES'  
Ohio Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of March 2016  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on April 8, 2016)  
STATESOURCES  
Actual  
Estimate*  
Variance  
Percent  
TAX REVENUE  
Auto Sales  
$133,012  
$654,696  
$787,708  
$123,200  
$9,812  
8.0%  
Nonauto Sales and Use  
$660,900  
-$6,204  
-0.9%  
Total Sales and Use Taxes  
$784,100  
$3,608  
0.5%  
Personal Income  
Corporate Franchise  
Financial Institution  
Public Utility  
$419,695  
$462  
$381,700  
$0  
$37,995  
$462  
10.0%  
---  
$43,547  
$2,265  
$33,919  
$1  
$35,850  
$1,500  
$36,200  
$100  
$7,697  
$765  
21.5%  
51.0%  
-6.3%  
-99.3%  
203.3%  
17.7%  
-21.1%  
-19.4%  
---  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
-$2,281  
-$99  
$15,167  
$2,236  
$109,402  
$161  
$5,000  
$1,900  
$138,700  
$200  
$10,167  
$336  
-$29,298  
-$39  
$6  
$0  
$6  
$79,475  
$6,884  
$3,412  
$28  
$79,000  
$5,000  
$3,200  
$0  
$475  
0.6%  
Alcoholic Beverage  
Liquor Gallonage  
Estate  
$1,884  
$212  
37.7%  
6.6%  
$28  
---  
Total Tax Revenue  
$1,504,366  
$1,472,450  
$31,916  
2.2%  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$3  
$33,330  
$638  
$0  
$4,000  
$329  
$3  
$29,330  
$309  
---  
733.3%  
93.9%  
Total Nontax Revenue  
$33,971  
$4,329  
$29,642  
684.7%  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$4,379  
$4,379  
$0  
$8,900  
$8,900  
$0  
-$4,521  
-$4,521  
---  
-50.8%  
-50.8%  
TOTAL STATESOURCES  
Federal Grants  
$1,542,715  
$1,096,016  
$2,638,732  
$1,485,679  
$1,092,987  
$2,578,666  
$57,037  
$3,029  
3.8%  
0.3%  
2.3%  
TOTAL GRFSOURCES  
$60,066  
*Estimates of the Office of Budget and Management as of September 2015, including revisions in February 2016.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
2
April 2016  
Ohio Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate  
FY 2016 as of March 31, 2016  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on April 8, 2016)  
Percent  
Change  
STATESOURCES  
Actual  
Estimate*  
Variance  
Percent  
FY2015  
TAX REVENUE  
Auto Sales  
$992,249  
$6,698,142  
$7,690,391  
$953,700  
$6,690,700  
$7,644,400  
$38,549  
4.0%  
$942,787  
$6,402,980  
$7,345,768  
5.2%  
Nonauto Sales and Use  
$7,442  
0.1%  
4.6%  
Total Sales and Use Taxes  
$45,991  
0.6%  
4.7%  
Personal Income  
Corporate Franchise  
Financial Institution  
Public Utility  
$5,727,312  
$30,368  
$129,640  
$75,407  
$261,696  
$30,647  
$959,792  
$5,598  
$5,819,300  
$0  
-$91,988  
$30,368  
$21,190  
$807  
-1.6%  
---  
$5,936,561  
-3.5%  
$218 13799.7%  
$108,450  
$74,600  
$270,300  
$31,400  
$971,200  
$4,900  
$316,300  
$4,900  
$0  
19.5%  
1.1%  
-3.2%  
-2.4%  
-1.2%  
14.3%  
0.2%  
-89.5%  
---  
$97,067  
33.6%  
20.2%  
14.2%  
-16.1%  
48.3%  
26.2%  
5.9%  
$62,738  
$229,109  
$36,524  
$647,395  
$4,436  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
-$8,604  
-$753  
-$11,408  
$698  
$316,940  
$514  
$640  
$299,221  
$7,537  
-$4,386  
$92  
-93.2%  
142.2%  
26.7%  
1.0%  
$92  
$38  
$689,009  
$41,717  
$33,808  
$933  
$665,700  
$40,300  
$32,900  
$0  
$23,309  
$1,417  
$908  
3.5%  
3.5%  
2.8%  
---  
$543,890  
$41,320  
$32,539  
$2,406  
Alcoholic Beverage  
Liquor Gallonage  
Estate  
3.9%  
$933  
-61.2%  
4.6%  
Total Tax Revenue  
$15,993,862 $15,984,650  
$9,212  
0.1% $15,286,767  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$16,606  
$53,635  
$45,240  
$115,480  
$11,000  
$24,787  
$35,427  
$71,214  
$5,606  
$28,848  
$9,813  
51.0%  
$11,416  
$52,938  
$24,636  
$88,990  
45.5%  
1.3%  
116.4%  
27.7%  
62.2%  
83.6%  
29.8%  
Total Nontax Revenue  
$44,266  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$194,576  
$194,576  
$0  
$191,100  
$191,100  
$0  
$3,476  
$3,476  
---  
1.8%  
1.8%  
$0  
$22,283  
$22,283  
---  
773.2%  
773.2%  
TOTAL STATESOURCES  
Federal Grants  
$16,303,918 $16,246,964  
$9,310,931 $9,622,165  
$25,614,849 $25,869,129  
$56,955  
-$311,234  
-$254,280  
0.4% $15,398,040  
-3.2% $7,167,352  
-1.0% $22,565,392  
5.9%  
29.9%  
13.5%  
TOTAL GRFSOURCES  
*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.  
April 2016  
3
Budget Footnotes  
Ohio Legislative Service Commission  
REVENUES  
Thomas Kilbane, Economist, 614-728-3218  
Overview  
GRF sources1 received in FY 2016 through March were  
254.3 million (1.0%) below the estimate released by the Office of Budget  
$
2
and Management (OBM). Total GRF sources have been below estimates  
since November, largely due to smaller than expected federal grants,  
primarily related to the level of spending in the Medicaid program.3 (See  
the Expenditures section of this publication.) In March, the GRF received  
$3.0 million (0.3%) more in federal grants than estimated, leaving the  
account with a shortfall for the fiscal year through March of  
Total state  
sources were  
$
57.0 million  
above estimate  
through March.  
$
$
311.2 million (3.2%). Total state sources (excluding federal grants) were  
57.0 million (0.4%) above estimate through March. This includes tax  
revenue, which was $9.2 million (0.1%) above estimate, nontax revenue,  
which was $44.3 million above estimate, and other transfers into the  
GRF, which were $3.5 million above estimate. Tables 1 and 2 above,  
show GRF sources for March and for FY 2016 through March,  
respectively.  
Total GRF receipts during March were $2.6 billion, an amount that  
was $60.1 million (2.3%) above estimate. Most of that surplus was from  
state sources which were $57.0 million (3.8%) above estimate during the  
month. Among state sources, tax revenue was $31.9 million (2.2%) above  
estimate, nontax revenue was $29.6 million above estimate, and transfers  
in were $4.5 million below estimate.  
Tax revenue  
was  
$
9.2 million  
above estimate  
Driving tax revenue above estimate in March was the personal  
through March. income tax (PIT), which was higher relative to its estimate ($38.0 million)  
than during any month in FY 2016. It was only the third month all fiscal  
year in which PIT revenue was higher than estimated. In addition, the  
commercial activity tax (CAT), sales and use tax, financial institutions tax  
(
in March. Coming in below estimate during the month were the foreign  
FIT), and the alcoholic beverage tax had higher revenues than estimated  
1 GRF sources consist of state-source receipts, which include tax revenue, nontax  
revenue, and transfers in, and federal grants, which are typically federal reimbursements  
for Medicaid and other programs.  
2 OBM estimates were initially released in September 2015 and subsequently  
revised to accommodate the enactment of S.B. 208 and H.B. 340 of the 131st General  
Assembly.  
3
GRF FY 2016 Medicaid expenditures were $550.9 million below estimate  
through March 2016, including a shortfall of $63.3 million in March.  
Budget Footnotes  
4
April 2016  
Ohio Legislative Service Commission  
insurance tax ($29.3 million), a timing-related shortfall that partially offset  
a large positive variance in February, and the kilowatt-hour excise tax  
$2.3 million). It was the fourth straight month the kilowatt-hour excise tax  
came in below estimate.  
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, overall tax revenue estimates were  
just 0.1% ($9.2 million) higher than actual receipts through March.  
Chart 1: Cumulative Performance of GRF Sources in FY 2016  
(
Variance from Estimates, in millions)  
$
$
$
600  
400  
200  
$
0
Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16  
-$200  
-$400  
-$600  
Tax Revenue  
Federal Grants  
Total GRF Sources  
GRF tax  
receipts  
Compared to the same period in FY 2015, FY 2016 sources through through March  
March were $3.0 billion (13.5%) higher. Much of the increase is due to an are  
accounting change related to Medicaid expenditures which pushed  
federal grants higher in FY 2016 by $2.1 billion (29.9%). In the current $  
707.1 million  
fiscal year, expenditures for individuals who became eligible for Medicaid higher than  
through the Affordable Care Act are made from the GRF, but in the past, FY 2015.  
such expenditures were debited from the Health Care Federal Fund  
(Fund 3F00), a non-GRF fund.  
GRF tax receipts grew by $707.1 million (4.6%), from the  
corresponding period in FY 2015. The taxes that contributed the most to  
year-over-year revenue growth are the sales and use tax, the CAT, and the  
cigarette tax. Sales and use tax revenue growth is largely reflective of a  
growing state economy and strong consumer spending during most of  
FY 2016, while the growth in the CAT and cigarette tax revenue are more  
the result of policy changes. H.B. 64, the budget act, 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.  
April 2016  
5
Budget Footnotes  
Ohio Legislative Service Commission  
Despite healthy employment gains in the state during FY 2016,  
PIT revenue has fallen by $209.3 million from the same period in  
FY 2015, also due primarily to tax changes enacted in H.B. 64.  
Personal Income Tax  
The PIT reversed its FY 2016 trend in March, coming in above  
estimate by far more than any other month during the year. March GRF  
revenue from the PIT was $419.7 million, $38.0 million (10.0%) above the  
estimate of OBM. However, it was only the third month during FY 2016  
for the tax to come in above estimate. Prior to March, PIT revenue (net to  
GRF) was at least $12 million below estimate in five of the last six  
months.  
PIT revenue  
was above  
estimate in  
In March, employer withholdings were $22.6 million (3.0%) above  
March for only estimate, and refunds were $33.2 million (7.3%) lower than expected.  
Partly offsetting the March PIT surplus, payments from annual returns  
were $14.1 million (20.1%) below OBM's estimate.  
the third time  
all fiscal year.  
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  
4
payments, trust payments, payments associated with annual returns, and  
other miscellaneous payments. The performance of the tax is typically  
driven by employer withholdings, which is the largest component of gross  
collections. However, in February, March, and April, refunds are also a  
significant component of net collections due to the impact of the tax filing  
season, which has a deadline (generally) of April 15.  
Despite the pickup in March, monthly employer withholding  
growth remains at a slowed pace. H.B. 64, the budget act, reduced  
income tax rates for all brackets by 6.3%, for taxable years beginning in  
5
2
015. The effects of the changes enacted in H.B. 64 and S.B. 208 have  
limited growth in revenue from the tax; however, revenue growth has  
also been lower than estimates which take into account the policy  
changes. The chart below illustrates the slowing growth of monthly  
employer withholdings as well as the deficit relative to estimates in  
recent months (actual figures in the chart are not adjusted for the August  
change in withholding rates).  
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 January of the following year. Most estimated payments are  
made by high-income taxpayers.  
5 S.B. 208 enhanced the small business income deduction under the income tax for  
tax year 2015, resulting in lower estimated PIT revenues in January through June of 2016.  
Budget Footnotes  
6
April 2016  
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
%
%
%
%
%
%
%
Actual  
Estimate  
-1%  
For FY 2016 through March, PIT revenues totaled $5.7 billion,  
92.0 million (1.6%) below estimate. All components of gross collections  
$
have contributed to the FY 2016 shortfall relative to OBM estimates, with  
the exception of trust payments. Employer withholding, quarterly  
estimated payments, payments from annual returns, and other  
miscellaneous payments were all below estimate. FY 2016 revenues  
through March from each component of the PIT relative to estimates and  
to the corresponding period in FY 2015 are detailed in the table below.  
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  
Category  
Amount  
$ in millions)  
Percentage  
(%)  
Amount  
($ in millions)  
Percentage  
(%)  
(
Withholding  
-$35.7  
-$3.5  
-0.6%  
-0.5%  
8.5%  
$110.2  
-$27.9  
$6.8  
1.8%  
-3.7%  
25.8%  
-11.7%  
-13.2%  
0.8%  
Quarterly Estimated Payments  
Trust Payments  
$2.6  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
-$27.8  
-$10.7  
-$75.0  
$18.7  
-$1.7  
-13.1%  
-13.6%  
-1.0%  
1.5%  
-$24.4  
-$10.3  
$54.5  
Less Refunds  
$249.2  
$14.6  
25.5%  
5.5%  
Less LGF Distribution  
Income Tax Revenue  
-0.6%  
-1.6%  
-$92.0  
-$209.3  
-3.5%  
April 2016  
7
Budget Footnotes  
Ohio Legislative Service Commission  
Sales and Use Tax  
The sales and use tax bounced back above estimate in March after  
a shortfall in February for the first time in FY 2016 but only on the back  
of strong auto sales and use tax collections. Nonauto sales and use tax  
collections were below estimate in March, something that has happened  
in five out of the last seven months. Total combined GRF sales and use  
tax receipts for the month were $787.7 million, $3.6 million (0.5%) over  
estimate. For the fiscal year-to-date through March, sales and use tax  
revenues are $46.0 million (0.6%) above estimate, and 4.7% higher than  
revenues through the same period in FY 2015.  
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  
6
tax instead of the auto tax. In FY 2016 through March, the nonauto  
portion accounted for 87.1% of the total sales and use tax collected, while  
auto collections were only 12.9%.  
Nonauto Sales and Use Tax  
Throughout FY 2016, sales and use tax collections have kept state  
tax revenue in (or near) the black. That performance has been supported  
by strong auto sales and very strong nonauto tax collections in July and  
August of 2015 in which they were $54.5 million above estimate  
combined. Since then, nonauto sales and use tax collections were a  
combined $47.1 million below estimate.  
Nonauto sales  
and use tax  
revenues have  
been below  
The chart below shows FY 2016 nonauto sales and use tax  
monthly revenues relative to OBM estimates. The chart illustrates weaker  
than expected revenues since December. Only part of the lower receipts  
can be explained by Medicaid health insuring corporations, whose  
estimate in five  
out of the last  
seven months. collections usually make up around 10% of nonauto sales and use tax  
collections. This portion is generally correlated to Medicaid spending  
which has been lower than expected in 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
April 2016  
Ohio Legislative Service Commission  
Chart 3: Nonauto Sales and Use Tax Receipts in FY 2016  
(Variance from Estimates, in millions)  
$
$
40  
20  
$31.2  
$23.3  
$5.0  
$3.3  
$
0
-$1.8  
-$2.2  
-$6.2  
-$10.6  
-
$20  
$40  
-$34.5  
-
For FY 2016 through March, nonauto sales and use tax revenues  
were still $7.4 million (0.1%) above estimate, and 4.6% higher than the  
same period in FY 2015.  
Auto Sales and Use Tax  
The GRF received $133.0 million in revenue from the auto portion Auto sales and  
of the sales and use tax in March, $9.8 million (8.0%) more than estimated.  
It was the sixth out of the last eight months that the auto sales and use tax use tax  
revenue was higher than expected. For the fiscal year through March, revenue was  
revenue from this tax is $38.5 million (4.0%) above estimate, and 5.2% $38.5 million  
higher than during the same period in FY 2015. The chart below shows above estimate  
FY 2016 auto sales and use tax monthly revenues relative to OBM through March.  
estimates. The chart illustrates stronger than expected revenues from auto  
sales and use tax throughout the fiscal year.  
Chart 4: Auto Sales and Use Tax Receipts in FY 2016  
(
Variance from Estimates, in millions)  
$
$
16  
12  
$13.8  
$9.8  
$
$
$
8
4
0
$6.5  
$4.6  
$4.6  
$2.2  
-$0.6  
-$0.9  
-$1.4  
-$4  
April 2016  
9
Budget Footnotes  
Ohio Legislative Service Commission  
U.S. auto sales have been very strong recently, with an all-time  
record of total light vehicle sales set in calendar year 2015. Sales  
remained strong in January and February but slowed a bit in March  
nationwide. Sales of cars and light trucks were down in March from both  
February one month before and also March one year ago. Much of  
March's auto sales may be reflected in April's sales and use tax  
collections  
Foreign Insurance Tax  
On March 1, the foreign insurance tax had its second collection  
date of the fiscal year. Receipts from the tax during the month totaled  
$
109.4 million, which was $29.3 million (21.1%) below estimate.  
However, because of the collection date on the first of the month, the  
shortfall was mainly timing related. In February, foreign insurance tax  
revenue was $39.9 million above estimate, mostly from more early  
payments than expected. In February and March combined,  
$
160.2 million in revenue had been expected and $170.8 million was  
collected, resulting in a positive variance of $10.6 million for the  
two-month period. However, for FY 2016 through March, the foreign  
insurance tax is only $0.6 million (0.2%) above estimate.  
Cigarette and Other Tobacco Products Tax  
GRF receipts from the cigarette and other tobacco products tax  
were $79.5 million in March, $0.5 million (0.6%) above estimate. Through  
March, total FY 2016 tax receipts were $23.3 million (3.5%) above OBM  
estimates, and 26.7% 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 28% increase, which has led to a predictable  
increase in tax revenues. Of the $79.5 million in March revenue,  
Cigarette tax  
revenue was  
$
23.3 million  
above estimate  
through March.  
$
73.3 million (92.2%) was from cigarette sales, $5.7 million (7.2%) was  
from sales of other tobacco products, and $0.5 million (0.6%) was from  
7
the "floor tax." Floor tax collections have been $17.2 million during  
FY 2016 through March.  
7 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.  
Budget Footnotes  
10  
April 2016  
Ohio Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of March 2016  
(
$ in thousands)  
(
Actual based on OAKS reports run April 6, 2016)  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
Primary and Secondary Education  
Higher Education  
$312,138  
$308,774  
$3,365  
$1,003  
$1,975  
$6,343  
1.1%  
$185,914  
$6,481  
$184,911  
$4,506  
0.5%  
43.8%  
1.3%  
Other Education  
Total Education  
$504,534  
$498,191  
Medicaid  
$1,465,594  
$129,482  
$1,528,862  
$99,886  
-$63,268  
$29,597  
-$33,671  
-4.1%  
29.6%  
-2.1%  
Health and Human Services  
Total Welfare and Human Services  
$1,595,076  
$1,628,747  
Justice and Public Protection  
General Government  
$169,479  
$20,946  
$135,784  
$25,241  
$33,695  
-$4,295  
$29,400  
24.8%  
-17.0%  
18.3%  
Total Government Operations  
$190,425  
$161,025  
Property Tax Reimbursements  
Capital Outlay  
$131,393  
$0  
$55,723  
$0  
$75,670  
$0  
135.8%  
---  
Debt Service  
$155,726  
$287,119  
$165,750  
$221,472  
-$10,024  
$65,646  
-6.0%  
29.6%  
Total Other Expenditures  
Total Program Expenditures  
$2,577,153  
$2,509,435  
$67,717  
2.7%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$0  
$4,779  
$4,779  
$0  
$3,000  
$3,000  
$0  
$1,779  
$1,779  
---  
59.3%  
59.3%  
TOTAL GRF USES  
$2,581,932  
$2,512,435  
$69,496  
2.8%  
*
October 2015 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
April 2016  
11  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2016 as of March 31, 2016  
(
$ in thousands)  
(
Actual based on OAKS reports run April 6, 2016)  
Percent  
Change  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
FY 2015  
Primary and Secondary Education  
Higher Education  
$5,783,723  
$1,676,627  
$58,890  
$5,807,813  
-$24,090  
-0.4%  
-0.9%  
9.7%  
$5,651,344  
$1,618,779  
$45,695  
2.3%  
$1,691,456  
$53,672  
-$14,829  
$5,218  
3.6%  
28.9%  
2.8%  
Other Education  
Total Education  
$7,519,240  
$7,552,940  
-$33,701  
-0.4%  
$7,315,818  
Medicaid  
$13,667,513  
$1,024,862  
$14,692,375  
$14,218,434  
$1,079,357  
$15,297,791  
-$550,921  
-$54,495  
-$605,416  
-3.9%  
-5.0%  
-4.0%  
$11,720,518  
$1,028,250  
$12,748,768  
16.6%  
-0.3%  
15.2%  
Health and Human Services  
Total Welfare and Human Services  
Justice and Public Protection  
General Government  
$1,540,326  
$269,875  
$1,511,628  
$295,357  
$28,698  
-$25,481  
$3,216  
1.9%  
-8.6%  
0.2%  
$1,420,933  
$263,027  
8.4%  
2.6%  
7.5%  
Total Government Operations  
$1,810,201  
$1,806,985  
$1,683,960  
Property Tax Reimbursements  
Capital Outlay  
$1,027,931  
$0  
$960,751  
$0  
$67,180  
$0  
7.0%  
---  
$936,404  
$0  
9.8%  
---  
Debt Service  
$1,186,616  
$2,214,547  
$1,208,960  
$2,169,710  
-$22,344  
$44,836  
-1.8%  
2.1%  
$1,157,118  
$2,093,521  
2.5%  
5.8%  
Total Other Expenditures  
Total Program Expenditures  
$26,236,363  
$26,827,427  
-$591,064  
-2.2%  
$23,842,067  
10.0%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$425,500  
$406,003  
$831,503  
$425,500  
$378,031  
$803,531  
$0  
$27,972  
$27,972  
0.0%  
7.4%  
3.5%  
$0  
$587,835  
$587,835  
---  
-30.9%  
41.5%  
TOTAL GRF USES  
$27,067,866  
$27,630,958  
-$563,092  
-2.0%  
$24,429,902  
10.8%  
*
October 2015 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
12  
April 2016  
Ohio Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on April 6, 2016)  
Month of March 2016  
Year to Date Through March 2016  
Actual Estimate* Variance  
$16,229,506 $17,799,363 -$1,569,857  
$13,223,088 $13,779,558 -$556,470  
Department  
Medicaid  
Actual  
Estimate*  
Variance  
Percent  
Percent  
$1,731,391  
$1,417,595  
$313,797  
$2,251,387  
$1,480,759  
$770,629  
-$519,996  
-$63,164  
-$456,832  
-23.1%  
-4.3%  
-8.8%  
GRF  
-4.0%  
Non-GRF  
-59.3%  
$3,006,418  
$4,019,805 -$1,013,387 -25.2%  
Developmental Disabilities  
$197,067  
$41,878  
$217,861  
$41,057  
-$20,793  
$820  
-9.5%  
2.0%  
$1,792,234  
$379,221  
$1,892,862  
$373,291  
-$100,628  
$5,930  
-5.3%  
1.6%  
-7.0%  
GRF  
Non-GRF  
$155,190  
$176,803  
-$21,614  
-12.2%  
$1,413,013  
$1,519,571  
-$106,558  
Job and Family Services  
$17,070  
$5,493  
$19,248  
$6,463  
-$2,179  
-$970  
-11.3%  
-15.0%  
-9.5%  
$158,711  
$58,269  
$152,861  
$58,946  
$93,915  
$5,850  
-$677  
3.8%  
-1.1%  
6.9%  
GRF  
Non-GRF  
$11,577  
$12,786  
-$1,209  
$100,442  
$6,527  
Health  
GRF  
$509  
$284  
$225  
$500  
$263  
$238  
$9  
$22  
1.7%  
8.2%  
$4,704  
$2,603  
$2,101  
$5,443  
$2,597  
$2,845  
-$739 -13.6%  
$6 0.2%  
-$745 -26.2%  
Non-GRF  
-$13  
-5.5%  
Aging  
$3,312  
$309  
$2,123  
$255  
$1,189  
$54  
56.0%  
21.2%  
60.8%  
$18,849  
$2,935  
$19,673  
$2,501  
-$824  
$434  
-4.2%  
17.4%  
-7.3%  
GRF  
Non-GRF  
$3,003  
$1,868  
$1,135  
$15,914  
$17,172  
-$1,259  
Mental Health and Addiction  
$227  
$35  
$515  
$65  
-$288  
-$30  
-55.9%  
-46.1%  
-57.3%  
$3,432  
$1,396  
$2,036  
$4,466  
$1,542  
$2,924  
-$1,034 -23.2%  
-$145 -9.4%  
-$889 -30.4%  
GRF  
Non-GRF  
$192  
$450  
-$258  
Total GRF  
$1,465,594  
$483,983  
$1,528,862  
$962,773  
-$63,268  
-4.1%  
$13,667,513 $14,218,434  
$4,539,923 $5,656,233 -$1,116,310 -19.7%  
$18,207,436 $19,874,668 -$1,667,231 -8.4%  
-$550,921  
-3.9%  
Total Non-GRF  
-$478,790  
-49.7%  
Total All Funds  
$1,949,577  
$2,491,635  
-$542,058  
-21.8%  
*Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
April 2016  
13  
Budget Footnotes  
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 April 6, 2016)  
March Year to Date Through March 2016  
Estimate*  
(
Payment Category  
Managed Care  
Nursing Facilities  
DDD Services  
Hospitals  
Actual  
Variance  
-$81,853  
$2,072  
Percent  
-9.4%  
1.9%  
Actual  
Estimate*  
$7,918,198  
$1,061,785  
$1,829,288  
$2,386,286  
$844,805  
$868,854  
$245,214  
$350,972  
$333,603  
$212,835  
$225,675  
$125,553  
$2,641,287  
$830,314  
Variance  
-$408,850  
-$19,442  
-$82,262  
Percent  
-5.2%  
$793,577  
$113,407  
$193,065  
$81,981  
$86,758  
$80,837  
$27,240  
$35,983  
$41,841  
$17,578  
$27,275  
$9,514  
$875,430  
$111,335  
$213,458  
$557,389  
$87,745  
$76,259  
$24,835  
$34,872  
$37,822  
$17,297  
$27,451  
$12,757  
$333,750  
$81,236  
$7,509,348  
$1,042,343  
$1,747,026  
$1,389,218  
$797,308  
$598,973  
$238,130  
$349,346  
$345,516  
$204,823  
$223,886  
$95,125  
-1.8%  
-$20,393  
-$475,408  
-$987  
-9.6%  
-85.3%  
-1.1%  
6.0%  
-4.5%  
-$997,068 -41.8%  
-$47,497 -5.6%  
-$269,881 -31.1%  
Behavioral Health  
Administration  
Aging Waivers  
Prescription Drugs  
Medicare Buy-In  
Physicians  
$4,578  
$2,405  
9.7%  
-$7,084  
-$1,626  
$11,913  
-$8,012  
-$1,788  
-2.9%  
-0.5%  
3.6%  
$1,111  
3.2%  
$4,020  
10.6%  
1.6%  
$282  
-3.8%  
-0.8%  
Medicare Part D  
Home Care Waivers  
ACA Expansion  
All Other  
-$176  
-0.6%  
-25.4%  
-3.3%  
45.1%  
-21.8%  
-$3,243  
-$11,114  
$36,648  
-$542,058  
-$30,428 -24.2%  
$322,636  
$117,884  
$2,838,623  
$827,771  
$197,337  
-$2,543  
7.5%  
-0.3%  
-8.4%  
Total All Funds  
$1,949,577 $2,491,635  
$18,207,436 $19,874,668 -$1,667,231  
*
Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
14  
April 2016  
Ohio Legislative Service Commission  
EXPENDITURES  
Russ Keller, Economist, 614-644-1751  
Nicholas J. Blaine, Budget Analyst, 614-387-5418  
Overview  
Through March, GRF program expenditures were $26.24 billion,  
$
591.1 million below the estimate released by OBM in October 2015. GRF For the first  
transfers out were $831.5 million, $28.0 million above their year-to-date three quarters  
estimate. Including both program expenditures and transfers out, GRF  
of FY 2016, GRF  
uses totaled $27.07 billion for the first nine months of FY 2016, uses totaled  
$
563.1 million below estimate. Medicaid accounted for almost 98%  
$
$
27.07 billion,  
563.1 million  
(
Details on Medicaid expenditures are provided in the section that follows  
this overview.  
$550.9 million) of the total negative year-to-date variance in GRF uses.  
below  
Tables 3 and 4 show GRF uses for the month of March and for  
FY 2016 through March, respectively. For the month of March, GRF  
program expenditures totaled $2.58 billion, $67.7 million (2.7%) above  
estimate. Several program categories registered notable variances this  
month. The largest positive variance occurred in Property Tax  
Reimbursements ($75.7 million, 135.8%). Funds provided under this  
program category are primarily used to reimburse school districts and  
other local governments for losses incurred as a result of the 10% and 2.5%  
estimate.  
Medicaid  
accounted for  
"rollbacks" in real property taxes. It is not unusual to see monthly  
variances in this category as the timing of disbursements assumed in the almost 98% of  
estimate may be different than the timing of payment requests from  
the total  
county auditors. The total reimbursement payments based on the August  
negative year-  
015 property tax settlement, which were made during the first half of  
to-date  
2
FY 2016, were fairly close to estimate ($6.1 million or 0.7% below  
estimate). The reimbursement payments based on the February 2016 variance in GRF  
property tax settlement will be made through the end of June.  
uses.  
The Justice and Public Protection program category had the second  
largest positive monthly variance at $33.7 million, which changed the  
category's year-to-date variance from a negative $5.0 million at the end of  
February to a positive $28.7 million at the end of March. Three agencies  
that accounted for the vast majority of the category's March variance were:  
the Department of Rehabilitation and Correction (DRC, $24.0 million), the  
Public Defender Commission (PUB, $5.0 million), and the Court of Claims  
(CLA, $4.4 million). While timing was the main contributing factor behind  
the positive variances in DRC and PUB expenditures, CLA will finish the  
fiscal year above estimate.  
April 2016  
15  
Budget Footnotes  
Ohio Legislative Service Commission  
Expenditures from DRC's GRF appropriation items, 501405,  
Halfway House, and 501501, Community Residential Programs CBCF,  
totaled $21.1 million in March. The OBM estimate, however, anticipated  
large disbursements from these two items in the month of April but none  
from March. The variances in these two items should resolve themselves  
by the end of April. PUB's year-to-date expenditures were essentially on  
target with estimate ($497,000 below estimate), despite a $5.0 million  
positive variance in March.  
GRF appropriation item 015402, Wrongful Imprisonment  
Compensation, accounted for the CLA's positive variance. This item,  
which is used to compensate an individual who has been judged  
wrongfully imprisoned, does not normally receive direct appropriation  
from the main operating budget act. Therefore, the OBM estimate  
assumes no expenditures from item 015402. When a wrongful judgment  
is journalized, funds are transferred from the Controlling Board's  
appropriation item 911614, CB Emergency Purposes, into item 015402 for  
expenditures. Expenditures from item 015402 were $4.4 million in March  
and $5.6 million for FY 2016 through March.  
As reported in prior issues of Budget Footnotes, due mainly to  
timing issues, expenditures from the Health and Human Services  
program category were below estimates in several months. This trend  
was reversed in March. The category's expenditures posted a positive  
variance of $29.6 million (29.6%) in March, which reduced the category's  
negative year-to-date variance to $54.5 million.  
Medicaid and Debt Service were the two program categories that  
experienced notable negative variances in March. Medicaid's March  
expenditures added $63.3 million to the category's total negative year-to-  
date variance (see below for more details). GRF debt service payments  
were $10.0 million below their March estimate, increasing the category's  
negative year-to-date variance to $22.3 million (1.8%). Funds provided  
under this category are used to retire general obligation bonds issued by  
the state. Those bonds are backed by the full faith and credit of the state.  
The state is obligated to fully fund any required debt service payments.  
Medicaid  
Medicaid is primarily funded by the GRF but it also receives  
funding from various non-GRF funds. For the month of March, GRF  
Medicaid expenditures were $1.47 billion, $63.3 million (4.1%) below  
estimate. Non-GRF Medicaid expenditures were $484.0 million,  
$478.8 million (49.7%) below estimate. Across all funds, Medicaid  
expenditures were $1.95 billion in March, $542.1 million (21.8%) below  
Budget Footnotes  
16  
April 2016  
Ohio Legislative Service Commission  
estimate. Once again, the timing of the Hospital Care Assurance Program  
(
reported in the last issue of Budget Footnotes, the anticipated HCAP payment  
totaling $305.2 million for February did not occur as scheduled. The estimate  
HCAP) payment was a major contributor to March's non-GRF variance. As Delay in HCAP  
and UPL  
anticipated another $305.2 million in HCAP payment for March. This payments for  
payment did not occur as scheduled either. Under HCAP, Ohio makes hospitals  
subsidy payments to hospitals that provide uncompensated care to low  
contributed  
income and uninsured individuals at or below 100% of the federal poverty  
level. The timing of the Upper Payment Limit (UPL) for hospitals accounted $  
765.3 million  
for another $154.9 million of March's non-GRF variance. UPL allows the to the total  
state to direct supplemental payments up to the difference between the  
negative year-  
Medicare and Medicaid amounts to service providers. An approval from to-date  
the Center for Medicare and Medicaid Services (CMS) is required for the  
variance in non-  
HCAP and UPL payments. While the estimate anticipated the HCAP and  
UPL payments in February and March, the Ohio Department of Medicaid  
GRF (all-funds)  
ODM) is still in the process of waiting for CMS's approval. These payments Medicaid  
expenditures.  
(
will now likely be made at the end of the fiscal year.  
For the first three quarters of FY 2016, GRF Medicaid expenditures  
were $13.67 billion, $550.9 million (3.9%) below estimate. Non-GRF  
Medicaid expenditures were $4.54 billion, $1.12 billion (19.7%) below  
estimate. All-funds Medicaid expenditures were $18.21 billion,  
For the first  
three quarters  
of FY 2016, GRF  
Medicaid  
$
1.67 billion (8.4%) below estimate. 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.  
Table 5 shows the GRF and non-GRF portions of Medicaid  
expenditures  
were  
expenditures made by ODM and five other state agencies that assist ODM  
8
in administering Medicaid. For the first nine months of FY 2016, ODM's  
GRF expenditures were $13.22 billion, $556.5 million (4.0%) below  
estimate. Its non-GRF expenditures were $3.01 billion, $1.01 billion (25.2%)  
below estimate. Across all funds, ODM's expenditures of $16.23 billion  
were $1.57 billion (8.8%) below their year-to-date estimate. GRF Medicaid  
expenditures for the Department of Developmental Disabilities (DDD),  
$
550.9 million  
below estimate;  
non-GRF  
Medicaid  
the second largest agency within this program category, were $5.9 million expenditures  
1.6%) above their year-to-date estimate. DDD's non-GRF Medicaid  
(
were  
expenditures were $106.6 million (7.0%) below their year-to-date estimate.  
Together, ODM and DDD account for about 99% of the Medicaid  
expenditure total.  
$
1.12 billion  
below estimate.  
8 These five agencies are: Developmental Disabilities, Job and Family  
Services, Health, Aging, and Mental Health and Addiction Services.  
April 2016  
17  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 6 details all-funds Medicaid expenditures by payment  
category. As seen from the table, Hospitals had the largest negative  
year-to-date variance at $997.1 million (41.8%), of which $475.4 million  
occurred in the month of March. As indicated earlier, the originally  
scheduled HCAP payments totaling $610.4 million for February and  
March and UPL payment totaling $154.9 million for March will not be  
made until the end of FY 2016. HCAP and UPL payments are made with  
non-GRF funds. Another major factor behind the negative variance for  
Hospitals was lower than forecasted per-member per-month cost for an  
Aged, Blind, and Disabled (ABD) recipient in fee-for-service. A  
forecasted increase in such a per-member per-month cost was included  
in the estimate for the Hospitals payment category. So far, the forecasted  
increase has not yet materialized.  
Through  
March, all-  
funds Medicaid  
expenditures  
were  
$
1.67 billion  
below  
estimate.  
Managed Care had the second largest negative year-to-date  
variance at $408.9 million (5.2%). One main contributing factor was lower  
than expected new managed care rates. Managed care rates are adjusted  
at the beginning of each calendar year. The new rates, effective  
January 1, 2016, are lower than the ones assumed in the estimate,  
particularly those for the MyCare program. MyCare is designed to  
provide for a better integration and coordination of benefits and services  
for Ohioans who are eligible for both Medicare and Medicaid. Another  
main contributor was lower than expected ABD caseloads in managed  
care. As a result of lower than expected rates and caseloads, the variance  
in the Managed Care category is expected to grow through the end of the  
fiscal year.  
Although the Administration payment category posted a small  
positive variance of $4.6 million in March, this category had the third  
largest negative year-to-date variance at $269.9 million (31.1%). The  
estimate for this payment category includes the contract for ODM's new  
eligibility determination system, Ohio Benefits, and pass-through federal  
grants for electronic medical records. The cost for Ohio Benefits and the  
demand for the federal grants have both been lower than expected.  
Furthermore, a number of ODM information technology contracts have  
not yet been completed. Payments for those contracts will likely be made  
at the end of the fiscal year.  
Also worth noting, the All Other category had a positive variance  
of $36.6 million (45.1%) in March. This positive variance was the result of  
a Medicaid School Program settlement of $40.4 million from CMS due to  
prior year adjustments. It brought the year-to-date variance for this  
category to just $2.5 million (0.3%) below estimate.  
Budget Footnotes  
18  
April 2016  
Ohio Legislative Service Commission  
ACA Expansion and Medicare Buy-in were the only two payment  
categories with positive year-to-date variances. Through March, ACA  
Expansion expenditures of $2.84 billion were $197.3 million (7.5%) above  
estimate. This positive variance was due largely to higher than expected  
caseloads. ACA caseloads have been about 5% higher than anticipated.  
However, the caseload driven positive variance has been offset to some  
extent due to the lower Managed Care rates described above that are also  
applicable to individuals enrolled in the ACA expansion. As a result, this  
category's positive variance will likely continue to shrink through the end  
of the fiscal year. Furthermore, some individuals currently enrolled in 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.  
Year-to-date expenditures of $345.5 million from the Medicare Buy-  
in payment category were $11.9 million (3.6%) above estimate, of which  
$
4.0 million occurred in the month of March. The category's positive  
variance was due to a larger than anticipated increase in Medicare Part B  
premiums, effective January 1, 2016. The Medicare Buy-in program pays  
Medicare premiums, deductibles, and coinsurance for certain low-income  
Ohioans.  
April 2016  
19  
Budget Footnotes  
Ohio Legislative Service Commission  
ISSUE UPDATES  
Controlling Board Approves Purchase of Mosquito Traps  
Jacquelyn Schroeder, Budget Analyst, 614-466-3279  
On March 21, 2016, the Controlling Board approved a $100,000 request by the  
Ohio Department of Health (ODH) to purchase 500 mosquito traps during FY 2016. The  
traps will allow ODH to estimate mosquito populations in order to help inform local  
control efforts. This type of trap has been recommended to capture the Asian tiger  
mosquito, which has been identified by the Centers for Disease Control and Prevention  
(CDC) as a vector of the Zika, dengue, and chikungunya viruses.  
The ODH Laboratory has recently started Zika virus surveillance testing, but it is  
limited to cases where blood specimens have been collected within seven days of  
symptom onset. Specimens collected after seven days are sent to the CDC for testing  
since ODH's method of testing becomes less effective after that time period. Dengue  
specimens are sent to the CDC while chikungunya specimens can be sent to either the  
CDC or one of four other out-of-state laboratories that perform this testing. As of  
March 14, 2016, there have been eight confirmed cases of Zika virus in Ohio. For  
calendar year 2015, there were eight cases of dengue and nine cases of chikungunya. In  
all of these cases, the viruses were acquired outside of Ohio during travel.  
BWC Approves 8.6% Premium Rate Reduction for Private Employers  
Terry Steele, Senior Budget Analyst, 614-387-3319  
On March 16, 2016, the Bureau of Workers' Compensation (BWC) Board of  
Directors approved a rate reduction of 8.6% for the approximately 256,000 private  
employers that pay premiums to the State Insurance Fund. The rate reduction will  
begin on July 1, 2016, and is estimated to decrease premium collections by about  
$
113 million in FY 2017.  
Since FY 2011, BWC has approved a series of rate reductions and premium  
rebates for both public and private employers. In addition, BWC is providing private  
and public employers premium credits as part of the switch to a prospective billing  
system. In total, the rate reductions have amounted to just over $1.0 billion, lowering  
the average premium rate for private employers by approximately 21.5% and the public  
employer rate by approximately 29.6% since FY 2011. The premium rebates, issued in  
FY 2013 and FY 2015, totaled nearly $2.0 billion. The premium credits that are being  
issued to private and public employers are expected to amount to $1.27 billion once the  
transition is complete. Altogether, the rate reductions, coupled with the premium  
Budget Footnotes  
20  
April 2016  
Ohio Legislative Service Commission  
rebates and credits, will reduce the net position of the State Insurance Fund by  
$
4.25 billion (see table below). The current net position of the State Insurance Fund is  
approximately $8.9 billion.  
Cumulative Effect of Premium Adjustments on State Insurance Fund Since FY 2011  
Rate Reductions  
Premiums Collected Reduction  
$755,000,000  
Private Employer Rate Reductions FY 2011-FY 2015  
Public Employer Rate Reductions FY 2011-FY 2015  
Premium Collection Total  
$251,000,000  
$1,006,000,000  
Premium Rebates  
Premium Rebates Issued  
$965,635,975  
Premium Rebate FY 2013  
Premium Rebate FY 2015  
$1,013,171,352  
Premium Rebate Total  
$1,978,807,327  
Transition Credit for Prospective Billing  
Private Employer Transition Credits  
Public Employer Transition Credits  
Transition Credit Total (Estimated)  
Total Cumulative Net Effect  
Value of Credits (Estimated)  
$1,085,781,000  
$182,000,000  
$1,267,781,000  
$4,252,588,327  
ODMHAS Awards $9.1 million to Support Early Childhood Mental Health  
Nicholas J. Blaine, Budget Analyst, 614-387-5418  
On January 21, 2016, the Ohio Department of Mental Health and Addiction  
Services (ODMHAS) awarded $9.1 million for the Whole Child Matters: Early  
Childhood Mental Health Initiative to reduce expulsions in preschool and  
9
kindergarten. As part of the initiative, 75 counties received $7.6 million (as shown in  
the table below) to support up to 64 mental health consultants who coordinate with  
teachers, staff, and families of at-risk children in early learning programs such as  
childcare, Head Start, and preschool. Services provided by the consultants include  
onsite interventions, resources for parents, and professional development for teachers.  
The remaining $1.5 million is to be used for workforce development, training and  
infrastructure, centralized intake, and Race to the Top Early Childhood Mental Health  
initiatives.  
9 During the 2012-2013 school year in Ohio, 3,996 kindergarteners were suspended or  
expelled for fighting or disruptive behavior.  
April 2016  
21  
Budget Footnotes  
Ohio Legislative Service Commission  
Whole Child Matters: Early Childhood Mental Health Initiative Grants  
Recipient Organizations  
Counties Served  
Funding  
Athens, Gallia, Guernsey, Hocking, Jackson,  
Lawrence, Meigs, Morgan, Muskingum, Noble,  
Perry, Pike, Ross, Scioto, Vinton, Washington  
Hopewell Health Centers  
$1,227,113  
Clark, Coshocton, Crawford, Delaware, Fairfield,  
Fayette, Franklin, Hardin, Jefferson, Knox, Licking,  
Madison, Marion, Morrow, Pickaway, Union,  
Wyandot  
Nationwide Children's Hospital  
$983,569  
Mental Health and Recovery Services  
Board of Stark County  
Ashland, Belmont, Carroll, Harrison, Holmes,  
Monroe, Portage, Stark, Tuscarawas, Wayne  
$
924,719  
Alcohol, Drug Addiction and Mental Health  
Services Board of Cuyahoga County  
Cuyahoga, Lorain, Summit  
$755,870  
$724,037  
Adams, Brown, Clermont, Clinton, Hamilton,  
Highland, Warren  
Child Focus, Inc.  
A Renewed Mind  
Lucas, Seneca, Sandusky  
$723,391  
$453,139  
$374,604  
$315,749  
Children's Resource Center  
D&E Counseling Center  
Crossroads Lake County  
Defiance, Fulton, Henry, Williams, Wood  
Columbiana, Mahoning, Trumbull  
Ashtabula, Lake  
Mental Health and Recovery Board of Erie  
and Ottawa Counties  
Erie, Ottawa  
$265,387  
Catalyst Life Services  
Richland  
Geauga  
Butler  
$194,790  
$192,363  
$188,172  
Catholic Charities of Geauga County  
Catholic Charities of Southwestern Ohio  
Hancock County Board of Alcohol, Drug  
Addiction and Mental Health Services  
Hancock  
$109,087  
Samaritan Behavioral Health  
Consolidated Care, Inc.  
TOTAL  
Montgomery  
$107,707  
$94,115  
Champaign, Logan  
$7,633,812  
Budget Footnotes  
22  
April 2016  
Ohio Legislative Service Commission  
Controlling Board Approves $14.6 million in Straight A Fund Grants  
Alexandra Vitale, Budget Analyst, 614-466-6582  
On February 22, 2016, the Controlling Board approved 20 grants totaling  
14.6 million in the third round of Straight A Fund grant awards. The grants will  
$
support projects that aim to increase student achievement, reduce spending, utilize a  
greater share of resources in the classroom, or use a shared services delivery model.  
City, local, exempted village, and joint vocational school districts, educational service  
centers, community schools, STEM schools, institutions of higher education, and  
education consortia representing partnerships among these groups were eligible to  
apply for the grants. Of the 20 grants awarded, 13 were provided to education consortia  
of varying sizes and the remaining seven were provided to individual applicants.  
Overall, 86 educational entities are represented among the applicants selected for  
funding. Grant amounts range from about $69,000 to $1 million. Grant recipients were  
selected by an appointed nine-member board. To see the full list of grant awards and  
project descriptions, go to education.ohio.gov and search for "Straight A Fund." H.B. 64  
funds the program through a transfer from FY 2015 GRF surplus revenues, which are  
appropriated in Fund 5RB0 line item 200644, Straight A Fund, in the Ohio Department  
of Education's budget. The fourth round of grant awards is slated to be announced  
early in FY 2017 with $15 million available for distribution.  
Controlling Board Approves Grant Awards for Regional Workforce Training  
Adam Wefler, Budget Analyst, 614-466-0632  
On February 22, 2016, the Controlling Board approved the allocation of  
3 million in capital funds under the Ohio Department of Higher Education's (DHE)  
$
Regionally Aligned Priorities in Delivering Skills (RAPIDS) Program. RAPIDS grants  
provide funding for capital equipment and facilities used to train students and current  
workers for the specific workforce requirements of varying regions throughout the  
state. This round of grants was awarded to institutions in the Northwest, Southeast, and  
Southwest regions, with each region allocated a total of $1 million. A brief description  
of each region's grant recipients and activities are provided below.  
Northwest region. A collaborative of Northwest State Community College, the  
University of Toledo, Bowling Green State University, Owens Community College, and  
Rhodes State College will focus on education and training in computer network security  
for the manufacturing sector.  
Southeast region. The Southeast Ohio Oil & Gas Training Collaborative, a group  
composed of Washington State Community College, Zane State College, Belmont  
College, and Eastern Gateway Community College, will focus on curriculum  
development, career pathways, and developing strong business partnerships with the  
April 2016  
23  
Budget Footnotes  
Ohio Legislative Service Commission  
region's energy industry. A goal of this collaborative is to train more diesel mechanics,  
welders, drivers with commercial driver licenses, pipefitters, and other technical  
occupations for work within the sector.  
Southwest region. REDI Cincinnati, a group made up of Miami University, the  
University of Cincinnati, and Cincinnati State Technical and Community College, will  
use new equipment to educate and train students in 3D printing technology and other  
tools in advanced manufacturing.  
Overall, H.B. 497 of the 130th General Assembly appropriated $8.5 million in  
capital funding for the program to DHE, $2 million of which was already allocated by  
the Controlling Board in November 2015. Additional regions will receive awards as  
strategic plans are submitted and approved.  
OHFA Awards Almost $10 million in March for Affordable Housing and  
Homelessness Initiatives  
Tom Middleton, Budget Analyst, 614-728-4813  
On March 18, 2016, the Ohio Housing Finance Agency (OHFA) Board approved  
almost $9.8 million in funding to support affordable housing and homelessness  
initiatives across the state. The assistance flows through four separate OHFA programs,  
summarized in the table below.  
OHFA Affordable Housing and Homelessness Awards, March 2016  
Program  
Purpose  
Award Amount  
Housing Development  
Loan Program  
Loans to develop and rehabilitate affordable housing  
projects  
$
$
$
7,000,000  
1,050,000  
1,200,000  
$540,000  
Housing Development  
Assistance Program  
Financing assistance for affordable housing  
developments  
Capital Funding to End  
Homelessness Initiative assist their strategies of ending homelessness in Ohio  
One-time boost of funds to local continuums of care to  
Multifamily Lending  
Loans for the development of multifamily housing units  
Program  
TOTAL  
$9,790,000  
As a quasi-public state agency, OHFA does not directly receive appropriations  
from the General Assembly for its grant programs. However, the Ohio Development  
Services Agency (DSA) typically provides some grant funding to OHFA to help support  
these programs. The DSA funding derives from the Ohio Housing Trust Fund (Fund  
6
460), as well as federal HOME Investor Partnership Program funding under the  
HOME Program Fund (Fund 3V10). Additionally, the Housing Development Loan  
Program is backed by unclaimed funds held by the Ohio Department of Commerce.  
Budget Footnotes  
24  
April 2016  
Ohio Legislative Service Commission  
Controlling Board Approves $4.6 million in Additional Funding for  
DRC’s Community-Based Programs  
Joseph Rogers, Senior Budget Analyst, 614-644-9099  
On February 8, 2016, the Controlling Board approved a request by the  
Department of Rehabilitation and Correction (DRC) to transfer $4.6 million in FY 2016  
from GRF line item 501407, Community Nonresidential Programs, to fund a  
community-based substance use disorder treatment program and to add more beds in  
community-based correctional facilities (CBCFs).1  
0
The majority of the transfer, $4.1 million, was moved to GRF line item 501405,  
Halfway House, to comply with a provision enacted in H.B. 64 that requires DRC to  
establish and operate a community-based substance use disorder treatment program.  
1
1
Under the program, qualified prisoners will be transferred into a halfway house to  
receive intensive substance abuse treatment from a provider certified by ODMHAS.  
DRC plans to amend existing agreements with eight halfway houses to incorporate  
around 236 additional beds to house participating prisoners at a maximum cost of  
$
85 per day per prisoner. Those prisoners successfully completing treatment generally  
will be placed at a private residence on electronic monitoring at a maximum cost of  
16 per day per prisoner. Prisoners who do not satisfactorily complete the treatment  
$
program may be returned to prison if they have not served their entire prison terms.  
The remainder of the $4.6 million transfer, $514,355, was moved to GRF line item  
5
01501, CBCFs, to fund a total of 98 additional CBCF beds split between two locations:  
the Bennett Cooper Complex in Dayton and a county-owned facility in Painesville  
Lake County). These beds will be used for offenders who violate their terms of post-  
(
release control and would otherwise be returned to prison.  
10 CBCFs are state-funded, county-operated facilities used to house nonviolent felony  
offenders in lieu of keeping them in state prisons.  
11 A qualifying prisoner must: (1) be at least age 18, (2) be serving the last 12 months of a  
prison sentence based solely on a fourth or fifth degree nonviolent felony, (3) have no record of  
violent offenses, (4) show no signs of drug or alcohol withdrawal or the need for medical  
detoxification, (5) be physically and mentally capable of uninterrupted participation in the  
treatment, and (6) have a substance use disorder.  
April 2016  
25  
Budget Footnotes  
Ohio Legislative Service Commission  
Attorney General Announces Ohio Part of Multi-jurisdictional Settlements  
Involving Municipal Derivative Transactions  
Jessica Murphy, LSC Fellow, 614-466-9108  
On February 24, 2016, the Ohio Attorney General's Office announced that Ohio  
will receive a portion of the multi-jurisdictional settlement agreements with Natixis  
Funding Corp. and Société Générale over their fraudulent and anticompetitive conduct  
in marketing, sale, and placement of municipal bond derivative transactions. The two  
settlements, which total $56.7 million, were entered into with Ohio and 21 other  
participating attorneys general.12 As part of the settlements, Natixis will pay  
$
30.0 million and Société Générale will pay $26.8 million into settlement funds. They  
will also pay $1.5 million and $1.3 million, respectively, to the attorneys general.  
Municipal bond derivatives are contracts that governments and not-for-profit  
entities use to reinvest the proceeds of tax-exempt bond offerings until the funds are  
needed or to hedge against interest rate risk. The settlement funds will be used to  
provide restitution to affected governments and not-for-profit entities. The potential  
eligible claimants in Ohio include state government, 20 local governments, eight not-  
for-profits, and one quasi-governmental entity. The majority of the tax-exempt bond  
offerings that were affected were for low-income housing or senior housing projects.  
12 Joining Ohio in the settlements are the attorneys general of: Colorado, Connecticut,  
District of Columbia, Florida, Idaho, Illinois, Iowa, Kansas, Maryland, Michigan, Missouri,  
Montana, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, South  
Carolina, Tennessee, and Wisconsin.  
Budget Footnotes  
26  
April 2016  
Ohio Legislative Service Commission  
TRACKING THE ECONOMY  
Ruhaiza Ridzwan, Senior Economist, 614-387-0476  
Overview  
Parts of the U.S. and Ohio economies continued to grow in the first  
quarter, but other parts are soft. The U.S. economy added more jobs and  
weekly earnings rose slightly in March. The U.S. unemployment rate  
U.S.  
edged up slightly as more people sought jobs. In Ohio, payroll unemployment  
employment increased in February. Ohio's unemployment rates matched  
U.S. unemployment rates in January and February. Nationwide,  
consumer spending growth slowed in the first quarter through February.  
Light vehicle sales in March remained at a high level, but were down  
from the record pace in 2015 and earlier this year. Mining activity  
continues to drop. In Ohio, sales of homes were up in February, but  
nationally existing home sales were down. Inflation measured by the  
consumer price index remains low, but increases in prices other than food  
and energy have been trending higher.  
edged up in  
March.  
The National Economy  
Employment and Unemployment  
Total nonfarm payroll employment in the U.S. grew by 215,000 in  
March while the unemployment rate increased slightly to 5.0%. The  
unemployment rate was 4.9% in February. The labor force participation  
U.S. payroll  
employment  
rate increased from 62.9% in February to 63.0% in March, the highest grew by  
labor participation rate since March 2014. In March, the number of  
2
15,000 in  
unemployed individuals increased slightly to 8.0 million from 7.8 million  
in February. Chart 5 presents trends in U.S. employment and  
unemployment over the last ten years.  
March.  
April 2016  
27  
Budget Footnotes  
Ohio Legislative Service Commission  
Chart 5: U.S. Employment and Unemployment  
1
1
8
6
4
2
2%  
0%  
%
1
1
1
1
1
44.0  
40.0  
36.0  
32.0  
28.0  
%
%
%
0%  
Nonfarm Payroll Employment  
Unemployment Rate (right scale)  
Last month's job growth occurred mainly in retail trade (which  
added 48,000 jobs), construction (37,000 jobs), and healthcare (37,000  
jobs). Employment in manufacturing and mining decreased by 29,000  
and 12,000, respectively, in March. The average number of hours worked  
during the week by all employees on private nonfarm payrolls was  
unchanged in March. The manufacturing workweek declined slightly,  
and factory overtime remained at the same level for the fourth month in  
a row. The average workweek for production and nonsupervisory  
employees on private nonfarm payrolls was also unchanged. The  
average hourly earnings for all employees on private nonfarm payrolls  
increased by seven cents in March, and increased by 2.3% over the last  
year. The average hourly earnings of private-sector production and  
nonsupervisory employees also increased.  
U.S.  
manufacturing  
employment  
decreased by  
2
9,000 in  
March.  
Production  
According to the third estimate produced by the U.S. Bureau of  
Economic Analysis (BEA), the nation's inflation-adjusted gross domestic  
1
3
product (real GDP) grew faster than previously estimated in the last  
quarter of 2015, at a 1.4% annual rate, following 2.0% growth in the third  
quarter. The growth in real GDP was revised upward from the second  
estimate of 1.0%, primarily due to higher estimated personal  
consumption expenditures and exports. For the entire year of 2015, real  
GDP grew 2.4%, the same rate as in 2014.  
13 BEA issues three estimates of GDP annualized rates for each quarter  
advance, second, and third estimates); the estimates are produced roughly a  
(
month apart within the following quarter as more data become available.  
Budget Footnotes  
28  
April 2016  
Ohio Legislative Service Commission  
Industrial production (IP) fell 0.5% in February, as a gain in  
manufacturing was more than offset by declines in the mining and  
utilities indexes. Manufacturing output increased 0.1% in February,  
following a 0.4% gain in January. Capacity utilization for total industry  
decreased 0.4 percentage point in February compared to the preceding  
month. In April, the Federal Reserve revised its IP index and the related  
measures of capacity utilization to incorporate newly available output  
and price data. The revision showed that total IP is now estimated to have  
returned to its prerecession peak in November 2014, six months later than  
previously estimated.  
Manufacturing activity expanded in March for the first time in the  
last six months, based on a survey of purchasing managers reported by  
the Institute for Supply Management (ISM). New orders and production  
1
4
increased. ISM's purchasing managers index (PMI) increased from 49.5  
in February to 51.8 in March. The PMI remained above 43.2 for 82  
consecutive months, which ISM estimates signifies expansion in the  
overall economy during that period.  
Consumer Spending  
Both personal income and disposable personal income grew by  
0
0
.2% in February. The previous month, personal income increased by  
.5% while disposable personal income increased by 0.4%. In February,  
wages and salaries decreased, but personal saving edged up. Consumer  
spending grew slowly in February. Real personal consumption  
expenditures increased 0.2% in February, following little change in  
January. According to the BEA, total light vehicle sales in the U.S.  
decreased 5.5% from February to March, on a seasonally adjusted basis.  
First quarter sales decreased 4% from the strong fourth quarter pace, a  
1
5% annualized rate of decline.  
In March, all three of the University of Michigan's indexes, based  
on surveys of consumers that are conducted throughout the month, fell  
slightly compared to the previous month, but responses were fairly stable  
over the last three quarters. Consumers continued to feel optimistic about  
their personal finances and expected another year of modest economic  
growth. The consumer sentiment index fell from 91.7 in February to 91.0  
in March. The index was 2.2% lower than the 93.0 level registered in the  
14 The PMI is a composite index based on the diffusion indexes of five of  
the ISM indexes (new orders, production, employment, suppliers' deliveries, and  
inventories) with equal weights. A PMI reading above 50 indicates expansion of  
the manufacturing sector and a reading below 50 indicates contraction. The  
difference from 50 indicates how widespread the expansion or contraction is.  
April 2016  
29  
Budget Footnotes  
Ohio Legislative Service Commission  
preceding March. The current conditions index fell to 105.6 in March  
from 106.8 in February while the index of consumer expectations  
decreased from 81.9 in February to 81.5 in March.  
Home Sales  
The National Association of Realtors reported that sales of existing  
homes nationwide fell by 7.1% in February, on a seasonally adjusted  
basis. Sales of existing homes were up by 2.2% compared to  
February 2015. In the Midwest, existing home sales tumbled by 13.8%  
from January to February but were unchanged compared to the  
preceding February.  
The U.S. Department of Commerce reported that new residential  
sales increased to 512,000 units on a seasonally adjusted annualized basis  
in February. This exceeded the revised January rate of 502,000 but was  
below the previous February's estimate of 545,000. The median sales  
price of new houses sold in February was $301,400 while the average  
price was $348,900. The number of new houses for sale at the end of  
February was 240,000.  
Inflation  
The consumer price index for all urban consumers (CPI-U)  
declined by 0.2% in February, seasonally adjusted; it was unchanged in  
January. Compared to a year ago, the CPI-U increased 1.0% before  
seasonal adjustment. The decrease in February was primarily driven by a  
Inflation,  
measured by  
CPI-U, was  
6
.0% decline in the energy index, with the price of gasoline down 13.0%.  
1
.0% over the  
The food index increased by 0.2% in February, and the CPI core index (all  
items excluding food and energy) rose by 0.3% in February. Compared to  
year ending in  
February, while  
core inflation  
was 2.3%.  
1
2 months ago, the core index is up by 2.3%. According to data published  
by the U.S. Energy Information Administration (EIA), the national  
average retail price for a gallon of regular gasoline increased over the last  
seven consecutive weeks through April 4, but prices remained low  
compared to a year ago.  
The producer price index for final demand also declined 0.2% in  
February, seasonally adjusted. Final demand prices grew 0.1% in January  
and decreased 0.2% in December. The drop in February was linked to the  
0
.6% decline in prices for final demand goods, primarily tied to lower  
prices of gasoline. The index for final demand services was unchanged in  
February. The index for final demand less food, energy, and trade  
services rose 0.1% in February, following an increase of 0.2% in both  
January and December. Wholesale food prices fell 0.3% in February after  
increasing 1.0% in January. Wholesale energy prices continued to drop in  
February.  
Budget Footnotes  
30  
April 2016  
Ohio Legislative Service Commission  
The Ohio Economy  
Employment and Unemployment  
Ohio's economy continued to add more jobs in February while its  
unemployment rate was unchanged. Chart 6 below shows trends in the  
state's payroll employment and unemployment rate over the last ten  
years.  
Chart 6: Ohio Employment and Unemployment  
5.6  
5.5  
5.4  
5.3  
5.2  
5.1  
5.0  
12%  
10%  
8%  
6%  
4%  
2%  
0%  
Nonfarm Payroll Employment  
Unemployment Rate (right scale)  
From January to February, total nonagricultural wage and salary  
employment increased by 12,400 jobs, on a seasonally adjusted basis, or Ohio payroll  
0
.2%. The state's employment increased by 78,700, or 1.5%, compared to a  
employment  
grew by 12,400  
in February.  
year ago. Ohio's unemployment rate was 4.9% in February, unchanged  
from the preceding month but lower than a year ago; the preceding  
February, the unemployment rate was 5.1%. The number of Ohioans  
unemployed increased to 285,000 in February compared to 279,000 in  
January.  
February employment gains in private service-providing industries  
(+9,600) and government employment (+3,400) were slightly offset by job  
losses in goods-producing industries (-600). Most of the increase in  
service-providing industries was in trade, transportation, and utilities  
(
(
+5,800), educational and health services (+4,300), and financial activities  
+3,900). Job gains in federal and local government outweighed job losses  
in state government. Job losses in goods-producing industries occurred  
mainly in manufacturing.  
April 2016  
31  
Budget Footnotes  
Ohio Legislative Service Commission  
Total private employees' average weekly earnings decreased by  
5.70 in February but increased compared to a year earlier. In February,  
$
the average workweek for total private employees, at 33.9 hours, was  
slightly shorter than in January and also shorter than in the preceding  
February. From January to February, average hourly earnings decreased  
by ten cents but was still higher than the preceding February. In  
February, both average weekly earnings and the average workweek for  
Ohio's production employees in manufacturing industries were  
unchanged from January but increased from one year ago. Average  
weekly earnings in durable goods manufacturing increased in February,  
but average weekly earnings in nondurable goods manufacturing  
decreased.  
Personal Income  
Ohio personal  
income grew  
Ohio's personal income grew 0.9% in the fourth quarter of 2015,  
augmented by bonuses paid to union workers in auto industries.  
Nationwide, the average state personal income grew 0.8% in the fourth  
quarter of 2015, down from 1.0% in the third quarter. For the entire year  
of 2015, Ohio's personal income grew 3.1%, somewhat below the  
nationwide growth rate for the period of 4.4%. Ohio's growth ranked  
0
.9% in the  
fourth quarter  
of 2015.  
3
8th in the nation (from highest growth to lowest).  
Ohio Home Sales  
The Ohio Association of Realtors reported that the number of  
existing home sales in Ohio increased by 9% in February compared to a  
year earlier. In the year's first two months, existing home sales rose by  
1
0% compared to the first two months in 2015. The average sale price in  
January and February was 4% higher than a year ago.  
Budget Footnotes  
32  
April 2016