Budget Footnotes  
A NEWSLETTER OF THE OHIO LEGISLATIVE SERVICE COMMISSION  
JUNE 2016  
VOLUME 39, NUMBER 10  
STATUS OF THE GRF  
STATUS OF THE GRF  
Highlights...................................1  
Revenues ..................................2  
Expenditures............................14  
HIGHLIGHTS  
Jean J. Botomogno, Principal Economist, 614-644-7758  
ISSUE UPDATES  
GRF tax receipts in May were $386 million below the  
Adult Diploma Pilot Program....24  
estimate by the Office of Budget and Management (OBM). Academic Achievement and  
Student Growth Awards .......24  
Summer Meal Programs..........25  
Most of that negative variance was due to timing-related  
shortfalls for the domestic insurance and cigarette taxes Infant Mortality Reduction........26  
Financial Literacy Education  
which should reverse in June, though GRF tax revenue as a  
Grants ..................................26  
whole still is likely to finish FY 2016 below estimate. Innovative Transportation  
Project Grants ....................27  
However, heading into the final month, the spending side is  
Recycling and Litter Prevention  
providing some cushion to the state budget.  
and Management Grants .....28  
EPA Market Development  
Grants ..................................29  
Ohio's unemployment rate rose from 5.1% in March to  
5
by 13,600 (0.2%) from March to April, but was 71,900 (1.3%)  
higher than in April 2015.  
.2% in April, and nonfarm payroll employment declined  
TRACKING THE ECONOMY  
The National Economy ............30  
The Ohio Economy..................35  
Through May 2016, GRF sources totaled $31.27 billion:  
Revenue from the personal income tax was  
$231.0 million below estimate;  
Sales and use tax receipts were $14.5 million above  
estimate.  
Through May 2016, GRF uses totaled $33.19 billion:  
Legislative Service Commission  
Program expenditures were $327.1 million below  
estimate due primarily to Medicaid ($270.8 million)  
and Education ($116.1 million);  
7
7 South High Street, 9th Floor  
Columbus, Ohio 43215  
Telephone: 614-466-3615  
Those negative variances were partially offset by a  
timing-related positive variance in property tax  
reimbursements ($186.6 million).  
AVAILABLE ON OUR WEBSITE: WWW.LSC.OHIO.GOV  
CLICK ON 'PUBLICATIONS/BUDGET FOOTNOTES'  
Ohio Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of May 2016  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on June 3, 2016)  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
TAX REVENUE  
Auto Sales  
$112,981  
$131,800  
-$18,819  
-14.3%  
Nonauto Sales and Use  
Total Sales and Use Taxes  
$779,357  
$776,200  
$3,157  
0.4%  
$892,338  
$908,000  
-$15,662  
-1.7%  
Personal Income  
$578,705  
$517  
$608,400  
$0  
-$29,695  
$517  
-4.9%  
---  
Corporate Franchise  
Financial Institution  
Public Utility  
$27,235  
$26,106  
$24,329  
$26,651  
$255,392  
$0  
$25,550  
$30,600  
$25,700  
$32,200  
$265,100  
$0  
$1,685  
-$4,494  
-$1,371  
-$5,549  
-$9,708  
$0  
6.6%  
-14.7%  
-5.3%  
-17.2%  
-3.7%  
---  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
-$23,618  
$4,716  
$6  
-$13,300  
$251,500  
$0  
-$10,318  
-$246,784  
$6  
-77.6%  
-98.1%  
---  
$87,740  
$4,685  
$3,738  
$244  
$153,500  
$4,200  
$3,500  
$0  
-$65,760  
$485  
-42.8%  
11.6%  
6.8%  
---  
Alcoholic Beverage  
Liquor Gallonage  
$238  
Estate  
$244  
Total Tax Revenue  
$1,908,784  
$2,294,950  
-$386,166  
-16.8%  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$3  
$605  
$0  
$6,700  
$217  
$3  
-$6,095  
$247  
---  
-91.0%  
113.8%  
-84.5%  
$465  
Total Nontax Revenue  
$1,073  
$6,917  
-$5,845  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$14,033  
$14,033  
$0  
$0  
$0  
$0  
$14,033  
$14,033  
---  
---  
---  
TOTAL STATE SOURCES  
Federal Grants  
$1,923,890  
$900,421  
$2,301,867  
$875,945  
-$377,977  
$24,476  
-16.4%  
2.8%  
TOTAL GRF SOURCES  
$2,824,311  
$3,177,812  
-$353,501  
-11.1%  
*Estimates of the Office of Budget and Management as of September 2015, including revisions in February 2016.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
2
June 2016  
Ohio Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate  
FY 2016 as of May 31, 2016  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on June 3, 2016)  
Percent  
Change  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
FY 2015  
TAX REVENUE  
Auto Sales  
$1,222,599  
$8,266,653  
$9,489,252  
$1,215,200  
$8,259,600  
$9,474,800  
$7,399  
0.6%  
$1,191,658  
$7,953,324  
$9,144,982  
2.6%  
Nonauto Sales and Use  
$7,053  
0.1%  
3.9%  
Total Sales and Use Taxes  
$14,452  
0.2%  
3.8%  
Personal Income  
$7,023,358  
$32,886  
$187,215  
$101,513  
$316,795  
$60,712  
$1,252,264  
$5,598  
$7,254,400  
$0  
-$231,042  
$32,886  
$20,865  
-$3,687  
-$13,905  
-$7,188  
-$22,736  
$698  
-3.2%  
---  
$7,710,347  
$1,370  
-8.9%  
2300.5%  
22.1%  
4.7%  
Corporate Franchise  
Financial Institution  
Public Utility  
$166,350  
$105,200  
$330,700  
$67,900  
$1,275,000  
$4,900  
12.5%  
-3.5%  
-4.2%  
-10.6%  
-1.8%  
14.3%  
-2.8%  
-97.9%  
---  
$153,378  
$96,914  
$275,939  
$74,653  
$850,061  
$4,436  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
14.8%  
-18.7%  
47.3%  
26.2%  
3.2%  
$293,569  
$5,281  
$302,100  
$256,400  
$0  
-$8,531  
-$251,119  
$98  
$284,538  
$179,668  
$42  
-97.1%  
132.4%  
17.2%  
-2.9%  
$98  
$855,761  
$49,508  
$41,239  
$1,857  
$893,300  
$49,200  
$40,000  
$0  
-$37,539  
$308  
-4.2%  
0.6%  
3.1%  
---  
$730,349  
$50,976  
$39,510  
$3,028  
Alcoholic Beverage  
Liquor Gallonage  
$1,239  
4.4%  
Estate  
$1,857  
-38.7%  
0.6%  
Total Tax Revenue  
$19,716,907  
$20,220,250  
-$503,343  
-2.5%  
$19,600,190  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$26,199  
$56,095  
$46,202  
$128,496  
$16,650  
$50,787  
$35,971  
$103,408  
$9,549  
$5,308  
57.3%  
10.5%  
28.4%  
24.3%  
$17,927  
$57,015  
$35,699  
$110,641  
46.1%  
-1.6%  
29.4%  
16.1%  
$10,230  
$25,087  
Total Nontax Revenue  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$209,508  
$209,508  
$0  
$191,100  
$191,100  
$0  
$18,408  
$18,408  
---  
9.6%  
9.6%  
$0  
$24,272  
$24,272  
---  
763.2%  
763.2%  
TOTAL STATE SOURCES  
Federal Grants  
$20,054,910  
$11,212,207  
$31,267,117  
$20,514,758  
$11,410,659  
$31,925,417  
-$459,848  
-$198,452  
-$658,301  
-2.2%  
-1.7%  
-2.1%  
$19,735,103  
$8,624,179  
$28,359,282  
1.6%  
30.0%  
10.3%  
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.  
June 2016  
3
Budget Footnotes  
Ohio Legislative Service Commission  
REVENUES  
Thomas Kilbane, Economist, 614-728-3218  
Overview  
GRF tax revenue was far below estimates in May (-$386.2 million)  
but mostly due to timing-related shortfalls with the domestic insurance  
tax and the cigarette tax. However, even disregarding those, tax revenue  
still missed estimates (-$73.6 million) by nearly as much as in April,  
when the conclusion of income tax filing season left the personal income  
tax (PIT) with a large shortfall. The deficit in May was the result of  
continued shortfall from the PIT (-$29.7 million), a big miss from auto  
sales and use tax (-$18.8 million) for the second month in a row,  
commercial activity tax (CAT) revenue lower than expected from the  
final quarterly payment of the fiscal year (-$9.7 million), and  
underperformance from the public utility tax (-$4.5 million) and the  
natural gas tax (-$5.5 million) in their biggest collection month of the  
year.  
May GRF tax  
revenue was  
$
386.2 million  
below  
estimate.  
Tables 1 and 2 above, show GRF sources1 for May and for FY 2016  
through May, respectively. GRF sources received in FY 2016 through  
May were $658.3 million (2.1%) below the estimate released by OBM.2  
Total cumulative GRF sources have been below estimates since  
November, largely as the result of smaller than expected federal grants,3  
but in recent months tax revenue has contributed an increasing share of  
the deficit.  
The chart below illustrates the cumulative performance of total  
GRF sources relative to estimates in each month of the fiscal year, broken  
down by its largest components. In the discussion that follows, the entire  
negative variance for both the domestic insurance tax and the cigarette  
tax is treated as due to timing. We do not know for certain that the entire  
negative variance is actually due to timing, but we do know that nearly  
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 Federal grants are primarily related to the level of spending in the  
Medicaid program which has generally been lower than expected in FY 2016.  
GRF FY 2016 Medicaid expenditures were $270.8 million below estimate through  
May 2016.  
Budget Footnotes  
4
June 2016  
Ohio Legislative Service Commission  
all of it is. The portion of May's tax revenue shortfall which is thereby  
assumed to be attributable to timing is represented by the peach striped  
triangle. Any differences between the sum of federal grants and tax  
revenue (as represented by the shaded area) and total GRF sources (as  
represented by the blue dots and labeled in parentheses) can be attributed  
to other state sources (nontax revenue and transfers).  
Chart 1: Composition of GRF Source Cumulative  
Performance in FY 2016  
$
$
400  
200  
$317  
$34  
FY 2016 GRF  
sources were  
$7  
$
0
-$200  
-$400  
-$600  
-$800  
($97)  
$139)  
$
658 million  
(
($222)  
(
$254)  
(
below estimate  
through May.  
($314)  
$305)  
($396)  
(
$658)  
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May  
Federal Grants Tax Revenue Timing-Related Tax Shortfall Total GRF Sources  
With 11 of the 12 months in the fiscal year complete, it appears very  
likely that tax revenue will finish FY 2016 with a deficit. While the chart  
above shows that total tax revenue has only fallen behind estimates in  
recent months, the PIT, which makes up 36% of year-to-date tax revenue,  
has been below estimates most of the fiscal year. Through January, sales  
and use taxes, which constitute 48% of year-to-date tax revenue, offset  
most of the shortfall from the PIT. Since February however, sales and use  
tax revenue has slowed significantly, in part due to a slowdown in auto  
purchases.  
The chart below illustrates the year-to-date performance of each tax  
that had been expected to contribute over $100 million in revenue to the  
GRF through May. The portion of May's tax revenue shortfall which we  
have treated as attributable to timing is represented by the peach striped  
area of the bars. For the domestic insurance tax, almost all annual  
collections are expected in June, so the large timing-related deficit makes  
up nearly the entire tax performance thus far. On the other hand, the  
cigarette tax has a fairly consistent monthly collection schedule which has  
been running a surplus for the bulk of the fiscal year. Through April,  
cigarette tax revenue was $28 million over estimate, which is represented  
June 2016  
5
Budget Footnotes  
Ohio Legislative Service Commission  
in the chart by the peach bar above the x-axis. In May, the big timing-  
related shortfall dragged year-to-date revenue from the tax $38 million  
below estimates for the year, as represented by the peach striped bar  
below the x-axis. June's collections are expected to offset the temporary  
negative variance in May and will likely allow the tax to finish the fiscal  
year with a surplus.  
Chart 2: FY 2016 Tax Revenue Performance by Tax  
Sales  
and Use  
Public Kilowatt  
Utility -Hour  
Foreign Domestic  
PIT  
FIT  
21  
CAT  
Ins.  
Ins.  
Cigarette  
($38)  
$
50  
$
$15  
$
0
($4)  
($9)  
($14)  
($23)  
-
$50  
-$100  
-$150  
-$200  
-$250  
-$300  
Timing-Related Tax Shortfall  
($231)  
($251)  
Total GRF receipts in FY 2016 through May were $31.3 billion,  
including $19.7 billion from tax receipts. Tax revenue is 2.5% lower than  
estimated, but would be only 0.9% below estimate if the timing-related  
shortfalls mentioned were excluded.  
Compared to the same period in FY 2015, FY 2016 sources through  
May were $2.9 billion (10.3%) higher. Most of the increase is due to an  
accounting change related to Medicaid expenditures which pushed  
federal grants higher in FY 2016 by $2.6 billion (30.0%). 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 3F00), a non-GRF fund.  
FY 2016 GRF  
sources are  
1
0.3% higher  
than FY 2015  
through May.  
Despite the shortfall from estimates illustrated above, GRF tax  
receipts were up $116.7 million (0.6%) 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 strong consumer  
spending during the first half of FY 2016, while the growth in the CAT  
and cigarette tax revenue are more the result of policy changes. H.B. 64,  
Budget Footnotes  
6
June 2016  
Ohio Legislative Service Commission  
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. Despite healthy employment gains in the state  
during FY 2016, PIT revenue has fallen by $687.0 million from the same  
period in FY 2015, also due primarily to tax changes enacted in H.B. 64.  
Personal Income Tax  
The PIT continued its FY 2016 trend in May, coming in below  
estimate for the eighth time in the 11 months of the fiscal year to date.  
May GRF revenue from the PIT was $578.7 million, $29.7 million (4.9%)  
below the estimate of OBM.  
May revenue  
from the PIT  
was 5% below  
estimate.  
PIT revenue is comprised of gross collections, minus refunds and  
distributions to the Local Government Fund (LGF). Gross collections consist  
4
of employer withholdings, quarterly estimated 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. In May,  
employer withholdings were $49.3 million (7.1%) below estimate, and  
refunds were $11.0 million (9.4%) higher than expected. Partially offsetting  
these contributions to the May PIT deficit, payments from annual returns  
were $18.3 million (49.3%) above OBM's estimate.  
Monthly employer withholding growth remains at a slowed pace.  
H.B. 64 reduced income tax rates for all brackets by 6.3% for taxable years  
beginning in 2015. Due to this, the Department of Taxation announced a  
reduction in withholding rates of 3.1% for payroll ending on or after  
5
August 1, 2015. The effects of the changes enacted in H.B. 64 and S.B. 208  
have limited growth in withholding 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.  
June 2016  
7
Budget Footnotes  
Ohio Legislative Service Commission  
Chart 3: 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 May, PIT revenues totaled $7.0 billion,  
231.0 million (3.2%) below estimate. All components of gross collections  
Revenue from  
the PIT is  
$
have contributed to the FY 2016 shortfall relative to OBM estimates.  
Employer withholding, quarterly estimated payments, trust payments,  
payments from annual returns, and other miscellaneous payments were all  
below estimate. FY 2016 revenues through May from each component of the  
PIT relative to estimates and to the corresponding period in FY 2015 are  
detailed in the table below.  
$231 million  
below estimate  
through May.  
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  
Percentage  
Amount  
Percentage  
(
$ in millions)  
(%)  
($ in millions)  
(%)  
Withholding  
-$72.7  
-$21.2  
-$1.8  
-1.0%  
-2.5%  
-2.8%  
-13.4%  
-9.1%  
-2.2%  
1.3%  
$102.0  
-$73.9  
-$2.7  
1.4%  
-8.3%  
-4.2%  
-32.0%  
-7.8%  
-3.1%  
26.1%  
1.9%  
Quarterly Estimated Payments  
Trust Payments  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
-$103.8  
-$9.2  
-$315.7  
-$7.8  
-$208.7  
$24.4  
-$298.1  
$382.7  
$6.2  
Less Refunds  
Less LGF Distribution  
Income Tax Revenue  
-$2.0  
-0.6%  
-3.2%  
-$231.0  
-$687.0  
-8.9%  
Budget Footnotes  
8
June 2016  
Ohio Legislative Service Commission  
Sales and Use Tax  
May was the third out of the last four months that the sales and use  
tax was at least $15 million below estimate. Over the last two months, the  
main culprit has been slowing auto sales tax collections. Nonauto sales  
OBM's FY 2016  
and use tax collections were above estimate in May for the first time in estimate of  
four months. Total combined GRF sales and use tax receipts for the month  
were $892.3 million, $15.7 million (1.7%) below estimate. For the fiscal  
year-to-date through May, sales and use tax revenues remained above  
estimate, though just barely ($14.5 million, 0.2%).  
sales and use  
tax revenue  
was only 0.2%  
less than actual  
For analysis and forecasting, the sales and use tax is separated into  
two parts: auto and nonauto. Auto sales and use tax collections generally collections  
arise from the sale of motor vehicles, but auto taxes arising from leases are  
through May.  
paid at the lease signing and are mostly recorded under the nonauto tax  
6
instead of the auto tax. In FY 2016 through May, the nonauto portion  
accounted for 87% of the total sales and use tax collected, while auto  
collections were only 13%.  
Nonauto Sales and Use Tax  
For the first half of FY 2016, sales and use tax collections had been  
the star performer of GRF tax revenue. That performance was supported  
by strong auto sales through the spring and very strong nonauto tax  
collections in the first two months of the fiscal year. Since August,  
nonauto sales and use tax collections have been slightly below estimate.  
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, though a bit of a rebound the last  
three months. Only part of the slowdown can be explained by Medicaid  
health insuring corporations, whose collections usually make up around  
1
0% 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.  
June 2016  
9
Budget Footnotes  
Ohio Legislative Service Commission  
Chart 4: Nonauto Sales and Use Tax Receipts in FY 2016  
(Variance from Estimates, in millions)  
$
$
40  
20  
$31.2  
$23.3  
$5.0  
$3.3  
$3.2  
$
0
-$1.8 -$2.2  
-$3.5  
-$6.2  
-$10.6  
-
$20  
$40  
-$34.5  
-
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May  
Over the nine months beginning in September, nonauto sales and  
use tax revenues were a combined $47.5 million (0.7%) below estimate.  
For the fiscal year to date, they were still tracking estimates remarkably  
closely, just $7.1 million (0.1%) above estimate, and 3.9% higher than the  
same period in FY 2015.  
Auto sales and  
use tax  
Auto Sales and Use Tax  
The GRF received $113.0 million in revenue from the auto portion  
of the sales and use tax in May, $18.8 million (14.3%) less than expected.  
It was the second straight month that the auto sales and use tax revenue  
was more than $10 million below estimate. For the fiscal year through  
May, revenue from this tax is still $7.4 million (0.6%) above estimate  
though, and 2.6% higher than during the same period in FY 2015. The  
chart below shows FY 2016 auto sales and use tax monthly revenues  
relative to OBM estimates. The chart illustrates stronger than expected  
revenues from the auto sales and use tax through March but a steep drop  
off in the last two months.  
revenue was  
more than  
$10 million  
below estimate  
for the second  
straight month.  
Budget Footnotes  
10  
June 2016  
Ohio Legislative Service Commission  
Chart 5: Auto Sales and Use Tax Receipts in FY 2016  
Variance from Estimates, in millions)  
(
$13.8  
$
$
15  
10  
$9.8  
$6.5  
$4.6  
$4.6  
$
$
5
0
$2.2  
-$0.9  
-$0.6  
-$5  
-$1.4  
-$10  
-$15  
-$20  
-$25  
-$12.3  
-$18.8  
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May  
U.S. auto sales nationwide were very strong in 2015, setting an all-  
time record for total light vehicle sales during a calendar year. Sales have  
dropped a bit since the end of the calendar year, but overall have  
remained fairly strong through May. Given this, possible reasons for the  
recent shortfall in Ohio's auto sales and use tax include a disconnect  
between Ohio auto sales and the nationwide rate, a decrease in the  
average sale price of car purchases, or timing-related reasons due to tax  
collection dates, particularly around the Memorial Day holiday weekend.  
Commercial Activity Tax  
The fourth and final CAT payment of the fiscal year was due in  
May for quarterly return taxpayers. Collections paid to the GRF were  
$
255.4 million for the month, $9.7 million (3.7%) below estimate. For  
FY 2016 through May, GRF revenue from the CAT was $22.7 million  
CAT revenue is  
1.8%) below estimates. With only small collections expected in June, CAT likely to finish  
the fiscal year  
(
revenue is certain to finish the fiscal year in the red as well. After only the  
PIT, the CAT has contributed the second largest share of the FY 2016 GRF  
tax revenue deficit (excluding temporary timing-related deficits of the with a deficit.  
cigarette and domestic insurance taxes). Weakness in collections can be  
explained, at least in part, by economic softening at the end of calendar  
year 2015, particularly in the industrial production sector. In FY 2015, 26%  
of CAT revenue came from manufacturers.  
Insurance Taxes  
The domestic insurance tax is paid annually, and due to legislative  
changes made in H.B. 64, is now primarily expected in June rather than  
June 2016  
11  
Budget Footnotes  
Ohio Legislative Service Commission  
May. The change creates a large temporary deficit on the budget relative  
to estimates until the payments are made in June. So far in FY 2016,  
domestic insurance tax revenue to the GRF has been only $5.3 million,  
but the total was estimated to be $271 million by fiscal year end.  
The foreign insurance tax however, has mostly already been  
collected for FY 2016. At this point in the year, only small adjustments  
are made to settle accounts between the state and foreign insurers.  
Revenue from the tax during May was below estimate ($10.3 million),  
mostly as the result of more refunds granted than had been estimated.  
For the fiscal year, revenue is $8.5 million (2.8%) below estimate.  
Public Utility Excise and Natural Gas Distribution Taxes  
Both of these taxes are typically collected quarterly, with May  
being the final large collection month of the fiscal year. Both delivered  
May revenue below estimates. Revenue from the natural gas tax was  
$
26.7 million in May, $5.5 million (17.2%) below estimate. The natural gas  
tax base is the amount of gas consumed by end users. The shortfall likely  
reflects less, or more efficient, heating during the cold months of winter.  
Due to a lag between gas usage and tax payment by distributors, the  
effects of the winter heating season are usually reflected in the May  
quarterly payment. For FY 2016, revenue from the tax is $7.2 million  
May revenues  
from public  
utility and  
(10.6%) below estimate, and without much collection expected in June,  
natural gas  
taxes were  
both close to  
almost certain to end the year with a deficit.  
May revenue from the public utility excise tax was $26.1 million,  
$
4.5 million (14.7%) below estimate. The public utility excise tax is based  
on gross receipts for each utility company. Most of the revenue also  
comes from natural gas companies. Therefore, the cause of the shortfall is  
likely similar to the deficit from the natural gas production tax, but also  
aided, at least in part, by cheap gas prices throughout FY 2016. For the  
fiscal year to date, revenue from the tax is $3.7 million (3.5%) below  
estimate. As with the natural gas tax, there are minimal public utility tax  
collections expected in June, so the tax is almost certain to end the year  
with a deficit.  
1
5% below  
estimate.  
Cigarette and Other Tobacco Products Tax  
GRF receipts from the cigarette and other tobacco products tax  
were $87.7 million in May, $65.8 million below estimate due to a timing  
issue related to legislative changes which took effect for the first time in  
FY 2016. In previous years, May was the largest collection date for the  
tax, but after changes made in H.B. 64, the extra revenue will be collected  
in June instead. Prior to May, revenue from the tax on cigarette and other  
tobacco products had been running at or above estimate consistently  
Budget Footnotes  
12  
June 2016  
Ohio Legislative Service Commission  
throughout the fiscal year. Through April, the tax was 3.8% above  
estimate, and after June collections, will likely regain its surplus for  
FY 2016.  
Generally, cigarette tax receipts have exhibited 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 an  
increase in total revenues. Of the $87.7 million in May revenue,  
81.6 million (93.0%) was from cigarette sales, $6.0 million (6.8%) was  
$
from sales of other tobacco products, and $0.2 million (0.2%) was from the  
7
"
floor tax." Floor tax collections have been $17.4 million during FY 2016  
through May.  
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.  
June 2016  
13  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of May 2016  
(
$ in thousands)  
(
Actual based on OAKS reports run June 2, 2016)  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
Primary and Secondary Education  
Higher Education  
$552,456  
$603,264  
-$50,808  
-8.4%  
$185,157  
$2,563  
$185,931  
$3,336  
-$775  
-$773  
-0.4%  
-23.2%  
-6.6%  
Other Education  
Total Education  
$740,176  
$792,531  
-$52,355  
Medicaid  
$1,502,269  
$73,074  
$1,368,432  
$64,536  
$133,837  
$8,538  
9.8%  
13.2%  
9.9%  
Health and Human Services  
Total Welfare and Human Services  
$1,575,343  
$1,432,968  
$142,375  
Justice and Public Protection  
General Government  
$135,699  
$31,411  
$138,389  
$26,102  
-$2,691  
$5,309  
$2,618  
-1.9%  
20.3%  
1.6%  
Total Government Operations  
$167,109  
$164,491  
Property Tax Reimbursements  
Capital Outlay  
$310,496  
$0  
$443,963  
$0  
-$133,467  
$0  
-30.1%  
---  
Debt Service  
$11,319  
$321,815  
$11,319  
$455,282  
$0  
0.0%  
-29.3%  
Total Other Expenditures  
-$133,467  
Total Program Expenditures  
$2,804,444  
$2,845,273  
-$40,829  
-1.4%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$0  
$5,000  
$5,000  
$0  
$0  
$0  
$0  
$5,000  
$5,000  
---  
---  
---  
TOTAL GRF USES  
$2,809,444  
$2,845,273  
-$35,829  
-1.3%  
*
October 2015 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
14  
June 2016  
Ohio Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2016 as of May 31, 2016  
(
$ in thousands)  
(
Actual based on OAKS reports run June 2, 2016)  
Percent  
Change  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
FY 2015  
Primary and Secondary Education  
Higher Education  
$7,218,916  
$2,041,212  
$64,683  
$7,315,518  
-$96,603  
-1.3%  
-1.0%  
1.5%  
$6,921,648  
$1,968,908  
$50,720  
4.3%  
$2,061,627  
$63,757  
-$20,416  
$926  
3.7%  
27.5%  
4.3%  
Other Education  
Total Education  
$9,324,810  
$9,440,903  
-$116,093  
-1.2%  
$8,941,277  
Medicaid  
$16,605,855  
$1,209,679  
$17,815,534  
$16,876,692  
$1,289,143  
$18,165,836  
-$270,838  
-$79,464  
-$350,302  
-1.6%  
-6.2%  
-1.9%  
$13,996,525  
$1,199,377  
$15,195,902  
18.6%  
0.9%  
Health and Human Services  
Total Welfare and Human Services  
17.2%  
Justice and Public Protection  
General Government  
$1,845,125  
$335,729  
$1,843,194  
$359,288  
$1,932  
-$23,559  
-$21,627  
0.1%  
-6.6%  
-1.0%  
$1,721,963  
$319,688  
7.2%  
5.0%  
6.8%  
Total Government Operations  
$2,180,855  
$2,202,482  
$2,041,652  
Property Tax Reimbursements  
Capital Outlay  
$1,758,462  
$0  
$1,571,891  
$0  
$186,571  
$0  
11.9%  
---  
$1,586,289  
$0  
10.9%  
---  
Debt Service  
$1,276,811  
$3,035,273  
$1,302,427  
$2,874,318  
-$25,616  
$160,955  
-2.0%  
5.6%  
$1,238,783  
$2,825,072  
3.1%  
7.4%  
Total Other Expenditures  
Total Program Expenditures  
$32,356,471  
$32,683,538  
-$327,067  
-1.0%  
$29,003,903  
11.6%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$425,500  
$411,027  
$836,527  
$425,500  
$382,431  
$807,931  
$0  
$28,596  
$28,596  
0.0%  
7.5%  
3.5%  
$0  
$625,262  
$625,262  
---  
-34.3%  
33.8%  
TOTAL GRF USES  
$33,192,998  
$33,491,469  
-$298,471  
-0.9%  
$29,629,165  
12.0%  
*
October 2015 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
June 2016  
15  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on June 6, 2016)  
Month of May 2016  
Year to Date Through May 2016  
Estimate* Variance  
$19,871,371 $21,967,044 -$2,095,674  
$16,061,576 $16,344,037 -$282,462  
Department  
Medicaid  
Actual  
Estimate*  
Variance  
Percent  
Actual  
Percent  
$1,944,110  
$1,452,072  
$492,038  
$2,200,924  
$1,320,270  
$880,655  
-$256,814  
$131,803  
-$388,617  
-11.7%  
10.0%  
-44.1%  
-9.5%  
GRF  
-1.7%  
Non-GRF  
$3,809,795  
$5,623,007 -$1,813,212 -32.2%  
Developmental Disabilities  
$214,088  
$43,043  
$235,968  
$41,057  
-$21,880  
$1,985  
-9.3%  
4.8%  
$2,198,892  
$466,294  
$2,344,962  
$454,659  
-$146,070  
$11,635  
-6.2%  
2.6%  
-8.3%  
GRF  
Non-GRF  
$171,045  
$194,911  
-$23,866  
-12.2%  
$1,732,597  
$1,890,303  
-$157,705  
Job and Family Services  
$17,915  
$6,378  
$18,420  
$6,522  
-$504  
-$144  
-$360  
-2.7%  
-2.2%  
-3.0%  
$190,932  
$69,528  
$189,617  
$70,191  
$1,316  
-$663  
0.7%  
-0.9%  
1.7%  
GRF  
Non-GRF  
$11,537  
$11,897  
$121,404  
$119,426  
$1,978  
Health  
GRF  
$464  
$323  
$141  
$500  
$263  
$238  
-$36  
$60  
-7.2%  
23.0%  
-40.6%  
$5,698  
$3,228  
$2,469  
$6,622  
$3,123  
$3,500  
-$924 -14.0%  
$106 3.4%  
-$1,030 -29.4%  
Non-GRF  
-$97  
Aging  
$3,084  
$323  
$2,123  
$255  
$961  
$68  
45.3%  
26.7%  
47.8%  
$23,203  
$3,562  
$23,919  
$3,011  
-$716  
$551  
-3.0%  
18.3%  
-6.1%  
GRF  
Non-GRF  
$2,761  
$1,868  
$893  
$19,641  
$20,908  
-$1,267  
Mental Health and Addiction  
$1,023  
$129  
$915  
$65  
$108  
$64  
11.8%  
99.2%  
5.1%  
$4,762  
$1,666  
$3,096  
$5,796  
$1,672  
$4,124  
-$1,034 -17.8%  
-$6 -0.4%  
-$1,028 -24.9%  
GRF  
Non-GRF  
$893  
$850  
$43  
Total GRF  
$1,502,269  
$678,415  
$1,368,432  
$1,090,418  
$133,837  
-$412,003  
9.8%  
$16,605,855 $16,876,692  
$5,689,003 $7,661,268 -$1,972,265 -25.7%  
$22,294,858 $24,537,960 -$2,243,102 -9.1%  
-$270,838  
-1.6%  
Total Non-GRF  
-37.8%  
Total All Funds  
$2,180,684  
$2,458,850  
-$278,166  
-11.3%  
*Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
16  
June 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 June 6, 2016)  
May Year to Date Through May 2016  
Estimate*  
(
Payment Category  
Managed Care  
Nursing Facilities  
DDD Services  
Hospitals  
Actual  
Variance  
-$79,277  
$1,441  
Percent  
-8.9%  
1.2%  
Actual  
Estimate*  
$9,683,917  
$1,297,748  
$2,266,020  
Variance  
-$554,810  
-$18,480  
-$124,820  
Percent  
-5.7%  
$814,470  
$117,181  
$211,615  
$255,967  
$110,169  
$69,923  
$28,462  
$42,893  
$42,564  
$20,129  
$27,154  
$11,879  
$330,956  
$97,322  
$893,747  
$115,740  
$224,284  
$428,694  
$113,194  
$76,372  
$32,672  
$43,877  
$38,008  
$20,398  
$27,536  
$16,099  
$321,093  
$107,136  
$9,129,106  
$1,279,269  
$2,141,200  
$1,717,207  
$992,910  
$745,184  
$294,983  
$428,139  
$430,190  
$241,922  
$278,354  
$116,489  
$3,495,317  
$1,004,587  
-1.4%  
-$12,668  
-$172,727  
-$3,025  
-$6,449  
-$4,210  
-$984  
-5.6%  
-40.3%  
-2.7%  
-8.4%  
-12.9%  
-2.2%  
12.0%  
-1.3%  
-1.4%  
-26.2%  
3.1%  
-5.5%  
$3,067,160 -$1,349,953 -44.0%  
Behavioral Health  
Administration  
Aging Waivers  
Prescription Drugs  
Medicare Buy-In  
Physicians  
$1,049,323  
$1,019,609  
$303,198  
$430,882  
$409,526  
$250,116  
$280,705  
$154,478  
$3,301,465  
$1,023,814  
-$56,413  
-5.4%  
-$274,425 -26.9%  
-$8,215  
-$2,743  
$20,665  
-$8,193  
-$2,351  
-2.7%  
-0.6%  
5.0%  
$4,556  
-$269  
-3.3%  
-0.8%  
Medicare Part D  
Home Care Waivers  
ACA Expansion  
All Other  
-$382  
-$4,220  
$9,864  
-$37,989 -24.6%  
$193,852  
-$19,227  
5.9%  
-1.9%  
-9.1%  
-$9,814  
-$278,166  
-9.2%  
-11.3%  
Total All Funds  
$2,180,684 $2,458,850  
$22,294,858 $24,537,960 -$2,243,102  
*
Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
June 2016  
17  
Budget Footnotes  
Ohio Legislative Service Commission  
EXPENDITURES  
Russ Keller, Senior Economist, 614-644-1751  
Nicholas J. Blaine, Budget Analyst, 614-387-5418  
Overview  
Through May, FY 2016 GRF program expenditures were  
32.36 billion, $327.1 million below the estimate released by OBM in  
For the first  
1 months of  
$
1
October 2015. GRF transfers out were $836.5 million, $28.6 million above  
FY 2016, GRF  
uses totaled  
8
estimate. Including both program expenditures and transfers out, GRF  
uses were $33.19 billion, $298.5 million below estimate. Tables 3 and 4  
show GRF uses for the month of May and for FY 2016 through May,  
respectively.  
$
$
33.19 billion,  
298.5 million  
Medicaid continued to be the program category that had the  
largest negative year-to-date variance. Through May, GRF Medicaid was  
270.8 million below estimate. Primary and Secondary Education had the  
below  
estimate.  
$
second largest negative year-to-date variance at $96.6 million, followed  
by Health and Human Service ($79.5 million), Debt Service  
($25.6 million), General Government ($23.6 million), and Higher  
Education ($20.4 million). These negative variances were partially offset  
by a timing-related positive variance of $186.6 million in Property Tax  
Reimbursements.  
Medicaid  
As reported in prior issues of Budget Footnotes, property tax  
reimbursement funds were requested and disbursed sooner than was  
anticipated in the OBM estimate. As a result, expenditures from the  
Property Tax Reimbursements program category were $252.9 million  
above estimate in April and $133.5 million below estimate in May. As of  
the end of May, Hamilton County is the only county that had not yet  
received its full reimbursement. The June reimbursement payment is  
expected to be much lower than the $274.6 million estimate for the  
month, which should completely resolve the timing-driven positive  
accounted for  
almost 91% of  
the total  
negative year-  
to-date  
variance in GRF  
uses.  
8 The positive variance in the Transfers Out category was primarily due to  
cash transfers made from the GRF to the Managed Care Performance Payment  
Fund (Fund 5KW0) pursuant to section 327.80 of H.B. 64. The Ohio Department  
of Medicaid is to withhold a percentage of each premium payment it pays to a  
managed care organization for a MyCare Ohio program participant for  
performance payments in order to improve access to and quality of care and  
services for individuals who are eligible for both Medicare and Medicaid. The  
withheld funds are transferred from the GRF to Fund 5KW0 for performance  
payments. The appropriation for GRF appropriation item 651525,  
Medicaid/Health Care Services, is reduced by the transferred amount.  
Budget Footnotes  
18  
June 2016  
Ohio Legislative Service Commission  
variance in this program category. The Property Tax Reimbursements  
program category is expected to finish the fiscal year with a modest  
negative variance.  
The remainder of this report will provide more details on Medicaid  
and the above mentioned program categories that had significant negative  
year-to-date variances.  
Medicaid  
Medicaid is primarily funded by the GRF, but 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 first  
1 months of  
1
FY 2016, GRF  
Medicaid  
expenditures  
were  
Table 5 shows the GRF and non-GRF portions of Medicaid  
expenditures made by the Ohio Department of Medicaid (ODM) and five  
9
other state agencies that assist ODM in administering Medicaid. As  
indicated earlier, year-to-date GRF Medicaid expenditures were below  
estimate by $270.8 million (1.6%). This negative variance is expected to  
$
270.8 million  
increase significantly in June, the last month of FY 2016. Due to a delay in below  
obtaining federal approval of the state's hospital assessment plan, certain  
estimate; non-  
Medicaid expenditures that were originally planned to be paid with  
hospital assessment fees, which are deposited into non-GRF funds, were  
paid from the GRF in April and May. As a result, GRF Medicaid was  
GRF Medicaid  
expenditures  
above estimate in April ($146.3 million) and, again, in May were  
$133.8 million), which reduced GRF Medicaid's negative year-to-date  
(
$
1.97 billion  
variance from $550.9 million at the end of March to $270.8 million at the  
end of May. This temporary GRF "substitution" effect will be reversed in  
June, the last month of FY 2016.  
below  
estimate.  
Non-GRF Medicaid expenditures were $1.97 billion below their  
year-to-date estimate. Approximately $1.06 billion of this total was due to  
a delay in making certain payments for hospitals (see below for more  
details on the variance in the Hospitals payment category). Across all  
funds, year-to-date Medicaid expenditures were $2.24 billion below  
estimate. ODM, the largest agency within the Medicaid category,  
accounted for 93.4% of the total negative year-to-date variance. ODM's  
GRF and non-GRF Medicaid expenditures were below estimates by  
$
282.5 million and $1.81 billion, respectively. The Department of  
Developmental Disabilities (DDD), the second largest agency within the  
9 These five agencies are: Developmental Disabilities, Job and Family  
Services, Health, Aging, and Mental Health and Addiction Services.  
June 2016  
19  
Budget Footnotes  
Ohio Legislative Service Commission  
Medicaid program category, registered a positive year-to-date variance  
of $11.6 million in GRF Medicaid but a negative year-to-date variance of  
157.7 million in non-GRF Medicaid. Together, ODM and DDD account  
$
Through May,  
all-funds  
for about 99% of total Medicaid expenditures.  
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 $1.35 billion (44.0%), of which $172.7 million  
occurred in the month of May. As reported in prior issues of Budget  
Footnotes, there was a delay in obtaining federal approval of the state's  
Upper Payment Limit (UPL) payment plan for hospitals. UPL allows the  
state to direct supplemental payments up to the difference between the  
Medicare and Medicaid amounts to service providers. The spending  
estimate assumed UPL payments of $154.9 million each for the month of  
March and April and another $309.8 million for the month of May.  
Through the end of May, only $167.7 million was disbursed. In other  
words, the timing of UPL payments accounted for $451.9 million of the  
total negative year-to-date variance in the Hospitals payment category.  
Similarly, federal approval is required for making payments to hospitals  
through the Hospital Care Assurance Program (HCAP). This approval  
was also processed later than expected. Under HCAP, the state makes  
subsidy payments to hospitals that provide uncompensated care to  
low-income and uninsured individuals at or below 100% of the federal  
poverty level. As of the end of May, the originally planned HCAP  
payments totaling $610.7 million for February and March had not yet  
occurred. The remaining UPL and HCAP payments, which are made  
with non-GRF funds, will be made in June. Finally, another contributing  
factor behind the negative variance in Hospitals was lower than  
forecasted per-member per-month cost for an Aged, Blind, and Disabled  
Medicaid  
expenditures  
were  
$
2.24 billion  
below  
estimate, of  
which  
$
1.06 billion  
was due to  
timing of UPL  
and HCAP  
payments for  
hospitals.  
(
member per-month cost was included in the estimate for the Hospitals  
payment category. This forecasted increase has not materialized.  
ABD) recipient in fee-for-service. A forecasted increase in the per-  
Managed Care had the second largest negative year-to-date  
variance at $554.8 million (5.7%). The 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 Ohio program. MyCare Ohio 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 major contributor was lower than expected ABD  
caseloads in managed care.  
Budget Footnotes  
20  
June 2016  
Ohio Legislative Service Commission  
The Administration payment category had the third largest  
negative year-to-date variance at $274.4 million (26.9%). 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 are being completed  
more slowly than originally anticipated.  
ACA Expansion and Medicare Buy-in were the only two payment  
categories with positive year-to-date variances. Through May, ACA Through May,  
Expansion expenditures of $3.50 billion were $193.9 million (5.9%) above  
estimate. This positive variance was due largely to higher than expected  
caseloads. ACA Expansion caseloads have been about 4% 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 may shrink  
somewhat in the last month of the fiscal year.  
all-funds ACA  
Expansion was  
$
193.9 million  
above  
estimate.  
Year-to-date expenditures of $430.2 million from the Medicare Buy-  
in payment category were $20.7 million (5.0%) above estimate, of which  
$
4.6 million occurred in the month of May. 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.  
Primary and Secondary Education  
GRF expenditures from the Primary and Secondary Education  
program category were $50.8 million (8.4%) below estimate in May, which  
increased the category's negative year-to-date variance to $96.6 million  
(
is included in this program category. GRF appropriation item 200550,  
Foundation Funding, had the largest negative year-to-date variance at  
1.3%). The Ohio Department of Education (ODE) is the only agency that  
$
48.8 million. Item 200550 is the main funding source of school foundation  
payments. For FY 2016, this item also includes an earmarked funding of  
40 million for additional state aid for special education students  
$
exceeding certain specified catastrophic cost thresholds. This funding has  
not yet been disbursed due to a delay in processing relevant data.  
Payments will be made either in June or funds will be encumbered for  
disbursement in FY 2017.  
June 2016  
21  
Budget Footnotes  
Ohio Legislative Service Commission  
Item 200437, Student Assessment, had the second largest negative  
year-to-date variance at $19.7 million, followed by item 200540, Special  
Education Enhancements, at $10.1 million and 200408, Early Childhood  
Education, at $8.2 million. These negative year-to-date variances were  
also largely due to timing issues and are expected to narrow somewhat  
in the last month of FY 2016.  
Health and Human Services  
GRF expenditures from the Health and Human Services program  
category were $73.1 million in May, $8.5 million (13.2%) above estimate.  
However, the category's year-to-date expenditures of $1.21 billion were  
$
79.5 million (6.2%) below estimate. Of this total, $30.1 million occurred  
in the Ohio Department of Job and Family Services (ODJFS). The Ohio  
Department of Mental Health and Addiction Services (ODMHAS) and  
the Ohio Department of Health (ODH) contributed another $27.6 million  
and $14.2 million, respectively, to the total. Expenditures from the  
majority of GRF appropriation items within these three agencies were  
below their year-to-date estimates. Prior issues of OBM's Monthly  
Financial Report indicated various timing issues that accounted for  
significant portions of the negative variances in these agencies.  
Within the ODJFS budget, items that had the largest negative  
year-to-date variances were item 600445, Unemployment Insurance  
Administration ($6.7 million), item 600416, Information Technology  
Projects ($6.1 million), item 600321, Program Support ($4.5 million), and  
item 600528, Adoption Services ($4.3 million). Lower than expected  
disbursements from prior year encumbrances also contributed to the  
negative variance in items 600416 and 600321.  
Item 336423, Addiction Services Partnership with Corrections,  
accounted for $14.8 million of the total negative year-to-date variance in  
the ODMHAS budget. Item 336504, Community Innovations, accounted  
for another $4.7 million. Items 336423 and 336504 were newly created in  
H.B. 64, the current biennium's budget act. The implementation of these  
two new initiatives was slower than originally anticipated. Item 336423  
was appropriated a total of $27.4 million for FY 2016 while item 336504  
was appropriated a little under $9.3 million for FY 2016.  
The two items that had the largest negative year-to-date variances  
within the ODH budget were item 440459, Help Me Grow ($3.4 million),  
and item 440444, AIDS Prevention and Treatment ($2.7 million).  
Budget Footnotes  
22  
June 2016  
Ohio Legislative Service Commission  
Debt Service, General Government, and Higher Education  
GRF debt service payments for the month of May totaled  
11.3 million, on par with the OBM estimate. For the year to date, GRF  
$
debt service payments were $1.28 billion, $25.6 million (2.0%) below  
estimate. This variance was primarily due to continued low interest rates.  
GRF expenditures from the General Government program category  
were $31.4 million in May, $5.3 million (20.3%) above estimate. This  
category's year-to-date expenditures of $335.7 million, however, were  
$
23.6 million (6.6%) below estimate. This program category includes  
executive agencies that are not included in other program categories, four  
1
0
out of the five statewide elected offices, and all legislative agencies. Year-  
to-date expenditures were below estimates for the majority of these  
agencies. The two agencies that had the largest negative year-to-date  
variances are the Development Services Agency ($6.6 million) and the  
Environmental Protection Agency ($3.2 million).  
GRF expenditures from the Higher Education program category  
were $185.2 million in May, $775,000 (0.4%) below estimate. The  
Department of Higher Education is the only agency that is included in this  
program category. The category's year-to-date expenditures were  
$
2.04 billion, $20.4 million (1.0%) below estimate. The majority of this  
variance occurred in student scholarship and financial aid appropriation  
items as the demand for and disbursement timing of these scholarships  
and financial aid grants may vary from estimates. Item 235599, National  
Guard Scholarship Program, had the largest negative year-to-date  
variance at $6.6 million, followed by item 235563, Ohio College  
Opportunity Grant, at $4.8 million and item 235591, Co-op Internship  
Program, at $2.1 million.  
10 The offices of the Governor, Secretary of State, Treasurer, and Auditor  
of State are included in the program category while the Office of the Attorney  
General is included in the Justice and Public Protection program category.  
June 2016  
23  
Budget Footnotes  
Ohio Legislative Service Commission  
ISSUE UPDATES  
State Board of Education Awards 78 High School Diplomas in  
First Year of Adult Diploma Pilot Program  
Adam Wefler, Budget Analyst, 614-466-0632  
In April, the State Board of Education awarded 78 high school diplomas to adults  
who participated in the first year of the Adult Diploma Pilot Program. The program is  
designed to provide adults, ages 22 and older, education to earn a high school diploma  
and skills training needed for a job in one of 20 in-demand career fields. Each  
participant worked with an advisor to create a customized plan that aligned with the  
student's career goals. The plans were competency-based, allowing the student to work  
at their own pace to master the necessary skills for the career they sought. Upon  
completion of the program, the participants also earned an industry-recognized  
credential or certificate. Five institutions across the state participated in the first year of  
the pilot program: Stark State Community College, Pickaway-Ross Joint Vocational  
School, Miami Valley Career Technical Center, Cuyahoga Community College, and  
Penta Career Center. These institutions partnered with other regional providers to  
deliver programming.  
H.B. 64 appropriates $3.8 million in FY 2016, a portion of which provides  
planning funds to participating institutions, and $5.0 million in FY 2017 for the program  
in GRF line item 200572, Adult Diploma, in the Ohio Department of Education's budget.  
Payments to participating institutions for each student enrolled in an approved  
program of study are calculated according to a formula providing certain tiers of  
funding based on the number of hours of technical training required in the student's  
career pathway training program and the student's grade level upon initial enrollment  
into the program.  
State Board of Education Recognizes Public Schools and Districts  
for High Academic Achievement and Student Growth  
Anthony Kremer, Budget Analyst, 614-466-5654  
On May 16, 2016, the State Board of Education acknowledged public schools and  
districts that demonstrated high academic achievement and student growth on local  
report cards through two new recognition programs. The All A Award is given to  
districts and schools that received A's on each of the district or school's applicable  
report card measures. For the 2014-2015 school year, two districts and 46 schools  
Budget Footnotes  
24  
June 2016  
Ohio Legislative Service Commission  
qualified. Beginning with the report cards for the 2017-2018 school year, this award will  
1
1
go to any school or district that earns an A on its overall report card grade.  
Districts and schools that earn straight A's on each applicable value-added  
measure on the report cards qualify for the Momentum Award. For the 2014-2015  
school year, 53 districts and 165 schools met the criteria for this award. The value-added  
measure is designed to help educators determine the impact schools and teachers have  
on students' academic growth and progress in reading and math from year to year. The  
measure is calculated on an overall basis and for three student subgroups: (1) gifted  
students, (2) students in the lowest 20% in achievement, and (3) students with  
disabilities. Districts and schools must have a grade for at least two of the three value-  
added subgroups of students to qualify for the award. A list of the districts and schools  
qualifying under both recognition programs is available on the Ohio Department of  
Education's website.12  
Controlling Board Approves $2.3 Million for Summer Meal Programs  
Nicholas J. Blaine, Budget Analyst, 614-387-5418  
On May 2, 2016, the Controlling Board approved a request by the Ohio  
Department of Job and Family Services, on behalf of the Governor's Office of  
Faith-Based and Community Initiatives, to contract with the Ohio Association of  
Foodbanks in the amount of $2.33 million ($1.88 million in FY 2016 and $449,700 in  
FY 2017) for the Summer Meals Program Services. The contract will run from  
approximately June 1, 2016 to August 30, 2016 and be funded with the federal  
Temporary Assistance for Needy Families (TANF) Block Grant. The program provides  
supplemental food to TANF-eligible children who reside in rural school districts where  
4
0% or more of the population is at or below 200% of the federal poverty level.  
The Summer Meals Program Services consists of three separate programs: the  
Summer Rural Delivery Meals Program, the Summer Weekend Meals Program, and the  
Mobile Farmers' Market Program. The Summer Rural Delivery Meals Program is  
anticipated to serve about 2,000 children with 11 meals each week, composed of two  
breakfasts, seven lunches, and two dinners. The Summer Weekend Meals Program is  
expected to serve about 10,000 children with six meals each weekend. In addition to the  
shelf-stable items distributed in the above programs, the Mobile Farmers' Market  
Program will provide at least one fresh protein item and four fresh fruit or vegetable  
options each week. Last summer, these programs provided over 900,000 meals and over  
1
.1 million pounds of fresh protein and produce.  
11 Due to "safe harbor" provisions in current law, the report cards for the 2017-2018  
school year will be the first to include overall letter grades for districts and schools.  
12 http://education.ohio.gov/Topics/School-Improvement/Awards-and-Recognition.  
June 2016  
25  
Budget Footnotes  
Ohio Legislative Service Commission  
Medicaid Awards $1.6 Million to Reduce Infant Mortality  
Wendy Risner, Fiscal Supervisor, 614-644-9098  
On March 15, 2016, the Ohio Department of Medicaid (ODM) awarded  
1.6 million to four projects to reduce infant mortality in the Akron area (Summit  
$
County). The table below lists each project, the amount received, and provides a brief  
description of project activities.  
Akron Infant Mortality Projects  
Project  
Activities  
Amount  
Mount Calvary Baptist Church/  
Minority Behavioral Health Group  
Educational opportunities to churches through  
nursing outreach  
$
$
299,800  
250,000  
Fame Fathers/  
Charisma Community Connection  
Ensure that fathers play an active role in the fight  
against infant mortality  
Improve access to primary care and social services  
for women and families  
Akron Summit Community Action, Inc.  
$566,983  
438,394  
$1,555,177  
Project Ujima/  
Summa Center for Health Equity  
Weekly wellness circles for expectant and new  
parents; support for pregnancy centering circles  
$
TOTAL  
In total, ODM plans to distribute $26.8 million over the FY 2016-FY 2017  
biennium to combat infant mortality in the following nine high priority areas: Butler,  
Cuyahoga, Franklin, Hamilton, Lucas, Mahoning, Montgomery, Stark, and Summit  
counties. ODM, along with other interested parties, have met with local leaders to  
determine the projects or strategies that best address the specific needs of each  
community. Funding will vary according to these discussions.  
Ohio's infant mortality rate for all races decreased slightly from a rate of  
7
.4 (number of infant deaths per 1,000 live births) in 2013 to 6.8 in 2014. However, the  
black infant mortality rate increased from a rate of 13.8 in 2013 to 14.3 in 2014. During  
this same time period, the white infant mortality rate decreased from 6.0 to 5.3, while  
the Hispanic rate decreased from 8.8 to 6.2. Ohio's goal is to obtain a rate of 6.0 or lower  
for every race or ethnic group. The three leading causes of infant mortality are  
prematurity/pre-term births, sleep-related deaths (i.e., Sudden Infant Death Syndrome  
or asphyxia), and birth defects.  
Department of Commerce Awards $75,000 in Financial Literacy Education  
Grants to Six Recipients Serving Eight Counties  
Shannon Pleiman, Budget Analyst, 614-466-1154  
On April 29, 2016, the Ohio Department of Commerce announced funding of  
75,000 to six groups under the Financial Literacy Grant Program. The purpose of the  
$
Budget Footnotes  
26  
June 2016  
Ohio Legislative Service Commission  
grant program is to support innovative education programs that strengthen adult  
financial literacy. Grants are awarded to applicants that demonstrate the need for  
financial education in their community. The grant recipients will use the funding for  
courses that cover topics including personal budgeting, student loan borrowing, money  
management, and financial services. The table below displays the award recipients,  
their location by county, and the total amount awarded.  
FY 2016 Financial Literacy Grant Recipients  
Grant Recipient  
County  
Summit  
Award Amount  
$19,112  
$15,683  
$13,688  
$12,500  
$7,517  
Project Learn  
Community Action Organization  
Miami University Regional Campus  
Catholic Charities  
Highland  
Butler and Warren  
Ashtabula  
Pickaway-Ross Career and Technology Center  
Boys & Girls Club of Columbus  
Pickaway and Ross  
Franklin  
$6,500  
TOTAL  
$75,000  
The grant is financed through quarterly transfers of 5% of all charges, penalties,  
and forfeitures levied by the Consumer Finance Section within the Division of Financial  
Institutions. This revenue is deposited into the Financial Literacy Education Fund  
(Fund 5FW0). Grant guidelines require that at least half of the financial literacy  
education programs be conducted by or offered at public community colleges or state  
institutions of higher education.  
Ohio Awarded Just Over $1 Million in Federal Grants for  
Innovative Transportation Projects  
Tom Middleton, Budget Analyst, 614-728-4813  
On April 29, 2016, the U.S. Department of Transportation announced that Ohio  
will receive two grants totaling slightly over $1.0 million in the latest round of awards  
under the Accelerated Innovation Deployment (AID) Demonstration Program.13  
Created in 2014, the goal of the AID Demonstration Program is to promote the  
deployment of innovative highway planning and construction projects by offsetting the  
risk of trying the innovation.  
13 Projects in five other states also received funding under this round of awards totaling  
almost $4.9 million. In FY 2014, the Northeast Ohio Areawide Coordinating Agency (NOACA)  
was awarded $600,000 for its Transportation Asset Management Program development project  
under the AID Demonstration Program.  
June 2016  
27  
Budget Footnotes  
Ohio Legislative Service Commission  
Under the first grant, the Ohio Department of Transportation (ODOT) will  
receive approximately $512,000 to improve document management and workflow  
needs through "e-Construction" on two projects. According to the Federal Highway  
Administration, e-Construction is a construction administration delivery process that  
electronically documents and manages the project, taking paperwork out of the process  
and improving workflow among contractors and project owners.  
The second grant of $557,600 will be jointly awarded to ODOT and Muskingum  
County to replace a bridge on County Road 7 within Muskingum County. The bridge  
design will incorporate steel tub girders that are more durable, have a greater span  
range, and are easier to maintain than conventional girders. The bridge deck will be  
constructed using lighter-weight prefabricated metal and composite plates, referred to  
as a Sandwich-Plate System (SPS) design. Used together, these construction techniques  
will reduce construction time and limit road closures. The new design will also lower  
the dead load, or the combined weight of the paved surface, structural components and  
utilities borne by the bridge superstructure.  
Ohio EPA Awards $2.2 Million in Local Recycling and Litter Prevention  
and Management Grants  
Robert Meeker, Budget Analyst, 614-466-3839  
On April 25, 2016, the Ohio Environmental Protection Agency (EPA) announced  
the award of 76 competitive grants totaling $2.2 million to support various recycling  
and litter prevention and management projects.1 Of this total, approximately  
4
$
1.7 million was awarded through the Community Development Grant Program to  
fund 35 projects for the collection and processing of recyclable materials and litter  
prevention efforts. The grants range from $750 to $250,000. The Community  
Development Grant Program provides financial assistance to local governments that  
propose to establish projects related to the collection and processing of recyclable  
materials or litter prevention initiatives. Local governments must commit to provide  
funding for 50% of the project through matching funds.  
The remaining $560,000 was awarded through the Litter Management Grant  
Program to fund 41 projects to support community-based litter collection or tire  
1
5
amnesty activities. The grants range from $2,250 to $50,450. The Litter Management  
Grant Program requires a minimum of 10% local matching funds and eligible entities  
include municipal corporations, counties, townships, villages, state colleges or  
14 The complete listings of grant recipients are available on the Ohio EPA's website:  
http://epa.ohio.gov/News/OnlineNewsRoom/NewsReleases/tabid/6596/ArticlePage/1/Default.aspx.  
15 Tire amnesty refers to opportunities for residents to dispose of scrap tires with a  
political subdivision at no charge to the resident.  
Budget Footnotes  
28  
June 2016  
Ohio Legislative Service Commission  
universities, solid waste management districts or authorities, health districts, Keep  
America Beautiful (KAB) affiliates, boards of education, and certain other nonprofit  
organizations.  
Ohio EPA Awards $1.8 Million in Market Development Grants  
Robert Meeker, Budget Analyst, 614-466-3839  
In April 2016, the Ohio EPA announced the award of ten competitive grants  
totaling $1.8 million to support a variety of recycling and scrap tire market  
development projects. Of this total, approximately $1.4 million was awarded as  
Recycling Market Development grants for eight projects involving the partnership of a  
political subdivision with a business or nonprofit organization to develop the  
infrastructure for strengthening end-product markets involving targeted materials (see  
table below).16  
Recycling Market Development Grants  
Political Subdivision  
Darke County Solid Waste District  
Partner  
Kitchen Aid  
Grant Amount  
$44,433  
Lorain County Solid Waste District  
Barnes Nursery  
I.D. Images  
G.I.B.  
$66,538  
Medina County Solid Waste Management District  
Ottawa, Sandusky, and Seneca Solid Waste District  
$108,027  
$138,195  
$250,000  
$250,000  
$250,000  
$250,000  
$1,357,193  
Delaware, Knox, Morrow, and Marion County Solid Waste District Price Farm Organics  
Franklin County  
Econopia  
Summit and Akron Solid Waste Management Authority  
The Ohio State University  
Waste Management  
Zanesville Energy  
TOTAL  
The remaining $400,000 was awarded as Scrap Tire Processing grants to fund  
two Ohio business scrap tire market infrastructure projects. Jackson Township in  
Franklin County, which partners with Liberty Tire Recycling, was awarded $350,000 to  
purchase a scrap tire processing equipment unit. Cuyahoga County Soil and Water  
Conservation District, which partners with St. Clair Superior Development Corporation,  
was awarded $50,000 to purchase equipment that can create geo cells comprised of  
scrap tire material for soil stabilization engineering designs.  
1
6
Targeted materials include aluminum, carpet, carpet padding, construction and  
demolition debris, electronics/CRT glass, glass, mattresses, metals, organic (food waste)  
material, corrugated cardboard, paint, paper, plastic, shingles, and wood waste.  
June 2016  
29  
Budget Footnotes  
Ohio Legislative Service Commission  
TRACKING THE ECONOMY  
Phil Cummins, Senior Economist, 614-387-1687  
Ruhaiza Ridzwan, Senior Economist, 614-387-0476  
Overview  
The economy continues to expand but at only a slow pace and  
weak employment growth in May raises questions about the strength of  
the expansion. Inflation-adjusted gross domestic product (real GDP) for  
the 2016 first quarter was revised upward, in the latest estimate from the  
U.S. Bureau of Economic Analysis (BEA), but only to a 0.8% annual rate  
of growth. An increase in U.S. nonfarm payroll employment in May was  
the smallest for any month since 2010. However, earlier employment  
gains and anecdotal reports point to tightening labor markets. Factory  
output has been about flat, on balance, since 2014, depressed in part by  
the strong dollar and by cutbacks related to sharp declines in mining  
activity. Consumer spending and housing market activity continue to  
advance, supported by pay increases in excess of the low inflation rate.  
Light vehicle sales remain at a high level but are down from the pace in  
last year's second half. In Ohio, employment fell in April and the  
statewide unemployment rate rose.  
Uncertainties raised by the latest employment report as well as the  
still low pace of inflation may lead the Federal Reserve, the nation's  
central bank, to again delay tightening monetary policy when the bank's  
main policy-setting group meets June 14 and 15. The bank's Federal  
Open Market Committee decided at its meeting last December to raise its  
short-term interest rate target by 0.25 percentage point to a range of  
0
.25% to 0.5%, and has held the target rate at that level since then. The  
rate had previously been held at zero to 0.25% since December 2008.  
The National Economy  
Employment and Unemployment  
Total nonfarm payroll employment nationwide rose only 38,000  
(0.03%) in May, and increases in March and April were revised lower by  
a total of 59,000. The U.S. unemployment rate fell to 4.7% in May, lowest  
since 2007. Trends in employment and unemployment are shown in  
Chart 6.  
Budget Footnotes  
30  
June 2016  
Ohio Legislative Service Commission  
Chart 6: U.S. Employment and Unemployment  
1
1
1
1
1
1
1
1
48  
45  
42  
39  
36  
33  
30  
27  
11  
10  
9
8
7
6
5
4
2
010  
2011  
2012  
2013  
2014  
2015  
2016  
Nonfarm Payroll Employment  
Unemployment Rate (right scale)  
Nonfarm payroll employment increased in May in health care but  
fell again in mining. Health care employment continues to grow year after  
year and increased 487,000 (3.2%) during the past year. Mining  
employment has fallen 207,000 (24%) from the recent peak in  
September 2014. Manufacturing employment fell slightly (-0.1%) in May,  
all in durable goods. From a recent peak in March 2015 to May 2016,  
durable goods manufacturing employment fell 82,000 (1.1%).  
Employment  
increases  
averaged  
1
50,000 per  
Employment increases in the first five months of 2016 averaged  
month in 2016,  
down from  
1
2
50,000 per month, down from 229,000 per month in 2015 and 251,000 in  
014. In May 2016, a strike by telecommunications workers reduced  
employment by 35,000, according to the U.S. Bureau of Labor Statistics  
2
29,000 per  
(BLS). The increase in employment in May was one of the smallest  
month in 2015.  
monthly changes of the past five years, even with an upward adjustment  
for the workers temporarily out on strike.  
The unemployment rate decline in May resulted from a fall of  
4
84,000 in the number of persons unemployed, to 7.4 million, the fewest  
persons counted as unemployed since 2007. Little of the monthly decline  
in unemployment was attributable to increased employment, with most  
reflecting a drop in the number of persons in the labor force. The labor  
1
7
force participation rate fell 0.2 percentage point in May to 62.6%. This  
17 The labor force participation rate is the number of persons in the labor  
force as a share of the working age population. The labor force includes those  
who are either employed or are unemployed and actively looking for work.  
June 2016  
31  
Budget Footnotes  
Ohio Legislative Service Commission  
was just above the low point of 62.4% in September 2015, lowest since  
977. From last September to March, labor force participation had begun  
1
to recover, climbing to 63.0%.  
Production, Shipments, and Inventories  
Real GDP rose at a 0.8% annual rate in this year's first quarter,  
revised upward from 0.5% estimated initially. Growth of the national  
economy averaged 2.4% per year in each of 2014 and 2015, but has been  
below that pace in the latest three quarters. The slowdown has been  
particularly sharp in nonresidential fixed investment, due in part to large  
cutbacks in mining exploration, shafts, and wells but also to declines or  
slower growth in investment in industrial, transportation, and other  
types of equipment, in software, and in research and development.  
Inventory accumulation and exports have slowed. Consumer spending  
continues to expand but not as rapidly as earlier. In contrast, residential  
fixed investment has grown more rapidly.  
Real GDP rose  
.8% in the first  
quarter of  
016.  
0
2
Industrial production rose 0.7% in April after declines in February  
and March and in most months since a peak in late 2014. The total index  
consists of components for manufacturing, mining, and utilities, and the  
latest monthly increase mainly reflects a jump in the index for utility  
output, held down by unusually warm weather in March. Factory output  
rose in April while mining output continued to fall.  
From the recession low point in June 2009 to the end of 2014, the  
index for total manufacturing production recovered 19% but was  
essentially flat thereafter through April. The index for all types of mining  
fell 18% from a peak in December 2014 through April 2016, with sharp  
declines in drilling of oil and gas wells, in coal production, and in iron  
ore mining. Production of crude oil fell by much less than drilling of new  
wells, and production of natural gas continued to rise. Trends in the  
indexes for factory production and for mining are shown in Chart 7.  
Manufacturing accounts for about 78% of total industrial production,  
with mining and utilities each accounting for about 11%.  
.
Budget Footnotes  
32  
June 2016  
Ohio Legislative Service Commission  
Chart 7: Industrial Production  
1
1
1
1
1
1
25  
20  
15  
10  
05  
00  
9
9
8
8
5
0
5
0
2
010  
2011  
2012  
2013  
2014  
Mining  
2015  
2016  
Manufacturing  
Manufacturing production continued to rise in May, based on a  
survey of purchasing managers by the Institute for Supply Management.  
More survey respondents said production increased than reported  
decreases for the month. New orders also increased while inventories and  
the backlog of unfilled orders contracted, according to the survey. Higher  
prices for manufacturers' inputs were reported to be more widespread  
than lower prices for the third consecutive month. A comparable survey  
of purchasing managers with nonmanufacturing organizations also  
showed continued growth.  
Consumer Spending  
Real consumer spending rose a robust 0.6% in April, as consumer  
outlays for durable goods jumped 2.2%. Consequently, consumer  
spending growth started the second quarter stronger than the 1.9%  
annual rate of increase in the first quarter. Growth of consumer  
spending is being supported by increases in the dollar value of incomes  
that are substantially outpacing price increases. Real disposable (after tax)  
personal income was 3.3% higher in January through April than a year  
earlier, following growth of 3.5% in 2015.  
Real consumer  
spending rose  
1
8
0
.6% in April.  
In May, U.S. light vehicle sales were at a 17.4 million unit  
seasonally adjusted annual rate, little changed from April's sales pace.  
The sales pace in April and May was up from the first quarter rate. Year-  
to-date sales through May averaged a 17.2 million unit pace, down from  
the 17.8 million unit rate in last year's second half.  
18 Growth of 0.6% for one month would compound to 7.4% growth for a  
full year.  
June 2016  
33  
Budget Footnotes  
Ohio Legislative Service Commission  
Construction and Real Estate  
Housing starts nationwide rose 7% in April and were 10% higher  
in the first four months of the year than a year earlier. Single-family  
home starts in January through April were 17% higher than the year-ago  
pace, while starts on units in apartment buildings (five or more units)  
were 2% lower. Earlier in the recovery from the low point in 2009,  
growth of multifamily housing starts outpaced starts on single-family  
homes. The average annualized rate of housing starts in this year's first  
four months, 1.15 million units, if continued through year-end would be  
the strongest year for housing construction since 2007. But the pace of  
building remains well short of the peak in 2005, 2.07 million units, and  
below the long-term average for housing starts, 1.55 million per year in  
1
959 through 2007.  
Construction spending in the U.S. fell 2% from March to April.  
The value of construction put in place on a year-to-date basis was 9%  
higher than in January through April 2015, with private residential  
construction 9% higher than a year ago, private nonresidential  
construction 10% higher, and public construction up 6%.  
New home sales nationwide in April were 17% higher than a  
month earlier, and year-to-date home sales were 9% above a year earlier.  
The average rate of sales in January through April, 0.55 million  
annualized, would, if maintained all year, be the highest rate since 2007  
but well below the 2005 peak, 1.28 million units sold, and below the long-  
term average, 0.70 million units in 1963 through 2007. The new home  
sales statistics represent contract signings.  
Home sales reported by the National Association of  
Realtors (NAR), which are generally closings on previously occupied  
units, rose 2% in April. Year-to-date sales in January through April were  
6
% above a year earlier, following a 6% increase in all of 2015. Realtors'  
listings of homes offered for sale remain tight, according to NAR. A  
separate series, pending home sales, which are contract signings for the  
purchase and sale of previously occupied homes, rose in April to the  
highest level in more than ten years, according to NAR.  
An index of U.S. house prices from the Federal Housing Finance  
Agency rose in this year's first quarter to 6% above a year earlier. The  
nationwide index of housing prices has been rising for nearly five years,  
from a low point in 2011, and in the 2016 first quarter was 2% above the  
prerecession peak in 2007.  
Budget Footnotes  
34  
June 2016  
Ohio Legislative Service Commission  
Inflation  
The consumer price index increased 0.4% in April, to 1.1% higher  
than a year earlier. Of this total, prices for services were up 2.7% from a  
year earlier while prices for goods were down 1.4%. Reversing earlier  
declines, consumer energy prices rose in April and also in March.  
Gasoline prices rose 8.1% in April but remained 13.8% lower than in April  
2
015. Food prices rose 0.2% in April after declining in March. Excluding  
food and energy, consumer prices were 2.1% higher in April than a year  
earlier.  
The producer price index for final demand rose 0.2% in April, after  
declines in March and February, and was unchanged in April from its  
year-earlier level. Final demand goods prices were 1.9% lower than a year  
earlier, and final demand services prices were 1.0% higher. At an earlier  
stage in production, prices for unprocessed goods for intermediate  
demand rose 2.6% in April and 2.5% in March, after declining in earlier  
months since the first half of 2015.  
The Ohio Economy  
Employment and Unemployment  
Ohio's total  
nonfarm  
Ohio's total nonfarm payroll employment declined by 13,600, or  
about 0.2%, from March to April but was 71,900, or 1.3%, higher than in  
April 2015. The decrease is the largest since June 2009. Chart 8 presents payroll  
the monthly change in the number of nonfarm payroll jobs in Ohio over  
the last ten years. Government employment accounted for more than half  
of the jobs lost in April, mostly local government jobs. Employment in  
goods-producing industries fell by 2,000, due to manufacturing and  
employment  
declined  
1
3,600 in April,  
mining and logging; employment in construction rose. Employment in the largest  
private service-producing industries fell by 4,600, with the largest decline  
in professional and business services. Employment gains in the past year  
were primarily in construction; trade, transportation, and utilities;  
educational and health services; and leisure and hospitality.  
since June  
2009.  
June 2016  
35  
Budget Footnotes  
Ohio Legislative Service Commission  
Chart 8: Ohio Total Nonfarm Payroll Employment,  
Seasonally Adjusted  
4
3
2
1
0
0
0
0
0
-10  
-20  
-30  
-40  
-50  
The state's unemployment rate rose slightly from 5.1% in March to  
.2% in April, the highest level since November 2014. The state's  
5
unemployment rate has been higher than the U.S. unemployment rate  
since February. The number of unemployed Ohioans increased by 8,000  
from 294,000 in March to 302,000 in April.  
The average  
price of  
Ohio Home Sales  
existing homes  
sold in the first  
four months of  
The number of existing homes sold in Ohio increased by 9.4% in  
April, compared to the preceding April, according to the Ohio  
Association of Realtors. For the first four months of 2016, existing home  
2
016 was 5.8% sales also rose by 9.4% compared with the corresponding months in the  
year earlier. The average price of homes sold in the first four months of  
higher than the  
corresponding  
period a year  
earlier.  
2
016 was 5.8% higher than the corresponding period a year earlier.  
Regional Economy  
Business activity in the region continued to grow at a modest  
pace, according to the latest report published by the Federal Reserve  
1
9
Bank of Cleveland. Manufacturers reported a modest increase in  
production and capital spending. New and existing single-family home  
sales continued to grow strongly. Retailers, except for restaurants, noted  
1
9
Based on the Summary of Commentary on Current Economic  
Conditions, a report commonly known as the Beige Book, using information  
collected before May 23, 2016. The Federal Reserve Bank of Cleveland serves the  
Fourth Federal Reserve District, which includes Ohio and parts of Kentucky,  
Pennsylvania, and West Virginia.  
Budget Footnotes  
36  
June 2016  
Ohio Legislative Service Commission  
disappointing sales, attributed to the ongoing shift from brick-and-mortar  
stores to online. Sales of light trucks and SUVs remained strong, but sales  
of luxury brand vehicles softened. Natural gas production continued at a  
high level despite the sharp drop in drilling activity.  
June 2016  
37  
Budget Footnotes