Budget Footnotes  
A NEWSLETTER OF THE OHIO LEGISLATIVE SERVICE COMMISSION  
SEPTEMBER 2016  
VOLUME 40, NUMBER 1  
STATUS OF THE GRF  
STATUS OF THE GRF  
Highlights...................................1  
Revenues ..................................2  
Expenditures............................12  
HIGHLIGHTS  
Jean J. Botomogno, Principal Economist, 614-644-7758  
ISSUE UPDATES  
Total GRF sources in the first two months of FY 2017  
Naloxone Grant Program.........20  
were $145.4 million (2.5%) below estimates published by Neighborhood Initiative  
Program ...............................20  
Employment First Expansion...21  
the Office of Budget and Management (OBM) in August  
2
016. Year-to-date GRF tax revenue was $80.6 million College Admissions Tests  
Selected ...............................22  
Arts Council Grant Awards ......23  
(2.2%) short of estimates, including a large negative  
variance from the personal income tax. On the other hand, Family Violence Prevention  
Grants ..................................24  
GRF uses through August were $148.4 million (2.2%) below  
Motor Fuel Tax Revenue .........24  
their anticipated levels.  
Mosquito Control Grants..........25  
Higher Education Innovation  
Ohio's unemployment rate fell to 4.8% in July, down  
from 5.0% in June, but was 0.1 percentage point higher than  
the July 2015 rate of 4.7%. Ohio nonfarm payroll  
employment increased 11,400 (0.2%) over June and was  
Grants ..................................26  
TRACKING THE ECONOMY  
The National Economy ............28  
The Ohio Economy..................33  
7
8,800 (1.5%) higher than in July 2015.  
Through August 2016, GRF sources totaled $5.78 billion:  
Revenue from the personal income tax was  
61.2 million below estimate;  
$
Sales and use tax receipts were $21.6 million below  
estimate.  
Through August 2016, GRF uses totaled $6.52 billion:  
Program expenditures were $148.8 million below  
estimate, due primarily to Medicaid ($165.7 million);  
Legislative Service Commission  
7
7 South High Street, 9th Floor  
Columbus, Ohio 43215  
Property Tax Reimbursements experienced a  
positive variance of $48.7 million.  
Telephone: 614-466-3615  
AVAILABLE ON OUR WEBSITE: WWW.LSC.OHIO.GOV  
CLICK ON 'PUBLICATIONS/BUDGET FOOTNOTES'  
Ohio Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of August 2016  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on September 8, 2016)  
STATESOURCES  
Actual  
Estimate*  
Variance  
Percent  
TAX REVENUE  
Auto Sales  
$133,347  
$731,655  
$865,003  
$130,400  
$2,947  
2.3%  
Nonauto Sales and Use  
Total Sales and Use Taxes  
$748,200  
-$16,545  
-2.2%  
$878,600  
-$13,597  
-1.5%  
Personal Income  
Corporate Franchise  
Financial Institution  
Public Utility  
$657,448  
-$482  
$720,600  
$0  
-$63,152  
-$482  
$470  
-8.8%  
---  
$470  
$0  
---  
$23,304  
$34,249  
$10,773  
$250,973  
$0  
$25,500  
$33,600  
$10,900  
$259,300  
$0  
-$2,196  
$649  
-8.6%  
1.9%  
-1.2%  
-3.2%  
---  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
-$127  
-$8,327  
$0  
$350  
$400  
-$50  
-12.6%  
---  
$2  
$0  
$2  
$0  
$0  
$0  
---  
$87,101  
$5,138  
$4,067  
-$16  
$82,400  
$4,100  
$3,900  
$0  
$4,701  
$1,038  
$167  
5.7%  
25.3%  
4.3%  
---  
Alcoholic Beverage  
Liquor Gallonage  
Estate  
-$16  
Total Tax Revenue  
$1,938,380  
$2,019,300  
-$80,920  
-4.0%  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$3  
$42,545  
$1,357  
$0  
$5,415  
$1,175  
$6,590  
$3  
$37,130  
$182  
---  
685.7%  
15.5%  
Total Nontax Revenue  
$43,905  
$37,315  
566.2%  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$8,893  
$8,893  
$0  
$7,500  
$7,500  
$0  
$1,393  
$1,393  
---  
18.6%  
18.6%  
TOTAL STATESOURCES  
Federal Grants  
$1,991,177  
$1,022,537  
$3,013,715  
$2,033,390  
$1,108,543  
$3,141,933  
-$42,213  
-$86,006  
-$128,219  
-2.1%  
-7.8%  
-4.1%  
TOTAL GRFSOURCES  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
2
September 2016  
Ohio Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate  
FY 2017 as of August 31, 2016  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on September 8, 2016)  
Percent  
Change  
STATESOURCES  
Actual  
Estimate*  
Variance  
Percent  
FY2016  
TAX REVENUE  
Auto Sales  
$245,589  
$1,569,242  
$1,814,831  
$247,900  
$1,588,500  
$1,836,400  
-$2,311  
-0.9%  
$238,991  
$1,554,676  
$1,793,667  
2.8%  
Nonauto Sales and Use  
-$19,258  
-1.2%  
0.9%  
Total Sales and Use Taxes  
-$21,569  
-1.2%  
1.2%  
Personal Income  
Corporate Franchise  
Financial Institution  
Public Utility  
$1,197,516  
-$298  
$1,258,700  
$0  
-$61,184  
-$298  
$773  
-4.9%  
---  
$1,247,550  
$1,320  
$179  
-4.0%  
-122.6%  
332.9%  
-17.3%  
-2.3%  
$773  
$0  
---  
$23,382  
$60,347  
$11,918  
$290,252  
$0  
$25,500  
$58,300  
$12,100  
$295,100  
$0  
-$2,118  
$2,047  
-$182  
-$4,848  
$0  
-8.3%  
3.5%  
-1.5%  
-1.6%  
---  
$28,258  
$61,742  
$12,101  
$277,106  
$0  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
-1.5%  
4.7%  
---  
$662  
$600  
$62  
10.3%  
---  
-$37  
1879.6%  
$2,370  
$5  
$0  
$2,370  
$5  
$5 43198.8%  
$0  
---  
$21  
-79.1%  
-0.6%  
$110,567  
$10,818  
$7,954  
-$17  
$108,000  
$9,500  
$7,500  
$0  
$2,567  
$1,318  
$454  
2.4%  
13.9%  
6.1%  
---  
$111,276  
$10,420  
$7,660  
Alcoholic Beverage  
Liquor Gallonage  
Estate  
3.8%  
3.8%  
-$17  
$72  
-123.5%  
-0.6%  
Total Tax Revenue  
$3,531,079  
$3,611,700  
-$80,621  
-2.2%  
$3,551,341  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$6  
$43,367  
$2,044  
$0  
$6,555  
$2,115  
$8,670  
$6  
$36,812  
-$71  
---  
561.6%  
-3.4%  
$6  
$6,146  
$2,470  
$8,622  
-0.2%  
605.6%  
-17.3%  
426.7%  
Total Nontax Revenue  
$45,416  
$36,746  
423.8%  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$13,893  
$13,893  
$0  
$12,500  
$12,500  
$0  
$1,393  
$1,393  
---  
11.1%  
11.1%  
$0  
$163,073  
$163,073  
---  
-91.5%  
-91.5%  
TOTAL STATESOURCES  
Federal Grants  
$3,590,388  
$2,191,259  
$5,781,647  
$3,632,870  
$2,294,164  
$5,927,034  
-$42,482  
-$102,905  
-$145,389  
-1.2%  
-4.5%  
-2.5%  
$3,723,036  
$2,540,219  
$6,263,255  
-3.6%  
-13.7%  
-7.7%  
TOTAL GRFSOURCES  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
September 2016  
3
Budget Footnotes  
Ohio Legislative Service Commission  
REVENUES  
Thomas Kilbane, Economist, 614-728-3218  
Overview  
GRF tax revenue through the first two months of FY 2017 was  
.2% ($80.6 million) below OBM's estimate. This continued a trend that  
2
started during FY 2016, when GRF tax revenue ended the year 1.0%  
GRF tax  
1
($216.0 million) under expectations. Underperformance of the GRF's two  
revenue was  
dominant sources of tax revenue was to blame thus far in FY 2017. The  
personal income tax (PIT) performed poorly in FY 2016, ending the year  
with a $217.7 million revenue deficit, 2.7% below what was expected to  
be collected. In FY 2017 through August, that trend has continued. New  
FY 2017 revenue estimates from OBM take into account FY 2016's  
underperformance, but PIT revenue in July and August combined was  
still $61.2 million (4.9%) below the updated expectation. The sales and  
use tax, the GRF's top projected tax revenue source for FY 2017, was also  
below estimate through the fiscal year's first two months, accumulating  
$
80.6 million  
(2.2%) below  
estimate  
through the  
first two  
months of  
FY 2017.  
$
21.6 million (1.2%) less revenue than was projected.  
Tables 1 and 2 above, show GRF sources2 for August and for  
FY 2017 year to date through its first two months, respectively. Total GRF  
sources received through August were $5.8 billion, which was  
$
145.4 million (2.5%) below estimate. Total GRF sources have been below  
estimate in each of the last five months due to tax revenue shortfalls but  
also due to smaller than expected federal grants, primarily related to the  
level of spending in the Medicaid program, which has generally been  
3
lower than expected.  
OBM's GRF revenue estimates for FY 2017, released in August,  
were revised based on updated information including FY 2016  
performance. As a result, OBM decreased most individual tax revenue  
projections. Among FY 2017 decreases due to FY 2016 experience were  
sales and use tax revenue projections ($23.5 million), commercial activity  
1 OBM estimates for FY 2016 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. Estimates for FY 2017 were released in August 2016.  
2
GRF sources consist of state-source receipts (tax revenue, nontax  
revenue, and transfers in) and federal grants, which are typically federal  
reimbursements for Medicaid and other programs.  
3
GRF Medicaid expenditures were $925.9 million below estimate in  
FY 2016 and were $165.7 million below estimate through the first two months of  
FY 2017.  
Budget Footnotes  
4
September 2016  
Ohio Legislative Service Commission  
tax (CAT) revenue projections ($34.9 million), and PIT revenue projections  
$223.0 million). Among taxes, only the cigarette tax ($45.6 million) and  
(
the financial institutions tax ($27.1 million) saw substantial increases in  
FY 2017 revenue outlook. In total, GRF tax revenue projections for FY 2017  
were decreased by a net $238.7 million. OBM retained funds in the GRF  
from the FY 2016 GRF ending balance to provide the resources needed to  
make up for the expected revenue losses.  
The chart below illustrates the cumulative performance of total  
GRF sources relative to estimates in the first two months of FY 2017 as  
well as in the entirety of FY 2016, broken down by its largest components.  
Despite positive contributions from the "other state revenue" component,  
FY 2017's cumulative sources through August were $145.4 million below  
estimate, as labeled in the far right column.  
Chart 1: GRF Source Fiscal Year Cumulative Performance  
by Component  
FY 16  
Jul-16  
Aug-16  
$
100  
$
0
-$17.2  
-$100  
-$200  
-$300  
-$400  
-$500  
-$600  
-$700  
-$800  
-$900  
-$145.4  
-$788.6  
Federal Grants  
Tax Revenue  
Other State Revenue  
The large positive contribution relative to estimates in August  
labeled as "other state revenue" was primarily the result of an earlier than  
expected payment to the state from JobsOhio in the amount of  
$
35.7 million. Other tax sources not mentioned above that contributed to  
the deficit in FY 2017 through August were the CAT, which was  
$
$
4.8 million (1.6%) below estimate, and the public utility tax, which was  
2.1 million (8.3%) below estimate. Partially offsetting these deficits were  
surpluses from the cigarette tax of $2.6 million (2.4%), the domestic  
insurance tax of $2.4 million (none expected), the kilowatt-hour excise tax  
of $2.0 million (3.5%), and the alcoholic beverage tax of $1.3 million  
(13.9%).  
September 2016  
5
Budget Footnotes  
Ohio Legislative Service Commission  
Compared to the first two months in FY 2016, FY 2017 sources  
through August were $481.6 million (7.7%) lower. Most of the decrease  
was due to smaller federal grants (-$349.0 million) and a large  
(-$163 million) transfer into the GRF in the first month of FY 2016.  
However, tax revenue in FY 2017 was also $20.3 million (0.6%) below its  
comparative FY 2016 amount. The decrease is almost entirely the result  
of the PIT, which through two months has collected $50.0 million less in  
FY 2017 than it did in FY 2016. Legislative policy changes enacted in  
H.B. 64, which led to a 3.1% reduction in the PIT withholding rate, did  
not take effect until August 2015. Based on this alone, July 2016's PIT  
withholdings would be expected to be 3.1% lower than in July 2015,  
though growth in wages would typically offset part or all of that  
decrease. Instead, PIT revenue in FY 2017 through August was 4.0%  
lower than those same months in FY 2016.  
FY 2017  
sources  
through August  
were down  
7
.7%  
($481.6 million)  
from one year  
ago.  
Partially offsetting the decrease in PIT revenue from FY 2016 were  
a $21.2 million increase in sales and use tax revenue and a $13.1 million  
increase in CAT revenue. The year-over-year increases in revenue from  
these taxes, which are also sensitive to changes in the economy,  
challenges the simple assumption that PIT revenue is down in FY 2017  
entirely due to economic softening. But it is true that employment  
expansion in Ohio has slowed in 2016 relative to 2015. Through July of  
4
this year, Ohio added 4,400 jobs per month on average, while in 2015 it  
added an average of 6,700 jobs per month.  
PIT revenue in  
FY 2017  
Personal Income Tax  
The PIT started FY 2017 nearly as gloomily as it ended FY 2016.  
Through the first two months of the fiscal year, GRF revenue from the  
PIT was $1.20 billion, $61.2 million (4.9%) below OBM's estimate,  
including $63.2 million (8.8%) below in August alone. This comes after  
finishing FY 2016 $217.7 million (2.7%) below estimate, including  
$138.1 million (3.7%) below in January through June.  
through August  
was  
$
61.2 million  
(4.9%) below  
estimate.  
PIT revenue is comprised of gross collections, minus refunds and  
distributions to the Local Government Fund (LGF). Gross collections  
5
consist of employer withholdings, quarterly estimated payments, trust  
payments, payments associated with annual returns, and other  
4 Nonfarm payroll employment, seasonally adjusted.  
5 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.  
Budget Footnotes  
6
September 2016  
Ohio Legislative Service Commission  
miscellaneous payments. The performance of the tax is typically driven by  
employer withholdings, which is the largest component of gross  
collections. In the first two months of FY 2017, the PIT revenue shortfall  
was led by employer withholdings, which were $40.7 million (3.0%) below  
estimate, and refunds, which were $17.7 million (20.3%) higher than  
expected.  
Monthly employer withholdings continue to grow year over year,  
but at a slow pace. Policy changes, which led to reduced withholding rates,  
took effect in August 2015 and limited year-over-year growth throughout  
FY 2016; however, revenue growth has also been lower than estimates  
which take policy changes into account. Those trends appear to have  
continued into FY 2017, even as the effects of policy changes are phased  
out of the year-over-year growth calculations. The chart below illustrates  
the slow growth of monthly employer withholdings relative to one year  
ago, as well as the deficit relative to estimates (actual figures in the chart  
are not adjusted for the withholding rate changes in August 2015).  
Chart 2: Monthly Withholding Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
FY 2017  
6
5
4
3
2
1
0
%
%
%
%
%
%
%
Actual  
Estimate  
-1%  
All components of gross collections underperformed expectations  
in the first two months of FY 2017 and only miscellaneous payments  
collected more than in the first two months of FY 2016. FY 2017 revenues  
through August from each component of the PIT relative to estimates and  
to revenue received in the corresponding period of FY 2016 are detailed in  
the table below.  
September 2016  
7
Budget Footnotes  
Ohio Legislative Service Commission  
FY 2017 Year-to-Date Personal Income Tax Revenue  
Estimate Variances and Year-over-Year Changes by Component  
Year-to-Date Variance  
from Estimate  
Year-to-Date Changes  
from FY 2016  
Amount  
$ in millions)  
Percentage  
(%)  
Amount  
($ in millions)  
Percentage  
(%)  
Category  
Withholding  
(
-$40.7  
$0.0  
-3.0%  
-0.1%  
-42.4%  
-8.9%  
-4.6%  
-3.1%  
20.3%  
-0.2%  
-4.9%  
-$10.0  
-$9.7  
-$3.2  
-$8.2  
$3.5  
-0.7%  
-34.9%  
-68.8%  
-36.4%  
52.5%  
-2.0%  
21.7%  
6.5%  
Quarterly Estimated Payments  
Trust Payments  
-$1.1  
-$1.4  
-$0.5  
-$43.7  
$17.7  
-$0.1  
-$61.2  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
-$27.5  
$18.7  
$3.9  
Less Refunds  
Less LGF Distributions  
GRF PIT Revenue  
-$50.0  
-4.0%  
Sales and Use Tax  
Sales and use tax receipts were just 0.2% ($25.3 million) below  
August was the OBM's estimate in FY 2016, but strong performance early in the fiscal  
year hid significant underperformance as it came to a close. FY 2017 is  
unlikely to repeat that pattern, as the underperformance spilled into the  
first two months of the new fiscal year. Total GRF sales and use tax  
receipts were $8.0 million below estimate in July 2016 and $13.6 million  
below in August. August marked the fifth straight month that sales and  
use tax receipts were below estimate. Over the last seven months going  
back to February, sales and use tax revenue was $125.1 million (2.1%)  
below expectations. The sales and use tax is the largest state sourced  
revenue stream to the GRF.  
fifth straight  
month that  
sales and use  
tax revenue  
was below  
estimate.  
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. Thus far in FY 2017, the nonauto portion  
accounted for 86% of the total sales and use tax collected, while auto  
collections were just 14%.  
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
September 2016  
Ohio Legislative Service Commission  
Nonauto Sales and Use Tax  
Nonauto sales and use tax collections were a near record high  
837.6 million in July and $731.7 million in August; however, neither was  
$
enough to match what OBM expected the state to collect. Picking up  
where FY 2016 left off, nonauto sales and use tax collections were 1.2%  
($19.3 million) below estimate through the first two months of FY 2017.  
Over the last seven months, nonauto sales and use tax collections were a  
combined $108.2 million (2.1%) below estimate. The chart below illustrates  
the positive year-over-year growth of nonauto sales and use tax  
collections but also the failure to meet estimates throughout the majority  
of calendar year 2016.  
Chart 3: Nonauto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
FY 2017  
8
7
6
5
4
3
2
1
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
Actual  
Estimate  
After softening in the first quarter of calendar year 2016, national  
measures of consumer spending picked up again in the late spring and  
early summer months. In Ohio, nonauto sales and use tax collections in  
the late spring and summer months have continued to grow relative to  
one year ago but not at the pace OBM estimates expected. Very little of the  
missed estimates in recent months can be blamed on Medicaid health  
insuring corporations, whose collections usually make up around 10% of  
nonauto sales and use tax collections. This portion is generally correlated  
to Medicaid spending, not necessarily broader consumer spending trends.  
However, despite lower than expected Medicaid spending throughout  
much of FY 2016, these collections grew at around the same pace as the  
rest of nonauto sales and use tax collections in recent months.  
September 2016  
9
Budget Footnotes  
Ohio Legislative Service Commission  
Auto Sales and Use Tax  
The GRF received $245.6 million in revenue from the auto portion of  
the sales and use tax in the first two months of FY 2017, $2.3 million (0.9%)  
less than expected. Auto sales tax collections finished FY 2016 1.2% above  
estimate as the result of record-setting sales figures in calendar year 2015.  
However, as the chart below illustrates, the pace of collections growth fell  
off steeply towards the end of the fiscal year. Year-over-year growth in  
early FY 2017 was expected to be slow due to high sales one year ago.  
Auto sales and  
use tax  
collections  
were  
Chart 4: Auto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
$
2.3 million  
(
Three-month Moving Average)  
(
0.9%) below  
FY 2017  
1
1
2.0%  
0.0%  
Actual  
Estimate  
estimate in the  
first two  
8
6
4
.0%  
.0%  
.0%  
months of the  
fiscal year.  
2.0%  
0.0%  
-2.0%  
-4.0%  
-6.0%  
While nationwide auto sales in 2016 have fallen from an all-time high  
in 2015, sales remained at healthy levels through August. In particular, sales  
of light trucks have sustained a record-setting pace begun in the fall of 2015.  
In contrast, sales of cars fell in August to a seasonally adjusted rate not seen  
since 2011. The changing makeup of light vehicle sales has driven average  
sales tax collected per purchase higher, helping to maintain revenue as the  
number of new vehicles sold and titled in Ohio slows.  
CAT revenue to  
the GRF was  
$
4.8 million  
(1.6%) below  
estimate in  
FY 2017  
through  
August.  
Commercial Activity Tax  
GRF receipts from the CAT were $290.3 million in the first two  
months of FY 2017, $4.8 million (1.6%) below estimate. The first CAT  
payment of the fiscal year was due in August for quarterly return  
taxpayers. CAT revenue also finished FY 2016 $25.6 million (2.0%) below  
estimates, which was the second largest shortfall among individual taxes  
for the year. Weakness in collections can be explained, at least in part, by  
continued economic softening through the end of FY 2016, particularly in  
the industrial production sector, which contributes around a quarter of  
CAT revenue.  
Budget Footnotes  
10  
September 2016  
Ohio Legislative Service Commission  
Cigarette and Other Tobacco Products Tax  
GRF receipts from the cigarette and other tobacco products tax  
were $110.6 million in the first two months of FY 2017, $2.6 million above  
estimate. The cigarette tax finished FY 2016 with 3.9% more revenue than  
was expected and was 2.4% above estimate through August of the new  
fiscal year. Of the $110.6 million in FY 2017 revenue, $99.5 million (90.0%)  
was from cigarettes and $11.1 million (10.0%) was from sales of other  
tobacco products.  
Revenue from the tax has been consistently at or above estimate for  
over a year now. Generally, cigarette tax receipts are trending downward  
long-term; however, H.B. 64 increased the cigarette tax from $1.25 to $1.60  
per pack of 20 cigarettes which has led to an increase in total revenues this  
biennium.  
September 2016  
11  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of August 2016  
($ in thousands)  
(Actual based on OAKS reports run September 6, 2016)  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
Primary and Secondary Education  
Higher Education  
$704,111  
$192,926  
$6,968  
$674,234  
$29,877  
4.4%  
$197,920  
$14,397  
-$4,994  
-$7,429  
$17,454  
-2.5%  
-51.6%  
2.0%  
Other Education  
Total Education  
$904,004  
$886,550  
Medicaid  
$1,528,406  
$91,076  
$1,666,960  
$95,646  
-$138,554  
-$4,570  
-8.3%  
-4.8%  
-8.1%  
Health and Human Services  
Total Welfare and Human Services  
$1,619,482  
$1,762,606  
-$143,124  
Justice and Public Protection  
General Government  
$149,807  
$43,556  
$161,478  
$47,500  
-$11,671  
-$3,944  
-7.2%  
-8.3%  
-7.5%  
Total Government Operations  
$193,363  
$208,978  
-$15,615  
Property Tax Reimbursements  
$135,422  
$86,105  
$49,317  
57.3%  
Debt Service  
$130,240  
$265,663  
$130,012  
$216,117  
$228  
0.2%  
Total Other Expenditures  
$49,546  
22.9%  
Total Program Expenditures  
$2,982,512  
$3,074,251  
-$91,739  
-3.0%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$0  
$42,876  
$42,876  
$0  
$42,509  
$42,509  
$0  
$366  
$366  
---  
0.9%  
0.9%  
TOTAL GRFUSES  
$3,025,387  
$3,116,760  
-$91,373  
-2.9%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
12  
September 2016  
Ohio Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2017 as of August 31, 2016  
($ in thousands)  
(Actual based on OAKS reports run September 6, 2016)  
Percent  
Change  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
FY2016  
Primary and Secondary Education  
Higher Education  
$1,442,926  
$373,603  
$15,285  
$1,419,491  
$379,315  
$23,183  
$23,435  
1.7%  
-1.5%  
-34.1%  
0.5%  
$1,584,418  
$352,284  
$16,465  
-8.9%  
6.1%  
-$5,712  
-$7,899  
$9,825  
Other Education  
-7.2%  
-6.2%  
Total Education  
$1,831,813  
$1,821,989  
$1,953,167  
Medicaid  
$3,228,650  
$216,993  
$3,394,352  
$240,435  
-$165,702  
-$23,442  
-$189,144  
-4.9%  
-9.7%  
-5.2%  
$3,301,914  
$246,645  
-2.2%  
-12.0%  
-2.9%  
Health and Human Services  
Total Welfare and Human Services  
$3,445,643  
$3,634,787  
$3,548,559  
Justice and Public Protection  
General Government  
$411,340  
$77,092  
$425,939  
$80,750  
-$14,599  
-$3,658  
-3.4%  
-4.5%  
-3.6%  
$417,154  
$81,498  
-1.4%  
-5.4%  
-2.0%  
Total Government Operations  
$488,432  
$506,689  
-$18,257  
$498,652  
Property Tax Reimbursements  
$135,496  
$86,761  
$48,735  
56.2%  
$92,486  
46.5%  
Debt Service  
$374,645  
$510,142  
$374,642  
$461,403  
$3  
0.0%  
$593,336  
$685,822  
-36.9%  
-25.6%  
Total Other Expenditures  
$48,739  
10.6%  
Total Program Expenditures  
$6,276,030  
$6,424,868  
-$148,837  
-2.3%  
$6,686,199  
-6.1%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$29,483  
$212,614  
$242,096  
$29,483  
$212,159  
$241,642  
$0  
$454  
$454  
0.0%  
0.2%  
0.2%  
$425,500  
$346,000  
$771,500  
-93.1%  
-38.6%  
-68.6%  
TOTAL GRFUSES  
$6,518,126  
$6,666,509  
-$148,383  
-2.2%  
$7,457,699  
-12.6%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
September 2016  
13  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on September 7, 2016)  
Month of August 2016  
Year to Date Through August 2016  
Estimate* Variance Percent Variance Percent  
Department  
Medicaid  
Actual  
Actual  
Estimate*  
$1,753,150 $1,897,134  
-$143,984  
-$133,111  
-$10,873  
-7.6%  
-8.3%  
-3.7%  
$3,424,731  
$3,113,714  
$311,017  
$3,593,040  
$3,272,035  
$321,005  
-$168,309  
-$158,321  
-$9,988  
-4.7%  
-4.8%  
-3.1%  
GRF  
$1,470,450 $1,603,561  
Non-GRF  
$282,700  
$293,573  
Developmental Disabilities  
$260,033  
$47,981  
$268,383  
$47,387  
-$8,349  
$594  
-3.1%  
1.3%  
$442,256  
$98,038  
$472,348  
$97,847  
-$30,092  
$191  
-6.4%  
0.2%  
GRF  
Non-GRF  
$212,053  
$220,996  
-$8,943  
-4.0%  
$344,218  
$374,501  
-$30,283  
-8.1%  
Job and Family Services  
$22,743  
$8,963  
$35,314  
$14,942  
$20,372  
-$12,571  
-35.6%  
$36,484  
$15,018  
$21,467  
$52,824  
$22,541  
$30,283  
-$16,339 -30.9%  
-$7,523 -33.4%  
-$8,816 -29.1%  
GRF  
-$5,979 -40.0%  
-$6,592 -32.4%  
Non-GRF  
$13,780  
Health  
GRF  
$4,400  
$324  
$1,927  
$288  
$2,473 128.4%  
$5,843  
$650  
$3,887  
$585  
$1,957  
50.3%  
$36  
12.6%  
$65 11.1%  
Non-GRF  
$4,076  
$1,639  
$2,437 148.7%  
$5,193  
$3,302  
$1,891 57.3%  
Aging  
$481  
$277  
$204  
$579  
$282  
$297  
-$98  
-16.9%  
$1,663  
$689  
$1,832  
$704  
-$169  
-9.2%  
GRF  
-$5  
-1.7%  
-$15  
-2.1%  
Non-GRF  
-$93 -31.3%  
-$94 -15.7%  
-$90 -17.9%  
$975  
$1,128  
-$154 -13.6%  
-$76 -8.1%  
-$99 -15.4%  
Mental Health and Addiction  
$506  
$410  
$95  
$600  
$500  
$100  
$864  
$541  
$323  
$940  
$640  
$300  
GRF  
Non-GRF  
-$5  
-4.5%  
$23  
7.6%  
Total GRF  
$1,528,406 $1,666,960  
$512,908 $536,977  
$2,041,314 $2,203,936  
-$138,554  
-$24,069  
-8.3%  
-4.5%  
$3,228,650  
$683,193  
$3,394,352  
$730,519  
-$165,702  
-$47,326  
-4.9%  
-6.5%  
Total Non-GRF  
Total All Funds  
-$162,622  
-7.4%  
$3,911,843  
$4,124,871  
-$213,028  
-5.2%  
*Estimates are fromthe Department of Medicaid.  
Detail may not sumto total due to rounding.  
Budget Footnotes  
14  
September 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 September 7, 2016)  
August Year to Date Through August 2016  
Estimate* Actual Estimate* Variance Percent  
$1,577,705 $1,672,605  
(
(
Payment Category  
Managed Care  
Nursing Facilities  
DDD Services  
Hospitals  
Actual  
Variance Percent  
$787,592  
$131,808  
$256,236  
$90,146  
$102,643  
$89,603  
$25,076  
$37,673  
$42,604  
$19,261  
$27,230  
$11,888  
$334,730  
$84,823  
$874,912  
$125,697  
$261,868  
$96,588  
$114,597  
$112,954  
$30,324  
$42,711  
$38,288  
$19,374  
$27,637  
$16,290  
$354,706  
$87,990  
-$87,320 -10.0%  
-$94,900  
$4,513  
-5.7%  
1.9%  
$6,111  
-$5,633  
-$6,442  
4.9%  
-2.2%  
-6.7%  
$245,533  
$433,009  
$164,535  
$186,054  
$155,853  
$60,601  
$68,070  
$84,890  
$33,430  
$54,568  
$21,167  
$670,702  
$155,726  
$241,020  
$457,998  
$171,367  
$203,928  
$182,222  
$57,841  
$76,881  
$76,482  
$34,939  
$55,242  
$29,268  
$706,292  
$158,786  
-$24,989  
-$6,832  
-$17,874  
-5.5%  
-4.0%  
-8.8%  
Behavioral Health  
Administration  
Aging Waivers  
Prescription Drugs  
Medicare Buy-In  
Physicians  
-$11,954 -10.4%  
-$23,351 -20.7%  
-$5,248 -17.3%  
-$5,039 -11.8%  
-$26,369 -14.5%  
$2,760 4.8%  
-$8,811 -11.5%  
$8,408 11.0%  
$4,316  
-$112  
-$407  
11.3%  
-0.6%  
-1.5%  
-$1,509  
-$674  
-4.3%  
-1.2%  
Medicare Part D  
Home Care Waivers  
ACAExpansion  
All Other  
-$4,401 -27.0%  
-$8,101 -27.7%  
-$19,976  
-$3,167  
-5.6%  
-3.6%  
-$35,590  
-$3,060  
-5.0%  
-1.9%  
-5.2%  
Total All Funds  
$2,041,314 $2,203,936 -$162,622  
-7.4% $3,911,843 $4,124,871 -$213,028  
*
Estimates are fromthe Department of Medicaid.  
Detail may not sum to total due to rounding.  
September 2016  
15  
Budget Footnotes  
Ohio Legislative Service Commission  
EXPENDITURES  
Russ Keller, Senior Economist, 614-644-1751  
Nicholas J. Blaine, Budget Analyst, 614-387-5418  
Overview  
For the month of August, GRF uses were $91.4 million below the  
estimate released by OBM in August 2016. Through August, FY 2017  
GRF uses totaled $6.52 billion, $148.4 million below estimate. GRF uses  
mainly consist of program expenditures but also include transfers out.  
For the first two months of FY 2017, GRF program expenditures were  
$6.28 billion, $148.8 million below estimate. GRF transfers out were  
For the first  
two months of  
FY 2017, GRF  
uses were  
7
$
148.4 million  
$
242.1 million, $0.5 million above estimate. Tables 3 and 4 show GRF  
below  
uses for the month of August and for FY 2017 through August,  
respectively.  
estimate.  
Medicaid expenditures were the most prominent source for the  
negative year-to-date variance in GRF uses. GRF Medicaid expenditures  
were $138.6 million below estimate in August, which increased the  
category's negative year-to-date variance to $165.7 million. While  
Medicaid is mainly funded by the GRF, it also receives funding from  
various non-GRF funds. The variances in both GRF and non-GRF  
Medicaid expenditures are discussed in detail in the section that  
immediately follows this overview.  
For the month of August, property tax reimbursement payments  
were $49.3 million above estimate. Through August, this category's  
expenditures were $48.7 million above estimate. GRF dollars provided  
under this program category are used to make semiannual payments to  
school districts and other local governments. The payments based on the  
August 2016 property tax settlement will be made through the end of  
December. As funds are disbursed when county auditors request the  
payments, it is not unusual to see variances from month to month,  
especially in the early months of a payment cycle.  
Medicaid Expenditures  
As indicated earlier, Medicaid receives funding from the GRF and  
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  
6
4% and 36%, respectively.  
7 See the last section of this report for a summary of the OBM estimate for  
GRF uses for FY 2017.  
Budget Footnotes  
16  
September 2016  
Ohio Legislative Service Commission  
Table 5 provides GRF and non-GRF Medicaid expenditures by  
agency. As seen from the table, for the month of August, GRF Medicaid  
expenditures of $1.53 billion were $138.6 million (8.3%) below estimate  
while non-GRF Medicaid expenditures of $512.9 million were  
$
24.1 million (4.5%) below estimate. Across all funds, Medicaid  
expenditures of $2.04 billion in August were below estimate by  
162.6 million (7.4%).  
Through the first two months of FY 2017, GRF Medicaid  
$
expenditures were $3.23 billion, $165.7 million (4.9%) below estimate,  
while non-GRF Medicaid expenditures were $683.2 million, $47.3 million  
(6.5%) below estimate. Across all funds, Medicaid expenditures totaled  
$
3.91 billion, $213.0 million (5.2%) below their year-to-date estimate.  
The Ohio Department of Medicaid (ODM) is primarily responsible  
for administering Medicaid, with the assistance of five other state  
agencies Developmental Disabilities, Job and Family Services, Health,  
Aging, and Mental Health and Addiction Services. As seen from Table 5,  
ODM, the largest agency within this program category, also had the  
largest year-to-date variance. Through the first two months of FY 2017,  
ODM's GRF expenditures totaled $3.11 billion, which was $158.3 million  
(
$
4.8%) below estimate, and its non-GRF expenditures totaled  
311.0 million, which was $10.0 million (3.1%) below estimate. Across all  
funds, ODM's expenditures were $168.3 million (4.7%) below their  
year-to-date estimate. GRF and non-GRF Medicaid expenditures from  
the Department of Developmental Disabilities (DDD), the second largest  
agency within this program category, totaled $442.3 million through the  
first two months of FY 2017, which was $30.1 million (6.4%) below  
estimate. Together, ODM and DDD account for about 99% of the  
Medicaid expenditure total.  
Table 6 details all-funds Medicaid expenditures by payment Managed Care  
category. As seen from the table, Managed Care had the largest negative had the largest  
variance for the year to date at $94.9 million (5.7%), mainly due to new negative  
managed care rates for 2016, effective January 1. These rates were lower variance for  
than projected, particularly those for the MyCare program, which  
the year among  
provides managed care services for Ohioans who receive both Medicaid  
and Medicare benefits. The rates will continue through the end of the Medicaid  
calendar year, meaning the Managed Care category will likely continue to  
have a negative variance through at least the first half of FY 2017.  
payment  
categories.  
Other payment categories that had significant negative year-to-date  
variances were ACA Expansion ($35.6 million, 5.0%), Administration  
(
negative variance for ACA Expansion is driven by the previously  
$26.4 million, 14.5%), and DDD Services ($25.0 million, 5.5%). The  
September 2016  
17  
Budget Footnotes  
Ohio Legislative Service Commission  
described lower than anticipated managed care rates, applicable to this  
group (Group VIII). Although Group VIII caseloads continued to be  
higher than expected in FY 2017, the effect on expenditures was  
completely offset by the managed care rate changes. The negative  
variance for Administration continued into the new fiscal year in part  
due to the underspending of federal grants for electronic medical  
records. This variance should shrink after ODM completes a number of  
information technology contracts. The negative variance for DDD  
Services was largely due to slower than projected new waiver  
enrollment. However, DDD anticipates that waiver expenditures will  
catch up before the end of FY 2017.  
The Medicare Buy-In, Nursing Facilities, and Aging Waivers  
categories had positive variances. All funds expenditures in the Medicare  
Buy-In category totaled $84.9 million, which was $8.4 million (11.0%)  
above estimate. This positive variance was driven by a larger than  
anticipated increase in Medicare Part B premiums for 2016. These rates  
will be in effect through the end of the calendar year, likely resulting in a  
positive variance for Medicare Buy-In through at least the first half of  
FY 2017. The Medicare Buy-in Program pays Medicare premiums,  
deductibles, and coinsurance for certain low-income Ohioans.  
GRF uses are  
expected to  
total  
Summary of OBM Estimate for GRF Uses for FY 2017  
The table below shows the estimate released by OBM in August  
2
016 for GRF uses for FY 2017. For reporting purposes, agencies' GRF  
$
36.62 billion  
expenditures are grouped into nine program categories. As seen from the  
table, GRF program expenditures are estimated to total $35.89 billion in  
FY 2017. Of this amount, over $18.54 billion will go to Medicaid and over  
for FY 2017.  
$
7.91 billion will go to Primary and Secondary Education. Together,  
these two program categories will account for more than 73% of the total  
program expenditures in FY 2017.  
OBM also anticipates $417.9 million in GRF transfers out. The  
largest transfer planned for this year occurred in July when $150 million  
was transferred to the Health and Human Services Fund (Fund 5SA4)  
per Section 512.33 of H.B. 64. The second largest transfer is scheduled  
for June, during which $100 million will be deposited in the Public  
School Building Fund (Fund 7021) per Section 531.10 of S.B. 310.  
Furthermore, OBM estimated $312.7 million in year-end encumbrances  
from the GRF. After accounting for program expenditures, transfers  
out, and year-end encumbrances, OBM expects GRF uses to total  
$
36.62 billion for FY 2017.  
Budget Footnotes  
18  
September 2016  
Ohio Legislative Service Commission  
OBM Estimate for GRF Uses for FY 2017 by Program Category  
($ in thousands)  
As a % of Total Program  
Expenditures  
Program Categories  
- Medicaid  
Expenditures  
1
2
3
4
5
6
7
8
9
$18,537,250  
$7,913,147  
$2,307,632  
$2,095,599  
$1,822,100  
$1,376,147  
$1,371,423  
$393,808  
51.6%  
22.0%  
6.4%  
5.8%  
5.1%  
3.8%  
3.8%  
1.1%  
0.2%  
100.0%  
--  
- Primary and Secondary Education  
- Higher Education  
- Justice and Public Protection  
- Property Tax Reimbursements  
- Debt Service  
- Health and Human Services  
- General Government  
- Other Education  
$75,504  
Total Program Expenditures  
$35,892,611  
$417,875  
Transfers Out  
Year-end Encumbrances  
$312,696  
--  
Total GRF Uses  
$36,623,182  
--  
September 2016  
19  
Budget Footnotes  
Ohio Legislative Service Commission  
ISSUE UPDATES  
Naloxone Grant Programs Helped Save Almost 2,400 Ohioans  
Justin Pinsker, Budget Analyst, 614-466-5709  
The Ohio Department of Mental Health and Addiction Services (OMHAS)  
announced that the Naloxone Grant Program helped save approximately 2,400 Ohioans  
from overdose during FY 2016 by making naloxone more accessible statewide. The  
program provided over 7,800 naloxone kits to 78 participating county health  
departments, who in turn distributed the kits to local law enforcement, emergency  
personnel, and first responders. Funds were awarded based on population size;  
however, each county health department was guaranteed an allocation of at least  
$
1,800. County health departments received either a Project DAWN kit, which contains  
two doses of naloxone, two nasal atomizers, a CPR barrier device, and instructional  
materials, or a ten-pack of naloxone syringes. H.B. 64, the current budget bill, provided  
$
500,000 in FY 2016 for the program. Another $500,000 is allocated to the program in  
FY 2017.  
Naloxone is a drug that can reverse an overdose caused by an opioid drug such  
as a prescription medication or heroin. It can be administered via intranasal spray,  
intravenous injection, or intramuscular injection. Naloxone cannot reverse an overdose  
caused by a non-opioid drug such as cocaine or methamphetamine. In Ohio, naloxone  
can be distributed without a prescription under certain conditions.  
OHFA Awards $104.3 million in Hardest-Hit Funds  
for Communities to Demolish Blighted Residential Property  
Shannon Pleiman, Budget Analyst, 614-466-1154  
On July 13, 2016, the Ohio Housing Finance Agency (OHFA) awarded  
104.3 million to 18 counties under the Neighborhood Initiative Program (NIP). The  
$
NIP is designed to stabilize local property values through the demolition and greening  
of vacant blighted homes. Funding comes from the fifth round of funding under the  
U.S. Treasury's Hardest-Hit Fund, a program started in 2010 to help struggling  
homeowners avoid foreclosure and communities tackle blight in areas particularly  
affected by the housing crisis. To be eligible for funding under NIP, counties must have  
a county land reutilization corporation. The table below shows the 18 county land  
reutilization corporations receiving awards and the total award amount under the July  
award announcement.  
Budget Footnotes  
20  
September 2016  
Ohio Legislative Service Commission  
Neighborhood Initiative Program Awards by County Land  
Reutilization Corporations  
County Land Reutilization Corporation  
Award  
$31,264,000  
$13,809,078  
$12,189,568  
$8,182,016  
$6,894,969  
$6,566,271  
$6,436,638  
$6,017,166  
$3,107,342  
$2,704,305  
$1,775,624  
$1,393,673  
$1,043,179  
$750,000  
Cuyahoga  
Lucas  
Franklin  
Montgomery  
Mahoning  
Trumbull  
Summit  
Stark  
Hamilton  
Ashtabula  
Butler  
Richland  
Erie  
Lake  
Clark  
$634,786  
Jefferson  
Portage  
Fairfield  
$634,786  
$450,000  
$443,906  
TOTAL  
$104,297,307  
Awards were based on each county's request for demolition funds and track  
record in using previous awards under earlier rounds of NIP funding. The maximum  
amount of assistance per property under NIP is $25,000. Since 2010, the U.S. Treasury  
has provided a total of $762.3 million in Hardest-Hit Fund allocations to OHFA to  
administer the state's foreclosure prevention and neighborhood stabilization programs.  
Of this amount, $238.0 million has been allocated for the demolition of blighted  
residential properties under NIP.  
Department of Developmental Disabilities Announces  
Expansion of Employment First Partnership  
Jacquelyn Schroeder, Budget Analyst, 614-466-3279  
On July 1, 2016, the Ohio Department of Developmental Disabilities (ODODD)  
announced the expansion of the Employment First Program. Employment First is a  
partnership between ODODD and the Opportunities for Ohioans with Disabilities  
Agency (OOD) that seeks to ensure that individuals with disabilities have the  
opportunity to gain community employment. ODODD is increasing funding for  
vocational rehabilitation (VR) counseling services by approximately $400,000, which  
September 2016  
21  
Budget Footnotes  
Ohio Legislative Service Commission  
will bring total program funding for these activities to $2.2 million. This additional  
funding will allow for the hiring of five new VR counselors who will serve an  
additional 300 individuals with disabilities seeking community employment. The new  
counselors will be placed in regions that were identified as having the greatest need  
based on the number of open cases and projected referrals. These regions will serve  
1
and OOD estimate that the Employment First Program will serve a total of 1,800 in  
federal fiscal year 2017.  
4 counties and include Akron, Dayton, Cleveland, Mansfield, and Toledo. ODODD  
The Employment First initiative was created on March 19, 2012, by Executive  
Order 2012-05K. Since the start of the program in October 2013, 700 individuals have  
been successfully employed for an average of approximately 19 hours per week at an  
average wage of $8.54 per hour. State funding for the program is provided through GRF  
appropriation item 322508, Employment First Initiative, which is within ODODD's  
budget. Federal match for the program is received through the Consolidated Federal  
Fund (Fund 3790) and expended through appropriation item 415616, Federal -  
Vocational Rehabilitation, which is within OOD's budget.  
ODE Contracts for ACT and SAT as State's College Readiness Tests  
Anthony Kremer, Budget Analyst, 614-466-5654  
In June 2016, the Ohio Department of Education (ODE) contracted with ACT,  
Inc., and the College Board to provide their respective ACT and SAT college readiness  
tests at state expense as part of the state's college and work ready assessment system.  
H.B. 487 of the 130th General Assembly required ODE and the Ohio Department of  
Higher Education (ODHE) to jointly select nationally standardized college admissions  
assessments that will be administered to all juniors in the spring of each school year.  
Statewide administration of the state-funded tests will occur for the first time in 2017.  
ODE expects approximately 140,000 high school juniors annually to take either the ACT  
or SAT. Each district and community school will choose to administer one test or the  
other. A district's selection applies to all of its schools each school year but may change  
from one year to the next. Under the contracts, the state will pay $36.35 per student for  
the SAT and $40.00 per student for the ACT. These costs are paid primarily from  
GRF line item 200437, Student Assessment.  
The results of the college readiness tests may be used to meet the new graduation  
testing requirements H.B. 487 established for students entering ninth grade in the  
2014-2015 school year (the class of 2018) and beyond. In addition to applicable curriculum  
requirements, such students must satisfy testing requirements for a diploma in one of  
three ways, including scoring at a "remediation free" level on one of the two college  
Budget Footnotes  
22  
September 2016  
Ohio Legislative Service Commission  
readiness tests.8 Currently, this requirement can be met by earning English, reading, and  
math subscores of at least 18, 22, and 22, respectively, on the ACT or writing, reading,  
9
and math subscores of at least 430, 450, and 520, respectively, on the SAT.  
Ohio Arts Council Announces FY 2017 Grant Awards  
Adam Wefler, Budget Analyst, 614-466-0632  
On July 27, 2016, the Ohio Arts Council (OAC) approved 630 grants for FY 2017  
totaling more than $12 million. According to OAC, 118 new applicants received awards  
this year. Funding for the grants from GRF appropriation item 307502, State Program  
Subsidies, has been increasing in recent years. Appropriations increased by  
$
2.75 million in FY 2016 and an additional $500,000 in FY 2017.  
The bulk of the grant awards were distributed through four major funding  
categories: Operating Support, Project Support, Arts Learning, and Individual Artists.  
Each of these four categories is comprised of one or more individual programs. The  
table below summarizes the number of grantees and the amount awarded by category  
and program.  
Ohio Arts Council Grant Awards Summary, FY 2017  
Funding Category  
Program  
Sustainability  
Grantees  
285  
18  
Amount Awarded  
$10,303,837  
$62,900  
Operating Support  
Arts Access  
Arts Partnerships  
Artist in Residence  
ArtSTART  
58  
$824,997  
Arts Learning  
13  
$32,000  
100  
38  
$324,302  
Project Support  
ArtsNEXT  
$337,799  
Individual Artists  
Other  
Traditional Arts Apprenticeships  
Various  
8
$32,000  
110  
630  
$418,771  
TOTAL  
$12,336,606  
As the table shows, OAC allocates the vast majority of funding to the Operating  
Support category's Sustainability program, which provides four-year funding support  
for established large and mid-sized arts organizations. The Arts Learning category  
supports projects in arts education and helps community arts organizations work with  
8 The other two options are to accumulate a certain number of points on end-of-course  
exams or earn a State Board of Education-approved industry-recognized credential and achieve  
a "workforce readiness score" on the state-selected job skills assessment.  
9
Under state law, remediation free levels are set periodically by Ohio's university  
presidents. According to ODE, these score thresholds may change based on the revised SAT  
exam that debuted earlier this year.  
September 2016  
23  
Budget Footnotes  
Ohio Legislative Service Commission  
local schools. The Project Support category helps organizations complete short-term  
and experimental projects. The Individual Artists category allows master artists to train  
apprentices. OAC also awarded funding under various other programs, including  
Artists with Disabilities Access, Building Cultural Diversity, Capacity Building, and  
Ohio Artists on Tour to name a few. Additional details regarding these programs are  
available on OAC's website at: http://www.oac.ohio.gov/grants.  
Criminal Justice Services Awards $2.8 million  
in Federal Family Violence Prevention and Services Act Grants  
Maggie Wolniewicz, Senior Budget Analyst, 614-995-9992  
On June 15, 2016, the Office of Criminal Justice Services awarded $2.8 million in  
federal Family Violence Prevention and Services Act grants for 60 projects in  
4
9 counties. The grants were awarded to nonprofit and faith-based associations to  
establish, maintain, and expand projects that prevent incidents of family violence or  
provide immediate shelter and related assistance for family violence victims and their  
dependents. Both new and continuation projects were eligible to apply for a grant  
award of up to $50,000. New projects had to provide a local funding match of at least  
3
5% of the project's total cost during the time period covered by the grant; continuation  
projects had to provide at least 20%. All but one of the 60 grants awarded were for  
continuation projects. Individual project awards ranged from $27,471 to the $50,000  
maximum, which was received by 22 projects in 21 counties. The average award was  
$
46,774. A list of project awards can be found on the office's website:  
www.ocjs.ohio.gov/.  
State and Local Governments Received a Total of $1.80 billion  
in State Motor Fuel Tax Revenue in FY 2016  
Tom Middleton, Budget Analyst, 614-728-4813  
Revenue from the $0.28 per gallon state motor fuel tax (MFT) amounted to  
1.80 billion in FY 2016, a 2.4% decrease from revenue of $1.84 billion in FY 2015, when  
$
MFT revenue recorded a ten-year high. Under the Ohio Constitution, MFT revenue  
must be spent on highway purposes. The revenue is distributed to various state  
agencies and local governments by statutory formula. The Highway Operating Fund  
(
Fund 7002), used by the Ohio Department of Transportation (ODOT), received the  
largest share at 56.5% ($1.01 billion) of the total MFT revenue distributed in FY 2016.  
Another 6.7% ($119.7 million) of MFT revenue was used to cover debt service on  
highway capital improvement bonds issued for ODOT to fund more highway  
construction and pavement and bridge preservation projects.  
Budget Footnotes  
24  
September 2016  
Ohio Legislative Service Commission  
Local governments received the second largest share of MFT revenue, totaling  
561.0 million (31.2%) of distributions in FY 2016 for road and bridge projects. In  
$
addition to this money, $61.5 million (3.4%) of total MFT revenue in FY 2016 was  
directed toward the Public Works Commission for local road and bridge projects under  
the Local Transportation Improvement Program (LTIP). Other state agencies, including  
the (1) Development Services Agency, (2) Department of Natural Resources, (3) Public  
Utilities Commission of Ohio, and (4) Department of Taxation, each received between  
$
1 million and $16 million in FY 2016 MFT revenue to support various transportation-  
related programs and activities overseen by the agencies.  
Ohio EPA Awards $328,553 in Mosquito Control Grants  
Robert Meeker, Budget Analyst, 614-466-3839  
On June 16, 2016, the Ohio Environmental Protection Agency (Ohio EPA)  
announced the first round of mosquito control grants totaling $328,553 to 17 local health  
departments and a collaborative project between Ohio State and the city of Cleveland  
1
0
Department of Public Health. The purpose of these competitively awarded grants is to  
support a larger statewide effort by the Ohio Department of Health to lessen the  
likelihood of an outbreak of mosquito-borne viruses such as Zika, West Nile, and  
La Cross Encephalitis.  
The grants will be used to implement one or more of the following activities:  
(1) mosquito surveillance, (2) larval control, (3) adult mosquito control, e.g., spraying,  
(4) community outreach, and (5) breeding source reduction, e.g., trash and tire removal.  
Grant awards range from $2,100 to the Coshocton County Health Department to  
$
$
44,800 to the Trumbull County Combined Health District. The average grant amount is  
18,253.  
The Ohio EPA plans to award a second round of mosquito control grants in  
FY 2017 totaling $691,340. Both rounds are drawing on money appropriated from the  
Scrap Tire Management Fund (Fund 4R50), which is primarily supported by a $0.50 per  
tire fee on the sale of tires, and the Environmental Protection Remediation Fund  
(Fund 5410), which is mainly supported by money collected from enforcement  
settlement actions.  
1
0
The list of individual awards can be found on the Ohio EPA's website:  
http://epa.ohio.gov/News/OnlineNewsRoom/NewsReleases/TabId/6596/ArticleId/971/language/  
en-US/month/6/year/2016/ohio-epa-announces-first-round-of-statewide-mosquito-control-  
grants.aspx.  
September 2016  
25  
Budget Footnotes  
Ohio Legislative Service Commission  
ODHE Awards Higher Education Innovation Grants  
Edward Millane, Senior Budget Analyst, 614-995-9991  
In July, the Ohio Department of Higher Education (ODHE) awarded $5 million  
in the first round of funding under the Ohio Higher Education Innovation Grant  
Program to six institutions of higher education and their partners. The program  
supports projects that seek to enhance the quality of higher education and make it more  
affordable. H.B. 64 earmarked $5 million in each fiscal year from Fund 5RA0 line item  
2
35616, Workforce and Higher Education Programs, to support the program. This fund  
received a transfer of FY 2015 GRF surplus revenues. ODHE plans to request proposals  
for the second round of grants later this fall, with awards likely determined sometime  
in the early months of 2017. The lead institution receiving a first round award, the  
amount of the award received, and a brief description of each project are listed below.  
Lakeland Community College ($1,965,684). Funds will be used to create the  
Pathways to Careers project, which will focus on the comprehensive use of data  
analytics to support better space utilization and course management strategies.  
The Ohio Association of Community Colleges will administer the project on  
behalf of the participating four universities and 18 community colleges.  
Columbus College of Art and Design (CCAD) ($998,000). Funds will be used  
to support the Credit for Life Integrated Portfolio (CLIP) program, which will  
assist schools in creating online portfolios for students to submit  
demonstrated, life-learning experience for college credit. CCAD developed  
CLIP in collaboration with Franklin University.  
Northwest State Community College ($607,458). Funds will be used to  
standardize procedures and consolidate administrative services and software  
that will be shared by Northwest State and Terra State community colleges.  
Shawnee State University ($517,545). Funds will be used to establish the  
Bridge to Success Program, which will provide an accelerated remediation  
program and other support services to a selected group of students who  
intend to enroll at Shawnee and that have been identified as academically  
unprepared, low income, and the first in their families to go to college.  
Students in the program will also receive support from Southern State  
Community College, Scioto Career Technical Center, Ohio University –  
Southern, and the Lawrence County Educational Service Center.  
Stark State College ($506,484). Funds will be used to create the ShaleNet  
Measurement and Mechatronics Technician degree program, which will  
educate and train students for work in the oil and gas industry on an  
accelerated 18-month schedule. The program will be open to students at Stark  
and its partnering schools, Eastern Gateway Community College and  
Hocking College.  
Budget Footnotes  
26  
September 2016  
Ohio Legislative Service Commission  
Sinclair Community College ($404,649). Funds will be used to support the  
Guided Pathways Model for Student Success, which will be a collaboration  
between Sinclair and Columbus State Community College to develop  
pathway coursework and to map out career choices to assist their students.  
The proposed project builds on a successful initiative at Sinclair.  
September 2016  
27  
Budget Footnotes  
Ohio Legislative Service Commission  
TRACKING THE ECONOMY  
Ruhaiza Ridzwan, Senior Economist, 614-387-0476  
Overview  
The U.S. economy continues to expand. Inflation-adjusted gross  
domestic product (real GDP) rose at an annualized rate of 1.1% in the  
second quarter, largely attributed to gains in consumer spending and  
exports. The U.S. economy continued to add more jobs, however, job  
gains slowed in August. Consumer spending increased at an  
annualized rate of 4.4% in the second quarter of 2016 compared to 1.6%  
in the first quarter and continued to grow in July. Sales of light vehicles  
decreased in August but remained at a high level. Personal income  
grew in July. Wages and salaries also increased. Inflation remained low.  
U.S. housing markets remained strong.  
U.S.  
employment  
grew 151,000  
in August after  
surging for two  
straight  
In Ohio, nonfarm payroll employment rose by 11,400 in July. The  
state's unemployment rate edged down to 4.8% in July, but was slightly  
higher than in July 2015. The state's unemployment rate in July was  
lower than the U.S. unemployment rate of 4.9%. The number of workers  
that are classified as unemployed in Ohio in July was more than in July  
of the previous year. In Ohio, the number of homes sold in the first  
seven months of this year was higher than in the year-earlier period,  
months. The  
unemployment but sales in July were lower.  
rate was  
The National Economy  
unchanged in  
Employment and Unemployment  
August,  
Total nonfarm payroll rose by 151,000 jobs in August,  
remaining at  
following two consecutive months of robust gains. The  
unemployment rate in August was unchanged at 4.9% since June.  
The total number of unemployed persons increased by 79,000 to  
4
.9% since  
June.  
7
.8 million in August; the number of unemployed persons in August  
was lower than total unemployed persons in August 2015. The labor  
force increased by 176,000 in August; the labor force participation  
rate was unchanged. Total employment gains in June and July were  
revised downward by a net 1,000 compared to the previously  
reported gains. Total nonfarm payroll as of March 2016 will be  
lowered by an estimated 150,000, 0.1% from the currently published  
level, according to the Bureau of Labor Statistics (BLS), when the  
Budget Footnotes  
28  
September 2016  
Ohio Legislative Service Commission  
annual benchmark of employment statistics is published next year.11  
Chart 5 shows trends in U.S. employment and unemployment over  
the last ten years.  
Over the 12 months ending in August, employment gains averaged  
2
04,000. Year-to-date monthly employment gains averaged 182,000  
compared to 229,000 per month in 2015. Compared to July, August saw  
significant employment gains in building material and garden supply  
stores, finance and insurance, and healthcare and social assistance.  
During the 12 months ending in August, employment gains were largest  
in education and health services, professional and business services,  
leisure and hospitality, and retail trade. Job losses occurred primarily in  
mining and logging and in manufacturing.  
Chart 5: U.S. Employment and Unemployment  
1
1
1
1
1
1
1
1
1
1
45  
43  
41  
39  
37  
35  
33  
31  
29  
27  
11.0%  
1
9
8
7
6
5
0.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
4.0%  
Nonfarm Employment  
Unemployment Rate (right scale)  
Production  
Real GDP grew at an annualized rate of 1.1% in the second quarter  
of 2016 following growth at a 0.8% rate in the first quarter, according to  
the revised estimate published by the U.S. Bureau of Economic Analysis  
(BEA) in August. The increase was largely due to gains in consumer  
spending and exports. Growth was reduced by declines in private  
inventory investment, residential fixed investment, state and local  
government spending, and nonresidential fixed investment. The estimate  
of second quarter real GDP growth was revised downward from an  
11 Each year, BLS revises the Current Employment Statistics (CES) survey  
estimates by incorporating the comprehensive counts of employment for the  
month of March based on actual state unemployment insurance tax records. The  
estimate released this month is preliminary.  
September 2016  
29  
Budget Footnotes  
Ohio Legislative Service Commission  
annualized rate of 1.2%, mainly due to lower state and local government  
spending and private inventory investment than previously estimated.  
Annual revisions to estimates for earlier years increased growth slightly.  
Industrial production increased 0.7% in July, with gains in all  
major sectors. The increase in July was the largest since November 2014,  
when the index rose to its highest level ever. Manufacturing output rose  
0
.5% in July and 0.2% compared to a year ago. The gain in July was the  
largest since July 2015. The index of factory output remained below its  
all-time peak in 2007. The output of utilities increased 2.1% in July due to  
above-normal temperatures. Mining output rose 0.7% in July following a  
decrease in June.  
Manufacturing activity declined in August after expanding for  
five straight months, according to a monthly survey of purchasing  
managers reported by the Institute for Supply Management (ISM). New  
orders, production, employment, inventories, order backlogs, and  
imports decreased. Nonmanufacturing activity continued to grow but at  
a slower pace in August. Nonmanufacturing business activity, new  
orders, employment, prices, and imports continued to increase.  
Nonmanufacturing inventories, order backlogs, and new export orders  
declined.  
Consumer Spending and Personal Incomes  
Retail and food services sales were unchanged from June to July  
but increased 2.3% compared to a year earlier. Motor vehicle and parts  
dealers sales increased 1.1% in July and increased 2.4% from July 2015.  
Retail and food services sales excluding motor vehicle and parts declined  
0
.3% in July but increased 2.2% from July 2015. Sales for food services  
and drinking places declined 0.2% in July but increased 5.0% compared  
to July 2015. Food and beverage stores decreased 0.6% in July but  
increased 1.4% from July 2015. Nonstore retailers and health and  
personal care stores increased by 14.1% and 7.8%, respectively, from a  
year earlier. Both gasoline stations and electronic and appliance stores  
decreased compared to a year earlier.  
Personal income rose 0.4% in July after increasing 0.3% in June.  
Wages and salaries edged up for a fifth straight month. Personal savings  
increased to 5.7% of disposable income in July after declining to 5.5% in  
June. Real consumer spending rose 0.3% in July after increasing 0.4% in  
June. Both consumer spending for durable goods and services grew in  
July.  
Budget Footnotes  
30  
September 2016  
Ohio Legislative Service Commission  
Sales of light vehicles declined in August. The annualized rate of  
U.S. total light vehicle sales was 16.9 million in August, seasonally  
adjusted, compared to 17.8 million in July and 17.6 million in  
August 2015. Total light vehicles sales from January to August averaged  
1
7.2 million units, unchanged compared to the average sales during the  
same period in 2015.  
Home Sales  
Sales of existing homes nationwide decreased by 3.2% on a  
seasonally adjusted basis in July, after increasing for four consecutive  
months, according to the National Association of Realtors. Compared to  
July 2015, sales of existing homes were down by 1.6%. Existing home sales  
in the Midwest fell by 5.2% on a seasonally adjusted basis in July but were  
unchanged compared to July 2015.  
In July, sales of new single-family houses increased to 654,000 units  
on  
a
seasonally adjusted annualized rate, according to the  
U.S. Department of Commerce. This was 12.4% above the revised June  
rate of 582,000 units and was 31.3% above the previous July's estimate of  
4
$
98,000 units. The median sales price of new houses sold in July 2016 was  
294,600 while the average sales price was $355,800. In the Midwest, sales  
of new single-family houses increased by 1.2% from June to July and by  
3
5.5% compared to July 2015.  
The number of building permits issued nationwide decreased by  
.1% on a seasonally adjusted basis in July from the revised June rate but  
0
was 0.9% above the July 2015 estimate. U.S. housing starts increased by  
2
.1% on a seasonally adjusted basis in July from the revised June estimate  
and 5.6% above the July 2015 rate. In the Midwest, housing starts  
increased by 2.3% from June to July and also by 2.3% compared to  
July 2015.  
Inflation  
Consumer Prices  
The consumer price index for all urban consumers (CPI-U) was  
unchanged in July, on a seasonally adjusted basis. The CPI-U rose 0.2% in  
June. Compared to a year earlier, the CPI-U increased 0.8% in July. The  
food index was unchanged in July after decreasing in May and June. The  
energy index declined 1.6% in July following gains for four straight  
months. The decrease was due to the gasoline index, which decreased  
4
.7% in July after increasing in four consecutive months.  
September 2016  
31  
Budget Footnotes  
Ohio Legislative Service Commission  
The core inflation, as measured by the CPI-U excluding food and  
energy, was 0.1% in July, seasonally adjusted, as reported by BLS. The  
CPI core index was up 0.2% in June and increased 2.2% over July of last  
year. Some of the largest 12-month percentage increases in the core CPI  
index were in medical care services (4.1%), medical care commodities  
(3.6%), and shelter (3.3%).  
The U.S. average regular gasoline retail price was $2.22 per gallon  
on September 5, 2016, according to the U.S. Energy Information  
Administration's weekly survey. Chart 6 shows weekly U.S. average  
regular gasoline retail prices since September 2014.  
Chart 6: Weekly U.S. Regular All Formulations Retail Gasoline  
Prices (Dollars per Gallon)  
$
$
$
$
$
$
$
4.00  
3.50  
3.00  
2.50  
2.00  
1.50  
1.00  
Producer Prices  
The producer price index (PPI) for final demand decreased 0.4% in  
July, seasonally adjusted, after increasing 0.5% in June and 0.4% in May.  
The decrease in July was due to decreases in prices for both final demand  
services and final demand goods. The final demand index decreased  
0
.2% compared to a year earlier.  
Prices for final demand less food, energy, and trade services were  
unchanged in July following a 0.3% increase in June. The index for final  
demand less food, energy, and trade services increased 0.8% compared to  
a year earlier.  
Budget Footnotes  
32  
September 2016  
Ohio Legislative Service Commission  
The Ohio Economy  
Employment and Unemployment  
In July, Ohio's total nonfarm payroll employment, seasonally  
adjusted, rose by 11,400, or about 0.2% from June's revised total, following  
an increase of 10,300 jobs from May to June. The state's nonfarm payroll  
employment was 78,800, or 1.5% higher than in July 2015. Employment  
gains during the past year were in healthcare and social assistance,  
accommodation and food services, state government (including public  
universities), and professional, scientific, and technical services.  
In July, employment in private service-producing industries and In July, Ohio's  
government increased by 8,000 and 4,700, respectively, while employment  
unemployment  
in goods-producing industries decreased by 1,300. The increase in private  
service-producing industries was more than accounted for by educational  
and health services (+5,000), trade, transportation, and utilities (+2,700),  
rate was  
slightly below  
and professional and business services (+2,100). Government employment the U.S.  
increased in local (+3,100) and state (+1,700) governments but federal  
employment decreased (-100). The goods-producing industries showed an  
increase in manufacturing (+2,600) but decreases in mining and logging  
unemployment  
rate.  
(-300) and in construction (-3,600).  
The state's unemployment rate edged down from 5.0% in June to  
4
.8% in July, but was slightly higher than in July 2015. In comparison, the  
U.S. unemployment rate was 4.9% in July, same as in June, but lowered from  
.3% in July 2015. The state's unemployment rate in July 2016 was lower than  
5
the U.S. unemployment rate. The number of workers that are classified as  
unemployed in Ohio was 278,000 in July, 11,000 more than in July 2015.  
Chart 7 shows U.S. and Ohio unemployment rates over the last ten years.  
Chart 7: U.S. and Ohio Unemployment Rates  
1
1
1
2.0%  
1.0%  
0.0%  
9
8
7
6
5
4
3
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
U.S.  
Ohio  
33  
September 2016  
Budget Footnotes  
Ohio Legislative Service Commission  
Ohio Home Sales  
In July, the number of existing homes sales in the state decreased  
by 7.0% compared to July 2015, according to the Ohio Association of  
Realtors. Existing home sales rose by 4.8% in the first seven months of  
this year compared with the corresponding months of 2015. The  
statewide sales price of homes sold in the first seven months of 2016  
averaged $163,173, 4.2% higher than the corresponding period a year  
earlier.  
Regional Economy  
Economic activity within the Federal Reserve Bank of Cleveland's  
district grew at a modest pace in recent months, according to the Beige  
1
2
Book report released in September. Manufacturing output rose slightly,  
but steel manufacturers reported positive expectations due to the  
increase in domestic steel prices. The suppliers to motor vehicle,  
aerospace, commercial construction, housing, and food industries  
continued to note an "elevated" level of activity. Sales of new and  
existing single-family homes remained robust. Prices of building  
Sales of  
existing single- materials increased modestly according to home builders and  
commercial contractors. Retailers noted higher revenues at the start of  
the third quarter in comparison to the same period in the previous year,  
supported by expanding labor markets, low gas prices, and sales  
promotion. Restauranteurs stated that softer retail sales were offset by a  
gain in corporate catering sales. Sales of new vehicles declined in the first  
seven months of 2016 compared to the same months in the previous year.  
Sales of light trucks, including SUVs and crossovers, outperformed car  
sales. Commercial and retail lending activity continued to grow at a  
steady pace, with the strongest demand in commercial real estate loans,  
mergers and acquisitions financing, auto loans, and home equity  
products. Natural gas production in the Marcellus and Utica shales  
remained at the highest level ever but grew at a slower pace over the last  
few months.  
family homes  
in Ohio  
remained  
robust.  
1
2
The Summary of Commentary on Current Economic Conditions  
commonly known as the "Beige Book") summarizes information from business  
(
and other contacts outside of the Federal Reserve System. Information in the  
latest report was collected on or before August 29, 2016. The Federal Reserve  
Bank of Cleveland's district includes all of Ohio and parts of Kentucky,  
Pennsylvania, and West Virginia.  
Budget Footnotes  
34  
September 2016