Budget Footnotes  
A NEWSLETTER OF THE OHIO LEGISLATIVE SERVICE COMMISSION  
OCTOBER 2016  
VOLUME 40, NUMBER 2  
STATUS OF THE GRF  
STATUS OF THE GRF  
Highlights...................................1  
Revenues ..................................2  
Expenditures............................12  
HIGHLIGHTS  
Ross Miller, Chief Economist, 614-644-7768  
ISSUE UPDATES  
GRF tax revenues eked out a positive variance of just  
Unemployment Compensation  
Debt......................................21  
School Report Cards ...............22  
Community School Facilities  
Grants ..................................22  
Ohio's Unified Disability  
under $9 million in September, despite relatively small  
negative variances for both the sales and use tax and the  
personal income tax. For the full first quarter of FY 2017  
recent trends continued, with GRF tax revenues below the  
Determination System..........23  
August estimates of the Office of Budget and Management Agricultural Society Facilities  
Grants ..................................24  
(
program expenditures also below estimates by a total of  
$
OBM) by almost $72 million, and year-to-date GRF  
Local Government Innovation  
Council Awards ....................25  
Medical Marijuana Control  
198.1 million.  
Program ...............................26  
Mosquito Control Grants..........26  
Ohio's unemployment rate fell to 4.7% in August, less  
than the national rate of 4.9% that month. Ohio nonfarm  
payroll employment decreased 2,000 from July to August,  
TRACKING THE ECONOMY  
with job losses in the private service-providing sector The National Economy ............28  
The Ohio Economy..................32  
outweighing job gains elsewhere in the economy.  
Through September 2016, GRF sources totaled $8.52 billion:  
Revenue from the personal income tax was  
$73.0 million below estimate;  
Sales and use tax receipts were $28.2 million below  
estimate.  
Through September 2016, GRF uses totaled $10.08 billion:  
GRF Medicaid expenditures were $288.7 million  
below estimate;  
Positive variances for Primary and Secondary  
Education ($51.5 million) and Property Tax  
Reimbursements ($50.8 million) were primarily  
timing related.  
Legislative Service Commission  
7
7 South High Street, 9th Floor  
Columbus, Ohio 43215  
Telephone: 614-466-3615  
AVAILABLE ON OUR WEBSITE: WWW.LSC.OHIO.GOV  
CLICK ON 'PUBLICATIONS/BUDGET FOOTNOTES'  
Ohio Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of September 2016  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on October 3, 2016)  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
TAX REVENUE  
Auto Sales  
$120,455  
$126,800  
-$6,345  
-5.0%  
Nonauto Sales and Use  
Total Sales and Use Taxes  
$718,424  
$718,700  
-$276  
0.0%  
$838,879  
$845,500  
-$6,621  
-0.8%  
Personal Income  
$789,942  
-$198  
$801,800  
$0  
-$11,858  
-$198  
$505  
-1.5%  
---  
Corporate Franchise  
Financial Institution  
Public Utility  
$505  
$0  
---  
$75  
-$300  
$29,100  
$0  
$375  
125.0%  
31.5%  
---  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
$38,266  
$0  
$9,166  
$0  
$8,130  
$1,542  
$9,558  
$0  
$5,500  
$1,200  
$3,900  
$0  
$2,630  
$342  
47.8%  
28.5%  
145.1%  
---  
$5,658  
$0  
-$683  
$0  
-$683  
$6,234  
$3,003  
$34  
---  
$84,134  
$7,203  
$3,834  
$90  
$77,900  
$4,200  
$3,800  
$0  
8.0%  
71.5%  
0.9%  
---  
Alcoholic Beverage  
Liquor Gallonage  
Estate  
$90  
Total Tax Revenue  
$1,781,276  
$1,772,600  
$8,676  
0.5%  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$3  
$1,426  
$0  
$1,995  
$1,410  
$3,405  
$3  
-$569  
---  
-28.5%  
713.6%  
278.9%  
$11,471  
$12,900  
$10,061  
$9,495  
Total Nontax Revenue  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$1,416  
$1,416  
$0  
$0  
$0  
$0  
$1,416  
$1,416  
---  
---  
---  
TOTAL STATE SOURCES  
Federal Grants  
$1,795,591  
$940,911  
$1,776,005  
$1,050,111  
$2,826,116  
$19,586  
-$109,200  
-$89,614  
1.1%  
-10.4%  
-3.2%  
TOTAL GRF SOURCES  
$2,736,502  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
2
October 2016  
Ohio Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate  
FY 2017 as of September 30, 2016  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on October 3, 2016)  
Percent  
Change  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
FY 2016  
TAX REVENUE  
Auto Sales  
$366,044  
$374,700  
-$8,656  
-2.3%  
$364,629  
0.4%  
Nonauto Sales and Use  
$2,287,666  
$2,307,200  
-$19,534  
-0.8%  
$2,249,638  
1.7%  
Total Sales and Use Taxes  
$2,653,710  
$2,681,900  
-$28,190  
-1.1%  
$2,614,267  
1.5%  
Personal Income  
$1,987,458  
-$496  
$2,060,500  
$0  
-$73,042  
-$496  
-3.5%  
---  
$2,081,152  
$2,364  
-4.5%  
-121.0%  
378.2%  
-16.8%  
4.0%  
Corporate Franchise  
Financial Institution  
Public Utility  
$1,278  
$0  
$1,278  
-$1,743  
$11,212  
-$182  
---  
-$459  
$23,457  
$98,612  
$11,918  
$298,382  
$1,542  
$25,200  
$87,400  
$12,100  
$300,600  
$1,200  
$4,500  
$0  
-6.9%  
12.8%  
-1.5%  
-0.7%  
28.5%  
127.1%  
---  
$28,194  
$94,779  
$12,060  
$283,565  
$1,350  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
-1.2%  
-$2,218  
$342  
5.2%  
14.2%  
85.1%  
$10,220  
$2,370  
$5,720  
$2,370  
-$678  
$5,522  
$6 42337.2%  
-$678  
$0  
---  
$28  
-2501.2%  
-3.0%  
$194,700  
$18,021  
$11,788  
$73  
$185,900  
$13,700  
$11,300  
$0  
$8,800  
$4,321  
$488  
4.7%  
31.5%  
4.3%  
---  
$200,635  
$12,041  
$11,333  
$148  
Alcoholic Beverage  
Liquor Gallonage  
49.7%  
4.0%  
Estate  
$73  
-50.5%  
-0.6%  
Total Tax Revenue  
$5,312,354  
$5,384,300  
-$71,946  
-1.3%  
$5,346,984  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$9  
$9,127  
$0  
$8,550  
$3,525  
$12,075  
$9  
$577  
---  
6.7%  
$8  
$7,911  
$3,887  
$11,806  
3.2%  
15.4%  
$49,180  
$58,316  
$45,655  
$46,241  
1295.2%  
382.9%  
1165.4%  
393.9%  
Total Nontax Revenue  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$15,309  
$15,309  
$0  
$12,500  
$12,500  
$0  
$2,809  
$2,809  
---  
22.5%  
22.5%  
$0  
$165,064  
$165,064  
---  
-90.7%  
-90.7%  
TOTAL STATE SOURCES  
Federal Grants  
$5,385,979  
$3,132,170  
$8,518,149  
$5,408,875  
$3,344,275  
$8,753,150  
-$22,896  
-$212,105  
-$235,002  
-0.4%  
-6.3%  
-2.7%  
$5,523,854  
$2,951,060  
$8,474,914  
-2.5%  
6.1%  
0.5%  
TOTAL GRF SOURCES  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
October 2016  
3
Budget Footnotes  
Ohio Legislative Service Commission  
REVENUES  
Jean J. Botomogno, Principal Economist, 614-644-7758  
Overview  
GRF sources1 ended the first quarter of FY 2017 with a cumulative  
negative variance of $235.0 million compared to OBM's estimates of  
August 2016. That result was due largely to a shortfall of $212.1 million  
in federal grants (which are primarily related to the level of spending in  
Federal grants  
were  
$212.1 million  
2
the Medicaid program ) but also a deficit of $22.9 million in state-sources.  
below estimate  
in the first  
quarter of  
FY 2017.  
Regarding the latter, though nontax revenue and transfers in were  
$46.2 million and $2.8 million above their respective estimates, GRF tax  
sources were below projected revenue by $71.9 million. The  
underperformance of tax sources in the first three months of the fiscal  
year continues a trend started in FY 2016, when GRF tax revenue ended  
3
the year 1.0% ($216.0 million) under expectations. Of concern are the  
two largest GRF tax sources, the personal income tax (PIT) and the sales  
and use tax, which were below estimates by a total of $101.2 million in  
the first quarter of FY 2017. Both tax sources performed poorly in FY 2016  
and are continuing to do so early in FY 2017, though this year's revenue  
estimates from OBM took into account FY 2016's underperformance.  
Tables 1 and 2 above, show GRF sources for September and for FY 2017  
year to date through September, respectively.  
GRF tax  
For the month of September, total GRF sources of $2.74 billion  
were $89.6 million below projections, due to a negative variance of  
revenue was  
$
109.2 million in federal grants. Partially offsetting that negative  
variance, tax sources, nontax revenue, and transfers in were $8.7 million,  
9.5 million, and $1.4 million above estimates, respectively. Most tax  
$
71.9 million  
below estimate  
in the first  
quarter of  
FY 2017.  
$
sources posted positive results for the month, but there were negative  
variances of $6.6 million for the sales and use tax and $11.9 million for  
the PIT. The kilowatt-hour excise tax, the cigarette tax, and the foreign  
insurance tax exceeded projections by $9.2 million, $6.2 million, and  
$
5.7 million, respectively. Also, the alcoholic beverage tax and the  
1
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.  
2 First-quarter GRF Medicaid expenditures were $288.7 million below  
estimate.  
3 OBM estimates for FY 2016 were revised downward 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.  
Budget Footnotes  
4
October 2016  
Ohio Legislative Service Commission  
commercial activity tax (CAT) had positive variances of $3.0 million and  
2.6 million. Variances for the remaining tax sources were small. The chart  
$
below illustrates the cumulative performance of total GRF sources relative  
to estimates through September 2016. As mentioned above, major  
categories of GRF sources were below estimates.  
Chart 1: Cumulative Variances of GRF Sources in FY 2017  
(
Variance from Estimates, in millions)  
$
50  
First-quarter  
GRF sources in  
FY 2017 were  
below  
$
0
Jul-16  
Aug-16  
Sep-16  
-
$50  
-
-
-
-
$100  
$150  
$200  
$250  
estimates by  
$
235.0 million.  
Federal Grants  
Tax Revenue  
Total GRF Sources  
For the fiscal quarter, the largest tax sources contributed to the  
early tax deficit: the PIT was $73.0 million below anticipated revenue, the  
sales and use tax, $28.2 million, and the CAT, $2.2 million. The public  
utility tax also had a negative variance of $1.7 million. Partially offsetting  
these negative variances were positive variances of $11.2 million for the  
kilowatt-hour excise tax, $8.8 million for the cigarette tax, $5.7 million for  
the foreign insurance tax, $4.3 million for the alcoholic beverage tax,  
FY 2017  
sources  
$
2.4 million for the domestic insurance tax, and $1.3 million for the  
financial institutions tax.  
Compared to the first quarter in FY 2016, FY 2017 GRF sources  
through  
September  
were up  
through September were $43.2 million higher. Federal grants and nontax  
4
revenue increased $181.1 million and $46.5 million, respectively. On the  
other hand, transfers in declined $149.8 million in FY 2017 (due to a large  
transfer of $163 million into the GRF in July 2015), and tax receipts were  
$
43.2 million  
$
34.6 million below FY 2016's level. The decrease in GRF tax sources is  
from one year  
ago.  
largely the result of $93.7 million in decreased PIT revenue through  
September. Other taxes which experienced revenue decreases included the  
cigarette tax ($5.9 million), the public utility tax ($4.7 million), and the  
4 This is primarily as the result of an earlier than expected payment to the  
state from JobsOhio in the amount of $35.7 million in August. The payment was  
expected in October.  
October 2016  
5
Budget Footnotes  
Ohio Legislative Service Commission  
corporate franchise tax (CFT), ($2.9 million).5 Those declines were  
partially offset by increases in revenue from the sales and use tax  
(
(
$39.4 million), the CAT ($14.8 million), the alcoholic beverage tax  
$6.0 million), the kilowatt-hour excise tax ($3.8 million), the domestic  
insurance tax ($2.4 million), and the financial institutions tax  
($1.7 million).  
Personal Income Tax  
The PIT ended the first quarter of FY 2017 as poorly as it ended  
PIT revenue in  
the first  
FY 2016. In the three months ending in September, total GRF revenue  
from the PIT of $1.99 billion was $73.0 million (3.5%) below OBM's  
estimate, including negative variances of $63.2 million (8.8%) in August  
and $11.9 million (1.5%) this month. This performance comes after this  
tax finished the previous fiscal year $217.7 million (2.7%) below estimate,  
including $138.1 million (3.7%) below from January to June of 2016.  
quarter of  
FY 2017 was  
$
73.0 million  
below  
PIT revenue is comprised of gross collections, minus refunds and  
distributions to the Local Government Fund (LGF). Gross collections  
consist of employer withholdings, quarterly estimated payments, trust  
estimate.  
6
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. Employer withholding has lagged estimates in six of the last  
nine months. Similarly to August, the PIT revenue shortfall this month  
was also led by employer withholding, which was $16.8 million (2.4%)  
below estimate. Also, trust payments in September were $1.0 million  
(
11.8%) below estimate. Partially offsetting those deficits, quarterly  
estimated payments and taxes due with annual returns were $9.9 million  
6.5%) and $7.5 million (53.9%), respectively, above estimates. In addition  
to the shortcoming in gross collections, PIT refunds were $13.8 million  
(
(46.5%) higher than expected.  
5
Though GRF receipts were not anticipated after this tax was eliminated  
at the end of 2013, adjustments to tax filings in previous years resulted in CFT  
revenue of $33.2 million in FY 2016.  
6 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
October 2016  
Ohio Legislative Service Commission  
For the fiscal year to date, gross collections were $43.2 million  
below anticipated revenue. Employer withholding was short of estimate  
by a total of $57.4 million, and trust payments were $2.1 million below  
projected revenue. Partially offsetting those negative variances, quarterly  
estimated payments and payments with annual returns were $9.9 million  
and $6.1 million above estimate, respectively, but refunds were  
$
31.5 million above the expected level through September 2016. FY 2017  
revenues through September from each component of the PIT relative to  
estimates and to revenue received in the corresponding period of FY 2016  
are detailed below.  
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  
PIT revenue in  
the first  
Category  
Withholding  
Amount  
$ in millions)  
Percentage  
(%)  
Amount  
($ in millions)  
Percentage  
(%)  
(
-$57.4  
$9.9  
-2.8%  
5.8%  
$30.3  
-$81.5  
-$3.4  
-$6.6  
$5.4  
1.5%  
-31.2%  
-27.0%  
-15.6%  
48.4%  
-2.4%  
28.0%  
6.0%  
quarter of  
FY 2017 was  
Quarterly Estimated Payments  
Trust Payments  
-$2.1  
$6.1  
-18.7%  
20.5%  
1.9%  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
$
93.7 million  
$0.3  
below FY 2016  
revenue  
-$43.2  
$31.5  
-$1.7  
-$73.0  
-1.9%  
27.0%  
-1.7%  
-3.5%  
-$55.8  
$32.4  
$5.5  
Less Refunds  
Less LGF Distributions  
GRF PIT Revenue  
through  
-$93.7  
-4.5%  
September.  
Compared to the first quarter in FY 2016, gross collections fell  
$55.8 million in FY 2017, due to decreases of $81.5 million in quarterly  
estimated payments and $6.6 million in payments due with annual returns.  
However, withholding grew $30.3 million, and miscellaneous payments  
increased $5.4 million; refunds, $32.4 million higher than in FY 2016, helped  
increase the year-over-year decline in PIT net collections.  
Ohio payrolls continue to grow year over year but at a reduced  
pace. Policy changes in H.B. 64 (the biennium budget act), which led to  
reduced withholding rates, took effect in August 2015 and limited year-  
over-year growth throughout FY 2016. The chart below illustrates the  
growth of monthly employer withholdings relative to one year ago.  
(Figures in the chart are not adjusted for the withholding rate changes in  
August 2015, thus actual payroll growth is stronger than presented.) As the  
effects of policy changes are phased out of the year-over-year growth  
calculations, monthly employer withholding would reflect the true growth  
October 2016  
7
Budget Footnotes  
Ohio Legislative Service Commission  
in payrolls. For example, withholding rates were the same in  
September 2015 and September 2016, so year-over-year growth in  
monthly withholding revenue, which was 5.1% for September, would be  
unaffected by the change in withholding.  
Chart 2: Monthly Withholding Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
FY 2017  
6
5
4
3
2
1
0
%
%
%
%
%
%
%
-1%  
Sales and Use Tax  
The sales and use tax is the largest state sourced revenue stream to  
the GRF, but this GRF source has been sluggish for several months.  
Through September in 2016, the tax has posted positive monthly  
performances only twice and experienced consecutive negative variances  
in the last six months.  
FY 2017 first-  
quarter sales  
and use tax  
revenue was  
Sales and use tax revenue to the GRF in September was  
$
838.9 million, $6.6 million (0.8%) below estimate, but $18.3 million  
(2.2%) above sales tax receipts in September 2015. First-quarter GRF  
$
28.2 million  
receipts of $2.65 billion in FY 2017 were $28.2 million (1.1%) below  
estimate and $39.4 million (1.5%) above FY 2016 revenue through  
September. Both the nonauto and auto portions of the sales and use tax  
were below projections.  
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  
Budget Footnotes  
8
October 2016  
Ohio Legislative Service Commission  
tax instead of the auto tax.7 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%.  
Nonauto Sales and Use Tax  
Nonauto sales and use tax collections of $718.4 million in  
September 2016 were $0.3 million (0.0%) below estimate but $23.5 million  
FY 2017 first-  
3.4%) above September 2015 revenue. For the fiscal quarter, GRF revenue  
quarter  
(
of $2.29 billion was $19.5 million (0.8%) below estimate. Compared to  
first-quarter receipts last year, revenue from the nonauto sales and use tax  
grew only $38.0 million (1.7%), while OBM estimates were for modest  
growth of 2.6% because of the recent performance of the tax. Year-over-  
year growth in quarterly revenue fell below 2% for the first time in several  
nonauto sales  
and use tax  
revenue was  
months, underscoring the paltry performance of the tax in recent months. $19.5 million  
Nonauto sales and use tax receipts include tax payments by Medicaid  
below  
health insuring corporations (MHICs), about 10% of sales tax receipts in  
FY 2016, and those payments historically have grown substantially each  
estimate.  
year. However, in the first quarter of FY 2017, sales tax revenue from  
MHICs was below receipts in the corresponding quarter in FY 2016. The  
chart below illustrates the weak but positive year-over-year growth of  
nonauto sales and use tax collections in recent months.  
Chart 3: Nonauto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
FY 2017  
7
6
5
4
3
2
1
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
7 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.  
October 2016  
9
Budget Footnotes  
Ohio Legislative Service Commission  
Auto Sales and Use Tax  
The GRF received $120.5 million in revenue from the auto portion of  
the sales and use tax in September 2016, $6.3 million (5.0%) less than  
expected, and $5.2 million (4.1%) below receipts last year in the same  
month. For the fiscal quarter, total GRF receipts of $366.0 million were  
Auto sales and  
use tax  
$
8.7 million (2.3%) below projections but $1.4 million (0.4%) above first-  
quarter receipts in FY 2016.  
Auto sales tax collections finished FY 2016 1.2% above estimate as  
collections  
were  
$8.7 million  
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, and year-over-year growth was expected  
to be slow in the earlier months of FY 2017 due to high sales a year ago.  
Fewer motor vehicles were purchased in Ohio in the first quarter of  
FY 2017 compared to the corresponding period last year, and the small  
increase in year over-year-sales tax revenue was solely due to an increase  
in the average price of vehicles.  
below estimate  
in the first  
quarter of the  
fiscal year.  
Chart 4: Auto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
FY 2017  
1
1
2.0%  
0.0%  
8
6
4
2
0
.0%  
.0%  
.0%  
.0%  
.0%  
-2.0%  
-4.0%  
-6.0%  
Nationwide, light vehicle sales (autos and light trucks) were back up  
on a seasonally adjusted annual rate in September to 17.7 million units,  
from 16.9 million units in August, but below the level of 18.0 million units of  
September 2015. Though the pace of sales remains historically strong,  
vehicle sales have cooled off. While nationwide vehicle sales have remained  
close to the all-time high of 2015 in 2016, only sales of light trucks have  
increased from the record-setting pace of 2015. Those sales were up about  
5
% in the third quarter of 2016 compared to the corresponding period in  
2015. In contrast, quarterly sales of cars fell about 10%.  
Budget Footnotes  
10  
October 2016  
Ohio Legislative Service Commission  
Commercial Activity Tax  
September GRF revenue from the CAT of $8.1 million was  
2.6 million (47.8%) above estimate and $1.7 million (25.9%) above CAT  
$
CAT revenue to  
revenue in September 2015. For the fiscal year through September, CAT  
GRF receipts of $298.4 million were $2.2 million (0.7%) below estimate but the GRF was  
14.8 million (5.2%) above revenue in the corresponding quarter in FY 2016.  
$
$2.2 million  
Though GRF receipts from the CAT were above FY 2016 first-quarter  
revenues, the year-over-year increase resulted from a decline of about  
below estimate  
in FY 2017  
22.6 million in refunds in the first quarter of FY 2017 compared to the  
through  
$
corresponding period last year. According to OAKS, quarterly gross  
collections from the tax were below last year's level by about $3.0 million.  
Generally, excluding any effect from legislated tax changes, CAT revenue is  
expected to grow with an expanding economy.  
September.  
The CAT is the third largest GRF tax source, and its performance has  
been lackluster over the last year. FY 2016 first-quarter CAT receipts were  
$30.6 million below estimate. That quarterly negative variance was  
followed by positive variances of $10.6 million and $8.6 million,  
respectively, in the two following quarters. However, the tax was  
$14.2 million below estimates in the last quarter and $25.6 million below  
estimate for the full fiscal year. Recognizing the weakness of this GRF  
source, OBM halved projected yearly revenue growth for FY 2017 for this  
tax, but first-quarter results in FY 2017 were uninspiring.  
Cigarette and Other Tobacco Products Tax  
September GRF receipts from the cigarette tax were $84.1 million,  
$
6.2 million (8.0%) above estimate. September revenue, $77.9 million from  
cigarettes and $6.2 million from other tobacco products (OTP), was  
5.2 million (5.8%) below receipts last year in the same month. However,  
this decline was almost entirely due to receipts from the "floor tax" of  
$
First-quarter  
cigarette  
$
$
cigarette dealers had to pay an extra $0.35 per pack of cigarettes in  
inventory which did not have the new tax stamp.)  
5.5 million in September 2015. (H.B. 64 increased the cigarette tax from  
1.25 to $1.60 per pack of 20 cigarettes starting on July 1, 2015, and  
revenue was  
$8.8 million  
For the first fiscal quarter, total revenue of $194.7 million was above estimate  
$
8.8 million (4.7%) above estimate but $5.9 million (3.0%) below receipts in  
in FY 2017.  
the corresponding quarter in FY 2016. Excluding the floor tax, receipts  
were $2.6 million above revenue in the first three months of FY 2016, with  
receipts from cigarettes and OTP, above last year's levels by $1.1 million  
and $1.5 million, respectively. Generally, cigarette tax receipts are  
trending downward long term, but revenue from the tax has been  
remarkably strong for over a year now.  
October 2016  
11  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of September 2016  
(
$ in thousands)  
(
Actual based on OAKS reports run October 6, 2016)  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
Primary and Secondary Education  
Higher Education  
$929,283  
$901,177  
$28,107  
3.1%  
$195,363  
$12,095  
$197,278  
$5,297  
-$1,915  
$6,798  
-1.0%  
128.3%  
3.0%  
Other Education  
Total Education  
$1,136,742  
$1,103,752  
$32,991  
Medicaid  
$1,400,168  
$78,126  
$1,523,190  
$78,606  
-$123,022  
-$480  
-8.1%  
-0.6%  
-7.7%  
Health and Human Services  
Total Welfare and Human Services  
$1,478,294  
$1,601,796  
-$123,502  
Justice and Public Protection  
General Government  
$194,916  
$24,295  
$153,261  
$26,232  
$41,656  
-$1,937  
$39,718  
27.2%  
-7.4%  
22.1%  
Total Government Operations  
$219,211  
$179,493  
Property Tax Reimbursements  
Debt Service  
$316,928  
$407,447  
$724,375  
$314,876  
$407,965  
$722,841  
$2,052  
-$517  
0.7%  
-0.1%  
0.2%  
Total Other Expenditures  
$1,534  
Total Program Expenditures  
$3,558,622  
$3,607,881  
-$49,259  
-1.4%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$0  
$1,000  
$1,000  
$0  
$0  
$0  
$0  
$1,000  
$1,000  
---  
---  
---  
TOTAL GRF USES  
$3,559,622  
$3,607,881  
-$48,259  
-1.3%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
12  
October 2016  
Ohio Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2017 as of September 30, 2016  
(
$ in thousands)  
(
Actual based on OAKS reports run October 6, 2016)  
Percent  
Change  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
FY 2016  
Primary and Secondary Education  
Higher Education  
$2,372,209  
$568,966  
$27,380  
$2,320,667  
$51,542  
2.2%  
$1,790,404  
$546,609  
$24,556  
32.5%  
4.1%  
$576,593  
$28,480  
-$7,626  
-$1,100  
$42,815  
-1.3%  
-3.9%  
1.5%  
Other Education  
11.5%  
25.7%  
Total Education  
$2,968,556  
$2,925,740  
$2,361,569  
Medicaid  
$4,628,818  
$295,119  
$4,917,543  
$319,040  
-$288,725  
-$23,922  
-$312,646  
-5.9%  
-7.5%  
-6.0%  
$4,746,425  
$324,131  
-2.5%  
-9.0%  
-2.9%  
Health and Human Services  
Total Welfare and Human Services  
$4,923,937  
$5,236,583  
$5,070,556  
Justice and Public Protection  
General Government  
$606,257  
$101,387  
$707,644  
$579,200  
$106,982  
$686,182  
$27,057  
-$5,595  
$21,462  
4.7%  
-5.2%  
3.1%  
$550,137  
$102,919  
$653,056  
10.2%  
-1.5%  
8.4%  
Total Government Operations  
Property Tax Reimbursements  
Debt Service  
$452,424  
$782,093  
$401,637  
$782,607  
$50,787  
-$514  
12.6%  
-0.1%  
4.2%  
$463,572  
$768,013  
-2.4%  
1.8%  
0.2%  
Total Other Expenditures  
$1,234,517  
$1,184,244  
$50,273  
$1,231,586  
Total Program Expenditures  
$9,834,653  
$10,032,749  
-$198,096  
-2.0%  
$9,316,766  
5.6%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$29,483  
$213,614  
$243,096  
$29,483  
$212,159  
$241,642  
$0  
$1,454  
$1,454  
0.0%  
0.7%  
0.6%  
$425,500  
$346,475  
$771,975  
-93.1%  
-38.3%  
-68.5%  
TOTAL GRF USES  
$10,077,749  
$10,274,391  
-$196,642  
-1.9%  
$10,088,741  
-0.1%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
October 2016  
13  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on October 5, 2016)  
Month of September 2016  
Year to Date Through September 2016  
Department  
Medicaid  
Actual  
Estimate*  
Variance  
Percent  
Actual  
Estimate*  
Variance  
Percent  
$1,694,112  
$1,346,957  
$347,155  
$2,061,892  
$1,462,612  
$599,280  
-$367,781  
-$115,655  
-$252,125  
-17.8%  
-7.9%  
$5,118,843  
$4,460,671  
$658,172  
$5,654,933  
$4,734,647  
$920,286  
-$536,090  
-9.5%  
GRF  
-$273,976  
-5.8%  
Non-GRF  
-42.1%  
-$262,114 -28.5%  
Developmental Disabilities  
$191,097  
$44,469  
$206,695  
$47,355  
-$15,598  
-$2,886  
-7.5%  
-6.1%  
-8.0%  
$633,353  
$142,507  
$490,846  
$679,043  
$145,202  
$533,841  
-$45,690  
-$2,695  
-6.7%  
-1.9%  
-8.1%  
GRF  
Non-GRF  
$146,628  
$159,339  
-$12,712  
-$42,995  
Job and Family Services  
$17,596  
$7,905  
$9,691  
$27,484  
$12,179  
$15,305  
-$9,888  
-$4,274  
-$5,614  
-36.0%  
-35.1%  
-36.7%  
$54,080  
$22,922  
$31,158  
$80,307  
$34,720  
$45,588  
-$26,227 -32.7%  
-$11,798 -34.0%  
-$14,429 -31.7%  
GRF  
Non-GRF  
Health  
GRF  
$1,304  
$295  
$3,582  
$263  
-$2,278  
$32  
-63.6%  
12.1%  
-69.6%  
$7,147  
$945  
$7,469  
$848  
-$322  
$97  
-4.3%  
11.4%  
-6.3%  
Non-GRF  
$1,009  
$3,319  
-$2,310  
$6,202  
$6,621  
-$419  
Aging  
$457  
$293  
$164  
$579  
$282  
$297  
-$121  
$11  
-20.9%  
4.0%  
$2,121  
$982  
$2,411  
$986  
-$290 -12.0%  
-$4 -0.4%  
GRF  
Non-GRF  
-$133  
-44.6%  
$1,139  
$1,425  
-$286 -20.1%  
Mental Health and Addiction  
$375  
$250  
$125  
$500  
$500  
$0  
-$125  
-$250  
$125  
-25.0%  
-50.1%  
---  
$1,239  
$791  
$1,440  
$1,140  
$300  
-$201 -13.9%  
GRF  
-$349 -30.6%  
Non-GRF  
$448  
$148  
49.4%  
Total GRF  
$1,400,168  
$504,773  
$1,523,190  
$777,541  
-$123,022  
-$272,768  
-8.1%  
$4,628,818  
$1,187,966  
$4,917,543  
$1,508,060  
-$288,725  
-5.9%  
Total Non-GRF  
-35.1%  
-$320,094 -21.2%  
-$608,819 -9.5%  
Total All Funds  
$1,904,941  
$2,300,732  
-$395,790  
-17.2%  
$5,816,784  
$6,425,603  
*Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
14  
October 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 October 5, 2016)  
September Year to Date Through September 2016  
Estimate* Variance  
(
Payment Category  
Managed Care  
Nursing Facilities  
DDD Services  
Hospitals  
Actual  
Percent  
-15.5%  
-1.4%  
-7.5%  
-70.0%  
-6.7%  
-33.0%  
-2.5%  
-11.4%  
11.0%  
-1.7%  
7.7%  
Actual  
Estimate*  
$2,633,007  
$366,810  
$652,389  
$406,541  
$296,345  
$290,329  
$86,860  
Variance Percent  
$811,104  
$123,967  
$179,895  
$70,459  
$86,216  
$72,446  
$28,291  
$30,231  
$42,600  
$15,262  
$29,811  
$9,195  
$960,402  
$125,790  
$194,391  
$235,174  
$92,417  
$108,108  
$29,020  
$34,120  
$38,381  
$15,519  
$27,683  
$13,077  
$357,748  
$68,903  
-$149,298  
-$1,823  
-$14,496  
-$164,715  
-$6,201  
-$35,662  
-$729  
$2,388,808  
$369,500  
$612,904  
$234,994  
$272,270  
$231,352  
$88,892  
-$244,198  
$2,690  
-9.3%  
0.7%  
-6.1%  
-$39,485  
-$171,547 -42.2%  
-$24,074 -8.1%  
-$58,977 -20.3%  
$2,031 2.3%  
-$12,700 -11.4%  
Behavioral Health  
Administration  
Aging Waivers  
Prescription Drugs  
Medicare Buy-In  
Physicians  
-$3,889  
$4,220  
$98,300  
$111,001  
$114,863  
$50,458  
$127,491  
$48,692  
$12,628  
-$1,766  
$1,454  
11.0%  
-3.5%  
1.8%  
-$257  
Medicare Part D  
Home Care Waivers  
ACA Expansion  
All Other  
$2,128  
$84,379  
$82,925  
-$3,883  
-$22,142  
$956  
-29.7%  
-6.2%  
1.4%  
$30,362  
$42,346  
-$11,984 -28.3%  
$335,607  
$69,859  
$1,006,309  
$222,531  
$5,816,784  
$1,064,040  
$227,689  
$6,425,603  
-$57,731  
-$5,158  
-5.4%  
-2.3%  
-9.5%  
Total All Funds  
$1,904,941 $2,300,732  
-$395,790  
-17.2%  
-$608,819  
*
Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
October 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 first quarter of FY 2017, GRF program expenditures totaled  
For the first  
quarter of  
$9.83 billion, $198.1 million below the estimate released by OBM in  
August 2016. GRF transfers out totaled $243.1 million, $1.5 million above  
estimate. Including both program expenditures and transfers out, GRF  
uses totaled $10.08 billion, $196.6 million below their year-to-date  
estimate. Tables 3 and 4 show GRF uses for the month of September and  
for FY 2017 through September, respectively.  
FY 2017, GRF  
uses were  
$
196.6 million  
below  
Medicaid continues to dominate the variances in GRF uses.  
Through September, GRF Medicaid expenditures were $288.7 million  
below estimate. The Health and Human Services program category had  
the second largest negative year-to-date variance at $23.9 million. The  
negative variances in Medicaid and Health and Human Services were  
partly offset by the largely timing-related positive year-to-date variances  
in Primary and Secondary Education ($51.5 million), Property Tax  
Reimbursements ($50.8 million), and Justice and Public Protection  
estimate.  
($27.1 million). Combined expenditures from these five program  
categories were $183.3 million below their year-to-date estimate.  
The remainder of this report will first discuss in detail the  
variances in both GRF and non-GRF Medicaid expenditures as Medicaid  
receives funding from both GRF and non-GRF sources. After that, it will  
briefly discuss the variances in the other four program categories.  
Medicaid  
For the first  
quarter of  
FY 2017, GRF  
Medicaid  
Table 5 shows GRF and non-GRF Medicaid expenditures by  
agency. Medicaid is administered by the Ohio Department of Medicaid  
ODM), with the assistance of five other state agencies Developmental  
Disabilities, Job and Family Services, Health, Aging, and Mental Health  
and Addiction Services. Table 6 shows all-funds Medicaid expenditures  
by payment category. 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  
(
expenditures  
were  
$
288.7 million  
6
4% and 36%, respectively.  
below  
For the month of September, GRF Medicaid expenditures of  
1.40 billion were $123.0 million (8.1%) below estimate. Non-GRF  
estimate.  
$
Medicaid expenditures of $504.8 million for the same month were  
$
272.8 million (35.1%) below estimate, of which $236.2 million was due to  
Budget Footnotes  
16  
October 2016  
Ohio Legislative Service Commission  
a delay in making certain anticipated payments for managed care  
organizations ($74.0 million) and hospitals ($162.2 million). (These timing  
issues are further explained below.) Across all funds, Medicaid  
expenditures totaled $1.90 billion in September, which was below estimate  
by $395.8 million (17.2%).  
For the first  
quarter of  
FY 2017, all-  
For the first quarter of FY 2017, GRF Medicaid expenditures were  
funds (including  
4.63 billion, $288.7 million (5.9%) below estimate, while non-GRF  
$
Medicaid expenditures were $1.19 billion, $320.1 million (21.2%) below both GRF and  
estimate. Across all funds, Medicaid expenditures totaled $5.82 billion,  
non-GRF)  
608.8 million (9.5%) below their year-to-date estimate. As expected, the  
Medicaid  
expenditures  
were  
$
majority of these variances occurred in ODM, which accounted for  
274.0 million and $262.1 million of the total year-to-date variances in GRF  
and non-GRF Medicaid expenditures, respectively.  
$
When examining all-funds Medicaid expenditures by payment $608.8 million  
category, the largest negative year-to-date variance occurred in Managed  
below estimate,  
Care. This payment category's negative variance grew $149.3 million in  
September to a total of $244.2 million (9.3%) for the first quarter of  
FY 2017. A large part of the September variance was caused by a delay in  
due partly to  
timing.  
making originally anticipated managed care pay-for-performance  
payments totaling $74.0 million for the month; approximately $49 million  
of these payments will now be made in October. Sections 327.60 and  
3
27.80 of H.B. 64 authorizes ODM to provide performance payments to  
Medicaid managed care organizations, respectively, for meeting certain  
performance standards and for providing care and services to participants  
of MyCare, which is a program designed to improve access to and quality  
of services for individuals who receive both Medicaid and Medicare  
benefits. Under both performance payment programs, ODM is to  
withhold a percentage of each premium payment it pays to managed care  
organizations. The withheld funds are then transferred from the GRF to  
the Managed Care Performance Fund (Fund 5KW0) for performance  
payments. The appropriation for GRF appropriation item 651525,  
Medicaid/Health Care Services, is reduced by the transferred amount.  
While timing led to a significant negative variance in managed care  
payments for the month of September, new managed care rates for 2016,  
which became effective on January 1, continued to be the main  
contributing factor to the category's negative year-to-date variance. The  
actual rates for 2016 are lower than the projected ones used in the  
estimates, particularly those for MyCare. Managed Care will likely  
continue to have a negative variance through at least the first half of  
FY 2017 as the rates are adjusted annually at the beginning of each  
calendar year. Lower than expected managed care rates for 2016 also  
October 2016  
17  
Budget Footnotes  
Ohio Legislative Service Commission  
accounted for the negative year-to-date variance of $57.7 million (5.4%)  
in the ACA Expansion (or Group VIII) category. Group VIII caseloads  
continued to be higher than expected in FY 2017; enrollments have been  
above estimate by almost 20,000. However, the caseload effect on  
expenditures was completely offset by the managed care rate changes.  
The delay in  
making UPL  
payments  
totaling  
The Hospitals payment category had the second largest negative  
year-to-date variance at $171.5 million (42.2%), of which $164.7 million  
occurred in the month of September. The estimate anticipated payments  
totaling $162.2 million in September for hospitals under the Upper  
Payment Limit (UPL) Program. These payments did not occur as  
originally scheduled, resulting in a large timing-related negative variance  
in the Hospitals payment category. UPL allows the state to direct  
supplemental payments, up to the difference between the Medicare and  
Medicaid amounts, to certain providers. These payments are funded by  
assessments on hospitals and federal reimbursements, both are deposited  
into non-GRF funds.  
$
162.2 million  
was the main  
culprit behind  
the negative  
year-to-date  
variance in the  
Hospitals  
Two other payment categories that had significant negative year-  
to-date variances were Administration ($59.0 million, 20.3%) and DDD  
Services ($39.5 million, 6.1%). Various contracts and related payments  
progressed slower than expected in ODM and its five "sister" agencies.  
Expenditures from the Administration category were, therefore, lower  
than anticipated. The negative variance for DDD Services was largely  
due to slower than projected new waiver enrollment. DDD anticipates  
that waiver expenditures will catch up before the end of FY 2017.  
payment  
category.  
Health and Human Services  
As indicated earlier, Health and Human Services is the other  
program category that had a significant negative year-to-date variance.  
Whereas the category's September expenditures were largely on par with  
estimate, the category's year-to-date expenditures of $295.1 million were  
$
23.9 million (7.5%) below estimate. The Ohio Department of Job and  
Family Services (ODJFS) and the Ohio Department of Health (DOH)  
accounted for $14.8 million and $4.4 million, respectively, of the  
category's total negative year-to-date variance.  
Expenditures from the majority of appropriation items within the  
ODJFS budget were below their year-to-date estimates. Item 600321,  
Program Support, had the largest negative year-to-date variance at  
$
3.7 million. Items 600521, Family Assistance Local and 600523, Family  
and Children Services, contributed $2.2 million each to the agency's  
overall negative year-to-date variance. Items 600445, Unemployment  
Insurance Administration, and 600416, Information Technology Projects,  
Budget Footnotes  
18  
October 2016  
Ohio Legislative Service Commission  
contributed another $2.1 million and $2.0 million, respectively. Similarly,  
expenditures from the majority of DOH's appropriation items were below  
their year-to-date estimates. The largest negative year-to-date variance  
($1.3 million) within the DOH budget occurred in item 440459, Help Me  
Grow.  
Primary and Secondary Education  
Through September, expenditures from the Primary and Secondary  
Education program category totaled $2.37 billion. These expenditures  
were above estimate by $51.5 million (2.2%), of which $28.1 million  
occurred in the month of September. Expenditures from appropriation  
item 200550, Foundation Funding, within the Ohio Department of  
Education (ODE) budget were $60.8 million above their year-to-date  
estimate, which was partially offset by the smaller negative year-to-date  
variances in several other items within the ODE budget. ODE is the only  
agency that is included in the Primary and Secondary Education program  
category.  
Foundation payments for individual schools are calculated based  
on a variety of factors, including a district's enrollment and property  
wealth. It is not unusual to see variances from month to month in school  
foundation payments as such payments for a given fiscal year are often  
not finalized until the following fiscal year. At the end of a fiscal year,  
funds are usually encumbered in item 200550 for expenditure in the  
following fiscal year for making adjustments to the prior fiscal year's  
foundation payments. For example, item 200550 carried encumbrances  
totaling $64.8 million at the end of FY 2016 for expenditure in FY 2017. In  
August, ODE made the first adjustment to FY 2016 foundation payments,  
which turned out to be higher than anticipated and contributed to the  
positive year-to-date variance in the Primary and Secondary Education  
program category. The second adjustment is scheduled to occur in  
October.  
Property Tax Reimbursements  
For the first quarter of FY 2017, property tax reimbursement  
payments totaled $452.4 million, $50.8 million (12.6%) above estimate. The  
month of August accounted for the majority ($49.3 million) of the  
category's positive year-to-date variance. 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. Funds are disbursed when county auditors and treasurers  
October 2016  
19  
Budget Footnotes  
Ohio Legislative Service Commission  
request the payments. Therefore, it is not unusual to see variances from  
month to month, especially in the early months of a payment cycle.  
Justice and Public Protection  
Expenditures from the Justice and Public Protection program  
category were $194.9 million in September, $41.7 million (27.2%) above  
estimate. This positive monthly variance changed the category's year-to-  
date variance from a negative $14.6 million at the end of August to a  
positive $27.1 million at the end of September. Year-to-date expenditures  
from the Department of Rehabilitation and Correction (DRC), the largest  
agency within this program category, were $31.1 million above estimate.  
This positive variance was partially offset by the smaller negative year-  
to-date variances in several other agencies included in the program  
category.  
Timing appears to be the main culprit behind the DRC's overall  
positive year-to-date variance. The OBM estimate anticipated  
disbursements totaling $15.0 million from item 501405, Halfway House,  
and $19.5 million from item 501501, Community Residential Programs –  
CBCF, in the month of October. These payments were made in  
September instead, contributing to the large positive year-to-date  
variances of $19.8 million in item 501405 and $19.6 million in item  
5
01501. These variances should resolve themselves by the end of October.  
Expenditures from DRC's item 505321, Institution Medical Services, on  
the other hand, were $12.9 million below their year-to-date estimate,  
which partially offset the positive year-to-date variances in items 501405  
and 501501.  
Budget Footnotes  
20  
October 2016  
Ohio Legislative Service Commission  
ISSUE UPDATES  
Paying Off Ohio's Unemployment Compensation Debt Early Saves Employers  
Approximately $351 Million in Calendar Year 2017  
Nicholas J. Blaine, Budget Analyst, 614-387-5418  
On August 30, 2016, the Ohio Department of Job and Family Services (ODJFS)  
paid off the remaining balance on $3.39 billion in loans taken out from the  
U.S. Department of Labor (DOL) to pay unemployment benefits. This early payoff is  
expected to produce a net savings of approximately $351 million in federal  
unemployment tax for calendar year (CY) 2017 paid by employers across the state.  
ODJFS was able to pay off the debt early by borrowing $246 million from the state's  
unclaimed funds. The loan from unclaimed funds was authorized by H.B. 390 of the  
1
31st General Assembly, which also requires ODJFS to apply a surcharge on employers  
in CY 2017 sufficient to repay the loan. ODJFS estimates that paying off the loan from  
DOL will reduce the amount of federal unemployment tax paid by Ohio employers in  
CY 2017 by $597 million. Net savings to Ohio employers, therefore, is approximately  
$
351 million ($597 million$246 million).  
Due to an increase in unemployment claims during the Great Recession, the  
state's Unemployment Compensation Fund, which is used to pay unemployment  
benefits, was depleted on January 12, 2009. At that time, Ohio began borrowing from  
DOL to pay benefits. Ohio was one of 36 states and territories required to take out loans  
from DOL as a result of the recession. After two years of a state having an outstanding  
loan balance, DOL begins annually to increase the federal unemployment taxes paid by  
the state's employers. An Ohio employer typically pays $42 per year per employee in  
federal unemployment taxes. However, due to the outstanding loan balance, Ohio  
employers are paying $147 per employee in CY 2016 and would have paid $168 per  
employee in CY 2017 if the loan had not been paid off.  
In addition to increasing federal unemployment taxes on employers, DOL  
8
charges interest on any outstanding loan balance. ODJFS has paid a total of  
$
257.7 million in interest on its loan from DOL, all from general revenue funds.  
According to ODJFS estimates, the early pay off of the loan will save the state about  
$
30 million in interest payments.  
8 DOL waived interest in federal fiscal years 2009 and 2010.  
October 2016  
21  
Budget Footnotes  
Ohio Legislative Service Commission  
ODE Releases First Report Cards with Component Grades  
Anthony Kremer, Budget Analyst, 614-466-5654  
On September 15, 2016, the Ohio Department of Education (ODE) released report  
cards for public districts and schools for the 2015-2016 school year, the first year A-F  
letter grades have been assigned for each of six components: Achievement, Graduation  
Rate, Progress, Gap Closing, K-3 Literacy, and Prepared for Success. All grades except  
for the one for the Prepared for Success component are derived from performance on  
the ten individually graded measures used to evaluate districts and schools for the three  
prior school years. The Prepared for Success component grade is based on six ungraded  
measures that, for the two previous school years, were reported for informational  
purposes only. Beginning with the report cards for the 2017-2018 school year, the  
component grades will be used to assign an overall letter grade. Due to recent changes  
to state tests, the General Assembly has suspended many sanctions related to state test  
results for the 2014-2015, 2015-2016, and 2016-2017 school years. The table below  
summarizes how the 608 school districts receiving report cards fared this past school  
year on the six component measures.  
School District Report Card Results, 2015-2016 School Year  
No  
Component  
A
B
C
D
F
Rating  
Graduation Rate  
54%  
19%  
1%  
27%  
34%  
11%  
6%  
11%  
13%  
34%  
45%  
15%  
5%  
4%  
25%  
49%  
43%  
32%  
6%  
3%  
9%  
0%  
0%  
Progress  
Achievement  
Prepared for Success  
K-3 Literacy  
5%  
0%  
2%  
5%  
0%  
1%  
3%  
39%  
86%  
11%  
0%  
Gap Closing  
0%  
3%  
As measured by the total percentage of A's and B's, school districts fared the best  
on the graduation rate and progress components, the latter of which measures the  
academic growth students are making from year to year. Based on the total percentage  
of D's and F's, school districts struggled most with closing achievement gaps between  
certain designated groups and all students and improving literacy among struggling  
readers in grades K-3.  
OFCC Approves $17 Million in Grants for Community School Facilities  
Jason Glover, Budget Analyst, 614-466-8742  
On August 18, 2016, the Ohio Facilities Construction Commission (OFCC)  
approved $17.0 million in grants to eight community schools under the Community  
School Classroom Facilities Grants Program (see table below). Created in H.B. 64, the  
Budget Footnotes  
22  
October 2016  
Ohio Legislative Service Commission  
program provides capital funding to eligible high-performing community schools for  
the purchase, construction, or renovation of classroom facilities. To qualify for funding,  
projects must increase the supply of seats in high performing schools, serve specific  
unmet student needs through community school education, and show innovation in  
design and potential as a successful, replicable school model. Recipients also must  
contribute a local match of at least 50% of total project costs. According to OFCC's  
program guidelines, the Controlling Board must give final approval to the awards  
before funds can be disbursed. Funding for the program is appropriated in Fund 7021  
line item C230W4, Community School Classroom Facilities Assistance.  
Community School Classroom Facilities Grant Recipients  
County  
Cuyahoga  
Cuyahoga  
Franklin  
Community School  
Menlo Park Academy  
Award Amount  
$4,635,885  
$4,604,390  
$1,912,487  
$1,698,054  
$1,567,128  
$1,462,720  
$777,567  
Village Preparatory School Willard  
Patriot Preparatory Academy  
Franklin  
Columbus Collegiate Academy West  
Citizens Academy Southeast  
Cuyahoga  
Richland  
Richland Academy School of Excellence  
DECA Prep, Inc.  
Montgomery  
Cuyahoga  
TOTAL  
Entrepreneurship Preparatory School Woodland Hills  
$352,595  
$17,010,826  
Ohio Transitions to a Unified Disability Determination System  
Ivy Chen, Principal Economist, 614-644-7764  
On August 1, 2016, the Ohio Department of Medicaid (ODM) implemented a  
new system for making Medicaid eligibility determinations for the aged, blind, and  
disabled (ABD) population. Under the new system, a single disability determination is  
9
used for both Medicaid and Supplemental Security Income (SSI). Under the old  
eligibility criteria, the income limit for Medicaid (64% of the Federal Poverty Line (FPL)  
or $634 per month in 2016) was more stringent than that used for SSI (75% of FPL or  
$
743 per month). However, individuals were permitted to "spend down" a portion of  
their income each month to qualify for Medicaid. For example, if individuals earning  
9 The old system is referred to as a 209(b) system and the new one as a 1634 system.  
These refer to the sections of the Social Security Act that authorize the eligibility rules used in  
each system. Prior to this change, Ohio operated two disability determination systems, one for  
Medicaid, which was operated by county departments of job and family services on behalf of  
Ohio Medicaid, and one for SSI, which is administered by the Opportunities for Ohioans with  
Disabilities Agency on behalf of the U.S. Social Security Administration.  
October 2016  
23  
Budget Footnotes  
Ohio Legislative Service Commission  
$
700 per month spent $66 on medical costs during the month, they would have "spent  
down" their income to $634 and could receive Medicaid for the remainder of the month.  
The new system eliminates the "spend down," but increases eligibility for full Medicaid  
coverage by raising the income limitation to the SSI level. Similarly, the asset limitation  
under the new system also increases from $1,500 to $2,000 to match the SSI level.  
The majority of the Medicaid enrollees who receive benefits as ABD are not  
impacted by these changes. All existing beneficiaries were moved from the old Client  
Registry Information System Enhanced (CRIS-E) to the new Ohio Benefits system on  
August 1 and are receiving full Medicaid coverage. According to ODM estimates based  
on data from July, this includes 346,392 individuals with full Medicaid coverage who  
qualified under the old system and 34,043 individuals who qualified for Medicaid in the  
previous year under the "spend down" provision. Pending approval by the federal  
Centers for Medicare and Medicaid, eligibility for these individuals will be  
redetermined under the new criteria after January 1, 2017, on their renewal date. Also  
receiving full Medicaid coverage on August 1 are 21,274 individuals who were not  
enrolled in full coverage previously, but qualify under the new system due to being SSI  
recipients, due to Medicaid expansion, or due to a new Specialized Recovery Services  
1
0
program. ODM also estimates that there are 34,050 individuals who may have  
qualified for Medicaid under the "spend down" provision of the old system (but did not  
actually qualify in the previous year) who do not qualify under the new system. This  
estimate includes 15,296 individuals who qualify for Medicare. The remaining 18,754  
will need to be covered by private insurance. The majority of them are expected to be  
1
1
enrolled in a federally subsidized Exchange plan.  
Department of Agriculture Awards $4.7 Million in Agricultural  
Society Facility Grants  
Shannon Pleiman, Budget Analyst, 614-466-1154  
The Department of Agriculture (AGR) recently awarded a total of $4.7 million to  
4 county and independent agricultural societies under the Agricultural Society  
9
Facilities Grant Program. The Controlling Board approved the release of the grant  
funding on August 8, 2016 ($300,000) and September 26, 2016 ($4.4 million). The grant  
program was created under H.B. 64 with funding of $4.7 million under capital line item  
C70022, Agriculture Society Facilities. Every grant recipient was awarded the maximum  
grant amount of $50,000 and was required to provide a matching grant. County and  
10 This new program is for individuals with serious and persistent mental illness with  
incomes up to 225% of FPL.  
11 An overview of the redesign is available on the Office of Health Transformation  
website: www.healthtransformation.ohio.gov.  
Budget Footnotes  
24  
October 2016  
Ohio Legislative Service Commission  
independent agricultural societies, which host county and agricultural fairs, can use the  
grant to support capital projects such as construction, reconstruction, planning, and  
equipping their facilities. In addition to this capital funding, AGR reimburses part of the  
expenses incurred by county and independent agricultural fairs for youth activities  
under GRF line item 700501, County Agricultural Societies. In FY 2016, approximately  
$
391,000 was spent for this purpose.  
Local Governments Receive $1.6 Million in Latest Innovation  
Grant and Loan Awards  
Tom Middleton, Budget Analyst, 614-728-4813  
On August 24, 2016, the Development Services Agency announced $1.6 million  
in funding for local government innovation and efficiency projects under two programs  
administered by the Local Government Innovation Council. Three loans totaling  
$
1,050,000 were approved in the seventeenth round of funding under the Local  
Government Innovation Program. The loans must be used on demonstration projects  
involving shared services, collaboration, or merger of services between political  
subdivisions. Twelve grants totaling $575,854 were approved under the tenth round of  
awards under the Local Government Efficiency Program. Local governments must use  
the grants on Lean Six Sigma strategies that improve processes and produce efficiencies.  
The Local Government Innovation Council was originally created in H.B. 153, the  
main operating appropriations act of the 129th General Assembly, for the purpose of  
making loans and grants to political subdivisions for qualified innovation projects. The  
first round of Innovation Program loans and grants was awarded in July 2013, while  
Efficiency Program grants began in February 2014. Including the August 24 awards, the  
1
2
loans and grants have totaled $30.9 million.  
The Council is also responsible for administering the Local Government Safety  
Capital Grant Program, which was established in H.B. 64. These grants are awarded to  
political subdivisions to buy vehicles, equipment, and systems that improve public  
safety. In May 2016, the Council awarded $9.5 million to 42 communities, the full  
amount appropriated for the program in FY 2016. Funding from the program is derived  
from GRF transfers to the Local Government Safety Capital Fund (Fund 5RD0). The  
program is also appropriated $10 million in funding in FY 2017.  
12 This amount does not include the Efficiency Program scholarships that are awarded to  
political subdivisions for employees to be trained in process improvement methods. The  
scholarships are up to $2,000 per employee.  
October 2016  
25  
Budget Footnotes  
Ohio Legislative Service Commission  
Controlling Board Approves $1.8 Million in Funding to Begin Implementing  
Ohio's Medical Marijuana Control Program  
Robert Meeker, Budget Analyst, 614-466-3839  
On August 22, 2016, the Controlling Board approved the creation of the Medical  
Marijuana Control Program Fund (Fund 5SY0) and a transfer of $1.8 million cash from  
the Emergency Purposes Fund (Fund 5KM0) into Fund 5SY0 for the Medical Marijuana  
Control Program, which was established by H.B. 523 of the 131st General Assembly. Of  
this total funding for FY 2017, $923,077 will go to the Department of Commerce, which  
is responsible for the licensure of medical marijuana cultivators, processors, and testing  
laboratories, and the remaining $882,400 will go to the Pharmacy Board, which is  
responsible for the licensure of retail dispensaries, the registration of patients and  
caregivers, and the operation of the Ohio Medical Marijuana Advisory Committee.  
Under H.B. 523, both agencies are required, by September 8, 2017, one year after the  
bill's effective date, to adopt program rules, including fees for licenses and registrations.  
They are also required to take all actions necessary to ensure the program is fully  
operational by September 8, 2018, or two years after the bill's effective date.  
Mosquito Control Grants Total Just Over $1.0 Million in 2016  
Jessica Murphy, LSC Fellow, 614-466-9108  
On September 6, 2016, the Ohio Environmental Protection Agency (Ohio EPA)  
announced the award of $691,340 in the second round of mosquito control grants to 31  
local health departments in 30 counties. Including the first round of grants awarded by  
1
3
Ohio EPA on June 16, 49 grantees in 45 counties were awarded a total of just over  
1.0 million in mosquito control grants in 2016. The table below summarizes 2016  
$
mosquito control grant totals by county. 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 are supported by 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  
(
settlement actions.  
Fund 5410), which is mainly supported by money collected from enforcement  
13 See the September 2016 issue of Budget Footnotes for details on the first round of  
mosquito control grants.  
Budget Footnotes  
26  
October 2016  
Ohio Legislative Service Commission  
2016 Ohio EPA Mosquito Control Grant Awards by County (Rounds 1 and 2)  
(
Total: $1,019,893)  
County  
Award  
$27,110  
$25,000  
$37,300  
$42,550  
$2,100  
County  
Award  
$18,500  
$8,509  
County  
Preble  
Award  
$5,900  
Athens  
Huron  
Butler  
Jackson  
Lake  
Putnam  
Richland  
Ross  
$5,000  
Champaign  
Columbiana  
Coshocton  
Cuyahoga  
Delaware  
Erie  
$60,750  
$20,741  
$3,200  
$30,350  
$28,050  
$68,300  
$44,900  
$44,800  
$60,000  
$13,000  
$20,000  
$14,579  
$7,500  
Lawrence  
Madison  
Mahoning  
Marion  
Scioto  
$32,500  
$22,450  
$4,780  
$20,940  
$12,800  
$25,750  
$5,000  
Shelby  
Trumbull  
Tuscarawas  
Union  
Medina  
Miami  
Fairfield  
Gallia  
$18,050  
$21,869  
$29,550  
$22,000  
$10,000  
$5,137  
Montgomery  
Morrow  
Muskingum  
Perry  
$9,300  
Van Wert  
Vinton  
Geauga  
Greene  
$5,600  
$18,124  
$22,650  
$27,954  
$15,000  
Warren  
Washington  
Wood  
Hancock  
Hocking  
Holmes  
$24,000  
$11,000  
$23,600  
Pickaway  
Pike  
$43,700  
Wyandot  
October 2016  
27  
Budget Footnotes  
Ohio Legislative Service Commission  
TRACKING THE ECONOMY  
Philip A. Cummins, Senior Economist, 614-387-1687  
Thomas Kilbane, Economist, 614-728-3218  
Overview  
The economy expanded further in the third quarter. Employment  
nationwide rose again in September. Total unemployment increased  
slightly but remained low. Rising employment and incomes, and  
improved job prospects, are supporting expansion of consumer  
spending. Light motor vehicle sales are at a high level though off the  
record pace set last year. Indicators for construction activity are mixed.  
Weakness in nonresidential fixed investment has been most pronounced  
in the oil and gas sector but not limited to that area. In Ohio, total  
nonfarm payroll employment trended upward in 2016 through August,  
though more slowly than last year. Inflation remains low but has picked  
up compared with a year ago.  
The National Economy  
Employment and Unemployment  
Total nonfarm  
payroll  
Total nonfarm payroll employment nationwide rose by  
156,000 (0.1%) in September, continuing the uptrend underway since  
2
010. Earlier this year, monthly employment gains through August  
employment  
nationwide  
rose by  
averaged 181,000, down from 229,000 per month in all of 2015. Nonfarm  
payrolls rose in September to 144.7 million people, 1.7% more than a year  
earlier. Job growth last month continued to be concentrated in the service  
sector, including professional and business services, health care,  
restaurants and bars, and retail trade. Mining employment was little  
changed in September after sharp declines in most earlier months for  
nearly two years. Average hourly earnings in the private sector rose 2.6%  
in the latest 12 months, the same as in 2015 but up from earlier in the  
expansion.  
1
56,000 in  
September,  
continuing the  
uptrend.  
The number of people unemployed (without a job and actively  
looking for work) in the U.S. rose to 7.9 million in September, and the  
unemployment rate rose slightly to 5.0% from 4.9% in the previous three  
months. The nationwide unemployment rate has been at or just below  
this level for the past year, after ranging as high as 10.0% during and  
following the 2007-2009 recession. The unemployment rate and total  
employment through September are shown in Chart 5.  
Budget Footnotes  
28  
October 2016  
Ohio Legislative Service Commission  
Chart 5: 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
006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016  
Nonfarm Payroll Employment Unemployment Rate (right scale)  
Various  
Various indicators point to labor market tightening. A survey  
indicators point  
to labor market  
tightening.  
showed 5.4 million private-sector job openings nationwide at the end of  
July, the most in the 15 years that this series has been published by the  
U.S. Bureau of Labor Statistics (BLS). Initial claims for unemployment  
compensation, also reported by BLS, fell in the week ended October 1 to  
2
1
49,000 nationwide, seasonally adjusted, one of the lowest levels since  
973.  
Monetary Policy  
At the conclusion of its September 20-21 meeting, the Federal Open  
1
4
Market Committee (FOMC) decided to maintain the target range for the  
1
5
federal funds rate at 0.25% to 0.5%. The committee last made a change in  
December 2015 when it moved the target range from near zero to its  
current status. Since then, projections for the pace of future rate rises have  
continually been softened. At the September meeting, the committee  
acknowledged that growth of economic activity has picked up since the  
first half of 2016, and that the case for an increase in the target range has  
strengthened. The vote among committee members was split, with three  
of ten voting members preferring to raise the target range immediately.  
That points to a potential rate rise in the near future, as does a report of  
the members' projections released following the meeting. In the  
14 The FOMC is the committee within the Federal Reserve that decides  
U.S. monetary policy.  
15 The federal funds rate is the short-term interest rate at which depository  
institutions lend reserve balances to other depository institutions overnight. The  
FOMC sets a target rate and the Federal Reserve uses monetary tools with the  
goal of moving the actual rate to the target.  
October 2016  
29  
Budget Footnotes  
Ohio Legislative Service Commission  
projections report, 14 of 17 committee members (not all vote at each  
meeting) thought a target rate rise would be appropriate before the end  
of 2016. There are two FOMC meetings left in 2016, one in November and  
one in December.  
Production  
Inflation-adjusted gross domestic product (real GDP) rose at a  
1
.4% seasonally adjusted annual rate in this year's second quarter,  
revised higher in the third estimate from the Bureau of Economic  
Analysis (BEA). Real GDP grew 2.4% in 2014 and 2.6% in 2015, but  
growth in six of the last seven quarters has been below that pace. The  
slowed growth is due in part to declines in business investment from a  
peak in the third quarter of 2015. Weakness in oil and gas drilling and  
related equipment spending appears to account for a substantial part of  
this slowdown. A slower pace of investment in transportation  
equipment, weaker exports, and an end to inventory accumulation also  
contributed to the slowdown in overall production growth. In the last  
four quarters, real GDP has grown by just 1.3%, the slowest year-over-  
year growth since the second quarter of 2013.  
Reports on this year's third quarter show fairly flat industrial  
production, and growth elsewhere in the economy. The manufacturing  
index from the Institute for Supply Management (ISM) ticked back up  
slightly into expansion territory in September, after indicating slight  
contraction in August. A comparable ISM report for nonmanufacturing  
industries showed continued expansion. The Federal Reserve's measure  
of industrial production decreased in August after strong readings in  
June and July. Predictions of third quarter real GDP from Federal  
Reserve banks as of October 7 showed growth at a 2.1% seasonally  
adjusted annual rate (Atlanta) and 2.2% (New York). BEA will report its  
first estimate of third-quarter 2016 growth near the end of October.  
Total U.S. rig  
count on  
The Federal Reserve's measure of industrial production declined  
in five of the last six quarters through the second quarter of 2016, largely  
due to slowdowns in mining related in part to natural gas and oil. But of  
late, total U.S. counts of drilling rigs actively exploring for or developing  
oil or natural gas have reversed that trend and begun climbing. On  
September 30, data from Baker Hughes indicated the total U.S. rig count  
(oil and natural gas combined) to be 29% higher than its low point in  
May. The Federal Reserve's measure of total nationwide manufacturing  
production in August was unchanged from December 2015.  
September 30  
was 29% higher  
than its low  
point in May.  
Budget Footnotes  
30  
October 2016  
Ohio Legislative Service Commission  
Consumer Spending  
Nationwide consumer spending dipped in August, ending a four-  
month period from April to July which saw the most growth in consumer  
spending since November 2014. Real consumer spending (adjusted for  
price changes) dropped just 0.1% in August; during the four months Consumer  
prior, it rose by an average of 0.4% per month (seasonally adjusted).  
August was the third month of the year in which seasonally adjusted  
spending decreased from the month before, but overall consumer  
spending has continued to grow in 2016 at the same average pace as  
during 2015 (0.2% per month, or at about a 2.6% annual rate).  
spending  
declined in  
August after  
four prior  
months of  
increases.  
Sales of motor vehicles remained strong through September,  
though at a slowed pace from one year ago. Annual sales of light vehicles  
rose to an all-time high in 2015. Light trucks have maintained sales  
volume better than cars, sales of which have softened throughout 2016.  
Still, total light vehicle sales averaged a seasonally adjusted annual rate of  
1
1
7.3 million units in 2016 through September, just a tick down from the  
7.4 million units that sold in all of 2015.  
Real Estate  
Seasonally adjusted sales volume of existing homes cooled in July  
and August from a recent peak in June. The median sales price of existing  
homes nationwide (the bulk of residential unit sales) was up 5.1% in  
August from one year ago. The pace of starts on new home construction  
cooled in August as well, though starts remained relatively flat from  
August one year ago (+0.9%). On the other hand, sales of new homes (a  
much smaller share of the market than existing homes) jumped in July  
and remained at an elevated level in August. The number of housing  
units under construction at the end of August was 13% higher than a year  
earlier, continuing a five-year uptrend.  
Mortgage rates began to rise in July after hitting a three-year low of  
3
.41% for a 30-year fixed-rate loan, according to the Freddie Mac Primary  
Mortgage Market Survey. But in mid-September, mortgage lending rates  
reversed course. By the week of September 29, rates fell enough to offset  
nearly all of the increase, averaging 3.42%  
Inflation  
Broad measures of consumer prices indicated increases in August,  
as they have for all but one month since February. This was despite  
decreases in the prices of food (fourth straight month) and energy (second  
straight month), based on price indexes for personal consumption  
expenditures (PCE). Over the last 12 months, the price index for PCE  
increased by 1.0%, while the price index for PCE excluding food and  
October 2016  
31  
Budget Footnotes  
Ohio Legislative Service Commission  
energy (core PCE) increased by 1.7%. After a jump at the beginning of  
016, the 12-month change in the price index for core PCE has remained  
2
fairly steady, as shown in Chart 6. Among consumer price index  
components, the largest increases over the last 12 months were for  
medical care.  
An index of prices received by producers for final goods and  
services in August remained unchanged from July and also from August  
one year ago.  
Chart 6: U.S. Price Index for Personal Consumption Expenditures  
3
2
2
1
1
0
0
.0%  
.5%  
.0%  
.5%  
.0%  
.5%  
.0%  
2
010  
2011  
2012  
2013  
2014  
2015  
2016  
PCE Price Index  
Core PCE Price Index (less Food and Energy)  
The Ohio Economy  
Employment and Unemployment  
Ohio lost 2,000 jobs16 in August, halting the momentum from an  
average monthly gain of 9,300 jobs in the prior three months. Year to  
date, employment continues to grow in Ohio, though at a slowed pace  
from 2015. Through August, job gains averaged 3,500 per month in 2016,  
compared to 6,700 per month throughout the 12 months of 2015.  
Ohio job gains  
have averaged  
3
,500 per  
The accommodation and food services subsector was the largest  
source of job growth in Ohio over the last 12 months adding 18,400 jobs,  
including 3,200 in August. Its pace of job growth during the last  
month in 2016,  
as compared to  
6
,700 in 2015.  
1
2 months (4.0%) was only eclipsed by the smaller subsectors of real  
estate and rental and leasing (6.5%), and state government (6.5%). Total  
government jobs in Ohio increased by 17,200 in the last 12 months,  
including 11,400 at the state level, mostly in public colleges and  
universities which are included in the state government job category.  
16 Nonfarm payroll employment, seasonally adjusted.  
Budget Footnotes  
32  
October 2016  
Ohio Legislative Service Commission  
Ohio's unemployment rate declined to 4.7% in August, nearly  
identical to a year ago (4.6%). Despite the year-over-year similarity, the  
unemployment rate has moved quite a bit during the last 12 months.  
Ohio's  
August was the fourth straight month of decline from a recent peak of unemployment  
5
.2% in April, which had been reached by five straight prior months of  
rate declined  
increases. The unemployment rate is measured as the number of  
unemployed persons as a percent of the labor force (those who are  
to 4.7% in  
August, nearly  
identical to a  
year ago.  
1
7
working or looking for work). Recent high volatility in Ohio's labor force  
correlates with unemployment rate changes, particularly in 2016. The  
share of the changes due to actual labor market developments and the  
share due to statistical noise is unclear. The chart below illustrates the  
high degree of volatility in Ohio's recent labor force data relative to the  
prior six-year period.  
Chart 7: Ohio Labor Force and Unemployment Rate  
5
5
5
5
5
5
5
5
,900  
,850  
,800  
,750  
,700  
,650  
,600  
,550  
11.0%  
10.0%  
9.0%  
8.0%  
7.0%  
6.0%  
5.0%  
4.0%  
2
010  
2011  
2012  
2013 2016  
2014  
2015  
Labor Force  
Unemployment Rate (right scale)  
Personal Income and Production  
Ohio's personal income grew by 1.0% in the second quarter of 2016.  
Wages and salaries grew faster than dividends, interest, and rent for the  
fourth out of the last five quarters. Over the last four quarters, Ohio's  
personal income grew 2.9%, slower growth than for the U.S. as a whole  
(3.2%).  
Ohio remained near the average of states for growth in production  
during the first quarter. The state's real GDP grew at a 1.4% seasonally  
adjusted annual rate, after growing by 1.8% in 2015. Production growth  
17 Specifically, the labor force is the number of civilians age 16 and over  
who are either currently employed or unemployed but looked for work in the  
last four weeks.  
October 2016  
33  
Budget Footnotes  
Ohio Legislative Service Commission  
has varied substantially across geographic regions of the state however.  
Of metropolitan areas in 2015, real GDP grew the fastest in Columbus  
3.3%) and Akron (2.9%), but declined in Dayton (-0.3%),  
Ohio is one of  
only two states  
that had at  
(
Springfield (-2.0%), and Mansfield (-2.1%). The Cleveland-Elyria  
metropolitan area led the state in 2015 with $128 billion of total GDP,  
followed by the greater Cincinnati area with $127 billion, and the  
Columbus metropolitan area with $124 billion. Ohio is one of only two  
states in the U.S. that was home to the central city of at least three  
least three  
central cities of  
metropolitan  
areas ranked in  
the top 30 for  
total GDP in  
1
8
metropolitan areas ranked in the top 30 for total GDP during 2015. Most  
of the state's GDP is produced in metropolitan areas.  
Housing  
Ohio home sales in August were up from one year ago (5.2%),  
continuing a strong 2016 for residential real estate. Through August,  
year-to-date sales volume was up 4.9% and the average sales price was  
up 4.2% over the same period in 2015. At those rates of annual growth,  
sales volume and average sales price would both finish 2016 at all-time  
highs, according to data from the Ohio Association of Realtors. The  
average sales price is up in 2016 in nearly all regions of Ohio as  
compared to the same period in 2015. Among the regions with the  
highest sales volume, sales price growth was highest in Columbus  
at 5.5%.  
2
015.  
1
9
18 California was the other state with five metropolitan areas ranked in the  
top 30. Florida just missed the list; its third largest metropolitan area, Orlando,  
ranked 31st.  
19 The Ohio Association of Realtors began keeping data in 1998.  
Budget Footnotes  
34  
October 2016