Budget Footnotes  
A NEWSLETTER OF THE OHIO LEGISLATIVE SERVICE COMMISSION  
NOVEMBER 2016  
VOLUME 40, NUMBER 3  
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  
A shortfall of $88 million in October pushed up the fiscal  
year's negative variance of GRF tax sources to $160 million;  
and total GRF sources fell below projections by  
College Credit Plus Program ...21  
Campus Sexual Violence  
Prevention Grants ................21  
Manufacturing Extension  
Partnership Program ............23  
$
262 million, including a shortfall of $108 million for federal  
grants. However, total GRF uses were also below estimates Neighborhood Initiative  
Program ...............................23  
Federal Medical Assistance  
Percentage Increases  
by a total of $156 million through October 2016.  
In September, Ohio's total nonfarm payroll employment  
fell by 3,100 (0.1%) from August, and the unemployment  
rate was 4.8% in September, up from 4.7% in August.  
Nationwide, total nonfarm payroll employment rose by  
for Ohio ................................24  
Child Support Demonstration  
Grants ..................................25  
Task Force on Criminal Justice  
and Mental Illness Annual  
Report ..................................26  
EPA Wastewater Treatment  
Loans ...................................27  
1
61,000 (0.1%) in October, and the unemployment rate  
declined to 4.9%, down from 5.0% in September.  
Through October 2016, GRF sources totaled $11.30 billion:  
TRACKING THE ECONOMY  
Revenue from the personal income tax was  
82.6 million below estimate;  
The National Economy ............28  
The Ohio Economy..................32  
$
Sales and use tax receipts were $76.4 million below  
estimate.  
Through October 2016, GRF uses totaled $13.24 billion:  
Legislative Service Commission  
Program expenditures were $128.9 million below  
7
7 South High Street, 9th Floor  
estimate, due to negative variances in most  
Columbus, Ohio 43215  
spending  
categories,  
including  
Medicaid  
Telephone: 614-466-3615  
($95.1 million);  
A positive variance for Primary and Secondary  
Education ($68.7 million) was primarily timing  
related.  
AVAILABLE ON OUR WEBSITE: WWW.LSC.OHIO.GOV  
CLICK ON 'PUBLICATIONS/BUDGET FOOTNOTES'  
Ohio Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of October 2016  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on November 1, 2016)  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
TAX REVENUE  
Auto Sales  
$109,927  
$115,300  
-$5,373  
-4.7%  
Nonauto Sales and Use  
Total Sales and Use Taxes  
$747,918  
$790,800  
-$42,882  
-5.4%  
$857,845  
$906,100  
-$48,255  
-5.3%  
Personal Income  
$608,352  
-$263  
$617,900  
$0  
-$9,548  
-$263  
-1.5%  
---  
Corporate Franchise  
Financial Institution  
Public Utility  
-$12,296  
$2,307  
$34,948  
$494  
-$1,600  
$6,300  
$30,600  
$500  
-$10,696  
-$3,993  
$4,348  
-$6  
-668.5%  
-63.4%  
14.2%  
-1.3%  
-16.2%  
---  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
$38,049  
$0  
$45,400  
$0  
-$7,351  
$0  
$150,670  
-$2,316  
$0  
$152,000  
$400  
-$1,330  
-$2,716  
$0  
-0.9%  
-679.1%  
---  
$0  
$84,576  
$3,185  
$3,830  
$175  
$91,100  
$5,500  
$3,500  
$0  
-$6,524  
-$2,315  
$330  
-7.2%  
-42.1%  
9.4%  
Alcoholic Beverage  
Liquor Gallonage  
Estate  
$175  
---  
Total Tax Revenue  
$1,769,555  
$1,857,700  
-$88,145  
-4.7%  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$14,182  
$1,669  
$801  
$8,500  
$855  
$5,682  
$814  
66.8%  
95.2%  
-98.0%  
-66.5%  
$40,420  
$49,775  
-$39,619  
-$33,123  
Total Nontax Revenue  
$16,652  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$0  
$0  
$0  
$9,800  
$9,800  
$0  
-$9,800  
-$9,800  
---  
-100.0%  
-100.0%  
TOTAL STATE SOURCES  
Federal Grants  
$1,786,207  
$991,355  
$1,917,275  
$887,442  
-$131,068  
$103,913  
-$27,154  
-6.8%  
11.7%  
-1.0%  
TOTAL GRF SOURCES  
$2,777,562  
$2,804,717  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
2
November 2016  
Ohio Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate  
FY 2017 as of October 31, 2016  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on November 1, 2016)  
Percent  
Change  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
FY 2016  
TAX REVENUE  
Auto Sales  
$475,971  
$490,000  
-$14,029  
-2.9%  
$471,963  
0.8%  
Nonauto Sales and Use  
$3,035,584  
$3,098,000  
-$62,416  
-2.0%  
$2,999,206  
1.2%  
Total Sales and Use Taxes  
$3,511,554  
$3,588,000  
-$76,446  
-2.1%  
$3,471,169  
1.2%  
Personal Income  
$2,595,810  
-$760  
$2,678,400  
$0  
-$82,590  
-$760  
-3.1%  
---  
$2,730,488  
$5,649  
-4.9%  
-113.4%  
-215.5%  
-15.4%  
6.1%  
Corporate Franchise  
Financial Institution  
Public Utility  
-$11,019  
$25,764  
$133,561  
$12,411  
$336,431  
$1,542  
-$1,600  
$31,500  
$118,000  
$12,600  
$346,000  
$1,200  
$156,500  
$400  
-$9,419  
-$5,736  
$15,561  
-$189  
-588.7%  
-18.2%  
13.2%  
-1.5%  
-2.8%  
28.5%  
2.8%  
-86.7%  
---  
-$3,493  
$30,448  
$125,833  
$12,570  
$327,491  
$1,350  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
-1.3%  
-$9,569  
$342  
2.7%  
14.2%  
3.9%  
$160,891  
$53  
$4,391  
-$347  
$154,878  
$344  
-84.5%  
-2408.6%  
-6.1%  
-$678  
$0  
-$678  
$29  
$279,276  
$21,205  
$15,618  
$248  
$277,000  
$19,200  
$14,800  
$0  
$2,276  
$2,005  
$818  
0.8%  
10.4%  
5.5%  
---  
$297,281  
$20,958  
$14,948  
$475  
Alcoholic Beverage  
Liquor Gallonage  
1.2%  
4.5%  
Estate  
$248  
-47.8%  
-1.5%  
Total Tax Revenue  
$7,081,909  
$7,242,000  
-$160,091  
-2.2%  
$7,190,419  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$14,191  
$10,796  
$49,981  
$74,968  
$8,500  
$9,405  
$5,691  
$1,391  
$6,036  
$13,118  
67.0%  
14.8%  
13.7%  
21.2%  
$7,927  
$8,754  
79.0%  
23.3%  
-85.9%  
-79.8%  
$43,945  
$61,850  
$354,554  
$371,234  
Total Nontax Revenue  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$15,309  
$15,309  
$0  
$22,300  
$22,300  
$0  
-$6,991  
-$6,991  
---  
-31.4%  
-31.4%  
$0  
$174,676  
$174,676  
---  
-91.2%  
-91.2%  
TOTAL STATE SOURCES  
Federal Grants  
$7,172,186  
$4,123,525  
$11,295,711  
$7,326,150  
$4,231,717  
$11,557,867  
-$153,964  
-$108,192  
-$262,157  
-2.1%  
-2.6%  
-2.3%  
$7,736,330  
$4,028,023  
$11,764,352  
-7.3%  
2.4%  
TOTAL GRF SOURCES  
-4.0%  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
November 2016  
3
Budget Footnotes  
Ohio Legislative Service Commission  
REVENUES  
Thomas Kilbane, Economist, 614-728-3218  
Overview  
GRF tax revenue in October was $88.1 million (4.7%) below the  
Office of Budget and Management's (OBM) estimate. This continued a  
trend that started during FY 2016, when GRF tax revenue ended the year  
GRF tax  
revenue was  
$
216.0 million under expectations. Through the first four months of  
FY 2017, tax receipts of $7.08 billion had a shortfall of $160.1 million  
2.2%). Underperformance of the GRF's two dominant sources of tax  
$
88.1 million  
(4.7%) below  
(
estimate in  
October.  
revenue was to blame thus far in the fiscal year. In October, the sales and  
use tax had its worst performance relative to estimate in any month of  
this biennium. In FY 2017 through October, revenue from the tax was  
$
76.4 million below expectations. The personal income tax (PIT) has also  
performed poorly. After ending FY 2016 with a $217.7 million deficit,  
revenue from the tax was $82.6 million below estimate through October  
of FY 2017. The trends are especially significant because FY 2017 revenue  
estimates for both the PIT and the sales and use tax were adjusted  
downward to take into account FY 2016's performance, but thus far both  
1
Through the  
first four  
taxes have failed to meet those lowered expectations.  
Tables 1 and 2 above, show GRF sources2 for October and for  
FY 2017 through October, respectively. Total GRF sources received  
through October were $11.30 billion, which was $262.2 million (2.3%)  
below estimates. In addition to the shortfall of GRF tax sources, federal  
grants of $4.12 billion were $108.2 million (2.6%) below expectations.  
Total GRF sources have been below estimate in each of the last seven  
months due to a combination of tax revenue shortfalls and smaller than  
expected federal grants, primarily related to the level of spending in the  
months of  
FY 2017, GRF  
tax receipts of  
$7.08 billion  
had a shortfall  
of $160.1 million.  
3
Medicaid program, which has generally been lower than expected.  
The chart below illustrates the cumulative performance of total  
GRF sources relative to estimates through each month of FY 2017, broken  
down by its largest components. Despite a small positive contribution  
from the "other state revenue" component (light green bar in the chart),  
1 Updated OBM revenue 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 $95.1 million below estimate through the first four months of FY 2017.  
Budget Footnotes  
4
November 2016  
Ohio Legislative Service Commission  
FY 2017's cumulative sources through October were $262.2 million below  
estimate, as labeled in the far right column.  
Chart 1: GRF Source Fiscal Year Cumulative Performance  
by Component  
Jul-16  
$17.2  
Aug-16  
Sep-16  
Oct-16  
$
100  
$
0
-
-$100  
-$200  
-$300  
-
$145.4  
-
$235.0  
-
$262.2  
Federal Grants  
Tax Revenue  
Other State Revenue  
Total tax revenue was within 0.5% of estimates in the months of  
July and September, but in August and October, it fell short of estimates  
by 4.0% and 4.7%, respectively. While the PIT and the sales and use tax  
are by far the main culprits, other tax sources that have contributed to the  
deficit thus far in FY 2017 were the commercial activity tax (CAT) which  
was $9.6 million below estimate, the financial institutions tax (FIT) which  
FY 2017 tax  
revenue  
was $9.4 million below estimate (negative net revenue expected through through  
October), and the public utility tax which was $5.7 million below estimate.  
Partially offsetting these deficits were surpluses from the kilowatt-hour  
excise tax of $15.6 million, the foreign insurance tax of $4.4 million, the  
October was  
108.5 million  
1.5%) lower  
$
4
(
cigarette tax of $2.3 million, and the alcoholic beverage tax of $2.0 million.  
than the first  
Compared to the first four months in FY 2016, FY 2017 tax  
revenue through October was $108.5 million (1.5%) lower. Nearly all of  
four months of  
the decrease can be attributed to the PIT which has collected FY 2016.  
$
134.7 million less in FY 2017 than through the corresponding period one  
year ago. Legislative policy changes can explain less than a quarter of  
4 Ohio insurance taxes apply to premiums received for policies covering  
Ohio risks; if the company receiving the premium is organized under Ohio law,  
they pay the domestic insurance tax, otherwise, they pay the foreign insurance  
tax.  
November 2016  
5
Budget Footnotes  
Ohio Legislative Service Commission  
that decrease.5 Partially offsetting that decline was sales and use tax  
revenue, which despite poor performance thus far in FY 2017 relative to  
estimates, has increased by $40.4 million from one year ago. Revenue  
also grew noticeably for the kilowatt-hour tax ($7.7 million), the CAT  
(
$8.9 million), and the foreign insurance tax ($6.0 million). On the other  
hand, year-over-year receipts fell for the cigarette tax ($18.0 million),  
6
the FIT ($7.5 million), the corporate franchise tax ($6.4 million), and the  
public utility tax ($4.7 million).  
Sales and Use Tax  
Sales and use tax receipts in October missed estimates by more  
than any other month this biennium, magnifying a trend of  
underperformance that began in the second half of FY 2016. Revenue  
from the tax was $48.3 million (5.3%) below estimate in October, bringing  
fiscal year-to-date receipts to $76.4 million (2.1%) below expectations.  
October marked the seventh straight month that sales and use tax  
receipts were below estimate. Over the last nine months going back to  
February, sales and use tax revenue was $180.0 million (2.3%) below  
expectations. The sales and use tax is the largest state sourced revenue  
stream to the GRF.  
Sales and use  
tax receipts in  
October were  
further below  
estimates than  
any other  
month this  
biennium.  
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  
7
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%.  
5 H.B. 64 reduced income tax rates by 6.3%, leading to a 3.1% reduction in  
the PIT withholding rate, which did not take effect until August 2015. Based on  
this, July 2016's PIT withholdings would be expected to be 3.1% lower than in  
July 2015, though growth in wages would typically offset at least part of that  
decrease.  
6
The corporate franchise tax was eliminated at the end of FY 2013,  
however adjustments to previous year's tax filings resulted in additional receipts  
in subsequent years, including $33.2 million in FY 2016.  
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.  
Budget Footnotes  
6
November 2016  
Ohio Legislative Service Commission  
Nonauto Sales and Use Tax  
Nonauto sales and use tax collections were $747.9 million in  
October, which was $42.9 million (5.4%) less than projected, intensifying  
the recent string of monthly shortfalls. It was the fifth straight month, and  
eight out of the last nine, in which collections from this segment of the tax  
were below estimate. Tax receipts were also $1.6 million (0.2%) below  
revenue in October 2015. For FY 2017 through October, nonauto sales and  
use tax revenue was $62.4 million (2.0%) below expectations. The chart  
Nonauto sales  
and use tax  
revenue has  
been below  
estimate in  
below illustrates the slowing year-over-year growth of nonauto sales and eight of the last  
use tax collections and its persistent failure to meet estimates throughout  
the majority of calendar year 2016.  
nine months.  
Chart 2: Nonauto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
7
6
5
4
3
2
1
0
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
Actual  
Estimate  
A small portion of the FY 2017 shortfall can be attributed to  
Medicaid health insuring corporations. Sales tax receipts from these  
corporations have grown at a slower pace than the rest of nonauto sales  
and use tax revenue in recent months. This portion of sales tax collections  
is generally correlated to Medicaid spending, not necessarily broader  
consumer spending trends. According to OBM Director Tim Keen, about  
one-sixth of the nonauto sales tax underage [in October] was attributable  
8
to poor collections from Medicaid health insuring corporations.  
Collections from these corporations have made up about 8.4% of nonauto  
sales and use tax revenue in FY 2017.  
8 Gongwer Ohio Report, Volume 85, Report 214, Article 2, November 4, 2016.  
November 2016  
7
Budget Footnotes  
Ohio Legislative Service Commission  
Auto Sales and Use Tax  
The GRF received $476.0 million in revenue from the auto portion  
of the sales and use tax in the first four months of FY 2017, $14.0 million  
(2.9%) 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 slow in part due to high sales one  
year ago.  
Chart 3: Auto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
1
0.0%  
Actual  
Estimate  
8
6
4
2
0
.0%  
.0%  
.0%  
.0%  
.0%  
-2.0%  
-4.0%  
-6.0%  
While the pace of nationwide auto sales in 2016 has fallen slightly  
from an all-time high in 2015, it remained at healthy levels through  
October. In particular, sales of light trucks have sustained a record-  
setting pace begun in the fall of 2015, and those sales peaked again in  
October at a seasonally adjusted pace (11.1 million annual rate) which  
had only historically been reached during months that included irregular  
promotional activity. In this case, low fuel prices for an extended period,  
as well as accommodative financing terms seem to be driving light truck  
sales. In contrast, sales of cars remained at a significantly slower pace  
than during 2015 (6.8 million seasonally adjusted annual rate in October).  
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.  
PIT revenue  
was  
$
9.5 million  
(1.5%) below  
estimate in  
October.  
Personal Income Tax  
The second largest state sourced revenue stream to the GRF has  
also underperformed thus far in FY 2017. PIT revenue was $9.5 million  
Budget Footnotes  
8
November 2016  
Ohio Legislative Service Commission  
(1.5%) below estimate in October, the third straight month the tax missed  
expectations. Through the first four months of the fiscal year, GRF  
revenue from the PIT totaled $2.6 billion, which was $82.6 million (3.1%)  
below OBM's estimate.  
PIT refunds  
were  
PIT revenue is comprised of gross collections, minus refunds and  
distributions to the Local Government Fund (LGF). Gross collections  
9
$38.3 million  
consist of employer withholdings, quarterly estimated payments, trust  
payments, payments associated with annual returns, and other (20.8%) higher  
miscellaneous payments. The performance of the tax is typically driven by  
employer withholdings, which is the largest component of gross  
collections. Through October, the PIT revenue shortfall was led by  
monthly employer withholdings, which were $51.3 million (1.9%) below  
than expected  
through the  
first four  
estimate, and refunds, which were $38.3 million (20.8%) higher than months of  
expected.  
FY 2017.  
Monthly employer withholdings continue to grow year over year,  
but at a slower pace than expected. Policy changes, 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. The pace of  
growth has increased in FY 2017 as the effects of policy changes are  
phased out of the year-over-year calculations, but it remains below OBM's  
FY 2017 estimates.  
Chart 4: Monthly Withholding Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
8
7
6
5
4
3
2
1
0
%
%
%
%
%
%
%
%
%
Actual  
Estimate  
9 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.  
November 2016  
9
Budget Footnotes  
Ohio Legislative Service Commission  
Not all components of gross collections underperformed  
expectations in the first four months of FY 2017. Revenue from quarterly  
estimated payments and annual returns was higher than expected, though  
not enough to offset the shortfall in withholding and the extra amount of  
refunds issued. In comparison to the first four months of FY 2016,  
withholding growth is 1.1%, though most of the other components of gross  
collections have fallen sharply, and refunds increased noticeably. FY 2017  
revenues through October 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.  
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  
Category  
Amount  
Percentage  
Amount  
Percentage  
(
$ in millions)  
(%)  
($ in millions)  
(%)  
Withholding  
-$50.6  
$9.4  
-1.9%  
5.1%  
$29.6  
-$88.8  
-$5.1  
1.1%  
-31.6%  
-33.5%  
-26.8%  
-3.3%  
-3.0%  
21.4%  
3.7%  
Quarterly Estimated Payments  
Trust Payments  
-$2.8  
$3.1  
-21.5%  
4.5%  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
-$25.7  
-$0.6  
-$5.0  
-$45.9  
$38.3  
-$1.7  
-$82.6  
-21.5%  
-1.5%  
20.8%  
-1.3%  
-3.1%  
-$90.7  
$39.3  
$4.6  
Less Refunds  
Less LGF Distribution  
GRF PIT Revenue  
-$134.7  
-4.9%  
Cigarette and Other Tobacco Products Tax  
October GRF revenue from the cigarette and other tobacco  
products tax of $84.6 million was $6.5 million (7.2%) below estimate, and  
12.1 million (12.5%) below revenue in October 2015. For FY 2017  
through October, receipts were $279.3 million, $2.3 million (0.8%) above  
estimate. Of the $279.3 million in revenue, $257.1 million was from  
cigarettes and $22.2 million was from sales of other tobacco products.  
FY 2017  
revenue from  
the cigarette  
tax has  
$
declined by  
Compared to FY 2016 through October, receipts in FY 2017 were  
6
.1% from  
$
18.0 million (6.1%) lower. Generally, cigarette tax receipts are trending  
FY 2016.  
10  
downward long-term; however, legislative changes led to increased  
receipts in the early months of FY 2016. Thus, the current year-over-year  
decline in FY 2017 revenue is larger than usual.  
10 H.B. 64 increased the cigarette tax from $1.25 to $1.60 per pack of 20  
cigarettes, effective July 1, 2015. This led to the payment of a "floor tax" for  
cigarettes in inventory at the time the new tax rate went into effect.  
Budget Footnotes  
10  
November 2016  
Ohio Legislative Service Commission  
Other Taxes  
A number of other tax sources also fell short of estimates in October  
which, when aggregated, contributed significantly to the monthly deficit.  
Neither the FIT, nor the CAT, were expected to collect large amounts  
during the month, but a larger than expected amount of refunds were  
responsible for shortfalls of $10.7 million and $7.4 million, respectively.  
The CAT will have its second quarterly collection date during November,  
while the FIT does not expect substantial receipts until January 2017. The  
1
1
public utility tax (-$4.0 million) and the insurance tax revenue streams  
(foreign: -$1.3 million, domestic: -$2.7 million) also contributed to the  
monthly deficit. Of these five tax revenue streams, only the foreign  
insurance tax has met revenue expectations for 2017 fiscal year to date.  
11 The public utility tax applies to the gross receipts of certain classes of  
public utilities. Typically, over 90% of the revenue from the tax comes from  
natural gas companies, therefore changes in natural gas prices and consumption  
drive its performance.  
November 2016  
11  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of October 2016  
(
$ in thousands)  
(
Actual based on OAKS reports run November 3, 2016)  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
Primary and Secondary Education  
Higher Education  
$721,635  
$704,520  
$17,115  
2.4%  
$194,421  
$7,699  
$195,249  
$8,526  
-$829  
-$826  
-0.4%  
-9.7%  
1.7%  
Other Education  
Total Education  
$923,755  
$908,295  
$15,460  
Medicaid  
$1,503,520  
$163,116  
$1,309,888  
$187,079  
$193,632  
-$23,963  
$169,669  
14.8%  
-12.8%  
11.3%  
Health and Human Services  
Total Welfare and Human Services  
$1,666,636  
$1,496,966  
Justice and Public Protection  
General Government  
$140,629  
$32,850  
$192,541  
$37,697  
-$51,912  
-$4,847  
-27.0%  
-12.9%  
-24.7%  
Total Government Operations  
$173,479  
$230,238  
-$56,759  
Property Tax Reimbursements  
Debt Service  
$301,837  
$88,808  
$360,962  
$88,836  
-$59,125  
-$28  
-16.4%  
0.0%  
Total Other Expenditures  
$390,645  
$449,798  
-$59,153  
-13.2%  
Total Program Expenditures  
$3,154,514  
$3,085,297  
$69,217  
2.2%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$0  
$10,256  
$10,256  
$0  
$38,464  
$38,464  
$0  
-$28,209  
-$28,209  
---  
-73.3%  
-73.3%  
TOTAL GRF USES  
$3,164,770  
$3,123,761  
$41,009  
1.3%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
12  
November 2016  
Ohio Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2017 as of October 31, 2016  
(
$ in thousands)  
(
Actual based on OAKS reports run November 3, 2016)  
Percent  
Change  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
FY 2016  
Primary and Secondary Education  
Higher Education  
$3,093,844  
$763,387  
$35,079  
$3,025,188  
$68,657  
2.3%  
$2,603,326  
$744,342  
$30,702  
18.8%  
2.6%  
$771,842  
$37,006  
-$8,455  
-$1,927  
$58,275  
-1.1%  
-5.2%  
1.5%  
Other Education  
14.3%  
15.2%  
Total Education  
$3,892,310  
$3,834,035  
$3,378,370  
Medicaid  
$6,132,338  
$458,235  
$6,227,430  
$506,119  
-$95,092  
-$47,885  
-$142,977  
-1.5%  
-9.5%  
-2.1%  
$6,199,230  
$467,697  
-1.1%  
-2.0%  
-1.1%  
Health and Human Services  
Total Welfare and Human Services  
$6,590,572  
$6,733,549  
$6,666,927  
Justice and Public Protection  
General Government  
$746,886  
$134,237  
$881,122  
$771,741  
$144,679  
$916,420  
-$24,855  
-$10,442  
-$35,297  
-3.2%  
-7.2%  
-3.9%  
$734,491  
$137,517  
$872,009  
1.7%  
-2.4%  
1.0%  
Total Government Operations  
Property Tax Reimbursements  
Debt Service  
$754,261  
$870,901  
$762,599  
$871,443  
-$8,338  
-$542  
-1.1%  
-0.1%  
-0.5%  
$836,009  
$839,943  
-9.8%  
3.7%  
Total Other Expenditures  
$1,625,162  
$1,634,042  
-$8,880  
$1,675,953  
-3.0%  
Total Program Expenditures  
$12,989,167  
$13,118,046  
-$128,879  
-1.0%  
$12,593,258  
3.1%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$29,483  
$223,869  
$253,352  
$29,483  
$250,623  
$280,106  
$0  
-$26,754  
-$26,754  
0.0%  
-10.7%  
-9.6%  
$425,500  
$358,700  
$784,200  
-93.1%  
-37.6%  
-67.7%  
TOTAL GRF USES  
$13,242,519  
$13,398,152  
-$155,633  
-1.2%  
$13,377,458  
-1.0%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
November 2016  
13  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on November 7, 2016)  
Month of October 2016  
Year to Date Through October 2016  
Department  
Medicaid  
Actual  
Estimate*  
Variance  
Percent  
Actual  
Estimate*  
Variance  
Percent  
$1,813,009  
$1,450,672  
$362,338  
$1,932,041  
$1,254,986  
$677,055  
-$119,032  
$195,685  
-$314,717  
-6.2%  
15.6%  
-46.5%  
$6,931,853  
$5,911,343  
$1,020,510  
$7,586,974  
$5,989,634  
$1,597,341  
-$655,122  
-8.6%  
GRF  
-$78,291  
-1.3%  
Non-GRF  
-$576,831 -36.1%  
Developmental Disabilities  
$217,104  
$47,273  
$228,475  
$47,394  
-$11,371  
-$121  
-5.0%  
-0.3%  
-6.2%  
$850,457  
$189,780  
$660,678  
$907,518  
$192,596  
$714,922  
-$57,060  
-$2,816  
-6.3%  
-1.5%  
-7.6%  
GRF  
Non-GRF  
$169,832  
$181,081  
-$11,250  
-$54,244  
Job and Family Services  
$11,909  
$4,400  
$7,509  
$19,389  
$6,824  
-$7,480  
-$2,423  
-$5,057  
-38.6%  
-35.5%  
-40.2%  
$65,990  
$27,322  
$38,667  
$99,697  
$41,543  
$58,154  
-$33,707 -33.8%  
-$14,221 -34.2%  
-$19,486 -33.5%  
GRF  
Non-GRF  
$12,566  
Health  
GRF  
$1,437  
$287  
$1,807  
$263  
-$370  
$24  
-20.5%  
9.2%  
$8,584  
$1,231  
$7,353  
$9,275  
$1,110  
$8,165  
-$691  
-7.5%  
$121  
10.9%  
Non-GRF  
$1,150  
$1,544  
-$394  
-25.5%  
-$812 -10.0%  
Aging  
$564  
$307  
$257  
$579  
$282  
$297  
-$15  
$26  
-2.5%  
9.1%  
$2,685  
$1,289  
$1,396  
$2,990  
$1,267  
$1,722  
-$304 -10.2%  
GRF  
$22 1.7%  
-$326 -19.0%  
Non-GRF  
-$40  
-13.5%  
Mental Health and Addiction  
$703  
$581  
$122  
$140  
$140  
$0  
$563 402.1%  
$1,942  
$1,372  
$570  
$1,580  
$1,280  
$300  
$362  
$92  
22.9%  
7.2%  
GRF  
$441 315.2%  
Non-GRF  
$122  
---  
$270  
89.9%  
Total GRF  
$1,503,520  
$541,207  
$1,309,888  
$872,543  
$193,632  
-$331,336  
14.8%  
$6,132,338  
$1,729,173  
$6,227,430  
$2,380,604  
-$95,092  
-1.5%  
Total Non-GRF  
-38.0%  
-$651,430 -27.4%  
-$746,523 -8.7%  
Total All Funds  
$2,044,727  
$2,182,431  
-$137,704  
-6.3%  
$7,861,511  
$8,608,034  
*Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
14  
November 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 November 7, 2016)  
October Year to Date Through October 2016  
Estimate*  
(
Payment Category  
Managed Care  
Nursing Facilities  
DDD Services  
Hospitals  
Actual  
Variance  
-$51,475  
$3,042  
Percent  
-5.7%  
Actual  
Estimate*  
$3,532,136  
$487,963  
$876,150  
$501,665  
$414,042  
$392,725  
$116,149  
$153,263  
$153,337  
$69,762  
Variance Percent  
$847,655  
$124,194  
$211,691  
$82,281  
$110,709  
$76,907  
$25,835  
$38,047  
$48,503  
$17,014  
$30,630  
$12,189  
$333,582  
$85,489  
$899,130  
$121,152  
$223,761  
$95,124  
$117,697  
$102,396  
$29,288  
$42,262  
$38,474  
$19,304  
$27,743  
$16,419  
$359,681  
$89,999  
$3,236,464  
$493,694  
$824,595  
$317,275  
$382,980  
$308,259  
$114,727  
$136,347  
$175,993  
$65,706  
-$295,673  
$5,732  
-8.4%  
1.2%  
-5.9%  
2.5%  
-$12,069  
-$12,843  
-$6,988  
-$25,489  
-$3,453  
-$4,215  
$10,029  
-$2,291  
$2,887  
-5.4%  
-$51,554  
-13.5%  
-5.9%  
-$184,390 -36.8%  
-$31,062 -7.5%  
-$84,467 -21.5%  
-$1,422 -1.2%  
-$16,915 -11.0%  
Behavioral Health  
Administration  
Aging Waivers  
Prescription Drugs  
Medicare Buy-In  
Physicians  
-24.9%  
-11.8%  
-10.0%  
26.1%  
-11.9%  
10.4%  
-25.8%  
-7.3%  
$22,657  
-$4,056  
$4,341  
14.8%  
-5.8%  
3.9%  
Medicare Part D  
Home Care Waivers  
ACA Expansion  
All Other  
$115,008  
$42,551  
$110,668  
$58,765  
-$4,230  
-$26,100  
-$4,510  
-$137,704  
-$16,214 -27.6%  
$1,339,891  
$308,020  
$7,861,511  
$1,423,722  
$317,687  
$8,608,034  
-$83,831  
-$9,668  
-5.9%  
-3.0%  
-8.7%  
-5.0%  
Total All Funds  
$2,044,727 $2,182,431  
-6.3%  
-$746,523  
*
Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
November 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  
Tables 3 and 4 show GRF uses for the month of October and for  
For the first  
four months of  
FY 2017, GRF  
uses were  
FY 2017 through October, respectively. GRF uses were $3.16 billion in  
October, $41.0 million above the estimate released by OBM in  
August 2016. GRF uses mainly consist of program expenditures but also  
include transfers out. Through October, FY 2017 GRF program  
expenditures totaled $12.99 billion, $128.9 million below estimate; GRF  
transfers out totaled $253.4 million, $26.8 million below estimate; and  
GRF uses as a whole totaled $13.24 billion, $155.6 million below their  
year-to-date estimate.  
$
155.6 million  
below  
estimate.  
Among the nine program categories, Medicaid had the largest  
positive variance, $193.6 million, in the month of October, which was  
partially offset by negative monthly variances in seven other categories.  
Medicaid also had the largest negative variance, $95.1 million, in the  
fiscal year through October. Other program categories with notable year-  
to-date negative variances include Health and Human Services  
(
$47.9 million) and Justice and Public Protection ($24.9 million).  
Cumulative expenditures from Primary and Secondary Education were  
68.7 million above the year-to-date estimate, which partially offset these  
$
negative variances. The variances for these four categories and GRF  
transfers out are discussed below.  
Medicaid  
Medicaid is primarily funded by the GRF although it also receives  
funding from various non-GRF funds. As a joint federal-state program,  
both GRF and non-GRF Medicaid expenditures contain federal and state  
moneys. Overall, the federal and state shares of Medicaid expenditures  
are about 64% and 36%, respectively.  
A positive GRF  
variance for  
Medicaid in  
October of  
Table 5 provides GRF and non-GRF Medicaid expenditures by  
agency. As seen from the table, across all funds Medicaid expenditures of  
was offset by a $2.04 billion in October were below estimate by $137.7 million (6.3%).  
$
193.6 million  
GRF Medicaid expenditures of $1.5 billion were $193.6 million (14.8%)  
above estimate while non-GRF Medicaid expenditures of $541.2 million  
were $331.3 million (38.0%) below estimate. Both the overspending of  
GRF and underspending of non-GRF in October were the result of  
hospital assessment revenue not being collected in October as planned.  
Hospital assessment revenue is used to make Hospital Upper Payment  
negative non-  
GRF variance of  
$
331.3 million.  
Budget Footnotes  
16  
November 2016  
Ohio Legislative Service Commission  
Limit (UPL) payments as well as to offset GRF spending. Without the  
assessment revenue, the Ohio Department of Medicaid (ODM) had to use  
more GRF than had been planned to make October Medicaid payments.  
This imbalance between GRF and non-GRF spending should be corrected  
when the assessment revenue is collected.  
Through the first four months of FY 2017, across all funds,  
Medicaid expenditures totaled $7.86 billion, $746.5 million (8.7%) below For the first  
the year-to-date estimate. GRF Medicaid expenditures were $6.13 billion,  
four months of  
95.1 million (1.5%) below estimate, while non-GRF Medicaid  
FY 2017, all-  
$
expenditures were $1.73 billion, $651.4 million (27.4%) below estimate.  
funds Medicaid  
expenditures  
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 had a negative  
Services. As seen from Table 5, ODM, the largest agency within this  
program category, also had the largest year-to-date variance. Across all  
funds, ODM's expenditures were $655.1 million (8.6%) below the year-to-  
date estimate. Through the first four months of FY 2017, ODM's GRF  
variance of  
746.5 million,  
including  
$
expenditures totaled $5.91 billion, which was $78.3 million (1.3%) below $95.1 million  
estimate, and its non-GRF expenditures totaled $1.02 billion, which was  
GRF and  
$
expenditures from the Department of Developmental Disabilities (DDD),  
the second largest agency within this program category, totaled  
576.8 million (36.1%) below estimate. GRF and non-GRF Medicaid  
$
651.4 million  
non-GRF.  
$
$
850.5 million through the first four months of FY 2017, which was  
57.1 million (6.3%) below estimate. Together, ODM and DDD account for  
about 99% of the Medicaid expenditure total.  
Table 6 details all-funds Medicaid expenditures by payment  
category. As seen from the table, Managed Care had the largest negative  
variance for the year-to-date at $295.7 million (8.4%), which grew as a  
result of consistent underspending due to new Managed Care rates for  
2
016, effective January 1. These rates were lower than projected,  
particularly those for the MyCare program, which provides managed care  
services for Ohioans who receive both Medicaid and Medicare benefits.  
The rates will continue through the end of the calendar year, meaning the  
Managed Care category will likely continue to have a negative variance  
through at least the first half of FY 2017. However, this variance was  
partially offset by approximately $50 million of pay-for-performance  
payments made during the month that were expected to be paid in  
September; approximately $24 million in payments are still outstanding.  
Other payment categories that had significant negative year-to-date  
variances were Hospitals, Administration, and ACA Expansion. The  
negative variance for Hospitals ($184.4 million, 36.8%) was almost entirely  
November 2016  
17  
Budget Footnotes  
Ohio Legislative Service Commission  
due to $162.2 million in UPL payments not going out as planned. UPL  
allows the state to direct supplemental payments, up to the difference  
between the Medicare and the Medicaid amounts, to providers. These  
payments will likely be made during November.  
The negative variance in Administration ($84.5 million, 21.5%)  
resulted from a mix of underspending by ODM and the other five  
agencies that administer Medicaid. ODM is waiting on invoices from the  
current year related to the administration of the Ohio Benefits system  
totaling approximately $10 million to $11 million. The negative variance  
for ACA expansion ($83.8 million, 5.9%) is driven by the previously  
described lower than anticipated managed care rates, which are also  
applicable to this group. The rate changes are enough to offset higher  
than expected caseloads; ACA expansion enrollments in managed care  
are about 1,600 above estimate and in fee-for-service are about 14,300  
above estimate.  
The Medicare Buy-In category had a significant positive variance.  
All funds expenditures in the Medicare Buy-In category totaled  
$
176.0 million, which was $22.7 million (14.8%) 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. Additionally, the Nursing Facilities and  
Medicare Part D categories had nominal positive variances.  
Health and Human Services  
GRF expenditures for Health and Human Services were  
458.2 million through October, $47.9 million (9.5%) below estimate. This  
negative variance widened from the previous month because October  
spending was $24.0 million below OBM's estimate. The Ohio Department  
of Mental Health and Addiction Services (ODMHAS) had the largest  
negative variance in October and for the year to date at $15.3 million and  
FY 2017  
$
expenditures  
for Health and  
Human  
Services were  
below estimate  
by $47.9 million  
at the end of  
October.  
$
16.9 million, respectively. Elsewhere, the Ohio Department of Job and  
Family Services (ODJFS) and the Ohio Department of Health (DOH)  
accounted for $14.8 million and $8.9 million, respectively, of the  
category's total negative year-to-date variance.  
Expenditures for two ODMHAS line items were significantly  
below their monthly and year-to-date estimates. Item 336421, Continuum  
of Care Services, was below by $7.2 million for the month and  
$
12.2 million for the year. Item 336423, Addiction Services Partnership  
Budget Footnotes  
18  
November 2016  
Ohio Legislative Service Commission  
with Corrections, was below by $4.5 million for the month and  
9.8 million for the year. Both of these items rely on coordination with  
$
other governmental entities, so timing issues are not uncommon.  
October expenditures for ODJFS were on par with their OBM  
estimate, so the agency maintained the negative year-to-date variance of  
$
14.8 million as reported in last month's issue of Budget Footnotes. This  
negative variance, however, would have grown this month except for a  
positive offsetting October variance of $5.3 million in item 600413, Child  
Care State/Maintenance of Effort. Item 600413 provides payments for  
publicly funded child care and is necessary to draw down federal child  
care grants. Most of the other items in the agency's budget had negative  
monthly and year-to-date variances.  
An October negative variance of $4.5 million in DOH spending  
increased the agency's negative year-to-date variance to $8.9 million. This  
negative variance continues to be widespread as 16 of the agency's 22 line  
items were below their FY 2017 estimate. The largest such variance  
(
optimal development of infants and toddlers. Funds from item 440459 are  
distributed to counties through contracts, grants, or subsidies.  
$2.4 million) was for item 440459, Help Me Grow, which promotes the  
Transfers Out  
GRF transfers out totaled $10.3 million during October, which was  
$28.2 million (73.3%) below the OBM estimate. This monthly transfer  
activity also created a $26.8 million (10.7%) negative year-to-date variance. Transfers out  
OBM expected four transfers to occur in October, but only one, a transfer of  
of the GRF  
10.2 million to the Development Services Agency's TourismOhio Fund  
contributed  
26.8 million to  
the year-to-  
$
(Fund 5MJ0), materialized.  
$
Among the planned transfers that did not occur, the largest was  
Medicaid related. OBM estimated that $17.7 million would be transferred  
from the GRF to the Managed Care Performance Payment Fund date negative  
(
Fund 5KW0) pursuant to section 327.80 of H.B. 64, which requires ODM to  
variance in GRF  
uses.  
provide performance payments to Medicaid managed care organizations  
providing care and services to participants of MyCare, a program that is  
designed to improve access to and quality of care and services for  
individuals who are eligible for both Medicare and Medicaid. ODM  
withholds a percentage of each premium payment it pays to a managed  
care organization for a program participant. The withheld funds are then  
transferred from the GRF to Fund 5KW0 for performance payments.  
Smaller transfers of $8.3 million for an upgrade of the Ohio  
Administrative Knowledge System (OAKS), the state's accounting system,  
and of $2.0 million for administration of the Multi-Agency Radio  
November 2016  
19  
Budget Footnotes  
Ohio Legislative Service Commission  
Communication System (MARCS), were also not completed as expected in  
October.  
Justice and Public Protection  
Expenditures from the Justice and Public Protection program  
category were $140.6 million in October, $51.9 million (27.0%) below  
estimate. This negative monthly variance changed the category's year-to-  
date variance from a positive $27.1 million (4.7%) at the end of  
September to a negative $24.9 million (3.2%) at the end of October. The  
negative variance in October was caused by a timing-related negative  
variance of $49.8 million from the Department of Rehabilitation and  
Correction (DRC) which offset a positive monthly variance of  
$
47.4 million in September. DRC was left with a negative year-to-date  
variance of $18.7 million. DRC line item 505321, Institution Medical  
Services, was largely responsible for the agency's year-to-date variance as  
it was $17.4 million below estimate. In addition to DRC, the Department  
of Youth Services ($3.9 million) and the Judiciary/Supreme Court  
($3.1 million) had significant negative variances which were partially  
offset by a positive variance of $2.4 million for the Attorney General.  
Primary and Secondary Education  
The only  
GRF expenditures from the Primary and Secondary Education  
program category were $721.6 million for the month of October,  
positive year-  
to-date  
$
17.1 million (2.4%) above estimate. Through October, Primary and  
Secondary Education expenditures totaled $3.09 billion, $68.7 million  
variance in GRF  
uses at the end  
(2.3%) above estimate. These variances were largely due to timing.  
The Ohio Department of Education (ODE) is the only agency that  
of October was is included in this program category. Expenditures from ODE's GRF  
appropriation item 200511, Auxiliary Services, were $36.8 million above  
estimate in October, yielding a positive year-to-date variance of  
in Primary and  
Secondary  
Education.  
Expenditures  
were  
$
34.3 million. A subsidy payment from this item, which supports secular  
services provided to chartered nonpublic schools, occurred in October  
rather than November as anticipated by the OBM estimate.  
GRF expenditures from item 200550, Foundation Funding, totaled  
2.66 billion through October, which was $54.1 million above its FY 2017  
$
$
68.7 million  
estimate. Item 200550 is the main funding source for school foundation  
payments. 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. In fact, this item has a  
negative variance of $6.7 million in October, partially offsetting positive  
variances in previous months.  
above estimate  
largely due to  
timing.  
Budget Footnotes  
20  
November 2016  
Ohio Legislative Service Commission  
ISSUE UPDATES  
Over 52,000 Students Participate in First Year of  
the College Credit Plus Program  
Alexandra Vitale, Budget Analyst, 614-466-6582  
On September 19, 2016, the Ohio Department of Higher Education (ODHE)  
announced that over 52,000 high school students participated in the College Credit Plus  
CCP) program in the 2015-2016 school year. More than 90% of those students passed  
(
their CCP courses and, thus, received college credit. Most students took between one  
and three college courses through the program. CCP courses were taken mainly  
through the two-year college sector. According to ODHE, a total of 78% of students  
took CCP classes offered through community colleges (66%) or university branches  
(12%). The remainder of students took courses offered through public four-year  
universities (11%) and independent or private colleges (11%).  
The CCP program replaced the former Post-Secondary Enrollment Options  
Program (PSEO). The program allows qualified public, nonpublic, and home-instructed  
students in grades 7-12 to take college courses at state expense for both college and high  
school credit. Under CCP, funding for public students is deducted from the state aid  
allocated to the educating district or school. Funding for nonpublic and  
home-instructed students is paid directly by the state through certain GRF and  
non-GRF appropriations. Additional details on the CCP program are available on  
ODHE's website at http://www.ohiohighered.org/ccp.  
ODHE Awards Over $120,000 to Nine Higher Education Institutions  
to Prevent Sexual Violence on Campus  
Edward Millane, Senior Budget Analyst, 614-995-9991  
In September, ODHE awarded more than $120,000 to nine colleges and  
universities for the second round of grants aimed at preventing sexual violence on  
campus. The awards are part of ODHE's Changing Campus Culture (CCC) initiative,  
which intends to strengthen the ability of colleges and universities to prevent and better  
respond to sexual assault on their campuses. Recipients use their awards to implement  
the best practices laid out in CCC's Changing Campus Culture Report, which include  
developing sexual violence prevention and response models and increasing awareness  
1
2
and understanding of the issue on campus. Last March, ODHE awarded 22 colleges  
12 The 2015 CCC report can be found at: https://www.ohiohighered.org/ccc/report.  
November 2016  
21  
Budget Footnotes  
Ohio Legislative Service Commission  
and universities more than $212,000 in the first round of CCC grants. The grants are  
funded by GRF line item 235492, Campus Safety and Training. The institutions  
receiving a second round award, the award amount, and a brief description of each  
project are listed below.  
Case Western Reserve University ($15,000). Funds will establish university  
measures against sexual misconduct and personal violence, develop a  
common language around sexual violence prevention, and align training  
efforts with prevention values and the university's strategic plan.  
Defiance College ($15,000). Funds will expand efforts under its Sexual  
Violence Prevention Project, which, among other goals, seeks to address  
personal and community responsibility toward situations and victims of  
sexual violence.  
Hocking College ($15,000). Funds will support the Prevention Education and  
Application through Collaborative Effort (PEACE) initiative, which aims to  
work in collaboration with local advocacy groups to increase response to and  
prevention of sexual violence on campus.  
Wittenburg University ($15,000). Funds will create the Wittenburg Campus  
Violence Prevention Programming initiative, which seeks to reduce  
power-based violence through education and awareness among faculty, staff,  
and students.  
Kent State University ($14,965). Funds will support a program to educate  
students about sexual violence prevention. The program will be woven into  
orientation programs, interactive workshops, community-wide events, and  
future online curriculum offerings.  
Mount St. Joseph University ($14,860). Funds will establish a comprehensive  
online training course to address alcohol and drug issues, gender-based  
violence, and bystander intervention.  
Bowling Green State University ($14,810). Funds will support the  
university's efforts to transform its Health, Wellness, and You Academic  
Learning Community into a sustainable, trauma-informed, residential  
community that will help support students who enter campus having already  
experienced trauma.  
Ashland University ($8,000). Funds will support the university's Healthy  
Ashland: Changing Campus Culture program, which aims to promote sexual  
violence prevention through training programs for new employees, a  
campus-wide marketing program, and a gender-based violence program for  
faculty, staff, and students.  
Wright State University ($7,900). Funds will be used to help promote and  
support peer education and to develop materials to assist trainers under  
Wright State's new bystander empowerment program, Got a Minute?.  
Budget Footnotes  
22  
November 2016  
Ohio Legislative Service Commission  
Development Services Agency Awards $6.8 million to Regional Partners  
Under the Manufacturing Extension Partnership Program  
Tom Middleton, Budget Analyst, 614-728-4813  
On September 26, 2016, the Controlling Board approved seven grants totaling  
almost $6.8 million in GRF funding to be distributed by the Development Services  
Agency (DSA) under the Ohio Manufacturing Extension Partnership (MEP) program.  
These grants constitute the state's share of funding under this federal public-private  
partnership overseen by the National Institute of Standards and Technology (NIST).  
The goal of the program is to leverage federal, state, and private dollars to support the  
manufacturing industry. Under the program, funding is awarded to regional MEP  
service partners to provide technical and business assistance in support of small- and  
medium-sized manufacturers. The seven Ohio award recipients are shown in the table  
below, along with the FY 2017 funding allocations.  
Ohio MEP Grant Awards, FY 2017  
Regional Partner  
Manufacturing Advocacy & Growth Network (MAGNET)  
TechSolve  
Region  
Northeast  
Southwest  
Northwest  
West  
State Funding Total Funding  
$2,750,000  
$1,500,000  
$740,000  
$700,000  
$450,000  
$7,248,880  
$3,899,546  
$2,229,546  
2,099,576  
$1,199,697  
Center for Innovative Food Technology (CIFT)  
University of Dayton Research Institute (UDRI)  
PolymerOhio  
Central  
Center for Design and Manufacturing Excellence (CDME) –  
The Ohio State University  
Central  
$350,000  
$950,000  
Appalachian Partnership for Economic Growth (APEG)  
Southeast  
$300,000  
$1,199,667  
TOTAL  
$6,790,000  
$18,826,912  
The state funding is provided under GRF line item 195453, Technology Programs  
and Grants. Federal funding for the MEP is not subject to Controlling Board approval,  
and flows through Federal Fund 3080, appropriation item 195672, Manufacturing  
Extension Partnership. NIST has committed $5.25 million in annual funding for MEP  
through FY 2021. In combination with state funding and the private sector, DSA  
estimates that over $80 million in funding will be available to Ohio regional MEP  
service partners over the FY 2017-FY 2021 period.  
OHFA Awards $54.2 million Under the Neighborhood Initiative Program  
Shannon Pleiman, Budget Analyst, 614-466-1154  
On October 19, 2016, the Ohio Housing Finance Agency (OHFA) awarded  
54.2 million to 35 counties under the Neighborhood Initiative Program (NIP). Of this  
$
amount, $26.9 million was awarded to 16 newly established county land reutilization  
November 2016  
23  
Budget Footnotes  
Ohio Legislative Service Commission  
corporations (CLRCs). The remaining $27.3 million was awarded to 19 previously  
participating CLRCs. NIP is designed to stabilize local property values through the  
demolition and greening of vacant blighted homes. This money comes from the fifth  
round of funding under the U.S. Treasury's Hardest-Hit Fund, a program started in  
2
010 to help struggling homeowners avoid foreclosure and communities tackle blight in  
areas particularly affected by the housing crisis.  
Counties must have established a CLRC to be eligible for funding under NIP.  
Awards are 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, with the average award amount being  
$
14,000. 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 and  
4
,000 blighted properties have been removed. The list of CLRCs receiving awards and  
the total award amount under the September award announcement can be found at:  
http://ohiohome.org/news/releases/2016/hhf-round5-2.aspx.  
Federal Medicaid Reimbursement Rates Are Estimated to Increase for Ohio  
Ivy Chen, Principal Economist, 614-644-7764  
On September 29, 2016, Federal Funds Information for States (FFIS) released  
estimates showing that the federal reimbursement rate for Medicaid services, known as  
the regular Federal Medical Assistance Percentage (FMAP) as well as the related  
1
3
enhanced FMAP (eFMAP), will increase for Ohio in federal fiscal year (FFY) 2018. The  
FMAP for Ohio is estimated to increase by 0.46 percentage point, from 62.32% in  
FFY 2017 to 62.78% in FFY 2018. The eFMAP for Ohio is estimated to increase by  
0
.32 percentage point, from 96.62% in FFY 2017 to 96.94% in FFY 2018.  
This increase in the regular FMAP will decrease Ohio's share of many  
Medicaid expenditures. For example, state fiscal year (FY) 2017 Ohio Medicaid  
expenditures that are subject to the regular FMAP are estimated to be approximately  
$
18.8 billion. At that level of expenditure, an increase in the FMAP of 0.46 percentage  
point would lower Ohio's share of Medicaid costs by approximately $86 million  
$18.8 billion x 0.46%). Likewise, FY 2017 expenditures for Ohio's Children's Health  
(
Insurance Program (SCHIP), which is subject to eFMAP, are estimated to be  
13 The FFY 2018 FMAP will apply to the last three quarters of FY 2018 and the first  
quarter of FY 2019. These changes in the FMAP do not affect the federal reimbursement rate for  
individuals newly eligible for Medicaid under the ACA expansion. This rate is uniform for all  
states that adopt the expansion and falls from 95% in 2017 to 94% in 2018.  
Budget Footnotes  
24  
November 2016  
Ohio Legislative Service Commission  
approximately $353.7 million. At that level of expenditure, an increase in the eFMAP  
of 0.32 percentage point would lower Ohio's share of SCHIP costs by approximately  
$
1 million ($353.7 million x 0.32%).  
The regular FMAP for each state is based on a formula that provides higher  
reimbursement to states with lower per capita incomes relative to the national average.  
The 2015 and updated 2014 personal income data released by the U.S. Bureau of  
Economic Analysis (BEA) on September 28, 2016, allow calculation of FFY 2018 FMAPs,  
which are based on per capita personal incomes for calendar years 2013 through 2015.  
Although Ohio's per capita personal income rose 3.3% to $46,566 in 2015, after  
increasing 3.6% in 2014, Ohio remains below the national average. The national average  
growth rates were higher than in Ohio at 4.4% in 2014 and 3.7% in 2015. The national  
average for per capita personal incomes was $48,112 in 2015. Ohio's per capita personal  
income ranks 31st among the 50 states and the District of Columbia. In addition to Ohio,  
FFIS estimates that regular FMAPs will increase in 24 other states and decline in  
1
2 states.  
Ohio Receives $400,000 in Child Support Demonstration Project Grants  
Justin Pinsker, Budget Analyst, 614-466-5709  
On October 5, 2016, Ohio received two federal grants totaling $400,000 from the  
U.S. Department of Health and Human Services' Administration for Children and  
Families to incorporate procedural justice principles into child support business  
practices. The grants were awarded through the Procedural Justice-Informed  
Alternatives to Contempt (PJAC) Demonstration Project. One grant was awarded to the  
Ohio Department of Job and Family Services' Office of Child Support Enforcement and  
the other to the Stark County Department of Job and Family Services. Each grantee  
received $200,000. Grantees may receive additional funding up to $581,000 over the next  
four years, depending on the grantee's performance and the availability of funds. Each  
grant project will last five years: year one will consist of program design and testing,  
years two through four will provide program enrollment and services, and year five  
will continue the provision of services to previously enrolled individuals as well as  
project evaluation.  
The PJAC Demonstration Project seeks to enhance participants' confidence and  
trust in the child support program, in order to increase compliance with child support  
orders, increase reliable payments, reduce arrears, and minimize the need for continued  
enforcement actions and sanctions. The project's targeted population will be parents  
who owe child support arrears and would normally be scheduled for a contempt action  
in court. Each grantee is required to identify at least 3,000 noncustodial parents within  
this targeted population. Of these parents, 1,500 will receive grant project services and  
1
,500 will be placed into a control group and be subject to current child support  
November 2016  
25  
Budget Footnotes  
Ohio Legislative Service Commission  
processes and actions. Available grant project services include enhanced child support,  
case management, dispute resolution, and employment services. Grantees may also  
provide additional services such as housing assistance, financial literacy, substance  
abuse assistance, and General Educational Development (GED) classes.  
Ohio Attorney General's Task Force on Criminal Justice and  
Mental Illness Releases Annual Report  
Joseph Rogers, Senior Budget Analyst, 614-644-9099  
On October 3, 2016, the Ohio Attorney General's Task Force on Criminal Justice  
and Mental Illness released its annual report detailing its work to reduce the number of  
1
4
people with mental illnesses in the state's criminal and juvenile justice systems. This  
work can be summarized in three broad areas as follows:  
Stepping Up Initiative. This is a national initiative to prevent those with  
mental illnesses from ending up in jails. It generally seeks to strengthen the  
coordination of criminal justice actors, such as jails, courts, and probation  
departments, to better screen and identify offenders with mental illnesses and  
determine appropriate and available treatment options.  
Supportive housing services. These services provide offenders in need with  
access to various rental subsidy programs that help secure stable housing.  
Under these types of programs, if an offender appears before a mental health  
court and is identified as homeless, the judge can refer that person to a mental  
health provider and other participants in the subsidy program to locate  
housing and provide for rental payments. The goal of these housing services  
is to keep offenders off the streets, better enable them to maintain treatment  
services, and reduce the likelihood they will reoffend.  
Crisis Intervention Team (CIT) training. CIT training programs help ensure  
that officers are educated on techniques of de-escalation such that persons  
with mental illnesses who are in crisis can be diverted from jails and into  
treatment whenever possible. In FY 2016, 942 full-time law enforcement  
officers from 345 Ohio law enforcement agencies attended CIT courses.  
Additionally, 126 court personnel, 125 correction officers, 41 fire and EMS  
personnel, 24 probation and parole officers, and 22 dispatchers attended. The  
Ohio Attorney General provided about $250,000 in grant funding over the  
past several years to cover the cost of sending peace officers for first-time  
training. To date, more than 8,800 individuals have received CIT training.  
1
4
http://www.ohioattorneygeneral.gov/Files/Briefing-Room/News-Releases/Task-Force-  
on-Criminal-Justice-and-Mental-Illness.  
Budget Footnotes  
26  
November 2016  
Ohio Legislative Service Commission  
Ohio EPA Awards $16.8 million in Below-Market Interest Rate Loans for  
Public Wastewater Projects  
Robert Meeker, Budget Analyst, 614-466-3839  
In September and October 2016, the Ohio Environmental Protection Agency  
(Ohio EPA) awarded below-market interest rate loans totaling $16.8 million for seven  
public wastewater projects. The loans are backed with money drawn from the Ohio  
Water Pollution Control Loan Fund (WPCLF), which is managed by the Ohio EPA with  
assistance from the Ohio Water Development Authority. The loans, including zero  
interest rate loans and principal forgiveness loans,1 will save recipients a total of  
5
$
3.4 million relative to the cost of going to the open market for a similar loan. The table  
below summarizes these loans in terms of the recipient, loan type, project description,  
loan amount, and estimated savings.  
Created in 1989, the WPCLF generally provides low-interest financing and  
incentives to public entities (municipalities, counties, and sewer districts) for the  
planning, design, and construction of projects to protect or improve the quality of  
Ohio's water resources. The fund consists of federal capitalization grants, loan  
repayments, and bond proceeds. In FY 2016, loans totaling $879 million were awarded  
from the fund to finance 153 wastewater infrastructure and water quality improvement  
projects.  
Ohio EPA Public Wastewater Treatment System Loans  
Recipient  
Loan Type  
Project Description  
Loan Amount  
Savings  
Below-Market  
Interest Rate  
Indian Creek wastewater treatment plant  
upgrades  
Hamilton County  
$7,345,000  
$1,200,000  
Below-Market  
Interest Rate  
Hamilton County  
City of Columbus  
Village of Butler  
Stark County  
White Street area sewer separation  
$4,500,000  
$3,600,000  
$643,800  
$300,000  
$300,000  
$643,000  
$532,000  
$53,750  
Below-Market  
Interest Rate  
Big Walnut augmentation/Rickenbacker  
interceptor component rehabilitation  
Zero Interest  
Rate  
New wastewater treatment plant design  
Principal  
Forgiveness  
Home sewage treatment system repair  
and replacement  
$401,000  
$401,000  
Principal  
Forgiveness  
Home sewage treatment system repair  
and replacement  
Ottawa County  
Warren County  
Principal  
Forgiveness  
Home sewage treatment system repair  
and replacement  
$150,000  
$201,000  
TOTAL  
$16,838,800  
$3,431,750  
15 Principal forgiveness loans are loans in which eligible capital costs of a project are  
reduced by the principal forgiveness amount, thereby eliminating a portion of the principal  
(
and interest) that the borrower must repay.  
November 2016  
27  
Budget Footnotes  
Ohio Legislative Service Commission  
TRACKING THE ECONOMY  
Philip A. Cummins, Senior Economist, 614-387-1687  
Ruhaiza Ridzwan, Senior Economist, 614-387-0476  
Overview  
The nation's economy continues to expand in this year's fourth  
quarter. Nonfarm payroll employment rose again in October, and the  
unemployment rate fell slightly to 4.9%. In the third quarter, inflation-  
adjusted gross domestic product (real GDP), the total output of the  
economy, rose at the most rapid rate in two years but due in part to one-  
time factors. Industrial output advanced in the third quarter and likely  
also into the fourth quarter, after earlier declines. Consumer spending  
continues to grow but more slowly than earlier. Residential investment  
fell in the latest two quarters and nonresidential investment grew slowly.  
Economic activity in this region continues to trend upward,  
though employment in Ohio fell in the latest two months. Service-sector  
activity and construction are expanding. The unemployment rate  
remains low.  
Price and wage inflation both have increased this year, but not by  
much and both are still low in historical perspective. The upturn in broad  
price measures is related in part to higher energy prices, after declines in  
2
labor in short supply in some industries and regions.  
014 and 2015. Rising wage pressures have been reported for types of  
16  
As widely expected, the central bank held monetary policy,  
including its short-term interest rate target, unchanged at the November  
meeting of its Federal Open Market Committee. Two committee  
members dissented in favor of an immediate interest rate increase.  
Total payroll  
The National Economy  
employment in  
the nation rose  
Employment and Unemployment  
Total nonfarm payroll employment in the nation rose by 161,000  
1
61,000 in  
(0.1%) in October to 145.0 million. The number of persons unemployed  
October.  
declined to 7.8 million, 4.9% of the country's labor force, down from 5.0%  
in September. Trends in employment and unemployment are shown in  
Chart 5.  
16 The latter report is from the Beige Book, a compendium of commentary  
on economic and business conditions gathered from outside contacts and  
published by the Federal Reserve, most recently in October.  
Budget Footnotes  
28  
November 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)  
Employment increases in this year's first ten months averaged  
1
1
81,000, down a little from the average earlier in the current expansion,  
92,000. In October, employment rose in health care, professional and  
business services, and financial activities, continuing uptrends in these  
industries. Employment changes in other industries were small.  
The unemployment rate in October was in the range in which it has  
fluctuated since August 2015. The recent low was 4.7% in May of this  
year. Other measures of labor utilization show less tightness. The labor  
1
7
force participation rate was 62.8% in October, up from a low of 62.4%  
last year but well below the peak of 67.3% in 2000. The employment-  
1
8
population ratio of 59.7% in October was up from a low of 58.2% in 2010  
and 2011, but below the peak, 64.7% in 2000.  
Production, Shipments, and Inventories  
Real GDP rose at a 2.9% annual rate in the third quarter, the  
strongest rise in two years in this broad measure of U.S. output. In the  
first half of 2016, increases in real GDP averaged 1.1% at an annual rate,  
following a 1.9% rise in the four quarters of 2015. Higher growth reflects a  
Real GDP rose  
at a 2.9%  
annual rate in  
jump in exports that the U.S. Bureau of Economic Analysis, the source the third  
agency for the GDP figures, attributed particularly to higher exports of  
quarter.  
soybeans. An end to inventory liquidation also added to demand. On the  
other hand, consumer spending growth slowed. Residential fixed  
17 The labor force participation rate is the ratio of civilians either working  
or looking for work, to the population age 16 and over.  
18 The employment-population ratio also includes only civilians age 16  
and over.  
November 2016  
29  
Budget Footnotes  
Ohio Legislative Service Commission  
investment declined for the second consecutive quarter after sizable  
gains in the previous two years. Nonresidential fixed investment in  
equipment fell for the fourth consecutive quarter, on lower investment in  
large trucks, aircraft, and railroad equipment and in machinery used in  
construction, mining including oil and gas, and agriculture.  
Industrial production rose 0.1% in September, and rose at a 1.8%  
annual rate in the third quarter after declines in four of the previous five  
quarters. Factory output rose 0.2% in September and at a 0.9% rate in the  
third quarter, but was unchanged from a year earlier following declines  
in previous months. Mining production rose 0.4% in September and at a  
Industrial  
production  
rose at a 1.8%  
annual rate in  
the third  
3
.7% annual rate in the third quarter, after six consecutive quarterly  
declines. The rise in September resulted from increased oil and gas well  
drilling, coal mining, and nonmetallic mineral mining and quarrying.  
quarter.  
The count of active U.S. oil and gas drilling rigs continued to  
climb in early November and was up by more than 40% from lows in  
1
9
May. The recovery in drilling activity will be reflected in future reports  
on industrial activity and GDP.  
In October, factory production increases were more widespread  
than the month before, in an Institute for Supply Management (ISM)  
survey of purchasing managers. Survey respondents reporting increases  
outnumbered those noting decreases for new orders, employment, and  
prices paid. Decreases were more widespread for inventories and  
unfilled orders. An October ISM survey of organizations other than  
manufacturers showed continued expansion in most industries.  
Consumer Spending and Incomes  
Real consumer spending rose 0.3% in September, and increased at  
a 2.1% annual rate in the third quarter, down from 2.9% on average in  
the first two quarters of the year and 3.2% in 2015. The third quarter  
slowdown mainly reflects weakness in nondurable goods buying,  
including purchases of gasoline and other energy goods, clothing and  
footwear, and other nondurables. Consumer spending continues to be  
supported by wage and salary growth outpacing price increases, though  
by less than last year. Nonfarm proprietors' incomes also are growing but  
farm income is weak. Payments are expanding to beneficiaries of most  
government transfer programs, except unemployment insurance. Social  
Security benefits will rise 0.3% in 2017.  
Consumer spending may grow more strongly in the current  
quarter than in the third quarter, based on motor vehicle sales in  
19 Data cited are from Baker Hughes' North America Rotary Rig Count.  
Budget Footnotes  
30  
November 2016  
Ohio Legislative Service Commission  
October. Light vehicle sales were at a 17.9 million unit annual rate,  
seasonally adjusted, the strongest monthly sales this year though below  
exceptionally strong year-earlier sales. The sales mix has continued to  
shift toward vehicles classified as trucks. Year-to-date light truck sales  
were 7% higher than a year earlier while auto sales were 9% lower.  
Construction and Real Estate  
Housing starts in the U.S. fell 9% from August to September, as  
construction commenced on fewer apartments while starts on homes rose.  
So far in 2016, construction was started on 4% more housing units than a  
year earlier, reflecting a 9% rise in home starts, and a 5% fall in starts on  
multifamily units after five years of booming apartment construction.  
Housing starts  
in the U.S. so  
far in 2016  
Overall, the pace of residential building has more than doubled from lows were 4% more  
in 2009 but remains short of levels typical in the past, particularly for new  
home construction.  
than a year  
earlier.  
New home sales rose 3% in September to 30% higher than a year  
earlier. Year-to-date sales were 13% higher than a year earlier, at the  
highest rate since 2007, and 84% above the low point in 2011 when sales  
were the lowest on records kept since 1963. Even with the current  
vigorous upturn, new home sales in January-September were well below  
the pace in boom years 1997-2005, and somewhat below sales rates typical  
before then. The shortfall is most pronounced in Northeastern states,  
followed by the Midwest.  
Home sales reported by the National Association of Realtors  
(NAR), generally previously occupied homes, rose 3% in September.  
Year-to-date sales were 3% higher than a year earlier, following a 6% rise  
in all of 2015. NAR said 34% of sales were to first-time buyers, highest in  
over four years, and also noted that listings of homes for sale remain low  
relative to demand.  
The value of construction put in place nationwide in September fell  
2
0
0
2
.4%, to 0.2% below the year-earlier value. In the first nine months of  
016, total construction rose 4%, including a 6% rise in private residential  
construction and an 8% increase in nonresidential construction, but a 2%  
decline in public construction. The decline in public-sector building  
follows two years of increases, and is concentrated in power projects,  
sewage and waste disposal, and public transportation.  
Housing prices on average nationwide rose 0.7% in August to 6.4%  
higher than a year earlier, as indicated by the Federal Housing Finance  
2
0
Construction put in place estimates, from the U.S. Department of  
Commerce, are in dollars of current purchasing power, not adjusted for inflation.  
November 2016  
31  
Budget Footnotes  
Ohio Legislative Service Commission  
Agency's House Price Index. The index had recovered by 33% from a low  
point in 2011, and was 5% higher than the prior peak in 2007, with  
considerable variation among regions of the country.  
Inflation  
The consumer price index (CPI) for all items rose 0.3% in  
September, its largest increase since April. Compared with a year earlier,  
the all-items index was 1.5% higher, the largest year-over-year rise in  
nearly two years. The more rapid rise largely reflects changes in  
consumer energy prices. The CPI for consumer energy has risen from the  
month before in most months this year, after declining precipitously in  
2014 and 2015. In contrast, consumer food and beverage prices have been  
about flat, overall, since early 2016, after increasing for several years.  
Prices of consumer goods and services other than food and energy have  
risen somewhat more rapidly this year. The CPI excluding food and  
energy was 2.2% above a year earlier in September, up from year-over-  
year increases averaging 1.8% in 2015 and 1.7% in 2014.  
The consumer  
price index in  
September was  
1
.5% higher  
than a year  
earlier, the  
largest rise in  
nearly two  
years.  
The producer price index for final demand, a measure of inflation  
at the factory or wholesale level, rose 0.3% in September to 0.7% higher  
than a year earlier, its largest year-over-year increase since 2014.  
Wage inflation has been edging higher this year. Wages and  
salaries in private industry, in the employment cost index report from  
the U.S. Bureau of Labor Statistics, rose 1.8% in the first nine months of  
2
016, about 2.4% at an annual rate, after increasing 2.1% in the 12 months  
of 2015 and 2.2% in 2014, the largest increase since 2008. State and local  
government wages and salaries rose at a 2.0% annual rate in the first nine  
months of 2016 and 1.8% in the 12 months of 2015, the most since 2009.  
The Ohio Economy  
Employment and Unemployment  
In September, Ohio's total nonfarm payroll employment,  
seasonally adjusted, fell by 3,100 or 0.1% from August's revised figure, a  
decline for the second consecutive month. Job losses in construction,  
manufacturing, and state government exceeded gains in private service-  
providing sectors. Ohio's unemployment rate was 4.8% in September, up  
from 4.7% in August. Chart 6 shows Ohio employment and  
unemployment rates over the last ten years.  
Budget Footnotes  
32  
November 2016  
Ohio Legislative Service Commission  
Chart 6: Ohio Employment and Unemployment Rates  
5
5
5
5
5
5
5
.60  
.50  
.40  
.30  
.20  
.10  
.00  
12%  
1
1
9
1%  
0%  
%
8%  
7
6
5
%
%
%
4%  
2
006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016  
Nonfarm Payroll Employment  
Ohio Unemployment Rate (right scale)  
The state's unemployment rate in September remained below the  
U.S. unemployment rate of 5.0%. The number of persons classified as  
unemployed in the state was 275,000 in September, 4,000 more than in  
August and 12,000 higher than in September of last year.  
Ohio's  
unemployment  
rate was 4.8%  
The state's payroll employment in September was 73,400 or 1.4%  
higher than in September of last year. Year to date, job gains averaged in September.  
2
,500 per month compared to 6,708 per month in 2015. Over the year, job  
gains occurred in educational and health services, leisure and hospitality,  
trade, transportation, and utilities, other services, financial activities, state  
government, local government, and construction.  
Ohio Home Sales  
The number of existing homes sold in Ohio rose by 3.6% in  
September compared to September 2015, according to the Ohio  
Association of Realtors. From January through September of this year,  
unit home sales increased by 4.8% compared to the same period in 2015.  
The statewide sales price of homes sold in January through  
September 2016 averaged $164,142, or 4.4% higher than the corresponding  
months a year earlier.  
November 2016  
33  
Budget Footnotes  
Ohio Legislative Service Commission  
Regional Economy  
Economic activity in the Federal Reserve Bank of Cleveland's  
district grew at a modest pace, according to the Beige Book report  
2
1
covering the period from late August to early October. Manufacturing  
production changed little since late August. Steel industry contacts  
reported lower demand for steel. Housing markets in the region  
remained strong. Retailers indicated that sales were essentially flat. Sales  
of cold-weather clothing were adversely affected by the unseasonably  
warm weather, but health-and-wellness and personal items were selling  
well. Sales of new motor vehicles were down compared to a year earlier.  
Sales of light trucks, including SUVs and crossovers, remained strong.  
Commercial and retail lending growth was stable, at a slow pace.  
Contacts reported an uptrend in permit issuance and drilling activity in  
the Marcellus and Utica Shales, as wellhead prices rose slowly. Coal  
production rose in the past two months as demand for electricity  
increased due to warm weather and inventory drawdowns at coal-fired  
power plants.  
Economic  
activity in the  
region grew at  
a modest pace.  
21 These comments are based on the Beige Book section written by the  
Federal Reserve Bank of Cleveland, with a district that includes Ohio and parts  
of Kentucky, Pennsylvania, and West Virginia.  
Budget Footnotes  
34  
November 2016