Budget Footnotes  
A NEWSLETTER OF THE OHIO LEGISLATIVE SERVICE COMMISSION  
JUNE 2017  
VOLUME 40, NUMBER 10  
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  
Recent revenue trends continued in the month of May with  
Opioid Abuse Pilot Program ....19  
negative variances for the personal income tax ($89 million) Targeted Response to Opioid  
Crisis Grant ..........................20  
Higher Education Institution  
and the sales tax ($8 million), compared to the August 2016  
estimate by the Office of Budget and Management (OBM). Fiscal Watch............................21  
Designated STEM Schools......22  
However, the commercial activity tax was $27 million above  
Immunization Media  
expected revenue, resulting in a positive variance year to date  
through May for that tax source.  
Campaign.............................23  
BWC Safety Intervention  
Grants ..................................23  
Fire Department Training  
Reimbursement Grants ........24  
With one month left in FY 2017, GRF tax revenue will end  
the year below both the August and the January estimates.  
The executive reduced the August estimate by $592 million in  
January, but through May, GRF tax revenues were down by  
Provigil Settlement Claim  
Deadline...............................25  
TRACKING THE ECONOMY  
The National Economy ............26  
$841 million, or $249 million more than January's revision.  
The spending side of the budget will also end the year below The Ohio Economy..................31  
both the August and the January estimates, led by Medicaid.  
Due largely to the lower than expected spending, the overall  
GRF budget is expected to be balanced for the fiscal year  
ending on June 30.  
Through May 2017, GRF sources totaled $30.72 billion:  
Revenue from the personal income tax was  
$643.1 million below the August OBM estimate;  
and sales and use tax receipts were $216.7 million  
below projected receipts.  
Legislative Service Commission  
7
7 South High Street, 9th Floor  
Columbus, Ohio 43215  
Through May 2017, GRF uses totaled $32.65 billion:  
Telephone: 614-466-3615  
Program expenditures were $1.30 billion below  
OBM's August 2016 estimate, with Medicaid  
accounting for $1.02 billion of the total variance.  
AVAILABLE ON OUR WEBSITE: WWW.LSC.OHIO.GOV  
CLICK ON 'PUBLICATIONS/BUDGET FOOTNOTES'  
Ohio Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of May 2017  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on June 1, 2017)  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
TAX REVENUE  
Auto Sales  
$129,030  
$125,800  
$3,230  
2.6%  
Nonauto Sales and Use  
$787,279  
$798,800  
-$11,521  
-1.4%  
Total Sales and Use Taxes  
$916,309  
$924,600  
-$8,291  
-0.9%  
Personal Income  
$556,534  
$279  
$645,300  
$0  
-$88,766  
$279  
-13.8%  
---  
Corporate Franchise  
Financial Institution  
Public Utility  
$27,925  
$33,904  
$23,443  
$26,327  
$279,785  
$0  
$27,200  
$28,800  
$22,900  
$29,700  
$252,900  
$0  
$725  
2.7%  
17.7%  
2.4%  
-11.4%  
10.6%  
---  
$5,104  
$543  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
-$3,373  
$26,885  
$0  
-$9,455  
$5,565  
$0  
-$13,900  
$5,100  
$0  
$4,445  
$465  
32.0%  
9.1%  
---  
$0  
$82,653  
$4,578  
$3,718  
$89  
$87,800  
$4,600  
$3,700  
$0  
-$5,147  
-$22  
-5.9%  
-0.5%  
0.5%  
---  
Alcoholic Beverage  
Liquor Gallonage  
$18  
Estate  
$89  
Total Tax Revenue  
$1,951,654  
$2,018,700  
-$67,046  
-3.3%  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$12  
$377  
$0  
$855  
$12  
-$478  
---  
-56.0%  
26.5%  
20.0%  
$12,360  
$12,749  
$9,770  
$10,625  
$2,590  
$2,124  
Total Nontax Revenue  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$11,157  
$11,157  
$0  
$0  
$0  
$0  
$11,157  
$11,157  
---  
---  
---  
TOTAL STATE SOURCES  
Federal Grants  
$1,975,560  
$947,141  
$2,029,325  
$1,159,949  
$3,189,274  
-$53,765  
-$212,808  
-$266,573  
-2.6%  
-18.3%  
-8.4%  
TOTAL GRF SOURCES  
$2,922,701  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
2
June 2017  
Ohio Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate  
FY 2017 as of May 31, 2017  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on June 1, 2017)  
Percent  
Change  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
FY 2016  
TAX REVENUE  
Auto Sales  
$1,265,997  
$8,413,287  
$9,679,284  
$1,268,800  
$8,627,200  
$9,896,000  
-$2,803  
-0.2%  
$1,222,599  
$8,266,653  
$9,489,252  
3.5%  
Nonauto Sales and Use  
-$213,913  
-2.5%  
1.8%  
Total Sales and Use Taxes  
-$216,716  
-2.2%  
2.0%  
Personal Income  
$6,817,379  
$3,650  
$7,460,500  
$0  
-$643,121  
$3,650  
-$31,780  
$3,769  
$14,449  
-$4,214  
$4,940  
$114  
-8.6%  
---  
$7,023,358  
$32,886  
$187,215  
$101,513  
$316,795  
$60,712  
$1,252,264  
$5,598  
-2.9%  
-88.9%  
-14.3%  
4.9%  
Corporate Franchise  
Financial Institution  
Public Utility  
$160,520  
$106,469  
$326,249  
$61,786  
$1,285,340  
$5,014  
$192,300  
$102,700  
$311,800  
$66,000  
$1,280,400  
$4,900  
-16.5%  
3.7%  
4.6%  
-6.4%  
0.4%  
2.3%  
7.4%  
18.2%  
---  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
3.0%  
1.8%  
2.6%  
-10.4%  
10.7%  
27.5%  
-790.0%  
-3.9%  
4.9%  
$325,080  
$6,735  
$302,800  
$5,700  
$22,280  
$1,035  
-$678  
$293,569  
$5,281  
-$678  
$0  
$98  
$822,695  
$51,944  
$42,391  
$668  
$821,300  
$49,900  
$41,000  
$0  
$1,395  
$2,044  
$1,391  
$668  
0.2%  
4.1%  
3.4%  
---  
$855,761  
$49,508  
$41,239  
$1,857  
Alcoholic Beverage  
Liquor Gallonage  
2.8%  
Estate  
-64.0%  
-0.1%  
Total Tax Revenue  
$19,694,525  
$20,535,300  
-$840,775  
-4.1%  
$19,716,907  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$37,369  
$58,845  
$67,412  
$163,626  
$25,900  
$56,430  
$64,525  
$146,855  
$11,469  
$2,415  
$2,887  
$16,771  
44.3%  
4.3%  
$26,199  
$56,095  
$46,202  
$128,496  
42.6%  
4.9%  
4.5%  
45.9%  
27.3%  
Total Nontax Revenue  
11.4%  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$108,019  
$108,019  
$0  
$41,600  
$41,600  
$0  
$66,419  
$66,419  
---  
159.7%  
159.7%  
$0  
$209,508  
$209,508  
---  
-48.4%  
-48.4%  
TOTAL STATE SOURCES  
Federal Grants  
$19,966,170  
$10,750,516  
$30,716,686  
$20,723,755  
$11,671,880  
$32,395,635  
-$757,585  
-$921,364  
-3.7%  
-7.9%  
-5.2%  
$20,054,910  
$11,212,207  
$31,267,117  
-0.4%  
-4.1%  
-1.8%  
TOTAL GRF SOURCES  
-$1,678,951  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
June 2017  
3
Budget Footnotes  
Ohio Legislative Service Commission  
REVENUES  
Thomas Kilbane, Economist, 614-728-3218  
Overview  
GRF tax revenue in May was $67.0 million (3.3%) below OBM's  
August estimate, which was an improvement from prior months. Tax  
1
GRF tax  
revenue was  
revenue performance has been better relative to estimates in only four  
other months during FY 2017. The relative improvement was primarily  
the result of higher than expected commercial activity tax (CAT) revenue  
from the final quarterly payment of the fiscal year ($26.9 million above  
estimate), and sales tax receipts which fell short of estimate by just 0.9%  
after missing by 4.9% in each of March and April.  
$
67.0 million  
(3.3%) below  
estimate in  
May.  
Tables 1 and 2 above, show GRF sources2 for May and for FY 2017  
through May, respectively. Total GRF sources received through May  
were $30.7 billion, which was $1.7 billion (5.2%) below estimates. Tax  
sources fell short of estimates during the 11-month period by  
$
840.8 million, but federal grants have also been significantly less than  
expected ($921.4 million below estimate). Federal grant revenue is  
primarily related to the level of spending in the Medicaid program,  
3
which has generally been lower than expected.  
Total GRF  
Total GRF sources have been below estimate in each of the last  
five months and in all months of FY 2017 but one. 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 peach bar in the chart), FY 2017's cumulative  
sources through May were $1.679 billion below estimate, as labeled in the  
far right column.  
sources were  
$
1.7 billion  
below estimate  
in FY 2017  
through May.  
1 OBM revised downward its August estimates of GRF tax revenue in  
January by $592 million, but did not publish monthly estimates based on the  
revised numbers. Therefore, variances in this article compare to the August  
estimates.  
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 $1.02 billion below estimate in  
FY 2017 through May. See the "Expenditures" section for more details.  
Budget Footnotes  
4
June 2017  
Ohio Legislative Service Commission  
Chart 1: GRF Source FY 2017 Cumulative Performance  
by Component  
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May  
$
400  
$
0
-
$17  
-
$145  
-$235  
-
$400  
$800  
-
$262  
-
-$611  
$714  
-
-
$846  
-$911  
-$1,200  
-$1,600  
-$2,000  
-
$1,230  
-$1,412  
-
$1,679  
Federal Grants  
Tax Revenue  
Other State Revenue  
With 11 of the 12 months in the fiscal year complete, it appears  
GRF tax  
very likely that tax revenue will finish FY 2017 with its largest negative  
variance since FY 2009 when revenues were $950.9 million (5.3%) below  
estimate. As was also the case that year, the largest FY 2017 culprits have  
revenue is  
headed for its  
been the personal income tax (PIT) ($643.1 million below estimate so far largest fiscal  
in FY 2017) followed by the sales and use tax ($216.7 million below  
estimate through May of FY 2017). The sales and use tax generates a  
larger share of total tax revenue (49.1% in FY 2017 through May) now  
than it did during FY 2009 (41.6%), while the more volatile PIT has seen  
its share decline (34.6% in FY 2017 versus 44.6% in FY 2009).  
year negative  
variance since  
FY 2009.  
The chart below illustrates the year-to-date performance of each  
tax that was expected to contribute over $100 million in revenue to the  
GRF this fiscal year, organized from left to right by total expected  
contribution.  
June 2017  
5
Budget Footnotes  
Ohio Legislative Service Commission  
Chart 2: FY 2017 Tax Revenue Performance by Tax  
Sales  
and Use  
Kilowatt-  
Cigarette Insurance* Hour  
Public  
Utility  
PIT  
CAT  
FIT  
$
100  
$23  
$5  
$1  
$14  
$4  
$
0
($32)  
-$100  
-$200  
-$300  
-$400  
-$500  
-$600  
-$700  
($217)  
($643)  
*
payment deadline for the domestic insurance tax is in June.  
Insurance tax receipts through May are primarily from the foreign tax. The annual  
FY 2017 GRF  
tax receipts  
through May  
are just 0.1%  
lower than one  
year ago.  
Compared to the corresponding period in FY 2016, FY 2017 GRF  
tax receipts through May were $22.4 million (0.1%) lower. Year-over-  
year growth was led by sales and use tax revenue ($190.0 million), CAT  
revenue ($33.1 million), and insurance tax revenue ($33.0 million) but  
was offset by revenue decreases from the PIT ($206.0 million) and  
cigarette tax ($33.1 million), among others.  
Sales and Use Tax  
Sales and use tax receipts totaled $916.3 million in May, missing  
estimates by $8.3 million (0.9%), but that was an improvement from prior  
months. There have only been four months in FY 2017 with better sales  
and use tax performance relative to estimates. Overall for the fiscal year  
through May, revenue from the tax was $216.7 million (2.2%) 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  
4
tax instead of the auto tax. Thus far in FY 2017, the nonauto portion  
4 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
June 2017  
Ohio Legislative Service Commission  
accounted for 87% of the total sales and use tax collected, while auto  
collections were just 13%.  
Nonauto Sales and Use Tax  
Nonauto sales  
and use tax  
revenue  
The nonauto portion of the sales and use tax has struggled to meet  
expectations all fiscal year, coming in above estimated monthly collections  
just once, in December. May receipts of $787.3 million were $11.5 million  
1.4%) below estimate, but that was the smallest monthly shortfall since  
December. The chart below illustrates that FY 2017 revenue from the tax is  
surpassed its  
estimate in just  
(
still growing year over year, but at a slower pace than was expected. one month so  
There has been no three-month span during FY 2017 in which nonauto  
sales and use tax revenue has met expectations.  
far this fiscal  
year.  
Chart 3: 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  
Auto Sales and Use Tax  
Revenue from the auto portion of the sales and use tax,  
129.0 million in May, exceeded its estimate by $3.2 million (2.6%). It was  
$
just the fourth month of the fiscal year to do so. Overall however, FY 2017  
receipts from the auto portion of the sales and use tax have been healthier  
than receipts from the nonauto portion. As seen in the chart below,  
year-over-year growth in auto sales tax collections was slow early in the  
fiscal year due in part to record levels of auto sales one year ago, but  
growth picked up since then. For the year through May, tax revenue from  
auto sales was just $2.8 million (0.2%) below estimate.  
June 2017  
7
Budget Footnotes  
Ohio Legislative Service Commission  
Chart 4: Auto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
6
4
2
0
.0%  
.0%  
.0%  
.0%  
Light vehicle  
sales mix  
Actual  
Estimate  
-
2.0%  
4.0%  
continues to  
shift towards  
light trucks,  
pushing sales  
tax collected  
per transaction  
higher.  
-
A big reason for the solid performance of the auto sales and use  
tax is the changing makeup of light vehicle sales. While nationwide sales  
of all light vehicles are down slightly in FY 2017 compared to FY 2016,  
the dropoff has occurred in the car market. Sales of light trucks in  
FY 2017 have actually been higher than one year ago. This changing sales  
mix has pushed the average tax paid per sale higher, helping to maintain  
revenue as the number of new vehicles sold and titled in Ohio slows.  
Nationwide seasonally adjusted sales of cars hit a nearly six year low  
point in May.  
Personal Income Tax  
PIT revenue in May totaled $556.5 million, continuing the string of  
FY 2017 underperformance. This time receipts were $88.8 million (13.8%)  
below estimate in May, the tenth straight month the tax missed  
expectations. Through 11 months of the fiscal year, GRF revenue from  
FY 2002 was  
the last time  
PIT revenue  
finished a fiscal the PIT totaled $6.8 billion, which was $643.1 million (8.6%) less than was  
year at least  
expected. FY 2002 was the last time PIT revenue finished a fiscal year at  
least 8.6% below estimate.  
8
.6% below  
PIT revenue is comprised of gross collections, minus refunds and  
estimate.  
distributions to the Local Government Fund (LGF). Gross collections  
5
consist of employer withholdings, quarterly estimated payments, trust  
5 Quarterly estimated payments are made by taxpayers who expect to be  
underwithheld by more than $500. Payments are due in April, June, and  
September of an individual's tax year and January of the following year. Most  
estimated payments are made by high-income taxpayers.  
Budget Footnotes  
8
June 2017  
Ohio Legislative Service Commission  
payments, payments associated with annual returns, and other  
miscellaneous payments. The performance of the tax is typically driven by  
employer withholdings, which is the largest component of gross  
collections, however a larger than expected amount of refunds has also  
greatly affected the tax performance in FY 2017. Through May, the PIT  
revenue shortfall was led by refunds, which were $375.9 million (24.1%)  
higher than expected, and monthly employer withholdings, which were  
$
242.0 million (3.1%) below estimate.  
FY 2017 revenues through May 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. All components have  
underperformed estimates with the exception of quarterly estimated  
payments.  
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  
-$242.0  
$14.4  
-3.1%  
2.4%  
$115.5  
-$205.6  
-$12.2  
-$14.5  
-$4.2  
1.5%  
-25.2%  
-19.8%  
-2.2%  
-4.6%  
-1.3%  
4.4%  
Quarterly Estimated Payments  
Trust Payments  
-$13.6  
-$32.2  
-$8.6  
-21.6%  
-4.7%  
-8.9%  
-3.0%  
24.1%  
-4.1%  
-8.6%  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
-$281.9  
$375.9  
-$14.7  
-$643.1  
-$121.0  
$81.0  
Less Refunds  
The average  
Less LGF Distribution  
GRF PIT Revenue  
$4.0  
1.2%  
weekly wage in  
Ohio during the  
second quarter  
-$206.0  
-2.9%  
Monthly employer withholdings continue to grow year over year, but  
at a slower pace than expected. Year-over-year growth was depressed early in of FY 2017  
the fiscal year due to the implementation of policy changes, but languished declined 2.3%  
6
further in the last quarter of calendar year 2016 largely due to a decline in  
wages. According to the U.S. Bureau of Labor Statistics (BLS), the average  
weekly wage in Ohio declined 2.3% from the same quarter one year ago.  
Since then, withholdings have recovered somewhat, though remain below  
from one year  
ago.  
6 H.B. 64 of the 131st General Assembly reduced income tax rates by 6.3%  
leading to a 3.1% reduction in the PIT withholding rate. The change in  
withholding rate took effect in August 2015, depressing year-over-year  
withholding growth in July 2016.  
June 2017  
9
Budget Footnotes  
Ohio Legislative Service Commission  
estimate. The chart below illustrates the growth of monthly employer  
withholdings on a three-month moving average relative to one year ago.  
Chart 5: Monthly Withholding Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
8
7
6
5
4
3
2
1
0
%
%
%
%
%
%
%
%
%
Actual  
Estimate  
-
1%  
2%  
-
Commercial Activity Tax  
The CAT will  
likely be the  
largest source  
of tax revenue  
to finish  
The fourth and final CAT payment of the fiscal year was due in  
May for quarterly return taxpayers. Collections paid to the GRF were  
$
279.8 million for the month, $26.9 million (10.6%) above what was  
expected. Through 11 months of FY 2017, receipts from the tax were just  
0.4% above estimate. With only a small amount of collections expected in  
June, it is likely that the CAT will be the largest tax revenue source to  
finish the fiscal year with a surplus. Through May, FY 2017 revenue from  
the CAT was $33.1 million (2.6%) greater than in the corresponding  
period one year ago.  
FY 2017 with a  
surplus.  
Cigarette and Other Tobacco Products Tax  
May GRF revenue from the cigarette and other tobacco products  
tax was $5.1 million (5.9%) below estimate and a nearly identical  
percentage (5.8%) below revenue in May 2016. For FY 2017 through May,  
receipts were $822.7 million, just 0.2% above estimate. Of the total year-  
to-date revenue, 93.0% was from cigarettes and 7.0% was from sales of  
other tobacco products.  
Budget Footnotes  
10  
June 2017  
Ohio Legislative Service Commission  
Thus far on the year, cigarette and other tobacco product tax  
receipts are down 3.9% from FY 2016, but this is a larger decline than  
7
usual due to legislative changes which provided a one-time boost for  
receipts in the early months of FY 2016. Cigarette sales have trended  
downward long-term, but generally at a slower pace. Excluding those  
from the floor tax (see footnote), FY 2017 receipts from sales of cigarettes  
were 1.9% lower than one year ago, while tax revenue from the sale of  
other tobacco products was nearly flat.  
7 H.B. 64 of the 131st General Assembly increased the cigarette tax rate  
effective July 1, 2015 and instituted a "floor tax" for cigarettes which were in  
inventory at the time the new rate went into effect.  
June 2017  
11  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of May 2017  
(
$ in thousands)  
(
Actual based on OAKS reports run June 3, 2017)  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
Primary and Secondary Education  
Higher Education  
$558,245  
$635,982  
-$77,737  
-12.2%  
$195,165  
$3,324  
$195,395  
$3,766  
-$230  
-$442  
-0.1%  
-11.7%  
-9.4%  
Other Education  
Total Education  
$756,734  
$835,143  
-$78,410  
Medicaid  
$1,603,682  
$86,763  
$1,752,490  
$90,606  
-$148,808  
-$3,842  
-8.5%  
-4.2%  
-8.3%  
Health and Human Services  
Total Welfare and Human Services  
$1,690,445  
$1,843,096  
-$152,651  
Justice and Public Protection  
General Government  
$138,572  
$25,780  
$143,176  
$30,961  
-$4,605  
-$5,181  
-$9,786  
-3.2%  
-16.7%  
-5.6%  
Total Government Operations  
$164,351  
$174,137  
Property Tax Reimbursements  
Debt Service  
$457,955  
$15,690  
$353,076  
$12,740  
$104,880  
$2,951  
29.7%  
23.2%  
29.5%  
Total Other Expenditures  
$473,646  
$365,815  
$107,830  
Total Program Expenditures  
$3,085,176  
$3,218,192  
-$133,016  
-4.1%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$0  
$16,591  
$16,591  
$0  
$0  
$0  
$0  
$16,591  
$16,591  
---  
---  
---  
TOTAL GRF USES  
$3,101,767  
$3,218,192  
-$116,424  
-3.6%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
12  
June 2017  
Ohio Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2017 as of May 31, 2017  
(
$ in thousands)  
(
Actual based on OAKS reports run June 3, 2017)  
Percent  
Change  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
FY 2016  
Primary and Secondary Education  
Higher Education  
$7,514,697  
$2,114,160  
$69,266  
$7,582,806  
-$68,109  
-0.9%  
-0.5%  
-3.8%  
-0.8%  
$7,218,916  
$2,041,212  
$64,683  
4.1%  
$2,124,176  
$71,987  
-$10,015  
-$2,721  
3.6%  
7.1%  
4.0%  
Other Education  
Total Education  
$9,698,123  
$9,778,969  
-$80,845  
$9,324,810  
Medicaid  
$16,107,091  
$1,252,229  
$17,359,320  
$17,128,461  
$1,324,720  
$18,453,182  
-$1,021,371  
-$72,491  
-6.0%  
-5.5%  
-5.9%  
$16,605,772  
$1,209,761  
$17,815,534  
-3.0%  
3.5%  
Health and Human Services  
Total Welfare and Human Services  
-$1,093,862  
-2.6%  
Justice and Public Protection  
General Government  
$1,905,164  
$343,482  
$1,941,633  
$366,898  
-$36,470  
-$23,416  
-$59,886  
-1.9%  
-6.4%  
-2.6%  
$1,845,125  
$335,729  
3.3%  
2.3%  
3.1%  
Total Government Operations  
$2,248,646  
$2,308,532  
$2,180,855  
Property Tax Reimbursements  
Debt Service  
$1,750,318  
$1,291,746  
$3,042,064  
$1,789,302  
$1,320,838  
$3,110,141  
-$38,984  
-$29,092  
-$68,077  
-2.2%  
-2.2%  
-2.2%  
$1,758,462  
$1,276,811  
$3,035,273  
-0.5%  
1.2%  
0.2%  
Total Other Expenditures  
Total Program Expenditures  
$32,348,153  
$33,650,823  
-$1,302,669  
-3.9%  
$32,356,471  
0.0%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$29,483  
$272,892  
$302,374  
$29,483  
$288,393  
$317,875  
$0  
-$15,501  
-$15,501  
0.0%  
-5.4%  
-4.9%  
$425,500  
$411,027  
$836,527  
-93.1%  
-33.6%  
-63.9%  
TOTAL GRF USES  
$32,650,527  
$33,968,698  
-$1,318,171  
-3.9%  
$33,192,998  
-1.6%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
June 2017  
13  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on June 5, 2017)  
Month of May 2017  
Year to Date Through May 2017  
Estimate* Variance  
$20,926,323 $22,261,238 -$1,334,915  
Department  
Medicaid  
Actual  
Estimate*  
Variance  
Percent  
Actual  
Percent  
$2,004,453  
$1,554,592  
$449,861  
$2,208,491  
$1,702,892  
$505,600  
-$204,039  
-$148,300  
-$55,739  
-9.2%  
-8.7%  
-6.0%  
-6.0%  
-6.1%  
GRF  
$15,523,900 $16,507,461  
-$983,561  
-$351,353  
Non-GRF  
-11.0%  
$5,402,423  
$5,753,777  
Developmental Disabilities  
$230,541  
$42,326  
$238,147  
$41,886  
-$7,607  
$440  
-3.2%  
1.1%  
-4.1%  
$2,294,896  
$510,195  
$2,423,141  
$521,223  
-$128,246  
-$11,028  
-$117,217  
-5.3%  
-2.1%  
-6.2%  
GRF  
Non-GRF  
$188,215  
$196,262  
-$8,047  
$1,784,701  
$1,901,918  
Job and Family Services  
$26,756  
$6,133  
$14,048  
$7,177  
$6,871  
$12,707  
90.5%  
$200,871  
$64,338  
$221,070  
$91,649  
-$20,199  
-9.1%  
GRF  
-$1,044  
-14.5%  
-$27,311 -29.8%  
Non-GRF  
$20,622  
$13,751 200.1%  
$136,533  
$129,421  
$7,112  
5.5%  
Health  
GRF  
$1,410  
$346  
$1,385  
$254  
$25  
$92  
1.8%  
36.3%  
-5.9%  
$23,756  
$3,539  
$23,047  
$2,998  
$710  
$541  
$168  
3.1%  
18.1%  
0.8%  
Non-GRF  
$1,064  
$1,131  
-$67  
$20,217  
$20,048  
Aging  
$462  
$285  
$177  
$514  
$282  
$232  
-$52  
$4  
-10.1%  
1.2%  
$6,349  
$3,368  
$2,981  
$6,792  
$3,379  
$3,413  
-$443  
-6.5%  
GRF  
-$11  
-0.3%  
Non-GRF  
-$55  
-23.9%  
-$431 -12.6%  
Mental Health and Addiction  
$1,264  
$0  
$606  
$0  
$658 108.6%  
$0 0.0%  
$658 108.6%  
$5,866  
$1,750  
$4,115  
$4,171  
$1,750  
$2,421  
$1,694  
$0  
40.6%  
0.0%  
GRF  
Non-GRF  
$1,264  
$606  
$1,694  
70.0%  
Total GRF  
$1,603,682  
$661,203  
$1,752,490  
$710,701  
-$148,808  
-8.5%  
-7.0%  
$16,107,091 $17,128,461 -$1,021,371  
$7,350,970 $7,810,998 -$460,028  
$23,458,061 $24,939,459 -$1,481,398  
-6.0%  
-5.9%  
Total Non-GRF  
-$49,498  
Total All Funds  
$2,264,885  
$2,463,191  
-$198,307  
-8.1%  
-5.9%  
*Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
14  
June 2017  
Ohio Legislative Service Commission  
Table 6: All-Funds Medicaid Expenditures by Payment Category  
Actual vs. Estimate  
(
$ in thousands)  
Actuals based on OAKS report run on June 5, 2017)  
May Year to Date Through May 2017  
Estimate*  
(
Payment Category  
Managed Care  
Nursing Facilities  
DDD Services  
Hospitals  
Actual  
Variance  
-$102,950  
$12,057  
-$7,337  
-$85,266  
-$2,255  
$3,627  
Percent  
-11.0%  
10.0%  
-3.1%  
Actual  
Estimate*  
Variance  
-$755,463  
$57,666  
Percent  
-7.5%  
4.3%  
$831,011  
$132,626  
$226,096  
$210,187  
$121,856  
$84,637  
$33,953  
$33,134  
$0  
$933,961  
$120,569  
$233,433  
$295,453  
$124,111  
$81,009  
$30,624  
$43,006  
$41,504  
$19,052  
$29,415  
$16,970  
$399,512  
$94,572  
$9,302,051 $10,057,514  
$1,402,441  
$2,225,188  
$2,036,440  
$1,075,098  
$833,228  
$320,822  
$350,383  
$506,867  
$153,726  
$377,810  
$114,183  
$3,813,796  
$946,030  
$1,344,774  
$2,345,755  
$2,244,639  
$1,133,892  
$979,482  
$325,145  
$411,913  
$437,093  
$186,718  
$312,150  
$159,038  
$4,133,541  
$867,808  
-$120,567  
-$208,199  
-$58,794  
-5.1%  
-9.3%  
-5.2%  
-28.9%  
-1.8%  
Behavioral Health  
Administration  
Aging Waivers  
Prescription Drugs  
Medicare Buy-In  
Physicians  
4.5%  
-$146,254 -14.9%  
-$4,323 -1.3%  
-$61,530 -14.9%  
$69,774 16.0%  
-$32,992 -17.7%  
$65,660 21.0%  
-$44,855 -28.2%  
$3,329  
10.9%  
-23.0%  
-$9,873  
-$41,504 -100.0%  
$14,028  
$41,134  
$12,504  
$383,570  
$140,150  
-$5,024  
$11,719  
-$4,466  
-26.4%  
39.8%  
-26.3%  
-4.0%  
48.2%  
-8.1%  
Medicare Part D  
Home Care Waivers  
ACA - Managed Care  
All Other  
-$15,942  
$45,578  
-$198,307  
-$319,744  
$78,222  
-7.7%  
9.0%  
-5.9%  
Total All Funds  
$2,264,885 $2,463,191  
$23,458,061 $24,939,459 -$1,481,398  
*
Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
June 2017  
15  
Budget Footnotes  
Ohio Legislative Service Commission  
EXPENDITURES  
Russ Keller, Senior Economist, 614-644-1751  
Nicholas J. Blaine, Budget Analyst, 614-387-5418  
Overview  
Through May, FY 2017 GRF Medicaid expenditures totaled  
16.11 billion. These expenditures were $1.02 billion below the estimate  
$
8
released by OBM in August 2016. GRF expenditures from all other  
program categories were below their year-to-date estimates as well.  
Overall, including Medicaid, GRF program expenditures totaled  
Through May,  
GRF Medicaid  
expenditures  
were  
$
32.35 billion through May, which was $1.30 billion (3.9%) below  
estimate. This negative year-to-date variance was much larger than the  
825 million downward adjustment made by OBM in January for GRF  
$
$1.02 billion  
program expenditures as a whole for the full fiscal year, which ends on  
June 30, 2017.  
below OBM's  
August 2016  
estimate.  
Program expenditures constitute the majority of GRF uses, but  
GRF uses also include transfers out. Through May, GRF transfers out  
were $302.4 million, $15.5 million below estimate. Including both  
program expenditures and transfers out, year-to-date GRF uses totaled  
Including  
Medicaid, GRF  
program  
$
32.65 billion, $1.32 billion (3.9%) below OBM's August 2016 estimate.  
Tables 3 and 4 show GRF uses for the month of May and for FY 2017  
through May, respectively.  
expenditures  
as a whole  
were  
As expected, the Property Tax Reimbursements program category  
registered a large positive variance of $104.9 million in May, which  
lowered the category's negative year-to-date variance from $143.9 million  
at the end of April to $39.0 million at the end of May. This program  
category is expected to finish the fiscal year below estimate by a modest  
amount, due mainly to decreases in homestead exemption  
reimbursement payments.  
$1.30 billion  
below the  
year-to-date  
estimate.  
The timing-related positive variance in property tax  
reimbursements in May was more than offset by the negative variances  
in other program categories, mainly in Primary and Secondary Education  
($77.7 million) and Medicaid ($148.8 million). Total GRF program  
expenditures in May were $133.0 million (4.1%) below estimate.  
8
OBM revised FY 2017 disbursement estimates downward from  
$
January 30, 2017. However, the variance analyses for this Expenditures report  
35.89 billion to $35.07 billion as part of its executive budget submission on  
continue to be based on those compiled by OBM in August 2016.  
Budget Footnotes  
16  
June 2017  
Ohio Legislative Service Commission  
The May variance from Primary and Secondary Education changed  
the category's year-to-date variance from a positive $9.6 million at the end  
of April to a negative $68.1 million at the end of May. The majority of this  
negative year-to-date variance occurred in GRF appropriation items  
2
00550, Foundation Funding ($41.5 million), and 200502, Pupil  
Transportation ($9.2 million). These variances were due partly to timing.  
Items 200550 and 200502 are mainly used to fund school foundation  
formula aid. In addition, expenditures from item 200408, Early Childhood  
Education were $10.7 million below the year-to-date estimate. This item is  
expected to finish the fiscal year below estimate.  
The remainder of this report will briefly discuss the variances in  
Medicaid expenditures.  
Medicaid  
Medicaid is primarily funded by the GRF, but 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. In  
recent years, the federal government reimburses about two-thirds of  
Ohio's all-funds Medicaid expenditures.  
Through May,  
year-to-date  
all-funds  
Table 5 shows GRF and non-GRF Medicaid expenditures for the  
Ohio Department of Medicaid (ODM) and ODM's five "sister" agencies Medicaid  
Developmental Disabilities, Job and Family Services, Health, Aging, and  
Mental Health and Addiction Services. Through May, GRF Medicaid  
expenditures were $1.02 billion (6.0%) below estimate while non-GRF  
Medicaid expenditures were $460.0 million (5.9%) below estimate.  
Including both GRF and non-GRF, Medicaid expenditures totaled  
expenditures  
were  
$
1.48 billion  
below OBM's  
August 2016  
estimate.  
$
23.46 billion through May, $1.48 billion (5.9%) below OBM's August 2016  
estimate.  
Table 6 details all-funds Medicaid expenditures by payment  
category. As seen from the table, year-to-date expenditures from ten of the  
4 payment categories were below estimates. Managed Care and ACA –  
1
Managed Care are the largest payment categories and have the largest  
negative variances at $755.5 million and $319.7 million, respectively.  
Together, they account for close to 73% of Medicaid's total negative year-  
to-date variance. Of the approximately three million Ohioans enrolled in  
Medicaid, more than 80% of them receive services through managed care.  
Negative variances in Managed Care spending continue to be driven by  
lower than forecasted managed care rates. Actual rates (which are set at  
the beginning of each calendar year) for calendar years 2016 and 2017  
were both below the rates used in the estimate. The negative variances in  
June 2017  
17  
Budget Footnotes  
Ohio Legislative Service Commission  
Managed Care and ACA Managed Care are expected to further  
increase in June, the last month of FY 2017.  
At the end of May, the All Other category had the largest positive  
year-to-date variance at $78.2 million. This positive variance was due  
partly to payments for the new Comprehensive Primary Care (CPC)  
Program. Participating CPC practices are eligible to receive a  
per-member per-month incentive payment by engaging in activities that  
are known to improve patients' health. Payments average $4 per member  
per month. The first payments were made in February. This category's  
variance was also affected by a $36.1 million federal payment for the  
Medicaid School Program that pushed the category's positive variance in  
May to $45.6 million.  
The Medicare Buy-In payment category had a negative variance of  
$
41.5 million in May as the originally scheduled payment of the same  
amount for the month was not made until early June. Due to this delay,  
the category's positive year-to-date variance was reduced from  
$
111.3 million at the end of April to $69.8 million at the end of May. The  
Medicare Buy-in Program pays Medicare premiums, deductibles, and  
coinsurance for certain low-income Ohioans. The positive variance in this  
payment category has been driven by larger than anticipated increases in  
Medicare Part B premiums for both calendar years 2016 and 2017. This  
category will finish the fiscal year above estimate.  
Budget Footnotes  
18  
June 2017  
Ohio Legislative Service Commission  
ISSUE UPDATES  
Attorney General Establishes Opioid Abuse Pilot Program in Southern Ohio  
Jessica Murphy, Budget Analyst, 614-466-9108  
The Ohio Attorney General recently launched an opioid abuse pilot program  
known as Ohio Sobriety, Treatment, and Reducing Trauma (Ohio START) in  
9 southern Ohio counties (see map below). Ohio START, which is modeled on a  
similar program in Kentucky, was first announced in March of this year with  
4 participating counties: Athens, Clermont, Clinton, Fairfield, Fayette, Gallia,  
1
1
Highland, Hocking, Jackson, Perry, Pickaway, Pike, Ross, and Vinton. In April, the  
Attorney General announced that five additional southern counties Adams, Brown,  
Lawrence, Meigs, and Scioto would be served by Ohio START. The Attorney General  
has focused the program on southern Ohio because the region has been particularly  
hard hit by the opioid crisis. The purpose of Ohio START is to identify children who  
have suffered victimization due to parental drug abuse, providing them with  
specialized services for any resulting behavioral or emotional trauma, and providing  
drug treatment for parents of the children referred to the program.  
Each participating county will receive an equal share of $4.8 million in state grant  
funding over two and a half years. The funding comes from the federal Victims of  
June 2017  
19  
Budget Footnotes  
Ohio Legislative Service Commission  
Crime Act (VOCA) grant program awarded by the U.S. Department of Justice. Casey  
Family Programs, a national foundation focused on providing and improving foster  
care, partnered with the Attorney General to develop the program and is providing an  
additional $75,000 grant. Both grants are being administered by the Public Children  
Services Association of Ohio. Depending upon the findings of an effectiveness study to  
be conducted by the Ohio State University and Ohio University, the program may be  
expanded to other counties.  
Ohio Receives $26.1 Million in Federal Funds to Target the Opioid Crisis  
Wendy Risner, Fiscal Supervisor, 614-644-9098  
On April 24, 2017, the Ohio Department of Mental Health and Addiction Services  
(OhioMHAS) was awarded $26.1 million in federal State Targeted Response to the  
Opioid Crisis Grant funds. Specific grant activities will include enhancing statewide  
prevention efforts and increasing access to recovery housing and employment services  
for persons recovering from an opioid use disorder. In addition, there will be several  
activities aimed at increasing the understanding and support of medication-assisted  
treatment (MAT), including efforts to recruit and train physicians in the use of MAT in  
counties heavily impacted by the opioid epidemic. Some of these activities will be  
conducted statewide, while others will be concentrated in counties with both the  
greatest treatment need and the highest number of opioid overdose deaths.  
Furthermore, the grant funds will be used to support certain community-specific  
projects proposed by various local alcohol, drug addiction, and mental health boards.  
OhioMHAS is currently working with these boards to evaluate their proposals and to  
determine specific allocations. For more information regarding grant funds, please refer  
to OhioMHAS' website: http://mha.ohio.gov/Default.aspx?tabid=889.  
The grant funds are provided through the federal 21st Century Cures Act, which  
was signed into law on December 13, 2016. The Act provided approximately  
$
970 million to states and territories to combat the opioid crisis. The amount each state  
receives is based on a formula that takes into consideration a state's unmet need for  
opioid use disorder treatment and overdose deaths. In Ohio, opioid deaths have  
increased dramatically over the last decade. According to the Ohio Department of  
Health, there were a total of 3,050 unintentional drug overdose deaths in Ohio in 2015.  
Of these, 2,590, or 85%, were the result of an opioid. In 2005, there were 1,020 total  
unintentional overdose deaths, with 489 (48%) involving an opioid.  
Budget Footnotes  
20  
June 2017  
Ohio Legislative Service Commission  
Central State University and Owens State Community College  
Removed from Fiscal Watch Status  
Edward M. Millane, Senior Budget Analyst, 614-995-9991  
In early May, the Department of Higher Education (DHE) announced it had  
terminated fiscal watch status for Central State University (CSU) and Owens State  
Community College (OTC). Pursuant to rule 126:3-1-01 of the Ohio Administrative  
Code, which was developed in response to S.B. 6 of the 122nd General Assembly, CSU  
and OTC were both placed under fiscal watch in April 2015 after scoring below the  
9
1
.75 threshold in their financial ratio composite scores for two consecutive years. Both  
institutions adopted financial recovery plans in mid-2015, with the goal of ending their  
designations within three years. For FY 2016, CSU and OTC had composite scores of  
2
.8 and 3.0, respectively. O.A.C. 126:3-1-01 requires that DHE terminate an institution's  
fiscal watch status when the institution achieves a composite score of at least 2.4 and  
has remediated the conditions that led to the fiscal watch, and no other condition exists  
that could result in an immediate return to fiscal watch status. DHE can also consult  
with the Auditor of State and the Office of Budget and Management (OBM) for  
assistance in the termination decision. In April, the Auditor of State notified DHE that  
both CSU and OTC had remedied or were making substantial progress towards  
remediation of their fiscal watch issues.  
S.B. 6 and O.A.C. 126:3-1-01 are designed to increase financial accountability of  
public colleges and universities by using a standard set of measures to monitor the  
fiscal health of individual institutions. Based on the year-end audited financial  
statements submitted by public colleges and universities, DHE annually calculates for  
each institution three ratios: viability ratio (expendable net assets divided by long-term  
debt), primary reserve ratio (expendable net assets divided by total operating expenses),  
and net income ratio (change in total net assets divided by total revenues). Each ratio is  
assigned a score ranging from zero to five. Furthermore, each institution is assigned a  
composite score that weights the institution's viability score at 30%, primary reserve  
score at 50%, and net income score at 20%. For FY 2016, among four-year institutions,  
Wright State had the lowest composite score of 2.1 while Miami had the highest score of  
4
.4. Among two-year institutions, Cincinnati State had the lowest score of 2.3 while  
Washington State had the highest possible score of 5.0.  
9 CSU's composite scores were 1.3 for FY 2013 and 1.0 for FY 2014 while OTC's scores  
were 1.1 for FY 2013 and 1.0 for FY 2014.  
June 2017  
21  
Budget Footnotes  
Ohio Legislative Service Commission  
ODE Announces 12 New STEM Schools for the 2017-2018 School Year  
Alexandra Vitale, Budget Analyst, 614-466-6582  
On April 26, 2017, the Department of Education (ODE) announced the  
designation of 12 new STEM schools for the 2017-2018 school year (see table below). The  
STEM school designation may be given to a school governed by a traditional public  
school board or by an independent governing board.1 Community or chartered  
nonpublic schools may be designated as a STEM school equivalent. To receive the  
STEM school designation, a school must present evidence of a working partnership  
with both public and private entities, including colleges and universities and business  
organizations, and evidence the school will offer a rigorous and diverse curriculum that  
emphasizes science, technology, engineering, and mathematics and includes arts and  
humanities.  
0
Starting in the 2017-2018 school year, STEM schools may enroll students in any of  
grades K-12, rather than just grades 6-12 as under previous law. Including the 12 newly  
designated schools, there will be a total of 42 STEM schools across the state. Of this  
total, 26 are governed by traditional school boards, seven are governed by independent  
boards, and nine are STEM school equivalents. The complete list of STEM schools is  
available on ODE's website at http://education.ohio.gov/Topics/Career-Tech/STEM.  
Newly Designated STEM Schools, 2017-2018 School Year  
County  
Franklin  
School Name  
Canal Winchester Middle School  
Herbert Mills Elementary  
Governing Board  
Traditional school board  
Traditional school board  
Traditional school board  
STEM school equivalent  
Traditional school board  
Traditional school board  
STEM school equivalent  
STEM school equivalent  
Traditional school board  
STEM school equivalent  
Traditional school board  
Traditional school board  
Franklin  
Licking  
Lake  
Summit Road Elementary  
Mater Dei Academy  
Lake  
Willoughby-Eastlake School of Innovation  
Ranger High-Tech Academy  
St. Mary of the Immaculate Conception  
St. Ambrose School  
Lorain  
Lorain  
Medina  
Richland  
Summit  
Wayne  
Wood  
Springmill STEM Elementary  
St. Sebastian Parish School  
Northwestern Elementary School  
Hull Prairie Intermediate School  
10 The Metro Early College High School in Columbus is an example of a STEM school  
governed by an independent board.  
Budget Footnotes  
22  
June 2017  
Ohio Legislative Service Commission  
ODH to Contract with Cleveland Browns for Immunization Media Campaign  
Jacquelyn Schroeder, Budget Analyst, 614-466-3279  
On May 22, 2017, the Controlling Board approved a request in the amount of  
150,000 for the Ohio Department of Health (ODH) to contract with the Cleveland  
$
Browns for a media campaign to increase immunization rates and to improve public  
health hygiene. The contract will cover infographics, graphic design work, as well as  
television and radio advertisements, including signage and electronic displays that will  
be shown at the Browns Stadium during football games, an international soccer match,  
and a U2 concert. During May and June, there will also be a National Football Draft  
Infographic Campaign that will feature at least ten infographics that highlight players  
selected in the draft and educational information regarding immunizations. According  
to ODH, the contract will enable the Department to reach an audience that has not been  
targeted in the past. It anticipates that approximately 400,000 people will receive the  
campaign messaging during the contract timeframe, which ends June 30, 2017.  
ODH plans to enter into another contract at the beginning of the new biennium  
for an additional $100,000 to continue the media campaign. This contract will likely  
include a Back to School Immunization Campaign during July and August and a Ready  
for Flu Campaign during September through December.  
BWC's Safety Intervention Grant Program Provides a 3-to-1 Match to  
Minimize Workplace Injuries and Illnesses  
Terry Steele, Senior Budget Analyst, 614-387-3319  
The Division of Safety and Hygiene of the Bureau of Workers' Compensation  
(BWC) administers a Safety Intervention Grant Program to incentivize any state-fund  
private or public employers to purchase equipment to substantially reduce or eliminate  
workplace injuries and illnesses. Under the program, every dollar contributed by an  
employer is matched by $3 from BWC, up to a maximum BWC contribution of $40,000  
per eligibility cycle. The eligibility cycles range from every three years for an employer  
with annual payroll totaling more than $10 million, every five years for an employer  
with annual payroll between $5 million to $10 million, every seven years for an  
employer with annual payroll between $1 million and $5 million, and to every ten years  
for an employer with annual payroll less than $1 million. As a condition of receiving a  
safety intervention grant, the employer must submit quarterly reports for two years that  
document use of the equipment and submit a case study within one year, including a  
cost-benefit analysis of the equipment that was bought with the grant money. BWC uses  
the results to analyze trends and develop best practices that can be shared and used to  
improve workplace safety across the state.  
June 2017  
23  
Budget Footnotes  
Ohio Legislative Service Commission  
An eligible employer may apply for a safety intervention grant at any time. The  
application evaluation process includes an onsite visit by a BWC consultant who will  
prepare a preassessment report. The latest round of the safety intervention grant  
awards was announced on May 2. Approximately $475,000 was awarded to  
2
6 employers in 21 counties, including 19 private employers and seven public  
employers. Individual awards ranged from a low of just under $2,000 to $40,000, the  
maximum available. Through the end of February, 339 employers were awarded  
FY 2017 safety intervention grants totaling $8.6 million. For FY 2016, 529 employers  
were awarded a total of $14.6 million in safety intervention grants.  
The Safety Intervention Grant Program is funded through assessments charged  
to employers. The charge is based on a percentage of paid workers' compensation  
premiums (1.0% for private employers and 0.75% for public employer taxing districts).  
This assessment income, as well as other cash transfers from the State Insurance Fund,  
is deposited into the Safety and Hygiene Fund (Fund 8260).  
State Fire Marshal Awards Approximately $453,000 in Fire Department  
Training Reimbursement Grants  
Shannon Pleiman, Budget Analyst, 614-466-1154  
On April 20, 2017, the State Fire Marshal announced calendar year 2016 fire  
department training reimbursement grants totaling over $453,000. Overall, 212 fire  
departments in 75 counties received reimbursement grants, ranging from $225 up to  
nearly $13,100 for successfully completing state certified fire classes and specific classes  
conducted by the Ohio Fire Academy. A complete list of fire departments that received  
grants can be found on the Ohio Department of Commerce's website at:  
http://www.com.ohio.gov/documents/fire_2016TrainingGrants.pdf. Funding for these  
reimbursement grants come from taxes on insurance companies selling fire insurance in  
Ohio and from inspection fees, hotel permits, and fireworks licenses. The receipts from  
these sources are deposited into the State Fire Marshal Fund (Fund 5460). The  
maximum reimbursement grant is capped at $15,000.  
The State Fire Marshal awards individual fire department training  
reimbursement grants based on a variety of criteria including: (1) resident population  
protected, (2) fire protection area size, (3) operating budget of the department, and  
(
4) number of fire incidents/calls/responses requiring a National Fire Incident Reporting  
System. Eligible grant recipients include the following entities that serve a population of  
5,000 or less: (1) fire departments that serve one or more small municipalities or small  
2
townships, (2) volunteer fire departments, (3) joint fire districts, (4) local governments,  
and (5) certain private fire companies.  
Budget Footnotes  
24  
June 2017  
Ohio Legislative Service Commission  
Attorney General Extends Deadline for Provigil Consumers to  
File for Share of Multistate Settlement Award  
Joseph Rogers, Senior Analyst, 614-644-9099  
On April 11, 2017, the Ohio Attorney General announced the extension, from  
April 13 to June 25, of the deadline for eligible Ohio consumers to file a claim for a cash  
payment from a multistate settlement involving the biopharmaceutical company  
Cephalon and its affiliated companies. Ohio and 48 other states reached a settlement  
with Cephalon and affiliated companies in August 2016 to resolve allegations that the  
companies engaged in anticompetitive practices to protect monopoly profits and delay  
the market entry of generic versions of Provigil, a prescription drug used to promote  
wakefulness and treat sleep disorders. An Ohio consumer may be entitled to a cash  
payment if they have purchased Provigil or its generic versions between June 24, 2006  
and March 31, 2012.  
The multistate settlement totaled $125 million, of which $4 million was Ohio's  
share. Of this $4 million, $1.57 million will be used to compensate eligible consumers,  
$
1.43 million to reimburse state entities such as the central pharmacy and state hospitals  
that bought Provigil, and $1 million to the Ohio Attorney General's Office. The latter  
was credited to the Consumer Protection Enforcement Fund (Fund 6310), which is used  
for paying expenses incurred by the Attorney General's Consumer Protection Section to  
enforce laws regulating consumer and business transactions.  
June 2017  
25  
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 pace of the nation's economic expansion appears to have  
picked up in recent months. Inflation-adjusted gross domestic product  
real GDP) rose only at a 1.2% rate in the first quarter. But in April, the  
(
increase in industrial production was the most rapid since 2014. Real  
consumer spending rose in March and April, after declines earlier in the  
year. The economic picture is mixed, as is generally the case. The rise in  
total nonfarm payroll employment in May was relatively modest and  
gains in the previous two months were revised lower. But the  
nationwide unemployment rate fell to 4.3%, a 16-year low. Inflation,  
dominated by swings in energy prices in recent years, has flattened in  
recent months following an uptrend.  
In Ohio, total nonfarm payroll employment fell in March and  
April. The pace of the uptrend in statewide employment, underway  
since 2010, has been trailing that of the U.S. Ohio's statewide average  
unemployment rate has been above that for the nation since last year.  
The Federal Reserve is widely expected to raise its short-term  
interest rate target at the next meeting of its Open Market Committee  
11  
(
FOMC) on June 13-14. The central bank recently announced the outline  
of a plan to begin gradually reducing its large holdings of U.S. Treasury  
and agency securities, a reduction expected to start later this year.  
Nonfarm  
payroll  
The National Economy  
employment  
rose 138,000 in  
May.  
Employment and Unemployment  
Nonfarm payroll employment rose 138,000 in May and  
unemployment as a share of the labor force fell to 4.3%, in data tabulated  
by the U.S. Bureau of Labor Statistics (BLS). Trends in employment and  
the unemployment rate nationwide are shown in Chart 6.  
11 Expectations are indicated, for example, by pricing of futures contracts  
for federal funds, as reported by CME Group. As of June 7, the probability of an  
increase of 0.25 percentage point in the Federal Reserve's target for federal funds  
to a range of 1% to 1.25% at the June FOMC meeting was reported to be 97%.  
These estimates are published on: http://www.cmegroup.com/trading/interest-  
rates/countdown-to-fomc.html.  
Budget Footnotes  
26  
June 2017  
Ohio Legislative Service Commission  
Chart 6: U.S. Employment and Unemployment  
1
1
1
1
1
1
1
1
48  
45  
42  
39  
36  
33  
30  
27  
11%  
10%  
9%  
8%  
7%  
6%  
5%  
4%  
2
007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017  
Nonfarm Payroll Employment Unemployment Rate (right scale)  
Employment growth so far in 2017 averaged 162,000 per month  
(1.3% per year), down from 187,000 in 2016. The year-to-date rate of  
increase reflects downward revisions to the numbers for March and April.  
In May, job growth was reported in health care, mining, professional and  
business services, and food services and drinking places. From a year  
earlier, employment gains are largest in private service-providing  
industries including health care, various professional and business  
services, and restaurants, bars, and similar businesses.  
At 4.3%, the  
country's  
At 4.3%, the country's unemployment rate in May was at its lowest  
level since 2001, and well below the recession peak of 10.0% in 2009. The unemployment  
number of long-term unemployed, those actively seeking work and  
rate in May  
without jobs for more than six months, totaled 1.7 million, near the lowest  
level since the 2007-2009 recession but higher than before the recession.  
Similarly, the number of persons working part time because of slack work  
was at its  
lowest level  
or inability to find full-time jobs was 5.2 million, lowest since the last since 2001.  
recession but higher than earlier.  
Markets for labor tightened further around the nation in recent  
weeks, with higher pay being offered to retain and attract workers in  
occupational categories and parts of the country short of workers with  
needed qualifications, according to a report from the Federal Reserve.1  
Overall, however, "modest to moderate" wage growth was noted in the  
2
12 These comments are from the latest Beige Book, a summary of mostly  
qualitative, anecdotal information collected by the 12 Federal Reserve District  
Banks from outside sources through May 22.  
June 2017  
27  
Budget Footnotes  
Ohio Legislative Service Commission  
report. Private-sector hourly wage and salary increases, as reported by  
BLS, have gradually trended higher over the past seven years, and  
averaged 2.5% in the four quarters ended March 31 compared with a  
year earlier, outpacing price increases.  
Two other indicators of labor market tightness are shown in  
Chart 7. The number of unemployed persons for each job opening has  
fallen below the level prior to the 2007-2009 recession, consistent with a  
relatively tight labor market. But participation in the labor force by  
persons in the prime working-age group from 25 to 54 years is well below  
its level before the recession, possibly an indicator that significant slack  
remains. Each 1% increase in this measure is about 1.3 million people.  
Chart 7: Indicators of Labor Resource Utilization  
7
6
5
4
3
2
1
0
83%  
82%  
81%  
80%  
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017  
Unemployed persons per job opening (left scale)  
Civilian labor force participation rate, 25 to 54 years of age  
Production, Shipments, and Inventories  
Real GDP growth in the first quarter was revised upward to a  
Real GDP  
1
3
growth in the  
first quarter  
was revised  
upward to a  
1.2% annual rate, from 0.7% in the initial estimate. Nonresidential as  
well as residential fixed investment rose rapidly in the first three months  
of the year. Petroleum and natural gas exploration and well drilling  
surged. Outlays for equipment grew including electronic, industrial, and  
transportation equipment. Exports strengthened. On the other hand, total  
consumer spending only edged up as consumer outlays for durable  
goods fell and services growth was slow. Government spending declined  
and inventory accumulation slowed. For all of 2016, real GDP rose a  
modest 1.6%, down from 2.6% growth in 2015.  
1
.2% annual  
rate.  
1
3
The source agency for GDP data is the U.S. Bureau of Economic  
Analysis.  
Budget Footnotes  
28  
June 2017  
Ohio Legislative Service Commission  
Economic growth is expected to turn higher in the current quarter.  
Estimates of second quarter real GDP growth from two sources, based on  
differing assessments of monthly data, show 3.4% and 2.2% annual rates  
of increase (Federal Reserve Banks of Atlanta and New York,  
respectively). The inventory weakness in the first quarter is unlikely to  
be repeated in the second quarter, and consumer spending appears to be  
growing more rapidly.  
Industrial  
production  
rose 1.0% in  
April, the  
largest  
1
4
Industrial production rose 1.0% in April, the largest monthly  
increase in over three years. Gains were widespread among industries.  
Manufacturing output also expanded by 1.0% in the month, the biggest  
gain since 2014, and output of mines and utilities rose. Production gains  
were reported for consumer durables including automotive products and  
appliances, furniture, and carpeting; for various consumer nondurables  
industries; and for business equipment. In the past year, the total  
industrial production index rose 2.2%, its largest 12-month increase since  
early 2015.  
monthly  
increase in  
over three  
years.  
Consumer Spending and Incomes  
Real consumer spending rose 0.2% in April, after a 0.5% rise in  
March, and declines in February and January. The weakness early this  
year resulted in part from slower sales of motor vehicles, and also from  
unseasonably mild weather reducing consumption of utility services.  
With the upturn since then, consumer spending as of April was growing  
at more than a 3% annual rate compared with outlays in the first quarter.  
Sales of light motor vehicles during May were somewhat below  
record levels, with a seasonally adjusted annualized 16.6 million units  
sold. For the first five months of 2017, sales were 2.0% below the  
comparable period in 2016. Full-year unit sales for 2016 were nearly  
1
2
7.5 million units, a record high. Sales of light trucks are running ahead of  
016 sales, but auto sales are well behind last year.  
Construction and Real Estate  
The number of housing units started fell 3% in April, seasonally  
adjusted, as starts on apartments declined. In the first four months of  
2
017, however, housing starts were 5% higher than a year earlier as starts  
on homes rose 7%. If the year-to-date trend continues, this year will be the  
eighth consecutive year of rising starts, but the rate of starts remains more  
than 20% below the long-term (1959-2007) average annual number of  
units started. Issuance of permits for new construction, estimated from a  
14 Estimates are as of June 2.  
June 2017  
29  
Budget Footnotes  
Ohio Legislative Service Commission  
separate survey, were 6% higher in the year's first four months than a  
year earlier, as single-family starts rose 10%.  
New home sales fell 11% in April. Sales in all four Census regions  
were down, but most of the drop nationwide was due to lower sales in  
the West. Even with the weak performance in April, year-to-date sales  
were 11% higher nationwide than in January-April 2016, and 26% higher  
In the first  
four months  
of 2017,  
housing starts in the Midwest. This year will be the sixth straight year of rising home  
sales, if the year-to-date trend continues; the sales pace remains more  
than 10% below the 1963-2007 average.  
were 5%  
higher than a  
Home sales reported by the National Association of Realtors  
year earlier.  
(NAR), generally previously occupied homes, fell 2% in April. Year-to-  
date sales were 2% above the year-ago pace; for all of 2016, sales rose 4%.  
NAR noted that numbers of homes listed for sale are low in much of the  
country, and that these tight inventories are pushing up prices.  
Housing prices nationwide rose 6% on average in the year ended  
1
5
in March, based on a nationwide index. This follows a similar price rise  
in the prior 12 months. The index has been rising from lows reached  
in 2011.  
Inflation  
The consumer price index for all urban consumers (CPI-U) rose  
0
.2% in April, seasonally adjusted, after decreasing 0.3% in March. Over  
the 12 months ending in April, the CPI-U increased 2.2% before seasonal  
adjustment, lower than the 2.4% increase for the 12 months ending in  
March.  
In April, the energy index picked up 1.1%, after declining for two  
consecutive months, 3.2% in March and 1.0% in February. The gain in  
April was boosted by rising prices in most energy categories. Gasoline  
prices rose 1.2%. The food index rose 0.2% in April, due to a sharp  
increase in prices for fruits and vegetables including a 5.1% price increase  
for fresh vegetables, which outweighed decreases in the index  
components for other categories of food, such as meat, poultry, fish, and  
eggs. Over the 12 months ending in April, the energy index rose 9.3%  
and the food index was up 0.5%. The CPI core index (all items excluding  
food and energy) increased 0.1% in April, rising to 1.9% higher than its  
level for April 2016.  
The producer price index for final demand (PPI) increased 0.5% in  
April, seasonally adjusted. Over the past 12 months the PPI rose 2.5%.  
15 These price changes are based on the Federal Housing Finance Agency  
Purchase-Only House Price Index.  
Budget Footnotes  
30  
June 2017  
Ohio Legislative Service Commission  
Wholesale food prices rose 0.9% in April, continuing a string of increases  
since December 2016. Wholesale energy prices rose 0.8% in April, after  
declining 2.9% in March.  
The Ohio Economy  
Ohio's April  
Employment and Unemployment  
unemployment  
rate dropped  
to 5.0% from  
Ohio's April unemployment rate dropped to 5.0% from 5.1% in  
March. In April of last year, Ohio's unemployment rate was also 5.0%. In  
comparison, the U.S. unemployment rate was 4.4% in April 2017. The  
number of unemployed Ohioans was 288,000 in April, a decrease of 5,000  
from March. Chart 8 below shows the unemployment rate over the last  
ten years in Ohio compared with that in the U.S.  
5
.1% in March.  
Chart 8: Ohio and U.S. Unemployment Rates  
1
1
1%  
0%  
9
8
7
6
5
4
%
%
%
%
%
%
2
007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017  
United States Ohio  
The state's total nonfarm payroll employment, seasonally adjusted,  
declined by 5,700, or 0.1% in April from the revised total in March,  
following a decrease of 4,300 jobs in March. In April, employment gains in  
private service-providing industries (+9,400) were more than offset by job  
losses in goods-producing industries (-13,200) and government  
employment (-1,900). The largest job gains in private service industries  
were in professional and business services and in leisure and hospitality.  
The largest job losses in goods-producing industries were in construction  
(-7,400), followed by manufacturing (-5,800). Job losses in the public sector  
were primarily in state government.  
Compared to a year ago, total nonfarm payroll employment  
increased by 35,900 (0.7%). The increase was largely in educational and  
June 2017  
31  
Budget Footnotes  
Ohio Legislative Service Commission  
health services, leisure and hospitality, professional and business  
services, nondurable goods manufacturing, and construction. The overall  
increase came in spite of a reduction in government employment  
of 9,200. Chart 9 shows payroll employment in Ohio compared with that  
in the U.S.  
The state's  
total nonfarm  
payroll  
employment  
declined by  
Chart 9: Ohio and U.S. Total Nonfarm Payroll Employment  
1
1
1
1
1
1
1
1
1
48.2  
45.6  
43.0  
40.4  
37.8  
35.2  
32.6  
30.0  
27.4  
5.7  
5.6  
5.5  
5.4  
5.3  
5.2  
5.1  
5.0  
4.9  
5
,700 in April  
following a  
decrease of  
4
,300 jobs in  
March.  
2
007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017  
United States Ohio (right scale)  
State Production  
Ohio's real GDP grew 1.9% at a seasonally adjusted annual rate in  
the fourth quarter of 2016, identical to real GDP growth for the  
16  
5
0 states. Sectors contributing the most to Ohio's growth were finance  
and insurance, mining, and retail trade. Ohio's growth was ranked 15th  
among the 50 states and the District of Columbia. In current dollars (i.e.,  
without adjusting for inflation), Ohio's GDP reached $638 billion at an  
annual rate in the fourth quarter, accounting for about 3.4% of U.S. GDP.  
For the year as a whole, Ohio's real GDP grew 1.7% from 2015 to 2016.  
Ohio Home Sales  
In April, the number of existing home sales in Ohio decreased by  
6
.6% compared to April 2016, according to the Ohio Association of  
Realtors. From January through April of this year, existing home sales  
were about the same as in the corresponding period in 2016. The  
16 GDP by state for the U.S. differs from GDP in the national income and  
product accounts (NIPAs) because GDP by state for the U.S. excludes federal  
military and civilian activity located overseas, which cannot be attributed to a  
particular state.  
Budget Footnotes  
32  
June 2017  
Ohio Legislative Service Commission  
statewide sales prices of homes sold during January through April 2017  
averaged $161,350, or 6.1% higher than the corresponding period a  
year ago.  
Regional Economy  
Economic activity in the region continued to expand at a moderate  
pace between early April and late May, according to the latest Beige  
Statewide sales  
prices of Ohio  
homes sold  
1
7
Book. Labor markets in the region continued to grow, with staffing firms  
reporting increased job openings and placements. Employers reported  
wage pressures for both low- and high-skilled workers. Freight  
transportation contacts noted that the high turnover of truck drivers during January  
remained a problem. Manufacturers reported shortages of qualified  
workers for low-skilled manufacturing jobs. Input prices in construction  
and manufacturing industries continued to increase.  
through  
April 2017  
averaged 6.1%  
higher than a  
Customer spending at brick-and-mortar stores increased slightly.  
Sales of new vehicles increased 3.5% in the first four months of this year  
compared to the same period a year ago. Manufacturing output grew year earlier.  
slightly. Natural gas drilling activity continued to trend up, but at a slow  
pace. Commercial real estate activity in the region remained strong. Bank  
lending increased slightly on balance. Mortgage lending increased, but  
credit card balances fell.  
17 Comments here summarize the Beige Book section from the Federal  
Reserve Bank of Cleveland.  
June 2017  
33  
Budget Footnotes