Budget Footnotes  
A NEWSLETTER OF THE OHIO LEGISLATIVE SERVICE COMMISSION  
JULY 2017  
VOLUME 40, NUMBER 11  
STATUS OF THE GRF  
STATUS OF THE GRF  
Highlights...................................1  
Revenues ..................................2  
Expenditures............................15  
HIGHLIGHTS  
Ross Miller, Chief Economist, 614-644-7768  
ISSUE UPDATES  
June GRF tax revenue was $8.5 million below the Office of  
Summary of FY 2017  
Expenditures ........................26  
Adult Diploma Program............27  
Ohio Means Internships and  
Co-ops..................................28  
Nutrient Management Tools ....29  
Wild Turkey Season.................30  
Budget and Management's (OBM) August 2016 estimate, a  
smaller negative variance than any yet in calendar year 2017.  
FY 2017 presented significant fiscal challenges, with GRF tax  
revenue ending the year $849.2 million (3.7%) below the  
August estimate, and having increased by a meager Drug Law Enforcement  
Grants...................................30  
MyCare Ohio Report................31  
$66.1 million (0.3%) from FY 2016. The challenge was  
mitigated somewhat by negative variances on the expenditure Medicaid LifeBio Study ............32  
Recycling and Litter Prevention  
Grants...................................33  
side of the budget. Medicaid had the largest negative  
variance. GRF Medicaid expenditures were $1.10 billion  
(
5.9%) below the August estimate for the fiscal year.  
The GRF finished the fiscal year with a cash balance of  
557.1 million to meet the year-end encumbrance and ending  
TRACKING THE ECONOMY  
The National Economy ............34  
The Ohio Economy..................38  
$
fund balance requirements. There was no surplus money to  
be transferred to the Budget Stabilization Fund, which stood  
at $2.034 billion as of June 30, 2017.  
Next Issue:  
September 2017  
Simplified GRF Cash Statement, as of June 30, 2017  
Have a great summer!  
(
$ in millions)  
Beginning Cash Balance  
$1,193.3  
$34,178.1  
$34,814.3  
$557.1  
Plus Actual Revenues, Transfers in, and Receivables  
Less Actual Expenditures and Transfers Out  
Ending Cash Balance  
Legislative Service Commission  
7
7 South High Street, 9th Floor  
Columbus, Ohio 43215  
Year-end Encumbrances  
$388.5  
Budget Stabilization Fund (BSF) Balance  
Combined GRF and BSF Unobligated Ending Balance  
$2,034.1  
$2,202.6  
Telephone: 614-466-3615  
AVAILABLE ON OUR WEBSITE: WWW.LSC.OHIO.GOV  
CLICK ON 'PUBLICATIONS/BUDGET FOOTNOTES'  
Ohio Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of June 2017  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on July 5, 2017)  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
TAX REVENUE  
Auto Sales  
$127,972  
$131,200  
-$3,228  
-2.5%  
Nonauto Sales and Use  
$807,320  
$780,400  
$26,920  
3.4%  
Total Sales and Use Taxes  
$935,291  
$911,600  
$23,691  
2.6%  
Personal Income  
$789,072  
-$4,860  
$26,789  
$433  
$799,500  
$0  
-$10,428  
-$4,860  
-$3,911  
-$367  
$787  
-1.3%  
---  
Corporate Franchise  
Financial Institution  
Public Utility  
$30,700  
$800  
-12.7%  
-45.9%  
3.9%  
---  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
$21,187  
$5  
$20,400  
$0  
$5  
$16,199  
$1,376  
-$23,539  
$261,832  
$2  
$6,600  
$1,100  
-$1,300  
$272,300  
$0  
$9,599  
$276  
145.4%  
25.1%  
-1710.7%  
-3.8%  
---  
-$22,239  
-$10,468  
$2  
$157,811  
$5,276  
$4,069  
$88  
$148,700  
$5,100  
$4,000  
$0  
$9,111  
$176  
6.1%  
3.5%  
1.7%  
---  
Alcoholic Beverage  
Liquor Gallonage  
$69  
Estate  
$88  
Total Tax Revenue  
$2,191,031  
$2,199,500  
-$8,469  
-0.4%  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$11,363  
$755  
$9,100  
$570  
$2,263  
$185  
24.9%  
32.5%  
-71.0%  
-12.6%  
$1,819  
$13,937  
$6,275  
$15,945  
-$4,456  
-$2,008  
Total Nontax Revenue  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$247,918  
$247,918  
$0  
$267,500  
$267,500  
$0  
-$19,582  
-$19,582  
---  
-7.3%  
-7.3%  
TOTAL STATE SOURCES  
Federal Grants  
$2,452,886  
$1,010,667  
$3,463,553  
$2,482,945  
$1,011,099  
$3,494,044  
-$30,059  
-$433  
-1.2%  
0.0%  
TOTAL GRF SOURCES  
-$30,491  
-0.9%  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
2
July 2017  
Ohio Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate  
FY 2017 as of June 30, 2017  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on July 5, 2017)  
Percent  
Change  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
FY 2016  
TAX REVENUE  
Auto Sales  
$1,393,968  
$9,220,607  
$10,614,575  
$1,400,000  
$9,407,600  
$10,807,600  
-$6,032  
-0.4%  
$1,346,315  
$9,001,684  
$10,347,999  
3.5%  
Nonauto Sales and Use  
Total Sales and Use Taxes  
-$186,993  
-2.0%  
2.4%  
-$193,025  
-1.8%  
2.6%  
Personal Income  
Corporate Franchise  
Financial Institution  
Public Utility  
$7,606,452  
-$1,211  
$8,260,000  
$0  
-$653,548  
-$1,211  
-$35,691  
$3,402  
$15,236  
-$4,210  
$14,539  
$390  
-7.9%  
---  
$7,799,334  
$33,234  
-2.5%  
-103.6%  
-12.2%  
3.5%  
$187,309  
$106,902  
$347,436  
$61,790  
$1,301,539  
$6,390  
$223,000  
$103,500  
$332,200  
$66,000  
$1,287,000  
$6,000  
-16.0%  
3.3%  
4.6%  
-6.4%  
1.1%  
6.5%  
0.0%  
-3.4%  
---  
$213,451  
$103,253  
$338,007  
$60,725  
Kilowatt-Hour Excise  
2.8%  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
1.8%  
$1,255,325  
$6,888  
3.7%  
-7.2%  
2.7%  
$301,542  
$268,567  
-$676  
$301,500  
$278,000  
$0  
$42  
$293,526  
$258,276  
$102  
-$9,433  
-$676  
4.0%  
-764.4%  
-2.7%  
5.1%  
$980,506  
$57,220  
$46,460  
$756  
$970,000  
$55,000  
$45,000  
$0  
$10,506  
$2,220  
$1,460  
$756  
1.1%  
4.0%  
3.2%  
---  
$1,007,643  
$54,446  
Alcoholic Beverage  
Liquor Gallonage  
$45,130  
2.9%  
Estate  
$2,154  
-64.9%  
0.3%  
Total Tax Revenue  
$21,885,556  
$22,734,800  
-$849,244  
-3.7%  
$21,819,492  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$48,732  
$59,600  
$69,230  
$177,563  
$35,000  
$57,000  
$70,800  
$162,800  
$13,732  
$2,600  
39.2%  
4.6%  
-2.2%  
9.1%  
$35,169  
$56,380  
$52,526  
$144,076  
38.6%  
5.7%  
-$1,570  
$14,763  
31.8%  
23.2%  
Total Nontax Revenue  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$355,937  
$355,937  
$0  
$309,100  
$309,100  
$0  
$46,837  
$46,837  
---  
15.2%  
15.2%  
$0  
$322,243  
$322,243  
---  
10.5%  
10.5%  
TOTAL STATE SOURCES  
Federal Grants  
$22,419,056  
$11,761,183  
$34,180,239  
$23,206,700  
$12,682,980  
$35,889,680  
-$787,644  
-$921,797  
-3.4%  
-7.3%  
-4.8%  
$22,285,810  
$11,645,735  
$33,931,545  
0.6%  
1.0%  
0.7%  
TOTAL GRF SOURCES  
-$1,709,442  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
July 2017  
3
Budget Footnotes  
Ohio Legislative Service Commission  
REVENUES  
Jean J. Botomogno, Principal Economist, 614-644-7758  
Overview  
A June shortfall of $30.5 million (0.9%) relative to OBM's August  
1
2
estimate concluded another dismal fiscal year for GRF sources. Through  
June, FY 2017 GRF sources of $34.18 billion were $1.71 billion (4.8%)  
below estimate with deficits from both state sources and federal grants.  
FY 2017 GRF tax sources of $21.89 billion fell short of estimates by  
$849.2 million (3.7%), driven down by a negative variance of  
FY 2017 GRF  
tax revenue  
was  
$
849.2 million  
$
653.5 million (7.9%) for the personal income tax (PIT). That shortfall in  
GRF tax sources was partially offset by positive variances of $46.8 million  
15.2%) for transfers into the GRF and $14.8 million (9.1%) for nontax  
below the  
August  
(
estimate.  
revenue, resulting in a state-sources deficit of $787.6 million (3.4%) for  
the fiscal year. Federal grants, which have been generally below estimate  
throughout FY 2017, finished the year with a negative variance of  
$
921.8 million (7.3%). Federal grant revenue is primarily related to the  
level of spending in the Medicaid program, which was lower than  
expected. Tables 1 and 2 above, show GRF sources for June and for  
FY 2017 through June, respectively.  
In June, the sales and use tax and the commercial activity tax  
Total GRF  
3
sources were  
$
1.7 billion  
below the  
August  
(CAT) were above anticipated levels by $23.7 million and $9.6 million.  
The cigarette tax also experienced a positive variance of $9.1 million.  
Those positive variances were more than offset by shortfalls of  
estimate in  
FY 2017.  
$
$
32.7 million for the insurance taxes, $10.4 million for the PIT, and  
8.8 million for taxes on financial institutions, including $4.9 million for  
the corporate franchise tax (CFT) which was eliminated at the end of  
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. GRF sources also had a bad  
year in FY 2016, ending with a shortfall of $788.6 million.  
3
GRF Medicaid expenditures were $1.10 billion below estimate in  
FY 2017. See the "Expenditures" section for more details.  
Budget Footnotes  
4
July 2017  
Ohio Legislative Service Commission  
2
0134 and $3.9 million for the financial institutions tax (FIT). Regarding the  
remaining GRF state sources in June, transfers in were $19.6 million below  
estimate and nontax revenue was $2.0 million below projected receipts.  
Total GRF sources were below estimate in all months of FY 2017  
but December 2016. 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, the  
cumulative sources shortfall from estimate grew in nearly every month of  
FY 2017 to total $1.71 billion, as labeled in the far right column.  
Chart 1: GRF Source FY 2017 Cumulative Performance  
by Component  
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May June  
$
400  
$
0
Federal grants  
were  
-$17  
-$145 -$235 -$262  
-
$400  
$800  
$
921.8 million  
-
-$714 -$611  
below the  
August  
-$846 -$911  
-
-
-
$1,200  
$1,600  
$2,000  
-
$1,230  
-$1,412  
estimate in  
FY 2017.  
-$1,679-$1,709  
Other State Revenue  
Federal Grants  
Tax Revenue  
GRF tax sources finished the fiscal year with their largest negative  
variance since FY 2009 when tax revenues were $950.9 million (5.3%)  
below estimate. That underperformance resulted from a deep economic  
recession. The latest one, however, occurred during a period of economic  
growth. The two largest sources, the sales and use tax ($193.0 million)  
and the PIT ($653.5 million), contributed nearly the entire tax shortfall of  
$
849.2 million, while positive variances were roughly equal to negative  
variances for the remaining taxes. The chart below illustrates the fiscal  
year performance of each tax that was expected to contribute over  
4 The estate tax, another tax that was eliminated on January 1, 2013,  
provided $4.0 million in revenue in FY 2017, of which the state GRF received  
$
township in which the decedent resided.  
0.8 million (20%), with the remainder distributed to the municipality or  
July 2017  
5
Budget Footnotes  
Ohio Legislative Service Commission  
$
100 million in revenue to the GRF this fiscal year, organized from left  
to right by total expected contribution.  
GRF tax  
Chart 2: FY 2017 Tax Revenue Performance by Tax  
revenue had its  
largest fiscal  
year negative  
variance since  
the last  
Sales  
and Use  
Kilowatt-  
Hour  
Public  
Utility  
PIT  
CAT  
$15  
Cigarette Insurance  
$11  
FIT  
$
100  
$15  
$3  
$
0
($9)  
($36)  
-
-
-
-
-
-
-
$100  
$200  
$300  
$400  
$500  
$600  
$700  
($193)  
economic  
recession.  
(
$654)  
Compared to FY 2016, FY 2017 GRF tax receipts were  
66.1 million (0.3%) higher. Sales taxes, the CAT, the insurance taxes,  
and the kilowatt-hour tax grew by $266.6 million, $46.2 million,  
18.3 million, and $9.4 million, respectively. On the other hand, revenue  
fell for the PIT ($192.9 million), the CFT ($34.4 million), the cigarette tax  
$27.1 million), and the FIT ($26.1 million), among others.  
$
$
(
Sales and Use Tax  
Total GRF sales and use tax receipts of $10.61 billion in FY 2017  
were $193.0 million (1.8%) below estimate but $266.6 million (2.6%)  
above FY 2016 receipts. Both the auto and the nonauto portions of the tax  
underperformed. This tax source struggled most of the fiscal year, but  
the sales and use tax had a good month in June. GRF sales and use tax  
revenue in June of $935.3 million was $23.7 million (2.6%) above  
estimate, only the second time in FY 2017 the tax exceeded anticipated  
revenue.  
The sales and  
use tax  
underperformed  
by  
$
193.0 million  
in FY 2017.  
For analysis and forecasting, the sales and use tax is separated into  
two parts: auto and nonauto. Auto sales and use tax collections generally  
arise from the sale of motor vehicles, but auto taxes arising from leases  
are paid at the lease signing and are mostly recorded under the nonauto  
Budget Footnotes  
6
July 2017  
Ohio Legislative Service Commission  
tax instead of the auto tax.5 In FY 2017, the nonauto portion accounted for  
7% of the total sales and use tax collected, while auto collections were  
just 13%.  
8
Nonauto Sales and Use Tax  
The nonauto portion of the sales and use tax was weak in FY 2017,  
coming in above estimated monthly collections just twice, in December  
and June. The positive variance in December 2016 was $6.5 million (0.8%),  
and through December, the nonauto sales and use tax was $95.5 million  
FY 2017  
nonauto sales  
and use tax  
revenue was  
(2.0%) below projections. June nonauto sales and use tax receipts of  
$
807.3 million were $26.9 million (3.4%) above estimate, and $72.3 million  
$
187.0 million  
(9.8%) above receipts in June 2016. For the fiscal year as a whole, GRF  
below  
receipts from the tax totaled $9.22 billion, $187.0 million (2.0%) below  
estimate, but were $218.9 million (2.4%) above FY 2016 receipts, a estimate.  
6
historically weak growth rate on a year ago basis. The chart below  
illustrates that FY 2017 revenue from the tax grew, but at a very uneven  
pace.  
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  
5 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.  
6 Excluding the recession years of FY 2009 and FY 2010, the last time  
nonauto sales and use tax growth was below 2.5% was in FY 2007 (1.1%).  
July 2017  
7
Budget Footnotes  
Ohio Legislative Service Commission  
FY 2017 nonauto sales and use tax receipts included $808.6 million  
from the tax on Medicaid health insuring corporations (MHICs), whose  
collections made up about 9% of nonauto sales and use tax collections  
this fiscal year. This portion of the nonauto sales and use tax is generally  
correlated to GRF Medicaid spending. After several years of double digit  
growth, revenue from MHICs grew only about 1.5% in FY 2016 and 5.1%  
in FY 2017. Excluding MHICs receipts, nonauto sales and use tax receipts  
would have grown about 2.0% over FY 2016. Starting July 1, 2017, the tax  
will be eliminated; federal rules require Ohio to discontinue applying the  
sales tax to MHICs.  
FY 2017 auto  
sales and use  
tax revenue  
was  
Auto Sales and Use Tax  
Revenue from the auto portion of the sales and use tax,  
128.0 million in June, was below its estimate by $3.2 million (2.5%). This  
monthly negative variance was the eighth time in FY 2017 the tax failed  
to meet estimates. Overall, FY 2017 auto sales tax receipts of $1.39 billion  
were $6.0 million (0.4%) below anticipated receipts, and $47.7 million  
$
$
6.0 million  
(3.5%) above receipts in FY 2016. As seen in the chart below,  
below  
year-over-year growth in auto sales tax collections has accelerated in the  
last few months.  
estimate.  
Chart 4: Auto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
1
0.0%  
8
6
4
2
0
.0%  
.0%  
.0%  
.0%  
.0%  
Actual  
Estimate  
-
2.0%  
4.0%  
-
In 2017, new vehicle sales have been unable to match their year-  
ago pace. 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. For example, light truck sales in June were 6% higher than their  
Budget Footnotes  
8
July 2017  
Ohio Legislative Service Commission  
year-ago pace, while car sales reached their slowest pace since 2011 and  
were more than 14% lower than their year-ago pace.  
A big reason for the growth of revenue from the auto sales and use  
tax has been this changing makeup of light vehicle sales. 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. Still-low gasoline prices should provide some support for light-  
truck sales moving forward, but inventories are growing and overall sales  
are likely to decline in the next few months.  
Personal Income Tax  
PIT GRF revenue of $789.1 million in June was again below  
estimate, this time by $10.4 million, concluding FY 2017  
underperformance. Except for July when the PIT was $2.0 million above  
estimate, this tax source was below estimate the remainder of the fiscal  
year. PIT revenue is comprised of gross collections, minus refunds and  
distributions to the Local Government Fund (LGF). Gross collections  
7
consist of employer withholdings, quarterly estimated payments, trust  
payments, payments associated with annual returns, and other  
miscellaneous payments. The performance of the tax is typically driven by  
employer withholdings, which is the largest component of gross  
collections, however, a larger than expected amount of refunds has also  
greatly affected the tax performance in FY 2017.  
FY 2017 PIT  
revenue to the  
For June, monthly employer withholding and miscellaneous  
receipts were above projections by $6.6 million (1.0%) and $1.2 million GRF was  
(
below estimates, including shortfalls of $6.4 million (4.9%) for estimated  
payments, $1.8 million (26.1%) for trusts payments, and $1.0 million  
14.1%), respectively. However, the remainder of PIT components fell  
$
653.5 million  
below the  
August  
(7.6%) for taxes due with annual returns. In addition, refunds were  
estimate.  
$
10.4 million (41.1%) more than anticipated.  
FY 2017 GRF revenue from the PIT totaled $7.61 billion, which was  
653.5 million (7.9%) less than was expected. Through June, the PIT  
$
revenue shortfall was led by refunds, which were $386.3 million (24.4%)  
higher than expected, and employer withholdings, which were  
$
235.3 million (2.7%) below estimate. Taxes due with annual return  
payments, trust payments, and miscellaneous payments experienced  
7 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.  
July 2017  
9
Budget Footnotes  
Ohio Legislative Service Commission  
shortfalls of $33.2 million (4.7%), $15.4 million (22.0%) and $7.3 million  
7.0%), respectively. FY 2017 revenues from each component of the PIT  
(
relative to estimates and to revenue received in FY 2016 are detailed in  
the table below. All components have underperformed estimates with  
the exception of quarterly estimated payments.  
FY 2017 Personal Income Tax Revenue  
Estimate Variances and Year-over-Year Changes by Component  
Variance  
Changes  
from Estimate  
from FY 2016  
Category  
Amount  
Percentage  
Amount  
Percentage  
(
$ in millions)  
(%)  
($ in millions)  
(%)  
Withholding  
-$235.3  
$8.0  
-2.7%  
1.1%  
$151.8  
-$222.6  
-$13.4  
-$14.3  
-$4.4  
1.8%  
-23.2%  
-19.8%  
-2.1%  
-4.3%  
-1.0%  
4.5%  
Quarterly Estimated Payments  
Trust Payments  
-$15.4  
-$33.2  
-$7.3  
-22.0%  
-4.7%  
-7.0%  
-2.8%  
24.4%  
-4.1%  
-7.9%  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
-$283.3  
$386.3  
-$16.0  
-$653.5  
-$102.9  
$85.1  
Less Refunds  
Less LGF Distribution  
GRF PIT Revenue  
$4.8  
1.3%  
-$192.9  
-2.5%  
Employer  
Employer withholdings continue to grow year over year, but at a  
withholding  
revenue has  
been trending  
upward in  
slower pace than expected. Year-over-year growth was depressed early in  
8
the fiscal year due to the implementation of policy changes, but languished  
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 recovered somewhat, though remained below  
estimate. The chart below illustrates the growth of monthly employer  
withholdings on a three-month moving average relative to one year ago.  
2017.  
8 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.  
Budget Footnotes  
10  
July 2017  
Ohio Legislative Service Commission  
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 and Petroleum Activity Taxes  
GRF receipts from the CAT in June were $16.2 million, $9.6 million  
(
June 2016. After three quarters of disappointing and below-estimate  
receipts, CAT receipts in the fourth fiscal quarter were 14.2% above  
145.4%) above estimate, and $13.1 million (429.1%) above receipts in  
FY 2017 CAT  
revenue was  
estimate and 15.6% above revenue in the corresponding quarter in $14.5 million  
FY 2016. Through March, CAT GRF receipts were $28.0 million below  
above  
estimates. However, for the fiscal year as a whole, GRF receipts of  
estimate.  
$
1.30 billion were $14.5 million (1.1%) above projections, and $46.2 million  
(3.7%) above FY 2016 revenue. FY 2017 CAT net revenues got a boost from  
lower refunds ($32.7 million) than in the previous year. Gross collections  
totaled $1.86 billion, $28.9 million (1.6%) above FY 2016 collections. CAT  
net revenue credited to the School District Tangible Property Tax  
Replacement Fund (Fund 7047) was $347.1 million, while the share  
credited to the Local Government Tangible Property Tax Replacement  
Fund (Fund 7081) was $86.8 million.  
The petroleum activity tax (PAT) is applied to receipts from the sale  
or exchange of motor fuel at a rate of 0.65% on a motor fuel supplier's  
adjusted gross receipts. OBM estimated GRF revenue of $6.0 million for  
the PAT in FY 2017. GRF revenue from the tax was $6.4 million, thus  
resulting in a positive variance of $0.4 million (6.5%) for the fiscal year.  
FY 2017 GRF revenue was also $0.5 million (7.2%) below revenue in  
FY 2016. All-funds revenue from the PAT was $62.6 million. Of that total,  
$
56.2 million was deposited in the Petroleum Activity Tax Public  
Highway Fund (Fund 5NZ0).  
July 2017  
11  
Budget Footnotes  
Ohio Legislative Service Commission  
Cigarette and Other Tobacco Products Tax  
June GRF revenue of $157.8 million from the cigarette and other  
tobacco products tax was $9.1 million (6.1%) above estimate and  
$
June, receipts were $980.5 million, $10.5 million (1.1%) above estimate. Of  
the fiscal year revenue, $914.4 million was from cigarettes and  
5.9 million (3.9%) above revenue in June 2016. For FY 2017 through  
The cigarette  
and other  
$
66.1 million was from sales of other tobacco products.  
tobacco  
FY 2017 receipts from the cigarette and other tobacco products tax  
were down $27.1 million or 2.7% from FY 2016. Though receipts from the  
other tobacco products grew $2.7 million, cigarette receipts declined  
products tax  
ended FY 2017  
with a positive  
variance of  
$
31.6 million. However, the decline in cigarette revenue includes  
9
legislative changes which provided a one-time boost to receipts in the  
early months of FY 2016. Excluding receipts of $18.3 million from the  
floor tax (see footnote) in FY 2016, FY 2017 receipts from sales of  
cigarettes were 1.7% lower than one year ago. Cigarette sales have  
trended downward long-term, generally at a slow pace.  
$
10.5 million.  
Utility-Related Taxes  
Utility-related taxes include the public utility tax, the natural gas  
distribution tax or MCF, and the kilowatt-hour tax. All receipts from  
these taxes are credited to the GRF.  
Utility-related  
taxes finished  
FY 2017 with a  
combined  
The public utility excise tax is levied on gross receipts. Tax  
revenues from this tax totaled $106.9 million in FY 2017, $3.4 million  
(3.3%) more than the estimate, and $3.6 million (3.5%) more than in  
positive  
FY 2016. Taxes paid by natural gas companies account for most tax  
receipts from the public utility excise tax, and were 95% of the total in  
FY 2017. Other classes of utilities that pay this tax include pipelines,  
waterworks, water transportation, and heating. Companies that pay the  
public utility excise tax do not pay the CAT.  
variance of  
$
14.4 million.  
The MCF tax is levied based on the quantity of natural gas  
distributed to end users in Ohio. Receipts from this tax were  
$
$
61.8 million in FY 2017, $4.2 million (6.4%) below estimate, but  
1.1 million (1.8%) more than in FY 2016.  
FY 2017 receipts from the kilowatt-hour tax that were retained by  
the GRF were $347.4 million, $15.2 million (4.6%) above estimate, and  
$
9.4 million (2.8%) higher than FY 2016 receipts. Total FY 2017 kilowatt-  
hour tax collections (revenues on an all-funds basis), net of refunds, were  
9 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.  
Budget Footnotes  
12  
July 2017  
Ohio Legislative Service Commission  
$
539.2 million, $11.9 million (2.3%) higher than total collections in FY 2016.  
The growth was primarily due to higher than expected sales of electricity.  
For accounting purposes, half of the share of GRF total tax revenue that is  
transferred to the Public Library Fund (PLF) is debited against this tax  
source. The other half is debited against the nonauto sales and use tax.  
Foreign and Domestic Insurance Taxes  
GRF foreign insurance tax receipts (paid by insurance companies  
whose headquarters are located outside of Ohio) were $301.5 million in  
FY 2017, about the same as the estimate, and $8.0 million (2.7%) above  
receipts in FY 2016. GRF domestic insurance tax receipts (paid by  
insurance companies whose headquarters are in Ohio) were $268.6 million  
in FY 2017, $9.4 million (3.4%) below estimate, and $10.3 million (4.0%)  
above the prior fiscal year receipts. Growth in revenue from the domestic  
tax in FY 2017 was due to larger premiums paid to domestic health  
insuring corporations related to Medicaid managed care and slightly  
smaller tax credits claimed by domestic insurers than were claimed in  
FY 2016.  
Financial Institutions and Corporate Franchise Taxes  
After good performances in FY 2016 in which the FIT and the CFT  
were $17.6 million and $33.3 million above estimates, both taxes reversed  
course in FY 2017. GRF receipts from the FIT this fiscal year totaled  
The FIT was  
$
187.3 million, $35.7 million (16.0%) below estimate and $26.1 million  
$
35.7 million  
(
12.2%) below receipts in FY 2016. The FIT did not perform well in  
below estimate  
in FY 2017.  
FY 2017 due primarily to increased tax credit claims against the tax. Also,  
though GRF receipts were not anticipated from the CFT in FY 2017  
(because H.B. 510 of the 129th General Assembly eliminated the tax at the  
end of 2013), adjustments to tax filings in previous years continue to affect  
GRF revenue, and this year resulted in net refunds to taxpayers of  
$
1.2 million.  
Alcoholic Beverage and Liquor Gallonage Taxes  
Combined revenue from the alcoholic beverage and liquor  
gallonage taxes was $103.7 million in FY 2017, 3.7% more than was  
projected by OBM and an increase of 4.1% from FY 2016. Growth was led  
by sales of wine and mixed beverages which brought in $13.2 million of  
revenue, 9.7% more than in FY 2016. Sales of beer and malt beverages  
netted $44.0 million of tax revenue in FY 2017, 3.8% more than in FY 2016.  
Finally, revenue from the liquor gallonage tax was $46.5 million in  
FY 2017, 2.9% higher than one year ago.  
July 2017  
13  
Budget Footnotes  
Ohio Legislative Service Commission  
Over the last decade, the share of combined revenue coming from  
the liquor gallonage tax rose from 37.8% in FY 2007 to 44.8% in FY 2017.  
The share of revenue coming from wine and mixed beverages increased  
more modestly during that time, while the share from beer and malt  
beverages decreased.  
Earnings on Investments  
In FY 2017, GRF earnings on investments of $48.7 million were  
$
13.7 million (39.2%) above estimate and $13.6 million (38.6%) above  
FY 2016 earnings. Earnings on investments grew due to an increase in the  
amount of available state cash for investment and slightly higher interest  
rates in FY 2017 than in FY 2016.  
Budget Footnotes  
14  
July 2017  
Ohio Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of June 2017  
(
$ in thousands)  
(
Actual based on OAKS reports run July 5, 2017)  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
Primary and Secondary Education  
Higher Education  
$358,935  
$330,341  
$28,594  
8.7%  
$180,625  
$2,969  
$183,456  
$3,518  
-$2,832  
-$549  
-1.5%  
-15.6%  
4.9%  
Other Education  
Total Education  
$542,529  
$517,315  
$25,213  
Medicaid  
$1,330,263  
$37,355  
$1,408,788  
$46,702  
-$78,525  
-$9,347  
-5.6%  
-20.0%  
-6.0%  
Health and Human Services  
Total Welfare and Human Services  
$1,367,618  
$1,455,490  
-$87,872  
Justice and Public Protection  
General Government  
$147,587  
$26,784  
$153,966  
$27,911  
-$6,379  
-$1,127  
-$7,506  
-4.1%  
-4.0%  
-4.1%  
Total Government Operations  
$174,370  
$181,877  
Property Tax Reimbursements  
Debt Service  
$39,943  
$30,910  
$70,853  
$32,798  
$55,309  
$88,107  
$7,145  
-$24,399  
-$17,254  
21.8%  
-44.1%  
-19.6%  
Total Other Expenditures  
Total Program Expenditures  
$2,155,370  
$2,242,789  
-$87,419  
-3.9%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$0  
$8,398  
$8,398  
$0  
$100,000  
$100,000  
$0  
-$91,602  
-$91,602  
---  
-91.6%  
-91.6%  
TOTAL GRF USES  
$2,163,768  
$2,342,789  
-$179,021  
-7.6%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
July 2017  
15  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2017 as of June 30, 2017  
(
$ in thousands)  
(
Actual based on OAKS reports run July 5, 2017)  
Percent  
Change  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
FY 2016  
Primary and Secondary Education  
Higher Education  
$7,873,632  
$2,294,785  
$72,235  
$7,913,147  
-$39,515  
-0.5%  
-0.6%  
-4.3%  
-0.5%  
$7,555,949  
$2,222,774  
$68,153  
4.2%  
$2,307,632  
$75,504  
-$12,847  
-$3,269  
3.2%  
6.0%  
4.0%  
Other Education  
Total Education  
$10,240,652  
$10,296,284  
-$55,632  
$9,846,875  
Medicaid  
$17,437,354  
$1,289,584  
$18,726,938  
$18,537,250  
$1,371,423  
$19,908,672  
-$1,099,896  
-$81,839  
-5.9%  
-6.0%  
-5.9%  
$16,995,860  
$1,283,641  
$18,279,501  
2.6%  
0.5%  
2.4%  
Health and Human Services  
Total Welfare and Human Services  
-$1,181,734  
Justice and Public Protection  
General Government  
$2,052,750  
$370,266  
$2,095,599  
$394,809  
-$42,849  
-$24,543  
-$67,392  
-2.0%  
-6.2%  
-2.7%  
$1,983,765  
$362,353  
3.5%  
2.2%  
3.3%  
Total Government Operations  
$2,423,016  
$2,490,409  
$2,346,118  
Property Tax Reimbursements  
Debt Service  
$1,790,260  
$1,322,657  
$3,112,917  
$1,822,100  
$1,376,147  
$3,198,247  
-$31,840  
-$53,491  
-$85,330  
-1.7%  
-3.9%  
-2.7%  
$1,786,704  
$1,333,866  
$3,120,570  
0.2%  
-0.8%  
-0.2%  
Total Other Expenditures  
Total Program Expenditures  
$34,503,523  
$35,893,612  
-$1,390,089  
-3.9%  
$33,593,065  
2.7%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$29,483  
$281,290  
$310,772  
$29,483  
$388,393  
$417,875  
$0  
-$107,103  
-$107,103  
0.0%  
-27.6%  
-25.6%  
$425,500  
$430,331  
$855,831  
-93.1%  
-34.6%  
-63.7%  
TOTAL GRF USES  
$34,814,295  
$36,311,487  
-$1,497,192  
-4.1%  
$34,448,896  
1.1%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
16  
July 2017  
Ohio Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on July 3, 2017)  
Month of June 2017  
Fiscal Year 2017  
Estimate* Variance  
Department  
Medicaid  
Actual  
Estimate*  
Variance  
-$62,622  
Percent  
Actual  
Percent  
$1,873,133  
$1,278,711  
$594,422  
$1,935,754  
$1,372,044  
$563,710  
-3.2%  
-6.8%  
5.4%  
$22,799,456 $24,196,992 -$1,397,536  
-5.8%  
-6.0%  
-5.1%  
GRF  
-$93,333  
$30,711  
$16,802,611 $17,879,506 -$1,076,894  
Non-GRF  
$5,996,845  
$6,317,487  
-$320,642  
Developmental Disabilities  
$193,250  
$42,314  
$212,029  
$31,120  
-$18,778  
$11,194  
-$29,973  
-8.9%  
36.0%  
-16.6%  
$2,488,146  
$552,509  
$2,635,170  
$552,343  
-$147,024  
$166  
-5.6%  
0.0%  
-7.1%  
GRF  
Non-GRF  
$150,936  
$180,909  
$1,935,637  
$2,082,827  
-$147,190  
Job and Family Services  
$20,059  
$8,582  
$19,779  
$5,035  
$280  
$3,547  
-$3,267  
1.4%  
70.4%  
-22.2%  
$220,930  
$72,920  
$240,849  
$96,685  
-$19,920  
-8.3%  
GRF  
-$23,764 -24.6%  
Non-GRF  
$11,477  
$14,744  
$148,009  
$144,165  
$3,845  
2.7%  
Health  
GRF  
$3,736  
$368  
$3,403  
$307  
$333  
$60  
9.8%  
19.6%  
8.8%  
$27,492  
$3,907  
$26,449  
$3,305  
$1,043  
$601  
3.9%  
18.2%  
1.9%  
Non-GRF  
$3,369  
$3,096  
$273  
$23,585  
$23,144  
$442  
Aging  
$459  
$288  
$171  
$514  
$282  
$232  
-$55  
$6  
-10.6%  
2.3%  
$6,808  
$3,656  
$3,153  
$7,306  
$3,661  
$3,645  
-$497  
-6.8%  
GRF  
-$5  
-0.1%  
Non-GRF  
-$61  
-26.3%  
-$492 -13.5%  
Mental Health and Addiction  
$1,358  
$0  
$171  
$0  
$1,187 694.9%  
$0 ---  
$1,187 694.9%  
$7,224  
$1,750  
$5,473  
$4,342  
$1,750  
$2,592  
$2,882  
66.4%  
GRF  
$0  
0.0%  
Non-GRF  
$1,358  
$171  
$2,882 111.2%  
Total GRF  
$1,330,263  
$761,732  
$1,408,788  
$762,861  
-$78,525  
-$1,129  
-5.6%  
-0.1%  
$17,437,354 $18,537,250 -$1,099,896  
$8,112,702 $8,573,859 -$461,157  
$25,550,056 $27,111,109 -$1,561,053  
-5.9%  
-5.4%  
Total Non-GRF  
Total All Funds  
$2,091,995  
$2,171,649  
-$79,654  
-3.7%  
-5.8%  
*Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
July 2017  
17  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 6: All-Funds Medicaid Expenditures by Payment Category  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on July 3, 2017)  
June  
Fiscal Year 2017  
Estimate* Variance  
$10,204,958 $10,989,397  
Payment Category  
Managed Care  
Nursing Facilities  
DDD Services  
Hospitals  
Actual  
Estimate*  
$931,883  
$125,081  
$201,403  
$83,937  
$98,127  
$96,577  
$26,860  
$34,236  
$41,603  
$14,998  
$29,468  
$13,646  
$400,372  
$73,459  
Variance  
-$30,031  
$2,278  
Percent  
-3.2%  
1.8%  
Actual  
Percent  
-7.1%  
4.1%  
$901,851  
$127,359  
$182,147  
$75,978  
$72,816  
$101,755  
$28,880  
$18,840  
$99,743  
$7,382  
-$784,438  
$59,946  
$1,529,801  
$2,407,335  
$2,112,596  
$1,147,031  
$934,983  
$349,702  
$369,223  
$606,614  
$161,108  
$418,595  
$121,421  
$4,164,159  
$1,022,529  
$1,469,855  
$2,547,158  
$2,328,576  
$1,232,019  
$1,076,058  
$352,005  
$446,150  
$478,695  
$201,715  
$341,617  
$172,684  
$4,533,913  
$941,266  
-$19,256  
-$7,959  
-$25,310  
$5,179  
-9.6%  
-9.5%  
-25.8%  
5.4%  
-$139,823  
-$215,980  
-$84,988  
-5.5%  
-9.3%  
-6.9%  
Behavioral Health  
Administration  
Aging Waivers  
Prescription Drugs  
Medicare Buy-In  
Physicians  
-$141,075 -13.1%  
-$2,303 -0.7%  
-$76,927 -17.2%  
$127,919 26.7%  
-$40,607 -20.1%  
$76,978 22.5%  
-$51,263 -29.7%  
$2,020  
7.5%  
-$15,397  
$58,141  
-$7,615  
$11,318  
-$6,477  
-$50,010  
$3,467  
-45.0%  
139.8%  
-50.8%  
38.4%  
-47.5%  
-12.5%  
4.7%  
Medicare Part D  
Home Care Waivers  
ACA - Managed Care  
All Other  
$40,786  
$7,169  
$350,362  
$76,926  
-$369,754  
$81,263  
-8.2%  
8.6%  
-5.8%  
Total All Funds  
$2,091,995 $2,171,649  
-$79,654  
-3.7%  
$25,550,056 $27,111,109 -$1,561,053  
*
Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
18  
July 2017  
Ohio Legislative Service Commission  
EXPENDITURES  
Russ Keller, Senior Economist, 614-644-1751  
Nicholas J. Blaine, Budget Analyst, 614-387-5418  
Overview  
GRF program expenditures totaled $34.50 billion in FY 2017,  
1.39 billion below the estimate released by OBM in August 2016 and FY 2017 GRF  
$
$
January 2017. Although all program categories were below the August  
estimates for the fiscal year, Medicaid's negative variance of $1.10 billion  
was by far the main driver of the variance, representing 79.1% of the total.  
565.1 million below the updated estimate released by OBM in  
Medicaid  
expenditures  
were  
1
0
$1.10 billion  
Program expenditures constitute the majority of GRF uses, but GRF  
uses also include transfers out. FY 2017 GRF transfers out were below OBM's  
$
310.8 million, $107.1 million below estimate. Most of this negative  
August 2016  
estimate.  
variance was due to a planned transfer of $100.0 million into the Public  
School Building Fund (Fund 7021) scheduled for June that did not occur.  
Including both program expenditures and transfers out, FY 2017 GRF uses  
Including  
totaled $34.81 billion, $1.50 billion (4.1%) below OBM's August 2016 Medicaid, GRF  
estimate. Tables 3 and 4 show GRF uses for the month of June and for  
FY 2017, respectively.  
program  
expenditures  
as a whole  
were  
Other than Medicaid, five program categories registered negative  
variances in excess of $30 million: Health and Human Services  
(
(
$81.8 million), Debt Service ($53.5 million), Justice and Public Protection  
$42.8 million), Primary and Secondary Education ($39.5 million), and $1.39 billion  
Property Tax Reimbursements ($31.8 million). These negative variances  
will be briefly discussed below.  
below the  
annual  
In addition, state agencies encumbered $388.5 million in GRF  
appropriations for expenditure in FY 2018. The Encumbrances section of  
this report provides additional information on FY 2017 year-end  
encumbrances.  
estimate.  
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  
1
0
OBM revised FY 2017 disbursement estimates downward from  
35.89 billion to $35.07 billion as part of its executive budget submission on  
$
January 30, 2017. However, the variance analyses for this Expenditures report  
continue to be based on those compiled by OBM in August 2016.  
July 2017  
19  
Budget Footnotes  
Ohio Legislative Service Commission  
recent years, the federal government reimburses about two-thirds of  
Ohio's all-funds Medicaid expenditures.  
Table 5 shows GRF and non-GRF Medicaid expenditures for the  
Ohio Department of Medicaid (ODM) and ODM's five "sister" agencies –  
Developmental Disabilities, Job and Family Services, Health, Aging, and  
Mental Health and Addiction Services. FY 2017 GRF Medicaid  
expenditures were $1.10 billion (5.9%) below estimate while non-GRF  
Medicaid expenditures were $461.2 million (5.4%) below estimate.  
Including both GRF and non-GRF, Medicaid expenditures totaled  
FY 2017 all-  
funds Medicaid  
expenditures  
were  
$
25.55 billion in FY 2017, $1.56 billion (5.8%) below OBM's August 2016  
estimate.  
Table 6 details all-funds Medicaid expenditures by payment  
$
1.56 billion  
below OBM's  
August 2016  
estimate.  
category. As seen from the table, year-to-date expenditures from ten of  
the 14 payment categories were below estimates. Managed Care and  
ACA Managed Care are the largest payment categories and have the  
largest negative variances at $784.4 million and $369.8 million,  
respectively. Together, they account for close to 74% 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 Medicare Buy-In payment category had the largest positive  
FY 2017 variance at $127.9 million. 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.  
Health and Human Services  
Spending in the Health and Human Services category totaled  
$
1.29 billion in FY 2017, $81.8 million below the estimates made in  
August 2016. Over half of this variance ($47.8 million) was incurred by  
the Department of Job and Family Services (ODJFS). Spending from most  
of ODJFS's GRF appropriation items was below estimate. The largest  
variances were in items 600416, Information Technology Projects  
(
(
$9.7 million), 600445, Unemployment Insurance Administration  
$7.3 million), 600321, Program Support ($6.7 million), and 600523,  
Children and Families Subsidy ($5.7 million). Two other agencies with  
Budget Footnotes  
20  
July 2017  
Ohio Legislative Service Commission  
smaller, but significant negative variances were the Department of Mental  
Health and Addiction Services and the Department of Health, with  
FY 2017 variances of $16.6 million and $12.1 million, respectively.  
Debt Service  
The Debt Service program category had a FY 2017 negative  
variance of $53.5 million. About 45% of that variance ($24.4 million)  
occurred in June in the Ohio Facilities Construction Commission (OFCC)  
appropriation item 230908, Common Schools General Obligation Debt  
Service, which pays service on general obligation debt issued to fund  
projects overseen by the School Facilities Commission. OFCC's negative  
debt service variance for the year was $25.5 million. Two other agencies  
with significant negative FY 2017 variances in this category were the  
Public Works Commission and the Department of Higher Education  
(
below OBM's August 2016 estimate.  
DHE), which ended the year $11.9 million and $11.5 million, respectively,  
Other Program Categories  
The Justice and Public Protection program category ended the year  
below estimate by $42.8 million. About 63% of this variance was from two  
appropriation items in the Department of Rehabilitation and Correction's  
budget each of which had variances of about $13.5 million. The first, item  
5
01321, Institutional Operations, started the year with available  
appropriations of $1.03 billion, almost half of the appropriations available  
in the entire program category. This item funds the operations of the  
state's prisons. The second, item 505321, Institution Medical Services,  
funds the provision of medical services to inmates.  
Although the Primary and Secondary Education program category  
was above estimate for much of the fiscal year and had a positive variance  
of $28.6 million in June, it ended the year with a negative variance of  
$
2
39.5 million. Three line items accounted for most of this variance. Item  
00408, Early Childhood Education, which provides funding to support  
education provided to low-income four-year-olds, was below estimate by  
$
Foundation Funding, which both fund the state's primary financial  
support to public schools, were below estimate by $11.2 million and  
11.8 million. Also, items 200502, Pupil Transportation, and 200550,  
$
6.4 million, respectively.  
Finally, the Property Tax Reimbursements category was below  
estimate for the year by $31.8 million. This category provides funding to  
local governments to reimburse them for the homestead exemption and  
for rollbacks on levies approved prior to 2014. Reimbursements to school  
July 2017  
21  
Budget Footnotes  
Ohio Legislative Service Commission  
districts were below estimate for the year by $14.4 million and to other  
local governments by $17.5 million.  
Encumbrances  
As of June 30, 2017, state agencies encumbered a total of  
$
388.5 million in GRF appropriations for expenditure in FY 2018. An  
agency generally has five months to spend prior-year encumbrances for  
operating expenses, after which time they will lapse. An agency may  
encumber funds for purposes other than operating expenses beyond the  
five-month period, if approval is obtained from the Director of Budget  
and Management. Encumbrances for some grant and aid payments are  
encumbered for several months or sometimes years.  
Outstanding  
GRF  
The table below summarizes the encumbrances by the fiscal year  
of the original appropriation. As seen from the table, the majority of the  
encumbrances were originally appropriated in FY 2017. However, small  
encumbrances remain from as early as FY 2007.  
encumbrances  
totaled  
$
388.5 million  
at the end of  
FY 2017.  
FY 2017 Year-End Encumbrances by Fiscal Year for Which  
Appropriations Were Originally Made  
Fiscal Year  
007-2010  
Amount (in thousands)  
Percentage of Total  
2
$490  
$802  
0.1%  
0.2%  
2
2
2
2
2
2
2
011  
012  
013  
014  
015  
016  
017  
$162  
0.0%  
$600  
0.2%  
$478  
0.1%  
$1,449  
$21,798  
$362,722  
$388,500  
0.4%  
5.6%  
93.4%  
100.0%  
Total  
The encumbrance amounts vary greatly from agency to agency.  
As shown in the following table, the Ohio Department of Education  
(ODE) has the largest encumbrance amount at $121.9 million, 31.4% of  
the total. The next five agencies with the largest encumbrances are ODJFS  
at $64.3 million (16.5% of the total), the Department of Rehabilitation and  
Correction (DRC) at $45.0 million (11.6%), DHE at $30.1 million (7.8%),  
ODM at $30.1 million (7.7%), and the Development Services Agency  
(DSA) at $23.3 million (6.0%). Forty-one other agencies encumbered the  
remaining $73.8 million (19.0%).  
Budget Footnotes  
22  
July 2017  
Ohio Legislative Service Commission  
FY 2017 Year-End Encumbrances by Agency  
Agency  
Amount (in thousands)  
$121,858  
$64,295  
Percentage of Total  
Education  
31.4%  
16.5%  
11.6%  
7.8%  
Job and Family Services  
Rehabilitation and Correction  
Higher Education  
Medicaid  
$44,997  
$30,130  
$30,077  
7.7%  
Development Services  
All Other Agencies  
Total  
$23,346  
6.0%  
$73,797  
19.0%  
100.0%  
$388,500  
Ohio Department of Education  
ODE encumbered $121.9 million for expenditure in FY 2018. Three  
appropriation items with significant encumbrances are: (1) item 200550,  
Foundation Funding, at $58.3 million, (2) item 200437, Student  
Assessment, at $25.5 million, and (3) item 200408, Early Childhood  
Education, at $19.0 million. These three items' encumbrances account for  
Education  
accounted for  
$
102.8 million (84.4%) of the total. The remaining $19.0 million was 31.4% of the  
encumbered in various other items.  
total year-end  
GRF  
Funds encumbered in item 200550 will be used mainly to meet  
year-end school foundation payment adjustments. Foundation payments  
are allocated to districts based on a variety of data. Some of these data are  
not finalized until the following fiscal year. Funds are generally  
encumbered each year in order to make adjusted payments based on these  
updated data.  
encumbrances.  
Funds encumbered in item 200437 will be used to pay contractors  
for scoring the state's standardized tests and other bills not yet received  
from vendors. Funds encumbered in item 200408 will mainly be used to  
pay providers who provide early childhood education services to children  
from lower income families.  
Ohio Department of Job and Family Services  
ODJFS encumbered a total of $64.3 million for expenditure in  
FY 2018. The encumbrances in six appropriation items account for  
$
53.3 million (83.0%) of the total. These six items are: (1) item 655523,  
Medicaid Program Support Local Transportation ($13.7 million), (2) item  
00416, Information Technology Projects ($11.6 million), (3) item 655522,  
6
Medicaid Program Support Local ($11.5 million), (4) item 600533, Child,  
Family, and Community Protective Services ($6.0 million), (5) item 600321,  
Program Support ($5.4 million), and (6) item 600445, Unemployment  
Insurance Administration ($5.1 million).  
July 2017  
23  
Budget Footnotes  
Ohio Legislative Service Commission  
Funds encumbered in items 655523 and 655522 will mainly be  
used for the remaining state share of Medicaid subsidies to county  
departments of job and family services. Item 655523 pays the state's share  
of Medicaid costs for local transportation services and item 655522 pays  
the state's share of Medicaid costs for local administrative services.  
Funds encumbered in item 600416 will be used mainly for the  
development, implementation, and maintenance of information  
technology systems used by ODJFS. Funds encumbered in items 600533  
will be used primarily to provide funding to county agencies for child  
protective services. The encumbrances in 600321 are mainly for contracts  
with vendors to provide administrative support for the Food Assistance  
Program. Finally, the encumbrances in 600445 are for administration of  
the unemployment compensation system in Ohio.  
Job and Family  
Services  
accounted for  
1
6.5% of the  
total year-end  
GRF  
encumbrances.  
Department of Rehabilitation and Correction  
DRC encumbered $45.0 million for expenditure in FY 2018, of  
which $28.3 million occurred in item 501321, Institutional Operations,  
and another $12.7 million in item 505321, Institution Medical Services.  
Funds were encumbered in item 501321 for a mix of purchased personal  
services, supplies, maintenance, repairs, equipment, materials, and other  
minor expenditures at DRC and institutions. Funds encumbered in item  
5
05321 will be used to pay various outstanding bills for providing  
medical services to inmates.  
Department of Higher Education  
DHE encumbered $30.1 million for expenditure in FY 2018. The  
majority ($22.7 million) of the total was encumbered in item 235438,  
Choose Ohio First Scholarship, to pay the state's obligations to  
scholarship recipients. Another $2.3 million was encumbered in item  
2
35563, Ohio College Opportunity Grant; these funds will be used for  
need‐based financial aid.  
Ohio Department of Medicaid  
ODM encumbered a total of $30.1 million for expenditure in  
FY 2018, including $22.0 million in item 651425, Medicaid Program  
Support State, and $8.1 million in item 651525, Medicaid/Health Care  
Services. Funds encumbered in item 651425 will be used mainly to pay  
ODM's outstanding personal services and contract expenses for  
administering the Medicaid program in Ohio. Item 651525 is the primary  
funding source for Ohio Medicaid. Funds encumbered in this item will  
be used for subsidy payments to Medicaid providers.  
Budget Footnotes  
24  
July 2017  
Ohio Legislative Service Commission  
Development Services Agency  
DSA encumbered $23.3 million for expenditure in FY 2018. These  
encumbrances are largely attributable to various economic development  
incentive grants that have been awarded but not yet disbursed. Many of  
DSA's grant programs are operated on a reimbursement basis, whereby  
grant recipients do not receive money from the state until a project has  
been completed or certain conditions have been met. For example, a  
grantee may be awarded grants in FY 2017 but not receive them until  
FY 2018 or later.  
Appropriation item 195453, Technology Programs and Grants, had  
the largest encumbrance at $12.2 million. These funds will be used to fund  
technology awards for small businesses and other entities. Item 195455,  
Appalachia Assistance, has the next largest encumbrance of $6.3 million.  
These encumbered funds will be used to provide financial assistance to  
projects in Ohio's Appalachian counties. In addition to these items, several  
other items within the DSA budget had smaller encumbrances.  
July 2017  
25  
Budget Footnotes  
Ohio Legislative Service Commission  
ISSUE UPDATES  
FY 2017 Operating and Capital Expenditures Total $68.27 billion  
Melaney Carter, Assistant Deputy Director, 614-466-6274  
In FY 2017, the state of Ohio incurred a total of $68.27 billion in operating and  
capital expenditures. As seen from Table A, $62.86 billion (92.1%) of the total  
expenditures were authorized in the main operating budget. The transportation and  
capital budgets accounted for $3.92 billion (5.7%) and $1.16 billion (1.7%), respectively,  
of the total. The remaining $329.7 million (0.5%) was authorized in the Bureau of  
Workers' Compensation and Industrial Commission budgets.  
Table A. FY 2017 Operating and Capital Expenditures by Budget  
Budget  
Main Operating  
Amount  
% of Total  
92.1%  
5.7%  
$62,863,755,633  
$3,920,417,746  
$1,159,429,127  
$329,701,851  
Transportation  
Capital  
1.7%  
Workers' Compensation System  
0.5%  
Total  
$68,273,304,356  
100.0%  
Table B shows FY 2017 expenditures by the account category used in the state's  
accounting system. As seen from Table B, Subsidies and Shared Revenue is the largest  
spending area. In FY 2017, 87.7% ($30.26 billion) of total GRF expenditures were  
distributed as subsidies to Medicaid service providers, schools, colleges and  
universities, local governments, and various other entities. Across all funds, this  
category's expenditures totaled $46.02 billion (67.4%). The vast majority of the  
expenditures incurred under the Capital Item category $3.61 billion (5.3%) across all  
funds supported the construction and maintenance of roads and bridges in the state as  
well as the construction and renovation of public K-12 schools and colleges and  
universities. Capital Item expenditures are mainly funded by bond proceeds. FY 2017  
debt service payments totaled $332.7 million (0.9%) for the GRF and $1.65 billion (2.4%)  
across all funds.  
For FY 2017, state payroll costs (including both salaries and fringe benefits)  
amounted to $4.54 billion across all funds, of which $1.97 billion was supported by the  
GRF. In addition to Payroll, what commonly is referred to as the state government's  
operating expenses also include expenditures incurred under the Purchased Personal  
Services and Other, Supplies and Maintenance, and Equipment categories. For FY 2017,  
the state government's operating expenses totaled $7.90 billion across all funds, of  
Budget Footnotes  
26  
July 2017  
Ohio Legislative Service Commission  
which $2.90 billion came from the GRF. In percentage terms, these amounts represent  
1
1.6% and 8.4% of the respective totals.  
Table B. FY 2017 Operating and Capital Expenditures by Account Category  
Account Category  
GRF Only  
$1,971,403,113  
$460,960,448  
$444,841,473  
$19,468,748  
$30,256,444,634  
$0  
% of Total  
5.7%  
All Funds  
$4,542,659,155  
$1,497,343,839  
$1,668,371,125  
$188,663,584  
$46,022,654,686  
$96,414,757  
% of Total  
6.7%  
5
5
5
5
5
5
5
5
5
5
00 - Payroll  
10 - Purchased Personal Services & Other  
20 - Supplies and Maintenance  
30 - Equipment  
1.3%  
2.2%  
1.3%  
2.4%  
0.1%  
0.3%  
50 - Subsidies and Shared Revenue  
60 - Goods and Services for Resale  
70 - Capital Items  
87.7%  
0.0%  
67.4%  
0.1%  
$63,991  
0.0%  
$3,610,235,941  
$36,492,378  
5.3%  
90 - Judgments, Settlements, & Bonds  
91 - Debt Service  
$10,854,221  
$322,729,144  
$1,016,757,277  
$34,503,523,048  
0.0%  
0.1%  
0.9%  
$1,653,467,400  
$8,957,001,492  
$68,273,304,356  
2.4%  
95 - Transfers & Non-expense  
2.9%  
13.1%  
100.0%  
Total  
100.0%  
State Board of Education Awards 345 High School Diplomas  
in Second Year of Adult Diploma Program  
Jason Glover, Budget Analyst, 614-466-8742  
This spring, the State Board of Education awarded 345 high school diplomas to  
adults who participated in the second year of the Adult Diploma Program, 267 more  
than the 78 graduates in the program's first year. The program is designed to provide  
adults, ages 22 and older, with education to earn a high school diploma and skills  
training needed for a job in one of 20 in-demand career fields. Each participant worked  
with an advisor to create a customized plan that aligned with the student's career goals.  
The plans were competency-based, allowing the student to work at their own pace to  
master the necessary skills for the career they sought. Upon completion of the program,  
the participants also earned an industry-recognized credential or certificate.  
Twenty-eight Ohio technical centers and community colleges across the state delivered  
programming to 850 students participating in the second year of the program.  
H.B. 64 appropriated $5.0 million in FY 2017 for the program in GRF line  
item 200572, Adult Diploma, in the Ohio Department of Education's budget. Payments  
to participating institutions for each student enrolled in an approved program of study  
are calculated according to a formula providing certain tiers of funding based on the  
number of hours of technical training required in the student's career pathway training  
program and the student's grade level upon initial enrollment into the program.  
July 2017  
27  
Budget Footnotes  
Ohio Legislative Service Commission  
DHE Awards $1.7 Million in Ohio Means Internships and Co-ops (OMIC)  
Awards to Six Institutions of Higher Education  
Edward M. Millane, Senior Budget Analyst, 614-995-9991  
In May, the Department of Higher Education (DHE) awarded approximately  
1.7 million under the Ohio Means Internships and Co-ops (OMIC) program to six  
$
public and private institutions of higher education. These six institutions collaborate  
with businesses and other educational institutions, such as Ohio Technical Centers  
(OTCs), to provide paid and credited internships to students and to encourage students  
to stay in Ohio after graduation. Institutions receiving awards are required to match  
with private funds at least 100% or 150% of the state award for undergraduate and  
graduate student placements, respectively. In FY 2017, the six institutions each received  
an award of $285,833.  
The lead college or university receiving the award in each region and a brief  
description of each project are listed below.  
Central Ohio Region (Ohio State University). Funds will allow the Central Ohio  
Lightweight Innovations for Tomorrow (LIFT) Workforce and Education  
Working Group to create internships in the advanced manufacturing sector and  
leverage Robotics and Advanced Manufacturing Training (RAMTEC) and  
Regionally Aligned Priorities in Delivering Skills (RAPIDS) investments  
matching postsecondary curriculum to industry needs.  
Northeast Region (Stark State College). Funds will be used by participating  
institutions to support programs that will assist small- and medium- sized  
businesses, an employability skills toolkit, and regional marketing tools for  
internships.  
Northwest Region (Bowling Green State University). Funds will allow  
participating institutions to focus on community or regional campus strategies to  
support internship credit transfer from community colleges to four-year  
institutions and to pilot internship business recruitment programs to target the  
regional insurance industry.  
Southeast Region (Southern State Community College). Funds will focus on  
strengthening the partnerships between local, in-demand industries and  
participating institutions targeting a wide range of majors to attract students,  
especially first-generation students, to those industries.  
Southwest Region (University of Cincinnati). Funds will be used to support  
development of the Innovation Corridor and to recruit first-generation and  
nontraditional students into opportunities in advanced manufacturing,  
aerospace engineering, consumer products, and brand development.  
Budget Footnotes  
28  
July 2017  
Ohio Legislative Service Commission  
Western Region (University of Dayton). Institutions in this region will focus on  
recruiting small businesses into the OMIC program through conducting small  
industry-education partner meetings to develop and promote work-based  
learning.  
Department of Agriculture Announces New Nutrient Management Tools  
Shannon Pleiman, Budget Analyst, 614-466-1154  
On May 17, 2017, the Ohio Department of Agriculture (AGR) announced two  
new nutrient management tools, the Ohio Applicator Forecast and the Ohio Agriculture  
Stewardship Program. The new tools are geared towards farmers and nutrient  
applicators with the goal of improving water quality by reducing nutrient runoff.  
The Ohio Applicator Forecast takes snow accumulation, soil moisture content,  
and forecast precipitation and temperatures data provided by the National Weather  
Service into account when predicting potential runoff, giving farmers additional  
information when they are making nutrient application decisions. AGR's Division of  
Plant Health will oversee the forecast map. The Division is partially funded by license  
fees collected from dealers and applicators that are deposited into the Pesticide,  
Fertilizer, and Lime Program Fund (Fund 6690).  
The Ohio Agricultural Stewardship Verification Program is designed to protect  
water quality in watersheds in the northwest area of the state. The soil and water  
conservation districts (SWCDs) in Henry and Wood counties will oversee this pilot  
program. To participate, farmers must develop nutrient management plans, maintain  
accurate soil tests, and follow best management practices that meet criteria set by AGR's  
Division of Soil and Water Conservation. State support for SWCDs comes from a  
combination of GRF and a portion of money generated by solid waste, construction and  
demolition debris, and scrap tire fees that is deposited into the Soil and Water Districts  
Assistance Fund (Fund 5BV0).  
Both nutrient management tools are an outgrowth of water quality initiatives  
under AGR's Fertilizer Applicator Certification Program established by S.B. 150 of the  
1
30th General Assembly. Under the requirements of this law, farmers that apply  
fertilizer other than manure to more than 50 acres must attend a fertilization training  
class offered by Ohio State University Extension and pay a $30 fertilizer applicator  
certification fee. Farmers and commercial fertilizer applicators must be certified by  
September 2017 and recertify every three years.  
July 2017  
29  
Budget Footnotes  
Ohio Legislative Service Commission  
Department of Natural Resources Announces that More Than 21,000 Wild  
Turkeys Harvested During the Spring Hunting Season  
Tom Wert, Budget Analyst (614) 466-0520  
On May 30, 2017, the Department of Natural Resources (DNR) released harvest  
totals for Ohio's spring wild turkey hunting season. Overall, hunters checked in more  
than 21,000 wild turkeys statewide, about 18.0% more than the spring 2016 harvest of  
nearly 17,800 birds. Tuscarawas County had the highest number of wild turkeys  
harvested (674), followed by Coshocton County (649) and Ashtabula County (648). The  
remaining top ten counties included Muskingum (612), Monroe (592), Gurnsey (564),  
Harrison (550), Washington (544), Meigs (533), and Belmont (532).  
Wild turkeys were extirpated from Ohio by 1904 due to settlement, deforestation,  
and unregulated hunting. In the 1950s, wild turkeys were reintroduced by DNR's  
Division of Wildlife, and in 1966 the first modern day hunting seasons opened in nine  
counties. A 2013 population survey estimated the total number of wild turkeys in Ohio  
to be approximately 180,000. Today, male birds, called Toms or gobblers, can be hunted  
during the spring season in all 88 Ohio counties. DNR's wild turkey management  
programs are supported by the Wildlife Fund (Fund 7015), consisting primarily of  
revenues from the sale of hunting and fishing licenses and permits, as well as grants  
from the U.S. Fish and Wildlife Service awarded to the state based on land area and the  
number of hunting and fishing licenses sold each year. As of June 21, 2017, FY 2017  
revenue deposited into Fund 7015 totaled more than $52.2 million.  
Criminal Justice Services Awards $5.4 Million in Ohio Drug Law  
Enforcement Fund Grants  
Jessica Murphy, Budget Analyst, 614-466-9108  
In May 2017, the Office of Criminal Justice Services (OCJS) awarded $5.4 million  
in Ohio Drug Law Enforcement Fund grants to 40 drug task forces across the state  
affiliated with a mix of counties (32), cities (6), and townships (2). The individual  
awards range from $9,736 up to $250,000. The grants help defray costs a drug task force  
organization incurs enforcing the state's drug and illegal drug activity laws. One of the  
goals is to reduce the impact of drug traffickers, pharmaceutical diversion, and other  
organized criminal activity on Ohio communities through multi-jurisdictional  
collaboration.  
Each recipient is required to provide a local match of at least 25% of the task  
force's total project operating costs in the time period covered by the grant. The grant  
money is distributed from the Drug Law Enforcement Fund (Fund 5ET0), which  
receives its revenue from $3.40 of the $10 court fee that is required to be assessed for all  
offenders who are convicted of, or plead guilty to, a moving traffic violation. The  
Budget Footnotes  
30  
July 2017  
Ohio Legislative Service Commission  
following table shows those counties with one or more drug task force organizations  
that received awards for the 12-month grant period beginning July 1, 2017, the number  
of project awards per county, and the total amount of funding received.  
Ohio Drug Law Enforcement Fund Grant Awards by County* (Total: $5,367,601)  
County  
Award  
$146,144  
$58,388  
County  
Hamilton (3)  
Hardin  
Award  
$468,523  
$11,159  
$14,236  
$105,603  
$108,625  
$239,730  
$12,287  
$232,048  
$44,647  
$204,892  
$165,392  
$9,736  
County  
Montgomery  
Ottawa  
Award  
$64,061  
$97,765  
$21,731  
$250,000  
$197,814  
$13,520  
$249,419  
$250,000  
$207,571  
$23,221  
$192,854  
$135,525  
Allen  
Auglaize  
Brown  
$12,204  
Jefferson  
Lake  
Portage  
Richland  
Ross  
Butler  
$41,576  
Clermont  
Columbiana  
Cuyahoga (3)  
Defiance  
Delaware  
Fairfield  
$178,324  
$132,075  
$531,520  
$180,567  
$156,108  
$200,502  
$250,000  
$159,834  
Lawrence  
Licking  
Sandusky  
Stark  
Logan  
Lorain  
Summit  
Lucas  
Trumbull  
Tuscarawas  
Warren  
Mahoning  
Medina  
Franklin  
Greene  
Monroe  
Wayne  
*Unless otherwise noted, the awarded amount will be used by one drug task force located in each of the listed counties.  
In the case of Cuyahoga and Hamilton counties, the awarded amount is the total amount of funding received by three  
separate drug task forces located in each of those counties.  
ODM Reports Savings of $2.4 Million Each Month From MyCare Ohio  
Wendy Risner, Fiscal Supervisor, 614-644-9098  
On April 25, 2017, the Ohio Department of Medicaid (ODM) released the third  
annual "MyCare Ohio Progress Report," which found that the program saved  
approximately $2.4 million per month during calendar years 2015 and 2016. This is  
largely due to the efforts of MyCare Ohio managed care plans to divert individuals  
from nursing facilities to home and community-based settings. On average, for each  
individual diverted, the program saves $2,800 per month. In addition to these savings,  
the capitation rates for MyCare Ohio participants decreased 6.8% from January 2015 to  
December 2016. During this same time period, average costs for traditional Medicaid  
fee-for-service participants have remained stable. The report also provides information  
regarding the timeliness of provider payments and participant satisfaction survey  
results. Overall, the report found that timeliness of payments and participant  
satisfaction have both improved over the three years that the program has been in  
1
1
operation.  
11 The report in its entirety can be accessed here: Medicaid Reports Page.  
July 2017  
31  
Budget Footnotes  
Ohio Legislative Service Commission  
MyCare Ohio is a five-year demonstration project that began operations in  
May 2014. ODM administers the program in partnership with the federal Centers for  
Medicare and Medicaid Services. Five MyCare Ohio managed care plans coordinate  
benefits for individuals that are eligible for both Medicare and Medicaid. The goal of  
the program is to improve access to care and quality of care, eliminate cost shifting  
between the two programs, and achieve cost savings through care coordination. The  
program covers 29 counties, including major metropolitan areas. Eligible individuals  
are those that are 18 and older, are Medicaid and Medicare eligible, and live in a  
participating county. As of April 2017, there were approximately 107,000 MyCare Ohio  
participants.  
Medicaid Awards $727,000 for Nursing Facility LifeBio Pilot Study  
Nicholas J. Blaine, Budget Analyst, 614-387-5418  
On April 15, 2017, the Ohio Department of Medicaid (ODM) awarded the Ohio  
State University College of Medicine, Government Resource Center a $727,000 grant to  
support the LifeBio Pilot Study. The study will include 830 nursing facility residents  
and examine the benefits of a Person-Centered Care approach that helps facility staff to  
better know residents. The project will use volunteers to complete "About Me"  
interviews with residents to develop a "Life Story Summary" to be shared with direct  
care staff, including family information, schools attended, work, notable life events,  
hobbies, interests, personal accomplishments, and care-related preferences. The study  
will evaluate the impact of LifeBio intervention on residents and include sustainability  
recommendations to continue the project beyond the Pilot Study's conclusion on  
December 31, 2018.  
The grant is funded with civil monetary penalties (CMP) from fines paid by  
nursing facilities that do not meet federal health and safety standards. States have  
discretion to use CMP funds for projects to improve resident outcomes in Medicare and  
Medicaid certified nursing facilities. ODM awards funds for quality improvement  
projects that are likely to produce results that may be used to benefit all Ohio nursing  
facility residents, result in sustainable improvement in residents' lives, use a data-  
driven approach to quality improvement, and incorporate research based  
methodologies. Including the LifeBio Pilot Study, ODM currently supports eight CMP  
1
2
grants.  
1
2
More information on CMP grants can be found on ODM's website:  
http://www.medicaid.ohio.gov/RESOURCES/CMPGrantProjects.aspx.  
Budget Footnotes  
32  
July 2017  
Ohio Legislative Service Commission  
Ohio EPA Awards $4.3 Million in Recycling and Litter Prevention Grants  
Robert Meeker, Budget Analyst, 614-466-3839  
In April 2017, the Ohio Environmental Protection Agency announced the award  
of 49 competitive grants totaling $4.3 million to support recycling and litter prevention  
projects across the state. The total includes awards to communities, local governments,  
businesses, and nonprofit organizations from four distinct grant programs (see table  
below). The purpose of the grant programs, which are funded with a mix of money  
generated by fees on the disposal of construction and demolition debris and the sale of  
new tires, can briefly be summarized as follows:  
Market Development: purchase equipment and build infrastructure to  
develop markets for recyclable materials and related products.  
Community Development: support and expand community collection and  
processing of recyclable materials and litter prevention.  
Scrap Tire Grants: create infrastructure necessary for successful markets of  
scrap tire materials and related products.  
Litter Management Grants: fund community litter cleanup and tire  
1
3
amnesty collection activities.  
Individual awards range from a $2,000 Litter Management grant to Highland  
County Recycling and Litter Prevention to Scrap Tire grants of $350,000 to each of Full  
Circle Technologies (Lorain County) and Willig Tire Recycling (Crawford County).  
Ohio EPA Recycling and Litter Prevention Grants by Program  
Grant Program  
Market Development  
Number of Awards  
Range of Awards  
Awards Total  
9
$5,700 to $250,000  
$1,663,374  
Community Development  
Scrap Tire  
10  
4
$34,400 to $250,000  
$98,000 to $350,000  
$2,000 to $38,000  
$2,000 to $350,000  
$1,320,930  
$998,000  
$325,960  
$4,308,264  
Litter Management  
26  
49  
TOTAL  
13 Tire amnesty refers to opportunities for residents to dispose of scrap tires with a  
political subdivision at no charge to the resident.  
July 2017  
33  
Budget Footnotes  
Ohio Legislative Service Commission  
TRACKING THE ECONOMY  
Thomas Kilbane, Economist, 614-728-3218  
Overview  
The economy continued to expand through this year's second  
quarter. Inflation-adjusted gross domestic product (real GDP) growth in  
the first quarter was revised upward again. Employment increased in  
June, but wage growth remains at a slowed pace from 2016. Consumer  
spending increased through May, however, motor vehicle sales slowed  
in June. Seasonally adjusted consumer prices decreased in May for the  
second time in the last three months, but the Federal Reserve still  
increased its target for short-term interest rates at the close of its  
June 13-14 meeting.  
The United  
States added  
2
22,000 jobs in  
June.  
Ohio employment expanded in May as well, though the state  
unemployment rate (4.9% in May) remains stuck at a higher level than  
the nation (4.3% in May, 4.4% in June). Ohio homes continue to sell at a  
rapid pace despite a low inventory of existing homes for sale.  
The National Economy  
Employment and Unemployment  
The U.S. added 222,000 jobs14 in June, and previously reported  
employment increases during April and May were revised higher by a  
combined 47,000. All put together, the average monthly employment  
increase in 2017 is now 180,000, not far from the 187,000 averaged during  
2
016. June continued an extraordinary streak of 81 straight months with  
employment gains. Begun in October 2010, the streak is the longest in  
records kept since 1939.  
14 Nonfarm payroll, seasonally adjusted.  
Budget Footnotes  
34  
July 2017  
Ohio Legislative Service Commission  
Chart 6: Unemployment Rate and Monthly Employment Change  
1
1
1
0
9
8
7
6
5
4
3
600  
500  
400  
300  
200  
100  
0
Growth in  
(100)  
(200)  
earnings has  
slowed in 2017  
averaging a  
2
010  
2011  
2012  
2013  
2014  
2015  
2016  
2017  
Nonfarm Payroll Employment Change (right scale)  
Unemployment Rate  
2
.1% increase  
Average hourly earnings15 increased again in June as well, up to (annual rate),  
26.25. The pace of growth in earnings has slowed a bit in 2017 however,  
$
compared to  
averaging a monthly increase of 2.1% (annual rate), compared to an  
increase of 2.9% during 2016. The current pace of earnings growth is  
below historical rates at this point in the business cycle, providing one  
piece of evidence that there may still be more slack in the labor market  
than is indicated by the unemployment rate (up just a tick to 4.4% in  
June). By historical standards of a mature labor market, rates of  
2
2
.9% during  
016.  
1
6
underemployment  
remain high, while rates of labor market  
1
7
participation remain well below past peaks.  
Monetary Policy and Financial Markets  
As was widely expected, the Federal Open Market Committee18  
announced a quarter-point increase to its short-term interest rate target at  
15 Private, nonfarm employees.  
1
6
One measure of underemployment is the number of workers who  
would prefer to work full time but are only employed part time for economic  
reasons.  
1
7
The labor market participation rate, defined as the percentage of  
civilians age 16 and over who are either currently employed or unemployed but  
looked for work in the last four weeks, was 62.8% in June and has been around  
that level since the beginning of 2014.  
18 The Federal Open Market Committee is the policy-setting body within  
the Federal Reserve.  
July 2017  
35  
Budget Footnotes  
Ohio Legislative Service Commission  
the close of its June 13-14 meeting. After the increase, the federal funds  
1
9
rate target is now between 1% and 1.25%. It was the second increase of  
the target range this year and the median projection of committee  
participants was for a third quarter-point increase of the range before the  
end of 2017.  
Broad measures of U.S. equity stock markets increased again  
during the second quarter of 2017. The S&P 500 Index closed 2.6% higher  
on June 30 than it opened on April 1, and was up 13.7% during the nearly  
eight months since the presidential election. However, there are also  
signs of growing hesitancy among investors, such as a flattening yield  
curve20 and rising prices for investments typically thought of as safe  
2
1
havens during a market decline.  
Inflation  
Seasonally adjusted consumer prices decreased in May for the  
second time in the last three months. The decline was driven by a fall in  
the sales price of gasoline, by 6.4% on a seasonally adjusted basis during  
the month, according to the Bureau of Labor Statistics' consumer price  
index. However, year-over-year growth in core consumer prices, or those  
which exclude energy and food, continued to move further from the  
Federal Reserve's target in May. These prices increased 1.4% over the last  
Seasonally  
adjusted  
consumer  
prices  
decreased in  
May for the  
second time in  
the last three  
months.  
1
2 months according to the Bureau of Economic Analysis' price index of  
personal consumption expenditures. That was down from 1.8% in  
January and February, the highest peak since 2012.  
A broad index of prices received by producers of goods and  
services to meet final demand was approximately the same in May as in  
April, on a seasonally adjusted basis. Prices received for services were  
higher during the month, while prices received for goods were sharply  
lower. Over the last 12 months though, price levels increased for both  
categories by over 2.0%.  
1
9
The federal funds rate is the rate at which banks loan overnight  
deposits to each other, typically to meet reserve requirements.  
20 The yield curve refers to the difference in yield between similar fixed-  
income securities of differing maturity dates. The yield curve tends to be  
upward-sloping (yields increase for maturity dates further in the future). A  
flattening curve indicates an increasing relative preference for longer-term  
bonds, which normally implies skepticism of further economic expansion.  
21 "  
Markets' Calm Unnerves Investors." Wall Street Journal, June 27, 2017.  
Budget Footnotes  
36  
July 2017  
Ohio Legislative Service Commission  
Real Estate  
Low nationwide inventory of homes for sale continues to push up  
prices. The inventory of existing homes for sale increased in each month  
of 2017 through May, but remained 8.4% below one year ago, according to  
data from the National Association of Realtors. Meanwhile, the median  
sales price of existing homes in May was 5.8% higher year-over-year. May  
sales of existing homes nationwide were greater than one year ago, but  
the Midwest lagged the other regions. New home sales in the region, as  
well as housing construction starts, both declined during the 12-month  
period. Housing starts were down nationwide in May, but year-to-date  
remained up 3.2% from the same period in 2016.  
Production  
Real GDP growth in the first quarter of 2017 was not as slow as  
first reported. Originally reported at a 0.7% annual pace of growth, it was  
revised upward upon a second and third estimate, now reported at 1.4%.  
With this upward revision, growth in the four quarters ended in the first  
quarter of 2017 was the fastest four-quarter real GDP growth (2.1%) since  
the period ended with the third quarter of 2015. Estimates of 2017 second  
Real GDP  
growth in the  
first quarter of  
2
017 was  
quarter growth from the Federal Reserve Banks of Atlanta and New York revised upward  
2
2
are 2.7% and 1.9%, respectively. The Bureau of Economic Analysis will  
release the first official advance estimate for the second quarter on July 28.  
to a 1.4%  
annual rate.  
The Federal Reserve's measure of manufacturing production has  
been volatile in recent months, but production through the first  
five months of 2017 was estimated to have increased 0.7% from  
December, seasonally adjusted. Overall industrial production during the  
same period was up 1.2%, boosted by a 7.7% rise in mining.  
Consumer Spending  
Real (price-adjusted) consumer spending increased slightly in May,  
the third straight month of growth. Over the past 12 months, spending  
grew 2.7%, with the fastest growth concentrated in durable goods. Recent  
spending growth has been supported by rising disposable income which  
increased at a 4.4% annual rate (with price and seasonal adjustments) in  
the four months ended in May. The prior four-month period, October  
through January, real disposable income decreased at a 0.4% annual rate.  
22 Estimates are as of July 6, and at annual rates of growth.  
July 2017  
37  
Budget Footnotes  
Ohio Legislative Service Commission  
Nationwide unit sales of light vehicles dipped in June to its  
slowest monthly pace since October 2014. During the interim, 2015 and  
016 both set records for annual unit sales, led in large part by soaring  
Nationwide  
2
unit sales of  
light vehicles  
dipped in June  
to its slowest  
monthly pace  
since October  
demand for light trucks. Sales of light trucks have remained at  
historically elevated levels in 2017, while the slowdown is almost entirely  
due to car sales (see chart below).  
Chart 7: Light Motor Vehicle Unit Sales (Monthly)  
1
1
2.0  
0.0  
2014.  
8
6
4
2
0
.0  
.0  
.0  
.0  
.0  
2
010  
2011  
2012  
2013  
Cars  
2014  
2015  
2016  
2017  
Light Trucks  
The Ohio Economy  
Labor Market  
Total nonfarm payroll employment in Ohio increased by 6,300  
jobs in May, after decreases in each of March and April. Overall during  
2
017, employment continues to grow but at a slower pace. Average  
monthly net job gain during the first five months of 2017 was 2,300, while  
the average was 4,100 throughout the whole of 2016.  
The chart below illustrates the pace of year-over-year job growth  
in Ohio and the U.S. since the beginning of 2005. Job growth has been  
sustained for an unusually long period, but has slowed since 2015. Ohio's  
year-over-year job growth dropped to its lowest level since 2010 in April,  
before bouncing back modestly in May.  
Budget Footnotes  
38  
July 2017  
Ohio Legislative Service Commission  
Chart 8: 12-Month Nonfarm Employment Change  
3
2
1
0
.0%  
.0%  
.0%  
.0%  
Total nonfarm  
payroll  
-1.0%  
-2.0%  
-3.0%  
-4.0%  
-5.0%  
-6.0%  
-7.0%  
employment in  
Ohio increased  
by 6,300 jobs in  
May, after  
decreases in  
2
005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017  
Ohio United States  
each of March  
and April.  
Among private industry sectors in May, professional and business  
services (+7,000) and education and health services (+6,500) gained the  
most jobs, while leisure and hospitality (-6,000) lost the most. Arts,  
entertainment, and recreation, a subset of the leisure and hospitality  
sector, has lost jobs at the fastest pace over the last 12 months, down 4.1%.  
The unemployment rate in Ohio dropped to 4.9% in May. The rate  
has been in the range between 4.9% and 5.1% since December of 2015,  
remaining fairly steady even as employment increased in part because of  
labor force growth. According to the Bureau of Labor Statistics, Ohio's  
labor force has increased over the last 12 months by more than in any  
other 12-month period since 1992.  
State Personal Income  
Ohio's personal income grew 1.0% (annual rate of 4.2%) from the  
fourth quarter of 2016 to the first quarter of 2017, an increased pace of  
growth from the two quarters prior. The first quarter growth rate ranked  
2
7th among the states. The majority of the income growth came from net  
earnings (mostly made up of wages and salaries), which grew more than  
twice as fast in Ohio as dividends, interest, and rent during the quarter.  
Home Sales  
The number of Ohio homes sold in May was the highest ever for the  
month according to data kept since 1998 by the Ohio Association of  
Realtors (OAR). Average sales price for the year through May was 6.0%  
higher than the same period in 2016. In its monthly market report, OAR  
expressed hope that the high sales activity and price growth would draw  
more sellers into the market since inventory has been disappointingly low.  
July 2017  
39  
Budget Footnotes