Budget Footnotes  
A NEWSLETTER OF THE OHIO LEGISLATIVE SERVICE COMMISSION  
DECEMBER 2017  
VOLUME 41, NUMBER 4  
STATUS OF THE GRF  
STATUS OF THE GRF  
Highlights...................................1  
Revenues ..................................2  
Expenditures............................12  
HIGHLIGHTS  
Ross Miller, Chief Economist, 614-644-7768  
ISSUE UPDATES  
Payroll employment in Ohio grew by 59,400 jobs from  
October 2016 to October 2017. Ohio's unemployment rate Regional Judicial Opioid  
Initiative ................................22  
Controlling Board Approved  
decreased to 5.1% in October still higher than the national  
rate of 4.1% that month, but fairly low by historical  
standards. Other recent economic data indicate that  
economic growth continues, both nationally and in Ohio.  
Medicaid Funding Request...22  
Take Charge Ohio ...................23  
Grants to Veterans Groups......24  
All A and Momentum Awards  
for Schools and Districts.......25  
School Facilities Projects in  
FY 2017................................25  
Outdoor Recreation Facility  
Grants...................................26  
November and year-to-date GRF tax revenue slightly  
exceeded the estimate released by the Office of Budget and  
Management (OBM) in September, continuing a trend in  
recent months, and GRF spending was below estimate Community Development  
Block Grant Set-Aside  
Programs..............................27  
through November.  
Through November 2017, GRF sources totaled  
13.30 billion:  
TRACKING THE ECONOMY  
$
The National Economy ............29  
The Ohio Economy..................30  
Revenue from the personal income tax was  
28.1 million above estimate;  
$
Sales and use tax receipts were $24.6 million above  
estimate.  
Through November 2017, GRF uses totaled $14.27 billion:  
Program expenditures were $220.2 million below  
estimate during the first five months of FY 2018;  
Legislative Service Commission  
All program expenditure categories were below  
estimate except primary and secondary education  
and property tax reimbursements which were  
above estimates by $19.5 million and $10.1 million,  
respectively, primarily due to timing.  
7
7 South High Street, 9th Floor  
Columbus, Ohio 43215  
Telephone: 614-466-3615  
AVAILABLE ON OUR WEBSITE: WWW.LSC.OHIO.GOV  
CLICK ON 'BUDGET CENTRAL/BUDGET FOOTNOTES'  
Ohio Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of November 2017  
(
$ in thousands)  
(
Actual based on report run in OAKS Actuals Ledger on December 1, 2017)  
STATE SOURCES  
TAX REVENUE  
Actual  
Estimate*  
Variance  
Percent  
Auto Sales  
Nonauto Sales and Use  
Total Sales and Use Taxes  
$102,674  
$710,799  
$813,473  
$100,100  
$696,200  
$796,300  
$2,574  
$14,599  
$17,173  
2.6%  
2.1%  
2.2%  
Personal Income  
Commercial Activity Tax  
Cigarette  
$652,410  
$302,794  
$82,663  
$26,661  
-$6,277  
$0  
-$12,741  
$23,377  
$4,818  
$5,619  
$3,880  
$0  
$640,700  
$314,200  
$75,900  
$25,500  
$100  
$11,710  
-$11,406  
$6,763  
1.8%  
-3.6%  
8.9%  
4.6%  
Kilowatt-Hour Excise  
Foreign Insurance  
Domestic Insurance  
Financial Institution  
Public Utility  
Natural Gas Consumption (MCF)  
Alcoholic Beverage  
Liquor Gallonage  
Petroleum Activity Tax  
Corporate Franchise  
Business and Property  
Estate  
$1,161  
-$6,377 -6377.2%  
$0 ---  
-$13,841 -1258.3%  
$2,577  
$318  
$619  
-$20  
$0  
$0  
$1,100  
$20,800  
$4,500  
$5,000  
$3,900  
$0  
$0  
$0  
$0  
12.4%  
7.1%  
12.4%  
-0.5%  
---  
---  
---  
---  
$52  
$0  
$16  
$52  
$0  
$16  
Total Tax Revenue  
$1,896,745  
$1,888,000  
$8,745  
0.5%  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$21  
$463  
$2,145  
$2,629  
$0  
$620  
$2,020  
$2,640  
$21  
-$157  
$125  
-$11  
---  
-25.4%  
6.2%  
Total Nontax Revenue  
-0.4%  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$297  
$297  
$0  
$7,200  
$7,200  
$0  
-$6,903  
-$6,903  
---  
-95.9%  
-95.9%  
TOTAL STATE SOURCES  
Federal Grants  
$1,899,670  
$571,290  
$1,897,840  
$651,192  
$1,830  
-$79,902  
-$78,072  
0.1%  
-12.3%  
-3.1%  
TOTAL GRF SOURCES  
$2,470,960  
$2,549,032  
*Estimates of the Office of Budget and Management as of September 2017.  
Detail may not sum to total due to rounding.  
December 2017  
2
Budget Footnotes  
Ohio Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate  
FY 2018 as of November 30, 2017  
(
$ in thousands)  
(
Actual based on report run in OAKS Actuals Ledger on December 1, 2017)  
Percent  
Change  
STATE SOURCES  
TAX REVENUE  
Actual  
Estimate*  
Variance  
Percent  
FY 2017**  
Auto Sales  
Nonauto Sales and Use  
Total Sales and Use Taxes  
$593,892  
$3,595,514 $3,595,000  
$4,189,406 $4,164,800  
$569,800  
$24,092  
$514  
$24,606  
4.2%  
0.0% $3,777,244  
0.6% $4,359,546  
$582,302  
2.0%  
-4.8%  
-3.9%  
Personal Income  
Commercial Activity Tax  
Cigarette  
$3,360,191 $3,332,100  
$28,091  
$10,106  
$1,155  
-$10,714  
-$10,557  
-$2,937  
0.8% $3,207,096  
4.8%  
17.8%  
-2.6%  
-9.2%  
-10.0%  
17.5%  
$719,606  
$350,155  
$145,686  
$144,843  
$63  
-$23,075  
$53,719  
$16,708  
$25,178  
$20,088  
$1,570  
$709,500  
$349,000  
$156,400  
$155,400  
$3,000  
-$9,600  
$53,400  
$17,400  
$25,400  
$19,300  
$1,300  
$0  
1.4%  
0.3%  
-6.9%  
-6.8%  
-97.9%  
$610,656  
$359,411  
$160,438  
$160,973  
$53  
Kilowatt-Hour Excise  
Foreign Insurance  
Domestic Insurance  
Financial Institution  
Public Utility  
Natural Gas Consumption (MCF)  
Alcoholic Beverage  
Liquor Gallonage  
Petroleum Activity Tax  
Corporate Franchise  
Business and Property  
Estate  
-$13,475 -140.4%  
-$9,902 -133.0%  
$319  
-$692  
-$222  
$788  
0.6%  
-4.0%  
-0.9%  
4.1%  
20.8%  
---  
$47,387  
$16,439  
$25,542  
$19,400  
$1,542  
-$736  
13.4%  
1.6%  
-1.4%  
3.5%  
$270  
1.8%  
$2,892  
$2,892  
-$374  
$100  
493.0%  
44.8%  
-70.1%  
0.5%  
-$374  
$0  
---  
-$678  
$100  
$0  
---  
$334  
Total Tax Revenue  
$9,006,755 $8,977,400  
$29,355  
0.3% $8,957,502  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$15,818  
$8,617  
$29,968  
$54,404  
$15,000  
$10,185  
$57,890  
$83,075  
$818  
-$1,568  
-$27,922  
-$28,671  
5.5%  
-15.4%  
-48.2%  
-34.5%  
$14,194  
$11,343  
$51,047  
$76,583  
11.4%  
-24.0%  
-41.3%  
-29.0%  
Total Nontax Revenue  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$111,644  
$111,644  
$0  
$103,429  
$103,429  
$0  
$8,215  
$8,215  
---  
7.9%  
7.9%  
$0  
$15,309  
$15,309  
---  
629.3%  
629.3%  
TOTAL STATE SOURCES  
Federal Grants  
$9,172,802 $9,163,904  
$4,131,744 $4,216,996  
$13,304,546 $13,380,900  
$8,898  
-$85,252  
-$76,354  
0.1% $9,049,393  
-2.0% $4,952,292  
-0.6% $14,001,685  
1.4%  
-16.6%  
-5.0%  
TOTAL GRF SOURCES  
*Estimates of the Office of Budget and Management as of September 2017.  
**Cumulative totals through the same month in FY 2017.  
Detail may not sum to total due to rounding.  
December 2017  
3
Budget Footnotes  
Ohio Legislative Service Commission  
1
REVENUES  
Jean J. Botomogno, Principal Economist, 614-644-7758  
Overview  
Through October 2017, GRF sources were nearly on target,  
1.7 million above estimate. However, year-to-date GRF sources through Through  
$
November were below projections, the first time in FY 2018 that has been  
the case. GRF sources totaling $13.30 billion were $76.4 million (0.6%)  
below OBM's estimates published in September 2017. Positive variances of  
November in  
FY 2018, GRF  
sources were  
29.4 million for GRF tax sources and $8.2 million for transfers into the  
$
GRF partially offset negative variances of $85.3 million for federal grants $76.4 million  
and $28.7 million in nontax revenue. GRF taxes and federal grants are  
expected to make up about 68% and 30%, respectively, of anticipated GRF  
sources for FY 2018. The latter mainly consists of federal reimbursements  
for Medicaid expenditures made from state GRF moneys.  
below  
estimate.  
Tables 1 and 2 show GRF sources for November and for FY 2018  
through November, respectively. For the fiscal year to date, receipts from  
most major tax sources personal income tax (PIT), commercial activity  
tax (CAT), auto sales tax, and cigarette tax were above estimates; the  
nonauto sales and use tax, following a good performance in November,  
erased its cumulative negative variance of the first four months of  
FY 2018.  
In November, total GRF sources of $2.47 billion were $78.1 million  
below estimate, from shortfalls of $79.9 million in federal grants and  
Through  
November,  
$
6.9 million in transfers in. Those negative variances were partially offset  
by a positive variance of $8.7 million for tax sources. The sales and use tax, GRF tax  
the PIT, and the cigarette tax exceeded estimates by $17.2 million,  
sources  
$
and the kilowatt-hour tax were above estimates by $2.6 million and  
$
11.7 million, and $6.8 million, respectively. Also, the public utility tax  
remained in  
positive  
1.2 million. On the other hand, the second payment for calendar quarter  
CAT taxpayers, which was due in November, fell short of estimates by territory.  
11.4 million. The financial institutions tax (FIT) was another source with  
$
a negative revenue variance: net refunds from the FIT totaled $12.7 million  
when net revenue of $1.1 million was expected, thus creating a deficit of  
1 This report compares actual monthly and year-to-date GRF revenue  
sources to OBM's estimates. If actual receipts were higher than estimate, that  
GRF source is deemed to have a positive variance. Alternatively, a GRF source is  
deemed to have a negative variance if actual receipts were lower than estimate.  
December 2017  
4
Budget Footnotes  
Ohio Legislative Service Commission  
$
13.8 million for this tax source.2 In addition, the foreign insurance tax had  
a monthly shortfall of $6.4 million.  
For the fiscal year to date, the following taxes were above estimates:  
the PIT ($28.1 million), the sales and use tax ($24.6 million), the CAT  
($10.1 million), the corporate franchise tax ($2.9 million), and the cigarette  
tax ($1.2 million). These positive variances were partially offset by a  
negative variance of $13.5 million for the FIT and shortfalls of  
$
10.7 million for the kilowatt-hour tax, $10.6 million for the foreign  
insurance tax, and $2.9 million for the domestic insurance tax. The  
remaining taxes had smaller variances. The chart below illustrates the  
cumulative performance of total GRF sources in the fiscal year.  
Chart 1: Cumulative Variances of GRF Sources in FY 2018  
(
Variance from Estimates, in millions)  
$
100  
$
$
$
$
80  
60  
40  
20  
$
0
Jul-17  
Aug-17  
Sep-17  
Oct-17  
Nov-17  
-$20  
-$40  
-$60  
-$80  
-$100  
Federal Grants  
Tax Revenue  
Total GRF Sources  
Through  
November,  
federal grants  
to the GRF  
were  
Year-to-date GRF sources were $697.1 million (5.0%) below GRF  
sources through November in FY 2017. Decreases of $820.5 million (16.6%)  
in federal grants and $22.2 million (29.0%) in nontax revenue were  
partially offset by increases in transfers in ($96.3 million, 629.3%) and tax  
receipts ($49.3 million, 0.5%).  
$820.5 million  
Regarding federal grants in the GRF, they will decline from FY 2017  
as an important source of Medicaid funding has shifted from the GRF to a  
dedicated purpose fund. For tax sources, revenue grew for the PIT  
less than in  
FY 2017.  
(
$153.1 million, 4.8%) and the CAT ($109.0 million, 17.8%). On the other  
2 The GRF typically pays out refunds under the FIT during the first half of  
a fiscal year as taxpayers make adjustments to previous tax filings. Receipts of  
the FIT are typically expected at the end of January, March, and May.  
December 2017  
5
Budget Footnotes  
Ohio Legislative Service Commission  
hand, revenue declined for the sales and use tax ($170.1 million, 3.9%),  
the foreign insurance tax ($16.1 million, 10.0%), the kilowatt-hour tax  
(
(
$14.8 million, 9.2%), the FIT ($13.2 million, 133.0%), and the cigarette tax  
$9.3 million, 2.6%). The revenue increase for the PIT is due, in large part,  
to continued growth in payroll employment and wages. The increase in  
CAT receipts was due in part to an increase in the share of CAT revenue  
allocated to the GRF enacted in H.B. 49, the budget act for the current  
biennium, while the decline in sales tax revenue resulted from a policy  
change that decreased the nonauto sales and use tax base, as explained in  
the following section. The decrease in FIT receipts is due to increased  
refunds this fiscal year relative to FY 2017.  
Through  
November in  
FY 2018, the  
sales and use  
tax was above  
estimates by  
Sales and Use Tax  
Through November in FY 2018, total GRF sales and use tax receipts  
of $4.19 billion were $24.6 million (0.6%) above estimate, but  
$
170.1 million (3.9%) below receipts in the corresponding period last year.  
$
24.6 million.  
Revenue from the auto sales tax generally has been more than expected  
throughout the fiscal year. The nonauto portion of the tax, which had been  
generally weaker than expected, improved last month. For November,  
sales and use tax revenue totaled $813.5 million, $17.2 million (2.2%)  
above estimates, with both the auto and nonauto sales taxes surpassing  
expected revenues.  
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 tax  
instead of the auto tax.3  
Through  
November in  
FY 2018, the  
nonauto sales  
Nonauto Sales and Use Tax  
The performance of the nonauto sales and use tax continues to be and use tax  
uneven in FY 2018. A large shortfall in July was followed by consecutive  
positive variances in August and September. In October, the tax was short  
of anticipated revenues. GRF revenue of $710.8 million in November was  
was on target  
relative to  
estimate.  
14.6 million (2.1%) above estimate, more than enough to erase a fiscal  
$
year shortfall of $14.1 million through October. Compared to revenue in  
3 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.  
December 2017  
6
Budget Footnotes  
Ohio Legislative Service Commission  
November 2016, nonauto sales and use tax revenue decreased  
30.9 million (4.2%). For the fiscal year through November, GRF receipts  
from this tax totaling $3.60 billion were on target relative to estimate, but  
181.7 million (4.8%) below revenue in the corresponding period in  
$
$
FY 2017, due to a change in law that reduced the taxable base. Starting  
July 1, 2017, H.B. 49 replaced the sales tax on Medicaid health insuring  
corporations (MHICs) with a provider assessment on both Medicaid and  
non-Medicaid managed care companies, with proceeds deposited in a  
non-GRF fund. Sales tax revenue attributable to MHICs had grown to be a  
sufficiently large portion of nonauto sales tax revenue overall by FY 2017,  
that negative growth in revenue from this tax source is generally expected  
this year when compared to the corresponding month in FY 2017.  
Monthly revenue growth on a year-ago basis, after adjusting for the  
decrease in the tax base described above, has improved in the latest  
4
months, as shown in Chart 2 below.  
Chart 2: Nonauto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
5
4
4
3
3
2
2
1
1
0
0
.0%  
.5%  
.0%  
.5%  
.0%  
.5%  
.0%  
.5%  
.0%  
.5%  
.0%  
Through  
November in  
FY 2018, the  
auto sales and  
use tax was  
Auto Sales and Use Tax  
$
24.1 million  
Excluding a negative variance in July 2017, the auto portion of the  
sales and use tax has been above expectations in subsequent months. In  
November, GRF revenue from the auto sales tax of $102.7 million was  
above estimate by $2.6 million (2.6%). This result increased the year-to-  
above  
estimate.  
4 Please note that to adjust for changes to the existing tax base, this chart  
excludes monthly revenue from MHICs starting in August 2016 in FY 2017 so  
that changes in nonauto sales and use tax revenue are on a comparable basis.  
December 2017  
7
Budget Footnotes  
Ohio Legislative Service Commission  
date positive variance for this source to $24.1 million (4.2%), up from  
21.5 million through October. Cumulative revenue of $593.9 million over  
$
the five months was $11.6 million (2.0%) above revenue in the  
corresponding period in FY 2017. Chart 3 provides year-over-year growth  
in auto sales tax collections in 2017.  
At a seasonally adjusted annualized rate of 17.4 million units,  
November U.S. light vehicle sales slowed from the pace set in the prior  
two months, when high sales numbers from post-hurricanes Irma and  
Harvey replacement vehicle demand provided a temporary boost to sales.  
Monthly sales were below sales in November 2016, resuming a persistent  
trend from earlier in the year. Incentive spending remained high in  
November and light-truck models continue to sell well as they comprised  
more than 62% of the month's total sales for the seventh consecutive  
month. The average price of light trucks is higher than the average price of  
automobiles, so the high share of light-truck models in unit sales supports  
tax revenue.  
Chart 3: Auto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
8
6
4
2
0
.0%  
.0%  
.0%  
.0%  
.0%  
PIT GRF  
revenue was  
$
28.1 million  
above  
estimate in  
FY 2018  
Personal Income Tax  
November GRF PIT revenue of $652.4 million was above estimate  
by $11.7 million (1.8%), raising the year-to-date positive variance for this through  
tax source to $28.1 million (0.8%), up from $16.4 million through  
November.  
October 2017. For the year to date, total PIT GRF revenue of $3.36 billion  
was $153.1 million (4.8%) above revenue in FY 2017 through November.  
December 2017  
8
Budget Footnotes  
Ohio Legislative Service Commission  
PIT revenue is comprised of gross collections, minus refunds and  
distributions to the Local Government Fund (LGF). Gross collections  
5
consist of employer withholdings, quarterly estimated payments, trust  
payments, payments associated with annual returns, and other  
miscellaneous payments. The performance of the tax is typically driven by  
employer withholdings, which is the largest component of gross  
collections, and to a lesser extent, the amount of refunds to taxpayers. For  
November 2017, employer withholding, miscellaneous payments, and  
quarterly estimated payments were above projections by $33.5 million,  
Revenue  
growth from  
monthly  
$
5.0 million, and $0.7 million, respectively. However, for the second  
consecutive month, refunds exceeded estimates, this time by $27.3 million.  
employer  
(In October refunds were higher than expected by $24.9 million.)  
PIT trends in the earlier months of FY 2018 continued: all components withholding  
of gross collections exceeded estimates through November with the  
exception of annual return payments. Also, year-to-date refunds were  
larger than anticipated in the first five months of the fiscal year. FY 2018  
revenues from each component of the PIT relative to estimates and to  
revenue received in FY 2017 are detailed in the table below.  
appears to be  
on the  
upswing.  
FY 2018 Personal Income Tax Revenue  
Estimate Variances and Year-over-Year Changes by Component  
Variance  
Changes  
from Estimate  
from FY 2017  
Category  
Amount  
Percentage  
Amount  
Percentage  
(
$ in millions)  
(%)  
($ in millions)  
(%)  
Withholding  
$59.1  
$7.2  
1.7%  
3.5%  
$169.2  
$13.3  
$1.8  
5.1%  
6.6%  
Quarterly Estimated Payments  
Trust Payments  
$2.2  
21.9%  
-14.6%  
70.2%  
1.9%  
17.0%  
-14.6%  
75.4%  
5.2%  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
-$11.4  
$15.1  
$72.2  
$43.0  
$1.1  
-$11.4  
$15.7  
$188.6  
$33.6  
$1.9  
Less Refunds  
16.5%  
0.7%  
12.5%  
1.2%  
Less LGF Distribution  
GRF PIT Revenue  
$28.1  
0.8%  
$153.1  
4.8%  
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.  
December 2017  
9
Budget Footnotes  
Ohio Legislative Service Commission  
Compared to corresponding receipts in FY 2017 through November,  
receipts from employer withholding, quarterly estimated payments, and  
miscellaneous payments were higher in FY 2018, but payments with annual  
returns were below such payments last year. Refunds were also higher than  
in the corresponding period in FY 2017. The chart below illustrates the growth  
of monthly employer withholdings on a three-month moving average relative  
to one year ago. It shows revenue growth from employer withholding, which  
was negative for the month of September, rose in the latest months.  
Chart 4: Monthly Withholding Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
8
7
6
5
4
3
2
1
0
%
%
%
%
%
%
%
%
%
Commercial Activity Tax  
Despite subpar results this month, the CAT was still above estimate  
for the fiscal year at the end of November 2017. The second payment for FY 2018 CAT  
calendar quarter taxpayers was due in November, and it provided  
GRF tax  
302.8 million in GRF revenue, an amount $11.4 million (3.6%) below  
receipts  
$
estimate. This performance reduced the year-to-date positive variance of  
this tax to $10.1 million (1.4%) in the first five months, down from  
through  
$
21.5 million through October.  
November  
FY 2018 CAT receipts to the GRF of $719.6 million were were  
$
109.0 million (17.8%) above receipts in FY 2017 through November 2016.  
$
10.1 million  
Excluding the change in allocation in H.B. 49, growth in GRF CAT  
revenue would have been about 4.0%. The increase in CAT gross  
collections in the first five months, relative to the corresponding period in  
FY 2017, was nearly 6.0%. However, increases in CAT refunds reduced  
that growth rate by about two percentage points.  
above  
estimate.  
H.B. 49 increased the share of CAT revenue credited to the GRF  
from 75% to 85% beginning July 1, 2017; and decreased the shares  
December 2017  
10  
Budget Footnotes  
Ohio Legislative Service Commission  
allocated to reimburse school districts from 20% to 13% (Fund 7047), and  
to other local taxing units from 5% to 2% (Fund 7081) for their loss of  
tangible personal property tax revenues. While the allocation change  
increases the amount of CAT receipts directly credited to the GRF, it  
reduces "excess" CAT receipts that are transferred back to the GRF. Under  
continuing law, CAT receipts deposited into Fund 7081 and Fund 7047 are  
used to make reimbursement payments to school districts and other local  
taxing units, respectively, for the phase-out of property taxes on general  
business tangible personal property. Any receipts in excess of amounts  
needed for such payments are transferred back to the GRF. In other  
words, the CAT allocation change has no net effect on its total  
contribution to the GRF.  
Cigarette and Other Tobacco Products Tax  
Through November in FY 2018, GRF cigarette and other tobacco  
products tax revenue of $350.2 million was $1.2 million (0.3%) above  
estimate. November GRF revenue of $82.7 million from this tax was  
FY 2018  
$
6.8 million (8.9%) above estimate. This performance only partially  
cigarette tax  
receipts were  
reversed a negative variance of $7.4 million in the month of October, but  
returned collections from this tax to positive territory for the fiscal year  
through November. Monthly revenue was also $2.5 million (3.2%) above  
revenue in November 2016. The year-to-date revenue of $350.2 million  
$
1.2 million  
above  
included $320.6 million and $29.6 million, respectively, from sales of estimate  
cigarettes and sales of other tobacco products. FY 2018 revenue was  
through  
9.3 million (2.6%) below collections in the corresponding period in  
November.  
$
FY 2017. Receipts from cigarette sales fell $12.6 million while those from  
other tobacco products grew $3.3 million. Revenue from the cigarette and  
other tobacco products tax usually trends downward, generally at a slow  
pace.  
December 2017  
11  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of November 2017  
(
$ in thousands)  
(
Actual based on OAKS reports run December 1, 2017)  
PROGRAM  
Actual  
Estimate* Variance Percent  
Primary and Secondary Education  
Higher Education  
$679,915 $636,683 $43,232  
6.8%  
3.3%  
$210,418 $203,611  
$3,754 $3,289  
$894,087 $843,583 $50,503  
$6,806  
Other Education  
$465 14.1%  
6.0%  
Total Education  
Medicaid  
$828,384 $949,851 -$121,467 -12.8%  
$97,309 $107,586 -$10,277 -9.6%  
$925,692 $1,057,437 -$131,745 -12.5%  
Health and Human Services  
Total Welfare and Human Services  
Justice and Public Protection  
General Government  
$151,647 $152,456  
$30,318 $30,895  
$181,964 $183,351  
-$810 -0.5%  
-$577 -1.9%  
-$1,387 -0.8%  
Total Government Operations  
Property Tax Reimbursements  
Debt Service  
$93,841 $111,152 -$17,311 -15.6%  
$22,681 $22,681 -$1 0.0%  
Total Other Expenditures  
$116,522 $133,833 -$17,312 -12.9%  
Total Program Expenditures  
TRANSFERS  
$2,118,265 $2,218,205 -$99,940 -4.5%  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$0  
$10,364  
$10,364  
$0  
$0  
---  
---  
---  
$0 $10,364  
$0 $10,364  
TOTAL GRF USES  
$2,128,629 $2,218,205 -$89,576 -4.0%  
*September 2017 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
December 2017  
12  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2018 as of November 30, 2017  
(
$ in thousands)  
(
Actual based on OAKS reports run December 1, 2017)  
Percent  
Estimate* Variance Percent FY 2017** Change  
PROGRAM  
Actual  
Primary and Secondary Education  
Higher Education  
$3,529,533 $3,510,076 $19,457  
$930,520  
0.6% $3,463,940  
1.9%  
-3.1%  
-2.2%  
0.8%  
$971,480 -$40,960 -4.2%  
$960,421  
$38,331  
Other Education  
$37,479  
$37,900  
-$421 -1.1%  
Total Education  
$4,497,532 $4,519,456 -$21,924 -0.5% $4,462,692  
Medicaid  
$6,330,163 $6,459,972 -$129,810 -2.0% $7,464,106 -15.2%  
$550,667 $589,281 -$38,614 -6.6% $568,381 -3.1%  
$6,880,830 $7,049,253 -$168,423 -2.4% $8,032,486 -14.3%  
Health and Human Services  
Total Welfare and Human Services  
Justice and Public Protection  
General Government  
$916,469  
$158,958  
$944,052 -$27,584 -2.9%  
$168,121 -$9,164 -5.5%  
$895,149  
$166,538  
2.4%  
-4.6%  
1.3%  
Total Government Operations  
$1,075,427 $1,112,174 -$36,747 -3.3% $1,061,687  
Property Tax Reimbursements  
Debt Service  
$864,722  
$881,846  
$854,625 $10,097  
$885,050 -$3,204 -0.4%  
$6,893 0.4% $1,789,280  
1.2%  
$898,887  
-3.8%  
-1.0%  
-2.4%  
$890,393  
Total Other Expenditures  
$1,746,568 $1,739,675  
Total Program Expenditures  
TRANSFERS  
$14,200,357 $14,420,558 -$220,202 -1.5% $15,346,144  
-7.5%  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$0  
$68,772  
$68,772  
$0  
$65,514  
$65,514  
$0  
$3,258  
$3,258  
---  
5.0%  
5.0%  
$29,483 -100.0%  
$238,587 -71.2%  
$268,070 -74.3%  
TOTAL GRF USES  
$14,269,129 $14,486,072 -$216,944 -1.5% $15,614,214  
-8.6%  
*
September 2017 estimates of the Office of Budget and Management.  
*Cumulative totals through the same month in FY 2017.  
*
Detail may not sum to total due to rounding.  
December 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 December 6, 2017)  
Month of November 2017  
Year to Date Through November 2017  
Department  
Actual  
Estimate*  
$1,824,733  
$890,772  
$933,960  
$204,167  
$49,761  
$154,405  
$35,010  
$8,547  
$26,463  
$3,486  
$271  
Variance  
$38,776  
Percent  
2.1%  
Actual  
$10,221,900  
$6,034,328  
$4,187,572  
$1,109,259  
$252,564  
$856,695  
$109,575  
$38,985  
$70,590  
$9,638  
$1,614  
$8,023  
$1,879  
$1,122  
$757  
Estimate*  
$10,229,839  
$6,165,285  
$4,064,553  
$1,173,506  
$250,625  
$922,881  
$114,329  
$39,959  
$74,369  
$12,195  
$1,488  
Variance  
-$7,939  
Percent  
-0.1%  
-2.1%  
3.0%  
Medicaid  
$1,863,509  
$771,966  
$1,091,542  
$207,575  
$51,130  
$156,445  
$27,329  
$4,648  
$22,681  
$1,357  
$284  
GRF  
-$118,806 -13.3%  
-$130,958  
$123,019  
-$64,246  
$1,940  
-$66,186  
-$4,754  
-$975  
Non-GRF  
$157,582  
$3,409  
$1,369  
$2,040  
16.9%  
1.7%  
2.8%  
1.3%  
Developmental Disabilities  
-5.5%  
0.8%  
GRF  
Non-GRF  
-7.2%  
-4.2%  
-2.4%  
-5.1%  
-21.0%  
8.5%  
Job and Family Services  
-$7,681 -21.9%  
-$3,899 -45.6%  
-$3,782 -14.3%  
-$2,129 -61.1%  
GRF  
Non-GRF  
-$3,779  
-$2,558  
$126  
Health  
GRF  
$13  
4.8%  
Non-GRF  
$1,074  
$310  
$3,216  
$516  
-$2,142 -66.6%  
-$206 -39.8%  
-$123 -54.6%  
-$83 -28.4%  
-$112 -20.6%  
$10,707  
$2,093  
-$2,684  
-$214  
-25.1%  
-10.2%  
-0.6%  
-21.5%  
-24.2%  
-2.6%  
-42.5%  
-82.8%  
--  
Mental Health and Addiction  
GRF  
$102  
$225  
$1,129  
-$7  
Non-GRF  
Aging  
$208  
$291  
$964  
-$207  
$432  
$544  
$2,326  
$1,371  
$955  
$3,068  
-$742  
GRF  
$240  
$256  
-$16  
-6.3%  
$1,407  
-$36  
Non-GRF  
Pharmacy Board  
GRF  
$192  
$288  
-$96 -33.4%  
$1,661  
-$706  
$115  
$36  
$79 220.2%  
$259  
$1,507  
-$1,248  
$0  
$0  
$0  
$0  
--  
$0  
$0  
Non-GRF  
Education  
GRF  
$115  
$36  
$79 220.2%  
-$23 -62.0%  
-$5 -29.2%  
-$17 -94.9%  
$259  
$1,507  
-$1,248  
$34  
-82.8%  
22.5%  
$14  
$36  
$186  
$152  
$13  
$18  
$179  
$79  
$100 127.3%  
Non-GRF  
$1  
$18  
$8  
$74  
-$66  
-89.5%  
Total GRF  
$828,384  
$1,272,258  
$2,100,641  
$949,851  
$1,118,677  
$2,068,528  
-$121,467 -12.8%  
$6,330,163  
$5,124,860  
$11,455,022  
$6,459,972  
$5,076,716  
$11,536,689  
-$129,810  
$48,143  
-2.0%  
0.9%  
Total Non-GRF  
Total All Funds  
$153,581  
$32,113  
13.7%  
1.6%  
-$81,666  
-0.7%  
*Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
December 2017  
14  
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 December 6, 2017)  
Month of November 2017 Year to Date Through November 2017  
(
(
Payment Category  
Managed Care  
Actual  
Estimate*  
$910,805  
$341,733  
$199,144  
$62,278  
$124,444  
$85,942  
$89,671  
$86,500  
$50,865  
$40,002  
$27,935  
$38,936  
$10,273  
Variance Percent  
Actual  
Estimate*  
Variance  
$9,314  
Percent  
0.2%  
$920,725  
$336,582  
$202,744  
$102,036  
$123,941  
$78,324  
$91,480  
$84,063  
$55,622  
$40,026  
$24,758  
$30,863  
$9,471  
$9,920  
-$5,151  
$3,600  
$39,758  
-$503  
1.1%  
-1.5%  
1.8%  
$4,644,004 $4,634,690  
$1,711,004 $1,714,080  
$1,078,491 $1,132,444  
$1,157,877 $1,133,409  
ACA - Managed Care  
DDD Services  
-$3,076  
-$53,953  
$24,468  
$27,095  
-$27,987  
$20,014  
-$43,973  
$1,434  
-0.2%  
-4.8%  
2.2%  
Hospitals  
63.8%  
-0.4%  
-8.9%  
2.0%  
Nursing Facilities  
Physicians/All Other  
Behavioral Health  
Administration  
$640,047  
$484,081  
$523,616  
$401,244  
$253,809  
$199,299  
$140,497  
$167,150  
$53,897  
$612,953  
$512,068  
$503,602  
$445,218  
$252,375  
$204,933  
$159,536  
$173,352  
$58,029  
4.4%  
-$7,617  
$1,808  
-$2,437  
$4,758  
$24  
-5.5%  
4.0%  
-2.8%  
9.4%  
-9.9%  
0.6%  
Medicare Buy-In  
Medicare Part D  
Prescription Drugs  
Aging Waivers  
0.1%  
-$5,634  
-$19,039  
-$6,202  
-$4,132  
-$81,672  
-2.7%  
-11.9%  
-3.6%  
-7.1%  
-0.7%  
-$3,177  
-$8,073  
-$802  
-11.4%  
-20.7%  
-7.8%  
1.6%  
Home Care Waivers  
Total All Funds  
$2,100,636 $2,068,528  
$32,108  
$11,455,017 $11,536,688  
*
Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
December 2017  
15  
Budget Footnotes  
Ohio Legislative Service Commission  
6
EXPENDITURES  
Russ Keller, Senior Economist, 614-644-1751  
Nicholas J. Blaine, Budget Analyst, 614-387-5418  
Overview  
Tables 3 and 4 show GRF uses for the month of November and for  
FY 2018 through November, respectively. GRF uses mainly consist of GRF uses were  
program expenditures but also include transfers out. For the month of  
$
216.9 million  
November, GRF uses totaled $2.13 billion, which was $89.6 million below  
estimate. Through November, FY 2018 GRF uses totaled $14.27 billion,  
which was $216.9 million below estimate. Medicaid is the key culprit for  
below  
estimate for  
these variances. In November, GRF Medicaid expenditures were FY 2018 up to  
$
negative year-to-date variance from $8.3 million (0.2%) at the end of  
October to $129.8 million (2.0%) at the end of November.  
121.5 million (12.8%) below estimate, which increased the category's  
the end of  
November.  
In addition to Medicaid, several other program categories also  
posted notable year-to-date variances. Higher Education had the second  
largest negative year-to-date variance at $41.0 million, followed by Health  
and Human Services at $38.6 million and Justice and Public Protection at  
$
27.6 million. Primary and Secondary Education and Property Tax  
Reimbursements, on the other hand, had positive year-to-date variances,  
due mainly to timing issues. As expected, Primary and Secondary  
Education posted a positive variance of $43.2 million (6.8%) in November,  
which changed the category's year-to-date variance from a negative  
$
23.8 million (0.8%) at the end of October to a positive $19.5 million (0.6%)  
at the end of November. The negative monthly variance of $17.3 million  
15.6%) in Property Tax Reimbursements lowered the category's positive  
year-to-date variance from $27.4 million (3.7%) at the end October to  
(
$
10.1 million (1.2%) at the end November.  
The remainder of this report will first discuss in more detail the  
negative year-to-date variances in GRF expenditures and then provide a  
summary of prior year encumbrance activities as of December 1, 2017.  
6
This report compares actual monthly and year-to-date expenditures  
from the GRF to OBM's estimates. If a program category's actual expenditures  
were higher than estimate, that program category is deemed to have a positive  
variance. The program category is deemed to have a negative variance when its  
actual expenditures were lower than estimate.  
December 2017  
16  
Budget Footnotes  
Ohio Legislative Service Commission  
Medicaid  
Medicaid is a joint federal-state program. Both GRF and non-GRF  
Medicaid expenditures contain federal and state dollars. Federal  
reimbursements for Medicaid expenditures made from the state GRF are  
deposited into the GRF as revenue to help support the GRF  
GRF Medicaid  
appropriations for Medicaid. Federal reimbursements for Medicaid expenditures  
expenditures made from state non-GRF funds are deposited into various  
were below  
non-GRF funds for expenditures. In recent years, the federal government  
has reimbursed about two-thirds of Ohio's total Medicaid expenditures.  
year-to-date  
estimates by  
Table 5 shows GRF and non-GRF Medicaid expenditures for the  
$
129.8 million.  
Ohio Department of Medicaid (ODM), the Ohio Department of  
Developmental Disabilities (ODODD), and six other "sister" agencies that  
also take part in administering Ohio Medicaid. ODM and ODODD  
account for about 99% of the total Medicaid budget. The other six  
agencies Job and Family Services, Health, Aging, Mental Health and  
Addiction Services, State Board of Pharmacy, and Education account for  
the remaining one percent. Unlike ODM and ODODD, the six "sister"  
agencies incur only administrative spending.  
As shown in Table 5, for the first five months of FY 2018, GRF  
Medicaid expenditures were $129.8 million (2.0%) below estimate while  
non-GRF Medicaid expenditures were $48.1 million (0.9%) above estimate.  
Across all funds, Medicaid expenditures were $81.7 million (0.7%) below  
estimate. All-funds expenditures from ODM and ODODD were  
$
7.9 million (0.1%) and $64.2 million (5.5%), respectively, below their year-  
to-date estimates.  
Table 6 shows all-funds Medicaid expenditures by payment  
category. Expenditures from Managed Care and ACA-Managed Care, the  
two largest payment categories, were close to estimates with expenditures  
being $9.3 million (0.2%) above and $3.1 million (0.2%) below estimates,  
respectively. Overall, more than 80% of Ohioans enrolled in Medicaid  
receive services through managed care. The ACA-Managed Care category  
tracks managed care expenditures for individuals who became eligible for  
Medicaid through the federal Affordable Care Act.  
Services provided by ODODD (labeled "DDD Services" in the table)  
had the largest negative year-to-date variance at $54.0 million (4.8%).  
Approximately $40.0 million of the negative variance is the result of a  
county board cost settlement payment that has not yet been processed.  
Cost settlement involves reconciling the amount that county boards  
received to administer services versus how much the boards actually  
spent. The settlement payment, which will be disbursed across all  
counties, will likely be processed within the next few months. The  
December 2017  
17  
Budget Footnotes  
Ohio Legislative Service Commission  
remaining variance is primarily due to lower than expected spending on  
targeted case management services.  
Administration had the second largest year-to-date negative  
variance at $44.0 million (9.9%). Of this amount, approximately one-half is  
attributed to ODM and one-half is attributed to the other Medicaid  
agencies. Of the ODM variance, about $11.0 million is due to prior fiscal  
year contracts that have not yet been paid. The remaining $11.0 million is  
attributable to caseload-driven contracts requiring lower payments to  
vendors than anticipated.  
The Physicians/All Other category had the third largest negative  
year-to-date variance at $28.0 million (5.5%). Some of this variance is due  
to lower than estimated caseload for home health services. The fourth  
largest negative variance is the Prescription Drugs category with a  
variance of $19.0 million (11.9%). The reason for this variance is due to a  
lower than estimated per-member per-month expense for the Aged, Blind,  
and Disabled population.  
Nursing Facilities had the largest positive year-to-date variance at  
27.1 million (4.4%). This variance is due to a higher than estimated  
$
caseload and per-member per-month expense.  
Lastly, the Hospitals category had the second largest positive  
variance at $24.5 million (2.2%). This is a timing issue as ODM made a  
$
50 million Hospital Upper Payment Limit (UPL) payment one month  
earlier than planned. The UPL program allows the state to direct  
supplemental payments, up to the difference between the Medicare and  
the Medicaid amounts, to providers.  
Expenditures  
by the  
Higher Education  
Although GRF expenditures for Higher Education were above  
estimate by $6.8 million in November, this was not enough to completely  
reverse the negative variances from previous months. The year-to-date  
variance in this category fell to $41.0 million (4.2%) below estimate. The  
Department of  
Higher  
Education  
Department of Higher Education (DHE) is the only agency that is were below  
included in this program category. The negative variance was largely due  
to a pair of line items supporting two of the Ohio State University's land-  
grant university mandates. Item 235535, Ohio Agricultural Research and  
Development Center, and item 235511, Cooperative Extension Service,  
were below their FY 2018 estimate by $15.2 million and $10.0 million,  
respectively.  
estimate by  
$
41.0 million  
year-to-date.  
December 2017  
18  
Budget Footnotes  
Ohio Legislative Service Commission  
Health and Human Services  
GRF expenditures for Health and Human Services were  
550.7 million through November, $38.6 million (6.6%) below estimate.  
$
This negative variance widened from the previous month as November  
spending was $10.3 million below estimate. The Ohio Department of Job  
and Family Services (ODJFS) had the largest negative variance for the  
year to date at $33.9 million, most occurring in months prior to November.  
For a more detailed description of the ODJFS line items with significant  
negative variances, please refer to the previous month's issue of  
Budget Footnotes. Year-to-date GRF expenditures for the Department of  
Health (DOH) were $4.4 million below estimate, and negative variances  
were widespread across many DOH line items.  
Justice and Public Protection  
GRF expenditures for Justice and Public Protection were  
$
916.5 million through November, $27.6 million (2.9%) below estimate.  
The Department of Rehabilitation and Correction (DRC) had the largest  
negative variance among the 12 agencies in this program category. DRC's  
$
19.3 million year-to-date negative variance was largely due to  
item 501321, Institutional Operations, which was $16.5 million below  
estimate through November, despite a positive monthly variance of  
$
6.2 million in November. In addition to DRC, the Judiciary/Supreme  
Court ($3.6 million), the Ohio Public Defender Commission ($3.0 million),  
and the Department of Youth Services ($2.6 million) had significant  
negative year-to-date variances.  
A total of  
79.3 million in  
Prior Year Encumbrances  
$
As reported in the July issue of Budget Footnotes, state agencies  
carried into FY 2018 $388.5 million in encumbered GRF funds that were  
originally appropriated for fiscal years prior to FY 2018. An agency  
prior year GRF  
encumbrances  
generally has five months to spend prior year encumbrances for operating were  
expenses. Any unspent operating expense encumbrances will lapse at the  
outstanding on  
end of the five-month period and will become part of the GRF cash  
balance once OBM cancels the encumbrances. Subject to the approval of  
the Director of Budget and Management, an agency may carry funds  
encumbered for purposes other than operating expenses beyond the  
five-month period. Encumbrances for some grant and aid payments may  
be carried for several months or even years.  
December 1,  
017.  
2
December 2017  
19  
Budget Footnotes  
Ohio Legislative Service Commission  
Prior Year GRF Encumbrances by Agency ($ in millions)  
Prior Year  
Encumbrances  
as of  
Outstanding  
Encumbrances  
as of  
Share of  
Outstanding  
Encumbrances  
December 1, 2017  
Agency  
July 1, 2017  
December 1, 2017  
Higher Education  
Education  
$30.1  
$121.9  
$23.3  
$13.0  
$64.3  
$45.0  
$90.9  
$388.5  
$20.6  
$19.6  
$14.7  
$8.9  
26.0%  
24.7%  
18.5%  
11.2%  
10.3%  
5.0%  
Development Services  
Transportation  
Job and Family Services  
Rehabilitation and Correction  
All Other Agencies  
Total  
$8.2  
$4.0  
$3.3  
4.1%  
$79.3  
100.0%  
Detail may not sum to total due to rounding.  
As shown in the table above, as of December 1, 2017, $79.3 million  
(20.4%) of the $388.5 million in total prior year encumbrances was still  
outstanding, which means the remaining $309.2 million (79.6%) was  
expended or cancelled so the corresponding funds could subsequently  
lapse back into the GRF. DHE had the largest share (26.0%) of the total  
outstanding encumbrances as of December 1, followed by the Ohio  
Department of Education (ODE) at 24.7%, the Development Services  
Agency (DSA) at 18.5%, the Department of Transportation (DOT) at  
1
1.2%, ODJFS at 10.3%, and DRC at 5.0%. Together, these six agencies had  
$
76.2 million (95.9%) of the $79.3 million in total outstanding prior year  
encumbrances. The nature of these outstanding encumbrances is  
discussed below.  
DHE had $20.6 million in outstanding prior year encumbrances as  
of December 1, of which $19.0 million occurred in item 235438, Choose  
Ohio First Scholarship. Item 235438 is used to pay the state's obligations to  
scholarship recipients.  
For ODE, items 200408, Early Childhood Education, 200550,  
Foundation Funding, and 200572, Adult Education Programs, accounted  
for $6.6 million (33.7%), $4.7 million (24.2%), and $2.9 million (14.6%),  
respectively, of ODE's total $19.6 million in outstanding prior year  
encumbrances as of December 1. These encumbrances will be used for  
making any necessary subsidy payment adjustments for early childhood  
education service providers, schools, and institutions that assist adults in  
acquiring their high school diploma and an industry-recognized  
credential.  
DSA had $14.7 million in outstanding prior year encumbrances as  
of December 1. The vast majority of DSA's outstanding prior year  
December 2017  
20  
Budget Footnotes  
Ohio Legislative Service Commission  
encumbrances were for various economic development grants. Many of  
these grant programs are operated on a reimbursement basis, under  
which grantees have to carry out the programs and certify that certain  
requirements or objectives have been met before they are reimbursed by  
the state. Depending on the scope of a project, the grantee may not  
actually receive the award until several years after the award was  
originally made.  
As of December 1, DOT had $8.9 million in outstanding  
encumbrances. The largest such amount ($5.1 million) was for  
item 777471, Airport Improvements State, which provides capital  
improvement grants to small, publicly owned airports that do not receive  
FAA passenger or air cargo entitlements. Two other notable outstanding  
encumbrances were for items 776465, Rail Development ($2.5 million),  
and 775451, Public Transportation State ($1.3 million). These amounts  
will fund state grants supporting rail and rail-related infrastructure as  
well as urban and rural transit systems operating throughout the state.  
ODJFS had $8.2 million in outstanding prior year encumbrances as  
of December 1. Numerous line items had outstanding encumbrances, but  
the two most significant are item 655523, Medicaid Program Support –  
Local Transportation ($2.2 million, 27.3%), and item 655522, Medicaid  
Program Support Local ($1.5 million, 18.5%). Funds encumbered for  
these items are used to pay the state's share of Medicaid costs for local  
administrative services.  
Finally, DRC had $4.0 million in outstanding prior year  
encumbrances as of December 1. These encumbrances are primarily in  
item 505321, Institution Medical Services ($1.7 million, 43.5%), and  
item 501321, Institutional Operations ($1.3 million, 32.8%).  
December 2017  
21  
Budget Footnotes  
Ohio Legislative Service Commission  
ISSUE UPDATES  
Regional Opioid Initiative Receives $1 Million Federal Grant  
Robert Meeker, Budget Analyst, 614-466-3839  
On September 29, 2017, the Supreme Court announced the award of a $1 million  
federal grant from the Department of Justice's Bureau of Justice Assistance on behalf of  
the Regional Judicial Opioid Initiative (RJOI) to improve regional coordination and seek  
data-driven responses to prescription drug misuse. The Supreme Court of Ohio is  
acting as the fiscal agent for the grant on behalf of the Initiative, and will use the  
$
1 million to fund various projects including contracts with vendors and partners to  
establish a website for the Initiative, as well as for the creation of initial reports,  
infographics, and protocols related to the work of the Initiative.  
RJOI is a multistate collaborative the goal of which is to develop a regional action  
plan and strategies to address the opioid epidemic by state courts, children's services  
agencies, and criminal justice and treatment systems. Ohio and seven other states are  
currently involved in the Initiative: Illinois, Indiana, Kentucky, Michigan, North  
Carolina, Tennessee, and West Virginia. RJOI has also partnered with the National  
Center for State Courts, a nonprofit based in Williamsburg, Virginia whose mission is to  
improve judicial administration in the courts, to implement the initiative.  
$
264 million in Additional State Funding Approved for Medicaid Program  
Ivy Chen, Principal Economist, 614-644-7764  
On October 30, 2017, the Controlling Board approved a request to authorize the  
expenditure of approximately $264 million in FY 2018 from the Health and Human  
Services Fund (Fund 5SA4) to help pay for the costs of the Medicaid Program. H.B. 49  
permits the Controlling Board to authorize such expenditures as long as the  
U.S. Congress had not amended the federal medical assistance percentage (FMAP) for  
recipients that became eligible for Medicaid under the Affordable Care Act (ACA). Cash  
to support these expenditures was transferred from the GRF ($42 million) at the  
beginning of the fiscal year. Additional transfers of $26 million from the Support and  
Recoveries Fund (Fund 5DL0) and $196 million from the Health Insuring Corporation  
(
HIC) Class Franchise Fee Fund (Fund 5TN0) may also be made due to the Controlling  
Board's approval of the additional expenditures. These three transfer amounts total  
264 million. These state dollars will draw down approximately $638 million in federal  
$
Medicaid reimbursements in FY 2018. The table below shows a summary of these  
transfers and the corresponding federal matching dollars. Across all funds, the  
December 2017  
22  
Budget Footnotes  
Ohio Legislative Service Commission  
Controlling Board's action will provide a total of $902 million in additional funding for  
Ohio Medicaid during FY 2018.  
FY 2018 Transfers to Fund 5SA4 ($ in millions)  
Fund  
Federal  
Match  
Sources of Funds  
Total  
5
SA4  
$42  
$26  
General Revenue Funds (GRF)  
$101  
$63  
$143  
$89  
Support and Recoveries Fund (Fund 5DL0)  
HIC Class Franchise Fee Fund (Fund 5TN0)  
$196  
$474  
$670  
TOTAL  
$
264  
$638  
$902  
Take Charge Ohio Campaign Launched  
Robert Moore, Budget Analyst, 614-466-4280  
On November 2, 2017, the Ohio Department of Health (ODH) launched a new  
public awareness campaign, Take Charge Ohio, to target the state's opioid epidemic.  
The campaign's primary focus is on educating healthcare professionals and patients  
about safe opioid prescribing practices and nonopioid pain management therapies. The  
campaign website has educational resources for patients and providers, as well as the  
general public. These resources include information about support groups, treatment  
providers and facilities in each county, crisis text lines, and instructions about disposing  
of unused medicines. The website also contains flyers and brochures that healthcare  
professionals can distribute to patients to educate them about safe medication practices.  
Additionally, campaign efforts will include the use of billboards and social media  
advertising to raise awareness about these issues. More information about the campaign  
can be found on its website, www.takechargeohio.org. ODH developed the campaign  
with the assistance of several other state agencies and licensing boards including the  
departments of Mental Health and Addiction Services and Medicaid and the State  
Board of Pharmacy. The campaign is funded by a $923,000 grant that ODH received  
from the federal Centers for Disease Control and Prevention.  
Over the past several years, the state has sought to reduce the prescription opioid  
supply through a number of efforts. Some of these include establishing new prescribing  
guidelines and requiring prescribers to conduct mandatory checks of a patient's medical  
record from the state's Ohio Automated Rx Reporting System (OARRS) prior to  
prescribing opioids or benzodiazepine. As a result of these efforts, the State Board of  
Pharmacy reports that the total number of opioid prescriptions issued to patients  
decreased by approximately 20% (2.5 million doses) from 2012 to 2016. In addition, the  
number of patients who see multiple prescribers to obtain controlled substances  
decreased by 78.2% during this same time period.  
December 2017  
23  
Budget Footnotes  
Ohio Legislative Service Commission  
Attorney General Awards $971,000 in Grants to Veterans Groups  
Jessica Murphy, Budget Analyst, 614-466-9108  
On November 9, 2017, the Office of the Attorney General announced the award  
of ten grants totaling $971,000 to various veterans groups (see table below). Awards,  
ranging from $10,000 to $150,000, were granted at the discretion of the Attorney General  
based on the recommendation of specialized outreach staff. As the table below  
indicates, the largest grant $150,000 was awarded to Operation Legal Help Ohio to  
support 20 veterans courts in 16 counties. This organization also received an additional  
award of $100,000 to connect low-income veterans with free legal help.  
These grants are funded using a portion of the $3.9 million default judgment in a  
civil case that the Attorney General brought against the U.S. Navy Veterans Association  
(
nationwide by claiming the collections would support veterans.  
USNVA). USNVA was a scam charity that collected millions of dollars from donors  
7
U.S. Navy Veterans Association Grant Awards  
Recipient and Project Description  
Operation Legal Help Ohio  
Grant Award  
Veterans Courts  
$150,000  
$100,000  
Free legal assistance to low-income veterans  
Honor Flight Hubs  
Veterans' travel to their respective national memorials  
Flag City Honor Flight (Findlay)  
Honor Flight Cleveland  
$575,000  
$115,000  
$115,000  
$115,000  
$115,000  
$115,000  
Honor Flight Columbus  
Honor Flight Dayton  
Honor Flight Tri-State (Cincinnati)  
Family and Community Services, Inc.  
Repairs and appliances at female veterans' housing facility  
Ross County Veterans Council  
Healing garden for veterans  
$100,000  
$36,000  
Heroes in Action  
Military outreach and support  
$10,000  
TOTAL  
$971,000  
7 In 2013, the man who ran the scam charity, Bobby Thompson, was convicted and  
sentenced to 28 years in prison.  
December 2017  
24  
Budget Footnotes  
Ohio Legislative Service Commission  
State Board of Education Recognizes Public Schools and Districts  
for High Academic Achievement and Student Growth  
Anthony Kremer, Budget Analyst, 614-466-5654  
On November 14, 2017, the State Board of Education acknowledged public  
schools and districts that demonstrated high academic achievement and student growth  
on the 2016-2017 local report cards. This is the third year the State Board has recognized  
schools and districts through the All A Award and Momentum Award programs. The  
All A Award is given to districts and schools that received A's on each of the district or  
school's applicable report card measures. For the 2016-2017 school year, one district and  
three schools qualified. In comparison, one district and five schools met the recognition  
criteria in the 2015-2016 school year. Beginning with the report cards for the 2017-2018  
school year, this award will go to any school or district that earns an A on its overall  
report card grade.8  
Districts and schools that earn straight A's on each applicable value-added  
measure on the report cards qualify for the Momentum Award. For the 2016-2017  
school year, 64 districts and 214 schools met the criteria for this award, an increase from  
the 54 districts and 169 schools that were recognized for the previous school year. The  
value-added measure is designed to help educators determine the impact schools and  
teachers have on students' academic growth and progress in reading and math from  
year to year. The measure is calculated on an overall basis and for three student  
subgroups: (1) gifted students, (2) students in the lowest 20% in achievement, and  
(3) students with disabilities. Districts and schools must have a grade for at least two of  
the three value-added subgroups of students to qualify for the award. A list of the  
districts and schools qualifying under both recognition programs is available on the  
9
Ohio Department of Education's website.  
Ohio Facilities Construction Commission Completed Classroom Facilities  
Projects for 11 School Districts in FY 2017  
Adam Wefler, Budget Analyst, 614-466-0632  
During FY 2017, the Ohio Facilities Construction Commission (OFCC) completed  
projects that fully addressed the facilities' needs for 11 school districts, including  
ten traditional school districts and one joint vocational school district (JVSD). The total  
8 Due to "safe harbor" provisions in current law, the report cards for the 2017-2018 school  
year will be the first to include overall letter grades for districts and schools.  
9 http://education.ohio.gov/Topics/District-and-School-Continuous-Improvement/ Awards-  
and-Recognition.  
December 2017  
25  
Budget Footnotes  
Ohio Legislative Service Commission  
master facility plan costs for these projects, as assessed by OFCC, amounted to  
$
531.6 million. Of that total, the state share was $329.4 million (62%) and the local share  
was $202.3 million (38%). The Lorain City School District was the largest school district  
whose plan was completed in FY 2017, with master facility plan costs of $216.3 million  
and 14 buildings constructed or renovated. The state contributed $175.2 million (81%) of  
the district's plan cost, which was originally funded in 2001. On average, the state share  
1
0
for the other ten districts was about 49%.  
Through the end of FY 2017, 42% of districts statewide, including 261 school  
districts and 15 JVSDs, have completed projects that fully addressed their facilities'  
needs through the Classroom Facilities Assistance Program (CFAP) and another 17% of  
districts, including 115 regular districts, have buildings in the design or construction  
phase or had some work performed through another OFCC program. An additional  
2
0% of districts, including 114 school districts and 17 JVSDs, have been offered funding,  
but have either deferred the offer, allowed it to lapse because they were unable to  
secure the required local share, or are in the process of seeking the required local share.  
In contrast, 21% of school districts statewide, including 120 regular districts and  
1
7 JVSDs, have not yet been offered CFAP funding.  
Overall, OFCC disbursed $267.9 million on school facilities assistance projects in  
FY 2017, over 88% of which was spent on CFAP projects. The remainder, $31.7 million,  
primarily supported OFCC's Exceptional Needs Program ($13.0 million), which  
addresses the facilities' needs of a specific building rather than the entire facilities' needs  
of a district, as well as facilities assistance for science, technology, engineering, and  
mathematics (STEM) schools ($7.8 million) and high-performing community schools  
($6.4 million). S.B. 310 of the 131st General Assembly, the current capital appropriations  
act, appropriates a total of $650 million for classroom facilities assistance projects for the  
FY 2017-FY 2018 capital biennium, primarily supported through the sale of bonds.  
DNR Awards Nearly $11.8 Million Under Outdoor  
Recreation Facility Grant Programs  
Tom Wert, Budget Analyst, 614-466-0520  
On November 1, 2017, the Department of Natural Resources (DNR) announced  
the recipients of nearly $11.8 million in funding under three grant programs. Of this  
total, nearly $7.3 million will go to 20 communities in 18 counties under Clean Ohio  
Trails Fund grants for community projects that connect regional trail systems and  
provide access to outdoor recreation areas from urban areas. Next, almost $2.8 million  
10 For a list of these districts, please refer to page 18 of OFCC's annual report for FY 2017,  
available online at: http://ofcc.ohio.gov/Resources/Publications.aspx.  
December 2017  
26  
Budget Footnotes  
Ohio Legislative Service Commission  
under the NatureWorks Grant Program is being awarded to 92 recipients in 74 counties  
to create and renovate parks and outdoor recreation areas including the acquisition of  
green space and improvements and construction of playgrounds, restroom facilities,  
shelters, and ballfields. Finally, the remaining amount of almost $1.7 million will go to  
1
1 communities and organizations in 14 counties under the Recreational Trails Grant  
Program for local trails projects. A complete list of grant recipients can be found on  
DNR's website: ohiodnr.gov.  
Funding for Clean Ohio Trail Fund and NatureWorks grants is supported by  
bond proceeds that are deposited into the Clean Ohio Fund (Fund 7061) and the Ohio  
Parks and Natural Resources Fund (Fund 7031), respectively. Recipients of Clean Ohio  
Trails Fund grants must provide a 25% local match for their projects. NatureWorks  
grants provide up to 75% of eligible project costs. Recreational Trails grants provide up  
to 80% of eligible project costs and are made available through funding from the  
Federal Highway Administration.  
Development Services Agency Awards $4.8 million Under Community  
Development Block Grant Set-Aside Programs  
Tom Middleton, Senior Budget Analyst, 614-728-4813  
On November 8, 2017, the Development Services Agency announced the award  
of $4.8 million in community infrastructure grants to 11 local governments (ten counties  
and one city) for FY 2018. The funding is allocated under two Community Development  
Block Grant (CDBG) set-aside programs: the Downtown Revitalization Program and the  
Neighborhood Revitalization Program. Downtown Revitalization Program awards  
support downtown improvements in communities through remediation of building  
code violations or investment in streetscapes or other public infrastructure.  
Neighborhood Revitalization Program awards provide additional capital toward public  
facilities such as the construction, reconstruction, or rehabilitation of public  
infrastructure in low- and moderate-income neighborhoods. The award recipients are  
listed in the following table.  
Federal funding for the CDBG program is deposited into Fund 3080. While the  
vast majority of CDBG money is distributed by formula to communities across Ohio, a  
small amount is set aside for discretionary awards under the Downtown Revitalization  
and Neighborhood Revitalization programs. The $4.8 million awarded in this round of  
funding represents the majority of discretionary grants available in FY 2018.  
December 2017  
27  
Budget Footnotes  
Ohio Legislative Service Commission  
Community Development Block Grant Set-Aside Awards (FY 2018)  
Program  
Recipient  
Grant Amount  
City of Piqua  
Crawford County  
$300,000  
$300,000  
$600,000  
$500,000  
$500,000  
$500,000  
$494,700  
$450,000  
$450,000  
$450,000  
$450,000  
$439,100  
$4,233,800  
$4,833,800  
Downtown Revitalization  
Total Downtown Revitalization Program  
Hardin County  
Logan County  
Coshocton County  
Clinton County  
Neighborhood  
Putnam County  
Revitalization  
Defiance County  
Ashtabula County  
Jackson County  
Vinton County  
Total Neighborhood Revitalization Program  
TOTAL ALL PROGRAMS  
December 2017  
28  
Budget Footnotes  
Ohio Legislative Service Commission  
TRACKING THE  
ECONOMY  
Philip A. Cummins, Senior Economist, 614-728-1687  
Ruhaiza Ridzwan, Senior Economist, 614-387-0476  
Overview  
Economic activity in the nation and Ohio continues to advance.  
U.S. nonfarm  
payroll  
U.S. nonfarm payroll employment in November rose 228,000. Industrial  
output growth nationwide strengthened in October. Inflation-adjusted  
gross domestic product (real GDP) continued to grow at a more rapid rate  
than last year, through the third quarter for the U.S., and through the  
second quarter in the latest figures for Ohio. Inflation remains tame. A  
slight tightening of monetary policy, with an upward adjustment in short-  
term interest rates, is widely expected later this week.  
employment  
in November  
rose 228,000.  
The National Economy  
Total nonagricultural payroll employment nationwide has risen  
every month for more than seven years, though the rate of growth has  
slowed slightly on balance this year through November. Unemployment  
as a share of the nation's labor force remained at 4.1% in November,  
lowest in almost 17 years. U.S. total nonfarm employment and the  
unemployment rate are shown in Chart 5.  
Chart 5: U.S. Employment and Unemployment  
1
1
1
1
1
1
1
1
48  
45  
42  
39  
36  
33  
30  
27  
11%  
10%  
9%  
8%  
7%  
6%  
5%  
4%  
2
007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017  
Nonfarm Payroll Employment  
Unemployment Rate (right scale)  
December 2017  
29  
Budget Footnotes  
Ohio Legislative Service Commission  
Real GDP grew at an upward-revised 3.3% annual rate in this  
year's third quarter, up from 3.1% in the second quarter and 1.2% in the  
first quarter. Last year, real GDP rose only 1.5%. In the first nine months  
of 2017, growth of nonresidential fixed investment and exports picked up,  
and consumer spending continued to expand. Housing investment  
slowed, however, and real government spending was little changed on  
balance. Additions to inventories were slow early in 2017 but accelerated  
in the third quarter.  
In October,  
Industrial output nationwide rose briskly in October. The index for  
total industrial production increased 0.9%. The manufacturing component total industrial  
gained 1.3%. Both activity measures were revised higher in the third  
quarter. Mining production, however, fell in October, attributed to cuts in  
oil and gas drilling and extraction caused by Hurricane Nate. Total  
industrial output in October was 2.9% higher than a year earlier.  
production  
increased  
0
.9%.  
The consumer price index (CPI) rose 0.1% in October to 2.0% above  
a year earlier. Prices of gasoline and most other consumer energy  
commodities fell in October after increasing the previous two months.  
Excluding food and energy, the CPI rose 0.2% to 1.8% higher than a year  
earlier. A related inflation measure, the personal consumption  
expenditures deflator excluding food and energy, was 1.4% higher in  
October than a year earlier.  
The Federal Open Market Committee, the central bank's decision-  
making body for monetary policy, meets December 12 and 13, and is  
expected to raise its target range for the federal funds rate, currently 1% to  
1
1
1
.25%. An increase of one-quarter percentage point is expected, though  
some market participants appear to be anticipating a one-half percentage  
1
2
point rise in the rate, based on futures trading.  
The Ohio Economy  
Ohio's unemployment rate edged down to 5.1% in October from  
.3% in September. Ohio's unemployment rate was 5.0% in October 2016.  
5
The number of unemployed Ohioans decreased by 9,000 from 305,000 in  
September to 296,000 in October. The number of unemployed Ohioans  
1
1
Federal funds are loans, mostly overnight, between depository  
institutions of dollar reserves held at Federal Reserve banks.  
12 The CME Group calculates probabilities of federal funds target rate  
changes from exchange trading in federal funds futures. Information is at:  
http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html/.  
December 2017  
30  
Budget Footnotes  
Ohio Legislative Service Commission  
grew by 11,000 from October 2016. The U.S. unemployment rate was 4.1%  
in October 2017. Chart 6 below shows trends in the state's payroll  
employment and unemployment rate over the last ten years.  
Ohio's  
unemployment  
rate edged  
down to 5.1%  
in October.  
Chart 6: Ohio Employment and Unemployment Rates  
5
5
5
5
5
5
5
4
.6  
.5  
.4  
.3  
.2  
.1  
.0  
.9  
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)  
In October, the state's total nonfarm payroll employment,  
seasonally adjusted, increased for the sixth consecutive month, by 4,300,  
or 0.1% from the revised total in September. In October, employment  
gains in goods-producing industries (+3,000) and government  
employment (+3,300) exceeded job losses in the private service-producing  
industries (-2,000). Job gains were in manufacturing; other (miscellaneous)  
services; trade, transportation, and utilities; and local government.  
Employment fell in construction, mining and logging, both state and  
federal government, and most private service-providing sectors.  
Over the 12 months ending in October, the state's total nonfarm  
payroll employment increased by 59,400 or 1.1%. Goods-producing  
industries added 12,400 jobs, mostly in construction. Private service-  
producing industries added 48,800 jobs, including 17,900 jobs in  
educational and health services and 17,500 jobs in leisure and hospitality.  
The growth in the state's total employment in the 12 months ending  
October 2017 was slightly higher than the year-over-year increase in the  
previous year, but lower than the year-over-year increases in the five  
years prior.  
As shown in Chart 7, workers' income from private sector payroll  
jobs grew 4% in the first four months of FY 2018, compared with a year  
December 2017  
31  
Budget Footnotes  
Ohio Legislative Service Commission  
earlier. During that period, the growth of incomes from work reflected  
continued increases in both the number of jobs and in hourly earnings.  
The proxy of workers' income from private sector payroll jobs is created  
using the payroll data from the U.S. Bureau of Labor Statistics (BLS),  
including private sector average hours paid per week and earnings per  
hour.  
In October,  
the state's  
total nonfarm  
payroll  
Chart 7: Ohio Total Private Payrolls  
employment  
increased for  
the sixth  
1
0%  
8
6
4
2
0
%
%
%
%
%
consecutive  
month, by  
4,300.  
-2%  
-4%  
-6%  
-8%  
State Fiscal Years  
Average Weekly Hours  
Employment  
Average Hourly Earnings  
In the second quarter of 2017, Ohio's real gross domestic product  
GDP) grew 2.0% at a seasonally adjusted annual rate, following 1.3%  
growth in the first quarter in 2017. In comparison, the real GDP growth in  
(
1
3
all 50 states in the second quarter was 2.8%. Ohio's growth was mainly  
contributed by the real estate sector, durable-goods manufacturing,  
healthcare and social assistance, retail trade, and mining. Ohio's growth  
ranked 38th among the 50 states. Ohio's GDP growth rate was slower than  
in the adjoining states, except for Indiana (1.7%). GDP growth was at a  
5
.5% rate in Michigan, 4.1% in West Virginia, 3.7% in Kentucky, and 2.5%  
in Pennsylvania.  
13 GDP by state for all 50 states differs from U.S. GDP in the national  
income and product accounts (NIPAs) because the GDP by state for the U.S.  
excludes federal military and civilian activity located overseas, which cannot be  
attributed to a particular state.  
December 2017  
32  
Budget Footnotes  
Ohio Legislative Service Commission  
The U.S. Bureau of Economic Analysis recently released county-  
level estimates of per capita personal income for 2016. Statewide personal  
income per capita in Ohio for 2016 was $44,593, having grown by 1.8%  
from 2015. Among Ohio counties, Delaware County had the highest  
personal income per capita ($66,532) while Noble County had the lowest  
In the second  
quarter of  
2
017, Ohio's  
(
$29,673). In 2016, personal income per capita grew in 79 counties and fell  
in nine counties in the state. The highest personal income per capita  
real gross  
growth was in Hancock County (8.7%) while the lowest was in Coshocton domestic  
County (-6.3%).  
product (GDP)  
In October, the number of existing homes sold in Ohio was 3.2%  
higher than a year earlier, according to the Ohio Association of Realtors.  
The number of existing homes sold in Ohio during the period of January  
through October 2017 was 0.9% higher than the same period in 2016. The  
average statewide sales price of homes sold during the first ten months of  
grew 2.0% at  
an annual  
rate.  
2
017 was $172,883 or 5.3% higher than the corresponding months in 2016.  
Regional economic activity in the Cleveland Federal Reserve  
District1 continued to grow at a moderate pace. Many contacts across  
industry sectors cited difficulties in attracting and retaining qualified low  
and high skilled workers. Some brick-and-mortar retailers indicated  
increased traffic. Auto dealers reported 2% growth in new vehicle unit  
sales through September, compared with a year earlier, but also noted the  
start of slowing demand. Manufacturing output continued to expand at a  
modest pace with the strongest levels of activity noted by suppliers to the  
aerospace, consumer electronics, motor vehicle, oil and gas, and  
residential construction industries. Output at the region's auto assembly  
plants in the first nine months in 2017 was weaker than the corresponding  
period in 2016. Sales of new and existing single-family homes continued  
to increase. Business and consumer lending activities increased at a  
modest pace.  
4
14 The Federal Reserve Bank of Cleveland's district consists of all of Ohio,  
western Pennsylvania, eastern Kentucky, and the northern panhandle of  
West Virginia. Comments summarized above are from the latest edition of the  
Beige Book, a Federal Reserve publication that summarizes comments from  
business and industry contacts outside of the Federal Reserve System collected  
on or before November 17, 2017.  
December 2017  
33  
Budget Footnotes