Budget Footnotes

A NEWSLETTER OF THE OHIO LEGISLATIVE SERVICE COMMISSION

JUNE 2018

VOLUME 41, NUMBER 10

STATUS OF THE GRF

Highlights...................................1

Revenues ..................................2

Expenditures............................13

HIGHLIGHTS

–

Ross Miller, Chief Economist, 614-644-7768

ISSUE UPDATES

With just one month remaining in FY 2018, the GRF

budget situation looks very good. May GRF tax revenue Naloxone Rebate Program

Extension..............................21

Workers' Compensation

was $57.9 million above the estimate published by the

Office of Budget and Management (OBM) in

September 2017. Through 11 months, GRF tax revenue was

Rebate..................................22

Cribs for Kids Funding .............22

Autonomous Vehicle Technology

Planning Contract.................23

Medicaid Work Requirements....23

Newly Designated STEM and

STEAM Schools ...................24

Ohio History Fund Grants........25

Recycling and Litter Prevention

Grants...................................26

$

418.5 million above estimate, while expenditures were

below estimate.

Ohio's unemployment rate edged down to 4.3% in April.

Wages have begun rising more strongly: income tax

revenue from monthly payroll withholding during the

months of March through May increased by 5.2% compared

to the corresponding months of 2017.

TRACKING THE ECONOMY

The National Economy ............28

The Ohio Economy..................30

Through May 2018, GRF sources totaled $29.42 billion:



Revenue from the personal income tax was

$401.9 million above estimate;



Sales and use tax receipts were $40.2 million above

estimate.

Through May 2018, GRF uses totaled $29.65 billion:



Program expenditures were $298.2 million below

estimate during the first 11 months of FY 2018;

Legislative Service Commission



Medicaid and Health and Human Services were

below estimates by $265.3 million and

7

7 South High Street, 9th Floor

Columbus, Ohio 43215

$

67.1 million, respectively, but Primary and

Telephone: 614-466-3615

Secondary Education was $47.9 million above

estimate, due primarily to timing.

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 May 2018

(

$ in thousands)

(

Actual based on report run in OAKS Actuals Ledger on June 1, 2018)

STATE SOURCES

TAX REVENUE

Actual

Estimate*

Variance

Percent

Auto Sales

Nonauto Sales and Use

Total Sales and Use Taxes

$136,956

$724,834

$861,790

$121,500

$733,200

$854,700

$15,456

-$8,366

$7,090

12.7%

-1.1%

0.8%

Personal Income

Commercial Activity Tax

Cigarette

$682,754

$326,673

$80,706

$24,779

-$24,989

$22,926

$38,275

$35,358

$31,187

$4,052

$3,749

$0

$590,200

$309,100

$81,600

$23,100

-$14,000

$89,800

$27,200

$30,700

$28,700

$4,600

$3,700

$0

$92,554

$17,573

-$894

$1,679

-$10,989

-$66,874

$11,075

$4,658

$2,487

-$548

$49

15.7%

5.7%

-1.1%

7.3%

-78.5%

-74.5%

40.7%

15.2%

8.7%

-11.9%

1.3%

---

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

$0

$45

$0

$14

$45

$0

$14

$0

---

Total Tax Revenue

$2,087,318

$2,029,400

$57,918

2.9%

NONTAX REVENUE

Earnings on Investments

Licenses and Fees

Other Revenue

$27

-$2,411

$563

$0

$630

$12,480

$13,110

$27

-$3,041

-$11,917

-$14,931

---

-482.7%

-95.5%

Total Nontax Revenue

-$1,821

-113.9%

TRANSFERS

Budget Stabilization

Other Transfers In

Total Transfers In

$0

$1,200

$0

-$1,200

---

-100.0%

TOTAL STATE SOURCES

Federal Grants

$2,085,498

$628,870

$2,043,710

$661,969

$41,788

-$33,099

$8,689

2.0%

-5.0%

0.3%

TOTAL GRF SOURCES

$2,714,368

$2,705,679

*Estimates of the Office of Budget and Management as of September 2017.

Detail may not sum to total due to rounding.

June 2018

2

Budget Footnotes

Ohio Legislative Service Commission

Table 2: General Revenue Fund Sources

Actual vs. Estimate

FY 2018 as of May 31, 2018

(

$ in thousands)

(

Actual based on report run in OAKS Actuals Ledger on June 1, 2018)

Percent

Change

STATE SOURCES

TAX REVENUE

Actual

Estimate*

Variance

Percent

FY 2017**

Auto Sales

Nonauto Sales and Use

Total Sales and Use Taxes

$1,312,186 $1,236,100

$7,916,323 $7,952,200

$9,228,510 $9,188,300

$76,086

-$35,877

$40,210

6.2% $1,265,997

-0.5% $8,413,287

0.4% $9,679,284

3.6%

-5.9%

-4.7%

Personal Income

Commercial Activity Tax

Cigarette

$7,582,045 $7,180,100

$1,511,932 $1,484,700

$401,945

$27,232

-$1,002

-$11,543

-$7,328

-$68,751

$20,846

$10,032

$4,049

-$1,397

$1,825

$642

5.6% $6,817,379

1.8% $1,285,340

11.2%

17.6%

-3.2%

-1.9%

-10.2%

263.0%

14.5%

11.9%

12.6%

-3.4%

3.4%

$796,298

$320,057

$291,972

$24,449

$183,846

$119,132

$69,549

$50,203

$43,825

$5,442

$797,300

$331,600

$299,300

$93,200

$163,000

$109,100

$65,500

$51,600

$42,000

$4,800

$0

-0.1%

-3.5%

-2.4%

-73.8%

12.8%

9.2%

6.2%

-2.7%

4.3%

13.4%

---

$822,695

$326,249

$325,080

$6,735

$160,520

$106,469

$61,786

$51,944

$42,391

$5,014

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

8.5%

$2,016

-$374

$146

$3,650

-44.8%

44.8%

-78.2%

2.7%

-$374

$0

---

-$678

$146

$0

---

$668

Total Tax Revenue

$20,229,048 $19,810,500

$418,548

2.1% $19,694,525

NONTAX REVENUE

Earnings on Investments

Licenses and Fees

Other Revenue

$46,871

$58,465

$263,547

$368,884

$44,000

$56,380

$288,460

$388,840

$2,871

$2,085

-$24,913

-$19,956

6.5%

3.7%

-8.6%

-5.1%

$37,369

$58,845

$67,412

$163,626

25.4%

-0.6%

291.0%

125.4%

Total Nontax Revenue

TRANSFERS

Budget Stabilization

Other Transfers In

Total Transfers In

$0

$133,327

$0

$130,129

$0

$3,198

---

2.5%

$0

$108,019

---

23.4%

TOTAL STATE SOURCES

Federal Grants

$20,731,258 $20,329,469

$8,686,578 $8,930,071

$29,417,836 $29,259,540

$401,789

-$243,493

$158,295

2.0% $19,966,170

-2.7% $10,750,516

0.5% $30,716,686

3.8%

-19.2%

-4.2%

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.

June 2018

3

Budget Footnotes

Ohio Legislative Service Commission

1

REVENUES

–

Jean J. Botomogno, Principal Economist, 614-644-7758

Overview

Through May 2018, year-to-date (YTD) GRF sources of

29.42 billion were $158.3 million (0.5%) above OBM's estimates published Through May

$

in September 2017, probably ensuring that the GRF budget would finish

FY 2018 with a surplus. Tax sources and transfers in had positive

variances of $418.5 million (2.1%) and $3.2 million (2.5%), respectively.

These positive variances were partly offset by shortfalls of $243.5 million

FY 2018, GRF

sources were

$

158.3 million

(2.7%) and $20.0 million (5.1%) for federal grants and for nontax revenue, above

respectively. GRF taxes and federal grants are expected to make up about

estimate.

8% and 30%, respectively, of anticipated GRF sources for FY 2018. The

6

latter mainly consists of federal reimbursements for Medicaid

expenditures made from state GRF moneys. Tables 1 and 2 show GRF

sources for May and for FY 2018 through May, respectively.

Total GRF sources for May of $2.71 billion were $8.7 million (0.3%)

above estimates. Recent revenue trends for GRF categories continued in

May. Tax sources were ahead of anticipated receipts by $57.9 million

(

$

2.9%). That positive variance was partially offset by shortfalls of

33.1 million (5.0%) for federal grants, $14.9 million (113.9%) for nontax

FY 2018 GRF

tax sources

were

revenues, and $1.2 million (100.0%) for transfers in. Except for the

cigarette tax that was short of estimates by $0.9 million, the largest tax

sources performed well. With a positive variance of $92.6 million, the

personal income tax (PIT) had another strong month. The commercial $418.5 million

activity tax (CAT) and the sales and use tax were $17.6 million and

above

$

payment for the financial institutions tax (FIT) was $11.1 million above

estimated receipts, and the public utility tax posted $4.7 million more

7.1 million, respectively, above estimates. In addition, the third annual

estimate

through May.

2

than expected for the month. On the other hand, the foreign insurance tax

and the domestic insurance tax had negative variances of $11.0 million

and $66.9 million, respectively. The shortfall for the domestic tax was due

¹This 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.

²Receipts of this tax are typically expected at the end of January, March,

and May. The GRF typically pays out refunds under this source during the first

half of a fiscal year as taxpayers make adjustments to previous tax filings.

June 2018

4

Budget Footnotes

Ohio Legislative Service Commission

in large part to timing; nearly all the revenue from the tax is received in

the final two months of the fiscal year, but it is difficult to predict which of

the two months will yield the most.

Through May,

For the fiscal year to date, taxes with the largest positive variances federal grants

included the PIT ($401.9 million), the auto sales and use tax

to the GRF

($76.1 million), the CAT ($27.2 million), the public utility tax

($10.0 million), the FIT ($20.8 million), the natural gas consumption tax

($4.0 million), and the corporate franchise tax ($2.0 million); and taxes

were

243.5 million

$

with the largest negative variances included the domestic insurance tax less than

($68.8 million), the nonauto sales and use tax ($35.9 million), the

estimate.

kilowatt-hour tax ($11.5 million), and the foreign insurance tax

$7.3 million). Table 2 above provides the revenue variances for the

remaining taxes.

(

Chart 1: Cumulative Variances of GRF Sources in FY 2018

(Variance from Estimates, $ in millions)

$

500

400

300

200

100

$

0

Jul-17

Sep-17

Nov-17

Jan-18

Mar-18

May-18

-$100

-$200

-$300

Federal Grants

Tax Revenue

Total GRF Sources

Compared to receipts in the corresponding period in FY 2017, YTD

GRF sources of $29.42 billion were $1.30 billion (4.2%) lower due to a

decline of $2.06 billion (19.2%) in federal grants. That decline was partially

offset by increases of $534.5 million (2.7%) for GRF tax sources,

$

205.3 million (125.4%) for nontax revenue, and $25.3 million (23.4%) for

transfers in.

As explained in previous editions of this publication, federal grants

to the GRF have declined from FY 2017 as an important source of

Medicaid funding has shifted from the GRF to a dedicated purpose fund.

More spending for the Medicaid program is being made from non-GRF

funds this fiscal year, so federal reimbursements are deposited into those

funds instead of the GRF. Though federal grants have decreased

substantially, tax sources increased, especially for the PIT ($764.7 million,

June 2018

5

Budget Footnotes

Ohio Legislative Service Commission

1

1.2%) and the CAT ($226.6 million, 17.6%). Receipts also increased for the

auto sales and use tax ($46.2 million, 3.6%), the FIT ($23.3 million, 14.5%),

the domestic insurance tax ($17.7 million, 263.0%), and the public utility

tax ($12.7 million, 11.9%). However, revenue declined for the nonauto

sales and use tax ($497.0 million, 5.9%), the foreign insurance tax

(

$33.1 million, 10.2%), the cigarette tax ($26.4 million, 3.2%), and the

kilowatt-hour tax ($6.2 million, 1.9%). 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.

Sales and Use Tax

Through May 2018, YTD GRF sales and use tax receipts of

$

9.23 billion were $40.2 million (0.4%) above estimate, but $450.8 million

Through May

in FY 2018, the

sales and use

tax was above

(4.7%) below receipts in the corresponding period last year. This tax

source has experienced some resurgence in the latest three months. Sales

and use tax revenue to the GRF totaling $861.8 million in May was above

estimate the third consecutive month, this time by $7.1 million (0.8%). In

the prior two months, the tax was above estimates by $29.2 million in estimate by

April and $28.9 million in March. In the December to February period, the

$

40.2 million.

combined negative variance for the sales and use tax totaled $49.6 million.

For the fiscal year, revenue from the auto sales and use tax

generally has been more than expected, while the nonauto portion of the

tax has failed to match expectations during most months and remains

below estimate year to date. 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

3

under the nonauto tax instead of the auto tax.

³Taxes 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.

June 2018

6

Budget Footnotes

Ohio Legislative Service Commission

Nonauto Sales and Use Tax

After two good months, the nonauto sales and use tax reversed

course in May. Receipts to the GRF of $724.8 million from this source were

YTD nonauto

sales and use

tax receipts

27.5 million through April. May 2018 revenue from this source was also

62.4 million (7.9%) below receipts in the same month last year, for were

$

YTD negative variance of this tax source to $35.9 million (0.5%), up from

$

8.4 million (1.1%) below projections, which increased the cumulative

reasons described below.

$

35.9 million

For the fiscal year through May, GRF receipts from the nonauto sales

below

and use tax totaled $7.92 billion, $497.0 million (5.9%) below revenue in the

corresponding period in FY 2017, due to a change in law that reduced the

taxable base. As explained in previous editions of this publication, 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 and use tax revenue overall by

FY 2017, that declines in revenue from this tax source had been expected this

year when compared to the corresponding months in FY 2017. Monthly

revenue growth on a year-ago basis, after adjusting for the decrease in the tax

estimate.

4

base described above, is shown in Chart 2 below.

Chart 2: Nonauto Sales and Use Tax Receipts Trend

Actual vs. Prior Year (With Tax Base Adjustment,

Three-month Moving Average)

5

4

3

2

1

0

.0%

⁴Please 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.

June 2018

7

Budget Footnotes

Ohio Legislative Service Commission

Auto Sales and Use Tax

Through May, GRF revenue from the auto sales and use tax

totaling $1.31 billion was $76.1 million (6.2%) above estimate, and

$

46.2 million (3.6%) above its level during the corresponding period in

FY 2017. This tax source is likely to finish above projected revenue at the

end of June, as it has been noticeably below estimates only twice in the

Through May

first 11 months in FY 2018. Revenue in May of $137.0 million was in FY 2018, the

$

receipts in May 2017. Chart 3 provides year-over-year growth in auto sales

and use tax collections starting in 2017.

15.5 million (12.7%) above estimate, and also $7.9 million (6.1%) above

auto sales and

use tax was

$76.1 million

U.S. sales of new light vehicles (autos and light trucks) in May

totaled 16.8 million units (at a seasonally adjusted annualized rate), with

above

auto sales of 5.2 million units and light truck sales of 11.6 million units. estimate.

Rising gasoline prices and tightening access to credit have not hurt sales

so far. Gasoline prices jumped nearly 24% in 2018 compared to the

average regular gallon price in 2017, and auto loans have hit the highest

rates since 2009.

Chart 3: Auto Sales and Use Tax Receipts Trend

Actual vs. Prior Year

(

Three-month Moving Average)

8

7

6

5

4

3

2

1

0

.0%

The average financing rate on a new vehicle was about 5.7% in

May 2018, compared with 5% in May 2017; and financing rates are likely

to continue to rise as the Federal Reserve plans future interest rate hikes.

Despite these headwinds, through May in 2018, new light vehicle sales are

nearly identical to sales in the corresponding period in 2017.

June 2018

8

Budget Footnotes

Ohio Legislative Service Commission

Personal Income Tax

Through May 2018, PIT GRF revenue of $7.58 billion was

401.9 million (5.6%) above anticipated receipts. May receipts of

682.8 million were $92.6 million (15.7%) above projected revenue and PIT GRF

126.2 million (22.7%) above such revenue in May 2017. This latest

$

revenue was

performance likely ensures that this GRF source will also end FY 2018

above estimates.

$

401.9 million

above

PIT revenue is comprised of gross collections, minus refunds and

estimate in

distributions to the Local Government Fund (LGF). Gross collections

5

consist of employer withholdings, quarterly estimated payments, trust FY 2018

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.

through May.

In May, PIT gross collections were $81.4 million (10.9%) above

estimates. Excluding miscellaneous payments which were $3.9 million

(34.1%) below anticipated revenues, the remaining components performed

well. Most noticeably, taxes due with annual returns, employer

withholding, and trust payments, had positive variances of $46.0 million

(186.4%), $20.4 million (2.9%), and $15.1 million (377.6%), respectively.

Boosting the gain from gross collections, refunds were $13.6 million

(11.2%) below their anticipated level.

FY 2018 revenues through May from each component of the PIT

relative to estimates and to revenue received in FY 2017 are detailed in the

table below. Most components of gross collections exceeded projections,

including withholding ($142.2 million), quarterly estimated payments

($206.6 million), and annual return payments ($59.5 million). However,

both refunds and LGF distributions were higher than anticipated.

⁵Quarterly 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.

June 2018

9

Budget Footnotes

Ohio Legislative Service Commission

FY 2018 Personal Income Tax Revenue

Estimate Variances and Year-over-Year Changes by Component

Variance

Changes

from Estimate

from FY 2017

Category

Withholding

Amount

$ in millions)

Percentage

Amount

Percentage

(%)

(

(%)

1.8%

32.9%

20.4%

8.6%

-2.8%

4.4%

0.3%

2.5%

5.6%

($ in millions)

$382.1

$224.2

$16.0

$142.2

$206.6

$11.1

$59.5

-$2.5

5.0%

36.7%

32.4%

14.2%

-0.2%

7.9%

Quarterly Estimated Payments

Trust Payments

Annual Return Payments

Miscellaneous Payments

Gross Collections

$93.2

-$0.2

$416.9

$6.4

$715.4

-$57.4

$8.1

Less Refunds

-3.0%

2.4%

Less LGF Distribution

GRF PIT Revenue

$8.5

$401.9

$764.7

11.2%

As shown in the table, YTD receipts were $764.7 million (11.2%)

above receipts in FY 2017 through May. Receipts from all components of

gross collections but miscellaneous payments were higher in FY 2018 than

in FY 2017. LGF distributions were also higher than in the corresponding

Payroll growth

has

period in FY 2017, though refunds were lower. The chart below illustrates accelerated in

the growth of monthly employer withholdings on a three-month moving

average relative to one year ago. Payroll growth has accelerated in 2018. In

the first half of FY 2018, year-ago payroll growth was about 4.1%. This

calendar year, payroll growth has been roughly 5.0%, on average.

2018.

Chart 4: Monthly Withholding Receipts Trend

Actual vs. Prior Year

(

Three-month Moving Average)

8

7

6

5

4

3

2

1

0

.0%

June 2018

10

Budget Footnotes

Ohio Legislative Service Commission

Commercial Activity Tax

The CAT is another tax source that is all but certain to finish the

fiscal year with a positive variance. The last quarterly calendar taxpayer Through May

payments due in May for the fiscal year provided $326.7 million to the

GRF, an amount that was $17.6 million (5.7%) above estimates. This

performance increased the YTD overage for this GRF source to

in FY 2018,

CAT receipts

were

$

27.2 million (1.8%), up from $9.7 million at the end of April. OBM

estimated June receipts to be $9.6 million.

$27.2 million

YTD FY 2018 GRF receipts of $1.51 billion were $226.6 million above

(17.6%) above receipts in FY 2017 through May. As explained in previous

estimate.

editions of this publication, this strong growth was due in part to the

change in allocation of revenue enacted in H.B. 49. 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 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 losses of tangible personal property tax

revenues. This change in allocation increased GRF receipts by roughly

139 million this year relative to the previous allocation of CAT revenue.

$

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 7047 and Fund 7081 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.

Despite a setback in the third fiscal quarter, gross collections (i.e.,

all-funds revenue) have been relatively robust. Through May 2018, they

have increased by $114.5 million (6.3%) relative to collections in the

corresponding period in FY 2017. On the other hand, refunds also

increased by $50.8 million (56.1%), most of which came in the third fiscal

quarter. Chart 5 below provides the cumulative growth in CAT gross

collections and refunds this fiscal year relative to corresponding months in

FY 2018.

June 2018

11

Budget Footnotes

Ohio Legislative Service Commission

Chart 5: Cumulative Growth in Collections and Refunds in FY 2018

(Relative to FY 2017, $ in millions)

1

15

95

75

55

35

15

-5

Gross collections

Refunds

Cigarette and Other Tobacco Products Tax

Cigarette and other tobacco products tax revenue of $80.7 million

this month was $0.9 million (1.1%) below estimate, and $1.9 million (2.4%)

below revenue in May 2017. For the fiscal year through May, total revenue

of $796.3 million was $1.0 million (0.1%) below estimate, and $26.4 million

FY 2018

cigarette tax

receipts were

3.2%) below revenue in the corresponding period in FY 2017. Total

(

revenue included $731.2 million from sales of cigarettes and sales of other $1.0 million

tobacco products contributed $65.1 million. Compared to last year, YTD

below target

receipts from cigarette sales decreased $34.1 million (4.5%). Tax revenue

from cigarette sales usually trend downward. On the other hand, receipts

through May.

from sales of other tobacco products generally increase each year, and so

far, they have grown $7.7 million (13.4%). The performance of this tax will

be determined by revenue collected in June 2018. OBM estimates those

receipts would provide over 15% of annual collections, as dealers are

required to pay any debt owed through the year for purchases of stamps

on credit.

June 2018

12

Budget Footnotes

Ohio Legislative Service Commission

Table 3: General Revenue Fund Uses

Actual vs. Estimate

Month of May 2018

(

$ in thousands)

(

Actual based on OAKS reports run June 6, 2018)

PROGRAM

Actual

Estimate* Variance Percent

Primary and Secondary Education

Higher Education

$553,010

$201,050

$3,090

$586,225 -$33,214

-5.7%

2.2%

$196,688

$3,479

$4,362

Other Education

-$389 -11.2%

Total Education

$757,150

$786,392 -$29,241

-3.7%

Medicaid

$938,180

$69,359

$982,977 -$44,797

-4.6%

-8.3%

-4.8%

Health and Human Services

Total Welfare and Human Services

$75,646

-$6,286

$1,007,539 $1,058,622 -$51,084

Justice and Public Protection

General Government

$142,938

$25,249

$153,697 -$10,760

$28,350

$182,047 -$13,860

-7.0%

-$3,100 -10.9%

Total Government Operations

$168,187

-7.6%

Property Tax Reimbursements

Debt Service

$402,186

$63,205

$410,424

$20,580

-$8,238

-2.0%

$42,625 207.1%

Total Other Expenditures

$465,391

$431,004

$34,387

8.0%

Total Program Expenditures

TRANSFERS

$2,398,267 $2,458,065 -$59,798

-2.4%

Budget Stabilization

Other Transfers Out

Total Transfers Out

$0

---

TOTAL GRF USES

$2,398,267 $2,458,065 -$59,798

-2.4%

*September 2017 estimates of the Office of Budget and Management.

Detail may not sum to total due to rounding.

June 2018

13

Budget Footnotes

Ohio Legislative Service Commission

Table 4: General Revenue Fund Uses

Actual vs. Estimate

FY 2018 as of May 31, 2018

(

$ in thousands)

(

Actual based on OAKS reports run June 6, 2018)

Percent

Estimate* Variance Percent FY 2017** Change

PROGRAM

Actual

Primary and Secondary Education

Higher Education

$7,399,118 $7,351,233

$2,125,141 $2,132,610

$47,885

-$7,469

-$1,406

$39,010

0.7% $7,514,697

-0.4% $2,114,160

-1.5%

0.5%

Other Education

$65,978

$67,384

-2.1%

$69,266

-4.7%

-1.1%

Total Education

$9,590,237 $9,551,227

0.4% $9,698,123

Medicaid

$13,343,736 $13,608,991 -$265,255

$1,197,992 $1,265,102 -$67,110

$14,541,729 $14,874,093 -$332,365

-1.9% $16,107,091 -17.2%

-5.3% $1,252,229 -4.3%

-2.2% $17,359,320 -16.2%

Health and Human Services

Total Welfare and Human Services

Justice and Public Protection

General Government

$1,985,929 $2,009,717 -$23,788

-1.2% $1,905,164

-6.9% $343,482

4.2%

-4.9%

2.8%

$326,640

$350,942 -$24,301

Total Government Operations

$2,312,569 $2,360,658 -$48,089

-2.0% $2,248,646

Property Tax Reimbursements

Debt Service

$1,788,406 $1,761,090

$1,343,895 $1,327,923

$3,132,300 $3,089,013

$27,315

$15,972

$43,287

1.6% $1,750,318

1.2% $1,291,746

1.4% $3,042,064

2.2%

4.0%

3.0%

Total Other Expenditures

Total Program Expenditures

TRANSFERS

$29,576,835 $29,874,992 -$298,157

-1.0% $32,348,153

-8.6%

Budget Stabilization

Other Transfers Out

Total Transfers Out

$0

$69,486

$0

$65,514

$0

$3,972

---

6.1%

$29,483 -100.0%

$272,892 -74.5%

$302,374 -77.0%

TOTAL GRF USES

$29,646,322 $29,940,506 -$294,185

-1.0% $32,650,527

-9.2%

*

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.

June 2018

14

Budget Footnotes

Ohio Legislative Service Commission

Table 5: Medicaid Expenditures by Department

Actual vs. Estimate

$ in thousands)

Actuals based on OAKS report run on June 7, 2018)

(

Month of May 2018

Actual Estimate* Variance Percent

Year to Date Through May 2018

Actual Estimate* Variance Percent

Department

Medicaid

$1,848,076 $1,953,145 -$105,069

$872,686 $925,969 -$53,283

$975,390 $1,027,176 -$51,786

-5.4% $21,597,066 $22,044,772 -$447,706

-2.0%

-2.1%

-1.9%

-3.3%

0.9%

GRF

-5.8% $12,706,519 $12,977,778 -$271,259

Non-GRF

-5.0%

-13.0%

5.4%

$8,890,548

$2,453,499

$549,405

$1,904,094

$235,619

$79,506

$156,113

$25,098

$3,702

$21,396

$3,521

$1,250

$2,271

$5,393

$3,096

$2,297

$1,657

$0

$9,066,995 -$176,447

Developmental Disabilities

$204,282

$51,341

$152,940

$33,253

$13,486

$19,767

$3,645

$377

$234,845 -$30,563

$48,711 $2,630

$186,133 -$33,193

$2,536,742 -$83,243

GRF

$544,578

$4,827

Non-GRF

-17.8%

-0.5%

74.0%

-23.0%

3.1%

$1,992,164 -$88,070

-4.4%

-5.3%

0.8%

Job and Family Services

$33,425

$7,753

$25,672

$3,536

$271

$3,266

$1,264

$0

-$172

$5,733

-$5,906

$109

$106

$3

$248,815 -$13,196

GRF

$78,848 $658

$169,967 -$13,854

Non-GRF

-8.2%

-2.4%

14.0%

-4.8%

Health

$25,712

$3,249

$22,463

$5,469

$1,250

$4,218

$6,583

$3,050

$3,533

$1,740

$0

-$614

$454

GRF

39.0%

0.1%

Non-GRF

$3,269

$316

-$1,068

Mental Health and Addiction

-$948

$0

-75.0%

--

-$1,948 -35.6%

$0 0.0%

GRF

$0

Non-GRF

Aging

$316

$1,264

$550

$250

$300

$36

-$948

-$81

$28

-75.0%

-14.7%

11.4%

-36.5%

-1.2%

--

-$1,948 -46.2%

$469

-$1,190 -18.1%

GRF

$278

$46 1.5%

-$1,236 -35.0%

Non-GRF

Pharmacy Board

GRF

$190

-$110

$0

$35

-$84

$0

-4.8%

--

$0

Non-GRF

Education

GRF

$35

$36

$0

-1.2%

-74.1%

-50.5%

-97.6%

$1,657

$266

$1,740

$471

-$84

-4.8%

$11

$44

-$33

-$11

-$22

-$205 -43.5%

$20 8.2%

-$224 -96.3%

$11

$22

$258

$238

Non-GRF

$0

$22

$9

$233

Total GRF

$938,180

$982,977 -$44,797

-4.6% $13,343,736 $13,608,991 -$265,255

-7.4% $10,978,383 $11,261,313 -$282,930

-6.1% $24,322,119 $24,870,304 -$548,185

-1.9%

-2.5%

-2.2%

Total Non-GRF

Total All Funds

$1,151,908 $1,243,869 -$91,961

$2,090,088 $2,226,845 -$136,758

*Estimates are from the Department of Medicaid.

Detail may not sum to total due to rounding.

June 2018

15

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 June 7, 2018)

(

Month of May 2018

Year to Date Through May 2018

Actual Estimate* Variance Percent

Payment Category

Managed Care

Actual

Estimate* Variance Percent

$961,545 $946,090 $15,456

$331,283 $346,016 -$14,733

1.6% $10,251,322 $10,254,019

-$2,697

0.0%

-1.6%

-3.4%

-3.2%

4.7%

ACA - Managed Care

DDD Services

-4.3% $3,745,868 $3,805,169 -$59,302

$192,699 $229,444 -$36,745 -16.0% $2,374,114 $2,457,093 -$82,978

$67,308 $110,607 -$43,300 -39.1% $1,884,860 $1,946,654 -$61,794

Hospitals

Nursing Facilities

Physicians/All Other

Behavioral Health

Administration

$119,949 $117,928 1.7% $1,391,768 $1,329,309 $62,459

$2,021

$86,325 $107,507 -$21,182 -19.7% $1,025,947 $1,130,578 -$104,631

-9.3%

-3.2%

$90,240

$91,120

$49,914

$36,781

$22,096

$32,033

$8,796

$96,097

$99,017

$55,512

$38,425

$29,119

$40,220

$10,863

-$5,857

-$7,897

-6.1% $1,069,712 $1,105,142 -$35,430

-8.0%

$846,823

$554,052

$424,139

$283,152

$358,856

$111,506

$981,907 -$135,084 -13.8%

Medicare Buy-In

Medicare Part D

Prescription Drugs

Aging Waivers

-$5,599 -10.1%

-$1,644 -4.3%

$578,786 -$24,733

$440,163 -$16,024

-4.3%

-3.6%

-$7,023 -24.1%

-$8,187 -20.4%

-$2,067 -19.0%

$330,283 -$47,131 -14.3%

$384,206 -$25,350 -6.6%

$126,996 -$15,490 -12.2%

-2.2%

Home Care Waivers

Total All Funds

$2,090,088 $2,226,845 -$136,758

-6.1% $24,322,119 $24,870,304 -$548,185

*

Estimates are from the Department of Medicaid.

Detail may not sum to total due to rounding.

June 2018

16

Budget Footnotes

Ohio Legislative Service Commission

6

EXPENDITURES

–

Russ Keller, Senior Economist, 614-644-1751

Charles Dobson, Economist, 614-466-1523

Overview

GRF uses mainly consist of program expenditures but also include

transfers out. Tables 3 and 4 show GRF uses for the month of May and for

FY 2018 through May, respectively. For the first 11 months of FY 2018,

GRF uses totaled $29.65 billion, which was $294.2 million (1.0%) below the

year-to-date (YTD) estimate. This variance is the net result of a negative

YTD variance of $298.2 million (1.0%) in program expenditures and a

positive YTD variance of $4.0 million in transfers out.

Through May,

FY 2018 GRF

uses were

$294.2 million

Medicaid accounted for 89.0% of the total negative YTD variance in

GRF program expenditures. In May, GRF Medicaid expenditures were below

$

44.8 million (4.6%) below estimate, which increased the category's

estimate.

negative YTD variance to $265.3 million (1.9%). While Medicaid is mainly

funded by the GRF, it is also supported by various non-GRF funds.

Further details on both GRF and non-GRF Medicaid expenditures are

given in the section following this overview.

In addition to Medicaid, Health and Human Services, Justice and

Public Protection, and General Government also had notable negative

YTD variances. Expenditures from the Health and Human Services

program category were below the YTD estimate by $67.1 million (5.3%), of

which $6.3 million occurred in the month of May. This program category

consists of non-Medicaid health and human service expenditures from

1

1 agencies. Three of them accounted for the majority of the category's

negative variance total: the Department of Job and Family Services

(

$37.3 million), the Department of Mental Health and Addiction Services

$16.0 million), and the Department of Health ($12.9 million).

The negative YTD variance in the Justice and Public Protection

program category grew by $10.8 million in May and stood at $23.8 million

1.2%) at the end of May. The largest agency within the program category,

the Department of Rehabilitation and Correction, accounted for

(

$

18.7 million (78.5%) of the category's negative variance total. The

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.

June 2018

17

Budget Footnotes

Ohio Legislative Service Commission

negative variance in the General Government program category also grew

in May, by $3.1 million, to $24.3 million (6.9%) at the end of May.

Together, the Department of Development ($8.9 million), the Department

of Transportation ($4.7 million), and the Department of Taxation

(

$3.8 million) accounted for $17.4 million (71.6%) of the category's

negative variance total.

Due mainly to timing issues, Primary and Secondary Education,

Property Tax Reimbursements, and Debt Service had positive YTD

variances totaling $91.2 million, which partially offset the negative YTD

variances in other program categories. The positive YTD variance in the

Primary and Secondary Education program category was narrowed by

$

33.2 million in May to $47.9 million (0.7%) at the end of May. As reported

in prior issues of Budget Footnotes, timing issues in the state's foundation

funding program have driven fluctuating expenditure variances in this

category.

Timing was also the main factor behind the positive YTD variance

of $27.3 million (1.6%) in the Property Tax Reimbursements program

category. As expected, May payments for property tax reimbursements

were below the estimate for the month, by $8.2 million. June payments are

anticipated to be lower than expected as well. This program category

should finish FY 2018 relatively close to OBM's full-year estimate.

The Debt Service program category posted a positive variance of

$

42.6 million (207.1%) in May due to sooner-than-expected payments

totaling $44.1 million from GRF appropriation item 230908, Common

Schools General Obligation Bond Debt Service, in the Ohio Facilities

Construction Commission's budget. The estimate assumed these

payments would be made in June. As a result of this timing driven

positive monthly variance, the Debt Service program category registered a

positive YTD variance of $16.0 million (1.2%) at the end of May. However,

this program category should finish the fiscal year somewhat below the

OBM estimate.

With only one more month to go, total GRF uses should finish

FY 2018 below the OBM estimate for the full fiscal year. However, the

amount of the negative variance in GRF uses and the amount of the

potential year-end GRF surplus will not necessarily be equal to each other.

Agencies will encumber funds at the end of the fiscal year for obligations

that have occurred but have not yet been paid in FY 2018. The July issue of

Budget Footnotes will provide more information on the GRF year-end cash

balance and encumbrances.

June 2018

18

Budget Footnotes

Ohio Legislative Service Commission

Medicaid

Medicaid is a joint federal-state program that receives funding from

the GRF and several non-GRF funds. Both GRF and non-GRF Medicaid

expenditures contain federal and state dollars. Table 5 shows GRF and

non-GRF Medicaid expenditures for the Ohio Department of Medicaid

Through May,

(ODM), the Ohio Department of Developmental Disabilities (ODODD), FY 2018 GRF

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

and non-GRF

Medicaid

expenditures

Education – account for the remaining 1%. Unlike ODM and ODODD, the were

six "sister" agencies incur only administrative spending.

$

265.3 million

As indicated earlier, YTD GRF Medicaid expenditures were

and

$

Medicaid expenditures were also below the YTD estimate, by

$

expenditures were $548.2 million (2.2%) below estimate.

265.3 million (1.9%) below estimate at the end of May. Non-GRF

$

282.9 million

below

estimate,

282.9 million (2.5%). Through the end of May, all-funds Medicaid

As can be seen from Table 5, the majority of the negative YTD respectively.

variance in all-funds Medicaid expenditures can be attributed to ODM

(

$447.7 million) and ODODD ($83.2 million). ODM's GRF and non-GRF

Medicaid expenditures were $271.3 million (2.1%) and $176.4 million

1.9%), respectively, below the YTD estimates. ODODD's GRF Medicaid

(

expenditures were above the YTD estimate by $4.8 million (0.9%) while its

non-GRF Medicaid expenditures were below the YTD estimate by

$

88.1 million (4.4%).

Table 6 shows all-funds Medicaid expenditures by payment

category. Expenditures for Managed Care and ACA-Managed Care, the

two largest payment categories, continued to be largely in line with

estimates with negative YTD variances of $2.7 million (0.0%) and $59.3

million (1.6%), 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.

The Administration category had the largest negative YTD variance

at $135.1 million (13.8%). Of this total, $117.1 million (86.7%) was

attributable to ODM. This negative variance was primarily due to the

following: timing-related issues, prior fiscal year contracts that have not

yet been paid, and caseload-driven contracts requiring lower payments to

vendors than anticipated.

June 2018

19

Budget Footnotes

Ohio Legislative Service Commission

The Physicians/All Other category had the second largest negative

YTD variance at $104.6 million (9.3%), due primarily to two factors. The

first is lower than estimated caseloads for home health services. The

second is that cost settlement adjustments have not yet been processed for

the Medicaid School Program. Cost settlement involves reconciling the

amount that schools received to administer services versus how much the

schools actually spent.

Other payment categories with significant negative YTD variances

include services provided by ODODD (labeled "DDD Services" in the

table), Hospitals, and Prescription Drugs. YTD expenditures for DDD

Services were below estimate by $83.0 million (3.4%). The primary reasons

for this are timing-related issues and lower than expected expenditures for

targeted case management services. YTD expenditures for Hospitals were

below estimate by $61.8 million (3.2%). This variance was largely caused

by a $50.0 million payment for the Care Innovation and Community

Improvement Program that was anticipated to occur in May but was not

disbursed. YTD expenditures for Prescription Drugs were $47.1 million

(

14.3%) below estimate, due largely to lower than estimated per-member

per-month prescription drug costs for the Aged, Blind, and Disabled

ABD) population.

Nursing Facilities was the only category with a positive YTD

(

variance. Both caseload and per-member per-month cost for Nursing

Facilities have been higher than projected. As a result, this payment

category's YTD expenditures were above estimate by $62.5 million (4.7%).

June 2018

20

Budget Footnotes

Ohio Legislative Service Commission

ISSUE UPDATES

Ohio Attorney General Announces One-Year Extension

of Naloxone Rebate Program

–

Joseph Rogers, Senior Budget Analyst, 614-644-9099

On April 12, 2018, the Ohio Attorney General announced a one-year extension of

a rebate program that has saved 127 non-federal government agencies in Ohio a total of

732,384 on the cost of purchasing naloxone, a drug used to treat opioid overdoses. The

$

renewed agreement with Amphastar Pharmaceuticals will continue to allow

non-federal government agencies to receive a $6 rebate for each Amphastar-

manufactured naloxone syringe purchased between March 2, 2018 and March 31, 2019.

The rebate program began in March 2015 and has been renewed three times. The

average cost of naloxone is about $30 to $40 per dose depending on the distributor and

volume purchased.

The largest rebate amount, $420,984, which constitutes 57.5% of the total, was

7

received by the Ohio Department of Mental Health and Addiction Services. To enhance

statewide access, the Department purchases naloxone and then distributes it to county

health departments to dispense to local law enforcement, emergency personnel, and

first responders who are not able to bill or to be reimbursed for the use of the drug in

the field. The rebate money received by the Department has primarily been used to

purchase additional naloxone with the balance distributed directly to local police and

fire departments; county alcohol, drug, and mental health boards; county health

departments; and Project DAWN community programs.⁸

The rebate money is not appropriated as part of the Attorney General's biennial

operating budget. Eligible agencies submit their receipts for naloxone purchases to the

Attorney General, who then submits one consolidated and certified request to

Amphastar for each quarter of the calendar year. Amphastar issues a single rebate

payment to the Attorney General within 90 days of receiving the certified request. The

Attorney General in turn disburses the payments to those agencies.

⁷http://www.ohioattorneygeneral.gov/Files/Briefing-Room/News-Releases/Heroin-

Unit/Requesting-Agency-Naloxone-Rebate-Totals-from-2015.aspx.

⁸Project DAWN is a community-based overdose education and naloxone distribution

program. Participants receive training to recognize overdoses, perform rescue breathing, and

administer intranasal naloxone.

June 2018

21

Budget Footnotes

Ohio Legislative Service Commission

BWC Approves $1.5 Billion in Rebates to Private and Public Employers

Covered by the State Insurance Fund

–

Terry Steele, Senior Budget Analyst, 614-387-3319

On May 24, 2018, the Bureau of Workers' Compensation (BWC) approved a

rebate of approximately $1.5 billion to all private and public employers that receive

coverage for workers' compensation through the State Insurance Fund. Of the total

amount to be rebated, approximately $1.3 billion will go to private employers and

approximately $159.0 million will go to public employers. The rebate represents

approximately 85% of the employer's premium for the policy year ending June 30, 2017

(or calendar year 2016 for public employers). In order to be eligible for the rebate,

private employers and public employers must pay into the State Insurance Fund, must

have been billed a premium for the most recent policy year, and be current in meeting

their policy requirements. The rebate is possible mostly because of strong investment

returns, and, to a lesser degree, declining claims costs in recent years. The current net

position of the State Insurance Fund is slightly more than $11 billion.

Controlling Board Approves Funding for Cribs for Kids

–

Jacquelyn Schroeder, Budget Analyst, 614-466-3279

On May 21, 2018, the Controlling Board approved a $500,000 request from the

Ohio Department of Health (ODH) to contract with Cribs for Kids, Inc. for the purchase

of safe sleep survival kits. Through this contract, a total of 6,250 survival kits will be

provided, at no cost, to eligible families residing in 22 counties with high infant

mortality rates. In order to be eligible, a family must have an income below 185% of the

federal poverty guidelines for 2018 ($38,443 for a family of three). Each survival kit

includes a portable crib, a fitted sheet, a sleep sack, a Sleep Baby Safe and Snug board

book, and educational materials from ODH. The Cribs for Kids survival kits encourage

parents to follow safe sleep recommendations, otherwise known as the "ABCs of Safe

Sleep" – Alone, on their Backs, and in a Crib. Sleep-related deaths are among the most

preventable causes of infant mortality.

This is the second time during fiscal year 2018 that ODH has contracted with

Cribs for Kids, Inc. The first contract, approved by the Controlling Board in

September 2017, was for $250,000. It provided 3,125 survival kits to families in

2

7 counties. This second contract will allow ODH to meet an increase in demand for

these survival kits. ODH began offering survival kits in 2015 as a result of the

enactment of S.B. 276 of the 130th General Assembly. S.B. 276 established an infant safe

sleep screening procedure for hospitals and birthing centers to use to determine if an

infant has a safe crib in which to sleep at the infant's residence. If the hospital or

birthing center determines that a safe crib is not available, the facility must make a good

faith effort to arrange for the acquisition of one at no cost to the family. According to

June 2018

22

Budget Footnotes

Ohio Legislative Service Commission

ODH, as a result of these and other efforts, the number of sleep-related deaths has

decreased. In 2016, there were 117 sleep-related deaths, 33 fewer than in 2015.

Controlling Board Approves $5.0 Million Contract for ODOT to

Plan for Autonomous and Connected Vehicles

–

Tom Middleton, Senior Budget Analyst, 614-728-4813

On May 21, 2018, the Controlling Board approved a request by the Ohio

Department of Transportation (ODOT) to contract with a consultant to prepare a plan

for future autonomous vehicles and connected vehicles (AV/CV). ODOT will pay

$

5.0 million to AECOM Technical Services, Inc. of Akron, Ohio, to prepare ODOT for

the next generations of AV/CV technology. ODOT outlined six deliverables that

AECOM must produce under the contract, including: (1) recommendations for AV/CV

data storage, management, and security; (2) a business plan to prioritize future AV/CV

deployments; (3) a master plan for AV/CV data communication infrastructure in Ohio;

(4) the identification of public-private partnership (P3) opportunities to support AV/CV

in Ohio; (5) the statewide framework to guide current and future AV/CV application

deployments complying with federal requirements; and (6) the creation of software

requirements for an Ohio Integrated Data Exchange. The Highway Operating Fund

(

Fund 7002) will be used to pay for these consulting services. Of the $5.0 million

contract, $4.0 million (80%) of the funding is derived from federal highway revenue

received by the state. The remaining $1.0 million (20%) is matching funding derived

from state motor fuel tax revenue.

The groundwork for the use of AV/CV technology will be overseen by

DriveOhio, an office within ODOT that was created by Executive Order of the Governor

in January 2018. DriveOhio will act as a one-stop shop for researchers, developers, and

manufacturers to collaborate on AV/CV technology in Ohio. A subsequent Executive

Order, signed by the Governor on May 9, 2018, established guidelines for the testing of

autonomous vehicles in the state. Testing of AV/CV technology is underway at the

Transportation Research Center in East Liberty. Projects involving vehicle connectivity

are underway along the Route 33 Smart Corridor in central Ohio as well as a portion of

I-90 in northeastern Ohio.

Ohio Department of Medicaid Submits Work Requirement Proposal

–

Charles Dobson, Economist, 614-466-1523

On April 30, the Ohio Department of Medicaid (ODM) submitted a Group VIII

9

Work Requirement and Community Engagement proposal to the Centers for Medicare

9

The complete proposal is available online at: www.Medicaid.ohio.gov under the

Resources/Public Notices heading.

June 2018

23

Budget Footnotes

Ohio Legislative Service Commission

and Medicaid Services (CMS). ODM submitted this proposal in response to a

requirement in H.B. 49. If approved, the proposal will generally require Group VIII

Medicaid recipients to work or participate in a community engagement activity for a

minimum of 20 hours per week. Qualified community engagement activities include

education, training, job search, and job readiness programs. The proposal anticipates a

start date of July 1, 2018.

Approximately 5% (36,000) of 700,000 Group VIII Medicaid recipients will be

required to comply with the proposed work requirement or lose their Medicaid

coverage. The remaining 95% of Group VIII Medicaid recipients will be exempt from or

are already in compliance with the proposed work requirement. Individuals exempted

from the proposed work requirement include the following: pregnant women; students

enrolled at least half-time; those participating in a drug or alcohol treatment program;

those physically or mentally unfit for employment; and those 50 years of age or older.

In order to reduce administrative costs and to comply with CMS rules, individuals

compliant with or exempt from an existing Temporary Assistance to Needy Families

(TANF) or Supplemental Nutritional Assistance Program (SNAP) work requirement

will automatically be deemed in compliance with the Group VIII work requirement.

Ohio is not the first state to seek this federal approval. In fact, multiple states

have filed proposals to mandate Medicaid work requirements. So far, applications from

Kentucky, Indiana, and Arkansas have been approved.

ODE Announces 11 New STEM and STEAM Schools

for the 2018-2019 School Year

–

Alexandra Vitale, Budget Analyst, 614-466-6582

On April 30, 2018, the Department of Education (ODE) announced the

designation of 11 new STEM and STEAM schools for the 2018-2019 school year (see

table below). STEM and STEAM school designations may be given to a public school

1

0

governed by a traditional school board or by an independent governing board. Public

community or chartered nonpublic schools may be designated as a STEM or STEAM

school equivalent. To receive the STEM school designation, a school must present

evidence of a working partnership with both public and private entities, including

colleges and universities and business organizations, and evidence the school will offer

a rigorous and diverse curriculum that emphasizes science, technology, engineering,

and mathematics and includes arts and humanities. STEAM schools must follow those

requirements as well as present evidence that the curriculum will integrate arts and

design into STEM subjects. H.B. 49 of the 132nd General Assembly established the

¹⁰The Metro Early College High School in Columbus is an example of a STEM school

governed by an independent board.

June 2018

24

Budget Footnotes

Ohio Legislative Service Commission

STEAM school designation beginning with the 2018-2019 school year. Three schools will

operate under that designation when school begins this fall.

Including the 11 newly designated schools, there will be a total of 53 STEM and

STEAM schools across the state. Of this total, 34 are governed by traditional school

boards, seven are governed by independent boards, and 12 are STEM or STEAM school

equivalents. The complete list of STEM and STEAM schools is available on ODE's

website at http://education.ohio.gov/Topics/Career-Tech/STEM.

Newly Designated STEM and STEAM Schools, 2018-2019 School Year

County

Champaign

Cuyahoga

Lorain

School Name

Graham Elementary School

Graham Middle School

Boulevard Elementary School

Gesu School

Type

STEM

Governing Board

Traditional school board

STEM

STEAM

STEM

Traditional school board

STEM/STEAM school equivalent

Traditional school board

Lander Elementary School

Orchard Elementary STEM

St. Joseph Parish School

St. Ambrose School*

Traditional school board

STEM/STEAM school equivalent

Traditional school board

Medina

Montgomery Southdale Elementary School

Ross

Stark

Bishop Flaget School

STEM/STEAM school equivalent

Traditional school board

STEAMM Academy @ Hartford Middle STEAM

School

Summit

I Promise School

STEM

Traditional school board

*St. Ambrose School was previously designated as a STEM school.

OHC Awards Ohio History Grant Funds

—

Jason Glover, Budget Analyst, 614-466-8742

On March 1, 2018, Ohio's Statehood Day, the Ohio History Connection (OHC)

awarded $76,000 to nine Ohio History Fund grant recipients. The 2018 recipients,

project descriptions, and award amounts are described in the table below. The History

Fund Grant Program, which receives support primarily through a state income tax

check-off, provides competitive grants to local history organizations, nonprofits, and

local governments for projects designed to support historic preservation and education.

Grant amounts depend on the type of projects seeking funding and may range from a

$

1,000 minimum for an organizational development project to a $20,000 maximum for

brick-and-mortar or programs and collections projects. The grants require a local match

of between 20% and 40%, depending on the project.

June 2018

25

Budget Footnotes

Ohio Legislative Service Commission

018 Ohio History Fund Grant Recipients

2

Award

Amount

County

Organization

Project Description

Columbiana Museum of Ceramics

Foundation

Preservation of 65 volumes of East Liverpool newspapers

on microfilm (East Liverpool was well-known for its ceramics

manufacturing industry)

$14,950

Stark

Alliance Historical

Society

Roof repair of Mabel Hartzell Historical Home

$13,240

$10,000

Cuyahoga

Cleveland Museum of Archaeological excavation in Columbiana County, jointly

Natural History

conducted with Kent State University, to learn more about

Ice Age mastodon hunters

Cuyahoga

Athens

Rock and Roll Hall of

Fame and Museum

Preservation and sharing of amateur film and video

recordings documenting northeast Ohio's musical heritage

$9,100

$7,000

$6,700

Southeast Ohio

History Center

Preservation and archival of images taken by Pulitzer Prize-

winning photographer Jon Webb

Wood

Bowling Green State

University, Center for

Archival Collections

Digitization, preservation, and sharing of a collection of

nearly 100 oral histories of World War II

Jefferson

Trumbull

Wood

Historical Society of

Mount Pleasant

Installation of HVAC system and window restoration in

Mount Pleasant's Historical Center

$6,000

$5,000

$4,010

$76,000

Trumbull County

Historical Society

Inventory and storage of over 580 textile and accessory

items of historical significance

Wood County

Historical Society

Improved capacity and quality of storage of the Society's

collection of artifacts

TOTAL

Ohio EPA Awards $3.9 Million in Recycling and Litter Prevention Grants

–

Robert Meeker, Budget Analyst, 614-466-3839

In April 2018, the Ohio Environmental Protection Agency announced the award

of 60 competitive grants totaling $3.9 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:



Community Development: support and expand community collection and

processing of recyclable materials and litter prevention;

Market Development: purchase equipment and build infrastructure to

develop markets for recyclable materials and related products;

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

amnesty collection activities.

June 2018

26

Budget Footnotes

Ohio Legislative Service Commission

Individual awards range from a $318 Litter Management grant to Keep Akron

Beautiful (Summit County) to Scrap Tire grants of $300,000 to each of Liberty Tire

Services (Franklin County) and Willig Tire Recycling (Crawford County).

Ohio EPA Recycling and Litter Prevention Grants by Program

Grant Program

Number of Awards

Range of Awards

Awards Total

Community Development

18

$7,066-$200,000

$1,812,019

Market Development

Scrap Tire

7

4

$6,172-$200,000

$107,381-$300,000

$318-$40,225

$841,250

$833,322

$423,892

$3,910,483

Litter Management

31

60

TOTAL

$318-$300,000

June 2018

27

Budget Footnotes

Ohio Legislative Service Commission

TRACKING THE

ECONOMY

–

Philip A. Cummins, Senior Economist, 614-387-1687

Ruhaiza Ridzwan, Senior Economist, 614-387-0476

Overview

Economic indicators show expanding activity and somewhat

higher inflation. A broad measure of the U.S. economy, inflation-adjusted

gross domestic product (real GDP), grew in this year's first quarter at a

2

.2% annual rate, and appears to be growing faster in the current quarter.

Nationwide employment growth strengthened through May and

industrial production growth was strong in March and April. In Ohio,

employment fell slightly in April following vigorous gains earlier in 2018.

Unemployment rates fell in the nation and Ohio to the lowest levels in

more than 16 years. Federal fiscal stimulus is supporting the expansion. In

this environment, further increases in short-term interest rates are widely

Total nonfarm

1

expected. However, participants in the May Federal Open Market payroll

Committee meeting reported that their contacts were concerned about

possible adverse effects from tariffs and restrictions on trade, including

reductions in capital spending.¹²

employment

nationwide

rose by

The National Economy

2

23,000 in

Total nonfarm payroll employment nationwide rose by 223,000 in

May, and unemployment as a share of the labor force fell to 3.8%. Trends

in employment and the unemployment rate are shown in Chart 6.

May.

¹¹As of June 7, federal funds futures trading indicates a 91.3% probability

that the Federal Reserve Bank's target for the federal funds rate will be increased

to a range of 1.75%-2.00% when the central bank's Open Market Committee

meets June 12-13. Probabilities of interest rate increases are at

http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html/.

¹²Minutes of the Federal Open Market Committee, May 1-2, 2018, page 7,

at https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm.

June 2018

28

Budget Footnotes

Ohio Legislative Service Commission

Chart 6: U.S. Employment and Unemployment

1

52

49

46

43

40

37

34

31

28

11%

10%

9%

8%

7%

6%

5%

4%

3%

2

008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Nonfarm Payroll Employment Unemployment Rate (right scale)

Employment gains in the first five months of 2018 averaged

07,000 per month, up from 182,000 monthly in all of 2017 and the

2

strongest since 2015. Over the latest 12 months, total nonfarm payroll

employment nationwide rose 2.4 million (1.6%). Significant employment

gains were reported in most goods-producing and private service-

providing industry groups. The largest year-over-year increases in

employment were in professional and business services, health care and

social assistance, construction, leisure and hospitality, and manufacturing.

At 3.8%, the

unemployment

rate for the

nation in May

At 3.8%, the unemployment rate for the nation in May was the

lowest since April 2000, and before that since 1969. The number of people was the

counted as unemployed declined to 6.1 million in May, 0.8 million lower

than a year earlier. Of these, the number who had been out of work and

looking for jobs for more than six months fell to 1.2 million, down

lowest since

April 2000,

and before

that since

0

.5 million from May 2017.

A separate report showed the number of job openings at the end of

April totaled 6.7 million, highest ever in a series kept since 2000. Job 1969.

openings exceeded the number of unemployed persons in March and

April for the first time in the history of this series.

Real GDP grew in this year's first quarter at a 2.2% annual rate,

revised downward slightly from 2.3% first reported. Nonresidential fixed

investment expanded at a robust 9.2% rate, and exports rose at a 4.2%

rate, while consumer and government spending grew slowly and

residential fixed investment contracted. In 2017, growth averaged a 3.0%

annual rate in the second through fourth quarters. Slower growth of

production (real GDP) in this year's first quarter mainly reflects smaller

June 2018

29

Budget Footnotes

Ohio Legislative Service Commission

increases in personal consumption, with declines in some segments

including spending on motor vehicles and clothing.

For the current quarter, published projections show an upturn in

real GDP growth. The Federal Reserve Bank of Atlanta calculates that real

GDP is expanding at a 4.5% annual rate in the second quarter, and the

Federal Reserve Bank of New York thinks real GDP is growing at a 3.3%

rate. These estimates are based on monthly statistics through June 6 and

June 1, respectively. Official figures for second quarter GDP are due from

the source agency, the U.S. Bureau of Economic Analysis (BEA), on

July 27.

The nation's industrial production rose strongly in the latest two

months, increasing 0.7% in both March and April. Mining output

increased 1.1% in April due to higher oil and gas production. Utility

output was up 1.9% in April as below-normal temperatures stimulated

heating demand. Factory output rose 0.5% in April after being unchanged

in March.

The consumer price index (CPI) rose 0.2% in April to 2.5% higher

than a year earlier, the largest year-to-year increase in the index since

January and February 2017, and before that since 2012. The larger CPI

increase was due in part to higher prices for gasoline and other energy

commodities. Excluding food and energy, the CPI was 2.1% higher than

in April 2017, the same as in March and largest since early 2017. A related

inflation measure, the price index for personal consumption expenditures,

was 2.0% higher in April than a year earlier, the same year-over-year

increase as in March, and 1.8% higher excluding food and energy.

In April, the

state's

The Ohio Economy

In April, the state's unemployment rate edged down to 4.3%,

lowest since 2001, from 4.4% in March. The U.S. unemployment rate for

April was 3.9%. Ohio's unemployment rate was 5.1% in April 2017. The

number of unemployed workers in Ohio decreased to 249,000 in April,

unemployment

rate edged

down to 4.3%,

4

,000 fewer than in March and 43,000 fewer than in April 2017. Ohio's lowest since

total nonfarm payroll employment, seasonally adjusted, decreased by

2001.

1

9

,000 in April from the revised total in March, following an increase of

,300 jobs in March. Chart 7 shows Ohio employment and unemployment

rates over the last ten years.

June 2018

30

Budget Footnotes

Ohio Legislative Service Commission

Chart 7: Ohio Employment and Unemployment Rates

5

4

.7

.6

.5

.4

.3

.2

.1

.0

.9

12%

11%

10%

9%

8%

7%

6%

5%

4%

2

008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Nonfarm Payroll Employment

Unemployment Rate (right scale)

In April, employment in private service-providing industries

increased by 2,100, while employment in goods-producing industries and

government decreased by 1,700 and 1,400, respectively. Job gains

occurred largely in trade, transportation, and utilities; professional and

business services; and other services. Job losses were mostly in leisure and

hospitality; manufacturing; financial activities; and local government.

Compared to

April 2017,

the state's

Compared to April 2017, the state's nonfarm payroll employment nonfarm

was 56,900 or 1.0% higher. During the past year, employment gains were

widespread among industries.

payroll

employment

was 56,900 or

Ohio's real personal income, adjusted after inflation, rose 0.9% in

2

016, after increasing 3.6% in 2015, according to BEA estimates.

1

.0% higher.

Nationwide, real personal income in all 50 states and the District of

Columbia, adjusted for inflation, rose by an average of 1.1% in 2016,

following an average increase of 4.7% in 2015. States with the highest

growth rates in 2016 were Utah and Georgia (both 3.3%), followed by

Washington (3.0%), and Maryland and Idaho (both 2.7%). Real personal

income fell in eight states. Wyoming had the largest decline (-3.6%),

followed by Oklahoma (-2.7%), and Louisiana (-1.9%).

BEA also estimates cost-of-living comparisons across states using

its Regional Price Parity (RPP) index, in which the cost of all items (goods,

rents, and other services) in a particular geographic area is compared to

the national average. In 2016, Ohio's all-items RPP was 89.3, which

implies that on average the cost of living in Ohio was 10.7% lower than

the U.S. average. Among Ohio's neighboring states, Kentucky (87.8) and

June 2018

31

Budget Footnotes

Ohio Legislative Service Commission

West Virginia (87.6) had lower all-items RPPs than Ohio. Among all

0 states and the District of Columbia, Hawaii had the highest all-items

RPP in 2016 (118.4) while Mississippi had the lowest (86.4).

5

Economic

In April, the number of existing homes sold in Ohio was up by

.2% compared to April 2017, according to the Ohio Association of

activity in the

6

Realtors. In the first four months of 2018, the number of existing homes region

sold was essentially unchanged from the corresponding months in 2017.

The statewide sales price of homes sold in the first four months in 2018

averaged $171,016 or 6.1% higher than in the corresponding months in

continued to

expand at a

moderate

pace,

2

017.

Economic activity in the region continued to expand at a moderate

1

3

pace, according to a Federal Reserve Bank of Cleveland report. Hiring according to a

picked up, but difficulties finding qualified workers continued across

most sectors. Prices of construction materials and various commodities

trended higher. Consumer spending rose modestly. Manufacturing

activity for customers in extractive industries, transportation equipment,

Federal

Reserve Bank

of Cleveland

and agriculture continued at a strong pace. Residential and nonresidential report.

real estate markets in the region remained robust. Transportation

companies reported that freight volume continues to increase.

¹³The report is part of the latest Federal Reserve System Beige Book that

summarizes information from outside contacts collected on or before

May 21, 2018. The Federal Reserve Bank of Cleveland's district includes all of

Ohio and parts of Kentucky, Pennsylvania, and West Virginia.

June 2018

32

Budget Footnotes