A monthly newsletter by LSC economists and budget analysts  
Volume: Fiscal Year 2019  
Issue: September 2018  
Highlights  
Ross Miller, Chief Economist  
The Office of Budget and Management (OBM) revised its FY 2019 GRF revenue  
forecast upward in August due to Ohio's FY 2018 experience with revenues; the  
original forecast was produced a year ago. The upward revision to the tax revenue  
forecast for the full fiscal year amounted to $531 million, with nearly $380 million  
of that due to the income tax and $129 million due to the sales and use tax. GRF  
tax revenue received during August was $16.2 million above the revised estimate  
for the month. For the first two months of FY 2019, GRF tax revenue was  
$
27.8 million above estimate.  
Ohio's unemployment rate ticked up to 4.6% in July, from 4.5% in June. Private  
sector payroll employment increased by 8,800 from June to July, while  
employment in the government sector declined by 1,200.  
Through August 2018, GRF sources totaled $5.71 billion:  
Revenue from the sales and use tax was $47.6 million (2.7%) above  
estimate;  
Personal income tax (PIT) receipts were $18.3 million (1.3%) below estimate.  
Through August 2018, GRF uses totaled $6.87 billion:  
GRF program expenditures were $126.0 million below estimate, due  
primarily to Medicaid, which was below estimate by $168.7 million;  
Expenditures under the Property Tax Reimbursements category were  
above estimate by $112.6 million due to timing.  
In this issue...  
More details on GRF Revenues (p. 2), Expenditures (p. 11),  
the National Economy (p. 27), and the Ohio Economy (p. 28).  
Also Issue Updates on:  
2
1st Century Community Learning Center Grants (p. 20)  
High School Diploma Programs for Adults (p. 20)  
MyCare Ohio Evaluation (p. 21)  
Auditor Report on Medicaid PBMs (p. 22)  
EPA Awards for Household Sewage Treatment Systems (p. 23)  
Corrections Facility Capital Improvements Projects (p. 24)  
Increased Funding for State Board of Embalmers and Funeral Directors (p. 25)  
Southern Ohio Agricultural and Community Development Foundation Awards (p. 25)  
Available online at: www.lsc.ohio.gov/Budget Central  
Ohio Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of August 2018  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on September 5, 2018)  
State Sources  
Actual  
Estimate*  
Variance Percent  
Tax Revenue  
Auto Sales and Use  
Nonauto Sales and Use  
Total Sales and Use  
$137,928  
$745,931  
$883,859  
$138,100  
$718,600  
$856,700  
-$172  
$27,331  
$27,159  
-0.1%  
3.8%  
3.2%  
Personal Income  
Commercial Activity  
Cigarette  
Kilowatt-Hour Excise  
Foreign Insurance  
Domestic Insurance  
Financial Institution  
Public Utility  
Natural Gas Consumption  
Alcoholic Beverage  
Liquor Gallonage  
Petroleum Activity  
Corporate Franchise  
Business and Property  
Estate  
$714,474  
$292,970  
$84,367  
$36,295  
$1,238  
$0  
$727,700 -$13,226  
$304,800 -$11,830  
-1.8%  
-3.9%  
5.9%  
6.1%  
---  
$79,700  
$34,200  
$0  
$4,667  
$2,095  
$1,238  
$0  
$0  
---  
$206  
$700  
$29,100  
$11,100  
$5,200  
$4,300  
$0  
-$494  
$2,991  
$2,149  
$1,454  
-$113  
$0  
-70.6%  
10.3%  
19.4%  
28.0%  
-2.6%  
---  
---  
---  
---  
$32,091  
$13,249  
$6,654  
$4,187  
$0  
$115  
$0  
$22  
$0  
$115  
$0  
$0  
$0  
$22  
Total Tax Revenue  
$2,069,728 $2,053,500  
$16,228  
0.8%  
Nontax Revenue  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$29  
$4,836  
$1,739  
$6,604  
$0  
$5,091  
$988  
$29  
-$255  
$751  
$525  
---  
-5.0%  
76.0%  
8.6%  
Total Nontax Revenue  
$6,078  
Transfers In  
$0  
$4,200  
-$4,200 -100.0%  
Total State Sources  
Federal Grants  
$2,076,331 $2,063,778  
$917,873 $955,190 -$37,316  
$2,994,204 $3,018,968 -$24,763  
$12,553  
0.6%  
-3.9%  
-0.8%  
Total GRF Sources  
*Estimates of the Office of Budget and Management as of August 2018.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 2  
September 2018  
Ohio Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate ($ in thousands)  
FY 2019 as of August 31, 2018  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on September 5, 2018)  
State Sources  
Tax Revenue  
Actual  
Estimate*  
Variance Percent FY 2018** Percent  
Auto Sales and Use  
Nonauto Sales and Use  
Total Sales and Use  
$272,116  
$1,532,377 $1,496,900  
$1,804,493 $1,756,900  
$260,000  
$12,116  
$35,477  
$47,593  
4.7%  
2.4% $1,523,626  
2.7% $1,772,817  
$249,191  
9.2%  
0.6%  
1.8%  
Personal Income  
Commercial Activity  
Cigarette  
Kilowatt-Hour Excise  
Foreign Insurance  
Domestic Insurance  
Financial Institution  
Public Utility  
Natural Gas Consumption  
Alcoholic Beverage  
Liquor Gallonage  
Petroleum Activity  
Corporate Franchise  
Business and Property  
Estate  
$1,357,192 $1,375,500  
-$18,308  
-$12,900  
$3,022  
-1.3% $1,290,495  
5.2%  
-0.4%  
6.0%  
9.2%  
$344,000  
$107,922  
$63,135  
$2,561  
$0  
$356,900  
$104,900  
$61,300  
$1,000  
$0  
-3.6%  
2.9%  
3.0%  
$345,222  
$101,839  
$57,840  
$1,835  
$1,561 156.1%  
$0 ---  
-$734 -61.2%  
$3,205  
$2,539  
-$160  
$4  
$0  
$141  
$0  
$123 1983.4%  
$57  
$2,658  
$27,336  
$11,327  
$10,849  
$8,152  
$0  
-99.9%  
-82.5%  
18.2%  
31.0%  
-3.8%  
3.1%  
$466  
$1,200  
$29,100  
$12,300  
$10,600  
$8,400  
$0  
$32,305  
$14,839  
$10,440  
$8,404  
$0  
11.0%  
20.6%  
-1.5%  
0.0%  
---  
---  
-93.9%  
$141  
$0  
---  
$2,304  
$0  
$0  
---  
-$374 100.0%  
$37  
$0  
$37  
---  
$33  
15.3%  
Total Tax Revenue  
$3,745,936 $3,718,100  
$27,836  
0.7% $3,630,678  
3.2%  
Nontax Revenue  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$57  
$6,178  
$5,174  
$11,408  
$0  
$5,844  
$2,654  
$8,498  
$57  
$334  
$2,520  
$2,910  
---  
5.7%  
94.9%  
34.2%  
$0  
$5,777  
$5,846  
$11,623  
---  
6.9%  
-11.5%  
-1.8%  
Total Nontax Revenue  
Transfers In  
$75,995  
$80,190  
-$4,195  
$26,551  
-5.2%  
$111,347  
-31.7%  
2.1%  
Total State Sources  
Federal Grants  
$3,833,339 $3,806,788  
0.7% $3,753,649  
-5.5% $1,928,705  
-1.4% $5,682,353  
$1,872,048 $1,981,847 -$109,799  
$5,705,387 $5,788,635 -$83,248  
-2.9%  
0.4%  
Total GRF SOURCES  
*
*
Estimates of the Office of Budget and Management as of August 2018.  
*Cumulative totals through the same month in FY 2018.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 3  
September 2018  
Ohio Legislative Service Commission  
Revenues  
Jean J. Botomogno, Principal Economist  
Overview  
This section compares actual GRF sources posted each month against OBM's estimates  
for FY 2019, which were released in August 2018. GRF sources consist of state-source receipts  
(
reimbursements for Medicaid and other programs.  
tax revenue, nontax revenue, and transfers in) and federal grants, which are typically federal  
This report compares actual monthly and year-to-date (YTD) GRF revenue sources to  
OBM's estimates. If actual receipts are 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 are lower than estimate.  
Table 1, which precedes this section, shows GRF sources for the most recent month, in  
this case August, relative to the OBM estimates, while Table 2 compares the sources for the  
year to date for FY 2019 to the estimates. The YTD table also presents the sum of the sources,  
respectively, for the corresponding months in the previous fiscal year and the percent change  
from the previous fiscal year to the present fiscal year. For example, Table 1 shows that sources  
for August were $2.99 billion and OBM's estimates totaled $3.02 billion. Thus, August sources  
had a negative variance of $24.8 million (0.8%). Table 2 shows that year-to-date sources  
(
So, the YTD variance is a negative $83.2 million (1.4%). Table 2 also shows the sum of sources in  
July and August 2017 (FY 2018), which were $5.68 billion. Thus, year-to-date GRF sources are  
including both July and August) totaled $5.71 billion compared to an estimate of $5.79 billion.  
0
.4% ($23.0 million) higher than at the same time last fiscal year.  
Referring to Table 1, in August 2018, federal grants and transfers in were short of  
anticipated receipts by $37.3 million (3.9%) and $4.2 million (100.0%), respectively. On the other  
hand, GRF tax sources were above projections by $16.2 million (0.8%): the sales and use tax and  
the cigarette tax surpassed estimates, but those positive variances were partly offset by negative  
variances from the PIT and the commercial activity tax (CAT), netting a surplus of $6.8 million. The  
remaining tax sources provided a total of $9.5 million of the monthly positive variance.  
GRF tax revenue YTD was $3.75 billion, $27.8 million (0.7%) above the estimate, an  
encouraging start to the new fiscal year. GRF tax sources ended up FY 2018 with a positive  
variance of $573.6 million, driven up by large positive variances from the PIT ($433.8 million)  
and the sales and use tax ($120.3 million). Through August this fiscal year, though the sales and  
use tax posted a positive variance of $47.6 million, the PIT fell $18.3 million below anticipated  
revenue, and the CAT experienced a shortfall of $12.9 million. Most other GRF tax sources were  
above estimates, including the cigarette tax ($3.0 million) and utility-related taxes  
1
(
$7.6 million). Also, nontax revenue was $2.9 million above projections, but transfers in posted  
a deficit of $4.2 million. Therefore, state sources were $26.6 million above estimate. On the  
other hand, federal grants were $109.8 million (5.5%) short of projections for the fiscal year,  
1
Utility-related taxes include the kilowatt-hour excise tax, the public utility tax, and the  
natural gas consumption tax.  
Budget Footnotes  
P a g e | 4  
September 2018  
Ohio Legislative Service Commission  
including a negative variance of $72.5 million in July, due to GRF Medicaid spending having  
been below expectations so far this year. Chart 1, below, shows cumulative variances of GRF  
sources through August 2018.  
Chart 1: Cumulative Variances of GRF Sources in FY 2019  
(
Variances from Estimates, $ in millions)  
$
$
40  
20  
$0  
-
-
-
-
$20  
$40  
$60  
$80  
-
-
$100  
$120  
Jul-18  
Aug-18  
Federal Grants  
Tax Revenue  
Total GRF Sources  
Compared to GRF sources in the first two months of FY 2018, while federal grants  
decreased by $56.7 million (2.9%), GRF tax sources increased $115.3 million (3.2%). Among the  
largest tax sources, revenue from the PIT, the sales and use tax, and the cigarette tax increased  
$
66.7 million, $31.7 million, and $6.1 million, respectively, but receipts from the CAT fell  
$
1.2 million.  
Sales and Use Tax  
Through August in FY 2019, total GRF sales and use tax receipts of $1.80 billion were  
47.6 million (2.7%) above estimate, with both the nonauto and the auto portions of the tax  
$
above projections. Total revenue was also $31.7 million (1.8%) above receipts in FY 2018  
through August. The sales and use tax struggled for most of FY 2018 but ended the fiscal year  
on a strong footing and with a positive variance of $120.3 million. Thus, early results in FY 2019  
appear to continue the very recent trend. For the month of August, receipts of $883.9 million  
were $27.2 million (3.2%) above estimate. Compared to the same month last year, August  
receipts from this tax increased $66.6 million (8.2%).  
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.  
Nonauto Sales and Use Tax  
In August 2018, GRF revenue from the nonauto sales and use tax totaled $745.9 million,  
an amount $27.3 million (3.8%) above estimate. This performance follows positive variances of  
Budget Footnotes  
P a g e | 5  
September 2018  
Ohio Legislative Service Commission  
1
0.5% in June and 1.0% in July. Compared to revenue in the same month in 2017, August  
nonauto sales and use tax revenue increased $64.4 million (9.5%). This increase reflects actual  
growth of the tax base, as for the first time, the year-over-year revenue comparison was  
unaffected by the elimination of the sales tax on Medicaid health insuring corporations  
(
that of July 2017 which included $71.7 million in MHIC revenues. Adjusted for that change in  
the tax base, nonauto revenue in July 2018 would have grown $16.1 million (2.0%).  
MHICs). For example, nonauto sales tax revenue in July 2018 was $55.7 million (6.6%) below  
2
For the fiscal year, GRF receipts totaled $1.53 billion, an amount $35.5 million (2.4%)  
above estimate, and also $8.8 million (0.6%) above revenue in the corresponding period in  
3
FY 2018. Chart 2, below, shows year-over-year growth in nonauto sales tax collections. The  
nonauto sales and use tax has improved substantially in the last few months relative to the  
performance at the start of calendar year (CY) 2018. For the fiscal year, OBM expects GRF  
nonauto sales tax collections to increase modestly, about 2.0% compared to FY 2018.  
Chart 2: Nonauto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year (With Tax Base Adjustment,  
Three-month Moving Average)  
7
6
5
4
3
2
1
0
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
Jan-18  
Feb-18  
Mar-18  
Apr-18  
May-18  
Jun-18  
Jul-18  
Aug-18  
Auto Sales and Use Tax  
August GRF revenue from the auto portion of the sales and use tax of $137.9 million was  
below estimate by $0.2 million (0.1%), but those receipts were $2.2 million (1.6%) above  
revenue in August 2017. In July, however, the tax outperformed estimate by $12.3 million  
(10.1%), and was $20.7 million (18.3%) higher than receipts in July 2017. Through August,  
2
Beginning July 1, 2017, the sales tax on MHICs was eliminated as federal rules required Ohio to  
discontinue applying the sales tax to these corporations. Thus, the last payment deposited in the GRF  
was made in July 2017 (reflecting taxable activity in June 2017).  
3
Please note that to adjust for changes to the existing tax base, this chart excludes monthly  
revenue from MHICs from January to July in CY 2017 so that changes in nonauto sales and use tax  
revenue are on a comparable basis.  
Budget Footnotes  
P a g e | 6  
September 2018  
Ohio Legislative Service Commission  
FY 2019 auto sales tax receipts of $272.1 million were $12.1 million (4.7%) above anticipated  
receipts. Compared to FY 2018, revenue growth was $22.9 million (9.2%). The auto sales and  
use tax has generally experienced strong but uneven growth since March 2018, though the rate  
of growth has slowed in the latest months, as shown in Chart 3.  
Chart 3: Auto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
9
8
7
6
5
4
3
2
1
0
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
Jan-18  
Feb-18  
Mar-18  
Apr-18  
May-18  
Jun-18  
Jul-18  
Aug-18  
Nationwide, new light vehicle (i.e., auto and light truck) sales in the last two months  
averaged 16.6 million units (at seasonally adjusted annual rates), below their average pace of  
7.1 million units in the first six months of 2018. Passenger cars continue to fall out of vogue  
1
and reached an all-time low 30% of all new light vehicle sales in the July-August period. On the  
other hand, light truck sales continue to be healthy and have shown no serious decline so far,  
but a sustained drop in those sales would negatively impact Ohio auto sales tax revenue. For  
the fiscal year as a whole, OBM expects auto sales tax collections to increase just 1.0%  
compared to FY 2018.  
Personal Income Tax  
The PIT finished FY 2018 5.4% above estimate, mostly from outsized tax receipts in the  
last fiscal quarter. However, in FY 2019, the PIT has fallen below projections. GRF revenue of  
$
1.36 billion through August was $18.3 million (1.3%) below estimate, including negative  
variances of $5.1 million (0.8%) in July and $13.2 million (1.8%) in August. However, compared  
to year-ago receipts, FY 2019 revenue increased a healthy $66.7 million (5.2%).  
PIT revenue is comprised of gross collections, minus refunds and distributions to the  
Local Government Fund (LGF). Gross collections consist of employer withholdings, quarterly  
4
estimated payments, trust payments, payments associated with annual returns, and other  
4
Quarterly estimated payments are made by taxpayers who expect to be underwithheld by  
more than $500. Payments are due in April, June, and September of an individual's tax year and January  
of the following year. Most estimated payments are made by high-income taxpayers.  
Budget Footnotes  
P a g e | 7  
September 2018  
Ohio Legislative Service Commission  
miscellaneous payments. The performance of the tax is typically driven by employer  
withholdings, which is the largest component of gross collections (about 82% of gross  
collections in FY 2018). Larger than expected refunds could also greatly affect the monthly  
performance of the tax.  
For the year to date, revenues from each component of the PIT relative to estimates and  
to revenue received in FY 2018 are detailed in the table below. It shows withholding, quarterly  
estimated payments, and miscellaneous payments were below estimates. Those negative  
variances were partially offset by positive variances for annual return payments and trust  
payments, resulting in a shortfall of $9.8 million for gross collections. The PIT shortfall increased  
because refunds were $8.4 million higher than expected. FY 2019 refunds also increased  
compared to their amount in the July-August period last year.  
FY 2019 Personal Income Tax Revenue Variance and Annual Change by Component  
Variance from Estimate  
Changes from FY 2018  
Amount  
$ in millions)  
Percent  
Amount  
($ in millions)  
Percent  
Category  
(
(%)  
-0.7%  
-25.5%  
18.4%  
69.0%  
-3.1%  
-0.6%  
8.4%  
(%)  
4.8%  
-3.3%  
17.8%  
77.9%  
-4.3%  
5.2%  
9.0%  
0.5%  
5.2%  
Withholding  
-$10.0  
-$9.6  
$0.4  
$66.6  
-$1.0  
$0.4  
Quarterly Estimated Payments  
Trust Payments  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
$9.8  
$10.5  
-$0.5  
$76.0  
$8.9  
-$0.4  
-$9.8  
$8.4  
Less Refunds  
Less LGF Distribution  
GRF PIT Revenue  
$0.2  
0.3%  
$0.4  
-$18.3  
-1.3%  
$66.7  
Compared to revenue in the corresponding period in FY 2018, gross collections were  
.2% higher, from increased receipts from withholding, which accounted for the majority of the  
5
growth in collections, and annual return payments. Quarterly estimated payments decreased  
by $1.0 million compared to such revenue in the first two months of FY 2018. However, July and  
August are relatively small revenue months for this component of gross collections, while  
September will be the first big month of the fiscal year. Through August, employer withholding  
was 0.7% below estimate in FY 2019. Revenue growth for this PIT component has been  
generally respectable in 2018, though it has decelerated below 5% in the latest month. The  
chart below illustrates the growth of monthly employer withholdings on a three-month moving  
average relative to one year ago.  
Budget Footnotes  
P a g e | 8  
September 2018  
Ohio Legislative Service Commission  
Chart 4: Monthly Witholding Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
7
6
5
4
3
2
1
0
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
Jan-18  
Feb-18  
Mar-18  
Apr-18  
May-18  
Jun-18  
Jul-18  
Aug-18  
Commercial Activity Tax  
The performance of the CAT improved late in FY 2018, and for the last fiscal quarter, the  
tax was 9.6% above projections. In contrast, GRF receipts of $344.0 million in the first two  
months in FY 2019 fell $12.9 million (3.6%) below projections. The first CAT payment for  
quarterly return taxpayers, due in August, provided $293.0 million to the GRF, an amount  
$
11.8 million (3.9%) below estimate, which added to a shortfall of $1.1 million (2.1%) the  
previous month. Compared to FY 2018, YTD FY 2019 GRF receipts were $1.2 million (0.4%)  
lower. Available economic data suggest the CAT negative variance and the decline in receipts  
relative to FY 2018 are likely due to an increase in credit claims. For the fiscal year as a whole,  
OBM forecast GRF receipts growth of 3.9% for this tax source.  
Under continuing law, CAT receipts are deposited into the GRF (85%), the School District  
Tangible Property Tax Replacement Fund (Fund 7047, 13%), and the Local Government Tangible  
Property Tax Replacement Fund (Fund 7081, 2%). Distributions to 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.  
Cigarette and Other Tobacco Products Tax  
August GRF revenue of $84.4 million from the cigarette and other tobacco products tax  
was $4.7 million (5.9%) above estimate. Revenue from this tax in July 2018 was $1.6 million  
(
6.5%) below estimate. Thus, for the fiscal year, the cumulative positive variance for the  
cigarette and other tobacco products tax totaled $3.0 million (2.9%). Total revenue of  
107.9 million included $93.2 million from the sale of cigarettes and $14.7 million from the sale  
$
of other tobacco products.  
Budget Footnotes  
P a g e | 9  
September 2018  
Ohio Legislative Service Commission  
Though receipts from this tax in August fell $1.3 million below their level in the same  
month in 2017, July 2018 receipts were $7.4 million above revenue in the corresponding  
month last year. Thus, YTD FY 2019 revenue was $6.1 million above revenue through August  
last year. Cigarette sales contributed $3.3 million to the total increase, and receipts from the  
sale of other tobacco products increased $2.8 million. Revenue from the cigarette and other  
tobacco products tax usually trends downward generally at a slow pace due to a decline of  
cigarette revenue. OBM estimates a yearly revenue decline of about 2.4% compared to  
FY 2018.  
Summary of OBM Estimates for GRF Sources for FY 2019  
Estimated revenue by GRF source for the full fiscal year is provided below. As seen from  
the table, GRF sources are estimated to total $33.71 billion in FY 2019. Based on this estimate,  
the sales and use tax, the PIT, the CAT, and the cigarette tax would provide nearly two-thirds of  
total GRF sources in FY 2019.  
OBM Estimates for GRF Sources for FY 2019  
(
$ in thousands)  
As a % of Total  
Sources  
Revenue Source  
Sales and Use Tax  
Estimates  
$10,338,100  
$8,747,600  
$1,581,800  
$917,000  
30.7%  
26.0%  
4.7%  
Individual Income Tax  
Commercial Activity Tax  
Cigarette & Other Tobacco Products Tax  
Domestic and Foreign Insurance Taxes  
Utility Taxes  
2.7%  
$554,000  
1.6%  
$537,500  
1.6%  
Other Taxes  
$311,000  
0.9%  
Subtotal GRF Taxes  
$22,987,000  
$481,431  
68.2%  
1.4%  
Nontax Revenue and Transfers In  
Federal Grants  
$10,240,063  
$33,708,495  
30.4%  
100.0%  
Total GRF Sources  
Budget Footnotes  
P a g e | 10  
September 2018  
Ohio Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of August 2018  
($ in thousands)  
(Actual based on OAKS reports run September 5, 2018)  
Program Category  
Actual  
Estimate* Variance Percent  
Primary and Secondary Education  
Higher Education  
$682,920  
$190,203  
$10,734  
$711,752 -$28,833  
-4.1%  
-0.7%  
47.7%  
-2.9%  
$191,594  
$7,268  
-$1,391  
$3,466  
Other Education  
Total Education  
$883,857  
$910,614 -$26,757  
Medicaid  
$1,377,104 $1,447,337 -$70,233  
$96,101  
$1,473,205 $1,558,042 -$84,837  
-4.9%  
Health and Human Services  
Total Health and Human Services  
$110,705 -$14,605 -13.2%  
-5.4%  
Justice and Public Protection  
General Government  
$155,492  
$32,441  
$168,337 -$12,845  
$36,859  
-7.6%  
-$4,419 -12.0%  
Total Government Operations  
$187,933  
$205,196 -$17,263  
-8.4%  
Property Tax Reimbursements  
Debt Service  
$279,343  
$141,790  
$421,133  
$165,063 $114,280  
69.2%  
0.1%  
$141,666  
$124  
Total Other Expenditures  
$306,729 $114,404  
37.3%  
Total Program Expenditures  
Transfers Out  
$2,966,127 $2,980,581 -$14,454  
$2,500 $1,750 $750  
$2,968,627 $2,982,331 -$13,704  
-0.5%  
42.9%  
-0.5%  
Total GRF Uses  
*August 2018 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 11  
September 2018  
Ohio Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2019 as of August 31, 2018  
($ in thousands)  
(Actual based on OAKS reports run September 5, 2018)  
Program Category  
Actual  
Estimate*  
Variance Percent FY 2018** Percent  
Primary and Secondary Education  
Higher Education  
$1,443,273 $1,488,710  
-$45,437  
-$3,264  
$2,674  
-3.1% $1,440,759  
0.2%  
7.0%  
$374,997  
$18,562  
$378,261  
$15,888  
-0.9%  
16.8%  
$350,429  
$14,611  
Other Education  
27.0%  
1.7%  
Total Education  
$1,836,832 $1,882,858  
-$46,027  
-2.4% $1,805,799  
Medicaid  
$2,876,450 $3,045,163 -$168,713  
$223,129 $238,840 -$15,711  
$3,099,579 $3,284,003 -$184,424  
-5.5% $2,952,828  
-2.6%  
-2.1%  
-2.5%  
Health and Human Services  
Total Health and Human Services  
-6.6% $227,840  
-5.6% $3,180,668  
Justice and Public Protection  
General Government  
$454,243  
$74,963  
$464,369  
$72,994  
-$10,126  
$1,970  
-2.2%  
2.7%  
$432,140  
$72,996  
5.1%  
2.7%  
4.8%  
Total Government Operations  
$529,206  
$537,362  
-$8,156  
-1.5%  
$505,136  
Property Tax Reimbursements  
Debt Service  
$279,337  
$384,878  
$664,214  
$166,691 $112,646  
$384,941 -$63  
$551,631 $112,583  
67.6%  
0.0%  
$238,306  
$354,628  
$592,934  
17.2%  
8.5%  
Total Other Expenditures  
20.4%  
12.0%  
Total Program Expenditures  
Transfers Out  
$6,129,832 $6,255,855 -$126,024  
$741,858 $739,073 $2,784  
$6,871,689 $6,994,929 -$123,239  
-2.0% $6,084,537  
0.4%  
-1.8% $6,142,632  
0.7%  
$58,095 1177.0%  
Total GRF Uses  
11.9%  
*
*
August 2018 estimates of the Office of Budget and Management.  
*Cumulative totals through the same month in FY 2018.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 12  
September 2018  
Ohio Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on September 6, 2018)  
Month of August 2018  
Year to Date through August 2018  
Actual Estimate* Variance Percent  
Department  
Medicaid  
GRF  
Actual  
Estimate* Variance Percent  
$1,316,966 $1,385,121 -$68,155  
-4.9% $2,756,257 $2,920,865 -$164,608  
-3.1% $1,022,641 $1,063,481 -$40,840  
-4.4% $3,778,898 $3,984,346 -$205,448  
-5.6%  
-3.8%  
-5.2%  
Non-GRF  
$533,550 $550,364 -$16,814  
1,850,515 $1,935,485 -$84,970  
$
All Funds  
Developmental Disabilities  
GRF  
$50,119  
172,036  
222,155  
$49,036  
$171,256  
$220,292  
$1,083  
$780  
2.2%  
0.5%  
0.8%  
$102,750  
$355,192  
$457,942  
$104,233  
$368,898  
$473,130  
-$1,482  
-$13,706  
-$15,188  
-1.4%  
-3.7%  
-3.2%  
$
Non-GRF  
All Funds  
$
$1,863  
Job and Family Services  
GRF  
$9,292  
$18,649  
27,941  
$12,473  
$13,692  
$26,165  
-$3,181 -25.5%  
$15,913  
$33,410  
$49,323  
$18,312  
$21,750  
$40,062  
-$2,399 -13.1%  
Non-GRF  
$4,958  
$1,777  
36.2%  
6.8%  
$11,660  
$9,261  
53.6%  
23.1%  
$
All Funds  
Health, Mental Health and Addiction, Aging, Pharmacy Board, and Education  
GRF  
$727  
$706  
$4,722  
$5,429  
$21  
2.9%  
$1,530  
$5,629  
$7,160  
$1,753  
$7,891  
$9,644  
-$223 -12.7%  
-$2,261 -28.7%  
-$2,484 -25.8%  
Non-GRF  
$3,830  
-$892 -18.9%  
-$871 -16.1%  
$
4,557  
All Funds  
All Departments:  
GRF  
$1,377,104 $1,447,337 -$70,233  
$728,065 $740,033 -$11,969  
2,105,169 $2,187,370 -$82,201  
-4.9% $2,876,450 $3,045,163 -$168,713  
-1.6% $1,416,872 $1,462,020 -$45,147  
-3.8% $4,293,323 $4,507,182 -$213,860  
-5.5%  
-3.1%  
-4.7%  
Non-GRF  
All Funds  
$
*September 2018 estimates from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 13  
September 2018  
Ohio Legislative Service Commission  
Table 6: Medicaid Expenditures by Payment Category  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on September 6, 2018)  
Month of August 2018  
Year to Date through August 2018  
Actual Estimate* Variance Percent  
Payment Category  
Actual  
Estimate* Variance Percent  
Managed Care  
CFC†  
$1,373,030 $1,391,666 -$18,636  
-1.3% $2,717,560 $2,782,355  
-$64,795  
-$19,291  
-$44,146  
-$8,134  
-$1,840  
$8,615  
-2.3%  
-1.9%  
-5.8%  
-1.7%  
-1.2%  
2.1%  
$503,512  
$355,505  
$230,461  
$77,041  
$499,242  
$4,270  
0.9%  
-5.9%  
-1.6%  
-1.6%  
2.2%  
$979,267  
$711,316  
$459,770  
$154,433  
$412,774  
$998,557  
$755,462  
$467,904  
$156,273  
$404,159  
Group VIII  
ABD†  
$377,978 -$22,473  
$234,109  
$78,257  
-$3,648  
-$1,217  
$4,431  
ABD Kids  
MyCare  
$206,512  
$202,080  
Fee-For-Service  
ODM Services  
DDD Services  
Hospital - UPL†  
$535,051  
$325,400  
$209,651  
$0  
$586,768 -$51,717  
-8.8% $1,222,676 $1,344,051 -$121,375  
-9.0%  
$379,439 -$54,039 -14.2%  
$775,367  
$439,798  
$7,511  
$864,796  
$452,856  
$26,400  
-$89,429 -10.3%  
-$13,057 -2.9%  
-$18,889 -71.5%  
$207,328  
$0  
$2,322  
$0  
1.1%  
--  
Premium Assistance  
Medicare Buy-In  
Medicare Part D  
$89,131  
$51,219  
$37,912  
$91,235  
$52,576  
$38,659  
-$2,104  
-$1,357  
-$747  
-2.3%  
-2.6%  
-1.9%  
$175,734  
$100,139  
$75,595  
$187,975  
$110,807  
$77,167  
-$12,241  
-$10,669  
-$1,572  
-6.5%  
-9.6%  
-2.0%  
Administration  
$107,957  
$117,702  
-$9,745  
-8.3%  
$177,352  
$192,801  
-$15,449  
-8.0%  
-4.7%  
Total All Categories  
$2,105,169 $2,187,370 -$82,201  
-3.8% $4,293,323 $4,507,182 -$213,860  
*September 2018 estimates from the Department of Medicaid.  
†CFC - Covered Families and Children; ABD - Aged, Blind, and Disabled; UPL - Upper Payment Limit & Other.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 14  
September 2018  
Ohio Legislative Service Commission  
Expenditures  
Melaney Carter, Assistant Deputy Director  
Ivy Chen, Principal Economist  
Overview  
This section compares actual monthly and YTD program expenditures and transfers from  
the GRF (GRF uses) with OBM's estimates. The tables that precede this section summarize the  
data and are referred to in this section. Table 3 compares the uses for the most recent month  
with the estimates for that month, and Table 4 compares the uses for the fiscal YTD with the  
YTD estimates. The variance column in each table is calculated by subtracting the estimate from  
the actual; so if the actual use is higher than the estimate, the variance is positive and if the  
actual use is lower than the estimate, the variance is negative. The variance is shown both as a  
dollar value and a percent. Table 4 also shows the sum of the uses for the corresponding  
months in the previous fiscal year and the percent change from the previous fiscal year to the  
present fiscal year; a negative percent change means the value of the use has fallen from the  
prior year and a positive percent change means the value of the use has risen from the prior  
year. Program expenditures are broken out into nine program categories. Three are related to  
education, two to health and human services, and two to government operations. The  
remaining two are property tax reimbursements and debt service.  
Tables 5 and 6 provide more detailed data on Medicaid expenditures from both the GRF  
and non-GRF funds. They compare actual Medicaid expenditures with estimates provided by  
the Department of Medicaid for each month and YTD. Table 5 presents the data by agency, and  
Table 6 presents the data by payment category. There are four main payment categories –  
Managed Care, Fee-For-Service, Premium Assistance, and Administration.  
Through August, FY 2019 GRF program expenditures totaled $6.13 billion. These  
expenditures were $126.0 million (2.0%) below the estimate released by OBM in August 2018.  
The program categories with the greatest negative YTD variances were Medicaid at  
$
168.7 million (5.5%) and Primary and Secondary Education at $45.4 million (3.1%). The  
Property Tax Reimbursement category had a positive YTD variance of $112.6 million (67.6%),  
partially offsetting the negative variances. The rest of this section first discusses the variances in  
these three program categories and then summarizes the estimates for GRF uses and for  
all funds (including both the GRF and non-GRF) Medicaid expenditures for the full fiscal year.  
Medicaid  
Medicaid is a joint federal-state program. It is mainly funded by the GRF but is also  
supported by several non-GRF funds. Both GRF and non-GRF Medicaid expenditures contain  
5
federal and state dollars. Table 5 shows GRF and non-GRF Medicaid expenditures for the Ohio  
5
Federal reimbursements for Medicaid expenditures made from the state GRF are deposited  
into the GRF as revenue to help support the GRF appropriations for Medicaid. Federal reimbursements  
for Medicaid expenditures made from state non-GRF funds are deposited into various non-GRF funds for  
expenditure. In recent years, the federal government has reimbursed about two-thirds of Ohio's total  
Medicaid expenditures.  
Budget Footnotes  
P a g e | 15  
September 2018  
Ohio Legislative Service Commission  
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.  
GRF Medicaid expenditures were $168.7 million (5.5%) below the YTD estimate.  
Non-GRF Medicaid expenditures were also below estimate by $45.1 million (3.1%). Across all  
funds, Medicaid expenditures were $213.9 million (4.7%) below the YTD estimate.  
As can be seen in Table 5, the vast majority of the negative YTD variance in all-funds  
Medicaid expenditures can be attributed to ODM ($205.4 million) and ODODD ($15.2 million).  
ODM's YTD GRF and non-GRF Medicaid expenditures were $164.6 million (5.6%) and  
$
expenditures were $1.5 million (1.4%) and $13.7 million (3.7%), respectively, below estimate.  
40.8 million (3.8%), respectively, below estimate. ODODD's YTD GRF and non-GRF Medicaid  
6
Table 6 shows all-funds Medicaid expenditures by payment category. The Fee-For-Service  
FFS) category had the largest overall negative variance of $121.4 million (9.0%). This is primarily  
(
due to caseloads being lower than projected for the FFS category. Beginning January 1, 2018,  
individuals newly eligible were enrolled onto managed care shortly after receiving Medicaid  
benefits. When ODM was determining the projections, individuals newly eligible could remain in  
the FFS system for several weeks while they decided which managed care plan in which to enroll.  
The Managed Care category had the second largest negative variance of $64.8 million  
(2.3%). The largest variance within this category is for the Group VIII population, which has a  
YTD negative variance of $44.1 million (5.8%). With the exception of the MyCare population,  
the remaining Managed Care populations also experienced negative YTD variances. This is due  
to a decline in caseloads. Overall, the majority of Ohioans enrolled in Medicaid receive services  
through managed care.  
The Administration category had a negative YTD variance of $15.4 million (8.0%). This is  
primarily timing related.  
Primary and Secondary Education  
The YTD negative variance of $45.4 million (3.1%) in the Primary and Secondary  
Education category largely occurred in appropriation item 200550, Foundation Funding. This  
item provides most of the state's funding to public schools as distributed through the state's  
foundation funding formula. This formula is based on various data that are collected and  
updated throughout the year so there are often variances in this item.  
Property Tax Reimbursements  
Property Tax Reimbursement expenditures were $112.6 million (67.6%) above their YTD  
estimate. These funds are used to make semiannual payments to school districts and other  
6
For FY 2019, all ODM payments for services within the FFS system (e.g., nursing facilities,  
hospitals, and physician services) have been grouped into "ODM Services." In previous fiscal years, these  
payments were broken out into their own separate categories.  
Budget Footnotes  
P a g e | 16  
September 2018  
Ohio Legislative Service Commission  
local governments. Current payments are based on a property tax settlement conducted in  
August. Payments based on this settlement will be made through December as county auditors  
request reimbursement. Although monthly variances are common during each semiannual  
cycle, the YTD variance generally decreases by the end of the cycle.  
Summary of OBM Estimates for GRF Uses for FY 2019  
The table below shows the estimates released by OBM in August 2018 for GRF uses for  
FY 2019. The program categories are ordered from largest to smallest annual estimate. In  
addition to the nine program categories, OBM estimates that GRF appropriations will be  
increased by up to $40.0 million as a result of agency payroll increases due to recent collective  
bargaining agreements. Altogether, GRF program expenditures are estimated to total  
$
$
33.31 billion in FY 2019. Of this amount, $15.59 billion (46.8%) will go to Medicaid and  
8.13 billion (24.4%) will go to Primary and Secondary Education. Together, these two program  
categories are expected to account for 71.2% of total program expenditures in FY 2019.  
In addition to program expenditures, OBM estimates that $761.2 million will be transferred  
out of the GRF. Most of these transfers ($739.4 million) occurred in July 2018, including a transfer of  
$
FY 2019 appropriations will be encumbered at the end of the fiscal year for expenditure in future  
fiscal years. This results in an estimated total of GRF uses for FY 2019 of $34.39 billion.  
657.5 million into the Budget Stabilization Fund. OBM also estimates that $321.9 million of  
OBM Estimates for GRF Uses for FY 2019 by Program Category  
(
$ in thousands)  
As a % of Total Program  
Expenditures  
Program Categories  
Expenditures  
Medicaid  
$15,590,607  
$8,133,377  
$2,303,913  
$2,214,692  
$1,814,800  
$1,432,963  
$1,313,866  
$393,782  
46.8%  
24.4%  
6.9%  
6.6%  
5.4%  
4.3%  
3.9%  
1.2%  
0.2%  
0.1%  
100.0%  
--  
Primary and Secondary Education  
Higher Education  
Justice and Public Protection  
Property Tax Reimbursements  
Debt Service  
Health and Human Services  
General Government  
Other Education  
$70,929  
Estimated Payroll Increases  
$40,000  
Total Program Expenditures  
$33,308,929  
$761,233  
Transfers Out  
Year-end Encumbrances  
$321,927  
--  
Total GRF Uses  
$34,392,090  
--  
Budget Footnotes  
P a g e | 17  
September 2018  
Ohio Legislative Service Commission  
Summary of ODM Estimates for Medicaid Expenditures for  
FY 2019  
The table below shows the estimates by payment category released by ODM in August  
018 for both GRF and non-GRF Medicaid expenditures for FY 2019. There are four main  
2
payment categories Managed Care, Fee-For-Service, Premium Assistance, and Administration.  
Managed Care is a health care delivery system whereby ODM contracts with a managed  
care plan (MCP) to manage the cost and utilization of services in exchange for a set  
per-member per-month payment for each recipient. Managed Care is broken into six  
subcategories. The largest subcategory both in terms of expenditures and enrollment is  
Covered Families and Children (CFC), which includes expenses for children with household  
incomes up to 206% of the federal poverty level (FPL), pregnant women up to 200% FPL, and  
families (parents and children) who receive cash assistance under Ohio Works First or who have  
household incomes at or below 90% FPL. The second subcategory is Group VIII, which includes  
costs for nondisabled adults made Medicaid eligible under the Affordable Care Act (ACA). These  
individuals are under age 65 and have incomes at or below 138% FPL. The next subcategories  
are Aged, Blind, and Disabled (ABD) and ABD Kids. ABD includes expenditures related to  
individuals who are age 65 or older, who are significantly visually impaired, or who have a  
disabling condition that meets Supplemental Security Income requirements. These individuals  
must also meet income and asset limits. ABD Kids includes costs for children who are visually  
impaired or have a disabling condition as well as children in foster and adopted care. MyCare  
includes expenses for individuals enrolled in a demonstration project that coordinates the  
delivery of Medicare and Medicaid services for recipients eligible for both programs (otherwise  
known as "dual-eligibles"). The last Managed Care subcategory is Pay for Performance and  
Insurer Fee. Pay for Performance is an incentive program that rewards MCPs that achieve  
specific levels of performance in certain program priority areas. Insurer Fee includes payments  
ODM makes to reimburse MCPs for ACA required fees that are charged to health insurers.  
The second category is Fee-For-Service, which is a payment model in which qualified  
Medicaid providers are paid for each covered service. This category has four subcategories. The  
largest is ODM Services, which includes expenditures related to waiver-related services as well  
as other Medicaid covered services not paid for by MCPs (e.g., prescription drugs and payments  
to nursing facilities, hospitals, and physicians). The next category is Hospital Upper Payment  
Limit (UPL) & Other. Hospital UPL includes supplemental payments to hospitals such as  
payments that comprise the difference between total base payments for services and the  
maximum payment level allowed under the UPL for those services. Another subcategory is  
Hospital HCAP (Hospital Care Assurance Program), which includes subsidy payments to  
hospitals that provide uncompensated, or charity, care to low-income and uninsured  
individuals. The last subcategory is DDD Services, which include institutional and  
non-institutional services provided to individuals with an intellectual disability and reimbursed  
by ODODD.  
The Premium Assistance Category includes two subcategories Medicare Buy In and  
Medicare Part D. Medicare Buy In includes payments for individuals who receive assistance in  
paying their Medicare Part A or Part B premiums and other cost-sharing expenses such as  
copayments, coinsurance, and deductibles. Medicare Part D includes monthly payments to the  
federal Medicare Program for prescription drug costs for dual-eligibles.  
Budget Footnotes  
P a g e | 18  
September 2018  
Ohio Legislative Service Commission  
The last category is Administration and includes costs related to administering Medicaid  
in Ohio. Costs are included for ODM, ODODD, and the other six "sister" Medicaid agencies.  
ODM Estimates for Medicaid Expenditures for FY 2019 by Payment Category  
(
$ in thousands)  
As a % of Total  
Medicaid Expenditures  
Payment Categories  
Managed Care  
Expenditures  
$17,440,735  
$6,047,244  
$4,630,976  
$2,929,979  
$982,762  
61.6%  
21.3%  
16.3%  
10.3%  
3.5%  
Covered Families and Children (CFC)  
Group VIII  
Aged, Blind, and Disabled (ABD)  
ABD Kids  
MyCare  
$2,484,565  
$365,210  
8.8%  
Pay For Performance and Insurer Fee  
Fee-For-Service (FFS)  
ODM Services  
1.3%  
$8,705,063  
$4,675,607  
$499,038  
30.7%  
16.5%  
1.8%  
Hospital Upper Payment Limit (UPL) & Other  
Hospital HCAP  
$635,291  
2.2%  
DDD Services  
$2,895,128  
$1,164,016  
$690,329  
10.2%  
4.1%  
Premium Assistance  
Medicare Buy In  
2.4%  
Medicare Part D  
$473,687  
1.7%  
Administration  
$1,025,315  
$28,335,129  
3.6%  
Total Medicaid Expenditures  
100%  
Budget Footnotes  
P a g e | 19  
September 2018  
Ohio Legislative Service Commission  
Issue Updates  
ODE Awards $42 Million in 21st Century Community  
Learning Center Grants  
Alexandra Vitale, Budget Analyst  
On August 8, 2018, the Ohio Department of Education (ODE) awarded $42.0 million in  
new and continuing grants to 213 schools and community-based organizations under the  
1st Century Community Learning Centers (21CCLC) Grant Program. This federally funded  
2
program awards grants to support community learning centers that provide academic  
enrichment services during nonschool hours or extended learning time as part of the school  
day, particularly for students in low-performing, high-poverty schools. In this latest round of  
funding, ODE awarded grants for 79 new programs and 134 continuing programs, totaling  
$
15.7 million and $26.4 million, respectively.  
ODE distributes 21CCLC grant funds to recipients for a five-year period with a maximum  
of $200,000 per year for the first three years of the program and gradually reduced maximum  
amounts for the last two years as recipients must transition to other resources to sustain the  
program after the 21CCLC grant expires. Also, to continue receiving a grant, recipients must  
annually submit program data to ODE and undergo periodic evaluations of the program's  
effectiveness. Nearly all of the 79 new grantees received the maximum $200,000 in funding for  
this year. New grant recipients were concentrated in Cuyahoga (17), Gallia (5), Hamilton (5),  
Athens (4), Franklin (4), and Mahoning (4) counties. Together, these six counties represent  
about half of the new grant awards. To see the full list of grant recipients, visit  
education.ohio.gov and search for "21st Century Community Learning Centers."  
Number of High School Diplomas Awarded  
by Adult Programs Increased in FY 2018  
Jason Glover, Budget Analyst  
In FY 2018, 1,124 adults ages 22 and older received high school diplomas through the  
2+ Adult High School Diploma Program and the Adult Diploma Program, an increase of 28.3%, or  
48 graduates, compared to the prior year. Most of this growth stemmed from the 22+ Adult High  
2
2
School Diploma Program, which helps adults earn a locally issued high school diploma from a school  
district, community school, or two-year college. The number of graduates from this program has  
grown strongly since the program's beginning in FY 2016, increasing by 229 (58.9%) to 618 in the  
third year of the program, after increasing by 262 (206.3%) in the second year. The Adult Diploma  
Program grew in FY 2018 as well. Preliminary data suggests that at least 506 graduates received a  
state-issued high school diploma through the program, also in its third year of operation, though  
some providers have not yet completed reporting. In FY 2017, 487 adults completed the program.  
In addition to completing high school graduation requirements, participants receive skills training  
needed for a job in one of 20 in-demand career fields. Upon completion of the program, each  
participant also earns an industry-recognized credential or certificate.  
Budget Footnotes  
P a g e | 20  
September 2018  
Ohio Legislative Service Commission  
State subsidy for these programs also continues to increase. During FY 2018, ODE paid  
3.7 million to providers in the 22+ Adult High School Diploma Program, up $1.2 million (50.1%)  
$
from the $2.4 million paid in FY 2017. Providers receive up to $5,000 annually for each individual  
enrolled in the program depending on the extent of the individual's successful completion of  
high school graduation requirements. State subsidy to providers for students in the Adult  
Diploma Program was $2.2 million in FY 2018, an increase of about $384,000 (21.1%) compared  
to FY 2017. Payments to participating institutions for each student enrolled in an approved  
program of study are calculated according to a formula providing certain tiers of funding based  
on the number of hours of technical training required in the student's career pathway training  
program and the student's grade level upon initial enrollment into the program.  
The GRF supports both programs. In FY 2018, however, $1.2 million for the 22+ Adult High  
School Diploma Program came from leftover non-GRF funds comprised of fees the state formerly  
collected in connection with its administration and oversight of GED tests (in 2014, a national  
testing entity began collecting testing and transcript fees). Beginning in FY 2018, H.B. 49  
consolidated GRF funding for both programs into line item 200572, Adult Education Programs.  
The table below summarizes the numbers of graduates and state subsidies for the two programs.  
2
2+ High School Diploma and Adult Diploma Programs Graduates and State Subsidy, FY 2016-FY 2018  
Measure  
Program  
FY 2016  
127  
FY 2017  
389  
FY 2018  
618  
2
2+ High School Diploma  
Graduates  
Adult Diploma  
345  
472  
487  
876  
506*  
1,124  
Total  
Total  
2
2+ High School Diploma  
$545,962  
$1,029,595  
$1,575,557  
$2,434,397  
$1,820,464  
$4,254,861  
$3,653,106  
$2,204,582  
$5,857,688  
State Subsidy  
for Providers  
Adult Diploma  
*Reporting is not yet completed for FY 2018  
ODM Reports Annual Savings of $30 Million from MyCare Ohio  
Ryan Sherrock, Economist  
On June 29, 2018, the Ohio Department of Medicaid (ODM) released the fourth annual  
"MyCare Ohio Evaluation," which found that the program saved approximately $30 million  
annually in comparison to what would have been spent under the traditional Medicaid  
7
fee-for-service program. These savings are largely attributed to the efforts of MyCare Ohio  
7
Under the fee-for-service program, providers bill Ohio Medicaid for each individual service  
provided.  
Budget Footnotes  
P a g e | 21  
September 2018  
Ohio Legislative Service Commission  
plans to divert individuals from nursing facilities to home and community-based settings.  
According to the evaluation, the program has resulted in a 2% increase in the number of  
individuals who transitioned to community settings. On average, for each individual diverted,  
the program saves approximately $3,000 per month. In addition to these savings, the program  
has high member satisfaction rates with 70% of individuals reporting satisfaction with their care  
manager and 93% reporting satisfaction with their relationship to their care manager. Lastly,  
MyCare Ohio managed care plans (MCPs) scored favorably on Healthcare Effectiveness Data  
8
and Information Set (HEDIS) performance measures. In fact, for the statewide average, over  
5
0% of the measured rates exceeded the national 90th percentile benchmark. Examples of  
measures exceeding this benchmark include assessing whether individuals with asthma are  
given appropriate asthma controller medication and whether adults who have had a heart  
attack receive beta-blocker treatment for six months following hospital discharge.  
MyCare Ohio was approved as a five-year demonstration project and began operations in  
May 2014. According to the evaluation, ODM intends to seek approval from the federal Centers  
for Medicare and Medicaid Services to extend the program for an additional three years, or  
through December 2022. Under the program, five MyCare Ohio MCPs coordinate physical,  
behavioral, and long-term services benefits for individuals eligible for both Medicare and  
Medicaid. The overall goal of the program is to improve access to care and quality of care,  
eliminate cost shifting between Medicare and Medicaid, and maximize cost savings through care  
coordination. The program serves 29 counties, including major metropolitan areas. As of  
July 2018, there were almost 112,000 individuals enrolled onto MyCare Ohio.  
Auditor Reports that Medicaid PBMs were Paid $224.8 Million  
Alexander B. Moon, Economist  
9
On August 16, 2018, the Auditor of State r0eported that Pharmacy Benefit Managers  
1
(PBMs) were paid $224.8 million in total "spread" from April 2017 through March 2018 for  
prescription benefits provided to Medicaid managed care enrollees. The average spread paid by  
Medicaid MCPs was $5.71 for each prescription or 8.9% of total prescription costs. However,  
the spread was much higher for generic drugs, which comprise 86% of prescriptions, than for  
brand name or specialty drugs. For generic drugs, the average spread was $6.14 for each  
prescription or 31.4% of the total generic prescription cost. In contrast, the spread was $1.84  
for each brand name prescription (0.8% of the total brand name prescription cost) and $33.49  
for each specialty prescription (1.1% of the total specialty prescription cost). The report noted  
that it is not possible to compare the spread paid by MCPs with other states since Ohio is the  
8
According to the National Committee for Quality Assurance, HEDIS is a tool, used by more than  
9
service. HEDIS consists of 92 measures across six areas of care.  
0% of health plans in the United States, to measure performance on various aspects of care and  
9
The report in its entirety can be accessed here: https://ohioauditor.gov/auditsearch/Reports/  
2
018/Medicaid_Pharmacy_Services_2018_Franklin.pdf.  
10  
"Spread" is defined as the difference between what Medicaid MCPs pay PBMs and what the  
PBMs in turn pay pharmacies.  
Budget Footnotes  
P a g e | 22  
September 2018  
Ohio Legislative Service Commission  
first state to release an entire year's worth of data regarding this issue. However, the report  
provided several recommendations, including increasing requirements for statistical and  
financial reporting by PBMs in order to gain a better understanding of actual pharmacy  
reimbursements and analyzing the costs and benefits of alternative contract types for  
pharmacy services, specifically pass-through contracts. The report only focused on spread  
pricing and did not examine any additional revenue received by PBMs (e.g., drug rebates).  
The report was initiated by the Auditor of State at the request of the Ohio General  
Assembly. Prior to the release of the Auditor's report, ODM announced that, beginning  
January 1, 2019, it will end the practice of spread pricing and instead require MCPs to  
implement a pass-through pricing model. Under a pass-through pricing model, PBMs would  
charge Medicaid the same price that was paid to the pharmacy for the medication and would  
receive an administrative fee for doing so.  
MCPs contract with PBMs to manage and fill prescriptions. In turn, PBMs provide claim  
adjudications and customer service, negotiate drug manufacturer rebates, conduct drug  
utilization reviews, and operate mail-order and specialty pharmacies. In addition, PBMs establish  
pharmacy networks, which allow them to negotiate discounted prices for prescription drugs.  
Ohio EPA Awards $7.8 Million for Local Government Household  
Sewage Treatment Programs  
Robert Meeker, Budget Analyst  
In the last quarter of FY 2018 (April-June), the Ohio Environmental Protection Agency  
(
Ohio EPA) awarded $7.8 million in subsidies to 43 local government household sewage  
treatment system (HSTS) programs across the state. The award amounts ranged from $84,000 to  
the maximum of $200,000, the latter of which was received by 32 of those local HSTS programs.  
The funding will be used by counties and local health districts to provide principal forgiveness  
loans to low- to moderate-income homeowners to assist with the repair or replacement of a  
failing HSTS. These loans are basically grants 100% of the principal is forgiven, which means that  
a qualifying homeowner is not required to repay the principal or any interest.  
Homeowners apply to their local HSTS program to determine their eligibility for a  
principal forgiveness loan to assist with eligible repair or replacement costs. A homeowner may  
qualify for an amount equaling 50%, 85%, or 100% of the eligible costs, depending upon the  
size of their household and their aggregate household income. The local program is responsible  
for securing the services of an HSTS installer and payment of the eligible costs from the  
homeowner's loan to the installer and any other contractors involved in the installation.  
Local government HSTS subsidies are backed with money drawn from the Ohio Water  
Pollution Control Loan Fund (WPCLF) managed by the Ohio EPA with assistance from the Ohio  
Water Development Authority. The WPCLF generally provides below-market rate, zero interest  
rate, and principal forgiveness loans for the planning, design, and construction of wastewater  
treatment facilities and sewer systems and is funded with federal capitalization grants, loan  
repayments, and bond proceeds.  
Budget Footnotes  
P a g e | 23  
September 2018  
Ohio Legislative Service Commission  
Controlling Board Releases $1.5 Million for Juvenile Community  
Corrections Facility Capital Improvements Projects  
Maggie Wolniewicz, Senior Budget Analyst  
On August 20, 2018, the Controlling Board approved the Department of Youth Services'  
request for the release of $1.5 million to fully fund capital improvements projects at nine of  
Ohio's 12 juvenile community corrections facilities (CCFs). The funding is for general building  
renovations, with each facility identifying one or more specific priorities including roof  
replacement; fire alarm and panel replacement; safety and security system improvements;  
heating, ventilation, and air conditioning (HVAC) system equipment and control replacement;  
and various other facility improvements. The table below lists each of the nine CCFs and the  
cost of their funded projects.  
CCFs are local, secure, county-operated facilities that serve as an alternative for judges  
by providing residential treatment services to less serious felony level offenders between the  
ages of 12 and 18 that would otherwise be committed into the care and custody of the  
Department. All CCF construction, renovation, and operating costs are paid for by the  
Department. In FY 2018, the 12 CCFs as a group served 626 youth statewide, with lengths of  
stay typically ranging between four to nine months.  
Community Corrections Facility Project Funding  
County  
Belmont  
Facility Name  
Project Cost  
$485,000  
$232,497  
$209,393  
$199,868  
$159,559  
$73,055  
Oakview Juvenile Residential Center  
Montgomery  
Wood  
Montgomery County Center for Adolescent Services  
Juvenile Residential Center of Northwest Ohio  
Miami Valley Juvenile Rehabilitation Center  
Northern Ohio Juvenile CCF  
Greene  
Erie  
Miami  
West Central Juvenile Rehabilitation Center  
Multi-County Juvenile Attention System CCF  
Hocking Valley Community Residential Center  
North Central Ohio Rehabilitation Center  
Stark  
$56,053  
Athens  
Marion  
$43,659  
$41,739  
Total  
$1,500,823  
Budget Footnotes  
P a g e | 24  
September 2018  
Ohio Legislative Service Commission  
State Board of Embalmers and Funeral Directors Obtains More  
Funding to Oversee Crematories and Preneed Funeral Contracts  
Tom Wert, Budget Analyst  
On August 20, 2018, the Controlling Board approved a request by the State Board of  
Embalmers and Funeral Directors to increase the Board's operating appropriation by nearly  
400,000 in FY 2019, from approximately $844,000 to $1.24 million. The additional funding  
$
will be used to cover costs related to the Board's expanded role in regulating preneed  
funeral contracts and for oversight of crematory operators. Approximately $290,000 will be  
used to hire three new employees and provide funding for supplies and maintenance. Two  
of the new employees will be inspectors, allowing the board to inspect all licensed facilities  
on an annual basis. The third new employee will be a certification-licensure examiner who  
will cover increased workloads that have occurred (1) as a result of an increase in crematory  
facilities in 2017 and 2018 and (2) from the issuance of crematory operator permits set to  
begin in September 2018. The new permit was created under H.B. 49. The remaining  
$
110,000 will be used by the Board for costs related to ongoing litigation involving a former  
Board employee.  
The Board's operations are supported by license and permit fees and other receipts  
deposited into the Occupational Licensing and Regulatory Fund (Fund 4K90). As of  
August 14, 2018, in addition to the executive director, there were five full-time permanent  
employees, including two inspectors, two program administrators, and one  
certification-licensure examiner.  
Southern Ohio Agricultural and Community Development  
Foundation Awards $2.7 Million in Grants in FY 2018  
Shannon Pleiman, Budget Analyst  
In FY 2018, the Southern Ohio Agricultural and Community Development Foundation  
awarded approximately $2.7 million under seven grant programs. These programs are  
designed to help tobacco farm families and rural communities of the 22 burley  
tobacco-producing counties in southern Ohio diversify into farming other crops or start new  
business ventures. The total awarded included $200,000 issued under a new grant designed  
to help agricultural societies in these counties improve permanent facilities at county  
fairgrounds. The table below shows the number of awards issued and the total amount by  
grant program in FY 2018.  
Budget Footnotes  
P a g e | 25  
September 2018  
Ohio Legislative Service Commission  
Southern Ohio Agricultural and Community Development Foundation Awards in FY 2018  
Program  
Program Description  
Awards Issued  
Total  
Helps tobacco farmers undertake projects that  
expand or diversify their businesses into  
nontobacco-related agricultural markets  
Agricultural  
Development  
48  
$939,499  
Targeted toward communities affected by the  
reduction in demand for tobacco and provides  
financial assistance to projects that create or  
expand job opportunities for residents  
Economic  
Development  
4
$575,900  
Supports young farmers incorporating technology  
and conservation practices into their farming  
activities  
Young Farmer  
18  
118  
8
$395,617  
$357,050  
$200,000  
$150,000  
Provides education and training assistance to  
tobacco farmers to help them make the transition  
from tobacco production to other crops  
Educational  
Assistance  
Provides grants to agricultural societies for  
permanent improvements for youth education  
and agriculture at county fairgrounds  
Agricultural  
Society New  
Provides grants for tuition, on-campus room and  
board, and books for undergraduate students  
pursing a bachelor's degree  
Educational  
Excellence  
20  
Provides grants to farmers for expenses and  
permanent improvements that improve water  
quality  
Environmental  
and Water Quality  
4
$35,062  
Total  
220  
$2,653,128  
Since FY 2010, the Foundation's grant programs and operating expenses have been  
supported by an endowment fund and the investment and interest earning associated with that  
fund. The money in the endowment fund is not subject to the General Assembly's  
appropriation process. Previously, the Foundation was appropriated funding based on the  
stream of revenue derived from the 1998 Tobacco Master Settlement Agreement between the  
states and major tobacco manufacturers. Ohio's share of these proceeds was securitized and  
used for public school and higher education facilities construction.  
Budget Footnotes  
P a g e | 26  
September 2018  
Ohio Legislative Service Commission  
TErric Maakcelak, Eiconnomgist the Economy  
Overview  
Economic indicators generally point to continuing expansion of the U.S. economy.  
Second quarter growth in real (i.e., inflation-adjusted) gross domestic product (GDP) was at a  
.2% annual rate, the highest rate in almost four years. Exports of goods rose at a 13.1% annual  
4
rate during the second quarter of 2018. National unemployment remains unchanged from last  
month, sitting at 3.9%. According to the National Association of Realtors, existing home sales  
remain stagnant at the national level, but local data indicate unit sales are still rising in Ohio.  
Particularly among manufacturers and retailers, concerns remain over the effects of trade  
negotiations on tariffs and future international relations. According to the Federal Reserve Board's  
(
FRB's) Chairman Jerome Powell, the national inflation target of 2% has nearly been achieved, and  
there do not appear to be signs of an elevated risk of the market overheating. In his address  
summarizing the views and aims of the FRB, he concludes that the national economy and labor  
market are strong, and a gradual rise in interest rates will be appropriate. At least one increase in  
rates is likely before the end of the year, with moderate rises over the next couple of years.  
In Ohio, economic growth was moderate in July, although strong job gains in the  
manufacturing and construction industries were encouraging. The state added 7,600 jobs in  
July, while the unemployment rate rose to 4.6% and labor force participation rose. Real GDP  
growth in Ohio was 1.6% in the first quarter of 2018, below the 50-state average of 1.8%.  
The National Economy  
Nonfarm payroll employment increased by 201,000 in August, and the unemployment  
rate was unchanged at 3.9%. Nonfarm payroll employment and the unemployment rate are  
shown below in Chart 5. In August, employment increased in professional and business services  
(
transportation and warehousing (+20,000), and mining (+6,000). Employment showed little  
change in other major industries.  
+53,000), health care (+33,000), construction (+23,000), wholesale trade (+22,000),  
Chart 5: U.S. Employment and Unemployment  
1
1
1
1
1
1
1
1
1
52  
49  
46  
43  
40  
37  
34  
31  
28  
11.0%  
10.0%  
9.0%  
8.0%  
7.0%  
6.0%  
5.0%  
4.0%  
3.0%  
2
008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018  
Nonfarm Payroll Employment  
P a g e | 27  
Unemployment Rate (right scale)  
Budget Footnotes  
September 2018  
Ohio Legislative Service Commission  
Both the labor force participation rate and the employment-population ratio declined  
by 0.2 percentage point in August, to 62.7% and 60.3%, respectively. According to the  
U.S. Bureau of Labor Statistics, the number of involuntary part-time workers, who work part  
time because they were unable to obtain full-time work, was 4.4 million in August, and is down  
8
1
counted as being in the labor force because they have not actively been seeking work.  
30,000 from August 2017. The number of persons marginally attached to the labor force was  
.4 million in August; these people wanted work and were available for work, but are not  
According to statistics published by the U.S. Bureau of Economic Analysis, real GDP grew  
at an annualized rate of 4.2% in the second quarter of 2018, an increase from 2.2% first quarter  
growth and the strongest quarter of economic growth since quarter three of 2014. According to  
personal consumption expenditure (PCE) data, the service sector grew at its most rapid rate  
since quarter one of 2015, and the goods-producing sector also realized steady growth,  
particularly in durables. Nonresidential structure investment rose at a 13.2% rate from the  
previous quarter, while intellectual property product sales increased at an 11.0% annualized  
rate. National defense spending was increased 6% in the last quarter, its largest increase over  
the last nine years. After-tax corporate profits increased $69.5 billion in the second quarter to a  
record high of $1.97 trillion, reflecting strong demand and the effects of corporate tax cuts.  
Growth in this profit measure is reverberating through financial markets. As of the publishing of  
this report, the Standard & Poor's 500 stock price index stood near its all-time high closing price  
of 2,901.52, which occurred on August 31.  
Industrial production rose 0.1% in July after rising 1.0% in June. For all industries, total  
industrial production is up 4.2% from July of last year. Private nonresidential fixed investment  
rose at an annualized rate of 8.5% in the second quarter of 2018, while residential fixed  
investment declined at a 1.6% rate according to GDP data. The FRB Beige Book report indicates  
construction and machinery demand remains strong.  
The consumer price index rose 0.2% from June to July 2018, and has risen 2.9% from a  
year prior. Prices for food consumed at home have increased only 0.4% year to year, while the  
average price of gasoline has increased 25.4% from July 2017. The PCE price index, another  
well-recognized measure of inflation, rose 0.1% from June to July 2018, and is up 2.3% from  
one year ago.  
The Ohio Economy  
In July, total seasonally adjusted payroll employment in Ohio was 5.62 million, an increase  
of 0.14%, or around 7,600 over June employment. The number of unemployed workers was  
increased by 5,800 in July, and the unemployment rate rose by 0.1 percentage point to 4.6%.  
Strong gains in labor force participation during the summer months are an encouraging sign for  
the economy, although the number of unemployed workers has risen in each of the last four  
months. Despite more labor market entrants, many employers surveyed by the Cleveland Federal  
Reserve still cite a lack of qualified candidates as a primary concern. Chart 6, below, shows trends  
in the state's payroll employment and unemployment rate over the last ten years.  
In July, employment in goods-producing industries increased by 6,800 to approximately  
42,300, with the strongest gains in the manufacturing (+4,700) and construction (+2,200)  
9
industries. A total of 24,800 jobs were added between July 2017 and July 2018, with gains  
accruing in manufacturing, construction, and the mining and logging industry.  
Budget Footnotes  
P a g e | 28  
September 2018  
Ohio Legislative Service Commission  
Employment in the private service sector was increased by 2,000 jobs in the month of  
July. Increases in employment in educational and health services (+1,500), leisure and  
hospitality (+1,300), and financial activities (+700) were partly offset by job losses in  
professional and business services (-1,200) and information (-500). Overall employment in  
leisure and hospitality rose by 17,200 year to year in July, part of large-scale gains in the private  
service-providing sector. Government employment fell by 1,200 in July, with losses occurring at  
all levels of government but with the largest decreases accruing in local government payrolls  
(-700). However, between July 2017 and July 2018, overall state employment, including  
employment at public colleges and universities, rose by 6,300, partly offset by reductions in  
local government (-2,600) employment.  
Chart 6: Ohio Employment and Unemployment  
5
5
5
5
5
5
5
5
5
4
.8  
.7  
.6  
.5  
.4  
.3  
.2  
.1  
.0  
.9  
12.0%  
1
1
9
8
7
6
5
1.0%  
0.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
4.0%  
2
008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018  
Nonfarm Payroll Employment Unemployment Rate (right scale)  
Real GDP increased by a 1.6% annual rate in the state of Ohio in the first quarter of  
018, a rate higher than California (1.5%) but lower than many nearby Mid-Atlantic states such  
2
as Pennsylvania (2.0%) and Virginia (2.4%). Growth in Ohio was primarily driven by the financial  
and insurance industry, in addition to both durable and nondurable manufacturing. Agriculture  
and several other industries in Ohio saw declines in seasonally adjusted economic activity  
during the first quarter of 2018.  
The number of existing homes sold increased 5.8% year over year in the month of July,  
with the average cost of homes increasing 5.7% during that time. Year-to-date unit sales were  
little changed over 2017. The average price of existing homes sold in the first seven months of  
2
018 was around $182,300, an increase of about 6% over 2017 sales.  
The following economic summary is from the Federal Reserve Bank of Cleveland, which  
provides analysis of economic, consumer, and labor market conditions in Ohio, western  
Pennsylvania, eastern Kentucky, and northern West Virginia, quoted from July's FRB Beige  
Book:  
Budget Footnotes  
P a g e | 29  
September 2018  
Ohio Legislative Service Commission  
"Business activity in the Fourth District grew moderately during the survey period.  
Demand was strong in many sectors, but hiring continued at about the same pace as in the  
previous survey period as a dearth of qualified workers constrained hiring. Wages rose  
moderately, and increases were in line with recent trends. Upward pressure on input costs was  
strong, notably for fuel and metals. Contacts widely attributed the cost increases to import  
tariffs. However, final selling prices rose only moderately. Firms raised their prices to cover, at  
least partially, their increased raw materials and transportation costs. Otherwise, businesses  
were cautious about raising their selling prices. Consumer demand, including for autos, was  
stable to slightly higher. Manufacturing capacity utilization rose to meet strong demand, but a  
number of producers remarked that they were struggling to keep up with orders. Freight  
volumes trended higher. Construction activity remained strong."  
Budget Footnotes  
P a g e | 30  
September 2018