A monthly newsletter by LSC economists and budget analysts  
Volume: Fiscal Year 2019  
Issue: December 2018  
Highlights  
Ross Miller, Chief Economist  
November GRF revenue from the sales and use tax exceeded the estimate  
published by the Office of Budget and Management (OBM) in August by  
61 million. Most other GRF tax sources also came in above estimates; the foreign  
$
insurance tax was the sole notable exception, having been $17 million below  
estimate. Taken together, revenue from GRF taxes was $66 million above  
estimate for the month.  
Payroll employment in Ohio rose by 10,900 in October, led by educational and  
health services and professional and business services. Ohio's unemployment rate  
in October remained 4.6%, the same rate as in each of the preceding three  
months. The national unemployment rate was 3.7% in October.  
Through November 2018, GRF sources totaled $14.05 billion:  
Revenue from the sales and use tax was $124.6 million above estimate;  
Personal income tax receipts were $2.6 million above estimate.  
Through November 2018, GRF uses totaled $15.54 billion:  
Program expenditures were $267.2 million below estimate, primarily  
because Medicaid expenditures were below estimate by $243.8 million;  
Expenditures in the Health and Human Services category were below  
estimate by $47.1 million;  
Expenditures for Primary and Secondary Education were above estimate  
by $15.5 million, primarily due to timing.  
In this issue...  
More details on GRF Revenues (p. 2), Expenditures (p. 11),  
the National Economy (p. 28), and the Ohio Economy (p. 30).  
Also Issue Updates on:  
Buckeye Lake Dam Construction (p. 21)  
Diesel Mitigation Trust Fund Grants (p. 21)  
Medicaid Hepatitis C Treatment (p. 22)  
Workforce Grant (p. 23)  
Community School Sponsor Ratings (p. 23)  
FY 2018 Completed School Facility Plans (p. 24)  
School Safety Training Grants (p. 26)  
2
019 State Fair Budget (p. 26)  
Available online at: www.lsc.ohio.gov/Budget Central  
Ohio Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of November 2018  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on December 3, 2018)  
State Sources  
Tax Revenue  
Actual  
Estimate*  
Variance Percent  
Auto Sales  
Nonauto Sales and Use  
Total Sales and Use  
$110,487  
$787,298  
$897,785  
$107,400  
$728,900  
$836,300  
$3,087  
$58,398  
$61,485  
2.9%  
8.0%  
7.4%  
Personal Income  
Commercial Activity Tax  
Cigarette  
Kilowatt-Hour Excise  
Foreign Insurance  
Domestic Insurance  
Financial Institution  
Public Utility  
Natural Gas Consumption  
Alcoholic Beverage  
Liquor Gallonage  
Petroleum Activity Tax  
Corporate Franchise  
Business and Property  
Estate  
$685,732  
$330,347  
$78,659  
$27,344  
-$18,551  
$1  
-$2,988  
$32,342  
$4,890  
$6,603  
$4,086  
$0  
$686,300  
$325,000  
$76,000  
$26,600  
-$568  
$5,347  
$2,659  
$744  
-0.1%  
1.6%  
3.5%  
2.8%  
-$2,000 -$16,551 -827.5%  
$0  
-$5,600  
$24,100  
$4,700  
$4,600  
$4,000  
$0  
$0  
$0  
$0  
$1  
$2,612  
$8,242  
$190  
$2,003  
$86  
$0  
$10  
$0  
$0  
---  
46.6%  
34.2%  
4.0%  
43.6%  
2.1%  
---  
---  
---  
---  
$10  
$0  
$0  
Total Tax Revenue  
$2,046,260  
$1,980,000  
$66,260  
3.3%  
Nontax Revenue  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$33  
$424  
$1,024  
$0  
$556  
$1,839  
$33  
-$132  
-$815  
-$915  
---  
-23.8%  
-44.3%  
-38.2%  
Total Nontax Revenue  
$1,481  
$2,395  
Transfers In  
$0  
$2,047,740  
$774,125  
$0  
$1,982,395  
$740,172  
$0  
$65,345  
$33,953  
$99,297  
---  
3.3%  
4.6%  
3.6%  
Total State Sources  
Federal Grants  
Total GRF Sources  
$2,821,865  
$2,722,568  
*Estimates of the Office of Budget and Management as of August 2018.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 2  
December 2018  
Ohio Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate ($ in thousands)  
FY 2019 as of November 30, 2018  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on December 3, 2018)  
State Sources  
Tax Revenue  
Auto Sales  
Nonauto Sales and Use  
Total Sales and Use  
Actual  
Estimate*  
Variance Percent FY 2018** Percent  
$630,354  
$3,749,635  
$4,379,988  
$609,800  
$3,645,600  
$4,255,400  
$20,554  
$104,035  
$124,588  
3.4%  
2.9%  
2.9%  
$593,892  
$3,595,514  
$4,189,406  
6.1%  
4.3%  
4.5%  
Personal Income  
Commercial Activity Tax  
Cigarette  
Kilowatt-Hour Excise  
Foreign Insurance  
Domestic Insurance  
Financial Institution  
Public Utility  
Natural Gas Consumption  
Alcoholic Beverage  
Liquor Gallonage  
Petroleum Activity Tax  
Corporate Franchise  
Business and Property  
Estate  
$3,611,739  
$758,725  
$347,119  
$156,730  
$159,029  
$2  
-$21,855  
$68,100  
$20,253  
$25,476  
$20,899  
$2,019  
$3,609,100  
$747,300  
$341,300  
$155,500  
$146,700  
$0  
-$14,000  
$56,000  
$17,500  
$24,900  
$20,500  
$1,300  
$0  
$2,639  
$11,425  
$5,819  
$1,230  
$12,329  
$2  
0.1%  
1.5%  
1.7%  
0.8%  
8.4%  
---  
$3,360,191  
$719,606  
$350,155  
$145,686  
$144,843  
7.5%  
5.4%  
-0.9%  
7.6%  
9.8%  
$63 -97.3%  
-$23,075  
-$7,855 -56.1%  
5.3%  
26.8%  
21.2%  
1.2%  
4.0%  
28.6%  
$12,100  
$2,753  
$576  
$399  
$719  
$192  
$0  
$32  
21.6%  
15.7%  
2.3%  
1.9%  
55.3%  
---  
$53,719  
$16,708  
$25,178  
$20,088  
$1,570  
$2,892 -93.4%  
-$374 100.0%  
$100 -67.8%  
$192  
$0  
$32  
$0  
$0  
---  
---  
Total Tax Revenue  
$9,528,446  
$9,361,500  
$166,946  
1.8%  
$9,006,755  
5.8%  
Nontax Revenue  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$25,393  
$9,788  
$54,740  
$19,634  
$9,236  
$59,968  
$5,759  
$552  
-$5,227  
29.3%  
6.0%  
-8.7%  
$15,818  
$8,617  
$29,968  
60.5%  
13.6%  
82.7%  
65.3%  
Total Nontax Revenue  
$89,922  
$88,837  
$1,084  
1.2%  
$54,404  
Transfers In  
$76,109  
$9,694,477  
$4,357,089  
$80,190  
$9,530,527  
$4,510,534  
-$4,081  
$163,949  
-$153,445  
$10,504  
-5.1%  
1.7%  
$111,644 -31.8%  
Total State Sources  
$9,172,802  
$4,131,744  
5.7%  
5.5%  
5.6%  
Federal Grants  
-3.4%  
Total GRF SOURCES  
$14,051,565 $14,041,061  
0.1% $13,304,546  
*
*
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  
December 2018  
Ohio Legislative Service Commission  
1
Revenues  
Jean J. Botomogno, Principal Economist  
Overview  
Through November 2018, GRF sources were on target relative to OBM's estimate released  
in August 2018. GRF sources totaling $14.05 billion were $10.5 million (0.1%) above projections,  
and $747.0 million (5.6%) above such sources in the corresponding period in FY 2018. Positive  
variances of $166.9 million (1.8%) for GRF tax revenues and $1.1 million (1.2%) for nontax2  
revenue were partially offset by negative variances of $153.4 million (3.4%) for federal grants  
and $4.1 million (5.1%) for transfers in. The year-to-date (YTD) negative variance for federal  
grants results from GRF Medicaid spending being substantially below expectations so far this year  
due partly to timing. Tables 1 and 2 show GRF sources for the month of November and for  
FY 2019 through November, respectively. GRF sources consist of state-source receipts, which  
include tax revenue, nontax revenue, and transfers in, and federal grants.  
For the YTD, all individual GRF tax sources were ahead of estimates, with the exception of  
3
the financial institutions tax (FIT) which posted a shortfall of $7.9 million. Individual tax sources  
above estimates included the sales and use tax ($124.6 million), the commercial activity tax (CAT,  
$
11.4 million), the foreign insurance tax ($12.3 million), the public utility tax ($12.1 million), and  
the cigarette and other tobacco products tax ($5.8 million). Adding to those results, the natural gas  
consumption tax, the personal income tax (PIT), and the kilowatt-hour excise tax were above  
projections by $2.8 million, $2.6 million, and $1.2 million, respectively. The remaining taxes had  
smaller positive variances at the end of November.  
For the month of November 2018, GRF sources of $2.82 billion were $99.3 million above  
estimate. GRF tax sources and federal grants were above their anticipated levels by  
$
66.3 million and $34.0 million, respectively, and nontax revenue was $0.9 million below  
estimate. No transfers in occurred this month as none were expected by OBM. Regarding tax  
sources, with its receipts $61.5 million above estimate, the sales and use tax had a good month.  
Also, the public utility tax, the CAT, the cigarette tax, and the alcoholic beverage tax were above  
anticipated revenues by $8.2 million, $5.3 million, $2.7 million, and $2.0 million, respectively.  
OBM estimated FIT refunds of $5.6 million would be paid out in November, but only  
$
3.0 million was returned to taxpayers; thus, this tax source posted a positive variance of  
1
This report compares actual monthly and year-to-date GRF revenue sources to OBM's  
estimates. If actual receipts were higher than estimate, that GRF source is deemed to have a positive  
variance. Alternatively, a GRF source is deemed to have a negative variance if actual receipts were lower  
than estimate.  
2
Federal grants are primarily federal reimbursements for Medicaid.  
3
The GRF typically pays out refunds under the FIT during the first half of a fiscal year as  
taxpayers make adjustments to previous tax filings. Receipts of the FIT are typically expected at the end  
of January, March, and May.  
Budget Footnotes  
P a g e | 4  
December 2018  
Ohio Legislative Service Commission  
$
the foreign insurance tax and $0.6 million for the PIT.  
2.6 million. The positive variances above were partially offset by shortfalls of $16.6 million for  
4
Chart 1, below, shows cumulative variances of GRF sources through November 2018.  
Chart 1: Cumulative Variances of GRF Sources in FY 2019  
(
Variances from Estimates, $ in millions)  
$
$
$
200  
150  
100  
$
50  
$0  
-
$50  
-
-
-
-
-
$100  
$150  
$200  
$250  
$300  
Jul-18  
Aug-18  
Federal Grants  
Sep-18  
Oct-18  
Nov-18  
Tax Revenue  
Total GRF Sources  
Compared to GRF sources in FY 2018 through November, FY 2019 GRF sources increased  
747.0 million. GRF tax sources and federal grants increased $521.7 million and $225.3 million,  
$
respectively. On the other hand, an increase of $35.5 million for nontax sources canceled out a  
decrease in transfer in of the same amount. Receipts from the PIT, the sales and use tax, and  
the CAT increased $251.5 million, $190.6 million, and $39.1 million, respectively. Also,  
combined receipts from three utility-related taxes (the kilowatt-hour excise tax, the public  
utility tax, and the natural gas consumption tax) grew $29.0 million.  
Sales and Use Tax  
The sales and use tax turned in a strong performance in November. Receipts to the GRF  
of $897.8 million were $61.5 million (7.4%) above estimate, and $84.3 million (10.4%) above  
revenue in November 2017. The nonauto and the auto portions of the tax were above  
anticipated revenue by 8.0% and 2.9%, respectively. Through November, YTD GRF receipts from  
the sales and use tax of $4.38 billion were $124.6 million (2.9%) above estimate, with both the  
nonauto and the auto portions of the tax above projections. Total sales and use tax revenue  
was also 4.5% above receipts in FY 2018 through November.  
For analysis and forecasting, revenue from 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.  
4
Monthly revenue for this tax partially offset a positive variance of $29.0 million in October.  
Budget Footnotes  
P a g e | 5  
December 2018  
Ohio Legislative Service Commission  
Nonauto Sales and Use Tax  
The nonauto sales and use tax has generally performed well this fiscal year. Following a  
shortfall of $4.8 million in October 2018, this GRF source rebounded in November with a  
surplus of $58.4 million. This latest monthly performance increased the cumulative positive  
variance of this source to $104.0 million (2.9%), up from a positive variance of $45.6 million  
through October. Compared to revenue in November 2017, nonauto sales and use tax revenue  
increased $76.5 million (10.8%). For the YTD, GRF receipts of $3.75 billion were $154.1 million  
(
4.3%) above revenue in the corresponding period in FY 2018. As payrolls and income have  
steadily risen in recent months, the nonauto sales and use tax has made continu5ous  
improvement. Chart 2, below, shows year-over-year growth in nonauto sales tax collections.  
Chart 2: Nonauto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year (With Tax Base Adjustment,  
Three-month Moving Average)  
8
7
6
5
4
3
2
1
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 Sep-18 Oct-18 Nov-18  
Auto Sales and Use Tax  
GRF receipts from the auto sales and use tax of $110.5 million in November 2018 were  
above estimate by $3.1 million (2.9%). This performance increased this source's cumulative  
positive variance to $20.6 million (3.4%), up from $17.5 million through October. Through  
November, FY 2019 auto sales tax receipts of $630.4 million were $36.5 million (6.1%) above  
receipts in the corresponding period in FY 2018. Chart 3, below, shows year-over-year growth in  
auto sales tax collections. Auto sales tax revenue has grown compared to the prior year's level  
and, after slowing earlier in the fiscal year, the rate of growth picked up in recent months.  
5
Beginning July 1, 2017, the sales tax on Medicaid health insuring corporations (MHICs) was  
eliminated. Thus, the last payment of $71.7 million deposited in the GRF was made in July 2017  
(
excludes monthly revenue from MHICs from January to July in calendar year 2017 so that changes in  
nonauto sales and use tax revenue are on a comparable basis.  
reflecting taxable activity in June 2017). So, to adjust for changes to the existing tax base, this chart  
Budget Footnotes  
P a g e | 6  
December 2018  
Ohio Legislative Service Commission  
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 Sep-18 Oct-18 Nov-18  
The new vehicle market continues to look healthy. Monthly nationwide new light  
vehicle (auto and light truck) sales came in at 17.5 million units in November at seasonally  
adjusted annual rates, about the same as in October. Recent trends also continued with  
declines in auto sales and better truck sales. The shift to higher-priced trucks from lower-priced  
cars has helped boost the average price per vehicle and auto sales tax revenue. Nationwide unit  
sales totaled about 17.2 million units in 2017. Based on sales through November, light vehicle  
sales in 2018 may approximate those of last year.  
Personal Income Tax  
The PIT recorded a deficit of $13.4 million in the first quarter of FY 2019, followed by a  
positive variance of $16.7 million in October. Though GRF revenue in November of  
$
above their anticipated level by $2.6 million (0.1%). Compared to the corresponding period in  
FY 2018, revenue growth was 7.5% in the first five months of FY 2019.  
685.7 million was $0.6 million (0.1%) below projections, YTD PIT receipts of $3.61 billion were  
PIT revenue is comprised of gross collections, minus refunds and distributions to the Local  
Government Fund (LGF). Gross collections consist of employer withholdings, quarterly estimated  
6
payments, trust payments, payments associated with annual returns, and other miscellaneous  
payments. The performance of the tax is typically driven by employer withholdings, which is the  
largest component of gross collections (about 82% of gross collections in FY 2018). Larger than  
expected refunds could also greatly affect the monthly performance of the tax. For the month of  
November 2018, gross collections were $1.6 million below projection. Shortfalls of $3.5 million  
for withholding and $1.8 million for quarterly estimated payments were partially offset by  
6
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  
December 2018  
Ohio Legislative Service Commission  
positive variances of $3.3 million for annual return payments, and $0.2 million each for trust  
payments and miscellaneous payments. Refunds were $2.2 million below estimate for the month.  
For the YTD, revenues from each component of the PIT relative to estimates and to  
revenue received in FY 2018 are detailed in the table below. YTD, gross collections were above  
estimate by $10.7 million. Positive variances from withholding, annual return payments, and  
trust payments were partially negated by shortfalls for quarterly estimated payments and  
miscellaneous revenue. The positive variance from gross collections was reduced by refunds,  
which were $6.4 million higher than expected, and by higher distributions to the LGF. FY 2019  
refunds and LGF distributions also increased compared to their amounts in the corresponding  
period last year.  
FY 2019 Personal Income Tax Revenue Variance and Annual Change by Component  
YTD Variance from Estimate  
Changes from FY 2018  
Amount  
$ in millions)  
Percent  
(%)  
Amount  
($ in millions)  
Percent  
(%)  
Category  
(
Withholding  
$14.6  
-$20.4  
$3.4  
0.4%  
$183.5  
$50.0  
$5.8  
5.3%  
Quarterly Estimated Payments  
Trust Payments  
-7.2%  
23.0%  
24.5%  
-18.3%  
0.3%  
23.5%  
46.4%  
50.2%  
-18.9%  
7.0%  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
$19.7  
-$6.6  
$10.7  
$6.4  
$33.6  
-$6.9  
$265.9  
$7.9  
Less Refunds  
2.1%  
2.6%  
Less LGF Distribution  
GRF PIT Revenue  
$1.7  
1.0%  
$6.4  
4.0%  
$2.6  
0.1%  
$251.5  
7.5%  
Compared to their respective amounts in FY 2018 through November, components of  
gross collections were higher in FY 2019, except for miscellaneous payments. The two most  
important components, withholding and quarterly estimated payments, grew 5.3% and 23.5%,  
respectively. The chart below illustrates the growth of monthly employer withholdings on a  
three-month moving average relative to one year ago. It shows growth generally between 5%  
and 6% in FY 2019.  
Budget Footnotes  
P a g e | 8  
December 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 Sep-18 Oct-18 Nov-18  
Commercial Activity Tax  
In November 2018, the second CAT payment for quarterly calendar return taxpayers  
provided $330.3 million to the GRF, an amount that was $5.3 million (1.6%) above estimate.  
This performance increased the cumulative positive variance for this tax to $11.4 million  
(
1.5%), up from $6.1 million at the end of October. CAT revenue is estimated at $9.8 million in  
December 2018. Therefore, the second fiscal quarter is likely to be an improvement over the  
first fiscal quarter, which recorded a negative variance of $20.1 million. For the fiscal year  
through November, total GRF receipts were $758.7 million, $39.1 million (5.4%) above  
revenue in the first five months of FY 2018. Gross collections from the tax increased 6.8%  
relative to collections through November last fiscal year but, as stated in previous editions of  
this publication, increased credit claims and refunds restrained growth in net collections to  
the GRF.  
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.  
Budget Footnotes  
P a g e | 9  
December 2018  
Ohio Legislative Service Commission  
Cigarette and Other Tobacco Products Tax  
In November, GRF revenue from the cigarette and other tobacco products tax was  
$
78.7 million, $2.7 million (3.5%) above estimate. Receipts for the month were $4.0 million  
(4.8%) below revenue from the tax in November 2017. Through November, FY 2019 revenue  
from the cigarette and other tobacco products tax totaled $347.1 million, $5.8 million (1.7%)  
above estimate and $3.0 million (0.9%) below receipts through November in FY 2018. YTD  
revenue included $313.2 million from the sale of cigarettes and $33.9 million from the sale of  
other tobacco products. Compared to FY 2018, receipts from cigarette sales fell $7.3 million  
while those from the sale of other tobacco products increased $4.3 million. So far in FY 2019,  
cigarette tax revenues have exhibited an unusually volatile pattern. However, on a yearly  
basis, revenue from the cigarette and other tobacco products tax usually trends downward  
generally at a slow pace due to a decline of cigarette revenue.  
Budget Footnotes  
P a g e | 10  
December 2018  
Ohio Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of November 2018  
($ in thousands)  
(Actual based on OAKS reports run December 5, 2018)  
Program Category  
Actual  
Estimate* Variance Percent  
Primary and Secondary Education  
Higher Education  
$698,832  
$200,121  
$4,056  
$680,534 $18,297  
2.7%  
2.3%  
$195,640  
$3,624  
$4,481  
$432  
Other Education  
11.9%  
2.6%  
Total Education  
$903,008  
$879,798 $23,211  
Medicaid  
$1,155,939 $1,137,130 $18,809  
$100,247 $105,115 -$4,867  
$1,256,186 $1,242,245 $13,941  
1.7%  
-4.6%  
1.1%  
Health and Human Services  
Total Health and Human Services  
Justice and Public Protection  
General Government  
$169,069  
$30,052  
$146,397 $22,671  
$26,460 $3,592  
$172,857 $26,263  
15.5%  
13.6%  
15.2%  
Total Government Operations  
$199,121  
Property Tax Reimbursements  
Debt Service  
$75,510  
$27,544  
$109,637 -$34,127 -31.1%  
$27,549 -$5 0.0%  
$137,187 -$34,132 -24.9%  
Total Other Expenditures  
$103,054  
Total Program Expenditures  
Transfers Out  
$2,461,369 $2,432,087 $29,283  
$513 $0 $513  
$2,461,882 $2,432,087 $29,796  
1.2%  
---  
Total GRF Uses  
1.2%  
*August 2018 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 11  
December 2018  
Ohio Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2019 as of November 30, 2018  
($ in thousands)  
(Actual based on OAKS reports run December 5, 2018)  
Program Category  
Actual  
Estimate*  
Variance Percent FY 2018** Percent  
Primary and Secondary Education  
Higher Education  
$3,551,341  
$958,530  
$37,928  
$3,535,811  
$965,658  
$37,771  
$15,530  
-$7,128  
$157  
0.4%  
-0.7%  
0.4%  
$3,529,533  
$930,520  
$37,479  
0.6%  
3.0%  
1.2%  
1.1%  
Other Education  
Total Education  
$4,547,799 $4,539,240  
$8,559  
0.2% $4,497,532  
Medicaid  
$6,703,488  
$565,584  
$6,947,268 -$243,780  
$612,709 -$47,125  
-3.5%  
-7.7%  
$6,330,163  
$550,667  
5.9%  
2.7%  
5.6%  
Health and Human Services  
Total Health and Human Services  
$7,269,072 $7,559,977 -$290,905  
-3.8% $6,880,830  
Justice and Public Protection  
General Government  
$989,334  
$164,324  
$978,697  
$165,508  
$10,636  
-$1,184  
$9,453  
1.1%  
$916,469  
$158,958  
8.0%  
3.4%  
7.3%  
-0.7%  
Total Government Operations  
$1,153,658 $1,144,205  
0.8% $1,075,427  
Property Tax Reimbursements  
Debt Service  
$904,529  
$914,659  
$898,299  
$915,176  
$6,230  
-$517  
0.7%  
$864,722  
$881,846  
4.6%  
3.7%  
4.2%  
-0.1%  
Total Other Expenditures  
$1,819,189 $1,813,476  
$5,713  
0.3% $1,746,568  
Total Program Expenditures  
Transfers Out  
$14,789,718 $15,056,898 -$267,180  
$752,840 $751,933 $906  
$15,542,558 $15,808,831 -$266,274  
-1.8% $14,200,357  
4.2%  
0.1%  
$68,772 994.7%  
8.9%  
Total GRF Uses  
-1.7% $14,269,129  
*
*
August 2018 estimates of the Office of Budget and Management.  
*Cumulative totals through the same month in FY 2018.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 12  
December 2018  
Ohio Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on December 4, 2018)  
Month of November 2018  
Year to Date through November 2018  
Department  
Medicaid  
GRF  
Actual  
Estimate* Variance Percent  
Actual  
Estimate*  
Variance  
Percent  
$1,101,437 $1,082,575 $18,862  
$865,171 $928,986 -$63,815  
1,966,608 $2,011,561 -$44,953  
1.7%  
-6.9%  
-2.2%  
$6,411,177 $6,648,732  
$3,141,058 $3,980,662  
-$237,556  
-3.6%  
Non-GRF  
-$839,604 -21.1%  
$
$9,552,235 $10,629,395 -$1,077,160 -10.1%  
All Funds  
Developmental Disabilities  
GRF  
$46,574  
168,362  
214,936  
$49,012  
$175,298  
$224,309  
-$2,438  
-$6,935  
-$9,373  
-5.0%  
-4.0%  
-4.2%  
$251,783  
$927,098  
$254,446  
$951,956  
-$2,663  
-$24,857  
-$27,520  
-1.0%  
-2.6%  
-2.3%  
$
Non-GRF  
All Funds  
$
$1,178,882 $1,206,401  
Job and Family Services  
GRF  
$7,189  
$23,225  
30,415  
$4,891  
$20,519  
$25,410  
$2,298  
$2,707  
$5,005  
47.0%  
13.2%  
19.7%  
$36,666  
$75,320  
$39,811  
$63,623  
-$3,144  
$11,696  
$8,552  
-7.9%  
18.4%  
8.3%  
Non-GRF  
$
$111,986  
$103,434  
All Funds  
Health, Mental Health and Addiction, Aging, Pharmacy Board, and Education  
GRF  
$738  
$652  
$2,595  
$3,247  
$86  
$1,499  
$1,585  
13.2%  
57.8%  
48.8%  
$3,862  
$14,705  
$18,567  
$4,279  
$16,954  
$21,233  
-$417  
-9.7%  
Non-GRF  
$4,094  
-$2,249 -13.3%  
-$2,666 -12.6%  
$
4,832  
All Funds  
All Departments:  
GRF  
$1,155,939 $1,137,130 $18,809  
$1,060,853 $1,127,397 -$66,545  
1.7% $6,703,488 $6,947,268  
-5.9% $4,158,182 $5,013,195  
-$243,780 -3.5%  
-$855,014 -17.1%  
-9.2%  
Non-GRF  
$
2,216,791 $2,264,528 -$47,736 -2.1% $10,861,670 $11,960,463 -$1,098,793  
All Funds  
*September 2018 estimates from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 13  
December 2018  
Ohio Legislative Service Commission  
Table 6: All Funds Medicaid Expenditures by Payment Category  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on December 4, 2018)  
Month of November 2018  
Year to Date through November 2018  
Payment Category  
Actual  
Estimate* Variance Percent  
Actual  
Estimate*  
Variance  
Percent  
Managed Care  
CFC†  
$1,365,889 $1,395,759 -$29,870  
-2.1% $6,880,948 $7,067,038  
-$186,090  
-$49,569  
-$129,209  
-$10,831  
-$6,443  
-2.6%  
-2.0%  
-6.8%  
-0.9%  
-1.6%  
4.4%  
$486,610  
$350,308  
$232,402  
$76,549  
$220,020  
$0  
$496,394  
-$9,784  
-2.0%  
-7.5%  
-1.9%  
-2.9%  
7.4%  
-
$2,441,225 $2,490,794  
$1,762,404 $1,891,613  
$1,165,584 $1,176,415  
Group VIII  
ABD†  
$378,783 -$28,475  
$236,935  
$78,822  
-$4,533  
-$2,273  
ABD Kids  
$385,718 $392,161  
$1,060,042 $1,015,121  
$65,976 $100,935  
My Care  
PayForPerformance  
$204,826 $15,194  
$0 $0  
$44,921  
-$34,959  
-34.6%  
Fee-For-Service  
ODM Services  
DDD Services  
Hospital - HCAP†  
Hospital - Other  
$647,126  
$337,744  
$202,152  
$0  
$686,453 -$39,327  
-5.7% $3,103,583 $3,965,741  
-$862,158  
-$179,115  
-$24,828  
-$635,279 -100.0%  
-$22,936  
-21.7%  
-8.9%  
-2.1%  
$365,908 -$28,163  
-7.7%  
-4.2%  
-
$1,841,061 $2,020,176  
$1,137,662 $1,162,490  
$210,961  
$0  
-$8,809  
$0  
$12  
$635,291  
$147,784  
$107,229  
$109,584  
-$2,355  
-2.1%  
$124,848  
-15.5%  
Premium Assistance  
Medicare Buy-In  
Medicare Part D  
$88,451  
$51,014  
$37,437  
$92,768  
$54,067  
$38,701  
-$4,317  
-$3,053  
-$1,264  
-4.7%  
-5.6%  
-3.3%  
$441,232  
$253,029  
$188,203  
$464,404  
$270,982  
$193,422  
-$23,172  
-$17,953  
-$5,219  
-5.0%  
-6.6%  
-2.7%  
Administration  
Total  
$115,325  
$89,547 $25,778  
28.8%  
$435,907  
$463,281  
-$27,374  
-5.9%  
-9.2%  
$2,216,791 $2,264,528 -$47,736  
-2.1% $10,861,670 $11,960,463 -$1,098,793  
*September 2018 estimates from the Department of Medicaid.  
†CFC - Covered Families and Children; ABD - Aged, Blind, and Disabled; HCAP - Hospital Care Assurance Program.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 14  
December 2018  
Ohio Legislative Service Commission  
7
Expenditures  
Melaney Carter, Assistant Deputy Director  
Ivy Chen, Principal Economist  
Overview  
Although posting a positive variance of $29.3 million (1.2%) for the month of November,  
GRF program expenditures continued to track below estimates YTD, with a negative YTD  
variance of $267.2 million (1.8%) at the end of November. Transfers out exceeded estimates by  
$
0.5 million in November, increasing the YTD variance to $0.9 million (0.1%). Including both  
program expenditures and transfers out, GRF uses totaled $15.54 billion through November,  
which was $266.3 million (1.7%) below estimate. Tables 3 and 4 detail GRF uses for the month  
of November and for FY 2019 through November, respectively.  
Despite a positive variance of $18.8 million (1.7%) in November, Medicaid continued to  
dominate the negative YTD variances. YTD GRF Medicaid expenditures of $6.70 billion were  
$
supported by several non-GRF funds. More details on both the GRF and non-GRF variances in  
Medicaid expenditures are discussed in the section that follows this overview.  
243.8 million (3.5%) below estimate. Medicaid is mainly funded by the GRF but it is also  
Positive monthly variances in November turned the YTD variances positive for three  
program categories: Primary and Secondary Education had a positive YTD variance of  
$
15.5 million (0.4%) at the end of November; Other Education was $0.2 million (0.4%) above its  
YTD estimate, and Justice and Public Protection had a positive YTD variance of $10.6 million  
1.1%). Higher Education and General Government both had positive monthly variances in  
(
November, but maintained negative YTD variances of $7.1 million (0.7%) for Higher Education  
and $1.2 million (0.7%) for General Government. Both the Health and Human Services and Debt  
Service categories increased their negative YTD variances in November. At the end of  
November, Health and Human Services had a negative YTD variance of $47.1 million (7.7%) and  
Debt Service had a negative YTD variance of $0.5 million (0.1%). Finally, the Property Tax  
Reimbursements category's positive YTD variance fell by $34.1 million in November to  
$
discussion of Medicaid. Also included in this month's Expenditures report is an update on  
outstanding prior year GRF encumbrances.  
6.2 million (0.7%). A discussion of the more significant of these variances follows the  
Medicaid  
Although GRF Medicaid expenditures were $18.8 million (1.7%) above estimate for the  
month of November, non-GRF Medicaid expenditures were $66.5 million (5.9%) below  
estimate. For the YTD through November, both GRF and non-GRF Medicaid expenditures were  
below estimates, by $243.8 million (3.5%) and $855.0 million (17.1%), respectively. Including  
both the GRF and non-GRF, all funds Medicaid expenditures of $10.86 billion were $1.10 billion  
(9.2%) below the YTD estimate. As indicated in prior issues of Budget Footnotes, the  
7
This report compares actual monthly and YTD 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.  
Budget Footnotes  
P a g e | 15  
December 2018  
Ohio Legislative Service Commission  
$
317.6 million in non-GRF funded Health Care Assurance Program (HCAP) payments for  
hospitals in both September and October did not occur as was anticipated. This has resulted in  
a negative YTD variance in HCAP payments of $635.3 million, which accounts for 74.3% of the  
YTD non-GRF variance and 57.8% of the YTD all funds variance. When these payments are made  
they will cause these YTD variances to narrow.  
Table 5 shows GRF and non-GRF Medicaid expenditures for the Ohio Department of  
Medicaid (ODM), the Ohio Department of Developmental Disabilities (ODODD), and six other  
"sister" agencies that also take part in administering Ohio Medicaid. ODM and ODODD account  
for about 99% of the total Medicaid budget. Therefore, they also account for the vast majority of  
variances in Medicaid expenditures. The other six agenciesJob and Family Services, Health,  
Aging, Mental Health and Addiction Services, State Board of Pharmacy, and Education account  
for the remaining one percent of the total Medicaid budget. Unlike ODM and ODODD, the six  
"sister" agencies incur only administrative spending.  
Table 6 shows all funds Medicaid expenditures by payment category. Overall  
expenditures from all four major payment categories, Managed Care, Fee-For-Service (FFS),  
Premium Assistance, and Administration, were below their YTD estimates. The FFS category had  
the largest overall negative variance of $862.2 million (21.7%), followed by Managed Care  
(
(
$186.1 million, 2.6%), Administration ($27.4 million, 5.9%), and Premium Assistance  
$23.2 million, 5.0%).  
The negative variance in FFS was primarily due to the delay in HCAP payments  
($635.3 million) as indicated earlier. Under HCAP, the state makes subsidy payments to  
hospitals that provide uncompensated care to low-income and uninsured individuals at or  
below 100% of the federal poverty level. Another contributing factor to the negative variance in  
the FFS category was lower than expected FFS caseloads. Beginning January 1, 2018, newly  
eligible individuals are removed from FFS and enrolled onto managed care shortly after  
receiving Medicaid benefits. Previously, when ODM prepared the estimates, newly eligible  
individuals could remain in the FFS system for several weeks while they decided which  
managed care plan in which to enroll.  
Expenditures from all Managed Care categories were below their YTD estimates except  
for MyCare, which had a positive YTD variance of $44.9 million (4.4%). MyCare is a managed  
care program for Ohioans who are eligible for both Medicaid and Medicare. Group VIII  
(
individuals who became eligible for Medicaid through the federal Affordable Care Act) had the  
largest negative YTD variance of $129.2 million (6.8%) within the Managed Care category,  
followed by CFC (Covered Families and Children) at $49.6 million (2.0%). These negative  
variances were mainly due to lower than expected caseloads. For the first four months of  
FY 2019, on average the monthly managed care caseloads for Group VIII and CFC were 6.7%  
(
negative YTD variance in the Pay for Performance category was due to a delay in making the  
remaining part of the payment that was originally scheduled for September.  
40,300) and 1.3% (20,600), respectively, below estimates. Finally, the $35.0 million (34.6%)  
Health and Human Services  
The negative YTD variance in the Health and Human Services program category  
increased $4.9 million in November to $47.1 million (7.7%). All agencies included in this  
category had negative YTD variances at the end of November except for the Department of  
Developmental Disabilities, which had a positive variance of $0.9 million. The most significant  
Budget Footnotes  
P a g e | 16  
December 2018  
Ohio Legislative Service Commission  
negative YTD variance was $32.4 million for the Ohio Department of Job and Family Services  
(ODJFS), followed by $8.3 million for the Ohio Department of Mental Health and Addiction  
Services (ODMHAS) and $5.6 million for the Ohio Department of Health (ODH).  
Of the 18 GRF line items in the ODJFS budget that are included in this program category,  
only two had positive YTD variances, one of which was significant 600502, Child Support-  
Local, with a positive variance of $3.9 million. Item 600502 provides the state share of the  
administrative costs of local child support enforcement agencies. Of the many line items with  
negative YTD variances, the most significant were 600416, Information Technology Projects,  
with a negative variance of $10.1 million and 600521, Family Assistance Local, with a negative  
variance of $5.0 million. Item 600416 provides funding for the development, implementation,  
and maintenance of computer systems used by ODJFS and the county departments of job and  
family services (CDJFSs). Item 600521 is used to provide CDJFSs the state's share of their  
administrative costs for public assistance programs.  
The negative variance for ODMHAS came primarily from two line items. Item 336510,  
Residential State Supplement, had a negative YTD variance of $4.3 million and item 336412,  
Hospital Services, had a negative YTD variance of $3.5 million. Item 336510 is used to provide  
cash assistance and case management to aged, blind, or disabled adults who reside in approved  
alternate living facilities such as group homes and residential care facilities. Item 336412 funds  
the operating costs of the state's regional psychiatric hospitals.  
Most of ODH's line items had negative variances at the end of November. The largest  
were items 440459, Help Me Grow; 440474, Infant Vitality; and 440482, Chronic Disease/Health  
Promotion, with negative YTD variances of $1.4 million, $1.3 million, and $1.0 million,  
respectively. Item 440459 is used to distribute funds to counties to operate the Help Me Grow  
Home Visiting Program, which is the state's parenting education program for parents at highest  
risk for poor child outcomes. Item 440474 is used by ODH for programs that address infant  
mortality. Item 440482 supports the Bureau of Health Promotion's efforts to prevent and  
control chronic diseases.  
Primary and Secondary Education  
The Ohio Department of Education's (ODE) YTD variance was dominated by item  
2
00550, Foundation Funding, which had a positive YTD variance of $25.3 million at the end of  
November. Item 200550 is primarily used to provide operating subsidies to public schools  
through the state's school funding formula. This item often has variances as ODE collects and  
updates various data that are used in the formula. This positive variance is partially offset by  
negative variances in several other line items, including negative YTD variances of $3.8 million  
in item 200511, Auxiliary Services, and $2.2 million in item 200540, Special Education  
Enhancements. Item 200511 supports the provision of certain secular services to chartered  
nonpublic schools and is distributed on a per-pupil basis. Item 200540 provides subsidies to  
public providers of special education, primarily preschool providers and county boards of  
developmental disabilities.  
Justice and Public Protection  
The YTD variance in the Justice and Public Protection category turned from negative at  
the end of October to positive at the end of November mostly due to a positive variance for  
November of $15.1 million for the Department of Rehabilitation and Correction (DRC). DRC's  
Budget Footnotes  
P a g e | 17  
December 2018  
Ohio Legislative Service Commission  
YTD variance at the end of November was a positive $8.9 million. The Attorney General also  
had a significant positive YTD variance, which equaled $5.2 million.  
DRC's positive YTD variance was dominated by item 501407, Community Nonresidential  
Programs, with a positive variance of $8.9 million. Its positive variance in November, however,  
was mainly due to item 501321, Institutional Operations, which had a positive monthly variance  
of $10.3 million, resulting in a positive YTD variance of $3.4 million for that item. Item 501407  
funds grants to counties to operate intensive supervision and other community sanctions  
programming for felony offenders in lieu of prison or jail commitments. Item 501321 is the  
state's main source of funding for prison operations. The positive variances in these two line  
items and a few other items in DRC's budget were partially offset by a negative YTD variance of  
$
medical services to offenders in the state's prison system.  
4.0 million in item 505321, Institution Medical Services. Item 505321 is used to provide  
The Attorney General's positive YTD variance primarily occurred in item 055321,  
Operating Expenses, which had a positive YTD variance of $4.4 million. Item 055321 is the  
Attorney General's main appropriation for the office's operating expenses.  
Prior Year Encumbrances  
As reported in the July issue of Budget Footnotes, state agencies carried into FY 2019  
373.6 million in encumbered GRF funds that were originally appropriated for fiscal years prior  
$
to FY 2019. An agency generally has five months to spend prior year encumbrances for  
operating expenses. Any unspent operating expense encumbrances will lapse at the end of the  
five-month period and will become part of the GRF cash balance once OBM cancels the  
encumbrances. Subject to the approval of the Director of Budget and Management, an agency  
may carry funds encumbered for purposes other than operating expenses beyond the five-  
month period. Encumbrances for some grant and aid payments may be carried for several  
months or even years.  
Prior Year GRF Encumbrances by Agency ($ in millions)  
Prior Year  
Encumbrances  
as of  
Outstanding  
Encumbrances  
as of  
Amount  
Expended  
Amount  
Lapsed  
Agency  
July 1, 2018  
December 1, 2018  
Education  
$102.7  
$32.8  
$64.0  
$22.1  
$37.2  
$114.7  
$373.6  
$78.8  
$8.4  
$23.7  
$23.3  
$15.9  
$11.3  
$6.4  
$0.2  
$1.1  
Higher Education  
Job and Family Services  
Development Services  
Medicaid  
$45.8  
$10.6  
$16.7  
$97.8  
$258.2  
$2.3  
$0.2  
$14.1  
$2.9  
All Other Agencies  
Total  
$14.0  
$94.6  
$20.8  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 18  
December 2018  
Ohio Legislative Service Commission  
As shown in the table above, as of December 1, 2018, $258.2 million (69.1%) of the  
373.6 million in total prior year encumbrances was expended, $94.6 million (25.3%) was still  
$
outstanding, and the remaining $20.8 million was canceled so the corresponding funds would  
subsequently lapse back into the GRF. ODE had the largest share (25.1%) of the total  
outstanding encumbrances as of December 1, followed by the Department of Higher Education  
(
6
DHE) at 24.6%, ODJFS at 16.8%, the Development Services Agency (DSA) at 11.9%, and ODM at  
.7%. Together, these seven agencies had $80.6 million (85.2%) of the $94.6 million in total  
outstanding prior year encumbrances. The nature of these outstanding encumbrances is  
discussed below.  
Of ODE's outstanding encumbrances as of December 1, which totaled $23.7 million,  
5.0% ($10.7 million) was encumbered in item 200550, Foundation Funding. These  
4
encumbrances will be used mainly to meet year-end school foundation payment adjustments.  
Foundation payments are allocated to districts based on a variety of data. Some of these data  
are not finalized until the following fiscal year. Funds are generally encumbered each year in  
order to make adjusted payments based on these updated data. Other significant outstanding  
encumbrances were in items 200408, Early Childhood Education, ($4.4 million, 18.5%); 200511,  
Auxiliary Services, ($2.3 million, 9.7%); 200540, Special Education Enhancements, ($1.7 million,  
7
.3%); 200572, Adult Diploma, ($1.5 million, 6.4%); and 200437, Student Assessment,  
($1.5 million, 6.2%). These encumbrances will be used for making final payments and  
adjustments for early childhood education service providers, schools, and institutions that  
assist adults in acquiring their high school diploma and an industry-recognized credential, as  
well as final payments on school assessment contracts.  
DHE had $23.3 million in outstanding prior year encumbrances as of December 1, of  
which $23.2 million occurred in item 235438, Choose Ohio First Scholarship. Item 235438 is  
used to pay the state's obligations to scholarship recipients.  
ODJFS had $15.9 million in outstanding prior year encumbrances as of December 1.  
Numerous line items had outstanding encumbrances, but the three most significant are items  
6
00416, Information Technology Projects ($5.9 million, 36.8%), 600321, Program Support  
($2.9 million, 18.0%), and 600523, Family and Children Services ($1.5 million, 9.4%). Funds  
encumbered in item 600416 will be used mainly for the development, implementation, and  
maintenance of information technology systems used by ODJFS. The encumbrances in item  
6
Assistance Program. Finally, item 600523 is used for foster care and child protective services.  
00321 are mainly for contracts with vendors to provide administrative support for the Food  
DSA had $11.3 million in outstanding prior year encumbrances as of December 1. The  
vast majority of DSA's outstanding prior year encumbrances were for various economic  
development grants. Many of these grant programs are operated on a reimbursement basis,  
under which grantees have to carry out the programs and certify that certain requirements or  
objectives have been met before they are reimbursed by the state. Depending on the scope of  
a project, the grantee may not actually receive the award until several years after the award  
was originally made. The line items with the largest outstanding encumbrances are 195453,  
Technology Programs and Grants, ($6.7 million, 59.6%) and 195455, Appalachian Workforce  
Assistance, ($3.2 million, 28.1%).  
Budget Footnotes  
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December 2018  
Ohio Legislative Service Commission  
Finally, ODM had $6.4 million in outstanding prior year encumbrances as of December 1,  
of which $6.3 million (98.7%) was in item 651425, Medicaid Program Support State. These  
encumbrances will be used mainly to pay ODM's outstanding personal services and contract  
expenses for administering the Medicaid program in Ohio.  
Budget Footnotes  
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December 2018  
Ohio Legislative Service Commission  
Issue Updates  
DNR Announces Completion of Buckeye Lake Dam Construction  
Tom Wert, Budget Analyst  
On November 8, 2018, the Department of Natural Resources (DNR) announced the  
completion of construction activities at Buckeye Lake Dam. The project to reconstruct the  
00-year-old, 4.1-mile long, Class I dam located in Licking and Fairfield counties began in 2015  
2
following a U.S. Army Corps of Engineers report identifying the deteriorated condition of the  
dam and the significant risk to communities in the dam's downstream area. The project was  
initially expected to last five years at a cost of approximately $150 million but was completed in  
three years at a cost of approximately $107 million.  
Dam safety is overseen by DNR's Division of Water Resources. Dams are classified based  
on their size and the level of risk their failure poses to public safety. Class I dams are those that  
have an impoundment volume of at least 5,000 acre-feet of water or that are at least 60 feet  
high and, when compromised, could lead to the loss of human life or the structural collapse of  
at least one residential or commercial building. Of the 2,550 publicly and privately owned dams  
overseen by the Division, 365 are Class I dams. Funding for dam safety, including inspections  
and construction oversight, is provided by the Dam Safety Fund (Fund 6150), which receives  
revenue from dam permit fees and fines from dam safety violations. Construction activities are  
supported by capital appropriations from the Ohio Parks and Natural Resources Fund  
(
(
Fund 7031), the Parks and Recreation Improvement Fund (Fund 7035), and the Wildlife Fund  
Fund 7015).  
Ohio EPA Awards $15 Million in Diesel  
Mitigation Trust Fund Grants  
Robert Meeker, Budget Analyst  
On October 23, 2018, the Ohio Environmental Protection Agency announced the award  
of 21 Diesel Mitigation Trust Fund (DMTF) Program grants totaling $15 million. Ohio's  
DMTF Program provides competitive grants to government and nongovernment applicants to  
remove diesel engines from use and replace or repower them with clean diesel, alternative  
fuel, or electric engines. The $15 million in grants was awarded to replace 322 vehicles and  
pieces of equipment in specific project categories as follows: $5 million for 179 school buses,  
$
5 million for 21 transit buses, $3 million for 107 heavy duty trucks, and $2 million for 15 pieces  
of airport ground support equipment (see table below). Individual grant amounts range from  
51,399 (Kent State University Airport) to three $2 million awards (Greater Cleveland Regional  
$
8
Transit Authority, Columbus City Schools, and Durham School Services). A local match of at  
least 25% is required for all projects, with higher matches required from nongovernment  
applicants in certain project categories.  
8
See epa.state.oh.us for a full list of awardees.  
Budget Footnotes  
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December 2018  
Ohio Legislative Service Commission  
Grant Award Totals and Vehicles/Equipment Replaced by Project Type  
Number of  
Awards  
Number of Vehicles/Pieces  
of Equipment Replaced  
Project Type  
Total Award  
School Bus  
Transit Bus  
6
4
179  
21  
$5,000,000  
$5,000,000  
$3,051,616  
$1,948,384  
$15,000,000  
Heavy Duty Trucks  
Airport Ground Support Equipment  
Total  
9
107  
15  
2
21  
322  
Funds for these purposes are the result of an agreement between the  
U.S. Environmental Protection Agency, the state of California, and Volkswagen (VW) and its  
subsidiaries settling allegations that the latter violated the federal Clean Air Act by selling diesel  
9
motor vehicles in the U.S. that were equipped with "defeat devices." The settlement requires  
VW to contribute $2.7 billion to an Environmental Mitigation Trust for State Beneficiaries to pay  
for projects that reduce emissions of nitrogen oxides. Ohio expects to receive a total of  
$
75.3 million from the trust over the next ten years.  
Medicaid Expands Access to Hepatitis C Treatment  
Alexander B. Moon, Economist  
The Ohio Department of Medicaid (ODM) recently announced that beginning  
January 1, 2019, Medicaid will start paying for hepatitis C drug treatments when the disease is  
first diagnosed rather than when the disease has progressed to a more advanced state.  
Hepatitis C is measured based on an individual's level of liver scarring. The scarring ranges from  
a score of F0 (the lowest level) to F4 (the highest level). Currently, beneficiaries only receive  
treatment when the disease has reached a score of F2. Under the new guidelines, treatment  
will instead begin for Medicaid recipients with a score of F0. This is the second policy change  
impacting hepatitis C treatments in recent years. In 2017, ODM began covering recipients with  
an F2 score. Prior to that, only recipients with an F4 score were eligible for these treatments.  
Hepatitis C is a liver disease commonly contracted when infected blood enters the  
bloodstream of an individual who is not infected. According to the Centers for Disease Control  
and Prevention, the majority of individuals become infected by sharing needles or other  
equipment used to inject drugs. As a result of the opioid epidemic, the number of hepatitis C  
cases has been growing. While the treatment of hepatitis C was revolutionized in 2013 with the  
introduction of direct-acting antiviral medications, the cost of medications caused many health  
insurers to limit coverage to individuals with advanced stages of the disease. However, over the  
9
Emission testing defeat devices were in the form of computer software designed to make  
vehicles appear compliant during emissions testing, while during normal operation and use, the vehicles  
actually emitted up to 40 times the legally allowable amount of nitrogen oxides.  
Budget Footnotes  
P a g e | 22  
December 2018  
Ohio Legislative Service Commission  
past five years, newer, less expensive treatments have entered the market. The cost of  
treatment now varies from a low of $26,400 per course of treatment up to $94,500, depending  
on the drugs used. As a result of lower costs and increasing cases, many health insurers,  
including many state Medicaid departments, have begun covering treatment at an earlier stage.  
ODJFS Receives $8.0 Million Workforce Grant  
Nicholas J. Blaine, Budget Analyst  
On November 1, 2018, the Ohio Department of Job and Family Services (ODJFS) was  
awarded an $8.0 million, two-year Trade and Economic Transition Dislocated Worker Grant  
DWG) to address workforce issues in 16 counties affected by the opioid crisis. The grant will be  
(
used to aid businesses that hire individuals in recovery, create an addiction services  
apprenticeship program at community colleges, and help unemployed workers overcome  
addiction to find jobs. Grants of $1.8 million will be awarded to four regions across the state.  
The table below shows the regions, as well as the counties, receiving funds.  
Regions Receiving DWG Funds  
Region  
Western Region  
Counties  
Clark, Clinton, Fayette, Montgomery, Preble  
Butler, Clermont, Hamilton  
Southwest Region  
Southern Region  
Adams, Brown, Lawrence, Pike, Ross, Scioto  
Mahoning, Trumbull  
Mahoning Valley Region  
DWG is administered by the U.S. Department of Labor. In total, $110.0 million in grant  
funds were awarded to 21 state, tribal, and nonprofit entities. Ohio, along with state entities  
located in Oklahoma, Pennsylvania, and New York, received the maximum grant award of  
$
8.0 million. Grants are provided as part of the Workforce Innovation and Opportunity Act  
(
employment programs at both state and local levels.  
WIOA) of 2014. They are used to expand the service capacity of dislocated worker training and  
ODE Releases Community School Sponsor Evaluations for the  
2017-2018 School Year  
Alexandra Vitale, Budget Analyst  
On November 15, 2018, the Ohio Department of Education (ODE) released community  
school sponsor evaluations for the 2017-2018 school year. As can be seen in the following  
chart, of the 34 community school sponsors evaluated, 21 (62%) received an overall rating of  
"
community school sponsor ratings improved from the 2016-2017 school year, when about 47%  
of sponsors were rated either ineffective or poor. However, no sponsors received an overall  
effective," 12 (35%) were rated "ineffective," and one (3%) was rated "poor." On the whole,  
Budget Footnotes  
P a g e | 23  
December 2018  
Ohio Legislative Service Commission  
rating of "exemplary" for the 2017-2018 school year; three sponsors received that rating for the  
2
016-2017 school year.  
Chart 5: Community School Sponsor Ratings, 2017-2018 School Year  
Effective, 21, 62%  
Ineffective, 12, 35%  
Total of 34  
Sponsors  
Rated  
Poor, 1, 3%  
The overall rating is comprised of three equally weighted components that receive their  
own individual ratings: (1) academic performance of students enrolled in schools sponsored by  
the entity, (2) compliance with rules and laws, and (3) adherence to quality practices, such as  
performance contracting, evaluation, termination and renewal decision making, and technical  
assistance to community schools.  
Sponsors rated ineffective may not sponsor additional schools while those that receive a  
poor rating or three consecutive ineffective ratings have their sponsorship authority revoked,  
subject to an available appeals process. The overall number of sponsors evaluated dropped  
from 45 in the 2016-2017 school year to 34 in the 2017-2018 school year. Most of the entities  
that are no longer sponsoring schools had their sponsorship authority revoked due to poor  
ratings.  
OFCC Completed Facility Plans for Five School Districts and  
Two STEM Schools in FY 2018  
Daniel P. Redmond, Budget Analyst  
During FY 2018, the Ohio Facilities Construction Commission (OFCC) completed projects  
that fully addressed the facilities needs of five school districts. As shown in the following table,  
the total master facility plan costs of these projects, as assessed by OFCC, was $240.7 million.  
Of that total, the state share was $108.3 million (45%) and local share was $132.5 million (55%).  
In addition, OFCC completed school facilities projects for two independent science, technology,  
engineering, and mathematics (STEM) schools. The total cost of the STEM school projects was  
Budget Footnotes  
P a g e | 24  
December 2018  
Ohio Legislative Service Commission  
$
10.6 million. The state supported 50% of the cost of both projects, for a total of $5.3 million,  
while the remainder was supported by the schools. Under the STEM school facilities program, a  
STEM school must provide at least 50% of the total cost of the acquisition of the classroom  
facilities.  
FY 2018 Completed School Facility Plans  
State  
District/School  
County  
Total Plan Costs  
State Share  
Share %  
35%  
59%  
37%  
35%  
68%  
45%  
50%  
50%  
50%  
Bryan City School District  
Williams  
$53,945,575  
$55,784,080  
$70,023,698  
$33,021,672  
$27,940,118  
$18,880,951  
$32,912,607  
$25,908,768  
$11,557,585  
$18,999,280  
Defiance City School District  
Lebanon City School District  
Northwood Local School District  
Defiance  
Warren  
Wood  
West Liberty-Salem Local School District Champaign  
School District Total  
$240,715,143 $108,259,192  
Dayton Regional STEM School  
Global Impact STEM Academy  
Montgomery  
Clark  
$4,271,335  
$6,303,844  
$10,575,179  
$2,135,668  
$3,151,922  
$5,287,590  
STEM School Total  
Overall, OFCC disbursed $427.5 million for school facilities assistance projects in  
FY 2018, over 91% ($390.4 million) of which was spent on Classroom Facilities Assistance  
Program (CFAP) projects. The remainder, $37.1 million, primarily supported OFCC's Exceptional  
Needs Program ($19.8 million), which addresses the facilities needs of a specific building rather  
than the entire facilities needs of a district, as well as facilities assistance for high-performing  
community schools ($9.9 million) and independent STEM schools ($5.1 million). The current  
capital appropriations act, H.B. 529 of the 132nd General Assembly, appropriates a total of  
$
biennium, primarily supported through the sale of bonds.  
600 million for classroom facilities assistance projects for the FY 2019-FY 2020 capital  
Through the end of FY 2018, 43% of districts statewide, including 266 school districts  
and 15 Joint Vocational School Districts (JVSDs) have completed projects that fully addressed  
their facilities' needs through the CFAP and another 17% of districts, including 114 school  
districts and one JVSD, have buildings in the design or construction phase or had some work  
performed through another OFCC program. An additional 18% of districts, including 108 school  
districts and 11 JVSDs, have been offered funding but have deferred the offer, allowed it to  
lapse because they were unable to raise the required local share, or are in the process of  
seeking the required local share. The remaining 22% of districts, including 122 school districts  
and 22 JVSDs, have not yet been offered CFAP funding.  
Budget Footnotes  
P a g e | 25  
December 2018  
Ohio Legislative Service Commission  
Deadline to Claim School Safety Training Grants Extended  
Joseph Rogers, Senior Budget Analyst  
The Ohio Attorney General recently extended the deadline from November 1 to  
November 30, 2018, for schools to claim their allocations of school safety training grants.  
H.B. 318 of the 132nd General Assembly appropriated $12.0 million in GRF funding to the  
Attorney General's FY 2019 budget for school safety training grants. As of November 1,  
10  
9.1 million of the $12.0 million had been claimed by 1,108 (63%) of 1,755 eligible schools.  
$
The extended deadline provides another opportunity for the other 647 eligible schools to claim  
the remaining $2.9 million in grant funding.  
H.B. 318 requires the Attorney General to consult with the Superintendent of Public  
Instruction and the Director of Mental Health and Addiction Services to allocate safety training  
grants to public and chartered nonpublic schools and schools operated by county boards of  
developmental disabilities. Eligible schools were allocated $5.65 per student with a minimum  
allocation of $2,500 per school. The minimum allocation was awarded to 937 schools.  
Participating schools and county boards were required to work with or contract with the county  
sheriff's office or the appropriate local police department to develop the school safety training  
programs. The table below lists the ten largest grant allocations. As seen from the table, eight  
of them had claimed their allocations prior to the November 1 deadline.  
Status of Ten Largest School Safety Training Grant Allocations  
School District  
Columbus City  
Grant Allocation  
$283,082  
School District  
Akron City  
Grant Allocation  
$120,289  
$115,209  
$89,400  
Cleveland Metropolitan  
Cincinnati City*  
$218,949  
Olentangy Local  
Hilliard City  
$196,784  
Toledo City  
$130,685  
Dublin City  
$87,439  
South-Western City  
$128,780  
Lakota Local*  
$84,575  
*School had not claimed grant allocation as of November 1, 2018, deadline.  
Controlling Board Approves $2.8 Million Entertainment Budget  
for the 2019 Ohio State Fair  
Shannon Pleiman, Budget Analyst  
On October 29, 2018, the Controlling Board approved the Ohio Expositions  
Commission's proposed budget of approximately $2.8 million to enter into entertainment and  
related contracts for the 2019 Ohio State Fair. This is equal to the amount that was approved by  
10  
The full list of recipients can be found at: www.ohioattorneygeneral.gov/Files/Briefing-  
Room/News-Releases/SchoolGrants_Final.aspx. Several districts are in litigation with the Attorney  
General and their awards have been held up until issues are resolved.  
Budget Footnotes  
P a g e | 26  
December 2018  
Ohio Legislative Service Commission  
the Controlling Board for the 2018 State Fair, although actual spending on entertainment for  
2
018 was about $500,000 lower than the approved budget. Of the 2019 entertainment budget,  
about $2.3 million (82.1%) will be for signing name acts, back-up bands, free on-grounds  
entertainment, and related expenses. The remaining amount of just over $0.5 million (17.9%)  
will go toward contracts for entertainment support (stage hands, sound, lighting, etc.) and  
other special entertainment events.  
Controlling Board approval of the entertainment budget for the 2019 Ohio State Fair  
allows for the Expositions Commission to negotiate and sign contracts with popular  
entertainers and acts before they are booked at other venues. The contracts will be paid using  
FY 2020 appropriations which will be established in the main operating budget of the  
1
33rd General Assembly. For FY 2019, the Ohio Expositions Commission has an FY 2019 budget  
of approximately $16.0 million. Of that total, approximately $15.6 million is funded by non-GRF  
revenues, primarily from the State Fair and other events held on the state fairgrounds  
throughout the year, and the remaining $0.4 million is funded by the GRF.  
Budget Footnotes  
P a g e | 27  
December 2018  
Ohio Legislative Service Commission  
TErric Maakcelak, Eiconnomgist the Economy  
Overview  
America's robust economy continues to expand. National employment growth was  
moderate in November, and the unemployment rate remained steady at 3.7% according to the  
U.S. Bureau of Labor Statistics (BLS). Real gross domestic product (GDP), an inflation-adjusted  
measure of production, grew at a 3.5% seasonally adjusted rate in the third quarter of 2018.  
Consumer expenditures, nonresidential fixed investment, and government spending all  
increased, although weaker exports and residential fixed investment weighed on growth. The  
Federal Reserve Bank's Open Market Committee noted the strong growth in real GDP during  
2
018's third quarter. They indicate the labor market continues to strengthen; despite declines  
in financial market performance, consumer spending and prices indicated little change from the  
previous outlook. Sales of existing homes in the national housing market increased in October  
for the first time since March. Home inventories were higher at the end of October than at the  
same point in 2017.  
Ohio's economic activity was strong, particularly in the areas of durable goods  
manufacturing, information, and natural resource extraction. Real GDP grew at a seasonally  
adjusted 3.7% in 2018's second quarter, about on average with other states in the region.  
Nonfarm payroll employment this October was 5.65 million, 2.1% higher than in October 2017.  
The number of existing home sales declined 0.7% year to date from 2017, although the average  
sale price of a home has risen by approximately 5.7% this year.  
The National Economy  
Real GDP increased at a seasonally adjusted annual rate of 3.5% in the third quarter of  
018. This estimate is unrevised from the advance estimate released last month. This rise in  
2
real GDP reflects increases in consumer expenditure, private inventory investment,  
nonresidential fixed investment, and government spending, which offset negative contributions  
from net exports (exports imports) and residential fixed investment. Current dollar GDP  
increased 5.0%, or $248.4 billion, at an annual rate in the third quarter. GDP in the U.S. in the  
third quarter of 2018 reached an annual rate of $20.66 trillion.  
During its November 7-8 meeting, the Federal Open Market Committee (FOMC)  
generally concluded that third quarter GDP growth was strong, and that labor market  
conditions continued to improve in recent months. The monetary policy-setting committee  
found consumer price inflation, at 2.0% as measured by the change in the price index for  
personal consumption expenditures (PCE), was near its 2% objective. FOMC staff project real  
GDP to increase slightly less rapidly in the second half of 2018 as compared to the first, and  
expect labor market conditions to apply downward pressure on the une11mployment rate and  
"larger-than-usual" upward pressure on the labor force participation rate.  
11  
https://www.federalreserve.gov/monetarypolicy/fomcminutes20181108.htm.  
Budget Footnotes  
P a g e | 28  
December 2018  
Ohio Legislative Service Commission  
Chart 6: 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  
Unemployment Rate (right scale)  
Nonfarm payroll employment rose by 155,000 in November, while the national  
unemployment rate remained at 3.7%. The data, released by the BLS, reported that large  
shares of job gains were in the health care (+32,000), manufacturing (+27,000), and  
transportation and warehousing (+25,000) industries. General merchandise stores (+39,000)  
and miscellaneous store retailers (+10,000) added jobs in November, likely gearing up for the  
holiday season. BLS also noted that employment in some major industries, including  
construction, wholesale trade, finance, government, and leisure and hospitality, showed little  
change during November.  
The labor force participation rate in November 2018 was 0.2 percentage point higher  
than a year prior. Both total labor force numbers and employment as a share of the working-  
age population increased for both men and women 20 years of age and over.  
The unemployment rate, at 3.7%, was unchanged over the past three months.  
Unemployment rates were down from a year earlier for all racial groups and for both teenagers  
and adults. The rate fell for high school graduates and those with "some college or associate  
degree," but rose for people with less than a high school diploma as well as those with a  
"
working part time fell over the past month.  
Bachelor's degree and higher." The seasonally-adjusted measure of people employed but  
The Industrial Production Index (IPI) rose 0.1% in October, again achieving an all-time  
high. Modest declines in mining and utilities production were more than offset by an increase in  
manufacturing production. Total production capacity utilization, a measure of the percentage  
of resources being used from the total available resources, rose for finished goods and fell  
slightly for crude and semifinished products.  
The consumer price index (CPI) rose 0.3% in October, and is 2.5% above its year-earlier  
level. The cost of shelter rose 3.2% between October 2017 and October 2018, while the price  
index for all gasoline products was up 16.1% during that time. The CPI excluding food and  
Budget Footnotes  
P a g e | 29  
December 2018  
Ohio Legislative Service Commission  
energy was 2.1% higher than a year earlier. Another measure of price inflation at the consumer  
level, the price index for PCE excluding food and energy, increased 0.1% in October and was  
1
.8% higher than a year earlier.  
The Ohio Economy  
Ohio's economy continued to add jobs in October, although the unemployment rate  
remained at 4.6%, unchanged since July. The state's unemployment rate in October was higher  
than the U.S. unemployment rate. The unemployment rate in October was down moderately  
compared to 4.9% in October of last year. The number of unemployed people in Ohio was  
2
66,000 in October, almost unchanged from a month prior.  
Nonfarm payroll employment was 5.65 million in October, an increase of 0.2% from  
September and 2.1% from October 2017. Manufacturing employment rose by 1,400, or 0.2%, in  
October from the revised total in September, with those gains equally split between durable  
and nondurable goods manufacturers. Government employment, at 791,300, was unchanged  
with gains in local government (+200) offsetting losses in state government (-200). Private  
service-providing industries added 9,700 jobs, with most gains occurring in professional and  
business services (+3,600) and educational and health services (+3,800).  
Ohio has added 115,400 jobs since October 2017. Over this time, employment in goods-  
producing industries added 23,200 jobs, including increases in manufacturing (+13,200) and  
construction (+9,100). Among private service-producing industries, gains in trade,  
transportation, and utilities (+23,300), educational and health services (+20,600), leisure and  
hospitality (+18,800), other services (+8,800), and professional and business services (+8,000)  
were the most robust. The only major industrial groups with fewer Ohio employees in  
October 2018 than a year prior were information (-300) and management of companies and  
enterprises (-100).  
Chart 7: 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)  
In November, the Bureau of Economic Analysis released 2017 per capita personal  
income statistics for Ohio counties. The county with the largest year-over-year increase in  
Budget Footnotes  
P a g e | 30  
December 2018  
Ohio Legislative Service Commission  
personal income was Harrison County, where per capita personal income rose 8.5% from 2016  
to 2017. The only county that showed a decrease was Hancock County, where per capita  
personal income fell 7.3%. In 2017, per capita personal income in Ohio's three most populous  
counties, Cuyahoga, Franklin, and Hamilton, grew at 4.3%, 2.6%, and 3.6%, respectively.  
Ohio's GDP grew at an annualized rate of 3.7% in the second quarter of 2018, up from  
.2% growth in the first quarter. Durable goods manufacturing contributed 0.83 percentage  
0
point to the second quarter growth, while a decline in nondurable goods manufacturing  
subtracted 0.37 percentage point.  
A total of 13,205 existing homes were sold in October in the state of Ohio, nearly  
unchanged from a year prior. Through October 2018, the number of existing home sales has  
decreased 0.6% from last year. The market value of existing home sales in Ohio in 2018 is  
$
23.6 billion to date, up 5.1% from the $22.5 billion at this time in 2017. The average sales price  
for existing homes was $181,970 in October, and year-to-date average sale price has increased  
by $9,949 from 2017 to 2018.  
Economic a2ctivity in the region grew modestly, according to a Federal Reserve Bank of  
1
Cleveland report. Manufacturers reported in their business survey that conditions remained  
strong, but some indicated pessimism over future demand, as rising input prices will negatively  
affect the quantity of goods demanded upon the imminent expiration of fixed-price contracts.  
Banking conditions remained strong amid robust demand for credit in both commercial and  
consumer segments. Nonfinancial services firms also reported strong growth, citing business  
confidence and strong willingness to spend on business-to-business advisory services. Hiring  
was "very strong" in professional and business services. Contacts cited increased compensation  
by competitors as what required them to boost compensation to retain workers. Nonlabor  
input costs rose strongly, led by metals, fuel, and transportation costs. Nonresidential  
construction demand improved moderately, while demand for new residential construction  
softened; homebuilders cited decreasing home affordability as the driver of this decrease in  
demand.  
12  
The report is from the latest Federal Reserve System Beige Book that summarizes information  
gathered on or before November 26, 2018, from outside contacts. The Federal Reserve Bank of  
Cleveland's district includes all of Ohio and parts of Kentucky, Pennsylvania, and West Virginia.  
Budget Footnotes  
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December 2018