A monthly newsletter of the Legislative Budget Office of LSC  
Volume: Fiscal Year 2019  
Issue: February 2019  
Highlights  
Ross Miller, Chief Economist  
January GRF tax revenue was $72.0 million below the estimate published by  
the Office of Budget and Management (OBM) in August 2018. Personal income tax  
PIT) receipts alone were below estimate by $98.9 million, primarily due to  
(
estimated payments coming in well below estimate. The August estimate did not  
reflect a 3.3% decrease in income tax withholding rates that took effect January 1.  
The Revenues section of this report provides more detail on the rate reduction.  
Through January, GRF tax revenue was $56.7 million above the August estimate.  
Ohio's December unemployment rate (4.6%) was unchanged from November's  
rate. Private sector payroll employment declined in December, with employment  
in goods producing industries increasing by slightly less (+5,000) than the size of  
the decline in the private service sector (-5,500). Government employment  
increased by 3,400, due primarily to an increase in local government employment  
(+3,000). Total payroll employment increased by 2,900 for the month.  
Through January 2019, GRF sources totaled $19.63 billion:  
Revenue from the sales and use tax was $142.6 million above estimate;  
PIT receipts were $143.0 million below estimate.  
Through January 2019, GRF uses totaled $20.42 billion:  
Program expenditures were $531.6 million below estimate, primarily due  
to Medicaid, for which GRF spending was $459.2 million below estimate;  
Program expenditures for Health and Human Services were below  
estimate by $47.2 million.  
In this issue...  
More details on GRF Revenues (p. 2), Expenditures (p. 11),  
the National Economy (p. 25), and the Ohio Economy (p. 27).  
Also Issue Updates on:  
Lake Erie Dredge Material Reuse Projects (p. 18)  
Truck Parking Locator System (p. 18)  
Child Care Time and Attendance (p. 19)  
Ryan White HIV/AIDS Program Funding Increase (p. 19)  
School Achievement Awards (p. 20)  
Proprietary College Credit Transfer Plan (p. 21)  
Economic Development Award Compliance Report (p. 22)  
MARCS Grant Awards (p. 23)  
Diesel Emission Reduction Project Grants (p. 24)  
Available online at: www.lsc.ohio.gov/Budget Central  
Legislative Budget Office of the Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of January 2019  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on February 1, 2019)  
State Sources  
Tax Revenue  
Auto Sales  
Nonauto Sales and Use  
Total Sales and Use  
Actual  
Estimate*  
Variance  
Percent  
9.4%  
-0.5%  
0.6%  
$124,289  
$831,867  
$956,157  
$113,600  
$836,400  
$950,000  
$10,689  
-$4,533  
$6,157  
Personal Income  
Commercial Activity Tax  
Cigarette  
Kilowatt-Hour Excise  
Foreign Insurance  
Domestic Insurance  
Financial Institution  
Public Utility  
$1,011,644 $1,110,500  
-$98,856  
-$3,166  
$1,046  
$1,205  
-$6,162 -1232.3%  
$0  
$25,499  
$15  
-8.9%  
-4.6%  
1.4%  
4.2%  
$66,334  
$73,446  
$29,905  
-$5,662  
$0  
$69,500  
$72,400  
$28,700  
$500  
$0  
---  
50.8%  
---  
$75,699  
$15  
$50,200  
$0  
Natural Gas Consumption  
Alcoholic Beverage  
Liquor Gallonage  
Petroleum Activity Tax  
Corporate Franchise  
Business and Property  
Estate  
$2,242  
$5,474  
$5,165  
$0  
$48  
$0  
$1,700  
$3,900  
$5,100  
$0  
$0  
$0  
$542  
$1,574  
$65  
$0  
$48  
31.9%  
40.4%  
1.3%  
---  
---  
---  
$0  
$0  
$0  
$0  
---  
Total Tax Revenue  
$2,220,467 $2,292,500  
-$72,033  
-3.1%  
Nontax Revenue  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$29,645  
$3,317  
$472  
$18,577  
$3,220  
$3,278  
$25,075  
$11,068  
$97  
-$2,806  
59.6%  
3.0%  
-85.6%  
Total Nontax Revenue  
$33,433  
$8,359  
33.3%  
Transfers In  
$5,916  
$7,500  
-$1,584  
-21.1%  
-2.8%  
Total State Sources  
$2,259,816 $2,325,075  
$816,514  
$3,076,331 $3,251,272 -$174,941  
-$65,258  
Federal Grants  
$926,197 -$109,683  
-11.8%  
-5.4%  
Total GRF Sources  
*Estimates of the Office of Budget and Management as of August 2018.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 2  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate ($ in thousands)  
FY 2019 as of January 31, 2019  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on February 1, 2019)  
State Sources  
Tax Revenue  
Auto Sales  
Nonauto Sales and Use  
Total Sales and Use  
Actual  
Estimate*  
Variance Percent FY 2018** Percent  
$867,854  
$5,426,451 $5,319,200  
$6,294,305 $6,151,700  
$832,500  
$35,354  
$107,251  
$142,605  
4.2%  
2.0% $5,198,500  
2.3% $6,016,881  
$818,381  
6.0%  
4.4%  
4.6%  
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  
$5,384,887 $5,527,900 -$143,013  
-2.6% $5,264,194  
2.3%  
4.2%  
-1.6%  
6.2%  
5.5%  
$835,088  
$493,759  
$209,112  
$153,375  
$2  
$826,600  
$489,600  
$206,700  
$147,200  
$0  
$8,488  
$4,159  
$2,412  
$6,175  
$2  
1.0%  
0.8%  
1.2%  
4.2%  
---  
$801,493  
$501,891  
$196,995  
$145,357  
$63 -96.9%  
$47,319  
$73,087  
$22,495  
$32,529  
$30,336  
$4,750  
$1,227  
$0  
$34,000  
$56,900  
$19,400  
$33,300  
$29,600  
$2,700  
$0  
$13,319  
$16,187  
$3,095  
-$771  
$736  
$2,050  
$1,227  
$0  
39.2%  
28.4%  
16.0%  
-2.3%  
2.5%  
75.9%  
---  
$28,770  
64.5%  
31.0%  
19.9%  
-5.1%  
4.6%  
$55,791  
$18,755  
$34,280  
$29,012  
$3,280  
$2,397 -48.8%  
-$374 100.0%  
$118 -72.9%  
44.8%  
$0  
---  
---  
$32  
$0  
$32  
Total Tax Revenue  
$13,582,303 $13,525,600  
$56,703  
0.4% $13,098,903  
3.7%  
Nontax Revenue  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$55,070  
$13,660  
$55,444  
$124,174  
$38,211  
$13,137  
$64,978  
$116,326  
$16,859  
$522  
-$9,534 -14.7%  
$7,848  
-$5,665  
$58,886  
44.1%  
4.0%  
$30,304  
$13,596  
$235,409 -76.4%  
81.7%  
0.5%  
Total Nontax Revenue  
6.7%  
$279,309 -55.5%  
Transfers In  
$82,025  
$87,690  
-6.5%  
$133,171 -38.4%  
Total State Sources  
$13,788,501 $13,729,616  
0.4% $13,511,383  
-5.6% $5,721,340  
-1.4% $19,232,723  
2.1%  
2.0%  
2.0%  
Federal Grants  
$5,837,824 $6,184,127 -$346,303  
$19,626,326 $19,913,743 -$287,417  
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  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
1
Revenues  
Jean Botomogno, Principal Economist  
Overview  
Through January in FY 2019, GRF sources totaling $19.63 billion were $287.4 million  
(1.4%) below OBM's estimates released in August 2018, up from a cumulative negative variance  
of $112.5 million in the first half of FY 2019. The year-to-date (YTD) GRF negative variance was  
2
due to shortfalls of $346.3 million (5.6%) for federal grants and $5.7 million (6.5%) for transfers  
in. Those shortfalls were partially offset by positive variances of $56.7 million (0.4%) for GRF tax  
revenues and $7.8 million for nontax revenue (6.7%). The YTD negative variance for federal grants  
results from GRF Medicaid spending being substantially below expectations throughout the fiscal  
year. In contrast, monthly GRF tax sources had surpassed anticipations earlier in FY 2019, but  
stumbled in the last two months. Tables 1 and 2 show GRF sources for the month of January and  
for FY 2019 through January, respectively. GRF sources consist of state-source receipts, which  
include tax revenue, nontax revenue, and transfers in, and federal grants.  
Regarding YTD GRF tax sources, the personal income tax (PIT) posted a cumulative negative  
variance of $143.0 million, attributable largely to shortfalls from quarterly estimated payments  
(
exception of a $0.8 million negative variance for the alcoholic beverage tax, the remaining tax  
sources were above estimates, including the sales and use tax ($142.6 million), the public utility tax  
$70.9 million in January and $68.6 million in December) in the last two months. With the  
(
(
$16.2 million), the commercial activity tax (CAT, $8.5 million), the foreign insurance tax  
$6.2 million), and the cigarette and other tobacco products tax ($4.2 million). The financial  
institutions tax (FIT), which had a shortfall of $12.2 million in the first six months of FY 2019,  
posted a cumulative variance of $13.3 million through3 January, as a result of a positive variance of  
$25.5 million from the first payment of the fiscal year.  
Effective January 1, 2019, the Tax Commissioner reduced Ohio employer withholding tax  
rates by 3.3% to be fully consistent with the income tax rate reductions enacted in 2015 (H.B. 64  
of the 131st General Assembly). The withholding rate change does not affect tax liabilities, but is  
estimated to create a one-time $150.6 million reduction in GRF revenue during the January-June  
2
distributions to the Local Government Fund. LBO has received monthly estimates of PIT revenue  
updated to reflect the withholding rate reduction, but other taxes are affected by the change due  
019 period. The revision included declines of $152.6 million for withholding and $2.0 million for  
4
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.  
4
For accounting purposes, GRF tax revenue distributions to the fund are debited against income  
tax receipts.  
Budget Footnotes  
P a g e | 4  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
to reduced distributions to the Public Library Fund. Because LBO has not received updated  
monthly estimates for other taxes, Tables 1 and 2, above, continue to compare actual PIT (and  
other tax) revenue to OBM estimates released in August 2018.  
January GRF sources of $3.08 billion were $174.9 million (5.4%) below projections. Most  
categories underperformed, with the exception of nontax revenue which was $8.4 million above  
estimate. The shortfall was due to negative variances of $109.7 million for federal grants,  
$
72.0 million for tax sources, and $1.6 million for transfers in. Tax sources were brought down  
largely by a deficit of $98.9 million from PIT, but also negative variances of $6.2 million for the  
foreign insurance tax and $3.2 million for the CAT. On the other hand, in addition to the FIT's  
positive variance, the sales and use tax, the alcoholic beverage tax (which partly reversed a  
timing-related shortfall experienced in December), the kilowatt hour-tax, and the cigarette tax  
were above estimate by $6.2 million, $1.6 million, $1.2 million, and $1.0 million, respectively.  
Chart 1, below, shows cumulative variances of GRF sources through January.  
Chart 1: Cumulative Variances of GRF Sources in FY 2019  
(
Variances from August Estimates, $ in millions)  
$
$
200  
100  
$0  
-
-
-
-
$100  
$200  
$300  
$400  
Jul-18  
Aug-18  
Sep-18  
Oct-18  
Nov-18  
Dec-18  
Jan-19  
Federal Grants  
Tax Revenue  
Total GRF Sources  
FY 2019 GRF sources increased $393.6 million relative to sources through January in  
FY 2018. GRF tax sources and federal grants were higher by $483.4 million and $116.5 million,  
respectively. The increases were partially offset by decreases of $155.1 million for nontax  
5
revenue and $51.1 million for transfers in. For the largest tax sources, receipts increased for  
the sales and use tax ($277.4 million), the PIT ($120.7 million), and the CAT ($33.6 million). Also,  
revenue from the FIT, the public utility tax, the kilowatt-hour tax, and the foreign insurance tax  
increased by $18.5 million, $17.3 million, $12.1 million, and $8.0 million, respectively.  
5
An outsize payment of unclaimed funds of over $200 million was made to the GRF in January  
2
018, which explains this large decline in receipts from this category in FY 2019.  
Budget Footnotes  
P a g e | 5  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
Sales and Use Tax  
Through January, FY 2019 receipts to the GRF from the sales and use tax totaled  
6.29 billion, an amount $142.6 million (2.3%) above estimate, with both the nonauto and the  
$
auto portions of the tax ahead of projections. YTD GRF receipts from the sales and use tax were  
also 4.6% above revenue through January in FY 2018. For the month, GRF receipts of  
$
956.2 million were $6.2 million (0.6%) above anticipated revenue, propelled by another solid  
performance from the auto sales and use tax, while the nonauto sales and use tax failed to  
meet expectations. Monthly sales and use tax receipts were also $43.9 million (4.8%) above  
revenue in January 2018.  
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.  
Nonauto Sales and Use Tax  
GRF revenue from the nonauto sales and use tax of $831.9 million in January was short  
of estimate by $4.5 million (0.5%). This poor result follows positive variances of $58.4 million in  
November and $7.7 million in December. The latest performance decreased the cumulative  
positive variance of this tax to $107.3 million (2.0%), down from $111.8 million in the first six  
months of FY 2019. Compared to the same month last year, revenue increased $38.6 million  
(
the corresponding period in FY 2018. Chart 2, below, shows year-over-year growth in nonauto  
sales tax collections. Revenue growth for this tax has been excellent and supported by  
4.9%). For the YTD, GRF receipts of $5.43 billion were $228.0 million (4.4%) above revenue in  
6
employment and wage gains throughout FY 2019.  
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%  
Jul-18  
Aug-18  
Sep-18  
Oct-18  
Nov-18  
Dec-18  
Jan-19  
6
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  
reflecting taxable activity in June 2017). So, to adjust for changes to the existing tax base, this chart  
(
excludes monthly revenue from MHICs in July 2017 so that changes in nonauto sales and use tax  
revenue are on a comparable basis.  
Budget Footnotes  
P a g e | 6  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
Auto Sales and Use Tax  
The auto sales and use tax was again above estimates and prior-year receipts in January,  
a performance comparable to that of the previous three months. GRF receipts of $124.3 million  
were above expected revenue by $10.7 million (9.4%). The result increased this source's YTD  
positive variance to $35.4 million (4.2%) up from $24.7 million at the end of December.  
Through January, FY 2019 auto sales tax receipts of $867.9 million were $49.5 million (6.0%)  
above receipts in the corresponding period in FY 2018. Chart 3, below, shows year-over-year  
growth in auto sales tax collections.  
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%  
Jul-18  
Aug-18  
Sep-18  
Oct-18  
Nov-18  
Dec-18  
Jan-19  
Nationwide new light vehicle (auto and light truck) sales came in at 16.7 million units in  
January (at a seasonally adjusted annual average rate), following four months averaging  
1
7
7.5 million units. Light truck sales declined to about 67% of all light vehicle sales, down from  
0% in December 2018. However, given low gasoline prices, consumer preferences, and the  
shift in vehicle manufacturers away from cars, this drop in light truck sales may not persist. Unit  
sales exceeded 17 million units in each of the last four calendar years. With a strong labor  
market, rising income, still-low interest rates, and credit availability, calendar year (CY) 2019  
could yet be another good year for the industry, though unit sales may not reach the record  
levels of recent years.  
Personal Income Tax  
As explained above, the reduction in withholding tax rates implemented in January will  
decrease revenue in FY 2019. This action will also yield reduced CY 2019 income tax refunds, but an  
offsetting revenue gain will not occur until tax returns are filed in FY 2020. Starting with this month,  
in this section of the publication, PIT revenue will be compared to the revised estimates, though in  
the Overview section revenue comparisons were made relative to the original estimates for the  
PIT released in August 2018.  
Budget Footnotes  
P a g e | 7  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
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  
7
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.  
January receipts of $1.01 billion were $77.4 million (7.1%) below the revised estimate.  
If receipts were compared to the original projection, this negative variance would be 8.9%.) Like  
(
the PIT shortfall of $44.2 million in December, this recent performance was also due to a large  
negative variance of $70.9 million (23.1%) for quarterly estimated payments, after a deficit of $68.6  
million for this component in December 2018. For the two-month period, quarterly estimated  
payments were short of projections by about 34%. The impact of recent changes in federal law  
affecting tax year (TY) 2018 (the Tax Cuts and Jobs Act of 2017), and stock market declines later in  
the year may have reduced incentives for certain taxpayers to make their fourth and final federal  
8
and quarterly estimated payments. In addition to quarterly estimated payments, January  
miscellaneous payments were also short of estimates ($2.2 million), but employer withholding was  
higher than projected ($20.9 million), and refunds were higher than anticipated ($25.2 million).  
The January performance pushed up the YTD GRF negative variance of this tax to  
$121.5 million (2.2%), compared to updated estimates, from a shortfall of $44.2 million in the first  
half of FY 2019. (This YTD negative variance would be 2.6% relative to the August estimates.) YTD  
PIT revenue growth was 2.3%, when compared to revenue through January in FY 2018. For the first  
half of FY 2019, year-over-year growth was 5.4%, but the withholding rate reduction will tend  
to pull the growth rate down during the remainder of the fiscal year.  
Revenues from each component of the PIT relative to revised estimates and to revenue  
received in FY 2018 are detailed in the table below. YTD gross collections were below estimate  
by $86.9 million. Shortfalls for quarterly estimated payments and miscellaneous revenue were  
partially offset by positive variances from withholding and annual return payments. The  
negative variance for gross collections was increased by higher than projected refunds and  
distributions to the LGF. FY 2019 refunds and LGF distributions also increased compared to their  
amounts in the corresponding period last year.  
7
Quarterly estimated payments are made by taxpayers who expect to be underwithheld by  
more than $500. Payments are due in April, June, and September of an individual's tax year and January  
of the following year. Most estimated payments are made by high-income taxpayers.  
8
The reduction of federal income tax rates in the Act and the annual limitation of $10,000 of  
state and local taxes paid that could be claimed on the federal income tax returns may have negatively  
affected quarterly estimated payments from certain taxpayers.  
Budget Footnotes  
P a g e | 8  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
FY 2019 Personal Income Tax Revenue Variance and Annual Change by Component  
YTD Variance from Revised  
Changes from FY 2018  
Estimate  
Amount  
$ in millions)  
Percent  
(%)  
Amount  
($ in millions)  
Percent  
(%)  
Category  
(
Withholding  
$60.6  
1.1%  
$293.5  
-$155.0  
$1.4  
5.8%  
Quarterly Estimated Payments  
Trust Payments  
-$160.0  
$2.1  
-23.1%  
7.4%  
-22.6%  
4.7%  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
$21.1  
-$10.8  
-$86.9  
$32.3  
$2.3  
21.6%  
-20.6%  
-1.4%  
7.5%  
$35.8  
-$11.2  
$164.6  
$34.5  
$9.4  
43.0%  
-21.2%  
2.8%  
Less Refunds  
8.0%  
Less LGF Distribution  
GRF PIT Revenue  
1.0%  
4.2%  
-$121.5  
-2.2%  
$120.7  
2.3%  
Compared to FY 2018 through January, FY 2019 gross collections were higher by  
$
164.6 million. Regarding the two most important components of the PIT, employer  
9
withholding receipts grew 5.8%, while quarterly estimated payments fell 22.6%. 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.  
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%  
Jul-18  
Aug-18  
Sep-18  
Oct-18  
Nov-18  
Dec-18  
Jan-19  
9
Withholding receipts consist of monthly employer withholding (about 99% of the total) and  
annual employer withholding (about 1% of the total). YTD through January, monthly employer  
withholding was 5.9% above such receipts in the corresponding period in FY 2018. On the other hand,  
annual employer withholding fell 19.4%.  
Budget Footnotes  
P a g e | 9  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
Commercial Activity Tax  
January GRF receipts from the CAT were $66.3 million, an amount $3.2 million (4.6%)  
below estimate and $6.1 million (8.4%) below such receipts in the same month last year. This  
performance brought down the cumulative positive GRF variance of this tax to $8.5 million  
(
$
1.0%), down from $11.7 million in the first half of FY 2019. YTD GRF receipts totaled  
835.1 million, which was $33.6 million (4.2%) above revenue through January in FY 2018.  
Gross collections from the CAT increased about 4.8% relative to collections through January  
last fiscal year, but increased credit claims and refunds grew 11.5%.  
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%). The distributions 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  
In January, the cigarette and other tobacco products tax provided $73.4 million to the  
GRF. The yield was $1.0 million (1.4%) above estimate, but $7.6 million (9.4%) below revenue in  
January 2018. Through January, FY 2019 revenue from this GRF source totaled $493.8 million,  
$
4.2 million (0.8%) above estimate. However, that total was $8.1 million (1.6%) below receipts  
in the corresponding period in FY 2018. YTD revenue included $448.9 million from the sale of  
cigarettes and $44.9 million from the sale of other tobacco products (OTP). Compared to  
FY 2018, receipts from cigarette sales fell $14.2 million while those from the sale of OTP  
increased $6.1 million. On a yearly basis, revenue from the cigarette and OTP tax usually trends  
downward generally at a slow pace due to a decline of cigarette revenue, though receipts from  
OTP tax generally increase. The OTP tax is an ad valorem tax of 17% of the wholesale price paid  
by wholesalers for the product; thus, revenue from that portion of the tax base (about 7% of  
the total tax base) grows with OTP price increases.  
Financial Institutions Tax  
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. Other reconciliations and final tax returns  
for a tax year are due in the month of October. Most financial institutions do not pay their  
entire tax liability at once, and due dates of estimated payments for the FIT are at the end of  
January, March, and May. The first actual tax filing in January 2019 provided $75.7 million, an  
amount that was $25.5 million (50.8%) above estimate. However, this tax source had  
accumulated a deficit of $12.2 million through December 2018, so the YTD positive variance  
was at $13.3 million (39.2%) at the end of January.  
Budget Footnotes  
P a g e | 10  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of January 2019  
($ in thousands)  
(Actual based on OAKS reports run February 5, 2019)  
Program Category  
Actual  
Estimate*  
Variance  
Percent  
Primary and Secondary Education  
Higher Education  
$643,010  
$183,893  
$4,383  
$679,570  
$184,557  
$9,583  
-$36,560  
-$663  
-5.4%  
-0.4%  
Other Education  
-$5,200  
-$42,424  
-54.3%  
-4.9%  
Total Education  
$831,286  
$873,710  
Medicaid  
$1,233,173 $1,378,114  
$149,276 $147,228  
$1,382,449 $1,525,342  
-$144,941  
$2,048  
-10.5%  
1.4%  
Health and Human Services  
Total Health and Human Services  
-$142,893  
-9.4%  
Justice and Public Protection  
General Government  
$205,415  
$32,508  
$216,393  
$40,273  
-$10,979  
-$7,765  
-5.1%  
-19.3%  
-7.3%  
Total Government Operations  
$237,923  
$256,666  
-$18,743  
Property Tax Reimbursements  
Debt Service  
$0  
$128,405  
$128,405  
$493  
$136,558  
$137,051  
-$493  
-$8,153  
-$8,646  
-100.0%  
-6.0%  
Total Other Expenditures  
-6.3%  
Total Program Expenditures  
Transfers Out  
$2,580,063 $2,792,769  
$87 $0  
$2,580,150 $2,792,769  
-$212,706  
$87  
-7.6%  
---  
Total GRF Uses  
-$212,619  
-7.6%  
*August 2018 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 11  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2019 as of January 31, 2019  
($ in thousands)  
(Actual based on OAKS reports run February 5, 2019)  
Program Category  
Actual  
Estimate*  
Variance Percent FY 2018** Percent  
Primary and Secondary Education  
Higher Education  
$4,840,045  
$1,330,912  
$49,556  
$4,831,336  
$1,338,210  
$51,597  
$8,709  
-$7,298  
-$2,041  
-$630  
0.2% $4,849,888  
-0.5% $1,333,837  
-0.2%  
-0.2%  
1.1%  
Other Education  
-4.0%  
$49,003  
Total Education  
$6,220,514 $6,221,144  
0.0% $6,232,728  
-0.2%  
Medicaid  
$9,022,795  
$824,349  
$9,481,945 -$459,150  
$871,531 -$47,182  
-4.8% $8,642,401  
4.4%  
1.0%  
4.1%  
Health and Human Services  
Total Health and Human Services  
-5.4%  
$816,361  
$9,847,143 $10,353,476 -$506,333  
-4.9% $9,458,761  
Justice and Public Protection  
General Government  
$1,402,672  
$226,460  
$1,395,288  
$241,105  
$7,384  
-$14,645  
-$7,261  
0.5% $1,340,393  
4.6%  
0.3%  
4.0%  
-6.1%  
$225,838  
Total Government Operations  
$1,629,132 $1,636,393  
-0.4% $1,566,231  
Property Tax Reimbursements  
Debt Service  
$905,520  
$913,939  
-$8,420  
-$8,932  
-0.9%  
$906,414  
-0.1%  
4.0%  
2.1%  
$1,062,765  
$1,071,697  
-0.8% $1,021,866  
Total Other Expenditures  
$1,968,285 $1,985,636  
-$17,351  
-0.9% $1,928,280  
Total Program Expenditures  
Transfers Out  
$19,665,074 $20,196,649 -$531,575  
$752,927 $751,933 $994  
$20,418,001 $20,948,582 -$530,581  
-2.6% $19,186,001  
2.5%  
0.1%  
$69,445 984.2%  
6.0%  
Total GRF Uses  
-2.5% $19,255,446  
*
*
August 2018 estimates of the Office of Budget and Management.  
*Cumulative totals through the same month in FY 2018.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 12  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on February 4, 2019)  
Month of January 2019  
Year to Date through January 2019  
Department  
Medicaid  
GRF  
Actual  
Estimate* Variance Percent  
Actual  
Estimate*  
Variance Percent  
$1,179,401 $1,322,659 -$143,258 -10.8% $8,612,117  
$1,066,176 $802,343 $263,833 32.9% $5,485,524  
2,245,577 $2,125,002 $120,575  
$9,066,507 -$454,390  
$5,821,906 -$336,382  
-5.0%  
-5.8%  
-5.3%  
Non-GRF  
$
5.7% $14,097,641 $14,888,413 -$790,772  
All Funds  
Developmental  
Disabilities  
GRF  
$48,505  
$48,700  
$164,623  
$213,324  
-$195  
-$12,916  
-$13,111  
-0.4%  
$355,531  
$357,792  
$1,315,819  
$1,673,611  
-$2,261  
-$41,932  
-$44,193  
-0.6%  
-3.2%  
-2.6%  
Non-GRF  
All Funds  
$151,707  
-7.8% $1,273,887  
-6.1% $1,629,418  
$
200,212  
Job and Family Services  
GRF  
$4,604  
$14,148  
18,752  
$6,169  
$14,432  
$20,601  
-$1,565 -25.4%  
$49,575  
$106,461  
$156,036  
$51,841  
$90,942  
-$2,266  
$15,519  
$13,253  
-4.4%  
17.1%  
9.3%  
Non-GRF  
-$285  
-2.0%  
-9.0%  
$
-$1,849  
$142,783  
All Funds  
Health, Mental Health and Addiction, Aging, Pharmacy Board, and Education  
GRF  
$663  
$2,680  
$3,343  
$585  
$2,676  
$3,262  
$77  
$4  
13.2%  
0.2%  
2.5%  
$5,571  
$19,450  
$25,021  
$5,804  
$22,535  
$28,340  
-$233  
-4.0%  
Non-GRF  
-$3,086 -13.7%  
-$3,319 -11.7%  
All Funds  
$81  
All Departments:  
GRF  
$1,233,173 $1,378,114 -$144,941 -10.5% $9,022,795 $9,481,945 -$459,150  
-4.8%  
-5.0%  
-4.9%  
Non-GRF  
All Funds  
$1,234,711  
$984,075 $250,637  
25.5% $6,885,321 $7,251,202 -$365,881  
4.5% $15,908,116 $16,733,147 -$825,031  
$2,467,884 $2,362,188 $105,696  
*September 2018 estimates from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 13  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
Table 6: All Funds Medicaid Expenditures by Payment Category  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on February 4, 2019)  
Month of January 2019  
Estimate* Variance Percent  
Year to Date through January 2019  
Actual Estimate* Variance Percent  
Payment Category  
Actual  
Managed Care  
CFC†  
$1,321,803 $1,450,006 -$128,203  
-8.8% $9,681,537 $10,104,515 -$422,979  
-$28,565 -5.6% $3,410,958 $3,499,818 -$88,860  
-$62,558 -15.9% $2,435,250 $2,664,431 -$229,181  
-4.2%  
-2.5%  
-8.6%  
-2.2%  
-3.6%  
3.4%  
$483,023  
$331,875  
$227,597  
$73,660  
$205,648  
$0  
$511,588  
$394,433  
$250,112  
$84,454  
$209,419  
$0  
Group VIII  
ABD†  
-$22,515  
-9.0% $1,627,081 $1,664,029  
$535,674 $555,668  
-1.8% $1,477,629 $1,429,635  
$194,944 $290,935  
-$36,949  
-$19,994  
$47,994  
ABD Kids  
-$10,794 -12.8%  
MyCare  
P4P & Insurer Fee†  
-$3,771  
$0  
-
-$95,990 -33.0%  
Fee-For-Service  
ODM Services  
DDD Services  
Hospital - HCAP†  
Hospital - Other  
$960,134  
$328,312  
$194,119  
$316,772  
$120,931  
$723,616 $236,519  
32.7% $4,998,277 $5,342,887 -$344,610  
-6.4%  
-9.6%  
-2.6%  
-0.1%  
$383,397  
$208,134  
-$55,085 -14.4% $2,538,535 $2,809,539 -$271,004  
-$14,015  
-6.7% $1,576,701 $1,618,189  
-$41,487  
-$859  
$0 $316,772  
$132,084 -$11,154  
-
$634,432  
$248,609  
$635,291  
$279,869  
-8.4%  
-$31,260 -11.2%  
Premium Assistance  
Medicare Buy-In  
Medicare Part D  
$89,571  
$51,515  
$38,056  
$100,547  
$59,793  
$40,754  
-$10,977 -10.9%  
-$8,279 -13.8%  
$619,985  
$356,351  
$263,634  
$663,723  
$390,894  
$272,829  
-$43,738  
-$34,542  
-$9,196  
-6.6%  
-8.8%  
-3.4%  
-$2,698  
-6.6%  
Administration  
Total  
$96,376  
$88,019  
$8,357  
9.5%  
$608,318  
$622,022  
-$13,705  
-2.2%  
-4.9%  
$2,467,884 $2,362,188 $105,696  
4.5% $15,908,116 $16,733,147 -$825,031  
*September 2018 estimates from the Department of Medicaid.  
P4P - Pay For Performance, Insurer Fee - Health Insurer Fee.  
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  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
EWexndpy Zheann, Dirdectoirtures10  
Ivy Chen, Principal Economist  
Overview  
Through January, FY 2019 GRF program expenditures were $19.67 billion, which was  
531.6 million (2.6%) below estimate. GRF transfers out were $752.9 million, which was  
1.0 million (0.1%) above estimate. Including both program expenditures and transfers out,  
$
$
year-to-date (YTD) GRF uses totaled $20.42 billion, which was $530.6 million (2.5%) below  
estimate. Tables 3 and 4 detail GRF uses for the month of January and for FY 2019 through  
January, respectively.  
Medicaid continues to dominate the negative variances for both the month of January  
and YTD. In January, GRF Medicaid was $144.9 million (10.5%) below estimate, which  
accounted for 68.2% of the total negative monthly variance in GRF uses. Primary and Secondary  
Education, which had the second largest negative monthly variance, was $36.6 million (5.4%)  
below estimate. This monthly variance reduced the category's positive YTD variance to  
$
monthly variance in GRF uses.  
8.7 million (0.2%). Together, these two categories accounted for 85.3% of the total negative  
Through January, GRF Medicaid was $459.2 million (4.8%) below the YTD estimate,  
accounting for 86.5% of the total negative YTD variance in GRF uses. Non-Medicaid Health and  
Human Services contributed another 8.9% of the total. Health and Human Services  
expenditures were $47.2 million (5.4%) below the YTD estimate. The entire amount of this  
negative YTD variance occurred in months prior to January; this category's expenditures in  
January were $2.0 million (1.4%) above estimate. For additional information on the variances in  
Health and Human Services, please see the January issue of Budget Footnotes.  
Medicaid is mainly funded by the GRF, but it is also supported by several non-GRF funds.  
More details on both the GRF and non-GRF Medicaid variances are discussed below.  
Medicaid  
Similar to the variance pattern for the month of December, GRF Medicaid expenditures  
were below estimate for the month of January, by $144.9 million (10.5%), while non-GRF  
Medicaid expenditures were above estimate, by $250.6 million (25.5%). The primary reason for  
the negative variance in GRF Medicaid expenditures was the lower than expected Group VIII  
(
known as ACA) managed care caseload. Group VIII managed care caseload for January was  
about 79,000 (12.5%) below estimate. Group VIII managed care expenditures were  
individuals who became eligible for Medicaid through the federal Affordable Care Act, also  
$
payments was the culprit behind the positive monthly variance in non-GRF Medicaid  
62.6 million (15.9%) below estimate. The delay in Health Care Assurance Program (HCAP)  
10  
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  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
expenditures. 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. The Ohio Department of Medicaid (ODM) planned to make two HCAP payments,  
both non-GRF funded, in September and in October. However, these two payments were  
disbursed in December and January instead, resulting in large positive variances in non-GRF  
Medicaid expenditures for both of the months of December and January. In January, the  
negative monthly variances in several other non-GRF funded payment categories partially offset  
the positive $316.8 million monthly variance for the HCAP payment.  
For the YTD through January, both GRF and non-GRF Medicaid expenditures were below  
estimates, by $459.2 million (4.8%) and $365.9 million (5.0%), respectively. Including both the  
GRF and non-GRF, all funds Medicaid expenditures of $15.91 billion were $825.0 million (4.9%)  
below the YTD estimate.  
Table 5 shows GRF and non-GRF Medicaid expenditures for 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 agencies Job 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. Managed Care had  
the largest overall negative variance of $423.0 million (4.2%), followed by FFS ($344.6 million,  
6
.4%), Premium Assistance ($43.7 million, 6.6%), and Administration ($13.7 million, 2.2%).  
Expenditures from all Managed Care categories were below their YTD estimates except  
for MyCare, which had a positive YTD variance of $48.0 million (3.4%). MyCare is a managed  
care program for Ohioans who are eligible for both Medicaid and Medicare. Group VIII had the  
largest negative YTD variance of $229.2 million (8.6%) within the Managed Care category,  
followed by P4P & Insurer Fee (Pay for Performance and Health Insurer Fee) at $96.0 million  
(
33.0%), and CFC (Covered Families and Children) at $88.9 million (2.5%). The negative  
variances for Group VIII and CFC were mainly due to lower than expected caseloads. For the  
seven months of FY 2019, on average the monthly managed care caseloads for Group VIII and  
CFC were 8.0% (51,300) and 2.1% (32,900), respectively, below estimates. Finally, $61.0 million  
of the $96.0 million negative YTD variance in the P4P & Insurer Fee category was due to the  
lower than expected Health Insurer Fee. The Health Insurer Feea source of funding for the  
Marketplaces under ACA is a tax by the federal government on certain entities that provide  
health insurance. The tax applies to Me11dicaid managed care and is incorporated into Ohio's  
Medicaid managed care capitation rates.  
11  
The Health Insurer Fee was in effect from 2014 through 2016. The U.S. Congress approved a  
one-year moratorium for 2017 but the tax went back into effect (and remains in effect) for 2018.  
Congress suspended the tax once again in 2019; if not further delayed, it will be collected again  
beginning in 2020.  
Budget Footnotes  
P a g e | 16  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
The negative YTD variance in FFS was primarily due to 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.  
Budget Footnotes  
P a g e | 17  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
Issue Updates  
Department of Natural Resources Announces $9.9 million for  
Dredge Material Reuse Projects  
Tom Wert, Budget Analyst  
On January 8, 2019, the Ohio Department of Natural Resources (DNR) announced  
capital funding of $9.9 million for three Lake Erie dredge material reuse projects. Of this  
amount, $4.0 million will be provided to the city of Lorain for planning and construction costs of  
the Black River Dredge Reuse Facility, a 30-acre site on the south bank of the Black River. The  
site will have the capacity to accept approximately 150,000 cubic yards of dredge material from  
the Lorain Harbor Federal Navigation Channel each year. An additional $4.0 million will be  
provided to the city of Conneaut for planning and construction costs for the Conneaut Creed  
Dredge Material Facility, an approximately 18-acre site located at a former coal dock operated  
by the Canadian National railroad near the mouth of Conneaut Creek. This site is expected to  
accept up to 75,000 cubic yards of dredge material from the Conneaut Harbor Federal  
Navigation Channel annually. The remaining $1.9 million will be provided to the Toledo-Lucas  
County Port Authority for planning, design, and construction at the existing Facility 3 Confined  
Disposal Facility. The work at this location will entail constructing and upgrading dikes in and  
around a 235-acre dredge material containment area to increase its holding capacity to  
between 6.8 million and 7.5 million cubic yards. Material dredged from the Toledo Harbor  
Federal Navigation Channel is disposed of at this facility.  
Funding for the project is provided from the Ohio Parks and Natural Resources Fund  
(Fund 7031) which receives proceeds from the issuance of bonds. Grants for local projects that  
reduce nutrient runoff and pollution into Lake Erie are made under Fund 7031 capital  
appropriation item C725T3, Healthy Lake Erie Initiative. H.B. 529 of the 132nd General  
Assembly, the capital budget for the FY 2019-FY 2020 capital biennium, originally appropriated  
$
provided an additional $10.0 million, earmarking that amount to support projects that enhance  
efforts to reduce open lake disposal of dredged material into Lake Erie by 2020.  
10.0 million for these purposes. S.B. 299 of the 132nd General Assembly subsequently  
ODOT Launches New Real-time Truck Parking Locater System  
along Three Highways  
Tom Middleton, Senior Budget Analyst  
In January 2019, the Ohio Department of Transportation (ODOT) launched a new truck  
parking system. The system will help truck drivers more efficiently locate available parking spots at  
nine rest areas along three Ohio highways: I-70 (Belmont, Licking, and Madison counties), I-75  
(
Butler, Miami, Auglaize, Hancock, and Wood counties), and U.S. Route 33 (Union County). Under  
the new system, the parking information will be displayed on digital signs and on ODOT's website  
and OHGO application, allowing truck drivers to plan for federally mandated rest breaks at safe and  
convenient locations along these routes. The initiative also aims to reduce wear and tear on highway  
shoulders and ramps where truck drivers often park when they cannot find places at rest areas.  
Budget Footnotes  
P a g e | 18  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
This real-time parking information system is part of the multi-state Truck Parking  
Information Management System (TPIMS) paid for primarily by a federal grant of $25 million to  
Ohio, Indiana, Iowa, Kansas, Kentucky, Michigan, Wisconsin, and Minnesota. Ohio received  
$
5.3 million of the federal funding for the project, the largest award among the eight  
participating states. Ohio's match for the program is $787,000. The federal funding flows  
through Highway Operating Fund (Fund 7002) line item 772422, Highway Construction –  
Federal, while the state match comes from line item 772421, Highway Construction State.  
ODJFS Implements New Child Care Time and Attendance System  
Nicholas J. Blaine, Budget Analyst  
On January 11, 2019, the Ohio Department of Job and Family Services (ODJFS) launched  
a new Time, Attendance, and Payment (TAP) system to record attendance for children receiving  
publically funded child care services. The TAP system is designed to improve payment accuracy  
and reduce fraud by ensuring that providers are reimbursed only for the time they spend caring  
for children. To utilize the system, parents and caregivers dropping off or picking up their child  
will have the option to record their action using a tablet provided by the program, a free  
application on their smartphone, or the program's telephone to dial into an interactive voice  
response system. Previously, parents and caregivers swiped a magnetic stripe card into a point  
of service device to report attendance each day. The TAP system is easier to use and has built-in  
data authentication technology.  
Publically funded child care is supported through a combination of the federal  
Temporary Assistance for Needy Families Block Grant, the federal Child Care and Development  
Fund Block Grant, and state funds. In FY 2017, the latest year for which data is currently  
available, the state spent $639.6 million on direct subsidized child care, with an average  
monthly caseload of 131,000 children and average monthly cost of $400 per child. For most  
families, program eligibility is based on income level. Families with incomes up to 130% of the  
federal poverty level (FPL) (about $28,000 for a family of three) are eligible for initial services;  
families can remain eligible until their income rises above 300% FPL (about $64,000 for a family  
of three). Parents and caregivers are responsible for making copayments on a sliding scale  
based on their income.  
Appropriation Increase for the Ryan White HIV/AIDS Program  
Jacquelyn Schroeder, Budget Analyst  
On December 17, 2018, the Controlling Board approved a request from the Ohio  
Department of Health (ODH) to increase the appropriation for the Ryan White HIV/AIDS  
Program by $4.3 million in FY 2019. The funding for this increase comes from rebate revenue  
ODH receives from pharmaceutical companies that manufacture medications purchased and  
dispensed by the program. These funds will be used to provide grants to HIV case management  
agencies to assist in developing or enhancing access to a comprehensive continuum of health  
care, as well as improving the quality of that care, for low-income individuals with HIV.  
Additionally, funds will be used to provide early intervention services in areas of high HIV  
incidence.  
Budget Footnotes  
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February 2019  
Legislative Budget Office of the Legislative Service Commission  
The Ryan White HIV/AIDS Program offers a wide range of services to individuals with  
HIV/AIDS, including: outpatient, ambulatory health, oral health, and mental health services;  
medications to treat HIV and HIV-related conditions; health insurance premium assistance for  
participants with existing coverage; and case management services for uninsured or  
under insured individuals. Funding to support the program includes the federal Ryan White Part  
B grant, as well as state GRF and drug rebate revenues. Individuals are eligible to receive  
services if they are HIV positive, reside in Ohio, and have an income at or below 300% of the  
FPL (approximately $51,000 for a household of two). Currently, approximately 7,500 individuals  
receive services through ODH's Ryan White HIV/AIDS Program.  
State Board of Education Recognizes Public Schools and  
Districts for High Academic Achievement and Student Growth  
Jason Glover, Budget Analyst  
On December 17, 2018, the State Board of Education acknowledged public districts and  
schools that demonstrated high academic achievement and student growth on the report cards  
for the 2017-2018 school year. Three award programs recognize districts and schools that  
received an overall grade of "A," a subset of those districts and schools that earned all A's, and  
another group that exceeded expectations in student growth for the year. This is the fourth  
year the State Board has recognized schools and districts through the All A Award and  
Momen2tum Award programs and the first year recognizing schools receiving an overall A  
1
grade. The table below compares the number of districts and schools qualifying under each  
recognition program since the 2015-2016 school year, the first year the American Institutes for  
Research resumed supplying the state assessments in English language arts and mathematics.  
As the table shows, the number of districts and schools receiving the Momentum Award for  
student growth has been trending upward while the number of school buildings earning the  
All A Award increased substantially in the 2017-2018 school year.  
Districts and Schools Recognized for Achievement and Student Growth by School Year  
Recognition  
2015-2016  
2016-2017  
2017-2018  
School Districts  
Overall A Award  
All A Award  
N/A  
N/A  
1
28  
2
1
Momentum Award  
54  
64  
70  
School Buildings  
Overall A Award  
All A Award  
N/A  
5
N/A  
3
310  
57  
Momentum Award  
169  
214  
226  
12  
Due to "safe harbor" provisions, the report cards for the 2017-2018 school year are the first to  
include overall letter grades for districts and schools.  
Budget Footnotes  
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February 2019  
Legislative Budget Office of the Legislative Service Commission  
The All A Award is given to districts and schools that received A's on each of the district  
or school's applicable report card measures while districts and schools that earn straight A's on  
each applicable value-added measure on the report cards qualify for the Momentum Award.  
The value-added measure is designed to help educators determine the impact schools and  
teachers have on students' academic growth and progress in reading and mathematics from  
year to year. The measure is calculated on an overall basis and for three student subgroups: (1)  
gifted students, (2) students in the lowest 20% in achievement, and (3) students with  
disabilities. Districts and schools must have a grade for at least two of the three value-added  
subgroups of students to qualify for the award. A list of the districts and schools qualifying  
under the three recognition programs is available on the Ohio Department of Education's  
1
3
website.  
Higher Education Stakeholders Issue Plan to Improve  
Proprietary Credit Transferability  
Edward Millane, Senior Budget Analyst  
As required by H.B. 49, the Department of Higher Education, with the assistance of a  
committee of stakeholders, recommended a plan in late December to improve the  
transferability of credits earned at for-profit, private (proprietary) colleges to state institutions  
of higher education. According to the committee, approximately 10% to 15% of the nearly  
1
,000 students that transfer from a proprietary college to a public institution each year receive  
transferred credit. The committee also found that feasible credit transfer options exist but a  
lack of awareness, inconsistent application, and current state policy limit their use. As a result,  
the committee's plan involves the following prongs:  
Communicate existing credit transfer approaches. Some of these approaches include  
institutional credit transfer reviews, use of the American Council on Education's credit  
review process, and use of prior learning assessments, such as the College-Level  
Examination Program (CLEP), that award credit to students demonstrating college-level  
learning from prior learning experiences.  
Change certain state and institutional policies. The committee recommended  
modifying the Ohio Articulation and Transfer Network's (OATN) Articulation and  
Transfer Policy to (1) explicitly permit colleges and universities with regional  
accreditation to evaluate transfer credits from institutions with national accreditation,  
as allowed by the Higher Learning Commission (HLC, Ohio's regional accrediting body),  
and (2) clearly require each public institution of higher education to have an explicit,  
transparent policy regarding the evaluation of credits from nationally accredited  
institutions. According to the committee, the current OATN policy does not align with  
HLC policy that allows HLC-accredited institutions to award credit from nationally  
accredited institutions.  
13  
http://education.ohio.gov/Topics/District-and-School-Continuous-Improvement/Awards-and-  
Recognition.  
Budget Footnotes  
P a g e | 21  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
Further research and collaboration. Finally, the committee recommended additional  
work to aid proprietary credit transfers, including further study on institutional credit  
transfer review processes, exploration of ways to assist students in paying for CLEP  
examinations, and continued cross-sector meetings.  
The full plan is available online at: https://www.ohiohighered.org/transfer/research by  
scrolling down to "Transfer & Graduation Reports & Presentations" and then selecting  
"Proprietary Credit Transferability Strategy Plan."  
Attorney General Releases Annual Economic Development  
Compliance Report  
Jessica Murphy, Budget Analyst  
On December 14, 2018, the4Ohio Attorney General's Office released its latest Economic  
1
Development Compliance Report, a required annual review of recipient compliance with the  
terms and conditions of state awards for economic development administered by the Ohio  
Development Services Agency (DSA). For purposes of this review, DSA economic development  
awards are grouped into four categories: workforce training grants, project grants, tax credits,  
and project loans.  
The latest report examined 186 awards with a performance period ending in calendar  
year (CY) 2017. Of those, 145 recipients, or 78%, were determined to be substantially compliant  
having met at least 90% of the performance metrics set forth in the agreement. The remaining  
4
1 were determined to be noncompliant. Of those found to be noncompliant, remedial action  
was taken against 14 of them; the rate or term was reduced for six tax credit recipients and the  
interest rate was increased for eight project loan recipients. Remedial action was not taken  
against the remaining 27 recipients, largely because they were later deemed compliant based  
on the number of jobs created and retained. The metrics used to determine compliance  
included, as applicable, commitments for job creation, job retention, capital investment,  
worker wages, and workforce training.  
The table below shows the compliance rates reported in the CY 2013 CY 2017 reviews  
by award category. The workforce training grant compliance rate has been 100% over the  
entire five-year period; the project grant compliance rate increased annually, going from 74.4%  
in CY 2013 to 100% in CY 2017. In contrast, the tax credit and project loan compliance rates  
have both displayed considerably more year-to-year fluctuation.  
14  
https://www.ohioattorneygeneral.gov/Files/Reports/Economic-Development-Accountability-  
Report/2018-Economic-Development-Accountability-Report.  
Budget Footnotes  
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February 2019  
Legislative Budget Office of the Legislative Service Commission  
Economic Development Award Recipient Compliance Rates, CY 2013 CY 2017  
Award  
Category  
2
013  
2014  
2015  
2016  
2017  
Workforce  
Training Grant  
1
00.0%  
100.0%  
100.0%  
100.0%  
100.0%  
Project Grant  
Tax Credit  
Project Loan  
Overall  
74.4%  
62.4%  
57.1%  
76.3%  
73.4%  
81.3%  
78.9%  
86.3%  
80.0%  
82.8%  
84.8%  
89.4%  
68.1%  
63.8%  
78.3%  
100.0%  
75.5%  
61.7%  
78.0%  
70.6%  
State Fire Marshal Awards $3.0 Million in MARCS Grants  
Shannon Pleiman, Budget Analyst  
On January 18, 2019, the State Fire Marshal's Office within the Department of  
Commerce announced nearly $3.0 million in awards under the Multi-Agency Radio  
Communications System (MARCS) Grant program. Overall, 242 fire departments in 40 counties  
received awards, ranging from $120 to $50,000, the maximum award amount under the  
program1.5The $3.0 million in awards represents the full amount set aside for the program for  
FY 2019.  
The MARCS grants offset the costs that local fire departments incur for MARCS-related  
radio user fees and equipment that promote interoperability between fire services. The State  
Fire Marshal uses a variety of criteria to decide award amounts, including: (1) the fire  
department's annual budget, (2) the annual number of fire incidents, (3) the resident  
population served by the department, and (4) requests from multiple jurisdictions within the  
same county or region collaborating to acquire or complete MARCS service for their fire  
departments. Eligible grant recipients include volunteer fire departments, municipal or small  
township fire departments that serve one or more small municipalities or townships, joint fire  
districts, and certain private fire companies that serve a population of 25,000 or less. Funding  
for the MARCS grants comes from taxes on insurance companies selling fire insurance in Ohio  
and from inspection fees, hotel permits, and fireworks licenses. The receipts from these various  
sources are deposited into the State Fire Marshal Fund (Fund 5460).  
15  
A list of all the fire departments awarded MARCS grants can be found at:  
https://apps2.com.ohio.gov/admn/pressroom/view.aspx?FileName=3733.pdf.  
Budget Footnotes  
P a g e | 23  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
Ohio EPA Awards $8.1 million in Diesel Emission Reduction  
Project Grants  
Robert Meeker, Budget Analyst  
On January 9, 2019, the Ohio Environmental Protection Agency (Ohio EPA) announced  
the award of Diesel Emission Reduction Grants (DERG) totaling $8.1 million for eight public  
transit authority diesel fleet projects (see table below). The grant awards will be used to pay  
between 24% and 80% of the costs to replace aging diesel buses with buses powered by newer,  
cleaner diesel technology or alternative fuel technology. In total, the funded projects will  
replace 26 older diesel buses (model years 2003 to 2009).  
DERG Project Grant Awards  
%
of Project  
Costs  
Covered  
Grant  
Amount  
Total Project  
Cost*  
Buses  
Replaced  
Grant Recipient  
Greater Cleveland Regional Transit Authority $1,643,098  
67%  
60%  
24%  
80%  
70%  
80%  
80%  
70%  
$2,452,385  
$2,668,840  
$6,618,000  
$1,406,490  
$1,048,963  
$783,500  
5
5
8
3
2
1
1
1
Southwest Ohio Regional Transit Authority  
Central Ohio Transit Authority  
$1,601,304  
$1,588,320  
$1,125,192  
$734,274  
$626,800  
$389,293  
$369,460  
Greater Dayton Regional Transit Authority  
Metro Regional Transit Authority  
Lake Transit Authority  
Portage Area Regional Transit Authority  
Stark Area Regional Transit Authority  
$486,616  
$527,800  
Total $8,077,741  
51%  
$15,992,594  
26  
*
Total project costs are estimated based on grant award and percent of project covered as reported by Ohio EPA.  
The DERG Program is administered jointly by the Ohio EPA and the ODOT and is  
supported with federal Congestion Mitigation and Air Quality Program (CMAQ) funds allocated  
to Ohio by the Federal Highway Administration. Although all of the grants in this cycle were  
awarded to public transit authorities, public and private diesel fleets are generally eligible for  
DERG funding. Recipients are required to provide a minimum 20% in matching funds, which  
cannot be sourced from other federal funds or from in-kind services. To be eligible, the  
recipient's equipment must be operated in Ohio CMAQ-eligible areas for at least 65% of the  
time. These areas include 38 counties (or parts of counties), largely in central, southwest, and  
northeast Ohio.  
Budget Footnotes  
P a g e | 24  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
TRurhaaizacRidkzwiann, SegniortEchonoemistEconomy  
Phil Cummins, Senior Economist  
Overview  
The nation's economy continues to expand. Employment rose strongly in January.  
Unemployment ticked up slightly but remained very low. Incomes continued to grow. In  
December, industrial production rose as both factory and mining output increased. Inflation  
remains tame.  
The partial federal government shutdown ended in January but could resume in  
mid-February if a budget agreement is not reached. Reports indicate that about 800,000 federal  
workers were either furloughed or worked with their pay deferred until the shutdown ended,  
and work of private-sector companies with federal contracts was disrupted. The Congressional  
Budget Office (CBO) estimated that the shutdown cut inflation-adjusted gross domestic product  
(
point in the current quarter. CBO expects most of this lost output to be recovered in the  
remainder of this year. The shutdown also delayed release of statistics on which this report is  
usually based, notably estimates of GDP from the source agency, the U.S. Bureau of Economic  
Analysis.  
real GDP) growth by 0.2 percentage point in last year's fourth quarter and by 0.4 percentage  
1
6
The central bank's monetary policy-setting committee held its short-term interest  
rate target unchanged at its January meeting. Future interest rate increases may be more  
gradual than previously appeared likely. The post-meeting press release said the committee  
would be "patient" in considering future interest rate changes; six weeks earlier, nearly all  
committee members expected to raise short-term interest rates in 2019, by 0.25 to  
0
.75 percentage point.  
In Ohio, employment grew in December, continuing the uptrend underway since early  
010. Unemployment remains low and stable. Economic activity continues to expand, overall,  
2
though home sales have slowed.  
The National Economy  
U.S. total nonfarm payroll employment rose by 304,000 in January, the largest monthly  
increase in nearly a year. Unemployment as a share of the labor force nationwide rose to 4.0%  
in January from 3.9% in December and 3.7% in November and September, lowest since the  
1
960s. Chart 5 shows U.S. nonfarm payroll employment and unemployment.  
16  
CBO notes that the estimates do not include some indirect, difficult-to-quantify negative  
effects of the shutdown.  
Budget Footnotes  
P a g e | 25  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
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 2019  
Nonfarm Payroll Employment  
Unemployment Rate (right scale)  
Employment gains in January continued to be widespread across industries. Increases  
were reported in leisure and hospitality, construction, health care, transportation and  
warehousing, retailing, mining, professional and business services, and durable goods  
manufacturing. Mild weather in the survey period may have contributed to the large monthly  
increase, as relatively few workers were away from work or forced to work part time by bad  
weather. Federal employees on furlough during the partial government shutdown as well as  
those working with their pay deferred were counted as employed in the survey on which these  
estimates were based.  
Average hourly earnings of all private-sector employees were 3.2% higher in January  
than a year earlier, down from 3.3% in October to December 2018, the most rapid since 2009. A  
related measure, the Employment Cost Index, showed a 3.1% increase in private-sector hourly  
wages and salaries in the year to December and a 2.6% increase in the cost to employers of  
employee benefits per hour of work. Pay increases have been trending higher since a low point  
in 2009.  
The rise in the unemployment rate in January was due in part to the partial federal  
government shutdown, as some of the furloughed workers were counted as unemployed in the  
separate survey on which unemployment estimates are based. In addition, a jump in numbers  
of private-sector employees working part time who usually work full time may have resulted  
from the wider effects of the shutdown on businesses. Labor force participation, the share of  
the population age 16 and over that either is employed or is actively seeking employment, rose  
to its highest level in more than five years. The federal workers on furlough or working with  
deferred pay were counted as included in the labor force.  
GDP estimates for the 2018 fourth quarter, delayed by the partial government shutdown,  
have been rescheduled for release February 28 by the source agency, the U.S. Bureau of  
Economic Analysis. Model-based estimates from the Federal Reserve Banks of Atlanta and New  
Budget Footnotes  
P a g e | 26  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
York, that predict quarterly real GDP based on available monthly statistics, show real GDP  
growing at annual rates of 2.7% and 2.4%, respectively, in last year's fourth quarter.  
Industrial production rose 0.3% in December, as sizable increases in manufacturing  
+1.1%) and mining (+1.5%) were partly offset by reduced utility output (-6.3%).  
(
Unseasonably warm weather reduced heating demand. During the year to December, factory  
output rose 3.2% and mining output increased 13.4%. Factory output appears to have risen  
further in January, as more purchasing managers at manufacturers said production as well as  
new orders increased than reported decreases, according to the Institute for Supply  
Management.  
The consumer price index (CPI) declined 0.1% from November to December, and was  
.9% higher in December than a year earlier. The year-over-year change was less than 2.0% for  
1
the first time since August 2017. The drop in the index for all items in the latest month was due  
to lower gasoline prices. Excluding energy and also food prices, the CPI rose 0.2% in December  
to 2.2% higher than a year earlier.  
The Ohio Economy  
The state's unemployment rate was 4.6% in December, and remained at that same level  
since July 2018. The state's unemployment rate was 4.9% in December 2017. In comparison,  
the U.S. unemployment rate was 3.9% in December, 3.7% in November, and 4.1% in December  
of last year. The number of unemployed workers in Ohio was 265,000 in December, an increase  
of 2,000 from November, and 16,000 less than in December of last year.  
In December, Ohio's nonfarm payroll employment, seasonally adjusted, rose by 2,900 or  
.1% from the revised total in November, to 5.65 million. Employment increased in both  
0
goods-producing industries and government, by 5,000 and 3,400, respectively. However,  
employment in private service-providing industries declined by 5,500. Job gains were largely in  
local government, construction, and manufacturing while job losses occurred mostly in  
professional and business services and trade, transportation, and utilities. Jobs in the  
manufacturing sector continued to trend upward since late 2017, reaching the highest level  
since November 2008.  
Ohio's economy gained jobs in each month in 2018 except April, with an average of  
9
,700 jobs per month. During the 12 months ending in December, nonfarm payroll employment  
increased by 116,500 or 2.1%. Employment gains were mostly in trade, transportation, and  
utilities; educational and health services; construction; leisure and hospitality; professional and  
business services; miscellaneous private services; durable goods manufacturing; and state  
government.  
Budget Footnotes  
P a g e | 27  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
Chart 6 shows Ohio employment and unemployment.  
Chart 6: Ohio Employment and Unemployment  
5
5
5
5
5
5
5
5
4
.7  
.6  
.5  
.4  
.3  
.2  
.1  
.0  
.9  
12.0%  
11.0%  
10.0%  
9.0%  
8.0%  
7.0%  
6.0%  
5.0%  
4.0%  
2
008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018  
Nonfarm Payroll Employment Unemployment Rate (right scale)  
During the 12 months ending in December, nonfarm payroll employment increased in  
nine Ohio metropolitan areas, decreased in the Dayton and Lima metropolitan areas, and was  
unchanged in the Youngstown-Warren-Boardman metropolitan area. Unemployment rates in  
all metropolitan areas were higher last December than in December 2017, except for the  
Weirton-Steubenville metropolitan area where it was lower. Among all metropolitan areas in  
Ohio, the Youngstown-Warren-Boardman metropolitan area had the highest rate (6.0%) in  
December while the both Cincinnati and Columbus metropolitan areas had the lowest rate  
(
data for metropolitan areas are not seasonally adjusted.  
4.0%). Unlike the state nonfarm payroll employment and unemployment rate data, similar  
The region's economic activity expanded slightly, according to a Federal Reserve Bank of  
1
7
Cleveland report. Hiring demand was moderate but a little less than earlier. Firms raised base  
pay and nonwage incentives to attract and retain employees. Input prices of raw materials  
remained high. Some contacts in the manufacturing sector continued to report that increases in  
input prices were due to tariffs. Consumer demand for nondurable goods improved slightly.  
Auto dealers cited steady to slightly increased sales of used vehicles and less expensive models,  
but rising interest rates restrained sales. Manufacturing activity softened at year-end, thought  
to be seasonal. Residential real estate market activity was stable while nonresidential market  
activity remained strong. Lending activity eased seasonally. Activity in the professional and  
business services sector grew modestly.  
17  
The report is from the latest Federal Reserve System Beige Book that summarizes information  
from outside contacts and collected on or before January 7, 2019. The Federal Reserve Bank of  
Cleveland's district includes all of Ohio and parts of Kentucky, Pennsylvania, and West Virginia.  
Budget Footnotes  
P a g e | 28  
February 2019  
Legislative Budget Office of the Legislative Service Commission  
Existing home sales in Ohio dropped to 10,236 in December, a 6.9% decrease from a  
year earlier, according to the Ohio Association of Realtors. In December, sales were down for all  
multiple listing services in the state, except Athens, Heartland (Hancock and Wyandot counties  
and nearby areas), and Mansfield. In the full year 2018, existing home sales fell by 1.0%  
compared to the previous year. In 2018, the average sales price of homes sold in Ohio was  
$
182,618 compared to $173,203 in 2017, an increase of 5.4%.  
Budget Footnotes  
P a g e | 29  
February 2019