A monthly newsletter of the Legislative Budget Office of LSC  
Volume: Fiscal Year 2020  
Issue: November 2019  
Highlights  
Ross Miller, Chief Economist  
Strong October sales and use tax receipts resulted in GRF tax revenue for the  
month exceeding estimates by $25.6 million. Adding that to previous monthly  
variances, GRF tax revenue was $97.0 million above estimate for the first four months  
of FY 2020. Year-to-date (YTD) positive results were almost entirely attributable to the  
sales and use tax and the commercial activity tax (CAT); the personal income tax (PIT)  
was essentially on target, while most other tax sources were below estimates.  
Ohios unemployment rate rose from 4.1% in August to 4.2% in September.  
The national unemployment rate was 3.5% in September. Ohio nonfarm payroll  
employment decreased by 1,500 in September, due to a decline in government  
employment of 2,900; private sector payroll employment rose by 1,400.  
Through October 2019, GRF sources totaled $11.45 billion:  
Revenue from the sales and use tax was $82.3 million above estimate;  
PIT receipts were $1.8 million below estimate.  
Through October 2019, GRF uses totaled $12.97 billion:  
Program expenditures were $127.8 million below estimate, due primarily  
to Medicaid spending, which was $79.9 million below estimate;  
Expenditures from all other program categories were below estimates  
except for Property Tax Reimbursements, which was above estimate by  
$
47.5 million, due to timing.  
In this issue...  
More details on GRF Revenues (p. 2), Expenditures (p. 10),  
the National Economy (p. 25), and the Ohio Economy (p. 28).  
Also Issue Updates on:  
Federal Medical Assistance Percentage Changes for Ohio (p. 17)  
Progress on School Construction (p. 18)  
Comprehensive Literacy State Development Grant (p. 19)  
Aid to Families of Multi-system Youth (p. 20)  
Federal Housing Safety Funding (p. 20)  
Launch of TechCred Program (p. 21)  
Behavioral Health Juvenile Justice Initiative (p. 22)  
Funding for Local Air Agencies (p. 22)  
Election Cybersecurity Project (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 October 2019  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on November 01, 2019)  
State Sources  
Tax Revenue  
Actual  
Estimate* Variance Percent  
Auto Sales  
Nonauto Sales and Use  
Total Sales and Use  
$144,389  
$802,643  
$947,032  
$136,400  
$759,200 $43,443  
$895,600 $51,432  
$7,989  
5.9%  
5.7%  
5.7%  
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  
Estate  
$716,303  
$69,275  
$77,616  
$29,314  
$166,510  
$0  
-$17,282  
$2,794  
$534  
$4,675  
$4,029  
$0  
$23  
$0  
$736,900 -$20,597  
-2.8%  
-6.9%  
0.3%  
-2.9%  
5.4%  
---  
$74,400  
$77,400  
$30,200  
$158,000  
$0  
-$5,125  
$216  
-$886  
$8,510  
$0  
-$9,000  
$3,400  
$600  
-$8,282 -92.0%  
-$606 -17.8%  
-$66 -11.0%  
$3,600  
$4,100  
$0  
$1,075  
-$71  
$0  
29.9%  
-1.7%  
---  
---  
---  
$0  
$0  
$23  
$0  
Total Tax Revenue  
$2,000,823 $1,975,200 $25,623  
1.3%  
Nontax Revenue  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$41,338  
$860  
$1,610  
$43,808  
$27,500 $13,838  
50.3%  
$413  
$447 108.3%  
$1,417  
$192  
13.6%  
49.4%  
Total Nontax Revenue  
$29,330 $14,477  
Transfers In  
$67  
$0 $67  
---  
2.0%  
-0.1%  
1.4%  
Total State Sources  
$2,044,698 $2,004,530 $40,168  
$847,981 $848,842 -$861  
$2,892,679 $2,853,372 $39,307  
Federal Grants  
Total GRF Sources  
*Estimates of the Office of Budget and Management as of August 2019.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 2  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate ($ in thousands)  
FY 2020 as of October 31, 2019  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on November 01, 2019)  
State Sources  
Tax Revenue  
Auto Sales  
Nonauto Sales and Use  
Total Sales and Use  
Actual  
Estimate*  
Variance Percent FY 2019**  
5.0% $519,867  
1.8% $2,962,337  
2.3% $3,482,204  
Percent  
$563,002  
$3,128,047 $3,072,500 $55,547  
$3,691,049 $3,608,700 $82,349  
$536,200 $26,802  
8.3%  
5.6%  
6.0%  
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  
Estate  
$2,998,430 $3,000,200  
-$1,770  
-0.1% $2,926,007  
2.5%  
9.4%  
$468,707  
$257,005  
$119,227  
$175,429  
$1  
$440,200 $28,507  
6.5%  
-1.2%  
-1.5%  
5.9%  
---  
$428,378  
$268,461  
$129,385  
$177,579  
$1  
$260,100  
$121,000  
$165,600  
$0  
-$3,095  
-$1,773  
$9,829  
$1  
-4.3%  
-7.9%  
-1.2%  
-43.4%  
-42.0%  
-2.4%  
-13.4%  
-9.1%  
2.8%  
-$26,788  
$34,886  
$13,304  
$17,158  
$17,278  
$1,796  
-$4  
-$14,500 -$12,288 -84.7%  
-$18,867  
$35,758  
$15,363  
$18,873  
$16,813  
$2,019  
$35,300  
$14,600  
$20,200  
$17,100  
$2,000  
$0  
-$414  
-$1,296  
-$3,042 -15.1%  
$178 1.0%  
-$204 -10.2%  
-1.2%  
-8.9%  
-11.0%  
-$4  
$38  
---  
---  
$181 -102.0%  
$32  
$38  
$0  
16.9%  
Total Tax Revenue  
$7,767,514 $7,670,500 $97,014  
1.3% $7,482,187  
3.8%  
Nontax Revenue  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$41,457  
$9,465  
$71,220  
$122,143  
$27,500 $13,957  
$7,414 $2,051  
$56,458 $14,762  
50.8%  
27.7%  
26.1%  
33.7%  
$25,360  
$9,365  
$53,716  
$88,441  
63.5%  
1.1%  
32.6%  
38.1%  
Total Nontax Revenue  
$91,372 $30,771  
Transfers In  
$75,548  
$68,570  
$6,978  
10.2%  
$76,109  
-0.7%  
4.2%  
-2.6%  
2.0%  
Total State Sources  
$7,965,205 $7,830,441 $134,763  
$3,488,919 $3,538,556 -$49,637  
$11,454,124 $11,368,998 $85,126  
1.7% $7,646,736  
-1.4% $3,582,964  
0.7% $11,229,700  
Federal Grants  
Total GRF SOURCES  
*
*
Estimates of the Office of Budget and Management as of August 2019.  
*Cumulative totals through the same month in FY 2019.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 3  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
1
Revenues  
Russ Keller, Senior Economist  
Overview  
Four months into FY 2020, GRF sources totaling $11.45 billion were $85.1 million (0.7%)  
above the Office of Budget and Management (OBM) estimate. For the third consecutive month,  
tax revenue outperformed estimates while federal grants receipts were less than anticipated  
(
estimate, while nontax revenues and GRF transfers in also had positive variances of  
refer to Chart 1). At the close of October, the YTD tax receipts were $97.0 million above  
$
$
FY 2020 expectations. Tables 1 and 2 show GRF sources for the month of October and for  
FY 2020 through October, respectively. GRF sources consist of both federal grants and  
state-source receipts, such as tax revenue, nontax revenue, and transfers in.  
30.8 million and $7.0 million, respectively. On the other hand, federal grants were  
49.6 million below their four-month estimate as GRF Medicaid spending was 1.4% below  
Chart 1, below, shows cumulative variances of GRF sources through October 2019.  
Chart 1: Cumulative Variances of GRF Sources in FY 2020  
(
Variances from Estimates, $ in millions)  
$
$
120  
100  
$
$
$
$
80  
60  
40  
20  
$0  
-
-
-
$20  
$40  
$60  
Jul-19  
Aug-19  
Tax Revenue  
Sep-19  
Oct-19  
Federal Grants  
Total GRF Sources  
Two of the largest tax sources were ahead of estimates YTD as the sales and use tax  
posted a positive variance of $82.3 million while the CAT was $28.5 million above estimate. In  
addition, the foreign insurance tax was $9.8 million above anticipated levels. Two important tax  
sources had modestly negative YTD variances. The PIT and cigarette tax were $1.8 million  
(0.1%) and $3.1 million (1.2%), respectively, below their FY 2020 estimates. Other GRF taxes  
1 This report compares actual monthly and YTD GRF revenue sources to OBMs 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.  
Budget Footnotes  
P a g e | 4  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
yielded negative variances over the first four months of FY 2020, too. The financial institutions  
tax (FIT) was $12.3 million below anticipated collections, which matches a trend of negative  
2
variances observed in previous years. The combined receipts from three utility-related taxes  
(
$
the kilowatt-hour excise tax, the public utility tax, and the natural gas consumption tax) were  
3.5 million below projections. Similarly, the alcoholic beverage tax was $3.0 million short of  
expectations. All other taxes had smaller variances at the end of October.  
For the month of October 2019, GRF sources of $2.89 billion were $39.3 million above  
estimates. The overall performance of tax sources was positive, largely due to robust sales and  
use tax collections. Total tax revenue for October yielded a surplus of $25.6 million including  
positive variances of $51.4 million for the sales and use tax, $8.5 million for the foreign  
insurance tax, and $1.1 million for the alcoholic beverage tax. However, those positive  
variances were partially offset by shortfalls of $20.6 million for the PIT, $8.3 million for the FIT,  
and $5.1 million for the CAT. Nontax revenue was above estimate by $14.5 million, which was  
spurred by strong earnings on investments. Finally, federal grants were close to OBMs  
estimate, as they recorded a negative variance of $0.9 million (0.1%) in October.  
Sales and Use Tax  
The sales and use tax has been healthy so far this fiscal year. Through October, YTD GRF  
receipts from the sales and use tax of $3.69 billion were $82.3 million (2.3%) above estimate, with  
both the nonauto and the auto portions of the tax above projections. Total sales tax revenue was  
also $208.8 million (6.0%) above receipts in FY 2019 through October. For the latest month, GRF  
receipts were $947.0 million, $51.4 million (5.7%) above estimate, with broad-based gains for  
both the nonauto sales tax and auto sales tax. Compared to the same month last year, October  
receipts from this tax increased $94.2 million (11.0%). 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  
Although this GRF source was $6.9 million (0.9%) below estimate in September, the  
October receipts were more robust as monthly collections exceeded estimate by $43.4 million  
(
which was unseasonably strong for October. This performance increased the cumulative YTD  
positive variance of this source to $55.5 million (1.8%), up from a first-quarter positive variance of  
5.7%). GRF revenue from the nonauto sales and use tax totaled $802.6 million for the month,  
$12.1 million. Compared to revenue in the same month in 2018, October nonauto sales and use  
tax revenue increased $82.3 million (11.4%). For the fiscal year, GRF receipts of $3.13 billion  
through October were $165.7 million (5.6%) above revenue in the corresponding period in  
FY 2019.  
2 A negative variance in FIT collections through the first four months of the year is not  
uncommon. The OBM estimate always assumes refunds outweigh FIT collections at this time of year.  
Refunds typically occur during the first half of a fiscal year as taxpayers make adjustments to previous  
tax filings, which is inherently difficult to predict. Receipts of the FIT are typically expected in January,  
March, and May.  
Budget Footnotes  
P a g e | 5  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
Chart 2, below, shows year-over-year growth in nonauto sales tax collections. The  
recent uptick in growth, as seen in Chart 2, has been supported by increased sales tax  
remittances by out-of-state sellers. Though the total amount of additional tax revenue is  
uncertain, Ohio has benefitted from an increase in voluntary collections by certain remote  
sellers in the wake of the U.S. Supreme Court decision in South Dakota v. Wayfair in June 2018.  
Following this Supreme Court decision, H.B. 166, the main operating budget act for the  
3
biennium, substantially modified Ohios nexus assumptions, which are expected to increase  
nonauto sales tax revenue by $121 million in FY 2020. However, the revenue gains may be  
higher or lower depending on the behavioral response of remote sellers and market facilitators  
(e.g., Amazon Marketplace, eBay, Walmart Marketplace, Etsy).  
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%  
Auto Sales and Use Tax  
The auto sales and use tax continued to outperform expectations as GRF revenue from  
this source totaled $563.0 million through October, which was $26.8 million (5.0%) above  
estimates. YTD collections were $43.1 million (8.3%) above receipts in the corresponding period  
in FY 2019. For the month of October 2019, revenue from this tax was $144.4 million, $8.0 million  
(
2
5.9%) above estimate and $11.9 million (9.0%) above the amount received in the same month in  
018. Chart 3, below, shows year-over-year growth in auto sales and use tax collections. As  
mentioned in the previous edition of Budget Footnotes, recent gains in the tax base largely reflect  
higher vehicle prices paid by consumers rather than increases in the number of units sold.  
3 If an out-of-state seller has sufficient contact with the state (nexus), the seller is required to  
abide by Ohios tax laws. Effective August 1, 2019, Ohio enacted substantial nexus statutes when a seller  
has at least 200 transactions or $100,000 or more in gross sales into Ohio. With this change in statutes, a  
seller making sales into Ohio may have a requirement to collect Ohio (sellers) use tax without a physical  
presence in this state.  
Budget Footnotes  
P a g e | 6  
November 2019  
Legislative Budget Office of the 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%  
Personal Income Tax  
Through October, YTD PIT receipts of $3.00 billion were $1.8 million (0.1%) below  
projections. GRF receipts were above estimate in the first quarter, but a negative variance of  
$
20.6 million (2.8%) in October yielded a modest shortfall in FY 2020 collections. This tax source  
recorded a surplus of $18.8 million in the first fiscal quarter. For the month of October, PIT  
revenue of $716.3 million was $2.9 million (0.4%) above revenue in October 2018. Comparisons  
with year-ago receipts are affected by a 3.3% withholding rate reduction earlier this calendar  
4
year. Growth in the tax base has generally been strong and compared to PIT receipts from the  
same four-month period one year ago, FY 2020 revenue grew $72.4 million (2.5%).  
PIT revenue to the GRF is comprised of gross collections, minus refunds and distributions to  
the Local Government Fund (LGF). Gross collections consist of employer withholdings, quarterly  
5
estimated payments, trust payments, payments associated with annual returns, and other  
miscellaneous payments. The performance of the tax is typically driven by employer withholdings,  
which is the largest component of gross collections (about 81% of gross collections in FY 2019).  
Larger than expected refunds could also greatly affect the monthly performance of the tax.  
Annual tax returns are generally due by April 15 after the close of a calendar year.  
However, some taxpayers request a six-month filing extension, which requires them to file their  
completed tax returns on or before the October 15 deadline. According to the Internal Revenue  
Service (IRS), about 15 million taxpayers nationwide filed an extension for tax year (TY) 2018,  
which is equal to nearly 10% of all federal tax returns filed in the previous year. Because  
4 Effective January 1, 2019, Ohio employer withholding tax rates were reduced by 3.3% in order to be  
st  
fully consistent with the income tax rate reductions enacted in 2015 (H.B. 64 of the 131 General Assembly).  
5 Quarterly estimated payments are made by taxpayers who expect to be underwithheld by  
more than $500. Payments are due in April, June, and September of an individuals tax year and January  
of the following year. Most estimated payments are made by high-income taxpayers.  
Budget Footnotes  
P a g e | 7  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
taxpayers who request an extension generally have more complex finances, they represent  
about 16% of the total income and 20% of the total tax liability that will be reported for all  
individual income tax returns filed during the year.6  
Much like the federal government, Ohio permits taxpayers to extend the due date for  
filing a PIT return to October 15, provided the taxpayer qualifies for an IRS extension. Ohio does  
not have an extension request form, but it honors the IRS extension. An extension of time to  
file does not extend the time for payment of the tax due. Personal income taxpayers must  
make extension payments by April 15. Interest will accrue on any tax not paid by April 15, and  
penalties may also apply.  
For the YTD, revenues from each component of the PIT relative to estimates and  
revenue received in FY 2019 are detailed in the table below. It shows withholding, annual  
return payments, trust payments, and miscellaneous payments were above estimates. Those  
positive variances were partially offset by a negative variance for quarterly estimated  
payments, resulting in a surplus of $40.4 million (1.2%) for gross collections. The PIT surplus  
dissipated because refunds were $41.2 million (15.2%) higher than expected. FY 2020 refunds  
also increased compared to their amount in the same four-month period last fiscal year.  
Taxpayers who relied on extensions to file their TY 2018 tax returns are the beneficiaries of  
most of these refunds, as some of them overestimated their tax liabilities and remitted too  
much PIT payment by April when requesting an IRS extension.  
FY 2020 Personal Income Tax Revenue Variance and Annual Change by Component  
YTD Variance from Estimate  
Changes from FY 2019  
Category  
Amount  
$ in millions)  
Percent  
(%)  
Amount  
($ in millions)  
Percent  
(%)  
(
Withholding  
$32.3  
-$4.2  
$1.2  
1.1%  
$100.7  
$21.3  
$1.3  
3.5%  
Quarterly Estimated Payments  
Trust Payments  
-1.5%  
7.1%  
8.4%  
7.6%  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
$8.0  
7.6%  
$24.2  
$3.6  
27.5%  
16.5%  
4.6%  
$3.0  
13.7%  
1.2%  
$40.4  
$41.2  
$0.9  
$151.2  
$72.8  
$5.9  
Less Refunds  
15.2%  
0.7%  
30.3%  
4.4%  
Less LGF Distribution  
GRF PIT Revenue  
-$1.8  
-0.1%  
$72.4  
2.5%  
6 https://www.irs.gov/statistics/filing-season-statistics.  
Budget Footnotes  
P a g e | 8  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
Through October, FY 2020 employer withholding receipts7 grew 3.5%. The chart below  
illustrates the growth of monthly employer withholdings on a three-month moving average  
relative to one year ago. It shows both the actual change in withholding receipts in FY 2020 and  
estimated withholding receipts adjusted for the decrease in withholding tax rates in January.  
Chart 4: Monthly Witholding 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%  
Actual  
Adjusted  
Commercial Activity Tax  
In each of the first three months of the fiscal year, the CAT exceeded OBMs estimate,  
including a monthly surplus of $18.2 million in August for the first payment for quarterly  
calendar return taxpayers. However, in October 2019, GRF revenue from the CAT was  
$
source was $28.5 million (6.5%) above the four-month estimate.  
69.3 million, or $5.1 million (6.9%) below estimate. Nevertheless, YTD revenue from this  
Some of the YTD gains were driven by a decline in tax credits claimed against the CAT, as  
compared to the previous year. However, remarks published last month in OBMs Monthly  
Financial Report highlight growth in the tax base during the first quarter of FY 2020. Specifically,  
OBM observed that GRF CAT receipts were $52.4 million (15.1%) above collections during the  
same period in FY 2019. After adjusting for the $23 million (approximately) decline in tax credits  
claimed against the CAT, first quarter receipts still grew more than 8%.  
A number of Ohios business tax credits can be claimed against more than one type of  
tax, but many are claimed against the CAT, which is imposed on the privilege of doing business  
in Ohio. Since the CATs next quarterly due date is November 10, October tax collections give  
only limited information on growth of the tax base. CAT receipts reported in the next issue of  
Budget Footnotes will offer more conclusive evidence as to whether Ohios business tax base is  
continuing to grow at an 8% annualized rate.  
7 Withholding receipts consist of monthly employer withholding (about 99% of the total) and  
annual employer withholding.  
Budget Footnotes  
P a g e | 9  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of October 2019  
($ in thousands)  
(Actual based on OAKS reports run November 1, 2019)  
Program Category  
Actual  
Estimate* Variance Percent  
Primary and Secondary Education  
Higher Education  
$685,779  
$197,411  
$6,092  
$670,711 $15,067  
2.2%  
0.2%  
2.9%  
1.8%  
$197,079  
$5,923  
$332  
$169  
Other Education  
Total Education  
$889,282  
$873,714 $15,568  
Medicaid  
$1,276,142 $1,293,619 -$17,476  
$215,283 $212,836 $2,447  
$1,491,425 $1,506,455 -$15,029  
-1.4%  
1.1%  
Health and Human Services  
Total Health and Human Services  
-1.0%  
Justice and Public Protection  
General Government  
$236,638  
$41,712  
$239,439  
$37,719  
-$2,802  
$3,993  
$1,192  
-1.2%  
10.6%  
0.4%  
Total Government Operations  
$278,350  
$277,158  
Property Tax Reimbursements  
Debt Service  
$250,356  
$92,352  
$311,705 -$61,349 -19.7%  
$92,389 -$37 0.0%  
$404,094 -$61,385 -15.2%  
Total Other Expenditures  
$342,708  
Total Program Expenditures  
Transfers Out  
$3,001,766 $3,061,420 -$59,654 -1.9%  
$5,066 $27,200 -$22,134 -81.4%  
$3,006,831 $3,088,620 -$81,789  
Total GRF Uses  
-2.6%  
*September 2019 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 10  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2020 as of October 31, 2019  
($ in thousands)  
(Actual based on OAKS reports run November 1, 2019)  
Program Category  
Actual  
Estimate*  
Variance Percent FY 2019** Percent  
Primary and Secondary Education  
Higher Education  
$2,861,890 $2,888,265  
-$26,375  
-$13,352  
-$1,344  
-0.9% $2,852,509  
0.3%  
-2.5%  
11.4%  
-0.2%  
$739,145  
$37,743  
$752,497  
$39,088  
-1.8%  
-3.4%  
$758,409  
$33,872  
Other Education  
Total Education  
$3,638,778 $3,679,850  
-$41,072  
-1.1% $3,644,791  
Medicaid  
$5,434,467 $5,514,408  
-$79,941  
-$22,786  
-1.4% $5,547,550  
-2.0%  
10.2%  
-1.1%  
Health and Human Services  
Total Health and Human Services  
$512,919  
$535,705  
-4.3% $465,336  
-1.7% $6,012,886  
$5,947,387 $6,050,113 -$102,727  
Justice and Public Protection  
General Government  
$866,957  
$152,721  
$889,042  
$161,928  
-$22,084  
-$9,207  
-2.5%  
-5.7%  
-3.0%  
$820,265  
$134,273  
$954,537  
5.7%  
13.7%  
6.8%  
Total Government Operations  
$1,019,678 $1,050,969  
-$31,291  
Property Tax Reimbursements  
Debt Service  
$851,362  
$853,499  
$803,825  
$853,782  
$47,537  
-$283  
5.9%  
0.0%  
$829,019  
$887,115  
2.7%  
-3.8%  
-0.7%  
Total Other Expenditures  
$1,704,861 $1,657,607  
$47,254  
2.9% $1,716,134  
Total Program Expenditures  
Transfers Out  
$12,310,704 $12,438,540 -$127,836  
$661,667 $669,975 -$8,308  
$12,972,371 $13,108,515 -$136,144  
-1.0% $12,328,348  
-0.1%  
-1.2%  
$752,327 -12.1%  
-0.8%  
Total GRF Uses  
-1.0% $13,080,675  
*
*
September 2019 estimates of the Office of Budget and Management.  
*Cumulative totals through the same month in FY 2019.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 11  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on November 2, 2019)  
Month of October 2019  
Year to Date through October 2019  
Actual Estimate* Variance Percent  
Department  
Medicaid  
GRF  
Actual  
Estimate* Variance Percent  
$1,210,921 $1,223,881 -$12,960  
$648,135 $667,426 -$19,291  
$1,859,056 $1,891,307 -$32,251  
-1.1% $5,163,307 $5,240,245  
-2.9% $2,988,332 $3,050,802  
-$76,937  
-$62,469  
-1.5%  
-2.0%  
-1.7%  
Non-GRF  
All Funds  
-1.7% $8,151,640 $8,291,047 -$139,407  
Developmental Disabilities  
GRF  
$57,304  
159,701  
217,005  
$57,717  
$163,674  
$221,391  
-$413  
-$3,972  
-$4,386  
-0.7%  
-2.4%  
$233,858  
$814,461  
$234,333  
$821,671  
-$475  
-$7,210  
-$7,685  
-0.2%  
-0.9%  
-0.7%  
$
Non-GRF  
All Funds  
$
-2.0% $1,048,319 $1,056,004  
Job and Family Services  
GRF  
$7,096  
$13,227  
20,323  
$11,105  
$5,404  
-$4,009 -36.1%  
$7,823 144.8%  
$34,073  
$58,855  
$92,928  
$36,232  
$42,534  
$78,766  
-$2,159  
$16,321  
$14,162  
-6.0%  
38.4%  
18.0%  
Non-GRF  
$
$16,510  
$3,814  
23.1%  
All Funds  
Health, Mental Health and Addiction, Aging, Pharmacy Board, and Education  
GRF  
$821  
$915  
$3,198  
$4,113  
-$94 -10.3%  
-$330 -10.3%  
-$423 -10.3%  
$3,228  
$14,636  
$17,864  
$3,598  
$14,077  
$17,674  
-$369 -10.3%  
Non-GRF  
$2,869  
$559  
$190  
4.0%  
1.1%  
$
3,690  
All Funds  
All Departments:  
GRF  
$1,276,142 $1,293,619 -$17,476  
$823,932 $839,702 -$15,770  
2,100,074 $2,133,321 -$33,247  
-1.4% $5,434,467 $5,514,408  
-1.9% $3,876,284 $3,929,084  
-$79,941  
-$52,800  
-1.4%  
-1.3%  
-1.4%  
Non-GRF  
All Funds  
$
-1.6% $9,310,751 $9,443,492 -$132,741  
*September 2019 estimates from the Department of Medicaid  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 12  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
Table 6: All Funds Medicaid Expenditures by Payment Category  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on November 2, 2019)  
Month of October 2019  
Year to Date through October 2019  
Actual Estimate* Variance Percent  
Payment Category  
Actual  
Estimate* Variance Percent  
Managed Care  
CFC†  
$1,379,333 $1,390,314 -$10,981  
-0.8% $5,528,045 $5,554,751  
-0.5% $1,949,424 $1,974,587  
-1.0% $1,437,047 $1,449,548  
-$26,706  
-$25,164  
-$12,501  
-$12,325  
-$4,209  
-0.5%  
-1.3%  
-0.9%  
-1.3%  
-1.4%  
3.3%  
$490,084  
$358,909  
$230,601  
$75,268  
$226,395  
-$1,925  
$492,493  
$362,415  
$236,847  
$76,894  
$221,665  
$0  
-$2,409  
-$3,507  
-$6,246  
-$1,626  
$4,730  
-$1,925  
Group VIII  
ABD†  
-2.6%  
-2.1%  
2.1%  
$931,324  
$301,797  
$910,379  
-$1,925  
$943,649  
$306,005  
$880,962  
$0  
ABD Kids  
My Care  
P4P†  
$29,417  
-$1,925  
Fee-For-Service  
ODM Services  
DDD Services  
Hospital - HCAP†  
Hospital - Other  
$551,580  
$341,465  
$211,209  
$0  
$566,710 -$15,129  
-2.7% $3,118,897 $3,164,454  
-2.6% $1,401,425 $1,451,098  
-2.3% $1,019,239 $1,025,356  
-$45,557  
-$49,673  
-$6,117  
$11,202  
-$969  
-1.4%  
-3.4%  
-0.6%  
1.7%  
$350,507  
$216,203  
$0  
-$9,041  
-$4,994  
$0  
$680,646  
$17,587  
$669,444  
$18,557  
-$1,094  
$0  
-$1,094  
-5.2%  
Premium Assistance  
$91,525  
$92,773  
-$1,248  
-1.3%  
$363,075  
$368,903  
-$5,828  
-1.6%  
Medicare Buy-In  
$52,648  
$52,987  
-$340  
-0.6%  
$207,790  
$211,715  
-$3,925  
-1.9%  
Medicare Part D  
$38,877  
$39,785  
-$908  
-2.3%  
$155,285  
$157,188  
-$1,903  
-1.2%  
Administration  
Total  
$77,637  
$83,524  
-$5,888  
-7.0%  
$300,734  
$355,384  
-$54,650 -15.4%  
$2,100,074 $2,133,321 -$33,247  
-1.6% $9,310,751 $9,443,492 -$132,741 -1.4%  
*September 2019 estimates from the Department of Medicaid  
P4P - Pay For Performance  
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 | 13  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
EMexlanpey Cearnter,dDiriecttorures8  
Ivy Chen, Principal Economist  
Overview  
FY 2020 GRF program expenditures totaled $12.31 billion at the end of October,  
127.8 million under estimate. This negative YTD variance grew by $59.7 million in October. As  
$
was the case at the end of September, all program categories were below estimate except for  
Property Tax Reimbursements, although, as expected, the timing-driven positive variance in  
9
this category fell in October (by $61.3 million to $47.5 million). GRF Medicaid expenditures  
continue to have the largest negative YTD variance ($79.9 million). Three other program  
categories had negative variances greater than $20 million: Primary and Secondary Education  
(
(
$26.4 million), Health and Human Services ($22.8 million), and Justice and Public Protection  
$22.1 million). In addition to program expenditures, transfers out also had a negative YTD  
variance ($8.3 million), due to a negative variance of $22.1 million in October more than  
offsetting positive variances from the first quarter of the fiscal year.  
Including both program expenditures and transfers out, total YTD GRF uses at the end of  
October were $12.97 billion, which was $136.1 million below estimate. The remainder of this  
article will give more details about both GRF and non-GRF variances in Medicaid as well as  
significant GRF variances in other categories.  
Medicaid  
GRF Medicaid expenditures were below both their monthly and YTD estimates, by  
$
17.5 million (1.4%) and $79.9 million (1.4%), respectively. Non-GRF Medicaid expenditures  
were also below both their monthly and YTD estimates, by $15.8 million (1.9%) and  
52.8 million (1.3%), respectively. Including both the GRF and non-GRF, all funds Medicaid  
$
expenditures were $33.2 million (1.6%) below estimate in October and $132.7 million (1.4%)  
below the YTD estimate at the end of October. As a joint federal-state program, both GRF and  
non-GRF Medicaid expenditures contain federal and state dollars.  
Table 5 shows GRF and non-GRF Medicaid expenditures for the Ohio Department of  
Medicaid (ODM), the Ohio Department of Developmental Disabilities (ODODD), and six other  
sisteragencies that also take part in administering Ohio Medicaid. ODM and ODODD account  
for about 99% of the total Medicaid budget. Therefore, they generally also account for the  
majority of the 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 sisteragencies incur only administrative spending.  
8 This report compares actual monthly and YTD expenditures from the GRF to OBMs estimates.  
If a program categorys 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.  
9 Please see the October issue of Budget Footnotes for an explanation of the variances in the  
Property Tax Reimbursements category.  
Budget Footnotes  
P a g e | 14  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
Table 6 shows all funds Medicaid expenditures by payment category. Expenditures were  
below their YTD estimates for all four payment categories. Administration ($54.7 million, 15.4%)  
had the largest overall negative variance, followed by Fee-For-Service (FFS, $45.6 million, 1.4%),  
Managed Care ($26.7 million, 0.5%), and Premium Assistance ($5.8 million, 1.6%).  
The variance in the Administration category is mostly due to timing and is expected to  
smooth out throughout the fiscal year. The FFS variance is largely due to lower than expected  
spending in the Ohio Medicaid Schools Program (MSP). MSP allows school entities to be  
reimbursed for Medicaid covered services, certain administrative activities, and specialized  
transportation provided to eligible children aged 3 to 21 years. Services are delivered through  
an individualized education program designed to enable a child to participate in school. Any  
qualified local education agency may participate in MSP voluntarily.  
Primary and Secondary Education  
At the end of October, the Primary and Secondary Education category had a negative  
variance of $26.4 million (0.9%). This variance fell from a negative $41.4 million at the end of  
September. The two appropriation items that drove the negative variance at the end of  
September1 200550, Foundation Funding, and 200573, EdChoice Expansionboth had  
positive variances in the month of October. Item 200550 was over estimate in October by  
0
$
2
the end of October of $6.2 million.  
17.9 million, resulting in a negative YTD variance at the end of October of $2.0 million. Item  
00573 was over estimate in October by $10.4 million, resulting in a negative YTD variance at  
The remaining YTD negative variance at the end of October is largely from appropriation  
item 200437, Student Assessment. This appropriation item had a negative variance of  
$
11.7 million in October, which, when combined with smaller variances in August and  
September, resulted in a negative variance of $12.8 million YTD. Item 200437 is used to support  
the states system of achievement and diagnostic assessments for students. Most of this  
spending is for contracts with outside entities that develop, distribute, and score the  
assessments. The variance in October is related to the timing of payments on these contracts  
and should be resolved in future months.  
Health and Human Services  
For the month of October, this category had a positive variance of $2.4 million, which  
lowered its YTD negative variance to $22.8 million (4.3%). Whereas the variances in the first  
quarter of the fiscal year were spread out among the many appropriation items that make up  
this category, the variances in October were dominated by two appropriation items.  
Appropriation item 600523, Family and Children Services, in the Department of Job and Family  
Services, had a positive variance of $23.5 million in October, which was partially offset by a  
negative variance of $18.1 million in appropriation item 336421, Continuum of Care Services, in  
the Department of Mental Health and Addiction Services.  
The variance in item 600523 was mainly due to greater than estimated requests for  
reimbursements from local public children services agencies through the state child protection  
10 Please see the October issue of Budget Footnotes for more information about these items and  
their variances at the end of September.  
Budget Footnotes  
P a g e | 15  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
allocation. Item 336421 is used primarily to distribute funds to local boards of alcohol, drug  
addiction, and mental health. The October variance in this item was primarily due to timing.  
Justice and Public Protection  
For the month of October, this category had a negative variance of $2.8 million, which  
increased its YTD negative variance to $22.1 million. The most significant variances in October  
were a positive variance of $8.2 million for the Department of Rehabilitation and Correction  
(
DRC) and a negative variance of $6.4 million for the Attorney General’s Office (AGO). The  
AGOs negative variance in October is primarily due to a delay in the payment of school safety  
training grants. The estimates reflect a payment of $6.0 million in October that did not occur as  
planned. DRCs positive variance in October is primarily due to a positive variance of  
$
negative variance in this appropriation item of $9.9 million in September. For the YTD, however,  
8.8 million in appropriation item 501321, Institutional Operations, that partially offsets a  
DRCs positive variance of $7.5 million comes primarily from a positive YTD variance of  
$
6.8 million in appropriation item 505321, Institution Medical Services. Item 501321 is DRCs  
primary GRF appropriation item used to pay for the operation of the states prisons. Item  
05321 is used by DRC to pay for the provision of medical services to offenders housed in the  
5
states prison system.  
Transfers out  
For the first quarter of the fiscal year, transfers out were above estimate by  
13.8 million. This positive variance was reversed in October by a negative monthly variance of  
22.1 million, resulting in a negative YTD variance at the end of October of $8.3 million. The  
$
$
negative October variance was primarily due to a $20.0 million transfer to the Tourism Ohio  
Fund that took place in August, instead of October as reflected in the estimates. In addition, the  
estimates reflect an October transfer of $7.2 million to the Departmental Services Interstate  
Fund, but this transfer did not take place as planned. H.B. 166 authorizes this temporary  
transfer to pay costs for the reconstruction of the Hocking Hills Dining Lodge prior to receipt of  
insurance proceeds. Partially offsetting these two negative variances was a transfer of  
$
5.0 million to the State Park Fund that occurred in October, but was originally planned for  
August.  
The negative YTD variance in transfers out at the end of October consists of a remaining  
4.5 million negative variance in transfers out to the Information Technology Development  
$
Fund (estimated $9.0 million transfer in August, actual $4.5 million transfer in September), and  
the $7.2 million negative variance from the planned transfer to the Departmental Services –  
Interstate Fund as mentioned above, partially offset by an unplanned transfer of $3.7 million to  
the Ohio College Opportunity Grant Program Reserve Fund in September as reported in OBMs  
Monthly Financial Report.  
Budget Footnotes  
P a g e | 16  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
Issue Updates  
Ohio Federal Medical Assistance Percentage to Increase in  
FFY 2021  
Ivy Chen, Principal Economist  
On September 25, 2019, Federal Funds Information for the States (FFIS) released  
estimates showing that the federal reimbursement rate, known as the Federal Medical  
1
1
Assistance Percentage (FMAP) will increase for Ohio in federal fiscal year (FFY) 2021. The  
FMAP for Ohio is estimated to increase by 0.61 percentage point, from 63.02% in FFY 2020 to  
6
3.63% in FFY 2021. This increase in the FMAP will decrease Ohios share of many Medicaid  
expenditures. For example, state fiscal year (FY) 2019 Ohio Medicaid expenditures that are  
subject to FMAP are estimated to be close to $19 billion. At that level of expenditure, an  
increase in the FMAP of 0.61 percentage point would lower Ohios share of Medicaid costs by  
approximately $116 million ($19 billion x 0.61%).  
The FMAP for each state is based on a formula that provides higher reimbursement to  
states with lower per capita incomes relative to the national average. The revised 2018  
personal income data released by the U.S. Bureau of Economic Analysis (BEA) on September 24,  
2
019, allow calculation of FFY 2021 FMAPs, which are based on per capita personal incomes for  
calendar years 2016 through 2018. Although Ohios per capita personal income rose 4.5% to  
48,739 in 2018, after increasing 3.6% in 2017, the national average growth rates were higher  
$
at 4.0% in 2017 and 4.9% in 2018. The national average per capita personal income was  
nd  
$
54,446 in 2018. Ohios per capita personal income ranks 32 among the 50 states and the  
District of Columbia. In addition to Ohio, FFIS estimates that FMAPs will increase in 24 other  
states and decline in 13 states.  
In spite of this increase, the enhanced FMAP (eFMAP) for Ohio is estimated to decrease  
by 11.07 percentage points, from 85.61% in FFY 2020 to 74.54% in FFY 2021. The eFMAP  
generally is calculated by reducing each states share based on the FMAP by 30%, so when a  
states FMAP increases, its eFMAP also increases. However, the Affordable Care Act (ACA)  
increased states eFMAP above the typical calculation by 23 percentage points through  
FFY 2019.12 Subsequent legislation provided a transition year in FFY 2020 with an  
1
increase, all states experienced reductions in FFY 2020 that will continue in FFY 2021. FY 2019  
1.5 percentage point increase above the typical calculation. With the phase-out of the ACA  
expenditures for Ohios Childrens Health Insurance Program (SCHIP), which is subject to  
11 The FFY 2021 FMAP will apply to the last three quarters of FY 2021 and the first quarter of  
FY 2022. This change in the FMAP does not affect the federal reimbursement rate for individuals newly  
eligible for Medicaid under the Affordable Care Act (ACA) expansion. This rate is uniform for all states  
that adopt the expansion and is 93% in calendar year (CY) 2019 and will be 90% in CY 2020 and each  
year thereafter.  
12 For example, Ohio’s FMAP is 63.09% for FFY 2019, meaning Ohio’s share based on the FMAP is  
6.91% (100% - 63.09%). Reducing that state share by 30% results in 11.07% (30% x 36.91%). Adding  
3
that to Ohio’s FMAP results in 74.16% (63.09% + 11.07%). Under the ACA, however, the actual eFMAP in  
FFY 2019 is 97.16% (74.16% + 23%).  
Budget Footnotes  
P a g e | 17  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
eFMAP, were estimated to be approximately $570 million. At that level of expenditure, a  
decrease in the eFMAP of 11.07 percentage points would increase Ohios share of SCHIP costs  
by approximately $63 million ($570 million x 11.07%).  
OFCC Completed Facility Plans for Two School Districts in  
FY 2019  
Jason Glover, Budget Analyst  
During FY 2019, the Ohio Facilities Construction Commission (OFCC) completed projects  
that fully addressed the facilities needs of two school districts. As shown in the following table,  
the total master facility plan costs of these projects, as assessed by OFCC, was $138.1 million.  
Of that total, the state share was $76.5 million (55%) and the local share was $61.5 million  
(45%).  
FY 2019 Completed School Facility Plans  
County Total Plan Costs  
District  
State Share  
$24,243,963  
$52,285,638  
$76,529,601  
State Share %  
43%  
Eaton Community City School District  
Middletown City School District  
Preble  
Butler  
Total  
$56,381,310  
$81,696,309  
$138,077,619  
64%  
55%  
Overall, OFCC disbursed $200.0 million for school facilities assistance projects in  
FY 2019, almost 89% ($177.2 million) of which was spent on Classroom Facilities Assistance  
Program (CFAP) projects. The remainder, $22.8 million, primarily supported OFCCs Exceptional  
Needs Program ($15.6 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 independent  
science, technology, engineering, and mathematics (STEM) schools ($3.1 million); high  
performing community schools ($2.0 million); and the Vocational Facilities Assistance Program  
(
VFAP) for joint vocational school districts (JVSDs) ($2.0 million). The current capital  
nd  
appropriations act, H.B. 529 of the 132 General Assembly, appropriates a total of $700 for  
classroom facilities assistance projects for the FY 2019-FY 2020 capital biennium, primarily  
supported through the sale of bonds.  
Through the end of FY 2019, 43% of districts statewide, including 268 school districts  
and 15 JVSDs, have completed projects that fully addressed their facilities needs through CFAP  
and VFAP and another 17% of districts, including 113 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 110 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 21% of districts, including 119 school districts and 22 JVSDs, have not yet been  
offered CFAP funding.  
Budget Footnotes  
P a g e | 18  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
ODE Receives $42 Million Federal Literacy Grant  
Dan Redmond, Budget Analyst  
On October 15, 2019, the Ohio Department of Education (ODE) was competitively  
awarded a five-year, $42 million federal grant to improve language and literacy skills for  
children from birth through grade 12. Ohios Comprehensive Literacy State Development Grant  
will primarily support the establishment of up to 64 model literacy sites through subgrants to  
selected high-need school- or early childhood program-based locations throughout the state.  
According to ODE, the sites will serve as both incubators of sustainable practices and  
demonstration sites for districts and schools exploring and beginning to implement new  
practices. Model sites will implement practices aligned with Ohios Plan to Raise Literacy  
Achievement,a framework for schools to implement evidence-based strategies to improve  
proficiency in reading, writing, and oral language skills. Specifically, funded activities include:  
Development of shared leadership teams that include teachers and building and district  
administrators;  
Systems of supports that involve screening, intervention, progress monitoring,  
instructional decision-making, and communication with families;  
Professional development in evidence-based language and literacy practices and  
interventions;  
Family partnerships that provide caregivers with high-quality books for early learners  
and strategies to improve involvement in literacy development; and  
Collaboration with community partners to share practices in implementing literacy  
plans.  
These activities will be focused on assisting students from low-income families, English  
learners, and students with disabilities. Results from the model sites will be leveraged by  
schools in the model sites regional network to improve professional learning and coaching and  
by ODE to develop statewide resources.  
In accordance with federal grant requirements, ODE will award the subgrants through a  
competitive process. Further, certain portions of the funds must be allocated to programs  
supporting children in specified grade bands: at least 15% for children from birth through  
kindergarten entry, at least 40% for grades K-5, and at least 40% for grades 6-12. A request for  
applications will be released by January 2020. ODE may use up to 5% of the grant award for  
state leadership activities, technical assistance and training, data collection, reporting, and  
administration.  
Budget Footnotes  
P a g e | 19  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
Ohio to Provide $31 Million in FY 2020 to Aid Families of  
Multi-System Youth  
Ryan Sherrock, Economist  
On October 8, 2019, the Governor announced that the departments of Medicaid and  
Job and Family Services will provide $31 million in FY 2020 to aid families of multi-system youth.  
This funding was appropriated in H.B. 166 and will be used as follows:  
$20 million will be given to county public childrens services agencies to assist with costs  
for multi-system youth who have been relinquished or are at risk for relinquishment;  
$8 million will be used for direct aid to help parents avoid being forced to relinquish  
custody of their children in order to get the child treatment and services; and  
$3 million will be used by the Ohio Family and Children First councils to work with  
stakeholders to develop and implement an action plan. The Multi-System Youth Action  
Plan Committee will evaluate the existing Family and Children First infrastructure,  
current practices across the state, and service needs. Funds will be provided for  
sustainability efforts and technical assistance.  
The state plans to provide another $37 million in FY 2021 to prevent custody  
relinquishment, fund services for children with complex needs, and start to modernize the  
88 county Family and Children First councils.  
Ohio Local Governments Awarded $44.8 Million in Federal  
Housing Safety Funding  
Shannon Pleiman, Senior Budget Analyst  
On September 30, 2019, the U.S. Department of Housing and Urban Development  
(HUD) awarded $44.8 million to nine local governments in the state under two housing safety  
initiatives. Under the first initiative, the Lead-Based Paint Hazard Reduction Program, HUD  
awarded $40.6 million for nine local governments to identify and control lead-based paint  
hazards in 2,163 housing units occupied by low-income families with children. Under the  
second initiative, Healthy Homes Supplemental funding, HUD awarded the remaining  
$
1
paint hazards, that affect occupant health. The table below displays how much was awarded to  
4.3 million for eight of these local governments to perform healthy home assessments on  
,391 housing units to identify and address housing safety hazards, in addition to lead-based  
each grantee under both initiatives, which are both annual HUD programs.  
Budget Footnotes  
P a g e | 20  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
Lead-Based Paint Hazard and Reduction Program and  
Healthy Homes Supplemental Funding Awards in Ohio  
Lead-Based Paint  
Hazard Control Program  
Healthy Homes  
Supplemental  
Grantee  
Total Amount  
$9,700,000  
City of Cleveland  
City of Columbus  
Cuyahoga County  
Summit County  
City of Akron  
$9,100,000  
$5,000,000  
$5,000,000  
$5,000,000  
$4,000,000  
$4,000,000  
$3,478,430  
$3,000,000  
$2,000,000  
$40,578,430  
$600,000  
$600,000  
$600,000  
$600,000  
$600,000  
$600,000  
$350,000  
$300,000  
$0  
$5,600,000  
$5,600,000  
$5,600,000  
$4,600,000  
$4,600,000  
$3,828,430  
$3,300,000  
$2,000,000  
$44,828,430  
Mahoning County  
Erie County  
City of Canton  
City of Lima  
Total  
$4,250,000  
TechCred Program Application Details Announced  
Tom Middleton, Senior Budget Analyst  
On September 25, 2019, the state announced the rollout of the TechCred Program, a  
new workforce development program. The program is administered by the Development  
Services Agency (DSA) but was formed in conjunction with the Governors Office of Workforce  
Transformation and other state agencies to ensure the program falls in line with the states  
greater workforce mission. Under the program, the state will reimburse employers up to $2,000  
per employee for a technology-focused credential or qualification that leads to a more  
advanced position within the company. Other program requirements, including a list of eligible  
training programs, may be found at techcred.ohio.gov.  
The application period opened on October 1, 2019, and closed on October 31, 2019.  
Awards are to be approved on a competitive basis and are expected to be made in late  
November. DSA stated that the agency will assess applications received in October and  
determine whether there will be additional funding rounds of TechCred awards in FY 2020.  
According to DSA, $12.3 million in funding will be available for TechCred awards in each  
of FY 2020 and FY 2021. Of total annual program funding, $4.1 million per fiscal year will be  
allocated to assist workers employed in each of three business sizes: (1) small businesses, with  
5
0 or fewer employees, (2) medium-sized businesses, with between 51 and 200 employees, and  
(3) large businesses, with more than 200 employees. The funding source of the TechCred  
Program is a combination of GRF dollars and casino license fee revenue held in the Ohio  
Incumbent Workforce Job Training Fund (Fund 5HR0).  
Budget Footnotes  
P a g e | 21  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
Controlling Board Approves Continuation of Evaluation Services  
Contract for Behavioral Health Juvenile Justice Initiative  
Maggie West, Senior Budget Analyst  
On October 7, 2019, the Controlling Board approved the continuation of a contract  
between the Department of Youth Services (DYS) and Cleveland-based Case Western Reserve  
Universitys Begun Center for Violence Prevention Research and Education to provide  
evaluation services for the Behavioral Health Juvenile Justice (BHJJ) initiative. Case Western  
Reserve has provided evaluation services for BHJJ since it began in 2005. These services include  
compiling information related to treatment effects, behavioral and mental health outcomes,  
and criminogenic risks and needs, and determining the effects of certain evidence-based  
practices. The approved contracted amount for evaluation services is $141,128 in each of  
FY 2020 and FY 2021.  
BHJJ is a shared statewide initiative between DYS and the Department of Mental Health  
and Addiction Services (OhioMHAS) that provides funding to juvenile courts in 12 counties  
(
Ashtabula, Cuyahoga, Franklin, Hamilton, Holmes, Lorain, Lucas, Mahoning, Montgomery,  
Summit, Trumbull, and Wayne) for the purpose of diverting serious juvenile offenders with  
mental health or substance abuse issues from the juvenile justice system into community-based  
treatment. DYS has allocated $12.1 million from GRF line item 470401, RECLAIM Ohio, in each  
of FY 2020 and FY 2021 to fund three community programs or services: BHJJ, Competitive  
1
3
RECLAIM, and Targeted RECLAIM. To date, BHJJ has served more than 4,000 youth; it is  
expected to serve around 500 youth annually through the FY 2020-FY 2021 biennium.  
Ohio EPA Disburses $2.1 Million to Local Air Agencies in the  
First Quarter of FY 2020  
Jessica Murphy, Budget Analyst  
In the first quarter of FY 2020 (July through September), the Ohio Environmental  
Protection Agency (Ohio EPA) disbursed $2.1 million to eight local air pollution control agencies  
(
LAAs) with geographical jurisdiction in 24 of Ohios 88 counties. The LAAs are under contract to  
perform primarily the same air pollution control functions as the Ohio EPAs Division of Air  
Pollution Control, including air monitoring, permitting, and compliance oversight. The contract  
amount is based upon the workload of each LAA, including such factors as the population size  
of the jurisdiction served, the number of air permits issued for both new and existing sources,  
land area, and the number of air contaminant sources. The contract work is in addition to other  
activities and services that the LAA may be performing for the U.S. EPA or their parent  
organization. The Ohio EPAs four district offices have geographical jurisdiction over the 64 Ohio  
counties not covered by an LAA contract.  
13 This $12.1 million is a flexible pot of money that can be allocated for a range of services and  
activities, including supplementing the county subsidy portion of RECLAIM and financing behavioral  
health programs, wrap-around services for youth released from juvenile correctional facilities, and other  
residential and nonresidential services. These programs or services are aimed at reducing the number of  
juveniles that might otherwise be committed into the states care and custody.  
Budget Footnotes  
P a g e | 22  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
The table below summarizes the contract amounts that have been disbursed to the  
eight LAAs from FY 2018 through the first quarter of FY 2020. The LAAs with the largest contract  
amounts are located in Cleveland and Cincinnati, respectively. The LAA with the smallest  
contract amount is located in Mentor (Lake County). Unlike the seven other LAAs that are  
considered full-service contractors, the Mentor-based LAA does not perform permitting and  
related inspections. The source of the funds used by the Ohio EPA for these contracts include  
air pollution permitting and emissions fees (45%), solid waste disposal fees (35%), and federal  
air pollution control grants (20%).  
Ohio EPA Disbursements to Local Air Pollution Control Agencies  
Location  
Akron  
Agency  
Counties Served  
FY 2020*  
FY 2019  
FY 2018  
Akron Regional Air  
Quality Management  
District  
Medina, Portage,  
Summit  
$349,262 $1,310,944 $1,397,787  
Dayton  
Regional Air Pollution  
Control Agency  
Clark, Darke,  
Greene, Miami,  
Montgomery,  
Preble  
$271,255 $1,331,107 $1,360,538  
Canton  
Canton Board of City  
Health  
Stark  
$179,586  
$819,591  
$806,912  
Cincinnati  
Southwest Ohio Air  
Quality Agency  
Butler, Clermont,  
Clinton, Hamilton,  
Warren  
$401,961 $1,995,776 $1,956,061  
$530,079 $2,312,874 $2,431,324  
Cleveland  
Mentor  
Cleveland Division of  
Air Quality  
Cuyahoga  
Lake County General  
Health District  
Geauga, Lake  
$60,625  
$207,752  
$506,848  
$228,144  
$507,433  
Portsmouth Portsmouth City  
Health Local Air  
Adams, Brown,  
Highland,  
$106,681  
Division  
Lawrence, Scioto  
Toledo  
City of Toledo Division  
of Environmental  
Services  
Lucas  
$202,202 $1,008,632 $1,037,688  
Total $2,101,651 $9,493,524 $9,725,887  
*Total amount disbursed through the first quarter of FY 2020.  
Budget Footnotes  
P a g e | 23  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
Secretary of State Continues Election Cybersecurity Project in  
Collaboration with County Boards of Elections  
Terry Steele, Senior Budget Analyst  
On September 9, 2019, the Controlling Board approved a $1.7 million contract for the  
Secretary of State (SOS) to enhance cybersecurity through the Netflow/Intrusion Detection  
System Monitoring and Analysis Service known as ALBERT. This contract is a continuing part of a  
two-pronged attempt to enhance security before the 2020 election cycle. The first prong was a  
directive issued by SOS in June that instructed counties of the necessary actions needed for  
1
4
elections security in 2020. The contract awards $918,800 in FY 2020 and $791,920 in FY 2021  
to the Center for Internet Security, Inc. for the installation of ALBERT intrusion detection  
devices and monitoring devices for the network of each county board of elections and election  
system vendor. The system consists of single-unit physical servers outfitted with software that  
detects malicious network activity. This contract will be paid through federal grants received  
through the Help America Vote Act (HAVA) and held by the state in the HAVA Fund  
(Fund 3AS0).  
Besides this SOS contract, the second prong of the directive required county boards of  
elections to continue previously mandated efforts of recordkeeping and data sharing using  
federal Department of Homeland Security (DHS) resources. The directive contains new  
requirements to utilize DHS services under four categories of cybersecurity: (1) risk and  
vulnerability assessments, (2) remote penetration testing, (3) validated architectural design  
review, and (4) cyber threat hunts. To assist counties in completing this directive, SOS awarded  
grants to county boards of elections of up to $50,000 for each category of DHS service that had  
yet to be completed. Thus far in FY 2020, SOS has issued grants to 32 counties totaling nearly  
$
U.S. Election Assistant Commission grant of approximately $12.2 million in FY 2019 and  
deposited into Fund 3AS0.  
3.2 million for these purposes. These grants were paid using HAVA funding coming through a  
14 https://www.sos.state.oh.us/globalassets/elections/directives/2019/dir2019-08.pdf.  
Budget Footnotes  
P a g e | 24  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
TErric Maakcelak, Eiconnomgist the Economy  
Overview  
The U.S. economy added 128,000 nonfarm payroll jobs in October, and the nations  
unemployment rate increased by 0.1 percentage point to 3.6%. U.S. production, as measured  
by inflation-adjusted gross domestic product (real GDP), increased at a seasonally adjusted  
1
Economic Analysis (BEA). Third quarter economic growth was down slightly from the pace in  
.9% annual rate in the third quarter of 2019, according to the initial estimate by the Bureau of  
the years first half. Manufacturing output remained slower than in last years second half.  
During their October 29-30 meeting, the Federal Reserve Boards Open Market  
Committee (FOMC) again lowered the federal funds rate by one-quarter of a percentage point,  
with the target range on the short-term reserve lending rate now set between 1.5% and 1.75%.  
In a statement, the FOMC cited below-target15 inflation, weak business fixed investment and  
exports, and the implications of global developments for the economic outlookin their  
explanation for again reducing their principal target interest rate.  
Nonfarm payroll employment in Ohio decreased by 1,500 in September and the  
unemployment rate increased to 4.2%. Personal consumption expenditures (PCE) in Ohio  
increased by 4.1% in 2018. Ohios real GDP rose at a seasonally adjusted rate of 1.3% in the  
second quarter of 2019. According to the Federal Reserve Boards Beige Book, business activity  
in Ohio remained steady.  
The National Economy  
Total nonfarm payroll employment rose by 128,000 in October. Nationally, job losses of  
around 26,000 in goods-producing industries, mostly due to the now-settled General Motors  
strike, were more than offset by job gains of 157,000 in private service-providing industries.  
Trade, transportation, and utilities (+26,000), financial services (+16,000), professional and  
business services (+22,000), and education and health services (+39,000) all gained workers  
during October. The leisure and hospitality industry added 61,000 jobs during the month, over  
7
1
5% of which were in food services and drinking establishments. The federal government shed  
7,000 jobs in October, primarily part-time Census Bureau roles.  
15 The FOMC’s inflation target is 2%.  
Budget Footnotes  
P a g e | 25  
November 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
1
55  
52  
49  
46  
43  
40  
37  
34  
31  
28  
12.0%  
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)  
The U.S. unemployment rate increased marginally to a seasonally adjusted 3.6% in  
October, up from 3.5% in September. The number of people in the labor force rose by more  
than the working-age population, and the seasonally adjusted labor force participation rate  
increased by 0.1 percentage point to 63.3%. The number of discouraged workers was 341,000  
in October 2019, down by one-third from October 2018.16 However, the number of job  
openings nationwide has fallen since last year. Chart 5 details the national employment totals  
and unemployment rates from 2008 to the most recent data.  
According to the BEA, U.S. real GDP grew at an annualized rate of 1.9% in the third  
quarter of 2019, following 2.0% growth in the second quarter. Seasonally adjusted growth of  
consumer spending slowed to a 2.9% rate. Consumer outlays continue to be supported by  
employment growth and by pay gains generally outpacing inflation. Nonresidential fixed  
investment declined at a 3.0% rate, while residential fixed investment increased at a 5.1% rate  
after six quarters of contraction. Exports increased at a 0.7% rate during the quarter after  
declining at a 5.7% rate in the previous quarter.  
The industrial production index (IPI) decreased by a seasonally adjusted 0.4% in  
September, following an increase of 0.8% in August. Among major industry groups,  
manufacturing (-0.5%) and mining (-1.3%) activity both declined, while utilities production  
increased (+1.4%). The largest percent decrease in production among market groups was in  
automotive products, a result of the strike at General Motors. The Institute for Supply  
Managements (ISM) manufacturing purchasing managers index registered a slowing of  
manufacturing production in October. Both the IPI and ISM indexes indicate contracting  
industrial output nationally, from historically high points during the past year.  
16 Discouraged workers are persons not currently looking for work because they believe no jobs  
are available to them.  
Budget Footnotes  
P a g e | 26  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
The number of building permits for construction of privately owned housing units  
decreased by a seasonally adjusted 2.7% in September, compared to a month prior.17 However,  
the rate of housing units authorized was 7.7% greater than in September 2018. YTD, the total  
number of privately owned housing units started has decreased modestly from a year earlier.  
The consumer price index (CPI), a seasonally adjusted measure of inflation in the  
U.S. economy, was unchanged in September. A decrease in the price of energy commodities  
was offset by increases in the cost of services,18 causing the aggregate CPI to remain constant.  
The CPI for all items excluding food and energy was 2.4% greater in September 2019 than in  
September 2018. Year over year, the price indexes for medical care services (+4.4%), shelter  
(
aggregate index. An alternative measure frequently cited by the FOMC, the price index for  
personal consumption expenditures, was 1.3% higher in September than a year earlier, and  
+3.5%), and food away from home (+3.2%) have risen significantly faster than the CPI  
1
.7% higher excluding food and energy.  
During the October 29-30 meeting of the FOMC, the committee decided to lower the  
short-term interest rate range by one-quarter of a percentage point. A growing body of  
academic research concerns the U.S. treasury yield curve, the spread between short-term and  
long-term interest rates, as a leading indicator of recessionary pressures.19 Prior to each of the  
last six recessions, short-term interest rates rose above long-term interest rates, signaling  
investor speculation of a future economic downturn.20 The yield curve is considered a leading  
indicator because its movements typically precede a recession, as opposed to coinciding with a  
recession.  
Chart 6 displays the yield curve from 1990 to the current time. The line measures the  
monthly yield curve, while the shaded areas indicate a recession as measured by the National  
Bureau of Economic Research (NBER). October marks the fifth consecutive month in which the  
monthly short-term treasury yield was higher than the monthly long-term treasury yield. Ahead  
of the 2007-2009 recession, the yield spread was negative for ten months from 2006 to 2007  
before reverting to positive territory for six months prior to the business cycle peak at the start  
of the recession in December 2007.21 Both monetary policy and changes in investor  
expectations affect the yield curve; significant lags often exist between treasury markets and  
nationwide economic growth, and the Federal Reserve Board is careful to indicate that past  
correlations between the yield curve and economic performance are not necessarily indicative  
of future outcomes.  
17 Source: U.S. Department of Housing and Urban Development.  
18 Services excluding energy services.  
19 The yield curve indicator, as discussed in this article, is the difference between the annual  
yield on ten-year treasuries and three-month treasuries (Bond Equivalent Basis) as measured by the  
New York Federal Reserve Bank.  
20 https://www.newyorkfed.org/medialibrary/media/research/current_issues/ci12-5.pdf.  
21 As judged by the NBER.  
Budget Footnotes  
P a g e | 27  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
Chart 6: U.S. Treasury Yield Spread: Ten-Year Bond Rate  
Minus Three-Month Bill Rate  
4
3
3
2
2
1
1
0
0
.0  
.5  
.0  
.5  
.0  
.5  
.0  
.5  
.0  
-
-
0.5  
1.0  
The Ohio Economy  
Employers in Ohio cut 1,500 nonagricultural wage and salary jobs, and total  
employment in the state was 5,591,200 in September. The unemployment rate among Ohioans  
was 4.2% in September, a 0.1 percentage point increase over the prior month. Employment in  
private service-providing jobs increased (+4,400) during September, while employment  
decreased in private goods-producing jobs (-3,000) and government jobs (-2,900). Chart 7  
shows Ohio employment and unemployment.  
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%  
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)  
Budget Footnotes  
P a g e | 28  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
During September, a decrease in employment in construction (-1,700) and  
manufacturing (-1,400) industries accounted for the decrease in workers in goods-producing  
jobs. Over the month, employers added workers in the industries of leisure and hospitality  
(
+2,400); trade, transportation, and utilities (+1,900); other services (+1,000); and financial  
services (+800). The number of Ohioans employed in educational and health services (-1,000)  
and professional and business services (-600) decreased during the month. Jobs were shed at all  
levels of government in September.  
Between September 2018 and September 2019, nonfarm wage and salary employment  
was up by 23,100 (0.4%) in Ohio. Manufacturing employment increased by 1,800 year over  
year, while construction employment was down by 7,600 jobs between September and a year  
prior. Employment gains in the leisure and hospitality industry (+14,100) accounted for over  
half of the total net job gains over the past year, while nonfarm employment in educational and  
health services (+12,300) and professional and business services (+3,900) also increased  
significantly. Employment by local governments in Ohio decreased by 2,500 during the same  
time period.  
Ohios economy grew by a seasonally adjusted 1.3% in the second quarter of 2019,  
following growth of 2.3% in the first quarter. Though Ohios growth was slower than the  
national average over the first half of the year, this state had the fastest growth in real GDP  
among all states in the Great Lakes Census region during that period.22 Industries that were  
significantly above the regional average in their contribution to real GDP growth in Ohio include  
mining, quarrying, and oil and gas extraction; finance and insurance; and management of  
companies and enterprises.  
PCE by Ohioans increased by 4.1% between 2017 and 2018.23 In 2018, Ohioans spent an  
average of $40,852 per capita on consumption of goods and services, including $6,351 per  
capita on housing and utilities and $7,685 per capita on health care. Consumption growth in the  
Great Lakes region was lowest in Ohio and Indiana (4.1%), and stronger in Michigan (4.4%),  
Illinois (4.5%), and Wisconsin (4.9%). As compared to other census-defined regions, PCE growth  
in the Great Lakes, at 4.4%, was quicker than in New England (4.2%) and on par with the Plains,  
but slower than in all other regions.  
Existing home sales in Ohio, as measured by units, were up 5.4% in September,  
2
4
compared with a year prior. The average sale price of a residence was $198,351 in September  
019, up 7.9% from $183,864 in September 2018. YTD in 2019, the total dollar volume of  
2
existing home sales was around $22.8 billion, an increase of 6.7% over the dollar volume in  
January through September 2018. Total unit sales YTD are essentially unchanged from last year,  
up just 0.1%.  
22 The Great Lakes region includes Ohio, Illinois, Indiana, Michigan, and Wisconsin.  
23 PCE measures expenditure on goods and services purchased by households, as well as  
spending by nonprofit institutions serving households.  
24 According to Ohio Realtors.  
Budget Footnotes  
P a g e | 29  
November 2019  
Legislative Budget Office of the Legislative Service Commission  
Business activity was stable on balance in the Cleveland Federal Reserve District in the  
most recent survey period, according to a recent Federal Reserve System publication, the Beige  
Book.25 The economic environment continued to boost demand for business services. Home  
mortgage originations and auto sales increased, spurred by lower interest rates. Employment  
was generally stable in the district, and wages grew modestly. Some manufacturers reported  
that demand continued to soften. In real estate, some nonresidential construction contractors  
noted strong demand for office and healthcare buildings, and the expectation was that demand  
would remain strong. Activity in professional and business services strengthened in response to  
an increase in demand for a variety of products, services, and consulting work.  
25 The Federal Reserve Bank of Cleveland’s district consists of all Ohio, western Pennsylvania,  
eastern Kentucky, and the northern panhandle of West Virginia. Comments summarized above are from  
the latest edition of the Beige Book, a publication that summarizes comments from business and  
industry contacts outside of the Federal Reserve System collected on or before October 7, 2019.  
Budget Footnotes  
P a g e | 30  
November 2019