A monthly newsletter of the Legislative Budget Office of LSC

Volume: Fiscal Year 2021

Issue: January 2021

Highlights

–

Ross Miller, Chief Economist

December GRF tax revenue was $64 million above the estimate published by

the Office of Budget and Management (OBM) in September 2020. Revenue from

the sales and use tax exceeded expectations in December by $50 million,

continuing the strength shown during the first five months of FY 2021. Revenue

from all GRF taxes, including the sales and use tax, exceeded estimate by

$

revenue exceeding GRF expenditures early in the fiscal year, noted (and explained)

458 million during the first half of the fiscal year. The unusual situation of GRF

in the December edition of Budget Footnotes, held true for the first half of FY 2021.

Ohio’s unemployment rate dropped to 5.7% in November, and was a full

percentage point lower than the national rate for that month. Total nonfarm

payroll employment grew by 29,400 from October to November.

Through December 2020, GRF sources totaled $19.48 billion:



Revenue from the sales and use tax was $356.5 million (6.3%) above estimate;

Personal income tax (PIT) receipts were $75.3 million (1.5%) above estimate.

Through December 2020, GRF uses totaled $18.96 billion:



Program expenditures were $698.9 million (3.6%) below estimate, including

GRF Medicaid expenditures that were $539.2 million (5.3%) below estimate;

Expenditures in the Primary and Secondary Education program category

were above estimate by $26.4 million (0.7%); expenditures in all other

program categories were below estimates.



In this issue...

More details on GRF Revenues (p. 2), Expenditures (p. 14),

the National Economy (p. 30), and the Ohio Economy (p. 33).

Also Issue Updates on:

Increase in E-school Enrollment (p. 22)

School Threat Assessment Training (p. 23)

Children Services Transformation Report (p. 24)

OhioRISE Applications (p. 25)

CARES Act Funding for Veterans Homes (p. 25)

Wastewater and Drinking Water Infrastructure Loans (p. 26)

Maritime Assistance Program (p. 27)

Historic Preservation Tax Credits (p. 28)

Chronic Wasting Disease in Ohio Deer (p. 29)

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 December 2020

($ in thousands)

(Actual based on report run in OAKS Actuals Ledger on January 4, 2021)

State Sources

Actual

Estimate*

Variance

Percent

Tax Revenue

Auto Sales

Nonauto Sales and Use

Total Sales and Use

$132,100

$920,327

$1,052,428 $1,002,800

$124,400

$878,400

$7,700

$41,927

$49,628

6.2%

4.8%

4.9%

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

$830,622

$16,676

$82,202

$19,392

-$140

$825,200

$10,300

$69,700

$20,800

-$1,100

$2,000

-$7,000

$5,000

$0

$3,400

$4,300

$2,500

$0

$5,422

$6,376

$12,502

-$1,408

$960

-$2,000 -100.0%

$2,021 28.9%

-$15,034 -300.7%

$212

$52

$158

-$1,316

$6,577

$44

0.7%

61.9%

17.9%

-6.8%

87.3%

$0

-$4,979

-$10,034

$212

$3,452

$4,458

$1,184

$6,577

$44

---

1.5%

3.7%

-52.6%

---

$0

---

$0

Total Tax Revenue

$2,002,094 $1,937,900

$64,194

3.3%

Nontax Revenue

Earnings on Investments

Licenses and Fees

Other Revenue

$0

$722

$85

$0

$488

$3,750

$0

$235

-$3,665

---

48.1%

-97.7%

-80.9%

Total Nontax Revenue

$808

$4,238

-$3,430

Transfers In

$5,194

$0

$5,194

$65,958

---

3.4%

Total State Sources

Federal Grants

$2,008,096 $1,942,138

$475,907 $811,519

$2,484,004 $2,753,657

-$335,612

-$269,653

-41.4%

-9.8%

Total GRF Sources

*

estimate, adjusted for the shift of income tax filings from April (FY 2020) to July (FY 2021)).

Estimates of the Office of Budget and Management as of September 2020 (H.B. 166

Detail may not sum to total due to rounding.

Budget Footnotes

P a g e | 2

January 2021

Legislative Budget Office of the Legislative Service Commission

Table 2: General Revenue Fund Sources

Actual vs. Estimate ($ in thousands)

FY 2021 as of December 31, 2020

($ in thousands)

(Actual based on report run in OAKS Actuals Ledger on January 4, 2021)

State Sources

Tax Revenue

Auto Sales

Nonauto Sales and Use

Total Sales and Use

Actual

Estimate*

Variance Percent FY 2020**

Percent

$886,939

$5,095,963

$5,982,902

$781,500 $105,439

$4,844,900 $251,063

$5,626,400 $356,502

13.5%

$800,865

10.7%

6.4%

7.0%

5.2% $4,790,415

6.3% $5,591,280

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

$5,070,702

$775,275

$430,119

$152,531

$176,497

$824

-$19,947

$50,779

$19,217

$31,320

$28,771

$2,062

$4,995,400

$790,300

$391,600

$166,500

$160,700

$2,000

-$30,500

$67,700

$22,700

$27,700

$25,300

$4,400

$0

$75,302

-$15,025

$38,519

-$13,969

$15,797

-$1,176 -58.8%

$10,553 34.6%

-$16,921 -25.0%

-$3,483 -15.3%

$3,620

$3,471

-$2,338 -53.1%

$6,825

$59

$12

1.5% $4,431,242

14.4%

-4.1%

6.9%

-7.8%

2.6%

-78.5%

48.8%

-21.2%

5.0%

14.3%

10.4%

-49.0%

-1.9%

9.8%

-8.4%

9.8%

$808,022

$402,501

$165,435

$171,964

$3,826

-$38,958

$64,445

$18,293

$27,413

$26,053

$4,041

13.1%

13.7%

$6,825

$59

$12

$12,707,948 $12,250,200 $457,748

---

$52 13010.4%

$0

$38

$0

---

-67.1%

8.8%

Total Tax Revenue

3.7% $11,675,646

Nontax Revenue

Earnings on Investments

Licenses and Fees

Other Revenue

$17,577

$15,538

$82,952

$116,068

$13,750

$9,447

$79,101

$3,827

$6,091

$3,851

$13,769

27.8%

64.5%

4.9%

$41,498

$11,304

$77,395

$130,197

-57.6%

37.4%

7.2%

Total Nontax Revenue

$102,298

13.5%

-10.9%

Transfers In

$85,026

$77,932

$7,094

9.1%

$75,548

12.5%

8.6%

Total State Sources

Federal Grants

$12,909,042 $12,430,430 $478,612

$6,572,187 $7,208,262 -$636,075

$19,481,229 $19,638,692 -$157,463

3.9% $11,881,391

-8.8% $5,388,345

-0.8% $17,269,737

22.0%

12.8%

Total GRF SOURCES

*

Estimates of the Office of Budget and Management as of September 2020 (H.B. 166 estimate, adjusted for the

shift of income tax filings from April (FY 2020) to July (FY 2021)).

*Cumulative totals through the same month in FY 2020.

*

Detail may not sum to total due to rounding.

Budget Footnotes

P a g e | 3

January 2021

Legislative Budget Office of the Legislative Service Commission

1

Revenues

–

Jean J. Botomogno, Principal Economist

Overview

FY 2021 GRF sources through December of $19.48 billion were $157.5 million (0.8%)

short of the estimate released by OBM in September 2020. GRF sources consist of state-source

receipts, which include tax revenue, nontax revenue, and transfers in, and federal grants. In the

first six months of FY 2021, federal grants posted a negative variance of $636.1 million (8.8%).

Revenue for this GRF category is related to spending for Medicaid and other human services

programs; GRF Medicaid expenditures were $539.2 million below estimate through December.

The shortfall of federal grants was partially offset by positive variances of $457.7 million (3.7%)

for GRF tax sources, $13.8 million (13.5%) for nontax revenue, and $7.1 million (9.1%) for

transfers in. Tables 1 and 2 show GRF sources for the month of December and for FY 2021

through December, respectively.

Halfway through FY 2021, the sales and use tax, the PIT, and the cigarette tax were

356.5 million, $75.3 million, and $38.5 million above their respective estimates. However, the

$

commercial activity tax (CAT) had a year-to-date (YTD) shortfall of $15.0 million, primarily due

to poor tax payments in August tied to COVID-19-related measures in the spring quarter.²

Regarding the other taxes, the foreign insurance tax, the financial institutions tax (FIT), the

alcoholic beverage tax, and the liquor gallonage tax were above their respective YTD revenue

targets by $15.8 million, $10.6 million, $3.6 million, and $3.5 million. Unexpectedly, the

corporate franchise tax (CFT) had a YTD positive variance of $6.8 million, with $6.6 million of

that total coming in December. Though GRF receipts are no longer anticipated because H.B. 510

th

of the 129 General Assembly eliminated the CFT at the end of 2013, adjustments to tax filings

in previous years continue to affect this tax source. The positive variances were partly offset by

deficits from the public utility tax, the kilowatt-hour tax, the natural gas consumption tax, and

the petroleum activity tax (PAT). These taxes experienced negative variances of $16.9 million,

$

14.0 million, $3.5 million, and $2.3 million, respectively.

December GRF sources were below expectations by $269.7 million (9.8%) due to a

substantial shortfall of $335.6 million (41.4%) for federal grants and a negative variance of

3.4 million (80.9%) for nontax revenue. On the other hand, GRF taxes had another good

month and exceeded the estimate by $64.2 million (3.3%); and, revenue from transfers in was

5.2 million when none was expected during the month. For the month, the sales and use tax,

$

the cigarette tax, and the PIT were above their anticipated revenue levels by $49.6 million,

¹This report compares actual monthly and year-to-date (YTD) 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

To slow the pandemic outbreak, the Governor issued an emergency declaration on

March 9, 2020, and various public health orders followed, including a stay-at-home requirement and some

business closures. Those measures reduced economic activity and taxable gross receipts in the spring

quarter, which was the basis for the tax paid by quarterly CAT taxpayers in August 2020.

Budget Footnotes

P a g e | 4

January 2021

Legislative Budget Office of the Legislative Service Commission

$

12.5 million, and $5.4 million, respectively. The CAT and the FIT also had positive variances of

6.4 million and $2.0 million, respectively. Negative variances were recorded by the public

utility tax ($15.0 million), the domestic insurance tax ($2.0 million), the kilowatt-hour tax

$1.4 million), and the PAT ($1.3 million). Chart 1, below, shows cumulative YTD variances of

GRF sources in the first half of FY 2021.

(

Chart 1: Cumulative Variances of GRF Sources in FY 2021

(Variances from Estimates, $ in millions)

$

600

400

200

$0

-

$200

$400

$600

$800

Jul-20

Aug-20

Sep-20

Oct-20

Nov-20

Dec-20

Federal Grants

Tax Revenue

Total GRF Sources

First-half GRF sources rose $2.21 billion (12.8%) compared to sources in the

corresponding period in FY 2020. The growth was due to large increases in federal grants

$1.18 billion, 22.0%) and tax sources ($1.03 billion, 8.8%). The growth for federal grants was

(

due in part to a COVID-19-related temporary rise in the share of federal reimbursements for

Medicaid. This increase, which was authorized by the Coronavirus Aid, Relief, and Economic

Security (CARES) Act, accounted for $564.4 million of the $1.18 billion growth in federal grants.

Transfers in also rose by $9.5 million (12.5%), but nontax revenue fell by $14.1 million (10.9%).

The growth in GRF tax sources was led by an increase of $639.5 million in PIT revenue and

$

391.6 million for the sales and use tax. The increase in PIT revenue was primarily due to a delay

in the tax filing deadline from April until July, as explained in more detail in the PIT section

below, while sales and use tax revenue has been supported by federal income support

programs, as explained further in the section on that tax. Growth for the sales and use tax and

the PIT totaled $1.03 billion. Thus, combined receipts for the remaining taxes were virtually

unchanged from total revenue from those taxes in FY 2020. Revenue from the cigarette tax, the

FIT, the CFT, the foreign insurance tax, the alcoholic beverage tax, and the liquor gallonage tax

increased by $27.6 million, $19.0 million, $6.8 million, $4.5 million, $3.9 million, and $2.7 million,

respectively. On the other hand, revenue declined for the CAT ($32.7 million), the public utility

tax ($13.7 million), the kilowatt-hour tax ($12.9 million), the domestic insurance tax

($3.0 million), and the PAT ($2.0 million).

Budget Footnotes

P a g e | 5

January 2021

Legislative Budget Office of the Legislative Service Commission

Sales and Use Tax

The sales and use tax has been stronger than expected YTD in FY 2021, with both

portions of the tax (i.e., auto and nonauto) exceeding their respective estimates by large

margins. Through December, FY 2021 revenue totaled $5.98 billion. This amount was

$

sales and use tax revenue of $1.05 billion was $49.6 million (4.9%) above estimate, with both

portions of the tax above their respective projections. Compared to receipts last year in the

same month, December 2020 sales and use tax revenue was higher by $94.1 million (9.8%).

356.5 million (6.3%) above OBM projections. First-half GRF receipts from this tax were also

391.6 million (7.0%) above receipts in the corresponding period in FY 2020. December GRF

Various federal income support programs since the spring of 2020 have buttressed

FY 2021 sales and use tax revenue by offsetting the economic drag from the COVID-19

3

pandemic. Following a temporary drop in the spring, Ohio retail spending (including online

purchases, excluding groceries) was estimated to have increased by 12.4% compared to its

January level. Consumer spending on goods, which is mostly taxable under Ohio sales tax law,

has been strong, though spending on services (a majority of which is untaxed) has substantially

lagged. The positive effect of the recovery in Ohio is also likely due to increased employment

levels among high-wage earners, though employment rates among workers in the bottom wage

4

quartile has yet to recover to the levels of January and February 2020. A new federal income

support program was signed into law at the end of December. This new program provides $600

to most adults and children and is to be distributed in the coming weeks. Though this program

is smaller than federal personal transfer payment programs enacted earlier in 2020, it may

provide another boost to consumer spending and sales and use tax in the next few months.

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

YTD FY 2021 GRF nonauto sales and use tax receipts totaled $5.10 billion, an amount

$

251.1 million (5.2%) above estimate and $305.5 million (6.4%) above revenue in FY 2020

through December. December receipts of $920.3 million were $41.9 million (4.8%) above

estimate. The monthly tally was also $81.3 million (9.7%) above revenue in December 2019.

Generally, a large part of a month’s nonauto sales and use tax revenue is from tax collection or

³To address the economic fallout from COVID-19, the U.S. Congress passed the CARES Act at the

end of March 2020. The Act included cash payments of up to $1,200 (plus $500 for each child age 16 or

under) for each qualifying adult, an additional $600 per week on top of any state-provided

unemployment benefits through July 31, 13 weeks of unemployment benefits above that of each state’s

unemployment program, and unemployment benefits for self-employed and “gig” workers. The payroll

protection program is a loan program intended to subsidize payroll costs for eight weeks after those

loans, some of which are forgivable, are made. In the months following passage of the CARES Act, other

federal support programs have been enacted or modified.

⁴For these purposes, high-wage earners are defined as those earning in excess of $60,000 per year.

Low-wage earners are those earning below $27,000 per year. Employment rates as of October 15, 2020;

spending data as of December 6, 2020. Data available at: https://tracktherecovery.org/.

Budget Footnotes

P a g e | 6

January 2021

Legislative Budget Office of the Legislative Service Commission

tax remittance on taxable sales in the previous month. The future performance of this tax

source is likely to be dependent on improvement in the Ohio economy and labor markets and

potential statewide restrictions on economic activity due to high levels of COVID-19 infections.

Chart 2, below, provides year-over-year growth in nonauto sales and use tax collections

in 2020. After strong growth at the start of the fiscal year and a sharp drop-off during the

spring, the chart shows strong growth has returned in the most recent three months.

Chart 2: Nonauto Sales and Use Tax Receipts Trend

Actual vs. Prior Year

(

Three-month Moving Average)

1

0.0%

5

0

.0%

-

5.0%

-

10.0%

15.0%

Auto Sales and Use Tax

The performance of the auto sales and use tax has been exceptionally strong this fiscal

year. In the first six months of FY 2021, GRF auto sales and use tax receipts totaled

$

886.9 million, an amount $105.4 million (13.5%) above estimate and $86.1 million (10.7%)

above revenue in the first half of FY 2020. Growth of more than 10% from the prior year in the

absence of any significant tax policy change is unusual. In December, auto sales and use tax

revenue was $132.1 million, $7.7 million (6.2%) above estimate and $12.7 million (10.7%)

above such receipts in December 2019. Chart 3, below, shows year-over-year growth in auto

sales and use tax collections, the pandemic-related revenue declines earlier in the calendar year

from both low demand and low supply of vehicles, and the subsequent rebound starting in late

spring. Recently, revenue growth for this tax source has essentially returned to growth rates at

the start of the calendar year before the pandemic. As with the nonauto portion, the future

performance of this tax source is likely to be dependent on improvement in the Ohio economy

and labor markets.

Cheap credit and high demand for SUVs and pickup trucks have sustained the Ohio auto

sales and use tax. The pandemic may have led persons avoiding public transportation (either for

work or leisure) to purchase motor vehicles; and, the increased demand raised vehicle prices.

Budget Footnotes

P a g e | 7

January 2021

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)

3

2

1

0.0%

0

.0%

-

10.0%

20.0%

30.0%

40.0%

The increase in the Ohio auto tax base in the first half of FY 2021 relative to the

corresponding period in FY 2020 was due to a 6.5% increase in the number of motor vehicles

5

titled, according to data provided by the Ohio Bureau of Motor Vehicles (BMV) shown below.

Unit purchases of both new and used motor vehicles increased; and, the taxable base for both

new and used motor vehicles also rose.

Motor Vehicles Titled in Ohio

Spending

YTD FY 2021

Titles

Average Price

(

$ in millions)

New vehicles

Used vehicles

213,852

$7,992

$36,361

$9,539

928,468

$9,336

Total

1,142,320

$17,328

$14,247

Growth from FY 2020

New vehicles

Used vehicles

8.8%

6.0%

$849.2

$874.8

2.8%

4.1%

4.3%

Total

6.5%

$1,724.0

⁵Titled motor vehicles include passenger vehicles, trucks, motorcycles, and other motor vehicles.

Budget Footnotes

P a g e | 8

January 2021

Legislative Budget Office of the Legislative Service Commission

Also, data provided by the BMV show that new passenger vehicles sales were flat, while

new truck demand jumped about 10%, and their average prices increased 3% and 7%,

respectively. In the previously owned vehicle market, the demand for trucks was higher (8%)

than that of passenger vehicles (2%) and average prices grew 5% and 4%, respectively.

The U.S. auto industry reported its lowest yearly sales tally in nearly a decade, as the

fallout from the COVID-19 pandemic flipped over a record run for vehicle sales, though a sharp

bounce back in demand in the year’s second half led shoppers to pay record sums for new

transportation. U.S. auto and light trucks sales totaled 14.5 million units in 2020, roughly 15%

below sales in 2019, and the decline snapped a five-year stretch in which sales topped

1

7 million vehicles annually.

Personal Income Tax

YTD FY 2021 GRF receipts from the PIT of $5.07 billion were $75.3 million (1.5%) above

estimate and $639.5 million (14.4%) above such revenue in FY 2020 through December. Though

this tax source is above estimate for the fiscal year to date, the PIT underperformed in the

second quarter, being $8.9 million (0.4%) below estimate in the period, a shortfall driven mostly

by higher than estimated refunds. In the first fiscal quarter, GRF receipts were $84.2 million

(3.0%) above anticipated revenue.

The large year-over-year PIT revenue growth (which is expected to decrease over time)

is directly attributable to the delay of income tax filings from April to July 2020. Excluding July

receipts, combined PIT GRF revenue was $89.4 million (2.4%) above receipts in the August to

December period in FY 2020. Among measures designed to combat the impact of the COVID-19

rd

pandemic, H.B. 197 of the 133 General Assembly authorized the Tax Commissioner to delay

various state tax payments, which he did for this tax, to match the extended deadline for

federal income tax returns. Thus, in July 2020, payments associated with annual returns of

6

$

501.9 million were $492.5 million above such payments in July 2019; PIT GRF revenue for the

month was $550.1 million (87.3%) above receipts in July 2019.

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

7

withholdings, quarterly 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 87% of gross

collections in FY 2020). Larger or smaller than expected refunds (which decrease gross

collections) could also greatly affect the monthly performance of the tax.

December PIT revenue to the GRF of $830.6 million was $5.4 million (0.7%) above

anticipated revenue. Gross collections were $30.4 million (3.3%) above target, with all

components above estimates. Employer withholding and quarterly estimated payments had

positive variances of $17.4 million and $11.1 million, respectively. Taxes due with annual

returns, miscellaneous payments, and trust payments were above their respective estimates by

⁶In April 2020, this component was $697.8 million below anticipated revenue.

⁷Quarterly estimated payments are made by taxpayers who expect to be underwithheld by

more than $500. Payments are due in April, June, and September of an individual’s tax year and January

of the following year. Most estimated payments are made by high-income taxpayers.

Budget Footnotes

P a g e | 9

January 2021

Legislative Budget Office of the Legislative Service Commission

$

0.8 million, $0.7 million, and $0.3 million. Refunds were $24.8 million (50.8%) higher than

anticipated, and LGF distributions were $0.2 million (0.6%) above expectations.

For FY 2021 through December, revenues from each component of the PIT relative to

estimates and revenue received in FY 2020 are detailed in the table below. FY 2021 gross

collections were $71.9 million above anticipated revenue. Quarterly estimated payments,

employer withholding, and trust payments were above their projections by $54.8 million,

$

14.8 million, and $14.4 million, respectively. Those positive variances were partially offset by

shortfalls of $9.4 million for payments due with annual returns and $2.6 million for

miscellaneous payments. Refunds were $17.5 million below estimate, but LGF distributions

were above expectation by $14.1 million, thus resulting in the YTD positive variance of

$

75.3 million for the GRF.

Compared to the first half of FY 2020, gross collections have been higher in FY 2021 due

to the income tax filing delay. They grew $824.2 million, driven by an increase of $594.1 million

from payments due with annual returns. In addition, quarterly estimated payments, employer

withholding, and trust payments increased by $150.3 million, $38.8 million, and $43.6 million,

respectively. On the other hand, miscellaneous payments were $2.6 million lower than in

FY 2020. Year-over-year growth in withholding receipts in calendar year (CY) 2020 has been

limited because of a 4.0% reduction in withholding rates effective January 2020 due to the

reduction of income tax rates for nonbusiness income enacted in H.B. 166. FY 2021 refunds and

LGF distributions were higher than those in FY 2020 by $168.6 million and $16.1 million,

respectively. Therefore, growth in PIT GRF revenue totaled $639.5 million relative to YTD

receipts in FY 2020.

FY 2021 PIT Revenue Variance and Annual Change by Component

YTD Variance from Estimate

Changes from FY 2020

Category

Amount

$ in millions)

Percent

(%)

Amount

($ in millions)

Percent

(%)

(

Withholding

$14.8

0.3%

$38.8

$150.3

$43.6

0.8%

Quarterly Estimated Payments

Trust Payments

$54.8

$14.4

-$9.4

13.1%

28.4%

-1.3%

-7.2%

1.2%

46.5%

201.8%

452.5%

-7.2%

Annual Return Payments

Miscellaneous Payments

Gross Collections

$594.1

-$2.6

$71.9

-$17.5

$14.1

$75.3

$824.2

$168.6

$16.1

16.2%

38.6%

7.5%

Less Refunds

-2.8%

6.5%

Less LGF Distribution

GRF PIT Revenue

1.5%

$639.5

14.4%

Budget Footnotes

P a g e | 10

January 2021

Legislative Budget Office of the Legislative Service Commission

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 2021 and estimated withholding receipts adjusted for the decrease in

the withholding tax rate. Payrolls are estimated to have increased about 4.6%, on average, in

the last three months.

Chart 4: Monthly Witholding Receipts Trend

Actual vs. Prior Year

(

Three-month Moving Average)

8

6

4

2

0

.0%

-

2.0%

4.0%

6.0%

8.0%

-

10.0%

12.0%

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20

Actual Adjusted

Commercial Activity Tax

CAT GRF revenue of $16.7 million in December was $6.4 million (61.9%) above estimate

and $7.7 million (85.1%) above December 2019 revenue, resulting in a better fiscal quarter than

the first of the fiscal year. First-half GRF receipts from CAT taxpayers totaling $775.3 million

were $15.0 million (1.9%) below estimate and $32.7 million below GRF revenue in the first six

months of FY 2020. The CAT had recorded a first-quarter GRF shortfall of $23.5 million; however,

in the second fiscal quarter, the CAT posted a positive GRF variance of $8.5 million (2.0%).

Quarterly revenue was also $23.9 million (5.9%) above revenue in the corresponding quarter in

FY 2020. Thus, the impact on CAT receipts of the COVID-19 pandemic may have been confined to

the first quarter of FY 2021. YTD FY 2021 gross collections totaled $1.00 billion, a decrease of

$

credits were $83.2 million, an increase of $16.7 million (25.1%) above those items in FY 2020.

22.1 million (2.1%) relative to gross collections in FY 2020 through December. Refunds and

Under continuing law, CAT receipts are deposited into the GRF (85.0%), the School

District Tangible Property Tax Replacement Fund (Fund 7047, 13.0%), and the Local

Government Tangible Property Tax Replacement Fund (Fund 7081, 2.0%). Distributions to

Fund 7047 and Fund 7081 were $118.6 million and $18.2 million, respectively. The distributions

to Fund 7047 and Fund 7081 are used to make reimbursement payments to school districts and

other local taxing units, respectively, for the phase out of property taxes on general business

tangible personal property. Any receipts in excess of amounts needed for such payments are

generally transferred back to the GRF.

Budget Footnotes

P a g e | 11

January 2021

Legislative Budget Office of the Legislative Service Commission

Cigarette and Other Tobacco Products Tax

First-half revenue in FY 2021 from the cigarette and other tobacco products (OTP) tax

totaling $430.1 million was above estimate by $38.5 million (9.8%). This total included

$

this tax source in the latest month was outstanding. December receipts of $82.2 million were

379.6 million from the sale of cigarettes and $50.5 million from the sale of OTP. Revenue from

$

2

12.5 million (17.9%) above estimate and $9.0 million (12.2%) above revenue in December

019. Monthly growth relative to last year was almost entirely due to increased cigarette sales.

Through December, FY 2021 receipts grew $27.6 million (6.9%) relative to revenues in

the corresponding period in FY 2020. Receipts from cigarette sales and OTP sales increased by

17.0 million (4.7%) and $10.6 million (26.6%), respectively. The increase in OTP revenue is due,

$

in part, to additional revenue from the vapor tax. H.B. 166 levied a tax of 10¢ per milliliter (or

gram) of vapor product (depending on the form of the product) which is defined as any liquid

solution or other substance that contains nicotine and is depleted as it is used in an electronic

8

smoking product. The OTP tax is an ad valorem tax, generally 17% of the wholesale price paid

by wholesalers for the product; thus, revenue from that portion of the tax base (about 9% of

the total tax base in FY 2020) grows with OTP price increases.

On a yearly basis, revenue from the cigarette tax usually trends downward, generally at

a slow pace. However, that historical trend has been suspended since March 2020 by the

impact on smokers of the COVID-19 pandemic. Smokers are spending less on travel and

entertainment during the pandemic and thus have more disposable income for cigarettes.

Fewer social interactions and more time at home allow for more tobacco use occasions. Also,

some smokers may have switched back to traditional cigarettes due to recent federal

restrictions on e-cigarette flavors.

Other Taxes

Utility-related taxes – kilowatt-hour, public utility, and natural gas consumption – were

below their respective estimates in the first half of FY 2021, in part due to decreased energy

consumption related to closures induced by the COVID-19 pandemic.

The kilowatt-hour tax generated $152.5 million for the GRF during the first six months of

the fiscal year. This amount was $14.0 million (8.4%) below estimate and $12.9 million (7.8%)

below revenue during the comparable months of FY 2020. The performance of the tax is due in

part to milder weather than expected and lower than anticipated electricity consumption. The

tax base generally is kilowatt-hours of electricity used, i.e., it generally does not depend on the

price of electricity. Half of the allocation of GRF tax revenue to the Public Library Fund is

debited against this tax for accounting purposes, thus bad GRF tax revenue performance overall

can make the performance of this tax look relatively worse.

YTD through December, receipts from the public utility tax were $50.8 million,

$

16.9 million (25.0%) below estimate and $13.7 million (21.2%) lower than during July to

December 2019. Most receipts from this tax are in the second month of each calendar quarter,

with the largest receipts usually in May. Deliveries by natural gas utilities account for a large

⁸Of total receipts in FY 2020 of $82.4 million from the sale of OTP, the tax on vapor products

contributed $3.6 million, or about 4%, according to the Ohio Department of Taxation.

Budget Footnotes

P a g e | 12

January 2021

Legislative Budget Office of the Legislative Service Commission

part of the total. The drop in revenues from the public utility tax appears to be accounted for by

9

lower prices paid for natural gas by all types of consumers. Quantities of natural gas consumed

in the Ohio market were down overall, though consumption by electric power producers

somewhat grew.

Receipts from the natural gas consumption tax were $19.2 million in the first half of this

fiscal year, $3.5 million (15.3%) below estimate but $0.9 million (5.0%) higher than in the

year-earlier period. Payments in May account for nearly half of annual receipts from this tax in

most years.

The foreign insurance tax generated $176.5 million during the first half of FY 2021, an

amount $15.8 million (9.8%) above estimate, and $4.5 million (2.6%) above receipts in the

corresponding period in FY 2020. The reason for the jump in collections from this tax source is

unclear at this time. This tax is paid by insurance companies headquartered in other states

based on premiums they receive to provide insurance covering risks located in Ohio. But, the

revenue experience in the first six months generally reveals little about the full fiscal year

experience from the tax as payments received so far represent advance payments based on

previous-year tax liabilities before credits.

Only $0.8 million has been received so far in FY 2021 from the domestic insurance tax

(paid by insurance companies headquartered in Ohio). That amount was $1.2 million (58.8%)

below estimate and $3.0 million (78.5%) below revenue in the first six months of FY 2020.

However, similarly to the foreign insurance tax, the first-half performance says little about the

full-year experience: virtually all revenue from the tax is received in May and June each fiscal

year.

Nontax Revenue

YTD GRF nontax revenue totaling $116.1 million was $13.8 million (13.5%) above

estimate but $14.1 million (10.9%) below such revenue in the first six months of FY 2020. The

year-over-year decline in revenue was entirely due to earnings on investments. FY 2021

earnings on investments were 57.6% below earnings recorded in the corresponding period last

year, primarily due to lower federal funds rates implemented by the Federal Reserve in the last

year and a half.

⁹The following are the four types of consumers: residential, commercial, industrial, and electric

power generation.

Budget Footnotes

P a g e | 13

January 2021

Legislative Budget Office of the Legislative Service Commission

Table 3: General Revenue Fund Uses

Actual vs. Estimate

Month of December 2020

($ in thousands)

(Actual based on OAKS reports run January 7, 2021)

Program Category

Actual

Estimate*

Variance Percent

Primary and Secondary Education

Higher Education

$572,738

$187,996

$2,859

$567,173

$184,793

$3,919

$5,565

$3,203

1.0%

1.7%

Other Education

-$1,060 -27.0%

$7,708 1.0%

Total Education

$763,593

$755,885

Medicaid

$973,624 $1,100,981 -$127,356 -11.6%

Health and Human Services

Total Health and Human Services

$136,400

$123,370

$13,030

10.6%

$1,110,024 $1,224,351 -$114,326

-9.3%

Justice and Public Protection

General Government

$158,089

$27,404

$165,873

$44,480

-$7,784

-4.7%

-$17,076 -38.4%

Total Government Operations

$185,493

$210,353

-$24,860 -11.8%

Property Tax Reimbursements

Debt Service

$2,132

$21,991

$24,123

$14,977

$22,190

$37,167

-$12,845 -85.8%

-$199

-0.9%

Total Other Expenditures

-$13,044 -35.1%

Total Program Expenditures

Transfers Out

$2,083,234 $2,227,756 -$144,522

$23,750 $0 $23,750

$2,106,984 $2,227,756 -$120,772

-6.5%

---

Total GRF Uses

-5.4%

*September 2020 estimates of the Office of Budget and Management.

Detail may not sum to total due to rounding.

Budget Footnotes

P a g e | 14

January 2021

Legislative Budget Office of the Legislative Service Commission

Table 4: General Revenue Fund Uses

Actual vs. Estimate

FY 2021 as of December 31, 2020

($ in thousands)

(Actual based on OAKS reports run January 7, 2021)

Program Category

Actual

Estimate*

Variance Percent FY 2020** Percent

Primary and Secondary Education

Higher Education

$4,016,490 $3,990,059

$1,142,773 $1,151,121

$26,430

-$8,348

-$2,020

$16,062

0.7% $4,175,558

-0.7% $1,132,287

-3.8%

0.9%

Other Education

$41,339

$43,359

-4.7%

$50,769 -18.6%

Total Education

$5,200,602 $5,184,539

0.3% $5,358,614

-2.9%

Medicaid

$9,657,424 $10,196,641 -$539,218

$731,732 $780,618 -$48,886

-5.3% $8,424,866

14.6%

-1.5%

13.3%

Health and Human Services

Total Health and Human Services

-6.3%

$742,522

$10,389,156 $10,977,260 -$588,104

-5.4% $9,167,388

Justice and Public Protection

General Government

$1,283,029 $1,343,379 -$60,350

-4.5% $1,264,437

1.5%

-1.8%

1.0%

$217,714

$252,728 -$35,014 -13.9% $221,776

Total Government Operations

$1,500,743 $1,596,107 -$95,364

-6.0% $1,486,213

Property Tax Reimbursements

Debt Service

$904,349

$525,964

$933,578 -$29,229

$528,271 -$2,307

-3.1%

-0.4%

$905,289

-0.1%

$903,325 -41.8%

Total Other Expenditures

$1,430,312 $1,461,849 -$31,536

-2.2% $1,808,614 -20.9%

-3.6% $17,820,829 3.9%

-2.4% $662,799 -34.3%

-3.6% $18,483,627 2.6%

Total Program Expenditures

Transfers Out

$18,520,813 $19,219,755 -$698,941

$435,225

$445,900 -$10,675

Total GRF Uses

$18,956,038 $19,665,655 -$709,617

*

September 2020 estimates of the Office of Budget and Management.

*Cumulative totals through the same month in FY 2020.

Detail may not sum to total due to rounding.

Budget Footnotes

P a g e | 15

January 2021

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 January 8, 2021)

Month of December 2020

Estimate* Variance Percent

Year to Date through December 2020

Department

Medicaid

GRF

Actual

Estimate*

Variance Percent

$921,002 $1,051,607 -$130,605 -12.4% $9,312,876

$1,414,524 $1,454,366 -$39,842 -2.7% $4,867,771

$2,335,526 $2,505,974 -$170,448

$9,846,807 -$533,932

$4,968,717 -$100,945

-5.4%

-2.0%

-4.3%

Non-GRF

All Funds

-6.8% $14,180,647 $14,815,524 -$634,877

Developmental

Disabilities

GRF

$43,255

$42,430

$207,049

$249,479

$825

1.9%

$292,212

$292,629

$1,253,777

$1,546,406

-$416

$60,979

$60,563

-0.1%

4.9%

3.9%

Non-GRF

All Funds

$178,303

-$28,746 -13.9% $1,314,757

-$27,921 -11.2% $1,606,969

$

221,557

Job and Family Services

GRF

$8,563

$14,387

22,950

$6,012

$12,361

$18,373

$2,552

$2,026

$4,577

42.4%

16.4%

24.9%

$46,326

$88,477

$50,995

$94,914

-$4,670

-$6,437

-9.2%

-6.8%

-7.6%

Non-GRF

$

$134,803

$145,910

-$11,107

All Funds

Health, Mental Health and Addiction, Aging, Pharmacy Board, and Education

GRF

$805

$932

$2,478

$3,410

-$127 -13.6%

$6,010

$17,275

$23,285

$6,210

$20,872

$27,082

-$200

-3.2%

Non-GRF

$4,540

$2,062

$1,935

83.2%

56.7%

-$3,597 -17.2%

-$3,797 -14.0%

$

5,345

All Funds

All Departments:

GRF

$973,624 $1,100,981 -$127,356 -11.6% $9,657,424 $10,196,641 -$539,218

-5.3%

-0.8%

-3.6%

Non-GRF

All Funds

$1,611,754 $1,676,254

-$64,501

-3.8% $6,288,280 $6,338,280 -$50,001

-6.9% $15,945,703 $16,534,922 -$589,218

$2,585,378 $2,777,235 -$191,857

*September 2020 estimates from the Office of Budget and Management and Department of Medicaid.

Detail may not sum to total due to rounding.

Budget Footnotes

P a g e | 16

January 2021

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 January 8, 2021)

Month of December 2020

Year-to-Date through December 2020

Payment Category

Actual

Estimate* Variance Percent

Actual

Estimate*

Variance Percent

Managed Care

CFC†

$1,869,909 $1,849,807

$20,102

-$21,601

-$75,299

-$9,928

1.1% $10,682,701 $10,914,994 -$232,293

-2.1%

-2.7%

-6.0%

-2.0%

-2.3%

-2.4%

37.5%

$632,526

$529,559

$248,694

$80,532

$654,127

$604,858

$258,622

$83,704

-3.3%

-12.4%

-3.8%

-4.3%

---

$3,663,166 $3,764,603 -$101,437

$3,079,174 $3,275,135 -$195,960

Group VIII

ABD†

$1,505,338 $1,535,479

$482,979 $494,512

$1,432,459 $1,467,293

$519,585

-$30,141

-$11,533

-$34,834

ABD Kids

My Care

-$3,173

$237,830

$140,769

$248,497

-$10,667

P4P & Ins Fee†

$0 $140,769

$377,973 $141,612

Fee-For-Service

ODM Services

DDD Services

Hospital -

HCAP&Other†

$534,001

$316,172

$217,829

$751,256 -$217,255

-28.9% $4,261,868 $4,571,421 -$309,553

-6.8%

-8.9%

4.3%

$367,106

$235,800

-$50,934

-$17,971

-13.9%

-7.6%

$2,078,560 $2,281,923 -$203,363

$1,560,675 $1,496,681 $63,993

$

0

$148,350 -$148,350 -100.0%

$622,633

$792,816 -$170,184 -21.5%

Premium Assistance

Medicare Buy-In

Medicare Part D

$104,940

$70,293

$34,647

$95,975

$61,372

$34,602

$8,965

$8,920

$45

9.3%

14.5%

0.1%

$543,986

$369,771

$174,215

$530,121

$355,536

$174,585

$13,865

$14,236

-$370

2.6%

4.0%

-0.2%

Administration

Total

$76,528

$80,197

-$3,669

-4.6%

$457,149

$518,385

-$61,237 -11.8%

$2,585,378 $2,777,235 -$191,857

-6.9% $15,945,703 $16,534,922 -$589,218 -3.6%

*September 2020 estimates from the Office of Budget and Management and Department of Medicaid.

†

P4P & Ins Fee - Pay For Performance, and Health insurance provider 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 | 17

January 2021

Legislative Budget Office of the Legislative Service Commission

E_M_ex_l_a_np_e_y_Ce_a_rn_t_e_r_,d_D_i_ri_e_ct_t_o_rures¹⁰

–

Ivy Chen, Principal Economist

Overview

For the first half of FY 2021, GRF program expenditures totaled $18.52 billion. These

expenditures were $698.9 million (3.6%) below the estimate released by OBM in early

September 2020. All program categories, except for Primary and Secondary Education, had

negative YTD variances at the end of December. The program category with the largest

negative variance was Medicaid, which had a negative YTD GRF variance of $539.2 million

(

$

5.3%). Medicaid also had the largest negative variance for the month of December at

127.4 million (11.6%). It should be noted that Medicaid variances are measured against

estimates that are approximately $3 billion higher for all-funds Medicaid expenditures for the

fiscal year than the estimates established when H.B. 166 was enacted. Justice and Public

Protection had the second largest negative YTD variance at $60.4 million (4.5%). Health and

Human Services was next with a negative YTD variance of $48.9 million (6.3%). The only positive

YTD variance was $26.4 million (0.7%) for the Primary and Secondary Education category. YTD

variances are shown in the preceding Table 4, while Table 3 shows December variances.

In addition to program expenditures, total uses include transfers out. Transfers out

totaled $435.2 million YTD and had a negative YTD variance of $10.7 million (2.4%) at the end of

December. This negative variance fell by $23.8 million in December due to a transfer for that

amount to the Targeted Addiction Program Fund (Fund 5TZ0) occurring in December instead of

August as expected.

Combining program expenditures and transfers out, total GRF uses for the first half of

FY 2021 were $18.96 billion. These uses were $709.6 million (3.6%) below estimate. The rest of

this section discusses both GRF and non-GRF variances in Medicaid and the GRF variances in

Justice and Public Protection, Health and Human Services, and Primary and Secondary

Education.

Medicaid

GRF Medicaid expenditures were below their monthly estimate in December by

$

127.4 million (11.6%) and below their YTD estimate, by $539.2 million (5.3%), at the end of

December. Non-GRF Medicaid expenditures were below their monthly estimate, by

64.5 million (3.8%), and also below their YTD estimate, by $50.0 million (0.8%). Including both

$

the GRF and non-GRF, all funds Medicaid expenditures were $191.9 million (6.9%) below

estimate in December and $589.2 million (3.6%) below their YTD estimate at the end of

December. The Medicaid expenditure and caseload estimates used in this report were updated

by the Ohio Department of Medicaid (ODM) for FY 2021. These updates were precipitated by

the COVID-19 pandemic and are thus different from the expenditure and caseload estimates

¹⁰This 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 | 18

January 2021

Legislative Budget Office of the Legislative Service Commission

outlined in H.B. 166. The updated expenditure estimates include approximately $3 billion in

increases for the fiscal year, related to many impacts of the COVID-19 pandemic.

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 generally also account for the majority of the variances in Medicaid

expenditures. ODM had an all funds negative variance in December of $170.4 million (6.8%),

and YTD expenditures also were below estimate, with a negative variance of $634.9 million

(

4.3%). Part of the negative December variance for ODM was due to a scheduled Upper

Payment Limit payment of $148.3 million which did not go out during the month. ODM did

make a $141.0 million payment towards the health insurance fee. ODODD had a December all

funds negative variance of $27.9 million (11.2%) and ended the month with a YTD positive

variance of $60.6 million (3.9%). The other six “sister” agencies – Job and Family Services,

Health, Aging, Mental Health and Addiction Services, State Board of Pharmacy, and Education –

account for the remaining 1% 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. Expenditures were

below their YTD estimates for three of the four payment categories as of the end of December.

Fee-For-Service had the largest negative variance of $309.6 million (6.8%), followed by

Managed Care’s negative variance of $232.3 million (2.1%), and Administration’s negative

variance of $61.2 million (11.8%). Premium Assistance YTD expenditures were above estimate

by $13.9 million (2.6%).

The impact of the COVID-19 pandemic began to show in March 2020’s Medicaid

caseloads, and the impacts have continued to show through monthly caseload increases since

March. From March through December of 2020, caseloads have increased by 32,900 cases per

month, on average. According to ODM, nearly all of the caseload variance has been due to the

suspension of routine redeterminations of eligibility and an increase in the number of new

applications and approvals, due to the economic impacts of the COVID-19 pandemic. Based on

updated FY 2021 ODM estimates, December’s caseload of 3.1 million enrollees is approximately

2

72,000 cases (8.0%) below estimate.

Justice and Public Protection

The Justice and Public Protection program category had a YTD negative variance at the

end of December of $60.4 million (4.5%). This YTD variance has been gradually building up from

a series of negative monthly variances from August through December. The negative variance

for December was $7.8 million (4.7%). Two agencies make up the majority of the negative YTD

variance – the Department of Rehabilitation and Correction (DRC) and the Public Defender

Commission (PUB).

DRC had a positive variance in December of $2.5 million, but this was not enough to

offset negative variances in the previous four months, especially a negative variance of

$

17.1 million in September and a negative variance of $10.8 million in November. DRC’s

resulting YTD variance for the first six months of FY 2021 was a negative $31.8 million. All but

one of DRC’s appropriation items had negative YTD variances. The most significant was a

negative YTD variance for item 501321, Institutional Operations, which was below its YTD

Budget Footnotes

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January 2021

Legislative Budget Office of the Legislative Service Commission

estimate by $21.6 million at the end of December. Item 501321 is DRC’s main appropriation

item used to pay for its operating expenses.

PUB had a negative YTD variance for the first half of FY 2021 of $10.9 million. Most of

this variance was caused by a negative variance of $8.4 million for the month of December.

These variances were almost completely driven by appropriation item 019501, County

Reimbursement, which had a negative December variance of $8.4 million and a negative YTD

variance of $10.6 million. Item 019501 is used to reimburse counties for their expenditures for

indigent defense. At least part of the current variance in this item is due to timing issues with

the reimbursements. No expenditures were made from the item in December.

Health and Human Services

The Health and Human Services program category includes all non-Medicaid GRF

expenditures by several state agencies. This category had a positive variance of $13.0 million

(10.6%) in December, decreasing its YTD negative variance to $48.9 million (6.3%).

Job and Family Services

The Ohio Department of Job and Family Services (ODJFS) was responsible for

$

16.6 million of the YTD negative variance. ODJFS’s negative variance decreased significantly in

December due to a positive variance for the month of $26.7 million. ODJFS’s variances were

dominated by three appropriation items with negative variances partially offset by one

appropriation item with a positive variance as listed below:



600535, Early Care and Education, was $5.3 million under estimate in December and

14.4 million under estimate YTD;

$

600450, Program Operations, was $3.9 million under estimate in December and

$9.1 million under estimate YTD;

600413, Child Care State/Maintenance of Effort, was $3.1 million over estimate in

December and $7.8 million under estimate YTD;

600523, Family and Children Services, was $27.5 million over estimate in December and

$

17.1 million over estimate YTD.

Items 600535 and 600413 are used to provide publically funded child care. Item 600450

is used for administrative functions and operating expenses for a number of ODJFS’s program

offices. The uses of item 600523 include providing funding to public children services agencies

for child protection, supplementing federal Title XX funds provided to counties, and supporting

foster parents.

Mental Health and Addiction Services

The Department of Mental Health and Addiction Services (MHA) had a negative variance

in December of $11.0 million that increased its negative YTD variance to $15.5 million. MHA’s

negative variance in December came mainly from item 336421, Continuum of Care Services,

which was under its December estimate by $7.0 million, partially offsetting its positive

November variance of $8.3 million. For the YTD, this item was $5.6 million under estimate. Item

3

36421 is mainly used to distribute funds to local boards of alcohol, drug addiction, and mental

health.

Budget Footnotes

P a g e | 20

January 2021

Legislative Budget Office of the Legislative Service Commission

Primary and Secondary Education

The Primary and Secondary Education program category includes all GRF expenditures

by the Ohio Department of Education (ODE), except for Medicaid and Property Tax

Reimbursement expenditures. This category had a positive variance of $57.5 million in October,

another positive variance of $37.8 million in November, and now a positive variance of

$

negative September variance, resulting in a YTD positive variance of $26.4 million (0.7%). As

5.6 million (1.0%) in December. These positive variances have more than offset the category’s

reported in October’s issue of Budget Footnotes, this category had negative variances of

$

48.2 million in appropriation item 200550, Foundation Funding, and $30.7 million in

appropriation item 200573, EdChoice Expansion, in September, due mainly to a timing issue

related to scholarship payments. With positive variances in October, November, and December,

item 200573’s negative YTD variance has been reduced to $11.5 million. Item 200550 also had

positive variances in October, November, and December leaving it with a YTD positive variance

of $55.8 million. Item 200550 is the main source of state funding for local schools.

Budget Footnotes

P a g e | 21

January 2021

Legislative Budget Office of the Legislative Service Commission

Issue Updates

Internet- and Computer-based Community School Enrollment

Grows Amid Pandemic

–

Nick Ciolli, Budget Analyst

Enrollment in internet- and computer-based community schools (e-schools) has

increased substantially in the 2020-2021 school year (FY 2021), as more parents have opted to

enroll their children in e-schools in the wake of the COVID-19 pandemic. E-schools have grown

from an enrollment of 23,300 full-time equivalent (FTE) students at the end of FY 2020 to

3

4,100 FTE students for FY 2021 (as of December), an increase of 10,800 students, or 46.3%. The

vast majority of this growth is occurring in the state’s six general education e-schools, which are

listed in the table below and whose total enrollment has increased by 10,600 students (54.4%).

All but one of these schools has a “statewide” enrollment base, which means that students may

reside anywhere in Ohio and enroll in the school. Enrollment in the nine dropout prevention and

recovery (DOPR) e-schools has grown by about 210 students (5.5%). Site-based community

school enrollment is stable, increasing less than 1% compared to FY 2020.

While e-school enrollment has increased substantially, no e-school reached its statutory

enrollment limit in FY 2021. Each e-school has an enrollment limit based on the school’s

enrollment in FY 2013 or 1,000 students if the school opened after FY 2013 and a prescribed rate

of annual growth that is applied to the prior year’s enrollment limit (not the prior year’s FTEs).

E-school Enrollment Growth, FY 2020-FY 2021

FTE

Enrollment Enrollment

FTE

Change

FY2020-FY2021

% Change

FY 2020-FY 2021

Community School

FY 2020

11,825

4,182

2,025

843

FY 2021

17,727

5,389

4,802

1,288

642

Ohio Virtual Academy

5,902

1,207

2,777

445

49.9%

28.9%

137.2%

52.7%

17.5%

N/A

Ohio Connections Academy

Alternative Education Academy

Great River Connections Academy

Buckeye On-Line School

546

96

Quaker Preparatory Academy*

General education e-school subtotal

DOPR** e-school subtotal

Total

0

142

N/A

19,422

3,880

23,302

29,989

4,092

34,081

10,567

212

54.4%

5.5%

10,779

46.3%

*

Quaker Preparatory Academy newly opened for FY 2021.

*The nine DOPR e-schools are not listed in the table.

*

Budget Footnotes

P a g e | 22

January 2021

Legislative Budget Office of the Legislative Service Commission

As a result of the enrollment gains, funding for e-schools has also increased significantly.

E-school funding is slated to grow from $169.0 million in FY 2020 to $235.3 million in FY 2021,

an increase of $66.3 million (39.2%). Similar to enrollment growth, general education e-schools

are receiving almost the entirety of the funding increase, as shown in the chart below. Funding

for e-school students, like that for students attending site-based community schools, is

1

generally deducted from the foundation aid of the student’s resident district. E-school funding

is based on the full formula amount of $6,020 and, if applicable, the full per-pupil category

amounts for special education additional aid and career-technical education funds.

Chart 5: E-school Funding Transfers by School Education Plan, FY 2020-FY 2021

$

235.3

$250

$200

$150

$100

$

169.0

$

206.0

$

141.3

$

50

$

27.7

$29.3

$

-

FY 2020

FY 2021

DOPR E-schools

General Education E-schools

ODE Partners with Sandy Hook Promise on Threat Assessment

Training

–

Dan Redmond, Budget Analyst

On November 23, 2020, ODE announced a partnership with the Sandy Hook Promise

organization to provide school districts and other public schools with free school violence

prevention training through the organization’s Safety Assessment and Intervention program. The

rd

partnership follows the enactment of H.B. 123 of the 133 General Assembly, which requires the

establishment of threat assessment teams in public schools and completion of an approved

training program by team members. The six-hour, evidence-based training program is offered at

no charge to public schools for the FY 2020-FY 2021 school year using grant funding from the

U.S. Department of Justice. It is designed for multidisciplinary teams to help identify existing gaps

in school safety policies and codes of conduct and learn how to respond to keep the community

¹¹H.B. 123 of the 133^r^d General Assembly created a pilot program to provide additional funding

to certain DOPR e-schools in FY 2021. The program is funded directly by a $2.5 million earmark from

ODE’s FY 2021 GRF foundation funding line item and does not involve deductions and transfers from

traditional school districts.

Budget Footnotes

P a g e | 23

January 2021

Legislative Budget Office of the Legislative Service Commission

safe. This year it will be offered virtually due to the COVID-19 pandemic. Public schools that enroll

in the training will learn to:



Identify the threats, signs, and signals of a violent act;

Determine the seriousness of such threats, signs, and signals; and

Develop intervention plans to protect potential victims and address the problems

underlying the threatening behavior.

The goals of the training program align with Each Child, Our Future, ODE’s five-year

strategic plan for education, which includes a commitment that every child learn in a physically

and emotionally safe environment. Following the training, Sandy Hook Promise provides

ongoing support and resources.

Children Services Transformation Report Released

–

Nicholas J. Blaine, Budget Analyst

On November 20, 2020, the Governor released the Children Services Transformation

Advisory Council’s final report, which includes recommendations for reforming Ohio’s children

1

2

services system. One overarching recommendation was to address inequities in the system

that lead to black and multiracial youths being referred to children services and placed in

out-of-home care much more often than their white counterparts. The report also made

3

7 specific recommendations that were grouped into seven core action areas: prevention,

workforce, practice, kinship, foster care, adoption, and juvenile justice. Some of these include:

integrating and expanding peer mentoring services, enhancing prenatal-to-three prevention

and early intervention services, establishing a state-level ombudsman to independently

investigate and resolve complaints made by or on the behalf of children and families involved

with children services, and create a multisystem data exchange platform that makes sharing

state and local data easier. ODJFS will work to implement the recommendations.

The Children Services Transformation Advisory Council was formed in November 2019

by the Governor. It consisted of state and local government representatives, as well as public

members including foster and adoptive parents, kinship care providers, and foster care alums.

It was tasked with reviewing the foster care system and providing recommendations to

strengthen all areas of the system. The advisory council held ten forums from November 2019

to January 2020 to hear from Ohioans about their experiences with children services systems

and gather their feedback for its improvement. It heard testimony from approximately

5

00 individuals during this time.

12

The full report can be read here: https://governor.ohio.gov/wps/portal/gov/governor/

media/news-and-media/children-services-transformation-final-report-11202020.

Budget Footnotes

P a g e | 24

January 2021

Legislative Budget Office of the Legislative Service Commission

Ohio Medicaid Releases Request for Applications for OhioRISE

–

Nelson V. Lindgren, Economist

On October 28, 2020, ODM released its request for applications (RFA) for bidders to

administer the Ohio Resilience through Integrated Systems and Excellence (OhioRISE) program.

OhioRISE is a specialized managed care program that will serve children with complex

behavioral health and multi-system needs. The selected bidder will be responsible for both

developing and managing a full continuum of behavioral health network providers who have

the expertise necessary to serve these populations. In addition, the selected bidder will be

responsible for developing the infrastructure necessary to ensure the integration of physical

health and behavioral health services. Specifically, OhioRISE will provide intensive care

coordination services; offer new and enhanced critical services; and assist families, state and

local child-serving agencies, and other health providers to locate and use services. Program

objectives are broad and include the following: expand early interventions to reduce

hospitalization and emergency department use, increase access to community and in-home

support, increase school attendance, reduce recidivism rates in the juvenile justice system, and

reduce custody relinquishment and out-of-home placements such as foster care.

ODM expects 50,000 to 60,000 children will be enrolled in the program. In order to

receive services a child must be enrolled in Medicaid, be under age 21, and meet a functional

needs threshold that assesses a child’s needs and strengths in different areas including school,

trauma, mental health needs, and risk behaviors. RFAs had to be submitted to ODM by

December 16, 2020. ODM estimates the award for the administration of the OhioRISE managed

care contract will take place in February 2021 and the program will go live on January 1, 2022.

Ohio Department of Veterans Services Receives $2.6 Million in

Federal CARES Funding for Veterans Homes

–

Shaina Morris, Budget Analyst

On October 26, 2020, the Controlling Board approved a request from the Department of

Veterans Services to increase federal appropriation item 900609, Medicare Services, by

2.6 million in FY 2021. The increase is due to the receipt of federal funding from the CARES

Act. The state’s two veterans homes, located in Sandusky (Erie County) and Georgetown

Brown County), respectively, will use the funds for COVID-19-related expenses, including

$

(

testing, staffing, and personal protective equipment. Revenue from Medicare reimbursements

has dropped due to a decline in the resident population and new admissions having been put

on hold in response to the COVID-19 pandemic.

As of December 18, 2020, the Department reported that, since its first case,

84 residents had tested positive for COVID-19, 89 had recovered, and 38 had died. Of its staff

1

at the homes, the Department reported 139 had tested positive for COVID-19, 108 had

recovered, and none had died.

Sandusky and Georgetown have a combined capacity and capability to provide services

to more than 700 veterans. The Ohio Veterans Home in Sandusky is a 427-bed nursing home

facility and opened in 1888 to care for veterans of the Civil War. The location also hosts a

1

22-bed domiciliary. The Ohio Veterans Home in Georgetown offers 168 beds for nursing home

Budget Footnotes

P a g e | 25

January 2021

Legislative Budget Office of the Legislative Service Commission

care and opened in 2003. Combined, the two veterans homes are one of the largest nursing

home systems in the country and the largest in Ohio.

Ohio EPA Awards $122 Million in Wastewater and Drinking

Water Infrastructure Loans

–

Jamie Doskocil, Fiscal Supervisor

In November 2020, the Ohio Environmental Protection Agency (Ohio EPA) announced

that low-interest and principal forgiveness loans totaling approximately $122 million had been

awarded to 50 recipients for wastewater and drinking water infrastructure improvement

projects. Forty-seven of the recipients were units of local government. The loans were

approved during the third quarter of calendar year 2020 (period ending on September 30).

More than $11 million of the financing includes principal forgiveness, which means it does not

have to be repaid. Ohio EPA estimates that loan recipients will save a total of more than

$

28 million statewide compared to market-rate loans.

The largest amounts of financing were awarded to the Northeast Ohio Regional Sewer

District ($17.1 million for multiple wastewater projects), Akron ($16.7 million for three loans for

public water, and sanitary and sewer projects), Warren County ($15.3 million for upgrades to

the county’s two drinking water plants), and Columbus ($15 million for water plant, storm

water, and sewer projects). Three of the loan recipients were also awarded project-related

funding from the H2Ohio program: Pike Water Inc. ($1 million), New Waterford ($500,000), and

West Milton ($500,000).

The loans are backed with money drawn from the Ohio Water Pollution Control Loan

Fund (WPCLF) and the Water Supply Revolving Loan Account (WSRLA). Both funds are managed

by the Ohio EPA with assistance from the Ohio Water Development Authority. The WPCLF

provides below-market rate, zero interest rate, and principal forgiveness loans for the planning,

design, and construction of wastewater treatment facilities and sewer systems. The WSRLA

provides below-market rate loans to public water systems for the planning, design, and

construction of improvements to community water systems and nonprofit noncommunity

public water systems. Both the WPCLF and WSRLA are funded with federal capitalization grants,

loan repayments, and bond proceeds and were created in 1989 and 1998, respectively.

Budget Footnotes

P a g e | 26

January 2021

Legislative Budget Office of the Legislative Service Commission

Third Quarter Wastewater and Drinking Water Infrastructure Loans

Geographic

Area

Number of

Loan Recipients

Principal

Forgiveness

Total Estimated

Savings**

Total Financing*

Central

4

9

$16,000,000

$50,800,000

$7,000,000

$50,0000

$1,399,000

$630,492

$2,300,000

$8,400,000

$1,580,000

$10,900,000

$5,000,000

$28,180,000

Northeast

Northwest

Southeast

Southwest

11

19

7

$18,100,000

$30,000,000

$121,900,000

$8,050,000

$905,588

Totals

50

$11,035,080

*

Amounts are approximate due to rounding.

*Savings includes interest and principal.

*

ODOT Awards $23.0 Million in Maritime Assistance Program

Grants to Port Authorities in FY 2020-FY 2021 Biennium

–

Tom Middleton, Senior Budget Analyst

In November 2020, the Ohio Department of Transportation (ODOT) released a report

summarizing the allocation of all $23.0 million in grant funding appropriated under the

Maritime Assistance Program created by H.B. 166.¹³ In total, 13 projects received grant funding

at four port authorities, as summarized in the table below.

Under the competitive grant program, ODOT awarded grants to port authorities that

own active marine cargo terminals located on the shore of Lake Erie, a Lake Erie tributary, or

the Ohio River. Grants were awarded to projects that will have a significant local or regional

impact on Ohio’s logistics supply chain, and a minimum 50% match in funds. Projects receiving

grant support include those to purchase transloading equipment and to construct

infrastructure and facilities, including dock walls, roads, mooring cells, sediment processing

facilities, ore tunnel extensions, and intermodal transportation infrastructure.

13

The ODOT report is available for download at: https://www.transportation.ohio.gov/

wps/portal/gov/odot/programs/maritime-freight/resources/ohio-martime-awards.

Budget Footnotes

P a g e | 27

January 2021

Legislative Budget Office of the Legislative Service Commission

Maritime Assistance Program Grant Recipients, FY 2020-FY 2021

%

Funding of

Total Project

Grant

Number of

Grants

Total Grant

Funding

Total Project

Funding

Port Authority

Cleveland-Cuyahoga County

Toledo-Lucas County

Columbiana County

Monroe County

5

4

$9.7 million

$10.1 million

$1.7 million

$1.5 million

$23.0 million

$36.1 million

$26.1 million

$3.5 million

$3.0 million

$68.7 million

26.8%

38.5%

50.0%

33.5%

3

1

Total

13

Funding for the program was sourced from the Facilities Establishment Fund (Fund

037), typically used by the Development Services Agency (DSA) for business loans, via a

7

transfer of $23.0 million from Fund 7037 to the Ohio Maritime Assistance Fund (Fund 5QT0).

Development Services Agency Awards $26.5 Million in Ohio

Historic Preservation Tax Credits

–

Shannon Pleiman, Senior Budget Analyst

On December 17, 2020, the Development Services Agency approved 25 awards totaling

26.5 million in Round 25 of the Ohio Historic Preservation Tax Credits (OHPTC) Program. These

$

awards will be used for the rehabilitation of 53 historic buildings. The table below displays the

awards by region, including the number of awards, total value of awards, total project costs,

and the average percentage of the project cost covered by the award in each region.

Ohio Historic Preservation Tax Credit Awards, Round 25

Number of

Awards

Total Value of

Awards

Total Project

Costs

Award as % of

Total Project Costs

Region

Northeast

Southwest

Northwest

Central

8

14

1

$12,819,242

$11,315,433

$1,639,451

$748,957

$118,269,747

$115,070,920

$10,019,305

$15,997,973

$259,357,945

10.8%

9.8%

16.4%

4.7%

2

Total

25

$26,523,083

10.2%

Budget Footnotes

P a g e | 28

January 2021

Legislative Budget Office of the Legislative Service Commission

The OHPTC Program is designed to spur investment within historic areas, restore

buildings that will attract new businesses, and generate new jobs. To be eligible, generally a

building must be listed on the National Register of Historic Places or designated as a local

landmark by a certified local government. The program is administered through a partnership

between DSA and the Ohio History Connection. Each year, $60.0 million is allocated to the

program; however, an additional amount in tax credits may be awarded if projects that were

previously approved under the program have been withdrawn, or if there is a surplus of tax

credits from prior fiscal years. DSA awards two rounds of funding each year. Round 26 project

applications are due March 31, 2021, and the awards will be announced by the end of June. The

tax credits can be claimed against the applicable income tax, financial institutions tax, and

foreign and domestic insurance premium taxes.

DNR Begins Chronic Wasting Disease Response Plan After

Infection in Wild Deer Specimen Confirmed in Wyandot County

–

Tom Wert, Senior Budget Analyst

On December 14, 2020, the Department of Natural Resources (DNR) announced that

Chronic Wasting Disease (CWD) had been detected in tissue samples from a deer harvested by

a hunter on private property in Wyandot County. CWD is a contagious and fatal neurological

disease in deer and elk that has been documented in wild deer populations in 26 states

including Pennsylvania, Michigan, and West Virginia. As a result of this first documented

positive case among the wild herd in Ohio, DNR will implement its CWD response plan which

includes enhanced surveillance within a 10-mile radius of the CWD positive deer location in

Wyandot County and mandatory sampling of deer harvested during controlled hunts at Killdeer

Plains Wildlife Area. Additionally, DNR will contact all hunters who harvest a deer in Wyandot

County during the remaining 2020-2021 deer hunting season to obtain samples for testing. The

2

020-2021 deer hunting season ends February 7, 2021.

DNR has conducted CWD surveillance in Ohio’s wild deer populations since 2002. But

with cases of CWD in wild deer populations so close to Ohio’s borders, DNR expanded its

020-2021 testing program significantly. Under a previous agreement, Colorado State

University (CSU) was slated to test 1,200 hunter harvested or road killed wild deer in

020-2021. The number of tests was increased to 4,000 under a contract approved by the

2

Controlling Board on October 26, 2020. The cost per sample under both the previous and new

contracts totaled $19 per sample. Funding for the testing is supported by the Wildlife Fund

(Fund 7015) which receives revenue primarily from the sale of hunting and fishing licenses and

permits and federal sportfish and wildlife restoration grants.

Budget Footnotes

P a g e | 29

January 2021

Legislative Budget Office of the Legislative Service Commission

T_–_E_rr_i_c_Ma_a_kc_e_l_ak_,_Ei_c_on_n_o_mg_i_s_t the Economy

Overview

National economic recovery slowed in recent months, as the nation and its people

navigate a health crisis amidst economic tumult. Nonfarm payroll employment declined by

40,000 in December, and the nation’s unemployment rate remained at 6.7%. Nationally,

1

personal income decreased in November in conjunction with a decline in unemployment

insurance payments and proprietors’ incomes as pandemic-related support waned.

Inflation-adjusted gross domestic product (real GDP) increased 7.5% in the third quarter of 2020

after dropping 9.0% during the second quarter.¹⁴ Industrial production rose 0.4% in November,

though the level of production in major market groups is still below its level from a year prior.

Ohio employers added 29,400 jobs in November, with job gains in the service sector

slightly offset by job losses in the goods producing sector. From October to November, the

seasonally adjusted unemployment rate fell by 0.4 percentage point, to 5.7%. The number of

Ohioans receiving unemployment benefits during the last full week of 2020 (153,423) was

1

48.3% greater than during the same week of 2019. The state’s real GDP increased 8.2% in the

third quarter of 2020, snapping two consecutive quarters of decline in the indicator. The

housing market has remained heated through most of 2020, as the YTD average sale price of an

existing home in Ohio was 9.5% greater in 2020 than in 2019.¹⁵

The National Economy

The number of nonfarm payroll jobs in the United States tumbled by 140,000 in

December, though the national unemployment rate was unchanged at 6.7%. According to the

Bureau of Labor Statistics, the decline in payroll employment reflected the recent resurgence in

COVID-19 cases and efforts to contain the pandemic. Chart 6 shows nonfarm payroll

employment and Chart 7 displays unemployment.

During the month, the leisure and hospitality industry was most affected, with

seasonally adjusted employment decreasing by 498,000, mostly at restaurants and bars, but

also at amusement, gambling, and recreation venues and at hotels and motels. Recovery

continued in a number of other industries. In December, employment in professional and

business services increased by 161,000. Other industries to add payroll employment in

December included retail trade (+121,000), construction (+51,000), and transportation and

warehousing (+47,000), the last of these mostly due to further gains in couriers and

messengers.

Between December 2019 and December 2020, payroll employment in both the

goods-producing (-784,000, -3.7%) and private service-providing (-7,312,000, -6.8%) sectors

declined. Within the goods-producing sector, manufacturers of both durable goods

(

1

-391,000, -4.8%) and nondurable goods (-166,000, -3.5%) culled payrolls during those

2 months. Within the service-providing sector, industries including transportation and

¹⁴Percentages are from quarter to quarter, not at annualized rates.

¹⁵Data, according to the Ohio Association of Realtors, as of November 2020.

Budget Footnotes

P a g e | 30

January 2021

Legislative Budget Office of the Legislative Service Commission

warehousing (-67,100, -1.2%), financial services (-71,000, -0.8%), and professional and technical

services (-159,300, -1.6%) retained comparatively high percentages of their workers during the

year leading up to December 2020. Major industries such as leisure and hospitality (-3,825,000,

-

market change during this time period. Between December 2019 and December 2020, average

weekly earnings rose in all major industry groups except leisure and hospitality.

22.8%) and education and health services (-1,173,000, -4.8%) underwent more sizable labor

National production, as measured by real GDP, increased by a seasonally adjusted 7.5%

1

6

during the third quarter of 2020. Consumption of goods by persons rose a seasonally adjusted

1

2

5

0.2% during the quarter, while consumer services increased 8.4%. From the second quarter of

020 to the third quarter, nonresidential fixed investment increased by a seasonally adjusted

.3% while residential fixed investment was up 13.0%.

Personal income decreased by a seasonally adjusted 1.1% in November, the result of a

decline in proprietors’ income (-8.5%) and personal current transfer receipts (-3.3%).¹⁷ In the

private sector, wages and salaries rose a seasonally adjusted $39.4 billion (+0.5%).

Unemployment insurance payments decreased $27.1 billion (-8.9%). Seasonally adjusted

personal saving decreased for the seventh consecutive month in November (-6.4%), after a

drastic rise in March and April of this year. Real personal consumption expenditures fell by a

seasonally adjusted 0.4% in November; spending on both goods (-1.0%) and services (-0.2%)

declined.

Nationally, aggregate industrial production increased by 0.4% in November; among

major industry groups, a decrease in utilities (-4.3%) production was more than offset by

increases in manufacturing (+0.8%) and mining (+2.3%) output.¹⁸ A ramp-up in production of

motor vehicles and parts accounted for approximately half the month’s total increase in

manufacturing output. From November 2019 to November 2020, the total production of

durables manufacturers decreased 4.3% nationwide, with increases among computer and

electronic products manufacturers (+1.5%) offset by drops in most other major categories. The

decline in nondurables manufacturing (-2.6%) during the same period was driven by mixed

gains and losses in production among food, beverage, and tobacco products manufacturers

(+1.5%), paper producers (+1.2%), petroleum and coal products producers (-14.0%), chemical

makers (-2.9%), plastics and rubber products manufacturers (-2.7%), and other industries.

Consumer prices increased by a seasonally adjusted 0.2% in November, as measured by

the consumer price index (CPI) for all items. During the month, the national price index for food

decreased 0.1%, while the price index for energy increased 0.4%. During November, the CPI

level for all goods was 1.2% greater than a year prior. The index for all items less the more

volatile food and energy categories rose 1.6% over the 12 months leading up to November.

¹⁶See footnote 14.

17

Personal current transfer receipts are nonwage income and include Social Security,

Medicare/Medicaid, and unemployment insurance. This category also includes federal stimulus

payments and any federal supplements to state unemployment benefits.

¹⁸As measured by the Federal Reserve Board’s Industrial Production Index.

Budget Footnotes

P a g e | 31

January 2021

Legislative Budget Office of the Legislative Service Commission

Chart 6: U.S. and Ohio Nonfarm Payroll Employment

(

in millions)

1

53.9

48.5

43.1

37.7

32.3

26.9

5.7

5.5

5.3

5.1

4.9

4.7

2

016

2017

2018

2019

2020

U.S. Employment

Ohio Employment (right scale)

Chart 7: U.S. and Ohio Unemployment Rates

% of Labor Force

18.0%

15.0%

12.0%

9

6

3

.0%

2

016

2017

2018

2019

Ohio

2020

United States

Budget Footnotes

P a g e | 32

January 2021

Legislative Budget Office of the Legislative Service Commission

The Ohio Economy

Ohio’s economy added a seasonally adjusted 29,400 nonfarm payroll jobs in November,

a 0.6% increase in jobs from the previous month. During the month, employment losses in

manufacturing (-2,000, -0.3%) and other (miscellaneous) services (-1,600, -0.8%) were more

than offset by seasonally adjusted gains in leisure and hospitality (+11,300, +2.6%), professional

and business services (+7,400, +1.1%), and health care and social assistance (+5,000, +0.6%).

Year over year, nonfarm payroll employment decreased in both the goods-producing

(-41,900, -4.5%) and service-providing (-294,400, -6.3%) sectors. As of November, the Ohio

private industries that shed the greatest percentage of their November 2019 workforces were

leisure and hospitality (-20.3%), educational services (-13.4%), mining and logging (-13.0%), and

real estate and rental and leasing (-11.1%). Between November 2019 and November 2020,

employment by government entities declined at all levels, with the number of job holders in

federal (-1.7%), state (-14.2%), and local (-4.2%) governments all notably down in Ohio. Chart 6

displays nonfarm employment totals nationally and in Ohio over the past several years.

Ohio’s seasonally adjusted unemployment rate declined from October to November,

when it was 5.7%. Chart 7 displays the state’s unemployment rate. The number of initial

unemployment claims during the final full week of 2020 was 81% greater than in the

year-earlier week but 89% below this year’s peak weekly number of initial claims. In the prior

week, Ohio registered 153,423 continued unemployment insurance claims, 148% above the

number of continued claims during the year-earlier week of 2019.¹⁹

It should be noted that the Census Bureau’s survey of establishments, which provide the

primary data for state employment counts, is conducted for the pay period that includes the

th

1

2 of each month. As a result, Ohio’s employment data do not reflect observance of additional

COVID-19 restrictions between that period and the date of this publication.

According to recently released quarterly data from the Bureau of Economic Analysis

BEA), Ohio’s real GDP increased at a seasonally adjusted rate of 8.2% in the third quarter of

(

2

changes not annualized). During the third quarter, Ohio’s real GDP growth ranked 14 in the

020, after decreases in real GDP in the first (-1.4%) and second (-9.5%) quarters (percent

th

nation; growth in other Great Lakes states, such as Michigan (third), Indiana (fifth), and

2

0

Wisconsin (ninth) also was relatively rapid. On an annualized rate basis, GDP growth increased

rapidly in every state during the quarter, with growth rates ranging from 19.4% (Wyoming) to

5

2.2% (Nevada).

The number of small businesses operating in Ohio decreased during 2020. Womply, an

integrated business platform for small businesses, reports Ohio-specific data on small business

conditions.²The number of Ohio small businesses having at least one transaction in the last

1

¹⁹Initial claims measure how many new applicants filed for unemployment benefits during the

week; continued claims measure how many persons filed to continue receiving unemployment benefits.

Data are provided to the Department of Labor by the ODJFS.

²⁰The following states are included in BEA’s definition of the Great Lakes region: Illinois, Indiana,

Michigan, Ohio, and Wisconsin.

²¹Data according to Track the Recovery Project: https://tracktherecovery.org/. Small businesses

are defined as those with under 100 or 150 employees, with the threshold varying by industry.

Budget Footnotes

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January 2021

Legislative Budget Office of the Legislative Service Commission

three business days declined 28.7% from the January indexing period to December 9. Small

business revenue in Ohio declined 30.2% during the same time period. Revenue declined by

1

also down in professional and business services (-12.6%), education and health services (-

6.9% for small businesses in transportation and retail industries; small business revenue was

3

3.1%), and leisure and hospitality (-64.8%).

Existing home unit sales were 14.2% greater in November 2020 than in November 2019,

according to the Ohio Association of Realtors. Through November, the number of existing home

sales was 3.1% above the level in 2019, and the average sale price was 9.5% greater. The YTD

total dollar volume of existing home sales was 12.9% higher in 2020 than last year, a trend

which suggests a significant increase in demand for houses in the state during the year.

Budget Footnotes

P a g e | 34

January 2021