Insights & analysis

Ohio legislative update

2/25/2021
Overview

The 134th General Assembly commenced in early January and is off to a running start with the FY22-23 Transportation and Operating Budgets under consideration in the Ohio House of Representatives. COVID, education funding reform, and last General Assembly’s HB6 continue to take priority for legislators. Innovation districts are being established around the state as Ohio tries to drive more residents to the state. A surprising announcement from U.S. Senator Rob Portman that he does not intend to seek reelection has potential candidates from both sides stepping up for the challenge. Please see below for updates on the state budget, health and education policies, and business news around the state.

STATE BUDGET
State Budget Estimated Timeline

The legislature will first hear the FY22-23 Transportation Budget (HB 74), which should be signed into law by March 30th in order to go in effect on July 1st, the beginning of the new fiscal year. House hearings have already started, and it will likely move to the Senate in early March. The House has simultaneously started hearings for the Operating Budget (HB 110), which needs to be signed into law by June 30th.

February 1st — Governor DeWine releases his Executive Budget.
Early/Mid-February — House hears from state agency directors on their budget recommendations. House drops the “As Introduced” version of the Transportation Budget (HB 74) and the Operating Budget (HB 110) and begins hearings on both.
Late February — House expected to vote out Transportation Budget. Senate hears from state agency directors on their budget recommendations.
Early March — House begins hearings on the Operating Budget in subcommittees. Senate begins hearings on Transportation Budget.
Late March — House hears Operating Budget in full Finance Committee.
April — House passes Operating Budget, Senate begins hearings. The budget process in the Senate will be different this year than in recent years as Speaker Huffman has shifted away from a Finance subcommittee process. Now, the full Finance Committee will hear from state agency directors, as well as testimony from stakeholders on the potential impact of the budget. The committee then considers additional changes and amends those into the bill.
Late May/Early June — Senate passes Operating Budget.
Mid/Late June — Conference Committee meets and decides on final budget. House and Senate concur.
June 30th — Governor DeWine signs Operating Budget.

Budget Overview

Governor DeWine’s second Executive Budget did not dip into the Rainy Day fund, which currently stands at $2.69B. This is largely due to the influx of federal funds into the state in addition to steps the state took early on which included freezing and cutting spending and then refinancing the state's debt as well as the unintended consequences of the pandemic's shifting consumers' buying habits from purchasing services — which are not subject to the state sales tax — to purchasing goods, which are resulting in an increase in the state's sales tax revenue. The state is overall in decent financial shape despite the pandemic. Some highlights from DeWine’s proposal:

  • $460M to help small businesses — $200M for bars and restaurants, $150M in general relief, $50M for the lodging industry, $40M for indoor entertainment venues and $20M for new businesses that were often unable to receive previous funding.
  • $250M for expansion of broadband access.
  • $70M to strengthen the state workforce as part of a goal for Ohio to emerge from the pandemic even stronger.
  • $25M to help schools offer new in-demand credentials.
  • $16M to help high school students earn 70,000 workforce credentials.
  • $50M for a public relations effort to attract potential residents of coastal areas with a high cost of living to consider moving to Ohio.
  • $400M for quality outcome incentives for Medicaid nursing home services, including adding $100M to a new payment formula that moves to reward nursing homes for providing high-quality care.
  • Increased funding for Help Me Grow, Ohio's home visiting program.
  • Continuing lead hazard control efforts.
  • Re-procurement of Ohio's managed care system in the Ohio Department of Medicaid.
  • Expanded eligibility for childcare programs from 130% of poverty to 138% and 150% for special needs children.
Ohio Department of Health (ODH) Overview

Director Stephanie McCloud outlined the department's budget priorities and shared department requests with COVID at the helm of many funding decisions. For the FY22-23 state budget, ODH recommends:

  • $1.95M each fiscal year for the Help Me Grow program.
  • $5.5M over the biennium to work on reducing the state's infant mortality rate, particularly for Black babies who are three times more likely than White babies to die before their first birthday.
  • $7.15M per year to continue and increase the lead hazard control programs.
  • $2.7M per year to place additional providers in Federally Qualified Health Centers (FQHCs) which serve vulnerable populations.
  • $10.8M over the biennium to provide support for local health department efforts to reform the delivery of public health programs across the state. Of this amount, $6M would fund improvements based on findings and recommendations in Ohio’s 2020-2022 State Health Improvement Plan (SHIP), including addressing health issues created or exacerbated by the COVID-19 pandemic.
  • Statutory change to allow two or more local health districts to put a combined health district levy on the ballot for operating expenses.
Ohio Department of Job and Family Services (ODJFS) Overview

Director Kimberly Henderson stated their current annual budget totals more than $4.1B, nearly 71% of which is federal funding. The majority of those funds are allocated to more than 150 partner agencies throughout the state. For the FY22-23 state budget, ODJFS recommends:

  • Further funding increases for Step Up To Quality, the rating system that recognizes and rewards high-quality child care providers.
  • $367M in each year of the biennium to maintain current levels of support for childcare programming and to finalize modernization of the Support Enforcement Tracking System, used to track case information to collect and distribute the state’s child support funds.
  • $210M in each year for children’s services.
  • $34.5M FY22 and $30M in FY23 2023 for the Kinship Support Program, which would allow the state to pay kinship caregivers.
  • $221M for unemployment. Ohio is borrowing from the federal government to meet unemployment insurance benefit obligations. Current regulations are deferring the accrual of interest until March 14, 2021, and additional extensions are under consideration in Congress. Unless interest is deferred for the full federal fiscal year, the first annual interest payment will be due Sept. 30, 2021. This amount is not included in this budget submission.
Ohio Department of Education (ODE) Overview

Superintendent of Public Instruction Paolo DeMaria said the state's education system was "tremendously disrupted" by the COVID-19 pandemic, but teachers rose to the occasion in meeting the needs of students learning remotely, in hybrid models and in in-person settings. For the FY22-23 state budget, ODE recommends:

  • $1.1B to continue the student wellness and success initiative.
  • $450,000 to pilot the "P-Tech" educational model in which a student in ninth grade engages in a partnership with the student's high school, an institution of higher education and a business in a STEM field to complete both a high school diploma and an associate degree over six years.
  • $92.2M in each fiscal year for the EdChoice program.
  • $54M in each fiscal year to provide additional funding for community schools of quality.
Department of Medicaid (ODM) Overview

Director Maureen Corcoran shared there will be challenges when additional federal funds end at the end of 2021, as the state will be left with an inflated caseload for which redeterminations have been on hold since early 2020.

  • There are now 2 million Ohioans being served by the Medicaid program including 1.2 million children. ODM predicts that total is expected to peak during the next biennium at 3.45 million people in February 2022.
  • In exchange for receiving federal funds, the state agreed to a "maintenance of effort" requirement which, among other factors, means continuing eligibility for all individuals who were on the program as well as adding others in the succeeding months.
  • Address the regulatory unwinding of 200+ rules and six waivers when some of the administrative flexibility that the federal Centers for Medicare and Medicaid (CMS) granted due to the pandemic will also disappear in areas such as telehealth, home- and community-based waivers and other administrative simplification.
Department of Mental Health and Addiction Services (OMHAS) Overview

Director Lori Criss shared OMHAS’ budget represents a continued commitment to addressing the needs of Ohioans with mental illness or substance use disorder and the community provider network that facilitates sustained recovery. For the FY22-23 state budget, OMHAS recommends:

  • $4.5M for the Ohio Youth and Young Adult Early Intervention Initiative, which improves the state’s ability to intervene early for those age 10 to 25 who are at high risk for mental, emotional and behavioral health-related problems, including substance use disorder.
  • $1.1B effort with the Ohio Department of Education to better ensure all students can access effective, evidence-based prevention programs.
  • $10M to reduce stigma associated with mental illness and addiction, equipping Ohioans with skills needed to implement healthy prevention and intervention approaches in their own homes and personal relationships.
  • $4M for the Child and Adolescent Behavioral Health Center of Excellence and Mobile Response and Stabilization Services (MRSS) for youth and children.
  • $20M for specialty dockets that provide an alternative to jail for those with mental illness or substance use disorder
  • $10M increase to expand access to recovery services for those in DRC custody.
  • Increased federal funding has brought considerable additional resources to the State Opioid Response (SOR) line item, and the recently passed stimulus package will provide even more funds to the SOR grant, the Substance Abuse Prevention and Treatment Block Grant and the Mental Health Block Grant.
health
Mask Mandate for Members and Virtual Testimony for Ohioans

Seventy-five organizations and individuals wrote a letter sent to Speaker Cupp (R-Lima) and President Huffman (R-Lima) asking for virtual testimony to be considered in the midst of the pandemic. The letter shared concerns for those who are disparately impacted and whose communities have been harmed by the coronavirus, especially including Ohioans who are Black, immune-compromised and who have low-incomes and cannot appear in person for testimony. The pandemic has also placed a strain upon parents and caregivers who are shouldering additional care for their children, elders and family members amidst remote schooling, lack of childcare, and limited in-home caregiving options. Ohioans balancing these increased demands of caregiving and family responsibilities can be met with insurmountable obstacles in having their voices heard at the Statehouse because they cannot partake in person.

Rep. Brigid Kelly (D-Cincinnati) introduced two bills: HB55, which allows for virtual testimony, and HB56, which would require Members to wear masks. Kelly noted over the past year, businesses, organizations, educational institutions, and many others have continued telework policies to mitigate the spread and impact of COVID-19, and said it is critical for the Legislature to take similar steps so that Ohioans can more easily weigh in on important policy decisions that impact their lives. To date, the Ohio Legislature has voted against mandating masks for Members. G2G will monitor these bills closely.

Food Assistance for Children

ODJFS announced it would continue providing additional food benefits for Ohio children through the end of the school year. The Pandemic Electronic Benefit Transfer (P-EBT) payments help children who normally receive free or reduced-price meals through the National School Lunch Program but learned remotely (or a hybrid of remote and in-person learning) during the school year. The first round of P-EBT funding last spring was distributed to approximately 870,000 children, totaling about $260M. The second round, issued in the fall, assisted approximately 510,000 children, totaling about $59M, based on the number of consecutive days of remote learning.

Pharmacists Reimbursement Options

Last month, Medicaid rolled out a system for pharmacists to enroll as recognized providers and bill the department for a number of new services. Enrolled pharmacists with provider status can manage medication therapy in collaboration with a prescribing medical professional and administer a wider range of immunizations and certain injectable medications. While their services have evolved and expanded over the years, the mechanisms through which pharmacists are paid have been limited largely to dispensing drugs and administering vaccines.

Ohio is one of a few states to pay pharmacists as providers. Within the first month of the application process being available, more than 100 individual pharmacists registered. The option allows the department to use every resource available especially because there are more pharmacies than doctor's offices in rural areas, and patients may interact with pharmacists more frequently than their doctor.

Education
Fair School Funding Plan

The Fair School Funding Plan, also known as the Cupp-Patterson Plan, has been reintroduced in the House, joint sponsored by Rep. Jamie Callendar (R-Concord) and Rep. Bride Rose Sweeney (D-Cleveland). The bill is identical, aside from an LSC correction, to last General Assembly’s HB305.

The genesis of HB1 came from concerns with the state's current school funding formula raised by now-Speaker Bob Cupp (R-Lima) and former Rep. John Patterson (D-Jefferson), as well as by the "Fair School Funding Workgroup" of school treasurers and leaders. Concerns included:

  • Current base cost per pupil has no tether to actual costs.
  • Distributing funds to districts through the state share index has a cascading effect such that a change in valuation in one district will make every other district appear wealthier or poorer, affecting their state funding.
  • Funding caps and guarantees mean very few districts actually receive what the current funding formula says they should, with over 80% of districts being either capped or guaranteed.
  • Current formula counts students in their resident districts even though they may transfer out through open enrollment or attendance at charter schools.

A six-year phase-in would require about $333M additional dollars each year. From FY13 through FY19, the average annual increase in the state’s K-12 funding was approximately $294M. The existing tax structure in Ohio can accommodate this increase without raising taxes, if the General Assembly chooses to adopt the Fair School Funding Plan.

Education Update Amid the Pandemic

DeWine reaffirmed his commitment to getting students back to in-person learning by March by expanding the investment in student wellness and success programs to $1.1B. A December study by ODE found schools and districts used student wellness and success funds to start more than 3,000 separate initiatives, such as building onsite health clinics, counseling, and after school programs, which serve over a million Ohio children.

DeWine asked that school districts design plans to meet the needs of the students in their districts that include ending the school year later than scheduled, beginning the new year early, or even extending the school day. Summer programs, tutoring, or remote options could also be considered, and these plans should be provided to the public and General Assembly no later than Thursday, April 1.

State Superintendent Paolo DeMaria discussed 2020 enrollment and assessment data from ODE. This showed:

  • A 3% overall decrease in enrollment with the greatest concentration in pre-school and kindergarten likely because some parents opted to hold off on starting their children in school during the pandemic.
  • The kindergarten readiness assessment has expectedly lower scores, particularly among minority students and disadvantaged students.
  • On the third-grade test, there was an 8% drop in the number of students scoring "proficient or better" from 45% in the fall of 2019 to 37% in the fall of 2020.
  • 87% of districts had a decrease in their percentage of students scoring "proficient or better" between 2019 and 2020.
  • Fully remote districts third grade proficiency rates decreased more substantially by about 12%, as compared to about an 8% drop in districts using primarily a five day in-person model.
  • There was an 80% student participation for the assessments compared to 90 or 95% in a traditional year because the department promoted a "safety first" mentality. Students were not forced to take assessments and districts were not forced to bring students back to take them if they did not feel it was safe.
  • 45 % of Ohio students were attending school remotely full-time, but less than 15% of students are still attending classes completely online currently. The number of districts that are fully remote has similarly moved from 219 in the first week of January to only 35.
innovation & business
ResultsOHIO

Treasurer Sprague’s office announced the first five projects to be deemed “Pay-for-Success Appropriate and Ready” under the ResultsOHIO program, a step that will help them obtain private financing and government commitments for funding reimbursement upon completion. ResultsOHIO was created to unlock Ohio’s brightest minds in the private sector to solve Ohio’s biggest problems in the public sector. Those problems include addiction, infant mortality and poverty and all decisions in the program are data-driven to ensure that only successful ideas are funded. The duration of the pilot project is also considered, with short-term projects of two to three years favored over longer ones. Once the organizations have obtained initial private funding and a government commitment to reimburse those funds once the project is successful, they will return to the treasurer’s office to set up contracts.

The five organizations and their projects recognized include:

  • Cincinnati Works, which seeks to expand long-term supports that not only focus on job skills and employment, but also address physical, psychological, spiritual, legal and practical needs.
  • Columbus Works, which seeks to expand career, life, and financial coaching, job placement services and wraparound supports to individuals as a means to address barriers to self-sufficiency, including legal services, medical and behavioral health care, and housing.
  • Every Child Succeeds, in Hamilton County, which provides a year of home-visiting services to high-risk pregnant women to reduce preterm births and adverse effects on mothers, infants and families.
  • The Ohio Department of Higher Education (ODHE), which will encourage on-time graduation and the maximizing of military benefits among Ohio National Guard Scholarship students.
  • OneFifteen Recovery, in Montgomery County, which seeks to expand its integrated and accessible continuum of care for individuals in southwest Ohio’s criminal justice system, helping those experiencing substance use disorders.
CyberOhio

While legislation updating Ohio’s computer crime laws didn’t make it through the General Assembly, we expect a similar bill to be re-introduced and passed this time. Rep. Brian Baldridge (R-Winchester) had sponsored HB368 in the 133rd GA and is already working on reintroduction. President Huffman has expressed interest in including the bill in a larger criminal sentencing reform package. The bill would bring criminal penalties up to date with modern computer crime issues, as the current statute has hindered prosecution due to its focus on the amount of monetary harm caused.

The CyberOhio Advisory Board also discussed cyber education and workforce, stating 42% of Ohio high schools offer at least one computer science class, compared to a 47% national rate. The Executive Budget proposed a guarantee for access to computer science classes, giving students a statutory right to a computer science class that they can either get through their school or another provider of the student's choice. There are a lot of open jobs in cyber and so it is important to provide a pipeline of qualified graduates for them. Ohio does not have a standard K-12 curriculum on computer science and is not among the 20 states that require computer science be taught in their schools.

The Ohio Cyber Collaboration Committee (OC3) and the Ohio Cyber Reserve (OhCR), has delayed some in-person OhCR training but they currently have three teams established and around 60 members, largely recruited through word of mouth. The first state activation of an OhCR team has already occurred.

Innovation Districts

Cincinnati — Last March, Cincinnati became the first Innovation District and has led to a dramatic success story since then, including partnerships with Microsoft and other companies and significant increases in patents, technology transfer and commercialization. JobsOhio allocated up to $100M to research- and talent-focused initiatives at the University of Cincinnati and Cincinnati Children's Hospital Medical Center for the district.

Cleveland — Ohio’s second innovation district will be set up in Cleveland with the goal of making Ohio a global leader in health care fields including pathogen research as part of a project expected to generate 20,000 jobs in the next 10 years and create an economic impact of $3B. Details for the Cleveland are as follows:

  • Funding — $300M invested by the Cleveland Clinic, $110M from JobsOhio, and $155M from DSA, including $55M in related tax credits which were approved for the clinic’s new Global Center for Pathogen Research & Human Health. Further investments are expected as the project develops.
  • Jobs — Expected10,000 direct jobs in health care and information technology and 10,000 indirect jobs, including entry-level positions.
  • Partners — Cleveland Clinic, Case Western Reserve University (CWRU), MetroHealth System, University Hospitals (UH) and Cleveland State University (CSU).

Columbus — Columbus will hold Ohio’s third innovation district. The Columbus Innovation District will bring together globally recognized education and healthcare research institutions to bolster the creation of in-demand jobs and fuel $3B in economic impact for Columbus and Ohio over the next 10 years. This will be a hub for innovation and growth, expanding science, technology, engineering and math (STEM) educational opportunities, positioning Ohio to compete nationally for growing tech and healthcare employer. Details for the Columbus Innovation District are as follows:

  • Funding — JobsOhio, Ohio State and Nationwide Children's will invest $1.1B in the Columbus Innovation District.
  • Jobs — 20,000 new jobs in central Ohio over the next 10 years, involving an estimated 10,000 direct STEM jobs in the technology and healthcare industries, as well as 10,000 indirect jobs in the community at large.
  • Partners — JobsOhio, Ohio State and Nationwide Children's

More updates