Understanding JobsOhio's Funding
JobsOhio’s funding model is unlike the funding model for any economic development organization in the country in that absolutely no tax dollars or other public dollars are used to support it. JobsOhio is a private nonprofit corporation wholly funded by an independent private source – the profits from the JobsOhio Beverage System (JOBS) liquor enterprise. Let’s break it down:
- The JobsOhio Beverage System (JOBS)
JOBS is an affiliate of JobsOhio, but it is a separate organization. Like JobsOhio, JOBS is a nonprofit corporation and does not have shareholders. Instead, nonprofit corporations have members, and JobsOhio is the sole member of JOBS.
- The Creation of JOBS
On February 1, 2013, JOBS acquired an exclusive 25-year franchise from the state of Ohio for the sale of spirituous liquor in Ohio. JOBS purchased the franchise from the state of Ohio for an initial payment of $1.4 billion, plus additional future payments. To complete this acquisition, JOBS issued special-obligation private revenue bonds. The bondholders will be paid over the 25-year term of the franchise. No public funds were used to purchase the franchise.
- Where Does the JOBS Money Go?
JOBS has a contract with the Division of Liquor Control (DLC) to run the day-to-day operations of the business. JOBS uses money from the sale of liquor on the following:
- Payments of gallonage and local sales taxes.
- Costs to operate the liquor business, including the purchase of the liquor inventory, commissions to agents, contracts with warehousing and trucking companies, and services fees to the DLC.
- Principal and interest payments to bondholders
- Additional annual payments to the state when operating profits exceed a predetermined level.
The net profits after these payments and costs are granted from JOBS to JobsOhio for economic development activities.
- NOT Funded by Liquor Taxes
Since the creation of JOBS in 2013, JobsOhio has been funded solely from the profits on sales of spirituous liquor in Ohio, not from taxes paid on that liquor. All liquor sales in Ohio occur at private “agencies,” or stores that sell liquor. These include grocery stores, “mom and pop” shops and all state liquor stores, which were privatized in the 1990s and are not state owned. Every penny of the former taxes on liquor sales paid at agencies goes to the Ohio Treasury Department, not to JOBS or JobsOhio.
- Audited Financials
JOBS’ financial statements are audited annually and reviewed quarterly by a certified public accounting firm, currently Deloitte & Touche. These financial statements are posted on JobsOhio’s website, providing transparency to JOBS.
- Why is this Funding Important?
JOBS liquor profits provide a stable funding source for economic development in Ohio, and JobsOhio has proved its effectiveness in using these funds and making smart investments to fulfill its mission. Also, this allows JobsOhio to utilize a longer-term horizon for funding economic development activities, giving JobsOhio a competitive advantage over other state development organizations.