Glenn School’s Seligman and Yocco use ‘forensic public finance’ to help Ohio forecast revenue

In Europe, shaky national finances have prompted a $600 billion bailout. In the United States, job growth looks to be making a slow comeback. So what does that mean for Ohio?

Professor Jason Seligman and master’s student Dane Yocco of the John Glenn School of Public Affairs are trying to help the state figure that out.

Using what Seligman calls “forensic public finance,” he and Yocco work with the Ohio Office of Budget and Management (OBM) and the Department of Taxation to analyze local, national and global events that could affect the state’s tax base and revenue. They also pick apart the sometimes-murky methodology of professional financial forecasters like Global Insight and Moody’s Investors Service to determine how relevant their predictions are for Ohio.

“Dane and I are like sleuths,” said Seligman, who teaches public finance and budgeting at the Glenn School. “We go in and try to figure out where the plugs are.”

With the help of Cindy Holodnak, the Glenn School’s associate director for outreach and engagement, Seligman met last year with Tax Commissioner Richard Levin and OBM assistant director David Ellis to discuss a possible partnership.

“I think we all left the room knowing more about each other, but without necessarily any plan for work,” he said.

By late last fall, as economic and job news continued to look bad for Ohio, the parties decided to make a plan. Seligman approached second-year MPA student Yocco about helping out.

The primary task for the Glenn School researchers is to help document, replicate and innovate Ohio’s current revenue forecasting techniques.

“We want to look at where Ohio derives their tax base, and the evolution of that over time, especially with regard to what’s happening in Ohio,” said Yocco.

Part of that job is breaking down current forecasts from the state and international firms like Global Insight, finding weaknesses and supplementing the predictions with data gathered by the state. “We also look at old forecasts and try and discover the salience of components within those, both in the timeframe they existed and going forward,” said Seligman.

Another part is anticipating the effect of current and future events on Ohio’s economy. For example, if national economic indicators show growth in the manufacturing sector, should Ohio — with its manufacturing-heavy economy — see a comparable level of growth, more growth, or even less? And what will happen to Ohio’s revenue when federal stimulus money is no longer available?

Seligman describes the work arrangement as an “active dialogue” between him and Yocco and their state government colleagues. There are specific things the researchers are asked to examine, but they also are free to incorporate new data and creative approaches.

“We’re sort of sitting in on a jazz band,” said Seligman. “We’re not a solo act, and we know the rhythm and the meter and the structure of what’s happening.”

“We get to improvise for a few measures, then we go back to the main theme,” added Yocco.

In addition to providing a valuable service to the state, Seligman emphasizes the professional development opportunities such a partnership can offer students like Yocco. For his part, Yocco said the work has been fun and “much more gratifying than I would have imagined.”

“I came into this project with very little economics background or explicit interest,” he admitted. “It’s really driven me toward a different idea of where I want to be going in my career.” Specifically, he said, he’s considering pursuing more research-based jobs and possibly a doctorate down the road.

“It’s also very gratifying to be in a position where I think we can inform and inspire discussion,” he said.

 Yocco graduates in June, but Seligman is actively planning for the continuation of the project, which is funded this year by the Ohio State University with help from the Glenn School. A summer seminar program is in the works that will bring state financial workers to the Glenn School for talks about research, documenting data and managing Ohio’s budget in coming years.

He also hopes to involve more graduate students — at least one master’s and one doctoral student — in the future, and to encourage new Glenn School faculty members to participate in this and similar projects.

“It’s my sincerest hope that this partnership continues,” he said.