Updates: VCCS Transfers and Dominion Taxes

A Good Idea Which Is Spreading

A recent announcement from the Virginia Community College System provides a nice enhancement to an earlier Bacon’s Rebellion story about the smooth transition VCCS students can make to certain Virginia public universities.  A new articulation agreement has been signed with private Randolph-Macon College in Ashland.

The new agreement covers transfers from any of the state’s community colleges and “expands on an existing transfer program between R-MC and (J. Sargeant) Reynolds Community College, which already has facilitated transfers for more than 200 students over the past two years,” to quote the news release.

Not long ago there was a major cost difference between private schools such as Randolph-Macon and public universities.  Public-school price hikes have narrowed any gap and the private schools often have far more scholarship funds or work-study opportunities available.  Spending your first two years at a community college is still a substantial cost savings wherever you choose to finish.

“R-MC academic scholarships range from $14,000 to $21, 000, depending on the student’s GPA. All students are automatically considered for academic scholarships once they are granted admission to R-MC, and no separate scholarship application is required. In addition, (Guaranteed Admission Agreement) students who earned their Associate Degrees at a VCCS school will be eligible for a two-year College Transfer Grant from a program administered by the State Council of Higher Education for Virginia.”

This is a testament to the recognition throughout the higher education establishment that affordability is everybody’s problem, which of course requires recognition there is a problem at all.  It also indicates community colleges are providing a good educational outcome for students willing to do the work, which is always the essential ingredient.

Taxing Any Layman’s Ability to Understand

The State Corporation Commission is being asked to rule on yet another argument over recent federal corporation income tax reductions and how they should be reflected on utility bills.  Effective January 1, 2018, the tax rate dropped from 35 to 21 percent and the SCC quickly issued a directive to all public service companies that the benefits should pass directly to customers as soon as possible.

In a ruling earlier this year the SCC denied a Dominion Energy Virginia request to continue using the old, higher tax rate in calculating future bills for transmission costs.

The accounting behind that transmission issue was easier to explain than this latest issue, which centers on another of those specific rate riders which show up on your bill to pay for a specific purpose.  In this case the argument involves Rider W, for the Warren County gas combined-cycle generator, but the same question will crop up in all the other riders in effect during the change in the tax rates.  The decision on Rider W will be the precedent for all.

That charge on your bill is intended to collect the total lifetime cost of those individual projects, construction cost, operating cost, profit on capital, depreciation and taxes.  As the plant opened, a projection was made for how much to charge customers annually to cover all that, and it adjusted annually.  The adjustment looks back and includes an element of true-up, adding or subtracting a bit based on the actual experience of the prior year.

The argument at hand involves how to look at taxes which were accrued but deferred during the higher-rate period and paid later at the lower rate.  When I hit a phrase like “amortization of the deferral balance related excess deferred income taxes (“EDIT”) over the Projected Factor Rate Year” in written testimony, I’m going to step back and let the experts have it out.  For Rider W the dispute involves less than $3 million of the tax bill, and the total amount across all the various riders is not reported.  Forward-looking charges will reflect the lower 21 percent tax rate.

Two points, however:

  • Those folks down at the utility will not walk past one nickel on the sidewalk if they can help it.  They may have found a creative way to earn excess profits in a rider, which is supposed to be immune to excess profits. We need the SCC to be just as vigilant over small sums as large.
  • Should the General Assembly drop the ball on state tax policy adjustments to the new federal taxing regime, this process is going to work in the opposite direction at the state level. Dominion’s Virginia corporation income tax will grow, substantially, and every dollar will pass on to customers, not stockholders. Every dollar.
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7 responses to “Updates: VCCS Transfers and Dominion Taxes

  1. You know when there is OUTRAGE over the higher taxes from conformity and crickets from the same legislators on this – you know something is rotten in Denmark.

    It’s unbelievable that legislators stand back and watch Dominion do this – without a whimper while at the same time they hammer Northam over conformity.

    Used to be – fiscal conservatives would be all over this… but no more…

  2. re: ” A new articulation agreement has been signed with private Randolph-Macon College in Ashland.”

    I must be dense but why can’t people do this right now? Or are we saying that any student with any two years of study with passing grades will be accepted without further vetting?

    I’d support the CONCEPT of these transfers for any student in any Community College to any state-supported 4-yr – with restrictions. For instance – UVA cannot possibly accommodate any/all Community College transfers so there have to be qualification criteria but we ought to have a standard state-wide framework for transfers contingent upon the admission standards of each 4-yr.

    Ergo – someone might be able to transfer almost immediately to some schools but would not for other schools that have a lot of demand and competition that results in turning away even non-CC first-year/freshmen applicants.

    • Yes, it’s about guaranteed admission to R-MC with a 3.0 and the right combination of classes. The hang-up over the years has been acceptance of the credits more than the admission, and with acceptance of the credits you can move smoothly to on-time completion.

      • I guess I would wonder why that is not already pretty much universal/standard for all public higher ed and super easy for private higher ed to participate.

  3. What, UVa give full credit for English 101 or linear algebra at Podunk U? If the outcome is similar, why pay a three times as much? It has to be better!

    • Steve says:
      “What, UVa give full credit for English 101 or linear algebra at Podunk U? If the outcome is similar, why pay a three times as much? It has to be better!”

      Steve, that is one way to describe the issue, and a good one too.

      Here is another way:

      In Virginia, schools of higher education suffer from an over supply of seats. So, to the extent of that oversupply, each seat filled with a kid, any kid, adds near zero in costs but generates critical funds that are necessary often to just breakeven, or get as close to it as the school can, or to build even more capacity.

      Given this reality, it becomes next to irrelevant financially to the school, whether or not that kid sitting in that “overbuilt” seat is learning anything, or indeed is capable of learning anything, in that seat. But, keeping him in that seat is still critically important to earning the money critically necessary the school, if it be only to fill up an oversupply of facilities already built and having to be maintained and paid for.

      This reality is the central reason why the standards of learning, and testing for learning, in many of our colleges and universities, have fallen so far, and will likely continue to do fall, no matter their retention and graduation rates.

      But this problem multiplies other problems. For only one of many examples, in order to keep the very low or non-learners in their seats, all of the other kids in the class, no matter their abilities and needs, also get a free ride from having to learn, pass real tests and prove real performance achievement reached to a mandated level.

      As a result, for all kids in far to many of our schools there is no downside for their failure to learn or do as well as they can, insofar as concerns adverse consequences to them in school. Here even the threat or reality of a bad grade on a minor test, daily, weekly, or otherwise can have a great positive affect on a students performance. Without the constant reminder, for far too many of our kids drift off into the ether of non-learning until it is too late. We need to fix this.

  4. On direct transfers – certainly the applicant should meet all standards of the higher ed they want to transfer to – including the fact that UVA would be tougher than some other.

    I think the idea is to develop a process that removes obstacles for transfers.

    And this could be looked at from two different perspectives.

    Easier transfers properly vetted could put more qualified applicants in vacant/surplus seats in higher ed than unqualified and/or inflated grades straight from high school and it could motivate a system where folks in high school who want to go to college but are marginal and/or not quite ready – spending two years at a Community College is far better than going to a 4 year right off the bat – and needing remedial help and still flunk out – with a gob of debt.

    The thing is that the overall context of the US higher ed system has big contrasts. Lots of problems, no question, but still a system where folks from other countries around the world vie and compete to attend the US higher ed and as someone pointed out – despite our issues – we are the most productive country per capita on the planet and you don’t sit in that spot unless your workforce is highly educated.

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