New Federal Overtime Rule Adds to Financial Strain on Public Universities

By Peter McPherson

The administration is right to increase the minimum income threshold for exemptions to overtime pay, which has not kept up with inflation since it was set in 2004. But the size of the increase that the administration announced this week – more than double the current level of $23,660 – and its rapid implementation will have a significantly negative impact on public universities and its students and staff.

The overtime rule represents a major new expense for public universities and puts a further financial strain on them as they continue to deal with dramatic state funding cuts – an average of 17 percent less per student than before the recession. There is simply no way for universities to absorb costs of this magnitude without an impact on our academic, research, and outreach missions that will be felt by the public we serve.

Unfortunately, at some schools it’s likely that tuition will be forced to rise. Additionally, student support services may be curtailed, research projects may be cut back, personnel could be decreased, and community outreach may be limited in order to accommodate the changes. It is easy to point fingers at public universities for increasing tuition, but when state funding for public higher education is dramatically cut and new federal rules require substantially increased expenses there often isn’t a choice for these schools.

Public universities value their employees and that was reflected in our support for reasonable updates to an outdated overtime rule. And these institutions already work to provide for their employees through benefits packages that usually exceed those found in the private sector, including quality, affordable health insurance, paid leave, retirement plans, and tuition discounts for family members.

Universities have a responsibility to contain costs and develop efficiencies in the delivery of our services while advancing our public mission. And we know they will continue to do so. But, we also need the states and federal government to be better partners in this important collaboration.
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Peter McPherson is president of the Association of Public and Land-grant Universities.