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Ricardo Azziz has held quite a few govt positions in larger training and led the merger that resulted in Georgia Regents College, now Augusta College. He’s principal at Strategic Partnerships in Larger Schooling Consulting Group.
He writes the common Merger Watch opinion collection on company restructuring in larger training.
It’s no secret that larger training workers are sad with the trade. A latest CUPA-HR report famous that amongst 4,782 larger ed workers surveyed, 56.2% had been at the least considerably more likely to search for new employment alternatives within the subsequent yr, an increase within the quantity planning to depart in comparison with 2021’s survey.
Pay issues.
In reality, 86% of survey respondents reported that wanting a rise in pay was amongst their high three causes for looking for new employment. These outcomes recommend larger ed is vulnerable to experiencing important worker turnover within the coming yr.
This isn’t completely stunning. The median household earnings, adjusted for inflation, has dropped for the previous three years. The expiration of pandemic-era monetary help packages and the fast rise in inflation have made issues considerably worse for American households, with households final yr going through the biggest annual cost-of-living will increase in over 40 years.
Equally, pay will increase for larger ed employees haven’t saved tempo with inflation.
That’s why a regulatory proposal from the U.S. Division of Labor that may enhance the minimal wage threshold for time beyond regulation pay eligibility would appear to be welcome — at the least by employees. However the rule may create monetary burdens for faculties. That’s an added legal responsibility that officers might want to begin estimating and making ready for instantly.
The DOL proposal would enhance the yearly wage threshold for time beyond regulation pay eligibility from $35,568 to roughly $55,000. Nonetheless, the edge for being eligible for time beyond regulation pay might be as excessive as $60,000, because the cut-off worth applied within the closing regulation can be based mostly on the newest wage knowledge accessible.
Extra time pay refers to compensation for the time workers work past 40 hours in a workweek. The pay should be at a charge of at the least 1.5 instances their customary compensation. DOL’s proposal would imply that the variety of workers qualifying for time beyond regulation pay would enhance considerably — whether or not they’re presently categorised as exempt employees or not. We should always observe that the foundations don’t appear to use to school — together with athletic coaches and assistant coaches, relying on how a lot they really train — and to pupil employees, together with educating and analysis assistants.
Importantly, the proposal additionally adopts computerized wage threshold will increase each three years to mirror present earnings knowledge, which may additional enhance the variety of workers that qualify for time beyond regulation pay within the years to return. The principles had been open for public remark by way of Nov. 7 and are awaiting finalization.
In a nutshell, the brand new DOL time beyond regulation pay guidelines imply that workers making between roughly $35,000 and $55,000 yearly, whether or not hourly or not, would qualify for time beyond regulation pay. The DOL has estimated the rule would prolong time beyond regulation protections to roughly 3.6 million salaried employees — a quantity that might develop if the edge continues to extend.
Contemplating that the median workers salaries for faculties and universities in 2019-20 ranged from $27,000 to $59,000, the variety of workers affected in larger training might be important, notably as personnel is the one largest line merchandise in most larger ed budgets.
It’s unclear how a lot the brand new DOL rules would impression the anticipated enhance in worker turnover in larger training.
Whereas the CUPA-HR survey flagged pay as an essential driver for leaving, additionally it is essential to notice that the survey has its limitations, notably regarding hourly workers in lower-paying positions, comparable to environmental and cleansing providers, services, groundskeeping and so forth.
Roughly 40% of the CUPA-HR survey respondents had been supervisors and greater than 50% had been both in administration, human assets, pupil affairs or tutorial affairs. These are models which can doubtless be much less impacted by the brand new DOL time beyond regulation pay guidelines, as we are able to assume that the majority of those workers can be incomes above the edge.
Regardless of the plain profit for a lot of workers members, it’s clear the brand new time beyond regulation rules will add to the bills of upper training establishments. That’s on high of the present threats of extra capability, altering demographics, rising geographic competitors, and lowering willingness of scholars and their households to just accept persevering with tuition and charge will increase.
The added burden of accelerating workers salaries will solely worsen the forecast for a lot of faculties and universities.
The impression can be felt most by smaller establishments of upper training, i.e., these lower than 5,000 college students. Within the U.S., smaller establishments account for round 75% of all faculties and universities.
On this column, I’ve repeatedly acknowledged that the majority faculties and universities ought to incorporate consideration of a merger (aka acquisition or consolidation) into their common strategic assessments. Whether or not to pursue one ought to come after fastidiously contemplating options, in addition to clearly assessing the establishment’s long-term prospects and the present and future trade panorama.
Pursuing or exploring a merger ought to happen sooner relatively than later — earlier than their monetary, enrollment and branding belongings are exhausted. A merger shouldn’t be solely a tactic to boost institutional survival, however additionally it is an opportunity for faculties to protect their historical past and heritage, to reenergize their campuses and their branding, to develop and broaden their tutorial choices, to enhance pupil entry and success, and to boost their competitiveness.
The potential monetary stress from the pending DOL guidelines ought to function an extra name to motion for a lot of establishments in our nation, notably these which are smaller, are experiencing declining enrollment, or are financially fragile. The approaching rules will solely exacerbate the fragility of many establishments which are already financially precarious.
Additional complicating the image is the U.S. Division of Schooling’s new insurance policies on reviewing and approving school mergers, which might result in additional complexity and delay in having the merger authorised.
The time to start exploring a merger in earnest, whether or not for institutional sustainability, programmatic progress or each, is now — greater than ever.
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