Michael Rounds, associate vice provost for human resources at Kansas University, tells a congressional committee that the Obama administration's new rules on overtime pay could force the university to reduce services and raise tuition.

A Kansas University official testified before a congressional committee Thursday, saying new regulations from the Obama administration that will make millions more American workers eligible for overtime pay will be “detrimental” to higher education.

But an official from the U.S. Department of Labor rejected that claim, saying the impact of the new rules, which are scheduled to take effect in December, will be negligible on higher education and other nonprofit industries.

“It is KU’s position that this widespread reclassification is to the detriment of both our employees and students,” Michael Rounds, associate vice provost for human relations, told the U.S. House Committee on Education and the Workforce.

“In the face of these costs and challenges, KU will ultimately be forced to adjust or reduce services, eliminate or consolidate positions or, at some point, raise tuition, all to the detriment of our students,” he said. “The changes will also increase the costs of, and thus inhibit, important research done by the university.”

Michael Rounds, associate vice provost for human resources at Kansas University, tells a congressional committee that the Obama administration's new rules on overtime pay could force the university to reduce services and raise tuition.

Under current law, employers are required to pay overtime, or 1.5 times a worker’s hourly wage, for time worked in excess of 40 hours per week. But salaried workers who earn more than $23,660 a year may be exempt from overtime requirements, depending on their job duties.

But the Obama administration has been pushing since 2014 to raise that threshold, which has not changed since 1975, and last month the Labor Department issued new rules raising the cap to $47,476 per year.

That is expected to expand eligibility for overtime pay to an additional 4 million U.S. workers when it takes effect Dec. 1, including an estimated 354 employees of KU.

Rounds said it would cost KU $2.3 million a year in overtime costs if those employees lose their exempt status. The other option, raising their salaries above the new threshold in order to keep them exempt, would cost more than $2.9 million.

“The new changes to the (Fair Labor Standards Act) overtime rule represents a major expense for public universities and puts our campus in a further financial strain, as we continue to deal with decreased state funding,” Rounds said. “There is simply no way for universities like KU 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.”

The committee is reviewing the impact of the new overtime rule and may draft legislation that would overturn it.

Rep. Lynn Jenkins of Kansas, a Republican whose district includes Lawrence, called the new rules “misguided” and said she supports overturning the new rule.

“I will continue to work to undo the Administration’s overtime changes and help KU, and many other organizations like them, to be able to do their job to the benefit of Kansans and Americans,” Jenkins said.

Rounds’ testimony drew some sharp response from Democrats on the committee, including Rep. Robert Scott of Virginia, who pointed out that a $3 million cost increase would amount to less than 1 percent of KU’s entire $1 billion operating budget.

“What does your basketball coach make?” Scott asked pointedly.

“The basketball coach, Mr. Bill Self, is not a state employee, and therefore I don’t have his salary,” Rounds said.

Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, a left-leaning think tank, said Rounds was exaggerating the impact the new rules would have on higher education.

He noted, for example, that in writing the new rule, the Department of Labor ensured that future research grants from the National Institutes of Health will be above the income threshold for exempting workers from overtime. The rule also exempts many teachers, professors, adjunct instructors, coaches, administrators and many graduate and undergraduate students.

He said the new threshold will make 35 percent of all full-time salaried workers eligible for overtime. That’s far more than the 7 percent who are now eligible, but still much less than the 60 percent who were eligible when the current threshold was established in 1975.

“In other words, this new threshold is a reasonable but conservative choice,” Bernstein said. “The U.S. economy is twice as productive as it was 40 years ago, and the workforce is much more highly educated. I know of no plausible reason why our labor market cannot maintain a standard that approaches what we had back then.”