The Year in Preview
What will 2011 and the 112th Congress bring in the way of legislative and regulatory change that could impact the higher education workforce and its business operations?
Josh Ulman, chief government relations officer at CUPA-HR, and Larry (Chad) Chadwick, vice president of federal government relations for TIAA-CREF, agree that with the midterm election shake-up and a shifting balance of power in Congress, 2011 should see less sweeping legislation from Congress compared to the 2010 passage of health-care reform and financial regulatory reform.
While at this point, no one knows exactly how efforts to repeal parts of the Patient Protection and Affordable Care Act (PPACA) or efforts to defund it may play out, Chadwick anticipates active oversight of the new health-care and financial reform laws. Likewise, the possibility exists for significant potential rulemaking from federal agencies, notes Ulman.
Backdrop: A Productive Lame Duck
During the lame-duck session in December, President Obama signed into law an $857 billion extension of the Bush-era tax cut package, adding a 13-month extension of unemployment benefits for those whose benefits were set to expire. Most provisions were extended for an additional two years (through 2011 or 2012), including extension of current individual income tax brackets, capital gains and dividend rates, and extension of tax-free distributions from individual retirement plans for charitable purposes. The legislation also contains estate tax relief, an Alternative Minimum Tax patch, and a payroll/self-employment tax holiday during 2011 of two percentage points.
Of special interest to higher education, the legislation includes extension through 2012 of the increased annual contribution to Coverdell Education Savings Accounts from $500 to $2,000 and an expanded definition of education expenses to cover elementary and secondary school expenses, notes Chadwick. Other education incentives receiving a two-year extension include expanded student loan interest deductions, the American Opportunity Tax Credit, and the tax-free treatment of certain employer-provided educational assistance (section 127 of the Internal Revenue Code). Extension of section 127 allows an employee to exclude from income up to $5,250 per year in assistance provided by their employer for any type of educational course at the associate, undergraduate, or graduate levels.
With regard to policy changes originating from federal agencies, Ulman foresees a tremendous level of activity coming from the National Labor Relations Board and anticipates that major decisions are forthcoming. Among them are whether teaching assistants should be viewed as students or as employees with the right to organize.
Likewise, Ulman is looking for the Department of Labor to continue its active agenda in 2011. The agency has indicated it will issue new regulations with respect to recordkeeping and disclosure requirements under the Fair Labor Standards Act, says Ulman. “Essentially, the new rule would require employers to provide workers with a written explanation as to why they’ve been classified as either an independent contractor, exempt, or nonexempt employee, and to maintain a copy of this written disclosure for inspection by DOL. It’s unclear when we’re going to see that, but I imagine that would be a top-line item for the department to address,” adds Ulman. The DOL has also put together a new survey on the Family Medical Leave Act that many suspect may be a precursor to regulatory action and has been working on additional guidance for the nursing mother break requirement contained within the new health-care law.
The Occupational Safety and Health Administration is also moving toward requiring employers to create safety and health plans focused on reducing overall hazards and is considering increased recordkeeping requirements for ergonomic injuries, notes Ulman.
Meanwhile, the Equal Employment Opportunity Commission is reviewing the use of credit checks, which can have a negative impact on certain minorities. Under the existing guidelines, an employer needs to ensure that using the credit checks is job-related and consistent with business necessity. “We expect the EEOC may provide additional guidance on what ‘job-related’ and ‘consistent with business necessity’ mean in this context,” says Ulman. The EEOC also recently issued regulations on the Genetics Information Nondiscrimination Act. One highlight is that the EEOC recommends employers use specific language in any request for health-care information so they don’t accidentally request genetic information, which is prohibited, notes Ulman. “Because the standards are different for health-care information and genetic information, they have included new regulations on model disclaimer language that state that the employer is not seeking any genetic information.”
There has been some discussion that the Employment Nondiscrimination Act would prohibit discrimination based on actual or perceived sexual orientation or gender identity. “One development we might see is a version of this bill that eliminates protections based on gender identity and moves forward with something on sexual orientation, since gender identity provisions have been more controversial than the sexual orientation provisions,” explains Ulman.
Finally, the Treasury and Labor departments recently issued a joint request for information on the use of lifetime income in defined contribution plans. In September 2010, Treasury and DOL held a hearing on the same subject and asked a number of organizations, including TIAA-CREF, to testify, notes Chadwick. The Senate is also showing interest in the issue of retirement security. On Feb. 3, 2011, the Health, Education, Labor and Pensions Committee held a hearing entitled “Simplifying Security: Encouraging Better Retirement Decisions,” with additional hearings expected.
Reading Between the Committee Lines
With respect to higher education funding, something of interest for all business officers to watch is the level of austerity adopted by this Congress, says Chadwick. “With additional federal stimulus funding for states highly unlikely, many states will be forced to address massive budget shortfalls and looming deficits, and some are already announcing their own austerity measures,” notes Chadwick. As a result, a growing number of state legislators will have to consider the sustainability of their employee pension programs, among other expenditures. And while police and firefighters may be among the more immediate public employees to face scrutiny over pension payouts, higher education is still likely to face significant cuts in other areas, says Ulman.
Keep an eye on federal congressional committees as well, suggests Chadwick. He notes that whereas many used to monitor the activities of the House Committee on Appropriations to see who got what, today most are watching to see what the committee may seek to defund. Other committees to monitor include the House Committee on Oversight and Government Reform, which will begin monitoring implementation of new regulations within the health-care law, and the House Committee on Financial Services. While at this point the specific agenda of the 112th Congress is still not well formed, the broad themes of fiscal restraint and congressional oversight on regulatory agencies are taking a decidedly bottom-up approach, notes Chadwick.
Karla Hignite, principal of KH Communication, is editor of NACUBO's HR Horizons. E-mail: firstname.lastname@example.org.