Commentary: OT rule will hurt N.J. service providers and clients

Gov. Christie's draft 2017 budget includes funding to continue to move individuals with intellectual and developmental disabilities out of developmental centers and into communities, allowing them to lead independent and meaningful lives. This is a laudable act by Christie and one that is appreciated by individuals with disabilities, their families, and providers of supports and services to this community.

Providers have long been committed to enabling the population to move into community settings. This commitment, however, has never been more challenging. Providers have not received a cost-of-living wage adjustment in nine years and now face an impending federal regulation, the proposed overtime rule, that may lead to the closure of some agencies that have served individuals for more than 20 years.

President Obama, through an executive order, is requiring all employers to assume additional costs as a result of raising the salary threshold at which workers are exempt from overtime requirements. This essentially means salaried employees making less than $50,440 will now be eligible for overtime pay. This change alone will impact providers in the millions of dollars.

While it affects all types of businesses and services, the challenge this rule creates for providers serving people with intellectual and developmental disabilities in communities is especially significant. Providers are funded entirely by state and federal Medicaid dollars and have no means to increase prices or set higher rates to pay for this mandate.

Costs associated with supports and services cannot simply be raised to compensate for an increase in staffing costs, a strategy that will no doubt be adopted by companies and organizations throughout the country. As alarming, most providers in New Jersey do not maintain substantial reserves that could be used to offset the significant and unanticipated additional labor costs because they are prohibited from doing so.

There is not a provider we know that would say wages for their staff are adequate; in fact, some would say many employees serving the intellectual and developmental disabilities population do not even earn living wages. Had appropriate funding been available over these past nine years, wages would have gradually increased and the financial impact of the rule would not be as devastating. Quite simply, providers will not be able to absorb the enormous additional costs that come from this rule unless it is paired with additional state and federal funds.

Absent this funding, there is no question that many providers will be forced out of business. If this happens, the very staff the rule is meant to help, as well as the individuals they serve, will suffer the consequences.

Apparently, this wage threshold has been addressed only twice in the last 40 years. While supportive of raising the threshold, we believe it must be raised more incrementally and predictably. We urge New Jersey's congressional delegation to support legislation to increase federal funding for providers so that we can afford to comply with this rule and to avoid losing valuable providers when there are more than 3,000 individuals still waiting for services.

Valerie Sellers is CEO of the New Jersey Association of Community Providers. vsellers@njacp.org

Daniel J. Keating is executive director of the Alliance for the Betterment of Citizens with Disabilities. dan@abcdnj.org