Benefit not going away, but allowances are more selective
The trend in a 2000 survey conducted by MRA-The Management Association showed an increasing number of companies offering tuition reimbursement, but tighter economic conditions have since prompted many employers to reconsider that perk, according to Jane Berg, director of employee relations services for the Waukesha-based organization.
"We have heard that some employers are moving toward more restrictive policies with regard to tuition reimbursement," Berg said. "Initial requests may be scrutinized more closely. Requirements for grade performance may become steeper."
A case in point may be Jefferson Electric, which employs 100 at its Franklin facility, where it manufactures electrical transformers for industrial, military and government markets.
"We are thinking about starting to review them a little closer and maybe not approving them on as broad a spectrum of things as we used to," said Daniel Roltgen, director of human resources at Jefferson Electric.
The state of the economy, Roltgen said, prompted the company to limit reimbursement to "coursework more focused on the business or possible promotion in the future. We seem to have two or three employees on it most of the time – they do take advantage of it."
While Jefferson Electric’s written policies regarding tuition reimbursement have not changed, Roltgen and the rest of the management team at Jefferson Electric decided to adjust the way the policy was implemented during the budgeting process this spring.
The company’s fiscal year started July 1.
"Master’s degrees, per se, aren’t necessary in our business," Roltgen said. "We look for more specific coursework … customer service, engineering or technical coursework that would help them relate to our products or businesses."
As employers such as Jefferson Electric are changing the way they administer their policies, care must be taken to remain evenhanded in determining which requests for reimbursement are approved, according to Gail Olsen, an employee benefits attorney with the Milwaukee-based law firm Reinhart, Boerner, Van Deuren, Norris & Rieselback S.C.
"These policies typically leave leeway for the employer to exercise discretion," Olsen said. "The guideline from the IRS (for deductibility of tuition as a business expense) is that the education has to be directly related to the employee’s ability to maintain or increase their ability to perform their job. What is the value added to the business?
"Tuition reimbursement should be administered in a uniform and nondiscriminatory manner," Olsen said. "If you approve something for one person and deny it for someone else, you have to be able to explain why."
Some policies changing
In some workplaces, written policies regarding tuition reimbursement are changing. Requirements for performance in classes employers pay for and other factors may become more stringent, according to Berg and others.
Longevity of employment is becoming a growing criteria in determining whether employees receive reimbursement, Berg said.
"Compared with the 1996 data, there has been about a 10% increase in the number of employers having a longevity requirement of 3 to 12 months," Berg said.
The number of companies requiring benefit recipients earn a specific grade has also increased according to Berg, climbing to 62% from 56% between surveys.
However, changing tuition reimbursement policies is not a universal priority for companies.
"I haven’t had a lot of requests for looking at policies and revamping policies," Olsen said.
"I have not personally seen any companies pull back," Holly Teska of Milwaukee-based Right Management Consultants said. "I think they are looking more at economizing around health care. But with regard to tuition reimbursement, there are constantly discussions about benchmarking against what other companies do, but no one is pulling back yet. Companies are still focused on development of people."
Size is a factor
On the whole, Wisconsin manufacturers were more likely than service-based firms to pay for employees’ education. Smaller companies had a harder time offering the benefit than their larger counterparts.
Approximately 85% of manufacturing firms surveyed offer tuition reimbursement, while only 78% of non-manufacturers offered the benefit.
According to the survey:
– 83% of employers, most of which were located in southeastern Wisconsin, offer tuition reimbursement for managerial, supervisory and professional employees;
– 83% offer tuition reimbursement for the non-exempt clerical, technical and drafting employees;
– 81% offer tuition reimbursement for maintenance, service and production employees.
Perhaps the most significant factor affecting tuition reimbursement is the size of the company. The survey revealed that:
– 73% of companies with one to 49 employees offered tuition reimbursement;
– 76% of companies employing 50 to 99 employees reimbursed employees for tuition;
– 86% of companies with 100 to 249 employees offered tuition reimbursement.
More than 90% of companies with 250 to 500 employees offer tuition reimbursement. As the size of a company escalated to 500 employees, approximately 93% offer tuition reimbursement.
Aug. 30, 2002 Small Business Times. Milwaukee
