Ummm . . . in the current academic funding climate, this is happening even to tenured faculty.
clarification is an important matter. I've worked under three different sets of rules. 1) Massive R1 gave a 25% of yearly pay for every overload; 2) Ivy which gave nothing at all for supervising extra graduate students; 3) another massive university which pays adjunct rate for overload.
I think what no one else has mentioned is that if the department is in a serious bind, saying no to them might hurt the OP's recommendation letter.