news-record.com

GREENSBORO — When the federal government’s financial responsibility evaluation deemed Guilford College unstable last year, President Kent Chabotar heard from people who were concerned about the college’s future.

“I probably got half a dozen inquiries from people on campus, as well as two parents and a couple of alumni,” Chabotar said this week. “But that was six too many, given how misleading the test was.”

Chabotar is chairman of a task force working to change how the U.S. Department of Education measures schools’ financial stability. The task force hopes to make preliminary recommendations to the department by the end of the year, he said.

The education department assesses the financial health of private colleges using three ratios related to debt and assets. Colleges are scored on a scale of minus 1 to 3. Scores of at least 1.5 are considered passing.

Guilford earned a 1.4 based on its standing in the 2008-09 fiscal year.

It was among 149 private, nonprofit colleges across the country that failed the test.

A college’s score determines whether and how it is able to participate in federal financial aid programs.

Hope Williams, president of the advocacy group N.C. Independent Colleges and Universities, said colleges share the education department’s concern that those receiving federal aid be financially strong.

“But the question, like so many types of evaluations, is 'What kind of measures do you use?’ 'How do you evaluate that stability?’” Williams said.

The task force cites several concerns with the test. Chabotar, who is on the board of the National Association of Independent Colleges and Universities, said one is how endowment losses figure into the score.

As it stands, the education department counts endowment losses as an expense, he said.

Chabotar said Guilford’s endowment losses played into its negative score.

He said the task force also questions how consistently the education department applies its formula — whether the department applies the most current accounting rules in making its calculations, as well as the caps placed on how well a college can do in any given ratio.

Official scores for the 2010 fiscal year have not been released, but Chabotar said Guilford was notified in May that it earned a healthy 2.4.

Given that many colleges’ endowments have rebounded, Chabotar said he expects to see fewer schools on the list.

The Department of Education has issued scores since 1998, but in recent years has made the scores public.

Chabotar said it “doesn’t do anybody any favors” to give the wrong impression about a college.

“Last time I checked, we weren’t about to close our doors,” he said of Guilford College.

Contact Jonnelle Davis at 373-7080 or jonnelle.davis@news-record.com