Keuka College gets financial failing grade

PENN YAN—Keuka College joins 11 other universities in New York that failed the state education department’s fiscal responsibility test.
The U.S. Department of Education released the results in mid-August. According to the Chronicle of Higher Education, the test is for private non-profit and private for-profit universities.
Colleges that fail the test are subject to additional federal scrutiny of student-aid funds and, in cases of the lowest scores, extra financial obligations. A total of 12 colleges in New York failed.
For Keuka College, the score has declined since the 2006-07 school year. Then, the college was given a three, the highest grade on fiscal responsibility test. In 2007-08, Keuka College had a 2.3. The score for 2008-09 was 1.3.
The full scoring range is 3 to minus 1. The state gives scores between 1.5 and 3 to schools that pass the test. Failing colleges get extra monitoring, but colleges between 1 and 1.4 are still allowed to participate in federal financial aid programs.
Universities that score below a 1 are required to post a letter of credit with the department equal to 10 percent of the federal student aid that goes to their students annually. However, the education department said colleges are rarely kicked out of financial aid programs.
According to the Chronicle of Higher Education, all private colleges must participate in this test if they receive federal aid. The information evaluated for a score comes from the college’s audited financial statements.
The number of private non-profit colleges failing is also up in the last three years. Fewer for-profits failed during the same time. In 2008-09, 149 private non-profits and 37 private for-profits failed across the state. In 2007-08, the numbers were 126 private non-profits and 49 private for-profits. In 2006-07, 88 private non-profits and 48 private for-profits failed.
According to Chronicle, colleges usually failed because of the institution’s overall financial fragility. However, the Chronicle said that in 2009 several nonprofit colleges attributed it to “steep declines in their endowment values.”