The test was designed to keep tabs on the fiscal stability of colleges, with an eye toward preventing financial aid from going to institutions that may shut down abruptly. For example, Dowling College, which shut down last year, has a failing score on the new list.
However, many private college officials have for years criticized the department’s methodology for the test. They say the scoring system fails to use generally accepted accounting practices, is backward looking and does not capture the complexity of a college budget. For example, a decline in a college endowment’s investment value is counted as an operating loss.
The department’s Office of Inspector General recently agreed with some of that criticism, noting in an audit released last week that the test’s methodology should be improved.
