President Chabotar to Chair NAICU Task Force on Financial Responsibility
President Kent Chabotar joined the board of the National Association of Independent Colleges and Universities Feb. 1 and will chair the NAICU Task Force on Financial Responsibility.
He was elected to the board by other college presidents to represent Region IV in the southeast. With a membership of more than 900 institutions, NAICU is the principal group that represents the interests of independent higher education to the federal government and national media.
The task force will work with the U.S. Department of Education to improve the department’s financial responsibility test. Members of the task force include senior officials from the National Association of College and University Business Officers, Council of Independent Colleges, state independent college associations and individual institutions.
“We hope to make the test better reflect an institution’s true financial condition and creditworthiness,” Chabotar said. “The issue is complicated because so much of the test, including the numbers used, ratios, and weights, are mandated by federal law and regulations.”
On Feb. 2, Chabotar moderated a panel at the NAICU annual meeting in Washington, D.C., on “Dealing with the Department of Education’s Financial Responsibility Standards” that explained the issues with the test, how institutions should respond to the results on campus and in the media, and the role of the Task Force in developing a proposal to the department for reforming the current system.
Last summer, Guilford and more than 100 other institutions did not pass the Department of Education’s financial responsibility test for financial aid programs for FY 2008-09. At 1.4, the College’s score fell just below the “passing grade” of 1.5.
Although the score had no immediate effect on Guilford’s financial aid program, the College is a major recipient of federal aid including $5.4 million in Pell grants in FY 2010-11. On a scale of -1.0 to a maximum +3.0, Guilford had scored +2.2 and +3.0 the two previous years and the College’s auditors have estimated a +2.4 score for FY 2009-10.
Chabotar said, “The major influence on the scores here and elsewhere have been rising and falling endowment market values and not underlying financial weaknesses.”
Feb. 2, 2011
