State evaluation of universities is important for administrators to serve as a basis for performance monitoring, policy formulations and distribution of funds. In this paper, a formal methodology was proposed to build a rational basis for evaluation and ranking of Iranian state run universities. In the first step, the entropy method from MCDM is applied and tested using real data from 47 state universities. Poor results of entropy led to the development of a new nonlinear programming formulation. This new model was then reduced to an interactive linear programming formulation in order to solve the problem. Real data is used to test and validate our methodology.