Hershey School’s Governance: 2 Opposing Views

To the Editor:

It is astounding that Pablo Eisenberg wrote a lengthy opinion piece on regulation of Milton Hershey School and Hershey Trust Company without even bothering to call the subjects of his column.

It is disappointing—and a disservice to its readers—that The Chronicle so prominently published such a fundamentally inaccurate and profoundly unvetted piece.

Mr. Eisenberg’s column begins with this sentence: “For two decades neither the Pennsylvania Attorney General’s Office nor the Internal Revenue Service has been willing to take serious action to remedy the abuses that have plagued one of the wealthiest nonprofits in America, the Milton Hershey School for poor children.”

A single phone call would have shown that this sentence—and thus the entire premise of the column—is fundamentally wrong.

The column inexplicably ignores the central fact that in 2002 and 2003 the Pennsylvania attorney general quite publicly intervened by compelling the appointment of a new board of directors. How is that “unwilling to take serious action?”

That reconstituted board since has expanded the school’s enrollment by 50 percent, from about 1,200 students to about 1,850. As a result, the philanthropy now serves more students than ever before in its history—and the enrollment growth is continuing. Why is that unworthy of mention?

Mr. Eisenberg’s piece contains numerous other errors and material omissions. Since 2003, the school has undergone a dramatic transformation, resulting in documented, significant improvements in our more than 1,800 students’ academic performance, their social and behavioral development, and their postgraduate success. The school provides a home and school to children from pre-K through 12th grade who come from families in extreme poverty. An intellectually honest critique would have included those achievements along with a discussion of areas where improvements still can be made.

Essential context also was omitted. Take, for example, the issue of student retention.

For the past 50 years, about 10 to 12 percent of students have left each year, the vast majority because of homesickness. Milton Hershey School is a residential school, and its attrition rate is consistent with residential schools nationally, according to published reports from the Association of Boarding Schools and the National Association of Independent Schools. This is an area of ongoing focus for us. But Mr. Eisenberg instead portrays it as a unique and exceptional failing.

Additionally, Mr. Eisenberg attacks the board’s complex structure but fails to point out that that structure was established by our founder, Milton S. Hershey. Members of the board of directors of Hershey Trust Company, which serves as trustee of the Milton Hershey School Trust, have a complex mandate that involves oversight of multibillion-dollar investment interests in the Hershey Company and an entertainment company—as well as the largest school of its kind for children in need. As a result, board members must have a range of knowledge and experience.

Contrary to Mr. Eisenberg’s assertion, the board has members with meaningful and relevant education experience, including the former chairman of the Philadelphia School Reform Commission and a former educator and counsel to the Pennsylvania Department of Education. The board also includes four alumni of the school—an inconvenient fact for Mr. Eisenberg’s goal of portraying politics.

What’s more, the school is filled with career educators and child-care experts. Those individuals include our current president, who previously served as the superintendent of a highly successful 7,600-student school district.

And Mr. Eisenberg misquotes Mr. Hershey’s deed and never sees fit to mention that the real-estate purchases he describes were made in conjunction with a strategic plan to enable the school to expand the number of children it serves by expanding its campus footprint.

In fact, such land purchases are specifically allowed in the deed of trust, which clearly gives the board the ability to “purchase any additional land adjoining the school property, or conveniently near to it … if they consider such land necessary or convenient for the purposes of the school.”

If Mr. Eisenberg or anyone else at The Chronicle of Philanthropy had taken the time to contact the Hershey Trust Company or Milton Hershey School, they would have learned these facts.

Then, instead of running a column which is factually inaccurate, it could have published a balanced and accurate piece on an important philanthropic subject.

Connie McNamara
Vice President for Communications
Milton Hershey School
Hershey, Pa.

Pablo Eisenberg’s op-ed piece on the Milton Hershey School Trust distilled complex background material into an accurate snapshot of the school’s dysfunction, government-oversight neglect, and the disturbing impact on needy children.

Questions about the piece were raised by the school’s spokeswoman, Connie McNamara, a few days after the article appeared online. [See letter above.] She challenged, in particular, Mr. Eisenberg’s assertion that the Pennsylvania attorney general has been “unwilling to take serious action” to reform the school’s board.

According to Ms. McNamara, “a single phone call would have shown that this premise—and thus the entire premise of the column—is fundamentally wrong,” arguing that Attorney General Mike Fisher took meaningful measures in 2002-3.

But it is Ms. McNamara who has this fundamentally wrong. During the time in question, Mr. Fisher did intervene in Hershey, making matters dramatically worse.

To explain: Mr. Fisher’s subordinates succeeded in imposing on the school’s trustees a comprehensive governance-reform package on July 31, 2002. The reforms would have overhauled the school’s board, barred conflicts of interest, limited self-enrichment, curtailed child-crowding, and otherwise prevented many of the harms described by Mr. Eisenberg.

Mr. Fisher then erased the reform package and made the school’s governance rules worse. His changes freed the school’s trustees to pay themselves the annual compensation packages mentioned by Mr. Eisenberg. Since 2003, the total the Hershey school has spent on trustee fees has grown 257 percent.

This “intervention” is what Ms. McNamara’s “one phone call” would have revealed.

Ms. McNamara’s other criticisms are equally unsupported.

For instance, if the school’s board was “filled with career educators and child-care experts,” would they have spent $40-million on a facility that housed MHS students in 20-child bedrooms, turning the child-care clock back 100 years, before the experiment was abandoned?

Elsewhere, Ms. McNamara claims that the purchase of an insolvent luxury golf course was in “conjunction with a strategic plan to enable” the school to grow.

But one wonders why the school’s trustees spent an additional $5-million to build a luxurious clubhouse and restaurant on land that was supposedly never intended to remain a golf course, or why the trustees authorized subsidizing hundreds of thousands of dollars of annual course losses.

She also overlooks the thousands of dollars of free golf that the trustees have given themselves on the course, treating the asset like a personal playground.

Scrutiny of the facts demonstrates that Mr. Eisenberg’s assertions are spot on.

In the face of soaring child-poverty rates and shrinking resources for rescuing needy children, the fiscal and child-care decisions at the school are indeed disturbing. With more than $8-billion in assets, the Milton Hershey School could change the face of caring for at-risk children were the school properly administered.

Ric Fouad
President
Protect the Hersheys’ Children
Lafayette Hill, Pa.

The writer is an alumnus of the Milton Hershey School. He has an international law practice in New York and was a 2009-10 visiting scholar at Harvard Law School, focusing on charitable-trust and child-welfare matters.