Cutbacks in Programs and Expansion at Milton Hershey School (Inquirer Article)

[JPZenger]

http://www.philly.com/philly/business/89856207.html

Excerpts:

"The Milton Hershey Hershey School, the nation's wealthiest boarding school for impoverished children, has scrapped plans to boost enrollment to 2,000 students by 2013 and is seeking other ways to cut its budget. A dairy herd will be sold, and so will the president's $700,000 off-campus residence. In addition, the construction of new group homes for at least 150 students has been indefinitely postponed. These cutbacks and others end a brief period of rapid growth at the fabulously rich institution.

And they renew tension between managers of an extraordinary endowment and fretful alumni who say the school spends lavishly on infrastructure as opposed to more children - key components in a continuous discussion of how best to satisfy the mandate of Milton Hershey, who left his chocolate fortune to the orphanage and school. The expansion had its consequences, though. Per-student costs soared to more than $110,000, significantly higher than prestigious prep schools, and this became a problem when the economy crashed and endowment income shrank.

"Two thousand students is a very modest goal, and for them to be backing off at this early date, given their financial resources, does not make sense to me," said Joseph Berning, a 1973 graduate. "It was only a little more than 10 years ago that they marched into court and declared the school had more money than it could spend," he said.

John W. Schmehl, a partner with Dilworth Paxson L.L.P. who represented the school's alumni association in a court case seeking reforms at the school, said it was "nonsense for the trust to blame the economy for subjecting children to program cuts while sitting on $7 billion." The Hershey School's most recent IRS tax filing shows an endowment in 2008 of $7.3 billion, which would rank among the top 10 college and university endowments."