For more than two decades, Pennsylvania's Milton Hershey School for needy children has been rocked by a stream of scandals involving allegations of inappropriate spending, mismanagement, conflicts of interest, and abusive treatment of children.
Yet neither the Pennsylvania Attorney General's office nor the Internal Revenue Service, while fully aware of the allegations of outrageous behavior of school officials and board members, has done anything to remedy the situation. The regulators have repeatedly failed to regulate, even though state leaders have conducted at least two investigations of wrongdoing over more than a decade.
The mismanagement of the school, with current assets of about $12-billion, may well be the biggest and longest-running scandal in the history of American nonprofits. It is even more troubling than the landmark case involving the Bishop Estate in Hawaii, which was so mismanaged that the IRS at one point sought to have it repay $165-million, money the tax agency said was not used for tax-exempt purposes as it should have been.
The latest development in Hershey's horrifying tale comes in a report by an advocacy group--Protect the Hersheys' Children--accusing the school of bias against children who suffer treatable depression. According to the paper, which the advocacy group sent to the U.S. Justice Department, the school has been systematically expelling children diagnosed with depression instead of providing appropriate treatment. It cites 13 examples of mistreated children, including Abbie Bartels, who committed suicide in June 2013, after she was expelled.
Many other children were affected, the report says, alleging that perhaps as many as a hundred or more students were dismissed because they had depression or other mental health problems. The paper also states that Hershey has discriminated against other children with disabilities, including those who use wheelchairs.
Abbie Bartels is the best known and most tragic of the examples listed in the paper. An honor student and athlete, a member of an anti-bullying group, and a school volunteer, Abbie was receiving treatment for her depression outside the school and appeared on her way to recovery when the school, disregarding the advice of the medical professional treating her, told Abbie she could not graduate with her eighth-grade class or remain at the school. Despondent after not graduating with her friends, Abbie hanged herself in her closet at home.
For some inexplicable reason, the suicide received no media attention, with the exception of a single CNN broadcast that aired around the one-year anniversary of Abbie's death.
That segment was followed by a belated article by the Harrisburg Patriot-News. Other than Protect the Hersheys' Children, nobody seemed to care or was willing to deal with the issue. Hershey has been nearly silent about this matter, citing its desire to protect Abbie's privacy.
Its action to expel students with depression is only the latest contentious practice that the Hershey school has followed over the years, according to its critics. The report mentions several more, including discrimination against children with HIV. In 2013, the Justice Department took action on the HIV bias claim, prompting Hershey to promise to end discrimination against anyone with a disability. That broken promise may turn out to be the key to getting the federal government to force potential changes in the school's policies, given that federal anti-discrimination laws are now at issue.
The alleged mistreatment of children is not the only troubling matter. The school's governance and leadership are also problematic.
Hershey School is managed by the Hershey Trust, which controls two for-profit subsidiaries: the Hershey Company and the Hershey Entertainment and Resorts Company. The trust's board, which also serves as the school's board, has long been the haven of well-connected and highly paid politicians and their retainers who have little or no training or experience in social welfare, education, and youth development. Politicians have also been named to the boards of the trust's subsidiary companies.
Because Hershey has such a well-connected board, the school has been able to escape the kind of legal crackdowns one might have expected for its actions--an observation that the November report about Abbie Bartels makes pointedly. Allegations of wrongdoing at the school were sufficient to prompt a two-year investigation, which was begun by Linda Kelly, Pennsylvania's attorney general, and inherited by her successor, Kathleen Kane.
Ms. Kane concluded that no wrongdoing had occurred, but sought changes in governance and other matters. Among other things, the fees of board members were reduced to a base figure of $30,000 a year. That comes after some board members had been pocketing as much as $500,000 a year for their service.
But board members haven't lost as much financial compensation at it might seem; they still receive money beyond the $30,000 annual payments for their attendance at board and committee meetings, chairmanships of committees, and per diem activities. There is no justifiable reason why they should receive any money for their charitable work; university and college trustees receive no payments for their much more demanding jobs.
What is so frustrating about the Hershey case is what a long-running, well-known problem is has been.
At least since 1993, when Adam Bell, then a reporter for the Patriot-News, wrote a three-part exposé of the Milton Hershey School, the school has been a hotbed of inept administration and flagrant self-dealing.
Its approximately 2,000 disadvantaged students have been subject to what appears to be the largest expulsion and dropout rate of any school in the country. While the institution has provided solid educational opportunities to many who otherwise would not have received them, the faculty and staff have been plagued by a series of mishaps and incompetence. Its alumni association has refused to acknowledge any of the school's shortcomings, preferring instead to condemn alumni watchdogs critical of the school's activities.
In 2002, the Republican Attorney General D. Michael Fisher issued a report calling for major governance changes at the Hershey Trust and the school, citing long-term allegations of excessive board compensation and inappropriate school practices. Under political pressure, he quickly backtracked, and most of the suggested changes were never implemented. Career officials in the Attorney General's office say they have been overridden by their political bosses when they sought to punish Hershey.
Lax regulation means that other problems have occurred in recent years, most notably Hershey Trust's purchase of the Wren Dale golf course for $12-million--two to three times its appraised value--and the building of a $5-million clubhouse. These developments also benefited some of the board members and their friends, according to a Philadelphia Inquirer investigation, and the golf course was subsequently sold.
Adding to the criticism of board members were allegations reported by the Inquirer that the board chair had pushed for the $70-million renovation of the Hotel Hershey, which is owned by the trust, in part to improve the quality of their stays.
The poor qualifications of the board are a key reason the school has been run by administrators who lack strong education credentials and management skills.
Peter Gurt, the current president of Hershey School, was heavily involved in crafting the current "anti-depression" policies. He was said to have made a crude joke about a teenage girl--reported in the Inquirer--and, according to Protect the Hersheys' Children, "he has helped foster a climate of fear and intimidation such that employees are afraid to break ranks, even when a child's well-being is at stake, such as that of Abbie Bartels."
One might have hoped that the board's focus on its own self-interest and lack of attention to providing a solid education would change when Ms. Kane, a Democrat, was elected attorney general. But she has turned out to be as deaf to the needs of the Hershey children as her Republican predecessors.
Her report said the board didn't do anything wrong with the land deals, nor its compensation policies, and said that no child abuse had occurred. By failing to call for major changes, Ms. Kane's report was a total whitewash and a sign of politics as usual in Pennsylvania.
Pennsylvania's Office of the Attorney General has disgraced the notion of justice and fair play. Its complicity with politicians and school leaders cannot be condoned. Such a lamentable record reinforces the position of reformers who believe that attorneys general should be appointed, not elected.
What has been deplorable in this long, sad story of corruption and scandalous management has been the silence of educators, other academics, the media (with the exception of the Inquirer and Patriot-News), nonprofit leaders, human-rights activists, health-care professionals, and the general public. The Pennsylvania Association of Nonprofit Organizations remains unwilling to voice its criticism, although the school has cast a deep shadow over the state's nonprofit world. Thanks to the intrepid work of Protect the Hersheys' Children, led by lawyer and Hershey alumnus Ric Fouad, the issue has been kept alive and the children who have suffered have not been forgotten.
The lack of attention from state officials and the IRS prompted Mr. Fouad and his colleagues to turn to the U.S. Justice Department to provide some measure of restitution, not only for the school's discriminatory practices but for its other systemic failures. While we wait to see if the Justice Department will act, it's time for Pennsylvanians of good will to find the courage to speak out on behalf of the Hershey children.
Pablo Eisenberg, a regular Chronicle contributor, is a senior fellow at the Center for Public and Nonprofit Leadership at the McCourt School of Public Policy at Georgetown University. His email address is email@example.com.