Attorney General can push Trust to meet Milton Hershey's goals

Harrisburg Patriot News
Sunday, May 26, 2013

By Thomas Hylton

Earlier this month, Pennsylvania Attorney General Kathleen Kane ended a two-year investigation of allegations that directors of the Hershey Trust had engaged in a number of self-serving practices, such as the purchase of a golf course and free stays at the Hotel Hershey.  Kane’s probe exonerated its board members from any misconduct, but she negotiated a settlement with the Trust that lowers the compensation of its board members, restricts their membership on other Hershey-related boards, and establishes a new conflict of interest policy. 

The settlement sidesteps a larger issue: The Trust has done a superb job of growing its assets over 95 years, increasing from $60 million in 1918 to well over $8 billion today.  But how effectively is the Trust using these enormous resources to carry out the goals of Milton Hershey? 

Hershey donated the lion’s share of his wealth to the Milton Hershey School, which provides a free boarding school education for impoverished students.

With its fabulous endowment, the school is lavishly operated, spending about $110,000 annually per pupil.  Its 2,640-acre campus is larger than any college campus in the Ivy League, not including the golf course it bought in 2006, which has recently been earmarked for more student homes.  During the last 15 years, the school has spent hundreds of millions of dollars for new school buildings and nearly doubled its enrollment. Even so, the school serves just 1,850 students. 

The Hershey trustees have acknowledged the school has an obligation to enroll more students, setting a modest goal of 2,000 students. But according to the school’s 2011 non-profit IRS tax filing, the school’s revenues of $335 million exceeded its expenses by $130 million. That’s a lot of money going unspent.

Kane said she intends to visit the school in the near future to gain a firsthand understanding of its strengths and any areas needing improvement.  “I look forward to a new era of openness and collaboration to achieve the best possible outcomes for children in need,” she said. 

Could the school help far more students – perhaps thousands more -- than it does today without costly additions to its campus?  It would certainly appear so, and Kane has the authority to steer the Hershey Trust in that direction.

But the school was not Milton Hershey’s sole objective. In 1935, Hershey established the M.S. Hershey Foundation for the benefit of residents of Derry Township, where the school, chocolate factory, and town of Hershey are located.  It empowered the Foundation to establish and maintain educational institutions in Derry as well as to advance the vocational, cultural, or professional education of any Derry resident.

In 1963, using a broad interpretation of these purposes, The Hershey Trust, with the concurrence of the attorney general, used the Foundation to funnel $50 million and 100 acres of land in Derry to Pennsylvania State University for a new medical school.  Today, 50 years later, the Penn State Milton S. Hershey Medical Center is one of the leading teaching and research hospitals in the country, with more than 9,000 employees and a $1.5 billion annual budget.  Surely this has been one of the most productive investments in state history.  Not only is the medical center an economic bonanza for Derry residents, it has improved the health and quality of life of people throughout central Pennsylvania.

Now, the M.S. Hershey Foundation has an opportunity to fulfill Milton Hershey’s other dream – to build an ideal community “where the things of modern progress all center in a town that has no poverty, no nuisances, and no evil.” By the time Hershey founded his orphanage, he had already laid out a model town in Derry to support his new chocolate factory.   The town contained a small downtown, a K-12 public school, and tree-lined streets with housing for everyone from workers to corporate executives, all within walking distance of the chocolate factory.  He personally oversaw the design of its buildings – even workers’ houses.  The rest of Hershey’s land – indeed most of the township – was used for dairy farms to supply milk for the chocolate

Today, Hershey’s town-building enterprise would be called smart growth, emphasizing efficiency, land conservation, and walkability. But in recent decades, like virtually every   growing community in Pennsylvania, Derry has succumbed to sprawling, car-dependent development.  Sprawl consumes open space, creates traffic congestion, worsens air and water pollution, and requires exorbitant amounts of tax dollars to build and maintain.  

Three years ago, the Derry Township supervisors adopted a resolution supporting smart growth principles.  But so far, there’s been far more talking than doing.  To energize the process, and create a model for all Pennsylvania, the Hershey Foundation could fund a design center at Penn State Hershey to promote sustainable development.  The center could research zoning laws to focus development in the core of Hershey, ensuring new buildings are compatible with the town’s historic character, and to preserve Derry’s countryside.

Designing communities to encourage walking and bicycling, and to protect the environment, fits hand in glove with the medical center’s mission to enhance residents’ quality of life through healthy behaviors. 

 As Pennsylvania’s first female attorney general, Kathleen Kane has expanded the boundaries for women in the Commonwealth.  Now, through creative oversight of the Hershey Trust, she can expand the boundaries of the Hershey Trust to new and even more admirable achievements.