Hershey Trust appoints 2 new board members, four short of goal

The $14-billion Milton Hershey School is a boarding school for poor children with approximately 2,100 students in Hershey, Pa. Its oversight boards have been reconstituted as part of a reform agreement with the state attorney general’s office. The charity controls the Hershey Co. chocolate giant.

The multibillion-dollar Hershey Trust for poor children has elevated Chicago lawyer Robert “Bob” Heist, an alumnus of the Milton Hershey School, to head its oversight boards and has appointed two new board members, but it has fallen short of a goal set in a July 2016 reform agreement with the Pennsylvania Office of Attorney General.

The current Hershey Trust boards have nine members, including the two new ones, but the reform agreement calls for 13. The positions pay $110,000 a year.

Chairwoman Velma Redmond and member James Mead, both with long tenures, also departed  this month as part of a sweeping reconstitution of the two boards that finance and run the Milton Hershey School,  the world’s richest private residential/educational institutions for needy children, but one plagued with persistent under-enrollment, high per-student costs, and board infighting. The board changes were effective Dec. 15.

State Attorney General Josh Shapiro said Tuesday that the election of the new board members was a step forward, but that he was also looking for “something groundbreaking” from the $14 billion institution to help more Pennsylvania children. The school currently enrolls 2,100, with a goal of 2,300 at its lone campus in Hershey by the 2022-2023 academic year.

“I want to see new board members with meaningful expertise in education and innovative ideas on improving opportunities for many more children in need throughout Pennsylvania,” Shapiro said. “There is a real chance to do something groundbreaking here, and I’m committed to working with the board to see this through.”

Under the provisions of the 2016 reform agreement, Shapiro must approve new board members for the trust.

Late last week, Hershey Trust spokesman Kent Jarrell said that the charity was “being thorough and deliberate in the on-boarding process” with new members, and that 13 people was “optimal” for the size of its boards.

Under former AG Kathleen Kane, the state Attorney General’s Office settled its latest investigation into the charity, involving runaway travel expenses and board infighting. The internal disputes distracted the charity’s leadership and resulted in more than $4 million in legal fees being paid from its coffers.

The July 2016 reform agreement, which avoided a lawsuit, ousted five Hershey Trust members, timing the departures so that three left in December 2016 and two this month. That also gave the trust time to search for new board candidates. A year ago, the trust said that more than 200 resumes had been considered for the open board positions.

Heist, a 1982 Milton Hershey School graduate, said in a statement that “I can assure you that the boards’ members are all working together as a fully aligned team. We are a group of like-minded people, with different backgrounds and expertise.”

He declined to comment beyond the statement. In a letter to the community, Heist wrote that he had spent 10 years at the Milton Hershey School, and that the institution “has always been a guiding star for me” that prepared him “academically, morally and socially” for life.

Heist owns R. Conner & Associates law firm, with offices in Chicago and Boston. He was first appointed to the Hershey Trust oversight boards in 2011.

Milton Hershey School maintains a sprawling campus in central Pennsylvania with more than 175 boarding homes. The institution is now converting a former golf course, whose $12 million purchase was the target of a prior investigation by the state Attorney General’s Office, into a new residential campus for 300 students, bringing total enrollment to 2,300.

One expansion option, observers say, is for the school to open satellite locations throughout Pennsylvania and enroll thousands more poor children with its assets. Milton Hershey School officials have rejected this idea in the past.

Heist said in the community letter that the boards are reviewing “strategic, innovative, imaginative and creative ways for the Milton Hershey School to reach even more children.”

Hershey Trust board members oversee two organizations: the state-chartered Hershey Trust Co. bank, which manages Milton Hershey School’s $14 billion in assets, and the Milton Hershey School itself, founded by Milton and Catherine Hershey as an orphanage in 1909. The trust controls 80 percent of chocolate giant Hershey Co., its biggest asset.

Technically, the Hershey Trust and the Milton Hershey School have separate boards, but the two boards function as one unit, with the same people serving on both. Instead of enlarging the boards over the last 18 months, the trust has replaced those members who have departed.

As part of this month’s changes, Jan Loeffler Bergen was elected vice chair of the boards. Bergen joined the trust boards earlier this year, in the first wave of appointees approved by the Attorney General’s Office as part of the reform agreement. She is president and chief executive officer of Lancaster General Health/Penn Medicine.

The just-elected board members are Michela English, former president and chief executive officer of Fight for Children, a Washington nonprofit; and Maria Trinh Kraus, a 1989 Milton Hershey School valedictorian who is a certified public accountant and an executive vice president at Bioclinica Inc., a Doylestown firm that runs clinical trials for drug companies.