School expands in troubled times

The Milton Hershey School, one of the richest schools in the world, with its $8 billion endowment, says the chocolate company's financial troubles won't sidetrack its expansion plans.

Funded partly by dividends from the Hershey Co., the school educates and houses children from low-income families in kindergarten through high school.

Criticized for failing to boost enrollment as its endowment soared into billions of dollars, the school is spending about $600 million on renovations, a new medical center, new student housing, and other projects. It owns about 11,000 acres in the Hershey area.

The school has 1,700 students, its highest enrollment in history, and plans to increase that to 2,100 by 2013, officials said.

School president John A. O'Brien said of Hershey's financial crisis: "We're very aware and concerned of any long-term decline. I guess I would be alarmed if the endowment went from $8 billion to $5 billion."

About half of the school's endowment is invested in Hershey.

Milton S. Hershey, founder of the Hershey Co., created the school and provided its financing through his Deed of Trust.

In the 1970s, the school cut enrollment and retrenched when Hershey encountered difficulties, O'Brien said. Last year's enrollment of 1,500 students was the highest level since 1969.

James M. Sheehan, general counsel for the school, said the school was moving as fast as it could to expand.

"The concept that is out there that we can serve 50,000 students is unrealistic," he said.

Robert H. Sitkoff, a Harvard University law professor and an expert in trust law, said he believed that expanding the school enrollment to about 2,000 students "was a good start."

As a nonprofit, the school has a legal responsibility to serve as many students as possible, Sitkoff said.

"I would like to see a chain of Hershey schools," he said.