By Pablo Eisenberg

The Pennsylvania attorney general's long-awaited investigative report on the scandalous conditions at the Milton Hershey School for poor children is, unfortunately, a whitewash.

The fix appears to have been in, this time not by the Republican cabal that ran the school for 25 years, but by the newly elected attorney general, Kathleen Kane, and her fellow Democrats. It's clear that no one, and no party, wanted to challenge the powerful Hershey Trust, whose trustees manage the school, to make the changes needed at the institution.

The report was triggered 21/2 years ago by the school's questionable real-estate deals, notably the purchase of the failing Wren Dale golf course for two to three times its appraised value. The school had also been heavily criticized by The Inquirer, reform-minded alumni, and other observers for poor management, excessive compensation of its board members, major conflicts of interest, and inappropriate expenditures

The school was also subject to a number of sexual-harassment incidents and boasted one of the highest dropout rates in the nation.

Despite these conditions and serious allegations of impropriety, the report concluded that board members had not breached any of their fiduciary responsibilities in approving the real-estate deals, the enormous compensation and perks awarded to board members (a minimum of $95,000 each), and the way the Hershey School was mismanaged. In short, they were not guilty of any wrongdoing.

The agreement between the attorney general and the school, based on the report, does not require any changes in the board's composition. Though reformers had called for the appointment of new board members with expertise on disadvantaged youth, residential education, and social welfare, the agreement calls on the trust only to "use their best efforts to identify for election to their boards" such qualified people. Hardly a mandate.

Stipends for board members are to be reduced to $30,000, with an additional $5,000 for committee chairs and $4,500 for attendance at board meetings lasting more than four hours. No member can sit on more than two Hershey boards. Why aren't they limited to just one?

While the Attorney General's Office said it didn't find any fault with the real-estate deals, it now will require the school to notify the attorney general of any real-estate transactions of more than $250,000 or involving a lease of three or more years.

The agreement says little about the Hershey School, its management, or its operations in general. It does not call for the appointment of a highly qualified new director or an advisory council of experts to help guide the school through its transition period. The structure and personnel that caused all the problems are left intact.

The changes are political, not substantial. There is little concern for the needy kids who populate the Hershey School. That, alas, is the great tragedy of the agreement.

Pablo Eisenberg is a senior fellow at the Georgetown Public Policy Institute and a columnist for The Chronicle of Philanthropy. E-mail him at pseisenberg@verizon.net.