Milton Hershey School and School Trust

“Family/business relationship several of the board of managers members and officers of the filing organization also serve as directors and officers of business entities that are related to this filing organization. Other than their overlapping service on related company boards, they have no family or business relationships with each other. Please see form 990, schedules j and r for further information.”

“Election of members of governing body the milton hershey school and school trust have a unique, self-perpetuating, interlocking and integrated governance structure. Mr. And mrs. Hershey organized the school in the form of a trust (the "school trust") created under an original 1909 deed of trust that, as amended, still governs the operation of the school. The deed of trust sets forth the respective powers and authorities of the trustee and individual managers of the school and names the hershey trust company ("htc"), a state chartered trust company, as trustee for compensation of no more than $1,000 per year. Under the deed of trust, the trustee is directed to hold title to all school property and all investments and assets that support the school. The individual managers, in turn, are not permitted to hold school assets, but are otherwise generally responsible for managing the school, including with respect to admissions, the program of educating and full-time caring for the children, and employment decisions. As required under the deed of trust, the members of the board of managers of the milton hershey school and school trust are appointed by the trustee from among the trustee's own board of directors. Since mr. Hershey's death in 1945, all of the stock of htc has been owned by the milton hershey school and school trust. The milton hershey school and school trust's 100% ownership of the stock of htc has ensured a self-perpetuating, interlocking governance structure for the school because the htc stock carries the right to elect the directors of htc and in turn to appoint the board of managers of the milton hershey school and school trust from among htc's own board of directors. The same ten individuals (as of 7/31/15) serve on the board of directors of htc and the board of managers of the milton hershey school and school trust.”

“Form 990 review process the form 990 is reviewed by milton hershey school and school trust management and by milton hershey school and school trust's independent tax advisor, who signs the return as the "paid preparer." the audit committee of the board of managers reviews and discusses the form 990 at one of its scheduled meetings prior to filing the return with the irs. Additionally, the form 990 is provided to the full board of managers, noting key disclosures, prior to the filing of the form 990 with the irs.”

“Conflict of interest the board of managers operates under a conflict of interest policy which requires directors to disclose "all actual or potential conflicts of interest" with milton hershey school or hershey trust company. The conflicts policy cannot be modified or amended without the prior written approval of the pennsylvania office of attorney general ("pa oag"). The conflict of interest policy covering the managers of the milton hershey school and school trust and the directors of hershey trust is documented in their governance guidelines manual and is also posted on the milton hershey school website. The conflict of interest policy covering officers and other key employees of milton hershey school is documented in milton hershey school's conflict of interest policy and code of ethics. The conflict of interest policy covering officers and other key employees of hershey trust company, trustee for milton hershey school and school trust, is documented in hershey trust company's ethical standards, conflict of interest, and code of conduct sections of its policy manuals. Each manager, director, officer and key employee is required to avoid all activity that could create a conflict of interest or even give an appearance of a conflict of interest. Any conflicts of interest are to be reported as soon as practical after they become aware of such a conflict. Annually each manager, director, officer and key employee is required to complete an annual statement of disclosure. The forms identify vendors, investments, other board memberships, and family members that could give rise to conflicts of interest. The statements are reviewed by the compliance officer and deputy general counsel of hershey trust company in order for him to be aware of activities that could give rise to conflicts of interest. Potential conflicts of interest related to managers, directors, officers and key employees are brought to the attention of the president of milton hershey school or the chief executive officer or compliance officer of hershey trust company. The relevant executive (or his designee) determines the corrective measure, if any, to be taken to resolve the conflict, or will impose appropriate restrictions, if any, on the person with the conflict. For conflicts of interest involving the executives or managers/directors, the matter would be discussed with the nominating and governance committee of the board of directors of the hershey trust company and the board of managers of the milton hershey school. The nominating and governance committee, in consultation with the other board members, excluding such conflicted person, has the final approval of any recommended corrective measures or imposed restrictions.”

“Compensation process an independent compensation consultant evaluates and compares the compensation of the officers and senior directors of milton hershey school and school trust to similarly qualified persons in functionally comparable positions at similarly situated organizations to determine that it is fair and reasonable. This process occurs at the initial hire of the officer/senior director and at regular intervals thereafter, but not less frequently than every five years. The compensation information is reviewed and approved by the board of managers, the governing body of the milton hershey school, who do not have any conflict of interest with respect to the compensation arrangements of the officers and senior directors. The review of the compensation of the officers and senior directors, including detail on the deliberations and decisions, is contemporaneously documented within the minutes from the board meeting. A file with position descriptions, resumes of officers and senior directors, the report of the independent compensation consultant and a copy of the applicable board minutes is maintained by the milton hershey school and school trust. The compensation of the officers and key employees of hershey trust company, trustee of milton hershey school and school trust is determined by periodic review (generally, at least every 3 years) by third party compensation consultants to determine it is fair and reasonable. The compensation of the statutory officers (president, secretary, and treasurer) and also the compliance officer is fixed by the board of directors of hershey trust company in accordance with section 5 of its bylaws. The chief executive officer of hershey trust company approves compensation of the other officers and key employees and reports this compensation to the board of directors or a designated committee of the board of directors as any changes are made. The members of the board of managers of milton hershey school and school trust do not receive any direct compensation from milton hershey school and school trust. The managers receive compensation from hershey trust company as directors of the trust company in accordance with section 16 of its bylaws. The compensation is reviewed at least every two years by industry-recognized independent consulting firms approved by the pa oag. The firm's recommendation must be provided to the pa oag before acting on it. Independent counsel opines on the compensation process for determining compensation of officers, as appropriate, that is in accordance with the "rebuttable presumption of reasonableness" procedures set out in the regulations for section 4958 of the internal revenue code.”

“State filing of form 990 the form 990 is not required to be filed in the state of pennsylvania; however, a copy is provided to the pennsylvania office of the attorney general for their review.”

“Public availability of governing documents the deed of trust establishing the milton hershey school trust and the conflict of interest policy are posted on the milton hershey school website. The milton hershey school and school trust has its form 990 posted on another website, guidestar. Included in the 990 are certain financial statement components for review. The form 990 and tax exemption letter are provided to anyone who requests them in accordance with irs regulations.”

“Hershey Trust Company is listed as an Independent Contractor. Milton Hershey School reimburses Hershey Trust Company for the shared services (compensation and benefits) of certain individuals who perform services for both Hershey Trust Company and Milton Hershey School.”

“MILTON HERSHEY SCHOOL & SCHOOL TRUST MISSION Unable to have children of their own, Milton and Catherine Hershey signed the Deed of Trust establishing Milton Hershey School in 1909. For more than 100 years, the mission of the School has remained the same-to provide a nurturing home and school to children in need. MILTON HERSHEY SCHOOL SERVES AS A HOME AND SCHOOL FOR APPROXIMATELY 2,006 STUDENTS IN GRADES PRE-K THROUGH 12. THE SCHOOL AIMS TO PROVIDE EACH OF THEM WITH AMAZING OPPORTUNITIES FOR LEARNING AND DEVELOPMENT INSIDE AND OUTSIDE THE CLASSROOM. OUR PROGRAMS TAKE A WHOLE CHILD APPROACH AND REMAIN TRUE TO OUR DEED OF TRUST, AS WE WORK EVERY DAY TO NURTURE AND EDUCATE CHILDREN SO THEY CAN LEAD FULFILLING AND PRODUCTIVE LIVES. STUDENTS LIVE IN 173 HOMES ACROSS CAMPUS. THESE STUDENT HOMES ARE DESIGNED TO PROVIDE SAFE AND SUPPORTIVE ENVIRONMENTS FOR 8-12 STUDENTS OF SIMILAR AGES AND THE SAME GENDER, UP UNTIL THEIR SENIOR YEAR. HEALTHY LIVING AND PERSONAL WELLNESS ARE AN IMPORTANT PART OF THE CURRICULUM AT ALL GRADE LEVELS, AND STUDENTS RECEIVE MEDICAL AND DENTAL CARE AT NO COST TO THEIR FAMILIES. STUDENT GROWTH AND LEARNING IS FORTIFIED BY FOCUSING NOT ONLY ON INTELLECTUAL DEVELOPMENT, BUT ALSO ON EMOTIONAL, SOCIAL, AND SPIRITUAL ENRICHMENT. CHILDREN AT MILTON HERSHEY SCHOOL RECEIVE A PREMIER EDUCATION, WITH SMALL CLASS SIZES AVERAGING 15 STUDENTS. THEY ALSO HAVE ACCESS TO CAREER/TECHNICAL AND EXTRACURRICULAR OPPORTUNITIES UNOBTAINABLE IN THEIR HOME COMMUNITIES. THE SCHOOL PROVIDES CHILDREN WITH VALUABLE NURTURING RELATIONSHIPS AND THE CRITICAL TOOLS THEY NEED NOT ONLY TO OVERCOME THE CIRCUMSTANCES OF POVERTY, BUT TO GUIDE THEM TOWARD SUCCESS IN TODAY'S COMPETITIVE AND CHALLENGING WORLD. STUDENT TEST SCORES ARE JUST ONE INDICATOR OF STUDENT SUCCESS AT MHS. MILTON HERSHEY STUDENTS PERFORM WELL ACADEMICALLY, OFTEN SCORING BETTER THAN STATE AVERAGES ON STANDARDIZED TESTING AND RANKING EXCEPTIONALLY HIGHER THAN STUDENTS FROM SIMILAR SOCIO-ECONOMIC STATUS. MHS SETS ITS SIGHTS HIGH BY ADOPTING THE STATE TARGETS AS A MINIMUM GOAL AND HAS OUT-PERFORMED STATE AVERAGES AND SCORES OF SOME PREMIER SCHOOL DISTRICTS. EIGHTY PERCENT OF MILTON HERSHEY SCHOOL GRADUATES WILL IMMEDIATELY CONTINUE THEIR EDUCATION AT A TWO- OR FOUR-YEAR COLLEGE OR TRADE SCHOOL. FOR STUDENTS WHO WILL GO ON TO HIGHER EDUCATION, MHS OFFERS SCHOLARSHIP CREDITS TO COVER MOST OF THE TUITION, FEES AND ROOM AND BOARD. ONE OF THE PROGRAMS CONTRIBUTING TO SUCCESS FOR OUR GRADUATES IS THE TRANSITIONAL LIVING PROGRAM. DURING THEIR FINAL YEAR OF RESIDENCE AT MHS, SENIORS ARE PLACED IN A SEMI-INDEPENDENT ENVIRONMENT UNDER ADULT LIVE-IN SUPERVISION. THIS COLLEGE/DORMITORY LIFESTYLE AND ITS ACCOMPANYING RESPONSIBILITIES ARE AN IMPORTANT PART OF THE SENIOR-YEAR LEARNING EXPERIENCE. EVERYTHING FROM PERSONAL FINANCE TO PERSONAL SAFETY TO HEALTHY SLEEPING AND EATING HABITS ARE COVERED AS PART OF THE TRANSITIONAL LIVING CURRICULUM. SURVEYED STUDENTS INDICATE THE EXPERIENCE ENHANCES THEIR KNOWLEDGE AND BUILDS THEIR CONFIDENCE. THE SCHOOL CARES FOR ITS STUDENTS 24 HOURS A DAY AND OPERATES YEAR ROUND, INCLUDING HOLIDAYS AND THE SUMMER MONTHS. WHILE MANY SCHOOLS CLOSE DOWN FOR THE SUMMER, STUDENTS AT MILTON HERSHEY SCHOOL CONTINUE TO LEARN THROUGH THE SCHOOL'S OPTIONAL YEAR ROUND EXPERIENCE (YRE) PROGRAM. STUDENTS WHO CHOOSE TO STAY ON CAMPUS DURING SUMMER BREAK ARE PROVIDED WITH A NUMBER OF ENRICHMENT LEARNING OPPORTUNITIES. FROM A SUZUKI FESTIVAL FEATURING ART, MUSIC, AND DANCE TO OPPORTUNITIES TO WORK ALONGSIDE VOLUNTEER FIREFIGHTERS IN NON-EMERGENCY ENVIRONMENTS, A WIDE RANGE OF PROGRAMS TO SUIT ALL INTERESTS ARE OFFERED ON AND OFF CAMPUS. SIX WEEKS ARE PACKED FULL OF LEARNING EXPERIENCES AND ADVENTURES. IF YOU ASK THE CHILDREN, MANY SAY THE TIME GOES BY VERY QUICKLY. EIGHTY-FOUR PERCENT OF STUDENTS PARTICIPATED IN YRE PROGRAMMING IN THE 2014-2015 SCHOOL YEAR. THE MAJORITY OF STUDENTS WHO ENROLL AT MHS REQUIRE MORE INTENSIVE SUPPORT IN ALL AREAS OF THEIR LIVES, AND THESE SUPPORTS REQUIR”

“Program service accomplishments milton hershey school seeks to nurture and educate the "whole child" which means the school and school trust provide for each child in a comprehensive manner - covering the expenses of but not limited to the following: -the education of students in state-of-the-art classrooms with small class sizes averaging 15 students per classroom -the physical, dental, and psychological care of all students -clothing, food, and room and board -career-technical training, college courses before graduation, visual and performing arts, musical instruction, athletic programs and camps, and environmental and agricultural education often students who come to the school have fallen at least one or two grade levels behind because of factors related to poverty, such as homelessness, family drug and alcohol addiction, or mental illness. Thirty-two percent of students have attended three to five different schools before arriving at mhs. Forty-six percent have experienced drug and alcohol abuse in their family, and thirty-nine percent have witnessed domestic violence. Students are given psychological and emotional support when needed, and close to eighty-nine percent of students receive anywhere from one to nine specialty services. Eleven percent receive ten or more services, while less than one percent of students receive none. A rigorous academic program helps to bring students up to grade level, and the aggressive academic supports bring measurable results. Students outperform peers in most subject areas on state standardized testing. In fact, mhs test scores are comparable to some of pennsylvania's top school districts. A strong focus on career technical education, job shadowing, and hands-on learning helps to prepare students for life beyond milton hershey school. For the past five years, every graduating senior earned at least one industry certification by passing an industry-approved test in their area of study. During the 2014-2015 school year every graduating senior earned at least two industry certifications by passing an industry-approved test in their area of study. Currently, there are eleven career pathways students are able to pursue, including business/financial management & accounting, law, public safety, & security, and health science. The school operates year round and more than seventy percent of students attend during holiday breaks or summer months. A comprehensive list of programs for continued learning are offered for children to participate both on and off campus, in addition to music and athletic camps. These programs offer both enrichment and enjoyment to students. During the school year, students are able to participate in more than one hundred different extracurricular activities and clubs. In addition to lodging, food, and clothing, each student receives regular physical and dental checkups from the school, as well as any necessary health service or medication. There were 37,159 medical visits by students to the school's medical professionals during the reporting year in addition to 47,550 dental procedures performed on students. It is not rare to have a high school student arrive at milton hershey and have their first trip to the dentist be at the mhs campus clinic. This tuition-free, comprehensive program, including physical care as well as educational programming in academic, home life, and community/career settings, costs approximately $74,000 per student. (this is minus depreciation and continuing education scholarship. With those two it is $96,046) a premier boarding school like mhs, offering similar academic programming and small class sizes, charges approximately $60,000 per year without providing personal effects like clothing, technology, transportation, or extracurricular activities like sports, visual and performing arts, and internships. Additionally, mhs assumes the cost for medical, psychological, dental, orthodontic, social work, and prescription care for each student. Costs”

“Other fees for service this amount is for hospital, medical, and dental services provided for the students.”

“Reconciliation of net assets increase in unrecognized pension service cost $20,097,225”