May 28, 2005
Boarding School's Rector, Under Fire, Will Step Down
By STEPHANIE STROM, NY TIMES

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Under investigation by tax authorities and falling short of its fund-raising goals, St. Paul's, the elite New Hampshire boarding school, announced yesterday that its rector would retire at the end of this school year, two years ahead of schedule.

Craig B. Anderson, the Episcopal bishop who became rector eight years ago, had been criticized by a vocal group of alumni over his compensation, handling of the school's money and other matters. The state's attorney general and, more recently, the Internal Revenue Service have stepped up their scrutiny of the school.

St. Paul's issued a brief statement about the rector's departure, and a spokeswoman said that no one there would discuss the matter further.

"The decision was reached after careful deliberation," the statement said, "and the board and the rector believe this to be in the best interests of the school."

Bishop Anderson will be replaced on an interim basis by Bill Matthews, the director of development and a St. Paul's graduate who has been a teacher and administrator. Sharon D. Hennessy, the vice rector, will remain in her post, the school said.

The struggle over how the school should be run appears to have made donors skittish. In a letter to alumni earlier this month, James W. Waterbury, chairman of the school's current annual fund, wrote that the school was $700,000 short of its $2.1 million goal.

But Michele Clark, a spokeswoman for St. Paul's, said yesterday, "The school always sees a large amount of donations in June."

"As of today," Ms. Clark said, "there is only one year in the school's history where it has raised more dollars, at this point in the year, than this year."

Alexis H. Johnson, a lawyer who graduated from St. Paul's in 1976 and has been critical of the board and the school administration, applauded the leadership change but added that the board should continue to examine the school's business affairs.

"What I want is a stronger school," Mr. Johnson said, "and I perceive that this move makes the school stronger, although it's a partial move. There's an awful lot that remains to be done."

Before Bishop Anderson and Dr. Hennessy took over, St. Paul's ousted the previous rector at the demand of alumni and faculty members.

For several weeks, critics had been discussing the fortunes of Bishop Anderson, who has put his waterfront house in Boothbay, Me., on the market for $2.7 million. The house was only recently completed, and faculty and students were surprised to see it for sale.

Two faculty members and a former school official also said Dr. Hennessy had been hinting in some conversations that she might soon succeed Bishop Anderson.

The school's board, which met on Thursday and yesterday, has been under pressure since the fall of 2003, when the New Hampshire attorney general's office began a review of the school's compensation, investment and management practices. The review resulted in an agreement that obliged the school to limit increases in the rector's and vice rector's compensation, among other things.

Last fall, more than a dozen senior girls were involved in a hazing incident, and a student drowned in the school's new $24 million gym.

The Internal Revenue Service showed up in December to start an audit of the school's 2001-2 fiscal year, an audit that has since expanded, said alumni who have been informed by board members.

Private schools typically set their annual fund goals at modest levels to ensure they are reached. As of early May, Phillips Exeter Academy, another elite private school in New Hampshire, had raised $5.9 million of its $6 million goal, and Phillips Academy, better known as Andover, had raised $5.8 million of its $7 million goal by the end of April. (Those schools have roughly twice the number of students as St. Paul's.)

H. Johan von der Goltz, a St. Paul's alumnus, said the turmoil at the school had hampered fund-raising among his classmates, who as part of their 50th reunion this year are expected to make sizable gifts. "If you ask me how much I think we're going to raise, I don't think we're even going to get half a million, and that's devastating," Mr. von der Goltz said.

The school plans to kick off its 150th anniversary celebration during its commencement and reunion weekend starting June 3, and board members had been warned that unhappy parents and alumni would confront them there. Instructions for producing bumper stickers reading "Save St. Paul's - Oust Anderson and Hennessy" were posted on a St. Paul's Listserv, and alumni could buy T-shirts depicting a modified version of the school's coat-of-arms on which the school mascot, a pelican piercing its breast to feed its young with its blood, has been replaced by an ostrich with its head in the sand.

Mr. von der Goltz said yesterday that the rector's departure might help soothe relations.

"They did the right thing in getting rid of this guy," he said. "We'll see if that has an impact on my class."

I.R.S. Is Auditing Boarding School After Disputes on Its Finances
By STEPHANIE STROM (NYT) 576 words
Published: May 14, 2005

The Internal Revenue Service is conducting an audit of St. Paul's School, the elite New Hampshire boarding school that has drawn criticism over its financial management and governance.
It is unclear what piqued the I.R.S.'s interest in St. Paul's, though some alumni and parents have objected to the administrators' pay, the school's investments and what they call cozy business dealings.


''The I.R.S. has requested information from St. Paul's School related to the 2001-2002 tax year,'' said Michele Clark, a spokeswoman for the school, in Concord. ''The business office has cooperated fully and provided the information requested.''

The school's board learned of the inquiry in a November e-mail message from John K. Greene, who is chairman of its audit committee. Though Mr. Greene asked board members to destroy the message, some did not and an alumnus recently received a copy and informed The New York Times.

Mr. Greene did not return telephone and e-mail messages. Two other board members also did not respond, and another said he did not recall Mr. Greene's e-mail message.

An I.R.S. spokesman noted that federal law forbids the service from commenting on any specific case.

Two years ago, the New Hampshire attorney general's office conducted a review of the school, which reached an agreement to limit the compensation of its top two administrators, to establish formal controls over a discretionary fund and to allow four experts in investment management and governance to examine its practices.

The school must also sit down each year with representatives of the attorney general's office for a formal review. The school has said that such supervision is the norm for charities in New Hampshire, but Michael S. DeLucia, the senior assistant attorney general in charge of charity oversight, described the agreement as ''special oversight.''

In his e-mail message, Mr. Greene said the I.R.S. audit was to cover the fiscal year that ended June 30, 2002. I.R.S. auditors were to meet with Michelle Chicoine, the school's chief financial officer, on Dec. 20.

The agency is conducting a study of compensation practices among nonprofits and has promised to examine those groups in which administrators are paid unusually well.

Craig B. Anderson, the Episcopal bishop who is St. Paul's rector, and Sharon D. Hennessy, its vice rector, agreed to a 10 percent pay cut in the year that began July 1, 2004, after Mr. DeLucia began his inquiry.

In the year that ended June 30, 2004, Dr. Anderson received $502,394 in compensation and benefits, or 4.7 percent less than the previous year, and Dr. Hennessy received $321,269 in compensation and benefits, 1 percent more than the previous year.

The rector's total compensation and benefits today are twice what they were when he took the job almost eight years ago.

In investment practices, the school has a higher than average share of its endowment in alternative assets, including hedge funds, which could have attracted I.R.S. attention. The school has made several changes since the accord with the attorney general last year. Two longtime board members have stepped down.

For the first time, the school disclosed in its latest tax return that it was paying the rector's wife, Lizbeth, $39,158 in compensation and benefits for her work as a rectory associate. It also paid Dr. Hennessy's husband, Gary, $40,332, for his work as a special events assistant, and Ms. Chicoine's daughter, Sarah Goldman, $3,116 for summer work.

Private School to Limit
Top Two Administrators' Pay
By Darcia Harris Bowman, Education Week, February 25, 2004

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A leading New Hampshire boarding school has agreed to limit pay increases for its top two administrators, following an examination of its finances by the state attorney general.

The charitable-trust unit of Attorney General Peter W. Heed's office had been investigating for more than a year whether the 500-student, nonprofit St. Paul's School in Concord was overpaying its rector, Craig B. Anderson, an Episcopal bishop, and its vice rector, Sharon D. Hennessy.

The review was prompted by concerns that arose during the attorney general's yearly review of financial statements the school files with the state under the New Hampshire charitable-trust laws, said Michael S. DeLucia, the director of the attorney general's charitable-trust unit.

In a Feb. 12 letter from the school's lawyers to the attorney general, Bishop Anderson and Ms. Hennessy volunteered to take 10 percent reductions in pay for the 2004-05 fiscal year. The school also informed the attorney general that it would not allow the total compensation packages of the two positions to exceed $452,000 and $297,000, respectively, before the end of fiscal year 2005-06.

In the 2002-03 school year, Bishop Anderson was paid $524,000 in salary, benefits, deferred compensation, and other perks, and Ms. Hennessy received $316,400, plus a number of additional benefits.

During the remainder of the two administrators' tenure, salary increases for those positions will not exceed the percentage increase offered to faculty members, and the two will not be "granted any new, additional benefits that are not also granted to the faculty as a whole on like terms," according to the letter from the school.

St. Paul's School also volunteered a number of new internal and external controls on its finances, according to attorneys on both sides.

The boarding school, which enrolls students in grades 9-12, agreed to exercise greater control over the rector's discretionary fund.

The school's lawyer, Robert B. Gordon, said St. Paul's officials have dealt with a "very small number of incorrect payments" from the discretionary fund and shifted its management from the rector's office to the school's business office.

The letter to the attorney general's office was not an admission of impropriety on the part of the administrators or the school itself, Mr. Gordon added.

"This letter of agreement is a vindication of St. Paul's," he said.

From the National Council of Churches:

The Right Reverend Craig B. Anderson, a Bishop of the Episcopal Church and Rector of St. Paul's School in Concord, New Hampshire, is the 19th president of the National Council of Churches.

A seasoned ecumenist, he has served on the NCC's governing body for a decade and has been active on several committees, including one that guided NCC social justice work from 1988-91. He is also the Episcopal Church's representative to the World Council of Churches' Ecumenical Decade of Churches in Solidarity with Women 1988-98. He has served his communion as a participant in several bilateral theological dialogues, as well as representing the Episcopal Church in the Consultation on Church Union. Throughout his church career, he has worked ecumenically, building on the gifts of the Episcopal Church, which he characterizes as a "bridge church" between Catholicism and Protestantism that sees reconciliation as its ministry.

As NCC President, Bishop Anderson works to strengthen the Council for significant ministry in a nation and a world marked by increasing religious pluralism--and in a time when secular values compete with religious values, even among the churched population. He is interested particularly in the relationship between theology and public policy and how churches bring appropriate pressure to bear on government structures to promote justice, righteousness and healing.

A VARIED BACKGROUND, A CLEAR CALL

Born and raised in Los Angeles, California, Bishop Anderson graduated from Valparaiso University, Valparaiso, Indiana. Following college, he served for two years on active duty as an infantry officer in the U.S. Army. After completing military service, he joined the Procter and Gamble Company, where he was a marketing and advertising manager from 1966 to 1972.

Discerning a call to ministry, he attended The School of Theology at the University of the South in Sewanee, Tennessee, as a postulant from the Diocese of Colorado. He received his M.Div. with honors in 1975.

MINISTRY IN THE EPISCOPAL CHURCH

In 1975, he was ordained to the priesthood and was assistant chaplain at All Saints Chapel at the University of the South, while beginning graduate work at Vanderbilt University. Subsequently, he earned his M.A. and Ph.D. in theology from Vanderbilt. In 1977, Bishop Anderson returned to his seminary, where he taught theology until he was elected the eighth diocesan bishop of South Dakota.

Upon arrival in South Dakota, he was adopted by the Oglala Tribe of the Pine Ridge Reservation and given the name Wanbli Tokaheya (Leading Eagle) at a gathering of Episcopal Indian Churches of the eight reservations in the Diocese. The name, he said, was given as a call to be a spiritual person and a leader. During nine years in South Dakota, he focused on teaching, ecumenical concerns and issues relating to American Indian ministry and women in the ministry. In a poor diocese where the majority of members are Native American, Bishop Anderson "saw past the despair and poverty of the reservation to the deep sense of holiness in the people and the land." Compelled by an ecumenism "dictated by need," he helped bring people together to provide the necessities of life and to resist racist--sometimes violent--structures of oppression. He received many honors for his work there, including the Governor's Award for Reconciliation in 1990 and 1991 and the Sacred Hoop Peace Medal by the Great Sioux Nation in 1991.

Bishop Anderson was awarded a Mershon post-doctoral fellowship at Ohio State University for research and teaching in the areas of public policy and theology for the academic year 1992-93. Following that period of study, he began his ministry as 11th President and Dean of The General Theological Seminary in New York City. In addition to administrative and pastoral duties, he taught systematic, philosophical and pastoral theology. He continued his ministry as a bishop, assisting in surrounding dioceses.

In July 1997, Bishop Anderson assumed duties as Rector (headmaster) at St. Paul's School. Having led a variety of educational institutions, he describes his current post as an opportunity to come full circle and to nurture in students the qualities of character, virtue and academic excellence "so vital as our culture seeks to regain its spiritual and intellectual bearings."

Over the years, he has served on numerous committees and commissions of the Episcopal Church at national and diocesan levels.

FAMILY

Bishop Anderson and his wife, Lizbeth, have three children.