Monday, March 9, 2009
The New York Times reports that a group of parents and students have filed a lawsuit challenging the decision to shut down the Conserve School in Wisconsin and redirect its assets toward a single semester of environmental study. According to the article, the heart of the dispute is the allegation that the trustees for the trust that supports the school are violating their fiduciary duties by placing the interests of a for-profit steel company, for which they are officers, above the interests of the school. The plaintiffs cite the fact that while the trustees have identified the current economic downturn as the reason for their decision, the school of 143 students has an endowment of $181 million that could be used to ensure the school's survival. The plaintiffs argue that the real motivation of the trustees is to avoid selling the trust's stock in the Central Steel and Wire Company, which could reduce the stake of the trust to below 50 percent and so expose the company to a possible takeover by a third party. The trustees deny these claims.
A majority of the trust's endowment is invested in the company's stock, which former company CEO James R. Lowenstine left to the trust, along with a significant amount of land on which the school has been built. The trust's stated mission is to provide general education with an emphasis on nature. According to the article, the judge overseeing the case has scheduled a hearing in late April and refused an initial request by the plaintiffs to temporarily halt the trustees' planned shut down.