School suffers a financial loss
Parents warned as Maimonides trust's value falls
The Maimonides School, the oldest and largest Jewish day school in Greater Boston, is warning parents that it has lost a steady source of income because a bequest that benefited the school lost 60 percent of its value in the fraud-driven collapse of Bernard L. Madoff Investment Securities.
The school's board chairman, Timberland Co. president Jeffrey Swartz, on Monday night e-mailed the school's parents to tell them of the loss. The school did not have money directly invested with Madoff, but a trust whose sole beneficiary is the school did. Swartz said in the e-mail that the Saval Trust had lost about $3 million with Madoff, which he said was about 60 percent of the trust's value, and he said trust officials had thus far been unable to recover the balance of its funds, so the loss could be greater. He said income from the trust had in the past generated $8 million for the school, "funds that have helped pay our faculty and keep our school solvent."
"The consequence of this fraud is deeply felt," Swartz wrote. "As I reported to you, we have depended upon the annual earnings from the Saval Trust, as well as from the restricted and unrestricted funds we manage, to help the school operate its 'business.' I acknowledge with sadness that the sharp diminution of Saval Trust funds poses a real financial challenge for the school."
Swartz was traveling on business in Europe yesterday and said by BlackBerry he was not available for comment. School officials did not return calls and e-mails seeking comment.
Maimonides is the second local Jewish institution to report significant problems caused by the case of alleged fraud; last week, the Robert I. Lappin Charitable Foundation, which funded Jewish programs on the North Shore, closed its doors because its money had been invested through Madoff.
The school was founded in 1937 in Dorchester by Rabbi Joseph B. Soloveitchik, a revered figure in the Jewish community and a pioneer of modern orthodoxy. Located in Brookline since 1962, the school now has about 600 students in kindergarten through 12th grade.
The school has had a variety of financial and management challenges in recent years, and its investments have been hurt along with the broader stock market. Swartz's letter warns of several potential future challenges - an increased number of families requiring scholarship aid, lower enrollment, reduced giving, and diminished endowments.
"The need to act with real financial caution with respect to our budget is self-evident," he wrote, as he appealed to people to give generously. "I have been engaged with the principals and the board for nearly six weeks now, examining what can be done to minimize our expenses and maximize donations to the school. We were motivated by the meltdown in the financial markets and the economy. The incremental horror of the fraud has forced the work we have been doing to become even more urgent."
Michael Paulson can be reached at mpaulson@globe.com. 