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By Matthew Franck

St. Louis Post-Dispatch


Like many private schools, it has a strong academic track record. But unlike other private schools, it also has paid millions to a company owned by the school's CEO, Andrew Signorelli Jr. And there's more that sets Andrews apart from its peers. In fact, the differences are so stark that other local private school administrators were stunned to hear that Andrews was a nonprofit school.

Andrews, together with a sister company that runs Hope Montessori preschools, listed investment assets of $106 million, at book value, last June. Their wealth may be even higher, but it is impossible to tell from the way they report their assets to the IRS. At least $69 million of those assets belongs to Andrews. Few private elementary schools in the nation have even $5 million in investments.

Andrews Academy, 888 North Mason Road, could use its enormous wealth to offer financial aid or supplement tuition with extra educational programs. But the school offers no scholarships to offset its $9,240 annual tuition.

And with the exception of a recent $2 million construction project, tax records indicate that little of Andrews' investment assets are used on educational programs for the school's approximately 245 pupils.

Instead, much of what the school spends each year has been on business transactions with the school's officers. That includes more than $3.2 million in investment fees paid over six years to Signorelli's investment company.

Hope preschools paid his company an additional $1.5 million during that period. On top of that, Signorelli received salary and benefits totaling $165,457 from Hope and Andrews last year.

Signorelli said his company's investment fees are reasonable, given the work he has done to increase the school's assets.

"My compensation is fair compensation, " he said.

Signorelli's company is registered to provide investment services, but he is not personally registered as an investment adviser.

Signorelli said he has not spent the school's nest egg on children, choosing instead to let it accumulate for future construction.

A Post-Dispatch review of Hope and Andrews points to business practices that are at odds with standards among private schools. For example:

* Private schools typically go to great lengths to make sure investment management services are provided by an outsider.

* 24 percent of Andrews' operational expenditures went to Signorelli and his company in one year.

* Hope and Andrews own a for-profit subsidiary operated by Signorelli's sons.

* The subsidiary has lost at least $3.2 million since 1996, creating a drain on the schools' assets.

* Andrews' board is about one-third the size of typical private school boards, and it excludes parents. Also, typical private schools don't have a headmaster as well as a chief executive officer.

Andrews is one of a few nonreligious schools in the area that is not accredited by the Independent Schools Association of the Central States. But academically, the school is regarded as excellent, placing the vast majority of its pupils in the area's selective prep schools.

As nonprofit schools, Hope and Andrews are exempt from paying taxes. The law allows nonprofit organizations to do business with companies owned by board members and other officers as long as they pay competitive rates for those services.

Signorelli said he is confident that he meets the requirements of the law.

He said board members check his rates against industry standards.

"They can cut me off any time they want to, " he said.

Comparing Signorelli's rates with those of other schools is difficult. Investment fees are typically based on a percentage of a school's investments, at market value. But unlike other schools, Hope and Andrews will not disclose the market value of their assets.

Wealthy beginnings

The school and preschools owe their wealth to the sale of Faith Hospital in Creve Coeur, which Barnes-Jewish Hospital bought in 1989. Faith Hospital was founded in 1937 by Signorelli's father, Andrew Signorelli Sr.

The hospital opened Hope preschools in 1972. By 1979, Andrews Academy was born, serving many of the children that had enrolled in the preschool.

Signorelli said the schools are run by the same board members that operated Faith Hospital. The schools' headquarters are on North Mason Road, on land once owned by the hospital. Signorelli said he cannot disclose how much money the school and preschools received from the hospital sale, but he said virtually all of the organization's assets are owed to the initial gift.

Private school leaders in St. Louis say Andrews is discrete about its assets. The school, occupies a well-furnished, but practical 50,000-square-foot building. A new addition features a computer lab, an art studio and a science lab. But the building isn't lavish and might be compared to a well-funded suburban public school.

Private secondary school administrators say Andrews graduates who enroll at their schools often rank among their best students.

Laila Hanna of Ballwin has sent three children to Andrews, beginning in 1981. She gives the school extremely high marks. A son now attends Stanford University, and a daughter is at John Burroughs School.

"All I wanted was a good education for my kids, and I got it, " she said.

Hanna said she had no idea Andrews had such tremendous assets. And she had thought Signorelli owned the school.

A selling point for parents at Andrews is the fact that the school does not ask parents to contribute donations above annual tuition. The recent construction of six classrooms was completed without asking parents for help.

A different approach

Andrews doesn't appear in the rankings of two national organizations that track the wealth of private schools. But neither list shows any elementary school with investments of more than $50 million. The lists are self-reported by the schools.

"Based on the numbers we have, I don't know of any elementary school that wealthy, " said Jeff Ourvan, a researcher at the Council for Aid to Education.

Andrews' wealth is even more remarkable when scaled against its enrollment.

According to the Independent Schools of the Central States, the region's wealthier private schools have an average of $25,000 in assets for each pupil. Andrews has about $284,000 per child.

Andrews also uses its assets in a way that contrasts with other wealthy schools.

The National Association of Independent Schools estimates that such schools spend from 4 percent to 7 percent of their endowments each year on the school. The remainder covers fees and goes toward increasing assets.

Tax records from 1994 to 2000 for Andrews, however, show the school is spending little of its investment income on the school's educational programs.

In 1998-99, for example, the school raised about $2.5 million from tuition, fees and gifts and spent about $2.1 million on educational programs. The school's total operational expenses that year were about $3.1 million, more than $700,000 of which was paid to Signorelli and his company.

In contrast, wealthy private schools in St. Louis use their financial assets to supplement tuition.

John Burroughs School in Ladue, for example, spends about $4,000 more per student than it collects in tuition. About half of the extra spending comes from revenue from investments.

Private schools in the Midwest also typically award financial aid to about 20 percent of students. Pat Bassett, head of the Independent Schools Association of the Central States, said schools in the Midwest award financial aid totaling about 10 percent of their tuition revenue. Doing so allows schools to diversify their classrooms, bringing in children of all economic backgrounds.

Signorelli said he hasn't thought much about the issue of financial aid. He said the school plans to use it assets more for construction than for tuition relief. He said he doubts the school's parents need the assistance.

"You know, all of our children that come are pretty well endowed themselves, " he said.

Andrews Academy also stands apart from other private schools in the way it is structured.

The school has just four board members, with Signorelli serving as CEO.

Bassett said schools in the region have an average of 20 board members, including a mix of parents, alumni and officers of the school.

Bassett said large boards offer a balance. Parents look out for the immediate needs of the school; alumni look to the future; and current officers provide insight on daily operations.

Signorelli, however, describes large boards as inefficient. He also discounted the need for parent representation and said they are not objective.

"Parents have shorter-range thinking, and sometimes that causes more animosity than it's worth, " he said. "We are all professionals. We've been in this field for many years."

Signorelli said parents have a voice in the school through parent-teac her organizations.

Hanna said she didn't have time to become involved at the school when her children attended Andrews. But she said the headmaster, Joe Patterson, always had an open door, and any concerns she had with the school were quickly addressed.

"It was like a big family, " she said.

Managing the money

Signorelli said the boards of Hope and Andrews have entrusted him to manage the investments through his company, National Advisors and Consultants Inc. The company is not listed in the phone book. State records list the company address as that of Signorelli's residence. Officers include Signorelli, his wife, Helen, and John Loughlin of Creve Coeur.

In 1999, the company reported assets to the state of about $1 million.

Signorelli said through a lawyer that he would not disclose whether the company has other clients.

Signorelli said in an interview Monday that he and Loughlin are licensed with the state as investment managers. He said he has been registered for years. Signorelli said he provides a majority of the investment work, with Loughlin acting as a consultant.

But according to the Securities Division of the Missouri secretary of state's office, only Loughlin is licensed with the state as an investment adviser.

Alan Kohn, a lawyer representing Signorelli, said Friday that his client is not licensed.

James I. Hollrah, vice president of Hope preschools, said he has been satisfied with Signorelli's services.

It's impossible to tell from tax records how much Andrews' and Hope's investments have grown, at market value. The documents show Andrews' assets, at book value, growing to $69 million from $37 million from 1994 to 2000.

Private school officials and a national survey of wealthy schools paint a picture of the investment fees schools typically pay. Mary Institute and St. Louis Country Day School, which had a $77 million endowment last year, paid about $261,000 in investment fees, said school business director Jim Hakes. A study by the National Association of Independent Schools said those fees are consistent with a survey of several dozen schools.

In the fiscal year 1999-2000, Andrews and Hope paid Signorelli's company $1,034,508 to manage their investments. Of that, $715,209 came from Andrews. But tax records make it impossible to tell how much money Signorelli's company managed for either school.

Bassett said school investment decisions are typically made by a committee, in part to make sure no trustees benefit from the arrangement.

Signorelli said Andrews Academy has an independent committee that reviews investments and fees. But he refused to provide names of its members.

"I don't want to get into all that detail, " he said.

Hollrah, the vice president of Hope preschools, said he has not c ompared Signorelli's investment fees against what other schools pay. Nor, he said, does he know of any other trustees that have done so.

A failing venture

Board members of Hope and Andrews not only hired Signorelli for investment management, they also bought a for-profit company that has employed at least three of Signorelli's children.

Andrews Manufacturing International, as the company was most recently known, was set up to produce metal products, including CD racks, computer chassis and bird houses, according to a local business registry.

Current state records list A.J. Signorelli as president. Sorkins Directory also names Mark Signorelli as director of purchasing, and Dan Signorelli as national sales manager. All three are Signorelli's sons.

The venture recently closed its plant in O'Fallon, Mo., after posting years of losses -- which were covered by the assets of Andrews and Hope.

Since 1996, the school and preschools have reported at least $3.2 million in losses from the struggling manufacturing firm. Were it not for a fire at the company's O'Fallon plant, the company might have succeeded, the elder Signorelli said.

Signorelli said the school was wise to invest in the venture, despite its poor performance. He said the fact that his children worked there did not influence the decision to purchase the company.

"There was an opportunity to buy a company at a very fair rate and to make it go, " he said.

Hollrah said he had hoped each year that the venture would produce money for the schools. At one point, Hollrah was listed as the president of the for-profit venture when it was known as Andrews Metal Technologies Corp.

Signorelli said he is proud of the school and its accomplishments. The investment assets, he said, offer the school all kinds of options.

In the immediate future, that could include creating a campus for hundreds of pupils, either in west St. Louis County or St. Charles.

"The asset base of the endowment that you see will be spent, " he said. "There is a time to tap into it."

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