PhillyDeals: Girard's uncertainties persist amid disputes
Stephen Girard trusted that Philadelphia officials would use his fortune and his detailed instructions to guide Girard College, the stone-walled, 43-acre boarding school for poor kids, after he died in 1831.
Stephen Girard trusted that Philadelphia officials would use his fortune and his detailed instructions to guide Girard College, the stone-walled, 43-acre boarding school for poor kids, after he died in 1831.
They've been fighting about it ever since. Girard's may be "the most litigated will in history," Orphans' Court Judge Joseph O'Keefe noted last year, when he rejected the Board of Directors of City Trusts plan to close Girard's high school and dorms until it enlarges its endowment and improves its programs.
The board, appointed by city judges and headed by lawyer, ward leader, and Register of Wills Ron Donatucci, appealed O'Keefe's "No" to Commonwealth Court. If the board wins, it will keep the daytime grade-school program running and shut and overhaul the rest.
"They are operating as if they are going to get a favorable decision" on appeal, Dan Garrett, a Girard College staffer and leader of the school's 28-member residential advisers' labor union, told me.
"They said their ultimate goal is to rebuild and restore funding and restore the program" - but still be prepared for layoffs if the board wins on appeal and shuts the high school and boarding program, Garrett added.
Enrollment at Girard has gone up and down, partly with the value of the office buildings, coal mines, and securities bought with the founder's fortune. It peaked at around 1,700 students after World War II, and has fallen to 260 - below Girard's call for "for the residence and accommodation of at least 300 scholars."
Pleading poverty in the investment crash of 2008-09, the board shut Girard's overnight program on weekends. But O'Keefe said the estate was rich enough to keep the boarding programs open during the week and still sock aside a few million a year for upgrades.
Girard's overseers haven't done a great job of planning in the past. The board spent $28 million building a dorm in 2001 for a projected 1,000 students.
It's "staggering," the judge wrote, that even after cuts, Girard is spending $17 million a year to educate its declining student body - but only 15 percent of recent grads tested ready for college, and only one-third of Girard graduates were finishing the colleges they entered.
School president Clay Armbrister and a committee including Girard alumni are working on a plan to make Girard a model college prep, the board's executive director, Joseph Bilson, told me.
As though confirming O'Keefe's fiscal diagnosis, Girard says its investments gained 19 percent in fiscal 2014, putting it in the top 10 percent of charitable institutions, though a few points below the bull-market Standard & Poor's 500. "We kicked ass," Bilson told me.
Assets totaled $263 million at the end of fiscal year 2014, up from $234 million a year before, and the 2011 low of $198 million.
That's still below the 2007 peak of $334 million, or the minimum $350 million that Bilson says would generate enough cash flow to safely let Girard run a 12-academic-year boarding school again.
How did Girard get 19 percent? Bilson read me a list of Girard's hired investors, including Swarthmore Group, Philadelphia Trust Co., Valley Forge Asset Management Co., and other local firms, plus BlackRock (for bonds) and SPDR Standard & Poor's 500 exchange-traded funds (ETFs), and others. Girard also lent $3 million to developer Leonard Poncia's AQ Rittenhouse tower at 2021 Chestnut St.
I asked about each manager's performance, assets, fees. "Historically, we have not given out that information," Bilson told me. "We've never had a request for anything in our investment portfolio."
When the endowment hits its target, the board hopes to attract outside funding to upgrade the campus and improve the high school. I expect it is going to have to give donors a lot more data than it had on hand last week.
And the shrunken school struggles on. Girard "is a great place. We all love it. We live with these kids," Garrett told me. The uncertainty "is definitely having an effect on students. We're lifting them up and doing the best we can."
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