Philadelphia has failed Girard College

The “Spirit of Girard” sculpture by Bruno Lucchesi greets campus visitors Monday, June 3, 2013, as the Girard College Board of Managers announced plans to temporarily end its residential and high school programs until finances have improved. DAVID M WARREN / Staff Photographer

Martha Woodall writes that the city-run Board of City Trusts decision to shrink Girard College from a Grades 1-12 boarding school to a 1-8 day-only program -- "temporarily," until it can build back the shrunken assets of Stephen Girard's early 19th Century estate -- is being blamed on investment losses since the 2008 recession, read it here.

In fact the city-run investment portfolio's status is complicated by decisions taken back in the 1990s and early 2000s, when State Sen. Vincent Fumo, D-Phila, was a power on the Board of City Trusts that oversees Girard.

Fumo's move to open up Girard's real estate portfolio and borrow money to hire private investment managers -- sometimes to buy money-losing investments like interest-rate swaps -- have led to complications -- including a Cumberland County lawsuit that cites arguments from the infamous Girard racial desegregation fight of the 1950s and 60s -- that have kept the Trust from liquidating or diversifying assets that might have helped it recover with the investment markets. The late 2000s decision to lease out the Aramark building -- followed by the board's inability to deploy the proceeds so as to replace the lost annual income -- also hurt. Read more here and here.

Maybe the financial engineering, along with staff layoffs and enrollment shrinkage, allowed the aging boarding school facilities to remain open awhile longer and put off the crisis. But operating costs have risen faster than investment profits. City officials can blame high labor and maintenance costs, investment volatility (though that hasn't stalled a lot of other charitable endowments, including, say, the Hershey School trust), aging buildings, or old Stephen Girard's insistence on an expensive residential program at the site he devised. The crisis has finally forced steps that might better have been planned years ago.