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Philly's Girard College closer to salvage plan

Founder's legacy no longer pays the bills

Philly's Girard College closer to salvage plan

Clay Armbrister, president of Girard College, outside of the school on Jan. 9, 2013. (APRIL SAUL / Staff Photographer)
Clay Armbrister, president of Girard College, outside of the school on Jan. 9, 2013. (APRIL SAUL / Staff Photographer)

"We're not moving. We're not closing. Everything else is on the table," says Girard College headmaster Clarence Armbrister of the North Philadelphia boarding elementary and high school established by pioneer trader and industrialist Stephen Girard in his 1831 will.

"Everything" could include, for example, a moratorium on accepting new students for a year or two, or ending the residential program and becoming a day school, or restoring the seven-day boarding program (currently down to five), or starting a capital campaign for an estimated $100 million in overdue renovations; or more than one of the above; or something else cooked up by Girard's consultants...

Childless Girard, who sold opium to China, American foodstuffs to English-blockaded Napoleon and gunpowder to South American revolutionists, among much else, bought and sold the first U.S. central bank, financed the War of 1812, and developed the Pennsylvania coal, railroad, commercial farming, port and shipbuilding industries, intended the walled 43-acre campus, its columned stone buildings, and an eternity of trade-schooled or college-prepped Philadelphia orphans (originally, at Girard's insistence, all-white and -male, now mostly African-American, and co-ed) to be his monument after death.

But the city-run Girard Trust's privately-managed $224 milllion investment pool -- down from a peak of $330 million before the 2008 crash and a series of debt restructurings -- and other properties no longer yield enough for the school's annual budget, forcing managers to spend down its principal, endangering its survival, even as they have cut costs.

To cut spending below the recent unsustainable $20-23 million a year, the board has laid off staff and cut enrollment, to a recent low of 24 new students each year, for a total of around 400 students, down from 753 in 2007 (and more than three-quarters from Girard's historic highs). Estimated expenses are down to $17 million this year -- still too high, says the board.

Much of the million-square-foot campus, including former dorms that date to the late 1800s, is vacant and awaiting rehabiltation.

Saying this can't continue without wiping out Girard's legacy and shutting the school, Armbrister, Board of City Trusts chairman Ronald Donatucci, and city investments adminstrator Joseph Martz met with students, parents, alumni and other "stakeholders" in December and plan another meeting tonight [2/28] to underline how broke they say the Trust has become, before they present alternatives and choose a final plan.

Martz has labored to reduce Girard's debt, which expanded in the 1990s and early 2000s as previous directors gambled on expanded investments and real estate. He and Armbrister defend those attempts and insist the Trust would be even worse off today if it had tried to rely on rents from its aging office buildings in Center City, Harrisburg and other communities instead of trying to diversify.

Martz also says Girard's old anthracite coal lands in east-central Pennsylvania have resumed mining and added water and timber sales and wind-power generation, boosting income from that source up from nothing in 2007 to $1.9 million this year. But that's not enough to balance the books.

It's hard to see how Girard can survive as a boarding school in its current location without raising new funds from outside sources.

Beyond the fiscal challenge looms a legal threat: a lawsuit by Cumberland County, waiting a Pennsylvania Supreme Court decision since last May, challenges Girard's tax-free status. The city expects to prevail, avoiding millions in back taxes that would squeeze Girard's legacy still further, says Martz. 

Joseph N. DiStefano
About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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