Karen Heller: Despite huge bequest, Girard College in dire straits

When Stephen Girard died in 1831, he was the richest man in America. He left his $7.5 million fortune for a boarding school to educate indigent boys. The bequest was the equivalent of almost $100 billion today.

"When I am dead," he said, "my actions must speak for me."

But Girard had the misfortune to die in Philadelphia. His enormous public trust fell under the supervision of a board of local political potentates.

Now Girard College, which opened in 1848 with the richest endowment of any educational institution in America - by comparison, Harvard had less than a million - is on life support.

The school's Residuary Fund has plummeted from $323 million in 2007 to $230 million today. So dire is the situation that officials even discussed shuttering the school and selling off the 43-acre Fairmount campus. Academically, it also struggles. Only a third of graduates complete a four-year college.

Historically encompassing all grades and now integrated and coed, the school will "temporarily" suspend its high school and boarding operation. Girard will serve 425 students, a quarter of its Depression-era enrollment, with a reduced staff.

It will not be Girard College. It will be another underperforming elementary school, which I'm not sure the city needs.

"Girard saved my life," said Steven H. Biondolillo, who spent seven years at the school and runs a nonprofit marketing and consulting firm. "The thought that this gift, for whatever reasons, is not available to this generation of children in need is saddening and troubling."

While Girard spends $47,000 per student, much of the expenditure covers the costly physical plant.

"The kids don't get educated and the money gets squandered. Welcome to Philadelphia," said Mark Schwartz, an estate and trust attorney who was involved in the Barnes Foundation litigation.

Politicians are in charge of the Board of City Trusts - the entity that controls the money - and these are people you wouldn't have managing your retirement account. Poor children seem an afterthought.

I met last week with Girard president Clay Armbrister, board member Bernard Smalley, Girard Estate executive director Joe Martz and spokesman and alum Kevin Feeley. They treated me to two hours of defense and a PowerPoint of woe.

Deferred building maintenance was frequently cited as a problem, and the vagaries of the stock market and real estate, as if this was news in operating a historic campus and trust.

Armbrister, Mayor Nutter's former chief of staff and Girard's second president in four years, earns $250,000, more than his former boss. During the last two academic years, the trust spent $617,000 on academic, financial, and architectural consultants. It may be too late.

Finances could get worse should the trust's Aramark Building in Center City lose a major tenant. In the 21st century, the trust is reliant on income from coal. Said Martz: "Wish our founder had invested in chocolate instead of coal."

He was alluding to the Milton Hershey School and board, with its own questionable investments. But Hershey has $10 billion in assets and operates a boarding school that serves 1,800 poor children.

In 1997, an Inquirer investigation revealed that during a period when the value of trust stocks and bonds almost doubled, Girard College's funding decreased by a third. The Board of City Trusts launched a coal-mining company, invested in a hotel, office buildings, and helicopter hangars, all without seeking approval from Orphans' Court.

The board's response to public exposure was to spend $28 million on a new building, rather than dealing with deferred maintenance. In 1990, the trust borrowed $100 million and incurred debt, now being repaid. The trust is also engaged in a protracted legal battle over its tax-exempt status on investments. A ruling may cost additional millions.

Would another school with such remarkable financial assets get to this point? Had the institution's fiduciary stewardship been managed by alumni, educators, and experienced financial experts invested in its mission, there might still be a Girard College serving and educating the poor as its founder so generously intended.

Contact Karen Heller

at 215-854-2586 or kheller@phillynews.com, Follow her at @kheller on Twitter. Read the metro columnists' blog, "Blinq," at www.inquirer.com/blinq.