Marlene Brenner, secretary of the board, said that Girard, a free tuition and room and board school in Fairmount, closed out the last fiscal year in August with a $1.2 million deficit.
"There has been a decline in the interest rates as it affects bonds in their investment portfolio," Brenner said. "Costs have continued to rise and income has leveled off."
She said that the soft real estate market in Center City has also meant that the Girard Estate has not been earning as much money from its real estate holdings.
For the 1991 fiscal year, income generated by the estate for the school totaled $12.1 million while expenses came to $13.3 million. She said income during the previous fiscal year had totaled $12.4 million, compared with expenses of $12.1 million.
Brenner said she could not provide a detailed explanation for the $1.2 million increase in Girard expenses last year. However, a new contract for Girard's 68 full-time teachers and counselors, which was ratified in June, was responsible for a portion of it.
David Murawski, former president of the teachers' union, said the contract called for an average pay increase of about 6 percent for the first year of the four-year pact. Since the previous contract had expired on Aug. 31, 1990, teachers received their retroactive pay increases for the 1990-91 school year in lump sum payments last summer.
Wages increased 5.5 percent this year and will increase 5 percent in each of the last two years of the contract.
Girard teachers generally earn less than their counterparts at most public and nonpublic schools. A beginning teacher with a bachelor's degree will earn $15,500 this year at Girard, compared with $20,650 at high schools operated by the Archdiocese of Philadelphia and $26,000 for new teachers in Philadelphia public schools.
Girard College is an unusual boarding school that provides a free, college- preparatory education for qualified low-income students from throughout the region and across the country.
Although it educates students from first grade through high school, it is called a "college" because that is the term that Stephen Girard, the merchant-banker, used in 1831 when he bequeathed the bulk of his $7.5 million estate to establish a school for white male orphans.
Admission criteria have been broadened over time to include minorities, girls and children from single-parent households.
This year there are 505 students living and going to school on Girard's 43- acre campus on Girard Avenue. Students who meet admission requirements also receive free clothing and health and dental care. The school is said to spend about $26,000 per year on each student.
Brenner said the 12-member Board of City Trusts had studied the financial problems at Girard for months before the job cuts were made.
SUPPLIES, SERVICES CUT
As part of the general belt-tightening, Joseph T. Devlin, Girard's director of education, said funds for supplies and services were reduced last month by 10 percent.
"The instructional program has not been affected in any way," he said.
However, a member of the student-life staff, which supervises children away
from the classroom, said children are feeling the impact of the cuts in other ways. Funds for trips are no longer available and heat has been turned down in the buildings.
But Brenner said the children were not being shortchanged.
"The board would never do anything that would have any effect on the children and their safety," she said. "This was studied very thoroughly for many months before this decision was made."
She also said it was impossible to calculate the worth of the Girard Estate, since it includes coal mines as well as real estate holdings both in and outside the city. But the residual fund, which is used to operate Girard
College, is worth approximately $179 million, Brenner said.
REAL ESTATE HOLDINGS
Aside from the 43-acre Girard College campus, the Girard Estate's largest holding in Philadelphia is known as Girard Square. That is the Center City block bounded by Market, Chestnut, 11th and 12th Streets.
That property is worth at least $60 million, according to an appraisal reported a few years ago at a meeting of the Board of City Trusts.
According to the annual report for the 1990 fiscal year - the most recent available - U.S. government bonds accounted for 11.4 percent of Girard
College's residual fund investment. Corporate bonds and notes accounted for the largest share of the fund - 27.8 percent; 25.7 percent was devoted to common stocks and 21.8 percent was held in mortgage-backed sercurities.
Brenner said no decisions have been made on further cutbacks. She said that only Louis J. Esposito, president of the Board of City Trusts, could discuss whether further cuts might be made. He was out of the country and could not be reached for comment.
Although no full-time teachers or houseparents have lost their positions yet, employees say they are braced for the possibility of another round of layoffs next month.
"It is not very conducive to doing a good job," said one employee who asked not to be quoted by name. "It's like Alcoholics Anonymous. We're living day by day."