Penn State pays $100M so far in abuse scandal

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Costs to Penn State University from the Jerry Sandusky child sex scandal have reached $100 million, and the meter on those charges could continue to run for years.

The university is reporting on its website that costs alone for legal fees, public relations and other consultants grew to nearly $26 million as of Oct. 31. That figure, along with a $60 million National Collegiate Athletic Association fine and $13 million in bowl revenue stripped away by the Big 10, brings the financial impact on Penn State so far to $99 million.

But that does not include other Sandusky-related expenses either expected or already incurred. It does not, for instance, include the $1.2 million severance portion of a $3.3 million package provided to former Penn State president Graham Spanier, who resigned by mutual agreement five days after Sandusky's November 2011 arrest.

Nor does it include civil settlements for the roughly two dozen potential child victims of Sandusky, 68, a former Penn State assistant football coach now serving a lengthy prison term for attacks on 10 boys over more than a decade, some occurring on campus. Talks with those victims are ongoing.

And it does not factor in what Penn State says are fines likely to be levied by the U.S. Department of Education, which is investigating potential violations of the federal Clery Act.

Penn State spokesman David La Torre on Monday declined to speculate on the scandal's ultimate price tag. In June, when the scandal's known costs were $7.5 million, Penn State president Rodney Erickson told the Pittsburgh Post-Gazette he expected it would be "more than a couple of years" before the state's flagship pubic university moved beyond the scandal.

"The university anticipates all costs will be covered by insurance," Mr. La Torre said Monday. "That has not changed."

Just the same, a report Penn State submitted to its accrediting body in September offers a glimpse at how a university with $2.2 billion in unrestricted net assets was cobbling together funds for any unrecovered costs. The report to the Middle States Commission on Higher Education reiterated Penn State's pledge not to use tuition, donor or taxpayer funds.

It said Penn State already had identified an "initial pool" of approximately $51 million in interest proceeds from internal loans the university made over the years to self-supporting units, including Hershey Medical Center and the athletic department. The report said "additional similar sources of unrestricted funds are already available and will continue to become available" as other internal loans and commitments are paid over time.

Penn State has not discussed the number or size of those pools.

"In the event of more dire circumstances, the university is prepared to make additional modifications in its overall financial plans going [forward," the report stated.

It said Penn State already anticipated a $50 million cut in projects from its $1.6 billion capital plan for 2014-18, so it can provide a bridge loan to the athletic department, which must pay the NCAA fine. It suggested other capital plan cuts could be made as needed.

Of the $25,926,451 in legal and consulting fees identified on Penn State's website, the biggest share is for the internal investigation and communications: $12,713,964. The next largest share is for university legal services and defense, toward which Penn State has paid $7,005,036.

Penn State also paid $956,449 for externally initiated investigations and nearly $3,678,600 for indemnified person legal defense.

The university paid an additional $1,572,402 for what it called other institutional expenses.

education - state - psusports

Bill Schackner; bschackner@post-gazette.com or 412-263-1977.


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