Penn State Strikes Deal With Sex Abuse Victims

Penn State University has reached a settlement with 26 sexual abuse victims of jailed former assistant football coach Gerald Sandusky that will cost the university $59.7 million. According to an announcement from the school, the deal will be reflected in the university’s audited financial statements for the year ended June 30, 2013.

Only 23 of the 26 settlements are signed deals with three more agreed to in principle, according to the school.

“The Board of Trustees has had as one of its primary objectives to reach settlements in a way that is fair and respects the privacy of the individuals involved,” said Keith Masser, chair of the Board of Trustees.

“We hope this is another step forward in the healing process for those hurt by Mr. Sandusky, and another step forward for Penn State,” said University President Rodney Erickson. “We cannot undo what has been done, but we can and must do everything possible to learn from this and ensure it never happens again at Penn State.”

The settlements will not be funded by student tuition, taxpayer funds or donations, according to officials. The university maintains liability insurance policies, which university officials believe cover the settlements and defense of claims brought against the school and its officers, employees and trustees. Expenses not covered by insurance are expected to be funded from interest revenues related to loans made by the university to its self-supporting units.

Penn State received claims from 32 individuals who were or allege that they were victims of Sandusky. The university rejected six claims as being without merit and has engaged others in possible settlement discussions.

Sandusky was found guilty on 45 of the 48 charges of sexual crimes against children and was sentenced to 30 to 60 years in prison on Oct. 9, 2012.

Subsequent investigations found that university officials knew of suspected incidents but did little or nothing to intercede. Prosecutors claim that former Penn State President Graham Spanier, former Vice President Gary Schultz, and former Athletic Director Tim Curley knew that Sandusky was abusing boys but did not tell police, then lied to a grand jury. Charges against them include perjury, child endangerment, obstruction of justice, endangering the welfare of children, and failure to properly report suspected abuse. They are expected to go to trial next year.

The scandal cost long-time football coach Joe Paterno his job. The school also removed a statue of Paterno from in front of the school’s football stadium. He died from lung cancer just months after the charges came to light in November 2011.

The NCAA leveled unprecedented penalties against the school’s football program, including a $60-million fine. The $60-million is equivalent to the average gross annual revenue of the football program. It was to be paid over a five-year period into an endowment for programs preventing child sexual abuse and/or assisting victims of child sexual abuse. Those programs can’t be operated by the university. The minimum annual payment will be $12 million until the $60 million is paid but no current sponsored sport may be reduced or eliminated to pay the fine.

The charges and conviction also put out of business a charity Sandusky started, Second Mile Foundation Centre County, Pa.

According to the school, Penn State during the past year has instituted more than 115 changes related to safety, human resources, security, compliance and governance. Through self-imposed urgency, the Board of Trustees, administration and staff have brought sweeping reform and best practice processes to nearly every aspect of the university’s governance and oversight. In doing so, the university considered the recommendations of multiple parties to determine the best course forward, including but not limited to the Pennsylvania Auditor General, Penn State University Faculty Senate and the Freeh Report recommendations.

“We have made great strides, but a great deal of work remains,” Erickson said. “Our university is a better institution today as a result of the work and dedication of our trustees, administrators, faculty, staff and students.”