Penn State

Penn State President Rodney Erickson outlines Jerry Sandusky costs for University Faculty Senate

Penn State’s costs are adding up — a $60 million fine from the NCAA, $21 million for legal and public relations expenses, and $2.5 million in severance owed to the former university president after he was dismissed.

Jim Strauss, who is on the faculty in Penn State’s Eberly College of Science, wanted to know just how those costs from the Jerry Sandusky scandal fallout would be paid.

So he asked President Rodney Erickson at the University Faculty Senate meeting on Tuesday.

“I feel I am a stakeholder in this institution, and I don’t understand how financially this is going to work,” Strauss, a senior lecturer in biology, told Erickson.

No doubt, Erickson told Strauss and the more than 150 faculty senators, it’s going to be expensive for Penn State.

“When we’re all said and done with this, well, I’m sure we’ll look back and say, “If we we hadn’t used those funds for particular uses to deal with the fallout of the Sandusky crimes, we would’ve had enough money to renovate a couple of buildings, some laboratories,” Erickson said.

“We can’t print money, so there are opportunity costs as we speak.”

Strauss was hoping to get an explanation from the president at a future Faculty Senate meeting.

But Erickson gave a quick rundown.

The costs are more than $83 million, considering the fine, the severance to Graham Spanier, and the legal and PR costs.

To handle the biggest chunk, the NCAA fine, the university loaned the athletic department the $60 million, which will be paid back over 30 years. The athletic department also will pay interest on the loan, with a “rather significant” interest rate, Erickson said, but he did not elaborate on what it is.

As for other costs, Erickson said the university’s insurance will pick up the legal costs of former university officials like Spanier, Tim Curley, Gary Schultz and Cynthia Baldwin. Spanier, Curley and Schultz have been accused of covering up abuse allegations against Sandusky and have retained defense attorneys. Baldwin testified to the grand jury and has retained an attorney.

Erickson said Penn State will pay other costs out of reserve funds that were built up from interest that accrued from other internal loans the university has done over the years.

In addition to the question about the cost, Erickson was asked about how the recommendations from the Freeh report will be implemented.

Erickson said Penn State officials have used other universities as benchmarks for comparison on the recommendations.

He said the process is not the equivalent of quickly marking off items on a punch list.

The Freeh report made 119 recommendations, and the university announced last week that it had completed 61 of them.

Erickson said there are a few recommendations that do not make sense for the university to implement, most of which are suggestions for adjusting reporting lines, such as the recommendation that the associate vice president for human resources report to the president.