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Penn State asks parties to settle $60M dispute

Published June 12, 2013 3:20 pm

Courts • School says deal could run afoul of NCAA agreement.
This is an archived article that was published on sltrib.com in 2013, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Harrusburg, Pa. • Penn State asked the NCAA and Pennsylvania government officials to settle litigation over who will control the $60 million the school must pay for child abuse prevention efforts under a consent agreement it signed nearly a year ago.

University attorney Frank Guadagnino wrote to other attorneys Tuesday, saying the school had no desire to get involved in pending state and federal court battles. His four-page letter said Penn State intends to hold onto the first $12 million installment until the NCAA asks for it.

"We note that a settlement of the dispute would permit the funds to be used for their intended purpose in an expeditious manner," Guadagnino wrote, offering to meet with the parties if they think the university can help settle the matters. The money is designed to aid child sexual abuse prevention and to help its victims.

The consent agreement was signed shortly after former Penn State assistant football coach Jerry Sandusky was convicted last summer of sexually abusing boys, some of them on campus.

At issue, Guadagnino said, is that if Penn State pays the money to the state, it could run afoul of its deal with the NCAA. If it pays the NCAA, it could violate a state law passed in January that requires the money be paid into the state treasury, he said.

The letter was first reported Wednesday by the online news site Capitolwire.

The NCAA is pursuing a federal court challenge to the new state law, a case that is in its early stages. Also, state Sen. Jake Corman, R-Centre, and Democratic state Treasurer Rob McCord are suing in state Commonwealth Court over the use of the money, with oral arguments scheduled for June 19.

McCord spokesman Gary Tuma said McCord sympathizes with Penn State's dilemma and is opposed to the NCAA's attempt to bring the university into the litigation.

"He supports attempts to resolve it," Tuma said. "He and Sen. Corman are considering the next steps they might take toward that end."

An NCAA spokeswoman declined to comment, but in a letter sent Wednesday to Guadagnino, NCAA lawyer Everett Johnson called the new state law "an extraordinary, indeed unprecedented, attempt to exercise control over the university's decision-making authority and the expenditure of its own funds."

"As a matter of governance, the university's professed indifference to its independence, autonomy and substantial financial obligations (if true) is surprising," Johnson wrote. He did not return a phone message.

Corman's attorney did not return a message seeking comment. The general counsel's office for Gov. Tom Corbett, a defendant in the NCAA's federal lawsuit, said the Guadagnino letter was being reviewed.

Guadagnino declined to discuss his own letter, which stated the NCAA does not intend to ask for the money until the litigation is resolved.

The consent agreement calls for a four-year ban on post-season play, a temporary reduction in football scholarships and the elimination of 112 losses from the final years of longtime coach Joe Paterno.

Sandusky, who had been a defensive assistant under Paterno, was convicted in June 2012 of 45 counts of child sexual abuse, and is serving a 30- to 60-year prison sentence. He denies the allegations.

The consent agreement was imposed to penalize the school for how top administrators handled complaints about Sandusky with children. Paterno died early last year, but three others currently face criminal charges for an alleged cover-up of Sandusky complaints: former president Graham Spanier, former athletic director Tim Curley and former vice president Gary Schultz. They also deny the allegations.