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Pennsylvania Taxpayers on the Hook for Penn State

The NCAA levied their punishment on Penn State earlier this week, but maybe it’s time for the taxpayers to come down hard on the legislature and Governor since residents are actually the ones being punished. David Post sums up the situation quite nicely in this post at Volokh:

So let me get this straight: The NCAA is ordering the taxpayers of Pennsylvania, because of the misdeeds of their agents, to set up an endowment program for preventing child sexual abuse and fund it to the tune of sixty million dollars?? And oh, by the way, taxpayers of Pennsylvania: you can take it out of lab space, computers, and teaching salaries, but YOU MAY NOT PAY THIS FINE BY REDUCING CURRENT SPENDING ON ATHLETICS!

This would be hilarious, except it is pathetic, and it has real consequences. I happen to teach at a (different) public institution in Pennsylvania, and I can tell you this: $60 million is a decent-sized chunk of a higher education budget that is under severe strain these days, with the Governor having recently proposed a 30% cut in all higher ed funding because, as he put it, “we simply don’t have the money.”

Most of the coverage we read about the news of the punishment on the day it broke didn’t mention that it cannot come out of the athletics budget. Our attitude was that the fine should only be paid by football budget and nothing else. If football staff had to be let go or the program dramatically reduced, so be it.* But with this news, oh no, this is not okay. We plan on letting our local lawmakers know that we find this be quite unacceptable to be on the hook for the civil penalties related to the criminal acts of others. Penn State can work its ass off fundraising for the money, but they should not be able to just toss it off to taxpayers or slash from academic programs to pay off for the bad behavior of the athletic staff.

However, taxpayers in Pennsylvania aren’t just screwed by this fine because insurance isn’t likely to pay off any claims that come from the Sandusky actions or cover-up.

The Pennsylvania Manufacturers’ Association Insurance argues that Penn State withheld key information needed to assess risk, at least after school officials investigated a May 1998 complaint that Sandusky had showered with a boy on campus.

In a memo filed this week in Common Pleas Court in Philadelphia, the company argues that Penn State failed to disclose that it had information about Sandusky that “was material to the insurable risk assumed by PMA.”

The company, which has long insured the university, also argues that its policies after March 1, 1992, were amended to exclude “abuse or molestation.” The insurer also argues that coverage for such behavior is excluded as a matter of public policy in Pennsylvania.

Oh, and if that isn’t enough, it appears all taxpayers are picking up the dime for the feds to hire the ousted President.

Graham Spanier might have been ousted from his post at the helm of Penn State over the sex-abuse scandal that engulfed the university, but it seems he’s found a backup employer: the American taxpayer. …

His lawyer confirms to the Loop that Spanier is working on a part-time consulting basis for a “top-secret” agency on national security issues.

I guess they knew he was good at keeping secrets and leading cover-ups of government employees behaving badly.

*As an aside, I am sympathetic to the idea that the current players would be punished rather unfairly. Even with the current sanctions that essentially keep them from all post-season play, I would be supportive of the idea of giving all current and recently recruited Penn State football players an extra year of eligibility so that they can get their academic and financial affairs in order this year to transfer somewhere else.

28 Responses to “Pennsylvania Taxpayers on the Hook for Penn State”

  1. Heather from AK says:

    Current players are allowed to transfer with no penalty, effective immediately. Apparently they are being swamped by calls and visits from other coaches.

    • Bitter says:

      That’s good. Though I still wouldn’t be opposed to an extra year of eligibility, especially for younger players who haven’t had as much chance to prove themselves, and incoming players who may have looked at other schools that no longer have open admissions. The decision came down at an awful time for them.

  2. Pyrotek85 says:

    Uh, why isn’t the money just coming from PennState itself? I thought they were rolling in money. Am I missing something here?

    • Bitter says:

      Penn State is a publicly funded school. It is not a private university.

      • Pyrotek85 says:

        Yeah, but why aren’t they just taking it from their budget? I admit I’m largely ignorant to the whole deal, but I’m not sure why other places in PA should have to suffer.

        • Bitter says:

          If the school uses the non-sports budget, it means that all the programs that don’t have to do with sports are cut – academics, other activities, etc. That money ultimately comes from the taxpayers. Therefore taxpayers either have to give more to the school in order for them to pay off the fine or they have to sacrifice other programs in order to pay it off – you know, like that whole “higher education” program. So either taxpayers pay more, or they see substantial cuts to programs that Penn State was actually founded to provide. Since mostly Pennsylvania residents attend the school and benefit from the classes, they pay either way.

          • Pyrotek85 says:

            Ah, thanks. I guess I’d understand better if I knew what the budget amounts were and what costs what. I agree that I don’t think other programs within Penn State should have to suffer either. I guess we just have to eat the costs then, can’t get blood from a stone.

            • Bitter says:

              I admit that I would like to know if dropping out of the NCAA would be a possibility. I realize that means basically no competitive sports on campus, but I don’t think that needs to be relative to the mission if they are costing the university so much money and trouble. (Keep in mind that we still don’t know the full cost of this scandal since the lawsuits haven’t been filed yet.) The only potential issue I see there is whether, ultimately, sports bring in more money than they cost and the cost of the fine can be made up in “profits” in the next few years. If that’s the case, then there’s a reasonable argument to remain.

              • Spade says:

                Sure, I bet if they told the NCAA “Fuck off, we’ll just have no sports but clubs t(‘.’o)” there’s nothing the NCAA can do about it.

                Most college sports, especially D1, are really an unnecessary distraction from a school’s real purpose anyway.

                • jetfxr69 says:

                  And that’s really what should happen here. The precious football program, the reason for the cover-up, should be closed. Any additional budget necessary to pay the fine should come from the other athletic programs. The school does not exist to provide sports opportunities. It’s supposed to be an institution of higher LEARNING. Taking the $$ from other than athletics suggests that learning hasn’t taken place.

              • Diomed says:

                Could try the NAIA? No football, but maybe that’s not a bad thing.

  3. Spade says:

    On the other hand….when I was at Penn State 6 years ago we had TWO Vice Provosts handling diversity related issues with associated staffs. And a bunch of the usual useless “Victim Group X Studies” with full staffs. So it could be used to cut out some of the fat.

    Other than that the whole thing here “And oh, by the way, taxpayers of Pennsylvania: you can take it out of lab space, computers, and teaching salaries, but YOU MAY NOT PAY THIS FINE BY REDUCING CURRENT SPENDING ON ATHLETICS!” is retarded.

    • Bitter says:

      I would absolutely encourage trimming administration, especially since the administration was a key part of the cover-up. I just don’t see how that will come up with the $12 million per year they need.

      As for that quote, that isn’t my style. It’s the quote featured that makes the point of how the NCAA is sending that message to taxpayers and tuition-paying families.

      • Spade says:

        No no no, the issue the quote relates to is retarded. Not the quote itself. The whole “you can’t cut athletics so you HAVE to cut academics” thing is retarded.

        • Bitter says:

          Where do you propose they will find that much money then? By the NCAA’s rules, they can’t pay the fine from anything related to athletics. They can’t make cuts to or eliminate any athletics programs. I haven’t looked up numbers, but I doubt you can cut back that much administrative staff. You could cut other extracurricular programs and punish them for the actions of the football program, but I’d be shocked if you found all the extra cash there.

          I believe the author is looking at the issue with the understanding that Penn State will not even put on the table that it could withdraw from the NCAA instead of bending to its will on how to pay the fine that is largely the responsibility of one program that they won’t allow to pay the fine. I, personally, don’t think that option should be ignored. But, I also realize that I’m not in charge.

          • jetfxr69 says:

            Bitter, you’re absolutely right of course. The NCAA only has a hold over Penn State in the athletic arena, so to speak. Telling PSU they can’t cut athletics is clearly self-serving.

            They’re not an accrediting agency, they’re not a governmental entity, and they’re not even an alumni association from whom endowments come. The correct response from PSU is a solid “F.U.” to the NCAA.

          • Spade says:

            I mean what the NCAA is doing is retarded. I AGREE WITH THE QUOTE.

  4. jkp says:

    It would be nice if the Pa. legislature conditioned its future subsidies to the private college known as the Pennsylvania State University on it neither raising tuition nor cutting its academic programs to pay any fines to the NCAA.

    A pipe dream. But still, this is bullshit. All over some goddamned game.

  5. I really don’t understand how the NCAA can decide that it can not come from athletics. Oh wait, yes I can. The truth is, that is all the NCAA cares about. If I was the state of Pennsylvania, I would give the finger to the NCAA and completely cut football at Penn State.

  6. Sigivald says:

    The NCAA levied their punishment on Penn State earlier this week, but maybe it’s time for the taxpayers to come down hard on the legislature and Governor since residents are actually the ones being punished.

    Isn’t college football a gigantic money-maker for the school?

    I don’t have so much sympathy for the school or the taxpayer who was happy to take money from a profitable football program being indirectly-and-sort-of hit with a fine for its failures.

    (Note that the $60M is meant to be a single year’s football revenue, and to be paid out over five years.

    They shouldn’t even have to cut current athletics to pay that.

    If we cared about universities as pure centers of academics, we’d simply end college sports as a profit center, since it encourages entirely the wrong set of priorities.)

    • Bitter says:

      I did make the point that if the program is a profit center that brings in significantly more revenue to other programs than what it costs, then there’s a point to be made for keeping it. However, since the money can’t come out of football programs, that kind of defeats the point of supposedly connecting it to the revenue.

      Added: I also just check the NCAA statement, and they note that the fine represents the “gross revenue,” so that’s not what the university sees in actual profit from the program. So, I’m still a bit unsure of how it balances out. At this point, I’m really just still irritated that it has to come from other budgets instead of the athletic programs.

      • Heather from AK says:

        I was under the impression that the money couldn’t come from OTHER athletics, or academics. The school says they will be using the athletic reserve fund, capital maintenance budget, and (if necessary) internal borrowing.

        • Bitter says:

          “No current sponsored athletic team may be reduced or eliminated in order to fund this fine.” That’s the part of the statement. Considering the football program is a current team, that would indicate that it can’t come out of their budget.

          • Heather from AK says:

            Regardless, as I said, the money is coming from he athletic reserve fund, capital maintenance budget, etc, according to Penn Live.

  7. AndyN says:

    How much of the fine could be covered by eliminating the entire climate “science” program? Who could object to using one crooked enterprise to pay for the sins of another crooked enterprise?

  8. rambosdad says:

    From the distant perspective of Illinois, what I see here is a conspiracy to rip off the Pennsylvania taxpayers for $60 million being condoned by a Board of Trustees drunk on political correctness.
    What is needed is someone directly injured by the agreement who has legal “standing” to challenge the agreement, maybe the state Attorney General. In my opinion this agreement could not stand the sunlight of a proper lawsuit.
    Otherwise, the best option is to dump the NCAA.

  9. Harold Lloyd says:

    The football program brings in more than that in a year.

    Wait for some fancy accounting, because that’s where the money will come from.

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