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Penn State details costs of response to Sandusky allegations

Posted On: Feb. 14, 2012 12:00 AM CST

Penn State details costs of response to Sandusky allegations

STATE COLLEGE, Pa.—Pennsylvania State University says it has paid nearly $3.2 million in legal fees and to consulting and public relations firms as it addresses child sexual abuse allegations against former assistant football coach Gerald A. Sandusky.

Some of those fees and costs associated with the sexual abuse scandal are expected to be reimbursed under the university's insurance policies, Penn State said Monday in a newly launched website designed to relay information for ongoing investigations and related matters.

“The University maintains general liability and directors and officers insurance policies, which are expected to cover the defense of claims brought against the University and its officers, employees and trustees,” Penn State said on the website. “Legal and other expenses not covered by insurance are expected to be funded from interest revenues with respect to loans made by the University or from additional payments made by the athletic department to the University with respect to the financing of the most recent Beaver Stadium expansion.”

Penn State said any uninsured costs will not be funded by donations, student tuition or taxpayer funds.

Since the first civil lawsuit naming Penn State in connection with child sexual abuse allegations was filed in November, state and school officials have moved to define how the university's liability insurance will address potential liability. Penn State may face unlimited liability in civil litigation because it may not be able to invoke sovereign immunity, which protects state entities and employees from tort claims and imposes limits on liabilities, experts say.

Some of the costs outlined on the website include $2.47 million for internal investigations and crisis communications; $50,131 for externally initiated investigations; $468,000 for the university's legal fees and defense costs; and $210,309 for university officers' legal defense costs.

Undergraduate and graduate admissions applications are on pace for the year, up more that 2.5% and 5% respectively over last year, the university said.

Penn State, which faces a review of its bond rating that will examine reputational damage and financial risk, has launched the new website to address concerns of the community and other stakeholders regarding the investigations.

“This new website represents reform and change and our commitment to improve the university's openness with the public,” said Karen Peetz, chairwoman of the board, in a statement.