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New Penn State trustees chairwoman vows aid to victims

| Saturday, Jan. 21, 2012

STATE COLLEGE -- The new chair of the Penn State University board of trustees pledged on Friday that the university will pay for health care and counseling for any victims in the Jerry Sandusky child sex abuse scandal.

Karen B. Peetz promised that the school will reach out to the victims and establish itself as a research center for child abuse prevention after she was elected unanimously to lead the 32-member board. The vote came during the board's first meeting since it ousted the university's president and its legendary head football coach in November in connection with the Sandusky case.

In her first meeting with the press, Peetz, vice chairman and CEO of financial markets and treasury services for The Bank of New York Mellon Corp., said the university must focus on the victims.

"There is no higher priority for us than to be fair to the victims of abuse," said Peetz, who replaces former board chairman Steve Garban, Penn State treasurer emeritus, who remains on the board. "We and President (Rodney) Erickson will find a way to help."

Erickson said the school will use insurance proceeds and interest to cover those costs. He vowed not to touch tax dollars, tuition money or donor funds to cover them.

It's unclear how many lawsuits the school may eventually face from the scandal, but general counsel Cynthia Baldwin said Penn State has been served with one lawsuit and notified that a second one is in the works.

"We will do our best to work out a process that will not take any victim through years of litigation," Peetz said.

Sandusky, a retired defensive coordinator for the Nittany Lions football team, was charged with 52 counts of child sexual abuse after a grand jury investigation that concluded he had abused 10 boys over 15 years, some in Penn State facilities.

Sandusky, who continues to maintain his innocence, is free awaiting trial. Penn State athletic director Tim Curley and retired vice president Gary Schultz also have been ordered to trial on charges that they failed to report allegations against Sandusky and lied about it to the grand jury. They have pleaded not guilty.

At its last meeting on Nov. 9, the board forced university President Graham Spanier to resign and fired head football coach Joe Paterno.

Garban and vice chairman John Surma, who led the trustees through the last two months after the grand jury report, declined to seek re-election. Surma, president and CEO of U.S. Steel, said his business obligations preclude him from continuing in a leadership post but he will remain on the board.

Trustees elected Keith Masser, chairman and CEO of Sterman Masser Inc., as vice chairman.

Peetz said the board yesterday adopted interim recommendations of the Special Investigations Task Force, which the trustees commissioned in the wake of the grand jury investigation, that focus on "change, reform and transparency."

The task force called for strengthening policies for university programs involving minors; prompt reporting of incidents of sexual abuse and sexual misconduct; compliance with federal training and reporting requirements; administrative reforms; and security at athletics facilities.

In a press conference following the meeting, Gov. Tom Corbett, Peetz, Masser, Erickson and trustee Kenneth Frazier, who is chairing the investigative task force, took questions from the media.

Corbett, who started the Sandusky investigation while attorney general and sits on the board of trustees by virtue of his office, said he's optimistic for Penn State. But he cautioned the board to be conservative in its spending and said he wants more transparency from a school that receives hundreds of millions of dollars each year in state funding.

"The board has to decide whether they are going to be a public entity or a private entity," Corbett said.

If Penn State intends to continue to accept hundreds of millions of dollars each year in state money, the governor said, he will support efforts to bring it under the State's Right to Know Act. The act's rules of information disclosure generally do not apply to Penn State.

During the meeting, Corbett abstained from voting to authorize a multimillion-dollar package of building and renovation projects. University officials voted to authorize projects, which include the $89 million Pegula Ice Arena. The hockey arena is funded largely with an $88 million gift from oil and gas entrepreneur Terry Pegula.

Meanwhile, acting athletic director David Joyner told the board that the university will pay about $4.5 million in severance pay to seven assistant football coaches who were dismissed when new head coach Bill O'Brien took over the program.

Joyner said the money represents the majority of an expected $5 million shortfall for Penn State athletics at the end of the 2011-12 year.

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