Treasurer McCord, Senator Corman Seek Mediation for PSU Sanction Funds

State officials ask Commonwealth Court to help resolve litigation with NCAA.

Harrisburg – State Senator Jake Corman (R-Centre) and State Treasurer Rob McCord have asked Commonwealth Court to place their lawsuit against the National Collegiate Athletic Association (NCAA) into mediation, in the hope of deciding the use of Penn State University sanction funds as soon as possible. Their request, filed with the court yesterday afternoon, came after they received an exchange of correspondence from legal counsels for Penn State and the NCAA.

Corman and McCord believe the letters collectively establish a persuasive argument for the Court to compel the litigants to participate in meaningful mediation to resolve their dispute.  Stating that it has “no legal or financial interest in the litigation and therefore is not an indispensable party,” to the case, Penn State said the dispute places it “in the middle between two conflicting legal demands” – Act 1 of 2013 and the NCAA’s consent decree.

As a consequence, Penn State requested that the parties make a “good faith effort to settle the litigation” and offered its assistance. Unfortunately, the NCAA’s response dismissively rejected Penn State’s suggestion that a mediated settlement would be both appropriate and in the public interest. Counsel for the NCAA wrote: “we are sure you understand that Pennsylvania law, in the form of the Endowment Act, now renders that impossible.”

Corman and McCord sympathize with the concerns raised by the University and agree that it would be reasonable and consistent with the public interest to avoid protracted litigation.  The NCAA letter makes clear, however, that without judicial intervention a good faith settlement discussion among the litigants is impossible.

“We strongly disagree with the NCAA — and hope it will change course and seek a workable settlement that helps Pennsylvanians. We believe the NCAA needs to focus less on its power and authority and more on quickly helping Pennsylvanians who have been the victims of child abuse. We can achieve that goal with a reasonable settlement,” McCord said.

“As I have stated from the beginning, I believe fine money, which is coming from Pennsylvania residents, should stay in our state and benefit our organizations and our children.  Any effort to resolve this issue quickly will benefit everyone.” Corman said.

Oral arguments on the NCAA’s preliminary objections are scheduled for June 19. Corman and McCord acted yesterday under court rules giving parties the right to ask formally for an order requiring mediation. Granting the request is at the Court’s discretion.

In the wake of the Jerry Sandusky child sex abuse case, the NCAA reached a consent decree with Penn State in 2012 that included a fine of $60 million, to be spent on child abuse programs, but under the control of the NCAA. Pennsylvania enacted a law earlier this year, sponsored by Corman, requiring the money to be used on programs within the state of Pennsylvania, where Sandusky’s crimes occurred. Penn State is a public university that receives taxpayer funds.

That law makes the state treasurer the legal custodian of the penalty money until it is dispersed to child abuse programs. Corman and McCord sued the NCAA on March 27, asking that the first installment of penalties Penn State was ordered to pay, $12 million, be turned over to the state treasury.

In its June 11 letter, Penn State noted that it should not be party to the case because it has no legal or financial interest in the litigation, but the school pointed out that whether it turns the money over to the NCAA or to the state treasury, it will be in the uncomfortable position of violating either the consent decree or state law. Penn State also noted that as long as the dispute remains pending, no child will receive the benefits of the programs that will eventually receive the funds.

Media contact:

Gary Tuma, 717-787-2465 or gtuma@patreasury.gov
Scott Sikorski, 717-787-1300 or ssikorski@pasen.gov