Bloomberg News

Penn State Shame From Abuse Scandal Threatens College’s Rise

November 13, 2011

(Adds Merck chief’s investigative role in 19th paragraph.)

Nov. 11 (Bloomberg) -- Dozens of Penn State University students locked arms on the campus yesterday to sing the school’s Alma Mater.

“May no act of ours bring shame to one heart that loves thy name,” they sang.

Penn State will struggle for years from the “shame” of a child sex-abuse scandal that ended the careers this week of football coach Joe Paterno and President Graham B. Spanier, students, alumni, college counselors and academic officials inside and outside the university said yesterday.

The allegations and continuing investigations will likely hurt donations and the recruiting of top students and athletes, threatening the college’s rising financial and academic standing, said Aine Donovan, director of Dartmouth College’s Ethics Institute. Buoyed by the football program, the university’s endowment more than quintupled, to a record $1.83 billion, during Spanier’s 16-year tenure.

“They are going to pay a serious price, especially when you look at Joe Paterno’s motto of ‘Success with honor,’” Donovan said in a telephone interview. “The irony will not be lost on people. There is no way to minimize the impact.”

Bruce Edelson, 73, president of the Fort Myers, Florida, chapter of the Pennsylvania State Alumni Association, said he heard from about 30 alumni who may not give money because they are upset both about the scandal and the dismissal of Paterno, whom they don’t blame for it.

“It’s like what happened with the Catholic Church,” Edelson said, referring to the sexual abuse of children by priests. “A lot of people stopped giving to the church.”

‘Sheer Devastation’

Carl Bugaiski, president of the Penn State Alumni Association of Greater Binghamton, New York, described the impact as “sheer devastation and pain for Penn Staters all over.”

“It’s like a part of my personal identity has been ripped away from me,” he said in a telephone interview.

Senior Christie Damato, 22, said she will be looking for a job next year and is concerned that the negative publicity will hurt the university’s reputation and her job search in a weak economy.

“By then, hopefully it will have died down,” Damato, a public-relations major from Long Island, New York, said yesterday in an interview in the student union. “We just took a bit of a hit.”

Trustees Meeting

Penn State media representatives didn’t return messages. The university’s Board of Trustees met today in State College, Pennsylvania, to consider the university’s next steps. Addressing the board, Rodney Erickson, interim president, promised a full investigation, saying his “heart aches for the victims and their families, and my mind searches for answers, like millions of others across the nation.”

“This is a tragedy for many lives, and it will take all of us some time to come to grips with the full magnitude of all the damage that has been done,” he said.

“We are a university that is committed to its core values of honesty, integrity and community,” he said. “We are a university that will rebuild the trust and confidence that so many people have had in us for so many years.”

Penn State’s trustees fired Spanier and Paterno after former defensive coordinator Jerry Sandusky, 67, was charged with the sexual assault of eight boys from 1994 to 2009. Athletic Director Tim Curley, 57, and Senior Vice President Gary Schultz, 62, were charged with perjury and failure to report the allegations. Paterno, the coach with the most wins in major college football history, wasn’t charged.

Police in riot gear used pepper spray to disperse thousands of protesters chanting “We Are Penn State” early yesterday morning after the firing of the coach and president.

Fundraising Rises

Until now, Penn State -- with 96,000 students and more than 500,000 alumni -- had been on a roll under Spanier. The university raised $195.3 million last year, up from $82 million when he was named president in 1995, according to the Council for Aid to Education, which tracks gifts.

Alumni include Kenneth Frazier, chief executive of Merck & Co. and a board member, who yesterday called it “a terribly sad time for us” during a meeting with analysts; William Perry, defense secretary under former U.S. President Bill Clinton; and Rick Santorum, the former U.S. senator from Pennsylvania.

Frazier will chair a special Penn State board investigation committee looking into the abuse allegations, determining “what failures occurred, who is responsible and what measures are necessary to ensure that this never happens again,” the board said in a statement today. Pennsylvania Secretary of Education Ron Tomalis, also a trustee, was named vice chairman.

Paterno’s football team was at the heart of Penn State’s fundraising and rising academic profile.

Paterno Record

The Nittany Lions were 409-136-3 in Paterno’s 46 years as head coach, winning national titles in 1982 and 1986. The program’s 819 wins are the fifth-most in college football’s highest division and Beaver Stadium seats 106,572 fans, second in capacity to the University of Michigan’s stadium in Ann Arbor. The 84-year-old former coach kept the school’s navy-blue and white uniforms plain: There are no names on the shirts and no school logos anywhere.

Penn State will likely see an immediate reduction in sponsorship money, said Paul Swangard, managing director of the Warsaw Sports Marketing Center at the University of Oregon in Eugene. Many sponsorship contracts have moral clauses built in that would allow companies to sever their relationship with the university. Penn State athletic sponsors include PepsiCo Inc. and AT&T Inc.

“Sports brands tend to rely on their corporate sponsors to do a lot of their marketing, and what Penn State needs is people hearing about all the great things going on and the success of the football program,” Swangard said in a telephone interview. “None of the sponsors are going to be willing to do that, at least in the short run.”

Honors Program

Spanier, 63, also beefed up Penn State’s honors program. In 1997, he accepted a $30 million gift to found the Schreyer Honors College, which now enrolls 1,800. The middle 50 percent of students entering for the fall of 2009 had high school grade- point averages of 3.98 to 4.33, according to the program’s annual report.

In recent years, the program was able to lure away students who would have gone to selective schools such as the University of Pennsylvania in Philadelphia and Amherst College in Amherst, Massachusetts, because of its quality and affordable price, said Jeff Haviland, a private college consultant and former guidance counselor for 32 years at the Wallingford-Swarthmore, Pennsylvania, school district.

“I’m sure they will now take a hit in admissions,” Haviland said in a telephone interview. “Kids may apply but choose not to go there. How things play out in the next few months is going to be crucial.”

The turmoil and uncertainty in the upper administrative ranks is likely to make top faculty recruits more reluctant to join Penn State, Don Heller, an education professor at Penn State’s Center for the Study of Higher Education, said in a telephone interview. He said the school should recover, especially since jobs are so scarce in academia.

“I fully expect it will at least give pause to some candidates,” Heller said.

--With assistance from Eben Novy-Williams, Erik Matuszewski and Heather Perlberg in New York. Editors: Jonathan Kaufman, Michael Sillup

To contact the reporters on this story: John Hechinger in Boston at jhechinger@bloomberg.net; Mark Niquette in Columbus at mniquette@bloomberg.net

To contact the editor responsible for this story: Jonathan Kaufman at jkaufman17@bloomberg.net.


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