Treasurer McCord Asks Federal Court to Wait for State Resolution of Penn State/NCAA Case

Treasurer also cites his responsibility to keep university funds in state

Harrisburg – State Treasurer Rob McCord today asked a federal court to refrain from considering the National Collegiate Athletic Association’s (NCAA) lawsuit challenging control of Penn State University sanction funds until related pending state and federal court proceedings are resolved. McCord also signaled his intention to defend vigorously the state legislature’s attempt to spend those funds on sex abuse victim and prevention programs within Pennsylvania.

McCord is among several defendants in the NCAA’s suit, due to his role as custodian of an endowment fund created by state legislation enacted last month. The law, sponsored by state Senator Jake Corman, required all payments from a consent decree between Penn State and the NCAA to be deposited into a special fund under the Treasurer’s control. The penalties resulted from the Jerry Sandusky child molestation case.

“Any diversion of money from the endowment, no matter how temporary, represents lost investment earnings on behalf of state taxpayers,” McCord said. “I plan to defend my obligation to carry out my responsibilities in legal proceedings, as necessary.”

As custodian of the endowment fund, the state Treasurer has a fiduciary responsibility to protect and ensure its safekeeping.

Prior to both the enactment of Corman’s legislation and to the NCAA’s complaint in U.S. Court (Middle District of Pennsylvania), Corman and other members of the legislature had filed a petition in Pennsylvania Commonwealth Court to prevent the NCAA from spending the sanction money on programs outside the state.

McCord said whatever the appropriate penalties may be against Penn State for its handling of the Sandusky matter, it is improper for an entity such as the NCAA to assume authority over spending by a school that receives Pennsylvania taxpayer support.

“The commonwealth has an absolute right to regulate the operation of state-supported, state-regulated institutions of higher education,” McCord said. “The NCAA is an association of collegiate athletic programs; it has no right to compel state-related universities to disburse non-athletic funds at its own sole discretion. The NCAA has grossly overstepped its authority.”

McCord filed a Motion to Dismiss, asking the Middle District court to abstain from considering the NCAA suit until related litigation Corman and his legislative colleagues originated, as well as the Governor’s antitrust action, is resolved. In addition to contending the NCAA is using its federal lawsuit as a shortcut to pre-empt the state from taking action to oversee the distribution of the endowment fund, McCord also argues in favor of a general legal tenet that a federal court not involve itself in a case until necessary.

Along with McCord, the other defendants in the NCAA’s federal suit are Governor Tom Corbett, Auditor General Eugene DePasquale, and Chairman of the Pennsylvania Commission on Crime and Delinquency Mark Zimmer. The NCAA claims the legislation, by directing all consent decree payments into a fund under the custodial control of the Treasurer, violated the Commerce Clause of the U.S. Constitution. The NCAA claims the consent decree is a private contract between itself and one of its member schools.

The Corman legislation and the consent decree both direct sanction funds to be spent for sexual abuse victims and prevention programs. The legislation stipulates that the spending be on programs within the state.

The consent decree imposed a variety of financial and non-financial penalties on the university for its handling of reports about the actions of Sandusky, a former assistant football coach who was eventually convicted for child molestation.

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