EAST LANSING - Members of the Michigan State University Board of Trustees gave the go-ahead to sell some $500 million in bonds to pay for settlements related to sexual abuse perpetrated by former university doctor Larry Nassar.
Trustees also gave Vice President of Legal Affairs and General Counsel Robert Young the authority to move toward finalizing settlements with more than 300 plaintiffs currently suing MSU in the wake of the Nassar scandal.
"We are in the final stages of the drafting of the final agreement with plaintiff's counsel," Young said during the meeting.
Money raised through the same general revenue bonds will be deposited in a fund created by the plaintiff's attorneys for distribution, interim President John Engler said during Friday's Board of Trustees meeting. MSU is required to make funds available to plaintiffs within 30 days of reaching a settlement and to play no role in dispersing funds to plaintiffs or survivors.
Both sides would have to sign a final settlement agreement and the judge overseeing negotiations would have to approve it before the settlement is finalized.
MSU expects to initially pay down its bond debt with money from insurers.
"There are ongoing negotiations with our insurers, and over those 19 years we have had lots of insurers, and we're certainly expecting that will be a significant reduction in the amount of indebtedness," Engler said.
Investment income, as well as other revenue from investments, could also be used to pay down the debt, Engler said after the meeting.
"It's due to a very long history of strong and conservative financial management here at Michigan State University that we are in a position that we can have such a large bond issue without it having a detrimental effect on the university," Melanie Foster, chair of the finance committee, said during the meeting.
She also noted that no tuition money or state appropriations will go toward settlements. MSU spokesperson Emily Guerrant didn't immediately know whether funds from those sources would be used to pay the interest on bonds.
Audience members wearing teal t-shirts held up their phones with the phrase #FireEngler as he talked about the next steps of the settlement process. Several voiced their displeasure throughout the meeting, both with Engler and with board members the supporting the interim president.
As trustees tried to move on to other items up for approval, audience members expressed their frustration, demanding Engler resign and chastising board members for not supporting a motion to add a vote on his termination to the agenda.
Leslie Miller, the mother of Nassar survivor Emma Ann Miller, said she'd hoped to see Engler step down after news reports brought attention to emails in which he said Nassar survivor Rachael Denhollander may be getting kickbacks from trial attorneys suing MSU
"He can't just apologize for getting caught," Miller said. "Those are his true colors."
Once settlements are reached, Trustee Mitch Lyons said, he was opening to having a dialogue with members of the MSU community.
"As a board member, when we hired John, the city was aflame, okay," Lyons said. "This board, 100% of us, were on board with hiring John because we felt he could put the fires out in Lansing and D.C., which were the immediate issues, calming things down so we could move forward in terms of settlement and everything else."
He said Engler has made positive structural changes at MSU to make it safer, while also making regrettable comments about survivors. He vowed that if it happened again, he would be the first one to step down, as he said he believes that if Engler goes, so too should the board.
"We can't be fighting with you guys, there's no place for it."
Contact RJ Wolcott at (517) 377-1026 or rwolcott@lsj.com. Follow him on Twitter @wolcottr.
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