Michigan State University agrees to pay Larry Nassar’s victims $500 million, hopes to avoid bankruptcy

Can a public university actually go bankrupt? Hey, a city can. (Save the Detroit jokes. You should see it here now.) And you can make a legal agreement to pay money without knowing where you’re going to get it, or if you even can, which is what MSU appears to have done yesterday. Larry Nassar’s victims are now entitled to about $1.25 million per – because he had a lot of victims – and the university is going to have to get it from somewhere. I’m a Michigan taxpayer. I’m putting my wallet in a lock box right now.

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This is a disaster any way you look at it:

The university’s board of trustees agreed to the settlement terms Tuesday night. On Wednesday morning, the board’s chairman, Brian Breslin, issued a statement saying the board was “truly sorry to all the survivors and their families for what they have been through, and we admire the courage it has taken to tell their stories.” Michigan Sen. Tonya Schuitmaker, chair of the subcommittee for higher education appropriation, said the university hadn’t approached the state for money to cover the settlement. “I would certainly hope before they agreed to a settlement they figured out how to pay for it,” she said. “Whether it’s endowment, or licensing or asking donors or having insurance pay for it.” A Michigan State spokeswoman said the school “will be working on the solution in the near future.” In testimony earlier this year before the state legislature, Mr. Engler warned that the costs for the settlement ultimately would be borne by “students and taxpayers.” “I don’t know if it would force bankruptcy (for the university) or not,” he said. “I hope not.”

He hopes not? Mr. Engler, by the way, is former Michigan Gov. John Engler – a Republican and an MSU grad – who agreed to serve as the university’s interim president after the Nassar scandal took down then-President LouAnna Simon.

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The university can’t simply raise tuition to get the money. Its legislative allocation from the state comes with restrictions on tuition rates, and if MSU just up and raises tuition it will forfeit all that state money, which accounts for about 11 percent of its budget. It’s common to rely on insurance policies to cover settlements like this, and yet you also have to acknowledge there aren’t many settlements like this. The Nassar case appears to be one of a kind, and indeed, you certainly have to hope it is. God help us if there are any more Larry Nassars out there. But this Larry Nassar would never have been able to hurt so many victims if authorities at MSU had taken complaints about him seriously. They either didn’t understand what was really going on, or didn’t want to know because they didn’t want to deal with anything that might embarrass the university. That’s very common behavior at large institutions. They mouth concern for victims, but their first priority is always protect the institution, and if they can sweep something under the rug and make it go away, that’s what they’ll do. MSU’s leadership really wanted to believe Nassar wasn’t such a big problem, or at least they wanted the rest of the world to think that. And the more monstrous he became, the bigger the embarrassment to MSU if the truth got exposed. That’s how we got here. That’s how someone – probably us Michigan taxpayers – are going to end up on the hook for $500 million. Maybe a major institution like Michigan State needs to go bankrupt, or fold up shop entirely, in order for people to learn the lesson that you can’t cover up evil because it might embarrass you. Then again, they might learn the opposite lesson. Cowards tend to think everything that ever happens justifies their cowardice.

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