Trustee Anthony Lubrano, a critic of the board's dismissal of Paterno in November, said the board was still formulating a response.
Freeh said Sandusky's conduct was in part a result of the school's lack of transparency, which stemmed from a "failure of governance" on the part of officials and the board of trustees. He said the collective inaction and mindset at the top of the university trickled all the way down to a school janitor who was afraid for his job and opted to not report seeing sex abuse in a school locker room in 2000.
The report also singled out the revered Penn State football program — one built on the motto "success with honor" — for criticism. It says Paterno and university leaders allowed Sandusky to retire in 1999, "not as a suspected child predator, but as a valued member of the Penn State football legacy, with future 'visibility' at Penn State'," allowing him to groom victims.
Investigators, however, found no evidence linking his $168,000 retirement package to the 1998 police investigation. Freeh called the payout unprecedented but said there was no evidence it was an attempt to buy Sandusky's silence.
Sandusky's trial last month included gut-wrenching testimony from eight young men who said he abused them as boys, sometimes on campus, and included testimony that showed he used his prestige as a university celebrity to manipulate the children.
By contrast, Freeh's team focused on Penn State and what its employees did — or did not do — to protect children.
More than 430 current or former school employees were interviewed since November, including nearly everyone associated with the football program under Paterno. The Hall of Fame coach died of lung cancer in January at age 85, without telling Freeh's team his account of what happened.
Some of the report's most damning evidence against Paterno consists of handwritten notes and emails that portray him as being involved with a decision by the officials not to tell child welfare authorities about the 2001 encounter.
Spanier, Schultz and Curley drew up a plan that called for reporting Sandusky to the state Department of Child Welfare. But Curley later said in an email that he changed his mind about the plan "after giving it more thought and talking it over with Joe."
Spanier concurred but noted "the only downside for us is if the message isn't (heard) and acted upon and we then become vulnerable for not having reported it."
The emails also show Paterno closely followed the 1998 allegation.
Michael Boni, a lawyer for a boy known as Victim 1, called the report a "serious indictment against Penn State's culture and environment of protecting at all costs the football program."
He added: "Nothing is shocking anymore in this case ... but the fact that the highest levels of the school made a conscious decision to cover up what Sandusky had done, it comes close. It is shocking."
With the report now complete, the NCAA said Penn State now must address four key questions concerning "institutional control and ethics policies," as outlined in a letter sent to the school last fall.
"Penn State's response to the letter will inform our next steps, including whether or not to take further action," said Bob Williams, the NCAA's vice president of communications. "We expect Penn State's continued cooperation in our examination of these issues."
The U.S. Department of Education is examining whether the school violated the Clery Act, which requires reporting of certain crimes on campus, including ones of a sexual nature. The report said Penn State's "awareness and interest" in Clery Act compliance was "significantly lacking."
Only one form used to report such crimes was completed on campus from 2007 through 2011, according to the Freeh findings. And no record exists of Paterno, Curley or assistant coach Mike McQueary reporting that McQueary saw Sandusky in a shower with a boy in 2001, as they would be obligated to do under the Clery Act.
As of last November, Penn State's policies for Clery compliance were still in draft form and had not been implemented, the report found.
U.S. Department of Education said it was still examining whether Penn State violated the Clery Act, but declined to comment on Freeh's report.
Mary Krupa, an 18-year-old Penn State freshman who grew up in State College, said the conclusion that the school's highest officials were derelict in protecting children didn't shake her love of the town or the school.
"The actions of five or six people don't reflect on the hundreds of thousands" of students and faculty who make up the Penn State community, she said while walking through the student union building on campus.
Freeh said he regretted the damage the findings would do to Paterno's "terrific legacy" but there was no attempt to pin the blame on the late coach.
"What my report says is what the evidence and the facts show," he said.
Christian Beveridge, a masonry worker who grew up near Penn State, said the findings will ruin Paterno's legacy but not the closeness that people in town and fans feel for him.
"He built this town," said Beveridge, 40, resting in the shade on campus during a break. "All of his victories, he'll be remembered by everyone in town for a long time, but there will be that hesitation."
Armas reported from Scranton and Scolforo from Harrisburg. Marc Levy in State College, Maryclaire Dale in Philadelphia and Tim Reynolds in Miami contributed to this report.
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