Curley, 58, and former university vice president Gary Schultz face trial in January on charges of perjury and failing to report child abuse. The case arises from allegations that they neglected to alert authorities to early reports of Sandusky's inappropriate contact with children and then later lied about it to a grand jury.
Schultz retired within days of his November arrest. Both men have entered not guilty pleas.
A former Penn State football player and recruiting coordinator, Curley was appointed athletic director in 1993. But he had long been a member of former head football coach Joe Paterno's inner circle. In recent years, his attorney and family have said, he has battled lung cancer.
Since his suspension, Curley's role has been filled by former Penn State trustee David Joyner, who is expected to remain in the post through the term of current university president Rodney Erickson.
Erickson announced this year that he had no plans to continue in his post past his current contract, which ends in 2014.
The university's decision regarding Curley's future came the same day that credit-rating agency Standard & Poor's downgraded Penn State's outlook from stable to poor, citing concerns over its potential civil liability in the wake of the Sandusky case. However, the agency noted, the university's long-term bond rating remains strong.
Sandusky, a former assistant football coach, was sentenced last week to a minimum of 30 years in prison for the serial molestation of 10 adolescent boys. He met all of his victims through the Second Mile, a charity for underprivileged youth he founded, and he abused many of them on Penn State's campus.
According to a university-sponsored internal investigation, Curley, Schultz, and other top administrators including Paterno and ex-university president Graham B. Spanier ignored warning signs of Sandusky's behavior as early as 1998.
And at least four of the former assistant coach's accusers have sued the university for negligence. Sixteen others have entered into preliminary settlement negotiations with the university over their abuse claims, the university's appointed negotiator, Michael Rozen, said last week.
Rozen noted that he had not begun to closely examine any of those claims.
Standard and Poor's move Tuesday came after another rating agency, Moody's Investor Services, signaled in July that it was considering downgrading Penn State's rating.
Contact Jeremy Roebuck at 267-564-5218, jroebuck@phillynews.com, or @jeremyrroebuck on Twitter.
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