The talks are also considering a proposal that "would leave the $60 million fine levied by the league within the state and the university, to be used for child protection," according to the Inquirer.
The school was forced to vacate 112 victories from 1998-2011, all but one of which came under Paterno, as part of the NCAA's sanctions following the release of the Freeh Report in 2012. The sanctions penalized the school for the Jerry Sandusky scandal, in which the longtime Penn State assistant football coach was convicted on 45 counts of sex abuse earlier that year.
The punishment dropped Paterno's career win total from 409 -- the most in Division I college football history -- to 298. Paterno died in January 2012 at the age of 85.
The NCAA also gave Penn State a four-year postseason ban, restricted the team to 65 scholarships per year through 2017 and fined the team $60 million, among other sanctions.
In early September, the NCAA Executive Committee restored Penn State's postseason eligibility and its full allotment of scholarships.
Last month, a judge delayed the trial on the legality of the NCAA's consent decree that punished the university to Feb. 17.
Sandusky is currently serving a 30- to 60-year prison sentence after he was convicted in 2012.
- Molly Geary