I am sure this would come out of TV revenue, ticket sales and not any taxpayers wallets.
What TV revenue? PSU is on Bowl probation.
We don't know what the Big Ten might do, but it's conceivable that PSU may not be featured on the Big Ten Channel for a similar period, meaning that PSU will not realize any TV appearances for a long time. They might still get a 1/12th split of the Big Ten Channel revenues, however. Not sure that anything short of kicking them out of the conference can change that.
Money is fungible and universities are not likely to have tight accounting practices.