No, nobody at Penn State reported it, despite reports over a period of years and eyewitnesses to child rape. Sandusky was forced to retire in 1999 but was allowed to keep an office, emeritus title, and keys to Penn State athletic facilites.
The victims and their parents eventually reported the abuse.
I still ask the question, how come very few schools approached Sandusky about a head coaching job? With his reputation, he would have been perhaps the most highly sought out assistant coach in college football. And we know coaching is a kind of Fraternity so you have to wonder, just how many others at least had an inkling about Sandusky?