A 2019 California law, Assembly Bill 218, which significantly extended the statute of limitations for childhood sexual abuse lawsuits, has resulted in billions of dollars in settlements and skyrocketing insurance premiums for public agencies across the state. The law raised the age limit for victims to report past abuse and file lawsuits from 26 to 40 years old, and created a three-year window for previously expired claims to be revived. While supporters argue it provides justice for survivors, counties and school districts warn the financial burden is unsustainable, with some facing potential bankruptcy.
Los Angeles County alone has committed nearly $5 billion in payouts for sex abuse claims, including a $4 billion settlement for over 11,000 victims, which was the largest sex abuse settlement in U.S. history. This financial strain has forced the county to cut its budget by 3% and consider using the bond market to cover some costs. California school districts are projected to incur up to $3 billion in liabilities, with many seeing their liability insurance premiums soar by $1 million or more annually. Smaller districts like Poway Unified have cut $10 million from their budget over three years, allocating $7.5 million for insurance and self-insurance funds, equivalent to 75 teachers' salaries.
The widespread financial impact is leading public agencies to urge the California Legislature for intervention, including capping settlements and attorney fees, similar to medical malpractice cases. The current system, where public entities often rely on risk pools, means that large settlements against one agency can drastically increase premiums for all, even those with few or no claims. Officials are concerned that the full extent of the costs is yet to be realized, as many agencies are dipping into reserves, cutting services in areas like public safety, roads, healthcare, social services, and educational programs, or even going to the bond market to fund these settlements. Napa County's insurance premiums, for example, are expected to climb to $20 million annually, with abuse claims being a significant factor alongside other issues like wildfires.
