California schools face billions in liability under child sex abuse law

California schools are starting to get an idea of how much liability they could face under a law that extended the statute of limitations on civil cases for past sexual assault. The potential cost is so large that the main witness at a Senate hearing Thursday compared it to the 9/11 terrorist attacks.

That was the testimony of Mike Fine, CEO of the state's Fiscal Crisis and Management Assistance Team. The Legislature established the team in 1991 as an independent outside monitor to help local educational agencies meet financial obligations.

Fine suggested the state create a "statewide data repository" for cases under AB 218, the 2019 law, but said the responsibility for paying claims would remain with local entities. These include school districts, county education offices, directly funded charter schools, and special education local plan areas.

A subsequent law, AB 452 in 2023, eliminated the statute of limitations for recovery for childhood sexual assaults that occur after Jan. 1, 2024, and into the future.

"You can say it's the locals, but it becomes the state that's backing it up," replied Sen. John Laird, D-Santa Cruz, chair of the Budget and Fiscal Review Subcommittee No. 1 on Education.

The exchange was the latest instance of entities trying to balance the impact of unspeakable crimes against the reality of unpayable costs. The hearing came one day after the California Supreme Court denied review of the challenge to AB 218. Attorneys for Ventura County argued the law was an unconstitutional giveaway of public funds that could force counties and school districts around the state into bankruptcy. Ventura County v. Superior Court, S289121 (Cal. Sup. Ct., filed March 12, 2025).

Schools and districts face potentially immense liabilities under AB 218. This 2019 law created a three-year window for plaintiffs to file civil suits alleging sexual assault that would otherwise be time-barred. The same law has pushed five of California's 12 Roman Catholic dioceses to seek Chapter 11 bankruptcy protection in the past two years.

Laird made it clear that his sympathy for public entities facing fiscal ruin only went so far.

"Let me be clear at the beginning that the incidents of sexual assault on children should have never happened, and the adults in these cases failed these children, some of whom are now adults," Laird said. "These cases can and often do leave lifelong impacts and scars that no amount of compensation can erase."

But he added that anyone who has "been reading the newspaper since January 20th" knows cuts in the federal budget will cost the state billions this year. That means 2025 "is not a year we would establish a fund that is new that costs billions of dollars."

Fine presented the findings of a report his team put out Jan. 31. "Childhood Sexual Assault: Fiscal Implications for California Public Agencies" included 22 recommendations. Besides the data repository, these included creating a classification system to sort claims, establishing longer-term payout deadlines, and creating a commission to study the idea of establishing a victims' compensation fund.

"We introduced the concept of a first resort, full-service victims' compensation fund as an alternative to the time-consuming and costly judicial remedy for victims," Fine said. "Senator, directly responding to your comments, we actually didn't envision this state necessarily funding it. That's certainly an option. I think it would be important, probably, for a state agency to administer it."

Fine said school districts and community colleges had "special constitutional protections" when "experiencing insolvency." The report estimated that claims brought against local education agencies under AB 218 already total between $2 billion to $3 billion, and that the final total could be even higher. He also noted that his team was still determining how much of this liability would be covered by insurance policies, and how feasible it was to make up some of the difference through special assessments.

Finally, he noted that the report discussed the fact that most public agencies are not covered by commercial insurance but reinsurance risk pools. These pools and other forms of liability insurance have been "significantly altered" by waves of claims hitting across the state at the same time, the report found.

"The report is not a call to limit in any way the rights of childhood sexual assault survivors or limit in any way their remedies from public agencies," Fine said. "It's not a call to abandon or otherwise discharge the obligations of those our judicial system holds responsible for injuries to children. It's not a call to amend the revival statute and it makes no recommendations to do so."

Fine also spoke about some of the 30 other states that have been dealing with retroactive liability statutes. He pointed to New York as another large state that has been dealing with similar issues of past school sexual abuse. Several New York teachers have been convicted in recent months of sex crimes against students, some of them involving assaults decades ago. Lawmakers there are debating the "Child Victims Act Fund," a bill that would create a $200 million fund to compensate victims of abuse in schools and foster care, with an emphasis on uninsured claims.

But Fine said his team was looking at a different New York compensation fund--one that totaled over $7 billion--as a more apt model for the liability California schools could face.

"The fund that we found had the most characteristics we're looking for is ... the September 11th Fund in New York," Fine said. "We acknowledge that fund has significant federal contributions that we don't envision being available here."