Year in Review Column,
Dec. 4, 2023
Once time-barred sexual assault claims could upend school district budgets
The proliferation of claims and the increase in damage awards has increased the cost of insurance, putting additional financial pressure on school districts. For example, one risk pool that covers schools with 2.85 million students reports that its rates have risen five-fold since the 2015-16 school year.
Accounts of childhood sexual assault by school personnel inspire calls for schools to be held accountable. That translates into demands that school districts pay substantial damages to victims. When procedures established under the Government Claims Act for presenting claims to public entities stood in the way of recovery, the Legislature enacted Senate Bill 640 in 2008 to eliminate the claim presentation requirement for such cases. When the statute of limitations prevented victims with stale claims from getting paid, the Legislature enacted Assembly Bill 218 in 2019 to eliminate the statute of limitations for pre-existing claims for three years. This year the Legislature did away with the statute of limitations altogether by enacting Assembly Bill 452, effective with respect to claims arising from Jan. 1, 2024, forward. Plaintiffs with claims that accrued before then have at least until they turn forty to file lawsuits under Code of Civil Procedure Section 340.1, subdivision (a). The legislature enacted these statutes despite warnings in committee reports that unknown, major costs might be imposed on school districts.
Assembly Bill 218 unleashed a flood of lawsuits that would otherwise have been barred by the statute of limitations. The San Francisco Chronicle reported that in just the last six months of 2022, fifty-two lawsuits alleging sexual assault were filed against school districts in the Bay Area, some of them based on acts dating as far back as the 1970's. www.sfchronicle.com/bayarea/article/schools-sexual-abuse-lawsuits-17885043.php. The Los Angeles Times reported that thousands of lawsuits alleging sexual assault as far back as the 1940s had been filed statewide against school districts and other defendants during the three years that the statute of limitations was suspended. www.latimes.com/california/story/2022-12-28/child-sex-abuse-lawsuits-california-deadline-ab218.
Statutes of limitations are intended "to prevent stale claims, give stability to transactions, protect settled expectations, promote diligence, encourage the prompt enforcement of substantive law, and reduce the volume of litigation." Stockton Citizens for Sensible Planning v. City of Stockton, 48 Cal.4th 481, 499 (2010). Assembly Bills 218 and 452 contravene that policy. As a result, school districts have had to litigate these cases without records that were discarded after the statute of limitations expired, and without access to critical witnesses who have died or whose memories have faded. That increased school districts' financial exposure for sexual assault claims.
Financial exposure has also increased because of jury verdict inflation in sexual assault cases. Seven figure verdicts have become routine. Eight figure verdicts are not uncommon. Although the Fair Responsibility Act requires juries to allocate responsibility for noneconomic damages between the school district and the perpetrator, juries have been showing a tendency to allocate more than half the responsibility to school districts.
A recent verdict against the Moreno Valley Unified School District is instructive. Two plaintiffs alleged that a middle school teacher molested them between 1997 and 2001, twenty years before Assembly Bill 218 lifted the statute of limitations. They filed their complaint in June 2021. The jury awarded one plaintiff $55 million in noneconomic damages, and the other $80 million. Although the perpetrator had been sent to prison for 50 years, the jury allocated 90% of the responsibility for the damages to Moreno Valley. Blair v. Moreno Valley Unified Sch. Dist., Case No. CVR12102718 (Riverside Superior Ct. Oct. 10, 2023).
If the verdict against Moreno Valley becomes the judgment, the district will need $121.5 million to pay it. The California Department of Education reports that the average mid-range teacher salary for a district the size of Moreno Valley was $86,843 for the 2020-21 school year. www.cde.ca.gov/fg/fr/sa/cefavgsalaries.asp. $121.5 million would pay for 1,400 teachers. According to U.S. News & World Report, Moreno Valley's total annual revenue based on 2019-20 and 2020-21 data was $510,351,000, 75% of which comes from a state allocation. See www.usnews.com/education/k12/california/districts/moreno-valley-unified-102761. With that money, Moreno Valley must educate 32,000 students, operate forty schools, and pay about 5,000 employees.
Although insurance (either through commercial insurers or, more commonly, through a risk pool with other school districts) may cover some sexual assault claims, coverage may be nonexistent or hard to prove for claims based on conduct from years ago. The proliferation of claims and the increase in damage awards has increased the cost of insurance, putting additional financial pressure on school districts. For example, one risk pool that covers schools with 2.85 million students reports that its rates have risen five-fold since the 2015-16 school year.
If insurance does not cover a claim, the school district must pay the entire amount. Some relief is available by obtaining court permission under Government Code Section 970.6 to pay in installments over ten years. School districts may also issue bonds to pay judgments pursuant to Government Code Sections 975-978.8. However payment is made, a school district would have to cut spending from other areas in order to satisfy a nine-figure judgment.
The increase in financial exposure from the factors discussed here threatens the ability of school districts to "use the limited funds at their disposal to carry out the state's constitutionally mandated duty to provide a system of public education." Wells v. One2One Learning Foundation, 39 Cal.4th 1164, 1195 (2006). Although they are obligated to provide a public education, school districts "must pay legal judgments from their limited revenues and appropriations, even if they cannot exceed their tax or appropriations ceilings to do so and must therefore cut spending in other areas." (Id. at p. 1196.)
Although deserving victims of childhood sexual assault should receive reasonable compensation for injuries caused by school personnel negligence, the special treatment accorded such claims is straining school district finances, and threatening the ability of districts to conduct their educational mission. Since the State of California provides the financial resources that school districts rely on to carry out their missions, its legislators should remediate the consequences of the legislation they passed. Current students and current administrators should not be deprived of the resources necessary to provide a good education because former employees acted unlawfully years ago.