Child sex abuse claims challenge Santa Monica and California locals

Santa Monica, California, a pocket of triple-A rated affluence nestled between the Pacific and Los Angeles, is among the local governments facing fiscal pressure from old child sex abuse claims allowed under recent state laws.

Hundreds of lawsuits have been filed across the state against cities, counties and school districts since Assembly bills 218 and 2777 became effective.

The twin laws extended the window for adult survivors of sexual abuse to file claims.

The Santa Monica City Council approved on Sept. 9 a resolution declaring fiscal distress, citing decreased revenues and increased liabilities.

The city of 88,000 has had difficulties convincing state and federal agencies it needs relief, because of its reputation as an affluent city, said Oliver Chi, Santa Monica’s city manager.

“Our intention was to create a new tool to strengthen the arguments the city has been making to regulatory agencies and federal agencies offering grants,” Chi said. “The fiscal distress resolution is a compilation of what the city has been trying to communicate through the budget cycle.”

AB 218, which took effect in January 2022, allowed for adult survivors of childhood sexual abuse to file claims through the end of 2022. AB 2777 allowed for claims to be filed between Jan. 1, 2023, and Dec. 31, 2026.

AB 218 allows people to seek damages for assaults until they turn 40 or within five years of becoming aware of trauma caused by the alleged abuse, essentially increasing the previous statute of limitations on cases by 14 years.

Claims of sexual abuse by Eric Uller, a former Santa Monica police dispatcher, have already cost the city $229 million in settlement payouts and the city still faces 180 claims of sexual abuse by the same employee, Chi said.

Uller, who volunteered for the Police Activities League after-school program, was charged in October 2018 with molesting four boys, and committed suicide a month later, the Los Angeles Times reported at the time.

“We still have substantial resources, but we are on our fifth round of settlements and that could deplete the existing reserves still further,” he said.

The city had to close a $60 million deficit to pass a balanced budget for the 2024-25 fiscal year, Chi said. The claims have reduced the city’s cash reserves to $150 million, he said.

“We are triple what the GFOA [Government Finance Officers Association] recommends for cash reserves. They say two to three months operating cash and we have half a year,” Chi said.

The city doesn’t plan layoffs and the declaration will not give the city manager special emergency powers, nor is Santa Monica declaring a fiscal emergency as defined by state code, according to a slide presentation Chi presented at the council meeting.

But the city’s fiscal conditions have been eroding since 2018.

The city has historically relied on tax revenue from tourism and travel to support city services; and the COVID-19 pandemic resulted in a 26.8% decline in general fund revenue in fiscal year 2020-21, according to the resolution.

The city council responded to the decline in revenues during the pandemic by reducing the city’s budget by 23.9% and eliminating 299 permanent and 122 temporary positions.

City services have not been restored to pre-pandemic levels, and numerous capital projects have remained unfunded in light of the financial challenges faced by the city, according to the resolution.

The City Council adopted a general fund budget for fiscal year 2025-26 with adjusted expenditures of $484.3 million and $473.5 million in expected revenue, Chi said.

Since its adoption, he said, the city has faced challenges achieving the revenue, expenditures, and general fund reserve targets set forth in the FY 2025-26 adopted budget.

The recent financial forecasts anticipate that the city will continue to operate under a structural deficit for several years, and the city faces ongoing uncertainty that revenue projections may come in lower than expected, according to the resolution.

“We are working on an overarching strategy to get the city on better financial footing – and to address public safety issues,” Chi said. “We are working on strategies to present in October.”

The city has been working closely with Los Angeles County, Chi said. County officials told the Bond Buyer in July they were working with advisors to come up with a plan involving 26-year bonds to pay for a $4 billion settlement with alleged sex abuse victims.

The city also had hope for relief through state legislation, but that vanished, at least for this year, when lawmakers adjourned Saturday without approving the bills under consideration.

“There was legislation with carve-out exemptions for Santa Monica and Los Angeles County on specific abuse claims,” Chi said.

The legislation was still under consideration into the final days of session, but ultimately didn’t advance, he said.

There was broad support in the Legislature for relief measures, Chi said. But, while there is sympathy and support for victim compensation, concerns have arisen that some people are viewing the extension as a windfall opportunity, he said.

Lawmakers will resume work in January, and hopefully limit Santa Monica’s liability, Chi said.

“We want to do right by the victims, but there appears to be folks who are abusing the system,” Chi said.

State Sen. Ben Allen, D-Santa Monica, introduced Senate Bill 832, but pulled the bill. Sen. John Laird, D-Santa Cruz, stepped up at the request of school districts in the region he represents with Senate Bill 577.

The bill cleared the Senate on a 35-0 vote, but foundered in the other house.

“What happened was the Assembly leadership wanted the bill to go much further than it did and the rank and file members did not support that. So in the end, the bill got blown up because of differences on the Assembly side,” Laird said.

Laird said he spent seven months working with the different factions, including the plaintiff’s attorneys, victim’s right groups, city leaders and school districts, starting with a budget subcommittee hearing after the Fiscal Crisis and Management Assistance Team released a report about how school districts were being affected.

Laird said he doesn’t intend to reintroduce the bill in January.

“I am willing to amend my bill if they come to an agreement on the Assembly side, but first they need to figure out how to reach a compromise internally,” Laird said.

The “dust is settling” in the early days after the close of session, and so far no one has taken up the charge, Laird said.

“I am disappointed that SB 577 will not be advancing this year,” Laird said. “I had hoped to protect survivors access to justice while finding some fiscal relief for local governments and school districts.”

Allen said in an email he remains a strong proponent of AB 218 reform.

“It’s becoming quite obvious that some serious AB 218 reform is needed to protect the financial security of public jurisdictions across California,” Allen said.

“However, this is a tremendously difficult balancing act to ensure victims of childhood sexual assault, one of the most egregious criminal actions, receive the justice they are owed. This is a difficult, but necessary, needle to thread,” he said.

Allen said he is certain the issue will remain a top priority in Sacramento come January.

“The sad reality is that it is the students and residents of today that are now paying the price of somebody’s crime from years or even decades ago,” Allen said. “Schools and cities alike are needing to cut services in order to meet the financial liability they are now subject to.”

The California School Boards Association also plans to lobby lawmakers to “take another shot” at curbing the extent of sex abuse claims, said Troy Flint, the association’s communications chief.

“The issue is not going away,” Flint said.

“The threat presented by these runaway judgments and settlements is an existential one for our school districts,” he said.

“As far as what happens with the bill… it was always going to be a difficult push, because it’s such a sensitive issue. It can be framed in such a way that the [public relations] for people trying to reframe AB 218 is potentially negative,” Flint said.

“It looked like the vote counts for SB 577 were favorable early on and the bill had some momentum,” Flint said, “but in the final days, people rallied against it.”