(Don’t) Show Me the Money

A strange thing happened – or, I should say, didn’t happen – to AB 218 on its way through the California State Assembly.  Bills deemed to impose non-negligible costs upon the state are generally heard before an Appropriations Committee in each house.  AB 218, a measure that would open a three-year window for the revival of previously time-barred claims of negligence against third-parties to acts of childhood sexual assault, was deemed not to saddle the state with significant costs.  Consequently, after winning passage in the Assembly Judiciary Committee, the measure now proceeds directly to a floor vote.

The bill’s journey is unusual for a couple of reasons.  First, an almost identical version of AB 218  (AB 3120) was assigned to undergo analysis by, and heard before both the Assembly and Senate Appropriations Committees during the prior legislative session.  Those analyses projected, “Unknown, potentially-major out-year costs to local school districts to the extent litigation is successfully brought outside the current statute of limitations.”  Second, the author of both bills, Assemblymember Lorena Gonzalez (D. – San Diego) chairs the Assembly Appropriations Committee.

The California Association of Private School Organizations maintains an “oppose unless amended” position on AB 218.  CAPSO’s objections to the bill are grounded in principle: as currently written, the measure is fundamentally unfair to both victims and employers.  This is so because state agencies and entities are not subject to the proposed law’s provisions.  If an act of negligence had taken place at Stanford University, a previously time-barred claim could be revived.  Had the same act of negligence occurred at U.C. Berkeley, AB 218 would not permit the advancement of a claim.

CAPSO is not alone in holding this view.  Last year, Governor Jerry Brown vetoed AB 3120 – the nearly identical predecessor to AB 218 – writing the following in his accompanying message to the Legislature:

Indeed, it would be unreasonable, if not shocking, for the Legislature to intentionally discriminate against one set of victims, e.g. those whose abusers happened to be employed by a public instead of a private entity.

While state agencies and entities are shielded from AB 218’s provisions, local government agencies are not.  These include local public school districts, whose leaders have voiced grave concerns about the financial liability to which their districts would be exposed should the measure become law.  In a letter to the Assembly Judiciary Committee, the Association of California School Administrators, California Association of Joint Powers Authorities, California Association of School Business Officials, California School Boards Association, Schools Excess Liability Fund, and Schools Insurance Authorities write:

If AB 218 is not amended, there will be an immediate fiscal impact on our organizations due to the need to assess and fund risk for older, potentially large exposures. Public entities are already finding that liability coverage is drastically more expensive and difficult to obtain. In fact, our members are facing significantly increased rates, hard caps, exclusions, settlement inflation, lower limits of coverage, and stricter underwriting processes. The liability and related cost pressures could leave our public school students, education partners, local governments, and the risk pools they are members of, without coverage and exposed to the direct cost of these claims.

Like CAPSO, the above-mentioned organizations have registered an “oppose unless amended” position on AB 218.  Unlike, CAPSO, they aren’t asking for fundamental fairness via the inclusion of state agencies and entities; they want the three-year revival period proposed by the bill eliminated. Those responsible for administering our state’s public schools are well aware that if AB 218 is enacted in its current form, it may prove prohibitively expensive to acquire insurance coverage against decades-old charges, should such coverage be available at all.  As the Independent Insurance Agents and Brokers of California note in their letter of opposition to AB 218:

Together the changes to current law proposed by AB 218 all but ensures insurance companies will no longer be able to provide this type of coverage to public and private institutions in California ranging from daycare facilities; schools, both public and private; children’s hospitals; and various non-profit organizations serving the youth.

Should AB 218 become law, what will happen if and when a court awards a judgment against a public school district that finds itself without sufficient insurance?  The answer is: The same thing that will happen when public school districts sign agreements with striking teachers unions that cannot be upheld without financial assistance from the state.  Which is why it is irresponsible for the Legislature to ignore the financial exposure to be faced by the state if AB 218 is enacted in its current form.  An estimate of such exposure will become public if AB 218 undergoes analysis and is heard by the Senate Appropriations Committee.  The Committee may vote to pass the bill, but at the very least, our state lawmakers’ commitment to transparency and accountability would be upheld.  It’s simply the right thing to do.

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