Thousands of Los Angeles residents who were sexually abused as children in county-run facilities dating back to the 1950s are finally getting compensation. In April, the Los Angeles County Board of Supervisors agreed to settle nearly 7,000 claims with the largest municipal payout in U.S. history: $4 billion.
California extended the statute of limitations on filing child abuse claims in 2020. By early 2023, claims came pouring in and county officials began to glimpse the magnitude of what this settlement could be. Initial estimates undercounted the final payout by as much as $2 billion, but even the more conservative figures “blew my hair back,” concedes Fesia Davenport, CEO of Los Angeles County.
L.A. County’s settlement was enormous, but it’s far from alone in paying out huge claims. New York Citypaid $35 million in 2023 to address allegations that police violated protestors’ civil rights. The city of Los Angelesis expected to pay at least $320 million to settle allegations ranging from housing discrimination and collapsing infrastructure to a police officer driving his vehicle into a pedestrian. As of July 31, Chicago taxpayers had already doled out $231 million to resolve more than 70 police misconduct cases this year, exceeding the city’s total annual budget for such cases by $149 million. In September, Chicago agreed to pay $90 million to victims of various forms of abuse and harassment from one former sergeant's squad.
If settlements aren’t new or particularly unusual, the question remains how to pay for them, especially as they grow in size. Government officials also have to figure out how to compel agencies to fix the problems that spurred legal claims in the first place.
Under normal circumstances, L.A. County makes the departments named in a settlement pay up. Each department has a line item in its budget for these purposes. If costs outstrip that fund, the department in question may need to cut from other areas.
“If we centrally funded lawsuits and judgments and settlements, it disincentivizes departments from remaining vigilant, from taking preventive and corrective actions,” Davenport says. “If I just told all the departments, ‘Just send all those bills to me and the CEO will figure out how to cover it,’ I think our liability would be far higher than what it is now.”
The $4 billion settlement posed special problems. L.A. County has drawn from its rainy-day fund and year-end fund balance but still needed to cut all department budgets by 3 percent. (Maryland lawmakers, who also lifted the statute of limitations on child sexual abuse claims, capped payouts, fearing the state would otherwise be on the hook for billions.)
L.A. County also issued judgment obligation bonds, which like all bonds accrue interest and fees. L.A. County now expects to pay off damages to plaintiffs in five years but will still be paying off debt until 2051. “This is a very delicate conversation, because it essentially pits populations against each other,” Davenport says. “You have those who have suffered harm in the past, and then you have those who are suffering harm today that are relying on the county to provide services they want.”
In the case of L.A.’s child abuse claims, it’s hard to attach the pain directly to the perpetrators. MacLaren Hall, a foster-care facility where much of the abuse took place, shut down more than 20 years ago.
Looking forward, the county has proposedchanges to make it easier to file abuse claims against government employees. Future claims will be investigated promptly by an outside party, enabling the county to fire and report to law enforcement any child abusers in its employ.
Sometimes officials are nervous about including money in the budget expressly for legal settlements, fearing this will invite fraudulent claims. Nevertheless, it’s important to plan for valid claims. And repeated settlements should be a call to action. If a city keeps being sued because kids get hurt biking on cracked sidewalks, it’s time to fix those sidewalks.
When it comes to settlements against police, funding strategies often fail to compel improvements. In a studyof 100 law enforcement agencies nationwide, UCLA law professor Joanna Schwartz found that only half contributed financially to settlements leveled against them or helped pay liability insurance premiums. For the rest, their central governments covered their costs. As in L.A. County, that can translate into cuts to other departments and services.
“When you had an increase in lawsuit payouts, that would mean a decrease in lead paint testing, because that’s the kind of cost that can get stripped from a budget without political consequences,” a former Chicago city attorney told Schwartz. “As just a matter of political reality, the money tended to come from things that were earmarked to bene-fit the least politically powerful.”
Indemnification policies mean that individual officers rarely pay misconduct settlements. Over a six-year period, officers themselves covered just 0.02 percent of the roughly $735 million paid to settle serious suits, per Schwartz’s 2016 study. Officers contributed even less to minor settlements.
Police aren’t paid enough to compensate plaintiffs in major cases. When Minneapolis officer Derek Chauvin killed George Floyd in 2020, Minnesota cops at the timeearned an average of $72,000, Schwartz reports. Chauvin wouldn’t have been able to pay anything like the $27 million settlement Floyd’s family ultimately received from the city.
But removing officers’ indemnification can reduce accountability by deterringmisconduct lawsuits, because attorneys know the officers will not be able to pay plaintiffs — or the cut they’d take themselves.
Jurisdictions that want to penalize individual offending officers could have them contribute a portion of the settlement. Colorado, for example, holds officers personally liable for knowingly breaking the law. In such cases, the officer must pay $25,000 or 5 percent of the judgment, whichever is less.
Some jurisdictions, including L.A. County, let law enforcement use unspent litigation funds for other purposes but require them to cover any shortfalls from other parts of their own budget. That creates both a reward for avoiding lawsuits and tangible consequences for incurring them.
Paying for private insurance can prod governments to change protocols and reduce risk. Otherwise, they risk facing higher premiums or reduced coverage.
“It seems like outside insurers can, and have, put more pressure on local government to improve their practices,” Schwartz says. “Insurance companies have strong financial incentive to reduce payouts, and they’re not guided by some of the political constraints that a city council would be.”
