Old Claims, Today‘s Budgets – Six years after AB 218 reopened decades-old childhood sexual abuse claims, districts are absorbing the cost through JPA rates and reserves.

A small elementary district of about 800 students has never been sued for childhood sexual abuse. Even so, it has paid its former excess pooled liability fund nearly $150,000 since Assembly Bill 218 took effect in 2020 – roughly $87,000 of that in the most recent year – for abuse that occurred in another school district while the district belonged to the pool, which it left about two decades ago. On a $15 million budget, $150,000 is a teacher’s salary and benefits.

A second district, with 4,200 students, paid $389,000 for liability coverage in 2025-26, against $158,000 in 2017-18, a 146% increase. Neither figure reflects a verdict against either district. Both reflect the same thing: Decades-old claims are being paid with today’s money, and the bill is spread across the pool.

That’s the part of AB 218 that gets lost in the litigation coverage. For school business officials, this is not primarily a legal problem. It’s a risk-financing and multiyear-projection problem caused by a legal problem, and it reaches districts that have never received a complaint.

How the Deadline Disappeared

Code of Civil Procedure Section 340.1 has been expanding in reach since it was added in 1986, when it gave victims three years to sue and reached abuse only within a household or family. SB 108 (Lockyer) dropped the family-member limitation in 1990 and set the framework practitioners knew for a generation: eight years from majority, or three years from delayed discovery, whichever was later. In 2003, SB 1779 (Burton) opened a one-year window for claims against non-perpetrator third parties. That window is the template the Legislature returned to in 2019.

For public agencies, though, the operative gatekeeper was rarely the limitations period. It was the Government Claims Act. Present a claim within six months or the suit is barred. Survivors coming forward decades later almost never had.

AB 218 (Gonzalez), Chapter 861, Statutes of 2019, removed both barriers at once. Effective Jan. 1, 2020, it extended the limitations period to 22 years from majority – age 40 – or five years from delayed discovery, whichever is later, and opened a three-year revival window running through Dec. 31, 2022, for claims barred by any statute of limitations, claim presentation deadline or other time limit. It authorized treble damages where the abuse resulted from a “cover up.” And it amended Government Code Section 905(m) to eliminate the claim presentation requirement for these actions, retroactively and prospectively. That last change is the one that matters most to public agencies, because it revived cases that had failed at the procedural threshold before getting to the merits.

The Legislature has since gone further. AB 452 (Addis, 2023) eliminated the limitations period altogether for assaults occurring on or after Jan. 1, 2024 – prospective only, but the exposure window never closes going forward. SB 558 moved the pre-2024 regime into a new Section 340.11.

The Projection Gap

The Senate Appropriations Committee did assess what the bill would cost. Its analysis identified three fiscal effects: unknown but potentially significant costs to state entities, unknown workload pressure on the courts and – the item that reached districts – “unknown, potentially major out-year costs to local entities and school districts to the extent litigation is successfully brought outside the current statute of limitations.” The committee went further. If payouts grew large enough, it warned, the measure could produce cost pressures on the state to stabilize a local juris-diction or district. And districts might face costs simply procuring liability insurance, apart from any specific claim.

Six years on, that is a fair description of what has happened. What the committee never did was attach a number to it. The only dollar figure anywhere in the fiscal analysis was $41.8 million – a General Fund appropriation cited to illustrate trial court funding pressure, not district exposure. Against that, in January 2025, the Fiscal Crisis and Management Assistance Team (FCMAT) valued claims brought to date at $2 billion to $3 billion for local educational agencies, and has since projected the total could exceed $4 billion.

What the Courts Have Settled

Punitive damages against a school district are not available.

In Los Angeles Unified School District v. Superior Court (2023) 14 Cal.5th 758, the Supreme Court held that treble damages under Section 340.1 are primarily punitive and therefore barred against public entities by Government Code Section 818. Thus, school district exposure under Section 340.1 is bounded by compensatory damages.

Retroactive revival is not a gift of public funds.

In West Contra Costa Unified School District v. Superior Court (2024) 103 Cal.App.5th 1243, the First District Court of Appeals held that waiving the claim presentation requirement created no new substantive liability; the Legislature merely withdrew a condition it had imposed on its own consent to suit. The Second District (in O.B. v. Los Angeles Unified School District and the Fifth District (in John Doe R.L. v. Merced City School District), both published in 2025, have agreed. The Supreme Court has repeatedly denied review, with Justice Groban the lone vote to grant each time.

The practical consequence is that these cases are decided on ordinary negligence – hiring, retention and supervision – which is precisely the preexisting liability the gift clause opinions rely on. Defense turns on whether documentary evidence of notice and supervision still exists.

Reform Without a Bill

Reform is being negotiated, but not in public. As of early August 2026, no introduced active bill carries Section 340.1 language. The effort sits with Speaker Robert Rivas and Senate President Pro Tem Monique Limón, with Los Angeles County pressing from outside after roughly $4.8 billion in settlements. Public employee unions have joined the push this year. SB 577 (Laird), the last live vehicle, has been on the Assembly inactive file since Sept. 10, 2025. (The current session ended August 31).[JR1.1]

One proposal, attributed to the California State Association of Counties, would require clear and convincing proof where abuse is alleged more than 20 years before filing, and would require plaintiffs filing at or after age 40 to show the entity had actual knowledge – a higher bar than the gross negligence standard SB 577 used. The same proposal would cap noneconomic damages at four times economic damages; The California School Boards Association (CSBA) has called caps the only sustainable approach, while Laird called them a non-starter. FCMAT has recommended studying a September 11-style compensation fund with administered minimum and maximum awards. And SB 577’s own content – adding demurrers to the motions eligible for defense cost recovery, barring refiling of stale dismissed actions and easing bond validation before judgment is entered – remains the most concretely drafted relief on the table.

What Business Officials Should Do Now

Districts should not budget for relief. The work in front of business officials looks like this: Model JPA rate increases and retroactive assessments into multiyear projections, remembering that excess pools can assess former members for historic coverage years – the School Excess Liability Fund (SELF) has notified roughly 500 districts to expect $300 million to $400 million in supplementary assessments.

Reconstruct coverage history back to at least the mid-1980s and identify every pool the district belonged to.

Confirm contingent liability accrual and disclosure treatment with auditors, because Moody’s has flagged uneven disclosure as a source of credit uncertainty. Audit records retention practices. And engage bond counsel before a judgment lands, because judgment obligation bonds are unsecured general fund debt validated under Code of Civil Procedure Section 860.

As of Moody’s November 2025 briefing to the state’s debt and investment commission, no rating action had been taken as a direct result of the law. That picture is tightening. In July 2026, after the county office of education notified Los Angeles Unified that it met the statutory criteria for a lack of going concern designation, Moody’s and Fitch downgraded the district – including the judgment obligation bonds it issued to pay these settlements – citing enrollment decline and cost growth rather than AB 218. FCMAT’s chief executive treats a district emergency loan as a question of when rather than whether, and warns that the risk runs highest for the smallest districts. That is the prudent place to plan from.

Courtesy of Lozano Smith, a CASBO Premier Partner.
This article was written prior to the end of the legislative session on August 31. Subsequent legislative developments are not reflected in this piece.