Santa Monica officials on Tuesday declared the city in "fiscal distress," saying a $230 million settlement and ongoing litigation tied to a decades-old sexual abuse scandal involving a former police employee are the principal factors pushing the seaside community toward financial collapse.
City Manager Oliver Chi told the City Council the designation is intended to communicate the municipality's strained finances to other agencies while the city seeks grants and funding. "There is no doubt that the financial circumstances facing the city are serious," the city said in a statement. Mayor Pro Tem Caroline Torosis said the city is "carrying the weight of more than $229 million in sexual abuse allegations," and that officials must both support survivors and protect the city’s fiscal stability.
The settlement, reached in April 2023, resolved claims by more than 200 people who say they were sexually abused as children by former police dispatcher Eric Uller. Uller, who volunteered with the Police Activities League in the 1980s and 1990s, was arrested in 2018 and died by suicide later that year while awaiting trial. Plaintiffs have alleged Uller groomed children, used an unmarked police car or a personally owned vehicle equipped with police gear, and preyed on children in predominantly Latino neighborhoods; the allegations have led to suits asserting negligence and cover-up by city officials.
Since the 2023 settlement, Santa Monica officials say the city has engaged in four rounds of settlement talks and now faces roughly 180 additional claims. Individual payouts in many cases have ranged from about $700,000 to just under $1 million, officials said. While the city has insurance, some policies carry a deductible of $1 million and the city has sued some insurers to recover portions of the payments.
The settlement and continuing claims come as Santa Monica's approved 2025-26 budget projects $473.5 million in revenue against estimated costs of $484.3 million. City leaders say other pressures — including pandemic impacts, local spending decisions and changes in tariffs — have strained revenues and the local economy, but they identify the litigation costs tied to the Uller cases as the primary driver of the current shortfall.
Former Mayor Phil Brock told the council the scandal has attracted what he called "unscrupulous lawyers" in some instances, a concern echoed by other local officials as they weigh future settlements. Councilman Oscar de la Torre said he raised concerns about Uller starting in the early 2000s and that earlier attempts to address alleged misconduct were unsuccessful.
Legal developments at the state level have also affected the volume of claims. In 2019, the California Legislature passed Assembly Bill 218, temporarily extending the statute of limitations for historic child sex abuse cases and allowing survivors to file claims until age 40 or within five years of discovering the abuse. The extension allowed many alleged victims to pursue civil claims that otherwise would have been time-barred, officials said.
City Manager Chi said the council had considered declaring a "fiscal emergency" but voted instead to declare "fiscal distress," a designation Chi described as part of a broader strategy to coordinate responses and seek external assistance. He said the city will present a more detailed plan to the council in late October. Chi also noted that pending legislation under consideration in Sacramento could limit claims under AB 218 and potentially provide some relief to affected local governments.
Santa Monica's litigation costs have included both settlement payments and legal fees, and city officials have said a share of the expense has come directly from municipal coffers because of insurance deductibles and policy limitations. The city has pursued litigation against insurers to recoup costs and reduce the fiscal burden on taxpayers.
Advocates for survivors and some former program staffers have told investigators and news outlets they raised concerns about Uller decades ago. A former Police Activities League staff member said she reported Uller to program leadership in the 1990s but saw no corrective action. Those accounts have been cited by plaintiffs who contend the city and affiliated organizations failed to prevent or properly investigate the alleged abuse.
The council's declaration of fiscal distress signals an intensified search for state or federal aid, adjustments to spending and potential changes in how the city manages risk related to historic abuse claims. Officials stressed that decisions on staffing, policing and services remain under review as they balance support for survivors with the need to maintain essential municipal functions.
The city’s fiscal outlook and legal exposure will remain a central issue as Santa Monica approaches the presentation of a comprehensive financial plan. City staff have told council members they are exploring all available options, including pursuing recoveries from insurers, negotiating further settlements where appropriate and seeking legislative relief that could narrow the scope of claims tied to historic abuse statutes.
For now, the declaration formalizes what officials have described as a precarious fiscal position and begins a period in which Santa Monica will seek external support while crafting internal measures to address multimillion-dollar liabilities and ongoing service needs.