Surcharge reduction saves the city $50,000

In 1989, Los Angeles County Sheriff’s deputies dispersed a large bridal shower at the home of a Samoan-American family in Cerritos. Eleven deputies and three dozen party guests were injured in the incident.

Deputies said the party had gotten out of hand, and that they were greeted with a shower of rocks and bottles. Family members said law enforcement used excessive force, roughing them up and striking them after they had already been subdued on the ground. What’s more, there was an amateur video shot by a neighbor to support their claims.

The Samoan family sued and years of litigation followed, culminating in a $25 million payout. It was the largest such judgment against police in California history, and it decimated the Liability Trust Fund, which is financed by cities (including Cerritos and La Cañada Flintridge) that contract for services with the county of Los Angeles.

The liability fund surcharge, which contract cities pay to cover liability costs associated with the services rendered by the county, tripled to 6% of the value of each city’s sheriff’s-services contract. Fearing costs would climb even higher, the California Contract Cities Association (CCCA) in 1998 helped establish the Liability Trust Fund Oversight Committee to assume a key advisory role in steering the direction of the fund, previously managed exclusively by the county.

Twelve years later, claims and payouts have decreased dramatically. In addition, the financial position of the fund has improved significantly — so much so that the surcharge recently was reduced to 4%, which will save the 42 contract cities more than $10 million through 2010.

For example, the reduction in the fund surcharge will save the city of La Cañada Flintridge, which previously contributed $150,000 annually to the pool, $50,000 a year, said City Manager Mark Alexander. The county takes seriously the input of contract cities and the oversight committee, he said, and the results have been mutually beneficial.

“It behooves us as members of the pool to really evaluate these claims and to provide direction to the Sheriff’s Department on how they can improve risk-management practices and reduce liability expenses,” Alexander said. “And it behooves the Sheriff’s Department to also be looking at ways to improve their practices and training.”

“It truly has been a success story for all the players involved,” said Jon Shull, chief executive officer of the California Joint Powers Insurance Authority, which was contracted by the Liability Trust Fund Oversight Committee to provide risk-management support. “It has been a very good collaborative process between the county and the cities to find a better way to manage the costs associated with providing those types of services.”

Claims levied against the fund have decreased from a few hundred to a few dozen a year, said Sam Olivito, executive director of CCCA. And the Oversight Committee now has a say in whether a case should be settled or challenged, saving time and resources.

Much of the successful management of the fund, which comes amid headlines of ever-increasing insurance costs and mismanagement of tax-payers’ dollars, is due to enhanced communication and cooperation between the contract cities and the county departments that service them, Olivito said.

Most significant, perhaps, are the improved practices implemented by the county Sheriff’s Department that include everything from deputies driving more carefully to avoid accidents to minimizing the use of force on the job.

“It is not only saving tons of money, which is absolutely essential, it is just a better sheriff’s department,” Steve Whitmore, department spokesman, said of the changes.

The savings are especially significant given the current economic climate in which cities struggle to make ends meet, said Lois Gaston, Duarte City Council member and immediate past-president of the CCCA. Annual actuarial studies will be conducted to ensure the fund maintains the right quantity of liquid assets as well as extra liability insurance coverage, she said.

“Transparency is good because when you open up about what you are doing and let everyone see it, not only do you pay closer attention to it, so does everyone else,” Gaston said. “Collectively, you continue to make things better. We have come a long way and learned a lot. What we have learned is that relationships are important and we will continue to keep plugging along to get better at doing better.”