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Settlement fund faces shortfall risk as administrator warns $60M allocation may be insufficient
Summary
The claims administrator and Attorney General's office told the committee that the $60 million appropriated this fiscal year is likely insufficient to cover projected awards from the settlement fund; they urged either the $75 million fiscal-year cap be fully funded or for the legislature to provide clarity.
Officials administering the statutory settlement fund that handles historic youth-development-center (YDC) claims and related matters told legislators that the $60 million currently appropriated for fiscal 2025 is likely to be insufficient to cover awards and administrative costs through June 30.
Attorney General staff and the claims administrator's general counsel reviewed projections based on recent quarterly reports and hearings scheduled through the summer. The claims administrator's office said 242 claims had been resolved and paid through the fund as of late 2024, split between settlements negotiated directly with the Attorney General's Office and awards issued by the independent claims administrator.
Legal counsel for the settlement process said staff ran two projection scenarios using encumbered awards and recent resolution rates. Those scenarios suggested the $60 million appropriation would be exhausted well before the end of the fiscal year unless additional funds are allocated; one projection put the needed amount closer to $71–72 million given scheduled hearings and near-finalized decisions.
Officials emphasized procedural choices the Legislature could make: if the $75 million-per-year cap in statute is not funded (or only partially funded), hearings and awards will continue to be processed until the fund is exhausted, at which point the administrator would have to suspend further payouts or slow processing. "If the 75,000,000 is not fully funded, we need to make adjustments pretty darn quick," the administrator's counsel said.
Attorney General John Formella and his staff confirmed the office is prepared to continue representing the state but said the legislature is not legally obligated to appropriate $75 million annually; prior appropriations and the statutory cap are distinct. The committee was asked to consider whether additional fiscal-year support will be submitted via the fiscal committee or in HB 2.
Ending: The administrator's office and the Attorney General asked the committee to consider making up the shortfall this fiscal year and to clarify whether the $75 million cap established in statute will be funded in future years. Committee staff plan follow-up on the administrator's quarterly reports, schedule of upcoming hearings and a request for any planned fiscal-committee actions.
