I do see the need for there to be a remedy for judicial system/law enforcement incompetence or negligence. I just have a philosophical problem with what seems to be a society-wide mindset that says if something bad happens to you, someone must be made to pay you a large sum of money, and if the person who caused the harm has no money, you go after whatever entity to whom a lawyer can draw a correlation, however tenuous.
The correlation may be justified in this instance, but in too many instances, the entity being sued is cornered into settling the case or risking going to trial and losing to the whims of a fickle jury prone to hand out large sums to victims out of sympathy.
So I guess what I'm saying is that after contemplation, my distaste is more on principle than on the specifics of this case. I don't like it that the taxpayer can be held over a barrel when a crime victim wants to sue the government because their assailant wasn't given the "proper" government mental health treatment, or wasn't handled by parole officers in a way that only hindsight can guarantee 100%. It is too arbitrary, and opens the taxpayer up to exposure to financial risk that I do not think necessarily belongs there.
I like Charles' idea. How about we codify negligence of this sort, and make it a criminal offense? Put people like the ones who failed Jaycee Dugard in prison. That'll cost money too, but at least the taxpayer gets something in return - as in - real justice instead of this justice-by-windfall litigation crap.