Financial Statements Audit Report  
Washington Counties Risk  
Pool  
For the period October 1, 2022 through September 30, 2023  
Published May 30, 2024  
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Report No. 1034986  
Office of the Washington State Auditor  
Pat McCarthy  
May 30, 2024  
Board of Directors  
Washington Counties Risk Pool  
Tumwater, Washington  
Report on Financial Statements  
Please find attached our report on the Washington Counties Risk Pool’s financial statements.  
We are issuing this report in order to provide information on the Pool’s financial activities and  
condition.  
Sincerely,  
Pat McCarthy, State Auditor  
Olympia, WA  
Americans with Disabilities  
In accordance with the Americans with Disabilities Act, we will make this document available in  
alternative formats. For more information, please contact our Office at (564) 999-0950, TDD  
Relay at (800) 833-6388, or email our webmaster at webmaster@sao.wa.gov.  
Insurance Building, P.O. Box 40021 Olympia, Washington 98504-0021 (564) 999-0950 Pat.McCarthy@sao.wa.gov  
TABLE OF CONTENTS  
Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance  
and Other Matters Based on an Audit of Financial Statements Performed in Accordance with  
Government Auditing Standards..................................................................................................... 4  
Independent Auditor's Report on the Financial Statements............................................................ 6  
Financial Section........................................................................................................................... 10  
About the State Auditor's Office................................................................................................... 45  
Page 3  
Office of the Washington State Auditor  
sao.wa.gov  
INDEPENDENT AUDITOR’S REPORT  
Report on Internal Control over Financial Reporting and on Compliance and Other  
Matters Based on an Audit of Financial Statements Performed in Accordance with  
Government Auditing Standards  
Washington Counties Risk Pool  
October 1, 2022 through September 30, 2023  
Board of Directors  
Washington Counties Risk Pool  
Tumwater, Washington  
We have audited, in accordance with auditing standards generally accepted in the United States of  
America and the standards applicable to financial audits contained in Government Auditing  
Standards, issued by the Comptroller General of the United States, the financial statements of the  
Washington Counties Risk Pool, as of and for the year ended September 30, 2023, and the related  
notes to the financial statements, which collectively comprise the Pool’s basic financial statements,  
and have issued our report thereon dated May 23, 2024.  
REPORT ON INTERNAL CONTROL OVER FINANCIAL  
REPORTING  
In planning and performing our audit of the financial statements, we considered the Pool’s internal  
control over financial reporting (internal control) as a basis for designing audit procedures that are  
appropriate in the circumstances for the purpose of expressing our opinion on the financial  
statements, but not for the purpose of expressing an opinion on the effectiveness of the Pool’s  
internal control. Accordingly, we do not express an opinion on the effectiveness of the Pool’s  
internal control.  
A deficiency in internal control exists when the design or operation of a control does not allow  
management or employees, in the normal course of performing their assigned functions, to prevent,  
or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a  
combination of deficiencies, in internal control such that there is a reasonable possibility that a  
material misstatement of the Pool’s financial statements will not be prevented or detected and  
corrected on a timely basis. A significant deficiency is a deficiency, or a combination of  
deficiencies, in internal control that is less severe than a material weakness, yet important enough  
to merit attention by those charged with governance.  
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Office of the Washington State Auditor  
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Our consideration of internal control was for the limited purpose described above and was not  
designed to identify all deficiencies in internal control that might be material weaknesses or  
significant deficiencies and therefore, material weaknesses or significant deficiencies may exist  
that were not identified.  
Given these limitations, during our audit we did not identify any deficiencies in internal control  
that we consider to be material weaknesses.  
REPORT ON COMPLIANCE AND OTHER MATTERS  
As part of obtaining reasonable assurance about whether the Pool’s financial statements are free  
from material misstatement, we performed tests of its compliance with certain provisions of laws,  
regulations, contracts and grant agreements, noncompliance with which could have a direct and  
material effect on the financial statements. However, providing an opinion on compliance with  
those provisions was not an objective of our audit, and accordingly, we do not express such an  
opinion.  
The results of our tests disclosed no instances of noncompliance or other matters that are required  
to be reported under Government Auditing Standards.  
PURPOSE OF THIS REPORT  
The purpose of this report is solely to describe the scope of our testing of internal control and  
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the  
Pool’s internal control or on compliance. This report is an integral part of an audit performed in  
accordance with Government Auditing Standards in considering the Pool’s internal control and  
compliance. Accordingly, this communication is not suitable for any other purpose. However, this  
report is a matter of public record and its distribution is not limited. It also serves to disseminate  
information to the public as a reporting tool to help citizens assess government operations.  
Pat McCarthy, State Auditor  
Olympia, WA  
May 23, 2024  
Page 5  
Office of the Washington State Auditor  
sao.wa.gov  
INDEPENDENT AUDITOR’S REPORT  
Report on the Audit of the Financial Statements  
Washington Counties Risk Pool  
October 1, 2022 through September 30, 2023  
Board of Directors  
Washington Counties Risk Pool  
Tumwater, Washington  
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS  
Opinion  
We have audited the accompanying financial statements of the Washington Counties Risk Pool,  
as of and for the year ended September 30, 2023, and the related notes to the financial statements,  
which collectively comprise the Pool’s basic financial statements as listed in the financial section  
of our report.  
In our opinion, the accompanying financial statements referred to above present fairly, in all  
material respects, the financial position of the Washington Counties Risk Pool, as of September 30,  
2023, and the changes in financial position and cash flows thereof for the year then ended in  
accordance with accounting principles generally accepted in the United States of America.  
Basis for Opinion  
We conducted our audit in accordance with auditing standards generally accepted in the United  
States of America (GAAS) and the standards applicable to financial audits contained in  
Government Auditing Standards, issued by the Comptroller General of the United States. Our  
responsibilities under those standards are further described in the Auditor’s Responsibilities for  
the Audit of the Financial Statements section of our report. We are required to be independent of  
the Pool and to meet our other ethical responsibilities, in accordance with the relevant ethical  
requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient  
and appropriate to provide a basis for our audit opinion.  
Responsibilities of Management for the Financial Statements  
Management is responsible for the preparation and fair presentation of these financial statements  
in accordance with accounting principles generally accepted in the United States of America, and  
for the design, implementation, and maintenance of internal control relevant to the preparation and  
fair presentation of financial statements that are free from material misstatement, whether due to  
fraud or error.  
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Office of the Washington State Auditor  
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In preparing the financial statements, management is required to evaluate whether there are  
conditions or events, considered in the aggregate, that raise substantial doubt about the Pool’s  
ability to continue as a going concern for twelve months beyond the financial statement date,  
including any currently known information that may raise substantial doubt shortly thereafter.  
Auditor’s Responsibilities for the Audit of the Financial Statements  
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole  
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report  
that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute  
assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and  
Government Auditing Standards will always detect a material misstatement when it exists. The  
risk of not detecting a material misstatement resulting from fraud is higher than for one resulting  
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or  
the override of internal control. Misstatements are considered material if there is a substantial  
likelihood that, individually or in the aggregate, they would influence the judgment made by a  
reasonable user based on the financial statements.  
Performing an audit in accordance with GAAS and Government Auditing Standards includes the  
following responsibilities:  
•
•
Exercise professional judgment and maintain professional skepticism throughout the audit;  
Identify and assess the risks of material misstatement of the financial statements, whether  
due to fraud or error, and design and perform audit procedures responsive to those risks.  
Such procedures include examining, on a test basis, evidence regarding the amounts and  
disclosures in the financial statements;  
•
Obtain an understanding of internal control relevant to the audit in order to design audit  
procedures that are appropriate in the circumstances, but not for the purpose of expressing  
an opinion on the effectiveness of the Pool’s internal control. Accordingly, no such opinion  
is expressed;  
•
•
•
Evaluate the appropriateness of accounting policies used and the reasonableness of  
significant accounting estimates made by management, as well as evaluate the overall  
presentation of the financial statements;  
Conclude whether, in our judgment, there are conditions or events, considered in the  
aggregate, that raise substantial doubt about the Pool’s ability to continue as a going  
concern for a reasonable period of time; and  
Communicate with those charged with governance regarding, among other matters, the  
planned scope and timing of the audit, significant audit findings, and certain internal  
control-related matters that we identified during the audit.  
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Office of the Washington State Auditor  
sao.wa.gov  
Required Supplementary Information  
Accounting principles generally accepted in the United States of America require that the  
management’s discussion and analysis and required supplementary information listed in the  
financial section of our report be presented to supplement the basic financial statements. Such  
information is the responsibility of management and, although not a part of the basic financial  
statements, is required by the Governmental Accounting Standards Board who considers it to be  
an essential part of financial reporting for placing the basic financial statements in an appropriate  
operational, economic or historical context. We have applied certain limited procedures to the  
required supplementary information in accordance with auditing standards generally accepted in  
the United States of America, which consisted of inquiries of management about the methods of  
preparing the information and comparing the information for consistency with management’s  
responses to our inquiries, the basic financial statements, and other knowledge we obtained during  
our audit of the basic financial statements. We do not express an opinion or provide any assurance  
on the information because the limited procedures do not provide us with sufficient evidence to  
express an opinion or provide any assurance.  
Other Information  
The other information comprises of DES Schedule of Expenses and List of Participating Members  
but does not include the basic financial statements and our auditor’s report thereon. Management  
is responsible for the other information included with the financial statements. Our opinion on the  
basic financial statements does not cover this other information, and we do not express an opinion  
or provide any assurance thereon.  
In connection with the audit of the basic financial statements, our responsibility is to read the other  
information and consider whether a material inconsistency exists between the other information  
and the basic financial statements, or the other information otherwise appears to be materially  
misstated. If, based on the work performed, we conclude that an uncorrected material misstatement  
of the other information exists, we are required to describe it in our report.  
OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING  
STANDARDS  
In accordance with Government Auditing Standards, we have also issued our report dated May 23,  
2024 on our consideration of the Pool’s internal control over financial reporting and on our tests  
of its compliance with certain provisions of laws, regulations, contracts and grant agreements and  
other matters. The purpose of that report is to describe the scope of our testing of internal control  
over financial reporting and compliance and the results of that testing, and not to provide an  
opinion on the effectiveness of the Pool’s internal control over financial reporting or on  
Page 8  
Office of the Washington State Auditor  
sao.wa.gov  
compliance. That report is an integral part of an audit performed in accordance with Government  
Auditing Standards in considering the Pool’s internal control over financial reporting and  
compliance.  
Pat McCarthy, State Auditor  
Olympia, WA  
May 23, 2024  
Page 9  
Office of the Washington State Auditor  
sao.wa.gov  
FINANCIAL SECTION  
Washington Counties Risk Pool  
October 1, 2022 through September 30, 2023  
REQUIRED SUPPLEMENTARY INFORMATION  
Management’s Discussion and Analysis – 2023  
BASIC FINANCIAL STATEMENTS  
Statement of Net Position – 2023  
Statement of Revenues, Expenses and Changes in Net Position – 2023  
Statement of Cash Flows – 2023  
Notes to Financial Statements – 2023  
REQUIRED SUPPLEMENTARY INFORMATION  
Schedule of Proportionate Share of the Net Pension Liability – PERS 1, PERS 2/3 – 2023  
Schedule of Employer Contributions – PERS 1, PERS 2/3 – 2023  
MLC Claims Development – 2023  
Notes to the Required Supplementary Information – 2023  
SUPPLEMENTARY AND OTHER INFORMATION  
DES Schedule of Expenses – 2023  
List of Participating Members – 2023  
Page 10  
Office of the Washington State Auditor  
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WASHINGTON COUNTIES RISK POOL  
2558 R.W. Johnson Road SW, Suite 106  
Tumwater, WA 98512-6103  
Created by Counties for Counties  
Management’s Discussion &Analysis  
The Washington Counties Risk Pool (WCRP) management provides this discussion and analysis for the Pool’s  
financial activities following the conclusion of its 33rd Fiscal Year (FY), ending September 30, 2023. The information  
in this discussion and analysis should be considered in conjunction with that in the financial statements and  
accompanying notes to understand WCRP’s financial position.  
WCRP has no other component units for which it is financially accountable. It operates as an enterprise fund and uses  
the accrual accounting basis in accordance with the U.S. generally accepted accounting principles. This fund type is  
used for ‘business type activities’ that are intended to recover all or a significant portion of their costs through user  
fees and charges. Revenues are recognized when earned and expenses are recognized when incurred.  
WCRP’s operating revenues consist mostly of assessments paid by its member counties. Its operating expenses consist  
primarily of payments made to resolve claims, including allocated loss adjustment expenses, and for premiums for  
reinsurances and excess liability, property and cyber risk/security, and crime insurance policies acquired from  
superior-rated commercial carriers.  
Discussion of the Financial Statements: The basic financial statements are comprised of two components:  
the financial statements and the notes to those financial statements. WCRP’s two financial statements in a condensed  
format are presented hereafter with two-year comparative data.  
The Statement of Net Position presents information on an entity’s assets, liabilities, deferred outflows, and deferred  
inflows at fiscal year-end with the difference between them reported as Net Position.  
COMPARATIVE STATEMENT OF  
Fiscal Years Ending  
NET POSITION  
09/30/2022  
$57,846,491  
09/30/2023  
$69,171,241  
Current Assets  
Total Current Assets  
$57,846,491  
$69,171,241  
Capital Assets (Net)  
$742,502  
0
$666,252  
128,717  
SBITA’s (Net)  
Net Pension Asset (Non-current)  
Total Non-Current Assets  
258,354  
$1,000,856  
315,189  
$1,110,158  
Deferred Outflows of Resources  
$245,553  
$223,364  
Total Deferred Outflows  
$245,553  
$223,364  
Current Liabilities  
Non-Current Liabilities  
Total Liabilities  
$7,858,640  
28,018,881  
$35,877,521  
$9,413,195  
$35,378,249  
$44,791,444  
Deferred Inflows of Resources  
Total Deferred Inflows of  
Resources  
$288,351  
$206,091  
$288,351  
$206,091  
Investment in Capital Assets  
$742,502  
$666,251  
Unrestricted Net Position  
Restricted Net Position  
Total Net Position  
21,926,172  
258,354  
24,525,789  
315,189  
$22,927,028  
$25,507 229  
Page 11  
Analysis:  
WCRP’s total assets increased between year-end 2022 and year-end 2023, while the WCRP’s liabilities also  
increased but did not exceed the total increase in assets. The result is the WCRP’s ending Net Position seeing a  
year-over-year increase of $2.6M. The changes in the WCRP’s liabilities were the result of actuarial adjustments to  
current and prior year loss projections, meaning the projections have been increased by approximately $4.2M.  
Adjustments have been made in both the prior and current years, based on unfavorable loss trends, claim  
settlements, and trial outcomes.  
The Statement of Revenues, Expenses and Changes in Net Position presents details of an entity’s revenues and  
expenses during a fiscal year that resulted in the reported Change in Net Position — an increase in net position is the  
result of revenues exceeding expenses, while a decrease in net position results when revenues are less than expenses.  
COMPARATIVE STATEMENT OF REVENUES,  
EXPENSES AND CHANGES IN NET POSITION  
FY-2022  
FY-2023  
Operating Revenues  
Member Liability Assessments  
Member Cyber/Terrorism/Crime Assessments  
Member Property Assessments  
Operating Revenues – Miscellaneous  
Total Operating Revenues  
$19,818,077  
643,828  
5,727,146  
0
$29,503,199  
745,831  
6,829,517  
577,270  
$26,189,051  
$37,655,817  
Non-Operating Revenues  
Interest Income  
Rental Income  
$658,993  
13,750  
$1,548,129  
16,919  
Gain on Capital Asset Disposition  
Fair Value Adjustment of Investments  
Total Non-Operating Revenues  
Total Revenues  
0
6,300  
416,142  
1,987,490  
$39,643,307  
(2,272,934)  
(1,600,191)  
$24,588,860  
Operating Expenses  
Liability, Property, ULAE Reserve & Prior Year Adj  
Premiums for Liability Insurance Policies  
Premium for Cyber Insurance Policy  
Premiums for Property Insurance Policies  
Premium for Terrorism Insurance Policy  
Premium for Crime Insurance Policy  
$13,389,085  
6,160,352  
195,885  
5,109,568  
37,851  
$18,699,414  
8,494,863  
238,461  
5,722,214  
42,596  
40,057  
43,643  
Depreciation, Bad Debt & Administrative Expenses  
3,347,784  
3,825,678  
Total Operating Expenses  
Non-Operating Expenses  
Rental Expense  
Total Non-Operating Expenses  
Total Expenses  
$28,280,582  
$37,066,869  
$2,451  
$2,451  
$28,283,033  
$1,926  
$1,926  
$37,068,795  
Changes in Net Position  
($3,694,173)  
$26,602,571  
$18,631  
$2,574,511  
$22,927,029  
$5,689  
Beginning Net Position (October 1st)  
Prior Period Adjustment  
Ending Net Position (September 30th)  
$22,927,028  
$25,507,229  
Analysis: Between year-end 2022 and year-end 2023, Member Liability Assessments increased by $9,685,122,  
Member Property Assessments increased by $1,102,371, and Member Cyber/Terrorism/Crime Assessments increased  
by $102,003. These increases are largely the result of increases in premiums paid to insurers. The Liability increase  
includes the Board’s decision to budget an additional $5,000,000 to further improve the Pool’s Net Position. These  
increases in revenue were offset by expenses that saw a year-over-year increase of $8,786,287, with the result being  
an increase in the Pool’s Net Position.  
Page 12  
Overall Analysis of Financial Position and Result of Operations:  
The WCRP’s Self-Insured Retention (SIR) has increased over recent years to its current $3M in the 2022-23 year.  
This increased SIR has increased the Pool’s exposure and uncertainty, requiring a continued aggressive funding  
approach to build our Net Position. While FY2023 saw an increase in the Net Position, it is anticipated that the direct  
capital funding in the 2023, along with doing so in future years, will see our Net Position continue in the upward  
trajectory it is currently progressing to.  
The Pool continues to remain confident in its financial position, financial practices, claim handling, and in its  
investment strategy and performance. The growth of our Net Position over several years has significantly helped  
during years of unfavorable loss projections. Appropriate reserve estimates were included within the Pool’s FY2023  
financials for any such matter stemming from liability claim against a member county. The WCRP anticipates  
continued success and favorable outcomes of cases currently pending.  
The WCRP continues to focus on its ongoing goal of stable rates and maintaining an unrestricted Net Position that  
continues to meet the solvency requirements established by the State under Washington Administrative Code (WAC)  
200-100 and continues to fall within the funding target established by the WCRP Board of Directors.  
Budget Variance Analysis:  
There were no amendments “to” or significant variations “from” the budget adopted then supplemented by the Pool’s  
Board of Directors during the fiscal year ending September 30, 2023.  
Request for Information:  
This MD&A is provided for those interested in a general overview of the financial operations of the Washington  
Counties Risk Pool. Questions concerning the information provided and WCRP’s financial report, or requests for  
additional information, should be addressed to: WASHINGTON COUNTIES RISK POOL, Attn: Executive Director,  
2558 R W Johnson Rd SW, Suite 106, Tumwater, WA, 98512-6103; or by telephone at (360) 292-4500.  
Page 13  
Washington Counties Risk Pool  
FY2022-23  
MCAG NO. 0774  
Statement of Net Position  
September 30, 2023  
ASSETS:  
As of  
September 30, 2023  
CURRENT ASSETS:  
Cash and Cash Equivalents  
Investments  
Members' MLC Deductible Receivable  
Excess/Reinsurance Recoverable  
Accrued Interest  
1,291,033  
58,243,977  
1,390  
8,582,799  
224,891  
143,125  
684,025  
Prepaid Expenses  
Other Accounts Receivables  
TOTAL CURRENT ASSETS  
69,171,241  
NONCURRENT ASSETS:  
Capital Assets (Net of Accumulated Depreciation/Amortization)  
SBITA (Net of Accumulated Amortization)  
Net Pension Asset_Non-Current  
666,252  
128,717  
315,189  
TOTAL NON-CURRENT ASSETS  
TOTAL ASSETS  
1,110,158  
70,281,399  
223,364  
TOTAL DEFFERED OUTFLOWS RELATED TO PENSIONS  
LIABILITIES:  
CURRENT LIABILITIES:  
"SIR" Claims Reserves  
Open Claims - SIR Reserves  
Open Claims - Corridor Reserves  
Property Reserves  
8,397,058  
15,000  
666,641  
68,837  
Cyber Reserves  
Accounts Payable  
Payroll Liabilities  
209,993  
55,667  
TOTAL CURRENT LIABILITIES  
9,413,195  
NON CURRENT LIABILITIES  
"SIR" Claims Reserves  
Open Claims-SIR Reserves  
IBNR Reserves - IBNR  
Reserve for ULAE  
SBITA Liabilities  
16,848,913  
16,917,051  
1,148,000  
125,862  
Compensated Absences  
Net Pension Liability -- GASB 68  
TOTAL NON CURRENT LIABILITIES  
202,097  
136,326  
35,378,249  
TOTAL LIABILITIES  
44,791,444  
206,091  
TOTAL DEFERRED INFLOWS RELATED TO PENSIONS  
NET POSITION:  
Unrestricted Net Position  
Restricted Net Position  
Prior Year Adjustment  
24,520,100  
315,189  
5,689  
Net Investment in Capital Assets  
666,252  
TOTAL NET POSITION  
25,507,229  
Page 14  
The accompanying notes are an integral part of these financial statements  
Washington Counties Risk Pool  
FY2022-23  
MCAG NO. 0774  
Statement of Revenues, Expenses, and Change in Fund Net Position  
For Year Ending September 30, 2023  
As of  
OPERATING REVENUES:  
9/30/2023  
Members' Assessments -- MLC  
Members' Assessments -- WCPP  
Cyber/Terrorism/Crime Coverage  
Other Operating Income  
$
$
29,503,199  
6,829,517  
745,831  
577,270  
37,655,817  
Total Operating Revenues  
OPERATING EXPENSES:  
Current Year Liability SIR  
Current Year Property SIR  
Current Year Cyber SIR  
Adjustment in Prior Years' Liability SIR  
Adjustment in Prior Years' Property SIR  
Adjustment in Prior Years' Cyber SIR  
Adjustment in Prior Years' WCRP Correction  
Adjustment in Reserve for ULAE  
MLC Reinsurance Premiums/Excess  
WCPP Insurance Premiums  
$13,750,000  
500,000  
200,000  
4,587,572  
(402,366)  
(120,851)  
4,060  
180,999  
8,494,863  
5,722,214  
238,461  
43,643  
Cyber Liability - Premium  
Crime Liability  
Terrorism Liability Premiums  
Depreciation / Amortization Expense  
Operating Expenditures  
42,596  
129,429  
3,696,248  
37,066,869  
Total Operating Expenses  
$
$
OPERATING INCOME  
588,948  
NON OPERATING REVENUES (EXPENSES)  
Interest Income  
Rental Income  
$
1,548,129  
16,919  
Rental Expense  
(1,926)  
Gain (Losses) on Capital Assets Disposition  
Adjustment to Investments  
6,300  
416,142  
1,985,564  
Total Nonoperating Revenues (Expenses)  
CHANGE IN NET POSITION  
TOTAL NET POSITION, Beginning of Year  
$
$
2,574,512  
$
$
22,927,029  
5,689  
PRIOR YEAR ADJUSTMENT  
TOTAL NET POSTION, as of September 30th  
$
25,507,229  
Page 15  
The accompanying notes are an integral part of these financial statements  
Washington Counties Risk Pool  
FY2022-23  
MCAG NO. 0774  
Statement of Cash Flows  
For Year Ending  
September 30, 2023  
Year Ended  
9/30/2023  
CASH FLOWS FROM OPERATING ACTIVITIES:  
Cash received from Members & Insurers  
$
$
34,233,126  
Cash payments for goods and services  
Cash payments to employees for services  
(25,505,708)  
(1,170,515)  
Net Cash Provided (Used) by Operating Activities  
7,556,902  
CASH FLOW FROM CAPITAL AND RELATED FINANCING ACTIVITIES:  
8300000 · PROPERTY & EQUIPMENT:8300001 · Property - Buildings  
8300000 · PROPERTY & EQUIPMENT:8300002 · Equipment  
8300000 · PROPERTY & EQUIPMENT:8300003 · Accumulated Depreciation  
8300005 - SBITA's: Right-to-Use Assets  
8300004 · Net Pension Asset_Non-Cur Asset  
8400000 · DEFERRED OUTFLOW GASB 68  
26,201  
50,049  
(181,896)  
(56,835)  
22,189  
Net cash provided by Investing Activities  
$
(140,292)  
CASH FLOW FROM INVESTING ACTIVITIES:  
8600001 SBITA Liabilities  
8600600 · ULAE  
125,862  
180,999  
19,999  
8600700 · Compensated Absenses:8600701 · Annual Leave Accruals  
8600700 · Compensated Absenses:8600702 · Sick Leave Accruals  
8600800 · Net Pension Liability -GASB 68  
8700000 · Deferred Inflow - GASB 68  
3088900 · Unrestricted Net Position  
3088902 · Restricted Net Position  
57,166  
(11,998)  
(82,260)  
38,046  
56,835  
3088901 · Net Investment in Capital Asset  
3881000 · Prior Year Adj  
Net cash provided by Financing Activities  
(76,250)  
(12,942)  
295,457  
$
$
Increase (Decrease) in Cash and Cash Equivalents  
7,712,067  
Cash and Cash Equivalents - Beginning of the Year  
$
51,822,943  
Cash and Cash Equivalents (including restricted) - End of the Year  
$
59,535,010  
Page 16  
Washington Counties Risk Pool  
FY2022-23  
MCAG NO. 0774  
Statement of Cash Flows  
For Year Ending  
September 30, 2023  
Year Ended  
9/30/2023  
RECONCILIATION OF OPERATING INCOME TO NET CASH  
PROVIDED (USED) BY OPERATING ACTIVITIES  
OPERATING INCOME  
$
588,948  
Reconciliation Adjustment  
Cash provided (used) by Operating Activities:  
Depreciation Expense  
76,250  
Changes in Assets and Liabilities  
(Increase) Decrease in Accounts Receivable  
(Increase) Decrease in Accrued Interest  
(Increase) Decrease in Prepaid Expenses  
(Increase) Decrease in SBITA Right-to-Use Asset  
Increase (Decrease) in "SIR" Reserves  
Increase (Decrease) in "1st/2nd Layers' Corridor" Reserves  
Increase (Decrease) in "SIR" Reserves Cyber/Property  
Increase (Decrease) in Accounts Payable  
Increase (Decrease) in Payroll Liabilities  
(Increase) Decrease in Pension Asset  
(Increase) Decrease in Deferred Outflow  
Increase (Decrease) in SBITA Liabilities  
Increase (Decrease) in Reserve for ULAE  
Increase (Decrease) in Compensated Absences  
Increase (Decrease) in Pension Liability  
Increase (Decrease) in Deferred Inflow  
Prior Year Adjustment  
(3,421,203)  
(65,631)  
(125,848)  
(128,717)  
10,936,962  
(2,203,156)  
(302,000)  
107,855  
2,233  
(56,835)  
22,189  
125,862  
180,999  
77,165  
(11,998)  
(82,260)  
5,689  
FMV Adjustment  
Interest Income  
Rental Income (net of expenses)  
416,142  
1,548,129  
14,993  
Gain (Loss) on Sale of Capital Asset  
6,300  
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES  
$
$
7,712,068  
1
The accompanying notes are an integral part of these financial statements  
Page 17  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
These notes are an integral part of the accompanying financial statements.  
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  
The financial statements of the Washington Counties Risk Pool (WCRP) have been prepared in conformity with  
Generally Accepted Accounting Principles (GAAP). The Governmental Accounting Standards Board (GASB) is  
the accepted standard setting body for establishing governmental accounting and financial principles. The  
significant accounting policies are described below.  
A.  
Reporting Entity  
The WCRP was formed by Interlocal Agreement in August 1988 pursuant to Chapters 48.62 and 39.94  
Revised Code of Washington (“RCW”).  
The WCRP is governed by its 24-member Board of Directors with a President, Vice-President, and  
Secretary/Treasurer serving as its annually elected officers. The WCRP Board meets three times each year  
at its Spring Conference & Board Meeting, Fall Conference & Board Meeting, and its Summer Annual  
Conference & Board Meeting. The WCRP’s Executive Committee, consisting of 11 members of the Board  
of Directors, meets four to six times each year for general Pool administration and oversight.  
Through the Executive Director, the Pool’s 12-member staff carries out the mission and directives of the  
Board of Directors. The Finance & Operations Department handles day-to-day operations and  
administration of the Pool, the Risk & Claims Department provides risk management support to the Pool  
and to its member counties, and manages all liability claims brought against member counties, while the  
Member Services Department provide the various training, scholarships, conference and event planning,  
and other educational resources to participating members.  
Annual deposit assessments are adjusted to incorporate actuarial projections and operational needs, and  
then approved by the (WCRP) Board of Directors at their Annual Meeting. If the Pool’s assets were  
depleted, members would be responsible for outstanding liabilities of the WCRP.  
B.  
Basis of Accounting and Presentation  
The accounting records of the WCRP are maintained in accordance with methods prescribed by the State  
Auditor’s Office under the authority of Chapter 43.09, RCW. The WCRP also follows the accounting  
standards established by the Governmental Accounting Standards Board (GASB) Statement 10, Accounting  
and Financial Reporting for Risk Financing and Related Insurance Issues, as amended by GASB  
Statement 30, Risk Financing Omnibus, and GASB Statement 31, Accounting and Financial Reporting for  
Certain Investments and for External Investment Funds.  
The WCRP uses the full-accrual basis of accounting where revenues are recognized when earned and  
expenses are recognized when incurred. Capital asset purchases are capitalized, and long-term liabilities  
are accounted for within the financial statements.  
The principal operating revenues of the WCRP are member assessments, while its operating expenses  
include both claims paid from current year’s allowances and adjustments to prior year’s reserves, premiums  
for reinsurances and excess, property, terrorism and cyber risk insurances, and the Pool’s administrative  
expenses.  
Page 18  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
C.  
Assets, Liabilities and Net Position  
1.  
Cash and Cash Equivalents  
For the purposes of the Statement of Cash Flows, the WCRP considers all highly liquid  
investments with maturities of three months or less when purchased to be cash equivalent.  
2.  
3.  
Capital Assets and Depreciation  
See Note 6, Capital Assets  
Receivables  
Amount owing from members and reinsurers for deductibles are identified on the Statement of Net  
Position.  
Accrued Interest Receivable is the amount earned on investment at the end of the fiscal year.  
The WCRP Board of Directors, acting through its Executive Committee, decides if any accounts  
are deemed uncollectible. Uncollectible accounts are charged to expense in the period they are  
deemed uncollectible.  
4.  
5.  
Investments  
See Note 2, Deposits and Investments.  
Compensated Absences  
Compensated absences are leave for which employees may receive one or more (a) cash payments  
when the leave is used for time off; or (b) other cash payments, such as payment of unused leave  
upon termination of employment. Examples of compensated absences include vacation (or annual)  
leave, sick leave, holidays, parental leave, and bereavement leave.  
Annual Leave may be accumulated up to 30 days and is payable upon resignation, retirement, or  
death. An employee with more than sixty days sick leave accrued may convert the days earned in  
the previous year (less any sick leave days used in that year) to annual leave days at the rate of  
four days of sick leave for one day of annual leave. Sick leave may accumulate up to 130 days.  
Sick leave does not vest until death or retirement, and the accrued liability is booked at one-half of  
the amount earned.  
6.  
Unpaid Claim Liabilities  
The WCRP establishes claims liabilities based upon independent actuarial estimates of the  
ultimate losses (costs of claims), including future claims adjustment expenses for claims/lawsuits  
that have been reported but are not settled, and for claims that have been incurred but are not yet  
reported. The length of time for which such costs must be estimated varies depending on the  
coverage type involved. Estimated amounts of salvage and subrogation and reinsurance  
recoverable on unpaid claims are deducted from the liability for unpaid claims. Because actual  
claims costs depend on such complex factors as inflation and changes in doctrines of legal liability  
and in damage awards, the process used in computing claims liabilities does not necessarily result  
in an exact amount, particularly general liability coverage.  
Page 19  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
Claims liabilities are actuarially recomputed and incorporate the current case reserves on files,  
which incorporates the Jury Verdict Value processes. The actuary uses a variety of techniques and  
formulas that reflect recent settlements, claims frequencies, and other economic and social factors  
to produce current estimates. A provision for inflation in the calculation of estimated future  
claims costs is implicit in the calculation because reliance is placed both on actual historical data  
that reflects past inflation and on other factors that are appropriate modifiers of experience.  
Adjustments to claims liabilities are charged or credited to expense in the periods in which they  
are made.  
7.  
Reinsurance  
The WCRP acquires reinsurance (agreements) to directly reduce its exposure to large third-party  
liability losses and to indirectly reduce its (present and past) member counties’ exposures to  
contingent liabilities. Reinsurance permits recovery of substantial portions of the losses from  
commercial reinsurers, although it does not discharge the primary liability of the WCRP (and its  
member counties by contingent liabilities) as the direct insurer of the risks reinsured. The WCRP  
does not report reinsured risks as liabilities unless it is probable that those risks will not be covered  
by reinsurers.  
The cumulative to-date incurred loss amount deducted from claims liabilities as of September 30,  
2023, and 2022 as being reinsured were $196,794,241 and $171,791,545 respectively. Premiums  
paid to reinsurers during 2023 and 2022 were $8,494,863 and $6,160,352 respectively. The  
independent actuary’s estimate for the ceded reinsured amount of gross loss reserves as of  
September 30, 2023, was $42,178,022.  
8.  
Member Assessments and Unearned Member Assessments  
Member assessments are collected in the first month of the new policy year and recognized as  
revenue in the period for which the coverage is to be provided. On the balance sheet, member  
assessments receivables were billed on or about October 1st with up to the amount equivalent to  
100% of the prior year’s assessment being due by October 31st, and any remaining assessments  
balance(s) due by the following May 1st. The assessments calculated for liability coverage were  
based in substantial part upon the members’ prior year’s worker hours.  
The assessments for FY 2022-23 property coverage were calculated based upon the values of the  
real and personal properties scheduled by the participating counties. Member counties are billed  
on or about October 1st with up to 50% of the assessment due by October 31st, and the remaining  
balance due before May 1st.  
The cyber costs, which include the premium paid to the insurer and the projected losses to be paid  
within the Pool’s Self-Insured Retention of $500,000 per claim, are assessed using members’  
annual operating budgets. The terrorism coverage assessment is divided evenly among the  
members. The crime coverage is allocated based on total employee count.  
Investment income is not presently considered for the determination of member assessments.  
Unpaid Claims  
9.  
Liability claims/lawsuits are charged to expenses as incurred. Claims reserves represent the  
accumulation of estimates for reported, unpaid liability claims plus a provision for liability claims  
incurred but not reported (IBNR). These estimates are continually reviewed using the Jury  
Page 20  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
Verdict Value process and updated by WCRP’s consulting actuary. Any resulting adjustments are  
reflected in current earnings.  
10.  
Reserve for Unallocated Loss Adjustment Expense  
The reserve for unallocated loss adjustment expenses (ULAE) represents the estimated cost to be  
incurred with respect to the settlement of both liability claims in process and those liability claims  
recognized as incurred but not reported (IBNR). WCRP’s independent actuary estimates these  
liabilities at the end of each fiscal year. The changes in these liabilities each year are reflected in  
current earnings.  
11.  
12.  
Exemption from Federal and State Taxes  
Pursuant to revenue ruling number 90-74, income of Municipal Risk Pools is excluded from gross  
income under IRC Section 115(1). RCW 48.62.151 exempts the WCRP from state insurance  
premium taxes and from business and occupation taxes imposed pursuant to Chapter 82.04 RCW.  
Pensions  
For purposes of measuring the net pension liability or asset, deferred outflows of resources and  
deferred inflows of resources related to pensions, and pension expense, information about the  
fiduciary net position of all state sponsored pension plans and additions to/deductions from those  
plans’ fiduciary net position have been determined on the same basis as they are reported by the  
Washington State Department of Retirement Systems. For this purpose, benefit payments  
(including refunds of employee contributions) are recognized when due and payable in accordance  
with the benefit terms. Investments are reported at fair value. Restricted net position, related to net  
pension asset, was calculated using the GASB preferred method.  
13.  
Lease Commitments Operating Leases  
The Pool is committed under operating leases for office machines. These leases are considered  
operating leases for accounting purposes. Total costs for operating leases were $6,817 for the year  
ended September 30, 2023. The future minimum lease payments through the end of the lease terms  
are as follows:  
Fiscal Year Ending September 30th:  
2024  
2025  
Total  
$4,331  
$1,805  
$6,136  
14.  
Subscription-Based Information Technology Arrangements (SBITA)  
The Pool is committed under subscription agreements for software needed to conduct business. As  
per new GASB 96 requirements effective FY2023, the Pool is reporting on subscription-based  
agreements that have a contractual period of not less than 12 months and meet the $10,000 SBITA  
threshold per WCRP’s implementation document and policy.  
See Note 7, Subscription-Based Information Technology Arrangements (SBITA)  
Page 21  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
NOTE 2 – DEPOSITS AND INVESTMENTS  
A. Deposits  
In accordance with RCW 39.58, WCRP deposits its funds into a public depository with collateral held in a  
multiple financial institution collateral pool administered by the Washington Public Deposit Protection  
Commission (PDPC). Funds are transferred between the WCRP’s public depository (depositories) and  
either the State Treasurer’s Local Government Investment Pool (LGIP); a US Bank custodial account; or  
the Spokane County Treasurer’s Spokane County Investment Pool (SCIP). There are no credit ratings for  
positions in external investment pools.  
WCRP funds deposited as of September 30, 2023, and September 30, 2022 were as follows:  
9/30/2023  
9/30/2022  
Wells Fargo (checking)  
$1,291,033  
$11,598,609  
$674,357  
$1,221,816  
$1,444,635  
$4,363,363  
$44,793,130  
$51,822,944  
Washington State Investment Pool (LGIP)  
Spokane County Investment Pool (SCIP)  
US Bank Custodial Account  
$45,971,012  
$59,535,011  
Total deposits and investments  
B.  
Investments:  
2023 Concentration of Credit:  
Average  
Duration  
Average  
Maturity  
Rating  
Moody/Sp  
Percent of  
Portfolio  
Issuer:  
Cost  
Market Value  
$33,575,425  
$4,872,345  
$3,541,090  
$2,510,986  
$1,051,703  
$419,463  
Government of the  
United States  
Federal Home Loan  
Bank  
$ 34,932,359  
$4,970,782  
$3,605,951  
$2,650,357  
$1,151,439  
$419,463  
1.75  
1.87  
2.26  
2.13  
1.04  
1.57  
0
Aaa AA+  
Aaa AA+  
Aaa AA+  
Aaa AA+  
Aaa AA+  
Aaa AAA  
73.04%  
10.60%  
7.70%  
5.46%  
2.29%  
0.91%  
2.07  
1.96  
1.00  
1.52  
0
Federal Farm  
Credit Bank  
Federal Home Loan  
Mortgage Corp  
Federal National  
Mortgage Assoc  
First American  
Govt Oblig Fund  
2022 Concentration of Credit:  
Average  
Duration  
Average  
Maturity  
Rating  
Moody/Sp  
Percent of  
Portfolio  
Issuer:  
Cost  
Market Value  
$35,586,874  
$3,049,484  
$3,005,286  
$2,093,608  
$975,301  
Government of the  
United States  
Federal Home Loan  
Bank  
Federal Home Loan  
Mortgage Corp  
Federal National  
Mortgage Assoc  
Federal Farm  
$ 37,364,374  
$3,164,265  
$3,225,914  
$2,208,148  
$1,003,079  
$82,576  
1.73  
.99  
1.81  
1.03  
1.77  
1.47  
1.63  
0
Aaa AA+  
Aaa AA+  
Aaa AA+  
Aaa AA+  
Aaa AA+  
Aaaa AAA  
79.44%  
6.81%  
6.71%  
4.67%  
2.18%  
0.18%  
1.72  
1.42  
1.56  
0
Credit Bank  
First American  
Govt Oblig Fund  
82,576  
Page 22  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
Investments Measured at Fair Value  
WCRP’s measures and reports investments at fair value using the valuation input hierarchy established by generally  
accepted accounting principles, as follows:  
•
•
Level 1: Quoted prices in active markets for identical assets or liabilities.  
Level 2: These are quoted market prices for similar assets or liabilities, quoted prices for identical or  
similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not  
active, or other than quoted prices that are not observable;  
•
Level 3: Unobservable inputs for an asset or liability.  
At September 30, 2023 and 2022 WCRP had the following investments measured at fair value:  
Investments by Fair Value Level  
Spokane County Investment Pool  
U.S. Agencies  
09/30/2023  
$674,357  
$11,976,124  
$33,575,425  
Level 1  
Level 2  
$674,357  
$11,976,124  
$33,575,425  
Level 3  
U.S. Treasuries  
Total Investments measured at  
Fair Value  
$46,225,906  
$46,225,906  
Investments at Amortized Cost  
LGIP  
Money Market Fund  
$11,598,609  
$419,462  
Total Investments at Amortized Cost  
$12,018,072  
$58,243,977  
Total Investments in Statement of Net Position  
Investments by Fair Value Level  
Spokane County Investment Pool  
U.S. Agencies  
09/30/2022  
$4,363,363  
$9,123,679  
$35,586,874  
Level 1  
Level 2  
Level 3  
$4,363,363  
$9,123,679  
$35,586,874  
U.S. Treasuries  
Total Investments measured at  
Fair Value  
$49,073,916  
$49,073,916  
Investments at Amortized Cost  
LGIP  
Money Market Fund  
$1,444,635  
$82,576  
Total Investments at Amortized Cost  
$1,527,211  
Total Investments in Statement of Net Position  
Disclosure of Custodial Credit Risk  
$50,601,127  
WCRP’s investment policy states that all security transactions shall be conducted on a delivery-versus-payment  
(DVP) basis. Securities purchased by the Pool will be delivered against payment and held in a custodial safekeeping  
account with the trust department of a bank. A third-party custodian will be designated by the Executive Director  
and all transactions will be evidenced by safekeeping receipts.  
Concentration of Credit Risk  
Concentration Risk disclosure is required for all investments in any one issuer that represents 5% or more of the  
Pool’s total investments, excluding investment pools and investments issued by the U.S. government. No disclosure  
of concentration risk currently meets this requirement.  
Page 23  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
Interest Rate Risk  
Interest rate risk is the risk that the portfolio value will fluctuate due to changes in the general level of interest rates.  
The Pool recognizes that, over time, longer-term portfolios have higher volatility of return. The Pool mitigates  
interest rate risk by providing adequate liquidity for short-term cash needs, and by making longer-term investments  
only with funds that are not needed for current cash flow purposes. The Pool has deposits of $674,357 with the  
Spokane County Investment Pool and $11,598,609 with the Washington State Investment Pool that are available  
immediately. The Pool further recognizes that certain types of securities will affect the interest rate risk profile of  
the portfolio differently in different interest rate environments. The Pool restricts callable securities to a maximum  
of 20% of the portfolio, restricts maximum maturity to 5 years, and constrains duration to plus or minus 20% of a  
market benchmark index selected by the Investment Committee based on the Pool’s investment objectives,  
constrains and risk tolerances.  
Investment in Local Government Investment Pool (LGIP)  
The Washington Counties Risk Pool is a participant in the Local Government Investment Pool (LGIP). The LGIP  
was authorized by Chapter 294, Laws of 1986 and is managed and operated by the Washington State Treasurer. The  
State Finance Committee is the administrator of the statue that created the pool and adopts rules. The State  
Treasurer is responsible for establishing the investment policy for the pool and reviews the policies annually and  
proposed changes are reviewed by the LGIP advisory Committee.  
Investments in the LGIP, a qualified external investment pool, are reported at an amortized cost which approximates  
fair value. The LGIP is an unrated external investment pool. The pool’s portfolio is invested in a manner that meets  
the maturity, quality, diversification, and liquidity requirements set forth by the GASBS 79 for external investment  
pools that elect to measure, for financial reporting purposes, investments at amortized cost. The LGIP does not have  
any legally binding guarantees of share values. The LGIP does not impose liquidity fess or redemption gates on  
participant withdrawals.  
The Office of the State Treasurer prepares a stand-alone LGIP financial report. A copy of the report is available  
from the Office of the State Treasurer, PO Box 40200, Olympia, WA 98504-0200, online at http://www.tre.wa.gov.  
NOTE 3 – JOINT SELF-INSURED RETENTION  
WCRP retains complete responsibility for the payment of covered liability claims, both within its specified self-  
insured retention limits and that provided under its reinsurance contracts. For 2023, the Pool’s SIR for liability  
claims was $3,000,000. Each member’s selected and applicable deductible is a part of, and not in addition to, the  
Pool’s SIR. Through pre-funded member liability assessments (deposit assessments) collected at the beginning of  
the Pool’s fiscal year, WCRP committed assets of $20,694,863, specifically for funding its liability SIR for the 2023  
year.  
For 2023, the WCRP group-purchased first-party property coverage through various insurers. The WCRP carried a  
Pool deductible of $100,000 for all first-party property claims. The Pool’s deductible is fully funded by the  
membership at amounts using actuarial projections. Each member’s selected and applicable deductible is a part of,  
and not in addition to, the Pool’s deductible. Through pre-funded member property assessments (deposit  
assessments) collected at the beginning of the Pool’s fiscal year, WCRP committed assets of $5,842,116,  
specifically for funding its property deductible for the 2023 year.  
The WCRP also secures cyber coverage for all participating member counties. For 2023, the WCRP’s Self-Insured  
Retention was $500,000 with zero member deductibles. This SIR is fully funded by the membership at amounts  
using actuarial projections. Through pre-funded member cyber assessments (deposit assessments) collected at the  
beginning of the Pool’s fiscal year, WCRP committed assets of $238,461, specifically for funding its cyber SIR for  
the 2023 year.  
Page 24  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
During the past three fiscal years, the Pool has not approved a settlement that exceeded the insurance coverage noted  
herein that is more specifically outlined in Note 4.  
NOTE 4 – REINSURANCE/EXCESS INSURANCE CONTRACTS  
Through Gallagher Risk Management Services, Inc., the Producer (Broker-of Record) retained by the Pool’s Board  
of Directors, WCRP partners with multiple superior-rated commercial insurers by acquiring reinsurance agreements  
and “following form” excess, property, and cyber risk insurances. The limits provided by these insuring agreements,  
contracts, and policies for FY2023 follow:  
A. Memorandum of Liability Coverage (“MLC”): Since October 1, 1988, the Pool has provided its  
member counties with risk-shared (jointly purchased and/or self-insured), occurrence-based coverage under a  
MLC Coverage Form for 3rd-party liability claims against members due to bodily injury, personal injury,  
property damage, errors and omissions, and advertising injury.  
For 2023, the total “occurrence” coverage remained at $20,000,000 with an additional “occurrence” limit of  
$5,000,000 available for member counties to acquire as an individual (county-by-county) option. For the first  
$10,000,000 of coverage, the Pool acquires reinsurance from reinsurers that follow the WCRP’s MLC  
coverage form. The reinsurance is acquired from multiple higher-rated carriers as protection for the Pool  
from unexpected losses and for the membership from contingent liabilities that might result otherwise.  
Reinsurance agreements respond up to the applicable policy limits and the agreements contain aggregate  
limits for the maximum annual reimbursements to the Pool of $30,000,000 (lowest reinsured layer) and  
$50,000,000 (second layer). The Pool purchases following form excess coverage for the additional  
$10,000,000 with an aggregate limit of $100,000,000. Since the Pool is a cooperative program, there is a  
joint liability among the participating members. Fourteen of the Pool’s member counties group purchase an  
additional $5,000,000 policy in excess of the pooled $20,000,000.  
Each member annually selected a deductible amount of $10,000, $25,000, $50,000, $100,000, $250,000, or  
$500,000, which is applied to each of the member’s occurrences from that year. There were/are no aggregate  
limits for the payments the Pool makes for any individual member county’s losses.  
Reinsurance and excess premiums ceded for liability coverage during the year totaled $8,494,863.  
B. Washington Counties Property Program (“WCPP”): For FY2023, WCRP offered jointly-purchased  
(1st-party) property coverage as an individual (county-by-county) option. This coverage was acquired from a  
consortium of higher-rated commercial carriers. The coverage offered follows the commercial property  
policies issued by the various participating insurers. All 25 WCRP counties participated in the FY2023 WCPP,  
with covered properties (in composite) exceeding $3.7 billion.  
The WCPP limits include $500 million for typical (All Other Perils or AOP) losses, $200 million for catastrophe  
(earthquake or flood), and many sub-limited coverages including Equipment Breakdown / Boiler & Machinery  
($100 million) and Special Flood Hazard Areas ($25 million). Other coverages included Green Construction  
Upgrades, and Reproduction for Historic Structures,  
All Other Perils (AOP) occurrence deductibles between $5,000 and $50,000 were/are selected by the  
participating counties which they are solely responsible for paying. Higher deductibles apply to catastrophe  
losses.  
C. Cyber Risk and Other Coverage: For FY2023, the Pool group purchased cyber risk and security coverage  
which includes (1st party) business interruption, data recovery, cyber extortion, breach response and  
management (regulatory compliance) protections associated with date breaches. The coverage offered follows  
the Cyber and Technology Liability Policy issued by the AXA XL, the single insurer providing the coverage.  
Page 25  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
For FY2023, the WCRP group purchased first and third-party terrorism coverage, with the liability coverage  
having per occurrence limits of $25 million, no WCRP retentions and no member deductibles, and the property  
coverage having a per occurrence limit of $100 million, with a $10,000 WCRP retention and no member  
deductibles.  
Beginning FY2023, the WCRP group purchased crime coverage having per occurrence limits of $2,000,000,  
which includes employee theft, forgery or alteration, theft of money and securities, and funds transfer fraud.  
Twenty-three member counties participated with a $25,000 deductible per claim.  
NOTE 5 – MEMBER'S SUPPLEMENTAL ASSESSMENTS AND CREDITS  
RCW 48.62.141 and the WCRP Interlocal Agreement provide for the contingent liability of participants in the  
program if assets of the program are insufficient to cover the program's liabilities. Deficits of the WCRP are  
financed through supplemental (retroactive) assessments against those counties that were WCRP members for the  
deficient period(s). During fiscal year 2023, there was no deficiency, and no additional retroactive assessments were  
levied or collected.  
NOTE 6 – CAPITAL ASSETS  
Capital assets are defined by WCRP policy as having an initial, individual cost of at least $2,500 and an estimated  
useful life in excess of one year. Capital assets are recorded at historical cost.  
Capital assets activities for the fiscal year ended September 30, 2023, were as follows:  
Beginning  
Balance  
Ending  
Balance  
10/01/2022  
Increase  
(Decrease)  
09/30/2023  
Capital Assets being  
Depreciated  
Building & Improvements  
Furniture/Equipment/Vehicles  
Total Capital Assets being  
depreciated  
1,338,353  
282,105  
1,338,353  
255,904  
(26,201)  
$1,620,458  
$1,594,257  
Less Accumulated  
Depreciation:  
Building & Improvements  
680,060  
197,896  
48,572  
27,678  
728,632  
199,373  
Furniture/Equipment/Vehicles  
Total Accumulated  
Depreciation  
(26,201)  
$877,956  
$928,005  
TOTAL CAPITAL ASSET  
NET  
$742,502  
$666,252  
Capital assets activities for the fiscal year ended September 30, 2022, were as follows:  
Beginning  
Balance  
Ending  
Balance  
10/01/2020  
Increase  
7,995  
(Decrease)  
09/30/2021  
Capital Assets being Depreciated  
Building & Improvements  
1,330,358  
218,670  
1,338,353  
282,105  
Furniture/Equipment/Vehicles  
Total Capital Assets being  
depreciated  
63,434  
$1,549,028  
$71,429  
$1,620,458  
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Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
Less Accumulated Depreciation:  
Building & Improvements  
Furniture/Equipment/Vehicles  
Total Accumulated  
583,686  
158,854  
48,572  
21,194  
680,060  
197,896  
Depreciation  
$808,189  
$877,956  
TOTAL CAPITAL ASSET  
NET  
$69,766  
$740,839  
$742,502  
When equipment is retired or otherwise disposed of, the original cost is removed from WCRP’s capital assets  
accounts, and the net gain or loss on disposition is credited to or charged against income.  
Capital assets are depreciated using the straight-line method over the following estimated useful lives:  
Asset  
Building  
Building Improvements  
Vehicles  
Years  
30  
30  
5
Equipment  
5
NOTE 7 – SUBSCRIPTION-BASED IT ARRANGEMENTS (SBITA)  
Per GASB Statement No. 96, a SBITA is a contract that conveys control of the right to use another party’s IT  
software, alone or in combination with tangible capital assets, as specified in the contract, for a period of time in an  
exchange or exchange-like transaction.  
ACCOUNTING OVERVIEW  
The WCRP implemented the reporting requirement for SBITA contracts with a term greater than one (1) year (with  
annual auto-renewal contracts extended out an estimated three (3) years), and that exceed the capitalization  
threshold of $10,000 in payments over the subscription term as indicated below.  
All subscription agreements are recorded on a tracking spreadsheet noting contract length, right-to-terminate notes,  
and the total subscription amount through the term of each agreement.  
LIABILITY  
ASSET  
COMMENCEMENT OF SUBSCRIPTION  
TERM*  
Record Subscription Liability (GL 8600001)  
equal to present value of subscription  
payments (fixed payments, variable  
payments that depend on a rate, and variable  
payments that are fixed in substance)  
Reduce Subscription Liability as payments  
are made for portion related to principal for  
FYE  
Record Subscription Asset (GL 8300004)  
equal to Subscription Liability +  
capitalizable initial implementation costs +  
payments made to SBITA vendor at contract  
commencement  
Record amortization expense (GL 5011900)  
and allowance for amortization subscription  
(GL 8300005) over the subscription term  
using straight-line method  
SUBSEQUENT PERIODS  
*The subscription term begins when the subscription asset is placed into service. This occurs when (1) the initial  
implementation stage is completed and (2) the pool has obtained control of the right to use the underlying IT assets.  
Initial Implementation Stage expenses are capitalizable. These activities include ancillary charges to design the  
chosen path, such as configuration, coding, testing and installation. It does not include training.  
Short-term SBITA contracts have a maximum subscription term of one year or less, including options to  
extend. Non-Capitalized SBITA contracts that do not meet the reporting threshold are recorded as an expense (GL  
5190050.X).  
Page 27  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
New contracts are recorded in the tracking spreadsheet regardless of length of contract. Details associated with each  
contract will be identified and reported on, as necessary. Any contract with auto-renewal policies are recorded as an  
estimated three (3) year contract period. The three (3) year carryover is utilized as the Pool has no advanced  
knowledge of new software availability and/or better pricing structures for similar software.  
SBITA Reporting  
The following represents capitalized SBITA asset balances as of September 30, 2023.  
Beginning Balance  
Increases  
$53,178  
Decreases  
Ending Balance  
$181,896  
SBITA Assets  
Less  
$181,896  
$53,178  
Accumulated Amortization  
Net SBITA Asset  
$181,896  
$128,718  
Principal and Interest  
As of September 30, 2023, the principal and interest (if applicable) requirements to maturity are as follows:  
Assure Claims (SAS): Expiration 10/31/2026  
Year Ended September 30  
Principal  
$34,257  
Interest  
Total  
2024  
2025  
2026  
2027  
2028  
$34,257  
$34,257  
$2,855  
$34,257  
$2,855  
ISO Services, Inc (PAS): Expiration 5/31/2026  
2024  
2025  
2026  
2027  
2028  
$9,894  
$10,486  
$7,260  
$9,894  
$10,486  
$7,260  
JTC Technologies, LLC (SAS): Auto-renewal Contract  
2024  
2025  
2026  
2027  
2028  
$5,687  
$5,687  
$5,687  
$5,687  
Praetorian Digital – Lexipol (PAS) Auto-renewal Contract  
2024  
2025  
$10,000  
$8,334  
$10,000  
$8,334  
2026  
2027  
2028  
Total – All Contracts  
$128,717  
$128,717  
NOTE 8 – SOLVENCY  
Washington Administrative Code (WAC) 200-100 requires the Washington Counties Risk Pool to maintain certain  
levels of primary and secondary assets to meet solvency standards. As defined in WAC 200-100-03001 total  
primary assets, i.e. cash and cash equivalents less non-claims liabilities, must at least equal the independent  
actuary’s expected estimate of unpaid claims. Furthermore, a pool’s total primary and secondary assets must at least  
Page 28  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
equal the independent actuary’s 80% confidence level estimate of unpaid claims (70% before 2015). Secondary  
assets include insurance receivables, real estate or other assets less any non-claim liabilities, the values for which  
can be independently verified by the state risk manager.  
Primary Asset Test 1  
Cash and cash equivalents  
Investments  
2023  
2022  
$1,291,033  
58,243,977  
$59,535,011  
729,945  
$1,221,816  
50,601,127  
$51,822,943  
430,572  
Total  
Non-claims Liabilities  
Unearned Revenues  
0.00  
0.00  
Total Primary Assets  
Claims Liability – Expected Level  
Test 1 Result – Primary Asset Test  
$58,805,066  
$44,061,499  
PASS  
$51,392,371  
$35,448,694  
PASS  
Secondary Asset Test  
Cash and cash equivalents  
Investments  
Receivables  
Prepaid Expenses  
Accrued Interest  
Capital Assets  
Net Pension Asset  
Less:  
2023  
2022  
$1,291,033  
58,243,977  
9,268,215  
143,125  
$1,221,816  
50,601,127  
5,847,011  
17,277  
224,891  
666,252  
315,189  
159,259  
742,502  
258,354  
Non-Claims Liabilities  
Unearned Revenues  
Total Secondary Assets  
Total Primary plus Secondary Assets  
729,945  
0.00  
$10,617,672  
$70,152,683  
430,572  
0.00  
$6,593,831  
$57,986,202  
Claims Liabilities at 80%  
$54,668,500  
$28,358,955  
Test 2 Results – Secondary Asset Test  
PASS  
PASS  
NOTE 9 – PENSION PLANS  
The following table represents the aggregate pension amounts for all plans for the year 2023 and 2022:  
Aggregate Pension Amounts – All Plans  
2023  
$136,326  
2022  
Pension liabilities  
$148,324  
258,354  
245,553  
288,351  
(109,952)  
Pension assets  
315,189  
223,364  
Deferred outflows of resources  
Deferred inflows of resources  
Pension expense/expenditures  
206,091  
(128,904)  
State Sponsored Pension Plans Substantially all WCRP’s full-time and qualifying part-time employees participate  
in one of the following statewide retirement systems administered by the Washington State Department of  
Retirement Systems, under cost-sharing, multiple-employer public employee defined benefit and defined  
contribution retirement plans. The state Legislature establishes, and amends, laws pertaining to the creation and  
administration of all public retirement systems.  
The Department of Retirement Systems (DRS), a department within the primary government of the State of  
Washington, issues a publicly available annual comprehensive financial report (ACFR) that includes financial  
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Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
statements and required supplementary information for each plan. The DRS ACFR may be downloaded from the  
DRS website at www.drs.wa.gov.  
Public Employees’ Retirement System (PERS)  
PERS members include elected officials; state employees; employees of local governments; and higher education  
employees not participating in higher education retirement programs.  
PERS is composed of and reported as three separate plans for accounting purposes: Plan 1, Plan 2/3 and Plan 3. Plan  
1 accounts for the defined benefits of Plan 1 members. Plan 2/3 accounts for the defined benefits of Plan 2 members  
and the defined benefit portion of benefits for Plan 3 members. Plan 3 accounts for the defined contribution portion  
of benefits for Plan 3 members. Although employees can be a member of only Plan 2 or Plan 3, the defined benefits  
of Plan 2 and Plan 3 are accounted for in the same pension trust fund. All assets of Plan 2/3 may legally be used to  
pay the defined benefits of any Plan 2 or Plan 3 members or beneficiaries.  
PERS Plan 1 provides retirement, disability and death benefits. Retirement benefits are determined as 2% of the  
member’s average final compensation (AFC) times the member’s years of service. The AFC is the average of the  
member’s 24 highest consecutive service months. Members are eligible for retirement from active status at any age  
with at least 30 years of service, at age 55 with at least 25 years of service, or at age 60 with at least five years of  
service. PERS Plan 1 retirement benefits are actuarially reduced if a survivor benefit is chosen. Members retiring  
from active status prior to the age of 65 may also receive actuarially reduced benefits. Other benefits include an  
optional cost-of-living adjustment (COLA). PERS 1 members were vested after the completion of five years of  
eligible service. The plan was closed to new entrants on September 30, 1977.  
Contributions  
The PERS Plan 1 member contribution rate is established by State statute at 6%. The employer contribution rate is  
developed by the Office of the State Actuary, adopted by the Pension Funding Council and is subject to change by  
the legislature. The PERS Plan 1 required contribution rates (expressed as a percentage of covered payroll) for 2023  
were as follows:  
PERS Plan 1  
Actual Contribution Rates  
January 2023 – June 2023  
PERS Plan 1  
PERS Plan 1 UAAL  
Administrative Fee  
Total  
Employer  
Employee  
6.36%  
3.85%  
0.18%  
10.39%  
6.00%  
6.00%  
July 2023 – August 2023  
PERS Plan 1  
PERS Plan 1 UAAL  
Administrative Fee  
Total  
6.36%  
2.85%  
0.18%  
9.39%  
6.00%  
6.00%  
September 2023 – December 2023  
PERS Plan 1  
PERS Plan 1 UAAL  
Administrative Fee  
Total  
6.36%  
2.97%  
0.20%  
9.53%  
6.00%  
6.00%  
The WCRP’s actual contributions to the plan for fiscal years ended September 30, 2023, and 2022 were $37,618 and  
$36,080, respectively.  
PERS Plan 2/3 provides retirement, disability and death benefits. Retirement benefits are determined as 2% of the  
member’s AFC times the member’s years of service for Plan 2 and 1% of AFC for Plan 3. The AFC is the average  
of the member’s 60 highest-paid consecutive service months. Members are eligible for retirement with a full benefit  
Page 30  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
at 65 with at least five years of service credit. Retirement before age 65 is considered an early retirement. PERS Plan  
2/3 members who have at least 20 years of service credit and are 55 years of age or older, are eligible for early  
retirement with a benefit that is reduced by a factor that varies according to age for each year before age 65. PERS  
Plan 2/3 retirement benefits are actuarially reduced if a survivor benefit is chosen. Other PERS Plan 2/3 benefits  
include a COLA based on the CPI, capped at 3% annually. PERS 2 members are vested after completing five years  
of eligible service. Plan 3 members are vested in the defined benefit portion of their plan after ten years of service;  
or after five years of service if 12 months of that service are earned after age 44.  
PERS Plan 3 defined contribution benefits are totally dependent on employee contributions and investment  
earnings on those contributions. Members are eligible to withdraw their defined contributions upon separation.  
Members have multiple withdrawal options, including purchase of an annuity. PERS Plan 3 members are  
immediately vested in the defined contribution portion of their plan.  
Contributions  
The PERS Plan 2/3 employer and employee contribution rates are developed by the Office of the State Actuary to  
fully fund Plan 2 and the defined benefit portion of Plan 3. The rates are adopted by the Pension Funding Council,  
and are subject to change by the Legislature. The employer rate includes a component to address the PERS Plan 1  
Unfunded Actuarial Accrued Liability (UAAL).  
As established by Chapter 41.34 RCW, Plan 3 defined contribution rates are set at a minimum of 5% and a  
maximum of 15%. PERS Plan 3 members choose their contribution rate from six options when joining membership  
and can change rates only when changing employers. Employers do not contribute to the defined contribution  
benefits.  
The PERS Plan 2/3 defined benefit required contribution rates (expressed as a percentage of covered payroll) for  
2023 were as follows:  
PERS Plan 2/3  
Actual Contribution Rates  
January 2023 – June 2023  
PERS Plan 2/3  
PERS Plan 1 UAAL  
Administrative Fee  
Total  
Employer 2/3 Employee 2  
Employee 3  
6.36%  
3.85%  
0.18%  
10.39%  
6.36%  
Varies  
6.36%  
July 2023 – August 2023  
PERS Plan 2/3  
PERS Plan 1 UAAL  
Administrative Fee  
6.36%  
2.85%  
0.18%  
6.36%  
Varies  
Varies  
Employee PERS Plan 3  
Varies  
Total  
9.39%  
6.36%  
September 2023 – December 2023  
PERS Plan 2/3  
PERS Plan 1 UAAL  
6.36%  
2.97%  
6.36%  
Administrative Fee  
Employee PERS Plan 3  
Total  
0.20%  
Varies  
9.53%  
6.36%  
The WCRP’s actual contributions to the plan for the years ended September 30, 2023, and 2022 were $65,786 and  
$61,652, respectively.  
Page 31  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
Actuarial Assumptions  
The total pension liability (TPL) for each of the DRS plans was determined using the most recent actuarial valuation  
completed in 2023 with a valuation date of June 30, 2022. The actuarial assumptions used in the valuation were  
based on the results of the Office of the State Actuary’s (OSA) 2013-2018 Demographic Experience Study and  
the 2021 Economic Experience Study.  
Additional assumptions for subsequent events and law changes are current as of the 2022 actuarial valuation report.  
The TPL was calculated as of the valuation date and rolled forward to the measurement date of June 30, 2023. Plan  
liabilities were rolled forward from June 30, 2022, to June 30, 2023, reflecting each plan’s normal cost (using the  
entry-age cost method), assumed interest and actual benefit payments.  
•
•
Inflation: 2.75% total economic inflation; 3.25% salary inflation  
Salary increases: In addition to the base 3.25% salary inflation assumption, salaries are also expected to  
grow by service-based salary increase.  
•
Investment rate of return: 7.00%  
Mortality rates were developed using the Society of Actuaries’ Pub. H-2010 mortality rates, which vary by member  
status (e.g. active, retiree, or survivor), as the base table. OSA applied age offsets for each system, as appropriate, to  
better tailor the mortality rates to the demographics of each plan. OSA applied the long-term MP-2017 generational  
improvement scale, also developed by the Society of Actuaries, to project mortality rates for every year after the  
2010 base table. Mortality rates are applied on a generational basis; meaning, each member is assumed to receive  
additional mortality improvements in each future year throughout their lifetime.  
Methods did not change from the prior contribution rate setting June 30, 2021 Actuarial Valuation Report (AVR).  
OSA did make an assumption change to adjust TRS Plan 1 assets, LEOFF Plan 1/2 assets, and LEOFF participant  
data to reflect certain material changes occurring after the June 30, 2022 measurement date.  
Discount Rate  
The discount rate used to measure the total pension liability for all DRS plans was 7.0%.  
To determine that rate, an asset sufficiency test was completed to test whether each pension plan’s fiduciary net  
position was sufficient to make all projected future benefit payments for current plan members. Based on OSA’s  
assumptions, the pension plans’ fiduciary net position was projected to be available to make all projected future  
benefit payments of current plan members. Therefore, the long-term expected rate of return of 7.0% was used to  
determine the total liability.  
Long-Term Expected Rate of Return  
The long-term expected rate of return on the DRS pension plan investments of 7.0% was determined using a  
building-block-method. In selecting this assumption, OSA reviewed the historical experience data, considered the  
historical conditions that produced past annual investment returns, and considered Capital Market Assumptions  
(CMAs) and simulated expected investment returns provided by the Washington State Investment Board (WSIB).  
The WSIB uses the CMA’s and their target asset allocation to simulate future investment returns at various future  
times.  
Estimated Rates of Return by Asset Class  
The table below summarizes the best estimates of arithmetic real rates of return for each major asset class included  
in the pension plan’s target asset allocation as of June 30, 2021. The inflation component used to create the table is  
2.2% and represents the WSIB’s most recent long-term estimate of broad economic inflation.  
Page 32  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
% Long-Term Expected  
Asset Class  
Target Allocation  
Real Rate of Return  
Arithmetic  
Fixed Income  
Tangible Assets  
Real Estate  
Global Equity  
Private Equity  
20%  
7%  
18%  
32%  
23%  
100%  
1.5%  
4.7%  
5.4%  
5.9%  
8.9%  
Sensitivity of the Net Pension Liability/(Asset)  
The table below presents Washington Counties Risk Pool’s proportionate share of the net pension liability calculated  
using the discount rate of 7%, as well as what Washington Counties Risk Pool proportionate share of the net pension  
liability would be if it were calculated using a discount rate that is 1-percentage point lower (6%) or 1-percentage  
point higher (8%) than the current rate.  
1% Decrease  
(6%)  
Current Rate  
(7%)  
1% Increase  
(8%)  
2023  
PERS 1  
PERS 2/3  
$136,325  
(315,189)  
$89,081  
(855,773)  
342,806  
Pension Plan Fiduciary Net Position  
Detailed information about the State’s pension plans’ fiduciary net position is available in the separately issued DRS  
financial report.  
Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of  
Resources Related to Pensions  
At June 30, 2023 and 2022, the Washington Counties Risk Pool reported its proportionate share of the net pension  
liabilities as follows:  
Liability (or Asset)  
Liability (or Asset)  
2023  
2022  
PERS 1  
PERS 2/3  
$136,325  
($315,189)  
$148,323  
($258,354)  
At June 30, 2022 the Washington Counties Risk Pool proportionate share of the collective net pension liabilities was  
as follows.  
Proportionate  
Share 6/30/23  
Proportionate  
Share 6/30/22  
Change in  
Proportionate Share  
PERS 1  
PERS 2/3  
.005972%  
.007690%  
.005327%  
.006966%  
.000645%  
.000724%  
Employer contribution transmittals received and processed by the DRS for the fiscal year ended June 30, 2023 are  
used as the basis for determining each employer’s proportionate share of the collective pension amounts reported by  
the DRS in the Schedules of Employer and Nonemployer Allocations for all plans except LEOFF 1.  
Page 33  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
Pension Expense  
For the year ended September 30, 2023 and 2022, the Washington Counties Risk Pool recognized pension expense  
as follows:  
Pension Expense  
Pension Expense  
2023  
2022  
PERS 1  
$ 19,492  
$ 75,074  
PERS 2/3  
TOTAL  
(44,992)  
(87,294)  
($25,500)  
($12,220)  
Deferred Outflows of Resources and Deferred Inflows of Resources  
At September 30, 2023, the Washington Counties Risk Pool reported deferred outflows of resources and deferred  
inflows of resources related to pensions from the following sources:  
PERS 1  
Deferred Outflows of  
Resources  
Deferred Inflows of  
Resources  
Differences between expected and  
actual experience  
Net difference between projected  
and actual investment earnings on  
pension plan investments  
($15,378)  
Changes of assumptions  
Changes in proportion and  
differences between contributions  
and proportionate share of  
contributions  
Contributions subsequent to the  
measurement date  
6,379  
TOTAL  
$6,379  
($15,378)  
PERS 2/3  
Deferred Outflows of  
Resources  
Deferred Inflows of  
Resources  
Differences between expected and  
actual experience  
$64,204  
($3,522)  
Net difference between projected  
and actual investment earnings on  
pension plan investments  
(118,782)  
(28,842)  
Changes of assumptions  
132,327  
Page 34  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
Changes  
differences between contributions  
and proportionate share of  
contributions  
in  
proportion  
and  
6,176  
(39,565)  
Contributions subsequent to the  
measurement date  
14,181  
Total  
$216,887  
($190,711)  
Deferred outflows of resources related to pensions resulting from the Washington Counties Risk Pool’s contributions  
after the measurement date will be recognized as a reduction of the net pension liability in the year ended September  
30, 2023. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be  
recognized in pension expense as follows:  
Year ended  
September:  
2024  
2025  
2026  
PERS 1  
($10,463)  
PERS 2/3  
($67,115)  
(76,380)  
95,014  
(13,158)  
8,113  
129  
2027  
31,501  
2028  
30,707  
Thereafter  
TOTAL  
(1,731)  
$11,996  
($15,378)  
Deferred outflows of resources related to pensions resulting from the Washington Counties Risk Pool’s contributions  
after the measurement date will be recognized as a reduction of the net pension liability in the year ended September  
30, 2022. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be  
recognized in pension expense as follows:  
Year ended  
September:  
2023  
2024  
2025  
PERS 1  
($10,402)  
PERS 2/3  
($63,295)  
(59,859)  
(67,957)  
87,729  
(9,448)  
(11,852)  
7,121  
2026  
2027  
30,120  
Thereafter  
TOTAL  
29,488  
$ (43,774)  
$ (24,582)  
NOTE 10 – QUALIFIED PENSION PLAN  
The WCRP also participates in a defined contribution pension plan created in accordance with Internal Revenue Code  
Section 401(a). This plan is with MissionSquare Retirement (formerly known as The International City/County  
Management Association). Employer contributions to the Qualified Pension Plan for the years ended September 30,  
2023 and 2022 were $72,572 and $63,631, respectively. There are no employee contributions to this plan.  
NOTE 11 – DEFERRED COMPENSATION PLANS  
The WCRP offers its employees a choice of two deferred compensation plans created in accordance with Section  
457 of the Internal Revenue Code that are strictly employee contributions only.  
The plans are with MissionSquare Retirement (formerly known as The International City/County Management  
Association) and the Washington State Department of Retirement. The plans, available to all eligible employees,  
Page 35  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
permit them to defer a portion of their wages until future years. The deferred compensation is not available to  
contributing employees until their termination, retirement, death, or unforeseeable emergency.  
In 1998, the ICMA Deferred Compensation Program plans’ assets were placed into trust for the exclusive benefit of  
participants and their beneficiaries. Pursuant to Governmental Accounting Standards Board (GASB) Statement 32,  
and since the WCRP is not the owner of these assets, these plans’ assets and liabilities are not reported in the WCRP  
financial statements.  
NOTE 12 – LONG TERM LIABILITIES  
During the year ended September 30, 2023, the following changes occurred in long-term liabilities:  
Beginning  
Balance  
9/30/2022  
Ending  
Balance  
9/30/2023  
Due Within  
One Year  
Changes in Long -Term Liabilities  
Additions  
Reductions  
Claims Reserves  
Corridor Reserves  
$31,226,060  
2,218,156  
$10,936,962  
$42,163,022  
15,000  
$8,397,058  
15,000  
(2,203,156)  
(244,985)  
Property  
ULAE Reserve  
SBITA Liability  
Compensated Absences  
Net Pension Liability – GASB 68  
911,626  
967,001  
0
124,931  
148,324  
666,641  
1,148,000  
128,717  
202,097  
136,326  
666,641  
180,999  
181,896  
77,165  
(53,179)  
(11,998)  
Total Long-Term Liabilities  
$35,596,098  
$11,377,022 ($2,513,318)  
$44,459,802  
$9,078,699  
During the year ended September 30, 2022, the following changes occurred in long-term liabilities:  
Beginning  
Balance  
9/30/2021  
Ending  
Balance  
9/30/2022  
Due Within  
One Year  
Changes in Long -Term Liabilities  
Additions  
Reductions  
Claims Reserves  
Corridor Reserves  
Property  
ULAE Reserve  
Compensated Absences  
Net Pension Liability – GASB 68  
$21,887,792  
3,589,924  
633,512  
933,478  
88,724  
$9,338,268  
$31,226,060  
2,218,156  
911,626  
$5,821,443  
844,149  
(1,371,768)  
278,114  
33,523  
36,207  
85,869  
911,626  
967,001  
124,931  
148,324  
62,455  
Total Long-Term Liabilities  
$27,195,885  
$9,771,981 ($1,371,768)  
$35,596,098 $7,577,218  
NOTE 13 – UNPAID CLAIMS LIABILITIES  
As discussed somewhat in Notes C.6 and C.9, WCRP establishes a liability for both reported and unreported insured  
events that include estimates of both future payments of losses and related claims adjustment expenses. The following  
represents comparative changes in those aggregate liabilities for WCRP’s SIR Reserves, reinsurance’ Corridor  
Deductibles, and Quota Share during the past two years:  
Page 36  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
2023  
2022  
SIR - Incurred Claims & Claims Adjustment Expenses:  
$31,226,060  
13,750,000  
4,587,572  
$21,882,792  
10,700,000  
992,806  
SIR - Unpaid claims and claim adjustment expense/claims reserve at beginning of the year  
Provisions for Insured Events of the Current Year  
Increase (Decrease) in Provision for Insured Events Prior Years  
SIR - Total Incurred Claims & Claims Adjustment Expense  
$49,563,632  
$33,575,598  
SIR - Payments:  
1,908  
Claims & Claims Adjustment Expenses Attributable to Insured Events of the Current Year  
Claims & Claims Adjustment Expenses Attributable to Insured Events of Prior Years  
(7,400,609)  
($7,400,609)  
$42,163,023  
(2,351,446)  
($2,349,538)  
$31,226,060  
SIR - Payments  
SIR - Total Payments & Adjustments  
SIR - Total Unpaid Claims & Claims Expense Reserves at End of Year  
Corridor – Incurred Claims & Claims Adjustment Expenses:  
2,218,156  
3,589,924  
Corridor - Unpaid claims and claim adjustment expense/claims reserve at beginning of the year  
Provisions for Insured Events of the Current Year  
701,940  
Increase (Decrease) in Provision for Insured Events Prior Years  
$2,218,156  
$4,291,864  
Corridor - Total Incurred Claims & Claims Adjustment Expense  
Corridor – Payments:  
Claims & Claims Adjustment Expenses Attributable to Insured Events of the Current Year  
Claims & Claims Adjustment Expenses Attributable to Insured Events of Prior Years  
(2,203,156)  
($2,203,156)  
$15,000  
(2,073,972)  
($2,073,972)  
$2,218,156  
Corridor – Payments  
Corridor - Total Payments & Adjustments  
Corridor - Total Unpaid Claims & Claims Expense Reserves at End of Year  
Property – Incurred Claims & Claims Adjustment Expenses:  
Property Program Balance at beginning of year  
Provisions for Insured Events of the Current Year  
Increase (Decrease) in provision for Property Program  
Property - Total Incurred Claims & Claims Adjustment Expense  
Property – Payments:  
$911,626  
500,000  
$633,512  
940,000  
(402,366)  
$1,009,260  
(342,619)  
123,536  
$1,697,048  
(785,423)  
Claims & Claims Adjustment Expenses Attributable to Insured Events of the Prior Year  
Property – Payments  
(342,619)  
($342,619)  
$666,641  
(785,423)  
($785,423)  
$911,626  
Property - Total Payments & Adjustments  
Property - Total Unpaid Claims & Claims Expense Reserves at End of Year  
Cyber – Incurred Claims & Claims Adjustment Expenses:  
Cyber Program Balance at beginning of year  
$125,851  
200,000  
$132,978  
100,000  
Provisions for Insured Events of the Current Year  
Increase (Decrease) in provision for Cyber Program  
(120,851)  
(101,240)  
Page 37  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2022 Thru September 30, 2023  
$205,000  
$131,738  
Cyber - Total Incurred Claims & Claims Adjustment Expense  
Cyber – Payments:  
Claims & Claims Adjustment Expenses Attributable to Insured Events of the Prior Year  
Cyber – Payments  
(136,164)  
($136,164)  
$68,837  
(5,886)  
($5,886)  
$125,851  
Cyber - Total Payments & Adjustments  
Cyber - Total Unpaid Claims & Claims Expense Reserves at End of Year  
$42,913,499  
1,148,000  
$34,481,693  
9367,001  
Grand Total all Coverages (SIR, Corridor, Property, and Cyber) at year end  
Unallocated Loss Adjustment expense (ULAE) at year end  
Total Claims Reserve at Year End  
$44,061,499  
$35,448,694  
The actuary estimated the current portion of total net reserves at the end of FY23 and FY22 to be $9,147,535 and  
$7,703,069, respectively.  
NOTE 14 – Prior Year Adjustments  
A minor accounting error of $5,689 for a prepaid expense was discovered and corrected. The expense was not coded to a  
prepaid account and has been corrected by recording to prior year adjustment (asset) and offsetting the appropriate  
expense for FY2022-23.  
Page 38  
Washington Counties Risk Pool  
FY2022-23  
MCAG NO. 0774  
REQUIRED SUPPLEMENTARY INFORMATION  
Washington Counties Risk Pool  
Schedule of Proportionate Share of the Net Pension Liability  
PERS 1  
As of June 30  
Last 9 Fiscal Years (2015 Detail - First Available)  
2015  
2016  
2017  
2018  
2019  
2020  
2021  
2022  
2023  
Employer's proportion of the net pension liability (asset)  
Employer's proportionate share of the net pension liability  
0.007815% 0.008828% 0.006216% 0.005474% 0.004806% 0.005075% 0.005114% 0.005327% 0.005972%  
$408,797  
$408,797  
$716,208  
57.08%  
$474,105  
$474,105  
$807,402  
58.72%  
$294,954  
$294,954  
$760,179  
38.80%  
$244,471  
$244,471  
$762,046  
32.08%  
$184,808 $179,175  
$184,808 $179,175  
$62,454 $148,323 $136,325  
$62,454 $148,323 $136,325  
TOTAL  
Covered Payroll  
$668,344 $745,304 $785,133 $879,953 $1,063,094  
Employer's proportionate share of the net pension liability as a  
percentage of covered employee payroll  
Plan fiduciary net position as a percentage of the total pension  
liability  
27.65%  
67.12%  
24.04%  
68.67%  
7.95%  
16.86%  
76.56%  
12.82%  
80.16%  
59.10%  
57.03%  
61.24%  
63.22%  
88.74%  
Washington Counties Risk Pool  
Schedule of Proportionate Share of the Net Pension Liability  
PERS 2/3  
As of June 30  
Last 9 Fiscal Years (2015 Detail - First Available)  
2015  
2016  
2017  
2018  
2019  
2020  
2021  
2022  
2023  
Employer's proportion of the net pension liability (asset)  
Employer's proportionate share of the net pension liability  
0.006456% 0.007261% 0.007993% 0.007028% 0.006208% 0.006616% 0.006564% 0.006966% 0.007690%  
$230,677  
$230,677  
$572,850  
40.27%  
$365,586  
$365,586  
$644,146  
56.76%  
$277,719  
$277,719  
$760,179  
36.53%  
$119,997  
$119,997  
$762,046  
15.75%  
$60,301  
$84,615 ($653,880) ($258,354) ($315,189)  
TOTAL  
$60,301  
$84,615 ($653,880) ($258,354) ($315,189)  
Covered Payroll  
$668,344 $745,304 $785,133 $879,953 $1,063,094  
Employer's proportionate share of the net pension liability as a  
percentage of covered employee payroll  
Plan fiduciary net position as a percentage of the total pension  
liability  
9.02%  
11.35%  
-83.28%  
-29.36%  
106.73%  
-29.65%  
107.02%  
89.20%  
85.82%  
90.97%  
95.77%  
97.77%  
97.22% 120.29%  
Page 39  
MCAG NO. 0774  
REQUIRED SUPPLEMENTARY INFORMATION  
Washington Counties Risk Pool  
Schedule of Employer Contributions  
PERS 1  
As of September 30  
Last 9 Fiscal Years (2015 Detail - First Available)  
2015  
2016  
2017  
2018  
2019  
2020  
2021  
2022  
2023  
Statutorily or contractually required contributions  
Contributions in relation to the statutorily or  
contractually required contributions  
Contribution deficiency (excess)  
38,174 47,705 38,082 38,083 33,845  
38,174 47,705 38,082 38,083 33,845  
35,961  
36,003  
36,080  
37,618  
35,961  
0
36,003  
0
36,080  
0
37,618  
0
0
0
0
0
0
Covered Payroll  
Contributions as a percentage of covered employee  
payroll  
728,221 803,177 775,769 756,032 673,242  
5.24% 5.94% 4.91% 5.04% 5.03%  
754,003  
4.77%  
751,653  
4.79%  
934,854 1,034,367  
3.86% 3.64%  
Washington Counties Risk Pool  
Schedule of Employer Contributions  
PERS 2/3  
As of September 30  
Last 9 Fiscal Years (2015 Detail - First Available)  
2015  
2016  
2017  
2018  
2019  
2020  
2021  
2022  
2023  
Statutorily or contractually required contributions  
Contributions in relation to the statutorily or  
contractually required contributions  
Contribution deficiency (excess)  
31,045 44,017 51,177 56,644 51,376  
31,045 44,017 51,177 56,644 51,376  
59,717  
59,194  
61,652  
65,786  
59,717  
0
59,194  
0
61,652  
0
65,786  
0
0
0
0
0
0
Covered Payroll  
Contributions as a percentage of covered employee  
payroll  
584,437 675,866 775,766 756,033 673,242  
5.31% 6.51% 6.60% 7.49% 7.63%  
754,003  
7.92%  
751,653  
7.88%  
934,854 1,034,367  
6.59% 6.36%  
Page 40  
Page 41  
Washington Counties Risk Pool – MCAG NO. 0774  
October 1, 2022 Thru September 30, 2023  
REQUIRED SUPPLEMENTARY INFORMATION  
1.  
Ten-Year Claims Development Information  
The 10-year Claims Triangle table illustrates how the WCRP earned revenues (net of reinsurance) and  
investment income compared to related costs of loss (net of loss assumed by reinsurers) and other expenses  
assumed by the WCRP as of the end of each of the last ten years. The rows of the table are defined as  
follows:  
a. This line shows the total of each fiscal year gross earned contribution revenue and investment revenue,  
contribution revenue ceded to reinsurers, and net earned contribution revenue and reported investment  
revenue.  
b. This line shows each fiscal year's other operating costs of the WCRP including overhead and claims  
expenses not allocable to individual claims.  
c. This line shows the WCRP gross incurred claims and allocated claims adjustment expenses, claims  
assumed by reinsurers, and net incurred claims and allocated adjustment expenses (both paid and  
accrued) as originally reported at the end of the first year in which the event that triggered coverage  
under the contract occurred (called policy year).  
d. This section of ten rows shows the cumulative net amounts paid as of the end of successive years for  
each policy year.  
e. This line shows the latest estimated amount of claims assumed by reinsurers as of the end of the  
current year for each accident year.  
f.  
This section of ten rows shows how each year’s net incurred claims increased or decreased as of the  
end of successive years. (This annual estimation results from new information received on known  
claims, reevaluation of existing information on known claims, as well as emergence of new claims not  
previously known.)  
g. This line compares the latest estimated net incurred claims amount to the amount originally established  
(line 3) and shows whether this latest estimate of net claims cost is greater or less than originally  
thought. As data for individual policy years mature, the correlation between original estimates and  
estimated amounts is commonly used to evaluate the accuracy of net incurred claims currently  
recognized in less mature policy years. The columns of the table show data for successive policy  
years.  
2.  
Reconciliation of Claims Liabilities by Type of Contract  
The schedule presented in Note 13 presents the changes in claims liabilities for the past two years for the  
WCRP’s one type of contract, liability insurance.  
Page 42  
Washington Counties Risk Pool  
MCAG NO. 0774  
FY2023 DES Schedule of Expenses  
09/30/2023  
Insurance Premiums/Reserve Expense  
ULAE Expense  
Adjustment to Prior Years' "1st/2nd Layers' Corridor" Reserves  
Adjustment to Prior Years' "SIR" Reserves  
Adjustment to Prior Year' Property/Cyber  
$28,991,777  
180,999  
0
4,587,572  
(519,157)  
Contracted Services:  
Actuarial  
State Audit Expense  
State Risk Manager Expenses  
Legal Fees  
IT Consultants  
Property Appraiser  
Independent Adjusting Expense  
Investment Advisor  
Other Consulting/Contracted Service & Fees  
120,250  
16,128  
90,673  
626,302  
35,838  
70,717  
5,635  
35,701  
28,434  
General Administrative Expenses  
Employee Salaries and Benefits  
Communication  
Supplies  
Dues and Memberships  
Travel - Employee  
Committee and Board Meetings  
Depreciation  
Building and Auto Insurance  
Operating Leases  
1,530,717  
24,088  
12,396  
8,959  
76,850  
151,325  
76,250  
24,059  
6,817  
Utilities/Building Maint.  
Member Services - Training  
Member Services - Scholarships  
Miscellaneous Expenses  
58,701  
599,369  
101,841  
124,626  
Total Operating Expenses  
$37,066,869  
Page 43  
Washington Counties Risk Pool – MCAG NO.  
0774  
October 1, 2022 Thru September 30, 2023  
LIST OF PARTICIPATING MEMBERS  
The following is a list of WCRP membership during the fiscal year 2022-23  
Adams County  
Benton County  
Chelan County  
Clallam County  
Cowlitz County  
Mason County  
Okanogan County  
Pacific County  
Pend Oreille County  
San Juan County  
Douglas County  
Franklin County  
Grays Harbor County  
Island County  
Skagit County  
Skamania County  
Spokane County  
Thurston County  
Walla Walla County  
Jefferson County  
Kittitas County  
Klickitat County  
Lewis County  
Whatcom County  
Yakima County  
Page 44  
ABOUT THE STATE AUDITOR’S OFFICE  
The State Auditor’s Office is established in the Washington State Constitution and is part of the  
executive branch of state government. The State Auditor is elected by the people of Washington  
and serves four-year terms.  
We work with state agencies, local governments and the public to achieve our vision of increasing  
trust in government by helping governments work better and deliver higher value.  
In fulfilling our mission to provide citizens with independent and transparent examinations of how  
state and local governments use public funds, we hold ourselves to those same standards by  
continually improving our audit quality and operational efficiency, and by developing highly  
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As an agency, the State Auditor’s Office has the independence necessary to objectively perform  
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Page 45  
Office of the Washington State Auditor  
sao.wa.gov