Financial Statements Audit Report  
Washington Counties Risk  
Pool  
For the period October 1, 2019 through September 30, 2021  
Published May 26, 2022  
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Report No. 1030618  
Office of the Washington State Auditor  
Pat McCarthy  
May 26, 2022  
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 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............................................................................................................................. 9  
About the State Auditor's Office................................................................................................... 44  
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Office of the Washington State Auditor  
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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, 2019 through September 30, 2021  
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 years ended September 30, 2021 and 2020, 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 19, 2022.  
As discussed in Note 14 to the financial statements, the full extent of the COVID-19 pandemic’s  
direct or indirect financial impact on the Pool is unknown.  
INTERNAL CONTROL OVER FINANCIAL REPORTING  
In planning and performing our audits of the financial statements, we considered the Pool’s internal  
control over financial reporting (internal control) to determine the audit procedures that are  
appropriate in the circumstances for the purpose of expressing our opinions 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 in the first paragraph  
of this section and was not designed to identify all deficiencies in internal control that might be  
material weaknesses or significant deficiencies. Given these limitations, during our audit we did  
not identify any deficiencies in internal control that we consider to be material weaknesses.  
However, material weaknesses may exist that have not been identified.  
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 the Pool’s compliance with certain provisions  
of laws, regulations, contracts and grant agreements, noncompliance with which could have a  
direct and material effect on the determination of financial statement amounts. 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 19, 2022  
Page 5  
Office of the Washington State Auditor  
sao.wa.gov  
INDEPENDENT AUDITOR’S REPORT  
Report on the Financial Statements  
Washington Counties Risk Pool  
October 1, 2019 through September 30, 2021  
Board of Directors  
Washington Counties Risk Pool  
Tumwater, Washington  
REPORT ON THE FINANCIAL STATEMENTS  
We have audited the accompanying financial statements of the Washington Counties Risk Pool,  
as of and for the years ended September 30, 2021 and 2020, and the related notes to the financial  
statements, which collectively comprise the Pool’s basic financial statements as listed on page 9.  
Management’s Responsibility 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; this  
includes 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.  
Auditor’s Responsibility  
Our responsibility is to express opinions on these financial statements based on our audits. We  
conducted our audits 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. Those standards require that  
we plan and perform the audit to obtain reasonable assurance about whether the financial  
statements are free from material misstatement.  
An audit involves performing procedures to obtain audit evidence about the amounts and  
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,  
including the assessment of the risks of material misstatement of the financial statements, whether  
due to fraud or error. In making those risk assessments, the auditor considers internal control  
relevant to the Pool’s preparation and fair presentation of the financial statements 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, we express no such  
opinion. An audit also includes evaluating the appropriateness of accounting policies used and the  
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reasonableness of significant accounting estimates made by management, as well as evaluating the  
overall presentation of the financial statements.  
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis  
for our audit opinions.  
Opinions  
In our opinion, the financial statements referred to above present fairly, in all material respects,  
the financial position of the Washington Counties Risk Pool, as of September 30, 2021 and 2020,  
and the changes in financial position and cash flows thereof for the years then ended in accordance  
with accounting principles generally accepted in the United States of America.  
Matters of Emphasis  
As discussed in Note 14 to the financial statements, the full extent of the COVID-19 pandemic’s  
direct or indirect financial impact on the Pool is unknown. Our opinion is not modified with respect  
to this matter.  
Other Matters  
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 on page 9  
be presented to supplement the basic financial statements. Such information, 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.  
Supplementary and Other Information  
Our audits were conducted for the purpose of forming opinions on the financial statements that  
collectively comprise the Pool’s basic financial statements as a whole. The List of Participating  
Members and DES Schedule of Expenses are presented for purposes of additional analysis and are  
not a required part of the basic financial statements. Such information has not been subjected to  
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Office of the Washington State Auditor  
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the auditing procedures applied in the audit of the basic financial statements and, accordingly, we  
do not express an opinion or provide any assurance on it.  
OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING  
STANDARDS  
In accordance with Government Auditing Standards, we have also issued our report dated May 19,  
2022 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 internal control over financial reporting or on 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 19, 2022  
Page 8  
Office of the Washington State Auditor  
sao.wa.gov  
FINANCIAL SECTION  
Washington Counties Risk Pool  
October 1, 2019 through September 30, 2021  
REQUIRED SUPPLEMENTARY INFORMATION  
Management’s Discussion and Analysis – 2021 and 2020  
BASIC FINANCIAL STATEMENTS  
Statement of Net Position – 2021 and 2020  
Statement of Revenues, Expenses and Changes in Net Position – 2021 and 2020  
Statement of Cash Flows – 2021 and 2020  
Notes to Financial Statements – 2021 and 2020  
REQUIRED SUPPLEMENTARY INFORMATION  
Schedule of Proportionate Share of Net Pension Liability – PERS 1 & PERS 2/3 – 2021  
and 2020  
Schedule of Employer Contributions – PERS 1 & PERS 2/3 – 2021 and 2020  
Ten-Year Claims Development Information – 2021 and 2020  
Notes to the Required Supplementary Information – 2021 and 2020  
SUPPLEMENTARY AND OTHER INFORMATION  
DES Schedule of Expenses – 2021 and 2020  
List of Participating Members – 2021 and 2020  
Page 9  
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 31st Fiscal Year (FY), ending September 30, 2021. 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 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 three financial statements in a condensed  
format are presented hereafter with three-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.  
Fiscal Years Ending  
09/30/2020  
COMPARATIVE STATEMENT OF  
NET POSITION  
09/30/2019  
$59,790,227  
09/30/2021  
$53,351,913  
Current Assets  
$60,170,143  
Total Current Assets  
$59,790,227  
$60,170,143  
$53,351,913  
Capital Assets (Net)  
$830,805  
0
$806,790  
0
$740,839  
653,880  
Net Pension Asset (Non-current)  
Total Non-Current Assets  
$830,805  
$806,790  
$1,394,719  
Deferred Outflows of Resources  
$62,516  
$79,983  
$70,317  
Total Deferred Outflows  
$62,516  
$79,983  
$70,317  
Current Liabilities  
Non-Current Liabilities  
Total Liabilities  
$27,234,025  
13,427,677  
$40,661,702  
$19,739,420  
16,470,931  
$36,210,351  
$6,390,577  
21,119,338  
$27,509,915  
Deferred Inflows of Resources  
$190,465  
$116,425  
$704,462  
Total Deferred Inflows of Resources  
$190,465  
$116,425  
$704,462  
Investment in Capital Assets  
$830,805  
$806,790  
$806,790  
Unrestricted Net Position  
Restricted Net Position  
Total Net Position  
19,000,532  
0
23,923,351  
0
25,141,901  
653,880  
$19,831,381  
$24,730,141  
$26,602,571  
Page 10  
Analysis:  
While the WCRP’s total assets declined between year-end 2020 and year-end 2021, the WCRP’s liabilities were  
reduced by an even greater amount. The result is the WCRP’s ending Net Position seeing a year-over-year increase  
of another $1.9M. 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 reduced in both prior and current years, based on  
favorable loss trends and claim resolutions.  
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  
Operating Revenues  
FY-2019  
FY-2020  
FY-2021  
Member Liability Assessments  
Member Cyber Assessments  
Member Property Assessments  
Operating Revenues – Miscellaneous  
Total Operating Revenues  
Non-Operating Revenues  
Interest Income  
$16,062,464  
138,060  
2,809,340  
991  
$19,010,855  
$18,107,737  
187,980  
4,206,701  
25,000  
$22,527,418  
$18,507,257  
259,969  
5,077,293  
421,771  
$24,266,290  
$615,889  
43,824  
$661,954  
21,056  
$653,232  
17,500  
Rental Income  
Gain on Capital Asset Disposition  
Fair Value Adjustment of Investments  
Total Non-Operating Revenues  
Total Revenues  
5,300  
468,335  
$1,156,645  
$23,684,063  
0
399,134  
$1,058,847  
$20,069,702  
(526,894)  
$143,838  
$24,410,128  
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  
$9,636,960  
5,180,310  
163,060  
$7,929,680  
4,490,650  
140,084  
3,664,924  
36,999  
$10,355,651  
4,802,450  
162,954  
2,669,207  
4,693,447  
38,926  
Depreciation, Bad Debt & Administrative Expenses  
2,433,336  
2,520,864  
2,482,052  
Total Operating Expenses  
Non-Operating Expenses  
Rental Expense  
Total Non-Operating Expenses  
Total Expenses  
$20,082,873  
$18,783,203  
$22,535,479  
$5,627  
$5,627  
$20,088,500  
$2,100  
$2,100  
$18,785,303  
2,221  
$2,221  
$22,537,700  
Changes in Net Position  
$(18,798)  
$19,850,179  
$4,898,758  
$19,831,383  
$1,872,428  
$24,730,141  
22,022  
Beginning Net Position (October 1st)  
Prior Period Adjustment  
Ending Net Position (September 30th)  
$19,831,381  
$24,730,141  
$26,602,571  
Analysis: Between year-end 2020 and year-end 2021, Member Property Assessments increased by $870,592 due to  
an increase in premiums paid to insurers. The Member Liability Assessments also increased, but by a modest  
$399,520, which included an overall reduction in projected costs, offset then by the Board’s decision to budget an  
additional $1,000,000 to further improve the Pool’s Net Position. These increases in revenue were offset by expenses  
that saw a year-over-year increase of $3,752,397, with the result being continued improvement in the Pool’s already  
strong Net Position.  
Page 11  
Overall Analysis of Financial Position and Result of Operations:  
The WCRP’s Self-Insured Retention (SIR) had increased in the 2018-19 Fiscal Year to $1M. This was followed  
immediately by another increase to $2M in the 2019-20 year and remaining at $2M in the 2020-21 year. This increased  
SIR over several years increases the Pool’s exposure and uncertainty and has required the continued aggressive  
funding approach we have taken. As we combine the direct effort to add capital funding, along with efforts to reduce  
losses through risk management, education and efficient claims handling, we see the results in our once-again  
improved Net Position.  
The Pool continues to remain confident in its financial position, financial practices, claim handling, and in its  
investment strategy and performance. Appropriate reserve estimates were included within the Pool’s FY2021  
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.  
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 12  
WASHINGTON COUNTIES RISK POOL  
STATEMENT OF NET POSITION - AUDITED  
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ASSETS:  
9/30/2021  
9/30/2020  
CURRENT ASSETS:  
Cash and Cash Equivalents  
Investments  
Members' MLC Deductible Receivable  
Excess/Reinsurance Recoverable  
Members' MLC Assessments Receivable  
Members' WCPP Assessments Receivable  
Members' Cyber Assessments Receivable  
Accrued Interest  
$
2,126,392  
39,766,150  
843,741  
10,208,669  
$
14,834,602  
44,146,130  
502,122  
551,557  
-
-
-
-
-
-
115,577  
13,991  
277,393  
112,271  
22,250  
1,211  
Prepaid Expenses  
Other Accounts Receivables  
TOTAL CURRENT ASSETS  
$
53,351,913  
$
$
$
60,170,143  
806,790  
NONCURRENT ASSETS:  
Capital Assets (Net of Accumulated Depreciation)  
Net Pension Asset_Non-Current  
$
$
740,839  
653,880  
TOTAL ASSETS  
$
54,746,632  
70,317  
60,976,933  
79,983  
TOTAL DEFFERED OUTFLOWS RELATED TO PENSIONS  
LIABILITIES:  
CURRENT LIABILITIES:  
Claims Reserves :  
"SIR" Reserves  
Open Claims - SIR Reserves  
Open Claims - Corridor Reserves  
Property Reserves  
Cyber Reserves  
Compensated Absences  
Accounts Payable  
$3,745,001  
1,698,034  
633,512  
132,978  
-
129,208  
51,844  
0
$2,622,266  
3,225,166  
183,012  
-
14,560  
211,419  
Payroll Liabilities  
Unearned Revenue - Members Assessments  
13,482,998  
TOTAL CURRENT LIABILITIES  
$
6,390,577  
$
19,739,420  
NON CURRENT LIABILITIES  
CLAIMS Reserves:  
"SIR" Reserves  
Open Claims - SIR Reserves  
IBNR Reserve - IBNR  
Open Claims - Corridor Reserves  
IBNR Reserves -IBNR  
Reserve for ULAE  
Compensated Absences  
Net Pension Liability -- GASB 68  
$4,294,433  
13,848,358  
534,864  
1,357,026  
933,478  
88,724  
$1,063,227  
10,651,662  
3,382,368  
168,025  
883,622  
58,236  
62,455  
263,791  
TOTAL NON CURRENT LIABILITIES  
TOTAL LIABILITIES  
$
$
$
21,119,338  
27,509,915  
704,462  
$16,470,931  
36,210,351  
116,425  
$
TOTAL DEFERRED INFLOWS RELATED TO PENSIONS  
$
NET POSITION:  
Unrestricted Net Position  
Restricted Net Position  
$
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653,880  
$
23,923,353  
-
Net Investment in Capital Assets  
ϴϬϲ͕ϳϵϬ  
806,790  
TOTAL NET POSITION  
$
26,602,571  
$
24,730,143  
The accompanying notes are an integral part of these financial statements  
Page 13  
WASHINGTON COUNTIES RISK POOL  
STATEMENT OF REVENUES AND EXPENSES - AUDITED  
AND CHANGES IN NET POSITION  
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OPERATING REVENUES:  
9/30/2021  
9/30/2020  
Members' Assessments -- MLC  
Members' Assessments -- WCPP  
Cyber/Terrorism Coverage  
Other Operating Income  
$
$
18,507,257  
5,077,293  
259,969  
421,771  
24,266,290  
$
$
18,107,737  
4,206,701  
187,980  
25,000  
22,527,418  
Total Operating Revenues  
OPERATING EXPENSES:  
Current Year Liability SIR  
Current Year Property SIR  
Current Year Cyber SIR  
$
8,400,000  
700,000  
280,000  
720,329  
193,810  
(25,000)  
5,540  
31,116  
49,856  
4,802,450  
4,693,447  
162,954  
38,926  
$
9,804,000  
725,000  
135,778  
(1,967,593)  
(235,075)  
(325,000)  
-
Adjustment in Prior Years' Liability SIR  
Adjustment in Prior Years' Liability Corridor  
Adjustment in Prior Years' Property SIR  
Adjustment in Prior Years' Cyber SIR  
Adjustment in Prior Years' True up to Actuary  
Adjustment in Reserve for ULAE  
MLC Reinsurance Premiums/Excess  
WCPP Insurance Premiums  
-
(71,652)  
4,490,652  
3,664,924  
4,306  
Cyber Deductible  
Terrorism Liability Premiums  
Depreciation Expense  
36,999  
75,102  
65,951  
Operating Expenditures  
2,416,101  
22,535,479  
2,445,762  
18,783,203  
Total Operating Expenses  
$
$
$
$
OPERATING INCOME  
1,730,811  
3,744,215  
NON OPERATING REVENUES (EXPENSES)  
Interest Income  
Rental Income  
Rental Expense  
Gain (Losses) on Capital Assets Disposition  
Fair Value Adjustment to Investments  
Total Nonoperating Revenues (Expenses)  
$
653,232  
17,500  
(2,221)  
-
(526,894)  
141,617  
$
661,954  
21,056  
(2,100)  
5,300  
468,335  
1,154,545  
$
$
$
$
$
CHANGES IN NET POSITION  
1,872,428  
4,898,760  
TOTAL NET POSITION, Beginning of Year  
PRIOR PERIOD ADJUSTMENT  
$
$
24,730,143  
22,022  
19,831,383  
-
TOTAL NET POSTION, as of September 30th  
$
26,602,571  
$
24,730,143  
The accompanying notes are an integral part of these financial statements  
Page 14  
MCAG NO. 0774  
WASHINGTON COUNTIES RISK POOL  
STATEMENT OF CASH FLOWS  
For the Fiscal Years Ended September 30, 2021 and 2020  
Year Ended  
9/30/2021  
Year Ended  
9/30/2020  
CASH FLOWS FROM OPERATING ACTIVITIES:  
Cash received from Members & Insurers  
$
530,400  
$
19,593,869  
Cash payments for goods and services  
Cash payments to employees for services  
(16,561,726)  
(932,164)  
(12,945,458)  
(1,054,691)  
Net Cash Provided (Used) by Operating Activities  
$
$
(16,963,490)  
$
$
5,593,720  
CASH FLOW FROM CAPITAL AND RELATED FINANCING ACTIVITIES:  
Purchase of Equipment & Building  
Gain on the Sale of Surplus  
Cash received from Rental  
-
0
(51,086)  
5,300  
18,956  
$
$
15,279  
$
$
Net Cash Provided (Used) from Capital and Related Financing Activities  
15,279  
(26,830)  
CASH FLOW FROM INVESTING ACTIVITIES:  
Proceeds from Sale and Maturities of Investments  
Interest/Accrued Income  
(526,894)  
649,926  
468,335  
645,962  
$
$
$
$
Net Cash Provided (Used) by Investing Activities  
123,032  
1,114,297  
6,681,187  
Increase (Decrease) in Cash and Cash Equivalents  
$
(16,825,179)  
$
Cash and Cash Equivalents - Beginning of the Year  
Prior Year Adjustments  
$
$
58,980,732  
22,022  
$
$
52,299,545  
-
Cash and Cash Equivalents (including restricted) - End of the Year  
$
42,177,575  
$
58,980,732  
Year Ended  
9/30/2021  
Year Ended  
9/30/2020  
RECONCILIATION OF OPERATING INCOME TO NET CASH  
PROVIDED (USED) BY OPERATING ACTIVITIES  
OPERATING INCOME  
$
1,730,811  
$
3,722,196  
Adjustments to Reconcile Net Operating Income to Net  
Cash provided (used) by Operating Activities:  
Depreciation Expense  
22,022  
65,951  
(10,274,913)  
8,134,115  
(3,185,635)  
49,856  
75,102  
6,309,281  
6,000,170  
(1,264,099)  
(71,652)  
(9,242,829)  
88,746  
(50,806)  
19,631  
7,981  
Decrease (Increase) in Accounts Receivable  
Increase (Decrease) in "SIR" Reserves  
Increase (Decrease) in "1st/2nd Layers' Corridor" Reserves  
Increase (Decrease) in Reserve for ULAE  
Increase (Decrease) in Unearned Revenue  
Increase (Decrease) in Accounts Payable  
Increase in Pension Liability (Net)  
(13,482,998)  
(82,211)  
0
Increase (Decrease) in Accrued Liabilities  
Increase (Decrease) in Prepaid Expenses  
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES  
67,772  
(8,259)  
(16,963,489)  
$
$
5,593,721  
The accompanying notes are an integral part of these financial statements  
Page 15  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
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 26-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, meet four to six times each year for general Pool administration and oversight.  
Through the Executive Director, the Pool’s 12-member staff carries out of 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 16  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
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 absences for which the employees will be paid such as annual and sick  
leave. The WCRP records accrued leave for compensated absences as an expense and liability  
when incurred.  
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 17  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
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,  
2021, and 2020 as being reinsured were $157,218,042and $144,653,489 respectively. Premiums  
paid to reinsurers during 2021 and 2020 were $4,802,450 and $4,490,655 respectively. The  
independent actuary’s estimate for the ceded reinsured amount of gross loss reserves as of  
September 30, 2021, was $26,244,206.  
8.  
Member Assessments and Unearned Member Assessments  
Member assessments are collected in advance 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 September 1st with up to the amount equivalent to 100% of the prior year’s assessment  
being due by September 30th, 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 property coverage were calculated based upon the values of the real and  
personal properties scheduled by the participating counties. For FY 2020-21 and following a  
significant increase in property premiums paid to insurers, along with a revision to flood zoning  
exposures, the WCRP Board of Directors approved capping the total property assessments at  
100% of the prior Fiscal Year’s assessment.  
Both the cyber and terrorism coverage assessments are divided evenly among the members.  
Investment income is not presently considered for the determination of member assessments.  
9.  
Unpaid Claims  
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  
Verdict Value process and updated by WCRP’s consulting actuary. Any resulting adjustments are  
reflected in current earnings.  
Page 18  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
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.  
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 $8,352 for the year  
ended September 30, 2021. The future minimum lease payments for these leases are as follows:  
Fiscal Year Ending September 30th:  
2022  
2023  
2024  
2025  
Total  
$8,120  
$6,225  
$4,331  
$1,805  
$20,481  
NOTE 2 – DEPOSITS AND INVESTMENTS  
Deposits  
A
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.  
Page 19  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
WCRP funds deposited as of September 30, 2021 and September 30, 2020 were as follows:  
9/30/2021  
9/30/2020  
Wells Fargo (checking)  
$2,126,392  
$1,933,285  
$1,268,059  
$36,564,807  
$41,892,543  
$14,834,602  
$11,924,580  
$5,627,084  
$26,594,495  
$58,980,761  
Washington State Investment Pool (LGIP)  
Spokane County Investment Pool (SCIP)  
US Bank Custodial Account  
Total deposits and investments  
B.  
Investments:  
2021 Concentration of Credit:  
Average  
Duration  
Average  
Maturity  
Rating  
Moody/Sp  
Percent of  
Portfolio  
Issuer:  
Cost  
Market Value  
Government of the  
United States  
1.80  
1.83  
2.45  
1.82  
1.12  
69.75%  
10.16%  
9.24%  
9.04%  
1.81%  
$ 25,564,780  
$ 25,504,994  
$3,716,688  
Aaa AA+  
Aaa AA+  
Aaa AA+  
Aaa AA+  
Aaa AAA  
Federal Home Loan  
Mortgage Corp  
Federal National  
Mortgage Assoc  
Federal Home Loan  
Bank  
2.42  
1.79  
1.10  
$ 3,743,534  
$3,340,648  
$3,377,935  
$3,303,906  
$661,284  
$3,265,093  
$661,281  
First American  
Govt Oblig Fund  
0.00  
0.00  
2020 Concentration of Credit:  
Average  
Duratio  
n
Market  
Value  
Average  
Maturity  
Rating  
Moody/SP/Fitch  
Percent of  
Portfolio  
Issuer:  
Cost  
Government of the  
United States  
$ 14,429,207  
$ 3,848,957  
$ 4,310,280  
$ 2,733,756  
$ 726,524  
$ 14,739,510  
$ 3,924,113  
$ 4,448,034  
$ 2,756,284  
$ 726,524  
1.58  
1.78  
1.76  
2.32  
0.00  
1.61  
1.82  
1.81  
2.36  
0.00  
Aaa AA+  
Aaa AA+  
Aaa AA+  
Aaa AA+  
Aaa AAA  
55.42%  
14.76%  
16.73%  
10.36%  
2.73%  
Federal National  
Mortgage Assoc.  
Federal Home  
Loan Bank  
Federal Home Loan  
Mortgage Corp  
First American Govt  
Oblig Fund  
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.  
Page 20  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
At September 30, 2021 and 2020 WCRP had the following investments measured at fair value:  
Investments by Fair Value Level  
Spokane County Investment Pool  
U.S. Agencies  
09/30/2021  
$1,268,059  
$10,398,530  
$25,504,994  
Level 1  
Level 2  
Level 3  
$1,268,059  
$10,398,530  
$25,504,994  
U.S. Treasuries  
Total Investments measured at  
Fair Value  
$37,171,583  
$37,171,583  
Investments at Amortized Cost  
LGIP  
Money Market Fund  
$1,933,285  
$661,284  
Total Investments at Amortized Cost  
$2,594,569  
Total Investments in Statement of Net Position  
$39,766,152  
Investments by Fair Value Level  
Spokane County Investment Pool  
U.S. Agencies  
09/30/2020  
$5,627,085  
$11,128,431  
$14,739,510  
Level 1  
Level 2  
Level 3  
$5,627,085  
$11,128,431  
$14,739,510  
U.S. Treasuries  
Total Investments measured at Fair Value  
$31,495,026  
$31,495,026  
Investments at Amortized Cost  
LGIP  
Money Market Fund  
$11,924,850  
$726,524  
Total Investments measured at Amortized Cost  
Total Investments in Statement of Net Position  
$12,651,374  
$44,146,400  
Disclosure of Custodial Credit Risk  
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.  
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 $1,268,059 with the  
Spokane County Investment Pool and $1,933,285 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.  
Page 21  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
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 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 2021, the Pool’s SIR for liability  
claims was $2,000,000. 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 $9,853,000, specifically for funding its liability SIR for the 2021  
year.  
For 2021, 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 $556,000, specifically  
for funding its property deductible for the 2021 year.  
The WCRP also secures cyber coverage for all participating member counties. For 2021, the WCRP’s Self-Insured  
Retention was $100,000 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 $85,000, specifically for funding its cyber SIR for  
the 2021 year.  
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 FY2021 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,  
Page 22  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
property damage, errors and omissions, and advertising injury.  
For 2021, 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), $50  
million, (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. Sixteen 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 during the year totaled $4,802,450.  
B. Washington Counties Property Program (“WCPP”): For FY2021, 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 26 WCRP counties participated in the FY2021 WCPP,  
with covered properties (in composite) exceeding $3.4 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 FY2021, the Pool jointly 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.  
Also, for FY2020-21, 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.  
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 2021, there was no deficiency, and no additional retroactive assessments were  
levied or collected.  
Page 23  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
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, 2021, were as follows:  
Beginning  
Balance  
Ending  
Balance  
10/01/2020  
Increase  
(Decrease)  
09/30/2021  
Capital Assets being  
Depreciated  
Building & Improvements  
Furniture/Equipment/Vehicles  
Total Capital Assets being  
depreciated  
1,330,358  
218,670  
1,330,358  
218,670  
$1,549,028  
$1,549,028  
Less Accumulated  
Depreciation:  
Building & Improvements  
Furniture/Equipment/Vehicles  
Total Accumulated  
Depreciation  
583,686  
158,854  
48,102.03  
631,487  
176,702  
17,849  
$742,239  
$808,189  
TOTAL CAPITAL ASSET  
NET  
$65,951  
$806,790  
$740,839  
Capital assets activities for the fiscal year ended September 30, 2020, were as follows:  
Beginning  
Balance  
Ending  
Balance  
10/01/2019  
Increase  
9,408  
(Decrease)  
09/30/2020  
Capital Assets being Depreciated  
Building & Improvements  
1,320,950  
208,445  
1,330,358  
218,670  
Furniture/Equipment/Vehicles  
Total Capital Assets being  
depreciated  
41,677  
(31,452)  
$1,529,395  
$51,085  
$ (31,452)  
$1,549,028  
Less Accumulated Depreciation:  
Building & Improvements  
Furniture/Equipment/Vehicles  
Total Accumulated  
535,584  
163,306  
48,102  
27,000  
583,686  
158,854  
(31,452)  
Depreciation  
$698,589  
$75,102  
$(31,452)  
$742,239  
TOTAL CAPITAL ASSET  
NET  
$830,806  
$75,102  
$806,790  
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.  
Page 24  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
Capital assets are depreciated using the straight-line method over the following estimated useful lives:  
Asset  
Years  
Building  
Building Improvements  
Vehicles  
30  
30  
5
Equipment  
5
NOTE 7 – 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  
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  
2021  
2020  
Cash and cash equivalents  
Investments  
Total  
Non-claims Liabilities  
Unearned Revenues  
Total Primary Assets  
Claims Liability – Expected Level  
Test 1 Result – Primary Asset Test  
$2,126,392  
39,766,150  
$41,892,543  
332,231  
$14,834,602  
44,146,130  
$58,980,733  
548,006  
13,482,998  
$34,603,000  
$22,179,348  
PASS  
0.00  
$41,560,312  
$27,177,684  
PASS  
Secondary Asset Test  
Cash and cash equivalents  
Investments  
Receivables  
Prepaid Expenses  
Accrued Interest  
$2,126,392  
39,766,150  
1,053,679  
13,991  
$14,834,602  
$44,146,130  
$1,053,679  
$22,250  
115,577  
$112,271  
Capital Assets  
740,839  
$806,790  
Net Pension Asset  
Less:  
653,880  
Non-Claims Liabilities  
Unearned Revenues  
Total Secondary Assets  
Total Primary plus Secondary Assets  
332,231  
0.00  
$12,854,090  
$54,746,632  
$548,006  
$13,482,998  
$8,321,486  
$46,944,718  
Claims Liabilities at 80%  
$27,177,684  
$22,179,000  
Test 2 Results – Secondary Asset Test  
PASS  
PASS  
Page 25  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
NOTE 8 – PENSION PLANS  
The following table represents the aggregate pension amounts for all plans for the year 2021 and 2020:  
Aggregate Pension Amounts – All Plans  
2021  
2020  
Pension liabilities  
Pension assets  
$ 62,455  
653,880  
$ 263,790  
Deferred outflows of resources  
Deferred inflows of resources  
Pension expense/expenditures  
70,317  
704,462  
79,986  
116,426  
22,853  
(162,335)  
State Sponsored Pension Plans  
Substantially all Washington Counties Risk Pool 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, a department within the primary government of the State of  
Washington, issues a publicly available Annual Comprehensive Financial Report (ACFR) that includes  
financial statements and required supplementary information for each plan. The DRS ACFR may be  
obtained by writing to:  
Department of Retirement Systems  
Communications Unit  
P.O. Box 48380  
Olympia, WA 98540-8380  
Also, 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 the Supreme, Appeals and Superior  
Courts; employees of the legislature; employees of district and municipal courts; employees of local  
governments; and higher education employees not participating in higher education retirement programs.  
PERS is comprised of three separate pension plans for membership purposes. PERS plans 1 and 2 are  
defined benefit plans, and PERS plan 3 is a defined benefit plan with a defined contribution component.  
PERS Plan 1 provides retirement, disability and death benefits. Retirement benefits are determined as two  
percent 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. Members retiring from active status prior to the age of 65 may  
receive actuarially reduced benefits. Retirement benefits are actuarially reduced to reflect the choice of a  
survivor benefit. Other benefits include duty and non-duty disability payments, an optional cost-of-living  
adjustment (COLA), and a one-time duty-related death benefit, if found eligible by the Department of Labor  
Page 26  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
and Industries. 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 percent. The employer  
contribution rate is developed by the Office of the State Actuary and includes an administrative expense  
component that is currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts  
Plan 1 employer contribution rates. The PERS Plan 1 required contribution rates (expressed as a percentage  
of covered payroll) for 2021 were as follows:  
PERS Plan 1  
Actual Contribution Rates  
January 2021 – June 2021  
PERS Plan 1  
PERS Plan 1 UAAL  
Administrative Fee  
Employer  
Employee*  
7.92%  
4.87%  
0.18%  
6.00%  
Total 12.97%  
July 2021 – December 2021  
6.00%  
PERS Plan 1  
PERS Plan 1 UAAL  
Administrative Fee  
6.36%  
3.71%  
0.18%  
6.00%  
Total 10.25%  
6.00%  
The WCRP’s actual contributions to the plan for fiscal years ended September 30, 2021 and 2020 were $36,003 and  
$35,961 respectively.  
PERS Plan 2/3 provides retirement, disability, and death benefits. Retirement benefits are determined as  
two percent of the member’s average final compensation (AFC) times the member’s years of service for  
Plan 2 and 1 percent of AFC for Plan 3. The AFC is the average of the member’s 60 highest-paid  
consecutive service months. There is no cap on years of service credit. Members are eligible for retirement  
with a full benefit 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 members who have 30 or more years of service credit  
and are at least 55 years old can retire under one of two provisions:  
•
•
With a benefit that is reduced by three percent for each year before age 65; or  
With a benefit that has a smaller (or no) reduction (depending on age) that imposes stricter return-  
to-work rules.  
PERS Plan 2/3 members hired on or after May 1, 2013, have the option to retire early by accepting a  
reduction of five percent for each year of retirement before age 65. This option is available only to those  
who are age 55 or older and have at least 30 years of service credit. PERS Plan 2/3 retirement benefits are  
also actuarially reduced to reflect the choice of a survivor benefit. Other PERS Plan 2/3 benefits include  
duty and non-duty disability payments, a cost-of-living allowance (based on the CPI), capped at three  
percent annually and a one-time duty related death benefit, if found eligible by the Department of Labor  
Page 27  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
and Industries. 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. PERS Plan 3 members choose their contribution rate upon joining  
membership and have a chance to change rates upon changing employers. As established by statute, Plan  
3 required defined contribution rates are set at a minimum of 5 percent and escalate to 15 percent with a  
choice of six options. Employers do not contribute to the defined contribution benefits. 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 Plan 2/3 employer rates include  
a component to address the PERS Plan 1 UAAL and an administrative expense that is currently set at 0.18  
percent. Each biennium, the state Pension Funding Council adopts Plan 2 employer and employee  
contribution rates and Plan 3 contribution rates. The PERS Plan 2/3 required contribution rates (expressed  
as a percentage of covered payroll) for 2021 were as follows:  
PERS Plan 2/3  
Actual Contribution Rates  
January 2021 – June 2021  
PERS Plan 2/3  
PERS Plan 1 UAAL  
Administrative Fee  
Employer 2/3  
Employee 2*  
7.92%  
4.87%  
0.18%  
7.90%  
Employee PERS Plan 3  
Varies  
Total 12.97%  
7.90%  
July 2021 – December 2021  
PERS Plan 2/3  
PERS Plan 1 UAAL  
Administrative Fee  
6.36%  
3.71%  
0.18%  
6.36%  
Employee PERS Plan 3  
Varies  
Total 10.25%  
6.36%  
The WCRP’s actual contributions to the plan for years ended September 30, 2021 and 2020 were $59,193.86 and $59,717  
respectively.  
Actuarial Assumptions  
The total pension liability (TPL) for each of the DRS plans was determined using the most recent actuarial  
valuation completed in 2021 with a valuation date of June 30, 2020. 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 2019 Economic Experience Study.  
Additional assumptions for subsequent events and law changes are current as of the 2020 actuarial valuation  
report. The TPL was calculated as of the valuation date and rolled forward to the measurement date of June  
30, 2021. Plan liabilities were rolled forward from June 30, 2020, to June 30, 2021, reflecting each plan’s  
normal cost (using the entry-age cost method), assumed interest and actual benefit payments.  
Page 28  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
•
•
Inflation: 2.75% total economic inflation; 3.50% salary inflation  
Salary increases: In addition to the base 3.50% salary inflation assumption, salaries are also  
expected to grow by promotions and longevity.  
•
Investment rate of return: 7.4%  
Mortality rates were developed using the Society of Actuaries’ Pub. H-2010 mortality rates, which vary  
by member status, as the base table. The 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.  
There were no changes in assumptions since the last valuation. There were changes in methods since the  
last valuation.  
· For purposes of the June 30, 2020 Actuarial Valuation Report (AVR), a non-contribution rate setting  
valuation under current funding policy, the Office of the State Actuary (OSA) introduced temporary  
method changes to produce asset and liability measures as of the valuation date. See high-level summary  
below. OSA will revert back to the methods outlined in the 2019 AVR when preparing the 2021 AVR, a  
contribution rate-setting valuation, which will serve as the basis for 2022 ACFR results.  
· To produce measures at June 30, 2020, unless otherwise noted in the 2020 AVR, OSA relied on the same  
data, assets, methods, and assumptions as the June 30, 2019 AVR. OSA projected the data forward one year  
reflecting assumed new hires and current members exiting the plan as expected. OSA estimated June 30,  
2020, assets by relying on the fiscal year end 2019 assets, reflecting actual investment performance over  
FY 2020, and reflecting assumed contribution amounts and benefit payments during FY 2020. OSA  
reviewed the actual June 30, 2020, participant and financial data to determine if any material changes to  
projection assumptions were necessary. OSA also considered any material impacts to the plans from 2021  
legislation. See the 2020 AVR for more information.  
Discount Rate  
The discount rate used to measure the total pension liability for all DRS plans was 7.4 percent.  
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 7.4 percent 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 7.4 percent was determined  
using a building-block-method. In selecting this assumption, the OSA reviewed the historical experience  
data, considered the historical conditions that produced past annual investment returns, and considered  
Capital Market Assumptions (CMA’s) and simulated expected investment returns provided by the  
Page 29  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
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  
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, are summarized in the table below. The inflation component  
used to create the table is 2.2 percent and represents the WSIB’s most recent long-term estimate of broad  
economic inflation.  
% Long-Term  
Asset Class  
Target  
Allocation  
Expected Real Rate of  
Return Arithmetic  
2.20%  
5.10%  
5.80%  
Fixed Income  
Tangible Assets  
Real Estate  
Global Equity  
Private Equity  
20%  
7%  
18%  
32%  
23%  
100%  
6.30%  
9.30%  
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 7.4 percent, 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 (6.4 percent) or 1-percentage point higher (8.4 percent) than the current rate.  
1% Decrease  
(6.4%)  
Current Rate  
(7.4%)  
1% Increase  
(8.4%)  
2021  
PERS 1  
PERS 2/3  
$ 106,394  
(86,278)  
1% Decrease  
(6.4%)  
$ 224,427  
526,496  
$62,454  
(653,880)  
Current Rate  
(7.4%)  
$ 179,175  
84,615  
$24,134  
(1,038,951)  
1% Increase  
(8.4%)  
$ 139,711  
(279.275)  
2020  
PERS 1  
PERS 2/3  
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.  
Page 30  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources and Deferred  
Inflows of Resources Related to Pensions  
At June 30, 2021 and 2020, the Washington Counties Risk Pool reported its proportionate share of the net  
pension liabilities as follows:  
Liability (or Asset)  
Liability (or Asset)  
2021  
2020  
PERS 1  
PERS 2/3  
$62,455  
($653,880)  
$179,175  
$ 84,615  
At June 30, 2021 the Washington Counties Risk Pool proportionate share of the collective net pension  
liabilities was as follows.  
Proportionate  
Share 6/30/20  
Proportionate  
Share 6/30/21  
Change in  
Proportion  
PERS 1  
PERS 2/3  
.005075%  
.006616%  
.005114%  
.006564%  
.000039%  
(.000052) %  
Employer contribution transmittals received and processed by the DRS for the fiscal year ended June 30,  
2021 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.  
Pension Expense  
For the year ended September 30, 2021 and 2020, the Washington Counties Risk Pool recognized pension expense as  
follows:  
Pension Expense  
Pension Expense  
2021  
2020  
PERS 1  
$ 10,324  
$ 18,493  
PERS 2/3  
TOTAL  
$151,995  
$ 162,318  
$4,360  
$ 22,853  
Page 31  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
Deferred Outflows of Resources and Deferred Inflows of Resources  
At September 30, 2021, 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  
$
$
$(69,303)  
Changes of assumptions  
$
$
Changes in proportion and  
differences between contributions  
and proportionate share of  
contributions  
Contributions subsequent to the  
measurement date  
$7,301  
TOTAL  
$7,301  
$(69,303)  
PERS 2/3  
Deferred Outflows of  
Resources  
Deferred Inflows of  
Resources  
Differences between expected and  
actual experience  
$31,758  
$(8016)  
$(546,490)  
$(46,436)  
Net difference between projected  
and actual investment earnings on  
pension plan investments  
Changes of assumptions  
$956  
Changes in proportion and  
differences between contributions  
and proportionate share of  
contributions  
$17,788  
$(34,215)  
Contributions subsequent to the  
measurement date  
$12,516  
Total  
$63,017  
$(635,158)  
Page 32  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
At September 30, 2020, 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  
$
$
$(998)  
Changes of assumptions  
$
$
Changes in proportion and  
differences between contributions  
and proportionate share of  
contributions  
Contributions subsequent to the  
measurement date  
$9,390  
TOTAL  
$9,390  
$(998)  
PERS 2/3  
Deferred Outflows of  
Resources  
Deferred Inflows of  
Resources  
Differences between expected and  
actual experience  
$4,360  
$(10,604)  
Net difference between projected  
and actual investment earnings on  
pension plan investments  
$(4,297)  
Changes of assumptions  
$1,544  
$(57,799)  
Changes in proportion and  
differences between contributions  
and proportionate share of  
contributions  
$25,594  
$(42,728)  
Contributions subsequent to the  
measurement date  
$15,505  
TOTAL  
$70,593  
$(115,429)  
Page 33  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
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:  
PERS 1  
$ (18,358)  
$ (16,823)  
$ (15,907)  
$ (18,215)  
PERS 2/3  
2022  
2023  
2024  
2025  
2026  
$ (153,159)  
$ (143,341)  
$(140,276)  
$(147,725)  
$(761)  
Thereafter  
$607  
TOTAL  
$ (69,303)  
$ (584,656)  
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, 2021.  
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:  
PERS 1  
$ (4,527)  
PERS 2/3  
$ (27,950)  
2021  
2022  
2023  
2024  
2025  
$ (142)  
$ 1,381  
$ 2,291  
$ (1,232)  
$ 8,664  
$ 16,221  
Thereafter  
TOTAL  
$ (998)  
$ (4,297)  
NOTE 9 – 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, 2021  
and 2020 were $52,662 and $48,820, respectively. There are no employee contributions to this plan.  
NOTE 10 – 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. 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, 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.  
Page 34  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
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.  
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.  
NOTE 11 – LONG TERM LIABILITIES  
During the year ended September 30, 2021, the following changes occurred in long-term liabilities:  
Beginning  
Balance  
9/30/2020  
Ending  
Balance  
9/30/2021  
Due Within  
One Year  
Changes in Long -Term Liabilities  
Additions  
Reductions  
Claims Reserves  
Corridor Reserves  
$14,337,154  
6,775,559  
183,012  
$7,550,637  
450,500.27  
$21,887,792  
3,589,924  
633,512  
$3,745,001  
1,698,034  
633,512  
(3,185,635)  
Property  
Quota Share  
ULAE Reserve  
883,622  
72,796  
263,791  
49,856  
15,928  
933,478  
88,724  
62,455  
Compensated Absences  
Net Pension Liability – GASB 68  
Total Long-Term Liabilities  
(201,336)  
$22,515,935  
$8,066,922  
$(3,386,971  
$27,195,885  
$6,076,547  
During the year ended September 30, 2020, the following changes occurred in long-term liabilities:  
Beginning  
Balance  
9/30/2019  
Ending  
Balance  
9/30/2020  
Due Within  
One Year  
Changes in Long -Term Liabilities  
Additions  
Reductions  
Claims Reserves  
Corridor Reserves  
Property  
$14,337,154  
6,775,559  
183,012  
$5,817,158  
183,012  
$14,337,154  
6,775,559  
183,012  
$2,622,266  
3,225,166  
183,012  
(1,264,098)  
Quota Share  
ULAE Reserve  
883,622  
(71,652)  
883,622  
Compensated Absences  
Net Pension Liability – GASB 68  
72,796  
19,631  
18,681  
72,796  
14,560  
263,791  
263,791  
Total Long-Term Liabilities  
$17,813,202  
$6,038,485  
$(1,335,750)  
$22,515,935  
$6,045,004  
NOTE 12 – 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 35  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
2021  
2020  
$14,337,153  
$8,519,996  
SIR - Unpaid claims and claim adjustment expense/claims reserve at beginning of the year  
SIR - Incurred Claims & Claims Adjustment Expenses:  
8,400,000  
720,329  
$9,804,000  
(1,967,593)  
$16,356,403  
Provisions for Insured Events of the Current Year  
Increase (Decrease) in Provision for Insured Events Prior Years  
SIR - Total Incurred Claims & Claims Adjustment Expense  
$23,457,482  
SIR - Payments:  
14,638  
$32,005  
Claims & Claims Adjustment Expenses Attributable to Insured Events of the Current Year  
Claims & Claims Adjustment Expenses Attributable to Insured Events of Prior Years  
1,560,052  
$1,574,689  
$1,987,245  
$2,019,250  
SIR -Total Payments  
$21,887,792  
$14,337,153  
SIR - Total Unpaid Claims & Claims Expense Reserves at End of Year  
6,775,558  
$8,039,657  
Corridor - Unpaid claims and claim adjustment expense/claims reserve at beginning of the year  
Corridor – Incurred Claims & Claims Adjustment Expenses:  
Provisions for Insured Events of the Current Year  
193,810  
$(235,075)  
Increase (Decrease) in Provision for Insured Events Prior Years  
$6,969,368  
$7,804,582  
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  
3,379,444  
$3,379,444  
$3,589,924  
$1,029,024  
$1,029,024  
$6,775,558  
Corridor – Payments  
Corridor - Total Unpaid Claims & Claims Expense Reserves at End of Year  
Quota Share 10% – Unpaid claims and claim adjustment expense/claims reserve at beginning of the year  
Quota Share 10% – Incurred Claims & Claims Adjustment Expenses:  
Provisions for Insured Events of the Current Year  
Increase (Decrease) in Provision for Insured Events Prior Years  
Quota Share - Total Incurred Claims & Claims Adjustment Expense  
Quota Share - Payments:  
$0.00  
0.00  
Quota Share - Total Unpaid Claims & Claims Expense Reserves at End of Year  
Property Program Balance at beginning of year  
183,012  
700,000  
(25,000)  
441,488  
$633,512  
0
$725,000  
$(325,000)  
216,988  
$183,012  
0
Provisions for Insured Events of the Current Year  
Increase (Decrease) in provision for Property Program  
Claims & Claims Adjustment Expenses Attributable to Insured Events of the Current Year  
Property - Total Unpaid Claims & Claims Expense Reserves at End of Year  
Cyber Program Balance at beginning of year  
132,978  
36,656  
29,540  
Provisions for Insured Events of the Current Year  
Increase (Decrease) in provision for Cyber Program  
Claims & Claims Adjustment Expenses Attributable to Insured Events of the Current Year  
$26,244,206  
933,478  
Grand Total all Coverages (SIR, Corridor, Quota Share 10%) at year end  
Unallocated Loss Adjustment expense (ULAE) at year end  
$883,622  
$27,177,684  
$22,179,347  
Total Claims Reserve at Year End  
Page 36  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
The actuary estimated the current portion of total net reserves at the end of FY21 and FY20 to be $6,210,328 and  
$5,848,612, respectively.  
NOTE 13 – Prior Year Adjustments  
At year ending September 30, 2020, a mis-coded entry to deferred inflow and outflow was recorded and not reconciled.  
The prior year adjustment in the amount of $22,020 was made to deferred inflow, outflow, and pension expense as a  
correcting entry to bring the beginning balances current to reflect audited financial statement. Deferred inflows and  
outflows were debited in the amount of $11,010 and pension expense was credited in the amount of $22,020 to balance the  
prior year financial statements to the general ledger.  
NOTE 14 – Covid-19 Pandemic  
In February 2020, the Governor of the state of Washington declared a state of emergency in response to the spread  
of the deadly new virus known as COVID-19. In the months following the declaration, precautionary measures to  
slow the spread of the virus were ordered. These measures included closing schools, cancelling public events,  
limiting public and private gatherings, and restricting business operations, travel and non-essential activities.  
While certain Pool staff began transitioning from a telecommuting format to working in-office during 2021, the  
WCRP’s Board and Committee meetings continued to be held in a virtual format. The last in-person WCRP  
Conference and Board of Directors’ Meeting took place in November of 2019. Both the March 26 and July 30  
Board meetings took place virtually during the Pool’s 2021 year. The last in-person WCRP Executive Committee  
meeting occurred on February 28, 2020, and during the Pool’s 2021 year, the Executive Committee met virtually on  
March 11 and July 9.  
The length of time these measures will continue to be in place, and the full extent of the financial impact on  
Washington Counties Risk Pool is unknown at this time.  
Page 37  
REQUIRED SUPPLEMENTARY INFORMATION  
Washington Counties Risk Pool  
Schedule of Proportionate Share of the Net Pension Liability  
PERS 1  
As of June 30  
Last 7 Fiscal Years  
2015  
2016  
2017  
2018  
2019  
2020  
2021  
Employer's proportion of the net pension liability  
(asset)  
0.007815% 0.008828% 0.006216% 0.005474% 0.004806% 0.005075% 0.005114%  
Employer's proportionate share of the net pension  
liability  
$408,797  
$408,797  
$716,208  
$474,105  
$474,105  
$807,402  
$294,954  
$294,954  
$760,179  
$244,471  
$244,471  
$762,046  
$184,808 $179,175  
$184,808 $179,175  
$62,454  
$62,454  
TOTAL  
Covered Payroll  
$668,344 $745,304 $751,653  
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  
57.08%  
59.10%  
58.72%  
57.03%  
38.80%  
61.24%  
32.08%  
63.22%  
27.65%  
67.12%  
24.04%  
68.67%  
8.31%  
88.74%  
Washington Counties Risk Pool  
Schedule of Proportionate Share of the Net Pension Liability  
PERS 2/3  
As of June 30  
Last 7 Fiscal Years  
2015  
2016  
2017  
2018  
2019  
2020  
2021  
Employer's proportion of the net pension liability  
(asset)  
0.006456% 0.007261% 0.007993% 0.007028% 0.006208% 0.006616% 0.006564%  
Employer's proportionate share of the net pension  
liability  
$230,677  
$230,677  
$572,850  
$365,586  
$365,586  
$644,146  
$277,719  
$277,719  
$760,179  
$119,997  
$119,997  
$762,046  
$60,301  
$60,301  
$84,615 ($653,880)  
$84,615 ($653,880)  
TOTAL  
Covered Payroll  
$668,344 $745,304 $751,653  
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  
40.27%  
89.20%  
56.76%  
85.82%  
36.53%  
90.97%  
15.75%  
95.77%  
9.02%  
11.35%  
97.22%  
-86.99%  
120.29%  
97.77%  
Page 38  
REQUIRED SUPPLEMENTARY INFORMATION  
Washington Counties Risk Pool  
Schedule of Employer Contributions  
PERS 1  
As of September 30  
Last 4 Fiscal Years  
2015  
2016  
2017  
2018  
2019  
2020  
2021  
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  
47,705 38,082 38,083 33,845  
35,961  
36,003  
38,174  
0
35,961  
0
36,003  
0
0
0
0
0
Covered Payroll  
728,221 803,177 775,769 756,032 673,242  
745,304  
4.83%  
751,653  
4.79%  
Contributions as a percentage of covered employee  
payroll  
5.24%  
5.94%  
4.91%  
5.04%  
5.03%  
Washington Counties Risk Pool  
Schedule of Employer Contributions  
PERS 2/3  
As of September 30  
Last 3 Fiscal Years  
2015  
2016  
2017  
2018  
2019  
2020  
2021  
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  
44,017 51,177 56,644 51,376  
59,717  
59,194  
31,045  
0
59,717  
0
59,194  
0
0
0
0
0
Covered Payroll  
584,437 675,866 775,766 756,033 673,242  
5.31% 6.51% 6.60% 7.49% 7.63%  
745,304  
8.01%  
751,653  
7.88%  
Contributions as a percentage of covered employee  
payroll  
Page 39  
Page 40  
Washington Counties Risk Pool – MCAG NO. 0774  
October 1, 2019 Thru September 30, 2021  
REQUIRED SUPPLEMENTARY INFORMATION  
This required supplementary information is an integral part of the accompanying financial statements.  
1.  
Ten-Year Claims Development Information  
The table below illustrates how the WCRP earned revenues (net of reinsurance) and investment income  
compare 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 expense  
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 show 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 12 presents the changes in claims liabilities for the past two years for the  
WCRP’s one type of contract, liability insurance.  
Page 41  
WASHINGTON COUNTIES RISK POOL  
DES Schedule of Expenses  
Schedule T-2  
MCAG NO. 0774  
For Fiscal Years Ended September 30, 2021 and September 30, 2020  
09/30/2021  
09/30/2020  
Insurance Premiums/Reserve Expense  
ULAE Expense  
Adjustment to Prior Years' "1st/2nd Layers' Corridor" Reserves  
Adjustment to Prior Years' "SIR" Reserves  
$19,077,776  
49,856  
193,810  
731,985  
0
$18,536,661  
(71,652)  
(235,075)  
(1,967,593)  
0
Adjustment to Prior Year' "10% (8x2 Layer) Quota Share  
Contracted Services:  
Actuarial  
State Audit Expense  
State Risk Manager Expenses  
Legal Fees  
183,000  
19,204  
24,152  
574,554  
39,412  
4,900  
16,773  
8,257  
24,686  
1,667  
80,200  
15,820  
11,720  
514,517  
30,780  
68,875  
61,014  
5,884  
IT Consultants  
Property Appraiser  
Temporary Staffing Agency  
Independent Adjusting Expense  
Investment Advisor  
Other Consulting Fees  
20,804  
19,845  
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  
932,164  
18,027  
19,946  
9,443  
15,102  
11,887  
65,951  
20,630  
8,352  
1,031,441  
18,601  
19,289  
7,178  
23,250  
56,507  
75,102  
26,493  
7,371  
Utilities/Building Maintence  
Member Services - Training  
Member Services - Scholarships  
Miscellaneous Expenses  
52,391  
242,589  
24,850  
164,115  
44,259  
268,405  
13,734  
99,773  
Total Operating Expenses  
$22,535,479  
$18,783,206  
Page 42  
Washington Counties Risk Pool – MCAG NO. 0774  
Notes to Financials  
October 1, 2019 Thru September 30, 2021  
LIST OF PARTICIPATING MEMBERS  
The following is a list of WCRP membership during the fiscal year 2020-2021  
Adams County  
Benton County  
Chelan County  
Clallam County  
Columbia County  
Cowlitz County  
Douglas County  
Franklin County  
Garfield County  
Grays Harbor County  
Island County  
Lewis County  
Mason County  
Okanogan County  
Pacific County  
Pend Oreille County  
San Juan County  
Skagit County  
Skamania County  
Spokane County  
Thurston County  
Walla Walla County  
Whatcom County  
Yakima County  
Jefferson County  
Kittitas County  
Page 43  
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  
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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 44  
Office of the Washington State Auditor  
sao.wa.gov