According to the Office of Financial Management (OFM), the Department of Enterprise Services (DES) estimates that the state liability account will have a cash deficit of $580 million at the end of the current fiscal year (June 30, 2025).

Even though the Legislature knew of the problem, it did not appropriate funds in the operating budget to backfill the account.

The liability account (also known as the self-insurance liability account, or SILA) is used to “pay legal liabilities and defense costs of the state resulting from tortious conduct.” State agencies pay premiums to the account based on actuarial studies of projected liabilities. The account pays up to $10 million per claim.

As the chart shows, indemnity payouts have increased dramatically in recent years, particularly from cases involving the Department of Children, Youth, and Families (DCYF). (Prior to the creation of DCYF, children and family services and the juvenile rehabilitation program were administered by the Department of Social and Health Services.)

DES reported, in its 2025–27 operating budget request, that it needed $159.3 million to backfill the liability account:

The actuary study we received last biennium had recommended DES set SILA premium funding at $325M to cover anticipated expenditures for the 2023­25 biennium. However, SILA expenditures for FY24 alone have already exceeded $325M. The number of claims, as well as the associated costs, have been substantially higher for FY24 than was expected. As of Fiscal Month 12, the SILA account is at a net loss of $159.3M.

Consequently, former Gov. Inslee proposed appropriating $160.0 million from the general fund–state (GFS) to the liability account in FY 2025 to keep it out of deficit.

The Senate 2025 supplemental budget, as passed by the Senate March 29, would have addressed the projected shortfall by increasing FY 2025 GFS appropriations for agency self-insurance liability premiums by $391.7 million.

But there was no backfill in the House-passed budget or in the budget passed by the Legislature on April 27. (The Legislature did appropriate $31.0 million from the GFS to pay for four specific settlements that exceeded the $10 million threshold.)

The lack of a backfill is strange, given that OFM authorized—on April 15—the liability account “to be in a temporary cash deficiency of up to $580 million.” OFM’s letter notes, “Claims in the 2023-25 biennium are currently estimated to be more than $750 million, resulting in an estimated cash deficit of up to $580 million.” According to OFM, it will renew the deficit authorization at the end of the fiscal year, assuming the account is still in deficit.

Certainly, the amount of the deficit could change. But this is a big problem that the Legislature has kicked down the road.