State auditor finds Central Washington PUD insurance trust failed solvency requirements in 2025

A Central Washington trust insuring employees across seven public utility districts was found to have not met state-required solvency requirements at the end of 2025, which may jeopardize the health, vision and dental insurance of its employees.

The Central Washington Public Utilities Insurance Program Trust — composed of seven PUDs including Douglas County PUD, Grant County PUD and the Okanogan County PUD — did not have "sufficient cash and investments at year-end to cover 16 weeks of medical program expenses and eight weeks of vision, dental and prescription program expenses," according to findings from the Washington State Auditor.

The trust was formed in 1982 and contracts with commercial insurance carriers to offer a variety of insurance types to the districts' employees, according to the auditor's findings. One commissioner from each of the seven PUDs joins a board of trustees which oversees the trust.

State law requires that the trust's program have enough funding for 16 weeks of medical program expenses and eight weeks of vision, dental and prescription program expenses.

By the end of 2025, the trust's net position had decreased by nearly $2 million, or about 87%, with operating expenses reaching $6.5 million versus revenues of $5.2 million.

"The decrease in net position is attributable to medical and prescription drug cost inflation and an increase in utilization and large claims," according to the trust's financial analysis.

The state's audit found that the trust's program reserves were below the required amounts, which "increases the possibility that the Pool would not be able to cover its members’ unpaid claims," according to the auditor's findings.

Tod Ayers, the board's chair, said in a statement that the program reserves the auditor found were insufficient are only meant to ensure the fund has enough to "to pay outstanding claims for services already received but not yet submitted for payment at year-end, in the event the Trust were to cease operations."

The trust has a "contingency reserves" in addition to their program reserves which it can use to pay for any ongoing claims and administrative payments, according to Ayers.

Ayers said that the trust continues to meet its claims obligations and the auditor's finding does not reflect any unpaid claims or an inability to pay current obligations.

The pool also failed to notify the state Risk Manager that it would not meet these requirements before the end of the 2025 fiscal year, as it is meant to. The pool thought it had when it submitted its annual report.

"The Trust has historically maintained reserve levels sufficient to meet applicable solvency requirements; however, increased claims activity and associated costs contributed to the reserve shortfall identified during the audit period," said the trust as part of its response included in the auditor's report.

To address the issue, the trust has adopted a new "reserve methodology" and added "an additional three percent funding component in the 2026 premiums to strengthen program reserve," according to the auditor's report.

The board said in the auditor's report it would continue to monitor its claims, funding levels and reserves.

On whether PUD employees would need to pay more in premiums to cover the cost of an increase in claims, Ayers said that the board has trustees have not yet adopted 2027 premium rates and said an increase in the trust's overall premiums does "translate directly into the same increase for employees."

Participating PUDs pay the substantial majority of the cost of coverage, with employees contributing a relatively small portion of the total premium," he said. "The amount an individual employee pays depends on the medical plan selected and enrollment tier."

This story was updated Monday afternoon.

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