FY25 WA state tort payouts bigger than FY23+FY24 combined — $2.5B in pending claims, liability account facing $569M shortfall
Washington state tort payouts from the Liability Account reached approximately $502 million in FY25 alone (year ending June 30, 2025) — more than the prior two fiscal years combined per the AG’s office. Pending claims liability is estimated at $2.5 billion. The Liability Account faces a projected $569.5 million shortfall this biennium and $1.3B-$1.4B for 2025-27, with HB 2706 (2026) proposing a claims commission to adjudicate pre-2020 DCYF tort claims at lower cost.
What this record is
This is an aggregate pattern case documenting Washington state’s tort liability trajectory through the Liability Account. It pulls together: (1) the FY25 escalation revealed in June 2025 press reporting; (2) Sen. Gildon’s January 2025 compilation of four-year payout data; (3) the Department of Enterprise Services 2026 supplemental budget request quantifying the structural shortfall; (4) the Washington Research Council analysis of projected biennial shortfalls; and (5) the three legislative vehicles active in the 2025-26 biennium (SB 5144, SB 6239, HB 2706).
Individual cases in this registry document specific failures (see Related Cases below). This record documents the pattern, the fiscal trajectory, and the policy responses in motion.
FY25 escalation — the lead number
Per Spokane Public Radio (Jake Goldstein-Street, June 17, 2025) and Governing (June 18, 2025), as of June 13, 2025 — with about two weeks left in fiscal year 2025 — Washington state had paid out approximately $502 million in tort settlements and judgments through the Liability Account.
Scott Barbara of the Washington Attorney General’s Office characterized the trajectory directly: “FY 2023 was a record. FY 24 is a record. FY 25 is going to be bigger than FY 23 and FY 24 combined.”
The multi-year progression:
| Fiscal Year | Tort payouts | Source |
|---|---|---|
| FY18 | ~$72M | Spokane Public Radio / Governing |
| FY24 | ~$281M | Spokane Public Radio / Governing |
| FY25 (through June 13, 2025) | ~$502M | Spokane Public Radio / Governing |
Defense costs are climbing in parallel. DES legal defense costs were approximately $50M in FY24 and $56M+ in FY25, per the same reporting. There have been more than 3,800 tort claims filed against the state since July 2024.
Pending liability — the $2.5B overhang
Beyond claims already paid, an actuarial estimate from June 2024 puts pending claims liability at $2.5 billion. The driver, per state officials and HB 2706 findings, is largely pre-2020 conduct at DCYF.
Per Allison Krutsinger, DCYF Public Affairs Director, nearly two-thirds of DCYF claims paid in FY24 involved incidents before 2000. The cases reflect long-tail liability from historical foster care and child welfare failures rather than current agency performance — though that distinction does not change the fiscal exposure.
Liability Account shortfall — DES 2026 budget request
The Liability Account pays tort claims from premiums charged to state agencies. With payouts spiking, the account is structurally underfunded. The Washington Research Council (September 16, 2025) summarizes the DES 2026 supplemental budget request:
- 2023-25 biennium shortfall: $569.5M (DES one-time appropriation request)
- 2025-27 projected shortfall (best case): $1.308 billion
- 2025-27 projected shortfall (worst case): $1.403 billion
- 2027-29 projected shortfall (best case): $2.074 billion
- 2027-29 projected shortfall (worst case): $3.261 billion
The 2025-27 enacted biennial budget already imposed $330.8M in Liability Account premiums on state agencies, with DCYF paying $205.8M of that total. Premiums get baked into agency operating budgets, which means tort liability competes with program funding within each agency’s appropriation.
Gildon four-year breakdown — agencies of $1M+ payouts
Sen. Chris Gildon (R-Puyallup), Senate Republican budget leader, released a compilation in January 2025 from Office of Risk Management data. Over the four years ending January 2025:
| Agency | Payouts ≥ $1M |
|---|---|
| Department of Children, Youth and Families (DCYF) | 151 |
| Department of Social and Health Services (DSHS) | 14 |
| Department of Transportation (DOT) | 10 |
| Department of Corrections (DOC) | 9 |
| Washington State Patrol (WSP) | 3 |
| Department of Natural Resources (DNR) | 2 |
| Parks and Recreation Commission | 2 |
| Washington State University | 2 |
| Office of the Attorney General | 1 |
| Centralia College | 1 |
| Seattle Central College | 1 |
DCYF’s 151 payouts represent approximately 75% of all payouts over $1 million in the four-year period, per the Senate Republican Caucus.
Legislative responses — three vehicles, none enacted
SB 5144 (Gildon, 2025). Introduced January 7, 2025. Requires joint hearings of relevant policy and fiscal committees within 12 months of any final judgment or settlement of $1 million or more paid from the state Liability Account, with an AG report on facts, context, and policy modifications. Referred to Senate Law and Justice Committee. Gildon’s framing: aggregate liability disclosure tied to corrective action should be a statutory floor, not dependent on opposition caucus data requests.
SB 6239 (2025-26 session). Senate Bill Report dated January 29, 2026. Requires JLARC review of the arbitration requirement and report claims, lawsuit, and payout data to the Legislature by December 31, 2032. Heard in Senate Ways and Means.
HB 2706 (2026, Ormsby by request of OFM). Bill text. Creates a claims commission within the Office of Administrative Hearings to adjudicate pre-2020 DCYF tort claims, with the explicit finding that “the state’s liability account is facing a projected shortfall of $1.3 billion to $1.4 billion in the 2023-25 fiscal biennium, driven primarily by pre-2020 tort claims involving the Department of Children, Youth, and Families.” The legislative theory: a specialized adjudicative process for the long-tail pre-2020 DCYF cases reduces both payout amounts and defense costs versus jury trials in Thurston County Superior Court.
Why it’s in the registry
The aggregate is a governance finding distinct from any single case. Three observations matter:
First, the trajectory. FY18 to FY25 is roughly a 7x increase in single-year tort payouts. FY25 alone exceeded the prior two fiscal years combined. This is not a one-time spike; it is a sustained acceleration.
Second, the concentration. DCYF accounts for roughly three-quarters of $1M+ payouts and is the principal driver of pending liability. The fiscal exposure is concentrated in one agency’s historical conduct — much of it pre-2000 — but flows through to the entire state operating budget via Liability Account premiums.
Third, the structural disclosure gap. No routine reporting obligation requires agencies to surface large tort payouts, connect them to corrective action, or disclose aggregate exposure in a consistent format. The Legislature learns about the trajectory through press reports (the FY25 figure surfaced through Spokane Public Radio, not a state filing), opposition caucus compilations (the Gildon 2025 release), and budget cycle disclosures (the DES 2026 request). HB 2706 addresses the pre-2020 DCYF backlog as a fiscal triage problem. SB 5144 and SB 6239 address disclosure. None directly address the agency conduct that drove the historical claims.
Reform implication
Three reforms apply.
Aggregate liability disclosure (SB 5144 / SB 6239 framework): mandatory legislative reporting of $1M+ payouts within a fixed period, with AG context and required corrective action plans. This addresses the information gap but does nothing to prevent payouts.
Independent inspector general (cross-agency): an IG with statutory authority to investigate management failures before they become $1M+ tort payouts, and to publish findings, would provide continuous upstream oversight rather than reactive post-payout hearings.
Claims process reform (HB 2706): a specialized adjudicative track for pre-2020 DCYF claims may reduce per-claim costs and shorten resolution time. This is a fiscal response to a defined backlog rather than a structural reform to agency conduct.
The honest read: HB 2706 may pass because it has OFM behind it and a defined fiscal problem to solve. SB 5144/SB 6239 are sponsor-driven and face the usual partisan friction. An independent IG would require bipartisan momentum that does not currently exist. The Liability Account will continue absorbing the trajectory until one or more of these mechanisms takes hold. See [reform: independent_inspector_general], [reform: agency_liability_disclosure].
Related cases in this registry
- WA-2024-DSHS-SCC-WATER — One of the 14 DSHS payouts; $7.325M class-action settlement over contaminated drinking water at the Special Commitment Center.
- WA-2024-OSPI-IDEA — Federal settlement with OSPI; compensatory education costs will flow to school districts from a systemic IDEA compliance failure.
- Other DCYF-specific cases involving foster-care and child-welfare failures are documented separately; the 151 DCYF payouts are the largest aggregate category and the dominant driver of pending liability.
Open follow-ups
- Final FY25 figure (year-end June 30, 2025) not yet published; the ~$502M number is as of June 13, 2025.
- Office of Risk Management underlying dataset not publicly posted in machine-readable form.
- HB 2706 committee disposition and 2026 supplemental budget appropriation outcome.
- SB 5144 and SB 6239 floor action status.
- DCYF current-year (post-2020) tort claim trend separated from pre-2020 long-tail not separately published.
Reform implication
This is the largest aggregate liability pattern in Washington state history that has been documented in public sources. The FY25 single-year total (~$502M as of mid-June 2025) exceeded the prior two fiscal years combined per the AG's office. The actuarial estimate of pending claim liability was $2.5 billion in June 2024. The Liability Account, which pays these claims, is structurally underfunded — DES projects $1.3B-$1.4B shortfall this biennium and $2.0B-$3.3B by 2027-29 absent intervention.
No statutory mechanism currently requires agencies to disclose, explain, or respond to large tort payouts on a systematic basis. The Legislature learns about major payouts when individual cases surface in media or when legislators independently request data from the Office of Risk Management. The Gildon compilation (January 2025) was the first publicly available accounting; the FY25 escalation became public through June 2025 press reporting and the DES 2026 budget request.
Three reform threads run through this case. SB 5144 (Gildon, 2025) proposes joint legislative hearings within 12 months of any $1M+ payout. SB 6239 (2025-26) proposes JLARC review and routine reporting through 2032. HB 2706 (2026, Ormsby by request of OFM) proposes a claims commission within OAH to adjudicate pre-2020 DCYF claims at lower cost. None of these address the underlying agency conduct that drives the payouts. An independent inspector general with cross-agency authority to investigate management failures before they become $1M+ tort payouts remains the most direct structural response. See [reform: independent_inspector_general], [reform: agency_liability_disclosure].
Sources
- Washington state lawsuit payouts skyrocket to more than $500M in past year“FY 2023 was a record. FY 24 is a record. FY 25 is going to be bigger than FY 23 and FY 24 combined.”
- Washington State's Legal Liability Costs Are Soaring“Washington state agencies have paid more than $500 million in lawsuit settlements and judgments in the current fiscal year ending June 30 — more than the prior two fiscal years combined.”
- State liability account shortfall could grow to more than $1.3 billion by end of 2025-27“The Department of Enterprise Services (DES) is requesting a one-time appropriation of $569.5 million to backfill the Liability Account by the end of the 2023-25 biennium, plus ongoing premium increases. Without action, DES projects shortfalls of $1.308 billion to $1.403 billion for 2025-27 and $2.074 billion to $3.261 billion for 2027-29.”
- HB 2706 — Concerning the resolution of certain tort claims against the state by establishing a claims commission“The state's liability account is facing a projected shortfall of $1.3 billion to $1.4 billion in the 2023-25 fiscal biennium, driven primarily by pre-2020 tort claims involving the Department of Children, Youth, and Families.”Primary → No archive copy yet
- Half billion in state agency settlement payouts backdrop for WA GOP oversight bill“In looking over the last two years alone, we see the state paying out a little over $500 million. That's a half billion because of bad behavior by state employees.”
- Half billion in state agency settlement payouts backdrop for WA GOP oversight bill
- $ave Washington — Agency mistakes are costing taxpayers hundreds of millions“State government has paid out more than $500 million in the past two years alone due to claims and judgments, and the 2025 fiscal year is on pace to be even more expensive. Nearly 200 claims totaling $1 million or more apiece have been paid in the past four years alone, and 3/4 of those are associated with the state Department of Children, Youth and Families.”
- SB 5144 — Bill tracking: Providing oversight of state agency tortious conduct through legislative hearings
- SB 6239 Senate Bill Report - Senate Committee on Ways & MeansPrimary → No archive copy yet