Hillsboro: School Board Approves Pension Bond Option with 5.25% Cap and $14.5M Land Sale
- The Hillsboro School District board voted 6-0 on Oct.
- One of the board's seven members was absent, the video shows.
- The board also approved its yearly state compliance report that night, again 6-0.
The Hillsboro School District board voted 6-0 on Oct. 27 to let district officials sell pension bonds through a statewide pool of school districts, but only if the borrowing cost is 5.25% a year or less. In a separate 6-0 roll call, the board approved selling about 30 acres of district land in Cornelius to Lennar Northwest, LLC, for $14.5 million, according to the district’s meeting video.
One of the board’s seven members was absent, the video shows. The votes settle the two items Focus Hillsboro previewed on Oct. 23, and the board packet sets out the conditions attached to each one.
Three votes and the strings attached
The board also approved its yearly state compliance report that night, again 6-0. The table below lists each item with the condition and deadline the packet gives.
| Item | Vote | Key condition in the packet | Next step or deadline in the packet |
|---|---|---|---|
| Pension bond resolution | 6-0 | Bonds may not be sold at a true interest cost above 5.25% a year | Had to be enacted by Nov. 13, 2026, for the pooled option to proceed |
| Sale of about 30 acres to Lennar Northwest | 6-0 | Sale agreement required board approval within 90 days of its effective date | No closing date listed |
| 2025-26 Division 22 assurances | 6-0 | Acknowledges postponing the K-12 science adoption | Postponement puts the district out of compliance in 2026-27, to be reported in September 2027 |
The first of those conditions, the 5.25% limit, governs whether pension bonds can be sold at all.
A 5.25% cap, with rates near 7%
A pension obligation bond is borrowed money that a district deposits at PERS, Oregon’s Public Employees Retirement System. The resolution says this can lower costs if returns on the deposit beat the interest, and that the bond “shall not be sold at a true interest cost of more than 5.25% per annum.” True interest cost is the overall yearly borrowing rate, counting when each payment falls due.
Chief Financial Officer Scott Harrison told the board earlier in the meeting that rates on this kind of bond were close to 7%, according to the meeting video. He said the resolution does not mean the district will borrow, and that staff would not be authorized to act if rates stayed at 7% or came in at 5.5%.
Harrison also told the board the authority would last through this school year, according to the video, and that if rates did not reach the cap, he could ask the board next year whether to renew it. The resolution text in the packet does not list an end date; it says it takes effect on passage.
Within the cap, the resolution lets the superintendent or chief financial officer set the final amount, interest rates and payment schedule “without further action by the Board.” The borrowing is limited to what is needed to cover the district’s share of PERS debt, estimated at $247,610,926 as of Dec. 31, 2024, plus issuing costs.
Why pension costs are expected to climb
The staff report says one of the district’s PERS side accounts expires in 2027. A side account is a lump sum held at PERS that lowers the district’s monthly pension rates, and Harrison told the board the district’s side accounts had earned more than $54 million through 2024, the latest figures he had, according to the meeting video.
He said a second account should run until about June 2034. When the 2027 account expires, he said, the district’s PERS costs would likely rise by about four to six points, a range he said was still being analyzed. He estimated the district’s PERS cost at about 30% of payroll in 2027-28, while noting that payroll growth, the exact expiration date and investment returns could change it.
The risk study in the packet, by ECONorthwest, put the chance of a net savings at 75.7% for 20-year bonds at a 5.25% true interest cost. The staff report adds that “future savings are not guaranteed.”
Land the district bought in 2002
The land sale was a separate item. The district bought about 41.09 acres at 305 SW 345th Ave. in Cornelius on or about Jan. 4, 2002, a packet resolution says, and declared about 30 acres surplus on April 22, 2025.
Harrison and Kyle Hayden of Hayden Group negotiated the $14.5 million price, the staff report says, and the district will keep about 10 acres. The district entered into the agreement with Lennar Northwest on Oct. 5, 2026, and the agreement required board approval within 90 days of its effective date.
A resolution attached to the item in the packet, with its adoption date left blank, would authorize the superintendent or the district’s financial officer to sign deeds and other closing papers. The packet does not say how the district plans to use the money or describe Lennar’s plans for the site.
A science adoption put off
Just before the land and pension votes, the board approved the district’s 2025-26 Division 22 assurances, the yearly report the Oregon Department of Education requires on whether a district meets state school standards. The staff report says the district was “fully in compliance” in 2025-26.
The same report looks ahead. It says postponing a K-12 science adoption in 2026-27 “will bring Hillsboro School District out of compliance,” and that this will be reported in the September 2027 assurances. The agenda’s sample motion ties the postponement to “financial reductions.”
The board’s next meetings are a work and regular session on Nov. 17, 2026, and another on Dec. 8, 2026, according to the agenda.
Top image: Illustrative image, 2022: homes under construction in a new subdivision in Wasaga Beach, Ontario (not the Cornelius site). Photo: Transportfan70, CC0, via Wikimedia Commons (cropped).
