David Douglas board hears caution on possible PERS bond as district faces up to $1 million hit
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Summary
District staff described a proposed coordinated analysis of a possible pension obligation bond; board members voiced caution because of past losses and uncertain market benefits. Staff estimated the PERS side-account expiration could add about $1,000,000 to next-year costs and said the district will respond to a statewide survey without committing to issue bonds.
District staff briefed the board on a statewide broker-led analysis for a potential pension obligation bond and warned that the district could face a higher PERS rate if its side account expires earlier than expected.
Pat (district staff) told the board the bond broker, Piper Sandler, suggested an 18–24 month market analysis to determine whether issuing a pension obligation bond would be advantageous and that the analysis typically costs "$35,000 to $50,000," to be split among participating districts. He said smaller per-district costs are possible if many districts join the coordinated effort.
The board was reminded of the district’s previous experience with pension bonds and the risk that a depleted side account would require the district to pay a higher base PERS rate. Pat said the district is "anticipating it could add up to 1000000 dollars" to the budget depending on when the side account runs out and emphasized the uncertainty in that estimate.
Several directors pressed for caution. One said the district "made a bad bet, lost money, and we're still paying for that," and another asked for alternatives to the bond such as using district cash or selling assets to fund a side account. Pat responded that options exist—holding cash in a side account would avoid bond payments—but added the district is "not cash rich," and selling existing assets likely would not generate enough funds to make a material difference.
Board members also asked about the mechanics and the commitment entailed. Staff repeatedly emphasized that answering a statewide survey to express interest would not bind the district to issue a bond; a future affirmative board action would be required to proceed.
What’s next: the board agreed the district will participate in the survey process (answering "yes" or "maybe") to receive analysis results and will return to the board if the market analysis or recommended terms change the district’s view on issuing a bond.