Hillsboro budget staff model $10–12M shortfall; board approves classified retirement incentive to reduce costs

Hillsboro School District 1J budget staff told the board on March 1 that, under current assumptions, the district is modeling a general‑fund structural deficit roughly in the $10,000,000 to $12,000,000 range for next year and described cost pressures including PERS increases and rising liability insurance costs.

At the budget committee presentation, staff said enrollment continues a modest decline and the district has factored in negotiated salary increases; benefits costs remain a large portion of total salary expenditures and pension costs (PERS) pose a growing challenge. The presenter said the district will update models with February and March numbers and bring proposed reduction options to the April budget session.

As one near‑term measure to reduce ongoing costs while avoiding involuntary layoffs, the board voted later in the regular session to approve a memorandum of understanding with Hillsboro Classified United establishing a voluntary retirement/separation incentive. District staff explained the program parameters during the work session and presented final language after the union ratified the agreement.

Key terms approved by the board include: a capped classified program (initial cap of 20 classified staff with subcaps for 12‑month and less‑than‑12‑month employees and district discretion for additional slots); a one‑time taxable cash payment of $8,500 for less‑than‑12‑month classified employees and $10,000 for 12‑month classified employees; optional district contributions to health insurance comparable in value to the cash payment; and rehiring restrictions for participants (proposed rehiring moratoria described at the presentation). The district said payment would occur July 20, 2026, and that health contributions, where chosen, would continue through 09/30/2027.

During the full‑board vote the motion carried on roll call with all directors present voting "Aye." Board members and union representatives acknowledged the trade‑offs: the incentive could yield savings and make some layoffs unnecessary but also risks loss of institutional knowledge and experience. Union leaders urged continued attention to replacements, mentorship and workload.

Next steps: district staff will track uptake and return to the board with estimates of savings and potential staffing impacts; the budget committee will present detailed reduction options at the April session and the board will consider adoption of the full budget at the June hearing.