CHEYBOYGAN, Mich. - Cheboygan Area Schools will go bankrupt if it continues to spend more than it takes in, Superintendent Dan Bauer told the Cheboygan Daily Tribune in an article outlining the district's budget prospects.

"The biggest problem with our budget over the last few years is that we continued to deficit spend," Bauer said in the article. "While the federal government can seem to do this with no problem, school districts and businesses can't or they will eventually go bankrupt." 

Cheboygan's fund balance has declined from about 12 percent of expenditures in 2005 to an anticipated 5.4 percent at the end of the current fiscal year, Bauer told the Daily Tribune.

Like other districts, Bauer said, Cheboygan's enrollment has dropped, which means less per-pupil state funding. Teacher retirement contributions and health insurance premiums are expected to rise next year, he told the Daily Tribune, and payroll will increase as teachers move up the salary schedule.

Bauer told the Daily Tribune that he has discussed the budget situation with employees and asked for ideas on reductions, and that he plans to do the same with the community at large. The district already offers a voluntary retirement incentive plan and has cut some programs, the Daily Tribune reported; future plans could include renting or selling unused facilities, as well as closing a building.

The Cheboygan Daily Tribune, "CAS budget headaches years in the making," March 3, 2009

Mackinac Center for Public Policy, "The Six Habits of Fiscally Responsible Public School Districts," Dec. 3, 2002