A district is considered to have a deficit fund balance if;

1) Its General Fund balance before reserves is negative, or

2) Other funds have negative fund balances that in total exceed the General Fund balance.

Districts should notify the Michigan Department of Education, State Aid and School Finance Office as soon as they discover a deficit fund balance exists. The notification should be in written form and mailed to: Glenda Rader, Michigan Department of Education, State Aid and School Finance, PO Box 30008, Lansing, MI 48909

Fiscal Year 2008 Deficit District Information

Procedures and forms for Districts with a Deficit Fund Balance

In order to avoid possible interruption in State School Aid funding, a deficit district must obtain Michigan Department of Education approval of a Deficit Elimination Plan.  The plan is an excel spreadsheet composed of multiple separate worksheets.  The first worksheet is an instruction flowchart that will lead the user through the process of completing the plan.  Once the plan is approved, Budgetary Control Reports must be submitted for approval on a monthly basis.  The Budgetary Control Report is the final tab of the spreadsheet, marked "Month1Summary".  The user can add a new copy of that worksheet for each month the district is required to file a Budgetary Control Report.

School District Plan for Eliminating a Deficit

  Section 102 of the State School Aid Act (MCL 388.1702) states that a deficit is to be eliminated "not later than the end of the second school fiscal year after the deficit was incurred."  However, it also grants the superintendent of public instruction the authority to extend this time period if the district is unable to comply.  If you would like to use this form to extend your Deficit Elimination Plan beyond 2 years, please submit a written request that states the extenuating circumstances that cause the district to require additional time.  The request should be addressed to Glenda Rader or Phil Boone, Michigan Department of Education, State Aid and School Finance, PO Box 30008, Lansing, MI 48909.  Please be aware that plans that extend beyond two years are subject to increased scrutiny by the department.

School District Plan for Eliminating a Deficit (extended schedule)