The two funding sources are not interchangeable. The operating millage supports the district’s day-to-day operating budget. The sinking fund may be used only for eligible capital needs.

Cheboygan Area Schools uses different funding sources for different types of expenses. The operating millage, sinking fund, and 2024 bond are not interchangeable. Each has its own purpose and rules for how the money may be used.

SUMMARY:

• • • Operating Millage = Runs the schools

    • Sinking Fund = Maintains facilities and assets

    • 2024 Bond = Completes the approved, typically more large scaled, projects

Cheboygan Area Schools uses different funding sources for different types of expenses. The operating millage, sinking fund, and 2024 bond are not interchangeable. Each has its own purpose and rules for how the money may be used.

Question #1:  Non-Homestead Operating Millage Replacement

• • • If you own and live in your primary residence, the operating millage will have $0 tax impact.

    • It only applies to non-principal-residence and other non-exempt property. If this applies, use the online tax calulator provided to find your tax impact.

Question #2:  Sinking Fund Millage Replacement

• • • Unlike the operating millage proposal, the sinking fund applies to taxable property throughout the district, including primary residences.

    • Cheboygan’s current sinking-fund rate has been automatically reduced over time from 0.5603 mill to 0.5290 mill.

    • The replacement proposal would authorize the original 0.5603-mill rate.

      • • Example impact:  On a property with $100,000 in taxable value = $56.03 per year / approximately $3.13 more per year than the current sinking fund rate.

• Michigan law can automatically reduce a voter-approved millage rate when the value of existing property rises faster than inflation. This limits how quickly the overall tax revenue generated by the millage can grow. 

• As a result, Cheboygan Area Schools’ operating rate has been reduced from 18 mills to 17.6589 mills. The proposal would allow the district to return to the 18-mill level if needed during 2027 and 2028, but never exceed it.

• Revenue from the non-homestead operating millage provides approximately $8 million annually, accounting for nearly 23% of Cheboygan Area Schools’ annual operating budget. The district would continue collecting this revenue at a reduced amount if Question #1 is not approved. 

• Approval would restore the district’s ability to levy the full 18 mills, providing approximately $156,000 in additional operating revenue in 2027 and protection against further Headlee reductions through 2028.

The official ballot language estimates that the proposal would provide approximately $156,319 in operating revenue in 2027. 

• The district is trying to recapture the Headlee rollback revenue we have recently lost. If approved, we estimate that this would generate approximately $150,000 over the next two years, which is a significant amount of money for our district, particularly because we have been deficit spending for the past two years.

• If voters do not approve the Headlee Override, the district would be unable to restore its non-homestead operating millage to the full 18 mills and would receive approximately $156,000 less in 2027, which the state would not replace. Because these funds support day-to-day operations—including staffing, classroom programs, supplies, and services—the district would need to account for the shortfall in its annual budget.

The district’s current authorization has been reduced to 17.6589 mills. Based on that rate, 0.3411 mill would restore the levy to 18 mills, while the remaining authorization would protect against additional Headlee reductions in 2027 and 2028. Under Michigan law, the district could not levy more than 18 mills for operating purposes.

• Cheboygan’s current sinking-fund rate has been automatically reduced over time from 0.5603 mill to 0.5290 mill.

• The replacement proposal would authorize the original 0.5603-mill rate.

• Cheboygan Area Schools already has a sinking fund, but the current authorization is expiring.

• The proposal would replace the district’s existing sinking fund when it expires, extending this dedicated funding source for another 10 years, from 2027 through 2036.

• The 2024 bond provides borrowed money for a specific list of voter-approved projects, including improvements at East Elementary.

• The sinking fund provides ongoing, pay-as-you-go funding for other eligible repairs and replacements. The district cannot use both sources for the same expense.

Sinking-fund revenue is restricted to eligible capital purposes. It cannot be used for regular expenses such as:

• • Employee salaries and benefits

  • Classroom programming

  • Utilities

  • Other ordinary day-to-day operating expenses

This is why the sinking fund and operating millage are separate funding sources.

Technology

• Much of the district’s technology is approaching the end of its useful life. The district anticipates needing approximately $500,000 in technology replacements over the next couple of years.

Safety & Security

• Eligible security improvements could include cameras, door-lock systems, protective safety film, and other school security upgrades.

Transportation

• The district operates a fleet of approximately 15 school buses that will need to be methodically replaced over time. Each new school bus now costs more than $150,000.

Facilities

• Sinking fund revenue could also support eligible building repairs and improvements, site improvements, building systems and infrastructure, and other capital needs included in the ballot proposal.

The current sinking fund would expire after 2027, and the district would lose approximately $500,000 annually in dedicated funding for qualifying facility, safety, technology, and transportation improvements. Those projects would need to be delayed, reduced, or paid for from other sources—including the district’s operating budget, which also supports staffing, classroom programs, supplies, and services.