Teachers at Buena Vista School District have voted to work without pay for a week.
They hope the district and the state can figure out a way to keep the doors open through the end of the school year.
The Saginaw area district lost its state aid after officials discovered the school system accepted money for a program it no longer operated.
The state is withholding the district's March, April, and May payments - leaving the already-distressed district without money for payroll.
Joe Ann Nash is President of the district's teachers' union.
Nash blames gross financial mismanagement by the district's administration - along with cuts in school funding by Governor Snyder.
"As teachers in the Buena Vista School District, we find ourselves, along with our students, pawns in a high-stakes game that we did not choose to be a part of," Nash said during a conference call arranged by the Michigan Education Association.
State officials said last week they are legally obligated to withhold the state aid, and it's up to the district to find a way out of the jam.
The district has about 400 students and 27 teachers. That's almost half the district's size just a few years ago.
The school system has been losing enrollment rapidly, and many of its schools are failing to meet federal and state benchmarks.
The last time a district shut down before the end of the school year was in 1993, when Kalkaska Public Schools shut down two and a half months early, after voters rejected an operating millage. Interlochen Public Radio has more on that story here.
Since then, state funding of schools has changed, putting distribution of property taxes into state hands. But years of state funding cuts have left many districts in a continuous budget-cutting mode.