The federal government is being asked to take over a Manitoba First Nation where teachers say their pay cheques have bounced, retirees can't get access to their pensions and those who are ill can't get disability benefits.

The Manitoba Teachers' Society said Ottawa should appoint a third-party manager to address chronic financial problems at the Sandy Bay reserve.

Lawyers for the union have submitted a detailed package to Aboriginal Affairs and Northern Development Canada to support the request.

"The situation for our members in Sandy Bay has become worse than intolerable," society president Paul Olson said Tuesday.

The union alleges the First Nation has defaulted or delayed paying its teachers many times over the last 18 months, forcing some to miss mortgage and loan payments.

The reserve has been deducting pension contributions, insurance and employment premiums, but Olson said that money hasn't been passed on to insurance companies or to the Canada Revenue Agency, leaving teachers without coverage.

"All the deductions have been made. Where the money went after that, is anyone's guess. We're hoping that third-party management might reveal that and actually fix the problem."

The 55 teachers on the reserve are owed a total of at least $737,000, Olson said.

To make matters worse, conditions at the school are deplorable with broken fire alarms and bathrooms without toilet paper, he added.

Mike Beaulieu, whose father founded the Sandy Bay school, has been teaching at for 23 years, said the situation is frustrating and heartbreaking.

"The situation is deplorable," he said. "And it appears to be no solution in sight, even though many times it was proposed."

Every payday, he said, speculation starts about whether cheques will actually be issued.

Beaulieu said payment has been delayed many times and teachers were told if they wanted to be paid on time, some of them would lose their jobs.

"I have trouble getting out of bed in the morning to show up there. The atmosphere in the school, the promises that are broken, the uncertainty," he said, his voice shaking with emotion.

"If it wasn't for the students in my care, I don't know if I could stay there."

He said it's been hard to manage on a personal front as well.

"Few times we've had only half a cheque a few days late. And then another half cheque later," he said. "Over Christmas last year, some people's cheques had bounced. [It] was one of those, 'here's your cheque and hope we get the money to the bank in time.'"

He said it's also affecting the students. "There is a lot of stress in the school. A lot of tension," he said. "Bottom line is, the chief and council aren't forwarding the money that should be going to the school."

Chief Russell Beaulieu told CBC he will hold a news conference Wednesday.

He said he was caught off guard by MTS calling for Sandy Bay to be put under third party management.

Marlene Lavasseur said she couldn't afford to stay. The special education teacher quit her job last summer after two of her pay cheques bounced. Many more were delayed making it hard for her to pay her rent, she said.

"It wasn't easy having to leave," she said. "I had to make that decision just so I could survive," said Lavasseur, who is supporting two children and three grandchildren.

"It was hard for me knowing that I wasn't going to be able to see these students again. But it was that or put myself in danger with my health and the stress levels I was experiencing."

Sandy Bay First Nation is currently listed as being under co-management, which means it has hired an adviser to help with its books. But the teachers' union said it's been told that the reserve is "between co-managers" at the moment.

with files from CBC's Jillian Taylor