UPDATED 06/15/11 7:09 p.m.

CHICAGO (CBS) — The Chicago School Board has voted to cancel a promised 4 percent raise for teachers next year, on the grounds that there is not enough money in the budget.

As CBS 2 Chief Correspondent Jay Levine reports, the decision came in a special meeting of the board Wednesday.

The pay raise for next year is mandated by the current contract under which the teachers are working.

But CPS is facing a $712 million budget shortfall, and voted that it cannot afford to keep the pay raises. The 4 percent raises for the teachers account for nearly $100 million of that shortfall.

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In 2007, under Mayor Richard M. Daley and then-CPS chief executive officer Arne Duncan, teachers signed a contract that granted them the raises.

But now, under a new leadership – Mayor Rahm Emanuel and schools CEO Jean-Claude Brizard, the mission is all about slashing costs and getting more done in the classroom.

“I have the utmost respect and admiration for teachers and all that they do for our children,” Brizard said in a statement. “But today’s board action was taken in response to the massive financial crisis facing our system.”

“I commend the Board for their courage in facing the hard-truth of a $712 million deficit,” Emanuel said in a statement. “I appreciate their vigilance in minimizing cuts to our children’s classrooms and their commitment to ensuring the public schools are accountable to Chicago’s taxpayers.”

Chicago Teachers Union president Karen Lewis said the mission should not mean paying teachers less than they are worth.

“The city did not get into this financial mess by overpaying teachers and paraprofessionals, and engineers and lunchroom ladies,” Lewis said. “Please, I want you to really think seriously when you make this decision today.”

Lewis was speaking in front of the seven School Board members, including new Board president David Vitale, and Brizard. She fought unsuccessfully to persuade the board to keep the teachers’ contract as is.

“It would make no sense for this brand new board to shortchange the children who need a quality teacher in every classroom by voting down teachers’ raises,” Lewis said, “and in terms of salary, CPS ranks 71st in salary for high school teachers, and 38th in salary for elementary teachers in this state.”

Teachers have gotten contractual 4 percent pay hikes the past four years. Administrators and other non-union employees haven’t seen raises in two years, and were forced to take as many as 15 unpaid furlough days this year.

And, most teachers making an average of $69,000 a year would still be getting so-called step or seniority raises of $2,100 to $2,800 dollars a year, even if the raise specified in the contract was canceled.

The new cutbacks come at a time when Emanuel and Brizard want to add at least an hour to the school day.

Parents stood up for teachers too. Chicago resident and CPS father Ronald Jackson had some tough words for Brizard.

“Mr. Brizard, come to the school that my daughter goes to, without your suit and tie. Just come up there unannounced, and you will see what these teachers go through, so I say before you decide to say that we don’t have the money, the money is in that budget,” he said.

A CPS finance official later told the board that regardless of the pay raise vote, 74 percent of CPS teachers are expected to get step increases of 3 to 5 percent in their salaries in this upcoming school year.

With the salary hikes voted down, fuel has been added to the fire in contract negotiations with the teachers’ union, especially as teachers will soon be required to put in more hours. A bill that was just signed by Gov. Pat Quinn on Monday calls for the extension of the school day and the school year.

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