CHICAGO – The Chicago Teachers Union president offered a stinging attack on Gov. Bruce Rauner and Chicago Public Schools leadership Wednesday, amplifying pressure on the cash-starved district as it pleads for more state funding and works to avert a strike.

The address by Karen Lewis was delivered at a City Club of Chicago luncheon amid rising tensions between the union and district during the district's spring break.

The union on Monday rejected an independent arbitrator's endorsement of the district's proposed four-year contract offer that provides raises but phases out the district's coverage of teachers' pension payments. The CTU, which wants more assurance on job protections, rejected the recommendation, paving the way for the union to strike as soon as next month.

"The reality is that the Chicago Board of Education cannot afford to sign a contract with the Chicago Teachers Union. CPS finances have surpassed the danger zone and are now a meltdown. We need revenue solutions to finance public education, not more cuts to the system, which has already been cut well past the bone and now threatens the vital organs," Lewis said, quoting CTU attorney Robert Bloch's comments on the report.

CPS is struggling to close a $1.1 billion deficit in its next budget. The district has trimmed $330 million through cuts and shifting the teacher's pension payment off its balance sheet. Officials are also banking on the reinstatement of a property tax levy for pensions and more state help to solve its budget woes.

The junk-rated district's leaders said this week said they need fresh fiscal 2017 credit lines to remain afloat and don't plan on long-term borrowing in the next fiscal year. The district struggled to sell more than $700 million of debt earlier this year and paid a top yield of 8.5% on the bonds. That deal pushed off about $200 million of near-term debt coming due for budget relief.

A teachers' strike would notably add to the strains that have shaken the district given the potential costs and the negative headlines, both of which could damage the value of outstanding bonds, market participants say.

"Is the city of Chicago headed toward another teachers' strike? Yes," Lewis said, holding out hope for a deal. "While contract negotiations have not yielded the results we want, we remain at the table."

Lewis said the only fix is an infusion of more revenue.

"The district desperately needs stable, sustainable and increasing revenue to finance its operations. Without it, the mayor's handpicked Board of Education cannot afford any contract proposal, even its own," she said.

"The CTU has been clear on its revenue positions: tax the rich, reign in the banks and close the budget gap. Structural solutions require progressive income tax," she said. The union wants the district to press for a tax on Board of Trade related trades, closing corporate loopholes, and to pursue banks involved in the district's now cancelled swaps.

Lewis took a harsh tone with both the district administration, led by Mayor Rahm Emanuel's hand-picked chief executive officer Forrest Claypool.

"Gross mismanagement, the closing of schools, the starving of school budgets, the disruption of education services, the dismantling of special education programs, the revolving door at Central Office …is the rule of the day," she said.

Her harshest words were directed at Gov. Bruce Rauner who she called a "liar" and likened to a recruit of the terrorist group ISIS "because the things he's doing look like acts of terror on poor and working class people." Unions across the state have blasted Rauner for his proposals that are viewed as an attack on labor.

"Rauner lacks the ability to govern. He purchased his seat, conned the people of Illinois and is clueless on how to turn around Illinois to better serve its citizens," she said.

Rauner's spokeswoman Catherine Kelly responded: "This kind of rhetoric has no place in American public discourse and sets a terrible example for our kids."

Rauner has called the district's fiscal request a "bailout" and called the district a candidate for bankruptcy if the state were to enact a statute that would allow it. The state board of education is reviewing CPS finances but the state lacks the authority to take over the district. CPS has argued that its request for the state to help cover pension payments would just bring it in line with what's done for other districts in the state.

Ahead of the address, CPS said it asked the district to agree to binding arbitration. "The best course is for CPS and CTU to join together in Springfield for long term sustainable funding for our schools," the letter says.

The union rejected the request. "Binding arbitration puts our fate in the hand of a single person rather than our nearly 30,000 rank and file members," the union responded.

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