The Chicago Board of Education last week voted to rescind a planned 4% teachers’ raise in the district’s next $6.5 billion budget as it struggles with a looming $712 million deficit.

The raise was scheduled as part of the final year of the current contract between the district and the Chicago Teachers Union. Officials said the district couldn’t afford the $100 million price tag.

The district has plans to spend about $35 million on separate step increases many teachers will receive based on length of service and education.

The newly appointed board took the action at its first meeting. New Mayor Rahm Emanuel, who is responsible for appointing board members, praised their action on the raises.

“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,” he said.

Some fear the action could lead to a strike after a long period of labor peace since the mid-1990s.

Emanuel and new schools chief Jean-Claude Brizard previously announced plans to scale back borrowing in fiscal 2012 and trim administrative costs to shave $75 million off the deficit.

“My team is now tasked with developing a balanced budget and presenting it to the board and the public in August and our promise remains to minimize any impacts on the classroom and our kids,” Brizard said in a statement.

Fitch Ratings last year downgraded the district’s $5 billion of debt to A-plus. It’s rated AA-minus by Standard & Poor’s and Aa2 by Moody’s Investors Service, both with negative outlooks.

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