By Juan Perez Jr. and Nereida Moreno

The Chicago Teachers Union reached a tentative contract agreement with the school board minutes before a midnight strike deadline Monday, meaning schools will be in session Tuesday morning.

The two sides narrowly averted what would have been the second strike of Mayor Rahm Emanuel's tenure after almost 12 hours of talks Monday. Negotiations to replace a contract that expired in June 2015 had stretched for well over a year.

Earlier Monday evening CTU President Karen Lewis said that while "we have no tentative agreement in hand yet," the latest offer from Mayor Rahm Emanuel's administration "does look significantly better" than previous proposals.

Janice Jackson, chief education officer for Chicago Public Schools, said that "we do believe that we are close and we are hopeful that we will reach an agreement very soon."

She said at a 10 p.m. news conference that the union had received the offer less than two hours earlier and was going over it "line by line."

The late night dramatics follow well over a year of negotiations to replace a contract reached after a seven day strike in 2012. A key union demand has been more money for schools, particularly from special taxing districts, and indications were Emanuel's administration was coming through on that front.

A source said the mayor was prepared to offer more money from those tax increment financing districts to sweeten the pot, but it was unclear how much money he would direct to schools.

Lewis acknowledged the latest city offer "addressed a lot of things we brought back and countered to the board before" but said she didn't know where the additional financing came from.

The union has pointed to the surplus TIF funds as a source of money that could be used to protect jobs and ensure teachers get raises they believe they deserve as CPS asked them to contribute more toward their retirements.

As talks continued into the night, Emanuel aides made preparations for the mayor to give his 2017 city budget address Tuesday, although the mayor retained the option of shifting gears and postponing it.

The 11 a.m. budget speech would provide a high-profile platform for the mayor to frame his message in the event of a strike. But going ahead with an address on City Hall matters also carries the risk that Emanuel isn't focused enough on a major crisis, given that the backdrop would be thousands of teachers picketing as children were out of the classrooms and not learning.

At the opening of a grocery store Monday in Bronzeville, Emanuel talked about the "shared goal" of making sure school doesn't get disrupted for CPS students, with a deal that's fair to teachers and Chicago taxpayers. "That's our goal, and my No. 1 priority is to keep kids in school safe," he said.

Many CTU members spent Monday afternoon picking up strike materials outside a Near West Side union hall and being told to show up for picket lines outside schools at 6 a.m. Tuesday unless they heard otherwise. Volunteers and CTU staff members distributed shirts, picket signs and bundles of twine under a large banner reading "CTU Strike Headquarters."

Hundreds of teachers stopped in throughout the afternoon to pick up supplies for a possible strike, said Julieta Riesco, a teacher at Drummond Montessori School in Bucktown. Norine Gutekanst, a CTU staff member, said union members are hoping for a resolution but preparing for a strike.

"We're absolutely willing to go on strike if there's no resolution, if we don't get a good agreement," Gutekanst said. "We're going to do what we have to do. We all know that what we really want is to have strong schools in every neighborhood and that's what this is all about."

A strike affecting more than 300,000 children and their families would come at a difficult time for Emanuel, already on his heels politically due to the fallout from police shootings. As he did in 2012, Emanuel has positioned the strike as one of "choice" by the CTU, noting repeatedly that the city has proposed a contract that includes raises for teachers.

If there is a strike, CPS has said it will put a contingency plan in place that will keep all schools open for students, who also can spend the day at park district facilities and city libraries. The schools will be staffed by non-union workers and no instruction will be offered

Teachers have been working without a contract since June 2015. A key sticking point has been the city's desire to phase out the practice of picking up most of the amount teachers must contribute toward their pensions.

In addition, CTU leaders have outlined a $200 million wish list to offset cuts to pay and benefits, bolster staffing levels and pay for what they say would be a $500-per-student funding increase. The union has said the money also would help school counselors, social workers and psychologists; ease classroom sizes in early grades; and restore cuts to library services.

While the city has said it continues to operate under the guidelines of an offer it made in January that was rejected by the union's 40 member bargaining team, Lewis made clear late Monday that the union considered the latest offer considerably better.

The January proposal included an 8.75 percent base-salary raise over four years in addition to resuming other raises based on experience and education level in the final three years. It would have prevented "economic layoffs" through 2019 and put a cap on the number of privately operated charter schools in Chicago. But the offer also phased out the pension pickup.

The road to Monday began in May 2015, when CPS announced it would not offer a one-year extension to the deal sealed after the union's seven-day strike in 2012. The district said it couldn't afford a built-in 3 percent pay increase, and urged the CTU to help it lobby Springfield for more money.

Not long after that, the union made it known that the district was seeking to phase out the long-standing practice of picking up the bulk of teacher pension contributions. The union said it saw the end of the pension pickup as a pay cut; the city said it was necessary to meet the burgeoning demands of funding teacher pensions.

Lewis quickly described the city's efforts to eliminate the pension pickup as "strike-worthy" and the union staged its first strike authorization vote in December. According to the union, 88 percent of its members authorized leaders to call a strike if a contract agreement couldn't be reached, well beyond the 75 percent required by state law.

Both sides appeared close to a deal in January, when Lewis said she would take what she termed a "serious offer" to a team of negotiators for a vote. But the union's bargaining unit promptly rejected the deal, and it was never brought before the full membership for a vote.

Union leaders said they approved of certain provisions in the proposal but were concerned about the cash-strapped district's ability to enforce the deal.

"The real problem is the lack of trust in CPS," Lewis told reporters. A day later, district officials said they would slash school budgets and stop paying the bulk of teacher pension contributions -- moves Lewis quickly blasted as "an act of war."

CTU responded with a one-day walkout April 1 that clogged Loop streets with red-shirted union members. The district argued the walkout was illegal and filed a complaint with the Illinois Educational Labor Relations Board.

After months of wrangling to get more money from Springfield, the state finally did come through with help for CPS in June. Among the measures passed was one allowing the school board to authorize a property tax levy that officials said would generate $250 million for CPS contributions to the city's teacher pension fund. CPS isn't expected to see the additional tax revenue until at least July or August 2017 but is relying on those funds.

Other funding measures approved by Springfield lawmakers included $250 million in grants that would be distributed based on the number of high-poverty students in each of the state's school districts. CPS said it expects to get about $130 million of that total.

CPS took all that money as a given in a $5.4 billion operating budget that was passed by the school board in August. The district said the budget counted on $31 million in labor savings but that not all of that amount was on the backs of teachers.

A few weeks later, the union took a second strike authorization vote, in part to rally members and in part to ward off any potential legal challenges to a strike. Again, an overwhelming majority of teachers gave their approval for a strike, the union said. A day after announcing results of the vote, the union's House of Delegates set the Oct. 11 strike date.

Lewis has repeatedly said that the decision on the contract is up to the union's members, not her and other leaders. That was the case in January when the bargaining team rejected the city's offer, and again on Monday when the team was part of negotiations in the hours before a strike.

Lewis has acknowledged that makes it harder to land a contract, "but here's the deal," she said earlier in negotiations. "I don't have to work under this contract. They do."

Chicago Tribune's John Byrne, Hal Dardick and Nereida Moreno contributed.

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