* 29,000 teachers, support staff involved in walkout
* Chicago is third-largest U.S. school system
* Strike affects 350,000 secondary school students
CHICAGO, Sept 10 (Reuters) - Thousands of public school teachers formed picket lines in Chicago on Monday and parents scrambled for child care during their first strike in a quarter century over reforms sought by Mayor Rahm Emanuel and endorsed by President Barack Obama's administration.
Some 29,000 teachers and support staff in the nation's third-largest school system were involved, leaving parents of 350,000 students between kindergarten and high school age to find alternative supervision.
"There's no excuse for either side for not coming to an agreement," said Faith Griggs-York, mother of a first-grader at Agassiz Elementary School, as she dropped her daughter off at a community center a mile from the school.
"I think both sides, because of what they are doing to parents and because of what they are doing to kids, should be embarrassed," Griggs-York said.
Churches, community centers, some schools and other public facilities were ready on Monday to care for thousands of children under a $25 million strike contingency plan financed by the school district. The children will be supervised half a day and receive breakfast and lunch, allowing some parents to work.
"What are these families going to do? Are you going to stay home from work today because of this?" U.S. Senator Dick Durbin, an Illinois Democrat, said on CNN. "What is going to happen to your son or daughter?"
"Both sides need to get back to the table as quickly as possible and really stay there and negotiate through the night if necessary. Get it over with quickly so we can get these kids back in school," Durbin said.
Talks resumed on Monday morning in the months-long contract negotiations. Emanuel is among a number of big city U.S. mayors who have championed such school reforms and Obama's education secretary, Arne Duncan - a former head of Chicago public schools - has endorsed them.
The Chicago confrontation also threatens to sour relations between Obama's Democratic Party and labor unions before the presidential election on Nov. 6.
While Obama is expected to win the vote in Chicago and his home state of Illinois, union anger could spill into neighboring Midwestern states such as Wisconsin, Michigan and Ohio, where the race with Republican challenger Mitt Romney is much closer.
The union has called the plan to care for children during the strike a "train wreck." It warned that caregivers for the children do not have proper training, and there are fears of an increase in gang-related violence in some high-crime areas.
The school district's charter schools will be open on Monday, meaning about 50,000 public school students will be in classes as scheduled.
About 20 teachers picketed in front of Overton Elementary School on Chicago's South Side, wearing red T-shirts, carrying strike signs and singing "We're not going to take it," the chorus from the rock band Twisted Sister's popular anthem.
Several passing cars honked in support, prompting loud cheers from the striking teachers.
Emanuel, the tough talking former White House chief of staff for Obama, blamed the union for the strike and said the two sides had been close to agreement. Union officials have accused Emanuel of disregard and disrespect, which the mayor has denied.
"The kids of Chicago belong in the classroom," Emanuel said at a Sunday night news conference after talks broke down.
Chicago offered teachers raises of 3 percent this year and another 2 percent annually for the following three years, amounting to an average raise of 16 percent over the duration of the proposed contract, School Board President David Vitale said.
"This is not a small contribution we're making at a time when our financial situation is very challenging," he said.
Laura Gunderson, a fourth-grade teacher at Nettelhorst Elementary School, held a "proud union home" sign outside the North Side school with 55 other teachers, aides and clerks lining both sides of the street. Cars honked in support and teachers cheered.
"My heart sank on Friday night when I clocked out and realized I was not going to be teaching Monday," said Gunderson, a teacher for 26 years.
Catherine Schaller, a math teacher at Beethoven Academic Center, an elementary school on the South Side, said: "It's all about people's rights. Our children have a right to a solid education. We're going to stand up for that."
Chicago's South Side, often mentioned by first lady Michele Obama in reference to her humble roots, is one of the city's poorest districts and has a large African-American population.
SCHOOLS BUDGET DEFICIT
The Chicago school district, like many cities and states across the country, is facing a financial crisis, with a projected budget deficit of $3 billion over the next three years and a crushing burden of pensions promised to retiring teachers.
Emanuel said two main issues remain: his proposal that teachers be evaluated based in part on student performance on standardized tests, and more authority for school principals.
Union President Karen Lewis, who has sharply criticized Emanuel, said standardized tests do not take into account inner city poverty as well as hunger and violence in the streets.
Vitale said the two sides were not far apart on compensation issues. But he said district proposals on evaluations followed an Illinois state law passed last year mandating a role for the tests.
"We're following the law and while they may not like the law we have to put it in place," Vitale said on Monday.
More than 80 percent of Chicago students qualify for free lunches because they come from low-income households, and Chicago students have performed poorly compared with national averages on most reading, math and science tests.
Union officials said more than a quarter of Chicago public school teachers could lose their jobs if they are evaluated based on the tests.
"Evaluate us on what we do, not the lives of our children we do not control," Lewis said in announcing the strike.