UPDATE 4-Agreement near in Chicago teachers strike, no school Friday
* Negotiators on both sides cite progress on most vexing issues
* Teacher evaluations, school closings, layoffs contentious
* Union says no school on Friday, calls meeting to discuss progress
CHICAGO, Sept 13 (Reuters) - The Chicago Teachers Union and the nation's third-largest school district were close to a deal on Thursday to end a four-day strike over education reforms sought by Mayor Rahm Emanuel, but school will not be open on Friday.
"We are optimistic, but we are still hammering things out. Schools will not open Friday," union president Karen Lewis said.
Lewis, a former high school chemistry teacher, said the union House of Delegates will meet at 2 p.m. local time Friday (3 p.m. EDT) to provide an update on the talks. Lewis has said she would need the approval of that body to seal a deal.
The strike by 29,000 public school teachers and support staff, affecting 350,000 kindergarten, elementary and high school students, is the biggest private or public labor dispute in the United States in a year.
Lewis, who called Emanuel a "bully" and "liar" before leading teachers on their first strike in 25 years, struck a conciliatory tone after late-night talks on Wednesday.
As for schools reopening on Monday, Lewis said: "I'm praying, praying, praying... I'm hoping for Monday."
Lewis said there was progress on the two most vexing issues - using student test scores to evaluate teachers and giving more authority to local principals to hire teachers.
The union is concerned that more than a quarter of its membership could be fired because the teachers work in poor neighborhoods where students perform badly on standardized tests, which Emanuel wants to use to evaluate teachers.
Emanuel's negotiators released a copy of their latest compromise offer on teacher evaluations. The mayor would phase in the new teacher evaluation system over five years and give no more than 20 percent weight to standardized tests. Classroom observations and a survey of students would also be used.
Other unresolved issues include the role of principals in hiring teachers and what happens to teachers when a school closes and teachers face layoffs.
The union fears Emanuel plans to close scores of schools, putting unionized teachers out of work. In recent years, about 100 public schools have been closed, with officials usually citing low enrollment. At the same time, a similar number of publicly funded, non-union charter schools have opened.
About 52,000 students enrolled at those schools have not been affected by the strike this week.
Thousands of teachers and supporters held another rally in downtown Chicago on Thursday to underscore their strike resolve.
Support for the union from Chicago parents appeared to be holding up. A new poll for Capital Fax by We Ask America found 66 percent of parents with children in Chicago Public Schools supported the strike. The majority of people who opposed the strike were either white voters or had children in private schools, Capital Fax said. Some 85 percent of students in Chicago Public Schools are either African-American or Hispanic. The poll surveyed 1,344 voting Chicago households on Wednesday.
Emanuel supporters also weighed in on Chicago media with television and radio ads calling on the union to end the strike. Democrats for Education Reform, a group backed by major financiers, hedge funds and philanthropists, ran an ad quoting from Chicago newspapers saying the union should go back to work.
The strike in Barack Obama's home city has put the U.S. president in a tough spot. Emanuel is a former top aide to Obama and the president is counting on labor unions to drum up support for his re-election on Nov. 6. Obama's own Education Department has championed some of the reforms Emanuel is seeking.
Both sides agree Chicago schools need fixing. Chicago students consistently perform poorly on standardized math and reading tests. About 60 percent of high school students graduate, compared with 75 percent nationwide.
More than 80 percent of Chicago public school students qualify for free school lunches because they come from low-income households.
The fight does not appear to center on wages, with the school district offering an average 16 percent increase over four years and some benefit improvements.
But a major credit rating agency on Thursday warned that Chicago cannot afford the salary rises it is offering the teachers, and any deal will bust the budget.
"It's highly likely that actual salary increases will exceed budgeted salary increases," Moody's Investor Services said.
Rating agencies already have downgraded the debt rating of the school district, which means it might have to pay a higher interest rate to issue debt to finance deficits.
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