After hearing from district officials that Chicago’s schools are $712 million in debt, the new board of education agreed unanimously this morning that it could not afford the 4 percent raises called for in the teachers contract.

It was board members’ first meeting, and the first action under Mayor Rahm Emanuel’s new administration. The raises for teachers and other union employees cost $100 million.

The action puts the ball is the union’s court. The Chicago Teachers Union must tell the district by Monday whether it intends to negotiate a new salary schedule. If it does, and if those talks fail, the union could open the entire contract. That would leave both sides vulnerable. Mayor Rahm Emanuel has said he wants a longer school day and school year, and he could push for that. Meanwhile, the district would no longer be protected from a strike once the current contract is terminated.

Chicago Teachers Union president Karen Lewis asked board members before the vote to show they value teachers by upholding the contract and approving the raises.

“The city did not get into this financial mess by overpaying teachers and paraprofessionals and engineers and lunchroom ladies,” Lewis told board members.

In stark contrast to last year, when the district also faced a dire budget predicament that threatened class sizes of 37 and deep cuts to sports and other student programs, CEO Jean-Claude Brizard said the priority will be to preserve class sizes, kindergarten programs, magnet school and language programs, and the district’s high-profile anti-violence program operating in high schools.

“I have the utmost respect and admiration for teachers and all that they do for our children. But today’s board action was taken in response to the massive financial crisis facing our system,” Brizard said in a written statement.  “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,” he said.

CPS says it believes 74 percent of teachers will still get a pay increase. That’s because of so-called step and lane increases, which pay teachers more for additional years of service or advanced educational credentials.

With a soured economy and federal stimulus dollars running out, the district pegged its current deficit today at $712 million and for the first time under the new administration outlined the factors driving the budget hole. Chief Administrative Officer Tim Cawley told board members that deep cuts in previous years mean there are fewer obvious targets for cost savings.

Lewis left the board meeting before the board’s actual vote. She said she was heading to a meeting with other affected unions. Janitors, building engineers, and lunchroom staff also lost raises in today’s vote.