By Mary Wisniewski

CHICAGO (Reuters) - Chicago Public Schools on Monday began notifying nearly 1,500 teachers and support staff who are being fired amid a previously announced, $200 million budget cut and a shift in student enrollment.

The announcement came as CPS released its $5.7 billion 2016 budget, which includes a historic $1.1 billion budget deficit driven by rapidly rising pension payments.

The layoff notices will affect 479 teachers and 1,012 other staff members out of more than 41,500 employees, according to the school system.

CPS officials said 99 percent of the teacher cuts are due to shifting student enrollment, though a history teacher who got a notice, Allison Valentine, said she didn't understand it since the department was understaffed and the school was seeing an increase in students.

The notice was a "total shock," Valentine said.

CPS expects to have to fill about 1,450 teaching vacancies before the school year and affected teachers can apply for those openings, officials added.

The spending plan also includes about $500 million in pension savings that have yet to be enacted by the Illinois legislature. School officials said that if lawmakers do not reach a resolution on pensions, CPS will close the funding gap with additional cuts or more borrowing.

Last month, the Chicago Board of Education approved the sale of up to $1.16 billion of bonds for the cash-strapped system.

Speaking to reporters, CPS Chief Executive Officer Forrest Claypool pointed to higher test scores and graduation rates in the city's school system, which serves 400,000 students.

"Yet all that hard-earned progress is threatened by a budget crisis that can be solved if our leaders come together," he said on Monday.

Fitch Ratings downgraded its view of Chicago Board of Education general obligation bonds on July 27 by one notch to BB+ from BBB-, reflecting the lack of progress over the school budget gap.

CPS has asked Chicago teachers to take what amounts to a 7 percent pay cut, by paying a greater share of their retirement contribution. Chicago Teachers Union President Karen Lewis has called the proposal "strike worthy."

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Asked if she would call for a strike if CPS insists on the cut, Lewis said on Monday, "I think our members would do that for themselves."

Chicago teachers went on strike in 2012.

Lewis said that if CPS does not find a way to fill the $500 million hole, the schools could close in November.





(Editing by Susan Heavey and Eric Walsh)