Teachers in the Chicago Public Schools system, the third-largest school district in the US, went on strike on Thursday, canceling classes for 361,000 students after protracted labor negotiations between the union and district leadership failed to produce a deal.

Teachers planned to picket at more than 500 schools across the city beginning at 6.30am local time, before holding a downtown rally and march in the afternoon.

School buildings stayed open for children who need a place to go during the strike, officials said. Schools will serve breakfast and lunch, but all after-school activities, including sports, tutoring and field trips, have been canceled.

The strike is the latest in a recent wave of work stoppages in school districts across the United States in which demands for school resources have superseded calls for higher salaries and benefits. In Chicago and elsewhere, teachers have emphasized the need to help under-funded schools, framing their demands as a call for social justice.

Thousands of Chicago teachers staged a one-day walkout in 2016 to protest the lack of a contract and failures to stabilize the finances.

In addition to wage increases, the Chicago Teachers Union (CTU) is demanding more funding to ease overcrowded classrooms and hire more support staff, such as nurses and social workers, two perennial issues plaguing the district.

Members of the Chicago Teachers Union and SEIU Local 73 march on 14 October 2019. Photograph: Ashlee Rezin Garcia/AP

On Wednesday, Chicago Mayor Lori Lightfoot said the district’s bargaining team has offered 80 proposed changes to the current contract related to issues the union requested.

The proposal would provide teachers with a 16% raise over five years along with support for oversized classes, enforceable targets for reducing class sizes and adding more support staff across the district, she said.

The mayor said the union’s full list of demands would cost the district an additional $2.5bn annually.

CPS finances “are still recovering from the brink of insolvency, and we do not have unlimited funds”, the mayor said.

The district’s credit ratings remain at the non-investment, or “junk” status, although they have improved in the wake of a revised statewide school funding formula that boosted revenue for CPS operations and pension payments.

In addition to school buildings, district officials also encouraged students to go to public libraries and community organizations where educational programs and activities will be offered during the strike. District officials said students will be able to use mass transit for free during the strike.