(CNN) Of all the teachers' strikes across the country, this one is especially consequential.

Oakland teachers hit the picket lines Thursday, unable to afford the soaring cost of living near Silicon Valley

Some are getting priced out of their homes. The crisis is so dire, the school district is losing almost 20% of its teachers every year.

Charlotte Taboada Rep for school psychologists standing strong! She works at 4 schools. School psychologists work after hours & on weekends & have huge caseloads. Our students deserve better. Our educators deserve better. Oakland deserves better! #StrikeReady #WeAreLA #redFored pic.twitter.com/6aDh0pi7H7

"It's time for the (school) district to listen now. They forced us to this moment to strike," said Oakland Education Association President Keith Brown.

But here's the problem: Teachers are demanding higher raises from a school district that's already broke. The Oakland Unified School District is in such bad shape, it's planning to lay off 112 staff.

The district says it barely has enough money to take care of its low-income students -- 75% qualify for free or reduced lunch. So giving teachers higher raises might be out of the question.

No one knows how long this strike will last, or what victory for either side will look like. But it will come at a steep cost to a community already suffering.

The district says it overspent, but for good reason

Both sides agree teachers should be paid more. The big debate is how much the school district can afford.

Roxana De La O Cortez marches with other teachers in Oakland.

Teachers are demanding a 12% increase in pay over the next three years. They also want more counselors and nurses, so schools can have at least one counselor for every 250 students and at least one nurse for every 750 students.

The school district has offered at least 5% raises over three years -- short of what the Oakland Education Association is demanding.

That offer "will not keep pace with inflation," said arbitrator Najeeb Khoury, who wrote an independent fact-finding report about the dispute.

"It is also clear that OUSD will have a very difficult time affording a 12% raise over three years, as it is in a structural deficit."

School district spokesman John Sasaki said "there's no question there's been mismanagement over the years" -- but not for the reasons you might think.

"We have done a lot more for our kids than other school districts. A lot of that is because in the city of Oakland, there's a lot more need," he said.

Sasaki said 75% of students qualify for free or reduced lunches, and the district also offers them free dinner before they go home.

OUSD also has dental clinics where needy children can get checkups, and washers and dryers for students' families who can't afford them.

But the district says rising costs, insufficient funding from the state and its gaping deficit will require major budget reductions for the third year in a row -- including layoffs.

Sasaki said about 112 employees could be laid off, but they will mostly come from the district's central office. No teachers will be laid off.

School 'won't be business as usual'

The 37,000 students in Oakland's district-run schools are still supposed to go to class, OUSD said. But as long as the strike lasts, many will be taught by strangers.

"Generally, temporary teachers will not be picking up lesson plans where our OUSD teachers left off," the district said.

But principals will have access to lesson plans that substitute teachers can use.

Sasaki said a few hundred reassigned administrators and substitutes will try to fill in for as many as 2,300 teachers.

"This won't be business as usual," he said.

So some families have decided to let their children skip school to join the picket lines.

Sacrificing more money to strike

Because teachers aren't getting paid while on strike, their protest makes a painful situation even more difficult.

"We'll be dipping into our savings to cover my loss of wages during the strike," said special education teacher Alex Webster Guiney. "It's taken a toll on our family."

Alex Webster Guiney said the cost of living has exploded, but pay hasn't kept up.

She spends her entire paycheck on the mortgage for a two-bedroom, one-bathroom house for her family of four. Her husband, a video producer, pays the utilities and covers the groceries.

Webster Guiney, an eighth-year teacher, said she made $52,800 before taxes last year.

They bought the home for $426,000 in 2012. It's now valued at $975,000, she said.

"We would never be able to afford this house now."