The Chicago Teachers Union protested outside school board headquarters Tuesday.
The demonstration, led by the union's new president, Karen Lewis, came ahead of an emergency board meeting.
The board must decide by Wednesday to fund teachers' 4 percent pay raise.
The Chicago School Board wanted to give Chicago Public Schools CEO Ron Huberman new powers to dismiss teachers. CPS has also announced it will increase class size.
In some cases, there could be 35 students per class.
The teachers union filed a lawsuit to try and stop that.
“Our concern is the lack of transparency in the budget,” Lewis said.
Union leaders say the cuts should come from the district's central office, not the classroom.
Huberman said the board has to take drastic measures.
“After having substantially reduced the size of the central office over the last year, the reality of the situation remains that if concessions are not made by our bargaining units, the district will have to layoff a significant number of teachers, resulting in an increase in class size," Huberman said.
Lewis said there would not be a teacher’s strike, saying teachers have a contract until 2012 that they will fight to preserve.
The board was also expected to vote on borrowing $800 million to close that budget gap.