Chicago’s cash-strapped schools—the third largest public school system in the country—and its teachers’ union agreed to a contract proposal, narrowly averting a strike set for October 11.

The four-year agreement, which the Chicago Teachers Union (CTU) will recommend to its 28,000 members, includes provisions on pensions, classroom sizes, and layoffs, says Chicago Teachers Union President Karen Lewis. The teachers have been working without a contract since June 30, 2015.

Chicago schools are grappling with escalating pension payments that will jump to $720.2 million this fiscal year from $676 million in fiscal 2016. The city had initially pledged to give teachers an 8.75% raise in exchange for a shift pension payments to teachers.

Under the deal the existing 21,000 teachers will continue to contribute 2% to their pension, with the school board chipping in an additional 7%. However, new hires will not get the 7% “pension pickup,” but will get a salary adjustment to compensate for that, Lewis says.