CHICAGO (Reuters) - The Chicago Public Schools (CPS) should be able to afford a new contract with teachers, but it must continue to look to the state of Illinois for more money, the district's CEO said on Wednesday, less than a day after union members ratified the deal.

Forrest Claypool, who heads the nation's third-largest public school system, said the four-year contract will cost CPS $400 million less than the previous pact, which expired in 2015.

"While we're clearly not out of the woods yet, we are in better shape than we were under the previous contract," he told reporters, adding the new deal was the district's most cost-effective in decades.

Claypool said CPS must continue to cut costs and obtain more "equitable" funding from state officials, who have agreed to send the district a one-time $215 million pension contribution, which is contingent on the still-uncertain passage of comprehensive pension reforms by lawmakers this year. The district included the money in its $5.46 billion operating budget for the fiscal year that ends June 30.

CPS is struggling with pension payments that will jump to about $720 million this fiscal year from $676 million in fiscal 2016, as well as drained reserves and debt dependency. As a result, the district's credit ratings have fallen deeper into the junk category.

The Chicago Teachers Union reported late on Tuesday that more than 70 percent of its members voted in favor of the deal, which was reached on Oct. 10, averting a strike the union had called for the following day.

A CPS fact sheet indicated a $55 million boost in surplus revenue from Chicago's economic development districts will cover the cost of the new contract in the current fiscal year. That money, agreed to by Chicago Mayor Rahm Emanuel, who controls the school system, is not considered a recurring revenue source, making its future availability uncertain.

The new contract, which has a retroactive start date of July 1, 2015, includes $11 million in initial healthcare savings, pay raises, an early retirement program, and the continued coverage by the district of 7 percent of current teachers' 9 percent pension contributions at an annual cost of $130 million.

The new contract is subject to a final vote by the Chicago Board of Education on Dec. 7.

(Reporting by Karen Pierog; Editing by Matthew Lewis)