CHICAGO (Reuters) - Chicago's cash-strapped public school system plans to seek up to $389 million in short-term loans to avoid closing schools early for the summer and to make required pension payments next month, the mayor's office said on Friday.

The fix will be secured through short-term financing against $467 million in delayed block grant funding by Illinois' fiscally paralyzed state government, which has not passed a full-year operating budget in 23 months.

Escalating pension payments have led to drained reserves, debt dependency and junk bond ratings for Chicago Public Schools.

The planned borrowing follows Republican Governor Bruce Rauner's veto in December of legislation that would have funneled $215 million in state funds to the nation's third-largest school system to help it make a required $721 million pension payment next month.

A school-funding overhaul that would direct more money to Chicago's schools passed the Illinois Senate this week but drew immediate criticism from Rauner's education chief, casting serious doubts on the measure's long-term prospects.

Absent any movement in the state legislature on school funding, Chicago Mayor Rahm Emanuel described the borrowing plans as a short-term bridge.

"While we work with state lawmakers on long-term solutions to Illinois' education funding challenges, in the short-term, (we) are doing what is necessary to keep our students in the classroom and on the path to a brighter future," Emanuel said in a statement.

Terms of the borrowing were not immediately known. The Emanuel-appointed Chicago school board expects to vote on the new borrowing authority at its May 24 meeting.

The grant money upon which the borrowing will be secured is part of $1.1 billion in state payments Illinois owes to more than 400 school systems. The state has been unable to distribute those grant payments because of the unrelenting budget stalemate.

The mayor's office said CPS expects to receive its allotment of state grant funds in "coming months." But Abdon Pallasch, a spokesman for Illinois Comptroller Susana Mendoza, said on Friday his office has no idea when the money will be disbursed.

Rauner's office did not have an immediate reaction to CPS's new borrowing.