MANCHESTER — As teacher contract talks continue, the Board of School Committee has canceled a meeting set for Tuesday night on next year’s school budget.

Mayor Ted Gatsas said Monday if the talks result in a tentative agreement, a special meeting will be held Wednesday or Thursday to seek school board approval.

The unions representing teachers and principals rejected proposed contract concessions last week. The teachers union voted 3-1 against proposed contract changes, while the principals rejected a similar deal by a much narrower margin. The rejected agreements each provided for employees to pay more for health insurance. Layoff notices effective at the end of the school year have been sent to 161 school employees, 143 of them teachers,

On Friday, School Supt. Thomas Brennan said he was looking at saving teaching jobs with the use of school budget surpluses held in special funds called expendable trusts.

“That’s an option that at least needs to be discussed because we are not moving in other areas,” Brennan said. “We need revenue from any place to get teachers back in the classroom.”

In addition, the city’s budget surplus is expected to be some $400,000 higher than the $1.7 million previously projected. The budget filed by Gatsas proposes using $1.7 million for prepayment of some of next year’s retirement expenses, engineering costs at Derryfield golf course and another batch of recycling buckets.

The budget proposed by Gatsas is $2 million less than what the school board requested, and $12 million less than what administrators have said is needed to continue programs at current levels. Gatsas is required by city charter to submit a budget to the Board of Mayor and Aldermen that is within the city tax cap. The charter also requires a two-thirds majority of aldermen, or 10 votes, to override the cap and increase spending.

Aldermen are to meet as scheduled in a special budget session Tuesday night. Ward 1 Alderman Joyce Craig said she has been working with other members on an alternative to Gatsas’ budget,

“In my opinion, it is better than what the mayor has put forward, but doesn’t come close to what their needs are,” Craig said.

A hastily organized group of parents known as Citizens for Manchester Schools is expected to rally at City Hall plaza today at 5:30 p.m.

According to organizer Jim O’Connell, the group was established by parents upset that their point of view is not being represented in the public discussions of the school budget.

“As parents, we don’t have a horse in this race; we’re not part of this, I’d describe it as a game of chicken,” O’Connell said. “We’re united on a very simple premise that our schools are underfunded and need to be fully funded.”

O’Connell had an impromptu meeting with Gatsas and Brennan on school spending issues on Friday after showing up in Gatsas office to request a meeting and finding the mayor and school chief in a meeting.

“We talked about the terrible impact to our schools,” O’Connell said. “They avoided the answer mostly. The mayor wanted to talk about the teacher’s union making a concession, that was his primary point.”

No matter what happens with the 2012-13 school budget, O’Connell predicts the parents group will stay active.

“We are interested in being part of the conversation,” he said. “We as parents spend eight or nine months building up our schools and then the city does this ‘death by a thousand self-cuts.’”