Chicago plots reform of its public school bureaucracy. Chicago's school system is the third largest in the US and often referred to as the worst. As school opens, state officials hope to disperse the city's highly politicized school administration.

US Secretary of Education William Bennett last year called the Chicago Board of Education's bureaucracy ``The Blob,'' referring to the horror movie about a sticky, ever-growing monster. This year's sequel could be titled ``Lost in the Legislature.''

After a stormy popular uprising by parents and community leaders that was sparked by a lengthy and bitter 1987 teachers' strike, real reform remains in doubt. And the creeping inertia that blocks improvement of the nation's third-largest school system emanates not so much from the classroom itself as from the byzantine labyrinth of Chicago politics.

Legislation that was passed this summer, designed to decentralize the school system and lay the groundwork for future educational reform, is now headed back to the state legislature after an amendatory veto by Gov. James Thompson.

While supporters are hopeful that a compromise can be negotiated, there is a possibility that an amended version will not pass.

That could let the air out of the school-reform movement here, many of whose leaders viewed the legislation as a good first step. But it would also allay concerns of some that Democratic politicians in Chicago have cut a deal with special-interest groups by not carrying reforms far enough, creating a new potential enclave of political clout by providing for hundreds of locally elected school councils.

Last year, Chicagoans were moved to reform their school system - one in which half of the high schools have been ranked nationwide in the lowest 1 percent of ACT college entrance exam scores.

``Then there was a spirit of cooperation among the Board of Education, the teachers union, and the business community,'' recalls James Deanes, chairman of the parent-community council of the mayoral summit on education reform.

``But after politics got involved, we found people keying in on power struggles and who controls the money,'' Mr. Deanes says. ``We presented changes for early child education programs, reducing class size, teachers going to a teacher training institute, and none of those things passed the legislative session.''

The current legislation is mainly administrative, and even supporters admit it's only a ``good first step'' to improving children's classroom education and building more community support for increased state funding of school improvements.

The reform legislation as it stands would establish:

Councils at each school composed of elected parents, staff, and community members, with budgeting powers and the ability to hire and fire principals.

An expanded number of seats on the central Board of Education.

An oversight panel with some members appointed by the governor.

Cuts in the central office's bureaucracy, whose members have also become involved in the politicking surrounding reform.

Most of the provisions would not take effect until the 1989-90 school year, another issue of contention for those who want reform now.

Key Democrats involved in the legislation have close political ties to the influential Chicago Teachers Union and to constituencies whose children in many cases attend the city's Roman Catholic school system.

Republican Governor Thompson's amendments are mainly minor changes. They include an even balance of appointees by the mayor and the governor to the new oversight panel and a change to allow principals to overlook seniority when hiring teachers who have lost jobs elsewhere in the system due to declining enrollment.

The Chicago Teachers Union is angered by one of Thompson's proposed amendments that would slightly increase the ability of principals to hire their faculty regardless of seniority.

And some black political leaders from Chicago object to what they see as increased gubernatorial authority over the school system.

Both groups are hopeful that negotiations with the governor can work out a compromise to prevent the legislation from being defeated in November.

Some key Democrats have said they would accept the amendments, although the Democratic leadership in the State House of Representatives could block the bill's passage because of an ongoing feud with the governor over his amending of bills.

The large question is whether there will be adequate parental involvement to keep the new system viable and democratic. For example, with 420,000 children in public schools here, the largest parent group, the PTA, currently has only 25,000 members, many of them not active.

But Deanes says whatever happens politically, meaningful school reform is an idea whose time will come in Chicago. Parents, educators, business leaders and politicians in the past year have started talking with each other about education - and specifically the public schools as a community resource - like never before.

``We have the moral obligation as parents, whatever comes out of reform, to do what we must do for our children,'' he adds. ``That's our impetus to go on and on.''