By Lisa Lambert
WASHINGTON (Reuters) - Nicole Lyons gave up.
After she was laid off from her job teaching at a public elementary school she bounced through longer-term substitute postings and held a part-time job, all the while hoping she would land a permanent placement.
"In 2012, after two years working as a sub and continuing to see layoffs, I was like, 'I can't work 50 hours a week one more year,'" said the Los Angeles resident. "I want a full-time job. I want my benefits back."
Even her mother, a former school principal who told Lyons she was destined to teach, agreed with her recent decision to become a paralegal.
"She said: You know what? At this point, you're right, it's not going to get better," Lyons said.
Indeed, as the latest data shows momentum gathering in private-sector employment and overall unemployment dropping to a four-year low of 7.7 percent, government jobs - education positions in particular - are still disappearing as local government budgets remain pressured by the residual effects of the housing crisis and recession.
Since the peak in local public school employment in July 2008, about 361,000 jobs in the sector have been eliminated, roughly half of the 725,000 government jobs lost overall in the same period, Bureau of Labor Statistics data show. The losses are continuing, with 4,500 local government education jobs shed in the first two months of this year compared with 412,000 private-sector jobs created.
"When we looked at private-sector job loss, at first we were losing jobs, then we were losing jobs less fast, then we were adding jobs," said Heidi Shierholz, an economist at the liberal leaning Economic Policy Institute in Washington.
The public sector is only now "starting that second step."
PRESSURE FROM MANY SIDES
The 2013 figures signal local budgets are still in a slump. Money from the 2009 federal economic stimulus is gone and individual states have chipped away at funds they send to cities and counties. Meanwhile, property tax revenues, the main source of public school funding, remain low.
"Education is the largest or the second largest expenditure for states. When they need to cut their budgets, education and local aid are places they cut," said Naomi Richman, Moody's Investors Service managing director of public finance.
State spending on education dipped to 19.8 percent of total outlays in fiscal 2012, the first time it has accounted for less than 20 percent, according to the National Association of State Budget Officers. For many states, fiscal 2012 ended on June 30.
"I think it's very hard to say when you're going to see jobs start coming back in a really sustained way. It's particularly hard given the sequestration cuts are going to lead to additional job losses in education," said Michael Leachman, director of state fiscal policy at the liberal leaning Center on Budget and Policy Priorities.
Automatic government spending cuts totaling $1.2 trillion and spanning a decade, began this month and President Barack Obama has warned the first year of reductions totaling $85 billion will lead to cutbacks in education. Federal funds provide about 10 percent of public school budgets.
The White House estimates 10,000 teachers' and aides' jobs are at risk under the automatic spending cuts, referred to in Washington parlance as "sequestration." Up to 7,200 special education teachers and aides may no longer receive government funding.
Leachman said the first educators to be affected work on military bases and Native American reservations, because they receive direct federal funding. Other cuts will trickle into the budgets that states are crafting for their fiscal years starting July 1. That means many school districts will feel the squeeze at the start of the 2013-2014 school year.
LOOKING FOR RECOVERY
Some breaks in the clouds are starting to appear, however.
Each year, the University of Virginia's Curry School of Education hosts a career fair that in strong years has attracted about 100 recruiters from public and private schools, according to Hilary Kerner, head of the career services office. That number dropped during the recession, but at the fair this month, about 60 recruiters attended, more than at other recent fairs.
Moreover, many recruiters spoke of easing budget restrictions, Kerner said.
The Labor Department lists elementary school teachers among its projections of 30 occupations with the largest employment growth by 2020. And in September California warned of a looming shortage of teachers and principals.
States such as Virginia that are flourishing now have restored some local and education funding, as well.
The job market will likely recover unevenly, a reflection of how quickly budgets rebound. Places rich in natural gas and other commodities, like North Dakota, have recovered quicker from the recession than others.
In Philadelphia, the School Reform Commission appointed by the state voted last week to close 23 schools, hoping to save nearly $24.5 million. Chicago is looking at 80 schools to see if it can find savings through closures.
"It's definitely region specific," said Rachel Cortez, who tracks local government conditions for Moody's. "There are some regions in the country where local government school district hiring is not under pressure ... In North Dakota funding to school districts is increasing and they're hiring more teachers as the population grows."
(Reporting by Lisa Lambert; Editing by Dan Burns and Christopher Wilson)