Bill Gates took on state officials across the country Thursday, accusing them of playing accounting tricks with budgets that even Enron’s executives wouldn’t have tried.
“The guys at Enron would never have done this, this is so blatant, so extreme,” said Gates, speaking at the TED Conference in Long Beach, California. “Is anyone paying attention to what these guys do?”
The Microsoft founder and philanthropist said the stakes in the growing deficits in states are huge because obligations to pay for health care and pensions for an aging population threaten to force huge cuts in education.
Gates used California’s budget as an example, pointing to the $25 billion shortfall faced by Gov. Jerry Brown when he took office this year. As health care takes up a larger and larger proportion of the budget, education spending would have to be cut in half to make up the difference. Gates cast that as a choice between paying the older generation versus investing in education for the young.
On paper, 49 states have to have balanced budgets. But Gates said that’s a “pretense” and that rather than balancing budgets, many states are playing tricks by borrowing, securitizing the proceeds from tobacco company settlements, and using one-shot tactics such as selling off state property to balance budgets.
While California spends more than $100 billion a year, far less brainpower goes into studying the accounting and the wisdom of spending decisions than at two much smaller enterprises - Microsoft and Google, Gates said. States should be held to the same accounting principles as those which apply to private companies, he said.
He said he will use his foundation’s website to publicize the facts about state budgets and suggested people read Marguerite Roza’s book “Educational Economics: Where Do School Funds Go?”to learn more.
“We need to care about state budgets because they are critical for our kids and our future,” said Gates, who has used the TED conference as a platform in recent years for his views on global health, education and energy. Gates also curated a session Wednesday at the conference, which is run by TED, a nonprofit dedicated to “Ideas worth spreading.”