Bill Gates Accuses States of Enron Style Budgeting
During his recent presentation at the recent TED conference in Long Beach, California, former Microsoft CEO Bill Gates accused state governments of creative accounting methods that would have made Enron executives blush.
“The guys at Enron would never have done this, this is so blatant, so extreme,” he said. “Is anyone paying attention to what these guys do?”
Schools or Pensions?
The “guys” he was referring to are the state representatives grappling with budget deficits all over the nation. Gates believes that creative accounting on the part of elected officials is shortchanging the nation’s children.
Obligated to fund pensions for state retirees and hobbled by the rising costs of health care coverage for current employees, states are balancing the difference on the future of their children by underfunding education. Gates believes that the sacrifice children are asked to make in order to fund the retirements of the older generation and provide health care for their teachers and other state employees is too much to ask.
It’s also bad for the future of the United States, which is already dealing with knowledge gaps in comparison to the rest of the world and can’t help but to fall further behind if state governments continue to use education funding to fill in their shortfalls.
Cooking the State Books
Gates points out that sleight-of-hand funding techniques allow states to appear to have balanced budgets on paper, but in reality, money is being shifted about like the Queen of Hearts in a game of Three Card Monte.
States use tricks like borrowing funds from one-time proceeds or the sale of state property - something Gov. Scott Walker of Wisconsin is proposing to do by selling state-owned power and water plants to private businesses. But these tactics produce only enough money for one budget year and leave the state with the same shortfall year after year.
States should, Gates says, be obligated to the same financial principles that private businesses must employ, and he plans to use the Gates’ Foundation website to expose state budget practices in his campaign to eliminate what he feels is fraud at the expense of the nation’s children.
He makes valid points about unrealistic state pension plans which promise future retirees a return on investment that far exceeds what someone in the private sector could expect, and he rightly points out that health care costs are rising at a rate that states cannot hope to keep up with, even if the economy were to return to robust health.
His bottom line pits the youth of America in a fight for their futures against their parents’ and grandparents’ retirement expectations. He asks, “Whom should we worry about more?” An excellent question, but one that from the federal government on down seems to have been decided already, and they didn’t pick the kids.
What Do You Think?
Gates has been on a roll lately, questioning the wisdom of pay increases for teachers based on seniority and declaring that teacher raises for advanced degrees are a waste of money. His new efforts to force states to be more accountable for their budgets, and to invest in America’s future workers rather than spend more on its aged, is likely the opening shot in the coming generational struggle between the Baby Boomers and their children and grandchildren.
Where do you think the limited resources of states should be directed? Should education be a sacred cow and Social Security and Medicare be put on the chopping block? Is it time for Americans to make such choices? Can’t we have it all? Let’s hear from you.
Photo credit: Bill Gates at CES 2007 by Domain Barnyard