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Saturday, March 5, 2011

Bill Gates Commentary on State Budgets

The Wall Street Journal of 3/3/11 had an article -"Gates Calls for 'Clear and Honest' Accounting of State Budgets" by Robert A. Guth. Bill Gates commented that the lack of transparency in state budgets harms public education funding. He offers a blunt commentary:

""It's riddled with gimmicks," Mr. Gates said of the "tricks" states use to balance their budgets. Citing moves such as selling state assets and deferring payments, he said some methods are "so blatant and extreme," that "Enron would blush," referring to the energy company that collapsed a decade ago amid an accounting scandal."

He also questions funding priorities including making payments for early retirement while K-12 funding suffers.

Certainly in California, lack of transparency in the budget process, including the exchanges of funds between the state and local jurisdictions, is a problem. Legislators and voters have created a confusing budget system that includes "swaps," "triple flips," and "subventions." There are restrictions on some funds, tying the hands of legislators. To get a sense of the complexity of one California-local government financing system, see this almost 200 page report, SB 1096 Guidelines (2005), by the California State Association of County Auditors - here.

What do you think?

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