Today’s Wall Street Journal reports (at A4; available online here):
Billionaire philanthropist Bill Gates will step into the national debate over state budgets Thursday with a call for states to rethink their health care and pension systems, which he says stifle funding for public schools.
Mr. Gates in an interview said he will use a high-profile conference Thursday in Long Beach, Calif., to urge that more attention be paid to how states calculate their employee-pension funding and health-care obligations. “These budgets are way out of whack,” Mr. Gates said. “They’ve used accounting gimmicks and lot things that are truly extreme.”
The comments come after Mr. Gates spent more than a year studying the issue and enlisting the advice of leading academics and others.
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One focus of Mr. Gates is public pension funds’ use of a relatively high discount rate to calculate obligations. The discount rate is an assumed rate of return used to calculate the current value of a future liability.
The higher the rate, the smaller a fund’s obligations appear—and the less that states need to contribute to their pension funds. Critics blame this accounting approach for contributing to state pension shortfalls, estimated nationwide to total more than $1 trillion.
No word yet on whether and how Kelty Carew and her allies (who last week held a demonstration against the billionaire Koch brothers for their efforts to prompt public officials to deal with budget realities) plan to demonstrate against Mr. Gates.