[When referring to the recording of state costs]  Undermining public education, he said, is a system that channels too much money to pensions for retired teachers. He predicts that state and local governments will have to lay off 100,000 active teachers in the next couple of years. "I'm very much against that," said Mr. Gates who noted that many of the teachers who lose their jobs will be younger, more motivated teachers at the bottom of the seniority system.

Mr. Gates said a big part of the problem is "fraudulent" state budgeting systems, which fail accurately to account for the cost of pension promises. A legislator who "says 'yes' doesn't feel any pain at all," he said. Thus the "accounting fraud" that lets politicians treat generous teacher pensions as a free lunch rewards them for spending more on retired teachers than on current students.  More here.