Challenging state lawmakers to use federal stimulus funds to revolutionize public education, Microsoft founder Bill Gates today said that "difficult times can spark great reforms" and "a crisis can act as a pivot" to innovation.

Addressing the 5,500-member National Conference of State Legislatures meeting in Philadelphia, Gates said the $100 billion in economic recovery funds earmarked for improving education should be used: to create more effective charter schools; hold teachers accountable for student performance; enforce strong common standards; spread knowledge through online learning and develop better assessment tools to evaluate individual schools, pupils and teachers.

"The stimulus package contains funding for longitudinal data systems," he said. "I hope you will use it to track students' right into the workplace."

Noting that the United States ranks 10th among industrialized nations in terms of the percentage of students who graduate from college, he said, "If that's a leading indicator, I don't like where it is leading."

Through his philanthropy, the Bill and Melinda Gates Foundations, Gates has donated hundreds of millions of dollars to improving primary, secondary and college education.

To fix what is wrong with American learning, he said, will require new ways of looking at its problems.

"We don't know the answers because we are not asking the right questions," he said.

Right now, he said, teachers are rewarded for "seniority and masters' degrees," and that is not the best way to assure educational quality.

Most critical to determining whether a student will drop out of high school, he said, is whether he or she connects with a good teacher in the fifth to eight grades and develops a passion for learning.

He said "the worst schools should be replaced with higher performing charters" and "the most effective factor in student achievement is having a great teacher."

In response to a question by North Carolina House Speaker Joe Hackney about how states can do more with less in these turbulent economic times, Gates said class sizes might have to change.

"I am not against small class size," he said, but class sizes can grow, without negative consequences, "if you can raise the average effectiveness of teachers."