SAN FRANCISCO ASIAN JOURNAL: Senate education panel approves Sen. Lieu’s ‘financial literacy’ plan for students
SACRAMENTO—After Sen. Ted W. Lieu cited how ‘illiteracy’ of basic financial topics has contributed to the economic malaise affecting California and the nation, the Senate Education Committee today approved his plan to improve personal finance instruction in public junior and senior high schools statewide.
“If we’d had better financial literacy among our citizenry, the financial crisis of the last decade would have been mitigated,” Lieu, a Torrance Democrat, said shortly before the committee approved Senate Bill 1080 on a bipartisan, 9-0 vote.
According to the National Strategy for Financial Literacy:
• Americans 25 to 34 years of age have the second highest rate of bankruptcy, just after Americans 35 to 44 years of age.
• The bankruptcy rate among Americans between 25 to 34 years of age increased between 1991 and 2001, indicating that those individuals were more likely to file bankruptcy as young adults than were baby boomers at the same age.
• The national annual savings rate has declined from 9 percent in the 1980s to negative 0.4 percent of after-tax household income, a level not seen since the Great Depression.
• California high school seniors taking part in a national survey of financial knowledge scored an average of 44 percent, or F.
“The recent economic crisis has highlighted how essential it is that individuals and families have the information, education, and tools that they need to make good financial decisions in an increasingly complex US and global financial system,” the national report said in a 2011 summary. “Indeed, as we have learned, the financial difficulties of individuals and families can dramatically affect the financial health of local communities and regional markets.”
The crisis also illustrates that the financial well-being of individuals and families is fundamental to national financial stability, Lieu said, and that a lack of financial literacy is one barrier that can lower standards of living and limit prosperity.
More than 38 states require some form of personal finance instruction to be incorporated into curriculum; California would be the 39th.
Specifically, SB 1080 would authorize school districts to provide instruction related to personal finances in economics curriculum, personal finance topics, such as budgeting, savings, credit and identity theft. The bill would also require the state Department of Education to include financial literacy in the textbooks for mathematics and history-social science.
SB 1080 marks the fifth measure Lieu has pushed his education-improvement policy. Former Gov. Arnold Schwarzenegger vetoed previous versions, but Lieu is hopeful that the current governor, Jerry Brown, will be more receptive.
“I believe the teaching of financial literacy skills is vital to equip the young people of California with the tools they need to enter the workforce,” Lieu said.