Bill Text: CA SB696 | 2011-2012 | Regular Session | Amended
Bill Title: Pupil instruction: economics: personal finance.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2012-01-31 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB696 Detail]
Download: California-2011-SB696-Amended.html
BILL NUMBER: SB 696 AMENDED
BILL TEXT
AMENDED IN SENATE JANUARY 4, 2012
INTRODUCED BY Senator Lieu
FEBRUARY 18, 2011
An act to add Division 22 (commencing with Section 70000)
to the Financial Code, relating to financial literacy.
Section 51220.7 to the Education Code, relating to pupil
instruction.
LEGISLATIVE COUNSEL'S DIGEST
SB 696, as amended, Lieu. California Financial Literacy
Initiative. Pupil instruction: economics: personal
finance.
Existing law requires a school district, as part of its adopted
course of study for grades 7 to 12, inclusive, to offer courses in
specified areas of study, including, among others, social sciences,
drawing upon the disciplines of anthropology, economics, geography,
history, political science, psychology, and sociology.
This bill would encourage the instruction provided in economics to
include instruction related to the understanding of personal
finances, including, but not limited to, budgeting, savings, credit,
and identity theft. The bill would also make several legislative
findings and declarations.
The California Constitution requires the Legislature to encourage
the promotion of intellectual improvement. Existing law regulates
financial institutions and their interactions with the public.
Existing law recognizes the existence of specialized financial
institutions that provide services, including, but not limited to,
financial literacy training, to underserved communities.
This bill would establish the California Financial Literacy
Initiative in the Controller's office for the purpose of providing
resources and instruction to Californians to improve financial
literacy. The initiative would be administered by the Controller. The
bill would establish the California Financial Literacy Fund in the
State Treasury and would authorize the Controller to deposit private
donations into the fund from entities with no direct financial
interest in any financial products. The bill would require those
moneys to be made available upon appropriation in the annual Budget
Act. The bill would require the Controller, beginning in 2012, to
report to specified committees of the Legislature annually on or
before August 30 on the implementation of the initiative, as
specified.
Vote: majority. Appropriation: no. Fiscal committee: yes
no . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of
the following:
(a) California does not have an official statewide policy or
educational plan for the teaching of financial literacy. The growing
negative economic effects of financial illiteracy have spurred the
need for financial literacy education for all elementary and
secondary pupils.
(b) According to a national survey conducted in the fall of 2007,
nearly half of homeowners with adjustable rate mortgages admitted
that they did not know how their adjustable rate mortgages will
adjust or reset, and nearly 75 percent did not know how much their
monthly mortgage payments would increase when the payments adjust or
reset.
(c) 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.
(d) The national annual savings rate has declined from 9 percent
in the 1980s to approximately negative 0.4 percent of after-tax
household income, which is a level not seen since the Great
Depression.
(e) California high school seniors taking part in a national
survey of financial knowledge scored an average of 44 percent, which
is four percentage points lower than the national average.
(f) Many states have already recognized the importance of
financial literacy. Thirty-eight states report having personal
finance standards in various forms, while nine of those states
currently include personal finance instruction as part of their
graduation requirements.
(g) Increasing the financial literacy of all economic and ethnic
groups is documented to improve attitudes, lead to improved
decisionmaking, and provide for a more secure future for individuals
and their families, who have been educated with regard to these
issues.
(h) Financial literacy education is an essential ingredient for
creating an active citizenry that is able to understand how the state'
s budget decisions will affect their personal lives.
(i) The teaching of financial literacy skills is vital to equip
the young people of California with the tools they need to enter the
workforce.
(j) Financial literacy instruction may be easily integrated as a
valuable component for elementary and secondary schools, colleges and
universities, libraries, community groups, and citizen town hall
meetings.
(k) Many groups are dedicated to increasing the financial literacy
of Americans, and a broad range of quality personal finance
instructional materials and curricula have been created for this
purpose, but California's pupils are not getting this vital
information.
(l) At this crucial economic time, it is imperative that the state
encourage the provision of financial literacy instruction to all
pupils.
SEC. 2. Section 51220.7 is added to the Education Code,
to read:
51220.7. The Legislature encourages the instruction provided in
economics pursuant to subdivision (b) of Section 51220 to include
instruction related to the understanding of personal finances,
including, but not limited to, budgeting, savings, credit, and
identity theft.
SECTION 1. The Legislature finds and declares
all of the following:
(a) The average American household consumer credit card debt is
about eight thousand five hundred dollars ($8,500).
(b) Forty-three percent of American families spend more than they
earn, and data from the Federal Reserve states that Americans hold a
total debt of $1.9773 trillion, not including mortgage debt,
averaging eighteen thousand six hundred fifty-four dollars ($18,654)
per household.
(c) As the mortgage crisis demonstrated, there is a severe
shortage of affordable financial advisors to counsel middle and lower
income Californians and advise them on how to plan when a fiscal
crisis hits.
(d) Studies show that 60 percent of homeowners facing foreclosure
did not know to reach out to their lenders, which has proven the best
way to avoid foreclosure and foreclosure scams.
(e) The first quarter of 2008 reported 169,831 foreclosure filings
in California, the highest in the country, at a rate of one in every
78 households.
(f) High school seniors taking part in a national survey of
financial knowledge scored an average of 48.3 percent, which is a
failing grade.
(g) Undergraduate students reported their freshman year as the
most prevalent time for obtaining credit cards, with 78 percent
reporting that they obtained their first credit card at 18 years of
age.
(h) Sixty-five percent of 18 to 19 year olds, the average age that
college students reported getting their first credit card, failed a
financial literacy test.
(i) Many groups are dedicated to increasing the financial literacy
of Americans and a broad range of quality personal finance
instructional materials and curricula have been created for this
purpose.
(j) California does not have an official statewide policy or
educational plan for the teaching of financial literacy.
(k) Financial literacy materials and resources exist in many
forms, but are not organized or collected in a systematic manner.
(l) The teaching of financial literacy skills is vital to equip
the young people of California with the tools they need to enter the
workforce.
SEC. 2. Division 22 (commencing with Section
70000) is added to the Financial Code, to read:
DIVISION 22. CALIFORNIA FINANCIAL LITERACY INITIATIVE
70000. For purposes of this division, "initiative" means the
California Financial Literacy Initiative.
70001. (a) The California Financial Literacy Initiative is hereby
established in the Controller's office as a program for improving
financial literacy by providing resources and instruction to
Californians.
(b) The initiative shall be administered by the Controller.
70002. The California Financial Literacy Fund is hereby
established in the State Treasury. The purpose of the fund is to
implement measures defined by the initiative. The Controller may
accept private donations from entities with no direct financial
interest in any financial products and deposit those donations into
the fund, which shall be made available upon appropriation in the
annual Budget Act.
70003. Beginning in 2012, the Controller shall provide to the
respective chairpersons of the Assembly Committee on Banking and
Finance and the Senate Committee on Banking, Finance and Insurance an
annual report on the initiative. This report shall include, but not
be limited to, steps taken to partner with the financial services
community and governmental and nongovernmental stakeholders to
improve Californians' financial literacy, a description of the basic
financial skills information available on the Controller's Internet
Web site and plans to improve that clearinghouse of information, any
nonstate funding received for purposes of this initiative, and any
additional recommendations to enhance financial literacy in
California. This report shall be submitted no later than August 30 of
each year.
