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York, North Carolina, South Carolina, South Dakota, Tennessee, Texas and Utah—include personal finance education at the high school level. Three of these states—South Carolina, Texas and Utah—require personal finance education only in grades 10 through 12. Four states—Minnesota, Nevada, Pennsylvania and Rhode Island—place personal finance education in various middle and high school levels. Rhode Island, for example, places the curriculum in grades eight through 12, whereas Nevada places it in grades five through 12. ENCOURAGING AND MANDATING SPECIFIC COURSE WORK Encouraging Course Work In some states, legislators only encourage schools to include personal finance education. Legislators argue that this approach asserts their wishes, yet honors local control. School districts have the opportunity and flexibility to offer the course work where and when it is most beneficial to their students. In 2005, legislators in California, Kentucky, Maine, Maryland, Missouri, Oregon, South Carolina, Texas and Washington considered such legislation. In 2003, North Carolina took a unique approach by creating a pilot program to determine best practices around personal finance education. Assistance will be offered in up to five local school administrative units to implement programs on teaching personal financial literacy. The purpose of the pilot program is to determine the best methods of equipping students with necessary knowledge and skills before they become self-supporting and need to make critical decisions regarding their personal finances. The components of personal financial literacy include consumer financial education, personal finance and personal credit. Before the program sites are selected, the state Board of Education must develop curricula, materials and guidelines for local boards of education to implement a program of instruction for personal financial literacy. In 2005, Texas introduced legislation to develop a similar pilot program. Requiring Course Work Although some states have had success with only encouraging personal finance education, several states are finding that simply encouraging such education has led to a marked disparity in the delivery and results of personal finance education. Utah, for example, has reexamined and strengthened its original personal finance legislation. In 2002, the Legislature passed a resolution that encouraged school district boards, superintendents and principals to find ways to include financial literacy in existing curricula. After two years, legislators found that not much had changed. As a result, they amended the legislation in 2004 to mandate financial literacy course work as a requirement for graduation. NATIONAL CONFERENCE OF STATE LEGISLATURES Other states also are moving beyond encouraging curricula to mandating instruction in personal finance education. Research supports this move. A report by the Credit Union National Association states that, “Requiring every student in the nation to study financial literacy is the most effective way to develop a credit smart society and combat the negative implications of debt-stressed families and increasing bankruptcies.” 4 According to the National Council on Economic Education, eight states require schools to offer a course, and seven states require students to take the course. 5 Examples of such legislation follow. ■ In 2003, the Louisiana Legislature required the mandatory free enterprise curriculum to include instruction in personal finance beginning with the 2004-2005 school year. The new personal finance components must include income, money management, spending and credit, and savings and investment. In summer 2004, 280 teachers were trained in the NEFE High School Financial Planning Program at no charge for registration or materials and received a stipend for completing the six-hour workshop. ■ Ohio legislators introduced legislation in 2005 to require that every high school include instruction in personal economics as a requirement for graduation. ■ In 2005, Texas passed House Bill 492, directing the state Board of Education to include elements relating to personal finance as part of the essential knowledge and skill of economics and requiring course work in personal finance education for high school graduation. ■ Virginia legislators enacted two laws in 2005 that address personal finance education. Chapter 741 requires economics education not only in all middle and high schools, but also requires that all public institutions of higher education make “….provisions for the promotion of the development of student life skills through inclusion of principles of economics education and financial literacy within an existing general education course, the freshman orientation process, or other appropriate venue.” Virginia law requires that financial literacy be systematically infused into the state standards; however, the objectives are not required in the state assessments. The law also encourages public schools to establish on-site banking programs for students. Virginia also passed Chapter 33, the Entrepreneurship Education Program. The program consists of grants administered by the Board of Education to public secondary schools to support innovative educational programs that are designed to help students develop their entrepreneurial, academic and life skills. The programs can incorporate experiential learning; can include partnerships with business and higher education; and can assist students in practicing and mastering business concepts, such as negotiation, pricing, and the development and implementation of plans for individual student businesses.
Although mandating personal finance education is potentially beneficial, policymakers will want to consider the effects of adding such curricula to an already stretched staff and budget. Some argue this increases demands on teacher workload and pressure for students to succeed in the core curriculum on which they are annually tested. Implementing new curricula also can be both expensive and time-consuming; it involves adopting and purchasing new materials and providing appropriate professional development to teachers. To be successful, schools will need to find time in an already full instructional load for personal finance education. PARTNERSHIPS In addition to encouraging or mandating personal finance education courses, states also are considering new and creative approaches to integrate personal finance education into the school day. States such as Iowa, New Jersey and Louisiana are making use of public-private partnerships to encourage and promote financial literacy. Such partnerships or networks target specific audiences and provide necessary information and financial support without adding layers to a saturated public school system. New York authorizes credit unions to open and maintain student branches within the elementary and secondary schools. By placing banks and credit unions inside the school, legislators hope to give students the skills, knowledge and experience necessary to manage their personal finances and obtain general financial literacy. ■ Banks and Credit Unions are increasing their involvement in the public school arena. According to a 2004 Consumers Bankers Association study of bank-sponsored financial literacy programs, 89 percent of banks are involved in consumer financial education, representing a 16 percent increase from the previous year. They now reach approximately 142,967 students. 6 The survey reports that 88 percent of employees tutor students when the bank works with public schools, and 70 percent of banks participate in “adopt-a-school” programs. 7 Currently, 74 credit unions in 25 states operate student-run branches in 238 schools. 8 The Credit Union National Association also has partnered with the National Endowment for Financial Education (NEFE) to work with credit unions to provide financial planning classroom materials and volunteer teachers to high schools around the country. During the 2001- 2002 school year, credit unions distributed financial education classroom materials to more than 71,000 students. ■ Washington Mutual is one example of an institution that supports youth financial literacy. It offers the Class Acts program, where employees volunteer to organize projects to support schools and financial literacy; the School Savings program that gives students hands-on lessons about how to handle NATIONAL CONFERENCE OF STATE LEGISLATURES money responsibly using their Washington Mutual savings accounts and how to organize weekly Bank Days at school; the WaMoola for L.I.F.E. Lessons for grades K-12, an education program that teaches money basics, checking, credit and other skills through interactive lessons taught by employees; and a high school internship program that provides work experience for high school juniors and seniors. Washington Mutual also partners with a nonprofit community development group, REACH, on its Youth$ave program. Youth$ave targets youth who live in REACH’s affordable housing communities. Youth$ave children attend nine financial education classes and use the program to save for a community-related, artistic, athletic or academic goal. 9 Other institutions that sponsor successful programs for K-12 students include Bank of America, Citigroup, Fleet, National City and Wells Fargo. ■ The Jump$tart Coalition was established to improve personal finance literacy for young adults. The coalition has worked directly with state representatives who are familiar with their state’s needs for K-12 personal finance education to form coalitions for finance literacy in 26 states. In April 2005, the Jump$tart Coalition recognized Wisconsin as the first state coalition of 2005. This coalition was noted for its work with the National Institute of Financial and Economic Literacy and for organizing summer workshops to train teachers to teach student financial literacy. Several credit unions in Wisconsin sponsored local teachers to attend the training sessions. ■ Junior Achievement works directly with schools on personal finance education. Through 145 American offices, Junior Achievement reaches approximately 4 million students per year in inner cities, suburbs and rural areas. Junior Achievement programs which span grades K-12, focus on seven key content areas, including business, citizenship, economics, entrepreneurship, ethics/character, financial literacy and career development. Teachers in more than 169,000 classrooms use Junior Achievement programs each year. ■ The National Academy of Finance introduces high school students to career opportunities in the financial services industry. The academy’s mission is to open the door to new options and equip students to make sound choices for the future. One of three member programs of the National Academy Foundation, the Academy of Finance operates as a small learning community and is located in more than 275 high schools nationwide. ■ The National Endowment for Financial Education (NEFE) is a nonprofit foundation dedicated to helping all Americans acquire the information and gain the skills necessary to take control of their personal finances. NEFE provides the necessary funding, logistical support and financial planning expertise to create personal finance programs and materials for the public. The NEFE High School Financial Planning Program (HSFPP), which
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