BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 597 (Eng)
Hearing Date: 8/25/2011 Amended: 7/12/2011
Consultant: Maureen Ortiz Policy Vote: BFI: 6-1
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BILL SUMMARY: AB 597 establishes the California Financial
Literacy Fund, to be administered by the State Controller's
Office, which will enable partnerships with the financial
services community and governmental and nongovernmental
stakeholders for the purpose of improving the financial literacy
of Californians.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Financial literacy program --------unknown, potentially
over $50 ------ Private
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STAFF COMMENTS: SUSPENSE FILE.
While AB 597 does not describe details of the type of financial
literacy program the State Controller's Office will implement,
it is anticipated that the scope of any activities will depend
on how much revenue is contributed to the newly created
California Financial Literacy Fund. AB 597 allows for the
creation of a financial literacy advisory committee, but does
not state the makeup of that committee or whether members will
receive per diem or reimbursement for travel expenses.
Additionally, there could be unknown costs to other governmental
agencies that are requested to participate as stakeholders in
the financial literacy program.
AB 597 provides that the California Financial Literacy Fund will
be administered by the State Controller. The Controller may
accept private donations which would be available upon
appropriation in the annual Budget Act. Donations will not be
allowed to be used to promote or market the financial products
of any contributor. Any funds not appropriated within 18
AB 597 (Eng)
Page 1
months will be returned in full to the contributor.
AB 597 authorizes the Controller to convene a financial literacy
advisory committee to provide additional insight of the fund and
to develop strategies to improve financial literacy. The
committee must comply with the Bagley-Keene Open Meeting Act.
Beginning in 2013, the Controller must provide a brief summary
on the use of the funds to the Legislature no later than August
30 of each year.
AB 597 provides Legislative Intent that contributions to the
California Financial Literacy Fund constitute gifts made for a
public purpose and would be eligible to be claimed as a
deductible charitable contribution to the extent otherwise
allowable under federal income, California income, and franchise
tax laws. Any contributions deducted must be recaptured if the
funds are later returned by the state.
The U. S. Financial Literacy and Education Commission defines
financial literacy as "the ability to make informed judgments
and to take effective actions regarding the current and future
use and management of money." California does not currently
have a centralized system that collects and administers
financial literacy funds or implements financial literacy
programs. While there are numerous financial literacy materials
and resources available, they are not organized or collected in
a systematic manner.
Last year the Senate adopted SR 485 in 2010 which designated
April 2010 as "Financial Literacy Month" to raise public
awareness about the importance of personal financial education.
In addition, several other efforts have been developed aimed at
improving the financial literacy of California residents
including the following:
1) In January 2008, the Governor announced the formation of the
Bank on California program, run through the Office of Planning
and Research. That effort encourages the unbanked to open
starter accounts at local banks and credit unions.
2) The California State Library, as well as other public
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Page 2
libraries, works regularly with financial advisors and banks to
help provide financial literacy resources to patrons.
3) Citigroup has made a ten-year $200 million commitment to
fund financial education programs.
4) The California Bankers Association has created a Financial
Empowerment Program to provide financial education tools for
adults with an emphasis on basic personal finances and household
money management skills.
.
This bill is similar to AB 2457 (Salas) which was vetoed by the
Governor in 2010. In the veto message, the Governor indicated
that the bill was duplicative of existing efforts of the Bank on
California program.
This bill is also similar to AB 2123 (Lieu) which was vetoed by
the Governor in 2008 who stated, in part, that the bill
duplicated existing services and resources and that its intended
efforts could be done administratively. Another similar bill,
AB 550 (Lieu) was held in the Assembly Appropriations Committee
during the 2009-10 Legislative Session.