BILL ANALYSIS Ó
AB 597
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CONCURRENCE IN SENATE AMENDMENTS
AB 597 (Eng)
As Amended July 12, 2011
Majority vote
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|ASSEMBLY: |75-0 |(May 12, 2011) |SENATE: |28-7 |(August 30, |
| | | | | |2011) |
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Original Committee Reference: B. & F.
SUMMARY : Establishes the California Financial Literacy Fund
(CFLF) in the State Treasury. Specifically, this bill :
1)Establishes the CFLF to be administered by the State
Controller, to support partnerships with the financial
services community and other stakeholders, to improve
Californians' financial literacy.
2)Authorizes the Controller to accept private donations for
deposit into the CFLF, and would make those funds available,
subject to appropriation in the annual Budget Act.
3)Provides that donations may not be used to promote or market
the financial products of any contributor.
4)Requires donations not appropriated within 18 months of being
contributed to the CFLF would have to be returned in full to
the contributor.
5)Authorizes the Controller to convene a financial literacy
advisory committee to provide additional oversight of the CFLF
and develop strategies to improve financial literacy, and
would require that, if the committee is convened, it must
comply with the Bagley-Keene Open Meeting Act.
6)Requires, beginning in 2013, the Controller to submit a brief
annual summary by August 30th of each year, regarding the use
of the funds in the CFLF, to the chairpersons of the Assembly
Banking & Finance Committee and the Senate Banking and
Financial Institutions Committee.
7)Provides the intention of the measure is for the contributions
to be eligible to be claimed as deductible charitable
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contributions to the extent otherwise allowable under federal
income tax law and California income tax and franchise tax
law, subject to recapture if the contribution is subsequently
returned by the state.
The Senate amendments:
1)Require donations to be returned to contributors if not
appropriated within 18 months.
2)Prohibit the use of donations to promote or market the
financial products of any contributor.
3)Specify that if the advisory committee is convened, it must
comply with the Bagley-Keene Open Meeting Act.
4)Delete the recommended representatives of the advisory
committee.
5)Find that contributions should be eligible to be claimed as
deductible charitable contributions to the extent allowable
under the federal income tax law and California income tax and
franchise tax law.
EXISTING LAW does not have an official statewide policy or
educational plan for the teaching of financial literacy.
AS PASSED BY THE ASSEMBLY , this measure was substantially
similar to the bill passed by the Senate with further
clarification to the intention of the contributions and the
process of how the donations will be used and returned if not
appropriated.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, minor absorbable costs to the Controller and those
state agencies that may elect to participate in the advisory
committee.
COMMENTS : California does not have a one-stop shop system for
collecting and administering financial literacy funds and
implementing programs. A number of financial institutions and
non-profit organizations conduct their own events and workshops
to promote financial literacy. This bill would provide an
outlet for the Controller to deposit private donations into the
financial literacy fund from entities with no direct financial
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interest in any financial products. Through the financial
literacy fund, the Controller would have the ability to promote
financial literacy events, create and distribute financial
literacy documents and make the public aware of more serious
issues related to scams. The bill also allows the Controller to
convene an advisory committee and contains a reporting
requirement allowing the Legislature to receive necessary
information into how the funds are used and appropriated on a
yearly basis.
More efforts aimed at promoting financial literacy can produce
long-term, beneficial effects, onto California citizens.
Promoting financial literacy allows consumers to make smarter
financial decisions that reduce personal financial collapse and
ease the corresponding burden on the state. The economic crisis
demonstrates there is a vast need for people to become more
financially literate. California does not require financial
education which makes constituents more susceptible to scams and
other forms of financial abuse. If California did have more
education requirements in place, the overall impact of the
foreclosure crisis may have been less. Although this bill does
not place education requirements in schools, it does establish a
fund in the State Treasury for the sole purpose of promoting
financial literacy.
The Jumpstart Coalition for Personal Financial Literacy
conducted a survey of college students in 2007 that found more
than 75% of the respondents wish they had more help preparing
for their financial future. Despite surveys and reports
documenting Americans' poor knowledge of personal finance
basics, financial education is currently only required learning
in 20 states. California is not one of these states.
Federal action : In February 2011, Representative Andre Carson,
D-Ind., introduced HR 300, which would create a federal grant
program intended to increase financial literacy among teens and
young adults. The Young Adults Financial Literacy Act calls for
grants to be funnelled to organizations that could develop and
implement financial education programs for students 15 through
24. The program would include teaching skills such as financial
planning, budgeting, saving and managing debt.
President Barack Obama named the month of April, National
Financial Literacy Month. President Obama said in a
proclamation that a better understanding of the financial system
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can help prevent another economic crisis. He called on
Americans during April to recommit "to teaching ourselves and
our children about the basics of financial education."
The federal government established The Financial Literacy and
Education Commission (Commission) under Title V, the Financial
Literacy and Education Improvement Act which was part of the
Fair and Accurate Credit Transactions (FACT) Act of 2003, to
improve financial literacy and education of persons in the
United States. The FACT Act named the Secretary of the Treasury
as head of the Commission and mandated the Commission include 19
other federal agencies and bureaus. The Commission coordinates
the financial education efforts throughout the federal
government, supports the promotion of financial literacy by the
private sector while also encouraging the synchronization of
efforts between the public and private sectors.
Analysis Prepared by : Kathleen O'Malley / B. & F. / (916)
319-3081
FN:
0002149