BILL ANALYSIS Ó AB 166 Page 1 Date of Hearing: March 20, 2013 ASSEMBLY COMMITTEE ON EDUCATION Joan Buchanan, Chair AB 166 (Hernandez) - As Amended: March 11, 2013 SUBJECT : Pupil instruction: economics: personal finances SUMMARY : Adds instruction related to personal finances to the required course of study in grades 7 through 12. Specifically, this bill : 1)Requires that instruction in economics provided in grades 7 through 12 include instruction related to personal finances, including, but not limited to, budgeting and managing credit, student loans, and debt. 2)Requires the California Department of Education (CDE) to develop a personal finances curriculum in the next cycle in which the next history-social science curriculum framework is adopted. 3)Makes findings and declarations regarding the importance of financial literacy education. EXISTING LAW 1)Requires the course of study in grades 7 through 12 to include, among other subjects, social sciences. 2)Requires the course of study in social sciences to draw upon the disciplines of anthropology, economics, geography, history, political science, psychology, and sociology, designed to fit the maturity of the pupils. 3)Requires the SBE to include financial preparedness in the next revision of the social science curriculum frameworks. 4)Requires the CDE to conduct work necessary to revise the curriculum framework and evaluation criteria for instructional materials in history-social science only after it has completed work related to the development of curriculum frameworks for the common core academic contents standards in mathematics and language arts. AB 166 Page 2 5)Requires the State Board of Education (SBE) to adopt revised curriculum frameworks and criteria by which instructional materials will be evaluated that are aligned to the common core standards for mathematics by May 30, 2013 and English language arts by May 30, 2014). FISCAL EFFECT : State mandated local program. COMMENTS : According to the author, "The growing negative effects of financial illiteracy, such as the housing mortgage crisis and a low national savings rate, have spurred the need for financial literacy education for California students." The Washington, DC-based Jump$tart Coalition for Personal Financial Literacy reports that its 2008 survey of high school seniors revealed that "The financial literacy of high school students has fallen to its lowest level ever?" The survey covered issues ranging from savings and investment to personal debt and credit, and, on average, high school seniors answered 48.3. California Jump$tart reports 46 states have personal finance standards in various forms, but only 13 of those states include personal finance instruction as part of their K-12 graduation requirements. Jump$tart did not report whether students in states with financial literacy standards or required coursework scored higher than other students on the survey. While financial literacy instruction is not required in California, districts may offer it under the permissive Education Code. The CDE provides an electronic resource library for grades K-12 with links to 44 programs that are appropriate for use in the classroom or at home as a resource for students, teachers, and parents. In addition, the California Council on Economic Education has created curricula and lesson plans for grades 6-8 and 9-12 called "Financial Fitness for Life." Model Curriculum Standards . Existing law establishes the minimum coursework required to receive a high school diploma: three courses in English, two courses in mathematics, two courses in science, three courses in social studies (including a one-semester course in economics), one course in visual or performing arts or a foreign language, and two courses in physical education. Existing law also requires the Superintendent of Public Instruction (SPI) to coordinate the development, on a cyclical basis, of model curriculum standards for the courses required for high school graduation. The curriculum standards are developed by the Instructional Quality AB 166 Page 3 Commission (IQC) and adopted by the SBE. The IQC is an 18-member commission consisting of one member of the Assembly, one member of the Senate, and 16 public members. At least seven of the public members must have taught, written, or lectured on the subject areas required for graduation. Related Legislation . Five related bills are pending: AB 123 (Bonta) requires school districts to include instruction on the contribution of Filipino Americans to the farm labor movement in California. AB 137 (Buchanan) requires the IQC to receive input from specified experts on civic learning the next time the history-social science frameworks are developed and specifies civic learning content to be taught. AB 424 (Donnelly) adds the Magna Carta, the Articles of Confederation, and the California Constitution to the historical documents that are required to be incorporated into history-social science curriculum framework and requires instruction in the social sciences to include the development of democracy and the history of the development of the United States Constitution. AB 700 (Gomez) requires instruction in the social sciences in grade 8 and in any of grades 9 to 12, inclusive, and the one-semester course in American government and civics that is required for high school graduation, to include a voter education component providing instruction in how to register and cast votes in local, state, and federal elections, and how to use the voter information pamphlet and other materials to become an informed voter. SB 552 (Calderon) provides that instruction in the area of social sciences may include instruction on violence awareness, which may include a component drawn from personal testimony in the form of oral or video histories of individuals who were involved with violence awareness efforts. SB 552 is different from the other three bills in that is authorizes, rather than requires instruction is a specific area. However, under the permissive Education Code, school districts are already authorized to provide instruction on violence awareness. AB 166 Page 4 Prior legislation relating to financial literacy instruction has been unsuccessful. These bills include: SB 1080 (Lieu, 1012) would have encouraged instruction in personal finance and required the CDE to develop a personal finances curriculum. This bill died in the Senate Appropriations due to the cost to the CDE. AB 1502 (Lieu, 2008) would have required the SBE to ensure that financial literacy is included in appropriate subject area frameworks and encouraged school districts to include instruction in financial literacy. This bill was vetoed by Governor Schwarzenegger with the following message: "While I acknowledge that teaching students the importance of financial literacy is meritorious, school districts already have the flexibility to incorporate money management into their lesson plans. Moreover, the State Board of Education adopted content standards are developed by a diverse group of experts and are intentionally broad in order to allow coverage of various events, developments, and issues. I continue to believe that the State should establish rigorous academic standards and frameworks, but refrain from being overly prescriptive in specific school curriculum." AB 150 (Lieu, 2007) would have required the SPI to administer a California Financial Literacy Initiative, as specified. This bill was also vetoed by Governor Schwarzenegger on the basis that the SPI already has this authority. AB 1950 (Lieu, 2006) and AB 2435 (Wiggins, 2004) both would have authorized districts to provide instruction on personal finances. Both bills were vetoed by Governor Schwarzenegger on the basis that districts are already authorized to provide such instruction under the permissive Education Code. This bill raises a fundamental policy question regarding the role of the Legislature vis-ŕ-vis the role of the IQC and SBE in establishing curriculum content standards, frameworks, and instructional requirements. In prior years, the Legislature has AB 166 Page 5 generally deferred this process to the IQC (formerly the Curriculum Development and Supplemental Materials Commission) by statutorily urging the commission to consider including specific content, rather than requiring it. The commission has the subject matter expertise and is also in a better position to balance competing demands for limited instructional time. Staff recommends amending the bill to (1) delete the requirement to include instruction in financial preparedness in coursework in economics and (2) change the requirement that the next history-social science frameworks include financial preparedness to a requirement to include "financial literacy, including but not limited to, budgeting and managing credit, student loans, and debt." REGISTERED SUPPORT / OPPOSITION : Support California Bankers Association California Communities United Institute California Council on Economic Education California Credit Union League California Independent Bankers California Jump$tart Coalition for Personal Financial Literacy California Society of CPAs Opposition None received Analysis Prepared by : Rick Pratt / ED. / (916) 319-2087