BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 166
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          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.









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          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  








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          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.








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          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  








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          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