BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2546


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          Date of Hearing:  April 20, 2016


                           ASSEMBLY COMMITTEE ON EDUCATION


                              Patrick O'Donnell, Chair


          AB 2546  
          (Calderon) - As Amended April 7, 2016


          SUBJECT:  Pupil instruction: history-social science curriculum  
          framework: financial literacy.


          SUMMARY:  Requires that, when the history-social science  
          curriculum framework is revised after January 1, 2017, the  
          Instructional Quality Commission (IQC) include specified content  
          on financial literacy.  Specifically, this bill:  


          1)Requires that, when the history-social science curriculum  
            framework is revised after January 1, 2017, the IQC consider  
            including content on financial literacy at least twice in  
            grade spans: Kindergarten through grade 5, grades 6-8, and  
            grades 9-12.



          2)Requires that the IQC consider including instruction on:



             a)   fundamentals of banking for personal use, including, but  
               not limited to, savings and checking










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             b)   principles of budgeting and personal finance



             c)   employment and understanding factors that affect net  
               income



             d)   uses and costs of credit, including the relation of debt  
               and interest to credit



             e)   uses and costs of loans, including student loans



             f)   types and costs of insurance



             g)   forms of governmental taxation



             h)   principles of investing and building wealth



             i)   identity theft and security



             j)   planning and paying for postsecondary education











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             aa)  charitable giving



          EXISTING LAW:  


          1)Requires that, concurrently with, but not prior to, the next  
            revision of textbooks or curriculum frameworks in the social  
            sciences, health, and mathematics curricula, the State Board  
            of Education (SBE) ensure that these academic areas integrate  
            components of human growth, human development, and human  
            contribution to society, across the life course, and also  
            financial literacy, including, but not limited to, budgeting  
            and managing credit, student loans, consumer debt, and  
            identity theft security.



          2)Requires the Superintendent of Public Instruction (SPI), with  
            the approval of the SBE, to plan and develop a one-semester  
            course entitled consumer economics, which includes instruction  
            on the uses and costs of credit, for use in schools  
            maintaining any of the seventh to twelfth grades, inclusive. 



          3)Requires students to complete a one-semester course in  
            economics in order to be eligible to graduate from high  
            school. 





          4)Requires the SBE to adopt statewide academic content standards  
            in core curriculum areas, pursuant to the recommendations of  
            IQC, for the establishment of academic content standards. 









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          FISCAL EFFECT:  Unknown


          COMMENTS:  


          Need for the bill.  According to the author, "Financial  
          illiteracy negatively impacts young people entering the labor  
          market. Young adults aged 18 to 25 tend to have large amounts of  
          credit card and student loan debt upon entering the workforce.  
          Lacking a clear understanding of basic financial concepts, 18-25  
          year-olds are more likely to rely on high-cost methods of  
          borrowing. Risky borrowing not only undermines future  
          homeownership but also the ability to control one's financial  
          future. 


          Financial literacy also hinders adults and their hopes for  
          retirement. Without a base knowledge of financial tools, adults  
          are less likely to invest in retirement plans. According to the  
          Employment Benefit Research Institute, 46% of Americans have  
          less than $10,000 saved for retirement. Another survey found  
          that 15% had not saved a single cent.  Low saving and retirement  
          participation rates could lead to a dramatic increase in the  
          number of people on welfare and drive up costs nationally.


          Research has shown that early introduction to financial concepts  
          and repetition of those lessons yields a deeper understanding.  
          As a result, students who had financial education courses early  
          and more often had higher rates of savings and were less likely  
          to rely on high-cost methods of borrowing."


          Curriculum, standards, frameworks, and model curricula.   
          California's public school curriculum is based on content  
          standards in various subjects, including English-Language Arts,  








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          Mathematics, Science, History-Social Science, Physical  
          Education, English Language Development, Career Technical  
          Education, Health Education, World Languages, and Visual and  
          Performing Arts.  These standards are developed by the IQC  
          through a public process, and are adopted by the SBE.  


          These standards form the basis of California's curriculum  
          frameworks.  These documents guide the implementation of these  
          standards, and are used to establish criteria for the evaluation  
          of instructional materials for state adoption for grades  
          kindergarten through grade eight. They also guide district  
          selection of instructional materials for grades nine through  
          twelve.


          In addition to developing standards in the above subject areas,  
          the SPI is sometimes directed by law to develop model curricula  
          on different topics, such as those on the life of Cesar Chavez,  
          and on human rights and genocide.  


          Draft History-Social Science Framework revision addresses  
          financial literacy.  The CDE is in the process of revising the  
          state's curriculum framework in history-social science.  The  
          draft revision to the framework released in September, 2014  
          includes financial literacy content in at least the following  
          grades:


            Grade 1:  Students acquire a beginning understanding of  
            economics, including how people exchange money for goods and  
            services, and how people make choices about how to spend  
            money, including budgeting.


            Grade 2:  Students learn basic economic concepts of human  
            wants, scarcity, and choice; the importance of specialization  
            in work today.  Students also develop an understanding of  








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            their roles as consumers in a complex economy.


            Economics course:  Students learn about personal budgeting,  
            banking, debt, credit cards, interest, student loan debt,  
            mortgage debt, saving, and investing.  This content is  
            presented in relation to larger economic issues and concepts.   



            Elective course outline:  Students learn about credit cards  
            and other forms of consumer debt, savings and budgeting,  
            retirement planning, state and federal laws related to  
            personal finance (e.g., bankruptcy), financial credit scores,  
            credit card applications, bank account applications, simple  
            and compound interest calculations, retirement calculations,  
            and mortgage and interest rates. Students also learn about the  
            importance of managing credit and debt, and identity theft  
            security. 


          History-social science framework adoption delayed.  The  
          History-Social Science standards currently in use were adopted  
          in 1998, and the most recent framework was published in 2005.  


          The Curriculum Development and Supplemental Materials Commission  
          (now the IQC) began revising the History-Social Science  
          Framework in January of 2008.  A significant amount of the  
          process had been completed (focus groups, selection of  
          evaluation criteria committee members, five drafting meetings)  
          when in 2009 the state's fiscal emergency halted all work on  
          instructional materials adoptions and framework revisions until  
          the 2013-14 school year AB 4 X2 (Evans) Chapter 2, Statutes of  
          2009.  That suspension was later extended until the 2015-16  
          school year by SB 70 (Committee on Budget), Chapter 7, Statutes  
          of 2011.










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          The IQC began work again on the revision in July, 2014, and  
          released the draft History-Social Science framework for field  
          review in September, 2014.  The draft generated extensive public  
          comment it generated (nearly 700 comments).  The IQC also  
          determined that more subject matter expertise was needed certain  
          areas (including some mandated for inclusion by legislation),  
          and submitted a budget request for $124,000 to hire experts  
          through an interagency agreement.  The IQC held a second field  
          review for this draft from November, 2015 through February,  
          2016.


          These events have caused significant delays in the production of  
          the revised framework.  Originally scheduled for adoption in  
          May, 2015, this framework is now set to be recommended to the  
          SBE by May 2016, with final publication in winter, 2016.


          Because this framework is likely to be adopted in 2016, and  
          curriculum frameworks are revised every eight years, the  
          requirements of this bill would likely not go into effect until  
          2024.


          Related and prior legislation.   SB 1296 (Liu) of this Session  
          would require "consumer and homemaking education" to include  
          financial literacy instruction on subjects including, but not  
          limited to, student loans, credit cards, and investment and  
          retirement accounts.


          AB 166 (Hernández), Chapter 135, Statutes of 2013 requires that,  
          concurrently with, but not prior to, the next revision of  
          textbooks or curriculum frameworks in the social sciences,  
          health, and mathematics curricula, the SBE ensure that these  
          academic areas integrate components of human growth, human  
          development, and human contribution to society, across the life  
          course, and also financial literacy, including, but not limited  
          to, budgeting and managing credit, student loans, consumer debt,  








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          and identity theft security.


          AB 391 (Wieckowski) of the 2013-14 Session proposed the Common  
          Cents Curriculum Act of 2013, requiring the SPI and SBE to adopt  
          a one semester course in consumer education, include specified  
          areas of content related to financial literacy, and encouraged  
          financial literacy instruction to be included in the next  
          revision of the history-social science frameworks. This bill was  
          held in the Assembly Appropriations Committee.





          SB 1080 (Lieu) of the 2011-12 Session would have authorized  
          instruction provided in economics to include personal finances,  
          including budgeting, savings, credit, and identity theft.  The  
          bill would have required the CDE to develop a personal finance  
          curriculum in the next cycle in which the mathematics and  
          history-social science curriculum framework were to be adopted.  
          This was held in the Assembly Judiciary Committee. 


          SB 696 (Lieu) of the 2011-12 Session would have encouraged the  
          instruction provided in economics to include instruction related  
          to the understanding of personal finances, including budgeting,  
          savings, credit, and identity theft. The bill would also make  
          several legislative findings and declarations.  This bill was  
          not heard in any committee.


          SB 1080 (Lieu) of the 2011-12 Session would have authorized  
          instruction provided in economics to include personal finances,  
          including, but not limited to, mathematics, budgeting, savings,  
          credit, and identity theft.  The bill would have required the  
          CDE to develop a personal finance curriculum in the next cycle  
          in which the mathematics and history-social science curriculum  
          framework were to be adopted. This measure was not heard by this  








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          committee and was held in the Assembly Judiciary Committee. 





          SB 779 (Lieu) of the 2011-12 Session authorized a school  
          district, as part of providing economics instruction in grades  
          7-12, to include personal finances, including, but not limited  
          to, budget savings, credit, and identify theft.  This bill would  
          have also required the CDE to consider developing a personal  
          finance curriculum in the next cycle in which the history/social  
          science curriculum framework would have been adopted. This bill  
          was held in the Assembly Appropriations Committee.





          SB 223 (Wyland) of the 2009-10 Session would have required that  
          one-half of the economics course required for high school  
          graduation focus on personal finance and financial literacy.  
          This measure was held in the Assembly Appropriations Committee.


          AB 1502 (Lieu) of the 2007-08 Session would have required the  
          SBE and the Curriculum Development and Supplemental Materials  
          Commission (now the IQC) to ensure that information about  
          financial literacy be included in appropriate subject area  
          frameworks, encouraged school districts to include instruction  
          in personal finance, as specified in economics, and authorized  
          the SPI to accept private donations for the purposes of  
          implementing these provisions. This measure was vetoed by  
          Governor Schwarzenegger.


          AB 1950 (Lieu) of the 2005-06 Session authorized school  
          districts to provide instruction in personal finances in  
          economics courses. This measure vetoed by Governor  








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          Schwarzenegger who stated that school districts already have the  
          flexibility to incorporate money management into their lesson  
          plans and that the state's content standards are intentionally  
          broad in order to allow instruction on a range of topics.





          AB 2435 (Wiggins) of the 2003-04 Session authorized school  
          districts to include instruction related to the understanding of  
          personal finances in economics courses. This measure vetoed by  
          Governor Schwarzenegger who stated that school districts already  
          have the flexibility to incorporate money management into their  
          lesson plans and that the state's content standards are  
          intentionally broad in order to allow instruction on a range of  
          topics.


          


          REGISTERED SUPPORT / OPPOSITION:




          Support


          None received




          Opposition


          None received








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          Analysis Prepared by:Tanya Lieberman / ED. / (916) 319-2087