BILL ANALYSIS Ó AB 2546 Page 1 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 AB 2546 Page 2 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 AB 2546 Page 3 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. AB 2546 Page 4 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, AB 2546 Page 5 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 AB 2546 Page 6 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. AB 2546 Page 7 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, AB 2546 Page 8 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 AB 2546 Page 9 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 AB 2546 Page 10 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 AB 2546 Page 11 Analysis Prepared by:Tanya Lieberman / ED. / (916) 319-2087