BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 550
                                                                  Page  1

          Date of Hearing:   April 29, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                     AB 550 (Lieu) - As Amended:  April 14, 2009 

          Policy Committee:                              Banking and  
          Finance      Vote:                            11-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill permits the state controller to accept private  
          donations to fund efforts to enhance financial literacy.  
          Specifically, the bill:  

          1)Establishes the financial literacy initiative in the  
            controller's office, and the California financial literacy  
            fund in the state treasury. 

          2)Authorizes the controller to deposit donations from entities  
            with no direct financial interest in any financial products  
            into the newly created fund.  

          3)Requires money deposited into the fund to be made available  
            upon appropriation in the annual Budget Act.  

          4)Requires the controller, beginning in 2011, to report to the  
            specified committees of the Legislature annually on or before  
            August 30 on the implementation on the initiative and any  
            recommendations to enhance financial literacy in California.    

           
           FISCAL EFFECT 

          Unknown costs, presumably in excess of 150,000, to the  
          controller to administer the new initiative and prepare annual  
          reports.

           COMMENTS  

           1)Rationale.  This bill is sponsored by the state controller, who  








                                                                  AB 550
                                                                  Page  2

            states "I firmly believe this legislation constitutes a  
            prudent investment by the State in its citizens' long-term  
            financial viability.  The need for AB 550 could not be  
            clearer:  A recent article reported that poor asset management  
            is an epidemic problem in California, as 43% of Americans  
            spend more than they earn.  Financial Literacy is recognized  
            as a critical issue throughout the U.S, with nearly 35 states  
            implementing some kind of financial literacy program."

           2)Not much detail  . The bill consists of a large number of  
            findings and declarations about the need for financial  
            literacy, but contains almost no detail about what the key  
            elements of the program would be. The only reference to  
            specific activities is found in the reporting requirement,  
            which alludes to internet-based financial skills information  
            that would be on the controller's web site. Given the lack of  
            detail, it is not possible to evaluate the potential benefits  
            of the initiative or the fiscal impact of the measure on the  
            controller's office.
           Analysis Prepared by  :    Brad Williams / APPR. / (916) 319-2081