BILL ANALYSIS �
AB 597
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Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 597 (Eng) - As Introduced: February 16, 2011
Policy Committee: Banking and
Finance Vote: 11-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill permits the state controller to accept private
donations to fund efforts to enhance financial literacy.
Specifically, the bill:
1)Establishes the California financial literacy fund in the
state treasury and state for depositing donations that could
be used to establish partnerships with the financial services
community and governmental and nongovernmental stakeholders to
improve California's financial literacy, to enable the
controller to develop and share financial literacy materials.
2)Authorizes the controller to administer the fund and deposit
into the fund donations from entities with no direct financial
interest in any financial products. Requires money deposited
into the fund to be made available upon appropriation in the
annual Budget Act.
3)Allows the State Controller to convene a financial literacy
advisory committee, which may be comprised of the
Superintendent of Public Instruction, the Treasurer, the
California State Library, the Department of Corporations, the
Department of Financial Institutions, the Department of
Consumer Affairs and the Department of Finance. Requires
state agencies to use existing resources to participate in the
financial literacy advisory committee.
4)Requires the controller, beginning in 2012, 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.
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FISCAL EFFECT
Minor absorbable costs to the Controller and those state
agencies that may elect to participate in the advisory
committee.
COMMENTS
1)Purpose. According to the sponsor, the state controller, this
proposal would establish, at no cost to the state, a financial
literacy fund and enable strategic partnerships with the
private and nonprofit sectors who are already working on these
issues. It would allow other state agencies, nonprofits and
financial institution representatives to participate on an
Advisory Committee, using their existing resources. The
creation of a financial literacy fund would provide a funding
source for organizations who wish to partner with California
on financial literacy efforts. In the long run, partnering
with the state to educate people on financial literacy could
benefit the California economy by helping to prevent
bankruptcies, foreclosures and job loss.
2)Background. There is evidence that many adults do not have a
sufficient level of financial literacy.
a) 28%, or nearly 64 million adults, admit to not paying
all of their bills on time with some groups reporting
significantly higher proportion, 47% for African-Americans
and 42 % for Hispanics.
b) Though a majority of adults (67 %) say they pay for most
purchases with cash or a debit card, about two in five (41
%) report that their household carries credit card debt and
more than 11 million people (5 % of adults) say they carry
$10,000 or more in credit card debt from month to month.
c) In spite of it being free, nearly two-thirds of adults
(65 %), or nearly 148 million people, have not ordered a
copy of their credit report in the past year. And nearly
one-third (31%) do not know their credit score.
1)Previous legislation. Both AB 2457 (Salas) of 2010 and AB 550
(Lieu) of 2009 were very similar to this bill. AB 2457 was
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vetoed by Governor Schwarzenegger. AB 550 was held on the
suspense file in the Assembly Appropriations Committee.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081