BILL ANALYSIS �
SB 779
Page 1
Date of Hearing: June 22, 2011
ASSEMBLY COMMITTEE ON EDUCATION
Julia Brownley, Chair
SB 779 (Lieu) - As Amended: March 3, 2011
SENATE VOTE : 32-7
SUBJECT : Pupil instruction: economics: personal finances
SUMMARY : Supports the inclusion of personal finance topics in
K-12 curriculum and instruction. Specifically, this bill :
1)Authorizes a school district to include instruction related to
the understanding of personal finances, including, but not
limited to, budgeting, savings, credit, and identity theft in
the one-semester course in economics required for high school
graduation.
2)Requires the California Department of Education (CDE) to
consider developing a personal finances curriculum in the next
cycle in which the history and social science curriculum
framework is adopted.
EXISTING LAW :
1)Recognizes the existence of specialized financial institutions
that provide services, including, but not limited to,
financial literacy training, to underserved communities.
2)Requires that social sciences, health, and mathematics
textbooks and curriculum frameworks integrate specified
components, including financial preparedness.
3)Requires the Superintendent of Public Instruction, with the
approval of the State Board of Education, 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 grades 7 to 12, inclusive.
4)Requires students to complete a one-semester course in
economics as a condition for graduation from high school.
5)Allows, through permissive authority granted in the Education
Code, for the governing board of any school district to
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initiate and carry on any program, activity, or otherwise act
in any manner which is not in conflict with or inconsistent
with, or preempted by, any law and which is not in conflict
with the purposes for which school districts are established.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : This bill makes two proposals: 1) to authorize
school districts to provide instruction in personal finance as
part of the one-semester economics course required for
graduation, and 2) to require the CDE to consider development,
and thus inclusion, of personal finances curriculum in the next
adoption of the history-social science curriculum framework.
Financial literacy and use of consumer credit is already
provided for to some extent in model courses, textbooks and
curriculum frameworks. Many students also already receive
instruction of this nature as part of the required one-semester
course in economics, though the extent or existence of personal
finance instruction in that course is dependent upon how the
course is designed and taught by the individual teacher. Some
students also receive instruction in personal financial literacy
and use of credit in Life Skills courses taught in Home
Economics or other more specialized instructional areas.
Current law requires that the Superintendent of Public
Instruction, with the approval of the State Board of Education,
plan and develop a one-semester instructional program entitled
consumer economics for use in schools maintaining any of grades
7 through 12, and that the program be made available to all
school districts and schools with those grades. This program
must include information on the fundamentals of banking for
personal use, elementary contracts, consumer guides to
purchasing, uses and costs of credit, types and costs of
insurance, and forms of governmental taxation. However there is
no requirement on school districts to adopt this course or any
other that provides instruction in this area. It is clear,
then, that some students in California schools never receive
instruction in the area of personal finance and the use of
credit.
It has been argued in previous bills making similar proposals,
that the teaching of financial literacy skills is vital to equip
California's young people with the tools they need to enter the
financial market place. It has also been argued that a lack of
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financial knowledge is especially problematic for the most
vulnerable members of our society, since the poor, elderly, and
minority groups are often victims of fraud and deception,
predatory lending, and other such abuses; experiences during the
years prior to the start of the current financial crisis in the
United States appear to be proof of these problems.
It should be noted that the first proposal in this bill, to
authorize a school district to include any specific topic or
information in its instructional program, is unnecessary.
Education Code section 35160 expressly grants broad legislative
power to school districts, and establishes a permissive default
in the Education Code. Since the Education Code, unlike any
other state code, is permissive, local education agencies have
the ability to take actions and implement programs as long as it
is not in conflict with the purposes for which the state's
schools are established or with specific prohibitions in code.
In other words, a school district may choose to implement (or
not) any program or action, unless it is prohibited (or
required) by state or federal law, would work against the
educational improvement of its students, or would in some way
violate students' constitutional rights. Since there are no
statutory or constitutional prohibitions against a school
district instructing its pupils in the area of personal finance,
any school district may choose to offer such instruction even
without the specific authority granted in this bill. The first
proposal in this bill, however, would serve to emphasize the
importance of instruction in personal finance.
Committee Amendments: Committee staff recommends that the bill
be amended to reflect the more common description of the content
area under which economics and the proposed personal finances
curriculum fall - "history-social science". This change
conforms to the most common usage in statute and to previous
versions of the history-social science curriculum frameworks.
Previous legislation : SB 1448 (Alpert), Chapter 233, Statutes
of 2004, reauthorized language requiring the State Board of
Education to adopt statewide academically rigorous content
standards in the core curriculum areas of reading, writing,
mathematics, history/social science and science to serve as the
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basis for assessing the academic achievement of individual
pupils and of schools, school districts, and the California
education system. The grade 12 history/social science standards
focus on Principles of American Democracy and Economics. SB
1213 (Hart), Chapter 1158, Statutes of 1985, revises high school
graduation requirements by to include one semester in American
government and civics and one semester in economics. The bill
also appropriated $300,000 to the California State University to
supplement existing funding for the Centers for Economic
Education, which disseminate information to schools and provide
K-12 teacher training in economics.
Bills on personal finance and related subjects have often
appeared on the legislative calendar over the previous five
sessions. AB 448 (Torres), held in the Assembly Appropriations
Committee in 2009, would have required the Department of
Consumer Affairs to create and improve financial literacy (FL)
programs. AB 550 (Lieu), held in the Assembly Appropriations
Committee in 2009, would have established the California
Financial Literacy Initiative for the purpose of providing
financial resources and instruction to Californians to improve
financial literacy. AB 1122 (Duvall), held in the Assembly
Appropriations Committee in 2009, would have required the CDE to
develop and make available to school districts information
regarding instruction on the consumer credit system, including
its history, the manner of obtaining credit, the proper use of
credit, understanding credit reports, the correction of an
erroneous credit report, and ways of improving a credit report.
AB 1950 (Lieu), vetoed in 2006, would have permitted school
districts to provide instruction in economics courses related to
the understanding of personal finances, including budgeting,
savings, credit, and identity theft, and requires the Department
of Education to consider including a personal finances
curriculum in the next history/social science adoption cycle.
AB 2787 (Niello), held in Assembly Appropriations in 2006, would
have required a personal finances component to be added to the
content standards for economics in the history/social science
curriculum. ACR 6 (Koretz), Resolution Chapter 6, Statutes of
2005-2006, made April of 2005, Financial Literacy Month. ACR
120 (Niello), Resolution Chapter 34, Statutes of 2005-2006, made
April, 2006, Financial Literacy Month. AB 1492 (Evans), as
introduced in 2005, required the CDE to create a finance
sub-curriculum to be added to the history/social science
curriculum; the bill was later amended to a different subject
matter. AB 2435 (Wiggins), vetoed in 2004, was nearly identical
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to AB 1492. AB 707 (Correa), held in Assembly Appropriations in
2003, would have required the State Board of Education to
establish a Personal Financial Management Task Force to develop
educational programs that would instruct pupils in comprehensive
personal financial management in kindergarten and grades 1-12;
the bill also would have required this instruction to include
consumer education, debt management, and financial planning.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : Gerald Shelton / ED. / (916) 319-2087