BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Alan Lowenthal, Chair
2011-12 Regular Session
BILL NO: SB 1080
AUTHOR: Lieu
AMENDED: March 22, 2012
FISCAL COMM: Yes HEARING DATE: March 28, 2012
URGENCY: No CONSULTANT:Beth Graybill
SUBJECT : Pupil instruction: Personal finances.
SUMMARY
This bill provides that instruction in economics may include
instruction related to personal finances and would require
the California Department of Education to develop a personal
finances curriculum in the next adoption cycle of the
mathematics and history and social science curriculum
frameworks.
BACKGROUND
Current law requires the State Board of Education (SBE) to
adopt statewide academic content standards in core curriculum
areas, pursuant to the recommendations of the Commission for
the Establishment of Academic Content and Performance
Standards. The History-Social Science Standards for
California Public Schools were adopted in 1998 and the
curriculum framework for those standards was adopted in
October 2000. (Education Code � 60605)
Although the update of the history-social science framework
was originally scheduled to be completed in 2010, the process
for reviewing frameworks and adopting instructional materials
has been suspended since July 2009. Current law prohibits
the SBE from revising and/or adopting instructional materials
until the 2015-16 school year. (EC � 60200.7)
Current law establishes the Academic Content Standards
Commission and requires the Commission to develop academic
content standards in language arts and mathematics and
requires 85 percent of these standards to be common core
academic standards (CCS). Further, current law calls for the
SBE to adopt revised curriculum frameworks and evaluation
criteria that are aligned to the common core standards for
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mathematics and English language arts no later than May 30,
2013 and May 30, 2014 respectively. (EC � 60207 and �
60605.8)
Current law requires the SBE, after January 1, 2003, to
ensure that the revision of textbooks or curriculum
frameworks in the social sciences, health, and mathematics
curricula integrate certain components, including financial
preparedness.
(EC � 51284)
Current law requires the adopted course of study for students
in grades 7-12 to include specified content in social studies
and requires students in grades 9 to 12 inclusive, to
complete, as part of the high school graduation course
requirements, three courses in social studies, including a
one-semester course in economics.
(EC � 51220 and � 51225.3)
ANALYSIS
This bill :
1) Provides that instruction in economics may include
instruction related to the understanding of personal
finances, including, but not limited to, budgeting,
mathematics, savings, credit, and identity theft.
2) Requires the California Department of Education (CDE) to
develop a personal finances curriculum in the next cycle
in which the mathematics and history-social science
curriculum frameworks are adopted.
3) Includes various findings and declarations relating to
the personal finance literacy, stating in part:
a) California does not have an official statewide
policy or educational plan for teaching financial
literacy.
b) Americans 25-34 years of age have the second
highest rate of bankruptcy, just after Americans 35
to 44 years of age. The bankruptcy rate among
Americans between 25 to 34 years of age increased
between 1991 and 2001, indicating that those
individuals were more likely to file bankruptcy as
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young adults than were baby boomers at the same
rate.
c) The national annual savings rate has declined
from 9 percent in the 1980s to approximately
negative 0.4 percent of after-tax household income,
which is a level not seen since the Great
Depression.
d) California high school seniors taking part in
a national survey of financial knowledge scored an
average of 44 percent, which is four percentage
points lower than the national average.
e) Thirty-eight states report having personal
finance standards in various forms, while nine of
those states currently include personal finance
instruction as part of their graduation
requirements.
STAFF COMMENTS
1) Need for the bill : According to the author's office,
while current law provides schools with the flexibility
to teach budgeting, savings, and personal finance, most
pupils do not receive this information and many leave
high school ill equipped to manage their finances
responsibly, establish and maintain good credit or
protect themselves from fraud, deception, predatory
lending, or identity theft. According to the U.S.
Financial Literacy and Education Commission
(Commission), "The recent economic crisis has
highlighted how essential it is that individuals and
families have the information, education, and tools that
they need to make good financial decisions in an
increasingly complex U.S. and global financial system."
A major goal of the Commission is to increase awareness
and access to effective financial education.
The author also states: "A lack of financial knowledge is
especially problematic for the most vulnerable members
of our society. The poor, the elderly, and minority
groups can be victims of fraud and deception, predatory
lending, and other such abuses. Financial education is
a crucial weapon in our arsenal to protect our citizens
from these types of attack."
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2) Where does financial literacy instruction belong ? The
State is currently in the process of transitioning to
Common Core State Standards. In 2009, the Council of
Chief State School Officers (CCSSO) and the National
Governors Association Center for Best Practices (NGA
Center) committed to developing a set of standards that
would help prepare students for success in college and
career. The SBE adopted the Common Core State Standards
(CCSS) for English language arts and mathematics on
August 2, 2010 and is in the process of developing
curriculum frameworks for those standards. The timeline
calls for the SBE to adopt the revised mathematics
framework by November 2013, with implementation in
schools expected during the 2013-14 school
year.
The update to the current History-Social Science curriculum
frameworks was nearly complete when the work was
suspended in 2009. Even if the update is completed in
the near future, it is possible the process and cycles
for revising frameworks and instructional materials will
change as California collaborates with other states in
implementing common core standards and assessments.
Given that the landscape has changed and given that
current law already mandates that financial literacy be
included in future frameworks and instructional
materials, it is unclear whether this bill will achieve
the author's intended effect.
3) Public awareness efforts . The SPI has launched a
financial literacy awareness campaign to provide
schools, teachers, students and parents with access to
supplemental resources that can help students develop
knowledge and understanding of money management. The
goal of this initiative is to provide schools, teachers,
students, and parents with access to supplemental
resources that can help students develop a keen
understanding of responsible money management and
increase their overall financial literacy. The CDE
hosts an online resource library for grades K-12 that
provides more than 30 Internet links to programs that
are appropriate for use in the classroom or at home to
increase financial literacy.
4) Fiscal impact . This bill is substantially similar to SB
779 (Lieu, 2011) which would have encouraged personal
finance instruction and required the CDE to consider
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developing a personal finances curriculum. That bill,
was passed by this Committee on a 9-1 vote, and was
placed on the second reading file pursuant to Senate
Rule 28.8. The bill is currently located in the
Assembly Appropriations Committee. The Assembly
Appropriations Committee Analysis for SB 779 noted that
in order for SB 779 to be implemented, curriculum
framework adoptions must resume, which requires at least
$150,000 for the CDE to conduct framework development,
as specified. Additionally, the analysis noted that
there could be General Fund cost pressure ranging
between $75,000 to $150,000 to develop personal finances
curriculum.
5) Related and prior legislation . SB 1540 (Hancock), which
is scheduled to be heard in this Committee on March 28,
would, by June 30, 2014, require the SBE to consider the
adoption of a revised curriculum framework and
evaluation criteria for the instructional materials in
history-social science.
SB 223 (Wyland, 2009) required that one-half of the economics
course required for high school graduation focus on
personal finance and financial literacy. This measure
was passed by this Committee on a 9-0 vote and was later
held by the Assembly Appropriations Committee.
AB 1502 (Lieu, 2008) would have required the SBE and the
Curriculum Development and Supplemental Materials
Commission to ensure that information about financial
literacy is included in appropriate subject area
frameworks, encouraged school districts to include
instruction in personal finance, as specified in
economics, and authorized the Superintendent of Public
Instruction to accept private donations for the purposes
of that Act. This measure was passed by the Senate
Education Committee on a 8-0 vote and was subsequently
vetoed by Governor Schwarzenegger.
AB 150 (Lieu, 2007) would have required the SPI to administer
a California Financial Literacy Initiative (CFLI) as a
program for improving pupil financial literacy. This
measure was passed by the Senate Education Committee on
a 9-0 vote and later vetoed by Governor Schwarzenegger.
AB 1950 (Lieu, 2006) would have authorized school districts
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to provide instruction in economics courses relating to
the understanding of personal finances including
budgeting savings, and credit. This measure was passed
by the Senate Education Committee on a 9-0 vote and was
later vetoed by Governor Schwarzenegger.
AB 2435 (Wiggins, 2004) would have authorized school
districts to include instruction related to the
understanding of personal finances, including budgeting,
savings, and credit. This measure was passed by the
Senate Education Committee on a 8-1 vote and was vetoed
by Governor Schwarzenegger.
In his veto messages for these bills, then Governor
Schwarzenegger opined that school districts already have
the flexibility to incorporate money
management into their lesson plans and the content
standards are intentionally broad in order to allow
coverage of various issues.
SUPPORT
California Communities United Institute
California Credit Union League
California Independent Bankers
OPPOSITION
None received.