BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 150
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          Date of Hearing:   April 25, 2007

                           ASSEMBLY COMMITTEE ON EDUCATION
                                 Gene Mullin, Chair
                     AB 150 (Lieu) - As Amended:  April 18, 2007
          SUBJECT  :   California Financial Literacy Initiative

           SUMMARY  :   Establishes the California Financial Literacy  
          Initiative and the California Financial Literacy Council for the  
          purpose of improving financial literacy in the state.   
          Specifically,  this bill  :  

          1)Makes findings as to the importance of educating the young  
            people of California in the area of financial literacy and the  
            use of credit.

          2)States the intent of the Legislature to establish a statewide  
            policy on financial literacy, provide a clearinghouse of  
            resources on the subject, and give school districts  
            pedagogical flexibility in teaching this topic.

          3)Creates the California Financial Literacy Council, within the  
            Department of Education, consisting of representation from the  
            department, the Treasurer, the Department of Corporations, the  
            Department of Financial Institutions, and the Controller.

          4)Charges the Council with providing a clearinghouse of  
            resources, disseminating materials, drafting curriculum and  
            standards in this subject.

          5)Authorizes the Council to promulgate regulations, receive  
            monies in a fund established for this purpose, and make grants  
            from that fund.

           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 the revision of textbooks and curriculum frameworks  
            in the social sciences, health, and mathematics to ensure that  
            these academic areas integrate specified components, including  
            financial preparedness.


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          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.

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   Financial literacy and use of consumer credit is  
          already provided for to some extent in model courses, textbooks  
          and curriculum frameworks. Many students receive instruction of  
          this sort 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 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.

          Supporters of the bill argue 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. They  
          also argue that a lack of 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  


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          The author states that the goals of the program are to:

          1)Provide students in kindergarten through twelfth grade with  
            tools they will need in the real world to manage their  

          2)Increase comprehensive services so students have reduced risk  
            for financial failure after high school; and 

          3)Promote high quality programs that provide instruction on  
            pertinent financial literacy issues as determined by the  
            Department of the Education and the Office of the State  

          The author also notes that the program is modeled after  
          successful financial literacy programs administered by other  
          states including West Virginia, South Carolina, Kentucky and  

           Related legislation  :  AB 1122 (Duvall) requires the department  
          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.

           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  
          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  


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          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 appeared  
          annually on the legislative calendar since the early part of the  
          decade.  AB 1950 (Lieu), vetoed in 2006, permits 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,  
          requires a personal finances component to be added to the  
          content standards for economics in the history/social science  

          ACR 120 (Niello) in 2005 set the month of April, 2006 as  
          Financial Literacy Month.  ACR 6 (Koretz), Chapter 6, Statutes  
          of 2005 made April of that year Financial Literacy Month.   
          Though later amended to a different subject, AB 1492 (Evans) as  
          introduced in 2005 required the Department of Education to  
          create a finance sub-curriculum to be added to the  
          history/social science curriculum; AB 2435 (Wiggins), vetoed in  
          2004, was nearly identical. AB 707 (Correa), held in Assembly  
          Appropriations in 2003, 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.   
          It required this instruction to include consumer education, debt  
          management, and financial planning.


          California Association of Collectors
          California Consumers United
          California Financial Services Association
          California Independent Bankers
          California Society of Certified Public Accountants
          California State PTA


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          Coalition for Financial Security
          Coalition for Quality Credit Counseling
          Educational Partnerships Foundation
          Healthcare Services, Inc.
          League of United Latin American Citizens
          The California Alliance For Consumer Protection
          The Each One Teach One Foundation

          None on file.
          Analysis Prepared by  :    Gerald Shelton / ED. / (916) 319-2087