(April 21, 2011) A bill that seeks to improve the financial literacy of adults in California by establishing a Financial Literacy Fund passed a state Assembly committee last week.
AB 597 (Eng; D-Monterey Park), supported by the California Chamber of Commerce, makes a step toward improving the financial literacy of adults in California by authorizing the State
Controller to establish the fund and convene an Advisory Committee for fund oversight made up of state agencies, non-profits, and financial institution representatives.
The purpose of the fund is to enable partnerships with the financial services community, and governmental and nongovernmental stakeholders to improve Californians’ financial literacy.
The controller would develop and share financial literacy materials, as well as connect resources not currently organized in a systematic manner.
The revenue for the fund would be comprised solely of private donations from entities with no direct financial interest in any financial products, and therefore would bear no cost to the state.
According to a financial literacy background paper submitted to the Assembly Banking and Finance Committee, in early 2006 there were 190 million credit card holders who charged an average of $8,500 during 2005, while the average outstanding credit card balance for American households with at least two adults was more than $13,000.
Moreover, in the same year, the savings rate for Americans fell to negative 1 percent, which is the lowest margin since the Great Depression.
Financial illiteracy and the consequences for uninformed financial decisions are a growing problem in California. In the long run, educating Californians would result in benefits to the economy by helping to prevent bankruptcies, foreclosures and job loss. Providing access to financial literacy tools is an important part of the solution.
AB 597 passed Assembly Banking and Finance with unanimous bipartisan support. The bill will be considered next by the Assembly Appropriations Committee.
Staff Contact: Marti Fisher