2008 financial literacy efforts

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MemoTo: Members of the Financial Literacy Public Private PartnershipFrom: Representative Sharon Tomiko Santos, FLPPP ChairRe: 2008 Financial Literacy Legislation and Funding Requests

This memo intends to briefly outline the various pieces of legislation and budget itemsthat were introduced and passed into law this past session that pertains to financialliteracy efforts.

I am also including the seven Consumer Education and Financial Literacyrecommendations developed by the Governors Task Force on Homeowner Security thatwas presented to the legislature before the start of the 2008 legislative session.

1. Legislation

HB 2829 (Kelley) SB 6272 (Berkey) One of the two Governors request legislation onhomeowner security that would have the Department of Financial Institutions (DFI)establish, administer, and implement financial literacy and education programs. Thesewould include but not be limited to: (1) Education and outreach programs that assistWashingtonians in understanding saving, investing, and budgeting, and other skillsnecessary to obtain individual financial independence, fiscal responsibility, and financialmanagement skills. (2) Counseling, marketing, and outreach programs regardingresidential mortgage transactions, nontraditional or subprime mortgages, predatorylending practices, or other financial products or practices in the marketplace relating tohomeownership.

The DFI would also convene an interagency workgroup to identify current state fundedefforts to support financial literacy, assess whether there are opportunities to create acentralized location of information regarding these existing state efforts, and to identifywhether there are opportunities for expanding partnerships with other community entitiesalso providing financial literacy services. (SB 6272 Signed into law)

HB 2898 (Darneille) - The Washington asset building coalition (WABC) is created. Itsmission is to provide statewide leadership on initiatives that foster financial self-sufficiency and economic security for low-income working families and foster youth. TheWABC shall work with CTED, community asset building coalitions, and other public andprivate sector partners to perform and execute a number of duties, specifically expandingfinancial literacy opportunities and outcomes. The legislation had a $2m budget

appropriation for the Individual Development Account program. (Not signed into law)

HB 3164 (Kelley) Thehomeownership security account is created and the DFI mayprovide funds from the account for the establishment, administration, and implementationof financial literacy and education programs, including but not limited to:(1) Education and outreach programs that assist Washington citizens of all ages inunderstanding saving, investing, budgeting, and other skills necessary to obtainindividual financial independence, fiscal responsibility, and financial management skills.

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(2) Unbiased information and counseling regarding residential mortgage transactions,nontraditional or subprime mortgages, predatory lending practices, gap financing anddown payment assistance programs, or other financial products or practices in themarketplace relating to homeownership.

This legislation would also allow private or nonprofit organizations to deposit funds inthe homeownership security account. More than fifty percent of the funds from thisaccount must be used to assist low and moderate-income persons. (Not signed into law)

HB 3221 (Santos) A financial services intermediary would be created to improve theability of low-income individuals to access and use mainstream financial products offeredby financial institutions. Some of the primary duties of the intermediary are as follows:

improve the ability of low-income individuals to access and use mainstream financialproducts offered by financial institutions; identify strategies to make more mainstream financial products available to low-income

individuals; coordinate with financial institutions to leverage the financial resources of low-incomeindividuals to offer mainstream financial services to those individuals; and consult and cooperating with organizations and government agencies that are alreadyengaged in asset building and financial literacy activities. (Not signed into law)

2. Budget

Homeownership Counseling - Senate Bill 6272 bill was the first bill signed into law thissession and also had a $1.5m appropriation specifically designated for homeowners pre-purchase and post-purchase counseling and support. $700,000 was allocated for fiscalyear 2008 and $800,000 is allocated for fiscal year 2009.

3. Governors Task Force on Homeownership Security Consumer Education andFinancial Literacy Recommendations:

1. The State fund the expansion of financial literacy through established networks in theworkplace, community organizations, state and local government agencies, our states K-12, community college and higher education systems, and other organizations. (Notdeveloped into legislation)

2. The incorporation of financial literacy in our K-12 schools as part of our WashingtonAssessment of Student Learning (WASL) curriculum. (Not developed into legislation)

3. Using available state government information resources to provide a centralizedlocation for consumers to obtain financial literacy and counseling information, includingthe linking of all state Web sites with financial education information from a singledesignated location. (Included in HB 2829 & SB 6272 Section 3)

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4. Forming and utilizing partnerships with local private sector resources, communitycoalitions such as the Washington Asset Building Coalition and government to promotefinancial literacy. (Included in part of the requirement of HB 2898 Section 3)

5. Increasing private and public sector funding for financial literacy from a variety of

local, state, federal and private sources. (Included in HB 3164 Section 3 and SB 6272Section 4)

6. Washington should demonstrate leadership by developing, in concert with public,private and education sector partners, a standard, national definition of financial literacyto be used across all segments, along with nationally standardized, qualitative andquantitative measures to evaluate the short and long-term impact of financial educationprograms. (In the 2006 Interim FLPPP report the group defined financial literacy as:[t]he achievement of skills and knowledge necessary to make informed judgments and

effective decisions regarding earning, spending and the management of money and

credit.)

7. Providing greater financial and other support for the mission and goals of theWashington Financial Literacy Public Private Partnership. (No additional funding orlegislative requirements given to FLPPP in 2008)

8. Encouraging federal regulators to classify substantive financial literacy outreachefforts as innovative and responsive for the federal Community Reinvestment Actpurposes. (Not developed into legislation, but DFI sent letter to federal bankingregulators. Please see attached pdf documents)

2008 financial literacy efforts

Documents