California Financial Literacy Standards and Mandates

Thanks for joining me as I review California’s latest financial literacy bill, 2927, introduced by Kevin McCarthy here recently, that will mandate financial education and make it a graduation requirement for high school students. So this video will focus on bill 2927. I will not be reviewing another bill that’s coming out of California as well from David Vellato. I’ll do so in a different video. His office has been in communication with us, asking us to back their bill, which will update the Financial Literacy Education and Improvement Act. We said, no, we cannot back it at this stage. We gave them suggestions. So once we hear back from them on those suggestions, we’ll see and we’ll do a special review on that. But again, today’s focus is on Bill 2927. And really it’s mandating financial literacy and making it a graduation requirement one semester for students graduating here in a few years. Now, currently the landscape of financial education in California is non-existent. There’s no mandates, no requirement it be taught, and really few students are ever getting any type of financial education in graduating into an environment that has one of the highest costs of living in the country where housing and food insecurity is amongst the highest in addition personal debt levels are extremely high so people are graduating from high school into a very challenging challenging environment so it’s critical especially for these youth to have a financial education and learn these concepts in a safe secure environment so they are well prepared right now the state’s absolutely failing and with bill 9 to nine to seven, they will continue to fail. This bill lacks any real difference. And I see major, major problems with this bill. But before I get too deep into that, I always want to thank people that are pushing these bills forward. I appreciate your efforts. Thank you for what you’re doing. But my goal is to elevate standards. I want to ensure students are graduate college or high school with the abilities to make competent near term decisions. Things like moving out on your own, if they’re going to buy a car, if they’re going to pay for school, the things that get most young people in trouble. I want every student to graduate prepared for those near-term challenges. And to do so, we need to elevate financial literacy so it meets the minimum education requirements of other topics. This bill does neither. I’ll point out some of the things. But first, I’m going to highlight one of the things I like about this bill. In many states, they’ll pass financial education bills that will require the state to start teach personal finance in classrooms, but they provide no funding for it. It’s called an unfunded mandate. So the politicians say, hey, you need to teach personal finance. The schools say, wonderful, where’s our money to do so? They say, you get no money, teach it anyway. At least California, and I’ll put a link to this bill in there, has a requirement. California Constitution requires state to reimburse local agencies of school districts to cover certain costs mandated by the state. If a commission mandates a bill, certain costs will be reimbursed to those schools. Even though it’s not very clear on the funding, I’m glad to see there is funding there. I would really like if it said, here’s how much we’re going to give toward financial literacy education, like we saw STEM years ago. Everybody was bragging how much money was going into STEM coursework. I want to see the same for financial literacy education, because I would argue it’s a more important topic and our kids need this to be prepared to enter the real world. So that was, I think, the one positive I have of this bill. Now let’s get into some of the text here. And you’ll find this, if you are following along, you’ll find this at the bottom of page three of the bill linked in the show notes below. So it basically says, Pupils, people graduating 29, 20, 30, this will be a mandate, a requirement that they have completed a class. Personally, I think it’s a little long. Now students in 2026 and 2027 will start to be taking the classes, but still that’s two years away. Now I get things take a while. I know red tape and all that stuff, but when you have an emergency need, Things need to be fast-tracked, and we do have an emergency need. We see it with debt levels, credit card levels, student loan debt levels. We see a major problem out there. If you go back to the education system, when Russia made it to space first with the Sputnik, There was a massive overhaul of the education system to ensure we were competing. A massive overhaul, massive change. And that’s what we need today. High school subjects are outdated and they’re failing to adapt to the new changing times. And this is just one example of how slow delays will cause the students for at least the next few years, some severe problems. So I’d love to see a world where there’s less red tape. If it’s going to help students, let’s get this fast track to helping them right now. The other thing I don’t like on this page, you’ll see here, it will be offered to kids in freshman to senior year, grades nine through 12. Now, if we’re doing a financial education class for students in ninth grade, and this is the only class that they’re going to get, no other class, By the time they get to the 12th grade or even graduate, they’re going to have forgotten a lot of what they learned, especially with the topics they’re teaching and how they’re teaching. We’ll get into that a bit. But by that time, learning loss will be so severe, so deep, it will have made absolutely no difference in their lives. It may have inspired a few students to get additional education. but not much of a difference. Now, if we were only teaching one semester course, it should be for students in the 12th grade, although I would argue it should be taught all four years and even elementary school. If we’re only teaching one age level, one grade level, it should be the senior year because then they can apply that in the near term. And application is the key thing to combat learning loss, and they’ll be able to benefit more from that as well. So that’s a big problem there. Also, I do not like sub point two there where it says they must use a locally developed personal finance course approved by the governing school district and charter school, whatever. Why does it need to be locally developed? It should be getting the most quality evidence-based curriculum out there that’s proven to make a difference. Now, I don’t want you to think I’m biased. We have a California chapter of the Financial Educators Council, so we likely would qualify. But even with us, I would welcome more competition to ensure that these kids are getting the highest quality material. So this thing of locally sourced, it doesn’t make a lot of sense to me. Let’s get these kids the best education possible and not worry where it comes from. I think that will open up a free market to have people compete at a very high level to earn that honor of educating students of California. So, again, a few problems. If it’s going to be one class, one semester, it needs to be in the 12th grade. Forget about locally sourced. Let’s just make sure they’re getting the highest quality materials. And let’s fast track this education so they’re getting what they need. Let’s move on to the topics being taught. This moves on just to page four. So the very next page, you’re gonna see the topics they’re talking about teaching. So I’m gonna talk about language in a second, but there’s a lot about language I don’t like, and I’m gonna get to that in a second. So for those of you familiar with the webs and the hierarchy of learning, we’ll talk about that in a second, but let’s just cover the topics here. So sub point one, it says developing a budget and skills for independent living. Okay. Now, I think it’s good. I think they’ve listed a life stage, which is good, a lot better than most states. It says for independent living, but it doesn’t give very clear guidance. Budgeting skills, right, is very general, and I think it needs to be more specific and outcome-based so it’s clear for the teachers and clear for the mandate. So they could do a lot of tweaking there. But I do like the fact that they mentioned a life stage, which is independent living. Now, if it was just worded a little differently, hey, develop the skills, confidence systems and behaviors that will help them successfully manage independent living. Now, that’s a much clearer barometer to try to shoot. The second bullet point. understanding tax system, including impact on personal income process to file taxes, how to read tax forms and pay stubs. Yeah. You know, I think really, uh, Hiring a professional to do your taxes is always important. You can spend an entire year on the tax system. It’s so complex. Now, basic taxes are one thing, but I still think with the consequences there, you can apply much more relevant topics to them. And I think it’s important that students are encouraged to find team members that are qualified and competent to do that instead of doing their own taxes. That’s my thought. Next, bullet point three. understanding retirement accounts, investment accounts, IRAs, stock bonds, mutual funds, index funds. I think it’s great, but They don’t, if we have time to address their near-term needs, that’s great, right? If we got through and we knew every student was competent, they can make qualified decisions on their near-term things, wonderful. Let’s teach this as a luxury. But because we’re not getting them anywhere close with this bill, one semester of personal finance, that’s it, just one semester. I think this is way too much. You could spend several years on these topics. And I think it’s your two problems there. It’s too much information to include in class. It’ll eat up a lot of time and they cannot apply it in the near term. Instead, if they made an outcome like encouraging students to find investing options that they’re interested in and committing to lifelong education there, Very simple, but that’s what people need to do. We can’t teach them enough to ever benefit them. By the time they’re ready to invest, let’s say they do really well, five, 10 years they’re ready to invest, which is not the norm for most, then they’ll still forget what they’ve learned in this class. So I think we can inspire them to gain additional education, but too much, too advanced, and it’s failing to still address near-term topics. The next one, evaluating types of credit. And dangers, I think it’s good. But again, we’ll talk about language in a second. I’m not going to get in there. Next, understanding the importance of managing credit, establishing credit rules, credit scores. You know, through this whole thing, there’s nothing talking about debt specifically or repayment of debt or what it costs to repay, how interest rates impact debt. And I think that’s an important topic that they fail to include anywhere in here. Next, consumer protection skills, fine, great. Next, identifying means to pay for college. I think that’s fine. Or workforce education. I’m glad they included some other option in the college. College isn’t for everybody. And for those that aren’t, why make them sit through a class? Let’s focus on that. I think it should be a separate thing. If you’re going to college, you need to go through a separate class to understand how to fund, how to pay, and what it means to take out a student loan. And lastly, learning about the features of bank accounts, including how to manage an online account and minimize fees. Fine. I think that’s all well and good. But there is some missing options. I think we’re missing a lot of the life stage options that they’re going to face. Transportation options. How are they going to buy a car? What are they going to do? What are they going to do for transportation? What does that look like? And you can make a class. If you’re doing this all four years, for sophomores, that’s a very motivational class. And you can teach them budgeting, credit, goal-setting. income, all these things under the goal of buying a car. And then this could build in their senior year with a class on moving out on your own and having them actually do a project-based learning course where they’re going through and investigating how much it costs for rent. finding out how much cable costs, finding out how much cell phone costs and building out a budget, what it would look like to move out on their own. We can do some cool things. They just listed a bunch of random topics. Many of these don’t work together. Many of these are too advanced, but the biggest problem I have here crosses is the language they are using. Let me get into this. For those not in the education space, there’s learning frameworks. We have Webb’s Depth of Knowledge and Bloom’s Hierarchy of Learning skill sets. And basically, the language they’re using is at the lowest level of learning, recall, reproduction, understanding, remembering. They’re not using higher order thinking skill sets like create, analyze, evaluate. There’s a major problem there. When you get people to very low levels of learning, they’re going to forget learning loss is steep. If somebody can pass a test in the near term, they’re going to forget things within a year if you’re just getting them to that basic level. Let me give you an example of the language they’re using. So the first main thing, if we go back here, if we go back one slide, the very top thing right here. It says, personal finance course may include content designed to develop knowledge of topics. For every teacher out there, they’re going to understand knowledge means here. This is the area of knowledge. It’s not creating, evaluating, analyzing. All teachers know these frameworks, right? So when you use this, it’s either written by somebody that has no experience in the education space and they’re just making up words. Or it’s had people that are qualified to give guidance here that know that with the time limit they have, they can never get people to the application analysis and creation phase, right? And that’s where real learning and real difference occurs. So we see it here. Develop knowledge, understanding, understanding, evaluating. Okay, good. Evaluating types of credit. But it’s, yeah, that’s one good term. Understanding. Enhancing. identifying low level learning, learning very low level, all but this evaluating is very low level skills. So if I gave this to a teacher, they’re gonna say, oh, hey, we just need to get them to possess that knowledge, which on blooms and webs is down here. Again, when you’re down here, that’s not gonna benefit students at all. Let me give you an example. Hey, if I’m teaching a class where I need to get them to have knowledge, right? They’ll end my class with knowing, hey, let’s say I do a class on credit. They’ll know there’s three credit bureaus, seven or 800 is a good credit score. They’ll understand that, hey, they should pay their bills on time and keep their debt low. They’ll have that knowledge maybe for a week, maybe a couple of weeks, maybe a month. It definitely will not last a year. They’re definitely going to forget unless they’re really smart and unique because people don’t, if you’re not applying what you learned in the near term, you’re going to forget happens to all of us. Now, if I get somebody to these levels, creating, evaluating, analyzing. Now I have a student that is able to get a copy of their credit report, analyze what’s on there, create a plan to build their credit, create systems to manage their accounts so they’re not paying bills late, automated bill pay, et cetera, creating a calendar system for follow-up so they know to check their credit a few times a year. Now we’ve made a real difference because they’re applying what they’ve learned. They’ve built out systems that will follow them and carry with them. And this bill completely fails on that. I don’t know if it’s intentional or non-intentional, but with a one semester class, you’re exactly right. You’re going to be at this low level of knowledge, which will make absolutely little difference in anybody’s lives. I would much rather them focus, if they have one semester, narrow down the topics, dump the advanced topics so they can really focus and help students achieve higher order thinking skill sets on a few concepts that will protect them. Maybe a budget and credit debt, et cetera. Those are the main pain points you face. But they have absolutely failed there. And again, I don’t know if it’s intentional or not, but that is a problem. That language is a problem. And I learned about this language. We partner with Charlotte Danielson’s team of consultants. For those that aren’t familiar with Charlotte Danielson, she wrote the Framework for Teaching, one of the most widely used frameworks for educators, traditional educators, first through 12th grade across the country. and one of the first meetings they said is language is important what how you’re describing things is critical when you’re describing learning outcomes pay very close attention and you give clear instructions on what that outcome should be because teachers follow that so obviously again they’re not pulling in the right consultants or they understand that their bill will make absolutely no difference in students lives so With that said, let me get into the rating system. I’m going to go through 12 key points on how we rate financial literacy bills. Again, my goal isn’t to be some mean guys making fun of people that wrote this bill. It is to elevate standards so our kids are protected. So we know they have the skill sets that will help them avoid problems. I went through many of you went through when you were coming out of high school for the first time. So it’s a 12 point rating scale. We’ll go through one by one. Is it delivered in a standalone class? Yes. Good job. Is it integrated into other subjects? No mention of that. And the reason this is important, especially with a one semester class, we need repetition. We need hearing it from other ways. I’m glad it’s a standalone class. Great job there. But it is not integrated into other subjects. So I’m going to give it a yellow mark there because we’re getting one out of two. I’m going to be a little generous here for California on that one, but I’m glad it’s a standalone class. A lot of states have it integrated with other subjects with no standalone. So good job. Semi-good job. Does it assign adequate time and rigor? Absolutely not. Miserable failure there if we look at two things. One, there’s not enough time. And second, the language they’re using is low rigor. Knowledge, understanding, low rigor. So major problem there. Conduct ongoing education to support long-term outcomes. Nothing mentioned there. So after the class is done, there’s no follow-up, no support. You know, if you’re going to high school, then you go to college on like English, math, science, you’re going to get that follow-up education, right? When you have a one semester course and that’s it, you’re going to forget about it. Most students will, which is a missed opportunity. Relevant content that prepares students for near-term life events, nope. And in fact, they chose to talk about very much advanced life events that the students won’t face in the near term. And if they get into debt or other trouble financially early on, now they’re putting off investing in those other topics they were mentioning for many, many years. Some people don’t start investing or saving for the future until, well, they’re in their 40s, 50s, even 60s, 70s, right? You know those people, I do, and it’s sad. I want these kids. to grow up into adults that have a good momentum in their favor so that life events preparation is key adopt proven curriculum that encourages higher order thinking skill sets fail there on two things first the curriculum as what they’re stating low level learning skill sets not high rigor not higher order thinking application at all big miss in addition they limit their curriculum provider to local again i don’t think that’s needed Next, customized lesson plans based on student need. Fail there. And let me just tell you this. I come from Southern California. I grew up in Huntington Beach. I love the city. I love the state. I love the weather. I love the people too, right? I just enjoyed it. But I grew up in Huntington Beach where one side of Warner Avenue was very wealthy school district. They had money. They’re spending millions and millions of dollars on track and field and all this stuff. On the other side, right across from Warner was Santa Ana School District, one of the poorest school districts there. 20 minutes up the road, we had Long Beach and LA, which were very low socioeconomic school districts. And when I came up, when I started financial education, that was my market. So one day I’d be in Huntington Beach or Newport Beach or Laguna Beach. Next day I’d be in Santa Ana, downtown Los Angeles or somewhere in Long Beach. Completely different types of people socioeconomically. What I found is people in lower socioeconomics actually had more skill sets on budgeting and delayed gratification. They got those concepts very well. Where they lacked was hope. on the other side of town the more wealthy town uh it was you know they had uh they did not have those skill sets delayed gratification they didn’t understand buddy much they were used to getting credit cards by their parents now not everybody i’m generalizing here but a lot of that was and i saw that i’ve done several hundred events if not closer to a thousand events in that area that’s where i started So I know firsthand we need to modify curriculum slightly based on people’s socioeconomic status. They failed to mention that as well. And anybody teaching various groups like that will be able to say that is an important piece. Next, courses led by highly qualified educators. Absolutely no mention of teacher training. Zero mention of teacher training. And a qualified teacher is the biggest indicator of student success. So I can give a great teacher a very bad curriculum, the class will turn out well. So the fact that they don’t mention teacher training, and the fact is I know who are tapped on the shoulders to teach. I’ve talked to coaches. I’ve talked to English teachers. I’ve talked to social studies teachers that never have a background in personal finance. They’re told, hey, you have a mandate now. You need to go teach this. And they have to figure it out, right? And typically it’s the younger teachers that are just coming in. Oh, great, I got a new subject now. So that’s a big problem. Personal finance is a unique subject to teach. It takes unique skillsets. You need to understand the behavior of money, psychology, emotional state of money. All these kids have different habits, goals, beliefs. It’s a challenging subject. And also these teachers that went to school taking English, math, science, all those that they’re teaching for years, elementary, high school, college. And instead, now they’re told to teach personal finance that they have no background in. Right. It’s a challenge when we do teacher training for districts. It’ll often get hijacked with teachers asking questions about their personal finance. So big problem there. Next program led and deployed by experienced leaders. By the way, this bill was written. There’s been no consultation or it’s a miserable failure on their part. Learning outcomes, focus, and assess. No mention of learning outcomes, right? Now, I’m guessing they’ll do some testing because it is a mandate, but with learning outcomes for personal finance, it’s different. We need to measure sentiment, confidence, behaviors, outcomes. Systems are setting up. There’s many things we can measure to determine if the class is having a real impact. They mentioned nothing there. Funding, again, I would like for them to have mentioned a specific funding source like they did with STEM. Hey, we’re going to inject this much money in here to make sure our kids are protected. They didn’t do that, but the California Constitution has some funding. It looks like it’s set aside there. A fail here too, nothing mentioned about elementary school. And it’s easy to integrate financial education into elementary school. Very simple because we’re teaching literacy and numeracy. You can interject financial literacy very easily without disrupting the class. They haven’t done so. And encouraging parental involvement. Now there was one mention, hey, they’re going to review the curriculum with the parent board, which is good. But what I mean by parental involvement here is where you’re, getting the parents to participate in the child’s, uh, financial education as well. And they have not done that. So meaning a, we’re giving lessons to your kid. Here’s what we’re teaching your kid. Here’s how you can help support the school and outcome. Here’s some activities you can do with your kid at home. They have not done that a big miss. So let’s take a look at this overview again. A big, big fail there across the board. I gave them, um, uh, you know, some, some, uh, some challenges there with this. So we have two all X’s and two okay symbols. Not a good job, California. You can do better. You need to, your populace needs you to perform at a higher level. These kids are graduating into a very tough, an expensive environment. It’s expensive to live there. You need to prepare them, please. Now, I just didn’t come with problems. We have written policy and framework standards for legislatures enacting these personal finance bills. So it’s aligned with research-based education principles. So it’s meeting standards for education. So it will help the students and put them in the best position to win financially. The key goals of this, all we’re asking for are very simple. Financial literacy should meet the minimum education standards of other topics. If you’re teaching math, you need to have qualified teacher. You need to have good research-based curriculum. You need to have clear outcome goals. You need to work them toward higher order thinking skill sets. Enough time and rigor in one semester is not enough. Very simple. That’s what we’re asking for there. The second thing is that every student graduates prepared to meet near-term decisions. That should be a must, right? I don’t want kids experiencing that pain, that struggle, that lifelong, many people struggle for life. One credit mistake early on, just doing something dumb. You know, when you graduated high school, you probably made some dumb mistakes. I did. I can probably count hundreds of mistakes I made early on. And it’s easy to get behind one credit mistake. That can be five, seven years putting you back, maybe missing job opportunities, maybe paying higher rate on your car, maybe not being able to rent a place. A lot of problems can occur. Students, every student across the country should graduate prepared to meet their near-term financial decisions. I thank you for joining. Please help us elevate personal finance standards across this country. Bills like this are unacceptable. They will do little to make a difference in our students’ lives. And that’s what we need to be supporting, quality bills that have enough rigor time to actually make a real difference.