The following post is a reprint of a commentary that first appeared on April 23, 2022 in the Times Union of Albany, New York, authored by Richard Liskov, Esq., Senior Counsel at Arent Fox and a fellow member of the Insurance Law Committee of the Association of the Bar of the City of New York, including its Legislative Subcommittee.
Mr. Liskov's commentary highlights the Committee's interest in a proposed amendment to New York State education law which would require all New York high schools to include, in their curriculum, a course or series of courses, imparting to students (as a prerequisite to graduation) topics of basic financial knowledge useful to them during their adult careers and lives.
The commentary is reprinted on the website of the Federation of Regulatory Counsel, Inc (www.FORC.org). with permission of its author and without objection from the Times Union of Albany, New York.
New York Students Need a Course in Personal Financial Literacy
Recent legislation in Florida, Texas and other states preventing public schools from teaching certain controversial subjects has stirred anger. New York public schools need to mandate something that should not incite controversy at all-- requiring public high schools to teach personal financial literacy. Every year thousands of New York high school graduates enter adulthood with only the vaguest notion of the tools they will need to be productive citizens: for example, what an auto insurance policy covers and does not cover, what a credit score is and why that is important, how to maintain a checking account with the least amount of fees, how to apply for college loans, the relative advantages and disadvantages of leasing a car or buying a car with a loan, and what the risk/reward rubric is for investments.
The Legislature should mandate, or Commissioner Rosa and the Regents should require by regulation, every public high school in the state to develop a separate personal financial literacy course for students to take in the tenth, eleventh and twelfth grades. The Council for Economic Education surveys financial literacy curricula in all states and found that as of 2022 New York does not require any separate personal financial literacy course for high school students, but merely suggests possible topics to be integrated as part of a one-half credit requirement (one credit in New York City) that students complete in economics.
A 2018 study by the respected Brookings Institution found that in New York only three of the fifteen standards for financial literacy were being taught. The Brookings report stated:
“In New York, the DOE framework for “Economics, the Free Enterprise System, and Finance," which can be used to teach the economics course required for high school graduation, contains a few financial literacy standards (three of 15 standards). (Emphasis added)
There are presently several bills pending in the New York State Legislature, such as A. 731, A. 6234 and S.7257, which would mandate high school instruction in personal financial literacy, but these proposals were referred to the Education Committee in each house in January, 2021, where they remain. By contrast, students in Alabama, Iowa, Mississippi, North Carolina, Ohio, Tennessee, and Utah are required, by law, to pass a separate high school course in personal financial literacy, and just recently, the Florida Legislature unanimously voted to mandate a separate financial literacy course.
Yet here in New York--the financial capital of the world--, it is deeply dismaying that a student can graduate high school and even obtain an Advanced Regents Diploma without ever receiving this valuable, essential instruction. As the Brooking Institution found, that some school districts in the State may briefly cover related topics as part of broader instruction in a one-half credit economics course (or one credit course in New York City public schools) is hardly a sufficient means of educating thousands of New York high school students in what they need to know about banking, insurance, investing and borrowing.
Indeed, the quality of instruction for financial literacy in our state is currently so abysmal that the New York State Education Department has posted on its website a document entitled the “Grades 9-12 Social Studies Framework”. The Department document lays out what topics in history, civics and economics New York high school students should learn. In the section on economics the Framework devotes all of two paragraphs to understanding the role of credit as informed consumers, but it contains not one single mention of the importance of knowing about checking accounts, savings accounts, individual retirement accounts, money transmitter services such as Zelle and Venmo, student loans, car leases, auto insurance, health insurance, homeowners/renters insurance, and life insurance.
The Department of Financial Services provides much useful and detailed information to consumers about various types of insurance and about banking services, credit and student loans on its consumer web pages. Yet the Department has not published statistics showing how many New Yorkers have read any of these materials, and there is no systematic effective program to encourage, let alone require, high school students in New York to read them.
School districts should not have to spend scarce funds to train teachers to present lessons in personal financial literacy. There are a wide variety of internet-based lesson modules and other materials developed by experts and made available through organizations such as CentsAbility, Jump$tart, and The Council for Economic Education. The Federal Reserve also offers online information about banking and credit which a school district can easily adapt with assistance from the State Education Department. Teachers do not have to administer in-class examinations to students. A pass/fail assessment can be taken online.
If public officials in Alabama, Florida, Mississippi, and Tennessee can insist that their high school graduates know the essentials of banking, insurance, investments and credit, there is absolutely no reason for New York to leave its high school graduates bereft of this critical information. Hopefully Governor Hochul and New York legislators, or Chancellor Young and the Regents and Commissioner Rosa, will act this year to give our high school students the financial literacy tools they will need to navigate an increasingly complex world.
Richard G. Liskov is a former Deputy Superintendent and General Counsel of the New York State Insurance Department and former Assistant Attorney General of the State of New York.