SB 1080 Fact Sheet

							                                                                           Senator Ted W. Lieu
                                                                                           28 th Senate District


                                                            FACT SHEET
                                               SB 1080 Financial Literacy

Background                                                         the elderly, and minority groups can be victims of fraud
                                                                   and deception, predatory lending, and other such abuses.
The United States’ Financial Literacy and Education                Financial education is a crucial weapon in our arsenal to
Commission has developed a new national strategy to                protect our citizens from these types of attack.
promote financial literacy and education.                          Understanding personal finance is a consumer’s first line
                                                                   of defense against financial rip-offs and scams. Those
According to the National Strategy for Financial Literacy          most vulnerable to these attacks are precisely the people
2011, “The recent economic crisis has highlighted how              who have the most to gain by a concerted statewide effort
essential it is that individuals and families have the             to raise Californians' level of financial knowledge.
information, education, and tools that they need to make           Youth and Credit Cards
good financial decisions in an increasingly complex U.S.
and global financial system. Indeed, as we have learned,           Americans 25 to 34 years of age have the second highest
the financial difficulties of individuals and families can         rate of bankruptcy, just after Americans 35 to 44 years of
dramatically affect the financial health of local                  age. The bankruptcy rate among Americans between 25
communities and regional markets. The crisis has also              to 34 years of age increased between 1991 and 2001,
illustrated that the financial well-being of individuals and       indicating that those individuals were more likely to file
families is fundamental to national financial stability, and       bankruptcy as young adults than were baby boomers at
that a lack of financial literacy is one barrier that can          the same age. The national annual savings rate has
lower standards of living and limit prosperity.”                   declined from 9 percent in the 1980s to approximately
                                                                   negative 0.4 percent of after-tax household income,
The National Strategy 2011 has four goals. Goal 1 is to            which is a level not seen since the Great Depression.
increase awareness and access to effective financial               Many states have already recognized the importance of
education, including an objective to “provide unbiased             financial literacy.
and understandable financial education resources at
financial decisions points, such as during the home-               Thirty-eight states report having personal finance
buying and college financing, and as part of the education         standards in various forms, while nine of those states
strategies shared in schools, colleges and career and              currently include personal finance instruction as part of
technical centers as well as work places.                          their graduation requirements. Increasing the financial
                                                                   literacy of all economic and ethnic groups is documented
Financial Literacy                                                 to improve attitudes, lead to improved decision making,
                                                                   and provide for a more secure future for individuals and
Financial literacy is the familiarity with the money,              their families, who have been educated with regard to
banking, and credit system. Financially literate people            these issues.
know where to go to apply for a loan, the power of credit,
and how to establish a credit rating. In general,                  Financial literacy is an essential ingredient for creating an
financially literate people know how to best use their             active citizenry that is able to understand how the state’s
income to build wealth.                                            budget decisions will affect their personal lives. The
                                                                   teaching of financial literacy skills is vital to equip the
A lack of financial knowledge is especially problematic for        young people of California with the tools they need to
the most vulnerable members of our society. The poor,              enter the workforce.


                                                       As of 04/17/2012
                                                                            Senator Ted W. Lieu
                                                                                           28 th Senate District


                                                              FACT SHEET
                                                 SB 1080 Financial Literacy

Identity Theft                                                       Contact

As identity theft has been called the fastest-growing crime          Veronica Nelson
in the United States, it's an important component of                 Office of Senator Ted Lieu, 916-651-4028
financial literacy curriculum to complement knowledge in             Veronica.Nelson@sen.ca.gov
budgeting, savings, and credit. Over 9 million Americans
were victims of identity theft in 2003 and 2004 annually,
including more than 1 million Californians. Identity theft
has also cost consumers and businesses over $52 billion
in 2004. 8 It has become the number one complaint filed
with the Federal Trade Commission for the past five
years. Gaining the knowledge and tools to protect oneself
from being a victim of identity theft is a significant part of
learning how to manage money and build good credit.

Summary of Bill

SB 1080 encourage school districts to provide instruction
related to personal finance in economics curriculum,
including, mathematics, budgeting, savings, credit, and
identity theft. The bill would require the State Department
of Education to develop a personal finances curriculum in
the next cycle in which the mathematics and history-
social science curriculum frameworks are adopted.

Support

California Communities United Institute
California Credit Union League
California Council on Economic Education
California Independent Bankers

Oppose

None




                                                         As of 04/17/2012