In 2013, West Covina Assemblyman Roger Hernandez made a pitch to improve California’s teaching of financial literacy.
He made a strong case that California public schools needed to do much more to teach personal finance: California, unlike 17 other states, had no financial literacy graduation requirement. Surveys showed that one third of adults had no savings. And nearly half of American teens don’t know how to use a credit card effectively.
So Hernandez authored a bill that year that was passed by the legislature and signed into law by Governor Jerry Brown. “With this new law, California requires financial literacy to be taught as part of the official state curriculum,” Hernandez wrote in a blog post on his website after the bill was signed into law.
But the law did not actually require any basic money management skills to be taught, and three years later, personal finance instruction in California remains a patchwork effort often totally reliant on the efforts of individual schools or teachers.
“Personal financial education is definitely on a hit or miss basis," said California State University, San Bernardino Professor Jim Charkins. "Some schools, some school districts are very interested in it. Others are ignoring it."
Hernandez's bill compelled the State Board of Education to include financial literacy in new frameworks for math, health and social science instruction. But, Charkins said, those frameworks don't require any particular kind of instruction and rather are closer to a suggestion for teachers of those subjects to touch on those lessons at some point in the school year.
Hernandez’s office did not respond to requests for comment on the apparent contradiction between his statement and the law’s wording.
Long Beach's Polytechnic High School is emblematic of both how schools can succeed at teaching financial literacy and where they're falling short.
“I want to close the gap between those who learn personal finance at home and those who don’t,” said economics teacher Dan Adler.
Adler leads the school's Volunteer Income Tax Assistance group, a club that trained students to help low-income residents fill out their tax returns. This year, the three dozen members of the club helped complete over 500 returns – an increase of 30 percent over the group's work last year.
There’s no better way to learn the basics of personal finance, Adler said, than learning how to fill out the IRS’s 1040 form and its Schedule A and D sections.
“There’s just so much knowledge built around filling out a Schedule A for somebody, in terms of mortgage interest deductions and which part of your motor vehicle fees are deductible, and your mortgage insurance premiums and your property taxes,” he said.
Many of the students in this club are also in Adler’s Advanced Placement Economics class and said they plan to major in finance or business in college. The dos and don’ts of financial planning became clear to these students as they helped people fill out their tax returns.
“I had a lady who had to withdraw early from her retirement fund so she got just slammed with all these penalties and stuff,” said 12th grader Alysssa Wren. “And so that kind of made me think, 'wow, I don’t want to do that,' and it made me start thinking, 'but I should start a retirement account.'”
Filling out these returns also made it clear to Wren and her classmates that public schools aren’t teaching them the basics of financial literacy.
“A lot of us are in very strenuous academic programs, so in that respect we’re very over prepared," Wren said. "But in terms of actually, like, going out into the world and balancing a checkbook and all these things, we’re clueless. So it’s frustrating for sure."
Poly High School did offer seniors a year-long economics class that focused on personal finance for an entire semester. It was created and taught by Adler; he taught students about saving, investing, loans, paying taxes.
The class was cancelled this year after an enrollment drop.
“There’s a big push throughout the country to do AP tests,” Adler said. “Kids have to ask, 'can I take this regular class or do I need to take another AP?' The majority of kids have to choose to the APs if they’re looking to get into really good colleges.”
Why teach personal finance?
A recent survey found that fewer than ten percent of California teachers touched on personal finance in their lessons.
“Many of the teachers that were surveyed didn’t think that financial education was an important concept,” said Brian Cullinan, the market managing partner for the auditing firm Pricewaterhouse Cooper in Southern California, which sponsored the survey.
But CSU San Bernardino's Charkins points to the financial crisis and the municipal bankruptcy that have gripped the San Bernardino community around his campus to show how important it is to teach these topics.
“We’ve got to save these kids and probably economic reasoning and personal financial literacy are tools to help along the way," Charkins said. "But we can’t continue to watch kids leave school and live a life of poverty unless something is done.”
Charkins has been working with the California Council on Economic Education to help train teachers. And he points to the efforts of San Bernardino City Schools, which has increased the number of financial literacy lessons students receive in elementary schools and high schools as well as the efforts of individual teachers.
Meanwhile, Long Beach teacher Adler recommends the creation of a personal finance Advanced Placement class so that students would be motivated to study the topic.
Charkins believes that creating a statewide personal finance graduation requirement is far fetched given the state's busy education policy priorities. For the time being, he said, increasing teacher training on the subject may be the best approach.