Debt Articles Financial Education Government

Congress Holds Hearing on Financial Literacy

The Honorable Dennis McKinney, Treasurer, State of Kansas

U.S. House of Representatives
Committee on Financial Services

Subcommittee on Oversight and Investigations

Representative Moore, Chairman

August 24, 2010

Testimony by Kansas State Treasurer Dennis McKinney

Good morning Chairman. As Kansas State Treasurer, I believe financial literacy is a national priority. As a result, my office provides a variety of financial literacy programs to Kansans of all ages. Among other initiatives, we offer an in-school savings program and financial management workshops for grade school and middle school aged students. We also host financial seminars and on-line resources for adults. These programs are a great resource to Kansas teachers, students, and families. Our goal is to help hard working Kansans save, invest, and grow to create more opportunities to improve families and communities across Kansas.

Children and adults alike must understand that they do have control over their financial future. Money management programs such as [email protected], stress basic financial responsibilities that are best learned early in life and reinforced through the years.

The [email protected] program provides the early education that is critical in shaping young minds in financial management. With the leadership of educators and the cooperation of local financial institutions, this program is reaching thousands of students across Kansas. The curriculum for the [email protected] program is designed to; make students aware of the benefits of saving, encourage good habits relating to saving and spending, and carry over to the student’s family as a way to make positive changes in their own financial lives’.

[email protected] joins the State Treasurer’s office, local financial institutions and schools with the common goal of teaching children so that they become educated consumers who will make responsible financial decisions in the future. Participants open savings accounts and make deposits to their accounts on scheduled savings days at their school. The students learn the importance of savings through hands-on experience and classroom exercises with the guidance of an employee of the financial institution and the curriculum provided by the State Treasurer’s office. This curriculum aligns with current Kansas state mathematics standards.

Children and adults alike must understand that they do have control over their financial future. Stressing basic financial responsibilities is a lesson best learned early in life and reinforced through the years. The Treasurer’s LIFE reading list (Lessons in Financial Education) provides lessons on cost-benefit analysis, barter and exchange, having a job, work and human capital, having and earning money, and saving techniques for kids from preschool through high school. This list is designed to get kids to begin thinking about and engaging in dialog on some basic financial concepts.

As both Kansas State Treasurer, and as a parent myself, I recommend that parents talk to their children about finances early and often. Reading these books to kids is a great way to communicate the message of financial responsibility. I appreciate the important role that parents and caregivers play in shaping our children’s future.

Another initiative at the Treasurer’s office for parents and children is the Kansas Investments Developing Scholars (K.I.D.S.) program. This is a unique opportunity for Kansas families that want to begin planning for their child’s education beyond high school but may need some assistance to make the goal of savings a reality. The K.I.D.S. program is just one step to bring Kansas families closer to reaching their goals to allow their students the opportunity to advance beyond post-secondary education. This includes community college, technical college or university level accredited education.

K.I.D.S. matching grant program will match the first $600 that participants contribute to a Learning Quest 529 Education Savings Program account each year that they are eligible. K.I.D.S. was developed for families with income less than 200% of the federal poverty level. To be eligible participants must be Kansas residents. Whether it is community college, technical college or university, the challenge of paying for a child’s education will only increase in the future.

We reach the middle school students through a one-day workshop called Money$mart Financial Management. This event was created specifically for Kansas middle school students. Money$mart is designed to offer middle school students training in sound personal financial philosophies and practices in a fun environment that enhances leadership and teamwork skills. Students engage in specific lessons regarding topics such as money and choices, budgeting, saving and goal-setting and cash and credit. These events are sponsored by Kansas State Treasurer Dennis McKinney and the Kansas Credit Union Association (KCUA) and held throughout the state.

The ABCs of Credit Card Finance is a program aimed at educating high school seniors and young adults entering college. It was created by the Center for Student Credit Card Education, Inc. and instructs students on how to wisely choose and responsibly use a credit card before they enter the workforce. The Treasurer’s Office offers a trainer’s guide, PowerPoint, and student primer free.

By participating in the program, students develop the skills necessary to build a positive credit history that will benefit them for years to come. This program can help prevent creditors from profiting at the expense of our young adults. Some high school teachers are using this to enhance their curriculum in business and economics classes in Kansas.

The Treasurer’s office has provided seminars specifically for women and for seniors. In 2009 as a strong partner on the Women & Money Coalition we sponsored an 8-week series for 90 women to gain control over their finances. This training was developed by women for women of all income and education levels. These women increased their financial knowledge, developed confidence in their decision making ability, and gained control of their life through informed money management. Back by popular demand, the Women & Money Series will be held September through October, 2010 at Washburn University in Topeka.

Our office has also begun conducting brown bag lessons on personal finances to help Kansans maintain financial independence. Financial education empowers individuals or families to become more financially secure and independent. We believe it is important for Kansans to make educated decisions to make their money work as hard as possible for them.

The Treasurer’s office, partnering with a number of other organizations, has offered financial literacy programs in Topeka starting with state employees as a pilot project. Based on the success of these pilot sessions, we recently decided to expand the opportunities for more Kansans to benefit from these informational sessions. This Fall the Treasurer’s Office Brown Bag Series is traveling to Hays, Manhattan, Wichita, Emporia, Pittsburg, and Lawrence.

What kinds of programs have worked well in promoting greater financial literacy? The best programs are ones that can entertain the participants as well as educate them. Students of all ages consider finances a boring topic. Money is fun to talk about. Once the word finance or budget is mentioned; eyes start glazing over.

The Money$mart program at the Treasurer’s Office partners with the Kansas Credit Union Association (KCUA) to bring college students to facilitate financial workshops for middle school students. The energy generated by the college student facilitators causes the Middle school students to pay attention and enjoy learning. Not only do the middle school students learn about finances; they also learn about college life. Fun balanced with responsibility.

Middle school students are receptive to listening about why continuing education is important to a college student; why it is important to get good grades in high school and why it is important to take challenging classes while they are still in high school. Seeds are planted encouraging students to continue their education in subjects they are passionate about. Another win-win benefit of this Money$mart program is the financial education the college students receive by teaching the curriculum!

The Kansas Council on Economic Education, among other great initiatives, offers the Financial Foundations for Kansas Kids personal finance/economics curriculum for the K-8 grade classroom. This is a comprehensive set of standards-based, interactive computer courseware lessons that integrate personal financial literacy and its underlying economic principles into the language arts and math curriculums. All elementary schools and middle schools in Kansas receive the courseware free! A pre-test and post-test are also available for teachers to measure learning.

Consumer Credit Counseling Services (CCCS) is a non-profit organization teaching several successful financial classes: The Money Action Program (a basic budgeting and credit use program); Couples and Money (a program that helps couples discuss money issues and a forum to work out solutions); Raising Money Smart Kids (a program that teach to parents how to talk to their kids about money and spending); and Homebuying (a program that educates consumers on the homebuyer process and how much they can afford).

Housing and Credit Counseling, Inc. is a non-profit United Way Agency that provides counseling and education about budgeting, credit, debt repayment, tenant-landlord issues and homeownership opportunities with offices in Topeka, Lawrence, and Manhattan. These classes are a huge benefit to citizens of all income levels in these communities.

The Kansas State University Research and Extension offices also provide valuable financial education to Kansas consumers across the state–no marketing or selling financial products.

An exciting pilot in Kansas is The Bank On America Saves – Greater Kansas City initiative to move unbanked and underbanked households into the financial mainstream as a way to promote economic success among all residents, particularly low- to- moderate income residents of the Kansas City metro. In cities around the country these initiatives have been used by city and county leaders to support or compliment local government driven economic development plans.

How can we coordinate efforts at the local, state and national levels? The Jump$tart Coalition is a big step in the right direction. The national Jump$tart encourages public and private entities to come together with the purpose of promoting and teaching financial education. Their primary audience is children pre-kindergarten through college-age youth. In Kansas the Jump$tart Coalition for Personal Financial Literacy has taken that a step further to include Kansans of all ages (pre-K through senior citizens). The Coalition efforts encourage partners to work together, combining resources and creating a win-win for the citizens of our state.

The Treasurer’s Office supports the efforts of Jump$tart to get public and private entities working cooperatively together. This creates a win-win scenario for our state in stretching valuable dollars while working toward common goals to make a positive impact on their financial welfare and improve families and communities across Kansas.

Another collaborative effort that has been effective in Kansas is the Federal Reserve Bank of Kansas City’s initiative for Money Smart Week of Greater Kansas City. This week-long event in April each year creates synergy among private and public entities.

The partnerships developed during this weekly activity continue throughout the year and create additional opportunities for financial growth and development for the citizens of the greater Kansas City community. Organizers of this event are making strides to take this concept statewide. Wichita is holding an information session with the hopes of hosting the first Money Smart Week, Wichita in April, 2011! Information provided by Erika Ramirez, Community Affairs Advisor, Federal Reserve Bank of Kansas City 816-881-2480

In Wichita the BEST Coalition (Building Economic Stability Together) has made great strides in collaboration–local organizations working together. The Goal of the Coalition is that South Central Kansans will have income and assets to strengthen family stability by expanding financial and educational opportunities in order to sustain economic setbacks. Colleen O’Callaghan, United Way of the Plains, 316-267-1321 ext 4215

The Kansas Partners for Asset Development (KPAD) is another healthy collaboration of organizations to establish real opportunities for Kansas families to achieve financial prosperity. Kansas Action for Children spearheads this group and published a report in February 2009 “Getting Ahead in Kansas; An Asset-Building Policy Roadmap for Establishing Real Opportunities for Kansas Families to Achieve Financial Prosperity”. April Holman, Kansas Action for Children, 785.232.0550

What are the major barriers to financial literacy in Kansas? There is widespread agreement that financial education is important and should be implemented comprehensively in our public schools—Pre-K through collegiate levels. The biggest barrier to implementing this is funding and preparing teachers to teach financial education.

There is a great need for financial literacy education. In the past five years, HCCI has seen an alarming increase in home loan delinquency and default on the part of its clients. Kansas’ Attorney General, Steve Six, reported in July 2010 that Kansas foreclosure activity now ranks Kansas as 34th in the nation. Attorney General Six predicts the numbers of foreclosed homes in Kansas will reach 11,500 to 12,500 by the end of December 2010.

The President’s Advisory Council on Financial Literacy submitted a comprehensive report to President Obama in January, 2009. Please take a few minutes to review the report. It not only identifies barriers to financial literacy; this report contains recommendations to address these issues that are vital to the future of our economy.

Are there any specific segments of society that need greater attention? Lower-income groups are targeted most by predatory lenders. This makes financial education in lower- income communities particularly important. It is important to put reasonable safeguards in place to keep predatory financial practices in check. One example of this is limiting the percentage of interest that can be charged in short-term loans like the Military Personnel Financial Services Protection Act of 2006 caps the rate institutions can charge military families at 36 percent.

Thank you for your time this morning and for your attention to these important issues facing our nation. Children and adults alike must understand that they do have control over their financial future. My office stands ready to assist in any way possible to help hard working Kansans save, invest, and grow to create more opportunities to improve families and communities across Kansas.

I will be happy to entertain questions.

The Honorable Sandy Praeger, Commissioner, Kansas Insurance Department

Testimony of Commissioner of Insurance

Sandy Praeger State of Kansas

before the

Committee on Financial Services Subcommittee on Oversight and Investigations U.S. House of Representatives

“Empowering Consumers: Can Financial Literacy Education Prevent Another Financial Crisis?”

August 24, 2010

Good morning Chairman Moore, members of the committee, distinguished guests and audience members. I am Sandy Praeger, and I am the elected Commissioner of Insurance for the State of Kansas. I have served in that capacity since being elected in 2002. I am pleased today to testify before this subcommittee on empowering consumers with financial literacy education in order to prevent another financial crisis, and especially on the necessity of including insurance information for consumers in any initiatives in regard to this.

The Kansas Insurance Department’s mission is to Regulate insurance companies, Educate consumers about insurance issues and Advocate for consumers when needed. It is the educational aspect of our current mission that I am here to help promote.

The need for financial education among youth is always important. The earliest segments of those activities often focus on saving money and spending it wisely, which are both parts of sound financial freedom.

Those segments embody tangible financial ideas: Teach a child to save his or her money early, and money will be available when he or she needs it. Teach them to shop wisely and compare quality, price and need, and the money-saving cycle is repeated.

Going one step further, it’s long been my belief that any educational component of financial literacy has to contain a segment on insurance. However, the idea of spending money to avert risk is a more abstract concept. It’s hard for younger people to understand that you spend money buying insurance without receiving immediate gratification for your expenditure. The need for immediacy in gratification often carries over to adulthood, with unfortunate consequences when it comes to understanding insurance.

Surveys from the National Association of Insurance Commissioners (NAIC) have shown that 60 percent of adults can’t answer basic insurance questions correctly.

Add to that the ever-increasing bombardment of unclear and unsound financial offers to the general public, and it’s no wonder that money-management skills, especially when it comes to insurance topics, are misunderstood and misused.

The NAIC, of which I am a member, past officer and current committee chair, has responded to the need for increased consumer insurance awareness through its Insure U program. Insure U is an online educational curriculum customized for consumers in eight different life stages.

At the website, the curriculum includes a basic introduction to the four major types of insurance—auto, home, health and life—as they pertain to people at different ages and in difference situations. Consumers can test their knowledge about insurance by taking an online quiz. Since its inception in 2006, Insure U has achieved national media and website attention, with millions of viewing impressions, and has been promoted heavily by state insurance departments.

On the state level, our own Kansas Insurance Department, as part of our continuing consumer education priority, has made its insurance expertise available throughout the state through speaker presentations and exhibits. My staff and I have been to more than half of our state’s counties in the last two years, making presentations on insurance issues to a variety of audiences. Annually, our state fair booth in Hutchinson in September, throughout the 10 days of the fair, gives our department instant access to fairgoers, their questions and concerns.

Assistant Commissioner Bob Tomlinson, a former teacher, has made understanding insurance for young people a personal project. He has developed many presentations for high school youth on insurance, and he has spoken to dozens of high school classes.

Finally, our Government and Public Affairs Division within the department is responsible for producing and maintaining more than 30 publications and brochures on all aspects of consumer insurance information. We even have an educational coloring book that we make available to children that explains basic insurance concepts.

The Kansas Insurance Department and the NAIC are working to help Kansas consumers of all ages become literate in insurance matters. Still, there’s more work to be done, and if we can collaborate with other agencies and organizations in “getting the word out,” we are certainly open to it.

Successful financial literacy education needs to be available through designated lifelong learning environments. Emphasis on basics in the elementary school classroom, followed by advanced high school curriculum and continuing “refresher” courses in adult life would be ideal. Increased public/private partnerships could be emphasized. There are many insurance education foundations in the United States, established by consumer groups and by insurance companies, but they could use a coordinated effort in order to achieve the consumer success we all desire.

Thank you, Chairman Moore and subcommittee members, for the opportunity to be a part of this hearing. Please call on me and the Kansas Insurance Department staff to assist you in any way to promote successful consumer financial literacy.

The Honorable John P. Smith, Administrator, Kansas Department of Credit Unions

Testimony by
John P. Smith Administrator
Kansas Department of Credit Unions

Before the

U.S. House of Representatives
Subcommittee on Oversight and Investigations


“Empowering Consumers: Can Financial Literacy Education Prevent Another
Financial Crisis?

August 24, 2010
Robert J. Dole Institute of Politics
University of Kansas
Simmons Media Room

John P. Smith, Administrator
Kansas Department of Credit Unions
109 S.W. 9th Street, Suite 610
Topeka, Kansas 66612
785 296 3021
[email protected]

Chairman Moore, Ranking Member Biggert, and Members of the Subcommittee:

I am John P. Smith, Administrator, Kansas Department of Credit Unions. I appreciate the opportunity to appear today before the subcommittee. My credit union background includes twenty-one years as a volunteer credit union board member prior to appointments as a credit union regulator. In 1993 I was appointed by the Governor Joan Finney as Administrator of the Department of Credit Unions. In 1999 I was appointed by Governor Mel Carnahan as Director of the Missouri Division of Credit Unions. I returned to Kansas in 2006 to accept the appointment as Administrator, Department of Credit Unions from Governor Kathleen Sebelius.

The Kansas Department of Credit Unions (KDCU) is the state credit union financial regulatory agency authorized by the Kansas Legislature to provide for management, control, regulation and general supervision of state-chartered, Kansas credit unions.

KDCU is fully funded as a fee fund agency operating solely on the revenue produced through fees collected from state-chartered credit unions examined and regulated by the agency.

KDCU supervises and examines 82 natural person credit unions and 1 corporate credit
union. As of March 31, 2010:

  • Total assets of Kansas chartered credit unions: $3,869,671,286.
  • Total credit union members in Kansas: 538,983.
  • Largest Kansas chartered credit union has assets of $659,696,030.
  • Smallest Kansas chartered credit union has assets of $160,049.
  • The 5 largest credit unions make up 44.27% of the total assets or $1,573,087,798.
  • The 10 largest credit unions make up 63.81% of the total assets or $2,366,170,448.

Kansas also has 21 federal-chartered credit unions regulated and examined by the National Credit Union Administration (NCUA).

Share deposits in Kansas credit unions are federally insured through the National Credit Union Share Insurance Fund (NCUSIF), an arm of the NCUA.

In addition to examinations, the statutes and regulations provide for KDCU to grant new charters, merge and liquidate credit unions when necessary and handle consumer complaints.

Credit unions are member owned cooperatives. Their board and committees members are non-paid volunteers.

As a regulatory agency KDCU has no mandate by law to provide financial literacy education nor have we been asked to do so. We do recognize the importance of financial literacy through a variety of ways. The consumer resources section of our web site has links to consumer protection laws and a brief description of each law.

    Federal Trade Commission (FTC)
    Regulation B – Equal Credit Opportunity
    Regulation E – Electronic Funds Transfer Act
    FCPR – Fair Credit Practice Rule
    FDCPA – Fair Credit Reporting Act
    HIDC – Holder in Due Course
    Regulation M – Consumer Leasing Act
    Regulation Z – Truth in Lending Act

    National Credit Union Administration (NCUA)
    BSA – Bank Secrecy Act
    Regulation C – Home Mortgage Disclosure
    Regulation CC – Expedited Funds Availability
    FDPA – Flood Disaster Protections Act
    TISA – Truth in Savings Act
    Gramm-Leach-Bliley Act – Privacy of Consumer Financial Information

    Housing and Urban Development (HUD)
    RESPA – Real Estate Settlement and Procedures Act
    FHA – Fair Housing Act

    Federal Reserve
    Regulation D – Reserves on Transaction Accounts

To prepare for the testimony today, several Kansas credit unions active in financial literacy education were contacted last week for information on their efforts to promote financial literacy. Here are details of the information received.

Educational Credit Union (ECU), Topeka, Kansas

In our response to your request regarding our credit union’s efforts and commitment to the goal of increasing financial literacy among our membership, here are some details about our recent activities in that area:

  • Save @ Schools – ECU was one of the first credit unions in the state to sign on with the State Treasurer’s office with the promotion of a formal Save @ Schools initiative. Our credit union has participated with as many as 13 local Topeka elementary schools by opening youth savings accounts for students and then returning to the schools on a frequent published basis throughout the school year in order to accept deposits to those accounts. The goal is to work with younger students to increase knowledge and understanding of building savings as a means of planning for the future. Our data indicates that ECU opened 555 Save @ Schools youth accounts, with current total savings accumulated of more than $83,000.
  • Money$mart Camp – ECU staff members have participated in the Money$mart Camp from the very first years of partnership with the State Treasurer’s office when the event was held at the Rock Springs 4-H camp. This camp is structured to reach the middle school age child as they begin to form their spending habits for the future, and focuses more on the wise use of credit and how to determine the difference between a “need” and a “want”. The day-long camps are now held on at least an annual basis, but are based in our local community with the hope that we can reach more children. ECU staff continue to donate, support, and volunteer with this event on an ongoing and annual basis, including one coming up in early September.
  • Newsletter – As many credit unions do, nearly every quarterly newsletter mailed to our membership includes at least one article aimed at financial education and literacy. While we have no way of knowing how many read the article or heed the advice, we believe that it is important to continue to promote life-long financial learning as a means of helping consumers of all age make better financial decisions and choices. These articles are posted on our website then as well.
  • Debt in Focus – About a year ago, ECU joined a beta program with the Filene Research Institute to develop and promote an online financial tool called Debt in Focus. The online tool was added to our website, and is designed to allow members (and non-members who find the site) to anonymously enter their current financial data and then compare themselves against peers and benchmarks for household financial performance. The site gives them tools and tips for increasing their individual financial situation, including suggested options for paying down debt more quickly in an effort to increase their discretionary household budget and their net worth. The site also allows a user to save the data and revisit the site periodically to track their progress and improvement.
  • Women & Money – For the second year of this new program, ECU has co- sponsored and promoted the local Housing & Credit Counseling, Inc. Women & Money series. This six-week night class is designed for women of all ages, income and education levels and is designed to increase financial knowledge and decision making ability through informed money management. The course is designed with single mothers in mind, due to the stronger money management
    Page 4
  • As probably every other credit union does, ECU uses every one-on-one opportunity available with our members to talk about wise financial choices. Many members applying for a loan or accessing another of our products or services ask questions and seek guidance with improving their net worth, reducing household budget expenses, improving their credit scores, etc. and we do everything reasonable during those interactions to help inform and educate members on financial concepts.

Credit Union of America (CUA), Wichita, Kansas

  • This is the second school year with the student branch at Southeast High School. USD 259 is very supportive and involved with this program.
  • We hire two students as CUA employees to work in the branch and they also work at our other credit union locations. Our first two student workers now have permanent positions with CUA following high school graduation. The student branch initiative created jobs and employment training, a win-win for CUA and the student.
  • CUA has a student and faculty accessible location for member/student business and also has placed an ATM at Southeast High School.
  • We are an active part of the curriculum at Southeast High School as well as other schools. We have conducted more than 12 financial literacy classes or programs in 2009 and plan to expand the number in future years.
  • CUA’s board of directors has made a commitment to fund the branch and program for both an initial trial period and long term basis based on community and student value knowing the revenue or value to CUA will likely never be there to support the costs.
  • CUA has set up special student membership accounts and processes to better serve this unique membership/demographic base.

First Choice Credit Union (FCCU), Maize, Kansas

  • This is the third year in operating the branch at Maize High School. We are planning for another branch in the new Maize High School in 2011.
  • The high school credit union is staffed by a senior and a junior student supervised by a FCCU staff member. Students also work part time at regular FCCU locations.
  • ATM dispenses only $5. Otherwise the branch is full service.

Sunflower UP Federal Credit Union (SUPFCU), Marysville, Kansas

  • Provides financial literacy education for parochial and public schools from K through 12 in Marysville, Kansas for the fifth year.
  • Schools are visited one day per week. 50% participation in the parochial schools, 25% participation in the public schools.
  • Most successful learning tool is students making deposits and watching their accounts grow in value.

K-State Federal Credit Union (KSFCU), Manhattan, Kansas

  • Since 2004, when KSFCU partnered with then Kansas State Treasurer, Lynn Jenkins, and local schools we have been offering a youth financial literacy program called Save at School. Woodrow Wilson Elementary was the first school to offer the program in the 2004/05 school year. To date, we are operating in 6 elementary schools.
  • The goal of the Save at School program is to teach students the importance of saving money and the concept of money management. Each school has an in- house credit union one morning per week, where 5th and 6th grade students are hired to manage and operate the business. Students may open an actual credit union account and make deposits at their in-house credit union. As part of the learning experience, educational materials on financial literacy are available, that can be presented by teachers or credit union personnel.
  • We have several teachers that see the value in what we offer and have us back each year. They incorporate what we can teach the kids with, most often their math classes. We strive to get more and more time in front of the kids so that we actually have an opportunity to teach more than just showing the benefits of a savings account.
  • Everything we do with the school and the children is 100% free; we have no fees of any kind for going into the schools teaching or for the onsite branch.

Promotion of Financial Literacy Outside of Schools

Credit unions with close ties with companies that are experiencing effects of the economic conditions often provide financial counseling to their members. The sponsor company of Cessna Credit Union recently reduced its workforce by over 55%. Cessna Credit Union made a concerted effort to buffer the impact of job loss by deferring payments, restructuring loans, offering a safe place to deposit severance or early retirement funds and offering financial education and counseling programs.

We have observed similar efforts in other credit unions. We encourage credit unions to become proactive if an economic downturn may affect their members financial ability to handle their financial obligations.

Encouraging Financial Literacy

While KDCU has no mandate under Kansas law to promote or provide financial literacy education, I support a role for KDCU in financial literacy.

The financial literacy of credit union members enhances KDCU’s mission as the safety and soundness regulator. Fewer delinquent loans and bankruptcies improves the financial performance of the credit union, which influences the ability of that credit union to loan money at a competitive rate and pay improved dividends.

Concluding Suggestion

To be financially literate is a life-long venture. New financial products such as individual retirement accounts (IRAs), debit cards, different types of home mortgages, and home equity loans continue to be developed. While financial literacy education is part of the K through 12 educational systems, more could be done to promote life-long financial literacy to keep informed about new financial products and to budget for their proper use. With the current focus on the recent financial crisis, public policy makers have an opportunity to support and encourage financial institutions to provide financial education regarding consumer safeguards (such as overdraft protection) for their members/customers and the general public. While another crisis may not be prevented, the general public will be better prepared.

As a caveat, federal agencies should not pre-empt state consumer protections laws that offer greater protection than federal laws.

In adopting federal regulations implementing the Dodd–Frank Wall Street Reform and Consumer Protection Act, federal agencies must not over regulate and allow the marketplace to function. Additional regulations are a difficult burden on our smaller asset size credit unions.

I thank you for allowing me to present testimony on this important topic.

The Honorable Kevin Glendening, Deputy Commissioner, Consumer and Mortgage Lending Division, Office of the State Bank Commissioner, State of Kansas

Testimony of

Kevin Glendening
Deputy Bank Commissioner
Administrator, Kansas Uniform Consumer Credit Code
State of Kansas

before the

Committee on Financial Services
Subcommittee on Oversight and Investigations
U.S. House of Representatives

“Empowering Consumers: Can Financial Literacy Education Prevent Another Financial Crisis?”

August 24, 2010

Thank you, Mr. Chairman and members of the committee. I am Kevin Glendening, Deputy Bank Commissioner and Administrator of the Kansas Uniform Consumer Credit Code. I appreciate the invitation and opportunity to appear before the Subcommittee on Oversight and Investigations today on such an important and timely topic as financial literacy. I’ve been asked to comment on initiatives my office has taken with respect to promoting financial literacy education in Kansas, our experiences and lessons learned in that endeavor, and other observations about financial literacy in general.

In my position as the Administrator of the Kansas Uniform Consumer Credit Code and Deputy Bank Commissioner of our consumer and mortgage division, I have the primary responsibility for supervision, regulation, and enforcement of Kansas consumer credit and mortgage lending laws. In that capacity I have witnessed the often devastating consequences the absence of financial literacy can have on consumers. These consequences, including unmanageable debt levels, poor credit, repossessions, and foreclosures, can have severe effects on both the individual’s personal and family life. These consequences are sometimes as a result of the illegal actions of an unscrupulous lender or broker, but frequently simply the result of a lack of understanding of basic financial, credit, and borrowing issues. With that backdrop, I would like to briefly share those initiatives my office has undertaken to help promote the financial literacy of Kansans.

Aware of the relationship between informed consumers and lowering the incidence of predatory or deceptive lending practices, in 1999 we were successful in adding provisions to the Kansas Consumer Credit Code which allowed us to fund financial literacy programs by utilizing monies received through fines levied against lenders who engage in illegal activities. The advantage of this approach was to avoid reliance on tax dollars and place that responsibility more centrally on that small percentage of lenders who engage in deceptive and illegal activities.

Once a source of funding for these programs was in place, our attention turned to what types of financial literacy programs were out there. At that point, several issues became clear to us. Among them, that there was a significant amount of financial literacy materials available although with varying degrees of quality and accuracy. Second, one of the primary challenges with financial literacy materials is getting someone to use it in a meaningful way. Third, how financial literacy is effectively presented and delivered depends greatly on the target audience. Lastly, the realization that, at least in my case, I am primarily a regulator not an educator and that partnering with groups who have expertise in working with the target audiences you wish to reach can be an effective way to leverage resources.

Our financial literacy initiatives generally fall into two groups, those targeted toward school age children and those geared toward the needs of adults. Among the financial literacy programs for school age children, two of our most successful involve partnerships with nonprofit organizations. The Kansas Council on Economic Education (KCEE) has as its mission the enhancement of curriculum for school teachers to facilitate economic and personal finance education. My office has been the primary sponsor of the KCEE for several years including the development and distribution of a computer-based financial literacy curriculum called “Financial Foundations”. This interactive courseware is designed to help K-8th grade teachers and students understand personal finance issues and is made available free of charge to all elementary and middle schools in Kansas. Last year nearly seven thousand students participated in the online program in two hundred forty-six schools, representing ninety two school districts in Kansas.

More recently, our office has partnered with a non-profit organization know as Communities in Schools of Wichita/Sedgwick County (CIS). This organization attempts to bring businesses, schools, and community groups together to assist in meeting student and family needs. Our office sponsors one component of CIS services know as “Reality University”, a financial literacy exercise that provides a hands-on learning experience for students to help prepare them for life after high school and the responsibilities of adult life. Students plan their budget, pay bills, and apply decision making and problem solving skills within a level of income based on a predetermined level of education. The goal is to develop the skills needed to make good decisions in practical, real-life situations involving the use of money. This past year over five thousand students in middle and high schools participated in Reality University in seventeen schools in the Wichita/Sedgwick County area. We hope to expand this financial literacy program across the state in the future.

In the area of adult financial literacy initiatives, we routinely partner with several Kansas nonprofit organizations to sponsor a variety of events and programs ranging from counseling on mortgage and consumer debt issues to budgeting and the responsible use of credit. To the extent possible, we have made an effort to take financial literacy information to the consumer rather than making the consumer seek us out. This may take the form of presentations in the workplace, on college campuses, or participation in financial fairs or other community meetings and neighborhood events. This is, I believe, a critically important aspect of a successful adult financial literacy program. Unlike school based programs, where you generally have a captive audience, financial literacy programs geared toward adults can be considerably more challenging. Many of the problems and behaviors that can contribute to an individual’s financial distress are the same issues that can make delivering financial literacy information to adults difficult. Participating in events that also provide other information of interest to adult audiences, for instance home purchase or tenant/ landlord issues, parenting and childcare issues, or specific community interest areas can create a value added element and attract more interest. In 2009, more than eleven thousand individuals attended one of our sponsored adult programs.

While our own financial literacy initiatives have had a measure of success, it is difficult to quantify the extent to which these and other programs may ultimately contribute to the stability of our financial future. This, however, should not deter additional efforts at both the state and federal level to invest in greater financial literacy efforts. The benefit of these programs, particularly those aimed at children will not be fully apparent until those children enter adulthood and become the primary users or financial products and services. The recent financial crisis has generated more interest and awareness of financial literacy issues; however it is important to remember this must be an ongoing long term educational goal. Ultimately, encouraging more aware and better informed consumers is at least part of the solution to insuring the financial crisis is not repeated.

Again, thank you for the opportunity to appear before the committee today and I would be happy to answer any questions.

Mr. Taylor Petty, Master’s in Accounting Student, University of Kansas

Testimony of Taylor Petty
Before the
House Financial Services Subcommittee on Oversight and Investigations
Field Hearing at the Robert J. Dole Institute of Politics
University of Kansas
Lawrence, Kansas
August 24, 2010

Chairman Moore, Representatives Jenkins and Cleaver, I appreciate the opportunity to testify today about how the University of Kansas partnered with the Wichita School District in providing financial literacy education.

It’s hard to care about something you don’t understand.

And it is clear American high school students do not understand financial basics. A nationwide assessment found that high schoolers understand less than half of the financial basics covered in the exam.

We’ve already seen the consequences of that lack of understanding.

The credit crisis and mortgage meltdown are largely because many American consumers do not understand their financial decisions. We cannot continue this cycle by failing to provide the next generation with financial education.

Evidence shows we are still failing our youth today. Eighteen to 25 year olds are the fastest growing age group of bankruptcy filers. One in five bankruptcy filers are college students, and college freshman average over $3,000 in credit card debt.

After working with two fellow graduate students last year with the Wichita School District, I believe financial literacy coursework can be successfully included in the high school curriculum. We support initiatives to assess the financial literacy knowledge of high school students. Without a requirement for a financial education course, our youth will continue to depend on their parents for knowledge about financial decisions – many of whom are in financial crisis themselves due to a lack of education.

As Kansas’ flagship research university, service is one of the missions of KU. Under recent Kansas law, Kansas School districts must incorporate financial literacy into their curriculum. Because of KU’s strong commitment to serve Kansas, my accounting master’s class received the opportunity to partner with the Wichita School District on developing a financial literacy course.

The Wichita School District asked our class to assist in developing curriculum for five financial topics that were not currently addressed. We developed the curriculum during the 2009 school year.

We began by examining existing financial literacy curriculums and we found that existing financial literacy curriculum is not designed to appeal to the interests of high school students. We chose to design the curriculum around situations and decisions the students are currently facing to make the financial literacy material more relevant and to demonstrate how to apply the concepts to real problems.

Education made practical motivates students to learn. Every class session includes opportunities for students to apply what they are learning to their own personal financial decisions.

Each section of the curriculum was authored by one of the three graduate students working on the project. I developed the format and design of the curriculum based on similar curriculum I developed for the School of Social Welfare at the University of Kansas. Each lesson plans was reviewed and critiqued by the other two graduate students and the faculty at the University of Kansas. Each section of the curriculum emphasizes competency and the development of research skills to enable students to be able to find answers to future financial questions.

We consulted with the Wichita School District extensively in developing the curriculum. A panel of teachers reviewed the curriculum and provided suggestions to help facilitate learning. Electronic copies of the curriculum have been provided to the Wichita School District to facilitate future revisions.

Mr. Chairman, I want to thank Rebecca Feickert and Kristen Hageman for helping to author the curriculum. I also want to thank Dennis McKinney, the Treasurer for the State of Kansas, for initiating our involvement in the project. Finally, I want to thank Alice Duwe from the Wichita School District for being a great partner on the program. We hope that it is very successful.

The KU/Wichita School District Curriculum addresses the following major financial literacy issues for students.

  1. Budgeting and Savings
  2. Credit
  3. Home Mortgages
  4. Identity Theft
  5. Taxes

In our review of prior financial literacy courses, teaching focused more on learning definitions of terms instead of real life application. For example, teaching interest rates must be more than describing the definition as the charge for lending money. Students need a clear explanation of why zero interest rate loans or other teaser rates are not financially wise. There are hard and fast costs to interest rates related to personal savings, home mortgage payments, or personal credit cards. Current financial literacy curriculum should prepare students to make financial decisions, not just inform students about relevant terms. The University of Kansas’ curriculum emphasizes understanding and practical application.

Our KU curriculum is user friendly for the teacher. We provide teaching notes, student handouts, assignments, and projects, and grading rubrics. Teaching notes include directions for classroom discussions and activities to enhance learning. Activities direct students to resources that can be used in the classroom and outside the course. Articles from financial publications, such as the Wall Street Journal, and government agencies are used to facilitate classroom discussion and understanding. Assignments and projects require practical application. Students must develop personal financial plans for each topic. Projects include creating an individual portfolio of personal financial decisions and summarizing lessons learned from each topic. The curriculum is developed to meet the varied learning capabilities of students. Completion and personal application of the financial topics is emphasized for grading purposes.

The University of Kansas’ curriculum comprises nine weeks of course material. The curriculum is independent of the State of Kansas’ existing financial literacy curriculum and is capable of being implemented into any existing financial literacy curriculum. Other states and existing financial literacy programs can implement our curriculum. Our goal in creating the curriculum was to help students to practically understand financial topics and use that understanding to make wise financial decisions.

Mr. Chairman, my class appreciated the opportunity to help educate Kansans. We hope this course and work will continue to foster the Kansas tradition of carefully managing personal financial matters and knowing when its time to borrow or not to borrow, renting or buying a home, or investing in the stock market.

A list of the class content and an outline of the curriculum are included in my written testimony.

It is a great honor to be here today. Thank you for this opportunity to share our work promoting financial literacy in Kansas high schools.

Appendix A: Financial Literacy Curriculum Developed for the State of Kansas

  1. Budgeting
    • What is a budget? Why Should I Care?
    • How Much Does It Really Cost?
    • Budgeting and Bills! d. What Are My Short Term Goals?
    • Budgeting for My Short Term Goals
    • Long Term Planning & Personal Savings
    • My Financial Portfolio
  2. Credit
    • Credit Cards
      • Credit Basics
      • FICO Credit score
      • Understanding Principal and Interest
      • Credit Card Act of 2009
      • Credit Card Applications
    • Student Loans
      • Financial Aid Overview
      • Federal Grant Options
      • Federal Loan Options
      • Online Financial Aid Tools
    • Auto Loans
      • Auto Loan Overview
      • Glossary Terms Review
  3. Home Mortgages
    • How Much Home Can I Afford?
    • What are the Costs of Buying a Home?
    • How to Use Rent vs. Buy Calculators
    • What Do I Need to Know Before I Buy?
    • What is Equity in a Home? f. What is a Home Equity Loan?
    • Lessons Learned About Home Equity Loans
    • The Pitfalls of Home Mortgages
  4. Identity Theft
    • How to Avoid Identity Theft
    • Identity Theft Prevention in Your Community
    • Identity Theft Statistics
    • The Fallacy of Identity Theft
    • Identity Theft Through a Lifetime
    • Final Written Project: Identity Theft Current Events
  5. Taxes
    • What Types of Taxes Exist?
    • Sales Tax & The Candy Conundrum
    • What is the Use Tax?
    • Characteristics of Tax Rates
    • Quiz: Understanding the Differences Between Progressive, Proportional, & Regressive Tax Rates
    • How Should We Be Taxed?
    • Classroom Debate: Debate Arguing for a Progressive or Proportional System
    • What is Withholding?
    • Completing Form W-4
    • What are FICA Taxes?
    • What is Considered Income?
    • Becoming Familiar with Form W-2
    • Form 1099
    • Introduction to Form 1040
    • Introduction to the Tax Formula
    • What is Adjusted Gross Income & Why Does It Matter?
    • What is the Standard Deduction?
    • What are Itemized Deductions?
    • How Do I Know If I Can Claim an Exemption?
    • Tax Credits- Child, Earned Income, & Education Credits
    • Which Form 1040 Should I Use?
    • Final Project – Completing Form 1040A

Ms. Kathryn Nemeth Tuttle, Assistant Vice Provost for Student Success, University of Kansas

Testimony of Dr. Kathryn Nemeth Tuttle
Assistant Vice Provost for Student Success
University of Kansas
Before the
House Financial Services Subcommittee on Oversight and Investigations
Field Hearing at the Robert J. Dole Institute of Politics
University of Kansas
Lawrence, Kansas
August 24, 2010

Chairman Moore, Representatives Jenkins and Cleaver, I appreciate the opportunity to testify today about a new financial literacy education program for KU students at the University of Kansas.

Executive Summary

Financial literacy for college students is a significant concern across the country. Not only does it affect students’ financial lives, but their ability to persist and graduate, another nationwide issue.

KU students returning to campus last week were greeted with a new way to improve their financial literacy education, and their ability to graduate, when Student Money Management Services opened its doors in the Kansas Union. Student Money Management Services is dedicated to improving KU students’ financial situations by empowering them to analyze their finances, develop a budget, manage funds, make sound decisions, and commit to controlling their financial lives at KU and into the future.

The need for this service is clear and convincing: we are in the midst a financial crisis; the average debt for KU graduating seniors is $22,478, an increase of $4200 in just six years; and we have evidence of both KU students’ lack of financial knowledge and their understanding that this education is important. This evidence is from the research of the KU Financial Literacy Task Force:

  • The average financial literacy score in a study of KU students was 3.26 on a scale of 1-6, where 1 represented no understanding and 6 indicated complete understanding of financial competency;
  • 82% of KU students in the study think it is important to learn more about money management and credit and debt management; and
  • 84% indicated it is important to learn more about savings/investing.

Leticia Gradington, a KU alumna with extensive experience in financial planning and with teaching college students, is the new Program Coordinator. We are in the process of hiring several financial Peer Educators—trained KU students who can work one-on-one with students, give class presentations, and do outreach to student groups and organizations. Information will also be provided through publications, websites, and other electronic communication methods.

The staff will provide information to KU students on managing personal finances, developing budgets, tracking expenses, understanding credit card and loan indebtedness, planning for life after graduation and appropriate referral to campus resources such as Financial Aid and Scholarships, Legal Services for Students, Bursar’s Office, and the School of Business Personal Finance 101 course.

The program is a collaborative effort that is funded through the Office of the Vice Provost for Student Success, School of Business, Student Senate, and a new initiatives program fund. An Advisory Board with membership from the campus — faculty, staff and students — and the community will continue to provide guidance for our efforts. An assessment plan is being developed.

Student response has already been enthusiastic—hundreds of students talked to us about the new service at an on-campus job fair just last week.

Other KU innovations, available to all KU students, include:

  • Financial Literacy Guide: available on the Financial Aid and Scholarships website which includes sections on planning for college, managing finances while in college and life after graduation.
  • CashCourse: a free, online personal finance course, developed by the National Endowment for Financial Education, which includes a budgeting and financial planning section with a budget wizard for student use and sections on dealing with debit and credit cards and economic survival tips.
  • Financial Aid TV: short, on-line videos on a variety of topics including money basics; saving and borrowing money; credit cards; credit scoring and tips on saving money. Available on the Financial Aid and Scholarships website.

In our Task Force survey, students indicated utilizing websites was a preferred method for receiving financial literacy information. For today’s college students, social media such as Facebook should also be utilized to connect with students on this important issue.

In addition, the School of Business offers a FIN 101 course, a 3 credit-semester long course which provides much more in-depth financial education, including understanding the basics of mortgages, renting and leasing, savings, investments, and insurance. Course enrollment averages 140 students each semester. Students who have completed this course will be candidates for the financial Peer Educator position.

Barriers to greater financial literacy include better coordination between K-12 and Higher Education. As you are hearing today, KU is making strides in this area. Efforts should be made with faculty members to increase financial literacy education across disciplines. Special attention should be paid to better help low income and first generation college students in this area; in addition some cultures are averse to borrowing, even from low-interest federal financial aid loan programs. In general, we should consider all opportunities to provide more financial education, such as when students are employed, or are hired for their first full-time jobs.

The development of Student Money Management Services is based on the work of the KU Financial Literacy Task Force that issued its report in 2009. Mr. Chairman, I request that this report be included as part of the record.

Mr. Chairman, I appreciate this opportunity to provide information on the efforts made by the University of Kansas to improve the financial literacy of our students. Improving the financial education of our citizens is a vital issue for the University of Kansas, our state, and our nation. Thank you.

Report of the University of Kansas Financial Literacy Task Force


The U.S. Financial Literacy and Education Commission defines financial literacy as “the ability to make informed judgments and to take effective actions regarding the current and future use and management of money.” Therefore, financial literacy should include the ability to understand financial choices, plan for the future, spend and manage money wisely, and be ready for life events such as losing a job or saving for retirement. At the heart of the definition of financial literacy is the term “informed,” as emphasized previously. It is the effective use of information in the decision making process that separates the more financially literate from the less financially literate decision.

Financial literacy or lack thereof, is of critical concern to students, financial aid administrators and others on and off-campus. Recently, many institutions have implemented campus-wide Financial Literacy programs to assist students in managing personal finances, including information about how to graduate with as little debt as possible.

Although Financial Aid and Scholarships currently offers individual debt counseling services, we believe a comprehensive program would benefit students, colleagues and community constituents through more coordinated efforts and communication. Our proposal to create a Financial Literacy Task Force was approved in the spring of 2008, with the primary goals of assessing the current financial management tools available on this campus as well as other institutions and exploring new ideas for connecting students with the appropriate resources to help them achieve financial awareness while pursuing their post-secondary education.


We have conducted research to determine the level of need for a financial literacy program at KU and the necessary skills and resources needed to effectively educate our students on financial management issues. Through our research and discussions, the Task Force members believe it is imperative that KU provide financial literacy information to students, parents, and alumni. For example, the average debt for undergraduates continues to rise, as does the use of credit cards. May 2009 graduating seniors who borrowed educational loans in 2009 had an average loan debt of $22,478, up from $18,271 in 2003, a jump of over $4,200 in just six years. Effective financial education and tools must be provided to students so they are better equipped to make sound financial decisions and enhance their success, both in and out of the classroom.

The need for financial literacy programs appears to be universally recognized and many universities already have programs in place. To determine the need for financial literacy education at the University of Kansas, Master’s degree students in Dr. Susan Twombly’s Assessment and Program Evaluation class surveyed students in 13 fall 2008 PRE101 courses (194 first-year students responded). Based on the students’ self-reported responses to this survey, we learned the following:

  • The average financial literacy score for the population surveyed was 3.26 on a scale of 1-6, where 1 represented no understanding and 6 indicated complete understanding of the financial competency (financial competencies included: money management, credit management/debt, insurance, and savings/investing).
  • When asked if respondents thought it was important to learn more about each financial competency while in college:
    • 82%indicateditisimportanttolearnmoreaboutmoneymanagementandcreditanddebt management;
    • 84%indicateditisimportanttolearnmoreaboutsavings/investing;and
    • 77%indicateditwasimportanttolearnmoreaboutinsurance
  • In response to the survey question asking how they would like to learn more about financial literacy, the majority of respondents indicated they would most likely use websites and printed resources to obtain financial literacy information in the future, followed by classroom instruction and one-on-one counseling.
  • These responses are consistent with the approach taken by other institutions that currently have financial literacy programs.

Additionally, the Task Force found that key components of programs at other institutions include:

  • online information via the university website (most common approach)
  • extracurricular seminars or workshops on personal finance topics, often presented in cooperation with student organizations;
  • financial counseling services;
  • informational publications (either printed and/or downloadable from the university website)
  • online interactive courses or modules on financial topics; and
  • public service announcements on university radio stations.


  • Develop a Financial Literacy Office. (Student Money Management Students opened August 2010.)
  • Develop a Financial Literacy Advisory Board. (First Board meetings held in Summer 2010.)
  • Provide online financial literacy information for students, parents, and alumni. (CashCourse added Spring 2009.)
  • Develop curriculum and create a peer-to-peer mentor program. (Peer Educators to be hired by September 2010).
  • Provide professional development opportunities for faculty and staff across campus to enhance financial literacy across disciplines (e.g. offer a certificate to faculty/staff members who complete the training).
  • Encourage students to enroll in FIN 101 Personal Finance.
  • Increase collaboration with high schools to develop or enhance financial education.
  • Continue to assess the need for financial literacy among KU students. Personal finance modules should be developed and infused into courses such as PRE 101, PRE 210, and LA&S 492.
  • Consider and possibly develop a noncredit certificate program through an academic unit such as the School of Business


The KU Financial Literacy Task Force strongly believes that KU should play a role in educating our students on managing personal finances. We are committed to developing programs to help KU students become more financially literate while receiving their KU education, and to persist and graduate from the University of Kansas.

Ms. Gayle Voyles, Director, University of Missouri-Kansas City (UMKC) Center for Economic Education

Subcommittee on Oversight and Investigations Hearing
“ Empowering Consumers: Can Financial Literacy Education Prevent Another Financial Crisis”
10 AM Tuesday, August 24, 2010
Simons Media Room at the Robert J. Dole Institute of Politics
University of Kansas

The views I am expressing today are my personal beliefs; they are not the views of the university (UMKC). Gayle Voyles, Director of the UMKC Center for Economic Education

Thank you for the opportunity to share the role the Missouri Council on Economic Education has in educating students in personal finance and economics and preparing them for success in life.

The Council for Economic Education website points out that in the coming years, young people will face unprecedented economic opportunities and challenges. They also ask whether young people will be ready to meet these economic opportunities and challenges head on and then answer by saying yes, provided they understand the “economic way of thinking”.

I have served as an elementary and high school educator for seven years, as well as teaching at the college level for the past 15 years. My experience has taught me that it is much easier to teach and influence student behavior at the younger ages in developing this “economic way of thinking”. When students are not introduced to economics and personal finance concepts prior to entering high school the broad range of knowledge and skills students bring to class make it very difficult for high school teachers to know where to start.

led the cooperative effort of requiring a personal finance course for graduation and then collaborated with Missouri educators, administrators, and districts to provide resources for classroom and teacher preparation, in addition to managing student competitions (Stock Market Game and Regional, State, and National Personal Finance Challenges) that motivate students to master the concepts and principles. Three National Studies show The Stock Market Game’s impact on Economics, Mathematics and Financial Literacy Skills: National Assessment of Educational Progress (NAEP) tests show that general economics students who participated in a stock market simulation score significantly higher on economics tests. Learning Points Associates study reports significant gains in academic achievement in mathematics and financial literacy by SMG students. National Jump$tart Coalition research finds consistently higher scores in money management skills among SMG students.

Throughout this process, teacher participation was critical as they are responsible for educating the students. I will share the thoughts of two master personal finance educators from the Blue Springs School District: Mike Hagerty and Kevin Clevenger, who highlight the importance of personal finance education: “Can the Missouri required Personal Finance Course prevent another financial crisis? In our opinion; no, but nothing can actually prevent it. However, if one is asking whether the personal finance course can make a substantial difference for the future of citizens in our state and our country, absolutely yes!

Interestingly, there is not a day that goes by that we don’t have a parent or another adult tell us that they only wished they had taken a course like “Personal Finance” when they were in school. It is obvious that they now recognize the importance of education in regards to leading the way in successful personal financial management.

Our youth are starting to “get it.” They are asking the right questions and seeking answers to our economy’s current issues. We feel strongly that the classroom forum and in particular “Personal Finance Class” will continue to not only allow them to seek out the answers but also help resolve many of the crises across our country. Interestingly, we are addressing the same major issues on a daily basis in the classroom which are headlining the news: “The credit crisis/the housing crisis/the banking crisis and many others are all topics that we deal with on a daily basis.

As high school teachers, it is sometimes difficult to explain to a young person how they might use material taught in the classroom inside the real world. Personal Finance is a course that students can immediately see how the material taught in the classroom can have an immediate and lasting effect in their lives.”

Qualitative information helps tell the story, but quantitative data provides stronger evidence that personal finance and economic education is making a difference. Below is pre and post test data from the Missouri State Department of Elementary and Secondary Education. It is important to recognize that if districts have a stand‐ alone personal finance course they are not required to have their students take the state test. Only 23 districts’ students who were enrolled in last year’s second semester course participated in the state level personal finance pre and post tests. After reviewing those districts’ 1, 811 students’ average scores I found the following to be true:

  • Overall gains between the pre and post tests were reflected for the following areas of personal finance (from highest to lowest gains): Spending and Credit (16.05% gain); Money Management (15.3% gain); Saving and Investing (14.19% gain); and Income (11.99% gain).

  • When examining pre and post averages of males versus female students I noticed that male students’ average gains were a little higher than those of female students in three of the four areas of personal finance:

  • While examining the average scores of students by grade level I found that the largest number of students enrolled in the state‐mandated personal finance course were tenth grade students; next highest number of students were eleventh grade students, followed by twelfth grade students.
  • Finally, when reviewing the total number of students who have taken the state’s pre and post tests (over time) I found the following to be true regarding their cut scores:
    • 1,232 students = 90 – 100%
    • 2,608 students = 80‐89%
    • 3,073 students = 70–79%
    • 2,775 = 60–69%
    • 5,406 = 0 – 59%

The Council for Economic Education’s website provides a multitude of ways for K‐ 12 teachers to integrate economics and personal finance across the curriculum in order to build knowledge.

One favorite choice for elementary students is sharing children’s literature stories after teaching economic s and personal finance concepts and having students identify where those concepts can be applied within the story. The KU Center for Economic Education hosts a website which helps K‐6 teachers find over 600 annotated book suggestions for teaching economic concepts, offers teacher tips for using the books, and often identify additional online lesson plans which focus on the same economics and/or personal finance concepts.

The School of Economics, a model for community involvement in Economics Education, provides K‐5 economic and personal finance simulations that students participate in during their field trip experience. Last year, over 11,000 students participated in these simulations.

There are many effective financial literacy programs available for K‐12 students today; the challenge for teachers and districts is finding which work best with their particular group of students and district curriculum.

Yes You Can, Financial Education from American Century Investments, provides resources for the home and classroom including a quarterly newsletter and curriculum which aligns with the National Standards in K‐12 Personal Finance Education. The program helps teachers and parents become more involved in their students’ and children’s financial education so they can: 1) examine their personal financial behaviors; 2) establish new and financially rewarding habits; 3) learn about personal financial concepts; and 4) create the foundation for financial independence. These resources are available at

It is my belief that a push for K‐12 financial literacy programs in every school has the potential to improve our citizens’ ability to make better economic decisions. When national, state, and local organizations, teachers, and parents work together the future looks brighter. A plan of action is needed for integrating economic and financial education into state standards, training teachers, implementing curriculum, and verifying behavioral impacts. I am aware that Representative Cleaver introduced a bill, referred to as “The Financial Literacy for Youth Act of 2009” that would require the Secretary of Education to establish a pilot program to award grants to State and local educational agencies to develop financial literacy programs in elementary and secondary schools, and for other purposes. I am in support of the proposed bill and believe it has the potential to make a significant difference for our local, state, and national communities.

Respectfully submitted,
Gayle Voyles, Director
UMKC Center for Economic Education
5306 Holmes
Kansas City, MO 64110
(816) 235‐2524
[email protected]

Mr. Shawn P. Mitchell, President and Chief Executive Officer, Community Bankers Association of Kansas

Testimony of

Shawn P. Mitchell
President and Chief Executive Officer
Community Bankers Association of Kansas

On behalf of the

Community Bankers Association of Kansas
Independent Community Bankers of America

Before the

Congress of the United States
U.S. House of Representatives
Committee on Financial Services
Subcommittee on Oversight and Investigations

Field Hearing on

“Empowering Consumers: Can Financial Literacy Education Prevent Another Financial Crisis?”

August 24, 2010
Robert J. Dole Institute of Politics, University of Kansas
Lawrence, Kansas

Chairman Moore, Ranking Member Biggert, and Members of the Subcommittee, I am Shawn P. Mitchell, President and Chief Executive Officer of the Community Bankers Association of Kansas, located in Topeka, KS. The Community Bankers Association of Kansas (CBAK) is a statewide association of banks bound together by the shared philosophy that a community-based bank can better serve its customers than a nationwide mega bank. CBAK currently represents 298 banking locations throughout Kansas. CBAK is the Kansas state affiliate of, and actively engaged with, the Independent Community Bankers of America (ICBA). ICBA represents nearly 5,000 community banks across the country and has an ongoing commitment to promote financial literacy throughout the nation.

I have personally been a community banker in Kansas for the last 15 years, serving as CBAK CEO for the last 20 months and previously as President and CEO of The Farmers & Merchants State Bank, Wakefield, Kansas (a $25MM community bank located 90 miles west of Topeka, KS). I have an AS degree in Criminology from Barton County Community College, Great Bend, KS, a BS in Business Management from Baker University, Baldwin City, KS and I am a graduate of the Graduate School of Banking at Colorado, University of Colorado, Boulder, CO.

I am pleased to address the Subcommittee here today at this field hearing entitled, “Empowering Consumers: Can Financial Literacy Prevent Another Financial Crisis?”


Managing money wisely and making effective financial decisions is critical to excelling in life and enjoying a secure financial future. Unfortunately, too many Americans lack the skills and knowledge to make appropriate financial decisions. Our nation’s mounting consumer debt, falling savings rates, skyrocketing personal bankruptcies and the proliferation of high-cost nonbank “fringe” providers (even before the recent financial crisis) point to a need for better financial education. Moreover, millions of Americans do not have a relationship with a depository institution, simply because they do not understand the system. Building a relationship with the consumer is how a financial institution finds out how to best serve the consumer and how the consumer discovers what products or services are appropriate for them. One size does not fit all.

Community banks engage in a wide range of financial education efforts, many in conjunction with local schools and civic groups. But CBAK and ICBA recognize there is more the industry can do. For this reason, CBAK and ICBA support federal efforts to promote financial literacy education and forge government, nonprofit and private-sector partnerships to bring more financial literacy programs and resources to community banks and their communities. Whether showing students how to manage credit responsibly, helping a family understand the home buying process or teaching foreign-born residents the benefits of having a checking account, financial literacy programs build a stronger future for all.

ICBA has an ongoing commitment to promoting financial literacy, encouraging its nearly 5,000 member community banks to provide programs within their communities, as well as forging government, nonprofit and private-sector partnerships, such as with the Jump$tart Coalition and the FDIC Money Smart program. ICBA also recognizes community banks with outstanding financial literacy programs through a financial literacy award as part of the annual National Community Bank Service Awards.

Examples of Financial Education Initiatives in Kansas

The First National Bank of Frankfort, KS has purchased textbooks for the consumer family science teacher for use in the classroom. This specific textbook leads students through a lesson in which they “write” checks and balance their checkbooks. The checks are used for real life items such as gas, groceries, etc. The bank doesn’t actually process the checks, but the students are able to know their balance and track expenses. This same community bank also purchased the student edition of the Wall Street Journal for the current affairs class.

First Option Bank, with locations in Osawatomie and Paola Kansas, supplies check balancing kits for business classes at Osawatomie High School and Prairie View High School to assist in teaching the financial segment to business students. The kits are published by Internal Training Services and provide materials for training on how to open a checking account & prepare a deposit slip, proper technique for writing checks, how to maintain a checkbook, how to interpret and reconcile a monthly bank statement as well as information about debit cards, ATMs, and on-line banking. During Community Bank Week in April, First Option Bank is present in five area schools touching over 1100 students with information and encouragement to begin saving. This should have a huge impact in their trade area in relation to financial literacy.

Barriers to Greater Financial Literacy

Financial literacy is a complex issue with many variables. We are constantly bombarded with the message that we deserve… no we are entitled to have that new car, new house, new clothing, newest electronic gadget, etc. What we do not hear is that those “things” have to be paid for from what we earn.

We have a responsibility to teach prudent money management skills to our children so that they will create good financial habits early and carry them into their adult life. We see too many examples of good people who have made themselves victims of poor financial management simply because they did not understand what they could truly afford. They have confused their needs with their wants.

One banker serves on several committees for their local school district. This banker has observed that our students are extremely technologically literate, but very financially illiterate when it comes to dealing with real world financial concepts. Due to the structure of current curriculums, which are geared for preparing students for college and passing assessment tests, our educational system is neglecting to teach our young people real life skills. The importance of these “life skills” classes is being overlooked and undervalued. We are sending our children out into the world with a PC and the latest checkbook software and assuming that they are smart enough to become financially literate on their own. The current curriculums have great relativity, but if we do not also teach our children how to live within their means we haven’t taught them how to live well.

For our nation to continue the economic recovery and avoid finding ourselves back in this situation there are actually two key initiatives that need to be considered; financial literacy and appropriate government regulation of the financial sector.

Banks have seen a massive wave of regulatory restructuring and increased government intervention. An unfortunate side effect of the massive regulatory push is that financial products are becoming more difficult to understand for even the savviest of consumers. What was once a one page loan contract is now a 25 page document full of government required disclosures and loaded with legal terminology. Instead of reading the entire document consumers look at the payment and sign where told. Does this help? Or do we just make it easier for the unscrupulous non-bank firms to victimize our consumers. Increasing massive regulatory burdens on community banks is not a substitute for an educated consumer. Over regulation hurts banks and consumers alike.


American consumers were abused by many of the non-bank financial firms of Wall Street as well as unscrupulous mortgage brokers pushing the “American dream” without consideration for the consumer welfare. Community banks serve a vital role in their respective communities. They stand ready to assist their friends, neighbors and communities with safe, sound financial products and services. Community banks support and promote many financial literacy programs for all consumers, especially those programs that help the underserved, disadvantaged and youth of our nation. Increasing financial literacy protects consumers, fosters financial stability and benefits individuals, communities, and our nation as a whole.

Mr. Chris Wolgamott, Community Development Liaison, Meritrust Credit Union

Testimony of Chris Wolgamott
On behalf of
Meritrust Credit Union

Before the
Subcommittee on Oversight and Investigations
of the
Committee on Financial Services
United States House of Representatives Field Hearing
August 24, 2010

“Empowering Consumers: Can Financial Literacy Education Prevent Another Financial Crisis”

Respectfully submitted to Chairman Moore, Ranking Member Biggert and Members of the Subcommittee,

I am Chris Wolgamott, Community Development Liaison at Meritrust Credit Union, Wichita KS. For the past 5 years, I have been responsible for providing financial literacy to our members, organizations and businesses in and around the Wichita area. I currently sit on the Financial Literacy Committee for the Kansas Credit Union Association representing the South Central Chapter of Kansas Credit Unions and also sit on the Youth Entrepreneurs of Kansas Advisory Panel. I received a Masters Degree in Adult and Continuing Education from Kansas State University, and am a certified Dave Ramsey Financial Peace University Workplace trainer.

The Need for Financial Literacy Programs

Financial literacy encompasses a broad range of topics and spans a lifetime of learning. From the basics of sorting coin in a piggy bank to learning budgeting techniques, acquiring knowledge about purchasing a home, deciphering the best choice for retirement savings and protecting your identity, every financial decision that can be made has been taught in some capacity under the umbrella of financial literacy. Learning how to save, spend, share, invest and protect money have become key components to many financial literacy curricula nationally and globally. Not all Americans, unfortunately, have experienced nor retained this worthwhile information.

  • In 2003, The Wall Street Journal reported that 70% of American families live paycheck to paycheck. (Source: Wall Street Journal, April 9, 2003)
  • Half of college undergraduates had four or more credit cards in 2008. This number was up from 43% in 2004 and 32% in 2000. (Source: Sallie Mae, “How Undergraduate Students Use Credit Cards,” April 2009)
  • 60% of college students experienced surprise at how high their credit card balance had reached, and only 17% regularly pay their full balance each month. (Source: Sallie Mae, “How Undergraduate Students Use Credit Cards,” April 2009)
  • 42% of Americans fail to follow a budget and 26% do not pay all of their bills on time. (Source: Harris Interactive 2009 Consumer Financial Literacy Survey)
  • Less than 1/3 of all 18-25 year-olds contribute to a 401(k), and less than 2/3 of all 26-41 year-olds contribute. (Source: Harris Interactive 2009 Consumer Financial Literacy Survey)

Credit Unions Create Positive Solutions

The credit union movement is founded on the principle of “People Helping People”. This philosophy is evident both at the state and national level with concern for financial literacy. From July 1, 2009 to June 30, 2010, credit union employees and volunteers conducted 13,577 presentations nationwide reaching over 413,000 youth as reported by the National Youth Involvement Board (NYIB), a national organization which serves as a financial literacy resource to credit unions. This represents a 6.3% increase in the number of students reached in ’08-’09, and does not reflect the numerous educational events for youth and adults not reported to NYIB.

Credit unions in Kansas are also extremely involved in financial literacy across the state. This past year, over 6,000 students were instructed by credit union staff and volunteers utilizing various curriculums and partnering with many social service organizations. Three such instances are highlighted below:

Money Smart Financial Camp

The Kansas Credit Union Association (KCUA) partnered with the former Kansas State Treasurer Lynn Jenkins to create Money Smart Financial Camp, a money management curriculum designed for middle school students. The partnership and commitment to financial literacy continues today under State Treasurer Dennis McKinney. The camp uses five lessons to build participants’ knowledge in goal setting, budgeting, making wise financial decisions, earning interest and recognizing/using different methods of payment. In the past two years, the curriculum has been revamped and has been used at seven different locations to reach 602 students. There are currently three upcoming camps scheduled that will reach over 200 additional students.

Communities in Schools (CIS) Reality U

I have worked with the Reality U program created and facilitated by CIS for three years, and the impact on high school students is extremely positive. Each student is given a job and income based on their current GPA. The student must use this income to navigate a one-month simulation of expenses they will face in adulthood (housing payment, transportation payment, utilities, daycare and many more). Students learn tracking purchases, maintaining a budget and earning enough to support their lifestyle are mandatory to prioritize expenses and finish the month with money left over. As a supplement to the Reality U program, I have been invited to hold lectures that teach the basics of creating a budget, common pitfalls young adults fall into with regard to overspending, and setting financial goals. Meritrust Credit Union has also used a less intensive variation of the reality store at smaller high schools, middle schools and camps where CIS does not currently operate. This program is eye-opening to the students, many of whom have never considered financial consequences to poor decisions.

Meritrust Credit Union’s Partnerships with Local Social Organizations

Meritrust Credit Union currently partners with many organizations to add a financial literacy component. In the past year we have provided classes for Youth Entrepreneurs of Kansas, Gear-Up, Upward Bound, Americorps, various classes at Wichita State University, Butler County Community College, many area high schools, VanGo, TRIO, ComCare, and partnered with the Kansas Attorney General’s office for National Consumer Protection Week. We also held five summer financial camps in Wichita, Lawrence and Junction City. Collectively, we have impacted over 2,200 individuals with financial literacy in 2010. We are the only credit union in the state with a full-time paid position dedicated specifically to financial literacy, which shows our organizational commitment to improve the financial lives of those we serve.

Areas to Strengthen Financial Literacy

My experiences in financial literacy have revealed a struggle to provide financial literacy to adults. Many adults agree that financial literacy is important, but fail to attend classes provided by financial institutions. This is backed by the research from the 2009 Harris Interactive Financial Literacy Survey. 41% of adult respondents gave themselves a C, D or F letter grade regarding their knowledge of personal finance, yet only 12% say they are likely to learn from a financial professional, sighting self help books and family as the two most used sources. When asked, many financial literacy providers convey they offer classes to membership and have low numbers of attendees. It is easier to reach adults at their place of employment or partnering with an organization they are currently affiliated with than offering classes at retail branches.

Another weakness is the ability to reach students in the classroom. Teachers are placed under tremendous pressure to fulfill all the requirements asked of them within a school year. Because of this strain, it is difficult for some schools to find time to allow guests to present topics that may or may not teach exactly to an educational standard, or to even present the teacher with the option. Current legislation in many states allows for financial literacy to be taught in schools, but this information could often be accentuated by allowing an expert in the personal finance field. Building a connection between schools and financial institutions is a tremendous benefit to both organizations.

Concluding Comments

The need for financial literacy is large, not just for adults, but those soon to be adults as well. Current statistics point to increasing personal debt and a continued “spend first and ask questions later” financial culture. The credit union industry is currently providing many opportunities, both locally and nationally, to strengthen the financial position of many, using our cooperative and member-centric ideology. With such a large network of national financial literacy providers, innovative channels are continually being created to deliver quality curriculum to those in need. A consistent focus on programs involving policy makers, educators and financial intuitions will only strengthen what is currently being provided by financial institutions and social organizations.

About the author

Amanda Miller

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