A coalition for financial literacy in the Commonwealth has been formed in response to legislation passed in the 2018 Kentucky General Assembly. House Bill 132 requires Kentucky public high school students to complete a financial literacy course so they can graduate.
The coalition includes: Cynthia Harter at Eastern Kentucky University; Janet Ratliff at Morehead State University; Abdullah Al-Bahrani at Northern Kentucky University and Mary Ann Vimont at the University of Kentucky.
Tom Martin spoke with Harter, associate professor of economics and director of the Center for Economic Education at Eastern Kentucky University.
Question: Tell us more about the legislation, House Bill 132, that mandates this work.
Answer: House Bill 132 requires students who will be entering ninth grade for the 2020-2021 school year to complete a financial literacy course or program as a high school graduation requirement.
This course or program must meet financial literacy standards and the Kentucky Board of Education has been directed to develop these standards. The Department of Education will then be developing curriculum materials and guidelines that schools can use to teach these financial literacy courses or programs.
Q: Financial literacy seems so fundamentally important. It's not an issue that’s unique to any one population. It affects everybody. Yet a nationwide survey of college students by the National Financial Educators Council found the overwhelming majority never received any financial education. Why do you think financial ed hasn't been right up there with reading, writing and arithmetic?
A: I think it's about testing. Schools have limited resources and they have to decide what they're going to concentrate on. And the things that are tested in schools are reading, writing, and arithmetic. And those are the things that they put resources into teaching. And I think that financial education is considered common sense. We think people will pick it up as they make decisions, but we really don't teach them the underlying methods to use in making those decisions.
Q: Going to the origins of this legislation, what are some of the concerns that were being articulated about the need for financial literacy?
A: The major arguments for having this kind of requirement are the kind of mistakes that we've made. If you look at surveys that rank states by financial literacy and financial decision-making, for example, Kentucky does not score well compared to other states.
There has been a FINRA — Financial Industry Regulatory Authority — financial capability survey every couple years, and Kentuckians have been the third-worst at having unpaid medical bills and tied for fourth-worst at having rainy day savings. And we have average credit scores that are much lower than some other states.
So, I think those kinds of results are a strong argument for doing something to reverse it.
Q: This new law directs the Kentucky Board of Education to establish academic standards for a financial literacy course and to develop curricula materials and guidelines for schools to use in teaching financial literacy. What topic areas do you anticipate addressing with the curricula?
A: The Kentucky Department of Education has a process by which it develops standards for whatever the content area is. And the department often invites input from various groups — teachers and higher education professors, and in this case, business and industry leaders have some input in terms of what's important for the workforce to know in terms of financial education.
But I would advocate that they also take a look at the national standards for financial literacy that have been developed by the Council for Economic Education. This group has taken professional educators in higher education along with teachers and worked on the standards that have six areas of understanding: earning income, buying goods and services, using credit, saving, financial investing, and protecting and insuring.
There are standards for each of these content areas that go from kindergarten through 12th grade. And there are benchmarks that students should be able to accomplish by fourth grade, eighth grade, and 12th grade. I think that these standards are a good place to start in figuring out what we want as standards for Kentucky.
Research has shown that “one size fits all” is not necessarily the best in terms of financial education standards because we have different cultures, we have different experiences. In Appalachia, there are areas that don't have a lot of access to banks, for example. And so, we have unique circumstances and we would not necessarily want to adopt the national standards without crafting them to our particular situations in Kentucky, but I think that's a good place to start.
Q: The partners in this coalition including perhaps you, have been providing K-12 teachers with training and resources in this content area for quite some time. How is this different?
A: Yes. We have all been working individually in our regions. We're all from different regional universities in Kentucky and we all have been working with teachers in economic education and financial literacy for a number of years. And so, because of the legislation, we decided that it would be helpful for us to work together to try to put forward a uniform plan in terms of curriculum choices and research results and to work with the Department of Education and others who will be developing standards and also developing appropriate assessments to see if those standards are being implemented.
Q: Researchers at the University of Wisconsin-Madison looked at teachers’ backgrounds and their capacity to teach personal finance. Fewer than 20 percent of K-12 teachers reported feeling “very competent” to teach any of the six personal finance topics that you mentioned earlier.
More than 70 percent said that they were very likely to get formal financial education training. Will the coalition have in mind that teachers will need training before any curricula can be implemented and taught?
A: Definitely. That's one of the reasons we wanted to work together on this initiative because there are a lot of groups out there that have offerings in terms of curriculum materials and programs that can be used in the classroom to teach financial education, but our group is different in that we focus on teacher training.
That's what we've been doing for decades. We train teachers so that teachers can then teach the students. Besides training teachers in how to use curriculum, we want to teach teachers how to manage their own money and how to make financial decisions for themselves.
We found that teachers who come to our trainings don’t do a very good job of managing their own money and certainly don't feel confident to teach someone else to do that. We want them to feel confident about the decision making that they will be teaching to the students and we want them to feel confident about their own decisions that they make about their own resources. We want the teacher to be an integral part of this financial education process.
Q: This could be life changing for the teachers because it's widely recognized that teacher salaries are lower than those of other professionals with comparable education or responsibilities. So, many who are teaching financial education to young people are themselves dealing with personal economic challenges.
A: Yes, that's true. In Kentucky, with the teacher pension program, a lot of teachers have not had to worry a lot about retirement planning because they've had this program that has been promised to be in place for them. I think that that has taken some of the urgency off of that particular group to say ‘we don't really need to spend a lot of time figuring out how we can plan for our retirement.’
But in today's world, everybody needs to be planning for their own retirement. And so, we really do want to train the teachers so that they can then teach the students what they need to know.
Q: This coalition is working with partners in the private and the public sectors. Can you offer some examples of those?
A: Well, the event that we had recently at Keeneland was largely funded by some donations from private businesses. Sutherland & Associates, a consulting firm out of Lexington, was one of our big contributors. And we had donations from Central Bank and WesBanco, Commerce Lexington’s Business Education Network, Columbia Gas and KU donated money for our event, and each of our universities donated, as well. That allowed us to have the resources to provide the event for free to teachers so that all the teachers left with some resources they could take into the classroom tomorrow and teach to their students.
Q: What is your vision of how this all turns out? Will House Bill 132 make an important difference in the lives of our kids as they become adults and take on life's responsibilities?
A: I think the first step is figuring out where it's going to fit in the curriculum and making sure that teachers have the training that they need to implement the course. The goal is that we will make better decisions as Kentuckians. We’ll have higher credit scores. We will have rainy day funds. We will make smarter decisions about debt — consumer debt, in particular. And we’ll use the banking system as opposed to things like payday loans for getting cash. And it will help the Commonwealth in the long run.
Tom Martin’s Q and A appears every two weeks in the Herald-Leader’s Business Monday section. This is an edited version of the interview. To listen to the interview, find the podcast on Kentucky.com. The interview will also air on WEKU-FM on Mondays at 7:35 a.m. during Morning Edition and at 5:45 p.m. at All Things Considered. Eastern Standard, broadcast live on WEKU (88.9), live streamed on esweku.com from 11 a.m. to noon, July 5; rebroadcast on July 8 at 6 p.m.