II 109th CONGRESS 2d Session S. 3863 IN THE SENATE OF THE UNITED STATES September 7 (legislative day, September 6), 2006 Mr. Akaka (for himself, Mr. Lautenberg, Ms. Stabenow, and Mr. Obama) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend part A of title IV of the Social Security Act to require a State to promote economic and financial education under the Temporary Assistance for Needy Families (TANF) Program and to allow economic and financial education to count as a work activity under that program.

1.

Short title

This Act may be cited as the TANF Economic and Financial Education Promotion Act of 2006.

2.

Findings and Purposes

(a)

Findings

Congress makes the following findings: (1)Most recipients of assistance under the Temporary Assistance for Needy Families (TANF) Program established under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) and individuals moving toward self-sufficiency operate outside the financial mainstream, paying high costs to handle their finances and saving little for emergencies or the future. (2)Personal debt levels and bankruptcy filing rates are high and savings rates are at their lowest levels in 70 years. In 2005, the savings rate was negative. The inability of many households to budget, save, and invest prevents them from laying the foundation for a secure financial future. (3)Financial planning can help families meet near-term obligations and maximize their longer-term well being, especially valuable for populations that have traditionally been underserved by our financial system. (4)Economic and financial education can give individuals the necessary financial tools to create household budgets, initiate savings plans, and acquire assets. (5)Economic and financial education can prevent vulnerable customers from becoming entangled in financially devastating credit arrangements. (6)Economic and financial education that addresses abusive lending practices targeted at specific neighborhoods or vulnerable segments of the population can prevent unaffordable payments, equity stripping, and foreclosure. (7)Economic and financial education speaks to the broader purpose of the TANF Program to equip individuals with the tools to succeed and support themselves and their families in self-sufficiency. (b)

Purposes

The purposes of this Act are the following: (1)To promote economic and financial literacy among individuals receiving assistance under Temporary Assistance for Needy Families programs funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) by permitting States to include economic and financial literacy education that is provided directly to individuals as a work activity under such programs. (2)To provide individuals receiving assistance under Temporary Assistance for Needy Families programs funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) with the skills and knowledge needed to effectively address personal financial matters and to make financial choices that will lead such individuals toward becoming financially self-sufficient.

3.

Requirement to promote economic and financial education under TANF

(a)

State plan requirement

Section 402(a)(1)(A) of the Social Security Act (42 U.S.C. 602(a)(1)(A)) is amended by adding at the end the following new clause: (vii)Establish goals and take action to promote economic and financial education in accordance with a program established under section 404(l) among parents and caretakers receiving assistance under the program through collaboration with community-based organizations, financial institutions, business entities, the Financial Literacy and Education Commission established under section 513 of the Fair and Accurate Credit Transactions Act of 2003 (20 U.S.C. 9702) and departments and agencies that are members of such Commission, including the Department of Agriculture, the Securities and Exchange Commission, and the Board of Governors of the Federal Reserve System. . (b)

Program requirements

Section 404 of the Social Security Act (42 U.S.C. 604) is amended by adding at the end the following new subsection: (l)

Economic and financial education

(1)

In general

Subject to the succeeding paragraphs of this subsection, a State to which a grant is made under section 403— (A)shall use the grant or State funds that are qualified State expenditures (as defined in section 409(a)(7)(B)(i)) to establish a program to provide economic and financial education directly for parents and caretakers receiving assistance under the State program funded under this part; and (B)may count a parent's or caretaker's hours of participation in such program as being engaged in work for purposes of determining monthly participation rates under section 407(b)(1)(B)(i). (2)

Requirements

A State shall ensure that the economic and financial literacy activities conducted under the program established under this subsection— (A)are accessible to the target population through curriculum geared to the general literacy level of the participants; (B)provide relevant and practical information to participants; (C)include a direct delivery component; and (D)to the extent practicable, are conducted in conjunction with an asset building program conducted in the State. (3)

Collaboration with nongovernmental or nonprofit organizations encouraged

In carrying out economic and financial education activities under a program established under this subsection, a State is encouraged to collaborate with nongovernmental or nonprofit organizations with a proven record of educating the public, especially at-risk populations, regarding economic and financial literacy. (4)

Evaluation

A State shall conduct an evaluation of the economic and financial literacy program established under this subsection not less than once every 3 years for the purpose of— (A)monitoring the number of parents and caretakers served under the program; (B)improving program administration; (C)facilitating replication and expansion of best practices; (D)assessing behavioral changes of participants; and (E)assessing asset accumulation of participants. (5)

Definition of economic and financial education

In this subsection, the term economic and financial education means education that— (A)promotes an understanding of consumer, economic, and personal finance concepts, including basic economic concepts such as supply and demand and opportunity cost, as well as basic financial literacy concepts such as budgeting and money management, saving, retirement planning, maintaining good credit, and the avoidance of predatory lending and financial abuse schemes; and (B)is based on recognized standards for economic and financial education. . (c)

Effective Date

(1)

In general

Except as provided in paragraph (2), the amendments made by this section take effect on October 1, 2006. (2)

Exception

In the case of a State plan under part A of title IV of the Social Security Act which the Secretary of Health and Human Services determines requires State legislation in order for the plan to meet the additional requirements imposed by the amendments made by this Act, the effective date of the amendments imposing the additional requirements shall be 3 months after the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after the date of enactment of this Act. For purposes of the preceding sentence, in the case of a State that has a 2-year legislative session, each year of the session shall be considered to be a separate regular session of the State legislature.