Promoting youth financial literacy

Title IV of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7101 et seq.) is amended by adding at the end the following:

PROMOTING YOUTH FINANCIAL LITERACY

4401.

Short title and findings

(a)

Short Title

This part may be cited as the Youth Financial Education Act. (b)

Findings

Congress finds the following: (1)In order to succeed in our dynamic American economy, young people must obtain the skills, knowledge, and experience necessary to manage their personal finances and obtain general financial literacy. All young adults should have the educational tools necessary to make informed financial decisions. (2)Despite the critical importance of financial literacy to young people, the average student who graduates from high school lacks basic skills in the management of personal financial affairs. A nationwide survey conducted in 2006 by the Jump$tart Coalition for Personal Financial Literacy examined the financial knowledge of 5,775 12th graders. On average, survey respondents answered only 52 percent of the questions correctly. This figure is up only slightly from the 50 percent average score in 2002. (3)An evaluation by the National Endowment for Financial Education High School Financial Planning Program undertaken jointly with the United States Department of Agriculture Cooperative State Research, Education, and Extension Service demonstrates that as little as 10 hours of classroom instruction can impart substantial knowledge and affect significant change in how teens handle their money. (4)State educational leaders have recognized the importance of providing a basic financial education to students in kindergarten through grade 12 by integrating financial education into State educational standards, but by 2004, only 7 States required students to complete a course that covered personal finance before graduating from high school. (5)Teacher training and professional development are critical to achieving youth financial literacy. Teachers should be given the tools they need to educate our Nation’s youth on personal finance and economics. (6)Personal financial education helps prepare students for the workforce and for financial independence by developing their sense of individual responsibility, improving their life skills, and providing them with a thorough understanding of consumer economics that will benefit them for their entire lives. (7)Financial education integrates instruction in valuable life skills with instruction in economics, including income and taxes, money management, investment and spending, and the importance of personal savings. (8)The consumers and investors of tomorrow are in our schools today. The teaching of personal finance should be encouraged at all levels of our Nation’s educational system, from kindergarten through grade 12. (9)Despite worrisome data about the lack of basic financial literacy among our Nation’s high school students, the Department of Education obligates less than 1 percent of its educational improvement funds toward financial education efforts.

4402.

State grant program

(a)

Program Authorized

The Secretary is authorized to provide grants to State educational agencies to develop and integrate youth financial education programs for students in elementary schools and secondary schools. (b)

State Plan

To be eligible to receive a grant under this section, a State educational agency shall submit an application that includes a State plan that is approved by the Secretary. (c)

Allocation of Funds

(1)

Allocation factors

Except as otherwise provided in paragraphs (2) through (4), the Secretary shall allocate the amounts made available to carry out this section pursuant to subsection (a) as follows: (A)The first $100,000,000 for a fiscal year shall be allocated on a competitive basis based solely upon the merit of the applications submitted. (A)Any remaining amounts shall be allocated to each State according to the relative populations in all the States of students in kindergarten through grade 12, as determined by the Secretary based on the most recent satisfactory data. (2)

Minimum allocation

Subject to the availability of appropriations and notwithstanding paragraph (1), a State that has submitted a plan under subsection (b) that is approved by the Secretary shall be allocated an amount that is not less than $500,000 for a fiscal year. (3)

Reallocation

In any fiscal year an allocation under this subsection— (A)for a State that has not submitted a plan under subsection (b); or (B)for a State whose plan submitted under subsection (b) has been disapproved by the Secretary;

shall be reallocated to States with approved plans under this section in accordance with paragraph (1).

(4)

Funding threshold

Until appropriations for programs under this Act exceed $30,000,000, the Secretary shall conduct an annual competitive application process with funding distributed among the States based solely upon the merit of the applications submitted. (d)

Use of Grant Funds

(1)

Required uses

A grant made to a State educational agency under this part shall be used— (A)to provide funds to local educational agencies and public schools to carry out financial education programs for students in kindergarten through grade 12 based on the concept of achieving financial literacy through the teaching of personal financial management skills and the basic principles involved with earning, spending, saving, investing, credit, and insurance; (B)to carry out professional development programs to prepare teachers and administrators for financial education; and (C)to monitor and evaluate programs supported under subparagraphs (A) and (B). (2)

Limitation on administrative costs

A State educational agency receiving a grant under subsection (a) may use not more than 4 percent of the total amount of the grant in each fiscal year for the administrative costs of carrying out this section. (e)

Applications by States

In order to receive an allotment under this section for any fiscal year, a State shall submit to the Secretary, at such time as the Secretary may require, an application that— (1)designates the State educational agency as the agency responsible for the administration and supervision of programs assisted under this part; (2)describes how the State educational agency will use funds received under this part, including funds reserved for State-level activities; (3)describes how the programs assisted under this part will be coordinated with other relevant Federal, State, regional, and local programs; (4)contains an assurance that the State educational agency will make awards under this part only to eligible entities that propose to give priority to serving— (A)low-income populations; and (B)populations that are above the poverty level but are low income working populations; (5)describes the procedures and criteria the State educational agency will use for reviewing applications and awarding funds to eligible entities on a competitive basis; (6)describes how the State educational agency will ensure that awards made under this part are of sufficient size and scope to support high-quality, effective programs that are consistent with the purpose of this part; (7)describes the steps the State educational agency will take to ensure that programs implement effective strategies, including providing ongoing technical assistance and training, evaluation, and dissemination of promising practices; (8)provides an assurance that the application was developed in consultation and coordination with appropriate State officials, including the chief State school officer, representatives of teachers, the business community, and community-based organizations; and (9)describes how the State educational agency will evaluate the effectiveness of programs and activities carried out under this part, which shall include, at a minimum— (A)a description of the performance indicators and performance measures that will be used to evaluate programs and activities; and (B)public dissemination of the evaluations of programs and activities carried out under this part. (f)

Local competitive grant program

(1)

In general

A State that receives funds under this part for a fiscal year shall provide the amount made available under this section to eligible entities in accordance with this part. (2)

Application

(A)

In general

To be eligible to receive an award under this part, an eligible entity shall submit an application to the State educational agency at such time, in such manner, and including such information as the State educational agency may reasonably require. (B)

Contents

Each application submitted under subparagraph (A) shall include— (i)a description of how the eligible entity will use funds received under this part; (ii)an identification of Federal, State, and local programs that will be combined or coordinated with the proposed program to make the most effective use of public resources; (iii)a description of the partnership between a local educational agency, a community-based organization, and another public entity or private entity, if appropriate; (iv)an evaluation of the community needs and available resources and a description of how the program proposed to be carried out in the center will address those needs; (v)a demonstration that the eligible entity has experience, or promise of success, in providing educational and related activities that will complement and enhance positive youth development of the students; and (vi)if the eligible entity plans to use volunteers, a description of how the eligible entity will encourage and use individuals with appropriate financial literacy qualifications to serve as the volunteers; and (vii)such other information and assurances as the State educational agency may reasonably require. (3)

Amount of awards

A grant awarded under this part may not be made in an amount that is less than $50,000. (4)

Priority

In awarding grants under this part, a State educational agency shall give priority to applications proposing to give priority to serving— (A)low-income populations; and (B)populations that are above the poverty level but are low income working populations. (g)

Report to the Secretary

Each State educational agency receiving a grant under this section shall transmit a report to the Secretary with respect to each fiscal year for which a grant is received. The report shall describe the programs supported by the grant and the results of the State educational agency’s monitoring and evaluation of such programs.

4403.

Clearinghouse

(a)

Authority

Subject to the availability of appropriations, the Secretary shall make a grant to, or execute a contract with, an eligible entity with substantial experience in the field of financial education to establish, operate, and maintain a national clearinghouse (in this part referred to as the Clearinghouse) for instructional materials and information regarding model financial education programs and best practices. (b)

Eligible Entity

In this section, the term eligible entity means— (1)an institution of higher education; or (2)a national nonprofit organization. (c)

Application

An eligible entity desiring to establish, operate, and maintain the Clearinghouse shall submit an application to the Secretary at such time, in such manner, and accompanied by such information, as the Secretary may reasonably require. (d)

Basis and Term

The Secretary shall make the grant or contract authorized under subsection (a) on a competitive, merit basis for a term of 5 years. (e)

Use of Funds

The Clearinghouse shall use the funds provided under a grant or contract made under subsection (a)— (1)to maintain a repository of instructional materials and related information regarding financial education programs for elementary schools and secondary schools, including kindergartens, for use by States, localities, and the general public, that take into account limited-English populations and cultural differences and sensitivities among various populations; (2)to disseminate to States, localities, and the general public, through electronic and other means, instructional materials and related information regarding financial education programs for elementary schools and secondary schools, including kindergartens; and (3)to the extent that resources allow, to provide technical assistance to States, localities, and the general public on the design, establishment, and implementation of financial education programs for elementary schools and secondary schools, including kindergartens. (f)

Consultation

The administrator of the eligible entity selected to establish and operate the Clearinghouse shall consult with community-based organizations, educational institutions, and financial organizations, and with appropriate elements of the Federal Government, if appropriate. (g)

Submission to Clearinghouse

Each Federal agency or department that develops financial education programs and instructional materials for such programs shall submit to the Clearinghouse information on the programs and copies of the materials. (h)

Application of Copyright Laws

In carrying out this section the Clearinghouse shall comply with the provisions of title 17 of the United States Code.

4404.

Evaluation and report

(a)

Performance Measures

The Secretary shall develop measures to evaluate the performance of programs assisted under sections 4402 and 4403. (b)

Evaluation According to Performance Measures

Applying the performance measures developed under subsection (a), the Secretary shall evaluate programs assisted under sections 4402 and 4403— (1)to judge their performance and effectiveness; (2)to identify which of the programs represent the best practices of entities developing financial education programs for students in kindergarten through grade 12; (3)to identify which of the programs may be replicated and used to provide technical assistance to States, localities, and the general public; and (4)to assess whether educational practices described herein increased the aptitude and ability of students to manage financial resources including credit cards, insurance, savings accounts and student loans. (c)

Report

For each fiscal year for which there are appropriations under section 4407(a), the Secretary shall transmit a report to Congress describing the status of the implementation of this part. The report shall include the results of the evaluation required under subsection (b) and a description of the programs supported under section 4402.

4405.

Definitions

In this part: (1)

Financial education

The term financial education means educational activities and experiences, planned and supervised by qualified teachers, that enable students to understand basic economic and consumer principles, acquire the skills and knowledge necessary to manage personal and household finances, and develop a range of competencies that will enable the students to become responsible consumers in today’s complex economy. (2)

Qualified teacher

The term qualified teacher means a teacher who holds a valid teaching certification or is considered to be qualified by the State educational agency in the State in which the teacher works. (3)

State

The term State includes the District of Columbia, the Commonwealth of Puerto Rico, and any other territories or possessions of the United States.

4406.

Prohibition

Nothing in this part shall be construed to authorize an officer or employee of the Federal Government to mandate, direct, or control a State, local educational agency, or school’s specific instructional content, curriculum, or program of instruction, as a condition of eligibility to receive funds under this part.

4407.

Authorization of appropriations

(a)

Authorization

For the purposes of carrying out this part, there are authorized to be appropriated, for each of fiscal years 2008 through 2012, the following: (1)

Grant program

$100,000,000 to carry out section 4402. (2)

Clearinghouse

$1,500,000 to carry out section 4403. (b)

Limitation on Funds for Secretary Evaluation

The Secretary may use not more than $200,000 from the amounts appropriated under subsection (a) for each fiscal year to carry out subsections (a) and (b) of section 4404. (c)

Limitation on Administrative Costs

Except as necessary to carry out subsections (a) and (b) of section 4404 using amounts described in subsection (b) of this section, the Secretary shall not use any portion of the amounts appropriated under subsection (a) for the costs of administering this part.