[Congressional Record Volume 143, Number 69 (Thursday, May 22, 1997)]
[Extensions of Remarks]
[Pages E1024-E1026]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 SENSE OF THE HOUSE RESOLUTION SUPPORTING THE JUMP$TART COALITION FOR 
                      PERSONAL FINANCIAL LITERACY

                                 ______
                                 

                           HON. DAVID DREIER

                             of california

                    in the house of representatives

                         Thursday, May 22, 1997

  Mr. DRIER. Mr. Speaker, we all know the statistics on the general 
state of educational achievement among high school graduates in 
America. Poor school performance and student achievement are leaving 
young adults ill-equipped to function in today's increasingly 
competitive world. This is particularly true when it comes to basic 
financial management skills. Increasingly, the lack of basic money 
management skills among young adults is a major cause of consumer 
bankruptcies and family crises.
  To reverse this trend and help students to become financially 
competent upon graduation from high school, a group of business 
associations, government agencies, and universities have formed a 
partnership known as the Jump$tart Coalition for Personal Financial 
Literacy. The goal of the Jump$tart Coalition is to provide every 
student with the skills to be financially competent upon graduation 
from high school. By dramatically improving the ability of adults to 
manage their finances, the Coalition hopes to bring about a reduction 
in credit card delinquencies and bankruptcy filings which undermine the 
health and welfare of families.
  To accomplish these goals, Jump$tart is establishing major 
initiatives to evaluate the current and future levels of financial 
literacy of young adults, disseminate teaching guidelines for grades K-
12; and operate a national clearinghouse to serve as a one-stop 
information source for high-quality teaching materials.
  Given the current concern over the state of education in America, we 
need to promote more public-private partnerships dedicated to high 
academic standards, improved school performance and greater student 
achievement. That is why today, I have introduced House Resolution 658. 
It expresses the sense of the House of Representatives that the goal of 
having young adults who can enter the mainstream of an increasingly 
complex financial world with confidence and prudence is one which can 
be advanced through coordinated efforts such as the Jump$tart Coalition 
for Personal Financial Literacy.
  I urge my colleagues to join me in support of the Jump$tart Coalition 
and its efforts to promote personal finance education by cosponsoring 
this resolution. The following is the text of the resolution, a fact 
sheet on the Jump$tart Coalition and the summary of a summary of a 
recent financial survey of high school seniors.

                              H. Res. 158

       Whereas at a time when more consumers are using credit than 
     ever before, the financial skills of young adults are not 
     adequate to cope with the rapid, technologically driven 
     development of new financial products and new ways to deliver 
     those products;
       Whereas lack of financial management skills is a major 
     cause of rising consumer bankruptcies and family crises, and 
     generally impairs the health and welfare of the general 
     public;
       Whereas it is critical that students and young adults 
     develop functional skills in money management, including 
     basic budgeting, savings, investing, spending, and income;
       Whereas the House of Representatives commends the Jump$tart 
     Coalition for Personal Financial Literacy for its effort to 
     promote personal financial literacy; and
       Whereas the House of Representatives supports the 
     Coalition's objective of promoting education to ensure that 
     basic personal management skills are attained during the 
     kindergarten through 12th grade educational experience: Now, 
     therefore, be it
       Resolved, That it is the sense of the House of 
     Representatives that the goal of having young adults who can 
     enter the mainstream of an increasingly complex financial 
     world with confidence and prudence is one which can be 
     advanced through coordinated efforts such as the Jump$tart 
     Coalition for Personal Financial Literacy.

                               __________
                               

     Jump$tart Coalition for Personal Financial Literacy Fact Sheet


                            About Jump$tart

       Q. What is the Jump$tart Coalition for Personal Financial 
     Literacy?
       A. The Jump$tart Coalition consists of a wide range of 
     organizations, including federal agencies, universities and 
     non-profit associations which have formed a partnership to 
     launch a national effort geared toward improving personal 
     finance literacy among young adults.
       The newly formed coalition, a non-profit based in 
     Washington, D.C., currently has about 20 members and expects 
     to add more over time.
       Q. What does the coalition want to see happen?
       A. In ten years (by the year 2007), Jump$tart would like to 
     see every student have skills to be financially competent 
     upon graduation from high school. Specifically, these young 
     adults will have an understanding of a wide range of skills 
     and concepts falling within four core areas: income; money 
     management; saving and investment; and spending.
       The coalition also wants to increase public awareness that 
     personal finance management--like reading, math or driver 
     education--is a fundamental life skill which needs to be 
     taught to the nation's 50 million students in grades K-12 to 
     give them a``jumpstart'' on their future.
       Ultimately, what the coalition wants to see happen is a 
     dramatic improvement in adults' ability to manage their 
     finances. The impact will likely be a reduction in credit 
     card delinquencies and bankruptcy filings.

[[Page E1025]]

       Q. How does the Coalition plan to achieve these goals?
       A. Jump$tart's major initiatives fall into three broad 
     categories:
       (1) Evaluation of the current and future levels of 
     financial literacy of young adults. The survey results 
     released today provide a baseline measurement by which to 
     gauge progress toward the coalition's goal of financial 
     competency among 12th graders by the year 2007. Jump$tart 
     plans to conduct such measurement surveys on a two-year basis 
     over the next ten years.
       (2) Dissemination of teaching guidelines for grades K-12. 
     Jump$tart's educator guidelines--which received input from a 
     panel of elementary, secondary and high school teachers as 
     well as numerous other educators throughout the country--
     provide a recommended scope of personal finance topics and 
     concepts to be taught in the nation's classrooms. The 
     coalition will seek the support of state and local officials 
     in adopting these guidelines for use within their own 
     jurisdictions.
       Dissemination of these guidelines to the education 
     community will take place through a variety of methods: for 
     example, the coalition's home page on the internet, educator 
     networks available through individual members of Jump$tart 
     and presentations at appropriate conferences.
       (3) Operation of a national clearinghouse. Jump$tart's 
     clearinghouse will serve as a one-stop information source for 
     high-quality teaching materials that help educators teach the 
     competencies covered by the coalition's guidelines.
       More details about the survey and guidelines follow in this 
     fact sheet.
       Q. What makes the coalition think there's a problem in the 
     first place?
       A. The survey results released today show a lack of 
     personal finance knowledge among high school seniors that is 
     very disturbing. On average, survey participants answered 
     57.9% of the questions correctly--a failing grade based upon 
     the typical grade scale used by schools (90-100%=A, 80-89%=B, 
     etc.)
       For another indicator, just take a look at today's adult 
     consumers. Recent measures of financial distress indicate 
     that many of them lack the financial literacy skills to make 
     informed decisions. Rising consumer credit delinquencies, 
     sharp increases in personal bankruptices, and inadequate 
     saving for retirement during a period of general economic 
     prosperity lead to this conclusion. We need to increase 
     understanding of personal finance issues to prevent these 
     problems in the next generation.


                            About the Survey

       Q. Why did Jump$tart conduct this survey?
       A. To provide a benchmark on the existing level of personal 
     finance knowledge among America's youth. Now that these 
     national survey results are available, the coalition and the 
     country have a basis to measure progress in this area.
       Q. What criteria did you use to determine which questions 
     to include in the survey?
       A. Most of the survey's questions related to four areas 
     identified by the coalition's guidelines as key components 
     for personal finance literacy: income, money management, 
     saving and investment; and spending. The survey examined the 
     respondents' present knowledge level in these areas, as well 
     as their ability to apply this knowledge, solve problems, 
     define basic terms and understand basic financial 
     relationships--for example, how taxes affect disposable 
     income; how lifestyle and career choices affect future 
     financial goals.
       Q. What about the survey's design?
       A. The survey, conducted by Lewis Mandell, Ph.D., an 
     economist and researcher who is Dean of Business at Marquette 
     University, consisted of a written 40-minute examination 
     administered to 1,509 12th graders. The survey's sample 
     consisted of 149 high schools, out of which 64 (43%) actually 
     participated. The schools were representative of geographic 
     region and size of school, guaranteeing the inclusion of 
     schools within each region from central cities, suburbs and 
     rural areas. The survey took place in March and April, 1997.


                          About the Guidelines

       Q. How were the coalition's personal finance teaching 
     guidelines developed?
       A. The guidelines underwent a rigorous development and 
     review process to ensure a high-level of credibility, based 
     on input from the education community. Written input was 
     sought from over 20 representatives from elementary schools, 
     middle schools, business education, family and consumer 
     science and several other relevant areas. In addition, a 
     panel of five teachers from across the U.S. met with 
     Jump$tart representatives for a two-day session, during which 
     the teachers provided additional input for the guidelines 
     based upon their classroom experiences.
       Q. What types of personal finance topics are covered by the 
     guidelines?
       A. The guidelines cover four key areas: income; money 
     management; saving and investment; and spending. Within each 
     area are specific skills and concepts that the coalition 
     believes students should be taught before their graduation 
     from high school. For example, under ``money management,'' 
     the guidelines call for students being able to develop, 
     analyze and revise a budget and to know how to use checking 
     and savings accounts.
       Q. Aren't Jump$tart's guidelines already covered by other 
     existing standards?
       A. Some aspects of personal finance are covered within 
     existing standards. But no set has focused on personal 
     finance in a comprehensive and exclusive manner.


                            Other Questions

       Q. What about Jump$tart's clearinghouse?
       A. While still in the developmental stages, the 
     clearinghouse should be up and running during the 1997-98 
     school year.
       The primary vehicle for dissemination of information is 
     expected to be the World Wide Web. For users who may not have 
     access to the Web, print copies of the resource list will be 
     available via traditional distribution channels, including 
     mail, telephone and direct contact at exhibits, seminars and 
     conferences.
       Q. How will Jump$tart measure the success of its efforts?
       A. Jump$tart plans to conduct surveys every two years to 
     determine if students' knowledge levels of personal finance 
     are increasing. The ultimate indicator, however, will be if 
     adult consumers' management of their finances improves.
       Q. Many organizations have been in the business of personal 
     finance education for years. How is your work different, and 
     what makes you think you'll make an impact?
       A. Perhaps the two things that set Jump$tart apart are 
     timing and the urgent need for this information. As we 
     approach the year 2000, education reform is on the minds of 
     many; consumers are being offered an array of revolutionary 
     new financial services products; and economic indicators 
     point to an inability among households to manage their 
     finances.
       Our belief is that the current ``social mood'' will 
     manifest itself into strong support--from the public, 
     Washington policy makers, the education community and 
     parents--for the coalition's initiatives.

                               __________
                               

   1997 Personal Financial Survey of High School Seniors Executive--
                                Summary

       America's young adults are leaving schools without the 
     ability to make critical decisions affecting their lives. 
     This finding, from an historic benchmark study of graduating 
     high school seniors, may help explain a number of distressing 
     recent phenomena including record numbers of personal 
     bankruptcies. Moreover, those high school seniors with lower 
     income and educational aspirations know substantially less 
     than the dismal amount known by their college-bound 
     counterparts.
       These findings come from the 1997 Personal Financial Survey 
     which was administered to 1509 high school seniors from 64 
     high schools throughout the United States. Overall students 
     averaged 57 percent on the 31 question multiple choice 
     examination which was designed by a team of educators to test 
     basic financial survival skills. Since there were just 4 
     multiple choice answers to each question, random responses 
     would have yielded a score of 25 percent.
       The fact that students were able to choose correct answers, 
     on average, more than half the time was due in large part to 
     a number of questions that tested terminology rather than 
     reasoning ability. For example, 88.7% knew that salaries, 
     wages and tips constituted primary sources of income for most 
     people age 20-35, but fewer than half suspected that if a 
     person's income doubled (from $12,000 to $24,000 per year) 
     income taxes would double, at least. The inability to apply 
     the concept of income tax progressivity hinders the decision 
     making ability of young labor force entrants who may tend to 
     overextend themselves in terms of consumption and debt in 
     anticipation of inflated future take home pay.
       The decision to test high school seniors was made because 
     many graduates do not go on to college and formal education 
     ends for them in the 12th grade. In addition, relatively few 
     college students study personal finances, making primary and 
     secondary schools the only place where the vast majority of 
     young Americans can acquire financial survival skills. 
     However, according the survey results, fewer than 11 percent 
     of students replied that they learned about managing money 
     primarily at school and their average score was 54.7% 
     compared to the majority of students who learned most at home 
     from their families and who had a higher average score 
     (57.5%). This implies that the schools that are teaching 
     tools of money management may need some strengthening of 
     their curricula.
       Questions were divided into four categories: income, money 
     management, savings and investment, and spending. By far the 
     weakest area of knowledge was savings and investment where 
     students answered only 47.3 percent of questions correctly. 
     For example, only 14.4% of students felt that stocks would 
     have a higher rate of growth over 18 years than savings 
     accounts, checking accounts or U.S. Government savings bonds. 
     In addition, 51 percent said that a certificate of deposit at 
     the bank is not protected against loss by the Federal 
     Government. Finally, fewer than a third knew that interest 
     earned on a bank savings account may be taxable if total 
     income is high enough.
       Women, on average, scored slightly more than men (57.8% 
     compared to 56.6%) although differences in knowledge were far 
     more pronounced among the male respondents. For example, 30.2 
     percent of men scored in the top quartile as compared with 26 
     percent of women while 33.2 percent of men scored in the 
     bottom profile in contrast to just 26.4 percent of women.

[[Page E1026]]

       Differences also existed for students of different racial 
     backgrounds. The study was carefully designed to reflect the 
     diversity of American 12th graders and, in fact, only 60 
     percent of the sample were whites who answered, on average, 
     60.7 percent of the questions correctly. Native Americans 
     averaged 48.8, African Americans 50.3, Hispanic Americans 
     55.1 and Asian-Americans 55.7.
       Contrary to expectations, differences in scores were not 
     very dependent upon family income. Students with family 
     incomes below $20,000 per year averaged 55.2% in contrast to 
     the 58.6% of families in the over $80,000 bracket. In fact, 
     average scores were slightly lower for students in the top 
     income bracket than for those in the bracket below ($40,000 
     to $79,999) indicating, perhaps, that more affluent, college-
     bound students were not as concerned than their less affluent 
     counterparts with personal survival skills. However, the 2 
     percent of students who planned no education beyond high 
     school did nakedly worse on the exam (43.8%) than did others.
       Students were asked to name the most difficult money 
     management problems faced by people their age and also by 
     adults who have families. The most frequently mentioned 
     problem for their age cohort was spending on things that they 
     really didn't need. This was followed by the problems of 
     being able to save, particularly for college. For adults, 
     problems of paying bills, budgeting and supporting children 
     were identified as being most severe.
       The magnitude of the problems of financial literacy 
     uncovered by this study greatly understates the true extent 
     of the problem nationally for two reasons. First, the sample 
     included only high school seniors who will shortly become 
     high school graduates and did not include those who dropped 
     out. Second, even among high school seniors, the sample 
     picked up only 2 percent who planned no additional education. 
     This may relate to the request that high schools administer 
     the test to 12th grade classes in English or social studies 
     other than economics to avoid biasing study results. Since 
     students who were not college bound did substantially worse 
     than the others, the study may have omitted as many as a 
     third of all 18 year olds who will not graduate from high 
     school or who plan no additional education and who would have 
     caused a substantial decrease in the overall results. For 
     this reason, the plan of the Jump$tart Coalition to encourage 
     the teaching of financial literacy in all grade levels is 
     critical.


                            SAMPLE QUESTIONS

       1. Retirement income received from a company is called
       (a) Social Security.
       (b) pension.
       (c) 401k plan.
       (d) rents and profits.
       2. Ralph worked his way through college earning $12,000 per 
     year. After graduation, his first job pays $24,000. The total 
     dollar amount Ralph will have to pay in federal income taxes 
     in his new job will
       (a) be lower than when he was in college.
       (b) stay the same as when he was in college.
       (c) go up a little from when he was in college.
       (d) double, at least, from when he was in college.
       3. Many young people receive health insurance benefits 
     through their parents. Which of the following statements is 
     true about health insurance coverage:
       (a) You are covered by your parents' insurance until you 
     marry, regardless of your age.
       (b) You continue to be covered by your parents' insurance 
     as long as you live at home, regardless of your age.
       (c) If your parents become unemployed, your insurance 
     coverage must stop, regardless of your age.
       (d) Young people don't need health insurance because they 
     are so healthy.
       4. Paulo and Susanna just had a baby. They received money 
     as baby gifts and want to put it away for the baby's 
     education. Which of the following is likely to have the 
     highest growth over the next 18 months:
       (a) A savings account.
       (b) A checking account.
       (c) A U.S. government bond.
       (d) Stocks.
       5. If your credit card is stolen and the thief runs up a 
     total of $1,000, you will be responsible for the following 
     amount after notifying the credit card issuers:
       (a) None.
       (b) $500.
       (c) $1,000.
       (d) $50.
       Answers: 1. (b); 2. (d), 3. (c); 4. (d) and 5. (d).

       

                          ____________________