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June 12, 2023 Editor’s Take

Bordonaro: Banks, credit unions play key role in passage of financial literacy curriculum mandate

Greg Bordonaro

Connecticut is poised to join 20 other states that will require high school students to complete a financial literacy course in order to graduate.

Such a mandate is long overdue, even if it adds to the costs of local school budgets.

It’s an issue that’s been debated at the state legislature — and nationwide — for years. The House and Senate last month both passed legislation that will require Connecticut high school students, starting with the graduating class of 2027, to take a half-credit financial literacy course in order to earn their diplomas.

It tasks the state Board of Education with developing the curriculum, which must include topics on banking, investing, savings, and credit and debit cards.

Similar legislation has been proposed in the past but failed to gain enough support. This year, a bipartisan group of lawmakers coalesced around the issue, with help from key state officials including state Treasurer Erick Russell and Comptroller Sean Scanlon.

Also key to getting legislation over the finish line was private-sector support, particularly from banks and credit unions, which have long lobbied for financial literacy requirements.

The Connecticut Bankers Association, Credit Union League of Connecticut and Financial Planning Association of Connecticut all testified in favor of the legislation. Of course, they each have a vested interest in a more financially literate populace: It will increase their pool of future potential customers.

But a financial literacy requirement is a win-win proposition for the state because it increases the likelihood that more residents will be financially independent in the future, and — hopefully — less reliant on government support programs.

A more financially literate population can yield other economic benefits, including raising the prospects of individuals starting a business and creating jobs.

According to Next Gen Personal Finance, only 13.4% of Connecticut students are currently guaranteed at least one semester of a standalone personal finance course. And of the schools that guarantee a standalone personal finance course, none are in any of the state’s largest cities, putting minority and other underserved students at a further disadvantage.

Credit Union League of Connecticut President and CEO Bruce Adams said the financial literacy mandate has been the flagship priority for his organization since he joined it in 2019.

“A financial education graduation requirement ensures that the state will prepare every student for economic success in adulthood,” he said. “This is a matter of fundamental fairness and justice. In a capitalist economy, a free and fair public education must include principles of personal finance.”

Adams said his members want to be involved in the development of any financial literacy curriculum, noting Connecticut credit unions have trained and deployed over 100 certified financial counselors who are available to consumers at no cost.

Connecticut Bankers Association CEO Tom Mongellow noted that his industry has been pushing for a statewide financial literacy curriculum mandate since at least the 1980s. That’s when CBA was appointed to a task force that studied how to improve access to mortgage lending products.

The task force concluded that the lack of personal financial knowledge and skills led to poor financial decisions that hurt many residents’ credit scores and disqualified them from getting a mortgage.

Mongellow also noted that many banks have provided educational programs to a small number of high schools over the years to try to help fill the financial-literacy void.

However, banks don’t have the capacity, or cooperation of each school district, to reach a mass student base.

Of course, there is often a cost associated with any new state mandate. According to the Office of Fiscal Analysis, the average salary plus fringe costs to hire a new full-time teacher in Connecticut is about $100,000. However, those costs would be substantially lower, if school districts can offer a financial literacy program by training a current employee.

Potential costs to municipalities didn’t deter many fiscally conservative Republicans from voting in favor of the curriculum mandate, which passed by wide margins in both the House and Senate.

Supporters included state Rep. Tom Delnicki, a Republican from South Windsor who is also the ranking member of the Banking Committee.

Delnicki, who previously served as a voluntary director for a local credit union, said financial literacy is key to living a successful life, and he credited banks and credit unions for helping get the legislation passed.

“They were great allies,” Delnicki said.

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