06/13/12: Meeting the demand for financial literacy

This op-ed appeared in The Virginian-Pilot on the date shown.

THE 30-SOMETHING young lady came to my office for a brief lesson on investing. My first question: Do you know what a CD is? And not that little round disc that you put in a player. She shook her head: No.

A lot of the students in my accounting class have never written a check. Forget reconciling a bank account — the bank balance on the receipt is correct, right?

A client wanted to buy a house. She couldn’t figure out how people ever came up with the money. A mortgage? She had never heard of it.

And we expect everyone to save for their own retirement, use credit wisely and manage their money. How do we get there from here?

Fortunately for Virginia students, it is now a requirement for high school graduation that they take a one-credit course in economics and finance. The requirement became effective for those entering ninth grade last fall.

It was a long time coming. The Virginia Jump$tart Coalition for Personal Financial Literacy was established in April 2005 as an affiliate of the national organization. Among its more than 120 members are credit unions, government agencies, nonprofits, financial planning groups and educational institutions. Leading the effort to create the group was the Virginia Society of CPAs, of which I am a member.

The VSCPAs has been pressing the issue of financial literacy since 2004. In 2005, the General Assembly approved a bill to require instruction in the topic. In 2008, Chesapeake Del. Lionell Spruill Sr. introduced legislation to make the education a graduation requirement, but the bill failed to make it out of committee. The Virginia Board of Education did what the legislature would not. In February 2009, it revised its Standards of Accreditation, making the course a graduation requirement. Then-Gov. Tim Kaine approved the regulatory changes.

Initially, the requirement was to take effect in the 2010-2011 school year, but legislation in the 2010 General Assembly session delayed its implementation one year. Attempts to delay it again during the 2011 legislative session were met with an outcry from the Coalition and members of the VSCPAs. It helped that Gov. Bob McDonnell expressed his support for the requirement. He signed a bill in March 2011 protecting it.

The elements included in the Standards of Learning for Economics and Personal Finance are comprehensive. In addition to basic economic concepts of supply and demand, they cover such things as consumer skills, like comparison shopping; planning for living and leisure, such as buying a home; banking transactions, such as reconciling bank statements; and credit. Also included is information on the role of government and the global economy. The entire SOL can be viewed at http://1.usa.gov/MpSveU.

The VBOE has developed free resources for school boards to use in implementing this requirement, including an online course. Resources are also provided to help teachers prepare to cover all of the topics. At this time, there is no plan to have an SOL test on economics and personal finance.

Virginia §22.1–200.03 cites as its goal of economic education and financial literacy to “further the development of knowledge, skills and attitudes needed for responsible citizenship in a constitutional democracy.” It is a laudable goal — and one I am glad they have added.

A version of this article appeared in Virginia Business 8/19/12.