Should Mass. high school seniors need to take financial literacy classes for graduation?

BOSTON — With its history of fiercely local municipal control, requiring that Massachusetts high school students take a financial literacy course in order to qualify for graduation may come down to putting it before the voters in the form of a ballot question.

That is the approach being taken by California, a local-control state similar to Massachusetts, in order to force its school districts to make classes available as a requirement for graduation, according to John Pelletier, director of the Champlain College Center for Financial Literacy in Vermont.

Pelletier attended a legislative briefing Monday to support bills that address the lack of standardized financial literacy courses in public schools. Two measures, one reported out of the Joint Committee on Education, the second a later file, are similar in calling for standardized curriculum.

However, the Senate bill, filed by Sen. Patrick O’Connor, R-Weymouth, only requires that a class in financial literacy be offered as an elective. The House bill filed by Rep. Ryan Hamilton, D-Methuen, would make it a requirement for graduation.

“Massachusetts is being left behind,” Pelletier said, explaining that if the state does not act, it could be the only one in the nation in the 2030s that fails to educate its youth in making financial decisions. According to the Center, Massachusetts has earned a failing grade of “F” along with California, the District of Columbia and South Dakota, in student financial literacy.

And California is taking steps to remedy the lack, Pelletier said, adding that in South Dakota, 50% of school districts require financial literacy courses as a graduation requirement and 40% offer the courses as an elective. “So they only have a 10% gap,” Pelletier said.

The mission to have financial literacy courses available to Massachusetts students is dear to Treasurer Deborah Goldberg. She started the process almost as soon as she was elected in 2015, picking a panel of experts to work on creating and implementing a plan.

“We learned the best way to address the lack of financial understanding was to present it in schools, where the kids are, through a standardized curriculum,” Goldberg said at the briefing. She remembers a childhood school field trip to a local bank where all the kids received passbooks and started saving their pennies, nickels and dimes to deposit them regularly.

“These courses are not available in our schools,” Goldberg said. She noted that high school seniors face big, complicated financial decisions that will affect the rest of their lives: deciding whether and where to continue their educations, whether to take loans to pay for schooling and even how to maximize loans.

“Working people loaded down with debt affect the Massachusetts economy; they can’t be consumers,” Goldberg said. Debt inhibits people’s ability to move ahead with their lives, transition from a shared rental property to homeownership, to establishing a family and caring for it.

In her remarks, Goldberg said that as treasurer she didn’t need to know the rate of convergence for speeding conveyances, but she needed to know it for the Massachusetts Comprehensive Assessment system. She said she also doesn’t find a need for algebra, but “I need to know how to pay my bills.”

Financial literacy classes are critical for students, for the future of Massachusetts families and for all residents, she said. While ideally, the financial literacy classes should be mandatory throughout public schools in Massachusetts, Goldberg said, she understands that districts have difficulty with unfunded mandates.

O’Connor said the legislature included a $100,000 line item in a past budget and used the funds to educate 80 teachers, introducing them to financial literacy curriculum and how to convey it to their students. The senator suggested that 83% of Massachusetts residents support the concept of teaching financial literacy as a mandatory graduation requirement and that support transcends political lines.

Data offered by Pelletier indicates that financial literacy rates differ along cultural, ethnic and financial lines. Older adults are more financially savvy than youngster adults; and men, especially in certain cultures, are more financially literate than women. Income, education and employment are also indicators, with higher earners and those with higher education reflecting higher levels of literacy. Employed people are also more informed about money.

Lower-income residents and those living in poorly resourced communities, and residents who identify as of color, also have lower levels of financial know-how. They have higher debt levels, lower credit scores, higher delinquency rates and use financial tools like payday loans.

Financial literacy is a matter of equity, Pelletier said, adding the only way to fix the deficit is that it be a graduation requirement for high school students.

“Massachusetts needs 723 teachers to educate the 73,200 students who would take a financial literacy course that was required for graduation,” Pelletier said, adding that once educators are trained to teach the course, he estimates the state would spend $3,000 per teacher, the bulk of the cost would be met. The group, Next Generation Personal Finance, has the curriculum and teaching tools available online for free.

First steps, the legislators agree, is to have each district offer financial literacy courses as electives and then make it a graduation requirement.

This article originally appeared on Telegram & Gazette: Lawmakers eye financial literacy electives, possible mandates