Arkansas students, starting with the class of 2021, won't be able to graduate from high school without some understanding of financial planning, taxes and how to make a household budget.
The Legislature this year passed House Bill 1442, which became known as the Personal Finance and Job Readiness Act. It mandates students receive instruction on a range of standards related to financial literacy. They must get that instruction in grades 10-12.
Dollars and sense
The Personal Finance and Job Readiness Act lays out five broad categories of instruction all students must get before they graduate from high school.
• Money management
• Spending and credit
• Saving and investing
• Preparing for employment
Source: Staff report
All high school students are required to take economics. Some of what's taught in today's economics courses is related to personal finance, but the law presents additional topics that must be taught, said Marsha Masters, associate director of Economics Arkansas.
The law doesn't require schools to offer a personal finance course. It directs the Arkansas Department of Education, in consultation with the Department of Career Education, to develop personal and family finance standards, which may be inserted into existing courses.
"We have written those standards. We are now taking those standards and embedding them into the economics course," said Stacy Smith, director of instruction and curriculum at the Department of Education.
The standards will be presented to the state Board of Education for approval next month.
State Rep. Andy Davis, R-Little Rock, was the lead sponsor of the bill that passed with one vote against it.
Davis said he pushed the bill because he thought too many young people were leaving high school unaware of the kind of financial issues they were bound to encounter in the real world.
"We hear from employers around the state quite a bit about employees changing jobs a lot or just having general employment problems that stem from personal finance issues," Davis said.
The new state law also mandates soft skills training. Soft skills, sometimes called "people skills," cover things such as communication, time management and meeting an employer's expectations. The hope is to prepare students for success when they get a job, Davis said.
"It seems like some of these things are not taught at home as much as they used to be," he said.
Findings from the National Financial Capability Study, released last year by the Financial Industry Regulatory Authority Foundation, showed many Americans lacking in financial literacy.
Study respondents were asked five questions covering fundamental concepts of economics and finance. The study showed 37 percent of respondents were considered to have high financial literacy, meaning they could answer at least four of the five questions correctly -- down from 42 percent in 2009.
Statistics indicate Arkansas is worse than most states in financial literacy.
For example, 44 percent of Arkansans -- compared with 51 percent of all Americans -- have a prime credit score, a score of 720 or above. Arkansas is ranked 44th among the states in that category, according to the nonprofit organization Prosperity Now.
"That's not a healthy place to be," said Alden Napier, executive director of Credit Counseling of Arkansas. "So most people don't even know where to check their credit score, how to make it go up and why it's relevant."
Napier also pointed out 55 percent of Arkansas households have savings accounts, compared with 71 percent nationally, according to Prosperity Now -- a distressing sign saving money is not a priority in Arkansas, he said.
Credit Counseling of Arkansas, a Fayetteville-based nonprofit organization, assists people with personal finance issues and offers free financial education seminars to the community.
Napier said he was excited to hear about the Personal Finance and Job Readiness Act. It has the potential to affect not only the kids, but also their families, because of the knowledge the kids will bring home from school, he said.
"Kids can be the catalyst for a lot of robust change in a family, a lot of healthy discussion in a family," Napier said.
Davis wanted the personal finance curriculum limited to older students, because it's more relevant to those who have jobs and are closer to adulthood, he said. That's why only students in grades 10 and up will get credit for taking the personal finance standards.
That creates some complications for schools, most of which teach the one-semester economics course in ninth grade, paired with civics the other semester, Smith told a gathering of Northwest Arkansas superintendents Nov. 2.
One option is to move economics and civics to the 11th grade. That would involve moving the U.S. history classes taught in 11th grade and eighth grade to the ninth grade. Many educators believe civics is a better fit for 11th grade anyway, because students are closer to being eligible to vote, Smith said.
Another option is to have students take economics at some point after ninth grade and take an elective in ninth grade to replace economics, she said.
"I don't have a strong recommendation for you," Smith told the superintendents. "It's your choice."
What about this year's ninth-graders who already are taking the economics course? The state is developing an online unit on personal finance that could be embedded in another course or offered as a standalone activity for those students to complete, said Jennifer Morrow, director of secondary education for Bentonville Schools.
NW News on 11/13/2017
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