Gov. Gavin Newsom recently signed a bill into law that is poised to radically reform the state of financial literacy in California.
Assembly Bill 2927, which was passed near the end of June, changes high school graduation requirements to include a financial literacy course in 2031, and requires school districts to have one as an elective starting in 2027. This marks California as the latest among a group of over two dozen states that will require students to take a financial literacy class for graduation.
“We need to help Californians prepare for their financial futures as early as possible. Saving for the future, making investments, and spending wisely are lifelong skills that young adults need to learn before they start their careers, not after," said Newsom, in a statement last month.
California's State Superintendent of Education, Tony Thurmond, one of the bill's main co-sponsors during its two year odyssey through the state legislature, told NBC Bay Area that he feels the bill "represents the opportunity for us to have more Californians who can contribute to our society and be able to provide for themselves and their family."
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Thurmond, who throughout an interview with NBC Bay Area voiced strong support for financial literacy education, is far from alone in his feelings either. A 2022 poll from the National Endowment for Financial Education showed that 88% of adults support adding financial literacy as a graduation requirement. Additionally, a more recent report from Tyton Partners, a consulting firm comprised of self-declared "Global Knowledge Sector experts," says that a financial literacy course could hold a lifetime value upwards of $127,000.
Thurmond also said that only 25% of Californians have access to personal finance courses, compared to 70% percent for students nationwide. He hopes that the change in curriculum will help students better navigate living in a state with some of the highest cost of living in the country.
"Students will be getting great messaging about how to manage their finances, how to make good decisions, how to be able to afford to live in a state and in a nation that has inflation and high cost of living, helping young people learn decisions that will stay with them for the rest of their life and will help to guarantee their success," he said
The bill comes at a time where post-pandemic cost of living has surged far past the rate of inflation. Goods and services have increased 20% since 2020, and recent housing data suggests that the sale price of homes in the Bay Area is approaching record highs. The two largest metropolitan areas in the Bay Area, San Jose and San Francisco consistently rank amongst the top five nationally in cost of living indexes, problems which appear to be here to stay for the long term.
Next-Gen Personal Finance, an East Palo Alto based financial literacy nonprofit founded in 2014, is said to be assisting in the bill's implementation, offering up "over a million" dollars in grants to for professional development of teachers and curriculum creation, according to Superintendent Thurmond. Tim Ranzetta, a co-founder of the East Palo Alto based organization, said in a CNBC op-ed that he was "elated" at the bill's passage.
"Every student in the state — regardless of where they go to school or their economic status — will now have equal opportunity to learn such vital 21st century skills including budgeting, credit management and understanding financial options for career or college," wrote Ranzetta, later in the piece.
AB 2927's author and main legislative sponsor, Assemblymember Kevin McCarty, holds similar views as well, saying in a news release that, “This is a time where young people are bombarded with credit card offers which can lead to thousands of dollars in debt," he said. "Taking a finance class in high school can help students make smart money decisions that will benefit them throughout their adult life.”
