White House wants to consolidate financial literacy programs

The Treasury secretary has been tasked by the White House to develop recommendations for a revamp of the government’s financial literacy education efforts and to share those recommendations with the Office of Management and Budget (OMB) before Oct. 1.

The administration says it will consider “streamlining and consolidation” proposals as part of its fiscal 2020 budget.

This effort is part of a government-wide reform plan detailed in a report released earlier this week by the White House through OMB. The plan – the same one that seeks consolidation of the Department of Labor and Department of Education, nutrition assistance programs and more – also envisions a reduction in the number of agencies involved in financial literacy and education; better coordination with nongovernmental entities; and a “data-driven” approach to increase the impact of financial literacy programs and make financial literacy information more accessible.

The reform plan emphasizes Treasury’s role as head of the Financial Literacy and Education Commission (FLEC), where Consumer Financial Protection (BCFP) Acting Director Mick Mulvaney serves as vice chair.

Created in 2003, the council now includes the heads of 22 federal agencies (including all the federal financial institution regulators) and the White House Domestic Policy Council. FLEC’s charge was to improve financial literacy and education in the U.S. through a national strategy, but the White House document says FLEC has had “limited success rationalizing federal efforts to promote access to quality financial literacy and education tools for all Americans.”

The types of proposals it seeks include, but are not limited to, the following:

  • Using an evidence-based approach to articulate a national vision that outlines the appropriate role for the federal government and leverages the current work of non-profit organizations, the private sector, and state and local governments.
  • Elimination and development of programs based on how much knowledge participants are acquiring from the financial literacy and education program, as well as how likely the program is to result in behavior that leads to greater financial capability.
  • Consolidation of financial literacy programs into fewer agencies, with a mandate that they consult with relevant experts in other agencies.
  • Consolidation of financial literacy policy and research into a single agency or commission that would evaluate both existing programs and proposals for future programs.

The plan says the federal government spends $250 million annually on financial literacy and education and that another $170 million is spent on technical assistance and education for entrepreneurs by the Small Business Administration, “one component of which addresses financial literacy.” It says six of the agencies that administer financial literacy programs account for nearly 90% of related federal spending, but only three agencies have evaluated their programs for outcomes measuring changes in behavior.

FLEC, the report says, is currently reviewing, among other things, the appropriate federal role and methods to support outside programs (of non-profits and the private sector, state and local governments, etc.); consolidation of efforts; best practices; developing a high-quality curriculum; oversight and governance; alignment with a government-wide mission.

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Financial Literacy and Education Commission