DiNapoli: State should improve financial literacy efforts

According to an audit released today by New York State Comptroller Thomas P. DiNapoli, New York State should improve its track record in promoting financial literacy and providing New Yorkers with access to information and tools to develop their financial knowledge and skills.

The audit of five agencies, including the Department of Financial Services (DFS), Department of State (DOS), NYS Office for the Aging (NYSOFA), Office of Temporary and Disability Assistance (OTDA), and State University of New York (SUNY), found that the state has not developed a cohesive strategy or made a concerted effort to provide financial education and information to the public.

“Many New Yorkers are trying to navigate tough economic times right now. Having the right information and tools to manage their personal finances can help people be better positioned to weather the good times and the bad,” said DiNapoli: “This audit found that state agencies responsible for promoting financial education and giving New Yorkers the resources they need to protect their finances can improve and better coordinate their efforts.”

Studies have shown that most Americans, especially young adults, are unprepared for financial emergencies and that financial literacy can help prevent personal financial crises among all generations. In a 2018 survey, the Financial Industry Regulatory Authority found that in New York:

  • 28% of credit cardholders only made the minimum monthly payment some months
  • 41% had no savings to cover expenses for three months in case of an emergency.
  • 12% owed more on their home than it was worth.

Additionally, 2.5 million New Yorkers each owed more than $37,600 in federal student debt in 2020, slightly more than the national average, and 11.5% of seniors live in poverty, compared to 9.7% nationally.

Several New York agencies offer financial literacy training to help protect vulnerable consumers, increase household savings, and promote responsible personal finances and financial well-being. A 2021 state law required certain agencies and authorities to provide all relevant new and updated financial literacy education information to the DFS by November 1, 2021. The DFS was to publish the information on its website by January 1, 2022.

DiNapoli’s audit found that, despite some collaboration between the agencies, there is no cohesive strategy to coordinate their various efforts, nor a common definition of “financial literacy.”

For example, DFS, which is the designated clearinghouse for all agency information, displays some links. However, as of June 2022, less than 15 of the state’s more than 100 eligible entities are represented on DFS. Financial aid for New Yorkers Web page.

NYSOFA, the leading service agency for aging New Yorkers, said it had no role in administering financial education programs, although DFS linked to its website. Only three – SUNY, DOS, and OTDA – work to identify and reach vulnerable consumer groups as part of their financial education efforts.

SUNY was the only agency that attempted to measure individuals’ knowledge gains after participating in financial literacy offerings and was the most consistent in disseminating information, primarily to students and prospective students. Obtaining feedback from participants is critical to determining whether educational efforts are successful and where improvements are needed.

The audit found that DOS, OTDA, and SUNY are not using the information and data they have to help them evaluate and improve their financial literacy offerings.

Recommendations

Looking at all five agencies, DiNapoli’s audit made recommendations for each that could improve their reach:

  • DFS: Work with agencies and authorities to ensure entities subject to the Financial Literacy Act provide information and education and are accessible on the DFS website. These actions should include creating a definition of “financial literacy” to help agencies determine relevant content.
  • DOS: Work with DFS to ensure that access to information about DOS’ financial literacy content and efforts is available on the DFS website.
  • NYSOFA: Improving financial education and literacy for older New Yorkers.
  • OTDA: Obtain feedback from Youth Summer Jobs Program participants to identify strengths and weaknesses of financial literacy offerings.
  • SUNY: In coordination with the Smart Track provider, as appropriate, use available Smart Track information and user metrics to identify potential areas of focus and improvement.

Answer

Agencies, with the exception of NYSOFA, generally agreed with the recommendations and said they were taking steps to improve financial literacy education. Their full responses are available in the audit.

The audit is part of DiNapoli’s ongoing financial literacy initiative. In 2019, DiNapoli signed an executive order recognizing the need for stronger financial education in the state and providing New Yorkers with more tools to manage their finances.

Audit
Roles of Selected Agencies in Financial Literacy


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Sarah J. Greer