FRANKFORT, Ky. (2/7/14) – This week House Bill 223, a bill to create a Kentucky Financial Literacy Commission passed out of committee and the House with unanimous bipartisan support.
“Advancing financial literacy has been an important focus of my administration and for Representative Jim Glenn and Representative Rita Smart,” said Treasurer Todd Hollenbach. “We have a real opportunity here to help educate Kentucky citizens in making sound financial decisions in the areas of planning, saving, investing, and knowledgeable decision making.”
Applauds Reps. Glenn and Smart for championing the cause
Sponsored by Representative Glenn and cosponsored by Representative Rita Smart, the bill would create a Kentucky Financial Literacy Commission that would make its focus to increase the college savings rate, increase financial understanding of our youth, increase the savings rates of low-income families, increase the rate of retirement savings, and inform and protect seniors.
“This commission would attempt to focus on the four biggest financial areas of concern for Kentucky, while uplifting the financial position of our citizens and therefore our Commonwealth as a whole,” said Treasurer Hollenbach.
The bill is rooted in statistics showing a gap in financial literacy among these groups. While 82 percent of parents surveyed in 2013 by the Kentucky Education Savings Plan stated that they have made saving for their child’s college education a priority, only 51 percent of parents familiar with Kentucky’s 529 savings plan were even aware of the tax benefits associated with utilizing the program.
Further, the fastest growing demographic in declaring bankruptcy is in the age group between 20 – 24, many of whom never budgeted or managed their money as a teen.
Another factor for the rise of bankruptcy in this demographic may come from the estimated 61 percent of college students who have said they misunderstood or were surprised by aspects of their student loans or the loan process in general, graduating with the highest college loan debt rate seen in our nation’s history.
It is estimated that 25 percent of families who fall into the low income demographic do not have a bank account of any kind. Many describe feeling lost in debt with no knowledge or resources to pull themselves out, and only realized that financial decisions they made where poor decisions after experiencing the effects.
Finally, 14 percent of our senior citizens are living in poverty.
In addition, seniors are at a high risk of falling prey to financial scams aimed at their misunderstanding of a 21st century financial system.
The Commission would be a resource to help them navigate the modern financial climate. It would work to educate, communicate with, and protect our elderly. “We need to safeguard Kentucky seniors in every way possible so that they do not fall prey to those dubious enough to take what little they have, as well as providing tips and tools for living on a fixed income in our changing economy,” stated Treasurer Hollenbach.
The bill is modeled after a similar bill which passed into Tennessee law in 2010. Since the commission was created in Tennessee, their state has risen to be a national leader in financial literacy, receiving the highest ranking given by The Center for Financial Literacy at Champlain College.
“Our neighbor to the south has made tremendous strides toward goals we also seek here in our Commonwealth,” stated Treasurer Hollenbach. “This bill and commission is modeled by their success, and I feel it is only prudent to use a model already proven to be effective in advancing our own state.”
Members of Treasury will be attending a financial literacy summit in April hosted by Tennessee Treasurer Lillard, and speaking with him concerning the most effective ways of implementing a similar Financial Literacy Commission in Kentucky.
“At the beginning of this year, I called on our legislature and citizens to put partisanship aside and join me in a United Kentucky,” said Treasurer Hollenbach. “I am still dedicated to that goal, and hope to see the Senate follow the exemplary leadership and foresight that Representatives Glenn and Smart have shown in presenting this bill for the financial health of our Commonwealth and our citizens.”
Information provided by Commonweath of Kentucky Treasury
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