Financial Literacy and Education Commission
Further Progress Needed to Ensure an Effective National Strategy Gao ID: GAO-07-777T April 30, 2007The Financial Literacy and Education Improvement Act created, in December 2003, the Financial Literacy and Education Commission. This statement is based on a report issued in December 2006, which responded to the act's mandate that GAO assess the Commission's progress in (1) developing a national strategy; (2) developing a Web site and hotline; and (3) coordinating federal efforts and promoting partnerships among the federal, state, local, nonprofit, and private sectors. To address these objectives, GAO analyzed Commission documents, interviewed its member agencies and private financial literacy organizations, and benchmarked the national strategy against GAO's criteria for such strategies.
The National Strategy for Financial Literacy serves as a useful first step in focusing attention on financial literacy, but it is largely descriptive rather than strategic and lacks certain key characteristics that are desirable in a national strategy. The strategy provides a clear purpose, scope, and methodology and comprehensively identifies issues and challenges. However, it does not serve as a plan of action designed to achieve specific goals, and its recommendations are presented as "calls to action" that generally describe existing initiatives and do not include plans for implementation. The strategy also does not fully address some of the desirable characteristics of an effective national strategy that GAO has previously identified. For example, it does not set clear and specific goals and performance measures or milestones, address the resources needed to accomplish these goals, or fully discuss appropriate roles and responsibilities. As a result of these factors, most organizations that GAO spoke with said the strategy was unlikely to have a significant impact on their financial literacy efforts. The Commission has developed a Web site and telephone hotline that offer financial education information provided by numerous federal agencies. The Web site generally serves as an effective portal to existing federal financial literacy sites. Use of the site has grown, and it averaged about 69,000 visits per month from October 2006 through March 2007. The volume of calls to the hotline--which serves as an order line for a free tool kit of federal publications--has been limited. The Commission has not tested the Web site for usability or measured customer satisfaction with it; these are recommended best practices for federal public Web sites. As a result, the Commission does not know if visitors are able to find the information they are looking for efficiently and effectively. The Commission has taken steps to coordinate the financial literacy efforts of federal agencies and has served as a useful focal point for federal activities. However, coordinating federal efforts has been challenging, in part because the Commission must achieve consensus among 20 federal agencies, each with its own viewpoints, programs, and constituencies, and because of the Commission's limited resources. A survey of overlap and duplication and a review of the effectiveness of federal activities relied largely on agencies' self-assessments rather than the independent review of a disinterested party. The Commission has taken steps to promote partnerships with the nonprofit and private sectors through various public meetings, outreach events, and other activities. The involvement of state, local, nonprofit, and private organizations is important in supporting and expanding Commission efforts to increase financial literacy, and our report found that the Commission could benefit from further developing mutually beneficial and lasting partnerships with these entities that will be sustainable over the long term.
GAO-07-777T, Financial Literacy and Education Commission: Further Progress Needed to Ensure an Effective National Strategy
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Testimony:
Before the Subcommittee on Oversight of Government Management, the
Federal Workforce, and the District of Columbia, Committee on Homeland
Security & Governmental Affairs, U.S. Senate:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 2:30 p.m. EDT:
Monday, April 30, 2007:
Financial Literacy And Education Commission:
Further Progress Needed to Ensure an Effective National Strategy:
Statement of Yvonne D. Jones, Director:
Financial Markets and Community
Investment:
GAO-07-777T:
GAO Highlights:
Highlights of GAO-07-777T, a testimony before the Subcommittee on
Oversight of Government Management, the Federal Workforce, and the
District of Columbia, Committee on Homeland Security & Governmental
Affairs, U.S. Senate
Why GAO Did This Study:
The Financial Literacy and Education Improvement Act created, in
December 2003, the Financial Literacy and Education Commission. This
statement is based on a report issued in December 2006, which responded
to the act‘s mandate that GAO assess the Commission‘s progress in (1)
developing a national strategy; (2) developing a Web site and hotline;
and (3) coordinating federal efforts and promoting partnerships among
the federal, state, local, nonprofit, and private sectors. To address
these objectives, GAO analyzed Commission documents, interviewed its
member agencies and private financial literacy organizations, and
benchmarked the national strategy against GAO‘s criteria for such
strategies.
What GAO Found:
The National Strategy for Financial Literacy serves as a useful first
step in focusing attention on financial literacy, but it is largely
descriptive rather than strategic and lacks certain key characteristics
that are desirable in a national strategy. The strategy provides a
clear purpose, scope, and methodology and comprehensively identifies
issues and challenges. However, it does not serve as a plan of action
designed to achieve specific goals, and its recommendations are
presented as ’calls to action“ that generally describe existing
initiatives and do not include plans for implementation. The strategy
also does not fully address some of the desirable characteristics of an
effective national strategy that GAO has previously identified. For
example, it does not set clear and specific goals and performance
measures or milestones, address the resources needed to accomplish
these goals, or fully discuss appropriate roles and responsibilities.
As a result of these factors, most organizations that GAO spoke with
said the strategy was unlikely to have a significant impact on their
financial literacy efforts.
The Commission has developed a Web site and telephone hotline that
offer financial education information provided by numerous federal
agencies. The Web site generally serves as an effective portal to
existing federal financial literacy sites. Use of the site has grown,
and it averaged about 69,000 visits per month from October 2006 through
March 2007. The volume of calls to the hotline”which serves as an order
line for a free tool kit of federal publications”has been limited. The
Commission has not tested the Web site for usability or measured
customer satisfaction with it; these are recommended best practices for
federal public Web sites. As a result, the Commission does not know if
visitors are able to find the information they are looking for
efficiently and effectively.
The Commission has taken steps to coordinate the financial literacy
efforts of federal agencies and has served as a useful focal point for
federal activities. However, coordinating federal efforts has been
challenging, in part because the Commission must achieve consensus
among 20 federal agencies, each with its own viewpoints, programs, and
constituencies, and because of the Commission‘s limited resources. A
survey of overlap and duplication and a review of the effectiveness of
federal activities relied largely on agencies‘ self-assessments rather
than the independent review of a disinterested party. The Commission
has taken steps to promote partnerships with the nonprofit and private
sectors through various public meetings, outreach events, and other
activities. The involvement of state, local, nonprofit, and private
organizations is important in supporting and expanding Commission
efforts to increase financial literacy, and our report found that the
Commission could benefit from further developing mutually beneficial
and lasting partnerships with these entities that will be sustainable
over the long term.
What GAO Recommends:
In its report, GAO recommended that the Commission (1) incorporate
additional elements into the national strategy to help measure results
and ensure accountability, (2) conduct usability tests of and measure
customer satisfaction with its Web site, (3) provide for an independent
reviewer to evaluate duplication and effectiveness of federal
activities, and (4) expand upon current efforts to cultivate
sustainable partnerships with nonprofit and private entities. The
Commission has taken steps to address some of these recommendations.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-777T].
To view the full product, including the scope
and methodology, click on the link above.
For more information, contact Yvonne D. Jones, (202) 512-8678 or
jonesy@gao.gov.
[End of section]
Mr. Chairman and Members of the Committee:
I appreciate the opportunity to be here today to discuss the federal
government's role in financial literacy. Ensuring that Americans have
the knowledge and skills to manage their money wisely is a key element
in improving the economic health of our nation in current and future
generations. Financial literacy has become increasingly important in
recent years due to the convergence of a number of economic, policy,
and demographic trends. For example, workers today are increasingly
responsible for managing their own retirement savings--yet at the same
time, the nation's personal saving rate has fallen dramatically over
the past few decades, and household debt hovers at record high levels.
In recent years, we have issued several products on the federal
government's role in improving financial literacy.[Footnote 1] My
statement today focuses on the Financial Literacy and Education
Commission, which is comprised of 20 federal agencies and was created
in 2003 by the Financial Literacy and Education Improvement
Act.[Footnote 2]
Today I will discuss the Commission's progress in (1) developing an
effective national strategy to promote financial literacy and
education; (2) implementing its Web site, hotline, and multimedia
campaign; and (3) coordinating federal financial literacy efforts and
promoting partnerships among government, nonprofit, and commercial
organizations. This statement is based primarily on our December 2006
report that assessed the Commission's effectiveness.[Footnote 3] In
preparing that report, we reviewed the Financial Literacy Act and
analyzed relevant Commission documents, including the National Strategy
for Financial Literacy. We assessed the national strategy, in part, by
benchmarking it against general characteristics of an effective
national strategy we have identified in prior work. We interviewed
representatives of all 20 federal agencies that are members of the
Commission as well as representatives of nonfederal organizations that
address issues of financial literacy. We also gathered and analyzed
data on the content and usage of the Commission's Web site, telephone
hotline, and publication tool kit. We conducted our work from January
2006 through November 2006 in accordance with generally accepted
government auditing standards.
In summary:
* The National Strategy for Financial Literacy serves as a useful first
step in focusing attention on financial literacy, but it is largely
descriptive rather than strategic and lacks certain key characteristics
that are desirable in a national strategy. While the strategy
comprehensively identifies issues and challenges related to financial
literacy, its recommendations are presented as "calls to action" that
generally describe existing initiatives and do not include plans for
implementation. Further, the strategy only partially addresses some of
the characteristics we previously have identified as desirable for any
effective national strategy. For example, although it provides a clear
purpose, scope, and methodology, it does not go far enough to establish
specific goals and performance measures or milestones; discuss the
resources that would be needed to implement the strategy; or discuss,
assign, or recommend roles and responsibilities for achieving its
mission. As a result, most federal and nonfederal agencies we
interviewed said that the national strategy was unlikely to have a
significant impact on their financial literacy and education efforts.
Our report recommended that the Commission incorporate additional
elements into the national strategy to help measure results and ensure
accountability. In commenting on our report, the Department of the
Treasury (Treasury), in its capacity as chair of the Commission, noted
that the national strategy was the nation's first such effort and said
its calls to action were appropriately substantive and concrete.
* The Commission has developed a Web site and telephone hotline that
offers financial education information from numerous federal agencies.
The site serves as a portal to other federal financial education sites,
and representatives of financial literacy organizations generally told
us that the site served its purpose effectively. Use of the site has
been growing, and it averaged about 69,000 visits monthly from October
2006 through March 2007. The volume of calls to the hotline--which acts
as an order line for free publications--has been limited. For example,
it received 526 calls in March 2007. The Commission has not yet
implemented some best practices recommended for federal public Web
sites, such as testing its site for usability and measuring customer
satisfaction. As a result, the Commission does not know if visitors can
readily find the information for which they are looking. Our report
recommended that the Commission conduct usability tests of and measure
customer satisfaction with its Web site, which the Commission said it
will do by the second quarter of 2009. To fulfill a Financial Literacy
Act requirement that the Treasury Department develop a pilot national
public service campaign for financial literacy and education, the
department has contracted with the Advertising Council to create a
campaign designed to improve credit literacy among young people. The
campaign, which is scheduled to be distributed to media outlets in the
third quarter of 2007, will also promote the Commission's Web site and
telephone hotline.
* The Commission has played a role in coordinating federal agencies'
financial literacy efforts and promoting public-private partnerships
but has faced several challenges in these areas. The Commission serves
as a single focal point for federal agencies to come together on the
issue of financial literacy, and several calls to action in the
Commission's national strategy involve interagency efforts. However,
coordinating federal efforts has been challenging, in part because the
Commission must achieve consensus among 20 federal agencies, each with
its own viewpoints, programs, and constituencies, and because of the
Commission's limited resources. Further, the Commission's survey of
overlap and duplication and its review of the effectiveness of federal
activities relied largely on agencies' self-assessments rather than the
independent review of a disinterested party. The Commission has taken
some steps to promote partnerships with the nonprofit and private
sectors through various public meetings, outreach events, and other
activities, but the impact of these steps is unclear. Our report
recommended that the Commission expand its current efforts to cultivate
sustainable partnerships with nonprofit and private entities. We also
recommended that the Commission provide for an independent third party
to review for duplication in federal programs and evaluate the
effectiveness of federal activities. Since our report was issued, the
Commission has identified several steps it is taking or plans to take
to address these recommendations, including plans for independent
third-party assessments.
Background:
According to the Financial Literacy Act, the purpose of the Financial
Literacy and Education Commission is to improve financial literacy and
education through the development of a national strategy to promote
them. The act defines the composition of the Commission--the Secretary
of the Treasury and the heads of 19 other federal departments and
agencies--and allows the President to appoint up to five additional
members.[Footnote 4] The Commission must hold one public meeting at
least every 4 months. It held its first meeting in January 2004 and
nine subsequent meetings, most recently in January 2007.
The act requires the Commission to undertake certain activities,
including (1) developing a national strategy to promote financial
literacy and education for all Americans; (2) establishing a financial
education Web site to provide information about federal financial
literacy education programs and grants; (3) establishing a toll-free
hotline; (4) identifying areas of overlap and duplication among federal
activities and coordinating federal efforts to implement the national
strategy; (5) assessing the availability, utilization, and impact of
federal financial literacy and education materials; and (6) promoting
partnerships among federal, state, and local governments, nonprofit
organizations, and private enterprises. The act requires that the
national strategy be reviewed and modified as deemed necessary at least
once a year. It also requires the Secretary of the Treasury to develop,
implement, and conduct a pilot national public service multimedia
campaign to enhance the state of financial literacy and education in
the United States.
The Treasury Department's Office of Financial Education provides
primary support to the Commission and coordinates its efforts. As of
April 2007, the office had assigned the equivalent of about 3 full-time
professional staff to handle work related to the Commission and in the
past also has received assistance from staff detailed from other
federal agencies. The Commission has no independent budget. The act
authorized appropriations to the Commission of amounts necessary to
carry out its work, and for fiscal year 2005 Congress specified that $1
million should be used for the development and implementation of the
national strategy.
The National Strategy Is Descriptive Rather Than Strategic, Limiting
Its Value in Guiding the Nation's Financial Literacy Efforts:
To develop the National Strategy for Financial Literacy, the Commission
formed a national strategy working group of 13 member agencies, issued
a call for public comment in the Federal Register, and held six public
meetings--five organized around the commercial, government, nonprofit,
education, and banking sectors and one for individual
consumers.[Footnote 5] Although the Financial Literacy Act required the
Commission to adopt the strategy within 18 months of enactment, or June
2005, the strategy was not publicly released until April 2006.[Footnote
6] The Commission sought unanimous consent on the national strategy,
and Commission members told us that the Treasury Department faced a
significant challenge in trying to get 20 federal agencies--each with
its own mission and point of view--to unanimously agree to a strategy.
A particular source of disagreement involved whether nonfederal
entities should be cited by name as illustrative examples in the
strategy. The Commission ultimately agreed that it would not name these
organizations in the national strategy, but cite them in a separate
document issued by Treasury, called the Quick Reference Guide to the
strategy."[Footnote 7]
The content of the National Strategy for Financial Literacy largely
consists of a comprehensive overview of issues related to financial
literacy and examples of ongoing initiatives. It describes many major
problems and challenges that relate to financial literacy in the United
States, identifies key subject matter areas and target populations, and
describes what it believes to be illustrations of potentially effective
practices in financial education across a broad spectrum of subjects
and sectors. As such, the strategy represents a useful first step in
laying out key issues and highlighting the need for improved financial
literacy. At the same time, as some representatives of the Commission
told us, the strategy is fundamentally descriptive rather than
strategic. It provides information on disparate issues and initiatives
but is limited in presenting a long-term plan of action for achieving
its goal.
Most notably, the strategy's recommendations are presented as "calls to
action," defined as concrete steps that should be taken for improving
financial literacy and education. Sixteen of these 26 calls to action
are addressed to federal entities, 5 to private or nonprofit
organizations, and 5 to the public. However, many of these calls to
action are very general and do not discuss an implementation strategy,
and others describe initiatives that already exist. For example, one
call to action states, "Investors should take advantage of the wealth
of high quality, neutral, and unbiased information offered free of
charge," but does not lay out a plan for helping ensure that investors
will do so.
We have previously identified a set of desirable characteristics for
any effective national strategy.[Footnote 8] While national strategies
are not required to contain a single, consistent set of attributes, we
found six characteristics that can offer policymakers and implementing
agencies a management tool to help ensure accountability and more
effective results. As shown in the table below, we found that the
National Strategy for Financial Literacy generally addresses the first
of these characteristics and partially addresses the other five.
Table 1: Extent the National Strategy for Financial Literacy Addresses
GAO's Desirable Characteristics of an Effective National Strategy:
Desirable characteristic: Clear purpose, scope, and methodology;
Generally addresses: X;
Partially addresses: [Empty];
Does not address: [Empty].
Desirable characteristic: Detailed discussion of problems and risks;
Generally addresses: [Empty];
Partially addresses: X;
Does not address: [Empty].
Desirable characteristic: Desired goals, objectives, activities, and
performance measures;
Generally addresses: [Empty];
Partially addresses: X;
Does not address: [Empty].
Desirable characteristic: Description of future costs and resources
needed;
Generally addresses: [Empty];
Partially addresses: X;
Does not address: [Empty].
Desirable characteristic: Organizational roles, responsibilities, and
coordination;
Generally addresses: [Empty];
Partially addresses: X;
Does not address: [Empty].
Desirable characteristic: Description of integration with other
entities;
Generally addresses: [Empty];
Partially addresses: X;
Does not address: [Empty].
Source: GAO analysis of the National Strategy for Financial Literacy.
[End of table]
The six characteristics we considered follow:
* Clear Purpose, Scope, and Methodology. An effective strategy
describes why the strategy was produced, the scope of its coverage, and
how it was developed. The National Strategy for Financial Literacy
generally addresses this characteristic. For example, it cites the
legislative mandate that required the strategy, the overall purpose,
and subsidiary goals such as making it easier for consumers to access
financial education materials. At the time of our review, the strategy
did not specifically define "financial literacy" or "financial
education" and we noted that doing so could provide additional benefit
in helping define the scope of the Commission's work. In its April 2007
report to Congress, the Commission provided definitions of these terms
that it said would guide its work.[Footnote 9]
* Detailed Discussion of Problems and Risks. A strategy with this
characteristic provides a detailed discussion or definition of the
problems the strategy intends to address, their causes, and the risks
of not addressing them. Based on our review, the National Strategy for
Financial Literacy partially addresses this characteristic. It
identifies specific problems that indicate a need for improved
financial literacy and often discusses the causes of these problems.
However, it might benefit further from a fuller discussion of the long-
term risks--to the well-being of individuals, families, and the broader
national economy--that may be associated with poor financial literacy.
As we have reported in the past, a clear understanding of our nation's
overall financial condition and fiscal outlook is an indispensable part
of true financial literacy.[Footnote 10] Due to current demographic
trends, rising health care costs, and other factors, the nation faces
the possibility of decades of mounting debt, which left unchecked will
threaten our economic security and adversely affect the quality of life
available to future generations.[Footnote 11] One element of financial
literacy is ensuring that Americans are aware of these potential
developments in planning for their own financial futures since, for
example, we can no longer assume that current federal entitlement
programs will continue indefinitely in their present form.
* Desired Goals, Objectives, Activities and Performance Measures. The
National Strategy for Financial Literacy partially addresses this
characteristic, which deals not only with developing goals and
strategies to achieve them, but also the milestones and outcome
measures needed to gauge results. The strategy does identify key
strategic areas and includes 26 calls to action that, although often
lacking detail, provide a picture of the types of activities the
strategy recommends. However, in general, the strategy neither sets
clear and specific goals and objectives, nor does it set priorities or
performance measures for assessing progress. Several stakeholders in
the financial literacy community that we spoke with noted that the
strategy would have been more useful if it had set specific performance
measures. The Commission might also have set measurable goals for
changing consumer behavior, such as seeking to reduce the number of
Americans without bank accounts or increase the number saving for their
retirement to a specified figure in the next 5 or 10 years. Without
performance measures or other evaluation mechanisms, the strategy lacks
the means to measure progress and hold relevant players accountable.
* Description of Future Costs and Resources Needed. Effective national
strategies should include discussions of cost, the sources and types of
resources needed, and where those resources should be targeted. The
National Strategy for Financial Literacy discusses, in general terms,
the resources that are available from different sectors and its Quick
Reference Guide provides a list of specific organizations. However, the
strategy does not address fundamental questions about the level and
type of resources that are needed to implement the national strategy.
The strategy does little to acknowledge or discuss how funding
limitations could be a challenge to improving financial literacy and
offers little detail on how existing resources could best be leveraged.
Neither does it provide cost estimates nor does it discuss specifically
where resources should be targeted. For example, it does not identify
the sectors or populations most in need of additional resources. The
strategy also might have included more discussion of how various "tools
of government" such as regulation, standards, and tax incentives might
be used to stimulate nonfederal organizations to use their unique
resources to implement the strategy. Without a clear description of
resource needs, policymakers lack information helpful in allocating
resources and directing the strategy's implementation.
* Organizational Roles, Responsibilities, and Coordination. Effective
national strategies delineate which organizations will implement the
strategy and describe their roles and responsibilities, as well as
mechanisms for coordinating their efforts. The National Strategy for
Financial Literacy partially addresses these issues. For example, it
discusses the involvement of various governmental and nongovernmental
sectors in financial education and identifies in its calls to action
which agencies will or should undertake certain tasks or initiatives.
However, the strategy is not specific about roles and responsibilities
and does not recommend changes in the roles of individual federal
agencies. Addressing these issues more fully is important given our
prior work that discussed the appropriate federal role in financial
literacy in relation to other entities and the potential need to
streamline federal efforts in this area.[Footnote 12] In addition, the
strategy is limited in identifying or promoting specific processes for
coordination and collaboration between sectors and organizations.
* Description of Integration with Other Entities. This characteristic
addresses how a national strategy relates to other federal strategies'
goals, objectives, and activities. The National Strategy for Financial
Literacy does identify and describe a few plans and initiatives of
entities in the federal and private sectors, and it includes a chapter
describing approaches within other nations and international efforts to
improve financial education. However, the strategy is limited in
identifying linkages with these initiatives, and it does not address
how it might integrate with the overarching plans and strategies of
these state, local, and private-sector entities.
Because the National Strategy for Financial Literacy is more of a
description of the current state of affairs than an action plan for the
future, its effect on public and private entities that conduct
financial education may be limited. We asked several major financial
literacy organizations how the national strategy would affect their own
plans and activities, and the majority said it would have no impact at
all. Similarly, few federal agencies with which we spoke could identify
ways in which the national strategy was guiding their work on financial
literacy. Most characterized the strategy as a description of their
existing efforts.
Our report recommended that the Secretary of the Treasury, in concert
with other agency representatives of the Financial Literacy and
Education Commission, incorporate into the national strategy (1) a
concrete definition for financial literacy and education to help define
the scope of the Commission's work; (2) clear and specific goals and
performance measures that would serve as indicators of the nation's
progress in improving financial literacy and benchmarks for the
Commission; (3) actions needed to accomplish these goals, so that the
strategy serves as a true implementation plan; (4) a description of the
resources required to help policymakers allocate resources and direct
implementation of the strategy; and (5) a discussion of appropriate
roles and responsibilities for federal agencies and others, to help
promote a coordinated and efficient effort. In commenting on our
report, Treasury, in its capacity as chair of the Commission, noted
that the National Strategy for Financial Literacy was the nation's
first such effort and, as such, was designed to be a blueprint that
provides general direction while allowing diverse entities the
flexibility to participate in enhancing financial education. The
department said that the strategy's calls to action are appropriately
substantive and concrete--setting out specific issues for discussion,
conferences to be convened, key constituencies, and which Commission
members should be responsible for each task. As noted earlier, in its
April 2007 report to Congress, the Commission provided definitions for
"financial literacy" and "financial education" to help guide its work.
We acknowledge that the national strategy represents the nation's first
such effort, but continue to believe that future iterations of the
strategy would benefit from inclusion of the characteristics cited in
our report.
Web Site and Telephone Hotline Offer Financial Education Information
from Federal Agencies:
The Financial Literacy Act required the Commission to establish and
maintain a Web site to serve as a clearinghouse and provide a
coordinated point of entry for information about federal financial
literacy and education programs, grants, and materials. With minor
exceptions, the Commission did not create original content for its Web
site, which it called My Money. Instead, the site serves as a portal
that consists largely of links to financial literacy and education Web
sites maintained by Commission member agencies. According to Treasury
representatives, the English-language version of the My Money site had
more than 290 links as of April 2007, organized around 12
topics.[Footnote 13] A section on federal financial education grants
was added to the site in October 2006, which includes links to four
grant programs.[Footnote 14] Many representatives of private and
nonprofit financial literacy initiatives and organizations with whom we
spoke were generally satisfied with the Web site, saying that it
provided a clear and useful portal for consumers to federal financial
education materials.
From its inception in October 2004 through March 2007, the My Money Web
site received approximately 1,454,000 visits.[Footnote 15] The site
received an average of 35,000 visits per month during the first 6
months after its introduction in October 2004. Use of the site has
increased since that time and reached 78,000 visits in April 2006, when
the Commission and the Web site received publicity associated with the
release of the national strategy. From October 2006 through March 2007,
the site averaged about 69,000 visits per month. The number of visits
to the My Money Web site has been roughly comparable to some recently
launched private Web sites that provide financial education.[Footnote
16] Some representatives of financial literacy organizations with whom
we spoke said the Commission should do more to promote public awareness
of the Web site. Commission representatives, however, noted to us
several steps that have been taken to promote the site, including, for
example, a promotional effort in April 2006 that printed the My Money
Web address on envelopes containing federal benefits and tax refunds.
However, the Commission has not yet conducted usability tests or
measured customer satisfaction for the My Money Web site. The federal
government's Web Managers Advisory Council provides guidance to help
federal Web managers implement recommendations and best practices for
their federal sites.[Footnote 17] The council recommends testing
usability and measuring customer satisfaction to help identify
improvements and ensure that consumers can navigate the sites
efficiently and effectively. Representatives of the General Services
Administration (GSA), which operates the site, acknowledged that these
steps are standard best practices that would be useful in improving the
site. They said they had not yet done so due to competing priorities
and a lack of funding.[Footnote 18] Without usability testing or
measures of customer satisfaction, the Commission does not know whether
the Web site's content is organized in a manner that makes sense to the
public, or whether the site's visitors can readily find the information
for which they are looking.
Our report recommended that the Commission (1) conduct usability
testing to measure the quality of visitors' experience with the site;
and (2) measure customer satisfaction with the site, using whatever
tools deemed appropriate, such as online surveys, focus groups, or e-
mail feedback. In its April 2007 report to Congress, the Commission
said it would conduct usability testing of, and measure customer
satisfaction with, its Web site by the second quarter of 2009.
In addition to a Web site, the Financial Literacy Act also required
that the Commission establish a toll-free telephone number for members
of the public seeking information related to financial
literacy.[Footnote 19] The Commission launched the telephone hotline,
1-888-My Money, simultaneously with the My Money Web site in October
2004. The hotline supports both English-and Spanish-speaking callers. A
private contractor operates the hotline's call center and GSA's Federal
Citizen Information Center oversees the operation and covers its cost.
According to GSA, the cost of providing telephone service for the
hotline was about $28,000 in fiscal year 2006. The hotline serves as an
order line for obtaining a free financial literacy "tool kit"--
pamphlets and booklets from various federal agencies on topics such as
saving and investing, deposit insurance, and Social Security. The tool
kit is available in English and Spanish versions, and consumers can
also order it via the My Money Web site. The volume of calls to the My
Money telephone hotline has been limited--526 calls in March 2007 and
an average of about 200 calls per month between February 2005 and
February 2006.
As part of the national strategy, the Financial Literacy Act required
the Secretary of the Treasury to develop, implement, and conduct a
pilot national public service multimedia campaign to enhance the state
of financial literacy in the United States.[Footnote 20] The department
chose to focus the multimedia campaign on credit literacy among young
adults. It contracted with the Advertising Council to develop and
implement the multimedia campaign, which is expected to be advertised-
-using donated air time and print space--on television and radio, in
print, and online.[Footnote 21] According to the Commission's April
2007 report to Congress, the launch of the campaign is scheduled for
the third quarter of 2007.
The Commission Has Taken Steps to Coordinate Federal Agencies' Efforts
and Promote Partnerships but Faces Challenges:
The Financial Literacy Act required that the Commission develop a plan
to improve coordination of federal financial literacy and education
activities and identify areas of overlap and duplication in these
activities. The Commission created a single focal point for federal
agencies to come together on the issue of financial literacy and
education. Some Commission members told us that its meetings--including
formal public, working group, and subcommittee meetings--have helped
foster interagency communication and information sharing that had
previously been lacking. In addition, the Commission's Web site,
hotline, and tool kit have helped centralize federal financial
education resources for consumers. Further, the national strategy
includes a chapter on federal interagency coordination and several of
the strategy's calls to action involve interagency efforts, including
joint conferences and other initiatives.
However, the Commission has faced several challenges in coordinating
the efforts of the 20 federal agencies that form the Commission. Each
of the Commission's participating federal agencies has different
missions and responsibilities and thus different perspectives and
points of view on issues of financial literacy. The agencies also
differ in their levels of responsibility for and expertise on financial
literacy and education. Further, because agencies tend to be protective
of their resources, it might be very difficult to recommend eliminating
individual agencies' programs. Moreover, the Commission's ability to
coordinate such major structural change, if it chose to do so, would be
constrained by its limited resources in terms of staff and funding. In
addition, the Commission has no legal authority to compel an agency to
take any action, but instead must work through collaboration and
consensus. Given these various constraints, a Treasury official told us
that the Commission saw its role as improving interagency communication
and coordination rather than consolidating federal financial education
programs or fundamentally changing the existing federal structure.
To meet a requirement of the Financial Literacy Act that the Commission
identify and propose means of eliminating areas of overlap and
duplication, the Commission asked federal agencies to provide
information about their financial literacy activities. After reviewing
these resources, the Commission said it found minimal overlap and
duplication among federal financial literacy programs and did not
propose the elimination of any federal activities. Similarly, to meet a
requirement of the act that it assess the availability, utilization,
and impact of federal financial literacy materials, the Commission
asked each agency to evaluate the effectiveness of its own materials
and programs--and reported that each agency deemed its programs and
resources to be effective and worthy of continuance.
In both cases, we believe that the process lacked the benefit of
independent assessment by a disinterested party. Our report recommended
that the Secretary of the Treasury, in conjunction with the Commission,
provide for an independent third party to carry out the review of
duplication and overlap among federal financial literacy activities as
well as the review of the availability, utilization, and impact of
federal financial literacy materials. In response to these
recommendations, the Commission reported in its April 2007 report to
Congress that it would identify an independent party to conduct
assessments on both of these matters, with the first series of
independent assessments to be completed in 2009.
The Financial Literacy Act also charged the Commission with promoting
partnerships between federal agencies and state and local governments,
nonprofit organizations, and private enterprises. Partnerships between
federal agencies and private sector organizations are widely seen as
essential to making the most efficient use of scarce resources,
facilitating the sharing of best practices among different
organizations, and helping the federal government reach targeted
populations via community-based organizations.[Footnote 22] Treasury
officials have cited several steps the Commission has taken to promote
such partnerships. These have included calls to action in the
Commission's national strategy that encouraged partnerships; community
outreach and events coordinated by Treasury and other agencies; and
public meetings designed to gather input on the national strategy from
various stakeholders. In general, the private and nonprofit financial
literacy organizations with which we spoke said that these steps had
been useful, but that their relationships with federal agencies and
other entities have changed little overall as a result of the
Commission. Several private and nonprofit national organizations have
extensive networks that they have developed at the community level
across the country, and some of these organizations suggested the
Commission could do more to mobilize these resources as part of a
national effort. Some stakeholders told us they also felt the
Commission could do more to involve state and local governments.
Greater collaboration by the Commission with state and local
governments may be particularly important given the critical role that
school districts can play in improving financial literacy. The
Commission might consider how the federal government can influence or
incentivize states or school districts to include financial education
in school curriculums, which many experts believe is key to improving
the nation's financial literacy.
Given the wide array of state, local, nonprofit, and private
organizations providing financial literacy programs, the involvement of
the nonfederal sectors is important in supporting and expanding
Commission efforts to increase financial literacy. Thus far, the
Commission has taken some helpful steps to promote partnerships,
consisting mainly of outreach and publicity. As the Commission
continues to implement its strategy, we believe it could benefit from
further developing mutually beneficial and lasting partnerships with
nonprofit and private entities that will be sustainable over the long
term. Our report recommended that the Commission consider ways to
expand upon current efforts to cultivate sustainable partnerships with
nonprofit and private entities. As part of these efforts, we
recommended that the Commission consider additional ways that federal
agencies could coordinate their efforts with those of private
organizations that have wide networks of resources at the community
level, as well as explore additional ways that the federal government
might encourage and facilitate the efforts of state and local
governments to improve financial literacy. In commenting on our report,
Treasury noted that it had a long history of partnerships with
nonfederal entities and would consult with the Commission about how to
work more closely with the types of organizations described in our
report. On April 17, 2007, the Commission held the inaugural meeting of
the National Financial Education Network, which it said was intended to
create an open dialogue and advance financial education at the state
and local level.
In conclusion, in the relatively short period since its creation, the
Commission has played a helpful role by serving as a focal point for
federal efforts and making financial literacy a more prominent issue
among the media, policymakers, and consumers. We recognize the
significant challenges confronting the Commission--most notably, the
inherent difficulty of coordinating the efforts of 20 federal agencies.
Given the small number of staff devoted to operating the Commission and
the limited funding it was provided to conduct any new initiatives, we
believe early efforts undertaken by the Commission represent some
positive first steps. At the same time, more progress is needed if we
expect the Commission to have a meaningful impact on improving the
nation's financial literacy.
Mr. Chairman, this concludes my prepared statement. I would be happy to
answer any questions at this time.
Contacts and Acknowledgments:
For further information on this testimony, please contact Yvonne D.
Jones at (202) 512-8678, or jonesy@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this statement. Individuals making key contributions
to this testimony include Jason Bromberg, Assistant Director; Nima
Patel Edwards; Eric E. Petersen; William R. Chatlos; Emily R. Chalmers;
and Linda Rego.
FOOTNOTES
[1] For example, see GAO, Increasing Financial Literacy in America,
GAO-07-284CG (Washington, D.C.: Dec. 11, 2006); GAO, Credit Reporting
Literacy: Consumers Understood the Basics but Could Benefit from
Targeted Educational Efforts, GAO-05-223 (Washington, D.C.: Mar. 16,
2005); GAO, Highlights of a GAO Forum: The Federal Government's Role in
Improving Financial Literacy, GAO-05-93SP (Washington, D.C.: Nov. 15,
2004).
[2] Title V of the Fair and Accurate Credit Transactions Act of 2003,
Pub. L. No. 108-159, Title V, 117 Stat. 2003 (Dec. 4, 2003) (codified
at 20 U.S.C. §§ 9701-08). Hereafter, this statement refers to the
Financial Literacy and Education Improvement Act as the "Financial
Literacy Act." The act also mandated that we assess the Commission's
effectiveness in promoting financial literacy and education. Our
December 2006 report fulfilled that mandate.
[3] GAO, Financial Literacy and Education Commission: Further Progress
Needed to Ensure an Effective National Strategy, GAO-07-100
(Washington, D.C.: Dec. 4, 2006).
[4] Under the act, the agencies represented on the Commission are the
Departments of Agriculture, Defense, Education, Health and Human
Services, Housing and Urban Development, Labor, Treasury, and Veterans
Affairs; the Board of Governors of the Federal Reserve System; the
Office of the Comptroller of the Currency; the Office of Thrift
Supervision; the Federal Deposit Insurance Corporation; the National
Credit Union Administration; the Securities and Exchange Commission;
the Federal Trade Commission; the General Services Administration; the
Small Business Administration; the Social Security Administration; the
Commodity Futures Trading Commission; and the Office of Personnel
Management. As of April 2007, the President had not appointed any
additional members.
[5] Financial Literacy and Education Commission, Taking Ownership of
the Future: The National Strategy for Financial Literacy (Washington,
D.C.: April 2006).
[6] The Financial Literacy Act required the National Strategy for
Financial Literacy to be provided to Congress as part of a report
issued by the Commission called the "Strategy for Assuring Financial
Empowerment." U.S. Department of the Treasury, Strategy for Assuring
Financial Empowerment (Washington, D.C.: Apr. 3, 2006). That report
also contained other elements required by the act, including a survey
and assessment of certain federal financial education materials and
information on the activities and future plans of the Commission. 20
U.S.C. § 9703 (h)(2).
[7] U.S. Department of the Treasury, Quick Reference Guide to the
National Strategy for Financial Literacy (Washington, D.C.: Apr. 4,
2006).
[8] GAO, Combating Terrorism: Evaluation of Selected Characteristics in
National Strategies Related to Terrorism, GAO-04-408T (Washington,
D.C.: Feb. 3, 2004).
[9] U.S. Department of the Treasury, Strategy for Assuring Financial
Empowerment (Washington, D.C.: April 2007).
[10] GAO-05-93SP, pp. 2-3.
[11] For example, see GAO, The Nation's Long-Term Fiscal Outlook:
September 2006 Update, GAO-06-1077R (Washington, D.C.: Sept. 15, 2006).
[12] GAO-05-93SP, pp. 5-8.
[13] The topic areas are Budgeting and Taxes; Credit; Financial
Planning; Home Ownership; Kids; Paying for Education; Privacy, Fraud
and Scams; Responding to Life Events; Retirement Planning; Saving and
Investing; Starting a Small Business; and Financial Education Grants.
[14] The Financial Literacy Act required that the Web site offer
information on all federal grants to promote financial literacy and
education, and on how to target, apply for, and receive such grants. 20
U.S.C. § 9703(b)(2)(C). The four federal grant programs cited on the
Web site as of April 2007 were the Department of Education's Excellence
in Economic Education program, Department of Health and Human Services'
Assets for Independence program, Department of Housing and Urban
Development's Housing Counseling program, and National Credit Union
Administration's Community Development Revolving Loan Fund program.
[15] A "visit" is defined as all the activity of one visitor to a Web
site within a specified period, usually 30 minutes. Because federal
government Web sites are generally prohibited from using "cookies"
(small files stored on a visitor's computer that can contain
identifying information about the visitor), the number of unique
visitors to the My Money Web site cannot be counted. Thus, data on
total number of visits do not represent the number of users who have
visited the Web site because some users may visit the site multiple
times. According to a GSA official, because unique visitors cannot be
counted, the best measure of the Web site's usage is number of visits.
[16] For example, in fiscal year 2006, the My Money Web site received
approximately 628,000 visits. During that same time period, the
Employee Benefit Research Institute's "Choose to Save" Web site, the
American Institute of Certified Public Accountants' "360 Degrees of
Financial Literacy" Web site, and the National Endowment for Financial
Education's "Smart about Money" Web site received, respectively,
1,538,000, 437,000, and 229,000 visits.
[17] The Web Managers Advisory Council is an interagency group of about
40 senior Web managers from every cabinet-level agency, several
independent agencies, and the judicial and legislative branches. In
2004, the council recommended policies and guidelines for all federal
public Web sites. See: Interagency Committee on Government Information,
Recommended Policies and Guidelines for Federal Public Websites,
submitted to the Office of Management and Budget (Washington, D.C.:
June 9, 2004).
[18] According to a usability specialist from GSA, it might cost
roughly $10,000 to $15,000 for a basic usability study with eight
participants and recommendations for redesign of the site.
Representatives of the Department of Health and Human Services told us
it might be able to offer the Commission use of its Web testing lab at
no charge, which would reduce the cost of usability testing.
[19] 20 U.S.C. § 9703(c).
[20] 20 U.S.C. § 9707.
[21] The Advertising Council (commonly known as the Ad Council) is a
private, nonprofit organization that produces, distributes, and
promotes public service campaigns on behalf of nonprofit organizations
and government agencies.
[22] For example, see GAO-05-93SP, pp. 6-8. By "partnerships," we refer
to shared, or joint, responsibilities between organizations from the
public and private sectors where there is otherwise no clear or
established hierarchy of lead and support functions.
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