To determine selected State agencies’ roles in providing financial literacy offerings, including how they identify and reach out to the most critical and vulnerable consumer groups and how they measure gains in individuals’ knowledge after participating in financial literacy offerings. We also sought to determine what data these agencies use to evaluate and improve financial literacy offerings. The agencies we selected were the Department of Financial Services (DFS), Department of State (DOS), New York State Office for the Aging (NYSOFA), Office of Temporary and Disability Assistance (OTDA), and State University of New York (SUNY). Our audit scope covered the period January 2018 to March 2022.
About the Program
Not only is financial literacy critical to an individual’s financial growth and sustained well-being, as well as their resilience in the face of economic downturns, but – with greater economic participation – it's also a springboard to robust and resilient local, state, and national economies. According to the New York State Comptroller’s internal Executive Order on Financial Literacy, financial literacy, including a strong understanding of the basic principles of managing personal finances, borrowing, debt, and investing, directly affects the prosperity and quality of life of the people of New York State and is inextricably linked to the economic health of the State.
Despite the importance of being equipped to make financial decisions that support their well-being, many Americans remain unprepared for financial emergencies – a point that the COVID-19 pandemic (pandemic), which adversely affected millions of Americans, brought greater attention to. Studies have shown that Americans across all generations, but particularly younger adults, demonstrate relatively low levels of financial literacy and have difficulty applying basic sound decision-making principles to real-life situations. For example, based on 2018 survey data, the Financial Industry Regulatory Authority Foundation found that in New York State:
- 28% of people with credit cards made only the minimum monthly payment during some months in 2018;
- 41% of New Yorkers did not have a rainy-day fund to cover expenses for 3 months in case of emergency (e.g., illness, job loss); and
- 12% of homeowners owed more on their home than its current market value.
In addition, student loan data indicates that about 2.5 million New York residents owed an average of more than $37,600 in federal student loan debt in 2020, slightly more than the nationwide average of $36,510. Further, 11.5% of older adults in New York State are living in poverty, compared with 9.7% nationally.
That Americans continue to struggle to recover from the financial fallout of the pandemic, including a highly volatile economy, reinforces the need for personal financial awareness and preparedness and has inspired renewed efforts to deliver comprehensive financial literacy education for all Americans. Toward this end, in its 2020 Annual Report to Congress, the U.S. Financial Literacy and Education Commission called for a coordinated approach among government entities to provide consumers with resources to make informed financial decisions.
In addition, in 2021, New York State enacted legislation that essentially creates a single repository of links to all State agency and authority financial literacy information and programs. All agencies and authorities are required to provide all relevant new and updated financial literacy-related education information to DFS, which is responsible for posting the information on its website. The law required all agencies and authorities to provide the appropriate information in electronic format to DFS by November 1, 2021; DFS was required to post it to its website by January 1, 2022. Agencies and authorities are also required to send any updates, revisions, and new information to DFS annually by November 1 for posting.
- Although each of the agencies we audited are involved, to some degree, in financial literacy efforts, and some collaboration exists, there does not appear to be a coherent strategy or plan to coordinate these efforts statewide, nor is there a shared understanding or definition of “financial literacy.” Such a plan, if well-implemented, would likely provide a stronger level of service to New Yorkers.
- DFS posts links on its website of financial literacy information provided by agencies and authorities, as required, but as of February 2022 had taken no action to help ensure that it had received relevant information and/or links from all those subject to the new law.
- As of June 2022, fewer than 15 of the State’s 100-plus entities were represented on DFS’ Financial Help for New Yorkers webpage. Further, just three of the four agencies we audited that were required to submit relevant information to DFS – that is, NYSOFA, OTDA, and SUNY – were represented with a link on DFS’ webpage; DOS was not represented.
- DOS, OTDA, and SUNY generally seek to identify and reach critical and vulnerable consumer groups through their financial literacy efforts. However, SUNY is the only agency that attempts to measure gains in individuals’ knowledge after participating in financial literacy offerings.
- NYSOFA, as the State’s primary aging services agency serving one of the most critical and vulnerable consumer groups, disclaimed having any role in administering or overseeing any financial literacy programs. Nonetheless, the DFS webpage included a link to NYSOFA’s website.
- DOS, OTDA, and SUNY have access to information and data that may help them evaluate and improve their financial literacy offerings but generally don’t use this information – or communicate it to partners where applicable – to identify potential strengths, weaknesses, and topic areas that warrant greater focus.
- Work with agencies and authorities to help ensure that those that are subject to the law are providing the required information to enhance consumer financial literacy and education and that it’s accessible on DFS’ website. Such actions could include, for example, establishing and communicating a definition of “financial literacy” to guide agencies’ determination of relevant content.
- Work with DFS to ensure that access to information about DOS’ financial literacy-related content and efforts is available on DFS’ website.
- Identify and pursue ways to enhance financial education and literacy among older New Yorkers.
- Implement a method to obtain Summer Youth Employment Program participant input to identify potential strengths and weaknesses in financial literacy offerings and share this information with partners as considered appropriate.
- In coordination with the Smart Track vendor, where appropriate, use available Smart Track information and user metrics to identify potential areas of focus and improvement.
State Government Accountability Contact Information:
Audit Director: Brian Reilly
Phone: (518) 474-3271; Email: [email protected]
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236