SENATE 3rd Reading Unamended February 29, 2012 SENATE Amended 2nd Reading February 28, 2012Second Regular Session Sixty-eighth General Assembly STATE OF COLORADO REENGROSSED This Version Includes All Amendments Adopted in the House of Introduction LLS NO. 12-0429.01 Debbie Haskins x2045 SENATE BILL 12-021 SENATE SPONSORSHIP Nicholson, HOUSE SPONSORSHIP Lee, Senate Committees House Committees Local Government Appropriations A BILL FOR AN ACT Concerning the creation of a financial literacy pilot program for residents of counties, and, in connection therewith, making an appropriation. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) The bill creates a pilot program administered by the division of local government (division) of the department of local affairs to distribute grants to counties to teach financial literacy classes to county residents (pilot program). A county may apply to the division to participate in the pilot program. The county determines the appropriate county agency or nonprofit organization to administer the pilot program in the county. A county may apply with a community partner, such as a nonprofit organization. The county must indicate the role of any community partner in its application. The director of the division will select no more than 4 counties to participate in the pilot program. The Colorado state university cooperative extension service (CSU extension service) will design the curriculum for the financial literacy classes used in the pilot program based upon curriculum the CSU extension service has already developed. The pilot program will test the efficacy of two teaching methods: CSU extension service staff teaches the financial literacy classes to county residents directly, or CSU extension service trains the trainers (county staff or volunteers) to teach the financial literacy classes. The division may seek gifts, grants, and donations to support the pilot program, which shall be credited to the financial literacy pilot program fund (fund). The division must report to the legislative council staff when it has received adequate funding through gifts, grants, or donations. Subject to available appropriations from the fund, the division will award grants to each of the counties selected to participate in the pilot program to cover a portion of the costs of administering the pilot program. Nothing in the bill precludes a county or a community partner from providing additional funds to support the pilot program. The division, in consultation with the CSU extension service, will set fees that participants pay for the financial literacy classes based on a sliding scale and may include a waiver of fees for hardship reasons. The division, in consultation with the CSU extension service, will also set a fee that counties pay for the costs of classes to teach participants and to train trainers. The fees paid by participants and by counties will be credited to the fund. The moneys in the fund are subject to annual appropriation by the general assembly to the division to make grants and to the CSU extension service to teach classes. The CSU extension service will collect data from participants and from counties. The CSU extension service will contract with an outside evaluation specialist to evaluate the pilot program and submit a report and recommendations to the finance committees of the house of representatives and the senate, or any successor committees, on or before February 1, 2015. The evaluator will measure whether recipients have become more self-sufficient or financially knowledgeable because of the financial literacy classes and will evaluate the credit scores self-reported by the participants at the beginning of the instruction and one year after instruction. The statutes authorizing the pilot program are repealed, effective July 1, 2016. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. In Colorado Revised Statutes, add part 34 to article 32 of title 24 as follows: PART 34 FINANCIAL LITERACY PILOT PROGRAM 24-32-3401. Financial literacy pilot program - legislative declaration. (1) The general assembly declares that the purpose of the financial literacy pilot program is to increase the ability of participants in the pilot program to manage their personal finances by providing access to classes on financial literacy. The goals of the pilot program are to: (a) Provide access to financial education and resources so that participants can obtain personal financial knowledge and skills that they can employ at various life stages and for particular life events to make informed financial decisions; (b) Decrease the number of persons in the state who are evicted, lose their homes due to foreclosure, or lose their transportation due to repossession of a motor vehicle; (c) Decrease the number of persons in the state who rely on Colorado works or other forms of public assistance; and (d) Increase the number of persons in the state who are financially self-sufficient. 24-32-3402. Definitions. As used in this part 34, unless the context otherwise requires: (1) "Community partner" means a nonprofit organization that partners with a county to provide volunteers or financial resources or both to assist a county in operating a financial literacy pilot program in the county. (2) "CSU extension service" means the Colorado state university cooperative extension service as provided for in part 7 of article 31 of title 23, C.R.S. (3) "Department" means the department of local affairs created in section 24-1-125. (4) "Financial literacy" means knowledge of personal finances that is sufficient to enable a person to create and maintain a household budget, manage personal debt, save to meet his or her financial goals, understand consumer credit and finance, know the importance of seeking information and asking questions before entering into financial transactions, and understand and select from among short-term and long-term investment options. (5) "Pilot program" means the financial literacy pilot program created in section 24-32-3404. (6) "Participant" means a person who attends financial literacy classes offered in his or her county of residence by a county selected to participate in the financial literacy pilot program. 24-32-3403. Department of local affairs - oversight and administration. As outlined in section 24-32-3404, the department of local affairs shall oversee and administer the financial literacy pilot program and shall award grants to counties selected to participate in the pilot program. 24-32-3404. Financial literacy pilot program - fund - notice of funding through gifts, grants, and donations. (1) The CSU extension service shall design a financial literacy pilot program to test the efficacy of two teaching methods of providing financial literacy classes to participants, using the curriculum described in subsection (5) of this section, as follows: (a) Under one method, the CSU extension service teaches the financial literacy classes to participants; and (b) Under the other method, the CSU extension service trains staff from a county or volunteers from a community partner working with a county to teach financial literacy classes to participants. In the method described in this paragraph (b), the CSU extension service emphasizes how to work effectively and sensitively with low-income populations. The training may also include how to deliver financial literacy instruction to an individual participant or to groups in a classroom setting. (2) On or before October 1, 2012, the department shall develop and announce the requirements for the pilot program, the application process, and the criteria for selecting counties to participate in the pilot program. In developing the criteria for the pilot program, the department shall include a requirement that participation by participants is voluntary. Based on the criteria for the pilot program and the strength of the application, the department shall select no more than four counties to participate in the pilot program. One of the counties shall have a population of less than twenty-five thousand, one of the counties shall have a population of more than twenty-five thousand but less than one hundred thousand, and two of the counties shall have a population of more than one hundred thousand. The pilot program shall commence on or after January 1, 2013, and end on December 31, 2015. (3) The department, in consultation with the CSU extension service, shall establish fees for financial literacy classes. The fees paid by participants shall be reasonable and established on a sliding scale based on income or ability to pay, including the waiver of fees based on hardship. Any fees paid by participants shall be paid to the department, which shall transmit the fees to the state treasurer to be credited to the financial literacy pilot program fund created in subsection (6) of this section. The department and CSU extension service shall also set a fee that the counties shall pay to cover the direct costs to the CSU extension service of teaching classes to participants and of training staff and volunteers to teach financial literacy classes. The county shall pay those fees to the department, which shall transmit the fees to the state treasurer to be credited to the financial literacy pilot program fund created in subsection (6) of this section. (4) (a) On or before November 1, 2012, a county may apply to the department to participate in the pilot program. The applying county determines the appropriate county agency to administer the pilot program in that county, which agency may include the county library, the county department of social services, the county department of public health, another county agency, or a community partner. Each application shall specify, at a minimum: (I) Which of the two teaching methods described in subsection (1) of this section that the county intends to use; (II) How the county would notify its residents of the financial literacy classes, including radio and newspaper announcements, press releases, posters, and brochures; (III) The number of participants the county expects to serve; (IV) The agency that will administer the program in the county and whether the county is partnering with a community partner; (V) Whether the county would provide county funds for the pilot program, and, if so, the projected amount; (VI) The projected budget for the pilot program; and (VII) Any other information the CSU extension service or the department deems necessary to the application. (b) The county may apply with a community partner. If the county applies with a community partner, the county shall indicate the role of the community partner and whether the community partner is providing additional funding to support the costs of the pilot program in that county. (5) (a) The CSU extension service shall design the curriculum for the financial literacy classes based upon curriculum the service has already developed that emphasizes the five core competencies that help consumers to make informed decisions about their personal finances: Earning, spending, saving and investing, borrowing, and protecting against risk. The CSU extension service will determine the frequency and duration of the classes and how to measure the participants' improved knowledge and application of the instruction to their lives. The CSU extension service shall also design the financial literacy curriculum to teach a participant, at a minimum, to: (I) Assess his or her earning capabilities and income, including increased earning potential; (II) Assess his or her current spending practices or assess the spending practices of his or her household; (III) Develop a budget, including how to determine how much of the household's income can be spent on rent or housing, groceries, child care, transportation, incidentals, or other items; (IV) Find ways to save money and to determine how much to save; (V) Understand consumer credit and finance, including how to understand and obtain a consumer credit report, how to avoid pitfalls and risks from different financial credit products, and where to obtain help and information on consumer credit and finance; (VI) Manage personal debt and evaluate credit options; and (VII) Understand and evaluate personal investment options. (b) The class instructor shall prepare a report and submit it to the CSU extension service, including the name of the participating county, the number of participants, and an evaluation tool completed by each participant indicating the participant's knowledge of his or her credit score and that the participant prepared a written financial plan for the personal use of the participant and not shared with the evaluator. (6) (a) The department is authorized to seek and accept gifts, grants, or donations from private or public sources for the purposes of awarding grants to counties selected to participate in the pilot program; except that the department may not accept a gift, grant, or donation that is subject to conditions that are inconsistent with this part 34 or any other law of the state. The department shall transmit all private and public moneys received through gifts, grants, or donations to the state treasurer, who shall credit the same to the financial literacy pilot program fund, which fund is hereby created and referred to in this section as the "fund". The fund shall consist of moneys received from gifts, grants, and donations, fees collected from participants who attend financial literacy classes as described in subsection (4) of this section, fees paid by counties for training classes as described in subsection (4) of this section, and any moneys that may be appropriated to the fund by the general assembly. The moneys in the fund are subject to annual appropriation by the general assembly to the department to make grants and to the CSU extension service for the direct and indirect costs associated with implementing this part 34. (b) The state treasurer may invest any moneys in the fund not expended for the purpose of this part 34 as provided by law. The state treasurer shall credit all interest and income derived from the investment and deposit of moneys in the fund to the fund. Any unexpended and unencumbered moneys remaining in the fund at the end of a fiscal year remain in the fund and shall not be credited or transferred to the general fund or another fund. The state treasurer shall transfer all unexpended and unencumbered moneys remaining in the fund as of June 30, 2016, to the general fund. (c) (I) In seeking or accepting a gift, grant, or donation, the department shall notify the legislative council staff when the department has received adequate funding through gifts, grants, or donations for the pilot program and shall include in the notification the information specified in section 24-75-1303 (3). (II) This paragraph (c) is repealed, effective July 1, 2016. (7) (a) Subject to available appropriations from the fund created in subsection (8) of this section, the department shall award a grant to each of the counties selected to participate in the pilot program. The purpose of the grant is to cover the costs of administering the pilot program in a selected county. Nothing in this section precludes a county or a community partner from providing additional funds to support the pilot program. (b) As a condition of accepting a grant, each county shall agree to participate in any surveys from and submit any data or evaluations requested by the CSU extension service. (8) (a) The CSU extension service shall contract with an outside evaluation specialist to evaluate the results of the pilot program. The evaluation specialist shall submit a report to the department and to the finance committees and local government committees of the house of representatives and the senate, or any successor committees, on or before February 1, 2015. (b) The report submitted pursuant to paragraph (a) of this subsection (8) shall include: (I) The number of counties that participated in the pilot program; (II) The number of participants that participated in and completed financial literacy classes; (III) Evaluation measures such as the number of participants who know their actual credit scores, the number of participants who know how to develop budgets and financial plans, whether participants have become more self-sufficient or financially knowledgeable through participating in the financial literacy classes, and whether the goals stated in section 24-32-3401 were met; (IV) A comparison of the two teaching methods described in subsection (1) of this section and a consideration of whether one method was more effective than the other; and (V) Recommendations for future financial literacy training. 24-32-3405. Repeal of part. This part 34 is repealed, effective July 1, 2016, unless extended by the general assembly acting by bill. SECTION 2. In Colorado Revised Statutes, 23-31-704, add (5) as follows: 23-31-704. Organization - cooperative relationships - repeal. (5) (a) The service shall cooperate with the department of local affairs and with any participating counties to carry out the purposes of the financial literacy pilot program created in part 34 of article 32 of title 24, C.R.S., and to carry out duties assigned to the service in section 24-32-3404, C.R.S. (b) This subsection (5) is repealed, effective July 1, 2016, unless part 34 of article 32 of title 24, C.R.S., is extended by the general assembly acting by bill. SECTION 3. Appropriation. In addition to any other appropriation, there is hereby appropriated, out of any moneys in the financial literacy pilot program cash fund created in section 24-32-3404 (6) (a), Colorado Revised Statutes, not otherwise appropriated, for the fiscal year beginning July 1, 2012, the sum of $68,433 and 1.8 FTE, or so much thereof as may be necessary, for the implementation of this act. Of said sum, $25,933 and 0.3 FTE, or so much thereof as may be necessary, is appropriated to the department of local affairs for allocation to the division of local government, and $42,500 and 1.5 FTE, or so much thereof as may be necessary, is appropriated to the department of higher education for allocation to the board of governors of the Colorado state university system. SECTION 4. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.