New York State should improve its track record of promoting financial literacy and giving New Yorkers access to information and tools to build their financial literacy and skills, according to an audit by State Comptroller Thomas P. DiNapoli.
Auditing by 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 Zealand York (SUNY), noted that the state has not developed a coherent strategy or made a concerted effort to provide financial education and information to the public.
“Many New Yorkers are trying to get through tough economic times. Having the right information and tools to manage their personal finances can help people get through both the good times and the bad.” said Dinapoli. “This review found that government agencies tasked with promoting financial literacy and providing the resources they need to protect their finances can improve and better coordinate their efforts.”
Studies have shown that most Americans, particularly young adults, are unprepared for financial emergencies and that financial education can help prevent personal financial crises for all generations. In a 2018 survey, the Financial Industry Regulatory Authority found that in New York:
¯ 28% of credit cardholders have only made the minimum monthly payment in some months,
¯ 41% had no savings to cover three months of emergency expenses.
¯ 12% owed more for their home than it was worth.
¯ In addition, as of 2020, 2.5 million New Yorkers each owed more than $37,600 in federal student loan debt, slightly more than the national average, and 11.5% of older adults live in poverty, compared to 9.7% in the Inland.
Several New York agencies provide financial education to protect vulnerable consumers, increase household savings, and promote responsible personal finance and financial well-being. A 2021 state law required certain agencies and authorities to provide DFS with all relevant new and updated educational information related to financial literacy by November 1, 2021. DFS should publish the information on its website by January 1, 2022.
DiNapoli’s audit found that despite some collaboration between the agencies, there is no coherent strategy to coordinate their various efforts, nor is there a common definition of “Financial Education”.
For example, the State Financial Services Department, which acts as the clearing house for all government information, posts some links. However, as of June 2022, fewer than 15 of the state’s 100+ qualifying agencies were represented on the Department of Financial Services’ website for financial aid to New Yorkers.
The State Office for the Aging, the main agency providing services to aging New Yorkers, said it has no role in administering financial literacy programs, although the Financial Services Department has linked to its website. Only three agencies — SUNY, the State Department, and the Bureau of Temporary and Disabled Assistance — make efforts to identify and reach vulnerable consumer groups as part of their financial literacy efforts.
SUNY was the only agency attempting 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. Gathering feedback from participants is critical to determining if the educational effort is successful and where improvements are needed.
The audit found that DOS, OTDA and SUNY do not use the information and data available to them to help them evaluate and improve their financial education offerings.
Reviewing the five agencies, DiNapoli’s review made recommendations for each that could improve their reach:
¯ DFS: Work with agencies and authorities to ensure that entities subject to the Financial Literacy Act provide information and training and that this is accessible on the DFS website. Such measures should include the creation of a definition of “Financial Education” Helping agencies identify relevant content.
¯ DOS: Work with DFS to ensure that information about DOS content and efforts related to financial literacy is accessible on the DFS website.
¯ NYSOFA: Improving Financial Literacy and Literacy among Older New Yorkers.
¯ OTDA: Collect feedback from Summer Youth Employment Program participants to identify strengths and weaknesses in financial literacy offerings.
¯ SUNY: Use available Smart Track information and user metrics, where appropriate in coordination with the Smart Track provider, to identify potential areas of focus and improvement.
The agencies, with the exception of NYSOFA, generally agreed with the recommendations and said they would take steps to improve financial literacy education.