New York state should improve its track record when it comes to promoting financial literacy and providing New Yorkers with access to information and tools to build their financial knowledge and skills, according to an audit released today by New York State Comptroller Thomas P. DiNapoli.
The audit of five agencies, including the Department of Financial Services (DFS), the Department of State (DOS), the NYS Office for the Aging (NYSOFA), the Office of Temporary and Disability Assistance (OTDA) and the State University of New York (SUNY), found the state has not developed a coherent strategy or made a concerted effort to provide financial literacy education and information to the public.
“Many New Yorkers are trying to get through tough economic times right now. Having the right information and tools to manage their personal finances can help people be in a better position to weather both good times and bad,” DiNapoli said. “This audit found that the state agencies tasked with promoting financial education and giving New Yorkers the resources they need to safeguard their finances can improve and better coordinate their efforts.”
Studies have shown that most Americans, particularly young adults, are not prepared for financial emergencies and that financial literacy can help prevent personal financial crises among all generations. In a 2018 survey, the Financial Industry Regulatory Authority found that in New York:
- 28% of credit card holders made only the minimum monthly payment in some months,
- 41% did not have savings to cover expenses for three months in an emergency.
- 12% owed more on their home than it was worth.
In addition, 2.5 million New Yorkers each owed over $37,600 in federal student loan debt in 2020, slightly more than the national average, and 11.5% of older adults live in poverty, compared to 9.7% nationally.
Several New York agencies offer financial literacy education to help 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 all relevant new and updated financial literacy-related education information to DFS by Nov. 1, 2021. DFS was to post the information to its website by January 1, 2022.
DiNapoli’s audit found that, despite some collaboration among the agencies, there is no coherent strategy to coordinate their various efforts, nor is there a shared definition of “financial literacy.”
For example, DFS, which is the designated clearinghouse for all agencies’ information, does post some links. However, as of June 2022, fewer than 15 of the state’s 100-plus eligible entities were represented on DFS’ Financial Help for New Yorkers webpage.
NYSOFA, the primary agency for services for aging New Yorkers, said it did not have a role in administering any financial literacy programs, although DFS did link to its website. Only three — SUNY, DOS and OTDA — make efforts to identify and reach vulnerable consumer groups as part of their financial literacy efforts.
SUNY was the only agency that attempts to measure gains in individuals knowledge after they participate in financial literacy offerings and was the most consistent in getting information out, primarily to students and prospective students. Getting feedback from participants is critical to identifying whether the educational efforts are successful and where improvements are needed.
The audit found that DOS, OTDA, and SUNY do not use the information and data they have to help them evaluate and improve their financial literacy offerings.
In examining the five agencies, DiNapoli’s audit made recommendations for each that could improve their outreach:
- DFS: Work with agencies and authorities to ensure entities subject to the financial literacy law provide information and education and that it’s accessible on DFS’ website. Such actions should include creating a definition of “financial literacy” to help agencies determine relevant content.
- DOS: Work with DFS to ensure that access to information about DOS’ financial literacy-related content and efforts is available on DFS’ website.
- NYSOFA: Enhance financial education and literacy among older New Yorkers.
- OTDA: Get feedback from Summer Youth Employment Program participants to identify strengths and weaknesses in financial literacy offerings.
- SUNY: 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.
The agencies, with the exception of NYSOFA, generally agreed with the recommendations and said they were taking steps to improve financial literacy education. Their full responses are available in the audit.
The audit is part of DiNapoli’s ongoing financial literacy initiative. In 2019, DiNapoli signed an executive order recognizing the need for more robust financial education in the state and providing New Yorkers with more tools to manage their finances.
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