Objective

To assess the extent of implementation of the five recommendations included in our initial audit report, Selected State Agencies’ Roles in Financial Literacy (Report 2020-S-53).

About the Program

In recent decades, financial literacy has emerged as a key education initiative at both the federal and state levels. As defined by the U.S. Department of the Treasury, financial literacy describes the skills, knowledge, and tools that equip people to make individual financial decisions and actions to attain their goals; this may also be known as financial capability, especially when paired with access to financial products and services.

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, which adversely affected millions of people, 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, the Financial Industry Regulatory Authority (FINRA) Foundation, which conducts a National Financial Capability Study (Study) every 3 years, reported in 2022 that 47% of survey respondents reported not having emergency funds to cover 3 months of expenses. The results varied depending on respondents’ degree of financial literacy, with 35% of those with higher financial literacy reportedly not having 3 months of emergency funds vs. 58% for those with lower financial literacy. Similarly, the Study found that about 25% of credit card-holding respondents with higher financial literacy had paid only the minimum balance within the previous 12 months, vs. 46% for those with lower financial literacy.

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. The law required all agencies and authorities to initially provide relevant financial literacy-related education information to the Department of Financial Services (DFS) in electronic format by November 1, 2021; DFS was required to post the information on its website by January 1, 2022. Those subject to the law are also required to send any updates, revisions, and new information to DFS annually by November 1 for posting. Numerous State agencies have roles in New York’s financial literacy efforts, whether these roles are statutorily defined or not.

The objective of our initial audit, issued on September 14, 2022, was to determine selected State agencies’ roles in 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 audit covered the period from January 2018 through March 2022. For purposes of our initial audit, we selected five agencies: DFS, the Department of State (DOS), New York State Office for the Aging (NYSOFA), Office of Temporary and Disability Assistance (OTDA), and the State University of New York (SUNY).

Our audit found that, although each of the five agencies were involved to some degree in financial literacy efforts and some collaboration existed, there didn’t appear to be a coherent strategy or plan to coordinate these efforts statewide, nor was 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. Agency-specific observations were as follows:

• DFS posted 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—NYSOFA, OTDA, and SUNY—were represented with a link on DFS’ webpage; DOS was not represented.
• DOS, OTDA, and SUNY generally sought to identify and reach critical and vulnerable consumer groups through their financial literacy efforts. However, SUNY was the only agency that attempted 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 had access to information and data that may have helped them evaluate and improve their financial literacy offerings but generally didn’t use this information—or communicate it to partners where applicable—to identify potential strengths, weaknesses, and topic areas that warrant greater focus.

Key Finding

The agencies have made progress in addressing the problems we identified in the initial audit report. Of the report’s five recommendations, four—issued to DFS, DOS, NYSOFA, and OTDA—have been implemented and one—issued to SUNY—has not been implemented.

Key Recommendation

Agency officials are requested, but not required, to provide information about any actions planned to address any unresolved issues discussed in this follow-up within 30 days of the report’s issuance.