Financial literacy  encompasses financial education—the process by which individuals  improve their knowledge and understanding of financial products,  services, and concepts. Overview of Federal Programs or Activities on Financial Literacy and Agency Roles

In our 2012 report, we identified 16 significant financial literacy programs  or activities administered by the federal government in fiscal year 2010. As shown in table 1, there were 16 programs or activities among 14  federal agencies and 4 housing counseling programs (which can include  elements of financial education) among 2 federal agencies and a federally  chartered nonprofit corporation. While we have not done a comprehensive update of this  federal program summary since 2012, representatives of Treasury and  CFPB—which represent the Chair and Vice Chair of the Commission,  respectively—told us that as of April 2014, 3 of the 16 financial literacy  programs and 1 of the 4 housing counseling programs either no longer  existed or no longer received funding, and no new federal programs had  been added since fiscal year 2010. Also among Commission charges are developing a  national strategy for improving financial literacy and proposing means of  eliminating overlap and duplication among federal financial literacy  activities. Furthermore, since 2008, three Presidential advisory councils  related to financial literacy have been tasked, in part, with creating  partnerships among federal, state and local, nonprofit, and private  entities. Federal Agencies Addressed Several GAO Recommendations, but More Progress Needed on Determining the Best Allocation of Resources

Our reviews of federal financial literacy efforts in recent years have  examined, among other things, issues of fragmentation and overlap; the  effectiveness of programs; coordination across multiple agencies and  between federal, state, local, and nonprofit entities; the potential  consolidation of programs or activities; and the need to improve the   The following  Commission’s national strategy for financial literacy. summarizes progress in four areas in which we have observed  improvements or successes—coordination, partnerships, CFPB’s role,  and evaluation tools—and one major area in which we believe significant  work remains to be done—determining the most effective and efficient  allocation of federal resources. These have included an internal web portal to allow federal  agencies involved in financial literacy efforts to share information and  resources; publication of 2012 Research Priorities and Research  Questions to help coordinate federal research efforts; a clearinghouse of  federal research and data on financial literacy; an initiative for  coordinating among federal agencies’ activities and resources to help  parents and teachers prepare children and young adults for financial  success; and support to the Office of Personnel Management in  promoting agency strategic plans for employee retirement readiness. Partnerships

The Commission has continued to build on its progress in promoting  partnerships among federal and nonfederal sectors. Delineation of CFPB’s Role

CFPB has taken steps to delineate and distinguish its role in financial  literacy from that of other federal agencies. Furthermore, CFPB’s  Office of Financial Protection for Older Americans finalized a  memorandum of understanding with the Federal Trade Commission in  January 2012 to help cooperation on consumer education efforts and  promote consistent messages. Evaluation Tools

We suggested in 2011 that the Commission and CFPB take steps to  develop and disseminate a standard set of evaluation tools or  benchmarks to help assess the outcomes and effectiveness of financial  literacy programs.2012, CFPB signed a contract with the Corporation for Enterprise  Development to develop a set of metrics and outcome measures for  assessing the success of financial literacy programs. Allocation of Federal Resources

We continue to believe that further progress is needed in one area— helping to ensure that the most effective and efficient allocation of federal  financial literacy resources occurs and avoids unneeded overlap. The creation of CFPB  added a new player to the mix. In particular, some consolidation of these efforts  could help ensure the most efficient and effective use of federal  resources. As a result, in July 2012 we recommended to Treasury and  CFPB that the Commission identify for federal agencies and Congress  options for consolidating federal financial literacy efforts into the agencies  and activities that are best suited or most effective.draft of that report, Treasury agreed with the recommendation, and  subsequently CFPB noted its agreement as well, but the recommendation  has not been implemented. The Commission’s national strategy could serve as one mechanism for  determining how federal resources might best be allocated among  programs and agencies, but it does not yet do so. And without recommendations on resource allocations,  policymakers lack information to avoid overlap and help ensure the most  efficient and effective use of federal funds.
Why GAO Did This Study

Giving Americans the information they need to make effective financial decisions is key to their financial well-being. The federal government plays a role in promoting financial literacy, which encompasses financial education—the process by which individuals improve their knowledge and understanding of financial products, services, and concepts. The federal role evolved with the creation of the Commission in 2003 and CFPB in 2010.
This testimony provides an (1) overview of federal financial literacy activities and agency roles, and (2) update on the progress made in addressing GAO's recommendations in this area. This testimony is largely based on and partially updates a July 2012 report ( GAO-12-588 ) and relevant portions of GAO's annual duplication reports ( GAO-11-318SP and GAO-12-342SP ). For those reports, GAO reviewed and analyzed relevant reports, plans, and websites related to federal financial literacy efforts, and interviewed staff of 17 federal agencies and of nonprofit organizations. To update selected information, GAO spoke with staff and reviewed materials from CFPB and the Department of the Treasury.

What GAO Found

In its July 2012 report, GAO identified 16 significant financial literacy programs or activities among 14 federal agencies in fiscal year 2010, and 4 housing counseling programs among 2 agencies and a federally chartered entity. As of April 2014, 3 of the financial literacy programs and 1 housing counseling program no longer existed or no longer received funding, and no new federal programs had been added, according to staff representing the Financial Literacy and Education Commission (Commission). The creation of the Bureau of Consumer Financial Protection (known as CFPB) in 2010 added a significant new player, with offices devoted to financial education broadly and to educating servicemembers, older Americans, and students specifically. The multiagency Commission, created in 2003, coordinates among federal agencies and between federal agencies and state, local, nonprofit, and private entities. Commission responsibilities also include developing national strategies for improving financial literacy and proposing means of eliminating overlap and duplication among federal activities. Finally, since 2008 three Presidential advisory councils related to financial literacy have had charges that include fostering partnerships among private, nonprofit, and government entities.
GAO has observed improvements or successes in four areas—coordination, partnerships, delineating CFPB's role, and evaluation tools—but significant work remains to be done in one major area—determining the most effective and efficient allocation of federal resources.
Coordination . Coordination among federal agencies has improved in recent years, largely due to the role of the Commission. Recent efforts include a research clearinghouse and a coordinated initiative on youth education.
Partnerships. The Commission has continued to build and promote partnerships. Several initiatives have partnered with academics, nonprofits, and other entities.
Delineating CFPB's role. To help avoid unnecessary overlap, CFPB has further delineated its role in financial literacy efforts, discussing respective roles with federal agencies that have overlapping responsibilities and signing agreements on cooperation and areas of focus.
Evaluation tools. The Commission and CFPB have helped develop and disseminate evaluation tools to assess outcomes and effectiveness of financial literacy programs. CFPB also contracted with a company to develop metrics and outcome measures and with a nonprofit to evaluate and report on financial education programs and activities.
However, further progress is needed to help ensure effective allocation of federal financial literacy resources and avoid unneeded overlap. In 2012, GAO concluded the Commission was best placed to consider consolidating federal efforts, which could help ensure the most efficient and effective use of federal resources. The Commission's national strategy could serve as a mechanism to identify those resources and how they might be allocated, but has not yet done so. Without recommendations on resource allocations, policymakers lack information to avoid overlap and help ensure the most efficient and effective use of federal funds.

What GAO Recommends

GAO makes no new recommendations in this testimony, but reiterates its July 2012 recommendations for the Commission to identify options for consolidating federal financial literacy efforts and address the allocation of federal resources in its national strategy. The Commission agreed with these recommendations.