Federal Agencies Spent about $68 Million on Financial Literacy Activities in Fiscal Year 2010

In fiscal year 2010, the federal government spent about $68 million on 15  of its 16 significant financial literacy programs and about $137 million on 4  programs providing housing counseling, which can include elements of  financial education. We did not identify any new federal financial literacy  programs created since fiscal year 2010 other than CFPB, which was  being formed as an agency that year. Some agencies also have deep  knowledge and ties to particular populations and may be the most  efficient and natural conduit to providing them with information and  services, as with the Department of Defense’s (DOD) role in providing  financial information and counseling to servicemembers and their  families. Our review did identify cases of overlap—that is, multiple agencies or  programs with similar goals and activities. These activities potentially overlap with those of FTC, which  also plays a role in helping seniors avoid unfair and deceptive practices. Ensuring  clear delineation of the respective roles and responsibilities between  CFPB and agencies with overlapping financial literacy responsibilities is  essential to help ensure efficient use of resources. However, its national  strategy does not include a discussion of the appropriate allocation of  federal resources. The Financial Literacy and Education Commission Has Improved Coordination but Has Not Addressed Resource Allocation

In general, we found that coordination and collaboration among federal  agencies with regard to financial literacy has improved in recent years, in  large part due to the efforts of the Financial Literacy and Education  Commission. Several federal agencies have  efforts under way seeking to determine the most effective approaches  and programs. Agencies Assess Their Financial Literacy Efforts in Various Ways

The wide range of federal financial literacy programs and activities and  their evaluation metrics and methods, makes it difficult to systematically  assess overall effectiveness or compare results across programs. HUD housing counseling. Moreover,  the creation of CFPB may signal an opportunity for reconsidering how the  federal government’s financial literacy efforts are organized. The commission’s 2011 national strategy includes  some elements that may be useful in guiding federal financial literacy  efforts, but it could do more to identify the resources needed to implement  the strategy and how federal resources might best be allocated among  programs and agencies, characteristics we have found to be desirable for  any national strategy. Without a clear discussion of resource  needs and where resources should be targeted, policymakers lack  information to help direct the strategy’s implementation and help ensure  efficient use of funds. While some measured the effect on participant behavior, often  they assessed changes in participant knowledge or tracked output  measures, such as the number of consumers reached. To help ensure effective and efficient use of federal financial literacy  resources, we also recommend that the Secretary of the Treasury and the  Director of the Consumer Financial Protection Bureau, in their capacity as  Chair and Vice Chair of the Financial Literacy and Education  Commission, and in concert with other agency representatives of the  commission:  identify for federal agencies and Congress options for consolidating  federal financial literacy efforts into the activities and agencies that are  best suited or most effective, and revise the commission’s national strategy to incorporate clear  recommendations on the allocation of federal financial literacy  resources across programs and agencies. In its response, CFPB neither agreed nor disagreed with the  recommendations addressed to it, but it highlighted steps that its Offices  of Financial Education, Servicemember Affairs, and Financial Protection  for Older Americans are taking to delineate roles and responsibilities,  improve coordination, and avoid duplication with other federal agencies. Appendix I: Objectives, Scope, and Methodology

Our objectives were to address (1) what is known about the cost of  federal financial literacy activities; (2) the extent and consequences of  overlap and fragmentation among financial literacy activities; (3) what the  federal government is doing to coordinate its financial literacy activities;  and (4) what is known about the effectiveness of federal financial literacy  activities. In addition, we reviewed information on program effect that  appeared in agencies’ strategic plans and performance and accountability  reports.
Why GAO Did This Study

Financial literacy—the ability to use knowledge and skills to manage financial resources effectively—plays an important role in helping to ensure the financial health and stability of individuals and families. Federal agencies promote financial literacy through activities including print and online materials, broadcast media, individual counseling, and classroom instruction. In response to a mandate requiring GAO to identify duplicative government programs and activities, this report addresses (1) the cost of federal financial literacy activities; (2) the extent of their overlap and fragmentation; (3) the federal government’s coordination of these activities; and (4) what is known about their effectiveness. GAO reviewed agency budget documents, strategic plans, performance reports, websites, and other materials, and interviewed representatives of federal agencies and other organizations.

What GAO Found

The federal government spent about $68 million on 15 of the 16 financial literacy programs that were comprehensive in scope or scale in fiscal year 2010; cost data were not available for the Consumer Financial Protection Bureau (CFPB), which was created that year. In addition, about $137 million in federal funding in four other major programs was directed to housing counseling, which can include elements of financial education. Since fiscal year 2010, at least four of these programs have been defunded and CFPB has received resources to fund its financial literacy activities.
Federal financial literacy and housing counseling activities are spread across multiple agencies and programs. GAO has not identified duplication—programs providing the same activities and services to the same beneficiaries—but has found overlap—multiple programs with similar goals and activities—in areas such as housing counseling and the financial education of youth. Further, CFPB was charged with some financial education duties that overlap with those of other federal agencies, making it essential that their respective roles and responsibilities be clearly delineated to ensure efficient use of resources. Moreover, CFPB’s creation may signal an opportunity for consolidating some federal financial literacy efforts, which would be consistent with federal goals of reorganizing and consolidating federal agencies to reduce the number of overlapping government programs.
Federal agencies have made progress in recent years in coordinating their financial literacy activities and collaborating with nonfederal entities, in large part due to the efforts of the federal multiagency Financial Literacy and Education Commission. The commission’s 2011 national strategy includes some useful elements—such as plans to coordinate interagency communication, improve strategic partnerships, and promote evaluation. However, it does not recommend or provide guidance on the appropriate allocation of federal resources among programs and agencies, which GAO has found to be desirable in a national strategy. While the commission’s governance structure presents challenges in addressing resource issues, without a clear discussion of resource needs and where resources should be targeted, policymakers lack information to help direct the strategy’s implementation and help ensure efficient use of funds.
The wide range of federal financial literacy activities and evaluation methods makes it difficult to systematically assess overall effectiveness or compare results across programs. Among the federal financial literacy programs that we reviewed, most included some evaluation component. Some measured the effect on participant behavior and others assessed changes in participant knowledge or tracked output measures, such as the number of consumers reached. Rigorous evaluation measuring behavior change is costly and methodologically challenging and may not be practical for all types of activities. However, CFPB and other federal entities have new efforts under way that seek to determine the most effective approaches and programs, which GAO believes to be positive steps toward helping ensure the best and most efficient use of federal financial literacy resources.

What GAO Recommends

GAO recommends that CFPB clearly delineate with other agencies respective roles and responsibilities, and that the Financial Literacy and Education Commission identify options for consolidating federal financial literacy efforts and address the allocation of federal resources in its national strategy. CFPB neither agreed nor disagreed with these recommendations and the Department of the Treasury agreed with the recommendations directed to the commission.