Overlap of Programs Suggests There May Be Opportunities for Consolidation
GAO-12-588: Published: Jul 23, 2012. Publicly Released: Jul 23, 2012.
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.
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 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.
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Recommendations for Executive Action
Status: Closed - Implemented
Comments: Consistent with GAO's recommendation, the Consumer Financial Protection Bureau (CFPB) has continued to take steps to avoid duplicating its financial literacy efforts with those of other federal agencies. CFPB's Office of Financial Education meets approximately monthly with its counterparts at the Department of the Treasury, and these meetings have addressed respective roles and responsibilities, according to staff from both agencies. CFPB's Office of Servicemember Affairs meets monthly with staff responsible for financial literacy at the Department of Defense, and the two agencies have developed two Joint Statements of Principles to help delineate their roles and responsibilities and help coordinate their efforts. Further, CFPB's Office of Financial Protection for Older Americans finalized a memorandum of understanding with the Federal Trade Commission in January 2012 to help cooperate on consumer education efforts and promote consistent messages. CFPB's Office of Students has developed a memorandum of understanding with the Department of Education designed, in part, to clarify respective areas of focus in providing education on student loans and financial aid. These actions have helped ensure that CFPB's financial literacy activities do not duplicate those of other federal agencies.
Recommendation: As part of its ongoing coordination efforts, the Consumer Financial Protection Bureau should take steps to help ensure clear delineation of the respective roles and responsibilities between itself and other federal agencies that have overlapping financial literacy responsibilities.
Agency Affected: Consumer Financial Protection Bureau
Comments: The Financial Literacy and Education Commission and its member agencies have taken actions to avoid potential duplication, but the Commission has not yet identified options for consolidating federal financial literacy efforts. The Commission has made significant progress in coordinating federal financial literacy programs. Moreover, the Commission and its committees have promoted collaborations that delineate appropriate roles among agencies. For example, in recent years, CFPB signed memorandums with several federal agencies clarifying respective roles in financial education for specific subpopulations, and the Commission led an initiative that sought to coordinate and avoid overlap in federal financial literacy research efforts. Such efforts have helped avoid duplication and inefficiency, which also is a key goal of consolidation. However, as of March 1, 2017, the Commission still has not specifically examined options for consolidation of federal financial literacy efforts. In August 2016, a representative of the commission told GAO it believes that identifying options for consolidation would be outside the commission's scope. GAO maintains that identifying options for consolidating federal financial literacy efforts is needed to help ensure the most efficient and effective use of resources.
Recommendation: To help ensure effective and efficient use of federal financial literacy resources, 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 should 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.
Agency Affected: Department of the Treasury
Comments: No executive action taken as of March 1, 2017. The Financial Literacy and Education Commission has not made clear recommendations on allocation of federal financial literacy resources. In November 2016, the Commission updated its national strategy. The update describes activities that the Commission and federal agencies have taken to advance financial literacy in the areas of policy, education, practice, research, and coordination, and identifies next steps in these areas. In addition, in a 2016 report describing its progress, the Commission states that it will consider whether actions are needed to streamline, improve, or augment federal financial literacy programs, grants, and materials. However, these reports do not specifically make recommendations on allocation of federal resources. Without a clear discussion of resource needs and where resources should be targeted, policymakers lack information to direct the strategy's implementation and help ensure efficient use of funds.
Recommendation: To help ensure effective and efficient use of federal financial literacy resources, 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 should revise the commission's national strategy to incorporate clear recommendations on the allocation of federal financial literacy resources across programs and agencies.
Agency Affected: Department of the Treasury