Financially fit students: the importance of teaching students how to be good money managers is catching on around the country.

Like most disasters, Hurricane Katrina brought out the best and worst in people. For at least one Mississippi teacher, the storm provided a teaching moment--in economics. Pam Carrubba, a master teacher of economics at Bay-Waveland Middle School in Bay St. Louis, Miss., used Katrina to help students understand FEMA debit cards, rebuilding family finances, and the connection between poverty and the problems resulting from the hurricane. It was a real-life opportunity to teach her students how being smart financially could empower them to improve their lives.

Determined to turn out financially literate graduates, Mississippi and Tennessee have embarked on ambitious programs to infuse personal finance education into their K-12 curricula.

Mississippi is the first state to roll out a major financial education initiative that will eventually train more than 14,000 K-12 teachers in seven states: Arizona, California, Florida, Georgia, Illinois, Mississippi and Texas. Spearheaded by the National Council on Economic Education and State Farm Insurance, the three-year-effort is designed around the council's Virtual Economics[R] CD-ROM program, an interactive tool containing more than 1,200 lessons organized by grade level, concept and economics standards.

The Mississippi Council on Economic Education, in conjunction with the State Department of Education, is starting the program through a grant from State Farm, with a goal of training 6,000 teachers who will reach more than 400,000 students annually. Although no specific amount has been announced for the grant, Mia Jazo-Harris, media relations specialist at State Farm corporate headquarters in Bloomington, Ill., says State Farm is committed 100 percent to the Missouri K-12 program. "We're just waiting for figures to come in from various school districts," she says.

Mississippi teachers can become master teachers of economics by completing a year-long program on how to integrate macro- and micro-economic principles into high school and middle school curricula. The national council also provides workshops for teachers of all grade levels on subjects such as a general introduction to teaching economics, stock market games, economics and U.S. history, and international economics.

Mississippi Senator Mike Chaney, chair of the Education Committee, advocates putting state resources into financial education. He says funds to help increase financial literacy are included in the state's high-school redesign efforts, and he has proposed appropriating $1 million to the Virtual Economics program.

STARTING YOUNG

In Tennessee, first and fourth graders in 18 Memphis schools are learning how to make good financial decisions this spring as part of a pilot program called Smart Tennessee. Their teachers were trained last fall in the Financial Fitness for Life curriculum created by the National Council on Economic Education. The legislature appropriated $125,000 to the program, and First Tennessee Bank committed $125,000 a year for three years.

The curriculum provides materials at four levels--grades K-2, 3-5, 6-8 and 9-12, and is designed to help students make better decisions for earning, spending, saving, borrowing, investing and managing money.

Courtney Magbee, a first-grade teacher at Peabody Elementary School in Memphis, says her students were quick to embrace the financial lessons.

"They love to talk about money," she says. Magbee particularly likes the activity-based nature of the lessons. One activity, for example, requires students to write sentences onto strips of construction paper--things they did to earn money on green paper and money that was given as a gift on orange paper. Then they made a paper train with the strips of paper. Their train consisted mostly of orange paper.

"At that young age, they could see that they were given more money than they earned," says Magbee. "I did one for myself, and they could see that I had much more green, or earned, money.

"And they got to practice their writing skills," she adds.

CONNECTING WITH OTHER SUBJECTS

Incorporating economic concepts into core subjects like writing is key to teaching and learning financial literacy, say proponents. The programs are specifically designed to be integrated into reading, math, language arts and social studies.

"We felt that if we wanted to have the financial literacy concepts taught, we should align them with those subjects," says Joseph Peri, executive vice president at National Council on Economic Education.

The ability to include financial concepts into existing subjects is what ultimately will make adding financial literacy to schools' already-full plates amenable, according to Dr. Julie Heath, chair of the Department of Economics and director of the Center for Economic Education at the University of Memphis, which trains teachers in the Financial Fitness for Life program.

"Financial literacy is not what people think it is," she says. "It's not how to write a check, it's not how to invest your money. Financial literacy is how do I make a good decision? That's critical thinking, and that's what schools are teaching anyway."

Schools in Memphis, for example, are required to do 90 minutes of reading per day. Part of that reading can include a story about a little girl who gets money for her birthday and has to decide what to do with it, says Heath. Or teachers can incorporate financial education into discussions about character building. They can talk about borrowing, and how that establishes a relationship of trust.

"It's a subtle change of emphasis," she explains.

AROUND THE COUNTRY

While Mississippi and Tennessee forge ahead, other states are beginning to add financial literacy to their list of education goals. According to the National Council on Economic Education, by the end of 2004, 38 states had personal finance standards or guidelines mentioned in their education standards; eight states required that a course with personal finance content be offered in schools; seven states required that such a course be taken in order to graduate; and nine states actually tested for personal finance knowledge. The council surveys states every two years; results of its most recent survey will be published in June and can be found at www.ncee.net.

Mississippi Superintendent of Education Hank M. Bounds believes such requirements provide a good jumping-off point. His state is one that requires students to take a semester of economics in order to graduate, but Bounds cautions that one course is not enough.

"It's not a one-shot exposure," he says. "We're working to incorporate financial literacy principles throughout the curriculum."

A CHANGING WORLD

While the nation's schools wrestle with mounting challenges, including meeting the requirements of the federal No Child Left Behind Act, financial literacy proponents argue that our increasingly complex financial world makes it crucial that economics be added to the list of what needs to be taught in school.

"The world has changed an awful lot in the last generation or so," says Peri, noting that people now change jobs often, have myriad credit options and make their own investment choices.

"The onus is being shifted to the individual to make these decisions in a much more complex environment," he says.

Indeed, according to the report "Who Will Own Our Children?" published in 2006 by the National Association of State Boards of Education, there has been a massive reduction in the availability of pension plans, covering only 46 percent of workers in 2004. Further, American consumers now owe about $1.7 trillion in credit card and other debt.

Bad debt has been a major impetus for action, especially in Tennessee. Heath says her passion for personal finance education stems simply from living in Memphis, which for many years was "the bankruptcy capital of the nation."

According to Senator James F. Kyle Jr., predatory lending has been a problem in Tennessee for years, but only recently has there been any organized resistance to it. But, he points out, "you can't just make things illegal. What you really need to do is help drive the marketplace away from those types of products. A part of that is educating people so they make the right decisions," he says. "It's the old 'teach them to fish' story."

Representative Lois DeBerry, speaker protempore of the Tennessee House, became involved in the issue several years ago when she tried to pass a bill prohibiting credit card companies from recruiting on college campuses.

"Kids were missing out on job opportunities because of bad credit," she says.

SEX AND MONEY

Of course, it's not only kids who struggle with money issues. Even the most well-educated teachers and parents are often overwhelmed by modern financial complexities, and as such are ill-equipped to teach their students and children.

"Parents are less likely to talk to their kids about financial issues than sex," says Heath.

"Especially in this state, many parents cannot help their children in this area," agrees Dr. Pamela P. Smith, president of the Mississippi Council on Economic Education. "Frankly, our teachers need help as well. The world of finance is not simple."

Not only should personal finance be taught in schools, proponents argue, it should be taught from a very young age.

"This kind of learning is incremental, and so it is best started at a young age and then built upon as kids move through the grades," says Peri. "Kids today--even at the upper elementary and certainly middle school age--make a lot of spending decisions.

"We don't wait until high school to teach students reading or math," he adds, "so why wait until high school to teach them what is arguably one of the more important life skills?"

Heath feels very strongly that learning to be financially literate--which really means learning to make wise choices--should begin as early as preschool.

"Even middle school is too late," she says. "It has to happen when kids are first learning to be critical thinkers."

It's much easier to adapt the basic learning concepts at a younger age, agrees Susan Lamey, public affairs specialist for State Farm in Jackson, Miss., who serves on the board of the MCEE.

"Kids should learn early to understand the difference between a want and a need, which is the basic foundation of financial literacy education," she says.

CHANGING BEHAVIOR

Heath says research shows that waiting until high school to teach financial concepts does not change students' learning very much, let alone their actions.

"They can score adequately on a test, but they don't change their behavior," she says.

Luckily for budget-strapped states and school districts, this is an area where it makes sense for the private sector to step up. Besides waiting to be good corporate citizens, private companies have a vested interest in ensuring future graduates are financially savvy.

Smith says bankers tell her they can't hire people unless they have the skills that kids learn in the stock market game. But training teachers and students to play the stock market game would not be possible without help from businesses and foundations.

"Mississippi has one of the more successful efforts because the business community is behind it," she says.

According to Jazo-Harris, State Farm has been involved with the National Council on Economic Education for 25 years.

"If we can educate students and teachers, that only makes them better consumers," she says, "and it helps bolster the workforce as well."

Peri points to the Bank of America, which since 2000 has invested more than. $6 million in the National Council on Economic Education to develop the Financial Fitness for Life program.

"There is a direct correlation between economic growth and economic literacy in states," he says. "State legislators concerned about economic growth and attracting jobs have got to have well-prepared employees."

Bounds agrees. "It's an economic development issue."

Whatever is in store for tomorrow's graduates--from the day-to-day challenges of managing their money to facing a natural disaster like Hurricane Katrina--Mississippi is working hard to ensure its students are prepared to lead successful lives. Bounds sees financial literacy as an important component in those efforts. He is determined to change low student performance, at least in his neck of the woods.

"We are trying to be very thoughtful about what the education experience should look like," he says. "I look forward to the day very soon when folks will say, 'Oh, you have issues? Contact Mississippi and see what they did to turn their state around.'"

FINANCIAL ILLETERACY

* American consumers owe about $1.7 trillion in credit card and other debt.

* In 2000, 53 percent of Americans said they live from paycheck to paycheck.

* One third of high school students use a credit card.

* In 2003, teens spent $175 billion, averaging about $103 a week.

* Children's spending has roughly doubled every 10 years for the past three decades and tripled in the 1990s.

* Eighty-three percent of undergraduate students have at least one credit card, a 24 percent increase from 1998.

* The average monthly credit card balance of an undergraduate student is $2,237.

* By the time each student graduates from college, they have an average of $20,402 in combined education loan and credit card balances.

Sources: National Public Radio, 2003; Consumer Federation of America, 2001; Teenage Research Unlimited, 2004; The U.S. Kids Market, Packaged Facts 2002.

PRIVATE EFFORTS TO HELP FINANCIAL LITERACY

Banks, credit unions and credit card companies are working with policymakers and educators to improve financial education. MoneySKILL, an interactive curriculum created by the American Financial Services Association Education Foundation, teaches high school students concepts such as income, expenses, assets, liabilities and risk management. More than 4,000 teachers from all 50 states and several foreign countries have taught the course to more than 46,000 students. The curriculum is available online at http://www.moneyskill.org/.

Working with the National Endowment for Financial Education, the Credit Union National Association has helped distribute the High School Financial Planning Program to more than 3 million students in all 50 states. They have distributed the materials in English and Spanish to public and private schools for free. In addition, at least 150 credit unions in 29 states and the District of Columbia operate student-run branches in 517 schools and youth centers for hands-on learning,

Visa's Practical Money Skills for Life combines a teacher curriculum with interactive tools, educational games and personal finance information. And last year, Visa worked with the National Football League to develop an educational video game and curriculum called Financial Football. The game and curriculum were tested in five West Virginia high schools. Based on the success of the pilot program, the West Virginia Treasurer's Office and Visa agreed to send Financial Football to all 184 high schools and 176 libraries in the state. The program satisfies West Virginia's graduation requirement of financial education.

Visa is also involved with the Federal Reserve Bank of Chicago in hosting a free online webinar on May I. Legislators are invited to join educators and folks from nonprofits and financial institutions to discuss whether or not financial education should be required for high school graduation. To register for the Financial Literacy and Education Summit go to www.practicalmoneyskills.com/summit2007/

--Heather Morton, NCSL 

Jane Carroll Andrade is a former editor of State legislatures magazine. She now freelances from her home in Evergreen, Colo.