Budget in Shambles, New Mexico Opts Out of Financial Education
By Dan Kadlec
December 19, 2016
New Mexico has a nasty budget shortfall, and officials there are trying to fix it in part by cutting a state-run youth financial literacy program. Let that sink in.
Last week, the state eliminated the jobs of two officials who ran the financial education program, sealing the fate of a new and growing effort that had reached 5,000 high school students in public schools statewide. The program focused on helping young people make smart decisions about saving and debt as they enter college or the workforce.
State Treasurer Tim Eichenberg called the cuts ironic, noting that he had campaigned on the need for such a program in 2014. “How do I teach financial literacy if I’m not fiscally responsible myself?” he told the AP. Fair enough. He wants to teach by example.
But Eichenberg misses the ultimate irony. It’s not about abandoning a program that helped him get elected. It’s not even about funding a financial literacy program through poor financial practices like deficit spending. It’s that he is dropping a program designed to help individuals prevent just the kind of problem New Mexico is now experiencing—a painful budget shortfall.
Leading and teaching by example is a good thing. So cut another program. Financial know-how is lacking everywhere, from households to governments around the world. We need more financial education. It’s the best way to address the problem long-term. Killing financial literacy efforts only makes future budget problems more likely.
New Mexico’s budget issues stem from a downturn in the oil and natural gas sector and the nation’s second-highest unemployment rate. That can’t be ignored. Yet even as the treasurer is cutting financial literacy programs he is asking lawmakers for a budget increase next year to hire a chief risk management officer and a chief investment officer to help the state through this difficult period for its finances.
The cost of those new hires would far outstrip the immediate savings from eliminating the youth financial literacy program. Long term, the costs of this choice are incalculable. As New Mexico Deputy State Treasurer Sam Collins said: “It’s just a matter of priorities.” Sadly, that is all too true