Can credit unions help reduce financial illiteracy? Some CUs are giving it a shot

ST. HELENS, Ore. - Results of reports and opinion polls on financial illiteracy in the U.S. have come in and the results have not been encouraging. In fact they showed huge increased in financial illiteracy among the U.S. population. This startling fact has created one of the most important jobs credit unions can take on - connect with young people, provide them financial education. It's not an easy job. In some schools, either the teacher or the students think the credit union staff will do all the work. They are surprised, but ultimately rewarded, when they learn how to excel on their own. In Oregon, a handful of credit unions has begun the task of reducing financial illiteracy, and they all make glowing and positive reports on their experiences. In addition to visiting elementary through high school classes several CUs have established branches inside high schools. One of the newest high school branches is in St. Helens, started in 1998 by St. Helens Community FCU. Melinda Roth, vice president of sales and marketing, and Tammy Glowack, a member of Roth's department, were the godmothers to the project. They said they had very few obstacles to overcome, but could understand why newcomers might be worried about expense, time and energy drains on the founding credit union. "We found the biggest expense was just starting up," Roth said. "We paid for phone lines, shelving and a computer," but the total cost was only about $2,500. For credit unions just venturing out into setting up branches in high schools, Roth and Glowack warn beginners to be careful not to bite off more than they can chew. Their high school branch has two teachers overseeing the four students who run the branch, which is open during lunch hour for deposits and withdrawals. The district superintendent and high school principal were both supportive in the first two years of the program, but at the beginning of this year, a new principal was a bit skeptical, Glowack said. They attribute the support they have gotten to the entrepreneurial approach the school district has taken recently. "St. Helens High School has about six programs like ours," Roth said. Among other student-run businesses which are part of the work-study curriculum, they make signs, have a J.C. Penney outlet and build computers. Second Time Around Some Oregon credit unions like their high school branches so much they've started second branches. In fact, three have done just that: TLC FCU in Tillamook, MaPS Credit Union in Salem, and Rogue FCU in Medford, each have two credit union branches at two different high schools. CEOs and managers are unanimous in their enthusiasm for the projects, citing benefits to the students as well as the credit unions. They too have some practical advice for credit unions thinking about starting up their own high school credit union branches based on their experiences. For example, when you are opening up your second branch, don't expect it to go as well (or badly) as the first branch did, they say. "We're not giving up on it yet," Connie Fields, regional manager in Tillamook, says of one of the high school branches she's overseeing. TLC FCU's first branch started in 1997, the second just last year. They are dealing with a large school district and a small one in their three-county territory: Tillamook, Lincoln and Clatsop counties. "The main problem we had with the branch that wasn't progressing as well, was due to not as much buy-in from the administration as we would have liked. So, the teacher was kind of on his own. At the other school, the whole school and administration was right there for anything we needed. In fact, they actually came to us," Fields says. After some difficulty, the principal at the troubled school came in for a second meeting with CEO Mike Pierce, who "reiterated what our expectations were." TLC had several large meetings with consultants from MaPS, principals, teachers, students, credit union staff, and Fields and Pierce. Even if the offending principal didn't get any value out of that first meeting, Fields and her staff did. "One of the largest benefits was the fact that they let us know we needed to limit the number of kids involved," Fields said. "One problem we were having at Tillamook was that the teacher was trying to work with the whole class of 15 students. So when we started at Neahkanie in 1999, we kept the class size down to five students, so we could work one-on-one. There weren't students standing around with nothing to do." This year, TLC focused on basic services-transactions, deposits, withdrawals and checking. Next year, they plan to bring in loans, mortgages, accounting, marketing and information systems. Other credit union managers stressing the importance of administrative buy-in were Rogue FCU staff members Karen Zurger, who looks after the South Medford High School Panther branch founded in 1993, and Kim Galloway, who is in charge of the Ashland High School Grizzly Branch, founded in 1995. "They were really behind it. It started out just as a senior high school project," Zurger says, "by a student who now is a certified public accountant in a law firm." She is philosophical about the physical space allotted to the high school branch. "It used to be a closet-but... it's bigger than my office!" Zurger laughs. They have one terminal that swivels on a turntable so two students can work at a time cashing checks, receiving loan payments, deposits and withdrawals. Teachers come, too, and do all their banking at the branch. Like St. Helens Community FCU, the cost of establishing the branch has been minimal. A used computer and printer, a coat of paint, and they were ready for business. "The only real money involved is time we spend training the students," Zurger says. Student buy-in is important, too. "Kids who had no jobs, especially in the professional world-you grow them," Zurger says. "To see the change has been wonderful. We stress confidentiality, and train on that, and continually stress that they cannot be talking to anyone about anything that goes on in the branch." Rogue FCU also had a different experience with its second high school branch in Ashland High School. That branch is open for savings account transactions and opening new accounts during lunch and after school, plus the students take a class related to the branch. The credit union class also goes out to the local elementary schools and teaches kids about saving money. "One obstacle we had to overcome was that teachers didn't want students to have access to the information the kids had access to," Kim Galloway says. "Teachers had gotten wind we were doing to do this. They even went into my branch and voiced their concern. It took a few months. It wasn't something we had expected." Career Opportunities The business teacher supervising the program was very instrumental in helping choose kids the teachers would have confidence in. He also picked a riskier type of student. "A couple of kids who might not have stayed in school, did so because of this program. It makes me feel we are really contributing to this society," Galloway says. "We have hired several of them out of high school, several are going to Southern Oregon State College part time and working for us. So we've created a wonderful training ground." A personal benefit the teacher conferred upon her, Galloway says, was showing her how to handle her own teenage daughter. MaPS CU in Salem has activities at all levels from elementary to college and has just started its own second high school branch. "I don't think anyone is doing it to the extent we are," says Dan Penn, CEO at MaPS. "We continue to receive a high level of recognition." Carol Kilfoil, the teacher who has been with the North Salem High School Viking branch program all along just received the Teacher of the Year award from the Salem Downtown Rotary club. The MaPS coordinator is Cori Frauendiener, who gets calls from all over the U.S. about their program. The North Salem High School Viking branch, established in March 1995, is a full service branch and has even made a couple of $200 loans, already repaid, to students this year. Students now understand the functions of financial institutions, including how ATMs work, and have had real life experience in those areas. But they wanted to go a lot deeper with it. They have entered into a business partnership with a nearby elementary school, taking the spirit of business to school. The elementary program is in pre-launch mode at this stage. "We have already done a get-acquainted activity," Frauendiener says. "They will be helping with schoolwork, then will set up a mini-branch so students can have a savings account program. They will also go in and do curriculum work." MaPS funded a curriculum program for K-12 units for finance that high school students will use. "Viking kids are very sharp, nurturing and top in their class in their abilities," says mother hen Frauendiener. She found that not all students want to be leaders, not all have understood the importance of self-directed follow through, and some didn't always appreciate the time and intellectual commitment the credit union would take. Each class has its own personality, so different trials arise each year To solve the problem of uncommitted and inactive branch workers at North Salem High, Viking branch students were invited to participate in the process of selecting their successors. They now interview applicants and review their academic and activity records. At McKay High School, the second high school branch, a different set of problems cropped up. "They have a great teacher there, but it's very different. We started in the spring of 1998. By the fall of 1999, the program started to lose students. They thought they could hang out and socialize. Some thought it was an easy A. Then, they found out it was different." What everyone involved in the high school credit unions likes most about their programs is that they are all learning continually, they say. "The best lesson is that it never stays the same from one term to the next," Frauendiener says. -mcintyre@viclink.com