High school students get some savvy advice in elective business course
Andrew Surmacz hands out bags of assorted dollar-store items to students in a financial literacy class at Urban Pathways Charter School. Students traded their items with others in an exercise to learn how consumers in the marketplace express their preferences.
Bob Fragasso sponsors a class called Introduction to Entrepreneurship at Urban Pathways Charter School.
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Bob Fragasso is convinced schools aren't doing enough to teach children the dangers of spending too much and saving too little, so he decided to do something about it.
The chairman and CEO of Fragasso Financial Advisors, Downtown, sponsors an elective course at Urban Pathways Charter School at 914 Penn Ave., Downtown, where students get a financial education by running and operating a business of their own creation.
"Nationally we are failing our students because we are teaching a 100-year-old education system that's out of date," Mr. Fragasso said. "We need to teach a functional education that readies people for life."
His sponsorship includes paying for the course material and training two teachers to lead the class called Introduction to Entrepreneurship. The class is offered by Entrepreneuring Youth, an organization that grew out of the national Network for Teaching Entrepreneurship when its Pittsburgh office closed in 2009. Financial advisers from Mr. Fragasso's office and other business leaders and entrepreneurs also serve as mentors for the 16 ninth-grade students.
"As you go later through your life, you will come to know more and more how important the skills are that you are learning in this class," Mr. Fragasso told the students on a recent visit to the class.
At a time when young people are leaving college with more debt than ever, and a record number of Americans face bankruptcy and foreclosures stemming from poor financial decisions, most high school students across the country can receive their diplomas without taking a single course on basic financial principles.
Although financial education is a subject that is sorely needed for success in a world where more workers are responsible for funding their own retirement, the tremendous impact that money has on everyday life from the cradle to the grave is rarely addressed in public education.
Pittsburgh Public Schools do not offer personal finance as a course of study in the regular curriculum, although high school students enrolled in the career and technical education program have some financial training incorporated into their classes.
Career and technical education programs are offered at four of the 11 city schools serving high school students -- Perry Traditional Academy and Carrick, Brashear and Allderdice high schools. They are elective courses taken by only about 200 high school students in the Pittsburgh school system, which represents less than 3 percent of the total population of 7,054 high school students grades 9 through 12.
More than half of the states in the nation do not have statewide financial education requirements for students, according to Jumpstart Coalition, a Washington, D.C.-based organization that advocates for financial literacy. Only 17 states have legislation specifically mandating personal finance education requirements for graduation. Pennsylvania does not require schools to offer personal finance in its regular curriculum.
A survey conducted every two years by Jumpstart Coalition to gauge how much high school students across the country know about money has consistently documented low levels of financial literacy. The average student gave wrong answers to more than half the survey questions concerning credit, budgeting, interest, investing and retirement planning.
The Introduction to Entrepreneurship Youth class at Urban Pathways is not a traditional learning experience.
By spring, after the students have formed their business idea and have been coached by their mentors, they should have a sense of what it costs to start the business and its potential revenue. They will manage money in the form of buying inventory, marking up their prices and seeing what kind of net revenue they generate.
"These kids will become masterful in understanding cost, which from the consumer point of view is very important because price doesn't necessarily mean value," said Jerry Cozewith, president of Entrepreneuring Youth, based Downtown. "They will learn how businesses can take in tons of money and still go out of business because they don't understand cost," he said. "Cost is what makes for everything in the marketplace, including their personal finances."
Entrepreneuring Youth reaches a total of 140 high school students in classes also offered at McKeesport High School, Beaver High School and Manchester Charter School.
For two years the program was offered at Carrick High School, but it was later withdrawn from Pittsburgh Public Schools because the school system was not able to support the program during a period of reform. Schools were closed and realigned, causing the principal and instructors at Carrick to be reassigned.
"We are trying to work something out to get Entrepreneuring Youth back in Pittsburgh schools," said Angela Mike, director of the Career and Technical Education program in Pittsburgh Public Schools. "It's a great program and it ties right in with what we are doing. We definitely want to get that program back."
In one recent class at Urban Pathways, the instructors turned what could have been a humdrum economics lecture on supply and demand into an animated trading game the students are not likely to forget.
Each student was given a brown bag filled with assorted items the instructors bought at a dollar store. The students were asked to rate the contents of their bag from 1 to 10. While many of the scores were initially low, as students were given the freedom to trade trinkets from their bag with each other, they rated the contents of their bag higher and higher after each round of trading with more and more classmates.
They learned how consumers in the marketplace express their preferences and how opening more markets and trading with more people can provide buyers and sellers with more opportunity.
Their next lesson would focus on how the restraint of trade causes negative effects in the marketplace.
One student, Dwayne Kellog, dreams of a career involving sports but said he signed up for the Introduction to Entrepreneurship class to learn business skills.
"I've learned there's opportunity out there," said Dwayne, 15, of the North Side. "You can go from something small to something big.
"I've learned, too, that you have to spend a little to make a little. I'm starting to save my money a little more now so I can buy things in the future. I can't always just spend my money when I get it," he said.
Fourteen-year-old La'Nia Tillman of Homewood said she now has a different way of looking at money. "I actually save now," she said. "When I get money now, I put a few dollars away and save it. This class has made me think about how I handle it."
The single biggest change to the American retirement system was triggered in 1974 when Congress passed the ERISA Act, which paved the way for companies to eliminate their pension plans and shift the burden of retirement to workers who must contribute to 401(k) plans.
The change forced many workers to become investors in the stock market without the tools needed to make wise investments. Or they blindly turn their money over to financial advisers.
The recent crisis that cast a dark cloud over the nation's economy in recent years has affected even well-educated, high-income earners who never learned how to create a budget and manage their money.
In a report titled "The Economics of Payday Lending," researcher John Caskey found more than half of the payday borrowers surveyed had household incomes between $25,000 and $50,000. Another 25 percent of borrowers made more than $50,000 a year. The survey, sponsored by Swarthmore College, also found that payday loan customers tend to be younger than the general adult population and are more likely to have children.
Andrew Surmacz, one of the two entrepreneurship instructors at Urban Pathways, said the training they received before tackling this assignment gave them some fresh ideas on teaching methods.
"We could have done a 50-minute lecture showing graphs on supply and demand," he said. "We could have had them take notes and do a lot of traditional things, and they probably would have zoned out after about 10 minutes.
"Now they will remember [the lesson] for a while because they can relate to the activity. Other kids around the building hear about what we are doing in here and it gets them interested in getting involved in business as well."
First Published November 29, 2011 12:00 am