Money Talks: Documenting the Economic Impact of Extension Personal Finance Programs

"Money talks." Right or wrong, these words ring true for many aspects of daily life, including program evaluation within Cooperative Extension. As a result of the Government Performance and Results Act (GPRA) and other accountability initiatives, Extension educators are increasingly being requested to quantify the impact of their educational efforts with a dollar figure. As employees of a publicly-supported government entity, answerable to a variety of funders and stakeholders, Extension faculty must demonstrate program effectiveness through performance resulting in positive outcomes.

If a dollar figure can be placed on these outcomes, all the better. Numbers make the presentation of impact data simple. Compared to a narrative report, they can be presented quickly to busy stakeholders in a chart or soundbite (e.g., "500 clients collectively saved $10,000"). When aggregated across a region or state, even small numbers can look impressive. Program funders are increasingly evaluating programs by linking budget allocations to program accomplishments (Boyle, 1997) and determining a "return on investment." When program impact greatly exceeds total dollar inputs, funders are often impressed. What counts, more than anything, is quantifiable results, not "laundry lists" of activities or long descriptions of methodology.

It is no longer "enough" to recount historic achievements or isolated individual success stories (Boyle, 1997). Instead, university administrators, taxpayers, and legislators at all levels of government are demanding recent evidence of the economic impact of Extension programs on the lives of constituents. In other words, an answer to the question "What have you done for us lately?" The key to success in this era of increased accountability is incorporating the collection of economic impact data into the program development process. Contrary to common practice, evaluation instruments and methods of measuring impact should be considered while a program is being developed, as well as during its delivery and completion (Diem, 1997).

This article will describe how a northeast state developed new personal finance programs and evaluation procedures that enabled it to document almost $2 million of economic impact on the lives of clients in less than two years. The potential exists to document billions of dollars of impact resulting from Extension personal finance programs nationwide.

Impact is the difference that Extension educators make in people's lives as a result of educational programs (Diem, 1997). High-impact programs change the attitudes and/or behavior of participants or benefit society in other ways (e.g., reduced pollution, better community leaders, etc.). According to Diem (1997), reasons for documenting program impact include:

• to satisfy the requirements of political bodies and funding agencies
• to justify an investment of time and effort in a program
• to justify the use of public and/or private funds
• to build individual and organizational credibility and support
• to build political credibility and support
• to yield tangible results to serve as the base for scholarly publications
• to earn awards and professional recognition (e.g., promotion and tenure).

To demonstrate the value of an Extension educational program, well-written impact statements should include a clear description of benefits to participating clientele. According to Boyle (1997), an effective impact statement should include the following three components:

• identification of the issue or problem being addressed (e.g., low savings rates, teen pregnancies). Where possible, a national issue should be "localized" to show its effect on the actual clientele being served.

• a brief description of the program or service being evaluated (i.e., number of participants, location, methodology).

• specific impact of a program in terms of its value to people. Of these three components, the latter is clearly the most important. Impact statements should communicate changed lives and/or improved family well-being as a result of Extension programming.

Documenting economic impact is often easier said than done, however. Compared to their agricultural counterparts, many Extension educators in family and consumer sciences and 4-H youth development have found it more difficult to describe their program impact in numerical terms. Perhaps there are fewer numbers (e.g., farm acreage, tons of pesticide, crop yields) to begin with or they've been too busy "doing their jobs" to calculate a dollar impact figure.

Fortunately, in the subject matter area of personal finance, economic impact is easier to quantify. Dollar figures are already a "given." Specific examples of dollar impact that can be documented include: increased savings, decreased debt, reduced household expenses, increased participation in employer retirement savings plans (for example, 401(k)s), and reduced income taxes. When aggregated across a region or state, the economic impact of Extension personal finance education programs can easily dwarf the costs of implementation. Strategies for measuring and aggregating the economic impact of four different programs are discussed below, each with an emphasis on measuring increased savings and reduced debt by Extension clientele.

MONEY 2000 is a five-year campaign developed by Rutgers Cooperative Extension to address the twin financial problems of low savings and high debt experienced by many New Jersey families. Implemented in 1996, and now being replicated by 20 states (with over 20 others planning to do so), the program's objective is to encourage participants to save and/or reduce debt by $2,000 by the end of the year 2000. Each participating individual or household is asked to set their own financial goal (that is, a specific amount of increased savings and/or reduced debt), which can be greater or less than $2,000. To date, these goals have ranged from several hundred dollars to well into six figures.

Participants are provided with information (for example, web site, quarterly newsletters, classes, home study course, statewide conferences, fact sheet, computer analyses) and encouragement (for example, follow-up contact) to reach their individual financial objective. The inspiration for MONEY 2000 was a popular weight loss program where participants also set a goal for themselves and "weighed in" periodically with the sponsor to assess their progress.

As MONEY 2000 was being planned, methods and materials were developed to document its impact on participants. A key component of the program is periodic follow-up with participants to assess progress toward their financial goal. Participants are surveyed about changes in their savings and debt level every six months, beginning with the sixth month following their enrollment.

Only changes in financial status are requested, not the actual amount of participants' income, assets, or debt. All new savings amounts, including 401(k) plan contributions and automated mutual fund deposits, are requested in the survey, as well as the dollar amount of reduction of home equity loans and unsecured debts such as credit cards and student loans. Mortgage principal pre-payments are also counted in the total but not secured loans like mortgages or car payments that consumers are already obligated to pay in order to retain their collateral. Participants are originally contacted in writing and, if necessary, by telephone to obtain this information.

Unlike weight control programs that take objective measurements with a scale, MONEY 2000 relies on self-reported data provided by participants. Admittedly some of those enrolled could inflate their savings and debt reduction figures for a variety of reasons. This is a potential weakness of MONEY 2000 that must be acknowledged. On the other hand, short of actually reviewing participants' financial records (such as, credit card statements, bank books), which would be time-consuming and expensive, self-reports are the only way to obtain needed data. Moreover, when individual behaviors, such as money management, are studied, self-reports are a commonly-used data collection method. MONEY 2000 is believed to be the only savings education program ever launched in the United States to include a behavioral monitoring component over an extended period of time (O'Neill, 1997).

After two years of implementation, the economic impact of MONEY 2000 on the lives of participants has exceeded the $1 million mark. By December 1997, 1,195 New Jersey residents had enrolled and those that had completed follow-up surveys reported $1,285,999 of financial progress ($715,685 of increased savings and $570,314 of decreased debt). This figure nearly doubled from results reported six months earlier.

Adding MONEY 2000 impact data reported by participants in New York and South Carolina (the only other states with follow-up data as this article is being written), there are almost 3,000 participants enrolled who have reported over $1.5 million of increased savings and reduced debt. Never before have such numbers been reported collectively for a single Extension personal finance program.

Since MONEY 2000 is being widely replicated, its collective national impact in a few years could approach the $1 billion mark. The impact data reported represent an increase in the net worth of participants and funds available to fund future financial goals such as a new car or retirement.

Impressive as these MONEY 2000 impact figures are, there is another personal finance teaching method that could perhaps eclipse its dollar impact: computerized financial analyses (for example, debt reduction, savings calculations, retirement planning). A request for reports on the impact of programs using technology prompted the realization that documentation of thousands of dollars of impact was possible if the results of computer analyses are aggregated statewide and recipients are contacted periodically to ascertain their progress. In 1997, Rutgers Cooperative Extension decided to test this premise by purchasing two personal finance software programs, providing in- service education for Extension faculty, and tracking the impact of computer programs on clientele statewide.

The first software program, PowerPay (Miner, Harris, & Bond, 1993), was developed by Utah Cooperative Extension to help users accelerate their repayment of debt, thereby saving months of payments and hundreds, even thousands, of dollars of interest. The principle behind PowerPay is that, as soon as one debt is repaid, the monthly payment from that debt, which is called a powerpayment (for example, $25 to Sears), is applied to other debts in succession until all balances are zero. Debts can be repaid in a variety of sequences including paying those with the smallest balance, the shortest term, and the highest interest rate first.

A PowerPay analysis indicates which sequence of repayments provides the largest cost savings and summarizes the amount of time and money that can potentially be saved by following the program. Each analysis also includes a calendar which indicates the amount of monthly payment due each creditor until all debts are repaid.

Prior to the tracking of statewide impact, PowerPay printouts were simply sent to clients in several counties without aggregation of debt reduction data or follow-up evaluation. Once the potential for impact was realized, tracking forms (to record clients' debt load and time and dollar savings) and a follow-up survey for persons who received PowerPay printouts were developed.

Along with MONEY 2000 data, PowerPay impact figures are collected twice a year from county faculty and summarized for a state impact report. Between July and December 1997, the first six-month period following the in-service, Extension faculty in four counties provided PowerPay analyses for 66 individuals or households with a combined debt load of $2,554,544. Recipients of these analyses had the potential to save $865,683 collectively or an average of about $13,000 apiece.

Of course, PowerPay only illustrates the savings that are possible; that is, potential results. Actual results, based on actions taken by clients, must also be assessed to document impact. Follow-up surveys returned by 23 Powerpay recipients in three counties indicated that about three-quarters (74%) of respondents had both tried to follow their PowerPay plan and were still following it. Seven in ten had decreased their debt load and 43% had eliminated one or more debts. Nine in ten were satisfied with their analysis and 30% said it made a difference in their life.

Specific actions taken by respondents since receiving a printout included: managing debt with increased confidence (74%), making changes in spending habits (52%), referring others to Extension for a PowerPay analysis (43%), paying bills on time (34%), incurring no new debt (30%), and canceling one or more credit cards (26%). Even if only a fraction of PowerPay recipients reply and save only part of the amount listed on their printout, the impact of computer analyses is still impressive.

The second software program with high impact potential is The Banker's Secret (Eisenson, 1991), which calculates the savings possible by pre-paying mortgage principal. Because mortgage debt is long-term debt, the potential interest savings is much greater than that of consumer debts analyzed by PowerPay. Even small principal prepayments can produce substantial savings. For example, a $50 prepayment on an 8%, $100,000 mortgage would save 6 years of monthly payments and almost $40,000. Prepaying $100 a month would cut the loan term by almost 10 years and save over $60,000. Like PowerPay, a Banker's Secret analysis only illustrates the savings that are possible by pre-paying mortgage principal.

Clients need to be surveyed following receipt of a computer printout to determine if they actually made principal prepayments and how much they saved. Once again, however, impact data add up quickly. If 200 principal prepayment analyses are done annually by a state where the mean savings is $40,000, that's an $8 million potential impact. Stated another way, that's $8 million that clients could have spent on mortgage interest, but didn't. When compared to the cost of preparing an analysis (about 10 minutes of staff time and postage), the "return on investment" for an organization providing financial analyses is awesome.

Another personal finance teaching method provided by Extension educators is individual financial counseling. Two common reasons why clients seek financial advice are overextension and a desire to learn more about a specific topic (e.g., mutual funds, long term care insurance). Counseling sessions often take an hour or more and consume valuable professional time. Like computer analyses, they also require follow-up evaluation to determine their impact on the lives of clientele.An instrument was, therefore, developed to query persons who benefited from this service. Among the topics covered are: changes in savings and debt, resolution of the problem/issue, satisfaction with the consultation, and whether or not specific actions were taken as a result of debt counseling sessions or general financial planning sessions. Surveys are sent to clients within six months of a consultation and respondents' self-reported dollar impact is tallied and added to figures reported for other outreach methods.

Two desired outcomes of Extension personal finance classes are the adoption of recommended financial practices by clients and improved financial well-being (for example, increased savings and reduced debt). Follow-up evaluation data, especially behavioral changes over time, are necessary to document the impact of single- and multi-session classes. In order to collect these data, a simple follow-up survey postcard was developed for use with clients attending personal finance seminars.

Postcards are sent to class members within 3 to 4 months of the end of a session. Clients are asked to list on the postcard the total amount of dollar savings and debt reduction, if any, resulting from their participation in a specific personal finance seminar and any other action(s) taken to improve their finances. Postcards are returned to an administrator at Rutgers, rather than county Extension offices, to reduce the "halo effect" that can occur when respondents are more positive than they otherwise might be with people they know. Postcard responses received to date indicate a client's willingness and ability to put a dollar value on actions taken as a result of knowledge gained at Extension personal finance seminars.

Although amounts reported on individual postcards are often low, the total impact quickly multiplies when aggregated across a county. Some quality "soundbite" impact statements have also been generated for use in brochures and annual reports.

The word "accountable" is defined as "answerable" and "bound to give an explanation," in Webster's Dictionary. As public servants accountable to three levels of government, Extension educators are responsible for producing results that meet established objectives. There is also a responsibility to document the impact of programs on the lives of clients. Where possible, dollar impact figures should be obtained, both for their ability to be quickly understood by stakeholders and their aggregation potential across an entire organization. This article has described benefits of documenting program impact, components of high-quality impact statements, and specific programs and methods that have been developed to document the economic impact of Extension personal finance programs. Today, more than ever, money "talks" in Extension evaluation. Incorporating economic impact assessments into program planning should be a high priority for every Extension educator.

Boyle, P. (1997, May/June). What's the impact? Epsilon Sigma Phi Newsletter, No. 68, 1-4.

Diem, K. (1997). Measuring impact of educational programs. (Extension fact sheet FS869), New Brunswick, NJ: Rutgers University

Eisenson, M. (1991). The banker's secret. New York: Villard Books.

Miner, F.D., Harris, J., & Bond, L. (1993). PowerPay Version 3.0. Utah State Cooperative Extension Service, Logan, UT.

O'Neill, B. (1997). MONEY 2000: A model for personal finance employee education. Roanoke, VA: Proceedings of the Personal Finance Employee Education Best Practices and Collaborations Conference, 76-80.