Iowa bank teaches youngsters savings are built upon trust, good habits

Northwestern Financial Review, Oct 1-Oct 14, 2003 by Hilgert, Jackie

In one area of Rex Mathes elementary school in West Des Moines, Iowa, students can be found passing money to other students long before the morning bell kicks off the day's learning. No goods are involved in the trade; nor are there drugs. The exchange of funds between grade-schoolers is purely legitimate, highly educational and fully insured by the FDIC.

What happens before school at Rex Mathes also occurs at nearby Clegg Park elementary. Students are making deposits and withdrawals to their own savings accounts at Kids' Bank, an education bank operated by First Bank, West Des Moines, in partnership with the two elementary schools. Lori Short, retail banking supervisor at the $100 million First Bank, has overseen Kids' Bank for five years. "We originally started working with Clegg Park as a business partner," Short said. The bank would provide financial support for educational offerings that fell outside of district budget parameters, like buying newspapers for civics lessons or T-shirts as incentives for outstanding readers.

"Kids' Bank kind of evolved out of that relationship," Short added. "We wanted to teach children about savings and how important it is to save."

First Bank's Short and retail banking sales consultant, Deb Dawson, come to each elementary school one morning per week to oversee banking activity performed by students for students. During each banking session, Kids' Bank is staffed by four student employees: three tellers and one member of the bank's board. A teacher and a parent volunteer also are on hand to supervise.

"It's been a great way for the school to offer leadership opportunities to the students," said Sheila Hirsch, the schools' assistant principal. Each September, the bank solicits job applications from fourth, fifth and sixth grade students. Applicants go through an interview process before being hired as Kids' Bank employees.

"When we interview we look for kids who understand that other kids will be trusting you with their money," Short said. All student employees undergo two training sessions before the bank opens for business in October. "Students who work at the bank learn responsibility, respect and how to be fair," said Short. The students are instructed to be polite; they must greet their customers, thank them and send them away with a smile. They also must balance their cash drawers at the close of each banking session. Six out of nine tellers at both schools finished the last school year with 100 percent accuracy in balancing.

All students attending Rex Mathes and Clegg Park elementary schools are eligible to maintain a Kids' Bank savings account and may keep it active for as long as they remain enrolled. Rules for an education bank stipulate that transactions only can be made at school and, for this bank, students are limited to $5 cash withdrawals and $20 cash deposits unless a parent is present at the transaction.

Kids' Bank employees aren't the only students benefiting from the education bank; the customers are learning too. "We encourage students to keep their register balanced and to add the interest amount to their register when they receive their monthly statements," Short said. "Some students ask us what the rate is or ask 'what did I earn this month?'" Short boasted. Some lessons stick more quickly than others.

As is the case with the general public, some students have fully embraced the concept of saving while others have remained neutral. "The largest balance we've seen was $900," Short said. "That tells us that the parents were really involved in this child's life." At the other end of the scope Short sees account balances of 50 cents or $1.00. The bank will issue each child a check for the account's balance when the student leaves the school.

At the close of the school year, Kids' Bank tellers and board members receive a certificate. "With our business partner, First Bank, our kids are learning how to become good citizens and contributing members of their community," Hirsch said.