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jose cisneros san francisco

This Former Banker is Fighting Income Inequality from City Hall

On the first day of kindergarten, San Francisco public school students get something more than name-tags and cubbies—they’re automatically given $50 in a college savings account. That’s thanks to city treasurer José Cisneros and his Kindergarten to College initiative, the first publicly funded universal college savings program in the U.S.

It’s a trail-blazing program, and just one example of Cisneros’ innovative approach to a job that’s traditionally been more about tax collection than activism. Public health departments tell residents to get immunized, he reasons, and fire departments remind us to check smoke detectors: Why shouldn’t the treasurer’s office play a similar role in influencing people’s money habits?

A one-time assistant VP at the Bank of Boston who worked in management and finance for Lotus and IBM, Cisneros has inspired city treasurers across the country with his fierce commitment to financial empowerment, and landed an advisory role in the White House as well as a place on Fast Company’s 2015 list of the “100 Most Creative People in Business.”

We recently sat down with the new-fashioned politician to find out more about how he’s fighting income inequality with an unexpected weapon—bank accounts.

Here’s why he’s the kind of finance guy we admire:

He sees San Francisco as a tale of two cities: the “banked” and the “unbanked”

Cisneros began his tenure by digging into the particular financial challenges that low-income residents faced in his city. His research led to a big “a-ha” moment: that there are two distinct financial systems operating in San Francisco (and most other cities). While middle- and upper-class families take banking for granted, one in five San Franciscans don’t even have checking accounts. Due in large part to lack of access to mainstream services, these families turn to services like check cashers, payday lenders, and pawn stores instead.


And he thinks of banking as a civil right

As a result of going “unbanked,” Cisneros realized, low-income residents aren’t able to take advantage of the building blocks of financial security—such as savings accounts, 401(k)s, and mortgages. Deeply concerned by the disparity, he spurred the city’s government and big banks to action. Thanks to his 2006 program Bank On San Francisco, 75 percent of San Francisco’s banks and credit unions now offer low-cost starter accounts (which are accompanied by a public education campaign). A decade later, low-income San Franciscans now open 10,000 checking accounts per year and over 100 American cities have implemented similar programs.

In August 2015, his office went even further—and launched Smart Money Coaching, an initiative that provides free one-on-one financial advising through social service agencies. This translates to more than dollars and cents, he says: “It’s about everybody having the same chance to be successful and have the same tools and resources to make things right for their family and their kids.”

Did we mention those kindergarteners’ saving accounts?

A 2010 Washington University study found that kids with college savings accounts are more likely to go to college — no matter how much money is actually in that account. When Cisneros heard that, another lightbulb went off. His 2011 program, Kindergarten to College, opens a $50 college savings account for every kindergartner entering SF public schools (about 4,500 kids per year). Parents get financial incentives to add more savings, and classrooms use the accounts as real-life teaching tools. To date, under the award-winning program, San Francisco families have collectively saved more than $1.2 million.

And P.S., he’s got a point about your credit card bill

Whether he’s talking to low-income families or “high-flying professionals,” Cisneros says we’re all in danger of making financial choices that may not serve us best. Imagine if we paid half as much attention to the difference between credit card companies or money market funds as we do to food or fashion, he says.

For example: With the Federal Reserve’s current low interest rates, there’s no reason for someone with good credit to have a credit card with an interest rate upwards of 12 percent. “If people did that [research] once a month, gosh, or for some of them, even if they did it once a year, that would be a huge step forward in terms of just being smart about how we keep our money safe,” he says.

Questions for Cisneros? Tweet him directly @treasurerSF

Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.