FOR OFFICIAL USE ONLY

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY PROJECT PAPER ON A PROPOSED ADDITIONAL CREDIT IN THE AMOUNT OF SDR 32.1 MILLION (US$50 MILLION EQUIVALENT) TO THE ISLAMIC REPUBLIC OF PAKISTAN FOR THE SINDH EDUCATION SECTOR PROJECT February 28, 2011 Report No: PK This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank s policy on Access to Information.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective January 31, 2011) Currency Unit = PKR PKR = US$1 US$ 1.56 = SDR 1 FISCAL YEAR July 1 June 30 ABBREVIATIONS AND ACRONYMS ASC BER CPD DLI ED EEP EMR ESMF ERU EU FD GoP GoS ISR IUFR MFSS NER PDO PIFRA PSLM QA RSU SDR SEMIS SEP SERP SMC SNE TA USAID USD Annual School Census Budget Execution Report Continuous Professional Development Disbursement Linked Indicator Education Department Eligible Expenditure Program Education Management Reform Environmental and Social Management Framework Economic Reform Unit European Union Finance Department Government of Pakistan Government of Sindh Implementation Status and Results Interim Unaudited Financial Report Minimum Funding Standards for Schools Net Enrollment Rate Project Development Outcome Project for Improving Financial Reporting and Auditing Pakistan Social and Living Standards Measurement Survey Quality Assurance Reform Support Unit Special Drawing Rights Sindh Education Management Information System Sindh Education Sector Project Sindh Education Sector Reform Program School Management Committee Schedule of New Expenditures Technical Assistance United States Agency for International Development United States Dollar Vice President: Country Director: Sector Director Sector Manager: Co-Task Team Leaders: i Isabel M. Guerrero Rachid Benmessaoud Michal Rutkowski Amit Dar Umbreen Arif and Dhushyanth Raju

3 ISLAMIC REPUBLIC OF PAKISTAN ADDITIONAL FINANCING FOR THE SINDH EDUCATION SECTOR PROJECT TABLE OF CONTENTS Project Paper Data Sheet...iii Project Paper I. Introduction.1 II. Background and Rationale for Additional Financing..1 III. Proposed Changes 4 IV. Appraisal Summary..6 Annexes 1. Revised Results Framework and Monitoring Indicators Operational Risk Assessment Framework Detailed Description of Project Activities...16 ii

4

5 ADDITIONAL FINANCING FOR THE SINDH EDUCATION SECTOR PROJECT DATA SHEET Basic Information - Original Project Project ID: P Environmental category: B Project Name: Sindh Education Sector Expected Closing Date: June 30, 2012 Project Lending Instrument: Specific Investment Joint IFC: NA Loan Joint Level: Basic Information - Additional Financing (AF) Country Director: Rachid Benmessaoud Sectors: General education sector Sector Manager/Director: Amit Dar (60%); Public administration- Co-Team Leaders: Umbreen Arif and Education (40%) Dhushyanth Raju Themes: Education for All (60%); Project ID: P Other public sector governance (40%). Expected Effectiveness Date: April 1, Environmental category: B 2011 Expected Closing Date: June 30, 2012 Lending Instrument: Specific Investment Joint IFC: NA Loan Joint Level: Additional Financing Type: Scale Up Project Financing Data [ ] Loan [X ] Credit [ ] Grant [ ] Guarantee [ ] Other: Proposed terms: Standard IDA terms; 35-year maturity including a 10-year grace period. Financing Plan (US$m) Source Total Program Cost: Borrower: IBRD IDA SEP (parent project) New-SEP AF Cofinancing (European Union Sindh Education Plan Support Programme): iii Total Amount (US $m) Client Information Borrower: Islamic Republic of Pakistan Responsible Agency: Education and Literacy Department, Government of Sindh Secretariat #2 (Tughluq House) Sharah-e-Kemal Ataturk Karachi, Sindh, Pakistan Tel: Reform Support Unit (RSU) NJV Building, Opposite Radio Pakistan MA Jinnah Road Karachi, Sindh, Pakistan Tel: Fax: Estimated Additional Financing Disbursements (Bank FY/US$m)

6 FY 2010/11 Annual 50 Cumulative 50 Project implementation period: Start April 1, 2011 End: June 30, 2012 Expected effectiveness date: April 1, 2011 Expected closing date: June 30, 2012 Does the project require any exceptions from Bank policies? Ref. Section Appraisal of Project Activities Have these been approved by Bank management? Does the project include any critical risks rated substantial or high? [ ]Yes [X] No [ ]Yes [ ] No [X]Yes [ ] No Ref. Section Project Risks and Mitigating Measures Project development objective Ref. Section Bank Response The development objective of the Sindh Education Sector Project (SEP) is to support the Government of Sindh s medium-term Sindh Education Sector Reform Program (SERP). The objectives of SERP are to increase school participation, reduce gender and rural-urban disparities, increase progression, and improve the measurement of student learning. Revised project development objective: There is no revision to the project development objective. Project description Ref. Section Bank Response Project description: The Additional Financing (AF) project supports the implementation of three reform activities for government schools under SERP: the (1) rationalization of teachers across schools and the formal allocation of teaching posts to schools; (2) preparation and management of school-specific nonsalary budgets; and (3) extension of the existing district Education Management Reform (EMR) initiative to additional districts. Which safeguard policies are triggered, if any? Ref. Section Appraisal of Project Activities No new safeguard policies triggered. The policies that apply remain the same as for SEP. Project Agreement Reference Section III.B (Financing Agreement) Section I.C (a) Conditions and Legal Covenants: Description of Condition/Covenant 1. Disbursement of the Additional Financing Credit will be contingent on the achievement of the Additional Financing Disbursement Linked Indicators, as verified by the Association. The three Additional Financing DLIs are monetized equally, with each DLI accounting for 33.33% of the Credit amount. 2. GoS shall ensure that a communication plan be developed and implemented to provide and gather relevant information from stakeholders on, among others, the school-specific nonsalary budgets, allocation of teaching posts to schools, and the district and sub-district education management reform initiatives, in a manner and substance satisfactory to the Association. Recurrent Recurrent Date Due iv

7 Section I.C (b) 3. GoS shall ensure that the agreed communications plan for school management committees, secondary school stipends for girls, and textbook distribution is implemented, in a manner and substance satisfactory to the Association. Section I.C (c) 4. GoS shall ensure that any shifting of government schools occurs only after the need in prospective communities is verified against agreed objective criteria through an independent field survey, in a manner and substance satisfactory to the Association. Section I.C (d) 5. GoS shall complete and submit a detailed inventory and investigation report of all new schools without SEMIS codes. Section I.C (e) 6. GoS shall issue an official directive to district governments that no new SEMIS codes (provisional or otherwise) or school resources (including SNE, school management committee grants, non-salary budgets, and girls stipends) will be provided by ED/RSU to government schools taken up/planned in FY2011/12 onwards. Section I.C (f) 7. As a one-time exercise, using Annual School Census data and the investigation report of new schools (see Covenant 5) to set the frame, GoS shall issue all existing government schools permanent, unique, fixedlength Sindh Education Management Information System (SEMIS) codes. Section I.C (g) 8 GoS shall ensure that all government middle, elementary, and secondary schools display their school names and permanent, fixed-length, unique SEMIS codes (see Covenant 7) in a prominent place following issued guidelines. Recurrent Recurrent. October 31, 2011 October 31, 2011 December 31, 2011 March 31, 2012 v

8

9 I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an additional credit in an amount of US$50 million to the Islamic Republic of Pakistan for the Sindh Education Sector Project (SEP), Project ID P107300, Credit No. IDA The Additional Financing (AF) is expected to further support the provincial Government of Sindh (Government) to potentially enhance the impact and effectiveness of its medium-term Sindh Education Sector Reform Program (SERP), supported by SEP. Specifically, the AF would leverage its resources to support the launch of two new education sector reform activities and the extension of one existing reform activity under SEP. These activities are considered by the Government as critical for improving school system and service delivery management and performance over the medium term, in turn, supporting the achievement of SERP s aims related to access, equity, and achievement. The activities comprise of the (1) rationalization of teachers across schools and the formal allocation of teaching posts to schools; (2) preparation and management of school-specific nonsalary budgets; and (3) extension of the existing district Education Management Reform (EMR) initiative to additional districts. 3. The objectives, design, and scope of SEP, as well as the institutional arrangements for implementation and results monitoring, remain intact. The AF will follow the performance-based design of SEP, financing a subset of SEP s Eligible Expenditure Programs (EEPs), which represent key education budget line items, with the event and amount of AF disbursements contingent on the satisfactory achievement of AF Disbursement Linked Indicators (DLIs), which represent agreed, prespecified implementation progress and performance targets in the selected activities. The Government expects to meet the AF DLIs before the end of FY2010/11. The AF will however remain open over FY2011/12, and close on June 30, 2012 (the same closing date as SEP). 4. The European Union (EU) presently cofinances SERP under its Sindh Education Plan Support Programme (Project Period: FY2006/ /11). The current project commitment is 39 million, against the same disbursement targets (among others) as SEP. The EU is also preparing a new Education Sector Programme. A formulation mission in this regard is expected to start its work in March 2011 to decide on the size of EU financing and its modality. The United States Agency for International Development (USAID) is presently in discussions with the Government to support SERP; the project is not expected to be ready and disburse in FY2010/11. II. Background and Rationale for Additional Financing in the amount of $50 million 5. The original credit amount for SEP is US$300 million. The project was approved on June 4, 2009 and became effective on June 11, SEP closes on June 30, 2012, and no change in the closing date is currently expected. To date, US$188 million (62%) has been disbursed against annual sets of DLIs. 6. The development objective of SEP is to support SERP. The objectives of SERP are to increase school participation, reduce gender and rural-urban disparities in school participation, 1

10 increase progression, and improve the measurement of student learning. Success in meeting these objectives is measured against specified quantitative targets. SEP supports activities in four areas which make up SERP: (1) improving fiscal sustainability and the effectiveness of public education expenditures; (2) improving education sector management; (3) improving access to quality schooling in rural areas and for girls; and (4) improving the quality of teaching and student learning. The project is composed of two components. The first component, amounting to US$294 million, finances Eligible Expenditure Programs (EEPs), with the event and amount of credit disbursements tied to the satisfactory achievement of annual sets of DLIs. The second component, amounting to US$6 million, finances essential Technical Assistance (TA) activities, which support the Government in the implementation and monitoring and evaluation of SERP. Bank fiduciary guidelines apply to the EEPs and TA component. The Environmental and Social Safeguards Framework (ESMF) applies to the entire SERP. 7. SEP has performed well to date. The IP/DO ratings in the last two Implementation Status Reports (ISRs), archived dates February 13, 2010 and November 10, 2010, were rated Satisfactory (S) or Moderately Satisfactory (MS). The Government has met the DLIs in FY2008/09 and FY2009/10, and there has been significant progress towards the PDO targets. There are no unresolved fiduciary or safeguard issues and the Government has committed to strengthening its compliance and implementation of fiduciary and safeguard requirements. 8. SEP has contributed significantly to SERP results. Table 1 provides information on the progress to date towards SEP s PDO targets. The latest data used precede the recent catastrophic floods and rains which have likely impaired service delivery and dampened household demand for schooling. As the table shows, before the floods, some PDO targets were either nearly met or have already been met. Table 1. Progress to date on Sindh Education Sector Project Development Objectives Outcome indicator Baseline Target, 2011/12 Progress to Date (latest available data source) Primary NER (%) 50 (2006/07) (2008/09 PSLM) Female-male ratio NER, primary, rural (%) 61.2 (2006/07) (2008/09 PSLM) Class 5-6 transition rate, rural, 51.2 (2007/08) girls, public school (%) Learning levels monitored through diagnostic learning assessments Baseline measurements for diagnostic mathematics, language, science and social studies established for class 4 students in a district-representative sample of public schools in 2008/09, 2009/10, 2010/11, and 2011/12 respectively. Follow-up measurements for diagnostic mathematics established for class 4 students in a district-representative sample of public schools in 2010/11. (2009/10 ASC) Baseline diagnostic mathematics assessment in grade 4 successfully administered in April 2009 in a district-representative sample of public schools. Findings reports prepared and disseminated in December Baseline diagnostic language assessment in grade 4 successfully administered in March 2010 in a district-representative sample of public schools. Data entry and processing underway. Preparation for diagnostic mathematics and science assessments in grade 4 and mathematics in grade 8 underway. Notes: NER: Net enrollment rate; PSLM: Pakistan Social and Living Standards Measurement Survey. ASC: Government of Sindh s Annual School Census. 2

11 9. In terms of program implementation progress and performance, the achievement in three SERP subprograms is highlighted. First, under the second round of school rehabilitation initiative supported by performance-based grants to district governments (district Terms of Partnership), 847 government schools (82% of the schools screened in for the second round) were fully rehabilitated and met minimum construction quality and school safety standards in a record time of twelve months as independently certified. Initial descriptive evidence collected by the third-party construction supervision firm overseeing the school rehabilitation initiative indicates that these schools suffered less damage than other schools in flood-affected areas. Second, in a radical shift from past practices, over two recruitment rounds, 13,000 new teachers were hired into government service based on test scores and other objective criteria and locally placed in schools under fixed-term, school-specific contracts. In the second round, the teachers were additionally placed in understaffed schools as measured by excess student-teacher ratios. Initial descriptive evidence collected via an independent survey suggests that the newly-recruited teachers have a lower rate of absence on average than older teachers. Third, slightly less than 300 new private coeducational primary schools are now in operation in underserved rural communities in disadvantaged districts, supported by public per-student cash subsidies (and other in-kind benefits) conditional on free schooling and stipulated school quality standards. Experimental evidence suggests that the school participation rate has increased from 30% to 80% on average in these communities, and that gender disparity in school participation has been eliminated. 10. The original objectives, design, and scope of SEP are expected to remain intact. The Government has proposed expanding selected existing and adding new reform activities for enhancing the effectiveness of its reform program (supported by SEP) and requests AF resources from the Bank. At present, there is Government consensus and commitment to roll out a strengthened system of service delivery. 11. One of the key justifications for Bank engagement in the sector and for SEP was to leverage its resources to promote robust Government commitment and effort for significant reforms (see SEP Project Appraisal Document [PAD], pg. 3). The SEP has demonstrated the success of this strategy, as reflected in the Government s maintenance and commitment to meritand needs-based teacher recruitment, among others. In line with this rationale, the AF is expected to leverage its resources to promote Government commitment and effort in the design and early implementation of the selected key reform activities in the sector to improve school system management and service delivery performance, thereby, potentially enhancing (or scaling up) SEP s effectiveness. 12. The AF-supported activities are fully consistent with SEP s PDO, and with the primary mechanism (improvements in accountability and governance) and objectives (improvements in access, equity, and quality) advocated for the sector in the FY Country Partnership Strategy. The PDO relates to improving school participation and progression, with a focus on disadvantaged population groups human capital accumulation through the education system is widely viewed as key for improved socioeconomic prospects, including sustainable poverty reduction. 3

12 13. Other means and mechanisms to finance the selected reform activities were explored but the Government s ability for own-financing has deteriorated given reduced revenues and additional expenditure demands as a result of the recent floods. As discussed in Section I, other Development Partners (USAID and EU) are planning additional support for SERP but this support will likely materialize in FY2011/12 or later. 14. The benefits of the AF are that, among others: (1) the use of DLIs promotes a strong focus on results and performance, valued by the Government; (2) it supports improvements in accountability and governance, which are increasingly seen by the Government as critical for service delivery improvements; (3) it supports the Government s evolving reform agenda; and (4) it is potentially fast disbursing when targeted results are satisfactorily met. 15. The AF-supported activities essentially top up SEP, yielding benefits that will largely materialize over the medium term. 1 The early stages of implementation of the AF-supported activities may entail some additional costs but these costs are not expected to be significant and can be absorbed by the Government. By and large, the reforms entail making better decisions on the allocation and use of scarce budgetary resources; any additional costs are likely to be offset to some extent by cost savings from greater efficiency and reduced leakage. Given that the AFsupported activities constitute important reform initiatives, strong and sustained commitment and support from the political and bureaucratic leadership are critical for sound designs and implementation progress and performance; this commitment is currently present. The administrative capacity of the Government to carry out the AF-supported activities is adequate, but the provincial government will have to strengthen and ensure durability in the buy-in and cooperation from the district governments, who have primary responsibility for service delivery. The provincial government has already initiated active, regular consultations with the district governments and is in the process of setting up working groups with representation from key provincial departments and selected district governments to discuss design and implementation specifics. This cooperation will also help in developing sound designs that reflect important general ground realities. The AF-supported activities may have stakeholders who prefer the status quo; these stakeholders may voice their grievances and exert pressure against the reforms. Managing these countervailing forces will require strong, regular, and proactive communication from the Government on the process and the expected stream of benefits of the reform activities to a wide set of stakeholders, including the primary target beneficiaries of potentially-improved service delivery: families that are the target population for government schools. Government communications will also be essential to address any misconceptions or misinformation related to the AF-supported activities. Communications and stakeholder relations represent a legal covenant under the AF. III. Proposed Changes 16. The PDO for SEP and the AF match. The AF is expected to enhance the performance of the SEP in achieving its PDO by supporting Government efforts to streamline, manage, and 1 If the AF does not perform as well for any reason, progress towards SEP s PDO targets is not expected to be impaired. The risk to the achievement of SEP s PDO targets now largely come from the adverse effects of the floods on the demand and supply of schooling. 4

13 strengthen the school system, potentially yielding service delivery performance improvements over the medium term as the activities are sustained, gain implementation traction, and scale. Towards this end, the AF will follow the design of SEP, namely the key design features of EEPs, DLIs, and project covenants, as well as rely on the existing arrangements for implementation, results monitoring, fiduciary and safeguards management under SEP. As the SEP results monitoring framework remains unchanged, the Revised Project Results Framework is not included in Annex 1 of this paper. 17. EEPs: The AF will finance one EEP from SEP s set of EEPs: employee-related expenses in primary and secondary education at the district level. The other EEPs under SEP are not relevant for the AF-supported activities. The selected EEP for the AF has no procurement implications. 18. DLIs: The event and amount of disbursements will be contingent on the satisfactory achievement of DLIs in the AF-supported activities. Three DLIs, one in each AF-supported activity, have been framed in partnership with the Government. The DLIs promote first-stage implementation in the following activities: the (1) teacher rationalization across schools and the formal allocation of teaching posts to schools; (2) preparation and management of comprehensive school-specific nonsalary budgets following stipulated funding norms; and (3) expansion of the existing Education Management Reform initiative to three additional districts. Each DLI accounts for one-third of the total credit amount; when a given DLI is satisfactorily met, as verified by the Bank, the relevant disbursement amount is released to the Government. Section IV discusses the disbursement design in more detail. Annex 3 discusses the reasons for and the contents of the AF-supported activities in more detail. The DLIs and agreed expected evidence for verifying satisfactory achievement (the verification protocol) are presented in Annex Project covenants: The project covenants under the AF, framed in partnership with the Government, support complementary efforts for strengthening SERP performance by setting requirements related to, among other things, (1) the systematic communications related to SERP with stakeholders, including in the AF-supported activities, and (2) school identification and the management of the size and spread of the government school system. In addition, the covenants related to institutional and fiduciary arrangements and safeguards under SEP, contained in the SEP Financing and Project Agreements and PAD, apply to the AF. 20. The institutional arrangements for AF implementation and results monitoring are expected to be identical to those for SEP. Implementation and monitoring responsibilities will lie with the Education Department (ED), the Reform Support Unit (RSU), and the district education departments, with support from the Finance Department (FD) and Planning and Development Department (P&D), and oversight and coordination by the Reform Steering Committee (RSC). The AF-supported activities may have implications for the Government s financing plan in FY2011/12, but the magnitude and direction of change are presently unknown. Government expenditures may increase if school-specific nonsalary budgets reflect a higher amount and quality of non-salary inputs; this increase may be offset by expenditure savings from greater efficiency and reduced leakage from setting and managing school-specific budgets. Arrangements for financial management and disbursement, procurement, and social and 5

14 environmental safeguard management are expected to be identical to those for SEP. Finally, the Bank s AF supervision strategy is expected to be identical to that of SEP; supervision missions will simultaneously review implementation progress and performance of both SEP and the AF project. Given that there are no changes in these arrangements, the Government is expected to apply all relevant arrangements, guidelines, policies and procedures detailed in the SEP PAD and Operation Manual. IV. Appraisal Summary 21. The economic and financial analysis estimations for SEP are likely to be affected favorably by the AF-supported activities. Any increases in Government expenditures from the activities are likely to be limited since they support the early stages of phased implementation. If the activities produce service delivery improvements, these are likely to raise the demand for schooling (school participation and progression), yielding higher expected economic benefits. Consequently, the estimated presented discounted value of SEP will increase. The economic viability of SEP continues to remain robust to the selected scenarios assessed as part of the original sensitivity analysis. 22. As mentioned above, institutional arrangements and results monitoring are expected to be identical to those for SEP. Financial management, disbursement, and procurement are also largely consistent with the guidelines in the SEP PAD and Operation Manual. The SEP ratings in the latest ISR (Archival date: November 10, 2010) are Moderately Satisfactory (MS) for implementation progress, financial management, procurement, and project management. These ratings largely reflect implementation lags; ED/RSU has made efforts over the third quarter of FY2010/11 to address existing lags and adopt measures to prevent the emergence of new lags. 23. Financial management arrangements: As for SEP, the overall FM risk rating for the AF is considered Moderate. The arrangements for staffing, budgeting, accounting, internal controls, financial reporting, external audit, funds flow and disbursement in place under SEP will apply to the AF. The AF will disburse against a single EEP, A01 Employee related expenses of primary and secondary education sub-functions at district level, contingent upon successful achievement of the AF DLIs. This EEP is one of the existing EEPs under SEP; therefore, the format of the Interim Un-audited Financial Reports (IUFRs) agreed for SEP will also be used for the AF. The report-based disbursement will be used. The Credit proceeds will be allocated as indicated in Table 2. Table 2: Allocation of Credit Proceeds Category 6 Amount of Credit (expressed in USD) Eligible Expenditure Program-Employee related expenses of primary and secondary education sub-functions at district level TOTAL AMOUNT 50,000,000 Percentage of Expenditures to be Financed 50,000, % 24. IDA financing is inclusive of duties and taxes. As for SEP, there will be no segregated Designated Account for the AF and disbursements from the Credit will be made to the Provincial

15 Government Consolidated Fund Account No. 1 (Non-food) based on Withdrawal Applications duly prepared by the RSU and approved by the Finance Department, Government of Sindh. 25. Disbursement of the Credit proceeds will be on a reimbursement basis, as opposed to an advance basis for the SEP, and will be contingent upon the achievement of AF DLIs as specified in Annex 1. The global DLI under SEP is not applicable to the AF. Each of the three DLIs accounts for 33.33% of the Credit amount, i.e., approximately USD16,666,667. After the achievement of the DLI has been verified by the Bank, a Withdrawal Application for the amount related to the DLI may be submitted. This will be supported by an IUFR showing expenditures in the EEP since the last IUFR. These expenditures will be based on Budget Execution Reports (BERs) of the Education Sector generated from the national Financial Accounting and Budgeting system implemented under the Project to Improve Financial Reporting and Auditing (PIFRA). Since the AF s EEP is also part of the EEPs under SEP, the expenditures will count towards the AF as well as the total EEP expenditures for SEP. 26. Project Financial Statements for SEP will include the AF. These are audited by the Auditor-General of Pakistan. Acceptable audit reports have been received for SEP. There are no overdue audit reports or ineligible expenditures. 2 The FM arrangements in place are considered adequate and there will be reasonable assurance that funds are used for intended purposes with economy and efficiency and that the requirements of OP/BP will be met. Table 3: Audit Requirements Audit Report Project Financial Statements (SEP including the AF) for the year ended June 30 each year Due Date December 31 each year 27. Procurement Arrangements: As discussed above, the AF will disburse against a single EEP, A01 Employee related expenses of primary and secondary education sub-functions at district level, contingent upon successful achievement of the AF DLIs. The selected AF EEP is a nonprocurable eligible expenditure and, thus, has no procurement review requirements. Furthermore, the AF does not have a TA component. The Government can draw TA under SEP for the AF-related activities, if needed, in order to support implementation and monitoring and evaluation. The use of TA, including procurement rules and review requirements, is stipulated in the Financing Agreement for SEP. 28. The procurement implementation performance of RSU has been variable; however, RSU has focused in recent months on streamlining and strengthening the system. The RSU is required to continue to maintain a dedicated procurement specialist, who will report to the Chief Program Manager (CPM) and the Deputy Program Manager (DPM) Policy and Coordination. DPMs will be responsible for the technical aspects of procurement for their respective subprograms. 2 The role of the Auditor-General to carry out the annual audit of the financial statements of the Bank-financed projects is generally acceptable to the Bank. The Auditor-General being the Supreme Audit Institution in Pakistan has formally adopted the INTOSAI Standards on auditing. In addition, the Financial Audit Manual enshrines the principles contained in the International Standards on Auditing issued by International Federation of Accountants. 7

16 29. Fiduciary guidelines prepared for and distributed to schools and SMCs under SEP are expected to be appropriately revised and distributed to schools that are covered under the sc hoolspecific nonsalary budgeting activity under the AF. 30. Safeguard policies: SEP is categorized as B, in accordance with World Bank OP For the SEP, an Environmental Assessment was carried out and an ESMF was developed and adopted by the Government. A programmatic social assessment is expected to be carried out under SEP. The AF-supported activities do not raise the environmental category of the project nor do they trigger any new safeguard policies. The ESMF under SEP applies equally to the AF. The school safety and environmental management efforts under SEP can also benefit the AFsupported activities, if relevant. 31. There are no exceptions to Bank policies. 8

17 DLI 1: Teacher rationalization across schools and the formal allocation of teaching posts to schools Annex 1: Results Framework and Monitoring PAKISTAN: Additional Financing for the Sindh Education Sector Project Results Framework Disbursement Linked Indicators Area Baseline DLI target Verification protocol Teaching posts are not at the school level for primary, middle, and elementary government schools. DLI 2: Preparation and management of school-specific nonsalary budgets No school-level budget planning and management for primary, middle, and elementary government schools. Allocation of sanctioned teaching posts to schools and incorporation of school-specific teaching posts in FY2011/12 budget books in at least three districts. Preparation of school-specific nonsalary budgets using preliminary MFSS and incorporation into the FY2011/12 budget books in at least three districts. Definition(s): Schools are functional primary, middle, and elementary schools. Allocation of posts entail shifting sanctioned posts from taluka to school level based on agreed objective norms. Verification source(s): List of all functional primary, middle, and elementary schools in relevant districts based on the ASC. FY2011/12 draft budget books with school-wise information on allocated (sanctioned) teaching posts. Definition(s): Schools are functional primary, middle, and elementary schools. Minimum funding standards for schools (MFSS) will stipulate norms for determining the quality and quantity of nonsalary inputs for attaining and maintaining minimum levels of service delivery. Verification source(s): Government-approved notification of preliminary MFSS document; draft FY2011/12 district budget books with school-wise information on nonsalary budgets. DLI 3: Extension of the district and subdistrict education management reform initiative to additional districts. The district Education Management Reform (EMR) initiative is under early implementation in three districts. Implementation of the EMR initiative, including education management structure, posts, job descriptions, training, school quality assurance framework, cluster-based school management in at least 3 additional districts. Definition(s): Schools covered by the EMR activity are functional primary, middle, and elementary schools per the ASC. Expansion will be to at least one taluka in each district. EMR implementation is per the Government s approved EMR policy and roadmap. Verification sources: Government-approved notification of selection of three districts for the expansion of Cluster-Based School Management (CBSM) and Quality Assurance (QA) strategy; 9

18 10 Government-approved notification of clusters and guide teachers; Government-approved notification of school advisors and evaluators; Government-approved notification of redesignated district education management positions; and draft district budget books for FY2011/12 incorporating budgetary allocation for mobility support for guide teachers and QA teams.

19 PDO Revisions to the Results Framework Current (PAD) Support SERP to increase school participation, reduce gender and rural-urban disparities in school participation, increase progression, and improve the measurement of student learning. PDO indicators Current (PAD) Net enrollment rate at primary level (grades 1-5) Female-male ratio in NER, primary, rural Class 5-6 transition rate, rural, girls, government schools Learning levels monitored through diagnostic learning assessments. Intermediate Results indicators Current (PAD) Preparation and implementation of annual education budgets, including SERP budgets and financing plans consistent with medium term fiscal/budget frameworks. Number of residual audit paragraphs resolved in the education sector. Procurement deviations based on ex-post procurement reviews and third-party supervision of school rehabilitation works. Number of months to complete administration of the Annual School Census (ASC). Share of schools with less than 10% discrepancy in ASC data from validation data, based on sample verification. Steps in the implementation of the Education Management Reform (EMR) initiative to strengthen capacity and accountability of education managers. Share of prioritized schools completed to meet stipulated school design, construction quality, and functionality standards. Proposed Proposed change Proposed change Comments/ Rationale for Change 11

20 Revisions to the Results Framework Share of government schools with active SMCs. Number of schools covered under pilot program for SMC pilot mobilization for capacity building and school improvement planning. Share of government schools receiving free textbooks within the first month of the academic year. Share of beneficiary girls that received stipends within the academic year. Number of low-transition rate talukas with higher girls stipends (Differential Stipends Program- DSP). Number of private schools supported under fully-funded pilot public subsidy program in qualifying underserved rural localities (Promoting Low-Cost Private Schooling in Rural Sindh- PPRS). Implementation of merit- and needs-based teacher recruitment. Steps in the implementation of Teacher Education and Development (TED), comprising of standards and competencybased Continuous Professional Development (CPD), accreditation of CPD providers, and colleges with new teaching diploma. Subject and grade for fielding of diagnostic assessment in district representative sample of government schools Subject and grade for analysis reports of diagnostic student assessment. Number of districts with the allocation of sanctioned teaching posts to schools and the incorporation of school-specific teaching posts in FY2011/12 budget books. Number of districts with schoolspecific nonsalary budgets for elementary schools incorporated into the FY2011/12 budget books. Continued Continued New. New. Comments/ Rationale for Change New target. The target reflects an AF Disbursement Linked Indicator in a new reform activity to be carried out by the Government. New target. The target reflects an AF Disbursement Linked Indicator in a new reform activity to be carried out by the Government. 12

21 Revisions to the Results Framework Number of districts under the pilot education management reform initiative. New. Comments/ Rationale for Change Expanded target. The target reflects an AF Disbursement Linked Indicator associated with the expansion of an existing reform activity under SEP. 13

22 ANNEX 2 OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) Project Development Objective(s) The development objective of the proposed project is to support the Government of Sindh's Medium Term Education Sector Reform Program (SERP). The objectives of SERP are to increase school participation, reduce gender and rural-urban disparities, increase progression and improve the measurement of student learning. PDO Level Results Indicators: 1. Primary Net Enrollment Rates (NER) (%) 2. Female-male ratio NER, primary, rural (%) 3. Class 5-6 transition rate, rural, girls, public school (%) 4. Learning levels monitored through diagnostic learning assessments Risk Category Risk Rating Risk Description Proposed Mitigation Measures Project Stakeholder Risks MI Education is a priority sector for GoS and recurrent expenditures are to be protected against cuts; however, if GoS s fiscal position deteriorates significantly, SERP may experience cutbacks. AF supported activities require strong cooperation between provincial and district governments, and measures to limit short-term losses, communicate medium-term gains, and prevent public misconceptions and address misinformation. The learning by GoS on stakeholder relations on difficult reforms under SEP is to inform AF-supported initiatives. 1. If the fiscal situation deteriorates, GoS to direct needed cuts to development expenditures. If further cuts are required, GoS to target benefits or slow the pace of implementation scale up. 2. School specific budgets may yield cost savings by limiting leakage. 3. Early detection and dialogue on fiscal and budget management matters under SEP. 4. Measures for stakeholder relations and management include continuous dialogue with political leadership; GoS dialogue with district governments on AF supported initiatives to strengthen district awareness and commitment; careful sequencing of implementation and scaleup pace to limit potential losses; a communications consultant to support GoS with stakeholder and public relations, and grievance management. Implementing Agency Risks MI There are efforts to strengthen FM and procurement at different levels but weaknesses remain. The quality of SERP implementation, coordination, and monitoring has improved but lags need to be addressed and prevented and progress kept steady. Limiting staff transfers and speedily addressing staffing gaps in ED/RSU remain challenges. Sector governance is challenging at all levels and corruption and fraud controls need to be strengthened. SERP supports important initiatives to 1. Continue oversight and guidance to strengthen ED/RSU FM and procurement performance. 2. Offer TA support under SEP for incremental staffing and capacity building to strengthen ED/RSU and limit disruptions due to staff changes. 3. Continue dialogue with political and bureaucratic leadership to minimize transfers and retain quality staff, and on the governance agenda and improving the effectiveness and efficiency of education expenditures. 4. Tie AF disbursements to implementation- 14

23 improve governance and accountability and increase the efficiency and effectiveness of expenditures. related targets in key governance activities. 5. Benefit from ongoing governance reforms for AF supported initiatives. Project Risks MI Design MI Design risks arise from possible divergent interests between district and provincial governments and between political and bureaucratic levels. Social and Environmental L AF-supported activities have limited social and environmental implications. The ESMF under SEP applies equally to AF. School safety and environmental management activities can benefit the AF-supported activities, if relevant. Program and Donor L The Bank and EU, the two main development partners (DPs) in education, support GoS s program, priorities, and goals. The AF activities are subsumed within SERP and do not contradict the existing elements in the program. New DPs have indicated an interest in supporting SERP, in alignment with existing DP support. Delivery Quality ML The pace and steadiness of implementation progress remains weak with some SERP subprograms due to internal administrative issues which generate delays (e.g., reviews, approvals, and funding releases). District government capacity to implement is variable and often weak. Measures include: 1. gather regular design input and feedback for the political leadership; 2. maintain a regular dialogue between district and provincial governments on design; 3. use data from M&E systems to inform design; and 4. provide regular technical support for the design work. Measures include: 1. maintaining regular dialogue with the political and bureaucratic leadership on the benefits and feasibility of stronger school safety and environmental management; and 2. monitoring the implementation of the AFsupported activities and integrating in relevant social and environmental management measures if needed. NA. Measures include: 1. Tying AF disbursements to implementation performance and progress targets; 2. building capacity of district governments via the district education management reform subprogram and EU s district education managers training initiative; and 3. streamlining procedures for documentation preparation, reviews, approvals and managing procedure compliance. Overall Risk Rating at Overall Risk Rating During Comments Preparation Implementation Medium-I Medium-I There is no change in the risk rating from preparation to implementation. The Government is taking proactive steps to contain risks, and the Government and the task team will closely monitor risks and take actions as needed. 15

24 Annex 3: Detailed Description of Project Activities PAKISTAN: Additional Financing for the Sindh Education Sector Project The Government has identified two additional reform activities to integrate into SERP and one existing reform activity under SEP to extend. These activities are viewed by the Government as key for streamlining and strengthening the school system, potentially yielding service delivery performance improvements. These reform initiatives are expected to be sustained, refined, and scaled up over the medium term. 3 The AF DLIs, one DLI in each reform area, reflect intermediate steps (largely at the front-end of reform implementation). The AF-supported reform activities comprise of the (1) rationalization of teachers across schools and the formal allocation of teaching posts to schools; (2) preparation and management of school-specific nonsalary budgets, covering expenditures for inputs in line with minimum funding standards; and (3) extension of the existing pilot district and sub-district Education Management Reform (EMR) initiative to three additional districts. ED/RSU has already begun sensitizing district governments (the level of government primarily responsible for service delivery) on the requirements in the selected reform activities. ED/RSU has set up working groups composed of key provincial departments and district governments for discussing design and implementation issues related to the activities. Districts have expressed support for the activities; some districts have begun the initial groundwork for the initiatives in collaboration with ED/RSU. Details on the AF-supported activities are presented below. Disbursement Linked Indicator 1 Teacher rationalization across schools and the formal allocation of teaching posts to schools Decisions on the placement of teachers do not closely reflect the distribution of students across government schools, although province wide, the student-teacher ratio is 27, which is within international norms. As a result of existing practices, the distribution of student-teacher ratios across schools has significant spread, with large shares of overstaffed and understaffed schools (see Figure 1). Arbitrary transfers and deputation of regular teachers also hamper efforts to control the distribution of teachers. One strategy the Government has pursued in recent times to tackle this issue is to recruit new teachers and locally place them in schools under school-specific contracts (in effect, nullifying transfers of any kind), under its merit-based teacher recruitment subprogram in the SERP. With the second round of recruitment under this subprogram, ED/RSU worked with the district governments in order to locally place newly-recruited teachers under school-specific contracts in understaffed schools determined on the basis of student-teacher ratios. 3 As such, the expected improvements are likely to be largely realized after the AF implementation period. 16

25 0 Density STR STR for Rural Schools STR for Urban Schools Figure 1: Distribution of school student-teacher ratios, Sindh, by urban/rural As a complementary strategy, the Government plans to shift teaching posts for primary, middle, and elementary schools, which now are pooled at the taluka level, down to the school level, using student-teacher ratio norms and minimum staffing criteria (at least two teachers per school, where possible) to determine the allocation of (sanctioned) teaching posts for each school. These school-specific teaching posts will be reflected in the district and provincial government budget books. The process of formally allocating teaching posts to schools, reflecting them in the FY2011/12 budget books, and redistributing teachers will be undertaken in a phased manner starting with at least three districts in FY2010/11. The Government plans to expand the initiative to additional districts in FY2011/12. Initial simulation exercises conducted by ED/RSU using the Annual School Census data suggest that shifting of teachers across schools within districts may be insufficient to bring student-teacher ratios down to the range of 30:1 to 40:1, as, to a great extent, the unbalanced distribution of teachers in the province is due to large differences in the numbers of teachers between districts. Moving teachers between districts is viewed as more difficult by the Government. Thus, given this constraint, the Government expects to set different student-teacher ratio norms for different districts that reflect the available number of teachers. Disbursement Linked Indicator 2 Preparation and management of school-specific nonsalary budgets The vast majority of government schools experience critical resourcing shortfalls, likely impairing school performance. Aggregate recurrent expenditures for the sector largely comprise of teacher salaries and benefits with scarce (residual) resources for important nonsalary inputs such as basic school maintenance and operation and teaching and learning materials. In the case of primary, middle, and elementary schools, budgets are prepared and managed at levels higher than the school (at the district and taluka levels), with little or no systematic relation to the specific immediate and expected needs of individual schools. In FY2010/11, the total nonsalary budget is Rs. 800 million (US$9.4 million), which is less than Rs. 20,000 per school. In practice, primary schools receive little or no resources for nonsalary inputs and middle and high schools receive insufficient amounts, often with significant delays. Much of the total allocation for nonsalary inputs is not disbursed to schools. 17