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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 PUNJAB EDUCATION SECTOR PROJECT February 28, 2011 Human Development Department (Education Unit) South Asia Region Report No: PK This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective February 2, 2011) Currency Unit = PKR PKR = US$1 US$ 0.55 = SDR 1 FISCAL YEAR July 1 June 30 ABBREVIATIONS AND ACRONYMS ADP CAD CIDA CPD DAC DfID DLI DMO DSD DTEs EDO EEP EMIS ESMF FAS FM GBP GOP ISR IDA IUFRs Annual Development Plan Canadian Dollars Canadian International Development Agency Continuous Professional Development Departmental Accounts Committee Department for International Development Disbursement Linked Indicators District Monitoring Officer Directorate of Staff Development District Training Educators Executive District Officer Eligible Expenditure Program Education Management Information System Environmental and Social Management Framework Foundation Assisted Schools Financial Management Great Britain Pound Government of Pakistan Implementation Status Report International Development Association Interim Un-audited Financial Reports MEA MDGs MTSF NER PEAS PEC PEF PESRP PMIU PSLM PTBB SED SC SMIS TPV Monitoring and Evaluation Assistant Millennium Development Goals Medium-Term Sector Framework Net Enrollment Rate Punjab Education Assessment System Punjab Examination Commission Punjab Education Foundation Punjab Education Sector Reform Program Program Monitoring and Implementation Unit Pakistan Social and Living Standards Measurement Survey Punjab Textbook Board School Education Department School Council School Management Information System Third Party Validation Vice President: Country Director: Sector Director: Sector Manager: Co-Task Team Leaders: Isabel Guerrero Rachid Benmessaoud Michal Rutkowski Amit Dar Sofia Shakil and Huma Waheed

3 ISLAMIC REPUBLIC OF PAKISTAN PUNJAB EDUCATION SECTOR ADDITIONAL FINANCING PROJECT TABLE OF CONTENTS I. Introduction...1 II. Background and Rationale for Additional Financing in the amount of $ 50 million....1 III. Proposed Changes...4 IV. Appraisal Summary...5 TABLES Table 1: Allocation of Credit Proceeds...6 Table 2: Indicative Disbursement Schedule...7 Table 3: Audit Requirements...7 ANNEXES Annex 1: Results Framework and Monitoring...9 Annex 2: Operational Risk Assessment Framework (ORAF)... 19

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5 ADDITIONAL FINANCING FOR THE PUNJAB EDUCATION SECTOR PROJECT DATA SHEET Basic Information (Original Project) Project ID: P Project Name: Punjab Education Sector Project Team Leader: Sofia Shakil Expected Closing Date: June 30, 2012 Environmental category: Lending Instrument: Specific Investment Loan B - Partial Assessment Joint IFC: NA Basic Information (Additional Financing) Date: January 13, 2011 Team Leaders: Sofia Shakil and Huma Country Director: Rachid Benmessaoud Sector Manager/Director: Amit Dar/Michal Rutkowski Project ID: P Lending Instrument: Specific Investment Loan Project Financing Data [ ] Loan [X] Credit [ ] Grant [ ] Guarantee [ ] Other: Waheed Sectors: General education sector (100%) Themes: Education for all (40%); Administrative and civil service reform (30%); Natural disaster management (30%) Environmental category: Partial Assessment Additional Financing Type: Financing Gap Joint IFC: NA Joint Level: For Loans/Credits/Others: Total Bank financing (US$m.): Proposed terms: Standard IDA terms; 35 year maturity including a 10-year grace period. Financing Plan (US$m) Source Local Foreign Total BORROWER/RECIPIENT International Development Association (IDA) International Development Association (IDA) Cr PAK Total: 3, , UK Department for International GBP Development Canadian International Development Agency CAD19.00 Borrower: Islamic Republic of Pakistan Responsible Agency: Program Monitoring and Implementation Unit (PMIU) School Education Department, Government of Punjab 22-B, New Muslim Town Pakistan Tel: (92-42) Fax: (92-42) pd5.pmiu@gmail.com

6 Estimated disbursements (Bank FY/US$m) FY 11 Annual Cumulative 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? Ref. Section Project Risks and Mitigating Measures [X]Yes [ ] No [X]Yes [ ] No [X]Yes [ ] No Project development objective Ref. Section Bank Response The Additional Financing Project s development objectives are the same as the original Project which are to improve access and equity, and the quality and relevance of education in Punjab. Project description Ref. Section Bank Response The proposed AF, having the same PDO as the original Project, would help finance the Punjab Education Sector Reform Program and the gaps in the education sector that have arisen due to the Government of Punjab s need to divert resources to flood relief and rehabilitation efforts. The AF will be designed to disburse in the same manner as PESP, against a smaller set of most relevant Eligible Expenditure Programs. All institutional and monitoring arrangements will remain the same as for PESP. Which safeguard policies are triggered, if any? Ref. Section Appraisal of Project Activities No new safeguard policies triggered; remain the same as for PESP. Significant, non-standard conditions, if any, for: Ref. Section Appraisal of Project Activities Board presentation: None Covenants applicable to project implementation: Same as for the Punjab Education Sector Project (P102608). For two covenants, the timeline of achievement is being changed, as follows: a) GoPunjab shall hold at least two Department Accounts Committee meetings at the district level in each district by June 30, 2011 (instead of March 2011) for FY09 advance audit paras; and by April 30, 2012 (instead of March 2012) for FY10 advance audit paras. b) GoPunjab shall prepare, notify and disseminate a design and execution manual for construction by December 31, 2011 (instead of May 31, 2010) Disbursement Conditions: Disbursement of the proceeds of the Credit will be done on the basis of fulfillment of at least 80% of the DLIs as defined in Annex 1 to the Project Paper. DLIs will be monetized equally and the authorized amounts for each disbursement will be the sum of the achieved DLIs multiplied by the unitary DLI price.

7 I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an additional credit in the amount of US$50 million to the Islamic Republic of Pakistan for the Punjab Education Sector Project (PESP) P102608; Cr PAK. 2. The proposed additional credit would help support the Government of Punjab s continued implementation of the medium term sector framework of the Punjab Education Sector Reform Program (PESRP) supported by PESP. 3. Punjab, Pakistan s largest province, suffered huge losses from the devastating floods that hit Pakistan in August In response, the Government of Punjab developed a strategy for rehabilitation of damaged infrastructure and livelihoods which relied heavily on self-financing. The province has since financed relief and reconstruction largely out of reallocation of its own resources: by rationalizing the Annual Development Program and managing more tightly its recurrent expenditures. This has had a significant impact on the fiscal space available for all other expenditures, including education. The proposed Additional Financing (AF) would help finance the gaps in the education sector that have arisen due to the Government of Punjab s diversion of resources to flood relief and rehabilitation efforts. The Government of Punjab has requested this Additional Financing to help ensure that the medium term sector framework remains on track, by continuing uninterrupted funds flow to the core education sector programs. 4. The objectives, design, and scope of the Additional Financing will remain the same as that of the original PESP. The institutional arrangements for implementation and results monitoring will also remain intact. The AF will provide programmatic financing for the Government s reform program following the results based design of PESP. Disbursements will be made against a subset of PESP s Eligible Expenditure Programs (EEPs), which represent key education budget line items. The event and amount of disbursements will depend on the verification of satisfactory achievement of the set of 10 Disbursement Linked Indicators (DLIs), which represent pre-specified implementation progress and performance targets that had been agreed with the Government of Punjab for FY11 under PESP. If the Government meets all 10 FY11 PESP DLIs, the AF will fully disburse within this fiscal year. The AF will close on the same date as PESP; June 30, Partnership Arrangements: UK s Department for International Development (DfID) is providing parallel financing in the amount of GB 45 million in support of PESRP with synchronized disbursements and using the same supervision mechanisms. The Canadian International Development Agency (CIDA) is supporting PESRP through a co-financing arrangement of CAD 19 million with IDA. Together, Development Partner assistance to the education sector in Punjab comprises less than 12 percent of the total Punjab education sector budget. II. Background and Rationale for Additional Financing in the amount of $ 50 million. 6. The Punjab Education Sector Project (PESP) aims to improve access and equity, and the quality and relevance of education in the province of Punjab. The $350 million Project was

8 2 approved on June 4, 2009 and became effective on June 11, The Project closes on June 30, PESP supports the Punjab Education Support Reform Program (PESRP) with the key objectives of: (i) enhancing fiscal sustainability and the effectiveness of public expenditures including in education; (ii) enhancing the quality of school education; (iii) improving and expanding access through improvements in school participation and completion rates and reduction in gender and regional disparities; and (iv) strengthening school management and governance in the education sector. The Project has two components: (i) Component 1 which amounts to $ 340 million provides programmatic financing to PESRP linked to the achievement of pre-specified disbursement-linked indicators (DLIs); and (ii) Component 2 finances technical assistance activities to support strengthening of existing capacities for implementation and monitoring of the sector program. The proposed Additional Financing will provide enhanced financing to Component 1 of PESP. Component 2 will remain the same and support both PESP and the proposed AF. There have been no changes in the objectives, design or scope of Project. 8. The last two Implementation Status Reports archived on 7 September 2010 and 29 January 2010 rated progress in implementation and achievement of development objectives as either satisfactory or moderately satisfactory. DLIs for the first two years of the operation were met, and the third year s DLIs are expected to be on track, with two at risk of being met with a delay 1. The Project s loan/implementation covenants are largely in compliance. Implementation of the Environment and Social Management Framework has improved after a slow start. 9. PESP has contributed significantly to strengthened implementation of the PESRP with an enhanced focus on achievement of results and strengthening of monitoring systems through an innovative design which links disbursements to achievement of results. Some key achievements of selected sub-programs of PESRP include: Delivery of free textbooks to over 95% (against a target of 90% in year 3) of public schools within the first month of the academic year. The streamlining of the delivery process positioned the Government of Punjab well to re-distribute textbooks to all impacted schools within a month of the floods. This ensured availability of textbooks to schools at the same time that classes were resuming in the affected areas. The public private partnership program of the Government of Punjab has grown substantially, with more than 800,000 students in 1800 schools supported under the Foundation Assisted Schools (FAS) program against an end-of-project target of 1500 schools, and an addition of over 300,000 students since the project started. As a result of explicitly targeting the program at high illiteracy districts, the majority of program students and schools (70% and 68%, respectively) are in the seven most lagging districts 1 In the second year, the DLI relating to school up-gradation was delayed due to slower progress in this activity, and was in advance stages of completion when the floods occurred and caused set back in progress. As a result of these delays, there is slow, but steady, progress in the up-gradation program. The Government and the task team are closely monitoring to ensure completion of the targets during the project period. The Whole School Improvement Program (missing facilities) has also suffered set back in timely implementation. The AF will enable room for Government to ensure flow of funds for these two programs, and even with delays, there is provision until June 30, 2012 to meet the targets in these two DLIs.

9 3 of the province. In addition, close to 230 new private primary schools have been established in underserved rural areas of the province, which have enrolled almost 20,000 students to date, out of which approximately 7,000 are girls. The Continuous Professional Development Program has been expanded rapidly to 24 of Punjab s 36 districts. All teachers in these districts are being provided comprehensive support, including on-site support at a cluster level. Over 1350 schools throughout the province have been provided all basic facilities on a whole school approach basis which uses a single scheme per school for timely and efficient provision of facilities. The schools prioritized for receiving the facilities were selected based on need and enrolment loads. School Councils throughout the province have been re-mobilized through focused capacity building efforts. The Capacity Building program for School Councils has covered nearly 70% of schools in the province in the last two years. This support has been matched by timely transfer of School Council grants to all SC accounts to provide them adequate resources to play an active role in school management and improvement. The Punjab Examination Commission has been conducting examinations for Grades 5 and 8 regularly in all districts of Punjab. In 2009, 93.4% of students enrolled in Grade 5 took the PEC exam and 93.5% in The results framework (including the disbursement linked indicators) of the Project had been implemented at a moderately satisfactory pace before the floods hit vast areas of the country and province in August The districts that were most affected by the floods are congruent to those areas where gaps in access to schooling, and poverty, are already the highest in the province, as this region owes the status of its social and human indicators to its disadvantaged and disparate demographic and economic characteristics. The Government has used a sizeable part of the current year s budget for the emergency relief and rehabilitation efforts in the impacted areas of the province. For instance, spending on social protection programs during the first half of the fiscal year was over 5 times the full-year budget. These much-required efforts are taxing the Government s own resources, and reducing the funding space available for other expenditures including the education reform program supported by IDA. 11. Increased focus on implementation and a strengthened system of service delivery is expected to lead to improvements in access and quality over the medium term. It is critical for the province to maintain the pace of implementation, and reverse the trends observed recently with stagnation in primary net enrollments, in order to remain on a trajectory to meet its education development outcomes and millennium development goals. A slowdown at this stage of the reform program could be detrimental to the long term goals of education development of the province and will be hard for the Government to regain given the ambitious nature of the reforms that have been achieved in the past few years. The Government of Punjab has shown continued commitment to maintaining and expanding the core education sector program despite the extreme fiscal stress it has been faced with. The Bank is proposing to provide additional financing to the Government at this time of extreme fiscal stress, compounded by the additional

10 4 burden due to the damage caused by the floods, to enable it to maintain its course and ensure that adequate funds are allocated to the education sector reform program. 12. The AF proposes to support the same results framework as under PESP, specifically linked to the satisfactory implementation of the third year of the program (including the disbursement linked indicators). To this end, the same institutional, implementation and disbursement mechanisms as under PESP will be used for the AF. 13. Given its increasing financial burdens after the floods and reduced revenue collections at both the federal and provincial levels, the Government has been actively exploring other means of financing including through bilateral and multilateral donors. A number of donors have indicated enhanced support for the education sector, including DfID and USAID. However, this additional support is unlikely to materialize in the current financial year when needs are most acute. III. Proposed Changes 14. The PDO for the Project will remain unchanged, with modifications in the PDO targets to reflect the achievement of some targets ahead of time in some cases and the recent stagnation in primary level indicators. 2 The AF is expected to assist the Government of Punjab maintain and step up progress towards meeting the original Project s outcome indicators. The original sector wide approach of the Project which provides programmatic support to the PESRP and disburses against Eligible Expenditure Programs (EEPs) on the achievement of pre-specified DLIs will also remain intact. PESRP s program costs are expected to remain the same. IDA s contribution to the Program costs, however, would increase from 8.2% to 11.9% for FY11. The existing arrangements for implementation, results monitoring, fiduciary and safeguards management will apply to the AF. 15. Disbursement Arrangements: The mechanism of making disbursements upon the verification of achievement of 80% of the DLIs will remain the same. The same set of 10 DLIs will be applied to the AF, and the AF will only disburse if the DLIs are met as per the existing threshold conditions of the original Project. Each DLI will continue to be priced equally and the price per DLI would be approximately $16 million, after applying Additional Financing. However, disbursements for the AF will be made against a limited set of EEPs which will include Girls Stipends Program, School Council Recurrent Expenditure, Public/Private Partnership Grants (PEF), School Council Capacity Building Program, Performance Based Incentive Program and Monitoring Systems (CM Monitoring Force). These EEPs have been selected to ensure the required financing to achieve the third year DLIs of the Project. 2 Punjab witnessed steep increases in primary net enrolments from 45% in to 62% now, higher than other provinces. In recent years, there is a visible stagnation in primary enrollments, while improvements in middle and secondary net enrollments continue. At the primary level, gaps in in frastructure are large and the program for missing facilities/whole school improvement aims to fill this gap, although the pace of supply has not kept up with demand. A major focus on quality has been initiated under the present program and the dividends from the quality initiative may not be immediately visible in the classroom level. With continued focus of these major elements of the reform program, supported by additional innovative initiatives to consider in the future phase of reforms, Punjab could reverse these stagnant trends.

11 5 16. Financial Management: The arrangements for staffing, budgeting, accounting, internal controls, financial reporting, external audit, funds flow and disbursement in place for PESP will apply to the AF. 17. Closing Date: The timeframe for implementation of the current year s DLIs which will be supported by the Additional Financing is not expected to change. Therefore, the closing date will remain unchanged as June 30, As noted earlier, even with delays in meeting two key DLIs where progress has been affected due to the delays in financing and implementation, these targets are achievable prior to the closing date. 18. Project Covenants: The same set of covenants used for the original Project will apply to the Additional Financing operation. For two covenants, the timeline of achievement is being changed, as follows: a) GoPunjab shall hold at least two Department Accounts Committee meetings at the district level in each district by June 30, 2011 (instead of March 2011) for FY09s advance audit paras; and by April 30, 2012 (instead of March 2012) for FY10 advance audit paras. 3 b) GoPunjab shall prepare, notify and disseminate a design and execution manual for construction by December 31, 2011 (instead of May 31, 2010) 4 IV. Appraisal Summary 19. Fiscal Analysis. The economic analysis for the AF does not differ from that of the original Project. However, there have been significant changes in the fiscal situation of the province. Provincial finances in Punjab underwent deterioration between 2007/08 and 2008/09. Due to burgeoning development, wage and subsidy expenditure, the province, which had sizable cash balances with State Bank of Pakistan (SBP) by the end-2007/08, not only had to rely heavily on ways and means advances from SBP to discharge its obligations, but was also unable to pay back these advances to SBP. As a result, these accumulated advances were converted into a medium-term debt with significant debt servicing implications. 5 This added to fragility of provincial finances and led to acute cash flow problems unduly compressing even high-priority expenditures. Cognizant of the unsustainability of its fiscal situation, provincial authorities adopted strong expenditure control measures in 2009/10 to improve its fiscal position. While these efforts were successful in lowering the provincial fiscal deficit, a lot more was required to improve the overall situation. In the first half of 2010/11, revenue shortfalls continued to exacerbate provincial government s cash flow problems. In addition, large expenditure needs arising from the devastating floods that inundated large areas of the province are further leading the government to cut back on other expenditures. The Additional Financing will create some fiscal space to ensure that key education expenditures continue to be financed in this fiscal scenario, and allow for the momentum of implementation to be maintained. 3 This target date has slipped due to the diversion of activities caused by the flood, as a result of which timely DAC meetings could not be held in all districts. 4 Due to the multiple stakeholders involved in preparation and roll out of this manual, which requires ownership to make its implementation meaningful, the manual is under advanced stages of preparation but has not yet been finalized and disseminated. This requires additional time. 5 Presently, the provincial government is paying about Rs 1.5 billion a month on account of interest and debt amortization payments to SBP.

12 6 20. Financial Management Arrangements: The Financial Management (FM) performance of the ongoing project is rated as Moderately Satisfactory. Overall FM risk for the AF, as for the ongoing PESP, is considered Moderate. 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. The EEPs for the AF are a sub-set of the EEPs under PESP and therefore the format of Interim Un-audited Financial Statements agreed for PESP will also be used for the AF. Report-based disbursement will continue to be used and the AF will disburse against the following EEPs contingent upon the successful achievement of DLIs: Object code / Scheme ID Description 1. A03977 Girls Stipends Program 2. A03975 School Councils Recurrent Budget 3. A06507 Grants to Punjab Education Foundation 4. LO School Council Capacity Building 5. A01250 Performance Based Incentive Program 6. LQ5296 Monitoring Systems (CM Monitoring Force) 21. The Credit proceeds will be allocated as indicated below. Table 1: Allocation of Credit Proceeds Category Amount of Credit Percentage (expressed in USD) Expenditures be Financed Eligible Expenditures Program 50,000, % TOTAL AMOUNT 50,000,000 of to 22. IDA financing is inclusive of duties and taxes. As for PESP, there will be no segregated Designated Account for the AF and disbursements from the Credit will be made to the Provincial Government Consolidated Fund Account No. 1 (Non-food) based on Withdrawal Applications duly prepared by the PMIU and approved by the Finance Department of the Government of Punjab. 23. Similar to the ongoing PESP, disbursement of the Credit proceeds will be on advance basis. Meeting 80% of the DLIs under PESP by the annual verification date for the disbursement cycle for FY will constitute the primary basis for triggering Credit disbursements under the AF. For any DLIs not met (provided that the 80% rule is met), disbursements will be deferred and made only upon verification of completion but must take place prior to the end of

13 7 Project date (June 30, 2012). As already noted, the price per DLI would be approximately $16 million, after applying Additional Financing. The following table provides the indicative disbursement schedule for the AF: Number Estimated Date Table 2: Indicative Disbursement Schedule Type of Disbursement Capped Allocation Disbursement Basis 1. April months estimated EEP expenditures against budget for FY11 (April May 2011) 2. June months estimated EEP expenditures against budget for FY12 (Jul. Dec 2011) 50% of Credit 50% of Credit Advance payment against potentially meeting 10 DLIs to be evaluated by May 15, 2011 and any missed DLIs to be deducted from the June 2011 final disbursement amount at an allocation of 10% of Credit. Conditioned on achievement of minimum of 80% of DLIs. Any missed DLIs to be deducted at an allocation of 10% of Credit. Amount netted with any under-spends in April 2011 advance. 24. Withdrawal Applications will be supported by IUFRs showing expenditures in the AF EEPs 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 PIFRA. Withdrawal application for the first advance of AF will be submitted subsequent to the Signing. Since the AF s EEPs are also part of the EEPs under PESP, the expenditures will count towards the AF as well as the total EEP expenditures for PESP. Expenditures from the advance disbursed against budget for April-May, 2011 will be documented through the IUFRs to be submitted in June Similarly, IUFRs submitted in January 2012 will document expenditures against advance disbursed for the period July December Project Financial Statements for PESP will include the AF. These are audited by the Auditor-General of Pakistan. 6 Acceptable audited financial statements have been received for the original project and there are no outstanding ineligible expenses or overdue audit reports in PESP. Audit Report Project Financial Statements (PESP including AF) for the year ended June 30 each year Table 3: Audit Requirements Due Date December 31 each year 26. There are nine IDA-financed projects in Pakistan which have not refunded or provided documentation on the use of Designated Accounts/Special Accounts (DA/SA) after the deadline 6 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.

14 8 of two months after the end of the grace period (i.e., the lapsed loan date, normally six months after the Closing Date). Under Bank policy (OP12.00, disbursement paragraph 12), failure to refund unused Designated Accounts/Special Accounts balances results in the Bank not permitting the use of DA under new loans/credits. Management endorsement for a waiver of the requirements of OP12.00 has been secured for a period of 12 months ending on October 31, 2011 to allow for continued use of DAs for loans and credits to Pakistan. It is hereby requested that the waiver be confirmed by the Board for this AF. 27. The proposed AF does not included any modified or new activities that raise or impact the environmental category of the original Project, and neither are any new safeguard policies triggered. The Environmental and Social Management Framework will continue to be implemented and monitored.

15 9 ANNEX 1: RESULTS FRAMEWORK AND MONITORING PAKISTAN: Punjab Education Sector Project Results Framework PDO Revisions to the Results Framework Current (PAD) To improve access to access and equity, and the quality and relevance of education in Punjab. Proposed No change Comments/ Rationale for Change PDO indicators Current (PAD) Learning levels monitored through assessments in 4 key subjects at the Grade 4 and 8 levels and through examinations (all subjects) at grade 5, 8 & 10 levels. Increase in net enrollment rates at primary level (Grades 1-5; age group 5-9) Overall: 62 percent to 65 percent Girls: 59 percent to 66 percent Boys: 64 percent to 65 percent Increase in net enrollment rates at middle level (Grades 6-8; age group 10-12) Overall: 20 percent to 24 percent Primary school completion rate: 50 percent to 55 percent Intermediate Results indicators Current (PAD) Annual education budget consistent with Medium- Term Sector Framework and Medium-Term Fiscal Framework Education expenditures in line with budget targets At least 60 percent reduction in outstanding advance audit paragraphs (provincial and district levels) in the education sector for FY09 and FY10 40 percent improvement in procurement performance in education sector as measured by improvement in: a) publication of awards, b) time for preparation of bids; c) bidder Participation; d) bid acceptance; e) bid processing lead time; f) cancelled bidding procedures; g) contract amendments; h)contract dispute resolution; i) completion rate; and j) late payment Teachers in all districts provided training and on-site support by DSD under the CPD Framework Development, piloting and evaluation of program for enhanced use of teacher resource and supplementary Proposed change*, with targets modified to reflect current situation Indicator continued, with revised methodology / source, which corrects the baseline Proposed change* Recent trends of stagnation in primary net enrollments (especially for boys) Outer year targets modified to reflect the increase Baseline and target revised to use household survey data instead of public sector data only (see below)

16 10 Revisions to the Results Framework learning material Establishment of a certification and licensing program for teachers Implementation of textbook reform; Number of books developed by authors selected through an open competitive process; Number of textbooks field tested Number of schools awarded performance-linked incentives for teachers in best-performing schools Decrease in number of schools with missing facilities from 2009 baseline Number of schools upgraded from primary to middle; Number of schools upgraded from middle to secondary; (percent of girls schools upgraded) Free textbooks delivered to public schools within the first month of the academic year Timely delivery of stipends to eligible girls Public financial support for students in low cost private schools expanded and evaluated Percent of SCs that received non-salary budget in a timely manner Percent utilization of school-based budgets Percent of SCs provided capacity support Percent reduction in teacher absenteeism from 2008 baseline Number of teacher recruited in accordance with a recruitment plan based on the approved recruitment policy Transparent examination and assessment system, providing quality information on student learning Monitoring and evaluation system strengthened at province and district levels School census conducted annually Revised Comments/ Rationale for Change National teacher standards are being developed, whereas the province will only develop a certification and licensing program. * Indicate if the indicator is Dropped,, New, Revised, or if there is a change in the end of project target value

17 Core 11 Project Development Objective (PDO): REVISED PROJECT RESULTS FRAMEWORK 7 To improve access to access and equity, and the quality and relevance of education in Punjab. PDO Level Results Indicators 1. Overall NER, primary level (5-9 age group, Grades 1-5) [female, male]* 2. Overall NER, middle level (10-12 age group, Grades 6-8)* 3. Female-male ratio NER, primary level in rural areas (5-9 age group, Grades 1-5)* 4. Female-male ratio NER, middle level in rural areas (10-12 age group, Grades 6-8)* UOM % Baseline Original Project Start (2008) 62% [59%, 64%] Progress To Date (200() Cumulative Target Values Frequency 62% 62% 63% 65% Annual % 20% 22% 22% 23% 24% Annual PSLM % 89% 90.2% 90.5 % 91.3% 92% Annual PSLM % 74% 85% 85% 86% 86% Annual PSLM 5. Primary school completion rate % 50% 51% 51% 53% 55% Annual PSLM Data Source/ Methodology Pakistan Social and Living Standards Measurement Survey (PSLM): Responsibility for Data Collection Federal Bureau of Statistics Federal Bureau of Statistics Federal Bureau of Statistics Federal Bureau of Statistics Federal Bureau of Statistics Comments Target at appraisal for 2008/09 was 63%. NER for 2009/10 are expected to be impacted negatively due to the floods, so it is being revised downwards from 64% at appraisal to 62% and showing an increase henceforth. The end of Project target for Middle NER was achieved much ahead of time. Given this trend, the targets for the remaining years were increased. Targets were achieved ahead of time and thus enhanced for the remaining years. The source/methodology used initially relied on the Annual School Census which collects data only for public schools. It was calculated as the students in Grade 6 in year x/ students in Grade 1 five years earlier. This methodology had several deficiencies since it did not account for children who may have moved to private schools for further education or 7 Changes to the Results Framework include: (i) an increase in targets for PDO indicators 2 and 4 given that end-of-project targets were achieved ahead of time; and (ii) change in data source/methodology for PDO indicator 5given the shortcomings of the methodology used at appraisal.

18 Core Teacher absenteeism rate % 15.1% x% 7. Learning levels monitored through assessments and examinations Yes/N o 12.6 % 11.3% 10% Annual Yes Yes Yes Yes Yes Annual District monitoring reports PEC Gazette; PEAS database PESRP PMIU based on DMO Reports Punjab Examination Commission; Punjab Education Assessment System dropped out after completing primary school. The revised indicator uses data for completion available from the PSLM which measures population above age 10 that has completed grade 5. The targets have also been revised accordingly. District monitoring reports from December 2010 are being compiled. There was reportedly an increase in teacher absenteeism after the floods, but intensive monitoring and resumption of school operations is expected to keep this indicator on track. * The baseline for these indicators is from the 2007/08 and the progress to date from the 2008/09 PSLM surveys. This is the latest data available. Intermediate Results and Indicators Intermediate Results Indicators Unit of Measur ement Baseline Original Project Start (2008) Progr ess To Date (2010) Target Values Frequency Data Source/ Methodolog y Responsibility for Data Collection Comments Intermediate Result 1: Enhance education sector expenditure and improve fiduciary environment 1. Annual education budget consistent with Medium-Term Sector Framework and Medium-Term Fiscal Framework Yes/No N/A Yes Yes Yes Annual MTSF prepared/app roved by Education Dept/Provin cial budget Finance Department; School Education Department

19 Core 13 Intermediate Results and Indicators Intermediate Results Indicators Unit of Measur ement Baseline Original Project Start (2008) Progr ess To Date (2010) Target Values Frequency Data Source/ Methodolog y documents Responsibility for Data Collection Comments 2. Reduction in outstanding advance audit paragraphs (provincial and district levels) in the education sector for FY08 and FY09 % 1022 total outstanding advance audit paragraphs for FY07 40% - 60% Annual Auditor General s reports Auditor General s office Intermediate Result 2: Improve teaching practices and effective use of teaching and learning materials 3. Number of districts where teachers provided training and on-site support by DSD under the CPD Framework 4. Development, piloting and evaluation of program for enhanced use of teacher resource and supplementary learning material 5. Establishment of a certification and licensing program for teachers 6. Percent of schools awarded performance-linked incentives for teachers in best-performing schools No Annual Yes/No No - - Yes One time Yes/No No No - Yes One time No. 0 20% 20% 20% Annual Department for Staff Developmen t reports School Education Dept reports/notifi cations School Education Dept reports/notifi cations PMIU reports/tpv reports Department for Staff Development (DSD) School Education Dept (SED) School Education Dept PMIU/SED The Continuous Professional Development Program (CPD) for teachers to be expanded to al 36 districts. Intermediate Result 3: Provide incentives for school participation and improved equity

20 Core 14 Intermediate Results and Indicators Intermediate Results Indicators 7. Decrease in number of schools with missing facilities from 2009 baseline 8. Number of schools upgraded from primary to middle; Number of schools upgraded from middle to secondary; (percent of girls schools upgraded) 9. Free textbooks delivered to public schools within the first month of the academic year 10. Timely delivery of stipends to eligible girls 11. Public financial support for students in low cost private schools expanded and evaluated Unit of Measur ement Baseline Original Project Start (2008) Progr ess To Date (2010) Target Values Frequency No. 30, Annual No. 44,684 public primary schools, 7,397 public middle schools, 4,545 public high schools Annual % 80% 95% 90% 90% Annual % - 92% 90% 90% Annual PKR bln Annual Data Source/ Methodolog y PMIU reports/tpv reports PMIU reports/tpv reports PMIU reports/tpv reports PMIU reports/tpv reports Finance Dept releases/punj ab Education Foundation Responsibility for Data Collection PESRP PMIU PMIU/SED PESRP PMIU PESRP PMIU Finance Dept/PEF Comments The baseline is the number of schools with at least one missing basic facility; the targets are the number of schools that are provided all basic facilities Intermediate Result 4: Improve school management, governance and monitoring and assessment and examination systems 12. Percent of SCs that received non-salary budget in a timely manner % - 75% 95% - Annual PESRP PMIU monitoring reports PESRP PMIU

21 Core 15 Intermediate Results and Indicators Intermediate Results Indicators 13. Percent of SCs provided capacity support 14. Transparent examination and assessment system, providing quality information on student learning Unit of Measur ement Baseline Original Project Start (2008) Progr ess To Date (2010) Target Values Frequency % 20% 75% 95% - Annual Yes/No Yes Yes Yes Yes Annual Data Source/ Methodolog y PESRP PMIU monitoring reports Punjab Examination Commission Gazette /PEAS reports Responsibility for Data Collection PESRP PMIU Punjab Examination Commission/PE AS Comments 15. School census conducted annually Yes/No Yes Yes Yes Yes Annual PMIU database PESRP PMIU

22 16 DISBURSEMENT LINKED INDICATORS 8 Area Indicator Baseline DLIs for FY11 disbursement DLI 1: Fiscal and budget Preparation of FY11 sector program management MTSF approved with financing levels in accordance with MTSF Protocol (i) Funding for the core education program included in the Medium Term Fiscal Framework (MTFF) and approved by Finance and Planning and Development Departments; and (ii) subsequent annual budgets in accordance with the approved sector framework. DLI 2: Improving teacher performance DLI 3: School improvement DLI 4: Increased access to higher levels of education Improved quality of teaching Decrease in number of schools with missing facilities 9 Increased transition from Primary to Limited teacher incentive programs currently underway 30,854 public schools (Primary, Middle, High and Higher Secondary) with one or more missing facility 10 44,684 public primary (1) Disbursement of performance-linked awards for FY11 to 20 percent highest performing schools and to most improving schools in all districts based on approved criteria and validated by third party An additional 1,500 schools provided missing facilities on a whole school approach basis and validated by a third party organization An additional 800 Primary Schools and 200 Middle Schools upgraded; validation (i) Initial criteria (for FY09) to be based on (a) student performance as verified by achievement in PEC/matric exams; and (b) school performance as verified by increase in enrollment and decrease in dropouts using SMIS data; (ii) Final criteria (based on simulation exercises) agreed with DPs and notified for implementation of the program by September 2009; (iv) Program implemented on the basis of approved criteria; (v) the lists of schools provided awards publicly disclosed; (vi) TPV conducted in FY11 and (vii) criteria for most improving schools to be agreed with the DPs. (i) Guidelines for selection of schools to be provided missing facilities to be agreed with DPs and to include: (a) One scheme for each school by SED to provide all missing facilities, (b) lists of qualifying schools to be prepared using SMIS data, (c) list provided to districts for review by the District Steering Committees for selection and preparation of individual PC-1s; (ii) Program implemented in accordance with the guidelines agreed with the DPs; and (iii) TPV completed in FY11 on a sample basis to assess if: (a) all missing facilities were provided to each school; and (b) schools provided missing facilities in accordance with the guidelines for provision of missing facilities agreed with DPs. (i) Criteria for selection of school to be upgraded to be based on: (a) land area {for Primary to Middle(boys:25 marlas; girls: 20 marlas) for Middle to High (boys:60 marlas; girls:40 8 No changes to FY11 DLIs agreed with the Government of Punjab under the original project have been made. 9 Missing facilities defined as boundary wall, clean drinking water, toilet and electricity 10 October 2008 census

23 17 Area Indicator Baseline DLIs for FY11 disbursement Middle, Middle schools, by a third party organization. to High and High 7,397 public to Higher middle Secondary schools, 4,545 public high schools DLI 5: Provision of textbooks to public schools DLI 6: Girls Stipend Program DLI 7: Support to the low cost private sector schools timely delivery of free textbooks to public schools Timely provision of stipends to eligible girls enrolled in grades 6-10 in public schools Increase in public financial support for students in low cost private schools Free textbooks delivered to 80% of public schools (grades 1-10) % of eligible girls enrolled in grades 6-10 in public schools received stipends within the quarter for the preceding quarter Foundation Assisted Schools (FAS) providing support to 494,958 students; New Schools (1) Free textbooks delivered to at least 90 percent of public schools within the first month of the academic year beginning April 2010; and (2) Commence field testing of selected new books on a sample basis. Delivery of stipends to at least 90 percent of eligible girls (grades 6-10 in public schools) as per the schedule agreed with IDA. Quarter By date Oct-Dec 09 Apr 1 10 Jan-Mar 10 July 1 10 Apr-Jun 10 Oct 1 10 Jul-Sep 10 Jan 1 11 Over 1,500 schools supported under the FAS program, and over 200 schools supported under the NSP program with appropriate resources (PEF budget for FY11 approved in line with the Medium Term Sector Framework along Protocol marlas) for high to higher secondary: min. 16 kanals} (b) total enrollment {for Primary to Middle (boys:100; girls:80) and in grades 4 and5 (boys:20; girls:15) for Middle to High (boys:200; girls:150) and in grades7and 8(boys:40; girls:30); (c) For High to Higher Secondary, no college/higher secondary school in 10km radius and 20km for boys; (ii) criteria to be agreed with DPs; (iii) medium-term school up-gradation plan to prioritize schools on the basis of enrollment needs using data provided by the PMIU developed and sent to District Steering Committees for implementation; (iv) schools up-gradation implemented in accordance with the approved criteria agreed with the DPs and the medium-term up-gradation plan; and (v) TPV conducted in FY11. (i) All books continue to be published through an open competitive process for development, printing/publishing of textbooks; (ii) TPV conducted in FY10; and (iii) At least 5 new textbooks developed under the new curriculum guidelines fieldtested on a sample basis in 8 districts. (i) Streamlined process for delivery of stipends: (a) Funds transferred to Account- IV in the first half of the disbursement month (April for Jan-March quarter); (b) Funds transferred from Account IV to PSA within 1 month of the beginning of the disbursement month; and (c) issuance of money orders to eligible girls commenced from week 4 of the disbursement month; and (ii) TPV conducted in FY10. Timely is defined as within one month of beginning of the financial quarter

24 18 Area Indicator Baseline DLIs for FY11 disbursement Program with a timely quarterly (NSP) transfer of allocated funds. initiated DLI 8: Strengthening school level management DLI 9: Public school teacher recruitment DLI 10: Examination and assessment systems (i) Enhanced accountability of teachers; (ii) Increased capacity of SCs for effective school management; and (iii) Reduced teacher absenteeism Teachers recruited on a merit and need basis (i) Transparent examination and assessment system; and (ii) Good quality information on student learning School Council capacity support being provided in 6 districts of Punjab Merit-based teacher recruitment policy in place. Number of teachers to be recruited identified based on annual demand. 3 rounds of Grade 5 & 8 exams conducted in AY07-08; provincewide assessment of students in grade 4 undertaken for all 4 key subjects in AY07 95 percent of public primary and middle School Councils in all 35 districts provided capacity building through arrangement with RSPs, and receiving School Council grants in their accounts. Implementation of teacher recruitment as per the agreed recruitment plan and validated by a third party organization (1) A province-wide mathematics, language and social studies assessment of students in grade 4 in a district-representative sample of public schools successfully implemented by PEAS in Academic year beginning April (2) Analysis of mathematics assessment data undertaken in previous year completed by PEAS. Protocol (i) MOUs with RSPs signed for capacity building for School Councils, including mobilization and training; (ii) Funds transferred to SC Accounts within the first quarter of the fiscal year for FY10 and FY11; (iii) TPV to assess the capacity support provided by the RSPs to SCs conducted in FY10 and FY11; (iv) School Council operational guidelines to include simplified procurement, financial record-keeping procedures; and (v) SC Policy implemented effectively including the hiring of voluntary teachers. (i) Recruitment consistent with merit based recruitment policy; (ii) The recruitment plan to take into account: (a) subject specialist needs (at least one teacher of each subject in all schools), (b) enrollment loads (STR 40:1) and (c) Recruitment Policy(2008) implemented in past years; and (iii) recruitment plan to be agreed with DPs; (iv) TPV (i) PEC Exams conducted by March 2009 for AY08; (ii) technical staff for PEC to include research staff and Examination Coordinator and their ToRs to be agreed with the DPs;(iii) funds transferred in accordance with MTSF; and (iv) Successful implementation of PEAS assessment is defined as complete fielding of the test. Assessments are those developed by PEAS. Completion of data analysis verified by using PEAS data analysis reports. Test sample documentation for each round to be provided by PMIU. Use of assessment by teachers in public schools verified by using PEAS reporting documentation; and (v) Program to provide additional support to low performing schools and districts developed