Document of The World Bank FOR OFFICIAL USE ONLY Report No: 74241-PH INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN IN THE AMOUNT OF US$300 MILLION TO THE REPUBLIC OF THE PHILIPPINES FOR A LEARNING, EQUITY AND ACCOUNTABILITY PROGRAM SUPPORT PROJECT February 21, 2014 Human Development Sector Unit East Asia and Pacific Region 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. CURRENCY EQUIVALENTS (Exchange Rate Effective February 5, 2014) Currency Unit = Philippine Peso (Php) US$1 = Php 45.05 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AusAID Australian Agency for IFR Interim Unaudited Financial International Development Report AAP Abot Alam Program IPF Investment Project Financing BEIS Basic Education Information IPPF Indigenous Peoples Planning System Framework BESRA Basic Education Sector Reform IPs Indigenous Peoples Agenda LEAPS Learning, Equity and CAS Country Assistance Strategy Accountability Program Support COA Commission on Audit Project C A . .vM & E Monitoring and Evaluation CSC Civil Service Commission MOOE Maintenance and Other Operating DBM Department of Budget and Expenses Management MTB- Mother Tongue-Based Multilingual DepEd Department of Education MLE Education DLI Disbursement-Linked Indicator NAT National Achievement Test DSWD Department of Social Welfare NPSBE National Program Support for and Development Basic Education DVA DLI Verification Agent PBB Performance-Based Bonus eBEIS Enhanced Basic Education PDO Project Development Objective Information System Phil-IRI Philippines Informal Reading EEP Eligible Expenditure Programs Inventory ESBM School-Based Management EGMA Early Grade Math Assessment SPHERE Support for Philippine Basic EGRA Early Grade Reading Assessment Education Reform Project FM Financial Management SRC School Report Card GAA General Appropriations Act SY School Year GOP Government of the Philippines WA Withdrawal Application IAS Internal Audit Services Regional Vice President: Axel van Trotsenburg Country Director: Motoo Konishi Sector Director: Xiaoqing Yu Sector Manager: Luis Benveniste Task Team Leader: Lynnette de la Cruz Perez 11 PHILIPPINES LEARNING, EQUITY AND ACCOUNTABILITY PROGRAM SUPPORT PROJECT TABLE OF CONTENTS Page I. STRATEGIC CONTEXT .................................................................................................1 A. Country Context ......................1.......................... B. Sectoral and Institutional Context............................................ 1 C. Higher Level Objectives to which the Project Contributes ........... ........ 3 II. PROJECT DEVELOPMENT OBJECTIVES ...........................................................3 A. PDO........................................................ 3 B. Project Beneficiaries ................................................. 3 C. PDO Level Results Indicators......................4.... ............4 III. PROJECT DESCRIPTION ......................................................................................... 5 A. Project Components ..................................... ........ 5 B. Project Financing .......................................... ..... 9 C. Lessons Learned and Reflected in the Project Design..................... 11 IV. IM PLEM ENTATION .....................................................................................................11 A. Institutional and Implementation Arrangements ................ ............. 11 B. Results Monitoring and Evaluation .................................... 12 C. Sustainability......... ........ ............................... 12 V. Key Risks and Mitigation Measures ...........................................................................13 A. Risk Ratings Summary Table ...................................... 13 B. Overall Risk Rating Explanation .................................... 13 VI. APPRAISAL SUMMARY ......................................................................................... 13 A. Economic and Financial Analysis .......................... ......... 13 B. Technical .................................................... 14 C. Financial Management...................... ................ 14 D. Procurement ......................................... ......... 14 E. Social (including Safeguards) ...................................... 15 F. Environment (including Safeguards) .................................. 15 iii Annex 1: Results Framework and Monitoring ....................................................................16 Annex 2: Detailed Project Description .................................................................................. 28 Annex 3: Implementation Arrangements .............................................................................40 Annex 4: Operational Risk Assessment Framework (ORAF).............................................56 Annex 5: Implementation Support Plan................................................................................ 63 Annex 6: DLI Disbursement Rules and Verification Protocol Summary ..........................63 Annex 7: Economic and Financial Analysis .........................................................................72 List of Tables Table 1: Profile of Project by Target Regions .......................... ......... 28 Table 2: PDO-level Results Indicators ............................... ......... 30 Table 3: DLI and EEP Allocations ................... ................ 46 Table 4: Eligible Expenditures per Component (in US$) ..................... 47 Table 5: Minimum EEP related DLIs per Period (in US$)..................... 48 Table 6: Tentative Disbursement Schedule (in US$) ..................... ......... 50 Table 7: Estimated Project Benefits................ .................... ..... 83 List of Figures Figure 1: Learning Achievement in the Philippines ............................... 74 Figure 2: Grade 3 Reading Levels, 2013 ....................................... 75 Figure 3: Project Logic and Components ...................................... 78 Figure 4: Elementary Students Scoring Zero in Comprehension Assessments, 2013.............. 77 iv PAD DATA SHEET Philippines Learning, Equity and Accountability Program Support Project (Pl18904) PROJECT APPRAISAL DOCUMENT EAST ASIA AND PACIFIC EASHE Report No.: PAD364 Basic Information Project ID Lending Instrument EA Category Team Leader P118904 Investment Project B - Partial Assessment Lynnette Dela Cruz Perez Financing Project Implementation Start Date Project Implementation End Date 1-July-2013 31-December 2017 Expected Effectiveness Date Expected Closing Date 2-June-2014 31-August-2018 Joint IFC No Sector Manager Sector Director Country Director Regional Vice President Luis Benveniste Xiaoqing Yu Motoo Konishi Axel van Trotsenburg Borrower: Republic of the Philippines Responsible Agency: Department of Education Contact: Francisco Varela Title: Undersecretary Telephone (63 2) 6339342 Email: finvarela68@gmail.com No. Project Financing Data(in USD Million) [X] Loan [ ] Grant [ ] Other ] Credit [ ] Guarantee Total Project Cost: 300.00 Total Bank Financing: 300.00 Total Cofinancing: Financing Gap: 0.00 Financing Source Amount Borrower 0.00 International Bank for Reconstruction and 300.00 Development V Total 300.00 Expected Disbursements (in USD Million) Fiscal 2014 2015 2016 2017 2018 2019 0000 0000 0000 Year Annual 15.83 77.50 107.68 72.12 26.12 0.00 0.00 0.00 0.00 Cumulati 15.83 93.33 201.01 273.13 299.25 299.25 0.00 0.00 0.00 ve Institutional Data Sector Board Education Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co- Co-benefits % benefits % Education Primary education 70 Education Secondary education 30 Total 100 Z I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Human development Education for all 100 Total 100 Proposed Project Development Objective(s) The project development objective is to improve the quality of grades 1 to 3 reading and math skills of children in Target Regions and Target Schools, with a special focus on those belonging to Target Disadvantaged Groups. Components Component Name Cost (USD Millions) Improvement of Teaching and Learning in Grades 1 to 3 180.25 Reading and Math Strengthening of Accountability and Incentives of Department 82.50 of Education Employees Improvement of Program Design for Targeting Disadvantaged 36.50 vi Groups Compliance Policy Does the project depart from the CAS in content or in other significant Yes [ ] No [X] respects? Does the project require any waivers of Bank policies? Yes [ ] No [X] Have these been approved by Bank management? Yes [ ] No [ ] Is approval for any policy waiver sought from the Board? Yes [ ] No [X] Does the project meet the Regional criteria for readiness for implementation? Yes [X] No [ ] Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 X Natural Habitats OP/BP 4.04 X Forests OP/BP 4.36 X Pest Management OP 4.09 X Physical Cultural Resources OP/BP 4.11 X Indigenous Peoples OP/BP 4.10 X Involuntary Resettlement OP/BP 4.12 X Safety of Dams OP/BP 4.37 X Projects on International Waterways OP/BP 7.50 X Projects in Disputed Areas OP/BP 7.60 X Legal Covenants Name Recurrent Due Date Frequency Institutional Arrangements X Description of Covenant Borrower's obligation to maintain, throughout the implementation of the Project, an executive committee chaired by DepEd, a DepEd project management office, , and operational units of DepEd at central, region, division, and school levels, all assigned with functions, responsibilities and resources for the Project, satisfactory to the Bank. Name Recurrent Due Date Frequency DLI Verification Protocol X Description of Covenant Borrower's obligation to carry out the Proiect. and monitor and re-ort on the achievement of the vii Disbursement Linked Indicators, in accordance with the arrangements and procedures set out in the DLI Verification Protocol Legal Covenants Name Recurrent Due Date Frequency Verification Agent X Appointment by Verification by December 15, February 15 and 2014 August 15 of ea(h year Description of Covenant Borrower's obligation to appoint and retain for the duration of the Project an independent DLI verification agent having qualifications and terms of reference acceptable to the Bank to verify th achievement of some of the DLIs semi-annually. Name Recurrent Due Date Frequency Indigenous Peoples Planning X Framework Description of Covenant Borrower's obligation to ensure that the Project is implemented in accordance with the Indigenous Peoples Planning Framework. Name Recurrent Due Date Frequency Interim Unaudited Financial Reports X Semi-annual for (IFRs); Audited Financial Statements IFRs not later than 45 days after the end of each calendar semester; Annual for Audited Financial Statements not later than six months after the end of the fiscal year of the Borrower Description of Covenant Borrower's obligation to DreDare and furnish semi-annual IFRs. including the sDending status o viii the Eligible Expenditure Program under the Project, and annual Audited Financial Statements Name Recurrent Due Date Frequency Project Reports; Mid-Term Review X Semi-annual for Project Reports not later than 45 days after the end of the period covered; June 30, 2016 for mid- term report. Description of Covenant Borrower's obligation to prepare and furnish semi-annual project reports and a mid-term report. Conditions Name Type Withdrawal Conditions Disbursement Description of Condition Conditions of disbursement providing that the withdrawal of loan proceeds is dependent upon the achievement and verification of the relevant DLIs against which the withdrawal is requested, the incurrence of the minimum required levels of eligible expenditures, the submission of the semi-annual interim financial reports, and compliance with other pertinent withdrawal instructions stipulated in the Disbursement Letter.(Details are found in Annex 3, Financial Management, Withdrawal Conditions section). Team Composition Bank Staff Name Title Specialization Unit Rene SD. Manuel Senior Procurement Senior Procurement EASRI Specialist Specialist Danielle Malek Senior Counsel Senior Counsel LEGEN Manush Hristov Senior Counsel Senior Counsel LEGEN Matthew James Keir Senior Social Senior Social EASPS Stephens Development Specialist Development Specialist Lynnette Dela Cruz Senior Education Team Lead EASHE Perez Specialist Miguel-Santiago da Senior Finance Officer Senior Finance Officer CTRLN Silva Oliveira Maria Loreto Padua Senior Social Senior Social EASPS Development Specialist Development Specialist Samer Al-Samarrai Senior Education Senior Education EASHE ix Economist Economist Gerardo F. Parco Senior Operations Operations Officer EASPS Officer Aisha Lanette N. De Financial Management Financial Management EASFM Guzman Specialist Specialist Bonnie Sirois Senior Financial Financial Management EASFM Management Specialist Franco Russo Operations Officer Operations Officer EASHE Nicholas M. Tenazas E T Consultant EASHE Kristine May San Juan Program Assistant Program Assistant EACPF Ante Corinne V. Bernaldez Team Assistant Team Assistant EACPF Brenda Batistiana Consultant Consultant EASHE Victoria Medrana Consultant Consultant EACPF Catibog Maria Adoracion Fausto Consultant Consultant EASHE Vicente Paqueo Senior Education Senior Education EASHE Consultant Consultant Redempto Parafina SBM Consultant SBM Consultant EASHE Merle Tan Math Consultant Math Consultant EASHE Felicitas Pado Reading Consultant Reading Consultant EASHE Non Bank Staff Name Title Office Phone City Locations Country First Location Planned Actual Comments Administrative Division x I. STRATEGIC CONTEXT A. Country Context 1. The Philippines is a lower middle-income country (Gross National Income per capita of US$2,210) with a population of 94.8 million, with 26.5 percent living below the national poverty line.I Despite respectable economic growth during the past decade, poverty incidence and income inequality remain high.2 The country's main development challenge, therefore, continues to be the achievement of more inclusive growth. To meet this challenge, the Government has laid out in the 2011-2016 Philippine Development Plan three strategic objectives: (i) attaining a sustained and high rate of economic growth that provides productive employment opportunities; (ii) equalizing access to development opportunities for all Filipinos; and (iii) implementing effective social safety nets to protect and enable those who do not have the capability to participate in the economic growth process. As a first step, GOP increased the budget of the social services sectors with the Department of Education (DepEd) receiving a 15.2 percent increase in its budget in 2012 compared to the previous year. B. Sectoral and Institutional Context 2. The most critical issue in the Philippines is the growing number of non-readers and non-numerates, mainly at the primary level. Available evidence, both international and local, shows that the poor performance of students in terms of enrolment, retention, and completion as well as in terms of learning outcomes, as measured by results of student assessments, is partly explained by the lack of foundational skills in reading and math in the early grades. Recent reading-related subtests in the Grade 3 National Achievement Test (NAT)show disturbing trends, as Mean Percentage Scores (MPS) in the English Reading Comprehension and Grammar tests decreased from 61.74 and 61.94 in SY 2009-2010 to 54.42 and 57.23 in SY 2011-2012, respectively. The results are just as dismal in the Filipino Reading Comprehension and Grammar tests over the same period, as the respective decreases are from 61.25 and 63.94 to 58.61 and 56.97. In terms of math, the decline in MPS over the same period is from 65.09 to 59.87. 3. One of the main reasons for the poor performance of students is traced to the inadequate training of teachers on developmentally appropriate approaches and strategies in teaching reading and math. On the other hand, courses for teaching early reading have only been formally required as part of the Teacher Education Curriculum beginning in 2005. More experienced teachers who might be knowledgeable in effective strategies to teach early grade reading and math are more likely to be assigned to higher rather than lower grades, which is a loss for those Grade 1 - 3 pupils who are struggling. For a long time, DepEd did not have a clearly articulated official reading or math program. Based on local and international experiences, learning in a language which is not one's own in the early grades has slowed down the acquisition of basic skills especially in reading and math. I National Statistical Coordination Board. February 2011. 2 World Bank. 2010. Philippines: Towards Inclusive Growth. World Bank, Manila. 1 4. The challenge of poor educational access and low student learning is far worse for certain population subgroups, reflecting high education inequality. There are four major dimensions of inequality: income, ethnicity, disability and geography. Data from the Department of Social Welfare and Development (DSWD) through the National Household Targeting System for Poverty Reduction identified 5.2 million poorest households in the country. Out of the 5.2 million poor households, 3.9 million individuals aged 3-18 do not attend school. Lack of access and low quality of learning is particularly pronounced among the Indigenous People (IP) communities and those with disabilities. In some barangays, many pupils and even teachers need to travel (usually on foot) long distances to and from school. 5. The education system is characterized by a weak incentives structure, compounded by lack of accountability. In the Philippines, the issue of accountability and incentives for performance has largely been a missing factor in past education reforms. Salary increases are provided regardless of performance; underperforming teachers languish in the system until retirement; and budget allocations to schools and divisions do not reward results, and sometimes even provide incentives to remain as poor performers. Despite its recognized importance as a driver of performance, there is a need to forge a consensus on how to raise student and teacher motivation (external vs. intrinsic) to improve learning outcomes. 6. The Government, through the DepEd, has embarked on reforms to address these challenges. In 2005, the government developed the Basic Education Sector Reform Agenda (BESRA), a coherent education reform program that sought sustainable and system-wide improvements in outcomes and which was to serve as the overall framework for a coordinated sectoral approach, involving the participation of government, donors, and other partners. In line with the objectives of the BESRA, the DepEd recently introduced the Kindergarten to Grade 12 Program (K to 12). The program aims to support mastery of the curriculum through increasing the number of years required from 10 to 12 years so that students have more time to absorb the curriculum material. This also places the country at par with the international standard of years of basic education and prepares graduates for the world of work, even without undergoing tertiary education. Simultaneously, DepEd is also including in the BESRA Mother Tongue- Based Multi-lingual Education (MTB-MLE) and has issued DepEd Order No. 16, s.2012, which outlines the guidelines for the use of the child's first language in classroom instruction in Grades 1 to 3. In response to the low reading and math skills of early graders, DepEd is currently working on the development of a holistic reading and math program for elementary schools, in line with the major policy reforms. Central to this program is the development of Early Grade Reading and Math Assessment tools in the 12 Mother Tongues initially put forward by the MTB- MLE policy. 7. To address accountability issues, DepEd is currently working on major organizational development initiatives that are in line with the key reform thrust of the BESRA on Institutional Culture Change and the K to 12 program. DepEd implements programs that are targeting specific disadvantaged groups. For out of school youths and adults, an Alternative Learning System (ALS) is available, wherein mobile teachers and contracted Non-Governmental Organizations (NGOs) bring needs-based learning opportunities to far-flung areas. For the poorest students enrolled in schools, Abot Alam Program (AAP) of education are provided so that these children are not forced to forego learning in exchange for economic activities. The Department is also conducting Special Education programs serving people with the following disabilities: autism, 2 behavioral problems, blindness, cerebral palsy, communication disorders, hearing impairment, intellectual disability, learning disability, low vision, multiple handicaps, orthopedic challenges and special health problems. More recently, DepEd has also adopted the National Indigenous Peoples Education Policy Framework and established the IP Education Office. C. Higher Level Objectives to which the Project Contributes 8. The project is closely aligned to the objectives of the World Bank 2010-2013 Country Assistance Strategy (CAS) in the Philippines of improving public service delivery and governance. It will directly support the CAS strategic objective which aims to improve access and quality of basic education services. Although the new Country Partnership Strategy in the Philippines for 2014-16 is still under preparation, it is expected that these key objectives of improving public service delivery, including the improvement of quality basic education, will remain as a major theme. The components and key result indicators of the proposed project are aligned with the World Bank's twin objectives of supporting poverty eradication and promoting shared prosperity. The project's emphasis on ensuring access of the disadvantaged groups to quality basic education services serves as a pathway for these students' advancement and human capital development. The project is also consistent with the Bank's Education Sector Strategy which emphasizes "Learning for All." The project will support the GOP's 2011-2016 Philippine Development Plan strategies and objectives, including a cross-cutting approach of developing human resources through improved social services, and promoting transparent and responsive governance. It also supports the President's commitments in the Social Contract which puts "education as the central strategy for investing in the Filipino people, reducing poverty and building national competitiveness." II. PROJECT DEVELOPMENT OBJECTIVES A. PDO 9. The project development objective is to improve the quality of grades 1 to 3 reading and math skills of children in Target Regions and Target Schools, with a special focus on those belonging to Target Disadvantaged Groups. 10. For the purposes of the Project, the "target regions" are Regions 5, 8, 9, CAR and CARAGA. "Target schools" shall be defined as a subset3 of elementary and/or high schools in the target regions implementing the relevant project components. Furthermore, the "target disadvantaged groups" will include the following groups in the target regions: (i) indigenous peoples; (ii) persons with disabilities; (iii) children living in remote or difficult-to-access locations; and (iv) out-of-school children and youth. B. Project Beneficiaries 11. The Project beneficiaries include: (i) DepEd central, regional and division staff; (ii) school heads; (iii) teachers; (iv) public school students; (v) Indigenous Peoples students; (vi) 3 Explained further in paragraph 13. 3 children with disabilities and (vii) out-of-school children and youth of the select target regions and schools. 12. The five target regions were selected because they are among the eight poorest regions in the country, based on the 2012 poverty statistics released during the second quarter of 2013. Two regions were selected from Luzon, one from Visayas and two from Mindanao. These regions also: (i) suffer from significant dropout rates (especially between Grades 1 and 2); (ii) record low performance in reading and math scores; and (iii) have a significant IP population and other disadvantaged groups. 13. Beneficiaries specifically within the five target regions can also be broken down by components: (i) Component I will benefit all 11,998 elementary schools by implementing Early- Grade Reading Assessment (EGRA) and Early Grade Mathematics Assessment (EGMA) tools; (ii) Component 2 will benefit all 14,121 schools (11,998 elementary plus 2,123 high schools), as well as officers and staff from DepEd's administrative offices through the project's accountability interventions; and (iii) Component 3 will support all 14,121 schools and students/learners from the targeted disadvantaged groups (i.e. indigenous peoples, persons with disabilities, out of school children and youth and children living in remote or difficult-to-access locations). By the nature of the interventions, target disadvantaged groups will also be served under Components 1 and 2. Overall, the five target regions include 14,121 elementary and secondary schools, 116,587 school teachers and approximately 4,038,780 students. 14. DepEd will implement all LEAPS activities to all schools nationwide. As a matter of fact, DepEd will set higher internal targets for itself to further accelerate the institutionalization of the reforms reinforced under LEAPS. This project, however, will focus on select target regions and the schools within these, but will be ready to provide strategic support to DepEd in their plan of nationwide implementation. C. PDO Level Results Indicators 15. The project outcome indicators for measuring achievement of the PDO are in the following table. These pertain mostly to improved performance of both regular and disadvantaged students using the EGRA and EGMA tools. The project will monitor at least 3,000 elementary schools in the target regions to be included in the computation of the PDO indicators.4 PDO-level indicators School year School year School year School year 2014-15 2015-16 2016-17 2017-2018 Decrease of students 0 3% decrease 5% decrease 7% decrease with scores of zero in from the from previous from previous the Comprehension Baseline baseline year's value year's value domain subtest of the gathering to (Grade 1 (Grade 2 (Grade 3 relevant EGRA-mother take place in students) students) students) tongue tool school year 4 This is roughly 25% of all elementary schools in the five project regions. For monitoring purposes, these 3,000 elementary schools per year do not need to be the same elementary schools. 4 2013/14 0 3% increase 5% increase 7% increase Increase of students from the from previous from previous with at least 60% Baseline baseline year's value year's value scores in the relevant gathering to (Grade 1 (Grade 2 (Grade 3 EGMA-mother tongue take place in students) students) students) tool school year 2014/15 Decrease of students 0 3% decrease 3% decrease 3% decrease from disadvantaged from the from previous from previous groups5 with scores of Baseline baseline year's value year's value zero in the gathering to (Grade 1 (Grade 2 (Grade 3 Comprehension domain take place in students) students) students) subtest of the relevant school year EGRA-mother tongue 2014/15 tool Increase of students 0 3% increase 3% increase 3% increase from disadvantaged from the from previous from the groups with at least Baseline baseline year's value previous year's 60% scores in the gathering to (Grade 1 (Grade 2 value (Grade 3 relevant EGMA-mother take place in students) students) students) tongue tool school year 2014/15 Number of 4,038,780 4,038,780 4,038,780 4,038,780 beneficiaries Note: Results will be disaggregated by gender III. PROJECT DESCRIPTION A. Project Components 16. The project has three components: Component 1: Improvement of Teaching and Learning in Grades 1 to 3 Reading and Math Component 2: Strengthening of Accountability and Incentives of Department of Education Employees Component 3: Improvement of Program Design for Targeting Disadvantaged Groups The third and fourth PDO indicators will track performance of students/learners from the following targeted disadvantaged groups: (i) indigenous peoples; (ii) persons with disabilities; and (iii) children living in remote or difficult-to-access locations. Out of school children can no longer be assessed using the EGRA and EGMA tools as these are school-based assessments. Out of school children and adults will be served primarily through the Alternative Learning System of DepEd, which this project will also strengthen. 5 17. The project will focus on improving teaching and learning in early grades reading and math through: (i) enhancing and supporting DepEd's overall reading and math program; (ii) providing incentives and increasing accountability for results of school/education personnel; and (iii) helping ensure that the most disadvantaged have access to these educational services. By focusing on these key interventions, the foundational skills of learners can be greatly improved. This is very much in line with the objective of the Philippine basic education reform agenda: preparing students for higher learning and the world of work. Component 1: Improvement of Teaching and Learning in Grades 1 to 3 Reading and Math (US$180.25 million) 18. This component seeks to develop the capacity of teachers and schools to improve the teaching of reading and math skills of Grades 1 to 3 students in the target schools and consequently students' learning outcomes. Recognizing that reading and math is a vital tool for learning and a predictor of a student's success in school, DepEd is committed to develop these important foundational skills starting in the early grades. Sub-component 1.1: Improvement of early grade reading and math assessment in selected Mother Tongues (US$23.25 million) 19. The EGRA and EGMA tools in Mother Tongues will be developed during the first year of the project. In line with the recent implementation of DepEd's MTB-MLE program, the EGRA and EGMA tools for Grades 1 to 3 under this project will be developed in five of the twelve major mother tongue languages: Bikol, 11oko, Sinugbuanong Binisaya, Waray and Chabacano. At least six versions of EGRA and EGMA per Mother Tongue will be developed so that yearly assessments are credible and comparable. Sub-component 1.2: Professional development of key personnel in target regions to enhance capability in teaching grades 1 to 3 reading and math (US$120 million) 20. The intention is for the EGRA and EGMA tools to provide DepEd with a national diagnostic tool on the learning of reading and math skills which will be administered at least once a year in the early grades. On the basis of the results of the new reading and math assessment, the government will put in place different sets of interventions to enhance teaching and learning of early grade reading and math. This sub-component involves training on the interpretation of the results of the assessment, and training on classroom activities to help address reading and math skills gaps identified among students. 21. DepEd will organize trainings for Grades 1 to 3 teachers, as well as school principals from the identified schools. The project is targeting training of 11,998 teachers each for Grades 1, 2 and 3 (for a total 35,994 teachers) as well as 11,998 principals/head teachers assigned to identified schools. They will be coached in training others and to become resource persons for their peers and colleagues in their respective schools. The capability to introduce appropriate interventions for the unique learning challenges of each child as identified by the assessment results will be a critical innovation of this project. 6 Sub-component 1.3: Institutionalization of early grade reading and math program (US$37 million) 22. This sub-component aims to support DepEd develop and implement policies that will establish guidelines on the use of assessment tools in the appropriate mother tongue for each grade and help improve the implementation of DepEd's MTB-MLE policy in the target regions. Activities under this sub-component will ensure that DepEd implements necessary enabling policies to institutionalize the package of interventions tested and proven during project implementation. 23. With the introduction of EGRA and EGMA, DepEd will need to specify the role these two new tools will play in relation to the tools it already applies (i.e. the School Readiness Assessment - SReA - and the Philippine Informal Reading Inventory (Phil-IRI). DepEd therefore proposes to use: (i) the SReA tool as the assessment tool for Kindergarten; (ii) EGRA and EGMA for Grades 1-3 (because it coincides with the period wherein the mother tongue is more prominent in classroom instruction); and (iii) the Phil-IRI for Grade 4-6 (as it is in English and Tagalog only). The project would support DepEd's efforts in analyzing the feasibility of this proposal and developing the relevant policy. 24. Before being able to implement the MTB-MLE policy effectively, DepEd would require a complete list of all its mother tongues and their variations, which currently does not exist. The project would therefore support DepEd in its efforts to collect data and produce a comprehensive and reliable linguistic map, which will also help make informed decisions on material distribution and further contextualize assessment results. The government has started initial work on creating such a map of the country, which could also serve as the springboard for future and more detailed mapping activities. 25. Finally, to ensure that incoming generations of teachers are familiar with all EGRA and EGMA principles, DepEd's Teacher Induction Program (TIP) needs to be updated. Courses on early literacy and numeracy will be included in the TIP curriculum, which will be informed by DepEd's experience and evaluation of the reading and math program, including the use of EGRA and EGMA tools. Component 2: Strengthening of accountability and incentives of Department of Education Employees (US$82.5 million) 26. This component will be used to reinforce the effectiveness of the package of interventions proposed in Component 1 of the project. First, it aims to ensure that the implementation of the Performance Incentive Scheme for the Philippine Government will produce the intended result of improved performance, especially better teaching in early grades reading and math. Second, it plans to intensify the culture of accountability in schools, which was introduced through School-Based Management (SBM) reforms. Finally, it aims to address financial management constraints and bottlenecks. Although interventions under this component will have an impact on the overall education system, the project will monitor their effectiveness and impact specifically in the five target regions and selected schools. 7 Sub-component 2.1: Development of enabling mechanisms to enhance the effectiveness of implementation of the government's Performance Incentive Scheme (US$30 million) 27. Under this project, DepEd will devise a reliable Performance Monitoring System (PMS) that not only measures the achievement of performance indicator targets by year end, but also provides real-time information on the status and progress of achieving targets. This provides DepEd with an accurate dashboard of achievement of targets so that any lags or delays can be addressed in a timely manner. Once the details of the PMS and the incentive scheme are known, DepEd will also conduct mass information campaigns to explain the details of the implementation of the Performance Incentive Scheme. These activities will provide valuable insight into the effectiveness of the Performance Incentive Scheme for future reference. Sub-component 2.2: Improvement of school reporting and feedback mechanism (US$30 million) 28. DepEd understands the importance of stakeholder participation in planning, monitoring, and resource mobilization to achieve desired outcomes at the school level. During the Bank- financed National Program Support for Basic Education (NPSBE) project period, significant gains were achieved in institutionalizing community-based school planning and management of resources. However, the School Report Card (SRC) which the DepEd is currently using was found to be inadequate to properly inform stakeholders and stimulate participation. Therefore, DepEd will revise its SRC and institutionalize its use throughout all schools. DepEd aims for a high participation rate of schools using the updated SRC by project closing. Sub-component 2.3: Strengthening of DepEd's Financial Management Capability (US$22.5 million) 29. This sub-component will support the development of a FM manual and associated training of FM personnel to ensure that: (i) DepEd FM controls, policies and rules, both internal and external (e.g. those issued by oversight agencies), are codified, unified and made available to all FM personnel; (ii) FM reporting requirements are streamlined, simplified and completed on a timely basis; (iii) appropriate and relevant training is provided to all FM personnel; and (iv) consultations and consensus-building with oversight agencies on critical FM issues are carried out. Component 3: Improvement of program design for Targeting Disadvantaged Groups in the Target Regions (US$36.5 million) 30. The project will support the improvement of access and quality outcomes for disadvantaged groups in the target regions: poor students residing in areas far from a school or learning center, out of school youth, indigenous peoples and persons with disabilities. While these target groups are geographically dispersed and will inevitably benefit from wider DepEd programs and projects, focused attention on their specific contexts, especially on early grades reading and math, is expected to help improve national education outcomes substantially and more equitably. This component will focus on two main critical areas to ensuring effective interventions for any of these disadvantaged groups. 8 Sub-component 3.11: Improvement of targeting of Disadvantaged Groups in the Target Regions (US$12.5million) 31. In this subcomponent, DepEd will aim for the development of an information strategy that outlines the information gaps for programs serving target disadvantaged groups and how these can be addressed, as well as an information system that can produce reliable and updated information on these programs. Sub-component 3.2: Expansion of knowledge base on selected programs targeting Disadvantaged Groups and improvement of program design and implementation capabilities (US$24.0 million) 32. DepEd will invest in evaluating its ongoing programs which are serving the target 6 disadvantaged groups. Four major programs serving disadvantaged groups will be comprehensively reviewed, focusing on its design, budget and performance. The list of programs to be reviewed will be finalized three months after project start-up. It is the intention of DepEd management that these reviews be conducted by external groups or organizations, while making sure that key DepEd staff are also trained on the management of studies. B. Project Financing Lending Instrument 33. The lending instrument that has been selected is an Investment Project Financing (IPF), utilizing a results-based approach, with the amount and event of disbursements based on the achievement of pre-identified results, referred to as Disbursement-Linked Indicators (DLIs), on or before the last day of the relevant period and the incurring of spending levels for the eligible expenditures. Activities under selected key DepEd budget line items referred to as Eligible Expenditure Programs (EEPs) will constitute the eligible expenditures. LEAPS will support elements of the Government's BESRA within budget financing that will help guarantee the delivery of budget items critical to the reform agenda. 34. Reporting of DLIs Achieved. PDO level indicators will require yearly submission (2015 to 2018) of the EGRA and EGMA results for 3,000 schools. On the other hand, while DLIs have annual targets, verification will be done semi- annually. DepEd will submit a "Verification Report #1" to the Bank no later than February 15 of each year on the status of the results framework and the DLIs (covering DLI's achieved from July 1 to December 31 of each year), and will include the Interim Unaudited Financial Report for the same period as well as a DLI Verification Agent (DVA) assessment for selected DLIs, if applicable.8 DepEd will also prepare and submit to the Bank no later than August 15 of each year "Verification Report #2" on DLI 6 The programs initially identified are: (i) Multigrade Classrooms; (ii) Special Education; and (iii) School Feeding 7 This is roughly 25 percent of all schools in the five project regions. For monitoring purposes, these 3,000 schools per year do not need to be the same schools. 8 The first Verification Report will cover the period from July 1, 2013 (retroactive financing period start date) to Project Effectiveness date. The DLI Verification Agent assessment will cover selected DLls, as indicated in Annex 6 of this PAD as not all DLIs will be subject to review by the DVA. 9 achievement, covering the first six months of each year (which will also include the Interim Unaudited Financial Report for the same period as well as a DVA assessment, if applicable). If the Bank is satisfied (based on the "Verification Report" or evidence of individual DLI achievement) that the DLI requirements and the minimum levels of EEP disbursements that are equal to the DLI values have been met, and the verification protocol properly followed, it authorizes the withdrawal of proceeds in accordance with the disbursement rules associated with each DLI. 35. The DLIs and project activities will be monitored either through the independent validation to be conducted by a DVA to be hired by DepEd or through regular Bank implementation support missions jointly undertaken with the government. The DVA will submit verification reports on pertinent DLIs by February 15 and August 15 of each year. 36. Bank reviews: The Bank will conduct a mission in February and August of each year to coincide with the timing of the "Verification Report #1" as well as the "Verification Report #2" and review a sample from the findings of the DVA during implementation support missions. As part of the aide-memoire, the Bank will communicate to DepEd any comments or recommendations it may have to help accelerate or improve project implementation and DLI achievement. 37. Disbursement Arrangements. The GOP will pre-finance all of the expenditures under the EEPs and then get reimbursed by the Bank. EEPs were selected based on consultations with DepEd using the General Appropriations Act (GAA) and because they are directly linked to the project's DLIs. Each EEP represents a distinct line item from the DepEd budget. The EEPs that the project will support are: (i) school Maintenance and Other Operating Expenses (MOOE); (ii) in-service training (INSET); (iii) human resource training and development fund (HRTD); (iv) Abot Alam Program (AAP); and (v) Alternative Learning System (ALS).9 Project funds will be disbursed to the Bureau of Treasury as reimbursements for expenditure already incurred upon achievement of the DLIs. The accounting processes of DepEd are designed such that they can determine the funding sources of various expenditures and projects so there is no double financing and counting. 38. DLIs will have an associated amount or 'price tag', which will correspond to an amount of EEP to be reimbursed provided that DepEd spends the required minimum levels for each EEP (See Table 5). Each DLI has a specific set of disbursement rules and a verification protocol, which will guide the timing and level of disbursements for each DLI. For scalable DLIs, the minimum EEPs are also scalable using the same disbursement rules applicable to such DLIs. Withdrawal of funds from the Bank will be through the submission of duly signed Withdrawal Applications (WA) and IFRs. Given that the loan includes a front-end fee of US$750,000, it will only disburse US$299.25 million, which is the total price of all DLIs. 9 These expenditure items mostly include maintenance and other operating expenses such transportation, supplies and materials, training and utilities. These do not include personnel services, capital outlays, works or school laboratory equipment. 10 39. Remedies at the Bank's disposal for dealing with DLIs not having been met by the achievement date or not having conclusive evidence of DLI achievement, or insufficient EEP expenditures being incurred are spelled out in detail in the loan agreement as well as the DLI verification protocol. They include, amongst others, providing an additional 12 months to meet the DLI, an extended period to report eligible expenditures, withholding or cancelling the amount corresponding to a DLI. The DLI verification table in Annex 6 also includes additional information as well. C. Lessons Learned and Reflected in the Project Design 40. Lessons from basic education projects implemented by the government in the past have informed the design of this planned operation. While the NPSBE project covered a wide range of activities called for by BESRA and in all divisions, a key lesson from this project is that given DepEd's implementation and absorptive capacity limitations, it would arguably be more efficient to keep management focused on a limited number of critical reforms in areas that are lagging behind in basic education. As highlighted in several project implementation support missions on NPSBE and the Support for Philippine Basic Education Reform Project (SPHERE), there is a need to integrate and coordinate various reform initiatives, and refocus and align reform efforts to a limited number of critical areas to serve as "tipping points" to realize successful reform of the education system. In light of this, LEAPS will thus be covering fewer but more focused and strategic interventions and aim for specific outcomes. It will put great emphasis and focus on improving the acquisition of reading and math skills in the early grades, improve performance accountability, and work on interventions to address the needs of specific disadvantaged groups. These interventions are intended to selectively address remaining gaps in terms of learning and access and strengthening and expanding some of the critical reforms started with support from NPSBE. 41. Accountability and incentives for performance have largely been a missing factor in past reforms. There has been a failure to institute results-oriented incentives and social accountability mechanisms. The lack of accurate, timely, and coherent databases for evidence-based policy- making, performance monitoring, and social accountability was a problem identified in the past which is currently being addressed by the current administration and included as part of the project deliverables. 42. As experienced in previous Bank-supported education projects that involved "within budget" financing, the LEAPS project will continue to support country systems and will be managed and implemented by organic staff from DepEd in coordination with other government agencies. IV. IMPLEMENTATION A. Institutional and Implementation Arrangements 43. Overall responsibility for the project will be vested with the DepEd, which is in charge of meeting the objectives of the Philippine Development Plan on basic education, the BESRA and under it, the K to 12 program, and the President's Social Contract. Furthermore, a project management office within DepED will be established and charged with functions, 11 responsibilities and resources, and is expected to hire competent staff in adequate numbers, to be responsible for the overall coordination of the project activities. The DepEd units at the central, regional, division offices, and schools will be responsible for their respective levels, as reflected in their revised organizational restructuring plan. The Executive Committee composed of senior management of DepEd, chaired by the Secretary of Education, will provide the overall strategic directions for the project, review its progress, and address major issues. The other agencies of government, such as the DBM, DOF and National Economic and Development Authority (NEDA), COA and Civil Service Commission (CSC) will have specific roles in the implementation of the project to ensure the delivery of the results that the GOP will commit to achieving by the end of the project. 44. A DLI Verification Protocol has been developed with GOP which includes detailed definitions and conditions of DLIs to assess compliance and related disbursements. This DLI Verification Protocol shall guide DepEd, the Bank and the DVA on how to measure achievement of the DLIs and compute eligible disbursements for every assessment period. B. Results Monitoring and Evaluation 45. The results-based nature of the operation necessitates a strong monitoring and evaluation (M&E) system to ensure that the project is achieving the results desired. The data to monitor the PDO level indicators for reading and math will come from the EGRA and EGMA results in the target schools. The EGRA and EGMA assessments will be given in the five major mother tongue languages. The pre- and post- assessment scores will serve as the sources of data for measuring improvements in the domains assessed. 46. The data and information required to monitor and evaluate the intermediate indicators in Component 1 do not yet exist because the project is introducing innovative approaches for which there are no data points. Therefore, the performance measurement tools and protocols will be developed and integrated into the DepEd's existing information systems during project implementation. For Component 2, many of the data systems needed to measure the project indicators already exist within DepEd. These systems include: (i) DepEd's Electronic Basic Education Information System (EBEIS), School Information System; (ii) the SRC that is submitted annually by schools to the Division, up to the Regional and DepEd Central Offices; and (iii) DepEd's financial records, the financial information system, and reports to monitor progress towards the identification and resolution of key financial issues. While these systems already exist, it will be important for the systems to be reviewed and refined to accommodate new data required with the implementation of the new pilot performance incentive program. Tools will be developed to monitor the program implementation particularly looking into the overall performance rating and performance incentives awarded. Finally, Component 3 results indicator data will be obtained from various DepEd offices' records. C. Sustainability 47. As in the recent NPSBE project, LEAPS is financing those items in the DepEd budget that are critical for achieving the objectives of the DepEd's reform program. The Bank assistance through LEAPS will facilitate implementation of the reforms that have been articulated by the government. The government partners, particularly the Department of Education, Department of 12 Budget and Management (DBM), National Economic and Development Authority (NEDA), Department of Finance (DOF) and even the Civil Service Commission (CSC), were extensively involved in the project preparation especially in identifying key results (specified as the DLIs) and the corresponding prior and concomitant actions to be taken to ensure achievement of these DLIs. The key indicators and the programs and interventions that were selected to form part of the project components and deliverables are aligned with the overall policy and program priorities of the government in basic education in the next four years, as well as government's overall priorities in terms of spending and execution. V. KEY RISKS AND MITIGATION MEASURES A. Risk Ratings Summary Table Stakeholder Risk Rating Implementing DepEd Risk Capacity Substantial Governance Substantial Project Risk Design Substantial Social and Environmental Low Program and Donor Moderate Delivery Monitoring and Sustainability Moderate Overall Implementation Risk Substantial B. Overall Risk Rating Explanation 48. The overall implementation risk rating for the project is substantial. The key risks relate to: (i) implementation and technical capacity of the DepEd to implement the innovations introduced in the project; and (ii) the challenge of achieving agreed results in a results-based operation which could mean low or slow disbursement. The risk mitigation measures which will be evaluated during project implementation are indicated in Annex 4. VI. APPRAISAL SUMMARY A. Economic and Financial Analysis 49. Despite recent increases in public education spending the quality of basic education in the Philippines has remained relatively low over the last 10 years. Annex 7 shows that low quality is partly the result of children failing to master basic skills in the early grades of education. Given the linguistic diversity of the Philippines, the annex highlights the potential of mother tongue education to improve the acquisition of basic reading and mathematics skills. It shows that 13 changes to the language of instruction coupled with interventions to improve the teaching of basic skills can lead to significant improvements in the quality of education. 50. Annex 7 also shows that the potential social and economic benefits of raising the quality of education through the planned components of the project are considerable. While it is not possible to provide an accurate economic rate of return for a program of this kind, the annex suggests that the benefits of successfully implementing mother tongue education and improving levels of learning are large. These benefits are likely to outweigh the costs of the project and the additional spending the government incurs to implement the reforms supported by the project. B. Technical 51. The selected technical design builds on the Bank's deep policy engagement and extensive operations experience working with the GOP in basic education particularly with the DepEd in support of the GOP's BESRA, and within it, the K to 12 program of the new administration. The results orientation of the project is the Bank's response to the challenge of guiding and redirecting the GOP's efforts and priorities to address problems confronting the basic education sector including the following: (i) significant deficits in reading and math skills of the early grade learners; (ii) weak accountability mechanisms; (iii) absence of performance incentives impeding implementation of reforms; and (iv) inequitable access of specific target groups to quality basic education services further marginalizing important segments of society. The policy and program actions and results indicators included in the project are informed by international and local evidence, including impact evaluation/analyses on the various reform areas covered (e.g. early grade reading assessment, performance incentives, use of social accountability tools and use of mother tongue as a language of instruction). C. Financial Management 52. Based on a FM assessment of the project carried out in accordance with the "Financial Management Practices in World Bank-Financed Investment Operations," DepEd FM systems meet the Bank's requirements provided the recommended mitigating measures are incorporated in the design and implementation of the project. Also, although audit reports showed non- compliance to established internal controls, overall control environment is adequate for the implementation of the project. For additional information, please refer to Annex 3. D. Procurement 53. Based on the Eligible Expenditures that have been identified for the project, procurement will be done using the Government procedures acceptable to the Bank and consistent with the World Bank's "Guidelines: Procurement of Goods, Works, and Non-consulting Services under IBRD Loan and IDA Credits & Grants by World Bank Borrowers" dated January 2011, and "Guidelines: Selection and Employment of Consultants under IBRD Loan and IDA Credits & Grants by World Bank Borrowers" dated January 2011. 54. Based on a capacity assessment, DepEd was assessed to have adequate experience and capacity to carry out the relatively small procurement packages and activities to be funded under the project. Details are provided in Annex 3. 14 E. Social (including Safeguards) 55. Since some of the project sites would have the presence of IPs as project beneficiaries, OP 4.10 is triggered. The proposed project is expected to have positive social impact particularly in terms of improved access to basic education among marginalized groups, such as Indigenous Peoples (IPs), out of school youth and students with disabilities. DepEd updated its existing Indigenous Peoples Planning Framework (IPPF) under the predecessor project, NPSBE, based on the lessons learnt under the project. LEAPS will promote equity and social inclusion by adopting socially-responsive educational mechanisms and tools such as the use of mother tongue instruction and SBM that includes broader participation of stakeholders in the preparation, implementation, monitoring as well as resource mobilization for school improvement plans. Further, LEAPS includes strong social accountability mechanisms such as performance-based incentives; decentralization of responsibilities to school levels mainly through SBM; parental access to school information through the use of SRC; and mobilization of private and CSO partnerships. F. Environment (including Safeguards) 56. During the project concept stage, the government proposed the inclusion of classroom construction into project activities to be financed by the loan. To address routine environmental issues, the DepEd prepared an Environmental Code of Practice for classroom construction. As project preparation progressed, however, the government decided not to finance any school construction or rehabilitation as part of the LEAPS project. The final project design also excludes the financing of any other civil works, acquisition of potentially hazardous school laboratory equipment or materials/chemicals to be used in laboratories. Therefore, no negative or long-term environmental impacts are expected for any activity under the project. The PDO of improving the early grade reading and math skills of students in the target areas can be achieved independent of classroom construction through the conduct of professional development activities for teachers to enhance their assessment and teaching skills, and training of principals and head teachers to strengthen field-level support systems. The project's special focus on disadvantaged groups involves the implementation of alternative delivery modes and alternative learning systems which are usually conducted outside the classroom. However, OP 4.01 is triggered due to the need to assess and take into account, in an integrated manner, the social aspects of the project, particularly its impact on IPs. 15 Annex 1: Results Framework and Monitoring Country: Philippines Project Name: Learning, Equity and Accountability Program Support Project (P118904) Results Framework Project Development Objectives PDO Statement The project development objective is to improve the quality of grade 1 to 3 reading and math skills of children in Target Regions and Target Schools, with a special focus on those belonging to Target Disadvantaged Groups. These results are at Program Level Project Development Objective Indicators Cumulative Target Values Data Responsib Source/ ility for Indicator Core Unit of Baselin SY 2014- SY SY 2016- SY 2017- Frequen Methodolo Data Name Measure e 15 2015-16 17 18 cy gy Collection Decrease of Bureau of students Percenta Elementar .it (TBD) (TBD) -3% -8% -15% -15% Annual of with scores ge y of zero in Education Education 16 the (or Comprehens Rationaliz ion domain ation Plan subtest of equivalent the relevant ) EGRA- mother tongue tool Increase of Bureau of students Elementar with at least y 60% scores Department Education DPercenta in the (TBD) (TBD) 3% 8% 15% 15% Annual of (or relevant ge Education Rationaliz EGMA- ation Plan mother equivalent tongue tool ) Decrease of students from Bureau of disadvantag Elementar ed groups y with scores Department Education DPercenta of zero in (TBD) (TBD) -3% -6% -9% -9% Annual of (or the ge Education Rationaliz Comprehens ation Plan ion domain equivalent subtest of ) the relevant EGRA- 17 二一一 Intermediate ResultS IndiCatorS 川一一他 18 developed (or for each Rationaliz Selected ation Plan Mother equivalent Tonguein each Target Region Number Sub- CARAGA Type 0.00 2.00 10.00 10.00 10.00 10.00 Breakdo wn Number Sub- Region 9 Type 0.00 2.00 10.00 10.00 10.00 10.00 Breakdo wn Number L Sub- Region 8 Type 0.00 2.00 10.00 10.00 10.00 10.00 Breakdo wn Number Sub- Region 5 Type 0.00 2.00 10.00 10.00 10.00 10.00 Breakdo wn Number CAR Sub- 0.00 2.00 10.00 10.00 10.00 10.00 19 Type Breakdo wn Teachers from identified Bureau of schools Elementar trained to y improve Department Education their Number 0.00 0 11,998 23,996 35,994 35,994 Annual of (or capability to Education Rationaliz effectively ation Plan teach equivalent Grades 1 to ) 3 reading and math School principals / head Bureau of teachers Elementar from identified Department Education schools traie o Number 0.00 0 5,999 11,998 11,998 11,998 Annual of (or Education Rationaliz strengthen field level ationlan supportequivalent support system for improved early grade 20 reading and math teaching Policy on: (i) EGRA Developme . and ntvlo e Policy on Policy on EGM nt of an teheEGMA enabling Policy on Policy inclusion inclusion tool Bureau of environment the on the of early of early utilization; Elementar for the th fel fery and (ii) the fftie utilizatio utilizatio literacy literacy inc ion y n of the n of the and and Department Education implementat Text 0.00 EGRA EGRA numeracy numeracy of early Annual of (or ion of the and and course in course in literacy Education Rationaliz grades I - 3EGMA EGMA DepEd's DepEd's ation Plan reading and tools tools teacher teacher numera. equivalent math . . . . course in program inadopted adopted induction induction De)' program in porm rgam DepEd's the Target pgram pga teacher Regions induction program adopted Linguistic Bureau of map for Elementar each Target y Region Department Education developed Number 0.00 1 2 3 5 5 Annual of (or for Education Rationaliz improved ation Plan targeting equivalent and ) 21 implementat ion of the grades 1 - 3 reading and math program Office of Capability Undersecr of DepEd to Performa PMS etary for implement nce Regional its moyitorn 14,173 14,173 14,173 developed Department Operation Performanc Text 0.00 monitri staff staff staff and 14,173 Annual of s(or oriented oriented oriented staff Education Rationaliz elIncentive develope .Rtoai Scheme d oriented ation Plan improved equivalent Office of Developme ]Oe . the nt of an Policy on Undersecr enabling 8,474 13,415 13,415 SRC etary for environment Policy on target target target adopted for the use the use of schools schools schools and 13,415 Deaumn Reion Text 0.00 shos colsAnnual of Operation of school SRC use tre use refined use refined target Education s (or report cards adopted refined schools .i . .SRC SRC shosRationaliz (SRC) in the SRC use refined ation Plan Target SRC equivalent Regions Financial Financial 233 233 FM Department Office of managemen Text 0 0 manage finance finance manual Annual of the t capacity of ment and and adopted Education Undersecr 22 DepEd manual administrat administrat and etary for central, for all ive staff ive staff relevant Finance regional and DepEd trained trained staff and division finance trained Administr offices and ation (or improved administ Rationaliz rative ation Plan staff equivalent develope ) d and adopted Improveme nt of data managemen Ofic managem. Informatio Office of t for Informatio o . Informat n strategy Planning educational . Informatio n system developed ion dvlpdService programs n strategy for Department strategy . and (or serving Text 0 0 dl developed educationa informatio Annual of Rationaliz Target and 1 programs Education . Disadvantag doand adopted implement nmysem ationlan adopted implement equivalent ed Groups ed ed in the Target Regions Comprehens Office of ive reviews Planning completed DeatetService cosleted Number 0.00 1 2 3 4 4 Annual of (or on selected .dcto (or DepEd Rationaliz programs ation Plan 23 serving the equivalent Target ) Disadvantag ed Groups in the Target Regions 24 Annex 1: Results Framework and Monitoring Country: Philippines Project Name: Learning, Equity and Accountability Program Support Project (P118904) Results Framework Project Development Objective Indicators Indicator Name Description (indicator definition etc.) Decrease of students with scores of zero in the Submission of EGRA results of all 3,000 schools plus independent validation of Comprehension domain subtest of the relevant sample schools EGRA-mother tongue tool Increase of students with at least 60% scores in the Submission of EGMA results of all 3,000 schools plus independent validation relevant EGMA-mother tongue tool of sample schools Decrease of students from disadvantaged groups Submission of EGRA results of all 3,000 schools plus independent validation of with scores of zero in the Comprehension domain sample schools subtest of the relevant EGRA-mother tongue tool Increase of students from disadvantaged groups with Submission of EGMA results of all 3,000 schools plus independent validation at least 60% scores in the relevant EGMA-mother of sample schools tongue tool Number of beneficiaries Number of students that will be directly influenced by the collective deliverables of the project Intermediate Results Indicators Indicator Name Description (indicator definition etc.) 25 Versions of EGRA and EGMA tools developed for 5 versions of EGRA and 5 versions of EGMA each for Iloko, Bikol, Waray, each Selected Mother Tongue in each Target Region Sinugbuanong Binisaya and Chabacano CARAGA EGRA and EGMA tools in Sinugbuanong Binisaya Region 9 EGRA and EGMA tools in Chabacano Region 8 EGRA and EGMA tools in Waray Region 5 EGRA and EGMA tools in Bikol CAR EGRA and EGMA tools in Iloko Teachers from identified schools trained to improve 11,998 grade 1, 11,998 grade 2 and 11,998 grade 3 teachers trained on reading their capability to effectively teach Grades 1 to 3 and math reading and math School principals / head teachers from identified 11,998 school principals / head teachers trained on reading and math schools trained to strengthen field level support system for improved early grade reading and math teaching Development of an enabling environment for the Policy on: (i) EGRA and EGMA tool utilization; and (ii) the inclusion of early effective implementation of the grades 1 - 3 reading literacy and numeracy course in DepEd's teacher induction program adopted and math program in the Target Regions Linguistic map for each Target Region developed for DepEd has developed linguistic maps for each of the five Target Regions improved targeting and implementation of the grades 1 - 3 reading and math program Capability of DepEd to implement its Performance Y1: Performance monitoring system that will be used in the implementation of Incentive Scheme improved DepEd's Performance Incentive Scheme in place; Y2 onward refers to staff from 5 DepEd regional offices, 47 DepEd division offices and 14,121 Target Schools oriented on DepEd's Performance Incentive Scheme and performance monitoring. Development of enabling environment for the use of School report card policy (including guide-lines, procedures and templates) school report cards in the Target Regions implemented and 13,415 schools in the five target regions utilize the refined 26 SRC by end of project. Financial management capacity of DepEd central, FM manual adopted and Trainers' training on the financial management manual regional and division offices improved of at least 1 finance and administrative staff each from the central office, the 17 regional offices and the 215 division offices of DepEd conducted. Improvement of data management for educational Development and adoption of an information strategy for educational programs programs serving the Target Disadvantaged Groups serving the Target Disadvantaged Groups; and information system implemented in the Target Regions in accordance with the information strategy for educational programs serving the Target Disadvantaged Groups that aims to address information gaps of programs serving Target Disadvantaged Groups Comprehensive review completed on selected DepEd reviews programs targeting disadvantaged groups DepEd programs serving the Target Disadvantaged Groups in the Target Regions 27 Annex 2: Detailed Project Description PHILIPPINES: Learning, Equity and Accountability Program Support Project VI. PROJECT DEVELOPMENT OBJECTIVES A. PDO 1. The project development objective is to improve the quality of grade 1 to 3 reading and math skills of children in Target Regions and Target Schools, with a special focus on those belonging to Target Disadvantaged Groups. 2. For the purposes of the Project, the "target regions" are Regions 5, 8, 9, CAR and CARAGA. "Target schools" shall be defined as a subset10 of elementary and/or high schools in the target regions implementing the relevant project components. Furthermore, the "target disadvantaged groups" will include the following groups in the target regions: (i) indigenous peoples; (ii) persons with disabilities; (iii) children living in remote or difficult-to-access locations; and (iv) out-of-school children and youth. B. Project Beneficiaries 3. The Project beneficiaries include: (i) DepEd central, regional and division staff; (ii) school heads; (iii) teachers; (iv) public school students; (v) Indigenous Peoples students; and (vi) children with disabilities and (vii) out-of-school children and youth of the select target regions and schools. 4. The five target regions were selected because they are among the eight poorest regions in the country, based on the 2012 poverty statistics released during the second quarter of 2013. Two regions were selected from Luzon, one from Visayas and two from Mindanao. These regions also: (i) suffer from significant dropout rates (especially between Grades 1 and 2 ); (ii) record low performance in reading and math scores; and (iii) have a significant IP population and other disadvantaged groups. Table 1: Profile of Project by Target Regions Characteristic and Rank" CAR Region Region CARAG Region IX V A VIII Average Poverty Incidence'2 39.86% 39.8% 35.60% 40.23% 35.57% 3rd13 4th 5th 2nd 6th 10 Explained further in paragraph 5 1 Lower rank connotes poorer situation / performance 12 Average of 2006, 2009 and 2012 poverty incidence of the regions; 2012 poverty incidence obtained from http://nscb.gov.ph/povertv/defaultnew.asp 13 without Benguet, CAR region's poverty incidence rises to 41.18 in 2012, making it Rank 2 for that year 28 Number of poor households who are part 59.40% 26.20 0.80% 12.20% 0.80% of an IP group 14 st % 16th 9th 15th 6th Number of poor households with a 31.40% 18.50 19.10% 29.80% 10.50% disabled family member15 1st % 5th 2nd 13th 6th 2011 Regional incidence of Severely 1.44% 2.71% 4.63% 2.38% 3.64% Wasted Children 1 17th 10th 3rd 14th 9th 2010 Dropout rate 6.00% 10.41 5.79% 6.72% 6.42% 10I th 6th 8th 2nd 2012 G3 NAT Reading Comprehension in 52.03% 59.72 55.36% 74.31% 68.74% Filipino MPS 3rd % 6th 17th 16th 10th 2012 G3 NAT Math MPS 54.72% 65.20 58.18% 79.37% 72.64% 3rd % 9th 17th 16th 12th 5. Beneficiaries specifically within the five target regions can also be broken down by components: (i) Component I will benefit all 11,998 elementary schools by implementing Early- Grade Reading Assessment (EGRA) and Early Grade Mathematics Assessment (EGMA) tools; (ii) Component 2 will benefit all 14,121 schools (11,998 elementary plus 2,123 high schools), as well as officers and staff from DepEd's administrative offices through the project's accountability interventions; and (iii) Component 3 will support all 14,121 schools and students/learners from the targeted disadvantaged groups (i.e. indigenous peoples, persons with disabilities, out of school children and youth and children living in remote or difficult-to-access locations). By the nature of the interventions, target disadvantaged groups will also be served under Components 1 and 2. Overall, the five target regions include 14,121 elementary and secondary schools, 116,587 school teachers and approximately 4,038,780 students. 2011-2012 Elem Elem Elem Sec Sec Sec Schools Teachers Enrolment Schools Teachers Enrolment Rank 2: 1,626 11,658 400,346 391 4,323 158,265 CARAGA Rank 3: CAR 1,515 7,881 216,495 280 3,044 86,468 Rank 4: 2,083 16,610 584,083 377 5,820 213,082 Region IX Rank 5: 3,141 27,107 988,183 626 10,744 389,582 Region V Rank 6: 3,633 21,853 709,835 449 7,547 292,441 Region VIII 1 14 Department of Social Welfare and Development: National Household Targeting System for Poverty Reduction 15 DSWD: NHTS-PR 16 DepEd Health and Nutrition Center 29 Total 11,998 85,109 2,898,942 2,123 31,478 1,139,838 6. DepEd will implement all LEAPS activities to all schools nationwide. As a matter of fact, DepEd will set higher internal targets for itself to further accelerate the institutionalization of the reforms reinforced under LEAPS. This project, however, will focus on select target regions and the schools within these, but will be ready to provide strategic support to DepEd in their plan of nationwide implementation. C. PDO Level Results Indicators 7. The project outcome indicators for measuring achievement of the PDO are in the following table. These pertain mostly to improved performance of both regular and disadvantaged students using the EGRA and EGMA tools. The project will monitor at least 3,000 elementary schools in the target regions to be included in the computation of the PDO indicators. 17 Table 2: PDO-level Results Indicators PDO-level School School School Year School Year indicators Year 2014- Year 2015- 2016-17 2017-2018 15 16 Decrease of students 0 3% 5% decrease 7% decrease with scores of zero in decrease from from previous the Comprehension Baseline from the previous year's value domain subtest of the gathering baseline year's value (Grade 3 relevant EGRA- to take (Grade 1 (Grade 2 students) mother tongue tool place in students) students) school year 2014/15 0 3% 5% increase 7% increase Increase of students increase from from previous . Baseline from the previous year's value with at least 60%0. scores in the relevant gathering baseline year's value (Grade 3 to take (Grade 1 (Grade 2 students) tonueG A otr place in students) students) school year 2014/15 Decrease of students 0 3% 3% decrease 3% decrease from disadvantaged decrease from from previous groups18 with scores Baseline from the previous year's value 17 This is roughly 25% of all elementary schools in the five project regions. For monitoring purposes, these 3,000 elementary schools per year do not need to be the same elementary schools. 18 The third and fourth PDO indicators will track performance of students/learners from the following targeted disadvantaged groups: (i) indigenous peoples; (ii) persons with disabilities; and (iii) children living in remote or difficult-to-access locations. Out of school children can no longer be assessed using the EGRA and EGMA tools as 30 of zero in the gathering baseline year's value (Grade 3 Comprehension to take (Grade 1 (Grade 2 students) domain subtest of the place in students) students) relevant EGRA- school year mother tongue tool 2014/15 Increase of students 0 3% 3% increase 3% increase from disadvantaged increase from from the groups with at least Baseline from the previous previous 60% scores in the gathering baseline year's value year's value relevant EGMA- to take (Grade 1 (Grade 2 (Grade 3 mother tongue tool place in students) students) students) school year 2014/15 Number of 4,038,780 4,038,780 4,038,780 4,038,780 beneficiaries Note: Results will be disaggregated by gender. VII. PROJECT DESCRIPTION 8. The project has three components: Component 1: Improvement of Teaching and Learning in Grades 1 to 3 Reading and Math Component 2: Strengthening of Accountability and Incentives of Department of Education Employees Component 3: Improvement of Program Design for Targeting Disadvantaged Groups 9. The project will focus on improving teaching and learning in early grades reading and math through: (i) enhancing and supporting DepEd's overall reading and math program, (ii) providing incentives and increasing accountability for results of school/education personnel, and (iii) helping ensure that the most disadvantaged have access to these educational services. By focusing on these key interventions, the foundational skills of learners can be greatly improved. This is very much in line with the objective of the Philippine basic education reform agenda: preparing students for higher learning and the world of work. 10. As previously mentioned, support to the three components and proposed activities will be provided through an IPF with a programmatic design, and disbursements made against evidence that a particular DLI has been achieved and eligible expenditures incurred. Eligible expenditures refer to maintenance and other operating expenses incurred for programs under five key DepEd these are school-based assessments. Out of school children and adults will be served primarily through the Alternative Learning System of DepEd, which this project will also strengthen. 31 budget line items19 (Eligible Expenditure Program - EEP) and include: (i) School MOOE; (ii) in- service training (INSET); (iii) human resource training and development (HRTD); (iv) Abot Alam Program; and (v) Alternative Learning Systems. Component 1: Improvement of Teaching and Learning in Grades 1 to 3 Reading and Math (US$180.25 million) 11. This component seeks to develop the capacity of teachers and schools to improve the teaching of reading and math skills of Grades 1 to 3 students in the target schools and consequently students' learning outcomes. Recognizing that reading and math is a vital tool for learning and a predictor of a student's success in school, DepEd is committed to develop these important foundational skills starting in the early grades. Sub-component 1.11: Improvement ofEarly Grade Reading and Math Assessment in Selected Mother Tongues (US$23.25 million) 12. The EGRA and EGMA tools in Mother Tongues will be developed during the first year of the project. In line with the recent implementation of DepEd's MTB-MLE program, the EGRA and EGMA tools for Grades 1 to 3 under this project will be developed in five of the twelve major mother tongue languages: Bikol, 11oko, Sinugbuanong Binisaya, Waray and Chabacano. At least five versions of EGRA and EGMA per Mother Tongue will be developed so that yearly assessments are credible and comparable. 13. For several years, the DepEd was relying on the Philippine Informal Reading Inventory (PHIL-IRI)20 to assess the reading skills and gaps of their students. However, an in-depth review of this informal reading test by the University of the Philippines College of Education professors has revealed several weaknesses and deficiencies of the test, which made it an unreliable instrument to measure reading proficiency and gaps in the early grades. For math, there is no existing formal tool being used to assess competencies on a regular basis. The introduction of EGRA and EGMA instruments, and contextualized in Mother Tongue languages, would be a critical innovation. 14. DepEd has begun preliminary work in developing the EGRA and EGMA tools. The Bank and USAID have been providing technical assistance for capacity building and tool development. These tools will provide valuable information on the least-learned or least- demonstrated reading competencies. The two tools will also provide useful insights into the competency level of each student, thereby providing teachers with information necessary to plan class activities, adjust teaching methods and strategies accordingly and ensure that all pupils are improving at their own levels and pace. 15. At the same time, the Department is at an early stage of implementing the MTB-MLE policy with the intention to formalize teaching in a child's language until Grade 3 before 19 These EEPs were in place at the time of project preparation. In case any of these EEPs would be replaced by an equivalent successor budget line, such changes would have to be agreed to by the Bank first. 20 Phil-IRI is only administered in English and Filipino 32 gradually shifting to Filipino and English instruction in the higher grades. As a first step, DepEd, with the Komisyon ng Wikang Filipino (the government agency for all local languages and dialects), has identified 12 out of around 170 languages with the most users in the country and contextualized materials in those languages. 16. However, implementation of this program has been challenging: (i) teachers have been using mother tongue as the language of instruction without being trained on methodology or effectively maximizing a child's chance to learn in its mother tongue and (ii) the quality of teacher training and materials, as well as the availability of these key inputs for all early grade teachers in the country has been largely insufficient or inadequate (training on MTB-MLE too short, pedagogical materials not appropriate for intended schools or not available at all, etc.) 17. Recognizing these challenges, DepEd has committed to filling the gaps in the implementation of both the reading and math and the MTB-MLE programs by assessing: (i) the capability of teachers to teach early grades in the mother tongue; and (ii) the current reading and math level of the students in their own language. Developing EGRA and EGMA tools in the five mother tongues will provide DepEd with the necessary instruments to tackle these issues and collect the necessary information to be able to make informed decisions as previous teaching has largely applied a single strategy, regardless of the students' learning gaps and capacities. Sub-component 1.2: Professional development of key personnel in Target Regions to enhance capability in teaching grades 1 to 3 reading and math (US$120 million) 18. The intention is for the EGRA and EGMA tools to provide DepEd with a national diagnostic tool on the learning of reading and math skills which will be administered at least once a year in the early grades. On the basis of the results of the new reading and math assessment, the government will put in place different sets of interventions to enhance teaching and learning of early grade reading and math. Assessment results will also be used to track progress and identify schools that might need additional, targeted support to improve math and reading learning outcomes in Grades 1 to 3. This sub-component involves interpretation of the results of the assessment and training on classroom activities to help address reading and math skills gaps identified among students. 19. DepEd will organize trainings for Grades 1 to 3 teachers, as well as school principals from the identified schools. The project is targeting 11,998 teachers per grade (for a total 35,994 teachers) as well as 11,998 principals/head teachers assigned to the identified schools. In addition to training them on the use and administration of the new tools, they will also be coached in training others and to become resource persons for their peers and colleagues in their respective schools. The capability to introduce appropriate interventions for the unique learning challenges of each child as identified by the assessment results will be a critical innovation of this project. 20. To improve classroom practices, teachers will be trained on how to adjust their teaching methods and approaches based on assessment results. Understanding students' areas of difficulty and cognitive struggles would allow teachers to design more effective lessons that target students' specific needs. Adjusting how teachers teach math and reading should positively 33 influence pupils' learning outcomes in these two subjects. Teachers will be supported not only in monitoring and assessing the skills acquired by the pupils but also in terms of identifying their training and other capacity-building needs in their respective schools/districts. 21. As part of the professional development of teachers, support will be given to the: (i) development of a teacher's general classroom assessment skills which will be made part of the teacher education curriculum (pre-service teacher training coursework and practicum); and (ii) training on general classroom assessment and observation techniques to help teachers conduct ongoing monitoring of students' reading and math skills (in-service teacher training). Furthermore, specific learning modules will be developed to strengthen teachers' ability to teach beginner level math and reading since it is not a skill taught to all teachers during college. These professional development activities would include: (i) hands-on and inquiry-based trainings, using material that is user-friendly and designed based on the results of the early grade assessments; and (ii) mentoring of teachers, both face to face and long-distance. 22. Furthermore, principals and school heads will be instrumental in institutionalizing the use of these new tools and application of their results in their respective schools. Aside from being trained on the same topics taught to teachers, principals and school heads will be trained on how to effectively support these reading and math initiatives. The aim is for the whole school to have a sustainable and effective reading and math program. Sub-component 1.3: Institutionalization of early grade reading and math program (US$37 million) 23. This sub-component aims to support DepEd develop and implement policies that will establish guidelines on the use of assessment tools in the appropriate mother tongue for each grade and help improve the implementation of DepEd's MTB-MLE policy in the target regions. Activities under this sub-component will ensure that DepEd implements necessary enabling policies to institutionalize the package of interventions tested and proven during project implementation. 24. With the introduction of EGRA and EGMA, DepEd will need to specify the role these two new tools will play in relation to the tools it already applies (i.e. the School Readiness Assessment - SReA - and Phil-IRI). DepEd proposes to use: (i) the SReA tool as the assessment tool for Kindergarten; (ii) EGRA and EGMA for Grades 1-3 (because it coincides with the period wherein the mother tongue is more prominent in classroom instruction); and (iii) the Phil- IRI for Grade 4-6 (as it is in English and Tagalog only). The project would support DepEd's efforts in analyzing the feasibility of this proposal and developing the relevant policy. 25. Before being able to implement the MTB-MLE policy effectively, DepEd would require a complete list of all its mother tongues and their variations, which currently does not exist. The project would therefore support DepEd in its efforts to collect data and produce a comprehensive and reliable linguistic map, which will also help make informed decisions on material distribution and further contextualize assessment results. The government has started initial work on creating such a map of the country, which could also serve as the springboard for future and more detailed mapping activities. 34 26. Finally, to ensure that incoming generations of teachers are familiar with all EGRA and EGMA principles, DepEd's Teacher Induction Program (TIP) needs to be updated. Courses on early literacy and numeracy will be included in the TIP curriculum, which will be informed by DepEd's experience and evaluation of the reading and math program, including the use of EGRA and EGMA tools. 27. This sub-component is critical as it will safeguard all the interventions introduced during project implementation. This will ensure that the DepEd implements programs with the necessary enabling policies that can make operations easier and more effective. By clearly defining the assessment tools to be used in specific circumstances, by adjusting assessments and interventions to suit the real mother tongue of the student and by ensuring that incoming teachers will have training on EGRA and EGMA, the project will institutionalize the package of interventions tested and proven during project implementation. Component 2: Strengthening of Accountability and Incentives of Department of Education Employees (US$82.50 million) 28. This component will be used to reinforce the effectiveness of the package of interventions proposed in Component 1 of the project. First, it aims to ensure that the implementation of the Performance Incentive Scheme for the Philippine Government, as implemented by DepEd, will produce the intended result of improved performance, especially better teaching in early grades reading and math. Second, it plans to intensify the culture of accountability in schools, which was introduced through School-Based Management (SBM) reforms. Finally, it aims to address financial management constraints and bottlenecks. Although interventions under this component will have an impact on the overall education system, the project will monitor their effectiveness and impact specifically in the five target regions and selected schools. Sub-component 2.1: Development of enabling mechanisms to enhance the effectiveness of implementation of the Government's performance incentive scheme (US$30 million) 29. The current administration recently issued Executive Order (EO) No. 80 establishing a performance-based incentive system for government employees (called the Performance-Based Bonus or PBB). This EO will be effective immediately and is open to further revisions in future years of implementation. This scheme intends to harmonize all the bonus structures in government and standardize performance monitoring across agencies. The maximum amount to be provided by the new scheme is currently four times (from PhP 10,000 in 2011 to PhP40,000 in 2012 for best performers in the best service units) higher than previous bonuses in recent history. 30. This significant increase in bonus amounts raises the concern of collusion and other forms of gaming of the incentive scheme. If that happens, the design of the scheme will break down and not produce its intended results. In this light, the project will focus on helping ensure that whatever form and structure the Performance Incentive Scheme of the government takes, it will be implemented with the least degree of inefficiency. 35 31. To date, the DepEd has drafted the implementing guidelines on the PBB for the Department for 2013, including specific performance indicators for each of the delivery units (i.e., School, Division, Region, Central Office) to determine their corresponding performance category. These performance indicators include the National Achievement Test Scores and dropout rate at the school level to timely submission of pertinent FM-related reports or data at the Division level to percentage of accomplishment vis-a-vis the Annual Work and Financial Plan of the Region. These specific indicators are currently undergoing review by the inter-agency Task Force specifically set up for the PBB. 32. Under this project, DepEd will devise a reliable Performance Monitoring System (PMS) that not only measures the achievement of performance indicator targets by year end, but also provides real-time information on the status and progress of achieving targets. This provides DepEd with an accurate dashboard of achievement of targets so that any lags or delays can be addressed in a timely manner. Once the details of the PMS and the incentive scheme are known, DepEd will also conduct mass information campaigns to explain the details of the implementation of the Performance Incentive Scheme. These activities will provide valuable insight into the effectiveness of the Performance Incentive Scheme for future reference. 33. This deliverable was included in the project because the incentive scheme has great potential to significantly improve performance on a Department-wide basis. Previous performance incentive systems have failed to produce wide-scale improvements in performance due to the weak enforcement of the criteria or the amounts involved were too small to matter even to the lowest level employees. However, the most significant hindrances to the successful implementation of previous incentive schemes were lack of complete information and ineffective monitoring. While the project cannot easily influence both the criteria and amounts of the incentives, it can help DepEd implement the scheme more effectively. Sub-component 2.2: Improvement of school reporting and feedback mechanism (US$30 million) 34. DepEd understands the importance of stakeholder participation in planning, monitoring, and resource mobilization to achieve desired outcomes at the school level. During the NPSBE project period, significant gains were achieved in institutionalizing community-based school planning and management of resources. However, the School Report Card (SRC) which the DepEd is currently using was found to be inadequate to properly inform stakeholders and stimulate participation. 35. Therefore, DepEd will revise its SRC and institutionalize its use throughout all schools. DepEd aims at 100 percent participation rate of schools using the updated SRC by project closing. Using the new SRC is also expected to contribute to: (i) a strengthened participatory school planning process; (ii) a participatory SBM self-assessment exercise; (iii) convening of regular Parent-Teacher Association meetings; (iv) holding of regular School Governing Council meetings; and (v) organizing "State of the School Addresses" and similar fora. 36. This deliverable was included in the project to further strengthen the implementation of SBM towards delivering better results in teaching early grades reading and math skills. During the NPSBE project period, significant gains have been achieved in institutionalizing community- 36 based school planning and management of resources. By intensifying stakeholder reporting, the education system will further improve its accountability to the clients. In addition, a more informed stakeholder group will be able to provide more substantial feedback during the school planning process and be more empowered to support school operations. Sub-component 2.3: Strengthening of DepEd's Financial Management Capability (US$22.5 million) 37. With the aim of achieving better results in early grades reading and math through strengthening the implementation of SBM, DepEd will adopt a more systematic approach to addressing its long-standing financial management (FM) issues. DepEd will deliberately address internal FM concerns first, to ensure that effective and efficient internal controls and financial data analysis will be in place throughout the agency. The presence of a strong FM environment will ensure fiduciary support to the program. After these so-called housekeeping activities, DepEd will also conduct intensive consultations and discussions with oversight agencies (e.g. the DBM and COA) to resolve FM issues that affect budgeting, funds flow, accounting, internal control and financial reporting. 38. This deliverable has major implications on DepEd program implementation. Covering approximately 46,000 schools, funds flow and financial reporting pose major implementation challenges. Issues noted in previous DepEd programs and projects include the following: (i) unclear guidelines/varied interpretations on eligibility of expenses, which significantly slowed down project implementation; (ii) stringent document requirements resulting in untimely liquidation of school funds/grants; (iii) limitations on the opening of bank accounts of schools to transfer their monthly budget allocation usually encounter opposition from financial oversight agencies; and (iv) numerous financial reporting requirements of the Central Office and oversight agencies which tend to diminish the relevance of financial data analysis. This sub-component will support the development of a FM manual and associated training of FM personnel to ensure that: (i) DepEd FM controls, policies and rules, both internal and external (e.g. those issued by oversight agencies), are codified, unified and made available to all FM personnel; (ii) FM reporting requirements are streamlined, simplified and completed on a timely basis; (iii) appropriate and relevant training is provided to all FM personnel; and (iv) consultations and consensus-building with oversight agencies on critical FM issues are carried out. Component 3: Improvement of Program Design for Targeting Disadvantaged Groups (US$36.5 million) 39. The project will support the improvement of access and quality outcomes for disadvantaged groups in the target regions: poor students residing in areas far from a school or learning center, out of school youth, indigenous peoples and persons with disabilities. While these target groups are geographically dispersed and will inevitably benefit from wider DepEd programs and projects, focused attention on their specific contexts, especially on early grades reading and math, is expected to help improve national education outcomes substantially and more equitably. This component will focus on three main critical areas to ensuring effective interventions for any of these disadvantaged groups. 37 Sub-component 3.1: Improvement of targeting of disadvantaged groups in the target regions (US$12.5 million) 40. Participation rate in the elementary level has reached 95.96 percent in 20112. This implies that almost all of the children of the correct school age are going to school. Nonetheless, the Millennium Development Goal of universal primary education will not be attained even after 2015 if DepEd is not able to reach the most disadvantaged groups. In elementary, this implies the remaining 2 to4 percent of children who are probably in the most difficult situations. For the secondary level, 38 percent of children who should be in school are not and it is unclear what form of disadvantage these people are experiencing that is influencing their decision not to attend high school. 41. Current data on these disadvantaged groups is incomplete and outdated, which makes it difficult to determine the extent of their access to basic education services. There is a need to improve the quality and availability of data related to the education of children belonging to these disadvantaged groups, in terms of coverage and reliability to establish sound policies, strategic plans, and ensure the provision of effective services and support. In this subcomponent, DepEd will aim for the development of an information system that can produce reliable and updated information on these target disadvantaged groups. However, before a meaningful information system can be developed, DepEd first needs to identify an information strategy outlining the details of the information gap for programs serving target disadvantaged groups and how these gaps can be addressed. 42. Currently, DepEd is developing a Learner Information System (LIS) in phases. Central to the LIS is the Learner Reference Number (LRN) that assigns a unique number to each pupil/student/learner (the latter for enrollees of ALS). The LRN is expected to make student performance tracking easier and more reliable. The proposed information system for programs serving disadvantaged groups (Indigenous Peoples, children with disabilities, children living in remote or difficult-to-access locations and out-of-school children and youth) may be a standalone system or may be an additional/supplementary module that can be integrated within the expanded LIS. Sub-component 3.2: Expansion of knowledge base on selected programs targeting disadvantaged groups and improvement of program design and implementation capabilities (US$24 million) 43. DepEd will invest in evaluating its ongoing programs which are serving the target disadvantaged groups. Four major programs serving disadvantaged groups22 will be comprehensively reviewed, focusing on its design, budget and performance. The list of programs to be reviewed will be finalized three months after project start-up. It is the intention of DepEd management that these reviews be conducted by external groups or organizations, while making sure that key DepEd staff are also trained on the management of studies. 21 Computed using 2010 Census data 22 The programs which may be included in the program reviews include: (i) Multigrade; (ii) Special Education; (iii) School Feeding; (iv) Alternative Learning System; and (v) Modified In-School, Off-School Approach. 38 44. While the DepEd programs for specific disadvantaged groups have been implemented for long periods of time, there is still no credible information on the performance of these programs. The DepEd policymakers have no scientific basis for allocating and justifying budget requests from various program implementers. An evaluation of these major programs is in line with the Government's zero-based budgeting principle, where it can provide higher allocations for certain programs if there is proof of its effectiveness. 45. After analyzing the performance of selected major equity-related programs, DepEd will redesign aspects of their implementation. These revisions may include but not be limited to program objectives, implementation strategies and budget requirements and allocations. Such redesign can be seen through: (i) new policy issuances, (ii) re-orientation re-training activities; (iii) realignment of budget allocations; (iv) development of new materials; and (v) other activities introducing substantial improvements in the implementation of the programs. 46. This deliverable was included in the project because it will help institutionalize evidence- based policy-making in the Department. Through this sub-component, DepEd will not just re- strategize program implementation based on evaluation studies; it will also ensure that sufficient funds are available to cover these more useful activities. Given that DepEd has many equity- related programs for the target disadvantaged groups, the project will only track progress on four programs. However, the process of reviewing and redesigning introduced by the project will be used to evaluate other DepEd projects, whether mainstream or equity-related in nature. 47. This entire sub-component was included in the project because it will help institutionalize evidence-based policy-making in the Department. Often, policies for the general clients of DepEd are easy to develop because of availability of information and cumulative experience of the Department in serving this mainstream group. However, there is a shortage of documentation on field experience in serving very specific disadvantaged groups and an outright absence of data on the said groups, especially on their performance in reading and math. Under such uncertainty, policy decisions at the national level, no matter how informed by theory and the collective competence of policy-makers, always run the risk of being ineffective and inefficient. Through this sub-component, DepEd will not just re-strategize program implementation based on evaluation studies; it will also ensure that sufficient funds are available to cover these more useful activities. 39 Annex 3: Implementation Arrangements PHILIPPINES: Learning, Equity and Accountability Program Support Project Project Institutional and Implementation Arrangements 1. Overall responsibility for the project will be vested with the DepEd, which is in charge of meeting the education goals and objectives articulated in the Philippine Development Plan, the President's Social Contract and the BESRA. The DepEd units at the central, regional, division offices and schools will be responsible for their respective roles, as reflected in their revised 23 organizational restructuring plan . The Executive Committee composed of senior management of the DepEd, chaired by the Secretary of Education, will provide the overall strategic directions for the project, review its progress, and address major issues. With the policy shift in recent years, decision-making powers are being decentralized to local-level managers at the region, division, district, and school levels. Direct release of funds to the DepEd regional offices, division offices, and implementing unit secondary schools24, will continue. The DBM will ensure the timely release of the DepEd budget allocation, including the DepEd budget line items included in the EEP of the project. DBM will provide supervision and advisory role in the overall implementation of the government-wide Performance-Based Incentive system. Together with COA, the DBM will work closely with the DepEd to improve the financial management capability of the DepEd, and consequently improve budget execution and redound to the improvement in the targeted outcomes. The NEDA, the government's socio-economic planning agency, will ensure alignment of the project targets with the overall priorities of the government in basic education, and its consistency with the Social Contract and the Philippine Development Plan. NEDA will also monitor the implementation of the project as part of its annual portfolio review. The DOF will be the main representative of the Philippine Government with respect to the implementation of the loan. The Civil Service Commission and other agencies will have specific roles in the implementation of the project to ensure the delivery of the results that the Government will commit to achieve by the end of the project. 2. Primary responsibility for the Reading and Math program under Component 1 is lodged in the Curriculum and Instruction, with the Bureau of Learning Delivery and Bureau of Education Assessment, and their Regional and Division counterparts taking the lead in the implementation, monitoring and evaluation of the various initiatives under the program. The National Educators Academy of the Philippines, the training arm of the DepEd will take the lead in the conduct of the training programs for teachers in the early grades and school heads, but with technical support from the technical experts to be mobilized. 3. The Bureau of Human Resource and Organizational Development of the Governance and Operations would be responsible for the general policy, direction, management and oversight of the performance incentives system including activities under Component 2. Key aspects of the 23 The DepEd Rationalization Plan was approved in November 2013 and is in its initial phase of implementation. 24 Implementing unit secondary schools directly receive fund transfer from DBM while the rest of secondary schools receive their funds from the Schools Division Office 40 implementation of the program would be delegated to the Division Superintendents and the Regional Directors. Consistent with their core responsibilities, the latter would be assigned the task of monitoring, collecting, maintaining, securing and certifying the data required for performance monitoring. 4. The School Effectiveness Division under the Governance and Operations will lead the initiatives to improve SBM practice, and ensure the effective use of the SRCs as a social accountability tool. The Finance and Administration, on the other hand, will be in charge of the sub-component to address bottlenecks and challenges in financial management, including on budget execution, and will take the necessary actions to resolve these. It will also be in charge of implementing the required activities under the third subcomponent of Component 2. 5. Equity-related activities under Component 3 of the Project will be under the Planning Service and Information and Communications Technology Service. These will have overall responsibility in the achievement of all protocols and DLIs while being supported by various DepEd offices. Specifically, the Education Management Information System of the Planning Service will be responsible for implementing the protocols and achieving the DLIs on Data. The Project Development Division of the Project Management Service will be responsible for implementing the protocols and achieving the DLIs on the Program reviews and the Impact Evaluation. They will, however, be supported by the proponents of all the programs being implemented, namely: Bureau of Curriculum Development, Bureau of Learning Delivery and Bureau of Education Assessment. 6. The Project Management Division of the Project Management Service in DepEd will be in charge of overall coordination of project activities among responsible implementing units. PMD will ensure the preparation and timely submission of required reports and facilitate regular monitoring of project initiatives and provide an oversight role in terms of ensuring compliance by DepEd/Govemment on the loan conditions and covenants. Financial Management, Disbursements and Procurement Financial Management 7. Arrangements for oversight and accountability include the following: * An organic unit will oversee the project implementation and facilitate the timely preparation of financial reports and maintenance of adequate FM system. * As part of the IFR submission and Quarterly Consolidated Report of Disbursements, DepEd will design an expenditure tracking system of the EEP identified in the 2013 General Appropriations Act (GAA) and develop a financial reporting protocol to be rolled-out in all regions, divisions and implementing units to monitor expenses per EEP. Sufficient FM manpower must also be ensured in all levels of the DepEd to track actual EEP expenses and reconcile against budget line items including audited reports to measure financial performance. * The IFR for the second semester of the calendar year will show a reconciliation of the EEPs in the IFR submissions with the annual audited financial statements 41 * DepEd will monitor and resolve issues noted by COA. A time-bound action plan will be made to resolve COA issues. FM Organization and Staffing Arrangements 8. The project will use the existing structure for FM of DepEd. FM units in the Central Office that are involved in financial management have adequate and qualified officers and staff. The Accounting Division also has a dedicated staff for foreign assisted projects that facilitate the financial transactions and monitoring of such projects. DepEd should ensure adequate number of personnel who will track expenditures and facilitate submission of reporting requirements in the region, division and school levels during the life of the project. Budgeting Arrangement 9. Budget proposals are prepared annually by DepEd and submitted to the DBM for review. The annual budget of the DepEd is included in the annual GAA which has to be approved by Congress. Five budget line items have been identified to form part of the EEP for this project. GOP need to ensure that such expenditure line items remain in the budget over the life of the project otherwise disbursement cannot occur. Accounting Arrangement 10. DepEd conforms to the New Government Accounting System (NGAS) which COA issued as per COA Circular No. 2001-004 dated October 30, 2001 and took effect January 1, 2002. The bookkeeping segment of NGAS is computerized and is referred to as electronic NGAS (eNGAS) but is only operational at the Central Office and rolled out in only one Regional Office. Accounting records will be maintained by the DepEd Central Office using the eNGAS financial management system. However, as the EEPs were selected from budget reports that are classified per expense activity, program or project (e.g. kindergarten expenses, physical fitness, school health and nutrition), there is a reporting gap with eNGAS which only reports on a functional expenditure category (e.g. salaries, transportation, supplies). The eNGAS has no reporting capability to categorize expenses per activity, program or project. The EEP cost accounting records will have to be supplemented by spreadsheets detailing the functional expense categories. DepEd will have to develop a financial reporting protocol to be rolled-out in all divisions to monitor expenses per EEP. 11. As project funds are already incorporated into the budget, the only additional financial work load will be the semester IFRs supplemented by the quarterly consolidated report of EEP expenditures to monitor expenses per EEP. Resources will need to be made available to ensure timely completion of the IFR and facilitate timely disbursements. It is recommended that DepEd allocate a designated officer for this task. 42 Internal Controls 12. Basic internal controls such as separation of conflicting functions, segregation of bookkeeping functions from custodianship of assets, reconciliation of subsidiary records with the corresponding general ledger control account, and a multilevel system of review and approval of transactions before their execution are required under NGAS and are assessed by the Bank to be adequate. Although audit reports showed non-compliance with established internal controls, overall control environment is adequate for the implementation of the project. DepEd had been very consistent in monitoring the resolution of audit issues noted by the external auditors. Internal Audit 13. As part of the control environment, the IAS conducts internal audits as part of the mitigating measures to reduce fiduciary risks. Any issues and control strengthening measures raised by the IAS that affects the EEPs and the projects will require management response and evidence that the issue is being addressed as part of the subsequent internal audit report. Should there be IAS reports covering the EEPs, such reports will also be furnished to the Bank within three months after the end of the audited period while semi-annual updates on the status of any issues and recommendations made by IAS will be furnished to the Bank within two months after the end of each semester. Funds Flow 14. A Modified Disbursement Scheme (MDS) is being used for the transfer of funds from the Bureau of Treasury (BTR) to government agencies. Under the system, MDS accounts with an authorized government servicing bank (GSB) are maintained for each agency and their regional offices. The BTR makes initial deposits to each MDS account. Notice of Cash Allocation (NCA) is a document issued by the DBM which notifies the agency of the availability of cash in the GSB and authorizes the agency to use this available cash to pay its obligations. DBM releases the NCA directly to the DepEd Central office, Regional offices and Implementing Units with financial staff. The head office of the GSB submits to BTR on a daily basis a summary of cheques paid and a request for replenishment. BTR then releases the replenishment after checking the summary of cheques submitted by the head office of the GSB against the summary of cheques received from the branches of the GSB through its provincial and regional offices. The project will utilize the above-described funds flow arrangement, since the project is financing within the DepEd budget. 15. The project will fund exclusively expenditures incurred for the 5 selected EEPs on a reimbursement basis. As such, the maintenance of a designated account throughout the duration of the project is not necessary. Financial Reporting Arrangement 16. Under this project, DepEd will prepare and submit semestral IFR to the Bank along with the status of the various DLIs which will form part of the documentation for the Withdrawal Application. This report will: (i) keep track of the DLIs to show which DLIs have been met, and 43 the values disbursed or not yet disbursed; and (ii) provide proof that expenditure levels for the EEPs meet the required minimum levels. The information for the IFR will have to be consolidated as the data will come from the various division offices. To ensure timely release of funds, the IFR will be due within 45 days after the end of each semester. 17. The IFR, as a document, will summarize the data from the expenditure tracking system of the EEPs covered by the project. A financial reporting protocol will have to be developed and rolled-out in all regions, divisions, and implementing units to monitor expenses per EEP and conduct a mandatory reconciliation of EEPs with the expenses in the GAA. The EEP data in the IFR submissions during the year will also be reconciled with the annual audited report. Attachment 1 below outlines the general format of the IFRs. 18. To ensure timely monitoring of the levels of spending on the five EEPs, DepEd will also submit a consolidated report of disbursement on a quarterly basis 45 days after the end of each quarter. The quarterly submission will facilitate the early resolution of issues prior to the submission of IFRs that will support withdrawal applications. External Audit 19. The Project Financial Statements will be audited by COA. The scope of the audit will include a review of the Eligible Expenditure Programs to be conducted on an annual basis and submitted to the Bank within six months after the end of each calendar year. The audit will be conducted in accordance with International Standards on Auditing. FM personnel of the Agency should work closely with COA to minimize the risk of late receipt of audit reports. Summary of FM Reports 20. Under this project, DepEd will submit the following reports to the Bank throughout the life of the project: 21. Semester IFRs within 45 days after the end of each calendar semester. 22. Quarterly Consolidated Report of Disbursement within 45 days after the end of each quarter. 23. Annual Audited Project Financial Statements together with a copy of the management letter reflecting the auditor's findings and recommendations will be submitted to the Bank no later than 6 months after the end of each fiscal year. The auditor for this project is COA. DepEd will also reconcile the EEPs in the IFRs with the audited reports. DepEd will also monitor issues noted by COA and prepare a time bound action plan to resolve all issues. Supervision Plan 24. The scope of the supervision is left to the professional judgment of the FM specialist. It may cover any of the following: (i) review of the continuous maintenance of adequate FM system by DepEd; (ii) review of IFRs and Withdrawal Applications; (iii) follow up of timeliness 44 of FM reporting and actions taken on issues raised by external auditors; (iv) review of the project's financial reports such as the quarterly report of disbursements; (v) follow up of the status of any agreed action; and (vi) review of compliance with the financial covenants including FM-related DLI 8. Disbursements Disbursement Arrangements 25. The Project will be implemented using the GOP and DepEd's financial management systems as the basis for budgeting, accounting, internal controls, financial reporting and auditing. 26. The lending instrument that has been selected is Investment Project Financing, utilizing a results-based approach, with the amount and event of disbursements based on the achievement of pre-identified results, referred to as DLIs and the incurring of eligible expenditures. These DLIs include intermediate outcomes, implementation performance or institutional change indicators which are critical to achieving the sector's desired outcomes and the project's PDO. They were selected in collaboration with the Government. Activities under the selected EEPs will constitute the eligible expenditures. Similar to the NPSBE, LEAPS will support elements of the Government's BESRA within budget financing that will help guarantee the delivery of budget items critical to the reform agenda. 27. The loan will be disbursed over a period of 5 years based on the achievement of DLIs and incurring of eligible expenditures using the Reimbursement disbursement method, documented by the IFRs (the Report-based documentation method). 28. The breakdown of project costing by component is as follows: Component 1 - Improvement of Teaching and Learning in Grades 1 to 3 Reading and Math (US$180.25 million) Component 2 - Strengthening of Accountability and Incentives of Department of Education Employees (US$82.50 million) Component 3 - Improvement of Program Design for Targeting Disadvantaged groups (US$36.50million) 29. DLIs will have an associated amount or 'price tag' which will correspond to an amount of EEP to be reimbursed provided that the DepEd spends the required minimum levels for each EEP. Withdrawal of funds from the Bank will be through the submission of duly signed WA and IFRs. Given that the loan includes a front-end fee of US$750,000, it will only disburse US$299.25 million against the total cost of DLIs. Table 3 is a summary of the DLI values and amount that will be disbursed to DepEd per semester if the DLIs are 100 percent achieved. 45 Table 3: DLI and EEP Allocations Withdrawal Application (WA) Number 1 2 3 4 5 6 7 8 9 Period Period 1 Period 2 Period3 Period4 Category per Loan Agreement 1(a) 1(b) 1(c) 1(d) 1(e) 1(f) 1(g) 1(h) 1(i) Period Cowred 1 July 2013 to Signing Date 1 July 2014 1 Jan 2015 1 July 2015 1 Jan 2016 to 1 July 2016 1 Jan 2017 1 July 2017 Signing Date to 30 June 2014 to 31 Dec to 30 June to 31 Dec 30 June 2016 to 31 Dec to 30 June to 31 Dec 2014 2015 2015 2016 2017 2017 VerificationPeriodandlFRSubmission May-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Target WB Disbursement Jun-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 Disbursement Linked Indicators DLI No. Value EEP Component 1 1 23,250,000 MOOE 4,650,000 18,600,000 2 90,000,000 MOOE 30,000,000 30,000,000 30,000,000 HRTD and 3 30,000,000 Inset 15,000,000 15,000,000 4 12,000,000 MOOE 6,000,000 6,000,000 5 25,000,000 MOOE 5,000,000 5,000,000 5,000,000 10,000,000 Component 2 6 30,000,000 MOOE 5,000,000 25,000,000 7 30,000,000 MOOE 5,000,000 10,000,000 15,000,000 8 22,500,000 MOOE 7,500,000 15,000,000 Component 3 9 12,500,000 MOOE 6,250,000 6,250,000 AAP,ALS, 10 24,000,000 MOOE 6,000,000 6,000,000 6,000,000 6,000,000 TOTAL 299,250,000 20,650,000 11,000,000 123,350,000 92,000,000 52,250,000 46 30. Disbursements will be made against EEPs. The trigger for disbursement will be the achievement of DLIs and will also require minimum levels of actual expenditure of the corresponding EEPs. 31. The GOP will pre-finance all of the expenditures under the EEPs and all the disbursements from the Bank will be made on a reimbursement basis. EEPs were selected based on consultations with DepEd using GAA and because they are directly linked to the project's DLIs. Each EEP represents a distinct line item from the DepEd budget. Project funds will be disbursed to the Bureau of Treasury as reimbursements for expenditure already incurred upon achievement of the DLIs. The accounting processes of DepEd are designed such that they can determine the funding sources of various expenditures and projects so there is no double financing and counting. 32. The EEPs that the project will support25 are: (i) School MOOE, (ii) in-service training (INSET), (iii) human resource training and development fund (HRTD), (iv) AAP, and (v) ALS. Table 4: Eligible Expenditures per Component (in US$) Eliibl Epenitr - tComponent ComponentCopnt TOA =Preag Human Resource Training & Development 20,000,000 20,000,000 6.68% i-service Training 10,000,000 10,000,000 3.34% School Maintenance and Other 150,250,000 82,500,000 30,500,000 263,250,000 87.97% Operating Expense Abot Alam Program 4,000,000 4,000,000 1.34% Alternative Learning System 2,000,000 2,000,000 0.67% Total 180,250,000 82,500,000 36,500,000 299,250,000 100.00% 33. Withdrawal of funds from the Bank will be made through the submission of duly signed WA and IFRs. Table 5 is a summary of the minimum levels of EEP per year and for each DLI that should be spent by DepEd. 25 As mentioned above, while changes to these identified EEPs through equivalent successor budget lines can occur, they would have to be agreed to by the Bank first. 47 Table 5: Minimum EEP related DLIs per Period (in US$) DLI No. Total for the Project Related EEP Period 1 Period 2 Period 3 Period 4 Component 1 1 23,250,000 MOOE 4,650,000 18,600,000 - 2 90,000,000 MOOE 30,000,000 30,000,000 30,000,000 3 30,000,000 HRTD 10,000,000 10,000,000 INSET 5,000,000 5,000,000 4 12,000,000 MOOE 6,000,000 6,000,000 5 25,000,000 MOOE 5,000,000 5,000,000 5,000,000 10,000,000 Component 2 6 30,000,000 MOOE 5,000,000 25,000,000 7 30,000,000 MOOE 5,000,000 10,000,000 15,000,000 8 22,500,000 MOOE 7,500,000 15,000,000 Component 3 9 12,500,000 MOOE 6,250,000 6,250,000 24,000,000 AAP 2,000,000 2,000,000 10 ALS 1,000,000 1,000,000 MOOE 3,000,000 3,000,000 6,000,000 6,000,000 TOTAL 299,250,000 31,650,000 123,350,000 92,000,000 52,250,000 48 34. Reporting of DLIs Achieved. By February 15 and August 15 of each year, DepEd will submit a Verification Report to the Bank on the results framework including the DLIs and the Interim Unaudited Financial Report. The February Report will reflect the achievement of specified targets and expenditures incurred for the six month period from July 1 to December 31 while the August Report will reflect achievements and expenditures incurred for the six month period from January 1 to June 30. The Bank will conduct a mission in February and August of each year to review the status of the current DLIs and any unmet DLIs from the previous period. Independent verification will be performed semi-annually to determine if DLIs are achieved. Based on the results of the mission, and the results of the independent verification, the Bank will communicate to the GOP by March 30 and September 30 of each year whether the DLIs have been met or not and any follow-up actions needed. Based on the number of DLIs achieved, and the IFRs submitted, the Bank will disburse the funds to the GOP by April and October of each year. 35. After loan effectiveness, and subject to the achievement of the DLIs, the GOP will submit the first WA to reimburse EEP expenditures paid in the period from July 1, 2013 (retroactive financing date) to date of Signing. The second WA will be submitted on September 2014, to reimburse EEP expenditures paid in the period from July 1, 2013 to June 30, 2014 (taking into account expenditures previously claimed/paid in the previous application). This process will be repeated in March and September of each year, covering the previous twelve-month period that ended in December and June, respectively. 36. Withdrawal of Loan Proceeds. DepEd may withdraw the proceeds of the Loan to: (i) finance the Front-end Fee; and (ii) finance Eligible Expenditures as set forth in the table below which specifies the categories of expenditures that may be financed out of the proceeds of the Loan ("Category"), the allocation of the amounts of the Loan to each Category, and the percentage of expenditures to be financed for Eligible Expenditures in each Category. Category Amount of the Loan Percentage of Expenditures Allocated to be financed (expressed in US$) (Inclusive of Taxes) (1) Payments under the Eligible Up to 100% of amounts Expenditures Program as follows: spent and reported under the IFRs (a) First scheduled disbursement (on or 20,650,000 after the Effective Date) (b) Second scheduled disbursement (on 11,000,000 or after October 1, 2014) (c) Third scheduled disbursement (on or after April 1, 2015) (d) Fourth scheduled disbursement (on or 123,350,000 after October 1, 2015) (e) Fifth scheduled disbursement (on or after April 1, 2016) (f) Sixth scheduled disbursement (on or 92,000,000 after October 1, 2016) (g) Seventh scheduled disbursement (on 49 Category Amount of the Loan Percentage of Expenditures Allocated to be financed (expressed in US$) (Inclusive of Taxes) or after April 1, 2017) (h) Eighth scheduled disbursement (on or 52,250,000 after October 1, 2017) (i) Ninth scheduled disbursement (on or after April 1, 2018) (2) Front-end Fee 750,000 (3) Interest Rate Cap or Interest Rate Collar premium TOTAL AMOUNT 300,000,000 Table 6: Tentative Disbursement Schedule (in US$) Disbursement Disbursement Planned Requirements No. Estimated Type Disbursement Date Amount in USD 1 June 2014 Reimbursement of 20,650,000 * Expenditures under identified expenditures EEPS of at least US$20,650,000 incurred from July * Compliance with DLIs 1, 2013 to date of * Submission of IFR Signing 2 October Reimbursement of 11,000,000 * Expenditures under identified 2014 expenditures EEPS of at least US$11,000,000 incurred from July * Compliance with DLIs 1, 2013 to June 30, * Submission of IFR 2014 taking into account expenditures previously claimed/paid in the previous application 3 April 2015 Reimbursement of expenditures incurred from January 1, 2014 to December 31, 2014 taking into account expenditures previously claimed/paid in the previous application 4 October Reimbursement of 123,350,000 * Expenditures under identified 2015 expenditures 50 incurred from July EEPS of at least 1, 2014 to June 30, US$123,350,000 2015 taking into * Compliance with DLIs account * Submission of IFR expenditures previously claimed/paid in the previous application 5 April 2016 Reimbursement of expenditures incurred from January 1 to December 31, 2015 taking into account expenditures previously claimed/paid in the previous application 6 October Reimbursement of 92,000,000 * Expenditures under identified 2016 expenditures EEPS of at least US$92,000,000 incurred from July * Compliance with DLIs 1, 2015 to June 30, * Submission of IFR 2016 taking into account expenditures previously claimed/paid in the previous application 7 April 2017 Reimbursement of expenditures incurred from January 1, 2016 to December 31, 2016 taking into account expenditures previously claimed/paid in the previous application 8 October Reimbursement of 52,250,000 * Expenditures under identified 2017 expenditures EEPS of at least US$52,250,000 incurred from July * Compliance with DLIs 1, 2016 to June 30, 51 2017 taking into * Submission of IFR account expenditures previously claimed/paid in the previous application 9 April 2018 Reimbursement of expenditures incurred from January 1, 2017 to December 31, 2017 taking into account expenditures previously claimed/paid in the previous application 37. Withdrawal of the loan proceeds will be subject to the conditions as spelled out in the loan agreement's Schedule II, Section IV, B. 38. At the mid-term review (or at any other time as relevant), the Government and the Bank will review the levels of undisbursed funds due to the non-achievement of DLIs and/or the insufficiency of actual expenditures vis-d-vis required minimum levels of expenditures and decide if this should be cancelled or the project should be restructured to fully utilize the undisbursed funds. 40. Disbursements under the Project will comply with the Bank policies and procedures on disbursements and financial management as reflected in the Bank's Disbursements Handbook and Financial Monitoring Report Guidelines. Procurement 41. Based on the Eligible Expenditures that have been identified, procurement will be done using the Government procedures acceptable to the Bank and consistent with the World Bank's "Guidelines: Procurement of Goods, Works, and Non-consulting Services under IBRD Loan and IDA Credits & Grants by World Bank Borrowers" dated January 2011, and "Guidelines: Selection and Employment of Consultants under IBRD Loan and IDA Credits & Grants by World Bank Borrowers" dated January 2011. Aside from the School MOOE given to schools, Component 1 (Improved Reading and Math) Eligible Expenditures include the Human Resource Training and Development Fund (which includes related expenditures for travel and accommodation, supplies, professional services requirements, fees and materials), and In-service Training and will be procured in accordance with existing government administrative procedures and prescribed limits acceptable to the Bank. Component 2 will finance School MOOE. 52 Basically, this would involve comparison of at least three quotations for physical items and of at least three CVs for contractual personnel. Component 3 (Improved Equity among Disadvantaged Groups) will finance the various AAP, ALS and School MOOE, and procurement will again be done using government procedures acceptable to the Bank. 42. If, during project implementation, the need arises to procure goods and consulting services under the project involving bigger amounts of contracts, procurement will be carried out in accordance with the World Bank's "Guidelines: Procurement of Goods, Works, and Non- consulting Services under IBRD Loan and IDA Credits & Grants by World Bank Borrowers" dated January 2011, and "Guidelines: Selection and Employment of Consultants under IBRD Loan and IDA Credits & Grants by World Bank Borrowers" dated January 2011, respectively, and the provisions stipulated in the Loan Agreement. For the relatively bigger contract amounts, DepEd may use International Competitive Bidding (ICB), National Competitive Bidding (NCB) and Shopping, as appropriate, for goods contracts; and for consultancy contracts, Quality- and Cost-Based Selection (QCBS) would be used as the preferred method. However, where QCBS is not suitable, consulting services may be procured using other methods including Quality-Based Selection (QBS), Selection based on Consultants' Qualification (CQS), or Individual Consultants depending on their specific nature, value and complexity. Single-Source Selection (SSS) may also be used but only in exceptional circumstances described in para. 3.9 of the Consultant Guidelines. Requests for proposals will be prepared using the Bank's most up-to-date Standard Request for Proposals document. All these, however, will be subject to the preparation and submission by DepEd of the procurement plan to be approved by the Bank. While the Philippine Procurement Law (RA9184) is sufficiently in harmony with the Guidelines at the NCB level, the Procurement Section of the Loan Agreement will include an annex detailing the procedures under the national law that are not acceptable to the Bank. Other than that, NCB procurement will be carried out in accordance with the country's law. 43. In case any goods will need to be procured under the project, any contract estimated to cost the equivalent of US$3,000,000 will be procured following ICB procedures; with contracts estimated to cost the equivalent of US$200,000 or more, up to less than US$3,000,000, will be procured following NCB procedures using the Philippine Bidding Documents (PBD) as harmonized with the Bank. Procurement of goods estimated to cost the equivalent of less than US$200,000 will be procured using shopping procedures, by comparing price quotations obtained from several contractors, or suppliers as the case may be, with a minimum of three, as defined in paragraph 3.5 of the Procurement Guidelines. 44. In case procurement will be undertaken under the project, the following contracts would be subject to Prior Review by the Bank: (i) all works and goods contract procured through ICB procedures; (ii) first works and goods contract procured through NCB procedures, regardless of the estimated cost; (iii) first works and goods contract procured through shopping procedures, regardless of the estimated cost; (iv) each contract with consulting firms estimated to cost the equivalent of US$100,000 or more; and (v) each contract procured and awarded under SSS method. Twice a year field supervision missions, including post reviews, will be implemented under the project in addition to the prior reviews to be carried out from the Bank's Manila office. With respect to each contract not subject to prior review, the procedures set forth in paragraph 5 of Appendix 1 to the Bank's Procurement and Consultant Guidelines will apply at an initial ratio 53 of not less than one (1) in ten (10) contracts. The ratio may be adjusted during project implementation based on the performance of the implementing units. 45. In addition, the Bank will also consider the results of the post audit done by the COA as part of its Annual Audit Program. The COA Chairman issued in January 2010 to all auditors assigned to all agencies, procuring entities and LGUs, through Memorandum No. 2010-003, the Guide in the Audit of Procurement which includes the audit of foreign assisted project. COA's role as the supreme audit institution in the country is to ensure that the expenditures are proper and in accordance with the law, rules and regulations. As they are the repository of all original transaction documents, their post audit normally covers more than 50 percent of the number of transactions. Their audit goes beyond procurement as they review the effectiveness of internal controls of the agency. 46. A Procurement Plan detailing the contract packages that will be identified, if any, for goods and consultancy contracts will be prepared by DepEd and updated on an annual basis or as the need arises to reflect current circumstances, and cleared with the Bank. The Procurement Plan will be strictly followed especially in ensuring that procurement timelines conforms to either the Bank's or the Government's prescribed standards. This Plan will be available in the project's database and in the Bank's external website and at DepEd's website. 47. With respect to goods and contracts to be procured in accordance with NCB procedures, the national Procurement Law will apply, except that, unless otherwise agreed by the Bank in writing, the following procedures will be adhered to: a. Eligibility screening shall not be applied. However, bids that do not contain any of the following documents will not pass the documentary compliance check: i) evidence of the required financial, technical or production capability; ii) audited financial statements; iii) credit line or cash deposit certificate; iv) bid security; and v) authority of the bid signatory. b. A ceiling may be applied to bid prices provided the following conditions are met: i) bidding documents are obtainable free of charge on a freely accessible website; ii) the agency has procedures in place to ensure that the approved budget for the contract (ABC) is based on Engineer's Estimate; iii) the agency has trained cost estimators on estimating prices and analyzing bid variances; and iv) the agency has established a system to monitor and report bid prices relative to the ABC and Engineer's Estimate. c. Domestic or regional preferences will not be applied in the evaluation of bids, and other preferences in effect in the Philippines will not be used except with the prior concurrence of the Bank. d. Foreign suppliers and contractors shall be allowed to participate, if interested, without first being required to associate with, or enter into joint venture with, local firms. Moreover, foreign bidders shall be allowed to bid, even without registration, licensing and other government authorizations, leaving these requirements for after award and before signing of contract. e. Alternative procurement methods defined in the implementing rules and regulations such as Limited Source Bidding, Direct Contracting and Shopping are acceptable. The use of the other alternative methods will require prior Bank concurrence. 54 Environmental and Social (including Safeguards) Environment 48. During the project concept stage, the government proposed the inclusion of classroom construction into project activities to be financed by the loan. To address routine environmental issues, the DepEd prepared an Environmental Code of Practice for classroom construction. As project preparation progressed, however, the government decided not to finance any school construction or rehabilitation as part of the LEAPS project. The final project design also excludes the financing of any other civil works, acquisition of potentially hazardous school laboratory equipment or materials/chemicals to be used in laboratories. Therefore, no negative or long-term environmental impacts are expected for any activity under the project. The PDO of improving the early grade reading and math skills of students in the target areas can be achieved independent of classroom construction through the conduct of professional development activities for teachers to enhance their assessment and teaching skills, training of principals and head teachers to strengthen field-level support system and implementation of alternative delivery modes and alternative learning system which are usually done outside the classrooms. However, OP 4.01 was triggered due to the need to assess and take into account, in an integrated manner, the social aspects of the project, particularly its impact on IPs. Social Safeguards 49. Due to the presence of IPs in some project sites, OP 4.10 is triggered. The proposed project is anticipated to have positive impact on indigenous students in terms of increasing their access to basic education. Specifically, Component 3 of the project focuses on disadvantaged groups, including IP students. In close coordination with the National Commission on Indigenous Peoples (NCIP), DepEd updated its existing Indigenous Peoples Planning Framework (IPPF) based on the lessons learned under the NPSBE and provides more specific strategies for implementing IP-sensitive strategies which will be pursued under the third Component of the project. The IPPF was disclosed in Infoshop on December 20, 2012. It aims to expand learning opportunities for IP learners through the design and implementation of culturally appropriate learning modalities; put in place mechanisms for the effective and sustained implementation of IP education; and support IP learning systems and other learning modalities. The draft IPPF includes the consolidation and analysis of IP data primarily from the Basic Education Information System (BEIS) which serves as a screening procedure as well as monitoring tool. Once the specific target schools are identified during implementation phase, DepEd will prepare specific IP plans for the schools that cover IP students as part of the School Improvement Plans, which will involve broad participation of the specific IP groups in each target school. The draft enhanced IPPF has been presented to the NCIP Board with no major comment. The DepEd, through its Indigenous Peoples Education Office (IPsEO), will regularly consult with NCIP as part of its regular inter-agency committee on IP Education at national and sub-national levels. 55 Annex 4: Operational Risk Assessment Framework (ORAF) PHILIPPINES: Learning, Equity and Accountability Program Support Project (P118904) Stage: Negotiations Stakeholder Risk Rating Low Description: Risk Management: Lack of or decline in internal and external stakeholder Extensive consultation and discussions were conducted with a broad range of support to the key reforms to be supported by the project stakeholders in the course of preparing the project, including the selection of results and the interventions, discussion of the resource and manpower requirements and capacity development activities required to achieve the results. Several consultations and focused group discussions were held with Officials and relevant staff from the Departments of Education, Budget and Management and the Civil Service Commission as well as with parent-teacher associations, student representatives, DepEd Region and Division officials, NGOs and civil society organizations to discuss the incentives program which is an integral component of the project. Focused group discussions with various parents, community associations, teachers, principals and other civil society organizations were organized in various geographic locations to consult, and get their buy-in and ownership to the reforms to be supported by the project including the component on improving equity for disadvantaged groups. Resp: Status: Stage: Recurrent: Due Date: Frequency: Client Completed Preparation L] 31-Jul-2012 Capacity Rating Substantial Description: Risk Management: d y .n . . . Technical Assistance was mobilized during project preparation and will be mobilized Limited capacity in FM which limited progress m . during implementation to initiate discussion on FM and fiscal issues. Capacity building implementing FM reforms. Manually prepared financial activities will be pursued in FM areas which are problematic or which need to be records delay the preparation of timely and accurate reformed. WB, AusAID and other development partners have committed to supporting 56 financial information and reports. the improvement of their FM system. While capacity of FM staff at the Central Office is Resp: Status: Stage: Recurrent: Due Date: requency: adequate, there is lack of FM capacity at the Region, Both In Progress Implementation Division and school levels, which could impede collection of financial reports needed for WB reimbursement of Risk Management: actual expenditures incurred vis-Ai-vis the eligible Under the project, a disbursement-linked indicator was included to strengthen financial expenditures. management capacity of the DepEd. Under this result framework, DepEd will adopt a more systematic approach to addressing its long-standing financial management (FM) Lack of technical capacity of DepEd implementers to issues. DepEd shall deliberately address internal FM concerns first, to ensure that implement the innovations, reforms under the project. effective and efficient internal controls and financial data analysis will be in place throughout the agency. The presence of a strong FM environment will ensure fiduciary support to the program. These so-called housekeeping activities will also include consultations with the oversight agencies (eg the Department of Budget and Management and the Commission on Audit) to resolve FM issues such as outstanding issues on budgeting, funds flow, accounting, internal control and financial reporting. Resp: Status: Stage: Recurrent: Due Date: Frequency: Both In Progress Implementation Risk Management: As risk mitigation measure, DepEd has to design an expenditure tracking system of the Eligible Expenditures program (EEP) identified in the General Appropriations Act (GAA) and develop a financial reporting protocol to be rolled-out in all regions, divisions and implementing units to monitor expenses per EEP. Sufficient FM manpower must also be ensured in all levels of the Agency to track actual EEP expenses and compare against budget line items to measure financial performance. Resp: Status: Stage: Recurrent: Due Date: Frequency: Both In Progress Implementation Risk Management: The Bank will continue to mobilize technical and supervision resources to support DepEd to achieve the project commitments. The Bank has started the training of DepEd colleagues in managing and conducting Impact Evaluation. Reading and Math experts were mobilized to assist the DepEd in refining/developing its Early Grade Reading and Math Program and in the development of Assessment tools; concept development for a performance-based incentives program. 57 Resp: Status: Stage: Recurrent: Due Date: Frequency: Both In Progress Implementation Governance Rating Substantial Description: Risk Management: Pursue the finalization and approval of the DepEd organizational restructuring plan Thoesasesne ofgadequatogaiztn ses an which is designed to make the bureaucracy more responsive to present and future processes and significant challenges in the level of. organizational management capacity to implement and operational changes linked to various reform items monitor implementation of broad-scale reform combined Resp: Status: Stage: Recurrent: Due Date: Frequency: with the DepEd staff's weak incentive to perform and the Client In Progress Implementation lack of accountability mechanisms, could delay the implementation of reforms supported by the project. Risk Management: WeakThe introduction of the performance-based incentive program in the government has Goverinnment, and odai betwe en great potential to significantly improve performance on a Department-wide basis. The units on resource allocation and lo ornment DepEd's commitment to conduct massive information campaigns to explain the details euitson reourcuerloaion andor utlzainfor basi of the implementation of the scheme, and to set up a reliable performance monitoring education could undermine reform efforts.system and grievance redress system to accompany the implementation of the Political intervention (especially Congressional performance incentive program is expected to develop an effective and sustainable interference) in resource allocation (e.g., hiring of system of incentives for results and enhance implementation of accountability Division Superintendents) and utilization could impede mechanisms to improve outcomes. implementation of reforms. Resp: Status: Stage: Recurrent: Due Date: Frequency: Client In Progress Implementation Risk Management: The Department of Budget and Management (DBM) is spearheading the finalization of the Joint Memorandum circular involving DepEd, DBM and the Department of Interior and Local Government defining the allocation and utilization of the Special Education Fund managed by the Local Government Units (LGU) for basic education. Expand the forging of Memorandum of Agreement between various local leagues and the DepEd on counterpart funding for classroom construction and resource complementation for various inputs. Resp: Status: Stage: Recurrent: Due Date: Frequency: Client In Progress Implementation Risk Management: 58 DepEd to continue to pursue its recent initiatives which strengthened recruitment, hiring and selection processes of Division Superintendents; a Political Economy Assessment study funded under the PGAT will be undertaken to analyze the political economy relationship between division superintendents and school personnel (school heads and teachers), particularly in relation to access and utilization of eligible expenditure items under the LEAPS project. Resp: Status: Stage: Recurrent: Due Date: Frequency: Client In Progress Implementation Risk Management: Fast-track the completion of the Unified Information System which will allow evidence- based/data-based decision making in resource allocation and utilization which could minimize political intervention. Resp: Status: Stage: Recurrent: Due Date: Frequency: Client In Progress Implementation Risk Management: Pursue the innovative approaches that DepEd has adopted in recent years to mitigate corruption through civil society/citizen participation and involvement in: a) delivery of inputs such as textbooks, tables, chairs (e.g. Boy Scouts of the Philippines); b) the procurement process, from the approval of the Annual Procurement Plan to delivery and acceptance of procured goods, services, and infrastructure project; and c) budget tracking (in terms of allocation and actual utilization). The Bank will support measures to strengthen such mechanisms. Transparency processes such as publication of planned deliveries of textbooks before hand in order to eliminate diversion of deliveries and encourage civil society monitoring of delivery will be expanded Resp: Status: Stage: Recurrent: Due Date: Frequency: Both In Progress Implementation Design Rating Substantial Description: Risk Management: Difficulty in achieving agreed results in a results-based Disbursement-linked indicators/key results were developed in very close collaboration operation could mean low or slow disbursement. Under with key stakeholders (DepEd officials and staff, key DepEd implementing units, 59 results-based financing, inputs will have to be already sample of target project regions) responsible for delivering on results, as well as other purchased, installed or used and showing results before agencies/units responsible for resource allocation and provision and in implementation disbursement can take place. monitoring and oversight (e.g. DBM, COA, NEDA). Ensure clear assignment of responsibilities and accountabilities of all key actors Resp: Status: Stage: Recurrent: Due Date: Frequency: Client In Progress Implementation Social and Environmental Rating Low Description: Risk Management: Indigenous peoples not participating or benefiting, or The project includes a subcomponent to improve the targeting of disadvantaged groups, educational services not appropriate or efficient for IPs. including IPs, in project regions. The DepEd updated its existing Indigenous Peoples Planning Framework (IPPF) which provides more specific strategies for implementing IP-sensitive strategies which will be pursued under the project. The IPPF aims to expand learning opportunities for IP learners through the design and implementation of culturally appropriate learning modalities; put in place mechanisms for the effective and sustained implementation of IP education; and support IP learning systems and other learning modalities. Resp: Status: Stage: Recurrent: Due Date: Frequency: Client In Progress Both Program and Donor Rating Moderate Description: Risk Management: Poor coordination of reform efforts/initiatives of various The Bank team coordinated with various local and international development partners donors resulting in duplication, inefficiencies, DepEd staff working with DepEd on basic education reforms especially on the areas to be supported overload, inconsistent/non-harmonized monitoring and by the project - early grade reading and math assessment and teacher training; evaluation systems and reporting. performance incentives; school report card; FM issues and bottlenecks; Impact evaluation; concerns on Out-of-school youth, IP, disabled to ensure full and complementary interventions to support DepEd achieve its goals and objectives in this area. A number of donor partners have subsequently committed to support DepEd in a subset of the programs/innovations and some large international donors have expressed interest and/or commitment to support DepEd in achieving the disbursement-linked indicators of the WB project. Resp: Status: Stage: Recurrent: Due Date: Frequency: Both In Progress Both [ 60 Delivery Monitoring and Sustainability Rating Moderate Description: Risk Management: e PA semi-annual review process will assess progress against all the agreed protocols and TheiProject il inthrec ocen ote aohes iand t disbursement-linked indicators, review project implementation and analyze reasons for design of its three components. Most of the data and.. information required to monitor and evaluate these any deviations and identify lessons and actions to improve the next 6 months innovative approaches are not readily available so there is implementation and performance. a need to strengthen the reporting, collection, monitoring Resp: Status: Stage: Recurrent: Due Date: Frequency: and evaluation system of the DepEd to ensure Both In Progress Both achievement of results. Risk Management: A mid-term review will also be conducted during the end of the second year to assess the extent to which the project is moving towards its intended results and any need for mid-course adjustment in the project strategy and design. At project completion, an end of project evaluation will be conducted to assess the project relevance, achievement of development objectives and generate lessons to inform future basic education programs. An evaluation firm will be contracted to conduct the mid-term review and end of project evaluation to be supervised by the Task Team Leader or relevant Bank staff. Resp: Status: Stage: Recurrent: Due Date: Frequency: Both In Progress Both [ Risk Management: Continuous random checking of target schools and divisions will also be conducted starting on the second year to determine the veracity of data and the observance of the recommended processes in implementing the Project Components. Resp: Status: Stage: Recurrent: Due Date: Frequency: Both In Progress Both { Other (Optional) Rating Description: Risk Management: Resp: Status: Stage: Recurrent: Due Date: Frequency: 0_ 61 Other (Optional) Rating Description: Risk Management: Resp: Status: Stage: Recurrent: Due Date: Frequency: 0-0 Implementation Risk Rating: Substantial Comments: The overall implementation risk rating for the project is substantial. The key risks relate to: (i) implementation and technical capacity of the DepEd to implement the innovations introduced in the project; (ii) the absence of adequate and appropriate organizational structures, processes, and significant challenges in the level of organizational management capacity to implement and monitor implementation of broad-scale reform; and (iii) the need to strengthen the reporting, collection and M&E system of DepEd to ensure achievement of results committed under the project. Note: Include on average no more than 3 Risk Management Measures per Risk Category 62 Annex 5: Implementation Support Plan PHILIPPINES: Learning, Equity and Accountability Program Support Project Strategy and Approach for Implementation Support 1. All project components, subcomponents and activities committed under this project are part of wider programs of the DepEd. The Bank has extensively consulted DepEd and the concerned oversight agencies such as the DBM, NEDA and DOF regarding their major priorities and selected a few key activities that can serve as DLIs for the project. Hence, all of these activities will be implemented with or without the proposed project. 2. Nonetheless, DepEd still needs support in expediting the achievement of these activities. The Bank will support DepEd in achieving the project commitments on both the activity level and the policy level. Activity-level support will focus on ensuring the quality of the activities being conducted by DepEd. Policy-level support will focus on analytical assistance in creating the best policy environment to ensure the success of specific programs, projects and activities. 3. For Component 1, activity-level support focuses on the development of the new assessment tools in Reading and Math in the five selected mother tongues. In the case of the EGRA, contextualizing the original English tool into five languages requires expert advice not just in linguistics and semantics, but also in making sure that all items conform with beginning-reading principles. The case of EGMA is more difficult as there is no official English tool that can serve as basis for the contextualization into the mother tongues. This requires expert advice not just on the development of the tool but also on its appropriateness for early grades. Policy-level support for this component focuses on the possibility of using the tools as the quarterly assessment for early grades, which requires careful analysis and clear implementation planning. 4. Another activity-level support requirement for Component 1 is on the training of school heads and teachers on administering the assessment tool, analyzing the assessment results and being capable of implementing the appropriate intervention based on the assessment results. On this matter, USAID, through its Basa Pilipinas (Read Philippines) Project has committed to support the GOP and the Bank by including the LEAPS project regions in their wider project. USAID has also agreed to use the training framework that will be developed by DepEd and the Bank for their major reading project. This will ensure congruence of all early reading initiatives and provide DepEd with additional resources to be able to train all the stated recipients under the LEAPS project. 5. Component 1 also requires policy-level support for more effective implementation of DepEd's MTB-MLE Policy. DepEd needs help in conducting a small-scale lingua franca mapping and analysis to better target MTB-MLE activities. It also needs support in pushing for the inclusion of early grade assessment and interventions in the Teacher Education Curriculum. 6. For Component 2, both activity-level and policy-level support is required in guiding the Department in developing its PMS. The Bank has had good experience in other countries in terms of 63 performance incentives and is in a credible position to advise DepEd management on the design of such a system. AusAID, through its PAHRODF initiative, has committed to help DepEd develop the PMS, and the World Bank Task Team was invited to input on this major undertaking. 7. DepEd is also in the process of revising the SBM process to strengthen its learner and community orientation. The Bank is ready to provide expert advice on this series of activities, to help ensure that field implementers are not confused in the process and that any revisions strengthen rather than dilute the SBM concept, which has provided good results in the past. 8. Activity-level support is also required to assist DepEd sort through all its fiscal and financial management issues that have been impeding budget execution for the past years. The Bank is in a good position to liaise between DepEd, DBM, COA and other government agencies to be able to find common ground on long-standing issues plaguing DepEd operations. This also includes helping DepEd organize its key policies first so that a clearer message can be communicated to its oversight agencies. 9. For Component 3, the major support requirement is in the conduct of program reviews of programs and projects and the conduct of one impact evaluation of a long-standing DepEd programs serving the selected disadvantaged groups. The DepEd has budget allocation for the conduct of the streamlined program reviews while various facilities and organizations like 31E and SIEF are being tapped to help DepEd conduct these studies. Aside from tapping expertise from within the Bank, local expertise in Impact Evaluation is also available and can be tapped by the Bank, subject to the availability of funds. Training DepEd personnel in managing impact studies are also important. 10. On top of the support mentioned above, the Bank team will continue to carry out semi-annual Implementation Support Missions, which will cover the technical as well as fiduciary and portfolio aspects. Given the results-based nature of the operation, the Government and the Bank will jointly monitor and report on the progress on, and verify the achievement of the DLIs. Technical and/or fiduciary experts other than the Task Team will also be mobilized and included in the Implementation Support Missions, where necessary. Implementation Support Plan 11. Specifically, the following table outlines the implementation support required for the duration of the project: Time Focus Skills Needed Resource Estimate Partner Role Year 1 (2013) Development of EGRA Teaching beginning USAID will support and EGMA in the reading and math; the development of mother tongues Item analysis EGRA in at least 4 other mother tongues Assessment data not covered by the Training on EGRA and analysis; teaching project and will train EGMA administration, beginning reading teachers on teaching assessment data and math reading; this will analysis and beginning complement the reading and math activities to be interventions undertaken by the 64 DepEd which will be Lingua Franca financed under the mapping Linguistics; project Sociology Improvement of SBM practice SBM expert; social accountability expert Resolution of fiscal and Finance specialist financial management issues Impact Evaluation of Impact evaluation; Alternative Learning policy formulation System (ALS) and operational program: Design of planning Impact evaluation Year 2 (2014) Training on EGRA and Assessment data EGMA administration, analysis; teaching assessment data beginning reading analysis and beginning and math reading and math Teacher Education interventions Curriculum expert Inclusion of early grade assessments in Teacher education Curriculum Development of DepEd Organizational Performance Development; Management System Incentive (P) Formulation; Behavioral Improvement of SBM Economics practice SBM expert; social accountability expert Resolution of fiscal and financial management Finance expert issues Impact Evaluation of ALS: baseline data Impact evaluation collection for prospective impact evaluation Year 3 (2015) Development of DepEd Organizational AusAID's Philippine and Year 4 PMS Development; Human Resource (2016) Incentive and Organizational 65 Formulation; Development Behavioral Facility is also Economics supporting DepEd in its performance management system Resolution of fiscal and Finance expert financial management issues 66 Annex 6 Disbursement Linked Indicators (DLI) Disbursement Rules and Verification Protocol Summary Period 1 Period 2 Period 3 Period 4 (July 1, 2013 - (January 1 - (January 1 - (January 1 - December 31, December 31, December 31, December 31, 2014) 2015) 2016) 2017) DLI 1: Target: 5 EGRA tools 40 EGRA and Versions and 5 EGMA EGMA tools (4 of EGRA tools (1 version of additional versions and each tool per each of each tool per EGMA Selected Mother each Selected tools Tongue in each Mother Tongue in developed Target Region) each Target for each Region) Selected Allocated US$4,650,000 US$18,600,000 Mother amount: I Tongue in Disbursement rule: (i) US$465,000 per each EGRA and EGMA tool finalized on or before each the last day of the relevant period; (ii) Minimum 1 tool per Selected Mother Tongue in Target Period 1 (non-scalable); and (iii) 40 tools in Period 2 (scalable: minimum of 3 additional Region versions per mother tongue and maximum of 4 versions, for a total of 40 additional versions). DLI achievement measure: Periods 1-2: DepEd has developed 25 EGRA tools and 25 EGMA tools (five comparable versions per Selected Mother Tongue) that meet standards set forth in the DLI Verification Protocol. DLI verification process: Periods 1-2: (i) DepEd submits EGRA and EGMA tools; and (ii) the Bank reviews the tools against the standards specified in the DLI Verification Protocol. EEP: MOOE; Minimum expenditure level: DLI target for Period 1: US$4,650,000; DLI target for Period 2: US$18,650,000. Period 1 Period 2 Period 3 Period 4 July 1, 2013 - January 1 - January 1 - January 1 - December 31, December 31, December 31, December 31, 2014 2015 2016 2017 DLI 2: Target: 11,998 grade 1 11,998 grade 2 11,998 grade 3 Teachers teachers trained teachers trained teachers trained from Allocated US$30,000,000 US$30,000,000 US$30,000,000 identified amount: schools trained to Disbursement rule: Periods 2-4: (i) percent of achievement of target on or before the last improve day per period equal to the percent of total allocated amount for the relevant period to be their disbursed; (ii) scalable: minimum of 51% achievement to be eligible for disbursement. capability DLI achievement measure: Periods 2-4: Training per period carried out in accordance with to the DLI Verification Protocol. effectivel DLI verification process: Periods 2-4: (i) DLI Verification Agent conducts training spot checks and post-training assessment in accordance with the DLI Verification Protocol; and -67- y teach (ii) the Bank reviews the verification report during the semi-annual Bank implementation grades 1 - support missions. 3 reading EEP: MOOE; Minimum expenditure level: DLI targets for Periods 2-4: US$30,000,000 per and math DLI target. Period 1 Period 2 Period 3 Period 4 July 1, 2013 - January 1 - January 1 - January 1 - December 31, December 31, December 31, December 31, 2014 2015 2016 2017 DLI 3: Target: 5,999 principals/ Additional 5,999 School head teachers principals/ head principals/ trained on effective teachers trained head early grade reading on effective teachers and math teaching early grade from strategies reading and identified match teaching schools strategies trained to Allocated US$15,000,000 US$15,000,000 strengthen amount: field-level Disbursement rule: Periods 2-3: (i) percent of achievement of target on or before the last support day of the relevant period equal to the percent of total allocated amount to be disbursed per system for period; (ii) scalable: minimum of 510% achievement to be eligible for disbursement. improved DLI achievement measure: Periods 2-3: Training per period carried out in in accordance early with the DLI Verification Protocol. grade DLI verification process: Periods 2-3: (i) DLI Verification Agent conducts training spot- reading checks and post-training assessment in accordance with the DLI Verification Protocol; and and math (ii) the Bank reviews the verification report during the semi-annual Bank implementation teaching support missions. EEP: HRTD; INSET; Minimum expenditure level: DLI target for Periods 2-3: (1) HRTD: US$10,000,000 per DLI target; and (2) INSET: US$5,000,000 per DLI target. Period 1 Period 2 Period 3 Period 4 July 1, 2013 - January 1 - January 1 - January 1 - December 31, December 31, December 31, December 31, 2014 2015 2016 2017 DLI 4: Target: Policy on the Policy on the s Developm utilization of the inclusion of ent of an EGRA and early literacy and enabling EGMA tools numeracy course policy adopted in DepEd's environme teacher induction nt for the program adopted effective Allocated US$6,000,000 US$6,000,000 implement amount: ation of Disbursement rule: (i) Period 1: Policy on EGRA and EGMA tools (non-scalable); (ii) the grades Period 3: Policy on inclusion of early literacy and numeracy course (non-scalable). 1 - 3 DLI achievement measure: (i) Period 1: Policy on EGRA and EGMA utilization and reading application in classrooms has been formulated according to standards specified in the DLI and math Verification Protocol, and approved, issued and disseminated to all DepEd levels through a program DepEd order on or before the last day of the relevant period; (ii) Period 3: Policy on -68- in the including an early literacy and numeracy course as appropriate in the DepEd teacher Target induction program has been formulated according to standards specified in the DLI Regions Verification Protocol, and approved, issued and disseminated to all DepEd levels through a DepEd order on or before the last day of the relevant period. DLI verification process: Periods 1 and 3: (i) DepEd submits the policy on EGRA and EGMA utilization and application in classrooms, and the policy on inclusion of early literacy and numeracy course; and (ii) Bank reviews the policies against thestandards specified in the DLI Verification Protocol, during the semi-annual Bank implementation support missions. EEP: MOOE; Minimum Expenditure Level: DLI targets for Period 1: US$6,000,000; DLI target for Period 3: US$6,000,000. Period 1 Period 2 Period 3 Period 4 July 1, 2013 - January 1 - January 1 - January 1 - December 31, December 31, December 31, December 31, 2014 2015 2016 2017 DLI 5: Target: Policy on the Linguistic map Linguistic map Linguistic maps Linguistic dissemination and covering another covering another covering another map for utilization of Target Region Target Region 2 Target each linguistic maps developed developed Regions Target adopted, and developed Region linguistic map developed covering 1 Target for Region developed improved Allocate US$5,000,000 US$5,000,000 US$5,000,000 US$10,000,000 targeting d and amount implement :_ I_I_I_I ation of Disbursement rule: (i) Period 1: Policy on linguistic maps and completion and a linguistic the grades map covering one Target Region (non-scalable); (ii) Periods 2-4: US$5,000,000 per 1 - 3 linguistic map completed for each Target Region on or before the last day of the relevant reading period (non-scalable). and math DLI achievement measure: (i) Period 1: Policy on dissemination and utilization of program linguistic maps has been formulated according to standards specified in the DLI Verification Protocol, and approved and issued through a DepEd order, and DepEd has developed and approved a linguistic map covering 1 Target Region in accordance with the policy; (ii) Periods 2-4: DepEd has developed and approved linguistic maps for each of the remaining Target Regions in accordance with the policy. DLI verification process: Periods 1-4: (i) DepEd submits policy on the dissemination and utilization of linguistic maps, and the linguistic maps for each Target Region; and (iii) the Bank reviews the policy and the maps against the standards specified in the DLI Verification Protocol during the semi-annual Bank implementation support missions. EEP: MOOE: Minimum expenditure level: DLI targets for Periods 1-3: (1) US$5,000,000 per DLI target; and (2) DLI target for Period 4: US$10,000,000 Period 1 Period 2 Period 3 Period 4 July 1, 2013 - January 1 - January 1 - January 1 - December 31, December 31, December 31, December 31, 2014 2015 2016 2017 -69- DLI 6: Target: Performance 5 DepEd regional Capability monitoring system offices, 47 DepEd of DepEd to developed that division offices implement will be used in the and 14,121 Target its implementation of Schools in all Performance DepEd's Target Regions Incentive Performance oriented on Scheme Incentive Scheme DepEd's improved Performance Incentive Scheme and performance monitoring system Allocated US$5,000,000 US$25,000,000 amount: ' _I Disbursement rule: Period 1: (i) Performance monitoring system developed (non-scalable); Period 2: (ii) percent of achievement of target (i.e. 5 regions + 47 division and 14,121 schools = 100% of target) on or before the last day of the period equal to the percent of total allocated amount to be disbursed; (iii) scalable: minimum of 510% orientation of offices and schools is required to be eligible for disbursement. DLI achievement measure: Period 1: Performance monitoring system meeting standards specified in the DLI Verification Protocol in place and operational; Period 2: Field offices and Target Schools oriented on the incentive scheme and the performance monitoring system according to standards specified in the DLI Verification Protocol. DLI verification process: (i) Period 1: DepEd reports on the development of the performance monitoring system developed for the performance incentive scheme; (ii) the Bank reviews the report against the standards specified in the DLI Verification Protocol during the semi-annual Bank implementation support missions; (iii) Period 2: DLI Verification Agent conducts spot checks and post-orientation assessment against the standards specified in the DLI Verification Protocol; and (iv) the Bank reviews the verification report for Period 2 during the semi-annual Bank implementation support missions. EEP: MOOE; Minimum expenditure level: DLI target for Period 1: US$5,000,000; DLI target for Period 2: US$25,000,000. Period 1 Period 2 Period 3 Period 4 July 1, 2013 - January 1 - January 1 - January 1 - December 31, December 31, December 31, December 31, 2014 2015 2016 2017 DLI 7: Target: Policy on the use 8,473 Target 13,415 Target Developm of school report Schools in the Schools in the ent of an cards (including Target Regions use Target Regions -70- enabling guide-lines, refined school use refined policy procedures and report card school report environm templates) card ent for the adopted use of Allocated US$5,000,000 US$10,000,000 US$ 15,000,000 school amount: I report Disbursement rule: (i) Period 1: Adoption of policy on the use of school report cards (non- cards in scalable); (ii) Period 2: percent of achievement of target (i.e. 8,473 schools, whether the Target elementary or high schools = 100% of target) on or before the last day of the period equal to Regions the percent of total allocated amount to be disbursed; (iii) minimum of 51% of schools is required to be eligible for disbursement (scalable); (iv) Period 3: percent of achievement of target (i.e. 13,415 schools = 100% of target) on or before the last day of the period equal to the percent of total allocated amount to be disbursed; and (v) minimum of 51% of schools (i.e. 6,842 schools) is required to be eligible for disbursement (scalable). DLI achievement measure: Period 1: School report card policy adopted (through a DepEd order or memorandum) on or before the last day of the relevant period meeting the standards specified in the DLI Verification Protocol; Period 2: 8,473 Target Schools in the Target Regions use refined school report card in accordance with the school report card policy on or before the last day of the relevant period; Period 3: 13,415 Target Schools in the Target Regions use refined school report card in accordance with the school report card policy on or before the last day of the relevant period DLI verification process: Period 1: (i) DepEd reports on the adoption of the policy on the use of updated school report cards; (ii) the Bank reviews the report against the standards specified in the DLI Verification Protocol during the semi-annual Bank implementation support missions; Periods 2-3: (i) DepEd reports on the list of Target Schools using refined school report cards per Target Region; (ii) DLI Verification Agent spot-checks that listed schools are indeed using the refined school report card and for the purposes specified in the DLI Verification Protocol; and (iii) Bank reviews the verification reports during the semi- annual Bank implementation support missions. EEP: MOOE; Minimum expenditure level: DLI target for Period 1: US$5,000,000; DLI target for Period 2: US$10,000,000; DLI target for Period 3: US$15,000,000 Period 1 Period 2 Period 3 Period 4 July 1, 2013 - January 1 - January 1 - January 1 - December 31, December 31, December 31, December 31, 2014 2015 2016 2017 DLI 8: Target: Financial Trainers' Financial management training on the managem manual for all financial ent DepEd finance and management capacity administrative staff manual of at of DepEd developed and least 1 finance central, adopted and regional administrative and staff each from division the central offices office, the 17 improved regional offices and the 215 division offices -71- of DepEd Allocated US$7,500,000 US$15,000,000 amount: Disbursement rule: (i) Period 2: non-scalable for the financial management manual; (ii) Period 3: non-scalable for completed training at central, regional and division levels. DLI achievement measure: (i) Period 2: Financial management manual adopted through a DepEd order or memorandum, meeting the standards specified in the DLI Verification Protocol; (ii) Period 3: Trainers training on the financial management manual in form and substance specified in the DLI Verification Protocol of at least 1 finance and administrative staff each from the central office, the 17 regional offices and the 215 division offices of DepEd on or before the last day of the relevant period. DLI verification process: Period 2: (i) DepEd submits the financial management manual;; (ii) the Bank reviews the manual against the standards specified in the DLI Verification Protocol during the semi-annual Bank implementation support missions; Period 3: (i) DepEd conducts training on the manual and provides post-training reports which will include proof of conduct of the activities and other information that will be useful in DLI verification; (ii) the DLI Verification Agent conducts training spot-checks against the standards specified in the DLI Verification Protocol; and (iii) the Bank reviews the verification reports during the semi-annual Bank implementation support missions. EEP: MOOE; Minimum expenditure level: DLI target for Period 2: US$7,500,000; DLI target for Period 3: US$15,000,000 Period 1 Period 2 Period 3 Period 4 July 1, 2013 - January 1 - January 1 - January 1 - December 31, December 31, December 31, December 31, 2014 2015 2016 2017 DLI 9: Target: Information Information Improvem strategy for system for ent of data educational educational managem programs serving programs serving ent for the Target the Target education Disadvantaged Disadvantaged al Groups developed Groups programs and adopted developed in serving accordance with the Target the information Disadvant strategy aged Allocated US$6,250,000 US$6,250,000 Groups in amount: the Target Disbursement rule: (i) Period 2: Information strategy for programs serving the Target Regions Disadvantaged Groups (non-scalable); (ii) Period 4: Information system for programs serving the Target Disadvantaged Groups (non-scalable). DLI achievement measure: (i) Period 1: Information strategy for programs serving the Target Disadvantaged Groups developed and adopted by DepEd according to standards specified in the DLI Verification Protocol; (ii) Period 4: DepEd has developed an information system for programs serving the Target Disadvantaged Groups in accordance with the strategy. DLI verification process: Periods 2 and 4: (i) DepEd submits the information strategy and reports on the development of the information system; (ii) the Bank reviews the strategy and -72- information system against the standards specified in the DLI Verification Protocol during the semi-annual Bank implementation support missions. EEP: MOOE; Minimum expenditure level: DLI targets for Periods 2 and 4: US$6,250,000 per DLI target. Period 1 Period 2 Period 3 Period 4 July 1, 2013 - January 1 - January 1 - January 1 - December 31, December 31, December 31, December 31, 2014 2015 2016 2017 DLI 10: Target: Review of 1 Review of another Review of Review of Comprehe program program another program another program nsive review completed Allocated US$6,000,000 US$6,000,000 US$6,000,000 US$6,000,000 on amount: selected Disbursement rule: Review by DepEd per program: US$6 million each, non-scalable. DepEd DLI achievement measure: Periods 1-4: Review of program serving Targeted education Disadvantaged Groups completed on or before the last day of the relevant period in al accordance with standards specified in the DLI Verification Protocol. programs DLI verification process: Periods 1-4: (i) DepEd reports on the conduct of the program serving reviews; and (ii) the Bank reviews the reports against the standards specified in the DLI the Target Verification Protocol during the semi-annual Bank implementation support missions. Disadvant EEP: AAP, ALS, MOOE; Minimum expenditure level: DLI targets for Periods 1 and 2: (1) aged AAP: US$2,000,000 per DLI target; (2) ALS: US$1,000,000 per DLI target; (3) MOOE: Groups in US$3,000,000 per DLI target; DLI targets for Periods 3 and 4: (1) MOOE: US$6,000,000 the Target per DLI target. Regions -73- Annex 7: Economic and Financial Analysis PHILIPPINES: Learning, Equity and Accountability Program Support Project I. Project Rationale: The Importance of Investing in Early Grade Reading and Mathematics Skills in Disadvantaged Areas in the Philippines 1. The skills that children acquire during their schooling and later lives are an important determinant of an individual's welfare and a key driver of economic growth. Recent studies have shown that an additional year of schooling raised individual labor market earnings by an average of 10% and long term per capita growth by approximately one percentage point. 2. The benefits of a good quality education are not only confined to the economic sphere. For example, individuals with higher levels of education attainment tend to be healthier than those with less education even after controlling for income and other determining factors. 3. Despite the government's strong and growing commitment to education, the quality of primary and secondary education in the Philippines remains low. The Philippines last participated in an international assessment in 2003 it showed that, compared with other countries, average achievement was low and the majority of students failed to achieve the lowest benchmark at either elementary or high school.26 While these results are old, national assessment data since 2003 suggests that quality remains low (see Figure 1). Figure 1: Learning Achievement in the Philippines Elementary: Grade 6 High school: Year 2 BID% 60% 70% 50% 60% 50% -40%- 40%-30 30%- 20%- 20%- 10% -10% 0% l lli - 200/05 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2004/05 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 Note: There is no information on year 2 achievement after 2010/11 because the assessment was changed to cover year 4 students in 2011/12. Source: Department of Education and Philippines Statistical Agency 26 TIMSS 2003 International Mathematics Report. -74- A. The importance of early grade reading and mathematics skills 4. Low overall levels of learning achievement partly reflect a failure on the part of many students to master basic learning skills (i.e. basic literacy and numeracy) in the early grades. A nationally representative survey conducted in 2013 shows that while oral reading fluency was relatively high, less than half of grade 3 students met national standards of fluency and accuracy (Figure 2). Despite relatively high average scores on Filipino reading comprehension, less than a fifth of grade 3 students demonstrated similar competency levels in English. It is likely that children who have not acquired these basic skills by Grade 3 will benefit less from learning opportunities in later grades. They also are more likely to drop-out as school work becomes more difficult and reliant on a solid grounding in these basic skills. Figure 2: Grade 3 Reading Levels, 2013 80% 80% 70% 70%- 6O% - -0 - O 50% - 50% - 40% - 40% - 30% - 30%- 20% -20% 10% Filipino English Filipino English Horal reading fluency (rorrect words per minute) comprehension (%correct) 1% meetingORFstandard % meeting accuracy standard % meeting both Source: USAID PhilEd Data: Early Grade Reading Assessment Results, 2013 5. Tackling weaknesses in early grade reading and mathematics skills has the potential to raise levels of learning. A strong foundation of basic reading and mathematics skills is crucial in order for children to fully exploit the learning opportunities they will face as they grow up. Children who manage to master these basic skills can expect to stay in school longer and do better than children who do not. 6. Strengthening early grade reading and mathematics skills also has the potential to improve future livelihood outcomes. A recent study, tracking a cohort of British children from 1970 showed that a one standard deviation increase in mathematics and reading scores at age 10 was associated with a wage premium of between 7% and 11% when the same individuals reached the age of 30.27 27 Crawford, C. and J. Cribb (2013). Reading and maths skills at age 10 and earnings in later life: a brief analysis using the British Cohort Study, -75- B. The link between the language of instruction and education outcomes 7. While many factors determine levels of learning achievement, the language of instruction can be importance particularly in the early grades. Analysis of the 2011 TIMSS assessments found that primary school students performed less well if they did not speak the language of instruction at home before they started their school careers. These disparities persisted into secondary school and in some cases widened. Mother tongue-based education, particularly in the early years, can have significant benefits which include: a. Improved access and equity. Schools are more attractive and less daunting for students when the language of instruction is familiar. A recent study that looked at a large number of developing countries found that children with access to schools teaching in their own mother tongue were more likely to be enrolled and attending school than children who were taught in a second language. The introduction of mother tongue based education also tends to benefit disadvantaged and marginalized groups more than wealthier children who are more likely to live in areas where second language use is more common at home and in the wider community. b. Improved learning. Children who begin school in their mother tongue already have built up some vocabulary, are able to pronounce commons sounds and are familiar with the structure of the language. This prior learning enables children to learn to read faster and gives them a head start in comprehension. Research in a number of different settings tends to confirm that children who study in their mother tongue learn better and more quickly than children who study in a second language. Recent evidence includes: i. In the Philippines a small scale program that introduced mother-tongue instruction in elementary schools in Lubuagan improved levels of learning in 28 all subjects. ii. In Cameroon, children taught in their mother tongue had better learning outcomes than children attending comparison schools where English was the -29 language of instruction. iii. In 3 provinces in Viet Nam, a pilot mother tongue based bilingual education program improved learning in mathematics for program participants compared with children living in the same localities but attending schools that were not participating in the program. 30 c. Improved internal efficiency. Mother tongue based education has also been shown to reduce levels of drop-out and grade repetition which in turn can improve the overall efficiency of an education system. For example, primary school children in Mali attending schools where the language of instruction was the same as their home language were 5 times less likely to repeat and more than 3 times less likely to drop out of school. In the few studies that have been undertaken, the savings made from 28 Walter, S. L. and D. E. Dekker (2011). "Mother tongue instruction in Lubuagan: A case study from the Philippines." 29 Walter, S. L. and K. G. Chuo (2012). The Kom Experimental Mother Tongue Education Pilot Project. 30 Ministry of Education and Training and UNICEF (2012). Action Research on Mother Tongue-Based Bilingual Education: Improving the equity and quality of education for ethnic minority children in Viet Nam. -76- improved internal efficiency have been found to outweigh the costs of introducing mother tongue based education. 8. This section has demonstrated the potential economic and social benefits of the project's focus on strengthening early grade reading and mathematics skills. It has shown that the project's focus on improving early grade reading and mathematics skills is likely a) to improve early grade outcomes and b) to provide the foundation for improved learning in later grades of elementary school as well as in secondary and tertiary education. The section has also shown that mother tongue based education has been successful in the Philippines and other countries in improving early grade reading and mathematics skills. In summary, the section has shown that successful implementation of the LEAPS is likely to raise the overall quality of education and lead to significant benefits for individual beneficiaries and the Philippines as a whole. II. Rationale for public investment and World Bank Involvement 9. Investments in education suffer from a number of market failures that justify public investment and include: a. Significant positive externalities. Parents do not take account of the social and wider benefits associated with education investments when making education decisions for their children. These externalities include; (i) improvements in family health and (ii) the potential for education investments to raise an economy's productivity and competitiveness and long-term economic growth rate. The failure of individuals to account for these benefits will lead them to under invest in education. b. Credit constraints. The up-front costs of education can be considerable and households, particularly poor households, are frequently unable to cover these costs directly and credit markets are not developed enough to extend education loans. c. Lack of information on the costs and benefits of education. Parents frequently lack the information on the costs and benefits of education to make informed decisions on education investments. d. Limited information on school quality. Information on the quality of schooling can be limited and parents can face difficulties in identifying the most suitable provider. e. Lack of competition. There are significant economies of scale in providing education services which may limit competition amongst providers in sparsely populated areas within a country. 10. Public investment in education is also justified on equity grounds and in particular on the belief that access to basic education services should not be conditional on wealth. Ensuring access to good quality education for all will require public intervention to ensure that children from disadvantaged and marginalized communities are supported. These arguments for government intervention also provide the main justification for public investment in the current project. 11. The World Bank can add value to the project through its long engagement in the Philippines education sector. In particular, the World Bank has recently provided assistance through the National Program Support for Basic Education (NPSBE) project which supported the Government's Basic Education Sector Reform Agenda (BESRA). The current project continues -77- support for BESRA and experiences and lessons learned from the previous phase of support will be valuable for implementation. 12. The World Bank can also draw on a considerable knowledge base of similar interventions across the region to support the implementation of the project. In addition, the World Bank is undertaking a considerable number of analytical and advisory activities on key education reform issues which will provide additional support to the project. III. Project components and achievement of the PDO 13. The project development objective is to improve the quality of grade 1 to 3 reading and mathematics skills in target regions and target schools, with a special focus on those belonging to target disadvantaged groups. The three components of the project contribute to this overall development objective in different ways. Figure 3: Project Logic and Components Improve the quality of grade 1-3 reading and mathematics skills of children in target regions and schoo s with a focus on target disadvantaged groups fmproving teaching and learning f radnge onand Target disadvantaged in grades 1-3 low.uThebassessmnt groups incentives ability intemteMoge fIoaoic oolstatn haoeotditoucnfohrtnu EGRA and EGMA tool promneDvlpn devesopment in 5 mother s at aos half of a rae tongues f xdibeenrs to rapr of Professional developmentof i key personnel in teaching rprigadgop reading and mathfedakEpnkow dg Institutionalization of early Srnteigbs nporm grade reading and mathfiac ltrg in *A M o np a ito ri nguof 14. The limited in ~ ~~~~ ~peformatinta saalbeo h ence niaosicudda ato h few childre scored zeo in an asessment ofreporing and eesoni iiin.Hwvr comprehension~~~~~~~~ ~ SnGae3Egls a o.Tengthenin loepoe rd edn ability n the moher tonge of Iloano in shoolfinacia eotditoucn ohrtnu instructio in 2011 rogram ersut hwtatams afofalGaeI tdnswr unabe toanswr an quetion fro a txt teyanageentakdt eda ato h seset *-ev lo in This reflects in part low overall levels of reading fluency but also points to the need to strengthen the skills of early grade teachers in mother tongue based instruction. Figure 4: Elementary Students Scoring Zero in Comprehension Assessments, 2013 50% 45% - 5% -- 0% 8 25% 20% S15% 010 50% 0% Filipino (G rade 3) English (Grade 3) lokano (Grade 1) U reading rom prehension 1 listening com prehension Source: USAID PhilEd Data: Early Grade Reading Assessment Results, 2013 Component 1: Improving teaching and learning in the early grades (US$ 180.25 million) 15. This component supports the introduction of mother tongue based education in the early grades through the professional development of teachers and the introduction of new assessment tools. The DepEd will develop a set of early grade reading and mathematics assessments designed to allow teachers to assess individual child progress. These assessments are intended to form the basis of a training course designed to introduce new techniques and innovations into the teaching of reading and mathematics in the early grades. Teachers will also learn how to use the assessments as a diagnostic tool and develop appropriate interventions for their students. 16. This approach to improving the teaching of early grade reading and mathematics has been successful on a small scale in a number of other countries. For example, Save the Children has been recently implementing the Literacy Boost program in 24 countries including the Philippines. The program uses a combination of regular reading assessments to gauge how well children are reading, teacher training in early grade reading techniques and community involvement to 'boost' early grade literacy levels.31 While not all countries have been assessed, the program appears to have had considerable success. Children's reading fluency and comprehension have improved significantly compared with children not participating in the program. Children taking part in the program also tend to stay in school longer. Moreover, children from households with very limited reading materials (a proxy for the poorest households) were also found to benefit significantly from the program. A similar approach was used in Liberia in a small scale pilot with similar results. A randomized controlled trial found 31 Save the Children (2013). Beyond school walls: a boost for readers. -79- that reading achievement improved by a much larger amount in treatment schools when compared to control schools. The effect sizes were also large with estimates suggesting that reading fluency and comprehension had increased by the equivalent of two additional years of h -32 schooling. 17. A small scale study in Lubuagan has also demonstrated the potential of mother tongue based education to raise education outcomes in the Philippines (Walter and Dekker 2011). The program introduced mother tongue education in the first three elementary grades and supported teachers to learn to read and write in their own language. The program also held teacher training workshops that focused on adapting the curriculum to include local culture, producing a first language primer, translating textbooks and developing other local language materials. The results of the study showed that children assigned to the treatment group had better average performance than children in the control group and effect sizes were large (1.31 to 1.61 standard deviations). Moreover, children in the treatment group also outperformed the control group in English and Filipino demonstrating that mother tongue based instruction did not negatively affect the acquisition of second languages. 18. In order to replicate the success of the evidence from pilot programs this component of the project also supports the institutionalization of the early grade reading and mathematics program. In order to support the large scale adoption of the assessment tools and teaching improvements developed under the new program of reforms the DepEd will establish an EGRA and EGMA policy. The policy will outline how these new tools relate to existing assessment tools and how they are to be utilized in quality improvement activities. Successful implementation also requires a detailed knowledge of the location of different linguistic groups to ensure that schools have the necessary resources to offer mother tongue education. The component also supports the development of a series of linguistic maps to facilitate the adoption of the early grade reading and mathematics program. Component 2: Strengthening accountability and incentives of key personnel ($82.5 million) 19. This component will support two key reform efforts that will contribute to the PDO through a strengthening of accountability at the school level and the institutionalization of the Government's performance based incentive scheme for DepEd staff. 20. Providing information on local school performance can strengthen the ability of parents to hold schools accountable for delivering good quality education. Many countries have adopted school report cards to provide information to parents to strengthen accountability. For example, the Brazilian state of Parana implemented a state-wide school report card system between 1999 and 2002 aimed at increasing awareness about school quality and raising parents' voice on school matters. While the program was never rigorously evaluated, anecdotal evidence suggests that parents were more engaged with school issues and it served to raise parents views and opinions in policy debates on education.33 32 USAID (2010). EGRA Plus: Liberia Program Evaluation Report. Bruns, B., D. Filmer, et al. (2011). Making schools work: new evidence on accountability reforms. Washington D.C., The World Bank. -80- 21. Small scale pilots and experiments in more recent times have shown that report cards can improve learning outcomes particularly when they are accompanied by other interventions.34 In Pakistan, a randomized controlled trial that provided school and student level report cards in around half of 112 villages found a small but significant impact on learning. Other studies have suggested that the impact of providing information is partly influenced on how this information is produced and utilized. In one randomized experiment in Uganda, local school committee participation in the development of the school report cards improved learning outcomes whereas less participatory methods had little impact. In the Liberia early grade reading pilot, discussed earlier, improvements in early grade reading outcomes were only realized when reporting of assessment results was accompanied by training of teachers in improving instructional methods. 22. Building on the lessons from the implementation of school report cards, DepEd is planning to improve school report cards and strengthen parental participation in school planning and assessment processes. Over recent years, and through the former NPSBE project, significant progress was made in institutionalizing and strengthening community participation in school affairs. While a school report card was also introduced it was found to have significant weaknesses. The development of a new school report card will be supported under this component and will utilize the early grade reading assessments and further support quality improvement at the school level. 23. The component also seeks to support the development of the monitoring system that will be used to monitor the implementation of the Government's Performance-Based Bonus (PBB) initiative. The performance-based incentive system covers all government employees, including teachers, and sets performance indicators for each level of the administration as well as schools. 24. Recent evidence suggests that performance based incentive schemes have the potential to raise education outcomes (McEwan 2013). In Kenya, for example, a randomized controlled trial of a performance based teacher bonus scheme improved average student participation and performance in national examinations. Evidence from the OECD PISA international assessments also shows that performance based pay for teachers tends to have a large positive impact on student learning where teacher pay is low relative to other workers. 25. The success of performance based bonus schemes partly rests on the appropriateness of the indicators used to measure performance. Incentive schemes can sometimes lead to a focus only on those aspects of performance that are measured. For example, in the Kenya experiment performance only improved in the areas that performance pay was directly linked to. Other measures of student performance including drop-out rates and performance on a broader assessment of learning were largely unchanged. While improvements in other subject areas may have also been beneficial to students, their exclusion from the indicators used for the incentive scheme meant that they were not targeted for improvement by schools and teachers. 34 McEwan, P. (2013). Improving Learning in Primary Schools of Developing Countries: A Meta-Analysis of Randomized Experiments. -81- 26. It is also important that administrators, schools and teachers have the ability to influence the indicators chosen to assess performance. Learning outcomes are affected by many factors outside the control of the education system. It is necessary that these outside factors are accounted for in the indicators used to assess and compare performance between schools and teachers. It is also vital that systems are in place to accurately monitor these performance indicators. The component's support to the development of a monitoring system for the performance incentive scheme is therefore a crucial component in ensuring better early grade learning outcomes. Component 3: Improvement ofprogram design for targeting disadvantaged groups ($36.5 million) 27. A key objective of the project is to improve learning for disadvantaged groups. In order to successfully support children from marginalized groups an accurate and up-to-date information system on their progression through the education system is crucial. This will allow programs and policies to be developed to tackle the education challenges faced by these groups. The component will support efforts by DepEd in this important area and feed into the program reviews that are also being planned. 28. Improving programs designed to target disadvantaged groups can also support efforts to improve early grade reading and mathematics achievement. DepEd has a number of ongoing programs designed to improve levels of access and learning for disadvantaged groups. For example, the Alternative Learning System (ALS) aims to provide learning opportunities for children and adults that are not well served by the formal education system. However, it is hard to judge the effectiveness of these programs because they have not been evaluated recently. The inclusion of a series of program reviews under this component is aimed at providing the necessary information and analysis to raise their effectiveness. IV. Cost-Benefit Analysis 29. The main economic benefits of increases in early grade learning achievement are likely to arise from improvements in future labor market outcomes of project beneficiaries. Previous sections have shown that improvements in early grade learning are likely to increase the number of years that children stay in school as well as increasing the skills that they leave school with. These increases in schooling and skill acquisition will have significant payoffs in the labor market both in terms of an increased likelihood of employment as well as better rates of pay. Unfortunately no estimates exist for the Philippines on the size of these effects. Two approaches are adopted to provide some ball-park estimates of the labor market benefits of improving early grade reading: a. Utilizing recent estimates of the returns to schooling in the Philippines. The World Bank's skills report for the Philippines estimated that in 2006 returns to an additional year of education ranged from 6% at the primary level to approximately 18% at the tertiary level. In order to estimate the benefits of the components supported by the project it is also necessary to know the impact of improved early -82- grade reading on the number of years a child remains in education. In the absence of estimates of this kind, it is assumed that improvements in early grade learning lead to an increase of 0.5 - 2 years in the time children spend at school. b. Using international evidence of the returns to improved learning achievement in the early grades. Recent analysis using the British Cohort Study estimated that a one standard deviation increase in reading and mathematics test scores at age 7 and 10 were associated with increases in the gross hourly wage of between 7% and 15%. The overall effect of the project investments on early grade achievement is not known but effect sizes from other studies suggest that they could be quite large. For the purposes of estimating benefits it is assumed that the project gives rise to improvements in early grade test scores of between 0.5 and 1 standard deviation. Table 7: Estimated Project Benefits Increased no. of Return to 1 Unemployment Net present years of year of rate value of benefit schooling/ schooling/ stream (US$ increase in early improved early million) grade reading grade reading achievement (s.d) achievement Benefits using increase in schooling Low 0.5 6% 10% 531 Middle 1.0 8% 10% 1,417 High 2.0 10% 10% 3,543 Benefits using effects of increased early grade achievement Low 0.25 8% 10% 354 Middle 0.50 10% 10% 886 High 1.00 15% 10% 2,657 Note: The number of project beneficiaries is assumed to include all grade 1 students in targeted regions over the five years of the project (2014-2018). In 2011/12 there were 640,000 students in Grade 1 in disadvantaged regions. In 2006, the overall unemployment rate was 6% but for the purposes of providing realistic estimates of project benefits we assume that 10% of beneficiaries are unemployed. Benefits are assumed to start 10 years after children have first enrolled in elementary school. Net present value of benefit stream is based on looking at benefits over 25 years. In the first 10 years it is assumed there are no benefits because children who benefit are still in school. A discount rate of 6% is assumed to calculate the net present value of the benefit stream. 30. While it is not possible to provide a precise and comprehensive account of project costs and benefits, a more limited analysis suggests a substantial return to project investments. Table 1 outlines a number of scenarios for project benefits based on the approaches outlined previously. Even relatively modest assumptions on the benefits associated with improvements in early grade reading show large economic returns. The middle case scenarios suggest that the benefits of the project in the 5 targeted regions could be in the region of US$ 900-1,400 million. Given the net present value of project costs (US$ 268 million) the project is likely to realize significant -83- positive economic returns. While these estimates are only suggestive they point to an economic rate of return of between 8% and 27%.35 31. These estimates of the economic rate of return to the project provide only a partial picture of the returns to improving early grade learning achievement. The estimates are limited on a number of fronts which include: a. Estimates are not based on information of the actual benefits of raising early learning achievement in the Philippines. b. Estimates of the rates of return to education in the labor market are based on average returns despite significant differences in returns by gender, education level and school ownership (e.g. public or private). c. Other aspects of the program of reforms supported by the project have not been included in the cost benefit analysis (e.g. school report cards, program reviews, improved financial management etc.). d. No account is taken of the social benefits associated with education investments of this kind. e. In some cases, historical information on the returns to education in the Philippines is used to estimate project benefits. It is not clear that past returns will be a good reflection of future education returns. f. No actual estimates of the costs of introducing the project components have been used to estimate net benefits and overall economic rates of return. 32. Despite these limitations, the analysis uses the best available information and suggests that the benefits of the reforms supported by the project are substantial and exceed the costs of the reform program. V. Financial sustainability 33. The project and the support provided to early grade reading achievement is likely to be sustainable because it will not absorb a significant part of the education budget. The components used to support improvements in early grade reading achievement represent approximately 5% of the overall government education budget. This suggests that investments of this kind do not place a significant burden on the education budget. Moreover, some of the investments supported by the project will last for a considerable amount of time (e.g. development of linguistic maps and reading and mathematics assessments). For example, linguistic maps are likely to be relevant for a number of years and will not require updating on an annual basis. 35 The estimates are based on the 5 targeted regions and the overall loan amount. Given that the reforms supported by the project are country wide it is also worthwhile looking at the benefits and costs of the program across the Philippines. Based on Table 1 assumptions but estimating benefits for all grade 1 students, the NPV of the benefits range from US$ 1.57 billion to 15.7 billion. The NPV of costs are estimated at approximately US$ 1.56 billion if it is assumed that budgeted spending on all eligible expenditure components (i.e. maintenance and operating expenses, human resource training and development, in-service training, alternative delivery mode and the alternative learning system) are devoted to the early grade reading program. This suggests significant positive economic returns. -84- References Andrabi, T., J. Das, et al. (2009). 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