Colombia - Second Subsector Project For Primary Education

Document of The World Bank FOR OFFICIAL USE ONLY CM z;3 C/D- G /a Report No. 7265-CO STAFF APPRAISAL REPORT COLOMBIA SECOND SUBSECTOR PROJECT FOR PRIMARY EDUCATION November 2, 1988 Human Resources Division Country Department III Latin America and Caribbean Regional Office This document has a restridted distribution and may be used by recipients only in the performance of  CURRENCY EQUIVALENCY UNITS Currency Unit - Colombian Peso (Col$) Col$l.00 - US$0.0033 (July 1988) US$1.00 - Col$305.O0 (July 1988) ABBREVIATIONS CEP - Regional Center for Support of Educational Reforms DANE - Natiort Statistics Department DNP - National Planning Department FERs - Regional Education Funds FONDO/MEN - Development Fund of the Ministry of Educatlon ICCE - Colombian Institute for School Construction ICFES - Colombian Institute for Development of Higher Education INEM - Diversified Secondary School IVA - National Value-added Tax MEN - National Ministry of Education NES - National Executive Secretariat (for the proposed project) OSPE - Planning Office of the MEN SENA - National Vocational Training System SIED - Integrated Information System for Education of the MEN FISCAL YEAR January 1 - December 31 SCHOOL YEAR February 1 - November 30 (September 1 - June 30, in some regions)  FOR OMCIAL USE ONLY COLOMBIA SECOND SUBSECTOR PROJECT FOR PRIMARY EDUCATION STAFF APPRAISAL REPORT Table of Contents Page No. BASIC DATA ....................................................... iii LOAN AND P-IJECT SUMKARY.... . iv I. THE SECTOR Achievements ........................ 1 Selected Issues...................... 2 Government Strategy ........................ .O- ............. . 7 Bank Strategy ...................... ... 8 II. THE PROJECT Project Origin ....................................... 9 Project Objectives and Content ... 9 Rationale for Bank Involvement ................ 9 Project Components .............................10 Implementation Arrangements. ......... 15 Project Costs and Financing . .18 Procurement ...................19 Disbursements ............... 20 Accounting, Auditing and Reporting . ................. 20 Benefits and Risks. ...... ...... 21 III. RECOMMENDATIONS . ...................... . ... . 22 ANNEXES ANNEX 1: COMPARATIVE EDUCATION INDICATORS ANNEX 2: ECONOMIC PERFORMANCE OF THE EDUCATION SYSTEM - RATES OF RETURN BY EDUCATIONAL LEVEL ANNEX 3: RESOURCE USE, ALLOCATION AND MOBILIZATION - POLICY ISSUES IN EDUCATION This report is based on the findings of an appraisal mission carried out in January-February 1988 and comprising Eleanor L. Schreiber (Leader, LA3HR), Maryvonne Plessis-Praissard (Economist, LA3HR), Maria-Victoria Lister (Operations Assistant, LA3HR); Ernesto Schiefelbein (Education Planner, UNESCO). Mr. Schiefelbein, then Bank staff, led the preparation and pre- appraisal missions carried out during 1987. This document has a restricted distribution and ma;' be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii. - ANNEX 4s SELECTED ISSUES IN SECTOR MANAGEMENT ANNEX 5t THE ESCUELA NUEVA ANNEX 6t DESCRIPTION OF PROJECT COMPONENTS (POLICY, MANAGEMENT AND PRIMARY EDUCATION DEVELOPMENT COMPONENTS) ANNEX 7: PROJECT MANAGEMENT AND FINANCING ARRANGEMENTS ANNEX 8t PROJECT COSTS AND FINANCING ANNEX 9: PROCUREMENT ANNEX 10: DISBURSEMENT SCHEDULE ANNEX 11: ACCOUNTING AND AUDITING ANNEX 12: SELECTED DOCUMENTS AVAILABLE IN THE PROJECT FILE MAP IBRD 21089  - iii - COLOMBIA Second Subsector Project for Primary Iducation Basic Data Sheet Data Year A. General Country Data: 1. Populati,n Estimate (million) 28.4 1985 2. Population Growth Rate (Z) 1.8 1978-85 3. Income Per Capita (USS) 1,320 1985 4. GDP Growth Rate (Z) 5 1987 5. Literacy Rate (2) 88 1985 6. Area ('000 Sq. Km.) 1,139 1988 B. Education Datas 1. Primary Education Enrollment Rate (2) * 90 1986 2. Secondary Education Enrollment Rate (2) * 50 1986 3. Higher Education Enrollment Rate (2) 10 1986 4. Education Expenditures as Share Public Expenditures (2) 20 1987 5. Primary Expenditures as a share of Ministry of Education Expenditures (2) 40 1985 6. Secondary Expenditures as a share of Ministry of Education Expenditures (:) 29 1985 7. Higher Education Expenditures as a Share of Ministry of Education Expenditures (2) 21 1985 * Including over-aged children Source: IBRD, MEN, and Misssion Estimates  - iv - COLOMBTA SECOND SUBSECTOR PROJECT FOR PRIMARY EDUCATION Loan and Project Summary Borrower: Republic of Colombia Beneficiary: Ministry of Education (MEN) Amountt US$100 million equivalent Terms: Payabie in 17 years, including a 5-year grace period, at. the Bank's standard variable interest rate. Project Obiectives The project is designed to strengthen resource use and Description: and mobilization policies for primary education, and to raise the quality of primary education while expanding access to all school-aged children. It incorporates a six-year investment program prepared by the Government for the subsector, and includes a policy component, a management component and a primary education development component. The policy component aims to: (a) raise the share of non-personnel inputs in recurrent expenditures in part by curtailing the establishment of new teacher posts and financing incentives to relocate excess teachers, mainly to rural areas; (b) introduce a new student promotion policy to reduce repetition, dropout and average costs per graduate; (c) raise the level of investment for primary education and direct the largest share of investment resources to schools in disadvantaged rural areas; (d) encourage local contributions to the financing of civil works in the subsector; and (e) finance studies to assess alternatives for the future financing of higher education. The management component includes funding for technical assistance, staff training and studies to: (a) complete introduction of an improved information system and strengthen medium-term planning and policy monitoring for education; (b) develop budgeting and financial management skills within the MEN; (c) improve technical support capacity at the central and departmental levels of the MEN, and program planning and implementation capabilities at departmental and local levels; and (d) prepare future projects. The primary education development component would finance:  v student and teacher materials and school libraries in 4,000 schools and in-service training for 20,000 teachers, to complete the introduiction of a successful rural curriculum, the Escuela Nuev&; (b) basic school furniture for 13,000 rural schools and classroom upgrading for about 4,300 rural schools to improve access; (c) textbooks and in-aervice teacner training to support a revised urban curriculum and, in marginal areas, furniture for some 2,100 urban schools; and (d) a system to assess student achievement in primary education, extension of rural basic education beyond the primary cycle on a pilot basis, and a policy study on the future development of secondary education. Benefits: The project's focus on policies for resource management would contribute to improvements in quality and access without substantially raising routine expenditure requirements for primary education. In particular, the project would support an increase in the share of recurrent expenditures for non-personnel inputs from 1X to 3?, an increase in the participation rate of rural school-aged children from 70? to 90? and in the completion rate of rural students from 20? to 60?, and reduce the cost per primary graduate by nearly 302. The planned management improvements would also strengthen planning and implementation capacities at the regional and municipal levels, in line with increasing decentralization of administrative responsibilities and financial strengthenirg underway at the municipal level. Risks: The project faces a risk of implementation delays owing to the size of the investment program and the direct participation of the municipalities in school upgrading. To reduce this risk, the build- up of implementation activities would be incremental and project management authorities and processes have been strengthened to support implementation at both the central and state levels. Procedures for implementing civil works, in particular, incorporate a two-year cycle to support both preparation and implementation, and works would be managed mainly by experienced semi- autonomous entities and executed by contracted firms or individuals. To reduce a related risk that cost-sharing by the municipalities may not be achieved, targets are conservatively estimated.  - vi - Estimated Costssl/ 2/ Local Foreign Total ------- USS Millions - Policy Component Teache- Salaries and Incentives 34.0 - 34.0 Studies 0.1 - 0.1 Subtotal 34.1 - 34.1 Management Development Component Staff Training and Technical 1.1 0.1 1.2 Assistance Studies 1.1 0.0 1.1 Subtotal 2.2 0.1 2.3 Primary Education Development Component Materials 11.7 3.9 15.6 Teacher Training 2.2 0.1 2.3 Furniture 40.6 5.0 45.6 Classroom Upgrading 31.2 10.4 41.6 Studies and Testing 2.5 0.1 2.6 Subtotal 88.2 19.5 107.7 Total Base Cost 124.5 19.6 144.1 Physical Contingencies 5.0 0.8 5.8 Price Escalation 16.7 2.6 19.3 Total Project Cost 146.2 23.0 169.2 1/ Exclusive of taxes and duties, which are negligible. 2/ Figures rounded. Financing Plan: Local Foreign Total -------- US$ Millions -------- Central Government 56.6 56.6 Departments 2.5 2.5 Municipalities 10.1 - 10.1 Bank 77.0 23.0 100.0 Total 146.Z 23.0 169.2  - vii - Disburmemnt Plan: BANK FISCAL YEAR 1989 1990 1991 1992 1993 1994 1995 1996 _--------------------- US$ millions ---------- Annual 2.0 5.0 11.0 15.0 17.0 21.0 19.0 10.0 Cumulative 2.0 7.0 18.0 33.0 50.0 71.0 90.0 100.0 Economic Rate of Return: not applicable maps IBRD 21089  COLOMBIA SECOND SUBSECTOR PROJECT FOR PRIMARY EDUCATION STAFF APPRAISAL REPORT I. THE SECTOR Achievements 1.1 Over the past 25 years, Colombila's education system expanded dramatically at all levels, and within the public and private sectors. While a third of children lacked access to primary education in 1960, the corresponding figure today is about lOX. During the same period, primary enrollments more than doubled, secondary enrollments increased six-fold and higher education enrollments rose 15 times. Private education, offered mainly in urban localities, currently accounts for 152 of primary enrollments, 401 of secondary enrollments and 60? of higher education enrollments. 1.2 Primiry education (covering only grades 1-5 in Colombia) enrolls four million students (almost equally divided between males and females). Some 652 of those enrolled are in urban areas and the remainder are in rural areas. Over lSO,OO0 teachers, 80X meeting National Ministry of Education (MEN) standards, are employed in primary schools. About 802 of the relevant cohort, children aged 7-11 is currently enrolled in the system; however, this ratio is 702 in rural areas and as low as 60Z in some regions. 1.3 Secondary education (comprising lower secondary, grades 6-8 and upper secondary, grades 9-11) enrolls 2.1 million students, about 502 of youth in the post-primary age group, and employs 100,000 teachers. Rapid growth in the number of graduates from primary education has stimulated social pressure to expavd secondary education, which at present is concentrated in urban P.reas (accounting for 922 of enrollments). Secondary technical education In relatively limited and comparatively costly in Colombia. It is concentrated in diversified secondary schools (INEMs) offering academic and pre-vocational streams at the upper secondary level. Outside the formal sector, the national vocational training system (SENA) is widely supported and has proved effective in training young workers. 1.4 Higher education serves an enrollment of some 400,000 students, 150.000 in public universities. The social sciences account for most of the recent increase in enrollmeiits; courses of study and graduate research in science and technology, inzluding management, are relatively weak. Although expansion of higher education has taken place with the active participation of the private sector, relatively high unit costs (over 11 times those for primary education) significantly increased the share of public educational expenditure allocated for this level since the mid- 19608.  - 2 - 1.5 Economic performance of the education system has been satisfactory. Social and private returns to education, estimated during the 1960* and 1370s, showed relatively high rates for primary and secondary education and lower rates for higher education. More recent estimates show more uniform returns among the three levels (Annex 2). Rates of return to vocational education have been especially high and are consistent with secular increases in demand for employable skills. 1.6 The significant expansion of enrollments, especially at the primary level, has depended largely on increased public resources. Real public expenditure on education more than doubled since 1970 and constituted about 20Z of the national budget (30X of all national recurrent expenditures and 5? of the investment budget) in the mid-1980s. Public education expenditure absorbed about 32 of GDP annually over the past 10 years, a share lower than average for countries at similar levels of development. However, private expenditure, accounting for another 1.5Z to 2? of GNP, raises the total to the relevant international level. Selected Issues 1.7 Despite the significant expansion of educational coverage achieved during the past two and a half decades, the basic education system (primary and lower secondary education) in Colombia continues to face several obstacles. In practice, policies for the use and mobilization of resources. conflict with priority objectives for achieving quality improvements and further gains in coverage in basic education; and the policy shortcomings are heightened by weaknesses in management at all administrative levels. Resource Use and Mobilization Policies (Annex 3) 1.8 Policies for the use of public resources for education reinforce an excessive share for personnel-related expenditures, a high cost per graduate, and w related shortfall in investment resources available for basic educatiot Personnel expenditures account for 992 of recurrent expenditures or .ublic primary and secondary education. The heavy focus on teacher-related expenditures has severely curtailed expenditures on other quality inputs, including the supply and replacement of materials, facilities' maintenance and school and teacher supervision. Inefficiencies in the appointment and deployment of teachers, resulting in a low average student-teacher ratio in urban areas, largely explain this high concentration. To illustrate the problem, the National Planning Department (DNP) notes that an increase as high as a third (from about 30 to 40 students per teacher) would be educationelly acceptable and would yield a surplus of urban teachers on the order of 12,000. By contrast, the current student-teacher ratio in rural areas (nearly 50) is appropriate in view of low population density and results in a shortfall of some 5,000 teachers. In addition, nearly nine years of schooling, rather than the five planned, are required per primary school graduate, mainly as a result of patterns of student repetition (30? per year throughout the primary cycle) and dropout (15? per year in the first four grades). The actual cost per graduate exceeds the nominal cost for the five year cycle (at about US$500) by some 80?. The inefficiencies in use of resources for recurrent expenditures have contributed to an inadequate level and declining share for sector invest.ment in public education expenditures since the mid-1970s. Systematic investment programming, required to achieve quality and further coverage gains in basic educatior, has also been lack4na.  -3- 1.9 Policies for resource mobilization and ailocation reinforce an over-concentration of publlc financing at the central level and a comparatively high share for higber education at the epense of primary and secondary education. (At the tortiary level, studets in public universities are highly subsidled, at a level of 952 of costs. The subsidies further tend to be regressive, benefitting mainly students from middle and higher income brackets). Until the aid-1970s, departmntal contributions were significant at the primary and secondary levels. However, econoaic string*ncies and a lack of fiscal and institutional mechanisms and incentives reduced this source of finance in the following decade. In recent years, about 972 of public financing for privmry education was provided by the central Government, compared with 722 in 1975. During the period 1965-1984, the share of central Government resources allocated for recurrent expenditures for education rmained relatively constant for primary education, at about 45?, while the share for higher education increased from 5? to 21?. For the more recent period, 1982-1987, the share of total public expenditures for education (investment and recurrent) allocated by the central Government for primary and secondary educAtion, together, declined from about 752 to 702, the share for higher education remained constant at atout 201 and the share for other educational activities incr'- _e frow 5? to 10Z. In terms of public investment in education, primary, secondary a.nd higher education each received about 202 of central Government resources allocated for education over the name period, 1982-87. 1.10 To ensure public resources availability for basic educatJon of reasonable quality, financing and allocation policies require reorientation. A reversal of the recent trend towards declining resource shares for basic education is needed together with increased capital expenditure. Wthin public resources available, an effort to direct a marginally higher share to non-salary expenditures is also needed for primary and secondary education, and could be achieved in part through improvements in teacher use. Further, additional resources need to be mobilized for basic, as well as higher education. To reduce the burden on the central Government for primary education, the renewed mobilization of local resources is required. A new law (Ley 12 of 1986), which would raise from 302 to 50? the municipal share of proceeds from a national value added tax during the period 1985-1992, is designed in part to stimulate local contributions to social services financing, including investments in education. As regards higher education, potential exists for mobilizing additional private resources and expanding student credit to reduce the level of direct government subsidies and to improve equality of access. Sector Management (Annex 4) 1.11 Educational Management. The structure for educational management comprises the central MEN, Departmental Secretariats of Education and District Offices. The MEN is officially charged with system guidance and orientation, and overall management and evaluation. It comprises two p:incipal Directorates, one for educational development and training, and one for administration and supervision. These units are supported by a recently strengthened office for planning (OSPE). In practice, the technical support function of the MEN is weak, and direct responsibility for educational management, excluding higher education which is autonouious, is overly concentrated at this level. The Ministry is burdened with many local management responsibilities, including direct management of some  - 4 - 1,000 secondary schools, which could be more efficiently handled by departmental authorities. Moreover, the division of responsibilities between the two main directorates lacks clarity and results in some duplication of effort (e.g., in the areas of curriculum development, teacher training and teacher supervision) while other needs (e.g., for regional support and coordination, management of the teaching profession) are not addressed systematically under the present structure. 1.12 The departmental (or regional) structure for management parallels that of the MEN, with offices for educational development, administration and planning within Secretariats of Education. The Secretariats are directly responsible for regional planning and program coordination. However, they generally suffer from a shortage of qualified personnel. A tradition of preparation of educational planners and administrators is lacking though university programs are currently available in these fields. A related problem at the departmental level is high turnover of key personnel, including Secretaries of Education who are appointed by department governors. Below the- department level, the structure of the education system is still evolving. In the early 1980s, a plan for creating school districts was introduced, but the process is not yet complete. It is estimated that 60? of the country is covered by the program and the role of the district officer is still subject to regional variations. With few exceptions, the Secretariats and sub-departmental staff in education lack adequate technical capacity to develop and implement medium-term plans and programs, and related support from the MEN is insufficient. 1.13 The continuing high degree of centralization in sector management derives largely from historical weaknesses in management capacity at lower administrative levels. However, the rapid expansion of services since the 19609 has reduced the feasibility and efficiency of centralized management. The Government has thus introduced a gradual process of decentralization. To support this process, the policy management and technical support functions of the MEN would be strengthened. The planned introduction of a new regional management information system, the SIED, and a modest restructuring of the MEN, approved by the Congress in early 1988, would serve as complementary inputs. Key features of the reorganization are the clear separation of educational and administrative management functions; the abolition of central responsibilities for direct administration of secondary schools and for school construction (previously the responsibility of the semi-autonomous Colombian Institute for School Construction, ICCE); and the establishment of neT divisions for the development of the teaching profession and for support and coordination for the regions. At the department and district levels, the pool of educational and resource management skills also needs to be strengthened to increase the effectiveness of planning and program implementation. 1.14 Financial Management. At the central level, routine expenditures and transfers to the departments are managed through the regular MEN structure. A separate fund, FONDO/MEN, is responsible for financial management and control of development projects. It was established to e-nedite project financing outside regular MEN channels. However, insufficient expertise in critical areas (e.g., financial planning, accounting, and reporting) has reduced the potential effectiveness of this mechanism to date. At the departmental level, both routine (mainly central  payroll transfers) and investment (mainly FONDO/MHN transfers) resources for public education are managed separately from the administration of *ducational services through special funds, me. The *ffectiveness of financial mnagement and control exercised by the FRs, created in 1968, is mixed. In all cases, efforts recently initiated by the Government to inerease mmicipal contributions to the financing of education will increase the workloads of the mlRs. 1.15 Traditional programaing and budgeting practices, set at the central level, contribute to inefficiency in resources management for education. Within each fiscal year, allocations for education made by the Ministry of Finance (recurrent) and the DNP (investment) often fall short of approved and budgeted levels. As much as 502 of the expected budget is commonly retained as a supplement which must be further negotiated. In practice, MEN is often targeted for non-salary cuts when other priorities emerge in the recurrent budget of the M0F. Equally problematic, late authorizations and cumbersome procedures for transfers create obstacles to timely implementation of programs and may result in underexpenditure of funds allocated. The lack of certainty and the time expended negotiating detract from effective planning and forecasting for the sector. Improvements in both financial control and budgeting need to be pursued both within the sector and more broadly. Primary Education 1.16 Low Student Achievement. At both the primary and secondary levels, average student achievement is low. At present, no nationwide test results exist to offer as evidence of a lack of learning. However, poor performance of students in some regions, indicated by less than 40Z of expected scores on secondary and university admissions tests, serve as proxies and suggest that many students are not learning adequately the basics of reading, writing and mathematics in the primary grades, or mathematics and science in the secondary grades. The relatively high grade repetition, as well as student dropout (para. 1.8), also indicate quality problems. Dropout is often a temporary phenomenon in Colombia (many students who leave school during the year re-enroll in the same grade the following year), attributable to non-school causes. Included are conditions of poverty and the need for children to work on the farms or in the household, illness and migration. However, factors related to schooling also apply: traditional curricula, rigid promotion standards, and lack of community involvement in school affairs. 1.17 Chief among school-related determinants of poor quality in primary education has been a shortage of textbooks and other learning materials in classrooms. Colombia manufactures excellent textbooks; however, the cost of acquiring them has been borne mainly by students' families. As a result, textbooks have been virtually non-existent in traditional primary schools in rural and poorer urban areas. Since the early 1980., a revised government practice, to provide textbooks free of charge for use by primary school students, has been introduced and is improving the situation. Inadequate teacher preparation has also reduced student achievemert. While only 20 percent of primary school teachers have less than the prescribed amount of training, the quality of preservice teacher training in normal schools is highly variable. Absenteeism among students and teachers, holidays, and teachers' strikes drastically reduce the number of days in the school calendar and further erode the quality of education.  1.18 An ongoing project assisted by the Bank (the Subsector Project for Rural Basic Education, Loan 2192-CO) supports the introduction of a revised rural curriculum for the primary grades, the Escuela Nueva, first introduced in the mid-1970s. I includes provision of student and teacher materials, school libraries and inservice training and follow-up for teachers. The Escuela Nueva is a well-tested program for delivering basic educational services (Annex 5). It was developed on the basis of principles of multigrade teaching in small (one to two classroom) rural schools. It comprises a semi-programmed learning package which enables children to progress individually or in small groups, and teachers to cater for different learning or even grade levels in the same classroom. An important objective is to provide the full primary cycle in rural areas, including in small schools, as necessary. The curriculum incorporates flexible promotion practices which are based on mastery of prescribed sets of skills and permit grade promotion throughout the school year. The Escuela Nueva was used in full or part in about half of the 25.700 rural gvverrnment schools by late 1987. Sustained evaluation of the Escuela Nueva demonstrates that it is a viable program for providing the full primary cycle in rural areas. Moreover, results of a 1987 assessment confirm that student achievement in Spanish and mathematics is higher, and repetition rates lower (by 10), for Escuela Nueva students than for students attending traditional, rural primary schools. This model also encourages parents' interest in, and support for, school programs. Community participation in the maintenance and upgrading of schools is common. To further improve quality and redress equity problems in primary education, the use of the Escuela Nueva should be broadened. Materials and teacher upgrading are also needed in public primary schools in urban areas to support a revised curriculum in use since the mid-1980s; and systematic evaluation and testing of student achievement need to be introduced at the primary level. 1.19 Unequal Access. Although enrollments have increased, some 52 of the urban population cohort and as much as 30X of the rural cohort reaching school age still do not have ready access to primary schooling. Substantial variations remain in access among the departments, with participation rates for children aged 7-11 ranging from 602 to 901. These differences are explained largely by variations in levels of urbanization and availability of teachers. On average, for example, the student-teacher ratio is 29, with a departmental range of 23 to 37. In rural areas, this ratio is 28. Past policy to allow teachers to transfer easily, primarily from rural to urban posts, has resulted in a shortage of teachers in some rural areas and in underutilization of teachers in urban areas (para. 1.8). In many rural and marginal urban areas, school facilities in poor condition and a lack of furniture contribute to problems of access. 1.20 The population density of each department and the geographical extension of school catchment areas also have an impact on access to primary schools. Low concentration of the population in many rural areas is associated with incomplete schools, i.e., those unable to offer the full five-year cycle. This condition creates barriers to the completion of the primary cycle by rural students. Of rural students entering grade one, only 202 complete grade five (compared with 6O0 of urban students), and of these, only a quarter continues to secondary education. As Government  - 7 - nears its objective to provide universal primary education, it vill need to initiate measures to provide the full primary cycle in all rural 3chools. The Escuela Nueva is well-designed to meet this need. The Government will also need to encourage the timely enrollment of children aged 6-7 in grade one and to reduce repetition in an effort to improve coverage and gradually reduce the number of over-aged children in the system. Further measures, to provide opportunities for rural students to obtain some schooling beyond the primary level, will be required over the next decade -- to meet both social and economic demand. In line with these needs, development of an efficient system of basic education, which incorporates the primary and lower secondary cycles (i.e., grades 6 to 8) is being considered. ,. Additional analysis and policy decisions will also be required to determine a cost-effective means for expanding secondary education more generally, and an appropriate mix of academic, pre-vocational, and vocational training at the upper secondary level. Government Strategy 1.21 Thq expansion and improvement of education and other basic social services are high priorities for social and economic development in Colombia. The current Government, which assumed power in September 1986, has stated in its National Rehabilitation and Poverty Eradication Programs that the main objectives for development are stabilization of the domestic environment and reduction of poverty. The broad strategy for achieving these objectives rests on increasing the productivity of the poor through improvements in basic services, including education. Decentralization of responsibility, accompanied by administrative and financial strengthening of the municipalities is a corollary priority, embodied in part in implementation of Lev 12 (para. 1.10). To ensure continued economic recovery, priority is also given to the efficient use of resources and the mobilization of additional private resources for education. 1.22 The Government's most recent development plan, published by the DNP in September 1987, presents educational policies and strategies. These incorporate results and recommendations of recent sector analysis carried out jointly by the Bank and Government and documented in a sector memorandum ("Education Sector Finance and Efficiency', Report No. 6857-CO of April 1987). Highest priority is assigned to raising the overall quality of primary education and improving access to enable all children reaching school age to enroll. This priority is reflected in a six-year investment program prepared by the Government for primary education. Emphasis is given to expanding coverage in rural and marginal urban areas. Drawing on its successful experience with the Escuela Nueva (para. 1.18), the Government plans to extend this program to all rural schools. Other immediate objectives include improving the efficiency of resource use for primary education; encouraging resource mobilization for the sector at local levels and in the private sector; and improving management throughout the education sector. over the medium- to longer terms, the Government also plans to extent basic education to eight grades and to assess the role for upper secondary education with a view to reorier.ting vocational courses to meet needs of school leavers.  -8- Bank Strategy 1.23 -The Bank's country lending strategy is oriented towards assisting the Government to increase the volume and efficiency of investments in tgie social sectors. The strategy rests on maintaining the level of public investment and related recurrent expenditures within a viable fiscal and macroeconomic framework. The Lank's sector work and lending are also designed to address poverty issues and sector-specific issues of cost recovery, the balance between public and private sector participation and between recurrent and capital expenditures, and the composition of recurrent expenditures. The Bank's efforts in the education sector are designed to support these tasks. They will focus on development of effective sectoral allocation and administration mechanisms at central and local levels, resolution of institutional rigidities, and better definition of the role of the public sector in education finance. The proposed subsector project would contribute substantially to these tasks through a focus on sector financing and resource use policies and on the upgrading of primary education, particularly for rural and underserved urban population groups. Experiments to extend the primary cycle in rural areas would also be included. The project would build upon the achievements and experience gained under the ongoing Subsector Project for Rural Basic Education and would complement Bank operations in the areas of basic health, rural water supply and municipal development. 1.24 Beyond the proposed project, elements of the Bank's medium-term strategy for the education sector relate to extension of basic education through the lower secondary cycle and selective improvements for upper secondary education. Needs for reorienting technical education and training, including management and finance of higher education, will also be assesseed. 1.25 The Bank has previously supported four education projects in Colombia with loans &aounting to US$50.3 million. Loan 552-CO of 1968, for US$7.6 million,-supported the first phase of development of diversified secondary education. Loan 679-CO of 1970, for US$6.5 million, assisted with the second phase project for diversified secondary education. Loan 920-CO of 1973, for US$21.2 million, provided for common facility centers for secondary education. These three projects, which supported the introduction of vocational streams into upper secondary education at government schools, have been completed. The first two each suffered delays of about two years due largely to difficulties with equipment procurement but were otherwise satisfactorily executed. The third project was delayed by about four years due to changes in Government's educational priorities, periodic shortages of counterpart funds, and weak project management. The diversified education provided through these projects has been evaluated by the Bank. Educationally, the programs have been successful and in high demand. However, the diversified model has proved costly and, in a period of rapid expansion of higher education, has generally been used as a stepping stone to higher education rather than as a direct route to employment. 1.26 The fourth loan, 2192-CO of 1982 for US$15.0 million, reflects more recent government priorities. It supports the Subsector Project for  - 9 - Rural Primary Education, which represents the pilot phase of the proposed project and the Gvernment's planned investment program for primary education. This project, scheduled for completion during 1988, suffered considerable start-up delay owing in large measure to.underestimation of the management load and a highly decentralized management structure. In the past three years the difficulties have been overcome through a major strengthening of central project management and direct implementation responsibilities, as well as a simplification of the management structure (Annex 7, attachment). As the project nears completion, the main targets for physical inputs to support the Escuela Nueva have been met or exceeded at costs in line with appraisal estimates. The needs for adapting project management responsibilities and procedures to implementation capacities at the various administrative levels; for selecting experienced project managers, especially for financial management and control at the central level; and for clarifying responsibilities and keeping implementation processes simple and consonant with existing structures have been been duly considered in design of the proposed project. II THE PROJECT Pro1ect Origin 2.1 The proposed subsector project was prepared by the MEN in collaboration with the DNP and the Bank. The Colombian Institute for the Developisent of Higher Education, ICFES, also contributed to the proposals for studies on the financing of higher education included in the project. Preparation was carried out during November 1986 to December 1987. Appraisal was completed in February 1988. Negotiations took place in Washington, D.C. during October 11-14, 1988. At negotiations, the government delegation was headed by Ms. Silvia Escovar, Chief of the Project Monitoring aad Evaluation System, DNP. Proiect Obiectives and Content 2.2 The proposed project aims to strengthen resource management and mobilization in the education sector, and to raise the quality of primary education while expanding access to all school-aged children. It includes three components: a policy component; a management development component; and a subsector development component for primary education. The policy component is supported by a letter of subsector policy of October 7, 1988, signed by the Minister of Education, and a related plan of action (Annex 6, Attachment 1). The project incorporates the expenditure focus of the Government's six-year investment program for primary education, planned for the period 1989-1994. Rationale for Bank Involvement 2.3 The proposed project forms an integral part of the Bank's overall country and education sector strategies. It supports the planned shift in investment priorities towards the social sectors and addresses key sector issues of recurrent expenditure composition, and resource mobilization and allocation through a focus on primary education. The Bank's involvement in sector work, project identification and preparation has been essential to project design. Continued Bank involvement will be a significant factor in  - 10 - implementing and further developing policy measures designed to improve the efficiency of resource use and maximize resource mobilization potential for the education sector broadly. Project Components (Annex 6) Resource Use and Mobilization Policy Component (proposed outlay, $38.5 million including contingencies) 2.4 Recurrent Expenditure Composition and Teacher Use Policy. The Government has adopted policies to curtail the establishment of new teaching posts (both permanent and temporary), and to improve the efficiency of use of existing teachers while meeting the current rural deficit (para. 1.8). Teacher transfers from rural to urban areas would also be carefully monitored and limited. In urban areas with excess teacher supply, tentatively defined as student-teacher ratios below 35, posts vacated by regular retirement, estimated at about 1,000 annually, (exclusive of voluntary departures) would be shifted to rural (5,000) and gradual.y marginal urban areas (up to 3,000) where teachers are in short supply. The posts relocated to rural areas would be filled from a pool of temporary teachers hired by the central Government since the early 1980s on ten-month contracts. The project would finance the contract salaries of these teachers, which would decline in number from 2,500 in 1989 to 500 in 1994 (a total of 8,500 contracts during the six-year period), as the transfer process reaches completion. To retain these and other teachers in remote rural areas, the project would also initiate and finance special incentives: during 1992-1996, up to 2,000 rural teachers would be offered housing loans (a lack of adeq",te housing has been a major obscacle to teacher transfers), and teachers serving in remote areas would also be offered a family health insurance system. Other incentives, already in place, include bonuses, early promotion and retirement plans, and training opportunities. Project financing for the salaries and incentives would amount to some US$5.7 million annually, on average. It contrasts with the total cost of establishing and filling 5,000 new rural posts (including non-salary benefits) at about US$20 million annually. The potential savings from use of the teacher transfer and incentive mechanisms would be roughly equivalent to twice the minimum requirements for non-personnel recurrent expenditures on primary education. These costs are estimateA to reach US$7 million by 1993 -- a targetted 32 of recurrent expenditure for primary education (compared to the present 12). 2.5 Expenditure per Primary School Graduate and Promotion Policy. The Government has adopted a revised promotion policy to reduce repetition and dropout at the primary level. Students would progress from unit to unit on the basis of mastery of core skills rather than end of year assessments. The revised practices (already incorporated in the Escuela Nueva program) are being introduced throughout the primary system during the 1988-89 school year. It is expected that the average number of years of schooling required per graduate would decline from the current 8.9 to about 6.5 by 1993, with a corresponding savings in cost per graduate. 2.6 Investment Expenditure and Programming Policy. The preparation of the six-year investment program for primary education reflects the Government's policy to increase investment in the subsector. The total direct investment at the school level is estimated at about US$108 million (mid-1988 prices) by Government during 1989-94. In line with priorities,  - 11 - about 75Z of investment capital would be allocated for rural, and 25Z for marginal urban schools. The level of capital expenditure planned would raise the share for primary education in public capital expenditure on education from about 20 at present to about 35? during 1988-94 (the increase would be balanced mainly by a temporary decrease in the share for secondary education over the period). The investment program would roughly double recent capital expenditure for primary education on an average annual basis over the period (Annex 8, Table 1), and would be sufficient to provide student and teachers' materials for all primary schools lacking these items, and to complete the basic furnishing of all rural and the majority of needy urban schools. It would not be sufficient to meet all current needs for the upgrading of school plants. The backlog for repair and upgrading of school facilities has been determined through an inventory carried out in 1987 by the municipalities and departments, and verified by the MEN on the basis of minimum standards. For facilities upgrading, the MEN has thus adopted investment criteria which would direct investment only to rural schools, with the larger share of new capital spending for poorer localities. Departments have been divided into two main groups based primarily on indicators of income (reflecting capacity to invest additional local capital resources), and on the analysis of upgrading needs. Within the limits of proposed capital finance, it is estimated that about 552 of defined needs for facilities upgrading could be met in poorer departments and about 25? in higher income departments. 2.7 Central-Regional Cost-Sharing and Resource Mobilization Policy. The Government has also adopted a policy to encourage and increase local contributions to the financing of primary education under the investment program. Ley 12 of 1986 transfers administrative responsibility for civil works in the social sectors to the municipalities, as well as the increased share of revenues from the value-added tax (para. 1.10). On this basis, municipalities would be expected to contribute about 20Z of the value of facilities upgrading to be included under the investment program, with a range of 101-SOZ depending on total municipal revenues. In addition, the departments would be expected to contribute 5Z of the total costs of planned facilities upgrading. This level of cost-sharing would raise non- central contributions to school investments from about 3Z at present to about lOZ during project implementation. In the interests of mobilizing additional resources, municipalities would be encouraged to exceed respective targets. In view of competing claims on IVA and other municipal resources, however, the targeta for local cost-sharing are conservatively estimated (at less than 1OZ of planned IVA increments). They would be confirmed or adjusted as reasonable during annual review of project implementation progress. The component would also include studies to support the formulation of future policy for the financing of higher education. Emphasis would be given to review of alternatives for reducing direct government subsidies at this level and expanding student credit. Draft terms of reference for the studies were reviewed at negotiations and are acceptable. They will be further elaborated during project implementation. Management Development Component (proposed outlay, $2.8 million) 2.8 To strengthen decentralized policy and program implementation for basic education, the project includes support for selected improvements in management. The component builds on the restructuring of the MEN currently underway (described in para. 1.13 and Annex 4). Consultant services and staff training would be provided to improve the technical support capability of the MEN and the implementation support services of the  - 12 - regional SecretRriats of Education. Specifically, the component would aim too introduce fully the key elements of the new MEN information system, the SIED, to improve planning: develop budgeting and financial management capacity within the MEN system; and improve local implementatior. capacity. The component would also include financing for selected sector studies and the preparation of future education projects. These would be managed by a working level committee comprising DNP and MEN representatives. Terms of reference for proposed studies would be developed in consultation with the Bank. 2.9 The SIED. The project would support the full introduction of planning and project management subsystems of the SIED. The OSPE has already introduced parts of the planning subsystem, including the facilities inventories (para. 2.6), socio-economic data and budget and cost information for the regions. To these would be added data for monitoring sector policies and educational achievement. The National Executive Secretariat (NES), responsible for coordinating the project, is currently developing a project management subsystem. .t would incorporate information needed to monitor budget, expenditure, and physical, policy and institutional development targets under the proposed project. To complete the design and introduction of these subsystems, and to strengthen MEN and regional capabilities to atalyze and apply information for medium-term planning, the project would finance consultant services (10 staff-years local) and training and technical follow-up for some 90 regional planning staff (amounting to about 360 staff-weeks of local trainivg). During negotiations, the Government agreed that the planning and project management subsystems of the SIED would be introduced by December 31, 1989. 2.10 Budgeting and Financial Management. MEN programming and budgeting practices would be strengthened under the project to reinforce multi-year planning objectives (a four-year rolling plan mechanism is in place) and to minimize disruptions resulting from the complex national budgeting process. A manual on MEN programming and budgeting procedures was completed in April 1988 by a long-term advisor to the director of the FONDO/MEN, retained in early 1988. Staff training in use of these procedures, to be reinforced by technical follow-up, would be provided to expedite the budget process and related problem resolution. In addition, an improved system of accounts (financed under Loan 2192-CO) has been introduced for projects and programs managed by the FONDO/MEN. The system incorporates new procedures for financial management of projects, including procedures for the FERs and for municipalities participating in school upgrading. The project would include financing for training for the relevant central and regional staff (about 200) in budget and expenditure management and in financial control and accounting (about 800 staff-weeks, local). 2.11 Project and Program Implementation. The project would assist the regions to build project and program execution capabilities. Technical support to be provided wou'd be designed to meet specific regional needs under the proposed project. However, the aim would be to institutionalize long-term improvements. Financing would be provided for advisory services to the departments involving visits by MEN staff including 11 NES staff regularly assigned to this task (70 staff-years), and for training for regional staff (about 550 staff-weeks local) and for supporting materials. In addition, staff of the NES, FONDO/MEN and other central entities would receive selective upgrading in project management skills (30 staff-weeks  _ 13 - Primary Education Development Component (proposed outlay, $127.9 million) 2.12 This component comprises the bulk of the investment program for primary education. It is designed to raise the overall quality of primary education and to improve access to the full primary cycle for children in rural and marginal urban settings. It centers on the provision of school inputs (i.e., materials, teacher training, furniture and facilities upgrading) to support the expansion of the Escuela Nueva to all rural primary schools. It includes the provision of materials and teacher training for disadvantaged urban primary schools. The component further includes the introduction of systematic evaluation of student achievement at the primary level and experiments and a study related to the future extension of basic education beyond grade five. 2.13 Improving Educational Quality. To improve the quality of rural primary education, the project would introduce (or complete introduction of) the Escuela Nueva in rural schools enrolling about 800,000 children. Student learning guides, teachers' manuals, and.school libraries, specifically designed to support the Escuela Nueva curriculum, would be provided for about 4,000 schools not yet served. The student materials comprise one to three guides per major subject area per grade. In accordance with government textbook policy, each set of materials would be used by two students. The libraries contain about one hundred volumes, mainly reference materials, for school as well as community use. Based on average school sizf and requirements for replacement of Escuela Nueva materials excluding libraries (once each four years), the project would provide financing for replacement student and teaching materials for 25,000 schools. In addition, inservice training would be included under the project to orient existing teachers towards the introduction of the Escuela Nueva curric-ilum. The training, carried out in workshops totalling three weeks' time, covers orientation to the Escuela Nueva and the revised promotion practices; use and preparation of materials; and student assessment and evaluation. It would be complemented through regular follow-up and support provided in small group workshops conducted at demonstration schools (some 2,800 have been designated). Initial training is scheduled to coincide with delivery of school materials. The project includes financing for the in-service training for about 20,000 rural teachers (including updated training for some teachers trained ear'ier in Escuela Nueva methods). 2.14 Textbooks, classroom materials, and related teacher training for public primary schools in margina. urban areas would also be provided under the project for schools lacking materials. Both are designed to support a revised urban curriculum introduced in the mid-1980s. Like the Escuela Nueva, this program permits students to progress on a continuous basis and is well-suited to the revised promotion policy. The in-service training covers the use of the textbooks, the introduction of the revised promotion policy and student assessment. Financing would be provided for some 3.3 million textbooks, training for about 6,500 teachers and for the materials for some 30,000 classrooms. 2.15 To monitor and ensure quality gains in primary education, systematic educational testing would be introduced under the project.  - 14 _ and students. Gradually, testing would be extended to cover the entire school-aged population at key points in the school cycle. The pilot testing program contains three main parts: teacher administered tests for students in each primary grade in mathematics, reading and writing (400 schools in eight regions); supervisor administered tests in the same subjects and schools, to be used to verify and control the quality of the testing program; and externally administered tests in grades 4 and 5 for 30,000 students nationwide. The examinations would be developed and tested by 1989, adjusted during 1990 and 1991 and introduced on a permanent basis beginning in late 1991. Results of the tests would be used to identify problems such as poorly performing departments, to assist teachers to orient methods and emphasis towards students' learning needs, and to identify requirements for improving teacher quality, curricula or materials. Analysis of achievement through the testing program would 1be merged with analysis of non-school determinants of student performance. Related base data would be made available through the SIED. Examination results would also serve as baseline data for time-series studies on improvements in educational standards. The in-service training to be provided for teachers (both urban and rural) would include an orientation to the testing program. During negotiations the Government agreed to extend, on a national scale, the system for evaluating student achievement in primary education by December 31, 1991, and to apply results to improve achievement. 2.16 Improving Access. The project would aim to ra'se the participation rate of rural, school-aged children from 70? to a targetted 90? and the completion rate of these children from 20? to about 60Z. This would be achieved by encouraging the timely enrollment of children entering school (i.e., those aged 7) through regular MEN information campaigns; assuring increased access for rural children to the full primary cycle through the widespread use of the Escuela Nueva (including use of multigrade teaching techniques, where needed); and introducing the new promotion practices. Achievement of the targetted increase in the net enrollment ratio in rural areas would correspond with an increase in the number of children enrolled in rural schools of some 300,000 (or, about 20? of current enrollments). However, it is expected that this increase would be largely offset as a result of the new promotion policy, which would decrease the level of student repetition, and the revised policy for student intake. In urban areas, experiments with community involvement in school management, at about 250 project schools in marginal areas, would be supported by the project in an effort to improve participation. 2.17 To assist in reaching the rural participation and completion targets, as well as to contribute to quality gains, the project would provide basic furniture (teacher and student desks and chairs) for about 13,000 unfurnished or partially unfurnished rural schools and for the replacement or rehabilitation of dilapidated classrooms. Central investment allocations, which would not cover all needs, w:!uld give priority to comparatively disadvantaged regions and schools (para. 2.6), on a cost-shar4ng basis with the departments and municipalities (para. 2.7). The project includes financing for the school furniture and for the replacement of classrooms at 3,600 rural schools (about 1.6 classrooms per school) and upgrading of classrooms at about 700 rural schools (water supply and sanitary facilities would be included where lacking). F'nancing is also included for basic school furniture for about 2,100 disadvantaged  - 15 - 2.18 Extending Basic Education in Rural Areas. The project includes an experimental component which will test delivery systems for providing education beyond grade 5 for rural youth. Earlier experiments, which required transporting students to centers of higher population density, have proved costly and ineffective: a recent assessment suggests that most rural students in the upper grades of basic education contribute to family income and cannot attend school outside the community. This subcomponent would thus experiment with extending the Escuela Nueva model through grades 7 or 8, using exssting primary schools. Alternatives to be assessed include incorporation of the additional grades into the regular school day and use of teacher-tutors after school hours and on weekends. Distance learning techniques, using radio materials, would also be tested. The experiments would be mounted in eight districts. Financing would be provided for the preparation of materials, training for teachers, program delivery and evaluation. The project would also finance a MEN study to assess requirements and financing prospects for the broader expansion of lower secondary education and a selective expansion of general upper secondary education. Draft terms of reference for this study were reviewed with the Bank during negotiations and judged to be satisfactory. Implementation Arrangements 2.19 Project Management Responsibill:ies (Annex 7). Crerall authority for management of the subsector investment program would be vested in the Vice-Minister of Education, responsible for the National Program for Primary Education. At the policy level, the Vice-Minister would be supported by a national coordinating committee. This committee, also responsible for allocating investment resources, is chaired by the Vice- Minister, and includes the Director of the National Executive Secretariat, the central management t-mit for the project, and representatives of the MEN and DNP units involved with primary education. Day-to-day planning, monitoring and evaluation for the project would be provided through the NES, drawing on the relevant MEN units (see chart attached to Annex 7). The PONDO/MEN would be responsible for financial management and control under the project and the central MEN, through the NES, would manage directly the implementation of the policy and management development components, and procurement of materials and furniture. The central management structure would be largely replicated at the department level, with the departmental Secretariats of Education fulfilling the role of the NES, and the FER fulfilling the FONDO/MEN role. The Secretariats would program and monitor teacher tcaining and civil works activities. In respect of civil works, municipal administrations would also be directly involved with project implementation. 2.20 Based on implementation difficulties encountered under Loan 2192-CO (para. 1.26) the management capacity of both the NES and the FONDO/MEN has been substantially strengthened in preparation for project implementation. To establish the capacity to handle the increased workload, the staff of the NES has been doubled to 20, allocated as follows: regional coordination and support - 11, programming and information management - 3, financial coordination - 2, and procurement support - 4 (including experienced, ex-ICCE staff). FONDO/MEN personnel assigned to the project would be increased from three to ten professionals. Besides existing staff, already appointed are a new director and the long-  - 16 - disbursements officer, a budget officer and an experienced financial umaager for the pruject (also an accountant). During negotiations, the Government agreed that it would maintain during project implementation, as directors of the NES and the PONDO/MEN, individuals with qualifications and experience satisfactory to the Bank. 2.21 Implementation Procedures. Implementation plans and schedules for the policy and management development components are summarized in the plan of action for these items attached to a letter on subsector policies prepared by the Minister of Education (Annex 6, Attachment 1). Ir-estments for school materials, school furniture and teacher training would be based on agreed programs described in project contracts between the MEN and the participating department and its FER. The procurement of student manuals and textbooks, teachers' materials, school libraries, and school furniture would be carried out centrally. Technical specifications and bid documents for materials would be prepared, and bids evaluated, by the relevant HEN unit (i.e., the Curricula Department for materials, the Department for School Facilities for furniture). The MEN procurement committee would award contracts in accordance with evaluation outcomes and contract payments would be handled by the FOnI4%!?%N. Contracts include the costs of delivery to regional warehouses. Final delivery would be arranged through the FERs. These mainly centralized procedures have been developed and improved under Loan 2192-CO and are considered efficient and appropriate for continued use. Procedures for providing teacher training also follow existing arrangements, which are satisfactory. The NES communicates to the regions the authorized training budget; and the allocation is transferred to the FERs for use by the departmental CEPs (Regional Centers for Support of Educational Reform), which deliver an agreed program of training. 2.22 As a result of the decentralization of responsibility embodied in the introduction of Law 12 and the phasing out of ICCE, procedures for implementing school upgrading are in transition. The procedures to be used for executing civil works under the project have been designed in recognition of the recent decentralization initiative. However, these procedures do not depend upon the decentralization program for successful implementation of the civil works component. Rather, they would build on and take advantage of local mAnagement skills and institutions whare these are judged adequate, and use a more centralized approach in other cases. 2.23 The procedures for implementing project civil works follow a two- year cycle, and include four main activities (Annex 7, Attachment 4 provides detail on start-up activities in the cycle). First, eligible departments, and through the departments the municipalities, would confirm to the MEN thei. conmmitment to cofinance civil works in the targetted shares (52 of total for the departments; 202 of works for the municipalities, para. 2.7): and submit requests for civil works based on the centrally verified needs assessments, which are updated anually (para. 2.6). Second, the MEN would inform the participating depaLt.--rs of recomended, and later approved, investment ceilings for project civil works. These decisions would be based upon the investment guidelines set for civil works (para. 2.6) and implementation progress under the component (para. 2.27). Agreed investments and cost-sharing would be described in supplemental contracts (para. 2.21) between the departments and the MEN, and between the departments and participating municipalities. Third, the MEN, with department involvement, would determine acministrative *1. . . . . .  - 17 _ of the cycle. The criteria for deciding on administrative arrangements and the schedules for departments' participation take into account variations in municipal and departmental management and financing capabilities and experience. They are based on a reliable classification of municipalities according to financial and management capacity carried out by the Banco Central Hipotecario. In most cases (for up to 90Z of eligible municipalities). on experienced financial and management agent, the Banco Central Hipotecario, (or the Banco Popular or Caia Agraria supported by the Banco Central Hipotecario) would be contracted by the departmental Secretariat of Education to administer civil works contracts which would be executed by firms or individuals. Exceptions to this approach would be made for a few departments, where departmental and municipal management of civil works contracts are comparatively strong. In these cases. Secretariats of Education, with inputs from departmental offices of public works, reloc&ted ex-ICCE staff and FERs wo,41d directly support municipal management of civil works contracts. In the least developed departments, the MEN would directly administer, or arrange for administration of, works as required (for example, where the qualified financial agents lack representation). The quality of the management and the timely implementation of works would be closely monitored by the NES staff who would provide additional support as required. Fourth, the procedures incorporate regular government practice for contracting works within each department. Municipalities would deposit in a local account their share of the contract value. Remaining deposits for advance and partial payments would be transferred to that account from an account held by the management agent or FER, which would contract separately for supervision and physical control of the works. A share of the value of contracts in poorer, rural municipalities would be provided in the form of community labor, in line with self-help efforts common to the Escuela Nueva. This support would be costed and included in the construction contracts. 2.24 The civil works procedures have been designed with support of an engineering firm retained by the MEN. They are based on assessment of recent, successful experience with execution of reconstruction works in Popayan, and with local financing of works in some 50 municipalities. The procedures and management arrangements would be further tested and refined during the first year of project implementation, prior to the formal start of construction (scheduled to begin in the second year). The consultants have also assessed the capacity of selected public financial management entities to participate in the civil works component. Based on this assessment, the Banco Central Hipotecario, followed by the Banco Popular and Caja Agraria, were judged to have the greatest experience in financial and technical management of development projects at the municipal level. 2.25 Implementation Schedule, Monitoring and Review. The project would be completed within a six-year period beginning in 1989, with start-up scheduled for late 1988. A detailed investment program and implementation plan by department has been prepared and reviewed by the Bank for the first year of project implementation for the primary education development component. Bid documents for goods to be procured through 1989 have also been completed by the MEN, and a request for the local budget contribution for 1989 has been preliminarily approved. The practice of completing and updating annual plans, which would coincide with the initiation of the budget cycle, would be continued throughout the implementation period. Annual program and investment planning would be based mainly on the plan of action for implementing policy and management support measures (attached to the subsector policy letter, para. 2.21). The guidelines for investment olannina, including criteria and proposed limits by department and  - 1l - investment activity, are embodied in the MEN's project preparation documents, together with implementation and reporting procedures (including procedures for financial management and control). Criteria for assessing managerial, technical and financial feasibility for departmental and municipal participation, for scheduling investments and, in the case of civil works, for determining appropriate administrative arrangements, are also included. These guidelines, criteria and procedures were consolidated in a project operating manual reviewed during negotiations. 2.26 The planned build-up of investment activities tinder the project is gradual, with peaks in years three through five of a six-year implementation period. On average, annual investments would amount to about twice the level of investments in primary education managed by project authorities during 1986-88. The recent and significant strengthening of central project management staff and processes (paras. 2.20, 2.21) was designed to establish adequate capacity to implement the larger investment program and to provide appropriate financial control. It aims to take advantage of succesaful experience, provide back-up support for the introduction of new procedures in the area of civil works, and ensure economy and efficiency in the procurement of goods and satisfactory accounting, auditing and monitoring. 2.27 In addition, the project would incorporate as the key monitoring tool annuil progress reviews, to be conducted jointly by the Government and the Bank. The prograunmatic approach to investments in primary education provides a flexible mechanism for periodic adjustments to the pace or scope of the program, as may reasonably be required. Decisions on investment levels and content for the coming y6ar vould be based mainly ont (i) availability af resources and determination of an appropriate share of investment for primary education in total public investment for education; (ii) progress achieved towards implementing investments agreed for the previous year; and (iii) advances made towards achieving financing and resource use policy targets and related institutional improvements. The execution of the civil works component -- including the determination of departmental allocations, implementation of cost-sharing arrangements and effectiveness of the implementation process -- would form a particular focus of the review, particularly in the early years of implementation. The security of regions (or subregions) receiving investments would also be considered as a matter of priority during the annual reviews: project investments would be directed only to areas judged by the Government to be sufficiently secure to allow Bank supervision missions (a changing situation during the investment year would warrant shifts in planned investments). During negotiations, the Government agreed to carry out jointly with the Bank a review of the project by September 30 each year and to prepare, for Bank approval, the detailed investment program for the following calendar year by November 30 each year. Pro4ect Costs and Financing 2.28 Project Costs and Financing. Project costs are based on, and incorporate, the Government's six-year investment program for primary education for the period 1989 to 1994 ((Annex 8, Table 1). The project has a total base cost of US$144.1 million equivalent (mid-1988 prices). Total project costs (net of import duties) amount to US$169.2 million, including contingencies (Annex 8, Table 2). Of the total, about 14Z represents foreign exchange costs. Physical contingencies are estimated at  - 19 - 4Z of base costs (this comparatively low level reflects the programmatic design of the project) and price contingencies at 132 of base costs plus physical contingencies. The rates used for the price contingencies, based on estimated international price increases, were 31 for 1989-90, and 42 thereafter. It is assumed that periclic exchange rate adjustments would compensate for differences between projected international inflation and local inflation rates. The loan amount of US$100.0 million would finance 59Z of total project costs (or 1002 of the foreign exchange costs and 53Z of local costs). Remaining financing would be provided in the following shares: central Government - 34?, departments 12, municipalities - 6S (Annex 8, Table 3). 2.29 Recurrent Costs. Upon completion of the implementation period, the project will generate annually an increased recurrent cost of US$13 million in the MEN budget. This increase would include up to US$6.0 million to be used for incentives for the redeployment of primary teachers and US$7 million for textbook replacement, inservice teacher training, supervision and student assessment. This amount represents less than 22 of the MEN recurrent budget at present and could be accommodated in overall increases in MEN recurrent resources anticipated over the period. In line with policy objectives, the increase in non-salary expenditures for primary education would raise the total non-salary share of recurrent expenditures to the targeted 3X (para. 2.4). Procurement 2 30 Procurement arrangements and limits by type of procurement are presented in Annex 9. Contracts for civil works (total estimated value, about US$50 million), for the replacement or rehabilitation of primary school classrooms, are judged to be of insufficient value to attract foreign bidders (the estimated average value per contract is about US$35,000 and are all expected to be far below US$250,000). Civil works contracts exceeding US$35,000 in value would be carried out under regular government procedures for local competitive bidding (LCB), which have been reviewed and are satisfactory to the Bank. Civil works contracts of less than US$35,000 in value would be awarded on the basis of local shopp4.ng procedures subject to an aggregate total of US$20.0 million. 2.31 Contracts for the provision of textbooks and other materials, and furniture (total estimated value about US$72 million) exceeding US$250,000 in value (representing about 552 of total value) would be awarded on the basis of international competitive bidding (ICB). Contracts for materials and furniture of less than US$250,000 and more than US$30,000 in value (representing about 352 of value) would be awarded in accordance with LCB procedures which have been reviewed by the Bank and found to b. adequate. Miscellaneous items of materials, furniture and equipment, which cannot be grouped in packages of US$30,000 or more in value and subject to an aggregate total of US$10.0 million, would be procured through local shopping. Contracts for technical assistance and consultants would be awarded in accordance with Bank guidelines. Prior Bank review would be required for contracts for goods exceeding US$250,000, and, for the first two LCB contracts to be awarded for civil works and goods respectively. Other contracts and bid evaluations would be subject to random ex post review by Bank staff.  - 0O - Disbursements (Annex 10) 2.32 The proposed loan would be disbursed over a seven-year period ending December 31, 1995. This corresponds with the regional disbursement profile for the sector. Proceeds of the loan would be disbursed as followsa (a) 55Z of total expenditures for civil works; (b) 10O2 of foreign and 902 of local expenditures for materials and furniture; (c) 1002 of foreign and 90X of local expenditures for teacher training; and (d) 10O of foreign and 902 of local expenditures for technical assistance and studies. Disbursements for civil works contracts, all other local expenditures with a contract value less than US$200,000 equivalent and foreign expenditures with a contract value less than US$50,000 would be made on the basis of certified statements of expenditure. Supporting documentation for these expenditures would be retained by the FONDO/MEN and made available for periodic review by Bank staff. Disbursements on all other items would be fully documented. To expedite disbursements, a Special Account would be established by the Government in the Central Bank in US dollars. The Bank would make an initial deposit of US$10.0 million. Project expenditures for materials, furniture, teacher training and civil works incurred after June 1, 1988 would be eligible for retroactive financing up to an amount of US$5.0 million. At negotiations, the Government agreed that disbursements against expenditures on school materials, furniture and training would be contingent upon evidence that the MEN had completed project contracts with participating departments, and for civil works, supplementary agreements with departments and between the departments and mttnicipalities. Accounting, Auditing and Reporting 2.33 Based on previous experience with accounting and auditing, the FONDO/NEN is being strengthened to carry out responsibilities under the project and a new system of accounts was introduced in September 1988 (para. 2.10 and Annex 11). In particular, efforts are underway to streamline and clarify administrative procedures related to the system of accounts, authorizations and control of funds by executing agencies. Under the project, the FONDO/MEN would establish and maintain consolidated project accounts as well as other records that are needed to account for project financing. Similar separate accounts and records would be maintained by the departmental FERs and by the Banco Central Hipotecario (and other financial agents employed) and the municipalities participating in the civil works component. Such accounts would be clearly identified within the FONDO/MEN accounting system and be adequate to record, monitor and report on the financial transactions for the project, including local and Bank financing. The accounts would be audited annually by the Government's Comptroller General, in accordance with the Bank's auditing guidelines, including a separate opinion on withdrawal applications made on the basis of statements of expenditure. The Special Account would also be audited annually by the Comptroller General in accordance with terms of reference to be supplied by the Bank. The annual audit reports would be provided to the Bank no later than six months after the close of the financial year. 2.34 The head of the National Executive Secretariat for the project would be responsible for preparing semi-annual (by June 30 and December 31) progress reports for Bank review, to provide information on project  - 21 - implementation, covering both quantitative and qualitative aspects of the project and linking these vith financial performance. (The main indicators fir project monitoring to be covered in the reports are suummarized in the plan of action for implementing policy and management.support measures, and in tables indicating physical investment targets in Annex 6). These reports would contribute to information required for the annual reviews of project progress and would facilitate Bank supervision. Benefits and Risks 2.35 Benefits. The project's focus on strengthened policies for the use and mobilization of resources for primary education would contribute to long-term gains in both quality and efficiency in the subsector. Policy measures would create an improved balance in recurrent expenditures by reducing the share for personnel and raising the share for other inputs; reduce the cost and number of years of schooling required per graduate by nearly 302; and, encourage the mobilization of additional resources for the sector. The project would also develop decentralized management experience and capabilities in the education sector, including municipal capacity to manage and finance educational investments. Together, the policy measures and management improvements should help to ensure the availability of adequate public resources to extend the first cycle of education beyond the primary level, to meet the basic education needs of Colombian youth and to sustain productive employment, thereafter. 2.36 The immediate benefits of the project would be to assist the Government towards achieving universal provision of primary education, most notably by raising the participation and completion rates of rural school- aged children from 70? to 90?, and 202 to 60?, respectively. These gains would be complemented by improvements in the quality of primary education through the expansion of use of the Escuela Nueva program and materials to nearly 800,000 children and the widespread provision of materials in urban areas. The invostment program for the primary education subsector is expected to have a significant poverty impact. Virtually all of direct investments at the school level, planned for both rural and urban areas, would benefit disadvantaged population groups. In addition, project benefits would be distributed equally between males and females in view of the current profile of enrollments in primary education. 2.37 Risks. The main project implementation risks derive from the broad scope of the subsector investment program for primary education and the addition of new, decentralized management responsibilities for the municipalities. There is a risk that the planned extension of the improved rural primary curriculum and related inputs will overcax management capacity at all admlnistrative levels and result in Aelays. Relying mainly on experience gained under the first phase effort (assisted by Loan 2192-CO), several measures have been taken to minimize this risk. The NES and the FONDO0MEN have been strategically strengthened; successful (mainly centralized) implementation processes and procedures would be continued; and technical assistance and training will be provided to assist both MEN and department staff to participate effectively in the process. In addition, the build-up of implementation activities over the implementation period vill be incremental and any necessary adjustments would be effected through annual reviews of progress under the investment program.  - 22 _ 2.38 The second and related risk is that the municipal participation in civil works would pose particular implementation difficulties, in view of weaknesses in both financial and management capabilities at that level. Targets for cost-sharing have been conservatively estimated, clear implementation procedures have been defined, and, in most departments, financial and technical management support services would be provided on a contract basis with an experienced entity to reduce these risks. In addition, regular support would be channeled through the NES, and a two- year cycle for civil works, normally conducted in one year, would compensate in part for variations in capacity. III. RECOMMENDATIONS 3.1 During negotiations, the Government agreed that: (a) the planning and project management system of the SIED would be fully introduced by the MEN by December 31, 1989 (para 2.9); (b) a system for evaluating student achievement in primary education would be put in place on a national scale by December 31, 1991 and that results would be applied regularly to strengthen primary education (para. 2.15); (c) the directors of the NES and FONDO/MEN, with qualifications and experience satisfactory to the Bank, would be maintained throughout implementation (para. 2.20); Cd) it would complete annually by September 30 a joint review of the project with the Bank, and annually by November 30 a detailed investment program for the coming year for Bank approval (para. 2.27). 3.2 As conditions for disbursement, the Government would provide evidence of completed project contracts between the MEN and the departments for materials, furniture and teacher training, and separate (supplementary) agreements with the departments and between the departments and municipalities for civil works (para. 2.32). 3.3 Subject to the above conditions, the proposed project constitutes a suitable basis for a Bank loan in the amount of US$100 million equivalent to the Republic of Colombia.  -21- 0031AA?VS ROUCAMN0 IK 9935l Page I of 2 November 3, 1980 3 3-*-3-.-----.....--43 3 ~ .-.-.-4 3 3 3093 fIICA~~~~~~~~~:PRDTION 9UATO :OMLEIN .3i?cOS 1003809 I 3 I low Ml3 3AM 6610C3? 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TO 3gR31Li. 3STUDOE3I i9NROL3L.% 3 313*E3NXYSKtKLL5.a(US$) 301V0?U TO 3001389339 tPR1 SEC HI i (Z) 384A110 ICICLE 3118 3M PRACKUT?809CONAR1 38ATIO tiER 334TIO t 3 a~~~~~ s(1979)t(1979) 3 tDUJCAIION sEX?E330TU19 3 (8 3 (1976) 3 (3) 3 (3) 313*035 IGN?ICAPUTAS (3) a (Z) 31T40C36 3 (83 3 3 3~~~~~(1)3(2)3i (3) (4) : (3) 3 (6) i(7) I (8) 3(9)3(10)3 ( 3)i (12) i(13)3(14)3i *OSTR*L1A ~so 14.6b 6,870 6.3' 14.6 - - - - 1032 300 21 99t 73 13 20.90 CANADA el 237 9,63Ob 7. 18.3ay 30& 34s? 23& ggb 106* 100 21 19.9*? 100 92' t8 22.60' 0853143 1.3. 79 61.2 12,200 4.6 9.9' - - - 29b $9 100' - 100' 94' - 12.30' 631T33RLANDS is 14. 10,490 7.9 3.1 20 31 25 99b1 96 9s to 15.3 99 82 13 12.40 UV3 Z1*A.A6 so 3,02b 6:0Ub 1:5W 134 37 31 26 ,gb t00 100 24 11.6 300 82 is 35.80"6 811I089 19 8.3 12,250 9.0 18.2 31 10 30 g9b 991 300 18 19.9 100 79' 30'? 36.50'Y 508WANA n3 1.06 9304 6. 22.0 41 34 22 40 100 77 32 30.0 40 20 21 1.80 SIIIINI 81 4.2 231 2.86w 19.0 43 28 27 21 29' I5 3i 20.2 12 3' 17 1.00 -Omans p4 0.4b 341 3.8' 28.0 49 29 22 49 76 40 39 41 36 28 0.60 DJISOUTI 84 0.4 480 1.0 31.9 73 26 ... 10 42 66 40 67.0 40 t0 19 0.60 EUTIOPIA 8s 43.0 310 3.69 9.1 33 26 37 39 37 30' 63 39.) 93' 14 44 0.50 31111 6l 37,44 420b S.&mb 29,3b 65136 I1 456 it3 16 36 14.4 31 I8 26 - 3*40739 82 1,44 4354 1.S 16.9 38 32 26 334 336' 41 48 9.6 46 21 21 1.30 SOAStCAX 77 8.1 330 4.0' 24.0 13 28 19 10 9461 33 11b 8.0 36 14 23 3.30by 8I 6.16 230k 3.5 13.4 38 14 21 216 62 23 61 1.8 12 4 21 0.40 MAURITIUS ~ 3 1jb 1.170b 4 14.0 46 36 7 Bob 93 72 23 33.0 100 50 23 3.00 RWANEDA 83 5.gb 2706 3.6 21.4 11 16 33 376 61 30 40 16.0 9 1 14 0.40 8ITC33RLLEB 79 0.6 1,770 1.9 22.4' 34' 330 10' 25 - - - - S0OMALIA 81 4.8 280 3.5 to.5 Sob 444 66 304 22b 806 29b 9.0b Bob 12b 22 3.00 SUDAN4 60 19 2b 380b 3.0 - 66 39 .. 32 11"x 68 34 1.4 44 16 16 SWAZILAN3D 83 0.76 940b 3,8pb 20.4 51 34 ;; 61b 93 s0 33 33.0 98 29 l8 3.00 TANZANIA4 so 38.1 260 3.9 17.7 47 10 16 79b 986 87 43 31.0 39b 3 20' 0.30 UGANDA 66 13,2b 22Ob I.. 12.0 18 33 28 12 346b 42 34 1.5b 3t 396 22 0.60k? 34161 81 29.s~~~~~ 210b 7. 26.4 - - t0o 6 76 21 30 2. 03 8 20 1*1383A 80 3,k 66b 4.Sp 11.1 48 23 22 444 91 80 48 12.S 19 16 22 3.50 3133jj333 ~ 7,7 7St 3.1 19.1 62 32 6 4b 90 Ss 39 20.0 81 IS 23 0.51; 33111389 M?ICA 81319 79 3,46 320b 6.1' 35.0 43 23 1 33b 42 30 46 14.0 30 3t 43 3.00? 8063133 81 6.1 210b 2.1' 23.7 43 29 28 9 16 25 31 24.3 16 3 24 0.03 CAIIEROO 84 10.0 ajob 3.39 33 38 28 20 69 45b so - -- 23 28 2.70 C.4.3. 86 2,6b 260k 3.5*7 24.7'? 49 16 24 -- 79 45 61'? is 18 67 1.40'? 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NAUJRITA9tA 86 1307b 4106 3.0 22.4 32 40 21 37 33 35 s0 30.0 64 16 23 4.80 NIGER 84 5.2 300 2.8 21.0 40 21 20 14 21 20 36 41.0 37 6 28 0.50 IicERiA 83 93,6b 7606 7.47 16.0 - - 13 36 93 70 36 39.3 47 23 30 2.00 SENEGAL3 84 6.4 380 1.06 24.0 46b 356 396 28 12 39 46 26.0 19' 36' 24 2.20' 81533*31033 77 3.4 210 4.06 36.06 -. -- _. 356 37* - 31 23.06 84 31' 22 0.606? TM0 18 2.4 400 6.533W 26.34 30* 28' 21' 38 74 40 546? 18.0 52 326*? 486 1.60by ARGENTIN3A 78 27. 2,1I27 3.9 4'33 o8 ,: 89 12 17 -87 33 8 23.00 8*AH*1AS 79 0.2 2,770 1.7 19.1 36 36331 934 9 97 24 97 71 19 - BARBADOS 78 0.2 2.680 0.5"? 22.1' 43' Its 16' 99b 300? 99' 217 39.9' 99' 78? 20? - BOLIVIA so 5.4 530 4,1'? 30.3' - - 63 747 - 20? - --3?S -- 12.60? BSRAZTL 79 136.3 170 1. . 1 - 3 6 7367 - 23&? 41.5b 61' 35* 14'Y 12.62b 03313.8 ~~76 10. 369 3.2b7 .36: - -b 11941y? 3467 - S 3341 20by 31.906? 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JA33A1C6 80 2.1 1,310 6.3 13.7 37 43 20 90 98 98 40 2.3 91 at 22 8.00 3311100 e0 61.1 1,880 4, 17.0' 46 39 11 92 98 13 44 9.1 86 56 17 30.30 61041*00 78 2.6b b10 3.061 14.ob - - gob *s61 24 7 -- 2661 30b - PANAMA6 78 I.8b 1,510 Sob S6*y 23,847 42* 13' 33 826 9367 3367 13.6 83' 50by 376? 20.40by PAL*0UA1 79 1.0 1,140 1.4' 14.2 42 17 20 84 83 32 29 3,Ir 76 22 12 0.70 7810T 80 16.6 1,000 3. 14. 53 31 19 80 83 56 39 9.8 89 39 22 34.40? TRINIDAD 6 0O. 77 1.1 3,910 4.867b g:',4y 48 32 20 95 98 91 30 10.3? 4.9 62 24 -- UE3JUA! 78 2.9 2,300 2.5 9.4b - - - 94 aOl6x - 344 - - 6461 17.80'? VEIIEZUELA 78 14.44 3,440 3.17 t8.9b - - - 82 10661 - 28 - - 386' 17 23.10?  -24- I.1131139'6A39 3504lU 601Al.8