Honduras - Basic Education Project

Document of The World Bank Report No. 13791-HO STAFF APPRAISAL REPORT HONDURAS BASIC EDUCATION PROJECT MARCH 8, 1995 Country Department II Human Resources Operations Division Latin America and the Caribbean Regional Office  CURRENCY EQUIVALENTS Currency Unit = Lempira (L) US$1.00 = 9.3 Lempiras (January 1995) SDR 1.0 = US$1.47 (January 31, 1995) FISCAL YEAR January I - December 31 ACADEMIC YEAR February 1 - November 30 ACRONYMS AND ABBREVIATIONS ADEPRIR Rural Primary Education Management Project (Proyecto Administracion de la Educacion Primaria Rural - ADEPRIR) AMHON Honduran Association of Municipalities (Asociaci6n de Municipios de Honduras) CADs Teacher Training Centers (Centros de Aprendizaje Docente) CAS Country Assistance Strategy CBH Central Bank of Honduras (Banco Central de Honduras) CEPENF Centers for Non-Formal Preschool Education (Centros de Educaci6n Pre-escolar No Formal) CCIE Community Centers for Initial Education (Centros Comunitarios para la Iniciaci6n Escolar) EDI World Bank Education Development Institute FHIS Honduran Social Investment Fund (Fondo Hondureflo de Inversion Social) GDP Gross Domestic Product GOH Government of Honduras GTZ German Agency for Technical Cooperation (Deutsche Gesellschaft fur Technische Zusammenarbeir) ICB International Competitive Bidding INFOP Professional Training Institute (Instituto Nacional de Formaci6n Profesional) INICE National Institute for Education Research and Training (Instituto Nacional de Invesngaci6n y Capaciraci6n Educativa) IDA International Development Association KfW German Credit Institute for Reconstruction (Kreditanstalt fur Wiederauflwau) MIS Management Information System MOE Ministry of Education (Secretaria de Educacion Publica) MOF Ministry of Finance (Secretaria de Hacienda y Credito Publico) MOH Ministry of Health (Secretaria de Salud Publica) NGO Non-Governmental Organization PCU Project Coordination Unit PRAF Family Assistance Program (Programa de Asignaci6n Familiar) PRONEEAN National Program of Education for Indigenous Ethnic Groups (Prograna Nacional de Educaci6n para las Etnias Aut6ctonas de Honduras) SECPLAN State Secretariat of Planning, Coordination and Budget (Secretaria de Planificaci6n, Coordinacion y Presupuesto) FHIS-I Social Investment Fund Project FHIS-I1 Second Social Investment Fund Project SOE Statement of Expenditure RUTA SOCIAL Regional Unit for Technical Assistance in the Social Sectors UNDP United Nations Development Programme (Programa de las Naciones Unidas para el Desarrollo) UNESCO United Nations Education, Science and Culture Organization UNHA Honduran National Autonomous University (Universidad Nacional Aut6noma de Honduras) UNICEF United Nations International Children's Emergency Fund (Fondo de las Naciones Unidas para la Infancia) UPNFM National Pedagogic University (Universidad Pedag6gica Nacional Francisco Morazan) UMCE Unit for the Measurement of Education Quality USAID United States Agency for International Development  HONDURAS BASIC EDUCATION PROJECT STAFF APPRAISAL REPORT TABLE OF CONTENTS CREDIT AND PROJECT SUMMARY ......... ...................... iii I. ECONOMIC AND SOCIAL CONTEXT ........ .................... I H. THE PRIMARY EDUCATION SYSTEM ....... .................... 2 A. Overview .......................................... 2 B. Issues in Primary Education ........ ....................... 4 Quality .......................................... 4 Efficiency ......................................... 8 Equity .......................................... 11 C. Government Strategy for the Education Sector .................... 13 D. Bank and IDA Support and Experience in the Social Sectors ... ........ 15 E. Lessons Learned from Past Operations ........................ 15 Lessons Learned from Honduran Projects ..................... 15 Bank-Wide Education Projects ............................ 16 F. Rationale for Bank Involvement ............................. 18 Im. THE PROJECT .......................................... 19 A. Project Objectives ..................................... 19 B. Project Areas and Target Population .......................... 19 C. Project Components .................................... 19 D. Project Description .................................... 20 Component A. Improving the Quality of Basic Education ... ........ 20 Subcomponent A. 1. Training of primary and preprimary teachers, supervisors and school principals ... ........ 20 Subcomponent A.2. Textbooks and Didactic Materials ... ..... 22 Subcomponent A.3. Bilingual Education ................. 22 Subcomponent A.4. External Evaluation of Student Academic Achievements ............................. 23 Subcomponent A.5. Improvement of Physical Infrastructure in Rural Areas .............................. 24 Component B. Institutional Strengthening .................... 25 This report is based on the findings of the appraisal mission that visited Honduras in August, 1994. The mission wus composed of Mmes. /Messrs. Anna Sant'Anna (mission leader) (LA 2HR), Alfredo Sarmiento, Maria Elena Anderson (Ruta Social); Johanna Filp, Josemar Rodrfguez, Carlos Benito, and Carlos Chamorro (consultants). Juan Eduardo Garcla-Huidobro (consultant) participated in earlier stages of project preparation; Rosaria Thoia (LA2HR) participated in post-appraisal stages. Mmes. Claudia Otero and Marfa Colchao (LA22HR), contributed to the report at headquarters. Peer reviewers are Donald Wnkler (LATAD) and Eleanor Schreiber (LA22HR). Messrs. Edilberto L. Segura and Kye Vibo Lee are the Department Director and Division Chief, respectively, for this operation.  - ii - Subcomponent B. 1. Reorganization and Decentralization of the MOE ............ .. .. ... .. .. .. .. ... .. . . 26 Subcomponent B.2. Teachers' Performance Incentives Program . . . 28 Subcomponent B.3. Project Administration, Monitoring and Evaluation ....... . . . . . . . . . . . . . . . . . . . . . . . . 29 IV. PROJECT COST, PROCUREMENT, DISBURSEMENT, AND AUDITS ...... . . 30 A. Project Costs and Financing ....... . . . . . . . . . . . . . . . . . . . . . . . . 30 B. Procurement ........................................ . 33 C. Disbursements ......... . .. . .. . . .. . . .. . .. . . .. . . .. . .. . . 35 D. Accounts and Audits ........ . . .. . . . . . .. . . . . . . .. . . . . . .. . . 36 V. PROJECT MANAGEMENT AND SUPERVISION .... . ......... . . . . . . . 36 A. Project Implementation ........ . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Project Preparation ........ . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Project Monitoring ........ . . . . . . .. . . . . . . . . . . . .. . . . . . . 37 Annual Project Reviews ....... . . . . . . . . . . . . . . . . . . . . . . . . . 37 Mid-Term Review ........ . . . . . . .. . . . . . . . . . . .. . . . . . . 37 B. Project Supervision ........ . . .. . . . . . .. . . . . . . .. . . . . . . . . . 37 C. Project Launch Seminar ....... . . . . . . . . . . . . . . . . . . . . . . . . . . 38 D. Project Sustainability ........ . . . . . . .. . . . . . . . . . . . . .. . . . . . 38 VI. PROJECT BENEFITS AND RISKS ....... . . . . ......... . . . . . . . . . . 38 A. Project Benefits ......... . . .. . . . .. . . .. . . .. . . . .. . . .. . . . 38 B. Impact on Women ........ .. . . . . .. . . . .. . . . . .. . . . .. . . . . . 39 C. Environmental Impact ........ . . . . . . .. . . . . . . . . . . . .. . . . . . . 39 D. Project Risks ......... .. . .. . .. . .. .. . . .. .. . .. . .. . .. . . . 39 E. Program Objective Category ....... . . . . . . . . . . . . . . . . . . . . . . . . 39 VII. AGREEMENTS REACHED AND RECOMMENDATION ..... . . . . . . . . . . . 40 ANNEXES ................................................. 43 MAPS - IBRD Nos. 26279R - 26281  HONDURAS BASIC EDUCATION PROJECT CREDIT AND PROJECT SUMMARY Borrower: The Republic of Honduras hnplementing Agency: The Ministry of Public Education (MOE). Beneficiary: Not applicable. Poverty: Program of Thrgeted Interventions. The project will support the national policy of equitable access to education opportunities, by channeling resources especially to rural and indigenous areas, thus contributing to poverty reduction and development of human resources. Amount: SDR 20.4 million (US$30.0 million equivalent). Terms: Standard IDA terms with 40 years maturity, including 10 years of grace. Commitment 0.50% on undisbursed credit balances, beginning 60 Fee: days after signing, less any waiver. Financing See para. 4.4. Plan: Net Present Value: Not applicable. An alternative economic analysis scenario which only considers potential gains in the future earnings power of students yields IRRs of 13.8% with a 5% student income differential, and 18.1% with a 10% income differential. See Annex 17. Maps: IBRD Nos. 26279R and 26281  BASIC DATA SHEET Honduras Year A. General Country Data GNP Per Capita (US$) 580 1993 Area (Thousand Square Kilometers) 112.5 1994 Population Estimate (Millions) 5.5 1994 Rural Population (% of Total) 60.6 1994 Population Projection, Year 2000 6.3 1994 B. Social Indicators Birth rate (per thousand) 37.1 1994 Average Annual Rate of Population Growth (%) 3.0 1994 Total Fertility Rate 4.5 1994 Infant Mortality Rate (per 1,000 live births) 45.3 1994 Life Expectancy at Birth (years) 67.6 1994 Adult Illiteracy Rate (% of persons 15 and over) 32.0 1992 C. Education Statistics Primary (Net)(Grades 1-6)(%) 80.0 1992 Lower Secondary (Grades 7-9)( %) 37.0 1992 Total Primary Enrollment (millions) 1.0 1993 Primary School and Efficiency Data: Number of Teachers (thousands) 29.0 1993 Student/Teacher Ratio 34.0 1993 Incomplete Schools (% of total enrollment) 8.8 1993 Single Grade Schools (% of total enrollment) 0.4 1993 Repetition Rate (%) 28.0 1993 Dropout Rate (%) 4.9 1993 Completion Rate (%) 30.0 1993 Education Expenditure Data: Total Public Education Spending (% of GDP) 4.1 1993 Public Education Spending (% of Central Government Expenditures) 15.2 1993 Public Primary Education Spending (% of Public Education Expenditures Among all Levels) 47.3 1993 Sources: MOE and Bank staff estimates, 1994; UNICEF, El Gasto Social en Honduras, 1993; and SECPLAN Honduras: Proyecciones de Poblaci6n, 1992.  EDUCATION GLOSSARY Completion rate For six-year primary education, the ratio between the number of students exiting grade 6 in a given year T and the number of students entering grade I in year T-6, as a close approximation of the percentage of students of a given cohort to complete six- year primary school. Dropout rate Percentage of students who abandon the system without completing the education cycle, e.g., primary school. Educational attainment Number of formal school years achieved by a student. Educational achievement Magnitude achievement in any subject area, generally measured on the basis of national curriculum learning objectives. Enrollment ratio Ratio of total enrollment in a given school cycle (e.g., primary) to the population in the corresponding age group. Incomplete school Primary school with fewer than the six official primary education grades. Net enrollment rate Percentage of children of a given age group enrolled in their corresponding grade level. Promotion rate Percentage of the students enrolled in a given grade who enroll in the next higher grade the following year. Repetition rate Percentage of the students enrolled in a certain grade who are not promoted to the next grade and who therefore enroll again in the same grade the following year.   HONDURAS BASIC EDUCATION PROJECT STAFF APPRAISAL REPORT I. ECONOMIC AND SOCIAL CONTEXT 1.1. Although Honduras experienced some economic progress over the last two decades, per capita GNP in 1994 remains low at an estimated US$580. One-third of the population of 5.5 million lives in extreme poverty and 80 percent of the poor live in rural areas. The promising economic trends of 1991-92 were not sustained in 1993. As the elections approached, the fiscal deficit, which was targeted to fall to 3.8 percent of GDP in 1993, reached over 10 percent. A new Administration took office in January 1994, inheriting serious fiscal and balance of payments problems. Inflationary pressure began to build up in 1993, and foreign exchange reserves have now been depleted. The present Administration is committed to the resumption of sustainable economic growth, through the implementation of a medium-term program that aims to: (a) reduce the fiscal deficit; (b) reform the public sector by reducing its size and increasing its efficiency; (c) restructure the social security system to eliminate the existing financial deficit; (d) privatize selected public enterprises; (e) reduce the number of tax exemptions, and (f) strengthen tax administration. At the same time, the Government intends to maintain the present level of social expenditures in the face of fiscal austerity, and continue its program of poverty reduction and human resource development. The two safety net programs created in 1990, the Honduran Social Investment Fund (Fondo Hondurehlo de Inversi6n Social - FHIS) and the Family Assistance Program (Programa de Asignaci6n Familiar - PRAF), target the poorest and most vulnerable groups of the population, and are supported by IDA Credits 2212-HO and 2401-HO for the FHIS-I and FMIS-II projects, approved in 1991 and 1992, respectively. The PRAF nutrition program is further supported by IDA Credit 2452-HO, approved in 1993 for a Nutrition and Health project. To complement these safety net programs, the Government proposes to implement a broad range of policy reforms and investment programs in health and education, in order to improve resource allocation, achieve greater operational efficiency, enhance service quality, and ensure better targeting of public education and health services to the poorest groups of the population. The Government has a clear perception of social needs and is assigning high priority to the development of human resources through investment in education, particularly at the primary level (paras. 2.21-2.22). In order for macroeconomic reforms to be successful, the policies must promote a more equal distribution of gains and opportunities in society at large. Through improved basic schooling, a more capable labor force will develop, which will help to offset regional imbalances and make more Hondurans active beneficiaries of development. In pursuit of this strategy, the Government of Honduras asked for IDA support for a Basic Education Project in June 1993. IDA started project preparation in July 1993 and appraised it in August 1994. This report analyzes and supports the proposed Basic Education Project. 1.2. Honduras' potential for economic growth is constrained by low levels of human capital accumulation and widespread poverty. In 1992, the illiteracy rate for the adult population was still at 32 percent, reaching over 42 percent in rural areas. The average level of educational attainment of the population was only 3.9 years of schooling. These low indicators are due to the small financial base available for public education, limited institutional capacity, and inappropriate resource allocation within the education sector. As a result, the education system is characterized by low internal efficiency and quality, albeit with fairly extensive coverage, and  high repetition and dropout rates especially at the primary level. In recent years, public spending on education reached 4 percent of GDP, which compares favorably to neighboring countries of similar income. However, the share of education in total public expenditure declined in real terms, from 21 percent in 1974 to 16 percent in 1995, notwithstanding large increases in total public sector spending during this period. Within the education sector, the share of spending on preprimary and primary education declined by 6 percent, from 54 percent in 1980 to 47 percent in 1993, while secondary, technical and university education expenditures increased in real terms. Primary school enrollment expanded rapidly in response to a population growth rate of over 3.0 percent per year, public spending per student at preprimary and primary levels declined by 20 percent, while administrative expenditures per student doubled, reflecting a pattern of inefficient spending which aggravates the inadequacy of resources available for education. II. THE PRIMARY EDUCATION SYSTEM A. Overview of Sectoral Organization and Achievements 2.1. Honduras has made considerable progress in expanding access to education in recent decades, particularly at the primary school level. Adult illiteracy decreased from 53 percent in 1961 to about 32 percent in 1992; access to primary school is now nearly universal; net enrollment in primary schools is estimated at 80 percent in 1992; the number of students attending primary schools tripled, from 319,381 to 990,352 over the 1970-93 period. The system's capacity to retain students is also high--as the average primary student stays at school for 6.7 years. By 1992, 14 percent of children aged 4-6 attended preprimary school, and an additional 12 percent participated in non-formal preschool education programs; 80 percent of children aged 7-12 attended primary school; and 32 percent of children aged 13-19 were enrolled in secondary school, nearly three times as many as in 1981. Primary education is provided by a network of 7,513 schools (95.6 percent public), and about 29,096 teachers, or an average of 34 students per teacher (Table 1). The proportion of primary students attending schools offering all six grades of primary instruction has increased from 48 percent to 92 percent during the last 13 years. The percentage of students who complete primary school in six years grew from 27 percent in 1986 to 33 percent in 1992 (Annex 1). Thble 1. Honduran School System - 1993 Number of Students Number Total Public Age Coverage of Number of Enrollment (%) group (%) Teachers Schools Preschool Formal 1' 63,449 77 4-6 13.4 2,024 1,021 Informal1' 55,173 N/A 11.5 Primary 990,352 96 7-12 80.0 29,096 7,513 Secondary 1' 274,324 56 13-19 32.0 9,847 589 Higher Education 2' 34,850 94 20-25 9.0 3,641 8 Total 1,418,148 89 44,608 9,131 1' 1992 data. 2' 1987 data.  - 3 - 2.2. The formal education system in Honduras is based on the 1982 Constitution, the 1966 Organic Education Law (Ley Orgdnica de Educaci6n), the Higher Education Law (Ley de Educaci6n Superior) of 1989, and the Organic Law of the National Autonomous University of Honduras (Ley Orgdnica de la Universidad Nacional Aut6noma de Honduras - UNAH). It includes two to three-year preschool (pre-kinder, kinder, and preparatory grade), six years of mandatory primary education, three years of basic secondary education, two to four optional additional years of secondary education, and undergraduate and graduate higher education programs. Of a total enrollment in 1993 of about 1.4 million students in all education levels, over two-thirds were enrolled at the primary level (grades 1-6). The basic secondary education leads to a diversified cycle of 2-3 years that presently offers 27 career tracks, although the commerce and liberal arts baccalaureates account for more than half of the total enrollment. Higher education lasts from three to six years, depending on the career pursued, and the universities have an autonomous relationship with the Ministry of Education - MOE (Secretaria de Educaci6n Publica). The public sector serves 89 percent of the students, mostly at the primary level. 2.3. The education attainment of Honduran women has reached levels similar to those of men. There are at present no gender differences in the overall literacy rate, although older women are less literate than older men, reflecting a bias in favor of boys in the early development of primary education. Female enrollment now surpasses that of males at the preschool, secondary and higher education levels. In primary education, the enrollment of boys is roughly equal to that of girls. 2.4. The MOE is the main public agency of the education sector, employing 37,600 teachers and administrators and managing 78 percent of the public education budget. The MOE is responsible for preschool, primary, secondary and adult education nationwide. The National Council for Higher Education is the normative entity for higher education. There are six universities and five higher education institutes. Public higher education facilities, the National Autonomous University of Honduras (Universidad Nacional Aut6noma de Honduras - UNAH) and the National Pedagogic University (Universidad Pedag6gica Nacional Francisco de Morazdn - UPNFA), account for 94 percent of higher education enrollment; the remaining 6 percent of students attend private universities. Manpower training is under the responsibility of the Professional Training Institute (Instituto Nacional de Formaci6n Prfesional - INFOP) which is financed by a special payroll tax. The share of the private sector in the national educational system is small but significant at the secondary level, where it accounts for 44 percent of enrollment, and at the preschool level, where private enrollment is estimated to be 23 percent of the total. Except in a few cases (of scholarships for secondary students and MOE support for semi-official secondary schools) private schools receive no public subsidies!'. In 1993, transfers to the private sector represented only 1.6 percent of the education sector budget. The MOE manages the educational system in a highly centralized fashion; departments and municipalities have no formal responsibilities for public education. 2.5. Public expenditures on education in Honduras are relatively high. The proportion of GDP spent on education is higher than the international average, exceeding that of most Central American countries, except Costa Rica and Panama. Over the last few decades, the share of GDP spent on public education increased in real terms, from about 3.3 percent during 1974-79, 1' These subsidies are estimated as the equivalent of about US$120,000 per year in 1994.  - 4 - to 3.7 percent in 1980-84, rising sharply to about 4.6 percent in 1985-80, then declining to an average of about 4 percent during the 1990-93 period (Annex 2). Sector expenditures are unequally distributed, favoring the urban areas at the expense of rural areas where most of the poor live. The share of primary and secondary education declined by 6 percent during the 1980- 92 period, while administrative expenditures grew by 8 percent, and higher and technical education expenditures rose by 3 percent. Although substantial cuts in administrative expenses can be made, the education sector budget would have to increase in line with the projected growth in GDP, to finance substantial improvements in the equity and quality of basic education (para. 2.21). B. Issues in Primary Education 2.6. Despite recent educational achievements, key problems must still be addressed under three principal headings: quality, efficiency, and equity. Quality 2.7. Low Educational Achievement. Although there is no nation-wide standardized academic evaluation system in Honduras, data from school tests suggest that effective learning in school is deficient. In 1990, a sample Spanish test for students in grades I and 3 showed that academic achievement levels were very low: 36 for third grade students and 41 for first grade students, out of a possible score of 100.Y Moreover, there is a considerable disparity in achievement levels between students attending rural and urban schools. A sample external evaluation conducted in 1990 reports average scores for first graders at rural multigrade schools to be 10 percent below those of students attending urban schools.2' These low educational achievement levels are associated with deficiencies in the administration of the system that are reflected as inadequate supervision (insufficient classroom time, poor teaching quality and teacher absenteeism); insufficient didactic materials; overcrowded and dilapidated school facilities; and inappropriate curricula. External factors associated with family poverty and lack of incentives for community and parental involvement in school issues compound the problem. Teachers' evaluations of student achievement levels are marred by lack of evaluation skills and inadequate testing instruments, resulting in a considerable degree of arbitrariness in the grading system. 2.8. Poor Teaching Quality. The educational system lacks a permanent and systematic in- service teacher's training program, therefore instruction is teacher-centered and of low quality, emphasizing mechanical rules and memorization rather than student involvement. Most Honduran primary school teachers are graduates of special public teacher training schools (Escuelas Normnaes), which give them the required secondary-level teaching qualification. Training provided by these schools is inadequate, however, due to the low quality of instruction and obsolete curricula. As a result, most teachers lack the theoretical background and pedagogical skills needed to foster effective interaction with students, teach children effectively ' Results based on evaluations done by teacher of a sample of 1255 rural primary student. Harvard University, Bridges Project. Estudio sobre Repitencia y Desercion en Honduras: Asistr y Aprender o Repetir y Desertar, Mimeographed Report, Cambridge, MA: June 1991. 2' Secretarfa de Educaci6n Publica, Republica de Honduras. Infonne de la Aplicaci6n de Pruebas, Proyecto Eficiencia de la Educacion Primaria, Tegucigalpa: 1992. Results are based on the external evaluation of 7,261 students, or the equivalent to I percent sample of the primary school population in 1990/91.  in the crucial lower grades, make the best use of textbooks and other instructional materials, and identify and orient children with learning disabilities. These deficiencies are exacerbated by inadequate in-service training programs, which currently cover too many topics with little relevance to classroom teaching. Rural teachers are those most in need of training because of their relative isolation, inexperience, lack of supervision, and the added difficulty of handling multigrade teaching of children from deprived communities. Effective management of multigrade classrooms (almost the rule in rural schools) is one of the principal ways to improve teaching quality, requiring coordinated action between training, provision of educational materials, and supervision. Poor socioeconomic conditions add to the learning difficulties of children in rural communities, whose families have little or no educational background. Teachers must learn how to deal with these situations on the job. The proposed project will provide better designed and more comprehensive in-service teacher training, through a network of 1,500 conveniently located Teacher Training Centers (Centros de Aprendizaje Docente - C4Ds). The CADs have already been established but need strengthening through continuous technical supervision with improved pedagogical inflection. The project will also support improvements to pre-service training curricula at normal schools (paras. 3.7-3.10). 2.9. Insufficient Classroom Time. Although the Organic Education Law defines the length of the school year as 200 days, the legal school calendar is not respected in most schools. Effective classroom time is limited to 3-4 hours per day, 110 days per year. Some schools are frequently not in session due to teachers' absence, especially in rural areas. The loss is partly due to administrative inefficiency: some 40 to 50 days of school are lost every year (25 percent of the school year), due to long matriculation and examination periods, and poorly planned teacher training schedules. The amount of time that teachers are actually available to interact with students is further reduced by the shortage of teachers in rural areas. The average rural school has only two teachers, compared to 12 teachers on average per urban school. Low enrollment in many small rural schools does not justify additional teachers or classrooms, but about 25 percent of rural multigrade schools have more than 60 students and only one teacher, who is responsible for all grades in a single classroom. Nationwide, 62 percent of primary school teachers teach more than one grade, and most of them lack the skills to teach in multigrade conditions. The proposed project will include measures to increase effective classroom time by a minimum of 64 percent (from 110 to 180 days of instruction per year), and reduce overcrowding and teacher shortages in rural areas by providing incentives to teachers and by improving physical infrastructure in rural areas (paras. 3.16-3.17, 3.22). 2.10. Teacher Absenteeism, Misallocation and Lack of Incentives. Teacher absenteeism in rural areas stems from: (a) difficult working and living conditions; (b) long commutes from homes to schools; (c) excessive amount of time necessary (an average of three working days per month) for teachers to cash their monthly checks; and (d) the lack of incentives (such as training opportunities, performance rewards, or faster promotions). As a result, teacher absenteeism is high, and students lose many class days each year. In addition, the turnover rate among rural teachers is higher than in urban areas, leading to the assignment of inexperienced entry-level teachers to the most crucial initial grades in difficult locations. Difficulties are further compounded by teacher hiring and assignment practices, inadequate admission tests, and frequent reassignments from rural to urban areas, resulting in the overstaffing of many urban schools and the understaffing of rural schools (the student/teacher ratio is 29 in urban areas and 40 in rural areas). Teacher salary levels are adjusted uniformly, and there is no incentive for teachers to excel in their performance. The proposed project will introduce a teachers' performance  improvement program for rural teachers who achieve significant improvements in student and teacher attendance as well as community and parental involvement in school. This program will grant incentives amounting to about 7 percent of the teacher's average annual salary, and will start on a pilot basis in selected rural schools. Participation will be voluntary, and participating teachers will be asked to promote and accept community monitoring of their school activities, including attendance. Student attendance will be verified by MOE supervisors (para. 3.22). 2.11. Inadequate Supervision. Teacher supervision is infrequent and limited to the administrative inspection of school statistics. This has resulted in: (a) little or no feedback on teacher performance; (b) no systematic follow-up on improvement in student achievements; (c) weak control over teacher attendance; and (d) insufficient supervisory input for timely textbook and materials distribution. The problem is especially acute in rural schools, which typically lack a principal, have the least experienced teachers working in isolation, and are most in need of supervision. The problem of inadequate supervision is largely due to insufficient number of supervisors (the 1993 teacher/supervisor ratio was 101/1), lack of adequate in-service training for supervisors, weak oversight by departmental offices, and difficult work conditions. The number of schools allocated to each supervisor is too high (about 31), precluding frequent supervision to all schools. Lack of budgetary allocations for transport costs further exacerbates the problem, as supervisors must pay their own expenses. As a consequence, isolated rural schools are mainly left unattended. At the district level, supervisors must borrow working space at schools or other public buildings or work out of their own homes. The project will improve and modernize the supervision system by hiring additional staff, revising technical-pedagogic supervision norms, providing specific training for supervisors, financing travel costs and vehicles, and strengthening supervision offices (paras. 3.7, 3.19-3.21). 2.12. Shortages of Library Books and Other Teaching Materials. Although Honduras now provides 4 textbooks per student, per grade (Spanish, mathematics, sciences and social studies), the system lacks complementary didactic materials such as library books, maps, posters, and other school supplies, all of which are needed to increase educational achievement and attainment. The lack of school library books is especially problematic in rural areas, since few rural schoolchildren have access - at school or at home - to any reading material besides their textbooks (textbooks are expected to last at least 3 years and are kept at school to minimize the risk of loss or damage and, in some instances, to serve second-shift students). The lack of early reading stimulation can retard children's progress in developing reading and writing skills. The absence of additional educational materials is particularly serious among indigenous children who often do not speak Spanish, have less qualified teachers, and have in some schools the lowest education levels. When books are available, most teachers do not know how to use them. Tl increase access to learning materials, the project will provide: (a) a small library for every classroom (Biblioteca Bdsica Dr. Ramon Rosa); (b) sets of educational materials for classroom and teacher use, including student and teacher guides, maps, posters, and classroom supplies; and (c) bilingual textbooks for two of the largest non-Hispanic ethnic groups (the Gar(funa and the Miskito); the needs of other ethnic groups will be met by the government under a parallel program). Students will be able to borrow library books and take them home to share with parents and siblings (para. 3.11-3.12). 2.13. Deficiencies in lextbook Production and Distribution. Honduras' small printing and editorial industry requires that all textbooks be edited by the MOE and printed abroad, since most local print shops lack capacity for large jobs that must be completed on a tight schedule  - 7 - (improvements are observed though, as local firms have been awarded some textbook printing contracts starting in 1992). Since 1987, textbooks have been produced by the MOE under the USAID-financed Primary Education Efficiency Project. Printing has been done through international competitive bidding (ICB) and distribution from a central depot to the municipalities was contracted to local transportation firms. Total production of textbooks has been impressive, with over 5.3 million low-cost, well-designed and -illustrated textbooks being produced and distributed nationwide. However, financing for textbooks is no longer available, and reprinting is urgently needed, since some textbooks have already exceeded their usable life. Starting in 1996, when the Primary Education Efficiency Project is concluded, textbook production and distribution may become a major problem. Measures must be taken in the near future to ensure the sustainability of textbook production and distribution. Existing textbooks also need to be revised and updated, and the distribution system requires improvements. Tl meet these needs, the proposed project will: (a) provide for the revision and reprinting of existing textbooks; and (b) organize a textbook distribution system ensuring timely delivery of textbooks by private transportation firms from 3 strategically located warehouses to the seat of each municipality, and mobilizing supervisors, municipal officials and parents to transport books from the seat of the municipality to the schools (para. 3.12). 2.14. Inappropriate Curriculum. The primary school curriculum has not been revised in 28 years. In practice, the new student-centered textbooks, stressing basic skills in four subjects, and utilizing appropriate gender language, have in fact reformed the curriculum. However, there is still a need to integrate environmental, public health, and intercultural concerns into the curriculum. The proposed project will support a study to evaluate the quality and appropriateness of the basic education curricula, leading to the corresponding revision of textbooks, and will improve teachers' ability to implement curriculum reforms through training (paras. 3.11-3.12, 3.24). 2.15. Overcrowded and Dilapidated Physical Facilities. A 1990 survey found that 55 percent of primary schools lacked safe water, 30 percent did not have adequate sanitary facilities, and 85 percent lacked electricity. Moreover, an estimated 80 percent of the schools (about 6,000 schools) had fallen into disrepair due to lack of maintenance by the MOE. Since then, the physical condition of schools has improved. During the 1990-1993 period, the FlIIS succeeded in rehabilitating approximately 2,000 public primary schools (about 32 percent of the total in need of repairs), several of them required total reconstruction. The FHIS also provided financing for school toilets and water supply, and for the construction of over 300,000 bi- personal school desks. This program would be strengthened through improved standards and planning, and continued, with IDA support, under a proposed Third Social Investment Fund project. However, although a school maintenance manual was prepared by FlIRS in 1992, appropriate maintenance arrangements are still not in place. In addition, 660 rural schools are presently overcrowded. These schools enroll more than 60 students and offer six grades of education in a single classroom. An additional classroom is urgently needed to reduce overcrowding. The proposed project will provide for: (a) construction and equipment of 290 classrooms in rural schools which are now overcrowded; and (b) the implementation of a municipal school maintenance program, which would start with the schools that would be expanded under the project (paras. 3.16-3.17). Following the completion of a school mapping in 1996, and using its own resources, FEIS will build and equip at least 370 additional classrooms in rural areas, and rehabilitate the remaining primary schools presently in need of repairs.  - 8 - 2.16. Need for Greater Community Participation. Community participation in school-related activities enhances the community's role in the improvement of academic performance, and fosters a positive learning environment. Historically, municipalities and parent associations have supported local schools, but many areas still lack sustained community participation. A 1993 study of municipal education expenditures shows that most municipalities are committed to supporting primary education. Through Municipal Education Councils or School Committees, about 89 percent of the municipalities provide some form of maintenance of school buildings, 78 percent pay salaries for auxiliary staff (such as custodians, cooks, preschool teachers, and librarians), and more than half are involved in school construction, provision of school furniture, and supply of school materials.4' The proposed project will further promote community participation through: (a) enlisting the support of municipalities and local education committees to stimulate improvement in teachers' attendance (para. 3.22); (b) involving communities in school construction (para. 3.16); (c) transferring resources for school maintenance to municipalities through contractual agreements (para. 3.17(c)); and (d) implementing promotion campaigns among local authorities and communities, especially focused on early enrollment, school attendance, and student achievement (para. 3.22). 2.17. Lack of Evaluation. Limited resources and technical capacity contribute to the difficulty in monitoring and evaluating academic achievement and teaching standards across the system. The MOE has undertaken external evaluations of primary student achievement on an experimental basis, under the Primary Education Efficiency project financed by USAID. A set of valuable achievement indicators has been developed and tested in the field. However, evaluation capabilities need to be further developed based on the models of standard evaluation tests, similar to those established in several Latin American countries. To carry out this activity, an evaluation unit independent of the MOE needs to be created, with appropriate analytical capacity; standard tests must be developed and applied to a representative sample of primary students on an annual basis; and test results should be disseminated to teachers, parents, and the general public. Without systematic evaluations and enhanced public awareness regarding the importance of education quality, the selection of the best education investments and most effective reforms is bound to be clouded by a dim understanding of the impacts brought about by previous programs and policies. The project will foster the capacity for sustainable measurement of the quality of education by supporting: (a) the creation of an independent evaluation unit in one of the public universities (UPNFM); (b) the administration of achievement tests, on a yearly basis; and (c) the dissemination of information to the public about evaluation results and determinants of academic achievement (paras. 3.15). Efficiency 2.18. High Repetition Rates. Honduras faces the serious problem of high repetition rates- a typical Latin American proxy for school failure - which result in a costly and inefficient education system. The MOE estimates that primary school repetition rates were 11.4 percent in 1992. Estimates made by the United Nations Education, Science and Culture Organization (UNESCO) following student cohorts for a period of nine years, place nationwide repetition rates it MOE-FHIS-Honduran Municipal Association (AMHON). Estudio de Casos Sobre la Participacion de las Municipalidades en el Manteniniento Preventivo de la lnftaestructura Escolar. 1993.  - 9 - at 28 percent in 1988, and first grade repetition rates at 46 percent.5' Using the UNESCO estimates, the cost associated with grade repetition in 1992, is estimated to be nearly 28 percent of the education sector budget, and more than half of primary education expenditures.