China - Third Basic Education Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 24247 IMPLEMENTATION COMPLETION REPORT (IDA-28310; TF-29177) ON A CREDIT IN THE AMOUNT OF SDR 67.3 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR A THIRD BASIC EDUCATION PROJECT June 25, 2002 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective As of June 30, 2002) Currency Unit = Chinese Yuan-RMBY RMB 1.00 = US$ 0.12 US$ 1.00 = RMB 8.3 FISCAL YEAR January I December 31 ABBREVIATIONS AND ACRONYMS BEIII - Third Basic Education Project CAS = Country Assistance Strategy CEP = Chinese Experts Panel EMIS = Education Management Information System FILO = Foreign Investment and Loan Office GOC = Govemment of China IDF = Institutional Development Fund MOE = Ministry of Education MOF = Ministry of Finance NYCE = Nine-Year Compulsory Education Program SAR = Staff Appraisal Report SEdC = State Education Commission TTL = Task Team Leader UBE = Universal Basic Education WBOB = World Bank Beijing Office Vice President: Jemal-ud-din Kassum Country Manager/Director: Yukon Huang Sector Manager/Director: Emmanuel Y. Jimenez Task Team Leader/Task Manager: Halsey L. Beemer, Jr.  CHINA CN-BASIC ED. POOR III CONTENTS Page No. I. Project Data I 2. Principal Performance Ratings I 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 3 5. Major Factors Affecting Implementation and Outcome 8 6. Sustainability 9 7. Bank and Borrower Performance 10 8. Lessons Learned 12 9. Partner Comments 13 10. Additional Information 14 Annex 1. Key Performance Indicators/Log Frame Matrix 15 Annex 2. Project Costs and Financing 17 Annex 3. Economic Costs and Benefits 19 Annex 4. Bank Inputs 20 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 22 Annex 6. Ratings of Bank and Borrower Performance 23 Annex 7. List of Supporting Documents 24 Annex 8. Borrower's ICR Contribution 25   Project ID: P036950 Project Name: Third Basic Education Team Leader: Halsey L. Beemer TL Unit: EASHD ICR Type: Core ICR Report Date: June 25, 2002 1. Project Data Name: Third Basic Education LIC/TFNumber: IDA-28310; TF-29177 Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: EP - Primary Education KEY DATES Original Revised/Actual PCD: 06/07/1995 Effective: 07/16/1996 07/16/1996 Appraisal: 10/19/1995 MTR: 10/01/1998 09/12/1998 Approval: 03/21/1996 Closing: 12/31/2001 12/31/2001 Borrower/lImplementing Agency: PRC/SEDC Other Partners: STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Russell J. Cheetham Country Manager: Yukon Huang Nicholas C. Hope Sector Manager: Emmanuel Jimenez Joseph R. Goldberg Team Leader at ICR: Halsey L. Beemer Halsey L. Beemer ICR Primary Author: Sandra F. Erb 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S S Project at Risk at Any Time: No  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: Context. In 1995, the Chinese Ministry of Education (MOE) and the World Bank began work on what was to be the third basic education project in a program of basic education projects. When the identification and design work began for the Third Basic Education (BEIII) Project, the government's policies continued to place greatest priority on the achievement of universal basic education (UBE) by the year 2000 or as soon as it was practical in poor and remote areas in order to support China's goal of development, modernization and eliminate illiteracy. This government priority drove both targeting and design issues and, after working with the Bank project development team, enabled the MOE to set the project objectives which were to: (a) support the attainment of universal primary education and the expansion of coverage of lower secondary education in poor and minority areas, and (b) build stronger institutions responsible for education delivery. These objectives reflected MOE policies to accelerate education decentralization by establishing broad principles to guide provincial and local governments in developing their county and village level education services; to implement the Compulsory Education Law using the resources available, and pursue their own educational targets, according to their own means. Important in this process was improving the targeting of education financing to the poorest populations in a province, increasing the efficiency of the use of these funds, and utilizing available intergovernmental transfer mechanisms to achieve these objectives. The objectives also fit squarely within Bank's Country Assistance Strategy (CAS) which gave attention to: (a) efficient resource use, including utilization of teachers and facilities; (b) more equitable funding mechanisms, targeted to basic education in poor rural areas; and (c) support for institution building to increase the capacity of education authorities at all levels to carry out their responsibilities within an increasing operational decentralization. 3 2 Revised Objective: Not applicable 3.3 Original Components: Component 1: Institutional Development Cost: US$ 142.5 million The institutional development component included facilities upgrading, improvement in instructional equipment within primary and junior secondary schools, and training of classroom teachers, school principals and local education administrators to provide better instruction in and leadership of the education institutions at the provincial, county and village levels. This component also supported the procurement of tent schools and the development of a distance education system in Qinghai Province in order to meet the special characteristics and needs of the nomadic peoples on the Tibetan Plateau. Component 2. Management Improvement Cost: US$ 1.2 million The management improvement component was to develop management capabilities for the education system at the central, provincial, county and institutional levels through staff training, the provision of equipment and expert services. Training was provided to local education management authorities and local project implementation staff. There was also a provision for the development of an education management information system (EMIS). Component 3. Central Component Cost: US$ 4.7 million -2-  The central component supported national level management training for provincial trainers, education managers and administrators and project implementation staff; dissemination of good results of previous educational experiments; a national level study of student assessment; monitoring of the most efficient way to establish a student assistance program and the activities of the Chinese Experts Panel (CEP). The design of the three components was clearly linked to the objectives described above. The credit focused on the improvement of facilities to address access issues in poor and remote areas and training at all levels of the education systems in an effort to strengthen the institutions responsible for the delivery of education. In addition, the credit gave local education authorities the opportunity to disseminate good results of educational experiments related to enrollment, retention and quality improvement in the classroom. 3.4 Revised Components: Component Cost Rating INSTITUTIONAL COMPONENT $142,500,000.00 S MANAGEMENT IMPROVEMENT COMPONENT $1,200,000.00 S CENTRAL COMPONENT; $4,700,000.00 S 3.5 Quality at Entry: Quality at entry, as assessed by the peer reviewers, was satisfactory based on (i) consistency of objectives with the priorities of the Ministry of Education (MOE); (ii) successful experience and lessons learned by the first two basic education project which were being implemented at the time of project design; (iii) demonstrated capacity of the Foreign Investment and Loan Office (FILO)/MOE to implement previous projects; and (iv) project design that was related to MOE decentralization policies and practices. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: The achievement of objectives and physical outputs under the Third Basic Education (BEIII) project is satisfactory. The project took place during and in support of the government's own massive effort during the 1990s to accelerate the achievement of the national nine-year compulsory education goals. The project objectives were broad and flexible enough to allow provinces and counties to implement the Compulsory Education Law and to accelerate the completion, at the county level, of the government's Nine Year Compulsory Education (NYCE) program. All of this in accordance with China's unique minority and regional characteristics and within the context of a rapidly decentralizing basic education system. In the end, the MOE reported that the project accelerated, in some cases by two years, the achievement of universal primary education in 18 of the 124 project counties (14.5 percent) and the achievement of nine-year compulsory education in 99 (79.8 percent) of the counties. The project also assisted five of the seven provinces to reach the two basics which are: nine year compulsory education and elimination of illiteracy among the young and middle-aged adults. The MOE uses a rigorous review methodology in order to certify an individual county's achievement of either primary or basic education goals. This methodology not only uses reported educational data but also makes use of site visits to the counties under review. The certification methodology has been reviewed and reported on by the Institute of Higher Education at Peking University and the Shanghai Academy of Educational Research, found to be reliable and provides an accurate description of an individual county's achievement of either the six or nine year compulsory education goals. The physical output targets for all provinces in primary and junior secondary were met and in some cases exceeded. During the project period, project-supported primary school enrollment rates increased from 88.3 to 95.2 percent and lower secondary enrollment rates increased by 66.3 percent to 87.9 percent. - 3-  Output indicators showed robust improvements in safety of buildings, supply of teaching materials, enrollment of children, and qualifications of teachers and principals. There has been the institutionalization of a systematic management system for the delivery of education services at the local level. The dissemination program met expectations in spreading of provincial based research results to project schools in areas such as girls education, multi-grade teaching and prevocational education in lower secondary schools. The heavy poverty focus and the success in securing adequate counterpart funding for student assistance funds allowed for large numbers of poor children to enroll and stay in school. The project helped minority education in Qinghai province by the development and distribution of minority language textbooks and teaching materials and providing training for minority teachers and principals, the provision of environmentally and culturally appropriate classrooms and teaching spaces, and the development of a distance education system using both Tibetan and Han language teaching materials. During the implementation of the project there was a strong emphasis by the project provinces on investment inputs. Project design and the Chinese policy for expanding education in poor rural areas placed heavy weight on increasing inputs which would help ensure increased access with less regard to educational outcomes. However, this project also included the first learning achievement indicators, based on pass rates of grade six children, to be included in any of the Bank-supported basic education projects in China, and over the life of the project they have shown steady improvement with mathematics pass rates increasing from 88.0 to 96.2 percent and Chinese pass rates from 89.9 to 97.1 percent. Anecdotal evidence shows that these increases can be attributed to improved teaching due to improvements in teacher qualification rates, 79.9 to 94.9 percent over the life of the project, and improved materials i.e. books and teaching equipment. 4.2 Outputs bY components: Institutional Component (US$ 142.5 million SAR, US$206.99 million Actual) The overall rating for this component is satisfactory. This component was 96 percent of base costs and supported the following: (a) facilities upgrading; (b) instructional equipment, furniture and books; and (c) staff upgrading. Facilities Upgrading. Facilities upgrading was highly successful. The project supported the new construction and replacement of 4,695 new primary and lower secondary schools and repair of 2,966 more schools. In all provinces there was successful completion of the civil works portion of the project with all project provinces meeting or slightly exceeding their original targets for new construction, rehabilitation and elimination of dangerous buildings. Site visits by Bank supervision missions and civil works specialists from the Chinese Experts Panel (CEP) showed that on average overall quality of construction was good to very good with little extra funds spent on decoration and substantial attention given to indigenous designs to deal with local climatic, physical and cultural conditions. The new buildings have provided adequate, safe and hospitable space for village children to attend school, and the parents, teachers and principals interviewed indicated that the new buildings encouraged children to attend and stay in school. Maintenance plans, most for the five years after project completion, have been developed by all project provinces and are well documented in their individual provincial project completion reports. The plans have designated an annual allocation that seems to be adequate to cover the maintenance cost of the newly constructed schools. In addition, the central government has also recently initiated the National School Construction Fund and some of these resources will be eannarked for maintenance of these buildings and thus sustain the investments made by this project. Instructional equipment, furniture and books. This subcomponent is rated satisfactory. Prior to the BEIII project, schools in the project areas had been seriously disadvantaged because there had been no investments in teaching equipment for 10 years. This project was able to provide approximately 16,000 - 4 -  primary and lower secondary schools with MOE [formnerly State Education Commission (SEdC)] standard equipment levels, or 100 percent of the Staff Appraisal Report (SAR) target. (MOE classifies equipment needs ("Standard Levels") by school size, centrality and teacher training responsibility, conducts periodic surveys to assess current levels and new procurement needs, and did, for this project identified specific requirements for project supported schools.) Even though the schools have achieved great progress in meeting the MOE standards, the utilization rate of books and equipment needs to be increased. Science teachers and librarians have been trained but there is still reluctance on the part of principals and teachers to use the equipment and books for fear equipment will be broken and books lost or destroyed. These attitudes will need to be changed through continued principal and teacher training as well as assurance that adequate resources will be made available to the school principals to replace damaged materials. Staff Upgrading. This subcomponent is also rated satisfactory although there were weaknesses in design and delivery of these services. Teacher and education administrator training goals were exceeded by 36 and 5 percent respectively. Project indicators show that all the project provinces have experienced increases - 18 percent on average above SAR targets - in the qualification rate of teachers which has meant a reduction in the number of minban teachers. (Minban teachers are hired and paid by the local communities, generally village education committees, and generally do not have the years of formal education and training that governnent teachers do. The Ministry of Education, working closely with provincial education bureaus, has over the recent years upgraded the quality of the minban teachers by special training and other upgrading programs and have all but eliminated this type of teachers in the provinces supported by this project.) Whereas numerical targets were met or surpassed, training methodology and pedagogy have been recognized as problematic. Training programs are generally set by formulae provided by the province which often follow the national standards and show little understanding of the deeper sense of innovative teacher behavior or teaching theories. School principals have little contact with the normal schools and colleges which provide the training. Normal schools and 2-3 year teachers colleges which are responsible for teacher training services are generally run by prefecture education bureaus and four year colleges by the province. Therefore horizontal linkages between the supply and demand of the services at the county or village level is lacking and training services often ill designed or poorly delivered. Cascade system of teacher training services demonstrate their inherent weaknesses in such cases. However, as the project was ending, a new national curriculum along with new training materials and delivery mechanisms were being prepared. The training materials and delivery mechanisms have been prepared with the assistance of international organizations and will be used in rural areas to give teachers the appropriate skills to better teach in their local environment. This will have tremendous impact at the local level as provinces and counties begin to use the new materials. Principal training targets also met or exceed targets. Principal training conducted at the national level was reported to have had a substantial impact on broadening the thinking and experience of rural school principals. Anecdotal evidence shows that school management was improved as a result of training. Management Improvement Component (US$ 1.2 million SAR, US$ 1.41 million actual) The overall rating of this component is highly satisfactory. This component was designed to develop management capabilities for the education system at the central, provincial and institutional levels through staff training and the development of Education Management Information Systems (EMIS). The educational management system introduced by the project consisted of national, provincial and county level project implementation units. These units were responsible for project design issues during preparation, project procurement and financing issues during implementation and project monitoring and reporting throughout implementation. Provision of adequate levels of counterpart funding were the responsibility of these implementation units at the provincial and county level. Project planning and decisions on staff training were handled by these units. Gathering data for mid-term and final reviews was carried out by - 5 -  these units as well as reviewing progress toward achieving objectives. Project implementation training not only gave the local staff adequate skills to implement the project but also institutionalized a system of management for the delivery of education services at the local level. This was judged by the Government of China (GOC) and the provinces during the final ICR mission as one of the major contributions of this project. Because of the improved capacity of the project staff, the seven project provinces are using implementation staff and offices for the implementation of the Chinese govemment's own Nine Year Compulsory Education Program - Phase Two (2001-2006) (NYCE-II) as well as other provincial and county level poverty-alleviation focused activities both within and outside the education sector. This utilization of Bank and MOE trained provincial staff in activities outside the education sector should be seen as a major contribution to provincial level institutional capacity building. In addition, several provinces have reported the introduction of World Bank procurement and disbursement procedures into their own provincial procedures as the result of the training in and utilization of these procedures during the implementation of the Third Basic Education Project. In addition to project-supported training, the provincial implementation staff were trained through an IDF grant-supported Economics of Education Network (the Network) which provided them with knowledge on modem techniques and methods in education management and resource utilization. This training utilized interactive computer-based study modules developed by the East Asia Human Development Sector Unit (EASHD) and the World Bank Institute (WBI) for analyzing provincial level education financing options. As a result of all of the training, provincial education managers are demonstrating a more thorough understanding of how better to manage their education finance systems, although it is less clear that the network has yet had substantial impact at the county level. EMIS was organized in each province, region and municipality, equipment bought and installed and training was completed. It is evident from the increasingly improved statistical reporting provided the Bank during project implementation, that the equipment, software and training have had a strong impact on provincial project implementation. However, utilization of data for analytical purposes and to inform policy making at the local level is not yet obvious. Additional work needs to be done in this area, but as has been demonstrated in earlier Bank-supported education projects, full, useful and sophisticated utilization of education statistics depends largely on the needs for and uses made of this data by education administrators. Without the appropriate incentive structure for the demand of proper data reporting there will be little change in this area. Central Component. (US$ 4.7 million SAR, US$ 5.24 million actual) The overall rating for this component is satisfactory. This component was designed to: (a) provide national level management training for local education; (b) support dissemination of good results of previous educational experiments; (c) carry out a national level study of student assessment; (d) monitor the most efficient way to establish a student assistance program; and (e) support activities of the Chinese Experts Panel (CEP). Pupil Learning Achievement Study. This sub-component is rated marginally satisfactory. The study assessed grade five learning achievement in Mathematics, Chinese and General Knowledge (regarding health, safety, and labor). The study attempted to associate differences in learning achievement with region, place of residence, family background and teaching practices. However, the sampling techniques used were questionable. Sampling was not random. Tests were administered in two counties in each province. County officials were asked to choose teachers with more than five years experience whose students would then be tested. Comparability and objectivity in the study were therefore compromised since there was no way to know if counties choose the best, the worst, or a representative sample of -6 -  teachers. Even so, a number of useful conclusions emerged which the provinces reportedly have taken into consideration when designing their own education development programs. These new designs include: (a) more investments in schools and teachers in the poorer and more remote areas; (b) teacher training programs which encourage addressing a special problem identified in the study, the finding that students who struggle in Mathematics also struggle with Chinese language; (c) more extracurricular activities and homework assignments because the report found that students with more extracurricular activities and homework had higher achievement levels; and (d) more focus on parental participation in their children's learning because the study showed that students whose parents have high expectations of them tended to perform better than students whose parents had lower expectations. Dissemination Program. This sub-component is judged to be satisfactory. The dissemination program was designed to spread knowledge and experience and use the results from successful pilot programs and research. All provinces participated in the dissemination program and experienced success in spreading their findings on programs related to education for disabled children, bilingual education, girls education, multi-grade education and prevocational education in lower secondary schools. In one province, dissemination funds were used to spread a UNICEF-sponsored initiative to create "parent schools" that helped teach parents about the importance of schooling as well as how to help their children in their school work. The dissemination of "parent schools" is also directly related to the findings of the above mentioned pupil learning achievement study. Chinese Experts Panel. This sub-component is rated satisfactory. The Chinese Experts Panel (CEP) consisted of five educators who provided ongoing guidance and advice to MOE and the provinces on project implementation and policy issues related to the project. The CEP played an important role in project implementation by participating in semi-annual site visits, providing policy advice on such things as teacher education as well as assisting provinces in redirection of resources when their local situation warranted changes. Several provinces specifically commented on the instrumental work of the CEP in the introduction of distance learning programs (Qinghai) and primary school management (Fujian). Student Assistance Programs. This sub-component is rated satisfactory. Counterpart funds for this sub-component were put into a trust fund and the interest proceeds from the trust fund were to be used to provide assistance to approximately 230,000 primary and lower secondary students from poor backgrounds. Students were not to receive cash payments, but rather depending on individual need, they received varying amounts of reduction in their payment for school textbook costs, miscellaneous school fees and other schooling related costs. However, the trust funds were small and over the life of the project interest rates decreased substantially which meant that fewer students were assisted through the accrued interest payments than was originally anticipated. Despite the decrease in interest payments the overall number of students assisted by the provinces through some form of student assistance did increase to approximately 364,000 over the life of the project. This was due to the fact that provinces provide more direct government support. The successful rating of this sub-component is not based on how well the trust funds operated but rather the recognition by provinces that education fees are a substantial part of the household financial burden of education for poor families, and that the provinces increasingly recognized that the provision of direct assistance is necessary to keep children in school. The project thus, helped establish and institutionalize regular systems of student assistance, largely financed by provincial and county recurrent budgets and social donations which allowed, and will continue to allow, more children from poor households to enroll in and complete primary and lower secondary education programs. Since BEIII was designed and implemented the GOC designed its own NYCE-I1, which is an intergovernmental grant program, and has allocated a larger percentage of their resources to student assistance. There is a growing recognition in China that student fees are a key factor in low enrollment and - 7 -  high drop rates and therefore, they have made a larger commitment to reduce the household burden of education in the rural areas. 4.3 Net Present Value/Economic rate of return: Not Applicable 4.4 Financial rate of return: Not Applicable 4.5 Institutional development impact: The institutional development impact was satisfactory. The BEIII project was used by the MOE as a reference for the development and implementation of the Nine-Year Compulsory Education Program (1995-2000) (NYCE-I) which was supported by the intergovernmental transfer system. The NYCE-II continued the work of NYCE but changed its distribution percentages for project components. The NYCE-I1 has allocated a much higher percentage for student assistance based on the initial findings in the household survey conducted in BEIII as well as the student assistance component initiated under this project. This project also institutionalized an education management system in the project provinces that will continue to be responsible for the delivery of education as well as other social services. In addition, 94 percent of the project-supported counties have been able to build their primary education systems so that they meet, and in some cases exceed, the MOE minimum services standards for delivery of education. This allowed project-supported counties to accelerate by as much as two years achieving universal primary education as defined by the Central government and was a project goal, and in approximately 78 percent of the counties, NYCE which is now a national education goal. 5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementinig agency: Currency fluctuation of the SDR reduced the overall level of funding available from the Credit. Although this did not have a negative impact on project implementation, it did require additional counterpart money thereby placing some additional burden on poor counties to cover the costs of the exchange rate losses in order to achieve the various numerical and quality input targets set during project design. All counterpart funding targets were met or exceeded although as a disproportionately heavy burden on county finances as opposed to provincial or national finances. 5.2 Factors generally suibject to government control: Project implementation went well with few problems encountered. Project management at all levels was strong and efficient. This can be seen by the fact that at mid-tenn disbursements had reached approximately 76 percent of the IDA funds and project indicators for other deliverables were substantially ahead of schedule. However, the process by which the Ministry of Finance (MOF) responded to reimbursement requests from counties could have been improved and the delivery of this service accelerated. It was reported that some counties, during the life of the project, borrowed from commercial banks in order to cover expenses due to long lags in the reimbursement process. Poor counties have few resources and borrowing at short-term commercial rates offsets any potential benefit from an IDA credit. During the implementation of the project, the National Audit Bureau and the individual provincial audit departments improved their audit coverage providing both the MOE's national implementing unit and the Bank supervision teams with additional tools with which to monitor the financial flows of the project thus reducing the incidence of misuse of project funds and the periodic shortfalls in counterpart funding provision. The strengthening of the national and provincial audit system was an important element of the government's ongoing concern to improve the quality of provincial and county level implementation of - 8 -  Bank-supported projects. 5.3 Factors generally subject to implementing agency control: Strong commitment and efficient and good leadership with effective problem solving demonstrated by MOE/FILO provided the foundation for implementation to continuously exceed SAR targets with regard to human resource development, performance monitoring and project coordination. FILO has a long history of effective project implementation and was able to work with provinces and counties to institutionalize strong project management units. The CEP consistently added value to supervision in such areas as teacher training activities and advice on reallocating project resources when local situations warranted such changes. 5.4 Costs andfinancing: By the completion of the project, the project disbursed 67.07 million SDRs of the original 67.3 million SDRs. SDRs 228,011.64 or US$ 289,066.32 equivalent were not disbursed and cancelled effective May 3, 2002. In addition, the fluctuations of the US Dollar exchange rate with the SDR during the project meant that the total US Dollars disbursed from the credit were US$91.8 million and not the US$100 million estimated at appraisal. The current project cost, US$ 213.63 million, is somewhat higher than the SAR estimate of US$ 191.8 million. Most of the increase in the project cost is a reflection of the fact that Henan Province almost doubled its counterpart funding from the planned amount of US$ 21.8 million. All the other project provinces increased their counterpart funding but only to make up for the dollar losses in project financing which resulted from SDR:US$ exchange rate losses during the project. Counterpart funding for project investments came from the province, prefecture and county and the amount of counterpart funding raised, except in the case of Henan, seemed to be at a level that was based on the financial analysis conducted during project preparation. 6. Sustainability 6.1 Rationale for sustainability rating: The provinces have recognized the need for continuing support of the project schools from the inception of the project by providing a yearly maintenance plan for civil works, equipment and teachers training. Future sustainability plans have been provided by each province as an annex to the borrower portion of the ICR. The project has demonstrated the usefulness of project development and implementation approach modeled after Bank methods for the support of the government's own nine-year compulsory education program. With participation of these provinces in later Bank-supported projects as well as the MOE National Nine-Year Compulsory Education Project - Phase Two (2001-2006) and the National School Rehabilitation program, there is a high assurance that they will continue to support the project schools in the coming years. Due to the low population growth in China there will not be a rapid increase in the primary and lower secondary school enrollments; therefore more attention can be given to maintenance of the system rather than expansion of the system. Throughout the project implementation the provinces and counties proved their commitment to the project by giving their financial support and management support to all the project activities. However, new changes in the county level revenue system which eliminate education surcharges in favor of a comprehensive country-wide tax system has had a negative impact on education financing at the county level. This is being monitored carefully by the State Council, Ministry of Finance (MOF) and MOE so that appropriate adjustments in intergovernmental transfers can be made so as to offset some of the negative impact of the new tax system. -9-  6.2 Transition arrangement to regular operations: All project activities have been fully integrated into the regular operations of the provinces and counties. This project was designed to fit into the MOE's overall plans to achieve NYCE therefore, there is no need for special transition arrangements. The Government of China's (GOC) goals for achieving NYCE are well articulated and resources, both human and financial, have been allocated within the GOC to continue and expand their efforts. The GOC has just launched a 10 year program for the development of the "Western Areas" and these project provinces and their educational needs fit squarely within the Western Areas Development Program. 7. Bank and Borrower Performance Bank 7. 1 Lending: Bank lending in this sector, as well as AAA work, has covered all education sub-sectors and provided the foundation for ongoing policy dialogue and guidance for the whole sector. The Bank's focus on basic education, which has been programmatic in its coverage but project focused in its delivery, has been able to support incremental steps forward in reforming and improving education financing, poverty targeting, and the design of poverty focused projects. Working with the borrower on assessment of these issues has kept the Bank engaged in this sub-sector where the borrower has said that project financing is less important than access, at the provincial level, to new ideas and relevant international experience. Bank lending has also provided incremental additional funding for the challenges of increasing educational access for poor and minority children in the poorest parts of China where the costs for providing that access is high and availability of local funds, especially at the county level, problematic. 7.2 Supervision: Bank supervision has been robust, focused and diligent, identifying and resolving educational as well as financial management and procurement problems. Cluster supervision of currently implementing basic education projects and heavy use of WBOB staff have brought both efficiencies and synergies to the supervision process. The mission's heavy reliance on county and provincial audit materials and reports augmented the supervision process in a way that strengthened the local government's own responsibility for managing and implementing these projects. The pace of the Bank's supervision missions slackened somewhat during the final stages of the project. At mid-term, in September 1998, 75.4 percent of the project credit had been disbursed. By May 1999 more than 90 percent had been disbursed and an equal percentage of project activities completed. During FY00 lack of EASHD budget caused the cancelation of a scheduled supervision mission and by January 2001, 97 percent of the project was completed. The lessened level of supervision during the latter stages of the project does not seem to have negatively affected the quality of project implementation. 7.3 Overall Bank performance: The Bank's overall performance was satisfactory. In lending activities, comprehensive teams were fielded with many members maintained throughout supervision. Supervision missions included the required expertise and local staff monitored project activities when necessary. Borrower 7.4 Preparation: The Department of Finance of MOE coordinated with the Provincial, Municipal and County Education Bureaus to carefully develop proposals and collect the necessary data and informnation for project preparation. They also fielded a comprehensive team of Chinese experts that comprised educators and specialists with previous Bank project implementation expertise to assist in the development of the project. These individuals continued to provide advise to MOE during implementation as members of the Chinese - 10 -  Experts Panel. Government of China goals for this project were clearly articulated from the start and consistently supported by the Ministry of Education, the Ministry of Finance, the State Planning (and Development) Commission and all the provincial and county units with which the preparation team worked. 7.5 Governmnent implementation performance: The overall government implementation performance was highly satisfactory. The Government of China, at both the national and provincial levels, has 20 years experience with implementation of Bank-support education projects. GOC at all levels within MOF and MOE has established institutions that understand the intricacies of Bank-supported projects which facilitates the smooth implementation of education projects. The borrower also provided the necessary counterpart funds to complete all project-supported activities. The flow of reimbursements through the finance bureaus at the provincial and county level could have been quicker. This would have eliminated the need for poor counties to borrow at commercial rates to pay for outstanding contractual commitments. Of special note is the proactive way in which the MOE, working in consort with the MOF and the State Audit Bureau, identified and took corrective action when it became evident that a case of misuse of project funds was discovered. The misuse of project funds was revealed in provincial audits which listed an incident of use of project funds to pay for non-project cadre, economic development projects and the construction of non-project schools. The diversion of project funds was of short duration [three months] but this forced county level implementation units into the commercial banking sector to borrow to pay for civil works contracts. When the misuse was discovered, the MOF and Audit Bureaus at national and provincial levels forced the return of the funds and the resumption of normal disbursement cycles. It is interesting to note that the MOE, during project implementation, worked with the Ministry of Finance to develop an intergovernmental transfer system which provided central education budget funds directly to targeted poor counties. In so doing, the MOE and Ministry of Finance (MOF) took the model of the World Bank's project design, development and implementation and applied it to the design of their own poverty focused education fund, requiring counties and provinces to prepare project proposals which included education and financing targets, monitorable indicators and annual review of action plans and budgets. This design, which is largely consistent with project development models from the World Bank, remains in place and has been expanded to an additional central intergovernmental transfer progran, started in 2001, which deals specifically with school repair and construction in poor areas. 7.6 Imnplementing Agency: The overall performance of the implementing agency was highly successful. The implementing agency at the center - the MOE's FILO and their partners at the provincial level - the Provincial World Bank Project Implementation Units - provided consistently good direction and support for the implementation of the project. FILO organized and ran, with help from the World Bank Office Beijing (WBOB) staff, a number of provincial level training programs for procurement and financial management. Several of these training programs had to be repeated because of staff changes in the provincial level implementing units. FILO worked closely with the WBOB and the Task Team Leader (TTL) to develop and implement a prior review system of procurement which was highly successful and produced a virtually flawless procurement process with no mis-procurements. Likewise, working closely with the WBOB staff and the TTL and the State Audit Bureau, FILO was able to monitor closely the flows of project financing and ensure that cases of misuse of project funds were dealt with quickly and successfully. In addition, FILO's monitoring of the counterpart provision was persistent and ongoing with good results. Toward the end of the project the direct and personal involvement of the FILO Deputy Director in the supervision of the project was a welcome addition in that it helped sustain provincial attention on the need to maintain implementation rigor up until the final days of the project. All in all, the service of the implementing agency was excellent. - 1 1 -  7.7 Overall Borrower performance: The borrower's overall performance was satisfactory. In line with a good record in designing, preparing and implementing the IDA assisted education project, the MOE demonstrated satisfactory performance in preparing and implementing this project. 8. Lessons Learned * Poverty focused social service delivery projects should be increasingly targeted at the township rather than the county level. With more than half of China's absolute poor living outside the 592 nationally designated counties, targeting at the poor township level will more effectively include larger percentages of the absolute poor. However, in that townships lack the adequate administrative capacity to manage such poverty targeted projects, the counties should be given chief administrative responsibility for such projects; * Policy changes and institutionalization of programs, such as student assistance programs, can be realized when the appropriate survey work is conducted and pilot programs are developed and tested based on survey work. This project contributed to the recognition by provinces that education fees are a substantial financial burden on households and that provinces needed to provide direct assistance to students in order to keep them in school. It also contributed to the recognition at the national level that their own NYCE-II program should include a larger percentage of the fund to student assistance support; * Limited use of library books and teaching equipment, even after training librarians and teachers on the use of the books and equipment, is a problem in many project-supported schools. Librarians and teachers must be released from the personal responsibility for the books and equipment if the full utilization of these materials are to be realized. * Project management training can contribute to the institutionalization of a system of management when such training is conducted over the life of a project. This Bank-supported project provided such training and gave local staff skills to implement this project, the government's own NYCE-I1 program and county level poverty alleviation projects; * The key issue in developing education projects at the provincial, county and township levels is to convince the Chinese preparation teams that focusing on development outcomes is more important then emphasis on investment inputs; * Establishing experts panels with a broad range of educational skills from the start of the targeting exercise ensures the project of some balance in educational, financial and staffing needs. These panels are useful in reviewing provincial proposals, supervising the implementation of projects, assessing progress at mid term and with the final completion reports. Responsible to the provincial and/or national education authorities, they can be used to do studies which can change the direction of projects under implementation, give added emphasis to an element and provide technical advice to county and school level educators; * Teacher and staff training components have been chronically weak in Bank supported basic education projects. Training programs are generally set by formulae which follow national standards rather than provincial needs. School principals have little contact with the normal schools and colleges which provide the training. Normal schools have few horizontal links with the counties and villages where the - 12-  of the services comes from. This should be considered carefully in the development of any new project. * Monitoring and Evaluation (M&E) are critical aspects of any project and in education projects, educational outcomes should play a strong role in any M&E system. Bank-supported education projects in China, from the start of Basic Education I through the preparation of Basic Education IV, have increasingly moved away from only monitoring inputs, but not enough progress has been made in instituting a rigorous evaluation system which takes educational outcomes as the predominant monitoring factor. This should change in any future education projects, and a more rigorous evaluation system put in place with a strong focus on education outcomes. * Education Management Information Systems (EMIS) are only useful when data gathered is accurate and is used by decision makers. The current system in China provides perverse incentives for the reporting of such data (i.e., initial enrollments are exaggerated to achieve targets set by provincial and national govemments; local cadre's job reviews report on achievement of enrollment targets rather than educational outcomes). Much of the data reported in the EMIS system does not seem to be used by government officials at the provincial and county levels because it is so soft as to make the use suspect. Without changes in the incentive systems, the current EMIS system is seriously flawed and should be reformed. * Because of US$:SDR exchange rate fluctuations during the implementation of the project, provinces and counties had to provide increased amounts of counterpart funding over and above the amounts proposed during project appraisal in order to fully finance project investments. The additional financial burden on the poor provinces and counties could be eliminated if the central government assumed responsibility for exchange rate risks. 9. Partner Comments (a) Borrower/implementing agency: All project components were accomplished and satisfactory. The implementation of the project has greatly improved the school conditions and teaching quality in poor and minority areas, and has played an important role in the acceleration of the universalization of nine-year elementary compulsory education in poor areas. The project was carried on smoothly during the implementation period and the implementation quality was generally good. All project output targets were met and some were even exceeded. The Foreign Investment and Loan Office (FILO/MOE) strengthened the national level management training early in the project, in which FILO not only invited the staff from the Basic Education projects such as EDPP Project to introduce their experiences and lessons on project implementation, but also invited the experts from the Ministry of Education to give lectures on the theories and practices of education management and reform. FILO also organized the study tours, and provided a lot of guidance to the project provincial dissemination programs and project procurement of civil works and goods. FILO fulfilled its task in project supervision, providing constructive suggestions and recommendations to project units, and having good coordination with departments concemed. On the whole, the Ministry of Education has fulfilled its duties in project implementation and management. The World Bank (WB) officials and consultants sent to China are all possessed with high professional and management ability. They had worked harmoniously with the Chinese Counterparts. FILO/MOE have very good cooperation with the Bank in implementation period. From the beginning of the project, the task manager of the World Bank and Bank consultants have been paying much attention to the quality of the project. They provided lots of valuable suggestions and recommendations during the site visits to the - 13 -  project provinces and helped provinces solve problems appeared in the implementation period, which guaranteed the smooth implementation of the project. (b) Cofinanciers: Not Applicable (c) Other partners (NGOs/private sector): Not Applicable 10. Additional Information - 14-  Annex 1. Key Performance Indicators/Log Frame Matrix This project was developed prior to the new logframe indicator format and therefore the indicators listed below do not fit the new logframe format. However, this project was the first basic education project in China to include achievement indicators thereby giving a limited view of project outcomes. Indicators to measure individual provincial education progress rather than overall project indicators were developed at the start of implementation. Therefore, project indicators provided below are indicative, taken from only one project province, Hebei Province. Other specific provincial indicators can be found in the provincial ICR reports submitted March 2002 and located in the project files. Indicators Baseline Completion Target 1993 2001 PROJECT OBJECTIVE l.A: SUPPORT THE ATTAINMENT OF UNIVERSAL PRIMARY EDUCATION AND EXPANSION OF LOWER SECONDARY EDUCATION IN POOR AND MINORITY AREAS. School Primary School Indicators Attendance Enrollment Rate: Improved School Aged Children (%) 94.5 99.5 99.0 School Aged Girls (%) 93.7 99.3 98.4 School Aged Minorities (%) Dropout rate: Grade I (%) 2 0.5 0.7 Girls in Grade I (%) 2.1 0.5 0.7 Repetition rate: Grade I (%) 8.4 1.1 1.7 Girls in Grade I (%) 8.3 1.1 1.7 Completion Rate of 15 yr. old population (%) 90.4 99.2 98.6 15 yr. old girls 90.3 99.2 98.6 Number of Students receiving student assistance 900 1410 Transition Rate Right Aged Children (%) 76.0 98.5 89.0 Right aged girls (%) 74.5 98.4 89.0 Lower Secondary School Indicators Dropout Rate (%) 6.8 1.9 2.4 Girls (%) 6.9 1.9 2.4 Completion Rate of 17 yr. old population 87.0 98.0 95.0 17 yr. old girls 86.0 98.0 95.0 Number of students receiving student assistance 300 620 Primary School Indicators Learning Chinese Language Pass Rates of Grade 6 (%) 95.4 99.2 98.4 Achievement Pass Rates for Girls (%) 94.5 99.1 98.1 Increased Math Pass Rates of Grade 6 (%) 94.6 99.1 98.2 - 15 -  Pass Rates for Girls (%) 94.0 99.0 97.9 PROJECT OBJECTIVE 1.B: BUILD STRONGER INSTITUTIONS RESPONSIBLE FOR EDUCATION DELIVERY Full-time Qualification Rate: Teachers Primary Schools (%) 82.1 96.0 91.4 Skills Lower Secondary Schools (%) 43.1 85.0 76.7 Improved Qualification Rate in Bilingual education: Primary Schools (%) 0.0 0.0 0.0 Lower Secondary Schools (%) 0.0 0.0 0.0 Facilities Dilapidated building rate: Improved Primary Schools (%) 32.0 3.0 9.0 Lower secondary Schools (%) 21.0 3.0 8.0 Rate of schools w/standardized sets of equipment: Primary Schools (%) 62.8 96.8 96.3 Lower Secondary Schools (%) 47.1 93.0 92.3 Sufficiency rate of school furniture: Primary Schools (%) 92.1 100.0 100.0 Lower Secondary Schools (%) 93.6 100.0 100.0 Average books per student: Primary Schools 4.2 9.2 6.0 Lower Secondary Schools 8.4 15.0 10.3 1/ Hebei has no minority group and therefore no special category for minority enrollments. 2/ Hebei Province has no bilingual education teachers or teacher training programs. - 16 -  Annex 2. Project Costs and Financing Project Cost by Component (in US$ million equivalent) - . .' - . ~,. .... -Appraisal Actual/Latest Percentage of ' -~ -- -:: ~ - Estimate Estimate Appraisal Project Cost By Component . US$ million. US$ million INSTITUTIONAL COMPONENT a. Facilities Upgrading 94.90 147.29 155.21 b. Instructional Equipment/Books/Fumiture 36.20 45.96 126.96 c. Staff Development 11.40 13.74 120.53 MANAGEMENT COMPONENT a. Management Training 0.20 0.29 145 b. Expanding Education MIS 1.00 1.11 111 CENTRAL COMPONENT a. National Training 0.30 0.28 93.33 b. Research Dissemination Program 1.30 1.69 130 c. Stipend Program 2.70 2.87 106.3 d. Study Tours 0.30 0.30 100 e. Experts Panel 0.08 0.08 100 f. Studies 0.03 0.02 66.67 Total Baseline Cost 148.41 213.63 Physical Contingencies 14.90 0.00 Price Contingencies 28.50 0.00 Total Project Costs 191.81 213.63 Total Financing Required 191.81 213.63 Physical contingencies and price contingencies were allocated to the various project components under the actual estimates column. Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) ' ' - ' . - ' Procurement Method- - Expenditure Category .ICB - - . NCB - -.- Other . ; N.B.F. Total Cost 1. Works 0.(00 92.7(0) 28.00 0.00 120.70:) (0.00) (52.50) (15.70) (0.00) (68.20) 2. Goods 0.00 43.70 5.70 0.00 49.40 (0.00) (19.90) (2.60) (0.00) (22.50) 3. Services 0.00 0.00 5.80 0.00 5.80 Consultant Services (0.00) (0.00) (2.40) (0.00) (2.40) 4. Training 0.00 0.00 15.90 0.00 15.90 (0.00) (0.00) (6.90) (0.00) (6.90) 5. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 0.00 136.40 55.40 0.00 191.80 (0.00) (72.40) (27.60) (0.00) (100.00) - 17 -  Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) ; . v . Procurement Method d... . Expenditure-Category ICB NCB O N.B.F. TotalCost 1. Works 0.00 103.15 44.14 0.00 147.29 (0.00) (53.69) (9.48) (0.00) (63.17) 2. Goods 0.00 38.40 8.67 0.00 47.07 (0.00) (18.58) (2.06) (0.00) (20.64) 3. Services 0.00 0.00 5.24 0.00 5.24 Consultant Services (0.00) (0.00) (1.80) (0.00) (1.80) 4. Training 0.00 0.00 14.03 0.00 14.03 (0.00) (0.00) (6.31) (0.00) (6.31) 5. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 0.00 141.55 72.08 0.00 213.63 (0.00) (72.27) (19.65) (0.00) (91.92) Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies. 21 Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremcntal operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units. Project Financing by Financer (in US$ million equivalent) Fjincer Appraisal Estimate ActualULatest Estimat | . App?raisal, __________________ IDA Gt.... CoF. IDA :'GovLt 'CoF. :IDA 'Govt. . CoF.,.. Chinese Government 91.80 121.70 132.6 IDA 100.00 91.93 91 9 The actual IDA disbursement level is less than the original US$100 million due to the SDR/US$ currency fluctuations. In addition, US$ 289,066.32 were not disbursed from the special account. - 18-  Annex 3. Economic Costs and Benefits Not Applicable. This project conducted a Financial Analysis to ensure that the project was feasible during the project years and that the project effectiveness is sustained after project completion. Three types of financial analyses were conducted: feasibility analysis, sustainability and assessment of the availability of counterpart funding. - 19-  Annex 4. Bank Inputs (a) Missions: Stage of Project Cycle No. of Persons and Specialty Performance Rating (e.g. 2 Economists, I FMS, etc.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 3/95 4 2 General Educators, I S S Operations Analyst, I UNICEF Educator 6/95 6 2 General Educators, I S S Operations Analyst, I UNICEF Educator, I Architect, I Education Economist Appraisal/Negotiation 10/95 6 2 General Educators, 2 S S Operations Specialist, I Education Economist, I Minority Education Specialist 2/96 6 2 General Educators, I S S Operations Analyst, I Disbursement Officer, 2 Lawyers Supervision 5/96 Project 5 1 General Educator, I S S Launch Operations Analyst, I Operations Officer, I Procurement Specialist, I Disbursement Specialist 1/97 3 1 General Educator, I Operations S S Analyst, I Procurement Specialists 3/97 3 1 General Educator, I Operations S S Officer, I Procurement Specialist 1/98 2 1 General Educator, 1 Operations S S Analyst 4/98 3 1 General Educator, I Operations S S Officer, I Procurement Specialists 9/98 Mid-term 4 2 General Educators, I S S Operations Analyst, I Education Specialists 5/99 4 I General Educator, I Education S S Specialist, I Operations Officer, I Procurement Specialist 10/99 3 1 General Educator, I Education S S Specialist, I Operations Officer 1/01 2 1 Lead General Educator, I S S Operations Officer ICR 3/02 2 1 General Educator, I S S - 20 -  I I I (Operations Officer This information is based on project preparation and supervision aide-memoires. (b) Staff: Stage of Project Cycle Actual/Latest Estimate No. Staff weeks US$ ('000) Identification/Preparation 38 160,000 Appraisal/Negotiation 16 70,000 Supervision 107 362,200 ICR 6 35,000 Total 167 627,200 These figures are based on the project preparation file information, supervision aide-memoires, 590 forms and staff salary information that is available. - 21 -  Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating OMacro policies 0 H O SU * M 0 N 0 NA FSector Policies O H O SU * M O N O NA F Physical O H *SUOM 0 N O NA O Financial 0 H *SUOM O N 0 NA N Institutional Development 0 H 0 SU O M 0 N 0 NA FI Environmental 0 H OSUOM 0 N * NA Social