Colombia - Third Education Project

- FILE COPY DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPME14T INTERNATIONAL DEVELOPMENT ASSOCIATION Not For ublic Use Rport No. 132a-CO APPRAISAL OF A THIRD EDUCATION PROJECT COLOMBIA June 11, 1973 Education Projects Division Latin America and the Caribbean Regional Office This report was prepared for offal usn only by the Bank Group. It may not be publihed, quoted of cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completnes of the report.  Currency Equivalents US$1.00 22.50 Pesos I Peso - 1J$044&i 1 minlion Pesos us-0 Meaures 1 n 2 " 10.76 sq. ft. 1km o 0.62 mL. 1km2 - 0.38 sq. mi. 1 hectare - 2.47 acres Fiacal Year January 1 - December 31  GLOSSARY ACPO - Accion Cultural Popular (Popular Cultural Action), a private organization, promoting education through radio schools. CPU - Common Facilities Center, an institution providing workshop and laboratory facilities for diversified secondary education. ICCE - Instituto Colombiano de Construcciones Escolares (Colombian Institute for School Construction), a semi-autonomous agency responsible for implementing the Bank-financed education projects, and also for construction of Government school buildings. ICFES - Instituto Colombiano para el Fomento de la Educacion Superior (Colombian Institute for the Development of Higher Education), a semi-autonomous agency responsible for coordinating and planning higher education. ICOLPE - Instituto Colombiano de Pedagogia (Colombian Pedagogical Institute), a semi-autonomous agency responsible for educational research and developing educational materials especially at the primary school level. INEM - Instituto Nacional de Educacion Media (diversified secondary schools), offering a diversified curriculum that integrates practical and academic subjects. RCS - Rural Comprehensive School, a lower-secondary school which offers a diversified curriculum and forms the basis for an education extension service supporting the rural development program in the particular region. SENA - Servicio Nacional de Aprendizaje (National Appren- ticeship Service), a semi-autonomous agency offering specialized courses for workers in agricultural, industrial and commercial subjects in its training centers throughout the country.   COLOMIA. BASIC DATA Area 1,139,000 km2 Population (1972) 23.0 xU.lion Population Growth 3.2% p.a. Urban Population (in towns with over 20,000) GDP (1970) TiM market prices) Pesos 130 billion GDP per Capita (1970) US$ 325 Annual Growth of GDP in Real Terms (1960-1970) 5.2% National Government's BUdget as Proportion of GDP (1970) 14.1% Literacy Rate (1972) 74% &irollment Ratios (1970) (including over-aged) Primary 99% Secondary 19% Higher 3.5% Education Expenditures (1970) (as proportion of GDP) Public 3.7% Private 1.1% Total 4.8%   COLOMBIA APPRAISAL OF A THIRD EDUCATION PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ................................. i-ii I. INTRODUCTION .................................. 1 II. SOCIO-ECONOMIC BACKGROUND ............. 1 III. EDUCATION AND TRAINING ...... .................... 3 General .................. . .. 3 The Education and Training System .... ........... 4 Education Development Strategy . . . 7 IV. EDUCATION FINANCE ..... ... ........ 8 Expenditures, Past and Present ........ 8 Future Education Expenditures ........... 9 V. THE PROJECT ...oo ... .......... 10 General ......... o........... 10 Common Facilities Centers ........ 11 Rural Comprehensive Schools ....... 13 Technical Teacher Training Program ................ 14 Rural Development Services' Center ...... o.o ..... oo. 16 Sector Studies .... . .... .... ..-. 16 Technical Assistance ................ o.. 17 Follow-up Evaluation of the Project ......... 18 Cost of the Project ................... 18 VI. IMPLEMENTATION AND DISBURSEMENT. . 21 VII. AGREEMENTS ANI) RECOMMENDATIONS ....... oo........... 22 This report is based on the findings of an appraisal mission which visited Colombia in November 1972. The mission consisted of Messrs. B.A. Thoolen (economist), H. Leavitt (general educator), A. Stam (architect), A.G. Apodaca (FAO agricultural educator) and H. Baritsch (Unesco technical educator).   APPENDICES A. Education and Training B. Location of Project Institutions ANNEXES 1. Comparative Education Indicators 2. Latin America Education Indicators 3. GDP and Employment, 1970-1980 4. Outputs of the Formal Education System, 1960-1968 and 1969 5. Enrollment by Grade and Controlling Authority, 1968 6. Enrollment and Teachers by Type of Education, 1968 7. School-Age Population and Enrollment Projections, 1970-1980 8. Sources of Education Finance, 1965 and 1970 9. Education Expenditures by Level, 1970 10. Education Expenditures, 1970-1980 11. Curriculum for Diversified Secondary Education 12. CFC's: Enrollment in Designated Participating Schools, 1972 and 1978 13. CFC's: Projected Numbers of Graduates 14. CFC's: Teaching and Non-Teaching Staff Requirements 15. RCS's: Enrollment and Teaching Staff of Project-Connected Primary Schools 16. RCS's: Teaching and Non-Teaching Staff Requirements 17. Technical Teacher Training Program: Requirements for Project and Project-Related Secondary Schools, 1974-1977 18. UNDP Technical Assistance Program 19. Summary of Project Cost 20. Unit Capital Costs in Project Institutions 21. Contingency Allowances 22. Project Implementation Schedule 23. Estimated Disbursement Schedule CHARTS 1. Education Sector: Organization Chart, 1972 2. Structure of Formal Education, 1972 3. Population and School Enrollment by Age, 1968 4. Secondary School Enrollment, 1964-1980 5. Flow Chart Diversified Secondary Education 6. CFC's: Operational and Decision Flow Chart MAP   COLOMBIA APPRAISAL OF A THIRD EDUCATION PROJECT SUMMARY AND CONCLUSIONS i. This report appraises a project for the extension of a major reform of secondary education and for the expansion of education and training in rural areas for which a Bank loan of US$21.2 million equivalent is proposed. Colombia's secondary education reform is being implemented on a pilot basis in 19 new diversified secondary schools (INEM's) established with the help of two Bank loans, one of US$7.6 million in 1968 (No. 552-CO) and one of US$6.5 million in 1970 (No. 679-CO). The physical execution of the first and second projects has been slower than expected, but the main bottleneck, the procure- ment of equipment and furniture, is being overcome through strengthening the implementation agency's procurement capacity. The new diversified curriculum is being implemented properly and a number of innovations have been introduced successfully. As a result, the INEM's are having an impact on the whole edu- cation system. ii. The two projects under execution and the proposed third project are concerned with correcting the main deficiency in Colombia's education system, namely, the lack of relevance of most secondary education programs. Academic education prevails, which prepares students only for university entrance and does not produce the trained manpower needed for social and economic develop- ment. The Government gives high priority to the expansion of diversified secondary education which integrates practical and academic subjects into a properly balanced general education program and prepares students for a broad range of possible employment and further training. This shift away from the academic bias will help to meet Colombia's manpower needs while at the same time reducing the pressure on the universities. The proposed third education project would build on the experience gained in the INEM's and would assist the Government in its policy of expanding diversified education throughout the secondary level. The first stage of the reform was the establishment of new schools in the large cities. The logical next stage is the extension of diversified secondary education to existing schools in medium-size cities and to rural areas. iii. The implementation of the diversified secondary curriculum requires workshops and laboratory facilities which are lacking in existing secondary schools. Because the schools are generally of small, uneconomic size, these facilities should be concentrated in facilities centers for common use by groups of existing schools. The technical teachers needed for the envisaged expansion of diversified secondary education will be trained under a special program, since the present supply of technical teachers is insufficient. iv. To reverse the trend of a widening gap in living standards between urban and rural areas, the Government is giving more emphasis to increasing agricultural productivity and improving basic services in rural areas. The Government intends to establish rural comprehensive schools in regions where development programs are being carried out. These institutions will provide the opportunity for lower secondary education which presently is lacking and  - ii - be the basis for an education extension service needed to support rural de- velopment. In Colombia several models for integrated rural development are being tested. The rural development services' center in Las Gaviotas is de- veloping into a model for the vast area of the Eastern Plains and an exten- sion of this center is required. v. In addition to the secondary education reform, already being imple- mented, the Government has now defined the broad outlines of an education re- _orm at all levels and is formulating a comprehensive strategy for education development, which would be based on the outcome of a forthcoming sector sur- vey and specific sector studies, e.g., a mid-term assessment of experiences with the existing INEM's and a comprehensive manpower study, which would form the basis for further Bank lending in education. vi. The proposed project would help the Government to meet the above needs. It would consist of: (a) 24 common facilities centers; (b) 13 rural comprehensive schools; (c) a technical teacher training program; (d) extension of a rural development services' center; (e) assistance for a sector survey and for sector studies. vii. The Instituto uolombiano de Construcciones Escolares, ICCE, is re- sponsible for the implementation of the first and second education projects and would also be the project unit for the proposed project. ICCE will super- vise construction and equipping of all project institutions and carry out the major part of the design work. Contracting of civil works and procurement of equipment and furniture would be based on international competitive bidding, but it is expected that only the equipment component will attract foreign bidders. A preferential margin (equal to 15% of c.i.f. basic prices or the existing import duty, whichever is lower) would be accorded to domestic manu- facturers. Colombia is a member of LAFTA and the Andean Pact; preferential treatment under these agreements, however, is irrelevant for this project since ICCE is exempted from import duties. viii. The total project cost is estimated at US$33.5 million. The pro- posed loan of US$21.2 million would finance: (i) the estimated foreign ex- change cost of US$16.9 million; (ii) US$2.0 million for the local currency component of the ex-factory cost of equipment and furniture, for which local suppliers are likely to win the contracts under international competitive bidding; (iii) US$0.5 million for the local cost of technical assistance which ACPO, a Colombian institution, would be best qualified to provide; (iv) US$0.2 million for the local cost of civil works for the rural development services' center; and (v) US$1.6 million of interest and other charges during construc- tion. The remainder of the ca.pital funds would be provided by the Government and is within its financial capability. The funds would be disbursed over a 3-1/2 year period. ix. Subject to the provisions in Chapter VII of this report, the proposed pro-ect is suitable for a Bank loan of US$21.2 million to the Republic of Cozombia for a period of 30 years including a grace period of ten years.  I. INTRODUCTION 1.01 This report appraises a third education project in Colombia for which a Bank loan of US$21.2 million equivalent to the Republic of Colombia is proposed. The first and second education projects (1968 and 1970) assisted the Govermnent in the implementation of the first stage of a major secondary education reform program by establishing, on a pilot basis, 19 large diver- sified secondary schools (INEM's) in the larger cities. The physical execu- tion of the first and second projects has been slower than expected, but ini- tial shortcomings are being overcome and both projects should be completed before the end of 1973. 1.02 The INEM's introduced a number of innovations in Colombia's educa- tion system, and the original objectives of more relevant education and im- proved efficiency are being achieved. The logical next stage of the reform program is an extension of diversified education to existing secondary schools in medium-size cities and to rural areas. This second stage is now timely; it would provide continuity by making efficient use of local expertise built up under the earlier projects. 1.03 Towards this end the Government has requested financial assistance from the Bank for the establishment of: (i) 25 common facilities centers; (ii) 13 rural comprehensive schools; and (iii) an emergency program for the training of technical teachers. An appraisal mission consisting of Messrs. B.A. Thoolen (economist), H. Leavitt (general educator), A. Stam (architect), A.G. Apodaca (FAO agricultural educator) and H. Baritsch (Unesco technical educator) visited Colombia in November 1972. During appraisal the Govern- ment's request was modified by increasing the size of the common facilities centers, allowing substantial economies in initial capital investment per student place and in operation, and by deleting one center which would be of uneconomic size. Further, the project was expanded to include an exten- sion of the Las Gaviotas rural development services' center and technical assistance for a sector survey and for sector studies. 1.04 The project as appraised consists of: (i) construction and equip- ping of 24 common facilities centers; (ii) construction and equipping of 13 rural comprehensive schools; (iii) supplementary equipment to carry out a special program for the training of technical teachers; (iv) an extension of the rural development services' center in Las Gaviotas; and (v) techni- cal assistance for a sector survey and for sector studies. The total cost of the above project is estimated at US$33.5 million and the foreign exchange component at US$16.9 million; interest and other charges during construction would amount to US$1.6 million. II. SOCIO-ECONOMIC BACKGROUND 2.01 Geography. Colombia has a total area of 1.14 million sq. kms consisting of plains along the Pacific and Caribbean coast, rugged highlands in the central part and vast plains in the East descending to the Amazon river. Its population of 23 million is concentrated in the coastal plains  -2- and in the central highlands. There are approximately 60 large and medium- size cities which are spread throughout the more populated parts of the country. The topography makes travel difficult and hampers communication between the cities and the rural areas. 2.02 Population. The population is increasing at 3.2% per annum, but family planning programs are beginning to show results and it is expected that the growth rate will be under 3.0% in the second half of the seventies. The rapid population growth has resulted in an unbalanced demographic struc- ture with a school-age population (7-18 year olds) as large as the total labor force (30%). Although regional affiliation is important, the popula- tion is rather homogenous with the Spanish-Catholic tradition as the dominant factor. Heavy migration from the rural areas has increased the urban popula- tion from 36% to 44% in the last eight years. 2.03 The Economy. In 1970 agriculture accounted for 29% of GDP, and mining, manufacturing and construction for 25%. The remaining 46% was con- tributed by public and private services. The growth prospects of the Colombian economy appear promising. The growth rate of GDP was 5.2% in the sixties and is expected to average 7% in the seventies. Construction and export-oriented manufacturing are the strategic sectors in the Government's Development Plan and are expected to grow rapidly in the coming years (Annex 3). Within the economic sectors, the Government is aiming at increased diversification of production and exports. The third element in the Plan's strategy is the im- provement of productivity in agriculture, to reverse the trend of a widening gap in living standards between urban and rural areas. To this end, an Agrarian Reform is being implemented and the agricultural extension service expanded. 2.04 Rural Development. The rural areas of the country which are becoming an increasing concern of the Government are usually characterized by a lack of basic services, low productivity and pressure for farmland due to its maldis- tribution. Public services, particularly for education, health and trans- portation, are poor in rural areas, especially when compared with urban cen- ters. The educational level of the rural population is very low: 40% are illiterate, as against 16% in the urban areas. Institutional credit for small farmers is insufficient and the agricultural extension service reaches only a minority of the farmers. At least half the rural population live at subsistence level, partly due to lack of suitable land. Land is available in the largely unpopulated areas of the Eastern Plains and Amazonia, but the conditions are mostly suitable for semi-intensive livestock production which is not the tradition in subsistence farming. The Government is setting up, although as yet on a small scale, rural development services' centers, which will provide basic services in rural areas to help improve living conditions on the land. 2.05 Manpower. Agriculture accounted in 1970 for 41% of employment, mining, manufacturing and construction for 20%, and services for the remain- ing 39%. At least 10% of the labor force is unemployed and an estimated 10-15% is underemployed. Labor-intensive industries such as construction are being stimulated with a view to reducing unemployment. Still, the largest employment increase up to 1980 will be in services and increasing numbers of workers will have to find employment in agriculture (Annex 3).  -3- 2.06 The implementation of the Government's strategy of high economic growth and diversification of production requires a sufficient supply of trained manpower for all sectors and at all levels. However, the qualifica- tions of the labor force are low: in 1970, only 22% of the workers had any education or training beyond primary school. Up-to-date estimates of the requirements for the various types of trained manpower are not available, but the main need is overwhelmingly clear: there is a severe shortage of technically trained manpower at the middle level, i.e., skilled workers and lower cadres. These are mainly trained by SENA, the National Apprenticeship Service, and on the job; at present the formal education system does not pro- duce this type of manpower in sufficient numbers (Annex 4). Most graduates of secondary education (80%) are from the academic branch which prepares only for university entrance; they are ill-prepared for jobs at their proper level and many of them can only find casual jobs such as street vendors. Only 10% of the graduates have received vocational training though the proportion should be 40% to arrive at a more balanced situation. 1/ The most urgent need is a change in the profile of the labor force at this level through a shift au . from the academic branch to a more flexible type of education which emphasizes pre-vocational and vocational training. III. EDUCATION AND TRAINING General 3.01 The Government's policy for education development is aimed at cor- recting the three basic problem areas in Colombia's education system: (i) the low external efficiency of the system because school programs and concepts are increasingly failing to respond to the social and economic needs of the country; (ii) the low internal efficiency of the system as evidenced by high dropout rates at all levels; and (iii) the imbalance between the availability and quality of education in rural and urban areas. To correct these problems, the Government has defined the broad outlines of an education reform and plans to work out a comprehensive strategy on the basis of a forthcoming sector survey. The key to education development is the concept of diversified second- ary education, which was introduced under the secondary education reform program of 1968 and will be expanded throughout the secondary level. Deficiencies in education administration and planning are presently a major constraint for education development and the Government is taking measures to correct this situation. 3.02 Administration. The Ministry of National Education is responsible for the formulation of education policy and the coordination of all education activities in the country. This is a major task in view of the complex juris- diction over the multitude of national, departmental, municipal and private 1/ See D.K. Zschock, Manpower Perspective of Colombia, Princeton, 1967.  -4- education institutions. A recent administrative reform introduced a number of improvements in the administrative structure of the Ministry (Chart 1). Various semi-autonomous Decentralized Agencies were established which have control over their own budgets and some freedom from civil service limita- tions in selection and compensation of personnel. Despite this, education administration requires more flexibility and effectiveness. The main problem is a lack of administrative continuity in the Ministry since salaries of key officials are not competitive with high-level positions in the private sector and many appointments are political. To improve this situation, the Govern- ment proposes centralization of policy making and decentralization of admin- istration. Under this proposal, presently awaiting action by Congress, educa- tion administration vould be the responsibility of a new Decentralized Agency, Instituto Colombiano de Administracion Educativa y Servicios Docentes (INCA-S). The UNDP will provide technical assistance to help reorganize the structure of education administration and to strengthen education administration until this is accomplished -(Annex 18). 3.03 Planning. Education planning is concentrated on project develop- ment and does not provide an adequate framework for the planned development of the education system. The overall education reform which the Government is elaborating (para. 3.01) requires careful planning to arrive at a balanced program whicr- does not exceed available resources. Technical assistance will be provided by the UNtP to strengthen Colombia's planning capacity (Annex 18). Further, the statistilal basis for planning is weak: education statistics are outdated and deficient. The latest complete data are for 1968; data for more recent years are mostly estimated. Efforts to speed up data collection are hampered by the scattering of education authorities and the unreliability of local statistics. This situation requires a strong central agency for the collection and analysis of statistics, but the capacity of DANE, the National Statistics Department; is inadequate and low quality of statistics is a general problem in Colombia. Assurances were obtained during negotiations that the Government will seek steady progress in the collection and publication of education statistics. The Education and Training System 3.04 The Structure (see also Appendix A and Chart 2). Primary education lasts five years. Sedondary education, for which an entrance examination is required, consists generally of a four-year lower cycle (Plan Basico) followed by a two-year upper cycle (Bachillerato); there are limited opportunities to follow pre-vocational and vocational courses of several types. Higher educa- tion, with courses of three to six years, is offered at universities and spe- cialized post-secondary institutions. Various types of non-formal training are provided by a number of public and private agencies. 3.05 Primary Education. Although participation in primary education seems very high (99%), 30% of the students are overaged, resulting in a real participation rate of 70%. Drop-out rates are high and only 27% complete primary education (Annex 5). An estimated 85% of the primary graduates con- tinue on to secondary school. Opportunities in rural areas are limited with  -5- 80% of the rural schools containing no more than the third grade. The Gov- ernment is carrying out a program for the expansion of primary education in rural areas, both through the addition of classrooms to incomplete primary schools and through new construction. The 1973-1976 Investment Plan contains provisions for the construction of 14,000 additional classrooms in rural areas, a capacity increase of about 10% p.a. 3.06 Secondary Education. Secondary schooling has traditionally been divided into academic education (70%), primary teacher training (9%) and various vocational options (21%), in separate schools of uneconomic size (Appendix A and Annex 6). This distribution is seriously out of balance; the need for a shift away from academic to pre-vocational and vocational education is urgent (para. 2.06). This shift was initiated by the establish- ment, on a pilot basis, of 19 diversified secondary schools (INEM's), financed under the first and second education projects, the first of which opened in 1970. The INEM's offer a curriculum that integrates academic and pre-voca- tional subjects into a properly balanced general education program, prepar- ing students for a broad range of possible further training and employment. The six-year program is organized in three two-year stages. In the first stage, students explore the different vocational fields and in the second they receive a broad orientation to industry, commerce, social services or agriculture. In the final two years, students receive more specialized training in such specific fields as metal work, mechanics, electricity and construction (Annex 11 and Chart 5). Guidance counselors assist stud- ents in choosing suitable options. 3.07 INEI students graduate at two points, after the fourth and sixth grades. Although they are directly employable, the graduates should not be regarded as fully trained except for commerce. They are educated for life- long adaptability and trainability and have thus the potential to become, through subsequent training in formal education, in centers of SENA, and on the job, the middle-level personnel which are much needed for the coun- try's development (Chart 5). Graduates of the six-year course can continue their education in specialized post-secondary institutes or enter university education. The diplomas awarded by diversified secondary schools are formally recognized by the universities, but no students have graduated yet from the full six-year course. Through ICFES, the higher education institute, the Ministry of Education is working out appropriate adjustments in the univer- sity entrance examinations. In a number of INEM's practical subject teach- ing is unsatisfactory as a result of inadequate preparation and supervision of technical teachers, and a too theoretical orientation of teaching guides. To remedy this, the Government will establish a vocational education super- visory service (para. 5.06), and technical assistance to improve industrial and agricultural subject teaching will be provided by the UNDP (Annex 18). 3.08 Apart from the change in emphasis from academic to pre-vocational education, a number of innovations were introduced in the INEM's which have been tested successfully and can now be spread to the rest of the education system. The relevance to specific manpower needs is increased through co- operation of the schools with local industries and SENA centers. Internal efficiency is high as a result of improved programs, full-time qualified  - 6- teachers and remedial teaching; yearly dropout rates are below 10%, compared with an average of 30% for traditional schools. Further, improved methods of school administration and student scheduling are applied in large institutions, which greatly improves the efficient use of resources. The INEM's are co- educational, while traditional schools are mostly separated. The success of the INEtI's is evident from the widespread interest of parents and industry, and from the initiative taken by some private secondary schools to include pre-vocational subjects in their curriculum. The Government intends to spread the concept of diversified education throughout the secondary level. The 19 INEM's are located in the larger cities. As a next stage, diversified sec- o"-lary education will be expanded to existing schools in medium-size cities and, through new schools, to the rural areas. 3.09 While the main need in secondary education is quality improvement, participation should increase from its present 19%, which is rather low for a country of Colombia's stage of development (Annexes 1 and 2). More than 50% of the secondary students are in private schools, largely because there are insufficient places in public education. The quality of private secondary schools varies considerably; with the exception of a few elite schools, the quality of teaching is about equal to that of public secondary education. The high fees in private schools are prohibitive for the lower income groups, whereas public education is free for children of the poorer families. An expansion of public education is needed to increase equality of educational opportunities. It is expected that participation will increase to 33% in 1980 and that the major part of this expansion will be in public education. Particularly important is the envisaged establishment of public diversified secondary schools in rural areas where presently only very few secondary schools exist. The qualifications of secondary teachers are low: only 25% are fully qualified (Annex 6). This situation is expected to improve as a result of a major expansion of the Pedagogical Faculties of National Univer- sities and through a UNDP-assisted program for in-service training of teachers. 3.10 Higher Education. In 1970, total enrollment in universities and post-secondary institutions was 78,000 or 3.5% of the 19-24 age group. The rapid expansion of university education has resulted in low quality, a pro- liferation of institutions and high dropout rates. Of those who enter the university only 55% graduate but there is already an oversupply in various fields, including engineering. The universities are presently in turmoil, which precludes urgently needed improvements. A continuation of the em- phasis in secondary education on academic programs, preparing only for uni- versity entrance, would lead to pressures for a further rapid expansion of universities. This trend will be reversed when diversified secondary educa- tion, offering job-oriented courses, is expanded to existing secondary schools. Further, non-university types of higher education will be given more emphasis. The Government is developing a four-year training program for technicians and technical teachers in cooperation with the Pedagogical Faculties of National Universities, the polytechnic institutes and SENA. Plans are under discussion for regional cooperation and improved administration and management of the universities.  -7- 3.11 Non-Formal Training. Colombia's most important non-formal training institution is SENA, the semi-autonomous National Apprenticeship Service, which provides specific technical training for workers at various levels. SENA's courses are in high demand and satisfy an important need. A main problem is the inadequate basic education of its applicants which leads to inefficiencies and too expensive programs. Quality improvements in the formal education system will make it possible for SENA to concentrate more on specific technical training and thereby help improve its efficiency. SENA, the National Planning Department and the Ministry of National Education are investigating how the coordination of formal and non-formal education and training can be improved. The second important institution is ACPO, a private, non-profit community development organization, which has been effectively train- ing leaders and providing functional literacy training through the use of radio and its own training institutes. The Government plans to use ACPOts experience in the development of education in rural areas. Education Development Strategy 3.12 The Government gives high priority to a further implementation of the secondary education reform program and has defined the broad outline of a comprehensive strategy for the development of education at all levels. The key to education development is the concept of diversified secondary education which would be expanded horizontally and have its influence vertically. Hori- zontal expansion throughout the secondary level will take place through the introduction of the diversified curriculum in existing secondary schools and the establishment of new schools in rural areas. The philosophy of diver- sified secondary education would have its influence vertically downwards through an integration of the present five-year primary cycle with the lower four-year cycle of diversified secondary education into nine years of basic education. An integrated nine-year cycle is conceived to be the minimum schooling to enter and compete suc'cessfully in the labor market and would become compulsory in the long run. The nine grades of basic education would be organized in an initial three-year stage followed by three two-year stages. Within each stage promotion would be automatic, a procedure which should greatly improve internal efficiency. Vertically upwards there would be an influence on higher education as the more practically oriented technological institutes are strengthened as an alternative to a further overexpansion of the academically oriented programs of the universities (para. 3.10). 3.13 The framework for overall education development is well conceived and a reform along these lines could help improve greatly the relevance of the education system for economic and social development. IHowever, the reform is still in too early a stage to be completely assessed. The Government re- cognizes that its objectives are essentially long term in character and that there is a need to work out a strategy for education development indicating timing, priorities and means for the implementation of these objectives in view of manpower and financial constraints. To this end, the education plan- ning capacity will be strengthened (para. 3.03) and the Government plans to conduct a sector survey to evaluate past developments and design policies and priorities for the future. The outcome of this sector survey and the resulting Government strategy for overall education development would form the basis for possible future Bank lending for sectors other than secondary education.  -8- IV. EDUCATION FINANCE Expenditures, Past and Present 4.01 In 1970 total expenditures on education amounted to 6,250 million pesos, representing 4.8% of GDP. This proportion is still modest but has im- proved greatly from the low 3.7% in 1965 (Annex 8). The Central Government viational Government and Decentralized Agencies) finances only 55% of total expenditures, Departments (States) and Municipalities 22% and the remaining 23% comes from private sources. Between 1965 and 1970 the proportion of the National Government's budget spent on education remained at about 15%, but this constituted a rapidly increasing share of CDP. In the last few years, the Government has given increasing attention to the education sector as reflected in the growing appropriations for education in the national budgets. 4.02 The trend towards decentralization can be observed in the increasing share in the financing of the education sector by the Decentralized Agencies, which include SENA, ICCE and the National Universities. Their own resources are from sales, fees, special taxes, voluntary contributions, credit and ex- ternal aid. SENA is financed from a 2% payroll tax on larger enterprises and from payments for specific training programs; SENA's expenditures amounted to 410 million pesos in 1970, or 7% of total expenditures on education in Colombia, and were all financed from its own resources. The other decen- tralized Agencies receive the main part of their funds (63%) from the Min- istry of National Education. The Departments and Municipalities have dif- ficulty financing their education establishments, because their tax base is too small. As a result, the Ministry of National Education has to transfer an increasing part of its budget to these authorities. The transfers to De- centralized Agencies, Departments and Municipalities constituted in 1970 about half the Ministry's budget. 4.03 The importance of private education is reflected in the high con- tribution of the private sector to education finance, representing an estimat- ed 1.1% of GDP in 1970. Nearly 60% is spent on private secondary education, mainly because the number of places provided in public secondary schools is insufficient. Though the Government provides assistance to private schools, their fees are high, whereas those collected in public institutions for second- ary and higher education are modest and depend on parents' income. 4.04 External assistance comes from a variety of sources and in large amounts. For the years 1969-1971 average annual commitments are estimated at US$35 million, or 10% of total education expenditures, of which about two- thirds came from bilateral sources. Bilateral aid includes USAID sector loans through which the Education Ministry finances presently about 10% of its budget. USAID played an important role in the implementation of the INEM program through the financing of technical assistance and advanced training for Colombian school administrators, guidance counselors and teachers. The present sector loans include funds for primary and lower-secondary education  -9- in rural areas, which complement the proposed Bank-financed project. The IDB made a number of loans to various Universities during the mid-sixties, but it is presently less active in the education sector. The UNDP Program for 1972-1976 includes US$6.0 million for technical assistance in educattion, and contains the technical assistance needed for the proposed project which is not included in the project cost (Annex 18). 4.05 The distribution of education expenditures by level has not changed much in the last five years. Primary and secondary education each received about 30% and an excessive proportion (20%) is spent on higher education. The remaining 20% is used for non-formal training, general administration and other overhead costs (Annex 9). The recurrent costs per pupil are rather low in primary (US$35) and secondary education (US$95), mainly because teachers are underpaid. Their median annual salaries are US$1,100 in primary and US$2,000 in secondary education, which is appreciably lower than in other occupations at a comparable level. The average annual salary of the qualified teachers in the INEM's is US$3,300 for full-time employment, which is consi- dered attractive by the teachers. In the traditional schools very small amounts are spent on learning materials. On the other hand, efficiency is low because the schools are generally small and too much is spent on school administration. For the INEM's, budgetary allocations for teaching materials and maintenance have been adequate. During negotiations assurances were obtained that the Government will continue to provide sufficient funds for diversified secondary education. In higher education the recurrent cost per student is estimated at US$600 p.a. There is a proliferation of institutions, most with only few students, and frequent student unrest leads to low utilization of facilities and teachers. The actual duration of studies is long and the dropout rate is high, resulting in a total cost per university graduate of more than US$6,000. 4.06 Education investments by the Ministry of National Education are presently about 25% of its total expenditures, as compared with an average of 20% in the years 1965-1970. The Ministry plans to increase even further the proportion of its budget for investments, which will lead to a sharp in- crease in recurrent expenditures. In the past, the greater proportion of Government's investments has been carried out in urban centers in the wake of heavy migration from rural areas, while little impact has been made on the rural school problem. However, the present investment plan provides for increased expenditures for schooling in rural areas. Future Education Expenditures 4.07 Though the Government has initiated a program for a major expansion and quality improvement of the education system, no estimates have yet been made of future recurrent expenditures. The Bank has made projections on the basis of recent trends in enrollments and has worked out various alternatives for the implementation of an education reform as envisaged by the Government. The conclusion is that in 1980 primary education could be offered to all 7-11 year olds, but drastic efficiency measures would be needed. A realistic ob- jective for secondary education would be a participation rate of 33% of the  - 10 - 12-18 age group. Diversified secondary education would then be offered to 15% of secondary students and the proportion of students in academic courses would decrease from the present 70% to 55% (Annexes 7 and 10; Chart 4). This would leave funds for recruiting better qualified teachers, upgrading in-service teachers and improving teacher salaries in general. On these assumptions, total education expenditures would amount to 5.7% of GDP in 1980, a proportion which compares well with education efforts by other Latin American countries (Annex 2). More than half of the resources would have to come from the budget of the Ministry of Education, requiring 20% of the total National Government budget. The draft General Education Law proposes to provide in 1976 at least 2C % of the national budget for education. Further a new law the "Situado Fiscal," and a proposed law, the "Tasa Educativa," would increase the resources for education of Departments and Municipalities by an amount equal to 5% of the National Government budget. Thus, the Government appears to have the financial capacity for a gradual implementation of its plans for education development, but much attention has to be given to problems of timing and priorities. 4.08 The additional recurrent cost resulting from the proposed project would be 1.5% of the total 1980 expenditures as projected by the Bank. The total recurrent costs per student in the common facilities centers and par- ticipating schools would be US$170 and in the rural comprehensive schools US$105, which compares well with the US$190 per student in the INEM's. These per student costs are higher than in academic secondary schools (US$95), but the costs per graduate will be lower because of significantly smaller repeti- tion and dropout in the diversified secondary schools (para. 3.08). 4.09 The National Planning Department has allocated in the 1973-1976 Investment Plan an amount of US$13.9 million equivalent to meet the counter- part funds for the proposed project. The size of the proposed project has been determined by reviewing the need for diversified secondary education in the light of the financial resources available and the other priorities for improvement and expansion of education and training. The total project cost of US$33.5 million would constitute 11% of the total education investments planned by the Government for the period 1973-1976. This is reasonable in view of the Government's plans for other levels of education such as quality improvement and expansion of primary education in rural areas and development of higher education. V. THE PROJECT General 5.01 The proposed project would reinforce diversified secondary education by extending this approach to existing secondary schools and rural areas and by preparing technical teachers for the project schools. Further, the project would help improve the provision of services for rural development and provide assistance for an education sector survey and specific sector studies. Al- though the emphasis of the proposed project is on improvement of quality and education opportunity, the new facilities would provide additional enrollment capacity as follows.  - 11 - Additional Boarding Grades Number Enrollments Places Common Facilities Centers /1 6-11 24 39,400 - Rural Comprehensive Schools 6-9 13 7,000 1,700 Technical Teacher Training Program 12 plus 4 900 Rural Development Services' Center 1-5 1 500 300 Total 42 47,800 2,000 /1 The centers would provide facilities for a total number of 108,900 students, which includes 69,500 students already enrolled in existing secondary schools (Annex 12). Common Facilities Centers 5.02 The proposed 24 common facilities centers would provide the neces- sary workshops and laboratories to enable a total of 91 existing secondary schools to adopt the diversified curriculum introduced with the 19 INEM's under the first and second education projects. The centers would form a new approach in implementing the Government's policy of spreading diversi- fied education throughout the secondary level. Existing secondary schools lack the laboratories and workshops required for the implementation of the diversified curriculum. They are in general of small size making the pro- vision of such facilities to each school uneconomic. The centers would pro- vide workshops for practical subjects, laboratories and counseling services for a total number of 108,900 students, and will free classroom space by pro- viding 19,700 student places which would be used on a double-shift system. Consequently, the proportion of secondary students in diversified education would increase from 4% to 15% in 1980 (Chart 4). The number of students to be served by each center varies from 2,100 to 5,700, coming from two to six neighboring schools (Annex 12). These large enrollments would permit signi- ficant economies in initial investment per student and in operation due to an intensive utilization of teaching facilities. Further, a more diversified program can be offered and specialized staff can be used efficiently. An essential element of the new approach in diversified secondary education is the relevance to the social and economic needs of the country and of the re- gion in which the schools are located. Like the existing INEM's the centers will therefore have a strong community orientation. They will be used after school hours for other educational activities such as remedial teaching and non-formal adult courses. 5.03 All project centers will be suitably located in large and medium- size cities with sufficient numbers of secondary students for the full util- ization of a center of economic size. The cities have been selected, further,  - 12 - on the basis of their growth potential and their expected future role in the economic development of the country (Appendix B). The options to be offered and the enrollment in each of them has been determined in view of the antic- ipated manpower requirements in the respective regions (Annex 13). The selec- tion of participating schools within each city was based upon willingness to participate and geographical location within a radius of 20 minutes travelling time from the center. The project would provide buses where inadequate tran- sportation facilities exist. 5