Colombia - Subsector Project For Rural Basic Education

Document of The World Bank F 1 E FOR OFFICIAL USE ONLY Report No. 3896 b -CO COLOMBIA STAFF APPRAISAL REPORT SUBSECTOR PROJECT FOR RURAL BASIC EDUCATION July 6, 1982 Projects Department Latin America and the Caribbean Regional Office 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 Equivalent (as used in this report) Currency Unit = Peso (Col$) US$1.00 = Col$ 61 Col$ 1.00 = US$.01639 Col$ 1,000 = US$16.39 Glossary of Abbreviations CEP = Pilot Experimental Center DRI = Integrated Rural Development Program ECIEL = Joint Program for Studies of Economic Integration in Latin America FER = Regional Education Fund FONDO/MEN = Fund of the Ministry of Education ICCE = Colombian Institute for School Construction ICETEX = Colombian Institute for Educational Credit and Graduate Study Abroad IDB = Inter-American Development Bank IEA = International Association for the Evaluation of Educational Achievement MEN = Ministry of Education Glossary of Key Terms Escuela Nueva = An educational service, based on a multigrade teach- ing technique, designed to provide a full five-year primary course in small rural schools with up to three classrooms and teachers. Experimentacion Curricular = An educational service, based on providing full five years of instruction in separate grades, designed to improve quality and content of primary education in schools of at least five classrooms and teachers. Nuclearizacion = A program for management reform of the educational system, based on decentralization of schaol admin- istration to local levels. Escuelas Normales Demonstrativas = A program for improvement of the primary school teacher training system. Subsector Program = The Government's Subsector Program for Rural Basic Education, whereunder the above four services would be extended in three phases over a ten year period (1981-1992) to all of rural Colombia. a Subsector Project = Execution of the Subsector Program in approximately 150 school districts of selected areas of three departments during the three year first phase of the Subsector Program (1982-1984). Fiscal Year January 1 - December 31  FOR OFFICIAL USE ONLY COLOMBIA SUBSECTOR PROJECT FOR RURAL BASIC EDUCATION TABLE OF CONTENTS Page No. Basic Data I. Introduction A. Previous Bank Education Assistance ..... ........... 1 B. Proposed Project .......................... . 2 II. MAJOR ISSUES IN RURAL BASIC EDUCATION Overview . . . .3............ 3 A. Completion Rates and Primary School Efficiency .... 5 Initial Access . . .................... . 5 Incomplete Schools . .................... 5 Repetition .............l .... 5 Dropout ....... 6 B. Learning Deficiencies ................... 6 Curriculum ... 6 Teachers ................................ 6 Educational Materials ............... 6 Academic Supervision ............... 6 Physical Facilities ............................. 7 C. Educational Management .................... 7 Structural Separation . . .......................... 7 Lack of Local Education Administration ... 7 Organizational Weakness at Departmental Levels... 7 Ministry Encumbered by Routine Administrative Tasks ..... 8 Resource Allocation .............................. 8 III. SUBSECTOR PROGRAM FOR RURAL BASIC EDUCATION A. Strategy for Improving Rural Basic Education ...... 9 B. Delivery System for Rural Basic Education .... ..... 10 Overview ................................... 10 Escuela Nueva ............ ....................... 11 Educational Goals ................ 11 Social Objectives .... ............ 13 This report is based on the findings of a two-stage appraisal mission that visited Colombia in September/October 1981 and March 1982. Mission members included Messrs./Mmes. Ralph W. Harbison (Economist, Mission Leader), Mario Alonso (Financial Analyst), Susana Augusto (Disbursement Officer), Leonardo Concepcion (Architect), Nelson Fisher (Educator, Consultant), Mark Hanson (Educational Management Specialist, Consultant) and Sherry Keith (Educator). 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.  - it - TABLE OF CONTENTS (Continued) Page No. Experimentacion Curricular ...................... 13 Student Learning Materials ................... 14 School Supervision ................... . 14 Teacher Training ............................. 14 Escuelas Normales Demostrativas . . 15 Nuclearizacion ...................... ..15 Decentralization ............... 16 Other Aspects of Nuclearizacion . .17 Resource Allocation Policies . . 18 C. Quantification of the Subsector Program for Rural Basic Education .. ...................... 19 IV. MANAGEMENT AND IMPLEMENTATION A. Sector Approach . ................................. 21 Subproject Organization . ................ 21 Local Subprojects . . .................. 21 National Subprojects . . ....................... 21 Role of Intermediaries ............... . ..... . 22 Multiple Sources of Finance ... 22 B. Phased Implementation Schedule ...22 Implementation Phases ... 23 Implementation Schedule ...23 C. Organization and Staffing . . .24 Organization ............................ 24 Organizational Overview ...24 National Level Organization ... 24 Departmental Level Organization . .25 Local Level Organization ... 26 Staffing ....................................... 27 D. Procedures ............................... ..... . 27 Identification . . ............ 27 Preparation . . ............. 28 Appraisal ........................... 28 Approval ............................... 28 Supervision ...28 Monitoring . . .............. 29 Impact Evaluation . . ........... 29 Bank Involvement in the Subproject Cycle . .29 E. Criteria .................................. 30 Selection of Departments ... 30 Allocation of Funds Among Departments . .31 Selection of School Districts ... 32 Appraisal and Approval of Subprojects . . 32 F. Choice of Borrower .............. . ... 33  - iii - TABLE OF CONTENTS (Continued) Page No. V. SUBSECTOR PROGRAM COSTS AND FINANCING A. Total Costs ....................................... 34 B. Investment Costs ................. 35 Subsector Program Base Costs ................. 35 Phase I Subsector Project Base Costs .35 Contingencies .............................. 37 Foreign Exchange Component .37 C. Incremental Recurrent Expenditures ................ 38 Overall Subsector Program .38 Phase I Subsector Project .38 Price Contingencies ............................. 39 D. Financing and Bank Contribution .39 Overall Financing Plan .39 Bank Financing .40 Retroactive Financing and Readiness for Implementatlon ........................ 40 Working Fund .41 Special Account .41 E. Disbursements .42 F. Procurement ........................ 43 Civil Works ............................. 43 Goods .44 Contract Review ................................. 44 G. Accounts, Documentation and Auditing .44 VI. BENEFITS AND RISKS A. Benefits ..................-.-.-.-.-.-. 45 Coverage . 45 Equity .45 Quality .46 Efficiency ......... 46 Institutional Development ........................ 46 Impact ................................... 47 B. Risks ......... 47 Management Risks .... ........................... 47 Politico-Legal Uncertainty ...................... 47 Financial Uncertainty ........................... 47 VII. AGREEMENTS REACHED AND RECOMMENDATIONS .. ............... 48  - iv- TABLE OF CONTENTS (Continued) ANNEXES Comparative Education Indicators 1. Educational Administration at Departmental Level 2. Incremental Physical Targets by Implementation Phase 3. Incremental Physical Targets for Phase I by Year 4. Subsector Program Organization and Management Responsibilities 5. Estimated Investment Base Cost of the Subsector Program 6. Summary of Capital Costs 7. Documents Available in Project File MAP - IBRD 16419  BASIC DATA a/ EDUCATION Enrollments Teachers Schools ('000) ('000) ('000) Primary Rural as defined in census 1,453.0 48.5 24.1 Small towns and villages b/ 463.0 16.9 2.7 Subtotal: Rural Primary c/ 1,916.0 65.4 26.8 As % national total 46% 48% 76% Secondary Total Rural as defined in census 64.3 4.4 0.36 As % national total 3.5% 4.8% 6.5% Public Rural as defined in census 44.1 2.8 0.24 Small towns and villages 221.6 Subtotal: Rural Secondary 265.7 As % national total 26.6% Literacy rate (1970) 80.8% PrImary education participation rate 76.0% Primary education completion rate 36.0% a/ Data for 1980 except as otherwise noted. hi/ 1,500-7,000 inhabitants. c/ As defined for purposes of Subsector Program, to include both rural under census definition and small towns.   I. INTRODUCTION 1.01 Despite the remarkable progress in the last thirty years, Colom- bia's formal education system has yet to overcome important weaknesses. The most acute of these deficiencies is the severe educational deprivation of rural areas and villages. The loan here proposed--US$15 million to cover 34% of estimated total project costs of US$43 million--would help the Colombian Government finance initial implementation (1982-1984) in three departments of a comprehensive ten-year Subsector Program to provide high quality, cost- effective primary schooling to all children in rural Colombia by 1992. With separate financial assistance from IBRD and IDB for the second phase of the Integrated Rural Development Program (DRI-II), the Rural Basic Education Sub- sector Program would be concurrently implemented as the DRI-I1 education com- ponent in three additional departments. Contingent upon encouraging results in this first phase and availability of resources, it is expected that larger assistance would be sought from the Bank for continuing execution of the Sub- sector Program during 1985-1991. 1.02 Total costs of the Subsector Program over the ten-year period (capital and incremental recurrent, including price and physical contingen- cies) are currently projected at US$630 million (March 1982 prices). As rough orders of magnitude, this ten-year aggregate is equivalent to a maximum of: (a) 10% of projected national government expenditures on primary educa- tion; and (b) 3.4% of projected total national government expenditures on education during the period 1982-91. l/ A. Previous Bank Education Assistance 1.03 The Bank has previously supported three education projects in Colombia, for a total loan amount of US$35.3 million. 2/ The overall 1/ The projections assume 5% annual average real growth of GDP and of the national government's educational expenditures--i.e., no change in public education's share of GDP. 2/ The first and second projects (Loans 552-CO, 1968 and 678-CO, 1970) were completed in 1974 and 1975, respectively. Through the establishment of 19 large comprehensive high schools (INEMs), they assisted the Govern- ment in the introduction of diversified secondary education in major urban areas. Project Performance Audit Reports were issued in January and October 1976, respectively, for the two INEM projects (Report Nos. 992 and 1314). Impact Evaluation Report - Colombia: The First and Second Education Projects (Report No. 3062, June 30, 1980) contains fur- ther retrospective analysis of the INEM program. The third project (Loan 920-CO, 1973) closed March 31, 1982. It provided for 24 common facilities centers (CASDs) which offered the diversified component of secondary education to satellite secondary schools in smaller urban areas. The third project also included provision under a pilot scheme of agriculturally-oriented basic secondary education in rural zones.  objective of all three projects was the diversification of secondary educa- tion. None has involved significant assistance for rural primary education. A rigorous impact evaluation of the diversification strategy assisted by the Bank in Colombia is now being conducted jointly by the Ministry of Education and the Instituto SER de Investigacion, with funding provided in part under Research Proposal No. 672-45/DiSCuS. 1.04 Without prejudice to those results, implementatiorn experience rele- vant to the operation here proposed, especially under the third project, has revealed the importance of (a) providing adequate working capital to agencies implementing education projects, given the cumbersome Colombian budgetary process, and (b) of avoiding controversial educational concepts and inputs whose effectiveness has not been demonstrated and accepted in prior field trials. 1.05 The Bank also attempted to assist educational development in rural Colombia through a component (US$1.1 million) in its support for the first phase of Colombia's Integrated Rural Development Program (DRI) (Loan 1352-CO, 1977). The component was limited to the supply of school furniture for 2,300 classrooms and teaching kits for 3,800 existing schools in project areas. This experience indicated that provision of individual educational inputs to selected schools in a given project area is neither cost-effective nor con- ducive to improvement in educational cutcomes. By contrast, when this ori- ginal project concept was reformulated to include provision of integrated packages of proven software and hardware items to all schools in a given geo- graphical area, the desired educational changes appeared to be accomplished within the schools; and the impact on other dimensions of a community's development effort was also positive. B. Proposed Project 1.06 In the 1970s, as progress accelerated in meeting the goais of expanding educational coverage in rural areas, Colombian educational authori- ties came to the conclusion that deficiencies of rural primary schools deserved priority attention. Several new approaches to the problems of the subsector were launched on a trial basis by 1975. Experimentation intensi- fied with the most promising of these approaches later in the decade and resulted by 1980 in specially developed educational software of proven effec- tiveness in rural primary schools. Meanwhile, in 1978, the 1.inistry of Edu- cation had published a report on the rural education subsector, 3/ which included analysis of the economic waste associated with the inefficiencies of student flows in rural primary schools. Colombia's current development plan (Plan de Integracion Nacional, 1979-1982, PIN) thus accorded top educational priority to improving schooling in rural areas. Following appearance of the Plan in early 1980, the Government requested Bank assistance in the prepara- tion and financing of a comprehensive program to provide full, high quality primary education to all children in rural areas. Preparation began with a joint examination of the development context in Colombia, especially the past and projected future economic and demographic importance of rural areas, and 3/ Educacion para el Desarrollo Rural de Colombia (Ministerlo de Educacion Nacional, Oficina Sectorial de Planeacion Educativa, Bogota, 1978).  - 3 - an extensive study of education in rural Colombia. Findings are contained in the Bank's report on Basic Education in Rural Colombia: A Subsector Analysis (Report No. 3633-CO, April 5, 1982). 1.07 Based on those findings and subsequent detailed preparation over the last year, the Government now requests financing for the first three year time slice (Subsector Project) of a long-term Subsector Program for Rural Basic Education focused on increasing the quality and efficiency of primary schooling in rural Colombia. Bank support for the Subsector Project is recommended because: (a) the deficiencies of the subsector, as analyzed in Chapter II, are acute; (b) the Government's Program, described in Chapter III, is an effective solution to the subsector's interlocking problems; (c) the management arrangements, outlined in Chapter IV, offer reasonable assur- ance of the feasibility of implementing the Program; (d) the estimated costs, detailed in Chapter V, demonstrate that the Program is efficient and within the financial capacity of the country; and (e) the potential benefits greatly exceed the foreseeable risks, as explained in Chapter VI. II. MAJOR ISSUES IN RURAL BASIC EDUCATION Overview 2.01 In the thirty years since 1950, access to primary education in Colombia has been extended to the majority of the population, rural and urban. The expansion of school capacity in the 1970s increased enrollments in public primary schools from 2.84 million students in 1970 to 3.54 million in 1980. 4/ Public primary school enrollments have remained stable at roughly this level for the past four years (1977-1980) and the net primary enrollment ratio hovered around 80%. In the same decade, the teaching force in public primary schools increased from 68,000 to 112,000 teachers. The student teacher ratio in public primary schools thus declined from 42 in 1970 to 31 in 1980. 2.02 As stated in the Colombian analysis (para 1.06), these substantial accomplishments mask three fundamental weaknesses of primary education in Colombia, each of which is especially debilitating in rural areas. (a) Too few children in the age cohort finish the five-year primary school cycle. In rural areas fewer than one out of every five school-age children complete primary school, whereas in urban areas more than half in the age cohort finish the five-year cycle. The result is that in rural Colombia in 1980, society had to provide 21 student-years of services to produce a single graduate of the five-year cycle. Translated into financial terms, a single rural primary graduate costs society nearly US$1,700 in educational 4/ Over the same period, enrollments in private primary schools rose from 441,000 to 625,000 bringing total primary enrollments in 1980 to 4.17 million. Sixteen percent of Colombia's total population of 26 million is enrolled in primary schools; enrollments in the rural primary subsec- tor (including small towns) encompass about 7% of Colombia's total popu- lation.  -4 resources rather than the roughly US$400, equivalent to five times the average per student cost in 1980, which would have been required in a system with no inefficiencies of student flows. Eco- nomic waste of this magnitude demands priority remedial attention in a country where 25% of public resources is spent on education, 5% of total public expenditure is for rural primary schooling, and 7% of the nation's population is attending rutal primary schools. (b) Most children learn little while attending school. Among the seven Latin American countries where IEA achievement tests 5/ were administered to children in their final year of primary school, the mean scores for Colombian students were the lowest in both language and science components and were one standard deviation below results obtained in thirteen developed countries of the northern hemisphere. The sketchy data available further suggest that read- ing achievement of Colombian rural fifth graders may be only half that of their urban peers. (c) The needed improvements in Colombia's rural primary schools are impeded by a dysfunctional system of educational management. In most areas there are no effective educational authorities below the departmental level 6/, so that individual schools are left to function in isolated fashion without an intermediate structure of support and control. The several educational agencies at depart- mental level are poorly coordinated, highly politicized and lack appropriately qualified personnel. At the national level, educa- tion sector resource allocation policies result (a) in maldistri- bution of an overall surplus of teachers which leaves rural areas poorly served and (b) in failure to provide teachers the basic edu- cational tools which would make them pedagogically productive. The Ministry of Education, itself overburdened with routine administra- tive duties, is unable to concentrate on the performance monitoring and systems evaluation essential to educational planning and policy guidance. 51 During the 1960s IEA, the International Association for the Evaluation of Educational Achievement, developed and administered standardized achievement tests in core academic areas in 20 countries, of which four- teen were developed northern hemisphere nations and only one, Chile, was in Latin America. In the mid 1970s, ECIEL (Programa Conjunto de Estu- dios de Integracion Economica en America Latina) used the IEA instru- ments as a basis for examining learning outcomes in Mexico, Peru, Boli- via, Paraguay, Argentina, Brazil and Colombia. Because the ECIEL sample in Colombia was predominantly urban and because the tests incorporated only the easiest half of the items from the original IEA tests, this rough meassure of academic achievement underestimates the low level of learning in Colombian rural primary schools. 6/ Colombia is divided for administrative purposes into 970 municipios (counties), grouped into 22 departamentos (in some ways analogous to states) and 10 national territories. The Distrito Especial de Bogota, encompassing the metropolitan area of the capital, is treated for prac- tical purposes like a department.  -5- Each of these deficiencies is briefly sketched below. More detail is availa- ble in the Project File. A. Completion Rates and Primary School Efficiency 2.03 Too few rural children complete five years of primary school. Some still lack any access at all to schooling; others have access only to rural schools which do not offer all five grades of the primary cycle. Many repeat grades several times (especially first and second grades), drop out before finishing grade five, or repeat first and then drop out. Initial Access 2.04 Too few rural children acquire full primary education in part because some never enter school at all. According to the 1973 Census data, 56% of rural children aged 7-9 years old and 26% of the rural cohort aged 10-14 years had never attended school. It is estimated that about 10% of rural children today still have no initial access to primary schools, either because in the most isolated rural areas and frontier regions schools have yet to be built, or because teachers willing to serve in extant schools in such areas cannot be found, or because parents do not send the child to school. Incomplete Schools 2.05 Over 43% of the primary schools in rural areas and villages of Colombia do not give the full five years of primary education, and nearly one-fifth give two years or fewer. A sizeable proportion of rural primary school children are therefore effectively locked out of higher elementary schooling, because not all grades are given in the only school to which a rural child has access. Repetition 2.06 Repeaters accounted in 1980 for 22% of first grade enrollments and 15% of second grade students in rural Colombia. Repetition is the result of the compound influence of high absence rates in rural areas, curricular rigidity, inadequate evaluation standards and procedures, and the prevalence of incomplete schools. In the Colombian countryside, absenteeism is higher than in urban areas. Visits to rural schools suggest that on average each child may fail to attend school one day in each four or five, with the more frequent absences concentrated among the younger children. Poor health and nutrition, long distances from home to school, and the students' vital econo- mic roles also interfere with regular school attendance. The design of the curriculum compounds their disadvantage, because it does not permit students to pick up their studies where they left off prior to an absence. Students must move at the pace of the entire class, or not move at all. Teachers tend to view attendance as a readily available proxy for knowledge, and base a significant portion of a final grade on it rather than on reliably assessed academic performance.  -6- Dropout 2.07 Dropout is also closely linked with absenteeism. Students who get behind with their school work are not motivated to stay in school because their prospects of passing the current academic year are poor. Dropout is often a consequence of migration, since families may move during the school year and may not re-enroll their children upon relocation in another area. B. Learning Deficiencies 2.08 The second critical problem besetting rural primary schooling in Colombia is low levels of academic achievement of children who are in school. The low quality of educational inputs (curriculum, teachers, educa- tional materials, supervision services, and physical infrastructure) magni- fies the negative impact of low completion rates in producing poor academic outcomes. Curriculum 2.09 The current curriculum is unsuited to the conditions of most rural primary schools in Colombia. As presently designed, the curriculum presumes the availability of one teacher for each grade of primary school. Since more than two-thirds of rural primary schools are multigraded and have only one, two or at most three teachers, it is difficult to implement the existing cur- riculum in most rural areas. Teachers 2.10 Colombia has an estimated excess of 25,000 trained teachers in its urban areas. But field observations and discussions with departmental educa- tional authorities reveal that some hundreds of rural primary schools are closed for lack of teachers. In rural schools with teachers, half of the teachers lack minimally acceptable academic and pedagogic qualifications, while only a quarter of urban primary teachers are inadequately trained. Furthermore, rural teachers are much more prone than their urban peers to abandon their classroom, or even the profession, perhaps in the middle of the school year. Educational Materials 2.11 Two-thirds of rural Colombian school children do not have access to any textbook at all; only 6% have access to more than one book. Financial hardship prevents most rural primary students from obtaining the learning materials which support the primary school curriculum. In the absence of textbooks, the standard teaching method reverts to dictation, copying, and rote memorization. Academic Supervision 2.12 With each current supervisor responsible on average for 70 primary schools, many rural schools are never visited by a supervisor. Those which are receive at most an inspection visit, rather than technical assistance with the school's academic program. The lack of academic supervision is partly due to the absence of a local school administrative structure.  -7- Physical Facilities 2.13 Rural primary schools often lack the basic physical facilities to make them educationally functional. Roughly 80% of rural primary schools lack minimum basic furniture (student and teacher desks and chairs). Most also lack essential equipment, paper and writing materials, and sanitary facilities, including running water and toilets. Approximately 31% of class- rooms are in need of repair. Perhaps 6% are so dilapidated that they need to be replaced completely in order to become functional. The shortfall of phys- ical facilities stems from the administrative, financial and educational neglect of rural schools. C. Educational Management 2.14 Educational management in Colombia is complicated, frequently inef- fective, and inefficient. Inadequate management places sharp limits on Colombian capacity to diagnose problems, to generate alternative solutions, to plan projects based on a selection among options, and most importantly to execute approved projects and programs. The five central managerial issues are noted in sequence below. Structural Separation 2.15 The Colombian educational system is made up of 23 semi-autonomous departmental educational systems (including the Bogota Special District) and the national Ministry of Education. The President appoints the Minister of Education, and also the Governors of the Departments. The Governor appoints the departmental Secretary of Education, who is responsible only to him. A structural separation between the national and departmental systems of educa- tional administration is thus assured, a situation complicated by the hetero- geneity of the departments in terms of ability to finance education, institu- tional maturity, and size and distribution of population. Lack of Local Education Administration 2.16 With few exceptions, there is no effective system of educational administration below the departmental level. The absence of a local admin- istrative framework means that assistance for and control over schools and teachers outside the departmental capital city, and especially in remote areas, are minimal. Centralization at departmental levels has also resulted in a lack of mechanisms for the identification of local problems, for the planning of local solutions, and for the controlled implementation of proj- ects specifically designed to meet particular local needs. Organizational Weakness at Departmental Levels 2.17 With three or four exceptions, the departmental Secretariats have proven unequal to the task of managing a rapidly expanding school system, and especially so at the primary level in rural areas. As a consequence of the institutional debility of the Secretariats, a complex array of functionally specialized organizations involved in educational administration has emerged in the departments, although outside the exclusive control of departmental authorities. Coordination among these agencies is intermittent at best.  - 8 - Some functions are wastefully duplicated. Two others of particular import- ance--educational performance monitoring and planning, and pedagogical super- vision of teachers--are addressed only sporadically if at all. Ministry Encumbered by Routine Administrative Tasks 2.18 Despite legislation in 1976 decentralizing all school administra- tion to the department level, the confusion and institutional fragility of the educational agencies in the departments has thus far prevented the neces- sary freeing of the Ministry of Education from routine administrative tasks. The effort required to oversee the routine day-to-day operations of the nearly 500 secondary schools which report directly to the Ministry has pre- vented the Ministry from effectively performing its proper functions of policy guidance, promulgation of legal norms, overall system monitoring and evaluation, macro-level educational planning, and resource allocation. The Ministry's ineffectiveness is in large measure due to the inadequacy of information at its disposal upon which to base decisions on policy and pro- grams. Particularly notable is the lack of: (a) a modern management informa- tion system (including the integration of routine educational statistics on numbers of students, teachers, and establishments with data on student learn- ing, physical plant, educational materials, costs, and budgeting) and (b) the capacity to conduct educational research or even to tap the rich research on educational innovations which characterizes the Colombian private sector. Resource Allocation 2.19 The education sector in Colombia is characterized by an imbalance between investment and recurrent expenditures. Approximately 25% of Colombian public expenditures, equivalent to roughly 3% GDP, was spent on education in 1980, and the public primary system received about 35% of the educational expenditures readily identifiable by level. But less than 8% of total public spending for education was for capital goods; at the primary level, the proportion was approximately 2%. These figures are the reflection of substantial deterioration in the balance during the 1970s when the decline in investment resources for education accelerated from an average annual real rate of 1.65% in 1970-75 to about 3% in 1975-1980. Education's share in the public investment budget eroded from 10% in 1970 to 5% in 1980. By contrast, recurrent educational expenditure by the nation rose comfortably over the same decade at an annual real rate of 7.9%. In Colombia most of the cost of curriculum development, teacher training, textbooks and other educational materials, pedagogical supervision, school furniture and equipment, mainte- nance of the physical plant, and minimum sanitary services, as well as school construction, are counted as capital costs and so must be financed from the investment budget. Colombia employs enough primary teachers, but fails to provide this labor force, especially in rural ares, with the educational capital necessary to assure minimum productivity. III. SUBSECTOR PROGRAM FOR RURAL BASIC EDUCATION 3.01 Based on experience gained in the 1970s (para. 1.06), the Govern- ment has developed a Subsector Program to overcome the three main problems in rural basic education. The Subsector Program consists of a comprehensive strategy and a system for delivering educational services in rural areas  - 9 - through which to implement the strategy. The strategy, conceptual in nature, comprises hierarchically arrayed objectives, the means to their attainment, and the actions required to put each mean into effect. As such, the strategy is useful as a yardstick by which to assess the adequacy of educational services. The delivery system, operational in nature, takes the form of four integrated educational services which would be introduced in selected geogra- phical areas of rural Colombia. Together, the strategy and delivery system constitute an effective, feasible, and efficient Subsector Program for devel- opment of rural basic education in Colombia. These two aspects of the Government's Subsector Program are analyzed in sequence below. A. Strategy for Improving Rural Basic Education 3.02 Reduction of educational deprivation in rural areas will require dramatic increases in primary school completion rates, in student learning, and in management effectiveness. These are the three main objectives of the Subsector Program strategy. Attainment of the first, improvement in internal efficiency, depends in part upon concomitant increases in student achieve- ment. Attainment of these first two objectives depends in turn upon improv- ing educational management at all levels. 3.03 Recognizing the interdependent nature of these three objectives, the Government developed during the period 1979-1981 a coherent strategy to address them, as summarized below and presented in greater detail in the Project File. The strategy seeks to: (a) increase primary school completion rates, by: (i) providing the full five years of primary education in all rural primary schools by 1991, including especially the nearly 15,000 small one- or two-classroom schools in isolated areas; (ii) reducing repetition in primary schools; (iii) reducing dropout in rural primary schools; and (iv) increasing academic performance of rural school children, as described below; (b) increase learning efficiency in rural schools, by: (i) introducing educational programs better suited to rural needs; (ii) assuring more and better qualified teachers for rural schools; (iii) providing educational materials free of charge to all rural schools; (iv) establishing an effective system for supplying pedagogical support to teachers in rural schools; and (v) instituting a series of management reforms, as described below:  - 10 - (c) decentralize educational administration, by: (i) at the community level, organizing the schools into districts for which a single director can provide effective administra- tive oversight, elementary pedagogical support for teachers, community-based planning, and simple project implementation and evaluation capacity; (ii) at departmental level, coordinating the ongoing activities of the several agencies involved in educational administration and establishing mechanisms to perform needed but missing administrative functions; (iii) at the national level, redefining the responsibilities of certain key units of the Ministry; and (iv) at all levels, strengthening capacity for education monitor- ing, evaluation research, and planning; and (d) allocate an increased proportion of resources for rural basic edu- cation to investment expenditures, by: (i) restraining the growth of recurrent costs; and (ii) increasing overall real resource allocation to primary school- ing. B. Delivery System for Rural Basic Education Overview 3.04 The Government has developed a delivery system to carry out its strategy for rural primary education, consisting of four educational services: (a) Escuela Nueva would use multigrade teaching techniques to extend the education offered in schools of three classrooms or fewer to the full five-year primary cycle, while simultaneously introducing into those schools the new national primary school curriculum; (b) Experimentacion Curricular would provide the new curriculum and supporting inputs needed to improve academic performance and reten- tion in the complete graded schools with a minimum of five teachers and classrooms; (c) Escuelas Normales Demostrativas would initiate the reform of pre- service teacher education needed to make it directly supportive of the new curricular and methodological initiatives of Escuela Nueva and Experimentacion Curricular; and (d) Nuclearizacion would address the need for management improvement through decentralizing educational administration and strenthening capacity at all levels for planning, executing, and evaluating edu- cational projects.  - 11 - 3.05 With the exception of Escuelas Normales Demostrativas just now being started, each of these services has undergone extensive experimenta- tion, field testing, evaluation, and modification as required over the past five years. Each consists of a careful blend of the minimum education soft- ware and improvements in infrastructure required for an effective response to the problems of primary education in rural Colombia. Each is ready for nationwide expansion. 3.06 None of these educational services alone responds to all essential elements of the Government's development strategy for rural basic education as sketched above and described in more detail in the Project File. And a number of important components of the strategy, by contrast, are provided by more than one of the programs. Together, however, the four effectively address all the critical elements of the strategy, with the partial exception of assuring a long-range increase in real resource allocation to primary schooling. In operational terms, the Subsector Program consists of the coor- dinated delivery of these four educational services in Colombia's rural areas, initially in selected counties of three departments (Subsector Proj- ect). Escuela Nueva 3.07 Escuela Nueva comprises a package of inputs (software and infra- structure) designed specifically to provide a full five-year primary course of pertinent subject matter for the small rural school with one to two class- rooms and teachers. This program, the result of almost a decade of experi- mentation with multigrade teaching, was legally established by the government in 1976 and is currently operating in about 1,000 rural schools, roughly 7% of the schools for which it was designed. It takes as its premise the facts of the rural environment, and it seeks to achieve both social and educational goals whereby to enrich the quality of life in rural Colombia. Among its educational goals are: (a) the provision of the full five-year primary course; (b) the improvement of the relevance and quality of education; (c) improved student learning achievement; and (d) improved efficiency and external productivity. Its social objectives relate to the integration and involvement of child, school and community both in the educative process and in community living. Educational Goals 3.08 Providing the Full Five-Year Primary Cycle. Essentially the means to achieve this objective reside in the technique of multigrade teaching. To enable teachers to meet the challenge implied by this procedure, Escuela Nueva has developed a special classroom design, based on "resource corners" and simple classroom furniture calculated to allow groups of students to work on particular assignments appropriate to their grade and stage of progress. Class organization is flexible. Semi-programmed learning material enables students to work individually or in groups with only occasional direct help from the teacher. A small library provides additional resource material for a project approach to learning. With the assistance of popularly elected student "leaders" in the organization and control of learning groups, the teacher is thus able effectively to handle up to five grades simultaneously. 3.09 Educational Relevance and Quality. The Escuela Nueva curriculum is rural oriented and flexible. It deals with real life situations in inte-  - 12 - grated learning units, and is readily adaptable to the circumstances of a particular community. In content it favors simple and sequential themes. In approach it promotes practical problem-solving experiences rather than rote learning. What is taught is of sound quality, and is thoroughly mastered by the child before he proceeds to the next assignment. 3.10 Improved Student Achievement. Student textbooks and other learn- ing/teaching materials have been prepared for Escuela Nueva with strict regard for the psycho-physical maturation stage of the respective student. The concepts are within the child's grasp. The vocabulary and language structure are readily comprehended and the material is at once stimulating, challenging and frequently amusing. The material incorporates activity learning through projects, music, dance and drama. Yet it is appropriately rigorous in its learning demands. Students enjoy the relatively free atmos- phere in which learning occurs and the variety of classroom experiences. They take readily to assignments which they have set themselves. 3.11 Educational Efficiency and Productivity. Escuela Nueva is predi- cated upon evidence that the built-in inflexibility of linear learning proce- dures has been a major contr'butor to repetition and dropout rates. The pro- gram recognizes the differing aptitudes of students, and the corollary that children are subject to either falling behind their peers or becoming bored by slow class progress. It takes as given the inevitability of student absences during periods of agricultural activities, and seeks to enable children to resume their studies after such absence without repeating the course, or, frequently, being constrained to abandon their schooling. Escue- la Nueva has therefore developed individualized learning programs composed of different series of levels, among which the student can freely choose the one most appropriate to his interest and abilities. It insists, however, by an in-built continuous assessment and evaluation procedure, that real learning take place at each stage of the student's education. A principal impediment to student achievement, and, by extension, to student retention, is thus removed. 3.12 Escuela Nueva also provides in most cases an expanded school meal program, based on community participation and on the production from a school garden (whose purpose is didactic as well as nutritional). Problems of undernourishment and related health deficiencies, which impact negatively on retention, are thus addressed within the Escuela Nueva. 3.13 Finally, Escuela Nueva attacks directly two other contributors to inefficiency and low productivity in rural schools: (a) the lack or poor quality of teachers; and (b) inadequate school supervision. As regards the quality of teachers, Escuela Nueva places special emphasis both on their ini- tial training and their continuous in-service upgrading. Teacher training courses are eminently practical exercises in the philosophy and content of the program, school organization, the production and use of simple teaching aids, and student evaluation. Escuela Nueva is not introduced in a school until after the teacher has received the initial segment of this specialized training; the remainder is supplied in two further workshops over about a year, carefully sequenced to coincide with the teacher's needs for assistance with the new materials and evaluation systems. Teacher shortages are mini- mized by tying increased salary incentives for rural teachers to their completion of the in-service training program and successful introduction of Escuela Nueva methods in their schools. The training of supervisors in pro-  - 13 - gram content, and in the pedagogical aspects of supervision is also an inte- gral part of the Escuela Nueva program, as is regular and frequent school visitation by trained supervisors. Finally, during negotiations the govern- ment would be asked to provide assurances that a special emergency training program would be launched by February 28, 1984, to enable underqualified teachers presently excluded from training programs which give access to the official salary scale, to attain qualified status and progressive profes- sional careers. Social Objectives 3.14 Escuela Nueva considers the integration of the student, school and community as crucial not merely to the effectiveness of the school as a learning institution but also to the assumption by the community of responsi- bility for its own improvement and destiny. The interplay of the community and the school is therefore sought by a Parents' Committee, and by joint school/community projects, including the school meal program. To prepare students for their future community roles, their participation in the above- mentioned community-based activities is reinforced by training in group dyna- mics and in leadership. Both individual and group learning situations are engineered by the teacher. The Student Council is popularly elected, its membership regularly changes, and it is the constituent body for a group of committees and "leaders." Between them, they assume responsibility for the planning and execution of extracurricular activities (such as socio-cultural programs, sports and recreational activities), the library, school mainte- nance and the school garden. They assist the teacher in the organization and smooth functioning of the school, for example by operating the attendance record system. Experimentacion Curricular 3.15 In contrast to Escuela Nueva, with its focus on the small "incom- plete" rural schools, Experimentacion Curricular comprises a package of edu- cational inputs designed specifically to improve the quality and content of the program in the "complete" or graded school. Its goal, as enunciated in Decrees 1419 and 1816 of 1978, was the introduction and evaluation of a new curriculum in this type of school in both rural and urban areas. The produc- tion of learning/teaching materials, the training of teachers in the new cur- riculum, student evaluation and school supervision, were integral parts of the program. The program is currently in use in some 240 departmental schools and in all public primary schools in the Bogota Special District. 3.16 In common with Escuela Nueva, Experimentacion Curricular set out to provide a child-centered, activity-based, and problem-solving primary educa- tion, with a balanced approach with respect to theoretical and practical content, and to social and academic education. The general learning objec- tives of the two programs are the same. But the means used to attain these objectives differ significantly, however, from Escuela Nueva. Organization- ally, children continue to be taught in graded classes, with a separate teacher for each grade. Conceptually, the curriculum is planned on a thema- tic approach in the first three grades, followed by subject related study blocks in the later grades, rather than on the integrated approach used in Escuela Nueva. Pedagogically, the teaching method is currently predetermined by the absence of student learning materials. Manuals and teaching units are currently provided only to staff.  - 14 - 3.17 The program has substantially met the qualitative objectives of curriculum reform, specifically in regard to student creativity, linguistic and judgmental skills. Its effect on efficiency and external productivity, especially in schools in small towns and rural areas, has been less certain, because: (a) the lack of student learning material has perpetuated the linear learning approach with its attendant problems of repetition and drop- out; (b) resource limitations have resulted in inadequacies in the teacher training and school supervision and follow-up programs; and (c) community involvement has met with only modest success, largely because teacher train- ing courses have not included the necessary changes in teachers' attitudes. 3.18 As Experimentacion Curricular is introduced into rural schools under the Subsector Program, each of these deficiencies would be corrected. Student learning materials would be distributed to all schools. Teacher training programs would be intensified, and school supervisory services would be expanded and improved. Student Learning Materials 3.19 New textbooks, which conform in content and format with the needs of Experimentacion Curricular, have already been produced by private publish- ing firms. Conformity with program needs has been assured through the Stand- ing Consultative Committee of Printers and Publishers and the Ministry of Education. Selected materials, already available or in the process of publi- cation, would be distributed to schools in quantities sufficient to permit the adoption of individualized learning procedures. This would enable Exper- imentacion Curricular schools to initiate the flexible promotion system, already a feature of the Escuela Nueva. As a general rule, each book pro- vided would be used by a group of two or three students; texts for individual students would be the exception. 3.20 Additional resource materials (school libraries and basic educa- tional equipment) would also be provided to schools, to promote active, proj- ect-oriented learning. School Supervision 3.21 The number of school supervisors in each Department would be increased, so that each zone 7/ would have several full-time supervisors. All would be trained, both in the content and approach of Experimentacion Curricular and Escuela Nueva and in the pedagogical support function of the supervisor. Transport facilities would be provided at zone level, so that supervisors could readily visit districts and schools in their areas. Teacher Training 3.22 In-service teacher training courses would be expanded and intensi- fied to cover all teachers in the Experimentacion Curricular program. Spe- cial attention would be paid to the role of the teacher as the agent for com- munity integration and development, and to the student guidance and evalua- tion aspects of teaching. 7/ A description of the newly decentralized structure of educational admin- istration below the departmental level is contained in the section on Nuclearizacion, below.  - 15 - Escuelas Normales Demostrativas 3.23 In addition to meeting the training needs of practicing teachers by in-service courses for those employed in the Escuela Nueva or Experimentacion Curricular schools, the Subsector Program would initiate a much needed reform in pre-service teacher education. 3.24 The pre-service primary teacher training system suffers from three major defects: curriculum inadequacies, low quality courses, and a surfeit of training institutions graduating far more teachers than can be absorbed into the schools. The Escuelas Normales Demostrativas would deal with the first two of these constraints. Other government actions have already been set in motion to rationalize the output of graduates (para. 3.27). 3.25 Escuelas Normales Demostrativas involve the selection of thirty of the best training schools 8/, strategically sited to serve the main regions of Colombia, for upgrading to the stage where they would be able to: (a) provide a more relevant and better quality education to their own students; and (b) to train the staff, and supervise the activities of other teacher training schools within their own respective catchment areas. Six of the thirty schools have already been selected and initial steps have been taken to introduce the new program. The remaining 24 are included in the Subsector Program, of which three would be incorporated in Phase I (1982-1984). 3.26 The program provides for: (a) minor building modifications, basi- cally to ensure adequate facilities for science teaching and teaching aids production; (b) essential educational equipment, especially library books; and (c) training courses for the staff and administrators in the content and teaching methodologies and the evaluation and guidance techniques of the Escuela Nueva and Experimentacion Curricular programs, as well as in the secondary school curricula presently being developed by the Ministry of Edu- cation. 3.27 Meanwhile the government has initiated actions in the politically sensitive field of rationalizing primary teacher output. Since 1978 two dozen teacher training schools have been closed. Approximately seven others have been converted into diversified schools offering several secondary options, thereby reducing the number of students opting for teacher train- ing. Together these initiatives have already produced a significant impact on teacher output: between 1977 and 1980 teacher graduates declined by 22%, from 8,100 to 6,350. Nuclearizacion 3.28 Nuclearizacion encompasses those actions of needed reform in educa- tion management, the core of which is administrative decentralization of the sector. 8/ As identified in: "Evaluacion de las Escuelas Normales de Colombia" (Ministerio de Educacion Nacional, 1978) on the basis of objective measures of the adequacy of physical facilities and the level of train- ing and experience of the teaching staff. In total there are still 190 Escuelas Normales.  - 16 - Decentralization 3.29 The heart of the decentralization process is the school map, a detailed and exhaustive survey of existing educational facilities, and an inventory of broad needs. Based on the findings of the school map, admin- istrative subdivisions are established in each Department. The Department is subdivided into a small number (3-5) of homogenous zones (distritos); each zone is further subdivided into similarly homogenous school districts (nucleos) 9/, the number of which in the Department will vary between 70 and 150, depending on the extensiveness of the Department. The rural district contains some 10-15 schools on average, the majority of them small one or two classroom schools, with perhaps one or two complete (i.e., graded) schools. In roughly half the districts there will also be one or more junior secondary schools. 3.30 The overriding objective of Nuclearizacion is to remedy defici- encies of student flows and learning efficiency in the rural primary schools, thereby increasing the cost effectiveness of the subsector. The fundamental means of doing so is to develop a three-tier system of school administration in each Department. Annex 1 shows the system now being established. At the head of each school district is the District Director responsible for the administration and supervision of all schools in his area. At the next level the Zone Chief, operating through a corps of school supervisors, is charged with coordination of the activities of the District Directors. At Depart- mental level, the Secretariat of Education, with technical support units, shares the ultimate authority for school administration 10/ with: (a) Pilot Experimental Center (CEP) charged with responsibility for training of teach- ers for, and for pedagogical supervision of, all schools involved in either the Escuela Nueva or the Experimentacion Curricular programs; (b) a Regional Education Fund which handles all the money for the school system; and (c) regional offices of the school construction agency, ICCE, and scholarship/student loan agency, ICETEX. 3.31 Under Nuclearizacion, this administrative structure would be strengthened. Significant progress has already been made. By Presidential Decree 181 of January 22, 1982, national norms were established for: (a) school mapping; (b) establishment of the districts and zones; (c) appointment of district directors and zone chiefs; and (d) location of all supervisory services at zone level and strengthening of pedagogical tech- nical assistance to the schools. Decree 181 further provided for a fixed personnel establishment in each school district, to be determined on the basis of needs as assessed in the school map, and placed strict limits on the authority of the Secretariat of Education to transfer teachers, especially from rural to urban areas. 9/ The formal name for these districts is Nucleos de Desarrollo Educativo. Unlike the connotation often given to nuclear patterns of school orga- nization, these Colombian school districts do not generally involve edu- cational articulation between a large and more complete central school and smaller, incomplete satellite schools in peripheral areas. 10/ The Ministry of Education is still directly responsible for administra- tion of 474 (mostly) secondary schools, control over which should, under prevailing legislation, be passed to the Departments.  - 17 - 3.32 Prior to negotiations an addition to Decree 181 was enacted (Decree 1234), and the administrative rules that give operative force to it were issued (Resolution 10406). Major points included in the addition are: (a) the stipulation that all decisions on education resource allocation, not just teacher appointments and transfers, shall be based on the regularly updated inventory of needs contained in the school map; (b) the allocation of respon- sibility for overseeing administrative supervision (inspection) and academic supervision (pedagogical support to teachers) between the appropriate General Directorates of the Ministry of Education and their respective counterpart organizations at the departmental level. The administrative rules cover, inter alia, (a) the specification of qualifications and detailed procedures for merit-based selection and appointment of district directors, zone chiefs, and academic supervisors; and (b) the detailed description of functions and authority of district directors, zone chiefs, and supervisors. Other Aspects of Nuclearizacion 3.33 The impact on rural basic education of the administrative decen- tralization launched under Decrees 181 and 1234 would be limited in the absence of complementary measures to assure: (a) that rural schools are staffed with teachers; and (b) that the new personnel at all levels are thoroughly trained for their new responsibilities; and (c) that the Ministry of Education's capacity for performance monitoring, evaluation, project plan- ning, and policy formulation is increased. 3.34 The Government took significant steps in February 1982 to remove the constraints on the supply of teachers to isolated rural schools. The most significant measures include: (a) a general limitation on transfer to the urban areas of 100,000 inhabitants or more; (b) a requirement of two years' service outside the cities for all newly appointed teachers prior to becoming eligible for urban service; (c) the creation of fixed teacher estab- lishments in each school district and proscription against transfer of a teacher from an established position without simultaneously naming a replace- ment; (d) the double counting of time of service in rural schools for pur- poses of advancement in the salary scale; (e) the imposition of a national- level review requirement for transfer of any teacher involved in a "special program" of the Ministry of Education; 1l/ and (f) the decentralization to the zone level of the current corps of administrative supervisors (inspec- tors) and the establishment at zone level of a corps of academic supervisors, which in combination assures both improved operational control and pedagogi- cal support of rural teachers. 3.35 Accelerated appointment and training of district directors9 zone chiefs, and academic supervisors, along with provision of the infrastructure support needed to make them effective, would be key components of the Subsec- tor Program. While construction of new office buildings is not envisioned, conversion of current office space and excess classrooms in existing schools would be required, as would be provision of minimum furniture and equipment and, most important, transport facilities. When geographical circumstances so require, district directors' offices would be provided appropriate trans- port, whereas, typically, each zone would be provided with one or more jeeps and several motorcycles, to be used by the group of supervisors. 11/ The Subsector Program enabling legislation classifies it as such a "special program.  - 18 - 3.36 The impact of Nuclearizacion will ultimately depend upon strength- ening the Ministry of Education's own management capacity, especially in edu- cational research and planning. Fundamental to progress in these areas is the early establishment of a modern management information system for the education sector. This would include integrated components covering: rou- tine educational statistics (number of schools, teachers, students), physical plant, learning resources (including textbooks and other materials), academic achievement and background characteristics of students, compensation-related variables and basic biographic data on teachers, and education costs and budgets. Initial design, testing, and personnel training for such a system would thus be an early priority of the Subsector Program. The need for major hardware purchases would also be assessed, although any required action would take second priority in the early years to software development and staff training. The Government brought to negotiations for Bank review two technical proposals for the management information system. After negotiating the financial terms for the one jointly judged best, the Government will forward the contract for Bank approval. 3.37 Also important for increasing the Ministry of Education's deci- sion-making capacity is enlarging its access to research on priority educa- tional problems and to evaluation results concerning Colombia's rich tradi- tion of educational Innovations launched by the private sector. The Subsec- tor Program would therefore make provision for the channelling of public funds to research and evaluation. A technical committee, comprising recog- nized experts in social science research on education would be appointed (and paid) by the Ministry of Education to screen research proposals submitted in response to publication of the Ministry's list of priority areas and pro- blems. Emphasis would be given to studies relating to rural primary educa- tion and to curricular design and experimentation for junior secondary schools in rural areas. The Government bought to negotiations for Bank review its proposal for the expanded research program and, after incorporat- ing agreed modifications, will present the final proposal for Bank approval. Resource Allocation Policies 3.38 By increasing efficiency in the subsector, vigorous implementation of the Subsector Program would tend to restrain the growth of recurrent costs over what would otherwise be necessary. The proportion of subsector expendi- tures dedicated to investment would tend gradually to rise (para. 3.03(d) (i)). But the Government also needs to take effective measures to restruc- ture education costs and finance so as to increase real resources allocated to primary schooling (para. 3.03(d)(ii)). Serious examination of alterna- tives in this area has not yet begun, despite growing recognition that educa- tion's share of public resources 's close to the maximum sustainable limit. 3.39 The inauguration of a new administration in August 1982 offers a natural opportunity for the authorities to address the fundamental issues of educational costs and finance. Thus, although not funded within the Subsec- tor Program, a high-level commission would be named by the new administration and provided with an appropriate professional staff to examine the central issues of educational costs and finance and make policy recommendations. The Government brought to negotiations for review and comment by the Bank the draft terms of reference for such a commission, including the list of major issues to be addressed, the likely source of funding, and the size and general composition of the commission and its professionals. The Government  - 19 - provided assurances that, in accordance with agreed terms of reference, such a commission would be appointed and appropriate arrangements made to provide it with an professional staff before April 30, 1983 and that its final report would be delivered to the Government with a copy to the Bank no later than June 30, 1984. C. Quantification of the Subsector Program for Rural Basic Education 3.40 Nationwide implementation of Escuela Nueva, Experimentacion Curri- cular, Escuelas Normales Demostrativas, and Nuclearizacion will clearly require careful sequencing, since both financial and managerial resources are limited. As explained in greater detail in the following chapters, the Government therefore proposes a three phase approach over ten years. Detailed physical targets for each phase, derived from school map data and pilot experience in implementing Escuela Nueva and Experimentacion Curri- cular, are found in Annex 2, and highlighted in Table 3.1. A further break- down for Phase 1 (1982-1984) is contained in Annex 3, and highlighted in Table 3.2. Table 3.1: INCREMENTAL PHYSICAL TARGETS BY IMPLEMENTATION PHASE (Highlights of Annex 2) Phase III Phase I (1982-84) Phase II (1985-87) (1988-91) Total Subsector Basic Basic Project DRI II Program DRI II Program Primary Schools Included in Program 1,650 440 4,620 880 10,285 17,875 Teachers Trained Under Program (000) 6.1 1.6 15.3 2.9 29.8 55.7 Students Incorporated in Program (000) 113 30 352 67 784 1,346 Textbooks and Manuals Provided (000) 344 92 1,362 287 3,884 5,969 Student and Teacher Desks Provided (000) 92 25 259 49 577 1,002 Classrooms Repaired 1,134 302 3,175 605 7,069 12,285 New Classrooms Provided 780 208 2,184 416 4,862 8,450  - 20 - Table 3.2 INCREMENTAL PHYSICAL TARGETS FOR PHASE I (Highlights of Annex 3) DRI II Subector Project (150 districts) (40 districts) Total 1982 1983 1984 Total 1982-84 Primary Schools Included in the Program 85 490 1,075 1,650 440 2,090 Teachers Trained under Program 1,200 2,400 3,485 6,085 1,620 7,705 Students Incorporated in Program 16,700 73,000 22,450 112,500 30,000 142,500 Textbooks and Manuals Provided (000) 57 221 66 344 92 436 Student and Teacher Desks Provided (000) 18 65 9 92 25 117 Classrooms Repaired 60 345 729 1,134 302 1,436 New Classrooms Provided 40 230 510 780 208 988 IV. MANAGEMENT AND IMPLEMENTATION 4.01 Special arrangements have been made to facilitate prompt implemen- tation of the Subsector Program, as follows: (a) a sector approach, under which, with Bank and Borrower relying on intermediaries, program activities are broken down into subprojects and executed at local and national levels and financed from various sources; (b) implementation scheduling in three phases over ten years, under which for Phase I (1982-1984) rapid execution in 1983-1984 would be sought through preparatory activities in 1982 prior to effective- ness of the proposed loan from the Bank; (c) organizational and staffing patterns which are designed to be effective for a variety of subprojects executed at the national and local levels; (d) carefully defined criteria and procedures for allocation of program funds to geographical areas of greatest need and for preparation, appraisal, and execution of subprojects; and (e) choice of the Fund of the Ministry of Education (FONDO/MEN) as the Borrower with Government guarantee, thereby avoiding cumbersome Colombian budgetary procedures. These arrangements, treated in sequence below, are based on conservative assessments of the implementation capabilities of involved agencies and are specifically tailored to overcome current weaknesses in educational manage- ment.  - 21 - A. Sector Approach 4.02 In the conception of implementation as a series of discrete sub- projects, in the role assigned to intermediaries and in recourse to multiple sources of finance, the Government's Subsector Program adopts a coherent and pragmatic approach to the sector as a whole. Subproject Organization 4.03 The Subsector Program would be executed through a series of sub- projects, which would be of two types, local and national. Local Subprojects 4.04 A local subproject is an investment plan to address the aggregated minimum educational needs of two to five usually contiguous districts (involving 20-70 rural primary schools and 1,800 - 7,200 pupils). The school map is used to determine what each school needs of the particular mix of inputs--curriculum, teacher training, educational materials, supervision, repair or extension of physical plant, furniture, sanitary facilities-- provided by Escuela Nueva or Experimentacion Curricular. An investment proj- ect is then developed which includes training of teachers, educational mate- rials, school supervision, school furniture and equipment, and civil works for repair, extension, or sanitary upgrading of the physical plant. Both capital and incremental recurrent costs of local subprojects are calculated from norms provided by the responsible implementation agencies. 4.05 Responsibility for carrying out these local subprojects would rest with the departmental level authorities, assisted by the school district directors from below and by the technical support agencies of the Ministry of Education from above. By combining the educational needs of several dis- tricts, subprojects would be of economical size for programming of teacher training and supervisory services, rehabilitation of physical plant, distri- bution 12/ of furniture and educational materials. By limiting individual subprojects to coverage of a few districts, the risk would be minimized of the investment program becoming unwieldy and suffering implementation delays due to difficulties of synchronizing activities over wide areas. Thirty to forty local subprojects would constitute the core of the Subsector Project during Phase I. National Subprojects 4.06 In order to take advantage wherever possible of economies of scale in the provision of certain goods and services, the local subprojects would be supported by several national level subprojects. These would cover the following areas: (a) development of a computerized management information system for the education sector (para. 3.36); 12/ But not necessarily the production of furniture and materials, which will typically be handled in national subprojects, as described in the following paragraph.  - 22 - (b) expansion of applied research on education (including curriculum development for rural junior secondary schools) (para. 3.37); (c) impact evaluation of the Subsector Program, as described below; (d) production of the textbooks and other educational materials needed for Escuela Nueva and Experimentacion Curricular. Since the mate- rials have already been developed and tested for Escuela Nueva, only printing is involved. For Experimentacion Curricular, some publishing activity will be necessary, although textbook firms already have prototypes available. For each phase of implementa- tion, textbook subprojects would be developed for Escuela Nueva and Experimentacion Curricular; (e) production of school furniture and equipment, probably accomplished on a regional basis; (f) training of administrators and planners at national, departmental, and local levels. These national subprojects would be implemented directly by the Ministry of Education, in cooperation with departmental agencies where appropriate (e.g., training for District Directors). Role of Intermediaries 4.07 In formulating the Subsector Program for Rural Basic Education, the devolution of the routine implementation tasks to lower levels of govern- ment has been emphasized so as to allow the Ministry of Education: (a) to concentrate on monitoring the impact of far-reaching policies it has promul- gated for the rural primary subsector (and, incidentally, other parts of the formal education system); (b) to develop further the criteria and methodology for subproject processing on the basis of experience gained during implemen- tation; and (c) to provide timely and high quality technical assistance to lower level executing agencies. Multiple Sources of Finance 4.08 The Subsector Program would draw on several sources of support. The affected communities themselves would contribute labor and some materi- als, but this on average would not exceed 10% of total resource costs. Financial costs would be absorbed by the regular Government budget for educa- tion as supplemented with foreign borrowing. During the early years of exe- cution, and in addition to the loan here proposed, both IBRD and IDB would assist the Subsector Program through loans for the second phase of the Inte- grated Rural Development Program (DRI-II), of which the Subsector Program would constitute the education component in selected departments. B. Phased Implementation Schedule 4.09 Implementation of the Subsector Program has been planned with due regard for its magnitude and complexity.  - 23 - Implementation Phases 4.10 Execution would extend over ten years (1982-1991) in three stages. The Basic Program for Phase I, for which funding is here recommended as a Subsector Project, would incorporate 150 districts over three years (1982- 1984). DRI-II would finance implementation of the Subsector Program in an additional 40 districts in 1983-84. Assuming adequate performance in this start-up period, Phase II would expand the program to a further 500 districts in a second three-year period (1985-1987), including 80 financed under the DRI-II education component. Subsector wide coverage would be achieved in a final four-year Phase III (1988-1991) in which the remaining 935 districts would be added. 4.11 The slow start-up and rapid acceleration are designed to enable: (a) incorporation of any needed mid-course alterations in the two standard educational packages (Escuela Nueva and Experimentacion Curricular) as the program moves from its experimental scale to widespread implementation; (b) gradual development of implementation capacity in institutionally weaker departments, so as to avoid overloading the administrative system with excess project management burdens; this would be accomplished through early execu- tion in all departments of Nuclearizacion; (c) evolution of the broad national base of understanding of and support for the Subsector Program, which is essential to successful implementation through a succession of administrations. Implementation Schedule 4.12 Subsector Program implementation began on January 1, 1982. The first three years (1982-1984) are conceived as a start-up phase, in which emphasis would be placed upon: (a) testing the large-scale feasibility of the Subsector Program components in limited geographic areas; and (b) by execut- ing the Nuclearizacion component more widely, preparing the ground institu- tionally in other areas for rapid acceleration of implementation in the second phase beginning in 1985. 4.13 The same overall philosophy of concentrated and carefully monitored pilot effort combined with institutional preparation would be applied within the start-up phase itself. Activity in 1982 would focus on the preparation, appraisal, approval and launching of five to eight Basic Program subprojects, among them approximately three at the local level. Supporting national level subprojects would also get underway in 1982, most notably in: (a) printing of textbooks and construction of school furniture needed for implementation of local subprojects; (b) personnel training for administrators and planners; (c) design of the management information system; (d) final design and base- line cost studies for the impact evaluation research. 4.14 It is expected that during Phase I local subprojects would be approved on roughly this schedule: 1982 1983 1983 1984 1984 July-Dec Jan-June July-Dec Jan-June July-Dec Subsector Project 3-4 6-8 10-14 10 4 DRI-II 2 2 3 2 3  - 24 - Following approval, subproject execution would normally take about twelve months. C. Organization and Staffing 4.15 As documented in the Project File and summarized below, the Govern- ment has established appropriate organizational mechanisms and staffing patterns for implementing the Subsector Program. During negotiations, the Government provided assurances that no material changes in agreed organiza- tion and staffing would be instituted without prior consultation with and approval by the Bank. Organization 4.16 In accordance with the decision to decentralize educational admin- istration in Colombia (paras. 3.03(c) and 3.29ff), the government has identi- fied structures at national, departmental, and local zone and district levels among which responsibility will be shared for implementation of the Subsector Program. The guiding principle has been to make maximum use of existing organizational units, reinforcing their technical capacity where necessary. New units would be created only when no effective alternative is available. Organizational Overview 4.17 Annex 4 depicts the organizational structure for implementing the Subsector Program. Decisions at both national and departmental levels are to be made by management committees, each of whose members heads a unit within the administrative apparatus which would have defined implementation respon- sibilities. The collegial responsibility of the committees extends only to decision making; execution is centered in the regular operative units of the education sector. Further, each such unit at the departmental level has a functional equivalent at the national level, upon which to rely for overall policy guidance and technical assistance. Coordination would be achieved by creation of a small executive secretariat for the committees at each level, whose role is to oversee execution of committee decisions by channelling work to the technical units whose executive heads constitute the committee. Divi- sion of responsibilities between national and departmental levels would be specified in both the Subsector Program enabling legislation and the con- tracts between the nation and participating departments. At the zone and district levels, responsiblity would rest with the chiefs and directors, each working directly with, respectively, the supervisors and school directors. At district level, two advisory committees (of teachers, and community leaders) would assist the district director. National Level Organization 4.18 Overall responsibility for the Subsector Program would be assigned to the Rural Basic Education Subsector Program Management Committee. This Management Committee was established within Presidential Decree 1839 which gave the Subsector Program legal status and, inter alia, defined its manage- ment structure. Chaired by the Vice-Minister of Education who is designated National Director of the Subsector Program in the enabling legislation, the  - 25 - Management Committee has ten permanent members. 13/ Except for the proposed Executive Secretary of the Subsector Program, the members of the Management Committee already meet regularly in the Ministry's three ongoing coordinating committees (for operations, technical issues, and policy development). In essence these standing committees would, when dealing with aspects of rural basic education, declare themselves to be functioning as the Management Committee for which purpose they will be specifically assisted by a full-time Executive Secretary. 4.19 On the basis of procedures and criteria agreed with the Bank, the Management Committee, as the highest decision-making body will: (a) formulate general subsector policies; (b) approve distribution of program resources among participating departments; (c) establish administrative procedures; (d) review and approve each subproject proposal; (e) approve and periodically review subsector work programs for the implementing units within the Minis- try; and (f) approve all statements of expenditures under the Subsector Pro- gram. 4.20 Before negotiations, the Government: (a) promulgated Decree 1839 which creates the Rural Basic Education Subsector Program and establishes its objectives, management structure at national and departmental levels, and general operational policies; and (b) appointed the Executive Secretary of the Subsector Program, in accordance with qualifications agreed during appraisal. Departmental Level Organization 4.21 In Decree 1839 establishing the Subsector Program, management res- ponsibility in the participating departments was assigned to a Departmental Subsector Program Implementation Committee, comprising the current seven members of the Administrative Council of the Regional Education Fund (FER) plus the Director of the Pilot Experimental Center (CEP), and a newly created Departmental Executive Secretary of the Subsector Program (with voice but no vote). As President of the FER Administrative Council, the Governor will preside over the Departmental Implementation Committee and is designated in the enabling legislation as the Departmental Director of the Subsector Pro- gram. 4.22 Analogous to the Management Committee at the national level, the Implementation Committees at the departmental level comprise the executive heads of agencies which would necessarily have to plan and implement subproj- ects. The Implementation Committees would thus constitute the maximum departmental level decision bodies, responsible for: (a) reviewing subproj- ect proposals and recommending them for final approval by the Management Committee; and (b) oversight of their execution once approved. 13/ The Vice Minister of Education, the Secretary General of the Ministry of Education (who would preside in the absence of the Vice-Minister), the Head of the Social Sector Development Unit of the National Planning Department, the Director-General of the School Construction Agency (ICCE), the Head of the Sectorial Education Planning Office of the Ministry of Education, the three Directors-General of the Ministry of Education (for pedagogical improvement, school administration and ins- pection, and administrative services), the Head of the Legal Office of the Ministry of Education, and the Executive Secretary of the Subsector Program (with voice but no vote).  - 26 - 4.23 Because capacity for educational planning and project preparation is embryonic at the departmental level (and for complex institutional reasons cannot within the short run be sufficiently strengthened to assure timely implementation of the Subsector Program), remedial actions of two kinds would be required. 4.24 The Subsector Program contracts between the Ministry of Education and the FER Administrative Councils would provide, inter alia, for creation, staffing, and operation within the Secretariat of Education of an education planning unit according to criteria, procedures, and policies established by the Ministry of Education. The current educational map staff of the depart- ments would be incorporated into this planning unit, which would function under the guidance of the Ministry of Education's Sectoral Planning Office. One of the principal functions of this Office would be to help select and train the planning personnel at departmental levels. It is expected that several years of capacity-building effort would transpire before the depart- mental educational planning structures would attain sufficent standards of technical quality, professional stability, and institutional maturity to place Subsector Program coordination (as well as other departmental education planning tasks) under their exclusive responsibility. 4.25 In the meantime, provision has been made in Decree 1839 establish- ing the Subsector Program for a Departmental Executive Secretariat. It will comprise a minimum of three full-time professional positions: an Executive Secretary and two professional staff; in addition, the Executive Secretariat will have its own administrative and clerical support. In addition to record keeping and coordination functions analogous to those of the National Execu- tive Secretary, these Departmental Executive Secretariats will take on key technical responsibilities for subproject preparation, appraisal, implementa- tion, and monitoring. In doing so they will work in especially close colla- boration with the emergent educational planning unit of the Secretariats of Education, with which they are expected to be housed. 4.26 The Government brought to negotiations for review by the Bank the model implementing contracts to be signed by the Ministry of Education with the FER Administrative Councils. These contracts detail organizational and operational aspects of the Subsector Program at the departmental level and specify the division of responsibilities between national and departmental authorities. Signature and coming into force of one implementing contract in terms satisfactory to the Bank, as well as appointment of the Executive Secretary and two professional staff, in one participating department would be conditions of effectiveness. Local Level Organization 4.27 Responsibility for planning and executing the Subsector Program has been assigned in the first instance to the school district director. He will be assisted in his role in subproject identification, preparation, implemen- tation, and evaluation by two standing committees to be established when the school district is created: (a) a Consultative Committee of heads of community organizations (such as the parent-teachers association, the community action agency, the integrated rural development program committee, the producer cooperatives, etc.); and (b) an Operations Committee of direc- tors or head teachers of constituent schools. Zone chiefs will be responsi- ble for assuring that Subsector Program activities are synchronized in the districts whose needs are addressed in a single subproject.  - 27 - Staffing 4.28 The Ministry of Education has taken steps to assure that qualified personnel in sufficient numbers are available in all implementation units at national, departmental, and local levels. The creation and staffing of the positions of Executive Secretary at the national and departmental levels are the key actions at senior managerial levels, the first accomplished prior to negotiations and the second, in at least one department, prior to effective- ness. The National Executive Secretary will be assisted by one professional and a secretary, both probably seconded from other Ministry positions. Pro- vision has also been made to add technical staff as required within the three operational Directorates and, especially, the Sectoral Planning Office of the Ministry of Education. With the exception of the latter unit, where several positions may be required as the management information system is developed, the need for incremental staff is not expected to exceed two professional level positions in any Ministry unit. Some 500 district directors and zone chiefs are already at their posts, following merit-based selection and train- ing in 1981. The appointment of directors and chiefs for all first phase districts would be completed by mid-1983. Directors of all districts to be included in the second phase would be appointed during the last two years of the start-up period (1983-1984). Steps to stem the tide of teachers leaving rural areas have already been taken (para. 3.34). Appointment of the Depart- mental Executive Secretary and two professional staff would be a condition of disbursement for each participating department. D. Procedures 4.29 The Ministry of Education has designed and tested procedures to implement the Subsector Program. These cover subproject identification, pre- paration, appraisal, approval, supervision, monitoring, and evaluation. The Government has codified procedures for each stage of the subproject cycle in operational manuals. Before negotiations, the Government provided to the Bank for review, and the Bank (with additions and amendments agreed during negotiations) approved, the manuals for subproject identification and prepa- ration, appraisal and approval, and implementation control and follow-up. The Government provided assurances that: (a) remaining volumes of the opera- tions manuals (general introductory material, and execution details) will be furnished to the Bank by December 31, 1982; and (b) no material changes in the agreed procedures as set forth in the manuals will be instituted without prior approval of the Bank. Identification 4.30 Identification of specific local subprojects would be accomplished through execution of the school mapping process. The Sectoral Planning Office of the Ministry of Education would provide technical assistance for the school mapping. General identification of national subprojects has resulted from Ministry analysis of the requirements for logistical and tech- nical backstopping of local subprojects.  - 28 - Preparation 4.31 Local level subprojects would be prepared by the district director, with the active participation of the Consultative Committee and Operational Committee (para. 4.27). Subproject preparation entails the conversion of updated information on educational needs (drawn from the school map) into an action program to introduce into all schools either Escuela Nueva or Experi- mentacion Curricular, as appropriate. The investment proposals of two to five contiguous districts would be aggregated into a single subproject. This "packaging" process would normally take place at the zone level under the direction of the zone chief. Appraisal 4.32 District level subproject components would undergo a preliminary review at the zone level during the packaging process. Zone chiefs would check for compliance with program standards and procedures as stipulated in the preparation manual. A more thorough appraisal would be undertaken at departmental level under the direction of the Departmental Executive Secre- tary and his staff, with assistance of the technical units of the several departmental level organizations that share overall responsibility for the Subsector Program. As specified in operational detail in the subproject appraisal manual, the three major subproject evaluation criteria would be: demonstrated need, feasibility, and economy. Approval 4.33 The subproject proposal and accompanying report and recommendation of the Departmental Executive Secretary would be considered by the Implemen- tation Committee. If approved, the Implementation Committee would direct the Departmental Executive Secretary to forward the subproject to the National Executive Secretary for final review at the national level. Supervision 4.34 Under the general leadership of the Vice-Minister in his capacity as National Director of the Subsector Program, the Management Committee would oversee implementation of both national and local subprojects. The National Executive Secretary would have responsibility for overseeing the work of the implementing agencies at the national level and would bring to the attention of the Management Committee any deficiencies which persist following his intervention with the head of the concerned unit. Thus, ICCE would oversee execution of infrastructure aspects of the subprojects through its depart- mental offices. Educational components would be supervised by the Ministry's Pedagogical Directorate through the CEPs and the corps of academic supevisors being established at zone level. Subproject planning and evaluation would be assisted by the Ministry's Sectoral Planning Office through the newly estab- lished Planning Units within the Secretariat of Education. The Ministry's Directorate for School Administration and Inspection would work closely with the departmental inspectorates in the Secretariats of Education and through them with the zone level administrative supervisors. The national Director- ate for Administrative Services would supervise the FERs' control over flow of funds. The Executive Secretaries at the national and departmental levels would be responsible for assuring that the subproject implementation activi- ties of the several agencies are properly synchronized.  - 29 - Monitoring 4.35 Primary responsibility for coordination of progress reporting on local subprojects would rest with the Departmental Executive Secretariat. Using standard forms, each executing agency at the departmental level would prepare quarterly reports of activity on each subproject under preparation or implementation. The Departmental Executive Secretary would compile this information into a brief status report in standard format, for submission via the National Executive Secretariat to the Management Committee after certifi- cation by the Implementation Committee. Quarterly progress reporting on national level subprojects would be the immediate responsibility of the implementing agency concerned, whose executive head would submit the reports to the Executive Secretary for transmission to and review by the Management Committee. Semi-annually, the Executive Secretariat would prepare a consoli- dated progress report, which the Management Committee would submit to the Bank. Financial reports (commitments versus expenditures, capital and recur- rent, cumulative and for the period in question for each subproject) would be prepared monthly by the FER in each Subsector Program department, consolida- ted by the National Executive Secretary with financial reports on national subprojects, and forwarded to the Bank. Impact Evaluation 4.36 An impact evaluation of the Subsector Program would be undertaken in the context of the larger effort to strengthen applied research capacity in the education sector. The research on impact, which would constitute one of the national subprojects (para. 4.06(c)), would compare educational effi- ciency and learning achievement between school districts incorporated into the program and those not yet incorporated. It could also include micro- level analysis of a more qualitative nature of differences among classroom environments. The Government brought to negotiations a preliminary impact evaluation subproject proposal which was generally acceptable in its techni- cal aspects. The Government will shortly proceed, in conjunction with the firms involved, to produce and submit for final Bank approval the completed impact evaluation proposal including reworked cost estimates. Bank Involvement in the Subproject Cycle 4.37 The Bank's supervisory effort would concentrate on a semi-annual joint review with the Management Committee of subsector policy development, procedures for subproject generation and implementation, and compliance of approved subprojects with agreed criteria. In addition, Bank supervision would entail a field visit to at least one participating department on each mission to assess, in company with Management Committee representatives, the functioning of the Implementation Committee and local level execution agen- cies. 4.38 Because local level subprojects would vary only to the extent of differing mixes of standard components and because only the exceptional sub- project would exceed US$1.0 million in total investment expenditures, prior approval by the Bank of local subprojects would be limited to the first three subprojects and to those whose capital cost component exceeds Col$45 million (roughly US$740,000 at current exchange rates). Under these criteria, it is estimated that roughly 20% of local subprojects following the first three-- essentially those covering more than four school districts--would undergo  - 30 - prior review by the Bank. The Bank would, in addition, conduct an ex post review of the appraisal and approval process for roughly a third of the remaining local subprojects and all national subprojects in Phase I. These reviews would be conducted during semi-annual supervision visits and would involve all subprojects approved prior to effectiveness, plus a random sample of those approved thereafter. Finally, the Bank would review, at negotia- tions, prior to final consideration by the Management Committee, the national subprojects in Phase I for development of the management information system, educational research (paras. 3.36, 3.37) and impact evaluation of the Subsec- tor Program (para. 4.36), all of which are expected to be ready for implemen- tation beginning in mid-1982. During negotiations, the Government provided assurances that subprojects as detailed above would be submitted to the Bank for review and approval prior to final action by the Management Committee and that Bank supervision missions would have full access to subproject proposals for the ex post reviews. 4.39 The Government also prepared and appraised three local subprojects in accordance with the operational manuals (para. 4.29). During negotia- tions, these subprojects were extensively reviewed and, with changes stemming mostly from agreed modifications in the manuals, found acceptable by the Bank. E. Criteria 4.40 The Ministry of Education has developed criteria to govern: (a) selection of departments for incorporation into the Subsector Program; (b) allocation of available program funds among participating departments; (c) selection within departments of school districts where the Subsector Pro- gram will be implemented; and (d) appraisal and approval of subprojects. Application of these criteria would tend to ensure that the Subsector Program attends first to areas of most need, that unproductive geographical disper- sion of effort is avoided, and that the Subsector Program is both consistent and efficient wherever it is being implemented. During negotiations, the Government provided assurances that no material changes in these criteria would be adopted without prior consultation with and approval by the Bank. Selection of Departments 4.41 The Ministry of Education has developed an index for ranking departments in terms of priority for inclusion in the Subsector Program. The index is based on eight variables which measure the relative level of: (a) development of the department, particularly its rural areas; and (b) rural education deprivation. The development and education indicators are given equal weight in the index, whose elaboration and underlying data base may be examined in the Project File. Departments will be invited to partici- pate in the Subsector Program in an order approximating their standing on the index. Deviation from the priority accorded by the index would occur in the start-up phase if: (a) departments lack capacity to implement the program during Phase I, in which case the department would benefit in Phase I only from priority access to the management development components of the Subsec- tor Program (Nuclearizacion, (para. 3.28ff)); (b) invited departments are unwilling to comply with the conditions set by the Ministry of Education for program participation; or (c) the desirability of introducing the Subsector  - 31 - Program in areas broadly representative of the geographical diversity of the country would be precluded by an overly heavy concentration in one or another region resulting from strict adherance to the priority ranking. 4.42 Funding constraints for the start-up phase, combined with the need, for efficiency reasons, to achieve a high geographic concentration of effort, will limit participation in the Phase I Subsector Project (1982-1984) to 150 school districts in three departments, chosen from among the eight with high- est priority according to the index: Narino, Choco, Cauca, Cordoba, Sucre, Guajira, Boyaca and Norte de Santander. In addition, with financing from IDB and IBRD for the second phase of the Integrated Rural Development Program (DRI-II) 14/, the Subsector Program will be implemented in about 40 dis- tricts in two other departments in 1983-1984, and in 40 additional districts of the same two departments and 40 districts of an additional department in 1985-87. The Minister of Education has selected Narino, Cauca, and Norte de Santander for inclusion in the Phase I Subsector Project here recommended. In addition, the Minister of Education and Director General of DRI have tentatively agreed that implementation of the Subsector Program in Magdalena (IDB) and Huila and subsequently Tolima (IBRD) would constitute the education component of the second phase of the Integrated Rural Development Program. The Government confirmed these decisions on Subsector Program coverage at negotiations. The Government also provided assurances at negotiations that any changes in proposed geographic coverage of the Subsector Program would be initiated only after prior consultation with and approval by the Bank. Allocation of Funds Among Departments 4.43 For the Phase I Subsector Project (150 districts in three depart- ments in 1982-1984), the Government would establish for each participating department a quota of funds available for local subprojects and a rough allo- cation of the quota among the three years of Phase I. This departmental quota would result from distribution of total program funds available for local subprojects in proportion to the departmental scores on the selection index, weighted by the rural primary school-age population of the depart- ment. Departmental quotas so established help assure that limited resources are distributed roughly in accordance with relative need and are not absorbed disproportionately by politically influential or institutionally more developed departments. The quotas are intended as guidelines upon which to base planning targets at departmental levels; as such the yearly allocations would be flexible enough to accomodate unexpected departures from those tar- gets within and among departments. 4.44 Criteria for allocation of funds among departments in succeeding phases of the Subsector Program (1985-1987 and 1988-1991) would be reviewed in 1984 to balance the need to expand coverage in participating departments with the effort to include new departments in the program. 14/ See paragraphs 4.08, 4.10 above, and Staff Appraisal Report, Colombia, Second Integrated Rural Development Project (Report No. 3661-CO). DRI selection criteria for departments are somewhat different from those proposed for the Subsector Program, with the result that DRI would finance implementation of the Subsector Program in departments in the middle range of the Ministry of Education's selection index.  - 32 - Selection of School Districts 4.45 Following establishment of the resource quotas at the departmental level, the Ministry of Education would rank all counties of participating departments according to an index of relative need. 15/ As in the case of departments, the index would weight equally the indicitors of economic and educational well being, although the component variables are not exactly the same. The indices and supporting data for Cauca, Narino, and Norte de Santander are available in the Project File. The Implementation Committee would select counties for Subsector Program participation on the basis of priority accorded by the index. All school districts in selected counties would be invited to prepare subproject components. Those districts in which institutional constraints would preclude elaboration of a project proposal- --e.g., because no district director had yet been appointed--would become priority targets of Nuclearizacion. They would present subproject proposals towards the end of Phase I. The occasional district with a town exceeding 7,000 inhabitants would generally be instructed to exclude from its project proposal all schools in that urban area. This is reasonable because the edu- cational deficiencies in the large primary schools typical of such towns are qualitively different from those of smaller schools in rural areas and thus not necessarily addressed most effectively or efficiently with the inputs of the Subsector Program. Appraisal and Approval of Subprojects 4.46 Responsibility for appraisal and approval of local subprojects would be shared among departmental and national authorities. At each point in the process three criteria would be applied: relevance of the proposed local subproject activities to the objectives of the Subsector Program, spe- cifically improvements in internal efficiency and quality, as well as to the specific needs identified in the school map; feasibility of implementing the subproject; and efficiency of resource use. 4.47 Because Escuela Nueva, Experimentacion Curricular, and Nucleariza- cion--the three standard program components of the local subprojects--have already been successfully implemented on an experimental basis, their funda- mental relevance and feasibility are not generally at issue. The mix of these components within each subproject, however, would need to be examined to assure consistency with local educational needs and requisite community support. Rules for such an assessment are contained in the subproject appraisal manual. 4.48 Subprojects would be specifically assessed in terms of their over- all economy of resource use. In this connection each proposal would be 15/ The basic politico-administrative unit in Colombian departments is the county (municipio). Each county contains at least one school district, and sometimes more than two, even in sparsely populated rural counties. It is normally the case that school districts are contained within a single county; in a few instances a district may cover portions of two counties. Because socio-economic data are readily available at the county level, while only educational data are available at school dis- trict level, selection of geographical areas within departments must be at the county level.  - 33 - closely examined for any deviations from: (a) standard norms on unit costs; (b) the rules specified in the preparation manual for deciding when certain educational investments are justified--e.g., replacement rather than repair of a classroom, addition of a teacher to a school; (c) the optimal size of subprojects (two to five school districts); (d) the geographical contiguity of school districts in a given subproject; and (e) the three standard sub- project components. 4.49 National subprojects would be assessed primarily in terms of the direct contribution they would make to: (a) Subsector Program implementation in Phase I departments; or (b) the readying through institution building of other departments and supporting structures at national and local levels for later implementation of the Subsector Program. F. Choice of Borrower 4.50 The Fund of the Ministry of Education (FONDO/MEN) is a legally independent entity established by Congressional Law No. 35 of 1979 "to finance programs of the Ministry of Education and to increase its operative capacity." FONDO/MEN is for the education sector the legal analogue of the Ministry of Public Works's National Highway Fund (Fondo Vial Nacional), the Borrower under Loan 2121-CO. 4.51 FONDO/MEN is administered by a Board of Directors comprising the following five officials of the Ministry of Education, who together consti- tute a majority of voting members of the Subsector Program Management Committee: the Vice Minister (under delegation of the Minister), the Secre- tary General, the Head of the Sectoral Planning Office, the Head of the Legal Office, and the Director General for Administrative Services. The Minister is the director and legal representative of FONDO/MEN. The regular staff of the Ministry simultaneously serve as staff of FONDO/MEN. Under Colombian jurisprudence, FONDO/MEN has the legal capacity to contract external loans and to assume responsibility for execution through the Ministry of Education of programs financed by FONDO/MEN. While it has minor independent sources of revenue, FONDO/MEN derives most of its revenue from transfers from the national treasury; standing alone, in absence of a government guarantee, FONDO/MEN is not credit worthy. 4.52 For purposes of implementing the Subsector Program, FONDO/MEN offers a significant advantage as Borrower over the Republic of Colombia. FONDO/MEN must follow the same strict rules for contracting for goods and services as any public agency, and comes under the same direct fiscal control of the Controller General of the Republic. But, as the program execution agency of the Ministry of Education, FONDO/MEN is able to execute contracts of all sorts more quickly once they are let. This greater administrative agility, the fundamental reason for creation of FONDO/MEN, is due essentially to FONDO/MEN's authority to manage resources put at its disposal indepen- dently of the national treasury and its cumbersome procedures for central government payments and inter-governmental transfers. For example, disburse- ments against the proposed loan would typically take less than a week to be transferred by the Central Bank to control of FONDO/MEN; if the Republic were Borrower and the funds therefore were constrained to pass through the treas- ury, several months would usually be required. Past Bank projects in educa- tion (para. 1.04) and other social sectors have experienced implementation delays due to unreliable flows of both counterpart and Bank resources.  - 34 - Combined with the provisions for a Working Fund (described in the next chap- ter), choice of FONDO/MEN as Borrower would alleviate that constraint to prompt execution of the Subsector Program. 4.53 In Decree 1839 establishing the Subsector Program, FONDO/MEN has been assigned responsibility for Subsector Program administration, finance, and execution acting through the Ministry staff. V. SUBSECTOR PROGRAM COSTS AND FINANCING A. Total Costs 5.01 The Government's ten-year Rural Basic Education Subsector Program (including the portion financed through DRI-II) is tentatively estimated at about US$630.4 million (at March 1982 prices). This total program cost includes: (a) investment expenditures (base costs) in the order of about US$249.0 million and contingencies (physical and price) amounting to US$154.6 million, which are equivalent to 39.5% and 24.5% of total program cost res- pectively; and (b) incremental recurrent expenditure (base cost) of about US$135.9 million and price contingencies of about US$91.0 million, which represent 21.6% and 14.4% of the total program cost respectively. As a whole, investment costs represent 64% of the total program cost, and incre- mental recurrent expenditures account for the balance of 36%. As a propor- tion of projected national government expenditures on primary education over the period 1982-1991, total investment costs of the Subsector Program are approximately 6.5% and incremental recurrent costs are about 3.5%. The total program cost, by phase of execution, is broken down as follows: Table 5.1: ESTIMAT TOTAL COST OF THE SUBSECTOR PROGRAM (Prices in US millions as of March 1982) Incremental Investment Cost Recurrent Cost %of % of Basic Sub- Total Total Total Program DRI II Total Program Amount Program Cost Phase I Base Cost 28.16 6.52 34.68 7.58 42.26 (1982-84) Contingencies 8.07 0.76 8.83 0.97 9.80 Subtotal 36.23 7.28 43.51 6.9 8.5a/ 1.4 52.06 Phase II Base Cost 66.47 12.78 79.25 26.25 105.50 (1985-87) Contingencies 33.87 4.16 38.03 12.02 50.05 Subtotal 100.3 16.94 117.28 18.6 38.27 DI 6.1 155.55 Phase III Base Cost 135.03 - 135.03 102.03 237.06 (1988-91) Contingencies 107.71 - 107.71 78.03 185.74 Subtotal 242.74 - 242.74 38.5 180.06 c/ 28.5 422.80 TOTAL BASE CDST 229.66 19.30 248.96 39.5 135.86 21.6 384.82 TOTAL CONTINGENCIES 149.65 4.92 154.57 24.5 91.02 14.4 245.59 TOTAL PROGRAM COST (Including Continpencies) 379.31 24.22 403.53 64.0 226.88 36.0 630.41 a/ Incrpmpntal recurrent cost for the period; US$1.72 million is for 40 DRI-II districts. b/ Incremental recurrent cost for the period; US$6.12 million is for 80 DRI-II districts. c/ Incremental recurrent cost for the period.  - 35 - 5.02 The average unit investment cost (including contingencies) of the ten-year program would amount to about US$296 per improved student place. The average unit incremental recurrent cost would be about US$17 per student year. These costs are economical; the unit investment cost compares favor- ably with the median unit base costs in the region of about US$450 per student place. B. Investment Costs Subsector Program Base Costs 5.03 The total investment base cost of the Subsector Program would amount to about US$249.0 million (at March 1982 prices). Annex 5 provides details of the investment base cost by phase of execution, and by type of expenditure. Of the total investment base cost, expenditures for basic educational inputs (teaching materials, training programs, school furniture and transport facilities for supervision of the school districts) comprise 40%. Basic improvements of school physical facilities (classroom repair, provision of water and sanitary facilities, etc.) comprise 52%. Programs at the national level (management information systems, research and evaluation, and pilot facilities for the Escuelas Normales Demostrativas) comprise about 8%. The investment costs of the program are both economical and feasible and do not present an undue burden to the country. Phase I Subsector Project Base Costs 5.04 Investment costs by type of expenditure for the Subsector Project (excluding DRI-Il districts financed separately) are detailed in Tables 5.2 and Annex 6. The total investment base costs for the Subsector Project would amount to US$28.2 million (at March 1982 prices) and would comprise about 11.3% of total ten-year Subsector Program investment base cost.  - 36 - Table 5.2: SUMMARY OF INVESTMENT COSTS BY CATEGORY OF EXPENDITURE FOR THE SUBSECTOR PROJECT a/ (in US$'000 at March 1982 prices) (See Annex 6 for detailed breakdown of investment costs) Local Foreign Total Category Cost Foreign Category of Expenditure Cost Cost Investment As % of As % of Component Component Cost Base Cost Total Teaching Materials 489.2 489.2 978.4 3.47 50.0 Training of Teachers and 4,824.5 253.9 5,078.4 18.03 5.0 Administrators Furniture 4,112.6 457.0 4,569.6 16.23 10.0 Transport Facilities 20.4 183.8 204.2 0.73 90.0 Civil Works (new and repairs) 10,320.0 1,821.2 12,141.2 43.12 15.0 Equipment 51.9 466.7 518.6 1.84 90.0 Technical Assistance 4,435.4 233.4 4,668.8 16.58 5.0 TOTAL BASE OOST: 24,254.0 3,905.2 28,159.2 100.0 13.9 TOTAL CONTINGENCIES: 6,953.8 1,115.3 8,069.1 28.65 13.8 Physical 1,754.9 312.4 2,067.3 7.34 15.1 Price 5,198.9 802.9 6,001.8 21.31 13.4 TOTAL INVESTMENT COST (including contingencies) 31,207.8 5,020.5 36,228.3 Percent of Total Investment Cost 86.14 13.86 100 Interest during Construction - - - Front-End Fee on Bank Loan - 0.22 0.22 b/ TOTAL FINANCING REQUIRED 31,207.8 5.020.72 36.228.3 a/ For the 150 districts to be financed under the loan herein proposed, exclusive of DRI-II education component financed separately. b/ Bank loan assumed as US$15.0 million. 5.05 Base costs of the various components of the program refer to prices as of March 1982. These have been determined on the basis of: (a) recent contracts awarded and tenders received by ICCE for civil works (of similar design and location as the project schools), furniture for primary schools, vehicles, textbooks and instructional materials printing and supply; (b) current hiring rates of local specialists; (c) average training expendi- tures for courses of 1-2 weeks and 2-4 months duration including cost of training materials, transportation and per diem, honoraria and fees of train- ers and support staff when contracted outside the public sector; and (d) in case of research programs, staff requirements for the duration of the study, and estimates of materials, supplies, transport and incidental expenses required to complete the study. Assumptions of base costs for the ten-year program are uniform for all three phases of the Subsector Program.  - 37 - Duties and taxes on the project are negligible and program costs are esti- mated net of taxes. The basis for estimation of unit costs for the physical requirements of the average school district is contained in the Project File. Contingencies 5.06 Total contingencies for the Phase I Subsector Project (150 dis- tricts, excluding DRI-II districts financed separately) are estimated at about US$8.07 million or 28.7% of the base costs (at March 1982 prices). Physical contingencies would amount to US$2.07 million or 7.3% of the base cost, and price contingencies would amount to about US$6.0 million or about 19.9% of the base cost plus physical contingency cost. Physical contingen- cies are calculated as follows: 12% of the base costs of civil works; 10% for furniture; 5% of the base cost of transport facilities for school super- vision and equipment; 2.5% for student textbooks and 5% for teacher manuals and learning materials; none are expected for training and 2% for technical assistance (including research and evaluation programs, and the management information systems). 16/ Price contingencies are estimated as follows: Table 5.3: ESTIMATED PRICE CONTINGENCIES Local Currency Foreign Currency Calendar Year Components Components -------------------percentage------------------ Civil Works and Other Furniture Categories 1982 11.0 8.5 8.0 1983 8.0 8.0 8.0 1984 7.5 7.5 7.5 1985 7.0 7.0 7.0 1986-90 6.0 6.0 6.0 Foreign Exchange Component 5.07 The total foreign exchange cost of the ten-year Subsector Program is estimated at about US$56 million or equivalent to about 14% of the total subsector investment cost including contingencies. Foreign exchange costs of the Subsector Project would amount to about US$5.02 million or 13.9% of the investment cost including contingencies. Foreign exchange costs are 16/ In assessing the adequacy of physical contingencies, the following points should be considered: (a) Overall, the estimate is that 31% of total classrooms need repair work and 21% of total classrooms required are either new or replaced facilities. Due to lack of information about the actual conditions of the classrooms needing repairs (this is gene- rated in the course of subproject preparation) and difficult access to most of the districts, a higher than normal physical contingency has been applied for civil works; (b) 15% of the total number of student texts are to be printed additionally to cover losses during deliveries, damage, etc. Costs of these additional textbooks have been added to base costs. (c) A 5% attrition rate per year has been added to calculate base training costs.  - 38 - estimated on the basis of: 50% for the provision of textbooks and learning materials (assuming paper would be imported); 15% for civil works; 10% for furniture; 90% for vehicles and educational equipment; and 5% for training and technical assistance. C. Incremental Recurrent Expenditures Overall Subsector Program 5.08 The Subsector Program is expected to generate incremental recurrent expenditures on the order of US$227 million over the ten-year implementation period (including contingencies). This cost is equivalent to about 56% of the total investment cost including contingencies over the same period, or about 36% of the total cost of the Subsector Program. It is estimated that the incremental recurrent expenditures generated annually by the Subsector Program beginning in 1992 would comprise about 7.4% of the total annual budget of MEN for expenditures for primary education. The total incremental recurrent expenditure would comprise about 85% for salaries; 4% for supplies and materials and maintenance; and 11% for other recurrent expenditures. In assessing the magnitude of the incremental recurrent cost burden of the Sub- sector Program, four facts are important: (a) the added incremental cost is approximately equal to the potential operating economies obtainable by increasing the student teacher ratio in urban public primary schools to 37 from its current level of 31; (b) the incremental costs, projected under liberal assumptions especially regarding personnel, represent upper bound rather than "maximum likelihood" estimates; (c) in net resource terms, incre- mental recurrent costs are expected to be negative, since the economies attributable to efficiency gains are greater than costs (para. 6.05); and (d) approximately 40% of all Colombian primary school students would be covered by the Subsector Program beginning in 1992. Phase I Subsector Project 5.09 The Phase I Subsector Project (150 districts in 1982-84, exclusive of DRI-II districts financed separately) is expected to include incremental recurrent expenditures of about US$6.8 million, which represents 15.8% of the total cost of the Subsector Project. The projected incremental recurrent expenditures in 1984 represent less than 1.2% of expected MEN budgetary allo- cations for primary education in 1984. In view of the high priority accorded by the Government to the Subsector Program, this small increment is not expected to pose any special problems for financing. Table 5.4 shows the estimated incremental recurrent costs for the Subsector Project (exclusive of DRI-II districts).  - 39 - Table 5.4: ESTIMATED INCREMENTAL RECURRENT EXPENDITURES FOR THE SUBSECTOR PROJECT (1982-1984) (Exclusive of DRI II Districts - Millions of US$ at March 1982 prices, including price contingencies) Expenditure Category National Level Regional Level Total Salaries 1.25 4.60 5.85 Supplies, Materials and Maintenance a/ - 0.22 0.22 Others 0.16 0.60 0.76 TOTAL RECURRENT COSTS 1.41 5.42 6.83 a/ Community contributions to school maintenance cannot be determined and are excluded from these costs. Price Contingencies 5.10 Incremental recurrent expenditures projected for Subsector Project include provision for price contingencies of US$0.87 million, equivalent to about 12.8% of base incremental recurrent costs. D. Financing and Bank Contribution Overall Financing Plan 5.11 Sources of funding for the Subsector Program after 1984 are not yet fully identified. For the start-up period 1982-1984, the overall financing plan is presented in Table 5.5.  - 40 - TABLE 5.5: OVERALL FINANCING PLAN Government IBRD IDB Subsector Subsector Total Project a/ DRI-II b/ Total Project a/ DRI-II c/ DRI-II d/ Phase I - 1982-84 Investment 24.95 21.53 3.42 18.56 14.70 3.86 Incremental Recurrent 8.55 6.83 1.72 - - - Total 33.50 28.36 5.14 18.56 14.70 3.86 - Phase II Costs (Prefinanced under DRI II) Investment 7.94 - 7.94 4.5 - 4.5 4.5 Incremental Recurrent 6.12 - 6.12 _ - - Total 14.06 - 14.06 4.5 - 4.5 4.5 a/ That portion of overall Subsector Program proposed for financing in this report-i.e., 150 districts in three departments, plus national level overheads. b/ Counterpart costs of approximately 120 districts in three additional departments. c/ Loan contribution (53% of total cost) to approximately 80 districts total in Huila and Tolima, of which 40 districts implemented in 1982-1984 and rest in 1985-1986. d/ Estimated loan contribution to approximately 40 districts in Magdalena, implemented in 1985-86. Bank Financing 5.12 The proposed Bank loan of US$15.0 million (including the 1.5% front end fee and US$14.7 million effective financing) for support of the Subsector Project (1982-84 with 150 districts), would cover 34% of the total costs (including contingencies) which are estimated at about US$43.0 million (including investment and incremental recurrent costs). The Bank loan would finance 100% of the foreign exchange requirements of the Subsector Project and 25% of local costs. The Government would finance the remaining cost of about US$28.4 million or 66% of the total cost of the Subsector Project. Retroactive Financing and Readiness for Implementation 5.13 The Government began execution of the Rural Basic Education Subsec- tor Program on January 1, 1982. The project is in an advanced state of readiness. The policy framework is in place; educational software is ready following extensive field testing; curricular reform and administrative decentralization have been cautiously expanded over the past five years; preparation is nearly complete for national subprojects; and several local subprojects will be ready for implementation in 1982. About US$3.0 million equivalent for the Subsector Project has been provided in the 1982 budget.  - 41 - It is expected that the Subsector Program could accomplish about twelve months of implementation activities prior to the effectiveness of the pro- posed loan. 5.14 Retroactive financing of up to US$1.5 million or 10% of the loan amount is recommended to cover expenditures on textbooks, furniture, tech- nical assistance, and training incurred after January 1, 1982, and up to the date of loan signing. Working Fund 5.15 A Working Fund would be established by the Borrower (FONDO/MEN) for the purpose of financing local investment expenditures of the Subsector Proj- ect for which financing is here recommended (150 districts and associated actions at national level, exclusive of DRI-II districts). In amount, the Working Fund would equal US$6.0 million, equivalent to six months estimated investment expenditures, and would comprise (a) monies deposited directly by the National Treasury in the FERs of participating departments for local investment costs of the Subsector Project to be incurred at the departmental level; and (b) monies deposited (initial advance(s) and subsequent replenish- ments) in a Special Account of the Borrower (FONDO/MEN) by the Bank and the Guarantor (Republic of Colombia) for the remaining local investment costs of the Subsector Project. Special Account 5.16 The monies referred to in paragraph 5.15(b) above would be depo- sited by the Bank and Guarantor into a single Special Account in the name of the FONDO/MEN in a Colombian public bank acceptable to the Bank, and comin- gled. To the extent that sums available in the FERs of participating depart- ments for local Subsector Project investment costs at the departmental level (para. 5.15(a)) are not sufficient to prefinance eligible local investment expenditures at departmental levels, the Borrower would advance to sub- accounts in the FERs the necessary amounts from the Special Account without distinction as to whether the funds so advanced are loan proceeds (advances or replenishments) or counterpart. The Government would channel its counter- part share of the Working Fund (59% of six months estimated investment expenditures, equivalent to US$3.5 million) either directly to the depart- mental FERs (para. 5.16(a)) or to the Special Account, with the amount to be deposited in the Special Account being determined as the difference between US$3.5 million and counterpart funds for local investment expenditures already made available to the FERs of participating departments. 5.17 The ceiling of the Bank's total deposits to the Special Account would be US$2.5 million, equivalent to the Bank's 41% share of six months estimated investment expenditures. The Bank's initial deposit to the Special Account, in the amount of pesos equivalent to US$1.5 million would be made after effectiveness upon receipt of: (a) a Procedure III withdrawal applica- tion; (b) evidence that the Special Account has been established; and (c) receipt of the Government's Acuerdo(s) de Gastos authorizing deposit of US$1.5 million of Government's respective share to its Special Account and to the regional FERs. 5.18 Following subsequent deposit in the Special Account by the Govern- ment no later than May 15, 1983, of the remaining US$2.0 million of its share  - 42 - of the Working Fund, the remaining Bank deposits to the Special Account, totalling US$1.0 million, would be made against fulfillment of educational performance criteria important to timely implementation as follows: (a) 10% of the Bank's total contribution, the peso equivalent of US$250,000, when the first five local subprojects in the Subsector Project departments are finally approved by the Management Committee, and an identical amount when the second five local subprojects are so approved, for a total of 20% of the Bank's overall contribution to the Working Fund; (b) 6.65% of its total contribu- tion, the peso equivalent of US$166,665, when the process of selecting, training and appointing district directors is complete in any one of the three Subsector Project departments, and a similar amount of US$166,667 when this condition is reached in each of the remaining two Subsector Project departments, for a total of 20% of the Bank's overall contribution to the Working Fund. Detailed procedures for the operation of the Special Account are contained in the Project File. The opening of the Special Account in a Colombian public bank acceptable to the Bank would be a condition of effec- tiveness. E. Disbursements 5.19 Disbursements of the Bank loan for the Subsector Project would be made over a period of three years against 41% of total investment expendi- tures, equivalent to 34% of total estimated expenditures (including incremen- tal recurrent expenditures). With the exception of payments for paper for textbooks and equipment (including vehicles) procured outside Colombia, all disbursements would take the form of advances to or replenishments of the Working Fund. Disbursements for local contracts less than US$300,000, and for miscellaneous small local expenditures for goods and services estimated to cost under the equivalent of US$20,000 would be made against Statements of Expenditures. Details regarding disbursements against Statements of Expendi- tures are contained in the Project File. Disbursements for all other expen- ditures would be made against fully documented withdrawal applications. 5.20 Based on the expected deposit by the Bank of most of its US$2.5 million contribution to the Working Fund within six months of effectiveness and provision to reimburse up to US$1.5 million retroactively, Table 5.6 shows the estimated schedule of disbursements for the Subsector Project. The poor disbursement performance of the previous education project (Loan 920-CO) is expected to be improved upon under the Subsector Program due to the desig- nation of the FONDO/MEN as the Borrower, which is expected to manage funds better, the higher priority accorded the primary subsector by the Government, and the greater readiness for implementation of the Subsector Program. The nature of the Subsector Project--a three year time slice of a Subsector Pro- gram--and the arrangements incorporated to speed execution preclude use of the normal disbursement profiles for this operation.  - 43 - Table 5.6: DISBURSEMENT SCHEDULE Subector Project (1982-1984) (Costs in US$ millions) Bank Fiscal Accumulated Year/Semester Disbursements Disbursements % of Total 1983 2nd 3.0 3.0 20.0 1984 1st 0.5 3.5 23.3 2nd 2.0 5.5 36.6 1985 1st 2.0 7.5 50.0 2nd 2.5 10.0 67.0 1986 1st 5.0 15.0 100.0 5.21 Disbursement of the Bank loan would be made on the following basis for investment expenditures incurred under the Subsector Project: (a) 15% of total expenditures for civil works; (b) 100% of foreign expenditures for vehicles, equipment, and paper for textbooks; and (c) 60% of all other (local) expenditures for furniture; locally pro- cured equipment and paper; textbook production, printing, and dis- tribution; training; and technical assistance. This scheme for disbursements is proposed in order to focus Bank involvement on the qualitative components of the project. F. Procurement Civil Works 5.22 Civil works contracts totalling about US$16.7 million including contingencies, are small and scattered and comprise mainly the repair of existing classrooms in poor condition (about 60% of total number of class- rooms to be repaired, replaced and added); construction of new classrooms including replacement of unserviceable ones (40% of total) and small library/office/storage rooms, and the provision of sanitary and water facili- ties for schools. Civil works costs including contingencies for an average Escuela Nueva and Experimentacion Curricular would amount to about US$5,000 and US$25,000, respectively, whereas the average cost for an entire school district (comprising 11 schools) would amount to about US$95,000. Contracts would therefore generally be awarded on the basis of local competitive bidd- ing procedures acceptable to the Bank. Foreign bidders would have the opportunity to participate although it is highly unlikely that schools can be grouped into packages that would be economic and at the same time suffi-  - 44 - ciently large to attract big construction firms. It is estimated that about 50% of civil works generally involving repair work would be carried out under force account (with the assistance of the community which would contribute labor and some locally available building materials (about 5% of materials needed)). Construction materials in these cases would be procured separately on the basis of local competitive bidding procedures acceptable to Bank and delivered to the school site. Goods 5.23 Except for the procurement of paper, vehicles and educational equipment totalling about US$1.3 million including contingencies, it is unlikely that many foreign suppliers would be interested in participating in tenders for goods including the provision of textbooks, as Colombia has well developed and highly competitive furniture, publishing and printing indus- tries which are expected to win all contracts. Contracts for furniture, printing and technical assistance would be awarded on the basis of local competitive bidding procedures which are satisfactory to the Bank. Paper, vehicles and most equipment would be procured on the basis of ICB. Qualify- ing domestic manufacturers would receive a preference in bid evaluation of 15% or the import duty, whichever is lower. Miscellaneous items of equipment in packages not exceeding US$20,000 equivalent each, and subject to an aggre- gate total of US$500,000, would be purchased from the lowest of a minimum of three price quotes. Contract Review 5.24 All bidding packages for works and goods estimated to cost over US$300,000 would be subject to prior review by the Bank. Such review is estimated to cover about 10% of the total number and 30% of total value of contracts awarded for works and goods. The nature of the project makes it unlikely that many big contracts would be let. G. Accounts, Documentation and Auditing 5.25 The Subsector Project includes numerous small items to be procured locally. These include at least 90% of civil works contracts; off-the-shelf purchases of miscellaneous items, such as building materials for community- assisted civil works under force account; materials and services for training programs; teaching materials, and expenditures in connection with research and training programs. Submission of the numerous and small contracts, invoices, receipts, and other supporting documents for these items would be unduly burdensome and costly for both the Government and the Bank. Statement of expenditure procedures (SOEs) would therefore be used to support reim- bursement for these items. Supporting documents would, however, be retained and made available for review by visiting Bank missions. Disbursements against SOEs would be made on the basis of a consolidated summary of quarter- ly expenditures. To the extent possible, SOEs would be aggregated to amounts not less than US$50,000 per withdrawal. Disbursements against remaining expenditures would be made against full documentation. 5.26 Regular procedures employed by the Controller General of the Repub- lic and the internal auditing department of the MEN would provide adequate  - 45 - control over financial transactions under the Subsector Program. Government auditors are located throughout the departments to supervise transactions of government agencies. Separate books of accounts would be used for the Sub- sector Program to record expenditures from loan proceeds and government funds in accordance with appropriate accounting and auditing procedures. Such accounts, together with disbursement documents, would be audited annually by the Controller General in accordance with standard government practices. The annual audit report would be furnished to the Bank not later than three months after each fiscal year. VI. BENEFITS AND RISKS A. Benefits 17/ 6.01 The major benefits of the Subsector Program are increases in cover- age, equity, quality, and efficiency of primary education; the institutional development which makes these increases possible; and, ultimately, the impact of higher levels of learning on the welfare of rural dwellers. While ex ante estimation of the economic profitability of the Subsector Program would be difficult, ex post facto analysis of investments in primary education in both Colombia and elsewhere suggests that lower limit of the expected internal social rate of return to the Subsector Program would be at least 20%. Coverage 6.02 The net enrollment rate in the rural primary school subsector, now 78%, would increase to approximately 91% by 1995 18/. This would result from a decline in the 7-11 year old age group from 1.8 million in 1980 to 1.7 million in 1995, combined with an increase in subsector enrollments from 1.4 million to about 1.5 million over the same period. The impact of the Subsec- tor Program on coverage would not be significant in national terms during Phase I, although effects would begin to be discernible in those districts incorporated into the Subsector Program in 1982 and 1983. Equity 6.03 Subsector Program resources would be distributed both to depart- ments and school districts in accordance with needs criteria. The most dis- advantaged rural areas would thus be awarded priority in implementation of subprojects. The gaps in educational provision and quality between urban and rural areas generally, among departments, and among school districts within departments would be narrowed. Equity objectives would be directly served. 17/ The numbers of direct beneficiaries of Subsector Program activities- --students, teachers, administrators, schools--are detailed in Annexes 3 and 4. 18/ Five years after the final schools enter the program in 1991.  - 46 - Quality 6.04 Learning achievement of rural primary school children would increase, both in basic skills of literacy and numeracy and in attitudinal acquisition pertinent to life in rural areas. Prior quantification of learn- ing gains is not feasible; however, monitoring and evaluation procedures incorporated in the Subsector Program would enable ex post facto determina- tion of the impact of the program on student achievement. Efficiency 6.05 The overall efficiency 19/ of the rural primary school subsector would be expected to double between 1980 and 1995 as a consequence of the Subsector Program. Efficiency is between 24 and 32% in 1980 depending on the method of calculation; it would approach 40% at the end of Phase I, 50% at the end of Phase II, 60% at the end of Phase III in 1991 and 67% by 1995. These overall gains in efficiency would be the result of substantial declines in drop out and repetition rates attributable to the Subsector Program, as summarized below: Table 6.1 Projected Wastage Rates Rural Primary Education Subsector Grade One Grade Two Grade Three Grade Four Grade Five Year R D R D R D R D R D 1981 .22 .31 .23 .23 .22 .22 .17 .18 .04 .04 1984 .22 .28 .20 .20 .20 .20 .16 .16 .04 .04 1987 .18 .24 .17 .17 .17 .17 .13 .14 .03 .03 1991 .15 .20 .14 .14 .14 .14 .11 .11 .02 .02 1995 .12 .16 .12 .12 .11 .11 .09 .09 .02 .02 R = repetition rate D = dropout rate In other terms, the opportunity costs, on conservative assumptions, of not implementing the Subsector Program--i.e. the economies due to projected efficiency gains in rural primary schools which would not be realized--would exceed US$120 million annually by the early 1990's. 20/ Institutional Development 6.06 These gains in coverage, equity, quality, and efficiency of the subsector would have been achieved in part through improvement in educational management at local, departmental and national levels. But the impact of management improvements would not be limited to the rural primary schooling 19/ Efficiency is defined as the ratio of the number of student years of educational services which should ideally be necessary to produce a pri- mary graduate--in Colombia, five student years--to the number actually invested to produce a graduate. 20/ This estimate results from applying the expected change in efficiency of .30 (from about .30 in 1982 to .60 in 1991) to conservatively projected national government expenditures for primary education in 1991.  - 47 - subsector. Primary education in urban areas would also benefit from institutional development accomplished through the Subsector Program. Impact 6.07 Higher levels of learning among the rural population (and those who migrate from rural to urban areas) would result in increased labor produc- tivity, higher incomes, and sociocultural behaviors more supportive of rapid modernization. Among the latter would be greater occupational mobility for rural youth, reduced fertility among rural women, improved health practices among rural families, and enhanced participation in community affairs. B. Risks 6.08 The most important risks inherent in the Subsector Program concern the management, politico-legal, and financial prerequisites for successful implementation of the program's educational content. Management and politico-legal uncertainties are most significant in Phase I, with financial risk assuming greater weight later in the decade. Management Risks 6.09 Several aspects of the management structure of the program are both new and alien to long established practice. Bureaucratic resistance to the required changes in operating procedures and attitudes could impede implemen- tation, especially in Phase I (1982-1984). 6.10 Establishment of coordinating mechanisms at departmental and national levels gives hope that resistance to change will be minimal. In a departure from past practice, the units charged with implementation respon- sibilities at all levels would be involved from the beginning in project planning, and therefore are more likely to understand fully and support the program. Politico-Legal Uncertainty 6.11 Several actions already taken on teacher supply policies are areas of possible conflict with teachers unions. Departmental authorities may also view these actions, and others related to the new responsibilities assigned to the district directors and the CEPs, as impinging on their traditional prerogatives. 6.12 The logic of national policy which ensures that teachers of accept- able quality are available for all schools, the willingness to protect the career and financial interests of teachers transferred from one school to another, and the undertaking to provide salary and professional incentives to retain teachers in remote rural areas, would make resistance by union leaders or departmental officials to these national proposals difficult. Financial Uncertainty 6.13 The resources required for the Subsector Program are not beyond the country's financial capability. But there is uncertainty as to whether  - 48 - future administrations will make the appropriate changes in resource allocation policies. Financial Uncertainty 6.13 The resources required for the Subsector Program are not beyond the country's financial capability. But there is uncertainty as to whether future administrations will make the appropriate changes in resource allocation policies. 6.14 The risk of changing priorities for educational development resulting in a resource shortfall are smaller in regard to the rural primary subsector than any other, since there is consensus concerning both the need for and the educational effectiveness of the programs to be implemented. The residual risk of an aborted program has been reduced by designing the first phase as a geographically limited and concentrated input of high impact which would stand on its own if for any reason the Subsector Program were later to be abandoned. 6.15 On balance, the potential benefits of the Subsector Program are substantially greater than the risks that accompany it. Furthermore, the relatively slow pace of implementation proposed for Phase I would permit design of supplementary policies and actions as may be required to contain developing risks which appear to threaten successful execution of the Subsec- tor Program in later phases. VII. AGREEMENTS REACHED AND RECOMMENDATIONS 7.01 During negotiations, the Government provided assurances on the following matters: (a) a special program to train teachers (para. 3.13); (b) the national commission on education costs and finance (para. 3.39); (c) Subsector Program organization and staffing, procedures, and criteria (paras. 4.15, 4.29, 4.40); (d) Bank review of selected subprojects and Bank supervision missions (para. 4.38); and (e) geographical coverage of the Subsector Program (para. 4.42). 7.02 Conditions of effectiveness would be: (a) signature and coming into force of at least one implementing contract, acceptable to be Bank, between the Ministry of Edu- cation and a participating department (para. 4.26); (b) appointment of the Departmental Executive Secretary and two professional staff in at least one department for which an implementation contract has come into force (para. 4.26); and  - 49 - (c) opening of the Special Account (para. 5.18). 7.03 A condition of disbursement for subprojects in each department would be appointment of the Executive Secretary and two professional staff. 7.04 Retroactive disbusements up to $1.5 million are recommended for expenditures on textbooks, furniture, technical assistance and training incurred between January 1, 1982 and the date of loan signing (para. 5.14). 7.05 Subject to the above conditions and assurances, the Subsector Proj- ect for Rural Basic Education constitutes a suitable basis for a Bank loan of US$15.0 million equivalent to the Fund of the Ministry of Education, with the guarantee of the Republic of Colombia. The loan would have a term of 17 years, including a four-year grace period, with interest at the rate prevail- ing at the time of distribution of the documents to the Board.  - 50 - Page 1 of 2 COLOMBIA SUBESECTOR PROJECT FOR RURAL DASIC_EDUCATION COMPARATIVE EDUCATION; INDICATORS June 21, 1982 :CENTRAL: * : ~~~~:GOVT. : IEXP. ON? I PRI. :RECURRENT? : SEC. * . , ~~~~~~:EDU. AS? EDUCATION :LITER- P RI. ICOMPLE- :STU- :UNIT COST!PROGRESS-? SEC. ?STU-- IHIGHER: * . . IX~~~: TTL. I RECURRENT IACY IENROLLITION IDENTSIPRIM. ED. lION RATE IENROLLIDENTS:ENROLL? * IGNP/ I GNOP ?CENTRAL?EXP ALLOCATED?: RATE :RATID :RATE FORIPER :AS % GNP/:FROM PRI. IRATIO :PER :RATIOD BASEIP,OP. ICAPITA: DEVOTED: GOVT. I TO? 1(% OF I NET IPRI.SCH. ITEACH- CAPITA :TO SEC.I NET ITEACH- GROSS: YRIMILLS.: (US$): TO EDU.I EXP. IPRI. SEC. HI.IADULTS)I (%) :CYCLE(%8ER : N N ER, I(N :(1979):(1979): :(1976)I II II () 1(2) 1(3) (4) 1 (5) 1(6) 1(7) I (8) 1(9) I 10) 1(11) 1(12) : (13) 1(14) DIEVELOF'ED COIJNTRIES AUSTRALIA 80 14.6 8,670 6.38 14.6