Sri Lanka - Teacher Education and Teacher Deployment Project

Document of The World Bank Report No. 15282-CE STAFF APPRAISAL REPORT DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA FOR A TEACHER EDUCATION AND TEACHER DEPLOYMENT PROJECT May 10, 1996 Population and Human Resources Division Country Department I South Asia Region  CURRENCY EQUIVALENTS Currency Unit = SLRS (Rs) US$1.00 = Rs 50.00 (January 1996) FISCAL YEAR (FY) (Goverflnieni ot Sri Lanka) January I - December 31 PRINCIPAL ACRONYMS USED ADB = Asian Development Bank AUSaid = Australian Government Aid COE = Colleges of Education GTZ = Deutsche Gesellschaft fuer Technishe Zusammenarbeit GDP = Gross domestic product GNP = Gross national product IDA = International Development Association IMF = International Monetary Fund MEHE = Ministry of Education and Higher Education NEC = National Education Comission ODA = Overseas Development Agency (UK) RR = Ready Reckoner OUSL = Open University of Sri Lanka SDR = Special Drawing Rights TEI = Teacher Education Institutes TTC = Teacher Training Colleges TC = Teacher Centers TES = Teacher Educator Service  DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA TEACHER EDUCATION AND TEACHER DEPLOYMENT PROJECT TABLE OF CONTENTS Page No. Credit and Project Summary ...............................................................i Sri Lanka Basic Data and Social Profile ............................................................. ii Section 1 A. SECTOR BACKGROUND Education Sector ..............................................................1 Gender Issues ...............................................................2 Education Access/Enrollment ............................................................... 2 Education Administration ..............................................................3 Teachers ..............................................................3 Quality and Efficiency ..............................................................3 B. BUDGETARY ISSUES Expenditures ...........................................................4 High Cost of Teacher Recruitment and Budget Sustainability ......................4 High Cost of Recent Salary Increase ............................................................5 Provincial Expenditure on Education ...........................................................5 Inequitable Distribution of Resources Among Schools .................................6 C. TEACHER DEPLOYMENT ISSUES Mismatch of Teacher Demand and Supply ....................................................6 Declining Teacher Demand ............................................................6 Low Teacher Productivity ............................................................7 Shortages of Trained Teacher Output ............................................................7 Teacher Deployment Mechanisms ........................................................... 7 Ineffective Teacher Incentive System ...........................................................7 New System for Staff Transfers ............................................................ 8 D. QUALITY ISSUES IN TEACHER EDUCATION Poor Structure and Governance of Teacher Education ..................................8 Imbalances in Training Programs ........................................................... 9 Problems Facing Training Institutions ...........................................................9 Staff Development for Teacher Educators .....................................................9 Inflexible Training Specialization .......................................................... 10 Unsatisfactory Conditions of Physical Facilities ........................................... 10  E. COST ISSUES IN TEACHER EDUCATION PROGRAMS High Program Costs ............................................................. 11 High Cost of Residential Facilities ............................................................. 11 Cost Effectiveness and Sustainability of Distance Education ....................... 11 Costs of Teacher Education in Universities ................................................... 12 F. DONOR ACTIVITIES IN THE EDUCATION Other Donor participation in the Sector ......................................................... 12 IDA Support For Education ............................................................. 12 Country Assistance Strategy ............................................................. 13. G. GOVERNMENT POLICIES AND IDA STRATEGY National Education Commission ............................................................. 13 Government Policies ............................................................. 13 Future Donors Participation ............................................................. 14 Teacher Education and Deployment Subsector ............................................. 14 H. LESSONS LEARNED ............................................................. 14 Section 2 A. PROJECT OBJECTIVES. CONCEPT AND DESCRIPTION Objectives ................................................................ 16 Project Concept ................................................................ 17 Description ................................................................ 17 Component A: Rationalization of Teacher Deployment ............................. 19 Component B: Rationalization of Structure and Organization ................... 22 Component C: Updating Teacher Education Programs .............................. 24 Component D: Strengthening of Staffing and Management .......... . ........... 25 Component E: Strengthening and Upgrading of the Teacher Training Institutions ................................................................ 27 Component F: StrengthenManagement and Administration of Teacher Education Institutions ................................................................ 28 Component G: Studies and Monitoring ...................................................... 29 B. PROJECT CONTEXT Rational for IDA Involvement ............................................................. 29 Poverty Category and Program Objectives .................................................... 30 Other Donor Participation ............................................................. 30 C. ENVIROMENTAL CONSIDERATIONS ............................................................. 31 D. WOMEN IN DEVELOPMENT ............................................................. 31 Section 3 PROJECT COSTS ................. 32 Basis for Cost Estimates ................ 32 Contingency Allowances ................ 34 Foreign Exchange Component .................... 34  Retroactive Financing ............................................................... 34 FINANCING PLAN (INCLUDING ADB SUPPORT) .................................................. 34 PROCUREMENT .............................................................. 35 Architectural and Technical Studies .............................................................. 37 Procurement of Furniture ............................................................... 37 Equipment Packages .............................................................. 38 Books, Educational Materials .............................................................. 38 For ICB Procurement ............................................................... 38 Technical Assistance and Training .............................................................. 38 External Training .............................................................. 38 In-Country Training/Workshops .............................................................. 39 Disbursements ............................................................... 39 Accounts and Audits ............................................................... 40 Project Management .............................................................. 40 Lead Agency .............................................................. 40 Studies ............................................................... 41 Monitoring, Reporting and Supervision ............................................................... 42 Section 4 A. PROJECT BENEFITS AND RISKS ................................................................. 45 Economic and Financial Analysis ................................................................. 45 B. RISKS ................................................................. 50 Section 5 AGREEMENTS REACHED AND RECOMMENDATION .......................................... 52 Tables and Figures in Text Figure 1.1 Enrollment Projection by Education Level, 1994-2005 ................................2 Figure 1.2 Expenditure Per Student by Type of Expenditure, 1993 ...............................4 Table 1.1 Summary of Staff and Enrollment by Type of Institution, 1993 and 1994 . . .8 Table 3.1 Estimated Project Costs ............................................................... 32 Table 3.2 Summary of Project Costs by Category of Expenditure ................................ 33 Table 3.3 Financing Plan .............................................................. 35 Table 3.4 Amounts and Methods of Procurement ......................................................... 36 Table 3.5 Type, Number and Amount of Civil Works Contracts ................................... 37  Annexes Annex 1 Key Descriptive Statistics of Education System 1990-1994 (para. 1.5) ..................1 Annex 2 GDP Government and Education Expenditures 1985-1995 (para. 1.9) ................. 55 Annex 3 Ready Reckoner Resource Allocation Formula (paras. 1.14, 2.6 and 2.5) .56 Annex 4 Student Teacher ratio (STR) by Medium of Instruction in 1993-1994 (para.1.16) .63 Annex 5 Teacher Surpluses and Shortages by Province and Medium of Instruction in 1994 (para. 1.20) .................................... 64 Annex 6 National Policy on Teacher Transfers (para. 1.22) .................................... 65 Annex 7 Teacher Education Academic Staff in Universities, NIE, COEs and TTCs in 1995 (para. 1.27) .............................................. 68 Annex 8 Cost-Effectiveness of Teacher Education Programs (para. 1.31) .......................... 69 Annex 9 Structure of the Initial Training Curriculum (para. 1.35) ...................................... 74 Annex 10 Teacher Education Policy Statement (paras. 1.40 and 2.2) ................................... 75 Annex 11 Detailed Project Despcription (para. 2.3) .............................................. 83 Annex 12 Outcome, Benefits and Costs of Project Activities (para. 2.3) .............................. 94 Annex 13 Teacher Cadre Committee (para. 2.19) .............................................. 102 Annex 14 Technical Assistance/Consultants and Training Support by Project Component (paras. 2.12 and 3.14) ................................................... 104 Annex 15 Proposed Structure of Reformed System (para. 2.13) ......................................... 108 Annex 16 National Authority on Teacher Education (para. 2.14) ........................................ 110 Annex 17 Executive Structure for National Colleges of Education (para. 2.15) .................. 112 Annex 18 Type A and B Teacher Centers (para. 2.16) ................................................... 113 Annex 19A Existing and Proposed National Colleges of Education [para. 2.19 (a)] ............. 115 Annex 19B Existing TTCs and COEs to be converted to Teacher Centers Type A and B [para. 2.19 (a)] ................................................... 116 Annex 20 Continuing Education Programs [para. 2.19 (b)] ................................................. 117 Annex 21A Existing and New NCOEs Intake and Enrollment Plan 1994-2005 (para. 2.20) .120 Annex 21 B Teacher Recruitment and Attrition by Education Level 1994-2005 (para. 2.20) ................................................. 123 Annex 22 National Colleges of Education Staffing (para. 2.23) .......................................... 124 Annex 23 Criteria for Staff Development (para. 2.23) ................................................. 126 Annex 24 Teacher Educator Staff Development (para. 2.23) ............................................... 128 Annex 25 Physical Facilities (para. 2.28) ................................................. 131 Annex 26 Studies and Monitoring (paras. 2.31 and 3.27) ................................................. 132 Annex 27 Detailed Project Cost Tables (Tables A- to-E) (para. 3.1) .................................. 135 Annex 28 Procurement Threshold and Prior Review Requirements (para 3.8) .................. 140 Annex 29 Government Procurement Capacity (para. 3.8 ) ................................................. 141 Annex 30 Procurement Schedule for Civil Works and Linked Furniture and Equipment (para 3.10) .......................................... 143 Annex 31 Estimated Schedule of Disbursements (para. 3.17)) .......................................... 144 Annex 32 Civil Works Project Implemenation Indicators (para. 3.21) ................................ 145 Annex 33 Project Indicators and Implementation Plan [para. 3.27 (c)] ............................... 147 Annex 34 IDA Supervision Plan [para. 3.27 (f)] .......................................... 150  Annex 35 Selected Documentation in Project Files (para. 3.28) ..................................... 152 a) Reports Related to the Sector b) Reports and Studies Related to the Project c) Selected Working Papers Annex 36 Teacher Education Institutions Estimated Operational Costs,1 994-2005 (Rs mil) (para. 4.9) .153 This report is based on the findings of an appraisal mission which visited Sri Lanka in October 1995 comprising of Mr. Albert Aime (Senior Education Planner - Task Manager). Mr. Mohammed Allak (Economist), Mr. Ralph Rawlinson (Education Specialist), Mr. Bemard Masters (Education Specialist), Mr. Jacques Waechter (Architect), Ms. Agneta Flinck (Distance Education Specialist), and Ms. Starlet Vedamuthu (Administrative Assistant). Peer reviewers for this project were: Mr. William Rees (Principal Economist - EA2PH). Mr. Djamaldine Rouag (Education Specialist - AF2PH), Mr. Donald Holsinger (Education Specialist - HDD). Mr. Paul Blay (Principal Operations Officer - SAIPH), assisted with processing. Ms. Mieko Nishimizu, Director, SAI and Ms. Barbara Herz, Division Chief, SA I PH, have endorsed the project.   DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA STAFF APPRAISAL REPORT TEACHER EDUCATION AND TEACHER DEPLOYMENT PROJECT Credit and Proiect Summary Borrower: Sri Lanka. Implementation Agency: Ministry of Education and Higher Education. Beneficiary: National Authority for Teacher Education; Provincial Education Departments. Poverty: PTI: Program of targeted interventions. The project will help upgrade education quality of all children particularly those in deprived schools. Access to better education particularly for rural and slum children will enhance their educational opportunities and eventual earning and contributions to the economy. Credit Amount: SDR 44.0 million (US$64.1 million equivalent). Terms: Standard, with 40 years maturity. Commitment Fee: 0.50% on undisbursed credit balances, beginning 60 days after signing, less any waiver. Onlending Terms: Not applicable. Financing Plan: See paragraph 3.6. Net Present Value: Not applicable. Project Identification No.: No. LKPA42266 Map: - -EBRD No. 27674  I  Democratic Socialistic Republic of Sri Lanka: Basic Data and Social Profile INDICATORS GDP real growth rate, 1994 5.6% Per Capita GNP (USS), 1994 584 Population (000's) 1994 17,86 Population Growth Rate, 1994 1.4% Crude Birth Rate, 1990 (per W0) 20.6 Crude Death Rate, 1990 (per 'ODO) 5.5 Infant Mortality Rate, 1990 (per '000) 19.3 HEALTH SECTOR 11993) Population per Physician 4,508 Population Per Nurse 1.490 Population per Hospital Bed 360 Population with Access to Safe Drnldng Water 53% Contraceptive Prevalence 66% Health Expenditures as a % of Total Public Expenditures 4.5 EDUCATION SECTOR Enrollmnents, 1994 Primary Education (years 1 - 5) 1,928,017 % female 48.0 Secondary Education (years 6 - 11) 2,060,589 % female 51.0 Collegiate Education (years 12 & 13) 203,497 % female 57.0 Total Enrollment 4,192,103 % female 50.0 Enrollmrent Promections. 2006 Primary Education 1,580,882 Seoondary Education 1,730,742 Collegiate Education (years 12 & 13) 250,649 Total Enrollment 3,571,273 Literacy (1990 Females Adult Lfteracy Rate 88% Female Adult Literacy Rate 83% Lhteracy rate of urban ultra poor 87% 84% Literacy rate of urban non poor 96% 93% Literacy rate of rural ultra poor 84% 79% Lhteracy rate of rural non poor 91% 83% Studert Teacher Ratio, 1993 Primary Education Leved 28.7 Secondary Education Level 22.2 Collegiate Education Level 13.7 All Education Levels 24.1 Number of Teachers. 1993 Primary Level 69,010 % Sinhala 79.1 Secondary Level 90,076 % Sinhala 83.4 Collegiate Level 13,958 % Sinhala 84.6 Teachers in Schtol administration 13,883 Total Teachers 186.927 Education Expenditure (1994) Education Expenditures as a % of Total Public Expenditures 10.6 Education Expenditures as a % of GDP 3.0 Notes: Literacy rate is the % of Iterate in the population 10 years or more. 'Ultra poor' are those who score 0-100 on consumptio-related poverty line and 'non poor are those who sce >1 20. Source: Central Bank of Sri Lanka, Annual Report, 1994 and World Bank Economic Reports: Policies and Strategies for Teacher Education and Teacher Deplyment, SAl PH (June 1995) sardata.doc   1. BACKGROUND, ISSUES AND CONSTRAINTS A. Sector Background 1.1 Sri Lanka occupies an unusual place in the relationship between education and national economic development: its education system is in many ways a heartening success story. Although GNP per capita is only US$584, it has a literacy rate of over 90 percent, the highest basic and secondary education participation in South Asia, and its social indicators are those typical of countries with much higher incomes. However, it now faces "second-generation" problems, affecting the quality, equity and efficiency of education. Among these problems are the effects of the recruitment from 1989 to 1995 of about 50,000 mostly untrained teachers, a teacher deployment system that does not make teachers available in areas that suffer shortages, a teacher training system that cannot cope with the demands placed on it, and the content and nature of the education provided at primary and secondary levels. Government has now adopted a national education policy to address these issues, and the present project is an important step in supporting implementation of that policy. 1.2 Education Sector: The gross enrollment ratio in primary education is high (101 percent of age cohort), with net enrollment of over 90 percent, and universal primary education is expected to be achieved before the year 2000 (considerably faster than the rest of South Asia). Secondary enrollment (grades 6-11)1 in 1993 reached over 70 percent of the age cohort, far above South Asia averages. Participation of boys and girls in general education is approximately equal--again a sharp difference from the remainder of the Region. Most education is provided by the state sector (some administered nationally in a few prestigious schools, but the majority at a provincial level); the few licensed private sector schools are still officially not permitted to expand nor are new private schools accepted.2 Structure of Education System: The government school system has a structure of 5 years primary, 3 years lower secondary, 3 years upper secondary and 2 years collegiate. Schools however do not follow these levels, but are categorized as follows: Type 1 schools, which mostly provide grades 1-13 but some grades 6-13 (among Type I schools, Type IAB schools teach all subjects while Type IC schools do not teach science subjects at upper levels); type 2 schools have grades 1-11 or 6-1 1; type 3 schools have grades 1-5. There is constant political pressure to upgrade schools by adding higher classes onto a type 1 or type 2 school. Preliminary research by NIE shows a tendency for the best achievement in primary education to come from Type IAB or Type 3 schools. 2 Several "international schools" are tolerated, operating under the Companies Act without clearance from the education authorities, mostly teaching in English, and there are many crammers, supplementing teaching to help pass examinations. 1  1.3 At the higher education level, on the other hand, Sri Lanka has the lowest participation rates in Asia, less than 3 percent of the age group, versus the Asian average of 8 percent. Nonetheless, university graduates find difficulty in the labor market, with high unemployment among younger graduates. Private sector higher education is permitted but is almost non-existent: the least private sector activity in Asia. 1.4 Gender Issues: Sri Lanka has a unique position among developing countries, in reaching equitable female participation in education, apart from the vocational training and technical education sub-sector. Almost all girls complete primary education and most complete grade 11 (O Level). Female participation at A level and university equals that of males. Female enrollments dominate in areas such as humanities, health services and teacher education programs. In 1994, women comprised about 80 percent of primary and 60 percent of secondary school teachers and averaged over 70 percent of teachers at all levels. The average age of women teachers is only about 35 years. The problem facing the sector is indeed that too few trainees and new teachers are male, which makes teacher deployment more difficult. Women are less represented in administration, and continued attention is required to increase their opportunities; only 35 percent of school principals are women. 1.5 Education Access/Enrollment: Enrollment in general education increased by almost one million (24 percent) during the 1980s. However, during the 1990s declining population growth has started to affect education enrollment and population growth rates have fallen rapidly in the past 15 years, to about one percent annually. Due to declining fertility, first year primary intake has been declining since 1991 by over 3 percent a year (Annex 1). Enrollment projections show a continuing decline, especially in the junior years. During 1994-2005, the total number of students in primary years is expected to decrease by 1 percent per year; numbers in secondary school would decrease during 1997- 2005 by 1.4 percent per year. Enrollment in collegiate grades (12-13), only 4 percent of total students in 1994, is expected to continue growing, but at less than 2 percent per year (Figure 1.1). Figure 1.1 Enrollmrent Projection by Education Level, 1994-2006 (thousand students) 4500 3000 3000 2600 2000 1100 1000 500 sPnm-5 ESec6-1 0Cog 12-13 o MD l S I _o_ _ 111 E2 ,,. a a st9o 2  1.6 Education Administration: The state education system is managed by the provinces, coordinated by the national Ministry of Education and Higher Education (NEHE). The system of decentralized administration has been modified frequently in recent years, following changes in national administrative policy. The relative powers of MEHE, provinces, district and divisions in administering education overlap. Government and IDA are discussing how the system needs to be developed, and administrative reform is expected to be part of a future education project. 1.7 Teachers: Sri Lanka has nearly 190,000 teachers in public sector primary, secondary and collegiate schools. A salient feature of the education system is that it undertook a net increase of some 50,000 new, mostly unqualified teachers between 1989 and 1994 as a result of the rapid recruitment with political overtones (following a substantial reduction in numbers in 1989 through a poorly-designed public employment restructuring scheme). In addition, during that period, matters were further complicated by declines in enrollments averaging about 3 percent per annum farther increasing the over supply of teachers in favorable areas while deficits remained in rural and difficult areas. 1.8 Quality and Efirciency: Quality of education is declining, particularly in schools in urban slums and rural areas. Factors affecting quality and efficiency include: * Expenditures on quality inputs (e.g. teaching materials, school supplies, facilities and maintenance) are low and declining. * Resources are distributed inequitably among schools--those which serve poorer groups typically receive lower allocations of funds and teachers. * The unplanned teacher recruitment of 1989-95 raised teacher salary costs to an unsustainable level. * The deployment of teachers does not respond to demand. Teacher shortages remain in rural and slum areas, despite rising surpluses in favorable areas. Some disciplines are short of teachers overall, in particular in schools teaching in Tamil, and geographical shortages are especially serious in these disciplines. * Teacher absenteeism is high. * Teacher training has inadequate quality and content and is not cost-effective; pre- service teacher education programs have not been reviewed for almost a decade, while teacher training institutions are poorly maintained and not located according to population and regional needs. * The 48 percent untrained teachers in 1994 is gradually being reduced with over 20,000 being certified, by distance mode, in 1996 and another 15,000 expected to be certified in 1997. In spite of these large efforts the present training programs cannot keep pace with the needs. * Contrary to international trends, overall student:teacher ratios have fallen from about 28:1 in 1989 to 24:1 in 1995. * The teacher training system has inadequate capacity to train so many teachers, relies heavily on an in-service distance education program, and has a number of overlapping types of training institution whose pedagogical output is inadequate. 3  * Educational administration remains weak and disorganized following almost annual structural changes during the last five years. * The general education curriculum needs to be more responsive particularly at secondary levels. * Textbook contents are inadequate, and their poor physical quality result in about 80 percent of the books being replaced annually rather than every three years as practiced by most countries. * Allocations for welfare programs take up a higher percentage of educational costs than other education systems in the region. B. Budgetary Issues 1.9 Expenditure: Sri Lanka spends relatively little on education (Annex 2) by international standards, about 3 percent of GDP and 10 percent of total public expenditure (international averages are 5 and 20 percent respectively). Asian countfies average range 4 to 8 percent of GDP and I 1 to 18 percent of total expenditures. Expenditure has grown together with the expansion of the primary and secondary system, and has remained within 8 and 10 percent of overall public spending since 1982. About 38 percent of recurrent public expenditure is on primary education, 53 percent on secondary, and 9 percent on university education, although the structure of the school system (page 1) makes allocation of expenditures between primary and secondary levels difficult to assess. The emphasis on primary and secondary levels, rather than higher education, reflects relative enrollment and is reasonable by international standards. Unit costs as a percentage of per capita GDP are below other Asian countries. 1.10 In 1993, 71 percent of the national education budget was allocated to salaries and 26 percent for student welfare programs (to be addressed in a sector project under preparation), leaving less than 3 percent for inputs such as essential teaching materials, school supplies and school maintenance. Expenditure per student was the highest for salaries (Rs 1,700) followed by student programs (Rs 600), averaged nationally: some provinces spent as little as 1 percent of their budget on quality inputs (Figure 1.2). Figure 1.2: Expenditure Per Student by Type of Expenditure, 1993 (Rs) 1692 1800 /. 1 1600 * 1200 _ Salary St Prg Transp Others S.Supls Travel Rep&M 4  1.11 High Cost of Teacher Recruitment and Budget sustainability: The massive recruitment of teachers in the last five years has had an immense effect on salary expenditure. Between 1989 and 1993, newly recruited teachers added over Rs 1.2 billion (18%) to education sector salary expenditure, which could have been saved if recruitment had been confined to replacing attrition and stricter deployment practices applied. Funds saved could have been invested, for example, in teacher deployment incentives to fill shortages in remote areas, or in desperately needed quality inputs and maintenance. The 1994 Sector Report indicated that the present teacher recruitment trend would result in the doubling of teacher salary expenditures by 2000, and the education budget would grow at an unsustainable 7 percent per annum. The Sector Report estimated that if teacher recruitment were confined to off-setting attrition, the education budget would still need to grow, but only by about 3 percent per year for a few years to improve quality. Given the forecast 5 percent annual growth of GDP, that growth is sustainable. 1.12 High Cost of Recent Salary Increase: A 48 percent teacher salary increase in January 1995 removed the salary gap between teachers and other comparable civil servants, placing teachers among the better paid public servants. It added Rs 2.8 billion to the 1995 sector budget, raising it to Rs 20 billion; teacher salaries are now one fourth of the total civil servants' salary bill. It is true that teachers had been underpaid, but an occasion was missed to obtain changes in their conditions of service, requiring them to work in a manner more responsive to children's' needs. The 2 percent difference between the salary scales of trained and untrained teachers may not be an adequate incentive for the large group of untrained teachers to take training. Furthermore, as a result of the salary increase being given during a difficult fiscal situation, the allowances for teachers serving in hardship and difficult areas have been temporarily suspended. 1.13 Provincial Expenditure on Education: The provinces are responsible for most of the actual spending in education from funds they receive as block grants from the Ministry of Finance and Planning (MOFP), after they negotiate their budget with the Finance Commission (FC). Provinces currently spend almost all their block grants on teacher salaries although non-salary spending needs are also included. It is now proposed by the MEHE, the Finance Commission, the MOFP and provinces that some funds should be targeted for quality inputs. The provinces' current fiscal situation, if continued, will further deplete resources for quality inputs unless resources are targeted. Thus, unless teacher deployment is rationalized and resulting salaries adjusted, financing for quality inputs will remain difficult. 1.14 The main element in the budget negotiations is the "approved cadre" of teachers (number of posts) prepared jointly by the provinces and the MEHE. The preparation of a school cadre is based on a school entitlement formula called the "Ready Reckoner" (RR), which takes into account the size, type of school and staffing criteria (Annex 3). This mechanism has existed for the last fifteen years, but were too generous and had not been applied effectively and efficiently since 1989. However, in the light of difficult fiscal circumstances Government re-established the use of the RR formula in 1995, increasing the links between the teacher cadre and salary allocations to the provinces. The provinces 5  were informed that only salaries for the approved school cadre would be paid. However, the process is still largely informal and needs to be formalized under the coordination of the MOFP. 1.15 Inequitable Distribution of Resources Among Schools: The present budgetary structure contributes to an inequitable distribution of resources among schools. National Schools and the IAB type schools are usually large (kindergarten to grade 13), typically located in urban centers and better resourced (budget allocation, equipment, maintenance, etc.), and thus can attract more qualified teachers. Type 1C schools (which do not offer science programs) receive less resources. Smaller schools (types 2 and 3) which offer lower secondary and primary grades, and are often located in rural areas, generally receive only one third of the resources allocated to type 1AB schools. The type 2 and 3 schools experience the greatest shortages of teachers and receive negligible funds for maintenance. Type IAB schools tend to be allowed a more favorable STR; their better qualified teachers are typically paid 10 to 15 percent more than those in smaller schools. C. Teacher Deployment Issues 1.16 Mismatch of Teacher Demand and Supply: Although the number of teachers in the system has grown rapidly since the late 1980s (between 1989 and 1994 an average of 10,000 teachers--7 percent of the teaching force--were recruited each year), massive recruitment has not solved the problems of geographical shortages and surpluses, nor the mismatch of teachers particularly in mathematics, science and English. Also, there is still a marked difference between staffing of schools using Sinhala as a teaching language (STR 21:1) and Tamil medium schools (STR 29: 1) (Annex 4). In 1994 Sinhala medium schools were over-staffed by 10 percent and Tamil medium schools under-staffed by 25 percent: in other words there were 14,000 too many Sinhala-speaking teachers and 10,000 too few working in Tamil. Action taken by Government in 1996 to appoint a further 5,000 teachers to the Tamil medium schools reduced the shortage to 12 percent. 1.17 Declining Teacher Demand: Declining school enrollment and the resulting reduced demand for new teachers make the time appropriate to undertake a rationalization of teacher numbers and teacher training programs. Teacher recruitment could be confined to well below the present attrition rate of 2.8 percent per annum, since fewer teachers will be needed in the next few years, at all levels other than collegiate. This is for two reasons. First, demographic and enrollment projections show that total enrollment will decline by 1 percent per year during 1995-2005. Secondly, student-teacher ratios (STR) are currently below international norms. If they were increased over that period from the current levels of 24: 1 to 27: 1 for primary, and from 19:1 to 22: 1 for secondary and collegiate, demand for teachers would decline by 2% per year. Increasing ratios must be combined with measures to ensure that teachers are actually teaching where they are needed, because many schools at the moment in fact have large classes, due to inequitable allocation of teachers and high absenteeism. Based on the difficulties to obtain political commitment to reverse the teacher deployment policies, it was agreed that teacher attrition and transfers would become the main mechanisms for the such reduction in STR. 6  That approach makes it more realistic, is politically supported and is achievable but will result in a lower STR target. However, the most important goal of the project would be to reverse the present uneconomical and inequitable teacher deployment approaches. 1.18 Low Teacher Productivity: The current low productivity of teachers is linked to the increasing proportion of untrained teachers, minimal comrnitment to professional development for trained teachers, inflexible staffing practices, high teacher absenteeism, minimal quality inputs to schools, and inappropriate teacher training. Urgent attention needs to be given to: a major effort to train all working teachers, improving and updating training programs; staffing patterns, matching teacher employment to needs (matching supply and demand); and applying more stringent requirements to teacher work practices, reducing teacher absenteeism by various means including relating attendance to pay (the IDA-financed General Education Project included a study on reducing absenteeism). 1.19 Shortages of Trained Teacher Output. Planning for the supply of trained teachers has been confounded by massive recruitment, but in any case output of trained teachers was less than 20 percent of attrition. The Colleges of Education produce some 1,000 pre-service trained teachers per year, compared with the 5,000 who leave the service. Adding to this dilemma, the inadequate in-service training of teachers is detrimental to education quality and is unnecessarily costly. Therefore, increasing pre- service output is an urgent national priority. 1.20 Teacher Deployment Mechanisms: School staff entitlements are based on the calculations undertaken by the Ready Reckoner formula. The methodology is sound. However, in practice, the approved allocations bear little relationship to actual staffing in schools. Major inequities in resource distribution across schools are particularly marked in schools in less favorable and remote areas of the country, particularly for specialized teachers (including mathematics, language and science teachers). This in turn has increased the mismatch between teacher supply and demand with most provinces having large teacher shortages or surpluses and only two provinces have an acceptable cadre. However, even within these provinces there are major mis-matches between the supply and demand in the majority of disciplines or subject areas (Annex 5). 1.21 Ineffective Teacher Incentive System: Teachers are in principle offered a small (10 to 15 percent) allowance on their salaries when they are transferred to hardship areas, but these allowances were suspended after the 1995 teacher salary increase. Recently introduced transfer and promotion policies include compulsory service in difficult areas for new recruits, but the policies are still not adequately responsive to school needs. Without an improved teacher incentive scheme it will not be possible to attract teachers to hardship areas. There is an urgent need for an effective mechanism for teacher deployment, using resources saved by more stringent teacher deployment measures. In addition to incentives, difficult management decisions are needed to force teachers who refuse to take-up their rural assignments within three months to be dealt with in terms of the current Public Service Regulation related to vacation of post (abandonment). 7  1.22 New System for Staff Transfers: Inflexibility and inequities in staffing have occurred because the school cadre is not linked to enrollments and weak staff transfer policies. In cooperation with the Education Services Committee the MEHE updated teacher transfer policies during 1995. The recently introduced National Teachers Transfer Policy (Annex 6) is intended to make the transfer of teachers nationally controlled and responsive to school needs. The policy would retain the practice of appointing newly trained teachers to areas of greatest need, generally remote areas. It also establishes service and promotion requirements which would require teachers to serve in all types of schools. Finally, it establishes the possibilities of inter-provincial teacher transfers to facilitate transfer from surplus to deficit areas. This policy is sound and the project will support its implementation. D. Quality Issues in Teacher Education 1.23 Poor Structure and Organization of Teacher Education: For historical reasons, teacher education programs are offered in four different types of institutions-- Teacher Training Colleges (TTC) offer three year in-service training courses, Colleges of Education (COE) three-year pre-service training, the National Institute of Education (NIE) provides various schemes including distance education, and four Universities train graduate teachers for higher levels. The different institutions operate according to their own institutional agendas with little regard to national needs and priorities. Table 1.1 summarizes staff and enrollment of the types of institution. Table 1.1: Summary of Staff and Enrollment by Type of Institution, 1993 and 1994 No. and Type of Institution No. Staff No. Students ST Ratio 1993 1994 1993 1994 1993 1994 16 Teachers Tmg. Colleges 311 367 4438 3180 14.2 8.7 10 Colleges of Education 276 335 3877* 4244 14.0 12.7 1 N IE(Distance & Tr. Ed.)** 2846 2746 49393 53901 17.4 19.6 3 Universities (Fac. Ed.) 105 160 3173 5605 30.2 35.0 Total 3538 3608 60881 66930 17.2 18.6 * Only 9 institons with 2714 in full-time altendance in Years 1 and 2, the remainder were engaged in full-time teachi intemships ** Includes over 2,500 pan-time staffworking in over 250 study centers throughout the counwiy. 1.24 The annual output of the training colleges--about 1,000 from pre-service and another 1,000 from in-service training colleges--has been approximately one fifth of the 10,000 teachers recruited annually. The education system has thus had to rely heavily on a large distance education program to train teachers after recruitment. The total number of trainees in all types of teacher training programs reached 67,000 in 1994, with 80 percent of trainees (54,000) being enrolled in the National Institute of Education (NE) programs, nearly all of whom followed distance education. Of the 54,000 distance education students, about one third are expected to complete certification in 1996. The distance approach has not produced fully satisfactory pedagogical results. 8  1.25 Imbalances in Training Programs: Concerns about the effectiveness and efficiency of teacher education have been raised with increasing intensity over the past few years; the weakness of the training system contributes directly to the mis-matches described above between demand and supply of trained teachers. There is no national body coordinating the different types of institutions: the present system lacks national perspective. Although NIE has a charter for continuing education, there is no national strategy for ensuring the on-going professional development of trained teachers nor the monitoring of its successes and failures. There is a plethora of teacher training programs, with no common standards or academic awards, and no agreed standards for student attainment. Courses vary in length, content is not sufficiently linked to school curriculum needs, and the levels and types of qualification awarded differ. In the absence of a national policy, there is little relationship or standardization among the programs, and no accreditation system. The situation contributes to the mismatch between teacher demand and trained teacher supply. The NEC has identified the lack of scope for progression from one level of award to another and between institutions as basic weaknesses of the system. Lack of coordinated management is reflected in limited planning of teacher training, poorly defined policies, uneven staffing, outdated curricula lacking relevance to the schools, facilities which have not been designed or planned for adult leamers, and insufficient monitoring and evaluation. As a consequence, the overall quality of school education is jeopardized and resources are directed to areas of lower priority. 1.26 Problems facing Training Institutions: The 16 TTCs and 10 COEs are mostly small, residential, single and dual discipline institutions, not equitably distributed geographically, and not responsive to needs. They have high unit costs. The standard of facilities is low, with poor maintenance; equipment falls well short of needs. Data for 1994 showed serious inequities in staffing with overall student:staff ratios of 9:1 in TTCs and 13:1 in COEs, versus international ratio of 20:1. The most serious problems were: * an over-abundance of staff in most TTCs, where enrollments fell by over 50 percent in 1994 without corresponding reductions in staffing; e the large range of subjects offered in most institutions, all requiring specialized subject staff, each working with few trainees, which is not cost effective and reduces the needed focus on core subjects; * the inadequate training of the teacher trainers; * the poor physical condition of some training institutions; and * a need to rationalize the 250 small field study centers operated by NiE and the Open University supporting distance teacher education trainees, to reduce the large numbers of trainees of differing backgrounds assigned to each coordinator, to permit joint use by the NIE and university programs, and to locate them in areas matching teacher demand. 1.27 Staff Development for Teacher Educators: Staff of most teacher education institutions need to upgrade their academic qualifications (Annex 7). The minimum academic requirement for appointment as a teacher educator is a bachelor's degree (master's in universities). But in no institution is a teaching certificate required, and only 9  about 60 percent of teacher educators have studied the theory and practice of teaching. Appointment has been largely on seniority. Over 60 percent of teacher educators are more than 45 years of age; most acquired their training years ago and are probably not familiar with modem techniques. Fluency in English is not a requirement for teacher educators, but lack of English restricts access to current knowledge and publications, and limits possibilities for overseas exposure to modem methods. 1.28 As a group, teacher educators do not have a defined identity, an independent salary structure, or a system of incentives. The Government is considering establishing a Teacher Educator Service to meet these needs; it would also define criteria for appointment. Little opportunity exists for staff to continue professional development: opportunities for administrative leadership in particular disciplines are lacking, and there is virtually no training for prospective heads of institutions. Other, non-teaching areas requiring specialized staff (such as librarians, budget officers, maintenance engineers) usually also lack people trained for those functions. Making matters worse, teaching staff are not well utilized, with about 50 percent not teaching in their subjects/field of specialization. There is an urgent need to develop a comprehensive plan for development of teacher education staff, using in-country and overseas training. 1.29 Inflexible Training Specialization: The majority of secondary teachers are only required to be competent in, and to teach, one subject, which leads to inflexibility in use of teachers. A further inflexibility arises from the categorization of schools by medium of instruction: staff are allocated on the basis of their training and competence in Sinhala or Tamil. These policies limit the scope for equitable and responsive distribution of teachers across the country and increase salary costs. 1.30 Unsatisfactory Conditions of Physical Facilities: Teacher training facilities vary widely. In general, most are in poor physical condition; only three COEs, NIE, and the central campuses of the Open University have good facilities. Three major issues affect the physical facilities of teacher education institutions: - Inappropriate location and distribution throughout the country. Nearly half of the 25 districts have no teacher education institutions, whereas two districts have four or more. The location of institutions hinders trainee access, although there are residential facilities. The most populous district (Colombo) only has one TTC, but has two of the country's four universities that provide teacher education. Four institutions operate in unsuitable rented space. * Inappropriate physical lay-out and poor maintenance. Only three of the 31 institutions have effectively planned buildings. Almost all lack maintenance, requiring major repairs or even replacement (since major renovation is often more costly); some buildings should be condemned Furniture, equipment and infrastructure need urgent replacement or repair. The institutions do not employ permanent maintenance personnel, and the provincial authorities do not assign priority to maintenance. 10  * Lack of purpose built facilities for adults. Except in two institutions, little regard seems to have been given to the fact that the trainees are adults. Residential facilities are unsuitable: dormitories, ablution and toilet areas in poor condition, and limited and unsanitary kitchen and eating areas. Very meager facilities are provided for private study. No attempt seems to have been made to create a pleasant, studious atmosphere for future teachers. E. Cost and Efficiency Issues in Teacher Education Programs 1.31 High Program Costs: After two decades of neglect, inefficiencies in teacher education have become institutionalized, and operations costly (detailed cost analysis in Annex 8). Teacher education programs cost Rs 206 million in 1994, about 6 percent of the MEHE recurrent budget. The full salaries paid to TTC trainees and stipends to COE students add substantially to the budget, increasing system costs to Rs 366 million (10 percent of MEHE budget). Annual expenditure per student in training institutions ranges from Rs 55,000 in TTCs to Rs 2,000 in distance education. The differentials are due partly to program type, duration and mode of delivery; facilities and laboratories available; and the way staff is deployed. Low Student:Staff ratio in the TTCs and the COEs (9:1 and 13:1 respectively in 1994) inflates the unit cost. However, the high cost of the TTCs is mainly due to trainees' salaries, two thirds of their total cost. Disparities in unit cost among institutions also reflect weak management. Funding policies for institutions are unclear and bear no consistent relationship to enrollments or the number of staff required. Management staff lack training in financial and management skills, making it difficult to maximize resource allocations. Furthermore, due to the absence of a resource distribution formula based on standard criteria, the institutions' annual budgets do not reflect requirements: some receive more than others for the same activities. 1.32 High Cost of Residential Facilities: The provision of residential services to all trainees in the COEs and most in the TTCs is very expensive, accounting for half their recurrent expenditure. Residential services require numbers of non-academic staff and service workers. In 1994, the ratio of non-academic to academic staff was high, at 1:1 in the TTCs and 3:1 in the COEs. Costs are further increased by under-utilization of residential facilities, 74% of capacity in 1994. As in other Asian countries, Sri Lanka needs to develop a plan for relocation of teacher training institutions to increase cost- effectiveness, provide boarding according to needs and increase lower-cost day students. 1.33 Cost Effectiveness and Sustainability of Distance Education: The massive number of distance education students gives relatively low in-service training costs. Consequently little attention is paid to the cost of repetition and examination outcomes. Yet fewer than 80 percent of NIE distance education trainees take the final exam and only 65 percent of post-graduate trainees complete requirements. Minimum attention is given to output cost (cost per qualified teacher), reflecting failure at the terminal examinations, number of students not sitting for finals, and attrition from courses. In addition, recent school inspections indicate that teachers certified through distance education continue to 11  need content and pedagogy upgrading. Donor agencies financing 78 percent of the distance education programs plan to phase out their contributions in the coming few years. 1.34 Costs of Teacher Education in Universities: The unit cost of university teacher education programs is low compared to training in the TTCs and COEs (although financial analysis is complicated by the universities' inadequate cost accounting systems). On the other hand, costs to students of university programs are far higher than those of other teacher training programs. For example, students at the Faculty of Education at Colombo University pay Rs 4,200 per year for registration, tuition, exam, and field work fees, which represents 7 percent of the annual average salary of the teacher. F. Donor Activities in the Education Sector 1.35 Other Donor Participation in the Sector: Five main donors besides IDA are active in Sri Lanka's education sector. (i) SIDA (Sweden) is funding the distance education program involving about 54,000 teacher trainees and the construction of some plantation schools; (ii) GTZ of Germany is assisting with construction and operation of one teacher training institution and upgrading staff, (iii) British ODA and Australian Aid are helping with small language training programs--ODA has recently agreed to undertake a large program to upgrade English language teaching, starting 1996; and (iv) the Asian Development Bank (ADB) is supporting projects for technical education and secondary education--the latter project includes teacher education activities described in Chapters 2 and 3. ADB has agreed with Government's request to modify that project to conform to its new national strategy and revised curriculum structure for initial teacher training (Annex 9). 1.36 IDA Support for Education: An ongoing General Education Project, financed by a US$49 million equivalent IDA Credit of 1990 (Cr. 2072-CE), supports access and quality in primary and lower secondary education. It supplies educational facilities in rural deprived areas, trains principals, strengthens education planning, and supports the development of an MIS system. At the mid-term review it was modified to upgrade teachers' knowledge of English. The Project has contributed to studies of teacher absenteeism, of the links between employment and education, of teacher education, and an analysis of higher education. The project was the first operation in the sector and is expected to have an important impact on education. The closing date was extended for one year and the project is now scheduled to close on December 31, 1996. It was slow to start, but from 1994 implementation and disbursements accelerated so that it is expected to be fully disbursed by the revised closing date. 1.37 To increase its knowledge of the sector, the World Bank (with a contribution from ADB) worked with Government during 1992-94 on an Education and Training Sector Strategy Review to indicate strategies and priority needs for sector development. Among that report's conclusions (June 1994) were the needs to switch spending from excess teacher numbers and subsidy schemes (such as free school uniforms) to education quality expenditure, thus providing wider access to good quality education; to strengthen the 12  teaching service through better-controlled teacher recruitment, deployment, and training; to streamline education administration; to pay urgent attention to improving English language teaching; to encourage private education; and to make higher education more responsive to the needs of the economy and society, with courses relating to skills sought by employers. The review was a valuable input into policy discussions, and dissemination seminars took place in 1995. Under the IDA-financed General Education project, Government prepared a preliminary teacher training action plan in 1993. 1.38 Country Assistance Strategy (CAS): This project, and the Government strategies will support (see below), are fully consistent with the IDA CAS to be reviewed by the Executive Directors concurrently with this project, and especially with its fiscal, manpower, and social sector aspects. The draft CAS notes the importance in the education sector of maintaining the achievements of the education system while matching the quantitative successes with quality improvements. The CAS provides for continuing to support the Sri Lankan education development program through a two phase process: first a teacher training and deployment project to address the most urgent needs, followed by a wider education sector operation focused on other aspects of education quality. G. Government Policies and Strategy 1.39 National Education Commission: To identify ways to improve the education sector, the Government established a standing National Education Commission (NEC) in 1992, asking that it prepare a long-term strategy for the sector. The NEC served as a focus for Government participation in the Education Sector Strategy Review. It continues as the lead institution for reflection on sector policy issues. 1.40 Government Policies: In August 1995, the NEC prepared a National Education Strategy and a Teacher Education Strategy. These strategies, adopted by Government in 1995 together with a national policy on teacher transfer (Annexes 10 and 5), identify the following priorities: (i) increase equity of access and the availability of trained teachers particularly in rural areas; (ii) upgrade the quality and quantity of educational materials (textbooks and library materials in particular) and increase equitable supply to all the schools; (iii) rationalize teacher training and hiring/deployment practices; and (iv) supply adequate educational facilities, science laboratories, and libraries particularly in the urban slums and rural areas, where shortages are serious; and (v) increase the responsiveness of technical and tertiary education to skill shortages. These policies are consistent with the recommendations of the Education Sector Strategy Review. They are fiscally sustainable, so long as Government strictly controls teacher employment and deployment which would allow increased spending on quality-related inputs without significantly increasing the education budget. The Government strategy of concentrating first on teacher issues and subsequently in a future operation on wider education sector issues are consistent with the IDA Country Assistance Strategy. Future IDA support would be contingent on Government demonstrating its readiness to make fundamental policy changes. Government intends to seek participation of other donors in both the present operation and the proposed sector operation. 13  1.41 Future donor support: Government has a two-phase approach in seeking support from IDA and other donors. First, it seeks IDA support in implementing its national policies in the priority areas of teacher education and teacher deployment, seen as requiring the most urgent attention, in this first phase operation. Secondly, it wishes IDA support for other reforms, now being analyzed in greater detail, through a sector operation in the near future. The sector operation would focus on issues such as the financial arrangements between the national and provincial governments; strengthening education administration; improvements in curriculum; increasing the responsiveness and cost effective supply of textbooks; improving access to quality education facilities based on the 1995/96 school mapping exercise (focusing primarily on poor rural and slum areas); and supporting increased partnership with the private sector (at all levels but particularly in higher education). It would assist the rationalization of expenditures, redirecting resources to quality and equity inputs, to make education more cost effective. Either the sector operation or another might also address the need to increase the coordination, responsiveness and type of training opportunities at the post secondary level, both in higher education and in skill/technology training. In preparation for the sector operation Government is now preparing, with help from international and Sri Lankan consultants financed by a Japanese Policy and Human Resources Development Fund (PHRD) grant, studies of education costs and financing, and of textbook and reading material policy, as well as the recommendations of the education facilities survey which identify policies that require attention to increase equitable allocation of educational services. 1.42 Teacher education and deployment sub-sector policy: Since 1994, Government policy discussions and dialogue with IDA have focused on teacher education and deployment. A number of insightful studies in recent years, financed by the Government, by ADB, by the Japanese PHRD Fund and by IDA, have suggested solutions to these problems. They were summarized in a joint Government and World Bank report "Policies and Strategies for Teacher Education and Teacher Deployment" dated June 22, 1995 and reflected in the National Education Policy adopted by Government in 1995. The dialogue included a series of dissemination workshops. It has achieved significant acceptance, among national and provincial authorities, teacher educators and teachers, both of the need for reform and of new comprehensive Government policies and strategies to introduce these reforms. The recommended national and sector teacher education and deployment policies arrived at were confirmed by the Government during appraisal and became the basis for formulation of the current project. A policy letter and matrix received during negotiations outlines the policies and strategies in teacher education (Annex 10). H. Lessons Learned 1.43 The first social sector projects financed by IDA in Sri Lanka, other than a training project for the construction sector, are still being implemented, so there are no OED reports to draw on. Experience points to: (i) the importance of ensuring ownership of the project by a wide range of senior officials, particularly from the provinces; (ii) the 14  advantage of using a sector-wide approach to increase coordination and maximize sustainability; (iii) the need to obtain up-front commitments during project preparation since policy advances are difficult to obtain during implementation; (iv) the need to pay close, continuing attention to the complex bureaucratic and political environment, and to ensure participation of different levels of central and decentralized stakeholders to recognize their interests in project implementation; (v) the improved implementation performance following IDA missions, as Government learned IDA procedures and gave positive attention to implementation and monitoring, helping to resolve problems; and (vii) the need in project design to draw not only on previous experience in Sri Lanka but on lessons from projects in other countries. This experience and OED analyses confirm the importance of strengthening teacher training as a means of improving the quality of education. Similarly, demand-based criteria for teacher allocation have been shown to be the most equitable and cost-effective way to staff an education system. 15  2. THE PROJECT: CONCEPT, COMPOSITION AND CONTEXT A. Project Objectives, Concept and Description 2.1 The Project is designed to implement the Government's teacher education and deployment strategies described in Chapter 1. It constitutes the first phase in a series of actions to strengthen the education sector that Government hopes will be supported by donors in the next few years. The project has two key areas: The first, involves the rationalization of teacher numbers and their deployment; the second includes the strengthening and rationalization of teacher education programs, institutions, staff and management to enable Government to meet the demand and supply of teachers while improving quality and cost-effectiveness of teacher education. Project objectives, based on policy initiatives agreed between the Government and IDA over the past year, are to improve the quality, cost-effectiveness and coverage of education in Sri Lanka, by: * improving education attainment and equity, by having better-trained teachers widely available in schools--particularly in disadvantaged schools--so improving teaching/learning, reducing repetition and drop-out rates, and thus both reducing the cost of the education cycle and making the system more equitable; * making the system more efficient by rationalizing teacher recruitment, deployment, and training policies, making them demand driven to provide effective and equitable allocation of teachers to address national, district, and school level needs, and to reduce salary costs; 3 making more effective use of education expenditure through rationalizing teacher numbers and their deployment, thus reducing total salary costs and freeing funds for quality expenditures; * improving the quality of teacher education by measures to improve the coordination, quality and certification policies of teacher education, and improving teacher training programs to increase responsiveness, reduce duplication, and improve quality and cost-effectiveness; * making the teacher training system more cost-effective through rationalizing the number and geographical distribution of teacher training institutions, maximizing their utilization, and making the institutions multi- functional, upgrading the content knowledge and pedagogical skills of teacher trainers/educators and strengthening management capacity in teacher training institutions. 16  Project Concept 2.2 During the last two years the MEHE, supported by IDA and other donors, has undertaken a participatory process to seek agreement of stakeholders for improvements in teacher education and teacher deployment policies. Important policy agreements on the coordination and structure of teacher education programs and the need to rationalize the number and type of teacher education institutions were reached, and national teacher education and deployment policy programs agreed. An important part of the strategy is to re-shape the teacher supply and demand formula used by the national and provincial authorities to allocate teachers and funds for teacher salaries among the provinces. Discussions on the strategy have been held among education policy-makers, administrators, and teacher and union representatives; there seems to be wide acceptance of the program. Policy agreements reached during appraisal were confirmed during negotiations and are outlined in policy letter and matrix in Annex 10. 2.3 Description: Project Components are described in detail in Annex 11 and their expected outcome, costs and benefits in Annex 12. The project would improve education quality, equity and cost-effectiveness of the education system through programs and policies as follows: (a) Rationalization of teacher deployment by: (i) adjusting the present Government formula [called the "Ready Reckoner" (RR)] used for staff recruitment and allocation, to allocate teachers equitably according to school needs; (ii) monitoring teacher allocations and linking them to budget allocations; (iii) measures, including incentives, to facilitate teacher assignment in less favorable areas; and (iv) moving to a fully-trained teacher force, by training existing teachers and recruiting only trained teachers. This rationalization would improve the equity and cost-effectiveness of teacher recruitment and deployment practices (leading to redeployment of about 4,000 teachers p.a., with those teachers who do not accept redeployment being treated according to the current Public Service Regulations of vacation of post) through demand and supply mechanisms directly linked to budgetary allocations. The Credit would finance technical assistance. (Estimated baseline cost US$0.2 million.) (b) Rationalization of structure and organization of teacher education through (i) establishing a National Authority on Teacher Education (NATE), to plan, coordinate and upgrade teacher-education programs; (ii) strengthening the office of the Commissioner of Teacher Education (in MEHE); and (iii) rationalizing teacher training institutions into three types--Universities, NIE, and 14 National Colleges of Education (NCOEs), together with Teacher Centers (TCs) for teacher upgrading, while distributing teacher training resources more equitably among regions. The project would finance books, materials and equipment, together with technical assistance, and operating costs for NATE on a declining basis. (Estimated baseline cost US$0.8 million). 17  (c) Upgrading of teacher education programs. Training programs (for pre- service and for both direct and distance mode in-service training) will be upgraded, including revising curricula, updating teacher materials (in cooperation with the ADB and SIDA), consolidating programs, and increasing the content relationship between the school and teacher education curricula. The courses would be redesigned by NIE, based upon on-going needs assessments of teachers. The Project would provide equipment, books and materials, technical assistance and training. (Estimated baseline cost US$3.7 million). (d) Strengthening of staff and management. Staffing and enrollment patterns would be rationalized to increase student:staff ratios to 15:1. Teacher educators and administrators would be trained, improving quality through upgrading staff qualifications and skills (in cooperation with ADB and other donors). The component would support continuing education for 170, 000 teachers, partly financed by SIDA. As well as training, the project would provide technical assistance. (Estimated baseline cost US$11.2 million.) (e) Strengthening and upgrading of the teacher training institutions. The institutions offering teacher education would be reduced in number [from 31 to 19, including 14 NCOEs (of which 5 would be new institutions and 9 at existing institutions), the NIE, 4 Universities and about 80 TCs], and distributed equitably, to increase cost effectiveness and double the present pre-service output at the NCOEs to about 3025 and to 750 at the university level. Project inputs include rehabilitation and extension of 9 existing institutions, construction and equipping of 5 new NCOEs, and development of about 80 TCs for teacher upgrading programs. Buildings for most TCs already exist. These inputs are being coordinated with ADB, which is financing rehabilitation of training institutions. The component would allow Government to provide cost-effective, quality pre- service and in-service teacher education for primary and secondary teachers: for about 14,000 trainees in full time programs and 20,000 trainees in part-time programs annually. Thus, over five years about 186,000 teachers would be trained or upgraded with 16,000 participating in full-time pre-service programs and about 170,000 teachers being upgraded through continuing education programs improving the quality of education for 4 million students. The component would mainly provide civil works, furniture and equipment. (Estimated baseline cost US$46.8 million.) (f) Strengthening management of teacher training institutions by upgrading skills of academic and management staff, at the NCOEs, university education faculties, NIE, the TCs, the Office of the Chief Commissioner for Teacher Education (MEHE) and the NATE, through training and technical assistance. (Estimated baseline cost US$0.6 million.) 18  (g) Studies and monitoring, strengthening MERE capacity to monitor the education system; and preparing for future sector projects. (Estimated baseline cost US$0.3 million.) (h) Project Coordination. Support for project coordination and monitoring unit and support for NATE. (Estimated baseline cost US$1.3 million.) 2.4 Phasing: Implementation of components would be divided into two phases, with the investments that are included in the second phase being started after the Government has shown at the mid-term review attainment of a number of benchmarks. The benchmarks relate to the Cadre Committee functioning, compliance with the provisions of the RR and an increase in the STR to 26:1 at primary and 22:1 at secondary, the transfer policy being implemented, the rationalization of the teacher education system, the earmarking of savings for quality inputs, and progress on physical implementation. These benchmarks have been agreed with Government. 2.5 Component A: Rationalization of Teacher Deployment: Teacher recruitment and deployment mechanisms would be modified to improve response to demand while increasing equity and quality of education, as well as reducing teacher costs. This policy based component would reactivate and update the teacher allocation mechanism (the RR), and formalize efforts to standardize the teacher cadre and link it to budgetary allocations. The revised RR formula takes into consideration actual teacher needs based on student enrollments, the existing teacher cadre, and the annual loss of teachers from the system (due to retirement, death, departure etc.), in allocation of teachers at the primary and secondary levels. Use of the formula and associated mechanisms (including the revised transfer policy, below) would allocate a specific cadre of teachers to each school and province and, in turn, trigger annual budgetary allocations to be determined by a new Cadre Committee (see below) and used by the Ministry of Finance in allocating block grants to the provinces (throughi the Finance Commission). Control over budgetary allocations is the main tool by which the central administration can ensure that provinces follow the RR and transfer provisions. The agreed program provides that within three to five years the number of teachers should be rationalized; by the end of the project only trained teachers would enter the system and most existing teachers would have been trained. Teachers who do not accept redeployment would be treated as having vacated their post. 2.6 The component would: (i) control teacher recruitment to meet attrition and apply the modified RR to achieve STR targets of 26:1 for primary and 22:1 for secondary by year 2001 (see Annex 3 for details on the application of the RR); (ii) apply the RR consistently to all schools (with stringent provisions for variations to cater for exceptional circumstances); (iii) relate teacher demand projection analysis to teacher supply with annual adjustments; (iv) link the cadre entitlement for each province to the budget allocation for salaries; (v) target 3 percent of the provincial recurrent block grant, starting 1997 and reaching 6 percent in 2000 for quality inputs, particularly in disadvantaged areas; (vi) require all teachers entering the service to have successfully 19  completed an accredited teacher education program (with untrained teachers only being appointed, following the application of the RR, to meet staffing emergencies). During negotiations the Government gave assurances that MEHE and provincial authorities shall: gradually increase the overall the student:teacher ratio so as to ensure that by January 1, 2001 the said ratio has reached 26:1 for primary schools and 22:1 for secondary school [para. 5.1 (a)]. 2.7 The agreed policy letter also provides that Government would implement recent initiatives for the rationalization of teacher deployment measures by: (i) consolidation of smaller primary schools; (ii) training all primary teacher to teach English allowing the phasing-out English specialist at the primary level; (iii) eliminating the non-teaching positions of principals in schools with less than 5 teachers; (iv) consolidating secondary A level classes with 15 or less students in any stream; (v) undertaking special recruitment of Tamil medium teachers on a contract basis on condition of performance after the required professional training at the end of 5 years; (vi) undertaking special recruitment of university graduates according to identified subject specialist shortages; (vii) introducing a post-graduate diploma in education as an initial training course for an identified number of graduates annually prior to their employment as teachers. These measures would release 6,850 teaching and administrative positions and will accelerate the attrition and, over the next 8 to 10 years, reduce the teaching force by about 25,000 positions (Annex 3). These consolidation goals would be part of the mid-tern review benchmarks (para. 3.28). 2.8 The project would strengthen MEHE's capacity to: (i) collect and analyze data on teacher needs, and make demand projections; (ii) link needs to supply capacity; and (iii) regulate the annual teacher trainee intake and deployment of trained teachers. Salary savings resulting from using the RR would be reallocated to teacher incentives, quality inputs and maintenance. The goal would be to increase the present national average allocation of 3 percent for quality inputs (it is as low as 1 percent in some provinces) by about 1 percent per year reaching a minimum of 6 percent by the end of the project. During negotiation Government gave assurances that it would: earmark, on or about January 1, 1997: (i) 3 percent of the annual recurrent block grant budget allocation in each province for quality inputs (such as textbooks, audiovisual equipment and educational materials), and thereafter increase such percentage at the rate of 1 percent per annum so as to reach 6 percent for each province by January 1, 2001; and (ii) I percent of the education capital budget allocation to each province for maintenance of schools (para. 2.29). The Borrower shall evaluate this percentage during FY 97 and FY 98 to: (a) determine, in consultation with the Association, actual maintenance needs; and (b) prepare, based on such evaluation, a long-term maintenance plan for educational facilities, satisfactory to the Association [Para. 5.1 (b)]. 2.9 The approved cadre would be determined annually by a Teacher Cadre Commnittee (TCC --Annex 13) membership would comprise: (i) the Additional Secretary (Administration), Ministry of Education and Higher Education (MEHE) chair; (ii) a representative of the National Authority for Teacher Education; (iii) two Provincial Directors of Education (Rotate in every three years); (iv) a representative of the Secretary 20  to the Ministry of Provincial Councils; (v) two representatives of the Secretary to the Ministry of Finance one of whom shall be from the Planning Division and the other from the Budget Division; (vi) Director of Policy, Planning and Review Division, Ministry of Education; (vii) Chairman/Secretary of Education Service Committee; (viii) Chief Commissioner of the Colleges of Education; and (ix) Representative of the Finance Commission. Following the cadre determination the MOFP and the Finance Commission would ensure that the budgetary and salary allocations to each province would match the RR. When submitting the next year's cadre needs, the provinces would account for the use of the previous year's RR allocation. During negotiations the Government gave assurances that it would: (a) establish, by November 1, 1996 or such later date as the Association shall agree: (i) a Teacher Cadre Committee to overview the cadre allocation and implementation of the RR; and (ii) National Authority on Teacher Education (NATE) (para 2.14), both with membership, powers and responsibilities satisfactory to the Association; and (b) thereafter maintain and operate the Cadre Committee and NATE [para. 5.1 (c)]. 2.10 During negotiations the Government gave assurances that it would: undertake commencing January 1, 1997 to: (a) recruit and assign teachers only in accordance with the revised Ready Reckoner formula and Teacher Cadre Committee allocations directly linked to the annual budget and that special or emergency appointments of teachers will only follow the application of the said formula; and (b) the application of the Ready Reckoner formula will be monitored annually by the Government and any deviation therefrom promptly corrected and notice thereof given to the Association [para.. 1 (d)]. 2.11 Provinces which are over-staffed and do not meet the agreed staff equalization plan would not be allowed to use funds from other budget heads to pay salaries; they would have to conform to the student unit cost allocations for non-salary inputs being developed by MEHE. Provinces which are understaffed and unable to attract staff would, following development of a suitable support and incentive plan for targeted schools, be allocated additional funds. As part of the teacher monitoring provisions, the provinces would, in consultation with the ESC, develop during the first year of the project measures to track teacher absenteeism. Teachers who continued to take non-approved or authorized leave would have their remuneration reviewed. Provinces could then utilize unpaid funds to pay the costs of substitute teachers, being aware that no supplementary salary allocations would be made for teachers with excessive absenteeism. 2.12 Transfer Boards, created under the 1995 National Policy on Teacher Transfers, would have a critical role in redistribution of staff to achieve greater equity (Annex 6). Strict application of requirements for initial appointment to "non-congenial" schools (for a minimum of 4 years) and to "difficult" schools (for a minimum of 3 years) and for transfer of teachers after serving a maximum of 8 years in a "congenial" and 6 years in a "very congenial" school, would be essential. MEHE would be responsible for designing a plan to attract teachers to, and to support teachers in, less favorable areas. This plan would be funded from the savings on teacher salaries, from applying the revised RR. It would, for example, provide differential allowances (incentives) based on the degree of hardships and 21  years of service in a less favorable location; together with support for teacher travel and housing, special provision to facilitate teacher access to study opportunities, and education of the teacher's children. However, teachers who were not ready to be transferred from surplus to deficit areas in accordance with the new policy would be deemed to have vacated (abandoned) their post; provinces would not have the funds to pay salaries of teachers above the approved cadre, and would therefore have an incentive to apply this provision. During negotiations the Government agreed that it will no later than January 1, 1998, commence the application of a teacher support and incentives system satisfactory to the Association to facilitate teacher assignments in less favorable areas through the Teacher Transfer Boards [Section 5, para. 5.1 (e )]. As a further measure to facilitate equitable and flexible deployment, the initial teacher appointment will be to hardship areas ("non-congenial" and "difficult" schools) and future teacher promotions will depend on their having served a mimimum of three years in these types of schools/areas. For the above activities, the project would support 57 person months of technical assistance outlined in Annex 14. Terms of reference for each consultant are included in the Implementation Volume. 2.13 Component B: Rationalization of Structure and Organization: The proposed structure of the reformed teacher education covering all institutions involved in training teachers, is outlined in Annex 15. The system, evenly distributed across the provinces, would consist of the coordinating body -- NATE, and three types of training institutions offering initial and continuing teacher education by direct and distance mode -- 4 Universities, NIE and 14 National Colleges of Education (NCOEs) -- supported by 84 TCs [about 81 Type A and 3 Type B which are in the process of being renamed Teacher Education Institutions (TEIs)]. The restructuring would: (i) provide the framework for coordinating all aspects of teacher education on a national basis, including the linking of teacher demand with supply through the training institutions; (ii) provide sufficient initial training places to meet national needs for trained teachers; (iii) concentrate initial teacher education in larger and more economical institutions, centrally located in the main population centers, thereby increasing the proportion of students in non-residential places; (iv) progressively transform distance mode teacher training from initial certificate to diploma and graduate diploma courses, and to continuing education; (v) achieve a better coverage of staff expertise in areas of specialization within each institution; and (vi) establish and safeguard standards for teacher education programs through a national accreditation and monitoring mechanism. Government has formally endorsed this program, including the integration in the national teacher education system of NIE and the faculties of education of the universities that train teachers (Colombo, Peradeniya, Jaffna and Open University). The Office of the Chief Commissioner for Teacher Education in MIEHE would be given a clearer mandate and be strengthened with additional staff and equipment. 2.14 During negotiations the Goverment gave assurances that it would establish and staff NATE by November 1, 1996 [ para. 5.1 (c)]. NATE would be a semi-autonomous body responsible to the Minister for Education and Higher Education, and funded as a separate entity. Its membership and functions are outlined in (Annex 16). It would advise 22  education; facilitate implementation of the integrated system; do monitoring and research; and provide public information on teacher education. NATE would have a key role in regulating the supply of trained teachers to meet projected demand in schools, making annual recommendations on student intake to the Minister, MEHE. It would advise on budget requirements for each teacher education institution, based on student enrollment and unit costs. All teacher education programs would be subject to accreditation through NATE. NATE would coordinate development of a comprehensive continuing education plan; and undertake subject-based needs assessments to help design courses for teacher educators. The project would support NATE's incremental recurrent budget on a declining basis. Technical assistance support for NATE and the Commissioner of Teacher Education totaling 46 person months is outlined in Annex 14. 2.15 The 14 NCOEs would be national institutions, under the overall responsibility of the MEHE, with a principal focus on initial training to diploma level and on short continuing teacher education courses. NCOEs would normally offer 3 to 4 disciplines for an enrollment of around 700-1,000 students (including 300 third year students in their internship year in schools), with a physical capacity of 500-800, and provision for residential and non-residential students. Each NCOE would have within its organizational structure a number of TCs, assigned according to location and other strategic factors. The executive structure of the NCOEs is shown in Annex 17. 2.16 The TCs would serve as (i) centers for continuing education courses (half day to three weeks); (ii) resource bases for teachers; (iii) learning and administrative outlets for distance teacher education activities run by universities and NIE; (iv) bases for advisors working with teachers in local schools, where appropriate; and (iv) centers for English language teaching for teachers, if required. The about 80 TCs Type A would have a capacity for about 100 non-residential teachers at one time, catering to teachers who can attend on a daily basis (week days and week-ends). The three Type B TCs /TIEs would day programs, but also have residential facilities for teachers without reasonable access to Type A TCs. NCOEs would receive funding for the full operation of the assigned TCs and TEIs as a specific item within their annual budget. Most TCs and TEIs would employ a fili time principal and about three lecturers. The location of the proposed TCs and TEIs is provided in Annex 18. 2.17 The Faculties/Departments of Education at the universities would provide initial teacher education both in subjects taught in schools and in educational methodology, through either a first integrated degree (B.Ed.) or post graduate diploma (Dip.Ed.) programs. Some universities would continue to give doctorate programs in education. The faculties would operate under their institutions' academic structures. In order to receive funding for teacher education programs, the universities would have to participate in the integrated national system. In particular, this would involve allocation of teacher trainee places consistent with national needs; selection of students based on agreed minimal criteria; agreed student:teacher ratios; and the accreditation of courses by NATE. 23  2.18 The National Institute for Education (NIlE) would continue to develop programs for initial and continuing teacher education, and train teacher educators. It would also deliver distance education programs to upgrade teachers, including diplomas in education, B.Ed degrees, and post-graduate diplomas in education and management. Given the change-over to initial training for all teachers entering the service, NIE's delivery role should decline. It would work closely with the Universities and NATE. (See Staffing and Staff Development, below). 2.19 Component C: Unprading of Teacher Education Programs Both initial and continuing programs would be improved, to create a better learning climate in the schools by raising the quality of teaching, and to make the teacher education programs more cost- effective. (a) The initial (pre-service) teacher education program would prepare all teachers prior to their entry into the teaching service. Successful completion would be a pre-requisite for all seeking appointment as a teacher. Secondary teachers would be trained in universities (Post Graduate Diploma in Education and Bachelor of Education; primary teachers would follow two year courses in NCOEs, and then a one year internship prior to the award of a Diploma in Teaching. The NCOE curriculum is being revised, with ADB assistance (Annex 9). Each NCOE has been assigned geographically in response to enrollments and needs for teachers (Annexes 19A and 19B). Teaching observation and practice in affiliated schools would be essential. Entry to NCOEs would require a minimum of 3 subject passes at A level; enrollment would be based on projected demand for subject teachers. Within ten years, as the country moves towards having a teacher force with degree qualifications, a three year Bachelor of Education should be developed for NCOEs and selected universities. (b) The continuing (in-service) teacher education program, to improve the quality of teachers already in the service, would offer courses in all teacher education institutions - Universities, NIE and NCOEs (including TCs). There would be four major types of continuing teacher education courses: (i) upgrading; (ii) broadening; (iii) re-training; and (iv) refresher courses (see Annex 20 for details). The sub-component builds on and complements the present distance education program (assisted by SIDA) which has been making important progress in providing a first level certification to untrained teachers. The continuing education program, as expanded by the Project, would thus continue the important work of giving all untrained teachers a first training, undertake further upgrading, and offer refresher courses for lowly qualified teachers. Course design would be modified by NIE, based on an on-going needs assessments, using technical assistance. (see Component D, Staff Development, and Annex 11). 2.20 A plan for teacher demand and supply for primary and secondary education (1996- 2005) was prepared. Projections of teacher stock for primary are based on the annual attrition of 2.8% and the recruitment of NCOEs diplomates according to the institutions 24  plan (Annex 21A and 21B). At the primary level the number of teachers is expected to decline by about 4,000 (6%) and the STR will increase from 25:1 to 27:1 by 2005. The number of secondary teachers is expected to decrease by 13,000 (12%) and the STR would remain slightly above 22:1. The projections of teacher stock for secondary are based on the annual attrition, the recruitment of NCOEs diplomates and an estimated maximum annual output of 750 from the universities (made-up of 400 trained university graduates and about 350 untrained graduates both based on actual subject needs). The above strategy will result in the NCOEs output matching the demand by year 2005 for primary (with all teacher intake at the primary level being trained). In the case of secondary the above strategy will result in the NCOEs and Universities output matching the demand by year 2003 with all intake of teachers at the secondary level being trained. 2.21 In respect to teacher trainee intake and output a summary of agreements reached with the MEHE, included in the policy letter, are: * intake to the existing and new NCOEs should follow the institutions plan provided in Annex 21A taking into consideration the designed capacity under the project (to match demand); * recruitment of graduate teachers would be the last resort and carried out only after and in coordination with efforts in re-training some of the surplus existing teachers while filling the shortages based on subject needs; * place a ceiling 750 on graduate teacher recruitment (made-up of 400 trained university graduates with PG diplomas and 350 untrained university graduates for special subject needs following prerequisite short-term training of 3 months). This will involve the gradual increase of PG diploma and a limited number of B.ED graduates to reach an all trained graduate system intake of 750 by year 2003; and * intake into university post graduate diploma should be according to subject needs identified by the provinces, consolidated by MEHE, and transmitted to the universities by NATE [para. 5.1 (d)]. 2.22 The component would include the following technical assistance, overseas assignments and fellowships (see Annex 14 for details): (i) 51 consultant months for program design and courses outlines; (ii) 42 consultant months for teacher educator training in new programs and 180 persons months for curriculum development of pre- service teacher education programs; (iii) 40 consultant months for the design, update and development of continuing programs; (iv) 6 international consultants for assessment and modification of certification and 10 consultant months of national consultants to conduct pilot needs assessment; (v) 48 consultant months for national curriculum development at NIE; (vi) three consultant months to update and develop student selection criteria; (vii) annual seminars for teacher educators; (viii) pilot initiatives in teacher education; and (ix) update and develop continuing education materials and their printing costs. The Project would provide books for libraries, equipment and educational materials at the university Faculties of Education, NIE, the TCs, and the NCOEs. Details are given in Annex 11. 25  2.23 Component D: Strengthening of Staff and Manaeement: The proposed 14 NCOEs and about 80 TCs Type A and 3 Type B/TEIs would require about 190 administrative and 1110 academic staff (Annex 22 outlines the NCOE staffing). Staffing of the four universities and NIE (Department of Distance Education and Department of Teacher Education) central campuses would remain at approximately the current level of about 160. During the first two years of the project conversion would be made to the new staffing structure. The majority of staff appointments would be made from the existing staff at COEs, TTCs and study centers and would be based on agreed criteria outlined in Annex 23. Staff in NCOEs, including TCs, would belong to the Teacher Educator cadre. Part-time staff may be required for specific courses and could be recruited locally as needed. A data base of existing teacher educators has been compiled and analyzed to determine their training needs. The project would provide opportunities for staff who meet agreed criteria to improve their teacher education qualifications and experience. A teacher educator staff development plan has been prepared (Annex 24 ). The goal would be to maintain following 1999, a more highly qualified Teacher Educator Service comprising about 10 percent with Ph.Ds, 45 percent with Masters degrees, 35-40 percent with advanced diplomas, and about 10-15 percent with a first degree. During negotiations. the Government provided assurances that it will: carry-out until the completion of the Project, a staff development plan for teacher educators, satisfactory to the Association, in accordance with criteria satisfactory to the Association for the selection, bonding, and assignment and reassignment of trainees [para 5.1 (f)]. 2.24 The staff development plan, financed under the project, would cover the following: (a) Long-term fellowships: about 250 long-term fellowships (about 25 percent of teacher educator staff). About 150 educators would study in Sri Lanka ($675,000); 50 in regional countries ($400,000); and another 50 in OECD countries ($3.0 million). Training (two years of study for each teacher educator, usually at post-graduate level) would cover content knowledge and pedagogy. (b) Linkages with overseas institutions: About four teacher education institutions would be identified overseas as link institutions, the focal points for work assignments, exchanges and training of staff. Selected teacher educators (20 educators for 3 month internships each year over a period of 4 years for a total of $600,000) would work at link institutions to learn modem approaches. Teacher educators from the link institutions would visit Sri Lanka (6 staff for about 2 months per year for 4 years for a total cost of about $720,000) to conduct courses and seminars. The costs of establishing and maintaining these linkages are estimated at $10,000 per institution. To support exchange of knowledge with the link institutions and avail the teacher training institutions of the "ERIC education library service" the project would also support a computer network (Internet). The unit cost of the equipment needed for 19 local institutions (14 NCOEs, 4 Faculties of Education, NIE) and MEHE/NATE (total of 20) is estimated at $ 26  100,000. Internet time use is estimated at $ 60,000, training in the Internet estimated at $15,000, and Internet operational costs about US$175,000. (c) Short-term internships and study visits: About 160 teacher educators (2 from each institution) would undertake 3 month visits to institutions in OECD countries (most at link institutions) to gain experience of teaching and teacher education methods (estimated cost $1.0 million). Another 160 teacher educators would visit regional countries for about 4 to 6 weeks over the period of the project. In the case of teacher educators over 45 years of age training will be short-term and with at least three to five years to serve before retirement. (d) Continuing teacher education: The project would support continuing education for teachers (US$3.6 million) through NIE, the NCOEs and the TCs. Part of this effort is to be financed by SIDA, which is already making an important contribution to teacher education. This sub-component would be based on programs and materials agreed to during annual reviews (Annex 20). (e) Other training activities: The project would also support other training activities, such as an annual conference for teacher educators, visits by staff from teacher education institutions to other Sri Lanka institutions to observe initiatives, training in data collection and analysis and educational planning techniques (including technical assistance on course design), translation and printing of education research reports and theses, and an annual writing competition to develop instructional materials to be used by teacher educators. 2.25 Component E: StrenEtheninf and Upgrading of the Teacher Training Institutions: The component would: (i) rationalize the number and location of teacher education institutions to improve regional equity and to meet needs for initial and continuing education; and (ii) improve the quality of facilities and equipment. The proposed rationalization would reduce unit costs of operation, improve access and reduce the proportion of residential facilities for initial training. The 31 institutions now involved in delivery of teacher education would be reduced to 19 (14 NCOEs, 4 universities, and NIE); the 250 teacher centers (mostly now in school buildings) would be reduced to 81. Many institutions are not now located where they are needed (based on demographic and enrollment data), and others use buildings that need to be replaced. It will be more cost- effective to construct five new NCOEs than to upgrade existing buildings, although most existing buildings not needed for NCOEs will be used as TCs. Relocation would allow an increase in the number of day students, reducing operation costs, while increasing residential facilities for women. All buildings in satisfactory condition would be retained. 2.26 The project would support: (i) rehabilitation and extension of 9 existing COEs, upgrading them to NCOEs; (ii) construction of 5 new NCOEs; (iii) upgrading facilities for teacher education at the Universities of Colombo and Jaffna; (iv) refurbishing, furnishing and equipping 60 TCs/Type A and 3 Type B/TEIs; (v) developing, refurbishing furnishing and equipping a further 18 TCs/Type A within existing facilities; and (vi) 27  furnishing and equipping 14 NCOEs, NIE, the Universities of Colombo, Peradeniya, Jaffna and Open University. ADB is expected to finance the 3 Type B TCs/TEIs. The civil works will be undertaken at existing sites or at sites already acquired. The TCs will continue primarily to conduct courses in existing schools. Details of institutional rationalization are provided in Annex 19A and 19B. 2.27 A National Teacher Education Physical Planning and Building Committee in NATE would provide standards for construction, renovation and maintenance. It would also review the proposed physical plans for different types of teacher education institutions to ensure that norms, agreed during appraisal, are met. The physical facilities identified for each institution result from an exercise which matched the revised/proposed curriculum and the resources/spaces required to achieve these goals. Detailed education and architectural worksheets have been prepared for each institution and are included in the Implementation Volume. Thus, the facilities proposed are in response to actual needs and programs to be offered in each institution. 2.28 Many of the project civil works and physical facilities inputs are at existing institutions (Annex 25); the focus would be on improving facilities to acceptable common standards. The unit investment cost (civil works, architectural fees, furniture and equipment) per student place would vary from US$1,000 - 4,600 for the existing institutions and about US$7,400 - 8,100, dependent on site, for the new facilities. These norms are based on other IDA-financed projects in Asia and on the UNESCO recommended average space allocations. Detailed design work for each institution is being completed (architectural estimates based on educational worksheets will be available in the implementation volume). The current Secondary Education Development Project (Credit 1 247-SRI) financed by ADB covers the rehabilitation of some of these institutions, and agreement has been reached on coordinating activities. 2.29 Each institution would prepare, by the end of the second year of the project, a comprehensive maintenance plan with budget requirements (based on criteria developed by the School Construction Unit during the first year of the project). Upon endorsement of these plans by NATE, a basis for allocation of maintenance funds would be formulated [para. 5.1 (b)]. The institutions would administer the program, prepare annual reports of needs and on that basis receive future annual allocations. The project would train the institutions' maintenance officers. 2.30 Component F: Strengthen Management and Administration of Teacher Education Institutions: The Project would address the management and funding policies of the post-secondary teacher education institutions, which will, under coordination of NATE and the Chief Commissioner of Teacher Education, be given more opportunities for self-management, including of their budgets. Budgets would be computerized. Self- management will allow the institutions realistic amounts for daily operation and maintenance (contrary to the present system where authorization is needed to spend $10.00). Annually, each institution (including the university Faculties of Education and NIE Teacher Education and Distance Education Departments) would submit to NATE a 28  budget following prescribed categories and agreed norms and unit cost allocations. Once accepted by NATE, these budget lines/items would be included in the operational budgets of the respective universities, NIE and MEHE (subdivided directly to the other institutions), dedicated to teacher training. Within that scenario, each institution will receive every semester about half of its budget (decentralized to the school with increased accounting). The next semester's allocation would only be made following receipt of the previous semester's accounting report. Budgets would be based on detailed analyses of the needs of each institution, made during the first year of the Project coordinated by NATE (Annex 11), to develop agreed unit costs. The project would support the review of the system during the first year of the project; training in budgeting and administration would be given to institution heads, accountants or registrars and other administrators throughout the life of the project. During negotiations the Government gave assurances that it will: (a) by January 1, 1998 formulate and furnish to the Association for its concurrence, a system of unit cost budgetary allocation for teacher training institutions; and (b) by January 1, 1999 commence the implementation of such system [para. 5.1 (g)]. 2.31 Component G: Studies and Monitoring: Six main studies would be undertaken during the project. Their principal focus would be on monitoring the impact of the policy changes and restructuring envisaged under the project, with particular regard to: (i) impact of rationalization of teacher deployment policies; (ii) teacher trainee access, progression, repetition, and attrition; (iii) professional development of teacher:continuing education; (iv) teacher education funding; (v) the effectiveness of the NATE and national system of teacher education; (vi) study of quality inputs at the primary and secondary levels; and (vii) project preparation. In addition, the project would support monitoring of the impact of improved teacher education on student examinations and assist with the preparation of future project. Draft Terms of Reference and estimated cost for these studies are provided in Annex 26. B. Project context 2.32 Rationale for IDA Involvement. IDA supports investments in the social sector as an integral part of its program to assist in poverty reduction, economic, public sector and public expenditure reforms, and as an investment in human capital that is a crucial basis for wider development objectives. The World Bank 1995 paper on Priorities and Strategies for Education notes that World Bank financing for education will generally be designed to leverage spending and sector-wide policy change by national authorities, focusing on institutional development and appropriate financial mechanisms. The present project, and the program which it supports, coincide precisely with these objectives. 2.33 During the last two years, the Government and IDA have been building in-depth knowledge of the education sector through joint and participatory analyses, some financed from the World Bank sector work budget, some through the General Education Project, some as preparation for this and future projects. These include: an Education and Training Sector Strategy Report, Education Employment Linkages Report, Poverty Report, Public Expenditure Report, Policy Issues in Teacher Training and Teacher Deployment (issued June 1995), a Sector Finance Study (December 1995). IDA is also 29  financing the mapping of school facilities leading to a rationalization of the number of small schools, and a study of education expenditure, costs and financing is under way with Japanese funding. In addition, with funds from the ongoing education project, a Book Development Study, proposals for a "Functions, Staffing and Policy Planning Review" of the education administration, and a Management Training Needs Assessment for principals have been undertaken. The preparation team drew heavily on the experiences of projects in similar countries, during discussions with the Government. Reports and policy proposals have been widely discussed in a series of dissemination workshops. 2.34 The above participatory process has established Government and stakeholder ownership for substantial institutional and policy change in the education sector. IDA has a comparative advantage in sector knowledge, has developed a cordial but frank dialogue and still appears to be the main donor willing to address policy issues. The above factors led Government in November 1994 to request IDA's continued and expanded involvement in the education and training sectors, as a key part of our operational program. In April 1995 Government further sought specific IDA assistance for the rationalization of teacher education and teacher hiring policies and deployment practices. IDA is in a good position to respond to Government's request and to assist with further support in the sector, and is the only donor able to play such a role. The project is fully consistent with the CAS, described in Chapter 1, which provides for continuing to support the Sri Lanka education development program through a two phase process: first a teacher training and deployment project to address the most urgent needs, followed by a wider education sector operation focused on other aspects of education quality. 2.35 Poverty Category and Program Objectives: The Project forms part of the Program of Targeted Interventions. Poverty is widespread in Sri Lanka particularly in the rural areas and in the urban slums. These areas suffer from inferior education services directly linked to the predominance of untrained teachers, higher teacher absenteeism, and inadequate inputs. A major focus of the project would be to assist the children in these schools through upgrading of teachers and measures to ensure that teachers are present and teaching. Better trained teachers should improve the quality of education in all schools (benefiting all 4.1 million students): however since schools in rural and slum areas currently suffer disproportionately from lack of trained teachers and from teacher absenteeism, the project outcome of better availability of trained teachers and better teacher deployment is likely to be disproportionately beneficial in improving the learning opportunities of poor children. Improved teaching/learning quality will enhance the education opportunities of children from disadvantaged areas and eventually improve their earning capacity, thus increasing their contributions to the economy. Data on how the number of untrained teachers has been reduced in rural and slum areas would be monitored as part of the MEHE annual statistical collection and analysis. The impact on school examination and promotion would also be analyzed during project implementation. 2.36 Other Donor Participation: Other donors who have indicated interest in participating in this project are ADB, Swedish SIDA, AusAID and for the German Government, GTZ. The secondary education project which ADB is currently financing 30  includes components relevant to teacher education. They are (a) rehabilitation of Teacher Training Colleges; (b) curriculum development for primary, secondary and teacher education; and (c) support for technical assistance and external fellowships for teacher educators. Government has reviewed the design of the teacher education components of the ADB-financed operation jointly with ADB and IDA in the context of the wider reforms that it now wishes to undertake, and has agreed with ADB to modify them accordingly. SIDA will continue to support distance education activities and the German Government through GTZ intend to appraise in June 1996 the staff development component. AusAid wants to assist with link institutions but not until 1997. C. Environmental Considerations 2.37 The project is in Environmental Category C, in that none of the construction activities are likely to have any significant environmental impact. For the larger buildings in the project (5 NCOEs) an environmental review will be undertaken during the design stage, by the Central Environment Authority which regularly reviews larger construction proposals. Sri Lanka has a sound environmental program and was one of the first to develop a National Environmental Action Program. The education system has programs to support the national environmental effort. Environmental studies are already part of the teacher training programs and the school curriculum. Practical environmental activities are an integral part of teacher education, and environmental knowledge will be strengthened as a result of improved teacher training programs. The agencies responsible for revising teacher training programs will establish links with the Central Environment Authority set up in 1980 under the National Environmental Act. The project would also establish links with the Environment Division within the Ministry of Transport and Women Affairs (set up in 1990). Finally, the project would confer with the staff implementing the proposed Environment Action 1 Program being prepared by ID. D: Women in Development 2.38 Sri Lanka has attained a unique position among developing countries since it has reached equitable female participation at all levels of education and training. All girls, except a few in rural areas, complete primary education and most complete about grade 10 (O Level). Since 1993 female participation at A level and university has equaled that of males. Female enrollments continue to dominate in certain areas such as humanities, health services and teacher education programs. Women are rapidly integrating into the service industry. In 1994, women comprised about 80 percent of the primary and 60 percent of the secondary school teachers and in total averaged over 70 percent of all teachers at all levels. The average age of women teachers is only about 35 years. Women are less represented in administrative areas and continued attention is required to increase their opportunities, their representation as principals still only totals about 35 percent. Finally, national reports have estimated that the equitable participation of female in education has greatly assisted in reducing the birth rate in Sri Lanka now down to 1.4 percent and expected to further decline. 31  3. PROJECT COSTS, FINANCING AND IMPLEMENTATION 3.1 The total project cost is estimated at US$79.3 million equivalent. The estimated cost by project component is summarized in Table 3.1 and by category of expenditure in Table 3.2. Detailed estimated project costs by components are given in Annex 27. Table 3.1 Estimated Project Cost Local Foreign Total -------------(US$ million)----- Rationalization of Teacher Deployment (RR) 0.1 0.1 0.2 Rationalization of Structure and Organization 0.2 0.7 0.9 Upgrading of Teacher Education Programs 0.4 3.2 3.7 Strengthening of Staff and Management 4.2 7.6 11.8 Strengthening and Upgrading of the Teacher 31.4 18.0 49.4 Training Institutions Studies & Monitoring 0.1 0.2 0.3 Project Coordination 1.2 0.3 1.4 Total BASELINE COSTS 37.6 30.1 67.7 Physical Contingencies 3.3 2.0 5.3 Price Contingencies 1.9 4.4 6.3 Total PROJECT COSTS 42.8 36.5 79.3 3.2 Basis for cost estimates: Baseline costs are estimated at October 1995 prices, at the time of appraisal. Construction costs are based on US$240 to US$270 per square meter depending on construction standards for new construction and on specific estimates for rehabilitation. Architectural services, including site supervision, are estimated at 8.5 percent of construction costs. Furniture costs are based on 8 to 10 percent of construction costs. Equipment costs are based on specific estimates depending on the activities, level of training and the kind of facilities. Unit cost for fellowships are based on annual rates of US$600 for local, US$7,200 for regional and US$30,000 for OECD countries. International consultant costs are estimated at: US$12,500 per month salary, daily allowances US$150 and travel cost US$5,500. Unit costs per month of local technical assistance are estimated at US$1,300 per consultant. Books and educational material are based on specific estimates of existing books for the Teacher Education Program, Training, and Staff Development of Teacher Educators and include all costs for development, translation and printing. National training programs are estimated on the basis of ongoing training programs and a per trainee unit cost of $1,000 (including organization and instruction costs) for management training programs and other in- country training. Continuing education, which includes upgrading, re-training, and refresher courses, is estimated at US$10.00 per trainee day, US$16.00 per trainee day for 32  residential programs, and US$70.00 per trainee week of residential training and US$6.00 per trainee day for refresher courses. Teacher incentives to be paid by the Government were estimated at 15 percent of average teacher salary for the most difficult schools, and 10 percent for difficult schools. Supplementary materials for the difficult schools having to use multi-class training were estimated at about US$200 p.a. per class and education support for the children of the teachers remaining in difficult schools were estimated at Rs.500 p.a. per student. Salaries for NATE will be paid on a declining basis (90 percent years I and 2; 60 percent years 3 and 4, and 30 percent year five). Table 3.2 Summarv of Project Costs by Category of Expenditure (Rs Million) (USS Million) % % Total Foreign Base Local Foreign Total Local Foreign Total Exchange Costs I. Investment Costs A Civil Works 1,386.3 462.1 1,848 4 27.5 9.2 36.7 25 54 B Architectural and Technical Studies 125.5 31.4 156.9 2.5 0.6 31 20 5 C. Furniture 68.1 681 136 1 14 1.4 27 50 4 D. Equipment Rationalization Facilities Equipment - 225.5 225 5 - 4.5 4 5 100 7 Structure and Organization - 17 0 17 0 - 0.3 0.3 100 - Equipment Subtotal Equipment - 242 6 242.6 - 4 8 4 8 100 7 E. Vehicles 2.9 25.9 28.7 0.1 05 06 90 1 F. Books, Educational Materials, and - 168 1 168.1 - 3 3 3 3 100 5 Printing Contracts G. Technical Assistance 1. International Consultant Fees - 170.6 170 6 - 34 3.4 100 5 Travel - 211 21.1 - 04 0.4 100 1 Subsistence - 30.5 30.5 - 0.6 0.6 100 1 Subtotal International Consultant - 222.2 222.2 - 44 4 4.4 100 7 2. Local Consultant Fees 26 4 - 26.4 05 - 0.5 - 1 Travel and Subsistence 0 8 - 0.8 0.0 - 0.0 - Consulting Firm 2.0 - 2.0 0 0 - 0.0 - Subtotal Local Consultant 29 2 - 29.2 0.6 - 0.6 - 1 Subtotal Technical Assistance 29.2 222.2 251.4 0.6 4 4 5.0 88 7 H In-Country Training/Workshops 214.9 - 214.9 4.3 - 4.3 - 8 1. External Training/Workshops OECD - 151.2 151 2 - 3.0 3.0 100 4 Regional - 21.6 21 6 - 0.4 0.4 100 1 Fellowships and Study Tours - 105.3 105 3 - 2.1 2.1 100 3 Subtotal External - 278.1 278 1 - 5.5 55 100 8 Training/Workshops J. Studies 3.0 12.1 15.1 0.1 02 0.3 80 K Project Coordination Unit 34.2 8.5 42 7 07 02 0.8 20 1 Total Investment Costs 1,864.0 1,519.1 3,383.0 370 30.1 67.1 45 99 II. Recurrent Costs B. Project Coordination Unit 31.7 - 317 0 6 - 0.6 - 1 Total Recurrent Costs 31 7 - 31.7 06 - 0.6 - 1 Total BASELINE COSTS 1,895 7 1,519 1 3,414.8 37 6 30.1 67.8 44 100 Physical Contingencies 164 1 99 1 263.2 3.3 2.0 5.2 38 8 Price Contingencies 537 5 585.8 1,123.3 1 9 4.4 6.3 70 9 Total PROJECT COSTS 2,597.3 2,204.0 4,801.2 42.7 36.5 79.3 46 117 33  3.3 Contingency Allowances: The contingency allowances of US$ 11.6 million (about 17% of baseline cost) include contingencies for physical and price increases. Physical contingencies are estimated at 10 percent of the baseline costs for civil works and 5 percent for all other categories of expenditure. It is estimated that price increases will vary from 2 to 2.2 percent per year for foreign expenditures and from 6 to 8 percent per year for local expenditures during the implementation period. 3.4 Foreign Exchange Component (excluding contingencies): The foreign exchange cost of US$36.5 million (about 46 percent of total estimated project costs) has been calculated on the basis of the following foreign exchange percentages: civil works 25 percent; architectural and technical studies 20 percent; furniture 50 percent; equipment 100 percent, books, educational materials and printing contracts 100 percent, overseas specialists 100 percent; national specialists 0 percent; external training 100 percent, in- country training 0 percent, studies 80 percent, project coordination 20 percent and recurrent costs 0 percent. 3.5 Retroactive Financing estimated at US$0.8 million is provided for employment of architectural consultants, for the salary of project coordinating unit (PCU) officers (future director and support staff) and for the establishment of the NATE office (computers, furniture, office supplies and vehicles). These funds would be used for the preparation of architectural designs ensuring that project preparation is in place and start- up occurs immediately after effectiveness. 3.6 Financing Plan: The proposed IDA credit of US$64.1 million equivalent would finance about 81 percent of the total estimated project costs (Table 3.3 below). Based on Government discussions with ADB it has been agreed that ADB would, from its ongoing credit (parallel), finance civil works, furniture and equipment at teacher centers, supply technical assistance for curriculum development and fund fellowships. SIDA has agreed to adjust its present distance education program to fit the project goals and will contribute, independently about US$2.4 million from 1996 to 1998. The German Government intends to appraise in June 1996 the staff development component and that amount is still to be determined. AusAid have indicated interest in supporting link institutions arrangement but cannot make any firm commitments until 1997. On that basis, the Government decided that the appraisal estimates, as approved by Cabinet, would be retained and the allocation of the IDA amount would be adjusted during the mid-term review based upon future allocations received from SIDA, the German Government and AusAid. On the basis of the above, ADB is expected to finance about 6.2 percent of the project and the Government about 10 percent of the total project costs. The IDA credit would cover about 81 percent of the estimated foreign exchange costs of the project. The financing plan follows: 34  Table 3.3 Financing Plan (Including Contingencies)* (US$ million) Government of Sri Lanka ADB IDA Other Totl Amount % Amount % Amount % Amount % Amount % A. CMI Works 6.0 13.8 2.6 6.0 34.7 80.2 - - 43.2 S4.5 B. Architectural and Technical 0.0 - 0.3 8.0 3.2 92.0 - - 3.4 4.4 Studies C. Fumiture 0.5 15.2 0.2 5.2 2.5 79.6 - - 3.1 4.0 D. Equipment - - 0.7 11.3 5.2 88.7 - - 5.8 7.3 E. Vehicles 0.0 - - - 0.6 100.0 - - 0.8 0.8 F. Books, Educational Materlala & - - 0.0 0.9 3.9 99.1 - - 4.0 6.0 Printing Contracts G. Technical Assistance - - 1.2 20.4 4.6 79.6 - - 5.8 7.3 H. External Training Regional TrainingWorkshops - - - - 0.5 100.0 - - 0.5 0.6 OECD Training/Workshop - - - - 3.6 100.0 - - 3.6 4.5 Fellowships & Study Tours - - - - 2.5 100.0 - - 2.5 3.1 Subtotal External Training 6- - - 6.6 100.0 - - o 8.3 1. In-Country Training/Workshops 0.0 - - - 2.3 49.0 2.4 51.0 4.7 S.9 J. Studies 0.0 - - - 0.3 100.0 - - 0.3 0.4 K. Project Coordination Unit 0.9 98.4 - - 0.0 1.6 - - 0.9 1.2 L. Recurrent Costs 1/ 0.5 80.9 - - 0.1 I 19.1 - - 0.7 0.9 Total 7.9 10.0 4.9 6.2 64.1 80.8 2.4 ; 3.0 79.3 100.0 1/ Govenmnent's recurrent costs include counterpart funds for SIDA and additional operating coats, which will double due to the number oftrainees for new NCOEs and TCs. 2/ Includes NATE and PCU operating costs on a declining basis. 3/ SIDA will adjust its on-going distance education program to fit the project goal. Commitment totals about USS800,000 p.a. until 1998. * Govement has agreed that there would be no taxes for IDA projects in the social sedts. 3.7 Procurement amounts and method of procurement are summarized in Table 3.4 below: 35  Table 3.4 Amounts and Methods of Procurement (US$ million) Procurement Method (Including Contingencies) a/ b/ cl Consulting ICB NCB Other Services N.I.F. Total A. Cvil Works 33.2 7.4 - - 2.6 43.2 (28.4) (6.3) (34.7) B. Architectural and Technical Studies - - - 3.2 0.3 3.5 (3.2) (3.2) C. Fumiture - 2.7 0.3 - 0.2 3.2 (2.3) (0.2) (2.5) D. Equipment 4.6 - 0.5 - 0.7 5.8 (4.6) (0.5) (5.1) E. Vehicles - 0.6 - - - 0.6 (0.6) (0.6) F. Books, Educational Materials 8 Printing Contracts - - 4.0 - 0.0 4.0 (4.0) (4.0) G. Technical Assistance - - - 4.6 1.2 5.8 (4.6) (4.6) H. External Training Regional Training/Workshops - - 0.5 - - 0.5 (0.5) (0.5) OECD Training/Workshop - - 3.6 - - 3.6 (3.6) (3.6) Fellowships & Study Tours - - 2.5 - - 2.5 (2.5) (2.5) 1. In-Country Training/Workshops - - 4.7 - - 4.7 (2.3) (2.3) J. Studies - - 0.3 - - 0.3 (0.3) (0.3) K Project Coordination Unit - - 0.0 - 0.9 0.9 (0.0) (0.0) L. Recurrent Costs - - 0.2 - 0.5 0.7 (0.2) (0.2) 37.8 10.7 16.6 7.8 6.4 79.3 (33.0) (9.2) (14.1) (7.8) - (64.1) Note: Figures in parenthesis are the respective amounts financed by International Development Association. a/ Includes intemational and local shopping, direct purchase, negotiations with book and software publishers, in accordance with Association Guidelines and selection of fellows under current and proposed Govemment administrative procedures. b/ Includes selection of architectural firms and of intemational and local consultants in accordance with Association Guidelines c/ NIF = Not IDA financed. d ADB would finance the Type B TCs. 3.8 Procurement thresholds and prior review requirements are outlined in Annex 28 and the Government's procurement capacity in Annex 29. About US$33.2 million of the contracts for civil works for new construction, major extensions and renovations at the NCOEs would be awarded on the basis of international competitive bidding (ICB) procedures including a seven and half percent preferential treatment to national bidders. It 36 -  is expected that about 15 contracts will be awarded using ICB. Because the remainder of the institutions are scattered throughout the country, rehabilitation and refurbishing contracts at NCOEs with smaller inputs, at about 80TCs and at two universities (Colombo and Jaffia) estimated at US$7.4 million, would be awarded on the basis of National Competitive Bidding (NCB) (contracts estimated to be about US$300,000 at the universities and between US$50,000-$100,000 at the TCs). The NCB contract bids would include foreign bidders, using tender procedures acceptable to the Association (Table 3.5). For the ICB and NCB tenders, the IDA Standard Bidding Documentation would be used. Other civil works activities (TC Type B/TEI) estimated at US$2.6 million will be covered by ADB under their own regulations and as part of an ongoing project. Table 3.5 Type. Number, and Amount of Civil Works Contracts (US$ million) Contract Type Number Amount Total USS Existing NCOEs ICB 9 0.900 8.100 New NCOEs ICB 6 4.183 25.100 Total ICB 15 5.083 33.200 Universities NCB 2 0.300 0.600 TCs and NCOEs with smaller inputs NCB 78 .05-.1 6.800 Total NCB 80 7.400 Total IDA and Government (IDA US$34.7) 95 40.600 ADB 2.600 Total IDA, Gov, ADB 43.200 3.9 Architectural and Technical Studies. Consultants would be selected in accordance with the Association's Guidelines for the Use of Consultants (US$3.2 million). Consultant contracts would result from competition based on selection criteria and specific terms of reference. Contracts with consulting firms costing more than US$100,000 and contracts for individual consultants costing more than US$50,000 would be subject to prior review by the Association. Architectural services related to TC Type B/TEI (US$0.3 million) would be selected under ADB regulations. 3.10 The procurement of furniture for the NCOEs would be done on the basis of NCB (US$2.7 million). The furniture tenders for the Universities, the TCs Type A and NATE would be done through local shopping on the basis of three price quotations (estimated at US$0.3 million). The initial tendering documentation would be subject to IDA prior review. The remaining furniture tenders for TCs Type B/TEI (US$0.2 million) would be done under ADB regulations. The procurement schedule for civil works and linked furniture and equipment is outlined in Annex 30. 37  3.11 Equipment packages (including computers) estimated to cost US$4.6 million would be awarded on the basis of ICB and in accordance with IDA Guidelines and will be subject to IDA prior review. Other equipment estimated to cost less than US$50,000 per package and aggregating to US$500,000 could be procured by international shopping on the basis of quotations from a minimum of three suppliers. Vehicles for PCU, NATE and NCOEs, estimated at US$600,000 would be procured on the basis of NCB. Equipment related to TC Type B/TEI estimated to cost US$0.7 mnillion would be procured under ADB regulations. 3.12 Books, Educational Materials; Reference and library books and educational materials including computer software (estimated to cost U S$2.7 million) would be procured directly from the publishers on the basis of pro-forma invoices. The project would cover the production of textbooks produced by the Government or by joint Government and private sector printers and in a few cases for direct production costs by publishers. Library books would be purchased directly from the suppliers following negotiations for volume/quantities and on the basis of pro-forma invoices. Whenever two or more similar books exist, comparative bids would be sought from a minimum of two publishers. Printing contracts for printing curriculum materials (estimated at US$] .3 million) would be awarded on the basis of quotations from a minimum of three printers. 3.13 For ICB procurement, the standard IDA ICB bidding documentation would be used, with prior review by the Association of bidding documentation. Contracts for goods and equipment estimated to cost US$50,000 or more and for civil works contracts estimated to cost US$300,000 or more will be subject to IDA prior review. Based on project experience the Government has the capacity to undertake the procurement. 3.14 Technical Assistance and Training: The types of consultants and technical assistance are summarized in Annex 14. Consultant costs are estimated at US$5.8 million with IDA financing US$4.6 mnillion and ADB financing UJS$1.2 million. Consultants under IDA financing would be selected in accordance with the Association's Guidelines for the Use of Consultants. Consultant contracts, either local or international, would result from competition based on selection criteria and specific terms of reference. The GOSL will request expressions of interest from suitable firms through advertisement in the Development Business in order to develop the short-lists. All international consultants will be selected using competitive procedures acceptable to IDA. The consultant TORs would be reviewed by IDA prior to tenders. Contracts with consulting firms costing more than US$100,000 and contracts for individual consultants costing more than US$50,000 would be subject to prior review by the Association. For national consultancies three firms, institutions or specialists would be sought based on advertised criteria and terms of references. For specific subject (upgrading and on-the-job training of national teacher educators) international technical assistance and consultancies based on comparative costs estimates would be sought from potential link institutions and institutions/specialists located in a minimum of two countries. 38  3.15 External Training estimated at US$6.6 million will cover regional training and workshops (US$0.5 million), OECD training workshops (US$3.6 million); and fellowships and study tours (US$2.5 million). Payments would be based on statements of expenditures and annually agreed rates or unit costs covering expenditures for course operation, trainee stipends, travel and lodging and for monitoring activities. Training activities would also cover inter institution seminars and visits to the link institutions. Lists of seminars, with expected costs, would be reviewed annually. Fellowships would be awarded under government procedures and criteria acceptable to the Association and in concurrence with the staff development plan agreed during negotiations. During negotiations the Government gave assurances that it will carry out the technical assistance and training programs in accordance with terms of reference and time schedules satisfactory to the Association [para 5.2 (h)]. 3.16 In country training/workshops estimated at US$4.7 million would cover national fellowships, continuing education, conferences and seminars including subsistence and travel for the upgrading of teachers. About US$3.6 millioll of the above would cover the continued upgrading of untrained teachers through the distance education/in-service modes. A large part of the continuing and distance education/in- service costs would be funded by other donors in accordance with their procedures. 3.17 Disbursement: To expedite disbursements, a special account with an authorized allocation of US$2.5 million representing about four months' average disbursements would be established at MEHE in coordination with MOFP and Central Bank. Applications for replenishment of the Account, supported by appropriate documentation, would be submitted regularly (preferably monthly, but no less than quarterly) or when the amounts withdrawn equal 50 percent of the initial deposit. Disbursements would be made on the basis of Statements of Expenditures (SOE) against: (i) contracts of less than US$50,000 equivalent for goods and vehicles; (ii) contracts for less than US$300,000 equivalent for works; (iii) consultant contracts of less than US$100,000 equivalent for firms and US$50,000 for individual contracts; (iv) local training; and (v) project management and recurrent costs. Documents supporting the SOEs would be retained by the project coordination unit and made available for inspection during the course of IDA supervision missions. Disbursements for all other expenditures would be against full documentation. The proposed credit of UJS$64.1 million equivalent would be disbursed over a period of five years (Annex 31). Disbursements would be made in the following manner: (i) civil works 100 percent of foreign and 80 percent of local expenditures (para. 3.8). All civil works should be completed within the first four years of the project period; (ii) architectural and technical studies 1 00 percent of expenditures (para. 3.9); (iii) firniture, vehicles and equipment at 100 percent of foreign expenditures and 100 percent of local expenditures (ex factory) and 85 percent of expenditures for other items procured locally (paras. 3.10 and 3.1 1 ); (iv) books, educational materials and local printing at 100 percent of foreign expenditures and 90 percent of local expenditures (para. 3. 1 2); (v) technical assistance and external training 1 00 percent of total expenditures (paras. 3.14 and 3 .15); (vi) in country training I 00 percent of total expenditures (para. 3.16); (vii) studies 100 percent of total expenditures (para. 3.26): and (viii) project 39  management and NATE on a declining basis: 90 percent in FY96 and 1997. 60 percent in FY1998 and 1999 and 30 percent thereafter. D)isbursements of local expenditures for whiclh 100 percenit of total financing is supported by the project. c.g.. equipment, books and edLucationial materials and local printing and project management would be net of taxes and other mark-up costs. 3.18 Accounts and Audit: The MEHE. Ministry of Finance and Planning and the project coordination unit would establish and maintain separate accounts for project expenditures. The accounts would be maintained in accordance with sound accounting practices acceptable to the Association. Auditing would be performed annually by a qualified auditor in accordance with procedures satisfactory to the Association and an audit report, including separate statements on disbursements against statements of expenditures and on the Special Account, submitted to the Association. 3.19 Project Management: The first project gave IDA an entry into the sector and much of the ongoing work has been a major building block for future operations. Based on the experiences of the first education project which assigned the implementation responsibilities to the different management units within MEHE and provincial authorities, implementation roles are well defined. However, based on lessons of the ongoing project. these responsibilities would be reviewed each year, during the annual review. To ensure effective implementation, there is also a need to ensure that sufficient technical assistance is attached to the project to train and assist MEHE in procurement and management skills so the processing of these activities can be improved in timing and quality. 3.20 The lead agency for project implementation will be the MEHE. PCU will be given the responsibilities to: (i) coordinate the IDA resources; and (ii) coordinate the monitoring and reporting aspects of the project. PCU will work closely with NATE, the MOFP, NIE, the provincial authorities and the Universities, which are responsible for the training, recruitment, and monitoring of teachers. The project would cover the following costs for PCU: (i) project coordination estimated at 1]S$0.9 million; and (ii) recurrent costs of IJSSO.7 nmillion to cover PCU for on-site supervision, the purchase of furniture and equipment and for the office and staff related implementation costs. 3.21 The project civil works implementation indicators are included in Annex 32 and the project's implementation plan that includes objectives, key indicators, targets, and implementation responsibilities are outlined in Annex 33. In addition, a Project Implementation Volume outlining the implementation and monitoring steps has been prepared and will be used to guide implementation. 3.22 With regard to physical aspects and as initial tasks, the PCU in collaboration with MEHE/School Construction Unit will: (i) ensure that the 5 new NCOE and TCs' designs are completed at the earliest for IDA review and tendering; (ii) ensure the supervision of the architectural and technical studies related to NCOEs and the University of Jaffna and 40  the Colombo Faculty of Education; and (iii) PCU/School Works would be responsible for ensuring the timely implementation and supervision of all the civil works activities. 3.23 The selection and detailed implementation of works and organization of the tendering process would be the responsibility of MEHE/PCU assisted by the School Construction Unit (SCU). Supervision of the works for the NCOEs and Universities would be provided by contracted architectural firms or full-time assigned architects from SCU. For the designs and supervision of theTCs, the MEHE/PCU would obtain the assistance of the Provincial Education Departments and Ministry of Public Works units jointly responsible for public works in their area. In addition to the above, regular supervision will be undertaken by MEHE/PCU/SCU and permanent on-site supervisors will be assigned to each NCOE. Final detailed specifications and preparation of the tendering documentation will be the responsibility of PCU. 3.24 For equipment, initial lists (subject and program based) with specifications appropriate to the syllabi, would be prepared by NIE in consultation with the lecturers in the various teacher training institutions. The universities would prepare their own equipment lists. The equipment and furniture lists, specifications and tender documentation (using IDA standard documents) would be finalized by PCU and forwarded to IDA for prior review. PCU will be responsible for all contracts related to physical, equipment and material aspects of the project. The provincial authorities would assist PCU with the monitoring of delivery of furniture, equipment and educational materials. 3.25 Government has agreed to staff PCU with: (i) a Director; (ii) an Accountant; (iii) an Architect (linked with SCU); (iv) a Procurement Officer; and (v) a Teacher Educator (most likely located in the office of the Teacher Education Commissioner). To assist with project organization and start-up activities, the Director has already been appointed by the MEHE. During negotiations Government gave assurances that it would: maintain until completion of the project the PCU with terms of references satisfactory to the Association, which shall be responsible for the overall implementation of the project [para. 5.1 (i)]. 3.26 Studies estimated at UJ%S$0.3 million are summarized in Annex 26. The aim of the studies is to improve the quality and efficiency of the education system. The topics addressed would be: (i) assessment of teacher education and staff development needs; (ii) analysis of student access, progression, repetition and attrition and ways to improve these; (iii) review of continuing education programs; (iv) impact of the rationalization of teacher deployment policies, and teacher education funding; (v) the effect of improved teachers' qualifications on pupil examination and promotion; (vi) study of quality inputs at theprimary and secondary levels; and (vii) after the mid-term review, assessment of the impact of NATE. For these studies, consultant contracts, either local or international would result from competition based on selection criteria and specific terms of reference. Consultants would be recruited in accordance with IDA guidelines (para. 3.14). 41  3.27 Monitoring, Reporting and Supervision: Sector and project performance would be monitored in the following ways: (a) Arrangements are built into the project for NATE to monitor outcomes in terms of teacher education, deployment and numbers. MEHE and MOFP will monitor the project's fiscal impact. As part of the future work on education sector development, a scheme for routine education assessment will be developed during the coming year. The assessment process will enable Government to monitor the effectiveness of the teacher education project in improving education quality. (b) A semi-annual progress report on the implementation of the project's policy and implementation aspects would be prepared by the PCU and submitted to IDA in July and January every year. The report should include: (i) a component by component summary of implementation (actual versus planned), including for Component A analysis (on the basis of NATE monitoring activities) of the application of the RR and its results, and of budgetary allocations to provinces; (ii) a financial summary by component including the status of commitments and of disbursements; (iii) an updated implementation schedule and implementation plan and key indicators; (v) a list of issues and problems faced with options for resolution; (vi) status of the studies; (vii) status of technical assistance; and (viii) a work plan for the following period. (c) PCU would coordinate with other departments of MEHE, MOF and provincial authorities the semi-annual update, the implementation plan and the review of key indicators. In the later years of the project, the reporting would include the monitoring of the impact of better trained teachers based on annual examination results (Annex 33). During negotiations the Government gave assurances that it will: by January 1, 1997 and every six months thereafter, throughout the Project execution period, update and furnish the Association for its review and approval the implementation plan and the key indicators for the project [para. 5.1 (j)]. (d) Annual implementation reviews would be held and the above monitoring reports would be discussed with the authorities concerned and with other donors participating in the project. During the annual review, the status of the implementation of the RR will be examined and the following year's goals set, as will the status of the reorganization of the teacher education system. This joint review would be held about February of each year. At negotiations Government gave assurances that it will:, (a) maintain policies and procedures adequate to enable it to monitor and 42  evaluate on an ongoing basis, in accordance with benchmarks and indicators satisfactory to the Association, the carrying out of the Project and the achievement of the objectives thereof (para. 3.28 below); (b) prepare. under terms of reference satisfactory to the Association, and furnish the Association, by July 31, 1998, for the mid-term review (para 3.28 below): (i) a report integrating the results of the monitoring and evaluation activities of the project during the period preceding the date of the said report and setting measures recommended to ensure the efficient carrying out of the project during the period following that date, and (ii) a specific report detailing the application of the Ready Reckoner formula and whether the Cadre Committee, transfer policy, allocation of funds in each province for quality inputs and school maintenance have reached the targets set and are operating in a manner satisfactory to the Association; and(c) review with the Association, by September 30, 1998, or such later date as the Association shall request, the progress reports and take all measures to ensure the efficient completion of the project [Section 5 para. 5.2 (k)]. 3.28 The mid-term review would be conducted two years after credit effectiveness (about July 1 998). Impleincntation progress after Pliase 1. would be evaluated according to agreed benchmarks (described below). Project goals would be adjusted, if necessary, to accelerate implementation and maximize the impact and sustainability of the project. The Implementation benchmarks for the mid-term review are: * the cadre committee be established, operating and the revised RR is being implemented (including status of cadre at school, district, province and national levels showing progress in matching demand and supply of teachers - as per Annex 13); - the transfer policy, established in 1995 is being implemented, in accordance with the RR (as per Annex 6); * implementing the consolidation measures at primary and secondary levels listed in Annex 3; * the primary STR increased to 26:1 at the primary and to 22:1 at the secondary level; * that NCOE intake follow the institutional plan outlined in Annex 21A; * the earmarking of quality inputs is initiated with a 3 percent allocation in 1997 and increased to 4 percent in 1998 (increasing by I 43  duplicating machine and paper; tool kits; consumable for science, life skills, environmental studies, art, home economics and technical subjects; minor maintenance after supervisory approval; audio-visual equipment; when justified photo-copiers; and financial assistance for organizing workshops, seminars and study/subject groups. Annual reports on the quality inputs, their impact on exam results would be assessed starting 1997; * One percent of the education capital budget allocated by the Government, to each province, would be earmarked for the maintenance of the schools. This amount would be assessed yearly, during the first two years of the project to arrive at a facilities plan by 1998 at which time a realistic earmarking plan for the maintenance of educational institutions and equipment would be established. * that implementation progresses to a level where the amounts disbursed, contracted and committed would be as follows: for civil works about 50 percent of the new institutions at Galle, Ratnapura, Polonnaruwa and Kurunegala and for Jaffna at about 20 percent; for the rehabilitation and renovations at existing institutions about 60 percent; for furniture supply about 50 percent; for equipment procurement about 30 percent; for training activities about 45 percent and for technical assistance and studies about 60 percent. (a) The IIDA supervision plan is outlined in Annex 34. This project would be jointly supervised by IDA headquarters and the resident mission during the first two years including a gradual decentralization to the resident mission. Since this is a very technical project, the key supervision should be guided by an experienced educator and an education economist who would ensure the application of the staffing, deployment and financial policies of the project; and (b) The Government would prepare and submit a project Implementation Completion Report (ICR) to IDA no later than six months after the project Closing Date. 3.29 The list of selected documentation and reports utilized during project preparation have been listed in Annex 35. 44  4. PROJECT BENEFITS AND RISKS A. Economic and Financial Analysis Economic Rationale for Project Investment 4.1 Sri Lanka's education system, despite its excellent coverage, has low internal and external efficiency. The quality of its output is below the levels that could be expected from the country's high literacy levels and coverage of education, and the substantial inputs made to the system. In large measure these inefficiencies relate to the quality and use of teachers. The uncontrolled recruitment of teachers has led to an exceptionally high proportion of the teaching force being inexperienced and untrained; on the other hand there are mismatches in the availability and use of teachers in different parts of the country, for different types of school, and in different subject specialties. Teacher absenteeism is high, and there is lack of continuity in that teachers transfer frequently away from difficult areas. In addition, many of those teachers who have been trained are less than fully productive because the neglected teacher training system is ineffective. The training system is fragmented, uncoordinated, and has a high unit cost. 4.2 In view of these inadequacies, it was concluded that policy measures to improve teacher deployment coupled with an investment project in teacher education would have positive impact in many areas. The project will help the government implement its program to manage teacher recruitment, employment and deployment, using the Ready Reckoner resource allocation formula, a school consolidation policy based on school mapping, and a revised teacher transfer policy, thus rationalizing deployment of almost 190,000 teachers; it will require that all teachers be trained before entering the service, ensuring over the next five years that all of the teaching force is pre-trained, rationalizing and upgrading the training levels of teacher education system. Research in Sri Lanka shows that upgrading of teachers has a major impact on student learning and quality of education. 4.3 Comparative analyses were made of various scenarios of modifying student- teacher ratios and salary costs, as well as of various ways of providing cost-effective teacher education and training. The conclusions of the selected scenario, described below, constitute a basis of the Government's new strategies, and show that the strategies are both feasible and highly cost effective. 45  4.4 The Project will: * make teacher employment more efficient by standardizing teacher recruitment, deployment, and training activities, as well as rationalizing teacher numbers and redirecting savings to other priority educational objectives; * make the teacher education system more effective by making it demand driven to better address national, district, and school level needs, by rationalizing the geographical distribution of institutions; * make the teacher education system more efficient through rationalizing the number of teacher training institutions thus lowering the unit cost while maximizing the utilization and making the institutions multi-functional. Also, by increasing student:staff ratios, reducing non-academic staff, rationalizing residential facilities according to demand, and increasing the proportion of day students (thereby reducing boarding costs); * improve the quality of education for 4.1 million students in primary, secondary, and collegiate levels by upgrading teachers, consequently increasing school outcomes and reducing the cycle cost; and * make education more equitable and rationalize teacher distribution according to school needs. 4.5 Project Benefits: The project provides benefits in the following overlapping areas, related to the different activities it supports. (a) Teacher deployment. This component produces substantial savings from reducing the numbers of teachers in the system, because of declining enrollment, controlled teacher recruitment, more equitable allocation of teachers and a policy to increase student:teacher ratios in schools. It also leads to improved education since a more equitable allocation system will provide trained teachers for children who at present have inadequate teaching. School consolidation also leads to reduced expenditure on non- teaching staff. Potential savings from this group of activities (that is total expenditure on salaries compared with what would have been spent on present trends) over the period 1996-05 could reach Rs 1.6 billion. (b) Components related to teacher education: These components provide for rationalizing the structure and organization of pre-service and in-service teacher education; improving teacher education programs; training teacher educators and administrators; rehabilitating, expanding and rationalizing 46  teacher training institutions; and strengthening teacher education management. They will give rise to benefits in three ways: * they will improve the quality of teacher education, by better programs and better teacher educators, thus improving the quality of education which the trained teachers themselves provide; * they will increase the cost-effectiveness of teacher education, through better situated training colleges which will allow a greater proportion of students to be non-residential, through better planning of teacher education, through increased trainee:trainer ratios, through shorter courses, and through better use of facilities. The increased cost effectiveness will allow the system to double its annual output of trained teachers with only an increase of 14% in recurrent costs; * the project will increase the number of teachers trained, both by increasing capacity for training teachers and by providing as part of the project direct, continuing education to an increased number of teachers. Thus by the end of the project most of the teachers in the system will have been given basic teacher training, and many undergone upgrading. This will have important benefits both for the general quality of education and for the equity with which it is provided. (c) All components: In their effect on ensuring that there are trained teachers available for the majority of students (and through the reallocation of the savings from reducing the numbers of teachers to improve availability of quality inputs), the project will improve general education levels. These are the most important benefits to be derived from the project: the unquantifiable effects for the quality of life and the economy, with the indirect social and economic effects that stem from better education. However, the improved quality will also reduce repetition and drop-out, increasing the efficiency of the education system. In the best case (see below) benefits from increased internal efficiency could total over Rs 2 billion over the period 1996-05. 4.6 Fiscal Sustainability: The Project and the programs it supports have a broadly neutral fiscal impact. The declining enrollment in general education (both primary and secondary) due to demographic trends, with the low STR of 24:1 and the excess of teachers in the system, increases the need to rationalize use of education sector resources at the school, provincial, and central levels. At the same time, the tight fiscal condition and the increasing public budget deficit further intensify the need to rationalize Government expenditures and, in turn, put more pressure on the MEHE and the provinces to rationalize teacher numbers and their distribution through recruitment control and consolidation of small schools. Teacher employment rationalization, linking application of the mechanism to resource allocations, would generate substantial sector cost reductions. Annex 12 contains an analysis of the project activities and of the reforms they will support, their outcome, and (where possible) estimates of their costs and benefits. During 47  the period 1996-2005, aggregate salary expenditure (using the recent 1995 salary scale) could be reduced by Rs 1.6 billion if teacher recruitment is controlled as planned, as the total number of teachers and school administrators would be reduced by 25,000 by 2005 (Figures 4.1 and 4.2). If project-related reforms are carried out filly, and the improvement in education progressively reduces repetition rates substantially, total fiscal savings during the period 1996-2005 could in the best case add further savings of between Rs 2 and 3 billion, making total savings for the 10 years over Rs 4 billion, or US$74 million, equivalent to the costs of the project and incremental expenditures on teacher training. When the unquantifiable (but large) benefits from improved levels of general education in the population at large are factored in, the project benefits are massive. The saving in education salaries would be re-invested in desperately needed quality components such as school supplies and teaching materials, increased teacher training, and to develop support and incentive schemes to motivate teacher transfers to remote and hardship areas. Figure 4.1: Projection of Teacher Salaries with Recruitment Control and Current Condition, 1996-2005 (Rs millions) 13000 110DX 0 C3 recruitment control *:current condition. aooo~~~ ~~~~~ , , E~*. '.. .. 7000d llwa- W Figure 4.2: Savings in Teachers and Administrators Salaries as a Result of Recruitment Control and School Consolidation 1400- / | |4 16001-,I 1400 - __ * to10 - _ 11 d d 1 1 Y. s .7.-. = Prim Sec Admin Total Teachers Teachers 48  4.7 The project's largest benefits by far come from improving the quality of education received by the 4.1 million students, by improving teacher competence. However, improved education quality also increases internal efficiency. A recent study of education in Sri Lanka (draft 1995) showed that the results of the 0 level exam were strongly associated with teacher qualifications. Thus, an investment in improving teacher qualifications is expected to increase efficiency of student progression through the system, reducing costly repetition and drop-outs, improve examination results, and lead to reductions in the system's cost. Analysis described in Annex 12 shows the potential extent of such savings, between Rs 2 and 3 billion in the most optimistic case. 4.8 There will be substantial benefits from more efficient operation of the teacher training institutions. The rationalization of teacher training institutions would lead to a reduction in their residential places by one third of enrollment (now 100 percent residential) and so in reduced running costs (currently residential facilities account for over 50 percent of institutional operating costs). Furthermore, the application of other cost- effectiveness measures -- such as standardizing programs, offering several programs in one location, having larger enrollments and increasing trainee:teacher educator ratios to 15: 1, maximizing the use of standardized equipment and facilities, reducing the number of support staff, reducing service costs through better location of institutions, and privatizing food services -- would result in much lower annual recurrent costs. Studies in other Asian countries that have rationalized their teacher training institutions through similar projects have shown that the operation of fewer and more cost effective institutions has amortized investment costs in about ten years and given long-term sustained lower operation costs. 4.9 Fiscal Sustainability of Teacher Training Reforms. The operational costs of the rationalized teacher education system for the period 1994-2005, which were estimated on the basis of the expected capacity needs, are reasonable, affordable and sustainable. The proposed scheme was shown during project preparation to be the most cost-effective means of achieving project objectives of several options that were analyzed. Annual recurrent costs of the institutions of teacher education after rationalization (even with a doubling of output) are expected to increase from Rs 221 million in 1995 to Rs 254 million after the end of the project in 2002, and then to decline slightly in real terms, reaching Rs 252 million in 2005. Had the system operated in its present manner, annual recurrent costs for the increased throughput of students would have reached Rs 314 million in 2002 and 367 million by 2005. The operating costs of teacher education programs represent 7 percent of the total MEHE budget and 3.3 percent of the total education budget. If the education budget grows as the Government projects at 3 percent per year, recurrent costs of teacher education programs -- 14 percent higher in real term at the end of the project, with a doubling of output -- will represent a smaller proportion than at present of the education budget. Thus the combined expansion and rationalization of teacher education programs and institutions is a desired, affordable and sustainable action (Annex 36). 49  4.10 Project activities also have other benefits that are difficult to quantify: * Reassignment of qualified teachers to deprived areas brings substantial education benefits for the (mainly poor) children from those areas. * The reallocation to quality inputs and maintenance of salary savings resulting from the stricter application of the RR would contribute to the positive impact on education attainment and related effects. * The increased funds for building maintenance will lead to long-term savings in building replacement. B. Risks 4.11 This policy-based project involves risks mainly related to policy implementation. During project preparation it was agreed by all levels of government, teacher educators, teachers and teacher associations that addressing teacher education and teacher deployment policies was long overdue, and that the programs proposed were acceptable. However, within the strongly political climate of Sri Lanka, circumstances can change rapidly. The main risks envisaged are: - The political or bureaucratic commitment to the application of new teacher deployment policies might not be fully implemented in some provinces. This applies especially to those provinces which are overstaffed and which might be reluctant to fully implement the Ready Reckoner formula. Similarly, some provinces may be reluctant to redirect salary savings. If savings are lower, the allocation for desperately needed quality inputs could, in turn, be reduced; * Some schools in the rural areas could still have inequitable allocations of teachers if the incentive system is not fully implemented. Due to national fiscal difficulties, a few provinces might attempt to use the incentive funds for other uses unless proper control and accountability are fully implemented; * Various political forces might resist rationalization of institutions. Others may oppose the implementation of firmer policies for teacher education hiring and deployment along with the stricter work criteria all part of the a national teacher strategy that would increase responsiveness to actual needs while increasing cost-effectiveness; and * Past project experience shows that implementation of agreed policies is difficult and time consuming in Sri Lanka. However, based on the consensus reached and as a result of the substantial participation and intensive technical dialogue undertaken during project preparation, it is estimated that these risks have been reduced. Nevertheless, the project is likely to suffer, as other projects, from the cumbersome bureaucracy and potential implementation 50  delays experienced by all projects in Sri Lanka. Government has already demonstrated its intent to address the administrative and staff issues by the appointment of the project coordination Director in December 1995. 4.12 The Government recognizes that ignoring or avoiding the issues in teacher education would be worse than attempting the changes proposed. MEHE's efforts to date have demonstrated a willingness to tackle policy concerns. These efforts suggest that the risks are worth taking and that there is political and professional will for the project to be implemented on schedule. 51  5. Agreements Reached and Recommendation General Agreements 5.1 During negotiations, agreements were reached with the Government on the following points: a) That MEHE and provincial authorities shall gradually increase the overall the student:teacher ratio so as to ensure that by January 1, 2001 the said ratio has reached 26:1 for primary schools and 22:1 for secondary schools (para. 2.6). b) To earmark, on or about January 1, 1997: (i) 3 percent of the annual recurrent block grant budget allocation in each province for quality inputs (such as textbooks, audiovisual equipment and educational materials), and thereafter increase such percentage at the rate of 1 percent per annum so as to reach 6 percent for each province by January 1, 2001; and (ii) 1 percent of the education capital budget allocation to each province for maintenance of schools. The Borrower shall evaluate this percentage during FY 97 and FY 98 to: (a) determine, in consultation with the Association, actual maintenance needs; and (b) prepare, based on such evaluation, a long-term maintenance plan for educational facilities, satisfactory to the Association (paras. 2.8 and 2.29). c) That it will: (a) establish, by November 1, 1996 or such later date as the Association shall agree: (i) a Teacher Cadre Committee, and (ii) NATE, both with membership, powers and responsibilities satisfactory to the Association; and (b) thereafter maintain and operate the Cadre Committee and NATE (paras. 2.9 and 2.14). d) That it undertakes, commencing January 1, 1997 to: (a) recruit and assign teachers only in accordance with the revised Ready Reckoner formula and Cadre Comnittee allocations directly linked to the annual budget and that special or emergency appointments of teachers will only follow the application of the said formula; and (b) that the application of the Ready Reckoner formula will be monitored annually by the Government and any deviation therefrom promptly corrected and notice thereof given to the Association (para. 2.10 and 2.21). e) That it shall no later than January 1, 1998, commence the application of a teacher support and incentives system satisfactory to the Association to facilitate teacher assignments in less favorable areas through the Teacher Transfer Boards (Para. 2.12). f) That it will carry-out until the completion of the Project, a staff development plan for teacher educators, satisfactory to the Association, in accordance with criteria satisfactory to the Association for the selection, bonding, and assignment and reassignment of trainees (para. 2.23). 52  g) That it will: (a) by January 1, 1998 formulate and furnish to the Association for its- concurrence, a system of unit cost budgetary allocation for teacher training institutions; and (b) by January 1, 1999 commence the implementation of such system.(para. 2.30). h) That it will carry-out the technical assistance and training programs under the project in accordance with terms of reference and time schedules satisfactory to the Association (para. 3.15). i) That it will maintain until the completion of the project the PCU with terms of references satisfactory to the Association, which shall be responsible for the overall implementation of the project (para. 3.25); j) That by January 1, 1997 and every six months thereafter, throughout the Project execution period, update and furnish the Association for its review and approval the implementation plan and key indicators for the project [para. 3.27 (c)]. k) That it will:, (a) maintain policies and procedures adequate to enable it to monitor and evaluate on an ongoing basis, in accordance with benchmarks and indicators satisfactory to the Association, the carrying out of the Project and the achievement of the objectives thereof, (b) prepare, under terms of reference satisfactory to the Association, and furnish the Association, by July 31, 1998: (i) a report integrating the results of the monitoring and evaluation activities of the project during the period preceding the date of the said report and setting measures recommended to ensure the efficient carrying out of the project during the period following that date. a specific report detailing the application of the Ready Reckoner formula and whether the Teacher Cadre Committee, transfer policy, allocation of funds in each province for quality inputs and school maintenance have reached the targets set and are operating in a manner satisfactory to the Association; and (c) review with the Association, by September 30, 1998 or such later date as the Association shall request, the progress reports and take all measures to ensure the efficient completion of the project [para. 3.27(d)]. 5.3 Recommendation Subject to the above understandings and conditions, the proposed project provides a suitable basis for an IDA credit of SDR 44.0 million (US$ 64.1 million) on standard IDA terms for 40 years maturity to the Government of Sri Lanka. 53  Annex I SRI LANKA TEACHER EDUCATION AND TEACHER DEPLOYMENT PROJECT Key Descriptive Statistics of Education System, 1990-1994 1990 1991 1992 1993 19940 Total Schools 10,3S2 10,520 10,5S3 10,710 10,760 Government 9,S64 9,998 10,042 10,160 10.193 Private 61 63 63 63 63 Privenas 457 459 478 497 504 Total Students 4,232,302 4,258,697 4,286,876 4,303,472 4,327,790 Government 4,111,272 4,135,114 4.159,313 4,172,897 4,193,970 Private 82,539 83,56S 84,324 83,912 84,110 Privenas 38,491 40,015 43,239 46,663 49,710 Total Teachers 184,822 177,231 182,608 193,916 194,645 Government 178,333 170,735 175,813 186,926 187,537 Private 3,069 3,076 3,132 3,243 3,288 Privenas 3,420 3,420 3,663 3,747 3,820 Govenunent Students: Year one Intake 387,314 388,315 359,228 354,320 342,220 No. repeated students 422,397 379,403 366,107 358,990 358,890 Repetition rate 10.3 9.2 8.8 8.6 8.6 Drop out rate 4.7 4.3 3.9 3.9 3.9 Student/teacher ratio \1 23.1 24.2 23.7 22.2 22.2 Source: Data Processing Unit, MEHE * Provisional \1 including school principals and other adrninistrators. STR in 1994 without adrninistrators is 24:1 C.SSRILANKAS496\ANNREXESTAMEXI .)XLSShetI 54  Arnex 2 SRI LANKA TFACHER EDUCATION AND TEACIIER DEPLOYMENT PROJECT GDP, Government and Education Expenditure, 198$5-1995 19t5 19S6 19S7 19U 1919 1990 1991 1992 1993 1994' 1995-' Current Prices CDP 162.375 179,474 196.723 221.912 251,891 321,751 372.345 425,283 449.800 578,800 668.000 Government Expenditure Recurrent 32,645 33,967 39.560 46,132 56,884 71,770 83.756 89,639 102,288 127,0X4 149,700 Capital 22.589 25.227 24.334 30.400 25.280 28,043 35,771 27.334 38,172 40,684 50.800 Total 55,234 59,194 63,894 76.532 82.164 99,813 119.527 116.973 140.460 167.768 200.500 Education Expenditure RecurTent 3.636 3,834 4.279 5.371 6.612 8,529 7.951 10.533 11,225 14,836 17.636 Capital 945 1,281 907 1.014 1,529 1,042 1.177 2,008 2845 2.877 2,890 Total 4,581 5,115 5.186 6.385 8,141 9,571 9.128 12.541 14,070 17.713 20,526 % Gov Exp/GDP 34.02 32.98 32.48 34.48 32.62 31.02 32.10 27.50 31.23 28.99 30.01 % Educ ExpIGDP 2.82 2.85 2.64 2.88 3.23 2.97 2.45 2.95 3.13 3.06 3.07 % EducReeJGovRec 11.1 11.3 10.8 11.6 11.6 11.9 9.5 118 11.0 11.7 11.8 % Educ Capital/Gov Capital 4.2 5.1 3.7 3.3 6.0 3.7 3.3 7.3 7.5 7.1 5.7 % Tot Educ Esp/Tot Gov Exp 8.3 8.6 8.1 8.3 9.9 9.6 7.6 107 10.0 10.6 10.2 GDP deflaor 1.4 1.4 1.5 1.7 19 2.2 25 2.0 2.1 2.1 2.1 t-n % Annual Inflation 5.8 7.0 11.5 9.6 20.0 11.4 9.5 9.9 9.7 9.5 Conatant Prices GDP 119.922 125,244 128,326 129.814 134,414 143,128 148.700 212,642 214,190 278,269 321.154 Government Expenditure Recurrenl 24.110 23,703 25.806 26.978 30.354 31,926 33.449 44.820 48,709 61,098 71.971 Capital 16.683 17,604 15.873 17.778 13,490 12,475 14,286 13.667 18,177 19.560 24.423 Total 40.793 41,308 41.679 44.756 43.844 44,401 47,734 58.487 66,886 80,658 96.394 Education Expenditure Recurrent 2,685 2,676 2.791 3.141 3.528 3,794 3.175 5.267 5,345 7,133 8,479 Capital 698 894 592 593 816 464 470 1.004 1,355 1,383 1.389 Total 3.383 3.569 3.383 3,734 4.344 4,258 3,645 6.271 6,700 8.516 9,868 Real Growth Rates (%) GDP 4.4 2.5 1.2 3.5 6.5 3.9 43.0 0.7 29.9 15.4 Govemment Expenditure Recixient -1.7 8.9 4.5 12.5 5.2 4.8 34.0 8.7 25.4 17.8 Capital 5.5 -9.8 12.0 -24.1 .7.5 14.5 4.3 33.0 7.6 24.9 Totl 1.3 0.9 7.4 -2.0 1.3 7.5 22,5 14.4 20.6 19.5 Education Expenditure Recurrent 0.4 4.3 12.5 12.3 7.5 -16.3 65.9 1.5 33.4 18.9 Capital 28.1 -33.8 0.2 37.6 -43.2 1.4 113.6 34.9 2.1 0.5 Total 5.5 -5.2 10.4 16.3 -2.0 .14.4 72.0 6.8 27.1 15.9 - proisonal 1' 2995 budpt (acudea teachu awy incme an 1995) Soures: Si Lana: Educamon and Tranirn Secor Stmt Review. Wodd Bank (June 27. 1994) Cenl Bnk SAnnual Report .994, and 1995 Budget c _xAaMAARLvWwA o4AiZm.aP4ACxOI  Annex 3 SRI LANKA TEACHER EDUCATION AND TEACHER DEPLOYMENT PROJECT READY RECKONER RESOURCE ALLOCATION FORMULA This annex includes eight parts (note in particular part 8): * Part 1 includes details on the Ready Reckoner entitlement formula; * Part 2 (pages 1-4) and the second includes an illustration of the mechanism of the Ready Reckoner applications, the connections to the budget allocation, and the relationship to teacher demand and supply (page 5); * Part 3 outlines RR agreements; * Part 4 includes the recommended consolidation of schools targets; * Part 5 includes quality inputs; * Part 6 includes incentives; * Part 7 monitoring steps for the RR and quality inputs; and * Part 8 which includes an illustration of the mechanisms of the Ready Reckoner applications, the connections to the budget allocation, and the relationship to teacher demand and supply. Part I - BACKGROUND: In 1983, the Ministry of Education issued a comprehensive set of Guidelines on Teaching Staff Requirements, using a formula - generally referred to as the Ready Reckoner (RR). The policy, which applies to all schools, is designed to ensure optimum and equitable deployment and utilisation of available teachers. Some minor modifications were made in 1990. School staffing entitlements are calculated separately for: * the number of students in the Primary Cycle (Kg-G5); * the number of students in the Secondary Cycle (G6-1 1); * the number of classes in the Collegiate Cycle (G12-13). It is the responsibility of the principal of each school to calculate the number of teachers needed and to complete and forward the requisite forms to the Divisional Office. Forms are sent to MEHE for collation and verification. Details of school entitlements are then forwarded to Provincial Education Offices. Representations may be made to MERE to review the allocation to a school or schools in a province. Actual numbers allocated under the RR for each province are submitted to the Finance Commission by MEHE as the basis for determining the teacher salary component of the block grants. A revised process has been developed for implementation in conjunction with the MIS system to be introduced in 1996. FACTORS AFFECTING ALLOCATIONS: Specific factors that have been taken into account in developing and applying the RR include: Primary * class size is 30; * grade 1 and 2 have 25 contact hours per week (5 per day), grades 3-5 have 30 contact hours per week (6 per day); * a primary teacher nornally teaches 35 periods (out of a weeldy total of 40 periods) the remaining 5 periods being for the teaching of English (by a specialist teacher); * special provision is made for small primary schools with enrolments below 50 (e.g., a school with 25 students will have 3 staff - principal, teacher, and specialist English teacher). 56  Secondary * class size is 35; * grades 6-11 have 30 contact hours per week (6 per day); * a secondary teacher normally teaches 32 periods (out of a weeldy total of 40 periods). Collegiate * grades 12-13 have 30 contact hours per week (6 per day); * collegiate class size is normally 25-30 students - smaller classes may be formed (minimum of 15 students) where students are unable to attend a larger school within a 5 mile radius, the number of teachers being 3 (one for each stream); * staffing is based on one teacher per class; * a collegiate teacher normally teaches 32 periods (out of a weekly total of 40 periods); * grade 13 students are allowed to repeat the year, but are not permitted to attend school on a regular basis - such students are not taken into account in calculating staff entitlements. OTHER FACTORS AFFECTING ALLOCATIONS: Regardless of size, all schools have a principal and a teacher(s) of English, in addition to the normal staff entitlement. See Note 1, below. There is no teaching allocation for principals, regardless of the size of the school. Depending on the size of the school, provision is made for sectional heads, an assistant principal, and a deputy principal. Teaching responsibilities for supervisory positions are as follows: * Subject Co-ordinator: 10 hours per week; * Grade Co-ordinator: 15 hours per week; * Supervisors: 10 hours per week; * Assistant Principal: 7 hours per week. An additional teacher is allocated to schools with an enrolment of 500+ in grades 6-11. Schools do not have administrative or clerical support. Teachers assigned to provide such support may be relieved of part or all of their teaching duties. It is generally acknowledged that this is an inappropriate use of teaching staff and that the strategy is not cost-effective. STUDENT:TEACHER RATIOS - 1993: Based on the 1993 census, the overall STR was 24.1 (or 22.6 with the inclusion of non teaching positions in the teaching service). The breakdown by cycle and medium of instruction was as follows: CYCLE SINHALA TAMIL TOTAL Primary 26.4 37.3 28.7 Secondary 21.2 27.1 22.2 Collegiate 13.3 16.1 13.7 Total 22.6 31.1 24.1 In order to address the imbalance between Sinhala and Tamil STRs, the Government has approved the appointment of 5,000 additional teaching positions for Tamil medium schools. These should be effective from the beginning of 1996. The effect of these appointments will be to decrease the Tamil STR. At the same time, as appointments to Sinhala medium schools have been limited to COE graduates, the Sinhala STR should show an increase in 1996, albeit marginally. Part 2 - ADulications: A. Primary Cycle 57  Target: that the overall long-term national STR target for the primary cycle be set at 27:1. * that the staff allocation for primary schools (other than smaller schools) be on the basis of one teacher for every 35 students enrolled in the school (ie., as for secondary) with the minimnum/maximum for teacher entitlement being 16 and 45, respectively. * that in schools with an enrolment of less than 400, principals have a teaching allocation, the extent of this being related to the size of the school. (See Note 1, below.) * that for schools with enrolments under 25 the number of staff be reduced from 3 to 2 (principal and one other teacher with competence in teaching of English). Comparable adjustments should be made for other smaller schools. (See Note 2, below.) Options for the organisation of small schools include: * Multi-grade teaching - combining classes (e.g., grades 1-3; 4-5, depending on the numbers); * Staggered intakes: - intake every alternate year - Year X would have grades 1, 3, 5, followed by year Y with grades 2 and 4 (depending on the size of classes, in Year X I and 3 or 3 and 5 could be combined; * Family grouping: students are formed into one "class" (school) and then grouped according to age and/or ability for different subjects (e.g., maths would require a group arrangement; music would be a "class" (school) activity. Schools, in consultation with their community, could determine which option is best suited to their particular circumsLance, and within the staff allocation. * that the fornation of composite classes be regarded as the norm rather than the exception, it being recognised that such classes would normally have fewer students (say 28) than single classes within a school. * Staff development (initial and continuing) would be required. Also, attention would need to be given to the provision of appropriate teaching and learning materials for small schools. B. Secondary Cyde (including Collegiate): Targ b: that the overall national STR for the secondary cycle (including collegiate) be set at 22:1. * that the staffing allocation for secondary schools (other than smaller schools) be on the basis of one teacher for every 35 students enrolled in the school, with the teaching allocation for different subjects within the school being calculated using a weighted system (based on subject periods per week for each grade and staff contact hours). (See Note 3, below.) * that the principals of smaller schools have teaching responsibilities, the actual number of periods being determined in relation to the size of the school. * that the number of relief periods allocated to supervisory staff be reviewed, having particular regard to the size of the school and the number of such positions in a given school. * that all teachers be required to teach major and minor subjects. * that teacher contact hours continue to be monitored in accordance with the current regulations to ensure that teachers have a period loading of at least 32 periods per week. * that in the smaller secondary schools, the number of options be limited to accord with staffing efficiencies. Government should not depart from current policy whereby core subjects are taught in all schools and the number of options increases with the size of the school. The viability of smaller secondary schools should continue to be monitored with a view to the amalgamations to improve quality, the general international view being that the effective operation of a secondary school requires at least 2 streams per grade. C. Administrative Support: * that consideration be given to the provision of administrative/clerical support for larger schools. This would be done in the context of reviewing the teaching requirements for principals and 58  supervisozy staff. The support allocation would be on a part or full time basis, depending on the size and complexity of the school. See Note 4, below. Notes: 1. For example, non-teaching entitlements could be as follows: < 50 students: equivalent of one day per week (for administrative duties); <100 students: 1.5 days; <200 students: 2 days; <300 students: 3 days; <400 students: 4 days per week; >400: full time release. All principals should remain in contact with students and have a minimum 4 hours teaching, per week. (See also Note 4 on administrative support.) 2. The allocation of specialist teachers of English lowers the STR. Such an allocation cannot be justified unless the teachers are adequately trained to teach English. (The allocation needs to be reviewed on the basis that there is a lack of evidence that students are in fact learning English and that the staffing of schools of less than 50 students at an STR of under 20:1 is not cost-effective. Accordingly, alternative staffing assignments should be assessed.) 3. Staff allocations for specific disciplines would be based on a weighted system involving the number of periods for each discipline for each grade and the number of teacher contact hours. 4. In the case of administrative support, Government should consider the employment of secretarial staff rather than the more costly alternative of assigning teachers to clerical duties. Part 3 Aireements Reached: The following principles were accepted: * that there be a change in the targets for the Ready Reckoner, the objective being to decrease teacher demand, without jeopardising quality; * that there be a gradual increase in the overall national student:staff ratios with a view to achieving a 27:1 STR for primary and 22:1 STR for secondary (provinces to be responsive to these targets within 1-3 years by adjusting actual staffing in schools, with ratios for entitlement increasing annually to an agreed threshold and thereafter continued). * that the RR be applied consistently to all provinces, as per the intention of the original Guidelines; (See Note 5, below.) i that teacher salary allocations to provinces/authorities be based on the actual cadre entitlement, as calculated under the Ready Reckoner, with a margin of some 2% to cover unexpected exigencies; * that the recently approved National Policy on Teachers Transfers be implemented consistently from the beginning of 1996. * intake to the existing and new NCOEs should follow the institutions plan provided in Annex 22A taking into consideration the designed capacity under the project (to match demand); * recruitment of graduate teachers would be the last resort and carried out only after and in co-ordination with efforts in re-training some of the surplus existing teachers while filling the shortages based on subject needs; * place a ceiling 750 on graduate teacher recruitment (made-up of 400 trained university graduates with PG diplomas and 350 untrained university graduates for special subject needs following prerequisite short-term training of 3 months). This will involve the gradual increase of PG diploma and a limited of Bed graduates to reach an all trained graduate system intake of 750 by year 2003; and * intake into university post graduate diploma should be according to subject needs identified by the provinces, consolidated by MEHE, and transmitted to the universities by NATE Part 4 School Consolidation Tar=et: A. Primary level to consolidate the teaching establishments (to be added as mid-term benchmarks) are: * Consolidation of smaller schools with less than 35 students, where practicable. This initiative is expected to remove some 750 positions from the teaching cadre. It is not expected that all schools in this category will be rationalised; there is a projected balance of 250 teachers who will be required to staff the remaining smaller 59  schools. The rationalization process will be gradual. It is expected that all 750 positions will be vacated by 1999-2000. The Minister has approved MEHE proceeding with this strategy.