Public Disclosure Authorized

Document o f

The World Bank

FOR OFFICIAL USE ONLY

Public Disclosure Authorized

Report No: 5 1925-MX

PROJECT APPRAISAL DOCUMENT ON A

Public Disclosure Authorized

PROPOSED LOAN IN THE AMOUNT OF US$ 100 MILLION TO THE UNITED MEXICAN STATES FOR A COMPENSATORY EDUCATION PROJECT

Public Disclosure Authorized

February 24,2010

This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not otherwise be disclosed without World Bank authorization.

CURRENCY EQUIVALENTS (Exchange Rate Effective January 26,2010) Currency Unit = Mexican Peso MX$1.00 = US$O.OS US$1 = MX$12.93 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS Support for School Management (Apoyo a la Gestidn Escolar) Associations o f Community Members in Support o f Community Education (Asociaciones Promotoras de la Eduacidn Cornunitaria) APFs Parent Associations (Asociaciones de Padres de Familia) Mobile Pedagogical Support (Asesoria Pedagdgica Itinerante) API APL Adaptable Program Loan National Commission for the Development o f Indigenous Peoples (Comisidn CDI Nacional para el Desarrollo de 10s Pueblos Indigenas) CONAFE National Council for Education Development (Consejo Nacional de Foment0 Educativo) CONAPO Consejo Nacional de Poblacidn Country Partnership Strategy CPS Direccidn de Administracidn y Finanzas DAF General Directorate for Indigenous Education DGEI Planning Directorate (Direccidn de Planeacidn) DP Early Childhood Development ECD Evaluacidn Nacional del Logro Acadkmico en Centros Escolares ENLACE FORTALECE Fortalecimiento Comunitario para la Educacidn Gross Domestic Product GDP International Bank for Reconstruction and Development IBRD International Development Association IDA Instituto Mexican0 del Seguro Social IMSS Instituto Nacional para la Evaluacidn de la Educacidn NEE Indigenous Peoples Plan IPP Municipal Educational Equity Office MEEO Nacional Financiera, S.N.C. NAFIN Organisation for Economic Co-operation and Development OECD Project Operational Manual OM National Action Party (Partido Accidn Nacional) PAN Procurement Accredited Staff PAS Programa para Abatir el Rezago en Educacidn Inicial y Bdsica PAREIB Program for International Student Assessment PISA National Development Plan (Plan Nacional de Desarrollo) PND Institutional Revolutionary Party (Partido Revolucionario Institucional) PRI

AGES APECs

1

FOR OFFICIAL USE ONLY PSE SBM SBD SEP SEPA SEPEs SHCP SIL SNTE UCE UPC

Sectoral Program for Education (Programa Sectorial de Educacidn) School-Based Management Standard Bidding Documents Secretaria de Educacidn Pziblica Sistema de Ejecucibn de Planes de Adquisiciones State-Level Secretariats o f Public Education (Secretarias Estatales de Educacidn Pziblica) Secretaria de Hacienda y Cre'dito Pziblico Specific Investment Loan National Syndicate for Education Workers (Sindicato Nacional de Trabajadores de la Educacidn) State Coordinating Units (Unidades Coordinadoras Estatales) Compensatory Programs Unit (Unidad de Programas Compensatorios) Vice President: Country Director: Sector Director: Sector Manager: Task Team Leader:

Pamela Cox Gloria M. Grandolini Evangeline Javier Chingboon Lee Peter Anthony Holland

This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not be otherwise disclosed without World Bank authorization.

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MEXICO COMPENSATORY EDUCATION PROJECT CONTENTS

.

STRATEGIC CONTEXT AND RATIONALE

I

.................................................................

Page

A . Country and sector issues ....................................................................................................

1 1

B. Rationale for Bank involvement ......................................................................................... 6 C . Higher level objectives to which the project contributes ....................................................

.

I1

7

.................................................................................................

7

Project development objective and key indicators..............................................................

7

PROJECT DESCRIPTION

A . Lending instrument ............................................................................................................. 7 B.

C.

Project components .............................................................................................................

D. Lessons learned and reflected in the project design............................................................

E.

.

I11

10

IMPLEMENTATION

....................................................................................................

11

Monitoring and evaluation o f outcomes/results.. ..............................................................

12

. . . C . Sustainability ..................................................................................................................... D. Critical risks and possible controversial aspects. .............................................................. E. Loadcredit conditions and covenants ...............................................................................

.

APPRAISAL SUMMARY

B.

Technical ...........................................................................................................................

IV

.............................................................................................

A . Economic and financial analyses ...................................................................................... C.

F.

11 14 14 17 17

17 18

Fiduciary ........................................................................................................................... 19

D. Social................................................................................................................................. E.

9

Alternatives considered and reasons for rejection ............................................................

A . Institutional and implementation arrangements ................................................................

B.

8

Environment ......................................................................................................................

Safeguard policies .............................................................................................................

20 20 20

G. Policy Exceptions and Readiness...................................................................................... 21

...

111

......................................................... 22 Annex 2 : Major Related Projects Financed by the Bank and/or other Agencies .................29 Annex 3: Results Framework and Monitoring........................................................................ 31 Annex 4: Detailed Project Description...................................................................................... 47 Annex 5: Project Costs ............................................................................................................... 60 Annex 6: ImplementationArrangements ................................................................................. 61 Annex 7: FinancialManagement and DisbursementArrangements..................................... 67 Annex 8: Procurement Arrangements...................................................................................... 77 Annex 9: Economic and Financial Analysis ............................................................................. 80 Annex 10: Safeguard Policy Issues ............................................................................................ 88 Annex 11: Project Preparation and Supervision ................................................................... 100 Annex 12: Documents in the Project File ............................................................................... 101 Annex 13: Statement o f Loans and Credits............................................................................ 103 Annex 14: Country at a Glance ............................................................................................... 106 Annex 15: Maps......................................................................................................................... 109 Annex 1: Country and Sector o r Program Background

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MEXICO COMPENSATORY EDUCATION PROJECT APPRAISAL DOCUMENT

LATIN AMERICA AND CARIBBEAN LCSHE Date: February 24,2010 Country Director: Gloria M. Grandolini Sector ManagedDirector: Chingboon Lee

Team Leader: Peter Anthony Holland Sectors: Pre-primary education (40%); Primary education (40%); Secondary education (20%) Themes: Education for all (100%) Project ID: P101369 Environmental category: Not Required Lending Instrument: Specific Investment Loan Joint IFC: Joint Level: Project Financing Data [XI Loan [ 3 Credit [ ] Grant [ ] Guarantee [ ] Other:

Source

Borrower International Bank for Reconstruction and Development Total:

Local 66.70 98.60

Foreign 0.00 1.40

Total 66.70 100.00

165.30

1.40

166.70

Borrower: United Mexican States Responsible Agency: Consejo Nacional de Foment0 Educativo (CONAFE) Avenida de 10s Insurgentes Sur No. 421 Torre B Colonia Hip6dromo Condesa. MCxico, 06100, D. F.Te1: (52-5) 5241-7400

FY 10 11 13 14 12 Annual 5.00 25.00 25.00 20.00 25.00 Cumulative1 5.00 I 30.00 I 55.00 I 80.00 100.00 Project implementation period: Start May 1, 2010 End: June 30, 2014 Expected effectiveness date: May 1, 20 10 Expected closing date: October 30, 2014

I

vi

I

Does the project depart from the CAS in content or other significant respects? Ref: ., PAD I.C. Does the project require any exceptions from Bank policies? Ref: PAD I K G. Have these been approved by Bank management? I s approval for any policy exception sought from the Board? Does the project include any critical risks rated “substantial” or “high”? Ref: PAD III.E. Does the project meet the Regional criteria for readiness for implementation? Ref: PAD I K G. Project development objective Ref: PAD ILC., TechnicalAnnex 3

[ ]Yes [XINO [ ]Yes [XINO [ ]Yes [ IN0 [ ]Yes [XINO

[XIYes [ ] N o

I

[XIYes [ ] N o

a

The development objective o f the Compensatory Education Project i s to improve access to Early Childhood Education (ECD) services and learning outcomes o f children in the most marginalized municipalities o f Mexico. This objective would be achieved through innovative interventions at the early childhood and basic education levels that strengthen the involvement o f members o f the school community and municipalities. Project description Ref: PAD I . D . , TechnicalAnnex 4 Component 1 would provide out-of-school training for parents, relatives and caregivers o f children aged 0-4, to improve their competencies and practices in caring for children and contribute to the children’s comprehensive development and school readiness. Component 2 would (i) provide grants to AGE Entities and FORTALECE Entities for minor school repairs and rehabilitation, minor infrastructure improvements, and activities to improve the school environment and enhance collaboration and accountability mechanisms at the school level; (ii) provide mobile pedagogical support to students, teachers and parents o f students in underperforming schools through tutors; (iii) provide technical assistance to design materials for tutors to provide pedagogical support; and (iv) provide technical assistance to strengthen the capacity o f Selected Municipalities to carry out strategic planning and other activities. Component 3 would provide technical assistance and training to strengthen the capacity o f the National Council for Education Development (CONAFE) to implement and manage the Project, and provide technical assistance and training to CONAFE and external stakeholders to monitor and evaluate the Project and other early childhood development programs o f the Borrower. Which safeguard policies are triggered, if any? Ref: PAD I K F . , TechnicalAnnex 10 Indigenous Peoples (OP/BP 4.10) Significant, non-standard conditions, if any, for: Ref: PAD III.F. Board presentation: None. Loadcredit effectiveness: (a) The Contrato de Mandato has been duly executed by the parties thereto; and (b) the Secretaria de Hacienday Cre‘dito Pziblico (SHCP), CONAFE, and Nacional Financiera, S.N.C. (NAFIN) indicate that the Contrato de Mandato has been duly vii

authorized or ratified by, and executed on behalf of, SHCP, CONAFE and NAFIN and i s legally binding. Covenants applicable to project implementation: (a) The Borrower shall, and shall cause CONAFE to, in coordination with SEP, SEPEs, AGE entities, and FORTALECE entities, carry out the Project in accordance with the Operational Manual satisfactory to the Bank. (b) The Borrower shall cause CONAFE to enter into separate agreements with the States to support the implementation o f the Project. (c) The Borrower, through SHCP, shall enter into a Contrato de Mundato among CONAFE and NAFIN, whereby CONAFE agrees to carry out the Project and NAFIN agrees to act as financial agent o f the Borrower.

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I. STRATEGIC CONTEXT AND RATIONALE A.

Country and sector issues

1. Mexico has made great strides in reducing poverty and improving human development outcomes, though inequity persists. Poverty rates in Mexico have fallen from a high o f 69.0 percent during the financial crisis o f the mid-1990s to an estimated 47.4 percent in 2008’. Human development indicators have improved markedly over this period: infant mortality rates have dropped from 36 to 29 @er thousand), illiteracy has declined from 12.4 to 7.2 percent, and l i f e expectancy i s now 75, from an estimated 722. While indigenous populations and the most disadvantaged communities have made above average gains over this time, they continue to face inequalities o f opportunities for improving their socio-economic status and escaping poverty. In 2005, illiteracy among the indigenous population (3 1.7%) and geographically isolated, highly marginalized3 municipalities (34.7%) was approximately four times the rate among the population overall (8.6%)4, Prior to the onset o f the current global economic downturn, Mexico experienced moderate growth within a framework o f enhanced macroeconomic stability. GDP growth averaged 3.8 percent annually between 2004 and 2007, as fiscal policy successfully focused on a reduction o f the public sector deficit and a decline in the public sector debt-to-GDP ratio, and enhanced price stability contributed to a healthy domestic credit expansion and growth o f domestic demand. 2.

3. However, the current global financial crisis, combined with lower o i l prices, has led to a severe recession and constrained public spending in Mexico. Global economic and financial shocks have been transmitted to the Mexican economy through weaker external demand, lower workers’ remittances, higher external borrowing costs, reduced access to external finance, and domestic credit contraction. Economic growth decelerated in the first three quarters o f 2008 and turned negative during the last quarter, thereby bringing GDP growth for the year to a modest 1.3 percent. For 2009, the country suffered a contraction o f annual GDP by 6.5 percent’, placing great strain on available resources over the short and medium term. Significant cuts have been introduced across all social sectors, impacting both the Ministry o f Education (Secretaria de Educacidn Pziblica - SEP) and the National Council for Education Development (Consejo Nacional de Fomento Educativo - CONAFE) (both described below under Sector Issues).

I

CONEVAL figures for 1996 and 2008. Pobrezapatrimonial, the broadest o f the national poverty indicators, i s defined as households whose income i s insufficient to cover basic needs in the areas o f food, health, education, clothing, housing and public transportation. World Bank HNP Stats (1995 and 2007), EdStats (1990 and 2007), and World Development Indicators (1995 and 2007) 3 CONAPO. indices de Marginacidn, 2005. 2006. Index comprises measures related to education, housing, income, and population dispersion. 4 INEE. La Educacidn Para Poblaciones en Contextos Vulnerables. 2007; CONAPO. indices de Marginacidn, 2005. 2006. Index comprises measures related to education, housing, income, and population dispersion. 5 INEGI data released Feb. 22, 2010.

1

4.

As a consequence of rising food prices, poverty in Mexico, particularly in rural areas, was already increasingleading up to the crisis and i s likely to have increased further, in particular due to a decrease in remittances. Although it remains well below mid-1990s levels, poverty increased from 42.7 percent in 2006 to 47.4 percent in 2008. Furthermore, it remains higher and has increased more dramatically in rural areas, rising from 54.7 percent to 60.8 percent (compared to an increase from 35.6 percent to 39.8 percent in urban areas). As a result o f the economic crisis, remittances declined by US$93 1 million (3.6%) in 2008, and by an estimated US$ 3.9 billion in 2009. This i s o f particular concern, because remittances are received predominantly by lower-income households living in rural areas, who allocate a major part o f them to human capital investment like health and education, rather than consumption.

5 . The effects of the food price and economic crises have been partially mitigated by substantial improvements in the social protection system put in place by the Government since the previous crisis of the mid-l990s, in an effort to foster shared prosperity and protect the most vulnerable in times of economic difficulty. In 1997, it established PROGRESA (now Oportunidades), a conditional cash transfer program that safeguards the ability o f extremely poor families to invest in their human capital by providing monetary transfers contingent on health check-ups and school attendance. Currently serving 5.2 million families, Oportunidades has expanded i t s scope to provide a range o f health, nutrition, education, and protective services to children from birth to five years, pregnant women, and parents o f young children. In 2002, the Government established Seguro Popular, public health insurance that currently covers 23.5 million non-formally employed Mexicans and their dependents, 95 percent o f whom are poor. Seguro Popular helps poor Mexicans offset the out-of-pocket costs associated with health care, such as for medications. In addition to investing in the human development o f poor families, the Government developed programs to foster their employment and income generation. In 1997, it established the Temporary Employment Program (Programa de Empleo Temporal), providing temporary work to rural inhabitants living in extreme poverty to address the fluctuations in income associated with seasonal agricultural work. In 2002, it established the Productive Options Program (Programa Opciones Productivas), creating selfemployment opportunities and projects through monetary and technical support. Recognizing the importance o f childcare in facilitating employment, the Government established Estancias Infantiles in 2007, offering day care to poor families, thereby enabling parents to participate in the labor force while providing early stimulation to children. Sector Issues

6. Institutional responsibility for education in Mexico i s shared between the Federal and state levels. The Ministry o f Education (Secretaria de Educacidn Pziblica - SEP) has overall responsibility for designing and implementing education policy and enforcing the regulation for education services, plans and study programs. In 1992, education service delivery was decentralized to the state education agencies (Secretarias de Educacidn Pziblica Estatales SEPEs), which transferred greater decision-making authority and responsibility to the state level. Since i t s inception in 1972, the National Council for Education Development (Consejo Nacional de Foment0 Educativo - CONAFE), a federal agency autonomous from the SEP, has played an important complementary role by administering “community schools” in the country’s hardestto-reach poor rural communities and, in order to equalize resources under the 1992 2

decentralization, by delivering compensatory programs to SEP’s general and indigenous schools in poor communities.

7. Mexico has significantly increased coverage in basic education6 and has narrowed gaps for disadvantaged groups. I t has achieved near-universal coverage among pre-school children aged 4 and 5 (93.1 percent and 99.8 percent respectively) and primary school students (95.1 percent)’. In addition, i t has greatly improved educational attainment, from 6.8 years in 1993 to 8.4 in 2006. Enrollment among primary and lower secondary school-aged indigenous children has increased dramatically, from 69.8 percent in 19908 to 91.5 percent in 2005, compared to 94.7 percent nationally’. In addition, poor children aged 5-14 living in rural areas were enrolled at 93.7 percent in 2006, up from 89.5 percent in 2000 (compared to a slight decrease from 97.7 percent to 97.6 percent for non-poor students over the same period)”. 8. Such improvements may have been bolstered by education sector reforms that the Government has undertaken since the early 1990s, and by the increase in demand for education stimulated by Oportunidades. Decentralization was accompanied by a number o f reforms and initiatives at the central and state levels. Primary curriculum contents and materials were wholly reorganized. The Federal Government carried out an initiative to provide diversified pedagogical materials to primary school students and teachers, including free textbooks in each subject, large classroom libraries in most schools, and textbooks in indigenous students’ native language. In addition, information and communication technology was introduced in primary and secondary classrooms. CONAFE’s network o f community schools was expanded, from 100 in 1973 to 30,000 in 2009. Furthermore, the Quality Schools Program (Programa de Escuelas de Calidad) was established, targeting disadvantaged urban and rural schools through a school-based management initiative. Finally, the expansion o f Mexico’s conditional cash transfer program, Oportunidades, from 300,000 families in 1997 to 5.2 million families in 2009 has also contributed to the gains made in education coverage, through the provision o f economic incentives to families to send their children to school.

9.

However, there remain concerns about the quality and relevance o f learning, which recent reforms aim to address. Mexico has the lowest results in PISA among all OECD countries. Mexico’s performance on the 2006 PISA test shows a decline in reading competencies among 15 year olds between 2000 and 2006, though results for mathematics were considerably better. On the science assessment, Mexico was the only OECD country where a majority o f test takers did not score above the proficiency level 2 (out o f 6). Recognizing quality as a key issue, the SEP’s Sectoral Program for Education (Programa Sectorial de Educacidn PSE) 2007-2012 includes as i t s first objective to elevate education quality so that students improve their academic achievement, and the Program states explicit goals for national and international assessment results. In addition, the Alliance for Education Quality (La Alianza Para la Calidad de Educacidn) was created by agreement between the Federal Government and 6

Basic education i s defined as preschool (educacidn preescolar) covering ages 3 to 5, primary education brimaria) covering grades 1 to 6, and lower secondary education (secundaria) covering grades 7 to 9 . Under the Mexican Constitution, basic education i s compulsory. SEP (2008) Sistema Educativo de 10s Estados Unidos Mexicanos: Principales Cifas Ciclo Escolar 2007-2008 INEGI. “ L a Poblacidn Indigena en Mbxico. ” 2004. Based on Conteo de Poblacidn y Vivienda 1990 and 2005 CDI. “Los Pueblos Indigenas de Mbxico. ” 2008. 10 INEE. “Panorama Educativo de Mixico. ” 2008.

*

3

the teacher’s union, the National Syndicate for Education Workers (Sindicato Nacional de Trajabadores de la Educacidn - SNTE), with the goal o f improving student learning through a transformation o f management and service delivery.

10. Marginalized populations continue to face unequal education opportunities. While differences in school enrollment between indigenous and non-indigenous populations have narrowed, a greater percentage o f children who are indigenous or living in remote areas remain outside the system, as noted above. Furthermore, indigenous children are more likely to be enrolled at a grade level lower than expected for their age”. Similarly, 20.4 percent o f poor children aged 8-14 living in rural areas were enrolled two or more years below grade level in 2006, compared to the national average o f 8.4 percent”. 11. The quality o f education services that does reach these communities i s low. The supply response by formal schools in remote regions with high proportions o f indigenous populations has been slow, serving more densely populated areas first. Schools located in indigenous and hard-to-reach remote communities face challenges attracting and retaining qualified teachers, due to travel distances and, in some areas, security issues. For indigenous communities, pedagogical materials continue to be unavailable in their native languages, complicating fundamental reading instruction, a core prerequisite for many follow-on pedagogical activities. 12. Parents in these areas face constraints to demanding quality education services and fostering their children’s learning. Parents are often unable to recognize whether their children are receiving quality services and unaware o f tools and methods that may be at their disposal to enhance accountability at the school level. The capacity o f families and community members in marginalized municipalities to support their children’s education i s limited by their own l o w educational attainment. In municipalities characterized as very highly marginalized in 2005, more than a third o f inhabitants 15 years or older were illiterate and nearly 60 percent had not completed primary while among indigenous people 15 years or older, nearly a third were illiterate and 55 percent had not completed primary scho01’~. Furthermore, school attainment among indigenous people was half that o f the population overall (4.5 years compared to 8.1 years) and particularly l o w for indigenous women (3.9 years), who are most likely to care for children. 13. Educational achievements in marginalized areas face multi-sectoralconstraints, and demand multi-faceted local development programs that municipalities are best placed to deliver. Yet municipalities have little incentive and capacity to focus on education goals, as they are largely excluded from the service delivery chain. Problems with transport, communication, housing, nutrition, and seasonal employment, as well as lack o f local empowerment for social and public auditing o f education sector performance, are major constrains to educational achievements in marginalized areas. As such, they demand broader local development initiatives that municipalities have a mandate and comparative advantage to undertake. Also, supply-driven 11

CDI and UNDP. “Informe sobre Desarrollo Humano de 10s Pueblos Indigenas de Mbxico 2006. ” 2006. NEE. “Panorama Educativo de Mbxico. ” 2008. l3 CONAPO. “indices de Marginacidn, 2005. ” 2006. 14 NEE. “La Educacidn para Poblaciones en Contextos Vulnerables.” 2007. 12

4

education sector programs and interventions, from both the state and Federal Governments, have tended to proliferate in response to single issues o f national importance, without regard for local demand. A greater role by municipalities in the planning and implementation o f such programs could bring the potential advantages o f their comprehensive planning mandate and closeness to communities to bear on the relevance and efficiency o f state and federal education programs, reducing waste and mobilizing additional resources. Yet municipalities remain largely marginalized from the education services delivery chain. As a consequence they have few incentives to make educational achievements a focus o f their own action and have developed neither the capacity to formulate local strategic plans driven by educational goals, nor the capacity to serve as efficient agents and operators o f state and federal education programs. As a result education services delivery in municipal jurisdictions and their marginalized areas continues to suffer from partial, uncoordinated and sub-optimal approaches.

14. Since it was established in 1972, CONAFE has carried out important work to address educational shortcomings among indigenous populations and in the most remote areas o f the country. CONAFE provided complementary support to the federalization o f education service provision by designing and implementing compensatory educational mechanisms to equalize resources and improve the quality o f education provided to i t s target greatly populations. Since that time, five generations o f programs have been rolled reducing inequality o f access to schooling. Over this period, the Bank’s support to CONAFE has evolved from financing specific education inputs towards financing innovation in education. CONAFE’s focus i s on l o w income populations where there are large numbers o f students that participate in the conditional cash transfer program, Oportunidudes. 15. I n 1998, CONAFE developed an early childhood development (ECD) intervention to improve the competencies of 0-4 year olds and their parents (educucio’n iniciul), with the objective of improving child development and school readiness. CONAFE’s approach uses existing assets such as preschools and public spaces for meeting areas, and a network o f volunteers to teach the parenting education classes, This community-based approach i s a successful and cost-effective way to provide important services to poor children. The program reaches an estimated 400,000 children and their parents in remote communities throughout Mexico. However, at present CONAFE only reaches about 20 percent o f i t s potential population: o f Mexico’s 10 million children between the ages o f 0-4, about 2 million live in communities o f high poverty incidence, that is, the main target areas o f CONAFE. This i s o f particular importance given the high correlation between early childhood development services and human development outcomes later in life, such as student learning in primary and secondary school and more favorable labor market outcomes.

16. Using school-based management and fostering greater social participation in schools, CONAFE i s improving the quality o f education offered in poor municipalities. As a

IsPrograma para Abatir el Rezago Educativo (PARE) 1992-1996, Proyecto para el Desarrollo de la Educacidn Inicial (PRODEI) 1993-1997, Programapara Abatir el Rezago en Educacidn Bdsica (PAREB) 1994-2001, Programa Integral para Abatir el Rezago Educativo (PIARE) 1995-2001 y Programa para Abatir el Rezago en Educacidn Inicial y Bdsica (PAREIB) 1998-2007.

5

component o f i t s compensatory programs, CONAFE developed the f i d 6 school-based management program in Mexico, Support for School Management (Apoyo a la Gestidn Escolar - AGE). Findings from impact evaluations o f AGE, as well as evaluations from other similar programs, show that S B M programs can translate into greater parental involvement in the management o f schools and changes in teacher actions, as well as have a positive impact on grade repetition and failure rates and to a lesser extent drop-out rates17. For example, Gertler et a1 (2006) find that AGE reduced grade repetition by 4 percent and grade failure by 4.2 percent’*. Using focus groups and discussions with parents, teachers, and school directors in beneficiary and non-beneficiary schools to corroborate their quantitative results, they find that more active participation by parents is behind the measured improvement in outcomes associated with the program”. AGE helps to increase parental participation in school matters and to improve relations and communication between parents and teachers. Parents in schools with AGE were more likely to observe and complain about teacher absence and poor teaching, and they were more likely to know when their child was not performing well and to take corrective action. B.

Rationale for Bank involvement

17. The proposed project i s in line with the National Development Plan (Plan Nacional de Desarrollo - PND) and the Bank’s Country Partnership Strategy (CPS) for Mexico for Fiscal Year 2008 - Fiscal Year 2013 (Report No. 42846-MXY’ M a r c h 4, 2008), both o f which emphasize increasing equality o f opportunity and promoting social inclusion. The CPS proposes comprehensive assistance to efforts to promote social inclusion and to reduce poverty. This includes supply-side and demand-side human development programs that target the poor. The Federal Government endorses programs aimed at “Promoting Social Inclusion and Reducing Poverty.” The Project would also contribute to the objectives outlined in the PSE and the Alliance for Quality Education to increase equality o f educational opportunities and to increase community participation in education. 18. Mexico has requested the Bank’s continued technical support to CONAFE’s efforts to reduce inequalities in the education sector in Mexico. As noted above, the Bank has been supporting CONAFE for nearly 20 years in the design and implementation o f education programs for Mexico’s most disadvantaged communities. The Government believes that the Bank’s presence would help consolidate and enhance the E C D and AGE interventions supported under the Programa para Abatir el Rezago en Educacidn Inicial y Bcisica - PAREIB co-financed by the Bank through the Basic Education Development A P L (1998-2007). Second, the Bank’s knowledge and expertise i s sought to provide crucial technical support to monitor, evaluate and improve the quality o f the programs delivered. Third, Bank support i s requested to assist in the design o f the pilot program for strengthening municipal institutions’ capacity to manage and supervise education services, with the view o f fostering more responsive and better coordinated education service delivery in Mexico. 16

As mentioned previously, the federal Government created the Program of Quality Schools (Programa Escuelas de Calidad) to promote community participation in schools in 200 1. See World Bank. “What Do We Know About School-Based Management?” 2007 for a review o f the 13 most rigorous evaluations o f SBM programs. 18 Gertler et al. “Empowering Parents to Improve Education: Evidence from Rural Mexico.” 2006 (revised 2008). l 9 World Bank. “Impact Evaluation for School-Based Management Reform.” 2007.

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19. The proposed Project would be an important complement to existing Bank-supported operations in the Human Development sector and beyond. First, the proposed support to CONAFE targeting rural and indigenous areas complements the Bank-supported Quality Schools Program (Program de Escuelas de Calidad), which focuses o n the peri-urban poor. Second, the proposed Project i s an important supply-side response to the Oportunidades program, which the Bank i s co-financing. Oportunidades has been instrumental in removing demand-side constraints for poor families to send their children to schools, particularly in rural areas. As the program’s targeting improves, and as more remote areas come online, supply-side initiatives in those areas such as those offered by CONAFE are central to better preparing schools and communities for receiving the increased number o f students, and guaranteeing minimum standards o f quality*’. This Project would explore areas o f overlap with Oportunidades in order to maximize potential synergies. Third, the focus on basic education f i t s naturally with the forthcoming policy-based Bank operation on upper secondary, currently under preparation, and the ongoing project at the tertiary level. Finally, the pilot giving municipalities the responsibility and the resources to fulfill their education mandate dovetails with the Bank’s ongoing analytical work surrounding sustainable municipalities in Mexico. C.

Higher level objectives to which the project contributes

20. The proposed Project contributes to reducing the inequalities o f opportunity that exist in Mexico. The CPS notes the existence o f “two worlds” in Mexico, with sharp differences in income, social outcomes, and access to and quality o f services between the northern and southern states and across ethnic groups. In order to close the gap between these two worlds, the Government’s P N D stresses social policy that creates equitable opportunities in order to achieve permanent medium- and long-term effects and break the intergenerational cycle o f poverty. As the P N D states, increasing opportunities across the social sectors - including education - enables people to participate actively in the economy and to realize their full potential. 11.

A.

PROJECT DESCRIPTION Lending instrument

The proposed Project would be implemented through a Specific Investment Loan (SIL) 21. o f US$100 million. B.

Project development objective and key indicators

22. The development objective o f the Compensatory Education Project i s to improve access to E C D services and learning outcomes o f children in the most marginalized municipalities of Mexico. This objective would be achieved through innovative interventions at the early childhood and basic education levels that strengthen the involvement o f members o f the school community and municipalities. This objective would be measured using the following project development indicators:

A recent study shows that 76 percent o f Oportunidades beneficiaries attend schools benefiting from CONAFE programs. This number i s markedly higher than those o f other programs examined. 2o

7

Gap in test scores between the 172 municipalities and the national level2’. Number o f children 0-4 years old who attend at least 80% o f the sessions o f the E C D intervention in target municipalities. C. Project components

23. The Project would represent a multi-layered, targeted approach to fulfilling CONAFE’s mandate o f serving the most marginalized. The Project would seek to improve education outcomes for children by intervening at the levels o f the child and parent (ECD, Mobile Pedagogical Support (APIs), teacher (APIs), school (School-based management through AGE/FORTALECE), community (AGE/FORTALECE) and municipality (municipal-based management). SEP indigenous and general schools would benefit from the long-standing and well evaluated school-based management program, AGE, while similar support would be provided to CONAFE-administered community schools through a new intervention, FORTALECE. The Project would target communities through the combined criteria o f high marginalization and social decline and minimum numbers o f potential beneficiaries, so as to reach as broad a segment o f the population living in marginalized municipalities as possible, thereby maximizing efficiency and impact, Certain interventions would be further targeted based on additional risk factors: AGE would prioritize indigenous schools, while APIs would target compensatory schools with poor performance on the national E N L A C E test. The interventions would converge in selected municipalities among the 172 o f the Agenda for Equitable Education (Agenda para la Equidad Educativa), such that a critical mass o f services would be provided, monitored and evaluated. The Project would also extend beyond these municipalities by supporting programs in marginalized communities across the country. The Project would also support several innovations for the sector through the 24. implementation and evaluation o f new interventions and program components providing targeted support to previously underserved groups. The E C D intervention would introduce new sessions working directly with children, as well as with fathers. Building on the success o f AGE, the FORTALECE intervention extends the potential o f school-based management to community schools. APIs, another new intervention, provides intensive pedagogical support to struggling students and their parents and teachers, in compensatory schools. In addition, the Project would seek to involve municipalities, which are largely excluded from the education service delivery chain, in education planning and service delivery through municipal-based management. Combining these interventions in select municipalities represents a further innovation by addressing the education needs o f communities at multiple levels. Component 1: Early Childhood Development Intervention (US$30.0 million)

25. This Component will finance training o f parents, relatives and caregivers o f children aged 0-4 to improve their competencies and practices in caring for children and contribute to the children’s comprehensive development and school readiness. Activities under this component include, inter alia:

Please refer to Methodological note 1 in Annex 3 for a reference on how to compute the gap indicator.

8

(a) provision o f technical assistance and training to E C D promoters, module supervisors, and zone coordinators to deliver the training o f parents, relatives and caregivers o f children aged 0-4;

(b) provision o f out-of-school training to parents, relatives and caregivers o f children aged 04; and (c) provision o f technical assistance to design training materials for the training o f parents, relatives and caregivers o f children aged 0-4. Component 2: Interventions in Basic Education (UW63.2 million)

26. This Component will finance activities to support basic education in the most marginalized schools and municipalities o f the Borrower. Activities include, inter alia: provision o f grants to AGE entities (under the AGE Intervention) and FORTALECE entities (under the FORTALECE Intervention) for minor school repairs and rehabilitation, minor infrastructure improvements, and activities to improve the school environment and enhance collaboration and accountability mechanisms at the school level; provision o f mobile pedagogical support to under-performing students, teachers and parents o f students in under-performing schools through tutors; provision o f technical assistance to design materials for tutors to provide the mobile pedagogical support under component 2 (b); and provision o f technical assistance to strengthen the capacity o f selected municipalities to carry out strategic planning and to delegate to selected municipalities, as allowed under the Borrower’s legal framework, the responsibility to carry out selected activities o f CONAFE to manage and supervise the provision o f early childhood education services. Component 3: Project Monitoring, Management and Evaluation (US$3.2 million)

27. This Component will finance the provision o f technical assistance and training to strengthen the capacity o f CONAFE to implement manage the Project, and provision o f technical assistance and training to CONAFE and external stakeholders (such as associations with an interest in local development, municipal associations, etc.) to monitor and evaluate the Project and other early childhood development programs o f the Borrower. D. Lessons learned and reflected in the project design

28. Several lessons from the previous Bank programs o f support have been incorporated in the design of this proposed Project. First, with respect to maximizing participation from parents, the Implementation Completion Report22 found that the participation

** World Bank 2008.

Implementation Completion Report. Basic Education (PAREIB 111).

9

from parents was lower than expected. Aside from reasons relating to inaccurate projections for participation in remote areas with fewer participating families on average, a portion o f the shortfall was attributed to a lack o f coordination with similar service providers. This has been corrected through increased cooperation with Oportunidades at the municipal level. Furthermore, the E C D intervention has been adjusted to increase parental motivation through tailoring a program series specifically for fathers, and FORTALECE would work with the larger community, including parents, to raise awareness o f the importance o f parental involvement in child development and education. 29. Second, with respect to institutional arrangements, the relationship with the states has been redesigned in order to ensure a strengthening of country systems. Under PAREIB 111, the UCEs located in each o f the SEPEs were closed once Project financing came to an end, and the capacity built up in the unit dissipated. In order to foster a more sustainable service delivery model at the state level, this Project would seek to strengthen the existing project management and monitoring and evaluation capacity within each o f the State Delegations, hereby improving the delivery o f interventions across all o f CONAFE’s programs.

30. Information generated from previous evaluations conducted of the ECD intervention show that further gains can be made from intervening directly at the level of the child. In addition to educating parents about their children’s developmental trajectory, the baseline survey undertaken by CONAFE revealed that the efforts working directly with children could be improved. CONAFE’s agents would therefore dedicate more time to direct interactions with children and their parents, focusing on early stimulation activities.

3 1.

Lessons from School-Based Management programs from other countries and regions have also been integrated into the technical design. S B M experiences have been documented around the globe, and the region (most notably in Central America, Brazil, and Mexico). CONAFE continues to improve upon the design o f the AGE intervention, including i) the refining o f the targeting criteria, ii)the updating o f the training materials for the AGE entities, and iii)the introduction o f S B M to community schools, transferring resources directly to community representatives (see Annexes 4 and 9 for more details).

32.

The pilot experience with APIs has also generated lessons that have been incorporated into the design o f the Project. First, the activities o f the APIs interventions have been broadened to include providing pedagogical support to the children themselves, focusing on teachers, and reaching out to parents. Second, it i s clear that being able to speak the local dialects i s a sine qua non criterion for those tutors posted to indigenous areas.

E. Alternatives considered and reasons for rejection

33,

Results-based disbursement modalities. The introduction o f disbursement modalities linking proceeds o f the Loan to results achieved under the Project was considered early during project preparation. Due to the uncertainty o f the overall macro situation in Mexico and the rapidly changing budgetary scenarios, it was decided that the current economic climate did not lend itself to accurate projections o f results, hereby risking ineffective use o f Loan proceeds.

10

34. Implementing an Adaptable Program Loan (APL). The use o f an A P L as the lending instrument rather than a Specific Investment Loan (SIL) was considered. Due to upcoming Presidential elections in 2012, it was decided to limit this operation to a SIL, with the possibility o f beginning an A P L series under the next administration. 35. Establishing PIUs at the state level. As was done under the PAREIB projects, the establishment (or reconstitution) o f the UCEs at the state level in the SEPEs was considered, in order to facilitate the implementation o f Project interventions. However, preference was given to strengthening existing Project Coordination Units fully integrated into CONAFE’s State Delegations, hereby strengthening country systems, and maintaining autonomy and responsibility within CONAFE for implementation, monitoring and evaluation o f Project activities. 36. Designing a larger pilot for Municipal-based Management. Consideration was given to extending the Municipal-based Management program to the bulk o f the 172 municipalities, and then to more than 10 percent. Finally, for reasons o f fiscal space, and given the degree to which this pilot represents a new realm o f project activities for CONAFE - and a substantial reform for public sector management - it was decided that the pilot would be limited to 5 municipalities, o f varying types, and that the experience would be carefully monitored and well documented. Designing a robust impact evaluation for all subcomponents. The inclusion o f a 37. comprehensive impact evaluation assessing the effects o f each o f the interventions in a statistically robust manner was considered. However, given the degree to which School-Based Management in Mexico has already been evaluated, and considering in particular the ongoing efforts to continue to evaluate the AGES intervention, it was decided that in-depth evaluation activities would focus only on those most innovative aspects o f the Project: i)early stimulation activities for children and sessions for fathers under the E C D intervention, ii)the expansion o f SBM to community schools (FORTALECE), iii)the support provided by APIs to compensatory schools, and iv) the Municipal-Based Management pilot. While full impact evaluation will not be undertaken for activities under the other components, monitoring indicators would continue to be tracked. 111.

IMPLEMENTATION

A. Institutional and implementationarrangements

38. The Project would use country systems to the maximum extent possible and would be managed by a fully integrated Project Coordination Unit. Nacional Financiera, S.N.C. (NAFIN) would act as financial agent o f the Borrower with regard to the Loan. In that capacity, NAFIN would be responsible for financial administration, including managing loan disbursement processes and providing other implementation support and oversight to CONAFE, based on i t s many years o f experience with Bank-financed projects. A Subsidiary Agreement would be signed between NAFIN, SHCP and CONAFE, outlining the obligations o f each party in the implementation o f the Project in order to ensure the achievement o f the stated objectives.

11

39. CONAFE would be responsible for the overall execution of the Project (see Figure A6.1). Responsibilities would be divided into three areas: technical activities, monitoring and administrative activities. The technical activities would be implemented by a fully integrated Project Coordination Unit composed o f the Unidad de Programas Compensatorios (Compensatory Programs Unit - UPC) and the la Direccidn de Planeacidn (Planning Directorate), which would be responsible for daily management o f activities including the consolidation o f the yearly work plan; program execution yearly reviews; and monitoring o f project objectives, goals, processes, and timetables in coordination with SEP and the Secretarias Estatales de Educacidn Publica (State Level Secretariats o f Public Education - SEPEs). The UPC would also be responsible for coordinating with normative areas o f SEP and communication with state-level offices. The monitoring o f project activities, including management o f information systems, would be undertaken by the Planning Directorate (Direccidn de Planeacidn (DP)). The administrative activities would be carried out by the Direccidn de Administracidn y Finanzas (DAF), including procurement and financial management, and would be the main counterpart for communications with the Bank, through NAFIN. 40. During the implementation o f the project, CONAFE would maintain Coordination Agreements, outlining the roles and responsibilities of actors in each of the States. The Agreements, together with their technical annexes, constitute the normative framework for the commitment o f CONAFE and participating states under the Project. Through this legal vehicle, the parties agree to carry out planning and targeting activities, as well as organization, execution, monitoring and evaluation for the fulfillment o f the objectives o f the Legal Agreement. Two types o f Coordination Agreements would be in place, depending on the 41. implementation arrangements, between CONAFE and States (through the state-level education ministries - SEPEs): i)“scenario A” states where CONAFE directly implements all activities (including the E C D intervention) through i t s Delegacidn Estatal, in close collaboration with the SEPEs, and ii)“scenario By’states where CONAFE would delegate the implementation o f the E C D intervention to the SEPEs (while maintaining responsibilities for financial management and procurement). Specificities as to the roles and responsibilities o f participating agencies in the Project are further detailed in Annex 6. It i s important to note that in both cases, the flow o f funds remains within CONAFE.

B. Monitoring and evaluation o f outcomes/results 42. CONAFE would compile and calculate Project indicator data on an annual basis from three main sources: i t s own program monitoring data, the E N L A C E test results, and “Estadisticas 911” produced by the SEP. Estadisticas 91I would include primary and secondary grade failure rates and pre-school and secondary school enrollment numbers. The E N L A C E test results are collected and compiled by SEP on an annual basis, and these tests are meant to be applied to all students in from 3‘d to 6th grade o f primary and lSt to 3‘d grade o f secondary school. 43. To date, data related to the implementation o f the programs to be financed by the Project have been collected at the State Delegation level using Excel spreadsheets, which are then forwarded to the Central level for aggregation. This aggregation process i s posing difficulties

12

because different Delegations use different formats, and the data entry system does not include automatic checks and balances for common data registration and entry errors. In order to improve this monitoring system, CONAFE would contract a consultant to design an information module for these programs, which would include standard formats for collecting data in the field, compiling data electronically at the State Delegation level, and aggregating data at the national level. This module would be required to be available by the beginning o f the 2010-201 1 school year, and would subsequently be integrated into CONAFE’ s Sistema de Informacidn CONAFE (SINCO) system and would be available by the beginning o f the 2010-201 1 school year. Municipal-Based Management Pilot

44. Monitoring and evaluating the Municipal-Based Management Pilot experiment requires that the criteria o f its success be specified and help define the conditions and modalities for the pilot’s replication across municipalities served by CONAFE compensatory education programs.

45.

Criteria for success relate to three basic assumptions o f the pilot’s design:

(i) that the partnership with CONAFE leads municipalities to assume greater responsibility, and develop greater capacity, for educational achievements in their communities and to re-align accordingly their own policies, programs and projects, (ii) that the use o f municipal administrations as contractual agents to deliver CONAFE programs may improve the allocative and operating efficiency o f CONAFE’s investments in such programs, and (iii) that the adoption o f the CONAFE-municipalities partnership modality may positively affect educational outcomes as measured by standardized tests in the concerned communities. 46. Success criteria by which the pilot should be assessed would therefore include, inter alia, (i) whether Municipal Councils have adopted community-specific educational goals, made them an integral part o f their municipalities’ development plans, and have mobilized the needed resources to finance them; (ii)whether Municipal investment programs and annual budgets indicate that an increasing share o f municipal spending i s directed to the achievement o f educational goals, (iii)whether Municipal Educational Equity Offices (MEEO) have increased the capacity for strategic planning and project management o f the municipal administration in general, including managing a participatory system for assessment o f needs and identification o f priorities for allocation o f CONAFE program resources, and (iv) whether MEEO help coordinate the delivery o f multiple State and Federal educational programs (see Annex 3 for more details).

47. Designing a strategy for replication, beyond the initial sample o f 5 municipalities, i s likely to require not only an assessment o f the pilot against the above criteria, (and the related systematization o f lessons learned), but also the adoption o f an “asymmetrid’ approach by which the pilot would be extended gradually and only where both (i) the commitment and minimum capacity o f candidate municipalities and (ii)the capacity to support them by the concerned CONAFE State Delegations, could be verified.

13

C. Sustainability

48. The Project would be implemented by an agency with a longstanding track record, CONAFE, whose programs are highly congruent with the Government’s stated policy goals of improving equitable opportunities. CONAFE has been expanding education opportunities in poor, remote communities for nearly forty years, and evaluations have shown several o f i t s programs to be successful in reducing achievement and efficiency gaps. CONAFE’s mission aligns directly with the equity objectives o f the PND and PSE, the latter o f which explicitly cites training teachers within CONAFE community schools and strengthening CONAFE’s ECD program as a means to achieve the Plan’s sub-objective o f serving children with lowest access and achievement. 49. Moreover, the Project would increase the efficiency of CONAFE interventions, hereby contributing to the sustainability of the activities in the long-term. Improved monitoring and evaluations systems providing accurate information in a timely manner would allow for adjustments to the design and delivery o f CONAFE services. These enhancements in the design o f ongoing interventions (such as under the ECD intervention) and the introduction o f novel approaches to addressing inequalities (such as the API and the municipal-based management pilot) in the education system would likely render CONAFE expenditures more efficient, reducing the marginal costs and making the interventions more financially sustainable. 50. The Project’s support for early and intensive intervention through CONAFE’s ECD and API interventions shows strong potential for a sustained, positive impact on children’s education and life success. Longitudinal research on ECD has shown long-term effects on academic achievement, school attainment, employment and earnings for disadvantaged children.23 Preliminary evidence finds positive effects on the transition to pre-school for children whose parents have participated in CONAFE’s program.24 Strengthening this evidence base through monitoring and evaluation activities would help ensure the longer-term sustainability of the ECD intervention and confirm i t s place at the core o f CONAFE’s interventions. Similarly, demonstrating the positive effects o f that the A P I intervention has on furthering learning and bringing students up to grade level to enable their successful progression through school would help streamline the intervention and bring it to scale.

D. Critical r i s k s and possible controversial aspects 51. The global economic downturn has resulted in severe fiscal constraints in Mexico. The decrease in GDP and corresponding reductions in the budget for the social sectors could jeopardize the financing o f activities, especially those innovative subcomponents that represent new financing under CONAFE’s budget. This i s partially mitigated by the reallocation o f resources from existing non-performing programs to the new more promising interventions.

Schweinhart, L.J. (2005). “The HigWScope Perry Preschool Study Through Age 40: Summary, Conclusions, and Frequently Asked Questions.” Campbell et a1 (2002). “Early Childhood Education: Young Adult Outcomes From the Abecedarian Project.” Kagitcibasi et a1 (200 1). “Long Term Effect of Early Intervention: Turkish Low-Income Mothers and Children.” 24 Survey by Fundacibn Este Pais (2006). 23

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52. The Municipal-based Management Pilot could be perceived as an encroachment by CONAFE on the mandated responsibilitieso f states in the education sector. Should partners at the state level not be sufficiently informed o f the pilot to strengthen municipalities, there i s the possibility o f misunderstandings between CONAFE, SEPEs, and participating municipal Governments. Given that the bulk o f activities for which municipalities would have newfound responsibility would be those within CONAFE’s mandate (as opposed to the SEPEs), it i s expected that any misperceptions would be minimal. Nonetheless, this possibility i s mitigated through upstream dialogues with state education sector representatives, and maintaining clear lines o f communication with the various actors.

Risk Factors

Inertia in school management

Perception o f municipal pilot as CONAFE encroaching on mandated states’ responsibilities in education sector

Exceedingly difficult access to communities

Description of Risk

Mitigation Measures

TechnicaVDesign The education sector has a The AGES intervention i s a long term effort to prominent role in Mexican society change school culture. The Bank’s support has and teachers and school directors been o f a long-term nature, featuring impact are prominent people in their evaluations to track changes over time. The fact communities. The structure o f the that resources are transferred directly to parents (as opposed to school committees led by the education system may protect traditional roles in the school. The school director) provides a direct incentive for Program might not have the parental involvement. Furthermore, the direct involvement o f communities through the expected social participation and might not lead to significant FORTALECE intervention will further bolster community participation. changes in the way schools operate. Specifically, the bulk o f resources may continue to be dedicated toward inputs that are not highly correlated with educational quality. Potential misunderstandings have been mitigated Should partners at the state level not be sufficiently informed o f the through upstream dialogues with state education sector representatives, and maintaining clear experiment to strengthen lines o f communication with the various actors. municipalities, there i s a At the local level, schools supervisors, directors possibility o f misunderstandings between CONAFE, SEPEs, and and teachers have and will continue to play an participating municipal integral role in the education sector strategic governments. Given that bulk o f planning under the Municipal-Based activities for which municipalities Management Pilot. will have newfound responsibility will be those within CONAFE’s mandate (as opposed to the SEPEs’), it i s expected that any misperceptions will be minimal The highly targeted nature o f the CONAFE Project translates into operational difficulties in accessing target populations, due to non-existent transportation infrastructure, cultural factors,

CONAFE has several years o f experience confronting these challenges. Educacidn inicial and API models make use o f local community resource persons that should facilitate access. Use o f municipalities as point o f entry reduces skepticism o f populations.

15

Rating a of residual

M

M

S

insecurity and violence. Continuedincreasing budget constraints render API model fiscally unsustainable, and dearth of candidates speaking indigenous languages impedes recruitment and efficacy. The structure o f the education system may interfere with the Project’s effectiveness in achieving education outcomes.

API model unsustainable

M

Criteria o f selection o f schools to benefit from APIs will be strict, focusing on those demonstrating the lowest results in the ENLACE. Recruitment o f APIs will focus on tutors in indigenous areas who have the requisite language skills. Many o f CONAFE’s compensatory education programs are embedded in the Alliance’s program, which has the full support of all actors in the education system. The centralized nature o f CONAFE’s delivery mechanism ensures full control at each level of implementation. Financial Ma) agement & Financing The aforementioned economic The Project focuses on those activities that do downturn could render counterpart not necessitate incremental resources. Those funding more difficult to obtain, activities that do require additional financing given the tight budgetary will be funded through the phase out o f other constraints in the upcoming fiscal CONAFE activities, such as the REDES year. program.

Some stakeholders resist CONAFE programs Scarce counterpart resources

M

M

Investment i s too focused on school infrastructure

L Gradually, AGEShas been adjusting its W h i l e physical investments play an important role in the quality o f operating rules to increase spending on qualityenhancing investments. education, it must be matched with “soft” investments. There i s a tendency for schools to dedicate a large portion o f the grant for infrastructure maintenance and improvement. Social and Environmental safeguards L Environmental The program only supports minor infrastructure Given the pressure from schools Assessment projects, such as replacing windows. The to build infrastructure, there could program i s increasingly focusing on non(OP/BP 4.01) be a negative impact on the environment. infrastructure investments and this will continue. L CONAFE i s developing an Indigenous People’s Indigenous Mexico has a significant Peoples indigenous population and many Plan (IPP) outlining explicit actions to be taken. (OP/BP 4.10) indigenous students will be The team includes a social development affected (both collectively and specialist to review thoroughly the program’s individually) by the Program. The compliance with OPBP 4.10. This will help Program will not cause any harm ensure that the CONAFE project brings the to any group but the challenge expected positive benefits to indigenous groups. remains to ensure positive benefits. Overall Risk (including Reputational Risks): Moderate a Rating of risks on a four-point scale - High, Substantial, Moderate, Low - according to the likelihood of occurrence and magnitude o f potential adverse impact. This matrix will be updated as more information becomes

I

I

16

E. Loankredit conditions and covenants Conditions o f Effectiveness: (a) The Contrato de Mandato has been duly executed by the parties thereto; and (b) the SHCP, CONAFE and NAFIN indicate that the Contrato de Mandato has been duly authorized or ratified by, and executed and delivered on behalf of, SHCP, CONAFE and NAFJN and i s legally binding. Legal Covenants:

53. The Borrower shall, and shall cause CONAFE to, in coordination with SEP, SEPEs, AGE entities, and FORTALECE entities, carry out the Project in accordance with the Operational Manual satisfactory to the Bank.

54. The Borrower shall cause CONAFE to enter into separate agreements with the States to support the implementation o f the Project. 55. The Borrower, through SHCP, shall enter into a contrato de mandato among CONAFE and NAFIN, whereby CONAFE agrees to carry out the Project and NAFJN agrees to act as financial agent o f the Borrower. IV.

APPRAISAL SUMMARY

A. Economic and financial analyses The economic analysis for the Project i s presented in Annex 9. The analysis estimates 56. the benefits, costs, and rates o f return o f the Project, using the Early Childhood Development calculator. The analysis concludes with a distributional analysis comparing the human development conditions in the 172 municipalities to the state and national averages. Overall, the analysis finds an estimated rate o f return o f 7.5 percent, 6.5 percent and 5 percent, under the high, middle and l o w scenarios (respectively) for changes in educational attainment o f beneficiaries. 57. In section one, the effect o f the interventions on educational outcome variables using available evidence from research i s estimated. Second, the effect o f changes in educational Using this data and outcome variables on wages using current income data i s estimated. methodology, the estimated benefits o f the Project are outlined in Table 1.

58.

The estimated project costs are outlined in detail in Annex 5.

17

Best estimates o f project impacts at the project appraisal stage25 Intervention

Early childhood parenting education

Strengthening o f parent associations and financing o f school improvement plans M o b i l e pedagogical assistance intervention

Impact on years o f education

Impact on repetition

Impact on dropout rate

Increase o f 15%

Reduction o f 7 - 10%

Reduction o f 10 - 15%

Significantly positive in core subject areas such as Spanish, math and sciences

Increase o f 8 10%

Reduction o f 4-6%

Reduction o f 3-5%

Significantly positive in core subject areas such as Spanish, math and sciences

Reduction o f 5%

Reduction o f 5%

Increase o f 5%

Impact on learning

Significantly positive, especially for poorly performing students who are deprived o f adequate teacher attention

B. Technical

The Project combines programs showing promising and strong results with enhancements 59. and innovations grounded in international evidence and CONAFE’s own experience. 0 The ECD intervention aligns with international research finding that investing early in children’s development, particularly among the economically disadvantaged, constitutes one o f the most effective and cost-effective means o f improving student learning and mitigating inequality o f opportunity. A survey conducted by Fundacibn Este Pais (2006) finds positive results o f CONAFE’s ECD intervention for pre-school readiness26. The intervention not only builds parents’ knowledge but provides them with opportunities to practice the skills that they learn, which research suggests i s important for impacting child development. Under the Project, the ECD intervention would be enhanced by incorporating activities working directly with children, another important characteristic o f successful ECD interventions in developing countries (Engle et a1 2007). 0

The A P I intervention, which provides tutoring support to students struggling academically and ongoing professional development to teachers, i s based on the research-

Each o f the interventions used as a contributory device in establishing the best estimates for this project are subject t o a certain degree o f individuality, in so far as intervention scope, methods and objectives would inherently differ dependent upon the context. 26 According t o the survey, 88 percent o f parents who participated felt their children had adapted more easily t o preschool as a direct result o f the program, while 74 percent o f pre-school directors and 77 percent o f pre-school teachers noted differences in language development, communication, and personal and social competencies o f children whose parents h a d attended the program relative t o children o f parents who had not. 2s

18

based premises that increased time on task and improved teacher quality can positively affect student learning. CONAFE has identified prior experience in i t s community schools and knowledge o f indigenous language and culture as success factors for serving as an API and has developed i t s selection process accordingly. CONAFE builds upon the pedagogical knowledge that A P I candidates have as recent teacher education graduates by providing training in the CONAFE approach. APIs’ ongoing presence in communities (alternating 15 days between 2 communities during a 10-month period) enables them to develop deep knowledge and trusting relationships with students, teachers, and parents and to provide continuous pedagogical modeling, monitoring and intervention to help students improve. Since the API intervention i s piloted new initiative, i t s operations and impact would be evaluated as it i s expanded under the Project. 0

0

As noted earlier, evaluations o f AGE and other school-based management interventions find both increased parent participation in schools and lower repetition and failure rates. CONAFE has incorporated elements o f the AGE intervention into i t s pilot intervention, FORTALECE, which extends school-based management to community schools.

The design o f the municipal-based management program builds upon research on the decentralization o f service delivery in other sectors, which suggests the importance of combining capacity, responsibility, and resources at the local level. The intervention would be tested on a small scale (5 municipalities) to determine the potential o f decentralizing CONAFE’s service delivery for both improving municipal capacity to plan and deliver education services and, ultimately, reducing education gaps among the most vulnerable.

C. Fiduciary

60. Financial Management: Annex 7 documents the results o f the Financial Management (FM) Assessment o f the Project as conducted by Bank staff in accordance with Bank policy. The large number and the geographical spread o f payments to schools and local actors pose significant financial management implementation challenges. In particular, the interventions involve a large number o f transfers flowing from the Central CONAFE office to the State Delegations, to the beneficiaries o f the interventions and the participating schools, which are characterized by few staff, and parents with very l o w levels o f education. In addition, each State Delegation functions as an independent administrative unit, which could be a cause o f divergence in operational practices. These factors make the FM risk, at inception, substantial. In terms o f controls, the interventions have been under implementation with the Bank support for nearly 20 years through the Basic Education Development A P L implemented from 1998 to 2007. Furthermore, CONAFE has several years o f experience monitoring expenditures at the school level, and the program operates under well defined Operating Rules. Hence, the residual FM risk, i.e. the inherent risk as mitigated by existing controls, is deemed Modest. Procurement: Procurement activities would be carried out by CONAFE. The agency i s 6 1. staffed by a Procurement Coordinator and 4 additional staff members with extensive experience in Bank operations. At least one o f these staff members would be in charge o f coordinating and supervising procurement activities. An assessment o f the capacity o f the Implementing Agency 19

to implement procurement actions for the Project was carried out on August 17 and September 1 to 3, 2009, by the Bank’s procurement accredited staff. The assessment reviewed the organizational structure for implementing the project and assessed the existing capacity within a sample o f the CONAFE State Delegations.

The key issues and risks concerning procurement for implementation o f the Project have 62. been identified and include the decentralized nature o f the Project. The corrective measures which have been agreed are the following: i)Staff training in order to update staff in Bank’s policies and procedures and ii)the incorporation o f the Procurement Plan to the web based system SEPA in order to achieve efficiency and transparency in the management o f the Plan. The overall project risk for procurement i s therefore moderate. D. Social 63. The Project builds on several years o f experience, evaluation and consultation carried out by CONAFE, since the early 1970s and has been further informed by the development o f an Indigenous People’s Plan (IPP). The IPP includes a review o f previously conducted studies, as well as a consultation with indigenous stakeholders currently participating in the CONAFE programs that would be supported by the Project. The IPP was disclosed on the CONAFE webpage on December 23, 2009 and in the Bank’s Infoshop on December 28, 2009. The important lessons drawn from internal and external evaluations are presented in detail as part o f Annex 10. The design o f this Project incorporates the main lessons learned from these consultations and introduces changes in the strategies used to implement the program.

E. Environment 64. The project poses no significant environmental issues, as it does not finance construction o f new schools and supports only limited rehabilitation works and maintenance carried out through community development. The environmental classification for the Project i s C.

F. Safeguard policies Safeguard Policies Triggered by the Project Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.1 1) Involuntary Resettlement (OP/BP 4.12) Indigenous Peoples (OP/BP 4.10) Forests (OP/BP 4.36) Safety o f Dams (OP/BP 4.37) Projects in Disputed Areas (OP/BP 7.60)* Projects on International Waterways (OP/BP 7.50)

Yes [I [I [I [I

[I

[XI [I [I [I [I

No [XI [XI [XI [XI [XI [I [XI [XI [XI [XI

* By supporting the proposedproject, the Bank does not intend to prejudice the final determination of the parties’ claims on the disputed areas

20

65. Indigenous People’s Plan: Under the proposed Project, CONAFE intends to reach a higher percentage o f indigenous population under i t s existing interventions (AGE and ECD), currently representing around 25 percent. Moreover, the Project would target the 172 poorest and most marginalized municipalities in Mexico. Indigenous population account for at least 40 percent o f the population in these municipalities. To address issues preventing indigenous populations to fully benefit from CONAFE’s programs and in compliance with Bank’s OP/BP 4.10 Indigenous Peoples, an Indigenous Peoples Plan (IPP) has been prepared to guide program implementation. The IPP details several recommendations for improving services to these populations by designing more culturally adequate alternatives to ensure indigenous children’s participation in CONAFE and further reducing education gaps. For specifics on the IPP, please see Annex 10. G. Policy Exceptions and Readiness

66. This Project complies with all applicable Bank policies. There are no outstanding issues with respect to readiness. An advanced draft o f the operational manual and procurement plan has been reviewed, with comments from the Bank incorporated. Draft coordination agreements with SEPEs and Municipalities have also been reviewed. Key Project staff are already in place, at CONAFE central and state levels.

21

Annex 1: Country and Sector o r Program Background MEXICO: COMPENSATORY EDUCATION PROJECT Country Background

1. Mexico, a country of 107 million people and the world’s 13‘h largest economy, has made great strides in reducing poverty and improving human development outcomes, though inequity persists. Poverty rates in Mexico have fallen from a high o f 69.0 percent during the financial crisis o f the mid-1990s to an estimated 47.4 percent today27. Human development indicators have improved markedly over this period: infant mortality rates have dropped from 36 to 29, illiteracy has declined from 12.4 to 7.2 percent, and l i f e expectancy i s now 75, from an estimated 7228. While indigenous populations and the most disadvantaged communities have made above average gains over this time, they continue to face inequalities o f opportunities for improving their socio-economic status and escaping poverty. In 2005, illiteracy among the indigenous population (3 1-7%) and geographically isolated, highly m a r g i n a l i ~ e d ~ ~ munici alities (34.7%) was approximately four times the rate among the population overall (8.6%) . These two populations overlap, as indigenous people are far more likely to live in localities with fewer than 2,500 inhabitants than non-indigenous people (62.3% versus 23.5%) and consequently have more limited access to formal employment and i t s corresponding benefits: in 2005, the informal economy was the source o f employment for 84 percent of indigenous people living in rural areas, compared to 55 percent o f non-indigenous people31.

8

2. Since the financial crisis of the mid-l990s, the Government has put in place a better developed social protection system, in an effort to foster shared prosperity and protect the most vulnerable in times of economic difficulty. In 1997, it established PROGRESA (now Oportunidades), a conditional cash transfer program that safeguards the ability o f extremely poor families to invest in their human capital by providing monetary transfers contingent on health check-ups and school attendance. Currently serving 5 million families, Oportunidades has expanded i t s scope to provide a range o f health, nutrition, education, and protective services to children from birth to five years, pregnant women, and parents o f young children. In 2002, the Government established Seguro Popular, public health insurance that currently covers 23.5 million non-formally employed Mexicans and their dependents, 95 percent o f whom are poor. Seguro Popular helps poor Mexicans offset the out-of-pocket costs associated with health care, such as for medications. In addition to investing in the human development o f poor families, the Government developed programs to foster their employment and income generation. In 1997, it established the Temporary Employment Program (Programa de Empleo Temporal), providing temporary work to rural inhabitants living in extreme poverty to address the fluctuations in CONEVAL figures for 1996 and 2008. Pobrezapatrimonial, the broadest o f the national poverty indicators, i s defined as households whose income i s insufficient to cover basic needs in the areas o f food, health, education, clothing, housing and public transportation. World Bank HNP Stats (1995 and 2007), EdStats (1990 and 2007), and World Development Indicators (1995 and 2007) 29 CONAPO. Indices de Marginacion, 2005. 2006. Index comprises measures related to education, housing, income, and population dispersion. 30 INEE. L a Educacidn Para Poblaciones en Contextos Vulnerables. 2007; CONAPO. Indices de Marginacion, 2005. 2006. Index comprises measures related to education, housing, income, and population dispersion. 3 1 INEE. L a Educacidn Para Poblaciones en Contextos Vulnerables. 2007 2’

’*

22

income associated with seasonal agricultural work. In 2002, it established the Productive Options Program (Programa Opciones Productivas), creating self-employment opportunities and projects through monetary and technical support. Recognizing the importance o f childcare in facilitating employment, the Government established Estancias Infantiles in 2007, offering day care to poor families, thereby enabling parents to participate in the labor force while providing early stimulation to children. 3. P r i o r to the onset o f the current global economic downturn, Mexico experienced moderate growth within a framework o f enhanced macroeconomic stability. GDP growth averaged 3.8 percent annually between 2004 and 2007, as fiscal policy successfully focused on a reduction o f the public sector deficit and a decline in the public sector debt-to-GDP ratio, and enhanced price stability contributed to a healthy domestic credit expansion and growth o f domestic demand. 4. However, the current global financial crisis, combined with lower oil prices, has led to a severe recession and constrained public spending in Mexico. Global economic and financial shocks have been transmitted to the Mexican economy through weaker external demand, lower workers’ remittances, higher external borrowing costs, reduced access to external finance, and domestic credit contraction. Economic growth decelerated in the first three quarters o f 2008 and turned negative during the last quarter, thereby bringing GDP growth for the year to a modest 1.3 percent. Economic activity declined by 9.2 percent during the first half o f 2009 and the current base case scenario projects a contraction o f annual GDP by 6.8 percent, placing great strain o n available resources over the short and medium term. Significant cuts have been introduced across all social sectors, impacting both the Ministry o f Education (Secretaria de Educacidn Pziblica - SEP) and the National Council for Education Development (Consejo Nacional para el Fomento de Educacidn - CONAFE) (described below under Sector Background). Despite these efforts, the Government estimates a shortfall in fiscal revenue in 2010 o f 2.9 percent o f GDP (374 billion pesos).

5.

As an additional consequence o f the crisis, the poverty rate in Mexico has increased, particularly in rural areas. Although it remains well below mid-1990s levels, poverty has increased from 42.7 percent in 2006 to 47.4 percent in 2008. Furthermore, it remains higher and has increased more dramatically in rural areas, rising from 54.7 percent to 60.8 percent (compared to an increase from 35.6 percent to 39.8 percent in urban areas). This can be attributed in part to lower remittances, which are received predominantly by lower-income households living in rural areas. Remittances declined by $931 million (3.6%) in 2008. This is o f particular concern, because a major part o f remittances i s spent on human capital investment like health and education, rather than consumption. Sector Background

6. Institutional responsibility for education in Mexico i s shared between the Federal and state levels. The Ministry o f Education (Secretaria de Educacidn Pziblica - SEP) has overall responsibility for designing and implementing education policy and enforcing the regulation for education services, plans and study programs. In 1992, education service delivery was decentralized to the state education agencies (Secretarias de Educacidn Pziblica Estatales 23

SEPEs), which transferred greater decision-making authority and responsibility to the state level. Since i t s inception in 1972, the National Council for Education Development (Consejo Nacional de Foment0 Educativo - CONAFE) has played an important complementary role by administering “community schools” in the country’s hardest-to-reach poor rural communities and, in order to equalize resources under the 1992 decentralization, by delivering compensatory programs to SEP’s general and indigenous schools in poor communities. Mexico has significantly increased coverage in basic education32and has narrowed 7. gaps for disadvantaged groups. It has achieved near-universal coverage among pre-school children aged 4 and 5 (93 percent and 100 percent respectively) and primary school students (95 percent)33. In addition, it has greatly improved educational attainment, from 6.8 years in 1993 to 8.4 in 2006. Enrollment among primary and lower secondary school-aged indigenous children has increased dramatically, from 69.8 percent in 199034to 91.5 percent in 2005, compared to In addition, poor children aged 5-14 living in rural areas were enrolled 94.7 percent at 93.7 percent in 2006 (compared to 95.8 percent n a t i ~ n a l l y ) ~ ~ .

nation all^^^.

Such improvements may have been bolstered by programs such as Oportunidudes 8. and sector reforms that the Government has undertaken since the early 1990s. Decentralization was accompanied by a number o f reforms and initiatives at the central and state levels. Primary curriculum contents and materials were wholly reorganized. The Federal Government carried out an initiative to provide diversified pedagogical materials to primary school students and teachers, including free textbooks in each subject, large classroom libraries in most schools, and textbooks in indigenous students’ native language. In addition, information and communication technology was introduced in primary and secondary classrooms. CONAFE’s network o f community schools was expanded, from 100 in 1973 to 30,000 in 2009. Furthermore, the Quality Schools Program (Programa de Escuelas de Calidad) was established, targeting disadvantaged urban and rural schools through a school-based management initiative. Finally, the expansion o f Mexico’s conditional cash transfer program, Oportunidades, from 300,000 in 1997 to 5.2 million in 2009 has also contributed to the gains made in education coverage, through the provision o f economic incentives to families to send their children to school. However, there remain concerns about the quality and relevance o f learning, which 9. recent reforms aim to address. Mexico has the lowest results in PISA among all OECD countries. Mexico’s performance on the 2006 PISA test shows a decline in reading competencies among 15 year olds between 2000 and 2006, though results for mathematics were considerably better. On the science assessment, Mexico was the only OECD country where a majority o f test takers did not score above the proficiency level 2 (out o f 6). Recognizing quality as a key issue, the Sectoral Program for Education (Programa Sectorial de Educacidn) 20072012 includes as i t s first objective to elevate education quality so that students improve their Basic education i s defined as preschool (educacidn preescolar) covering ages 3 to 5, primary education (primaria) covering grades 1 to 6, and lower secondary education (secundaria) covering grades 7 to 9. Under the Mexican Constitution, basic education i s compulsory. Upper secondary education (media superior) covers grades 10 to 12. 33 SEP (2008) Sistema Educativo de 10s Estados Unidos Mexicanos: Principales Cifas Ciclo Escolar 2007-2008 34 INEGI. “La Poblacidn Indigena en Mixico. ” 2004. Based on Conteo de Poblacidn y Vivienda 1990 and 2005 35 CDI. “Los Pueblos Indigenas de MPxico. ” 2008. 36 NEE. “Panorama Educativo de Mixico. ” 2008. 32

24

academic achievement, and the Plan states explicit goals for national and international assessment results. In addition, the Alliance for Education Quality (La Alianza Para la Calidad de Educacidn) was created by agreement between the Federal Government and the teacher’s union, the National Syndicate for Education Workers (Sindicato Nacional de Trajabadores de la Educacidn - SNTE), with the goal o f improving student learning through a transformation o f management and service delivery. The Alliance i s working with civil society and state Governments to promote i t s agenda to reform teacher policy, increase community participation, and increase investment in education. Marginalized populations continue to face unequal education opportunities. While 10. differences in school enrollment between indigenous and non-indigenous populations have narrowed, a greater percentage o f children who are indigenous or living in remote areas remain outside the system, as noted above. Furthermore, indigenous children are more likely to be enrolled at a grade level lower than expected for their age3’. Similarly, 20.4 percent o f poor children aged 8-14 living in rural areas were enrolled two or more years below grade level in 2006, compared to the national average o f 8.4 percent3*. The quality o f education services that does reach these communities i s low. The 11. supply response by formal schools in remote regions with high proportions o f indigenous populations has been slow, serving more densely populated areas first. Schools located in indigenous and hard-to-reach remote communities face challenges attracting and retaining qualified teachers, due to travel distances and, in some areas, security issues. For indigenous communities, pedagogical materials are often not available in their native languages, complicating fundamental reading instruction, a core prerequisite for many follow-on pedagogical activities.

12. Parents in these areas face constraints to demanding quality education services and fostering their children’s learning. Parents are often unable to recognize whether their children are receiving quality services and unaware o f tools and methods that may be at their disposal to enhance accountability at the school level. The capacity o f families and community members in marginalized municipalities to support their children’s education i s limited by their own l o w educational attainment. In municipalities characterized as very highly marginalized in 2005, more than a third o f inhabitants 15 years or older were illiterate and nearly 60 percent had not completed primary while among indigenous people 15 years or older, nearly a third were illiterate and 55 percent had not completed primary school40. Furthermore, school attainment among indigenous people was half that o f the population overall (4.5 years compared to 8.1 years) and particularly l o w for indigenous women (3.9 years), who are most likely to care for children.

13. Educational achievements in marginalized areas face multi-sectoral constraints, and demand broader local development programs than Municipalities are best placed to deliver. Yet Municipalities have little incentive and capacity to focus on education goals, as CDI and UNDP. “Informe sobre Desarrollo Humano de 10s Pueblos Indigenas de Mkxico 2006. ” 2006. INEE. “Panorama Educativo de Mkxico. ” 2008. 3 9 CONAPO. “Indices de Marginacion, 2005. ” 2006. 40 INEE. “ L a Educacidn p a r a Poblaciones en Contextos Vulnerables. ’’ 2007. 3’

38

25

they are largely excluded from the service delivery chain. Problems with transport, communication, housing, nutrition, and seasonal employment, as well as lack o f local empowerment for social and public auditing o f education sector performance, are major constrains to educational achievements in marginalized areas. As such, they demand broader local development initiatives that Municipalities have a mandate and comparative advantage to undertake. Also, supply-driven education sector programs and interventions, from both the state and Federal Governments, have tended to proliferate in response to single issues o f national importance, without regard for local demand. A greater role by Municipalities in the planning and implementation o f such programs could bring the potential advantages o f their comprehensive planning mandate and closeness to communities, to bear on the relevance and efficiency o f state and federal education programs, reducing waste and mobilizing additional resources. Yet Municipalities remain largely marginalized from the education services delivery chain. As a consequence they have little incentives to make educational achievements a focus o f their own action and have neither developed the capacity to formulate local strategic plans driven by educational goals, nor the capacity to serve as efficient agents and operators o f state and federal education programs. As a result education services delivery in municipal jurisdictions and their marginalized areas continues to suffer from partial, uncoordinated and sub-optimal approaches.

14. Since it was established in 1972, the National Council for Education Development (Consejo Nacional de Fomento Educativo CONAFE) has carried out important work to address educational shortcomings among indigenous populations and in the most remote areas o f the country. CONAFE provided complementary support to the federalization o f education service provision by designing and implementing compensatory educational mechanisms to equalize resources and improve the quality o f education provided to i t s target populations. Since that time, five generations o f programs have been rolled 0ut41, greatly reducing inequality o f access to schooling. Over this period, the Bank’s support to CONAFE has evolved from financing specific education inputs towards financing innovation in education. CONAFE’s focus i s on l o w income populations, in hard-to-reach areas where there are large numbers o f students that participate in the conditional cash transfer program, Oportunidades.

-

15. I n 1998, CONAFE developed an early childhood development (ECD) intervention targeted to 0-4 year olds and their parents (educacidn initial). CONAFE’s approach uses existing assets such as preschools and public spaces for meeting areas, and a network o f volunteers to teach the parenting education classes. This community-based approach i s an effective and cost-effective way to provide important services to poor children. The intervention reaches an estimated 400,000 children and their parents in remote communities throughout Mexico. However, at present CONAFE only reaches about 20 percent o f i t s potential population: o f Mexico’s 10 million children between the ages o f 0-4, about 2 million live in communities o f high poverty incidence, that is, the main target areas o f CONAFE. This i s o f particular importance given the high correlation between early childhood development services

41 Programa para Abatir el Rezago Educativo (PARE) 1992-1996, Proyecto para el Desarrollo de la Educacidn Inicial (PRODEI) 1993-1997, Programa para Abatir el Rezago en Educacidn Bdsica (PAREB) 1994-2001 , Programa Integral para Abatir el Rezago Educativo (PIARE) 1995-2001 y Programa para Abatir el Rezago en Educacidn Inicial y Bdsica (PAREIB) 1998-2007.

26

and human development outcomes later in life, such as student learning in primary and secondary school and more favorable labor market outcomes. 16. Using school-based management and fostering greater social participation in schools, CONAFE i s improving the quality of education offered in poor municipalities. As a component o f i t s compensatory programs, CONAFE developed the first42 school-based management program in Mexico, Support for School Management (Apoyo a la Gestidn Escolar - AGEs). Findings from impact evaluations o f CONAFE’s school-based management (SBM) program (as well as evaluations from other similar programs) show that SBM programs can translate into greater parental involvement in the management o f schools and changes in teacher actions, as well as have a positive impact on grade repetition and failure rates and to a lesser extent drop-out rates43. For example, Gertler et a1 (2006) find that AGEs reduced grade repetition in 4 percent o f schools and grade failure in 4.2 percent o f schools44. Using focus groups and discussions with parents, teachers, and school directors in beneficiary and nonbeneficiary schools to corroborate their quantitative results, they find that more active participation by parents i s behind the measured improvement in outcomes associated with the program45.AGEs help to improve relations between parents and teachers, as well as the overall school climate.

42

As mentioned previously, the federal Government created the Program o f Quality Schools (Programa Escuelas de Calidad) to promote community participation in schools in 200 1. 43 See World Bank. “What Do We Know About School-Based Management?” 2007 for a review o f the 13 most rigorous evaluations o f SBM programs. 44 Gertler, Patrinos and Rubio-Codina. “Empowering Parents to Improve Education: Evidence from Rural Mexico.” 2006 (revised 2008). 45 World Bank. “Impact Evaluation for School-Based Management Reform.” 2007.

27

m-mmm

Table A l . l Public ECD and ECE service providers in Mexico46

* I

Centros de Antencidn de Desarrollo Infantil (DIF)

Estancias Infantiles (SEDESOL) Estancias para el Bienestary desarrollo infanti1 (ISSSTE) Guarderias (IMSS)

Educacidn lnicial No Escolarizada (CONAFE)

Subtotal General

*

*

'

I

t

*

'

I

'

163

4,592

328

1:14

8,300

65,770

8,222

1:8

215

34,047

2,664

1:12

1,526

228,503

32,643

1:1

27,189

436,112

27,189

1:15

40,612

85 I,418

75,832

88,426

4,745,74 1

237,280

1:20

9,408

383,036

17,390

1:22

118,812

5,294,325

27,1190

159,424

614,s 743

34,7022

Early Childhood

Subtotal Total

Saenz, Arturo. Modelo de Educacidn lnicial de Conafe - MBxico. Presentation given at Global Conference on Early Childhood Development: Innovative Models and Global Evidence in Rio de Janeiro, June 17, 2009 46

28

Annex 2: Major Related Projects Financed by the Bank and/or other Agencies4' MEXICO: COMPENSATORY EDUCATION PROJECT Sector Issue

Latest Supervision (PSMSR) Ratings (Bank-financed projects

Project (Bank-financed only)

(IP) Decentralization - The Estado de Mexico Government's Structural Adjustment Loan, approved in December 2000, in the amount o f US$505 million, aims to bring the fiscal and financial accounts into a sustainable path, while protecting the social sectors and enhancing their efficiency, and increasing accountability and transparency in management o f the public sector. Supports implementation o f the Government o f Mexico's compensatory education program, as outlined in the National Education Program (PNE) o f the current and former administrations. Supports Mexico's compensatory education program, and as the final phase o f the three-phase APL program, aims to fine tune the delivery mechanisms, based on a fully developed decentralized model. Basic Health Care / Decentralization - Imurovement and expansion o f the delivery o f basic health care and nutrition to about 13 million uninsured people in 17 districts in Oaxaca, Chiapas, Hidalgo, Guerrero, and marginal areas o f the Federal District. Project objectives were accomplished to a great extent. Basic Health Care/ Decentralization - (i)Support :quitable access to cost-effective package o f quality health services for the uninsured and underserved in 19 states; (ii) support institutional development through the modernization and decentralization o f :ethnical, managerial and fmancing in the states; md (iii)support modernization and restructuring o f :he SSA to assume a leadership role in the sector. The mid-term evaluation indicated that project implementation performance i s highly satisfactory. By the end o f 2000, coverage with basic health services to the poorest rural population would reach 3 million. Total loan amount i s US$3 10.0 million :quivalent. Under implementation until June 2002. lealth Sector Reform - The Health System Reform rechnical Assistance Loan (TAL) in the amount of JS$25 million, and the accompanying adjustment Feration, Health System Reform-Znstituto Mexicano 47

Adjustment Loan (Ln.7043 ME), 2002

(DO) S

-

Basic Education A P L I1 (Ln. 7108-MX), 2002

S

S

MS

Basic Health Project (Ln.3272-ME), 1996

HS

S

Basic Health Care Project (Ln. 3943-ME)

HS

HS

Health System Reform Technical Assistance Loan (Ln.4367-ME)

S

S

Basic Education Dev Phases I11(Ln. 7249-MX); 2005

Adapted from Annex 2 o f the School-Based Management Project's Project Appraisal Document.

29

Sector Issue

Project (Bank-financed only)

del Sepuro Social (IMSS), in the amount o f US$700 million, approved in 1998, are supporting the design Health System Reform and implementation o f major policy changes in structural Adjustment Loan IMSS. Among them: (i)improvement o f financial (Ln. 4364-ME), 2002 management o f the health insurance system; (ii) strengthening o f institutional and regulatory frameworks for health insurance; and (iii) improvement o f quality and efficiency o f the IMSS health delivery system Decentralization - The Decentralization Adiustment Decentralization Adjustment Loan, approved in December 1999, in the amount o f Loan-DAL US$600 million, aims to move Mexico’s (Ln.70020-ME), 2001 decentralization toward an efficient and sustainable path. It includes a health policy commitment as part o f a group o f policy commitments for respective tranche disbursements. The goal in the health sector i s to help address one o f the main weaknesses in the implementation o f the PAC by establishing a onetime grant to finance training, monitoring, reporting, and institutional development to improve the delivery o f the basic package o f health services. ONGOING: The Project Development Objective i s to support the I11 Basic Health Care Project Borrower in: (i)implementing i t s Social Protection (Ln. 7061-MX), 2001

SPSS. Seeks to foster the sustainable and equitable expansion o f tertiary education, through student assistance. Improve the quality o f education as measured by coverage, social participation, and educational outcomes. Support Mexico’s conditional cash transfer program, Oportunidades.It seeks to increase capacities in health, nutrition and education o f poor families through human capital investment. It builds sustainable connections between Oportunidades and other social programs o f the Government o f Mexico in order to improve health and education outcomes for Program participants

Tertiary Education Student Ass A P L I(Ln. 7346-MX), 2006

School-Based Management Program (Ln. 7347-MX), 2006 Support to Oportunidades Project (Ln 7708-MX), 2009

30

Latest Supervision (PSRDSR) Ratings (Bank-financed projects only) Implementat Development ion Progress 0b.iective (IP) (DO)

S

S

MS

MS

MS

MS

Annex 3: Results Framework and Monitoring MEXICO: COMPENSATORY EDUCATION PROJECT This section presents the results framework and monitoring arrangements for the proposed Project. It i s subdivided into three parts: i)the results framework, presenting the overall framework, the results chain o f each intervention, and the results framework for the project; ii) methodological notes on monitoring and evaluating each intervention and iii)a comprehensive monitoring table that includes all indicators, their method o f calculation and use. Part 1: Results Framework The proposed Project would contribute to reducing the inequalities of opportunity that exist in Mexico. Specifically, the Project would work on reducing inequalities that exist between Mexico’s poorest municipalities and rest o f the country in terms o f education supply and learning. The development objective of the Compensatory Education Project i s to improve access to ECD services and learning outcomes o f children in the most marginalized municipalities o f Mexico. This objective will be achieved through innovative interventions at the early childhood and basic-education levels that strengthen the involvement o f members o f the school community and municipalities. Fimre A3.1: Overall results framework for the ComDensatory Education Proiect

I To Improve rho reach ana affect vnnessofthe ECU program in target mun c pa.tws.

Refocdng tne prognm to target mun cimtlIie6

Direct work w th cn Idren, fatnerr and preenam women

e

--0 reef s ~ p p o ( ti o rtcdenis n

ScnoWDared manapement

owest-performing campanwed Khoo Iin target munlciwllties

FORTPI-ECE in commmlty SchoOIsin target

AGES natlonrV oe

31

Strengthwing and mntfact ng mr%cma n e 6 to d. her COhAFE programs

Figures h3-2 through h 3 - 5 present the complete results chains for the Project's 5 m a i n i n t ~ r v e t i t i ~lines. n m u r e A3.2: Results Chain for the Earlv Childhood Lfevelament Intervetition

* Design, production and distribution of

educationat materials and tods * Training of promotoras, supervisors and coordinators * Training of : * Mothers, fathers and caregivers * Pregnant women Fathers Children * Pramation of c ~ i m ~ r ~ ~ ~ p ~ ~ i c i p a/ t ~ ~ n dimmination FolIow-up, monitoring and evaluation

@

32

Figure A3.3: Results Chain for School-based M ~ n a ~ (AGES e ~ ~and n FORTALECQ ~

*~

~ din t f~E ~ grade failure rctte

*Paining of APF in development of the school i r n provetnerit plan and in transparent managevent of funds 'Training in participation of p a r m t r tn schools and in learning oftheir chi I d e m Financial support (transfers} to APFs

~

out rates i Reduction in ttit, repetition rate (Odi7ii,lst/:l:I!.Y d O ' I ! '

* Improvement of

learning in primary and secondary education { r m i

EO/GC?)

Selection of cammunities FORTALECE trains personnel from Statebased delegations State-baseddelegations train the A P E 0 and camrnunity-based instructon on funds management Community participation sessions *Transfer of financial support to APEG

0

APECs with signed participation agreement

(#I

APE& are trained on funds management (#I APE& have agreed work progfam t#) 1Transfer of financial support to A P E 0 (#I * APEC account for funds usage (#of APK3) 0 APE& trained on community participation in education (#I

Improvement of the physical environment in schools (need ta devclop guideiines and instrumentsfor measurement - buseiine ond fallaw up] Physical spaces+ Teaching materia& Basic services involvement of parents in teaching and learning (survey - C O ~ P ~ RWith ? AGES)

Reduction of the financial burden on parents k r school maintenance (survey?) Heduction of absenteeism rate of children ( suwey?) 0 Note: tinea base a cargo de Harry inciuinb. /os 4 indicodom onibo

33

Redudion in repi&itim rates [ ~ ~ ~ j n j stfve rfu data) Reduction in the dropout rate ~ a d m i n ~ a'ata) ~ ~ a ~ ~ ~ e improvement in llearntng achievement in primary and secondary (t MACE test+ mid-year tmstsf Transition to the next eduction level fudministratbe data)

i

~

n

Figure A3.4: Results Chain for Mobile Pedagogical S u m o r t (APIsl

* Selection af

schools supported by APIs * Selection and training of APls Design,

* Establishments

supported by APIS (# ond e

~

~

~

* Students screened

*

e

~

API work plan

produced f#~fpfanr

~

~

~

Students supported

~

~

students]

materials

eva Iuation meet ings

*

by APls (#ofstudents screeenelf]

Improvement in the participation of ~parents @ r (witinotbu ~ s ~

~

~

~

m@misr&)

l ~ p ~ o inv ~ ~ ~ n ~ peda~o~i~~l practices fmse

studies] i

~ ~ l f in ~ Improvement test Scares during the school year

~ ~ ~ d " y&s&] ~ffr

Parents trained p a l

par en& trained)

Teachers and teaching aides supported

W u r c A3.5: Results Chain. for Municipal-based Management

Collaboratioi? for the allocation of CONAFE resouices to the municipality f # ) Strategic municipal plans for the educational sector ( # o f municipalitivs with plan approved and validated by CONAFE) * Execution of municipal palns (% of financial execut ,on) * Verification of executed re5ources arid presentation to the delgat1on (#) Qualified miinicipal and local groups (tt) A CONAFE p ~ l i c y document systernatiztng the experiment

* Educarional equity

* Decrease rn tile #of

children outside tarly Childhood and Basic tducation * IncIu5ion of gender, socio-ecunorn IC status and cukural diversi-y aspects in the educational policies of municipalities Municipal and local EE groups have capability of strategic planning and irnplementa~ionof delegated programs * Municipalities with capability to plan and operate programs delegated by CONAI-t lnmtutionalizatian of the project working toward educational equity in municipalities

34

Reduction in educational gap in the ina5 t vu Inera b Iel population (# OF chdaren outside the edicational system - according t o municipal asse:sments) * Improvement in learning results (Enlace tests]

1. The Project's development objective i s measured using the following project development indicators: Number o f children 0-4 years old who attend at least 80% o f the sessions o f the ECD intervention in the 172 target municipalities; (product indicator) 0 Gap in test scores between the 172 target municipalities and the national level4*. (final outcome indicator) T a b l e A3.1: Proiect Results F r a m e w o r k Project Development Objective

Project Outcome Indicators

yo improve access to ICD services and earning outcomes of .hildren in the most narginalized nunicipalities o f vlexico.

Number o f children 0 t o 4 years who attend at least 80 percent o f the sessions o f the Early Childhood Development intervention in the 172 target municipalities Gap, 6th grade o f primary Gap, 3rd year o f secondary

PRODUCT Measurement o f the use o f services by children in each calendar year Total Annual number o f sessions o f the model is: 18

Gap in test scores between the 172 target municipalities and the national level, measured as: Percentile ranking o f the median student test score in the ENLACE test in non-community schools, for M a t h and Spanish, 6" grade o f primary and 3'd year o f secondary, for the target municipalities, as compared to the national distribution o f test scores.

FINAL OUTCOME Monitoring o f the closing o f the gap between the target municipalities and the national level, in terms o f learning achievement. The gap would be closed if the 172 reached the 50" percentile. (see methodological note 1)

Intermediate Outcomes

Intermediate Outcome Indicators

Use of Project Outcome Information

Use o f Intermediate Outcome Monitoring

:omponent 1: Early Childhood Development Intervention improve the each and ffectiveness o f the I C D intervention in x g e t municipalities -0

48

Number o f E C D service points that are established and complete the minimum number o f sessions provided for by the model, in the target municipalities

PRODUCT Monitor the availability o f services in the target municipalities Annual minimum number o f sessions t o be provided is: 32

Number o f fathers and mothers trained, i.e. who attended at least 80 percent o f the total number o f sessions o f the ECD model, in the target municipalities

PRODUCT Measure the actual usage o f services by parents Annual number o f sessions for parents: 18

Number o f pregnant women trained, i.e. who attended at least 80 percent o f the total number o f sessions o f the ECD model specific t o pregnant women

PRODUCT Measure the actual usage o f services by pregnant women Number o f sessions for pregnant women: 8

Number o f fathers trained, Le. who attended at least 80 % o f the sessions o f the ECD model specific t o fathers, in the target municipalities

PRODUCT Measure the actual usage o f services by fathers Annual number o f sessions for fathers: 5

Cfr. Methodological note 1 for a reference o n h o w t o compute the gap indicator.

35

Application o f an instrument that measures the competencies of parents and children age 0-4 years old

PRODUCT Establish a measurement system - at baseline, the instrument exists but it i s not being used or applied systematically.

Longitudinal study

PRODUCT

Component 2. Interventions in Basic Education

I

Sub-component 2.1. Number of Parent Associations (Asociaciones Decentraiized de Padres de Familia or APF) iained yearly in Support to Basic AGE, nationally Education To improve the efficiency and quality o f the education system through schoolbased management

Number o f FORTALECE entities with a Work Program developed and approved by FORTALECE, in the target municipalities

(general and indigenous schools)

PRODUCT Monitor the continuation o f the AGES intervention. Disaggregate numbers at the preschool, primary and secondary education level (community schools)

PRODUCT Monitor the expansion of support to community schools in the target municipalities

Total amount o f financial support transferred to (community schools) PRODUCT and received by the FORTALECE entities Grade failure rate4’ in community schools in the (community schools) INTERMEDIATE OUTCOME target municipalities, primary and secondary Monitoring: the failure rate should drop education level over time. Sub-component 2.2. Number o f school establishments supported by Mobile Pedagogical Mobile tutors (Asesores Pedagdgicos support Itinerantes or APIs) To improve the learning Of students attending the lowestperforming community schools in target municipalities

PRODUCT (two establishments per API)

INTERMEDIATE OUTCOME Grade failure rate (ibidem) in non-community schools, primary and secondary education level, Monitoring: the failure rate should drop in 172 target municipalities over time. Student scores in the ENLACE test in noncommunity schools, primary and secondary education level, in 172 target municipalities Average in 6* grade of primary Average in 3rdyear of secondary

FINAL OUTCOME

PRODUCT Monitor the expansion o f the program

Management

INTERMEDIATE RESULT

49

1-(Nr who passed grade + Nr who got regularized in grade)/Nr who enrolled

36

effectiveness of education service delivery by contracting municipalities to deliver CONAFE programs and providing them with the necessary capacity to carry out that responsibility

Learning results on ENLACE test in 5 pilot municipalities Average in 6th o f primary Average in 3rd of secondary

To improve the Implementationof a management and monitoring o f monitoring module for the ECD, AGEs, CONAFE programs FORTALECE and API interventions

I FINAL

OUTCOME

PRODUCT

Number and percentage o f localities in the 172 municipalities, that have beneficiaries from both Oportunidades and Educacidn Inicial

Monitoring the coordination between the Educacibn Inicial and Oportunidades programs in the 172 municipalities

Number and percentage o f localities in the 172 municipalities, that have beneficiaries from both Oportunidades and AGEs

Monitoring the coordination between the AGEs and Oportunidades programs in the 172 municipalities

P a r t 2: Methodolodcal notes on MonitorinP and Evaluation o f the Compensatory Education Proiect Monitoring and Evaluation o f Activities under the Project

2. CONAFE will compile and calculate Project indicator data on an annual basis from three main sources: i t s own program monitoring data, the E N L A C E test results, and “Estadisticas 9 11” produced by the SEP. Estadisticas 9 11 would include primary and secondary grade failure rates and pre-school and secondary school enrollment numbers. The E N L A C E test results are collected and compiled by SEP on an annual basis, and are meant to be applied on a censal basis in 6th grade o f primary and 3rd grade o f secondary. 3. To date, data related to the implementation o f the programs to be financed by the Project have been aggregated at the State Delegation level using Excel spreadsheets, which are then forwarded to the Central level for aggregation. This aggregation process i s posing difficulties because different Delegations use different formats, and the data entry system does not include automatic checks and balances for common data registration and entry errors. In order to improve this monitoring system, CONAFE will contract a consultant to design an information module for these programs, which will include standard formats for collecting data in the field, compiling data electronically at the State Delegation level, and aggregating data at the national level. This module will be required to be available by the beginning o f the 2010-201 1 school year, and would subsequently be integrated into CONAFE’s Sistema Integrado (SINCO).

37

Methodological note 1: Monitoring and Evaluation o f General Education Equality

4. General idea and justifcation for the indicator: The aim i s to measure whether there i s a reduction in the gap in test scores between the most disadvantaged municipalities in Mexico and the rest o f the country. To do this, one can compare the test scores o f students in the 172 municipalities with those o f students at the national level. If the test score results were equally distributed, one would expect that the median test score in the target municipalities would Correspond to the median test score (Le. the 50th percentile) at the national level. In case o f unequal distribution, the median test score in the target municipalities will be significantly lower than the median test score at the national level.

5. Indicator for gap in test scores: Percentile ranking o f the median student test score in the ENLACE50 test for Math and Spanish in 6th grade o f primary and 3rd year o f secondary, for non-community schools in the target municipalities, as compared to the national distribution o f test scores. 6. Calculation of the indicator: The indicator can be computed by following these steps: (1) In the school-level database o f E N L A C E scores for 6th grade o f primary and the 3rd year o f secondary, identify those non-community schools located in the 172 municipalities targeted by

the Project; (2) compute, for each school, the average between the math and Spanish scores; (3) compute, for the schools in the 172 municipalities, the median result, using as weights the number o f children evaluated in each school; (4) compute the percentile corresponding to the number calculated in (3), in the national distribution o f test scores, using as weights the number o f children evaluated in each school

Expected result: For the 172 municipios, i t i s expected that the average test result would 7. improve by 5 points per year. This would correspond to an increase in the percentile for 5.8 to 9.4 in sixth grade o f primary, and an increase o f 10.5 to 22.1 in third grade o f secondary.

8. Note; For the interpretation o f the test results, it i s important to note that the InterAmerican Development Bank (IDB) project targets the same municipalities, but only in community schools. For this reason, the indicator for this Project only looks at non-community schools, to which the majority o f the World Bank Project’s investment i s directed.

9. Advantages of the indicator: This indicator i s not vulnerable to changes in the national test, as long as the 172 targeted municipalities are included in the new test. This is because, for any test, it i s possible to compute the median school test score at the national level and at the 172 municipalities. In addition, the indicator i s not vulnerable to manipulation o f test scores at the school level as long as all schools are vulnerable to manipulation. Finally, even though school level averages o f test scores are quite variable in the 172 municipalities due to the small sizes o f the schools, this does not affect the indicator because it only requires the median school test score for the entire group o f schools tested in the 172 municipalities, which does not depend o n the size o f schools. 50

If the ENLACE test i s replaced by a new test, this indicator will make use o f the new test, which can s t i l l be used to indicate a reduction in the gap between the national median and the average in the target municipalities

38

Methodological note 2: Evaluation of the Early Childhood Development Intervention

10. The E C D intervention has already been rolled out on a national basis. In 2005, an impact evaluation o f the intervention was initiated in collaboration with the Bank. However, for various technical reasons, it was not possible to continue with the evaluation. In 2008, CONAFE used i t s own funds to undertake a baseline measurement o f the competencies o f parents and children, which compares homes that receive the E C D intervention with those that do not, in the same locality. 11. In light o f this experience, the M&E o f the intervention under this project will concentrate on the following aspects: 0 Ensuring that the instruments that have been developed to measure competency o f children 0-4 years and parents are applied in a way that can contribute to the improvement o f the intervention. Monitoring the improvement in the reach o f the intervention, especially in regards to actual participation o f children, parents, pregnant women and fathers. 0

Starting a longitudinal study o f a sample o f children benefited by the intervention, comparing them to a sample o f children who did not benefit from the intervention. o Sample selection: CONAFE would select a national sample o f children age 0 to 2

years, in locations that receive the E C D intervention (treatment), and in localities that do not receive the intervention (control). o The study would have a duration o f 12 years, in order to be able to follow children until they complete basic education. o The study would include anthropological measures, measures o f health, nutrition, child development, and also educational outcomes.

Methodological note 3: M o n i t o r i n g and Evaluation o f the AGEs

A joint study (CONAFE-World Bank) i s currently underway to evaluate the impact o f the 12. AGEs intervention on school outcomes. Research questions of the existing study: The study seeks to estimate the impact o f the 13. AGEs intervention on the following variables: 1. Working o f the AGE 2. Parental participation in the school and in their children’s learning process 3. Study habits o f students 4. Participation o f teachers and directors

14. Strategy for identzfiing impacts: The study includes two treatment groups (one with regular AGE transfers, one with double AGE transfers) and a matched control group. Assignment to the groups was done in a randomized way. 15. 0 0

Evaluation activities with Financingf r o m the existing study: 2007: Baseline 2008 and 2009-2010: Follow-up survey

39

June 2010: Additional follow-up survey on the existing sample (control group and regular and double AGE groups) 16. 0

0

Plans for evaluation under the Project: June 2010: Baseline survey for community schools where FORTALECE i s planned for 2010-201 1 2010-201 1: Control schools from existing study to be integrated into AGE intervention June 201 1: Follow-up survey for community schools where FORTALECE was implemented in 2010-201 1

Methodological note 4: Monitoring and Evaluation o f the Mobile Pedagogical Support

The A P I intervention would be evaluated with the following indicators: results, and grade failure, drop-out and repetition rates. 17.

ENLACE

18. Strategyfor identifiing impacts: The APIs would rotate among compensatory schools in the 172 target municipalities, depending on their annual ENLACE results. For this reason, it i s not possible to identify a treatment group and a control group within the 172 municipalities, but rather the set o f compensatory schools within the 172 municipalities can be considered a treated group. In order to conduct an evaluation o f the intervention, it i s proposed that the difference-indifference method be used in combination with propensity score matching to identify suitable control schools. The evaluation stages would be the following: 1. Control group: Identify with propensity score matching, based on ENLACE test data and other CONAFE databases, a group o f comparable compensatory schools to the compensatory schools in the 172 target municipalities. 2. Baseline: ENLACE test 2009 results. 3. Application o f difference-in-difference methodology for each round o f the ENLACE test. The same methodology would be used to estimate the impact o f the intervention on other indicators. 19.

Responsibilities and timeline: 1. 2010: CONAFE would contract with consultant who would: (i)review existing databases, apply propensity score matching to identify the control group schools; (ii) describe the methodology to apply in order to carry out the evaluation in subsequent years in a concept note, including regressions and formulas, programming in a program apply the evaluation methodology to the data available for such as STATA or SPSS; (iii) 2010; (iv) provide to CONAFE all o f the programming that would be necessary for CONAFE to repeat the analyses in 201 1, 2012, and 2013. 2. 201 1,20 12, and 20 13: CONAFE would repeat the analysis annually.

In order to assure the continuous improvement o f the intervention, a qualitative study 20. would be carried out before the mid-term review, and would gather the points o f view o f the intervention participants, in order to inform improvements to both operating guidelines and program materials. This would be done through focus groups.

40

Methodological note 5: Monitoring and Evaluation o f the Municipal-based Management

21. General idea: The focus on the monitoring and evaluation activities o f the municipal pilot would be to ensure that the lessons learned from the Project are documented, in order to permit the evaluation o f the appropriateness o f an eventual expansion o f the pilot at the end o f the Project. 22. Evaluation proposal: CONAFE would contract a consultant to conduct a quantitative and qualitative study that would document the impact and institutionalization o f the pilot. In terms o f impact, it would investigate the quantitative contributions o f the pilot to (i) the state o f education infrastructure; (ii) the quality o f the school environment and school results; (iii) the increase in enrollment; and (iv) the results o f the E N L A C E test. In addition, the study would include a qualitative examination o f the processes carried out under the pilot and o f the institutionalization o f the advances in municipal management, including: (i) the development o f the capacity o f the MEEOs in strategic planning and project planning, participatory systems for diagnosing needs, the prioritization o f investment, the coordination o f other programs (state, the institutionalization o f education plans in pilot municipalities; federal, CONAFE, etc.); (ii) and (iii) the participation o f the population in the municipal management process. In 2010, the study would be undertaken in the two municipalities that will participate in 23. the first phase o f the pilot, and a baseline would be established for the three municipalities that will participate in the second phase. In 2013, the study would examine all five pilot municipalities.

Mid-Term Review

24. As part o f the mid-term review, a general review o f all the Project components would be carried out. CONAFE will commission a review o f the overall results o f the Project, which will include a review o f statistics and cross-overs between the components. In addition, they will commission a specific analysis by component, which will be carried out by a panel o f experts.

41

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Annex 4: Detailed Project Description MEXICO: COMPENSATORY EDUCATION PROJECT

1. The Project aims to bring families and the broader school community into the education process in Mexico, focusing on early childhood development (ECD) and basic education. In ECD, parents would be trained to be agents o f their own children’s well being and development, which would be complemented by early stimulation activities for children. In basic education, parent and community associations would manage resources to improve schools, and poorly-performing schools would receive added pedagogical support. Finally, municipal Governments would be strengthened and capitalized to respond to local education needs rapidly and effectively. Interventions would be directed to the poorest and hardest to reach municipalities in the country, with priority given to the 172 municipalities comprising the focus o f the Agendapara la Equidad Educativa. This Annex describes in detail the: Project Development Objective; Project components; and Lending instrument. Proiect DeveloDment Obiective

2. The development objective of the Compensatory Education Project i s to improve access to E C D services and learning outcomes o f children in the most marginalized municipalities o f Mexico. This objective would be achieved through innovative interventions at the early childhood and basic education levels that strengthen the involvement o f members o f the school community and municipalities. This objective i s measured using the following project development indicators: 0 0

Gap in test scores between the 172 municipalities and the national levels2. Number o f children 0-4 years old who attend at least 80% o f the sessions o f the E C D program in target municipalities.

Proiect ComDonents This Project features three components: 1) Early Childhood Development (ECD) 3. Intervention, 2) Interventions in Basic Education, and 3) Project Monitoring, Management and Evaluation. The Interventions in Basic Education Component includes three main activities: 2.1) Decentralized Support to Basic Education (Apoyo a la Gestidn Educativa - AGE - and Fortalecimiento Comunitario para la Educacidn - FORTALECE), 2.2) Mobile Pedagogical Support (Asesoria Pedagdgica Itinerante - APIs), and 2.3) Municipal-based Management.

4. The Project represents a multi-layered, targeted approach to fulfilling CONAFE’s mandate o f serving the most marginalized. The Project seeks to improve education outcomes for children by intervening at the levels o f the child and parent (ECD, APIs), teacher (APIs), school 52

Please refer to Methodological note 1 in Annex 3 for a reference on how to compute the gap indicator.

47

(AGE, FORTALECE), community (FORTALECE) and municipality (municipal-based management). SEP indigenous and general schools would benefit from the long-standing and well evaluated school-based management program, AGE, while similar support would be provided to CONAFE-administered community schools through a new intervention, FORTALECE. The Project would target communities through the combined criteria o f high marginalization and social decline and minimum numbers o f potential beneficiaries, so as to reach as broad a segment o f the population living in marginalized municipalities as possible, thereby maximizing efficiency and impact. Certain interventions would be further targeted based on additional risk factors: AGE would prioritize indigenous schools, while APIs would target compensatory schools with poor performance on the national E N L A C E test. The interventions would converge in selected municipalities among the 172 o f the Agenda para la Equidad Educativa, such that a critical mass o f services would be provided, monitored and evaluated. The Project would also extend beyond these municipalities by supporting programs in marginalized communities across the country. The Project also supports several innovations for the sector through the 5. implementation and evaluation o f new interventions and program components providing targeted support to previously underserved groups. The E C D intervention would introduce new sessions working directly with children, as well as with fathers. Building on the success o f AGE, the new FORTALECE intervention extends the potential o f school-based management to community schools. APIs, another new intervention, provides intensive pedagogical support to struggling students and their parents and teachers, in compensatory schools. In addition, the Project seeks to involve municipalities, which are largely excluded from the education service delivery chain, in education planning and service delivery through municipal-based management. Combining these interventions in select municipalities represents a further innovation by addressing the education needs o f communities at multiple levels. Innovative elements o f each component and intervention are further described below. Component 1: Early Childhood Development Intervention ($30.0 million)

6. Overview: This component would provide out-of-school training for parents and caregivers o f children aged 0-4, to improve their competencies and practices in caring for children and contribute to the children's comprehensive development and school readiness. The Project would provide coverage to 225,200 children by 20 13 and would partially refocus services to expand the intervention to approximately 52,670 children in the 172 municipalities targeted under the Agenda para la Equidad Educativa. Building on the successes under the PAREIB APL, two innovations would be designed under the new operation: more early stimulation activities working directly with children (through their parents), and parenting education directed explicitly toward fathers. The strategic objective o f this component would be to improve the reach and effectiveness o f the E C D intervention in target municipalities. 7. Activities to be financed: Activities to be financed would include: (a) training o f E C D promoters, module supervisors and zone coordinators, including per diem and travel costs for all participants; (b) delivery o f training sessions to parentshelatives and children over a period o f nine months per year through the remuneration o f promoters, supervisors and coordinators; and (c) consulting services to design training materials for new program components.

48

8. Selection criteria and targeting;: The E C D intervention would serve CONAFE’s target communities with a minimum number o f potential beneficiaries and would explore l i n k s with the conditional cash transfer program, Oportunidades. Communities would be selected based on CONAFE’s statutory Operating Rules as outlined in i t s E C D intervention guidelines (see Table 4. l), with priority given to the 172 municipalities in the Agenda para la Equidad Educativa. At this stage o f Project implementation, the aim would be to cover localities with at least 40 children. For the program cycle to start, the community would require a minimum o f eight families willing to participate. Participating families may change, as some leave because their child becomes older than age four or for other reasons, and new parents j o i n in any given year. The Project would foster linkages with Oportunidades to the extent possible, both by providing E C D services to recipients o f Oportunidades transfers and by creating opportunities for transfer recipients to perform community service and gain employment experience through the E C D intervention. However, as was noted during Project preparation, CONAFE’s target communities often lack the supply o f health services necessary for families to participate in Oportunidades. Operating Rules Selection Criteria Initial and Basic Rural communities with fewer than 500 rural inhabitants and Education Program for indigenous communities with fewer than 100 indigenous inhabitants, the Rural and with preference iven to communities with high or very high levels o f 59 Indigenous P o ~ u l a t i o n ~marginalization ~ and social decline55 Compensatory Actions 1. Communities with the lowest human development index or Program to Combat highest marginalization or social decline indices within Education Decline in municipalities identified as priorities by the state and Federal Government with a population between 0 and 3 years 11 months; Initial and Basic 2. Communities with high or very high marginalization with active Educations6 pre-school services o f any modalitys7; 3. Communities with a greater population expressing demand for CONAFE’s E C D intervention; 4. Communities receiving economic support from municipal Governments for the establishment o f the E C D intervention Source: E C D intervention guidelines, “Educacidn IniciaZ2OO9-2OlO: Lineamientos ”

9. ODerational specifics: CONAFE would also integrate i t s Community Initial Education intervention (Educacidn Inicial Comunitaria) and out-of-school parent education intervention into a single Initial Education offering. Staff o f the former intervention may serve as promoters or staff in other CONAFE programs, provided they meet the profile required. In addition, 53

Reglas de Operacidn (Acuerdo 451): Programa de Educacidn Inicial y Bdsica para la Poblacidn Rural y Indigena 54 Index defined by CONAPO that incorporates indicators o f education, basic services, quality o f housing, isolation (?Ao f population living in communities with fewer than 5,000 inhabitants), and income 55 Index defined by CONEVAL that incorporates indicators o f education, access to health services, basic services. quality o f housing, and household assets s6 Reglas de Operacidn (Acuerdo 460): Programa de Acciones Compensatorias para Abatir el Rezago Educativo en Educacidn Inicial y Bdsica 57 That is, general, indigenous or community pre-school

49

activities for directly stimulating children would form the basis o f the sessions for young children within the parent education program. 10. The training o f program staff, including E C D promoters, module supervisors and zone coordinators, aims to strengthen their knowledge o f early childhood development and improve the quality and efficiency o f service delivery. Prior to training, staff would sign joint contractual agreements with the state education agency and the CONAFE state d e l e g a t i ~ n ~ ~Zone . coordinators would each supervise two municipalities, while module supervisors would each supervise 10 promoters. The technical team o f each state would provide a minimum o f 120 hours o f training annually through workshops. Supervisors and coordinators would attend an update and induction meeting before the start o f the program cycle, followed by the first regional training, which promoters would also attend. Promoters would then participate in an initial preparation meeting. Promoters would participate in two subsequent training workshops during the program cycle, one o f which would also be attended by supervisors and coordinators. The promoters also receive assistance from their supervisors in twice-a-month meetings, when they can have questions answered and discuss their experience. In addition, evaluation workshops would be conducted at the end o f the program cycle. An overview o f the training plan, contained in the program guidelines, was presented during project preparation and found to be satisfactory. 11. Training sessions and activities for parents and caregivers, their young children and pregnant women aim to strengthen family understanding o f early childhood development, and demonstrate h o w the family can best stimulate the process. Each parent education session would follow a didactic approach consisting o f four phases: reflection, sharing ideas, practice, and closing and would be supported by program materials provided by CONAFE. Evaluation would be integrated into the program cycle at the beginning (3 sessions), periodically during the course o f the year (4 sessions), and at the conclusion (1 session). A trained promoter would provide 18 weekly two-hour sessions to families with children aged 0-4 years, eight monthly two-hour sessions to mothers, and eight monthly two-hour sessions to expectant mothers, during ninemonth yearly cycles. In addition, the Project would support 18 weekly two-hour early stimulation sessions for children under 2 years old accompanied by their parents, designed under CONAFE’s Educacidn Inicial Cornunitaria intervention, and five special two-hour sessions aimed at fathers, currently in development and expected to be finalized by the end o f 2009. 12. Special sessions aimed at fathers would address the issue o f fathers’ underrepresentation in CONAFE’s E C D intervention and promote their participation in childrearing. By targeting fathers explicitly, CONAFE would signal to them the importance o f being involved with their children and supporting their children’s development. Recognizing that fathers have different needs and levels o f knowledge from mothers with regard to childrearing and are potentially more constrained in their availability to attend sessions, CONAFE would offer a smaller number o f sessions (five) tailored to fathers’ needs. In addition, offering sessions only for fathers creates a space for them to share and learn amongst their peers, thereby reducing any potential negative association with attending the program or discussing personal matters.

5 8 However, in the case o f Aguascalientes, Baja California, Baja California Sur, Durango, Guanajuato, Guerrero, Hidalgo, Oaxaca, Querktaro, and Veracruz, staff sign agreements only with the CONAFE state delegation.

50

13. The Project would support the development and design o f educational and program dissemination materials to be used in the program. In integrating i t s out-of-school and centerbased approaches to ECD, the intervention seeks to design and develop the accompanying didactic materials for both program staff and beneficiaries. Component 2: Interventions in Basic Education ($64.6 million)

2.1: Decentralized Support to Basic Education 14. Overview: The Project would increase parent and community participation in school matters through grant-making and training to AGE entities and associations o f community members in support o f Community Education, known as FORTALECE entities, in order to improve the school environment and enhance collaboration and accountability mechanisms at the school level. The Project would provide training and grants to 46,462 AGE entities nationally each year from 2011 to 2013, as well as 1,338 FORTALECE entities in the 172 target and other marginalized municipalities by the Project’s end. This intervention represents an innovation in that it extends the reach o f school-based management, previously limited to formal state schools, to community schools serving the CONAFE target populations. The intervention would give parents and community members “a seat at the table” by endowing them with limited responsibility and authority for school-related decision-making, thereby reducing their exclusion from the education process5’. Furthermore, it would enable them to monitor and act upon the attendance and performance o f their own children as well as o f teachers, which it i s expected would lead to reduced repetition and failure rates. Finally, parents and community members would identify and meet the needs o f the school through strategic planning and the allocation o f grant funds, which i s expected to improve the school environment. I t s strategic objective would therefore be to improve the efficiency and quality o f the education system through school-based management. Activities to be financed: The Project would finance school-linked grants (AGES and 15. FORTALECE) and training expenses including stipends, travel and per diem for the instructors.

16. Selection criteria and targeting: CONAFE would select schools to participate according to criteria6’ pertaining to characteristics o f disadvantage, school size and school organization. For AGE, the selection criteria outlined in the procedural manual are presented in Table 4.2. CONAFE would use minimum enrollment as a further criterion: 10 students for preschools, 10 for primary schools, and 5 for telesecundaria schools. For FORTALECE, community schools would be selected from communities targeted by CONAFE’s Initial and Basic Education Program for the Rural and Indigenous Population, Le., rural communities with fewer than 500 rural inhabitants and indigenous communities with fewer than 100 indigenous inhabitants, with preference given to communities with high or very high levels o f marginalization and social decline. Schools located in the 172 municipalities o f the Agenda para la Equidad Educativa would be prioritized. From this pool, CONAFE would select schools using an index composed o f i)the results from the E N L A C E test, ii)the marginalization index,

’’Gertler et a1 (2006). “Empowering Parents to Improve Education: Evidence from Rural Mexico.”

6o Selection criteria are outlined in the CONAFE Reglas de Operacibn and the programs’ Lineamientos and Procedimientos

51

and iii)school enrolments. services would be selected.

Only communities with at least 5 students attending education

Operational specifics: The Project would provide training to AGE entities and APECs to 17. support the use o f funds and foster collaboration in planning and improving school performance. A School Supervisor or Community Advisor (community member, sometimes a teacher, to whom CONAFE provides training and a stipend) would train the AGE entities, while the CONAFE State Delegation would provide training to the FORTALECE entities. Training wouldfocus on the strategic use and effective management o f school funds to be transferred by CONAFE, including the preparation o f plans, as well as fulfilling parental responsibilities with regard to children’s schooling and social participation aimed at benefiting the school. In order to formalize their participation, the board o f directors o f each APF would sign an agreement with the state education agency and CONAFE state delegation, while the president o f each FORTALECE entity would sign an agreement with i t s CONAFE state delegation.

18. The Project would finance School Improvement Plans (Planes de Mejora) through an AGE to be administered by each AGE ENTITY. Based on the training received, AGE entities would elaborate their Plans, which in turn would trigger the provision o f a banking document to enable withdrawals. Under these Plans, AGE entities could purchase school materials, information and communication technology materials, maintenance materials and equipment, according to a positive list. Annual grants would vary from MX$3,000 to MX$5,000 for preschools, MX$5,000 to MX$7,000 for primary schools, and MX$l0,000 to MX$12,000 for telesecundaria schools. Grant amounts would vary according to the size o f pre-schools and telesecundaria schools (with larger schools receiving more funds) and the number o f teachers for primary schools (with schools with more teachers receiving more funds). Grants would be transferred annually to the AGE entities’ school accounts. The use o f these funds would be specified in the O M and subject to annual financial audits by the CONAFE brgano Interno de Control and Auditoria Superior o f the Federal Government, in a random sample o f schools. 19. Similarly, the Project would finance APECs’ Work Plans (Planes de Trabajo) through a FORTALECE grant to be administered by each FORTALECE entity. Under these Plans, APECs could pay for cleaning materials, sports items, first-aid supplies, utilities, interventionrelated transportation, construction and rehabilitation o f bathrooms, and maintenance o f school facilities and furniture, according to a positive list. Annual grants would vary from US$8,000 to US$12,000. In contrast to AGEs, higher grant amounts correspond to fewer students. This policy takes into account that schools with fewer students have fewer families to bear the costs associated with maintaining them, resulting in higher costs to each family. Grants would be transferred annually to the FORTALECE entity’s account. As with the AGEs, the use o f funds would be specified in the O M and subject to annual financial audits in a random sample of schools.

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Table A4.2. Select n Criteria for AGE Education Level Selection Criteria Pre-school 1. Criteria outlined by Operating Rules for Compensatory Programs: a. Schools located in priority municipalities o f Estrategia I 0 0 x l 0 0 identified by the Government; b. 50% o f indigenous-rural schools with highest comparative disadvantage; c. 25% o f general-rural schools with highest comparative disadvantage, after having reached the former. 2. Once have covered above population, CONAFE would consider the following additional criteria: a. Remaining indigenous schools; b. General-rural schools in communities with high or very high levels o f marginalization; c. 25% o f general-urban schools with high or very high levels o f marginalization. Primary 1. Criteria outlined by Operating Rules for Compensatory Programs: a. Schools located in priority municipalities o f Estrategia 100x100 identified by the Government; b. Remaining indigenous schools; c. 62.5% o f general-rural schools with highest comparative disadvantage, after having reached the former. d. 12.5% o f general-urban schools with highest comparative disadvantage; 2. Once have covered above population, CONAFE would consider the following additional criteria: a. General multi-grade schools in rural communities (1-4 teachers); b. General schools (with 5 teachers or complete) in rural communities o f high or very high marginalization; c. 25% o f general-urban schools o f high or very high marginalization. 1. Criteria outlined by Operating Rules for Compensatory Programs: Secondary a. Form part o f schools located in priority municipalities o f Estrategia 100x100 identified by the Government; 2. Once have covered above population, CONAFE would consider the following additional criteria: a. Schools from among the 75% o f rural schools with highest comparative disadvantage; b. Schools located in rural and urban communities with highest comparative disadvantage, after having reached the former; c. Schools o f special attention that have completed a study plan, curriculum development, and organization for the telesecundaria modality. Source: AGE procl ures manual, “Procedimiento para el Apoyo a la Gestidn Escolar. ”

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Table A4.3. Impact Evaluation Parental Empowerment in Mexico - AGE Primaria Impact Evaluation Parental Empowerment in Mexico--AGE Primaria

The randomization for the experimental evaluation o f the AGE Primaria program was launched in 2007. The experiment involves 250 schools in rural underdeveloped areas with a high share o f indigenous populations in four states (Chiapas, Guerrero, Puebla and Yucathn). H a l f the schools were randomly selected to receive twice the usual amount o f AGE resources. In the last quarter o f 2007 a baseline survey was carried out, continued with a follow up survey in June 2008. There were programmed surveys also for June 2009 and 2010. Unfortunately, the flu pandemic made it impossible to carry out the survey for 2009, so it i s being carried out in January-February 20 10. Surveys have been carried out for school directors, the president o f the parents committee, and teachers and students at the levels o f third, fourth and fifth grade. From these surveys we will be able t o show the participation levels o f the agents involved in school management and how the program changes the mechanics o f decision-making due t o higher funding levels. Surveys capture h o w often participation takes place and what decisions are influenced by such participation, as well as how the funds are spent. Surveys also capture student motivation, and school efficiency, as measured by school days missed, failure rates, repetition, and learning outcomes from national standardized tests. Even though the analysis i s on-going, some preliminary results show that the number o f parents participating has increased in the treatment schools. W e have also included a group o f schools without any intervention as a pure control group. In the final year o f the program a pure participation group has been added; that is, schools without funds are receiving the AGE capacity building program. Final results are expected in the summer o f 2010.

2.2: Mobile PedagogicalSupport (Asesoriu Pedagdgica Itinerunte - APIs).

20. Overview: The Project would expand the pilot Mobile Pedagogical Assistance intervention, with the aim o f improving mathematics and language skills among students attending compensatory schools. By the end o f the project, 2,000 schools within the 172 municipalities o f the Agenda para la Equidad Educativa and beyond would receive the pedagogical support o f tutors (asesores pedagdgicos itinerantes - APIs) at an average ratio o f one tutor for two localities. The A P I intervention represents a new approach, in that it leverages recent teacher graduates with the professional knowledge and motivation to support poorly performing schools in communities that are traditionally underserved due to their inaccessibility. Its strategic objective would therefore be to improve the learning o f students attending the lowest-performing schools in target municipalities. 21. Activities to be financed: The Project would finance stipends for APIs, training expenses including per diem and travel costs for all participants, and consulting services for the design o f materials. 22. Selection criteria and tarpeting;: The APIs would provide intense pedagogical support to poorly performing schools in marginal communities that nevertheless provide the critical mass o f students for tutors to have an impact. Criteria for selection o f schools would prioritize schools: i)that have at least seven students, ii)with small teaching bodies (two teachers or less), and iii)with at least 30 percent o f students reporting poor academic achievement based on

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E N L A C E results. At this stage o f implementation, the intervention would be implemented only in CONAFE’s compensatory schools. ORerational specifics: The A P I intervention would tap the supply o f recent teacher 23. graduates who have not yet been placed in the general education system and provide them with the systematic training and monitoring necessary to provide appropriate, continuous support to teachers, students and families during the program cycle. CONAFE would advertise the intervention among potential candidates and select tutors using a weighted average o f university grade point average (60%) and a letter describing their motivation to participate (40%). Tutors serving indigenous schools would be required to speak the local language. Selected tutors would sign a contractual agreement with CONAFE State Delegations and the SEPEs to serve for one annual program cycle. CONAFE would provide an initial five-day training to tutors on program norms, pedagogical approach, parent engagement strategies, didactic and school materials to be used, among other areas. Tutors would alternate 15 days in each community, so as to foster strong relationships and deep understanding o f the students, families and teachers with whom they work. In addition to evaluation workshops at the midpoint and end o f the program cycle, tutors would meet their supervisors on a bi-monthly basis to submit progress reports. Tutors would receive a monthly stipend o f about $400 over a period o f nine months per year, with an additional $200 for relocation expenses and $200 for delivery o f the final report, which all together corresponds to the approximate compensation o f a teacher.

24. During the program cycle, tutors would follow a systematic approach supported by CONAFE-developed materials and designed to improve student outcomes and enhance teacher practice. Tutors’ broad responsibilities would include: (a) provision o f remedial activities to children with learning disabilities, especially in math and Spanish, (b) promotion o f participation o f parents in school activities, and (c) provision o f general support to regular teachers. Specific responsibilities would include: Conducting a diagnostic o f students’ level and learning needs, including a review o f school records and test scores, as well as home visits; Collaborating with the main teacher to develop a work plan for the program cycle; Supporting the main teacher in implementing strategies to improve mathematics and language performance, in accordance with the work plan; Advising the teacher on the appropriate use o f didactic materials; Conducting extracurricular activities aimed at bringing under-performing students to grade level; Identifying students with special academic needs, orienting the teacher to understand and address those needs, supporting families in helping their children, and applying remedial activities; Developing or obtaining pedagogical materials appropriate to the needs o f the teachers and students; Supporting the teachers and students in the use o f information and communication technologies.

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2.3: Municipal-based Management 25. Overview: The Project would support a policy experiment in piloting a cooperative federalist model in the delivery o f public services. There are three main aspects to the pilot, o f which the Project would directly support the first: i)technical assistance (TA) to strengthen municipalities, with a focus on their capacity for strategic planning, ii)creation o f a fund to support the implementation o f municipal-level education strategies developed under the TA, and iii)the contractual delegation o f responsibilities to municipalities in the delivery o f certain CONAFE services (ECD intervention and eventually the CONAFE-run community schools). I t s strategic objective would be to improve the efficiency and effectiveness o f education service delivery by building municipalities’ capacity to manage and supervise educations services. Activities to be financed: The Project would finance training expenses including per 26. diem and travel costs for all participants and consultancies for technical assistance. Operational wecifics: Under this component, CONAFE would contract with 5 27. municipalities, to be selected from the 172, according to specific characteristics61. The municipalities would establish an institutional body within their municipal Governments known as the “Municipal Educational Equity Office” (MEEO), to be staffed by personnel financed by CONAFE (initially) and selected in coordination with the municipalities. Technical assistance would be tailored to the needs o f each municipality in order to facilitate the realization o f education sector-focused municipal strategic planning exercises and to build the capacity o f the M E E O for (a) education planning, monitoring and evaluation as well as social inclusion o f education services delivery; and (b) support to school supervision, administrative staff development, human resources management, management o f physical resources, and fiduciary management. The capacity o f CONAFE State Delegations would also be strengthened to ensure (i)effective administration o f the CONAFE-municipality agreements and (ii) the provision of quality technical assistance to participating municipalities.

28. In order to finance the strategic plans developed under the technical assistance, CONAFE would channel resources to municipalities through a Municipal Fund for Educational Equity (MFEE), to be financed with counterpart funding. The Fund would extend grants to municipalities for a wide range o f investments in local development (at municipal and community level) deemed to have an impact on the reduction o f the educational gap in marginalized and underserved areas. In addition to financing small works, equipment and materials for educational facilities, the MFEE resources could be applied to other investments including the provision o f transportation services, nutrition programs, information and education campaigns, etc., as well as to cover expenditures (e.g., feasibility and other studies) necessary to mobilize resources for investment with a direct impact on education goals, from other national programs financing municipal projects. While access to the MFEE resources would depend on eligibility and quality o f project proposals, an indicative amount, providing municipalities with a programmable ceiling, would be allocated to each municipality based on a formula reflecting the extent and type o f education needs. 61

The 5 municipalities would include an indigenous municipality, a larger municipality, a smaller municipality, a very rural municipality and a municipality where traditional practices for leader selection (“usos y costumbres ’7 are in effect.

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29. The third aspect o f the pilot i s for CONAFE to assign to the municipalities the responsibility to implement the E C D intervention (and, eventually, the community basic education programs) o f CONAFE. The contractual delegation o f these responsibilities would entail the further capacity development at the local level in the direct management and supervision o f E C D activities, including the recruitment o f promotoras (and eventually instructores in the community schools), and supervisores. The training o f these staff and the design and distribution o f the materials would continue to be the responsibility o f CONAFE.

30.

The agreements with the municipalities62would consist o f the following: CONAFE would (i) finance, (ii) support technically and (iii) supervise administratively the implementation o f the agreement by the 5 pilot municipalities Municipalities would act as contractual “agents” o f CONAFE and would commit to operate CONAFE programs as per the terms o f the agreement. In particular they would (i) establish the M E E O as integral part o f their own administration as the unit responsible for implementing the agreement. The personnel o f the M E E O would be selected jointly by CONAFE and the concerned Municipality and would be funded and trained by CONAFE (ii)mobilize and allocate to the educational activities covered by the agreement, additional human and financial resources sourced from community contributions, municipal revenue and other national programs. The M E E O staff would be responsible for the effective management o f the MFEE. Projects to be financed by the MFEE63: Would be identified through exercises o f participatory strategic planning driven by the goal o f reducing the educational gap in marginalized areas, and would be facilitated technically by CONAFE, In order to build i t s own capacity to extend to participating municipalities the required technical assistance, CONAFE would secure the services o f specialized national consultants. Would be prepared by the M E E O with technical assistance as needed from the CONAFE State Delegate Would be evaluated and approved by the concerned CONAFE State delegate Would be implemented by the concerned Municipality, according to the procurement and disbursement procedures applicable to the local public sector entities in Mexico. Would be subject to fiduciary oversight by an institutional body composed o f AGE Entity representatives and other members o f the school community. Would be subject to independent external auditing.

3 1. In support o f the smooth implementation o f these activities, the Project would engage in dialogue with institutional stakeholders involved in education to present the proposed objective and scope o f the pilot and to understand and address any concerns stakeholders may have. In particular, CONAFE would consult with SEPEs, school supervisors and directors, and teachers, whose buy-inwould be critical to the pilot’s success. 63

Contracts with municipalities would not imply a transfer o f loan proceeds. The MFEE would not be financed with loan proceeds.

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Component 3: Project Monitoring, Management and Evaluation ($3.2 million)

32. Overview: This component aims to ensure the quality and efficiency o f implementation and the appropriate use o f resources, as well as to build the knowledge and capacity o f CONAFE and external stakeholders, through monitoring, evaluation, and management. In addition to covering monitoring and operating expenses, the Project would support the development o f a Project information module to be integrated into i t s monitoring system and the procurement o f statistical software, as well as evaluations o f new programs and program elements. Furthermore, the World Bank would explore potential complementary funding sources to develop CONAFE’s capacity to track beneficiaries o f i t s ECD intervention until the end o f their working lives, thus providing a wealth o f longitudinal data comparable to Head Start in the USA and CrianCa Maravilhosa in R i o de Janeiro, Brazil. 33. Activities to be financed: The Project would finance travel to supervise activities in all municipalities; costs associated with budgeting, programming and executing Project resources for the E C D intervention, in accordance with applicable norms o f transparency and accountability; consulting services to develop an information module and evaluation studies; and the procurement o f licenses for statistical software, such as SPSS or the equivalent. 34. Operational specifics: Project monitoring would be jointly conducted in accordance with each program’s guidelines by CONAFE’s State Delegations and central office to measure progress, identify issues, and facilitate decision-making, and would be supported by the development o f an information module for the Project. State Delegations would be responsible for collecting data, assuring data quality, and reporting to the central office. State personnel would visit sites selected at random to observe Project activities and ensure that resources have been received and used in a transparent manner and in accordance with the Operating Rules. Documents reviewed would include records, agreements, improvement plans, and documentation o f expenditures, delivery o f stipends, receipt o f materials, and warehouse inventories. State Delegations would then submit progress reports to the central office, which would in turn consolidate and review the data. The central office would review the frequency and severity o f incidents, aided by the establishment o f early alert procedures. I t would also develop reports monitoring Project goals and indicators and providing analysis and recommended actions. In support o f these activities, and building on the progress achieved under PAREIB, the Project would design, develop and implement an information module.

35. The component would also support a series o f evaluation studies. Given that the AGE intervention has been and continues to be studied extensively, it would not be evaluated under this Project, though i t s implementation indicators would be monitored. Programs and program elements to be evaluated could include early stimulation activities for children and sessions for fathers under the E C D intervention, as well as FORTALECE, APIs, and Municipal-Based Management. The Project would support the development o f data collection instruments and a comprehensive database. Evaluations would utilize a treatment and control group for each program by selecting municipalities, communities, and education services with similar socioeconomic, demographic, and educational characteristics. In addition, the component would support evaluation studies o f innovative education materials aimed at improving the efficiency and quality o f education that are currently being developed by CONAFE: an education model 58

for complete rural schools, including i t s features and operational aspects, and a multi-grade, secondary community school model, with an updated curriculum aligned with CONAFE’s ECD and basic education approach. Lending Instrument

36. The Bank would co-finance the implementation o f the Compensatory Education Project using a Specific Investment Loan (SIL). The Loan would be implemented by CONAFE, using country systems to the maximum extent possible, and would be managed by a fully integrated Project Coordination Unit (for more details, please see annexes 6, 7 and 8). 37. In line with i t s debt management strategy, the Government requested an amortization schedule with a single bullet repayment in17 years. Mexico has traditionally relied on bond issues for i t s external funding needs. As bond issues are bullet (as per investors’ preferences), Mexico faces lumpy payments in certain years. Mexico’s strategy for managing the liquidity risk i s to spread out the repayments o f i t s external debt over time through bullet payments in different years, choosing to repay new loans in those years where they have low concentration o f payments. Through this strategy Mexico i s able to reduce i t s refinancing risk, hence its vulnerability to market disruption that might temporarily hamper i t s access to refinance i t s debt. In line with this strategy, Mexico has selected to repay this loan in a single payment in year 2027, a year where it has minimal payment o f external debt. The repayment structure selected by Mexico for this loan has an average l i f e o f 17 years and final maturity o f 17 years, within the maximum policy limits for customized repayment schedules o f 17 years and 30 years respectively.

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Annex 5: Project Costs MEXICO: COMPENSATORY EDUCATION PROJECT

Local Total Foreign U S $million US $million U S $million

Project Cost B y Component and/or Activity

Component 1: ECD intervention

0.0

30.0

30.0

Component 2: Support to Basic Education 2.1 AGESand Fortalece 2.2 Mobile Pedagogical Support 2.3 Municipal-based Management

0.0 0.0 0.0

63.2 53.0 9.1 1.1

63.2 53.0 9.1 1.1

1.4

1.8

3.2

Component 3 : Project Monitoring, Management and Evaluation Total Baseline Cost Unallocated

Total Project Costs Front-end Fee Total Financing Required

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0.0 1.4

95.0 3.35 98.35 0.25 98.60

96.4 3.35 99.75 0.25 100.00

Annex 6: Implementation Arrangements MEXICO: COMPENSATORY EDUCATION PROJECT

1. The implementation of the Compensatory Education Project would be carried out by the Consejo Nacionaf de Fomento Educativo (CONAFE), in collaboration with various other agencies at the federal, state and municipal levels. This section outlines the roles and responsibilities o f the agencies and actors involved in the implementation and operation o f the Project. Project Description

2. Project Development Objective and components: The development objective o f the Compensatory Education Project is to improve access to E C D services and learning outcomes of children in the most marginalized municipalities o f Mexico, through the implementation o f three components, further subdivided into the five following subcomponents: i)Early Childhood Development (ECD) Intervention, ii)Decentralized Support to Basic Education (Apoyo a la Gestidn Educativa - AGES, and FORTALECE), iii)Mobile Pedagogical Support (Asesorz’a Pedagdgica Itinerante - APIs), iv) Municipal-Based Education Management Pilot and v) Project Monitoring, Management and Evaluation.

3. Geographic Scope: All activities would be implemented in 172 priority municipalities in 11 states (see list in Table A6.1), selected from the bottom o f the municipality-level human development index. The first two would also be implemented in other priority municipalities as well, selected according to the following targeting mechanisms: a. E C D intervention: Selected communities would have less than 500 rural inhabitants and less than 100 indigenous inhabitants, prioritized by level o f marginalization and social decline64. At this stage o f Project implementation, the aim would be to cover localities with at least 40 children. b. A G E s ~ CONAFE ~: would prioritize schools located in priority municipalities under the Federal program, Estrategia 100x100, generally followed by rural indigenous schools with the greatest comparative disadvantage, though specific selection criteria vary by school It would use minimum enrollment as a further criterion: 10 students for pre-schools, 10 for primary schools, and 5 for telesecundaria schools. Roles and responsibilities o f agencies in the education system

4. Secretaria de Educacidn Plibfica (SEP): The SEP would have the overall responsibility to design and implement education policy and enforce the regulation for education services, plans and study programs. The SEP’s mission i s to create conditions that would ensure access for all Mexicans to quality education at all levels, irrespective o f geography. With respect to CONAFE, SEP would be responsible for establishing the normative framework for CONAFE’ s Additional criteria are outlined in the “Educacidn Inicial del CONAFE: Lineamientos 2009-201 0 ” Fortalece would be implemented exclusively in the 162 priority municipalities. 66 See “Procedimiento de Apoyo a la Gestidn Escolar ’’ 4.3.1 64 65

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programming, providing the financial resources to implement CONAFE’s programming, and coordinating activities under CONAFE and other federal education initiatives.

5. Consejo Nacionaf de Foment0 Educativo (CONAFE): CONAFE i s a decentralized, autonomous agency o f Mexico’s Federal Public Administration, created through presidential decree and consisting o f a separate legal entity. The agency i s governed by a Board o f Directors consisting o f the Secretary o f Public Education (Secretario de Educacidn Pziblica), who serves as chair, representatives from the Secretary o f Finance (Secretaria de Hacienda y Cre‘dito Pziblico - SHCP) and o f Planning and Budgeting (Secretaria de Programacidn y Presupuesto), the Director-General o f the Bank o f Mexico, S. A,, the Director General o f CONAFE, who serves as Secretary, and three members appointed by the Secretary o f Public Education. CONAFE’s mission i s to i)provide compensatory financial and technical resources, national and foreign, with the view to improving education in Mexico, and ii)promote Mexican culture abroad. Roles and responsibilitieso f participating agencies in Project implementation

6. The Project would use country systems to the maximum extent possible and would be managed by a fully integrated Project Coordination Unit.

7. CONAFE: CONAFE would be responsible for the overall execution o f the Project, on behalf o f SEP (see Figure A6.1). Responsibilities would be divided into three areas: technical The technical activities would be activities, monitoring and administrative activities. implemented by a fully integrated Project Coordination Unit Unidad de Programas Compensatorios (Compensatory Programs Unit - UPC), the Planning Directorate (Direccidn de Planeacidn - DP), and the Directorate o f Finance and Administration (Direccidn de Administracidn y Finanzas - DAF). The UPC would be responsible for daily management o f activities including the consolidation o f the yearly work plan; program execution yearly reviews; and monitoring o f project objectives, goals, processes, and timetables in coordination with SEP and the Secretarias Estatales de Educacidn Pziblica (State Level Secretariats o f Public Education - SEPEs). The UPC would also be responsible for coordinating with normative areas o f SEP and communication with state-level offices, and would be the main counterpart for communications with the Bank. The monitoring o f project activities, including management o f information systems, would be undertaken by the DP. Administrative activities would be carried out by the DAF, including procurement and financial management. The DAF would also serve as the coordinating body, and would be the main point o f contact for N A F I N and the World Bank. During the implementation o f the project, CONAFE would be responsible for monitoring and updating the existing Coordination Agreements with the participating states, providing technical assistance to states on issues relating to educational compensatory programs and general management (see below). 8. Nacionaf Financiera, S.N.C. (NAFIN): N A F I N would act as financial agent o f the Borrower with regard to the Loan. In that capacity, NAFIN would be responsible for financial administration, including managing loan disbursement processes and providing other implementation support and oversight to CONAFE, based on i t s many years o f experience with Bank-financed projects (for further details see Annex 7). 62

Figure A6.1 InstitutionalArrangements o f CompensatoryEducation Project

... . *

/

Federal 7--

4

co NA F

7

Administration y

I

Central offices _ -x I.-l.,I

Estatal

------+ Promotora de

\

-- - - _

Coord. Agr. Contract

Programas

I

I

- - - Legal Agr. - - - Subs. Agr.

Secretaria de Educacibn Publica [, Estatal (SEPE)

,K-----’

I . -

--i

State -____

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In ’Iftatel. Contractiilpnedwlth DdepoddnErtotoler

Instruments governing the Inter-Agency relationships Subsidiary Agreement (Contrato de Manduto): The Subsidiary Agreement would be 9. signed between NAFIN, SHCP and CONAFE. The agreement would outline the obligations o f each party in the implementation o f the Project in order to ensure the achievement o f the stated objectives. The agreement would be signed prior to effectiveness.

10. Coordination Agreements: Each year, CONAFE would sign executive annexes to the existing Coordination Agreements, which outline the roles and responsibilities o f each actor in each o f the states. The Agreements, together with their annexes, constitute the normative framework for the commitment o f CONAFE and participating states under the Project. Through this legal vehicle, the parties agree to carry out planning and targeting activities, as well as organization, execution, monitoring and evaluation for the fulfillment o f the objectives o f the Legal Agreement. Given that the agreements do not govern a transfer o f the loan proceeds, the timing o f the signing o f the agreements i s nor a disbursement condition nor a dated covenant.

11. Two types o f Coordination Agreements have been signed, depending on the implementation arrangements, between CONAFE and the States (through the state-level education ministries - SEPEs): i)“scenario A” states where CONAFE directly implements all activities (including the E C D intervention) through its state delegation, in close collaboration with the SEPEs, and ii)“scenario B” states where CONAFE would delegate the implementation o f the E C D intervention to the SEPEs6’.

‘’

I t i s important to note that the flow o f funds remains the same under both scenarios, that is, that financial management remains within the state delegation

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12. Territorial implementation responsibility: While the overall responsibilities for implementation o f the Project would reside in the UPC, the State Delegations would be responsible for planning and executing Project activities in the participating states, according to national guidelines and rules and regulations outlined in the CONAFE program guidelines and the Project’s operational manual. These specify the criteria and methodologies for targeting schools, communities, and municipalities, as well as the menu o f supported activities, the educational norms to be met, and the procedures to be used. The functions o f the State Delegations in each state include: 0 to administer and execute the project according to the operational rules and management and evaluation indicators; validate the information on the targeting methodology used for the project, and the compliance with the targeting criteria; carry out programmatic and budgetary operations; prepare project financial progress reports each semester; and prepare progress reports at the closing o f each fiscal year. Operational considerationsspecific to each activity:

13. Early Childhood Development (ECD) Intervention:Within the UPC, the directorate o f Early Child Development (educacidn inicial no escolarizada) would be responsible for designing pedagogical and training materials, carrying out the training programs for the Zone Coordinators, Module Supervisors and Education Promoters, and for the overall monitoring and evaluation o f the intervention. In 7 states, the State Delegation o f CONAFE would act as executor o f the CONAFE ECD Intervention (scenario A). In the other states, this role would be transferred to the SEPEs, through the State Coordinating Units (Unidades Ejecutoras Estatales UEEs) (scenario B). The executor would have the responsibility to enter into agreements with the Zone Coordinators, Module Supervisors and Education Promoters covering the conditions pertaining to their participation in the ECD Intervention (educacidn inicial). In both cases, financial management, including the remuneration o f the various actors, i s handled by the state delegation.

14. Decentralizationo f Basic Education (AGEsmORTALECE): The State Delegations/ UCEs would be in charge o f establishing coordinating mechanisms that permit the AGE entities and FORTALECE entities to j o i n efforts and collaborate in an organized and sustained way in the execution o f this intervention. As such, these state-level entities would sign agreements pertaining to the execution o f activities with the AGE entities and FORTALECE entities, to regulate the annual grants transferred to parent and community associations every year. As in the case o f the ECD intervention, all payments are handled by the state delegation. 15. Mobile Pedagogical Support (APIs): The central CONAFE team would be responsible for the overall implementation o f the intervention, the design and development o f pedagogical materials for tutors, and training materials. The State Delegations would be in charge o f recruiting the APIs and the schools that they would serve, according to the selection criteria and processes established in the operational guidelines. The State Delegations and the SEPEs would be responsible for entering into agreements with the newly appointed tutors, outlining the mutual rights and obligations under the mobile pedagogical support intervention. 64

16. Municipality-based management pilot: Implementation Agreements would be signed with each participating municipality by the State Delegations o f CONAFE. These agreements would specify the respective responsibilities o f CONAFE and 5 pilot municipalities with respect to (i) the financing, implementation, monitoring and evaluation o f the activities to be carried out to deliver CONAFE ECD and community basic education programs in the concerned municipalities and (ii)the identification, preparation, appraisal, approval, administration, monitoring, evaluation and auditing o f the investment projects and other expenditures to be financed by the MFEE. Note that the MFEE would be financed exclusively with counterpart funding. 17. Project Monitoring, Management and Evaluation: As discussed above, the responsibility for the overall implementation o f the Project would reside within the UPC, with the Direccidn de Administracidn y Finanzas (DAF) responsible for the fiduciary aspects and for overall communication with NAFIN and the Bank. The DAF and the DP would also be responsible for submitting progress reports on an annual basis. With respect to monitoring systems, the Information Technology unit within the Planning Directorate would be responsible for the drafting o f the Terms o f Reference for the integration o f systems, and for the implementation o f the modernization activities, in close coordination with the technical units for each o f the corresponding interventions. Operational Procedures

18. All processes and procedures governing project implementation are outlined in detail in the Project Operational Manual (OM). Procedures governing the basic relationship between the Government and the World Bank, mainly covering financial management and procurement, are further detailed in Annexes 7 and 8 and in the OM. Norms and procedures guiding the daily exercise o f responsibilities o f the CONAFE staff are also detailed in the OM. Procedures relating to Bank safeguards, especially with respect to indigenous peoples, are outlined in the Indigenous Peoples Plan (IPP), as well as Annex 10.

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Table A6.1 Distribution o f priority municipalities under the Agenda para la equidad educativa

State Chiauas Chihuahua Durango Guerrero Hidalgo Jalisco Michoacan Nayarit Oaxaca Puebla San Luis Potosi Veracruz

Number o f municipalities o f the Agenda para La Equidad Educativa 44 10 01 12 06 10 08 01 47 14 02 17

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Annex 7: Financial Management and Disbursement Arrangements MEXICO: COMPENSATORY EDUCATION PROJECT

1. Introduction. This annex documents the results o f the Financial Management (FM) Assessment o f the MX Compensatory Education Project (the Project), as conducted by Bank staff in accordance with OP/BP 10.02 and Guidelines for Assessment o f Financial Management Arrangements in World Bank-Financed Projects. 2. Summary. The Project poses considerable implementation challenges in terms o f FM for the following reasons: (i)there will be a large number o f cash transfers flowing from the central CONAFE office, to the CONAFE State Delegations, which in turn will transfer them to program personnel and beneficiaries, including operating staff, parent and community associations and municipal groups, which are characterized by few trained teachers, and parents with very l o w levels o f education; (ii)Each CONAFE State Delegation functions as an independent administrative unit, which to some extent may be a cause o f divergence in operational practices. These factors make the FM inherent risk substantial at inception. 3. CONAFE has nearly 20 years o f experience implementing Bank’s supported programs through the Basic Education Development A P L (1 998 to 2007). A strong system o f internal and external controls, validated through extensive experience, is in operation at the central institutional level and i t s financial agent. The mitigating control factors which are considered in assessing the residual FM overall risk for the project are described below : The country’s public financial management arrangements are generally strong and apply to the program, as the program i s integrated into the national budget; 0

The program operates under well defined operating rules, and the operational processes are documented in Manuals o f Policies and Procedures; a

0 The administrative staff o f CONAFE has considerable years o f accumulated experience with Bank FM related policies and procedures, as it i s at this time the same team that has been in charge o f FM matters during the implementation o f the Basic Education Development APL.

Some components o f this project (more specifically Component 2.(a) which involves making grants through the AGES (Apoyo a la Gestidn Escolar) and FORTALECE (Fortalecimiento Comunitario para la Educacidn) interventions, are designed to promote a strong commitment o f the parent and community members into the preparation and implementation o f sub projects, as well as the fiduciary control in the use o f the resources o f the intervention, which i s reflected in the agreements signed with the AGE entities and the associations o f community members in support o f FORTALECE 0

entities.

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e

In addition to independent external auditing and the internal control unit, the

supreme audit institution regularly conducts performance, financial and compliance audits on the program.

4. Hence, the residual FM overall risk, as mitigated by existing controls, i s Modest. At this stage, an acceptable version o f the Project FM Manual has been provided to the Bank. N o legal “non-standard” conditions are deemed necessary on FM matters at this stage. Description and Assessment o f Project FM arrangements

5. Country issues relevant to the Project. In general, public financial management in the Mexican federal administration relies on strong budgeting, treasury, accounting and control systems. These FM country systems apply to project transactions because Bank-financed operations form an integral part o f the public budget and are executed accordingly. Moreover, specific financial reporting and auditing arrangements for projects financed b y multilateral international institutions have been agreed to with the Government. 6. Implementing entity. The National Council for Education Development (Consejo Nacional de Fomento Educativo - CONAFE) is a decentralized administrative unit o f the Federal Government, created on September 11, 1971 by a Presidential Decree. I t s main functions are: (i) Research, develop, implement and assess new education models for the improvement o f the cultural and educational level o f the country, and (ii) Develop means o f social participation to increase education opportunities for the population.

7. The central offices o f CONAFE are located in Mexico City, and i t has 3 1 State Delegations, one per state. The organizational structure o f CONAFE includes two directorates which are directly involved in Financial Management matters: the Planning Directorate (Direccidn de Planeacidn), and the Administration and Finance Directorate (Direccidn de Administracibn y Finanzas). The heads o f both directorates report to the General Director o f CONAFE and the directorates are reasonably well staffed. 8. Administration and Finance Directorate. It includes the following units: accounting, treasury, resource management and a FM project unit, with the exclusive responsibility o f managing the financial matters associated with the requirements o f the World Bank and the Inter-American Development Bank (an investment loan from the IADB for US$ 100 million was approved in January 20 10). This Directorate i s adequately staffed considering i t s role and current needs, with four people, all o f whom have at least 10 years o f experience managing Bankfinanced projects, because they were in charge o f managing FM matters in the Basic Education Development APL financed by the Bank. It i s worth mentioning that CONAFE has indicated that they may increase in the future some administrativehancial staff at the central level according to future needs determined by the work load that the new projects may impose, but there i s not a final decision on this regard given the budget constraints imposed by the Ministry o f Finance. 9. Planning Directorate, whose responsibilities are programming and planning CONAFE’s budget.

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10. Loan Financial administration. NAFIN will act as the financial agent o f the Borrower for the Loan. In that capacity, NAFIN will manage loan disbursement processes and provide other implementation support and oversight, based on i t s many years o f experience with Bankfinanced projects. 11. Budgeting arrangements. The funds for the Project are allocated into the Federal Expenditure Budget (PEF). Thus, i t s operation i s subject to provisions o f the annual PEF Law, the Federal Budget and Fiscal Responsibility Law, the Government Accounting Law, the Manual o f Budget Procedures, and others. This set o f legal and regulatory arrangements, together with their implementation systems, provides for sound budget formulation, execution and internal control arrangements. 12. As per usual practice in Mexico, the Government will pre-finance the Project and the Bank will subsequently reimburse eligible expenditures recorded under budgetary lines earmarked for the Project (digito 2). In the specific case o f CONAFE the budget is approved annually by the Congress, and controlled through the Budgeting Register System (Sistema de Registro Presupuestario), which i s used to monitor the allocation o f the budget among the different programs supported by CONAFE according to a schedule o f payments.

13. Accounting and operational systems. CONAFE keeps budget execution records, on a cash basis, according to an economic, administrative, and functional/programmatic classification through the C O I (sistema de contabilidud integral) system, which i s commercial software, with adequate capabilities to recognize different levels o f accounts and to issue financial reports. However, it does not include web-based capabilities to transmit accounting information in real time between the State Delegations and central office, so the information i s sent via e-mail. The operational risks associated with this process are mitigated by a process o f reconciliation carried out by the central and state offices. 14. The information extracted from the C O I system i s used to produce disbursement requests and financial statements by the FM Project unit. The Operational Manual contains clear procedures to ensure that this process i s carried out in an adequate level o f internal control.

15. It i s also important to mention that in general terms CONAFE lacks an automated system to control, manage, and report the operational information related to this project. As an example, the databases o f beneficiaries are managed in spread sheets in Excel. As a consequence, there i s a lack o f managerial information related to the operations o f the program, and the different areas within CONAFE state and central offices need to carry out a considerable amount o f manual procedures to ensure the reliability and integrity o f the information through a reconciliation process. 16. In order to tackle the above mentioned problem, CONAFE i s developing a new system named SINCO (sistema de informacibn CONAFE), which i s in an advanced phase o f development. However, at this moment there i s not a defined date for i t s implementation. Component 3 o f the project includes support for the development o f a comprehensive monitoring system, and during the mission held on November, 2009 it was agreed that the project will include funds to hire a consultant to design a system that will enable the automation o f information. 69

17. Internal control and internal auditing. In addition to the budget regulations and procedures mentioned above, CONAFE i s subject to i t s own Operational Rules and to the Federal Public Administration Internal Control Standards issued by the Public Administration Ministry (Secretaria de Funcidn Pliblica - SFP), which as a whole provide for sound internal control arrangements for the Project. 18. The internal auditing function i s carried out by CONAFE’s Internal Control Unit (drgano Interno de Control - OIC), which reports to SFP and must follow the Public Audit Standards and Guidelines issued by SFP. The latter also approves the OIC’s annual work programs, oversees i t s operation, and receives i t s audit reports. Good systems are in place for timely follow-up to internal audit observations and implementation o f recommendations. 19. It i s also worth mentioning that CONAFE i s within the scope o f audit o f the Supreme Audit Institution (Auditoria Superior de la Federacidn - ASF), which is independent from the three levels o f Government in Mexico. During the preparation o f this report the FMS reviewed the latest report o f the ASF regarding the CONAFE compensatory programs and no major issues were found.

20. Flow of funds for the Bank Loan. Except for the Front-end fee (for the payment o f which the Bank shall, on behalf o f the Borrower, withdraw funds from the Loan Amount), the Loan will be disbursed in US Dollars into a bank account opened by NAFIN. These funds will be transferred into a US Dollar account at the Federal Treasury. The Federal Treasury shall use those funds in accordance with the Borrower’s applicable laws. The Federal Treasury, through its annual budget laws and mechanisms, will transfer to CONAFE an amount Equivalent to the amount disbursed in Dollars under the Loan to finance Eligible Expenditures. The general arrangements are described in the following chart and explained below:

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Central Office services

State Delegations

Payments to Program Beneficiaries under components 1 and 2 o f the project

Dotted line: Information flow Solid line: Funds flow

(1) CONAFE Planning Directorate and Administration and Finance Directorate have the responsibility o f program the budget for the State Delegations, and transfer the resources, respectively. (2) CONAFE State Delegations will make the following types o f payments: E C D related expenses (under component l), grants to AGE entities and FORTALECE entities, payments to APIs, and payments related to Municipal Technical Assistance6* (under component 2). (2b) CONAFE central offices will make payments to suppliers and consultants, all o f them related to Component 3 (Project Monitoring and Evaluation). (3) After making the payments CONAFE State Delegations will proceed to: (i) make the accounting registers, (ii) send operational and financial reports to the Administrative and Financial Directorate in the Central Office which in turn will consolidate all the information. The expenditures’ supporting documentation will be kept either on the SEPEs or in the State Delegations, in accordance with the program’s operating rules. With regards to the municipal part o f the component, i s important to mention that the payments to suppliers o f goods and services will be also made directly by CONAFE’s State Delegations (Le. the money will not flow into the Municipalities).

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(4) The FM Project Unit will select the eligible expenditures, and prepare the financial and disbursement information required by the Bank, and will send it to NAFIN. (5) NAFIN will review the SOEs and submit them, together with a loan withdrawal application, to the Bank. (6) The Bank will reimburse the eligible expenditures into the Project account designated by NAFIN. (7) NAFIN will reimburse TESOFE. In addition to conducting various visits to the central offices o f CONAFE as part o f the 21. FM Assessment, the FMS visited State Delegations o f Chiapas and Jalisco, in which were assessed the existence o f appropriate mechanisms in place to: (i) ensure the complete and timely receipt o f all the expenses' supporting documentation, (ii)the accounting o f financial information, and (iii) processing o f payments to all program beneficiaries. In general terms all these processes are carried out in an adequate control environment.

o f the above paragraph, it i s important to mention that 22. Specifically regarding point (iii) for making the payments to the program beneficiaries, the State Delegations have implemented an electronic banking transfer system for the great majority o f the payments, which is a transparent, reliable and efficient mechanism. However, given the lack o f managerial information there are no specific statistics o f the number o f payments that are made electronically (as opposed to the traditional nominative checks) to the program's beneficiaries. 23. I t i s also worth mentioning that the process established by CONAFE for making grants under the Component 2 (AGESand FORTALECE interventions), i s designed to promote a strong commitment o f the parent and community members into the preparation and implementation o f sub projects, as well as the fiduciary control in the use o f the resources o f the program. The latter is reflected in the agreements signed with the AGE entities and the FORTALECE entities, in which they are considered accountable on several responsibilities associated to the use o f the resources, including the delivery to the State Delegations or SEPEs o f the evidence o f the expenditures (e.g. copies o f receipts, invoices) o n a determined time framework.

24. Disbursement arrangements. The loan disbursement arrangements6' are hereby summarized: Disbursement method

This project will use primarily the reimbursement method to disburse to CONAFE eligible expenditures (pre-financed by the Government) into a project account in U S $ designated by NAFIN. The criteria for recognition of eligible expenditures will be after the payments to beneficiaries and suppliers o f goods and services have been made (Le. actual expenditures), except for Expendituresunder component 2(a) , (Le. School Grants), which will be recognized as eligible once finds are deposited by CONAFE's State Delegations into eligible beneficiaries/schools' bank accounts. Therefore, statements of expenditure (SOEs) documenting eligible expenditures for this specific disbursement category, will report transfers, not exceeding MX$I2,000, per year and per school, from CONAFE's State

69

For details, please see the Disbursement Letter.

72

r Other procedures

Supporting documentation Currency conversion for documentation o f eligible expenditures

_ _ _ _ _ _ _ _ _ _ ~ ~

_______~

Delegations into beneficiary schools bank accounts, as opposed to actual expenditures for Goods, Works and Services, under School Grants. Other disbursement procedures are not expected to be required; however, upon request from NAFIN, the direct payment method may be used, as well there may be the need for the use of Advances which will be agreed with the Government and LOA, in which case NAFIN will open a segregated Designated Account. SOEs7' In case that the Advance method i s used, and given the fact that: (i) the currency requested for the D A i s USD, and (ii) all the expenses of this project are expected to be made in pesos, the following criteria should be used for currency conversion in the process o f documentation of eligible expenditures paid from the DA: For disbursement category 1, the exchange rate (ER) should be the corresponding to the date o f the transaction (value date). For disbursement categories 2 and 3, the applicable ER will be the corresponding to the date o f the withdrawal o f funds from the DA. In both cases the ER will be the actual market rate paid by NAFIN for the conversion o f USD into pesos. Different aspects such as the minimum value o f applications for direct payments, ceiling of the Designated Account, and thresholds to deliver SOEs versus records, will be determined and agreed with CONAFE and NAFIN and confirmed with LOA. Eligible payments: I That do not exceed 20 percent o f the loan amount. I Made by the borrower one year before the date o f the Loan Agreement. I The retroactive expenditures will be subject to the same systems, controls and eligibility filters described above in this Annex. Those expenditures will also be subject to the regular project external audit (see below).

r 7 Limits

Retroactive expenditures

Amount o f the Loan Allocated (expressed in USD)

Percentage o f Expenditures to be financed (inclusive o f Taxes)

(1) Consultant services, and Training

34,300,000

100%

(2) School Grants

53,000,000

100%

(3) Tutors Stipends

9,100,000

100%

0

Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07

Category

(4) Front-end Fee

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A l l SOE supporting documentation will be available for review by the external auditors and Bank staff at all times during Project implementation, until at least the later o f (i)one year after the Bank has receivedthe audited Financial Statements covering the period during which the last withdrawal from the Loan Account was made; and (ii) two years after the Closing Date. The Borrower and the Project Implementing Entity shall enable the Bank's representatives to examine such records.

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(5) Premia for Interest Rate Caps and Interest rate Collars (amounts due under section 2.07 (c) of this Agreement) ( 6 ) Unallocated TOTAL AMOUNT

-0-

(b) of the General Conditions

3,600,000 100,000,000

100%

26. Financial reporting. CONAFE will use i t s accounting system, as described earlier, to prepare the semi-annual project unaudited Interim Financial Reports (IFRs) and the annual audited project financial statements. These will be prepared on a cash basis using the standard formats agreed with the SFP for the Mexico portfolio. 27. The IFRs will be prepared in local currency (i.e. Mexican pesos). In case the advance method i s used, the ER used for conversion purposes (as explained in the disbursement arrangements section, paragraph 24) will be revealed in the financial reports.

28. AAer loan effectiveness, the following financial reports will be presented by CONAFE to NAFIN for further submission to the Bank: Report Semi-annual unaudited project IF& Annual audit reuort on project financial

D u e date

Within 45 days after the end o f each calendar semester. Within six months after the end o f each calendar year o f loan

29. External audit. Annual audits on Project financial statements and eligibility o f expenditures will be performed in accordance with Bank policy, as reflected in the audit terms o f reference and memorandum o f understanding agreed between the Bank and SFP. An independent audit firm selected by SFP and acceptable to the Bank will conduct the project audits. The Terms o f Reference for the annual financial audit will require independent auditors to report on the actual use o f funds, received by eligible schools, ensuring that loan proceeds have been used for the purposes intended.

30. The Federal Supreme Audit Institution (ASF) regularly executes a number o f performance, financial and compliance audits o f the Project. The results from these audits are made public in the annual audit reports on the Federal Public Accounts. These external checks provide additional assurances about the Project’s operation and financial management.’l 3 1. Written Procedures. Project operation is governed primarily by i t s annual Operational Rules, to which a number o f procedures and guidelines are linked. Given available documentation, only those FM procedures that are specific to the Bank were compiled in a Project FM Manual that has been provided to the Bank. A S F audit reports o n the Federal Public Accounts are issued 15 months after the end o f the calendar year. Hence, while they remain an important source o f information for fiduciary purposes, they cannot be used by themselves t o meet the Bank’s project financial audit requirements.

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32. Risk assessment. On the basis o f the Bank’s Project FM assessment, the overall FM residual risk i s considered modest, as explained in the following table: FM Risk Table Risk type”

I Inherent risk

Risk Rating S M M

I-

Project

t-lsudgeting Control risk

Comments / Risk mitigating measures incorporated into project design

L CONAFE has nearly 20 years o f experience working with Bank and the IADB, and the FM Directorates o f CONAFE are well staffed with an adequate segregation of functions. The team in charge o f F M related matters i s basically the same in previous projects. The project poses considerable risk in terms o f FM, because o f the large number o f cash transfers flowing from the Central CONAFE office, to the State CONAFE Delegations, to the beneficiaries o f the program and the targeted Municipal schools, which are characterized by few trained teachers, and parents with very low levels o f education. In this case, the F M risk i s mitigated primarily by the strong institutional control systems already in place, and the fact that there are well defined operating rules governing the program. Each delegation i s administrative independent and manages their own budget, which originates the need to have solid and homogeneous controls. This risk i s mitigated by the centralization and consolidated control that i s implemented at the central level by the Planning Directorate. The accounting system COI i s not web-based between State Delegation and Central Office, so it i s not possible to transmit the information automatically. As mitigating measures there are a number o f processes, including reconciliation o f financial figures and diverse levels o f clearance processes, that are carried out at the central and State Delegation level in order to ensure the accuracy and consistency o f financial information. The entity i s subject to it s own operational rules, and different policies established in i t s operating manuals. The internal audit function i s carried out by the CONAFE’s OIC, and the program i s within the scope o f audit o f the Supreme Audit Institution. Almost all the payments o f the program will be carried out by the State Delegations, using electronic banking transfers. There are strong control procedures in place to ensure the adequate use o f resources. Moreover, for the grants related to Component 2.2 the beneficiaries o f the program are accountable for the adequate use o f resources

I Accounting

Internal Control

I-

Funds Flow

M

S

Resid ual Risk Ratin

12

M M L

M

M M

M

M

M

The FM inherent risk i s that which arises from the environment in which the project i s situated. The FM control risk i s the risk that the project’s F M system i s inadequate to ensure project finds are used economically and efficiently and for the purpose intended. The overall FM risk i s the combination o f the inherent and control risks as mitigated by the client control frameworks. The residual FM risk i s the overall F M risk as mitigated by the Bank supervision effort.

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through the signing o f agreements as described in paragraph 24. Financial Reporting

M

Auditing

M

Overall risk

S

Bank FM supervision

Residual risk

CONAFE will submit, through NAFIN, Project semi-annual unaudited Interim Financial Reports (IFRs) and annual audited financial statements. An independent audit fm selected by SFP and acceptable to the Bank will conduct the annual audit on Project financial statements and expenditure eligibility. A f i l l F M supervision mission per year, which will look into the operation o f the control systems and arrangements described in this annex, including but not limited to the beneficiary payments system, the reconciliationprocess, and the eligibility filters. Desk reviews o f IFRs and audit reports.

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L L

M

M

Annex 8: Procurement Arrangements MEXICO: COMPENSATORY EDUCATION PROJECT A. General

1 Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement Under IBRD Loans and IDA Credits” dated M a y 2004, reviewed on October 2006; and “Guidelines: Selection and Employment o f Consultants by World Bank Borrowers” dated M a y 2004, reviewed on October 2006 and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loan, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan would be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. I

2.

Procurement o f Works: N o t expected.

3. Procurement o f Goods: N o t expected other than those under AGES and FORTALECE Interventions; see bellow paragraph “Others.”

4. Procurement o f non-consulting services: The dissemination, training facilities and strengthening activities under Components 1 and 2 and outsourcing o f improvement o f IT infrastructure including a private network under Component 3 would be procured following Bank’s policies and using the Bank’s Standard Biddings Documents if an Harmonized Standard Bidding Document (SBD) i s not yet agreed between the Bank, SFP and IADB. 5. Selection o f Consultants: All the Components o f the Project would include procurement o f consultant services such as monitoring and implementation and dissemination o f the programs in the communities; design and production o f training materials; education planning, monitoring and evaluation o f education services delivery; support to school supervision and management. Short l i s t s o f consultants for services estimated to cost less than $500,000.00 equivalent per contract may be composed entirely o f national consultants in accordance with the provisions of paragraph 2.7 o f the Consultant Guidelines.

6. Firms: All contracts for f i r m s would be procured using QCBS procedures except for small contracts for assignments o f standard or routine nature and estimated to cost less than US$ 100,000 equivalent that would be procured using Least Cost Selection or using other procurement methods as defined in the annual procurement plan review. 7. Individuals: Specialized advisory services would be provided by individual consultants selected through comparison o f qualifications o f at least three qualified candidates. They would be contracted in accordance with the provisions o f paragraphs 5.1-5.3 o f the Consultant Guidelines as defined in the annual procurement plan review

8. Operating Costs: Operational costs would include reasonable expenditures to carry out the project such as travel and per diem cost for supervision activities and training. These 77

activities would be procured using CONAFE’s administrative procedures which were reviewed by the Bank and found acceptable. 9. Others: The Project includes cash transfers to schools through AGESand FORTALECE Interventions. These Interventions provide very small amounts to finance school improvement with a maximum amount o f $1200.00 per year for schools with more than 121 students. Because o f the very small amount involved it i s considered that no formal procurement procedure i s involved in the use o f these funds. Audits should include specific arrangements to review the good use o f the resources involved.

10. Under Subcomponent 2.3, Municipal-based Management, the project would finance training, technical assistance and supervision. The investments under this subcomponent would be financed with CONAFE’s own resources. 11. The procurement procedures and harmonized SBDs to be used for each procurement method, as well as model contracts for works and goods procured, are presented in the Operational Manual. Other forms o f procurement to be used as needed would include the methods o f 12. community procurement and commercial practices.

B. Assessment o f the agency’s capacity to implement procurement Procurement activities would be carried out by CONAFE. The agency i s staffed with a 13. Coordinator and 4 other staff members with many years o f experience in Bank operations. At least one o f these staff members would be in charge o f coordinating and supervising procurement activities. 14. An assessment o f the capacity o f the Implementing Agency to implement procurement actions for the project has been carried out by the Procurement Accredited Staff (PAS) assigned to the Project on August 17 and September 1 to 3, 2009. The assessment reviewed the organizational structure for implementing the project and assessed the existing capacity within a sample o f the CONAFE State Delegations. 15. The key issues and risks concerning procurement for implementation o f the project have been identified and include the decentralized nature o f the Project. The corrective measures which have been agreed are: Staff training in order to update staff in Bank’s policies and procedures and the incorporation o f the Procurement Plan to the web based system SEPA in order to achieve efficiency and transparency in the management o f the Plan. 16.

The overall project risk for procurement i s moderate.

C. Procurement Plan

17. The Borrower, at appraisal, developed a procurement plan for project implementation which provides the basis for the procurement methods. This plan has been agreed between the Borrower and the Bank on December 1, 2009 and i s available at project’s files. I t would also be available in the project’s database, in the Bank’s external website and in SEPA. The Procurement 78

Plan would be updated in agreement with the Bank annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. D. Frequency o f Procurement Supervision

18. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment o f the Implementing Agency has recommended one supervision missions to visit the field to carry out post review o f procurement actions. E. Details o f the Procurement Arrangements Involving InternationalCompetition 1. Goods, Works, and Non Consulting Services (a) List o f contract packages to be procured following I C B and direct contracting. N o t expected

2. Consulting Services (a) List o f consulting assignments with short-list o f international firms. It i s estimated that the Project would finance one evaluation per year during the l i f e o f the Project. The estimated cost o f each evaluation i s o f $348,000.00. It i s expected that a firm would be hired for the first year with the possibility o f a continuation for the next years. 1

2

3

4

5

6

7

Ref. No.

Description o f Assignment

Estimated cost

Selection Method

Impact Evaluation

$1’400,000.00

SBCC

Expected Proposals Submission Date TBD

Comments

1

Review by Bank (Prior / Post) Prior

Four evaluations are expected during the Project

(b) Consultancy services estimated to cost above $200,000.00 per contract and all single source selection o f consultants (firms) would be subject to prior review by the Bank. (c) Short lists composed entirely o f national consultants: Short lists o f consultants for services estimated to cost less than $500,000.00 equivalent per contract may be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines.

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Annex 9: Economic and FinancialAnalysis MEXICO: COMPENSATORY EDUCATION PROJECT In this Annex, we first describe the expected benefits o f the project. Using this information, we then calculate the expected benefit/cost ratio o f project investments. Finally, we analyze the distributional implications o f the project.

Estimated Benefits of the Project

1. In this section, we first estimate the effect o f the interventions on educational outcome variables using available evidence from research. Second, we estimate the effect o f changes in educational outcome variables on wages using current income data. Early Childhood Parenting Education

2. I n the first five years o f life, children lay the groundwork for lifelong development. There i s compelling evidence that interventions in early childhood are critically important for the practical issues o f feasibility and cost-effectiveness, as well as brain plasticity and physiologic development. Rapid brain and physical development, relationships, and environments work together to create phenomenal advances in children during this time frame. Children’s language, early understanding o f mathematics and reading, and self-control emerge during the first five years, and the extent to which children master these skills has long-term benefits for success in school and life.

3. Infants and toddlers growing up in poverty are more likely to experience developmental delays and growth deficits, than those from more privileged backgrounds because they are disproportionately exposed to a wide range o f co-occurring risk factors that can impact development. For example, children from low-income backgrounds are more likely to experience poor nutrition or malnutrition, less stimulating learning environments, more limited linguistic role models, crowded or substandard housing, exposure to domestic or community violence, greater environmental hazards, poor sanitation, crowding, and limited access to resources. These parents may have limited education and intelligence, and little knowledge o f both the importance o f play and child development. They may also suffer from anxiety or depression. For these reasons, children living in the context o f extreme poverty are extremely vulnerable to deficiencies in basic health and nutrition, and to delayed physical, language and cognitive development. A large body o f literature makes the case for investment in early childhood development. (Cf. Vegas and Santibaiiez (2009)). Returns to investments in early childhood are likely to be higher than those to investments made later in life, because beneficiaries have a longer time to reap the rewards. Investments in human capital have dynamic complementarities, so that “learning begets learning.” For these reasons, it i s more effective for a Government to equalize initial endowments through early childhood development programs, than to compensate for differences in outcomes later in life. A look at international experiences will help explain these findings.

4.

Estimating the impact o f early childhood investments i s complex because this type o f investment affects many aspects o f beneficiaries’ lives, including several that cannot be

80

monetarily quantified. Table 1 below summarizes the various types o f benefits o f early childhood interventions. Based on international evidence, we estimate the impact o f the E C D intervention on levels o f education. In the small-scale Carolina Abecedarian Program (CAP), follow up studies showed that children who participated in the program had higher test scores throughout their academic careers. At the age o f 15, both retention rates and the number o f students transferred into special education were found to be approximately 23 percent lower in the parti.cipatory group compared with the control group (Campbell & Ramey, 1994 in Tolani et al., 2006). By the age o f 21, participants were also twice as likely to remain in school or to have attended a four-year college program, than those who did not benefit from the program (Campbell et al. 2002). In addition, participants were some 15 percent more likely to be employed than non-participants. Studies conducted in the context o f the Turkish Early Enrichment Program (TEEP) (Kagitcibase et al., 2001; Kagitcibasi 1992) have concluded that child participants attained higher school grades and had greater self-confidence. Furthermore, in a 10-year follow-up survey, Kagitcibasi (1992) found that nearly 86 percent o f the children in the program were s t i l l in school, compared to 67 percent o f the children in the control group. Table A9.1: Taxonomy o f benefits from early childhood interventions Type o f benefit Primary Public o r Monetarily Evidence quantifiable? available beneficiary private? Yes No unless through Private Increased levels o f Child increased levels o f education

Increased levels o f income Decreased levels o f crime Intergenerational transmission o f benefits Increased selfesteem, confidence

Included in the analysis Yes

Child

Private

income Yes

Yes

Yes

Child, society

Public

Yes

Limited

No

Child, descendents

Private

Difficult

Limited

No

Child

Private

No

Yes

In as far as i s related to educational

5. There i s a substantial amount o f information on the impact o f School-Based Management in Mexico itself. The Apoyo a la Gestidn Escolar (AGEs) intervention was the first such intervention that granted parental associations access to schools. Gertler et al. (2006) use a difference-in-difference method to find that AGEs have significantly reduced repetition and failure rates by 4-5% in participating schools. The authors argue that active participation by parents was fundamental to these improvements. The authors find little evidence o f impact o f AGE on student enrollment, which i s not surprising given Mexico’s level o f enrollment (approximately 96%) in this target group. Another study by Lopez-Calva and Espinonsa (2006) finds a positive effect o f the AGE intervention o n student test scores in core subject areas such as M a t h and Spanish. Also in Mexico, the Programa Escuelas de Calidad (PEC) - designed to expand school autonomy and improve learning outcomes through provision o f grants o n the basis o f requisite conditions such as involvement o f parental groups and the development of PEC budgets tailored to local needs. The results to date indicate that PEC management has had a positive impact on learning outcomes. Skoufias and Shapiro (2006), using simple and difference81

in-difference propensity scoring matching techniques, find that participation in PEC since i t s inception in 2001 has decreased dropout and failure rates by 0.24 percentage points and repetition rates by 0.31 percentage points. Using a slight variation o f this approach, Murnane and Cardenas (2006) conclude that participation in PEC has reduced school dropout rates by 0.27 percentage points. 6. International experiences with SBM show that substantial educational achievements can be attained when the local stakeholders become empowered. In South America, Paes de Barros and Mendonca (1 998) use a difference-in-difference strategy with a fixed-effects model to estimate the impact o f decentralization o f education in Brazil, including direct transfer o f funds to schools, and creation o f local school councils among other aspects. The empirical aspects are profound, with a positive impact on dropout rates (reductions o f between 3.4 and 6.6 percent) and repetition rates (reduction o f between 1.7 and 4.2 percent). Eskeland and Filmer (2002) hypothesize that school autonomy and parental participation matters for learning in mathematics. Using a cross-section data set from Argentina, they expound that higher math scores among 6th and 7th graders are achieved. Furthermore, this effect i s found to be stronger in poorest schools and equally as strong for children o f poorer households. In Central America the EDUCO program in El Salvador has received substantial attention for the benefits it has fostered. A key characteristic o f this program i s the establishment o f school councils - made up o f community, school and legal representatives - which have the power to hire and dismiss teachers. Study o f EDUCO reveals increased reading scores and lower levels o f student absentees (Jimenez and Samada, 1999; Sawada and Ragatz, 2005) and increases in the probability that students will remain in school (Jimenez and Sawada, 2003). 7. The Mobile Pedagogical Assistance intervention provides an innovative way to support teachers, promote participation by parents, and improve learning outcomes in the classroom. There are several anticipated benefits. First, the improved teacher-to-student ratio directly impacts the amount o f attention educators can allocate to individual students. Second, a key element o f the Mobile Pedagogical Assistance intervention i s i t s ability to reach students in rural areas or with special needs, where the marginal impact o f early, intense pedagogical support may be highest. Third the intervention may improve the quality o f teachers, though with the current high turnover o f teachers this i s unlikely to be a lasting effect. It i s widely documented that teacher tutoring and reduced student-to-teacher ratios improve student learning outcomes (see: Eckert, 2005; Hock et al, 2001). 8. The concept o f Municipal-Based Management in the education sector i s founded in the principle argument in favor o f decentralization (see Raich, 2001). The impact on intermediate student achievement indicators may include reduced repetition rates, reduced dropout rates, better learning outcomes, and for all stakeholders, the increased participation o f local actors in decision-making processes leads to a more collegial relationship and improved satisfaction (World Bank, 2007).

9. Table A9.2 below presents the best estimates for each component o f this project’s impact. Based on the information available in the literature, and taking into consideration that programs vary in their intervention methods, project design, scope, evaluation and goals, we estimate the impact o f the interventions proposed in this project. Where possible, we provide a range o f plausible results. 82

Table A9.2: Best estimates o f project impacts at the project appraisal stage Intervention

Early childhood parenting education

Strengthening o f parent associations and financing o f school improvement plans M o b i l e pedagogical assistance intervention

Impact on years o f education

Impact on learning

Increase o f 15%

Reduction o f 7 - 10%

Reduction o f 10 - 15%

Significantly positive in core subject areas such as Spanish, math and sciences

Increase o f 8 10%

Reduction o f 4-6%

Reduction o f 3-5%

Significantly positive in core subject areas such as Spanish, math and sciences

Increase o f 5%

I Reduction o f 5 YO

Reduction o f 5 YO

Significantly positive, especially for poorly performing students who are deprived o f adequate teacher attention

BenefitKOst ratio o f Project investments

10. We compute the BenefitKOst ratio o f Project investments using the ECD calc~lator.’~ The calculator weighs the benefits associated with the investments: first, it estimates the reduction in costs associated with improved efficiency in the system; and second, it estimates the increase in earnings due to increased educational achievement o f beneficiaries. The calculator also estimates the costs associated with the investment: (i)the costs o f actually implementing the project interventions; and (ii)the cost o f providing additional years of education to those children who benefitted from the program and whose education potential has increased. We consider the two major investments o f this Project (Early Childhood Education and Basic Education interventions) as one package, as if both interventions were “delivered to one child” over the course o f childhood. In this section, we present the assumptions and parameters used, as well as intermediate and final results.

73 The ECD calculator is a tool developed by the Amsterdam Institute o f International Development and the W o r l d Bank in 2004.

83

Exchange rate (US dollars : local currency) Early Childhood Development, estimated annual cost per child Basic Education Interventions, estimated annual cost per child

1

1 : 13 U S $ 112 per year, for 3 years, ages 0-3

US$ 44 per year per child, for 3 years (US$1740 per school at 40 students per school) 35

Child Mortality Rate (per thousand) - before intervention Child Mortality Rate (per thousand) - after intervention

33

T h e structure and cost o f the school svstem a r e as follows:

I

Years

Yearly unit cost in

(source: SEP2008)

U S $ (converted at exchange rate o f 13)

Pesos 10,800 Pesos 16,600 Pesos 22,25 1 Pesos 5 1,300

US$83 1 US$1,277 US$1,712 US$3,946

Yearly unit cost in Pesos

6 3 3 4

Primary school Middle school Secondary school College

I

W a g e equation: (source: team calculations o n basis o f ENCOVI 2008) In(earnings) = a + p.PRI +

MID + GISEC+ ~ C O +L cy. EXP + 8.EXP’ + E

Where PRI i s a categorical variable that takes value 1 if a person completed primary school but did not complete middle school MID i s a categorical variable that takes value 1 if a person completed at least middle school but did not complete secondary school SEC i s a categorical variable that takes value 1 if a person completed at least secondary school but did not complete college COL is a categorical variable that takes value 1 if a person completed at least college EXP i s the number o f years o f experience

I

Constant Primary school Middle school Secondary school College Experience Experience squared

I

Coefficient 6.196 0.445 0.952 0.92 3.08 0.124 0

I

84

I

Before the introduction o f the ECD intervention The following table gives the social indicators before the introduction o f the E C D intervention: Primary school

Middle school

Secondary school

I College

I

99% 95% 96% 80%

I I

8% 22% 39% 40%

I I

4% 2% 2% 0%

I

After the introduction of the ECD intervention

The following table gives the social indicators after the introduction o f the E C D intervention (conservative scenario): Enrollment

Middle school College

99% 95% 96% 80%

20% 35%

3 8%

2%

The following table gives the social indicators after the introduction o f the E C D intervention (optimistic scenario): Enrollment Primary school Middle school College

Results n the isis o f these ds

Disc ount rate

3% 5%

N e t Present Value o f the school system before the introduction o f the E C D intervention'

99% 95% 96% 80%

18% 30%

35%

0%

the following r ;ults were obtair :d using the I :D calcu Ror: Estimated Benefit I B e n e f i t K O N e t Present N e t Present Value o f the school system after the introduction o f the ECD intervention, conservative scenario* ~.

US$7,826,000 US$4,656,300 1US$5.648,300) (US$7,164,600 (US$15,968,200 (US$15,463,500) 7% ) per co )rt o f 1000 chilc :n

Value o f the school system after the introduction o f the ECD intervention, optimistic scenario*

US$12,201,400 fUS$3.346.400) . . , (US$14,405,800)

costs o f the investments*

US$382,900

cost Ratio, conserv ative scenario

st Ratio, optimistic scenario

7.75 3.93 1.42

18.15 9.67 4.18

11. Using the discount rate of 5% that i s usual for economic analyses of Bank education projects, the BenefitKOst ratio i s between 3.93 (conservative scenario) and 9.67 (optimistic scenario). The internal rate o f return to investment i s the discount rate that equalizes the sum o f 85

the discounted stream o f costs o f the investment to the sum o f the discounted stream o f benefits that it generates; in other words, it i s the discount rate for which the BenefitEost Ratio i s 1. The internal rate o f return i s approximately 9.5% in the optimistic scenario and 8.5% in the conservative scenario. DistributionalAnalysis

12. The 172 targeted municipalities for this Project are some of the poorest performers in education, health and quality o f life indicators in Mexico. Table 3 below compares the education indicators o f 162 o f the 172 targeted municipalities to those o f the 8 poorest states, as well as to the national level. The targeted municipalities perform drastically worse on all indicators. These findings demonstrate that the education system needs to improve i t s provision o f services in those municipalities in order to reach the most underprivileged populations in Mexico.

rate (IS