Page 1 PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB3169 Project Name Argentina Results in Education Project Region LATIN AMERICA AND CARIBBEAN Sector Primary education (80%);Secondary education (10%);Pre-primary education (10%) Project ID P101197 Borrower(s) MINISTRY OF EDUCATION Implementing Agency Environment Category [ ] A [ ] B [X] C [ ] FI [ ] TBD (to be determined) Date PID Prepared June 7, 2007 Estimated Date of Appraisal Authorization June 16, 2008 Estimated Date of Board Approval July 30, 2008 1. Key development issues and rationale for Bank involvement Economic Overview 1.1. A combination of favourable contextual factors such as high commodity prices in the international market and continued strong domestic demand, combined with effective policy measures, has resulted in the past three years of average GDP growth rate of 9%, and an year to year growth of Public Revenues to the tune of 25%, while maintaining a primary surplus of the national budget at greater than 3%. In the meanwhile, even as poverty has declined significantly from its crisis level, it still remains at an unacceptably high level of 27%. Good performance on the economic front has enabled an increase in capital investment in Argentina, with consolidated national and provincial infrastructure expenditure increasing from its pre-crisis convertibility era level of 1.4% of GDP to a level of 3.5% of GDP in 2006. 1 In order to continue a strong economic performance in the future and reduce its vulnerability to negative cyclical shocks, Argentina needs to invest as well in improving its stock of human capital. 1.2. It is widely recognized as an international benchmark that in a world of ever increasing competition, a middle income country like Argentina, should target having a labour force with a minimum level of education of at least 12 years, which usually translates to a completed Upper Secondary level of education. 2 The Government of Argentina (GOA) seeks to move towards meeting this target by a series of measures to: (i) increase the magnitude of public expenditures for education to a level of 6% of GDP; and (ii) enhance the efficiency of the use of those public 1 Source: Informe Económico Año 2006 , Ministry of Economy and Production (MECON); Speech by Minister Felisa Miceli at the Annual Bank-Fund Spring Meeting, April 22, 2006. Poverty figure is for the 2 nd semester of 2006. 2 Information from the Household Survey ( Encuesta Permanente de Hogares – EPH) for the second semester of 2006 indicates an average attainment of 10.2 years for the population Aged 25 years and older in urban areas. Page 2 resources by a significant overhaul of the financial mechanism for education under the framework of fiscal federalism. Measures to upgrade the human capital include both measures to improve the skills and abilities of the adult labor force through training and competency certification programs throughout the life cycle, as well as measures to improve the quality of the future labor force through investments in the population currently in school. Sector Overview 1.3. The education sector is a center piece of the development strategy for Argentina. In the period following the crisis of 2001-2002, there has been an extended analysis and discussion about the results of the decentralization and curricular reforms introduced in Argentina in the 1990s. One of the conclusions of this discussion concerns the alignment between educational financing and responsibilities for service delivery. Provinces continue to be responsible for running their education systems, but would now receive technical and financial resources from the Federal government in a more systematic and non-discretionary manner, while at the same time being held accountable regarding their own fiscal effort for the education sector. The bulk of financial resource flows to Provinces from the national government takes the shape of an incremental supplement to teacher salaries that are paid by provinces, the other main component being various programs for infrastructure, training and other compensatory inputs. 3 While national financing to supplement teacher salaries is expected to continue for some time, there is now a great interest in Argentina that the additional resources now being directed at the educational sector, for increased teacher salaries, as well as for other educational inputs, also result in improved service delivery. 1.4. Three important new laws have been promulgated after an extended period of discussion and debate with the concerned actors and civil society at large. These are respectively the Technical Education Law (Law 26.058; September 2005); the Law of Education Financing (Law 26.075; December 2005) and the National Educational Law (Law 26.206; January 2007). These laws put in place a long term strategic framework for education policy. The consultative process in the formulation of the laws has served to highlight the lessons learnt from the crisis and the prior experience regarding educational reform. The legislation is being implemented through bilateral contracts that provinces sign with the national government regarding the use of the resources and the attainment of specific nation-wide educational goals. The most important goal is the completion of a quality education in a timely manner for all children starting from Pre- School through to Secondary Education. 4 In order to deliver the ambitious results defined by the legislation, the functioning of provincial ministries and their articulation with the national ministry is planned to be upgraded substantially. 1.5. Argentina has had a nearly universal coverage of Primary education for quite some time now, with the Population census of 1991 indicating a school coverage for the age group of 6 to 3 In the year 2005, the consolidated provincial wage bill was about AR$13,200 million (1US$ = 3AR$), and the nation provided an additional AR$1,300 million for salaries, roughly 9% of the total wage bill. Spending on other national programs in the provinces was to the tune of AR$500 million; Source CGECSE/MECyT. 4 In policy circles and in documentation in Argentina, this goal is referred to by the term “ Plena Escolarización ”, or Universal Completion. Page 3 12 years of 97%. In the same year coverage for the age group of 13 to 17, relevant to Secondary education, was 72%, going up to little over 85% in the Population census of 2001 5 . Even though the coverage of Secondary education is relatively high, the goal of universal secondary completion remains a significant challenge. 6 The completion of Secondary education is highly predicated by income level. The problem of low educational attainment is a problem that has its origins in the earliest grades, and through successive levels of education, it is the manifestation of poor school quality that entails unconscionable delays in learning to read and write (early literacy), to repeat grades, become over-aged for their grade level, and eventually drop out. This problem affects children from poor families to a far greater extent than those from relatively better off families. While direct action is being undertaken by the Argentine Government regarding the Secondary level by itself, the sector policy is also informed by the need to tackle problems at the root, at the Pre-School and Primary levels, so that children would arrive ready for Secondary School. 1.6. Bank involvement is intended to aid the implementation of results oriented programs in Provinces which would receive financing from the National Ministry of Education (MECyT) under the proposed Project. The Project fits in very well with the CAS Strategic objective of selective support to performance based interventions with a focus on poverty alleviation (CAS, Page 41). As a project to enhance social service delivery to lower income groups, the Project would form a part of the Social Inclusion pillar of the CAS. However, as the objective and design of the Project would indicate, the Project would also be harmonious with the CAS pillars of Sustained Growth with Equity and the Governance pillars. The proposed Project complements other national programs, including one to finance school construction and student scholarships for Secondary education, with financial assistance from the Inter-American Development Bank (IDB), and a rural education program partially financed by the Bank as the PROMER project. The intention is that the different projects work together on different elements towards the overall national policy goal of universal secondary completion. 2. Proposed objective(s) 2.1 Objective: The Project would lead to an increase in the number of children who receive and complete a quality primary education in a timely manner. A secondary objective is to strengthen the results orientation of the education sector as a whole, with a particular emphasis on the planning, supervision and management functions of provincial ministries. 2.2 Higher Level Goal: While project interventions are directed towards Primary education and its articulation with Pre-Primary and Secondary education, the ultimate objective of national educational policy supported by the project is to achieve universal completion of Secondary education and thus enhance the quality of Argentina’s human capital. 5 So urce: Table 2 on Page 11 of “ Tendencias recientes en la escolarización y la terminalidad del nivel medio de enseñanz a, ” Félix Abdala, DINIECE, MECyT, November, 2003. 6 In 2001, the transition rates were as follows:- Completion of EGB1 and EGB2 (Grades 1 through 6) was 86.24%; Completion of EGB3 (Grades 7 through 9) was 75.19%; Transition to Secondary ( Polimodal ) was 92.8%; Completion of Secondary was 58.62%. Successively applied, these figures would indicate that if 2001 rates were to persist for all students in the system as they moved through educational levels, out of 100 children who enroll in Primary School, only 35 would leave with a complete Secondary Education. Page 4 2.3 Indicators: (i) Pass Rate for Primary Education; (ii) Age-Grade Distortion Rate for 3 rd Grade and 6 th Grade; (iii) Net Enrollment Rate for Pre-School of 4 and 5 years of age; and (iv) Percentage of Primary Schools systematically using Student achievement of Core Learning Parameters (NAP). 7 The system of monitoring for the secondary Project objective of results orientation is detailed in Paragraph 3.4 below. A preliminary analysis of the cost of repetition and the consequent value of the output of the project is presented as Appendix 1. 3. Preliminary description 3.1 The proposed Project is based on the principle of the Bank as a partner in the implementation of national policy, a model that is now regarded as a standard for Bank support in Middle Income countries such as Argentina. The Project would mainly consist of a set of provincial sub-projects that would together address the project development objective. Such an arrangement allows for substantial provincial ownership to address the particular complexity of each provinc e’s local context, while at the same time adhering to national quality standards. The Project thus suggests an alternative or a third approach to the existing model that includes (a) National projects, that are designed nationally (generally with provincial ideas incorporated), funded nationally, and are implemented by the provinces; (b) Provincial projects, designed and funded provincially, with highly variable contribution to national educational goals. The Project would not bring additional financing to the education sector in Argentina, at national or provincial levels. Rather, the value added of the project would be to bring about a sharper focus on results, which we hope would be attained because the financing would be channeled under a mechanism that combines provincial ownership and national oversight for clearly defined results. Three project components are envisaged under the project:- 3.2 Component 1: Provincial Sub-Projects for Results in Primary Education (approximately 90% of Project): This component incorporates national financing to provinces for improving the quality and throughput of the primary education system in each province. Mainly, though not exclusively, financing would be provided for already existing provincial projects, with a view to enhance their quality and sustainability, as well as the expansion of the scale of selected provincial projects with evidence of successful implementation. The selection and supervision of provincial sub-projects would be the responsibility of the national Ministry of Education, under quality control parameters, institutional processes and incentive mechanisms to be agreed with the Bank. Resource flows to provinces would be closely tied to the outputs of the provincial sub-projects. The distribution of project resources across provinces would be based on a transparent non-discretionary scheme where resources would follow needs, under the overall formula of the Law 26.075, with potentially all provinces being able to seek funding for sub-projects. 8 In preliminary discussions, national authorities 7 This is a tentative list of indicators that would be defined further during project preparation. 8 Article 8 of Law 26.075 provides for a distribution scheme for co-participation revenues using an annually updated formula that gives an 80% weight to the enrollment of students, a 10% weight to the relative size of the rural enrollment in a province, and a further 10% weight to the size of the 3-17 years aged population outside of the schooling system. Article 14 of said law provides for distribution of national resources across provinces based on (a) the number of enrolled students and the out of school population of the 3-17 years age group; (b) the financial own- revenue capacity of the province; (c) the fiscal effort for education made by the province; and (d) compliance with Page 5 have indicated an interest in exploring the possibility of output-based financing, where resource flows to provinces, while continuing to be need based, would use the unit cost of completion of agreed outputs, thus providing a performance incentive to provinces for the timely completion of sub-projects. Another option would be to finance inputs under a time- bound or phased plan of sub-project evaluation and selection by the national ministry of education. Both altern atives would include a thorough diagnostic of each province’s situation, that would form part of the process leading up to signed bilateral agreements. 9 3.3 Sub-projects to be financed would include:- [For articulation of the Primary level with Pre-School (Ages 4 and 5) ] (a) Projects to enhance access and improve the quality of Pre-Schools, with a view to improve readiness for primary education; [For Primary (Ages 6 through 11) ] (b) Projects to enhance early literacy and numeracy, the ability of children to learn to read and write and do simple arithmetic; (c) Projects through the initial three grades that use pedagogical techniques that recognize and exploit differentials in learning abilities and varieties in learning techniques at early ages; (d) Projects to reduce repetition, while maintaining standards of learning as defined in the National Core Learning Priorities or NAP; (e) Projects to provide remedial learning and accelerated instruction to over-aged children; (f) Projects to improve the quality of the teaching learning experience in the school through school development plans; (g) Projects to improve the quality of pedagogical and administrative support provided by provincial administration to the school level; and [For articulation of the Primary level with Secondary education(Ages 12 through 17) ] (h) Projects to enhance student retention and transition to Secondary. Clearly, no single province would be executing all the above mentioned sub-projects, and a standard diagnostic protocol would help to determine the critical paths for each province. With clear links between a sub-project and the particular problem facing the province, this “building block” approach to project design seeks to harness the power from provincial diversity to obtain the nationally defined goal of universal secondary completion. 3.4 Component 2: Evidence Based Decision Making (approximately 5% of Project): This component is directed towards improving the results orientation of Provincial education ministries and their articulation with the National Ministry of Education. The component would focus on the use of information in decision making on a sustained basis, through two parallel activities: (i) At the national level, the component would strengthen the Planning function and the articulation of national programs with the provinces; (ii) At the provincial the annual program objectives set forth in the bilateral agreements. Further articles in the law provide for sanctions and remedies in case of non-compliance, including re-distribution of resources across provinces. These articles of the legislation provide a framework with substantial transparency, accountability and incentives for performance. 9 Details of the sub-project bilateral agreements between the national and provincial governments would be defined during project preparation, and would include arrangements regarding the flow of funds. Page 6 level, financial and technical assistance would be provided to provinces as part of a systematic process to evaluate and identify the particular needs of each province as it moves upward on a scale of administrative modernization. During project preparation a classification matrix would be developed that would classify each province along a set of dimensions required for superior results orientation. 10 This classification system would provide a transparent mechanism for monitoring the progress regarding capacity enhancement at the provincial level. The authorities have expressed an interest in exploring a tripartite agreement with the International Institute for Educational Planning – IIPE- UNESCO, and with the Organization of Ibero-American States for Education, Science and Culture (OEI) for this component. 3.5 Component 3: Project Coordination and Administration : (approximately 5% of Project): This component would provide resources for project coordination and administration, with a focus on utilization of existing government structures as compared to parallel project management units. Provincial or regional representation in administrative decision making would be sought wherever possible to enhance provincial ownership of various project activities. The management structure would thus seek to deepen at an administrative level the existing institutional mechanism of policy formulation under the aegis of the Federal Education Council ( Consejo Federal de Educación or CFE) that brings together the provincial and national ministries of education. 4. Safeguard policies that might apply [Guideline: Refer to section 5 of the PCN. Which safeguard policies might apply to the project and in what ways? What actions might be needed during project preparation to assess safeguard issues and prepare to mitigate them?] 5. Tentative financing Source: ($m.) Borrower 10 International Bank for Reconstruction and Development 100 Total 110 6. Contact point Contact: Suhas D. Parandekar Title: Senior Education Economist Tel: (202) 458-7622 Fax: Email: sparandekar@worldbank.org 10 The dimensions would include the fiduciary functions of financial management and procurement, and extend to the functions of planning, monitoring of educational expenditures and costs, statistical information and monitoring with feedback loops for decision-making, human resource management, and the general administration and supervision of the education system. Page 7