Document of The World Bank Report No: ICR00004210 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-85510) ON A LOAN IN THE AMOUNT OF US$100 MILLION
 TO THE THE REPUBLIC OF CHILE FOR A SOCIAL INCLUSION FOR SHARED PROSPERITY DEVELOPMENT POLICY FINANCING JULY 18, 2017 Equitable Growth, Finance and Institutions Practice Group Bolivia, Chile, Ecuador, Peru, and Venezuela Country Management Unit Latin America and the Caribbean Region 1 CHILE - GOVERNMENT FISCAL YEAR January 1 – December 31 CURRENCY EQUIVALENTS (Exchange Rate Effective May 23, 2017) Currency Unit = Chilean Peso (CLP) CLP 1.00 = US$0.0015 US$1.00 = CLP 668.21 Weights and Measures : Metric System ABBREVIATION AND ACRONYMS CASEN National Socioeconomic Survey (Encuesta de Caracterización Socioeconómica Nacional) CEPAL Economic Commission for Latin America and the Caribbean (Comisión Económica para América Latina y el Caribe) CHCC Social Protection System for Early Childhood (Chile Crece Contigo) CPS Country Partnership Strategy CRUCH Council of Rectors of Chilean Universities (Consejo de Rectores de las Universidades Chilenas) DIPRES Budget Office (Dirección de Presupuestos) DPF Development Policy Financing FDI Foreign Direct Investment GDP Gross Domestic Product GoC Government of Chile IEF Ethical Family Income (Ingreso Ético Familiar) IMF International Monetary Fund LAC Latin America and the Caribbean MDS Ministry of Social Development (Ministerio de Desarrollo Social) MINEDUC Ministry of Education (Ministerio de Educación) MPI Multidimensional Poverty Index OECD Organisation for Economic Co-operation and Development OPHDI Oxford Poverty & Human Development Initiative PACE Effective Access to Higher Education Program (Programa de Acompañamiento y Acceso Efectivo a la Educación Superior) PDG Government Program (Programa de Gobierno) PDO Program Development Objective PFM Public Financial Management PISA Program for International Student Assessment PSIA Poverty and Social Impact Assessment SEP Preferential School Subsidy (Subvención Escolar Preferencial) SIMCE Education Quality Measurement System (Sistema de Medición de Calidad de la Educación) SIIS Integrated System of Social Information (Sistema Integrado de Información Social) SISP Social Inclusion for Shared Prosperity 2 Regional Vice President : Jorge Familiar EFI Practice Group Vice President : Jan Walliser Country Director : Alberto Rodríguez Poverty and Equity Global Practice Senior Director : Carolina Sánchez-Páramo Practice Manager : Oscar Calvo-González Task Team Leader : Carlos Rodríguez-Castelán Co-Task Team Leader : Alan Fuchs Co-Task Team Leader : Javier Botero ICR Team Leader : Alan Fuchs Co-Task Team Leader : Yevgeniya Savchenko 3 CHILE SOCIAL INCLUSION FOR SHARED PROSPERITY DEVELOPMENT POLICY FINANCING CONTENTS A. Basic Information................................................................................................................................................. 5 B. Key Dates ............................................................................................................................................................. 5 C. Ratings Summary ................................................................................................................................................. 5 D. Sector and Theme Codes...................................................................................................................................... 6 E. Bank Staff ............................................................................................................................................................. 6 F. Results Framework Analysis ................................................................................................................................ 7 H. Restructuring (if any) ........................................................................................................................................... 8 1. Program Context, Development Objectives and Design ....................................................................................... 9 1.1 Context at Appraisal .......................................................................................................................................9 1.3. Revised PDO and Key Indicators, and Reasons/Justification ..................................................................... 11 1.4 Original Policy Areas Supported by the Program (as approved) ................................................................. 11 1.5 Revised Policy Areas (if applicable) ............................................................................................................ 13 1.6 Other significant changes ............................................................................................................................. 13 2. Key Factors Affecting Implementation and Outcomes ....................................................................................... 14 2.1 Program Performance (supported by a table derived from a policy matrix) ................................................ 14 2.2 Major Factors Affecting Implementation: .................................................................................................... 15 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization: ............................................. 16 2.4 Expected Next Phase/Follow-up Operation (if any): ................................................................................... 17 3. Assessment of Outcomes .................................................................................................................................... 17 3.1 Relevance of Objectives, Design and Implementation (to current country and global priorities, and Bank assistance strategy) ............................................................................................................................................. 17 3.2 Achievement of Program Development Objectives ..................................................................................... 21 3.3 Justification of Overall Outcome Rating (combining, relevance, achievement of PDOs) ........................... 31 3.4 Overarching Themes, Other Outcomes and Impacts .................................................................................... 31 3.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops ............................................. 35 4. Assessment of Risk to Development Outcome ................................................................................................... 35 5. Assessment of Bank and Borrower Performance ................................................................................................ 36 5.1 Bank Performance ........................................................................................................................................ 36 5.2 Borrower Performance ................................................................................................................................. 37 6. Lessons Learned ................................................................................................................................................. 37 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ..................................................... 38 Annex 1. Bank Lending and Implementation Support/Supervision Processes ....................................................... 39 Annex 2. Beneficiary Survey Results ..................................................................................................................... 41 Annex 3. Stakeholder Workshop Report and Results ............................................................................................. 42 Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR................................................................ 43 4 A. Basic Information Social Inclusion for Shared Country: Chile Program Name: Prosperity Development Policy Financing Program ID: P154213 L/C/TF Number(s): IBRD-85510 ICR Date: 05/08/2017 ICR Type: Core ICR Lending DPL Borrower: REPUBLIC OF CHILE Instrument: Original Total USD 100.00M Disbursed Amount: USD 100.00M Commitment: Revised Amount: Not Applicable Implementing Agencies: Ministry of Finance, Budget Office Co-financiers and Other External Partners: Not Applicable B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 11/03/2015 Effectiveness: 06/14/2016 Appraisal: 23/06/2015 Restructuring(s): Approval: 16/11/2015 Mid-term Review: Closing: 12/31/2016 12/31/2016 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory 1 Risk to Development Outcome: Moderate Bank Performance: Satisfactory Borrower Performance: Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Satisfactory Performance: Performance: 1 This version of the ICR for the Social Inclusion for Shared Prosperity Development Policy Financing has been revised to correct a discrepancy on the ratings. It replaces the previous version that was disclosed on July 26, 2017. 5 C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating: Performance (if any) Potential Problem Quality at Entry Program at any time No None (QEA): (Yes/No): Problem Program at any Quality of No None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 17 17 Tertiary Education 50 50 Other Education 17 17 Social Protection 16 16 Theme Code (as % of total Bank financing) Education for all 33 33 Social Inclusion 33 33 Poverty strategy, analysis and monitoring 17 17 Social Safety Nets/ Social Assistance & Social Care 17 17 Services E. Bank Staff Positions At ICR At Approval Vice President: Jorge Familiar Jorge Familiar Country Director: Alberto Rodríguez Alberto Rodríguez Practice Oscar Calvo-Gonzalez Oscar Calvo-Gonzalez Manager/Manager: Carlos Rodríguez Castelán Carlos Rodríguez Castelán Program Team Leaders: Alan Fuchs Alan Fuchs Javier Botero Javier Botero ICR Team Leader: Alan Fuchs ICR co-Team Leader: Yevgeniya Savchenko Alan Fuchs ICR Primary Authors: Yevgeniya Savchenko 6 F. Results Framework Analysis Program Development Objectives (from Project Appraisal Document) To support the efforts of the Government of Chile to: (i) promote equal opportunities in education; (ii) improve the conditions to enhance the quality of tertiary education; and (iii) strengthen institutions for poverty measurement and enhance targeting mechanisms of social programs. Revised Program Development Objectives (if any, as approved by original approving authority) Not Applicable (a) PDO Indicator(s) Original Target Formally Actual Value Achieved Values (from Revised Indicator Baseline Value at Completion or approval Target Target Years documents) Values Pillar 1 – Promoting equal opportunities in education Indicator 1 Number of students who receive the Preferential School Subsidy (SEP) Value (quantitative or 1,250,383 1,630,726 1,909,981 qualitative) Date achieved December 31, 2015 December 31,2016 December 31,2016 Exceeded (117 percent level of achievement): SEP program was implemented in Comments (incl. all regions of Chile. Out of total enrollment of 3,261,873, 1,909,981 received percent preferential school subsidy. achievement) Indicator 2 Number of students in secondary school incorporated in the PACE program Value (quantitative or 7,614 57,000 74,562 qualitative) Date achieved December 31, 2015 December 31,2016 December 31,2016 Comments (incl. Exceeded (131 percent level of achievement): In the base year, the PACE program percent was piloted in 6 regions and enrolled 7,614 students. In the following years, the achievement) program was scaled up. It currently runs in all 15 regions and benefits 74,562 students. Number of full scholarship recipients that belong to the five lowest income Indicator 3 deciles enrolled in their first year of tertiary education Value (quantitative or 2,479 30,000 48,555 qualitative) Date achieved December 31, 2015 December 31,2016 December 31,2016 Exceeded (162 percent level of achievement): Low income students in both public Comments (incl. and private universities were eligible for full scholarships. In the first year 48,555 percent students received full scholarships against target of 30,000. Students with full achievement) scholarships (in all years of studies) constituted 15.6 percent of student body. 7 Pillar 2 – Improve the conditions to enhance the quality of tertiary education Number of students enrolled in state universities included in the Convenio Indicator 4 Marco Value (quantitative or 0 180,000 178,000 qualitative) Date achieved December 31, 2015 December 31,2016 December 31,2016 Achieved (99 percent level of achievement): Convenio Marco covers all state Comments (incl. universities. The number of student enrollment was slightly below target due to a 2.6 percent percent cap on annual increase in enrollment at the universities which receive full achievement) scholarship students. This cap became effective as of 2016 and was not foreseen during the original design. Pillar 3 – Strengthen institutions for poverty measurement and enhance targeting mechanisms of social programs Release of monetary and multidimensional poverty indicators based on the Indicator 5 new methodology and its corresponding microdata with the release of the 2013 and 2015 household survey (CASEN) Value (quantitative or 0 1 1 qualitative) Date achieved December 31, 2015 December 31,2016 December 31,2016 Comments (incl. Achieved (100 percent level of achievement): Ministry of Social Development percent released monetary and multidimensional poverty indicators based on the new achievement) methodology with microdata. Furthermore, the Ministry has strengthened the multidimensional poverty indicators by incorporating additional dimensions. Number of social programs and subsidies whose eligible beneficiaries are Indicator 6 determined by the new targeting system Value (quantitative or 0 10 51 qualitative) Date achieved December 31, 2015 December 31,2016 December 31,2016 Comments (incl. Exceeded (510 percent level of achievement): the Ministry of Social Development percent successfully transitioned to the new targeting system based on the use of achievement) administrative data. G. Ratings of Program Performance in ISRs Not Applicable H. Restructuring (if any) Not Applicable 8 1. Program Context, Development Objectives and Design 1.1 Context at Appraisal Over the past three decades, Chile has achieved strong and sustained economic growth, largely through capital deepening backed by a solid macroeconomic framework. The country’s strong economic performance complemented with targeted social spending has contributed to significant poverty reduction. Between 2006 and 2013, extreme poverty fell by 8.1 percentage points to 4.5 percent, whereas moderate poverty decreased by 14.7 percentage points to 14.4 percent. In terms of sharing the benefits of economic prosperity, from 2009 to 2013, Chile’s less well-off households benefitted more from growth than the average person. In particular, real income per capita of the bottom 40 percent grew at 5.6 percent, while the mean growth rate was 4.1 percent. However, over the same period, income inequality in Chile has remained essentially constant, with only a slight reduction in the Gini coefficient between 2006 and 2013 (0.51 to 0.50). The average income of the richest 20 percent of Chileans was nearly 11.5 times that of the poorest 20 percent in 2013, a small change from the ratio of 11.7 times in 2006. These changes are much smaller than those observed in Latin America and the Caribbean (LAC) as a whole, when the Gini coefficient fell from 0.54 to 0.51 during the same period. In addition, since the end of the 1990s, productivity growth has slowed, and the recent fall in copper prices has exposed underlying challenges in productivity and diversification that predated the boom, but were less of a policy imperative during the boom. The government thus faces the challenge of gradually shifting from a growth model relying on volatile commodity exports toward a more knowledge- and technology-intensive model. In this sense, productivity can be boosted by enhancing the quality of education for every Chilean, regardless of their income level. At the core of the high and persistent inequality has been the segmentation of service provision in education, health care, and social security, which generates acute disparities in access to high quality services, especially education. Limited access to good-quality education translates into inequality in the labor market, which also influences health system participation and pension contributions. Current access to high quality education depends largely on family income, and limits the opportunity for the population at the bottom of the income distribution. Moreover, these circumstances affect Chile’s capacity for sustaining a rapid pace of productivity increases. Today, Chile lags the OECD average in key education outcomes. Furthermore, public expenditure on tertiary education in Chile is also of concern as it is among the lowest in the OECD. Chile’s spending per student is nearly half that of OECD countries. 2 The country’s dependence on household expenditure for funding tertiary education indicates that the largest share of tertiary education funding comes from tuition fees and ultimately results in a heavy financial burden for families. Not surprisingly, firms face increasing difficulty in hiring workers with appropriate skills. Ensuring that all Chileans have access to high-quality education and that the education system delivers the skills that the private sector needs, is critical to the effort to establish a more inclusive, 2 “Private spending on education,” OECD, Paris (accessed, March 28, 2017), http://www.oecd- ilibrary.org/education/private-spending-on-education/indicator/english_6e70bede-en. Spending per student for tertiary education is US$9,052 in Chile, while the OECD average is US$16,199. 9 knowledge-based economy. This assessment of poverty and inequality dynamics and the underlying causes has been confirmed by the recent Chile Systematic Country Diagnostic (SCD). The 2008 presidential advisory council (Consejo Asesor Presidencial Trabajo y Equidad) identified Chile’s main challenges in equity and defined specific goals to improve inclusion, equality of opportunities, social mobility and vulnerability. The Government of Chile (GoC), during the second term of President Bachelet (2014-2018), put forward a 2014–2018 Government Development Program (PDG) ‘Chile de Todos’. This program prioritizes reducing inequality through reforms that open opportunities for all. The PDG focuses on three key reforms: (a) education; (b) tax reform, and (c) a new Constitution. The government has defined a comprehensive program of policy reforms in education, fiscal policy, social protection and institutions for poverty measurement. Being the top priority, the PDG program covers a wide range of reform in education to promote equity and social inclusion. The FY11-FY16 joint Bank-IFC Chile Country Partnership Strategy (CPS), Report No. 57989-CL discussed by the Board of Directors in February 2011, focused on three key areas: (i) public sector modernization; (ii) job creation and equity improvement; and (iii) promoting sustainable investment. The new government came to power in 2014. While the FY11-16 CPS objectives remained relevant for the remainder of the CPS period, the Bank’s Performance and Learning Review (PLR) of the 2011-2016 CPS incorporated the priorities of new government and expanded the CPS focus to support the reforms under the PDG 2014-2018. The expanded focus included a Development Policy Loan to support the Government’s policy reform agenda in social sectors to address country’s high inequality rates. The Social Inclusion for Shared Prosperity Development Policy Financing (DPF), in line with the PLR and the PDG, grouped its support to help kick-off the reforms around three policy areas: (1) promoting equal opportunities in education; (2) improving the conditions to enhance the quality of tertiary education; and (3) strengthening institutions for poverty measurement and enhancing targeting mechanisms of social programs. 1.2 Original Program Development Objectives (PDO) and Key Indicators (as approved) The Program Development Objective of the DPF is to support the efforts of the Government of Chile to: (i) promote equal opportunities in education; (ii) improve the conditions to enhance the quality of tertiary education; and (iii) strengthen institutions for poverty measurement and enhance targeting mechanisms of social programs. Table 1 – Operation’s Project Development Objectives (PDOs) and Key Performance Indicators (KPIs) Policy Area 1: Promoting equal opportunities in education PDO 1 - Promote equal opportunities in education - RI 1: Students who receive the Preferential School Subsidy (SEP) (Number). - RI 2: Students in secondary school incorporated in the PACE program (Number). 10 - RI 3: Full scholarship recipients that belong to the five lowest income deciles enrolled in their first year of tertiary education (Number). Policy Area 2: Improving the conditions to enhance the quality of tertiary education PDO 2 – Improve the conditions to enhance the quality of tertiary education - RI 4: Students enrolled in state universities included in the Convenio Marco (Number) Policy Area 3: Strengthening institutions for poverty measurement and enhancing targeting mechanisms for social programs PDO 3 – Strengthen institutions for poverty measurement and enhance targeting mechanisms for social programs - RI 5: Release of monetary and multidimensional poverty indicators based on the new methodology and its corresponding microdata with the release of the 2013 and 2015 household survey (CASEN) - RI 6: Social programs and subsidies whose eligible beneficiaries are determined by the new targeting system For the purpose of the Implementation Completion and Results Report (ICR), the operation is evaluated against the PDOs corresponding to each of the policy areas and the Results Indicators (RI) defined for the individual policy actions within each policy area. 1.3. Revised PDO and Key Indicators, and Reasons/Justification Not Applicable 1.4 Original Policy Areas Supported by the Program (as approved) Policy Area 1: Promoting equal opportunities in education This policy area aims to support promotion of equal opportunities in access to education from primary to tertiary education. First, the World Bank Program supported Chile’s comprehensive 2014 Education Reform that was designed to improve equitable access to high-quality primary and secondary education. The DPF coalesced that support. The Inclusion Law No. 20845 approved in June 2015 issued three policy initiatives at the primary and secondary school level: (a) Regulate the admission process: The Law provided for establishment of a centralized admission system, replacing the previous one where individual schools set their own admission criteria. The initiative sought to eliminate directionality and prune out filters based on socioeconomic, ethnic, cultural or religious characteristics. (b) Eliminate co-payments: The Law gave private subsidized schools an option to continue receiving state funds if they progressively eliminated co-payments. School co-payments had been in place to give parents the opportunity to demand higher quality education, analysis showed, however, that high co-payments prevented students from lower socio-economic backgrounds to 11 access better quality education. The policy measure addressed this concern by linking continued subsidies to schools to the elimination of copayments. (c) Eliminate profits in establishments that receive State funding: approximately 84 percent of private subsidized schools are for-profit institutions. The Inclusion Law stipulates that these establishments will continue receiving public financing only if they become non-profit schools. The policy measure seeks to ensure that public subsidies go for improvements in the quality of education; and (d) Improve quality by increasing public resources for education: the Inclusion Law supported strengthening the quality of education by allocating more financing to public institutions. The impact of the Law was measured, under the DPF, by the number of students who received the Preferential School Subsidy (SEP). 3 Second, the operation supported the GoC’s Program for Effective Access to Higher Education (PACE) that sought to increase the number of highly vulnerable students making the transition from secondary education to tertiary education. The PACE was created by Ministerial Resolution 680 in June 2015 and the provision for this program was made starting from 2015 Public Sector Budget Law. 4 The program prepares vulnerable youths in upper secondary education to transition to college by providing academic, psychological, and vocational assistance. It also supports their entrance to and progression through college until graduation. The PACE was designed as a pilot intervention first, the budget allocation for the pilot and the scaled up program was provided in the Budget Laws (2015, 2016 and 2017). Third, under this policy area the operation supported the GoC efforts at improving equitable access to tertiary education by expanding scholarships for students that belong to the seven lowest income deciles. As an initial step, the expansion of scholarships to the bottom five deciles was budgeted in the 2015 Public Sector Budget Law. Further expansion of these scholarships has been incorporated into a draft law that is under the consideration of Parliament. The government aimed to directly subsidize institutions in order to defray the cost for students attending. This subsidy may be exercised at any tertiary education institution that is accredited, is not for-profit, and develops programs to strengthen and support vulnerable students, among other conditions. Similar to other reforms, promotion of equitable access to tertiary education has been executed gradually. In the first year of the reform implementation which corresponds to the implementation period of this operation, the government committed to provide full scholarships to first-year tertiary 3 The SEP established a new, targeted voucher that would give significantly more public funds to schools for each eligible student enrolled. Eligibility was set aside for approximately the poorest 40 percent of the population. 4 In the Chilean context including a new budget line for a program is an elaborate process which involves complex negotiations and approval of the Parliament. Once a budget line for a program is included in the Public Budget Law, taking it out would require going through the same process. Therefore, unless there is broad consensus, consultations and an approval of the Parliament, budget lines are not removed from the Public Budget Law. For the purpose of the ICR, we mention when new programs receive budget lines. Unless the program is dropped from the Public Budget Law, the provision for that program is budgeted in subsequent budget cycles. Therefore, we do not mention all years for which the provision was made. 12 education students from the five bottom deciles of the income distribution. By 2018, the coverage is expected to reach students from the bottom seven deciles. Policy Area 2: Improving the Conditions to Enhance the Quality of Tertiary Education Policy Area 2 supported enhancing the quality of public universities through increased financing for quality enhancement. In general, public financing of tertiary education in Chile is of concern as it is among the lowest in the OECD (measured as percentage of GDP). The Convenio Marco de Universidades Estatales initiative was launched in 2015 with all (16) public universities participating. Convenio Marco creates a network of public universities in order to harmonize and strengthen their quality across all regions. To strengthen the impact of the initiative, the government provided public universities with additional funding for institutional strengthening, research and innovation, teacher development and outreach activities of public universities. This initiative, “Convenio Marco de Universidades Estatales”, was originally introduced in the 2015 Public Sector Budget Law and subsequent provisions have been made in the Budget Law 2016 and 2017. A draft tertiary education law to formalize the program is under Legislative debate and consideration. Policy Area 3: Strengthening institutions for poverty measurement and enhancing targeting mechanisms for social programs First, the operation supported the GoC efforts to improve the measurement and monitoring of poverty (Oficio No 888 of March 30, 2015) by implementing and releasing (a) a revised official methodology for measuring monetary poverty and (b) launching and implementing an official Multidimensional Poverty Index (MPI). These actions would enhance the quality of information to effectively monitor poverty and other social welfare indicators of equity and to strengthen transparency of poverty measurement. Second, the operation supported the GoC in improving targeting of social programs through implementation of a new allocation model for benefits and social services as announced by Oficio No. 1244 of March 30, 2015. The new model would move from largely self-reported targeting to targeting based on objective characteristics using administrative data. Improving targeting of social programs was expected to result in better policy design, in more efficient government spending, and to contribute to reducing poverty and enhancing equity. Furthermore, the improved system was expected to make targeting “mas justo, mas transpariente, mas simple” more fair, transparent and simple. 1.5 Revised Policy Areas (if applicable) Not Applicable 1.6 Other significant changes Not Applicable 13 2. Key Factors Affecting Implementation and Outcomes 2.1 Program Performance (supported by a table derived from a policy matrix) Program performance was highly satisfactory. All prior actions were achieved on time and the loan disbursed according to original expectations. Expected Actual Release Tranche # Amount Release Release Date Date US$100 Tranche 1 April 2016 August 18, 2016 Regular million Tranche 1 (Single Tranche) Policy conditions as stated in the Loan Agreement Status The Borrower has enacted the Inclusion Law to improve social integration and expand schooling options for all students within the mandatory levels of Met schooling (primary and secondary education). (Inclusion Law No. 20845 approved June 2015) The Borrower has created the program for PACE to support the transition of highly vulnerable students from upper secondary education to tertiary education. (Ministerial Resolution 680, January 29 2015, & the 2015 Public Met Sector Budget Law Partida 09, Chapter 01, Program 03, Subtítulo 24, Item 03, Asignación 905 “Programa de Acompañamiento y Acceso Efectivo a la Educación Superior”, Ministry of Education) The Borrower has expanded scholarships for students that belong to the seven lowest income deciles to promote equitable access for tertiary education. (2015 Public Sector Budget Law Partida 09, Chapter 01, Program 30, Subtítulo 24, Met Item 03, Asignación 200 “Becas de Educación Superior”, Ministry of Education; Decree 97 that establishes the scholarship program in 2013) The Borrower has provided resources to state universities for institutional strengthening, research and innovation, teacher development and outreach activities to improve the conditions to enhance quality of tertiary education Met (2015 Public Sector Budget Law Partida 09, Chapter 01, Program 30, Subtitulo 24, Item 03, Asignación 807 “Convenio Marco Universidades Estatales”, Ministry of Education) The Borrower has enhanced the measurement and monitoring of poverty by implementing and releasing (a) a revised official methodology for measuring monetary poverty and (b) launching and implementing an official Multidimensional Poverty Index (MPI). (2015 Public Sector Budget Law Partida 21, Chapter 09, Program 01, Subtítulo 24, Item 03, Asignación 330 Met “Encuesta CASEN”, Ministry of Social Development, and Oficio No. 888 from MDS to the President of the Special Mixed Committee of Budgeting of the Borrower’s Congress to inform the release of the new methodology, March 30, 2015) The Borrower has designed a new allocation model for benefits and social Met services to improve targeting for social programs. (Oficio No. 1244 of March 14 30, 2015 from MDS to the President of the Special Mixed Committee of Budgeting of the Borrower’s Congress describing the effect of the new allocation model in the improvement of the targeting of social programs, 2015 Public Sector Budget Law Partida 21, Chapter 01, Program 01, Subtítulo 24, Item 03, Asignación 241 “Sistema de Apoyo a la Selección de Beneficios Sociales” Ministry of Social Development). 2.2 Major Factors Affecting Implementation: The operation was implemented as originally envisioned, as a result of its sound preparation and favorable macroeconomic and political environments. Specific factors affecting implementation can be summarized as follows: Adequacy of the government commitment. Addressing the country’s pressing inequality is among the government’s top priorities. The GoC has invested its political capital in designing and implementing policies to address the root causes that generate unequal opportunities and social outcomes. The government undertook substantial background work on the bottlenecks to equality and the mechanisms to address them under the first government of Bachelet with the 2008 presidential advisory council (Consejo Asesor Presidencial Trabajo y Equidad). Building on these efforts, the 2014-2018 PDG made concrete proposals for reforms in education, taxation, and the Constitution. The Inclusion Law of 2015 kick-started reforms in education. While the proposed tertiary education law is still being debated in Parliament, certain interventions from the tertiary education law are included in the Budget Law. The government mobilized teams to support the implementation of new interventions, e.g. elimination of copayments, new admission rules, PACE, etc., and set up strong M&E mechanisms to monitor the results of the programs. The government has supported the gradual implementation of these reforms, e.g., SEP, tertiary education scholarships, PACE, etc., with larger budgetary allocations, even as economic growth in Chile has slowed down recently. The tax reform has enabled the government to raise revenues to increase education financing, it is expected to generate additional revenues amounting to 3 percent of GDP. Using these revenues, authorities planned to permanently increase education expenditures by 2 percent of GDP. Nonetheless, the government needs to continue evaluating if demands can be met without putting pressure to the fiscal balance. Soundness of the background analysis. The Joint Studies Program (JSP) has been the key instrument of cooperation between Chile and the Bank in undertaking relevant, targeted and timely analytical work to ground initiatives. The JSP was launched in 2008 and has operated under different governments across the political spectrum. It reflects a deep level of trust that allows anchoring policies on solid analysis. During the timeframe of the current administration, the JSP has delivered analytical work on tertiary education, tax reform, and social protection which served as analytical underpinnings for reforms design. Furthermore, policies under Policy Areas 1 and 2 are closely linked with and build on the Reimbursable Advisory Services (RAS) on Tertiary Education Quality Assurance and the Tertiary Education Finance for Results Project, which aimed to strengthen the link between funding of 15 tertiary education institutions, accountability for performance and overall relevance. Additionally, policies under Policy Area 3 are closely related to and build on the technical work carried out by the RAS on Social Information System Redesign, which provided technical inputs for an updated and improved version of the country’s Integrated Social Information System and Registry and supported creation of the Sistema Nacional de Cuidados. Finally, also related to Policy Area 3, technical assistance provided specific policy recommendations to improve the Chilean institutional framework for poverty measurement in order to enhance its overall transparency and accountability. Assessment of the operation’s design. The operation had a simple design. It focused on reforms in two sectors – education and social development. Two ministries were responsible for the implementation of the operation: The Ministry of Education and the Ministry of Social Development. Relevance of the risks identified at appraisal and effectiveness of mitigation measures. A low take-up of the reforms by the public was a potential risk to the effectiveness of the operation. To mitigate this, a wide national consultation took place. The Inclusion Law was widely consulted with various stakeholders including academics, teacher unions, the private sector and student groups before being presented for discussion in Congress. The government took into consideration the contributions made by various national and international actors for the development of the new poverty methodology, including the OPHI and the Economic Commission for Latin America and the Caribbean (CEPAL), a report by the Commission for Poverty Measurement and recommendations from a joint collaboration from the Ministry of Social Development and the National Institute for Statistics. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization: Monitoring and Evaluation (M&E) Design. The M&E design of the operation is guided by the policy and results matrix. Six key results indicators, each corresponding to one policy action, were identified to monitor the progress towards achievement of the PDOs. These indicators are also used for internal M&E of the government and were collected using administrative data of the Ministry of Education and the Ministry of Social Development. The selected indicators do not capture fully outcomes and impacts of the policy actions supported by this DPF as improvements in quality of education is hard to observe over the short time period (this will be described in more details in the section on relevance of design). Thus, ICR relied also on other administrative data which are routinely collected by the GoC to assess the implementation. Additionally, several studies have been carried to assess poverty and social impacts of the operation. The review of the existing research and original estimations at the design stage showed that policy actions under policy areas 1 and 2 were expected to have direct positive effects on poverty reduction and equity in Chile. The policy actions under policy area 3 were expected to have indirect positive effects. Furthermore, the WB in collaboration with the MINEDUC designed a four year evaluation of the Higher Education reform. Monitoring and Evaluation (M&E) Implementation. The M&E Implementation was the responsibility of the Ministry of Education (results indicators 1-4) and the Ministry of Social Development (results indicators 5-6). The results indicators of this operation are also embedded 16 into the internal M&E of the respective ministries and are used for progress monitoring and decision making of these agencies on a regular basis. Monitoring and Evaluation (M&E) Utilization. As mentioned above, the ministries are using these indicators for internal monitoring purposes. Gradual roll-out of the reforms, allowed the government to assess the results of the pilots and incorporate lessons learned before scaling up the programs. For example, when implementing full scholarships at the tertiary level based on the high revealed demand, the 2.6 percent annual increase cap on new enrollment with full-scholarship was instituted not to overstretch the tertiary education system. In the case of strengthening the regulation of the admission process in primary and secondary education, gradual roll-out allowed for experimenting with and strengthening of messages of public campaigns. Furthermore, progress towards achievement of the PDO’s was monitored by the WB sector specialists and reflected in the Aide Memoires. 2.4 Expected Next Phase/Follow-up Operation (if any): Not Applicable 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation (to current country and global priorities, and Bank assistance strategy) Relevance: High Relevance of Objectives: This operation’s objectives are highly relevant to the GoC’s priorities and the strategic objectives guiding the collaboration of the GoC and the Bank. The DPF is fully aligned with the GoC’s 2014-2018 Government Program (PDG) “Chile de Todos”, which advances reforms to reduce the constraints in place to greater equality and creating a Chile for all. The PDG prioritizes three reforms: (a) education; (b) tax reform, and (c) a new Constitution. A critical underpinning of the three reforms is strengthening citizens’ rights. Policy areas 1 and 2 of this operation are directly aligned with the education reform strategy of the PDG. Policy area 3 of the operation is aligned more broadly with citizens’ rights by improving poverty measurement and enhancing social protection system. The operation is fully consistent with the expanded focus of the WBG’s Chile Country Partnership Strategy (2011–2016) (CPS) as reflected in the 2015 PLR. The CPS was designed and approved by the Board of Directors in February 2011. During the CPS implementation period, the government of President Michelle Bachelet took over in 2014 and proposed an ambitious reform agenda to address high and persistent inequality and improve access and quality of public services, in particular education. The GoC requested to deepen WBG’s collaboration in the major areas through technical assistance and lending. The 2015 Performance and Learning Review of the CPS incorporated this request sharpening the focus on (i) improving equity, quality, and accountability of the tertiary education system; (ii) deepening collaboration on strengthening the social protection system; and (iii) assessing the distributional impacts of tax reform. 17 In addition, the agenda under the JSP, Reimbursable Advisory Services Program and Bank lending operations also reflected these priorities. For example, the 2008 JSP focused on education reforms, including a report on Higher Education, an impact evaluation of the preferential school subsidy (SEP) and the design of new educational institutions. Similarly, this was later complemented by the 2015 JSP on Higher Education (HE) Quality Assurance design and public financing of HE Institutions, and the RAS on HE Public Technical Education Network: Comparative Analysis of Models. Furthermore, the DPF directly supports the objectives of the long standing GoC-Bank program on improvement of higher education quality and equity “Programa MECESUP: Mejoramiento de la calidad y la equidad en la educación terciaria” which started in 1998 and is moving to the fourth phase MECESUP-IV of its implementation. In the area of poverty, the Bank provided technical assistance on poverty measurement and an integrated social information system. In addition, under the JSP the Bank produced a study that analyzes the distributional effects of the 2014 Tax Reform, a study that proposes different institutional arrangements for poverty measurement, and a diagnostic of the Social Information Integrated System that served as a basis for the Household Social Registry. Relevance of Objectives – High PDO 1 - Promote equal opportunities in education. The Chilean education system faced a challenge of unequal access to quality education that permeated the whole educational system from primary through tertiary education. At the primary level students from lower socio-economic status could be denied admission to better quality schools since the admission decisions were made at the school level. Also, they frequently were not able to afford going to better quality schools due to high copayments and/or fees of private schools. Furthermore, the progression through and completion rates of secondary education often were lower for poorer students than for richer ones. Finally, poor students often were not able to afford tertiary education. To address these challenges of education equity, the GoC put the education reform at the forefront of its PDG 2014-2018. The PLR to the CPS 2011-2016, informed by the JPSs, also includes support to the education reform as a priority. Therefore, this PDO by focusing on the promotion on equal opportunities in education is highly relevant to both the GoC’s and the Bank’s priorities. PDO 2 - Improve the conditions to enhance the quality of tertiary education. The tertiary public education system was facing challenges of lower quality compared to private universities. Also, the quality of public universities was not homogeneous across different regions. Finally, due to the high cost of private universities, most students from poor background were attending public universities. To address these challenges, the PDG 2014-2018 places an emphasis on improving the quality of public tertiary education in the country. The Bank’s expanded CPS 2011-2016, informed by extensive analytical work and technical assistance, also includes quality, equity and financing of tertiary education as one of its main priorities. Therefore, this PDO is highly relevant to both the GoC’s and Bank’s strategic priorities. PDO 3 - Strengthen institutions for poverty measurement and enhance targeting mechanisms of social programs. The GoC measured poverty only with a monetary measure based on income. This approach failed to address multiple deprivations in access to electricity, water, education, and labor markets that different populations face. As Chile made substantial progress in monetary poverty reduction, measuring vulnerability to multidimensional deprivations 18 became important for the Chilean Government. Furthermore, to make public resources available for people who need them the most, the government strives to improve targeting of the resources by moving from a system that relied mostly on self-reporting and led to inefficiencies as well as inclusion and exclusion errors to a new targeting system which relies on more neutral administrative data. The Bank’s expanded CPS 2011-2016 supports efforts of the GoC to strengthen the methodology for poverty measurement and improve targeting of social programs. Therefore, this PDO is highly relevant both to the GoC’s and Bank’s objectives. Relevance of Objectives - High • High relevance to the PDG 2014-2018 - education reform PDO 1 - Promote equal with a focus on improving equity and quality of education is opportunities in education. one of the main pillars of the PDG • High relevance to the Bank’s CPS 2011-2016 expanded priorities. This area was informed by the JPS • High relevance to the PDG 2014-2018 - education reform with a focus on improving equity and quality of education is PDO 2 - Improve the one of the main pillars of the PDG conditions to enhance the • High relevance to the Bank’s CPS 2011- quality, equity and quality of tertiary education. financing of tertiary education is one of the main priorities of the expanded CPS. This area was also informed by extensive analytical work and technical assistance of the Bank PDO 3 - Strengthen • High relevance to the PDG 2014-2018 – focus on citizens’ institutions for poverty rights reform area including improving poverty measurement measurement and enhance and social protection system targeting mechanisms of • High relevance to the Bank’s CPS 2011-2016 – focus on social programs. improving service delivery and Chile’s social protection system. Relevance of Design: As a whole, the operation’s design is considered to have high relevance. Specifically, all three policy actions included in the Policy Matrix are considered highly relevant, as they focused on structural reforms aimed at enhancing quality and equity in education, as well as enhancing the measurement of poverty and enhancing targeting of social programs. The relevance of individual RIs is assessed as related to policy areas and varies from modest to high and discussed below. During the preparation of this operation, several design options were considered. Among these were the options for programmatic or single tranche. Upon discussion with the government, CMU, VPU, and the team, it was decided that the DPF would be designed as a single tranche operation in order to give a push for the reforms initiated by the government and give time to the government to implement the reforms. Similarly, a single tranche operation also gave more flexibility for future operations designs, and ensured better complementarity with other instruments that were under implementation. 19 While the DPF is not targeting gender issues directly, but rather vulnerable populations at large, this topic was considered during the design stage and the government has provided gender disaggregated indicators incorporated into the M&E framework. Relevance of Design – Substantial Policy Area 1 – Promoting equal opportunities in education. Policy Area 1 is deemed to be highly relevant because the actions under this policy area, i.e. Inclusion Law, PACE and introduction of full scholarships for tertiary education to students from poor backgrounds, directly address the main constraints that had been identified through extensive analytical work to access quality education across the socioeconomic spectrum. The recently completed SCD confirms the relevance of the constraints the government is addressing with the policies that the DPF supported. RI 1 - Students who receive the Preferential School Subsidy (SEP) is rated substantially relevant. While it measures the extent to which the opportunities at the primary and secondary schools have been expanded for students from the lower quintiles of the income distribution, it does not fully capture all of the implementation aspects of the Inclusion Law. To complement this indicator, the ICR analysis also assessed how well the change in admission process worked, how many schools took up the co-payment and elimination of profit for schools and whether more public resources were allocated to education. RI 2 - Students in secondary school incorporated in the PACE program is rated substantially relevant. While it measures how many students from lower quintiles were supported to improve their chances to transition to higher learning institutions, this is still a small scale program. To complement this indicator, the ICR also assessed the success of the students participating in PACE program in transitioning through secondary education and successfully applying to tertiary education. RI 3 - Full scholarship recipients that belong to the five lowest income deciles enrolled in their first year of tertiary education is rated substantially relevant as it measures by how much access to tertiary education for students from lower quintiles has been expanded. Nonetheless this indicator is not sufficient as it does not measure the progression of students through tertiary education, which would be important to monitor over time, and quality of tertiary education that these students apply to. In addition, the ICR assessed the distribution of students with full scholarships who enrolled in universities and technical schools. Finally, in the following years of implementation it would be important to monitor whether the share students from the bottom 40 percent of the income distribution is increasing over time. Policy Area 2 – Improving the conditions to enhance the quality of tertiary education. Policy Area 2 is considered to be highly relevant given that quality of the public education system lags that of private institutions and is fairly uneven nationwide. Furthermore, public financing of tertiary education in Chile is also of concern as it is among the lowest in the OECD. While strengthening the quality of tertiary education is a long-term process and outcomes of the initial investments can be observed only several years after, the first step (an input-related policy action) in the result chain was increasing budget allocation to state universities under the Convenio Marco. The initial output results indicator selected for this policy area is the number of students enrolled in state universities under the Convenio Marco. The timeframe of the DPF does not allow to 20 measure other outputs and outcome indicators. However, the potential indicators could include: (i) output indicator - share and number of students who graduated from state universities under the Convenio Marco; and (ii) outcome indicators – performance on standardized tests of students from the Convenio Marco universities compared to other universities; percentage of students who found jobs within 6 or 12 month after graduation in the field of their studies; monthly earnings of students from the Convenio Marco compared to other universities; perception of employers about skills/ quality of education of students from Convenio Marco universities. RI 4 – Students enrolled in state universities included in the Convenio Marco is rated as modestly relevant. While this indicator measures the output from the system with improved conditions to enhance quality of tertiary education, i.e. number of students enrolled in the Convenio Marco universities, it does not per se measure the improvement in the conditions. It is particularly difficult to measure improvements in the quality of education in the short- term; conventional measures include test scores, something we wouldn’t be able to measure until students go through all their tertiary education in a school with the Convenio Marco. However, other complementary indicators are available to facilitate evaluation of progress, for example, amount of money allocated to the Convenio Marco budget line, number of universities that submitted proposals in the first year of the implementation, and a new law which has been approved related to teacher professional development. Policy Area 3 – Strengthening institutions for poverty measurement and enhancing targeting mechanisms for social programs. Policy Area 3 is considered to have high relevance. While Chile has made a substantial progress towards reducing income-based poverty and increasing its middle-class, several challenges in household vulnerability and propensity of moving from middle class to vulnerable remain. The actions under this policy areas directly speak to these challenges. The newly adopted multi-dimensional poverty methodology accounts for the broad range of vulnerabilities as well as potential policy areas that could be targeted, which complements monetary poverty measures. Furthermore, under this policy area, greater transparency in poverty measurement has been achieved. In the area of enhancing targeting mechanism, Chile has a number of social programs and with limited fiscal space it is important to strive for greater efficiency in targeting of these programs. RI 5 - Release of monetary and multidimensional poverty indicators based on the new methodology and its corresponding microdata with the release of the 2013 and 2015 household survey (CASEN) – is rated as high relevance. While release of the monetary and multidimensional poverty indicators is an output indicator, the process which led to the development of the new methodology strengthened poverty measurement institutions through training. Furthermore, public release of data and methodology improved system transparency. RI 6 - Social programs and subsidies whose eligible beneficiaries are determined by the new targeting system- is rated modestly relevant. This is an output indicator which measures how many programs are using the new targeting system. However, improvement in the targeting mechanism can be reflected by coverage, accuracy, and timeliness which is not captured by the indicator itself. 3.2 Achievement of Program Development Objectives 21 Overall, the PDOs achievement was substantial. The operation supported effectively the government in kick-starting the reform process and making traction in implementing them in accordance with the PDO specified in the DPF. All laws and regulations as specified in prior actions have been launched. The reform agenda has also made traction: 1) programs that allow more equitable access to education and enhance quality of education have been scaled up; 2) the budget allocations for these programs have been secured by the Public Budget Law; 3) buy-in from the beneficiaries of the program is reflected by sizeable acceptance of the elimination of copay, scale-up of SEP, and despite controversy of tertiary education reform, take-up of student scholarships and PACE; and 4) the PSIA shows that these reforms are expected to have positive impacts on poverty and inequality reduction in the medium to long term. However, it is not possible to measure the full impact of the reforms supported by operation due to the short time period between policy enactment and the time by which the policy is assessed. By design some reforms used sequential geographical rollout, e.g. PACE, or sequential activity- based rollout, e.g. Convenio Marco universities; used piloting mechanisms before scaling up, e.g. PACE; or commenced with the normative design before moving to implementation, e.g. several activities under the Inclusion Law. Progress within each Policy Area and corresponding PDOs is summarized below. PDO1: Promote equal opportunities in education The achievement of this project objective is substantial as not only three results indicators exceeded their initial targets, but also acceptance of the reforms by the public at large has exceeded expectations, resources have been provided to implement the reforms, agencies have received adequate financing, and the pilots have been scaled-up and the roll-out of the reforms is going according to the plan. RI 1: Students who receive the Preferential School Subsidy (SEP). The SEP established a new targeted voucher that would give significantly more resources to schools for each eligible student enrolled. Eligible students correspond roughly to those in the poorest 40 percent of the income distribution. 5 The SEP effectively eliminated tuition fees for vulnerable students in most private- subsidized schools. It also required schools to provide a plan (Plan de Mejoramiento Educativo) on how the additional funds were going to be used. Under the Inclusion Law, SEP was scaled up as these funds were also tied to the elimination of copayment and for-profit motive in the schools. In 2016, out of total enrollment of 3,261,873, 1,909,981 students received preferential school subsidy which is 117 percent of targeted achievement. To enhance access to quality education at the primary and secondary education levels the Inclusion Law No. 20845 of June 2015 introduced the following procedural changes to existing norms: (a) regulate the admission process; (b) eliminate co-payments; (c) eliminate profits in establishments that receive state funding, and (d) improve quality by increasing public resources for education. The enactment of the Law has been gradual, starting with normative design of each component and then moving on to actual implementation. Normative design of the Law has largely been completed and implementation has completed the second year. 5 In order to be eligible, students must either belong to the lowest 33 percent of the income distribution according to the government targeting instrument Ficha de Proteccón Social; or belong to the social program for the poor Chile Solidario; or students’ parents must show that they are poor, of very low education or part of the lowest socioeconomic group in the public health system. 22 Regulation of the admission process: During the first year, a centralized regulated admission process for schools that receive public funding was rolled out in one region for the first-grade level provided by the school. The results of the evaluation showed that 75 percent of applicants received their first preference for school admission. In the second year, the selection system has been applied to all grades for pre-school, primary and secondary education in this same region, and the new selection mechanism also has been rolled out into four regions and applied to the first grade that schools offer. During the third year, the platform will be expanded to all grades in the aforementioned regions from year 2 of the implementation, and will be implemented nationwide for the first grade that schools offer. Elimination of co-payments: As of 2016, 783 schools applied for this system. 6 The government also offers increasing subsidies not only to compensate for the co-payments eliminated but directed to finance quality of education to incentivize the majority of schools to eliminate fees permanently. In 2016 this subsidy will be about 5,300 pesos per student, in 2017 it will increase to 7,000 pesos, and in 2018 – to 9,500 pesos. 7 Elimination of profits in schools which receive government financing. This area of the Law has completed the normative design stage and implementation teams are operating. As of 2017, 887 schools applied to be transferred from profit to non-profit status, 486 of them have completed the transfer. Once the school applies for the transfer it has up to three years to complete the process. There were several challenges with the transfer process, specifically related to the management of school assets during the transfer period. To address these issues, the GoC has issued Law No. 20.993 “Modifica Diversos Cuerpos Legales Para Facilitar El Funcionamiento Del Sistema Escolar” on January 28, 2017 which creates tax breaks related to property management for schools that are planning to transfer. During initial stage of the implementation, this component of the Law has not led to school closings other than those that were already anticipated. Improvement in quality by increasing public resources for education: The allocated nominal budget for the Ministry of Education increased by 13 percent in 2015 and by 16 percent in 2016 relative to only a 6 percent increase in 2014 (Figure 1). The total allocated budget increased from 7.1 billion pesos in 2014 to 9.4 billion pesos in 2016. 6 http://portales.mineduc.cl/contenido_int.php?id_contenido=32344&id_portal=1&id_seccion=9 7 Ibid 23 Figure 1. Annual budget expenditure allocation and year-to-year nominal budget increase for the Ministry of Education 18 10 Annual allocated expenditures, bln pesos Year-to-year budget growth, (percent) 16 9 14 8 7 12 6 10 5 8 16.1 4 13.2 6 3 4 2 6.3 2 1 0 0 2013 2014 2015 2016 Growth Expenditure Source: Public Sector Budget Law, 2013-2016 RI 2: Students in secondary school incorporated in the PACE program. The target was achieved since as of 2016 the program scaled up to 456 schools in 14 regions and supported 74,562 students (131 level of achievement). Similar to other reforms, PACE envisioned a gradual rollout. It started in 69 schools of 6 regions and supported 7,614 students. The collaboration was established with 5 tertiary education institutions (3 private and 2 public). The results of the pilot evaluation shows that program retention was 93 percent. Out of 3,868 students who completed PACE by the time of evaluation, 2,712 enrolled into Convenio Marco institutions, 505 enrolled in non-Convenio tertiary schools, and 651 did not enroll in tertiary education. In the first cohort of PACE graduates who enrolled in tertiary education 60 percent were women. The initial estimates suggest, that per capita annual cost of the program is 150,000 pesos for preparation during secondary school and 1,000,000 pesos for support at the tertiary level. The results from the first year evaluation based on the questionnaires administered to students and professors and focus group discussions with different stakeholders showed that the program was overall well received. The analysis showed that it was well targeted and interviewees perceived that it opened pathways for students from poor backgrounds to access tertiary education which they would have not otherwise. However, it was also mentioned that there were some challenges with the clarity of the design and communication campaign and information flows to the stakeholders about the program, specificities of design, and roles and responsibilities of different parties. Further, several interviewees mentioned that the current design benefits mostly the best students in the class instead of helping those who are lagging behind. Some aspects of these critiques were incorporated into the revision of the program design. 24 RI 3: Full scholarship recipients that belong to the five lowest income deciles enrolled in their first year of tertiary education. In 2016, 48,555 students received full scholarships in the first year of their studies exceeding the target of 30,000 by 62 percent. In the first year of implementation, 138,951 students received full scholarships out of which 34.9 percent were first year students and 65.1 percent were in their second year or higher. Students with full scholarships comprised 15.6 percent of the student body at the tertiary level (Figure 2). Figure 2. Enrollment at tertiary level 1990-2016 (number of students) 840,685 889,243 771,849 713,576 628,274 554,401 476,780 383,435 299,864 252,359 192,472 165,927 160,029 155,859 152,553 142,245 135,297 118,599 109,688 101,202 100,308 99,284 94,448 90,816 88,295 79,899 71,986 Créditos Becas Gratuidad Total Source: MINEDUC The majority (58.5 percent) of full-scholarship students enrolled in technical education and only 41.5 percent in universities. Table 1 shows the share of students by income decile and type of tertiary institution attended. Students from the bottom 40 percent of the income distribution were more likely to attend technical institutions than universities. Given that most students with the full- scholarships went to technical schools, one can expect that the bottom 40 highly benefitted from this policy. Finally, due to high demand the increase in enrollment at the universities with full- scholarship students was capped at 2.6 percent. 25 Table 1. Share of students by decile and type of tertiary education institution, 2013, percent HH Income Share of students enrolled at Share of students enrolled at Deciles the university technical institutions 1 42.7 57.3 2 47.2 52.8 3 40.5 59.5 4 42.9 57.1 5 48.9 51.1 6 42.2 57.8 7 41.8 58.2 8 37.5 62.5 9 30.9 69.1 10 18 82 Source: Authors’ calculation based on CASEN 2013. Note: Income deciles are estimated using per capita household income with the new income definition. Moreover, as shown in the Study of the Distributional Effects of the 2014 Chile Tax Reform (World Bank, 2015), given income levels, only individuals that belong to the top 25 percentiles of income actually pay income taxes. Individuals that belong to the lowest 74 percent of the income distribution earn less that the minimum income level above which a person is required to file a tax return to the Internal Revenues Service (Form 22) for the Complementary Global Tax. 8 This implies that targeting full scholarships for students that belong to the five lowest income deciles enrolled in their first year of tertiary education is in line with providing opportunities to vulnerable households. PDO2: Improve the conditions to enhance the quality of tertiary education. Improving quality of public tertiary education is a long-term objective given the wide discrepancies with the private universities and the variation in quality of public education across the country. In the context of this PDO, the conditions for enhancing the quality of tertiary education were defined as increased budget allocations to public universities for the purpose of improving quality of education. In evaluating progress, achievement of the indicator is complemented with information relevant to launching a credible process of improving the quality of public universities. The achievement of this project objective is substantial. First, the result indicator was achieved. Second, the government provided funds for quality improvements through the Convenio Marco. Third, public universities applied for those funds and initiated actions to assure their proper utilization as reported periodically to the Ministry of Education. The buy-in from the universities strengthens sustainability. Finally, to further harmonize and strengthen the quality of public tertiary education, the Law on teacher professional development was passed in 2016. 8 The figure for 2013 was CLP 6,605,064 for total annual income. 26 RI 4: Students enrolled in state universities included in the Convenio Marco. In 2016, 178,000 students enrolled in Convenio Marco universities, reaching 99 percent achievement of the 180,000 student enrollment target. The number of student enrollment was slightly below target due to a 2.6 percent cap on annual increase in university enrollment. This cap became effective in 2016 and was not foreseen during the original design of the operation. The Convenio Marco de Universidades Estatales was launched in 2015 and received a separate budget line under the Public Budget Law. The objective of this initiative was to strengthen and harmonize quality of public tertiary education across Chile and create a network of public universities. Under the Convenio Marco additional resources were made available to universities for projects that seek to improve education quality along the following four areas: institutional strengthening (management); research and innovation; links with the environment; and teacher training. These projects are typically related to the strategic development goals of the universities. The universities have freedom in budget execution as long as they fulfill the objectives and activities they committed to under the project. The implementation of the projects is evaluated annually by the MINEDUC. Since 16 universities under the Convenio Marco previously (before 2015) were eligible for applying for Basic Performance Fund (BD) under the CRUCH, the resources for Convenio Marco in 2015 were distributed based on historical distribution and averages received by universities over the previous two years (2013 and 2014). For 2016, resources were allocated using performance indicators similar to those used by BD with some minor modifications that took into account the performance achievements of the universities. Moving forward the resource allocation is guided by Decree No. 48 of 2015 and its modifications, which are modified and updated every year. Table 2 shows that resources for Convenio Marco universities have been increasing since 2015, reflecting the gradual increase and programmed substantial increase in capital expenditures in 2017. Table 2. Budget allocation to Convenio Marco universities, 2015-2017, million Chilean pesos 2015 2016 2017 Recurrent 23.8 33.6 35.7 Capital 10.3 12.9 22.1 Total 34.1 46.5 57.8 Source: Ley de Presupuestos, 2015-2017 Convenio Marco, similarly to other initiatives, is implemented using a gradual roll-out approach. In 2015 most universities worked on developing the strategic plans for the institutional development and quality enhancement. In 2016 Convenio Marco additional funds were allocated to teacher training projects. In 2015 each university was invited to submit one proposal, in 2016 – two proposals. The MINEDUC annually evaluates the performance of the universities in accordance with proposals. Also, the Teacher Law No. 20.903 “Crea El Sistema De Desarrollo Profesional Docente Y Modifica Otras Normas” was approved by the Congress and published on April 1, 2016. This law regulates teaching staff professional development and, thereby, aims to improve quality of education. In the following years, the project themes are expected to incorporate all focus four areas. 27 PDO3: Strengthen institutions for poverty measurement and enhance targeting mechanisms of social programs. The achievement of this PDO is high since the new poverty methodology was released and the new targeting mechanism was established and is in use. A new methodology for measuring poverty that incorporates multidimensional indicators is in place and has been communicated publicly and is available for consultation. Similarly, social programs are moving from largely self-reported indicators to ones based on administrative data thereby increasing efficiency of social spending, increasing transparency and making the social support system fairer. RI 5: Release of monetary and multidimensional poverty indicators based on the new methodology and its corresponding microdata with the release of the 2013 and 2015 household surveys (CASEN). The monetary and multidimensional poverty indicators based on the new methodology with corresponding microdata and program files for 2013 and 2015 CASEN have been published on the website of the Ministry of Social Development. The achievement of this part of the PDO is high. In 2014, the government issued an updated national official methodology for the measurement of monetary poverty, creating institutional arrangements for improving its quality, transparency, and replicability. The design and introduction of this new methodology is the result of extensive consultations and workshops with national and international leaders in poverty measurement. Furthermore, the government introduced a Multidimensional Poverty Index (MPI) that complements the monetary poverty estimate providing a richer set of tools for characterizing poverty, inequality and deprivations. To complement this measure, with the release of the 2015 CASEN data, a new dimension on environment and support networks available to individuals was incorporated. This measure includes indicators on environmental pollution, travel time, distance to public services (including transportation, health centers and schools), social participation, unfair treatment or discrimination and security. This new dimension can contribute significantly to target populations that are not only income poor but also suffer from discrimination and environmental degradation. These applications will allow design of policies and assign resources more effectively. Finally, a draft bill of the new Law on the poverty line (el Proyecto de La Ley de la Linea de Pobreza) is currently debated in Parliament. The law provides an updated definition of the poverty line, puts emphasis on strengthening the national system of statistics and creating common standards for statistics in Chile. RI 6: Social programs and subsidies whose eligible beneficiaries are determined by the new targeting system. The achievement of this results indicator exceed its target as 51 social programs started using the new system to target beneficiaries instead of the targeted 10. The social targeting mechanisms were enhanced through increased transparency, improved information quality and larger population coverage by using administrative data. The achievement of this part of the PDO is considered high. The government undertook a major transformation of its targeting mechanisms by establishing the Household Social Registry. This change resulted in moving from self-reported data for determining program eligibility to use of a combination of social protection records, social records, and administrative data (Figure 3). In order to succeed in 28 this transformation and reach out to all populations, the government undertook a large communication campaign through TV, Radio, press and social networks. These efforts resulted in substantial improvements in the system which resulted in “mas justo, mas transpariente, mas simple” more fair, transparent and simple targeting mechanism. The new system contains information of approximately 12.7 million individuals and 4.7 million households, which account for 72 percent of the Chilean population relative to 46 percent covered by the old system. Coverage of the population in the system is robust as the majority of individuals and households belong to the bottom 40 percent of the income distribution (Table 3). Since the system covers 72.3 percent of the total population, the robustness check shows that exclusion error of the bottom 40 percent of the distribution is less than 5 percent as the system covers 38.1 percent instead of 40 percent from bottom income quintiles. Another important feature of the system which allows for large coverage is delegation of the system information update to the municipalities (there are 345 municipalities in Chile) which are implementing agencies for the HSR information input, update and verification. Figure 3. Household Social Registry Source: Ministry of Social Development 29 Table 3. Population distribution by socio-economic deciles of the Household Social Registry Distribution Distribution of Distribution of relative to Number of Deciles households Individuals individuals total households (percent) (percent) population (percent) 40 2,509,553 53.6 6,683,807 52.7 38.1 50 463,849 9.9 1,335,837 10.5 7.6 60 372,300 8.0 1,032,543 8.1 5.9 70 362,824 7.7 998,686 7.9 5.7 80 344,744 7.4 924,912 7.3 5.3 90 460,074 9.8 1,300,471 10.3 7.4 100 169,648 3.6 408,483 3.2 2.3 Total 4,682,992 100 12,684,739 100 72.3 Source: Ministry of Social Development During the first year of the implementation, the HRS received 1,997,157 claims by 1,111,238 individuals. The support was provided to 951,251 households which corresponds to 20.3 percent of households registered in HSR. Of total applications, 62 percent were approved, 25 percent were rejected and 13 percent are still under revision. The average number of days to process the claim was also substantially reduced from 25 days in January 2016 to 6 days in December 2016. The Ministry of Social Development conducted a user study in February 2017 to evaluate satisfaction with the new system. Overall, the feedback was very positive – 90 percent agreed the system was more modern than the previous, 77 percent agreed it was more transparent, and 74 percent that is was simpler. However, only 34 percent said they had sufficient information about the system. The PSIA shows that both parts of the PDO are expected to have positive effects on poverty and inequality reduction. Complementing monetary poverty measurement with the MPI, allows the government to identify people who are deprived across different dimensions. Similarly, the new targeting mechanism makes social support programs more efficient. The objectives were highly relevant, directly aligned with the GoC reform agenda and expanded focus of the CPS. The design of the operation was built on strong analytical foundations. The design of the first and third policy areas is highly relevant and the second is substantially relevant. Efficacy was substantial for the promotion of equal opportunities in education and improving conditions to enhance quality of tertiary education sub-objectives. It was high for the objective on strengthening institutions for poverty measurement and enhancing targeting mechanisms of social programs. Overall, the outcome is rated as satisfactory. 30 3.3 Justification of Overall Outcome Rating (combining, relevance, achievement of PDOs) Achievement Relevance Relevance of Policy Area of of Design Objectives Objective (*) (Efficacy) PDO1: Promote equal opportunities in education High High Substantial PDO2: Improve the conditions to enhance the High Substantial Substantial quality of tertiary education. PDO3: Strengthen institutions for poverty measurement and enhance targeting mechanisms High High High of social programs. (*) Relevance of design refers to that of the policy area rather than individual RIs indicators. Efficacy is assessed based on RIs that are considered relevant and additional evidence that is consistent with the PDO. 3.4 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development The DPF is focused on issues of equity and poverty reduction, thus, it is expected to have a strong impact in areas of poverty, gender, and social aspects. Substantial analytical work on poverty and social impacts (PSIA) was carried out in preparation for this operation which elaborated on impacts of each policy action. While it is too early to judge on the longer term impacts and causal relationship of some aspects of the reforms, e.g. enhancement of the quality of tertiary education, impacts of reforms on education and labor market outcomes of poor students, the PSIA results show that the reforms are expected to have strong impacts on poverty reduction and improving equity. Policy Area 1: Promoting equal opportunities in education. Reforms supported under this policy action are expected to have explicit positive impacts on poverty reduction and improving equity, through elimination of school co-payments, regulation of school admission process and increasing public financing through SEP. The PSIA shows that initiatives under this policy action are expected to have positive impacts: 1) Short-run and long-run positive impacts on income inequality are expected from the increased resources to public education through the SEP; 2) Elimination of co-payment is expected to have a small effect on poverty and income inequality reduction (Table 4) and could potentially increase the probability of a student aged 15 to 18 years having completed secondary education by 9 percent 31 Table 4. Poverty and Inequality Impacts of Eliminating Shared Funding Eliminating Status Quo co-payment Extreme Poverty 4.536 4.451 Moderate Poverty 14.513 14.170 Income Inequality (Gini coefficient) 0.51028 0.5096 Source: Own calculation based on CASEN 2013. Note: Moderate and Extreme Poverty are calculated using the new methodology and using official income aggregate. Results are presented for the entire population. Calculation of the Gini coefficient are based on household monetary income. 3) The regulation of the admission process of schools receiving state funding is expected to reduce stratification across Chilean schools. The PSIA shows that PACE is expected to have a positive effect on expanding opportunities to enter tertiary education and, thus, potentially on improving students’ future earnings. Figure 4 shows that there is a significant return to completion of tertiary education. Gonzalez-Velosa et al. (2014) and Urzua (2013) estimate that university degrees on average have a positive rate of return in Chile, suggesting that vulnerable populations would benefit from programs that encourage post- secondary completion. In addition, studies have shown that providing students with information about their future earnings can increase their expectations and thus improve their educational outcomes. 9 Figure 4. Marginal Returns to Schooling in Chile (2015) 1.4 1.2 Wage premium over no 1.0 education 0.8 0.6 0.4 0.2 0.0 2003 2006 2009 2013 2015 Primary Secondary Tertiary Source: Own calculations based on calculations based on CASEN 2015. Note: Education results are all with respect to the excluded category of incomplete primary education or less. Socio-demographic controls include, gender, experience, experience squared, urban, regional dummies. Sample is limited to working individuals 18-65 years of age. 9 Jensen (2007). 32 The PSIA shows expected positive impacts of full scholarship: 1) Poverty and inequality are expected to decline (Table 5) 2) Expanding scholarships is expected to have a positive effect on tertiary education enrollment and completion - an increase of 5.4 percent in the probability of students aged 19 to 22 years of having tertiary education Table 5. Poverty and Inequality Rates Conditional on State Funding Moderate Extreme Gini Poverty Poverty Index Status Quo 14.513 4.536 0.51028 Simulation 1 (State Pays 5% of the Tuition) 14.465 4.490 0.51008 Simulation 2 (State Pays 10% of the Tuition) 14.384 4.454 0.50989 Simulation 3 (State Pays 20% of the Tuition) 14.283 4.422 0.50952 Simulation 4 (State Pays 30% of the Tuition) 14.160 4.392 0.50919 Simulation 5 (State Pays 50% of the Tuition) 13.988 4.371 0.50860 Source: Own calculations based on CASEN 2013. Moderate and Extreme Poverty are calculated using the new methodology for poverty measurement and using the official income aggregate. Calculations of the Gini Index for income inequality are based on household monetary income. State contributions to tuition are chosen arbitrarily. These results do not take into account the effect of the financing policy and are calculated only for the first seven income deciles. Furthermore, data from the first year of implementation shows that women were more likely to benefit from the full scholarships than men. More women than men received full scholarships – 55 vs. 45 percent (Figure 5). Figure 5. Distribution of full scholarship recipients by gender and year of study in 2016, percent 60 54.4 55.1 54.9 50 45.6 44.9 45.1 40 Percent 30 20 10 0 First year Second year + All years Male Female Source: MINEDUC 33 Policy Area 2: Improve the conditions to enhance the quality of tertiary education. Studies show that quality of education is as important as years of education. Furthermore, Chile has the lowest spending on tertiary education compared to other OECD countries which inevitably affects quality of education. The PSIA analysis shows that improving the quality of public higher education through increased resources will likely enhance labor market returns and reduce inequity in Chile. Policy Area 3: Strengthen institutions for poverty measurement and enhance targeting mechanisms of social programs. This policy area is expected to positively affect poverty and inequality reduction through better identification and better targeting mechanisms of poor and vulnerable. It also improves system’s efficiency and transparency. While this operation was not designed to have gender interventions. The policy areas of this operation are expected to benefit both genders. Furthermore, gender aspects are embedded into M&E systems of both implementing agencies. (b) Institutional Change/Strengthening The reforms supported under this operation were transformation in how education and social support institutions operate. Specifically, Policy Area 1: Promoting equal opportunities in education. The operation contributed to putting in place stronger and more equitable institutions that facilitate access to quality education for all. The Inclusion Law achieved this by introducing clear criteria to access schools, eliminating co-payment and eliminating gradually subsidies for profit schools. The approach to support students from poor backgrounds during their transition from secondary to tertiary education (PACE) was innovative. Finally, providing full-scholarships to students from households of bottom 70 percent in both private and public institutions was an important change in operating criteria. Policy Area 2: Improve the conditions to enhance the quality of tertiary education. The government made efforts to strengthen the quality of public tertiary education and bring them up to the same level of standards by creating the Convenio Marco and dedicating resources for quality strengthening. Policy Area 3: Strengthen institutions for poverty measurement and enhance targeting mechanisms of social programs. Under this Policy Area the institutional changes included strengthened poverty measurement that enhanced transparency, and added multi-dimensional criteria. Also, the shift of self-reporting to using administrative criteria is a significant institutional improvement. (c) Other Unintended Outcomes and Impacts (positive or negative, if any) One of the unexpected outcomes of the reform was high demand for full scholarships at the university level, which created pressure both on the fiscal and supply side. To control the situation, the government instituted a 2.6 percent cap increase of students at the universities which receive government financing. Consequently, those students who were not able to enter universities went 34 to technical schools, as mentioned earlier 55 percent of those who received full scholarships enrolled in technical schools. 3.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not Applicable 4. Assessment of Risk to Development Outcome Risk rating: moderate Overall, the sustainability of the operation’s outcomes is considered to be Moderate. The GoC is committed to the reform agenda as outlined in PDG 2014-2018. The main factors contributing to the risk of development outcome include changes in fiscal sustainability, success/ failure of reforms, and political risks. In terms of fiscal sustainability of the reforms, the financing of the reforms supported by this operation is regulated by the Public Budget Law and the provisions have been made for fiscal years 2017. The fiscal medium-term projections in the Chile SCD show steady increase of fiscal revenue, a gradual reduction of the fiscal deficit and sustainable public debt. The sustainability of the education and social protection reforms in the long term depends, however, on the success of the fiscal reform and additional fiscal pressures that may result from the demographic change. On the success/failure of the reforms, the implementation results show that the reforms supported by this operation gained traction on the ground and negative expectations have not materialized, the take-up and participation in the reforms is on track. Finally, on the political risks, the presidential elections are taking place in September, 2017 could bring a government with different priorities. However, the reforms at large are not expected to be reversed as they have been accepted by the public and reversal would affect large shares of population. Fine-tuning is likely. Policy Area 1: promoting equal opportunities in education – moderate risk. While reforms themselves are not expected to be reversed, the scale-up of certain initiatives, such as PACE and full scholarships, will depend on the fiscal situation in the future. Policy Area 2: improving the conditions to enhance the quality of tertiary education – negligible to low risk. The Convenio Marco initiative is not expected to be reversed as in addition to providing funds for quality improvements in tertiary education it also created a network among state universities. Furthermore, certain quality improvements, such as professional development for teachers have been incorporated into the law. However, the scale up of the financing to the universities under the Budget Law may depend on the fiscal situation in the long-run. Policy Area 3: strengthening institutions for poverty measurement and enhancing targeting mechanisms of social programs – negligible to low risk. The reforms under this policy area were 35 of methodological character or included system improvements. They have been implemented successfully and are being used by social protection programs. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Ranking: Satisfactory The Bank quickly responded to a request of the new Government and widened the focus areas of the CPS to make it relevant to the GoC development agenda addressing the issues of high inequality rates in the country. The objectives and policy areas of the operation were clear and highly relevant to the Government’s reform strategy and the Bank’s CPS. Furthermore, the operation built on solid analytical work and consolidated the contribution of several Bank’s operations under one umbrella. Specifically, the operation benefitted from the JSP programs and RAS’s. In tertiary education it built on long running engagement of the Bank in a series of lending projects, MECESUP, which focused on quality and equity aspects. Furthermore, this operation also paves the way for the upcoming MECESUP operation. Strong dialogue between the Bank and the GoC and long history of Bank’s involvement in the education sector in Chile were key to the operation’s success. Furthermore, active collaboration between different Global Practices within the Bank during preparation was an important factor in ensuring that the operations equity perspective was grounded in a relevant and robust cross- sectorial agendas. Finally, the Bank worked closely with the IDB in coordinating the support based on the comparative advantage of each institution. For example, while IDB works extensively in the areas of early childhood education, the Bank focused its efforts on overall quality and equity and tertiary education. (b) Quality of Supervision Ranking: Satisfactory As this was single tranche operation, only one supervision mission was conducted during the project period. However, the team maintained a good working relationship and common understanding on design and requirements of the operation with the main counterparts – the Ministry of Education and the Ministry of Social Development. Global Practice and CMU management followed project implementation closely. The Bank team continued to play an active role in the dialogue on equity and poverty in Chile and continued active dialogue on these issues during the preparation of Chile Systematic Country Diagnostic and the implementation of education and social protection sector programs. (c) Justification of Rating for Overall Bank Performance Ranking: Satisfactory Overall, the Bank’s performance is considered satisfactory to reflect the satisfactory rating for quality at entry and satisfactory rating for supervision. 36 5.2 Borrower Performance (a) Government Performance Ranking: Satisfactory The GoC’s performance was Highly Satisfactory as a result of strong political commitment and leadership during the preparation and implementation. These reforms are the top priority for the PDG 2014-2018. Another key factor of the GoC’s performance and subsequent success of the operation was a strong Monitoring and Evaluation system. As mentioned earlier, the GoC used the same indicators for internal M&E purposes, the reforms implementation was gradual which allowed for a fine-tuning based on the piloting results. (b) Implementing Agency or Agencies Performance Ranking: Satisfactory Performance of the implementing agencies, Ministry of Education and Ministry of Social Development, was Satisfactory as they (i) developed a gradual reform implementation plan to incorporate lessons learned from the pilots of the interventions into full rollout; (ii) effectively coordinated implementation in their respective areas; (iii) placed a strong focus on, deployed and used M&E systems. Implementation of the full-scholarships was the only initiative where the government didn’t utilize a pilot approach. (c) Justification of Rating for Overall Borrower Performance Ranking: Satisfactory Overall, the Borrower’s performance is considered satisfactory to reflect the highly satisfactory rating for Government performance and satisfactory rating for Implementing Agencies Performance. 6. Lessons Learned Piloting and sequential rollout are important. Most of the reforms implemented in the education sector, like the cases of the Inclusion Law and PACE, were piloted first in small geographical areas and a select number of schools. Lessons from these pilots were incorporated into the larger reform roll-out. This was also important for streamlining the processes and building capacity of the government to adjust to the new modus operandi. In comparison, in the case of introduction of full scholarship for the tertiary education the pilot and/or gradual roll-out was not implemented which resulted in large course corrections (capping admissions) and unintentional effects (55 percent of eligible students enrolled in technical schools and only 45 percent in the universities). Consensus building is critical for the success of the reform. Debates about the design of some components of the education reform, e.g. provision of full scholarships, included participants from the broad ideological spectrum. Technical conversations were critical to build the consensus on reform implementation. While there are still debates about sustainability of the full scholarship program, the public at large agrees on the importance of providing equitable access to quality tertiary education for all students. 37 Communication campaign is very important. Communication campaigns were critical to ensure reform-take up, especially when the reforms were to change established processes, for example, admission rules, copayment rules and school management. Communication also helped switch to the new targeting system. These communication campaigns played an important role in ensuring that the reforms stayed on track during the first year of reform implementation. The Bank adds important value in the context of high income countries. This operation coalesced the Bank’s continuous engagement in the areas of education, poverty and social inclusion in Chile. The Bank has been supporting the government of Chile by providing technical assistance though JSPs and RASs to generate technical justification and background for the major education reforms. Furthermore, the Bank has been supporting the GoC’s efforts in strengthening the quality and equity of higher education through MECESUP lending operations since 1998. This support was critical as improving quality and equity of tertiary education, design of the reform agenda and actual implementation take long time. Finally, the Bank has vast expertise on poverty, vulnerability and equity measurement which the GoC requested and used when re-designing their poverty lines and enhancing targeting mechanisms. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing agencies See Annex 4. (b) Co-financiers Not Applicable. (c) Other partners and stakeholders Not Applicable. 38 Annex 1. Bank Lending and Implementation Support/Supervision Processes Responsibility/ Names Title Unit Specialty Lending Carlos Rodríguez Castelán Senior Economist GPV04 Task Team Leader Co-Task Team Alan Fuchs Tarlovsky Senior Economist GPV04 Leader Co-Task Team Javier Botero Alvarez Lead Education Specialist GED04 Leader Mariana Margarita Montiel Senior Counsel LEGAM Patricia De La Fuente Hoyes Sr. Financial Management Specialist OPSPF Carmen Veronica del Rosario Sr. Social Protection Specialist Silva GSP04 Team Member Jessica Diane Adler Poverty Specialist GPV01 Team Member Rong Qian Economist GMF04 Sr. Water Resources Management Javier Zuleta Specialist GWA03 Team Member Giselle del Carmen Hasbun Consultant GPV04 Francisco Marmolejo Lead Economist GED06 Peer Reviewer Harry Anthony Patrinos Practice Manager GED02 Peer Reviewer Peter Siegenthaler Economic Adviser OPSPQ Peer Reviewer Wendy Cunningham Lead Specialist GSP02 Peer Reviewer Karem Edwards Program Assistant GPV04 Oscar Calvo Practice Manager GPV04 Team Advisor Maria Virginia Hormazabal Finance Officer WFALA Karina Brito Operations Analyst GPV04 Lourdes Rodriguez Chamussy Economist GPVGE Supervision Carlos Rodríguez Castelán Senior Economist GPV04 Alan Fuchs Tarlovsky Senior Economist GPV04 Task Team Leader Javier Botero Alvarez Lead Education Specialist GED04 Co-Task Team Yevgeniya Savchenko Economist GPV04 Leader Giselle Del Carmen Hasbun Consultant GPV04 Luis Alvaro Sanchez Consultant GPV04 ICR Preparation Karina Brito Operations Analyst GPV04 Maria Arriba Banos Advisor GPVGE Jessica Diane Adler Poverty Specialist GPV01 39 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage USD No. of staff weeks (incl. travel and consultant costs) Lending FY2015 23.50 US$104,435 FY2016 12.43 US$50,970 Total: US$155,405 Supervision / ICR FY2016 4.76 US$21,033 FY2017 4.80 US$16,149 Total: US$37,182 40 Annex 2. Beneficiary Survey Results Not Applicable 41 Annex 3. Stakeholder Workshop Report and Results Not Applicable 42 Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR Translation prepared by the ICR Task Team: Santiago, REF.: Comments to the Implementation and Completion Report (ICR) of the Development Policy Financing for Social Inclusion for Shared Prosperity” (IBDR-8551). Mr. Alberto Rodriguez Director for Andean Countries The World Bank Lima, Peru From my consideration: Through this letter, I would like to transmit the following comments regarding the Implementation and Completion Report of the Social Inclusion for Shared Prosperity Development Policy Financing, that our country signed with The World Bank. I am pleased to inform you that within the framework of this Program, several actions were implemented that have jointly contributed to the achievement of the objectives set out in the Government Agenda regarding the education reform, equity and social development, among which we include the following: • Since the enactment of the Inclusion Law in 2016 -which regulates the admission of students in Chile- our country provides the conditions for children and young adults, attending basic and secondary schools with State funding to receive a high-quality education. Eliminating profit in schools that receive State contributions and ending arbitrary selection allows the most vulnerable families to choose the educational programs and institutions for their children. It is estimated that, by 2018, more than 90% of students will not have to pay to study in Chile. • With respect to the initiative to promote the successful transition of vulnerable students from secondary school to higher education through the Effective Access to Higher Education (PACE), it has been possible to focus, identify and accompany talented students who come from disadvantaged sectors, making it possible to increase the levels of equity and quality in higher education. • Similarly, among the actions implemented under this Program we also highlight other important initiatives in the field of education, such as those that have made it possible to regulate budget implementation of state universities. This allows for further strengthening and improving quality of state universities and higher education based on institutional strengthening, research and innovation, outreach activities, teacher training, among others. Likewise, the significant increase in government resources allocated to education since 2015, particularly to support public funding of higher education (for enrolled students and coverage expansion), has allowed the country to make progress in the promotion of equitable access to higher education, expanding 43 coverage to students who belong to the country's most vulnerable population in the various educational centers, including universities, professional institutes, and technical training centers. • Also, in the Social Development area, this program was relevant in supporting policy actions that enabled our country to have an up-to-date poverty measurement methodology as well as the implementation of a Multidimensional Poverty Index (MPI). During this administration, after 25 years of measuring poverty with the same methodology, in 2015 Chile updated and expanded the way in which poverty is understood, along with modernizing the methodology to measure it. The new methodology imposed a higher acceptable standard of living for all Chileans, which in turn is consistent with a rights-based approach. At the same time, today Chile recognizes that poverty is not only related with the lack of income, but also with a wide set of shortcomings in dimensions such as Education, Health, Labor and Social Security, and Housing, which affect the quality of life and the well-being of Chileans. It should be noted that with the obtained information from these new poverty measurements it is possible to design and implement better social policies for our country’s most vulnerable population groups. • Finally, the Program supported the development of instruments that allow the Chilean State to establish a fairer, more transparent and more intuitive socio-economic characterization. By supporting the actions taken in this area by the Ministry of Social Development, the Program helped to develop a New Selection System for Social Benefits and the creation of the Social Information Registry for social policies. The latter makes it possible to gradually move towards a system of universal social protection, oriented to the assignment of benefits by the exclusion of higher-income sectors. The new system corrects some of the problems associated with the Social Protection Sheet (Ficha de Protección Social (FPS)) and allows for a more transparent, reliable and fair method. Its design considers three fundamental components (i) Social Registry, which allows households characterization based on information from the Social Information Registry; (ii) the design of instruments and mechanisms for determining the eligibility status of individuals and households, among which is the design of a socio-economic classification associated with a stratification in tranches, and (iii) procedures to rectify, update and/or supplement information from the Social Registry. Best regards, José Pablo Gómez Jefe División Finanzas Públicas Dirección de Presupuestos 44 QQ 134-c-17 * 12.jul.2017 Santiago, REF.: Comentarios al informe de Cierre de la implementación (ICR) del Contrato de Préstamo Programa “Políticas de Desarrollo en favor de la Inclusión Social para la Prosperidad Compartida” (IBDR- 8551). Señor Alberto Rodríguez Director para Países Andinos Banco Mundial Lima - Perú De mi consideración: Por medio de la presente, me permito remitir a usted los siguientes comentarios en relación al Informe de la Referencia, del Préstamo que permitió financiar parcialmente el Programa de Políticas de Desarrollo en favor de la Inclusión Social para la Prosperidad Compartida, que nuestro país suscribió con el Banco Mundial. Al respecto me es grato comunicarle que en el marco de este Programa se han realizado variadas acciones que, en conjunto, han contribuido al cumplimiento del logro de los objetivos planteados en la Agenda del Gobierno en el ámbito de la reforma educacional, equidad y desarrollo social. Entre ellas, cabe destacar las siguientes:  A partir de la promulgación de la Ley de Inclusión Escolar que Regula la Admisión de los estudiantes en Chile, desde el año 2016, nuestro país entrega las condiciones para que los niños y jóvenes que asisten a escuelas básicas y medias que reciben subvención del Estado, puedan recibir una educación de calidad, eliminado el lucro en los establecimientos que reciben aportes del Estado y terminando con la selección arbitraria, lo que permite que hasta las familias más vulnerables puedan elegir el establecimiento educacional y el proyecto educativo de sus hijos e hijas. A partir de esto, se estima que para 2018 más del 90% de los alumnos estudiarán de manera gratuita en Chile. 45  En relación a la iniciativa para poyar la transición de los estudiantes vulnerables de la educación media a la educación superior a través del Programa de Acompañamiento y Acceso Efectivo (PACE), se ha podido focalizar, identificar y acompañar a estudiantes con talento que provienen de sectores vulnerados en sus derechos, lo que hace posible avanzar en el aumento de los niveles de equidad y calidad en la educación superior.  En este mismo sentido, y bajo las acciones que se implementaron dentro de este Programa se destacan además otras importantes iniciativas en el ámbito de educación, como por ejemplo aquellas que han permitido regular la ejecución presupuestaria de las universidades estatales a fin de que éstas puedan avanzar en el fortalecimiento de las mismas a través del desarrollo de acciones propias de interés, basada en los ejes de: Fortalecimiento Institucional, investigación e innovación, vinculación con el medio, formación de profesores, entre otras, con la lógica de avanzar en las condiciones para mejorar la calidad en la educación superior de manera integral. De igual forma, el aumento significativo de recursos que el Gobierno ha destinado a partir del 2015 en el presupuesto de educación, para ir en apoyo del financiamiento público de educación superior en estudiantes que acceden a ella, y con esto ampliar la cobertura de las mismas, ha permitido avanzar en la promoción del acceso equitativo a la educación superior, ampliando la cobertura de ingreso a los estudiantes que pertenecen a la población más vulnerable del país, en los distintos centros educacionales, tales como universidades, institutos profesionales y centro de formación técnica.  Asimismo, en materia de desarrollo Social, este Programa fue relevante para apoyar acciones de política que permitieran a nuestro país contar con una la metodología actualizada respecto de la medición de la pobreza y la aplicación de un Índice de Pobreza Multidimensional (IPM) oficial. Es así entonces, que durante este Gobierno, y después de 25 años midiendo la pobreza con una misma metodología, en el año 2015 Chile logró actualizar y ampliar la manera en que entiende la pobreza, junto con modernizar y transparentar su medición. Con estas nuevas metodologías de medición, Chile se ha impuesto estándares más exigentes sobre un nivel de vida aceptable para los chilenos, que a su vez sea consistente con un enfoque de derechos. Al mismo tiempo, hoy Chile reconoce que la pobreza no se relaciona sólo con la falta de ingresos, sino también con diversas carencias en dimensiones como la Educación, Salud, Trabajo y Seguridad Social, y Vivienda, que inciden en la calidad de vida y en el bienestar de los chilenos. Cabe señalar que con la información que se obtiene de estas nuevas mediciones de pobreza están permitiendo diseñar e implementar mejores políticas sociales para los grupos de población más necesitada de nuestro país.  Finalmente, en el marco del desarrollo de instrumentos que permitan al Estado Chileno establecer una caracterización socioeconómica más justa, transparente y fácil de comprender por parte de la ciudadanía, este Programa ha apoyó las acciones impulsadas en esta materia por el Ministerio de Desarrollo Social, lográndose con ello un nuevo Sistema de Apoyo a la Selección de Usuarios de Beneficios Sociales y el relevamiento del Registro de Información Social para las políticas sociales, el cual ha permitido avanzar en forma gradual hacia un sistema 46 de protección social más universal, orientado a la asignación de beneficios por el mecanismo de exclusión de los sectores de mayores ingresos. Este nuevo sistema corrige los problemas asociados a la Ficha de Protección Social (FPS) y permite generar un método transparente, confiable y justo. Su diseño considera la incorporación de tres componentes fundamentales i) el registro social de hogares, que permite caracterizar a los hogares en base a información del Registro de Información Social, RIS; ii) el diseño de instrumentos y mecanismos que permitan determinar la condición de elegibilidad de personas y hogares, entre los que se encuentra el diseño de una clasificación socioeconómica asociada a una estratificación en tramos, y iii) procedimientos para rectificar, actualizar y/o complementar información del registro social de hogares. Sin otro particular, lo saluda cordialmente, José Pablo Gómez Jefe División Finanzas Públicas Dirección de Presupuestos 47 48