PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: PIDA7547 Public Disclosure Copy Project Name Mexico School Based Management Project (P147185) Region LATIN AMERICA AND CARIBBEAN Country Mexico Sector(s) Primary education (90%), Public administration- Education (10%) Theme(s) Education for all (40%), Participation and civic engagement (40%), Managing for development results (20%) Lending Instrument Investment Project Financing Project ID P147185 Borrower(s) United Mexican States Implementing Agency Secretaria de Educacion Publica Environmental Category C-Not Required Date PID Prepared/Updated 31-Jul-2014 Date PID Approved/Disclosed 07-Aug-2014 Estimated Date of Appraisal 27-Jun-2014 Completion Estimated Date of Board 22-Oct-2014 Approval Decision a) The QER meeting endorsed the decision of preparing a stand- Public Disclosure Copy alone IPF following Track 1. b) The chair authorized the team to appraise the Project; c)The review discussed the risk rating of the Project and agreed to rate the Project Moderate for both preparation and implementation. I. Project Context Country Context A middle-income country and a member of the Organization of Economic Co-operation and Development (OECD) with a per capita GDP of US$$9,749 (2012), Mexico is the second biggest economy of Latin America and the world's fourteenth. Although the country made a quick recovery from the 2008-09 recession, it has not achieved expected growth rates. Mexico's real GDP growth rate (1.4 percent in 2013) has been slower than the Latin America and Caribbean (LAC) average (2.5 percent). This disappointing growth performance is attributed to stagnant total factor productivity, and is partly explained by low competition, poor contract enforcement, excessive regulations, a modest level of technological innovation, and low levels of human capital. There is widespread consensus that the low quality of education services is among the main drivers of low productivity and hence one of the most important constraints to achieving long term growth. After a constant decline in the proportion of the population with incomes below the poverty line Page 1 of 7 observed between 1996 and 2006, poverty has been on the rise. According to the National Council for the Evaluation of Social Development Policy (Consejo Nacional de la Evaluación de la Política de Desarrollo Social, CONEVAL), the decentralized Government agency responsible for measuring Public Disclosure Copy poverty, in 2012 19.7 percent of the population in Mexico lived with incomes below those needed to satisfy basic needs up from 14 percent in 2006. The national poverty headcount ratio hides important differences within Mexico. For instance, the “food poverty” headcount ratio in the northern state of Nuevo León is as low as 7.8, but it reaches 48.6 in the southern state of Chiapas. CONEVAL’s multidimensional poverty measure shows that in 2012, one in five Mexicans did not have complete basic education with this proportion remaining constant since 2005. Both income inequality and the income of the bottom 40 percent have seen modest improvements when compared with the rest of the region. Between 2001 and 2012, Mexico’s Gini coefficient declined from 51.3 to 49.4, while for the entire LAC region it dropped from 59 to 52.1 during the same time period. Mexico has also made more limited progress in boosting shared prosperity. Between 2004 and 2012 the annual growth rate of the average income of the bottom 40 percent of the income distribution has grown at only 1.30 percent, as opposed to a regional average of 5.01 percent. The Government of Mexico (GoM) has undertaken a reform process to encourage economic growth while reducing poverty and income inequality. The constitutional reforms approved so far include Education, Labor, Telecommunications, Competition, Financial, Fiscal, Political and Energy. Additionally, the GoM’s National Development Plan (NDP) for 2013-2018 has five main components: Peace, Inclusion, Quality Education, Prosperity and Global Responsibility. A main priority for the growth and development of Mexico emphasized both in the reform process and in (NDP) is improving the quality of education, reducing access and achievement gaps between rich and poor to increase productivity and long term growth. Sectoral and institutional Context Public Disclosure Copy Mexico has made significant progress in basic education coverage, particularly in primary and lower secondary education, but there are still students left out of school. There are around 25.9 million students in basic education: 4.8 million attend preschool, 14.8million attend primary, and 6.3 million attend secondary school. Net coverage is 87 percent for preschool (5 year olds), 96 percent at primary and 87 percent for secondary (14 year olds). Gross enrollment is 71, 109, and 93 respectively. Some education indicators are looking better for primary than for secondary. The dropout rates in primary are quite low, with 0.6 percent of students leaving school earlier; however, in secondary this percentage is around nine times more (5.3 percent). Similarly, repetition in primary education has more than halved from 5.2 percent in 2003-4 to 2.1 percent in 2012-13 but at the secondary level (although repetition has also decrease) it continues to be high at 7.1 in 2012-13. Low learning outcomes is one of the biggest challenges faced by the country. Student learning, as measured by international standardized tests, lags behind OECD countries. The 2012 PISA scores place Mexico in the last position among OECD countries and in the 53rd place out of the 65 participating countries. Mexico has slightly improved its Mathematics results in PISA over time (from 387 in 2000 to 413 in 2012), but reading results have stagnated (from 422 in 2000 to 424 in 2012). The national standardized assessment, the National Evaluation of Academic Achievement in Page 2 of 7 Schools (Evaluación Nacional del Logro Académico de Centros Escolares, ENLACE) (currently under revision), also highlights the low learning outcomes of Mexican students. In 2013, the last year in which ENLACE was administered, 57 and 80 percent of primary and secondary students, Public Disclosure Copy respectively, obtained “insufficient” or “basic” achievement levels in Spanish and 51 and 78 did so in Mathematics, respectively. There are also important differences in educational attainment within the country. For instance, in 2013, only 28 percent of the students enrolled in primary indigenous schools scored either “good” or “excellent” on ENLACE, as opposed to 44 percent for those enrolled in general schools. The Education Reform to improve the quality of education is one of Peña Nieto administration’s priorities. A Constitutional amendment (February 7, 2013) resulted from the political will and coalition stemming from the Pacto por México, signed by the President and the leaders of three major political parties on December 2, 2012. The reform has been linked to the National Development Plan (NDP) for 2013-2018 and benefited from wide consultations. It is likely to be the most important education reform in the country’s recent history. The reform aims to improve the quality of education through: i) establishing a professional system for hiring, evaluating, and promoting teachers (Servicio Profesional Docente, SPD); ii) providing full autonomy to the National Institute for the Evaluation of Education (Instituto Nacional para la Evaluación de la Educación, INEE) to oversee all evaluation functions throughout the education system, including the performance of students, teachers, school directors, supervisors, and schools; (iii) the establishment of a federal census of education data and a national Education Management Information System (Sistema de Información y Gestión Educativa, SIGED); and (iv) fostering school autonomy and school-based management, among other goals. The articulation between the different aspects of the reform will be crucial for achieving the expected results. In order to implement the aforementioned plans, the Government recently published the Education Sector Program (Programa Sectorial de Educación, PSE) 2013-2018, which provides clear strategies and implementation arrangements to achieve the education objectives defined in the NDP. Public Disclosure Copy The Constitutional amendment states that adjustments must be made to the legal framework for: strengthening school based management and autonomy to improve school infrastructure, purchasing of educational materials, solving basic functioning problems, and promoting social participation so that students, teachers and parents under the principal’s leadership can solve the challenges each school faces. Similarly, the modifications to the General Law of Education state that the school based management programs should: use evaluation results as feedback for continuous improvement; develop annual school plans describing activities and verifiable targets (shared with the education authority and the school community); and, transparently and efficiently administer the direct resources that the school receives. In addition, the SPD Law has explicitly devolved responsibility to principals for verifying that teachers meet the adequate profile and pointing out the incompatibility of teachers’ profiles with the needs of the school. If such inconsistencies are confirmed, the educational authorities are compelled to replace teachers. Schools are at the center of the reform agenda. One of the main objectives of the PSE is to ensure quality learning in basic education for all. It does so through seven national strategies, three of which focus on schools as the units of change and improvement. These include: • Creating the conditions for schools to be at the center of the education system, allowing them to receive the support needed to achieve their objectives. Selected lines of action under this strategy include: coordinating federal and state support to ensure that schools achieve minimum Page 3 of 7 standards (normalidad mínima); introducing new mechanisms for allocating direct financial resources to schools to empower their decision-making process; and removing administrative requirements and programs that distract schools from their substantive (pedagogical) functions. Public Disclosure Copy • Increasing school management capacity to improve learning achievement. Selected lines of action under this strategy include: boosting each teacher’s commitment to and expectations of student learning; concentrating schools’ efforts on teaching and learning with a focus on academic achievement; developing school management standards as a benchmark for performance, evaluation and improvement; strengthening leadership of principals and supervisors; ensuring that principals and teachers work collaboratively through the Consejos Técnicos Escolares (CTE) and with the rest of the school community through the Consejos Escolares de Participación Social (CEPS); providing targeted support to schools based on their needs and managerial capacities; and establishing rules to simplify school budget reporting. • Strengthening the relationship between the school and the broader community to promote social participation, transparency in the use of resources and accountability. Some lines of action under this strategy include: promoting school communication with parents to collaborate with the school and build a respectful and violence-free environment; ensuring that the basic features of the curriculum are understood by families; and ensuring mechanisms for information and accountability to the community through the CEPS. Secondary legislation to enact the Constitutional mandate of strengthening school based management was recently published. The legislation defines the norms or guidelines that all programs aiming to strengthening school based management should observe or follow. Broadly speaking, the guidelines define the following: a. Objectives, responsibilities and legal attributes of schools (directors and teachers), school supervisors, and local authorities. b. The mandatory use of results from different evaluations as inputs for school improvement Public Disclosure Copy plans c. The elements that should be included in the mandatory school improvement plans d. The administration of additional resources at the school level within a framework that promotes transparency and accountability e. The need to promote an active participation of school agents (teachers and students) and social participation (parents’ association and the community at large). The guidelines for school based management are based on lessons learned from more than 13 years of the Programa Escuelas d e Calidad (PEC). PEC has operated in Mexico since 2001, through the Sub-secretariat of Basic Education (Subsecretaría de Educación Básica, SEB) and has been supported by the World Bank since 2006. PEC provides school grants and technical assistance to basic education schools (pre-primary, primary and lower secondary), subject to the design and implementation of a school improvement plan. The school council, formed by the school director, teachers, and parent representatives, are responsible for the design and accurate implementation of school improvement plans financed by the school grants. The policy of strengthening school based management is currently instrumented through two national programs, PEC and the Programa Escuelas de Tiempo Completo (PETC). In 2007-08, SEP introduced PETC in basic education to increase the number of school-day hours and promote school based management following the PEC scheme. The school based management component of PETC Page 4 of 7 is exactly the same as PEC and follows the guidelines for school based management, but the model also includes extra instruction time, free meals (in highly marginalized schools), and additional learning materials. The two programs share the goal of contributing to students’ learning within a Public Disclosure Copy framework of more school autonomy, the use of evaluations to improve pedagogical strategies, better managerial capacities at the school level, and active social participation. Evidence shows that PEC has improved social participation, governance, transparency and accountability and this has led to lowering dropout and repetition rates (Murnane, Willet and Cardenas (2006); Gertler, Patrinos and Rubio-Codina (2012). However, the existing evaluations show, at best, limited effects of PEC on learning outcomes –as measured by the national standardized test, ENLACE. The most recent international evidence suggests that promoting school autonomy and school based management can translate into higher quality of education services if schools have a minimum institutional capacity (Hanushek, Link and Woessmann (2013)). Data for Mexico shows a strong and significant correlation between school directors’ managerial practices and learning outcomes in Mathematics and Spanish, in line with international evidence (Bloom et al., 2014). Therefore, among other things, this Project would support the GoM in their goal of providing school directors adequate managerial skills to enable a positive relationship between school based management and education outcomes. II. Proposed Development Objectives The Project's development objective is to improve schools' managerial capacity and parental participation to reduce dropout, repetition and failure rates among schools participating in programs to strengthen school based management. III. Project Description Component Name Increasing School Autonomy and Parent Participation Comments (optional) Public Disclosure Copy Component 1 would provide support for strengthening school based management through the provision of school grants to eligible schools to implement school improvement plans (Ruta de Mejora) that have been discussed and agreed with parent associations. Component Name Improving Schools' Managerial Capacity Comments (optional) Component 2 would finance the necessary technical assistance to improve schools' managerial capacity or the school's ability to use existing resources in an effective way to provide better education services. Under the education reform, the role of supervisors and school directors are defined by a set of standards determined by the Federal and Local Education Authorities. The school supervisors are responsible for providing schools with the necessary tools, technical assistance, and advice to improve management practices and ultimately the quality of education services. The school directors are responsible for organizing the CTE to identify the schools’ challenges, discuss options for improvement, define measurable and reachable goals, monitor the performance of key indicators towards Component Name Monitoring and Evaluation Comments (optional) Page 5 of 7 This component would finance (i) the implementation of a new instrument to measure schools' managerial capacity; (ii) technical assistance to the State to improve implementation capacity; and (iii) an impact evaluation measuring the effects of the activities financed by this Project. Public Disclosure Copy IV. Financing (in USD Million) Total Project Cost: 785.00 Total Bank Financing: 300.00 Financing Gap: 0.00 For Loans/Credits/Others Amount Borrower 485.00 International Bank for Reconstruction and Development 300.00 Total 785.00 V. Implementation The implementation arrangements of the Project would be similar to the previous projects The implementing agency is SEP, through the General Directorate of Management Development and Education Innovation (Dirección General de Desarrollo e la Gestión e Innovación Educativa, DGDGIE), which manages both the PEC and PETC programs. These programs are carried out at the state level by AELs, in coordination with the DGDGIE and in compliance with the Programs’ Operating Rules, which serve as guidelines for schools and states implementing the program. SEP’s capacities for the execution of a Bank loan have been successfully proven. Though, implementation challenges, remain, especially the need for enough clarity and structure as well as flexibility to account for variations in operations and procedures between and across levels (federal, state and school). Both the GoM and the Bank teams are working on developing and implementing appropriate mitigation strategies to ensure the transparency and effectiveness of the Project. Public Disclosure Copy Nacional Financiera S.N.C (NAFIN) would act as the financial agent for the Borrower, managing loan disbursements and overseeing and supporting project implementation. The flow of funds and flow of information (presented in detail in Annex 4) would be carried out, whenever possible, using the country's mechanisms and systems. A Subsidiary Contract (Contrato de Mandato) would be established between SEP, SHCP, and NAFIN to define the responsibilities of each party in achieving the Project's objectives. VI. Safeguard Policies (including public consultation) Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 ✖ Natural Habitats OP/BP 4.04 ✖ Forests OP/BP 4.36 ✖ Pest Management OP 4.09 ✖ Physical Cultural Resources OP/BP 4.11 ✖ Indigenous Peoples OP/BP 4.10 ✖ Involuntary Resettlement OP/BP 4.12 ✖ Safety of Dams OP/BP 4.37 ✖ Projects on International Waterways OP/BP 7.50 ✖ Page 6 of 7 Projects in Disputed Areas OP/BP 7.60 ✖ Comments (optional) Public Disclosure Copy VII. Contact point World Bank Contact: Rafael E. De Hoyos Navarr Title: Senior Economist Tel: 473-9215 Email: rdehoyos@worldbank.org Borrower/Client/Recipient Name: United Mexican States Contact: Secretaria de Hacienda y Credito Publico Title: Tel: Email: Implementing Agencies Name: Secretaria de Educacion Publica Contact: Title: Tel: Email: VIII. For more information contact: The InfoShop The World Bank Public Disclosure Copy 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop Page 7 of 7