Document of The World Bank FOR OFFICIAL USE ONLY Report No: 74552-PK PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 259.6 MILLION (US$400 MILLION EQUIVALENT) TO THE ISLAMIC REPUBLIC OF PAKISTAN FOR A SECOND SINDH EDUCATION SECTOR PROJECT FEBRUARY 18, 2013 Human Development Department South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective: January 31, 2013) Currency Unit = Pakistani Rupee (PKR) PKR 97.71 = US$1.00 US$1.00 = SDR 0.65 FISCAL YEAR July 1 - June 30 ABBREVIATIONS AND ACRONYMS ACR Annual Confidential Report ADEO Assistant District Education Officer ADP Annual Development Program AFS Annual Financial Statement AGP Auditor General of Pakistan ARE Assistant Resident Engineer ASC Annual School Census BER Budget Execution Reports BoC Bureau of Curriculum CAPI Computer Aided Personal Interviewing CBA Cost Benefit Analysis CGA Controller General of Accounts CIDA Canadian International Development Agency CNIC Computerized National Identity Card CPS Country Partnership Strategy CQS Consultants Qualification Selection DAC Departmental Accounts Committee DAO District Accounts Officer DflD Department for International Development DDO Drawing and Disbursing Officer DLI Disbursement Linked Indicator DO District Officer DP Development Partner DSP Differential Stipends Program EA Environmental Assessment EC Environmental Coordinator ED Education and Literacy Department EEP Eligible Expenditure Program EFS Education Fund for Sindh ESMF Environmental and Social Management Framework EU European Union FBS Fixed Budget Selection FD Finance Department FM Financial Management FMIS Financial Management Information System GDP Gross Domestic Product GIS Global Information System GoS Government of Sindh GPE Global Partnership for Education GPN General Procurement Notice GST General Sales Tax HM Head Master HRMIS Human Resource Management Information System HST High School Teacher IASs International Accounting Standards ICR Implementation Completion Report ICT Information and Communication Technology IDA International Development Association IFR Interim Financial Report IFRS International Financial Reporting Standards ISR Implementation Status Report IUFR Interim Unaudited Financial Report JST Junior School Teacher LCS Least Cost Selection LSU Local Support Unit MDAs Ministries, Departments, and Agencies MDG Millennium Development Goal M&E Monitoring and Evaluation MIS Management Information System MoF Ministry of Finance MTBF Medium Term Budgetary Framework NAM New Accounting Model NGO Non-Governmental Organization NER Net Enrollment Rate NFC National Finance Commission ORAF Operational Risk Assessment Framework PAD Project Appraisal Document P&D Planning & Development Department PBS Pakistan Bureau of Statistics PDO Project Development Objective PDV Present Discounted Value PEACe Provincial Education Assessment Center PEFA Public Expenditure and Financial Accountability PFM Public Financial Management PIFRA Project for Improvement of Financial Reporting and Auditing PIRLS Progress in International Reading Literacy Study PITE Provincial Institute for Teacher Education PPP Public Private Partnership PPRS Promoting Private Schooling in Rural Sindh PSLM Pakistan Social and Living Standards Measurement PST Primary School Teacher QBS Quality Based Selection RCC Reinforced Concrete Structure RROC Region Reform Oversight Committee RFP Request for Proposal RSU Reform Support Unit SABER Systems Approach for Better Education Results SAT Student Achievement Test SC Steering Committee SDR Special Drawing Rights SEF Sindh Education Foundation SEDPC Sindh Education Sector Development Policy Credit SEP Sindh Education Sector Project SEP AF Additional Financing for the Sindh Education Sector Project SERP Sindh Education Sector Reform Program SERP II Second Sindh Education Sector Reform Program SIP School Improvement Plan SLGO Sindh Local Government Ordinance SMC School Management Committee SMS Short Messaging Service SOP Standard Operating Procedure SPLGO Sindh Peoples Local Government Ordinance SPN Specific Procurement Notice SPPRA Sindh Public Procurement Regulatory Agency STBB Sindh Text Book Board STEDA Sindh Teacher Education Development Authority STR Student Teacher Ratio TA Technical Assistance TIMSS Trends in International Mathematics and Science Study TOP Terms of Partnership UK DflD United Kingdom's Department for International Development UNDP United Nations Development Program UNICEF United Nations Children Fund USAID United States Agency for International Development WA Withdrawal Application WAN Wide Area Network Regional Vice President: Isabel Guerrero Country Director: Rachid Benmessaoud Sector Director: Jesko Hentschel Sector Manager: Amit Dar Task Team Leaders: Umbreen Arif and Dhushyanth Raju Table of Contents I. STRATEGIC CONTEXT ................................................................................................................ 1 A. COUNTRY AND PROVINCIAL CONTEXT............ . ......................... .........1 B. SECTORAL AND INSTITUTIONAL CONTEXT ..............................................1 C. HIGHER LEVEL OBJECTIVES TO WHICH THE PROJECT CONTRIBUTES ........................5 II. PROJECT DEVELOPMENT OBJECTIVE ............................................................................. 5 A. PROJECT DEVELOPMENT OBJECTIVE ........................................ ..........5 B. PDO-LEVEL RESULTS INDICATORS ....................................... .............5 C. PROJECT BENEFICIARIES AND CORE SECTOR INDICATORS ..................... ............7 III. PROJECT DESCRIPTION ....................................................................................................... 8 A. PROJECT COMPONENTS ..............................................................8 B. PROJECT FINANCING.. .............................................................10 C. LESSONS LEARNED AND REFLECTED IN THE PROGRAM DESIGN...........................12 IV. IMPLEMENTATION ..................................................................................................................... 14 A. INSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS ....................................14 B. RESULTS MONITORING AND EVALUATION ................................................15 C. SUSTAINABILITY ..................................................................17 V. KEY RISKS AND RISK-MITIGATION MEASURES...........................................................17 A. RISK RATING SUMMARY ............................................................17 B. OVERALL RISK RATING EXPLANATION ................................................18 VI. APPRAISAL SUMMARY .............................................................................................................. 19 A. ECONOMIC AND FINANCIAL ANALYSIS ................................................19 B. TECHNICAL ......................................................................20 C. FINANCIAL MANAGEMENT ..........................................................21 D. PROCUREMENT ...................................................................23 E. SOCIAL ............................................................24 F. ENVIRONMENT ...................................................................26 G. COMMUNICATIONS ................................................................27 ANNEXES: ANNEX 1. RESULTS FRAMEWORK AND MONITORING ........................ .....29 ANNEX 2. DETAILED PROJECT DESCRIPTION .................................... 39 ANNEX 3. IMPLEMENTATION ARRANGEMENTS ......................... .........61 ANNEX 4. OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) ....... ...........97 ANNEX 5. IMPLEMENTATION SUPPORT PLAN... ................................... 101 ANNEX 6. LESSONS LEARNED AND REFLECTED IN PROJECT DESIGN ........... .....106 ANNEX 7. LONGITUDINAL SCHOOL SAMPLE SURVEY DATA FOR DESCRIPTIVE AND EVALUATIVE RESEARCH ................................................... 118  PAD DATA SHEET Pakistan Pakistan: Second Sindh Education Sector Project (P125952) PROJECT APPRAISAL DOCUMENT SOUTH ASIA SASED Report No.: PAD437 Basic Information Project ID Lending Instrument EA Category Team Leaders P125952 Specific Investment B - Partial Assessment Dhushyanth Raju/Umbreen Loan Arif Project Implementation Start Date Project Implementation End Date 15-April-2013 30-Jun-2016 Expected Effectiveness Date Expected Closing Date 15-April-2013 30-Jun-2017 Joint IFC No Sector Manager Sector Director Country Director Regional Vice President Amit Dar Jesko S. Hentschel Rachid Benmessaoud Isabel M. Guerrero Borrower: ISLAMIC REPUBLIC OF PAKISTAN Responsible Agency: Education and Literacy Department, Government of Sindh Contact: Fazlullah Pechuho Title: Secretary Telephone (92-21) 99211227 Email: sec.edusindh(&gmail.com No.: Project Financing Data(US$M) [ ] Loan [] Grant [] Other Terms: Standard IDA blend terms, with a maturity of [X] Credit [] Guarantee 25 years, including a grace period of 5 years. For Loans/Credits/Others Total Project Cost (US$M): 2600.00 Total Bank Financing 400.00 (US$M): 1 Financing Source Amount(US$M) BORROWER/RECIPIENT 2200.00 International Development Association (IDA) 400.00 Total 2600.00 Expected Disbursements (in USD Million) Fiscal Year 2012/13 2013/14 2014/15 2015/16 2016/17 Annual 1.0 95.0 132.0 171.0 1.00 Cumulative 1.0 96.0 228.0 399.0 400.0 Project Development Objective(s) The project supports the Sindh Government's Second Sindh Education Sector Reform Program (SERP II). The Project Development Objective is to raise school participation by improving sector governance and accountability and strengthening administrative systems, and measure student achievement. Success in meeting the PDO will be measured by the following indicators: 1. Primary school participation: Net Enrollment Rate (NER), primary, 6-10 years; 2. Middle school participation: NER, middle, 11-13 years; 3. High school participation: NER, matriculate, 14-15 years; and 4. Measurement of student achievement: Annual administration of the Student Achievement Test in grades 5 and 8 in government schools. Components Component Name Cost (USD Millions) Results-based component: Finances the Sindh Government's 393.00 Second Sindh Education Sector Reform Program (SERP II) Technical Assistance (TA) component: Finances essential 7.00 technical, advisory, capacity-building support for SERP II Compliance Policy Does the project depart from the CAS in content or in other significant Yes [ ] No [X] respects? Does the project require any waivers of Bank policies? Yes [ ] No [X] Have these been approved by Bank management? Yes [ ] No [X] Is approval for any policy waiver sought from the Board? Yes [ ] No [X] Does the project meet the Regional criteria for readiness for implementation? Yes [X] No [] Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 X Natural Habitats OP/BP 4.04 X 11 Forests OP/BP 4.36 X Pest Management OP 4.09 X Physical Cultural Resources OP/BP 4.11 X Indigenous Peoples OP/BP 4.10 X Involuntary Resettlement OP/BP 4.12 X Safety of Dams OP/BP 4.37 x Projects on International Waterways OP/BP 7.50 X Projects in Disputed Areas OP/BP 7.60 X Legal Covenants Name: Environmental and social safeguards Recurrent Due Date Frequency Financing Agreement (FA) Reference: Section I.C of X Schedule 2 Project Agreement (PA) Reference: Section I.D of the Schedule Description of Covenant Activities under the Project (i) are carried out in accordance with the Environmental and Social Management Framework and (ii) do not entail involuntary land acquisition or give rise to Affected Persons. Name: Implementation arrangements Recurrent Due Date Frequency PA Reference: Section I.A of the Schedule X September 30, 2013 (for the establishment of LSUs) Description of Covenant Provisions requiring: (i) the maintenance of relevant Project implementation arrangements, including (1) the Steering Committee for SERP II, (2) the Reform Support Unit (RSU), (3) the Economic Reform Unit (ERU), and (4) Region Reform Oversight Committees (RROCs) in all provincial regions; and (ii) the establishment and thereafter maintenance of the Local Support Units (LSUs) in each district. Name: RSU staffing Recurrent Due Date Frequency PA Reference: Section I.A.2 (c) of the Schedule X Description of Covenant Retention within the RSU of (a) a Procurement Officer, (b) a Contract Management Officer, (c) a Financial Management Officer, (d) a Financial Reporting Officer, and (e) an Environmental Coordinator. Name: Performance-based incentive plan Recurrent Due Date Frequency PA Reference: Section I.E of the Schedule X Quarterly (for the submission of the reports) Description of Covenant Implementation of the Performance-based Incentive Plan for government officials posted at RSU and proposed Local Support Units (LSUs) and the submission to the Association of the monthly staff performance iii evaluation reports for incentive payments. Name: Audit reports Recurrent Due Date Frequency PA Reference: Section II.B.4 and 5 of the Schedule X One month of receipt Yearly from the Auditor General of Pakistan (for Sindh's audit report)/ Nine months after the close of SEF's fiscal year (for SEF's audits) Description of Covenant Preparation and submission to the Association of: (i) audit reports covering the overall budgetary expenditures of the Sindh government for its fiscal year; and (ii) the audit report of SEF. Name: Budget Execution Reports Recurrent Due Date Frequency PA Reference: Section II.C of the Schedule X 30 days after the end Quarterly of each calendar quarter Description of Covenant Preparation and submission to the Association of quarterly consolidated Budget Execution Reports setting out values of budgets, actual expenditures incurred, per budget line, for the whole education sector, with a cover note summarizing budget allocations and utilization in the Eligible Expenditure Programs for monitoring project implementation progress. Name: SERP-II progress reports from RROCs Recurrent Due Date Frequency PA Reference: Section II.A.2 of the Schedule X March 31 and Semi- September 30 Annually Description of Covenant Preparation and submission to the Association of SERP-II progress reports by the Region Reform Oversight Committees following agreed instructions and template and covering implementation progress and performance in identified initiatives and activities as well as the full set of minutes of meetings held. Name: Complaints management systems Recurrent Due Date Frequency PA Reference: Section I.F of the Schedule October 31, 2013 (for the establishment) Description of Covenant Procurement, establishment, and maintenance by ED/RSU and SEF of customized web-based complaints management systems for handling SERP-II and PPRS program related complaints, respectively. Name: Compliance with fiduciary guidelines by schools Recurrent Due Date Frequency and SMCs PA Reference: Section I.G of the Schedule X Description of Covenant Use of (i) school nonsalary budgets by government schools without Drawing and Disbursing authority; (ii) school nonsalary budgets by government schools with Drawing and Disbursing authority, (iii) grants by School Management Committees for government schools, and (iv) subsidies by SEF PPRS program schools, 1v in accordance with the applicable financial management and procurement guidelines. Name: Procurement documentation, recordkeeping, and Recurrent Due Date Frequency disclosure, complaints mechanism PA Reference: Section 111.2 of the Schedule X December 31, 2013 (for the establishment of the complaints handling mechanism) Description of Covenant (i) Maintenance of a procurement documentation and recordkeeping system; (ii) disclosure on RSU website of all relevant procurement activities and status of implementation of contracts financed through project EEPs and TA, textbook publication and textbook transportation contracts signed by the Sindh Text Book Board, and civil works and furniture contracts signed by the districts for school infrastructure development under the district Terms of Partnership initiative; and (iii) establishment of a system for the handling of procurement complaints. Name: Deletion of SEMIS codes of merged schools Recurrent Due Date Frequency PA Reference: Section I.H of the Schedule X 60 days after the official notification Description of Covenant Permanent cancellation and deletion of the Sindh Education Management Information System (SEMIS) identification codes of all government schools that are merged under the School Consolidation Policy. Name: Project Implementation Manual Recurrent Due Date Frequency PA Reference: Section I.C of the Schedule X October 31, 2013 (for - the update) Description of Covenant Update of the Project Implementation Manual (PIM) in form and substance satisfactory to the Association. Conditions Name: Withdrawal Conditions FA Reference: Section IV.B. 1 and 4 of Schedule 2 Description of Conditions * No withdrawal shall be made for payments made prior to the date of the Financing Agreement, except withdrawals up to an aggregate amount not to exceed US$1,000,000 equivalent may be made for payments made prior to this date but on or after July 1, 2012 for any eligible expenditure under Component 2. * Annual withdrawals under Component 1 are subject to the achievement of DLIs for the respective year. * Not more than 80% of the withdrawn amounts shall be used to finance salary-related expenditures (financing cap) at any point in time. All scheduled disbursements under Component 1 (results-based component) are to be processed on a reimbursement basis. Team Composition Bank Staff Name Title Specialization Unit V Surendra K. Agarwal Consultant Education SASED Anwar Ali Bhatti Financial Analyst Disbursement SACPK Robin S. Horn Adviser Education/Peer Reviewer HDNED Reema Nayar Sector Manager Education/Peer Reviewer LCSHE Ernesto Sanchez-Triana Lead Environmental Specialist Environment LCSEN Hanid Mukhtar Senior Economist Public Economics SASEP Chaohua Zhang Lead Social Development Specialist Social Development SASDS Amna W. Mir Senior Program Assistant Program Assistance SASHD Mohammad Khalid Program Assistant Program Assistance SASHD Khan Dhushyanth Raju Senior Economist Education/Team Lead SASED Chau-Ching Shen Senior Finance Officer Disbursement CTRLN Dilip Parajuli Senior Economist Education/QER panelist SASED MosufAli Consultant Environment SASED Uzma Sadaf Senior Procurement Specialist Procurement SARPS Eliana Carranza Young Professional Education AFTP2 Martin M. Serrano Senior Counsel Legal LEGES Naveed Hassan Naqvi Senior Education Economist Education/QER panelist ECSH2 Javaid Afzal Senior Environmental Specialist Environment SASDI Saceda Sabah Rashid Senior Financial Management Financial Management SARFM Specialist Khalid Bin Anjum Procurement Specialist Procurement SARPS Luis C.P Miglino Consultant Environment SASED Salman Asim E T Consultant Education SASHD Umbreen Arif Senior Education Specialist Education/Team Lead SASED Andaleeb Alam Consultant Education/Social SASED Quynh T. Nguyen Consultant Education SASED Aristeidis I. Panou E T Consultant Legal LEGOP Lorenza De Icaza E T Consultant Education SASHD Mariam Nusrat Adil E T Consultant Education SASED Malik Mirza Consultant Financial Management SARFM Locations Country First Location Planned Actual Comments Administrative Division Pakistan Sindh Sindh X vi Institutional Data Sector Board Education Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co- Co-benefits % benefits % Education General education sector 80 Public Administration, Law, and Public administration- 20 Justice Education Total 100 I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Human development Education for all 80 Public sector governance Other public sector governance 20 Total 100 vii  I. STRATEGIC CONTEXT A. Country and provincial context 1. Pakistan is the world's sixth most populous country with an estimated 177 million people in 2011. It is a lower-income country in the Bank's classification scheme, with a per-capita income of US$1,050 in 2011. Economic growth and progress in poverty reduction in the recent period have slowed markedly. These developments are likely due to a confluence of factors, including worsening and more volatile macroeconomic, political, and security conditions, combined with catastrophic natural shocks. Adding to this, weak public sector management, governance, and capacity hamper service delivery performance. The outlook for the country is poor, with predictions of weak economic growth, and heightened risks stemming from political, governance, and security fronts, debt and external financing concerns, persisting structural and fiscal weaknesses, and mounting price pressure. 2. Sindh is one of the four provinces in Pakistan. Its climate is hot arid to semi-arid, with agricultural activity concentrated around the Indus river and its extensive canal network, and industrial and commercial service activity centered in Karachi, the province's capital and Pakistan's largest city and main port. Sindh has the second highest income (highest in per-capita terms) among the provinces. Its population accounts for roughly quarter of the total population in the provinces. Slightly less than half of Sindh's population is urban, and over two-thirds of its urban population resides in Karachi and Hyderabad districts. The province has five administrative tiers: province, regions (5), districts (23), talukas (122), and union councils (1,030).1 3. Over the last decade, Sindh has experienced declining economic growth, and household incomes have stagnated. Several structural problems underlie these trends, including (1) a sharp split in the urban and rural economies which undermines the province's economic potential; (2) other forms of social and economic segmentation which erode social cohesion and economic integration; (3) poor law-and-order conditions, especially in Karachi, which exact a large economic toll; (4) vested interests associated with the provision of key social and economic services which undermine the cost-effectiveness and quality of these services; and (5) binding constraints on skills and other factors that limit productivity and output. In addition, over the last three years, Sindh has been disproportionately affected by natural disasters which devastated the rural economy, whereas the urban economy bore the brunt of the worst electrical power crises in the country's history. B. Sectoral and institutional context 4. School participation: The level of school participation in Pakistan is low in absolute terms, relative to other countries in the region, and relative to developing countries at its level of per capita income. The United Nations Development Program (UNDP) reports that, given Pakistan's present trend, the country is likely to fall significantly short of the United Nations' Millennium Development Goal (MDG) of universal primary education by 2015. The poor Information provided by the Sindh government on February 13, 2013. Counts may change. 1 progress on school participation in the country and policy developments in the region and the globe on the education agenda have spurred the Pakistan government to include free and compulsory education as a fundamental right in its Constitution with the intent to raise national attention and encourage greater effort to raise school participation. 5. The level of school participation in Sindh is by and large qualitatively similar to the other provinces. In 2010/11, school participation rates for children ages 6-10 and 11-15 years in the province were 63% and 61%, respectively; the corresponding shortfalls are explained mainly by children never going to school (36% and 28%) rather than dropping out of school (1% and 11%). Recent progress in school participation has been slow. Between 2004/05-2010/11, the rates for children ages 6-10 and 11-15 changed by one and two percentage points, respectively. Results from a conditional analysis suggest that children from poor households and girls in rural areas suffer the largest school participation shortfalls. There are sizeable differences in school participation rates across districts; some districts also exhibit large urban-rural gaps in school participation (see Section IV in Annex 3 for details). 6. Student achievement: Available data indicate that student achievement in the province, as in the rest of the country, is low. For example, a 2009 diagnostic test of grade-4 students in mathematics and local language (Sindhi or Urdu, depending on the area) in a district- representative sample of government schools across the province conducted by the Sindh government's Provincial Education Assessment Center (PEACe) shows an average score of less than 50%.2 Consistent with the evidence in general, the findings for the province suggest that the child's household background characteristics as well as school quality are correlated with the observed variation in student achievement. 7. The government school system: The Sindh government is the main provider of education services in the province. In FY2011/12, total expenditures by the Sindh government in primary and secondary education was roughly PKR79.17 billion (US$833 million), or 25.1% of total expenditures by the Sindh government that year. Recurrent expenditures for primary and secondary education were PKR74.65 billion (US$786 million), of which, 90% were for education sector employee salaries. Roughly 70% and 67% of school-going children ages 6-10 and 11-15 attend government schools, respectively. These shares increase into the nineties when we limit the sample to school-going children from poor households, rural areas, and the province excluding Karachi and Hyderabad districts, home to Sindh's two main cities. The government school system is extensive, comprising of roughly 43,000 functional schools, with a reported enrollment of 3.65 million students in grades 1-12 and 148,000 teachers (Annual School Census data 2011/12).3 Slightly more than 90% of functional government schools are primary schools (grades 1-5), and 72% of these primary schools have only one or two teachers. Roughly 20% of schools have very low reported enrollment (less than 25 students), and 52% have poor-quality or 2 This finding of low student achievement is corroborated by, among others, a 2012 independent test of grade-4 and grade-5 students in sample rural government primary schools in eight selected districts in Sindh carried out by the Bank team, and a 2006 independent test of grade-3 and grade-5 students in sample rural government schools in selected districts in Sindh (Saiens 2008). The Sindh government also provides financial and other support to private schools through public-private partnership (PPP) initiatives administered by the Sindh Education Foundation (SEF), a semi-autonomous organization. In FY2011/12, SEF supported over 2,400 schools with roughly 250,000 enrolled students. 2 no facilities and amenities.4 Most schools have little or no educational inputs apart from assigned teachers and textbooks. 8. The initial macro conditions summarized earlier in Section L.A likely have an important bearing on sector financing and management, service delivery performance, and the extent and durability of household demand for schooling in Sindh. Notwithstanding, an important factor behind the poor education outcomes in the province is likely the underperformance of the government school system. Among other things, performance is hampered by (1) poor incentives and capacity for systematic and strategic planning and effective implementation, (2) minimal monitoring and accountability of service delivery agents for implementation integrity and performance, and (3) system capture by insiders and other special interest groups that prefer the status quo. A signal of system underperformance is that over 90% and 55% of households in Sindh report living within fifteen minutes of the nearest primary school and middle school, respectively, but the school participation rates of children ages 6-10 and 11-13 in these households are only 65% and 78%, respectively. Another signal is poor school participation rates despite government schooling being officially free (no school fees, free textbooks). These findings suggest that distance and direct costs may in general be of secondary importance to other factors such as the quality of service delivery in influencing the school participation decision of households. 9. The Sindh Education Sector Reform Program: In FY2007/08, the Sindh government initiated a major, multifaceted, medium-term sector reform program for primary and secondary education called the Sindh Education Sector Reform Program (SERP). Reflecting an important shift from previous education development efforts by the Sindh government which aimed to increase expenditures, inputs, and benefits, SERP aimed to maximize the gains from any given level of expenditures, inputs, and benefits principally by strengthening governance and accountability. The Bank provided financial support to SERP between FY2006/07-FY2011/12 through the Sindh Education Sector Development Policy Credit (SEDPC) approved in June 2007, the Sindh Education Sector Project (SEP) approved in June 2009, and the Additional Financing to the Sindh Education Sector Project (SEP AF) approved in March 2011. Both SEP and SEP AF closed on time in June 2012. The European Union (EU) provided parallel financing to SERP through its Sindh Education Plan Support Program between FY2006/07-FY2011/12. 4 Having poor-quality or no facilities and amenities is defined as (1) lacking a school building, (2) having a school building but the building is reported to be in a dangerous condition, and (3) having a building but lacking toilets. Private schooling: Roughly 32% and 27% of school-going children ages 6-10 and 11-15 attend private schools, respectively. Private schooling is largely a phenomenon that characterizes relatively richer families and those that reside in Karachi. Roughly 96% and 97% of private-school students ages 6-10 and 11-15 come from households in the top three quintiles; in contrast, 48% and 64% of government-school students ages 6-10 and 11-15 come from these same quintiles, respectively. Likewise, about 65% and 78% of private-school students ages 6-10 and 11-15 reside in Karachi district, respectively; in contrast, 8% and 18% of government-school students ages 6-10 and 11- 15 reside in this same district, respectively. 6 The EU's Education Sector Plan Support Program disbursed E37.5 million, of which E33 million were disbursed against triggers agreed with the Sindh government and E4.5 million were disbursed as EU-managed TA services. The Program's twelve triggers in a given year subsumed the ten DLls in that year under SEP. The EU-managed complementary services and SEP TA were coordinated over the SEP period. 3 10. SEP was a results-based project, with 98% of its credit amount of US$300 million conditioned on the Sindh government satisfactorily complying with the credit covenants and meeting Disbursement Linked Indicators (DLIs), which were program implementation performance and progress targets agreed with the Sindh government. SEP AF was also a results- based project, with 100% of its credit amount of US$50 million conditioned on DLIs. The Project Development Objective (PDO) for SEP and SEP AF were to support SERP; success in meeting the PDO was measured using four PDO-level results indicators, three that measured changes in selected education outcomes and one that measured the Sindh government's performance in administering a programmed cycle of student diagnostic tests in sample government schools. The Sindh government complied with all credit covenants and satisfactorily met all of the agreed DLIs under SEP (ten DLIs per year in FY2008/09, FY2009/10, and FY20 10/11) and under SEP AF (three DLIs in FY20 10/11). SEP and SEP AF together disbursed US$347 million of the combined original amount as well as US$8 million in exchange rate gain before closing. The Implementation Completion Report (ICR) for SEP and SEP AF rated the achievement of the PDO-level results indicators as Moderately Satisfactory and the Bank and borrower's performance as Satisfactory. See Annex 6 for details on the achievement of the PDO- level results indicators and selected program implementation successes under SEP and SEP AF. 11. The Second Sindh Education Sector Reform Program: The Sindh government has embarked on the design and early implementation of the Second Sindh Education Sector Reform Program (SERP II). SERP II is not simply the second phase of SERP. It has drawn lessons from its SERP implementation experience to arrive at a reworked next version. Recognizing that markedly improving the quality of service delivery hinges on intensifying its efforts to strengthen sector governance and accountability, the Sindh government will (1) continue to carry forward (and strengthen) successful governance and accountability initiatives under SERP and (2) integrate in other complementary governance and accountability initiatives. In addition, recognizing that the success of any program design necessarily lies in program implementation integrity and performance, the Sindh government plans to carefully work out specific, pragmatic implementation steps and actions underpinned by strengthened implementation arrangements and coordination. 12. Rationale for Bank engagement: Under SEP, the Bank supported the Sindh government's own education development agenda, worked with government systems while striving to improve them, and backed important, difficult education sector reforms that the Sindh government was interesting in pursuing. The Bank is viewed by the Sindh government as a credible, reliable, and long-term partner in the education sector. 13. The main justifications for the Bank's sustained, productive engagement are that the contents (project design) and means (strategic dialogue, lending instrument design, advisory and technical services) of the engagement can 7 SDR 2.67 million (out of SDR 200.6 million) were cancelled from SEP for unutilized TA. 4 (1) help promote and protect the continuity of politically-difficult but important reform activities undertaken by the Sindh government to strengthen accountability and governance in the sector and improving administrative systems;8 (2) encourage a stronger results orientation by the Sindh government; (3) strengthen program and implementation design; and (4) facilitate the systematic generation of knowledge on challenges, constraints, and innovative interventions and strategies.9 C. Higher level objectives to which the project contributes 14. The project supports selected governance, accountability, and system improvement activities in SERP II in order to help the Sindh government improve the quality of service delivery and, thereby, increase child school participation. Improving school participation is a national priority as further underscored by the inclusion of education as a fundamental right in the country's Constitution. Improving human development service delivery-which includes education service delivery-is one of the four strategic priorities in the 2010-13 Country Partnership Strategy (CPS). The project is designed following the specific design guidance provided in the CPS for human development, namely (1) improving governance and accountability, (2) improving/strengthening mechanisms and systems, (3) explicitly tying project disbursements to agreed results, and (4) embedding a strong research and evaluation agenda within lending operations. 10 II. PROJECT DEVELOPMENT OBJECTIVE A. Project Development Objective 15. The project supports the Sindh Government's Second Sindh Education Sector Reform Program (SERP II). The Project Development Objective is to raise school participation by improving sector governance and accountability and strengthening administrative systems, and measure student achievement. B. PDO-level results indicators 16. PDO-level result indicators are provided in Table 1. 8 Continuity in the form of sustained implementation-along with any needed incremental additions, intensification of efforts, and scale up-is essential for crossing over the gestation period to when returns can be realized. 9 This last benefit provides the evidence base for guiding the evolution of the Sindh government's education development agenda and, as demonstrated in the past, in guiding the formulation of suitable and sound strategies for education development in other provinces in Pakistan, other South Asian countries, and other comparable developing countries, thus, yielding a significant positive externality. 10 The project is also designed to be consistent with the Bank's overall education development strategy framed in its Education Sector Strategy 2020: Learning for All: Investing in People's Knowledge and Skills to Promote Development and complementary activities such as its Systems Approach for Better Education Results (SABER). 5 Table 1. PDO-level result indicators No. PDO-level result indicator Latest available value Predicted target value in 2016/17 School participation 1. Net Enrollment Rate (NER), 61.6% (2010/11) 69.7 primary, 6-10 years 2. NER, middle, 11-13 years 35.7% (2010/11) 40.9 3. NER, matriculate, 14-15 years 23.1% (2010/11) 26.0 Measurement of student achievement 4. Annual administration of the Pilot (first) round of SAT Sixth full round of SAT Student Achievement Test (SAT) (grade-5 test) administered administered to students in in grades 5 and 8 in all government to students in grade 6 in grades 5 and 8 in schools. government schools in April government schools by the 2012 end of the academic year 2016/17. Notes: Statistics from the 2010-11 PSLM survey will be updated with the statistics from the 2011-12 PSLM survey if the published statistics are released before the completion of the draft Project Appraisal Document. The selected age groups represent the official age groups for participation in primary (grades 1-5) and middle school (grades 6-8) in Pakistan. The primary-level NER excludes katchi (preschool). Prediction method for NERs: The baseline value for a given indicator in 2012/13 is predicted by simply extending the linear trend between 2004/05-2010/11 (without any adjustment) for that indicator. Between 2013/14- 2016/17, the project period, the same linear trend line is tilted up by 10%, which reflects the expected "SERP-11 effect" over the project period (i.e., the annualized percentage-point change over the period 2004/05-2010/11 is multiplied by 1.1). The actual baseline for the project is 2012/13, and the predicted values for 2012/13 for the school participation- related PDO-level results indicators are presented in Table A1.1 in Annex 1. If the 2012-13 PSLM survey report shows values that differ from the predicted baseline values for these indicators, the baseline values will be updated and the prediction method will be reapplied to obtain revised target values for 2016/17. 17. School participation: School participation indicators-PDO-level result indicators #1, #2, and #3-will be measured by the Net Enrollment Rate (NER) at three levels of schooling (primary: grades 1-5; middle: grades 6-8; and matriculate: grades 9-10) using published official statistics from Pakistan's Social and Living Standards Measurement (PSLM) survey. The PSLM survey is a large-scale, province-representative household sample survey conducted by the Pakistan Bureau of Statistics (PBS), the country's official statistical organization, which serves as the main data source for Pakistan to measure progress towards the 2015 MDGs. " 18. Measurement of student achievement: Measuring progress in student achievement requires a student assessment system that yields valid and reliable information with the needed coverage and periodicity. This crucial first step remains work in progress. Under SERP, the Education Department (ED) and the Reform Support Unit (RSU) carried out multiple annual rounds of subject-specific diagnostic testing of students in grades 4 and 8 in district- representative samples of government schools through PEACe. ED/RSU has now prioritized and 1 The PBS has completed carrying out the 2011/12 PSLM survey; the official release of the report and unit data is awaited. Under the approved plan in effect (PSLM Project July 2004), the PBS is authorized to carry out the PSLM survey in 2012/13, 2013/14, and 2014/15. A new plan will have to be approved by the Pakistan government for the PBS to carry out subsequent rounds of the PSLM survey. 6 initiated annual rounds of standardized, competency-based tests in language, mathematics, and science for students in grades 5 and 8 in government schools, called the Student Achievement Test (SAT). ED/RSU has contracted a third-party organization for undertaking three rounds of SAT in academic years 2011/12, 2012/13, and 2013/14, with districts partnering in administering the test. A new competitive selection process will be undertaken by ED/RSU at the appropriate time for carrying out three rounds of SAT in academic years 2014/15, 2015/16, and 2016/17. Gender: Girls are not generally systematically disadvantaged relative to boys in terms of school participation. Their disadvantage appears in certain subpopulations, particularly in rural areas and poor households. Data from the 2010/11 PSLM survey indicate that the boy-girl gap in school participation for children ages 6-10 is two percentage points in urban areas and rich (top quintile) households, and 20 and 22 percentage points in rural areas and poor (bottom two quintiles) households, respectively. The findings are qualitatively similar for children ages 11-15. The findings suggest the importance of poverty and location (urban/rural) in understanding the gender gap. Independent of gender, rural and poor children suffer large relative shortfalls. Under the project, the Sindh government and the Bank will track government-school NERs at the primary, middle, and matriculate levels for rural children, rural girls, poor children, and children from districts with the lowest initial primary school participation rates using PSLM survey data. SERP-11 initiatives are designed to be appropriately-sensitive and/or disproportionately positively impact the above subpopulations. See Section IV in Annex 3 for details. 19. The PDO-level indicator #4 tracks the regular administration of the SAT over the project period. Under the project, the Bank will promote via DLIs and support via TA the regular administration of the SAT by a contracted third-party testing organization and an external review (followed by any technical or advisory support) carried out by another contracted third party (a specialized consulting firm) to help improve the SAT with respect to the sustainability and robustness of the testing system, the reliability and validity of test results, and the responsible use and dissemination of test results. C. Project beneficiaries and core sector indicators 20. Beneficiaries: Ultimate, direct beneficiaries will comprise of all students in government schools and schools operated by private entrepreneurs whose services are contracted by the Sindh government under the Sindh Education Foundation (SEF)'s Promoting Private Schools in Rural Sindh (PPRS) program. Annual counts of beneficiaries (disaggregated by gender) in the government school system will be obtained from administrative data collected by ED/RSU.12 Annual counts of beneficiaries (disaggregated by gender) in PPRS program schools will be obtained from administrative data collected by SEF. The information will be monitored and reported annually in monitoring reports submitted by ED/RSU and Aide Memoires prepared by the Bank over the project period. 21. Core sector indicators: Statistics on the core sector indicators for IDA results monitoring (the gender parity index in primary enrollment, additional qualified teachers for primary grades, additional classrooms for primary grades, and a student assessment system at the primary level) 12 The data source for these statistics is the ASC. Under SERP II, the Sindh government plans to improve ASC data quality via specific, well-defined actions, promoted via project DLIs and support via project TA funds. Thus, changes in values measured using the ASC will likely be attributable to a combination of real changes in values on the ground and "corrections" in values engendered by planned improvements in ASC administrative procedures and practices. 7 will be reported annually over the project period, and are included in the Results and Monitoring Indicators table (Table AL.1 in Annex 1). Information on the core sector indicators will be obtained from administrative data collected by ED/RSU and SEF. The information will be monitored and reported annually in monitoring reports submitted by ED/RSU and in Aide Memoires and Implementation Status Reports (ISRs) prepared by the Bank over the project period. III. PROJECT DESCRIPTION A. Project components 22. The project is a US$400 million Specific Investment Credit which supports the implementation of SERP II over the period 2013-17. The project comprises of two components: (1) a results-based component-Component 1-which finances specific expenditures under SERP II, amounting to US$393 million (roughly 98.3% of the total Credit); and (2) a Technical Assistance (TA) component-Component 2-which finances essential advisory, technical, capacity-building, and monitoring and evaluation support for SERP II, amounting to US$7 million (roughly 1.7% of the total Credit). 23. Results-based component: Under the results-based component, the event and amount of project disbursements will be contingent on the satisfactory achievement of DLIs (see Table Al.2 in Annex 1). 24. The Sindh government views poor sector governance and accountability and weak administrative systems as the principal problem in public education in the province. Consequently, under SERP II, the Sindh government aims to intensify efforts to address this problem in order to improve the quality of service delivery. Project DLIs support ten initiatives that aim to address gaps in and/or current poor practices in sector management and governance. The initiatives and actions promoted by DLIs over the project period are as follows. (1) Program budget and expenditure management: Preparation of sound budgets for primary and secondary education and SERP-II initiatives and ensuring that budgetary releases and expenditures are made in full and on a timely basis. (2) Annual School Census (ASC): Administration of the ASC for government schools on a regular basis through two distinct channels across districts, namely via a contracted third party and standard government process, accompanied by strengthened administrative procedures, procedures, and practices, and web-based direct reporting by secondary and higher secondary schools to improve the regularity, relevance, and reliability of ASC data. (3) Student Achievement Test (SAT): Administration of the SAT on a regular basis, accompanied by third-party review to strengthen the reliability and validity of the test results and the responsible use and dissemination of test results. 8 (4) School budgets: Preparation of school budgets, both salary and nonsalary components, following transparent, objective, and needs-based criteria; and third- party support to the districts for managing and monitoring the flow and use of school budgets in line with applicable rules and regulations. (5) School Management Committees (SMCs): Stronger due diligence and financial management controls; improved communication of expectations, roles, responsibilities, and redressal avenues to all key parties; support services offered by regions and districts to SMCs; and increasing grant use in line with applicable rules and regulations. (6) School system consolidation: Merging of distinct government schools that share the same building, same compound, or are in close proximity and cater to the same local child population into single schools and their reorganization and strengthening to function as single schools. (7) School infrastructure development: Investments in (i) the whole school development of schools with infrastructure deficiencies, (ii) upgradation of primary schools to elementary schools, and (iii) consolidated schools, following objective, transparent, and needs-based criteria; compliance with stipulated construction quality and school design specifications; third-party screening, support, monitoring, and certification of construction completion and quality; and pilot interventions on specific school environmental enhancements. (8) Incentive- and accountability-based public financing of the private provision of schooling: Incremental expansion of the SEF PPRS program; regularization of program financing; strengthened administrative and monitoring systems; strengthened design and enforcement of incentive and accountability conditions to improve school performance; and strengthened program qualification criteria and the rigorous application of rules and procedures to screen rural communities for program school placement. (9) Education management: Appointment of specialized cadres of education managers and school headmasters following transparent, objective, merit-based criteria and rigorous mechanisms; contracts with performance terms and conditions; induction training, job guidelines, management materials and tools; and a tailored annual performance evaluation process (within the government's standard performance evaluation system). (10) Teacher management: Strengthened merit- and needs-based teacher recruitment arrangements, procedures, and practices; teacher contracts with performance terms and conditions; induction training, job guidelines, teaching materials and tools; and a tailored annual performance evaluation process (within the government's standard performance evaluation system). 9 25. The fundamental elements of initiatives (1), (2), (5), (7), (8), and (10) listed above were supported by the Bank under SEP; under this project, the actions specified by the Sindh government in these initiatives attempt to build on and significantly strengthen procedures and practices to further improve the performance of these initiatives as well as, in the cases of (7) and (10), augment them via school upgradation and the performance management of contracted teachers. Initiatives (3), (4), (6), and (9) largely represent new bold reform initiatives by the Sindh government. In their implementation, initiatives (4), (5), (6), (7), (8), (9), and (10)-seven out of the ten initiatives-directly impact at the school level potentially improving service delivery as well as, in the cases of initiatives (7) and (8), extending service delivery by turning qualifying primary government schools into elementary schools and expanding the SEF PPRS program to new unserved rural communities, respectively. Initiatives (1), (2), and (3) provide the financial means and critical monitoring and evaluation data to facilitate the design and implementation of the other initiatives which potentially directly impact at the school level. Independent of the use of the critical data from (2) and (3) in the other initiatives, the systematic use and dissemination of the data from the policymaker to the parent will aid in (seeking) improvements in the quality of service delivery. See Section I in Annex 2 for more details on the above initiatives under the results-based component, including the backdrop, rationale, primary objectives, and primary actions. 26. TA component: Under the TA component, funds will finance important technical, advisory, and capacity-building support to strengthen fiduciary, environmental management, administrative, and monitoring and evaluation activities. The selected activities would aid program implementation progress and performance including, importantly, the achievement of DLIs. RSU will manage project TA funds and activities. RSU will make TA funds available and procure works, goods, and services to meet the needs of other government departments, entities, and agencies partnering on SERP-II related initiatives; responsibility for managing these TA activities will be shared accordingly and closely coordinated. RSU will maintain a single consolidated procurement plan. See Section II in Annex 2 for TA activities that have been identified by project appraisal. B. Project financing Lending 27. Results-based component (US$393 million): Under the results-based component, credit disbursements will reimburse expenditures incurred by Sindh government in selected key education budget line items referred to as Eligible Expenditure Programs (EEPs). The event and amount of project disbursements will be contingent on the satisfactory achievement of Disbursement Linked Indicators (DLIs). There are 10 DLIs for each fiscal year, and each DLI in the fiscal year is priced equally. The verification of the achievement of the DLIs in a given fiscal year will be conducted by May in that fiscal year. 28. DLIs are designed to help progressively intensify, deepen, or expand the supported reform initiatives under SERP II over the project period. Maximizing the returns in terms of improved quality of service delivery and improved schooling outcomes hinges on the Sindh government sustaining its efforts over the project period and beyond. In order to promote 10 sustained effort, the total planned disbursement in Component 1 is structured to increase annually over the project period, from US$93 million in FY2013/14, to US$130 million in FY2014/15, to US$170 million in FY2015/16. 29. Given that the total planned disbursement is fixed to increase annually over the project period, the price of each DLI also increases annually over the same period. Credit disbursements in any given fiscal year would be the simple sum of the unitary prices of the DLIs satisfactorily met by Sindh government, as validated on the basis of agreed evidentiary data and documentation. 30. The planned disbursements will reimburse expenditures incurred in EEPs, which would help ensure that allocations by Sindh government to EEPs translate into actual releases and expenditures. The proposed EEPs include both sizeable recurrent expenditures that would have an impact on the agreed results and outcomes and smaller ones that finance important small-scale initiatives and administrative and monitoring and evaluation systems. To promote expenditures in non-salary EEPs, 80% of each disbursement will reimburse expenditures incurred in employee-related expenses, while the remaining 20% of the disbursement will reimburse expenditures incurred in the rest of the EEPs (see Section II in Annex 3 for details on EEPs). 31. The proposed valuation of DLIs and schedule of disbursements are presented in Tables A3.3 and A3.4 in Annex 3. 32. TA component (US$7 million): ED/RSU has initiated critical procurement activities to support the design and early implementation of SERP II. The Bank has reviewed and approved these activities, including the performance-based honorarium incentive payments to government officials at RSU, and the expenditures incurred by the Sindh government between July 1, 2012 and the signing of the legal agreements will be reimbursed upon project effectiveness. Subsequently, project TA funds will be advanced to the Sindh government on a semi-annual basis against estimated expenditures for TA activities approved by the Bank. 33. Bank's guidelines on financial management and procurement will be applicable to the EEPs and TA. 34. Table 2 below presents program financing of EEPs under SERP II over the period FY2013/14-FY2015/16. 11 Table 2. Financing of EEPs under SERP II, FY2013/14- FY2015/16 (three years) Partner Total Share (in US$ million) (in percent) Sindh government 2,200.0 84.6 IDA 400.0 15.4 Total 2,600.0 100.0 Notes: Although the project period is FY2013/14-FY2016/17, all results- based disbursements under Component 1 and the bulk of the funds under Component 2 should disburse over the period FY2013/14-FY2015/16. Project EEPs are noted in Annex 2. The estimates for EEPs are rough; approved FY2012/13 budget amounts have been raised by 8% annually, and then summed over FY2013/14-FY2015/16. Development Partner support 35. Development Partner (DP) interest in supporting education development in Sindh has grown, with the Canadian International Development Agency (CIDA), United Kingdom's Department for International Development (UK DflD), the European Union (EU), the Global Partnership for Education (GPE), United Nations Children's Fund (UNICEF), and the United States Agency for International Development (USAID), either already supporting or planning to support initiatives in Sindh (see Section VII in Annex 3 for details). The Sindh government constituted a Sindh Education Development Partners' Coordination Forum on September 21, 2011, chaired by the Additional Chief Secretary, with the participation of all interested DPs. At the working level, ED/RSU, the implementing agency for SERP II, is the designated primary focal-point for coordination with DPs. 36. The Sindh government has assured DPs that all multilateral and bilateral development assistance for education will be aligned to meet its main education sector priorities and initiatives. These sector priorities and initiatives are reflected in SERP II, which the Bank plans to support under this project. The USAID also supports selected SERP-II priorities and initiatives (e.g., school infrastructure development, school system consolidation). The SERP-II priorities and initiatives are also expected to be reflected in a sector plan for primary and secondary education under preparation by the Sindh government. The sector plan will serve as a basis for, among others, GPE's development assistance to the province. C. Lessons learned and reflected in the program design 37. The program design is informed by lessons learned from Sindh government's experience with the implementation of SERP, supported by the Bank under SEP and SEP AF, as well as from the Punjab government's experience with its education sector reform program, also supported by the Bank under results-based operations. The main lessons learned in relation to (1) instrument design, (2) project content design, and (3) implementation arrangements are summarized below (see Section I in Annex 6 for details on these lessons as well as other, more specific lessons that have informed the design of SERP II and the project). The ICR for SEP and SEP AF also reports on these lessons. 12 38. Financing instrument design: The results-based design of SEP, with project disbursements under the results-based component tied to the satisfactory achievement of DLIs, likely helped in orienting and focusing Sindh government's efforts on agreed program implementation progress and performance targets. In particular, the DLIs likely helped promote and protect the continuity of political-difficult, govemance-oriented reforms undertaken by the Sindh government. Strings of annual DLIs over the project period also likely promoted steady, incremental progress, scale up, and improvements in program implementation over the project period. 39. The new design has some refinements from SEP. To help promote sustained program implementation (which would be critical for realizing the expected gains in outcomes from the program actions), planned annual disbursements are fixed to increase over the project period (annual disbursements were flat under SEP). To promote expenditures in the EEPs, project disbursements under the results-based component are to be on a reimbursement basis (rather than on an advance basis as under SEP). To promote expenditures in nonsalary EEPs, total disbursements against expenditures incurred in employee-related expenses is capped at a specified share (there was no cap under SEP). 40. Project content design: Four key lessons learned inform the contents of SERP II and the project. First, program actions that are likely to yield the highest returns remain those that aim to strengthen administrative systems and governance and accountability. Second, dislodging the government school system from its low-performance equilibrium requires additional and potentially more powerful actions to strengthen administration systems and governance and accountability. Third, the Sindh government pursued a set of program actions that were well- motivated and coherent; these actions overlapped at the system level but did not necessarily overlap at the school level. Fourth, program design has to go beyond the design of initiatives (the "what" to do) to specifying the design of implementation (the "how" to do) in order to ensure that design of implementation is sound, feasible, and robust. 41. Based on these lessons, the Sindh government plans to (1) continue the governance- oriented content design from SERP; (2) retain and strengthen past system development and govemance-oriented program actions and integrate other such program actions; and (3) maximize the reform "dose" felt at the school level, by explicitly coordinating and layering program actions on selected schools. " DLIs associated with the program actions are framed to promote specific implementation integrity, performance, or arrangement elements. 42. Implementation arrangements: While the project benefits from implementation arrangements that were put in place for SEP, with their performance improving over SEP, further actions are required to strengthen arrangements. In addition, many of these additional actions need to be completed in advance or at the onset of the project in order to "gear up" implementation. Some major actions already completed or planned to be completed within six months of project effectiveness include (1) restructuring RSU to align it with the priorities and 13 This is to be done without contradicting the eligibility and assignment rules derived from independent justifications for specific program actions. 13 activities under SERP II and adequately staffing and resourcing the unit; (2) adequately staffing and resourcing the Economic Reform Unit (ERU) in the Finance Department (FD) to undertake its designated tasks related to SERP-II budget and expenditure matters; (3) extending RSU into the regions and districts via the introduction of Local Support Units (LSUs); (4) introducing benefits and arrangements to encourage and facilitate RSU/LSU staff performance; (5) constituting new or refining existing inter-(sub)departmental and province-region/district committees for partnering and coordinating on program design and implementation; (6) constituting interdepartmental committees at the regional level to oversee program implementation progress and performance in the regions and districts; and (7) intensifying the use of contracted firms to provide capacity development to districts and field-level implementation and monitoring support (see Section I in Annex 3 for details). IV. IMPLEMENTATION A. Institutional and implementation arrangements 43. Institutional and implementation arrangements for SERP II will largely mirror the arrangements that were in place for SERP. These arrangements have in general performed satisfactorily under SERP. Notwithstanding, the Sindh government plans to take specific steps to enhance their performance under SERP II, based on lessons learned from their past implementation experience (these lessons are also discussed in the ICR for SEP and SEP AF). See Section I in Annex 3 for details on the implementation architecture, including the specific roles and responsibilities of the full set key entities, at all levels. 44. Steering Committee for SERP II and other working committees: The Steering Committee (SC) will provide overall strategic guidance and enabling support to SERP II, and serve as a forum for high-level, interdepartmental decisionmaking and an interface with the political leadership on SERP-II matters. The Sindh government notified the SC for SERP II on December 10, 2012, with well-specified powers, roles, and responsibilities. In addition, for SERP II, the Sindh government plans to set up working committees as and when needed, with specific terms of reference, for fostering joint technical work and coordination between departments at the provincial level as well as between the province and the regions and districts. 45. Implementing agency: ED will be the implementing entity. RSU, under ED, will be responsible for policy formulation, coordination, and monitoring of the initiatives under SERP II, and will have (joint) responsibility for the implementation of selected initiatives. Other departments, as well as subdepartments and entities of ED, will have important design, implementation, and monitoring responsibilities. In addition, with respect to the project, RSU is responsible for (1) coordinating and communicating with the Bank; (2) reporting on project covenants, DLIs, EEPs, monitoring indicators, and TA implementation; and (3) ensuring that Bank fiduciary and safeguard regulations and requirements are followed. 46. The Sindh government is in the process of taking or has taken four important actions to strengthen RSU's organizational capacity. First, it plans to restructure RSU to be aligned with the priorities and initiatives under SERP II. Second, to attract, retain, and motivate government officials working at RSU, the Sindh government approved a performance-based honorarium 14 incentive plan on October 19, 2012. Third, to facilitate more regular and intensive field support and monitoring visits by government officials at RSU, the Sindh government plans to contract a private transportation firm to provide rental car services. Fourth, the required procurement/contract management, financial management, and environmental management positions at RSU have been (re)filled with qualified personnel, with well-specified terms of reference. The honorarium plan, contracted rental car services, and contracted personnel for the aforementioned positions are to be financed using project TA funds. 47. Private sector support for program implementation: Following the demonstrated success of the approach under SERP, the Sindh government plans to further tap the private market to support program management, implementation, and oversight of SERP II. To this end, RSU plans to (1) hire needed additional staff (specialized or support) from the private market to be placed at RSU or in other entities associated with SERP II such as FD/ERU or SEF and (2) contract firms for specialized professional services. 48. Arrangements in the regions and districts: Districts have primary or joint responsibility for program implementation and monitoring. However, the districts suffer from important implementation capacity and performance weaknesses. The Sindh government plans to take or has taken three important actions, among others, to strengthen district-level implementation and institutional arrangements for SERP II. First, it has formally constituted Region Reform Oversight Committees (RROCs) in all regions for high-level, interdepartmental oversight and review of program implementation progress and performance. Second, under its new organizational structure, RSU will be extended into the districts with the introduction of LSUs, with each district LSU staffed by at least two personnel. Third, following the demonstrated success of the approach in SERP, RSU plans to intensify its use of contracted specialized private sector firms to provide capacity building services to the districts and field-level implementation and monitoring support for selected initiatives. Lastly, as a key SERP-II initiative promoted by project DLIs, in order to strengthen the performance of education management, the Sindh government plans to professionalize education management at all levels, including at the regional, district, and school levels. B. Results monitoring and evaluation 49. Project monitoring indicators: The Bank will monitor and report on progress on the PDO-level results indicators, the relevant core sector indicators, government school participation indicators for all children as well as subgroups where the shortfalls are largest (rural children, rural girls, children from poor households, children in districts with the lowest initial primary school participation rates) in selected age groups, and government budgets and expenditures for education at the required levels of disaggregation. These indicators are listed in the Results and Monitoring Indicators table (Table Al.1 in Annex 1). The Bank will also monitor and report on beneficiary numbers, disaggregated by gender. Data for the school participation indicators (relevant PDO-level results indicators and other indicators) will be obtained from the PSLM survey rounds. Data for the test administration related PDO-level results indicator, beneficiary numbers, and relevant core sector indicators will be obtained from ED/RSU and SEF program administrative data. Data on government budgets and expenditures for education will be obtained budget and expenditure reports and tables submitted by FD. 15 50. Monitoring program and project implementation: As under SERP, the various initiatives under SERP II will have their own dedicated administrative and monitoring systems. For monitoring implementation progress and performance of SERP-II initiatives, including progress towards and the achievement of DLIs, the Bank will rely on reporting and stipulated evidentiary data and documentation submitted by ED/RSU and SEF, largely obtained from these systems. For monitoring related to implementation arrangements, fiduciary and procurement activities and functions, and environmental and social safeguards and activities, including project covenants, the Bank will also rely on reporting and stipulated evidentiary data and documentation submitted by ED/RSU and SEF. 51. Refinements of monitoring arrangements: Under SERP II, ED/RSU plans to refine its existing implementation arrangements to monitor implementation progress and performance. Seven refinements are delineated here. First, one of main responsibilities of RROCs and LSUs, two new arrangements under SERP II, will be to monitor and review implementation progress and performance in the regions and districts. Second, RROCs and the districts will periodically assess how they are performing against key indicators captured in region and district performance cards prepared by ED/RSU, with Bank participation, when possible, in the review meetings conducted by the regions and districts. Third, RSU field monitoring will be facilitated by contracting transportation services using project TA funds. Fourth, ED/RSU will contract consulting firms using project TA funds for, among other things, monitoring of selected initiatives (e.g., school infrastructure development, school budgets) in the districts. Fifth, the roles and responsibilities of supervisors (who are the lowest level of officers in the district education administrations) are to be better specified with the requirement of regular monitoring visits (both announced and unannounced) to government schools and the use of standardized instruments and procedures for gathering information. Sixth, SEF is strengthening its monitoring capacity in terms of human resources, finances, logistics, and information technology, particularly in its regional offices, to ensure regular monitoring visits (both announced and unannounced) to PPRS program schools and the use of standardized instruments and procedures to gather required information. Seventh, stronger, well-defined efforts will be made by the districts and LSUs to encourage and support SMCs in regularly and effectively monitoring their government schools, serving as a formal mechanism for demand-side monitoring. 52. Strengthening monitoring and evaluation systems: Under SERP II, the Sindh government has prioritized and plans to strengthen its monitoring and evaluation (M&E) systems, drawing lessons from its experience under SERP. Under the project, the Bank will support five monitoring and evaluation activities in order to yield relevant, regular, and reliable data to aid the government in evidence-based decisionmaking to improve the quality of service delivery: the Annual School Census (via DLIs and TA), (2) the Student Achievement Test (via DLIs and TA), (3) an independent longitudinal school sample survey over the entire project period (via TA), (4) a public education employee management information system (via TA), and (5) a comprehensive MIS for the SEF PPRS program (via its integration into the PPRS program-related DLIs). See Section VI in Annex 3 for details on these activities. 16 C. Sustainability 53. The likelihood of sustained implementation of SERP II by the Sindh government beyond the project period is promoted by four factors. First, at both the national and provincial levels, the political and administrative arms of government have communicated (1) that education is a high priority and (2) their strong, steadfast commitment to addressing the acute and chronic deficiencies in the quality of service delivery. Second, the Sindh government has led the design of SERP II, ensuring that the design process is participatory with consultations with a range of internal and external stakeholders (see Section V.E for details). Third, during implementation of SERP II, the Sindh government plans to continue its engagement with internal and external stakeholders. The engagement will entail proactively communicating on program status, progress, and performance as well as gathering feedback. A major instrument for this effort is the communications unit to be established in RSU. This continuous engagement is likely to help build wide and deep ownership and consensus. Fourth, while the governance and accountability initiatives under SERP II will be difficult to undertake given potential resistance from status-quo proponents, the requirements in terms of additional government budgetary resources for SERP-II initiatives are minimal, as the initiatives largely aim to improve the effectiveness and efficiency of existing levels of expenditures for primary and secondary education. Thus, any required additional expenditures for SERP-II initiatives are considered to be fiscally sustainable (see Section V.A for more discussion). 54. Notwithstanding, risks to sustainability of SERP-II initiatives remain and these are discussed in Annex 4. V. KEY RISKS AND RISK-MITIGATION MEASURES A. Risk rating summary 55. The risk ratings summary is presented in Table 3 below. Table 3. Risk ratings summary Risk Rating Stakeholder Risk Substantial Implementing Agency Risk - Capacity Substantial - Governance Substantial Project Risk - Design Moderate - Social and Environmental Moderate - Program and Donor Substantial - Delivery Monitoring and Sustainability Moderate Overall Implementation Risk Substantial Risk rating scale: Low, Moderate, Substantial, High 17 56. The overall implementation risk rating for the project is Substantial, and is attributable to five risks summarized below. The full set of risks and risk mitigation measures is presented in Annex 4. B. Overall risk rating explanation 57. Poor initial conditions: In general, economic conditions and prospects for households in Sindh have deteriorated. International evidence suggests that households under unfavorable economic circumstances are more likely not to send their children to school, draw children out of school (earlier), or underinvest in goods and services that help promote children's schooling and learning. Even if economic conditions markedly improve over the coming years, the effects of past and present poor conditions are likely to persist, dampening improvements in schooling outcomes. Furthermore, the potential returns to past efforts of the Sindh government under SERP and the present/planned efforts under SERP II are likely (to be) significantly lower than if economic conditions and prospects were more favorable. 58. Adverse exogenous shocks: Sindh has experienced a series of major shocks, specifically successive heavy rains and floods which devastated the rural economy and the rapidly growing power crisis in the country which reached new proportions in 2012, undermining economic production and services, primarily in urban areas of the province. The province also suffers from recurrent security incidents and public demonstrations and strikes (with accompanying mobility restrictions and curfews) which, at times, lead to widespread and prolonged disruption of government functioning and school operations. These shocks, both anticipated and unanticipated, depress household demand for schooling, again, dampening improvements in schooling outcomes. Under SERP II, the Sindh government will take forward several environmental management measures to mitigate the impacts of natural disasters and create hospitable building conditions in schools without power (see Section V in Annex 3). These efforts are promoted via DLIs and supported via project TA funds. Notwithstanding, power shortages have a minimal direct impact on service delivery as most government schools do not have an electrical connection or rely on electrical power for daily school operations and teaching. Security incidents and protests will continue to adversely affect service delivery. 59. Policy and institutional instability and unpredictability: There have been several abrupt policy and institutional changes at the national and provincial levels. Some of the changes, such as the 18th amendment to the Constitution which fully delegated responsibility for education and selected other areas to the provinces and Article 25A of the Constitution which guarantees the right to free and compulsory education, have limited implications for SERP II. In the case of primary and secondary education, the 18th amendment largely formalized the responsibilities, roles, and activities that the provincial governments were already undertaking. The initiatives under SERP II to improve the quality of service delivery in government schools or extend service delivery via the SEF PPRS program and thereby attract households to send their children to school and keep children in school longer are fully consistent with Article 25A. 60. Some other policy and institutional changes have more profound effects, as they introduce uncertainty, the consequence of which include the inability to plan properly and the 18 poor attitude, interest, and effort by officials, contributing, in turn, to poor and/or variable implementation progress and performance. For example, the repeal of the 2001 Sindh Local Government Ordinance (SLGO) in late 2011 followed by a period of policy vacillation and vacuum before the enactment of the 2012 Sindh Peoples Local Government Ordinance (SPLGO) in October 2012 stalled implementation progress in selected initiatives under SERP when district administrative powers, structures, and procedures changed. 14 While future changes of this nature may effect changes in the implementation design of SERP II, which delays implementation progress, the design of SERP II is relatively protected, as the program reflects key priorities and activities of the Sindh government to improve the quality of service delivery. Similarly, the period around the upcoming general elections may slow program design and implementation progress, but the new government is unlikely to change the fundamental design of SERP II, given that the program actions attempt to address the underlying causes behind poor service delivery. 15 61. Reform resistance: By construction, the Sindh government's agenda of promoting reform actions that aim to improve sector governance and accountability necessarily entails eroding the capture over the system and diminishing the private rents of powerful insider groups and other special interest groups, with the concomitant risk of reform resistance and other counteractions, including noise. To mitigate these risks, the Sindh government has pursued a collaborative process in the design of SERP II and expects to maintain the engagement with key stakeholders during implementation (see Section V.E). The Sindh government also plans to implement an information dissemination and communications strategy for SERP II, including complaints handling through a formal system with stipulated service standards (see Sections V.E and V.G). These efforts are promoted via project covenants and supported via project TA funds. 62. Capacity weaknesses: Planning, implementation, and monitoring capacity is weak across departments at the provincial level, the subdepartments and other entities (including RSU) of the ED, and the various administrative levels from the province to the school. Specific actions to strengthen planning, implementation, and monitoring capacity are discussed in Annex 3. Many of these actions are promoted via project covenants and DLIs and supported via project TA funds. Notwithstanding, the capacity enhancement agenda requires sustained, intensive, multipronged efforts over an extended period. VI. APPRAISAL SUMMARY A. Economic and financial analysis 63. Cost-benefit analysis: A cost-benefit (CB) analysis of SERP II was carried out using the present discounted value method. The current and future economic benefits and costs incurred by a representative child age 6 (the official age for entering primary school in grade 1) given a projected average school attainment profile when the child reaches age 18 are estimated for two 14 The 2012 SPLGO is presently contested in the courts. For this and other reasons, work on specifying in detail government functioning, including powers, roles, and responsibilities, has been protracted and remains incomplete. 15 The possibility of a radical change to the fundamental design of SERP 11 after the elections cannot be ruled out however. 19 cases: (1) without SERP II, where the projected average school attainment profile is identical to the average school attainment profile over the period 2007/08-2010/11 and (2) with SERP II, where essentially the projected average school attainment profile is adjusted for raising the annualized change in the probability of completing secondary school by 10%. The difference between the two estimates provides the expected incremental net benefits per representative child age 6, and a positive expected incremental net benefit implies that the investment is worth pursuing. In line with standard practice in CB analyses of education investments, the economic benefits are estimated using lifetime adult labor earnings whereas the economic costs are estimated using schooling expenditures (for the child by the household and per-student public recurrent expenditures in education), and, given the context, forgone child labor earnings over the period of schooling. A discount rate of 10% is applied. 64. The CB analysis suggests that SERP II yields positive expected incremental net benefits under the base case as well as under the selected alternative cases examined in the sensitivity analysis, including halving the adjustment to the expected annualized change in the probability of completing secondary school. The CB analysis document is included as a project file. 65. Fiscal sustainability analysis: Over the project period, federal transfers under the 7th National Finance Commission award will continue to increase at a significant rate. In addition, the Sindh government's own revenues are expected to increase sharply, due, in part, to the provincialization of the General Service Tax on services. The Sindh government's total revenues are projected to increase by an average of 20% per annum until 2016/17. During the same period, the Sindh government's total expenditures (recurrent and development combined) are projected to grow at 18% per annum. Given this, the Sindh government's fiscal deficit is projected to decline from 0.8% of provincial Gross Domestic Product in 2011/12 to 0.4% in 2016/17. Even if the additional expenditures for initiatives under SERP II are financed through deficit spending, the additional impact on the relative size of the deficit is negligible. B. Technical 66. The technical review of SERP II indicates that the design principles applied and choices made appear to be sound, in that, there is tight relationship between the shape and substance of the proposed strategy and the nature of the problem. 67. Governance and accountability: The technical argument for SERP II is simple and direct: the Sindh government views poor accountability and governance and weak administrative systems as the principal problem in public education. The problem has led to acute underperformance in the government school system, manifesting itself in multiple ways. Furthermore, the Sindh government reports that the present level of underperformance is the outcome of a long slide in performance, stretching several decades. They also argue that the main source of the problem is system capture by special interest groups, undermining the quality of service delivery. The problem as described to this point is not unique to the public education sector; it applies to the public sector across the country. However, the scale of problem is much larger with the public education sector given the large numbers of service-delivery units and agents (employees). Given the source and characteristics of the problem, the Sindh government recognizes that, while necessary, improving governance and accountability will be difficult and 20 require a steady and long-term focus for it to succeed in shifting the system from a state of dysfunctionality to minimal functionality and then to acceptable performance (the latter shift is when a marked change in education outcomes is likely to be realized). 68. Expenditures and inputs: Under SERP II, the Sindh government does plan to increase expenditures and add inputs but the emphasis is less on the quantity of inputs and more on ensuring the integrity of the process in obtaining and applying inputs. Increasing expenditures and adding inputs, when sector governance is generally weak, would mean that the effectiveness and efficiency (returns) of the new investments would be relatively poorer. Similarly, offering demand-side benefits to students when the government school system is not delivering a quality education would mean that the returns of these investments would be relatively poorer. Thus, under SERP II, in order to augment the returns from any investments in additional inputs and benefits, the Sindh government plans to undertake needed investments either in tandem or sequenced to follow actions to improve administrative systems and governance and accountability. 69. Private sector participation: The Sindh government increasingly recognizes that the private sector can be an important partner to improve the effectiveness and efficiency of public expenditures in education, largely due to the fact that private sector partners can be subject to accountability arrangements that would be more difficult to introduce and enforce within the public sector. Consequently, well-designed and -implemented Public-Private Partnerships (PPPs) in education can yield returns relatively quicker. The Sindh government plans to integrate in two types of PPPs into SERP II; both types have demonstrated success under SERP. First, it plans to use public financing to attract and contract the private sector to deliver schooling with minimum quality standards (i.e., SEF's PPRS program). Second, as discussed earlier in Section IV.A, it plans to partner with the private sector to help it manage, implement, and monitor efforts under SERP II to improve the quality of service delivery in government schools. For both types of PPPs to be effective, contractual terms have to be well-specified and enforced, accompanied by high-powered performance incentives, to promote the objectives of the contracting party. C. Financial management 70. The assessment of the financial management arrangements proposed for the project takes into account the experience under SEP. Having due regard for the state of public financial management systems in the country and particularly in the province of Sindh, the overall financial management risk is rated as Substantial. Budgeting, accounting, internal controls, financial reporting and audit arrangements are found satisfactory. FM staffing at the RSU is considered adequate given the recent recruitment of a Finance Management Officer to support the finance function and a Financial Reporting Officer primarily dedicated to support the generation and analysis of reports from the government's Financial Management Information System (FMIS). 71. The Sindh government will prepare annual financial statements for the project in accordance with cash basis International Public Sector Accounting Standard, which will be submitted to the Bank within six months of the end of the fiscal year. The statements will be audited by the Auditor-General of Pakistan (AGP) acceptable to the Bank as an independent 21 auditor.16 In addition, the audit reports for the Sindh government (including ED) and the audited financial statements of SEF will be submitted, the former within one month of receipt from AGP and the latter within nine months of the end of the fiscal year. Quarterly Budget Execution Reports with a cover note summarizing budget allocations and utilization in the EEPs will be submitted within 30 days of the end of each calendar quarter. 72. Disbursement will be report-based. For Component 1 (the results-based component), funds will be disbursed to the Provincial Consolidated Fund Account No. I (Non-Food) of the Sindh government conditional on satisfactory achievement of DLIs which will be applied against reimbursement of expenditures incurred in EEPs. Not more than 80% of the amount to be disbursed will be applied against expenditures in the EEP for employee-related expenses; the remaining 20% will be applied against the overall expenditures in the rest of the EEPs. For Component 2 (the TA component) funds will be disbursed semi-annually against cash forecasts provided in unaudited Interim Financial Reports to be submitted within 30 days of the end of semesters ending April 30 and October 31. Retroactive financing to the extent of US$1,000,000 is made available to cover eligible expenditures incurred for TA, including the performance- based honorarium incentive payments for government officials at RSU, between July 1, 2012 and signing of the legal agreements. See Table Al.2 in Annex 2 for the DLIs and verification data and documentation. See Section II in Annex 3 for details on the financial management assessment. 73. Based on the Bank's assessment, the financial management arrangements for the project are considered satisfactory and there is sufficient assurance that the requirements of Bank OP 10.02 will be met. The implementing entity will ensure that Bank Guidelines: Preventing and Combating Fraud and Corruption in Projects financed by IBRD Loans and IDA Credits and Grants (revised January 2011) are followed under the project. There are no outstanding audit reports or unresolved ineligible expenditures with respect to ED/RSU. 74. Tracking releases and expenditures in school budgets, SMC grants, and PPRS program subsidies: Cost centers in the government's FMIS are created for the lowest delegation of financial authority which is the Drawing and Disbursing Officer (DDO). This is the basic unit for both budget formulation and budget execution. With respect to school nonsalary budgets, in the case of primary, middle, and secondary schools, the DDO for these schools is at the taluka level, namely the Assistant District Education Officer. The government's FMIS allows for the creation of "projects" under cost centers and for budgets and expenditures to be tracked at the project level; a project will be created for each primary, middle, and elementary school, with the SEMIS code for the school embedded in the project code. Budgets will be entered in the FMIS against these projects and, on incurrence of expenditures, the DDO shall clearly mark the relevant project code when submitting bills to the District Accounts Office. In addition, a firm has been contracted by RSU to provide implementation and monitoring support to the districts for the school budgets initiative. With respect to SMC grants, under SERP, ED/RSU and FD monitored 16 The role of the Auditor-General to carry out the annual audit of the financial statements of Bank-financed projects is acceptable to the Bank. The Auditor-General being the Supreme Audit Institution in Pakistan has formally adopted the INTOSAI Standards on auditing. In addition, the Financial Audit Manual enshrines the principles contained in the International Standards on Auditing issued by the International Federation of Accountants. 22 account-level information on grants deposited into SMC accounts. Under SERP II, ED/RSU and FD plan to additionally monitor account-level information on withdrawals from SMC accounts. With respect to PPRS program subsidies, under SERP II, SEF progressively shifted from issuing demand drafts to direct electronic transfers into the bank accounts set up for PPRS program schools by the private entrepreneurs. Today, 100% of PPRS program school operators receive their subsidies directly into their school bank accounts; this practice will be maintained under SERP II. 75. Complementing the above efforts, the independent longitudinal school sample survey will provide regularly information (1) to confirm information received from administrative sources as well as (2) on the nature of use of school nonsalary budgets and SMC grants provided to government schools. In addition, under SERP II, the Sindh government plans to send SMS's related to when and how much monies have been released in school nonsalary budgets, SMC grants, and PPRS program subsidies to school head/teachers, SMCs, and PPRS program school operators, respectively. D. Procurement 76. All procurement activities under project EEPs and TA are to be carried out in accordance with Bank Guidelines: Procurement of Goods, Works, and Nonconsulting Services under IBRD Loans and IDA Credits and Grants for World Bank Borrowers (dated January 2011) and Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers (dated January 2011). 77. Procurement arrangements were put in place under SEP and will be maintained under this project. The procurement unit at RSU has been revamped to comprise of a Procurement Specialist, a Contract Management Specialist, and a Procurement Assistant. The procurement unit staff are contracted using project TA funds and the Bank will provide procurement training to them. Subject to satisfactory performance, the procurement unit staff are expected to be retained over the project period. The Bank will also provide procurement training to the procurement manager and support staff at SEF. 78. RSU will be responsible for managing project TA funds, and RSU's procurement unit will carry out all procurements using these funds (see Section II in Annex 2 for an indicative list of TA activities identified by project appraisal). RSU will make TA funds available and procure goods and services to meet the needs of other government departments, entities, and agencies partnering on SERP-II related initiatives; responsibility for managing these TA activities will be shared accordingly and closely coordinated. RSU will maintain a consolidated plan of all procurement activities financed through EEPs and project TA over the project period and update it in a timely fashion for any new procurement activities, after any needed review and clearance by the Bank. SEF will do the same for its procurement activities financed using PPRS program funds. 79. ED/RSU has initiated critical procurement activities to support the design and early implementation of SERP II. Expenditures for certain contracts have been recorded under the relevant TA codes created for SEP in the government's FMIS. The Bank has reviewed and 23 approved these contracts, and expenditures incurred between July 1, 2012 and signing of the legal agreements will be reimbursed upon project effectiveness. 80. Transparency and complaints management: RSU will disclose all relevant procurement activities and status of implementation of all contracts financed through project EEPs and TA funds on its website; SEF will do the same for its procurement activities using PPRS program funds. In addition, RSU will disclose on its website all government contracts for civil works and furniture under the district TOP subprogram and government contracts for textbook publishing and transportation. A two-tier system for managing complaints on procurement related to SERP II will be operational over the project period. The first tier will be RSU and SEF's complaints handling systems; the second tier will be the complaints handling system at SPPRA. 81. Procurement guidelines for schools: Under SERP, ED/RSU prepared and adopted simplified fiduciary guidelines for the use of grants provided to SMCs and subsidies provided to schools under SEF's PPRS program; under SERP II, these guidelines may be revised as needed and (re)distributed to SMCs and schools before the start of the new academic year in April 2013. ED/RSU has also prepared and adopted guidelines for the procurement of goods using school nonsalary budgets; these guidelines are to be distributed to districts and schools before the start of the new academic year in April 2013. 82. Textbook procurement: As part of the Bank's technical and advisory support on education sector matters broadly, the Bank reviewed the procurement procedures and practices of the Sindh Text Book Board (STBB) and made recommendations to strengthen procurement procedures and practices. ED/RSU has prepared and is implementing an actionplan to take forward the recommendations. TA funds are made available for ED/RSU to contract technical and advisory support services to further study, plan, and implement any decisions to improve textbook procurement. 83. Civil works procurement: Under SEP, civil works contracts for the school rehabilitation activity under the district TOP initiative were packaged at the taluka level up to a contract cost ceiling. ED/RSU plans to continue with this practice, and may raise the contract cost ceiling for selected contracts after any necessary due diligence. In addition, under SEP, the third-party construction supervision firm for the school rehabilitation activity contracted by ED/RSU carried out ex-post procurement reviews of sample civil works contracts and recommendations for improvements were shared with the districts and civil works contractors. ED/RSU plans to continue with this practice as well. E. Social 84. Participatory approach: ED/RSU has pursued a collaborative approach in the design and early implementation of SERP II. There are four main types of collaborations that ED/RSU is undertaking and expects to maintain and further foster. First is the collaboration at the provincial level across relevant departments as well as subdepartments of ED. Second is the collaboration between the province and the regions, districts, and schools. These two types of collaborations have been undertaken through, for example, formal working groups, workshops and meetings, online groups, and the standard exchange of documents and written correspondence. Third is the 24 collaboration between ED/RSU and civil society entities, primarily through consultations as part of GPE for the preparation of a sector plan enveloping SERP II. Fourth is the collaboration between ED/RSU and the private sector, primarily through contracting private-sector firms/organizations to monitor, guide, and support government implementation of selected initiatives in the districts. 85. Land acquisition: As with SEP, World Bank OP 4.12 on Involuntary Resettlement is not expected to be triggered by the project. Under SERP II, no new government schools on new lands will be constructed. Land, however, may be needed by the Sindh government for meeting the infrastructural needs of existing government schools, specifically for school infrastructure investment activities under SERP II related to (1) school rehabilitation/whole school development, (2) school upgradation, and (3) school system consolidation. Land for these activities is to be obtained either through voluntary donations from communities or market-based purchases. The same two options are available to school operators under SEF's PPRS program, although, under SERP, most transactions for this program have been land and building lease agreements, and this will likely be the case under SERP II. 86. In order to ensure transparency and genuine voluntariness in any land transactions, the ESMF requires evidentiary documentation. Up-to-date evidence on land transactions for activities under SERP II is to be retained by the Environmental Coordinators at ED/RSU and SEF and made available for Bank review upon request. 87. Indigenous peoples: As with SEP, indigenous groups have not been identified in the areas to be covered by SERP II. Thus, World Bank OP 4.10 on Indigenous Peoples is not expected to be triggered by the project. Notwithstanding, if any such group is identified during the course of project implementation, the ESMF provides that Sindh government will prepare an Indigenous Peoples Development Plan and incorporate any needed safeguards into SERP II. 88. Grievance redressal: The ESMF for the project describes mechanisms for the redressal of grievances related to SERP II. To enable improved complaints handling, ED/RSU plans to procure and run a customized, web-based complaints handling system, with user access to the system by the districts; SEF will have a similar system. The ED/RSU and SEF systems will handle complaints related to SERP II and the PPRS program, respectively; the systems will handle complaints irrespective of the source and communication mode of the complaint. 17 The software solutions for the ED/RSU and SEF systems are to be procured using project TA and PPRS program funds, respectively; both systems are expected to be established by October 31, 2013. In addition to the web-based systems, formal guidelines and service standards are to be prepared and approved for the receiving, recording, processing, responding to, and reporting on complaints. The steps are expected to help ED/RSU and SEF have the means to improve the efficiency, transparency, consistency, and quality of complaints handling. 17 Under SERP, ED/RSU received complaints via letters, personal visits to district and provincial education offices, telephone calls, and cellphone-based SMS. Some are relayed directly to ED/RSU; others were relayed indirectly such as from the Bank. Irrespective of source or mode of communication, all complaints will be handled uniformly under the new system. 25 89. Complaints received during SERP often indicate that the source of the problem is the lack of information (or misinformation) on program activities, procedures and practices, and eligibility rules. Under SERP II, apart from putting in place and running systems for handling complaints, ED/RSU plans to proactively and widely communicate relevant information on SERP II through multiple products and channels. Such communication will be managed by RSU Program Managers and Program Officers for the initiatives, with any needed support from the communications unit in RSU. 90. Monitoring of social indicators: As noted earlier in Section IV.B, the gender parity index at the primary level, beneficiary counts (disaggregated by gender), and government-school NERs for subgroups with the largest shortfalls-namely poor children, rural children, rural girls, and children from districts with the poorest initial school participation rates-are to be monitoring over the project period (see Section VI in Annex 3 for a discussion of spatial [district, rural/urban] and gender differences in school participation, and how program initiatives are sensitive to these differences). In addition, the independent longitudinal school sample survey will gather information on the characteristics of sample students; the survey data will be made publicly available for researchers to examine, among other things, questions on the (changing) extent and nature of social inclusion in government and SEF PPRS program schools. F. Environment 91. Under SERP II, the Sindh government plans to carry out infrastructure development of existing eligible government schools with identified needs. This work will be carried out under the district Terms of Partnership (TOP) initiative. Under SERP, the TOP initiative offered annual grants to districts for school infrastructure rehabilitation with oversight and support provided by a contracted civil engineering firm. Under SERP II, the scope of the program will be expanded to include school upgradation and any infrastructure development needs emerging from school system consolidation. Under SERP, the Sindh government introduced the PPRS program, administered by SEF, which offers cash subsidies to qualifying private entrepreneurs to set up and operate schools in unserved rural communities; the contracts with the school operators specify minimal conditions for the provision and maintenance of basic school infrastructure and amenities. Under SERP II, the Sindh government plans to continue and strengthen the program. 92. The envisaged civil works under the district TOP initiative for government schools and by SEF PPRS program schools may yield low negative environmental impacts. Hence, the project is classified as Category B. The project triggers Environmental Assessment OP/BP 4.01 and Physical Cultural Resources OP/BP 4.11. The latter safeguard policy is triggered as a precaution; although the probability of school construction activity interfering with cultural sites is low, the ESMF for the project includes guidelines on how to proceed in case any such site is discovered during school construction. 93. For SEP, the Sindh government carried out an Environmental Assessment (EA) and prepared an Environmental and Social Management Framework (ESMF). The EA and ESMF have been revised to take into account the implementation record of the Sindh government in meeting minimal infrastructural and environmental standards in government schools and SEF PPRS program schools as well as the envisaged infrastructure investment plans of ED/RSU 26 under SERP II. The revised versions are referred to as EA II and ESMF II. The Sindh government approved and publicly disclosed ESMF II on RSU's website on January 26, 2013. 94. In line with the findings in EA II and the recommendations in ESMF II, under SERP II, the Sindh government plans to, among other things, (1) continue to competitively contract an engineering firm using government resources to guide, support, and monitor districts and schools in school civil works and (2) competitively contract a specialized consulting firm using project TA funds to evaluate, design, and support the implementation of (i) refined recommendations related to the structural safety of school buildings, (ii) GIS-based guidelines for school siting and structural resilience to natural disasters, (iii) safe drinking water and sanitation facilities, (iv) training of districts and schools in personal hygiene and disaster preparedness, and (v) pilot initiatives in drinking water facilities and low-cost renewable power systems. 95. Implementation arrangements and plans for the environmental management agenda are detailed in Section V in Annex 3 of this document and ESMF II. At RSU and SEF, Environmental Coordinators (ECs) will serve as focal-points for advising, supporting, and monitoring the environmental management agenda under SERP II. RSU contracted its EC in December 2012 using project TA funds; SEF will also contract its EC using project TA funds. The firms contracted by ED/RSU will play an important role in taking forward the environmental management agenda. Apart from data from administrative information from ED/RSU and SEF on progress and performance on environmental management actions, the independent longitudinal school sample survey will gather information on the characteristics of school infrastructure and the school environment; the survey data will be made publicly available for analysis. G. Communications 96. Under SERP, ED/RSU did not pursue a planned, systematic information and communications strategy. Consequently, the potential value of well-designed and well- implemented information and communications activities in aiding program implementation performance was not sufficiently exploited. Under SERP II, ED/RSU plans to set up, staff, resource, and run a communications unit in RSU. The unit's main objectives are to (1) manage donor, media, and public relations and internal information and communications demands; 18 (2) develop and maintain the RSU website with all relevant, permissible information on SERP-II initiatives and disclosures required by the Bank; (3) operate a web-based system for handling complaints related to SERP-II initiatives, including on fiduciary, social, and environmental concerns, in line with agreed guidelines and performance standards (discussed earlier in Section VI.E); and (4) operate an SMS communications system to exchange information on service delivery directly with districts and government schools. In addition, the communications unit will identify and feature, for example, high-performing education management officials, teachers, and SMCs, disseminating their stories along with guidance and insights to potentially 18 The communication will importantly include identifying and featuring high-performing education management officials, teachers, SMCs, etc. ("role models"), and disseminating their stories along with guidance and insights to potentially improve the performance of their counterparts elsewhere. 27 improve the performance of their counterparts elsewhere. Project TA funds are also made available for appropriately staffing and resourcing the unit over the project period. 97. SMS communications with schools: Under SEP, the Bank tested the use of Short Messaging Service (SMS) to exchange service delivery information with district officials and school teachers, contracting a ICT services firm to develop and manage a web-based platform for SMS communications. The tests revealed the feasibility and effectiveness of using this channel to (1) directly reach frontline service delivery agents; (2) transmit pertinent information to them in a timely fashion; and (3) allow them to easily, quickly, cheaply, and reliably relay information on service delivery performance (including any complaints) to ED/RSU. Under SERP II, ED/RSU plans to integrate two-way SMS communications as a key part of its information and communications strategy. The SMS communications system is to be managed by the communications unit in RSU, and the needed ICT services will be contracted using project TA funds. 98. Provision of information to schools and communities: Under SERP II, ED/RSU aims to more proactively and systematically provide information to schools and communities. For example, the release of school nonsalary budgets and SMC grants are to be communicated via SMS's to head/teachers and SMCs, respectively. School nonsalary budgets and SMC grant amounts and how these funds are (to be) used are to be prominently displayed on standardized charts at school. The delivery schedule for cash stipend benefits to girls in secondary grades and textbooks for all children in government schools are to be announced in regional and local newspapers and SMS's sent to school teachers. After each ASC round, school statistical profiles are to be provided to all government schools and made available at the school. SEMIS codes for all government schools are to be prominently marked on the school building and compound wall. Once the SAT system is assessed to yield credible and reliable student achievement information, the dissemination of SAT results will include the provision of school SAT report cards. Standardized boards placed prominently outside PPRS program schools will indicate, among other things, the contact information for SEF, details on accessing its grievance management system, and that the school offers free schooling. 28 Annex 1. Results framework and monitoring PAKISTAN: Second Sindh Education Sector Project Table A1.1. Results and monitoring indicators Project Development Objective (PDO): The project supports the Sindh Government's Second Sindh Education Sector Reform Program (SERP II). The Project Development Objective is to raise school participation by improving sector governance and accountability and strengthening administrative systems, and measure student achievement. Indicator Unit of Latest available Predicted Predicted cumulative target values over the project period Data source, periodicity, & Indicator description/definition measurement value value in 2013/14 2014/15 2015/16 2016/17 data collection agency 2012/13 PDO-level results indicators Net enrollment rate, primary % 61.6 64.1 65.5 66.9 68.3 69.7 PSLM surveys; annual; Share of 6-10 year olds in grades level, ages 6-10 years Pakistan Bureau of Statistics 1-5. NER, middle level, ages 11-13 35.7 37.3 38.2 39.1 40.0 40.9 (PBS) Share of 11-13 year olds in grades years 6-8. NER, matriculate level, ages 23.1 24.0 24.5 25.0 25.5 26.0 Latest available data year: Share of 14-15 year olds in grades 14-15 years 2010/11 9-10. Annual administration of the Event Pilot (1') round of 2donto 3 round 4rd round 5T round 6round Administrative documentation Competency-based test in Student Achievement Test a grade-5 be administered administered administered administered and data; annual; ED, RSU mathematics, science, and language (SAT) in grades 5 and 8 in competency-based administered, administered by a third party to government schools test administered in Latest available information students in grades 5 and 8 in (Note: the pilot SAT in grade 6 in year: 2012/13. government schools. FY2011/12 administered a government grade-5 test to grade-6 students schools in April in government schools.) 2012 Other monitoring indicators NER, primary level, government % All: 43.6 44.8 45.5 46.2 46.9 47.6 PSLM surveys; annual; PBS Share of 6-10 year olds in a given schools, ages 6-10 years subpopulation in grades 1-5 in Rural: 51.0 54.3 56.1 57.9 59.7 61.5 Latest available data year: government schools. Rural girls: 40.9 44.1 45.9 47.7 49.5 51.3 2010/11 Asset-poor: 35.6 37.8 39.0 40.2 41.4 42.6 Participation-poor 43.0 44.0 45.0 46.0 47.0 districts: 42.3 NER, middle level, government All: 23.5 24.2 24.6 25.0 25.4 25.8 Share of 11-13 year olds in a given schools, ages 11-13 years subpopulation in grades 6-8 in Rural: 24.3 26.1 27.1 28.1 29.1 30.1 government schools. Rural girls: 13.6 14.8 15.5 16.2 16.9 17.6 Asset-poor: 11.3 12.5 13.1 13.7 14.3 14.9 Participation-poor 20.0 21.0 22.0 23.0 24.0 districts: 19.6 NER, matriculate level, All: 14.1 14.1 14.1 14.1 14.1 14.1 Share of 14-15 year olds in a given 29 PAKISTAN: Second Sindh Education Sector Project Table A1.1. Results and monitoring indicators Project Development Objective (PDO): The project supports the Sindh Government's Second Sindh Education Sector Reform Program (SERP II). The Project Development Objective is to raise school participation by improving sector governance and accountability and strengthening administrative systems, and measure student achievement. Indicator Unit of Latest available Predicted Predicted cumulative target values over the project period Data source, periodicity, & Indicator description/definition measurement value value in 2013/14 2014/15 2015/16 2016/17 data collection agency 2012/13 government schools, ages 14-15 Rural: 12.9 13.5 13.9 14.3 14.7 15.1 subpopulation in grades 9-10 in years Rural girls: 5.9 6.3 6.5 6.7 6.9 7.1 government schools. Asset-poor: 4.5 4.8 4.9 5.0 5.1 5.2 Participation-poor 11.0 12.0 13.0 14.0 15.0 districts: 10.6 Total government education- PKR 64,000.0 64,223.0 69,360.0 74,909.0 80,902.0 87,374.0 Budget and expenditure See EEP list in Annex 2 for details. sector employees salary millions reports; annual; FD, ED, RSU expenditures Total government expenditures 2,680.0 2,921.0 3,257.0 3,561.0 3,883.0 4,199.0 Latest available data year: under nonsalary EEPs. 2011/12 Core sector indicators for IDA financing Gender Parity Index (GPI), % 69.1 70.0 71.0 72.0 74.0 76.0 ASC data; annual; ED, RSU Ratio of female to male enrollment primary level, government in grades 1-5 in government schools Latest available data year: schools. 2011/12 GPI, primary level, SEF PPRS 71.2 72.0 73.0 74.0 76.0 78.0 PPRS program administrative Ratio of female to male enrollment program schools data; annual; SEF in grades 1-5 in SEF PPRS program schools. Latest available data year: 2011/12 Number of additional 739 1108 1163 1221 1282 1346 Program administrative classrooms built or rehabilitated documentation and data; Number of additional classrooms at the primary level, government annual; ED, RSU built or rehabilitated under the schools school infrastructure development Latest available data year: initiative financed through district 2011/12 TOP (TOP III) Terms of Partnership (TOP) grants in primary (grades 1-5) or elementary (grades 1-8) government schools. 30 PAKISTAN: Second Sindh Education Sector Project Table A1.1. Results and monitoring indicators Project Development Objective (PDO): The project supports the Sindh Government's Second Sindh Education Sector Reform Program (SERP II). The Project Development Objective is to raise school participation by improving sector governance and accountability and strengthening administrative systems, and measure student achievement. Indicator Unit of Latest available Predicted Predicted cumulative target values over the project period Data source, periodicity, & Indicator description/definition measurement value value in 2013/14 2014/15 2015/16 2016/17 data collection agency 2012/13 Number of additional qualified # 13,500 13,500 Program administrative Cumulative number of additional teachers at the primary level, documentation and data; teachers recruited and contracted as government schools annual; ED, RSU. Primary School Teachers (PST) for government schools under the Latest available data: merit- and needs-based teacher Contracted Primary School recruitment subprogram. Teachers from Rounds 1 and 2 of the merit and needs-based teacher recruitment subprogram. System of learning assessment Yes, 4** Yes Yes Yes Yes Yes Administrative Whether or not the basic elements at the primary level, government documentation; annual; ED, of an assessment system exist for schools RSU government schools. Latest available data year: 2012/13 Notes: Interpretation of target values: Target values for monitoring indicators (sans PDO-level results indicators) are provided to facilitate the dialogue with the client on any needed program design and implementation refinements/adaptations; they do not reflect project performance measures. Definition of "all ": All is defined as all children in Sindh in the specified age group. Definition ofasset-poor households: Asset-poor households are defined as those in the bottom quintile in a Sindh-specific normalized asset index constructed the standard way (via PCA). Participation-poor districts: Participation-poor districts are composed of the districts with the lowest primary NER (excluding katchi), ages 6-10, using the 2010/11 PSLM survey. These districts are Thatta, Tando Muhammad Khan, Tando Allahyar, Badin, and Qamber-Shahdadkot. These same districts are tracked at the primary, middle, and matriculate levels. Prediction method for school participation related indicators: The predicted values for the PSLM survey-based indicators in 2012/13 (the year before the onset of the project) are set by taking the annualized percentage-point changes over the period 2004/05-2010/11 (period 2006/07-2010/11 in the case of asset-poor households). The annual target values over the project period 2013/14-2016/17 are set by tilting up the linear trend line by 10%, reflecting the expected SERP-J effect (i.e., the annualized percentage-point changes during 2004/05-2010/11 [2006/07-2010/11 in the case of asset-poor households] are multiplied by 1.1). For asset-poor households, the annualized percentage- point change is calculated over the period 2006/07-2010/11, as the set of asset indicators in the two survey years are extensive and identical. For participation-poor districts, the above method is not applied as in the past some of the participation-poor districts were part of other districts; consequently, the predictions are not based on past trajectories and are relatively more arbitrary. Prediction revision for school participation related indicators: When the 2012/13 PSLM survey report is available, if it shows values that differ from the predicted values for 20 12/13, the values for 20 12/13 will be revised and the target values over the project period will also be revised by taking the annualized percentage-point changes over the period 2004/05-2012/13 (period 2006/07-2012/13 for asset-poor households) and multiplying them by 1.1. Prediction method for other indicators: Baseline values for other indicators are based on data provided by the Sindh government (ED/RSU, FD/ERU); predicted values are either based on estimates provided by the Sindh government or arbitrarily determined. Teacher-related core sector indicator: Under round 3 of the merit- and needs-based recruitment program, the Sindh government expects to recruit roughly 12,000 Primary School Teachers (PSTs) to fill certified needs-based vacancies. The Sindh government may also decide that additional rounds of recruitment are required over the project period. The quantitative target of number of additional qualified teachers at the primary level is less important than the integrity of the process in recruiting and managing teachers to yield increased teacher quality and performance. 31 PAKISTAN: Second Sindh Education Sector Project Table A1.2. Disbursement Linked Indicators Subprogram Baseline Disbursement Linked Indicators (DLIs) Definitions and verification sources9 FY2012/13 FY2013/14 FY2014/15 FY2015/16 DLI 1: Program hudget Under SERP, the preparation and (i) Sindh has approved the (i) Sindh has approved the (i) Sindh has approved the Definitions: SERP-JJ initiatives are and expenditure submission of budgets was rushed, FY20 13/14 budget for the FY20 14/15 budget for the FY20 15/16 budget for the defined to additionally include project management: Preparing there were delays in seeking and financing ofall the initiatives financing of all the initiatives financing of all the initiatives EEPs. Cash plan is the detailed schedule budgets and execting them releasing finds for time-sensitive under SERP 11 and released it in under SERP 11 and released it in under SERP 11 and released it in for releases. ED/RSU to submit education in full and timely manner to activities, and there were issues in full, in accordance with a cash full, in accordance with a cash full, in accordance with a cash budget for the following year, including facilitate program planning the payments for completed plan, acceptable to the Association; plan, acceptable to the Association; plan, acceptable to the Association; for SERP-JJ initiatives, by April 15 in and implementation. activities and services rendered. (ii) Sindh has made payments (ii) Sindh has made payments (ii) Sindh has made payments each year. against approved expenditures against approved expenditures against approved expenditures under SERP re in lsll and in under SEPR n in gull and in under SEPR 11 in full and in Verfication sources: Budget documents accordance with a schedule of accordance with a schedule of accordance with a schedule of prepared by ED/RSU with submi ssion expenditures, acceptable to the expenditures, acceptable to the expenditures, acceptable to the date information; approved cash plan; Association; and (iii) ED has Association; and (iii) ED has Association; and (iii) ED has budget receipt records; budget expenditure prepared the FY2014/15 budget for prepared the FY20 1 5/16 budget for prepared the FY20 16/17 budget for and payment records; Budget Execution the financing of all the initiatives the financing of all the initiatives the financing of all the initiatives Reports. under SERP II and submitted it for under SERP II and submitted it for under SERP II and submitted it for review and approval, review and approval, review and approval. DLI 2: Annual School ASC for academic year 2011/12 (i) A third party has administered (i) A third party has administered (i) A third party has administered Definitions: The design and administration Census: Strengthening the completed and data available; data the ASC for academic year the ASC for academic year the ASC for academic year plan will comprise of a simplified ASC system to yield regular finalization steps remaining pending 2013/14 in three (3) districts, in 20 14/15 in eight (8) districts, in 20 15/16 in thirteen ( 13) districts, questionnaire, fixed data reference date, and reliable data on basic due to major delays during the accordance with a design and an accordance with a design and an in accordance with a design and an tools and training to schools for data government schoolpsystem activity administration plan, acceptable to administration plan, acceptable to administration plan, acceptable to recordkeeping and reporting, fixed indicators, the Association, (ii) ED has the Association, (ii) ED has the Association, (ii) ED has administration timetable, fielding plan and Preparation for ASC for academic administered the ASC for administered the ASC for administered the ASC for procedures, quality assurance measures, year 2012/13 underway but seriously academic year 2013/14 in the academic year 2014/15 in the academic year 2015/16 in the and information technology solutions for off-track. remaining districts, in accordance remaining districts, in accordance remaining districts, in accordance data collection and management. The third with a design and an with a design and an with a design and an party will be contracted by ED/RSU using administration plan, acceptable to administration plan, acceptable to administration plan, acceptable to SEMIS (ASC) EEP hinds. The web-based the Association; and (iii) at least the Association; and (iii) at least the Association; and (iii) at least direct reporting IT will be procured by 25% of Sindh's secondary and 50% of Sindh's secondary and 100% of Sindh's secondary and ED/RSU using SEMIS (ASC) EEP hinds. higher secondary schools report higher secondary schools report higher secondary schools report One/two districts can be selected in each ASC data through a web-based ASC data through a web-based ASC data through a web-based year for both third party and ED/RSU direct reporting IT platform. direct reporting IT platform. direct reporting IT platform. ASC data collection for cross-validation purposes. Verification sources: Questionnaires; fielding plans and schedule; fielding reports; recordkeeping and reporting tools; wall, clean ASC/GIS databases and adminstraion pan, cceptble o adinistatio plan accptabl to dminstratoncpan,paceptble toSEMSm(AC)aEE ifuns coTh ewebbase 19 The definitions and verification sources will be included in the updated Project Implementation Manual. 32 PAKISTAN: Second Sindh Education Sector Project Table A1.2. Disbursement Linked Indicators Subprogram Baseline Disbursement Linked Indicators (DLIs) Definitions and verification sources9 FY2012/13 FY2013/14 FY2014/15 FY2015/16 operational RSU website with public access to ASC/GIS data and statistics; quality control implementation reports; IT solution implementation reports. DLI 3: Student Pilot round of SAT (a competency- (i) A third party has administered (i) A third party has administered A third party has administered the Definitions: SAT, a competency-based test Achievement Test: based test for grade 5) administered the third round of the student the fourth round of the student fifth round of the student in mathematics, science, and language, is Strengthening the SAT to students in grades 6 in achievement test in language, achievement test in language, achievement test in language, to be administered in grades 5 and 8 in system to yield regular and government schools in April 2012. mathematics and science for mathematics and science for mathematics and science for government schools in all rounds. Third, reliable student achievement Data processing and analysis grades 5 and 8 for academic year grades 5 and 8 for academic year grades 5 and 8 for academic year fourth, and fifth rounds are for academic data. currently underway. The Sindh 2013/14 using test design, 2014/15 using test design, 2015/16 using test design, years 2013/14, 2014/15, and 2015/16, government is renewing the contract administration, quality assurance, administration, quality assurance, administration, quality assurance, respectively. The plan and manual will for conducting the SAT for academic and data use plan and manual, all and data use plan and manual, and data use plan and manual, specify arrangements, procedures, and year 2012/13. acceptable to the Association; and revised as per the revised as per the protocols for all stages of the SAT (ii) a third party has conducted a recommendations of the recommendations of the extensive process, including ancillary support preliminary review of the student preliminary review conducted in review conducted in 2014/15, in a provided to districts and schools to achievement test system and 2013/14, in a manner acceptable to manner acceptable to the strengthen and standardize their own performance. the Association; and (ii) a third Association. assessment activities. The SAT will be party has conducted an extensive conducted by a third-party testing review of the student achievement organization contracted by ED/RSU using test system and performance. SAT EEP funds The third party that will review the SAT activity is separate from the third party that will undertake the SAT activity, and will be contracted by ED/RSU using project TA funds. Verification sources: SAT test papers; implementation plans, manuals, and schedules; quality control implementation reports; third-party SAT activity review reports; district and school assessment support implementation reports; full, clean SAT data and accompanying documentation/codebooks. DLI 4: School budgets: Salary and nonsalary budgets (i) All Sindh's districts have (i) All Sindh's districts have (i) All Sindh's districts have Definitions/details: Eligible schools and Setting ofsalary and prepared following needs-based prepared school-specific budgets prepared school-specific budgets prepared school-specific budgets needs-based criteria for school nonsalary nonsalary budgets at the criteria for primary, middle, and for FY2014/15 for 100% of for FY2015/16 for 100% of for FY2016/17 for 100% of budgets described in FD notification school level in a sound elementary schools for FY2012/13 eligible schools using needs-based eligible schools using the revised eligible schools using the revised issued on May 16, 2011. School budgets manner and properly prepared, authorized, and approved. criteria, acceptable to the needs-based criteria; (ii) Sindh has needs-based criteria; (ii) Sindh has to be used in accordance with Framework managing and using school Association; (ii) Sindh has approved school-specific non- approved school-specific non- for Fund Utilization of School Specific nonsalary budgets to Third party contracted to provide approved school-specific non- salary budgets for FY2014/15 for salary budgets for FY2015/16 for Budget (Feb 15, 2012) and the relevant improve resourcing for implementation and monitoring salary budgets for FY2013/14 for all eligible schools, and released all eligible schools, and released approved procurement guidelines. school operations. support to districts. all eligible schools, and released them per a schedule, acceptable to them per a schedule, acceptable to Eligibility and school budget formula may 33 PAKISTAN: Second Sindh Education Sector Project Table A1.2. Disbursement Linked Indicators Subprogram Baseline Disbursement Linked Indicators (DLIs) Definitions and verification sources9 FY2012/13 FY2013/14 FY2014/15 FY2015/16 them per a schedule, acceptable to the Association; (iii) a third party the Association; (iii) a third party be subject to revision. A third party Releases of school budgets for the Association; (iii) a third party has reviewed the compliance of has reviewed the compliance of contracted by ED/RSU using project TA FY2012/13 are yet to be made. contracted by ED has reviewed the school non-salary expenditures for school non-salary expenditures for funds will support and monitor the compliance of school non-salary FY2014/15 with the applicable FY2015/16 with the with the implementation of school budgets in the expenditures for FY2013/14 with financial management and applicable financial management districts. the applicable financial procurement guidelines and the and procurement guidelines and management and procurement Framework for Fund Utilization of the Framework for Fund Verification sources: Design notifications; guidelines and the Framework for School Specific Budget. Utilization of School Specific revised formula document; school budget- Fund Utilization of School Budget. level databases; FD budget book Volume Specific Budget; and (iv) Sindh 3/Annex with school-level budgets; has revised the needs-based criteria release notifications; fiduciary guidelines for the determination of school- and documents of other instructions specific non-salary budgets, in a provided to districts and schools; third- manner acceptable to the party field implementation reports; third- Association. party expenditure reports; PIFRA project- level expenditure reports. DLI 5: School 82% of eligible schools received (i) RSU has assessed all (i) RSU has assessed all (i) RSU has assessed all Definitions/details: Assessment of SMC Management Committees: SMC grants in their SMC bank applications for SMC Grants for applications for SMC Grants for applications for SMC Grants for applications for grants to be carried out by Strengthening due diligence, accounts in FY2011/12. academic year 2014/15, in academic year 2015/16, in academic year 2016/17, in RSU (via LSUs) and the districts, with fiduciary management, and accordance with qualification accordance with qualification accordance with qualification final approval by RROCs. SMC grants are support for SMC grant A total of 5,025 schools received criteria and screening procedures, criteria and screening procedures, criteria and screening procedures, to be transferred directly into the Bank provision and use to capacity building services via acceptable to the Association; (ii) acceptable to the Association; (ii) acceptable to the Association; (ii) accounts of SMCs. Support services improve resourcingfor contracted NGOs in 8 districts in 100% of the SMCs with approved 100% of the SMCs with approved 100% of the SMCs with approved provided by ED/RSU (via LSUs) and community-identified school FY2009/10 and FY20 10/11. applications have received the applications have received the applications have received the districts consists of communication, improvement investments. SMC Grants for academic year SMC Grants for academic year SMC Grants for academic year awareness-raising, grievance management, Schools providedwith SMC 2013/14; and (iii) RSU has 2014/15; and (iii) RSU has 2015/16; and (iii) RSU has and facilitation services provided to guidelines and other materials. provided support services provided support services provided support services SMCs. The use of grants by SMCs is to be (including communication, (including communication, (including communication, in accordance with approved guidelines. awareness-raising, grievance awareness-raising, grievance awareness-raising, grievance management, and facilitation management, and facilitation management, and facilitation Verification sources: SMC Act/Policy; services) to SMCs, in accordance services) to SMCs, in accordance services) to SMCs, in accordance fiduciary guidelines; SIP and other with a plan, acceptable to the with a plan, acceptable to the with a plan, acceptable to the materials offered to schools; sample SMC Association. Association. Association. grant applications; SMC grant application vetting/clearance reports by LSUs/ROCs; SMC account-level database with deposit and withdrawal information; SMC grant formula and use documents; SMC support services implementation reports by districts and LSUs. DLI 6: School system A large share of distinct government (i) Sindh has consolidated at least (i) Sindh has consolidated at least (i) Sindh has consolidated at least Definitions/details: Identification can be consolidation: Rationalizing schools operating in the same 75% of the schools approved for 75% of the approved for 75% of the schools approved for undertaken through multiple means but government school facilities building, same compound, or consolidation in FY2013/14; and consolidation in FY2014/15; and consolidation in FY2015/16; and should include field-based verification. 34 PAKISTAN: Second Sindh Education Sector Project Table A1.2. Disbursement Linked Indicators Subprogram Baseline Disbursement Linked Indicators (DLIs) Definitions and verification sources9 FY2012/13 FY2013/14 FY2014/15 FY2015/16 and resources and the catering to the same child population (ii) ED has organized existing (ii) ED has organized existing (ii) ED has organized existing Schools to be consolidated are to be operation ofconsolidated in the local community. and/or provided additional staffing and/or provided additional staffing and/or provided additional staffing notified by the Director-School Education schools as single schools to and other resources for all schools and other resources for all schools and other resources for all schools in each region. Consolidated and merged improve asset management. As of December 2012, as recorded in consolidated prior to FY2013/14, consolidated prior to FY2014/15, consolidated prior to FY2015/16, schools, and forms of consolidation, are as SEMIS, 1,068 government schools so as to function as single schools. so as to function as single schools. so as to function as single schools. defined in the School Consolidation Policy consolidated in eleven districts, approved in February 2012. A third party yielding 414 consolidated schools contracted by ED/RSU using project TA and 648 merged schools. funds will support and monitor the implementation of school system consolidation in the districts. Verification sources: Identified school lists; field-based verification reports of identified schools; notifications of schools approved for consolidation; notifications of consolidated schools and surrendered SEMIS codes; updated SEMIS database. DLI 7: School As of December 2012, three rounds (i) Sindh has provided to districts (i) Sindh has provided to districts (i) Sindh has provided to Sindh's Definitions/details: Rehabilitation is infrastructure of school rehabilitation under the annual grants for FY20 13/14 annual grants for FY20 14/15 TOP, districts annual grants for defined as investments in (1) buildings for development: Promoting district Terms of Partnership (TOP) Terms of Partnership ("TOP"), in in accordance performance and FY20 15/16 TOP, in accordance shelterless schools; (2) additional improved rules, procedures, initiative undertaken in all 23 accordance performance and needs needs based criteria and ratios, performance and needs based classrooms; and (3) missing facilities and practices in school distnicts. Under TOP 11 and 111, 1,801 based criteria and ratios, acceptable to the Association, (ii) cniteria and ratios, acceptable to (toilets/boundary walls). Upgradation is rehabilitation and school schools (89% of screened-in schools) acceptable to the Association; (ii) Sindh has selected 100% of the the Association; (ii) Sindh has defined as infrastructure changes to upgradation to improve were rehabilitated and met agreed Sindh has selected 100% of the schools to be selected 100% of the schools to be convert a primary school to an elementary school infrastructure quality construction quality and design schools to be rehabilitated/upgraded under rehabilitated/upgraded under school. School rehabilitation will be on a and yield safe, healthy specifications as certified by a third rehabilitated/upgraded under FY20 14/15 TOP, in accordance FY20 15/16 TOP, in accordance whole school development basis. schools. party. FY20 13/14 TOP, in accordance with - acceptable to the with - acceptable to the Completion includes the provision of with - acceptable to the Association -qualification criteria Association -qualification criteria furniture. Construction timelines, quality Civil works under TOP IV Association -qualification criteria and screening procedures applied and screening procedures applied standards, and school design specifications (FY2012/13) initiated in 19 districts, and screening procedures applied by a third party; (iii) a third party by a third party; (iii) a third party are to be included in PC-Is. The pilot with third party super-vision of the by a third party; (iii) a third party has validated that at least 70% of has validated that at least 90% of programs for school environmental process and construction. has validated that at least 50% of qualifying schools under qualifying schools under enhancements comprise of drinking water qualifying schools under FY2012/13 and FY2013/14 TOP FY2012/13, FY2013/14 and facilities and low-cost renewable power FY20 12/13 TOP have been fully have been hilly constructed in FY20 14/15 TOP have been hilly systems. A third-party construction constructed in accordance with accordance with construction constructed in accordance with supervision firm contracted by the Sindh construction timelines and quality timelines and quality standards and construction timelines and quality government using its own resources will standards and school design school design specifications, standards and school design support and monitor the activity in the specifications, acceptable to the acceptable to the Association, and specifications, acceptable to the districts and school construction sites. Association, and delivered for use delivered for use to the districts; Association, and delivered for use to the districts; and (iv) Sindh has and (iv) Sindh has implemented to the districts; and (iv) Sindh has Verification sources: Screening survey implemented pilot programs for pilot programs for environmental implemented pilot programs for instruments; screened schools databases; environmental enhancements of enhancements of existing schools, environmental enhancements of sample PC-Is; revised construction existing schools, in accordance in accordance with a plan, existing schools, in accordance supervision reporting and recording 35 PAKISTAN: Second Sindh Education Sector Project Table A1.2. Disbursement Linked Indicators Subprogram Baseline Disbursement Linked Indicators (DLIs) Definitions and verification sources9 FY2012/13 FY2013/14 FY2014/15 FY2015/16 with a plan, acceptable to the acceptable to the Association. with a plan, acceptable to the instruments; sample filled-in construction Association. Association. supervision reports and records; school- level civil works databases, with photographic evidence; environmental enhancements implementation reports; ex post civil works procurement reviews. DLI 8: Public-private PPRS program financed through the (i) Sindh has financed the PPRS (i) Sindh has financed the PPRS (i) Sindh has financed the PPRS Definitions/details: Shift from partnership in education: development budget to expire on Program through its recurrent Program through its recurrent Program through its recurrent development to recurrent budget approved Strengthening the design June 30, 2013. As of December budget; (ii) 100% of the schools budget; (ii) 100% of the schools budget; (ii) 100% of the schools by SEF Board of Governors in August and implementation ofan 2012, three rounds of entry into the participating in the PPRS Program participating in the PPRS Program participating in the PPRS Program 2012. Quality assurance and accountability-based PPP program completed, and 385 PPRS are supported in compliance with are supported in compliance with are supported in compliance with accountability system will include initiative to cost-effectively schools in operation in partnership contracts and under partnership contracts and under partnership contracts and under biannual quality assurance tests with test deliver quality schooling to educationally-disadvantaged areas in quality assurance and quality assurance and quality assurance and score conditions for continued program unserved rural communities. 10 districts. accountability systems, all accountability systems, all accountability systems, all participation. Sites and operators screened acceptable to the Association; and acceptable to the Association; and acceptable to the Association; and in by third parties will be subject to Pilot quality assurance test in sample (iii) SEF has undertaken an (iii) SEF has undertaken an (iii) SEF has undertaken an additional due diligence by SEF. Program PPRS program schools administered additional round of school entries additional round of school entries additional round of school entries schools are to be registered under ED and in May 2012. Second quality into the PPRS Program in into the PPRS Program in into the PPRS Program in the Directorate of Private School assurance test in all schools FY2013/14, in accordance with FY2014/15, in accordance with FY2015/16, in accordance with Institutions-Sindh, as appropriate. administered in January 2013. qualifying criteria and screening qualifying criteria and screening qualifying criteria and screening procedures, acceptable to the procedures, acceptable to the procedures, acceptable to the Verification sources: PC-4 report for Association. Association. Association. completion of scheme in FY2012/13. Recurrent budget approval and budget code in SERP; budget release and expenditure reports; sample signed contracts; QAT instruments, plans and schedules; full, clean QAT databases; site/school screening instruments, plans, and schedules; full, clean screening databases; approved registration documents of schools; program schools databases. DLI 9: Education Currently no authorized headteacher (i) Sindh has approved new (i) Sindh has approved new (i) Sindh has approved new Definitions/details: Education management: positions for primary, middle, and education management positions education management positions education management positions management comprises of specialized Professionalizing education elementary schools. Education for FY2014/15; (2) Sindh has the for FY2015/16; (2) Sindh has for FY2016/17; (2) Sindh has education management cadres and a management in districts and management positions in the districts education management positions authorized that the education authorized that the education headmaster cadre. Approval of new schools to improve manager filled by appointing headteachers for FY2013/14 filled in accordance management positions for management positions for education management positions includes proficiency and from secondary and higher with notified appointment rules, FY2014/15 are filled in accordance FY2015/16 are filled in accordance inclusion in the budget book and peiformance. secondary schools, without provision acceptable to the Association; (iii) with notified appointment rules, with notified appointment rules, submission ofrecruitment needs to the and enforcement of well-specified Sindh has offered to all appointed acceptable to the Association; (iii) acceptable to the Association; (iii) Sindh Public Services Commission. job descriptions, job guidelines and education managers contracts with Sindh has offered to all appointed Sindh has offered to all appointed Revised rules for appointment comprise of tools, tailored training, and performance terms and conditions, education managers contracts with education managers in contracts revised civil servant rules for (1) selection, 36 PAKISTAN: Second Sindh Education Sector Project Table A1.2. Disbursement Linked Indicators Subprogram Baseline Disbursement Linked Indicators (DLIs) Definitions and verification sources9 FY2012/13 FY2013/14 FY2014/15 FY2015/16 performance criteria and procedures. acceptable to the Association; and performance terms and conditions, with performance terms and (2) promotion, and (3) recruitment for (iv) Sindh has provided to all acceptable to the Association; and conditions, acceptable to the education management. Revised contracted education managers (iv) Sindh has provided to all the Association; and (iv) Sindh has appointment rules, job induction training, job guidelines, contracted education managers provided to all the contracted descriptions/guidelines, and performance and management resources and induction training, job guidelines, education managers induction evaluation criteria, tools, and procedures assessed their performance and management resources and training, job guidelines, and are to be approved by Sindh Public annually using performance assessed their performance management resources and Services Commission and Services evaluation tools and procedures, all annually using performance assessed their performance General Administration and Coordination acceptable to the Association. evaluation tools and procedures, all annually using performance Department. acceptable to the Association. evaluation tools and procedures, all acceptable to the Association. Verification sources: Education management policy and notifications; revised appointment rules documents; sample signed contracts; recruitment and appointment databases; job descriptions; performance evaluation tools and procedure documents; sample performance evaluations in ACR; induction training databases. DLI 10: Teacher First round of recruitment of general (i) Sindh has carried out any (i) Sindh has carried out any (i) Sindh has carried out any Definitions/details: Teachers comprises of management: teachers following merit-based recruitment of any type of teachers recruitment of any type of teachers recruitment of any type of teachers all categories of teachers (general teachers Strengthening sound, criteria completed. Second round of for government schools only for for government schools only for for government schools only for [Primary School Teachers, Junior School standardized recruitment recruitment of general teachers needs-based vacancies and on a needs-based vacancies and on a needs-based vacancies and on a Teachers, High School Teachers], and and introducing following merit-based criteria and merit-based selection, in merit-based selection, in merit-based selection, in subject specialists) for government peiformance management, filling needs-based vacancies accordance with rules, acceptable accordance with rules, acceptable accordance with rules, acceptable schools. DLJs apply to all recruitment guidance and support to completed. Third round of merit- and to the Association; (ii) Sindh has to the Association; (ii) Sindh has to the Association; (ii) Sindh has rounds starting with round 3. improve teacher quality and needs-based recruitment initiated, offered recruited teachers contracts offered recruited teachers contracts offered recruited teachers contracts Consideration for recruitment is teaching performance. with performance terms and with performance terms and with performance terms and conditional on passing a knowledge test conditions, acceptable to the conditions, acceptable to the conditions, acceptable to the administered by a third party contracted Association; and (iii) Sindh has Association; and (iii) Sindh has Association; and (iii) Sindh has by ED using its own resources. provided to all contracted teacher provided to all contracted teacher provided to all contracted teacher Recruitment will be limited to filling induction training, job guidelines, induction training, job guidelines, induction training, job guidelines, needs-based vacancies determined using and management resources and and management resources and and management resources and agreed rules, including field-based assessed their performance assessed their performance assessed their performance verification. Recruitment rules comprise annually using performance annually using performance annually using performance of criteria, arrangements, and procedures. evaluation tools and procedures, all evaluation tools and procedures, all evaluation tools and procedures, all Contracts will be fixed-term, school- acceptable to the Association. acceptable to the Association. acceptable to the Association. specific, and specify performance conditions for contract renewal. Performance against agreed criteria will be assessed within the Annual Confidential Report (ACR) system. Training, job guidelines, and teaching resources will be offered to the recruited teacher within 12 37 PAKISTAN: Second Sindh Education Sector Project Table A1.2. Disbursement Linked Indicators Subprogram Baseline Disbursement Linked Indicators (DLIs) Definitions and verification sources9 FY2012/13 FY2013/14 FY2014/15 FY2015/16 months of appointment certified and approved by ED/RSU. Verification sources: Revised teacher recruitment policy and notifications; test instruments, plans, and schedules; full, clean test score databases and accompanying documentation; sample signed contracts; recruitment and appointment databases; sample job descriptions and teaching resources; performance evaluation tools and procedure documents; sample performance evaluations in ACR; induction training databases. 38 Annex 2. Detailed project description 1. The project is a US$400 million Specific Investment Credit which supports the implementation of SERP II over the period 2013-17. The project comprises of two components: (1) a results-based component-Component 1-which finances specific expenditures under SERP II, amounting to US$393 million (roughly 98.3% of the total Credit); and (2) a Technical Assistance (TA) component-Component 2-which finances essential advisory, technical, capacity-building, and monitoring and evaluation support for SERP II, amounting to US$7 million (1.7% of the total Credit). I. Results-based component (Component 1) 2. The Sindh government views poor sector governance and accountability and weak administrative systems as the principal problem in public education in the province. Consequently, under SERP II, the Sindh government aims to intensify efforts to address this problem in order to improve the quality of service delivery. 3. Under SERP II, there are ten initiatives that aim to address gaps in and/or current poor practices in sector management and governance. In what follows, more details are provided on each of the initiatives. For each initiative, the contents cover the backdrop, rationale, primary objectives, and primary actions. The contents also include how the project is framed to support the particular initiative using its main design features of DLIs, covenants, EEPs, and TA. This is followed by the presentation of results chains (Figure A2. 1) which attempt to delineate the main potential channels through which the proposed actions under SERP II can engender improvements in the PDO-level results indicators. The Annex ends with an indicative list of the analytical, advisory, and capacity-building activities to be supported by project TA funds. 4. Budget and expenditure management: Present poor practices and perverse organizational dynamics contribute to weak government education sector budget planning and preparation and delays or shortfalls in budget releases and payments, jeopardizing smooth program implementation progress and satisfactory performance. Under SERP, the Bank promoted via DLIs and supported via TA the fiscal and budget management efforts of the Sindh government, mainly the preparation of Medium Term Fiscal and Budgetary Frameworks; there was however insufficient effort and attention by ED/RSU and FD/ERU to education sector budgets, releases, and expenditures. 5. Consequently, under SERP II, the Sindh government plans to take actions to ensure (1) the careful preparation of sound budgets for primary and secondary education and SERP-II initiatives and (2) that budgetary releases and expenditures are made in full and on a timely basis. RSU officials (Chief Program Manager and Program Managers) in general, and the financial management team at the RSU in particular, will be responsible for the timely and careful preparation of annual budgets and the submission of proposed budgets for the upcoming fiscal year by April 15 in each year. ED/RSU and FD/ERU will also prepare a cash plan which will indicate when releases and payments for specific subprograms and activities are to be made, and agree on streamlined procedures for smooth releases and expenditures. 39 6. The proposed actions are to be promoted via DLIs and supported via TA under the project. Specifically, TA funds will be made available to adequately staff and resource ERU in FD to carry out its designated tasks related to this area, among other things. 7. Annual School Census (ASC): The Annual School Census (ASC) is an annual census of all government schools, and is the government's primary school facility survey. It captures basic information on school characteristics, enrollment by grade and gender, and teacher-level information. Information for the ASC forms are expected to obtained via observation at school (e.g., such as of the state of school infrastructure and amenities), interviews with/self-filling by school head/teachers (such as of detailed information on teaching staff), or by recording from school registers (such as of student enrollment on the reference date). Under SERP, the Bank, European Union-and USAID through its ED-LINKS initiative-promoted (via DLIs/triggers) and supported (via TA) agreed efforts at the provincial and district levels to strengthen the ASC activity in order to improve the timeliness and reliability of data. The efforts that were taken forward largely entailed changing ASC administration procedures and strengthening human and technological resources at RSU which managed the ASC activity. In addition, a parallel activity to collect Global Information System (GIS) data on government schools was initiated and completed in 11 districts (the remaining districts are expected to be covered under SERP II). TA funds under SEP were used to finance IT hardware/software and staff (District Coordinators) for collecting GIS data from schools. 8. Implementation: Primary responsibility for all stages of the ASC activity lies with RSU. SEMIS District Officers coordinate the entire ASC activity in the districts, following the stipulated standardized administration processes, procedures, and other directions provided by RSU. Importantly, SEMIS District Officers are responsible for managing the distribution and collection of the forms. In FY2011/12, supervisors (sub-taluka level officers) were responsible for visiting primary, middle, and secondary schools under their purview and filling out forms for these schools; headteachers of secondary and higher secondary schools were responsible for filling out forms for their schools. District Education Officers and Assistant District Education Officers were expected to support and monitor the activity in their districts and review and sign the filled-in forms. Data entry was carried out by firm contracted by RSU using TA funds under SEP. 9. Dissemination: After each ASC data collection round, RSU is expected to make available on its website an ASC statistical bulletin as well as the full ASC data, including a tool for structured data searches and the construction of customized data reports. In addition, after each ASC data collection round, RSU is expected to prepare and distribute to districts and schools statistical profiles in electronic and paper form. Revised district statistical profiles will include relevant statistics for the province; school statistical profiles will include relevant statistics for the union council, taluka, or district, as appropriate. The school statistical profiles are expected to be made available at the school for public access. 10. While there have been improvements, issues related to data timeliness and reliability remain. There are multiple explanations, ranging from poor capacity to poor interest and accountability to perverse incentives for incorrect data reporting by districts and schools, the latter issue likely amplified as certain pieces of information such as enrollment are increasingly 40 used to determine eligibility, assignment, and the extent of benefits to districts, schools, and teachers. Hence, ASC data remain problematical for use in making decisions on policy and the design and implementation of initiatives. 11. Under SERP II, the Sindh government plans to the following actions to further improve the timeliness and reliability of basic data collected through the ASC activity: (1) in an annually expanding set of districts, ASC and GIS data collection by a survey research firm contracted by ED/RSU, following an agreed administration plan; (2) in the remaining districts, ASC and GIS data collection by the Sindh government under the standard SEMIS-run activity; (3) integration of the already-initiated school GIS data collection activity into the ASC activity; (4) revision of the ASC questionnaire to limit it to key indicators that can be reliably captured given agreed administration procedures; (5) annual administration of the ASC/GIS activity following an agreed timetable with a fixed reference date for the data; (6) advice and support to and compliance monitoring of schools by LSUs and districts for the proper recordkeeping in school registers (e.g., student enrollment register, student attendance register, teacher records); (7) under the SEMIS-run activity, visits by supervisors to all primary, middle, and elementary schools to collect all information through observation, checks of school records and other approved documentation, and interviews of teachers; (8) procurement and provision of relevant information technology (IT) hardware, reporting modules, and a web-based data entry solution to ED/RSU and the district education/SEMIS offices specifically for the ASC/GIS activity; (9) procurement and provision of relevant information technology (IT) hardware, reporting modules, and a web-based data entry solution for secondary and higher secondary government schools; (10) the provision of needed guidance and support by RSU/LSUs and SEMIS District Officers for stages of the SEMIS-run ASC/GIS activity carried out by the districts; and (11) stronger, systematic oversight and monitoring of all stages of the SEMIS-run ASC/GIS activity by RSU/LSUs and SEMIS District Officers. 12. The proposed actions are to be promoted via DLIs and supported via TA under the project. Government expenditures for SEMIS (ASC) are an EEP under the project, and will finance, among other things, information technology (IT) hardware and software (including development) requirements at all levels (province, district, school) and associated training of relevant personnel as well as the contract of the survey research firm. Project TA funds will be made available for contracting individual consultants with specialized technical and support work for the SEMIS-run ASC/GIS activity. 13. Student Achievement Test (SAT): The performance of an education system cannot be fully gauged without regular and reliable information on student learning. Under SERP, the EU and the Bank promoted (via DLIs/triggers) and supported (via TA) a programmed cycle of diagnostic assessments in selected subjects in grades 4 and 8 in district-representative samples of 41 government schools. Primary responsibility for these assessments fell under the Provincial Assessment Center (PEACe) in the Bureau of Curriculum. Needed support was provided by ED/RSU and the districts. 14. While the Sindh government was able to successfully complete the programmed cycle of assessments over SERP, shortcomings remain in all stages of the assessment activity undertaken by PEACe-from test design to administration to analysis to dissemination of findings-which hampers the production of timely, reliable, and insightful findings. Multiple assignments assumed by PEACe have and can result in limited attention and effort on any one assignment. Critically, government ownership of and commitment to the assessment activity undertaken by PEACe has remained weak. Furthermore, unless overcome, binding constraints arising from the standard workings of the government make a specialized and skilled activity such as testing difficult to sustainably run wholly within a government entity. 15. Informed from lessons learned from the support of the diagnostic assessment activity under SERP as well as new priorities that have emerged, the Sindh government initiated a new assessment activity called the Student Achievement Test (SAT) in FY2011/12. The SAT is a standardized, competency-based test in language, mathematics, and science, to be administered to students in grades 5 and 8 (exit grades for primary and middle school, respectively) in government schools. ED/RSU has contracted a third-party organization to undertake three rounds of SAT in academic years 2011/12, 2012/13, and 2013/14, with districts partnering in the administration of SAT in government schools. A new competitive selection process will be undertaken by ED/RSU at the appropriate time for carrying out three rounds of SAT in academic years 2014/15, 2015/16, and 2016/17. In FY2011/12, the contracted organization administered the grade-5 SAT to students in grade 6 in government schools; the test data are being processed and analyzed. The FY2011/12 SAT was school-based. From 2012/13 onwards, given that the SAT will be administered to students in grade 5 from a large number of government schools (over 32,000 schools), the Sindh government plans to identify government schools that can serve as testing centers for nearby government schools with grade-5 students. In addition, the contract for the testing organization covers the costs of providing transportation to students to schools where the SAT is offered. 16. The contracted organization has primary responsibility for the design, administration, analysis, and dissemination of test findings. In addition the contracted organization is expected to prepare a test item bank for a wide set of grades for use by districts and schools in their own assessments as well as provide technical and advisory support to districts and schools to strengthen their assessment systems. Districts are expected to support the contracted organization in the administration of the SAT and use the services of the contracted organization to strengthen and standardize their own assessment systems. Responsibility for managing the allocated funds and the SAT activity lies with RSU. 17. The Sindh government has indicated that the SAT has wider and deeper ownership and contracting testing services from the open market through a competitive, transparent, and objective process potentially improves the quality of the activity. Notwithstanding, if the test data suffer from issues related to reliability and validity, they can compromise the credibility of the activity and impair decisionmaking using these data. 42 18. Under SERP II, the Sindh government plans to administer the SAT on an annual basis using a contracted organization, accompanied by a review (and any technical and advisory support) carried out by another third party (a specialized consulting firm) to help improve the SAT with respect to the sustainability and robustness of the testing system, the reliability and validity of test results, and the responsible use and dissemination of test results. The proposed actions are to be promoted via DLIs and supported via TA under the project. Specifically, TA is made available for contracting a consulting firm to carry out the review and provide technical and advisory support to strengthen the SAT system. Government expenditures for the SAT are an EEP under the project. 19. School budgets: At the primary, middle, and elementary levels, teacher numbers and nonsalary budgets for government schools are set at the taluka level rather than at the school level, managed by Assistant District Education Officers (ADEOs) who are Drawing and Disbursing Officers (DDOs) (i.e., have financial management powers) for nonsalary funds for schools in their respective talukas. How teaching posts and nonsalary budgets are assigned across these schools appears to be largely arbitrary, and schools lack a clear basis for demanding needed resources for basis school operations. The same applies to secondary and higher secondary schools, although budgets for these levels of schools are set at the school level, managed by headteachers who are the DDOs for nonsalary funds provided to their schools. Consequently, there are concerns about the suboptimal use and allocation of limited resources across schools in relation to needs. 20. In a major shift from these traditional practices, the Sindh government has initiated the development and provision of budgets at the school level, both for salary and nonsalary components, across the entire government school system. In FY2011/12, three districts prepared school budgets, promoted by a DLI under SEP AF. In FY2012/13, all 23 districts prepared school budgets. The schools budgets were prepared following objective, transparent, needs-based criteria provided by ED/RSU and FD. 21. Determination and use of school nonsalary budgets: The current formula for school nonsalary budgets is a function of the school's level, student enrollment, and number of classrooms. Specifically, 20% of the total nonsalary budget for schools in a given district is to be distributed in relation to the school's level, 45% in relation to school enrollment, and 35% in relation to the number of classrooms. Within the 20% of the budget allocated for distribution on the basis of school level, 50% is allotted for distribution among primary schools, 10% for distribution among middle schools, 15% among elementary schools, and 25% among high and higher secondary schools, up to specified ceilings in PKR terms. Use of school nonsalary budgets by primary, middle, and elementary schools is limited to certain stipulated categories of expenditures (travel expenses for teachers, stationery, teaching and learning materials, expenditures for co-curricular activities), up to stipulated ceilings in percent terms. Schools are expected to also receive SMC grants for community-identified small investments for school improvements; the scope of use of school nonsalary budgets and SMC grants are specified to be non-overlapping. Both nonsalary budgets and SMC grants are expected to be prominently displayed at school on the same board/School Improvement Plan (SIP) chart. 43 22. Fund flow: School nonsalary budgets are to be prepared by the districts following stipulated rules, with any needed assistance from ED/RSU and FD. The budgets are submitted by the districts to ED/RSU and FD for review and clearance, and included in the budget book prepared by FD (at present, the school budgets for primary, middle, and elementary schools are included as Annex to Volume 3 of the FY 2011/12 budget book). Moving forward, ED/RSU plans to request the release of the school nonsalary budgets by the FD in quarterly installments. School nonsalary budgets for primary, middle, and elementary schools are made available to their ADEOs while those for secondary and higher secondary schools are made available to their headteachers. The release of the school nonsalary budget, including the relevant amount, is to be communicated by ED/RSU (via its Communications Unit) to the school's head/teacher via SMS. ADEOs are to follow the procurement guidelines provided by ED/RSU for the procurement of any needed goods using school nonsalary budgets, aggregating similar needs across primary, middle, and elementary schools-more precisely, schools without Drawing and Disbursing authority-up to the district level. Similarly, headteachers of secondary and higher secondary schools-more accurately, schools with Drawing and Disbursing authority-are to follow the procurement guidelines provided by ED/RSU for school-level procurement of any needed goods using school nonsalary budgets. Bills for purchased goods and other permissible expenses are to be submitted by ADEOs and headteachers to District Accounts Officers (DAOs), and bills are to be reviewed and cleared by DAOs in compliance with the stipulated rules for use of school nonsalary budgets. 23. Recording nonsalary budgets and expenditures at the school level: In the case of primary, middle, and secondary schools, the lowest cost center in the government's FMIS is at the taluka level, namely the ADEO. The FMIS allows for the creation of "projects" under cost centers and for budgets and expenditures to be tracked at the project level. Using this provision, a project will be created for each primary, middle, and elementary school, with the SEMIS code for the school embedded in the project code. Budgets and expenditures will be managed by ADEOs and DAOs at the project level within cost centers. 24. Under SERP II, the Sindh government plans to undertake the following actions: (1) the annual preparation, both salary and nonsalary components, to qualifying government schools following transparent, objective, and needs-based criteria; (2) the approval of school budgets and the quarterly release of school nonsalary budgets; (3) use of school budgets and school-specific teacher positions/posts to rationalize the teaching workforce on the basis of criteria related to student-teacher ratios and the right teacher mix; (4) the linkage of the payroll system in the district account offices to school-specific teaching positions/posts to implement teacher rationalization; (5) the direct communication of school budgets to schools and the display of school nonsalary budgets and their use on the School Improvement Plan (SIP) chart at the school; (6) district and school compliance with stipulated fiduciary guidelines for managing the use of school nonsalary budgets; (7) third-party support to the regions and districts for managing and monitoring school budgets; and 44 (8) the refinement and customization of the formula for school nonsalary budgets to better account for (the variation in) school needs. 25. The proposed actions are to be promoted via DLIs and supported via TA under the project. School nonsalary budgets are an EEP under the project. TA funds are specifically made available for (1) contracting a consulting firm to support the regions and districts in managing and monitoring school budgets; (2) efforts by RSU, including contracting needed staff from the private market, for data analysis and support to districts in the development of school budgets; (3) efforts by FD, including contracting needed staff from the private market, to integrate school budgets into Volume 3 of the budget book; (4) contracting individual consultants for the refinement/customization of the existing formula/rules for determining salary and nonsalary budgets; and (5) efforts to include "projects" under cost centers in the government's FMIS for recording nonsalary budgets and expenditures for schools. The TA-supported independent longitudinal school sample survey will provide regular information on the extent and nature of use of school nonsalary budgets in surveyed schools. 26. School Management Committees: Under SERP, School Management Committees (SMCs), essentially community-based parent-teacher associations, were activated as a formal instrument for local communities to engage with government schools. SMCs were also provided with an annual flat grant of PKR 22,000 (US$231) for primary schools, PKR 50,000 (US$526) for middle and elementary schools, and PKR 100,000 (US$1,052) for high and higher secondary schools. To receive the grant, a main, functional government school was required to submit to RSU an application with SMC bank account information, including details on the co-signatories (school head/teacher who serves as the SMC's secretary and one parent who serves as the SMC's chairperson) on the account. This information was reviewed by RSU. Once cleared by RSU, the information was submitted by ED/RSU on a rolling basis (in batches) to FD and the funds were released directly by FD into the SMC bank account. The SMC was fully empowered to withdraw funds as and when needed, without seeking any authorization from education management authorities. Withdrawals from the SMC bank account were expected to be used consistent with the simplified fiduciary guidelines provided by RSU to the government school and with a School Improvement Plan (SIP) prepared by the SMC using a standardized template. The SIP was expected to be prominently displayed at the school. Past and ongoing initiatives to encourage community engagement with government schools: Under SERP, a pilot program was implemented to provide capacity-building services via contracted NGOs to SMCs of rural government primary schools in selected districts in the province, following a design to facilitate a rigorous evaluation of the intervention; this evaluation is presently ongoing. Near the end of the SEP period, two additional variants were designed to encourage parents and local communities to engage with their government schools, one through externally-administered community-level meetings to provide information on roles, responsibilities, rights, and options for recourse in engaging with government schools via SMCs and to discuss issues related to school performance and the other through the provision of similar information as well as a local community forum for discussion via cellphone-based SMS. Both interventions are in the process of being launched in rural communities in selected districts, following a design which facilitates a rigorous evaluation of the variants. 27. In FY2011/12, 82% of SMCs from main, functional government schools had grants deposited into their bank accounts. Furthermore, 5,025 SMCs received capacity development services from NGOs contracted by ED/RSU in FY2009/10 and FY20 10/11. These efforts by the 45 Sindh government to activate SMCs and provide them with grants were promoted via DLIs and supported via TA by the Bank under SEP. 28. Notwithstanding, there is a need for increased due diligence on the provision, flow, and use of SMC grants and relaxing the interference/impediments to the independent, full, and proper use of grants. There is also a need to radical shift from the prevailing perception of grants being a "right" for schools and SMCs towards providing grants to the "right" schools and SMCs. At present, these issues potentially contribute to under- and/or mis-utilization of grants. Thus, under SERP II, the Sindh government plans to take the following actions: (1) stronger conditions for SMCs to qualify for grants and rigorous screening procedures undertaken by RSU (via the LSUs) and the regions and districts; (2) SMC grant amounts determined using a new schedule and directly deposited into the bank accounts of qualifying SMCs as assessed through account-level information on deposits; (3) prescribed support services, specifically communications, awareness-raising, complaints management, and facilitation related to the rights, roles, responsibilities, of key stakeholders associated with the SMC initiative, provided by RSU (via the LSUs) and districts; (4) the provision of easy-to-read fiduciary guidelines for grant use, posters with the roles and responsibilities of SMCs, and SIP charts to SMCs; (5) the revised scope of use of SMC grants to prevent duplication with the scope of use of school nonsalary budgets and the display of SMC grants and school nonsalary budgets at the school in a single SIP chart; and (6) the increasing use of SMC grants assessed through, among other ways, account-level information on withdrawals. 29. To institutionalize SMCs in the province under a revised design, the Sindh government plans to prepare a new School Management Committee (SMC) Act, expected to be submitted by June 30, 2013 for approval by the Sindh Assembly, which specifies, among other things, (1) revised conditions for grant receipt; (2) revised grant schedule, with grant amounts expected to be a function of the school's level, student enrollment, and number of classrooms; (3) grant flow mechanism, with the direct transfer of SMC grants into SMC accounts; (4) revised scope of use of SMC grants, specifically ensuring that the uses of SMC grants and school nonsalary budgets are nonoverlapping; (5) that specifies the utilization of SMC grants in accordance with simplified fiduciary guidelines, to be issued from time to time and the applicable SIP as well as oversight and assurance mechanisms such as a social audit; and (6) that any government audit of the SMC expenditures is to be conducted only against the applicable simplified fiduciary guidelines. 30. The actions are promoted by the Bank via DLIs under the project. SMC grants are an EEP under the project. Moving forward, ED/RSU and FD will track SMC account-level information on deposits as well as withdrawals; this information will be shared with the Bank on a regular basis. The TA-supported independent longitudinal school sample survey will provide information on the nature of use of SMC grants by surveyed schools over the project period. 46 31. School system consolidation: The need for school system consolidation has arisen due to the past proliferation of schools, precipitated by poor planning and arbitrariness, donor-driven (often disjointed) programs, and political/patronage-based impetus. Many of the schools set up as a result of these practices are two-room, one-teacher schools which tend to have the poorest quality of service delivery. Recognizing the need to reverse this practice, strengthen service delivery and school performance, and reduce inefficiencies, in a major move, the Sindh government approved a School Consolidation Policy in February 2012. The policy has been notified and communicated to the regions and districts along with guidelines. These guidelines provide a framework for school consolidation. 32. In government nomenclature, school consolidation covers three types of schools: (a) adjoining schools; (b) embedded/same premise schools; (c) schools that are within a stipulated distance of each other and one strategic school among them having the horizontal and/or vertical space for expansion to accommodate students in merged schools In other words, school consolidation covers distinct schools that operate in the same building, same compound, or multiple schools that cater to same child population in a given local community. 33. School consolidation has already been initiated. As of December 2012, 1,068 government schools have been consolidated in 11 districts, yielding 414 consolidated schools and 648 merged schools. Thus far, the consolidation has been in relation to adjoining schools and embedded/same premise schools. ED/RSU has followed a pragmatic approach in implementing the policy, holding consultations and maintaining communications with districts and schools to gather feedback in order to ensure that implementation is sensitive to local realities and to mitigate any potential risks. Importantly, further work is required to ensure that consolidated schools operate as single schools. 34. Under SERP II, the Sindh government plans to continue with the initiative of merging the aforementioned types of schools into single schools and their reorganization and strengthening to function as single schools. Regions and districts will identify schools to be consolidated, with assistance from ED/RSU/LSUs. The Director-School Education in each region will notify (approve) schools to be consolidated (including the surrender and permanent deletion of the SEMIS codes of merged schools), and the Reform Region Oversight Committees (RROCs) will oversee and review the consolidation process by the regions and districts.20 35. To promote school system consolidation, a certain portion of funds for infrastructure development under the district Terms of Partnership (TOP) initiative is allocated towards supporting investments in infrastructure or amenities (e.g., furniture) generated by the school system consolidation activity. School nonsalary budgets and SMC grants which follow formula that account for student enrollment will result in augmented funds to consolidated schools. Benefits determined at the student level such as textbooks and secondary school stipends to beneficiary girls will be continued for the combined enrollment in the consolidated school. Consolidated schools will also be prioritized for the provision of headmasters through the 20 The permanent deletion of SEMIS codes would imply that merged schools will no longer qualify for, among other things, SMC grants, school nonsalary budgets, textbooks, girls' stipends, and teaching posts and teachers. 47 professionalized headmaster cadre and teachers through transfers or merit- and need-based teacher recruitment, if needed. 36. Under the project, the Bank plans to promote the above actions in the school system consolidation activity via DLIs. In terms of TA, while schools that operate in the same building or compound or more readily identifiable, project TA funds are made available for contracting a firm to provide technical, advisory, and monitoring support to districts and schools undergoing school system consolidation. 37. School infrastructure development: Infrastructure in the government school system tends to be poor. Administrative data (Annual School Census data) from 2011/12 indicate that there 48,922 schools in total. Roughly 80% of schools have a building. Conditional on having a building, 41% of schools have drinking water; 66% have an electrical connection; 50% have at least one toilet, and 66% have a boundary wall surrounding the school premises. These figures understate the extent of infrastructural deficiencies as they do not reflect the quality and safety of school infrastructure and the health of the school environment. Past school infrastructure rehabilitation efforts have been characterized by poor screening for eligibility, shoddy or incomplete construction, protracted construction periods, loss/waste of funds and construction materials, and duplication of works, given multiple, uncoordinated construction programs by districts, the provincial government through its Annual Development Program (i.e., development budget), and the federal government. 38. Under SERP, the Sindh government took forward a school rehabilitation initiative which offered districts annual grants from the recurrent budget for constructing (1) buildings for shelterless schools, (2) additional classrooms in overcrowded schools, and (3) basic facilities such as toilets and boundary walls. The next year's grant for the program for a given district was tied in part to the district's performance in meeting construction and reporting indicators (as well as schooling indicators), with the share of the grant linked to district performance increasing incrementally each year. Importantly, with the second round of the program, a civil engineering firm (referred as the third-party construction supervision firm) was contracted by the Sindh government to (1) verify in the field the eligibility status of schools proposed by the districts for the program; (2) provide guidance and handholding support to districts in administering the program in line with program timelines, rules, and requirements; and (3) review construction activity in the field and certify construction completion and compliance with construction quality and school safety specifications; and (4) carry out annual ex-post procurement reviews of sample civil works contracts. The initiative was promoted via DLIs and supported via TA by the Bank under SEP. 39. The initiative has produced important ground-level successes, with progressive improvements in civil works packaging, awards, management, and timelines; overall construction quality; and compliance with environmental management requirements. Monitoring visits by RSU and the Bank to random samples of schools that received civil works via the second and third rounds of the school rehabilitation activity under the district TOP initiative indicate significant improvements in school design and construction. The use of unframed structures was abandoned and replaced by the use of framed Reinforced Cement Concrete (RCC) structures, which are stronger and, thus, less vulnerable to earthquakes. To reduce the 48 vulnerability to floods, measures such as raising school floors above known flood levels were also adopted. Framed structures allow the use of larger windows that resulted in well-lighted and better ventilated classrooms (without the use of electricity). Boundary walls were built with proper heights. Toilets were built and connected to a proper sewage disposal facility (e.g., a septic tank) and running water. See Section II of Annex 6 for more details on implementation progress and performance successes under this initiative. 40. Notwithstanding, the monitoring visits revealed variation in construction quality and completeness. Apart from rehabilitation of poor infrastructure, new initiatives of the Sindh government, specifically school system consolidation (discussed earlier) and primary school upgradation (turning primary schools into elementary schools to expand secondary schooling opportunities where these opportunities are absent or highly constrained), is expected to generate new infrastructure investment demands. These new demands are expected to be subsumed with the district TOP initiative, with a major increase in funds to finance these additional investments. In addition, the Sindh government plans to address important lessons learned over SERP on issues, including (1) the need for the stronger application of coherent, appropriate school designs when carrying out civil works and (2) piecemeal/fragmented infrastructure development and the need to address all infrastructural deficiencies of a school simultaneously. 41. Under SERP II, the Sindh government plans to take the following actions: (1) provision of annual grants for infrastructure investments following needs- and performance-based criteria; (2) investments in the whole school development of schools with infrastructure deficiencies, upgradation of primary schools to elementary schools, and consolidated schools following objective, transparent, and needs-based criteria; (3) compliance with stipulated construction timelines, quality, and school design specifications; (4) third-party screening, support, monitoring, and certification of construction completion and quality; and (5) third-party supported pilot initiatives in drinking water facilities and low-cost renewable power systems. 42. The proposed actions are to be promoted via DLIs and supported via TA under the project. The Sindh government plans to contract a third-party construction supervision firm over the project period using its own resources with broadly the same terms of reference as under SERP. Major changes will however include the stronger field presence and formations of the firm's staff serving as site monitors and the use of an improved set of recording and reporting forms by the firm's staff to capture greater detail on compliance on minimum school infrastructural and environmental standards. Project TA funds will be made available to contract: (1) a consulting firm to assist with screening in schools preidentified by the districts for school rehabilitation and upgradation works (the firm would have specialized skills and adequate capacity to assess in the field the full set of infrastructure development needs of schools as well as identify appropriate primary schools in selected catchment areas to upgrade into elementary schools); (2) a consulting firm to evaluate, design, and support the implementation of (i) refined recommendations related to the structural safety of school buildings, (ii) GIS-based 49 guidelines for school siting and structural resilience to natural disasters, (iii) safe drinking water and sanitation facilities, (iv) training of districts and schools in personal hygiene and disaster preparedness, and (v) pilot initiatives in drinking water facilities and low- cost renewable power systems; and (3) an Environmental Coordinator to be placed at RSU to primarily oversee the environmental management agenda under SERP II for government schools. Note the field implementation of the work described in (2) will be carried out by the third-party construction supervision firm contracted by ED/RSU for the school infrastructure development activity under the district TOP initiative. 43. Incentive- and accountability-based public financing of the private provision of schooling: The government school system in general across the country has been hampered in its ability to improve education outcomes due to, in large part, the lack of effective accountability and incentive systems which promote the legitimate and efficient use of allocated resources. Under SERP, as an alternative instrument, the Sindh government initiated the Promoting Private Schools in Rural Sindh (PPRS) program to use government funding to leverage the private sector to cost-effectively extend quality schooling to underserved rural communities in order to raise school participation and student achievement. The program is financed as an Annual Development Program (ADP) scheme; it is administered by the Sindh Education Foundation (SEF), a semi-autonomous organization set up by the Sindh government to undertake education initiatives in underdeveloped areas and for marginalized/disadvantaged groups in Sindh. 44. As of December 2012, 385 private, coeducational primary PPRS schools are in operation in ten educationally-disadvantaged districts, supported by a cash subsidy of roughly US$4 per attending student per month. The schools also receive in-kind benefits in the form of teacher training, textbooks, and teaching and learning materials. An impact evaluation undertaken by the Bank (with external researchers) finds that (1) the program has drawn nearly all young children into school, (2) the cost-effectiveness of the program in increasing school participation is among the highest of all rigorously-evaluated programs in the developing world, and (3) the program produced large gains in child achievement. 45. Under SERP, the Sindh government envisaged the backbone of the accountability arrangements for the program to be the regular testing of students in program schools and conditioning continuing program eligibility of program school operators on the basis of student achievement outcomes. This component lagged behind. In May 2012, SEF successfully conducted a pilot standardized, competency-based student assessment in selected grades in a sample of program schools. Following this, in January 2013, SEF conducted a standardized, competency-based student assessment in English, Sindhi, mathematics, and science in selected grades in all program schools. 46. Building off this early success, further actions are needed in different aspects of the program to improve the quality of program management, program school operations, and schooling outcomes. The Sindh government plans to continue to support the PPRS program as an integral component of SERP II under, among other things, a strengthened design, implementation arrangements, and accountability system. Signaling its strong commitment for the PPRS program, SEF's Board of Governors, chaired by the Chief Minister of the province, 50 met on August 2012 and approved, among other things, (1) shifting the PPRS program from the development budget to the recurrent budget from FY2013/14 onwards in order to help ensure the program's sustained and regular funding and (2) registering PPRS program schools under the Education Department and the Directorate of Private School Institutions-Sindh, under special provisions as needed. 47. Under SERP II, the Sindh government plans to take the following actions to strengthen program sustainability, implementation and monitoring arrangements, and the design and enforcement of accountability and incentive conditions: (1) regularization of the PPRS program financing via the recurrent budget; (2) registration of PPRS program schools under the Education Department and the Directorate of Private School Institutions-Sindh; (3) introduction of new partnership contracts with well-specified accountability and incentive conditions for proper school operation, provision of adequate school infrastructure and quality service delivery; (4) strict enforcement of contracts; (5) introduction of a comprehensive, integrated Management Information System (including a web-based complaints management system), with the needed IT infrastructure, applications, and staffing; (6) introduction of new/adapted activities, tools, and procedures for collecting relevant information from program schools; (7) full and proper maintenance of all records, including student profiles, grade promotion, and student achievement results, and school compliance with all regulations; (8) greater, systematic monitoring and oversight by SEF regional and district offices; (9) administration of biannual competency-based student tests following a fixed schedule, conditioning program continuation on meeting stipulated test score requirements, and dissemination of test results to key stakeholders following a formal, systematic plan; and (10) refinement of program qualification criteria and screening procedures to improve the quality of program entrants and adherence with the unserved-community requirement for program school placement. 48. The proposed actions are to be promoted via DLIs and supported via TA under the project. Funds for the PPRS program are a project EEP. Project TA will be specifically made available for (1) contracting an Environmental Coordinator, with primary responsibility for managing the environmental management agenda in PPRS program schools; (2) contracting individual consultants with specialized skills such as in monitoring and evaluation and testing; (3) financing the participation of SEF staff in training programs/courses to strengthen their management and technical knowledge and skills, and (4) contracting consulting firms for specialized, short-duration activities. In addition, the Bank, using its own funds, aims to support the Sindh government to conduct an institutional assessment of SEF, covering, among other things, the status of staff, systems, structures, program portfolio, and institutional and program sustainability. 49. Education management: District education management positions are filled by selecting from headmasters. Selected headmasters lack the specific experience and expertise required to 51 carry out required tasks and responsibilities; they also do not receive adequate training and support to perform them. The selection into education management positions also appears to be largely ad hoc and arbitrary and lack transparency. Furthermore, district education management appears to be poorly structured (lacks specialized positions) to carry out its core functions. Under SERP, the Sindh government initiated efforts to strengthen education management at the district level but in practice the changes mainly comprised of the reorganization of education management posts in the districts, the introduction of cluster-based monitoring and mentoring support in selected talukas, and the design and implementation of the Sindh Education Sector Managers course for education managers at all levels. 50. Under the project, the Bank plans to promote via DLIs and support via TA the professionalization of education management service. Specific actions include the (1) annual sanctioned provision of education manager and headmaster posts; (2) annual promotion and/or recruitment of education managers and headmasters to fill sanctioned posts following transparent, objective relevant, transparent, objective, merit- based criteria and rigorous mechanisms; (3) provision of contracts which include well-specified, performance-related employment terms and conditions; (4) annual performance evaluation of contracted education managers and headmasters using stipulated performance evaluation tools and procedures integrated into the government's standard performance evaluation system, the Annual Confidential Report (ACR) system; and (5) provision of job descriptions, management materials and tools, and induction training to contracted education managers and headmasters to help them perform their assigned roles and responsibilities. 51. Teacher management: The recruitment and management of government school teachers has historically been distorted by political interference. This state of affairs potentially compromises teacher quality at entry and the alignment of teacher interest and efforts with desired duties and responsibilities over the teacher's service period. Under SERP, in a radical shift, the Sindh government approved a new general-education teacher recruitment policy in 2007 (updated in 2008) which was to serve as the only mechanism for new recruitment of Primary School Teachers, Junior School Teachers, and High School Teachers following transparent, objective, merit-based criteria, including a knowledge test administered by a contracted third-party organization, and rigorous, standardized procedures. Two rounds of recruitment have been completed, with the local placement of over 13,000 teachers on three- year, school-specific contracts. In the second round, teachers were additionally placed in schools with needs-based vacancies. A third round of merit-based recruitment of PSTs, JSTs, and HSTs to fill verified needs-based vacancies has been initiated. The merit and needs-based teacher recruitment initiative was promoted and supported by the Bank under SEP. See Section II in Annex 7 for more details of this initiative under SEP. 52. Contracts of teachers recruited and appointed under round I are in the process of being renewed as permanent (i.e., regularization). In principle, the District Education Officer is to make a recommendation on the appointed teacher's eligibility for regularization based on a performance review via the government's standard performance evaluation system, the Annual Confidential Report (ACR). However, it is widely acknowledged that, in practice, the ACR has 52 weaknesses that impair its usefulness as a performance evaluation tool. Contracts of teachers appointed under round 2 will expire starting in January 2013, and a court order has ruled that the contracts of appointed teachers under round 2 are to be regularized in the same way as the contracts of appointed teachers under round 1. 53. Building from SERP, to help improve the effectiveness of the contracted teacher requires integrating in teacher performance management and teacher support. Thus, under this project, for the third round of merit- and needs-based recruitment and any other rounds of recruitment of any type of teacher over the project period, the Bank plans to promote via project DLIs and support via TA the (1) further strengthening of merit- and needs-based teacher recruitment arrangements, procedures, and practices; (2) provision of contracts to teachers which include well-specified performance terms and conditions, including conditions for contract renewal or regularization; (3) annual performance evaluation of contracted teachers using agreed performance evaluation tools and procedures integrated into the ACR system; and (4) provision of job descriptions, induction training, and materials and tools by the Bureau of Curriculum and the Provincial Institute of Teacher Education to help contracted teachers perform their assigned roles and responsibilities. 53 Figure A2.1. Results chain for SERP-II initiatives supported by the project's results-based component Initiative Intermediate results Outcomes Student Achievement Test (DLI 3): Promoting a strengthened Reliable, regular measurement of student Reliable, timely information for government and SAT system learning in selected grades household decisionmaking Program budget and expenditure management (DLI 1): Full, timely expenditures for SERP II Promoting strengthened budget preparation and execution initiatives to yield smooth implementation of reform activities Education management (DLI 9): Promoting the Improved manager proficiency and lu professionalization of education management at all levels, performance lu including the school level Teacher management (DLI 10): Promoting sound, Improved teacher quality and teaching t standardized recruitment, performance management, guidance performance and support to contracted teachers Annual School Census (DLI 2): Promoting a strengthened Reliable, timely information for government ASC system decision making School budgets (DLI 4): Promoting sound school-level salary Appropriate, regular resourcing for basic - and nonsalary budgeting, and proper management and use of school operations K lu school nonsalary budgets JI School Management Committees (DLI 5): Promoting Stronger community engagement with K strengthened due diligence, fiduciary management and support schools, and more effective resourcing for 2 for SMC grant provision and use community-identified school improvement investments School system consolidation (DLI 6): Promoting the More efficient management of school rationalization of government school facilities and resources and facilities and resources operation of consolidated schools as single schools School infrastructure development (DLI 7): Promoting Timely construction, improved infrastructure a) strengthened rules, procedures and practices in school quality and safe and healthy environment rehabilitation and school upgradation -C:)- E 0 ' Public-private partnership (PPP) in education (DLI 8): Cost-effective delivery of quality schooling r). Promoting a strengthened accountability-based PPP to unserved rural communities - 0 54 Eligible Expenditure Programs 54. Disbursements under the results-based component will reimburse expenditures incurred by the Sindh government in selected education budget line items referred to as Eligible Expenditure Programs (EEPs). The EEPs include both sizeable recurrent expenditures that would have an impact on the agreed results and outcomes and smaller ones that finance important small-scale interventions and administrative and monitoring systems. The selected EEPs are as follows. 55. Sindh Education Management Information System (Annual School Census) [Code: A03973]: The full set of costs, at all levels (province to school), for all stages (from design to data analysis and findings dissemination), associated with the annual administration of the Annual School Census (ASC) in all government schools and all investments in, among other things, human resources, logistics, and information technology (hardware and software), to strengthen the administration of the ASC. The budget for SEMIS/ASC is assigned to RSU, and RSU is directly responsible for expenditures incurred. 56. Student Achievement Test (SAT) [Code: A03966]: The full set of costs, at all levels (province to school), for all stages (from test design to data analysis and findings dissemination), associated with the annual administration of the SAT in selected grades in government schools. The SAT budget importantly covers the costs of the contract offered to a third-party organization to undertake the SAT. The budget for SAT is assigned to RSU, and RSU is directly responsible for expenditures incurred. 57. School nonsalary budgets for primary and secondary education [Code: A03970; Sub-codes: 475-480]: The full operating costs of primary, middle, elementary, secondary, and higher secondary government schools which are, among other things, classified as functional and with valid SEMIS codes. These schools comprise of those in primary (91102) and secondary (92101). Responsibility for managing the nonsalary budget for schools lies with ED. Direct responsibility for the use of school nonsalary budgets lies with the Drawing and Disbursing Officer (DDO) where expenditures are incurred; the DDO is expected to follow the relevant approved fiduciary guidelines; this includes maintaining all accounts records (e.g., bills, vouchers) per the guidelines. 58. School Management Committees (SMCs) [Code: A03975]: Cost of SMC grants offered annually to qualifying government schools with valid SEMIS codes to support small community-identified investments in school improvement activities in accordance with the School Management Committee (SMC) Policy, simplified fiduciary guidelines, and other formal guidance offered by ED/RSU. The SMC budget is assigned to RSU. The SMC is directly responsible for the use of the SMC grant and is expected to follow the approved fiduciary guidelines. 59. Promoting Private Schools in Rural Sindh (PPRS) program under the Sindh Education Foundation [ADP Scheme No: 1732/FY2012/13]: The full set of costs associated with the administration of the PPRS program by SEF. It includes the benefits, cash and in-kind, offered to program schools as well as all program administrative costs. Financing for the 55 program is presently through an Annual Development Program scheme set to expire on June 30, 2013. Upon expiration, financing for the program will be shifted to the recurrent budget for education as approved by the SEF's Board of Governors in August 2012 and reflected as a separate scheme under SERP (KA5763). Responsibility for managing the PPRS program budget lies with SEF. The PPRS program school is directly responsible for the use of provided cash subsidies and in-kind benefits and is expected to follow the approved fiduciary guidelines; this includes maintaining all accounts records (e.g., bills, vouchers) per the guidelines. 60. Employee-related expenses for primary and secondary education [Code: A01]: The full costs of pay and allowances for provincial, regional, and district employees in or associated with primary education and secondary education. These employees comprise of those in primary (91102), administration of primary education (91103), secondary (92101), administration of secondary education (92102), and the Secretariat (96101). The budget for pay and allowances for the above categories is assigned to ED. Direct responsibility for pay and allowances lies with the Drawing and Disbursing Officer (DDO) where expenditures are incurred. II. Technical Assistance (Component 2) 61. Under the Technical Assistance (TA) component (Component 2), funds will finance important technical, advisory, and capacity-building support to strengthen fiduciary, environmental management, administrative, and monitoring and evaluation activities. The selected activities would aid program implementation progress and performance including, importantly, the achievement of DLIs. 62. RSU will manage project TA funds and activities. RSU will make TA funds available and procure goods and services to meet the technical, advisory, and capacity-building needs of other government departments, entities, and agencies (e.g., SEF, FD/ERU, SPPRA) partnering on SERP-II related initiatives; responsibility for managing these TA activities will be shared accordingly. RSU will maintain a single consolidated procurement plan for works, goods, and consultancy services procured using EEP and TA funds. 63. ED/RSU has initiated critical procurement activities to support the design and early implementation of SERP II. Expenditures for certain contracts have been recorded under the relevant TA codes created for SEP in the government's FMIS. The Bank will review and approve these contracts, and the expenditures incurred by the Sindh government between July 1, 2012 and signing of the legal agreements will be reimbursed upon project effectiveness. Subsequently, project TA funds will be advanced to the Sindh government on a semi-annual basis against estimated TA expenditures provided in Interim Financial Reports submitted by RSU. The Bank will transfer TA funds to the Provincial Consolidated Fund- Account No. 1 (Non-Food) of the Sindh government. The Sindh government will transfer funds for TA into a dedicated Special Drawing Account managed by RSU through normal budgetary procedures. Detailed TA expenditures incurred would be recorded by RSU under the relevant TA codes and reported via the government's FMIS. The Bank's procurement guidelines will apply to all procurement using project TA funds. 56 64. Notwithstanding the several important activities to be supported by project TA funds in initiatives promoted through DLIs and to facilitate/strengthen program implementation, selected TA-supported activities that are viewed as important in their own right are discussed in some detail below. The discussion is followed by a more comprehensive list of activities to be supported by TA funds. 65. Independent longitudinal school sample survey: While the Sindh government's M&E systems for its schools are being strengthened to yield regular and reliable data, there is an immediate need for such data. To meet this need, the Sindh government plans to contract a third- party organization using project TA funds to conduct a longitudinal survey of an appropriately- sized sample of government schools and SEF PPRS program schools. The survey will be administered twice a year, over the project period. The survey will capture extensive information on the characteristics of schools as well as the characteristics and behaviors of teachers and students in the schools. Accompanying the survey, a competency-based test of core subjects to students in selected grades as well as a school readiness test to students in grade 1 in a school subsample will be administered. 66. The independent longitudinal school sample survey will capture extensive information to assess and validate program implementation progress and performance at the school level, including on key fiduciary, social and environmental aspects. In addition, the longitudinal survey sample can serve as test-bed for carrying out rigorous school-based impact evaluations to identify and estimate the causal effects of specific interventions/mechanisms of interest for yielding gains in intermediate and final outcomes. See Annex 7 for details. 67. Management Information System (MIS) for public education employees: In terms of human resources, ED is the largest government department in the province; 48% of the total sanctioned public sector employment positions in the province are for ED.21 As in other government departments, reporting and supervising officers have largely relied on paper records (files) which may be incomplete or incorrect-and processes/steps which are viewed as inefficient and provide room for arbitrariness and partiality-in order to make personnel decisions related to, inter alia, placement, professional development and career progression and compensation. Under SERP II, the Sindh government plans to partner with the Project to Improving Financial Reporting and Auditing (PIFRA) to configure and customize (within the government's existing SAP system) and use a Human Resource Management Information System (MIS) for ED which integrates available, relevant data and documentation from multiple sources, tracks the history of personnel decisions made for a given employee, and allows the Sindh government to streamline processes for personnel-related decisionmaking. The HR MIS potentially serves as an important facilitating step towards performance-based human resource management. Project TA funds will be available to help the Sindh government assess, plan, develop the HR MIS and support its rollout and use by ED at the provincial, regional, and district levels. 21 in FY2011/12, the total sanctioned posts in the Sindh government were 551,940, of which, 262,377 posts were for ED, per Demand No. 24. 57 68. Development, procurement, and distribution of textbooks to schools: Under SERP, the EU and the Bank offered technical and advisory support to strengthen textbook procurement and contract management procedures and practices and administrative and monitoring procedures for the distribution of textbooks to government schools. Moving forward, project TA funds can be used to contract agreed technical and advisory support services to study, plan, and take forward work already initiated by the Sindh government to (1) develop textbook manuscripts that are consistent with the relevant curriculum; (2) improve textbook stock management procedures and practices in textbook warehouses; (3) further strengthen textbook procurement procedures and practices; and (4) explore ways to cost-effectively deliver textbooks to schools in a timely fashion. Project TA funds can also be used to procure agreed technical and advisory support services to study, plan, and take forward any efforts by the Sindh government to improve, among other things, the durability of textbooks, the presentation of material, and legibility of text and clarity of illustrations. 69. Detailed audit of payroll expenditures: The employee-related expenditures of primary and secondary education are the largest EEP supported by project funding. The internal controls over payroll have been greatly augmented in recent years with the automation of payroll using the government's FMIS. During SERP, cases of salaries paid in cash via DDOs and the need to review the quality of payroll data were highlighted. ED/RSU, along with FD and the AG Office, took several steps to reduce these gaps. Nevertheless, the lack of integration between personnel records and payroll data and the nonexistence of payroll audits remain a weak link. To assist the Sindh government in identifying systemic weaknesses and providing enhanced assurance, RSU will, using project TA funds, procure the services of a firm to conduct a detailed payroll audit for a sample of two districts in each fiscal year, thereby, covering eight districts over the project period. The sample will be selected by ED/RSU, in consultation with the Bank. The terms of reference for this payroll audit will include a physical verification of employees. The firm will be expected to provide tangible recommendations for improving internal controls for this very substantial expenditure of the Sindh government. 70. Provision of user-friendly teaching resources: Government school teachers largely run their schools and teach their students with little or no standardized guidance. This state-of-affairs is likely to lead to undesirable variation and compromise the daily operation of schools and the quality of teaching, and, hence, student learning. Project TA funds can be used to contract agreed services to plan and support the development, provision, and basic training of teachers and administrators to aid comprehension and use of user-friendly academic calendars, school timetables, curriculum guides, course syllabi, and lesson plan formats. In order to facilitate the process and make it more likely that the provided resources yield returns in school, the provision of and training in the use the teaching resources are to be offered in a phased manner starting with contracted teachers under the third and any subsequent rounds of merit- and needs-based teacher recruitment, contracted managers and headmasters under the proposed professionalized education management and headteacher cadres, and staff in government schools with high enrollment. 71. Guidance and training will also be provided to the same groups of government school teachers and education management officials discussed above in the preparation and maintenance of basic records (e.g., student enrollment, student attendance, teacher records, 58 school finances, school assets) and reports to the districts and the provincial government. If the guidance results in improved record-keeping and report-making by schools, this would also help improve the accuracy of data used by the provincial, regional, and district education authorities in managing and assessing program implementation progress and performance of their schools. 72. Strengthening the administration and monitoring of the girls stipends program: The Sindh government presently has a program that offers annual cash benefits to female students in grades 6-10 in government schools across the province (the program is called the Girls' Stipends program). In certain talukas with low and medium transition rates for girls from primary level to secondary level, higher annual cash benefits are offered (the subprogram is called the Differential Stipends Program). The program is administered by RSU, and cash benefits, in the form of money orders, are delivered to intended beneficiaries at their schools through the government postal system. Project TA funds can be used to procure agreed technical and advisory support services to study, plan, and take forward proposed efforts by the Sindh government to progressively strengthen the administration and monitoring of the delivery of stipends to beneficiaries. One potential area is to pilot and test alternative delivery mechanisms such as branchless banking solutions. 73. Apart from the above, an indicative list of TA uses and activities (to be) financed by project TA funds is provided below. If new needs requiring TA support emerge during the project period, these activities can be added to the consolidated procurement plan prepared and maintained by RSU, after the Bank's review and clearance. For overall implementation arrangements, TA funds are made available for contracting i. Environmental Coordinators for RSU and SEF; ii. Financial Management Officer and Financial Reporting Officer to be placed at RSU; iii. Procurement Officer and Contract Management Officer to be placed at RSU; iv. Public Relations Management Officer, Complaints Management Officer, and Website Management Officer for the Communications Unit within the RSU; v. Rental car services for monitoring visits to districts and schools by RSU staff; vi. Services for a web-based complaints management system to be managed by the Communications Unit at the RSU; vii. Adequate staffing of the Economic Reform Unit to undertake the full set of tasks associated with the MTBF and SERP-II initiatives (mainly, school budgets; education sector payroll; and SMC grants). viii. 23-25 Local Support Consultants for the Local Support Units; and ix. Performance-based honorarium incentive plan for government officials in the RSU and LSUs. 74. TA funds are also made available for, among other things, (1) vehicle and/or office equipment operation and maintenance; (2) printing, photocopying, and stationery costs; (3) consumable materials and supplies; (4) workshops and meetings; (5) ICT goods and services; and (6) low-cost drinking water and renewal power systems for schools. TA funds are also made available for contracting individual consultants (from the private market at market-competitive salaries) with specialized skills and experience (as well as support staff such as database managers, data analysts, and data entry operators) for the various SERP-II initiatives. All TA needs are expected to be fully justified and rationalized to avoid redundancies and excess. TA 59 funds for these purposes are made available to all entities with key responsibilities under SERP II, including, among others, RSU, LSUs, ERU, and SEF. 75. Key consulting firm contracts financed through TA will include those for the following activities: i. longitudinal school sample survey to describe the characteristics of schools, teachers, and students; validate program implementation progress and performance; and evaluate key interventions; ii. audit of teachers and payroll expenditures in batches of districts; iii. review and technical and advisory support for the SAT activity; iv. technical, advisory, and monitoring support to districts and schools for the implementation of the school budgets initiative; v. technical, advisory, and monitoring support to the districts and schools for the implementation of the school system consolidation initiative; vi. screening in schools preidentified by the districts for school rehabilitation and upgradation works; and vii. evaluation, design, and support the implementation of (i) refined recommendations related to the structural safety of school buildings, (ii) GIS-based guidelines for school siting and structural resilience to natural disasters, (iii) safe drinking water and sanitation facilities, (iv) training of districts and schools in personal hygiene and disaster preparedness, and (v) pilot initiatives in drinking water facilities and low-cost renewable power systems. 60 Annex 3. Implementation arrangements I. Institutional and implementation arrangements 1. Institutional and implementation arrangements largely mirror those under SEP. The Project Appraisal Document for SEP provides details on the arrangements at the provincial, district, and school/community levels, including on key roles and responsibilities. In what follows, critical arrangements that are new or existing ones that have undergone important changes are discussed. 2. Steering Committee for SERP II: The Steering Committee (SC) will provide overall strategic guidance and enabling support to SERP II, and serve as a forum for high-level decisionmaking and an interface with the political leadership on SERP-II matters. The Sindh government notified the SC for SERP II on December 10, 2012, with well-specified powers, roles, and responsibilities. The SC is to be chaired by the Additional Chief Secretary (ACS), with the participation of the Secretaries of the Finance Department (FD), the Education Department (ED), the Local Government Department, the Works and Services Department; the Accountant- General; and the Managing Director, Sindh Provincial Procurement Regulatory Authority. 3. Implementing agency: ED will be the implementing entity. RSU, under ED, will be responsible for policy formulation, coordination, and monitoring of the initiatives under SERP II, and will have (joint) responsibility for the implementation of selected initiatives. Other departments, such as FD, as well as subdepartments and entities of ED, such as the Provincial Institute for Teacher Education (PITE), the Bureau of Curriculum (BoC), and the SEF, will have important design, implementation, and monitoring responsibilities. In addition, with respect to the project, RSU is responsible for (1) coordinating support from and actively communicating with the Bank and other development partners; (2) reporting on project covenants, DLIs, EEPs, monitoring indicators, and TA implementation; and (3) ensuring that Bank fiduciary and safeguard regulations and requirements are followed. RSU is to be restructured to align it with the priorities and activities under SERP II and adequately staffed and resourced. 4. Other working committees: For SERP II, the Sindh government plans to set up working committees as and when needed, with specific terms of reference, for fostering joint technical work and coordination between departments at the provincial level as well as between the province and the regions and districts. For example, in January 2012, a working group on school budgets was constituted, composed of selected officials from FD and RSU as well as Directors- School Education from selected regions. Similarly, in January 2012, a working group for the Student Achievement Test was constituted, composed of selected officials from RSU, PITE, BoC/PEACe, and District Education Officers from selected districts. 5. Region Reform Oversight Committees (RROCs): The Sindh government has formally constituted Region Reform Oversight Committees (RROCs) in all five regions/divisions, with well-specified terms of reference, in order to guide and review region/district SERP-II implementation progress and performance. The RROC is to be chaired by the Regional Commissioner, with participation by the Director-School Education, District Education Officers, District Accounts Officers, and District Officers-Works for Education. Among others, a key 61 responsibility of the RROCs is to prepare and submit to the Bank semiannual progress reports following agreed instructions and template, covering implementation progress and performance in identified SERP-II initiatives and activities. 6. Local Support Units (LSU): In effect extending RSU into the districts, the Sindh government plans to set up Local Support Units (LSUs) in all districts, with well-specified roles and responsibilities for coordinating and supporting the implementation and monitoring of SERP-II initiatives in the districts. The LSU in each district will be staffed by two personnel: a District Coordinator, appointed from within the Sindh government (Grade Level 17), and a Local Support Consultant, recruited competitively from the private market and contracted using project TA funds. Positions (23 in total) for government officials in LSUs will be redesignated from RSU; additional positions may be required, in which case, new sanctioned positions will be sought by ED/RSU from FD by April 30, 2013. 7. LSUs and their staff positions will be approved by July 1, 2013; positions, both government official and consultant, will be fully staffed by September 31, 2013. Direct administrative control for LSUs will lie with RSU. The performance-based incentive plan and monitoring facilitation plan currently in effect for government officials in RSU will be extended to government officials in the LSUs over the project period. 8. Communications unit at the Reform Support Unit: Under SERP II, ED/RSU plans to set up, staff, resource, and run a communications unit in RSU. The unit's main objectives are to (1) manage donor, media, and public relations and internal information and communications demands; (2) develop and maintain the RSU website with all relevant, permissible information on SERP-II initiatives and disclosures required by the Bank; (3) operate a web-based complaints system for handling complaints related to SERP-II initiatives, including on fiduciary, social, and environmental concerns, in line with agreed standard operating procedures and service standards; and (4) operate an SMS communications system to exchange information on service delivery directly with districts and government schools. The communications unit will be staffed by a Public Relations Management Officer, a Complaints Management Officer, and a Website Management Officer, competitively hired from the private market. Project TA funds are made available for contracting staff and resourcing the unit over the project period. 9. Primary responsibility for designing and implementing activities, products, and channels for meeting the information and communications needs of initiatives under SERP II will lie with RSU Program Managers and Program Officers, who possess specialized knowledge on their initiatives. The communications unit will, however, be available to provide needed advisory and technical support to them. 10. Economic Reform Unit: The Economic Reform Unit was established within FD under SERP. Its key responsibilities under SERP were (1) the design and implementation of fiscal and budget management improvements, via Medium Term Fiscal and Budget Frameworks, and (2) support to ED/RSU in budgeting and budget execution. Under SERP II, its roles and responsibilities will be expanded to support and guide ED/RSU, other provincial entities, the regions, and the districts in the (1) effective implementation of DLI 1 on education sector budget and expenditure management; (2) design, implementation, and monitoring of school budgets and 62 SMC grants; and (3) design, management, and monitoring of actions to improve education sector employee payroll procedures and practices. In line with the expanded set of roles and responsibilities, ERU is expected to be structured appropriately and adequately staffed and resourced to effectively perform its assigned tasks. Project TA funds are made available to support ERU over the project period. 11. Organizational structures: Figures A3.1 and A3.2 depict the structure of the Education Department across entities and levels. The enactment of SPLGO 2012 has resulted in major changes in the structure of government at sub-provincial levels; Figure A3.2 depicts the new structure. Note that the information presented in the figures may change. 63 Figure A3.1. Organizational structure of the Education Department, Sindh Government Special Secretary 4 -eAdmin s * pecial Secretar-y 2 -Colleges/PDF tSecretariato Specal Scretry 3Academric & Training * Special Secretary 34 S Directorate of Drco Non-Formal Education Director Directorate of Chater & Inspection Director * Sindh Textbook Board - Drco * Bureau of Curriculumrnirco *Reform Support Unit -Chief Programn Mianager - Allied Institutions - Provincial Institute of Teacher Education Director-General Sindh Teacher Education & Director-General Development Authority Sindh Education Foundation Managing Director Directorate of Private Schools Director-General Directorate ofProjects Director Directorate of Colleges Director-General Note: Structure, entities, and titles of heads may change. 64 Figure A3.2. Organizational structure of the Education Department, by levels Secretary Regional Directors - Schools Education (5) DistrictEducation Officers (23) Districtofficers DistrictOfficers DistrictOfficestricttrictOfficers DistrictOfficers DistrictOfficers DistrictOfficers Secondary Schools Elementary Schools Academic & Training Sports Headquarters SEMIS & Planning Literacy (23) (23) (23) (23) (23) (23) (23) DeputyDistrictOfficers DeputyDistrictofficers DeputyDistrictOfficers DistriDistrictOffiers DeputyDistrictOfficers Secondary Schools ElementarSchchools Academic & Traning Sports Headquarters (23) (23) (23) (23) (23) Assistant District Education Officers (M+F in each tehsil/town) (242) I I SMF heisors Head Teacher Head Teacher MFineachUni Secondary School Higer Secondary School Incharge Head Teacher ofeach Primrary, Middle, and Elementary School Note: Structure, positions, titles, and counts may change. 65 II. Financial management and disbursement arrangements 12. Country issues related to public financial management systems. Pakistan has a fairly developed infrastructure for Public Financial Management (PFM). At the policy level, the Parliament has a key role in authorizing revenues, expenditures, and debts. The Ministry of Finance (MoF) plays a pivotal role in budget preparation and expenditure control. Line Ministries, Departments, and Agencies (MDAs) have well-defined roles in implementing budgets and rendering accounts. The Controller General of Accounts (CGA), with an extensive network of offices, makes payments, maintains accounts, and prepares annual financial statements. The Auditor General of Pakistan (AGP) has an elaborate organization for conducting financial, compliance, and performance audits. 13. The Bank has carried out extensive analytical work on PFM systems in the country, both at the national and sub-national levels. In June 2012, a Public Expenditure and Financial Accountability Assessment was finalized for the Federal Government using the PEFA 22 Performance Measurement Framework. This was a repeat assessment with a baseline established in 2009. The report noted positive progress as a result of ongoing reforms for improving PFM. Contributions were made by the Bank-funded Project to Improve Financial Reporting and Auditing (PIFRA) and the DFID-funded implementation of a Medium Term Budgetary Framework (MTBF). 14. Budgeting, accounting, and financial reporting have been automated at the federal, provincial, and district levels through the nation-wide implementation of an integrated Financial Management Information System (FMIS) using a SAP application with a uniform chart of accounts. Connectivity is in place for all line departments to monitor budget execution on a real time basis. Within 10 days of the end of each month, civil accounts are finalized. Progress on transparency through the public availability of information is noteworthy which can be seen in the high ratings in PEFA assessments for the concerned indicators. Extensive budget documentation is prepared and published. Annual financial statements and audit reports are prepared in a timely manner and presented before Parliament within nine months of the end of the fiscal year. In-year reports are uploaded on to the websites of the Finance Departments. The budget preparation process is well-documented and consultative and includes a multi-year perspective. 15. Donor-funded projects and a number of self-accounting entities still remain outside the Pakistan government's FMIS. The Pakistan government is yet to develop an effective internal audit function and continuing efforts are needed to improve effectiveness of tax collection and the management of cash balances impacting the predictability of availability of funds. 22 The Public Expenditure and Financial Accountability (PEFA) program was established in December 2001 as a multi-donor partnership between the World Bank, the European Commission, the UK's Department for International Development, the Swiss State Secretariat for Economic Affairs, the French Ministry of Foreign Affairs, the Royal Norwegian Ministry of Foreign Affairs, and the International Monetary Fund. The PEFA PFM Performance Measurement Framework was issued in June 2005 and updated in 2011. 66 16. For Sindh, a PEFA assessment was conducted in 2009. The findings of the provincial assessment mirrored the federal-level ratings in 2009. The review of PFM systems at the provincial level indicated that the improvements noted above were also observed in Sindh. However, the internal control environment remains weak. 17. Financial management risk assessment and mitigation. The risks and risk-mitigating measures for the Financial Management (FM) aspects of the project are summarized in the ORAF. The inherent and control risks are both rated as Substantial. Therefore, the overall project risk is rated as Substantial. 18. The risk rating summary is provided in the project files. Among the several elements of the control risks, funds flow and internal controls are both rated as Substantial. The former is being mitigated through project DLIs and disbursements against EEPs on a reimbursement basis to ensure the timely release of funds for project activities and report-based disbursement directly into the Consolidated Fund. For the latter, the risk will be mitigated through various means including support to RSU provided by at least two suitably-qualified persons and the introduction of third-party education sector employee payroll audits. It is anticipated that once the mitigation measures are in place, the residual risk will be Moderate. Strengths a) Institutional arrangements for FM in the province are already well established under PIFRA. b) RSU has experience of implementing SEP, and this project has similar general design features, specifically with respect to instrument design. Table A3.1. Weaknesses and action plan Weakness Action Completion date Weak internal controls as 1. Recruitment of the following after agreement with Completed. demonstrated through the Bank on Terms of Reference for: extensive compliance a) Financial Management Officer related audit observations b) Finance Reporting Officer 2. Active and regular use of PIFRA terminals at RSU Led by Financial Reporting and other offices to review and analyze data in the Officer and throughout government's FMIS and take actions on identified project implementation. errors and anomalies. 3. Data cleansing of personnel records through: Action plan and a) Phased annual process led by RSU using ASC, methodology for data AG Office and audit data focusing on data cleansing and Terms of quality. Reference for payroll audit b) Semi-annual third-party payroll audit for a to be submitted to Bank by sample of two districts each year of the project. April 15, 2013. Expenditures for school 4. Detailed technical and operational proposal to be Expenditures to be specific budgets not finalized and implemented to include these included in the being captured in the expenditures in the government's FMIS. government's FMIS by government's FMIS July 1, 2013. 67 Budget variance not 5. Budget variance analysis report for the PPRS Starting from the first monitored in SEF to program to be prepared and submitted to RSU for calendar quarter after improve in-year planning onward submission to the Bank within 15 days of project signing and and decisionmaking. the end of quarter. throughout the project life. Formation of Internal 6. Establishment of fully-staffed Internal Audit September 30, 2013. Audit function in SEF Section in SEF. approved by its Board but not implemented. Lack of comprehensive 7. Approval of a Financial Procedure Manual for SEF. December 31, 2013. Financial Procedure Manual at SEF. Notes: The retention of a Financial Management Officer and a Financial Reporting Officer at the RSU is a covenant in the Legal Agreement. The remainder of actions will be monitored by the Bank via regular supervision. All actions will be noted and detailed in the Project Implementation Manual to be prepared by the Sindh government. 19. Project implementing entity. Maximum use of country systems is being made for the project in all aspects of financial management and disbursement. As detailed in the relevant sections below, RSU will coordinate with the Finance Department (FD), the Accountant General (AG) office, the concerned Audit offices, and the Sindh Education Foundation (SEF) to ensure that all requirements are met. Certain eligible expenditures will be incurred by SEF. All aspects of SEF-related eligible expenditures will be managed by the SEF Karachi office. 20. Staffing. The team for finance at the RSU is headed by the Program Manager- Administration, who is a government officer. Requirement for incremental staffing, to be funded through project TA, includes a Financial Management Officer and a Financial Reporting Officer. The Program Manager-Administration, under the Chief Program Manager, RSU, will be primarily responsible for meeting the financial reporting requirements of the project and overseeing satisfactory implementation of financial management arrangements. It is important that a person with the requisite experience and qualifications for fulfilling this essential responsibility is appointed to this position during the project period. A staff member was hired under SEP for supporting the financial reporting function and remains in place but has been unable to demonstrate the required capacity. A SAP (PIFRA) terminal is available in RSU which will be used for expenditure monitoring and analysis. The Financial Management Officer and the Financial Reporting Officer will support the fulfillment of all financial reporting requirements, assist in carrying out a continuous and thorough analysis of the data available through the SAP terminal and help formulate tangible proposals for improving the efficiency and effectiveness of education sector expenditures. The RSU has hired the Financial Management Officer and Financial Reporting Officer, against Terms of Reference agreed with the Bank. 21. At SEF, the Finance Department is headed by the Associate Director-Finance and Planning. The Finance Department is divided into two primary functions: (1) internal control and compliance and (2) funds management and financial reporting. Staff strength and skill mix in the Finance Department at the SEF Head Office is considered adequate. Clearly-defined job descriptions are available which are duly signed by employees at the time of execution of their employment contracts. 22. Budgeting. The budgeting of all program expenditures will constitute a part of the government budgeting process. The function and object codes to capture expenditures for project 68 Eligible Expenditure Programs (EEPs) and the TA are clearly identified in the New Accounting Model (NAM) chart of accounts. SEF-related expenditures are clearly defined in their chart of accounts present in working paper files. These will form the basis of financial reporting and monitoring of budget allocations, revisions, releases, and expenditures. 23. The Sindh government follows a detailed budget preparation schedule, and budget forms are circulated during the year. This schedule provides deadlines for all the steps involved to ensure that there is sufficient time to receive, review, discuss, and compile the inputs from all departments. The consolidated budget is prepared by FD for submission to the Sindh Assembly. In recent years, efforts have been made to introduce a medium-term outlook through the preparation of a Medium-Term Budgetary Framework (MTBF), which has also been rolled out to the education sector. 24. SEF prepares its budget on an annual basis and includes all program and organizational operating expenses. The Managing Director and SEF's Executive Committee are responsible for approving SEF's annual budget before sending it to SEF's Board of Governors for its review and approval. At present, analyses of budget variance are carried out on a need basis. During this project, it is recommended that SEF prepares a budget variance analysis report at least on a quarterly basis. 25. Accounting. Accounting records will be maintained using the government-wide integrated FMIS, implemented under PIFRA, and in accordance with the country accounting procedures and policies defined in NAM. These policies and procedures are being progressively and consistently applied at the provincial as well as district levels. Use of NAM policies and procedures conforms to international standards and, thus, is acceptable to the Bank. 26. The system-generated accounting records will be the basis for preparation of Budget Execution Reports (BERs) of the education sector, including EEPs and TA financed under the project. 27. At SEF, accounting transactions are recorded in an accounting system which has been developed in-house. Trial balance is system generated while financial statements are prepared through Microsoft Excel. Transactions are classified per internally developed chart of accounts, using accrual basis of accounting in accordance with International Accounting Standards (IASs). Annual financial statements are prepared under the framework of International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board, as adopted in Pakistan. 28. Internal controls. The 2009 Sindh PEFA Assessment identifies the absence of internal auditing in the Sindh government as one of the major weaknesses in the PFM system. There has been no progress in this area. Internal controls on payroll rated well except for the dimension related to the integration of personnel records and payroll data and the absence of payroll audits to identify ghost workers. There were high scores for timeliness and controls for changes in the two records. Similarly, for controls over nonsalary expenditures, the weakest link is the comprehensiveness and understanding of controls despite a high degree of compliance. 69 29. Over SEP, an Internal Auditing Specialist was hired to review and analyze internal control structures and assist the education sector in laying the foundations of internal audit. This, however, did not prove successful. In addition to time lost due to turnover, there remained a lack of clarity on the roles and activities to be carried out and the envisaged benefits could not be realized. At the same time, SEP included covenants with clearly-specified targets for addressing the backlog of substantive audit observations from previous years as well as new ones arising from current audits through the holding of Departmental Accounts Committee (DAC) meetings. This was done to reinvigorate the institutional process for addressing internal control weaknesses which has been successful. Targets were all met; however, the entire activity remained concentrated in RSU. 30. Guidelines and procedures for the auditors have changed in the past year; now, the auditors cannot finalize audit findings unless a DAC has either been held or sufficient documented efforts have been made to pursue the department for holding one. Learning from the experience under SEP and considering the current rules in place, the project will support steps for improving internal controls in a manner which would help institutionalize this function. The Financial Management Officer and the Financial Reporting Officer at the RSU will assist in the enhancement of internal controls within the sector through tangible recommendations formulated on the basis of reviews of data from various sources, such as existing audit reports. This would include simultaneously increasing awareness among Drawing and Disbursing Officers (DDOs) to enhance compliance and systemic recommendations to simplify and strengthen controls within the education sector. Note that the span of internal controls will include all aspects of the sector's functioning of which financial controls are only a subset. 31. Concerns were raised during SEP on the credibility and accuracy of education sector employee payroll information. An initial review of payroll data revealed multiple issues including duplicate, incorrect, and missing Computerized National Identification Card (CNIC) numbers; potentially erroneous Bank account information; and missing or potentially erroneous information in other fields which reflect weak controls in the application and data acceptance, data entry, and database management. Importantly, these issues may in part reflect false payroll claims. As a consequence, several rounds of discussion took place between ED/RSU, AG office and FD. However, actions were focused only on the reduction in the number of education sector employees receiving salaries in cash through DDOs. Through concerted efforts by FD and ED/RSU, this number was reduced substantially. Steps required for reviewing and correcting the underlying payroll data for education sector employees were eventually initiated near the end the SEP period. No action has been taken on the data anomalies identified by the Bank in April/May 2011. Cooperation among the concerned departments needs be strengthened to effectively identify and jointly address discrepancies and to improve procedures and practices at the provincial and district levels to prevent these issues from arising. Since the payroll is the largest eligible expenditure program under the project, the importance of ensuring the credibility and integrity of this expenditure cannot be overemphasized. 32. The higher risk related to payroll shall be mitigated firstly through a continuation of systematic cleansing of payroll data over the project period using data from multiple sources, including the ASC/SEMIS database. Strong financial reporting capacity in the RSU will allow the regular generation and analysis of reports regarding payroll data and correlation with other 70 data sources. Cooperation with FD/ERU and AG Office needs to continue to address and rectify issues as they arise. Secondly, a consulting firm will be contracted by the RSU using TA funds to conduct a thorough and extensive payroll audit of the education sector in two districts each year, thereby covering at least six districts over the project period. This will include, inter alia, a physical census of employees in education administration offices and schools. Districts will be selected by ED/RSU, in consultation with the Bank. Tolerance levels will be identified before the start of the exercise. Should the results fall outside these levels, ED/RSU, in consultation with the Bank, shall proceed with either re-verification or a larger sample. A remedial time-bound action plan will be prepared for each report to include corrective measures for addressing both specific and systemic gaps. In addition, it is recommended that a rigorous degree verification process is put in place and carried out for all new teacher recruitment before issuance of appointment letters. 33. Sectoral PFM reforms will be supported using project TA funds to increase the efficiency and effectiveness of education sector expenditures via, for example, improving budget management, capacity-building of education-sector DDOs, timely and informed decision- making, enhancing procurement effectiveness, improving internal controls. The Program Manager-Administration will serve as the focal person for planning and managing these interventions with assistance from necessary personnel. 34. As with other government expenditure transactions, payments under the project will be subject to the normal pre-audit verification at accounting offices, before payments from the single treasury account are approved. Use of a single treasury account simplifies the vertical funds-flow and minimizes cash handling at all levels. Given that project TA funds, managed by RSU under Special Drawing Account (SDA) arrangements, will be expended in compliance with Bank procurement guidelines, the pre-audit activities at the accounting offices of AG-Sindh will be limited largely to budget availability checks, account coding validation, and verification of spending authorizations. 35. At SEF, there is no internal audit department. Based on the minutes of SEF's Board of Governors held in August 2012, the Board has approved the formulation of an internal audit section and the reconstitution of the finance and audit committee. The internal audit section is expected to be established by September 30, 2013. Once in place, appropriate steps will have to be taken to ensure that it remains fully functional and independent. 36. The bank accounts at SEF are jointly operated with two groups of signatories. Monthly bank reconciliations are prepared. Fixed assets have been tagged and a register is maintained. Currently, there is no policy for regular physical verification. Fixed assets related to the PPRS program are reported separately in the annual audited financial statements. 37. The procedures in place are laid out in various Standard Operating Procedures (SOPs) but no consolidated manual exists for finance and accounts. It is recommended that a Financial Procedure Manual be developed and made effective no later than December 31, 2013. The manual should contain clearly-defined control policies and procedures including, inter alia, program payments verification and processing, proper segregation of duties and responsibilities 71 among the staff, regular and timely reconciliation of bank accounts, and the maintenance of records from tagging and physically verifying fixed assets. 38. Funds flow and disbursement arrangements. Project disbursements under Component I will be made to the Sindh government annually; project disbursements under Component 2 will be made semi-annually. The report-based principle will be used. RSU, on behalf of the Sindh Government, shall prepare Interim Financial Reports (IFRs) based on Budget Execution Reports (BERs) verified by a responsible official of AG-Sindh. The IFRs will be due for submission within 30 days of the end of the period ending April 30 and October 31. For Component 1, the period of expenditures to be claimed for the first year of the project will be from project signing to April 2014. For Component 2, the first advance will be for forecasted expenditures for the period from project signing to October 31, 2013. Subsequently, the forecasts will be for expenditures during the semesters November to April and May to October. 39. The BERs will provide the details of expenditures in each of the agreed EEPs and the heads for TA. For Component 1, disbursements will be on reimbursement conditional on the achievement of DLIs. For each disbursement under Component 1, only 80% of the amount to be disbursed will be applied against reimbursement of expenditures in the EEP related to employee- related expenses. The remaining 20% of the amount to be disbursed will be applied against reimbursement of expenditures in other (nonsalary) EEPs. For Component 2, disbursements will be on advance in accordance with cash forecasts for the next six months adjusted for any unspent balance. 40. All project disbursements, under Components 1 and 2, will be made from the Credit account to the Provincial Consolidated Fund - Account No. 1 (Non-Food), based on a Withdrawal Application (WA) duly signed by a representative of FD. The WA will be based on the IFRs and BERs for the relevant period. Disbursement from the credit proceeds, in US Dollars, will be translated to Pakistani Rupees by the State Bank of Pakistan, and the local currency shall form the transaction basis for the operation's accounting and reporting. Funds for Component 2 will be released to RSU into its SDA, through normal budgetary allocations. The use of SDA should ensure availability of earmarked funds to RSU for critical TA activities for SERP II on a timely basis. 41. The format and content of IFRs were agreed during project negotiations. Advances will be provided for Component 2 based on budgeted/forecasted expenditures for the period up to the next submission of IFRs. Subsequent IFRs will document expenditures against the advance received and provide budgeted/forecasted expenditures for the next period on the basis of which the amount of funds to be disbursed will be determined. 42. Table A3.2 presents allocated IDA financing, inclusive of taxes, to the two disbursement categories under the project. The allocated amounts represent the 100 percent capped expenditure limits from IDA: 72 Table A3.2. Allocation of Credit Proceeds Category Amount of Credit Percentage of (expressed in USD) expenditures to be Financed Eligible Expenditure Programs (EEPs) 393,000,000 100% Technical Assistance (Goods, Consultants' Services, 7,000,000 100% Training and Workshops and Incremental Operating Costs) TOTAL AMOUNT 400,000,000 43. Incremental operating costs will cover the reasonable costs of incremental expenditures required by the project, including (1) consumable materials and supplies; (2) office rental costs; (3) utility costs; (4) insurance; (5) communications, advertising, and newspaper subscriptions; (6) printing, photocopying, stationery costs; (7) vehicle and/or office equipment operation and maintenance; (8) charges for opening and operating bank accounts required for the project; (9) travel, lodging, and per diem allowances for project staff; (10) salaries of contractual staff (other than consultants); (11) performance-based incentives to government officials in RSU and the LSUs as per plan approved by the Sindh government and agreed with the Bank; and (12) allowances to project staff. 44. Designated Account. A segregated designated account will not be established. As mentioned above, receipt of funds from the Bank shall be in the Provincial Consolidated Account No. I (Non-Food). The Bank will disburse funds annually for Component 1 into this account keeping in view the actual achievement of DLIs and semi-annually for Component 2 based on cash forecasts which shall be made available to the ED/RSU through normal budgetary procedures. 45. Retroactive Financing. There will be retroactive financing up to USD 1,000,000 for Component 2 for expenditures incurred for TA activities between July 1, 2012 and signing of the legal agreements. 46. Disbursement-Linked Indicators. Disbursements for Component 1 are conditional on the achievement of agreed SERP-II implementation performance and progress targets that are described in Table Al.2 in Annex 1. These are identified as Disbursement Linked Indicators (DLIs). There are ten DLIs for each fiscal year, and each DLI in the fiscal year is priced equally. 47. In order to incentivize increasing effort by the Sindh government over time, the total planned disbursement in Component 1 is structured to increase annually over the project period, from USD 93 million in FY2013/14, to USD 130 million in FY2014/15, to USD 170 million in FY2015/16. Given that the total planned disbursement increases annually over the project period, the price of each DLI also increases annually over the same period (see Table A3.3). 73 Table A3.3. Pricing of DLIs FY2013/14 FY2014/15 FY2015/16 (expressed in USD) (expressed in USD) (expressed in USD) DLI price 9,300,000 each 13,000,000 each 17,000,000 each Amount allocated for Component 1 93,000,000 130,000,000 170,000,000 48. For each year, the amount eligible for disbursement will be the product of the total number of DLIs achieved and the unitary DLI price as given in the table above. Where achievement of a DLI cannot be certified, an amount equivalent to the unitary DLI price will be withheld. This amount may be paid at any later date when such achievement can be verified by the Bank. 49. Table A3.4 below presents the disbursement schedule. Table A3.4. Indicative Disbursement Schedule No. Date of Description Capped Amount Basis Submission of (USD) IFRs and WA 1 Effectiveness Reimbursement of TA Up to 1,000,000 For Component 2: Forecast for expenditures incurred for retroactive advance and BER for the period between July 1, 2012 and period and TA July 1, 2012 to signing to signing. Forecast of TA for advance as per support reimbursement period up to Oct 31, 2013 estimate claimed. 2 Nov 30, 2013 Advance against forecast for TA as per For Component 2: the period Nov 2013 to Apr estimate Documentation of actual 2014 for TA expenditures against previous advance for TA and forecast. 3 May 30, 2014 Amount due for DLls met Up to 93,000,000 For Component 1: Certification subject to actual EEP for EEPs and TA of achievement of DLls and expenditures and advance as per estimate actual expenditures in EEPs as against forecast for the period per BER for the period from from project signing to Oct project signing to Apr 2014. 2014 for TA For Component 2: Documentation of actual expenditures against previous advance for TA and forecast. 4 Nov 30, 2014 Advance against forecast for TA as per Documentation of actual the period Nov 2014 to Apr estimate expenditures against previous 2015 for TA advance for TA and forecast. 5 May 30, 2015 Amount due for DLls met Upto For Component 1: Certification subject to actual EEP 120,000,000 for of achievement of DLls and expenditures and advance EEPs and TA as actual expenditures in EEPs as against forecast for the period per estimate per BER for the period May May 2015 to Oct 2015 for 2014 to Apr 2015. TA For Component 2: Documentation of actual expenditures against previous advance for TA and forecast. 6 Nov 30, 2015 Advance against forecast for TA as per Documentation of actual the period Nov 2015 to Apr estimate expenditures against previous 2016 for TA advance for TA and forecast. 74 7 May 30, 2016 Amount due for DLIs met Upto For Component 1: Certification subject to actual EEP 170,000,000 for of achievement of DLls and expenditures and advance EEPs and TA as actual expenditures in EEPs as against forecast for the period per estimate per BER for the period May May 2016 to Dec 2016 for 2015 to Apr 2016. TA For Component 2: Documentation of actual expenditures against previous advance for TA and forecast. 8 Nov 30, 2016 Advance against forecast for TA as per Documentation of actual the period Nov 2016 to Apr estimate expenditures against previous 2017 for TA advance for TA and forecast. 9 May 30, 2017 Advance against forecast for TA as per Documentation of actual the period May 2017 to Jun estimate expenditures against previous 2017 for TA. advance for TA and forecast. Unused portion of TA may be reallocated to EEPs. 10 Aug 31, 2017 Documentation of - expenditures against the above advance for TA 50. Eligible Expenditure Programs. Under Component 1, the Bank will finance, up to a capped amount and subject to any deductions equivalent to the price of unmet DLIs, particular expenditures which constitute sizeable recurrent expenditures that would have an impact on agreed results (DLIs) and education outcomes and smaller ones that finance important small- scale initiatives and administrative and monitoring and evaluation systems. These expenditures are clearly identifiable in the government's FMIS and the SEF internal chart of accounts and are referred to as EEPs. The Bank funds would not be separately tracked and the Bank will accommodate withdrawal applications from the Credit as long as the overall expenditures eligible under the EEPs are more than or equal to the amount to be withdrawn from the Credit. However, in any disbursement under Component 1, not more than 80% of the amount to be disbursed will be applied against reimbursement of expenditures in the EEP for employee-related expenses and the remaining 20% will be applied against reimbursement of expenditures in the rest of the EEPs. 51. The activities and expenditure mechanism satisfy Bank policy and in particular the principles stated in OP 6.00, namely, the expenditures are productive and necessary to meet the development objectives of the Project; the impact on the country's fiscal sustainability is acceptable; and acceptable oversight arrangements, including fiduciary arrangements, are in place to ensure that the Credit proceeds are used only for the purposes for which these are extended with due regard to economy and efficiency. 52. A brief description of EEPs under the project is provided below. (i) Employee related expenses of primary and secondary education sub-functions of provincial and all district governments Type: Recurrent budget 75 Code: Object head AO1 for education sub-functions 091, 092, and 096 Description: Pay and allowances for district, regional and provincial employees of Education and Literacy Department in or associated with primary and secondary education. These employees comprise of those in primary (91102), administration of primary education (91103), secondary (92101), administration of secondary education (92102), and the Secretariat (96101). Oversight: The budget for pay and allowances for the above categories is assigned to ED. Direct responsibility for pay and allowances lies with the Drawing and Disbursing Officer (DDO) where expenditures are incurred. Salaries are subject to overall payroll controls which are considered adequate. Amounts are transferred by the AG Office to the personal bank accounts of employees. Some employees receive their salaries in cash through DDOs. The Sindh government is making efforts to eliminate such cases. (ii) School-specific non-salary budget for primary and secondary education sub-functions of provincial and all district governments Type: Recurrent budget Code: Object head A03-Operating Expenses; sub-head A039-General and A03970- Others for education. Sub-functions codes are as follows: Code Account head 475 In-class material supplies 476 Library and laboratory material 477 Co-curricular activities 478 Other sports 479 Traveling allowance 480 Stationery Description: Non-salary budgets for schools including materials for use in classes, library and laboratory, extracurricular activities such as sports and stationery items. Oversight: Responsibility for managing the nonsalary budget for schools lies with ED. Direct responsibility for the use of school nonsalary budgets lies with the Drawing and Disbursing Officer (DDO) where expenditures are incurred; the DDO is expected to follow the relevant approved fiduciary guidelines; this includes maintaining all accounts records (e.g., bills, vouchers) per the guidelines. The release of school nonsalary budgets is to be communicated via SMS's to head/teachers. School nonsalary budgets and how these funds are (to be) used are to be prominently displayed on standardized charts at school. Cost centers in the government's FMIS are created for the lowest delegation of financial authority which is the Drawing and Disbursing Officer (DDO). This is the basic unit for both budget formulation and budget execution. With respect to school nonsalary budgets, in the case of primary, middle, and secondary schools, the DDO for these schools is at the taluka level, namely the Assistant District Education Officer. The government's FMIS allows for the creation of "projects" under cost centers and for budgets and expenditures to be tracked at the project level; a project will be created for each primary, middle, and elementary school, with the SEMIS code for the school embedded in the project code. Budgets will be entered in the FMIS against these projects and, on incurrence of expenditures, the DDO shall clearly mark the relevant project code when submitting bills to the District Accounts 76 Office. In addition, a firm has been contracted by RSU to provide implementation and monitoring support to the districts for the school budgets initiative. iii) Promoting Private Schools in Rural Sindh / Urban slums (PPRS) program under the Sindh Education Foundation Type: Development budget (to be shifted to recurrent budget) Code: All expenditures related to the PPRS program administered by SEF as booked against code number 33 and any successor code formulated in the SEF accounting system for the sole purpose of recording PPRS program-related expenditures. Description: The full set of costs associated with the administration of the PPRS program by SEF. It includes the benefits, cash and in-kind, offered to program schools as well as all program administrative costs. Financing for the program is presently through an Annual Development Program scheme set to expire on June 30, 2013. Upon expiration, financing for the program will be shifted to the recurrent budget for education as approved by the SEF Board of Governors in August 2012 and reflected as a separate scheme under SERP (KA5763). Oversight: Responsibility for managing the PPRS program budget lies with SEF. The PPRS program school is directly responsible for the use of provided cash subsidies and in-kind benefits and is expected to follow the approved fiduciary guidelines; this includes maintaining all accounts records (e.g., bills, vouchers) per the guidelines. SEF is expected to carry out regular field visits (both announced and unannounced) to PPRS program schools to collect a wide range of data, including on fiduciary matters, using standardized forms and procedures. The Internal Control and Compliance Department, part of SEF's Finance Department, reviews all the disbursements to PPRS program school operators. Based on the directions of the SEF's Board of Governors, an internal audit section is in the process of establishment. The procurement of goods, works, and consultancy services using this PPRS program budget will be undertaken by SEF in compliance with Bank procurement guidelines. iv) Annual School Census (Sindh Education Management Information System - SEMIS) Type: Recurrent Budget Code: A03973 Description: The full set of costs, at all levels (province to school), for all stages (from design to data analysis and findings dissemination), associated with annual administration of the Annual School Census (ASC) in all government schools and all investments in, among other things, human resources, logistics, information technology (hardware and software), to strengthen the administration of the ASC. Oversight: The budget for SEMIS/ASC is assigned to RSU, and RSU is directly responsible for expenditures incurred. The procurement of goods, works, and consultancy services using this budget will be undertaken by RSU in compliance with Bank procurement guidelines. (v) School Management Committee (SMC) Grants Type: Recurrent Budget 77 Code: A03975 Description: Cost of SMC grants offered annually to qualifying government schools with valid SEMIS codes to support small community-identified investments in school improvement activities in accordance with the School Management Committee (SMC) Policy, simplified fiduciary guidelines, and other formal guidance offered by ED/RSU. Oversight: The SMC budget is assigned to RSU. The SMC is directly responsible for the use of the SMC grant and is expected to follow the approved fiduciary guidelines. The release of SMC grants is to be communicated via SMS's to SMCs. SMC grant amounts and how these funds are (to be) used are to be prominently displayed on standardized charts at school. (vi) Student Achievement Test (SAT) Type: Recurrent Budget Code: A03966 Description: The full set of costs, at all levels (province to school), for all stages (from test design to data analysis and findings dissemination), associated with the annual administration of the SAT in selected grades in government schools. The SAT budget importantly covers the costs of the contract offered to a third-party organization to undertake the SAT. Oversight: The budget for SAT is assigned to RSU, and RSU is directly responsible for expenditures incurred. The procurement of any goods, works, and consultancy services using this budget will be undertaken by RSU in compliance with Bank procurement guidelines. 53. Financial reporting. Project reports and financial statements will identify the uses of funds according to the pre-defined Eligible Expenditure elements and Technical Assistance costs financed by the Bank as well as by the Sindh government. Adequate notes and disclosures consistent with acceptable international practice will be provided in the annual financial statements to provide an understanding of the operations, resources and expenditures of the project. Disbursements for Component 2 will be made against semi-annual IFRs to be submitted by the Sindh government to the Bank within 30 days after end of April/October each year. Component I will be disbursed annually on the basis of the IFRs as well. The format for the IFRs will be agreed during negotiations. 54. The IFRs will be supported by BERs (certified by the AG Office) for the relevant period which will form the basis of documentation of expenditures against advances and disbursements for EEPs up to the extent of the Bank's financing. In addition, certified BERs for the entire education sector along with a cover note summarizing the budget allocations and utilization for EEPs and the TA component will be submitted within 30 days after the end of each calendar quarter for continuous monitoring of expenditures and progress of the program. The IFRs will be prepared by RSU. SEF will provide information related to eligible expenditures incurred by it (actual expenditures, budget, reasons for variances +/- 10%) to RSU within 15 days of the end of the period to allow compilation and submission in time. 55. Annual financial statements will be prepared for the project in accordance with the Cash Basis International Public Sector Accounting Standard which will provide details of expenditures 78 against EEPs and TA for the whole program and sources of funding for the same (Sindh government, the Bank, and any other). These will be prepared by RSU. SEF will fully cooperate with RSU for (1) timely submission of necessary information for the preparation of the financial statements and (2) coordination with the concerned AGP formations for audit. 56. Auditing. Project financial statements with a comprehensive disclosure of the operations, resources and expenditures for the project will be prepared, audited and submitted to the Bank within six (6) months of the close of each financial year. AGP will conduct an audit of the project financial statements; this arrangement is acceptable to the Bank. The audit report for project financial statements for the financial year ending June 30 each year is due December 31 each year. 57. The audit activity will be carried out by the Director General (Provincial) Audit for provincial and district expenditures and the Director General (Commercial Audit) for SEF. Therefore, there would be a need for coordination among all formations to ensure timely submission of audit reports. The audit report will be based on the findings of all formations involved in the audit and the Management Letter will include all material observations. 58. All spending agencies within the education sector will provide the auditors with full access to the related documents and records. The Bank will monitor compliance with the audit requirements as per the table given below: Audit Report Due date Project Annual Financial Statements for the year ending June 30 December 31 each year 59. Country systems for the resolution and settlement of audit observations will be equally applicable to this project. 60. In addition to the audit report for the project, the audit report of the Sindh Government (including ED) will be submitted to the Bank for information within one month of receipt from AGP and the entity audit report of SEF, audited by a private sector audit firm, is to be submitted within nine (9) months of the close of each financial year. 61. Supervision plan. The project will require frequent implementation support, particularly on financial reporting aspects. During project implementation, the Bank will review (1) the IFRs, project audited financial statements, audit reports of the Sindh government and the BERs and (2) the project's financial management and disbursement arrangements to ensure compliance with the agreed requirements. With the sound implementation of the financial management and monitoring system by the professional staff proposed for RSU, the Bank's normal implementation review procedures will suffice. III. Procurement 62. All procurement activities under project EEPs and TA are to be undertaken in accordance with Bank Guidelines: Procurement of Goods, Works, and Nonconsulting Services under IBRD Loans and IDA Credits and Grants for World Bank Borrowers (dated January 2011) and 79 Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers (dated January 2011). 63. Any procurement of goods, works, or consulting services to be undertaken via International Competitive Bidding (ICB) is to be listed in the project's General Procurement Notice (GPN). A Specific Procurement Notice (SPN) will be published for goods, works, and consulting services undertaken via ICB and estimated to cost more than US$500,000. 64. Procurement of works. No major civil works are expected under project EEPs. In case any works are identified, they are to be undertaken via NCB or shopping. In case of NCB, the bidding documents agreed by the Bank are to be used. All works estimated to cost up to US$50,000 are to be undertaken via shopping; works estimated to cost more than US$50,000 are to be undertaken via NCB. The EEPs related to SMC grants and the SEF PPRS program could be used for minor works. These works are to be undertaken via shopping as documented under the agreed simplified fiduciary guidelines for the use of SMC grants by SMCs and SEF PPRS program subsidies by PPRS program school operators, ensuring adequate competition and transparency. 65. Procurement of goods. Goods could be procured under project EEPs related to SMC grants, the SEF PPRS program, school nonsalary budgets, and the ASC/SEMIS. The agreed fiduciary guidelines for the use of school nonsalary budgets, SMC grants, and PPRS program subsidies provide for adequate shopping procedures for the procurement of goods. In the case of procurement of goods through the project EEP for ASC/SEMIS or project TA funds, the Bank's procurement guidelines will be applicable. Goods contracts estimated to cost more than US$500,000 are to be procured via ICB, using the Bank's Standard Bidding Documents. Goods contracts estimated to more than US$50,000 are to be procured through NCB, using bidding documents acceptable to the Bank. Goods contracts estimated to cost up to US$50,000 may be procured via shopping. 66. Improvement of bidding procedures under national competitive bidding. When procuring goods and nonconsulting services pursuant to the provisions of Rules 4 to 15, 17, 20 to 26, 29, 30, 41 to 45 of the Sindh Public Procurement Rules (2010) (SROI (SGA&CD) 2- 30/2010), as agreed to with the Bank, the Sindh government shall ensure that the following additional requirements be applied in order to align such procedures with the Procurement Guidelines: i. Invitation to bid shall be advertised in at least one national newspaper with wide circulation, at least 30 days prior to the deadline for the submission of bids; ii. bid documents shall be made available, by mail or in person, to all who are willing to pay the required fee; iii. foreign bidders shall not be precluded from bidding and no preference of any kind shall be given to national bidders in the bidding process; iv. bidding shall not be restricted to pre-registered firms; v. qualification criteria shall be stated in the bidding documents; vi. bids shall be opened in public, immediately after the deadline for submission of bids; vii. bids shall not be rejected merely on the basis of a comparison with an official estimate 80 without the prior concurrence of the Bank; viii. before rejecting all bids and soliciting new bids, the Bank's prior concurrence shall be obtained; ix. bids shall be solicited and works contracts shall be awarded on the basis of unit prices and not on the basis of a composite schedule of rates; x. contracts shall not be awarded on the basis of nationally negotiated rates; xi. a single bid shall also be considered for award; xii. contracts shall be awarded to the lowest evaluated and qualified bidder; xiii. post-bidding negotiations shall not be allowed with the lowest evaluated or any other bidders; xiv. draft NCB contracts would be reviewed by the Bank in accordance with prior review procedures; xv. any firm declared ineligible by the Bank, based on a determination by the Bank that the firm has engaged in corrupt, fraudulent, collusive, coercive or obstructive practices in competing for or in executing a Bank-financed contract, shall be ineligible to be awarded a Bank-financed contract during the period of time determined by the Bank; and xvi. each contract financed from the proceeds of the Credit shall provide that the suppliers, contractors and subcontractors shall permit the Bank, at its request, to inspect their accounts and records relating to the performance of the contract and to have said accounts and records audited by auditors appointed by the Bank (the deliberate and material violation by the supplier, contractor or subcontractor of such provision may amount to obstructive practice). 67. Selection of consultants. All contracts with consulting firms will be procured in accordance with Quality and Cost Based Selection procedures or other methods given in Section III of the Consultant Guidelines, such as Quality Based Selection (QBS), Fixed Budget Selection (FBS), Least Cost Selection (LCS), Consultants Qualification Selection (CQS), or Single Source Selection (SSS). For contracts with consulting firms estimated to cost less than US$500,000 per contract, the shortlist of consultants may comprise entirely of national consultants in accordance with the provisions of Paragraph 2.7 of the Consultant Guidelines. 68. Selection of individual consultants. Services for assignments that meet the requirements set forth in Paragraph 5.1 of the Consultant Guidelines may be procured under contracts awarded to individual consultants in accordance with the provisions of Paragraphs 5.2 through 5.3 of the Consultant Guidelines. Under the circumstances described in Paragraph 5.4 of the Consultant Guidelines, such contracts may be awarded to individual consultants on a sole-source basis. 69. Selection of non-consulting services. There could be a need for data entry/processing contracts, survey contracts, rental services contracts, etc., using the procedures for the selection of non-consulting services. The costs for these services are not expected to exceed US$100,000 per contract. Contracts estimated to cost more than US$50,000 are to be procured via NCB, and contracts estimated to cost up to US$50,000 may be procured via shopping. The Bank's sample documents for non-consulting services are to be used for any procurement via NCB. 70. Assessment of agency's capacity to implement procurement. Procurement arrangements were put in place under SEP and will be maintained under this project. In the early 81 part of SEP implementation, delays and errors occurred due to capacity constraints in the adequate application of Bank procurement guidelines and inefficiencies in administrative processes at RSU; by the later part of SEP implementation, RSU procurement capacity was developed to an appreciable degree but timelines continued to be a challenge and contract management continued to be weak. Likewise, over SEP implementation, SEF required constant hand-holding for adequate procurement planning and implementation. 71. For the project, the procurement unit at RSU has been revamped to comprise of a Procurement Specialist, a Contract Management Specialist, and a Procurement Assistant. The procurement unit staff have been contracted using project TA funds and the Bank will provide training. Subject to satisfactory performance, the procurement unit staff are expected to be retained over the project period. At SEF, the procurement manager and support staff will be provided with procurement training. Given RSU and SEF's record under SEP, project risks are rated as Substantial from a procurement and contract management point of view. If any project TA funds are to be utilized by the other program partner departments (e.g., FD, SPPRA, SEF) the specifics on implementation arrangements shall be agreed before TA implementation. 72. In order to ensure efficiency and transparency in procurement, the following measures will be taken to strengthen project implementation: i. RSU will disclose all relevant procurement activities and status of implementation of all contracts financed via project EEPs and TA funds on a dedicated section of its website; SEF will do the same for its procurement activities using PPRS program funds. In addition, to improve transparency more broadly, RSU will disclose on a dedicated section of its website all government contracts for civil works and furniture under the district TOP initiative and government contracts for textbook publishing and transportation. The website sections will provide updated information on all procurement activities undertaken, including on goods, works and consultancy procurement. Information will include procurement plans, procurement notices, invitations to bid, bid documents, and requests for proposals as issued, latest information on procurement contracts, complaints and actions taken, contract award and performance under the contracts and other relevant information. The websites will be made accessible to all bidders and interested persons equally and free of charge. The relevant sections of websites are to be mentioned in all invitations to bid and requests for proposals. ii. Procurement training will be provided to RSU and SEF staff to ensure that the requirements and timelines for any procurement under project EEPs and TA funds are clearly understood at the commencement of the project. In addition, a simple procurement manual is to be prepared to document all steps and approval processes within RSU and SEF for each type of procurement. iii. Under SERP, ED/RSU prepared and adopted simplified fiduciary guidelines for the use of grants provided to SMCs and subsidies provided to schools under SEF's PPRS program; under SERP II, these guidelines may be revised as needed and (re)distributed to SMCs and schools before the start of the new academic year in April 2013. ED/RSU has also prepared and adopted guidelines for the procurement of goods using school 82 nonsalary budgets: one document pertains to schools without Drawing and Disbursing authority for which school resourcing needs will be consolidated to the district level for the purchase of goods and services and the second document pertains to schools with Drawing and Disbursing authority and thus can individually and independently purchase goods to meet its own resourcing needs. These guidelines are to be distributed to districts and schools before the start of the new academic year in April 2013. iv. A real-time procurement management tool for documenting school needs for the use of school nonsalary budgets will be developed by the consulting firm contracted by ED/RSU for supporting and monitoring the school budgets initiative and provided to the districts to run. v. A two-tier system for managing complaints on procurement related to SERP II will be operational over the project period. The first tier will be RSU and SEF's complaints handling systems; the second tier will be the complaints handling system at SPPRA. The software solutions for RSU and SEF's complaints handling systems are to be procured using project TA and PPRS program funds, respectively; both systems are expected to be established by October 31, 2013. RSU, SEF, and SPPRA will publicly disseminate information on a regular basis over the project period on how to access these systems. A status report for complaints handling shall be included in the semiannual monitoring reports submitted by RSU to the Bank. For ICB/international selection of consultants, the Bank prescribed complaint redressal mechanism shall apply. Table A3.5. Procurement actions No. Action Responsibility Date Status 1. Procurement documentation and RSU/SEF June 30, 2013 In place but not fully recordkeeping system functional. 2. Web-based complaints handling SEF October 31, 2013 Procurement of IT solution system at SEF initiated. 3. Web-based complaints handling RSU October 31, 2013 Procurement of IT solution to system at RSU I I be initiated. 73. Procurement planning. ED/RSU and SEF have prepared procurement plans for the procurement of goods, works, and services using project EEP and TA funds, which provide the basis for procurement methods. The plans were agreed between ED/RSU/SEF and the Bank, and are to be made available on RSU and SEF's websites. The procurement plans are to be managed using the Bank's software CALIPER, and made available in the project's database and on the Bank's external website. The procurement plans will be updated in agreement with the Bank on an annual basis or as required to reflect the actual project implementation needs and improvements in institutional capacity. 74. Review of procurement by the Bank. Thresholds for prior review of contracts under eligible expenditures are provided below: i. All ICB contracts for works and goods; ii. All single source selections or direct contracts; iii. First NCB contract for goods and non-consulting services, irrespective of value; 83 iv. First NCB contracts for works, irrespective of value; and thereafter each contract for works estimated to cost US$300,000 or more; v. First contract procured through shopping, for goods, works, and non-consulting services; vi. The first consulting services contract with consulting firms, irrespective of value, and, thereafter, all contracts with consulting firms estimated to cost US$200,000 or more; vii. First consulting services contract with individual consultants, irrespective of value, and, thereafter, all contracts with individuals estimated to cost US$50,000 or more. These thresholds will be reviewed in twelve (12) months and adjustments upwards or downwards will be made based on implementation experience, and documented in the procurement plans. 75. All other contracts will be subject to post review by the Bank. RSU and SEF will send to the Bank a list of all contracts for post review on a quarterly basis. Post reviews as well as implementation reviews will be conducted every six months. Such review of contracts below threshold will constitute a sample of about 20% of the contracts. 76. Procurement information and documentation - filing and database. Procurement information will be recorded and reported as follows: i. Complete procurement documentation for each contract, including bidding documents, advertisements, bids received, bid evaluations, letters of acceptance, contract agreements, securities, related correspondence, etc., will be maintained by ED/RSU in an orderly manner, readily available for audit. ii. Contract award information will be promptly recorded and contract rosters as agreed will be maintained. iii. Comprehensive quarterly reports by ED/RSU indicating: (i) revised cost estimates, where applicable, for each contract; (ii) status of on-going procurement, including a comparison of originally planned and actual dates of the procurement actions, preparation of bidding documents, advertising, bidding, evaluation, contract award, and completion time for each contract; and (iii) updated procurement plans, including revised dates, where applicable, for all procurement actions. 77. Textbook procurement. Improving textbook procurement has become an important concern of the Sindh government. As part of the Bank's technical and advisory support on education sector matters broadly, the Bank reviewed the procurement procedures and practices of the Sindh Text Book Board (STBB). Based on the review, the Bank recommended (1) the careful scheduling and timely execution of all stages of the procurement cycle of textbooks, (2) textbook procurement solely via publication contracts (instead of separate contracts for paper and printing services), (3) specific improvements in the bidding documents, and (4) the public disclosure of pertinent procurement activities and documents on STBB's website. ED/RSU has prepared and is implementing an actionplan to take forward the recommendations. As part of the Pakistan Education Sector Review, the Bank is contracting consultancy services to carry out an extensive review of the textbook procurement systems and market capacity in Punjab and Sindh; 84 the findings and recommendations from this study will also be shared to inform decisions by the Sindh government to improve textbook procurement. ED/RSU may contract technical and advisory support services using project TA funds to further study, plan, and implement any decisions to improve textbook procurement. 78. Civil works procurement. Under SERP, in order to attract larger contractors and benefit from administrative efficiencies and greater transparency, civil works contracts for the school rehabilitation activity under the district TOP subprogram were packaged at the taluka level up to a contract cost ceiling. Given the positive experience with this level of packaging, under SERP II, ED/RSU plans to continue with this practice, and may raise the contract cost ceiling for selected contracts after any necessary due diligence. Under SERP, the third-party construction supervision firm contracted by ED/RSU carried out ex-post procurement reviews of sample civil works contracts. ED/RSU communicated key findings from these reviews, including qualification checks, efficient procurement, and adequate contract management, to the districts and contractors via official correspondence and informational sessions to improve civil works procurement procedures and practices. Under SERP II, ED/RSU will continue with annual ex- post procurement reviews of sample civil works contracts conducted by the contracted third- party construction supervision firm. 79. Frequency of procurement supervision. Bank implementation review missions would be carried out every six months, with a procurement specialist participating. In addition to prior review cases, Bank review missions will undertake post review of procurement actions conducted in the preceding six month period. The Bank's procurement specialist based in the country office in Pakistan will be available to discuss procurement issues with the project implementing agency and partners, with visits when needed. IV. Social (including safeguards) 80. Participatory approach: Recognizing its importance, ED/RSU has pursued a collaborative approach in the design and early implementation of SERP II. There are four main types of collaborations that ED/RSU has already initiated and expects to maintain and further foster. First is the collaboration at the provincial level across relevant departments (e.g., ED/RSU, FD, P&D, AG-Sindh) as well as subdepartments of ED (e.g., STBB, BoC, PITE, STEDA). Second is the collaboration between the province and the regions, districts, and schools (i.e., with administrators and teachers). These two types of collaborations have been undertaken through, for example, formal working groups, workshops and meetings, online groups, and the standard exchange of documents and written correspondence. Third is the collaboration between ED/RSU and civil society entities, primarily through consultations as part of GPE for the preparation of a sector plan enveloping SERP II. Fourth is the collaboration between ED/RSU and the private sector, primarily through contracting private-sector firms/organizations to monitor, guide, and support government implementation of selected initiatives in the districts. 81. Poverty: The primary educationally-disadvantaged subpopulation is the poor. Children from poor households are disproportionately out of school, and poor students disproportionately attend government schools. Data from the 2010/11 PSLM survey indicate that 70% of out-of- school children ages 6-10 (primary-school ages) come from households in the bottom two 85 quintiles (roughly 40% of the population) of Sindh's socioeconomic (asset-based) distribution. Conditional on going to school, 95% of students ages 6-10 from households in the bottom two quintiles go to government schools. The findings are qualitatively similar for children ages 11- 15. 82. SERP II aims to improve the quality of service delivery in the government school system. Any resulting improvements in the government school system would thus disproportionately positively impact poor students as well as the demand for schooling by poor households. Note, given the general perception that the critical issue is the poor quality of service delivery, demand-side interventions that provide cash and in-kind benefits to attract children to schools, would not yield sustainable gains in school participation and student achievement. An important signal that poor school quality dominates constraints to the demand for schooling is that the nonpoor generally opt out of public education and choose private education. Hence, under SERP II, the Sindh government plans to narrowly and directly focus on addressing service delivery shortcomings. This focus would, however, indirectly benefit existing demand-side interventions, as their potential impacts increase when the quality of service delivery improves. 83. Spatial differences: There is significant variation in school participation rates across districts. Within districts, there is significant variation in school participation rates between urban and rural areas. Data from the 2010/11 PSLM survey indicate that the school participation rate for children ages 6-10 across districts varies between 41 and 79%. The urban-rural gap in school participation rates for children ages 6-10 across districts varies between 3 and 31 percentage points. These findings are qualitatively similar for children ages 11-15. 84. Some share of the differences in school participation across districts and between rural and urban areas is likely attributable to differences in the quality of service delivery but it would be safe to presume that service delivery shortcomings are pervasive in the government school system. The extent and depth of these shortcomings would vary to some degree across districts, and, within districts, between rural and urban areas. The eligibility and coverage rules for the various initiatives under SERP II are needs-based at the school level. This implies that where the needs (i.e., shortcomings) are greater, the more the school, local area (the rural community or urban neighborhood), or district stands to benefit from the initiatives. The only initiative under SERP II for which eligibility is limited to some districts is the SEF'S PPRS program: consistent with the program's objective of serving unserved communities, it is open to ten districts with relatively poorer education indicators, and, within these program districts, in qualifying unserved rural communities. 85. Gender differences: Girls are not generally systematically disadvantaged relative to boys in terms of school participation. Their disadvantage appears in certain subpopulations, particularly in rural areas and poor households. Data from the 2010/11 PSLM survey indicate that the boy-girl gap in school participation for children ages 6-10 is two percentage points in urban areas and rich (top quintile) households, and 20 and 22 percentage points in rural areas and poor (bottom two quintiles) households, respectively. The findings are qualitatively similar for children ages 11-15. The findings suggest the importance of poverty and location (urban/rural) in understanding the gender gap. 86 86. Where relevant, the initiatives under SERP II are explicitly designed to be sensitive to girls' school participation. Recent research shows that in rural communities in Sindh, the probability of school participation for girls declines (at a faster rate relative to boys) with increasing distance to school, and, furthermore, crossing settlement boundaries contributes to a sharp discontinuous drop in the probability of school participation for girls (World Bank 2005; Jacoby and Mansuri 2011). These findings suggest the higher sensitivity of girls' school participation to the location of the school. Cognizant of this, while decisions on which schools to rehabilitate, upgrade (adding grades 6-8 to primary schools), and consolidate into single schools would be transparent, objective, merit- and needs-based, ED/RSU and the districts plan to take into account local realities in order to, among other things, help ensure these infrastructure- related decisions benefit girls and minimize any adverse effects. SEF's PPRS program places primary, coeducational schools directly in unserved rural communities, and evaluative evidence indicates that these communities have seen large and commensurate gains in school participation for boys and girls. Girls' school participation may also be sensitive to the gender of the teacher. Cognizant of this, while the recruitment of general teachers follows transparent, objective, merit- and needs-based criteria, the government's teacher recruitment policy offers fixed additional points for female candidates; this means that, at the margin, female candidates will be recruited and placed in qualifying coeducational schools. 87. Land acquisition: As with SEP, World Bank OP 4.12 on Involuntary Resettlement is not expected to be triggered by the project. Under SERP II, no new government schools on new lands will be constructed. Land, however, may be needed by the government for meeting the infrastructural needs of existing government schools, specifically for school infrastructure investment activities under SERP II related to (1) school rehabilitation/whole school development, (2) school upgradation, and (3) school system consolidation. Land for these activities is to be obtained either through voluntary donations from communities or market-based purchases. The same two options are available to school operators under SEF's PPRS program, although, under SERP, most transactions for this program have been land and building lease agreements, and this will likely be the case under SERP II. 88. In order to ensure transparency and genuine voluntariness in any land transactions, the ESMF requires evidentiary documentation. Up-to-date evidence on land transactions for activities under SERP II is to be retained by the Environmental Coordinators at ED/RSU and SEF in an organized and readily accessible manner, and made available for Bank review upon request. 89. Indigenous peoples: As with SEP, indigenous groups have not been identified in the areas to be covered by SERP II. Thus, World Bank OP 4.10 on Indigenous Peoples is not expected to be triggered by the project. Notwithstanding, if any such group is identified during the course of project implementation, the ESMF provides that Sindh government will prepare an Indigenous Peoples Development Plan and incorporate any needed safeguards into SERP II. 90. Grievance redressal: The ESMF describes mechanisms for the redressal of grievances related to SERP II. Under SERP, complaints management performance was hampered largely by the lack of a positive attitude by officials towards received complaints. An important reason behind this attitude is reportedly the concern that investigating and addressing complaints would 87 be demanding and burdensome, taking officials away from their other important administrative duties, and that resolving complaints, while positive, may mean more complaints come in hoping to be resolved, creating more work for the officials. Thus, facilitating complaints management to the extent possible would be an important means to influencing a change in attitude. 91. To enable improved complaints handling, ED/RSU plans to procure and run a customized, web-based complaints handling system, with user access to the system by the districts; SEF will have a similar system. The ED/RSU and SEF systems will handle complaints related to SERP II and the PPRS program, respectively; the systems will handle complaints irrespective of the source and communication mode of the complaint.23 The software solutions for the ED/RSU and SEF systems are to be procured using project TA and PPRS program funds, respectively; both systems are expected to be established by October 31, 2013. In addition to the web-based systems, formal guidelines and service standards are to be prepared and approved for the receiving, recording, processing, responding to, and reporting on complaints. The steps are expected to help ED/RSU and SEF have the means to improve the efficiency, transparency, consistency, and quality of complaints handling. 92. Complaints received during SERP often indicate that the source of the problem is the lack of information (or misinformation) on program activities, procedures and practices, and eligibility rules. Under SERP II, apart from putting in place and running systems for handling complaints, ED/RSU plans to proactively and widely communicate relevant information on SERP II through multiple products and channels. Such communication will be managed by RSU Program Managers and Program Officers for the initiatives, with any needed support from the communications unit in RSU. 93. Monitoring of social indicators: In line with which subpopulations experience meaningful school participation shortfalls, the Bank will monitor government school participation rates of (1) rural children, (2) rural girls, (3) poor children, and (4) children in districts with the poorest participation rates initially, age groups 6-10, 11-13, and 14-15.24 These statistics will be obtained from the annual rounds of the PSLM survey. The Bank will also monitor the gender parity index in government schools and SEF PPRS program schools. These statistics will be obtained from ED/RSU and SEF administrative data. The above indicators are included in the Results and Monitoring Indicators table (Table Al .1 in Annex 1). In addition, the independent longitudinal school sample survey will gather information on the characteristics of sample students; the survey data will be made publicly available for researchers to examine, among other things, questions on the (changing) extent and nature of social inclusion in government and SEF PPRS program schools. 23 Under SERP, ED/RSU received complaints via letters, personal visits to district and provincial education offices, telephone calls, and cellphone-based SMS. Some are relayed directly to ED/RSU; others were relayed indirectly such as from the Bank. Irrespective of source or mode of communication, all complaints will be handled uniformly under the new system. 24 Note that official household sample surveys and censuses do not collect information on disability, language, religion, or caste/tribe. These characteristics could be associated with the probability of school participation, as suggested, for example, by Jacoby and Mansuri (2011). 88 V. Environment (including safeguards) 94. Under SERP II, the Sindh government plans to carry out infrastructure development of existing eligible government schools with identified needs. This work will be carried out under the district Terms of Partnership (TOP) initiative. Under SERP, the TOP initiative offered annual grants to districts for school infrastructure rehabilitation with oversight and support provided by a contracted civil engineering firm. Under SERP II, the scope of the program will be expanded to include school upgradation and any infrastructure development needs emerging from school system consolidation. Under SERP, the Sindh government introduced the PPRS program, administered by SEF, which offers cash subsidies to qualifying private entrepreneurs to set up and operate schools in unserved rural communities; the contracts with the school operators specify minimal conditions for the provision and maintenance of basic school infrastructure and amenities. Under SERP II, the Sindh government plans to continue and strengthen the program. 95. The envisaged civil works under the district TOP initiative for government schools and by SEF PPRS program schools may yield low negative environmental impacts. Hence, the project is classified as Category B. The project triggers Environmental Assessment OP/BP 4.01 and Physical Cultural Resources OP/BP 4.11. The latter safeguard policy is triggered as a precaution as there are several sites of archeological, cultural, historical, and religious significance distributed over the province. Although the probability of school construction activity interfering with cultural sites is low, the ESMF for the project includes guidelines on how to proceed in case any such site is discovered during school construction. 96. School infrastructure needs are large in the province. Administrative data (Annual School Census data) from 2011/12 indicate that there 48,922 schools in total. Roughly 80% of schools have a building. Conditional on having a building, 41% of schools have drinking water; 66% have an electrical connection; 50% have at least one toilet; and 66% have a boundary wall surrounding the school premises. These figures understate the extent of infrastructural deficiencies as they do not reflect the quality and safety of school infrastructure and the health of the school environment. 97. School rehabilitation under the district TOP initiative: Under SERP, the Sindh government took forward a school rehabilitation initiative which offered districts annual grants for constructing (1) buildings for shelterless schools, (2) additional classrooms in overcrowded schools, and (3) basic facilities such as toilets and boundary walls. The next year's grant for the program for a given district was tied in part to the district's performance in meeting construction and reporting indicators (as well as schooling indicators), with the share of the grant linked to district performance increasing incrementally each year. Importantly, with the second round of the program, a civil engineering firm was contracted by the Sindh government to (1) verify in the field the eligibility status of schools proposed by the districts for the program; (2) provide guidance and handholding support to districts in administering the program in line with program timelines, rules, and requirements; and (3) review construction activity in the field and certify construction completion and compliance with construction quality and school safety specifications. 89 98. Monitoring visits by RSU and the Bank to random samples of schools that received civil works via the second and third rounds of the school rehabilitation activity under the district TOP initiative indicate significant improvements in school design and construction. The use of unframed structures was abandoned and replaced by the use of framed Reinforced Cement Concrete (RCC) structures, which are stronger and, thus, less vulnerable to earthquakes. To reduce the vulnerability to floods, measures such as raising school floors above known flood levels were also adopted. Framed structures allow the use of larger windows that resulted in well-lighted and better ventilated classrooms (without the use of electricity). Boundary walls were built with proper heights. Toilets were built and connected to a proper sewage disposal facility (e.g., a septic tank) and running water. Notwithstanding, the monitoring visits revealed some variation in construction quality and completeness. 99. Sindh Education Foundation's Promoting Private Schools in Rural Sindh initiative: Under SERP, SEF's PPRS program offered cash subsidies to private entrepreneurs to run schools in unserved rural communities. The contractual agreement with the school operator specified minimal conditions for the provision and characteristics (including quality) of basic school infrastructure and amenities. Monitoring visits by SEF and the Bank indicate that compliance varies across schools-with many schools suffering from the same school infrastructural and environmental deficiencies of government schools-and enforcement of the relevant contractual terms by SEF has been weak. A large share of the operators rent premises to run their schools, which reportedly constrains their ability to improve school infrastructural and environmental conditions. 100. GIS-based natural hazard maps: Under the Pakistan Education Sector Review, the Bank has contracted consultancy services to develop digital GIS-based maps (in a 1:10,000 scale) for both Sindh and Punjab. The work is well advanced, and is expected to be completed in March 2013. The digital GIS-based maps have several layers of physical, administrative, socioeconomic information, including, importantly, information on (1) areas with high, moderate, and low risk of earthquakes and (2) areas with high, moderate and low risk of severe floods, tsunamis, and tidal surges. By entering a given school's GIS coordinates (for that matter, the coordinates of any site or building), one will be able to immediately assess the level of exposure to natural hazards and other key characteristics associated with those coordinates. Under SERP II, the digital GIS- based maps will underpin the refinement of the guidelines for school siting and structural resilience to natural hazards. 101. For SEP, the Sindh government carried out an Environmental Assessment (EA) and prepared an Environmental and Social Management Framework (ESMF). The EA and ESMF have been revised to take into account the implementation record of the Sindh government in meeting minimal infrastructural and environmental standards in government schools and SEF PPRS program schools as well as the envisaged infrastructure investment plans of ED/RSU under SERP II. The revised versions are referred to as EA II and ESMF II. The Sindh government approved and publicly disclosed ESMF II on January 26, 2013. 102. In line with the findings in EA II and the recommendations in ESMF II, under SERP II, the Sindh government plans to: 90 i. continue to contract a civil engineering firm using government resources to guide, support, and monitor districts and schools in school civil works under SERP II but with stronger field presence and formations of engineering firm staff serving as site monitors, called Assistant Resident Engineers (AREs); ii. further sensitize and better train relevant district officials (Education and Works and Services) and AREs on the full set of minimal school infrastructural and environmental standards; iii. have stronger supervision by engineers from the districts (District Officers and Deputy District Officers-Works for Education); iv. include additional relevant clauses related to construction quality and completeness in the contracts for civil works contractors; v. improve the set of recording and reporting forms used by district officials and AREs to capture greater detail on compliance on minimum school infrastructural and environmental standards; vi. contract a specialized consulting firm using project TA funds to evaluate, design, and support the implementation of (i) refined recommendations related to the structural safety of school buildings, (ii) GIS-based guidelines for school siting and structural resilience to natural disasters, (iii) safe drinking water and sanitation facilities, (iv) training of districts and schools in personal hygiene and disaster preparedness, and (v) pilot initiatives in drinking water facilities and low-cost renewable power systems; and vii. enforce more stringently the minimum school infrastructural and environmental conditions in the contractual agreements with school operators under SEF's PPRS program. Implementation arrangements 103. ESMF II defines the implementation mechanisms, roles and responsibilities of key stakeholders and also provides general guidelines to be followed during the implementation of (1) the school infrastructure development activity under the district Terms of Partnership (TOP) initiative and (2) infrastructure investments by SEF PPRS program school operators to comply with the minimum school infrastructural and environmental conditions in the contractual agreements. 104. Management responsibility: The overall responsibility for the environmental management agenda under SERP II would rest with ED/RSU. At RSU and SEF, Environmental Coordinators (ECs) will serve as focal-points for advising, supporting, and monitoring the environmental management agenda under SERP II. RSU hired its EC in December 2012; SEF will hire and retain its EC over the project period. The firms contracted by ED/RSU, namely the third-party construction supervision firm for the district TOP initiative and the specialized consulting firm for the environmental enhancement activities, will play important roles in taking forward the agenda. Apart from data from administrative sources, the independent longitudinal school sample survey will gather information on the characteristics of school infrastructure and the school environment; the survey data will be made publicly available for analysis. 105. The implementation of the environmental management agenda in the field will be the responsibility of the districts and the Sindh Education Foundation (SEF); they will, with the 91 support of the contracted consulting firms, and in coordination and under the supervision of ECs, ensure compliance with stipulated environmental management guidelines. The specialized consulting firm for the environmental enhancement activities will work closely with the third- party construction supervision firm for the district TOP initiative. 106. Documentation and reporting mechanism: ED/RSU and SEF will be responsible for developing reporting mechanisms for ascertaining compliance with the stipulated environmental management requirements and guidelines. ED/RSU will have primary responsibility for the preparation of standardized environmental management checklists, forms, and certificates of completion and construction quality, their application/use in the field, and the maintenance of all relevant records in an organized and readily accessible manner. District Officers and Deputy District Officers - Works for Education are expected to fill in relevant stipulated checklists, forms, and certificates during visits to civil work sites under the district TOP initiative, and provide copies to the third-party construction supervision firm. Resident Engineers and Assistant Resident Engineers of the third-party construction supervision firm are also expected to fill in relevant stipulated checklists, forms, and certificates of civil works under the district TOP initiative. All records are expected to be maintained in an organized and accessible manner by the third-party construction supervision firm, with copies provided to ED/RSU. 107. In the case of PPRS program schools, SEF will be responsible for the development of standardized recording and reporting tools (checklists and forms), the application of the tools by field office staff following agreed standardized procedures and schedules, and the maintenance of all such records as well as follow-up actions in an organized and readily accessible manner. 108. ED/RSU and SEF will also maintain records of all environmental management training modules developed, training programs conducted, and the attendees of these trainings. VI. Monitoring and evaluation arrangements 109. Monitoring program and project implementation: As under SERP, the various initiatives under SERP II will have their own dedicated administrative and monitoring systems. For monitoring of implementation progress and performance of SERP-II initiatives, including progress towards and the achievement of DLIs, the Bank will rely on reporting and evidentiary data and documentation submitted by ED/RSU and SEF, largely obtained from these systems. For monitoring related to implementation arrangements, financial management and procurement activities and functions, and environmental and social safeguards and activities, including project covenants, the Bank will also rely on reporting and agreed evidentiary data and documentation submitted by ED/RSU and SEF. 99. Refinements of monitoring arrangements: Under SERP II, ED/RSU plans to refine its existing implementation arrangements to monitor implementation progress and performance. Seven refinements are delineated here. First, one of main responsibilities of RROCs and LSUs, two new arrangements under SERP II, will be to monitor and review implementation progress and performance in the regions and districts. Second, RROCs and the districts will periodically assess how they are performing against key indicators captured in region and district performance cards prepared by ED/RSU, with Bank participation, when possible, in the review 92 meetings conducted by the regions and districts. Third, RSU field monitoring will be facilitated by contracting transportation services using project TA funds. Fourth, ED/RSU will contract consulting firms using project TA funds for, among other things, monitoring of selected initiatives (e.g., school infrastructure development, school budgets) in the districts. Fifth, the roles and responsibilities of supervisors (who are the lowest level of officers in the district education administrations) are to be better specified with the requirement of regular monitoring visits (both announced and unannounced) to government schools and the use of standardized instruments and procedures for gathering information. Sixth, SEF is strengthening its monitoring capacity in terms of human resources, finances, logistics, and information technology, particularly in its regional offices, to ensure regular monitoring visits (both announced and unannounced) to PPRS program schools and the use of standardized instruments and procedures to gather required information. Seventh, stronger, well-defined efforts will be made by the districts and LSUs to encourage and support SMCs in regularly and effectively monitoring their government schools, serving as a formal mechanism for demand-side monitoring. 110. Strengthening monitoring and evaluation systems: Under SERP II, the Sindh government has prioritized and plans to strengthen its monitoring and evaluation systems. Under the project, the Bank will support five monitoring and evaluation activities in order to yield relevant, regular, and reliable data to aid the government in evidence-based decisionmaking to improve the quality of service delivery: the Annual School Census (via DLIs and TA), (2) the Student Achievement Test (via DLIs and TA), (3) an independent longitudinal school sample survey over the entire project period (via TA), (4) public education employee Management Information System (MIS) (via TA), and (5) a comprehensive MIS for the SEF PPRS program (via its integration into the PPRS program-related DLIs. 111. Annual School Census: The Annual School Census (ASC) is the Sindh government's primary, system-wide monitoring instrument of government schools, and captures basic information on school characteristics, enrollment by grade and gender, and teacher-level information on an annual basis. Under SERP, the Bank, EU, and USAID (via its ED-LINKS initiative) supported agreed efforts at the provincial and district levels to strengthen the ASC subprogram. The efforts largely entailed changing ASC administration procedures and strengthening human and technological resources at RSU which manages the ASC activity. The timeliness and quality of ASC data improved over the SEP period, but shortcomings remain, hampering its use for describing and assessing the government school system and in informing the design and implementation of other initiatives. Given its critical importance, under the project, the Bank will promote (via DLIs) and support (via TA) specific actions to improve the timeliness and reliability of basic data collected through the ASC. 112. Student Achievement Test: Informed by lessons learned from the support of the diagnostic student assessment activity carried out by ED's Provincial Education Assessment Center (PEACe) under SERP as well as new priorities that have emerged, the Sindh government has initiated a new student assessment activity called the Student Achievement Test (SAT). The SAT is a standardized, competency-based test in language, mathematics, and science, to be administered to students in grades 5 and 8 in government schools. The Sindh government has contracted a third-party organization using its own funds to undertake three annual rounds of testing, with needed support from ED/RSU and the districts. A pilot round of testing (of students 93 in grade 6 in government schools) was conducted in April 2012, and the data are being processed and analyzed. The Sindh government has indicated that the SAT has wider and deeper ownership and contracting testing services from the open market through a competitive, transparent, and objective process potentially improves the quality of the activity. The annual administration of the SAT is a PDO-level results indicator. Under the project, the Bank will promote (via DLIs) and support (via TA) the regular administration of the SAT by a contracted third-party testing organization and an external review (coupled with any technical and advisory support) by another third party (a specialized consulting firm) to help improve the SAT with respect to the sustainability and robustness of the testing system, the reliability and validity of test results, and the responsible use and dissemination of test results. 113. Independent longitudinal school sample survey: While the Sindh government's M&E systems for its schools are being strengthened to yield regular and reliable data, there is an immediate need for such data. To meet this need, the Sindh government plans to contract a third- party organization using project TA funds to conduct a longitudinal survey of an appropriately- sized sample of government schools and SEF PPRS program schools. The survey will be administered twice a year, over the project period. The survey will capture extensive information on the characteristics of schools as well as the characteristics and behaviors of teachers and students in the schools. Accompanying the survey, a competency-based test of core subjects to students in selected grades as well as a school readiness test to students in grade 1 in a school subsample will be administered. 114. The independent longitudinal school sample survey will capture extensive information to assess and validate program implementation progress and performance at the school level, including on key fiduciary, social and environmental aspects. In addition, the longitudinal survey sample can serve as test-bed for carrying out rigorous school-based impact evaluations to identify and estimate the causal effects of specific interventions/mechanisms of interest for yielding gains in intermediate and final outcomes. See Annex 7 for details. 115. Management Information System (MIS) for public education employees: In terms of human resources, ED is the largest government department in the province; 48% of the total sanctioned public sector employment positions in the province is for ED.25 As in other government departments, reporting and supervising officers have largely relied on paper records (files) which may be incomplete or incorrect-and processes/steps which are viewed as inefficient and provide room for arbitrariness and partiality-in order to make personnel decisions related to, inter alia, placement, professional development and career progression and compensation. Under SERP II, the Sindh government plans to partner with the Project to Improving Financial Reporting and Auditing (PIFRA) to configure and customize (within the government's existing SAP system) and use a Human Resource Management Information System (MIS) for ED which integrates available, relevant data and documentation from multiple sources, tracks the history of personnel decisions made for a given employee, and allows the Sindh government to streamline processes for personnel-related decisionmaking. The HR MIS potentially serves as an important facilitating step towards performance-based human resource 25 in FY2011/12, the total sanctioned posts in the Sindh government were 551,940, of which, 262,377 posts were for ED, per Demand No. 24. 94 management. Project TA funds will be available to help the Sindh government assess, plan, develop the HR MIS and support its rollout and use by ED at the provincial, regional, and district levels. 116. Monitoring and evaluation of SEF PPRS schools: Under SERP II, the Sindh government plans to continue to support the SEF PPRS program, and, importantly, strengthen administrative, M&E, and accountability systems. The introduction of new/adapted activities, tools, and procedures for collecting relevant information from program schools, teachers, and students and an integrated Management Information System (MIS)-with the needed IT infrastructure, applications, and staffing-is seen as critical for improving SEF's performance in administering and monitoring program schools, in line with, among other things, the accountability conditions for promoting improved school performance. The integrated MIS will consist of (1) a data center for central and secure storage, (2) a private Wide Area Network (WAN) to which all SEF offices will be connected, and (3) customized web-based applications. SEF has initiated the procurement for the MIS; the system is expected to be fully operational by September 30, 2013. Other steps to improve M&E include (1) stronger links between program schools and SEF and between SEF regional and district offices and headquarters for the efficient transfer of information, (2) a greater role for regional and district offices in carrying out M&E activities related to program schools, (3) the provision of training to SEF staff and school operators on relevant M&E responsibilities, tools, and procedures, and the use of the MIS. SEF also plans to test the use of Computer-Aided Personal Interviewing (CAPI) and basic biometric technologies for monitoring PPRS program schools, teachers, and students. VII. Role of Partners Development partner support for education in Sindh 117. Development Partner (DP) interest in supporting education development in Sindh has grown. The Sindh government constituted a Sindh Education Development Partners' Coordination Forum on September 21, 2011, chaired by the Additional Chief Secretary, with the participation of all interested DPs, in order to coordinate and integrate efforts to support the Sindh government's priorities in education. At the working level, ED/RSU, the implementing agency for SERP II, is the designated primary focal-point for coordination with DPs. Current and planned projects by DPs are summarized below. 118. Canadian International Development Agency (CIDA): CIDA initiated its Pakistan- Canada Debt for Education Conversion project in 2006 in order to rehabilitate teacher training institutes, provide scholarships to students to enter the teaching profession, and provide in- service training throughout the country, including in Sindh. The $132 million project (of which roughly 19% is allocated to Sindh) closes in 2015. In addition, CIDA, in partnership with the Aga Khan Foundation Canada, is supporting the provision of certified training and technical support to teachers, teacher educators, and education managers to strengthen their professional development and performance in seven districts of Sindh through its Strengthening Teacher Education in Pakistan (STEP) project. 119. European Union (EU): The EU has signed its next project, the Sindh Education Sector Support Program, with a total allocation of 630 million, of which, E25.5 million will be 95 disbursed against triggers agreed with the Sindh government and C4.5 million will be disbursed as EU-managed complementary services. The Program was started in February 2012 and is expected to run for four years. The EU expects to first complete the selection of a firm for the complementary services and then, in due course, finalize and agree on triggers. 120. United Kingdom's Department for International Development (DflD): DFID initiated a program called the Education Fund for Sindh (EFS) in February 2012. The aim of EFS is to finance interventions to expand private schooling opportunities to disadvantaged children and engage the private sector in managing/supporting government schools in three districts, with an emphasis on meeting minimum child literacy and numeracy levels.26 EFS will be managed by a not-for-profit, autonomous company. The maximum financing allocation for EFS is set as £39.8 million until 2015; beneficiary children will be funded to complete five years of schooling. 121. United States Agency for International Development (USAID): USAID initiated a project called the Sindh Basic Education Program in September 2011, with a total allocation of US$155 million. The project targets eight districts.27 It has two components: (1) budgetary support of US$81 million for school construction and (2) USAID-executed technical assistance of US$74 million. The project is scheduled to close on September 2016. 122. Global Partnership for Education (GPE): The GPE has made available US$100 million to Pakistan to support education development programs in Balochistan (allocated US$34.1 million) and Sindh (allocated US$65.9 million). The Bank has been designated as Supervising Entity for GPE's program in Sindh, and will have primary responsibility for preparing and supervising the program. 26 The three districts are Karachi, Khairpur, and Qamber-Shahdadkot. 27 The seven districts are Dadu, Jacobabad, Karachi, Kashmore, Khairpur, Larkana, Qambar-Shahdatkot, and Sukkur. 96 Annex 4. Operational Risk Assessment Framework (ORAF) PAKISTAN: Second Sindh Education Sector Project (P125952) Stage: Board Project stakeholder risks Rating | Substantial Description: Risk Management: Elections: The reform program and project are being designed/put in Ongoing regular, formal consultations with internal and external stakeholders during the design phase to build place leading up to the general elections. Government attention on and ownership and facilitate implementation; planned regular, formal consultations with stakeholders during the effort in the program and engagement with the Bank may be set back implementation phase to gather feedback for refining/adapting design/implementation. by election-related activities. Election-related imperatives may * While implementation delays may occur due to elections, if the government is committed to improving influence the choice and shape of initiatives. Post-election, there may education, there would be little change in core priorities and interests as program actions are in line with also be a change in priorities and interests by the new government. underlying causes behind the shortcomings in service delivery. Periodic reviews of the implementation strategy to inform any needed reform refinements or adaptations. Reform resistance: The government expects to pursue multiple . Introduction of a dedicated information and communications unit in the implementing agency for donor, media, politically-difficult, governance-oriented reforms to improve service and civil society relations and engagement, complaints management, and proactive, regular, and wide delivery, with implications for the level and integrity of performance communication and consultation on the reform agenda. of officials, teachers, and providers of inputs. These reforms are likely . The establishment of a Sindh Education Development Partners' Coordination Forum by the provincial to be resisted by status-quo proponents. Potential consequences government to coordinate and integrate efforts to support the government's priorities in education. include poorer implementation quality and slowdown, negative media . Ongoing government dialogue with donors to ensure that the multi-donor Global Partnership for Education reports, personal complaints, public agitation, and court cases. initiative is fully aligned with its reform agenda in primary and secondary education. Dono cordiatin: oredonrs ae iterste insuportng Level-11 project restructuring to reallocate planned disbursements within the results-based component in case of Donor coordination: More donors are interested in supporatng poor implementation progress in politically-difficult initiatives supported by DLs. education in the province. Views on program priorities, initiatives, processes, plans, timetables, and targets may not be fully aligned among donors. Poor alignment could also mean the government administrative machinery would be additionally taxed in delivering on ageeens it te arou dnos.Resp: Client and the Bank Stage: Implementation Due Date: None. Status: Ongoing. Implementing agency risks (including fiduciary) Capacity Rating Substantial Description :Risk Management: Institutional and implementation arrangements have been functional Restructuring and strengthening RSU as well as other entities to align it with the priorities and activities under under SERP but theft performance needs to be enhanced under SERP SERP 1 and reconfiguring and formalizing the interlinkages and cooperation between all the entities to execute II. SERP 11. i Contracting and placing staff at RSU, with agreed terms of reference, expenence, and qualifications, for Planning, implementation, and monitoring capacity remains weak ensuring Bank fiduciary and safeguard regulations and requirements are followed. across departments at the provincial level, the sub-departments and Extending RSU into the regions and districts with the introduction of Local Support Units (LSUs). other entities (including RSU) of ED, and the various administrative Introducing benefits and arrangements to encourage and facilitate RSU/LSUs staff performance. levels fr7om the province to the school. * Constituting and running inter-(sub)departmental and province-region/district committees/working groups for The province suffers fom recurrent security incidents and public opartnering and coordinating on the design and implementation of selected activities. Constituting and running interdepartmental committees at the regional level to guide and review the demonstrations and strikes (with accompanying mobility restrictions region's/district's program implementation progress and performance. 97 and curfews) which adversely affects continuous, effective * Contracting third-party firms to provide capacity development and field-level implementation and monitoring implementation and monitoring by the government. support for selected activities. * Professionalization of education management: Appointment of specialized cadres of education managers and Delays and poor quality of financial reporting (interim as well as school headmasters following transparent, objective, merit-based criteria and rigorous mechanisms and annual audit reports). contracts with performance terms and conditions. Resp: Client and the Bank. Stage: Implementation. Due Date: None. Status: Ongoing. Governance Rating: | Substantial Description: There are important weaknesses in public sector Risk Management: management, governance, and capacity which hamper effective The government's reform program is governance oriented. The following governance-oriented activities are expected delivery of public services in general. These weaknesses are mirrored to be promoted by DLIs and supported by TA under the project: in public education in Sindh. * Program budget and expenditure management: Preparation of sound budgets for primary and secondary education and SERP-JJ initiatives and ensuring that budgetary releases and expenditures are made in full and on a timely basis. * School budgets: Preparation of school budgets following transparent, objective, and needs-based criteria; and third-party support to the districts for managing and monitoring the flow and use of school budgets in line with applicable rules and regulations. * School management committees: Stronger due diligence and financial management controls and improved communication of expectations, roles, responsibilities, and redressal avenues to all key parties. * School system consolidation: Merging of distinct government schools that share the same building, same compound, or are in close proximity and cater to the same local child population into single schools. * School infrastructure development: Investments in school infrastructure following objective, transparent, and needs-based criteria; compliance with stipulated construction quality and school design specifications; and third-party screening, support, monitoring, and certification of construction completion and quality. * Incentive- and accountability-based public financing of the private provision of schooling: Strengthened administrative and monitoring systems and strengthened design and enforcement of incentive and accountability conditions to improve school performance. * Education management: Appointment of specialized cadres of education managers and school headmasters following transparent, objective, merit-based criteria and rigorous mechanisms; contracts with performance terms and conditions; and a tailored annual performance evaluation process. * Teacher management: Strengthened merit- and needs-based teacher recruitment arrangements, procedures, and practices; teacher contracts with performance terms and conditions; and a tailored annual performance evaluation process. Resp: Client and the Bank. Stage: Implementation. Due Date: None. Status: Ongoing. Project risks Design Rating: Moderate Description: Risk Management: Program design, while sound, can be undermined by inadequate * DLIs framed to promote specific implementation integrity, performance, or arrangement elements. attention to and effort on the design of implementation to ensure that * Extending RSU into the regions and districts with the introduction of Local Support Units (LSUs). the design of implementation arrangements and mechanisms is sound, * Constituting and running inter-(sub)departmental and province-region/district committees/working groups for feasible, and robust. partnering and coordinating on the design and implementation of selected activities. * Constituting and running interdepartmental committees at the regional level to guide and review the The participation-related PDO-level results indicators are measured region's/district's program implementation progress and performance. using the PSLM survey. The current PSLM project expires after the * Contracting third-party firms to provide capacity development and field-level implementation and monitoring 98 2014/15 round, but additional future rounds of data are required to support for selected activities. measure progress until the end of the project in 2016/17. * Bank country management and team engagement with the federal government to ensure that the PSLM survey activity is continued after the 2014/15 round. Baselines for PDO-level results indicators related to school * If actual 2012/13 values for the PDO-level results indicators related to school participation differ significantly participation are from 2010/11 while the actual project baseline is from 2012/13 values predicted at appraisal, project baseline values will be changed, and the prediction method 2012/13 (two-year split). End-of-project targets are set to be will be reapplied to obtain new end-of-project targets. ambitious. Resp: Client and the Bank. Stage: Implementation. Due Date: None. Status: Ongoing. Social & environmental Rating: Moderate Description: Risk management: There are no important social safeguard risks. * Continued contracting of an engineering firm using government resources to guide, support, and monitor districts and schools in school civil works under SERP II but with stronger field presence and formations of Under the district Terms of Partnership program, there has been a engineering firm staff serving as site monitors, called Assistant Resident Engineers (AREs). significant improvement in the construction quality and school design * Additional relevant clauses related to construction quality and completeness in the contracts for civil works of government schools, but variation in construction quality and contractors. completeness remains. * Revisions to recording and reporting forms used by district officials and AREs to capture greater detail on compliance on minimum school infrastructural and environmental standards. Under the SEF PPRS program, there is variation in the degree of * Contracting of a specialized consulting firm using project TA funds to evaluate, design, and support the compliance by school operators with the minimal conditions for the implementation of (i) refined recommendations related to the structural safety of school buildings, (ii) GIS- provision and characteristics (including quality) of basic school based guidelines for school siting and structural resilience to natural disasters, (iii) safe drinking water and infrastructure and amenities specified in their contracts. sanitation facilities, (iv) training of districts and schools in personal hygiene and disaster preparedness, and (v) pilot initiatives in drinking water facilities and low-cost renewable power systems. * Stringent enforcement of the minimum school infrastructural and environmental conditions in the contractual agreements with school operators under SEF's PPRS program. * Contracting and placement of Environmental Coordinators at RSU and SEF to serve as focal-points for advising, supporting, and monitoring the environmental management agenda. Resp: Client and the Bank. Stage: Implementation. Due Date: None. Status: Ongoing. Program & donor Rating: Substantial Description: More development partners (DPs) are interested in Risk management: supporting education in the province. Views on program priorities, * The establishment and running of the Sindh Education Development Partners' Coordination Forum by the initiatives, processes, plans, timetables, and targets may not be fully provincial government to coordinate and integrate efforts to support the government's priorities in education. aligned between DPs. Poor alignment could also mean the government * SERP-II initiatives, supported by the Bank, reflect the key sector priorities of the Sindh government. administrative machinery would be additionally taxed in delivering on * Ongoing government dialogue with DPs to ensure that the multi-donor Global Partnership for Education (GPE) independent agreements with the development partners. initiative is fully aligned with its reform agenda in primary and secondary education. The Bank is nominated to serve as Supervising Entity for GPE's financial assistance for education to the province. The province suffers from recurrent security incidents and public * Invited participation of DPs in preparation and subsequently in supervision and implementation support demonstrations and strikes (with accompanying mobility restrictions missions conducted by the Bank. and curfews) which adversely affects continuous, effective supervision and implementation support by the Bank independent or in partnership with other donors. Resp: Client and the Bank. Stage: Implementation. Due Date: None. Status: Ongoing. Delivery monitoring & sustainability Rating: Moderate Description: Monitoring arrangements and capacity remains weak Risk Management: across departments at the provincial level, the sub-departments and * Extending RSU into the regions and districts with the introduction of Local Support Units (LSUs). 99 other entities (including RSU) of ED, and the various administrative * Constituting and running interdepartmental committees at the regional level to guide and review the levels from the province to the school. region's/district's program implementation progress and performance. * Contracting third-party firms to provide capacity development and field-level implementation and monitoring Program sustainability may be undermined by potential resistance support for selected activities. from insider groups and other special interest groups that prefer the * Strengthening the Annual School Census (via DLIs and TA), (2) the Student Achievement Test (via DLIs and status-quo of poor governance and accountability conditions (risk TA), (3) an independent longitudinal school sample survey over the entire project period (via TA), (4) a teacher management measures discussed in Section 1 of the ORAF). management information system (via TA), and (5) a comprehensive MIS for the SEF PPRS program (via its integration into the PPRS program-related DLIs) to yield relevant, regular, and reliable data. * Introduction of a dedicated information and communications unit in the implementing agency for donor, media, and civil society relations and engagement, complaints management, and proactive, regular, and wide communication and consultation on the reform agenda. Resp: Client and the Bank. Stage: Implementation. Due Date: None. | Status: Ongoing. Overall risk Implementation Risk Rating: Substantial Comments: The risk rating for project preparation and implementation is based on four main risks. First, poor general socioeconomic conditions in and prospects for the country can depress household and government investments in education. Second, there is a lack of policy stability and predictability, the consequences of which include the inability to plan properly and the poor attitude, interest, and effort by officials, contributing, in turn, to poor and/or variable implementation progress and performance. Third, some of the reforms proposed by the Sindh government under SERP II are likely to be resisted by powerful insider groups and other special interest groups, as the proposed reforms will erode their capture over the system. Fourth, planning, implementation, and monitoring capacity is weak across the provincial departments, the subdepartments and other entities (including RSU) of ED, and the various administrative levels from the province to the school. 100 Annex 5. Implementation support plan I. Program implementation supervision strategy 1. Implementation supervision and support missions: The proposed program implementation supervision and support strategy is informed, to a large extent, by lessons learned from supervising SEP. Program implementation supervision and support by the Bank will comprise of at least two formal program implementation review missions every year, throughout the project period, with review findings and recommendations recorded in Aide Memoires. Over the SEP period, these missions were undertaken jointly with EU; UK DflD, USAID, and UNICEF have also accepted mission invitations and attended selected mission meetings. This practice is expected to be continued by the Bank. 2. The main semiannual review missions are expected to be held in October/November and April/May every year, and will cover, among other things, (1) strategic policy dialogue on major sector matters, including on governance and accountability, financing and expenditures, and institutional strengthening and performance; (2) review of program implementation status and progress and performance to date with respect to the PDO-level results indicators, legal covenants, DLIs, monitoring indicators, EEPs, and TA funds use; and (3) advising on any actions and measures (including risk-mitigating measures) required to keep program implementation on track, progress on pace, and performance at expected levels. 3. In the periods between the main semiannual review missions, shorter missions with limited advance notice and more specific objectives of high/urgent priority may be carried out mainly by Islamabad-based staff. Bank staff and contracted local and international consultants will maintain continuous program implementation supervision and technical and advisory support through audio- and video-conference meetings, and email and phone communications. The Bank will also rely on the review and analysis of data and documentation submitted by the Sindh government following agreed formats, timetables, and expected contents. Key data and documentation include those related to compliance with legal covenants, achievement of DLIs, progress on monitoring indicators, financial reports, and procurement documents and contracts. 4. Either as part of the semiannual comprehensive review missions or the more targeted review/support missions, the Bank will periodically carry out a review of education sector budgets and expenditures with FD/ERU and ED/RSU. In addition, the Bank will participate, if feasible, in the reviews periodically carried out by the regions and districts to assess performance in key indicators included in region or district performance report cards prepared by ED/RSU. 5. Aide Memoires: Findings and recommendations from the semiannual review missions will be recorded in Aide Memoires. Missions carried out during the intervening periods will also be recorded in Mission Notes and referenced or integrated into the Aide Memoire of the semiannual mission immediately following them. The Aide Memoires will cover program implementation progress and performance following a standardized format. The Aide Memoires will benefit from monitoring reports, following agreed standardized formats and guidelines, submitted by ED/RSU and the SERP-II ROCs on a semiannual basis, by March 31 and September 30, each year. The Aide Memoire for the October/November review mission will also 101 report on PDO-level result indicators, core education sector indicators for IDA financing, and other monitoring indicators for the preceding academic year (ending March 31) or fiscal year (ending June 30). 6. Stakeholder consultations and field visits: In order to gather firsthand, qualitative information on program implementation status, progress, and performance, participation in Sindh government consultations with key stakeholders and field visits to districts and schools are expected to be integral elements of the overall implementation supervision and support strategy. The main semiannual review missions will include field visits. In the intervening periods, the Bank team plans to organize and carry out dedicated missions to visit districts and schools to hold discussions with local government officials (education and other), school teachers, and other local stakeholders. All visits to the field will be carried out if the security situation permits and in full compliance with the security rules in effect at the time. 6. Program implementation supervision and support under a variable security environment: The prevailing variable security conditions are a key source of difficulty for continuous, effective program implementation supervision and support. Subject to sufficient funds (via Bank budget and Trust Fund funds) and feasible, operational arrangements, if there is a deterioration in the security conditions that adversely affects mission frequency and timing, mission team size, and scope of mission objectives, the Bank team will increase its use of the following options to supervise and support program implementation: i. Virtual reviews (e.g., via video- and audio-conference meetings) to discuss program implementation progress and performance with the Sindh government. If needed, project TA funds can be used to finance video- and audio-conferencing equipment at RSU. ii. Contracting of consultancy firms, financed through the Bank's own funds, to aid in assessing program implementation performance and progress at the province, district, and school levels. iii. Contracting of individual consultants to be based in Karachi, financed through the Bank's own funds, to ensure local, continuous advisory and technical backstopping support. iv. When deemed critical, and in full compliance with security protocols in effect at the time, short visits by small teams (one to three team members) from Islamabad or short visits by teams from the Sindh government to Islamabad to meet with the Bank team. 7. Some of the above measures have been used in the past during periods of poor security conditions. Experience has demonstrated that they are practical and facilitated continuous program implementation supervision and support. 102 II. Implementation support plan 8. Human resources: Table A5.1 lists the responsibilities, specializations, and staff time requirements for personnel (Bank staff and consultants) that constitute the core supervision team. These personnel do not include other staff and consultants that may be brought in, as needed, to advise and support the Sindh government on specific program design and implementation elements and actions. 103 Table A5.1. Proposed required responsibilities, specializations, and time requirements Responsibilities Specialization of team member Number of persons; estimated weeks per year Overall policy dialogue, project implementation Task/project/team 1 person; 18 supervision and support management, team management; education SWs management and coordination, and internal administration and planning; reporting. policy dialogue and analysis; education economics Review of education systems and education Education administration and 2 persons; 12 program implementation progress and planning; policy dialogue and SWs each performance; technical and advisory support for analysis; education any needed design and implementation economics improvements. Review of monitoring and evaluation Monitoring and evaluation; 1 person; 10 - arrangements, implementation progress and design and technology SWs performance, and other matters; technical and advisory support for any needed design and implementation improvements. t Review of financial management and Financial management I person; 8 E procurement arrangements, implementation SWs progress and performance, and other matters; Procurement 1 person; 8 technical and advisory support for any needed SWs 2 design and implementation improvements. P Review of social inclusion and environmental Environmental management 1 person; 10 management arrangements, implementation SWs progress and performance, and other matters; Social development/inclusion 1 person; 5 1 technical and advisory support for any needed SWs R design and implementation improvements. P Review of fiscal, budget, and expenditure Public financial management; 1 person; 5 management, implementation progress and public economics; public SWs performance, and other matters; technical and finance advisory support for any needed design and implementation improvements. Assessment of ICT and communications ICT; communications 1 person; 5 arrangements, implementation progress and SWs performance, and other matters; technical and advisory support for any needed design and implementation improvements. Research and evaluation. Survey methods; quantitative 2 persons; 10 research methods SWs each Supervision costs: Results-based projects, given the need to supervise and support government implementation towards results as well as supervise and support efforts to measure results, is expected to a time- and cost- intensive process. Strategic policy dialogue, program supervision and implementation support will be undertaken continuously by the task team, through multiple 104 means; the costs associated with this activity will largely entail the costs of international and country-based staff and consultant time. In addition to continuous remote supervision and support, the task team will field missions at scheduled times as well as when needed with appropriate mission team sizes, comprising of both international and domestic travel; the costs associated with this activity will include significant travel costs. Poor security conditions which require additional precautions or result in disruptions to supervision and support will also add to costs. Over SEP, Bank budgetary resources allocated to supervision and implementation support fell significantly short of requirements and alternative resources (e.g., via Trust Funds) have been regularly used to close the gap. The risk to this approach is self-evident as it relies on the steady availability of adequate Trust Fund resources that can be used for program supervision and support purposes. 105 Annex 6. Lessons learned and reflected in project design A. Lessons learned and reflected in project design 1. Program design is informed by lessons learned from Sindh government's experience with the implementation of SERP, supported by Bank under SEP and SEP AF, as well as from the Punjab government's experience with its education sector reform program, also supported by the Bank under results-based operations. The ICR for SEP and SEP AF also reports on these lessons. 2. Financing instrument design: The results-based design of SEP, with project disbursements under the results-based component tied to the satisfactory achievement of DLIs, likely helped in orienting and focusing Sindh government's efforts on agreed program implementation progress and performance targets. In particular, the DLIs likely helped promote and protect the continuity of political-difficult, governance-oriented reforms undertaken by the Sindh government. Annual sets of DLIs also likely promoted steady, incremental progress, scale up, and improvements in program implementation over the project period. 3. The new design has some refinements from SEP. To help promote sustained program implementation (which would be critical for realizing the expected gains in outcomes from the program actions), planned annual disbursements are fixed to increase over the project period (annual disbursements were flat under SEP). To promote expenditures in the EEPs, project disbursements under the results-based component are to be on a reimbursement basis (rather than on an advance basis as under SEP). To promote expenditures in nonsalary EEPs, total disbursements against expenditures incurred in employee-related expenses is capped at 80% (there was no cap under SEP). 4. Project content design: Four key lessons learned inform the contents of SERP II and the project. First, program actions that are likely to yield the highest returns remain those that aim to strengthen administrative systems and governance and accountability. Second, dislodging the government school system from its low-performance equilibrium requires additional and potentially more powerful actions to strengthen administration systems and governance and accountability. Third, the Sindh government pursued a set of program actions that were well- motivated and coherent; these actions overlapped at the system level but did not necessarily overlap at the school level. Fourth, program design has to go beyond the design of initiatives (the "what" to do) to specifying the design of implementation (the "how" to do) in order to ensure that design of implementation is sound, feasible, and robust. 5. Based on these lessons, the Sindh government plans to (1) continue the governance- oriented content design from SERP; (2) retain and strengthen past system development and govemance-oriented program actions and integrate other such program actions; and (3) maximize the reform "dose" felt at the school level, by explicitly coordinating and directing program actions to selected schools.28 Consistent with above design philosophy of specifying the 28 This is to be done without contradicting the eligibility and assignment rules derived from independent justifications for specific program actions. 106 "how", the DLIs associated with the program actions are framed to promote specific implementation integrity, performance, or arrangement elements. 6. Implementation arrangements: While the project benefits from implementation arrangements that were put in place for SEP, with their performance improving over SEP, shortcomings remain. Learning from the SEP implementation experience, under this project, further actions are required to strengthen implementation arrangements and capacity across departments at the provincial level, the subdepartments and other entities (including RSU) of the ED, and the various administrative levels from the province to the school. In addition, many of these additional actions need to be completed in advance or in the front-end of the project in order to "gear up" implementation. Some major actions already completed or planned to be completed within six months of project effectiveness include (1) restructuring RSU to align it with the priorities and activities under SERP II and adequately staffing and resourcing the unit; (2) adequately staffing and resourcing the ERU in FD to perform its designated tasks related to fiscal, budget, and expenditure matters; (3) extending RSU into the regions and districts via the introduction of LSUs; (4) introducing benefits and arrangements to encourage and facilitate RSU/LSU staff performance; (5) constituting new or refining existing inter-(sub)department and province-region/district committees for partnering and coordinating on program design and implementation; (6) constituting oversight committees at the regional level to oversee program implementation progress and performance in the regions and districts; and (7) intensifying the use of contracted firms to provide capacity development and field-level implementation and monitoring support (see Section 1 of Annex 3 for details). 7. Monitoring and evaluation arrangements: Over SERP, apart from strengthening ED/RSU's M&E systems, several data collection activities were undertaken by contracting third parties in order to validate program progress and performance as well as to evaluate the efficacy and cost-effectiveness of selected interventions in producing desired results. However, administrative weaknesses at ED/RSU made multiple procurement and contract management activities a burden. In addition, there is a limited supply of reputable, capable survey research firms in the Pakistan market and, at times, poorer-quality firms were contracted by ED/RSU. The result was significant delays and poor-quality or incomplete data in some of the data collection activities undertaken by third parties. To circumvent this problem, under SERP II, ED/RSU plans to contracting a single competent, capable survey research firm (selecting from the top of the market) to undertake an extensive, multi-round school sample survey activity (implying a larger contract cost which would attract higher-quality firms). This approach may yield better data quality on a timely basis for analysis and decisionmaking. 8. Information and communications: Under SERP, ED/RSU did not pursue a planned, systematic information and communications strategy, and traditionally has not been prioritized in its standard day-to-day operations. When specific needs were identified under some initiatives, ED/RSU did respond by formulating and implementing information and communications activities, and some of these activities became a part of the regular administrative activities under some initiatives. However, the potential value of well-designed and well-implemented information and communications activities in aiding program implementation performance was not sufficiently exploited. 107 9. In addition, over SERP, RSU assumed the de-facto responsibility of serving as the focal agency for donor, media, and public relations as it relates to public education, as well as the primary agency for the preparation, presentation, and provision of briefs, slides, and other informational products on SERP initiatives as well as other public education activities and matters. The growing information and communications demands on RSU have come, at times, at the expense of its attention and efforts to its core responsibilities of guiding, supporting, and monitoring program implementation. 10. Under SERP II, ED/RSU plans to set up, staff, resource, and run a communications unit in RSU. The unit's main objectives are to (1) manage donor, media, and public relations and internal information and communications demands; (2) develop and maintain the RSU website with all relevant, permissible information on SERP-II initiatives and disclosures required by the Bank; (3) operate a web-based complaints handling system for complaints related to SERP-II initiatives, including on fiduciary, social, and environmental concerns, in line with agreed guidelines and performance standards; and (4) operate an SMS communications system to exchange service delivery information directly with districts and government schools. 11. Program supervision and implementation support: Under SEP, program supervision and implementation support provided by the task team have been time and cost intensive, as well as challenging given a variable security environment, frequent administrative reshuffles, and abrupt changes to government organizational structures and processes. The supervision and support requirements included (1) strategic policy dialogue on the reform agenda with the political and administrative leadership; (2) technical and advisory support to the main implementing agency, partnering entities, and contracted parties; (3) monitoring and review/analysis of data and documentation for assessing covenant compliance, DLI achievement, and EEP and TA expenditures. The lessons learned from responding to (changes in) circumstances and needs inform the design of actions and arrangements and required resources for continuous, high- quality supervision and implementation support, and the preparation of emergency/back-up arrangements for maintaining or ratcheting up supervision and support when needed, including during times of poor security conditions. See Annex 5 for details. B. The Sindh Education Sector Reform Program: Selected achievements 12. In FY2007/08, the Sindh government initiated a major, multifaceted, medium-term sector reform program for primary and secondary education called the Sindh Education Sector Reform Program (SERP). Reflecting an important shift from previous education development efforts by the Sindh government which aimed to increase expenditures, inputs, and benefits, SERP aimed to maximize the gains from any given level of expenditures, inputs, and benefits principally by strengthening governance and accountability. The Bank provided financial support to SERP between FY2006/07-FY2011/12 through the Sindh Education Sector Development Policy Credit approved in June 2007, the Sindh Education Sector Project (SEP) approved in June 2009, and the Additional Financing to the Sindh Education Sector Project (SEP AF) approved in March 2011. Both SEP and SEP AF closed on time in June 2012. The European Union (EU) provided parallel 108 financing to SERP through its Sindh Education Plan Support Program between FY2006/07- FY2011/12.29 13. SEP was a results-based project, with 98% of its credit amount of US$300 million conditioned on the Sindh government satisfactorily complying with the credit covenants and meeting Disbursement Linked Indicators (DLIs), which were program implementation performance and progress targets agreed with the Sindh government. SEP AF was also a results- based project, with 100% of its credit amount of US$50 million conditioned on DLIs. The Sindh government complied with all credit covenants and satisfactorily met all of the agreed DLIs under SEP (ten DLIs per year in FY2008/09, FY2009/10, and FY20 10/11) and under SEP AF (three DLIs in FY2010/11). SEP and SEP AF together disbursed US$347 million of the combined original amount as well as US$8 million in exchange rate gain before closing.30 14. The Project Development Objective (PDO) for SEP and SEP AF were to support SERP. Success in meeting the PDO was measured using four PDO-level results indicators, three that measured changes in selected education outcomes and one that measured the Sindh government's performance in administering a programmed cycle of student diagnostic tests in district-representative samples of government schools. As shown in Table A6. 1, the most recent values for the PDO-level results indicators indicate that two have been met (cells shaded in green), while two others have shown progress but the values fall short of the targets (cells shaded in orange). 15. It is likely that progress on the outcome indicators, which was on a positive incline in the first year of SEP, was abruptly set back by the historic, large-scale floods and heavy rains of 2010 and 2011.31 Each flooding event by itself caused extensive and major damage to school infrastructure and loss of school and student resources, disruption to school operations, economic losses for and the physical displacement of households, and the diversion of attention, efforts, and scarce funds of the government to disaster relief, recovery, and reconstruction activities. Two events in a row, with significant overlap in flood-affected districts, were crippling, likely resulting in a prolonged recovery period and long-lasting adverse effects. 16. Figure A6.1 depicts the evolution of primary-level NERs for specific subpopulations over the period 2004/05-2010/11, with vertical lines identifying the baseline and target years for SEP and the periods of the 2010 and 2011 floods. The figure clearly shows that the primary-NER values in 2010/11 (the year of the 2010 floods) were marginally poorer than in 2008/09, the first year of SEP (there are no values for 2009/10 as the Pakistan Bureau of Statistics did not gather comparable survey data that year). It is likely that the primary NER values for 2011/12, when the 2011/12 survey statistics are released, would show no improvement or even a drop. 29 The EU's Education Sector Plan Support Program disbursed E37.5 million, of which E33 million were disbursed against triggers agreed with the Sindh government and E4.5 million were disbursed as EU-managed TA services. The Program's twelve triggers in a given year subsumed the ten DLls in that year under SEP. The EU-managed complementary services and SEP TA were coordinated over the SEP implementation period. 30 SDR 2.67 million (out of SDR 200.6 million) were cancelled from SEP for unutilized TA. 31 According to official reports, the 2010 floods badly affected nine out of 23 districts. The 2011 floods badly affected 14 districts. There was also flooding in 2012 but received relatively less media coverage than the previous rounds of floods; eight districts were badly affected in 2012. 109 110 Table A6.1. PDO-level results indicators for the Sindh Education Sector Project, 2008/09-2011/12 Indicator Baseline value Target value, 2011/12 Present value Net enrollment rate (NER), 50.3 (2006/07) 55.6 53 (2010/11) primary, 5-9 years (%) Female-male ratio NER, 61.2 (2006/07) 64.6 72 (2010/11) primary, rural, 5-9 years (%) Grade 5-6 transition rate, rural, 51.2 (2007/08) 63.4 54.3 (2011/12)' girls, government schools (%) Learning levels monitored Baseline measurements via diagnostic student Achieved. through diagnostic student assessments in mathematics, language, science, and assessments. social studies established for grade-4 students in district-representative samples of government schools in 2008/09, 2009/10, 2010/11, and 2011/12. Follow-up measurements via student diagnostic assessment in mathematics established for grade-4 students in a district representative sample of government schools in 2010/11. Notes: NER statistics are obtained from Pakistan Social and Living Standards Measurement (PSLM) survey. The latest available PSLM survey statistics are from 2010/11. The NERs exclude katchi (preschool). The transition rate statistics are obtained from the Government of Sindh's Annual School Census (ASC) rounds. 'In 2011/12, ED/RSU dropped the rural/urban classification of schools in the ASC; consequently, the value calculated is the grade 5-6 transition rate for girls in government schools in all districts excluding Karachi and Hyderabad-the two predominantly-urban districts in the province-and, hence, is not strictly consistent with the original indicator. In addition, the ASC data suffer from reliability issues; consequently, changes in ASC values over SEP are partly spurious (see the ICR for SEP and SEP AF for a detailed discussion). S IO a2010 floods 2011 floods SEPPDO baseline year ______target year 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 Year e All 9 Girls - Rural children Figure A6.1. Primary-level NER trends for specific subpopulations, 2004/05-2010/11 111 17. Notwithstanding the above, under SERP, the Sindh government realized important program implementation successes, most notably with respect to subsidies tied to student attendance and other school quality standards offered to private entrepreneurs to set up and operate coeducational primary schools in qualifying underserved rural communities; (2) merit- based, objective, and transparent recruitment and placement of new teachers in qualifying government schools; and (3) infrastructure rehabilitation of qualifying government schools under district performance-based grants and with third-party oversight to help ensure compliance with minimum construction quality standards and school design specifications. At the center of these initiatives were governance and accountability measures that attempted to improve the mechanisms through which school infrastructure was rehabilitated/provided, new teachers were hired and placed, and education service delivery was extended to underserved, disadvantaged groups. These selected program implementation successes are discussed next. 18. Public financing, private provision, and reaching the unserved with quality schooling: The government school system in general across the country has been hampered in its ability to improve education outcomes due to, in large part, the lack of effective accountability and incentive systems which promote the legitimate and efficient use of allocated resources. While the government school system has struggled, a low-cost, for-profit private school system has emerged and is thriving in Punjab, Khyber-Pakhtunkhwa, and urban Sindh. Evidence indicates that (1) there is a naturally growing and dynamic low-cost private school system that is increasingly reaching low-income and rural households, (2) the level of student achievement in private schools tends to be significantly higher than that in government schools, (3) an important part of the explanation for the higher student achievement level in private schools is that these schools produce achievement gains, and (4) the higher student achievement level in private schools is obtained much more cost effectively relative to government schools, potentially arising from a combination of lower labor costs in private schools and the influence of market discipline on private schools which government schools are not subject to, at least directly (Andrabi et al 2007). 19. The Sindh government was interested in exploiting the above perceived advantages of the low-cost private school system but found that the natural growth of private schooling opportunities was inhibited in rural areas. Household survey data from 2008/09, just before the onset of the program discussed next, indicate that the private school participation rate for children ages 6-10 in rural areas was less than one percent, with little or no change over the preceding years. Under SERP, the Sindh government initiated a four-year pilot Public-Private Partnership (PPP) program in ten educationally-disadvantaged districts in the province, assuming that (1) there was a latent demand for schooling in underserved rural communities and (2) sustained, external intervention mainly in the form of incentives would trigger the private provision of schooling and solve a missing-market problem. 20. Called the Promoting Private Schooling in Rural Sindh (PPRS) program, the initiative is administered by the Sindh Education Foundation (SEF), a semi-autonomous organization set up by the Sindh government to undertake education initiatives in underdeveloped areas and for marginalized/disadvantaged populations in the province. The stated objective of the PPRS program is to use government funding to leverage the private sector to cost-effectively extend quality schooling to underserved rural communities in order to raise school participation and 112 student achievement. The school participation objective was directly promoted by situating schools in underserved communities, providing cash subsidies to school operators in relation to the number of students, and requiring school operators to offer free schooling to students. The student achievement objective was expected to be directly promoted by conditioning the provision of subsidies to program schools demonstrating a minimum level of (or change in) student achievement as measured in standardized, competency-based tests administered by SEF; this design element of the program suffered from delays over SERP but will be taken forward under SERP II. 21. At the time that SEP closed, 469 private, coeducational, primary schools were in operation in underserved rural communities supported by a cash subsidy of roughly US$4 per attending student per month conditional on free schooling and stipulated school quality standards. The schools also received in-kind benefits in the form of teacher training, textbooks, and learning materials. Unannounced inspection visits of program schools conducted by SEF in February-March 2012 found 65,413 enrolled students and 38,990 students in attendance on the day of visit in program schools. SEF spent roughly PKR 310 million (US$3.3 million) on the program in fiscal year 2011/12, which works out to roughly PKR 8,000 (US$85) per attending student per year. 22. The Bank (with external researchers) carried out an impact evaluation based on an experimental design, with qualifying communities up to a maximum number of such communities limited by the government randomly assigned to receive program schools, with the remainder of qualifying communities serving as evaluation "control" communities. This design allowed the research team to identify the average causal effects of the program on child school participation and child achievement. The impact evaluation was tied to the first round of schools that entered the program in fall 2009. The evaluation communities were surveyed twice, first in 2010 and second in 2011; children were also tested in 2011. 23. There are three main findings. First, the program has drawn nearly all young children into school: the average share of children that go to school in the control communities is 59%, while in the communities that received program schools, the share is 90%. Second, the cost- effectiveness of the program in increasing school participation is among the highest of all rigorously-evaluated programs in the developing world. The cost per program student to induce a one percent increase in the share of children that go to school is a very low PKR 265 (US$3) per year. Third, the program produced large gains in child achievement: mathematics and local language tests were conducted of all young children at their homes (children that go to school and children that do not were tested). On average, in control communities, children answered 3 and 2 questions correctly in the math and local-language tests, respectively. On average, in the communities with program schools, children answered an additional 5 and 3 questions correctly in the math and local-language tests, respectively.32 24. Under SERP II, the Sindh government plans to, among other things, (1) incrementally expand the SEF PPRS program, (2) regularize program financing (by shifting the program from the development budget [Annual Development Program] to the recurrent budget), (3) strengthen 32 The math and local-language tests had 24 and 15 questions, respectively. 113 administrative and monitoring systems, (4) strengthen the design and enforcement of incentive and accountability conditions to improve school performance, and (5) strengthen program qualification criteria and the rigor of procedures and practices to screen rural localities for program school placement. 25. Merit-based, objective, and transparent recruitment and placement of teachers in government schools: Recruitment of teachers into government school teaching service has historically been patronage based, and often without due consideration of whether the new hire was appropriately qualified and/or whether there was a genuine need at the school where the new hire was placed. In addition, academic and professional qualifications, often used to screen and select candidates, are generally viewed in the country as a poor signal of candidate knowledge and ability for a number of reasons including concerns regarding the quality and integrity of diploma and certificate conferring institutions. Political interference does not end with recruitment; it goes on to distort a range of conditions, decisions, and behaviors of teachers including teaching location, school tenure, job performance, and career progression. This state of affairs potentially compromises teacher quality at entry and the alignment of teacher interest and efforts with desired duties and responsibilities over the teacher's service period. 26. Under SERP, the Sindh government approved a new general-education teacher recruitment policy in 2007 (updated in 2008) which was to serve as the only mechanism for new recruitment for general-education teaching service in government primary and secondary schools in the province. The policy delineated merit-based, objective, transparent, and standardized criteria to be employed to recruit and place new teachers under school-specific, fixed-term (three-year) contracts. Transparent and standardized processes for implementing the recruitment policy were described in accompanying guidelines. Importantly, under the new policy, (1) the candidate was required to pass a standardized, written knowledge test designed and administered by an independent testing agency for further consideration; (2) the candidate was not subject to a selection interview (reducing the possibility for bias by eliminating room for discretion); (3) candidates were ranked using a composite score that summed up the test score and points for other relevant attributes and job offers were made starting from the top-ranked candidate and moving down on the list; (4) the qualifying candidate was to be placed at a school under a nontransferable, school-specific contract which implied that the teacher could not be transferred between schools; and (5) to the extent possible, the qualifying candidate for primary-school teaching service was placed locally (i.e., within the union council where the candidate had her residence). 27. Under the first round of recruitment, initiated in 2008, over 5,000 qualifying candidates were hired and placed in government schools. Under the second round of recruitment, initiated in 2009, over 8,000 qualifying candidates were hired and placed in government schools. In addition, under the second round, needs-based placement was introduced where a qualifying candidate for primary-school teaching service would only be hired if an understaffed school was identified in the qualifying candidate's union council of residence. The third round of recruitment under the policy has been initiated; placement under this round will also be needs- based in specific types of schools. 114 28. Descriptive evidence from a school sample survey conducted by an independent survey research firm contracted by the Bank indicates that all candidates that were recruited had passed the recruitment test and that the new teachers had a higher presence rate than older co-teachers in the same schools. Placement under the second round was based on whether the school was understaffed as measured by its student-teacher ratio (STR) relative to a STR floor. This rule is presently being exploited to undertake an evaluation to identify the average causal effects of the teacher recruitment initiative. 29. Under SERP II, the Sindh government plans to improve the effectiveness of the contracted teacher by integrating in teacher performance management and teacher support. Specifically, the government plans to, among other things, (1) strengthen merit- and needs-based teacher recruitment arrangements, procedures, and practices; (2) provide contracts with performance terms and conditions; (3) provide induction training, job guidelines, teaching materials and tools; and (4) introduce a customized annual performance evaluation process (within the government's standard performance evaluation system). 30. Infrastructure rehabilitation of government schools: Infrastructure in the government school system tends to be poor. Annual School Census data from 2008/09, just before SEP was initiated, indicate that the province had about 8,500 functional schools that were classified as shelterless (i.e., lacking a school building). Among functional schools that had buildings, roughly 5,000 schools were classified as having structures that were in dangerous condition. About 9,500 functional schools with buildings lacked toilet facilities. Past school infrastructure rehabilitation efforts have been characterized by poor screening for eligibility, shoddy or incomplete construction, protracted construction periods, loss/waste of funds and construction materials, and duplication of works, given multiple, uncoordinated construction programs by districts, the provincial government through its Annual Development Program (i.e., development budget), and the federal government. 31. Under SERP, the Sindh government took forward a school rehabilitation initiative which offered districts annual grants for constructing (1) buildings for shelterless schools, (2) additional classrooms in overcrowded schools, and (3) basic facilities such as toilets and boundary walls. The next year's grant for the program for a given district was tied in part to the district's performance in meeting construction and reporting indicators (as well as schooling indicators), with the share of the grant linked to district performance increasing incrementally each year. Importantly, with the second round of the program, a civil engineering firm was contracted by the Sindh government to (1) verify in the field the eligibility status of schools proposed by the districts for the program; (2) provide guidance and handholding support to districts in administering the program in line with program timelines, rules, and requirements; and (3) review construction activity in the field and certify construction completion and compliance with construction quality and school safety specifications. 32. In the second round of the school infrastructure rehabilitation initiative, the Sindh government undertook civil works of an estimated capital cost of PKR 2.2 billion (US$23 million). Administrative data indicate that 1,008 schools were screened in by the third party and underwent construction, of which, 1,003 schools were fully completed and met the stipulated minimum construction and school safety standards as certified by the third party construction 115 supervision firm. Furthermore, over 75% of the schools were completed within the stipulated time, namely six months for buildings for shelterless schools and four months for additional classrooms, toilets, and boundary walls. These results constitute an unprecedented achievement for the province. 33. In the third round of the school infrastructure rehabilitation initiative, the Sindh government undertook civil works of an estimated capital cost of PKR 2.5 billion (US$27 million). Administrative data indicate that 1,023 schools were screened in by the third party and underwent construction, of which, 732 schools (72%) were fully completed and met the stipulated minimum construction and school safety standards as certified by the third party before the province experienced the catastrophic 2011 floods followed by the dissolution of the local government system which led to the return of all funds, including funds for this program, from the districts back to the provincial government. These two events, particularly the latter, brought construction activity to a standstill over FY2011/12. Virtually all of the construction activity (completed structures and construction work in progress in the remainder of structures) was undertaken between March 2011 and June 2012. 34. Monitoring visits by RSU and the Bank to random samples of schools that received civil works via the second and third rounds of the school rehabilitation initiative indicate significant improvements in school design and construction. The use of unframed structures was abandoned and replaced by the use of framed Reinforced Cement Concrete (RCC) structures, which are stronger and, thus, less vulnerable to earthquakes. To reduce the vulnerability to floods, measures such as raising school floors above known flood levels were also adopted. Framed structures allow the use of larger windows that resulted in well-lighted and better ventilated classrooms (without the use of electricity). Boundary walls were built with proper heights. Toilets were built and connected to a proper sewage disposal facility (e.g., a septic tank) and running water. Notwithstanding, the monitoring visits revealed that construction quality and completeness varied across schools to some degree. 35. As a testament to improved construction quality, descriptive evidence indicates that the schools that were rehabilitated under this initiative experienced less damage than other schools in areas affected by the catastrophic floods of 2010 and 2011, suggesting improved construction quality. Rehabilitated schools also often served as emergency relief shelters during the rains and floods, with such schools selected again presumably because the structures fared better in withstanding the floods and offering protection. 36. Under SERP II, the Sindh government plans to, among other things, (1) ensure the whole school development of schools with infrastructure deficiencies following objective, transparent, and needs-based criteria; (2) expand the scope of the initiative to cover the upgradation of primary schools to elementary schools, and the infrastructure needs of consolidated schools following objective, transparent, and needs-based criteria; (3) ensure compliance with stipulated construction quality and school design specifications; (4) continue third-party screening, support, monitoring, and certification of construction completion and quality; and (5) undertake pilot programs in initiatives in drinking water facilities and low-cost renewable power systems for schools. 116 117 Annex 7. Longitudinal school sample survey data for descriptive and evaluative research 1. Under SERP II, ED/RSU is taking specific actions to strengthen its monitoring and evaluation systems to improve the regularity, relevance, and reliability of data. The actions are promoted via DLIs and supported via project TA funds, and will likely result in improved systems over the medium term. ED/RSU however recognizes that there is an immediate need for regular and reliable data to (1) describe the characteristics of schools, teachers, and students; (2) validate program implementation progress and performance; and (3) evaluate key interventions. These data can be used to inform policy formulation, program design, and implementation refinements/adaptations during and after the project period. These data can also be used to serve a greater public good by facilitating descriptive and evaluative research that attempts to answer questions for which findings in the existing literature on education are inconclusive or where the literature is thin or absent, potentially informing the international education development agenda. 2. Past approach: Over SEP, several distinct data collection activities (surveys and tests) were administered in multiple samples of government and PPRS program schools by contracting third parties. These data collection activities were undertaken to validate program progress and performance as well as to evaluate the efficacy and cost-effectiveness of selected interventions in producing desired results.33 The motivation for contracting third parties was to have a degree of independence in data collection (to presumably yield more impartial data) and to benefit from potentially higher technical competency and logistical capacity in the private market (to presumably yield timely and reliable data). Third parties were contracted for these activities either by ED/RSU using SEP TA funds or directly by the Bank via its own funds. 3. The model of hiring consultancy firms to undertake distinct data collection activities over the project period was however ill-suited to local realities. There were administrative weaknesses which made multiple procurement activities a significant burden on ED/RSU and the procurement process lengthy. At the same time, the supply of reputable, capable survey research firms is thin in the Pakistan market. Consequently, given the several, distinct procurements and the concomitant low contract costs for the activities, ED/RSU at times contracted poorer-quality firms that lacked the expertise, experience, and capacity to undertake the required tasks. The result was significant delays and poor-quality or incomplete data in some of the data collection activities undertaken by third parties. 4. Alternative approach: Both the Bank and ED/RSU recognize that significant efficiency gains can be realized from consolidating contracts for data collection activities. The procurement and contracting load of ED/RSU can also be lifted significantly. Furthermore, contracting a competent, capable firm (selecting from the top of the market) to undertake a larger, longer data 3 Under SEP, evaluative research (completed and ongoing) examined the average causal effects on relevant, key education outcomes of (1) the SEF PPRS program, (2) the Differential Stipends Program which offered higher stipends to girls in secondary grades in government schools in talukas with relatively low transition rates from primary to secondary schooling, and (3) NGO-provided capacity building services to School Management Committees in selected districts. 118 collection activity (implying a larger contract cost which would attract higher-quality firms) may yield better data quality on a timely basis for analysis and decisionmaking. Given these potential benefits, ED/RSU plans to contract a survey research firm to undertake a single longitudinal sample survey of government schools and SEF PPRS program schools over the project period. The contract will be financed using project TA funds. 5. Independent longitudinal sample survey of government and SEF PPRS schools: The proposed longitudinal survey will cover an appropriately-sized sample of government schools and SEF PPRS program schools. The sample will be drawn using the latest available ED/RSU and SEF administrative data on the universe of schools. The survey will be representative at the district level (among other relevant strata) and will be administered twice every school year for four consecutive school years (2013/14, 2014/15, 2015/16, 2016/17) over the project period. The survey will capture extensive information on the characteristics of schools as well as characteristics and behaviors of teachers (all) and students (sample) in the schools. The survey will also capture extensive information to assess and validate program implementation progress and performance at the school level of the various reform activities under SERP II, including on key fiduciary, social, and environmental management elements (in a small predefined school subsample, more in-depth data collection may be undertaken). 6. Student test data: In addition to the survey, a competency-based test of core subjects (language and mathematics) to students in selected grades and a school readiness test to students in grade 1 in a predefined subsample of schools will be undertaken. Literacy and numeracy test items from the Trends in International Mathematics and Science Study (TIMSS) and the Progress in International Reading Literacy Study (PIRLS and pre-PIRLS) may be added to the student tests. This would allow the results of the tested students in the province to be benchmarked against those of tested students from elsewhere. 7. Rotating panel sample design: The independent longitudinal school sample survey will follow a rotating panel survey design at the school level. Specifically, five equally-sized samples of schools (denoted by numbers 1-5), representative of the universe of schools of interest, are to be rotated in and out as depicted in Table A7. 1. Under this design, a selected set of schools will be tracked over the four school years covered by the project period, while other comparable cross-sections of schools will be surveyed for single school years. This design is proposed to help detect and account for "panel conditioning" wherein repeated observation can influence school behavior (i.e., the act of measurement can influence what is being measured, and this risk can increase with repeated measurement). Accounting for panel conditioning, comparing data over survey rounds for the same set of schools can shed light on the evolution of the extent and nature of school exposure to the various reform activities as well as the evolution in the quality of service delivery at the school level. Table A7. 1. School year and samples 2012/13 2014/15 2015/16 2016/17 Sample 1 Sample 1 Sample 1 Sample 1 Sample 2 Sample 3 Sample 4 Sample 5 Notes: Sample design may be refined if needed given any new considerations for data coverage and content. 119 8. Validations/operational evaluations: Data from the independent longitudinal school sample survey can be used by ED/RSU and the Bank to validate/assess program implementation progress and performance-including on fiduciary, social, and environment elements-at the school level. The data would allow the examination of the extent and nature of program implementation progress and performance across schools as well as over time. 9. Impact evaluations: Rigorous impact evaluations require multiple rounds of data on evaluation subjects (schools, teachers, and students). They also require credible strategies to identify the causal effects such as via a prospective experimental design, where the intervention is randomly assigned to some subjects and not others. The data requirement for school-based evaluations is satisfied by the longitudinal sample survey of schools, teachers and students.34 Interventions of interest for evaluation can be overlaid on the survey sample using assignment rules which enable a rigorous evaluation. In other words, the survey sample can serve as a "test bed", allowing for multiple interventions to be evaluated without confounding the analyses by, for example, cross-laying them. At project appraisal, no interventions have been identified by the Bank and the Sindh government for rigorous impact evaluations. From a policy perspective, given the importance of identifying the mechanisms or channels through which an intervention of interest yields impacts, an evaluative research agenda that tests alternative mechanisms or channels appears to be the most beneficial line of inquiry. 10. Roles and responsibilities: The Bank will have primary responsibility for survey, test, and sample design, working closely with ED/RSU and the contracted survey research firm. The Bank and ED/RSU will also work closely with the firm on survey administration arrangements, procedures, quality control measures, and human subject protections. ED/RSU will provide any facilitation needed by the firm in the fielding of the survey (e.g., permissions for the survey and accessing schools). ED/RSU will also make all data and documentation submitted by the firm publicly available on RSU's website. The firm will have primary responsibility for (1) survey administration in compliance with all survey regulations and requirements, (2) data processing and management, and (3) data submission in agreed formats, with accompanying data documentation as well as analysis reports customized to provide information on issues and matters of interest to ED/RSU. The firm will regularly report to the Bank on all stages of the work and seek advice on troubleshooting. 11. Responsible conduct of survey research: The Bank and ED/RSU will work closely with the contracted survey research firm to (1) put in place appropriate protections so that the risks of invasion of privacy and breach of confidentiality are minimized; (2) follow all standard requirements for obtaining and documenting informed consent from each subject (school administrator, teacher, student); (3) in particular, make special provisions for soliciting the assent of students (taking account of the age, and maturity and comprehension levels of the child) and the permission of teachers before initiating any data collection from students; and (4) undertake data collection in a respectful and culturally-sensitive fashion. 34 If household sample survey data are also required for an evaluation, the Bank will seek funds from alternative sources, including Trust Fund resources and external research grants. 120 12. Public availability of survey data: The data from the independent longitudinal school sample survey, along with all survey-related documentation, will be made publicly available online on the RSU's website, among other places. The objective is to encourage additional research by interested parties, within and outside Pakistan, using what is expected to be rich data on the education system and education development activities in the province. 13. Contract flexibility for additional data demands: The contract for the independent longitudinal school sample survey will be written to be sufficiently flexible to allow for the expansion of the (1) sample to additional schools in selected or all survey rounds and/or (2) set of indicators of interest. The demand for additional sample schools may arise, for example, from impact evaluations, where concentrated samples of initially-comparable schools may be required to aid statistical inference. Impact and operational evaluations may also have specialized data demands that may be identified later when the evaluation questions are determined jointly by ED/RSU and the Bank. 121 References Andrabi, Tahir, Jishnu Das, Asim Ijaz Khwaja, Tara Vishwanath, and Tristan Zajonc. 2007. Pakistan: Learning and Educational Achievement in Punjab Schools (LEAPS): Insights to inform the education policy debate. Washington, DC: World Bank. Barrera-Osorio, Felipe, David S. Blakeslee, Mathew Hoover, Leigh Linden, and Dhushyanth Raju. 2012. Expanding Educational Opportunities in Remote Parts of the World: Evidence from a RCT of a Public-Private Partnership in Pakistan. Manuscript Jacoby, Hanan G., and Ghazala Mansuri. 2011. Crossing Boundaries Gender, Caste and Schooling in Rural Pakistan. Policy Research Working Paper 5710. Washington, DC: World Bank. Siaens Corinne. 2008. Challenges for Education in Sindh, Pakistan: Key research findings on access and quality. Manuscript. World Bank. 2012. Sindh Education Sector Project: Implementation Completion Report. Report No: ICR2481. Washington, DC: World Bank. World Bank. 2011. Education Sector Strategy 2020: Learning for All: Investing in People's Knowledge and Skills to Promote Development. Washington, DC: World Bank. World Bank. 2009. Sindh Education Sector Project: Project Appraisal Document. Report No. 47642-PK. Washington DC: World Bank. World Bank. 2005. Pakistan: Country Gender Assessment: Bridging the Gender Gap, Opportunities, and Challenges. 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