Document of The World Bank Report No: 25789-NEP PROJECT APPRAISAL DOCUMENT ON A PROPOSEDCREDIT INTHEAMOUNT OFSDR3.6 MILLION(USS5.0 MillionEquivalent) TO THE KINGDOM OF NEPAL FORA COMMUNITY SCHOOL SUPPORT PROJECT June 11,2003 Human Development Sector Unit South Asia Regional Office CURRENCYEQUIVALENTS (Exchange Rate EffectiveMarch 2003) CurrencyUnit = Nepalese Rupees NPRs. 1 = USS 0.0133 US$ 1 = NPRs. 78.3 FISCAL YEAR July 16 -- July 15 ABBREVIATIONS AND ACRONYMS BPEP Basic and Primary EducationProgram CAS Country Assistance Strategy CBO CommunityBasedOrganizations csc Central SteeringCommittee CSSP CommunitySchool Support Project DDC DistrictDevelopmentCommittee DE0 District Education Office DFP District FocalPerson DOE Departmentof Education DSC District SteeringCommittee DTCO District TreasuryController Office EFA EducationFor All FCGO Financial ComptrollerGeneralOffice FMR Financial MonitoringReport FP FocalPerson IAP ImmediateAction Plan IDA IntemationalDevelopment Association LIL Learning InnovationLoan LSGA Local Self Govemance Act MDG MillenniumDevelopment Goals MOES Ministry o f Education and Sports MOF Ministry of Finance MOLD MinistryofLocal Development NGO Non Govemment Organization NPC NationalPlanningCommission OAG Office of the Auditor General PAC Project Advisory Committee PFP Project FocalPoint PMC ProjectMonitoring Committee PRSP PovertyReductionStrategyPaper RRSG RegionalResearchSupport Group SAC Social Audit Committee SMC School ManagementCommittee so Support Organization VDC Village DevelopmentCommittee Vice President: Mieko Nishimizu Country Director: KenichiOhashi Sector DirectodManager: Charles C. GriffdMichelle Riboud Task Team Leader: RajendraDhoj Joshi NEPAL FOROFFICIAL USEONLY COMMUNITY SCHOOL SUPPORT PROJECT CONTENTS A. LIL Justification Page 1. What is to be learned (why the piloting)? ..................................................................... 2 2. H o w are the results going to be used (vis a vis CAS objectives and any follo\v-on 3 operation)? 3 .Other countries or situations where similar efforts have shown promise................................ 4 B. Structure of the Pilot 1, H o w will the learning take place?.................................. ....................................... 4 2. Outcome-level test to be conducted ............................... ................................ 5 3. Steps Involved in Implementingthe Pilot.................................................. .......... 5 4. Learning Expectations to be Documented in the Pilot.......................................................... 5. Triggers for a Follow-on Operation .................................................................................... 67 6. Results-based Monitoring and Evaluation Arrangements ............................ ............. 8 C. Componentsand their ImplementationArrangements 1. Project components........................................................................................... 9 2. Implementation arrangements............................................................................................ 10 a. Procurement ................................................................................................................ 11 b. Financial Management .................................................................................................. 12 c. Other........................................................................................................................... 13 D. Risks 1. Social and Environmental Risks ................................................................................. 13 a. Safeguard Policies........................................................................................................ 13 b. Other social risks ............................................................................. 14 2. Other Risks...................................................................................................................... 14 E. Main Loadcredit Conditions 1. Effectiveness Conditions ................................................................................................... 15 2. Other........................................................................................................ ............... 15 F. Readinessfor Implementation............................................................................................. 15 G. Compliance with Bank Policies........................................................................................... 15 Annexes Annex 1. Project Design Summary............................................................................................. 16 Annex la. Project Monitoring Baseline and Targets...................................................................... 19 Annex 2. Project Description........................................................................................ 22 Annex 3. Financial Management................................................................................................ Estimated Project Costs.............................................................................................. 30 Annex 4. 31 Annex 5. Project Processing Schedule........................................................................................ 34 Annex 6. Procurement and Disbursement Arrangements ............................................................. 35 Annex 7. Documents in the Project File ............................ ............ 40 Annex 8. Statement of Loans and Credits ............................................................... ............ 41 Annex 9. Country at a Glance.................................................................................................... 43 Annex 10. Arrangements for Safeguarding Interests o f Indigenous Peoples.................................. 45 IThisdocument hasa restricteddistributionandmay be used by recipients only lthe performanceof their official duties. I t s contents-may not be otherwise disclosed I NEPAL Community School Support Project Project Appraisal Document South Asia RegionalOffice SASHD Date: June 11, 2003 Team Leader: Rajendra Dhoj Joshi Sector \Ianager/Director: Michelle Riboud, Charles C. Sector(s): General educationsector (100°6) 2riftin Thenie(s): Educationfor all (P) Country hlanager/Director: Kenichi Ohashi Project ID: PO82646 Lending Instrument: Learning and InnovationLoan 1LIL) Project Financing Data [ ]Loan [XI Credit [ ] Grant [ ] Guarantee [ ] Other: For LoanslCreditslOthers: Amount (US$m): 5.0 Million Proposed Terms (IDA): StandardCredit Grace period (years): 10 Years to maturity: 40 Commitment fee: 0.00-0.50% Service charge: 0.75% Financing Plan (US$m): Source Local Foreign Total BORROWER 0.18 1 0.00 I 0.18 IDA 5.OO 0.00 5.00 Total: 5.18 0.00 5.18 Borrower: KINGDOM OF NEPAL Responsible agency: MINISTRY OF EDUCATIONAND SPORTS Ministry o f Educationand Sports Address: Keshar Mahal, Kathmandu Contact Person: Mr.Chuman SinghBasnyat, The Officiating Secretary Tel: 977-1-4411599 Fax: 977-1-4414887 Email: moes@enet.com.np Other Agency(ies): Department of Education(DOE) Address: Sanothimi, Bhaktapur Contact Person: Mr.Satya Bahadur Shrestha, The Director General Tel: 977-1-6631075 Fax: 977-1-6631972 Emai1: doestat@mos.com.np Estimated Disbursements ( Bank FYlUS$m): , I FY 2004 2005 2006 Annual 1.50 2.30 1.20 Cumulative 1.50 3.80 5.00 Project implementation period: 3 years 2 months Expected effectiveness date: 07/16/2003 Expected closing date: 09130/2006 A. LIL Justification 1. What is to be learned (why the piloting)? Prior to nationalization o f schools in 1972, Nepal almost exclusively relied on community-owned schools for school education. These schools, established through community initiatives, were funded through tuition fees and block grants from the Government. In the quest for improvement o f quality o f education through assured funding and technical support, the Government nationalized schools. In spite o f the sizeable investment that the Government has made since then, the extent o f impro\,ement in quality and efficiency of school education did not match with the expectations o f the Government or the public. The large gap between the pass rates in the School Leaving Certificate Examinations o f public and private schools introduced in the mid-eighties - around 80 percent for private schools and 15 percent for public schools - i s being perceived as a glaring example o f the failure o f the public school system. This has led to the loss o f faith o f the public in public schools. At present, private provision accounts for around 10 percent o f primary enrolment and 20 percent o f secondary enrolment. The perceived large gap in quality between the private schools the poorer - has led - cateringto richer section o f the population and public schools catering to - - to a virtual segregation o f education along the wealth status. Reflecting the widely shared public perception that nationalization o f schools did not meet the expectations, the Seventh Amendment o f the Education Act, passed in 2001, articulated the policy o f devolving school management responsibilities to communities, and renamed all public schools as community schools. In 2002, the Government embarked on the transfer o f management o f government-funded community schools, hereinafter referred to as government-funded schools, to the community level by offering all communities the option o f taking over government-funded primary schools financed on a block grant basis, subject to meeting some basic prerequisites. The Government i s about to meet the immediate target o f transferring 100 out o f over 2 1,000 government-funded schools to community management. The objective o f the proposed Community School Support Project (CSSP), a Learning Innovation Loan (LIL), i s to assist the govenunent gain critical experience for successfully up-scaling the transfer o f management o f government-funded schools to communities. Transfer o f management o f government-funded schools to communities i s one o f the basic strategies o f the Tenth Plan aimed at achieving the Education for All (EFA) and Millennium Development Goals (MDG) targets. The lessons learned from the CSSP will help to achieve the EFMMDGtargets by raising the efficiency o f investments in school education. Before nationalization o f schools in 1972, there were about 4,000 community schools. Therefore, Nepal does have a wealth o f experience on management o f schools by communities. However, this experience alone may not be sufficient for success o f the on-going transfer o f schools to communities, as the socio-political landscape has changed since then. Some o f the major changes that have implications for community school operation are emergence o f private schools, replacement o f the party-less Panchayat System by a multi-party democracy and the policy o f devolving school education to local bodies in accordance with the Local Self Governance Act (LSGA) o f 1999. The richer section o f the population, which patronized community schools prior to 1972, no longer has a stake in community schools, as at present, its needs, by and large, are being met by private schools. Winningback the original patrons as well as building the capacity o f its constituency mainly consisting o f poor parents is a challenge for schools being transferred to communities. The earlier community schools were basically funded by local communities with token assistance from the Government. The new community-managed schools will receive sizable funding from the - 2 - Government, and will be more o f a Government-community partnership than the previous community-owned schools. The move towards this partnership from the Government command and control system implies serious behavioral change for the civil servants, teachers and communities. Likewise, the degree o f autonomy that the schools transferred to communities will enjoy may not be the same as that o f community schools in pre-nationalization days. The LSGA articulates the Government policy o f devolving the responsibility for managing primary education to the Village Development Committees (VDCs) - the lowest level o f local body - and loiver secondary and secondary education to District Development Committees - the highest level of local body. Some proponents o f decentralization feel that the Seventh Amendment of the Education Act, 2025 BS, proinulgated in 2001, which has paved the way for transferring schools to community management, does not clearly articulate the role o f local governments with respect to management o f schools. Therefore, there i s some confusion at the policy level on the role o f local bodies with respect to school education. In spite o f this confusion, local bodies have been playing a critical role in promoting school education. It i s desirable that the role o f local bodies with respect to community-managed schools be crystallized so that the community-managed schools could maximize support from them. The project will aim at forging a strong partnership between schools and the local government - one o f the main stakeholders o f the schools. Restoration o f a multi-party democracy in 1990 has considerably changed the culture o f teachers and other stakeholders, therefore the approach to school management that existed prior to 1972 may not be fully applicable now. The proposed Community School Support Project (CSSP) seeks to learn about the following: (i) the characteristics o f "successful" community-managed schools; (ii) approaches for formation o f school the management committees that represent the interest o f the entire cross-section o f parents including the socially excluded groups; (iii) needs, modalities and costs for capacity building at community, school, the village development committee/municipality, district and higher levels to ensure effective management o f schools by communities; (iv) the promising approaches for ensuring access to all primary age children, including those from indigenous peoples disadvantaged communities - -disadvantage janjatis (indigenous nationalities), dalits and in the school service area, and enhancing gender parity, completion rates and quality o f education; (v) the role o f local government and line agencies with respect to community-managed schools; (vi) service conditions o f community-employed teachers that ensures their efficiency; and (vii) the desired changes in the existing legal framework and policies for successful operation o f community-managed schools. 2. How are the results going to be used (vis a vis CAS objectives and any follow-on operation)? Document number: 25205 NEP - Date of latest CAS discussion: 12/19/2002 Devolution o f responsibility for management and financing o f schooling with the intention o f raising overall accountability o f Government schools was the primary means in the CAS o f reaching the objective o f improving the poor quality o f service delivery by public schools. This project will help generate the critical knowledge needed for successful transfer o f responsibility for management o f government-funded schools to communities. Therefore, the results o f this project will be o f direct relevance for meeting the CAS objectives. IDA, together with seven other donors, are supporting the basic and primary education sub-sector through the Basic and Primary Education Program I1(BPEP 11), and five o f these donors, including IDA, are funding this program through a basket funding mechanism. IDA is supporting this program through - 3 - an Adaptable Program Loan (APL) called the Basic and Primary Education Project 11, the first phase o f which will end in July 2004. The Government and the BPEP donors are now engaged in preparation for the next five-year phase o f the BPEP. The Poverty Reduction Strategy Paper (PRSP) aims at transferring management o f 8,000 schools to communities by mid-2007. In response to this government goal, the BPEP will have to be able to support community-managed schools. This project aims at developing the critical knowledge base for the BPEP so that it i s well equipped to cater to the needs o f community schools. As the next phase o f the BPEP i s being planned for delivery through a flexible programmatic approach and transfer o f schools to communities i s to be implemented gradually, the learning from this project will be relevant for the next phase o f the BPEP. In a larger context o f the serious reform process that Government is undertaking, the initiative to transfer government-funded schools to community management also has an important place. Given the entrenched structure o f poor governance, reforming the public sector and making it more responsive to the needs o f the poor may face strong resistance. To sustain the reform process, therefore, Government must win the confidence of the common people and create a broad-based constituency for refom. The transfer o f government-funded schools to community management i s one o f the most concrete and immediate steps the Government can take to demonstrate its commitment to changing the way it serves the people. The success of the overall reform process will importantly hinge on the success of this initiative. 3. Other countries o r situations where similar efforts have shown promise. The poor service delivery by public schools i s not unique to Nepal. Therefore various strategies for improving service delivery o f public schools are underway across the world. The experience o f community-managed schools in Guatemala, Nicaragua and El Salvador indicates the potential o f community-based approaches in school management. The success o f a large number o f community-owned schools inNepal, which do not receive public funding, also indicates the potential for success o f public schools transferred to community management. Similarly, the experience o f the UNDP-supported Community Owned Primary Education (COPE) program indicates the capacity o f communities to manage schools. B. Structure of the Pilot 1. How will learning take place? To respond to the need for taking reform actions urgently and to seize the political opening, the Government has launched the school transfers somewhat opportunistically. While the Government has issued basic guidelines for management o f schools and developed a legal agreement that i s used to formalize the obligations o f the school management committee and the Government, many issues will need to be addressed in making these community- managed schools truly effective. The Government i s learning to do it right as it proceeds. The proposed CSSP will assist the Government in this evolutionary approach to implementing a simple concept that nonetheless requires much attention to details in its application. Careful process documentation o f the experience from the initial phase o f transfers and its analysis will help in the learning o f critical design details as the transfers proceed to scale. In fact, emergence o f a well-designed support system and evidence o f substantial improvement in educational outcomes will be necessary to convince many communities to take up the option now presented to them. Each school i s unique by virtue o f the distinctive characteristics o f its stakeholders. A one-size-fits-all tendency o f top-down planning will be counterproductive for community-managed schools. The Government's school transfer initiative aims at facilitating the stakeholders to choose their own unique vision, mission, and goals for their schools. Therefore, the primary focus o f learning in this project will - 4 - be on learning how outside agencies such as local administration and line agencies facilitate and support the community-managed schools in their endeavors to improve school effectiveness. Inthis project, the following structure will be used for learning: 0 The community -- parents, teachers and SMC -- in partnership with NGOsiSOs (Support Organizations, which includes NGOs, firms and community managed schools) and with support from the local bodies will arrive at a vision o f school reform and design, implement,monitor, evaluate and document school activities. 0 A network o f the community-managed schools will be formed to facilitate exchange o f experience among the coinmunity-managed schools. 0 The MOES staff, resource persons and the Research Support Groups (RSGs) will pro\.ide professional support to the communities and NGOsISOs. The MOES with support from the RSGs will periodically analyze the experience o f community-managed schools and draw lessons, which will be communicated to the schools. 0 At the endo f the program, the project will be evaluated by independent consultants. 0 The RSGs will receive guidance from the Central Steering Committee. 2. Outcome-leveltest to be conducted The best indicator o f the positive outcome from the project will be a significant increase in number o f community-managed schools. Other outcome-level indicators to be tested are participation rates, promotion rates and learning achievements. While participation rates can improve relatively quickly, improvement in promotion rates and learning achievements takes time, and consequently, results o f the project inputs may be evident only after the completion o f the project. Therefore, transformation o f the school environment in terms o f factors such as class occurrence, student regularity, user satisfaction, participation o f parents from diverse socio-economic backgrounds in school governance activities, extracurricular activities, cleanliness, which will eventually translate into improvements in promotion rates and learning achievements and a lot beyond, will also be tested. For the purpose o f the outcome-level testing, a baseline will be established in a sample o f government-funded community-managed schools -treatment group, government-funded schools transferred to community but not receiving project support except for the incentive grant - partial treatment group, and government-funded schools managed by the Government-control group. The achievement o f these groups o f schools at the end o f the project will be compared with the baseline to find out whether community-management leads to better outcomes. 3. Steps involved in conductingthe pilot The pilot will be undertaken usingthe following steps: 0 Following the project effectiveness, a communication campaign will be launched to attract more schools to community management. 0 The project will seek applications from the schools transferred to communities that are willing to take advantage o f the project support. The schools will be selected for support from the project according to predetermined criteria. 0 This process will be repeated periodically till the project target in terms o f number o f schools to be supported is met. 0 Hiring o f NGOs/SOs for community mobilization and Research Support Groups (a private agency) to support the piloting. 0 Establishing self-organizing community groups to help the community - parents, teachers, school - 5 - management committees, local government, and social workers and politicians -to assume leadership in school improvement process. Community groups will comprise location specific CBOs as well as interest groups such as dalit groups, janjati groups, and groups o f households excluded from education. Formulating a school vision through a participatory approach. Establishing a baseline in terms of access to, and efficiency and quality o f education together with characteristics of school environment in participating schools. The indicators for the baseline will be compatible with the shared school vision o f the community and capture the ethnic diversity of the community. Participatory monitoring o f changes in the school. Sustained financial and technical support to the community from Government agencies, Research Support Groups and NGOsiSOs to maintain community leadership in the school transformation process. Mid-term review after one year. Final evaluation o f the project outcome. 4. Learning expectations to be documented in the pilot - Economic r -- Technical r- __Social - 3 - Participation ~ - - ~ .. Financial 1 Institutional __ Environmental L- Other Economic: Although the outcomes expected from the investment in school education such as improvement in participation rates, efficiency and quality have been clearly articulated, there i s not enough knowledge about the costs involved in achieving these outcomes, as the relationship between inputs and outcome is vague at the best. This project will help to make an initial attempt to establish this relationship, and will also document the possible sharing o f these costs between various stakeholders. Financial: Over 80 percent o f the public expenditure on education i s being allocated to school education. The total resource transfers to schools by far exceeds the total transfer o f funds to Village Development Committees - thelowest level o f local bodies. But this resource transfer to the schools, however, have not empowered the communities or schools as the development budget has largely been spent by the line agencies on behalf o f the schools, while the regular budget is tied to teachers employed by the Government. This project aims to learn the impact o f flow o f financial assistance in cash rather than in kindto project supported schools on the efficiency o f school management. TechnicaUpedagogic: School education experience so far has revealed that children and school should be the foci o f all education development activities so that the yields from investments in education could be maximized. However, translating this concept into practice has been difficult mainly due to systemic resistance to flowing funds directly to schools as opposed to availing schools with assistance in kind - civil works, goods and services. This project aims at facilitating focus on schools and children by channeling over 80% o f the project funds directly to schools. This project is expected to provide valuable documentation o f experience related to the way the school/community makes choices on issues related with pedagogy, school environment, teachers, parents, physical facilities, instructional and learning achievement standards, etc. Community participation/management: The transfer o f school management to School Management Committees dominated by the parents, elected from among the parents o f children studying in community schools, gives an excellent opportunity to make schools directly accountable to the parents - the closest stakeholders o f the school. The degree o f accountability o f SMCs to parents will, however, depend upon the extent to which parents are able to organize themselves and the degree to which they represent all stakeholders in the community. The major focus o f the CSSP is in building sustainable institutional - 6 - structures at the community level that can continuously monitor and support SMC initiatives. The procedures or practices that can ensure election of the SMC representing all cross-section o f the society including the marginalized are another area of focus o f this project. The CSSP i s expected to provide valuable insights into the potent modalities for building capacities o f the communities for managing schools, and monitoring and supporting school activities. Social inclusion: Mainstreaming out-of-school children i s one o f the critical challenges on the path towards achievement o f the Universal Primary Education goal of the Education for All (EFA) and MillenniumDevelopment Goals (MDGs). These challenges have proved to be formidable because of the inherent biases o f the institutions that deliver education resulting from the prevailing power, social and caste structures. The CSSP specifically aims at assisting marginalizeddisadvantaged cormnunities in overcoming the barriers to access to education. T o overcome these barriers, the project w i l l try out the promising strategies o f external interventions and provide necessary support including scholarships to households with out-of-school children. Mainstreaming out-of-school children will be made a community agenda rather than an agenda o f the disadvantaged b y implementing social contracts between the mainstream society and the excluded groups. Thus the project is expected to document the ways schools can be managed in a socially inclusive manner. Instittitional: The transfer o f management o f schools to communities not only change the way schools operate but also their relationship with other institutions like the local govemment, district education offices and other govemment agencies. This change in interrelationship may face some difficulties because o f the inherent systemic inertia as well as the change in the power structure. The new modality o f management will have profound implications for teachers. Evolving a terms o f service for the teachers that promotes efficiency would be a serious exercise to be supported by the CSSP. 5. Triggers for a follow-on operation IDA, together with seven other donors, is supporting the basic and primary education sub-sector through the Basic and Primary Education Program (BPEP), which i s due to end in July 2004. IDA i s supporting this program through the first phase o f an Adaptable Program Loan (APL) called Basic and Primary Education Project Phase 11. The Government, together with the BPEP donors, are now engaged in preparation for the next five-year phase o f the BPEP. The PRSP aims at transferring management o f 8,000 schools to communities by mid-2007. In response to this government goal, the BPEP will have to be able to support community-managed schools. This project aims at developing the critical knowledge base for the BPEP so that it i s well equipped to cater to the needs o f community schools. As the next phase o f the BPEP i s being planned for delivery through a flexible programmatic approach, and transfer o f schools to communities i s to be implemented gradually, the learning from this project will be relevant for the next phase o f the BPEP. While the BPEP i s catering to the basic and primary education sub-sector alone, this CSSP caters to the whole school system. If the CSSP becomes successful in achieving its aims, there may be a case for a separate follow-on project adopting the whole-school approach. The triggers for such an operation may be: 0 A significant increase innumber o f schools taking over management o f govemment-funded schools 0 Mainstreaming o f the majority o f the out-of-school children in the project areas. 0 A significant improvement inpromotion rates. 0 An improved fit between the ethnic, caste and gender profile o f the community served by the school with the ethnic, caste and gender profile o f the school population and passouts. - 7 - 6. Results-based Monitoring and Evaluation System The monitoring and evaluation framework i s presented in Annex 1. The first level o f monitoring will be at the communityischool level. A Project Monitoring Committee (PMC), described in Annex 2, will be formed at each school community. Support organizations (SOs) responsible for social mobilization will provide training on participatory monitoring to the communities. Monitoring indicators \vi11 comprise a standard set o f indicators reflecting the overall project objectives/outcomes, a supplementary set of indicators reflecting district priorities, and another set o f indicators reflecting community aspirations. The frequency of monitoring will vary from indicator to indicator. If indicators like class regularity will be monitored on a daily basis, indicators like promotion rates and participation rates \vi11 be monitored on an annual basis. School level indicators will also include process indicators such as classroom organization, display and use o f teaching learning materials, use o f participatory and activity based methods that will lead to improvement in system indicators. The resource persons and the Research Support Group providing professional support to the project will provide technical support for monitoring activities. The P M C will periodically submit the monitoring report to the Project Advisory Committee (PAC) described in Annex 2. The head teacher and the SMC Chairperson w i l l submit monitoring reports to the District Education Office (DEO) on a trimesterly basis. The next level o f monitoring activities will take place at the district level. The Focal Person (FP) responsible for the project activities in the district will process the monitoring reports received from the participating schools. The volume o f work involved w i l l depend upon the number o f participating schools in a given district. The RSG will provide support to the FP for monitoring related activities. The FP will present the finding o f the monitoring report to the District Steering Committee. The DE0 will submit the monitoring reports to the Project Focal Point (PFP), which will function as a project coordination unit, in the Department o f Education (DOE). The PFP will collect and process monitoring reports from all districts. In this task, the PFP will be assisted by the Monitoring and Evaluation Section and EMIS Section o f the DOE together with the RSG. The PFP will present the consolidated monitoring report with a summary o f the findings to the Central Steering Committee (CSC). The feedback from the CSC will be used for improvement o f the design o f the LIL and will be disseminated to the regional directorates, districts and participating schools. The PFP will provide financial monitoring reports (FMRs) to IDA on a trimester basis, within 35 days after the end o f each trimester. The project also envisages a formative research, under the proposed baseline studies, to document the process o f transformation o f the school and the community it i s serving. The baseline studies will also include poverty and social impact assessment o f the households served by the school. Evaluation of Outcomes: Final evaluation o f the outcomes o f the project will be contracted out to independent consultants. The evaluation will be based on monitoring and evaluation reports, aide-memoires o f supervision missions, baseline studies and progress assessment and an extensive field work. The terms o f reference (TOR) for the evaluation o f the project will be agreed upon with IDA and the report shall be completed by June 2006. - 8 - C. Project Components and Implementation Arrangements 1. LIL Components School education comprises primary education (grades 1-5), lower secondary education (grades 6-8), secondary education (grades 9-10) and higher secondary education (grades 11-12). At present, public provision serves for around 91% of the total enrolment in primary education, around 73% in lower secondary and 67% in secondary education. The net enrolment ratio at primary education was 80% in 2000. The gross enrolment ratios o f lower secondary and secondary education in the same year were 58% and 37% respectively. The primary school completion rate was 51% in 2000, while the School Leaving Certificate Examinations pass rate was 31%. The gender gaps in primary and secondary education were 12% and 18% respectively. Difficulties in mainstreaming the children from excluded or disadvantaged households, low promotion rates and poor learning achievements are among the main weaknesses o f school education. If the current trend of improvements continues, it is unlikely that Nepal will be able to meet the targets o f the Millennium Development Goals. The problems o f school education are mainly associated with poor accountability o f the school system originating from a poor participation o f stakeholders in the management o f schools. In support o f the Government policy o f providing an incentive grant to communities taking over management o f govemment-funded schools, this project will provide such grants to about 1,500 schools. Out o f these schools, the project will provide block, performance, supplementary and other grants, scholarships and technical assistance for capacity building to about 250 schools as follows: (a) SchoolGrants Component.The component will provide the following inputs: (a) incentive grants for communities that take over management o f government-funded schools; (b) block grants tied to performance for lower secondary and secondary schools funded entirely by the communities o f govemment-funded primary schools transferred to community management; (c) performance grants for improvement o f access to primary education and improvement o f promotion rates; (d) supplementary grants to community schools for schools expanding enrollment to cover additional costs; and (e) other grants for providing additional support to marginalized communities, and for encouraging for piloting innovative approaches such as bilingual education, teaching Nepali as a second language, and employment o f female teachers and teachers from disadvantaged communities. The outputs/outcomes from the above inputs will be: (i) mainstreaming the bulk o f out-of-school children o f primary school age into the school system; (ii)improving the access o f girls and disadvantaged communities to lower secondary and secondary education; (iii)improving the promotion rates and learning achievement; (iv) increasing the number o f community- managed schools; (v) holistic development o f school - from primary to lower secondary level; (vi) distributing equitable subsidies to communities; and (vii) ownership o f schools by communities. (b) Scholarship Component. This component will provide booster scholarships to out-of-school children in the first year and maintenance scholarships in the later years o f primary schools. The maintenance scholarship will be provided to all children from poor households. The scholarship will be a demonstration o f Government commitment to mainstream and retain all out-of school children in schools. This inclusive approach o f the project is likely to transform the social fabric of communities and make the school a focal point for inclusion. (c) Capacity Building. This component will provide the following inputs: (a) assistance to the communities by NGOs/SOs to organize themselves to manage schools; (b) training for teachers in instructional planning and delivery, and improving public relation with the community, and for SMC - 9 - members in school management; (c) orientation for civil servants, local government officials and social workers; and (d) communication o f government policy o f transfer o f schools to community management. The expected outputs/outcomes from this component are: (i) improved capacity o f communities to manage schools; and (ii)evolution o f roles o f local government, teachers, district education offices and other government agencies in relation to community-managed schools. (d) Monitoring and Evaluation.This component will assist in the development of a monitoring and evaluation system for the project in coordination with the existing monitoring and evaluation system within the MOES, and strengthen the capacity o f officials and communities responsible for monitoring and evaluation. The output/outcome o f this component will be a well-established and smoothly operating monitoring and evaluation system that can support periodic improvement in the experimental design of the LIL. Special emphasis will be given to community level monitoring and evaluation as the LIL relies heavily on communities for achieving the project outcomes. Indicative Bank- Yo of ~~ Component costs %of financing Bank- (US$M) Total (US$M) financing 1. School Grants 3.66 70.7 3.66 73.2 2. Scholarships 0.44 8.5 0.44 8.8 3. Capacity Building 0.66 12.7 0.56 11.2 4. Monitoring and Evaluation 0.42 8.1 0.34 6.8 Total Project Costs 5.18 100.0 5.00 100.0 Total Financing Reauiredl 5.18 I 100.0 I 5.00 I 100.0 1 2. Implementation Arrangements Project Management. The organizational structure and fund flow system for the CSSP are presented in the figure below. The implementing agency for the project will be the Department o f Education (DOE) under the Ministry o f Education and Sports (MOES). The DOE has designated one o f its divisions as the Project Focal Point (PFP) and the head o f the division is designated as the Project Coordinator. The PFP core team will comprise the Coordinator, a Deputy Director, a Section Officer, an Accounts Officer and a Procurement Officer. The PFP will be supported by the whole apparatus o f the DOE and other agencies under the MOES. The PFP will be guided by a Central Steering Committee (CSC) chaired by the Joint-Secretary, Planning Division, MOES, and it will include: Director General o f the DOE; one representative each from NPC, MOF and MOLD; one representative each o f dalits and ethnic minorities; one representative from among prominent educationists or social workers; and the Coordinator as the Member-Secretary. The main functions o f the committee will be approving the schools for funding, monitoring progress and providing policy advice. The representatives from ethnic minorities, dalits and prominent educationists or social workers, at least one o f whom should be female, will be nominated by the Government in consultation with IDA. The PFP will be supported by a Research Support Group (RSG). The DE0 will implement the project activity at the district level. A Focal Person will be designated in each DE0 to monitor the implementation o f project activities. The FP will report to the DE0 and will be assisted by other DE0 staff as necessary. The project activities at the district level will be guided by a District Steering Committee (DSC) comprising District Education Officer - Chair, one representative from among the SMC Chairpersons o f community-managed government-funded schools in the district selected by the community-managed schools and Focal Person - Member Secretary. The main functions o f the DSC will be approving recommendation for release of grants, reviewing progress and providing feedback on the program. - 10- Organizational Structure and Fund Flow of the Project * I I II Project Focal Point to the DOE Central Coordinator Steering Committss DTCO District Education Office District Focal Person .f-+ Steering Committee School ..... ..... Management Advisory Monitoring Committee Committee Committee A ............................................................................................................. Composition of Committees Central Steering Committee: Joint Secretary, Planning, MOES - Chair, Members - Director General, DOE; one representativeeach from NPC, MOF and MOLD; 1 representative each from dalits and disadvantaged ethnic minorities, 1 representativefrom prominent educationists and social workers; and Coordinator PFP - Member-Secretary District Steering Committee: District Education Officer - Chair, Members - one of the chairpersons of community managedschools, and District Focal Person -Member Secretary Line of command Fund flow Reporting Feedback 4 -.-.-.-.- --> ......,.....,...,,..,..... b Most o f the activities o f the project will be implemented by the communities - SMCs/schools, and CBOs supported by SOs. The DE0 will monitor and supervise the communities. a. Procurement The summary o f the procurement capacity assessment o f the DOE, the Implementing Agency for the Project, i s presented in Annex 6. At present, the DOE i s implementing the Basic and Primary Education Program (BPEP) jointly funded by eight donors including IDA. The BPEP i s usingthe IDA Procurement Guidelines. The DOE has a reasonably acceptable procurement capacity. The project will fund grants to schools, scholarships, training, goods, some administrative costs and services from consulting firms and NGOs/SOs. Over 80 percent o f the funds is allocated to grants and scholarships. The average level o f grant per school within the project period will be around Rs. 240,000 (US$3000). Most o f the grants are to be disbursed on an installment basis tied to the performance. Grants will be used solely for developmental activities that have been discussed and endorsed by the community and enable the community to achieve project objectives that would include, inter alia, small rehabilitation or construction works, teaching materials, training and consumables. Procurement o f such goods, works and services will be done by the school following simple procedures described in the - 11 - Operations Manual. Procurement at the district and central level mainly consists o f services. Senices and goods w i l l be procured at the district and central levels using IDA Procurement Guidelines, The PFP will get services from the Procurement In-charges o f the DOE, who have been engaged in procurement for the BPEP. Similarly at the district level, the official responsible for BPEP procurement will also handle procurement under the project. b. Financial Management Fundsfro)v and Disbiirsenient Armngenr ents Initially for the first year o f the program until the districts can be identified, the budget for the Project will be allocated under a separate identifiable budget head at the central level. Following the approval o f the program and budget estimates, the budget authorization will be released to the Department o f Education. Based on demands for transfer o f schools from various districts, the Project Focal Point (PFP) will allocate budget for districts, and provide spending authorization along with the transfer o f funds to respective District Education Offices (DEOs). DEOs will release funds to the schools that are qualified to obtain grants based on set indicators, and will maintain a record o f schools receiving grants. Grants provided to schools meeting specific criteria are considered as expenditures, without any need for schoolsicommunities receiving such grants to return any savings thereof, if any. Utilization o f grants for the intended purpose will be closely monitored and reported. Financing o f grants and scholarships are pre-financed by government's own resources, the consolidated claims o f which are later charged to the special account or submitted to IDA for reimbursement. Almost 80 percent o f required resources are pre-financed by the government, and the remaining 20 percent dealing with direct payments to consultants or suppliers are paid through the special account. A Special Account w i l l be established to facilitate payments o f various activities under the project. During the first year, as the demands for school transfers in districts get clearer, Government and IDA will review to determine whether the arrangement in place should continue or an alternate arrangement should be made from the second year onwards to transfer the budget to the district level budget allowing the resources to be transferred directly through the respective District Treasury Controller Offices (DTCOs) to the respective DEOs. Disbursements will be made against one time incentive grants for all government-funded primary, lower secondary and secondary schools that choose to take over management responsibilities from the Government. Selected schools will also get various performance-based grants. Disbursements will also be made for providing scholarships as per the criteria set to effectively mainstream the out-of-school children. Funds will also be provided for capacity buildingto encourage communities to experiment with different modalities o f community mobilization approaches. Funds will be disbursed to mobilize community, to train the CBO members, teachers, SMC and V D C members, to orient managers, social workers and politicians. Disbursement will also be made to establish an effective monitoring and evaluation system. Funds will be provided for the procurement o f various equipment and vehicles required for the Project Focal Point (PFP), and for incremental operating costs (incremental staff salary and allowances, operation and maintenance o f facilities used by the PFP for project implementation, office supplies, and utilities) that will be incurred by the PFP. Costs to cover consultancy services and training will also be covered under IDA disbursements. Financial Management A financial management assessment o f the implementing agency, the Department o f Education (DOE), was carried out (Summary, Annex 4). The DOE has been implementing the Basic and Primary Education Program (BPEP) jointly with other donors under an innovative "basket" approach. Despite the new - 12- initiative and several challenges, the DOE has been satisfactorily managing the basket approach. An Accounts Officer has been designated for the Project. In view o f proven experience o f managing the BPEP and a satisfactory financial management system in place, the overall institutional financial management risk is moderate. The first draft o f an Operations Manual, which will describe the reporting, monitoring and accounting procedures, has been completed. The manual will contain simple reporting formats that can be implemented by schools at the community level. It will provide guidelines stating how the accounts o f the grants received should be maintained, and also specify the reporting format that should be reported on a trimesterly basis to the DEOs. The report will indicate how the grants are being spent and how they have contributed to the overall school management. The guidelines will also specify the scope o f the social audit report which should be submitted to respective DEOs on a trimesterly basis. A monitoring system will also be established to allow the respective DEOs to monitor the use of grants on the basis o f the trimesterly reports that will be submitted by the schools. DEOs will submit a consolidated report to the PFP, to enable the PFP to assess the outputs o f the grants and related outcomes. c. Other D. Risks 1. Social and Environmental Risk Environmental Category: [X[ C The project aims to support the govemment's policy that i s designedto empower communities to manage their own schools. Communities would be provided with block grants which make them responsible for recruiting and managing teachers, determining resource requirements, and utilizing those resources according to local needs. Indigenous people, if any, in the project areas will benefit from the project through their mainstreaming into primary education. It also provides for scholarships to disadvantaged children and, therefore, would help improve equity. The project will assist indigenous communities, dalits and disadvantaged communities to organize so that their interests are protected. No new schools will be built under the project. The project will not fund civil works directly. Grants received by schools may be used for rehabilitation o f existing facilities and minor new construction within the boundaries o f existing schools. The average grant per school will not exceed Rs. 240,000 (US$3,000), most o f which i s to beused for non-construction activities. Therefore, negative environmental impacts are not expected from the CSSP. a. Safeguard Policies This project triggers Environmental Assessment OP 4.01 and Indigenous Peoples OD 4.20. Environmental Assessment OP 4.01: N o new land will be acquired for the project. Therefore, culturally sensitive areas or critical natural habitats will not be affected. The project does not directly fund construction, which if any, will be minor or associated with rehabilitation. The scale o f construction, if any, will be very small. Therefore, the impact on the bio-physical environment will be very small. Indigenous Peoples OD 4.20: The project aims to mainstream out-of-school children, many o f whom will belong to indigenous peoples, dalits and disadvantaged. Maximizing project benefits to these groups will be the focus o f the project. An Indigenous Peoples Development Plan (IPDP) has been prepared for - 13- the project and is presented in Annex 10. The IPDP was translated into Nepali and disclosed to stakeholders. Negative impacts on these groups are not expected. Environmental Category: C (Not Required) b. Other Social Risks The CSSP is aimed at assisting the Govemment in effective implementation o f the existing policy o f transferring school management to communities. This policy, already under implementation, enjoys broad social and political support. Since it should help empower more marginalized cominunities as mentioned above, social risks associated with the project are minimal and without implications for any reputational risks for the Bank. The potential positive social outcomes o f the project outweigh any possible risks. 2. Other (external, reflecting the failure of the assumptionsin the fourth column of Annex 1) Risk Risk Rating I Risk Mitigation Measure From Outputs to Objective The Government may not abide by its commitment to fund and provide N l technical assistance to I community-managed schools. The Government may not abide by its S To work out up front clear procedures for commitment to withdraw government withdrawing teachers from community- teachers when requested by the SMCs. managed schools. To orient bureaucrats on this procedures. M The Government may not abide by its To promote networking among community- commitment to let SMCs manage schools managed schools so that they can own interests. without government interference. T o issue a clear code o f conduct with respect to support to community schools. The Government may have difficulty in M To change the existing mode o f input-based, financing school transfer if the in-kindsupport from donor funding to community response becomes outcome-based support in cash. overwhelming. Dominant caste/ethnic groups in some M To carry out intensive social mobilization and communities may resist gender, caste and to evolve processes for election o f school ethnic mainstreamingo f students. management committees accountable to dalits and disadvantaged ethnic minorities. From Components to Outputs Poor communities may not be able to M T o assist communities get engaged in income mobilize local resources. generation activities through training. To introduce equity-based grants. Overall Risk Rating M Risk Rating H (High Risk), S (Substantial Ris , M (Modest Risk), N(Negligib1eor Low Risk) - - 1 4 - E. Main Loan Conditions 1. Effectiveness Condition Legal opinion by the Ministry of Law and Justice that the Agreement has been duly authorized or ratified by the Kingdom o f Nepal and legally binding on the saiiie. 2. Other (classify according to co\,cnant t!'pcs used in the Lcgal Agrecnicnts.) Thc. consolidated accounts for all components will be inaintained for anriunl audit by the Office of the Auditor General, and a certified project accounts including stateinent of expenditures account and speci:il account \\illbe submitted to IDA n.ithin six months of the close ofeach financial }.ear. F. Readiness for Implementation -_ .. 1. a) The engineering design documents for the first year's activities are complete and ready for the -.. start o f project impIementation. 1. b) Not applicable. - -2.Theprocurementdocumentsforthefirstsixmonths'activitiesarecompleteandreadyforthestart of project implementation; and a framework has been established for agreement on standard x bidding documents that will be usedfor ongoing procurement throughout the life o f LIL 3. The LIL's Implementation Plan has been appraised and found to be realistic and o f satisfactory - quality. -4.Thefollowingitemsarelackingandarediscussedunderloanconditions(SectionG): G. Compliance with Bank Policies - 1. This project complies with all applicable Bank policies. _ _ 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies. Rajendra Dhoj Joshi MichelleRiboud TeHm Leader- Sector Manager Country Manager - 1 5 - Annex I : Project Design Summary NEPAL: Community School Support Project I1 Key Performance Data CollectionStrategy ~ Hierarchy of Obiectives Indicators Critical Assumptions Sector-related CAS Goal: Sector Indicators: iectorl country reports: ?om Goal to Bank Mission) 0 Devolution of 0 National Education 0 Schools continue to responsibiIity for 0 Increase in nuinber of h.1anageiiient receive adequntt. public iiianagetnent of co111m11nity-ilian:Iged InFormation System Fundirig schooling u.iththe schools. 0 CoinparatiLe intention o f raising 0 Comitiunity-managed assessment of overall accountability schools emerge as cormnunity-managed o f leading public schools and private schools Govemment-financed 0 Parents' satisfaction schools survey 0 Targeting educationally 0 Enrolment profile of 0 Baseline studies :ommunities can be and socially schools more nobilized to support disadvantaged groups compatible with ethnic, :ender, caste and ethnic I caste and gender nainstreaming profile o f communities they serve Follow-on Development Objective: 0 To develop a critical 0 Improved capacity o f 0 National Education knowledge base for the Government to Management successful upscaling o f support community Information System transfer o f management based schools 0 Parents' satisfaction o f govemment-funded 0 Segregated schooling survey schools to communities for rich and poor originating from perceived significant quality gap between public and private provision starts to fade incase o f community-managed schools 0 Significant improvement in access to and efficiency and quality o f community-managed primary education 3utcome I Impact Project reports: :from Objective to Goal) ~ Objective: ndicators: -16- I0 T o test whether 0 Improvement in Financial Monitoring 0 Local government community participation and Reports elections are held management o f schools promotion rates Evaluation reports 0 Peaceful environment can better contribute Viable modalities for Parents' satisfaction i s established to enhance (a) community survey participation rates, (b) management o f schools Records o f social quality and efficiency; established audits and (c) accountability 0 Confidence o f public in o f schools community-managed schools established Output from each htput Indicators: `rojectreports: from Outputs to Objective) Component: School Grants Enrolment rate o f Financial Monitoring 0 The Government sticks 0 Enhanced participation children o f age 6 Reports to its commitment to and promotion 0 Net enrolment ratio o f Independent evaluation fund and provide Increase innumber o f primary education Supervision mission technical assistance to community managed Enrolment rate o f girls reports community-managed schools and disadvantaged 0 Implementation schools. Equityenhancement communities Completion Report 0 The Government abide: through block grants to Promotion, repetition Status reports by its commitment to community schools not and dropout rates 0 Parents' satisfaction withdraw government receivingpublic Improvement o f survey teachers when funding physical facilities National Education requested by the SMCs Scholarships 0 Share o f female Management The Government abide: 0 Mainstreaming o f teachers Information System by its commitment to out-of-school children Representationo f School annual reports let SMCs manage 0 Improved retention o f women and Baseline studies schools without children from disadvantaged government disadvantaged communities in various interference. households committees The Government CapacityBuilding Frequency o f meetings adjusts the block grants 0 Capacityof and monitoring as the enrolment communities to Community changes. manage, monitor and contribution in cash support schools and kind developed Relationship between Enhanced professional community-managed and management skills schools and district o f teachers education offices 0 Improvement in social Quality o f monitoring fabric by developing reports inclusive approaches in school management and operation -17- 0 Roles of local government, line agencies and communities with respect to schools crystallized 0 Monitoring and Evaluation 0 Participatory monitoring modalities developed 0 Monitoring capacity o f line agencies strengthened 'roject Components I nputs: (budget for each 'roject reports: (from Components to iub-components: :omponent) Outputs) 0 School grants US$3.66 million 0 Audit reports 0 Community i s able to 0 Scholarships US$0.44 million 0 Financial Monitoring generate matching fund 0 Capacity building US$0.66 million 0 Monitoring and 0USs0.42 million evaluation - 1 8 - Annex la: ProjectMonitoring Baselineand Targets Key Performance Indicator: Baseline Mid-term End of 06/30/03 09/30/04 Project 07/15106 Outcome/ImDact Indicator Target Target Fully supported schools Out-of-school children o f primary age in the service area, YO n 8 0 % o f a 5Oo/O o f n Out-of-school children o f age 6 in the school service area, % b 7 0 % o f b 3 3 % o f b Weighted average repetition and dropout rate o f primary grades c 9 0 % o f c 75%ofc together, YO Out-of-school girls o f primary age in the service area, YO d 8 5 % o f d 5 5 % o f d Out-of-school dalit children o f primary age in the service area, % e 9 0 % o f e 6O%ofe Out-of-school disadvantaged ethnic minority children o f primary age in f 90% off off lthe service area. % I I I60% I Out-of-school girls o f age 6 in the school service area, % g 7 0 % o f g 3 3 % o f g Out-of-school dalit children o f age 6 inthe school service area, % h 7 0 % o f h 3 3 % o f h Out-of-school disadvantaged ethnic minority children o f age 6 in i 70%ofi 3 3 % o f i the service area, YO Average gender gap in secondary and lower secondary education, % j 90% ofj 75% o f j Gender gap inrate o f transition from primary to lower secondary k 90% o f k 75% o f k grades, % Non-dalit to dalit gap in rate o f transition from primary to lower I 9 0 % o f I 7 5 % 0 f l secondary grades, % Gender gap inrate o f transition from primary to secondary grades, % m 9 0 % o f m 7 5 % o f m Non-dalit to dalit gap inrate o f transition from primary to secondary n 9 0 % o f n 7 5 % o f n grades, YO Weighted average repetition and dropout rates o f lower secondary o 95% o f o 8O%ofo I Weighted average mades. % repetition and dropout rates o f secondary grades, YOI p )95%ofp \ 8 0 % o f p Key Performance Indicators6 Baseline Mid-term End of Project 06/30/03 09/30/04 07/15/06 OutputIndicators Number o f schools transferred to community 86 700 1,500 management Number o f schools receiving full support from 0 200 250 the project Fully supportedschools Training o f NGOsiSOs 250 300 Number o f schools communities mobilized 200 250 I Number o f school communities oriented I I 1.000 Number o f civil servants and politicians oriented I I600 I 1000 I I I I -19- Number o f teachers receiving customized I 1,000 1,500 training Number o f staff supported for developmental 5 10 assimments I Participatory monitoring modalities developed Y Y Community mobilization modalities and Y Y modalities for school management/govemance by communities including developed modalities for ensuring o f management committees representing all cross sections o f parents developed Framework terms o f reference for employment o f Y teachers b y community managed schools develoDed Roles o f local government, district education Y office and other line agencies with respect to community-managed schools in terms o f funding, technical assistance, supervision and monitoring clarified Frameworks for performance grants and social Y Y contracts for improvements o f access including innovative scholarship modalities developed - 20 - Policy Framework Policies Due Date for Responsible Compliance Agency Guidelines for support to community-managed schools developed, which will among others include: Procedures for withdrawing teachers from community-managed September, PFPIMOES schools at the request of SMCs within 6 months of the request 2003 adopted 0 Procedures for termination and appointment of headteachers by September, PFP/MOES SMCs adopted 2003 0 Broad guidelines for appointment of teachers by SMCs of September, PFP/MOES community-managed schools adopted 2003 0 Procedures for up front release of block grants to October, PFP/MOF community-managed schools adopted 2003 Community-managed schools will continue to receive the same level and Complied kindof support as govemment-managed schools Regular block grants to community-managed schools will be revised Complied bi-annually New classroom blocks will be providedpromptly to accommodate December, IOE increased enrolment if available 2003 N o government teachers will be posted or transferred to community- Comp1ied managed schools A framework to establish a pension scheme for teachers of June 30,2004 'FP/HMG community-managed schoois will be adopted. 5For schools supported startingfrom the first halfo f the project.Baseline will be establishedfor each of the project-supportedschools following their selectionby the project. 6For schools supported startingfrom the first halfof the project. -21 - Annex 2: Detailed Project Description NEPAL: Community School Support Project School education in Nepal comprise primary education (grades 1-5), lower secondary education (grades 6-8), secondary education (grades 9-10) and higher secondary education (grades 11-12). Grades 1 to 10 are administered and/or regulated by the Department o f Education, uhile grades 11 and 12 come under the Higher Secondary Education Board. Schools offering secondary or lower secondary programs also offer lower level programs. School education i s offered by government-funded community schools, community schools owned and funded by community, and institutional (private) schools. At the primary - level, community-owned and private schools account for 2% and 7% o f the total enrolment, while at the lower secondary level their shares are 16% and 11% respectively, and at the secondary level 2 1% and 12% respectively. The Net Enrolment Ratio (NER) at primary, lower secondary and secondary levels are around 80%, 33% and 20% respectively. The promotion rate at grade 1 i s around 45%, while at grade 10 it i s around 81%. The promotion rates and learning achievement levels in private schools are significantly higher than that o f government-funded schools in spite o f the fact that government-funded schools on an average have better physical facilities and more qualified and trained teachers. To address this weakness o f the public school system, the Government has decided to gradually transfer government-funded schools to community management. To encourage communities to take over management o f government-funded schools, the Government has offered a one-time grant o f Rs. 100,000 (around USS1,200) to communities taking over management o f government-funded schools. Schools transferred to community management will have full authority for management o f schools including hiring and management o f staff, while the Government will continue to fund them through 'block grants, which will not be less than the current level o f funding. Community-managed schools are expected to perform better than government-managed schools, as such schools will be accountable to the community, whereas the latter i s accountable only to the Government. This Community School Support Project (CSSP) i s aimed at learning how schools transferred to community management can be best supported in a sustainable manner to improve access to, and quality and efficiency o f education, so that this important initiative o f the Government could be up-scaled at a fast pace to help Nepal achieve the MDG targets. In support o f the Government policy o f providing an incentive grant to communities taking over management o f government-funded schools, this project will provide such grants to about 1,500 schools (counting each level o f school as one school). Out o f these schools, the project will provide block and performance grants, scholarships and technical assistance for capacity building to about 175 primary schools, 50 lower secondary schools and 25 secondary schools, while the remaining schools will receive only a token assistance limited to development o f school vision and building their capacity for monitoringprogress in achievement o f their vision. While incentive grants will be made available to community-managed government-funded schools on a first-come first-serve basis, schools for full project support - all or some o f block, incentive, other, performance and supplementary grants - will be selected by the Government using criteria agreed upon with the Bank. Although this project finances primary, lower secondary and secondary schools, the project gives greater focus to primary schools. One o f the reasons for extending support to lower secondary and secondary - 22 - schools is that in Nepal, very often such schools are integrated with primary schools, and it i s not feasible to improve only a section o f the school. The project will have the following components: (a) School Grants; (b) Scholarships; (c) Capacity Building; and (d) Monitoring and Evaluation. By Component: Project Component 1 US$3.66 million - School Grants. The Education Act articulates the obligation o f the Government to primary education as providing the full cost o f salaries for teachers, and the partial costs o f salaries for secondary education. The obligation for mobilizing resources for other expenditures, especially physical infrastructure, lies with the communities. In spite o f the above provision, the Government has been providing inputs for capacity building, teacher training, physical facilities, etc., through the development budget - largely funded by donors. If the grants for salaries are directly disbursed to schools, the allocations for other expenses are mostly spent by district level agencies for activities aimed at supporting schools. The funds disbursed directly to schools for salaries or funds spent by districts for schools have not empowered schools as the salaries are to be paid to the teachers employed by the Government and schools have little choice over the expenditures from the developmental budget. The CSSP will provide a one-time incentive grant o f Rs. 100,000 (US$1,200) for government-funded primary schools that choose to take over management responsibilities from the Govemment consistent with the Govemment policy. Similarly, it will provide the same amount o f incentive grants to govemment-funded lower secondary and secondary schools. There i s no risk that incentive grants to lower secondary and secondary schools will encourage primary schools to upgrade themselves to higher levels, because schools upgraded without government approval/funding will not be eligible for incentive grants, and the cost o f such upgrading to be bome by the community is much higher than incentive grants. Tying up incentive grants to school levels i s also an attempt to link the grants with the school size. Schools inpoorer areas may need greater incentives to opt for community management, as they are likely to be less well o f f in terms o f physical facilities and, as investment and operating costs are likely to be higher in such areas. The CSSP will specifically study the incentive structures that could attract poor remote schools to community management. To ensure replicability o f the LIL experience, the proposed incentive grants together with performance grants described below, will be kept within the range o f the supports schools are receiving from the development budget. Therefore, incentive grants essentially attempt to empower schools b y disbursing the funds being spent for the schools by the Govemment agencies to the schools directly, which will allow the schools to make their own choices. The incentive grants are deemed critical for encouraging more and more communities to take over management o f schools and provide some resources up front to enable them to initiate school improvement activities right away. Some o f the govemment-funded primary schools transferred to community management may have lower secondary and secondary levels funded by the community, as it is usual practice to upgrade primary schools to lower secondary and secondary levels through community efforts. Many o f such schools eventually manage to get Govemment funding for lower secondary and secondary levels also. It i s in the interest o f the Government to strengthen such schools, as success o f such schools will help to expand community-managed schools. In this context the CSSP also will provide block grants tied to performance to exclusively community-funded lower secondary and secondary levels o f government-funded primary schools transferred to communities. These grants will cover up to 25% and 50% o f staff costs for secondary and lower secondary schools, respectively. - 23 - Mainstreaming the children from socially excluded families requires serious efforts. Lack o f incentives for schools in their mainstreaming has resulted in failure o f consecutive five-year plans in achieving the targets for improving participation rates in primary education. For example, the net enrolment ratio target for primary education in both the eighth and ninth five-year plans were 90%, while the achievement at the end o f ninth plan - mid-2002 - is estimated at around 83%. Therefore, the CSSP aims at learning the potential o f incentives in accelerating mainstreaming o f out-of-school children. The schools will receive a performance grant o f Rs. 500 for mainstreaming each out-of-school child o f primary school age. The project is counting heavily on social mobilization for inclusion o f indigenous, disadvantaged and dalit communities excluded from education. The social mobilization will lead to a social contract, which i s at the core o f the CSSP design, between the excluded community and the School Management Committee (SMC) witnessed by the community benefiting from school, the local government (VDC or municipality) and the District Education Office (DEO). The social contract i s intended to articulate: (a) the community's commitment to ensure inclusion of all households excluded from education; (b) clear delineation o f the roles o f all parties to the contract; and (c) specific mutual obligations o f these parties to each other. Social mobilization o f various stakeholder groups in the community around the articulation and implementation o f the social contract will be key to the project approach. It will be particularly critical to involve and empower the three groups who make up the bulk o f the out o f school population: females, dalits and disadvantaged ethnic groups. The primary cycle completion rate in year 2000 was around 54%, whereas the percentage o f children completing the primary cycle within the prescribed duration was only 14%. L o w completion rate i s the greatest impediment towards achieving the MDG o f universal primary education by 2015. Therefore with a view to learn the impact o f incentives on improvement o f pass rates, schools will be given a performance grant o f around Rs. 500/gain in pass ratelgrade for primary grades. Standardized assessments will be conducted for ensuring validity o f tests. The performance grants for access and completion rate improvements, and scholarships for out o f school children, are likely to boost enrolment. The CSSP i s not likely to achieve its objectives if schools do not receive additional resources to respond to the need for more teachers and physical facilities. Therefore, the CSSP will provide block grant to schools to enable them to meet needs for more teachers and physical facilities till the schools are able to receive such support from the Government. This policy fits well within the Government policy o f moving to block grants rather than directly bearing operating costs o f schools. Schools operate within diverse socio-economic and cultural environment, and consequently a flat level o f grants may discriminate against poor communities making them unable to get transferred to community management as well as make desired improvement intargeted indicators. For almost half o f the population, Nepali i s not the mother tongue, yet the medium o f instruction in community primary schools i s Nepali. This has been recognized as one o f the major reasons contributing to high dropout rates in primary education. During the consultations in the course o f preparation o f the project, the Nepal Federation o f Nationalities emphasized the need for dealing with this critical issue. Introduction o f bilingual education and teaching Nepali as a second language may help address this difficulty. There is a lot o f evidence that the presence o f female teachers in schools significantly contributes to - 24 - improvement in participation rates o f girls and improvement on learning environment in schools. The Government's policy o f employing at least one female teacher in every primary school remains unfulfilled mainly due to social biases in favor o f males. Similarly, there is some evidence that recruitment o f teachers from disadvantaged communities help in improving access to education for children from disadvantaged communities. The project will provide other grants specially targeted to marginalized communities, to piloting of innovative approaches such as bilingual education, teaching Nepali as a second language, and to recruiting female teachers and teachers from disadvantaged communities. A critical factor that affects progression and completion rates i s the standard o f instruction and performance level a school community sets for itself. Hence, attempts will be made to connect qua1itatii.e improvement in school/classroom atmosphere, instructional processes and learning acquisition level Lvith the performance grants. The ultimate achievement o f the project objectives will be contingent upon success o f the communities in improving the learning environment for children. Although the grants are not directly tied to the improvement in learning environment, the project will focus on assisting the communities to continuously improve the learning environment in schools in a systematic manner. Community vision o f school improvement and optimum child development will be the focus o f the reform activities. Enhanced consciousness and community participation in the management o f reform activities will serve as a glue that will bring together different actors to make a difference in school improvement and child learning. The effect and impact o f improved school atmosphere and instructional quality on mainstreaming out-of-school children will also be closely examined. Project Component 2 US$0.44 million - Scholarships.Around 20% o f the primary age children are still out o f school in spite o f the fact that the Government is providing free textbooks and n o fees are levied in government-funded primary schools. It i s believed that one o f the main barriers for mainstreaming such children into primary education i s the inability o f households to bear other costs associated with schooling such as cost o f stationaries, school uniforms, and in some cases opportunity cost o f labor. With a view to overcome this barrier, the Government has been providing various scholarships specifically for girls, dalits, and children from households below the poverty line. The success o f these scholarships inmainstreaming the disadvantaged communities into primary education has been limited. Some o f the arguments questioning the effectiveness o f the current scholarship programs are: (a) the scholarship i s too small to dismantle the barriers that the hard core groups are facing; (b) the mechanism for distribution o f scholarship does not preclude elite capture o f the scholarship funds; and (c) the scholarships are received only at the end o f academic year making them accessible only to children already in school. The scholarship component will be aimed at understanding how could scholarships be used effectively for mainstreaming the out-of-school children. The CSSP will aim at mainstreaming all out-of-school children within the service area o f community-managed schools funded by the project. The communities will be allowed to design scholarship modalities including topping up o f scholarships using performance grant for access. The basis for estimating scholarship grants to schools will be as follows: The first child and/or the first girl child from poor families, from which none o f the family members ever completed primary school, will be offered a scholarship o f Rs. 500 per year at grade 1 and Rs. 250 per year in subsequent years. Other children from such families will receive Rs. 250 per year. - 25 - This design i s based on the assumptions that: (a) higher scholarship is required to entice out-of-school children, but they can be retained by providing lower maintenance scholarship; and (b) once the first child and/or the first girl child goes to school, the household is likely to send other children to school even without an enhanced scholarship. The scholarship will become a part o f the social contract referred to above, so that there is social obligation for parties signing the contract to make sure that out-of-school children not only get enrolled, but also retained to the end o f primary school. This component will also provide scholarships for attending lower secondary and secondary schools to the first girl and to the first boy from poor dalitloppressedidisadvantaged janjati families, from which none o f the family members completed secondary school. This scholarship is aimed at improving access to secondary education for children from disadvantaged households. The estimates for scholarship grant are based on the assumption that the scholarships for lower secondary and secondary schools are Rs. 700 and Rs. 1,000 per child per year. The schools will be given flexibility to adjust the scholarship amounts. This component will also pilot scholarships for other secondary children (apart from the first boy and girl). As mitigation o f social and cultural barriers apart from economic barriers are critical to successful mainstreaming o f out-of-school children, the scholarship design will also take into account social and cultural background o f the school service area. Project Component 3 US$ 0.66 million - Capacity Building. Community-driven development i s being promoted across the world as an approach that can contribute to improvement o f service delivery. EDUCO in El Salvador, BRAC in Bangladesh and PRONADE in Guatemala are related to such successful initiatives. The community-driven development approach i s being successfully applied in forestry, rural energy and water supply sectors in Nepal. The Community-Owned Primary Education Program (COPE) in Nepal, assisted by the UNDP, does demonstrate the capacity o f communities to manage schools. COPE is supporting new community-owned schools that do not receive public funding, and hence, communities manage them on their own. Similarly, there are around 8,000 schools owned and managed by communities that do not receive public funding. This LIL aims at expanding the experience o f community management to public schools, which by virtue o f receiving public fundingand having government teachers have very different characteristics. The experience o f successful community-driven development indicates the need for rigorous community mobilization exercise for success o f community-driven development. This component will fund community mobilization activities in the service area o f schools funded by the project. Community mobilization will mainly draw upon seven basic principles adapted from the highly successful Rural Energy Development Program - skill enhancement, women's empowerment, establishment o f self governing community organizations, capital formation, technology promotion, literacy promotion and environment conservation. However, it i s to be noted here that none o f the community mobilization approaches adopted in other sectors exactly responds to the type o f community that this project serves. For example, if water supply, forestry and rural energy projects provide services to the whole community within the given locality, the community-managed schools provide services to only part o f the community as some households may be getting services from private schools and others may not have school-age children. Therefore, the project will encourage communities to try out different modalities o f community mobilization approaches. Major activities o f this component comprise community mobilization through a facilitator, training for CBO members, training o f teachers, SMC and V D C members, orientation o f managers and social workers. NGOs/SOs, which will be hired by the - 26 - communities themselves from among those qualified by the Department o f Education, will be used for community mobilization as they have developed a good capacity in this area. For empowering communities this component will provide grants for community mobilization, and training o f community, teachers and SMC members. The focus o f capacity building activities will be on enhancing collective consciousness level and on equipping key stakeholders with skills and readiness level to participate in school improvement activities that will ensure efficient instructional processes and optimum achievement levels. This component will also include communication o f the government policy of transferring management o f government-funded schools to communities within the civil service as kvell as to the public at large. Effective communication o f this policy will be critical for success in transfer o f schools to communities, as implementation o f this policy involves changes in the power structure, and consequently, is prone to misinterpretation from those who may lose privileges from this reform. The project will make the utmost effort to disseminate the government policy to the disadvantaged janjatis by communicating this policy in their languages. Project Component 4 US$0.42 million - Monitoring and Evaluation. A rigorous documentation and analysis o f the experience generated through the project w i l l be carried out as a part o f this component with a view to test whether the hypotheses o f the project have been confirmed, and draw conclusions on the best modalities for delivery o f various project components. The main hypothesis o f the project i s that community management o f government-funded schools can better enhance access to schools for all children including children from disadvantaged communities, and better improve efficiency and quality o f school education compared to schools not transferred to community management. A set o f indicators comprising progress in mainstreaming out-of-school children, their retention, pass rates and leaming achievements, and other qualitative and quantitative parameters indicating school effectiveness like class occurrence, student regularity, user satisfaction, participation o f parents in school activities, extra curricular activities, cleanliness will be used for the test o f the hypothesis. A baseline will be established in each o f the participating schools, and progress will be monitored on a periodic basis. The baseline will be developed through active participation o f the community and additional indicators reflecting the vision o f the community with respect to school improvement will be incorporated into the baseline. The community will be provided with training in order to enable them to periodically monitor progress against their targets. NGOs/SOs, local government, resource persons, district education offices, regional education directorates, Department o f Education and Research Support Groups (private firms or NGOs) will be involved invarious ways at various areas and levels o f monitoring. As the outcome o f this policy initiative may be significantly affected by the socio-economic and cultural status o f the community, the baseline survey will incorporate indicators reflecting development stages o f the communities such as living standard, assets, infrastructure and services, and the ethnic and caste composition o f communities. The effectiveness o f various components o f the project will also be evaluated with a view to draw inferences on promising approaches for delivery o f these components and contribution o f these components in achieving the overall objective o f the project. Some o f the other studies to be undertaken as a part o f this component are assessment o f community mobilization approaches, approaches for ensuring social inclusion in access to education and school management, assessments o f scholarships and performance grants and project evaluation. T o transfer the experience generated through the project to universities as well as to benefit from the experience o f universities, the project will modestly fund student research and field work in related areas. This component will also fund relevant on-the-job-training (development assignment). - 27 - The success of the project will, to a large extent, depend upon the extent o f success in ensuring synergy o f inputs from various components. Therefore, components will not be treated as independent activities. School activities will be guided by its goals, and inputs from various components will be matched with the requirements o f a given activity. School grants envisaged in this project are designed to give the communities flexibility in harmonizing inputs from various components. Consistent with this synergetic approach while executing project inputs along with processes will be monitored. Some o f the processes that will be carefully monitored in schools are: 0 Setting o f a vision, goal, standards o f instruction and performance e Transformation o f attitude o f stakeholders by reinforcing positive values e Inclusion o f all segments o f society in school transformation process 0 Transparency in business transactions e Team spirit and mutual trust e Transformation o f school physical and academiciclassroom environment 0 Use o f a wide variety o f teaching and learning materials 0 use o f participatory activity-based teaching learning methods e Monitoring o f visible progress in school functioning and learning level e Interaction on and communication o f school progress ImplementationArrangements The Department o f Education (DOE) under the Ministry o f Education and Sports (MOES) will be the implementing agency for the project. The DOE has designated one o f its divisions as the Project Focal Point (PFP) and the head o f the division i s the Project Coordinator. The Coordinator will be assisted by a Deputy Director, a Section Officer, an Accounts Officer, a Procurement Specialist and other officials. The PFP will be guided by a Central Steering Committee (CSC) comprising Joint-Secretary Planning Division, MOES - Chair, DG Member, one representative each from NPC, MOF and MOLD, and two - representatives from the private sector, Deputy Director designated for the project - Member, Coordinator PFP - Member Secretary. The main functions o f the committee will be to approve annual plans and budgets, select schools participating in the project, monitor progress o f project activities and provide policy advice. The representatives from the private sector will be from among prominent educationists, NGOs and social workers. The representatives from the private sector will be nominated by the Govemment in consultation with IDA. The PFP will be supported by one o f the Research Support Groups. The Director General (DG) o f the Department will assume overall responsibility for the project and will delegate authority for day-to-day operation o f the project to the Coordinator. The District Education Office (DEO) will implement the project activity at the district level. A District Focal Person will be designated to implement project activities. The Focal Person will report to the District Education Officer, and will be assisted by DE0 staff as necessary. The project activities at the district level will be guided by a District Steering Committee (DSC) comprising District Education Officer - Chair, one representative from among the SMC Chairpersons o f community-managed government-funded schools in the district selected by the community managed schools and Focal Person - Member Secretary. The main functions o f the DSC will be recommending annual work plans and budgets for consideration o f the CSC, screening schools applying for participation in the project, reviewing progress o f project activities and providing feedback on the program. The District Education Officer will assume overall responsibility for the project activities in the district and may delegate hidher authority as appropriate to the District Focal Person. Most o f the activities o f the project will be implemented by the communities - SMCsischools, and CBOs - 28 - supported by NGOs. The SMCs will have overall responsibility for implementation o f the project activities within the school communities. The DE0 w i l l monitor and supervise activities of the communities. For broad community involvement in the project activities, SMCs will form Project Advisory Committees (PACs), Project Monitoring Committees (PMCs), Social Audit Committee (SACS) and other committees, as appropriate. Desired composition o f the PAC, PMC and SAC are presented below for guidance. The SMCs may use their judgment with respect to composition o f the committees. Composition o f the Project Advisory Committee 1. SMC Chairperson Chair 2. All other members o f SMC Member 3. Chairperson, Parent Teacher Association Member 4. Chairpersons o f all committees formed according to Guidelines for Transferring management of Schools to Communities Member 5. A male and a female representative o f disadvantaged communities 6. A male and a female representative o f parents o f out-of-school children from indigenousIdalit /disadvantaged communities Member 7. Parents of children studyinginprimary grades Member 8. Representatives o f pupils including one from primary grades and one girl Member 9. Chairpersons PMC and SAC Member 10.Head teacher Member-Secretary 11.Chairperson, Village Development Committee Advisor Composition o f the Project Monitoring Committee 1. One male and one female representative o f parents Member 2. One male pupil and one female pupil Member 3. One male and one female representatives from disadvantagedlindigenousldalitcommunities Member 4. One social worker Member A Chairperson will be electedby the members from among the members. Composition o f the Social Audit Committee 1. One male and one female representative o f parents Member 2. One male pupil and one female pupil Member 3. One social worker Member A Chairperson will be elected by the members from among the members. - 29 - Annex 3: Estimated Project Costs NEPAL: Community School Support Project Local Foreign Total Project Cost By Component US $million US $million US $million School Grants 3.2 1 0.00 3.21 SchoInrships 0.38 0.00 0.38 C ;ipacity 3 ti i1diiig 0.59 0.00 0.59 Monitoring and Evaluation 0.45 0.00 0.45 Total Baseline Cost 4.66 0.00 4.66 Physical Contingencies 0.30 0.00 0.30 Price Contingencies 0.22 0.00 Total Project Costs1 5.18 0.00 5.18 Total Financing Required 5.18 0.00 5.18 Local Foreign Total Project Cost By Category US $million US $million US $million Grants 3.21 0.00 3.21 Scholarships 0.38 0.00 0.38 Goods 0.08 0.00 0.08 Services 0.52 0.00 0.52 Training, study visits, development assignments, 0.15 0.00 0.15 student research Incremental Operating Costs 0.32 0.00 0.32 Unallocated 0.52 0.00 0.52 Total Project Costs1 5.18 0.00 5.18 Total Financing Required 5.18 1 0.00 I 5.18 I ldentifiable taxes and duties are 0.I 8 (US$m)and the total project cost, net of taxes. is 5 (US$m). Therefore, the project cost sharing ratio is 100% of total project cost net of taxes. - 30 - Annex 4: Financial Management NEPAL: Community School Support Project Financial Management Arrangements The Department o f Education (DOE) is responsible for the management o f project funds, including the proceeds o f the credit and counterpart funds. DOE has designated a Project Focal Point (PFP), which functions as the Project Coordination Unit (PCU), and is responsible for overall project coordination and consolidation o f accounts. Its Accounting Division will be responsible to perform the relevant financial management functions. A Financial Controller, who has several years o f relevant accounting experience, heads the Division. There i s a total of six staff in the DOE, including the Accounts Controller. The DOE has designated one o f the Accounts Officer for the project. The Accounts Officer shall be responsible for assisting in formulating the annual budget, operation o f the accounting system, supervision o f district level accountants, training o f district level accountants, and monitoring o f overall financial transaction. Accounting Arrangements and Funds Flow A separate budget head will be assigned in the Government's Budget (Red Book) which will allow reporting o f expenditures and accounts under IDA funding. Initially for the first year o f the program, until the districts can be identified, the budget for the Project will be allocated under a separate identifiable budget head at the central level. Following the approval o f the program and budget estimates, the budget authorization will be provided to the Department o f Education. Based on demands for transfer o f schools from various districts, the Project Focal Point (PFP) will allocate budget for districts, and the DOE will issue spending authorization and transfer funds to respective District Education Offices (DEOs). DEOs will release funds to schools that are qualified to obtain grants based on set indicators, and will maintain a record o f schools receiving grants. Grants provided to schools meeting specific criteria are considered as expenditures, without any need for schools/communities receiving such grants to return any savings thereof. Utilization of grants for the intended purpose will be closely monitored and reported. Financing o f grants and scholarships are pre-financed by government's own resources, the consolidated claims o f which are later charged to the Special Account or submittedto IDA for reimbursement. Almost 80 percent o f required resources are pre-financed by the government, and the remaining 20 percent dealing with direct payments to consultants or suppliers are paid through the special account. Duringthe first year, as the demands for school transfers in districts get clearer, HMG and IDA will review to determine whether the arrangement in place should continue or an alternate arrangement should be made from the second year onwards to transfer the budget to the district level budget allowing the resources to be transferred directly through the respective District Treasury Controller Offices (DTCOs) to the respective DEOs. Following the handover decisions o f schools to communities by the Central Steering Committee and on signing o f agreement between the DE0 and schools incentives grants will be released by the DEOs to the SMCs. Similarly, other school grants tied to performance will be released to schools on approval by the District Steering Committee. The DOE will maintain the accounts for the project in accordance with the Government's cash-based accounting systems. The DOE has computer facility to maintain the accounts in spreadsheets. The DOE has a rich experience o f implementing innovative approach of basket funding involving five donors for the Basic and Primary Education Program. The accounting systems contain the following features: (a) application o f consistent cash accounting principles for documenting, recording, and reporting its financial transactions; (b) a well-defined chart o f accounts that allows meaningful summarization o f financial transactions for -31 - financial reporting purposes; (c) maintenance o f withdrawal monitoring register, SOE record, and special account register; (d) the use o f an asset register; (e) monthly closing and reconciliation o f accounts and statements; and (f) the production o f annual financial statements acceptable to IDA. Internal Control An Operations Manual containing among others the reporting and accounting procedure, and intemal control arrangements for the project i s under preparation. The Draft manual is expected to be completed by the negotiations date. The manual will also contain simple reporting formats that can be implemented by schools at the community level. It \vi11 provide guidelines as to how the accounts o f the grants received should be maintained, and also specify the reporting format that should be reported on a trimesterly basis to the DEOs. The report will indicate how the grant i s being spent and how it has contributed to the overall school management. It will specify internal control measures to ensure that funds are spent for the intended purpose, and records are maintained that should be transparent to the community and other interest groups. The guidelines will also specify a need for regular social audit and submission o f such reports to DEOs on a trimester basis. A monitoring system will also be established to allow the respective DEOs to monitor the use o f grants on the basis o f trimesterly reports that w i l l be submitted by the schools. DEOs will fulfill the role o f internal evaluators to oversee the proper use o f grants. DEOs will submit a consolidated report to the PFP o f the DOE to enable the PFP to assess the outputs o f the grants and related outcomes. The PFP will also arrange to recruit independent evaluators to visit districts and evaluate the works o f DEOs and the communities against the approved operations manual. Independent evaluators will submit an independent assessment report to the PFP with recommendations for improvements in the system. Initially, independent evaluators will be fielded every six months. A mechanism will also be put in place for technical audit during the mid-term review to measure the outcomes o f the grants provided to schools. DOE will hire independent consultants qualified to carry out performance audit to measure the impact o f the grant. District Education Offices will be responsible to maintain district level accounts under a separate ledger for the given budget head. DEOs will forward the monthly statements to the DOE which will prepare a consolidated monthly statement. A consolidated project expenditures will be reported by the DOE'SAccounting Division, based on the accounts maintained by it and the information providedby the DEOs on district project activities and grants expenditures. The annual financial statements will include, at a minimum, the following documents: (a) a Summary o f Sources and Uses o f Funds; (b) uses o f Funds by Project Activity; (c) summaries o f the Special Accounts statements and o f SOE disbursements, and (d) notes to financial statements. Audit Annual project accounts (including statement o f expenditures and special account) o f the project will be maintained by the PFP and will be audited by the Office o f the Auditor General o f Nepal (OAGN) as required by the Constitution o f the Kingdom o f Nepal, with audit reports due within six months o f the end o f each fiscal year. During audits, the grants released to communities will be considered as expenditures and accounts will be maintained as incurred expenditures, and audits thereof will be based on total grants released. Since grants released are treated as expenditures, there will be no need for recipients to refund - 32 - the savings, if any, of the receivedgrants. Reportingand Monitoring Schoolsicommunities will submit the trimester report as specified in the operations manual to respective DEOs. Respective DEOs will prepare a summary report for submission to the PFP. The PFP will prepare the financial monitoring report (FMR) on a trimesterly basis reporting the implementation progress on financial, physical progress and procurement. The PFP and IDA \\illagree to a reporting format during negotiations, which will be used as the standard form of reporting the progress both to HMGN and IDA. SupervisionPlan IDA will supervise the project on a regular basis, and more particularly, focus on the following during supervision: - Review of Statement of Expenditures(SOE), and - Periodic field visit to DEOs and communityschools to oversee the use of grants and financial management at DE0 and communitylevel. Supervisionwill be on an ongoingbasis from the Nepal Country Office, and will flag the issues on a timely basis. - 33 - Time taken to prepare the project (months) 2 First Bank mission (identification) 02:15/2003 Appraisal mission departure 05/05,2003 05:1212003 Negotiations 06/09,2003 06 09'2003 Prepared by: Department o f Education, Ministry o f Education and Sports Preparation assistance: None Bank staff who worked on the project included: Name Speciality Rajendra D.Joshi Sr. Education Specialist, Task Team Leader Susan E.Hirshberg Sr. Education Specialist Bigyan Pradhan Sr. Financial Management Specialist Kiran Ranjan Baral Sr. Procurement Specialist LynnBennett Lead Social Scientist Nawaf A. Al-Mahamel Counsel Ivonna Kratynski Senior Financial Officer Afshan H.Khawaja Senior Social Scientist Gertrude Cooper Program Assistant Sushila Rai Program Assistant - 34 - Annex 6: Procurement and Disbursement Arrangements NEPAL: Community School Support Project Procurement A. InstitutionalCapacity As a part of the project appraisal, the Bank carried out an assessment to determine the institutional capacity to carry out procurement in accordance with the World Bank guidelines for procurement and for selection o f consultants o f the Project Focal Point (PFP), which will function as a project coordination unit, within the Department of Education (DOE). The PFP will manage the procurement activities of the corresponding Part o f the Project. At present, the Department o f Education (DOE) i s implementing the Basic and Primary Education Program (BPEP) jointly funded by five donors including IDA under a basket funding approach. Procurement i s being carried out in accordance with IDA Procurement Guidelines. Over the four years o f implementation o f this project, DOE has gradually built up its procurement capacity which i s now well developed at the central level and reasonably developed at district level. B. ProcurementMethods All goods financed under the IDA credit shall be procured at the Central and District levels inaccordance with Bank guidelines for procurement (Guidelines: IBRDLoans and IDA Credits, January 1995, revised January and August 1996, September 1997, and January 1999). All consultant services and training and orientation funded by the IDA credit/grant shall be selected in accordance with the guidelines (Guidelines: Selection and Employment o f Consultants by World Bank Borrowers, January 1997, revised September 1997 and January 1999, and M a y 2002). IProcurementmethods (Table A) I The expenditure categories and their respective estimated costs, the procurement method and the respective amounts in parenthesis financed by the IDA Credit are summarized inTable A. Procurement Method l i Expenditure ~ICBIIS ~NCBINSIIS lother 21 ~ . B . F /TotalCost (1 Grants 13.21 13.19 Services (5) Training, Study 0.15 0.15 Tours, Development Assignments (6)Incremental 0.32 0.32 OperatingCost Unallocated 0.52 Total 0.75 3.91 5.18 -35 - Table Al: Consultant SelectionArrangements (US%million equivalent) Expenditure QCBS QBS SFB LCS CQ Other ~ , B . F . Total Cost Category I.Fimis 0.14 0.06 0.29 0.49 2. Individuals 0.03 0.03 Total 0.I 4 0.06 0.29 0.03 0.52 Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection (consulting services for NEA institutional strengthening) SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Single Source Selection o f Firms or SOE for Training, etc., Selection of Individual Consultants (per Section v of Guidelines for Consultants), Commercial Practices, etc. N.B.F. =Not Bank-financed C. [Prior review thresholds (Table B) (i) Each contract for goods for USS50,OOO equivalent and above. (ii) Each contract for consulting services for USS40,OOO and above in case o f firms, and USS10,OOO and above in case o f individuals. Table B: Thresholds for ProcurementMethods and Prior Review 1/ Expenditure Contract Value ProcurementMethod Contracts Subject to Prior Review Category (US$million equivalent) (1) Goods US%50,000 NCB All (3) Services a) Firms, exceeding USS40,OOO a) All b) Individual exceeding US$lO.OOO b) All - 36 - Disbursement hilocation of credit proceeds (Table C) I Table C: Allocation of Credit Proceeds Expenditure Category Amount in USS Rlillion Financing Percentage I. Grants 3.21 100% 2. Scholarships 0.38 100% 3. Goods 0.07 I00 % of foreign; 100% of local 1 expenditures (ex-factory cost), and 85% o f local expenditures for other items procured locally 4. Consulting Services 0.44 85% 5. Training, Study Tours, Development 0.14 100% Assignments 6. Incremental Operating Costs 0.24 85% during the first year; 75% during the second year; and 65% thereafter 7. Unallocated 0.52 DisbursementArrangements Disbursements from IDA will be made in accordance with traditional disbursement procedures, which include full documentation or statement o f expenditure (SOE). To facilitate disbursements, a Special Account will be established. For large payments exceeding the Special Account threshold, direct payments will be made by IDA. For small payments including the release o f grants and scholarships, disbursements from IDA will be on a reimbursement basis. Use of statements of expenditures (SOEs): SOEs will be used for the following expenditures: (a) for all grants and scholarship, (b) for goods under contracts costing less than $50,000 equivalent each, (c) for consultants' services contracts costing less than US$40,000 in case o f firms, and less than $10,000 or equivalent in case o f individuals, (d) for cost o f training, study tours and development assignments, and (e) incremental operating costs (incremental staff salary and allowances, operation and maintenance o f facilities used by the PFP for project implementation, office supplies, and utilities). Special account: A Special Account in US Dollars may be established, on terms and conditions satisfactory to IDA. The authorized allocations for special accounts will be US$200,000. The Special Account will be managed under thejoint signatures o f the Project Coordinator and the Accounts Officer. -37 - Table A: Procurement Plan (US$ million equivalent) Indicative Completion/ lckg ComponentlDesc. of Date of Date of Delivery No. ServiceslGoods cost' Method` RFPATB~ Award Date' 1 Capacity Building/NGO August 2003 - September August 2004: April services - 150 packages to be (0.00) lot I;April 2003-lot 2005; February procured independently by 2004 -lot 2; 1:hla>2004- 2006 schools April 2005 - lot 2; March lot 3) 2005 -lot 3 2 Training for NGOs - 5 35000.00 QCBS April 2003 July 2003 November 2005 packages (0.00) 3 Regional ResearchSupport 128000.00 CQ April 2003 July 2003 June 2006 Groups (0.00) 4 Transfer Policy 51000.00 QCBs January 2004 March2004 November 2005 Communication (0.00) 5 Baseline survey evaluation -2 - 70000.00 CQ June 2003 October 2003 February 2004 packages (0.00) October 2005 February 2006 May 2006 6 Baseline survey - formative 45000.00 CQ June 2003 October 2003 May 2006 research (0.00) 8 Project evaluation 49000.00 CQ December March2006 June 2006 (0.00) 2005 9 Individual consultant 30000.00 (0.00) 10 Orientation of civil servantsanc 50000.00 QCBS July 2003 November January 2005 social workers, and monitoring (0.00) 2006 Total $521000.00 $0.00 ' Figures inparentheses are the amounts to be financed by the . All costs include contingencies RFP - Request for Proposals, ITB - Invitation to Bid, ICB - Intemational Competitive Bidding, NCB - National under a Fixed Budget, LCS - Least-Cost Selection, CQ - Selection Based on Consultants'Qualifications Competitive Bidding. QCBS - Quality- and Cost-BasedSelection, QBS - Quality-based Selection. SFB - Selection )' End of contact may not exceed loadcredit board date - 38 - Disbursement Table B: Allocation of Credit Proceeds Expenditure Category I Amount in US$million I Financing Percentage 1 Grants 3.2 1 100 Scholarshim 0.38 IO0 Goods 0.07 100% of foreign, 100% o f local (es-factory) and 85% local expenditures of other items procured locally Consulting Services 0.44 85 Training, Study Tours, Development 0.I 4 100 Assignment IncrementalOperatingCosts 0.24 85% during the first year, 75% during the second year, and 65% thereafter IUnallocated II 0.52 I 0.00 II 0.00 ~~ 0.00 0.00 II 0.00 0.00 II Total Project Costs 5.00 I Total 5.OO - 39 - Annex 7: Documents in the Project File* NEPAL: Community School Support Project A. Project Implementation Plan Borrower's Project Implenientation Plunfor Conlnlunify School Siipport Project. Department of Education, Ministry o f Education and Sports. May 9, 2003. B. Bank Staff Assessments Community School Support Project, Learning Innovation Loan Proposal. South Asia Region, Human Development Sector. March 14, 2003. C. Other Education Regulations, HMGN,2002. Directives for Community Managed Schools, HMGN. September 2002. The Seventh Amendment o f Education Act 2028 BS, 2001, HMGN. The Tenth Five-Year Plan 2002-07, National Planning Commission, 2003. *Including electronic files - 40 - Annex 8: Statement of Loans and Credits NEPAL: Community School Support Project 26-Mar-2003 Difference between expected and actual Original Amount in US$ Millions disbursements' Project ID FY Purpose IBRD IDA Cancel Undisb Orig Frm Rev'd PO71291 2003 Financial Sector Technical Assistance 0 0 0 1600 000 1667 0 00 0 00 PO50671 2002 NP Telecommunications Sector Reform 0 0 0 2256 0OC 2325 -0 51 0 c0 PO45052 2000 ROADMAINTENANCEANDDEVELOPMENT 0 00 54 50 000 3541 4888 3 56 PO45053 1999 RURAL INFRA LiL 0 00 5 00 0 00 0 78 0 8 7 -0 17 PO40612 1999 BASIC a PRIMARY ED II 0 0 0 1250 0 00 5 10 5 77 2 05 PO10530 1998 IRRiG SECTOR DEVT 0 0 0 7977 8 01 7.86 17 61 2 32 PO10509 1998 MULTIMODAL TRANSIT 0 0 0 2350 0 00 4 30 5.02 4 92 PO10516 1997 RURAL WS& SANITATION 0 0 0 1830 155 1.74 4.59 2 52 Total 0 0 0 232 13 9 56 95 11 8222 1520 -41 - NEPAL STATEMENT OF IFC's Heldand DisbursedPortfolio Jun 30 2002 - InMillions US Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity QUXI Partic Loan Equity Quasi Partic I996 Bhote Koshi 19.26 2.95 0.00 29.45 19.26 2.95 0.00 29.45 I994 Himal Power 25.89 0.00 4.50 0.00 25.89 0.00 4.05 0.00 200 1 ILFC Nepal - 0.00 0.30 0.00 0.00 0.00 0.30 0.00 0.00 I998 Jomsom Resort 4.00 0.00 0.00 0.00 4.00 0.00 0.00 0.00 Total Portfolio: 49.15 3.25 4.50 29.45 49.15 3.25 1.05 29.15 Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic Total Pending Commitment: 0.00 0.00 0.00 0.00 - 42 - Annex 9: Country at a Glance NEPAL: Community School Support Project POVERTY and SOCIAL South Low- -. _ _ - ---. . Nepal Asia income Development dlamond' 2001 Population. mid-year (millions) 23.6 1,380 2,511 , Life expectancy GNI per capita (Atlas method, US%) 250 450 430 GNI (Atlas method, US%billions) 5.8 616 1,069 Average annual growth, 1995.01 Population (%) 2.4 1.9 1.9 Labor force (%) 2.5 2.4 2.3 GNi Gross per primary Most recent estimate (latest year available, 1995-01) capita enrollment Poverty (% ofpopulation below nationaipoverty line) 42 Urban population (% of total population) 12 28 31 Life expectancy at birth (years) 59 62 59 Infant mortality (per 1,000live births) 74 73 76 Child malnutrition (% of children under 5) 47 49 Access to improved water source ~ Access to an improved water source (% ofpopulation) 81 87 76 illiteracy (% ofpopulation age 15+) 57 44 37 Gross primary enrollment (% of school-age population) 126 101 96 Nepal Low-incomegroup Male 140 109 103 Female 112 93 88 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1981 1991 2000 2001 1 Economic ratios. GDP (US$billions) 2.3 3.9 5.5 5.6 Gross domestic investmenffGDP 17.6 20.8 24.2 24.3 Exports of goods and serviceslGDP 12.9 11.8 23.3 22.4 Trade Gross domestic savingsiGDP 10.9 9.6 15.0 14.7 Gross national savings/GDP 24.7 25.4 I Current account balancelGDP a/ -2.3 -7.5 2.1 2.8 Domestic - interest paymentslGDP 0.1 0.7 0.5 0.5 savings Total debt/GDP 12.2 45.7 51.5 48.5 Total debt service/exports 3.3 11.1 5.6 4.9 11 Present value of debffGDP 28.4 Present value of debffexports 87.3 Indebtedness 1981-91 1991-01 2000 2001 2001-05 (average annual growth) GDP 4.7 4.9 6.2 4.8 4.1 Nepal Low-incomegroup GDP per capita 2 4 2 4 3 7 2 4 1 8 STRUCTURE of the ECONOMY 1981 1991 2000 2001 I Growth of Investment and GDP (Oh) (% of GDP) Agriculture 60.9 48.6 40.7 Industry 12.4 17.9 22.1 Manufacturing 4.1 6.9 9.4 Services 26.7 33.5 37.2 < Private consumption 82.1 81.2 75.9 75.4 /o 1 1 96 97 98 99 00 01 General government consumption 7.0 9.2 9.1 10.0 Imports of goods and services 19.6 23.1 32.4 32.0 *GDP 1981-91 1991-01 2000 2001 (average annual growth) Agriculture 3.8 2.8 4.9 4.3 industry 8.7 6.4 8.7 2.5 Manufacturing 9.2 7.4 7.2 3.6 Services 4.5 6.0 5.8 6.6 Note: 2001 data are preliminary estimates. 'The diamondsshow four key indicatorsin the country (inbold)comparedwith its income-groupaverage If data are missing,the diamondwll be incomplete. - 43 - Nepal PRICES and GOVERNMENT FINANCE 1981 1991 2000 2001 Domestic prices (% change) Consumer prices 13.6 13.8 3.4 2.4 Implicit GDP deflator 7.9 9.1 4.4 3.1 Government finance (% of GDP, includes current grants) Current revenue 8.9 10.7 11.4 96 97 98 99 00 01 Current budget balance -2.8 1.1 0.2 Overall surplusideficit -10.7 -3.5 -4.5 GDP deflalor *CPI TRADE 1981 1991 2000 2001 JS$ millions) Export and import levels (US$ mill.) otal exports (fob) 135 228 971 942 12 000 Food 61 65 Pulses 46 56 Manufactures 230 256 otal imports (cif) 371 715 1,713 1,774 Food a7 157 81 95 96 97 98 99 00 01 Fuel and energy 70 273 338 Capital goods 184 297 312 i 3 Exports imports BALANCE of PAYMENTS I 1981 1991 2000 2001 (US$ millions) Current account balance to GDP (X) Exports of goods and services 294 437 1,433 1,359 4 T imports of goods and services 403 854 1,922 1,984 Resource balance -109 -417 -489 -625 Net income 10 66 20 9 Net current transfers 46 60 582 774 Current account balance -52 -290 113 158 Financing items (net) 39 417 101 -82 Changes in net reserves 13 -127 -214 -76 Memo: Reserves including gold (US$ millions) 451 952 1,027 Conversion rate (DEC, /ocal/US$) 12.0 31.0 69.3 73.8 EXTERNAL DEBT and RESOURCE FLOWS I 1981 1991 2000 2001 (US$ millions) Composition of 2001 debt (US$ mill.) Total debt outstanding and disbursed 279 1,776 2,823 2,700 IBRD 0 0 0 0 F 5 G 5 0 IDA 109 719 1,134 1,127 I Total debt service 12 66 100 89 IBRD 0 0 0 0 IDA 1 8 24 25 B 1127 Composition of net resource flows Official grants 72 52 76 36 Official creditors 65 139 97 60 Private creditors 0 -11 -8 0 Foreign direct investment 0 2 3 6 I Portfolio equity 0 0 0 0 C B World Bank program Commitments 32 62 55 0 E. Bilateral Disbursements 33 49 46 47 8 IDA D Othermultilateral . F Private Principal repayments 0 3 16 17 C IMF .- G Short-term .- Net flows 33 47 31 30 Interest payments 1 5 9 8 Net transfers 32 42 22 21 Ueveiopmenr tconomics I l i r Note: Overall Surplus/deficit includes grants. - 44 - Additional Annex 10: Indigenous Peoples Development Plan NEPAL: Community School Support Project 1. Legal and Socio-Cultural Framework Nepal is a country o f diverse cultures, races and religions. There are two major racial groups found in Nepal: "Caucasoid" and "Mongoloid". Although there has been cultural and religious cross influence between these two groups, both cultural and religious systems o f the t\vo racial groups retain varying degrees o f distinctness. Mongoloid groups (such as the Magar, Tamang, Kiranti, Gurung, etc.) tend to follow mostly Buddhism and animism, while most o f the Caucasoid groups generally follow Hinduism and a few follow Jainism and Islam. Also, a small proportion o f both Caucasoid and Mongoloid populations have adopted Christianity, and some o f the Kiranti peoples follow their own religion. As noted above, Hindus have a "vertical" (hierarchical) social structure based on the idea o f ritual purity. At the apex o f the system are the Brahmins or Bahuns and at the bottom are the Dalits or Untouchables. Formerly these castes were collectively called the doms or $uno jut (small castes), but currently those who have come into contact with critiques of the caste system and the caste politics o f India call themselves Dalits, literally "the oppressed". The term implicitly rejects the validity o f the caste system and focuses on its inherent lack o f social justice. So all Hindus are members o f some Jut or caste group, whether l o w or high. In contrast, Mongoloid groups tend to have more horizontal social structures and are recognized as Indigenous Nationalities or Indigenous People (IP). Although there i s still a degree o f uncertainty about the precise breakdown o f Nepal's population in terms o f "high" and "low" caste groups and IPS,Figure 1 below gives at least a rough estimate in terms o f orders o f magnitude. Figure 1:Distribution of Population by major CastedEthnic Grouping 1 BAHUN,CHHETRI, NEWAR ~ 40.00 37.85 0MIDDLE"KING HI1 EI]JANAJAll UDU 35.00 25.00 1 20.00 J 15.00 , 10.00 5.00 - Source: 2001 Census Considering Nepal's diversity o f cultures, races, languages and religions, the 1990 constitution has recognized the existence o f "tribes" or indigenous peoples. The constitution has committed to the - 45 - protection, preservation and promotion o f language, religion and culture, as well as to affirmative action for IPS and vulnerable groups. The Local Self Governance Act and the Seventh Amendment of Education Act have both articulated the right o f children to education in their mother tongue up to grade five to facilitate inclusion o f Ips. Due to continuous political pressure from the IPS,the government set up the National Committee for Development o f Nationalities in 1996. The committee recognized the existence o f 61 Indigenous Nationalities in Nepal. Consequently, for the first time, the Ninth Plan (1997-2002) explicitly made policies and programs targeting IPS. The Parliament has passed a bill forming a Foundation for Development o f Indigenous Nationalities, which has recognized 59 IPS in Nepal. In 1999, the Local Self-Governance Act was amended, giving more power and authority to local government bodies such as District Development Committees (DDCs), Municipalities and Village Development Committees (VDCs) - including the authority to protect, preserve and promote IPS'language, religion and culture. The National Planning Commission (NPC) has also included programs and strategies for IPSin the Tenth PlaniPRSP (2002-2007). However, in practice, IPShave had limited ability to obtain access to and effectively use the legal system to defend their rights. This i s because on the one hand, the machinery of the government i s controlled primarily by "high caste" groups who have held power for the last 250 years and who do not necessarily want to change their behaviors, and on the other hand because many IP groups have had poor access to education, and are not aware o f their legal rights. This situation can be seen from the data and discussion presented below. Dominance in the power structure on the basis o f caste hierarchy was first codified in the Muluki Ain o f 1853 and although discrimination o n the basis o f caste and ethnicity has been outlawed in the legal system, "high caste" dominance and its accompanying ideology, continues in Nepal. Political marginalization o f IPSand Dalits based on social discrimination i s the main reason why they are deprived of economic, educational, and the overall social well-being. The 1991 Census recorded that more than two-thirds o f the total educated (with BA and above) are from "high caste" HillHindupopulation (Table 1) - within which Chhetris are relatively less educated compared to Brahman and Newar. Then, another 19 percent o f the educated are also from the various Hindu castes group including those from the Tarai, but excluding Dalits. The share o f Ips and Dalits is desperatelylow. Table 1: Graduate and Above, 1991 Source: Adaptedfrom Gurung(2002), Table 5, p, 6. Note: Basedon 1991 census As with the distribution o f the college-educated population in the above table, so adult literacy and -46- income are also associated positively with one's position on the social ladder (Table 2). The human development index (HDI), a composite index of education, health(life expectancy at birth), and income, i s an indicator of overall well-being of the population. The HDI ranking in Nepal shows a similar close associationwith the caste hierarchy. On the basis of all three indices (adult literacy ratio, income index, and HDI), Brahmans, Newars, and Chhetris are well above the national average while IPS(excluding Newars), Dalits, and Muslims are below. Tarai castes have lower literacy and income than the national average; however, their HDIrank i s higher than that of the IPS. Social Group Adult Literacy Rate Per Capita Income Index HDI HDI Rank ( O h ) Income (Rs.) Caste Group Hill Bahun 58.0 9,92 I 0.237 0.44I I1 Hill Chhetri 42.0 7,144 0.181 0.345 111 Tarai Castes 27.5 6,91 1 0.160 0.313 IV Artisan Castes (Dalits) 23.8 4,940 0.1I O 0.239 VI1 Language Group Newar 54.8 11,953 0.289 0.457 I HillEthnics (IPS) Gurung, Limbu, 35.2 6,603 0.152 0.299 V Magar, Rai, Sherpa Religious Group Muslim 22. I 6,336 0.145 0.239 VI1 Others 27.6 7,312 0.170 0.295 VI Nepal 36.7 7,613 0.179 0.325 Table 3 shows the poverty incidence for selected castelethnic groups giving the proportion of each population group falling below the povertyline. The patternofpoverty incidence is similar to the pattern for income and HDIwith few exceptions (Table 3), IPSand Dalits have higher proportions and Newar, Brahmans and Yadav have smaller proportionsbelow the poverty line comparedto the national average. The exceptions are that, in terms of incidence of poverty, Muslims are relatively better off comparedto national average, whereas Chhetris are worse off and the Limbus have nearly three fourths of their communitybelow the poverty line. rable 3: Incidence of Poverty, 1996 Social Group Proportionbelow PovertyLine(YO) Rank Caste Group Bahun 34 I1 Yadav 40 IV Chhetri 50 VI1 Sarki (Dalit) 65 XI Damai (Dalit) 67 XI1 Kami (Dalit) 68 XI11 LanguageGroup Newar 25 I ieligiousGroup Muslim 38 111 3thnics (IPS) Gurung 45 V Than 48 VI Rai 56 VI11 Magar 58 IX Tamang 59 X Limbu 71 XIV Ithers 37 - 47 - I t i s clear that IPSand Dalits have been historically marginalized both legally and politically on the basis o f social and religious ideology which was codified in the Mduki Ain o f 1853. Despite its abolition in the legal code, this discrimination has continued even after the restoration o f democracy with the introduction o f the new constitution in 1991. Although overt public forms o f discrimination may be less visible in interactions of the urban elite, IPSand Dalits continue to face economic, educational and social disadvantages at all levels o f society - but especially among the poor in rural areas. Among the IP groups, there are very different degrees o f marginalization -- with some Janajati groups like the Sherpas, Thakalis, Manangis or Gurungs doing quite well due to income from tourism, trading or army service. But the government has recognized 28 of the 59 Janajati groups as particularly disadvantaged. These disadvantaged Janajati groups as well as the Dalits are eligible for targeted scholarships for primary education and also for free secondary education -- though these scholarships are quite minimal (Rs. 250 - or around $3 per year) and it is quite evident that not all the eligible children are receiving them. Inaddition to the classification of some caste and ethnic groups as disadvantaged, HMG/N recognizes geographic disadvantage and Nepal is categorized into four categories in terms o f remoteness. Eighteen districts belonging to the most remote category are severely disadvantaged economically. These districts are eligible for various types o f support from the Government. The Remote Area Development Board has been established to assist communities living in these areas. Scholarships are also being awarded to children from the 18 most remote districts. 2. Baseline Data: The project will provide assistance to children within the project area excluded from education to mitigate social, cultural and economic barriers. The area for the project i s not defined, as it will assist the schools taking over management o f schools on a voluntary basis. Each o f the schools selected for project support will identify the disadvantaged children eligible for project support through social and enrolment mapping. For each o f the schools a community baseline will be established, which will include the percentage of out-of-school children belonging to dalits, marginalized janjatis and disadvantaged communities, and their dropout and retention rates. These indicators will be monitored periodically and a final evaluation w i l l be carried out at the end o f the project. 3 . Land Tenure: The project or the project-supported schools will not acquire any land. 4. Strategy for Local Participation: The following arrangements aimed at ensuring protection o f interests o f indigenous peoples are in-built into the project design: (a) Representation o f dalitslindigenous peoples/womeddisadvantagedcommunities in the Central Steering Committee o f the project. (b) Representation o f dalitshdigenous peopleslwomeddisadvantagedcommunities in the Project Advisory Committee and Project Monitoring Committee. (c) Organization o f dalitslindigenous peopleslwomeddisadvantagedcommunities into Community Based Organization. The Terms o f Reference for the NGOs to be hired under the project specify the NGO should assist women, Dalits and IPS in the community to organize so that they can fully participate in the development o f the "social contract" and can collectively influence the decisions o f the SMC and monitor the SMC and the school interms of responsiveness to their children's needs. (d) The Government has been providing some scholarships to such households to mitigate the economic bamers. It i s also supposed to provide scholarships to mitigate social and cultural barriers, - 48 - but as noted above it is not clear how the scholarships are allocated and it is also evident that they are too small to have not had the desired impact even when the Dalit or disadvantaged Janajati child receives them. The low amount o f the scholarships as well as the delayed release o f scholarships and poor targeting also have made the scholarships ineffective. The project will rely heavily on social mobilization o f indigenous peoples (IPS). The social mobilization will lead to a social contract, which i s at the core o f the CSSP design, between the excluded community and the School Management Committee (SMC) witnessed by the community benefiting from school, the local government ( V D C or municipality) and the District Education Office (DEO). The social contract i s intended to articulate: (i)the community's commitment to ensure inclusion o f all households excluded from education; (ii)clear delineation in the roles o f all parties to the contract; and (iii) the specific mutual obligations o f these parties to each other. Social mobilization o f various stakeholder groups in the community around the articulation and implementation o f the social contract will be key to the project approach. It will be particularly critical to involve and empower the three groups who make up the bulk o f the out-of-school population: females, dalits and disadvantaged ethnic or janajati groups. (e) Another strategy for facilitating inclusion o f IPSwill be involvement o f IP-based NGOs/SOs for social mobilization o f IPS. 5. Technical Identification of Development or Mitigation Activities: The project aims at mainstreaming the out-of-school children, many o f whom will belong to indigenous peoples, dalits and disadvantaged. Maximizing project benefits to these groups will be the focus o f the project. Negative impacts on these groups are not expected. 6. Institutional Capacity: The Government through the DOE, the implementing agency for the project, has been providing scholarships and incentives targeted to 28 groups belonging to the disadvantaged indigenous nationalities (janjatis), dalits and economically marginalized communities. Experience has indicated that for effective implementation o f such programs, more field-based staff would be required. The project envisages employment o f NGOs/SOs for intensive social mobilization in the project area. Efforts will be made to mobilize dalitiindigenous nationalities-based NGOs/SOs for social mobilization o f targeted groups with a view to mainstream these groups to education as well as retain them. The project has allocated reasonable funds for investment and field-based operations. 7. Implementation Schedule: The consultations were held on May 2, 2003 with the Nepal Federation o f Nationalities and o n M a y 3, 2003 with the Movement for Liberation o f Oppressed, Dalits and Ethnic Groups. Similarly, consultations with dalits, disadvantaged and indigenous peoples were held in Srijana HighSchools and MahendraPrimary Schools inKaski district. Inevery school participating in the project, following social mapping, extensive social mobilization will be conducted to ensure inclusion o f dalits, indigenous and disadvantaged communities. The project focuses on mainstreaming and retaining IPSin schools. The project does have a time bound benchmarks for these indicators disaggregated by dalits and indigenous nationalities. Initially every school community, including community o f IPS, will be assisted by a NGO/SO for about eight months. It is expected that by the end o f this period the Community Based Organizations (CBOs) will mature to carry on activities aimed at achieving the project objectives with intermittent supervision. 8. Monitoring and Evaluation: The project envisages participation o f janjatis, disadvantaged communities and dalits in monitoring and evaluation o f the project. The first tier o f monitoring will take place within the CBOs, to which every single I P household will be tied. The second tier o f monitoring will take place at the level o f community institutions organized as interest groups such as parents o f - 49 - out-of-school children, and illiterate parents. The third level of monitoring, at the school community level, will take placethrough the Project Monitoring Community, in which IPSwill be represented. 9. Cost Estimates and Financing Plan:Around 10% of the project costs will be directly spent on indigenous peoples, disadvantaged communities and dalits. The figure would be slightly higher when all indirect support to such groups are accounted for. - 50 -