Costing Study on Early Childhood Education and Development (ECED) in Nepal: A Case for Investment in ECED Costing Study on Early Childhood Education and Development (ECED) in Nepal: A Case for Investment in ECED 1 Copyright © 2020  International Bank for Reconstruction and Development / The World Bank and UNICEF The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent, or those of UNICEF. The World Bank and UNICEF do not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank or UNICEF concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Contacts: Maya Sherpa Economist World Bank Email: msherpa@worldbank.org Dipu Shakya ECD Specialist UNICEF Nepal Email: dshakya@unicef.org Shota Hatakeyama Education Economist Michigan State University Email: hatakey2@msu.edu Cover Photo: © UNICEF/2017/K.Panday Costing Study on Early Childhood Education and Development (ECED) in Nepal: 2 A Case for Investment in ECED Contents 1. Why Invest in ECED? 5 Long-term Impacts of ECED Investment 6 Economic Aspect 6 Social Aspect 7 Dynamic Complementarity of ECED Investment 7 Does the Impact of ECED Fade-out? 8 2. Status of ECED in Nepal 9 Access to ECED 9 ECED Enrolment Pattern 10 Inequality in Access to ECED 11 Gender 11 Wealth 11 Geography 12 Role of Private ECED Providers 13 Non-registered Private ECED Providers 13 Quality of ECED 14 Early Childhood Development Index 14 Enabling Environment - Minimum Standards 15 Class Size 15 ECED Facilitators 16 ECED Financing 17 Costing Study on Early Childhood Education and Development (ECED) in Nepal: A Case for Investment in ECED 1 3. How Much Additional Cost is Required to Improve the Quality of ECED Service? 19 Enrolment Projection 19 Base Model 20 Cost of Improving the Quality of ECED Services 21 Option 1: Higher Facilitator Salary 20 Option 2: Provision of Principle Elements of Minimum Standards 22 Option 3: Provision of Supervisors 23 Feasibility of the Different Options 24 Increase in the Share of ECED Budget by the MoEST 25 Cost Recovery 26 Demographic Change 26 Cost Sharing Between Local and Federal Government 26 4. Conclusion 27 References 29 Annex 1: Population Projection 31 Costing Study on Early Childhood Education and Development (ECED) in Nepal: 2 A Case for Investment in ECED List of Tables Table 1: ECED Attendance Rate by Gender and Caste 11 Table 2: ECED Attendance Rate by Gender and Wealth Quintile 12 Table 3: Number of Children in ECED Facility by Age 14 Table 4: ECDI Score and Literacy and Numeracy Domain by Wealth and by Gender 14 Table 5: Percentage of Education Budget Allocation to ECED Sub-sector, 2014/15-2019/20 17 Table 6: ECED Budget Requirement under Scenario 1 25 Table 7: ECED Budget Requirement under Scenario 2 25 Table 8: Trend in Education Budget, 2014/15–2019/20 26 List of Figures Figure 1: Human Brain Development 6 Figure 2: Expansion of ECED Access 10 Figure 3: Over and Under Age ECED Attendance 10 Figure 4: Provincial Gap in ECED Access 12 Figure 5: Private ECED Centres in Nepal 13 Figure 6: Enrolment in ECED Centres 16 Figure 7: ECED Enrolment Prediction 20 Figure 8: ECED Cost Estimates under the Base Model (2019–2030) (NPR, millions) 21 Figure 9: Expected ECED Cost for the Next Decade with Increased Salary (NPR, millions) 22 Figure 10: Expected ECED Cost for the Minimum Standards (NPR, millions) 23 Figure 11: Expected ECED Cost of Deploying Supervisors to Every Municipality (NPR, millions) 24 Figure 12: Percentage of ECED Budget in the Total National Education Budget to Realize the Different Options 24 Costing Study on Early Childhood Education and Development (ECED) in Nepal: A Case for Investment in ECED 3 List of abbreviations ECD Early Childhood Development ECDI Early Childhood Development Index ECE Early Childhood Education ECED Early Childhood Education and Development ERO Education Review Office GDP Gross Domestic Product GER Gross Enrolment Rate GoN Government of Nepal LGs Local Governments LMICs Low- and Middle-Income Countries MICS Multiple Indicator Cluster Survey MoEST Ministry of Education, Science, and Technology PPE Pre-Primary Education SDGs Sustainable Development Goals SSDP School Sector Development Program STR Student Teacher Ratio TLMs Teaching-Learning Materials UNICEF United Nations Children's Fund Costing Study on Early Childhood Education and Development (ECED) in Nepal: 4 A Case for Investment in ECED Basis of Relationship Part 1 1 © UNICEF/2014/ C.S. Karki Why Invest in ECED? Skill formation and human capital accumulation are a lifetime process, and quality early childhood education and development (ECED) is critical for ensuring that children get a head start in this process. Robust quality ECED helps children build a strong foundation to acquire key cognitive and socio-emotional skills (Camilli et al. 2010; Nores and Barnett 2010). It helps launch children on higher learning trajectories, making them more adaptable, resilient, and productive (World Bank 2018). Quality ECED is also indispensable to realize the goals of poverty reduction and shared prosperity. First, provision of high-quality ECED to disadvantaged children yields a high rate of return (Heckman 2006). This result holds even in a low- and middle-income context (Grantham-McGregor and Smith 2016). Second, this investment has the potential to reduce the socioeconomic gap in society. The positive impacts of expanding access to high- quality, public ECED on learning achievements are concentrated on low-income children, and ECED only substitutes high-quality, public preschool for expensive private care and do not bring significant impacts on children with a wealthier background (Cascio and Schanzenbach 2013). Third, such high-quality interventions have dynamic complementarity and increase the rate of return to interventions in subsequent education levels (Johnson and Jackson 2017). Recognizing the importance of ECED, the Sustainable Development Goals (SDGs) include an early childhood development (ECD) target (Target 4.2) which aims to increase the percentage of children under 5 years of age who are developmentally on track in health, learning, and psychosocial well-being. Nepal has strived to achieve this target over the past decades, but significant disparities remain. Costing Study on Early Childhood Education and Development (ECED) in Nepal: A Case for Investment in ECED 5 Long-term Impacts of ECED Investment Economic Aspect Various experiments in both high-income countries and low- and middle-income countries (LMICs) exemplify ECED for marginalized children as the most critical step for human capital accumulation in a country. In the case of high-income countries, three well-known studies, the Abecedarian Early Intervention Project, the Chicago Child-Parent Centres, and the Perry Preschool Program, are often referred to as excellent investment cases. These cases uncover long-term impacts of ECED investment, such as better health conditions, better family planning, less criminal activities, and better employment. Some projects estimate 16 percent to 17 percent return on investment (Belfield et al. 2006; Rolnick and Grunewald 2003), while others estimate 7 percent to 10 percent return (Heckman et al. 2010). In the context of LMICs, the Jamaican programme is one of the most cited experiment. This programme intervened in different types of high-risk children, such as severely malnourished, stunted, and low birth weight infants born at term. The study followed targeted children at different stages until 22 years of age and found positive impacts of the different interventions on cognitive skills at every stage (Gertler et al. 2014; Walker et al. 2011). They also found positive effects on wages, with children who received quality ECED earning about 25 percent more than their counterparts. As such, both in high-income countries and LMICs, ECED investments yield a high return through various pathways, such as higher wage, stable employment, better health condition, less criminal activities, and better family planning. Figure 1: Human Brain Development Source: World Development Report, World Bank 2018. Costing Study on Early Childhood Education and Development (ECED) in Nepal: 6 A Case for Investment in ECED ECED investment is indispensable because children’s brains swiftly develop during this period, which becomes a foundation for further development, as summarized in figure 1. Even before Why Invest in ECED? early childhood education (ECE), disparities in brain development appear, and these disparities are strongly associated with the economic and social status of the child. Thus, if societies expect children to achieve academic success and advance society economically and democratically as citizens in the future, holistic and high-quality ECED interventions are crucial. Social Aspect 1 The impacts of ECED investment are not limited to labour market outcomes. Instead, they have social returns and externalities as follows: • Gender equality: The expansion of ECED coverage promotes labour force participation among mothers, where the labour force participation rate of women is not high (Berlinski and Galiani 2007; Nollenberger and Rodríguez-Planas 2015). Also, with some training, the expansion of ECED provides employment opportunities for women. However, in places where the female labour force participation rate and the availability of informal care are high, the expansion of ECED just replaces informal care, which results in no impact on female labour force participation rate (Fitzpatrick 2010; Havnes and Mogstad 2011). In the case of Nepal, the female labour force participation rate is at 26.8 percent with most of them engaged in the agricultural sector. In the agricultural sector, people work differently from the industry or service sector and are not tied to time. Thus, the expansion of ECED could enable women to move to the tied-to-time working sector. • Social equity: The positive impacts of expanding high-quality, public ECED on learning achievement are largely concentrated on low-income children. However, while the impact is not significant on children coming from wealthier backgrounds, high-quality public ECED services could still offer an alternative to expensive private care (Cascio and Schanzenbach 2013). As such, the expansion of high-quality ECED shrinks the achievement gap based on household wealth. • Inclusion: Children with disabilities are exposed to various risk factors which have severe negative impacts on their development and survival, such as poor caregiver interaction, abuse, and neglect. High-quality ECED has the potential to protect children with disabilities from these risk factors and catalyse their development (WHO and UNICEF 2012). Dynamic Complementarity of ECED Investment Investment in ECED should bring positive impacts on subsequent education levels. Cunha and Heckman (2007) theorize the spillover effects of ECED investment from the point of skill development. According to them, the impact of educational investment today differs for each individual. The impact is larger among those who have acquired more skills than those who have acquired less because skill development is an interactive and multi-stage process, and “skills produced at one stage raise the productivity of investment at subsequent stages” (Cunha and Heckman 2007). Johnson and Jackson (2017) refer this synergy between human capital investments at different education levels as dynamic complementarity and analyse whether such complementarity exists between ECED (Head Start Program1) and basic education in the United States. They find that 1 The Head Start Program is comprehensive early childhood education, health, nutrition, and parent involvement services to low-income children and their families. The program started in 1965 and The Head Start Act of 1981 significantly expanded the coverage. Costing Study on Early Childhood Education and Development (ECED) in Nepal: A Case for Investment in ECED 7 an increase in head start spending per four-year-old by roughly 25 percent (US$1,000) leads to not only better education attainment (0.077 years) but also about 10 percent higher wages. An increase in basic education spending also has similar effects. Importantly, when ECED expenditure increases followed by a 10 percent increase in basic education expenditure, the incremental impact of ECED expenditure becomes more than twice as large as in a case that is followed by a 10 percent reduction in basic education expenditure. Also, the same applied to basic education expenditure increase. Compared to a case where basic education expenditure increases without ECED, the impact of the basic education expenditure increase with ECED is more than twofold. However, the effect of dynamic complementarity is mainly observed among poor children and not among children with a wealthier background. Dynamic complementarity of ECED investment has three significant policy implications. First, the cost-benefit of increasing ECED investment tends to be underestimated due to a lack of consideration of dynamic complementarity. Second, the social aspect of ECED investment also tends to be undervalued for the same reason. Third, ECED investment should be followed by an improvement in the subsequent education level to further enhance and fully utilize the benefit of the investment. Does the Impact of ECED Fade-out? However, there is a counterargument on ECED investment. The argument is mainly based on fade-out of the impact of ECED investment in some studies. The critical concept to understand the results is a convergence of persistence effects (Yoshikawa et al. 2013), and this convergence takes place because of the following three factors. The first factor is catching up. Children who do not participate in ECED might have acquired knowledge and skills faster than those who do participate. It can be possible when teachers in basic education are attentive and provide additional support to students who are lagging. The second plausible factor is fade-out. If the quality of ECED is not good enough to build a foundation for learning or the quality of basic education is not sound enough to let children learn, fade-out might occur. The last plausible factor is sleeper effects. Although literature points out the labour market outcomes of ECED investment, its short-term impacts show confounding results. In other words, the effect might remain dormant when children are in school but is activated once they enter the labour market. If the impact of ECED investment is concentrated on non-cognitive skills rather than cognitive skills, sleeper effects might happen. An important takeaway from the convergence of persistence effects is the necessity to carefully interpret the results of a short-term impact evaluation of ECED investment. Education stakeholders should consider the quality of ECED and basic education and characteristics of the ECED programme they evaluate, regardless of the result. Otherwise, the ECED sub-sector plan based on the short-term impact evaluation would misguide ECED policies. Costing Study on Early Childhood Education and Development (ECED) in Nepal: 8 A Case for Investment in ECED The Situation of Children and Women in Nepal Part 2 2 © UNICEF/2012/ C.S. Karki Status of ECED in Nepal The Government of Nepal (GoN) has increasingly emphasized ECED in its education policies. Improving equitable access to ECED services was one of the main goals of the GoN’s national school education programmes of the previous decade.2 The 8th amendment to the Education Act passed in 2016 formally recognized one year of early childhood education as a part of the basic education. In the current national programme, the School Sector Development Program (SSDP, 2016–2021), greater emphasize is placed on improving the quality of ECED service while also carrying the access agenda forward. Further, the Free and Compulsory Education Act passed in 2018 defines ECED as a year-long childhood development and education focused on holistic development. It stipulates that at least one-year long ECED should be provided to four-year (48 months) old children, and parents shall enrol their children in a convenient school (within 2km from residence). The Act also stipulates that an ECD Center shall be established within three years if no convenient school is there to provide ECED services. Access to ECED In Nepal, ECED is provided by both public and private institutions through community schools and community-based centres, and private schools/facilities, respectively. Community schools provide a year of free ECED/pre-primary education (PPE) with the option of an additional year, if demanded by the local community, whereas most private schools provide three to four years 2 Education for All 2004–2009; School Sector Reform Program 2009–2015. Costing Study on Early Childhood Education and Development (ECED) in Nepal: A Case for Investment in ECED 9 of PPE classes for three-year-old to five-year-old (playgroup, nursery, lower kindergarten, and upper kindergarten). Nepal has significantly expanded access to ECED in the last decade. Administrative data show that the gross enrolment rate (GER) in ECED has reached 84 percent in 2017, an increase from about 60 percent in 2008. Correspondingly, there has been a significant increase in the percentage of new enrolments in Grade 1 with at least one year of ECED/PPE experience (figure 2). Increase in access is facilitated by the increase in the supply of ECED/ PPE centres. From 2008 to 2017, the number of ECED facilities has grown from about 20,000 to about 36,000. Furthermore, all regions in Nepal successfully expanded this supply in the last decade (figure 2). Figure Figure 2: 2 Figure 2:: Expansion Expansion Expansion of of of Access ECED ECED ECED Access Access 100.0 100.0 ECED ECED center center region byby region 12000 12000 Figure 2: Expansion of ECED Access 80.0 80.0 10000 10000 100.0 ECED center by region 8000 8000 12000 60.0 60.0 80.0 6000 6000 10000 4000 4000 8000 40.0 40.0 60.0 2000 2000 6000 4000 0 0 20.0 20.0 40.0 2010 2010 2011 2011 2012 2012 2013 2013 2014 2015 2014 2016 2015 2017 2016 2017 2000 0 Eastern Eastern Central Central 20.0 Gross enrollment Gross enrollment ratio ratio 2012 2010 2011 Western 2013 2014 2015 Western 2016 2017 Mid-western Mid-western % of % of grade grade 1 entrant 1 entrant with with ECED ECED experience experience Far-western Far-western Eastern Central Source: Source: Gross GoN GoN enrollment Flash Flash Report ratio Report from from various years. various years. Western Mid-western Source: GoN Flash Report from various years. % of grade 1 entrant with ECED experience Far-western ECED ECED EnrolmentPattern EnrolmentPattern Source:GoN Flash Report from various years. ECED Figure Enrolment Pattern 3: 3: Figure Over Over andand under ECED EnrolmentPattern age under ECEDAttendance age ECEDAttendance Figure 100% 3: Over and Under Age ECED Attendance 100% Figure 3: Over and under age ECEDAttendance 100% 80% 80% 38.6 38.6 44.1 44.1 6565 61.7 61.7 80% 38.6 44.1 60% 60% 82.6 82.6 65 61.7 60% 82.6 40% 40% 61.4 61.4 53.3 53.3 40% 20% 20% 3535 36.4 36.4 61.4 53.3 20% 36.4 16.9 16.9 35 0%0% 2.62.6 1.91.9 0.40.4 16.9 0% Age Age 3 3 Age Age 4 4 Age Age 2.6 5 5 1.9 Age Age 6 6 Age 0.4 Age 7 7 Age 3 Age 4 Age 5 Age 6 Age 7 Out Out school of of school Pre-primary Primary Pre-primary Primary Out of school Pre-primary Primary Source: Source: Calculation Calculation made made byby the author the based author based onon Multiple Indicator Multiple Cluster Indicator Cluster Survey Survey (MICS) (MICS) 2014. 2014. Source: Calculation made by the author based on Multiple Indicator Cluster Survey (MICS) 2014. According According Source: toto Calculation MICS2014, MICS2014, made aa sizable sizable by the author portion Multiple of portion based on ofchildren children Indicator Cluster enrolled enrolled Survey inin (MICS) ECED/PPE ECED/PPE 2014. were were overaged overaged According children. children. to More MICS2014, More than than half half a ofsizable ofageage 5portion children 5 children of were werechildren enrolled attending attending ECED inas ECED ECED/PPE opposed as opposed were to to overaged attending attending primary primary children. school. school. More TheThe than halfschool Nepalese Nepalese of age 5 school children calendar calendar were starts attending starts inin April April ECED while while as theopposed the MICS MICS todata attending data collectionprimary collection took took place place school. from from The January JanuaryNepalese 20142014 toschool June to June calendar 2014. 2014.Thus,starts Thus,some in April some portion while portion ofof the these MICS these data may children children collection may follow took followthe place enrolment the enrolment from ageagerule. Costing January rule. Study 2014 However, on However, Early to June as Childhood the as 2014. enrolment the enrolment Education andThus, somepattern pattern Development portion (ECED) of of of ageage in Nepal: these 66 children children children may follow suggests, suggests,the the the enrolment portion portion should should not not 10 A Case for Investment in ECED age rule. However, as the enrolment pattern of age 6 children suggests, the portion should not bebe soso large.More large.More than than one-third one-third ofof age age 66 andand one-sixth one-sixth ofofageage77 children, children, whowho should should not not bebe be so large.More than one-third of age 6 and one-sixth of age 7 children, who should not be affected affected by bythethe date dateofof data data collection, collection, were were attending attending ECED. ECED. There There waswasalso also a small a small portion portion ofof affected by the date of data collection, were attending ECED. There was also a small portion of According to MICS 2014, a sizable portion of children enrolled in ECED/PPE were overaged Status of ECED in Nepal children. More than half of age 5 children were attending ECED as opposed to attending primary school. The Nepalese school calendar starts in April while the MICS data collection took place from January 2014 to June 2014. Thus, some portion of these children may follow the enrolment age rule. However, as the enrolment pattern of age 6 children suggests, the portion should not be so large. More than one-third of age 6 and one-sixth of age 7 children, who should not be affected by the date of data collection, were attending ECED. There was also a small portion of children from an older age group (8–12 years) attending ECED/PPE classes.3 Administrative data show that over and under age enrolment still persists but has been declining. 2 Inequality in Access to ECED Despite the increased enrolment and number of ECED centres, disparities remain. Girls and children from disadvantaged background have disproportionately low access to ECED. In addition, socioeconomic and spatial inequities remain in accessing ECED services. Gender While Nepal has achieved gender parity in basic and secondary school enrolment, the ratio of girls to boys in ECED has averaged 0.90 in the last decade.4 In addition, the combination of gender and socioeconomic status compound the heterogeneous negative impact of being a girl. MICS 2014 shows that children from disadvantaged backgrounds are less likely to attend ECED programmes. Compared to about 69 percent of children from the Brahmin/Chhetri caste only around 45 percent of children from dalit and non-Brahmin/Chhetri castes were attending ECED. In addition, gender disparity in access was also found to be higher among these latter groups (table 1). Table 1: ECED Attendance Rate by Gender and Caste Total Boys Girls Non-Dalit Non-Brahman/Chhetri 45.0% 48.9% 40.9% Dalit 44.4% 45.9% 42.7% Brahman/Chhetri 69.1% 65.1% 73.0% Source: Author’s calculation based on MICS 2014. Wealth There is a stark difference in enrolment between the poorest and richest households. MICS 2014 shows that 83.5 percent of children age 36–59 months from households of the wealthiest quintile attend ECED, while the rate is only about 41 percent for the poorest quintile. Moreover, the impact of wealth on access is not linear. While the gap in access between children from households in the middle quintile and those from the bottom two quintiles is relatively small. The gap between children from households in the middle quintile and children from wealthier households (top two quintiles) is enormous. Accordingly, in addition to focusing on improving access for the most marginalized group (socially and economically), there is also a need to pay special attention to the children from average-/middle-income households. 3 3.4 percent of children from the 8–12 age group were attending ECED in 2014. 4 Based on Flash Report of different years. Costing Study on Early Childhood Education and Development (ECED) in Nepal: A Case for Investment in ECED 11 Table 2: ECED Attendance Rate by Wealth Quintile Wealth Index Quintiles Total Poorest 41.2% Second 39.1% Middle 38.8% Fourth 62.7% Richest 83.5% Geography Source: MICS 2014. Geography Improvement in access to ECED has also been spatially uneven. ECED enrolment r significantly Improvement by geography. in access to ECED has Provinces 2 and also been spatially 6 are uneven. disproportionately ECED enrolment rates differ behind in acces significantly compared geography. byto others Provinces 2 and Karnali (figure 4).The are disproportionately urban-rural gap is also behind in access to significant (ECED attendanc ECED compared to others (figure 4). The urban-rural gap is also significant (ECED attendance at 78.4 rate percent was at inurban 78.4 percent areas in urban areascompared to 47.2 compared to 47.2 percent percent inrural in rural areas).5 areas). 6 Figure4: Figure 4:Provincial Provincial Gap Gap in ECED in ECED Access Access Percent of 4 years' children enrolled in ECED/PPEs 100 91.3 93.5 89.4 88.1 84 77.8 80 72.2 60 40 20 0 m 1 2 5 i i i al ak at hi ce ce ce rn gm nd hc in in in Ka Ga Ba as ov ov ov rp Pr Pr Pr du Su Source: Flash Report (2017–2018). Source: Flash Report (2017–2018). Role of Private ECED Providers Private ECED service providers have played an important role in improving acces Ministry of Education, Science and Technology’s (MoEST) administrative datashow private ECED centres constitute about 17 percent of the total ECED centres, they a morethan one-third of the total enrolment (36.6 percent).The increase in private issupported by a rapid increase in private ECED facilities (figure 5, left panel).Fro MICS 2014 2017, 5 the. number of ECED facilities has increased by 42 percent, growing from abou about 6,100 facilities. As various studies point out, private education might be acce 12 for the Costing Study on relatively A Case for Investment in ECED privileged Early Childhood Education (ECED) in Nepal: 2011; Chudgar and Quin 2012; Härmä 2016; H (Cameron and Development Dixon 2017; Oketch et al. 2010) and privatization might exacerbate inequality in Nep ECED centres are mostly concentrated in urban areas and is characterizedby co Role of Private ECED Providers Status of ECED in Nepal Private ECED service providers have played an important role in improving access to ECED. Ministry of Education, Science and Technology’s (MoEST) administrative data show that while private ECED centres constitute about 17 percent of the total ECED centres, they account for more than one-third of the total enrolment (36.6 percent). The increase in private enrolment is supported by a rapid increase in private ECED facilities (figure 5, left panel). From 2010 to 2017, the number of ECED facilities has increased by 42 percent, growing from about 4,300 to about 6,100 facilities. As various studies point out, private education might be accessible only for the relatively privileged (Cameron 2 2011; Chudgar and Quin 2012; Härmä 2016; Humble and Dixon 2017; Oketch et al. 2010) and privatization might exacerbate inequality in Nepal. Private ECED centres are mostly concentrated in urban areas and are characterized by considerable gender disparity in access. At the national level, about 33 percent of the girls enrolled in ECED are enrolled in private ECED centres while 40 percent of the boys are enrolled in private ECED centres. While there is gender parity in enrolment in public ECED centres, gender parity in private ECED centres stands at 0.7. Gender disparity in access to private ECED centres holds across regions. Figure 5: Private ECED Centres in Nepal Figure 5: Private Figure ECED 5: Private Centres ECED in Nepal Centres in Nepal Increase Increase in in Increase Private Private ECED in Private ECED Centres Centres ECED Centres Figures Figuresfor for Private Figuresfor Private ECED Private Centres, ECED ECED Centres, Centres, by Province by Province by Province 7000 7000 60.0 60.0 6000 6000 50.0 50.0 40.0 40.0 5000 5000 30.0 30.0 4000 4000 20.0 20.0 3000 3000 10.0 10.0 2000 2000 0.00.0 m i i i 1 2 1 1 2 2 3 3 4 4 5 5 6 6 7 7 al ak at 5 hi 1000 ce ce 1000 rn gm ce hc nd Ka in in in as Ga Ba ov ov ov rp Province Province Pr Pr Pr du Su 0 0 2010 2011 2010 2012 2011 2013 2012 2014 2013 2015 2014 2016 2015 2017 2016 2017 % ECED facility% enrollmment facility % ECED % girls% boys % enrollmment% girls % boys Source: Source: Left - Flash Left Report - Flash various Report years;Right various - Flash years;Right Report - Flash 2017–2018. Report 2017–2018. Source: Left - Flash Report various years; Right - Flash Report 2017–2018. Non-registered private Non-registered ECED private providers ECED providers Non-registered Private ECED Providers should IT IT bebe should noted that noted MoEST’s that administrative MoEST’s data administrative does data not does fully not capture fully the capture presence the of of presence It should private private be ECEDECEDnoted that MoEST’s providers providers in inthethe administrative country. country. There There data are does number are number not fully private of of capture private ECED ECEDthe presence providers providers not of not private registeredECED registered providers in in the the in the Education Education country. Management Management There are number Information Information of private System System (EMIS)ECED (EMIS) thatproviders generates that generatesthat are not MoEST’s MoEST’s registered administrativein the administrative Education data.While data.While Management the theexact exact Information number number of of theseSystem these (EMIS)registered non-EMIS non-EMIS which generates registered private MoEST’s private ECED ECED administrative providers providers is not data. is notknown,While known, it isthe exact number it non-negligible. is non-negligible. of For these non-EMIS example, For example, registered according according the to to private 2014 the 2014 ECED Flash report, Flash providers report,the the is not number known, number ECED of of it is ECED not negligible. enrolment enrolment 2014 in in For 2014 example, was was according 1,014,339. 1,014,339.However, to the However, the2014 Flash report, age-specific the age-specific ECED ECED the number attendance attendance of ECED rates from rates enrolment from MICS MICS in 2014 2014 2014applied was applied to1,014,339. the to 2014 the 2014 However, single age single agethe age-specific population population ECED estimates estimates by attendance UN by UN rates population population from MICS division divisionshow2014 show thatapplied the that number the to the of number 2014 ECED of single ECED age population enrolment enrolment should should estimates be about be 1.3 about by 1.3 UN population million (table million (table division 3),3), about about show 2828 that percent the percent number higher higher of than ECED than the the enrolment should enrolmentpresented enrolmentpresented be about in in 1.3 million administrative administrative (table data. 3), data. about While While 28 part percent of part the of the higher than difference the enrolment might bebeexplainedpresented byby thein inaccuracy administrative of ofdata. the of the difference While partestimation,part population of might the difference might explained the inaccuracy the population estimation,part of the be explained by the inaccuracy of the population estimation6, part of the difference could be difference difference could could due bebe to to due the present the present non-registered of of non-registered private ECED private ECED providers. providers. 7 7 due to the present of non-registered private ECED providers. Table 3: Number Table of children 3: Number in ECED of children facility in ECED by by facility ageage 6 Agelast census TheAge UN was UN carried out in 2011. Percentage population population children of of Percentage childrenProjected number Projected number of of children children projection for projection 2014 for 2014 attending ECED attending (MICS ECED 2014) (MICS 2014) in in ECED facility ECED facility 3 3 560,153 560,153 38.6 38.6 216,219 216,219 Costing Study on Early Childhood Education and Development (ECED) in Nepal: 4 4 570,683 570,683 65.0 65.0 370,944 370,944 A Case for Investment in ECED 13 5 5 578,244 578,244 53.3 53.3 308,204 308,204 6 6 588,306 588,306 36.4 36.4 214,143 214,143 Table 3: Number of Children in ECED Facility by Age Age UN population Percentage of children attending Projected number of children projection for 2014 ECED (MICS 2014) in ECED facility 3 560,153 38.6 216,219 4 570,683 65.0 370,944 5 578,244 53.3 308,204 6 588,306 36.4 214,143 7 600,179 16.9 101,430 8 613,173 9.5 58,251 9 626,347 4.0 25,054 Total 1,294,246 Source: Projection based on MICS 2014 and UN population estimate for 2014. Quality of ECED Early Childhood Development Index Compared to the improvement in access, quality is far from commensurate. The early childhood development index (ECDI) shows that only about 64 percent of children age 36–59 months were developmentally on track.7 While 86 percent of children in the wealthiest quintile achieve the composite ECDI milestones, only about 60 percent of children in the poorest quintile do so. A similar disparity is found along the urban-rural and geographical divides. Table 4: ECDI Score and Literacy and Numeracy Domain by Wealth and by Gender ECDI Score Literacy and Numeracy Domain Wealth Index Quintiles Boys Girls Boys Girls Poorest 57.8% 64.3% 10.5% 14.2% Second 54.1% 59.0% 17.0% 21.6% Middle 53.2% 62.0% 19.1% 24.0% Fourth 68.1% 72.2% 36.7% 42.5% Richest 88.8% 86.9% 64.7% 68.6% Source: Author’s calculation based on MICS 2014. Overall, girls show better ECDI scores than boys across the wealth quintiles. Children from the most deprived quintile are not significantly behind children from the second and middle wealth quintiles. However, children from the fourth and the wealthiest quintile are substantially more advanced than the rest of children. 7 ECDI assesses children age 36–59 months in four domains: language/literacy and numeracy, physical, socio-emotional, and cognitive development. These four domains are measured through instruments based on observation. The MICS calculates an overall index score as the percentage of children who are on track in at least three of the four domains. Costing Study on Early Childhood Education and Development (ECED) in Nepal: 14 A Case for Investment in ECED Disaggregation of the ECDI shows that children are severely lacking in the literacy and numeracy Status of ECED in Nepal domains. On average, only about 28.8 percent of the children are developmentally on track on literacy and numeracy skills. Even for children attending ECED/PPE, the number stands at 53.1 percent. Overall, girls perform better than boys, and children from the bottom 60 percent of households show significant delay compared to children from the top 40 percent of households, indicating both overall low levels of learning and inequities in the children’s learning and development outcomes. Enabling Environment - Minimum Standards 2 National Minimum Standards for ECD centre was developed by the GoN in 2010 to ensure uniformity in management and operation of the different types of ECED centres operating in the country. It includes standards under eight dimensions: physical infrastructure; health nutrition, and safety; minimum required materials; outdoor environment; ECD management committee and governance; human resource quality; parents, children and community; and drinking water and sanitation. While the standards have been developed, it has not been followed by either adequate funding or monitoring to ensure that the standards are met and maintained. Further, data on minimum standards is not collected regularly to allow for appropriate planning and monitoring. A 2011 study by Save the Children international found that most of the ECED centres did not have satisfactory physical infrastructure. In fact, only 12 percent of the centres met more than half of the national minimum standards. A 2017 study carried out by Education Review Office (ERO) found that more than 40 percent of the ECED centres do not satisfy the infrastructure standards. In addition, less than 15 percent of ECED centres met the management standards related to health check up, management of compound area and management of learning and play materials.8 While these studies show improvement over time, much needs to be done to bring all ECED centres up to the national standards. Class Size An appropriate student teacher ratio (STR) is an important factor for ensuring the delivery of quality ECED. In Nepal, while data is collected on the number of ECED centres and number of children enrolled, data on number of ECED classes offered in each of the ECED centres is not captured to allow for calculation of the STR. While there has been a decrease in ratio of students per ECED centre in community ECED centres, the trend is increasing in private ECED centres (figure 6, left panel). In 2018, 59 percent of community ECED centres had fewer than 20 students, 29 percent had 21 to 40 students, and about 12 percent had more than 40 students. The trend is opposite for the private institutions with more than 80 percent of ECED centres have more than 40 students (figure 6, right panel). In private ECED centres, although the enrolment numbers are high, the centres also often run different levels of ECED classes (playgroup, nursery, lower kindergarten, and upper kindergarten). For the community ECED centres, the government provides support for one ECED facilitator per ECED centre which implies that about 40 percent of the community ECED centres with more than 20 students either have a higher than recommended STR9 or have to hire ECED facilitators on their own, which in turn might translate to parents sharing some of the cost. 8 A report on ECD Assessment in Nepal 2017, Education Review Office. 9 The global Standard for ECED/pre-primary STR recommended by the UNICEF is up to 20 pupils for 1 teacher. Costing Study on Early Childhood Education and Development (ECED) in Nepal: A Case for Investment in ECED 15 centreshavemore centreshavemore than than 4040students students (figure (figure 6, 6, right right panel). In In panel). private private ECED ECED centres, centres, although although theenrolment theenrolment numbers numbers are are high, high, the centresalso the centresalso often often run run different different levels levels ECED of of ECED classes classes (playgroup, (playgroup, nursery, nursery, lower lower kindergarten, kindergarten, and and upper upper kindergarten).For kindergarten).For the community the community ECED ECED centres, centres, thegovernment thegovernment provides provides support support forforoneone ECEDECED facilitator facilitator perper ECED ECED centrewhich centrewhich implies implies that that about about 4040 percent percent of the of the community community ECED ECED centreswith centreswith more more than than 2020 students students either either have have a higher a higher recommended than than recommended STRSTRor or 10 10 have to to have hire hire ECED ECED facilitators facilitators their onon own, their which own, whichin in turn turn might might translate translate to parents to parents sharing sharing some some of the of the cost. cost. Figure 6: Enrolment in ECED Centres Figure Figure 6: Enrolment 6: Enrolment in ECED in ECED Centres Centres Ratio of enrolled children to ECED Centres Percentage of ECED centres by number of enrolled children Ratio Ratio of enrolled of enrolled children children to ECED Centres to ECED Centres Percentage Percentage of ECED centresby of ECED centresby number number of enrolled children of enrolled children 100100 1 1 79.3 79.3 0.81 0.81 80 80 70.6 70.6 0.8 0.8 60 60 0.59 0.59 0.6 0.6 40 40 0.4 0.4 22.2 22.2 0.29 0.29 16.8 16.8 20 20 0.2 0.2 0.12 0.12 0.12 0.12 0.07 0.07 0 0 Community Community ECED ECED Private ECED Private ECED Centers Centers 0 0 Centers Centers <20<20 21-40 21-40 >40>40 2014 2018 2014 2018 Community Community ECED ECED Centers Centers Private ECED Private Centers ECED Centers Source: Source: Flash Flash Report Report 2017–2018. 2017–2018. Source: Flash Report 2017–2018. ECED Facilitators Qualification and Training 9 report A9 A report on ECD on ECD Assessment Assessment in Nepal in Nepal 2017, Education 2017, Review Education Office. Review Office. As per 10 The 10 The the global global new requirement standard standard for for introduced ECED/pre-primary ECED/pre-primary STR under STR the SSDP recommended recommended by the (2016–2021), UNICEF by the is up UNICEF is to up20 new to pupils 20 ECED pupils for for 1 facilitators teacher. 1 teacher. must have at a minimum grade 10 qualification. According to the 2017-2018 Flash Report, 15 15 38.6 percent of facilitators have beyond mimimum qualification, 54.9 percent have minimum qualification and only 6.4 percent are under minimum qualification. In addition to increasing the qualification threshold, the facilitators must be properly trained to ensure teaching quality. Accordingly, one of the key quality interventions introduced under the SSDP is to provide one- month intensive training and refresher training to ECED/PPE facilitators.10 While 88 percent of the ECED/PPE facilitators have received the 15-day basic training, only 10.4 percent of facilitators have received the full one-month training.11 Delay in implementation of the training programme has left a large number of ECED facilitators, particularly the new recruits, without training on the ECED curriculum. Without proper and adequate training, facilitators will not be equipped with appropriate pedagogy to deliver on the curriculum and the established Early Learning and Development Standards. Renumeration and Retention The current level of renumeration of ECED facilitators is low.12 Cognizant of the need to increase their pay to both attract and retain more qualified facilitators, the SSDP has envisioned increasing ECED facilitators’ renumeration to align with grade 10 level government employees as one of its goals. However, the result is yet to be seen. While some local governments (LGs) are reported to have supplemented official salaries of facilitators with their own resources, not all of them have done so, and the increase is not uniform across the LGs. Furthermore, there is no provision in place to ensure the continuity of the provision from the LGs. Linked to the low renumeration and lack of career development opportunities, retention is a problem, as facilitators tend to look for 10 Refresher trainings are for the existing ECED/PPE facilitators who have already received 15 days of related training. 11 Data for basic training is from Flash Report 2016–2017 and for the one-month training is from Flash Report 2018–2019. 12 ECED facilitators salary is NPR 6,000 per month (equivalent to US$52.6 at the exchange rate of US$1 = NPR 114). Costing Study on Early Childhood Education and Development (ECED) in Nepal: 16 A Case for Investment in ECED better opportunities. While data on the ECED retention rate is not available, anecdotal evidence Status of ECED in Nepal suggest an average annual turnover rate of about 20 percent. More qualified facilitators also tend to teach higher grades at the same school with an aspiration of being promoted to teach at a higher grade. ECED Financing Public Financing in ECED 2 In Nepal, investment in ECED represents a small portion of the national education budget. In the last five years, the share of the ECED budget in the national education budget was on average about 1.9 percent. This roughly translates to about 0.08 percent of the gross domestic product (GDP). Consequently, per-child financing for ECED has also been low. At NPR 5,500 (US$48), per-child spending in ECED is less than half of that of spending on primary schooling at NPR 13,100 (US$115).13 Table 5: Percentage of Education Budget Allocation to ECED Sub-sector, 2014/15-2019/20 2014/15 2015/16 2016/17 2017/18 2019/20 ECED 1.78% 1.47% 2.33% 2.03% 1.67% Sources: MOEST (2017) for FY 2014/15 to FY 2017/18; ASIP/AWPB (2018-19) for FY 2019/20 The majority of the government’s budget on ECED is allocated for ECED facilitators salary accounting for about 87 percent of the total ECED budget. The remaining budgets are allocated for per-child funding for teaching-learning materials (TLMs), facilitators’ training and other activities. The current level of allocation is grossly inadequate and poses significant challenges to improving the quality of ECED services. 13 UNESCO/IIEP-UIS 2016. Costing Study on Early Childhood Education and Development (ECED) in Nepal: A Case for Investment in ECED 17 Costing Study on Early Childhood Education and Development (ECED) in Nepal: 18 A Case for Investment in ECED 3 © UNICEF/2012/ C.S. Karki How Much Additional Cost is Required to Improve the Quality of ECED Service? Enrolment Projection Administrative data shows that 973,900 children were enrolled in ECED in academic year 2018/19. As discussed in the earlier section, a substantial percentage of children enrolled in ECED are overage enrolment. At the same time, more than one-third of age 3 children are also attending ECED. Thus, the future ECED/PPE enrolment trend will depend on the improvement in intake of age 4 children, the reduction in overage enrolment, and the trend in age 3 enrolment over time. In this analysis, cost estimates for the next 10 years (up to 2030) are presented under two scenarios. The first scenario considers the recent trends in ECED enrolment and assumes improvement in age 4 enrolment and reduction in overage enrolment over time while keeping the age 3 enrolment constant at 40 percent. This projection aligns with the GoN’s current commitment which stipulates that children should be provided with at least one year of free- of-cost ECED after 4 years of age before they enter Grade 1. The second scenario considers the cost of expanding the service to include both age 3 and age 4 children over time. Both scenarios assume that there is no repetition in ECED and there is a linear improvement in the enrolment trend.14 Single-age population projection by the United Nations Population Division is used to estimate the enrolment projection.15 14 Age 3 enrolment increases by 5 percentage points annually reaching 95 percent by 2030 (for the first scenario); age 4 enrollment im- proves by 2 percentage points annually reaching 99 percent in 2026; overage enrollment (ages 5–7) decreased by 1 percentage point annually reaching 6 percent by 2030 (applicable to both first and second scenarios). 15 United Nations population estimation data can be downloaded from the following link: https://population.un.org/wpp/Download/ (accessed December 2019). Costing Study on Early Childhood Education and Development (ECED) in Nepal: A Case for Investment in ECED 19 commitment which stipulates that children should be provided with at least oneyear offree-of- cost ECED after 4 years of age before they enter Grade 1. The second scenario considers the cost of expanding the service to include both age 3 and age 4 children over time.Both scenariosassume that there is no repetition in ECED and there is a linear improvement in the enrolment trend. 15Single-age population projection by the United NationsPopulation Division is used to estimate the enrolment projection. 16 Figure 7: ECED Enrolment Prediction Figure 7: ECED EnrolmentPrediction 1,200,000 1,000,000 800,000 600,000 400,000 200,000 - Scenario 1 Scenario 2 Source: Source: Calculation Calculation based based on United on United Nations Nations Population Population Division Division population population estimation. estimation. Under the Under the first scenario, the first scenario, enrolment will the enrolment willdecrease over time time reaching decrease over around 0.83 reaching around million 0.83 million children by 2030, lower than the current enrolment by around 11 percent. Under children by 2030, lower than the current enrolment by around 11 percent. Under the secondthe second scenario, the scenario, ECED enrolment the ECED enrolment will increase over will increase time and over time peak at will peak and will at 1.12 1.12 million, which is million, which is than the higher than higher current enrolment the current enrolmentby around15 byaround 15percent. percent. Base 15 Model Age 3 enrolment increases by 5 percentage points annually reaching 95 percent by 2030 (for the first scenario); age 4 enrollment improves by 2 percentage points annually reaching 99 percent in 2026; overage enrollment (ages 5–7) decreased by 1 percentage point annually reaching 6 percent by 2030 (applicable to both first and second The base model presents the cost estimates for maintaining the current input level, which scenarios). mainly includes 16 United provision Nations population for facilitators' estimation data can besalary, TLMs, downloaded fromand training. the following The unit cost for each of link: https://population.un.org/wpp/Download/ (accessed December 2019). the inputs are taken from the existing government norms. The following additional assumptions underpin the base model: 18 (a) Pupil to facilitator ratio remains the same (20:1). (b) Facilitators’ salary remains the same (US$52.8 per month or NPR 6,000 per month) and their turnover rate is 20 percent. (c) Share of private enrolment remains at 40 percent. (d) Cost of the one-month standard training for ECED facilitators is NPR 30,000 per facilitator. (e) Per-child funding of NPR 500 is provided to each community ECED centre for TLMs. (f) A new classroom with furniture is necessary per additional 20 new students. Its cost is NPR 400,000 per classroom. Maintaining the current level of input and allowing for the changes in enrolment under the two scenarios, the cost of providing ECED services (a) decreases from US$24 million (NPR 2.7 billion) in 2019 to US$20.4 million (NPR 2.32 billion) in 2030 under scenario 1 and (b) increases from US$24 million (NPR 2.7 billion) in 2019 to US$27.6 million (NPR 3.1 billion) in 2030, peaking at US$29.9 million (NPR 3.4 billion) in 2027, under enrolment projection scenario 2 (figure 8). Costing Study on Early Childhood Education and Development (ECED) in Nepal: 20 A Case for Investment in ECED Maintaining Maintaining the the current current level level of of input input andand allowing allowing for for the the changes changes in in enrolment enrolment under under the the twotwo scenarios, scenarios, thethe cost cost of of providing providing ECED ECED services(a) services(a) decreases decreases from from US$24 US$24 million million (NPR2.7 (NPR2.7 billion) billion) in in 2019 2019 toto US$20.4 US$20.4 million million (NPR (NPR 23.2 23.2 billion) billion) in in 2030 2030 under under scenario scenario 1 and 1 and (b)increases (b)increases from from US$24 US$24 million million (NPR (NPR 2.72.7 billion) billion) in in 2019 2019 toto US$27.6 US$27.6 million million (NPR (NPR 3.1 3.1 billion) billion) in in 2030, 2030, peaking peaking at at US$29.9 US$29.9 million million (NPR (NPR 3.43.4 billion) billion) in in 2027, 2027, under under enrolment enrolment projection projection scenario scenario 2 (figure 2 (figure 8). 8). Figure 8: ECED Cost Estimates under the Base Model (2019–2030) (NPR, millions) How Much Additional Cost is Required to Improve the Quality of ECED Service? 3,500 3,500 Facilitator Facilitator salary salary New New facilitators facilitators training training 3,000 3,000 s s TLM TLM Classroom Classroom construction construction 3,500 3,500 2,500 2,500 3,000 3,000 2,000 2,000 2,500 2,500 2,000 2,000 1,500 1,500 1,500 1,500 1,000 1,000 3 1,000 1,000 500500 - - 500 500 Scenario 1 Scenario 2 Scenario 1 Scenario 2 Scenario 1 Scenario 2 Scenario 1 Scenario 2 Scenario 1 Scenario 2 Scenario 1 Scenario 2 0 0 20212023 20192021 2019 20252027 20232025 2029 20272029 Scenario Scenario 1 1 Scenario Scenario 2 2 2019 2019 2025 2025 2030 2030 The share of different inputs in the ECED budget mirrors the current level. Facilitators’ salary will TheThe account share share for of of the majority different different inputs inputs of the in in the theECED ECED ECED budget budget budget (83 mirrors percent). mirrors the the Salary current current will level. continue level.Facilitators’ to account Facilitators’ salary salary for the will will majority account account forforof the the the ECED majority majority cost. of of the However, the ECED ECED under budget budget (83 (83 enrolment projection percent).Salary percent).Salary will will scenario continue continue 2, toto the account account ratio for of for salary thethe will majority majority decrease of of the the to 77 ECED ECED percent cost. cost. by However, 2022, However, owing under under to increase enrolment enrolment in age projection projection 3 and scenario scenario age 4 2, 2, the population the ratio ratio of of and salary their salary will willenrolment. decrease decrease Thus, toto77 77 new percent percent classrooms byby 2022, 2022, construction owing owing toto will increase increase be needed, in in ageage 33 and andand it age will age44 account population population for percent to 7 percent 3andtheirenrolment. andtheirenrolment. ofnew Thus, Thus, ECED new cost between classrooms classrooms 2020 and construction construction will2028. will bebe However, needed, needed, andand post it will 2028, it will the account account share forfor 3–3– of salary 7 percent 7 percent will of of bounce ECED ECED costback cost to between 83 between percent. 2020 2020 and and The 2028.main 2028. reason However, However, is postthe post reduction 2028, 2028, thethesharein share new of of classroom salary salary will will construction. Improvement in age 3 enrolment will be offset by reduction in overage enrolment. 1919 New facilitators training will account for 6 percent of the ECED cost throughout the next 10 years. The decline in ECED age population will offset the high turnover rate, and the number of new facilitators needed to be trained will stay around 5,000 to 6,500 per year under the two scenarios. Further, the training cost (NPR 30,000) is less than half of the annual salary of a facilitator (NPR 78,000). Thus, the training cost will remain a small portion of the total ECED cost. Cost of Improving the Quality of ECED Services Improving the quality of ECED services from its current level will require raising the level of inputs or introducing new inputs, which will have cost implications. The improvements considered for the costing exercise are those envisioned in the existing policies but are not currently provisioned for or implemented.16 • Higher Facilitator Salary • Provision of Principal Elements of Minimum Standards • Provision of Supervisors 16 SSDP (2016–2021); Free and Compulsory Education Act (2018); Education Policy (2019). Costing Study on Early Childhood Education and Development (ECED) in Nepal: A Case for Investment in ECED 21 Option 1: Higher Facilitator Salary The SSDP envisioned increasing ECED facilitators’ renumeration to align with grade 10 level government employees as one of its goals. Recently approved Education Policy (2019) also stipulates that provisions will be made to align ECED facilitators’ salary with the prevailing minimum wage defined by the government.17 Cost estimates are presented for both cases, that is, increasing facilitator salary to the level of primary school teachers with grade 10 qualification and to the level of minimum wage.18 With the increase in salary, it is assumed that the facilitators’ turnover rate will be lower. The turnover rate is set at 5 percent for a salary increase to primary teacher level and at 10 percent for the minimum wage. Figure 9: Expected ECED Cost for the Next Decade with Increased Salary (NPR, millions) 14,000 14,000 14,000 14,000 Comment Comment [RH2 [RH2]: Minimum Minimum wage wage 12,000 12,000 12,000 12,000 Comment Comment [RH3 [RH3]: 10,000 10,000 10,000 10,000 Minimum Minimum wage wage 8,000 8,000 8,000 8,000 6,000 6,000 6,000 6,000 4,000 4,000 4,000 4,000 2,000 2,000 2,000 2,000 0 0 0 0 2019 2020 2019 2021 2020 2022 2021 2023 2022 2024 2023 2025 2024 2026 2025 2027 2026 2028 2027 2029 2028 2030 2029 2030 2019 2019 2020 2020 2021 2021 2022 2022 2023 2023 2024 2024 2025 2025 2026 2026 2027 2027 2028 2028 2029 2029 2030 2030 Base Base model model Minimum Minimum wage wage Base Base model model Minimum Minimum wage wage Primary Primary teacher teacher salary salary Primary Primary teacher teacher salary salary Note: Left: scenario 1; right: scenario 2. Under Under both both enrolment enrolment projection projection scenarios, scenarios, thethe cost cost ECED of of ECED will will increase increase almost almost fourfold fourfold Under both enrolment projection scenarios, the cost of ECED will increase almost fourfold compared compared the to to the base base modelif modelifthe salary the salary is increased is increased match to to matchthethe primary primary teacher’s teacher’s salary. salary. The The compared to the base model if the salary is increased to match the primary teacher’s salary. cost cost will will bebe twotwotimes times higher higher the in in thecase case minimum of of minimum wage. wage. While While there there will will bebe some some The cost will be two times higher in the case of minimum wage. While there will be some savings savingsthrough savingsthrough low low turnover turnover rate rate and consequently and consequently thethe need need for for fewer fewer newnew facilitator’s facilitator’s training, training, through low turnover rate and consequently the need for fewer new facilitator’s training, the the the savings savings is negligible is negligible compared compared the to to increase the increase in in the overall the cost overall (less cost (less than than 2 percent 2 percent the of of the savings is negligible compared to the increase in the overall cost (less than 2 percent of the total total cost). cost). total cost). The The strategy strategy for for increasing increasing facilitator facilitator retention retention ratewith ratewith a higher a higher teacher teacher salary salary is an is an expensive expensive The policy policystrategy option. for option.Evenincreasing Even though though facilitator this option this option retention is costlier, is costlier, rate with of benefits benefits a higher of such it, it, teacher suchas as salary attracting attracting is moreanqualified expensive more qualified policy option. facilitators,higherEven facilitators,higher though retention retentionthis option rate, rate, better is better costlier, learning learning benefits outcomes, of outcomes, it, and such and as reductionattracting reduction in in more repetition repetitionqualified the in in the facilitators, subsequent subsequent higher education retention education levels, levels, rate, might might better bebe learning and substantial substantial outcomes, and thethe and reduction cost-benefit cost-benefit this of of in this repetition policy policy might might in the bebe subsequent better better than than education that of of that other other levels, policy policy might options. options. be substantial 20Notably, 20Notably, a and a higher the higher cost-benefit salary salary might might of this nurture nurture policy might be professionalism professionalism better among among than that of other facilitators, facilitators, which whichpolicy cancan options. result result 19 in in Notably, quality quality a higher ECED. ECED. Also, Also, salary since since might more more nurture than than 9090 professionalism percent percent the of of the among facilitators, facilitators facilitators areare female, which female,thethecan salary result salaryissue issuein quality should should alsoECED. also bebe Also, since considered considered frommore fromthe than the 90 perspective percent perspective of gender of of the gender facilitators wage wage arewomen equality, equality, female, women the salary issue empowerment, empowerment, should andandrightsalso rights of of be the considered the woman woman from the (ensuring (ensuring the perspective the minimum minimum of gender wage). wage). wage equality, women empowerment, and rights of the woman (ensuring the minimum wage). Option Option Provision 2: 2: Provision ofPrincipalElements ofPrincipalElements of of Minimum Minimum Standards Standards 17 Education Policy (2019) was approved by the Cabinet in November 2019. 18 The The second second Primary estimation estimation with is is with thethe provision provision principal of of principal elements elements the of of minimum the minimum teacher salary with grade 10 qualification is NPR 26,604 per month and the prevailing minimum wage is NPR 13,450. standards. standards. For 19 the For purpose the purpose of of the cost the cost estimation estimation exercise exercise five prioritized five prioritized minimum minimum standards standards The impact of teacher salary increase on student learning outcomes has not been extensively researched. Hanushek (2007)selected: are selected: are finds that a child-friendly simple increaseseating child-friendly in seating arrangement, arrangement, K-12 teacher qualified qualified salary in the United and States is andtrained trained ineffective teacher, and the teacher, increasesix six learning learning in salary areas, needs to beareas, easy easy accompanied access access with a set to to clean clean water, of incentiveswater, andand accessible accessible and accountability. toilet toilet In the context with with of LMICs, soap Pugatchsoap andandand water. Schroederwater. Among 21 Among (2018) 21 analyse thethethefive impact five in elements, the elements, case the of Gambia the and find that the salary increase through a hardship allowance does not have a positive causal impact on average learning achievement. Ac- cordingly, a simple salary increase without incentive or accountability may increase the retention rate but not learning outcomes. Costing Study on Early Childhood Education and Development (ECED) in Nepal: 22 20 The 20 The impact impact of teacher salary of teacher salary A Case for Investment in ECED increase on on increase student student learning outcomes learning outcomes hashas notnot been been extensively extensively researched. Hanushek researched. Hanushek (2007) (2007) finds finds that that a simple a simple increase increase in K-12 in K-12 teacher teacher salary salary in the United in the States United is ineffective States is ineffective and thethe and increase increase in salary in salary needs needs to be to be accompanied accompanied with a set with of incentives a set and of incentives and accountability. accountability. In the In the context context of LMICs, of LMICs, Pugatch Pugatch and Schroeder and Schroeder (2018) (2018) analyse analyse impact thethe impactin the in the case of Gambia case of Gambiaand find and find that thethe that salary salary increase increase through through a hardship a hardship allowance allowance does does not not have have a positive a positive causal causal impact impact average on on average learning learning achievement. achievement. Accordingly, Accordingly, a simple a simple salary salary increase increase without without Option 2: Provision of Principal Elements of Minimum Standards How Much Additional Cost is Required to Improve the Quality of ECED Service? The second estimation is with the provision of principal elements of the minimum standards. For the purpose of the cost estimation exercise, five prioritized minimum standards are selected: child-friendly seating arrangement, qualified and trained teacher, six learning areas, easy access to clean water, and accessible toilet with soap and water.20 Among the five elements, the qualified and trained teacher is covered under the base model. The unit cost for the remaining qualified qualified four and trained and elements trained is teacher teacher provided by is covered is Unitedcovered under the under Nations base the base Children’s model. model. Fund The The unit unit (UNICEF). cost 21 cost for the for remaining the remaining four four elements elements is provided is provided United byby United Nations Nations Children’s Children’s Fund Fund (UNICEF). (UNICEF). 22 22 Figure 10: Expected ECED Cost for the Minimum Standards (NPR, millions) Figure Figure 10:10: Expected Expected ECED ECED Cost Cost forfor the Minimum the Minimum Standard Standard (NPR, millions) (NPR, millions) 3 6,000 6,000 6,000 6,000 5,000 5,000 5,000 5,000 4,000 4,000 4,000 4,000 3,000 3,000 3,000 3,000 2,000 2,000 2,000 2,000 1,000 1,000 1,000 1,000 0 0 0 0 2019 2020 2019 2021 2020 2022 2021 2023 2022 2024 2023 2025 2024 2026 2025 2027 2026 2028 2027 2029 2028 2030 2029 2030 2019 2020 2019 2021 2020 2022 2021 2023 2022 2024 2023 2025 2024 2026 2025 2027 2026 2028 2027 2029 2028 2030 2029 2030 Minimum Minimum Standards Standards Base Base model model Minimum Minimum Standards Standards Base Base model model Note: Note: Left: Note: scenario scenario Left: Left: 1;right: 1; scenario right:scenario 1; right: scenario2.2. 2. scenario Compared Compared Compared toto to the the base base the base model model model thethe the initial initial cost initial cost of of cost of ensuring ensuring ensuring the the the minimum minimum minimum standards standard standard is relatively is relatively is relatively high. high. high. is is It It It is assumed assumed assumed that that that each each each year year year2020 20 percent percent percent of of the of the ECED the ECED ECED centres centres centres will will will get get get funding funding funding to to to fulfil fulfil fulfil the thethe minimum standards, and thereafter budget is provided for new ECED centres. The overall minimum minimum standards, standards, and and thereafter thereafter budget budget provided is is provided for new for new ECED ECED centres. centres.TheThe overall overall cost cost cost required to ensure the minimum standards is higher than the base model by about 28 required required ensure to to ensurethethe minimum minimum standard standard is higher is higher than than the base the model base modelbyby about about 2828 percent percent onon percent on average, requiring US$6 million – US$7 million (NPR 717 million to NPR 846 million) average, average, requiring requiring US$6 US$6 million million – US$7 – US$7 million million (NPR(NPR 717717 million million toNPR toNPR 846846 million) million) annuallyin annuallyin annually in additional cost. However, this is an upper bound estimate, as it assumes that none additional additional of cost. the existing However, cost. However, ECED centres this this an is is have anupper upper fulfilled anybound bound element estimate, estimate, as as of the minimumit it assumes assumes that that standards, none none whichof ofthe is the not existing existing ECED ECED necessarily the case. centres centres have have fulfilled fulfilled anyany element element of of the the minimum minimum standards, standards, which which is not is not necessarily necessarily the the case. case. Option 3:3: 3: Option Option Provision Provision Provisionof Supervisors ofSupervisors ofSupervisors Strengthening Strengthening Strengthening the thetherole role of local of role of LGsLGsgovernments to tosupervise supervise supervise toand and monitor monitor and monitor ECED/PPE ECED/PPE isECED/PPE one is oneof of the isstrategies one of the the strategies strategies envisioned envisionedenvisioned under under SSDP under SSDPto to improve SSDP improve to improve thethe quality the quality and quality and efficiency efficiency efficiency and the of of the of the sub-sector. sub-sector. sub-sector. Building Building Building onon this this on this strategy, strategy,strategy, as as as a third a third a third option, option,option, this report this this report report provides provides provides a cost a cost a cost estimate estimate estimate forfor hiringfor hiring hiring a a supervisor supervisor a supervisor every in in in every every local local local government. government. government. The The The costcostcost for afor for a a supervisor supervisor supervisor is is is assumed assumed assumed to to be tobebe the the the lowest lowest lowest salary salary salary level level levelofof of secondary secondary secondary school school school teachers. teachers. teachers. Supervisors Supervisors Supervisors will will bebe will be responsible responsible responsible for for for the the monitoring the monitoring monitoring and and and evaluation evaluation evaluation of of of ECEDECED ECED facilities facilities facilities to totoensure ensure ensure rulesrules rulesand and and regulations,standards regulations,and regulations,and and standards standards areare are complied. complied. complied. the AtAt At the samethetime, same same time, time, they they they should should should assist assistassist andand and provide provide provide pedagogical pedagogical pedagogical support support support to facilitators. facilitators. facilitators. to to Effective Effective Effective supervisors supervisors supervisors should should should bebeable be able able to to to supervise, supervise, supervise, mentor mentor mentor andandcoach coach and coach ECED ECED ECED facilitators facilitators facilitators providing providingadvice, providingadvice, advice, pedagogical pedagogical pedagogical support support support andand and customized customized customized feedback feedback feedback each to to each to each facilitator. facilitator. In In facilitator. other other other Inwords, words, words, they they mustthey mustbebemust be experienced, experienced, experienced, skilled, skilled, skilled, andand and academicallypersonnel. academicallyoriented academicallyoriented oriented personnel. personnel. 20 These prioritized minimum enabling conditions are chosen based on recommendation from the SSDP ECED thematic working group. 21 Child-friendly seating arrangement - NPR 125,000 per centre; six learning areas – NPR 75,000 per centre; and water and toilet - NPR 100,000 per centre. 22 Child-friendly 22 Child-friendly seating seating arrangement arrangement - NPR - NPR 125,000 125,000 perper centre; centre; sixsix Costing Study learning learning on Early areas areas Childhood –NPR –NPR 75,000 Education75,000perper centre; centre; and Development andand (ECED) in Nepal: water and water and toilet - NPR toilet - NPR 100,000 per 100,000 per centre. centre. A Case for Investment in ECED 23 2222 Figure 11: Expected ECED Cost of Deploying Supervisors to Every Municipality (NPR, millions) 4,000 4,000 4,000 4,000 Comment Comment [RH [RH4] 3,500 3,500 3,500 3,500 Comment Comment [RH [RH5] 4,000 4,000 4,000 4,000 Comment Comment [R [RH4 3,000 3,000 3,000 3,000 3,500 3,500 3,500 3,500 Comment Comment [R [RH5 2,500 2,500 2,500 2,500 3,000 3,000 3,000 3,000 2,000 2,000 2,000 2,000 2,500 2,500 2,500 2,500 1,500 1,500 1,500 1,500 2,000 2,000 2,000 2,000 1,000 1,000 1,000 1,000 1,500 1,500 1,500 1,500 500500 500500 1,000 1,000 1,000 1,000 0 0 0 0 500500 500500 2019 2020 2019 2021 2020 2022 2021 2023 2022 2024 2023 2025 2024 2026 2025 2027 2026 2028 2027 2029 2028 2030 2029 2030 2019 2019 2019 2020 2020 2020 2021 2021 2021 2022 2022 2022 2023 2023 2023 2024 2024 2024 2025 2025 2025 2026 2026 2026 2027 2027 2027 2028 2028 2028 2029 2029 2029 2030 2030 2030 2030 0 0 0 0 2019 2020 2019 2021 2020 2022 2021 2023 2022 2024 2023 2025 2024 2026 2025 2027 2026 2028 2027 2029 2028 2030 2029 2030 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Supervisor Supervisor Base Base model model Supervisor Supervisor Base Base model model Supervisor Supervisor Note: Left: scenario 1; Base Base right: scenario 2. model model Supervisor Supervisor Base Base model model Provision of supervisors will annually cost an additional US$3.3 million (NPR 378 million) compared to the base model. Feasibility of the Different Options The current ECED expenditure level is realized at 10.23 percent of the national education budget in the total government budget and 1.9 percent of the ECED budget in the overall national education budget. The analysis in this section presents the level of investment in ECED by the government/ MoEST that is needed to realize the different policy options discussed above, under the assumption that the national education budget remains at the current level. Figure 12: Percentage of ECED Budget in the Total National Education Budget to Realize the Different 10.0% 10.0% Options 10.0% 10.0% combined combined 2 2 10.0% 10.0% 10.0% 10.0% Primary Primary 8.0% 8.0% 8.0% 8.0% combined combined combined combined level level salary 2 salary 2 2 2 Primary Primary 8.0% 8.0% 8.0% combined 6.0% combined 8.0% level level salary salary 6.0% 6.0% Primary Primary 6.0% combined combined level 2 2 salary salary level 1 1 6.0% 6.0% combined combined Primary Primary 6.0% 6.0% Minimum Minimum combined combined 4.0% 4.0% 1 level 1 salary 4.0% salary level 4.0% wage wage 1 1 Minimum Minimum combined combined Supervisor Supervisor Minimum Minimum 4.0% 4.0% Supervisor Supervisorwage wage 1 1 4.0% 4.0% wage wage 2.0% 2.0% 2.0% 2.0% Minimum Minimum Minimum Minimum Standard Standard s s Supervisor Supervisor Supervisor Supervisor Minimum Minimum wage wage 2.0% 2.0% Standards Standards 2.0% 2.0% Minimum Minimum 0.0% 0.0% 0.0% 0.0% Standard Standard s s Minimum Minimum 2019 2019 2019 2020 2020 2020 2021 2021 2021 2022 2022 2023 2022 2022 2023 2024 2024 2024 2025 2025 2025 2026 2026 2026 2027 2027 2027 2028 2028 2028 2029 2029 2029 2030 2030 2030 2030 2019 2020 2019 2021 2020 2022 2021 2023 2022 2024 2023 2025 2024 2026 2025 2027 2026 2028 2027 2028 2029 2029 2029 2030 2030 2030 Standards Standards 0.0% 0.0% 0.0% 0.0% 2019 2020 2021 2023 2023 2024 2025 2026 2027 2028 2029 2019 2020 2019 2021 2020 2022 2021 2023 2022 2024 2023 2025 2024 2026 2025 2027 2026 2028 2027 2028 2029 2030 Note: Left: scenario 1; right: scenario 2. Combination 1: Minimum wage + supervisor + minimum standards; combination 2: primary teacher salary + supervisor + minimum standards. 2323 2323 Costing Study on Early Childhood Education and Development (ECED) in Nepal: 24 A Case for Investment in ECED As evident, increasing the salary of the facilitators to the level of primary teachers is the most expensive option and will require on average about 6.9 percent and 8 percent of the current How Much Additional Cost is Required to Improve the Quality of ECED Service? education budget under the two enrolment scenarios. Combining all three options will require on average about 4.4 percent to 7.7 percent of the education budget under scenario 1 and about 5.1 percent to 8.9 percent under scenario 2. Increase in the Share of ECED Budget by the MoEST While the increase in cost compared to the base model is high, the increment relative to the overall education budget is modest. If the MoEST slightly increases the share of the ECED 3 budget from its current level, most options are fiscally viable. Particularly, the options related to provision of supervisor and principal components of the minimum standards, which will require an increase of less than 1 percent of the current education budget. The combined option of increasing the facilitator salary to minimum wage, hiring supervisors, and providing principal components of a minimum standards (combination 1) is also feasible as it will require a modest increase in the ECED budget by 2.5 percent (under scenario 1) and by 3.2 percent (under scenario 2) from the base model, which translates to an average increase in annual cost by US$29.4 million to US$37.7 million (tables 6 and 7). Table 6: ECED Budget Requirement under Scenario 1 Increment Required % of ECED Budget Increment Increment Required Education Budget Policy Options in Education (NPR, (US$, from Base as % of National Budget (Average) millions) millions) Model (%) Budget Primary teacher salary 6.9 5.0 6728.41 59.20 10.74 Minimum wage 3.6 1.7 2319.20 20.41 10.40 Supervisor 2.1 0.2 233.65 2.06 10.25 Minimum standards 2.3 0.4 551.78 4.86 10.27 Combination 1a 4.4 2.5 3341.87 29.40 10.48 Combination 2b 7.7 5.8 7751.08 68.20 10.82 Note: aMinimum wage + supervisor + minimum standards; bprimary teacher salary + supervisor + minimum standards Table 7: ECED Budget Requirement under Scenario 2 Increment Required %of ECED Budget Increment Increment Required Education Budget Policy options in Education (NPR, (US$, from Base as % of National Budget (Average) millions) millions) Model (%) Budget Primary teacher salary 8.0 6.1 8233.3 72.4 10.85 Minimum wage 4.2 2.3 3118.3 27.4 10.46 Supervisor 2.5 0.6 749.6 6.6 10.28 Minimum standards 2.8 0.9 1205.8 10.6 10.32 Combination 1 a 5.1 3.2 4284.1 37.7 10.55 Combination 2 b 8.9 7.0 9399.1 82.7 10.94 Note: Minimum wage + supervisor + minimum standards; primary teacher salary + supervisor + minimum standards a b Costing Study on Early Childhood Education and Development (ECED) in Nepal: A Case for Investment in ECED 25 The education budget on average has increased by 12 percent in the last five years, which translates to an average nominal increase in budget by NPR 14,408 million annually. If it is assumed that the same trend will continue, allocating 25 percent to 30 percent of the annual increase in the education budget to ECED will be adequate to implement the combined policy of increasing the facilitator salary to minimum wage, hiring supervisors, and providing principal components of the minimum standards. Table 8: Trend in Education Budget, 2014/15–2019/20   National Education Budget (NPR, millions) Increase in Education Budget (NPR, millions) 2014/15 91,714 2015/16 98,643 6,929 2016/17 116,361 17,718 2017/18 126,642 10,281 2018/19 134,509 7,867 2019/20 163,756 29,247 Average 121,937 14,408 Source: MoEST’s Annual Work Plan and Budget of various years. Cost Recovery While estimating the cost recovery of these policy options are beyond the scope of the analysis, it should be noted that ECED policies that address the quality issue and enhance school readiness among children will recover some of the cost through improvement in the internal efficiency and better learning outcomes in the subsequent education levels. If these policies do improve the quality of ECED, the fiscal burden derived from these policies will be much smaller than the estimates generated by the simple costing exercise presented here. Demographic Change It is estimated that the basic education age children’s population (ages 5-12) in Nepal will shrink by 5 percent by 2030.22 Some portion of the fiscal space created by this population decrease can be used to increase financing for the ECED sub-sector. Cost Sharing Between Local and Federal Government Nepal’s transition to a federal system provides a unique opportunity to increase funding for the school sector, including the ECED sub-sector.23 Ensuring provision of basic services, including ECED, is the main mandate of the LGs.24 While currently the LGs mostly rely on the budget allocated by the federal government for basic services, some LGs have allocated portion of their discretionary funds towards school education and ECED. However, the contribution varies significantly across LGs with not all LGs supplementing the federal school education budget. Most federated countries have cost sharing provision in place between its different tiers of government. For Nepal as well, cost sharing provisions can be included in the Federal Education Act or similar legal provision can be put in place to ensure minimum contribution from the LGs towards school education, including ECED.25 22 Based on UN population estimates. 23 The Constitution promulgated in 2015 introduced a three-tier federal system comprised of federal, provincial and local governments with funds, functions, and functionaries hitherto managed by the central, district and village authorities are moving to the seven new provinces and 753 LGs. 24 The Local Government Operations Act 2017, which provides further details on the functions of the local government, specifies that the local government shall be responsible for formulation, implementation, monitoring, evaluation and regulation of policies, laws, standards and plans for early childhood development and education. 25 Federal Education Act is in the making and is expected to be tabled to the Parliament for approval in the winter parliament session (December 2019 – February 2020) Costing Study on Early Childhood Education and Development (ECED) in Nepal: 26 A Case for Investment in ECED 4 © UNICEF/2012/ C.S. Karki Conclusion While Nepal has improved access to ECED, the quality of these ECED services remains a concern. The study provides cost estimates of improving existing and introducing new inputs to improve the quality of ECED in Nepal. The analysis shows that while the cost of implementing different policy options can seem substantial compared to the current allocation, the increase required compared to the overall education budget is modest. Some of the policy options, particularly, related to provision of supervisor and principle components of the minimum standards can be achieved with increase of less than 1 percent of the current education budget. The combined option of increasing the facilitator salary to minimum wage, hiring supervisors, and providing principal components of the minimum standards can also be feasible as it will require a modest increase in the ECED budget by 2.5 percent (under scenario 1) and by 3.2 percent (under scenario 2) from the base model. While additional investments are necessary, mobilizing additional resources alone, without due consideration to the quality of inputs, is no guarantee that ECED outcomes will improve. Increasing evidence suggests that low quality early childhood education programmes are not just ineffective, they can in fact lead to worse learning and behavioural outcomes –hence constituting a waste of resources. Therefore, quality, effectiveness and efficiency of the investment will need to be enhanced if ECED goals, both national and SDGs, are to be achieved. For this to happen, proper implementation of the policies needs to be ensured. Furthermore, a strong M&E system with required data and information on the sub-sector, including data on child development outcomes, needs to be collected on a regular basis to track performance and inform future policies and reforms. 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Costing Study on Early Childhood Education and Development (ECED) in Nepal: 30 A Case for Investment in ECED Annex 1: Population Projection United Nations Population Projection by Age 3 4 5 6 7 2018 548,276 546,778 547,876 551,285 556,720 2019 538,621 545,378 546,244 548,950 553,316 2020 539,629 540,533 542,649 545,906 550,237 2021 538,953 539,056 540,360 542,803 546,321 2022 538,774 538,139 538,715 540,418 543,188 2023 538,644 537,321 537,228 538,278 540,378 2024 538,654 536,240 535,524 535,976 537,499 2025 537,249 534,620 533,304 533,197 534,195 2026 542,374 539,182 536,877 535,374 534,591 2027 545,568 543,001 540,669 538,692 537,004 2028 544,610 544,188 543,130 541,663 540,014 2029 527,426 540,459 542,300 542,748 542,145 2030 519,480 529,209 535,896 539,991 541,941 Source: United Nations Population Division (accessed December 11, 2019). Costing Study on Early Childhood Education and Development (ECED) in Nepal: A Case for Investment in ECED 31 Costing Study on Early Childhood Education and Development (ECED) in Nepal: 32 A Case for Investment in ECED Costing Study on Early Childhood Education and Development (ECED) in Nepal: A Case for Investment in ECED 33 Costing Study on Early Childhood Education and Development (ECED) in Nepal: 34 A Case for Investment in ECED