Official PDF , 97 pages

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 74241-PH

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED LOAN

IN THE AMOUNT OF US$300 MILLION

TO THE

REPUBLIC OF THE PHILIPPINES

FOR A

LEARNING, EQUITY AND ACCOUNTABILITY PROGRAM SUPPORT PROJECT

February 21, 2014

Human Development Sector UnitEast Asia and Pacific Region

This document is being made publicly available prior to Board consideration. This does notimply a presumed outcome. This document may be updated following Board consideration andthe updated document will be made publicly available in accordance with the Bank's policy onAccess to Information.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective February 5, 2014)

Currency Unit = Philippine Peso (Php)US$1 = Php 45.05

FISCAL YEARJanuary 1 - December 31

ABBREVIATIONS AND ACRONYMS

AusAID Australian Agency for IFR Interim Unaudited FinancialInternational Development Report

AAP Abot Alam Program IPF Investment Project FinancingBEIS Basic Education Information IPPF Indigenous Peoples Planning

System FrameworkBESRA Basic Education Sector Reform IPs Indigenous Peoples

Agenda LEAPS Learning, Equity and

CAS Country Assistance Strategy Accountability Program Support

COA Commission on Audit ProjectC A . .vM & E Monitoring and EvaluationCSC Civil Service Commission MOOE Maintenance and Other OperatingDBM Department of Budget and Expenses

Management MTB- Mother Tongue-Based MultilingualDepEd Department of Education MLE EducationDLI Disbursement-Linked Indicator NAT National Achievement TestDSWD Department of Social Welfare NPSBE National Program Support for

and Development Basic Education

DVA DLI Verification Agent PBB Performance-Based Bonus

eBEIS Enhanced Basic Education PDO Project Development Objective

Information System Phil-IRI Philippines Informal Reading

EEP Eligible Expenditure Programs InventoryESBM School-Based ManagementEGMA Early Grade Math Assessment SPHERE Support for Philippine BasicEGRA Early Grade Reading Assessment Education Reform ProjectFM Financial Management SRC School Report CardGAA General Appropriations Act SY School YearGOP Government of the Philippines WA Withdrawal ApplicationIAS Internal Audit Services

Regional Vice President: Axel van TrotsenburgCountry Director: Motoo Konishi

Sector Director: Xiaoqing YuSector Manager: Luis Benveniste

Task Team Leader: Lynnette de la Cruz Perez

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PHILIPPINESLEARNING, EQUITY AND ACCOUNTABILITY PROGRAM SUPPORT PROJECT

TABLE OF CONTENTS

Page

I. STRATEGIC CONTEXT ................................................................................................. 1

A. Country Context ...................... 1..........................

B. Sectoral and Institutional Context............................................ 1

C. Higher Level Objectives to which the Project Contributes ........... ........ 3

II. PROJECT DEVELOPMENT OBJECTIVES ........................................................... 3

A. PDO........................................................ 3

B. Project Beneficiaries ................................................. 3

C. PDO Level Results Indicators......................4.... ............ 4

III. PROJECT DESCRIPTION ......................................................................................... 5

A. Project Components ..................................... ........ 5

B. Project Financing .......................................... ..... 9

C. Lessons Learned and Reflected in the Project Design..................... 11

IV. IM PLEM ENTATION ..................................................................................................... 11

A. Institutional and Implementation Arrangements ................ ............. 11

B. Results Monitoring and Evaluation .................................... 12

C. Sustainability......... ........ ............................... 12

V. Key Risks and Mitigation Measures ........................................................................... 13

A. Risk Ratings Summary Table ...................................... 13

B. Overall Risk Rating Explanation .................................... 13

VI. APPRAISAL SUMMARY ......................................................................................... 13

A. Economic and Financial Analysis .......................... ......... 13

B. Technical .................................................... 14

C. Financial Management...................... ................ 14

D. Procurement ......................................... ......... 14

E. Social (including Safeguards) ...................................... 15

F. Environment (including Safeguards) .................................. 15

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Annex 1: Results Framework and Monitoring .................................................................... 16

Annex 2: Detailed Project Description .................................................................................. 28

Annex 3: Implementation Arrangements ............................................................................. 40

Annex 4: Operational Risk Assessment Framework (ORAF).............................................56

Annex 5: Implementation Support Plan................................................................................ 63

Annex 6: DLI Disbursement Rules and Verification Protocol Summary .......................... 63

Annex 7: Economic and Financial Analysis ......................................................................... 72

List of Tables

Table 1: Profile of Project by Target Regions .......................... ......... 28

Table 2: PDO-level Results Indicators ............................... ......... 30

Table 3: DLI and EEP Allocations ................... ................ 46

Table 4: Eligible Expenditures per Component (in US$) ..................... 47

Table 5: Minimum EEP related DLIs per Period (in US$)..................... 48

Table 6: Tentative Disbursement Schedule (in US$) ..................... ......... 50

Table 7: Estimated Project Benefits................ .................... ..... 83

List of Figures

Figure 1: Learning Achievement in the Philippines ............................... 74

Figure 2: Grade 3 Reading Levels, 2013 ....................................... 75

Figure 3: Project Logic and Components ...................................... 78

Figure 4: Elementary Students Scoring Zero in Comprehension Assessments, 2013.............. 77

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PAD DATA SHEET

Philippines

Learning, Equity and Accountability Program Support Project (Pl18904)

PROJECT APPRAISAL DOCUMENT

EAST ASIA AND PACIFIC

EASHE

Report No.: PAD364

Basic Information

Project ID Lending Instrument EA Category Team Leader

P118904 Investment Project B - Partial Assessment Lynnette Dela Cruz PerezFinancing

Project Implementation Start Date Project Implementation End Date

1-July-2013 31-December 2017

Expected Effectiveness Date Expected Closing Date

2-June-2014 31-August-2018

Joint IFC

No

Sector Manager Sector Director Country Director Regional Vice President

Luis Benveniste Xiaoqing Yu Motoo Konishi Axel van Trotsenburg

Borrower: Republic of the Philippines

Responsible Agency: Department of Education

Contact: Francisco Varela Title: Undersecretary

Telephone (63 2) 6339342 Email: [email protected].

Project Financing Data(in USD Million)

[X] Loan [ ] Grant [ ] Other

] Credit [ ] Guarantee

Total Project Cost: 300.00 Total Bank Financing: 300.00

Total Cofinancing: Financing Gap: 0.00

Financing Source Amount

Borrower 0.00

International Bank for Reconstruction and 300.00Development

V

Total 300.00

Expected Disbursements (in USD Million)

Fiscal 2014 2015 2016 2017 2018 2019 0000 0000 0000Year

Annual 15.83 77.50 107.68 72.12 26.12 0.00 0.00 0.00 0.00

Cumulati 15.83 93.33 201.01 273.13 299.25 299.25 0.00 0.00 0.00ve

Institutional Data

Sector Board

Education

Sectors / Climate Change

Sector (Maximum 5 and total % must equal 100)

Major Sector Sector % Adaptation Mitigation Co-Co-benefits % benefits %

Education Primary education 70

Education Secondary education 30

Total 100

Z I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information

applicable to this project.

Themes

Theme (Maximum 5 and total % must equal 100)

Major theme Theme %

Human development Education for all 100

Total 100

Proposed Project Development Objective(s)

The project development objective is to improve the quality of grades 1 to 3 reading and mathskills of children in Target Regions and Target Schools, with a special focus on those belongingto Target Disadvantaged Groups.

Components

Component Name Cost (USD Millions)

Improvement of Teaching and Learning in Grades 1 to 3 180.25Reading and Math

Strengthening of Accountability and Incentives of Department 82.50of Education Employees

Improvement of Program Design for Targeting Disadvantaged 36.50

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Groups

Compliance

Policy

Does the project depart from the CAS in content or in other significant Yes [ ] No [X]respects?

Does the project require any waivers of Bank policies? Yes [ ] No [X]

Have these been approved by Bank management? Yes [ ] No [ ]

Is approval for any policy waiver sought from the Board? Yes [ ] No [X]

Does the project meet the Regional criteria for readiness for implementation? Yes [X] No [ ]

Safeguard Policies Triggered by the Project Yes No

Environmental Assessment OP/BP 4.01 X

Natural Habitats OP/BP 4.04 X

Forests OP/BP 4.36 X

Pest Management OP 4.09 X

Physical Cultural Resources OP/BP 4.11 X

Indigenous Peoples OP/BP 4.10 X

Involuntary Resettlement OP/BP 4.12 X

Safety of Dams OP/BP 4.37 X

Projects on International Waterways OP/BP 7.50 X

Projects in Disputed Areas OP/BP 7.60 X

Legal Covenants

Name Recurrent Due Date Frequency

Institutional Arrangements X

Description of Covenant

Borrower's obligation to maintain, throughout the implementation of the Project, an executivecommittee chaired by DepEd, a DepEd project management office, , and operational units ofDepEd at central, region, division, and school levels, all assigned with functions, responsibilitiesand resources for the Project, satisfactory to the Bank.


DLI Verification Protocol X


Borrower's obligation to carry out the Proiect. and monitor and re-ort on the achievement of the

vii

Disbursement Linked Indicators, in accordance with the arrangements and procedures set out inthe DLI Verification Protocol

Legal Covenants


Verification Agent X Appointment by Verification byDecember 15, February 15 and2014 August 15 of ea(h

year


Borrower's obligation to appoint and retain for the duration of the Project an independent DLIverification agent having qualifications and terms of reference acceptable to the Bank to verify thachievement of some of the DLIs semi-annually.


Indigenous Peoples Planning XFramework


Borrower's obligation to ensure that the Project is implemented in accordance with theIndigenous Peoples Planning Framework.


Interim Unaudited Financial Reports X Semi-annual for(IFRs); Audited Financial Statements IFRs not later

than 45 days afterthe end of eachcalendarsemester; Annualfor AuditedFinancialStatements notlater than sixmonths after theend of the fiscalyear of theBorrower


Borrower's obligation to DreDare and furnish semi-annual IFRs. including the sDending status o

viii

the Eligible Expenditure Program under the Project, and annual Audited Financial Statements


Project Reports; Mid-Term Review X Semi-annual forProject Reportsnot later than 45days after the endof the periodcovered; June 30,2016 for mid-term report.


Borrower's obligation to prepare and furnish semi-annual project reports and a mid-term report.

Conditions

Name Type

Withdrawal Conditions Disbursement

Description of Condition

Conditions of disbursement providing that the withdrawal of loan proceeds is dependent uponthe achievement and verification of the relevant DLIs against which the withdrawal is requested,the incurrence of the minimum required levels of eligible expenditures, the submission of thesemi-annual interim financial reports, and compliance with other pertinent withdrawalinstructions stipulated in the Disbursement Letter.(Details are found in Annex 3, FinancialManagement, Withdrawal Conditions section).

Team Composition

Bank Staff

Name Title Specialization Unit

Rene SD. Manuel Senior Procurement Senior Procurement EASRISpecialist Specialist

Danielle Malek Senior Counsel Senior Counsel LEGEN

Manush Hristov Senior Counsel Senior Counsel LEGEN

Matthew James Keir Senior Social Senior Social EASPSStephens Development Specialist Development Specialist

Lynnette Dela Cruz Senior Education Team Lead EASHEPerez Specialist

Miguel-Santiago da Senior Finance Officer Senior Finance Officer CTRLNSilva Oliveira

Maria Loreto Padua Senior Social Senior Social EASPSDevelopment Specialist Development Specialist

Samer Al-Samarrai Senior Education Senior Education EASHE

ix

Economist Economist

Gerardo F. Parco Senior Operations Operations Officer EASPSOfficer

Aisha Lanette N. De Financial Management Financial Management EASFMGuzman Specialist Specialist

Bonnie Sirois Senior Financial Financial Management EASFMManagement Specialist

Franco Russo Operations Officer Operations Officer EASHE

Nicholas M. Tenazas E T Consultant EASHE

Kristine May San Juan Program Assistant Program Assistant EACPFAnte

Corinne V. Bernaldez Team Assistant Team Assistant EACPF

Brenda Batistiana Consultant Consultant EASHE

Victoria Medrana Consultant Consultant EACPFCatibog

Maria Adoracion Fausto Consultant Consultant EASHE

Vicente Paqueo Senior Education Senior Education EASHEConsultant Consultant

Redempto Parafina SBM Consultant SBM Consultant EASHE

Merle Tan Math Consultant Math Consultant EASHE

Felicitas Pado Reading Consultant Reading Consultant EASHE

Non Bank Staff

Name Title Office Phone City

Locations

Country First Location Planned Actual CommentsAdministrativeDivision

x

I. STRATEGIC CONTEXT

A. Country Context

1. The Philippines is a lower middle-income country (Gross National Income per capita ofUS$2,210) with a population of 94.8 million, with 26.5 percent living below the national povertyline.I Despite respectable economic growth during the past decade, poverty incidence andincome inequality remain high.2 The country's main development challenge, therefore, continuesto be the achievement of more inclusive growth. To meet this challenge, the Government has laidout in the 2011-2016 Philippine Development Plan three strategic objectives: (i) attaining asustained and high rate of economic growth that provides productive employment opportunities;(ii) equalizing access to development opportunities for all Filipinos; and (iii) implementingeffective social safety nets to protect and enable those who do not have the capability toparticipate in the economic growth process. As a first step, GOP increased the budget of thesocial services sectors with the Department of Education (DepEd) receiving a 15.2 percentincrease in its budget in 2012 compared to the previous year.

B. Sectoral and Institutional Context

2. The most critical issue in the Philippines is the growing number of non-readers andnon-numerates, mainly at the primary level. Available evidence, both international and local,shows that the poor performance of students in terms of enrolment, retention, and completion aswell as in terms of learning outcomes, as measured by results of student assessments, is partlyexplained by the lack of foundational skills in reading and math in the early grades. Recentreading-related subtests in the Grade 3 National Achievement Test (NAT)show disturbing trends,as Mean Percentage Scores (MPS) in the English Reading Comprehension and Grammar testsdecreased from 61.74 and 61.94 in SY 2009-2010 to 54.42 and 57.23 in SY 2011-2012,respectively. The results are just as dismal in the Filipino Reading Comprehension and Grammartests over the same period, as the respective decreases are from 61.25 and 63.94 to 58.61 and56.97. In terms of math, the decline in MPS over the same period is from 65.09 to 59.87.

3. One of the main reasons for the poor performance of students is traced to the inadequatetraining of teachers on developmentally appropriate approaches and strategies in teachingreading and math. On the other hand, courses for teaching early reading have only been formallyrequired as part of the Teacher Education Curriculum beginning in 2005. More experiencedteachers who might be knowledgeable in effective strategies to teach early grade reading andmath are more likely to be assigned to higher rather than lower grades, which is a loss for thoseGrade 1 - 3 pupils who are struggling. For a long time, DepEd did not have a clearly articulatedofficial reading or math program. Based on local and international experiences, learning in alanguage which is not one's own in the early grades has slowed down the acquisition of basicskills especially in reading and math.

I National Statistical Coordination Board. February 2011.2 World Bank. 2010. Philippines: Towards Inclusive Growth. World Bank, Manila.

1

4. The challenge of poor educational access and low student learning is far worse forcertain population subgroups, reflecting high education inequality. There are four majordimensions of inequality: income, ethnicity, disability and geography. Data from the Departmentof Social Welfare and Development (DSWD) through the National Household Targeting Systemfor Poverty Reduction identified 5.2 million poorest households in the country. Out of the 5.2million poor households, 3.9 million individuals aged 3-18 do not attend school. Lack of accessand low quality of learning is particularly pronounced among the Indigenous People (IP)communities and those with disabilities. In some barangays, many pupils and even teachers needto travel (usually on foot) long distances to and from school.

5. The education system is characterized by a weak incentives structure, compoundedby lack of accountability. In the Philippines, the issue of accountability and incentives forperformance has largely been a missing factor in past education reforms. Salary increases areprovided regardless of performance; underperforming teachers languish in the system untilretirement; and budget allocations to schools and divisions do not reward results, and sometimeseven provide incentives to remain as poor performers. Despite its recognized importance as adriver of performance, there is a need to forge a consensus on how to raise student and teachermotivation (external vs. intrinsic) to improve learning outcomes.

6. The Government, through the DepEd, has embarked on reforms to address thesechallenges. In 2005, the government developed the Basic Education Sector Reform Agenda(BESRA), a coherent education reform program that sought sustainable and system-wideimprovements in outcomes and which was to serve as the overall framework for a coordinatedsectoral approach, involving the participation of government, donors, and other partners. In linewith the objectives of the BESRA, the DepEd recently introduced the Kindergarten to Grade 12Program (K to 12). The program aims to support mastery of the curriculum through increasingthe number of years required from 10 to 12 years so that students have more time to absorb thecurriculum material. This also places the country at par with the international standard of yearsof basic education and prepares graduates for the world of work, even without undergoingtertiary education. Simultaneously, DepEd is also including in the BESRA Mother Tongue-Based Multi-lingual Education (MTB-MLE) and has issued DepEd Order No. 16, s.2012, whichoutlines the guidelines for the use of the child's first language in classroom instruction in Grades1 to 3. In response to the low reading and math skills of early graders, DepEd is currentlyworking on the development of a holistic reading and math program for elementary schools, inline with the major policy reforms. Central to this program is the development of Early GradeReading and Math Assessment tools in the 12 Mother Tongues initially put forward by the MTB-MLE policy.

7. To address accountability issues, DepEd is currently working on major organizationaldevelopment initiatives that are in line with the key reform thrust of the BESRA on InstitutionalCulture Change and the K to 12 program. DepEd implements programs that are targeting specificdisadvantaged groups. For out of school youths and adults, an Alternative Learning System(ALS) is available, wherein mobile teachers and contracted Non-Governmental Organizations(NGOs) bring needs-based learning opportunities to far-flung areas. For the poorest studentsenrolled in schools, Abot Alam Program (AAP) of education are provided so that these childrenare not forced to forego learning in exchange for economic activities. The Department is alsoconducting Special Education programs serving people with the following disabilities: autism,

2

behavioral problems, blindness, cerebral palsy, communication disorders, hearing impairment,intellectual disability, learning disability, low vision, multiple handicaps, orthopedic challengesand special health problems. More recently, DepEd has also adopted the National IndigenousPeoples Education Policy Framework and established the IP Education Office.

C. Higher Level Objectives to which the Project Contributes

8. The project is closely aligned to the objectives of the World Bank 2010-2013 CountryAssistance Strategy (CAS) in the Philippines of improving public service delivery andgovernance. It will directly support the CAS strategic objective which aims to improve accessand quality of basic education services. Although the new Country Partnership Strategy in thePhilippines for 2014-16 is still under preparation, it is expected that these key objectives ofimproving public service delivery, including the improvement of quality basic education, willremain as a major theme. The components and key result indicators of the proposed project arealigned with the World Bank's twin objectives of supporting poverty eradication and promotingshared prosperity. The project's emphasis on ensuring access of the disadvantaged groups toquality basic education services serves as a pathway for these students' advancement and humancapital development. The project is also consistent with the Bank's Education Sector Strategywhich emphasizes "Learning for All." The project will support the GOP's 2011-2016 PhilippineDevelopment Plan strategies and objectives, including a cross-cutting approach of developinghuman resources through improved social services, and promoting transparent and responsivegovernance. It also supports the President's commitments in the Social Contract which puts"education as the central strategy for investing in the Filipino people, reducing poverty andbuilding national competitiveness."

II. PROJECT DEVELOPMENT OBJECTIVES

A. PDO

9. The project development objective is to improve the quality of grades 1 to 3 reading andmath skills of children in Target Regions and Target Schools, with a special focus on thosebelonging to Target Disadvantaged Groups.

10. For the purposes of the Project, the "target regions" are Regions 5, 8, 9, CAR andCARAGA. "Target schools" shall be defined as a subset3 of elementary and/or high schools inthe target regions implementing the relevant project components. Furthermore, the "targetdisadvantaged groups" will include the following groups in the target regions: (i) indigenouspeoples; (ii) persons with disabilities; (iii) children living in remote or difficult-to-accesslocations; and (iv) out-of-school children and youth.

B. Project Beneficiaries

11. The Project beneficiaries include: (i) DepEd central, regional and division staff; (ii)school heads; (iii) teachers; (iv) public school students; (v) Indigenous Peoples students; (vi)

3 Explained further in paragraph 13.

3

children with disabilities and (vii) out-of-school children and youth of the select target regionsand schools.

12. The five target regions were selected because they are among the eight poorest regions inthe country, based on the 2012 poverty statistics released during the second quarter of 2013. Tworegions were selected from Luzon, one from Visayas and two from Mindanao. These regionsalso: (i) suffer from significant dropout rates (especially between Grades 1 and 2); (ii) record lowperformance in reading and math scores; and (iii) have a significant IP population and otherdisadvantaged groups.

13. Beneficiaries specifically within the five target regions can also be broken down bycomponents: (i) Component I will benefit all 11,998 elementary schools by implementing Early-Grade Reading Assessment (EGRA) and Early Grade Mathematics Assessment (EGMA) tools;(ii) Component 2 will benefit all 14,121 schools (11,998 elementary plus 2,123 high schools), aswell as officers and staff from DepEd's administrative offices through the project'saccountability interventions; and (iii) Component 3 will support all 14,121 schools andstudents/learners from the targeted disadvantaged groups (i.e. indigenous peoples, persons withdisabilities, out of school children and youth and children living in remote or difficult-to-accesslocations). By the nature of the interventions, target disadvantaged groups will also be servedunder Components 1 and 2. Overall, the five target regions include 14,121 elementary andsecondary schools, 116,587 school teachers and approximately 4,038,780 students.

14. DepEd will implement all LEAPS activities to all schools nationwide. As a matter of fact,DepEd will set higher internal targets for itself to further accelerate the institutionalization of thereforms reinforced under LEAPS. This project, however, will focus on select target regions andthe schools within these, but will be ready to provide strategic support to DepEd in their plan ofnationwide implementation.

C. PDO Level Results Indicators

15. The project outcome indicators for measuring achievement of the PDO are in thefollowing table. These pertain mostly to improved performance of both regular anddisadvantaged students using the EGRA and EGMA tools. The project will monitor at least3,000 elementary schools in the target regions to be included in the computation of the PDOindicators. 4

PDO-level indicators School year School year School year School year2014-15 2015-16 2016-17 2017-2018

Decrease of students 0 3% decrease 5% decrease 7% decreasewith scores of zero in from the from previous from previousthe Comprehension Baseline baseline year's value year's valuedomain subtest of the gathering to (Grade 1 (Grade 2 (Grade 3relevant EGRA-mother take place in students) students) students)tongue tool school year

4 This is roughly 25% of all elementary schools in the five project regions. For monitoring purposes, these 3,000elementary schools per year do not need to be the same elementary schools.

4

2013/140 3% increase 5% increase 7% increase

Increase of students from the from previous from previouswith at least 60% Baseline baseline year's value year's valuescores in the relevant gathering to (Grade 1 (Grade 2 (Grade 3EGMA-mother tongue take place in students) students) students)tool school year

2014/15Decrease of students 0 3% decrease 3% decrease 3% decreasefrom disadvantaged from the from previous from previousgroups5 with scores of Baseline baseline year's value year's valuezero in the gathering to (Grade 1 (Grade 2 (Grade 3Comprehension domain take place in students) students) students)subtest of the relevant school yearEGRA-mother tongue 2014/15toolIncrease of students 0 3% increase 3% increase 3% increasefrom disadvantaged from the from previous from thegroups with at least Baseline baseline year's value previous year's60% scores in the gathering to (Grade 1 (Grade 2 value (Grade 3relevant EGMA-mother take place in students) students) students)tongue tool school year

2014/15Number of 4,038,780 4,038,780 4,038,780 4,038,780beneficiaries

Note: Results will be disaggregated by gender

III. PROJECT DESCRIPTION

A. Project Components

16. The project has three components:

Component 1: Improvement of Teaching and Learning in Grades 1 to 3 Reading andMath

Component 2: Strengthening of Accountability and Incentives of Department ofEducation Employees

Component 3: Improvement of Program Design for Targeting Disadvantaged Groups

The third and fourth PDO indicators will track performance of students/learners from the following targeteddisadvantaged groups: (i) indigenous peoples; (ii) persons with disabilities; and (iii) children living in remote ordifficult-to-access locations. Out of school children can no longer be assessed using the EGRA and EGMA tools asthese are school-based assessments. Out of school children and adults will be served primarily through theAlternative Learning System of DepEd, which this project will also strengthen.

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17. The project will focus on improving teaching and learning in early grades reading andmath through: (i) enhancing and supporting DepEd's overall reading and math program; (ii)providing incentives and increasing accountability for results of school/education personnel; and(iii) helping ensure that the most disadvantaged have access to these educational services. Byfocusing on these key interventions, the foundational skills of learners can be greatly improved.This is very much in line with the objective of the Philippine basic education reform agenda:preparing students for higher learning and the world of work.

Component 1: Improvement of Teaching and Learning in Grades 1 to 3 Reading and Math(US$180.25 million)

18. This component seeks to develop the capacity of teachers and schools to improve theteaching of reading and math skills of Grades 1 to 3 students in the target schools andconsequently students' learning outcomes. Recognizing that reading and math is a vital tool forlearning and a predictor of a student's success in school, DepEd is committed to develop theseimportant foundational skills starting in the early grades.

Sub-component 1.1: Improvement of early grade reading and math assessment in selectedMother Tongues (US$23.25 million)

19. The EGRA and EGMA tools in Mother Tongues will be developed during the first yearof the project. In line with the recent implementation of DepEd's MTB-MLE program, theEGRA and EGMA tools for Grades 1 to 3 under this project will be developed in five of thetwelve major mother tongue languages: Bikol, 11oko, Sinugbuanong Binisaya, Waray andChabacano. At least six versions of EGRA and EGMA per Mother Tongue will be developed sothat yearly assessments are credible and comparable.

Sub-component 1.2: Professional development of key personnel in target regions to enhancecapability in teaching grades 1 to 3 reading and math (US$120 million)

20. The intention is for the EGRA and EGMA tools to provide DepEd with a nationaldiagnostic tool on the learning of reading and math skills which will be administered at leastonce a year in the early grades. On the basis of the results of the new reading and mathassessment, the government will put in place different sets of interventions to enhance teachingand learning of early grade reading and math. This sub-component involves training on theinterpretation of the results of the assessment, and training on classroom activities to helpaddress reading and math skills gaps identified among students.

21. DepEd will organize trainings for Grades 1 to 3 teachers, as well as school principalsfrom the identified schools. The project is targeting training of 11,998 teachers each for Grades1, 2 and 3 (for a total 35,994 teachers) as well as 11,998 principals/head teachers assigned toidentified schools. They will be coached in training others and to become resource persons fortheir peers and colleagues in their respective schools. The capability to introduce appropriateinterventions for the unique learning challenges of each child as identified by the assessmentresults will be a critical innovation of this project.

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Sub-component 1.3: Institutionalization of early grade reading and math program (US$37million)

22. This sub-component aims to support DepEd develop and implement policies that willestablish guidelines on the use of assessment tools in the appropriate mother tongue for eachgrade and help improve the implementation of DepEd's MTB-MLE policy in the target regions.Activities under this sub-component will ensure that DepEd implements necessary enablingpolicies to institutionalize the package of interventions tested and proven during projectimplementation.

23. With the introduction of EGRA and EGMA, DepEd will need to specify the role thesetwo new tools will play in relation to the tools it already applies (i.e. the School ReadinessAssessment - SReA - and the Philippine Informal Reading Inventory (Phil-IRI). DepEdtherefore proposes to use: (i) the SReA tool as the assessment tool for Kindergarten; (ii) EGRAand EGMA for Grades 1-3 (because it coincides with the period wherein the mother tongue ismore prominent in classroom instruction); and (iii) the Phil-IRI for Grade 4-6 (as it is in Englishand Tagalog only). The project would support DepEd's efforts in analyzing the feasibility of thisproposal and developing the relevant policy.

24. Before being able to implement the MTB-MLE policy effectively, DepEd would requirea complete list of all its mother tongues and their variations, which currently does not exist. Theproject would therefore support DepEd in its efforts to collect data and produce a comprehensiveand reliable linguistic map, which will also help make informed decisions on materialdistribution and further contextualize assessment results. The government has started initial workon creating such a map of the country, which could also serve as the springboard for future andmore detailed mapping activities.

25. Finally, to ensure that incoming generations of teachers are familiar with all EGRA andEGMA principles, DepEd's Teacher Induction Program (TIP) needs to be updated. Courses onearly literacy and numeracy will be included in the TIP curriculum, which will be informed byDepEd's experience and evaluation of the reading and math program, including the use of EGRAand EGMA tools.

Component 2: Strengthening of accountability and incentives of Department of EducationEmployees (US$82.5 million)

26. This component will be used to reinforce the effectiveness of the package ofinterventions proposed in Component 1 of the project. First, it aims to ensure that theimplementation of the Performance Incentive Scheme for the Philippine Government willproduce the intended result of improved performance, especially better teaching in early gradesreading and math. Second, it plans to intensify the culture of accountability in schools, whichwas introduced through School-Based Management (SBM) reforms. Finally, it aims to addressfinancial management constraints and bottlenecks. Although interventions under this componentwill have an impact on the overall education system, the project will monitor their effectivenessand impact specifically in the five target regions and selected schools.

7

Sub-component 2.1: Development of enabling mechanisms to enhance the effectiveness ofimplementation of the government's Performance Incentive Scheme (US$30 million)

27. Under this project, DepEd will devise a reliable Performance Monitoring System (PMS)that not only measures the achievement of performance indicator targets by year end, but alsoprovides real-time information on the status and progress of achieving targets. This providesDepEd with an accurate dashboard of achievement of targets so that any lags or delays can beaddressed in a timely manner. Once the details of the PMS and the incentive scheme are known,DepEd will also conduct mass information campaigns to explain the details of theimplementation of the Performance Incentive Scheme. These activities will provide valuableinsight into the effectiveness of the Performance Incentive Scheme for future reference.

Sub-component 2.2: Improvement of school reporting and feedback mechanism (US$30 million)

28. DepEd understands the importance of stakeholder participation in planning, monitoring,and resource mobilization to achieve desired outcomes at the school level. During the Bank-financed National Program Support for Basic Education (NPSBE) project period, significantgains were achieved in institutionalizing community-based school planning and management ofresources. However, the School Report Card (SRC) which the DepEd is currently using wasfound to be inadequate to properly inform stakeholders and stimulate participation. Therefore,DepEd will revise its SRC and institutionalize its use throughout all schools. DepEd aims for ahigh participation rate of schools using the updated SRC by project closing.

Sub-component 2.3: Strengthening of DepEd's Financial Management Capability (US$22.5million)

29. This sub-component will support the development of a FM manual and associatedtraining of FM personnel to ensure that: (i) DepEd FM controls, policies and rules, both internaland external (e.g. those issued by oversight agencies), are codified, unified and made available toall FM personnel; (ii) FM reporting requirements are streamlined, simplified and completed on atimely basis; (iii) appropriate and relevant training is provided to all FM personnel; and (iv)consultations and consensus-building with oversight agencies on critical FM issues are carriedout.

Component 3: Improvement of program design for Targeting Disadvantaged Groups in theTarget Regions (US$36.5 million)

30. The project will support the improvement of access and quality outcomes fordisadvantaged groups in the target regions: poor students residing in areas far from a school orlearning center, out of school youth, indigenous peoples and persons with disabilities. Whilethese target groups are geographically dispersed and will inevitably benefit from wider DepEdprograms and projects, focused attention on their specific contexts, especially on early gradesreading and math, is expected to help improve national education outcomes substantially andmore equitably. This component will focus on two main critical areas to ensuring effectiveinterventions for any of these disadvantaged groups.

8

Sub-component 3.11: Improvement of targeting of Disadvantaged Groups in the Target Regions(US$12.5million)

31. In this subcomponent, DepEd will aim for the development of an information strategythat outlines the information gaps for programs serving target disadvantaged groups and howthese can be addressed, as well as an information system that can produce reliable and updatedinformation on these programs.

Sub-component 3.2: Expansion of knowledge base on selected programs targetingDisadvantaged Groups and improvement of program design and implementation capabilities(US$24.0 million)

32. DepEd will invest in evaluating its ongoing programs which are serving the target6disadvantaged groups. Four major programs serving disadvantaged groups will be

comprehensively reviewed, focusing on its design, budget and performance. The list of programsto be reviewed will be finalized three months after project start-up. It is the intention of DepEdmanagement that these reviews be conducted by external groups or organizations, while makingsure that key DepEd staff are also trained on the management of studies.

B. Project Financing

Lending Instrument

33. The lending instrument that has been selected is an Investment Project Financing (IPF),utilizing a results-based approach, with the amount and event of disbursements based on theachievement of pre-identified results, referred to as Disbursement-Linked Indicators (DLIs), onor before the last day of the relevant period and the incurring of spending levels for the eligibleexpenditures. Activities under selected key DepEd budget line items referred to as EligibleExpenditure Programs (EEPs) will constitute the eligible expenditures. LEAPS will supportelements of the Government's BESRA within budget financing that will help guarantee thedelivery of budget items critical to the reform agenda.

34. Reporting of DLIs Achieved. PDO level indicators will require yearly submission (2015to 2018) of the EGRA and EGMA results for 3,000 schools. On the other hand, while DLIshave annual targets, verification will be done semi- annually. DepEd will submit a "VerificationReport #1" to the Bank no later than February 15 of each year on the status of the resultsframework and the DLIs (covering DLI's achieved from July 1 to December 31 of each year),and will include the Interim Unaudited Financial Report for the same period as well as a DLIVerification Agent (DVA) assessment for selected DLIs, if applicable.8 DepEd will also prepareand submit to the Bank no later than August 15 of each year "Verification Report #2" on DLI

6 The programs initially identified are: (i) Multigrade Classrooms; (ii) Special Education; and (iii) School Feeding7 This is roughly 25 percent of all schools in the five project regions. For monitoring purposes, these 3,000 schoolsper year do not need to be the same schools.8 The first Verification Report will cover the period from July 1, 2013 (retroactive financing period start date) toProject Effectiveness date. The DLI Verification Agent assessment will cover selected DLls, as indicated in Annex6 of this PAD as not all DLIs will be subject to review by the DVA.

9

achievement, covering the first six months of each year (which will also include the InterimUnaudited Financial Report for the same period as well as a DVA assessment, if applicable). Ifthe Bank is satisfied (based on the "Verification Report" or evidence of individual DLIachievement) that the DLI requirements and the minimum levels of EEP disbursements that areequal to the DLI values have been met, and the verification protocol properly followed, itauthorizes the withdrawal of proceeds in accordance with the disbursement rules associated witheach DLI.

35. The DLIs and project activities will be monitored either through the independentvalidation to be conducted by a DVA to be hired by DepEd or through regular Bankimplementation support missions jointly undertaken with the government. The DVA will submitverification reports on pertinent DLIs by February 15 and August 15 of each year.

36. Bank reviews: The Bank will conduct a mission in February and August of each year tocoincide with the timing of the "Verification Report #1" as well as the "Verification Report #2"and review a sample from the findings of the DVA during implementation support missions. Aspart of the aide-memoire, the Bank will communicate to DepEd any comments orrecommendations it may have to help accelerate or improve project implementation and DLIachievement.

37. Disbursement Arrangements. The GOP will pre-finance all of the expenditures underthe EEPs and then get reimbursed by the Bank. EEPs were selected based on consultations withDepEd using the General Appropriations Act (GAA) and because they are directly linked to theproject's DLIs. Each EEP represents a distinct line item from the DepEd budget. The EEPs thatthe project will support are: (i) school Maintenance and Other Operating Expenses (MOOE); (ii)in-service training (INSET); (iii) human resource training and development fund (HRTD); (iv)Abot Alam Program (AAP); and (v) Alternative Learning System (ALS). 9 Project funds will bedisbursed to the Bureau of Treasury as reimbursements for expenditure already incurred uponachievement of the DLIs. The accounting processes of DepEd are designed such that they candetermine the funding sources of various expenditures and projects so there is no doublefinancing and counting.

38. DLIs will have an associated amount or 'price tag', which will correspond to an amountof EEP to be reimbursed provided that DepEd spends the required minimum levels for each EEP(See Table 5). Each DLI has a specific set of disbursement rules and a verification protocol,which will guide the timing and level of disbursements for each DLI. For scalable DLIs, theminimum EEPs are also scalable using the same disbursement rules applicable to such DLIs.Withdrawal of funds from the Bank will be through the submission of duly signed WithdrawalApplications (WA) and IFRs. Given that the loan includes a front-end fee of US$750,000, it willonly disburse US$299.25 million, which is the total price of all DLIs.

9 These expenditure items mostly include maintenance and other operating expenses such transportation, suppliesand materials, training and utilities. These do not include personnel services, capital outlays, works or schoollaboratory equipment.

10

39. Remedies at the Bank's disposal for dealing with DLIs not having been met by theachievement date or not having conclusive evidence of DLI achievement, or insufficient EEPexpenditures being incurred are spelled out in detail in the loan agreement as well as the DLIverification protocol. They include, amongst others, providing an additional 12 months to meetthe DLI, an extended period to report eligible expenditures, withholding or cancelling theamount corresponding to a DLI. The DLI verification table in Annex 6 also includes additionalinformation as well.

C. Lessons Learned and Reflected in the Project Design

40. Lessons from basic education projects implemented by the government in the past haveinformed the design of this planned operation. While the NPSBE project covered a wide range ofactivities called for by BESRA and in all divisions, a key lesson from this project is that givenDepEd's implementation and absorptive capacity limitations, it would arguably be more efficientto keep management focused on a limited number of critical reforms in areas that are laggingbehind in basic education. As highlighted in several project implementation support missions onNPSBE and the Support for Philippine Basic Education Reform Project (SPHERE), there is aneed to integrate and coordinate various reform initiatives, and refocus and align reform effortsto a limited number of critical areas to serve as "tipping points" to realize successful reform ofthe education system. In light of this, LEAPS will thus be covering fewer but more focused andstrategic interventions and aim for specific outcomes. It will put great emphasis and focus onimproving the acquisition of reading and math skills in the early grades, improve performanceaccountability, and work on interventions to address the needs of specific disadvantaged groups.These interventions are intended to selectively address remaining gaps in terms of learning andaccess and strengthening and expanding some of the critical reforms started with support fromNPSBE.

41. Accountability and incentives for performance have largely been a missing factor in pastreforms. There has been a failure to institute results-oriented incentives and social accountabilitymechanisms. The lack of accurate, timely, and coherent databases for evidence-based policy-making, performance monitoring, and social accountability was a problem identified in the pastwhich is currently being addressed by the current administration and included as part of theproject deliverables.

42. As experienced in previous Bank-supported education projects that involved "withinbudget" financing, the LEAPS project will continue to support country systems and will bemanaged and implemented by organic staff from DepEd in coordination with other governmentagencies.

IV. IMPLEMENTATION

A. Institutional and Implementation Arrangements

43. Overall responsibility for the project will be vested with the DepEd, which is in charge ofmeeting the objectives of the Philippine Development Plan on basic education, the BESRA andunder it, the K to 12 program, and the President's Social Contract. Furthermore, a projectmanagement office within DepED will be established and charged with functions,

11

responsibilities and resources, and is expected to hire competent staff in adequate numbers, to beresponsible for the overall coordination of the project activities. The DepEd units at the central,regional, division offices, and schools will be responsible for their respective levels, as reflectedin their revised organizational restructuring plan. The Executive Committee composed of seniormanagement of DepEd, chaired by the Secretary of Education, will provide the overall strategicdirections for the project, review its progress, and address major issues. The other agencies ofgovernment, such as the DBM, DOF and National Economic and Development Authority(NEDA), COA and Civil Service Commission (CSC) will have specific roles in theimplementation of the project to ensure the delivery of the results that the GOP will commit toachieving by the end of the project.

44. A DLI Verification Protocol has been developed with GOP which includes detaileddefinitions and conditions of DLIs to assess compliance and related disbursements. This DLIVerification Protocol shall guide DepEd, the Bank and the DVA on how to measure achievementof the DLIs and compute eligible disbursements for every assessment period.

B. Results Monitoring and Evaluation

45. The results-based nature of the operation necessitates a strong monitoring and evaluation(M&E) system to ensure that the project is achieving the results desired. The data to monitor thePDO level indicators for reading and math will come from the EGRA and EGMA results in thetarget schools. The EGRA and EGMA assessments will be given in the five major mother tonguelanguages. The pre- and post- assessment scores will serve as the sources of data for measuringimprovements in the domains assessed.

46. The data and information required to monitor and evaluate the intermediate indicators inComponent 1 do not yet exist because the project is introducing innovative approaches for whichthere are no data points. Therefore, the performance measurement tools and protocols will bedeveloped and integrated into the DepEd's existing information systems during projectimplementation. For Component 2, many of the data systems needed to measure the projectindicators already exist within DepEd. These systems include: (i) DepEd's Electronic BasicEducation Information System (EBEIS), School Information System; (ii) the SRC that issubmitted annually by schools to the Division, up to the Regional and DepEd Central Offices;and (iii) DepEd's financial records, the financial information system, and reports to monitorprogress towards the identification and resolution of key financial issues. While these systemsalready exist, it will be important for the systems to be reviewed and refined to accommodatenew data required with the implementation of the new pilot performance incentive program.Tools will be developed to monitor the program implementation particularly looking into theoverall performance rating and performance incentives awarded. Finally, Component 3 resultsindicator data will be obtained from various DepEd offices' records.

C. Sustainability

47. As in the recent NPSBE project, LEAPS is financing those items in the DepEd budgetthat are critical for achieving the objectives of the DepEd's reform program. The Bank assistancethrough LEAPS will facilitate implementation of the reforms that have been articulated by thegovernment. The government partners, particularly the Department of Education, Department of

12

Budget and Management (DBM), National Economic and Development Authority (NEDA),Department of Finance (DOF) and even the Civil Service Commission (CSC), were extensivelyinvolved in the project preparation especially in identifying key results (specified as the DLIs)and the corresponding prior and concomitant actions to be taken to ensure achievement of theseDLIs. The key indicators and the programs and interventions that were selected to form part ofthe project components and deliverables are aligned with the overall policy and programpriorities of the government in basic education in the next four years, as well as government'soverall priorities in terms of spending and execution.

V. KEY RISKS AND MITIGATION MEASURES

A. Risk Ratings Summary Table

Stakeholder Risk Rating

Implementing DepEd Risk

Capacity Substantial

Governance Substantial

Project Risk

Design Substantial

Social and Environmental Low

Program and Donor Moderate

Delivery Monitoring and Sustainability Moderate

Overall Implementation Risk Substantial

B. Overall Risk Rating Explanation

48. The overall implementation risk rating for the project is substantial. The key risks relateto: (i) implementation and technical capacity of the DepEd to implement the innovationsintroduced in the project; and (ii) the challenge of achieving agreed results in a results-basedoperation which could mean low or slow disbursement. The risk mitigation measures which willbe evaluated during project implementation are indicated in Annex 4.

VI. APPRAISAL SUMMARY

A. Economic and Financial Analysis

49. Despite recent increases in public education spending the quality of basic education in thePhilippines has remained relatively low over the last 10 years. Annex 7 shows that low quality ispartly the result of children failing to master basic skills in the early grades of education. Giventhe linguistic diversity of the Philippines, the annex highlights the potential of mother tongueeducation to improve the acquisition of basic reading and mathematics skills. It shows that

13

changes to the language of instruction coupled with interventions to improve the teaching ofbasic skills can lead to significant improvements in the quality of education.

50. Annex 7 also shows that the potential social and economic benefits of raising the qualityof education through the planned components of the project are considerable. While it is notpossible to provide an accurate economic rate of return for a program of this kind, the annexsuggests that the benefits of successfully implementing mother tongue education and improvinglevels of learning are large. These benefits are likely to outweigh the costs of the project and theadditional spending the government incurs to implement the reforms supported by the project.

B. Technical

51. The selected technical design builds on the Bank's deep policy engagement and extensiveoperations experience working with the GOP in basic education particularly with the DepEd insupport of the GOP's BESRA, and within it, the K to 12 program of the new administration. Theresults orientation of the project is the Bank's response to the challenge of guiding andredirecting the GOP's efforts and priorities to address problems confronting the basic educationsector including the following: (i) significant deficits in reading and math skills of the earlygrade learners; (ii) weak accountability mechanisms; (iii) absence of performance incentivesimpeding implementation of reforms; and (iv) inequitable access of specific target groups toquality basic education services further marginalizing important segments of society. The policyand program actions and results indicators included in the project are informed by internationaland local evidence, including impact evaluation/analyses on the various reform areas covered(e.g. early grade reading assessment, performance incentives, use of social accountability toolsand use of mother tongue as a language of instruction).

C. Financial Management

52. Based on a FM assessment of the project carried out in accordance with the "FinancialManagement Practices in World Bank-Financed Investment Operations," DepEd FM systemsmeet the Bank's requirements provided the recommended mitigating measures are incorporatedin the design and implementation of the project. Also, although audit reports showed non-compliance to established internal controls, overall control environment is adequate for theimplementation of the project. For additional information, please refer to Annex 3.

D. Procurement

53. Based on the Eligible Expenditures that have been identified for the project, procurementwill be done using the Government procedures acceptable to the Bank and consistent with theWorld Bank's "Guidelines: Procurement of Goods, Works, and Non-consulting Services underIBRD Loan and IDA Credits & Grants by World Bank Borrowers" dated January 2011, and"Guidelines: Selection and Employment of Consultants under IBRD Loan and IDA Credits &Grants by World Bank Borrowers" dated January 2011.

54. Based on a capacity assessment, DepEd was assessed to have adequate experience andcapacity to carry out the relatively small procurement packages and activities to be funded underthe project. Details are provided in Annex 3.

14

E. Social (including Safeguards)

55. Since some of the project sites would have the presence of IPs as project beneficiaries,OP 4.10 is triggered. The proposed project is expected to have positive social impact particularlyin terms of improved access to basic education among marginalized groups, such as IndigenousPeoples (IPs), out of school youth and students with disabilities. DepEd updated its existingIndigenous Peoples Planning Framework (IPPF) under the predecessor project, NPSBE, basedon the lessons learnt under the project. LEAPS will promote equity and social inclusion byadopting socially-responsive educational mechanisms and tools such as the use of mother tongueinstruction and SBM that includes broader participation of stakeholders in the preparation,implementation, monitoring as well as resource mobilization for school improvement plans.Further, LEAPS includes strong social accountability mechanisms such as performance-basedincentives; decentralization of responsibilities to school levels mainly through SBM; parentalaccess to school information through the use of SRC; and mobilization of private and CSOpartnerships.

F. Environment (including Safeguards)

56. During the project concept stage, the government proposed the inclusion of classroomconstruction into project activities to be financed by the loan. To address routine environmentalissues, the DepEd prepared an Environmental Code of Practice for classroom construction. Asproject preparation progressed, however, the government decided not to finance any schoolconstruction or rehabilitation as part of the LEAPS project. The final project design alsoexcludes the financing of any other civil works, acquisition of potentially hazardous schoollaboratory equipment or materials/chemicals to be used in laboratories. Therefore, no negative orlong-term environmental impacts are expected for any activity under the project. The PDO ofimproving the early grade reading and math skills of students in the target areas can be achievedindependent of classroom construction through the conduct of professional developmentactivities for teachers to enhance their assessment and teaching skills, and training of principalsand head teachers to strengthen field-level support systems. The project's special focus ondisadvantaged groups involves the implementation of alternative delivery modes and alternativelearning systems which are usually conducted outside the classroom. However, OP 4.01 istriggered due to the need to assess and take into account, in an integrated manner, the socialaspects of the project, particularly its impact on IPs.

15

Annex 1: Results Framework and Monitoring

Country: Philippines

Project Name: Learning, Equity and Accountability Program Support Project (P118904)

Results Framework

Project Development Objectives

PDO Statement

The project development objective is to improve the quality of grade 1 to 3 reading and math skills of children in TargetRegions and Target Schools, with a special focus on those belonging to Target Disadvantaged Groups.

These results are at Program Level

Project Development Objective Indicators

Cumulative Target Values Data ResponsibSource/ ility for

Indicator Core Unit of Baselin SY 2014- SY SY 2016- SY 2017- Frequen Methodolo DataName Measure e 15 2015-16 17 18 cy gy Collection

Decrease of Bureau ofstudents Percenta Elementar

.it (TBD) (TBD) -3% -8% -15% -15% Annual ofwith scores ge yof zero in Education Education

16

the (orComprehens Rationalizion domain ation Plansubtest of equivalentthe relevant )EGRA-mothertongue tool

Increase of Bureau ofstudents Elementarwith at least y60% scores Department EducationDPercentain the (TBD) (TBD) 3% 8% 15% 15% Annual of (orrelevant ge Education RationalizEGMA- ation Planmother equivalenttongue tool )

Decrease ofstudentsfrom Bureau ofdisadvantag Elementared groups ywith scores Department EducationDPercentaof zero in (TBD) (TBD) -3% -6% -9% -9% Annual of (orthe ge Education RationalizComprehens ation Planion domain equivalentsubtest of )the relevantEGRA-

17

二一一Intermediate ResultS IndiCatorS

川一一他18

developed (orfor each RationalizSelected ation PlanMother equivalentTongueineach TargetRegion

NumberSub-

CARAGA Type 0.00 2.00 10.00 10.00 10.00 10.00Breakdown

NumberSub-

Region 9 Type 0.00 2.00 10.00 10.00 10.00 10.00Breakdown

NumberL Sub-


NumberSub-


NumberCAR Sub- 0.00 2.00 10.00 10.00 10.00 10.00

19

TypeBreakdown

Teachersfromidentified Bureau ofschools Elementartrained to yimprove Department Educationtheir Number 0.00 0 11,998 23,996 35,994 35,994 Annual of (orcapability to Education Rationalizeffectively ation Planteach equivalentGrades 1 to )3 readingand math

Schoolprincipals /head

Bureau ofteachers

Elementarfrom

identified Department Educationschoolstraie o Number 0.00 0 5,999 11,998 11,998 11,998 Annual of (or

Education Rationalizstrengthenfield level ationlan

supportequivalentsupportsystem forimprovedearly grade

20

reading andmathteaching

Policy on:(i) EGRA

Developme . andntvlo e Policy on Policy on EGMnt of an teheEGMAenabling Policy on Policy inclusion inclusion tool Bureau ofenvironment the on the of early of early utilization; Elementarfor the th fel fery and (ii) thefftie utilizatio utilizatio literacy literacy inc ion y

n of the n of the and and Department Educationimplementat Text 0.00 EGRA EGRA numeracy numeracy of early Annual of (orion of the and and course in course in literacy Education Rationalizgrades I - 3EGMA EGMA DepEd's DepEd's ation Planreading and tools tools teacher teacher numera. equivalentmath . . . . course in

program inadopted adopted induction induction De)'program in porm rgam DepEd'sthe Target pgram pga teacherRegions induction

programadopted

Linguistic Bureau ofmap for Elementareach Target yRegion Department Educationdeveloped Number 0.00 1 2 3 5 5 Annual of (orfor Education Rationalizimproved ation Plantargeting equivalentand )

21

implementation of thegrades 1 - 3reading andmathprogram

Office ofCapability Undersecrof DepEd to Performa PMS etary forimplement nce Regionalits moyitorn 14,173 14,173 14,173 developed Department OperationPerformanc Text 0.00 monitri staff staff staff and 14,173 Annual of s(or

oriented oriented oriented staff Education RationalizelIncentive develope .RtoaiScheme d oriented ation Planimproved equivalent

Office ofDevelopme ]Oe

. thent of an Policy on Undersecrenabling 8,474 13,415 13,415 SRC etary forenvironment Policy on target target target adoptedfor the use the use of schools schools schools and 13,415 Deaumn ReionText 0.00 shos colsAnnual of Operationof school SRC use treuse refined use refined target Education s (orreport cards adopted refined schools .i .

.SRC SRC shosRationaliz(SRC) in the SRC use refined ation PlanTarget SRC equivalentRegions

Financial Financial 233 233 FM Department Office of

managemen Text 0 0 manage finance finance manual Annual of thet capacity of ment and and adopted Education Undersecr

22

DepEd manual administrat administrat and etary forcentral, for all ive staff ive staff relevant Financeregional and DepEd trained trained staff anddivision finance trained Administroffices and ation (orimproved administ Rationaliz

rative ation Planstaff equivalentdevelope )d andadopted

Improvement of data

managemen Oficmanagem. Informatio Office oft for Informatio o

. Informat n strategy Planningeducational . Informatio n system developed

ion dvlpdServiceprograms n strategy for Department

strategy . and (orserving Text 0 0 dl developed educationa informatio Annual of RationalizTarget and 1 programs Education .Disadvantag doand adopted implement nmysem ationlan

adopted implement equivalented Groups ed edin theTargetRegions

Comprehens Office ofive reviews Planning

completed DeatetServicecosleted Number 0.00 1 2 3 4 4 Annual of (oron selected .dcto (orDepEd Rationalizprograms ation Plan

23

serving the equivalentTarget )Disadvantaged Groupsin theTargetRegions

24

Annex 1: Results Framework and Monitoring

Country: Philippines

Project Name: Learning, Equity and Accountability Program Support Project (P118904)

Results Framework

Project Development Objective Indicators

Indicator Name Description (indicator definition etc.)

Decrease of students with scores of zero in the Submission of EGRA results of all 3,000 schools plus independent validation ofComprehension domain subtest of the relevant sample schoolsEGRA-mother tongue tool

Increase of students with at least 60% scores in the Submission of EGMA results of all 3,000 schools plus independent validationrelevant EGMA-mother tongue tool of sample schools

Decrease of students from disadvantaged groups Submission of EGRA results of all 3,000 schools plus independent validation ofwith scores of zero in the Comprehension domain sample schoolssubtest of the relevant EGRA-mother tongue tool

Increase of students from disadvantaged groups with Submission of EGMA results of all 3,000 schools plus independent validationat least 60% scores in the relevant EGMA-mother of sample schoolstongue tool

Number of beneficiaries Number of students that will be directly influenced by the collectivedeliverables of the project

Intermediate Results Indicators

Indicator Name Description (indicator definition etc.)

25

Versions of EGRA and EGMA tools developed for 5 versions of EGRA and 5 versions of EGMA each for Iloko, Bikol, Waray,each Selected Mother Tongue in each Target Region Sinugbuanong Binisaya and Chabacano

CARAGA EGRA and EGMA tools in Sinugbuanong Binisaya

Region 9 EGRA and EGMA tools in Chabacano

Region 8 EGRA and EGMA tools in Waray

Region 5 EGRA and EGMA tools in Bikol

CAR EGRA and EGMA tools in Iloko

Teachers from identified schools trained to improve 11,998 grade 1, 11,998 grade 2 and 11,998 grade 3 teachers trained on readingtheir capability to effectively teach Grades 1 to 3 and mathreading and math

School principals / head teachers from identified 11,998 school principals / head teachers trained on reading and mathschools trained to strengthen field level supportsystem for improved early grade reading and mathteaching

Development of an enabling environment for the Policy on: (i) EGRA and EGMA tool utilization; and (ii) the inclusion of earlyeffective implementation of the grades 1 - 3 reading literacy and numeracy course in DepEd's teacher induction program adoptedand math program in the Target Regions

Linguistic map for each Target Region developed for DepEd has developed linguistic maps for each of the five Target Regionsimproved targeting and implementation of the grades1 - 3 reading and math program

Capability of DepEd to implement its Performance Y1: Performance monitoring system that will be used in the implementation ofIncentive Scheme improved DepEd's Performance Incentive Scheme in place; Y2 onward refers to staff

from 5 DepEd regional offices, 47 DepEd division offices and 14,121 TargetSchools oriented on DepEd's Performance Incentive Scheme and performancemonitoring.

Development of enabling environment for the use of School report card policy (including guide-lines, procedures and templates)school report cards in the Target Regions implemented and 13,415 schools in the five target regions utilize the refined

26

SRC by end of project.

Financial management capacity of DepEd central, FM manual adopted and Trainers' training on the financial management manualregional and division offices improved of at least 1 finance and administrative staff each from the central office, the 17

regional offices and the 215 division offices of DepEd conducted.

Improvement of data management for educational Development and adoption of an information strategy for educational programsprograms serving the Target Disadvantaged Groups serving the Target Disadvantaged Groups; and information system implementedin the Target Regions in accordance with the information strategy for educational programs serving

the Target Disadvantaged Groups that aims to address information gaps ofprograms serving Target Disadvantaged Groups

Comprehensive review completed on selected DepEd reviews programs targeting disadvantaged groupsDepEd programs serving the Target DisadvantagedGroups in the Target Regions

27

Annex 2: Detailed Project Description

PHILIPPINES: Learning, Equity and Accountability Program Support Project

VI. PROJECT DEVELOPMENT OBJECTIVES

A. PDO

1. The project development objective is to improve the quality of grade 1 to 3 reading andmath skills of children in Target Regions and Target Schools, with a special focus on thosebelonging to Target Disadvantaged Groups.

2. For the purposes of the Project, the "target regions" are Regions 5, 8, 9, CAR andCARAGA. "Target schools" shall be defined as a subset10 of elementary and/or high schools inthe target regions implementing the relevant project components. Furthermore, the "targetdisadvantaged groups" will include the following groups in the target regions: (i) indigenouspeoples; (ii) persons with disabilities; (iii) children living in remote or difficult-to-accesslocations; and (iv) out-of-school children and youth.

B. Project Beneficiaries

3. The Project beneficiaries include: (i) DepEd central, regional and division staff; (ii)school heads; (iii) teachers; (iv) public school students; (v) Indigenous Peoples students; and (vi)children with disabilities and (vii) out-of-school children and youth of the select target regionsand schools.

4. The five target regions were selected because they are among the eight poorest regions inthe country, based on the 2012 poverty statistics released during the second quarter of 2013. Tworegions were selected from Luzon, one from Visayas and two from Mindanao. These regionsalso: (i) suffer from significant dropout rates (especially between Grades 1 and 2 ); (ii) recordlow performance in reading and math scores; and (iii) have a significant IP population and otherdisadvantaged groups.

Table 1: Profile of Project by Target Regions

Characteristic and Rank" CAR Region Region CARAG RegionIX V A VIII

Average Poverty Incidence' 2 39.86% 39.8% 35.60% 40.23% 35.57%3rd13 4th 5th 2 nd 6th

10 Explained further in paragraph 51 Lower rank connotes poorer situation / performance12 Average of 2006, 2009 and 2012 poverty incidence of the regions; 2012 poverty incidence obtained fromhttp://nscb.gov.ph/povertv/defaultnew.asp13 without Benguet, CAR region's poverty incidence rises to 41.18 in 2012, making it Rank 2 for that year

28

Number of poor households who are part 59.40% 26.20 0.80% 12.20% 0.80%of an IP group 14 st % 1 6 th 9 th 1 5 th

6 th

Number of poor households with a 31.40% 18.50 19.10% 29.80% 10.50%disabled family member1 5

1 st % 5th 2 nd 13 th

6 th

2011 Regional incidence of Severely 1.44% 2.71% 4.63% 2.38% 3.64%Wasted Children 1 17th 10th 3rd 14 th 9th2010 Dropout rate 6.00% 10.41 5.79% 6.72% 6.42%

10I th 6th 8th

2 nd

2012 G3 NAT Reading Comprehension in 52.03% 59.72 55.36% 74.31% 68.74%Filipino MPS 3rd % 6th 17th 16th

1 0 th

2012 G3 NAT Math MPS 54.72% 65.20 58.18% 79.37% 72.64%

3rd % 9th 17th 16th

1 2 th

5. Beneficiaries specifically within the five target regions can also be broken down bycomponents: (i) Component I will benefit all 11,998 elementary schools by implementing Early-Grade Reading Assessment (EGRA) and Early Grade Mathematics Assessment (EGMA) tools;(ii) Component 2 will benefit all 14,121 schools (11,998 elementary plus 2,123 high schools), aswell as officers and staff from DepEd's administrative offices through the project'saccountability interventions; and (iii) Component 3 will support all 14,121 schools andstudents/learners from the targeted disadvantaged groups (i.e. indigenous peoples, persons withdisabilities, out of school children and youth and children living in remote or difficult-to-accesslocations). By the nature of the interventions, target disadvantaged groups will also be servedunder Components 1 and 2. Overall, the five target regions include 14,121 elementary andsecondary schools, 116,587 school teachers and approximately 4,038,780 students.

2011-2012 Elem Elem Elem Sec Sec SecSchools Teachers Enrolment Schools Teachers Enrolment

Rank 2: 1,626 11,658 400,346 391 4,323 158,265CARAGARank 3: CAR 1,515 7,881 216,495 280 3,044 86,468

Rank 4: 2,083 16,610 584,083 377 5,820 213,082Region IXRank 5: 3,141 27,107 988,183 626 10,744 389,582Region VRank 6: 3,633 21,853 709,835 449 7,547 292,441Region VIII 1

14 Department of Social Welfare and Development: National Household Targeting System for Poverty Reduction15 DSWD: NHTS-PR16 DepEd Health and Nutrition Center

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Total 11,998 85,109 2,898,942 2,123 31,478 1,139,838

6. DepEd will implement all LEAPS activities to all schools nationwide. As a matter of fact,DepEd will set higher internal targets for itself to further accelerate the institutionalization of thereforms reinforced under LEAPS. This project, however, will focus on select target regions andthe schools within these, but will be ready to provide strategic support to DepEd in their plan ofnationwide implementation.

C. PDO Level Results Indicators

7. The project outcome indicators for measuring achievement of the PDO are in thefollowing table. These pertain mostly to improved performance of both regular anddisadvantaged students using the EGRA and EGMA tools. The project will monitor at least3,000 elementary schools in the target regions to be included in the computation of the PDOindicators. 17

Table 2: PDO-level Results Indicators

PDO-level School School School Year School Yearindicators Year 2014- Year 2015- 2016-17 2017-2018

15 16Decrease of students 0 3% 5% decrease 7% decreasewith scores of zero in decrease from from previousthe Comprehension Baseline from the previous year's valuedomain subtest of the gathering baseline year's value (Grade 3relevant EGRA- to take (Grade 1 (Grade 2 students)mother tongue tool place in students) students)

school year2014/150 3% 5% increase 7 % increase

Increase of students increase from from previous. Baseline from the previous year's valuewith at least 60%0.

scores in the relevant gathering baseline year's value (Grade 3to take (Grade 1 (Grade 2 students)

tonueG A otr place in students) students)school year2014/15

Decrease of students 0 3% 3% decrease 3% decreasefrom disadvantaged decrease from from previousgroups1 8 with scores Baseline from the previous year's value

17 This is roughly 25% of all elementary schools in the five project regions. For monitoring purposes, these 3,000elementary schools per year do not need to be the same elementary schools.18 The third and fourth PDO indicators will track performance of students/learners from the following targeteddisadvantaged groups: (i) indigenous peoples; (ii) persons with disabilities; and (iii) children living in remote ordifficult-to-access locations. Out of school children can no longer be assessed using the EGRA and EGMA tools as

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of zero in the gathering baseline year's value (Grade 3Comprehension to take (Grade 1 (Grade 2 students)domain subtest of the place in students) students)relevant EGRA- school yearmother tongue tool 2014/15Increase of students 0 3% 3% increase 3% increasefrom disadvantaged increase from from thegroups with at least Baseline from the previous previous60% scores in the gathering baseline year's value year's valuerelevant EGMA- to take (Grade 1 (Grade 2 (Grade 3mother tongue tool place in students) students) students)

school year2014/15

Number of 4,038,780 4,038,780 4,038,780 4,038,780beneficiaries

Note: Results will be disaggregated by gender.

VII. PROJECT DESCRIPTION

8. The project has three components:

Component 1: Improvement of Teaching and Learning in Grades 1 to 3 Reading andMath

Component 2: Strengthening of Accountability and Incentives of Department ofEducation Employees

Component 3: Improvement of Program Design for Targeting Disadvantaged Groups

9. The project will focus on improving teaching and learning in early grades reading andmath through: (i) enhancing and supporting DepEd's overall reading and math program, (ii)providing incentives and increasing accountability for results of school/education personnel, and(iii) helping ensure that the most disadvantaged have access to these educational services. Byfocusing on these key interventions, the foundational skills of learners can be greatly improved.This is very much in line with the objective of the Philippine basic education reform agenda:preparing students for higher learning and the world of work.

10. As previously mentioned, support to the three components and proposed activities will beprovided through an IPF with a programmatic design, and disbursements made against evidencethat a particular DLI has been achieved and eligible expenditures incurred. Eligible expendituresrefer to maintenance and other operating expenses incurred for programs under five key DepEd

these are school-based assessments. Out of school children and adults will be served primarily through theAlternative Learning System of DepEd, which this project will also strengthen.

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budget line items19 (Eligible Expenditure Program - EEP) and include: (i) School MOOE; (ii) in-service training (INSET); (iii) human resource training and development (HRTD); (iv) AbotAlam Program; and (v) Alternative Learning Systems.

Component 1: Improvement of Teaching and Learning in Grades 1 to 3 Reading and Math(US$180.25 million)

11. This component seeks to develop the capacity of teachers and schools to improve theteaching of reading and math skills of Grades 1 to 3 students in the target schools andconsequently students' learning outcomes. Recognizing that reading and math is a vital tool forlearning and a predictor of a student's success in school, DepEd is committed to develop theseimportant foundational skills starting in the early grades.

Sub-component 1.11: Improvement ofEarly Grade Reading and Math Assessment in Selected MotherTongues (US$23.25 million)

12. The EGRA and EGMA tools in Mother Tongues will be developed during the first yearof the project. In line with the recent implementation of DepEd's MTB-MLE program, theEGRA and EGMA tools for Grades 1 to 3 under this project will be developed in five of thetwelve major mother tongue languages: Bikol, 11oko, Sinugbuanong Binisaya, Waray andChabacano. At least five versions of EGRA and EGMA per Mother Tongue will be developedso that yearly assessments are credible and comparable.

13. For several years, the DepEd was relying on the Philippine Informal Reading Inventory(PHIL-IRI)20 to assess the reading skills and gaps of their students. However, an in-depth reviewof this informal reading test by the University of the Philippines College of Education professorshas revealed several weaknesses and deficiencies of the test, which made it an unreliableinstrument to measure reading proficiency and gaps in the early grades. For math, there is noexisting formal tool being used to assess competencies on a regular basis. The introduction ofEGRA and EGMA instruments, and contextualized in Mother Tongue languages, would be acritical innovation.

14. DepEd has begun preliminary work in developing the EGRA and EGMA tools. The Bankand USAID have been providing technical assistance for capacity building and tooldevelopment. These tools will provide valuable information on the least-learned or least-demonstrated reading competencies. The two tools will also provide useful insights into thecompetency level of each student, thereby providing teachers with information necessary to planclass activities, adjust teaching methods and strategies accordingly and ensure that all pupils areimproving at their own levels and pace.

15. At the same time, the Department is at an early stage of implementing the MTB-MLEpolicy with the intention to formalize teaching in a child's language until Grade 3 before

19 These EEPs were in place at the time of project preparation. In case any of these EEPs would be replaced by anequivalent successor budget line, such changes would have to be agreed to by the Bank first.20 Phil-IRI is only administered in English and Filipino

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gradually shifting to Filipino and English instruction in the higher grades. As a first step, DepEd,with the Komisyon ng Wikang Filipino (the government agency for all local languages anddialects), has identified 12 out of around 170 languages with the most users in the country andcontextualized materials in those languages.

16. However, implementation of this program has been challenging: (i) teachers have beenusing mother tongue as the language of instruction without being trained on methodology oreffectively maximizing a child's chance to learn in its mother tongue and (ii) the quality ofteacher training and materials, as well as the availability of these key inputs for all early gradeteachers in the country has been largely insufficient or inadequate (training on MTB-MLE tooshort, pedagogical materials not appropriate for intended schools or not available at all, etc.)

17. Recognizing these challenges, DepEd has committed to filling the gaps in theimplementation of both the reading and math and the MTB-MLE programs by assessing: (i) thecapability of teachers to teach early grades in the mother tongue; and (ii) the current reading andmath level of the students in their own language. Developing EGRA and EGMA tools in the fivemother tongues will provide DepEd with the necessary instruments to tackle these issues andcollect the necessary information to be able to make informed decisions as previous teaching haslargely applied a single strategy, regardless of the students' learning gaps and capacities.

Sub-component 1.2: Professional development of key personnel in Target Regions to enhancecapability in teaching grades 1 to 3 reading and math (US$120 million)

18. The intention is for the EGRA and EGMA tools to provide DepEd with a nationaldiagnostic tool on the learning of reading and math skills which will be administered at leastonce a year in the early grades. On the basis of the results of the new reading and mathassessment, the government will put in place different sets of interventions to enhance teachingand learning of early grade reading and math. Assessment results will also be used to trackprogress and identify schools that might need additional, targeted support to improve math andreading learning outcomes in Grades 1 to 3. This sub-component involves interpretation of theresults of the assessment and training on classroom activities to help address reading and mathskills gaps identified among students.

19. DepEd will organize trainings for Grades 1 to 3 teachers, as well as school principalsfrom the identified schools. The project is targeting 11,998 teachers per grade (for a total 35,994teachers) as well as 11,998 principals/head teachers assigned to the identified schools. Inaddition to training them on the use and administration of the new tools, they will also becoached in training others and to become resource persons for their peers and colleagues in theirrespective schools. The capability to introduce appropriate interventions for the unique learningchallenges of each child as identified by the assessment results will be a critical innovation ofthis project.

20. To improve classroom practices, teachers will be trained on how to adjust their teachingmethods and approaches based on assessment results. Understanding students' areas of difficultyand cognitive struggles would allow teachers to design more effective lessons that targetstudents' specific needs. Adjusting how teachers teach math and reading should positively

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influence pupils' learning outcomes in these two subjects. Teachers will be supported not only inmonitoring and assessing the skills acquired by the pupils but also in terms of identifying theirtraining and other capacity-building needs in their respective schools/districts.

21. As part of the professional development of teachers, support will be given to the: (i)development of a teacher's general classroom assessment skills which will be made part of theteacher education curriculum (pre-service teacher training coursework and practicum); and (ii)training on general classroom assessment and observation techniques to help teachers conductongoing monitoring of students' reading and math skills (in-service teacher training).Furthermore, specific learning modules will be developed to strengthen teachers' ability to teachbeginner level math and reading since it is not a skill taught to all teachers during college. Theseprofessional development activities would include: (i) hands-on and inquiry-based trainings,using material that is user-friendly and designed based on the results of the early gradeassessments; and (ii) mentoring of teachers, both face to face and long-distance.

22. Furthermore, principals and school heads will be instrumental in institutionalizing the useof these new tools and application of their results in their respective schools. Aside from beingtrained on the same topics taught to teachers, principals and school heads will be trained on howto effectively support these reading and math initiatives. The aim is for the whole school to havea sustainable and effective reading and math program.

Sub-component 1.3: Institutionalization of early grade reading and math program (US$37million)

23. This sub-component aims to support DepEd develop and implement policies that willestablish guidelines on the use of assessment tools in the appropriate mother tongue for eachgrade and help improve the implementation of DepEd's MTB-MLE policy in the target regions.Activities under this sub-component will ensure that DepEd implements necessary enablingpolicies to institutionalize the package of interventions tested and proven during projectimplementation.

24. With the introduction of EGRA and EGMA, DepEd will need to specify the role thesetwo new tools will play in relation to the tools it already applies (i.e. the School ReadinessAssessment - SReA - and Phil-IRI). DepEd proposes to use: (i) the SReA tool as the assessmenttool for Kindergarten; (ii) EGRA and EGMA for Grades 1-3 (because it coincides with theperiod wherein the mother tongue is more prominent in classroom instruction); and (iii) the Phil-IRI for Grade 4-6 (as it is in English and Tagalog only). The project would support DepEd'sefforts in analyzing the feasibility of this proposal and developing the relevant policy.

25. Before being able to implement the MTB-MLE policy effectively, DepEd would requirea complete list of all its mother tongues and their variations, which currently does not exist. Theproject would therefore support DepEd in its efforts to collect data and produce a comprehensiveand reliable linguistic map, which will also help make informed decisions on materialdistribution and further contextualize assessment results. The government has started initial workon creating such a map of the country, which could also serve as the springboard for future andmore detailed mapping activities.

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26. Finally, to ensure that incoming generations of teachers are familiar with all EGRA andEGMA principles, DepEd's Teacher Induction Program (TIP) needs to be updated. Courses onearly literacy and numeracy will be included in the TIP curriculum, which will be informed byDepEd's experience and evaluation of the reading and math program, including the use of EGRAand EGMA tools.

27. This sub-component is critical as it will safeguard all the interventions introduced duringproject implementation. This will ensure that the DepEd implements programs with thenecessary enabling policies that can make operations easier and more effective. By clearlydefining the assessment tools to be used in specific circumstances, by adjusting assessments andinterventions to suit the real mother tongue of the student and by ensuring that incoming teacherswill have training on EGRA and EGMA, the project will institutionalize the package ofinterventions tested and proven during project implementation.

Component 2: Strengthening of Accountability and Incentives of Department of EducationEmployees (US$82.50 million)

28. This component will be used to reinforce the effectiveness of the package ofinterventions proposed in Component 1 of the project. First, it aims to ensure that theimplementation of the Performance Incentive Scheme for the Philippine Government, asimplemented by DepEd, will produce the intended result of improved performance, especiallybetter teaching in early grades reading and math. Second, it plans to intensify the culture ofaccountability in schools, which was introduced through School-Based Management (SBM)reforms. Finally, it aims to address financial management constraints and bottlenecks. Althoughinterventions under this component will have an impact on the overall education system, theproject will monitor their effectiveness and impact specifically in the five target regions andselected schools.

Sub-component 2.1: Development of enabling mechanisms to enhance the effectiveness ofimplementation of the Government's performance incentive scheme (US$30 million)

29. The current administration recently issued Executive Order (EO) No. 80 establishing aperformance-based incentive system for government employees (called the Performance-BasedBonus or PBB). This EO will be effective immediately and is open to further revisions in futureyears of implementation. This scheme intends to harmonize all the bonus structures ingovernment and standardize performance monitoring across agencies. The maximum amount tobe provided by the new scheme is currently four times (from PhP 10,000 in 2011 to PhP40,000 in2012 for best performers in the best service units) higher than previous bonuses in recent history.

30. This significant increase in bonus amounts raises the concern of collusion and otherforms of gaming of the incentive scheme. If that happens, the design of the scheme will breakdown and not produce its intended results. In this light, the project will focus on helping ensurethat whatever form and structure the Performance Incentive Scheme of the government takes, itwill be implemented with the least degree of inefficiency.

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31. To date, the DepEd has drafted the implementing guidelines on the PBB for theDepartment for 2013, including specific performance indicators for each of the delivery units(i.e., School, Division, Region, Central Office) to determine their corresponding performancecategory. These performance indicators include the National Achievement Test Scores anddropout rate at the school level to timely submission of pertinent FM-related reports or data atthe Division level to percentage of accomplishment vis-a-vis the Annual Work and FinancialPlan of the Region. These specific indicators are currently undergoing review by the inter-agencyTask Force specifically set up for the PBB.

32. Under this project, DepEd will devise a reliable Performance Monitoring System (PMS)that not only measures the achievement of performance indicator targets by year end, but alsoprovides real-time information on the status and progress of achieving targets. This providesDepEd with an accurate dashboard of achievement of targets so that any lags or delays can beaddressed in a timely manner. Once the details of the PMS and the incentive scheme are known,DepEd will also conduct mass information campaigns to explain the details of theimplementation of the Performance Incentive Scheme. These activities will provide valuableinsight into the effectiveness of the Performance Incentive Scheme for future reference.

33. This deliverable was included in the project because the incentive scheme has greatpotential to significantly improve performance on a Department-wide basis. Previousperformance incentive systems have failed to produce wide-scale improvements in performancedue to the weak enforcement of the criteria or the amounts involved were too small to mattereven to the lowest level employees. However, the most significant hindrances to the successfulimplementation of previous incentive schemes were lack of complete information and ineffectivemonitoring. While the project cannot easily influence both the criteria and amounts of theincentives, it can help DepEd implement the scheme more effectively.

Sub-component 2.2: Improvement of school reporting and feedback mechanism (US$30 million)

34. DepEd understands the importance of stakeholder participation in planning, monitoring,and resource mobilization to achieve desired outcomes at the school level. During the NPSBEproject period, significant gains were achieved in institutionalizing community-based schoolplanning and management of resources. However, the School Report Card (SRC) which theDepEd is currently using was found to be inadequate to properly inform stakeholders andstimulate participation.

35. Therefore, DepEd will revise its SRC and institutionalize its use throughout all schools.DepEd aims at 100 percent participation rate of schools using the updated SRC by projectclosing. Using the new SRC is also expected to contribute to: (i) a strengthened participatoryschool planning process; (ii) a participatory SBM self-assessment exercise; (iii) convening ofregular Parent-Teacher Association meetings; (iv) holding of regular School Governing Councilmeetings; and (v) organizing "State of the School Addresses" and similar fora.

36. This deliverable was included in the project to further strengthen the implementation ofSBM towards delivering better results in teaching early grades reading and math skills. Duringthe NPSBE project period, significant gains have been achieved in institutionalizing community-

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based school planning and management of resources. By intensifying stakeholder reporting, theeducation system will further improve its accountability to the clients. In addition, a moreinformed stakeholder group will be able to provide more substantial feedback during the schoolplanning process and be more empowered to support school operations.

Sub-component 2.3: Strengthening of DepEd's Financial Management Capability (US$22.5million)

37. With the aim of achieving better results in early grades reading and math throughstrengthening the implementation of SBM, DepEd will adopt a more systematic approach toaddressing its long-standing financial management (FM) issues. DepEd will deliberately addressinternal FM concerns first, to ensure that effective and efficient internal controls and financialdata analysis will be in place throughout the agency. The presence of a strong FM environmentwill ensure fiduciary support to the program. After these so-called housekeeping activities,DepEd will also conduct intensive consultations and discussions with oversight agencies (e.g. theDBM and COA) to resolve FM issues that affect budgeting, funds flow, accounting, internalcontrol and financial reporting.

38. This deliverable has major implications on DepEd program implementation. Coveringapproximately 46,000 schools, funds flow and financial reporting pose major implementationchallenges. Issues noted in previous DepEd programs and projects include the following: (i)unclear guidelines/varied interpretations on eligibility of expenses, which significantly sloweddown project implementation; (ii) stringent document requirements resulting in untimelyliquidation of school funds/grants; (iii) limitations on the opening of bank accounts of schools totransfer their monthly budget allocation usually encounter opposition from financial oversightagencies; and (iv) numerous financial reporting requirements of the Central Office and oversightagencies which tend to diminish the relevance of financial data analysis. This sub-componentwill support the development of a FM manual and associated training of FM personnel to ensurethat: (i) DepEd FM controls, policies and rules, both internal and external (e.g. those issued byoversight agencies), are codified, unified and made available to all FM personnel; (ii) FMreporting requirements are streamlined, simplified and completed on a timely basis; (iii)appropriate and relevant training is provided to all FM personnel; and (iv) consultations andconsensus-building with oversight agencies on critical FM issues are carried out.

Component 3: Improvement of Program Design for Targeting Disadvantaged Groups(US$36.5 million)

39. The project will support the improvement of access and quality outcomes fordisadvantaged groups in the target regions: poor students residing in areas far from a school orlearning center, out of school youth, indigenous peoples and persons with disabilities. Whilethese target groups are geographically dispersed and will inevitably benefit from wider DepEdprograms and projects, focused attention on their specific contexts, especially on early gradesreading and math, is expected to help improve national education outcomes substantially andmore equitably. This component will focus on three main critical areas to ensuring effectiveinterventions for any of these disadvantaged groups.

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Sub-component 3.1: Improvement of targeting of disadvantaged groups in the target regions(US$12.5 million)

40. Participation rate in the elementary level has reached 95.96 percent in 20112. Thisimplies that almost all of the children of the correct school age are going to school. Nonetheless,the Millennium Development Goal of universal primary education will not be attained even after2015 if DepEd is not able to reach the most disadvantaged groups. In elementary, this implies theremaining 2 to4 percent of children who are probably in the most difficult situations. For thesecondary level, 38 percent of children who should be in school are not and it is unclear whatform of disadvantage these people are experiencing that is influencing their decision not to attendhigh school.

41. Current data on these disadvantaged groups is incomplete and outdated, which makes itdifficult to determine the extent of their access to basic education services. There is a need toimprove the quality and availability of data related to the education of children belonging tothese disadvantaged groups, in terms of coverage and reliability to establish sound policies,strategic plans, and ensure the provision of effective services and support. In this subcomponent,DepEd will aim for the development of an information system that can produce reliable andupdated information on these target disadvantaged groups. However, before a meaningfulinformation system can be developed, DepEd first needs to identify an information strategyoutlining the details of the information gap for programs serving target disadvantaged groups andhow these gaps can be addressed.

42. Currently, DepEd is developing a Learner Information System (LIS) in phases. Central tothe LIS is the Learner Reference Number (LRN) that assigns a unique number to eachpupil/student/learner (the latter for enrollees of ALS). The LRN is expected to make studentperformance tracking easier and more reliable. The proposed information system for programsserving disadvantaged groups (Indigenous Peoples, children with disabilities, children living inremote or difficult-to-access locations and out-of-school children and youth) may be a standalonesystem or may be an additional/supplementary module that can be integrated within theexpanded LIS.

Sub-component 3.2: Expansion of knowledge base on selected programs targetingdisadvantaged groups and improvement of program design and implementation capabilities(US$24 million)

43. DepEd will invest in evaluating its ongoing programs which are serving the targetdisadvantaged groups. Four major programs serving disadvantaged groups22 will becomprehensively reviewed, focusing on its design, budget and performance. The list of programsto be reviewed will be finalized three months after project start-up. It is the intention of DepEdmanagement that these reviews be conducted by external groups or organizations, while makingsure that key DepEd staff are also trained on the management of studies.

21 Computed using 2010 Census data22 The programs which may be included in the program reviews include: (i) Multigrade; (ii) Special Education; (iii)School Feeding; (iv) Alternative Learning System; and (v) Modified In-School, Off-School Approach.

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44. While the DepEd programs for specific disadvantaged groups have been implemented forlong periods of time, there is still no credible information on the performance of these programs.The DepEd policymakers have no scientific basis for allocating and justifying budget requestsfrom various program implementers. An evaluation of these major programs is in line with theGovernment's zero-based budgeting principle, where it can provide higher allocations for certainprograms if there is proof of its effectiveness.

45. After analyzing the performance of selected major equity-related programs, DepEd willredesign aspects of their implementation. These revisions may include but not be limited toprogram objectives, implementation strategies and budget requirements and allocations. Suchredesign can be seen through: (i) new policy issuances, (ii) re-orientation re-training activities;(iii) realignment of budget allocations; (iv) development of new materials; and (v) otheractivities introducing substantial improvements in the implementation of the programs.

46. This deliverable was included in the project because it will help institutionalize evidence-based policy-making in the Department. Through this sub-component, DepEd will not just re-strategize program implementation based on evaluation studies; it will also ensure that sufficientfunds are available to cover these more useful activities. Given that DepEd has many equity-related programs for the target disadvantaged groups, the project will only track progress on fourprograms. However, the process of reviewing and redesigning introduced by the project will beused to evaluate other DepEd projects, whether mainstream or equity-related in nature.

47. This entire sub-component was included in the project because it will help institutionalizeevidence-based policy-making in the Department. Often, policies for the general clients ofDepEd are easy to develop because of availability of information and cumulative experience ofthe Department in serving this mainstream group. However, there is a shortage of documentationon field experience in serving very specific disadvantaged groups and an outright absence of dataon the said groups, especially on their performance in reading and math. Under such uncertainty,policy decisions at the national level, no matter how informed by theory and the collectivecompetence of policy-makers, always run the risk of being ineffective and inefficient. Throughthis sub-component, DepEd will not just re-strategize program implementation based onevaluation studies; it will also ensure that sufficient funds are available to cover these moreuseful activities.

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Annex 3: Implementation Arrangements

PHILIPPINES:Learning, Equity and Accountability Program Support Project

Project Institutional and Implementation Arrangements

1. Overall responsibility for the project will be vested with the DepEd, which is in charge ofmeeting the education goals and objectives articulated in the Philippine Development Plan, thePresident's Social Contract and the BESRA. The DepEd units at the central, regional, divisionoffices and schools will be responsible for their respective roles, as reflected in their revised

23organizational restructuring plan . The Executive Committee composed of senior managementof the DepEd, chaired by the Secretary of Education, will provide the overall strategic directionsfor the project, review its progress, and address major issues. With the policy shift in recentyears, decision-making powers are being decentralized to local-level managers at the region,division, district, and school levels. Direct release of funds to the DepEd regional offices,division offices, and implementing unit secondary schools2 4 , will continue. The DBM willensure the timely release of the DepEd budget allocation, including the DepEd budget line itemsincluded in the EEP of the project. DBM will provide supervision and advisory role in theoverall implementation of the government-wide Performance-Based Incentive system. Togetherwith COA, the DBM will work closely with the DepEd to improve the financial managementcapability of the DepEd, and consequently improve budget execution and redound to theimprovement in the targeted outcomes. The NEDA, the government's socio-economic planningagency, will ensure alignment of the project targets with the overall priorities of the governmentin basic education, and its consistency with the Social Contract and the Philippine DevelopmentPlan. NEDA will also monitor the implementation of the project as part of its annual portfolioreview. The DOF will be the main representative of the Philippine Government with respect tothe implementation of the loan. The Civil Service Commission and other agencies will havespecific roles in the implementation of the project to ensure the delivery of the results that theGovernment will commit to achieve by the end of the project.

2. Primary responsibility for the Reading and Math program under Component 1 is lodgedin the Curriculum and Instruction, with the Bureau of Learning Delivery and Bureau ofEducation Assessment, and their Regional and Division counterparts taking the lead in theimplementation, monitoring and evaluation of the various initiatives under the program. TheNational Educators Academy of the Philippines, the training arm of the DepEd will take the leadin the conduct of the training programs for teachers in the early grades and school heads, butwith technical support from the technical experts to be mobilized.

3. The Bureau of Human Resource and Organizational Development of the Governance andOperations would be responsible for the general policy, direction, management and oversight ofthe performance incentives system including activities under Component 2. Key aspects of the

23 The DepEd Rationalization Plan was approved in November 2013 and is in its initial phase of implementation.24 Implementing unit secondary schools directly receive fund transfer from DBM while the rest of secondary schoolsreceive their funds from the Schools Division Office

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implementation of the program would be delegated to the Division Superintendents and theRegional Directors. Consistent with their core responsibilities, the latter would be assigned thetask of monitoring, collecting, maintaining, securing and certifying the data required forperformance monitoring.

4. The School Effectiveness Division under the Governance and Operations will lead theinitiatives to improve SBM practice, and ensure the effective use of the SRCs as a socialaccountability tool. The Finance and Administration, on the other hand, will be in charge of thesub-component to address bottlenecks and challenges in financial management, including onbudget execution, and will take the necessary actions to resolve these. It will also be in charge ofimplementing the required activities under the third subcomponent of Component 2.

5. Equity-related activities under Component 3 of the Project will be under the PlanningService and Information and Communications Technology Service. These will have overallresponsibility in the achievement of all protocols and DLIs while being supported by variousDepEd offices. Specifically, the Education Management Information System of the PlanningService will be responsible for implementing the protocols and achieving the DLIs on Data. TheProject Development Division of the Project Management Service will be responsible forimplementing the protocols and achieving the DLIs on the Program reviews and the ImpactEvaluation. They will, however, be supported by the proponents of all the programs beingimplemented, namely: Bureau of Curriculum Development, Bureau of Learning Delivery andBureau of Education Assessment.

6. The Project Management Division of the Project Management Service in DepEd will bein charge of overall coordination of project activities among responsible implementing units.PMD will ensure the preparation and timely submission of required reports and facilitate regularmonitoring of project initiatives and provide an oversight role in terms of ensuring complianceby DepEd/Govemment on the loan conditions and covenants.

Financial Management, Disbursements and Procurement

Financial Management

7. Arrangements for oversight and accountability include the following:* An organic unit will oversee the project implementation and facilitate the timely

preparation of financial reports and maintenance of adequate FM system.* As part of the IFR submission and Quarterly Consolidated Report of Disbursements,

DepEd will design an expenditure tracking system of the EEP identified in the 2013General Appropriations Act (GAA) and develop a financial reporting protocol to berolled-out in all regions, divisions and implementing units to monitor expenses perEEP. Sufficient FM manpower must also be ensured in all levels of the DepEd totrack actual EEP expenses and reconcile against budget line items including auditedreports to measure financial performance.

* The IFR for the second semester of the calendar year will show a reconciliation of theEEPs in the IFR submissions with the annual audited financial statements

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* DepEd will monitor and resolve issues noted by COA. A time-bound action plan willbe made to resolve COA issues.

FM Organization and Staffing Arrangements

8. The project will use the existing structure for FM of DepEd. FM units in the CentralOffice that are involved in financial management have adequate and qualified officers and staff.The Accounting Division also has a dedicated staff for foreign assisted projects that facilitate thefinancial transactions and monitoring of such projects. DepEd should ensure adequate number ofpersonnel who will track expenditures and facilitate submission of reporting requirements in theregion, division and school levels during the life of the project.

Budgeting Arrangement

9. Budget proposals are prepared annually by DepEd and submitted to the DBM for review.The annual budget of the DepEd is included in the annual GAA which has to be approved byCongress. Five budget line items have been identified to form part of the EEP for this project.GOP need to ensure that such expenditure line items remain in the budget over the life of theproject otherwise disbursement cannot occur.

Accounting Arrangement

10. DepEd conforms to the New Government Accounting System (NGAS) which COAissued as per COA Circular No. 2001-004 dated October 30, 2001 and took effect January 1,2002. The bookkeeping segment of NGAS is computerized and is referred to as electronicNGAS (eNGAS) but is only operational at the Central Office and rolled out in only one RegionalOffice. Accounting records will be maintained by the DepEd Central Office using the eNGASfinancial management system. However, as the EEPs were selected from budget reports that areclassified per expense activity, program or project (e.g. kindergarten expenses, physical fitness,school health and nutrition), there is a reporting gap with eNGAS which only reports on afunctional expenditure category (e.g. salaries, transportation, supplies). The eNGAS has noreporting capability to categorize expenses per activity, program or project. The EEP costaccounting records will have to be supplemented by spreadsheets detailing the functionalexpense categories. DepEd will have to develop a financial reporting protocol to be rolled-out inall divisions to monitor expenses per EEP.

11. As project funds are already incorporated into the budget, the only additional financialwork load will be the semester IFRs supplemented by the quarterly consolidated report of EEPexpenditures to monitor expenses per EEP. Resources will need to be made available to ensuretimely completion of the IFR and facilitate timely disbursements. It is recommended that DepEdallocate a designated officer for this task.

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Internal Controls

12. Basic internal controls such as separation of conflicting functions, segregation ofbookkeeping functions from custodianship of assets, reconciliation of subsidiary records with thecorresponding general ledger control account, and a multilevel system of review and approval oftransactions before their execution are required under NGAS and are assessed by the Bank to beadequate. Although audit reports showed non-compliance with established internal controls,overall control environment is adequate for the implementation of the project. DepEd had beenvery consistent in monitoring the resolution of audit issues noted by the external auditors.

Internal Audit

13. As part of the control environment, the IAS conducts internal audits as part of themitigating measures to reduce fiduciary risks. Any issues and control strengthening measuresraised by the IAS that affects the EEPs and the projects will require management response andevidence that the issue is being addressed as part of the subsequent internal audit report. Shouldthere be IAS reports covering the EEPs, such reports will also be furnished to the Bank withinthree months after the end of the audited period while semi-annual updates on the status of anyissues and recommendations made by IAS will be furnished to the Bank within two months afterthe end of each semester.

Funds Flow

14. A Modified Disbursement Scheme (MDS) is being used for the transfer of funds from theBureau of Treasury (BTR) to government agencies. Under the system, MDS accounts with anauthorized government servicing bank (GSB) are maintained for each agency and their regionaloffices. The BTR makes initial deposits to each MDS account. Notice of Cash Allocation (NCA)is a document issued by the DBM which notifies the agency of the availability of cash in theGSB and authorizes the agency to use this available cash to pay its obligations. DBM releasesthe NCA directly to the DepEd Central office, Regional offices and Implementing Units withfinancial staff. The head office of the GSB submits to BTR on a daily basis a summary ofcheques paid and a request for replenishment. BTR then releases the replenishment afterchecking the summary of cheques submitted by the head office of the GSB against the summaryof cheques received from the branches of the GSB through its provincial and regional offices.The project will utilize the above-described funds flow arrangement, since the project isfinancing within the DepEd budget.

15. The project will fund exclusively expenditures incurred for the 5 selected EEPs on areimbursement basis. As such, the maintenance of a designated account throughout the durationof the project is not necessary.

Financial Reporting Arrangement

16. Under this project, DepEd will prepare and submit semestral IFR to the Bank along withthe status of the various DLIs which will form part of the documentation for the WithdrawalApplication. This report will: (i) keep track of the DLIs to show which DLIs have been met, and

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the values disbursed or not yet disbursed; and (ii) provide proof that expenditure levels for theEEPs meet the required minimum levels. The information for the IFR will have to beconsolidated as the data will come from the various division offices. To ensure timely release offunds, the IFR will be due within 45 days after the end of each semester.

17. The IFR, as a document, will summarize the data from the expenditure tracking system ofthe EEPs covered by the project. A financial reporting protocol will have to be developed androlled-out in all regions, divisions, and implementing units to monitor expenses per EEP andconduct a mandatory reconciliation of EEPs with the expenses in the GAA. The EEP data in theIFR submissions during the year will also be reconciled with the annual audited report.Attachment 1 below outlines the general format of the IFRs.

18. To ensure timely monitoring of the levels of spending on the five EEPs, DepEd will alsosubmit a consolidated report of disbursement on a quarterly basis 45 days after the end of eachquarter. The quarterly submission will facilitate the early resolution of issues prior to thesubmission of IFRs that will support withdrawal applications.

External Audit

19. The Project Financial Statements will be audited by COA. The scope of the audit willinclude a review of the Eligible Expenditure Programs to be conducted on an annual basis andsubmitted to the Bank within six months after the end of each calendar year. The audit will beconducted in accordance with International Standards on Auditing. FM personnel of the Agencyshould work closely with COA to minimize the risk of late receipt of audit reports.

Summary of FM Reports

20. Under this project, DepEd will submit the following reports to the Bank throughout thelife of the project:

21. Semester IFRs within 45 days after the end of each calendar semester.

22. Quarterly Consolidated Report of Disbursement within 45 days after the end of eachquarter.

23. Annual Audited Project Financial Statements together with a copy of the managementletter reflecting the auditor's findings and recommendations will be submitted to the Bank nolater than 6 months after the end of each fiscal year. The auditor for this project is COA. DepEdwill also reconcile the EEPs in the IFRs with the audited reports. DepEd will also monitor issuesnoted by COA and prepare a time bound action plan to resolve all issues.

Supervision Plan

24. The scope of the supervision is left to the professional judgment of the FM specialist. Itmay cover any of the following: (i) review of the continuous maintenance of adequate FMsystem by DepEd; (ii) review of IFRs and Withdrawal Applications; (iii) follow up of timeliness

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of FM reporting and actions taken on issues raised by external auditors; (iv) review of theproject's financial reports such as the quarterly report of disbursements; (v) follow up of thestatus of any agreed action; and (vi) review of compliance with the financial covenants includingFM-related DLI 8.

Disbursements

Disbursement Arrangements

25. The Project will be implemented using the GOP and DepEd's financial managementsystems as the basis for budgeting, accounting, internal controls, financial reporting and auditing.

26. The lending instrument that has been selected is Investment Project Financing, utilizing aresults-based approach, with the amount and event of disbursements based on the achievement ofpre-identified results, referred to as DLIs and the incurring of eligible expenditures. These DLIsinclude intermediate outcomes, implementation performance or institutional change indicatorswhich are critical to achieving the sector's desired outcomes and the project's PDO. They wereselected in collaboration with the Government. Activities under the selected EEPs will constitutethe eligible expenditures. Similar to the NPSBE, LEAPS will support elements of theGovernment's BESRA within budget financing that will help guarantee the delivery of budgetitems critical to the reform agenda.

27. The loan will be disbursed over a period of 5 years based on the achievement of DLIs andincurring of eligible expenditures using the Reimbursement disbursement method, documentedby the IFRs (the Report-based documentation method).

28. The breakdown of project costing by component is as follows:

Component 1 - Improvement of Teaching and Learning in Grades 1 to 3 Reading and Math(US$180.25 million)

Component 2 - Strengthening of Accountability and Incentives of Department of EducationEmployees (US$82.50 million)

Component 3 - Improvement of Program Design for Targeting Disadvantaged groups(US$36.50million)

29. DLIs will have an associated amount or 'price tag' which will correspond to an amountof EEP to be reimbursed provided that the DepEd spends the required minimum levels for eachEEP. Withdrawal of funds from the Bank will be through the submission of duly signed WA andIFRs. Given that the loan includes a front-end fee of US$750,000, it will only disburseUS$299.25 million against the total cost of DLIs. Table 3 is a summary of the DLI values andamount that will be disbursed to DepEd per semester if the DLIs are 100 percent achieved.

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Table 3: DLI and EEP Allocations

Withdrawal Application (WA) Number 1 2 3 4 5 6 7 8 9

Period Period 1 Period 2 Period3 Period4

Category per Loan Agreement 1(a) 1(b) 1(c) 1(d) 1(e) 1(f) 1(g) 1(h) 1(i)Period Cowred 1 July 2013 to Signing Date 1 July 2014 1 Jan 2015 1 July 2015 1 Jan 2016 to 1 July 2016 1 Jan 2017 1 July 2017

Signing Date to 30 June 2014 to 31 Dec to 30 June to 31 Dec 30 June 2016 to 31 Dec to 30 June to 31 Dec2014 2015 2015 2016 2017 2017

VerificationPeriodandlFRSubmission May-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18

Target WB Disbursement Jun-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18

Disbursement Linked Indicators

DLI No. Value EEP

Component 1

1 23,250,000 MOOE 4,650,000 18,600,000

2 90,000,000 MOOE 30,000,000 30,000,000 30,000,000

HRTD and3 30,000,000 Inset 15,000,000 15,000,000

4 12,000,000 MOOE 6,000,000 6,000,000

5 25,000,000 MOOE 5,000,000 5,000,000 5,000,000 10,000,000

Component 2

6 30,000,000 MOOE 5,000,000 25,000,000

7 30,000,000 MOOE 5,000,000 10,000,000 15,000,000

8 22,500,000 MOOE 7,500,000 15,000,000

Component 3

9 12,500,000 MOOE 6,250,000 6,250,000AAP,ALS,

10 24,000,000 MOOE 6,000,000 6,000,000 6,000,000 6,000,000

TOTAL 299,250,000 20,650,000 11,000,000 123,350,000 92,000,000 52,250,000

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30. Disbursements will be made against EEPs. The trigger for disbursement will be the achievementof DLIs and will also require minimum levels of actual expenditure of the corresponding EEPs.

31. The GOP will pre-finance all of the expenditures under the EEPs and all the disbursements fromthe Bank will be made on a reimbursement basis. EEPs were selected based on consultations withDepEd using GAA and because they are directly linked to the project's DLIs. Each EEP represents adistinct line item from the DepEd budget. Project funds will be disbursed to the Bureau of Treasury asreimbursements for expenditure already incurred upon achievement of the DLIs. The accountingprocesses of DepEd are designed such that they can determine the funding sources of variousexpenditures and projects so there is no double financing and counting.

32. The EEPs that the project will support 25 are: (i) School MOOE, (ii) in-service training (INSET),(iii) human resource training and development fund (HRTD), (iv) AAP, and (v) ALS.

Table 4: Eligible Expenditures per Component (in US$)

Eliibl Epenitr - tComponent ComponentCopnt TOA =Preag

Human Resource Training &Development 20,000,000 20,000,000 6.68%

i-service Training 10,000,000 10,000,000 3.34%School Maintenance and Other 150,250,000 82,500,000 30,500,000 263,250,000 87.97%Operating ExpenseAbot Alam Program 4,000,000 4,000,000 1.34%

Alternative Learning System 2,000,000 2,000,000 0.67%

Total 180,250,000 82,500,000 36,500,000 299,250,000 100.00%

33. Withdrawal of funds from the Bank will be made through the submission of duly signed WAand IFRs. Table 5 is a summary of the minimum levels of EEP per year and for each DLI that should bespent by DepEd.

25 As mentioned above, while changes to these identified EEPs through equivalent successor budget lines can occur, theywould have to be agreed to by the Bank first.

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Table 5: Minimum EEP related DLIs per Period (in US$)

DLI No. Total for the Project Related EEP Period 1 Period 2 Period 3 Period 4Component 1

1 23,250,000 MOOE 4,650,000 18,600,000 -

2 90,000,000 MOOE 30,000,000 30,000,000 30,000,0003 30,000,000 HRTD 10,000,000 10,000,000

INSET 5,000,000 5,000,000

4 12,000,000 MOOE 6,000,000 6,000,0005 25,000,000 MOOE 5,000,000 5,000,000 5,000,000 10,000,000

Component 26 30,000,000 MOOE 5,000,000 25,000,0007 30,000,000 MOOE 5,000,000 10,000,000 15,000,0008 22,500,000 MOOE 7,500,000 15,000,000

Component 39 12,500,000 MOOE 6,250,000 6,250,000

24,000,000 AAP 2,000,000 2,000,00010 ALS 1,000,000 1,000,000

MOOE 3,000,000 3,000,000 6,000,000 6,000,000

TOTAL 299,250,000 31,650,000 123,350,000 92,000,000 52,250,000

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34. Reporting of DLIs Achieved. By February 15 and August 15 of each year, DepEd willsubmit a Verification Report to the Bank on the results framework including the DLIs and theInterim Unaudited Financial Report. The February Report will reflect the achievement ofspecified targets and expenditures incurred for the six month period from July 1 to December 31while the August Report will reflect achievements and expenditures incurred for the six monthperiod from January 1 to June 30. The Bank will conduct a mission in February and August ofeach year to review the status of the current DLIs and any unmet DLIs from the previous period.Independent verification will be performed semi-annually to determine if DLIs are achieved.Based on the results of the mission, and the results of the independent verification, the Bank willcommunicate to the GOP by March 30 and September 30 of each year whether the DLIs havebeen met or not and any follow-up actions needed. Based on the number of DLIs achieved, andthe IFRs submitted, the Bank will disburse the funds to the GOP by April and October of eachyear.

35. After loan effectiveness, and subject to the achievement of the DLIs, the GOP will submitthe first WA to reimburse EEP expenditures paid in the period from July 1, 2013 (retroactivefinancing date) to date of Signing. The second WA will be submitted on September 2014, toreimburse EEP expenditures paid in the period from July 1, 2013 to June 30, 2014 (taking intoaccount expenditures previously claimed/paid in the previous application). This process will berepeated in March and September of each year, covering the previous twelve-month period thatended in December and June, respectively.

36. Withdrawal of Loan Proceeds. DepEd may withdraw the proceeds of the Loan to: (i)finance the Front-end Fee; and (ii) finance Eligible Expenditures as set forth in the table belowwhich specifies the categories of expenditures that may be financed out of the proceeds of theLoan ("Category"), the allocation of the amounts of the Loan to each Category, and thepercentage of expenditures to be financed for Eligible Expenditures in each Category.

Category Amount of the Loan Percentage of ExpendituresAllocated to be financed

(expressed in US$) (Inclusive of Taxes)(1) Payments under the Eligible Up to 100% of amountsExpenditures Program as follows: spent and reported under the

IFRs

(a) First scheduled disbursement (on or 20,650,000after the Effective Date)(b) Second scheduled disbursement (on 11,000,000or after October 1, 2014)(c) Third scheduled disbursement (on orafter April 1, 2015)(d) Fourth scheduled disbursement (on or 123,350,000after October 1, 2015)(e) Fifth scheduled disbursement (on orafter April 1, 2016)(f) Sixth scheduled disbursement (on or 92,000,000after October 1, 2016)(g) Seventh scheduled disbursement (on

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Category Amount of the Loan Percentage of ExpendituresAllocated to be financed

(expressed in US$) (Inclusive of Taxes)or after April 1, 2017)(h) Eighth scheduled disbursement (on or 52,250,000after October 1, 2017)(i) Ninth scheduled disbursement (on orafter April 1, 2018)(2) Front-end Fee 750,000(3) Interest Rate Cap or Interest RateCollar premiumTOTAL AMOUNT 300,000,000

Table 6: Tentative Disbursement Schedule (in US$)

Disbursement Disbursement Planned RequirementsNo. Estimated Type Disbursement

Date Amount in USD1 June 2014 Reimbursement of 20,650,000 * Expenditures under identified

expenditures EEPS of at least US$20,650,000incurred from July * Compliance with DLIs1, 2013 to date of * Submission of IFRSigning

2 October Reimbursement of 11,000,000 * Expenditures under identified2014 expenditures EEPS of at least US$11,000,000

incurred from July * Compliance with DLIs1, 2013 to June 30, * Submission of IFR2014 taking into

accountexpenditurespreviouslyclaimed/paid inthe previousapplication

3 April 2015 Reimbursement ofexpendituresincurred fromJanuary 1, 2014 toDecember 31, 2014taking intoaccountexpenditurespreviouslyclaimed/paid inthe previousapplication

4 October Reimbursement of 123,350,000 * Expenditures under identified2015 expenditures

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incurred from July EEPS of at least1, 2014 to June 30, US$123,350,0002015 taking into * Compliance with DLIs

account * Submission of IFR

expenditurespreviouslyclaimed/paid inthe previousapplication

5 April 2016 Reimbursement ofexpendituresincurred fromJanuary 1 toDecember 31, 2015taking into

accountexpenditurespreviouslyclaimed/paid inthe previousapplication


incurred from July * Compliance with DLIs1, 2015 to June 30, * Submission of IFR2016 taking into

account


7 April 2017 Reimbursement ofexpendituresincurred fromJanuary 1, 2016 toDecember 31, 2016taking into

account



incurred from July * Compliance with DLIs1, 2016 to June 30,

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2017 taking into * Submission of IFRaccountexpenditurespreviouslyclaimed/paid inthe previousapplication

9 April 2018 Reimbursement ofexpendituresincurred fromJanuary 1, 2017 toDecember 31, 2017taking intoaccountexpenditurespreviouslyclaimed/paid inthe previousapplication

37. Withdrawal of the loan proceeds will be subject to the conditions as spelled out in theloan agreement's Schedule II, Section IV, B.

38. At the mid-term review (or at any other time as relevant), the Government and the Bankwill review the levels of undisbursed funds due to the non-achievement of DLIs and/or theinsufficiency of actual expenditures vis-d-vis required minimum levels of expenditures anddecide if this should be cancelled or the project should be restructured to fully utilize theundisbursed funds.

40. Disbursements under the Project will comply with the Bank policies and procedures ondisbursements and financial management as reflected in the Bank's Disbursements Handbookand Financial Monitoring Report Guidelines.

Procurement

41. Based on the Eligible Expenditures that have been identified, procurement will be doneusing the Government procedures acceptable to the Bank and consistent with the World Bank's"Guidelines: Procurement of Goods, Works, and Non-consulting Services under IBRD Loan andIDA Credits & Grants by World Bank Borrowers" dated January 2011, and "Guidelines:Selection and Employment of Consultants under IBRD Loan and IDA Credits & Grants byWorld Bank Borrowers" dated January 2011. Aside from the School MOOE given to schools,Component 1 (Improved Reading and Math) Eligible Expenditures include the Human ResourceTraining and Development Fund (which includes related expenditures for travel andaccommodation, supplies, professional services requirements, fees and materials), and In-serviceTraining and will be procured in accordance with existing government administrative proceduresand prescribed limits acceptable to the Bank. Component 2 will finance School MOOE.

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Basically, this would involve comparison of at least three quotations for physical items and of atleast three CVs for contractual personnel. Component 3 (Improved Equity among DisadvantagedGroups) will finance the various AAP, ALS and School MOOE, and procurement will again bedone using government procedures acceptable to the Bank.

42. If, during project implementation, the need arises to procure goods and consultingservices under the project involving bigger amounts of contracts, procurement will be carriedout in accordance with the World Bank's "Guidelines: Procurement of Goods, Works, and Non-consulting Services under IBRD Loan and IDA Credits & Grants by World Bank Borrowers"dated January 2011, and "Guidelines: Selection and Employment of Consultants under IBRDLoan and IDA Credits & Grants by World Bank Borrowers" dated January 2011, respectively,and the provisions stipulated in the Loan Agreement. For the relatively bigger contract amounts,DepEd may use International Competitive Bidding (ICB), National Competitive Bidding (NCB)and Shopping, as appropriate, for goods contracts; and for consultancy contracts, Quality- andCost-Based Selection (QCBS) would be used as the preferred method. However, where QCBS isnot suitable, consulting services may be procured using other methods including Quality-BasedSelection (QBS), Selection based on Consultants' Qualification (CQS), or Individual Consultantsdepending on their specific nature, value and complexity. Single-Source Selection (SSS) mayalso be used but only in exceptional circumstances described in para. 3.9 of the ConsultantGuidelines. Requests for proposals will be prepared using the Bank's most up-to-date StandardRequest for Proposals document. All these, however, will be subject to the preparation andsubmission by DepEd of the procurement plan to be approved by the Bank. While the PhilippineProcurement Law (RA9184) is sufficiently in harmony with the Guidelines at the NCB level, theProcurement Section of the Loan Agreement will include an annex detailing the proceduresunder the national law that are not acceptable to the Bank. Other than that, NCB procurementwill be carried out in accordance with the country's law.

43. In case any goods will need to be procured under the project, any contract estimated tocost the equivalent of US$3,000,000 will be procured following ICB procedures; with contractsestimated to cost the equivalent of US$200,000 or more, up to less than US$3,000,000, will beprocured following NCB procedures using the Philippine Bidding Documents (PBD) asharmonized with the Bank. Procurement of goods estimated to cost the equivalent of less thanUS$200,000 will be procured using shopping procedures, by comparing price quotationsobtained from several contractors, or suppliers as the case may be, with a minimum of three, asdefined in paragraph 3.5 of the Procurement Guidelines.

44. In case procurement will be undertaken under the project, the following contracts wouldbe subject to Prior Review by the Bank: (i) all works and goods contract procured through ICBprocedures; (ii) first works and goods contract procured through NCB procedures, regardless ofthe estimated cost; (iii) first works and goods contract procured through shopping procedures,regardless of the estimated cost; (iv) each contract with consulting firms estimated to cost theequivalent of US$100,000 or more; and (v) each contract procured and awarded under SSSmethod. Twice a year field supervision missions, including post reviews, will be implementedunder the project in addition to the prior reviews to be carried out from the Bank's Manila office.With respect to each contract not subject to prior review, the procedures set forth in paragraph 5of Appendix 1 to the Bank's Procurement and Consultant Guidelines will apply at an initial ratio

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of not less than one (1) in ten (10) contracts. The ratio may be adjusted during projectimplementation based on the performance of the implementing units.

45. In addition, the Bank will also consider the results of the post audit done by the COA aspart of its Annual Audit Program. The COA Chairman issued in January 2010 to all auditorsassigned to all agencies, procuring entities and LGUs, through Memorandum No. 2010-003, theGuide in the Audit of Procurement which includes the audit of foreign assisted project. COA'srole as the supreme audit institution in the country is to ensure that the expenditures are properand in accordance with the law, rules and regulations. As they are the repository of all originaltransaction documents, their post audit normally covers more than 50 percent of the number oftransactions. Their audit goes beyond procurement as they review the effectiveness of internalcontrols of the agency.

46. A Procurement Plan detailing the contract packages that will be identified, if any, forgoods and consultancy contracts will be prepared by DepEd and updated on an annual basis or asthe need arises to reflect current circumstances, and cleared with the Bank. The ProcurementPlan will be strictly followed especially in ensuring that procurement timelines conforms toeither the Bank's or the Government's prescribed standards. This Plan will be available in theproject's database and in the Bank's external website and at DepEd's website.

47. With respect to goods and contracts to be procured in accordance with NCB procedures,the national Procurement Law will apply, except that, unless otherwise agreed by the Bank inwriting, the following procedures will be adhered to:

a. Eligibility screening shall not be applied. However, bids that do not contain any ofthe following documents will not pass the documentary compliance check: i)evidence of the required financial, technical or production capability; ii) auditedfinancial statements; iii) credit line or cash deposit certificate; iv) bid security; and v)authority of the bid signatory.

b. A ceiling may be applied to bid prices provided the following conditions are met: i)bidding documents are obtainable free of charge on a freely accessible website; ii) theagency has procedures in place to ensure that the approved budget for the contract(ABC) is based on Engineer's Estimate; iii) the agency has trained cost estimators onestimating prices and analyzing bid variances; and iv) the agency has established asystem to monitor and report bid prices relative to the ABC and Engineer's Estimate.

c. Domestic or regional preferences will not be applied in the evaluation of bids, andother preferences in effect in the Philippines will not be used except with the priorconcurrence of the Bank.

d. Foreign suppliers and contractors shall be allowed to participate, if interested, withoutfirst being required to associate with, or enter into joint venture with, local firms.Moreover, foreign bidders shall be allowed to bid, even without registration, licensingand other government authorizations, leaving these requirements for after award andbefore signing of contract.

e. Alternative procurement methods defined in the implementing rules and regulationssuch as Limited Source Bidding, Direct Contracting and Shopping are acceptable.The use of the other alternative methods will require prior Bank concurrence.

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Environmental and Social (including Safeguards)

Environment

48. During the project concept stage, the government proposed the inclusion of classroomconstruction into project activities to be financed by the loan. To address routine environmentalissues, the DepEd prepared an Environmental Code of Practice for classroom construction. Asproject preparation progressed, however, the government decided not to finance any schoolconstruction or rehabilitation as part of the LEAPS project. The final project design alsoexcludes the financing of any other civil works, acquisition of potentially hazardous schoollaboratory equipment or materials/chemicals to be used in laboratories. Therefore, no negativeor long-term environmental impacts are expected for any activity under the project. The PDO ofimproving the early grade reading and math skills of students in the target areas can be achievedindependent of classroom construction through the conduct of professional developmentactivities for teachers to enhance their assessment and teaching skills, training of principals andhead teachers to strengthen field-level support system and implementation of alternative deliverymodes and alternative learning system which are usually done outside the classrooms. However,OP 4.01 was triggered due to the need to assess and take into account, in an integrated manner,the social aspects of the project, particularly its impact on IPs.

Social Safeguards

49. Due to the presence of IPs in some project sites, OP 4.10 is triggered. The proposedproject is anticipated to have positive impact on indigenous students in terms of increasing theiraccess to basic education. Specifically, Component 3 of the project focuses on disadvantagedgroups, including IP students. In close coordination with the National Commission onIndigenous Peoples (NCIP), DepEd updated its existing Indigenous Peoples PlanningFramework (IPPF) based on the lessons learned under the NPSBE and provides more specificstrategies for implementing IP-sensitive strategies which will be pursued under the thirdComponent of the project. The IPPF was disclosed in Infoshop on December 20, 2012. It aimsto expand learning opportunities for IP learners through the design and implementation ofculturally appropriate learning modalities; put in place mechanisms for the effective andsustained implementation of IP education; and support IP learning systems and other learningmodalities. The draft IPPF includes the consolidation and analysis of IP data primarily from theBasic Education Information System (BEIS) which serves as a screening procedure as well asmonitoring tool. Once the specific target schools are identified during implementation phase,DepEd will prepare specific IP plans for the schools that cover IP students as part of the SchoolImprovement Plans, which will involve broad participation of the specific IP groups in eachtarget school. The draft enhanced IPPF has been presented to the NCIP Board with no majorcomment. The DepEd, through its Indigenous Peoples Education Office (IPsEO), will regularlyconsult with NCIP as part of its regular inter-agency committee on IP Education at national andsub-national levels.

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Annex 4: Operational Risk Assessment Framework (ORAF)

PHILIPPINES: Learning, Equity and Accountability Program Support Project (P118904)Stage: Negotiations

Stakeholder Risk Rating Low

Description: Risk Management:

Lack of or decline in internal and external stakeholder Extensive consultation and discussions were conducted with a broad range ofsupport to the key reforms to be supported by the project stakeholders in the course of preparing the project, including the selection of results and

the interventions, discussion of the resource and manpower requirements and capacitydevelopment activities required to achieve the results. Several consultations and focusedgroup discussions were held with Officials and relevant staff from the Departments ofEducation, Budget and Management and the Civil Service Commission as well as withparent-teacher associations, student representatives, DepEd Region and Divisionofficials, NGOs and civil society organizations to discuss the incentives program whichis an integral component of the project. Focused group discussions with various parents,community associations, teachers, principals and other civil society organizations wereorganized in various geographic locations to consult, and get their buy-in and ownershipto the reforms to be supported by the project including the component on improvingequity for disadvantaged groups.

Resp: Status: Stage: Recurrent: Due Date: Frequency:

Client Completed Preparation L] 31-Jul-2012

Capacity Rating Substantial


d y .n . . . Technical Assistance was mobilized during project preparation and will be mobilizedLimited capacity in FM which limited progress m . during implementation to initiate discussion on FM and fiscal issues. Capacity buildingimplementing FM reforms. Manually prepared financial activities will be pursued in FM areas which are problematic or which need to berecords delay the preparation of timely and accurate reformed. WB, AusAID and other development partners have committed to supporting

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financial information and reports. the improvement of their FM system.

While capacity of FM staff at the Central Office is Resp: Status: Stage: Recurrent: Due Date: requency:adequate, there is lack of FM capacity at the Region, Both In Progress ImplementationDivision and school levels, which could impede collectionof financial reports needed for WB reimbursement of Risk Management:actual expenditures incurred vis-Ai-vis the eligible Under the project, a disbursement-linked indicator was included to strengthen financialexpenditures. management capacity of the DepEd. Under this result framework, DepEd will adopt a

more systematic approach to addressing its long-standing financial management (FM)Lack of technical capacity of DepEd implementers to issues. DepEd shall deliberately address internal FM concerns first, to ensure thatimplement the innovations, reforms under the project. effective and efficient internal controls and financial data analysis will be in place

throughout the agency. The presence of a strong FM environment will ensure fiduciarysupport to the program. These so-called housekeeping activities will also includeconsultations with the oversight agencies (eg the Department of Budget andManagement and the Commission on Audit) to resolve FM issues such as outstandingissues on budgeting, funds flow, accounting, internal control and financial reporting.


Both In Progress Implementation

Risk Management:

As risk mitigation measure, DepEd has to design an expenditure tracking system of theEligible Expenditures program (EEP) identified in the General Appropriations Act(GAA) and develop a financial reporting protocol to be rolled-out in all regions,divisions and implementing units to monitor expenses per EEP. Sufficient FMmanpower must also be ensured in all levels of the Agency to track actual EEP expensesand compare against budget line items to measure financial performance.



Risk Management:

The Bank will continue to mobilize technical and supervision resources to supportDepEd to achieve the project commitments. The Bank has started the training of DepEdcolleagues in managing and conducting Impact Evaluation. Reading and Math expertswere mobilized to assist the DepEd in refining/developing its Early Grade Reading andMath Program and in the development of Assessment tools; concept development for aperformance-based incentives program.

57



Governance Rating Substantial


Pursue the finalization and approval of the DepEd organizational restructuring planThoesasesne ofgadequatogaiztn ses an which is designed to make the bureaucracy more responsive to present and future

processes and significant challenges in the level of.organizational management capacity to implement and operational changes linked to various reform itemsmonitor implementation of broad-scale reform combined Resp: Status: Stage: Recurrent: Due Date: Frequency:with the DepEd staff's weak incentive to perform and the Client In Progress Implementationlack of accountability mechanisms, could delay theimplementation of reforms supported by the project. Risk Management:

WeakThe introduction of the performance-based incentive program in the government has

Goverinnment, and odai betwe en great potential to significantly improve performance on a Department-wide basis. The

units on resource allocation and lo ornment DepEd's commitment to conduct massive information campaigns to explain the detailseuitson reourcuerloaion andor utlzainfor basi of the implementation of the scheme, and to set up a reliable performance monitoringeducation could undermine reform efforts.system and grievance redress system to accompany the implementation of the

Political intervention (especially Congressional performance incentive program is expected to develop an effective and sustainableinterference) in resource allocation (e.g., hiring of system of incentives for results and enhance implementation of accountabilityDivision Superintendents) and utilization could impede mechanisms to improve outcomes.implementation of reforms. Resp: Status: Stage: Recurrent: Due Date: Frequency:

Client In Progress Implementation

Risk Management:

The Department of Budget and Management (DBM) is spearheading the finalization ofthe Joint Memorandum circular involving DepEd, DBM and the Department of Interiorand Local Government defining the allocation and utilization of the Special EducationFund managed by the Local Government Units (LGU) for basic education. Expand theforging of Memorandum of Agreement between various local leagues and the DepEd oncounterpart funding for classroom construction and resource complementation forvarious inputs.



Risk Management:

58

DepEd to continue to pursue its recent initiatives which strengthened recruitment, hiringand selection processes of Division Superintendents; a Political Economy Assessmentstudy funded under the PGAT will be undertaken to analyze the political economyrelationship between division superintendents and school personnel (school heads andteachers), particularly in relation to access and utilization of eligible expenditure itemsunder the LEAPS project.



Risk Management:

Fast-track the completion of the Unified Information System which will allow evidence-based/data-based decision making in resource allocation and utilization which couldminimize political intervention.



Risk Management:

Pursue the innovative approaches that DepEd has adopted in recent years to mitigatecorruption through civil society/citizen participation and involvement in: a) delivery ofinputs such as textbooks, tables, chairs (e.g. Boy Scouts of the Philippines); b) theprocurement process, from the approval of the Annual Procurement Plan to delivery andacceptance of procured goods, services, and infrastructure project; and c) budgettracking (in terms of allocation and actual utilization). The Bank will support measuresto strengthen such mechanisms.Transparency processes such as publication of planned deliveries of textbooks beforehand in order to eliminate diversion of deliveries and encourage civil society monitoringof delivery will be expanded



Design Rating Substantial


Difficulty in achieving agreed results in a results-based Disbursement-linked indicators/key results were developed in very close collaborationoperation could mean low or slow disbursement. Under with key stakeholders (DepEd officials and staff, key DepEd implementing units,

59

results-based financing, inputs will have to be already sample of target project regions) responsible for delivering on results, as well as otherpurchased, installed or used and showing results before agencies/units responsible for resource allocation and provision and in implementationdisbursement can take place. monitoring and oversight (e.g. DBM, COA, NEDA). Ensure clear assignment of

responsibilities and accountabilities of all key actors



Social and Environmental Rating Low


Indigenous peoples not participating or benefiting, or The project includes a subcomponent to improve the targeting of disadvantaged groups,educational services not appropriate or efficient for IPs. including IPs, in project regions. The DepEd updated its existing Indigenous Peoples

Planning Framework (IPPF) which provides more specific strategies for implementingIP-sensitive strategies which will be pursued under the project. The IPPF aims toexpand learning opportunities for IP learners through the design and implementation ofculturally appropriate learning modalities; put in place mechanisms for the effective andsustained implementation of IP education; and support IP learning systems and otherlearning modalities.


Client In Progress Both

Program and Donor Rating Moderate


Poor coordination of reform efforts/initiatives of various The Bank team coordinated with various local and international development partnersdonors resulting in duplication, inefficiencies, DepEd staff working with DepEd on basic education reforms especially on the areas to be supportedoverload, inconsistent/non-harmonized monitoring and by the project - early grade reading and math assessment and teacher training;evaluation systems and reporting. performance incentives; school report card; FM issues and bottlenecks; Impact

evaluation; concerns on Out-of-school youth, IP, disabled to ensure full andcomplementary interventions to support DepEd achieve its goals and objectives in thisarea. A number of donor partners have subsequently committed to support DepEd in asubset of the programs/innovations and some large international donors have expressedinterest and/or commitment to support DepEd in achieving the disbursement-linkedindicators of the WB project.


Both In Progress Both [

60

Delivery Monitoring and Sustainability Rating Moderate


e PA semi-annual review process will assess progress against all the agreed protocols andTheiProject il inthrec ocen ote aohes iand t disbursement-linked indicators, review project implementation and analyze reasons fordesign of its three components. Most of the data and..information required to monitor and evaluate these any deviations and identify lessons and actions to improve the next 6 months

innovative approaches are not readily available so there is implementation and performance.a need to strengthen the reporting, collection, monitoring Resp: Status: Stage: Recurrent: Due Date: Frequency:and evaluation system of the DepEd to ensure Both In Progress Bothachievement of results.

Risk Management:

A mid-term review will also be conducted during the end of the second year to assessthe extent to which the project is moving towards its intended results and any need formid-course adjustment in the project strategy and design. At project completion, an endof project evaluation will be conducted to assess the project relevance, achievement ofdevelopment objectives and generate lessons to inform future basic education programs.An evaluation firm will be contracted to conduct the mid-term review and end of projectevaluation to be supervised by the Task Team Leader or relevant Bank staff.


Both In Progress Both [Risk Management:

Continuous random checking of target schools and divisions will also be conductedstarting on the second year to determine the veracity of data and the observance of therecommended processes in implementing the Project Components.


Both In Progress Both {

Other (Optional) Rating



0_

61

Other (Optional) Rating



0-0

Implementation Risk Rating: Substantial

Comments:

The overall implementation risk rating for the project is substantial. The key risks relate to: (i) implementation and technical capacity of the DepEdto implement the innovations introduced in the project; (ii) the absence of adequate and appropriate organizational structures, processes, andsignificant challenges in the level of organizational management capacity to implement and monitor implementation of broad-scale reform; and (iii)the need to strengthen the reporting, collection and M&E system of DepEd to ensure achievement of results committed under the project.Note: Include on average no more than 3 Risk Management Measures per Risk Category

62

Annex 5: Implementation Support Plan

PHILIPPINES: Learning, Equity and Accountability ProgramSupport Project

Strategy and Approach for Implementation Support

1. All project components, subcomponents and activities committed under this project are part ofwider programs of the DepEd. The Bank has extensively consulted DepEd and the concerned oversightagencies such as the DBM, NEDA and DOF regarding their major priorities and selected a few keyactivities that can serve as DLIs for the project. Hence, all of these activities will be implemented withor without the proposed project.

2. Nonetheless, DepEd still needs support in expediting the achievement of these activities. TheBank will support DepEd in achieving the project commitments on both the activity level and thepolicy level. Activity-level support will focus on ensuring the quality of the activities being conductedby DepEd. Policy-level support will focus on analytical assistance in creating the best policyenvironment to ensure the success of specific programs, projects and activities.

3. For Component 1, activity-level support focuses on the development of the new assessmenttools in Reading and Math in the five selected mother tongues. In the case of the EGRA,contextualizing the original English tool into five languages requires expert advice not just inlinguistics and semantics, but also in making sure that all items conform with beginning-readingprinciples. The case of EGMA is more difficult as there is no official English tool that can serve asbasis for the contextualization into the mother tongues. This requires expert advice not just on thedevelopment of the tool but also on its appropriateness for early grades. Policy-level support for thiscomponent focuses on the possibility of using the tools as the quarterly assessment for early grades,which requires careful analysis and clear implementation planning.

4. Another activity-level support requirement for Component 1 is on the training of school headsand teachers on administering the assessment tool, analyzing the assessment results and being capableof implementing the appropriate intervention based on the assessment results. On this matter, USAID,through its Basa Pilipinas (Read Philippines) Project has committed to support the GOP and the Bankby including the LEAPS project regions in their wider project. USAID has also agreed to use thetraining framework that will be developed by DepEd and the Bank for their major reading project. Thiswill ensure congruence of all early reading initiatives and provide DepEd with additional resources tobe able to train all the stated recipients under the LEAPS project.

5. Component 1 also requires policy-level support for more effective implementation of DepEd'sMTB-MLE Policy. DepEd needs help in conducting a small-scale lingua franca mapping and analysisto better target MTB-MLE activities. It also needs support in pushing for the inclusion of early gradeassessment and interventions in the Teacher Education Curriculum.

6. For Component 2, both activity-level and policy-level support is required in guiding theDepartment in developing its PMS. The Bank has had good experience in other countries in terms of

63

performance incentives and is in a credible position to advise DepEd management on the design of sucha system. AusAID, through its PAHRODF initiative, has committed to help DepEd develop the PMS,and the World Bank Task Team was invited to input on this major undertaking.

7. DepEd is also in the process of revising the SBM process to strengthen its learner andcommunity orientation. The Bank is ready to provide expert advice on this series of activities, to helpensure that field implementers are not confused in the process and that any revisions strengthen ratherthan dilute the SBM concept, which has provided good results in the past.

8. Activity-level support is also required to assist DepEd sort through all its fiscal and financialmanagement issues that have been impeding budget execution for the past years. The Bank is in a goodposition to liaise between DepEd, DBM, COA and other government agencies to be able to findcommon ground on long-standing issues plaguing DepEd operations. This also includes helping DepEdorganize its key policies first so that a clearer message can be communicated to its oversight agencies.

9. For Component 3, the major support requirement is in the conduct of program reviews ofprograms and projects and the conduct of one impact evaluation of a long-standing DepEd programsserving the selected disadvantaged groups. The DepEd has budget allocation for the conduct of thestreamlined program reviews while various facilities and organizations like 31E and SIEF are beingtapped to help DepEd conduct these studies. Aside from tapping expertise from within the Bank, localexpertise in Impact Evaluation is also available and can be tapped by the Bank, subject to theavailability of funds. Training DepEd personnel in managing impact studies are also important.

10. On top of the support mentioned above, the Bank team will continue to carry out semi-annualImplementation Support Missions, which will cover the technical as well as fiduciary and portfolioaspects. Given the results-based nature of the operation, the Government and the Bank will jointlymonitor and report on the progress on, and verify the achievement of the DLIs. Technical and/orfiduciary experts other than the Task Team will also be mobilized and included in the ImplementationSupport Missions, where necessary.

Implementation Support Plan

11. Specifically, the following table outlines the implementation support required for the duration ofthe project:

Time Focus Skills Needed Resource Estimate Partner RoleYear 1 (2013) Development of EGRA Teaching beginning USAID will support

and EGMA in the reading and math; the development ofmother tongues Item analysis EGRA in at least 4

other mother tonguesAssessment data not covered by the

Training on EGRA and analysis; teaching project and will trainEGMA administration, beginning reading teachers on teachingassessment data and math reading; this willanalysis and beginning complement thereading and math activities to beinterventions undertaken by the

64

DepEd which will beLingua Franca financed under themapping Linguistics; project

SociologyImprovement of SBMpractice SBM expert; social

accountabilityexpert

Resolution of fiscal and Finance specialistfinancial managementissues

Impact Evaluation of Impact evaluation;Alternative Learning policy formulationSystem (ALS) and operationalprogram: Design of planningImpact evaluation

Year 2 (2014) Training on EGRA and Assessment dataEGMA administration, analysis; teachingassessment data beginning readinganalysis and beginning and mathreading and math Teacher Educationinterventions Curriculum expert

Inclusion of early gradeassessments in Teachereducation Curriculum

Development of DepEd OrganizationalPerformance Development;Management System Incentive

(P) Formulation;Behavioral

Improvement of SBM Economicspractice

SBM expert; socialaccountabilityexpert

Resolution of fiscal andfinancial management Finance expertissues

Impact Evaluation ofALS: baseline data Impact evaluationcollection forprospective impactevaluation

Year 3 (2015) Development of DepEd Organizational AusAID's Philippineand Year 4 PMS Development; Human Resource(2016) Incentive and Organizational

65

Formulation; DevelopmentBehavioral Facility is alsoEconomics supporting DepEd in

its performancemanagement system

Resolution of fiscal and Finance expertfinancial managementissues

66

Annex 6

Disbursement Linked Indicators (DLI) Disbursement Rules and Verification ProtocolSummary

Period 1 Period 2 Period 3 Period 4(July 1, 2013 - (January 1 - (January 1 - (January 1 -December 31, December 31, December 31, December 31,2014) 2015) 2016) 2017)

DLI 1: Target: 5 EGRA tools 40 EGRA andVersions and 5 EGMA EGMA tools (4of EGRA tools (1 version of additional versionsand each tool per each of each tool perEGMA Selected Mother each Selectedtools Tongue in each Mother Tongue indeveloped Target Region) each Targetfor each Region)Selected Allocated US$4,650,000 US$18,600,000Mother amount: ITongue in Disbursement rule: (i) US$465,000 per each EGRA and EGMA tool finalized on or beforeeach the last day of the relevant period; (ii) Minimum 1 tool per Selected Mother Tongue inTarget Period 1 (non-scalable); and (iii) 40 tools in Period 2 (scalable: minimum of 3 additionalRegion versions per mother tongue and maximum of 4 versions, for a total of 40 additional

versions).DLI achievement measure: Periods 1-2: DepEd has developed 25 EGRA tools and 25EGMA tools (five comparable versions per Selected Mother Tongue) that meet standards setforth in the DLI Verification Protocol.DLI verification process: Periods 1-2: (i) DepEd submits EGRA and EGMA tools; and (ii)the Bank reviews the tools against the standards specified in the DLI Verification Protocol.EEP: MOOE; Minimum expenditure level: DLI target for Period 1:US$4,650,000; DLI target for Period 2: US$18,650,000.

Period 1 Period 2 Period 3 Period 4July 1, 2013 - January 1 - January 1 - January 1 -December 31, December 31, December 31, December 31,2014 2015 2016 2017

DLI 2: Target: 11,998 grade 1 11,998 grade 2 11,998 grade 3Teachers teachers trained teachers trained teachers trainedfrom Allocated US$30,000,000 US$30,000,000 US$30,000,000identified amount:schoolstrained to Disbursement rule: Periods 2-4: (i) percent of achievement of target on or before the last

improve day per period equal to the percent of total allocated amount for the relevant period to betheir disbursed; (ii) scalable: minimum of 51% achievement to be eligible for disbursement.capability DLI achievement measure: Periods 2-4: Training per period carried out in accordance withto the DLI Verification Protocol.effectivel DLI verification process: Periods 2-4: (i) DLI Verification Agent conducts training spot

checks and post-training assessment in accordance with the DLI Verification Protocol; and

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y teach (ii) the Bank reviews the verification report during the semi-annual Bank implementationgrades 1 - support missions.3 reading EEP: MOOE; Minimum expenditure level: DLI targets for Periods 2-4: US$30,000,000 perand math DLI target.


DLI 3: Target: 5,999 principals/ Additional 5,999School head teachers principals/ headprincipals/ trained on effective teachers trainedhead early grade reading on effectiveteachers and math teaching early gradefrom strategies reading andidentified match teachingschools strategiestrained to Allocated US$15,000,000 US$15,000,000strengthen amount:field-level Disbursement rule: Periods 2-3: (i) percent of achievement of target on or before the lastsupport day of the relevant period equal to the percent of total allocated amount to be disbursed persystem for period; (ii) scalable: minimum of 510% achievement to be eligible for disbursement.improved DLI achievement measure: Periods 2-3: Training per period carried out in in accordanceearly with the DLI Verification Protocol.grade DLI verification process: Periods 2-3: (i) DLI Verification Agent conducts training spot-reading checks and post-training assessment in accordance with the DLI Verification Protocol; andand math (ii) the Bank reviews the verification report during the semi-annual Bank implementationteaching support missions.

EEP: HRTD; INSET; Minimum expenditure level: DLI target for Periods 2-3: (1) HRTD:US$10,000,000 per DLI target; and (2) INSET: US$5,000,000 per DLI target.


DLI 4: Target: Policy on the Policy on the sDevelopm utilization of the inclusion ofent of an EGRA and early literacy andenabling EGMA tools numeracy coursepolicy adopted in DepEd'senvironme teacher inductionnt for the program adoptedeffective Allocated US$6,000,000 US$6,000,000implement amount:ation of Disbursement rule: (i) Period 1: Policy on EGRA and EGMA tools (non-scalable); (ii)the grades Period 3: Policy on inclusion of early literacy and numeracy course (non-scalable).1 - 3 DLI achievement measure: (i) Period 1: Policy on EGRA and EGMA utilization andreading application in classrooms has been formulated according to standards specified in the DLIand math Verification Protocol, and approved, issued and disseminated to all DepEd levels through aprogram DepEd order on or before the last day of the relevant period; (ii) Period 3: Policy on

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in the including an early literacy and numeracy course as appropriate in the DepEd teacherTarget induction program has been formulated according to standards specified in the DLIRegions Verification Protocol, and approved, issued and disseminated to all DepEd levels through a

DepEd order on or before the last day of the relevant period.DLI verification process: Periods 1 and 3: (i) DepEd submits the policy on EGRA andEGMA utilization and application in classrooms, and the policy on inclusion of early literacyand numeracy course; and (ii) Bank reviews the policies against thestandards specified in theDLI Verification Protocol, during the semi-annual Bank implementation support missions.EEP: MOOE; Minimum Expenditure Level: DLI targets for Period 1: US$6,000,000; DLItarget for Period 3: US$6,000,000.


DLI 5: Target: Policy on the Linguistic map Linguistic map Linguistic mapsLinguistic dissemination and covering another covering another covering anothermap for utilization of Target Region Target Region 2 Targeteach linguistic maps developed developed RegionsTarget adopted, and developedRegion linguistic mapdeveloped covering 1 Targetfor Region developedimproved Allocate US$5,000,000 US$5,000,000 US$5,000,000 US$10,000,000targeting dand amountimplement :_ I_I_I_Iation of Disbursement rule: (i) Period 1: Policy on linguistic maps and completion and a linguisticthe grades map covering one Target Region (non-scalable); (ii) Periods 2-4: US$5,000,000 per1 - 3 linguistic map completed for each Target Region on or before the last day of the relevantreading period (non-scalable).and math DLI achievement measure: (i) Period 1: Policy on dissemination and utilization ofprogram linguistic maps has been formulated according to standards specified in the DLI Verification

Protocol, and approved and issued through a DepEd order, and DepEd has developed andapproved a linguistic map covering 1 Target Region in accordance with the policy; (ii)Periods 2-4: DepEd has developed and approved linguistic maps for each of the remainingTarget Regions in accordance with the policy.

DLI verification process: Periods 1-4: (i) DepEd submits policy on the dissemination andutilization of linguistic maps, and the linguistic maps for each Target Region; and (iii) theBank reviews the policy and the maps against the standards specified in the DLI VerificationProtocol during the semi-annual Bank implementation support missions.EEP: MOOE: Minimum expenditure level: DLI targets for Periods 1-3: (1) US$5,000,000per DLI target; and (2) DLI target for Period 4: US$10,000,000


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DLI 6: Target: Performance 5 DepEd regionalCapability monitoring system offices, 47 DepEdof DepEd to developed that division officesimplement will be used in the and 14,121 Targetits implementation of Schools in allPerformance DepEd's Target RegionsIncentive Performance oriented onScheme Incentive Scheme DepEd'simproved Performance

Incentive Schemeand performancemonitoring system

Allocated US$5,000,000 US$25,000,000amount: ' _I

Disbursement rule: Period 1: (i) Performance monitoring systemdeveloped (non-scalable); Period 2: (ii) percent of achievement oftarget (i.e. 5 regions + 47 division and 14,121 schools = 100% oftarget) on or before the last day of the period equal to the percent oftotal allocated amount to be disbursed; (iii) scalable: minimum of 510%orientation of offices and schools is required to be eligible fordisbursement.DLI achievement measure: Period 1: Performance monitoring systemmeeting standards specified in the DLI Verification Protocol in placeand operational; Period 2: Field offices and Target Schools oriented onthe incentive scheme and the performance monitoring system accordingto standards specified in the DLI Verification Protocol.DLI verification process: (i) Period 1: DepEd reports on thedevelopment of the performance monitoring system developed for theperformance incentive scheme; (ii) the Bank reviews the report againstthe standards specified in the DLI Verification Protocol during thesemi-annual Bank implementation support missions; (iii) Period 2: DLIVerification Agent conducts spot checks and post-orientationassessment against the standards specified in the DLI VerificationProtocol; and (iv) the Bank reviews the verification report for Period 2during the semi-annual Bank implementation support missions.EEP: MOOE; Minimum expenditure level: DLI target for Period 1:US$5,000,000; DLI target for Period 2: US$25,000,000.


DLI 7: Target: Policy on the use 8,473 Target 13,415 TargetDevelopm of school report Schools in the Schools in theent of an cards (including Target Regions use Target Regions

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enabling guide-lines, refined school use refinedpolicy procedures and report card school reportenvironm templates) cardent for the adopteduse of Allocated US$5,000,000 US$10,000,000 US$ 15,000,000school amount: Ireport Disbursement rule: (i) Period 1: Adoption of policy on the use of school report cards (non-cards in scalable); (ii) Period 2: percent of achievement of target (i.e. 8,473 schools, whetherthe Target elementary or high schools = 100% of target) on or before the last day of the period equal toRegions the percent of total allocated amount to be disbursed; (iii) minimum of 51% of schools is

required to be eligible for disbursement (scalable); (iv) Period 3: percent of achievement oftarget (i.e. 13,415 schools = 100% of target) on or before the last day of the period equal tothe percent of total allocated amount to be disbursed; and (v) minimum of 51% of schools(i.e. 6,842 schools) is required to be eligible for disbursement (scalable).DLI achievement measure: Period 1: School report card policy adopted (through a DepEdorder or memorandum) on or before the last day of the relevant period meeting the standardsspecified in the DLI Verification Protocol; Period 2: 8,473 Target Schools in the TargetRegions use refined school report card in accordance with the school report card policy on orbefore the last day of the relevant period; Period 3: 13,415 Target Schools in the TargetRegions use refined school report card in accordance with the school report card policy on orbefore the last day of the relevant periodDLI verification process: Period 1: (i) DepEd reports on the adoption of the policy on theuse of updated school report cards; (ii) the Bank reviews the report against the standardsspecified in the DLI Verification Protocol during the semi-annual Bank implementationsupport missions; Periods 2-3: (i) DepEd reports on the list of Target Schools using refinedschool report cards per Target Region; (ii) DLI Verification Agent spot-checks that listedschools are indeed using the refined school report card and for the purposes specified in theDLI Verification Protocol; and (iii) Bank reviews the verification reports during the semi-annual Bank implementation support missions.EEP: MOOE; Minimum expenditure level: DLI target for Period 1: US$5,000,000; DLItarget for Period 2: US$10,000,000; DLI target for Period 3: US$15,000,000


DLI 8: Target: Financial Trainers'Financial management training on themanagem manual for all financialent DepEd finance and managementcapacity administrative staff manual of atof DepEd developed and least 1 financecentral, adopted andregional administrativeand staff each fromdivision the centraloffices office, the 17improved regional offices

and the 215division offices

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of DepEd

Allocated US$7,500,000 US$15,000,000amount:Disbursement rule: (i) Period 2: non-scalable for the financial management manual; (ii)Period 3: non-scalable for completed training at central, regional and division levels.DLI achievement measure: (i) Period 2: Financial management manual adopted through aDepEd order or memorandum, meeting the standards specified in the DLI VerificationProtocol; (ii) Period 3: Trainers training on the financial management manual in form andsubstance specified in the DLI Verification Protocol of at least 1 finance and administrativestaff each from the central office, the 17 regional offices and the 215 division offices ofDepEd on or before the last day of the relevant period.DLI verification process: Period 2: (i) DepEd submits the financial management manual;;(ii) the Bank reviews the manual against the standards specified in the DLI VerificationProtocol during the semi-annual Bank implementation support missions; Period 3: (i)DepEd conducts training on the manual and provides post-training reports which willinclude proof of conduct of the activities and other information that will be useful in DLIverification; (ii) the DLI Verification Agent conducts training spot-checks against thestandards specified in the DLI Verification Protocol; and (iii) the Bank reviews theverification reports during the semi-annual Bank implementation support missions.EEP: MOOE; Minimum expenditure level: DLI target for Period 2: US$7,500,000; DLItarget for Period 3: US$15,000,000


DLI 9: Target: Information InformationImprovem strategy for system forent of data educational educationalmanagem programs serving programs servingent for the Target the Targeteducation Disadvantaged Disadvantagedal Groups developed Groupsprograms and adopted developed inserving accordance withthe Target the informationDisadvant strategyaged Allocated US$6,250,000 US$6,250,000Groups in amount:the Target Disbursement rule: (i) Period 2: Information strategy for programs serving the TargetRegions Disadvantaged Groups (non-scalable); (ii) Period 4: Information system for programs

serving the Target Disadvantaged Groups (non-scalable).DLI achievement measure: (i) Period 1: Information strategy for programs serving theTarget Disadvantaged Groups developed and adopted by DepEd according to standardsspecified in the DLI Verification Protocol; (ii) Period 4: DepEd has developed aninformation system for programs serving the Target Disadvantaged Groups in accordancewith the strategy.DLI verification process: Periods 2 and 4: (i) DepEd submits the information strategy andreports on the development of the information system; (ii) the Bank reviews the strategy and

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information system against the standards specified in the DLI Verification Protocol duringthe semi-annual Bank implementation support missions.EEP: MOOE; Minimum expenditure level: DLI targets for Periods 2 and 4: US$6,250,000per DLI target.


DLI 10: Target: Review of 1 Review of another Review of Review ofComprehe program program another program another programnsivereviewcompleted Allocated US$6,000,000 US$6,000,000 US$6,000,000 US$6,000,000on amount:selected Disbursement rule: Review by DepEd per program: US$6 million each, non-scalable.DepEd DLI achievement measure: Periods 1-4: Review of program serving Targetededucation Disadvantaged Groups completed on or before the last day of the relevant period inal accordance with standards specified in the DLI Verification Protocol.programs DLI verification process: Periods 1-4: (i) DepEd reports on the conduct of the programserving reviews; and (ii) the Bank reviews the reports against the standards specified in the DLIthe Target Verification Protocol during the semi-annual Bank implementation support missions.Disadvant EEP: AAP, ALS, MOOE; Minimum expenditure level: DLI targets for Periods 1 and 2: (1)aged AAP: US$2,000,000 per DLI target; (2) ALS: US$1,000,000 per DLI target; (3) MOOE:Groups in US$3,000,000 per DLI target; DLI targets for Periods 3 and 4: (1) MOOE: US$6,000,000the Target per DLI target.Regions

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Annex 7: Economic and Financial Analysis

PHILIPPINES: Learning, Equity and Accountability ProgramSupport Project

I. Project Rationale: The Importance of Investing in Early Grade Reading andMathematics Skills in Disadvantaged Areas in the Philippines

1. The skills that children acquire during their schooling and later lives are an importantdeterminant of an individual's welfare and a key driver of economic growth. Recent studieshave shown that an additional year of schooling raised individual labor market earnings by anaverage of 10% and long term per capita growth by approximately one percentage point.

2. The benefits of a good quality education are not only confined to the economic sphere.For example, individuals with higher levels of education attainment tend to be healthier thanthose with less education even after controlling for income and other determining factors.

3. Despite the government's strong and growing commitment to education, the quality ofprimary and secondary education in the Philippines remains low. The Philippines lastparticipated in an international assessment in 2003 it showed that, compared with othercountries, average achievement was low and the majority of students failed to achieve the lowestbenchmark at either elementary or high school. 2 6 While these results are old, national assessmentdata since 2003 suggests that quality remains low (see Figure 1).

Figure 1: Learning Achievement in the Philippines

Elementary: Grade 6 High school: Year 2BID% 60%

70%50%

60%

50% -40%-

40%-30

30%-20%-

20%-

10% -10%

0% l lli -

200/05 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2004/05 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13

Note: There is no information on year 2 achievement after 2010/11 because the assessment waschanged to cover year 4 students in 2011/12.Source: Department of Education and Philippines Statistical Agency

26 TIMSS 2003 International Mathematics Report.

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A. The importance of early grade reading and mathematics skills

4. Low overall levels of learning achievement partly reflect a failure on the part of manystudents to master basic learning skills (i.e. basic literacy and numeracy) in the early grades. Anationally representative survey conducted in 2013 shows that while oral reading fluency wasrelatively high, less than half of grade 3 students met national standards of fluency and accuracy(Figure 2). Despite relatively high average scores on Filipino reading comprehension, less than afifth of grade 3 students demonstrated similar competency levels in English. It is likely thatchildren who have not acquired these basic skills by Grade 3 will benefit less from learningopportunities in later grades. They also are more likely to drop-out as school work becomes moredifficult and reliant on a solid grounding in these basic skills.

Figure 2: Grade 3 Reading Levels, 2013

80% 80%

70% 70%-

6O% - -0 -O

50% - 50% -

40% - 40% -

30% - 30%-

20% -20%

10%

Filipino English Filipino English

Horal reading fluency (rorrect words per minute) comprehension (%correct) 1% meetingORFstandard % meeting accuracy standard % meeting both

Source: USAID PhilEd Data: Early Grade Reading Assessment Results, 2013

5. Tackling weaknesses in early grade reading and mathematics skills has the potential toraise levels of learning. A strong foundation of basic reading and mathematics skills is crucial inorder for children to fully exploit the learning opportunities they will face as they grow up.Children who manage to master these basic skills can expect to stay in school longer and dobetter than children who do not.

6. Strengthening early grade reading and mathematics skills also has the potential toimprove future livelihood outcomes. A recent study, tracking a cohort of British children from1970 showed that a one standard deviation increase in mathematics and reading scores at age 10was associated with a wage premium of between 7% and 11% when the same individualsreached the age of 30.27

27 Crawford, C. and J. Cribb (2013). Reading and maths skills at age 10 and earnings in later life: a brief analysisusing the British Cohort Study,

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B. The link between the language of instruction and education outcomes

7. While many factors determine levels of learning achievement, the language of instructioncan be importance particularly in the early grades. Analysis of the 2011 TIMSS assessmentsfound that primary school students performed less well if they did not speak the language ofinstruction at home before they started their school careers. These disparities persisted intosecondary school and in some cases widened. Mother tongue-based education, particularly inthe early years, can have significant benefits which include:

a. Improved access and equity. Schools are more attractive and less daunting forstudents when the language of instruction is familiar. A recent study that looked at alarge number of developing countries found that children with access to schoolsteaching in their own mother tongue were more likely to be enrolled and attendingschool than children who were taught in a second language. The introduction ofmother tongue based education also tends to benefit disadvantaged and marginalizedgroups more than wealthier children who are more likely to live in areas wheresecond language use is more common at home and in the wider community.

b. Improved learning. Children who begin school in their mother tongue already havebuilt up some vocabulary, are able to pronounce commons sounds and are familiarwith the structure of the language. This prior learning enables children to learn to readfaster and gives them a head start in comprehension. Research in a number ofdifferent settings tends to confirm that children who study in their mother tonguelearn better and more quickly than children who study in a second language. Recentevidence includes:

i. In the Philippines a small scale program that introduced mother-tongueinstruction in elementary schools in Lubuagan improved levels of learning in

28all subjects.ii. In Cameroon, children taught in their mother tongue had better learning

outcomes than children attending comparison schools where English was the-29language of instruction.

iii. In 3 provinces in Viet Nam, a pilot mother tongue based bilingual educationprogram improved learning in mathematics for program participants comparedwith children living in the same localities but attending schools that were notparticipating in the program. 30

c. Improved internal efficiency. Mother tongue based education has also been shownto reduce levels of drop-out and grade repetition which in turn can improve theoverall efficiency of an education system. For example, primary school children inMali attending schools where the language of instruction was the same as their homelanguage were 5 times less likely to repeat and more than 3 times less likely to dropout of school. In the few studies that have been undertaken, the savings made from

28 Walter, S. L. and D. E. Dekker (2011). "Mother tongue instruction in Lubuagan: A case study from thePhilippines."29 Walter, S. L. and K. G. Chuo (2012). The Kom Experimental Mother Tongue Education Pilot Project.30 Ministry of Education and Training and UNICEF (2012). Action Research on Mother Tongue-Based BilingualEducation: Improving the equity and quality of education for ethnic minority children in Viet Nam.

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improved internal efficiency have been found to outweigh the costs of introducingmother tongue based education.

8. This section has demonstrated the potential economic and social benefits of the project'sfocus on strengthening early grade reading and mathematics skills. It has shown that the project'sfocus on improving early grade reading and mathematics skills is likely a) to improve early gradeoutcomes and b) to provide the foundation for improved learning in later grades of elementaryschool as well as in secondary and tertiary education. The section has also shown that mothertongue based education has been successful in the Philippines and other countries in improvingearly grade reading and mathematics skills. In summary, the section has shown that successfulimplementation of the LEAPS is likely to raise the overall quality of education and lead tosignificant benefits for individual beneficiaries and the Philippines as a whole.

II. Rationale for public investment and World Bank Involvement

9. Investments in education suffer from a number of market failures that justify publicinvestment and include:

a. Significant positive externalities. Parents do not take account of the social andwider benefits associated with education investments when making educationdecisions for their children. These externalities include; (i) improvements in familyhealth and (ii) the potential for education investments to raise an economy'sproductivity and competitiveness and long-term economic growth rate. The failure ofindividuals to account for these benefits will lead them to under invest in education.

b. Credit constraints. The up-front costs of education can be considerable andhouseholds, particularly poor households, are frequently unable to cover these costsdirectly and credit markets are not developed enough to extend education loans.

c. Lack of information on the costs and benefits of education. Parents frequently lackthe information on the costs and benefits of education to make informed decisions oneducation investments.

d. Limited information on school quality. Information on the quality of schooling canbe limited and parents can face difficulties in identifying the most suitable provider.

e. Lack of competition. There are significant economies of scale in providing educationservices which may limit competition amongst providers in sparsely populated areaswithin a country.

10. Public investment in education is also justified on equity grounds and in particular on thebelief that access to basic education services should not be conditional on wealth. Ensuringaccess to good quality education for all will require public intervention to ensure that childrenfrom disadvantaged and marginalized communities are supported. These arguments forgovernment intervention also provide the main justification for public investment in the currentproject.

11. The World Bank can add value to the project through its long engagement in thePhilippines education sector. In particular, the World Bank has recently provided assistancethrough the National Program Support for Basic Education (NPSBE) project which supported theGovernment's Basic Education Sector Reform Agenda (BESRA). The current project continues

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support for BESRA and experiences and lessons learned from the previous phase of support willbe valuable for implementation.

12. The World Bank can also draw on a considerable knowledge base of similar interventionsacross the region to support the implementation of the project. In addition, the World Bank isundertaking a considerable number of analytical and advisory activities on key education reformissues which will provide additional support to the project.

III. Project components and achievement of the PDO

13. The project development objective is to improve the quality of grade 1 to 3 reading andmathematics skills in target regions and target schools, with a special focus on those belonging totarget disadvantaged groups. The three components of the project contribute to this overalldevelopment objective in different ways.

Figure 3: Project Logic and Components

Improve the quality of grade 1-3 reading and mathematics skills of children in targetregions and schoo s with a focus on target disadvantaged groups

fmproving teaching and learning f radnge onand Target disadvantagedin grades 1-3 low.uThebassessmnt groupsincentives

ability intemteMoge fIoaoic oolstatn haoeotditoucnfohrtnu

EGRA and EGMA tool promneDvlpndevesopment in 5 mother s at aos half of a rae

tongues f xdibeenrs to rapr ofProfessional developmentof i

key personnel in teaching rprigadgopreading and mathfedakEpnkow dgInstitutionalization of early Srnteigbs npormgrade reading and mathfiac ltrg in

*A M o np a ito ri nguof

14. The limited in ~ ~~~~ ~peformatinta saalbeo h ence niaosicudda ato h

few childre scored zeo in an asessment ofreporing and eesoni iiin.Hwvr

comprehension~~~~~~~~ ~ SnGae3Egls a o.Tengthenin loepoe rd ednability n the moher tonge of Iloano in shoolfinacia eotditoucn ohrtnu

instructio in 2011 rogram ersut hwtatams afofalGaeI tdnswrunabe toanswr an quetion fro a txt teyanageentakdt eda ato h seset

*-ev lo in

This reflects in part low overall levels of reading fluency but also points to the need to strengthenthe skills of early grade teachers in mother tongue based instruction.

Figure 4: Elementary Students Scoring Zero in Comprehension Assessments, 2013

50%

45% -

5% --

0%

8

25%

20%

S15%010

50%

0%

Filipino (G rade 3) English (Grade 3) lokano (Grade 1)

U reading rom prehension 1 listening com prehension

Source: USAID PhilEd Data: Early Grade Reading Assessment Results, 2013

Component 1: Improving teaching and learning in the early grades (US$ 180.25 million)

15. This component supports the introduction of mother tongue based education in the earlygrades through the professional development of teachers and the introduction of new assessmenttools. The DepEd will develop a set of early grade reading and mathematics assessmentsdesigned to allow teachers to assess individual child progress. These assessments are intended toform the basis of a training course designed to introduce new techniques and innovations into theteaching of reading and mathematics in the early grades. Teachers will also learn how to use theassessments as a diagnostic tool and develop appropriate interventions for their students.

16. This approach to improving the teaching of early grade reading and mathematics hasbeen successful on a small scale in a number of other countries. For example, Save the Childrenhas been recently implementing the Literacy Boost program in 24 countries including thePhilippines. The program uses a combination of regular reading assessments to gauge how wellchildren are reading, teacher training in early grade reading techniques and communityinvolvement to 'boost' early grade literacy levels. 3 1 While not all countries have been assessed,the program appears to have had considerable success. Children's reading fluency andcomprehension have improved significantly compared with children not participating in theprogram. Children taking part in the program also tend to stay in school longer. Moreover,children from households with very limited reading materials (a proxy for the pooresthouseholds) were also found to benefit significantly from the program. A similar approach wasused in Liberia in a small scale pilot with similar results. A randomized controlled trial found

31 Save the Children (2013). Beyond school walls: a boost for readers.

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that reading achievement improved by a much larger amount in treatment schools whencompared to control schools. The effect sizes were also large with estimates suggesting thatreading fluency and comprehension had increased by the equivalent of two additional years of

h -32schooling.

17. A small scale study in Lubuagan has also demonstrated the potential of mother tonguebased education to raise education outcomes in the Philippines (Walter and Dekker 2011). Theprogram introduced mother tongue education in the first three elementary grades and supportedteachers to learn to read and write in their own language. The program also held teacher trainingworkshops that focused on adapting the curriculum to include local culture, producing a firstlanguage primer, translating textbooks and developing other local language materials. The resultsof the study showed that children assigned to the treatment group had better average performancethan children in the control group and effect sizes were large (1.31 to 1.61 standard deviations).Moreover, children in the treatment group also outperformed the control group in English andFilipino demonstrating that mother tongue based instruction did not negatively affect theacquisition of second languages.

18. In order to replicate the success of the evidence from pilot programs this component ofthe project also supports the institutionalization of the early grade reading and mathematicsprogram. In order to support the large scale adoption of the assessment tools and teachingimprovements developed under the new program of reforms the DepEd will establish an EGRAand EGMA policy. The policy will outline how these new tools relate to existing assessmenttools and how they are to be utilized in quality improvement activities. Successfulimplementation also requires a detailed knowledge of the location of different linguistic groupsto ensure that schools have the necessary resources to offer mother tongue education. Thecomponent also supports the development of a series of linguistic maps to facilitate the adoptionof the early grade reading and mathematics program.

Component 2: Strengthening accountability and incentives of key personnel ($82.5 million)

19. This component will support two key reform efforts that will contribute to the PDOthrough a strengthening of accountability at the school level and the institutionalization of theGovernment's performance based incentive scheme for DepEd staff.

20. Providing information on local school performance can strengthen the ability of parentsto hold schools accountable for delivering good quality education. Many countries have adoptedschool report cards to provide information to parents to strengthen accountability. For example,the Brazilian state of Parana implemented a state-wide school report card system between 1999and 2002 aimed at increasing awareness about school quality and raising parents' voice onschool matters. While the program was never rigorously evaluated, anecdotal evidence suggeststhat parents were more engaged with school issues and it served to raise parents views andopinions in policy debates on education. 3 3

32 USAID (2010). EGRA Plus: Liberia Program Evaluation Report.Bruns, B., D. Filmer, et al. (2011). Making schools work: new evidence on accountability reforms. Washington

D.C., The World Bank.

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21. Small scale pilots and experiments in more recent times have shown that report cards canimprove learning outcomes particularly when they are accompanied by other interventions. 3 4 InPakistan, a randomized controlled trial that provided school and student level report cards inaround half of 112 villages found a small but significant impact on learning. Other studies havesuggested that the impact of providing information is partly influenced on how this informationis produced and utilized. In one randomized experiment in Uganda, local school committeeparticipation in the development of the school report cards improved learning outcomes whereasless participatory methods had little impact. In the Liberia early grade reading pilot, discussedearlier, improvements in early grade reading outcomes were only realized when reporting ofassessment results was accompanied by training of teachers in improving instructional methods.

22. Building on the lessons from the implementation of school report cards, DepEd isplanning to improve school report cards and strengthen parental participation in school planningand assessment processes. Over recent years, and through the former NPSBE project, significantprogress was made in institutionalizing and strengthening community participation in schoolaffairs. While a school report card was also introduced it was found to have significantweaknesses. The development of a new school report card will be supported under thiscomponent and will utilize the early grade reading assessments and further support qualityimprovement at the school level.

23. The component also seeks to support the development of the monitoring system that willbe used to monitor the implementation of the Government's Performance-Based Bonus (PBB)initiative. The performance-based incentive system covers all government employees, includingteachers, and sets performance indicators for each level of the administration as well as schools.

24. Recent evidence suggests that performance based incentive schemes have the potential toraise education outcomes (McEwan 2013). In Kenya, for example, a randomized controlled trialof a performance based teacher bonus scheme improved average student participation andperformance in national examinations. Evidence from the OECD PISA international assessmentsalso shows that performance based pay for teachers tends to have a large positive impact onstudent learning where teacher pay is low relative to other workers.

25. The success of performance based bonus schemes partly rests on the appropriateness ofthe indicators used to measure performance. Incentive schemes can sometimes lead to a focusonly on those aspects of performance that are measured. For example, in the Kenya experimentperformance only improved in the areas that performance pay was directly linked to. Othermeasures of student performance including drop-out rates and performance on a broaderassessment of learning were largely unchanged. While improvements in other subject areas mayhave also been beneficial to students, their exclusion from the indicators used for the incentivescheme meant that they were not targeted for improvement by schools and teachers.

34 McEwan, P. (2013). Improving Learning in Primary Schools of Developing Countries: A Meta-Analysis ofRandomized Experiments.

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26. It is also important that administrators, schools and teachers have the ability to influencethe indicators chosen to assess performance. Learning outcomes are affected by many factorsoutside the control of the education system. It is necessary that these outside factors areaccounted for in the indicators used to assess and compare performance between schools andteachers. It is also vital that systems are in place to accurately monitor these performanceindicators. The component's support to the development of a monitoring system for theperformance incentive scheme is therefore a crucial component in ensuring better early gradelearning outcomes.

Component 3: Improvement ofprogram design for targeting disadvantaged groups ($36.5million)

27. A key objective of the project is to improve learning for disadvantaged groups. In orderto successfully support children from marginalized groups an accurate and up-to-dateinformation system on their progression through the education system is crucial. This will allowprograms and policies to be developed to tackle the education challenges faced by these groups.The component will support efforts by DepEd in this important area and feed into the programreviews that are also being planned.

28. Improving programs designed to target disadvantaged groups can also support efforts toimprove early grade reading and mathematics achievement. DepEd has a number of ongoingprograms designed to improve levels of access and learning for disadvantaged groups. Forexample, the Alternative Learning System (ALS) aims to provide learning opportunities forchildren and adults that are not well served by the formal education system. However, it is hardto judge the effectiveness of these programs because they have not been evaluated recently. Theinclusion of a series of program reviews under this component is aimed at providing thenecessary information and analysis to raise their effectiveness.

IV. Cost-Benefit Analysis

29. The main economic benefits of increases in early grade learning achievement are likely toarise from improvements in future labor market outcomes of project beneficiaries. Previoussections have shown that improvements in early grade learning are likely to increase the numberof years that children stay in school as well as increasing the skills that they leave school with.These increases in schooling and skill acquisition will have significant payoffs in the labormarket both in terms of an increased likelihood of employment as well as better rates of pay.Unfortunately no estimates exist for the Philippines on the size of these effects. Two approachesare adopted to provide some ball-park estimates of the labor market benefits of improving earlygrade reading:

a. Utilizing recent estimates of the returns to schooling in the Philippines. TheWorld Bank's skills report for the Philippines estimated that in 2006 returns to anadditional year of education ranged from 6% at the primary level to approximately18% at the tertiary level. In order to estimate the benefits of the componentssupported by the project it is also necessary to know the impact of improved early

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grade reading on the number of years a child remains in education. In the absence ofestimates of this kind, it is assumed that improvements in early grade learning lead toan increase of 0.5 - 2 years in the time children spend at school.

b. Using international evidence of the returns to improved learning achievement inthe early grades. Recent analysis using the British Cohort Study estimated that a onestandard deviation increase in reading and mathematics test scores at age 7 and 10were associated with increases in the gross hourly wage of between 7% and 15%. Theoverall effect of the project investments on early grade achievement is not known buteffect sizes from other studies suggest that they could be quite large. For the purposesof estimating benefits it is assumed that the project gives rise to improvements inearly grade test scores of between 0.5 and 1 standard deviation.

Table 7: Estimated Project Benefits

Increased no. of Return to 1 Unemployment Net presentyears of year of rate value of benefit

schooling/ schooling/ stream (US$increase in early improved early million)

grade reading grade readingachievement (s.d) achievement

Benefits using increase in schoolingLow 0.5 6% 10% 531Middle 1.0 8% 10% 1,417High 2.0 10% 10% 3,543Benefits using effects of increased early grade achievementLow 0.25 8% 10% 354Middle 0.50 10% 10% 886High 1.00 15% 10% 2,657Note: The number of project beneficiaries is assumed to include all grade 1 students in targeted regions over the fiveyears of the project (2014-2018). In 2011/12 there were 640,000 students in Grade 1 in disadvantaged regions. In2006, the overall unemployment rate was 6% but for the purposes of providing realistic estimates of project benefitswe assume that 10% of beneficiaries are unemployed. Benefits are assumed to start 10 years after children have firstenrolled in elementary school. Net present value of benefit stream is based on looking at benefits over 25 years. Inthe first 10 years it is assumed there are no benefits because children who benefit are still in school. A discount rateof 6% is assumed to calculate the net present value of the benefit stream.

30. While it is not possible to provide a precise and comprehensive account of project costsand benefits, a more limited analysis suggests a substantial return to project investments. Table 1outlines a number of scenarios for project benefits based on the approaches outlined previously.Even relatively modest assumptions on the benefits associated with improvements in early gradereading show large economic returns. The middle case scenarios suggest that the benefits of theproject in the 5 targeted regions could be in the region of US$ 900-1,400 million. Given the netpresent value of project costs (US$ 268 million) the project is likely to realize significant

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positive economic returns. While these estimates are only suggestive they point to an economicrate of return of between 8% and 27%.35

31. These estimates of the economic rate of return to the project provide only a partial pictureof the returns to improving early grade learning achievement. The estimates are limited on anumber of fronts which include:

a. Estimates are not based on information of the actual benefits of raising early learningachievement in the Philippines.

b. Estimates of the rates of return to education in the labor market are based on averagereturns despite significant differences in returns by gender, education level and schoolownership (e.g. public or private).

c. Other aspects of the program of reforms supported by the project have not beenincluded in the cost benefit analysis (e.g. school report cards, program reviews,improved financial management etc.).

d. No account is taken of the social benefits associated with education investments ofthis kind.

e. In some cases, historical information on the returns to education in the Philippines isused to estimate project benefits. It is not clear that past returns will be a goodreflection of future education returns.

f. No actual estimates of the costs of introducing the project components have beenused to estimate net benefits and overall economic rates of return.

32. Despite these limitations, the analysis uses the best available information and suggeststhat the benefits of the reforms supported by the project are substantial and exceed the costs ofthe reform program.

V. Financial sustainability

33. The project and the support provided to early grade reading achievement is likely to besustainable because it will not absorb a significant part of the education budget. The componentsused to support improvements in early grade reading achievement represent approximately 5% ofthe overall government education budget. This suggests that investments of this kind do notplace a significant burden on the education budget. Moreover, some of the investments supportedby the project will last for a considerable amount of time (e.g. development of linguistic mapsand reading and mathematics assessments). For example, linguistic maps are likely to be relevantfor a number of years and will not require updating on an annual basis.

35 The estimates are based on the 5 targeted regions and the overall loan amount. Given that the reforms supportedby the project are country wide it is also worthwhile looking at the benefits and costs of the program across thePhilippines. Based on Table 1 assumptions but estimating benefits for all grade 1 students, the NPV of the benefitsrange from US$ 1.57 billion to 15.7 billion. The NPV of costs are estimated at approximately US$ 1.56 billion if itis assumed that budgeted spending on all eligible expenditure components (i.e. maintenance and operating expenses,human resource training and development, in-service training, alternative delivery mode and the alternative learningsystem) are devoted to the early grade reading program. This suggests significant positive economic returns.

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