Document of The World Bank Report No: 25571 PROJECT APPRAISAL DOCUMENT ONA PROPOSED IDA GRANT IN THE AMOUNT OF SDR 3.3 MILLION (US$ 4.5 MILLION EQUIVALENT) TO KOSOVO, SERBIA AND MONTENEGRO FOR 'EDUCATION PARTICIPATION IMPROVEMENT PROJECT April 14, 2003 Human Development Sector Unit Europe and Central Asia Region CURRENCY EQUIVALENTS (Exchange Rate Effective April 10, 2003) Currency Unit = EURO EURO 1.067 = US$1.00 US$1 = EURO 1.067 FISCAL YEAR January I -- December 31 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy CDF Community Development Fund CFAA Country Financial Accountability Assessment CPE Central Procurement Entity CQ Consultant Qualification DC Direct Contracting ECA Europe and Central Asia EMIS Education Management Information System EPIP Education Participation Improvement Project FMR Financial Management Reporting GDP Gross Domestic Product GFMIS Government Financial Management Information System GPN General Procurement Notice IBRD International Bank for Reconstruction and Development IC Individual Consultant ICB International Competitive Bidding IDA International Development Association IFAC International Federation of Accountants IS International Shopping ISA International Standards on Auditing KEC Kosovo Education Center KCB Kosovo Consolidated Budget KFOS Kosovo Open Society Foundation LCS Least Cost Selection LSMS Living Standard Measurement Survey MDG Millenium Development Goal MED Municipal Education Director MEST Ministry of Education, Science and Technology MFE Ministry of Finance and Economy MSGT Municipal School Grant Team NCB National Competitive Bidding NGO Non-Governmental Organization PAD Project Appraisal Document PIO Principal International Officer PISG Provisional Institutions of Self-Government PMU Project Management Unit POM Project Operating Manual cont...... QAG Quality Assurance Group REO Regional Education Officer SA Special Account SDP School Development Plans SGAB School Grants Approval Board SDG School Development Grants SOE Statement of Expenditures SRSG Special Representative of the Secretary-General SS Sole Source STA Single Treasury Account UNICEF United Nations International Children's Emergency Fund UNMIK United Nations Interim Administration Mission in Kosovo Vice President: Johannes F. Linn Sector Director: Annette Dixon Sector Manager: Maureen McLaughlin Task Team Leader/Task Manager: Peter Darvas KOSOVO EDUCATION PARTICIPATION IMPROVEMENT PROJECT CONTENTS A. Project Development Objective Page 1. Project development objective 2 2. Key performance indicators 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2 2. Main sector issues and Government strategy 2 3. Sector issues to be addressed by the project and strategic choices 6 C. Project Description Summary 1. Project components 8 2. Key policy and institutional reforms supported by the project 9 3. Benefits and target population 10 4. Institutional and implementation arrangements 10 D. Project Rationale 1. Project alternatives considered and reasons for rejection 11 2. Major related projects financed by the Bank and/or other development agencies 13 3. Lessons learned and reflected in the project design 14 4. Indications of recipient commitment and ownership 14 5. Value added of Bank support in this project 14 E. Summary Project Analysis 1. Economic 14 2. Financial 15 3. Technical 16 4. Institutional 16 5. Environmental 18 6. Social 18 7. Safeguard Policies 19 F. Sustainability and Risks 1. Sustainability 20 2. Critical risks 20 3. Possible controversial aspects 21 G. Main Grant Conditions 1. Effectiveness Condition 21 2. Other 21 H. Readiness for Implementation 22 I. Compliance with Bank Policies 22 Annexes Annex 1: Project Design Summary 23 Annex 2: Detailed Project Description 25 Annex 3: Estimated Project Costs 41 Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 42 Annex 5: Financial Summary for Revenue-Earning Project Entities, or Financial Summary 50 Annex 6: (A) Procurement Arrangements 51 (B) Financial Management and Disbursement Arrangements 61 Annex 7: Project Processing Schedule 66 Annex 8: Documents in the Project File 67 Annex 9: Statement of Loans and Credits 68 Annex 10: Country at a Glance 70 MAP(S) IBRD 30432R KOSOVO Education Participation Improvement Project Project Appraisal Document Europe and Central Asia Region ECSHD Date: April 14, 2003 Team Leader: Peter Darvas Sector Manager/Director: Maureen McLaughlin Sector(s): General education sector (100%) Country Director: Orsalia Kalantzopoulos Theme(s): Education for all (P) Project ID: P079260 Lending Instrument: Specific Investment Loan (SIL) tProjet'Financing Data - - ] Loan [ ] Credit [XI Grant [ ]Guarantee [ ] Other: For Loans/Credits/Others: Amount (US$m): 4.5 mianding Plan-(US$m)..:- -~ 7 r .-Lbcal-. Foregn- aTotil. BORROWER/RECIPIENT 0.00 0.10 0.10 IDA GRANT FOR POST-CONFLICT 0.00 4.50 4.50 Total: 0.00 4.60 4.60 Borrower/Recipient: UNMIK Responsible agency: MINISTRY OF EDUCATION Ministry of Education, Science & Technology Address: Mother Tereza Street, Eximkos Building, Room 802 or Student Center, Room 314 Prishtina, Kosovo Contact Person: Avni Sahiti Tel: 00 381 38 244 974 Fax: 00 381 38 244 975 Email: Asahiti-Wb@hotmail.Com Estimated Disbursements ( Bank FY/US$m): FY --004 6 . j 1- - -. --*2 016 - ' ' - Annual 1.16 1.68 1.66 Cumulative 1.16 2.84 4.50 Project implementation period: 2003-2006 Expected effectiveness date: 07/01/2003 Expected closing date: 12/31/2006 A. Project Development Objective 1. Project development objective: (see Annex 1) The objective of the proposed Project is to improve educational attainment at primary and secondary education levels and to enhance access of vulnerable groups to education. 2. Key performance indicators: (see Annex 1) o Reduction of dropout rate in the targeted schools; o Improvement in the survival rate between grades and completion rate at primary level (currently nine years) in the targeted schools; o Improved attendance rate in the targeted schools at primary level; o Improved net and gross enrollment rates to primary education in targeted non-Serb and non-Albanian communities; and o Higher level transition to and attainment at secondary level especially by girls in the targeted communities. B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: No. 24275 - KOS Date of latest CAS discussion: July 25, 2002 The Transitional Support Strategy emphasizes the importance of increasing enrollment rates in primary and secondary education, and enhancing access of girls and vulnerable groups to education. The proposed Education Participation Improvement Project (US$ 4.5 million) operationalizes the Transitional Support Strategy with the explicit objective of improving access and attainment levels. 2. Main sector issues and Government strategy: In Kosovo, prior to the 1998-1999 conflicts, around 90 percent of the total population of 1.8 to 2.1 million people (the last census was carried out in 1991) were Albanians. During the 1990s, this section of the population had no official education services in the Albanian language. From 1989, the official language of the formal education system was Serbian. The Albanians were forced to resort to an unofficial education system at the primary, secondary and tertiary levels. The unofficial system was in parallel to the official system, and became known as the "parallel system." Running a parallel system based on informal financing and makeshift physical arrangements showed that students, teachers and the whole Albanian ethnic community are strongly committed to education. During the period of intensified conflict education provision was severely curtailed in the affected areas. During the NATO Campaign, education services were by and large suspended. Following the conflict, some 100,000 Kosovo Serbs left the province. The intemational community was left to rebuild the public sector, including education. In 2001, elections were held for Kosovo province. An Assembly was created, and new Provisional Institutions of Self-Govermment (PISG) of Kosovo were established. The new authority had a mandate, together with the international community, to establish its own public administration and run its public services. In its effort to rebuild education, the newly established provisional government in Kosovo and intemational authorities face a number of challenges including rebuilding a system of education administration and finance, ensuring education for all children, reforming curriculum, and rebuilding education infrastructure. The World Bank has been heavily involved over the past three years in helping the United Nations Intenm Administration Mission in Kosovo (UNMIK), and Kosovar authonties to - 2 - establish a new education governance and financing system. Efforts have been directed towards decentralizing authority and funding to Kosovo's 30 municipalities. Recently, the Bank has also assisted international and Kosovar authorities to begin defining sector priorities and a medium-term strategy, by preparing a medium term expenditure study that makes recommendations for improving effectiveness and efficiency, and ensuing fiscal sustainability in the education system (reports are available upon request). A sumniary of key sector issues relevant to the project is provided below. Education Administration Education administration, like the rest of public administration, is in transition. As of September 2002, responsibility for provision of education has been transferred to the PISG Ministry of Education, Science and Technology (MEST), with UNMIK officials playing a supportive, capacity-building role. The education governance and funding system created by UNMvIIK with World Bank support provides the framework for the devolution of about 80 percent of the education resources to municipalities on the basis of a per student funding formula. Local authorities are responsible for budgeting, expenditure control, and personnel management for teachers, school directors, and non-teaching staff, while the MEST focuses on monitoring performance and targeted development programs. In 2002, under the Ministry sponsorship, a Handbook on Municipal Education Governance and a Kosovo School Funding Handbook were issued, describing the role of the different level of administration agencies and the procedures of formula-based financing. International donors need to continue building adequate legal and institutional planning, monitoring and management capacities at central and local levels, the objective being to help focus on effective service delivery, education quality, the efficient use of public resources, as well as to promote equity in access and attainment. Education Expenditures Government spending on education was 3.7 percent of the per capita GDP in 2001, one of the lowest in the Central and Eastern European region. Education is clearly under-funded considenng that the student age share of the population is the highest in Europe. In'EU, average spending is about 5.3 percent of the per capita GDP. In Kosovo's consolidated recurrent budget education is by far the largest category at 19.8 percent of the total. Personnel expenditure accounts f'or about 70 percent of the budget. The Kosovo Poverty Assessment of 2001 shows that public expenditures are regressive given the strong correlation between poverty and utilization of education services particularly at secondary level. By and large, efficiency indicators are comparable to European averages with a 19:1 pupil-teacher ratio at both primary and secondary levels, and with minimal administrative overhead in 2001 (more on public expenditures in Annex 4). While on average public unit costs for primary school education were around 120EUROs, household expenditures (including out-of-pocket contributions, travel, clothing, etc.) were almost the same level at nearly lOOEUROs. For secondary education public unit costs were 140EUROs whereas household expenditures were as much as 200EUROs per student. Although the per capita funding introduced this year may help to alleviate inequities in funding, the government should consider providing some funding to compensate-for some of the expenses especially for the poorest households, or find alternatives to provide targeted support for them. -3 - Literacy, Educational Enrollment, Attainment and Completion The lack of access to formal education during the 1990s resulted in an increase in illiteracy (15 to 22 percent) among the 16 to 25 year olds. Given the present high level of enrollment in primary education, illiteracy is expected to drop down to below 5 percent. Also, during the 1990s, average educational attainment (number of years in school completed) fell significantly for the non-Serb population. Inequalities in educational attainment still persist between ethnic groups, by gender, by poverty and by the urban-rural divide. Although official information is lacking, the Poverty Assessment of 2001--based on a household survey carried out during the 1999/2000 academic year--indicated that there are gaps both in access, in completion and in attainment at primary and secondary education. Aggregate data show relatively high levels of enrollment in primary education, although if disaggregated, there are differences among ethnic groups with respect to attendance and completion. At the primary level, gross enrollment during the 1999/2000 school year was 97 percent. It is likely that many over-aged children were then enrolled as they missed many years of education during the 1 990s. If this is the case, it also means that children who are supposed to be enrolled now are not in the school system (a rapid social assessment based on an empirical survey and secondary analysis of the LSMS data has been finalized). The Living Standard Measurement Survey (LSMS) showed significant problems with completion of primary education, one of the comerstones for achieving the Millennium Development Goals (MDG) and to establish basic human capital if the province is to succeed in becoming competitive in the medium term. The survey showed that as many as I I percent of children age 14 are not in school, meaning that is highly unlikely that these children will ever complete primary education. Among girls, close to 10 percent of the 13 year olds and 17 percent of the 14 year olds are not in school. The LSMS data also provides information on completion and confirms that a large portion of different age cohorts do not complete eight years of primary education: Table M. Primary Education Completion by age cohort by gender and geographical location completion of 8 years or higher for different age groups age groups all boys girls rural urban rural boys rural girls 15 82.91 85.67 80.06 83.08 82.57 83.05 83.12 16 87.42 94.1 81.18 87.19 87.82 96.66 78.53 17 89.53 89.34 89.69 89.24 90.07 89.51 88.97 18 91.88 94.01 89.66 90.57 93.91 94.14 86.58 19 89.4 94.17 84.31 88.2 91.73 95.21 80.09 Source: Kosovo Living Standards Measurement Survey (LSMS). As the data shows, roughly 10 to 12 percent of the different age groups from age 16 do not complete primary education and this average is about 2 to 10 percent worse for those living in rural areas and for girls. For rural girls, the completion rate typically does not reach 90 percent. Among those who are out of school, 29 percent suggested it was too expensive, 20 percent found little interest in school, and 17 percent referred in 1999 to safety reasons. However, the issue of safety was significant largely among those living in urban areas. This also coincides with the children coming from extreme poverty. These are also predominantly Roma children. Among the poor, the most critical reasons are the out-of-pocket costs, the lack of interest and the need to participate in agricultural labor. It -4 - is also noteworthy that while out-of-pocket payment is the dominant reason among boys, among girls the most important reasons for not being in school were the lack of interest and security issues. The lowering of the minimum entry age from seven to six years was implemented from academic year 2001. To add to the challenge, as of September 2002, compulsory primary education has been extended to nine years (instead of the previous eight years). As a result, secondary education has been reduced by one year. The introduction of nine years of compulsory primary level schooling was carried out without adequate planning of the physical and human capacities necessary, and without adequate curriculum planning (including textbooks, training, etc.). In some parts of Kosovo, the ninth grade schooling is being provided in designated secondary schools and, especially in rural areas, a significant portion of the students do not have access to it, given the relatively large distance from secondary schools. At secondary level, the overall enrollment rate is low and there are significant gaps in enrollment among girls, children from rural areas, children from poor families as well as children from some ethnic groups. Gross enrollment data reveal enrollment rates of 74 percent of Albanian boys as opposed to 56 percent of Albanian girls; 78 percent of children from urban areas as opposed to 59 percent from rural communities; and 36 (rural) percent to 62 (urban) percent of those coming from the lowest expenditure decile as opposed to 76 (rural) percent to 89 (urban) percent of those coming from the highest expenditure decile. Key factors are transition from primary to secondary education, choice of secondary education tracks and successful completion of secondary programs. The key reasons include: high out-of-pocket payments (as discussed earlier), security problems and distance to school, plus the lack of incentives and sufficient attention to local level issues relating to enrollment, attendance and completion. Educational content, curriculum, teaching and learning standards So far, neither the Government nor the lead donor agencies have worked on quality standards in terms of the content, the output and outcomes of public education. The first steps have been made by the lead donor agencies which have been assigned responsibility for various inputs and levels of education, including: UNICEF for curriculum development and pre-school education, the Government of Canada for teacher development, the German Government for secondary technical/vocational, the Finnish Government for special education, and the World Bank for assessments and management. In this context, the Canadian Government has worked with the Government to define quality performance standards for teachers. The German support via GTZ helped define new structure for vocational education. The Finnish Government helped define quality objectives for special education. The World Bank's support for the Standards and Assessment Unit is expected to establish the basic capacities for testing and quality assessments. For a complete list of donor agencies and areas of support, please refer to Section D, sub-section 2. Reforms have progressed especially in teacher training and in curriculum matters for early primary grades, thanks to support from the Canadian Government, the Soros Foundation, and UNICEF. Meanwhile, reform of secondary education has not been started. Enrollment at secondary level is one of the lowest in Europe. Curriculum is teacher-centered. Supplies of materials, equipment and training are severely limited. Vocational programs are targeted towards narrow specializations. Vocational secondary education is not aimed at broad competencies, those that give young people the types of flexible skills that will be needed in Kosovo's dynamic, informal job market. - 5 - School Infrastructure and Rehabilitation As in most countries in the Balkans, many schools are organized into clusters under one administration with one central school providing education for eight grades linked to satellite schools providing education for the first four grades. In many areas, the recently introduced ninth grade classes at primary level are being provided in separate institutions. Of the 961 registered schools in 2001, 554 were central schools. At secondary level, out of the 147 schools, 10 were central schools. Primary schools had about 322 pupils on average whereas secondary schools had about 638 pupils. Reports indicate significant deterioration prior to the conflict and destruction of school infrastructure during the conflict. Between 1999-2001, about one fourth of the schools were rehabilitated with donor assistance, including the Japanese and Swiss Governments, as well as by the Islamic Development Bank. However, donor funding has declined over the last two years and is expected to further decline in the near future. Meanwhile, the fast growing student population and the status quo of the education infrastructure suggest that in the near future, Kosovo will have increasingly overcrowded schools. 3. Sector issues to be addressed by the project and strategic choices: The objective of the proposed Project is to improve educational attainment at primary and secondary education levels and to enhance access of vulnerable groups to education. With the youngest population and the highest birthrate in Europe, it is critical that the future labor force in Kosovo is adequately educated, and that individuals and groups have social mobility and opportunity to avoid poverty. The growth in student-age population requires special attention at all levels to the challenge of full enrollment and full completion of primary education. Schools are becoming overcrowded in urban areas and in some rural areas. At the state level, more government spending is needed for education as the low level Government financing will not sustain the system for a country with a high proportion of school-age children. The extension of primary/compulsory education to nine years further increases the challenge. The recently introduced capitation formula helps allocate the public resources to the municipalities where the student population is the largest. However, further training in the use of the guidelines is needed so that municipalities allocate resources to schools in line with demand. At the community and school level, adequate information needs to be collected about who is in and out of school. Many children do not attend primary education at all or attend for just a few years. This is especially the case for children from small ethnic groups, from rural areas (especially girls), and from poor communities. Not coincidentally, schools are most overcrowded in the same communities and schools have difficulties coping with demand. Many classrooms are small, under-equipped, textbooks are not available, and teachers are unable to cope with the large number of children. Children and families will not be motivated to enroll or to attend school if: (a) getting to school or staying in school are difficult or is considered unsafe; (b) they have no interest in education; and (c) it incurs expenses that families cannot afford (clothes, extra meals, school materials, etc.). The 2001 Poverty Assessment showed that some of the key factors affecting enrollment and attendance are significant out-of-pocket payments, lack of interest in education, safety concerns and distance to school especially in secondary education and especially for girls and among minorities. Of those, five to 14 year olds who were not enrolled in 1999-2000 (when the security situation was difficult), 28.75 percent quoted (c) 20.72 percent quoted (b) and 20.95 percent quoted (a), while some 10 percent of the children of this age group reported their education to be completed. Meanwhile, surprisingly, among the extremely poor and for those living in urban areas, the main concern was safety (42 percent and 49 -6 - percent respectively). For those living in rural areas, the dominant reasons are expenses and lack of interest. Among girls, lack of interest dominated whereas among boys, expenses were the main constraint. There are also indications that the most risky periods are transition from 8th to 9th grades and from primary to secondary education. There are indications that these transitions are especially challenging for specific groups, especially for girls and for those living in rural areas. Some data also show that the situation is not improving and for some groups it is actually worsening. These trends suggest that improvement in the quality of learning and effectiveness of schooling could have a positive impact on the completion rate for primary education and on these transitions. At secondary level, there are problems with demand for schooling. Children from non-Serb ethnic minority groups are not continuing their education because of low quality primary education, and consequent inadequacy in basic literacy and numeracy skills. These gaps have resulted in significant differences in education attainment. There are also indications of further declines at least for some minority groups (mainly Roma, Turks, Bosnians and other non-Serb Slavs). Some of these issues are difficult to address through an education investment project. Also, the amount planned for the proposed Project does not allow for significant improvement of physical access (i.e., building roads and schools), although schools could take some steps to facilitate travel arrangements, expand classrooms, or to improve school safety. Given the level of IDA financing (US$ 4.5 mllion) available for investment, a decision has been made to design a highly focused project, which will target only the access issue and will not directly target quality improvement. While the proposed Project interventions--school level planning and the implementation of small school-based projects-could be expected to have a positive impact on education quality and relevance, as well as on community participation in the education process, these outcomes will be defined for purposes of this project as incentives to increase participation in the education system. The success or failure of this highly focused project will be measured on the basis of increased enrollments, attendance and completion of grades and educational levels. It is important that both supply and demand challenges are addressed by appropriate service delivery. Schools and school/municipality partnerships are best positioned to monitor problems related to demand, i.e., dropouts, those not enrolled, those that do not attend or have consistently low performance levels, and to assess why some children or families are more pre-disposed to doing so than others. If demand could be improved by facilitating travel or safety arrangements, these may also be best addressed locally. The proposed Project is largely designed on the recognition that, in addition to the underlying social challenges, improving the quality and relevance of educational services is also essential to increasing enrollments. Particularly at the secondary level, programs need to be more attractive and flexible to meet local need. At all levels, teaching methods could be improved, some materials, equipment provided, and extra services (for instance for parents) introduced to make education more attractive, and some minor improvements in the infrastructure may be initiated (i.e., to improve hygiene or make classrooms better suited for education, etc.) where these factors are identified as problems affecting access or attendance. School-based initiatives are likely to be the best way to assure that improvements in access and attainment are sustainable in the medium term so that school management, school boards and municipalities learn how to track children, and how to connect effectiveness (measured for instance - 7 - by number of dropouts, numbers attending school) with measures to improve services. Strengthening the recently established decentralized institutional framework and defining adequate mandates for schools and municipalities are, therefore, key for sustainability. Since the Education and Health Project (approved in 2000) helped to decentralize education financing and administration, the proposed Project will continue the process by addressing the above challenges locally. Financial incentives to schools will be provided using a school grant scheme. It is expected that these incentives would motivate school management to engage in activities that help improve access and attainment. In order to achieve this, the proposed Project needs to help strengthen local planning and management capacities, strengthen the role of school boards, and the participation of municipalities. While the primary goal remains the improvement of attainment and access, implementation and sustainability will require improved local planning, management and participation. Maintaining adequate records of trends influencing attainment and access - including enrollment, attendance, year-end and school-end completion, require improved education management information system (EMIS) as part of a sustained effort to monitor and evaluate indicators. Reinforcing the sustainability of the EMIS established in the context of the ongoing Education and Health Project is also a priority. C. Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): (a) School Development Grants (SDG): The objective of the SDG component is to provide funding to schools to help increase enrollment, attendance, and retention in primary and secondary education. Through the SDG process, approximately US$ 3.4 million in grant finding will be awarded in targeted small grant contracts to approximately 50 percent of the 550 primary schools and 110 secondary schools in Kosovo's 30 municipalities. Primary schools will be eligible for grants up to US$10,000 and secondary schools will be eligible for grants up to US$ 15,000. The grants will be awarded on the basis of school development plans and grant proposals, which will be evaluated by Municipal School Grant Teams (MSGTs) and approved by a central School Grants Approval Board (SGAB). All schools selected for the program will receive technical assistance and training in the areas of school development planning and proposal writing. Schools will be selected for the program by municipal education officials on the basis of documented access and retention problems in the school's catchment area. Selection criteria will focus largely on enrollment, drop out, and attendance statistics. Grant proposals, prepared by the selected schools, will be evaluated by the MEST on the basis of how effectively they address access and retention problems. The grants will finance training, community outreach activities, educational materials and school supplies, and some small works aimed at improving security and the educational environment. Random special purpose audit of the school grants will be carried on a yearly basis to ensure that the school grants are being used for the purposes intended. (b) Improving the Education Management Information System: The objective of this component is to help strengthen and ensure the sustainability of the EMIS, which was designed and initiated under the ongoing Education and Health Project. More specifically, the EMIS will help monitor enrollment, attendance, repetition, dropout and completion, as well as try to account for children in the targeted municipalities, who are not participating in the school system. The proposed Project will finance local and intemational technical assistance, extemal training, and limited equipment and furniture of central level and municipal offices. -8 - (c) Project management: The objective of this component is the effective implementation, monitonng and evaluation of the proposed Project. The implementing agency for the Project is the Ministry for Education, Science and Technology (MEST). A small team of professional staff will form a Project Management Unit (PMU) for the implementation of the proposed Project. The PMU will be headed by a national Project Director who has been hired under the ongoing project as Deputy Director. He is receiving on-the-job training from an international Project Director of the education component of the Education and Health Project. The national Project Director recruited for the proposed Project has a background and experience in financial management. Most of the staff have already been contracted under the ongoing Education and Health Project and were involved in the preparation of the proposed Project. Perfornance of the local professional staff has been satisfactory to date and the team for implementation of the proposed Project will be maintained to ensure continuity and preserve the skills and knowledge gained under the ongoing project. The PMU will also be responsible for monitoring and evaluation of results under the school development grants component. The component would finance technical assistance, limited computer and office equipment, and training of staff. During negotiations it was agreed that UNMIK/MEST will ensure that the PMU is maintained under terms of reference satisfactory to IDA and is provided with adequate resources, staff and facilities. The PMU will have responsibility for day-to-day Project management and supervision, and will report to the Permanent Secretary, MEST and the Principal International Officer within MEST of UNMIK. ,,; - -.--. -. ...,.-=.-- r -*... ,.- - !- E l ndicative. ~ --- . ;" .E-- Component,,. .h pnB,> 'nk- , Costs --_- * . Inad pi =- - _ -. .f, if, i - .. (US$M) Total,' 'qUSM .financing: 1. School Planning and School Development Grants 3.79 82.4 3.70 82.2 2. Education Management Information System 0.30 6.5 0.29 6.4 3. Project Management 0.51 11.1 0.51 11.3 Total Project Costs 4.60 100.0 4.50 100.0 Total Financing Required 4.60 100.0 4.50 100.0 2. Key policy and institutional reforms supported by the project: The proposed Project will target the following policy issues (i) Improving equity in terms of access, retention and completion: The primary goals of the school development grants are to attract students whc are not enrolled to school, create incentives for schools to reduce the incidence of non-attendance and dropouts, and to increase primary completion at 9th grade and secondary completion. (ii) Strengthening school level education planning: School management and school boards will be trained to develop school development plans. These plans will be pre-requisites for schools to participate in the school grant process. (iii) Improving the effectiveness of schools to maximize enrollment, attendance, survival-rate and completion: Grants will support school-based initiatives to improve learning conditions, school effectiveness and the quality of teaching and learning, and, especially at secondary level, the relevance of education. (iv) Strengthening central and local government capacity: The education management information system will be strengthened to track student flows, school attendance, completion of classes and grades, monitor the outcomes of the system, enrollment, attainment and monitor the school grant -9- process as well as school based initiatives will set models for the central government to design and implement targeted interventions. In addition, the school grant scheme could be sustained either to continue improving access and attainment but also to target directly quality improvements in the system. 3. Benefits and target population: o Through the improvement of access and attainment, the project will primarily benefit the poorest, those who live in rural areas, girls, and non-Albanian, non-Serb minorities, who, in general, have had more limited access and lower attainment; o Through the improvement of effectiveness, quality and relevance, the whole student population in the selected schools will benefit; and o Through the improved planning, management and strengthened participation, local stakeholders will benefit from the project. 4. Institutional and implementation arrangements: The project implementation arrangements established under the Education and Health Project will continue under the Education Participation Improvement Project. The PMU will comprise a Project Director/Financial manager, Procurement Specialist, and an Accountant. The PMU Director, satisfactory to IDA, has been selected, and has been hired as Deputy Director of the ongoing Education and Health Project, on the understanding reached with IDA that he will be appointed as PMU Director immediately following Grant effectiveness. It is planned that an Education Specialist/Deputy Director, Accountant/Financial Management Specialist and a Procurement assistant will be selected once the project is effective. Project financial management will be handled by an international financial manager who was hired under an on going Education and Health Project with primary responsibility to monitor and prepare project management reports for all bank projects and who is located in the MFE. The MFE will be responsible for the financial management and reporting requirements of the project. The MFE has in place a financial management system that is capable of producing Project Management Reports as required by IDA. This system has been utilized for other IDA-financed projects. As part of its responsibilities, the MFE will open and maintain the project's Special Account in a commercial bank acceptable to IDA as it has done for several other IDA projects. All payments will be made by the MFE. The PMU established at the MEST will prepare all the relevant documents and obtain the required clearances and coordinate very closely with the MFE. The PMU will be responsible for implementation functions such as procurement, progress reports, annual work programs and budgets and monitoring of implementation of the School Grants. Relations between the MFE and the MEST have been exemplary under the ongoing project. Retroactive Financing. Retroactive financing under the EPIP, to a maximum amount of US$ 60,000 for school grants under the Education and Health Project, will be made to the MFE in accordance with IDA policy. During negotiations, MEST adopted an Operating Manual (dated March 31, 2003) that is satisfactory to IDA. The POM will facilitate project management and implementation. The Operating Manual contains:. (i) detailed project objectives and components description; (ii) key implementation issues and strategies; (iii) summary of procedures for monitoring project implementation; (iv) methods of procurement to be followed as per Procurement Schedule in the Grant Agreement; and (v) a Procurement Handbook (as a separate volume), including detailed procedures and forms to be used for procurement under the Schools Grants component. UNMIK/MEST/PMU shall not make changes to the POM without - 10 - written no objection approval from IDA. The PMU will organize training for all municipalities participating in the project to ensure understanding of the procedures specified in the POM. (a) School Development Grants The school grant process will position the schools and the local communities in the center of the implementation process. Schools will engage in development planning and development of grant proposals, which target improvements in access, attendance and completion. School management and the school boards in the selected schools will be expected to take a key role in defining the school development plans. These plans will define benchmarks in terms of student numbers, retention, completion, performance and use of resources to achieve these benchmarks. The selection will be done in consultation with municipal authorities (more details are provided in Annex 2). Under the ongoing Education and Health Project a pilot of the school grants process is currently being carmed out. The ongoing Education and Health Project finances a small contract with a local NGO, the Kosovo Education Center (KEC), to provide training to schools and facilitate preparation of the grant proposals and school development plans. An agreement has been reached between the Kosovo Open Society Foundation (KFOS) and the Bank during appraisal on joint financing of the contract with KEC for the school grant component. A total budget for technical assistance and outreach services is estimnated at about US$ 290,000. It is planned that KFOS will provide about US$ 100,000 (to cover fees of KEC staff and overheads) and the remaining US$ 190,000 (for contracting local facilitators, training of school teams, covering in-country transportation and lodging expenses for the training events participants) will be financed from the IDA Grant. The terms of reference have been jointly agreed by IDA and KFOS; both donors will disburse the funds through separate contracts with KEC based on the agreed terms of reference. Details and procedures for selection of schools, submission and evaluation of grant proposals, monitoring and supervision of the grants implementation, etc. are given in Annex 2, and are included in the Operating Manual. Procurement arrangements are summarized in Annex 6 and spelled out in detail in Procurement Handbook of the Operating Manual. (b) Education Information Systems Development of an EMIS which was started under the ongoing project will be continued under the Education Participation Improvement Project. The objective will be to ensure that the new MEST is able to monitor systemic performance in the areas of access and retention. Financing will be focused to ensure the sustainability of the EMIS. This will be done through capacity building of internal MEST (which is constrained by the inability of public services to pay and retain qualified staff), and possibly by outsourcing technical information services to a local contractor to ensure sustainability of the system after the project completion. D. Project Rationale 1. Project alternatives considered and reasons for rejection: The Poverty Assessment pointed towards several constraints to improving access and attainment. Accordingly, several types of interventions and institutional arrangements have been considered: (a) Compensating for out-of-pocket payments: Family support through cash payments may adequately compensate for household expenditures, improving demand for education. However, social - 11 - assessment showed that out-of-pocket expenditures are only one of the reasons for children not going to school. It does not explain why children drop out, which is more related to gender and location rather than to poverty. As a stand-alone instrument, cash payments would not be instrunental in addressing quality and effectiveness issues. Cash payments may be considered as a good complementary measure to assist marginalized families with the added incentive to make sure children from these families enroll and attend school. However, local capacities to account for these children need to be established, access to schools for some of the children (especially at secondary level) need to be facilitated, and educational programs, as well as the learning environment, need to be improved to make the effect of payments more sustainable. In addition, conditional cash transfers for now are not part of the Government's social assistance policy agenda. (b) Facilitating better physical access to schools: In order to improve access to schooling commensurate transportation arrangements will also be required. The provision of major works to facilitate physical access (roads, transportation) and/or more schools or classrooms may be appropriate to remedy limited access. However, the available project grant would not be adequate to address large transportation infrastructure issues or school construction. Therefore, building schools, roads or extended public transportation systems should be considered for other projects or donors. Surveys undertaken as part of project monitoring and evaluation will, however, identify areas in which transportation infrastructure or school space is an enrollment constraint. Also, schools may use the proposed development grants to support better transportation of the children especially at secondary level, and in limited cases, to extend classroom space. (c) Central provision of non-salary inputs: Kosovo lacks adequate textbooks, materials and other small equipment. These are presently paid mostly by parents. Central provision of these, however, would not be fiscally sustainable, and would not help promote planning and priorntization of needs at school level. Instead, schools may use the development grants to purchase textbooks, materials and small equipment. (d) Focus on supporting central government capacities versus municipalities or schools: Making sure that all children have access to education, and that public expenditures are fairly distributed are the basic responsibilities of the Govermnent. The institution-building that had started during the Education and Health Project should continue, and the Government needs to refine its financing to make it more pro-poor and policy oriented. Further, the Government should develop capacities and methods to provide assistance for the poorest e.g., subsidized textbooks or compensating out-of-pocket expenditures. However, the decentralization process that has been started during the first project requires further institutional and capacity building at the local level. As a complement to central capacity building, municipalities should take a key role in making sure that all eligible children are accounted for and given access to education. This in turn needs to be complemented by improving school effectiveness and the quality of learning/teaching to make sure increased access is sustained. Consequently, the main focus of the project is on improving municipal and school capacities, and on extending schools' mandates to improve access and attainment. (e) Focus on primary versus secondary education: The data show that secondary education has significant inequities and gaps in enrollment and attainment, whereas in primary education the aggregate information on gross enrollment shows no serious quantitative challenges. However, in primary education, while the gross enrollment rate is estimated at 97 percent, net enrollment may be significantly lower and there is evidence that specific minority groups do have low enrollment rates, which will need to be urgently addressed if Kosovo is to meet the EFA/MDG goals. Also, low attendance, low quality of education and similar problems at primary level have negative effects on secondary education enrollment - 12- and attainment. The planned social assessment should help define an adequate balance between assistance targeted at primary and secondary levels, respectively. (f) Competition versus targeting: There are several ways of identifying eligible schools to receive school development grants. One possibility, followed in other countries in the region, is to make the school grant scheme competitive, based on the adequacy of the school development plans and grant proposals. However, this option could result in the most advanced/able schools receiving the grants and not the ones where the enrollment/attendance problems are concentrated. Therefore, the project needs to use targeting procedures and criteria, which empower municipal authorities to identify schools for support under the project. (g) Why a grant and not a credit: Kosovo is currently under administration by the United Nations according to UNSC 1244, and the resolution of its final stalus may take some time. It is not currently possible for IDA to lend to Kosovo, and thus an IDA grant is the only financing mechanism available for this project. UNMIK will be the recipient of the IDA grant. (h) Public-Private institutions: The Project will opeiate through the public education system, and is designed to build on and reinforce systemic reforms, especially decentralization and management capacity-building, that were established in the current Kosovo Education and Health Project. The main institutional functions, therefore, are based at each level in public sector institutions. Privately provided education in Kosovo is not significant. Nevertheless, as with the ongoing Kosovo Education and Health Project, a certain number of the institutional capacity-building activities will be provided through NGOs and the private sector, with support from international expertise where required. 2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). [ K>_. . ~i-t --r- - ~ .u :.: '- -- _.Latest Supevsion d .i..:.Sector lssue.- -Pj -. .Ratings . ,,-_. -__ . L - B kfir d poj6Ets-only)- Implementation Development Bank-financed Progress (IP) Objective (DO) Education admmnistration and Kosovo Education and Health S S financing Project Design of basic safety net and Social Kosovo Social Protection S S welfare system Project Other development agencies UNICEF Curriculum Development and Capacity Building Program UNICEF--Japanese Government School reconstruction, Rehabilitation and Repair Program UNICEF Training on Interactive Learning Project UNICEF and Government of Finland Special Needs Educational Program for children in Lapje Selo and in Shtime/Stimlje CIDA Kosovo Educator Development Project (various dimensions of teacher training and capacity - 13- building) EC/EAR Vocational Training in Electronics and Business Adnnnistration UNDP--Japanese funded ADRA School Reconstruction Program Islamic Development Bank Reconstruction Program Swiss 2001 Reconstruction Program EAR Program on General Refurbishment of the University of Prishtina Buildings, including the chemistry, agriculture and engineering faculties German Technical Cooperation Vocational Education IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory) 3. Lessons learned and reflected in the project design: The first Education and Health Project in Kosovo helped to establish a decentralized education administration system and a core Education Management Information System. It helped to empower local authorities but also showed that partnership is needed with schools to establish incentives to achieve tangible education outcomes. The Bank has had a long experience working with school grants in most regions including in ECA and - in particular -- in the Balkans. Project implementation arrangements have been designed to take into account comments made in the recent QAG review of the Kosovo Social Protection Project. 4. Indications of recipient commitment and ownership A school grant pilot is being carried out under the ongoing project. Discussions about the pilot with government and UNMIK authorities, and with a range of education stakeholders, have demonstrated commitment at all levels to the project concept and objectives, as well as to the implementation and institutional arrangements. 5. Value added of Bank support in this project: The Bank's experience with school grants particularly in the South East European region provides a unique opportunity to adjust the project design based on lessons learned elsewhere. The Bank's ongoing role in supporting education financing and administration reform in Kosovo will also help make the project objectives an integral part of the policy agenda. E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) l. Economic (see Annex 4): J Cost benefit NPV=US$ million; ERR = % (see Annex 4) _ Cost effectiveness 0 Other (specify) See economic analysis in Annex 4. - 14 - 2. Financial (see Annex 4 and Annex 5): NPV=USS million; FRR = % (see Annex 4) N/A Fiscal Inpact: The planned project costs of US$ 4.6 million represents on average about USS 1.5 million for each of the three project implementation years (2003-2006). Total project costs represent about 6 percent of the 2002 education allocation in the Kosovo general budget. This is equivalent to just over one percent of the total general budget. Total counterpart funding in the amount of less than US$ 100,000 is relatively small and would not have a significant impact on the education budget. The counterpart funds required for the proposed Project cover 5 percent of operational costs. The increase in recurrent costs (to maintain the EMIS component and the school grants component) resulting from the project would also be relatively small. If following project implementation MES1' finds that the impact of school grants is positive, and has helped to improve access and attainment, MEST could consider continuing to provide targeted subsidies in the form of school grants through the education budget. This would largely vary by municipality depending on the geographical location of the schools, and the school development plans for the schools benefiting from the Project. The government is addressing recurrent cost issues with respect to the operation of the sector on the basis of recommendations outlined in the recently completed World Bank report, Kosovo: Medium Term Public Expenditure Priorities. Further research on ways to decrease costs and increase teacher efficiency is urgently required, particularly following the social tensions relating to education employees--a strike which paralyzed the education system for three weeks in October 2002. The fiscal impact of the project may also be measured in relation to different budget categories in the education budget. The project has three components: (1) School Development Grants; (2) Education Management Information System (EMIS); and (3) Project Management. The school development grants component (82 percent of total project costs) is expected to improve enrollment, attendance, and completion rates. Project costs will not finance recurrent expenses such as salaries and wages. Relative to goods, services and capital investments (24 percent of total budget for education), the school grants represent about 5 percent of the 2002 general budget. The World Bank's Medium Term Expenditure Priorities for Kosovo concluded that spending on goods, services and capital investments is not sufficient. Additional spending through the project is expected to have a positive impact on the structure of the education budget. School grants will be used as incenitives for school management and municipal governance. This is in line with international trends of using public expenditure to stimulate performance, efficiency, and quality. Improving enrollment and completion rates requires improvements in efficiency and lower per capital expenditures. Given the current budget structure, school development grants are expected to act as a positive incentive in terms of fiscal sustainability. - 15 - 3. Technical: N/A 4. Institutional: The proposed Project will be implemented over a three year period and all implementation arrangements will be governed by the guidelines and procedures set out in the Project Operating Manual (POM) and in accordance with the Project Implementation Schedule. The POM is aimed at supporting the overall achievement of project objectives. However, except as IDA shall otherwise agree, UNMIK shall not, and will ensure that the MEST and the PMU do not, amend, suspend, abrogate, terminate or waive any provision of the Operating Manual without the prior written consent of IDA. 4.1 Executing agencies: The Development Grant Agreement will be signed with UJNMIK. UNMIK will delegate the responsibility for project execution to the Principal International Officer of the MEST. The day-to-day operations of project implementation will be handled by the PMU on behalf of MEST. 4.2 Project management: An assessment of the institutional capacity of the PMU of the Education and Health Project (Attachment I to Annex 2) revealed that with minor modifications, including strengthening of the procurement and financial management capacity, the PMU of the ongoing Education and Health Project will be able to meet the demands of managing the proposed Project. The Project Management Unit's (PMU) main focus will be on: (1) providing assistance to the schools and municipalities on implementation, procurement and financial management (2) coordinating between the local and central levels and (3) monitoring and evaluating implementation at the institutional level and for the project overall. The core PMU capacities established under the Education and Health Project will be strengthened in these areas and will continue to be responsible for the implementation of the proposed Education Participation Improvement Project. The PMU will comprise a Project Director, Procurement Specialist, and an Accountant. It is planned that a Education Specialist/Deputy Director, Accountant/Financial Management Specialist and a Procurement assistant will be selected once the project is effective. Project financial management will continue to be handled by an international financial manager who was hired under an on going IDA-financed Grant with primary responsibility to monitor and prepare project management reports for all Bank projects and who is located in the MFE. A School Grants Approval Board (SGAB) composed of various stakeholders will be established to monitor implementation of the school grants program. The PMU Director will also function as the Secretary of the SGAB. The capacities of the PMU will be continuously be monitored to see if the responsibilities in terms of coordination, monitoring and reporting are adequately met. 4.3 Procurement issues: Procurement. Retroactive financing for School Grants for schools that participated in the school grant pilot and received funds from the MFE budget prior to EPIP effectiveness will be carried out in accordance with para 1.9 of the Advance Contracting and Retroactive Financing of Procurement Guidelines under IBRD Loans and IDA Credits. The procurement procedures will conform to the provisions of the Procurement Handbook for School Grants. The Procurement Handbook will be formally cleared by IDA prior to the commencement of any steps to initiate the procurement process. The amount of grants that were provided to schools participating in the pilot will be reimbursed - 16 - retroactively in one lumpsum payment amounting to a maximum of US$ 60,000 to the MFE following Grant effectiveness. Details of procurement issues are provided in Annex 6(A). 4.4 Financial management issues: A review of the Financial Management arrangements for the proposed Project was undertaken in October 2002 and revised in February 2003 to determine whether the financial management arrangements are acceptable to IDA. As of end-December 2002, the Central Fiscal Authority (CFA) has been merged with the Ministry of Finance and Economy (MFE). Along with the merger the staff, duties and responsibilities of the CFA were passed on to the MFE. MFE has a financial system in place, that is being used for other IDA-financed grants. This system is capable of providing accurate and timely information regarding project resources and expenditures, including planning, procurement accounting and financial reporting. Prior to negotiations, UNMIK/MFE confirmed that the project records, accounts and financial statements will be audited each year, commencing with the accounts for the year ending December 31, 2003. Furthermore, UNMIKIMFE confirmed that the Project chart of accounts has been entered into MFE's Free Balance System of accounting. Once this is completed, the Financial Management assessment will be revised to conclude that the project meets the IDA's minimum financial management requirements. During negotiations it was agreed that the financial management arrangements in place at the MFE for the ongoing IDA grant-financed operations would be maintained for purposes of the Project. UNM1IMEST agreed that the same Financial Monitoring Report (FMR) formats will be used for EPIP reporting purposes, which formats have been included in Volume I of the Project Operating Manual. Furtherrnore, during negotiations it was agreed that intemational standards on auditing would apply to the records, accounts and financial statements maintained and prepared for the Project. The IDA team confirmed that the audit services could be financed from the Grant proceeds. UNMIK/MEST agreed that the auditor chosen by MFE to audit the ongoing IDA grant-financed projects (Deloitte and Touche) would be retained to audit the Project accounts. It was also agreed that the auditors would carry out random, special-purpose audits of the School Grant Component on an annual basis to ensure that the funds under this component are being used for the purposes agreed. The audit TORs included in the Operating Manual have been amended to reflect the special-purpose audit for the School Grant. Component. It was agreed that IDA would be provided with the first set of audited financial statements by June 30, 2004. Retroactive Financing to a maximum amount of US$ 60,000 for school grants authorized under the Education and Health Project will be made to MFE in accordance with IDA policy. Details on financial management issues are provided in Annex 6(B). - 17 - 5. Environmental: Environmental Category: C (Not Required) 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. N/A 5.2 What are the main features of the EMP and are they adequate? N/A 5.3 For Category A and B projects, timeline and status of EA: Date of receipt of final draft: N/A 5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe mechanisms of consultation that were used and which groups were consulted? N/A 5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectives and results of the EMP? N/A 6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. A household survey showed that parental contributions are a major impediment to sending children to school and keeping them in school, especially in the case of girls and minority groups. It is inevitable that budgetary constraints will continue to make significant parental contributions-particularly for inputs such as textbooks, basic materials and school maintenance-a necessity in Kosovo, as in nearly all other countries in the region. Therefore, limited subsidies for books and materials provided by central funding sources or by donors should be targeted towards those families that cannot afford to pay for these inputs. Sustainable funding will not be available to permit the PISG or donors to subsidize these inputs for all parents. It is also important to develop mechanisms to regulate parents' contributions and to make them more transparent. Non-compulsory fees should be regulated and safeguards introduced to make sure that they are not used to keep children out of school. As part of project design and preparation, a social assessment was finalized. The conclusions of the social assessment were that: (i) school non-attendance and dropout is a significant problem in Kosovo; (ii) at secondary level, the overall enrollment rate is low and there are significant gaps in enrollment for girls, children from rural areas, children from poor families as well as children from some ethnic groups; (iii) significant inequalities exist in enrollment and attendance by gender; (iv) efforts should be made to improve gender equality in the eduation sector through long-term planning that incorporates both general public awareness-raising programs, as well as more targeted campaigns to address the causes of gender imbalances; (v) additional steps must be taken to integrate all segments of Kosovar society into the new educational system; (vi) public awareness campaigns should be undertaken to gradually change public perception and increased support for children with special needs and their teachers; (vii) private cost of education remains a serious obstacle for educational attainment; and (viii) there is a strong correlation between educational attainment and variables such as ethnicity, gender, income and geographical location. - 18- 6.2 Participatory Approach: How are key stakeholders participating in the project? The key focus of the proposed Project is on strengthening local community participation in school activities via school boards. At the municipal level, the Municipal School Grant Team (MSGT) will facilitate stakeholder participation. At the central level, the School Grant Approval Board (SGAB) is the key institution in which governmental and professional organizations will play an active role in implementation . 6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? The proposed Project is being prepared with a local non-governmental organization Kosovo Education Center (KEC) that is taking a lead role in piloting school grants under IDA and Soros Foundation projects. An independent evaluation of the school pilot concluded that the NGO's work was satisfactory. It is proposed that KEC will continue to take a lead in the training and outreach part of the school grants component of the proposed project. 6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? A School Grants Approval Board (SGAB) will oversee implementation of the school grant scheme, monitor and evaluate activities and outcomes. 6.5 How will the project monitor performance in tenns of social development outcomes? Project monitoring indicators to assess performance in terms of social development outcomes have been agreed at appraisal and are provided in Annex 1. Monitoring indicators will include tracking net and gross enrollment rates, completion rate at primary level, rate of transition from primary to secondary level, and participation rates of students from ethnic groups facing problems with respect to enrollment, attainment, and completion. 7. Safeguard Policies: 7 1 Are anv of the following safeguard policies triggered bv the project? ;'''., . Policy . : . - - |riggered p Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) Yes No Natural Habitats (OP 4.04, BP 4.04, GP 4.04) U Yes * No Forestry (OP 4.36, GP 4.36) U Yes @ No Pest Management (OP 4.09) (9 Yes * No Cultural Property (OPN 11.03) (9 Yes * No Indigenous Peoples (OD 4.20) U Yes @ No Involuntary Resettlement (OP/BP 4.12) U Yes * No Safety of Dams (OP 4.37, BP 4.37) U Yes * No Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) (U Yes * No Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* () Yes * No 7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies. There is no physical construction or civil works associated with the proposed Project. Therefore, the proposed Project is rated as environmental category "C". - 19- F. Sustainability and Risks 1. Sustainability: As Kosovo's education system is being decentralized, the roles and responsibilities of municipal authorities and school authorities will increase. Schools have increasing responsibility to work effectively: reach out to all eligible children, make sure pupils attend and complete successfully their education. Municipalities have increasing responsibility to make sure access is provided equally to all and financing of schools is adequate in that it also assures non-recurrent expenditures. In that sense, the school grant component helps to improve management and planning capacities, tests a feasible form of incentive to schools to effectively manage service delivery and also tests a transfer mechanism to cover some recurrent expenditures, finance equipment and materials, training and small capital improvements. Municipal and school leaders will develop the capacity to plan and deliver small scale development projects, and the central government will establish capacity to carry out project management and evaluation, as well as introduce incentives for improved effectiveness and development. The school grants will support the strengthening of school level management, the broadening of school level authority, local community and municipal capacities to make sure all children are enrolled, attend school, complete primary education and, preferably, transfer to secondary education. This capacity building will help to sustain the local institutional basis for improving the effectiveness of schools in the targeted areas of access and attainment. To the extent the grants help to achieve the stated objectives of the school grants component, and demonstrate the need for targeting resources to the poorest populations, MEST may consider financing this type of activity beyond the project's lifetime. The school grant mechanism may be continued to support the project's original objectives, but could also be used in the future to directly target quality improvements in the system. However, the scope of future need for Government or donor financed school development grants aimed at improving access and attainment cannot be judged at this point. Governments in the region and international donors frequently use school grants to support school based initiatives and to stimulate efficient and effective service delivery. Therefore, effective implementation of the project may demonstrate the usefulness of this mechanism to support future policy agendas and quality improvements. 2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1): Risk R Risk&Ring Ri-k Militigation Measure From Outputs to Objective Reduction in security and transportation N There is peace in Kosovo, and security is problems constrain students from provided by international forces. Further attending school. improvements in security are expected. Schools do not respond to the challenge; M Grants are likely to establish significant school principals are too busy dealing incentives for school principals and school with daily problems to engage in boards to participate. Extensive training and school-based initiatives or outreach strengthened local participation (school boards activities. School planning and and municipalities) will help strengthen management capacity is not adequate to capacities. meet the challenge. Municipalities and parents do not M Plans and school grant proposals will be signed become sufficiently involved in the by both municipalities and by school boards planning and school grant process. Government will not sustain the M The per capita based financing and increasing - 20- Education Management Information attention paid to the MDG goals would System. motivate the Government to sustain the EMIS. Schools and municipalities do not M TA for the pilot municipalities would help to monitor enrollment and attendance by the develop an adequate monitoring system for children from families receiving cash municipalities. benefits. From Components to Outputs There is a risk that grant activities will M The pilot planning and grant activities will be not bring about the planned outcomes in thoroughly evaluated, and training to school a short period. management and boards will be adjusted based on the lessons learned. There is a risk that the Ministry or local M The student based allocation formula plus the administrative agencies might not update school planning process will create incentives the information system on a regular basis, not only to regularly collect information but or use adequately the available also to rely on it in planning and management information. decisions. Overall Risk Rating M Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk) 3. Possible Controversial Aspects: None. G. Main Grant Conditions 1. Effectiveness Condition The IDA Grant will be subject to the policies and procedures applicable to all IDA Credits/World Bank Loans. Grant disbursement will begin only after IDA conveys to UNMIK a notice confirming effectiveness. 2. Other [classify according to covenant types used in the Legal Agreements.] (a) Disbursement of the school grants: * The MEST and/or the Recipient shall have established by all necessary legal and administrative measures the School Grants Approval Board pursuant to lerms of reference satisfactory to the Association and shall have appointed persons to such Board as members. * UNMIKJMEST shall have adopted and/or promulgated all necessary legal measures, satisfactory to IDA, to establish the cnteria and procedures, satisfactory to IDA, for the selection and appointment of school directors, and UNMIK/MEST, in accordance with such criteria and procedures, shall have selected and appointed such number of school directors as may be necessary to fill all vacancies as may exist in any schools in Kosovo. (b) Project Implementation: * UNMIK/MEST to ensure that the Project Management Unit with staffing, funds and facilities and - 21 - other resources satisfactory to IDA is maintained until the completion of the Project; o UTNMIK/MEST shall ensure that project implementation is carried out in accordance with the agreed procedures, as detailed in the Operating Manual; o Procurement: updated detailed procurement plan satisfactory to IDA shall be submitted for each following year of project implementation one month prior to the beginning of the year. H. Readiness for Implementation D 1. a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation. 1 1. b) Not applicable. E 2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. S 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. L 4. The following items are lacking and are discussed under loan conditions (Section G): UNMIK/MEST has adopted an Operating Manual, dated March 31, 2003 that is satisfactory to IDA. 1. Compliance with Bank Policies N 1. This project complies with all applicable Bank policies. D 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies. Peter Darvas Maureen McLaughl a Ogs haalant Os Team Leader Sector Manager/Director Cou t Direct r - 22 - Annex 1: Project Design Summary KOSOVO: Education Participation Improvement Project f-4' ."' -, .KeymPerf&rran'e2'7 ,tDataCollection_Strftegy i*. -; . e Hierarchy of Obje.ctives'- ' Indicators''. ---. -. .Critical -Assumnptions -: Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission) to increase enrollment rates in Net and gross enrollment Household survey, poverty Relatively stable political and primary and secondary rates, completion rate at assessment macroeconomic situation and education primary level, rate of Published information system continued Govemment transition from primary to data comnumtment to fund education secondary level Ministry reports on school thereby allowing greater effectiveness participation in education to enhance access of girls and Participation rates by students Household survey, poverty Kosovo adopts the MDG goals vulnerable groups to education from at risk groups assessment, Project Development Outcome / Impact Project reports: (from Objective to Goal) Objective: Indicators: The objective of the project is * reduction of dropout rate * Published Education Govemrnment remains to improve educational in the targeted schools; Statistics committed to increasing attainment at primary and * improvement in the * School Grant Project access for all, improving secondary education levels survival rate between progress reports quality as well as budget and grades and completion rate * Report from the management. to enhance access of at primary level (currently Education Management Schools and local vulnerable groups to 9 years) in the targeted Information System on communities find feasible education. schools;; attaimment, completion solutions for using the grants * improved net and gross and enrollment rates effectively to improve enrollment rates to attainment and completion primary education in targeted non-Serb and Non-Albanian communities, * higher level transition to and attainment at secondary level especially by girls in the targeted communities. Output from each Output Indicators: Project reports: (from Outputs to Objective) Component: Increasing enrollment in Enrollment rates, dropout Project report on enrollment, Enrollment, dropout, pnmary and secondary rates, average number of years dropout, attendance at pnmary attendance improve, impacting education, especially among in the education system and secondary level. on attainment and completion the marginalized groups, (9 years). Schools record Decreasing dropout and thoroughly and reliably increasing attendance in dropout and attendance primary and secondary information. - 23 - education. Increasing accountability and School Development Plans Evaluative reports of school Consensus on local policy participation via active school completed in about 300 development plans by objectives is developed; boards and school-municipal schools. Municipal Management Schools involve parents and government partnerships. Teams and PMU. local conimunity in grant activities and monmtoring. Inreasing accountability and Education Management Report on EMIS Government remains administrative effectiveness Information System has implementation. committed to sustain the via strengthened management established data on dropout, EMIS. system. attendance and completion (9 years) is available. Project is effectively managed. School Grant process is Regular project progress Cooperation between project implemented in a timely reports. management, ministry and manner. UNMIK remains close. Project Components / Inputs: (budget for each Project reports: (from Components to Sub-components: component) Outputs) School Planning and 3,790,000.00 Formal progress and financial Pilot school grant program Development Grants reports evaluated, adjustments are made in the manual, technical assistance to training and institutional development is procured, implementation is regularly monitored. Education Management 300,000.00 Supervision Aide memoire Technical assistance is Information System procured, central and local government has the capacity to collect and use information Project Management 510,000 00 Supervision Aide Memoire Ministry and UNMIK cooperation is effective - 24 - Annex 2: Detailed Project Description KOSOVO: Education Participation Improvement Project Project Objective: The objective of the project is to improve educational attainment at primary and secondary education levels to enhance access of vulnerable groups to education. By Component: Project Component 1 - US$3.79 million Providing School Development Grants Introduction The objective of the School Development Grant (SDG) component is to provide funding to schools to help increase enrollment, attendance and completion in primary and secondary education. During the project, about US$ 3.4 million in grant funding will be awarded in targeted small grant contracts to approximately 50 percent of the 550 primary schools and 110 secondary schools in Kosovo's 30 municipalities. Primary schools will be eligible for grants up to US$ 10,000, and secondary schools will be eligible for grants up to US$ 15,000. The grants will be awarded on the basis of school development plans and grant proposals, which will be assessed by Municipal School Grants Teams (MSGTs) and approved by a central School Grants Approval Board (SGAB). All schools selected for the program will receive technical assistance and training in the areas of school development planning and proposal writing. Schools will be identified for the program by municipal education officials on the basis of documented access and attainment problems in the school's catchment area. Schools will be selected for participation in the project by each MSGT from this initial list on the basis of secondary criteria, and given access to capacity-building support for the development of school grant proposals. Grant proposals; prepared by the selected schools, will be assessed by the MSGTs and approved by the SGAB on the basis of how effectively they propose to address access and retention problems. The grants will finance training, community outreach activities, educational materials, school supplies, and small works aimed at improving security and the educational environment. Grant contracts will be signed between the school director, the MSGT, and the MEST, as represented by the Project Manager (see description below) The aggregate amount of SDG funding will be allocated across municipalities on a per student capitation basis. A percentage share of funding for each municipality will be agreed at appraisal, using 2002-2003 student numbers. A pilot of the school grants process is currently being carried out under financing from the ongoing Education and Health Project. A small contract (about US$ 20,000) was signed with the local Kosovo Education Center (KEC) - a local NGO established by the Soros Foundation - and training provided in school development planning and proposal writing and to develop a grants manual, a grant application, and evaluation/targeting criteria for about 20 preselected primary and secondary schools. These schools were proposed by KEC and approved by the MEST on the basis of documented access and retention problems in the schools' catchment area. Due to limited funding under the ongoing project, only ten schools will be awarded grants in the amount of $5,000 under the pilot phase. An interim School Grants Approval Board, already established, has reviewed all proposals and ranked them in terms of quality. Best practice proposals from the pilot will be shared with all schools in the program as models. Schools - 25 - that did not receive grants during the pilot phase may resubmit their proposals during the first phase of the full project implementation. Due to the small amounts of the pilot grants, schools receiving grants under the pilot may also apply for new grants during the full SDG implementation. An external evaluation of the outreach phase of the school grant pilot has been carried out by experts from Lithuania, Slovenia and Albania and the first draft of the evaluation has been reviewed by the Bank team. The overall conclusion of the evaluation is that the outreach process has had a positive impact on the schools and that both school and municipal officials are well focused on dealing with problems in enrollment, attendance and student retention. Following the implementation of the grants, which are currently being awarded, there is every expectation that measurable increases in enrollment, attendance and retention will result in the coming years. The evaluation makes useful recommendations for improving the implementation of the training and school development planning process and for increasing the role, capacity and commitment of the stakeholders in the project. Among the report's recommendations are: to strengthen the role of the School Boards in providing outreach to the local community, to extend the training provided to mumcipalities, and to involve more actively the Regional Education Officers working on the school grant program at the level of municipalities. Institutional Arrangements Detailed institutional and procedural arrangements for the SDG component are described below. These procedures and arrangements have been developed in the context of the ongoing pilot and its evaluation, and may continue to evolve as more lessons are learned in respective phases of the project. Each of Kosovo's 30 municipalities will establish a Municipal School Grants Team (MSGT). The teams will include Regional Education Officers (REOs), which are appointed by the central MEST, and Municipal Education Directors (MEDs), which are elected in the municipality, as well as other key community leaders. The MSGT will be in charge of selecting the schools on the basis of established criteria, assessing proposals before they are evaluated in comparison with other municipalities, and monitoring implementation. Specific criteria for the selection of schools in the program, which focuses largely on enrollment, drop out and attendance statistics, will be reviewed and agreed at appraisal. Municipalities and local communities, through the MSGTs, will identify the schools and communities where problems of enrollment, attendance and completion are most serious. An outreach program will also help the municipalities in this process. If there are disagreements among different stakeholders about the schools to be selected, these will be resolved by the central level SGAB (see below). In the special case of Mitrovica North, as well as of other Serbian enclaves in Kosovo, the Mitrovica Regional Education Board is expected to provide outreach services, including preselection of schools and monitoring, mentoring planning, proposal writing and implementation. The Mitrovica Regional Education Board will be assisted by a regional outreach coordinator, and jointly supervised by the Project Director, PMU and by the Principal International Officer (PIO). Selected schools will receive training and outreach from a technical assistance provider. This technical assistance will help strengthen the capacity of school management, school boards, and municipal education officials to (i) define school development plans aimed at improving performance and effectiveness, especially in terms of enrollment, attendance and retention of students; (ii) develop grant proposals; (iii) set targets for increasing access to schooling, improved attendance and attainment; and (iv) help monitor enrollment, attendance and completion, as well as the implementation of the school-based projects. The Bank has agreed that the technical assistance will be provided by the Kosovo Education Center (KEC), which has successfully organized the pilot phase. The KEC outreach activities will be cofinanced by the Kosovo Foundation of Open Society (KFOS). A detailed breakdown of - 26 - activities to be financed by KFOS and those to be financed under the IDA funding has been agreed. Based on the training, school management, in close cooperttion with the school boards will be responsible for (a) producing school development plans focusing on access and retention issues, (b) developing grant proposals, and (c) directly managing the small grant contracts. Grant funding will be based on activities detailed in School Development Plans (SDPs) and grant proposals that address both pedagogical and material needs in the context of why children drop out, do not enroll, or do not attend school. School boards and school management will consult with other interested stakeholders, where appropriate, in the development of school plans and grant proposals. The grant proposals will be developed on the basis of a School Grant Manual and a grant application which were developed under the pilot phase of the project and further refined to suit the EPIP. The School Grant Manual and the grant application have been updated taking into account the findings of the pilot evaluation. Grant proposals will contain sections covering the objectives and rationale of the proposal, the activities that are going to be undertaken to achieve the objectives, who will be responsible for carrying out the activities, and a budget indicating what resources are needed. The basic aim is to ensure that the proposal outlines priority projects within the School Development Plan that would improve student enrollment, attendance and completion. The School Grant Proposals (SGP) and the School Development Plans (SDPs) will be reviewed and assessed by the respective MSGTs. These teams will determine whether or not the school proposals cover the most significant access and retention problems experienced in the municipality, whether they are realistic in terms of the capacity of the municipality, and whether they have appropriate school level and municipal monitoring mechanisms. SGPs will either be referred back to the school with recommendations for modification, or recommended for approval by the SGAB. MSGTs will consist of three core members (the REO, MED and technical assistance NGO) and other members (e.g. local NGO or women's groups etc.), by invitation of the core team, to assist in addressing specific issues in that municipality. Grant applications submitted by the schools and assessed by the MSGT will be forwarded for approval by the central level SGAB. The approval board is chaired by the Permanent Secretary of the MEST and has the PMU Director as ex-officio member, includes three more representatives of the MEST and representatives of the lead international donor agencies as well as of the local NGOs active in education. The SGAB will approve criteria for preselection of schools, approve the school grants, and make recommendations as to how to improve the school grant process. The board will also mediate conflicts, if necessary, and will help monitor the success of the overall grants program. It is expected that about 50 schools will receive outreach support in each of three annual phases beginning with the first half of 2003. The SGAB is, therefore, expected to evaluate about 150 grant proposals in each of the first two years of the project. Table 1 shows the role and structure of various agencies in the school grant scheme at different administrative levels. - 27 - Table 1. Kosovo School Development Grants: Level, lInstitution, Responsibilities, and Membership Level Institution Responsibilities Members (nominated by) Central School - Oversees, monitors and advises on MEST Permanent Secretary Grants the School Grants process. (Minister of Education, MEST) Approval -Reviews and approves selection of 2 MEST senior officials Board schools for participation in the (Permanent Secretary) (SGAB) Project in terms of selection I UNMIK international advisor criteria. (PIO) - Reviews and approves PMU Director (ex officio) recommendations from municipal 2 representatives of school grant management teams on international agencies (UNICEF award of school grants and KEDP 1/2 vote each) - Receives and comments on regular I representative of the Kosovo Progress Reports prepared by Parents Council (KAPC) PMU for presentation at SGAB The International Field meetings Officer/Head of Communities - Recommends to PMU Division (PIO) improvements or amendments to procedures. -- Advises MEST on policies that target access and attainment Project Overall project management and PMU Director Management Unit supervision Procurement specialist (PMU) -Secretariat to SGAB Education Specialist/Deputy -Submits Progress Report to each Director SGAB Meeting Accountant/Financial -Compiles School Grant Proposals wit Management Specialist ecommendations from MSGTs fo Translator/Procurement Assistant submission to SGAB Office manager/administrative -- Manages grant disbursement, assistant monitoring and reporting Driver -- Administers procurement and take overall responsibility for supervision o procurement at the municipal and schoo level under the school grant component Municipal Municipal - Identify project schools according Core Members: School Grants to approved Selection Cnteria Municipal Education Director Management - Receive School Grant Proposals (MED) Team (MSGT) and assess in terms of approved Regional Education Officer assessment cnteria (REO) - Forward Grant Proposals with Capacity-Building NGO (by assessments and recommendations NGO/ROSO) to SGAB via PMU - Refer back to schools and In consultation with (by Capacity-Building NGO Grant invitation): Proposals that do not meet Local PTC/PTA (where existing) assessment cntena Director of Centre for Social - Monitor implementation of school Welfare grants and training and outreach Local Handikos Office (where provided by Capacity-Building existing) NGO. Other local stakeholders - Refer problems, quenes or - 28 - recommendations to PMU. -- Under supervision and guidance from the PMU, carry out - procurement under School Grants component up to the thresholds agreed with IDA and spelled out in the School Grants Manual School School Board -- Participates in capacity-buildmg for As provided in General school development planning Education Law): provided by Capacity-Building NGO Parents (elected) Teachers (elected) -Prepares SDPs and SG Proposals Students (secondary school - -Approves and sign SG Proposals, elected) and submit to MED/REO Secretariat (School Director) - Implements approved projects in line with contract and according to the School Grant Manual - Prepares School Grant Completion Reports -- Administers small value procurement up to the thresholds agreed with IDA and stipulated in the School Grant Manual School Director - Serves as Secretanat of the School School Director Board. Secretary/Book keeper (assigned - Prepares SDP in consultation by School Board) with School Board and submits to School Board for approval. - Manages implementation of approved projects in accordance with the School Grant Agreement, and in consultation with School Board. -- Is responsible for reporting expenditures for school grant activities. Operational Procedures The school grant proposal and standard covering letter of application will be signed by both the school board and the MSGT before submission to the SGAB. The criteria that the board will use to evaluate the grant proposals are defined in the School Grant Manual. The School Grant Manual (SGM) provides schools with a proposal structure, additional guidelines with respect to the nature of the proposed school activities, and formats for reporting on the implementation of the school grants project. This list of proposed activities is not mandatory, but serve as guidelines for schools in terms of what may be most helpful to consider in improving access and retention. These activities could include improvement in the learning environment, in-service training for staff, new or improved equipment and instructional materials, and new educational or extra-curricular services. Some provisions could also be made to assist families for which out-of-pocket payments create an obstacle to participation in the system. These investments would include assistance for transportation, school lunch or personal learming materials (books, pens, notebooks, etc.), or minor repairs in the infrastructure. - 29 - Schools will be required, as a condition for receiving a grant, to agree to participate in extemal evaluation, as well as to conduct internal self-evaluation of their grant projects. In addition to monitoring the effectiveness of school-based project implementation, schools and municipalities will monitor the changes in the targeted indicators of enrollment, attendance, and completion. Municipalities will provide the data gathered to the central Education Management Information System (EMIS). A grant agreement or contract will be signed with each school which is awarded a grant indicating the amount of funds available and allowable usage of funds. Only small procurement packages of equipment and materials will take place under the grants. Such procurement will be undertaken by the schools themselves, based on community-based procurement procedures which are outlined in the School Grant Manual. Community-based procurement procedures will call for three quotations, where feasible, for all procured goods, services and works and, in justified cases, direct contracting. The primary responsibility for implementation of the grants rests with the schools under the direction of the School Director, with the oversight of the School Boards. Arrangements for interested stakeholders (parents, local businesses, NGOs, etc) to participate in the oversight of the grants will be encouraged. Sufficient advisory and technical support to the schools will be arranged via the outreach technical assistance through the contract with KEC, co-funded by the Soros Foundation. Schools will receive disbursements on the basis of due diligence procedure outlined in the Project Flow of Funds in the Project Operating Manual (POM). The evaluation and selection process for grants will be monitored by the Project Management Unit (PMU). The PMU will ensure that established criteria are applied by MSGTs and reviewed and approved by the School Grants Approval Board. The SGAB will also select a random sample of projects to review in detail in each round to verify that criteria and procedures are being applied. The Bank and the PMU will ensure that grant recipients understand procedures for contracting. For this purpose, the Bank and the PMU will review the first set of awarded contracts. Furthermore, grant recipients will continue to be monitored following the award of contracts on a sample basis to ensure compliance with procurement and disbursement procedures as per School Grant Manual. Random special purpose audit of school grants will be carried on a yearly basis to ensure that the school grants are being used for the purposes intended. An evaluation of the first two phases of school grants will be carried out in early 2004 to ensure that progress is being made in accordance with school development plans and the grant proposals. Schools receiving grants will provide a self-evaluation report about project activities and progress made in relation to school development plans, as well as provide specific details on enrollment, attendance, retention, and completion data. The respective municipal MSGTs will also evaluate the schools' self-evaluation reports and prepare a consolidated report on the outcomes of the activities of the first two phases. The consolidated reports will be sent to the PMU for final scrutiny and preparation of a summary. The PMU will submit the summary report to the SGAB and to IDA. This process will be repeated in the form for a final evaluation of the SDG process following completion of the project. See the summary of operational procedures in Table 2. - 30 - Table 2. Summary of Operational Responsibilities -Sub-Components Activities Responsibility In Consultation with Output 1.1 Establishing 1.1.1 Define roles and Project MEST, UNMIK List of SGAB roles institutional responsibilities of the SGAB. Preparation and responsibilities framework and Team, PMU design for school development grants 1.1.2 Identify membership of Project MEST, UNMIK List of SGAB roles SGAB Preparation and responsibilities Team, PMU 1.1 3 Convene SGAB to define PMU MEST, UNMIK Timetable for timelines for school development school grants grants proposals receipt and proposals approval process 1.1.4 Develop criteria for PMU MEST Distnbution criteria allocation of grant funds across municipalities. 1 1.5 Revise School grant PMtl Project --Revised school manual and design advisory preparation team, grant manual services. Local TA --List of advisory services 1.1.6 SGAB review of school SGAB, PMU --Approval of grant manual school grant manual 1.1.7 Prepare draft training PMU KEC (TA) Draft training material for capacity building by materials NGOs. 1.1.8 Mount public information PMU WB-TTL Public information campaign for school grant campaign component 1 2 Selection of 1.2.1 Distribute School Grant PMLt MEDs, REOs, Bnefing letters schools Manuals, preselection criteria, NGOs and/or meetings with municipal allocation ceilings and relevant EMIS data to MEDs, REOs and NGOs 1.2.2 Using EMIS data, other MEr) with REO NGO, relevant List of preselected data and local knowledge Community schools identify schools in greatest need interests (PTC, of support using the criteria SW, Handikos, provided in the School Grant etc.) Manual, and invite School Directors concerned to apply to NGO for capacity-building 1.3 Training and 1 3.1 Arrange capacity-building NGOs MED, REO, Draft SDPs and School workshops and outreach targeted Community SGPs for each Development support for preselected schools interests (PTC, school Planning and to assist in, (a) Election of SW, Handikos, Proposal Writing School Boards (where etc.) Process necessary); (b) Development of School Development Plans (SDPs); (c) Preparation of - 31 - School Grant Proposals. 1.3 2 Articulate a vision and Selected schools NGOs -- School grant long-term program for school - School proposal development, improving access Director, School -- School to schooling, promoting Board Development Plan attendance, ensuring completion - Application for of schooling, and improving grant quality of teaching and learning; 1.3.3 Prioritize problem areas and plans for solutions. 1.3.4 Outline plans for self-evaluation, to establish a modus operandi for school level monitoring of quality, attendance and attainment, incorporating school self-evaluation and effectiveness critena 1.3.5 School Boards approve School Director School Board, Signed School and submit School Grant NGO Grant Proposals Proposals (with SDP annex) to MEDs, REO, copied to NGOs for review. 1.3.6 MED/REO/KEC jointly MED/REO/KEC School grant review School grant proposals (MSGT) proposals with and forward, within 7 days, to municipal level School Grants Approval Board recommendations (SGAB) with recommendations via PMU (as secretariat) 1.4 Grant Approval 1.4.1 PMU (as SGAB secretariat) PMU Chair, SGAB Meeting of receives School grant proposals SGAB from MED/REOs and, in consultation with Chair, convenes meeting of SGAB. 1.4.2 SGAB reviews School SGAB List of approved grant proposals against school grant established criteria, and either proposals approves or refers back to School Board, copied to relevant NGO, MED. 1.4.3 PMU Director signs PMU Signed contracts contracts for each approved and authorization school grant proposal, and for release of funds forwards for release of first tranche (see Flow of Funds in the School Grant Manual (Vol. 11 of POM) and the Project Operating Manual (Vol. 1)). 1.4.4 Schools sign contract and School Director, Signed contract receive authonzation to use grant School Board funding from MSGT. representative 1.5 Implementation 1.5.1 School Boards implement School Board NGO and Monitoring school grant projects as per contracts. 1.5.2 NGOs provide outreach NGOs MED Progress reports - 32 - support and guidance. l 1.5.3 Implementation reports School Board First tranche and first tranche results (in terms implementation of improved access and reports attendance) of school grant activities from first tranche recipients for SGAB review 1.5.4 NGOs audit and control PMU Report on findings accounts and project accomplishments before disbursement of the grant's second tranche, under PMU and coordinating Agency supervision, in coordination with the Central Fiscal Authority (see flow of funds in the POM). 1 5.5 PMU and coordinating PMU and MEST Supervision and Agency monitor and control the Coordinating coordination of whole project cycle Agency school grant implementation by NGOs and project support other actors. 1.5.6 School Boards prepare School Board NGO Project Completion self-evaluation or Project Reports or Completion Reports-first self-evaluation tranche results (in terms of improved access and attendance) for submission to MED, REO. 1.5.7 MED, REO review school MED, REO Municipal level self-evaluation reports and summary report prepare summary for mumcipality for submission with recommendations to SGAB via PMU. 1 5.8 SGAB evaluates and PMU, SGAB Approval of approves self-evaluation/ second tranche implementation report summary of first tranche results for release of second tranche. 1.5.9 PMU submits periodic PMU, SGAB Oversight, Advice, progress reports to SGAB and Monitoring SGAB reviews Progress Reports and makes recommendations to MEST and PMU for modifications to improve project performance; SGAB advises MEST on policies that target access and attainment MEST-Ministry of Education, Science and Technology; PMU--Project Management Unit; NGO--Non-government Organization; MED-Municipal Education Director; REQ-Regional Education Officer; SGAB-School Grants Approval Board; PTC-Parent Teacher Councils; TORs-Terms of reference; WB-TTL-World Bank Task Team Leader. - 33 - Project Component 2 - US$0.30 million Improving the Education Management Information System. The objective of this component is to help strengthen and ensure the sustainability of the EMIS which was designed and began implementation under the ongoing Education and Health Project. Beginning in 2000, a database was designed for Kosovo's new education system that included modules on education statistics, personal and payroll. A procedure was developed, and included in the Municipal Education Governance Handbook, for biannual (September and April) updating of the database by the schools and municipalities. Training was also provided to municipal officials and school directors both on the mechanics of providing and entering the information and on the use of education data in management and decision making. The database initially included data from the 2000-2001 school year and has been updated for the 2001-2002 and 2002-2003 school years. In addition to providing stakeholders and donors with detailed information on the Kosovo school system, student data from the EMIS is used to drive the allocation of funding to the municipalities in Kosovo's using the formula funding mechanism. Following delays with contracting, dedicated software has been designed by a local company, and the database is currently being transferred from Excel to the new software, which will be made available at the municipal and central levels. Despite this progress, the sustainability of the system and its pay off in terms of using information to monitor system progress and performance is not assured. Local consultants who, together with international technical assistance, designed and updated the database and provided training to local authorities on system operation have proven unwilling to accept positions at low public sector salary levels in the newly created Ministry of Education, Science and Technology. The new ministry will require additional support to maintain, update, and expand the new software in the coming years. In addition, the new ministry will require support for better performance monitoring and for communicating systemic issues and analysis back to lower administrative levels and education stakeholders. Given the goals of the Education Participation Improvement Project (EPIP), further investment in the EMIS will focus principally on developing, maintaining and communicating access, attainment and retention indicators, such as enrollment, attendance, repetition, dropout and completion rates. Bringing student performance data such as assessment results into the EMIS is a medium term goal that will not be addressed directly in this project. In view of the difficulty encountered during implementation of the first project in hiring qualified staff in the MEST, the MEST has decided to enter into an outsourcing arrangement, to be financed initially under the project with a local information technology firm. Under terms of reference finalised at appraisal, the local firm will be contracted to provide the MEST with the equivalent of two full-time staff per year who would be responsible for two EMIS updates per year, the production of local and English languages reporting on system performance to be shared with municipalities, and the training of staff at the central MEST and in municipalities on technical manipulation of the system. Technical assistance will also be provided in the first year to support the roll out of EMIS software and required training. The outsourcing arrangement is expected to cost the MEST approximately US$ 20,000 per year to be financed from this grant on a declining basis. A contractor will be selected on in competitive basis. In addition to the outsourcing arrangement, the project will finance the services of an individual intemational consultant who will make periodic visits to Kosovo to (a) assist with initial supervision of the outsourcing contract, (b) participate in training design and delivery for both the MEST and municipalities, and (c) assist the MEST to undertake analysis based on EMIS data and indicators and to produce reports for system stakeholders and donors. As mentioned above, special focus will be given to - 34 - access, attainment and retention indicators in the Ministry's EMIS reporting. A terns of reference will be reviewed at appraisal. The Ministry will assign a staff member who will be principally responsible for managing the outsourcing contract, as well as be the primary counterpart of the international technical assistant. The responsible MEST staff will be expected to have an education policy background (or be willing to be trained), and not an IT background. External training will also be included under the project. A terms of reference for this assignment will be reviewed at appraisal. Limited equipment and furniture will be included under the component for a central MEST office and to upgrade municipal education offices. Project Component 3 - US$ 0.51 million Strengthening Project Management The objective of this component is the effective implementation, monitonng and evaluation of the proposed project. The Project Management Unit (PMU) that has been established under the ongoing Kosovo Health and Education Project will assume administration and implementation responsibilities for the proposed project. The PMU will report to the Principal International Officer (PIO, UNMIK) and the Permanent Secretary, Ministry of Education, Science and Technology (MEST). The contracts of the PMU staff will be extended under the new project. In addition to supporting project implementation in cooperation with UNMIK authorities responsible for financial management and procurement, the PMU will be responsible for monitoring and evaluation of results under the school development grants component.. The PMU will be primanly responsible for organizing and coordinating all school grant activities including authorizing grant payments, guiding technical assistance, managing the school development teams, and publicizing the grants component. It will also oversee the EMIS implementation and, as during the implementation of the ongoing project, will make sure that the reports of the EMIS system are regularly published and distributed. The Project Management Unit (PMU) will include the followving staff: (a) PMU Director; (b) Procurement specialist; (c) Education Specialist/Deputy Director; (d) Accountant/Financial Management Specialist; (e) Translator/Procurement Assistant; (f) Translator/Procurement Assistant; (g) Office manager/administrative assistant; (h) A driver. All PMU staff will be hired on a consultancy basis. The Deputy Director for the ongoing project will assume the position of the Director, PMU during EPIP preparation and during the first months following project effectiveness (until June 30, 2003). Under the Director's supervision, a Deputy Director will be hired. S/he will assume the responsibilities as PMU Manager after June 30, 2003, when the ongoing project is expected to close. The Deputy Director will be in charge of the preparation of the SDG component and will be trained on-the-job in IDA project implementation and procurement procedures by the staff of the ongoing project. The terms of reference for the Director's position have been approved and the selection process has commenced. A Deputy Director will be selected by a Committee including the Minister, the Permanent Secretary and the Pnncipal International Officer. Other PMU staff will be hired prior to Project effectiveness. The Grant will finance PMU office rent throughout project implementation, operating costs of the PMU, and an additional vehicle to be used by the PMU during project implementation. The PMU staff will coordinate efforts to complete a Project Operating Manual, which will be developed by Ministry and PMU staff and local experts. The POM will address the roles, responsibilities, accountabilities, and reporting requirements of various parties--municipalities, municipal level selection committees, school directors, and school boards. - 35 - Appendix 1. Institutional Assessment 1. PURPOSE The purpose of this assessment is to establish the extent to which the institutional capacity in Kosovo will be able to support implementation of the EPIP project, and to make recommendations on how any shortcomings might be addressed. This assessment does not focus on financial management or procurement capacity as this is dealt with elsewhere in the PAD. 2. METHODOLOGY The assessment is based on interviews conducted during the mission with key stakeholders at central, municipal and school level, and on documents and reports made available during the mission. 3. COMPONENTS FOR ASSESSMENT The central thrust of the project is the disbursement of small grants to schools that have prepared approved (three-year) School Development Plans and (one - two-year) Project Proposals. This will be the major focus of this assessment. A second component of the project is the strengthening of the Education Management Information System (EMIS) that was developed with Bank support under the present Education and Health Project. Effective implementation and monitoring of the school grants scheme will require the EMIS system to deliver timely and reliable management information. The third component of the project is the strengthening of the existing Project Management Unit into a Project Management Unit to ensure that it has the capacity to ensure effective implementation of the project, including the coordination, monitoring and reporting requirements. 4. INSTITUTIONAL FRAMEWORK 4.1 System levels The implementation and monitoring of the project will require institutional mechanisms at three levels of the system: at the school level, where the resources will be applied, at the municipal level, where key targeting, coordination and monitonng functions are located, and at the central level, which will manage the grant approvals process, disbursement of grants, and coordination and reporting. 4.2 Public and private sectors The project operates through the public education system, and is designed to build on and reinforce the system reforms, especially decentralization and management capacity-building, that were established in the current Education and Health Project. The main institutional functions, therefore, are based at each level in public sector institutions. However, as with the current project, a certain amount of the institutional capacity-building activities will be provided through NGOs and the private sector, with support from international expertise where required. 4.3 Institutional Elements The review assesses institutional capacity in terms of institutional structure (including policies, - 36 - procedures and manuals), human resources, and information capacity. 5. CENTRAL LEVEL INSTITUTIONS The role of central government institutions in the implementation of the project is limited by the fact that most of the activities and expenditure of funds occurs at the level of the school. 5.1 Ministry of Education, Science and Technology The Ministry of Education Science and Technology (MEST) supported by the Principal International Officer appointed by UNMIK will be responsible for overall oversight of the Project. In terms of human resources, the newly established Ministry of Education, Science and Technology has limited institutional capacity to take on additional tasks related to the project. Newly appointed senior staff (including Permanent Secretary and Head of Education) are still settling into their posts, and the process of hand-over of responsibility from the international staff is still under way. Recommendation The proposed School Grants Approval Board should be established to meet this institutional capacity limitation. The PAD makes provision for this body and describes its constitution and function. In terms of institutional structure, the obvious unit for locating responsibility for implementation, monitoring and supervision is the existing Project Management Unit. Assessment of the capacity of the PMU indicates that with minor modifications, including strengthening of the procurement and financial management capacity, it should be able to meet the demands of management of this project.. Recommendation The existing Project Coordination Unit, operating within the MEST, should be developed and expanded into a Project Management Unit as provided for in the Institutional Arrangements section of the PAD. The policy framework for financial delegation to municipalities and schools is well established and is supported by concise and helpful Manuals developed during the first project. Since the project operates within the provisions of the new policy and is in line with the General Education Law, it does not require modifications of existing policy. However, since the implementation of the EPIP will require the involvement of a range of inexperienced officials and some personnel not in MEST, there is a need for an operations manual that provides clear guidance on implementation, and relates it where appropriate to existing policy and regulations. Recommendation The Project Operating Manual currently under development be finalized and reviewed in good time to ensure that it is available to provide the necessary guidance. In terms of information and system resources, the project will depend for targeting, management and monitoring on information from the Education Management Information System, which was established as part of the current project. While the EMIS has reached a fairly advanced stage, it will not be able to meet the information requirements of the project without further development, consolidation, transfer from spreadsheet to database format, and additional arrangements to ensure that the necessary skilled - 37 - technical personnel can be drawn on to ensure that the EMIS develops at the pace needed to deliver information for the project. Recommendation The second component of the project makes provision for the further development and refinement of the EMIS, and this process should be expedited. The technical aspects of development of the EMIS should be contracted out as the salary limitations in the public service make it difficult to retain the services of skilled computer personneL Contracting out will also provide some flexibility with regard to accessing technical skills as and when needed, instead of on an ongoing full-time basis. OveraUl responsibility for the EMIS, and ownership of the data, should remain in MEST. 6. MUNICIPAL LEVEL ENSTITUTIONS The decentralization reforms supported by the Bank provide for substantial decentralization of responsibilities, especially in terms of financial management. The existing School Funding Handbook supported by ongoing training will help to build and consolidate capacity at this level. Interviews with MEST and UNMIK financial managers indicate that many municipalities are still not managing to spend the resources assigned to them. Other reports indicate that some schools may not be receiving their share of the per capita grant from municipal education authonties. The project does not envisage the involvement of the municipal authorities in direct disbursement of school funds, although they will have a role in momtoring and reporting on expenditure of grants. The "two level system" whereby certain functions are delegated to the Municipal Director (MED), and others remain the responsibility of the Regional Education Officer (REO), is operating unevenly. In some municipalities lack of cooperation between these officials could present problems to the implementation. The municipalities have a key role in implementing the targeting strategy according to the criteria approved by the School Grants Approval Board. Recommendation Small Municipal School Grant Management Teams, consisting of the MED, the REO and a representative of the NGO responsible for capacity-building and outreach in that municipality be established as providedfor in this PAD. Part of the Terms of Reference for Capacity-Building NGOs should be to participate in these teams, and to identify and alert the PMU to problems that might arise from limited or poor collaboration between MED and REO. These teams should also review School Development Plans and School Grant Project Proposals before they are submitted to SGAB for approval. 7. SCHOOL LEVEL [NSTTITUTIONS The most significant institutional demands for the implementation of the School Grants component fall at the level of the school. The pnncipal institutional structure involved is the School Board, which includes representatives of teachers, parents, and in the case of secondary schools, of students. The school director serves as secretariat ex officio. The School Board is a new institution and very few have been established, so it is difficult to establish the possible problems they may confront. The new General Education Law provides a policy framework that consolidates several official circulars and official instructions issued by the Department of Education and Science. There exists no manual for operation of School Boards, although the Kosovo School - 38 - Funding Handbook provides some guidance. There is some history in the parallel system (1990 - 1999) oi school committees that played a significant role in mobilizing resources for schools; these were similar in constitution and function to school committees that operated in schools under the authority of the (Serb) provincial authorities. In addition, since 1999 there is a wide range of different school level structures established with the support of various NGOs, including PTAs and Parent Teacher Councils (PTCs). The latter operate at both school and municipal level with support from Catholic Relief Services (CRS). Thus many communities claim to have experience and background in supporting or participating in school management, and mobilizing and administering resources. However, while there may be some experience to build on, there is no experience of constituting and managing school level goveming bodies of the type provided for in the School Board regulations, and early indications from the Pilot Project are that considerable amount of support, in the form of training, procedures manuals and follow-up will be required. This would normally be a function of the MEST, but it is unlikely that this kind of support will be available in time for implementation of the project. Recommendation It is recommended that the School Grant Manual currently under development in the Pilot Project be modified and updated in light of experience gained. The current draft Manual serves as both a procedures manual and as a training resource. On the basis of the experience in the Pilot, a decision will have to be made on whether this guidance would be better provided in theform of one manual or separate manuals. It is recommended that the proposed capacity-buildingfunction include guidance to school Directors in the establishment of School Boards, as well as intensive training of schoolpersonnel and School Board members in School Development Planning, project proposalpreparation andproject implementation. The capacity buildingfunction must includefollow-up outreach to schools. 8. NGO AND PRIVATE SECTOR INSTITUTIONS Kosovo has a strong, if short, history of NGO activity. The current decline in international funding has led to many intemational NGOs withdrawing or scaling back activities, and many local NGOs are struggling to survive. There is thus a surplus of NGO capacity in terms of human resources, and, given the right stimulus, it is clear that several NGOs could quite quickly scale up their institutional capacity to provide services for the Project. The project design envisages NGOs provision of the capacity-building including school outreach and follow-up that will be required for School Boards to ensure delivery of School Development Plans and School Grant Project Proposals. However, while the capacity exists and could quickly be mobilized, there are very few NGOs with coverage throughout Kosovo. Many NGOs did operate on a regional basis based on the five UNMIK regions. Thus the project design assumes that a number of NGOs will be contracted to provide services to schools in municipalities grouped on a geographic basis. Possible problems could anse in coordination of a number of contracting NGOs, and mechanisms must be in place to ensure that they operate within a coherent and consistent framework, while giving them the flexibility to adapt according to circumstances. Recommendation It is recommended that the TORsfor the Capacity-Building NGOs specify quiteprecisely the - 39 - institutional capacity and performance requirements. If this function is provided through partnership with KFOS, then this provision must be made clear in the memorandum of understanding. In addition, the Project Operating Manual must make very clear these requirements, and the Project Management Unit must be vigilant in ensuring that the capacity-building service is being provided on a coherent and consistent basis. The contracting out of the technical aspects of the EMIS development and maintenance to a local consultant will draw on private sector capacity. This assessment did not involve any examination of the capacity in the private sector, but the demands of this contract, are quite limited, and it is not envisaged that there will be senous constraints provided that the services are paid for at market related rates, which cannot be done while the function is performed by personnel in MEST. 9. CONCLUSION The EPIP project was designed to make minimal demands on the severely constrained institutional capacity of the central and provincial education authorities, and draws heavily on capacity, much of which needs to be developed, at the school level. It is, therefore, appropriate that significant resources are targeted at institutional capacity-building at the school level. The Project builds significantly on the institutional capacity developed through the support of the current Education and Health Project, especially the financial decentralization to municipalities and schools, the management development programs and the information management system. The Project Management Unit has demonstrated consistently high institutional capacity and has a good record of implementation effectiveness, and this also constitutes a significant institutional asset for the project to build on. As far as possible the project makes use of existing institutional capacity and mechanisms, especially with regard to financial management, project management and grant disbursement, but effective implementation of the project will require the creation of a high level board (SGAB) at the central level, and small Project Management Teams at the municipal level. The School Boards, which are established in terms of the new legislation/regulation, are not project institutions, but they are new institutions and it is unlikely that MEST will be able to support the establishment and quick capacity-building. It will, therefore, be necessary for the project to commit significant resources to building the capacity of these key institutions in the project schools. - 40 - ,Annex 3: Estimated Project Costs KOSOVO: Education Participation Improvement Project '~~~'. - '.' Pt,B .,C mponent'>' ;; ~$dlr* .', ,,-'io. -R I. School Development Grants (SDGs) 0.00 3.79 3.79 2. Education Management Informnation System 0.00 0.30 0.30 3. Project Management 0.00 0.51 0.51 Total Baseline Cost 0.00 4.60 4.60 Physical Contingencies 0.00 0.00 0.00 Price Contingencies 0.00 0.00 0.00 Total Project Costs' 0.00 4.60 4.60 Total Financing Required 0.00 4.60 4.60 tB'Ctor --. s - US$25,000 IC All IndividulasVuhn'\ g!X;TN sb o 1:.- MAIN ROADS A300 Juf L >frpezel X f8o / V Ago S TRE When, only one nome i5shon is ,elm h some in ( MlN ; , _{\ ) + \ GREECE 5§ - U KEYu2 both languages 20°301 21°00 t " w _<2 * o bII eTek 20'00~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~~~AC 2003 2 epPork No.: 25571 YU Type: PAD-,