Document of The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized

Report No: 5 1925-MX

PROJECT APPRAISAL DOCUMENT

ON A Public Disclosure Authorized

PROPOSED LOAN

IN THE AMOUNT OF US$ 100 MILLION

TO THE

UNITED MEXICAN STATES

FOR A

COMPENSATORY EDUCATION PROJECT Public Disclosure Authorized

February 24,2010

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World

Public Disclosure Authorized Bank authorization. CURRENCY EQUIVALENTS

(Exchange Rate Effective January 26,2010) Currency Unit = Mexican Peso MX$1.00 = US$O.OS US$1 = MX$12.93

FISCAL YEAR January 1 - December 31

ABBREVIATIONS AND ACRONYMS

AGES Support for School Management (Apoyo a la Gestidn Escolar) APECs Associations of Community Members in Support of Community Education (Asociaciones Promotoras de la Eduacidn Cornunitaria) APFs Parent Associations (Asociaciones de Padres de Familia) API Mobile Pedagogical Support (Asesoria Pedagdgica Itinerante) APL Adaptable Program Loan CDI National Commission for the Development of Indigenous Peoples (Comisidn Nacional para el Desarrollo de 10s Pueblos Indigenas) CONAFE National Council for Education Development (Consejo Nacional de Foment0 Educativo) CONAPO Consejo Nacional de Poblacidn CPS Country Partnership Strategy DAF Direccidn de Administracidn y Finanzas DGEI General Directorate for Indigenous Education DP Planning Directorate (Direccidn de Planeacidn) ECD Early Childhood Development ENLACE Evaluacidn Nacional del Logro Acadkmico en Centros Escolares FORTALECE Fortalecimiento Comunitario para la Educacidn GDP Gross Domestic Product IBRD International Bank for Reconstruction and Development IDA International Development Association IMSS Instituto Mexican0 del Seguro Social NEE Instituto Nacional para la Evaluacidn de la Educacidn IPP Indigenous Peoples Plan MEEO Municipal Educational Equity Office NAFIN Nacional Financiera, S.N.C. OECD Organisation for Economic Co-operation and Development OM Project Operational Manual PAN National Action Party (Partido Accidn Nacional) PAS Procurement Accredited Staff PAREIB Programa para Abatir el Rezago en Educacidn Inicial y Bdsica PISA Program for International Student Assessment PND National Development Plan (Plan Nacional de Desarrollo) PRI Institutional Revolutionary Party (Partido Revolucionario Institucional)

1 FOR OFFICIAL USE ONLY

PSE Sectoral Program for Education (Programa Sectorial de Educacidn) SBM School-Based Management SBD Standard Bidding Documents SEP Secretaria de Educacidn Pziblica SEPA Sistema de Ejecucibn de Planes de Adquisiciones SEPEs State-Level Secretariats of Public Education (Secretarias Estatales de Educacidn Pziblica) SHCP Secretaria de Hacienda y Cre'dito Pziblico SIL Specific Investment Loan SNTE National Syndicate for Education Workers (Sindicato Nacional de Trabajadores de la Educacidn) UCE State Coordinating Units (Unidades Coordinadoras Estatales) UPC Compensatory Programs Unit (Unidad de Programas Compensatorios)

Vice President: Pamela Cox Country Director: Gloria M. Grandolini Sector Director: Evangeline Javier Sector Manager: Chingboon Lee Task Team Leader: Peter Anthony Holland

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization.

ii

MEXICO COMPENSATORY EDUCATION PROJECT

CONTENTS

Page I. STRATEGIC CONTEXT AND RATIONALE ...... 1 A . Country and sector issues...... 1 B. Rationale for Bank involvement ...... 6 C . Higher level objectives to which the project contributes ...... 7 I1. PROJECT DESCRIPTION ...... 7 A . Lending instrument ...... 7 B. Project development objective and key indicators...... 7 C . Project components ...... 8 D. Lessons learned and reflected in the project design...... 9 E. Alternatives considered and reasons for rejection ...... 10 I11. IMPLEMENTATION...... 11 A . Institutional and implementation arrangements ...... 11 B. Monitoring and evaluation ofoutcomes/results...... 12 ... C . Sustainability ...... 14 D. Critical risks and possible controversial aspects...... 14 E. Loadcredit conditions and covenants ...... 17 IV. APPRAISAL SUMMARY ...... 17 A . Economic and financial analyses ...... 17 B. Technical ...... 18 C . Fiduciary ...... 19 D. Social...... 20 E. Environment ...... 20 F. Safeguard policies ...... 20 G. Policy Exceptions and Readiness...... 21

... 111 Annex 1: Country and Sector or Program Background...... 22 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ...... 29 Annex 3: Results Framework and Monitoring ...... 31 Annex 4: Detailed Project Description...... 47 Annex 5: Project Costs ...... 60 Annex 6: Implementation Arrangements ...... 61 Annex 7: Financial Management and Disbursement Arrangements...... 67 Annex 8: Procurement Arrangements ...... 77 Annex 9: Economic and Financial Analysis ...... 80 Annex 10: Safeguard Policy Issues ...... 88 Annex 11: Project Preparation and Supervision ...... 100 Annex 12: Documents in the Project File ...... 101 Annex 13: Statement of Loans and Credits ...... 103 Annex 14: Country at a Glance ...... 106 Annex 15: Maps...... 109

iv MEXICO

COMPENSATORY EDUCATION

PROJECT APPRAISAL DOCUMENT

LATIN AMERICA AND CARIBBEAN

LCSHE

Date: February 24,2010 Team Leader: Peter Anthony Holland Country Director: Gloria M. Grandolini Sectors: Pre-primary education (40%); Sector ManagedDirector: Chingboon Lee Primary education (40%); Secondary education (20%) Themes: Education for all (100%) Project ID: P101369 Environmental category: Not Required Lending Instrument: Specific Investment Loan Joint IFC: Joint Level: Project Financing Data [XI Loan [ 3 Credit [ ] Grant [ ] Guarantee [ ] Other:

Source Local Foreign Total Borrower 66.70 0.00 66.70 International Bank for Reconstruction and 98.60 1.40 100.00 Development Total: 165.30 1.40 166.70

Borrower: United Mexican States

Responsible Agency: Consejo Nacional de Foment0 Educativo (CONAFE) Avenida de 10s Insurgentes Sur No. 421 Torre B Colonia Hip6dromo Condesa. MCxico, 06100, D. F.Te1: (52-5) 5241-7400

FY 10 11 12 13 14 Annual 5.00 25.00 25.00 25.00 20.00 Cumulative1 5.00 I 30.00 I 55.00 I 80.00 I 100.00 I Project implementation period: Start May 1, 2010 End: June 30, 2014 Expected effectiveness date: May 1, 20 10 Expected closing date: October 30, 2014

vi Does the project depart from the CAS in content or other significant respects? [ ]Yes [XINO Ref:., PAD I.C. Does the project require any exceptions from Bank policies? Ref: PAD IK G. [ ]Yes [XINO Have these been approved by Bank management? [ ]Yes [ IN0 Is approval for any policy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risks rated “substantial” or “high”? [XIYes []No Ref:I PAD III.E. Does the project meet the Regional criteria for readiness for implementation? [XIYes [ ]No Ref:a PAD IK G. Project development objective Ref: PAD ILC., Technical Annex 3

The development objective of the Compensatory Education Project is to improve access to Early Childhood Education (ECD) services and learning outcomes of children in the most marginalized municipalities of Mexico. This objective would be achieved through innovative interventions at the early childhood and basic education levels that strengthen the involvement of members ofthe school community and municipalities.

Project description Ref: PAD I.D., Technical Annex 4

Component 1 would provide out-of-school training for parents, relatives and caregivers of children aged 0-4, to improve their competencies and practices in caring for children and contribute to the children’s comprehensive development and school readiness. Component 2 would (i)provide grants to AGE Entities and FORTALECE Entities for minor school repairs and rehabilitation, minor infrastructure improvements, and activities to improve the school environment and enhance collaboration and accountability mechanisms at the school level; (ii) provide mobile pedagogical support to students, teachers and parents of students in under- performing schools through tutors; (iii)provide technical assistance to design materials for tutors to provide pedagogical support; and (iv) provide technical assistance to strengthen the capacity of Selected Municipalities to carry out strategic planning and other activities. Component 3 would provide technical assistance and training to strengthen the capacity of the National Council for Education Development (CONAFE) to implement and manage the Project, and provide technical assistance and training to CONAFE and external stakeholders to monitor and evaluate the Project and other early childhood development programs ofthe Borrower.

Which safeguard policies are triggered, if any? Ref: PAD IKF., Technical Annex 10 Indigenous Peoples (OP/BP 4.10) Significant, non-standard conditions, if any, for: Ref: PAD III.F. Board presentation: None. Loadcredit effectiveness: (a) The Contrato de Mandato has been duly executed by the parties thereto; and (b) the Secretaria de Hacienday Cre‘dito Pziblico (SHCP), CONAFE, and Nacional Financiera, S.N.C. (NAFIN) indicate that the Contrato de Mandato has been duly

vii authorized or ratified by, and executed on behalf of, SHCP, CONAFE and NAFIN and is legally binding. Covenants applicable to project implementation: (a) The Borrower shall, and shall cause CONAFE to, in coordination with SEP, SEPEs, AGE entities, and FORTALECE entities, carry out the Project in accordance with the Operational Manual satisfactory to the Bank. (b) The Borrower shall cause CONAFE to enter into separate agreements with the States to support the implementation of the Project. (c) The Borrower, through SHCP, shall enter into a Contrato de Mundato among CONAFE and NAFIN, whereby CONAFE agrees to carry out the Project and NAFIN agrees to act as financial agent ofthe Borrower.

viii

I. STRATEGIC CONTEXT AND RATIONALE

A. Country and sector issues

1. Mexico has made great strides in reducing poverty and improving human development outcomes, though inequity persists. Poverty rates in Mexico have fallen from a high of 69.0 percent during the financial crisis of the mid-1990s to an estimated 47.4 percent in 2008’. Human development indicators have improved markedly over this period: infant mortality rates have dropped from 36 to 29 @er thousand), illiteracy has declined from 12.4 to 7.2 percent, and life expectancy is now 75, from an estimated 722. While indigenous populations and the most disadvantaged communities have made above average gains over this time, they continue to face inequalities of opportunities for improving their socio-economic status and escaping poverty. In 2005, illiteracy among the indigenous population (3 1.7%) and geographically isolated, highly marginalized3 municipalities (34.7%) was approximately four times the rate among the population overall (8.6%)4,

2. Prior to the onset of the current global economic downturn, Mexico experienced moderate growth within a framework of enhanced macroeconomic stability. GDP growth averaged 3.8 percent annually between 2004 and 2007, as fiscal policy successfully focused on a reduction of the public sector deficit and a decline in the public sector debt-to-GDP ratio, and enhanced price stability contributed to a healthy domestic credit expansion and growth of domestic demand.

3. However, the current global financial crisis, combined with lower oil prices, has led to a severe recession and constrained public spending in Mexico. Global economic and financial shocks have been transmitted to the Mexican economy through weaker external demand, lower workers’ remittances, higher external borrowing costs, reduced access to external finance, and domestic credit contraction. Economic growth decelerated in the first three quarters of 2008 and turned negative during the last quarter, thereby bringing GDP growth for the year to a modest 1.3 percent. For 2009, the country suffered a contraction of annual GDP by 6.5 percent’, placing great strain on available resources over the short and medium term. Significant cuts have been introduced across all social sectors, impacting both the Ministry of Education (Secretaria de Educacidn Pziblica - SEP) and the National Council for Education Development (Consejo Nacional de Fomento Educativo - CONAFE) (both described below under Sector Issues).

I CONEVAL figures for 1996 and 2008. Pobrezapatrimonial, the broadest of the national poverty indicators, is defined as households whose income is insufficient to cover basic needs in the areas of food, health, education, clothing, housing and public transportation. World Bank HNP Stats (1995 and 2007), EdStats (1990 and 2007), and World Development Indicators (1995 and 2007) 3 CONAPO. indices de Marginacidn, 2005. 2006. Index comprises measures related to education, housing, income, and population dispersion. 4 INEE. La Educacidn Para Poblaciones en Contextos Vulnerables. 2007; CONAPO. indices de Marginacidn, 2005. 2006. Index comprises measures related to education, housing, income, and population dispersion. 5 INEGI data released Feb. 22, 2010. 1 4. As a consequence of rising food prices, poverty in Mexico, particularly in rural areas, was already increasing leading up to the crisis and is likely to have increased further, in particular due to a decrease in remittances. Although it remains well below mid-1990s levels, poverty increased from 42.7 percent in 2006 to 47.4 percent in 2008. Furthermore, it remains higher and has increased more dramatically in rural areas, rising from 54.7 percent to 60.8 percent (compared to an increase from 35.6 percent to 39.8 percent in urban areas). As a result ofthe economic crisis, remittances declined by US$ 93 1 million (3.6%) in 2008, and by an estimated US$ 3.9 billion in 2009. This is of particular concern, because remittances are received predominantly by lower-income households living in rural areas, who allocate a major part ofthem to human capital investment like health and education, rather than consumption.

5. The effects of the food price and economic crises have been partially mitigated by substantial improvements in the social protection system put in place by the Government since the previous crisis of the mid-l990s, in an effort to foster shared prosperity and protect the most vulnerable in times of economic difficulty. In 1997, it established PROGRESA (now Oportunidades), a conditional cash transfer program that safeguards the ability of extremely poor families to invest in their human capital by providing monetary transfers contingent on health check-ups and school attendance. Currently serving 5.2 million families, Oportunidades has expanded its scope to provide a range ofhealth, nutrition, education, and protective services to children from birth to five years, pregnant women, and parents of young children. In 2002, the Government established Seguro Popular, public health insurance that currently covers 23.5 million non-formally employed Mexicans and their dependents, 95 percent of whom are poor. Seguro Popular helps poor Mexicans offset the out-of-pocket costs associated with health care, such as for medications. In addition to investing in the human development of poor families, the Government developed programs to foster their employment and income generation. In 1997, it established the Temporary Employment Program (Programa de Empleo Temporal), providing temporary work to rural inhabitants living in extreme poverty to address the fluctuations in income associated with seasonal agricultural work. In 2002, it established the Productive Options Program (Programa Opciones Productivas), creating self- employment opportunities and projects through monetary and technical support. Recognizing the importance of childcare in facilitating employment, the Government established Estancias Infantiles in 2007, offering day care to poor families, thereby enabling parents to participate in the labor force while providing early stimulation to children.

Sector Issues

6. Institutional responsibility for education in Mexico is shared between the Federal and state levels. The Ministry of Education (Secretaria de Educacidn Pziblica - SEP) has overall responsibility for designing and implementing education policy and enforcing the regulation for education services, plans and study programs. In 1992, education service delivery was decentralized to the state education agencies (Secretarias de Educacidn Pziblica Estatales - SEPEs), which transferred greater decision-making authority and responsibility to the state level. Since its inception in 1972, the National Council for Education Development (Consejo Nacional de Foment0 Educativo - CONAFE), a federal agency autonomous from the SEP, has played an important complementary role by administering “community schools” in the country’s hardest- to-reach poor rural communities and, in order to equalize resources under the 1992

2 decentralization, by delivering compensatory programs to SEP’s general and indigenous schools in poor communities.

7. Mexico has significantly increased coverage in basic education6 and has narrowed gaps for disadvantaged groups. It has achieved near-universal coverage among pre-school children aged 4 and 5 (93.1 percent and 99.8 percent respectively) and primary school students (95.1 percent)’. In addition, it has greatly improved educational attainment, from 6.8 years in 1993 to 8.4 in 2006. Enrollment among primary and lower secondary school-aged indigenous children has increased dramatically, from 69.8 percent in 19908 to 91.5 percent in 2005, compared to 94.7 percent nationally’. In addition, poor children aged 5-14 living in rural areas were enrolled at 93.7 percent in 2006, up from 89.5 percent in 2000 (compared to a slight decrease from 97.7 percent to 97.6 percent for non-poor students over the same period)”.

8. Such improvements may have been bolstered by education sector reforms that the Government has undertaken since the early 1990s, and by the increase in demand for education stimulated by Oportunidades. Decentralization was accompanied by a number of reforms and initiatives at the central and state levels. Primary curriculum contents and materials were wholly reorganized. The Federal Government carried out an initiative to provide diversified pedagogical materials to primary school students and teachers, including free textbooks in each subject, large classroom libraries in most schools, and textbooks in indigenous students’ native language. In addition, information and communication technology was introduced in primary and secondary classrooms. CONAFE’s network of community schools was expanded, from 100 in 1973 to 30,000 in 2009. Furthermore, the Quality Schools Program (Programa de Escuelas de Calidad) was established, targeting disadvantaged urban and rural schools through a school-based management initiative. Finally, the expansion of Mexico’s conditional cash transfer program, Oportunidades, from 300,000 families in 1997 to 5.2 million families in 2009 has also contributed to the gains made in education coverage, through the provision ofeconomic incentives to families to send their children to school.

9. However, there remain concerns about the quality and relevance of learning, which recent reforms aim to address. Mexico has the lowest results in PISA among all OECD countries. Mexico’s performance on the 2006 PISA test shows a decline in reading competencies among 15 year olds between 2000 and 2006, though results for mathematics were considerably better. On the science assessment, Mexico was the only OECD country where a majority of test takers did not score above the proficiency level 2 (out of6). Recognizing quality as a key issue, the SEP’s Sectoral Program for Education (Programa Sectorial de Educacidn - PSE) 2007-2012 includes as its first objective to elevate education quality so that students improve their academic achievement, and the Program states explicit goals for national and international assessment results. In addition, the Alliance for Education Quality (La Alianza Para la Calidad de Educacidn) was created by agreement between the Federal Government and

6 Basic education is defined as preschool (educacidn preescolar) covering ages 3 to 5, primary education brimaria) covering grades 1 to 6, and lower secondary education (secundaria) covering grades 7 to 9. Under the Mexican Constitution, basic education is compulsory. SEP (2008) Sistema Educativo de 10s Estados Unidos Mexicanos: Principales Cifas Ciclo Escolar 2007-2008 * INEGI. “La Poblacidn Indigena en Mbxico. ” 2004. Based on Conteo de Poblacidn y Vivienda 1990 and 2005 CDI. “Los Pueblos Indigenas de Mbxico. ” 2008. 10 INEE. “Panorama Educativo de Mixico. ” 2008. 3 the teacher’s union, the National Syndicate for Education Workers (Sindicato Nacional de Trajabadores de la Educacidn - SNTE), with the goal of improving student learning through a transformation ofmanagement and service delivery.

10. Marginalized populations continue to face unequal education opportunities. While differences in school enrollment between indigenous and non-indigenous populations have narrowed, a greater percentage of children who are indigenous or living in remote areas remain outside the system, as noted above. Furthermore, indigenous children are more likely to be enrolled at a grade level lower than expected for their age”. Similarly, 20.4 percent of poor children aged 8-14 living in rural areas were enrolled two or more years below grade level in 2006, compared to the national average of 8.4 percent”.

11. The quality of education services that does reach these communities is low. The supply response by formal schools in remote regions with high proportions of indigenous populations has been slow, serving more densely populated areas first. Schools located in indigenous and hard-to-reach remote communities face challenges attracting and retaining qualified teachers, due to travel distances and, in some areas, security issues. For indigenous communities, pedagogical materials continue to be unavailable in their native languages, complicating fundamental reading instruction, a core prerequisite for many follow-on pedagogical activities.

12. Parents in these areas face constraints to demanding quality education services and fostering their children’s learning. Parents are often unable to recognize whether their children are receiving quality services and unaware of tools and methods that may be at their disposal to enhance accountability at the school level. The capacity of families and community members in marginalized municipalities to support their children’s education is limited by their own low educational attainment. In municipalities characterized as very highly marginalized in 2005, more than a third of inhabitants 15 years or older were illiterate and nearly 60 percent had not completed primary while among indigenous people 15 years or older, nearly a third were illiterate and 55 percent had not completed primary scho01’~. Furthermore, school attainment among indigenous people was half that of the population overall (4.5 years compared to 8.1 years) and particularly low for indigenous women (3.9 years), who are most likely to care for children.

13. Educational achievements in marginalized areas face multi-sectoral constraints, and demand multi-faceted local development programs that municipalities are best placed to deliver. Yet municipalities have little incentive and capacity to focus on education goals, as they are largely excluded from the service delivery chain. Problems with transport, communication, housing, nutrition, and seasonal employment, as well as lack of local empowerment for social and public auditing of education sector performance, are major constrains to educational achievements in marginalized areas. As such, they demand broader local development initiatives that municipalities have a mandate and comparative advantage to undertake. Also, supply-driven

11 CDI and UNDP. “Informe sobre Desarrollo Humano de 10s Pueblos Indigenas de Mbxico 2006. ” 2006. 12 NEE. “Panorama Educativo de Mbxico. ” 2008. l3CONAPO. “indices de Marginacidn, 2005. ” 2006. 14 NEE. “La Educacidn para Poblaciones en Contextos Vulnerables. ” 2007. 4 education sector programs and interventions, from both the state and Federal Governments, have tended to proliferate in response to single issues of national importance, without regard for local demand. A greater role by municipalities in the planning and implementation of such programs could bring the potential advantages of their comprehensive planning mandate and closeness to communities to bear on the relevance and efficiency of state and federal education programs, reducing waste and mobilizing additional resources. Yet municipalities remain largely marginalized from the education services delivery chain. As a consequence they have few incentives to make educational achievements a focus of their own action and have developed neither the capacity to formulate local strategic plans driven by educational goals, nor the capacity to serve as efficient agents and operators of state and federal education programs. As a result education services delivery in municipal jurisdictions and their marginalized areas continues to suffer from partial, uncoordinated and sub-optimal approaches.

14. Since it was established in 1972, CONAFE has carried out important work to address educational shortcomings among indigenous populations and in the most remote areas of the country. CONAFE provided complementary support to the federalization of education service provision by designing and implementing compensatory educational mechanisms to equalize resources and improve the quality of education provided to its target populations. Since that time, five generations of programs have been rolled greatly reducing inequality of access to schooling. Over this period, the Bank’s support to CONAFE has evolved from financing specific education inputs towards financing innovation in education. CONAFE’s focus is on low income populations where there are large numbers of students that participate in the conditional cash transfer program, Oportunidudes.

15. In 1998, CONAFE developed an early childhood development (ECD) intervention to improve the competencies of 0-4 year olds and their parents (educucio’n iniciul), with the objective of improving child development and school readiness. CONAFE’s approach uses existing assets such as preschools and public spaces for meeting areas, and a network of volunteers to teach the parenting education classes, This community-based approach is a successful and cost-effective way to provide important services to poor children. The program reaches an estimated 400,000 children and their parents in remote communities throughout Mexico. However, at present CONAFE only reaches about 20 percent of its potential population: of Mexico’s 10 million children between the ages of 0-4, about 2 million live in communities of high poverty incidence, that is, the main target areas of CONAFE. This is of particular importance given the high correlation between early childhood development services and human development outcomes later in life, such as student learning in primary and secondary school and more favorable labor market outcomes.

16. Using school-based management and fostering greater social participation in schools, CONAFE is improving the quality of education offered in poor municipalities. As a

IsPrograma para Abatir el Rezago Educativo (PARE) 1992-1996, Proyecto para el Desarrollo de la Educacidn Inicial (PRODEI) 1993-1997, Programapara Abatir el Rezago en Educacidn Bdsica (PAREB) 1994-2001, Programa Integral para Abatir el Rezago Educativo (PIARE) 1995-2001 y Programa para Abatir el Rezago en Educacidn Inicial y Bdsica (PAREIB) 1998-2007. 5 component of its compensatory programs, CONAFE developed the fid6 school-based management program in Mexico, Support for School Management (Apoyo a la Gestidn Escolar - AGE). Findings from impact evaluations of AGE, as well as evaluations from other similar programs, show that SBM programs can translate into greater parental involvement in the management of schools and changes in teacher actions, as well as have a positive impact on grade repetition and failure rates and to a lesser extent drop-out rates17. For example, Gertler et a1 (2006) find that AGE reduced grade repetition by 4 percent and grade failure by 4.2 percent’*. Using focus groups and discussions with parents, teachers, and school directors in beneficiary and non-beneficiary schools to corroborate their quantitative results, they find that more active participation by parents is behind the measured improvement in outcomes associated with the program”. AGE helps to increase parental participation in school matters and to improve relations and communication between parents and teachers. Parents in schools with AGE were more likely to observe and complain about teacher absence and poor teaching, and they were more likely to know when their child was not performing well and to take corrective action.

B. Rationale for Bank involvement

17. The proposed project is in line with the National Development Plan (Plan Nacional de Desarrollo - PND) and the Bank’s Country Partnership Strategy (CPS) for Mexico for Fiscal Year 2008 - Fiscal Year 2013 (Report No. 42846-MXY’ March 4, 2008), both of which emphasize increasing equality of opportunity and promoting social inclusion. The CPS proposes comprehensive assistance to efforts to promote social inclusion and to reduce poverty. This includes supply-side and demand-side human development programs that target the poor. The Federal Government endorses programs aimed at “Promoting Social Inclusion and Reducing Poverty.” The Project would also contribute to the objectives outlined in the PSE and the Alliance for Quality Education to increase equality of educational opportunities and to increase community participation in education.

18. Mexico has requested the Bank’s continued technical support to CONAFE’s efforts to reduce inequalities in the education sector in Mexico. As noted above, the Bank has been supporting CONAFE for nearly 20 years in the design and implementation of education programs for Mexico’s most disadvantaged communities. The Government believes that the Bank’s presence would help consolidate and enhance the ECD and AGE interventions supported under the Programa para Abatir el Rezago en Educacidn Inicial y Bcisica - PAREIB co-financed by the Bank through the Basic Education Development APL (1998-2007). Second, the Bank’s knowledge and expertise is sought to provide crucial technical support to monitor, evaluate and improve the quality of the programs delivered. Third, Bank support is requested to assist in the design of the pilot program for strengthening municipal institutions’ capacity to manage and supervise education services, with the view of fostering more responsive and better coordinated education service delivery in Mexico.

16 As mentioned previously, the federal Government created the Program of Quality Schools (Programa Escuelas de Calidad) to promote community participation in schools in 200 1. See World Bank. “What Do We Know About School-Based Management?” 2007 for a review of the 13 most rigorous evaluations of SBM programs. 18 Gertler et al. “Empowering Parents to Improve Education: Evidence from Rural Mexico.” 2006 (revised 2008). l9 World Bank. “Impact Evaluation for School-Based Management Reform.” 2007. 6 19. The proposed Project would be an important complement to existing Bank-supported operations in the Human Development sector and beyond. First, the proposed support to CONAFE targeting rural and indigenous areas complements the Bank-supported Quality Schools Program (Program de Escuelas de Calidad), which focuses on the peri-urban poor. Second, the proposed Project is an important supply-side response to the Oportunidades program, which the Bank is co-financing. Oportunidades has been instrumental in removing demand-side constraints for poor families to send their children to schools, particularly in rural areas. As the program’s targeting improves, and as more remote areas come online, supply-side initiatives in those areas such as those offered by CONAFE are central to better preparing schools and communities for receiving the increased number of students, and guaranteeing minimum standards of quality*’. This Project would explore areas of overlap with Oportunidades in order to maximize potential synergies. Third, the focus on basic education fits naturally with the forthcoming policy-based Bank operation on upper secondary, currently under preparation, and the ongoing project at the tertiary level. Finally, the pilot giving municipalities the responsibility and the resources to fulfill their education mandate dovetails with the Bank’s ongoing analytical work surrounding sustainable municipalities in Mexico.

C. Higher level objectives to which the project contributes

20. The proposed Project contributes to reducing the inequalities of opportunity that exist in Mexico. The CPS notes the existence of “two worlds” in Mexico, with sharp differences in income, social outcomes, and access to and quality of services between the northern and southern states and across ethnic groups. In order to close the gap between these two worlds, the Government’s PND stresses social policy that creates equitable opportunities in order to achieve permanent medium- and long-term effects and break the intergenerational cycle of poverty. As the PND states, increasing opportunities across the social sectors - including education - enables people to participate actively in the economy and to realize their full potential.

11. PROJECT DESCRIPTION

A. Lending instrument

21. The proposed Project would be implemented through a Specific Investment Loan (SIL) of US$100 million.

B. Project development objective and key indicators

22. The development objective ofthe Compensatory Education Project is to improve access to ECD services and learning outcomes of children in the most marginalized municipalities of Mexico. This objective would be achieved through innovative interventions at the early childhood and basic education levels that strengthen the involvement of members of the school community and municipalities. This objective would be measured using the following project development indicators:

2o A recent study shows that 76 percent of Oportunidades beneficiaries attend schools benefiting from CONAFE programs. This number is markedly higher than those of other programs examined. 7 Gap in test scores between the 172 municipalities and the national level2’. Number of children 0-4 years old who attend at least 80% of the sessions of the ECD intervention in target municipalities.

C. Project components

23. The Project would represent a multi-layered, targeted approach to fulfilling CONAFE’s mandate of serving the most marginalized. The Project would seek to improve education outcomes for children by intervening at the levels of the child and parent (ECD, Mobile Pedagogical Support (APIs), teacher (APIs), school (School-based management through AGE/FORTALECE), community (AGE/FORTALECE) and municipality (municipal-based management). SEP indigenous and general schools would benefit from the long-standing and well evaluated school-based management program, AGE, while similar support would be provided to CONAFE-administered community schools through a new intervention, FORTALECE. The Project would target communities through the combined criteria of high marginalization and social decline and minimum numbers of potential beneficiaries, so as to reach as broad a segment of the population living in marginalized municipalities as possible, thereby maximizing efficiency and impact, Certain interventions would be further targeted based on additional risk factors: AGE would prioritize indigenous schools, while APIs would target compensatory schools with poor performance on the national ENLACE test. The interventions would converge in selected municipalities among the 172 of the Agenda for Equitable Education (Agenda para la Equidad Educativa), such that a critical mass of services would be provided, monitored and evaluated. The Project would also extend beyond these municipalities by supporting programs in marginalized communities across the country.

24. The Project would also support several innovations for the sector through the implementation and evaluation ofnew interventions and program components providing targeted support to previously underserved groups. The ECD intervention would introduce new sessions working directly with children, as well as with fathers. Building on the success of AGE, the FORTALECE intervention extends the potential of school-based management to community schools. APIs, another new intervention, provides intensive pedagogical support to struggling students and their parents and teachers, in compensatory schools. In addition, the Project would seek to involve municipalities, which are largely excluded from the education service delivery chain, in education planning and service delivery through municipal-based management. Combining these interventions in select municipalities represents a further innovation by addressing the education needs ofcommunities at multiple levels.

Component 1: Early Childhood Development Intervention (US$30.0 million)

25. This Component will finance training of parents, relatives and caregivers ofchildren aged 0-4 to improve their competencies and practices in caring for children and contribute to the children’s comprehensive development and school readiness. Activities under this component include, inter alia:

Please refer to Methodological note 1 in Annex 3 for a reference on how to compute the gap indicator. 8 (a) provision oftechnical assistance and training to ECD promoters, module supervisors, and zone coordinators to deliver the training ofparents, relatives and caregivers of children aged 0-4;

(b) provision of out-of-school training to parents, relatives and caregivers of children aged 0- 4; and

(c) provision oftechnical assistance to design training materials for the training ofparents, relatives and caregivers ofchildren aged 0-4.

Component 2: Interventions in Basic Education (UW63.2 million)

26. This Component will finance activities to support basic education in the most marginalized schools and municipalities ofthe Borrower. Activities include, inter alia:

provision of grants to AGE entities (under the AGE Intervention) and FORTALECE entities (under the FORTALECE Intervention) for minor school repairs and rehabilitation, minor infrastructure improvements, and activities to improve the school environment and enhance collaboration and accountability mechanisms at the school level;

provision of mobile pedagogical support to under-performing students, teachers and parents of students in under-performing schools through tutors;

provision of technical assistance to design materials for tutors to provide the mobile pedagogical support under component 2 (b); and

provision of technical assistance to strengthen the capacity of selected municipalities to carry out strategic planning and to delegate to selected municipalities, as allowed under the Borrower’s legal framework, the responsibility to carry out selected activities of CONAFE to manage and supervise the provision of early childhood education services.

Component 3: Project Monitoring, Management and Evaluation (US$3.2 million)

27. This Component will finance the provision of technical assistance and training to strengthen the capacity of CONAFE to implement manage the Project, and provision oftechnical assistance and training to CONAFE and external stakeholders (such as associations with an interest in local development, municipal associations, etc.) to monitor and evaluate the Project and other early childhood development programs ofthe Borrower.

D. Lessons learned and reflected in the project design

28. Several lessons from the previous Bank programs of support have been incorporated in the design of this proposed Project. First, with respect to maximizing participation from parents, the Implementation Completion Report22 found that the participation

** World Bank 2008. Implementation Completion Report. Basic Education (PAREIB 111). 9 from parents was lower than expected. Aside from reasons relating to inaccurate projections for participation in remote areas with fewer participating families on average, a portion of the shortfall was attributed to a lack of coordination with similar service providers. This has been corrected through increased cooperation with Oportunidades at the municipal level. Furthermore, the ECD intervention has been adjusted to increase parental motivation through tailoring a program series specifically for fathers, and FORTALECE would work with the larger community, including parents, to raise awareness of the importance of parental involvement in child development and education.

29. Second, with respect to institutional arrangements, the relationship with the states has been redesigned in order to ensure a strengthening of country systems. Under PAREIB 111, the UCEs located in each of the SEPEs were closed once Project financing came to an end, and the capacity built up in the unit dissipated. In order to foster a more sustainable service delivery model at the state level, this Project would seek to strengthen the existing project management and monitoring and evaluation capacity within each of the State Delegations, hereby improving the delivery ofinterventions across all of CONAFE’s programs.

30. Information generated from previous evaluations conducted of the ECD intervention show that further gains can be made from intervening directly at the level of the child. In addition to educating parents about their children’s developmental trajectory, the baseline survey undertaken by CONAFE revealed that the efforts working directly with children could be improved. CONAFE’s agents would therefore dedicate more time to direct interactions with children and their parents, focusing on early stimulation activities.

3 1. Lessons from School-Based Management programs from other countries and regions have also been integrated into the technical design. SBM experiences have been documented around the globe, and the region (most notably in Central America, Brazil, and Mexico). CONAFE continues to improve upon the design of the AGE intervention, including i) the refining of the targeting criteria, ii) the updating of the training materials for the AGE entities, and iii)the introduction of SBM to community schools, transferring resources directly to community representatives (see Annexes 4 and 9 for more details).

32. The pilot experience with APIs has also generated lessons that have been incorporated into the design of the Project. First, the activities ofthe APIs interventions have been broadened to include providing pedagogical support to the children themselves, focusing on teachers, and reaching out to parents. Second, it is clear that being able to speak the local dialects is a sine qua non criterion for those tutors posted to indigenous areas.

E. Alternatives considered and reasons for rejection

33, Results-based disbursement modalities. The introduction of disbursement modalities linking proceeds of the Loan to results achieved under the Project was considered early during project preparation. Due to the uncertainty of the overall macro situation in Mexico and the rapidly changing budgetary scenarios, it was decided that the current economic climate did not lend itself to accurate projections ofresults, hereby risking ineffective use of Loan proceeds.

10 34. Implementing an Adaptable Program Loan (APL). The use of an APL as the lending instrument rather than a Specific Investment Loan (SIL) was considered. Due to upcoming Presidential elections in 2012, it was decided to limit this operation to a SIL, with the possibility of beginning an APL series under the next administration.

35. Establishing PIUs at the state level. As was done under the PAREIB projects, the establishment (or reconstitution) of the UCEs at the state level in the SEPEs was considered, in order to facilitate the implementation of Project interventions. However, preference was given to strengthening existing Project Coordination Units fully integrated into CONAFE’s State Delegations, hereby strengthening country systems, and maintaining autonomy and responsibility within CONAFE for implementation, monitoring and evaluation of Project activities.

36. Designing a larger pilot for Municipal-based Management. Consideration was given to extending the Municipal-based Management program to the bulk of the 172 municipalities, and then to more than 10 percent. Finally, for reasons of fiscal space, and given the degree to which this pilot represents a new realm of project activities for CONAFE - and a substantial reform for public sector management - it was decided that the pilot would be limited to 5 municipalities, of varying types, and that the experience would be carefully monitored and well documented.

37. Designing a robust impact evaluation for all subcomponents. The inclusion of a comprehensive impact evaluation assessing the effects of each of the interventions in a statistically robust manner was considered. However, given the degree to which School-Based Management in Mexico has already been evaluated, and considering in particular the ongoing efforts to continue to evaluate the AGES intervention, it was decided that in-depth evaluation activities would focus only on those most innovative aspects of the Project: i)early stimulation activities for children and sessions for fathers under the ECD intervention, ii)the expansion of SBM to community schools (FORTALECE), iii)the support provided by APIs to compensatory schools, and iv) the Municipal-Based Management pilot. While full impact evaluation will not be undertaken for activities under the other components, monitoring indicators would continue to be tracked.

111. IMPLEMENTATION

A. Institutional and implementation arrangements

38. The Project would use country systems to the maximum extent possible and would be managed by a fully integrated Project Coordination Unit. Nacional Financiera, S.N.C. (NAFIN) would act as financial agent of the Borrower with regard to the Loan. In that capacity, NAFIN would be responsible for financial administration, including managing loan disbursement processes and providing other implementation support and oversight to CONAFE, based on its many years of experience with Bank-financed projects. A Subsidiary Agreement would be signed between NAFIN, SHCP and CONAFE, outlining the obligations of each party in the implementation ofthe Project in order to ensure the achievement ofthe stated objectives.

11 39. CONAFE would be responsible for the overall execution of the Project (see Figure A6.1). Responsibilities would be divided into three areas: technical activities, monitoring and administrative activities. The technical activities would be implemented by a fully integrated Project Coordination Unit composed of the Unidad de Programas Compensatorios (Compensatory Programs Unit - UPC) and the la Direccidn de Planeacidn (Planning Directorate), which would be responsible for daily management of activities including the consolidation of the yearly work plan; program execution yearly reviews; and monitoring of project objectives, goals, processes, and timetables in coordination with SEP and the Secretarias Estatales de Educacidn Publica (State Level Secretariats of Public Education - SEPEs). The UPC would also be responsible for coordinating with normative areas of SEP and communication with state-level offices. The monitoring of project activities, including management of information systems, would be undertaken by the Planning Directorate (Direccidn de Planeacidn (DP)). The administrative activities would be carried out by the Direccidn de Administracidn y Finanzas (DAF), including procurement and financial management, and would be the main counterpart for communications with the Bank, through NAFIN.

40. During the implementation of the project, CONAFE would maintain Coordination Agreements, outlining the roles and responsibilities of actors in each of the States. The Agreements, together with their technical annexes, constitute the normative framework for the commitment of CONAFE and participating states under the Project. Through this legal vehicle, the parties agree to carry out planning and targeting activities, as well as organization, execution, monitoring and evaluation for the fulfillment ofthe objectives ofthe Legal Agreement.

41. Two types of Coordination Agreements would be in place, depending on the implementation arrangements, between CONAFE and States (through the state-level education ministries - SEPEs): i) “scenario A” states where CONAFE directly implements all activities (including the ECD intervention) through its Delegacidn Estatal, in close collaboration with the SEPEs, and ii) “scenario By’states where CONAFE would delegate the implementation of the ECD intervention to the SEPEs (while maintaining responsibilities for financial management and procurement). Specificities as to the roles and responsibilities of participating agencies in the Project are further detailed in Annex 6. It is important to note that in both cases, the flow of funds remains within CONAFE.

B. Monitoring and evaluation of outcomes/results

42. CONAFE would compile and calculate Project indicator data on an annual basis from three main sources: its own program monitoring data, the ENLACE test results, and “Estadisticas 911” produced by the SEP. Estadisticas 91 I would include primary and secondary grade failure rates and pre-school and secondary school enrollment numbers. The ENLACE test results are collected and compiled by SEP on an annual basis, and these tests are meant to be applied to all students in from 3‘d to 6th grade ofprimary and lStto 3‘d grade of secondary school.

43. To date, data related to the implementation of the programs to be financed by the Project have been collected at the State Delegation level using Excel spreadsheets, which are then forwarded to the Central level for aggregation. This aggregation process is posing difficulties

12 because different Delegations use different formats, and the data entry system does not include automatic checks and balances for common data registration and entry errors. In order to improve this monitoring system, CONAFE would contract a consultant to design an information module for these programs, which would include standard formats for collecting data in the field, compiling data electronically at the State Delegation level, and aggregating data at the national level. This module would be required to be available by the beginning of the 2010-201 1 school year, and would subsequently be integrated into CONAFE’ s Sistema de Informacidn CONAFE (SINCO) system and would be available by the beginning of the 2010-201 1 school year.

Municipal-Based Management Pilot

44. Monitoring and evaluating the Municipal-Based Management Pilot experiment requires that the criteria of its success be specified and help define the conditions and modalities for the pilot’s replication across municipalities served by CONAFE compensatory education programs.

45. Criteria for success relate to three basic assumptions ofthe pilot’s design:

(i) that the partnership with CONAFE leads municipalities to assume greater responsibility, and develop greater capacity, for educational achievements in their communities and to re-align accordingly their own policies, programs and projects, (ii) that the use of municipal administrations as contractual agents to deliver CONAFE programs may improve the allocative and operating efficiency of CONAFE’s investments in such programs, and (iii) that the adoption of the CONAFE-municipalities partnership modality may positively affect educational outcomes as measured by standardized tests in the concerned communities.

46. Success criteria by which the pilot should be assessed would therefore include, inter alia, (i)whether Municipal Councils have adopted community-specific educational goals, made them an integral part of their municipalities’ development plans, and have mobilized the needed resources to finance them; (ii)whether Municipal investment programs and annual budgets indicate that an increasing share of municipal spending is directed to the achievement of educational goals, (iii)whether Municipal Educational Equity Offices (MEEO) have increased the capacity for strategic planning and project management of the municipal administration in general, including managing a participatory system for assessment of needs and identification of priorities for allocation of CONAFE program resources, and (iv) whether MEEO help coordinate the delivery of multiple State and Federal educational programs (see Annex 3 for more details).

47. Designing a strategy for replication, beyond the initial sample of 5 municipalities, is likely to require not only an assessment of the pilot against the above criteria, (and the related systematization of lessons learned), but also the adoption of an “asymmetrid’ approach by which the pilot would be extended gradually and only where both (i)the commitment and minimum capacity of candidate municipalities and (ii)the capacity to support them by the concerned CONAFE State Delegations, could be verified.

13 C. Sustainability

48. The Project would be implemented by an agency with a longstanding track record, CONAFE, whose programs are highly congruent with the Government’s stated policy goals of improving equitable opportunities. CONAFE has been expanding education opportunities in poor, remote communities for nearly forty years, and evaluations have shown several of its programs to be successful in reducing achievement and efficiency gaps. CONAFE’s mission aligns directly with the equity objectives of the PND and PSE, the latter of which explicitly cites training teachers within CONAFE community schools and strengthening CONAFE’s ECD program as a means to achieve the Plan’s sub-objective of serving children with lowest access and achievement.

49. Moreover, the Project would increase the efficiency of CONAFE interventions, hereby contributing to the sustainability of the activities in the long-term. Improved monitoring and evaluations systems providing accurate information in a timely manner would allow for adjustments to the design and delivery of CONAFE services. These enhancements in the design of ongoing interventions (such as under the ECD intervention) and the introduction of novel approaches to addressing inequalities (such as the API and the municipal-based management pilot) in the education system would likely render CONAFE expenditures more efficient, reducing the marginal costs and making the interventions more financially sustainable.

50. The Project’s support for early and intensive intervention through CONAFE’s ECD and API interventions shows strong potential for a sustained, positive impact on children’s education and life success. Longitudinal research on ECD has shown long-term effects on academic achievement, school attainment, employment and earnings for disadvantaged children.23 Preliminary evidence finds positive effects on the transition to pre-school for children whose parents have participated in CONAFE’s program.24 Strengthening this evidence base through monitoring and evaluation activities would help ensure the longer-term sustainability of the ECD intervention and confirm its place at the core of CONAFE’s interventions. Similarly, demonstrating the positive effects of that the API intervention has on furthering learning and bringing students up to grade level to enable their successful progression through school would help streamline the intervention and bring it to scale.

D. Critical risks and possible controversial aspects

51. The global economic downturn has resulted in severe fiscal constraints in Mexico. The decrease in GDP and corresponding reductions in the budget for the social sectors could jeopardize the financing of activities, especially those innovative subcomponents that represent new financing under CONAFE’s budget. This is partially mitigated by the reallocation of resources from existing non-performing programs to the new more promising interventions.

23 Schweinhart, L.J. (2005). “The HigWScope Perry Preschool Study Through Age 40: Summary, Conclusions, and Frequently Asked Questions.” Campbell et a1 (2002). “Early Childhood Education: Young Adult Outcomes From the Abecedarian Project.” Kagitcibasi et a1 (200 1). “Long Term Effect of Early Intervention: Turkish Low-Income Mothers and Children.” 24 Survey by Fundacibn Este Pais (2006). 14 52. The Municipal-based Management Pilot could be perceived as an encroachment by CONAFE on the mandated responsibilities of states in the education sector. Should partners at the state level not be sufficiently informed ofthe pilot to strengthen municipalities, there is the possibility of misunderstandings between CONAFE, SEPEs, and participating municipal Governments. Given that the bulk of activities for which municipalities would have newfound responsibility would be those within CONAFE’s mandate (as opposed to the SEPEs), it is expected that any misperceptions would be minimal. Nonetheless, this possibility is mitigated through upstream dialogues with state education sector representatives, and maintaining clear lines of communication with the various actors.

Rating Risk Factors Description of Risk Mitigation Measures a of residual

TechnicaVDesign Inertia in The education sector has a The AGES intervention is a long term effort to M school prominent role in Mexican society change school culture. The Bank’s support has management and teachers and school directors been of a long-term nature, featuring impact are prominent people in their evaluations to track changes over time. The fact communities. The structure of the that resources are transferred directly to parents education system may protect (as opposed to school committees led by the traditional roles in the school. The school director) provides a direct incentive for Program might not have the parental involvement. Furthermore, the direct expected social participation and involvement of communities through the might not lead to significant FORTALECE intervention will further bolster changes in the way schools community participation. operate. Specifically, the bulk of resources may continue to be dedicated toward inputs that are not highly correlated with educational quality. Perception of Should partners at the state level Potential misunderstandings have been mitigated M municipal pilot not be sufficiently informed of the through upstream dialogues with state education as CONAFE experiment to strengthen sector representatives, and maintaining clear encroaching municipalities, there is a lines of communication with the various actors. on mandated possibility of misunderstandings At the local level, schools supervisors, directors states’ between CONAFE, SEPEs, and and teachers have and will continue to play an responsibilities participating municipal integral role in the education sector strategic in education governments. Given that bulk of planning under the Municipal-Based sector activities for which municipalities Management Pilot. will have newfound responsibility will be those within CONAFE’s mandate (as opposed to the SEPEs’), it is expected that any misperceptions will be minimal

Exceedingly The highly targeted nature of the CONAFE has several years of experience S difficult access CONAFE Project translates into confronting these challenges. Educacidn inicial to operational difficulties in and API models make use of local community communities accessing target populations, due resource persons that should facilitate access. to non-existent transportation Use of municipalities as point of entry reduces infrastructure, cultural factors, skepticism of populations.

15 insecurity and violence. API model Continuedincreasing budget Criteria of selection of schools to benefit from M unsustainable constraints render API model APIs will be strict, focusing on those fiscally unsustainable, and dearth demonstrating the lowest results in the of candidates speaking indigenous ENLACE. Recruitment of APIs will focus on languages impedes recruitment tutors in indigenous areas who have the and efficacy. requisite language skills. Some The structure ofthe education Many of CONAFE’s compensatory education M stakeholders system may interfere with the programs are embedded in the Alliance’s resist Project’s effectiveness in program, which has the full support of all actors CONAFE achieving education outcomes. in the education system. The centralized nature programs of CONAFE’s delivery mechanism ensures full control at each level of implementation. Financial Ma) agement & Financing Scarce The aforementioned economic The Project focuses on those activities that do M counterpart downturn could render counterpart not necessitate incremental resources. Those resources funding more difficult to obtain, activities that do require additional financing given the tight budgetary will be funded through the phase out of other constraints in the upcoming fiscal CONAFE activities, such as the REDES year. program.

Investment is While physical investments play Gradually, AGEShas been adjusting its L too focused on an important role in the quality of operating rules to increase spending on quality- school education, it must be matched enhancing investments. infrastructure with “soft” investments. There is a tendency for schools to dedicate a large portion of the grant for infrastructure maintenance and improvement. Social and Environmental safeguards Environmental Given the pressure from schools The program only supports minor infrastructure I L Assessment to build infrastructure, there could projects, such as replacing windows. The (OP/BP 4.01) be a negative impact on the program is increasingly focusing on non- environment. infrastructure investments and this will continue. Indigenous Mexico has a significant CONAFE is developing an Indigenous People’s L Peoples indigenous population and many Plan (IPP) outlining explicit actions to be taken. (OP/BP 4.10) indigenous students will be The team includes a social development affected (both collectively and specialist to review thoroughly the program’s individually) by the Program. The compliance with OPBP 4.10. This will help Program will not cause any harm ensure that the CONAFE project brings the to any group but the challenge expected positive benefits to indigenous groups. remains to ensure positive I benefits. Overall Risk (including Reputational Risks): Moderate a Rating of risks on a four-point scale - High, Substantial, Moderate, Low - according to the likelihood of occurrence and magnitude of potential adverse impact. This matrix will be updated as more information becomes

16 E. Loankredit conditions and covenants

Conditions ofEffectiveness:

(a) The Contrato de Mandato has been duly executed by the parties thereto; and (b) the SHCP, CONAFE and NAFIN indicate that the Contrato de Mandato has been duly authorized or ratified by, and executed and delivered on behalf of, SHCP, CONAFE and NAFJN and is legally binding.

Legal Covenants:

53. The Borrower shall, and shall cause CONAFE to, in coordination with SEP, SEPEs, AGE entities, and FORTALECE entities, carry out the Project in accordance with the Operational Manual satisfactory to the Bank.

54. The Borrower shall cause CONAFE to enter into separate agreements with the States to support the implementation ofthe Project. 55. The Borrower, through SHCP, shall enter into a contrato de mandato among CONAFE and NAFIN, whereby CONAFE agrees to carry out the Project and NAFJN agrees to act as financial agent ofthe Borrower.

IV. APPRAISAL SUMMARY

A. Economic and financial analyses

56. The economic analysis for the Project is presented in Annex 9. The analysis estimates the benefits, costs, and rates of return of the Project, using the Early Childhood Development calculator. The analysis concludes with a distributional analysis comparing the human development conditions in the 172 municipalities to the state and national averages. Overall, the analysis finds an estimated rate of return of 7.5 percent, 6.5 percent and 5 percent, under the high, middle and low scenarios (respectively) for changes in educational attainment of beneficiaries.

57. In section one, the effect of the interventions on educational outcome variables using available evidence from research is estimated. Second, the effect of changes in educational outcome variables on wages using current income data is estimated. Using this data and methodology, the estimated benefits ofthe Project are outlined in Table 1.

58. The estimated project costs are outlined in detail in Annex 5.

17 Best estimates of project impacts at the project appraisal stage25

Intervention Impact on Impact on Impact on Impact on learning years of repetition dropout rate education

Early childhood Significantly positive in parenting education Increase of Reduction of Reduction of core subject areas such as 15% 7- 10% 10 - 15% Spanish, math and sciences

Strengthening of Significantly positive in parent associations Increase of8 - Reduction of Reduction of core subject areas such as and financing of 10% 4-6% 3-5% Spanish, math and school improvement sciences plans

Mobile pedagogical Increase of5% Reduction of Reduction of Significantly positive, assistance 5% 5% especially for poorly intervention performing students who are deprived ofadequate teacher attention

B. Technical

59. The Project combines programs showing promising and strong results with enhancements and innovations grounded in international evidence and CONAFE’s own experience. 0 The ECD intervention aligns with international research finding that investing early in children’s development, particularly among the economically disadvantaged, constitutes one of the most effective and cost-effective means of improving student learning and mitigating inequality ofopportunity. A survey conducted by Fundacibn Este Pais (2006) finds positive results of CONAFE’s ECD intervention for pre-school readiness26. The intervention not only builds parents’ knowledge but provides them with opportunities to practice the skills that they learn, which research suggests is important for impacting child development. Under the Project, the ECD intervention would be enhanced by incorporating activities working directly with children, another important characteristic of successful ECD interventions in developing countries (Engle et a1 2007).

0 The API intervention, which provides tutoring support to students struggling academically and ongoing professional development to teachers, is based on the research-

2s Each of the interventions used as a contributory device in establishing the best estimates for this project are subject to a certain degree of individuality, in so far as intervention scope, methods and objectives would inherently differ dependent upon the context. 26 According to the survey, 88 percent of parents who participated felt their children had adapted more easily to pre- school as a direct result ofthe program, while 74 percent of pre-school directors and 77 percent ofpre-school teachers noted differences in language development, communication, and personal and social competencies of children whose parents had attended the program relative to children of parents who had not. 18 based premises that increased time on task and improved teacher quality can positively affect student learning. CONAFE has identified prior experience in its community schools and knowledge of indigenous language and culture as success factors for serving as an API and has developed its selection process accordingly. CONAFE builds upon the pedagogical knowledge that API candidates have as recent teacher education graduates by providing training in the CONAFE approach. APIs’ ongoing presence in communities (alternating 15 days between 2 communities during a 10-month period) enables them to develop deep knowledge and trusting relationships with students, teachers, and parents and to provide continuous pedagogical modeling, monitoring and intervention to help students improve. Since the API intervention is piloted new initiative, its operations and impact would be evaluated as it is expanded under the Project.

0 As noted earlier, evaluations of AGE and other school-based management interventions find both increased parent participation in schools and lower repetition and failure rates. CONAFE has incorporated elements of the AGE intervention into its pilot intervention, FORTALECE, which extends school-based management to community schools.

0 The design of the municipal-based management program builds upon research on the decentralization of service delivery in other sectors, which suggests the importance of combining capacity, responsibility, and resources at the local level. The intervention would be tested on a small scale (5 municipalities) to determine the potential of decentralizing CONAFE’s service delivery for both improving municipal capacity to plan and deliver education services and, ultimately, reducing education gaps among the most vulnerable.

C. Fiduciary

60. Financial Management: Annex 7 documents the results of the Financial Management (FM) Assessment of the Project as conducted by Bank staff in accordance with Bank policy. The large number and the geographical spread of payments to schools and local actors pose significant financial management implementation challenges. In particular, the interventions involve a large number of transfers flowing from the Central CONAFE office to the State Delegations, to the beneficiaries of the interventions and the participating schools, which are characterized by few staff, and parents with very low levels of education. In addition, each State Delegation functions as an independent administrative unit, which could be a cause of divergence in operational practices. These factors make the FM risk, at inception, substantial. In terms of controls, the interventions have been under implementation with the Bank support for nearly 20 years through the Basic Education Development APL implemented from 1998 to 2007. Furthermore, CONAFE has several years of experience monitoring expenditures at the school level, and the program operates under well defined Operating Rules. Hence, the residual FM risk, i.e. the inherent risk as mitigated by existing controls, is deemed Modest.

6 1. Procurement: Procurement activities would be carried out by CONAFE. The agency is staffed by a Procurement Coordinator and 4 additional staff members with extensive experience in Bank operations. At least one of these staff members would be in charge of coordinating and supervising procurement activities. An assessment of the capacity of the Implementing Agency

19 to implement procurement actions for the Project was carried out on August 17 and September 1 to 3, 2009, by the Bank’s procurement accredited staff. The assessment reviewed the organizational structure for implementing the project and assessed the existing capacity within a sample of the CONAFE State Delegations.

62. The key issues and risks concerning procurement for implementation of the Project have been identified and include the decentralized nature of the Project. The corrective measures which have been agreed are the following: i) Staff training in order to update staff in Bank’s policies and procedures and ii) the incorporation of the Procurement Plan to the web based system SEPA in order to achieve efficiency and transparency in the management of the Plan. The overall project risk for procurement is therefore moderate.

D. Social

63. The Project builds on several years of experience, evaluation and consultation carried out by CONAFE, since the early 1970s and has been further informed by the development of an Indigenous People’s Plan (IPP). The IPP includes a review of previously conducted studies, as well as a consultation with indigenous stakeholders currently participating in the CONAFE programs that would be supported by the Project. The IPP was disclosed on the CONAFE webpage on December 23, 2009 and in the Bank’s Infoshop on December 28, 2009. The important lessons drawn from internal and external evaluations are presented in detail as part of Annex 10. The design of this Project incorporates the main lessons learned from these consultations and introduces changes in the strategies used to implement the program.

E. Environment

64. The project poses no significant environmental issues, as it does not finance construction of new schools and supports only limited rehabilitation works and maintenance carried out through community development. The environmental classification for the Project is C.

F. Safeguard policies

Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [I [XI Natural Habitats (OP/BP 4.04) [I [XI Pest Management (OP 4.09) [I [XI Physical Cultural Resources (OP/BP 4.1 1) [I [XI Involuntary Resettlement (OP/BP 4.12) [I [XI Indigenous Peoples (OP/BP 4.10) [XI [I Forests (OP/BP 4.36) [I [XI Safety of Dams (OP/BP 4.37) [I [XI Projects in Disputed Areas (OP/BP 7.60)* [I [XI Projects on International Waterways (OP/BP 7.50) [I [XI

* By supporting the proposedproject, the Bank does not intend to prejudice the final determination of the parties’ claims on the disputed areas 20 65. Indigenous People’s Plan: Under the proposed Project, CONAFE intends to reach a higher percentage of indigenous population under its existing interventions (AGE and ECD), currently representing around 25 percent. Moreover, the Project would target the 172 poorest and most marginalized municipalities in Mexico. Indigenous population account for at least 40 percent of the population in these municipalities. To address issues preventing indigenous populations to fully benefit from CONAFE’s programs and in compliance with Bank’s OP/BP 4.10 Indigenous Peoples, an Indigenous Peoples Plan (IPP) has been prepared to guide program implementation. The IPP details several recommendations for improving services to these populations by designing more culturally adequate alternatives to ensure indigenous children’s participation in CONAFE and further reducing education gaps. For specifics on the IPP, please see Annex 10.

G. Policy Exceptions and Readiness

66. This Project complies with all applicable Bank policies. There are no outstanding issues with respect to readiness. An advanced draft of the operational manual and procurement plan has been reviewed, with comments from the Bank incorporated. Draft coordination agreements with SEPEs and Municipalities have also been reviewed. Key Project staff are already in place, at CONAFE central and state levels.

21 Annex 1: Country and Sector or Program Background MEXICO: COMPENSATORY EDUCATION PROJECT

Country Background

1. Mexico, a country of 107 million people and the world’s 13‘h largest economy, has made great strides in reducing poverty and improving human development outcomes, though inequity persists. Poverty rates in Mexico have fallen from a high of 69.0 percent during the financial crisis of the mid-1990s to an estimated 47.4 percent today27. Human development indicators have improved markedly over this period: infant mortality rates have dropped from 36 to 29, illiteracy has declined from 12.4 to 7.2 percent, and life expectancy is now 75, from an estimated 7228. While indigenous populations and the most disadvantaged communities have made above average gains over this time, they continue to face inequalities of opportunities for improving their socio-economic status and escaping poverty. In 2005, illiteracy among the indigenous population (3 1-7%) and geographically isolated, highly marginali~ed~~ munici alities (34.7%) was approximately four times the rate among the population overall (8.6%) 8. These two populations overlap, as indigenous people are far more likely to live in localities with fewer than 2,500 inhabitants than non-indigenous people (62.3% versus 23.5%) and consequently have more limited access to formal employment and its corresponding benefits: in 2005, the informal economy was the source of employment for 84 percent of indigenous people living in rural areas, compared to 55 percent of non-indigenous people31.

2. Since the financial crisis of the mid-l990s, the Government has put in place a better developed social protection system, in an effort to foster shared prosperity and protect the most vulnerable in times of economic difficulty. In 1997, it established PROGRESA (now Oportunidades), a conditional cash transfer program that safeguards the ability of extremely poor families to invest in their human capital by providing monetary transfers contingent on health check-ups and school attendance. Currently serving 5 million families, Oportunidades has expanded its scope to provide a range of health, nutrition, education, and protective services to children from birth to five years, pregnant women, and parents of young children. In 2002, the Government established Seguro Popular, public health insurance that currently covers 23.5 million non-formally employed Mexicans and their dependents, 95 percent of whom are poor. Seguro Popular helps poor Mexicans offset the out-of-pocket costs associated with health care, such as for medications. In addition to investing in the human development of poor families, the Government developed programs to foster their employment and income generation. In 1997, it established the Temporary Employment Program (Programa de Empleo Temporal), providing temporary work to rural inhabitants living in extreme poverty to address the fluctuations in

2’ CONEVAL figures for 1996 and 2008. Pobrezapatrimonial, the broadest of the national poverty indicators, is defined as households whose income is insufficient to cover basic needs in the areas of food, health, education, clothing, housing and public transportation. ’*World Bank HNP Stats (1995 and 2007), EdStats (1990 and 2007), and World Development Indicators (1995 and 2007) 29 CONAPO. Indices de Marginacion, 2005. 2006. Index comprises measures related to education, housing, income, and population dispersion. 30 INEE. La Educacidn Para Poblaciones en Contextos Vulnerables. 2007; CONAPO. Indices de Marginacion, 2005. 2006. Index comprises measures related to education, housing, income, and population dispersion. 31 INEE. La Educacidn Para Poblaciones en Contextos Vulnerables. 2007 22 income associated with seasonal agricultural work. In 2002, it established the Productive Options Program (Programa Opciones Productivas), creating self-employment opportunities and projects through monetary and technical support. Recognizing the importance of childcare in facilitating employment, the Government established Estancias Infantiles in 2007, offering day care to poor families, thereby enabling parents to participate in the labor force while providing early stimulation to children.

3. Prior to the onset of the current global economic downturn, Mexico experienced moderate growth within a framework of enhanced macroeconomic stability. GDP growth averaged 3.8 percent annually between 2004 and 2007, as fiscal policy successfully focused on a reduction of the public sector deficit and a decline in the public sector debt-to-GDP ratio, and enhanced price stability contributed to a healthy domestic credit expansion and growth of domestic demand.

4. However, the current global financial crisis, combined with lower oil prices, has led to a severe recession and constrained public spending in Mexico. Global economic and financial shocks have been transmitted to the Mexican economy through weaker external demand, lower workers’ remittances, higher external borrowing costs, reduced access to external finance, and domestic credit contraction. Economic growth decelerated in the first three quarters of2008 and turned negative during the last quarter, thereby bringing GDP growth for the year to a modest 1.3 percent. Economic activity declined by 9.2 percent during the first half of 2009 and the current base case scenario projects a contraction of annual GDP by 6.8 percent, placing great strain on available resources over the short and medium term. Significant cuts have been introduced across all social sectors, impacting both the Ministry of Education (Secretaria de Educacidn Pziblica - SEP) and the National Council for Education Development (Consejo Nacional para el Fomento de Educacidn - CONAFE) (described below under Sector Background). Despite these efforts, the Government estimates a shortfall in fiscal revenue in 2010 of2.9 percent of GDP (374 billion pesos).

5. As an additional consequence of the crisis, the poverty rate in Mexico has increased, particularly in rural areas. Although it remains well below mid-1990s levels, poverty has increased from 42.7 percent in 2006 to 47.4 percent in 2008. Furthermore, it remains higher and has increased more dramatically in rural areas, rising from 54.7 percent to 60.8 percent (compared to an increase from 35.6 percent to 39.8 percent in urban areas). This can be attributed in part to lower remittances, which are received predominantly by lower-income households living in rural areas. Remittances declined by $931 million (3.6%) in 2008. This is of particular concern, because a major part of remittances is spent on human capital investment like health and education, rather than consumption.

Sector Background

6. Institutional responsibility for education in Mexico is shared between the Federal and state levels. The Ministry of Education (Secretaria de Educacidn Pziblica - SEP) has overall responsibility for designing and implementing education policy and enforcing the regulation for education services, plans and study programs. In 1992, education service delivery was decentralized to the state education agencies (Secretarias de Educacidn Pziblica Estatales -

23 SEPEs), which transferred greater decision-making authority and responsibility to the state level. Since its inception in 1972, the National Council for Education Development (Consejo Nacional de Foment0 Educativo - CONAFE) has played an important complementary role by administering “community schools” in the country’s hardest-to-reach poor rural communities and, in order to equalize resources under the 1992 decentralization, by delivering compensatory programs to SEP’s general and indigenous schools in poor communities.

7. Mexico has significantly increased coverage in basic education32and has narrowed gaps for disadvantaged groups. It has achieved near-universal coverage among pre-school children aged 4 and 5 (93 percent and 100 percent respectively) and primary school students (95 percent)33. In addition, it has greatly improved educational attainment, from 6.8 years in 1993 to 8.4 in 2006. Enrollment among primary and lower secondary school-aged indigenous children has increased dramatically, from 69.8 percent in 199034 to 91.5 percent in 2005, compared to 94.7 percent nation all^^^. In addition, poor children aged 5-14 living in rural areas were enrolled at 93.7 percent in 2006 (compared to 95.8 percent nati~nally)~~.

8. Such improvements may have been bolstered by programs such as Oportunidudes and sector reforms that the Government has undertaken since the early 1990s. Decentralization was accompanied by a number ofreforms and initiatives at the central and state levels. Primary curriculum contents and materials were wholly reorganized. The Federal Government carried out an initiative to provide diversified pedagogical materials to primary school students and teachers, including free textbooks in each subject, large classroom libraries in most schools, and textbooks in indigenous students’ native language. In addition, information and communication technology was introduced in primary and secondary classrooms. CONAFE’s network of community schools was expanded, from 100 in 1973 to 30,000 in 2009. Furthermore, the Quality Schools Program (Programa de Escuelas de Calidad) was established, targeting disadvantaged urban and rural schools through a school-based management initiative. Finally, the expansion of Mexico’s conditional cash transfer program, Oportunidades, from 300,000 in 1997 to 5.2 million in 2009 has also contributed to the gains made in education coverage, through the provision of economic incentives to families to send their children to school.

9. However, there remain concerns about the quality and relevance of learning, which recent reforms aim to address. Mexico has the lowest results in PISA among all OECD countries. Mexico’s performance on the 2006 PISA test shows a decline in reading competencies among 15 year olds between 2000 and 2006, though results for mathematics were considerably better. On the science assessment, Mexico was the only OECD country where a majority oftest takers did not score above the proficiency level 2 (out of 6). Recognizing quality as a key issue, the Sectoral Program for Education (Programa Sectorial de Educacidn) 2007- 2012 includes as its first objective to elevate education quality so that students improve their

32 Basic education is defined as preschool (educacidn preescolar) covering ages 3 to 5, primary education (primaria) covering grades 1 to 6, and lower secondary education (secundaria) covering grades 7 to 9. Under the Mexican Constitution, basic education is compulsory. Upper secondary education (media superior) covers grades 10 to 12. 33 SEP (2008) Sistema Educativo de 10s Estados Unidos Mexicanos: Principales Cifas Ciclo Escolar 2007-2008 34 INEGI. “La Poblacidn Indigena en Mixico. ” 2004. Based on Conteo de Poblacidn y Vivienda 1990 and 2005 35 CDI. “Los Pueblos Indigenas de MPxico. ” 2008. 36 NEE. “Panorama Educativo de Mixico. ” 2008. 24 academic achievement, and the Plan states explicit goals for national and international assessment results. In addition, the Alliance for Education Quality (La Alianza Para la Calidad de Educacidn) was created by agreement between the Federal Government and the teacher’s union, the National Syndicate for Education Workers (Sindicato Nacional de Trajabadores de la Educacidn - SNTE), with the goal of improving student learning through a transformation of management and service delivery. The Alliance is working with civil society and state Governments to promote its agenda to reform teacher policy, increase community participation, and increase investment in education.

10. Marginalized populations continue to face unequal education opportunities. While differences in school enrollment between indigenous and non-indigenous populations have narrowed, a greater percentage of children who are indigenous or living in remote areas remain outside the system, as noted above. Furthermore, indigenous children are more likely to be enrolled at a grade level lower than expected for their age3’. Similarly, 20.4 percent of poor children aged 8-14 living in rural areas were enrolled two or more years below grade level in 2006, compared to the national average of 8.4 percent3*.

11. The quality of education services that does reach these communities is low. The supply response by formal schools in remote regions with high proportions of indigenous populations has been slow, serving more densely populated areas first. Schools located in indigenous and hard-to-reach remote communities face challenges attracting and retaining qualified teachers, due to travel distances and, in some areas, security issues. For indigenous communities, pedagogical materials are often not available in their native languages, complicating fundamental reading instruction, a core prerequisite for many follow-on pedagogical activities.

12. Parents in these areas face constraints to demanding quality education services and fostering their children’s learning. Parents are often unable to recognize whether their children are receiving quality services and unaware of tools and methods that may be at their disposal to enhance accountability at the school level. The capacity of families and community members in marginalized municipalities to support their children’s education is limited by their own low educational attainment. In municipalities characterized as very highly marginalized in 2005, more than a third of inhabitants 15 years or older were illiterate and nearly 60 percent had not completed primary while among indigenous people 15 years or older, nearly a third were illiterate and 55 percent had not completed primary school40. Furthermore, school attainment among indigenous people was half that of the population overall (4.5 years compared to 8.1 years) and particularly low for indigenous women (3.9 years), who are most likely to care for children.

13. Educational achievements in marginalized areas face multi-sectoral constraints, and demand broader local development programs than Municipalities are best placed to deliver. Yet Municipalities have little incentive and capacity to focus on education goals, as

3’ CDI and UNDP. “Informe sobre Desarrollo Humano de 10s Pueblos Indigenas de Mkxico 2006. ” 2006. 38 INEE. “Panorama Educativo de Mkxico. ” 2008. 39 CONAPO. “Indices de Marginacion, 2005. ” 2006. 40 INEE. “La Educacidn para Poblaciones en Contextos Vulnerables. ’’ 2007. 25 they are largely excluded from the service delivery chain. Problems with transport, communication, housing, nutrition, and seasonal employment, as well as lack of local empowerment for social and public auditing of education sector performance, are major constrains to educational achievements in marginalized areas. As such, they demand broader local development initiatives that Municipalities have a mandate and comparative advantage to undertake. Also, supply-driven education sector programs and interventions, from both the state and Federal Governments, have tended to proliferate in response to single issues of national importance, without regard for local demand. A greater role by Municipalities in the planning and implementation of such programs could bring the potential advantages of their comprehensive planning mandate and closeness to communities, to bear on the relevance and efficiency of state and federal education programs, reducing waste and mobilizing additional resources. Yet Municipalities remain largely marginalized from the education services delivery chain. As a consequence they have little incentives to make educational achievements a focus of their own action and have neither developed the capacity to formulate local strategic plans driven by educational goals, nor the capacity to serve as efficient agents and operators of state and federal education programs. As a result education services delivery in municipal jurisdictions and their marginalized areas continues to suffer from partial, uncoordinated and sub-optimal approaches.

14. Since it was established in 1972, the National Council for Education Development (Consejo Nacional de Fomento Educativo - CONAFE) has carried out important work to address educational shortcomings among indigenous populations and in the most remote areas of the country. CONAFE provided complementary support to the federalization of education service provision by designing and implementing compensatory educational mechanisms to equalize resources and improve the quality of education provided to its target populations. Since that time, five generations of programs have been rolled 0ut41, greatly reducing inequality ofaccess to schooling. Over this period, the Bank’s support to CONAFE has evolved from financing specific education inputs towards financing innovation in education. CONAFE’s focus is on low income populations, in hard-to-reach areas where there are large numbers of students that participate in the conditional cash transfer program, Oportunidades.

15. In 1998, CONAFE developed an early childhood development (ECD) intervention targeted to 0-4 year olds and their parents (educacidn initial). CONAFE’s approach uses existing assets such as preschools and public spaces for meeting areas, and a network of volunteers to teach the parenting education classes. This community-based approach is an effective and cost-effective way to provide important services to poor children. The intervention reaches an estimated 400,000 children and their parents in remote communities throughout Mexico. However, at present CONAFE only reaches about 20 percent of its potential population: of Mexico’s 10 million children between the ages of 0-4, about 2 million live in communities of high poverty incidence, that is, the main target areas of CONAFE. This is of particular importance given the high correlation between early childhood development services

41 Programa para Abatir el Rezago Educativo (PARE) 1992-1996, Proyecto para el Desarrollo de la Educacidn Inicial (PRODEI) 1993-1997, Programa para Abatir el Rezago en Educacidn Bdsica (PAREB) 1994-2001, Programa Integral para Abatir el Rezago Educativo (PIARE) 1995-2001 y Programa para Abatir el Rezago en Educacidn Inicial y Bdsica (PAREIB) 1998-2007. 26 and human development outcomes later in life, such as student learning in primary and secondary school and more favorable labor market outcomes.

16. Using school-based management and fostering greater social participation in schools, CONAFE is improving the quality of education offered in poor municipalities. As a component of its compensatory programs, CONAFE developed the first42 school-based management program in Mexico, Support for School Management (Apoyo a la Gestidn Escolar - AGEs). Findings from impact evaluations of CONAFE’s school-based management (SBM) program (as well as evaluations from other similar programs) show that SBM programs can translate into greater parental involvement in the management of schools and changes in teacher actions, as well as have a positive impact on grade repetition and failure rates and to a lesser extent drop-out rates43. For example, Gertler et a1 (2006) find that AGEs reduced grade repetition in 4 percent of schools and grade failure in 4.2 percent of schools44. Using focus groups and discussions with parents, teachers, and school directors in beneficiary and non- beneficiary schools to corroborate their quantitative results, they find that more active participation by parents is behind the measured improvement in outcomes associated with the program45.AGEs help to improve relations between parents and teachers, as well as the overall school climate.

42 As mentioned previously, the federal Government created the Program of Quality Schools (Programa Escuelas de Calidad) to promote community participation in schools in 200 1. 43 See World Bank. “What Do We Know About School-Based Management?” 2007 for a review ofthe 13 most rigorous evaluations of SBM programs. 44 Gertler, Patrinos and Rubio-Codina. “Empowering Parents to Improve Education: Evidence from Rural Mexico.” 2006 (revised 2008). 45 World Bank. “Impact Evaluation for School-Based Management Reform.” 2007. 27 Table Al.l Public ECD and ECE service providers in Mexico46

*I * * 'I t* 'I m-mmm' Centros de Antencidn de Desarrollo Infantil (DIF) 163 4,592 328 1:14

Estancias Infantiles (SEDESOL) 8,300 65,770 8,222 1:8

Estancias para el Bienestar y desarrollo 215 34,047 2,664 1:12 infanti1 (ISSSTE)

Guarderias (IMSS) 1,526 228,503 32,643 1:1

Educacidn lnicial No Escolarizada (CONAFE) 27,189 436,112 27,189 1:15

Subtotal 40,612 85 I,41 8 75,832

General 88,426 4,745,74 1 237,280 1:20

Early Childhood 9,408 383,036 17,390 1:22

Subtotal 118,812 5,294,325 27,1190

Total 159,424 614,s 743 34,7022

46 Saenz, Arturo. Modelo de Educacidn lnicial de Conafe - MBxico. Presentation given at Global Conference on Early Childhood Development: Innovative Models and Global Evidence in Rio de Janeiro, June 17, 2009

28 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies4' MEXICO: COMPENSATORY EDUCATION PROJECT

Sector Issue Latest Supervision Project (PSMSR) Ratings (Bank-financed only) (Bank-financed projects

(IP) (DO)

Decentralization - The Estado de Mexico S Government's Structural Adjustment Loan, approved Adjustment Loan (Ln.7043 - in December 2000, in the amount ofUS$505 ME), 2002 million, aims to bring the fiscal and financial accounts into a sustainable path, while protecting the social sectors and enhancing their efficiency, and increasing accountability and transparency in management ofthe public sector. Supports implementation ofthe Government of Basic Education APL I1 (Ln. S Mexico's compensatory education program, as 7108-MX), 2002 outlined in the National Education Program (PNE) ofthe current and former administrations. Supports Mexico's compensatory education Basic Education Dev Phases S MS program, and as the final phase ofthe three-phase I11 (Ln. 7249-MX); 2005 APL program, aims to fine tune the delivery mechanisms, based on a fully developed decentralized model. Basic Health Care / Decentralization - Imurovement Basic Health Project HS S and expansion of the delivery ofbasic health care (Ln.3272-ME), 1996 and nutrition to about 13 million uninsured people in 17 districts in Oaxaca, Chiapas, Hidalgo, Guerrero, and marginal areas ofthe Federal District. Project objectives were accomplished to a great extent. Basic Health Care/ Decentralization - (i)Support Basic Health Care Project HS HS :quitable access to cost-effective package of quality (Ln. 3943-ME) health services for the uninsured and underserved in 19 states; (ii)support institutional development through the modernization and decentralization of :ethnical, managerial and fmancing in the states; md (iii)support modernization and restructuring of :he SSA to assume a leadership role in the sector. The mid-term evaluation indicated that project implementation performance is highly satisfactory. By the end of2000, coverage with basic health services to the poorest rural population would reach 3 million. Total loan amount is US$3 10.0 million :quivalent. Under implementation until June 2002. lealth Sector Reform - The Health System Reform Health System Reform S S rechnical Assistance Loan (TAL) in the amount of Technical Assistance Loan JS$25 million, and the accompanying adjustment (Ln.4367-ME) Feration, Health System Reform-Znstituto Mexicano

47 Adapted from Annex 2 ofthe School-Based Management Project's Project Appraisal Document. 29 Sector Issue Latest Supervision Project (PSRDSR) Ratings (Bank-financed only) (Bank-financed projects only) Implementat Development ion Progress 0b.iective (IP) (DO) del Sepuro Social (IMSS), in the amount of US$700 million, approved in 1998, are supporting the design Health System Reform and implementation of major policy changes in structural Adjustment Loan IMSS. Among them: (i)improvement of financial (Ln. 4364-ME), 2002 management of the health insurance system; (ii) strengthening of institutional and regulatory frameworks for health insurance; and (iii) improvement of quality and efficiency of the IMSS health delivery system Decentralization - The Decentralization Adiustment Decentralization Adjustment S S Loan, approved in December 1999, in the amount of Loan-DAL US$600 million, aims to move Mexico’s (Ln.70020-ME), 2001 decentralization toward an efficient and sustainable path. It includes a health policy commitment as part of a group ofpolicy commitments for respective tranche disbursements. The goal in the health sector is to help address one ofthe main weaknesses in the implementation of the PAC by establishing a one- time grant to finance training, monitoring, reporting, and institutional development to improve the delivery of the basic package ofhealth services. ONGOING: The Project Development Objective is to support the I11 Basic Health Care Project MS MS Borrower in: (i)implementing its Social Protection (Ln. 7061-MX), 2001

SPSS. Seeks to foster the sustainable and equitable Tertiary Education Student MS MS expansion oftertiary education, through student Ass APL I(Ln. 7346-MX), assistance. 2006 Improve the quality ofeducation as measured by School-Based Management coverage, social participation, and educational Program (Ln. 7347-MX), outcomes. 2006 Support Mexico’s conditional cash transfer Support to Oportunidades program, Oportunidades.It seeks to increase Project capacities in health, nutrition and education of poor (Ln 7708-MX), 2009 families through human capital investment. It builds sustainable connections between Oportunidades and other social programs ofthe Government ofMexico in order to improve health and education outcomes for Program participants

30 Annex 3: Results Framework and Monitoring MEXICO: COMPENSATORY EDUCATION PROJECT

This section presents the results framework and monitoring arrangements for the proposed Project. It is subdivided into three parts: i) the results framework, presenting the overall framework, the results chain of each intervention, and the results framework for the project; ii) methodological notes on monitoring and evaluating each intervention and iii) a comprehensive monitoring table that includes all indicators, their method ofcalculation and use.

Part 1: Results Framework

The proposed Project would contribute to reducing the inequalities of opportunity that exist in Mexico. Specifically, the Project would work on reducing inequalities that exist between Mexico’s poorest municipalities and rest of the country in terms of education supply and learning.

The development objective of the Compensatory Education Project is to improve access to ECD services and learning outcomes of children in the most marginalized municipalities of Mexico. This objective will be achieved through innovative interventions at the early childhood and basic-education levels that strengthen the involvement ofmembers of the school community and municipalities.

Fimre A3.1: Overall results framework for the ComDensatory Education Proiect

I e

To Improve rho reach ana affect vnnessofthe ECU program in target mun c pa.tws.

0 reef s~ppo(tio rtcdenis n Strengthwing and Refocdng tne prognm to Direct work w th cn Idren, owest-performing mntfact ng mr%cma ne6 to ScnoWDared manapement target mun cimtlIie6 fatnerr and preenam women campanwed Khoo Iin d. her COhAFE programs ---target munlciwllties FORTPI-ECE in commmlty AGES natlonrV oe SchoOIsin target

31 Figures h3-2 through h3-5 present the complete results chains for the Project's 5 main int~rvetiti~nlines. mure A3.2: Results Chain for the Earlv Childhood Lfevelament Intervetition

* Design, production and distribution of educationat materials and tods * Training of promotoras, supervisors and coordinators * Training of : * Mothers, fathers and caregivers * Pregnant women Fathers Children * Pramation of c~im~r~~~ p~~icipat~~n/ dimmination

@ Fol Iow-up, monitoring and evaluation

32 Figure A3.3: Results Chain for School-based M~na~e~~n~(AGES and FORTALECQ

*Paining of APF in * ~~d~~~i~nin tf E development of the grade failure rctte school i rnprovetnerit plan and in transparent out rates managevent of funds i 'Training in Reduction in ttit, participation of repetition rate parmtr tn schools and (Odi7ii,lst/:l:I!.Y dO'I!' in learning oftheir * Improvement of chi Idem learning in primary Financial support and secondary (transfers} to APFs education {rmi EO/GC?)

Redudion in repi&itim Selection of 0 APECs with signed Improvement of the cammunities participation agreement physical environment in rates [~~~jnjsrfutfve data) FORTALECE trains (#I schools (need ta devclop personnel from State- APE& are trained on guideiines and Reduction in the based delegations funds management (#I instrumentsfor dropout rate measurement buseiine ~admin~~~a~~~ea'ata) State-based delegations APE& have agreed work - ond fallaw up] Physical train the APE0 and progfam t#) improvement in llearntng spaces+ Teaching achievement in primary cam rnunity-based 1Transfer of financial materia& Basic services and secondary instructon on funds support to APE0 (#I (t MACE involvement of parents test+ mid-year tmstsf management * APEC account for funds in teaching and learning Transition to the next Community usage (#of APK3) (survey - CO~P~R?With participation sessions eduction level 0 APE& trained on AGES) data) *Transfer of financial fudministratbe community participation Reduction of the support to APEG in education (#I financial burden on parents krschool maintenance (survey?) Heduction of absenteeism rate of children ( suwey?) 0 Note: tinea base a cargo de Harry inciuinb. /os 4 indicodom onibo

33 Figure A3.4: Results Chain for Mobile Pedagogical Sumort (APIsl

* Selection af * Establishments e Improvement in schools supported by APIS the participation of (# ond e~~~~~@r~s~~~~ supported by * parents (witinotbu Students screened m@misr&) APIs by APls (#ofstudents * l~p~ov~~~n~in * Selection and screeenelf] peda~o~i~~l training of APls * API work plan practices fmse studies] Design, produced f#~fpfanr ~~~~~i~~lf~Improvement in Students test Scares during supported the school year students] ~~~d"y~ffr&s&] materials Parents trained pal paren& trained) Teachers and eva Iuation teaching aides me eti ngs supported

Wurc A3.5: Results Chain. for Municipal-based Management

Collaboratioi? for the * Educarional equity Reduction in allocation of CONAFE * Decrease rn tile #of educational gap in the resouices to the children outside tarly in a5 t vu Inera b Iel municipality f#) Childhood and Basic population (# OF chdaren Strategic municipal tducation outside the edicational plans for the * IncIu5ion of gender, system - according to municipal asse:sments) educational sector (#of socio-ecunorn IC status municipalitivs with plan and cukural diversi-y * Improvement in approved and validated aspects in the learning results (Enlace by CONAFE) educational policies of tests] * Execution of municipal municipalities palns (% of financial Municipal and local EE execu t,on) groups have capability * Verification of executed of strategic planning and re5ources arid irnplementa~ionof presentation to the delegated programs delgat1on (#) * Municipalities with Qualified miinicipal and capability to plan and local groups (tt) operate programs A CONAFE p~licy delegated by CONAI-t document systernatiztng lnmtutionalizatian of the experiment the project working toward educational equity in municipalities 34 1. The Project's development objective is measured using the following project development indicators: Number of children 0-4 years old who attend at least 80% of the sessions of the ECD intervention in the 172 target municipalities; (product indicator) 0 Gap in test scores between the 172 target municipalities and the national level4*. (final outcome indicator)

Table A3.1: Proiect Results Framework

Project Project Outcome Indicators Use of Project Outcome Information Development Objective yo improve access to Number ofchildren 0 to 4 years who attend at PRODUCT ICD services and least 80 percent ofthe sessions ofthe Early Measurement ofthe use ofservices by earning outcomes of Childhood Development intervention in the 172 children in each calendar year .hildren in the most target municipalities Total Annual number of sessions ofthe narginalized Gap, 6th grade of primary model is: 18 nunicipalities of Gap, 3rd year ofsecondary vlexico. Gap in test scores between the 172 target FINAL OUTCOME municipalities and the national level, measured Monitoring ofthe closing ofthe gap as: between the target municipalities and the Percentile ranking ofthe median student test national level, in terms oflearning score in the ENLACE test in non-community achievement. The gap would be closed if schools, for Math and Spanish, 6" grade of the 172 reached the 50" percentile. primary and 3'd year ofsecondary, for the target (see methodological note 1) municipalities, as compared to the national distribution oftest scores. Intermediate Intermediate Outcome Indicators Use of Intermediate Outcome Outcomes Monitoring :omponent 1: Early Childhood Development Intervention -0 improve the Number ofECD service points that are PRODUCT each and established and complete the minimum number Monitor the availability ofservices in the ffectiveness ofthe ofsessions provided for by the model, in the target municipalities ICD intervention in target municipalities Annual minimum number ofsessions to be xget municipalities provided is: 32 Number of fathers and mothers trained, i.e. who PRODUCT attended at least 80 percent ofthe total number Measure the actual usage of services by ofsessions ofthe ECD model, in the target parents municipalities Annual number of sessions for parents: 18 Number ofpregnant women trained, i.e. who PRODUCT attended at least 80 percent ofthe total number Measure the actual usage ofservices by of sessions ofthe ECD model specific to pregnant women pregnant women Number ofsessions for pregnant women: 8 Number offathers trained, Le. who attended at PRODUCT least 80 % ofthe sessions ofthe ECD model Measure the actual usage of services by specific to fathers, in the target municipalities fathers Annual number ofsessions for fathers: 5

48 Cfr. Methodological note 1 for a reference on how to compute the gap indicator. 35 Application of an instrument that measures the PRODUCT competencies of parents and children age 0-4 Establish a measurement system - at years old baseline, the instrument exists but it is not being used or applied systematically. Longitudinal study PRODUCT

Component 2. Interventions in Basic Education Sub-component 2.1. I Number of Parent Associations (Asociaciones (general and indigenous schools) Decentraiized de Padres de Familia or APF) iained yearly in PRODUCT Support to Basic AGE, nationally Monitor the continuation of the AGES Education intervention. Disaggregate numbers at the preschool, To improve the primary and secondary education level efficiency and Number of FORTALECE entities with a Work (community schools) quality ofthe Program developed and approved by PRODUCT education system FORTALECE, in the target municipalities Monitor the expansion of support to through school- community schools in the target based management municipalities Total amount of financial support transferred to (community schools) and received by the FORTALECE entities PRODUCT

Grade failure rate4’ in community schools in the (community schools) target municipalities, primary and secondary INTERMEDIATE OUTCOME education level Monitoring: the failure rate should drop over time. Sub-component 2.2. Number of school establishments supported by PRODUCT Mobile Pedagogical Mobile tutors (Asesores Pedagdgicos (two establishments per API) support Itinerantes or APIs)

Grade failure rate (ibidem) in non-community INTERMEDIATE OUTCOME To improve the schools, primary and secondary education level, Monitoring: the failure rate should drop learningOf students in 172 target municipalities over time. attending the lowest- performing Student scores in the ENLACE test in non- FINAL OUTCOME community schools community schools, primary and secondary in target education level, in 172 target municipalities municipalities Average in 6* grade of primary Average in 3rd year of secondary PRODUCT Monitor the expansion ofthe program Management INTERMEDIATE RESULT

49 1-(Nr who passed grade + Nr who got regularized in grade)/Nr who enrolled 36 effectiveness of Learning results on ENLACE test in 5 pilot I FINAL OUTCOME education service municipalities delivery by Average in 6th of primary contracting Average in 3rd of secondary municipalities to deliver CONAFE programs and providing them with the necessary capacity to carry out that responsibility

To improve the Implementation of a management and PRODUCT monitoring of monitoring module for the ECD, AGEs, CONAFE programs FORTALECE and API interventions Number and percentage of localities in the 172 Monitoring the coordination between the municipalities, that have beneficiaries from Educacibn Inicial and Oportunidades both Oportunidades and Educacidn Inicial programs in the 172 municipalities Number and percentage of localities in the 172 Monitoring the coordination between the municipalities, that have beneficiaries from AGEs and Oportunidades programs in the both Oportunidades and AGEs 172 municipalities

Part 2: Methodolodcal notes on MonitorinP and Evaluation of the Compensatory Education Proiect

Monitoring and Evaluation of Activities under the Project

2. CONAFE will compile and calculate Project indicator data on an annual basis from three main sources: its own program monitoring data, the ENLACE test results, and “Estadisticas 9 1 1” produced by the SEP. Estadisticas 9 11 would include primary and secondary grade failure rates and pre-school and secondary school enrollment numbers. The ENLACE test results are collected and compiled by SEP on an annual basis, and are meant to be applied on a censal basis in 6th grade ofprimary and 3rd grade of secondary.

3. To date, data related to the implementation of the programs to be financed by the Project have been aggregated at the State Delegation level using Excel spreadsheets, which are then forwarded to the Central level for aggregation. This aggregation process is posing difficulties because different Delegations use different formats, and the data entry system does not include automatic checks and balances for common data registration and entry errors. In order to improve this monitoring system, CONAFE will contract a consultant to design an information module for these programs, which will include standard formats for collecting data in the field, compiling data electronically at the State Delegation level, and aggregating data at the national level. This module will be required to be available by the beginning of the 2010-201 1 school year, and would subsequently be integrated into CONAFE’s Sistema Integrado (SINCO).

37 Methodological note 1: Monitoring and Evaluation of General Education Equality

4. General idea and justifcation for the indicator: The aim is to measure whether there is a reduction in the gap in test scores between the most disadvantaged municipalities in Mexico and the rest of the country. To do this, one can compare the test scores of students in the 172 municipalities with those of students at the national level. If the test score results were equally distributed, one would expect that the median test score in the target municipalities would Correspond to the median test score (Le. the 50th percentile) at the national level. In case of unequal distribution, the median test score in the target municipalities will be significantly lower than the median test score at the national level.

5. Indicator for gap in test scores: Percentile ranking ofthe median student test score in the ENLACE50 test for Math and Spanish in 6th grade of primary and 3rd year of secondary, for non-community schools in the target municipalities, as compared to the national distribution of test scores.

6. Calculation of the indicator: The indicator can be computed by following these steps: (1) In the school-level database of ENLACE scores for 6th grade of primary and the 3rd year of secondary, identify those non-community schools located in the 172 municipalities targeted by the Project; (2) compute, for each school, the average between the math and Spanish scores; (3) compute, for the schools in the 172 municipalities, the median result, using as weights the number of children evaluated in each school; (4) compute the percentile corresponding to the number calculated in (3), in the national distribution of test scores, using as weights the number ofchildren evaluated in each school

7. Expected result: For the 172 municipios, it is expected that the average test result would improve by 5 points per year. This would correspond to an increase in the percentile for 5.8 to 9.4 in sixth grade ofprimary, and an increase of 10.5 to 22.1 in third grade of secondary.

8. Note; For the interpretation of the test results, it is important to note that the Inter- American Development Bank (IDB) project targets the same municipalities, but only in community schools. For this reason, the indicator for this Project only looks at non-community schools, to which the majority ofthe World Bank Project’s investment is directed.

9. Advantages of the indicator: This indicator is not vulnerable to changes in the national test, as long as the 172 targeted municipalities are included in the new test. This is because, for any test, it is possible to compute the median school test score at the national level and at the 172 municipalities. In addition, the indicator is not vulnerable to manipulation of test scores at the school level as long as all schools are vulnerable to manipulation. Finally, even though school level averages of test scores are quite variable in the 172 municipalities due to the small sizes of the schools, this does not affect the indicator because it only requires the median school test score for the entire group of schools tested in the 172 municipalities, which does not depend on the size of schools.

50 Ifthe ENLACE test is replaced by a new test, this indicator will make use of the new test, which can still be used to indicate a reduction in the gap between the national median and the average in the target municipalities 38 Methodological note 2: Evaluation of the Early Childhood Development Intervention

10. The ECD intervention has already been rolled out on a national basis. In 2005, an impact evaluation ofthe intervention was initiated in collaboration with the Bank. However, for various technical reasons, it was not possible to continue with the evaluation. In 2008, CONAFE used its own funds to undertake a baseline measurement of the competencies of parents and children, which compares homes that receive the ECD intervention with those that do not, in the same locality.

11. In light of this experience, the M&E of the intervention under this project will concentrate on the following aspects: 0 Ensuring that the instruments that have been developed to measure competency of children 0-4 years and parents are applied in a way that can contribute to the improvement ofthe intervention. Monitoring the improvement in the reach of the intervention, especially in regards to actual participation ofchildren, parents, pregnant women and fathers. 0 Starting a longitudinal study of a sample of children benefited by the intervention, comparing them to a sample of children who did not benefit from the intervention. o Sample selection: CONAFE would select a national sample of children age 0 to 2 years, in locations that receive the ECD intervention (treatment), and in localities that do not receive the intervention (control). o The study would have a duration of 12 years, in order to be able to follow children until they complete basic education. o The study would include anthropological measures, measures of health, nutrition, child development, and also educational outcomes.

Methodological note 3: Monitoring and Evaluation of the AGEs

12. A joint study (CONAFE-World Bank) is currently underway to evaluate the impact ofthe AGEs intervention on school outcomes.

13. Research questions of the existing study: The study seeks to estimate the impact of the AGEs intervention on the following variables: 1. Working ofthe AGE 2. Parental participation in the school and in their children’s learning process 3. Study habits ofstudents 4. Participation ofteachers and directors

14. Strategy for identzfiing impacts: The study includes two treatment groups (one with regular AGE transfers, one with double AGE transfers) and a matched control group. Assignment to the groups was done in a randomized way.

15. Evaluation activities with Financingfrom the existing study: 0 2007: Baseline 0 2008 and 2009-2010: Follow-up survey

39 June 2010: Additional follow-up survey on the existing sample (control group and regular and double AGE groups)

16. Plans for evaluation under the Project: 0 June 2010: Baseline survey for community schools where FORTALECE is planned for 2010-201 1 2010-201 1: Control schools from existing study to be integrated into AGE intervention 0 June 201 1: Follow-up survey for community schools where FORTALECE was implemented in 2010-201 1

Methodological note 4: Monitoring and Evaluation of the Mobile Pedagogical Support

17. The API intervention would be evaluated with the following indicators: ENLACE results, and grade failure, drop-out and repetition rates.

18. Strategyfor identifiing impacts: The APIs would rotate among compensatory schools in the 172 target municipalities, depending on their annual ENLACE results. For this reason, it is not possible to identify a treatment group and a control group within the 172 municipalities, but rather the set of compensatory schools within the 172 municipalities can be considered a treated group. In order to conduct an evaluation of the intervention, it is proposed that the difference-in- difference method be used in combination with propensity score matching to identify suitable control schools. The evaluation stages would be the following: 1. Control group: Identify with propensity score matching, based on ENLACE test data and other CONAFE databases, a group of comparable compensatory schools to the compensatory schools in the 172 target municipalities. 2. Baseline: ENLACE test 2009 results. 3. Application of difference-in-difference methodology for each round of the ENLACE test. The same methodology would be used to estimate the impact of the intervention on other indicators.

19. Responsibilities and timeline: 1. 2010: CONAFE would contract with consultant who would: (i)review existing databases, apply propensity score matching to identify the control group schools; (ii) describe the methodology to apply in order to carry out the evaluation in subsequent years in a concept note, including regressions and formulas, programming in a program such as STATA or SPSS; (iii)apply the evaluation methodology to the data available for 2010; (iv) provide to CONAFE all of the programming that would be necessary for CONAFE to repeat the analyses in 201 1, 2012, and 2013. 2. 201 1,20 12, and 20 13: CONAFE would repeat the analysis annually.

20. In order to assure the continuous improvement of the intervention, a qualitative study would be carried out before the mid-term review, and would gather the points of view of the intervention participants, in order to inform improvements to both operating guidelines and program materials. This would be done through focus groups.

40 Methodological note 5: Monitoring and Evaluation of the Municipal-based Management

21. General idea: The focus on the monitoring and evaluation activities of the municipal pilot would be to ensure that the lessons learned from the Project are documented, in order to permit the evaluation of the appropriateness of an eventual expansion of the pilot at the end of the Project.

22. Evaluation proposal: CONAFE would contract a consultant to conduct a quantitative and qualitative study that would document the impact and institutionalization of the pilot. In terms of impact, it would investigate the quantitative contributions of the pilot to (i)the state of education infrastructure; (ii)the quality of the school environment and school results; (iii)the increase in enrollment; and (iv) the results of the ENLACE test. In addition, the study would include a qualitative examination of the processes carried out under the pilot and of the institutionalization of the advances in municipal management, including: (i)the development of the capacity of the MEEOs in strategic planning and project planning, participatory systems for diagnosing needs, the prioritization of investment, the coordination of other programs (state, federal, CONAFE, etc.); (ii)the institutionalization of education plans in pilot municipalities; and (iii)the participation ofthe population in the municipal management process.

23. In 2010, the study would be undertaken in the two municipalities that will participate in the first phase of the pilot, and a baseline would be established for the three municipalities that will participate in the second phase. In 2013, the study would examine all five pilot municipalities.

Mid-Term Review

24. As part ofthe mid-term review, a general review of all the Project components would be carried out. CONAFE will commission a review ofthe overall results of the Project, which will include a review of statistics and cross-overs between the components. In addition, they will commission a specific analysis by component, which will be carried out by a panel ofexperts.

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9E 1 Annex 4: Detailed Project Description MEXICO: COMPENSATORY EDUCATION PROJECT

1. The Project aims to bring families and the broader school community into the education process in Mexico, focusing on early childhood development (ECD) and basic education. In ECD, parents would be trained to be agents oftheir own children’s well being and development, which would be complemented by early stimulation activities for children. In basic education, parent and community associations would manage resources to improve schools, and poorly-performing schools would receive added pedagogical support. Finally, municipal Governments would be strengthened and capitalized to respond to local education needs rapidly and effectively. Interventions would be directed to the poorest and hardest to reach municipalities in the country, with priority given to the 172 municipalities comprising the focus ofthe Agendapara la Equidad Educativa. This Annex describes in detail the:

Project Development Objective; Project components; and Lending instrument.

Proiect DeveloDment Obiective

2. The development objective of the Compensatory Education Project is to improve access to ECD services and learning outcomes of children in the most marginalized municipalities of Mexico. This objective would be achieved through innovative interventions at the early childhood and basic education levels that strengthen the involvement of members ofthe school community and municipalities. This objective is measured using the following project development indicators:

0 Gap in test scores between the 172 municipalities and the national levels2. 0 Number of children 0-4 years old who attend at least 80% of the sessions of the ECD program in target municipalities.

Proiect ComDonents

3. This Project features three components: 1) Early Childhood Development (ECD) Intervention, 2) Interventions in Basic Education, and 3) Project Monitoring, Management and Evaluation. The Interventions in Basic Education Component includes three main activities: 2.1) Decentralized Support to Basic Education (Apoyo a la Gestidn Educativa - AGE - and Fortalecimiento Comunitario para la Educacidn - FORTALECE), 2.2) Mobile Pedagogical Support (Asesoria Pedagdgica Itinerante - APIs), and 2.3) Municipal-based Management.

4. The Project represents a multi-layered, targeted approach to fulfilling CONAFE’s mandate of serving the most marginalized. The Project seeks to improve education outcomes for children by intervening at the levels of the child and parent (ECD, APIs), teacher (APIs), school

52 Please refer to Methodological note 1 in Annex 3 for a reference on how to compute the gap indicator. 47 (AGE, FORTALECE), community (FORTALECE) and municipality (municipal-based management). SEP indigenous and general schools would benefit from the long-standing and well evaluated school-based management program, AGE, while similar support would be provided to CONAFE-administered community schools through a new intervention, FORTALECE. The Project would target communities through the combined criteria of high marginalization and social decline and minimum numbers of potential beneficiaries, so as to reach as broad a segment of the population living in marginalized municipalities as possible, thereby maximizing efficiency and impact. Certain interventions would be further targeted based on additional risk factors: AGE would prioritize indigenous schools, while APIs would target compensatory schools with poor performance on the national ENLACE test. The interventions would converge in selected municipalities among the 172 of the Agenda para la Equidad Educativa, such that a critical mass of services would be provided, monitored and evaluated. The Project would also extend beyond these municipalities by supporting programs in marginalized communities across the country.

5. The Project also supports several innovations for the sector through the implementation and evaluation of new interventions and program components providing targeted support to previously underserved groups. The ECD intervention would introduce new sessions working directly with children, as well as with fathers. Building on the success of AGE, the new FORTALECE intervention extends the potential of school-based management to community schools. APIs, another new intervention, provides intensive pedagogical support to struggling students and their parents and teachers, in compensatory schools. In addition, the Project seeks to involve municipalities, which are largely excluded from the education service delivery chain, in education planning and service delivery through municipal-based management. Combining these interventions in select municipalities represents a further innovation by addressing the education needs of communities at multiple levels. Innovative elements of each component and intervention are further described below.

Component 1: Early Childhood Development Intervention ($30.0 million)

6. Overview: This component would provide out-of-school training for parents and caregivers of children aged 0-4, to improve their competencies and practices in caring for children and contribute to the children's comprehensive development and school readiness. The Project would provide coverage to 225,200 children by 20 13 and would partially refocus services to expand the intervention to approximately 52,670 children in the 172 municipalities targeted under the Agenda para la Equidad Educativa. Building on the successes under the PAREIB APL, two innovations would be designed under the new operation: more early stimulation activities working directly with children (through their parents), and parenting education directed explicitly toward fathers. The strategic objective of this component would be to improve the reach and effectiveness ofthe ECD intervention in target municipalities.

7. Activities to be financed: Activities to be financed would include: (a) training of ECD promoters, module supervisors and zone coordinators, including per diem and travel costs for all participants; (b) delivery of training sessions to parentshelatives and children over a period of nine months per year through the remuneration of promoters, supervisors and coordinators; and (c) consulting services to design training materials for new program components.

48 8. Selection criteria and targeting;: The ECD intervention would serve CONAFE’s target communities with a minimum number ofpotential beneficiaries and would explore links with the conditional cash transfer program, Oportunidades. Communities would be selected based on CONAFE’s statutory Operating Rules as outlined in its ECD intervention guidelines (see Table 4. l),with priority given to the 172 municipalities in the Agenda para la Equidad Educativa. At this stage of Project implementation, the aim would be to cover localities with at least 40 children. For the program cycle to start, the community would require a minimum of eight families willing to participate. Participating families may change, as some leave because their child becomes older than age four or for other reasons, and new parents join in any given year. The Project would foster linkages with Oportunidades to the extent possible, both by providing ECD services to recipients of Oportunidades transfers and by creating opportunities for transfer recipients to perform community service and gain employment experience through the ECD intervention. However, as was noted during Project preparation, CONAFE’s target communities often lack the supply ofhealth services necessary for families to participate in Oportunidades.

Operating Rules Selection Criteria Initial and Basic Rural communities with fewer than 500 rural inhabitants and Education Program for indigenous communities with fewer than 100 indigenous inhabitants, the Rural and with preference iven to communities with high or very high levels of Indigenous Po~ulation~~marginalization 59 and social decline55 Compensatory Actions 1. Communities with the lowest human development index or Program to Combat highest marginalization or social decline indices within Education Decline in municipalities identified as priorities by the state and Federal Initial and Basic Government with a population between 0 and 3 years 11 months; Educations6 2. Communities with high or very high marginalization with active pre-school services of any modalitys7; 3. Communities with a greater population expressing demand for CONAFE’s ECD intervention; 4. Communities receiving economic support from municipal Governments for the establishment ofthe ECD intervention Source: ECD intervention guidelines, “Educacidn IniciaZ2OO9-2OlO: Lineamientos ”

9. ODerational specifics: CONAFE would also integrate its Community Initial Education intervention (Educacidn Inicial Comunitaria) and out-of-school parent education intervention into a single Initial Education offering. Staff ofthe former intervention may serve as promoters or staff in other CONAFE programs, provided they meet the profile required. In addition,

53 Reglas de Operacidn (Acuerdo 451): Programa de Educacidn Inicial y Bdsica para la Poblacidn Rural y Indigena 54 Index defined by CONAPO that incorporates indicators of education, basic services, quality of housing, isolation (?A of population living in communities with fewer than 5,000 inhabitants), and income 55 Index defined by CONEVAL that incorporates indicators of education, access to health services, basic services. quality of housing, and household assets s6 Reglas de Operacidn (Acuerdo 460): Programa de Acciones Compensatorias para Abatir el Rezago Educativo en Educacidn Inicial y Bdsica 57 That is, general, indigenous or community pre-school 49 activities for directly stimulating children would form the basis of the sessions for young children within the parent education program.

10. The training of program staff, including ECD promoters, module supervisors and zone coordinators, aims to strengthen their knowledge of early childhood development and improve the quality and efficiency of service delivery. Prior to training, staff would sign joint contractual agreements with the state education agency and the CONAFE state delegati~n~~.Zone coordinators would each supervise two municipalities, while module supervisors would each supervise 10 promoters. The technical team of each state would provide a minimum of 120 hours of training annually through workshops. Supervisors and coordinators would attend an update and induction meeting before the start ofthe program cycle, followed by the first regional training, which promoters would also attend. Promoters would then participate in an initial preparation meeting. Promoters would participate in two subsequent training workshops during the program cycle, one of which would also be attended by supervisors and coordinators. The promoters also receive assistance from their supervisors in twice-a-month meetings, when they can have questions answered and discuss their experience. In addition, evaluation workshops would be conducted at the end ofthe program cycle. An overview ofthe training plan, contained in the program guidelines, was presented during project preparation and found to be satisfactory.

11. Training sessions and activities for parents and caregivers, their young children and pregnant women aim to strengthen family understanding of early childhood development, and demonstrate how the family can best stimulate the process. Each parent education session would follow a didactic approach consisting of four phases: reflection, sharing ideas, practice, and closing and would be supported by program materials provided by CONAFE. Evaluation would be integrated into the program cycle at the beginning (3 sessions), periodically during the course of the year (4 sessions), and at the conclusion (1 session). A trained promoter would provide 18 weekly two-hour sessions to families with children aged 0-4 years, eight monthly two-hour sessions to mothers, and eight monthly two-hour sessions to expectant mothers, during nine- month yearly cycles. In addition, the Project would support 18 weekly two-hour early stimulation sessions for children under 2 years old accompanied by their parents, designed under CONAFE’s Educacidn Inicial Cornunitaria intervention, and five special two-hour sessions aimed at fathers, currently in development and expected to be finalized by the end of 2009.

12. Special sessions aimed at fathers would address the issue of fathers’ underrepresentation in CONAFE’s ECD intervention and promote their participation in childrearing. By targeting fathers explicitly, CONAFE would signal to them the importance of being involved with their children and supporting their children’s development. Recognizing that fathers have different needs and levels ofknowledge from mothers with regard to childrearing and are potentially more constrained in their availability to attend sessions, CONAFE would offer a smaller number of sessions (five) tailored to fathers’ needs. In addition, offering sessions only for fathers creates a space for them to share and learn amongst their peers, thereby reducing any potential negative association with attending the program or discussing personal matters.

58 However, in the case ofAguascalientes, Baja California, Baja California Sur, Durango, Guanajuato, Guerrero, Hidalgo, Oaxaca, Querktaro, and Veracruz, staff sign agreements only with the CONAFE state delegation. 50 13. The Project would support the development and design of educational and program dissemination materials to be used in the program. In integrating its out-of-school and center- based approaches to ECD, the intervention seeks to design and develop the accompanying didactic materials for both program staff and beneficiaries.

Component 2: Interventions in Basic Education ($64.6 million)

2.1: Decentralized Support to Basic Education

14. Overview: The Project would increase parent and community participation in school matters through grant-making and training to AGE entities and associations of community members in support of Community Education, known as FORTALECE entities, in order to improve the school environment and enhance collaboration and accountability mechanisms at the school level. The Project would provide training and grants to 46,462 AGE entities nationally each year from 2011 to 2013, as well as 1,338 FORTALECE entities in the 172 target and other marginalized municipalities by the Project’s end. This intervention represents an innovation in that it extends the reach of school-based management, previously limited to formal state schools, to community schools serving the CONAFE target populations. The intervention would give parents and community members “a seat at the table” by endowing them with limited responsibility and authority for school-related decision-making, thereby reducing their exclusion from the education process5’. Furthermore, it would enable them to monitor and act upon the attendance and performance of their own children as well as of teachers, which it is expected would lead to reduced repetition and failure rates. Finally, parents and community members would identify and meet the needs of the school through strategic planning and the allocation of grant funds, which is expected to improve the school environment. Its strategic objective would therefore be to improve the efficiency and quality of the education system through school-based management.

15. Activities to be financed: The Project would finance school-linked grants (AGES and FORTALECE) and training expenses including stipends, travel and per diem for the instructors.

16. Selection criteria and targeting: CONAFE would select schools to participate according to criteria6’ pertaining to characteristics of disadvantage, school size and school organization. For AGE, the selection criteria outlined in the procedural manual are presented in Table 4.2. CONAFE would use minimum enrollment as a further criterion: 10 students for pre- schools, 10 for primary schools, and 5 for telesecundaria schools. For FORTALECE, community schools would be selected from communities targeted by CONAFE’s Initial and Basic Education Program for the Rural and Indigenous Population, Le., rural communities with fewer than 500 rural inhabitants and indigenous communities with fewer than 100 indigenous inhabitants, with preference given to communities with high or very high levels of marginalization and social decline. Schools located in the 172 municipalities of the Agenda para la Equidad Educativa would be prioritized. From this pool, CONAFE would select schools using an index composed of i)the results from the ENLACE test, ii)the marginalization index,

’’ Gertler et a1 (2006). “Empowering Parents to Improve Education: Evidence from Rural Mexico.” 6o Selection criteria are outlined in the CONAFE Reglas de Operacibn and the programs’ Lineamientos and Procedimientos 51 and iii) school enrolments. Only communities with at least 5 students attending education services would be selected.

17. Operational specifics: The Project would provide training to AGE entities and APECs to support the use of funds and foster collaboration in planning and improving school performance. A School Supervisor or Community Advisor (community member, sometimes a teacher, to whom CONAFE provides training and a stipend) would train the AGE entities, while the CONAFE State Delegation would provide training to the FORTALECE entities. Training wouldfocus on the strategic use and effective management of school funds to be transferred by CONAFE, including the preparation of plans, as well as fulfilling parental responsibilities with regard to children’s schooling and social participation aimed at benefiting the school. In order to formalize their participation, the board of directors of each APF would sign an agreement with the state education agency and CONAFE state delegation, while the president of each FORTALECE entity would sign an agreement with its CONAFE state delegation.

18. The Project would finance School Improvement Plans (Planes de Mejora) through an AGE to be administered by each AGE ENTITY. Based on the training received, AGE entities would elaborate their Plans, which in turn would trigger the provision of a banking document to enable withdrawals. Under these Plans, AGE entities could purchase school materials, information and communication technology materials, maintenance materials and equipment, according to a positive list. Annual grants would vary from MX$3,000 to MX$5,000 for pre- schools, MX$5,000 to MX$7,000 for primary schools, and MX$l0,000 to MX$12,000 for telesecundaria schools. Grant amounts would vary according to the size of pre-schools and telesecundaria schools (with larger schools receiving more funds) and the number ofteachers for primary schools (with schools with more teachers receiving more funds). Grants would be transferred annually to the AGE entities’ school accounts. The use of these funds would be specified in the OM and subject to annual financial audits by the CONAFE brgano Interno de Control and Auditoria Superior ofthe Federal Government, in a random sample of schools.

19. Similarly, the Project would finance APECs’ Work Plans (Planes de Trabajo) through a FORTALECE grant to be administered by each FORTALECE entity. Under these Plans, APECs could pay for cleaning materials, sports items, first-aid supplies, utilities, intervention- related transportation, construction and rehabilitation of bathrooms, and maintenance of school facilities and furniture, according to a positive list. Annual grants would vary from US$8,000 to US$12,000. In contrast to AGEs, higher grant amounts correspond to fewer students. This policy takes into account that schools with fewer students have fewer families to bear the costs associated with maintaining them, resulting in higher costs to each family. Grants would be transferred annually to the FORTALECE entity’s account. As with the AGEs, the use of funds would be specified in the OM and subject to annual financial audits in a random sample of schools.

52 Table A4.2. Select n Criteria for AGE Education Level Selection Criteria Pre-school 1. Criteria outlined by Operating Rules for Compensatory Programs: a. Schools located in priority municipalities of Estrategia I00xl00 identified by the Government; b. 50% of indigenous-rural schools with highest comparative disadvantage; c. 25% of general-rural schools with highest comparative disadvantage, after having reached the former. 2. Once have covered above population, CONAFE would consider the following additional criteria: a. Remaining indigenous schools; b. General-rural schools in communities with high or very high levels of marginalization; c. 25% of general-urban schools with high or very high levels of marginalization. Primary 1. Criteria outlined by Operating Rules for Compensatory Programs: a. Schools located in priority municipalities of Estrategia 100x100 identified by the Government; b. Remaining indigenous schools; c. 62.5% of general-rural schools with highest comparative disadvantage, after having reached the former. d. 12.5% of general-urban schools with highest comparative disadvantage; 2. Once have covered above population, CONAFE would consider the following additional criteria: a. General multi-grade schools in rural communities (1-4 teachers); b. General schools (with 5 teachers or complete) in rural communities of high or very high marginalization; c. 25% of general-urban schools of high or very high marginalization. Secondary 1. Criteria outlined by Operating Rules for Compensatory Programs: a. Form part of schools located in priority municipalities of Estrategia 100x100 identified by the Government; 2. Once have covered above population, CONAFE would consider the following additional criteria: a. Schools from among the 75% of rural schools with highest comparative disadvantage; b. Schools located in rural and urban communities with highest comparative disadvantage, after having reached the former; c. Schools of special attention that have completed a study plan, curriculum development, and organization for the telesecundaria modality. Source: AGE procl ures manual, “Procedimiento para el Apoyo a la Gestidn Escolar. ”

53 Table A4.3. Impact Evaluation Parental Empowerment in Mexico - AGE Primaria Impact Evaluation Parental Empowerment in Mexico--AGE Primaria

The randomization for the experimental evaluation of the AGE Primaria program was launched in 2007. The experiment involves 250 schools in rural underdeveloped areas with a high share of indigenous populations in four states (Chiapas, Guerrero, Puebla and Yucathn). Half the schools were randomly selected to receive twice the usual amount of AGE resources. In the last quarter of 2007 a baseline survey was carried out, continued with a follow up survey in June 2008. There were programmed surveys also for June 2009 and 2010. Unfortunately, the flu pandemic made it impossible to carry out the survey for 2009, so it is being carried out in January-February 20 10.

Surveys have been carried out for school directors, the president of the parents committee, and teachers and students at the levels ofthird, fourth and fifth grade. From these surveys we will be able to show the participation levels of the agents involved in school management and how the program changes the mechanics of decision-making due to higher funding levels. Surveys capture how often participation takes place and what decisions are influenced by such participation, as well as how the funds are spent. Surveys also capture student motivation, and school efficiency, as measured by school days missed, failure rates, repetition, and learning outcomes from national standardized tests. Even though the analysis is on-going, some preliminary results show that the number of parents participating has increased in the treatment schools. We have also included a group of schools without any intervention as a pure control group. In the final year ofthe program a pure participation group has been added; that is, schools without funds are receiving the AGE capacity building program. Final results are expected in the summer of2010.

2.2: Mobile Pedagogical Support (Asesoriu Pedagdgica Itinerunte - APIs).

20. Overview: The Project would expand the pilot Mobile Pedagogical Assistance intervention, with the aim of improving mathematics and language skills among students attending compensatory schools. By the end of the project, 2,000 schools within the 172 municipalities of the Agenda para la Equidad Educativa and beyond would receive the pedagogical support of tutors (asesores pedagdgicos itinerantes - APIs) at an average ratio of one tutor for two localities. The API intervention represents a new approach, in that it leverages recent teacher graduates with the professional knowledge and motivation to support poorly performing schools in communities that are traditionally underserved due to their inaccessibility. Its strategic objective would therefore be to improve the learning of students attending the lowest-performing schools in target municipalities.

21. Activities to be financed: The Project would finance stipends for APIs, training expenses including per diem and travel costs for all participants, and consulting services for the design ofmaterials.

22. Selection criteria and tarpeting;: The APIs would provide intense pedagogical support to poorly performing schools in marginal communities that nevertheless provide the critical mass of students for tutors to have an impact. Criteria for selection of schools would prioritize schools: i)that have at least seven students, ii)with small teaching bodies (two teachers or less), and iii) with at least 30 percent of students reporting poor academic achievement based on

54 ENLACE results. At this stage of implementation, the intervention would be implemented only in CONAFE’s compensatory schools.

23. ORerational specifics: The API intervention would tap the supply of recent teacher graduates who have not yet been placed in the general education system and provide them with the systematic training and monitoring necessary to provide appropriate, continuous support to teachers, students and families during the program cycle. CONAFE would advertise the intervention among potential candidates and select tutors using a weighted average of university grade point average (60%) and a letter describing their motivation to participate (40%). Tutors serving indigenous schools would be required to speak the local language. Selected tutors would sign a contractual agreement with CONAFE State Delegations and the SEPEs to serve for one annual program cycle. CONAFE would provide an initial five-day training to tutors on program norms, pedagogical approach, parent engagement strategies, didactic and school materials to be used, among other areas. Tutors would alternate 15 days in each community, so as to foster strong relationships and deep understanding of the students, families and teachers with whom they work. In addition to evaluation workshops at the midpoint and end of the program cycle, tutors would meet their supervisors on a bi-monthly basis to submit progress reports. Tutors would receive a monthly stipend of about $400 over a period of nine months per year, with an additional $200 for relocation expenses and $200 for delivery of the final report, which all together corresponds to the approximate compensation ofa teacher.

24. During the program cycle, tutors would follow a systematic approach supported by CONAFE-developed materials and designed to improve student outcomes and enhance teacher practice. Tutors’ broad responsibilities would include: (a) provision of remedial activities to children with learning disabilities, especially in math and Spanish, (b) promotion of participation of parents in school activities, and (c) provision of general support to regular teachers. Specific responsibilities would include:

Conducting a diagnostic of students’ level and learning needs, including a review of school records and test scores, as well as home visits; Collaborating with the main teacher to develop a work plan for the program cycle; Supporting the main teacher in implementing strategies to improve mathematics and language performance, in accordance with the work plan; Advising the teacher on the appropriate use ofdidactic materials; Conducting extracurricular activities aimed at bringing under-performing students to grade level; Identifying students with special academic needs, orienting the teacher to understand and address those needs, supporting families in helping their children, and applying remedial activities; Developing or obtaining pedagogical materials appropriate to the needs of the teachers and students; Supporting the teachers and students in the use of information and communication technologies.

55 2.3: Municipal-based Management

25. Overview: The Project would support a policy experiment in piloting a cooperative federalist model in the delivery of public services. There are three main aspects to the pilot, of which the Project would directly support the first: i) technical assistance (TA) to strengthen municipalities, with a focus on their capacity for strategic planning, ii) creation of a fund to support the implementation of municipal-level education strategies developed under the TA, and iii) the contractual delegation of responsibilities to municipalities in the delivery of certain CONAFE services (ECD intervention and eventually the CONAFE-run community schools). Its strategic objective would be to improve the efficiency and effectiveness of education service delivery by building municipalities’ capacity to manage and supervise educations services.

26. Activities to be financed: The Project would finance training expenses including per diem and travel costs for all participants and consultancies for technical assistance.

27. Operational wecifics: Under this component, CONAFE would contract with 5 municipalities, to be selected from the 172, according to specific characteristics61. The municipalities would establish an institutional body within their municipal Governments known as the “Municipal Educational Equity Office” (MEEO), to be staffed by personnel financed by CONAFE (initially) and selected in coordination with the municipalities. Technical assistance would be tailored to the needs of each municipality in order to facilitate the realization of education sector-focused municipal strategic planning exercises and to build the capacity of the MEEO for (a) education planning, monitoring and evaluation as well as social inclusion of education services delivery; and (b) support to school supervision, administrative staff development, human resources management, management of physical resources, and fiduciary management. The capacity of CONAFE State Delegations would also be strengthened to ensure (i)effective administration of the CONAFE-municipality agreements and (ii)the provision of quality technical assistance to participating municipalities.

28. In order to finance the strategic plans developed under the technical assistance, CONAFE would channel resources to municipalities through a Municipal Fund for Educational Equity (MFEE), to be financed with counterpart funding. The Fund would extend grants to municipalities for a wide range of investments in local development (at municipal and community level) deemed to have an impact on the reduction of the educational gap in marginalized and underserved areas. In addition to financing small works, equipment and materials for educational facilities, the MFEE resources could be applied to other investments including the provision oftransportation services, nutrition programs, information and education campaigns, etc., as well as to cover expenditures (e.g., feasibility and other studies) necessary to mobilize resources for investment with a direct impact on education goals, from other national programs financing municipal projects. While access to the MFEE resources would depend on eligibility and quality ofproject proposals, an indicative amount, providing municipalities with a programmable ceiling, would be allocated to each municipality based on a formula reflecting the extent and type ofeducation needs.

61 The 5 municipalities would include an indigenous municipality, a larger municipality, a smaller municipality, a very rural municipality and a municipality where traditional practices for leader selection (“usos y costumbres ’7 are in effect. 56 29. The third aspect of the pilot is for CONAFE to assign to the municipalities the responsibility to implement the ECD intervention (and, eventually, the community basic education programs) of CONAFE. The contractual delegation of these responsibilities would entail the further capacity development at the local level in the direct management and supervision of ECD activities, including the recruitment of promotoras (and eventually instructores in the community schools), and supervisores. The training of these staff and the design and distribution ofthe materials would continue to be the responsibility ofCONAFE.

30. The agreements with the municipalities62would consist ofthe following: CONAFE would (i) finance, (ii) support technically and (iii) supervise administratively the implementation ofthe agreement by the 5 pilot municipalities Municipalities would act as contractual “agents” of CONAFE and would commit to operate CONAFE programs as per the terms of the agreement. In particular they would (i)establish the MEEO as integral part of their own administration as the unit responsible for implementing the agreement. The personnel of the MEEO would be selected jointly by CONAFE and the concerned Municipality and would be funded and trained by CONAFE (ii)mobilize and allocate to the educational activities covered by the agreement, additional human and financial resources sourced from community contributions, municipal revenue and other national programs. The MEEO staff would be responsible for the effective management of the MFEE. Projects to be financed by the MFEE63: Would be identified through exercises of participatory strategic planning driven by the goal of reducing the educational gap in marginalized areas, and would be facilitated technically by CONAFE, In order to build its own capacity to extend to participating municipalities the required technical assistance, CONAFE would secure the services of specialized national consultants. Would be prepared by the MEEO with technical assistance as needed from the CONAFE State Delegate Would be evaluated and approved by the concerned CONAFE State delegate Would be implemented by the concerned Municipality, according to the procurement and disbursement procedures applicable to the local public sector entities in Mexico. Would be subject to fiduciary oversight by an institutional body composed of AGE Entity representatives and other members of the school community. Would be subject to independent external auditing.

3 1. In support of the smooth implementation of these activities, the Project would engage in dialogue with institutional stakeholders involved in education to present the proposed objective and scope of the pilot and to understand and address any concerns stakeholders may have. In particular, CONAFE would consult with SEPEs, school supervisors and directors, and teachers, whose buy-in would be critical to the pilot’s success.

Contracts with municipalities would not imply a transfer of loan proceeds. 63 The MFEE would not be financed with loan proceeds. 57 Component 3: Project Monitoring, Management and Evaluation ($3.2 million)

32. Overview: This component aims to ensure the quality and efficiency of implementation and the appropriate use ofresources, as well as to build the knowledge and capacity of CONAFE and external stakeholders, through monitoring, evaluation, and management. In addition to covering monitoring and operating expenses, the Project would support the development of a Project information module to be integrated into its monitoring system and the procurement of statistical software, as well as evaluations of new programs and program elements. Furthermore, the World Bank would explore potential complementary funding sources to develop CONAFE’s capacity to track beneficiaries of its ECD intervention until the end of their working lives, thus providing a wealth of longitudinal data comparable to Head Start in the USA and CrianCa Maravilhosa in Rio de Janeiro, Brazil.

33. Activities to be financed: The Project would finance travel to supervise activities in all municipalities; costs associated with budgeting, programming and executing Project resources for the ECD intervention, in accordance with applicable norms of transparency and accountability; consulting services to develop an information module and evaluation studies; and the procurement of licenses for statistical software, such as SPSS or the equivalent.

34. Operational specifics: Project monitoring would be jointly conducted in accordance with each program’s guidelines by CONAFE’s State Delegations and central office to measure progress, identify issues, and facilitate decision-making, and would be supported by the development of an information module for the Project. State Delegations would be responsible for collecting data, assuring data quality, and reporting to the central office. State personnel would visit sites selected at random to observe Project activities and ensure that resources have been received and used in a transparent manner and in accordance with the Operating Rules. Documents reviewed would include records, agreements, improvement plans, and documentation of expenditures, delivery of stipends, receipt of materials, and warehouse inventories. State Delegations would then submit progress reports to the central office, which would in turn consolidate and review the data. The central office would review the frequency and severity of incidents, aided by the establishment of early alert procedures. It would also develop reports monitoring Project goals and indicators and providing analysis and recommended actions. In support of these activities, and building on the progress achieved under PAREIB, the Project would design, develop and implement an information module.

35. The component would also support a series of evaluation studies. Given that the AGE intervention has been and continues to be studied extensively, it would not be evaluated under this Project, though its implementation indicators would be monitored. Programs and program elements to be evaluated could include early stimulation activities for children and sessions for fathers under the ECD intervention, as well as FORTALECE, APIs, and Municipal-Based Management. The Project would support the development of data collection instruments and a comprehensive database. Evaluations would utilize a treatment and control group for each program by selecting municipalities, communities, and education services with similar socioeconomic, demographic, and educational characteristics. In addition, the component would support evaluation studies of innovative education materials aimed at improving the efficiency and quality of education that are currently being developed by CONAFE: an education model

58 for complete rural schools, including its features and operational aspects, and a multi-grade, secondary community school model, with an updated curriculum aligned with CONAFE’s ECD and basic education approach.

Lending Instrument

36. The Bank would co-finance the implementation of the Compensatory Education Project using a Specific Investment Loan (SIL). The Loan would be implemented by CONAFE, using country systems to the maximum extent possible, and would be managed by a fully integrated Project Coordination Unit (for more details, please see annexes 6, 7 and 8).

37. In line with its debt management strategy, the Government requested an amortization schedule with a single bullet repayment in17 years. Mexico has traditionally relied on bond issues for its external funding needs. As bond issues are bullet (as per investors’ preferences), Mexico faces lumpy payments in certain years. Mexico’s strategy for managing the liquidity risk is to spread out the repayments of its external debt over time through bullet payments in different years, choosing to repay new loans in those years where they have low concentration of payments. Through this strategy Mexico is able to reduce its refinancing risk, hence its vulnerability to market disruption that might temporarily hamper its access to refinance its debt. In line with this strategy, Mexico has selected to repay this loan in a single payment in year 2027, a year where it has minimal payment of external debt. The repayment structure selected by Mexico for this loan has an average life of 17 years and final maturity of 17 years, within the maximum policy limits for customized repayment schedules of 17 years and 30 years respectively.

59 Annex 5: Project Costs MEXICO: COMPENSATORY EDUCATION PROJECT

Foreign Local Total Project Cost By Component and/or Activity US $million US $million US $million

Component 1: ECD intervention 0.0 30.0 30.0

Component 2: Support to Basic Education 63.2 63.2 2.1 AGES and Fortalece 0.0 53.0 53.0 2.2 Mobile Pedagogical Support 0.0 9.1 9.1 2.3 Municipal-based Management 0.0 1.1 1.1

Component 3 : Project Monitoring, Management and 1.4 1.8 3.2 Evaluation

Total Baseline Cost 95.0 96.4 Unallocated 0.0 3.35 3.35 Total Project Costs 1.4 98.35 99.75 Front-end Fee 0.25 0.25 Total Financing Required 98.60 100.00

60 Annex 6: Implementation Arrangements MEXICO: COMPENSATORY EDUCATION PROJECT

1. The implementation of the Compensatory Education Project would be carried out by the Consejo Nacionaf de Fomento Educativo (CONAFE), in collaboration with various other agencies at the federal, state and municipal levels. This section outlines the roles and responsibilities of the agencies and actors involved in the implementation and operation of the Project.

Project Description

2. Project Development Objective and components: The development objective of the Compensatory Education Project is to improve access to ECD services and learning outcomes of children in the most marginalized municipalities of Mexico, through the implementation of three components, further subdivided into the five following subcomponents: i) Early Childhood Development (ECD) Intervention, ii) Decentralized Support to Basic Education (Apoyo a la Gestidn Educativa - AGES, and FORTALECE), iii) Mobile Pedagogical Support (Asesorz’a Pedagdgica Itinerante - APIs), iv) Municipal-Based Education Management Pilot and v) Project Monitoring, Management and Evaluation.

3. Geographic Scope: All activities would be implemented in 172 priority municipalities in 11 states (see list in Table A6.1), selected from the bottom of the municipality-level human development index. The first two would also be implemented in other priority municipalities as well, selected according to the following targeting mechanisms: a. ECD intervention: Selected communities would have less than 500 rural inhabitants and less than 100 indigenous inhabitants, prioritized by level of marginalization and social decline64. At this stage of Project implementation, the aim would be to cover localities with at least 40 children. b. AGEs~~:CONAFE would prioritize schools located in priority municipalities under the Federal program, Estrategia 100x100, generally followed by rural indigenous schools with the greatest comparative disadvantage, though specific selection criteria vary by school It would use minimum enrollment as a further criterion: 10 students for pre-schools, 10 for primary schools, and 5 for telesecundaria schools.

Roles and responsibilities of agencies in the education system

4. Secretaria de Educacidn Plibfica (SEP): The SEP would have the overall responsibility to design and implement education policy and enforce the regulation for education services, plans and study programs. The SEP’s mission is to create conditions that would ensure access for all Mexicans to quality education at all levels, irrespective of geography. With respect to CONAFE, SEP would be responsible for establishing the normative framework for CONAFE’ s

64 Additional criteria are outlined in the “Educacidn Inicial del CONAFE: Lineamientos 2009-201 0 ” 65 Fortalece would be implemented exclusively in the 162 priority municipalities. 66 See “Procedimiento de Apoyo a la Gestidn Escolar ’’ 4.3.1 61 programming, providing the financial resources to implement CONAFE’s programming, and coordinating activities under CONAFE and other federal education initiatives.

5. Consejo Nacionaf de Foment0 Educativo (CONAFE): CONAFE is a decentralized, autonomous agency of Mexico’s Federal Public Administration, created through presidential decree and consisting of a separate legal entity. The agency is governed by a Board of Directors consisting of the Secretary of Public Education (Secretario de Educacidn Pziblica), who serves as chair, representatives from the Secretary of Finance (Secretaria de Hacienda y Cre‘dito Pziblico - SHCP) and of Planning and Budgeting (Secretaria de Programacidn y Presupuesto), the Director-General of the Bank of Mexico, S. A,, the Director General of CONAFE, who serves as Secretary, and three members appointed by the Secretary of Public Education. CONAFE’s mission is to i)provide compensatory financial and technical resources, national and foreign, with the view to improving education in Mexico, and ii) promote Mexican culture abroad.

Roles and responsibilities of participating agencies in Project implementation

6. The Project would use country systems to the maximum extent possible and would be managed by a fully integrated Project Coordination Unit.

7. CONAFE: CONAFE would be responsible for the overall execution of the Project, on behalf of SEP (see Figure A6.1). Responsibilities would be divided into three areas: technical activities, monitoring and administrative activities. The technical activities would be implemented by a fully integrated Project Coordination Unit Unidad de Programas Compensatorios (Compensatory Programs Unit - UPC), the Planning Directorate (Direccidn de Planeacidn - DP), and the Directorate of Finance and Administration (Direccidn de Administracidn y Finanzas - DAF). The UPC would be responsible for daily management of activities including the consolidation of the yearly work plan; program execution yearly reviews; and monitoring of project objectives, goals, processes, and timetables in coordination with SEP and the Secretarias Estatales de Educacidn Pziblica (State Level Secretariats of Public Education - SEPEs). The UPC would also be responsible for coordinating with normative areas of SEP and communication with state-level offices, and would be the main counterpart for communications with the Bank. The monitoring of project activities, including management of information systems, would be undertaken by the DP. Administrative activities would be carried out by the DAF, including procurement and financial management. The DAF would also serve as the coordinating body, and would be the main point of contact for NAFIN and the World Bank. During the implementation of the project, CONAFE would be responsible for monitoring and updating the existing Coordination Agreements with the participating states, providing technical assistance to states on issues relating to educational compensatory programs and general management (see below).

8. Nacionaf Financiera, S.N.C. (NAFIN): NAFIN would act as financial agent of the Borrower with regard to the Loan. In that capacity, NAFIN would be responsible for financial administration, including managing loan disbursement processes and providing other implementation support and oversight to CONAFE, based on its many years of experience with Bank-financed projects (for further details see Annex 7).

62 Figure A6.1 Institutional Arrangements of Compensatory Education Project

Federal

. 7-- - - - Legal Agr. . 4 . */. - - - Subs. Agr. 7 Coord. Agr. Administration y Contract Programas coI NA F

I Central offices I

--II_.,-.-l..--xI Secretaria de State Estatal Educacibn Publica [, Estatal (SEPE) I-.--,K-----’ --_ -____ ------+ \ -- --i

Promotora de Cadena

In ’Iftatel. Contractiilpnedwlth DdepoddnErtotoler

Instruments governing the Inter-Agency relationships

9. Subsidiary Agreement (Contrato de Manduto): The Subsidiary Agreement would be signed between NAFIN, SHCP and CONAFE. The agreement would outline the obligations of each party in the implementation of the Project in order to ensure the achievement of the stated objectives. The agreement would be signed prior to effectiveness.

10. Coordination Agreements: Each year, CONAFE would sign executive annexes to the existing Coordination Agreements, which outline the roles and responsibilities of each actor in each of the states. The Agreements, together with their annexes, constitute the normative framework for the commitment of CONAFE and participating states under the Project. Through this legal vehicle, the parties agree to carry out planning and targeting activities, as well as organization, execution, monitoring and evaluation for the fulfillment of the objectives of the Legal Agreement. Given that the agreements do not govern a transfer of the loan proceeds, the timing ofthe signing ofthe agreements is nor a disbursement condition nor a dated covenant.

11. Two types of Coordination Agreements have been signed, depending on the implementation arrangements, between CONAFE and the States (through the state-level education ministries - SEPEs): i) “scenario A” states where CONAFE directly implements all activities (including the ECD intervention) through its state delegation, in close collaboration with the SEPEs, and ii)“scenario B” states where CONAFE would delegate the implementation ofthe ECD intervention to the SEPEs6’.

‘’ It is important to note that the flow of funds remains the same under both scenarios, that is, that financial management remains within the state delegation 63 12. Territorial implementation responsibility: While the overall responsibilities for implementation of the Project would reside in the UPC, the State Delegations would be responsible for planning and executing Project activities in the participating states, according to national guidelines and rules and regulations outlined in the CONAFE program guidelines and the Project’s operational manual. These specify the criteria and methodologies for targeting schools, communities, and municipalities, as well as the menu of supported activities, the educational norms to be met, and the procedures to be used. The functions of the State Delegations in each state include: 0 to administer and execute the project according to the operational rules and management and evaluation indicators; validate the information on the targeting methodology used for the project, and the compliance with the targeting criteria; carry out programmatic and budgetary operations; prepare project financial progress reports each semester; and prepare progress reports at the closing of each fiscal year.

Operational considerations specific to each activity:

13. Early Childhood Development (ECD) Intervention: Within the UPC, the directorate of Early Child Development (educacidn inicial no escolarizada) would be responsible for designing pedagogical and training materials, carrying out the training programs for the Zone Coordinators, Module Supervisors and Education Promoters, and for the overall monitoring and evaluation of the intervention. In 7 states, the State Delegation of CONAFE would act as executor of the CONAFE ECD Intervention (scenario A). In the other states, this role would be transferred to the SEPEs, through the State Coordinating Units (Unidades Ejecutoras Estatales - UEEs) (scenario B). The executor would have the responsibility to enter into agreements with the Zone Coordinators, Module Supervisors and Education Promoters covering the conditions pertaining to their participation in the ECD Intervention (educacidn inicial). In both cases, financial management, including the remuneration of the various actors, is handled by the state delegation.

14. Decentralizationof Basic Education (AGEsmORTALECE): The State Delegations/ UCEs would be in charge of establishing coordinating mechanisms that permit the AGE entities and FORTALECE entities to join efforts and collaborate in an organized and sustained way in the execution of this intervention. As such, these state-level entities would sign agreements pertaining to the execution of activities with the AGE entities and FORTALECE entities, to regulate the annual grants transferred to parent and community associations every year. As in the case of the ECD intervention, all payments are handled by the state delegation.

15. Mobile Pedagogical Support (APIs): The central CONAFE team would be responsible for the overall implementation of the intervention, the design and development of pedagogical materials for tutors, and training materials. The State Delegations would be in charge of recruiting the APIs and the schools that they would serve, according to the selection criteria and processes established in the operational guidelines. The State Delegations and the SEPEs would be responsible for entering into agreements with the newly appointed tutors, outlining the mutual rights and obligations under the mobile pedagogical support intervention.

64 16. Municipality-based management pilot: Implementation Agreements would be signed with each participating municipality by the State Delegations of CONAFE. These agreements would specify the respective responsibilities of CONAFE and 5 pilot municipalities with respect to (i)the financing, implementation, monitoring and evaluation of the activities to be carried out to deliver CONAFE ECD and community basic education programs in the concerned municipalities and (ii)the identification, preparation, appraisal, approval, administration, monitoring, evaluation and auditing of the investment projects and other expenditures to be financed by the MFEE. Note that the MFEE would be financed exclusively with counterpart funding.

17. Project Monitoring, Management and Evaluation: As discussed above, the responsibility for the overall implementation of the Project would reside within the UPC, with the Direccidn de Administracidn y Finanzas (DAF) responsible for the fiduciary aspects and for overall communication with NAFIN and the Bank. The DAF and the DP would also be responsible for submitting progress reports on an annual basis. With respect to monitoring systems, the Information Technology unit within the Planning Directorate would be responsible for the drafting of the Terms of Reference for the integration of systems, and for the implementation of the modernization activities, in close coordination with the technical units for each of the corresponding interventions.

Operational Procedures

18. All processes and procedures governing project implementation are outlined in detail in the Project Operational Manual (OM). Procedures governing the basic relationship between the Government and the World Bank, mainly covering financial management and procurement, are further detailed in Annexes 7 and 8 and in the OM. Norms and procedures guiding the daily exercise of responsibilities of the CONAFE staff are also detailed in the OM. Procedures relating to Bank safeguards, especially with respect to indigenous peoples, are outlined in the Indigenous Peoples Plan (IPP), as well as Annex 10.

65 Table A6.1 Distribution of priority municipalities under the Agenda para la equidad educativa

Number ofmunicipalities of the State Agenda para La Equidad Educativa Chiauas 44 Chihuahua 10 Durango 01 Guerrero 12 Hidalgo 06 Jalisco 10 Michoacan 08 Nayarit 01 Oaxaca 47 Puebla 14 San Luis Potosi 02 Veracruz 17

66 Annex 7: Financial Management and Disbursement Arrangements MEXICO: COMPENSATORY EDUCATION PROJECT

1. Introduction. This annex documents the results of the Financial Management (FM) Assessment of the MX Compensatory Education Project (the Project), as conducted by Bank staff in accordance with OP/BP 10.02 and Guidelines for Assessment of Financial Management Arrangements in World Bank-Financed Projects.

2. Summary. The Project poses considerable implementation challenges in terms of FM for the following reasons: (i)there will be a large number of cash transfers flowing from the central CONAFE office, to the CONAFE State Delegations, which in turn will transfer them to program personnel and beneficiaries, including operating staff, parent and community associations and municipal groups, which are characterized by few trained teachers, and parents with very low levels of education; (ii)Each CONAFE State Delegation functions as an independent administrative unit, which to some extent may be a cause of divergence in operational practices. These factors make the FM inherent risk substantial at inception.

3. CONAFE has nearly 20 years of experience implementing Bank’s supported programs through the Basic Education Development APL (1 998 to 2007). A strong system of internal and external controls, validated through extensive experience, is in operation at the central institutional level and its financial agent. The mitigating control factors which are considered in assessing the residual FM overall risk for the project are described below :

0 The country’s public financial management arrangements are generally strong and apply to the program, as the program is integrated into the national budget;

a The program operates under well defined operating rules, and the operational processes are documented in Manuals ofPolicies and Procedures;

0 The administrative staff of CONAFE has considerable years of accumulated experience with Bank FM related policies and procedures, as it is at this time the same team that has been in charge of FM matters during the implementation of the Basic Education Development APL.

0 Some components of this project (more specifically Component 2.(a) which involves making grants through the AGES (Apoyo a la Gestidn Escolar) and FORTALECE (Fortalecimiento Comunitario para la Educacidn) interventions, are designed to promote a strong commitment of the parent and community members into the preparation and implementation of sub projects, as well as the fiduciary control in the use ofthe resources of the intervention, which is reflected in the agreements signed with the AGE entities and the associations of community members in support of FORTALECE entities.

67 e In addition to independent external auditing and the internal control unit, the supreme audit institution regularly conducts performance, financial and compliance audits on the program.

4. Hence, the residual FM overall risk, as mitigated by existing controls, is Modest. At this stage, an acceptable version of the Project FM Manual has been provided to the Bank. No legal “non-standard” conditions are deemed necessary on FM matters at this stage.

Description and Assessment of Project FM arrangements

5. Country issues relevant to the Project. In general, public financial management in the Mexican federal administration relies on strong budgeting, treasury, accounting and control systems. These FM country systems apply to project transactions because Bank-financed operations form an integral part of the public budget and are executed accordingly. Moreover, specific financial reporting and auditing arrangements for projects financed by multilateral international institutions have been agreed to with the Government.

6. Implementing entity. The National Council for Education Development (Consejo Nacional de Fomento Educativo - CONAFE) is a decentralized administrative unit of the Federal Government, created on September 11 , 1971 by a Presidential Decree. Its main functions are: (i)Research, develop, implement and assess new education models for the improvement of the cultural and educational level ofthe country, and (ii)Develop means of social participation to increase education opportunities for the population.

7. The central offices of CONAFE are located in Mexico City, and it has 31 State Delegations, one per state. The organizational structure of CONAFE includes two directorates which are directly involved in Financial Management matters: the Planning Directorate (Direccidn de Planeacidn), and the Administration and Finance Directorate (Direccidn de Administracibn y Finanzas). The heads of both directorates report to the General Director of CONAFE and the directorates are reasonably well staffed.

8. Administration and Finance Directorate. It includes the following units: accounting, treasury, resource management and a FM project unit, with the exclusive responsibility of managing the financial matters associated with the requirements of the World Bank and the Inter-American Development Bank (an investment loan from the IADB for US$ 100 million was approved in January 20 10). This Directorate is adequately staffed considering its role and current needs, with four people, all of whom have at least 10 years of experience managing Bank- financed projects, because they were in charge of managing FM matters in the Basic Education Development APL financed by the Bank. It is worth mentioning that CONAFE has indicated that they may increase in the future some administrativehancial staff at the central level according to future needs determined by the work load that the new projects may impose, but there is not a final decision on this regard given the budget constraints imposed by the Ministry ofFinance.

9. Planning Directorate, whose responsibilities are programming and planning CONAFE’s budget.

68 10. Loan Financial administration. NAFIN will act as the financial agent of the Borrower for the Loan. In that capacity, NAFIN will manage loan disbursement processes and provide other implementation support and oversight, based on its many years of experience with Bank- financed projects.

11. Budgeting arrangements. The funds for the Project are allocated into the Federal Expenditure Budget (PEF). Thus, its operation is subject to provisions of the annual PEF Law, the Federal Budget and Fiscal Responsibility Law, the Government Accounting Law, the Manual of Budget Procedures, and others. This set of legal and regulatory arrangements, together with their implementation systems, provides for sound budget formulation, execution and internal control arrangements.

12. As per usual practice in Mexico, the Government will pre-finance the Project and the Bank will subsequently reimburse eligible expenditures recorded under budgetary lines earmarked for the Project (digito 2). In the specific case of CONAFE the budget is approved annually by the Congress, and controlled through the Budgeting Register System (Sistema de Registro Presupuestario), which is used to monitor the allocation of the budget among the different programs supported by CONAFE according to a schedule ofpayments.

13. Accounting and operational systems. CONAFE keeps budget execution records, on a cash basis, according to an economic, administrative, and functional/programmatic classification through the COI (sistema de contabilidud integral) system, which is commercial software, with adequate capabilities to recognize different levels of accounts and to issue financial reports. However, it does not include web-based capabilities to transmit accounting information in real time between the State Delegations and central office, so the information is sent via e-mail. The operational risks associated with this process are mitigated by a process of reconciliation carried out by the central and state offices.

14. The information extracted from the COI system is used to produce disbursement requests and financial statements by the FM Project unit. The Operational Manual contains clear procedures to ensure that this process is carried out in an adequate level ofinternal control.

15. It is also important to mention that in general terms CONAFE lacks an automated system to control, manage, and report the operational information related to this project. As an example, the databases ofbeneficiaries are managed in spread sheets in Excel. As a consequence, there is a lack of managerial information related to the operations of the program, and the different areas within CONAFE state and central offices need to carry out a considerable amount of manual procedures to ensure the reliability and integrity of the information through a reconciliation process.

16. In order to tackle the above mentioned problem, CONAFE is developing a new system named SINCO (sistema de informacibn CONAFE), which is in an advanced phase of development. However, at this moment there is not a defined date for its implementation. Component 3 of the project includes support for the development of a comprehensive monitoring system, and during the mission held on November, 2009 it was agreed that the project will include funds to hire a consultant to design a system that will enable the automation of information.

69 17. Internal control and internal auditing. In addition to the budget regulations and procedures mentioned above, CONAFE is subject to its own Operational Rules and to the Federal Public Administration Internal Control Standards issued by the Public Administration Ministry (Secretaria de Funcidn Pliblica - SFP), which as a whole provide for sound internal control arrangements for the Project.

18. The internal auditing function is carried out by CONAFE’s Internal Control Unit (drgano Interno de Control - OIC), which reports to SFP and must follow the Public Audit Standards and Guidelines issued by SFP. The latter also approves the OIC’s annual work programs, oversees its operation, and receives its audit reports. Good systems are in place for timely follow-up to internal audit observations and implementation ofrecommendations.

19. It is also worth mentioning that CONAFE is within the scope of audit of the Supreme Audit Institution (Auditoria Superior de la Federacidn - ASF), which is independent from the three levels of Government in Mexico. During the preparation of this report the FMS reviewed the latest report ofthe ASF regarding the CONAFE compensatory programs and no major issues were found.

20. Flow of funds for the Bank Loan. Except for the Front-end fee (for the payment of which the Bank shall, on behalf of the Borrower, withdraw funds from the Loan Amount), the Loan will be disbursed in US Dollars into a bank account opened by NAFIN. These funds will be transferred into a US Dollar account at the Federal Treasury. The Federal Treasury shall use those funds in accordance with the Borrower’s applicable laws. The Federal Treasury, through its annual budget laws and mechanisms, will transfer to CONAFE an amount Equivalent to the amount disbursed in Dollars under the Loan to finance Eligible Expenditures. The general arrangements are described in the following chart and explained below:

70 Central Office

services

State Delegations

Payments to Program Beneficiaries under components 1 and 2 of the project

Dotted line: Information flow Solid line: Funds flow

(1) CONAFE Planning Directorate and Administration and Finance Directorate have the responsibility ofprogram the budget for the State Delegations, and transfer the resources, respectively. (2) CONAFE State Delegations will make the following types of payments: ECD related expenses (under component l),grants to AGE entities and FORTALECE entities, payments to APIs, and payments related to Municipal Technical Assistance6* (under component 2). (2b) CONAFE central offices will make payments to suppliers and consultants, all of them related to Component 3 (Project Monitoring and Evaluation). (3) After making the payments CONAFE State Delegations will proceed to: (i)make the accounting registers, (ii)send operational and financial reports to the Administrative and Financial Directorate in the Central Office which in turn will consolidate all the information. The expenditures’ supporting documentation will be kept either on the SEPEs or in the State Delegations, in accordance with the program’s operating rules.

With regards to the municipal part of the component, is important to mention that the payments to suppliers of goods and services will be also made directly by CONAFE’s State Delegations (Le. the money will not flow into the Municipalities). 71 (4) The FM Project Unit will select the eligible expenditures, and prepare the financial and disbursement information required by the Bank, and will send it to NAFIN. (5) NAFIN will review the SOEs and submit them, together with a loan withdrawal application, to the Bank. (6) The Bank will reimburse the eligible expenditures into the Project account designated by NAFIN. (7) NAFIN will reimburse TESOFE.

21. In addition to conducting various visits to the central offices of CONAFE as part of the FM Assessment, the FMS visited State Delegations of Chiapas and Jalisco, in which were assessed the existence of appropriate mechanisms in place to: (i)ensure the complete and timely receipt of all the expenses' supporting documentation, (ii)the accounting of financial information, and (iii)processing of payments to all program beneficiaries. In general terms all these processes are carried out in an adequate control environment.

22. Specifically regarding point (iii)of the above paragraph, it is important to mention that for making the payments to the program beneficiaries, the State Delegations have implemented an electronic banking transfer system for the great majority of the payments, which is a transparent, reliable and efficient mechanism. However, given the lack of managerial information there are no specific statistics of the number of payments that are made electronically (as opposed to the traditional nominative checks) to the program's beneficiaries.

23. It is also worth mentioning that the process established by CONAFE for making grants under the Component 2 (AGESand FORTALECE interventions), is designed to promote a strong commitment of the parent and community members into the preparation and implementation of sub projects, as well as the fiduciary control in the use ofthe resources ofthe program. The latter is reflected in the agreements signed with the AGE entities and the FORTALECE entities, in which they are considered accountable on several responsibilities associated to the use of the resources, including the delivery to the State Delegations or SEPEs of the evidence of the expenditures (e.g. copies ofreceipts, invoices) on a determined time framework.

24. Disbursement arrangements. The loan disbursement arrangements6' are hereby summarized:

Disbursement method This project will use primarily the reimbursement method to disburse to CONAFE eligible expenditures (pre-financed by the Government) into a project account in US$ designated by NAFIN.

The criteria for recognition of eligible expenditures will be after the payments to beneficiaries and suppliers of goods and services have been made (Le. actual expenditures), except for Expenditures under component 2(a) , (Le. School Grants), which will be recognized as eligible once finds are deposited by CONAFE's State Delegations into eligible beneficiaries/schools' bank accounts. Therefore, statements of expenditure (SOEs) documenting eligible expenditures for this specific disbursement category, will report transfers, not exceeding MX$I2,000, per year and per school, from CONAFE's State

69 For details, please see the Disbursement Letter. 72 ______~~ ______~ Delegations into beneficiary schools bank accounts, as opposed to actual expenditures for Goods, Works and Services, under School Grants. Other procedures Other disbursement procedures are not expected to be required; however, upon request from NAFIN, the direct payment method may be used, as well there may be the need for the use of Advances which will be agreed with the Government and LOA, in which case NAFIN will open a segregated Designated Account. Supporting documentation SOEs7' rCurrency conversion for In case that the Advance method is used, and given the fact that: (i)the documentation of eligible currency requested for the DA is USD, and (ii)all the expenses of this expenditures project are expected to be made in pesos, the following criteria should be used for currency conversion in the process of documentation of eligible expenditures paid from the DA: For disbursement category 1, the exchange rate (ER) should be the corresponding to the date of the transaction (value date). For disbursement categories 2 and 3, the applicable ER will be the corresponding to the date of the withdrawal of funds from the DA. In both cases the ER will be the actual market rate paid by NAFIN for the conversion of USD into pesos. Limits Different aspects such as the minimum value ofapplications for direct payments, ceiling of the Designated Account, and thresholds to deliver SOEs versus records, will be determined and agreed with CONAFE and NAFIN and confirmed with LOA. Retroactive expenditures Eligible payments: rI That do not exceed 20 percent ofthe loan amount. 7I Made by the borrower one year before the date of the Loan Agreement. I The retroactive expenditures will be subject to the same systems, controls and eligibility filters described above in this Annex. Those expenditures will also be subject to the regular project external audit (see below).

Category Amount of the Loan Percentage of Expenditures to be Allocated financed (expressed in USD) (inclusive of Taxes)

(1) Consultant services, and 34,300,000 100% Training

(2) School Grants 53,000,000 100%

(3) Tutors Stipends 9,100,000 100%

(4) Front-end Fee 0 Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07

70 All SOE supporting documentation will be available for review by the external auditors and Bank staff at all times during Project implementation, until at least the later of (i)one year after the Bank has received the audited Financial Statements covering the period during which the last withdrawal from the Loan Account was made; and (ii)two years after the Closing Date. The Borrower and the Project Implementing Entity shall enable the Bank's representatives to examine such records. 73 (b) of the General Conditions (5) Premia for Interest Rate Caps -0- and Interest rate Collars (amounts due under section 2.07 (c) of this Agreement) (6) Unallocated 3,600,000 100% TOTAL AMOUNT 100,000,000

26. Financial reporting. CONAFE will use its accounting system, as described earlier, to prepare the semi-annual project unaudited Interim Financial Reports (IFRs) and the annual audited project financial statements. These will be prepared on a cash basis using the standard formats agreed with the SFP for the Mexico portfolio.

27. The IFRs will be prepared in local currency (i.e. Mexican pesos). In case the advance method is used, the ER used for conversion purposes (as explained in the disbursement arrangements section, paragraph 24) will be revealed in the financial reports.

28. AAer loan effectiveness, the following financial reports will be presented by CONAFE to NAFIN for further submission to the Bank:

Report Due date

Semi-annual unaudited project IF& Within 45 days after the end ofeach calendar semester. Annual audit reuort on project financial Within six months after the end ofeach calendar year ofloan

29. External audit. Annual audits on Project financial statements and eligibility of expenditures will be performed in accordance with Bank policy, as reflected in the audit terms of reference and memorandum of understanding agreed between the Bank and SFP. An independent audit firm selected by SFP and acceptable to the Bank will conduct the project audits. The Terms ofReference for the annual financial audit will require independent auditors to report on the actual use of funds, received by eligible schools, ensuring that loan proceeds have been used for the purposes intended.

30. The Federal Supreme Audit Institution (ASF) regularly executes a number of performance, financial and compliance audits of the Project. The results from these audits are made public in the annual audit reports on the Federal Public Accounts. These external checks provide additional assurances about the Project’s operation and financial management.’l

3 1. Written Procedures. Project operation is governed primarily by its annual Operational Rules, to which a number of procedures and guidelines are linked. Given available documentation, only those FM procedures that are specific to the Bank were compiled in a Project FM Manual that has been provided to the Bank.

ASF audit reports on the Federal Public Accounts are issued 15 months after the end of the calendar year. Hence, while they remain an important source ofinformation for fiduciary purposes, they cannot be used by themselves to meet the Bank’s project financial audit requirements. 74 32. Risk assessment. On the basis of the Bank’s Project FM assessment, the overall FM residual risk is considered modest, as explained in the following table:

FM Risk Table Resid ual Risk Comments / Risk mitigating measures Risk type” Risk Rating incorporated into project design Ratin L I Inherent risk S M M M M CONAFE has nearly 20 years of experience working with Bank and L the IADB, and the FM Directorates of CONAFE are well staffed with an adequate segregation of functions. The team in charge of FM related matters is basically the same in previous projects. Project The project poses considerable risk in terms of FM, because of the M large number of cash transfers flowing from the Central CONAFE office, to the State CONAFE Delegations, to the beneficiaries of the I- program and the targeted Municipal schools, which are characterized by few trained teachers, and parents with very low levels of education. In this case, the FMrisk is mitigated primarily by the strong institutional control systems already in place, and the fact that there are well defined operating rules governing the program. t--Control risk M lsudgeting Each delegation is administrative independent and manages their M own budget, which originates the need to have solid and homogeneous controls. This risk is mitigated by the centralization and consolidated control that is implemented at the central level by the Planning Directorate. Accounting The accounting system COI is not web-based between State M Delegation and Central Office, so it is not possible to transmit the Iinformation automatically. As mitigating measures there are a number of processes, including reconciliation of financial figures and diverse levels of clearance processes, that are carried out at the central and State Delegation level in order to ensure the accuracy and consistency of financial information. Internal M The entity is subject to its own operational rules, and different M Control policies established in its operating manuals. The internal audit function is carried out by the CONAFE’s OIC, and the program is within the scope of audit of the Supreme Audit Institution. Funds Flow S Almost all the payments of the program will be carried out by the M State Delegations, using electronic banking transfers. There are strong control procedures in place to ensure the adequate use of resources. I- Moreover, for the grants related to Component 2.2 the beneficiaries of the program are accountable for the adequate use of resources

12 The FM inherent risk is that which arises from the environment in which the project is situated. The FM control risk is the risk that the project’s FM system is inadequate to ensure project finds are used economically and efficiently and for the purpose intended. The overall FM risk is the combination of the inherent and control risks as mitigated by the client control frameworks. The residual FM risk is the overall FMrisk as mitigated by the Bank supervision effort. 75 through the signing of agreements as described in paragraph 24.

Financial M CONAFE will submit, through NAFIN, Project semi-annual L Reporting unaudited Interim Financial Reports (IFRs) and annual audited financial statements. Auditing M An independent audit fm selected by SFP and acceptable to the L Bank will conduct the annual audit on Project financial statements and expenditure eligibility. Overall risk S M Bank FM A fill FM supervision mission per year, which will look into the supervision operation of the control systems and arrangements described in this annex, including but not limited to the beneficiary payments system, the reconciliationprocess, and the eligibility filters. Desk reviews of IFRs and audit reports. Residual risk M

76 Annex 8: Procurement Arrangements MEXICO: COMPENSATORY EDUCATION PROJECT

A. General

1 I Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement Under IBRD Loans and IDA Credits” dated May 2004, reviewed on October 2006; and “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated May 2004, reviewed on October 2006 and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loan, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan would be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

2. Procurement of Works: Not expected.

3. Procurement of Goods: Not expected other than those under AGES and FORTALECE Interventions; see bellow paragraph “Others.”

4. Procurement of non-consulting services: The dissemination, training facilities and strengthening activities under Components 1 and 2 and outsourcing of improvement of IT infrastructure including a private network under Component 3 would be procured following Bank’s policies and using the Bank’s Standard Biddings Documents if an Harmonized Standard Bidding Document (SBD) is not yet agreed between the Bank, SFP and IADB.

5. Selection of Consultants: All the Components ofthe Project would include procurement ofconsultant services such as monitoring and implementation and dissemination of the programs in the communities; design and production of training materials; education planning, monitoring and evaluation of education services delivery; support to school supervision and management. Short lists of consultants for services estimated to cost less than $500,000.00 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 6. Firms: All contracts for firms would be procured using QCBS procedures except for small contracts for assignments of standard or routine nature and estimated to cost less than US$1 00,000 equivalent that would be procured using Least Cost Selection or using other procurement methods as defined in the annual procurement plan review.

7. Individuals: Specialized advisory services would be provided by individual consultants selected through comparison of qualifications of at least three qualified candidates. They would be contracted in accordance with the provisions of paragraphs 5.1-5.3 of the Consultant Guidelines as defined in the annual procurement plan review

8. Operating Costs: Operational costs would include reasonable expenditures to carry out the project such as travel and per diem cost for supervision activities and training. These 77 activities would be procured using CONAFE’s administrative procedures which were reviewed by the Bank and found acceptable.

9. Others: The Project includes cash transfers to schools through AGES and FORTALECE Interventions. These Interventions provide very small amounts to finance school improvement with a maximum amount of $1200.00 per year for schools with more than 121 students. Because of the very small amount involved it is considered that no formal procurement procedure is involved in the use of these funds. Audits should include specific arrangements to review the good use ofthe resources involved.

10. Under Subcomponent 2.3, Municipal-based Management, the project would finance training, technical assistance and supervision. The investments under this subcomponent would be financed with CONAFE’s own resources. 11. The procurement procedures and harmonized SBDs to be used for each procurement method, as well as model contracts for works and goods procured, are presented in the Operational Manual.

12. Other forms of procurement to be used as needed would include the methods of community procurement and commercial practices.

B. Assessment of the agency’s capacity to implement procurement

13. Procurement activities would be carried out by CONAFE. The agency is staffed with a Coordinator and 4 other staff members with many years of experience in Bank operations. At least one ofthese staff members would be in charge of coordinating and supervising procurement activities. 14. An assessment of the capacity of the Implementing Agency to implement procurement actions for the project has been carried out by the Procurement Accredited Staff (PAS) assigned to the Project on August 17 and September 1 to 3, 2009. The assessment reviewed the organizational structure for implementing the project and assessed the existing capacity within a sample ofthe CONAFE State Delegations.

15. The key issues and risks concerning procurement for implementation ofthe project have been identified and include the decentralized nature of the Project. The corrective measures which have been agreed are: Staff training in order to update staff in Bank’s policies and procedures and the incorporation of the Procurement Plan to the web based system SEPA in order to achieve efficiency and transparency in the management ofthe Plan.

16. The overall project risk for procurement is moderate.

C. Procurement Plan

17. The Borrower, at appraisal, developed a procurement plan for project implementation which provides the basis for the procurement methods. This plan has been agreed between the Borrower and the Bank on December 1, 2009 and is available at project’s files. It would also be available in the project’s database, in the Bank’s external website and in SEPA. The Procurement

78 Plan would be updated in agreement with the Bank annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

D. Frequency of Procurement Supervision

18. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment ofthe Implementing Agency has recommended one supervision missions to visit the field to carry out post review ofprocurement actions.

E. Details of the Procurement Arrangements Involving International Competition

1. Goods, Works, and Non Consulting Services

(a) List of contract packages to be procured following ICB and direct contracting. Not expected

2. Consulting Services

(a) List ofconsulting assignments with short-list ofinternational firms. It is estimated that the Project would finance one evaluation per year during the life of the Project. The estimated cost of each evaluation is of $348,000.00. It is expected that a firm would be hired for the first year with the possibility ofa continuation for the next years.

1 2 3 4 5 6 7

Ref. Description of Estimated Selection Review Expected Comments No. Assignment cost Method by Bank Proposals (Prior / Submission Post) Date 1 Impact $1’400,000.00 SBCC Prior TBD Four evaluations Evaluation are expected during the Project

(b) Consultancy services estimated to cost above $200,000.00 per contract and all single source selection ofconsultants (firms) would be subject to prior review by the Bank. (c) Short lists composed entirely of national consultants: Short lists of consultants for services estimated to cost less than $500,000.00 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.

79 Annex 9: Economic and Financial Analysis MEXICO: COMPENSATORY EDUCATION PROJECT

In this Annex, we first describe the expected benefits of the project. Using this information, we then calculate the expected benefit/cost ratio of project investments. Finally, we analyze the distributional implications ofthe project.

Estimated Benefits of the Project

1. In this section, we first estimate the effect of the interventions on educational outcome variables using available evidence from research. Second, we estimate the effect of changes in educational outcome variables on wages using current income data.

Early Childhood Parenting Education

2. In the first five years of life, children lay the groundwork for lifelong development. There is compelling evidence that interventions in early childhood are critically important for the practical issues of feasibility and cost-effectiveness, as well as brain plasticity and physiologic development. Rapid brain and physical development, relationships, and environments work together to create phenomenal advances in children during this time frame. Children’s language, early understanding of mathematics and reading, and self-control emerge during the first five years, and the extent to which children master these skills has long-term benefits for success in school and life.

3. Infants and toddlers growing up in poverty are more likely to experience developmental delays and growth deficits, than those from more privileged backgrounds because they are disproportionately exposed to a wide range of co-occurring risk factors that can impact development. For example, children from low-income backgrounds are more likely to experience poor nutrition or malnutrition, less stimulating learning environments, more limited linguistic role models, crowded or substandard housing, exposure to domestic or community violence, greater environmental hazards, poor sanitation, crowding, and limited access to resources. These parents may have limited education and intelligence, and little knowledge of both the importance of play and child development. They may also suffer from anxiety or depression. For these reasons, children living in the context of extreme poverty are extremely vulnerable to deficiencies in basic health and nutrition, and to delayed physical, language and cognitive development. A large body of literature makes the case for investment in early childhood development. (Cf. Vegas and Santibaiiez (2009)). Returns to investments in early childhood are likely to be higher than those to investments made later in life, because beneficiaries have a longer time to reap the rewards. Investments in human capital have dynamic complementarities, so that “learning begets learning.” For these reasons, it is more effective for a Government to equalize initial endowments through early childhood development programs, than to compensate for differences in outcomes later in life. A look at international experiences will help explain these findings.

4. Estimating the impact of early childhood investments is complex because this type of investment affects many aspects of beneficiaries’ lives, including several that cannot be

80 monetarily quantified. Table 1 below summarizes the various types ofbenefits of early childhood interventions. Based on international evidence, we estimate the impact of the ECD intervention on levels of education. In the small-scale Carolina Abecedarian Program (CAP), follow up studies showed that children who participated in the program had higher test scores throughout their academic careers. At the age of 15, both retention rates and the number of students transferred into special education were found to be approximately 23 percent lower in the parti.cipatory group compared with the control group (Campbell & Ramey, 1994 in Tolani et al., 2006). By the age of 21, participants were also twice as likely to remain in school or to have attended a four-year college program, than those who did not benefit from the program (Campbell et al. 2002). In addition, participants were some 15 percent more likely to be employed than non-participants. Studies conducted in the context of the Turkish Early Enrichment Program (TEEP) (Kagitcibase et al., 2001; Kagitcibasi 1992) have concluded that child participants attained higher school grades and had greater self-confidence. Furthermore, in a 10-year follow-up survey, Kagitcibasi (1992) found that nearly 86 percent ofthe children in the program were still in school, compared to 67 percent ofthe children in the control group.

Table A9.1: Taxonomy of benefits from early childhood interventions Type of benefit Primary Public or Monetarily Evidence Included in beneficiary private? quantifiable? available the analysis Increased levels of Child Private No unless through Yes Yes education increased levels of income Increased levels of Child Private Yes Yes Yes income Decreased levels Child, society Public Yes Limited No ofcrime Intergenerational Child, Private Difficult Limited No transmission of descendents benefits Increased self- Child Private No Yes In as far as is esteem, confidence related to educational

5. There is a substantial amount of information on the impact of School-Based Management in Mexico itself. The Apoyo a la Gestidn Escolar (AGEs) intervention was the first such intervention that granted parental associations access to schools. Gertler et al. (2006) use a difference-in-difference method to find that AGEs have significantly reduced repetition and failure rates by 4-5% in participating schools. The authors argue that active participation by parents was fundamental to these improvements. The authors find little evidence of impact of AGE on student enrollment, which is not surprising given Mexico’s level of enrollment (approximately 96%) in this target group. Another study by Lopez-Calva and Espinonsa (2006) finds a positive effect ofthe AGE intervention on student test scores in core subject areas such as Math and Spanish. Also in Mexico, the Programa Escuelas de Calidad (PEC) - designed to expand school autonomy and improve learning outcomes through provision of grants on the basis ofrequisite conditions such as involvement of parental groups and the development of PEC budgets tailored to local needs. The results to date indicate that PEC management has had a positive impact on learning outcomes. Skoufias and Shapiro (2006), using simple and difference-

81 in-difference propensity scoring matching techniques, find that participation in PEC since its inception in 2001 has decreased dropout and failure rates by 0.24 percentage points and repetition rates by 0.31 percentage points. Using a slight variation of this approach, Murnane and Cardenas (2006) conclude that participation in PEC has reduced school dropout rates by 0.27 percentage points.

6. International experiences with SBM show that substantial educational achievements can be attained when the local stakeholders become empowered. In South America, Paes de Barros and Mendonca (1 998) use a difference-in-difference strategy with a fixed-effects model to estimate the impact of decentralization of education in Brazil, including direct transfer of funds to schools, and creation of local school councils among other aspects. The empirical aspects are profound, with a positive impact on dropout rates (reductions ofbetween 3.4 and 6.6 percent) and repetition rates (reduction of between 1.7 and 4.2 percent). Eskeland and Filmer (2002) hypothesize that school autonomy and parental participation matters for learning in mathematics. Using a cross-section data set from Argentina, they expound that higher math scores among 6th and 7th graders are achieved. Furthermore, this effect is found to be stronger in poorest schools and equally as strong for children of poorer households. In Central America the EDUCO program in El Salvador has received substantial attention for the benefits it has fostered. A key characteristic of this program is the establishment of school councils - made up of community, school and legal representatives - which have the power to hire and dismiss teachers. Study of EDUCO reveals increased reading scores and lower levels of student absentees (Jimenez and Samada, 1999; Sawada and Ragatz, 2005) and increases in the probability that students will remain in school (Jimenez and Sawada, 2003).

7. The Mobile Pedagogical Assistance intervention provides an innovative way to support teachers, promote participation by parents, and improve learning outcomes in the classroom. There are several anticipated benefits. First, the improved teacher-to-student ratio directly impacts the amount of attention educators can allocate to individual students. Second, a key element of the Mobile Pedagogical Assistance intervention is its ability to reach students in rural areas or with special needs, where the marginal impact ofearly, intense pedagogical support may be highest. Third the intervention may improve the quality of teachers, though with the current high turnover of teachers this is unlikely to be a lasting effect. It is widely documented that teacher tutoring and reduced student-to-teacher ratios improve student learning outcomes (see: Eckert, 2005; Hock et al, 2001).

8. The concept of Municipal-Based Management in the education sector is founded in the principle argument in favor ofdecentralization (see Raich, 2001). The impact on intermediate student achievement indicators may include reduced repetition rates, reduced dropout rates, better learning outcomes, and for all stakeholders, the increased participation of local actors in decision-making processes leads to a more collegial relationship and improved satisfaction (World Bank, 2007).

9. Table A9.2 below presents the best estimates for each component of this project’s impact. Based on the information available in the literature, and taking into consideration that programs vary in their intervention methods, project design, scope, evaluation and goals, we estimate the impact of the interventions proposed in this project. Where possible, we provide a range ofplausible results.

82 Table A9.2: Best estimates of project impacts at the project appraisal stage

Intervention Impact on Impact on learning years of education

Early childhood Significantly positive in parenting education Increase of Reduction of Reduction of core subject areas such as 15% 7- 10% 10 - 15% Spanish, math and sciences

Strengthening of Significantly positive in parent associations Increase of8 - Reduction of Reduction of core subject areas such as and financing of 10% 4-6% 3-5% Spanish, math and school improvement sciences plans I Mobile pedagogical Increase of 5% Reduction of Reduction of Significantly positive, assistance 5 YO 5 YO especially for poorly intervention performing students who are deprived of adequate teacher attention

BenefitKOst ratio of Project investments

10. We compute the BenefitKOst ratio of Project investments using the ECD calc~lator.’~The calculator weighs the benefits associated with the investments: first, it estimates the reduction in costs associated with improved efficiency in the system; and second, it estimates the increase in earnings due to increased educational achievement of beneficiaries. The calculator also estimates the costs associated with the investment: (i)the costs of actually implementing the project interventions; and (ii)the cost of providing additional years of education to those children who benefitted from the program and whose education potential has increased. We consider the two major investments of this Project (Early Childhood Education and Basic Education interventions) as one package, as if both interventions were “delivered to one child” over the course of childhood. In this section, we present the assumptions and parameters used, as well as intermediate and final results.

73 The ECD calculator is a tool developed by the Amsterdam Institute ofInternational Development and the World Bank in 2004. 83 Exchange rate (US dollars : local currency) 1 : 13 Early Childhood Development, estimated annual US$ 112 per year, for 3 years, ages 0-3 cost per child Basic Education Interventions, estimated annual US$ 44 per year per child, for 3 years cost per child (US$1740 per school at 40 students per school) Child Mortality Rate (per thousand) - before 35 intervention Child Mortality Rate (per thousand) - after 33 1 intervention

The structure and cost of the school svstem are as follows: I I Yearly unit cost in I US$ (converted at Yearly unit cost in Pesos Years exchange rate of (source: SEP2008) 13)

Primary school 6 Pesos 10,800 US$83 1 Middle school 3 Pesos 16,600 US$1,277 Secondary school 3 Pesos 22,25 1 US$1,712 College 4 Pesos 5 1,300 US$3,946

Wage equation: (source: team calculations on basis of ENCOVI 2008)

In(earnings) = a + p. PRI + MID + GISEC+ ~COL+ cy. EXP + 8. EXP’ + E

Where PRI is a categorical variable that takes value 1 if a person completed primary school but did not complete middle school MID is a categorical variable that takes value 1 if a person completed at least middle school but did not complete secondary school SEC is a categorical variable that takes value 1 if a person completed at least secondary school but did not complete college COL is a categorical variable that takes value 1 if a person completed at least college EXP is the number ofyears ofexperience

I I Coefficient I Constant 6.196 Primary school 0.445 Middle school 0.952 Secondary school 0.92 College 3.08 Experience 0.124 Experience squared 0

84 Before the introduction of the ECD intervention The following table gives the social indicators before the introduction ofthe ECD intervention:

Primary school 99% I 8% I 4% Middle school 95% 22% 2% Secondary school 96% 39% 2% I College I 80% I 40% I 0% I

After the introduction of the ECD intervention

The following table gives the social indicators after the introduction ofthe ECD intervention (conservative scenario):

Enrollment 99% Middle school 95% 20% 96% 35% 2% College 80% 3 8%

The following table gives the social indicators after the introduction ofthe ECD intervention (optimistic scenario):

Enrollment Primary school 99% Middle school 95% 18% 96% 30% College 80% 35% 0%

Results n the isis ofthese ds the following r ;ults were obtair :d using the I :D calcu Ror: Net Present Net Present Estimated Benefit I BenefitKO Net Present Value of the Value of the costs of the cost st Ratio, Value ofthe school system school system investments* Ratio, optimistic Disc school system after the after the conserv scenario ount before the introduction of introduction of ative rate introduction of the ECD the ECD scenario the ECD intervention, intervention, intervention' conservative optimistic scenario*~. scenario* 3% US$4,656,300 US$7,826,000 US$12,201,400 7.75 18.15 5% (US$7,164,600 1US$5.648,300) fUS$3.346.400).., 3.93 9.67 (US$15,968,200 (US$15,463,500) (US$14,405,800) US$382,900 1.42 4.18 7% ) per co )rt of 1000 chilc :n

11. Using the discount rate of 5% that is usual for economic analyses of Bank education projects, the BenefitKOst ratio is between 3.93 (conservative scenario) and 9.67 (optimistic scenario). The internal rate of return to investment is the discount rate that equalizes the sum of

85 the discounted stream of costs of the investment to the sum of the discounted stream of benefits that it generates; in other words, it is the discount rate for which the BenefitEost Ratio is 1. The internal rate of return is approximately 9.5% in the optimistic scenario and 8.5% in the conservative scenario.

Distributional Analysis

12. The 172 targeted municipalities for this Project are some of the poorest performers in education, health and quality of life indicators in Mexico. Table 3 below compares the education indicators of 162 of the 172 targeted municipalities to those of the 8 poorest states, as well as to the national level. The targeted municipalities perform drastically worse on all indicators. These findings demonstrate that the education system needs to improve its provision of services in those municipalities in order to reach the most underprivileged populations in Mexico.

rate (IS<) Education Aged Population with years of Population not Incomplete Schooling Attending School Basic Education (15+) 162 municipalities 37.5% 12.4% 46.7% 3.95 8 states 13.8% 6.7% 41.5% 7.16 National level 7.5% 5.1% 23.6% 8.12

Municipal and National Rate of Illiteracy

Rate of Illiteracy per Municipality National Rate of Illiteracy

Rate of Illiteracy (per selected 162 municipalities and national average)

86 Figure A9.2 Distribution Analysis: Schooling

Municipal and National Rate of Average Years of Schoolin$

Average Years of Schooling per Municipality National Average Years of Schooling

45 40 35 30 25 20 15 10 5 n 1-1.5 1.5-2 2-2.5 2.5-3 3-3.5 3.5-4 4-4.5 4.5-5 5-5.5 5.5-6 6-6.5 6.5-7 7-7.5 7.5-8 8-8.5 Average Years of Schooling (per selected 162 municipalities and national average)

87 Annex 10: Safeguard Policy Issues MEXICO: COMPENSATORY EDUCATION PROJECT

Social Safeguards: Indigenous Peoples Plan

1. The development objective of the Compensatory Education Project is to improve access to ECD services and learning outcomes of children in the most marginalized municipalities of Mexico. This objective would be achieved through innovative interventions at the early childhood and basic education levels that strengthen the involvement of members of the school community and municipalities.

2. Safeguard OP 4.10 Indigenous Peoples applies to the Compensatory Education Project to be implemented by CONAFE. CONAFE’s programs focus on low income populations, in hard-to-reach areas where there are large numbers of students that participate in the conditional cash transfer program, Oportunidades. Most ofthese communities house indigenous populations who have been participating in CONAFE programs. Under the proposed Project indigenous schools would continue to benefit from the school-based management program and would also participate in the new interventions such as FORTALECE and activities to be carried out through the Municipal-Based Management Pilot. To attend CONAFE’s focus, an Indigenous Peoples Plan (IP) has been prepared to ensure that the Project benefit indigenous peoples in a culturally appropriate manner, respecting their rights, economies, framework of laws, policies and practices.

3. This Indigenous Peoples Plan builds on the experience of previous projects such as PAREIB (Programa para Abatir el Rezago Educativo en Educacidn Inicial y Bdsica - PAREIB APL of 1998-2007) and other Bank-financed education projects. Evaluation of these programs helped to identify some factors affecting indigenous peoples’ participation and means to improve CONAFE’s programs. This analysis was complemented with field research and consultations carried out in selected indigenous communities of four states that concentrate high percentages of indigenous populations and are within the area of the Project. Consultation carried out during field trips helped to identify indigenous beneficiaries’ perspectives and recommendations that have been incorporated into this IP to guide project design and implementation.

4. Indigenous Peoples Plan is summarized in this annex including: (a) a brief synopsis of background information; (b) participation of indigenous peoples in CONAFE programs; (c) main findings of consultation combined with previous studies; and (d) recommendations to strengthen the design of the proposed Compensatory Education Project and to ensure that it maximizes the benefits for indigenous peoples.

Background

5. Mexico’s rich cultural diversity stems from its indigenous roots, where language and territory represent foundational elements of identity. In total, 11 families of languages have been identified with 68 language groups and 364 language variations. In the 2005 Census of Population and Housing, the National Institute of Statistics and Geography (INEGI) and the National Commission for the Development of Indigenous Peoples (CDI) documented the

88 population of indigenous peoples at the locality As detailed in Table 1, Mexico’s indigenous population amounts to 9,740,560 across 5 1,606 localities. An important finding is that 70.1 percent of the total indigenous population is concentrated in 46.7 percent of the localities.

6. Critical analysis of indigenous peoples includes special attention to the distribution and composition of communities. An important finding shows that 23.1 percent of the national indigenous population is located in localities of fewer than 500 inhabitants. Previous assessment of the indigenous population indicates that this statistic has remained consistent in recent years and that localities of this size are often the most remote, and hard-to-reach. Furthermore, the demographic configuration of the indigenous population by degree of exclusion and the size of locality indicates that less populated municipalities are characterized by high and very high levels of marginalization. Illustrated in Table A10.2 below, 72.5 percent of localities with indigenous peoples have a total population of 500 or less. Of these localities, 80.1 percent are classified with either high or very highly marginalized populations.

5,000 to 9,999 752 6 149 144 263 190 __ 10,000 to 14,999 261 1 26 49 105 79 1 15,000 to 49,999 3 54 __ 10 54 114 176 __

74 Data has been provided by the National Commission for the Development of Indigenous Peoples (CDI). Compared with the 2005 INEGI National Census, this data set uses the same criteria but at the locality level as opposed to the municipal level. It is important to note the discrepancies between the two techniques. Most notably, Mexican confidentiality law does not permit use of information for localities with less than 5 dwellings in the locality analysis but because this data is aggregated with all other localities it is permitted in the municipal dataset. As a result, the locality dataset includes only 9,740,560 indigenous peoples while the municipal dataset records 10,103,571 indigenous peoples. For the purpose of this IP plan the locality analysis provides the most accurate information and therefore has been utilized for this analysis.

89 50,000 to 99,999 73 __ __ 1 20 52 __ 100,000 to 499,999 89 __ __ 1 8 80 __ 500,000 to 999,999 23 ______2 21 -_ Larger than 1,000,000 11 _- -. _- -_ 11 __ Total 51,606 15,669 21,661 5,437 4,525 2,274 2,040

7. In the 2005 INEGI census it was found that approximately 87 percent of Mexico’s indigenous population between the ages of 6 and 14 attended school. Although this is an improvement over the 84 percent that attended school according to the 2000 national census, this figure remains well below the national and state averages depicted in the distributional analysis of Annex 9. Furthermore, according to the 2000 national census, of the population aged 15 and above, only 66 percent are literate and in states such as Chiapas and Guerrero this figure dips below 60 percent. In addition, the average years of educational attainment per indigenous adult is well below national and state averages at approximately 4 years.

8. The aforementioned three points shed light on the diversity, disparity and hardship that characterize the indigenous peoples of Mexico, especially for those living in the least populated localities. To service and achieve better educational outcomes, indigenous populations require forms of compensatory education tailored to their unique set of circumstances.

Legal Framework

9. Indigenous grounds and their respective rights, interests, society, language and culture are protected, preserved and documented in Mexico’s Constitution, legislative decree and a set of international treaties. Two of the most substantial are the ratification of Convention 169 on Indigenous and Tribal peoples of the International Labor Organization and the United Nations Declaration of the Rights of Indigenous Peoples.

10. In regards to education, following decentralization, the General Education Law (Ley General de Educacio’n) establishes principles for the realization of the right to education. The law specifically sets guidelines for equal opportunities for all individuals, including a framework of bilingual education which states that in the first years of schooling indigenous education should use an indigenous language and use Spanish only as a second language. On March 13th2003 the General Law of Linguistic Rights of Indigenous Peoples was established as Article 7, Section IV of the General Education Law. This law mandates the creation of the National Council of the National Institute of Indigenous Languages and the realization of the Indigenous Languages catalog, thereby ensuring the recognition of cultural and linguistic diversity of the Mexican nation.

Indigenous Peoples and Education

1 1, Mexico has increased its human development conditions from the 1990’s through cash- transfer and compensation programs targeting poor population. While the indigenous population and the most disadvantaged communities have made significant gains over this time, they continue to face inequalities of opportunities for improving their socio-economic status and escaping poverty. This is especially true in the education sector.

90 12. In primary education Mexico has reached almost universal coverage although there are concerns about the quality and relevance of education offered. State schools do not respond adequately to demand for schooling in remote regions with high proportions of indigenous populations. A recent study indicates that 94 percent of the most educationally disadvantaged population in Mexico is located in villages or small towns of fewer than 15,000 inhabitants. These communities are those most in need of greater parental participation and improvements in teaching accountability at the school level. Schools located in indigenous and hard-to-reach remote communities face challenges attracting and retaining qualified teachers, have few resources with which to operate, and are often overlooked by the state and federal authorities that tend to focus their efforts on more densely populated areas.

13. Early childhood education is very low in rural communities. In fact, it is inaccessible to approximately two million children, 20 percent ofthe Mexico’s population between the ages of 0-4. This serves as a handicap for these children, given the high correlation between early childhood development and student learning in primary and secondary school.

14. CONAFE aims to remedy this situation by increasing access to early childhood education and ameliorating the quality of primary school. Through its network of small community schools and its various compensatory programs, CONAFE promotes education in the poorest areas of Mexico. In 1992, with technical and financial support from the Bank, the institution began designing and implementing compensatory educational mechanisms to enhance its program and improve the quality of education provided to their target populations. This is accomplished through two main programs which receive thorough attention elsewhere in this document:

a. Early childhood development (ECD): This intervention targets to 0-4 year old children and their parents (Educacidn Initial). It is a community-based program providing important services to poor children. Starting in 1998, the intervention reaches an estimated 400,000 children and their parents in remote communities throughout Mexico. CONAFE’s approach uses existing assets such as a network of volunteers to teach the parenting education classes in preschools and other public spaces.

b. School-based management (Apoyo a la Gestidn Escolar - AGES): This intervention is intended to improve the quality of education offered in poor municipalities by promoting greater social participation in schools and the mobilization of resources to support schools. As detailed previously in this document, recent evaluations indicate that increased parental involvement in the management of schools can translate into superior learning outcomes for students.

Indigenous Peoples and CONAFE

15. While indigenous populations and the most disadvantaged communities have made notable gains in recent years, they continue to face inequalities of opportunities for improving their socio-economic status and escaping poverty. This is especially true in the education sector. With the proposed Compensatory Education Project, 147 of the targeted 172 municipalities have indigenous populations of 40 percent or more. This represents a substantial improvement over

91 CONAFE’s existing programs (AGE and ECD), which currently serve approximately 25 percent of the indigenous population.

16. Since CONAFE launched these interventions in the 1990’s five generations of programs have been carried reducing inequality of access to schooling. Over this period, the Bank’s support to CONAFE has evolved from financing specific education inputs towards financing innovation in education. CONAFE has been successful in focusing on small rural communities with low-income populations where there are large numbers of students that participate in the conditional cash transfer program, Oportunidades.

17. CONAFE’s program coverage comprises marginalized poor indigenous populations in disadvantaged and isolated rural communities with low quality education services. For this type of population, strong in its institutional capacity, CONAFE designs culturally appropriate learning materials, assists in planning educational strategies and offers didactic materials that cater to various indigenous languages. Furthermore, CONAFE collects and maintains annual data on key educational indicators for indigenous students such as dropout, repetition and failure rates as well as test performance and learning outcomes in the most fundamental subjects. A series of empirical studies and recent evaluations indicate that CONAFE’ s compensatory programs have produced measurable results in improving student learning achievements and reducing inequalities between indigenous and non-indigenous students.

18. CONAFE’s programs are extensive and far-reaching - of the 51,606 localities with indigenous peoples, 49.5 percent, or 25,553, are beneficiaries. The selection criteria include emphasis on the level of marginalization in their locality. Nearly 75 percent of localities have 500 inhabitants or less and 86.2 percent of the serviced localities are classified with high or very high levels of marginalization. As far as its target beneficiaries, a mandate of CONAFE is to address localities with populations that are 40 percent or more indigenous. Table A10.3 indicates that 11,128 of the 25,553 localities with CONAFE programs have populations that are 40 percent or more indigenous. Of these, 95.2 percent of the localities are characterized with high or very high levels of marginalization.

19. Table A10.4 depicts CONAFE’s strong presence in localities with indigenous people by population of the locality. CONAFE demonstrates exemplary coverage in localities with indigenous populations that consist of fewer than 500 inhabitants and are often located in remote, isolated areas and therefore are not included in larger state education programs. CONAFE’s extensive coverage of small, underserved localities further includes those localities with populations between 500 and 2,499 inhabitants.

’’ Programa para Abatir el Rezago Educativo (PARE) 1992-1996, Proyecto para el Desarrollo de la Educacidn Inicial (PRODEI) 1993-1997, Programapara Abatir el Rezago en Educacidn Bdsica (PAREB) 1994-200 1) Programa Integral para Abatir el Rezago Educativo (PIARE) 1995-2001 and Programa para Abatir el Rezago en Educacidn Inicial y Bdsica (PAREIB) 1998-2007. 92 Ta

Ta

Description of Locality

More than 15,000 Total 25,553 5,928 13,217 2,876 2,451 993 88

20. CONAFE provides programming to 17,965 localities in the 11 relevant states for the proposed Compensatory Education Project. In the table below it can be seen that the coverage ofAGE is largest for primary schools, followed by preschools with coverage of 6 1.1 percent and 44.5 percent, respectively. Basic education has a presence in 49.6 percent of the localities.

Table A10.5: CONAFE Program Coverage CONAFE Program Coverage in Localities with Indigenous Peoples

Number of Localities Educaci6n Inicial AGE Preschool AGE Primary AGE Secondary State Serviced with CONAFE Program

3,348 635 I 235,146 419 1,540 1,456 640 805 411 11,155 2,930 525 261,634 1,987 181 61,397

1,075 361 100,931 3,288 :ii7 I 259,272 Total 17,965 1.097.078

93 21. In the current school cycle (2008-2009) CONAFE has supported basic education of 1,230,000 indigenous students through an investment of around 50 million dollars.76The main goals achieved by the program are summarized next:

Community education for indigenous children included 38,629 children and young students through an investment of 159.4 million pesos;

0 School supplies were provided for 9,8 19 indigenous primary schools with an investment of23.37 million pesos;

0 School-based management (AGES) reached 14,850 AGE entities in indigenous schools through an investment of 65.14 million pesos;

0 Teacher incentives benefited 5,926 teachers in indigenous schools at a cost of 103.1 1 million pesos.

22. CONAFE has also invested 434.19 million pesos in infrastructure including: (a) 1308 works under the regular CONAFE program (an investment of91.56 million pesos); and (b) 7,273 rehabilitation actions (an investment of 342.63 million pesos).

23. Despite progress achieved there are still gaps between indigenous and non-indigenous students. In the case of training of parents in the Initial Education Intervention for instance, participation was lower than expected because for some indigenous population cultural practices make it difficult for the mothers to participate in this type of activities. Perceptions about education by this type of population as well as socioeconomic conditions might be also affecting participation and performance ofindigenous children in CONAFE’s program.

Main Findings of Consultation

24. The Indigenous Plan comprises consultation of beneficiaries and main stakeholders of CONAFE programming in six municipalities with the lowest human development indexe~.’~ Choice of the sample set is defined by the following criteria: municipalities with the lowest levels of HD; localities with 40 percent indigenous population or more and simultaneous coverage of Early Education Interventions and AGE interventions for each tier of basic education.

25. Five interview instruments were utilized to collect data about CONAFE programs. Due to varying conditions, certain facets of the intended population were unavailable for consultation. Even with this the interviewing process did encompass a wide array ofpeople, including parents, beneficiaries, teachers, program instructors, school directors and education supervisors.

76 CONAFE D.G. de Planeacidn y Estadisticas 77 Localities from six municipalities were selected: Chil6n (Santiago Pojcol), Salto del Agua (Tiemopa, Trapiche), Copalillo (Acingo, Hueyatsale, San Francisco Ozutla), San Bartolo Tutotepec (San Migual, El Copal), Ixtacamaxtitlan (Analco) and Tlaola (Xaltepuxtla, Nexapa Ahila). 94 26. Indigenous peoples of rural Mexico have unique sets of needs, priorities and expectations when it comes to education. Consultation has found that in many localities basic education is a high priority for indigenous peoples and that when children are absent it is often not because their parents do not value education, but rather because ofpoverty or inadequacies of the school system. This is the very point that the Compensatory Education Project looks to combat. The targeting strategy is directed at the most educationally backward municipalities and schools as seen by the identification of marginal localities, with prioritization for those with a high share of extreme poverty, insufficient education services and expectant mothers. Stakeholders’ perception for each one ofthe CONAFE programs is summarized next.

27. Early Childhood Development: Consultation identified several trends associated with current early education programming. Mothers who have participated in the intervention for more than one year have realized notable benefits, including: improvements in the quality of food provided to children, better social interactions between their children and other children, thereby facilitating an easier transition into basic education as children are more independent, and higher awareness and confidence in women in the stage of pregnancy, birth and early care. Mothers also recognized that the program is compatible with their own traditions about caring for small children. Some aspects that should be improved are the following:

Incentives to encourage fathers’ participation, which is still reduced; Incentives to enhance local authorities involvement; Increase availability of didactic and educational material;

28. Support for School Management (Apoyo a la Gestidn Escolar -AGE): Consultation with key stakeholders determined that the AGE intervention has not yet fulfilled the extent of its potential. Consultation discovered that there is a generally held opinion that substantial capital investment in physical infrastructure would provide a much more suitable and invigorating arena for learning. Furthermore, stakeholders have raised concerns over what they perceive as insufficient resources that limit intervention benefits and a tedious and inefficient ‘proof-of- purchase’ receipts for all purchases. Other issues raised are the following:

0 Resources are insufficient to fulfill schools’ needs; 0 There is insufficient and in some cases bias information about expenditures criteria; Isolated rural areas have difficulties in getting receipts and other papers to prepare expenses statements; 0 Participation in AGE entities can have expenses that are not reimbursable to members.

29. The Mobile Pedagogical Assistance intervention is new for the education landscape and as a result feedback from consultation is somewhat limited. Conceptually, many respondents were receptive to, and agreed with, the idea that support for teachers of elementary and secondary schooling could help alleviate some of the educational problems in the community and lead to superior academic performance by indigenous students.

30. FORTALECE is a new intervention and therefore consultation focuses on perceptions and possible execution scenarios. The intervention is anticipated to produce positive results

95 through a specific focus on FORTALECE entities. The flexibility of FORTALECE would permit responsiveness and alterations as required. One salient point is that parents would not incur costs associated with school related investments or travel expenses related to the purchase of school materials in surrounding communities. Parents priorities include in order of importance: (i) improvement of school facilities; (ii)maintenance of school infrastructure; (iii)sanitary facilities; (v) sport facilities and equipment, first-aid material; and (vi) administrative expenses.

3 1. Municipal-Based Management: A key overarching finding in regards to the Municipal- Based Management Pilot is that stakeholders expressed the importance of having the support of local authorities. In addition, it is necessary to take into account that due to the unique characteristics ofthe targeted population any intervention must incorporate the different cultures and traditions of these people. As opposed to a program implemented by the state, we expect that the municipal-based model would best provide the flexibility, detail and community orientation that is required for the varying circumstances.

Main Recommendations by Project Components

32. This section examines each component and sub-component to assess and modify intervention design to ensure maximum reward for indigenous beneficiaries. This proposal incorporates finding and recommendations obtained during consultation that are not necessarily component specific but rather apply to the Compensatory Education Project in its entirety.

Component 1: Early Childhood Development

33. The implementation of early education programs in areas with high indigenous populations presents a unique set of circumstances. On a general level, the approach to raising infant children is in part a bi-product of cultural identity and social circumstances. For instance, because fathers, siblings and related family members work all day, the duty of childrearing including such responsibilities as care and feeding practices is generally bestowed upon mothers and other female family members.

34. Beneficiaries tend to be first time mothers between the age of 20 and 40. These women tend to form a cohesive group and are open to each other’s experiences, suggestions and opinions. Older women who have had experience in motherhood are generally of the belief that little can be learned from younger, first time mothers. A more effective version of this intervention would entail the inclusion of these older women for a number of reasons. First, although it is true that experienced mothers have comparatively less to learn, Early Childhood Education still has the potential to affect these mothers and the development oftheir children in a profound manner. Second, these women have the potential to add significant value to the intervention and other participants through their experience and support of other women in the program.

35. CONAFE uses a modified approach to target and provide early stimulation activities to indigenous peoples in remote, isolated and hard-to-reach areas. Current and future programs for indigenous peoples would benefit from better advocacy and subsequent reach of interventions. To date, some mothers were unaware of the program’s mere existence and

96 therefore did not participate. Furthermore, better dissemination and enhanced awareness of the program should also include better publication of the benefits of early childhood care as in some cases early childhood education is not seen as a priority for families.

36. The most critical element of current and future ECD success is the ability to design an intervention with a cultural perspective that is adaptable to environmental circumstances, yet targeted and capable of reaching the desired participants. Component 1 of the Compensatory Education Project would train its ECD would incorporate the following guidelines:

a. Promoters would receive training to raise their awareness about the importance of indigenous culture so that they are respectful of local culture and beliefs, especially in relation to childcare and family dynamics, and to be able to communicate in the local language.

b. Design of training materials would incorporate the specific conditions of each intended group of beneficiaries. The Compensatory Education Program would tailor materials to language and cultural factors and would ensure that sufficient supportive work material is available for children and parents.

c. Parent education sessions would take into account work and family schedules and would be held in a suitable, convenient and accessible facility. This is particularly important in support of the sessions aimed at fathers to promote their participation in childrearing and sessions that involve both parents.

ComDonent 2: Interventions in Basic Education

2.1: Decentralized Support to Basic Education

37. This component would increase participation of indigenous parents and communities to identify and meet school needs by strengthening and empowering AGE entities and FORTALECE entities. To achieve this end, the component would promote the following:

a. Taking into account indigenous peoples’ priorities and expectations about their children’s education;

b. To promote and improve child retention rates by providing parents with information to overcome bias or impediments;

c. To provide culturally specific training programs for indigenous parents that incorporate their views in the School Improvement Plans and budgets.

38. Previous studies have found that AGE entities are useful instruments in assisting preschool and primary school, where they have discretion to spend grant monies on school improvements, contribute to overall planning and administration of the school. As part of the overarching AGE intervention, AGE entities build community involvement in schools and improve relationships between school officials and indigenous peoples.

97 39. One of the principal issues facing decentralization support to basic education is the disparity that exists amongst different states and municipalities in Mexico. For instance, in some localities in Guerrero, there are high rates of temporary farming employment. This affects education in that entire families migrate for 3 to 6 months, forcing their children to switch schools. This difficulty has been associated with higher failure and grade repetition rates, as students attending school in the destination location could face different education schedules, experience incorrect placement, or be absent from learning many core concepts which will hamper learning in Math or Spanish, for example. Furthermore, in other cases such as communities in Hidalgo, it has been identified that one problem is that boys and girls have to work in the house or fields and therefore are not able to attend school or allocate enough energy to attain high performance levels.

40. This proposed sub-component would respond to these realities in a few ways. First, where possible, the combination of the Compensatory Education Project interventions with existing programs such as Oportunidades would provide a two-prong approach to promote learning and high student achievements whilst compensating for lost income in the short-term. Second, this sub-component would place an emphasis on disseminating the current project guidelines, educate local stakeholders ofthe program benefits and maintain information on the project’s operations.

4 1. The success ofthis sub-component is largely dependent on its acceptance by local indigenous peoples, as well as their participation in the program. For this reason it is essential that the various education figures (promoters, implementers and overseers) speak the native language of the community, possess strong communication skills and are able to work closely with all of the local stakeholders.

2.2: Mobile Pedagogical Assistance intervention

42. At this stage of implementation, the Mobile Pedagogical Assistance intervention would be implemented only in rural and indigenous schools. The project would specially cater to single-teacher and two-teacher schools with high or very high levels of marginalization and social decline with the aim of improving mathematics and language skills.

43. Design of the Mobile Pedagogical Assistance intervention incorporates the unique and diverse environment in which tutors would be working. Tutors would support the implementation of strategies to improve mathematics and language performance, conduct extracurricular activities, promote parental participation and identify and assist students with special academic requirements.

44. Studies have found that continuity of tutors throughout the school year enables better relationships with students, in-depth knowledge of the school and community, and in the end, improved academic performance. This may hold even greater relevance for smaller indigenous communities that are difficult to reach and infiltrate. For this reason, the Mobile Pedagogical Assistance intervention has been designed to have tutors work with students over the duration of a full academic year.

98 ComDonent 3, Proiect Monitorina, ManaPement and Evaluation

45. In regards to the indigenous population this component would: (a) incorporate monitoring reports disaggregated by gender to assess progress by the project adequately targeting indigenous peoples; (b) include process and outcome indicators specifically designed to assess success in reaching indigenous peoples and achieving education goals: (c) provide adequate institutional arrangements and strengthening programs to ensure CONAFE’s capacity to implement the IP both, at the national and municipal levels as well as at communities and schools.

46. The strengthened reporting mechanisms, up-to-date feedback and flexibility of the Compensatory Education Project would enable continual transition of targeting mechanisms and program delivery as required. This would ensure that maximum benefits of the proposed intervention are realized.

99 Annex 11: Project Preparation and Supervision MEXICO: COMPENSATORY EDUCATION PROJECT

Planned Actual PCN review 06/14/2009 09/15/2009 Initial PID to PIC 09/15/2009 09/30/2009 Initial ISDS to PIC 09/15/2009 10/08/2009 Appraisal 12/15/2009 12/22/2009 Negotiations 01/18/2010 02/02/20 10 BoardRVP approval 02/16/20 10 03/25/20 10 Planned date of effectiveness Planned date of mid-term review Planned closing date

Key institutions responsible for preparation of the project: National Council for Educational Development- CONAFE (Consejo Nacional de Foment0 Educativo) Secretariat of Public Education (Secretaria de Educacibn Pziblica) State Level Secretariats of Public Education (Secretarias Estatales de Educacibn Pziblica) Secretariat of Finance and Public Credit (Secretaria de Hacienda y Cre'dito Pziblico) National Financing Agency - NAFIN (Nacional Financiera, S.N. C.)

Bank staff and consultants who worked on the project included:

Name Title Unit Peter Anthony Holland Task Team Leader LCSHE Alej andra Gonzalez Language Program Assistant LCClC Amy L. Walter Consultant LCSHE Antonella Novali Team Assistant LCSHE Christel M.J. Vermeersch Economist LCSHE Clark A. Matthews Consultant LCSHE Claudia Macias Operations Officer LCSHH Erik A. Bloom Senior Economist LCSHE Gabriel Penaloza Procurement Analyst LCSPT Juan Carlos Serrano-Machorro Financial Management LSCFM Specialist Leonard0 G. Romeo Consultant LCSHE Maria E. Castro-Munoz Sr. Social Scientist LCSSO Ricardo Rocha Silveira Senior Operations Officer LCSHE Mariangeles Sabella Senior Counsel LEGLA Jose C. Janeiro Senior Finance Officer CTRFC Tomas Socias Senior Procurement Specialist LCSPT

Peer Reviewers: Luis Benveniste, Lead Education Specialist (AFTED); William Dillinger, Lead Public Sector Management Specialist (ECSP4); and Lucrecia Santibanez, Consultant (Fundacion IDEA). 100 Annex 12: Documents in the Project File MEXICO: COMPENSATORY EDUCATION PROJECT

Comisi6n Nacional para el Desarrollo de 10s Pueblos Indigenas - CDI - and United Nations Development Programme - UNDP (2006). Informe sobre Desarrollo Humano de 10s Pueblos Indigenas de Mkxico 2006. Mexico City, Mexico.

CONAFE (2009). Procedimiento de Apoyo a la Gestidn Escolar. Section 4.3.1.

CONAFE (2009). Programa de Educacidn Inicial: Lineamientos 2009-2010.

Consejo Nacional de Poblaci6n - CONAPO (2006). indices de Marginacidn, 2005. Mexico City, Mexico.

Consejo Nacional de Evaluaci6n de la Politica de Desarrollo Social - CONEVAL (2008). Cifras de Pobreza por Ingreso, 1992-2008.

Diario Oficial de la Federation del 30 de diciembre de 2008. Reglas de Operacidn (Acuerdo 451): Programa de Educacidn Inicial y Bdsica para la Poblacidn Rural e Indigena

Diario Oficial de la Federaci6n del 30 de diciembre de 2008. Reglas de Operacidn (Acuerdo 460): Programa de Acciones Compensatorias para Abatir el Rezago Educativo en Educacidn Inicial y Bdsica

Gertler, Paul J.; Harry A. Patrinos and Marta Rubio-Codina (2006, revised 2008). Empowering Parents to Improve Education: Evidence from Rural Mexico, Washington, D.C.: The World Bank.

Instituto Nacional para la Evaluaci6n de la Educaci6n - INEE (2007). La Educacidn Para Poblaciones en Contextos Vulnerables: Informe Anual200 7. Mexico City, Mexico.

Instituto Nacional para la Evaluaci6n de la Educaci6n - INEE (2008). Panorama Educativo de Mkxico: Indicadores del Sistema Educativo Nacional2008. Mexico City, Mexico

Instituto Nacional de Estadistica, Geografia e Informatica - INEGI (2004). La Poblacidn Indigena en Mkxico. Aguascalientes, Mexico.

Navarrete Linares, Federico (2008). Los Pueblos Indigenas de Mkxico. Mexico City, Mexico: Comisi6n Nacional para el Desarrollo de 10s Pueblos Indigenas (CDI).

Programa para Abatir el Rezago Educativo (PARE) 1992- 1996, Proyecto para el Desarrollo de la Educacidn Inicial (PRODEI) 1993-1997, Programapara Abatir el Rezago en Educacidn Bdsica (PAREB) 1994-2001, Programa Integral para Abatir el Rezago Educativo (PIARE) 1995-2001 y Programapara Abatir el Rezago en Educacidn Inicial y Bdsica (PAREIB) 1998- 2007.

101 Secretaria de Educaci6n Publica - SEP (2008). Sistema Educativo de 10s Estados Unidos Mexicanos: Principales Cfras Ciclo Escolar 2007-2008. Mexico City, Mexico

World Bank (2007). Impact Evaluation for School-Based Management Reform, Washington, D.C.: The World Bank.

World Bank (2008). Basic Education (PAREIB III),Implementation Completion Report, Washington, D.C.: The World Bank.

World Bank (2007). What Do We Know About School-Based Management? Washington, D.C.: The World Bank.

World Bank (1990). Education Statistics. Washington, D.C.: The World Bank.

World Bank (2007). Education Statistics. Washington, D.C.: The World Bank.

World Bank (1995). Health, Nutrition and Population (HNP) Statistics. Washington, D.C.: The World Bank.

World Bank (2007). Health, Nutrition and Population (HNP) Statistics. Washington, D.C.: The World Bank.

World Bank (1995). World Development Indicators, Washington, D.C.: The World Bank.

World Bank (2007). World Development Indicators, Washington, D.C.: The World Bank.

102 Annex 13: Statement of Loans and Credits MEXICO: COMPENSATORY EDUCATION PROJECT

~~ ~~~~~ ______~~ ~~

Diference between Expected and Actual Original Amount in US$ Millions Disbursements Frm Project ID FY Project Name IBRD IDA Grants Cancel Undisb. Orig. Rev,d

PO70108 2003 MX Savings & Credit Sector Strengthening 85.60 0.00 0.00 0.00 14.44 -6.56 6.10

PO87152 2004 MX (CRL1)Savings & Rurl Finance(BANSEF1) 154.50 0.00 0.00 0.38 36.82 -41.81 29.36

PO74755 2005 MX State Judicial Modernization Project 30.00 0.00 0.00 16.50 13.50 30.00 0.00

PO89865 2005 MX-(APL1) Innov. for Competitiveness 250.00 0.00 0.00 0.00 39.91 25.20 0.00

PO85593 2006 MX (APL 1) Tertiary Educ Student Ass 180.00 0.00 0.00 0.00 60.35 50.82 0.00 PO88732 2006 MX Access to Land for Young Farmers 100.00 0.00 0.00 0.75 46.61 47.36 0.00 PO87038 2006 MX Environmental Services Project 45.00 0.00 0.00 0.00 10.23 3.65 0.00

PO91695 2006 MX Modernization Water & Sanit Sector TA 25.00 0.00 0.00 0.19 5.34 5.53 2.19

PO88996 2008 MX (CRL2) Integrated Energy Services 15.00 0.00 0.00 0.00 14.96 7.30 0.00

P114271 2009 MX Customs Institutional Strengthening 10.03 0.00 0.00 0.00 10.03 0.16 0.00

P106589 2009 MX IT Industry Development Project 80.00 0.00 0.00 0.00 80.00 28.31 0.00

P112258 2009 MX Priv Housing Finance Markets Strngth 1,010.00 0.00 0.00 0.00 7.48 0.40 0.00

P106528 2009 MX Results-based Mgmt. and Bugdeting 17.24 0.00 0.00 0.00 17.24 7.04 0.00

P115067 2009 MX Support to Oportunidades Project 1,503.76 0.00 0.00 0.00 358.24 1,145.52 0.00

P106261 2009 MX Sustainable Rural Development 50.00 0.00 0.00 0.00 50.00 0.00 0.00

P116965 2010 MX Influenza Prevention and Control 491 .OO 0.00 0.00 0.00 491.00 0.00 0.00 Overall Result 4,047.13 0.00 0.00 18.12 1,351.02 -991.71 37.83

103 STATEMENT OF IFC's - Held and Disbursed Portfolio In Millions of US Dollars As of December 3 1,2009

Committed IFC Disbursed IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic Occihol 0.00 7.50 0.00 0.00 0.00 7.50' 0.00 0.00

Savoy 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Sierra Nevada 6.56 0.00 0.00 0.00 6.56 0.00 0.00 0.00

1992/ 1993/ 1996/ 2000 Grupo Posadas 0.00 0.00 8.00 0.00 0.00 0.00 8.00 0.00

1995/ 1997/ 1999 Mexplus Puertos 0.00 0.80 0.00 0.00 0.00 0.80 0.00 0.00

1995-961 1998-99 Baring MexFnd 0.00 1.70 0.00 0.00 0.00 1.70 0.00 0.00

1997 TMA 0.59 0.00 3.92 2.06 0.59 0.00 3.92 2.06

1998/ 1999 Merida 111 19.96 0.00 0.00 31.64 19.96 0.00 0.00 31.64 1998/ 2004/ 20081 2010 Grupo Calidra 54.23 0.00 0.00 0.00 49.23 0.00 0.00 0.00

1999/ 2000 ZN Mxc Eqty 0.00 0.80 0.00 0.00 0.00 0.80 0.00 0.00 Fund 2000/ 2004/ 2008 PanAmericanSilv 0.00 2.18 0.00 0.00 0.00 2.18 0.00 0.00

2001/ 2002/ 2004-2007 Su Casita 163.77 0.00 0.00 0.00 143.94 0.00 0.00 0.00 2002 Ecomex 2.40 0.10 0.08 0.00 2.40 0.10 0.08 0.00

2002 Puertas Finas 4.88 0.00 0.00 0.00 4.88 0.00 0.00 0.00

2002 ZN Mexico I1 0.00 0.10 0.00 0.00 0.00 0.00 0.00 0.00

2003 Occidental Mex 15.00 0.00 0.00 20.00 15.00 0.00 0.00 20.00

2003/ 2005/ 2010 Banorte (Mex) 0.00 217.70 0.00 0.00 0.00 150.00 0.00 0.00

2004 DTM 2.13 0.00 0.00 0.00 2.13 0.00 0.00 0.00

2005/ 2007 FMEM 23.18 0.76 0.00 0.00 13.71 0.76 0.00 0.00

2005/ 2008/ 2009 CMPDH 34.71 0.00 4.08 0.00 28.71 0.00 4.08 0.00

2005-06/ 2009-10 GMAC 0.60 0.00 0.00 0.00 0.60 0.00 0.00 0.00 Financiera 2006 Carlyle Mexico 0.00 3.83 0.00 0.00 0.00 3.46 0.00 0.00

2006 Vuela 40.00 0.00 0.00 0.00 25.82 0.00 0.00 0.00

2006/ 2008/ 2009 Banco del Bajio 0.00 49.96 0.00 0.00 0.00 49.47 0.00 0.00

2006/ 2009 Grupo Su Casita 0.00 10.16 0.00 0.00 0.00 10.16 0.00 0.00

2007 Infrainvest 0.00 50.00 0.00 0.00 0.00 0.00 0.00 0.00

2007 Interoyal 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00

2007 Irapuato 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

2007 Nexxus 111 Fund 0.00 20.00 0.00 0.00 0.00 10.56 0.00 0.00

2007 Petstar 7.23 0.00 5.56 10.40 7.23 0.00 5.56 10.40 2007/ 2008 Banco Amigo 0.00 2.22 0.00 0.00 0.00 2.22 0.00 0.00

2007/ 2009 MicroCred 0.00 0.59 0.00 0.00 0.00 0.59 0.00 0.00 Mexico 2008 Agrofinanzas 0.00 1.70 0.00 0.00 0.00 0.00 0.00 0.00

2008 Alta Growth 0.00 20.00 0.00 0.00 0.00 2.53 0.00 0.00

104 Fund

2008 Bioparques 7.00 0.00 5.00 0.00 7.00 0.00 5.00 0.00 2008 Vinte 10.36 7.06 0.00 0.00 8.61 7.06 0.00 0.00

2008-09 Hipotec Vertice 21.44 6.53 0.00 0.00 14.20 6.26 0.00 0.00 2009 City Express Hol 12.85 0.00 5.14 0.00 0.00 0.00 0.00 0.00

2009 Nasoft 0.00 8.00 0.00 0.00 0.00 0.00 0.00 0.00 2009 Progresemos 3.06 0.00 0.00 0.00 2.29 0.00 0.00 0.00

2010 Finterra 1.15 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2010 Optima Energia 10.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total Portfolio: 441.08 411.70 31.78 64.10 352.86 256.17 26.64 64 353

105 Annex 14: Country at a Glance MEXICO: COMPENSATORY EDUCATION PROJECT r r

Mexico at a glance v2m

Latin Upper Key Development Indicators America middle M edco &Carib. income Age dlstrlbutlon, 2007 72008) I Male Female Population, mid-year (millions) 06.4 561 824 Surface area (thousand sq. km) 1964 20,421 41497 Population growth (Oh) to 12 0.7 Urban population (%of total population) 77 78 75

GNI (Atlas method, US$ billions) '1062.1 3,252 5,854 GNI percaplta(At1as method, US$) 9,990 5,801 7,07 GNIpercapita(PPP,intemational$) n,9a 9,678 12,072

GDP growth(%) 13 5.7 5.8 8420248 percent of total poplalion GDP per capita growth (Oh) 0.3 4.4 5.0

(mort receni eriimaie, 2003-2008)

Povertyheadcountratio at$125aday(PPP,%) <2 8 Under-5 mortalltyrato(per 1,000) Poverty headcount ratio at $2.00 a day (PPP,Oh) 5 n Life expectancyat birth (years) 75 73 71 Infant mortality (per 1000 live births) 29 22 21 I Child malnutrition (%of children under 5) 3 4 50

40 Adult literacy, male (%of ages 15 and older) 94 92 95 Adult literacy, female (%of ages 15 and older) 91 90 93 10 Gross primaryenrollment, male (%of age group) 111 120 112 20 Gross primaryenroIlment,female(%of age group) m 18 09 IO

Access to an improvedwatersource (%of population) 95 91 95 0 Access to improved sanitation facilities (%of population) 81 78 63 I I990 1995 2000 2007 I OMexico .Latin Amencl 6 the Caribbean I I Net Ald Flows 1980 I990 2000 2008 '

(US$ millions) Net ODA and official aid 55 156 -56 121 I Growth ofGDP and GDP per caplta (X) Top 3 donors (in 2007): I United States 9 23 24 84 8 Germany 15 9 15 28 8 France 15 51 -11 8 4 2 0 Aid (%of GNI) 00 0.1 00 0.0 2 Aid percapita(US$) 1 2 1 1 d a 8 Long-Term Economle Trends -10 95 Consumer prices (annual Ohchange) 26 3 26.7 9.5 5.1 GDP implicit deflator(annua1 Ohchange) 33 4 28.1 12.1 6.6 --c. QIP GDP per csplt. - O5 Exchange rate (annual average, local per US$) 00 2.8 9.5 It1 I Terms of trade index (2000 = 00) 84 06 00 16 1980-90 1990-2000 2000-08 (average annual gm Mh %) Population, mid-year (millions) 67 6 83.2 98.0 m.4 2.1 16 to GDP (US$ millions) 84,851 262,70 581,428 1088,+28 11 3.1 2.7 (%of GDP) Agriculture 90 7.8 4.2 3.8 08 15 21 Industry 33 6 28.4 28.0 37.1 11 38 19 M anufactunng 22 3 20.8 20.3 8.8 15 43 18 Services 57 4 63.7 67.8 59.1 14 29 31 Household final consumption expenditure 65 1 69.6 67.0 65.5 14 23 38 General gov't final consumption expenditure 00 8.4 It 1 0.3 24 18 04 Gross capital formation 27 2 23.1 23.9 26.4 -3 3 47 15

Exports of goods and services D7 8.6 30.9 28.3 70 116 57 Imports of goods and services 00 8.7 32.9 30.5 10 123 63 Gross savings 22 0 20.3 20.5 24.9

Note: Figures in italics are for years other than those specified. 2008 data are preliminary. ((indicates data are not available &.Aid data are for 2007.

Development Economics Development Data Group (DECDG) 106 I

Mexico

Balanoe of Payments and Trade 2000 2008 Govornanoe Indicators, 2000 and 2008 (US$ millions) Total merchandiseexports (fob) 86,PI 291,343 Total merchandise imports (cif) V4,458 308,603 Vdcs and accourdability Net trade in goods and services -D,661 -24,340 Political stability Current account balance -8,684 -15,806 aSa%of GDP -3.2 -15 Regulatory qudity Ruleof Workers' remittances and lw compensation of employees (receipts) 6,573 25,U7 Control of curup(ion Reserves, including gold 35,577 95,298 0 25 50 75 I00

Central Government Flnance 02008 Counlry'a percentile rank (01W) 02000 higharv.iuarm~'yb~ternfnre (%of GDP) Current revenue (including grants) 214 237 Tax revenue D6 82 Current expenditure 214 88 Technology and Infr8rtruoture 2000 2007 Overall surplusldeficit -34 -2 1 Pavedroads (Ohoftotal) 328 500 Highest marginal taxrate(%) Fixed line and mobile phone Individual 40 28 subscribers (per '00 people) 27 82 Corporate 35 28 High techno logy exports (%of manufactured exports) 224 771 External Debt and Resource Flows Environment (US$ millions) Total debt outstanding and disbursed 150,901 203,984 Agricultural land (%of land area) 55 55 Total debt service 58,509 41,332 Forest area (%of landarea) 33.1 33.0 Debt relief (HIPC MDRI) - - Nationally protected areas (%of land area) .. 5.3

Total debt (%of GDP) 26.0 8.7 Freshwater resources per capita (cu. meters) 4,090 3,885 Total debt service (%of exports) 30.4 t2.1 Freshwater withdrawal (billion cubic meters) 78.2

Foreign direct investment (net inflows) 8,466 18,978 C02 emissions per capita (mt) 3.9 4 1 Portfolio equity(net inflows) 447 -3,503 GDP perunit of energyuse (2005 PPP $ per kg of oil equivalent) 7.9 7.7 Composltlon oftotal external debt, 2008 Energyuse per capita (kg of oil equivalent) 1533 1702 IBRD, 6,168 Ohr x:ll.L.r.l,1.n (US$ millions)

iBR0 Total debt outstanding and disbursed 11444 D,U2 167.158 Disbursements 1748 4,882 Principal repayments 1330 654 Interest payments 892 204

USSmillions IDA Total debt outstanding and disbursed - - Disbursements - - Private Seotor Development 2000 2010 Total debt service - - 2000 2007 Time required to start a business (days) - U IFC (fiscalFser) Cost to start a business (%of GNI per capita) - 117 Total disbursed and outstanding portfolio 1234 184 Time required to register property (days) - 74 of which IFC owaccount 723 796 Disbursementsfor IFC owaccount 779 209 Rankedas a majorconstraint to business 2000 2007 Portfolio sales, prepayments and (%of managers Surveyed who agreed) repaymentsfor IFC owaccount 66 04 ' Anticompetitiveorinformalpractices .. 8.0 ' Corruption .. 77.8 M IGA Gross exposure - - Stock market capitalization (%of GDP) 215 38.8 New guarantees - - Bank capital to asset ratio (Oh) 9.6 14.4

Note Figures in italics arefor years otherthan those specified 2008dataarepreiiminary 12510 indicates data are not available -indicates ObSeNatiOn is not applicable

Development Economics, Development Data Group (DECDG)

107 I Millennium Development Goals Mexico

With selected targets to achreve betwen 1990 and 2015 (estimatedosest lo dateshowt, V-Zflars)

Qoal 1: halve the rates for extreme poverty and mainutritlon 1990 1996 2000 2007 Povertyheadcount ratio at 5125aday(PPP Ohofpopulation) 77 70 48 c2 Poverty headcount ratio at national poverty line (%of population) 24 2 l76 Shareof incomeorconsumption to thepoorest qunitlle(%) 32 43 39 46 Prevalence of malnutntion (%of children under 5) 09 60 34

Qoal 2: ensure that children are able to complete primary schooling Primaryschool enrollment (net Oh) 98 97 98 Primarycompletion rate(%of relevant agegroup) 88 96 99 04 Secondaryschool enrollment (gross Oh) 55 58 72 87 Youth literacyrate (%of people ages 5-24) 95 96 97 96

Goal 3: elimlnate gender dlsparlty in educatlon and empower women Ratio of girls to boys in primary and secondaryeducation (Oh) 97 99 99 Women employed in the nonagricultural sector (%of nonagricultural employment) 37 36 37 39 Proportion of seats held bywomen in national parliament (Oh) a 14 $3 23

Qoal 4: reduce under.6 mortality by two-thirds Under-5 mortality rate (per 1000) 52 45 38 35 Infant mortality rate (per 1000 live births) 42 36 32 29 Measles immunization (proportionof one-yearolds immunized, %) 75 90 96 98

Qoal I:reduce maternal mortallty by three-fourths Maternal mortality ratio (modeled astimate per DO 000 live births) 60 Births attended by skilled health staff (%of total) 86 93 Contraceptive prevalence (%of women ages 15-49) 67 70 71

Qoal 8: halt and begln to reverse the spread of HIV/AiDS and other malor diseases Prevalenceof HlV (%of population ages 15-49) 02 03 03 03 Incidence of tuberculosis (per '00,000 people) 61 44 32 20 Tuberculosis cases detected under DOTS (Oh) 0 64 99

Ooal 7: halve the proportlon of people without turtalnable access to basic needs Access to an improvedwatersource (%of population) 88 90 93 95 Access to improved sanitation facilities (%of population) 56 66 76 81 Forest area (%of total land area) 35 5 34 6 33 7 33 0 Nationally protected areas (%of total land area) 53 C02 emissions (metnc tons per capita) 45 40 39 41 GDP per unit of energy use (constant 2005 PPP 0 per kg of oil equivalent) 66 69 79 77

Goal 8: develop a global partnership for development Telephone mainlines (per DO people) 64 97 t?6 180 Mobile phone subscribers (per DOpeo~Iel 01 08 144 63 2 Internet users (per DOpeople) 00 0.1 5.2 22.7 Personal computers (per '00 people) 08 2.6 5.6 Y.4

Educatlon Indicators (Oh) ICT indloatorr(perl00people) olds) 100 :: 1 n 75 70 60 50 50 40 25 30 :: :: 25 20 10 2000 2002 2004 20062007 0 0 1980 1985 2000 2007 2000 2002 2004 20062007 -C Pnmaly net enmiimeni ntio R 0Fix.d +mobile iubicnbem +Ratio ofgill8 to boy8 in pnmary & secondary DMexico OLstin Amenca &the Cinbbean education .internet YSBm

Note Figures in italics are for years other than those specified indicates data are not available V25/D

Develo pm ent Eco no rn ics. Development Data Group (DEC D G)

108 To Los Angeles 115°W 110°W 105°W 100°W 95°W 90°W 85°W To Albuquerque To To Alamogordo Gila Bend Tijuana MexicaliMexicali UNITED STATES OF AMERICA Ensanada SonoitaSonoita To SanSan Ciudad Juárez Midland FelipeFelipe R NogalesNogales R io io AguaAgua B G BAJABAJA r r PrietaPrieta a a To nd MEXICO 30°N vo e San Antonio 30°N CALIFORNIACALIFORNIA G

u SONORASONORA Y To l a f q CHIHUAHUAC H I H U A H U A San Antonio

u

i i

OjinagaOjinaga To o HermosilloHermosillo S Houston f i e

C r r ChihuahuaChihuahua S Sa a a la i d o l GuaymasGuaymas e i Santa f M r Rosalia o C r a on a r chos n d LaredoLaredo BAJABAJA r i NavojoaNavojoa COAHUILAC O A H U I L A a e F uer M FronteraFrontera CALIFORNIACALIFORNIA te O a SURSUR c d NUEVONUEVO LoretoLoreto c r i e LosLos MochisMochis d LEONLEON MatamorosMatamoros Gulf of Mexico 25°N 25°N e TorreónTorreón MonterreyMonterrey n SaltílloSaltíllo t a l O SINALOAS CuliacánCuliacán I r N DURANGOD U R A N G O i La Paz A e TAMAULIPASTAMAULIPAS PACIFIC n L DurangoDurango t O a A ZACATECASZACATECAS l CiudadCiudad OCEAN VictóriaVictória MazatlánMazatlán Cabo San Lucas ZacatecasZacatecas SANSAN LUISLUIS POTOSIPOTOSI Tampico AGUASCALIENTESAGUASCALIENTES QUERÉTAROQUERÉTARO SanSan LuisLuis This map was produced by the Map Design Unit of The World Bank. NAYARITNAYARIT AguascalientesAguascalientes L PotosíPotosí The boundaries, colors, denominations and any other information e r YUCATANYUCATAN Cancun shown on this map do not imply, on the part of The World Bank TepicTepic m VERACRUZVERACRUZ Merida a Group, any judgment on the legal status of any territory, or any GUANAJUATOGUANAJUATO GuanajuatoGuanajuato HIDALGOHIDALGO endorsement or acceptance of such boundaries. 110°W Cozumel Puerto Vallarta GuadalajaraGuadalajara QuerétaroQuerétaro DISTRITODISTRITO FEDERALFEDERAL PachucaPachuca TLAXCALATLAXCALA Campeche 20°N JALISCOJALISCO QUINTANAQUINTANA MEXICOMEXICO MEXICOMEXICO JalapaJalapa Bay of Campeche MoreliaMorelia CITYCITY ROOROO MEXICO TolucaToluca TlaxcalaTlaxcala Veracruz ColimaColima Chetumal CuernavacaCuernavaca CitlaltépetlCitlaltépetl (5,747(5,747 mm)) COLIMACOLIMA MICHOACANMICHOACAN PueblaPuebla CAMPECHECAMPECHE SELECTED CITIES AND TOWNS PUEBLAPUEBLA TABASCOTABASCO VillahermosaVillahermosa Gulf of Balsas STATE CAPITALS GUERREROGUERRERO BELIZE Honduras ChilpancingoChilpancingo U ssu NATIONAL CAPITAL um OaxacaOaxaca CHIAPASCHIAPAS a S ci ie nt Acapulco rra OAXACAOAXACA TuxtlaTuxtla a RIVERS Ma dre GutierrezGutierrez del Sur TehuantepecTehuantepec MAIN ROADS To Puerto MORELOSMORELOS San Salvador 15°N NOVEMBER 2008 0 100 200 300 Kilometers Escondido Gulf of RAILROADS GUATEMALAGUATEMALA IBRD 33447R Tehuantepec Tapachula HONDURAS STATE BOUNDARIES 15°N 0 50 100 150 200 Miles INTERNATIONAL BOUNDARIES EL 105°W 100°W 95°W SALVADOR