concept note: support to philippine basic education...
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Appraisal Document
Trust Fund to Support Philippine Basic Education Reforms
A. BACKGROUND
1. The World Bank and the Australian Agency for International Development (AusAID)
have agreed to coordinate their assistance to the Government of the Philippines (GOP) to achieve
its Education for All goals through the GOP‟s Basic Education Sector Reform Agenda (BESRA).
Both the World Bank-assisted National Program Support for Basic Education (NPSBE) and this
Trust Fund to be funded by AusAID called Support to Philippine Basic Education Reforms
(SPHERE), will provide additional financing and technical support to critical thrusts/areas of the
BESRA. The Administration Agreement between the World Bank as the administrator of the
Trust Fund, and AusAID, as the Donor and which was signed on July 31, 2007 spelled out
arrangements on the use of funds, progress and financial reporting, cost recovery fee, and
auditing.
B. PROJECT DESCRIPTION
2. This proposed SPHERE Trust Fund is in line with the international donor community‟s
commitment to support the Basic Education Sector Reform Agenda, which serves as the overall
framework for donor assistance and support. It is also designed to complement the World
Bank‟s support for national implementation of the reforms through the NPSBE project. The
project’s development objective is to support the implementation of the BESRA which in
turn aims to contribute to the achievement of the Philippines’ basic education goal of
improving quality and equity in learning outcomes.
3. SPHERE will support a subset of activities and expenditures in the implementation of
BESRA through targeting of activities and expenditures that are not covered in the ongoing
programs and/or areas with additional needs where the gaps are clearly identified to support the
essential building blocks of the reform agenda. The proposed partnership subscribes to the
World Bank‟s move towards increased support to and strengthened reliance on country systems.
4. The project has three components:
Component 1: Translation of system-level policies into actions (AUD21.15 m) through
(A1) providing funding for short to medium term technical assistance (TA), to translate
policy ideas on reform into action plans and to build the capacity of key DepEd managers to
implement and manage change in line with DepEd reforms (AUD0.52m);
(A2) capacity building in regional offices by supporting them to undertake their quality
assurance functions of monitoring progress in divisions and schools, delivering support as
required, and enhancing feedback on their performance. Support could include training programs
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for regional managers to enhance their role as change agents and assisting them to put in place
strategies for monitoring and supporting divisions and schools (AUD4.0 m);
(A3) funding the construction and/or refurbishment of teaching and learning resource
centers across the country, including ICT support, managed by regions as part of their QA work
to enhance monitoring and to improve teaching, learning and assessment, and with satellite hubs
constructed at a division level (AUD8.33m); and
(A4) funding the provision of teaching and learning materials (except textbooks) and
training programs, many derived from products of previous AusAID, WB and ADB-funded
projects and linked to systematic in-service training for managers and teachers, and teacher
upgrading (AUD8.3 m).
Component 2: Support for School-Based Management (SBM) through grants for school
improvement plan targeting disadvantaged elementary schools (AUD4.48 m). Grants will be
provided to public elementary schools which have installed the basic elements of School-Based
Management (SBM) (with well-developed school improvement plans, established school-
community partnerships, transparent reporting and accountability mechanisms at the school-
level). The purpose of the grants is to accelerate SBM even in the most difficult situations. The
grants will be provided over 5 years to eligible schools with year 3 funding allocated on the basis
of demonstrated performance.
Component 3: Classroom construction in high need locations in Southern Philippines (AUD
13.82m.). This will involve the construction of classrooms in identified priority schools under
the DepEd-managed School building Program in Southern Philippines. This will be
implemented by DepEd with extensive community partnership. This could serve as a forerunner
to policy reform on cost sharing between the national government and other partners such as the
private sector and local government units as a strategy in improved resource mobilization.
The Project cost table and expenditure categories are outlined in Annex 1.
C. IMPLEMENTATION
Institutional and Implementation Arrangements
5. The Republic of the Philippines will be the grant recipient. The Department of Education
(DepEd) will be the agency responsible for grant implementation. The DepEd units at the
central, regional and division offices and schools will be responsible for actual implementation
of the grant activities. As in the NPSBE, the Executive Committee, chaired by the DepEd
Secretary including all the Undersecretaries and Assistant Secretaries of the DepEd, will provide
the strategic overall directions for the Trust Fund, review its progress and solve major issues that
arise. A Management Committee made up of regional and central office managers, will serve as
a policy advisory committee to the Steering Committee. Overall management and coordination
of the SPHERE within the DepEd will be lodged at the Education Projects Implementing Task
Force (EDPITAF), which is also responsible for overall coordination of the NPSBE
implementation. Five Technical Working Groups (TWGs) (on School-Based Management,
Teacher Education and Development, Quality Assurance and Accountability, Resource
Mobilization, Monitoring and Evaluation) were created through a recently issued DepEd Order
to review and prioritize the policy recommendations of the BESRA Formulation TWGs and
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devise detailed work plans to ensure effective and efficient implementation of the BESRA.
Implementation of the detailed component activities of the Trust Fund will be undertaken by the
concerned DepEd operational unit.
6. An integrated Program Implementation Plan (PIP) for the BESRA/NPSBE which has been
prepared and adopted by the DepEd will be revised to incorporate the activities/components in
the SPHERE. The PIP describes Annual Work and Financial Plans and defines implementation
mechanisms, procurement, financial management, and monitoring and evaluation mechanisms
acceptable to the Bank.
Monitoring and Evaluation
7. DepEd has developed the Sector Monitoring and Evaluation framework. The framework,
on which the NPSBE indicators are also based, has been adopted in principle by the multi-
stakeholder National Education for All Committee. Data for many of the education indicators,
including those which will be monitored and tracked in this Trust Fund, are already being
collected through the Basic Education Information System (BEIS), or are available at the
national or divisional level. A Basic Education Survey will be undertaken in the first quarter of
2008 to provide the critical baseline data for the indicators.
8. The Trust Fund will contribute to improved outcome of quality, equity and efficiency to
be monitored and evaluated at sector and program level. Key performance indicators associated
with this Trust Fund are defined for the specific and measurable output to be produced with TF
supported input.
9. The monitoring and evaluation scheme is designed to measure the outputs of the reform
agenda in terms of policy action milestones, and the outcomes of system improvement in terms
of quality and equity. A set of selected indicators is shown in the table below and elaborated in
Annex 2 on Results Framework.
Table 1. Key Outcome and Output Indicators to be Used to Measure Progress Towards
Grant Project’s Objectives
Dimensions Key Outcome Indicators
Participation and completion
(disaggregated by gender, grade,
region, wherever appropriate).
Elementary
Participation rate 6-11 years
Cohort survival rate
Completion rate
Dropout rate
High school
Participation rate 12-15 years.
Cohort survival
Completion rates (based on First Year)
Dropout rate
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Quality and efficiency
(disaggregated by gender and
region, wherever appropriate).
Student achievement (means and SDs) in Grade 6 in
Mathematics, Filipino, English, Science and Social
Studies (Hekasi).
Dimensions Key Output Indicators
Implementation of reforms Action Plans developed and operationalized by
functional BESRA TWGS
National learning strategies and action plans
formulated and adopted (including provision of
teaching materials)
National Quality Assurance and Accountability
Framework developed and adopted (including
standards for inputs, process, outputs and outcomes)
% of schools receiving feedback from national
assessment
% of schools with access to teaching and learning
materials
% of elementary schools/clusters of elementary schools
receiving School-Based Management (SBM) Grants
School-Based Financial Management System
established
Regional Office personnel trained on quality
assurance/monitoring and evaluation providing
technical assistance to divisions and schools
Percentage of schools with access to teaching and
learning materials increased
Teaching and learning materials linked to systematic
in-service training for managers and teachers and
teacher upgrading
All regions monitor performance and report to DepEd
on performance improvements
Functioning quality assurance system established with
stakeholder participation at the regional level
Annual report from Regional Offices summarizing
their work with divisions and supervisors to support
schools not achieving outcome targets
Number of functional public elementary classrooms in
targeted schools with National Government/Local
Government Unit Cost sharing arrangements
Number of functional Teaching and Learning
Resource Centers at the region and division level
10. The DepEd will provide information on the progress of reforms and the system-wide
impact of the reform agenda through reports on the achievement of policy action milestones,
regular monitoring using indicators derived from their existing comprehensive Basic Education
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Information System (BEIS) and other Information Systems planned to be set up (e.g. Human
Resource Information System and Financial Management Information System) and results of
annual national achievement tests.
11. A joint planning and review process involving DepEd, World Bank and AusAID will be
undertaken through the conduct of joint semi-annual project implementation reviews for both the
NPSBE and SPHERE. Such review missions will assess progress against the overall Results
Framework and designated indicators, including qualitative assessment through field
observation, review disbursement progress and fiduciary procedures, identify issues and agree
on specific priorities for the next steps in implementation. A mid-term review will be conducted
during the third year to assess progress and any need for mid-course adjustment. An
implementation completion review will be carried out by the end of the project implementation
period for a full evaluation.
12. At a national level, the grant will monitor the implementation of the key policy programs
under BESRA which it is supporting through reports against specified milestones.
Sustainability
13. The project will finance key items required to implement key reforms as articulated in
DepEd‟s BESRA (see Annex 1 for the Project Cost breakdown). Since many of the components
in the Trust Fund are already mainstreamed in the DepEd‟s regular programs and budget, and
since BESRA is a conscious effort on the part of the DepEd to institutionalize and sustain the
reforms, these components are highly likely to continue to operate beyond the life of the grant.
The Philippine Government, through the DBM, and the DepEd have initiated the preparatory
work towards a medium-term expenditure framework for basic education, building on the multi-
year spending plan prepared by the DepEd with a WB team, as well as the Organizational
Performance Indicator Framework, including the identification of Major Final Outputs for the
DepEd for the next 3 years. Hence, the grant elements are even more likely to be sustained and
institutionalized. Most importantly, the TF components are geared towards laying down the
essential foundations to improve the efficiency and effectiveness of service delivery and sector
spending and thereby reduce threats to sustainability.
Critical Risks and Possible Controversial Aspects
14. The major risks and the proposed risk mitigation measures are set out in Table 2 below.
A Substantial overall risk rating is given to the SPHERE given the risks outlined below.
However, while the assessed financial management risks before the proposed mitigating
measures is considered substantial, the residual risk could be moderate after the proposed
mitigating measures described below are implemented and have shown effective impact.
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Table 1: Risk Table
Risks Risk Mitigation Measures
Risk
Rating
TThhee llaacckk ooff oorr ssttrreettcchheedd ccaappaacciittyy ooff DDeeppEEdd
ttoo iimmpplleemmeenntt rreeffoorrmmss Capacity building is built into the grant M
Activities; clear delineation of roles and
responsibilities of different levels of DepEd
based on the decentralization; phase the
transfer of responsibilities to correspond with
demonstrated responsibility to take on new
roles
Institutional instability and/or lack of Reform project and policies widely regarded
continuation of reform program and/or as priorities; key stakeholders must be M
policies of department leadership encouraged to push for continuity of reforms
Parallel financing of the TF activities may
delay or substitute loan disbursement
CCoonndduucctt ooff bbuuddggeett ppllaannnniinngg wwoorrkksshhooppss ttoo
iinnccrreeaassee DDeeppEEdd‟‟ss aabbiilliittyy ttoo ppllaann aanndd ssppeenndd tthhee
aavvaaiillaabbllee rreessoouurrcceess;; jjooiinntt ssuuppeerrvviissiioonn ssttrraatteeggyy
ffoorr tthhee TTFF aanndd NNPPSSBBEE;; TTFF ffuunnddeedd aaccttiivviittiieess
aarree mmaaddee mmoorree ddiissttiinncctt ffrroomm tthhee llooaann--ffuunnddeedd
aaccttiivviittiieess
S
Perceived high corruption in the Strengthening of the Internal Audit in
country affects DepEd and weak government agencies, including DepEd S
internal control compliance in the agency in progress; DepEd to maintain and expand
partnership with civil society organizations
in undertaking their programs
Lack of capacity to implement Clearly delineate roles and responsibilities
decentralization given magnitude of of different levels of DepEd; phase the
scale, including on financial management transfer of responsibilities to correspond S
with demonstrated capacity to take on new
roles; undertake capacity building activities;
ongoing trainings on FM of DepEd
implementers, including school heads
Accounting policies & procedures Create a team from the financial services unit
contained in NGAS not fully adhered to supervise and monitor the various
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to by DepEd as reported by COA regional/division offices on their compliance S
with the accounting and internal controls;
adopt a time-bound action plan to roll-out
the eNGAS
Non-compliance with internal controls and
procedures reported by COA in its audit of
2005 and 2006 DepEd financial statements Establishment of an Internal Audit unit, hiring S
of IA firm to provide the internal audit
services for the projects for at least a year and
at the same time provide capacity building to
the newly established IA unit, roll out of the
eNGAS based on a time-bound plan, hiring of
qualified contractual staff to assist DepED in
implementing a time-bound action plan to
resolve the COA audit issues
D. APPRAISAL SUMMARY
Technical Appraisal
15. The design of the SPHERE is made in such a way that it engages with all crucial aspects
of the system-wide reform presented by the BESRA, which the WB‟s NPSBE also supports. The
importance it accords to school-based management, which underpins the whole basic education
reform program, provides strong assurance for relevance, accountability, transparency and
flexibility. As in the NPSBE, the Trust Fund takes into account a potential unintended
consequence of school-based management, which is further inequity resulting from the higher
capacity of well-resourced schools to generate additional funds which they apply more
effectively than schools in disadvantaged locations. The design thus gives due regard to equity
through policy actions leading to positive discrimination in the allocation of resources in favor of
the disadvantaged, high need, underserved areas.
16. The Trust Fund takes into consideration the urgent need to improve, strengthen and
ensure capacity of the institution to implement not only its components, but also relevant reform
activities in the BESRA, given the new thrust of decentralizing authority and roles and
responsibilities to the lower levels. This includes not only capacity at the school level through
the school grants and relevant SBM training, but also at the region and division level, which now
have important responsibilities vis-à-vis quality assurance and monitoring of overall BESRA
implementation.
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17. SPHERE also provides the much-needed technical assistance to assist in moving policy
reforms into action plans and then ensuring their implementation by managers at other levels.
The design emphasizes support given to the Technical Working Groups created by DepEd to
operationalize the BESRA through the development of detailed work plans to ensure its
effective and efficient implementation (more discussion on TWGs under Implementation
Arrangement). This is critical as their role now involves implementation rather than planning
and has many positive features, particularly in terms of wide involvement and ownership of
change. It serves the purpose of DepED leadership by using key consultants to provide TA in
planning implementation actions and it provides a vehicle for wide consultation and support for
change management. The Trust Fund‟s is broadened to include support not only for TA but also
for the operation of the Technical Working Groups.
Fiduciary Assessment
Financial Management
18. A Financial Management Assessment (FMA) for the SPHERE was carried out in
accordance with the World Bank‟s guidelines under the Financial Management Practices in
World Bank-Financed Investment Operations (dated November 3, 2005). The objective of FMA
was to determine whether the Department of Education (DepED), as the implementing agency of
the SPHERE, has acceptable financial management arrangements. As the Department of
Education (DepED) is the implementing agency of the SPHERE, the conclusion was that overall,
DepEd's FM arrangements do not meet the minimum Bank financial management requirements
as stipulated in BP/OP 10.02 because (a) the FM system is only partially adequate; the books of
accounts of the agency are still maintained manually because the Electronic New Government
Accounting System (eNGAS) has yet to be implemented; (b) the number of FM staff to
implement the project is not adequate considering that the current staff are also handling other
tasks; and (c) the Commission on Audit (COA) reported several instances of non-compliance
with internal controls and rules and regulations. It is only after the implementation of the
suggested actions and COA recommendations that the FM arrangement would meet the
minimum requirements of the Bank. The assessed financial management risk for SPHERE
before implementation of the proposed mitigating measures is considered substantial. The
residual risk could be moderate after the proposed mitigating measures described below are
implemented and have shown effective impact. The factors supporting this conclusion and
significant observations and related existing and proposed mitigating measures are summarized
in Annex 5.
Procurement Assessment
19. Details of the procurement assessment and description of procurement arrangements,
procurement risk mitigation, and action plan are given in Annex 6. 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 revised October 2006, and
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“Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated May
2004 revised October 2006, and the provisions stipulated in the Legal Agreement. While the
new Philippine Procurement Law (RA 9184) is sufficiently in harmony with the Guidelines at
the NCB level, the Procurement Schedule of the Grant Agreement will include an annex
detailing the procedures under the national law that are not acceptable to the Bank. Other than
that, NCB procurement will be carried out in accordance with the country‟s law.
20. This assessment is based on the findings of the recently approved NPSBE and actual
experiences from the World Bank-assisted First and Second Social Expenditure Management
Projects (SEMP 1 and 2) and the Third Elementary Education Project (TEEP). The agency
implemented these Bank projects in the last ten years. The assessment reviewed the
organizational structure and the interaction among the project‟s staff responsible for
procurement. The assessment took into consideration various studies, including the updated
Country Procurement Assessment Report (CPAR) and the baseline indicator system (BIS)
assessment in which an independent consultant determined that the country, in general, was
substantially achieving the desirable standards for reliance on its public procurement system.
Based on the DepEd‟s procurement performance indicators, adopted and customized from the
DAC/OECD developed indicators, DepEd‟s adoption of the country system for its procurement
undertakings has been assessed as generally acceptable. The DepEd has greatly benefited from
the procurement and implementation reforms initiated and mainstreamed under previous Bank-
financed activities.
21. Issues/risks concerning the procurement aspects for implementation of the project and the
proposed corrective measures have been identified, and are outlined in Annex 6. The overall
project risk for procurement is average.
Environment and Social Safeguards
22. Safeguards agreed upon for the implementation of NPSBE would apply to the relevant
activities funded by the SPHERE Trust Fund.
23. The Trust Fund will finance upgrading and construction of new classrooms. These types
of activities are assessed to have minor and localized environmental impacts, i.e., normally
during construction phase only. To address construction impacts, civil works contract will have
environmental provisions that will require contractors to (i) strictly practice proper
housekeeping; (ii) implement dust suppression measures and (iii) properly store, manage and
dispose excavated earth materials. Classroom construction and rehabilitation that would impact
on critical natural habitats and protected areas would not be financed.
24. The DepEd has adopted an Indigenous People Planning Framework (IPPF) which
provides the mechanisms to ensure participation of indigenous people during the implementation
of the National Program Support for Basic Education (NPSBE) Project and to address the IP
needs, including the integration of their concerns in school improvement plans ( Annex 10 to the
PAD). The IPPF ensures compliance of the NPSBE to the Philippines Indigenous People‟s
Rights Act or IPRA (Republic Act No. 8371) as well as to the World Bank Revised Operational
Policy On Indigenous Peoples (OP 4.10). Since a lot areas in Southern Philippines would have
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the presence of indigenous people, the same IPPF will be used by DepEd in ensuring safeguards
as well as ensuring benefits for IPs under the SPHERE.
25. The Trust Fund will support upgrading and construction of classrooms in Southern
Philippines. Involuntary resettlement is not likely to occur as most of the upgrading and new
construction will take place in existing facilities. There will be no land acquisition involved in
this project.
26. The preparation of the education reform program involved a series of consultative
workshops with a range of stakeholders at all levels including LGU officials, teachers, PTCAs,
student organizations, indigenous peoples organizations, agencies for corporate social
responsibility, and civil society organizations. The DepED incorporated feedback from these
consultations into the design of the reform program.
Readiness for Implementation
27. Over the last two years, there has been growing support to and widespread commitment
to fully implement the key reform thrusts enunciated in the Basic Education Sector Reform
Agenda (BESRA), within the huge DepEd bureaucracy and among other concerned government
agencies including the oversight departments of Finance, Budget and Management and Socio-
economic planning. Critical policy reforms were either initiated, laid down or implemented by
all concerned units and staff of DepEd, in collaboration with its partners in government and the
private sector demonstrating DepEd‟s capacity to mobilize resources to ensure smooth
implementation of its reform program. These reforms include the development of teacher
competency standards, its adoption in pre-service education institutions and its application in
teacher hiring to enhance teacher quality; rolling out of school-based management to ensure full
participation of the community and other stakeholders in school improvement and enhancement
of student outcomes; development of a Quality Assurance and Accountability Framework; and
mobilization of resources under the BESRA framework (including the substantial real increase in
the DepEd budget for the past two years and the large resource support from the private sector)
to finance its large financial, technical and resource requirements. The clear commitment to
decentralize decision-making powers to local-level managers, and down to the school level is
manifested by the systematic restructuring of systems and structures and recent policy issuances
to support this. Various Technical Working Groups, with membership from DepEd and other
government agencies, the academe and selected non-government organizations have laid out
their respective detailed action plans related to critical reform areas of the BESRA for
implementation. Evidently, there remain challenges and gaps that need to be addressed,
particularly with respect to the FM systems and processes in DepEd, which could potentially
hamper smooth implementation. However, aside from the critical technical assistance areas that
SPHERE will focus on to address these challenges, there are tangible efforts on the part of
various government agencies, private sector, donor partners and civil society groups to unclog
bottlenecks, resolve problems, and address constraints. . Thus, overall, the DepEd is assessed as
ready to implement its reform priorities, including the subset of reforms contained in this
SPHERE project.
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Annex 1
Project Costs by Component and Expenditure (AUD million)
Project Costs by Component (WB and Recipient-executed)
Component Item USD AUD
DepEd-executed
System-level policies into action Technical Assistance/Capacity Building
for Change Management 400,000
520,664
Capacity Building of Regions for QA
3,074,125
4,001,464
and Monitoring
Construction/Refurbishment of Teaching
and Learning Resource Centers
6,400,000
8,330,622
Teaching and Learning Materials
6,374,125
8,296,941
Sub-Totals
16,248,250
21,149,691
Support for School-Based Management SBM Grants
3,440,000
4,477,709
Sub-Totals
3,440,000
4,477,709
Classroom Construction Construction of Classrooms
10,620,000
13,823,625
Sub-Totals
10,620,000
13,823,625
TOTAL : DepEd-executed
30,308,250
39,451,025
World Bank-managed
Demand Driven AAA Analytical Work and Technical Assistance
500,000 650,830
Incremental Supervision Bank Supervision
470,000
611,780
Sub-Totals
970,000
1,262,610
TOTAL: WB-managed
970,000 1,262,610
TOTAL: Dep-Ed executed + WB-managed
31,278,250
40,713,635
Cost-Recovery Fee 220,000
286,365
TOTAL GRANT AMOUNT 31,498,250
41,000,000
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Project Costs by Expenditure Category (Recipient Executed Components)
Category
Amount of the Grant
(Expressed in Australian
Dollars)
% of Expenditures
to be Financed
(1) Goods, consultants‟ services,
trainings and workshops
12,619,069
100%
(2) Civil works (this includes
construction of classrooms and the
teaching and learning centers)
22,154,247 100%
(3) School-grants
4,477,709 100% of amounts of
School Grants disbursed
(4) Incremental operating costs 200,000 100%
TOTAL 39,451,025
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Annex 2
Results Framework
Baseline
2003-2004
Actual
(2005)-2006 2007 2008 2009 2010 2011
Frequency and
Reports
Data Collection
Instruments
Responsibility for Data
Collection
Elementary participation
● Partic, rate, 6-11 years 88.58% 84.44 85.0% 87.0% 90.0% 92.0% 96.0% 96.1% Annual-reported BEIS data collection Central DepED (Planning &
● Cohort survival 63.57% 69.90 69.0% 72.0% 74.0% 75.0% 76.0% 77.2% DepED website instruments Development), with divisions
● Completion rate 62.09% 67.99 68.7% 70.2% 72.1% 74.5% 75.0% 76.3% and database and schools
● Dropout rate 8.9% 7.36 9.0% 8.0% 6.0% 5.0% 3.0% 2.7% accessible to
all levels of
DepED
High School participation
● Partic, rate, 12-15 years 61.16% 58.54 59.0% 70.0% 75.0% 80.0% 85.0% 86.0% Annual-reported BEIS data collection Central DepED (Planning &
●Cohort survival 63.11% 67.32 71.5% ? + 1% in DepED web- instruments
Development), with divisions
● Completion rate (Yr. 1) 58.22% 61.66 69.0% ? + 1% site and data- and schools
● Dropout rate 14.3% 12.51 8.0% 5.0% 4.0% 3.0% 2.0% 4.0% base accessible
to all levels of
Quality and efficiency Actual:
MPS Score in NAT of G6 60 66 71 76 79
Total Test nts nts nts nts nts
Mathematics 59.1 nts nts nts nts nts Annual-reported Central DepED (National
Filipino 61.7 nts nts nts nts nts through DepED Education Testing and
English 59.1 nts nts nts nts nts database to be
National assessment
Research Center), with
Science 54.1 nts nts nts nts nts made division and school
Hekasi (Social Studies) 59.5 nts nts nts nts nts accessible to
all schools as
MPS in NAT Y2 (?) 47 60 64 70 76
Total Test nts nts nts nts nts
Mathematics nts nts nts nts nts
Filipino nts nts nts nts nts
English nts nts nts nts nts
Science nts nts nts nts nts
Hekasi (Social Studies) nts nts nts nts nts
part of BESRA
NTS - No targets set
Data Collection and Reporting
Outcome Indicators
(Government schools)
Arrangements for Results Monitoring of Outcomes: Project SPHERE
Target Values
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Outcome IndicatorsBaseline Year 0 YR1 (2008) YR2 (2009) YR3(2010) YR4 2011
Frequency and
Reports
Data Collection
Instruments
Responsibility for
Data Collection
Component 1. Translation of system
level policies into actions
Component 1.1mponent 1.1 Operation of TWGs
● BESRA TCT and TWGs are ● Policy in ● Action ● 50% ● 75% ● 100% Quarterly BESRA Progress OPS and EDPITAF
operational/functional place Plans physical physical physical Reports
(2008- accomp- accomp- accomp-
2010) lishment lishment lishment
prepared
and imple-
mented w/
25%
accomp-
lishment
Component 1.2 Capacity-building for RO
on quality assurance of monitoring progress
● ● Framework
and system
developed,
pilot-tested
● Regional Offfice personnel trained on ●
quality assurance/monitoring and
evaluation and providing technical Regions
assistance to divisions and schools trained
on QA
● Functional quality assurance system ● 75% of ● 100% of
established with stakeholders Regions Regions
participation at the regional level with with
functional functional
QA system QA system
● All regions monitor performance and 100% 100% 100% Annual Reports made available Regions working
report to DepEd and other stakeholders using ICT to provide with divisions and
on performance improvements each school with schools
(Report to include regional activities information for the
with divisions and suppoervisors to schools, as well as
support schools not achieving outcome normative data for the
targets - this could be a section of the division, region and
Regional Report not a separate indicator) national levels
● Divisions (with their schools) ● 50% of ● 60% of ● 70% of ● 75%
received feedback from EMIS division divisions divisions
100% of
(the above targets are based on the current
current M&E practices; howeever if M&E
Results Monitoring: Project SPHERE, By Component
National Quality Assurance and
Accountability Framework developed
and adopted (which include standards
for inputs, process, outputs and
outcomes)
efforts will already be based on the
QAA Framework, the targets would be
75% in 2010 and 100% in 2011)
Target Values Data Collection and Reporting
15
● Policy in place ● Support Support ● Support ● Support
Component 1.3 Establishment of Learning Resource Center
● Policy ● Phase 1 ● Phase 2 ● Phase 3
in place rollout rollout roll-out
plan formulated and adopted (incl.
provision of teaching materials)
● Teaching and Learning Resource Policy in Phase 1 Phase 2 Phase 3
Centers at the regional and divisional place roll-out rollout roll-out
levels operational
(operational teaching and learning
resource centers could mean that
"teaching and learning materials are
linked
to systematic in-service training for
managers and teachers" - may not
necessarily be a separate indicator)
Outcome IndicatorsBaseline YR0 YR1 YR2 YR3 YR4
Frequency and
Reports
Data Collection
Instruments
Responsibility for
Data Collection
Component 1.4
● Policy on the procurement/production ● Policy in Phase 1 Phase 2 Phase 3 Annual OPIF-based monitoring DepED CO working
of teaching and learning materials
(including roles of place rollout roll out rollout
reports
with regions and
central, regional, divisional and school
divisions
levels) adopted
● Increased percentage of schools with
access to teaching and learning
materials 25% of 40% of 65% of Annual
OPIF-based monitoring
OPS working with
schools schools schools reports regions and divisions
Component 2. Support for SBM thru
grants for SIP
● Schools/clusters of schools 25% 40% 50% 65% Annual OPIF-based monitoring DepED CO
received school grants reports with divisions and
● School-Based Financial Management 25% 40% 50% 65% Annual OPIF-based monitoring DepED CO
System established reports with divisions and
schools
Component 3
● Cost sharing between GOP and LGU ● ● ● ● ● DepED Central
to classroom construction, including
equity factors
In italics comments/inputs from DepED/BESRA TWGs
65% of
classroom
constr.
Follows
scheme
National learning strategies and action
School receive feedback from national
assessment
target (?)targets (?)
Budget submission with
support documents
Development of
guidelines
target (?) target (?)
Target Values Data Collection and Reporting
10% of
classroom
constr.
Follows
scheme
25% of
classroom
constr.
Follows
scheme
40% of
classroom
constr..
Follows
scheme
16
Annex 3A
Grant Agreement
The World Bank 1818 H Street N.W. (202) 477-1234
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS
[insert date upon CD signing]
Honorable Margarito B. Teves
Secretary of Finance
Department of Finance
DOF Building, BSP Complex,
Roxas Boulevard, Manila
Republic of the Philippines
Re: Philippines Support to Philippine Education Reform
Grant No._________
In response to the request for financial assistance made on behalf of Republic of the
Philippines (“Recipient”), I am pleased to inform you that the International Bank for
Reconstruction and Development (“World Bank”, acting as administrator of grant funds
provided by the Australian Agency for International Development (“AusAID”) proposes to
extend to the Recipient, a grant in an amount not to exceed thirty nine million four hundred fifty
one thousand twenty five Australian Dollars (AUD 39,451,025) (“Grant”) on the terms and
conditions set forth or referred to in this letter agreement (“Agreement”), which includes the
attached Annex, to assist in the financing of the project described in the Annex (“Project”).
The Recipient represents, by confirming its agreement below, that it is authorized to enter
into this Agreement and to carry out the Project in accordance with the terms and conditions set
forth or referred to in this Agreement.
Please confirm the Recipient‟s agreement to the foregoing by having an authorized
official of the Recipient sign and date the enclosed copy of this Agreement, and returning it to
the World Bank. Upon receipt by the World Bank of this countersigned copy, this Agreement
shall become effective as of the date of the countersignature i[; provided, however, that the
offer of this Agreement shall be deemed withdrawn if the World Bank has not received the
countersigned copy of this Agreement within [_____ days] after the date of signature of this
Agreement by the World Bank, unless the World Bank shall have established a later date for
such purpose.]
17
Very truly yours,
INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT
Bert Hofman
Country Director, Philippines
East Asia and Pacific Region
AGREED:
REPUBLIC OF THE PHILIPPINES
By __________________________
Name: __________________________
Title: __________________________
Date: __________________________
Enclosures:
(1) Standard Conditions for Grants Made by the World Bank Out of Various Funds, dated
July 20, 2006
(2) Disbursement Letter dated _____,1 together with World Bank Disbursement Guidelines
for Projects, dated May 1, 2006
1 Pls. insert date of signature of DL.
18
19
Annex 3B
Disbursement Letter
The World Bank 1818 H Street N.W. (202) 473-1000
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS
[DATE]
Honorable Margarito B. Teves
Secretary
Department of Finance
Roxas Blvd.
Manila, Republic of the Philippines
Dear Sir:
Re: Grant No ____-PH (Philippines Support to Philippine Education Reform) Additional
Instructions: Disbursement
I refer to the Loan Agreement between the International Bank for Reconstruction and
Development (the “Bank”) acting as an administrator of grant funds provided by Australia, and Republic
of the Philippines (the “Borrower”) for the above-referenced project, dated _______. The Agreement
provides that the World Bank may issue additional instructions regarding the withdrawal of the proceeds
of Grant ____-___ (“Grant”). This letter (“Disbursement Letter”), as revised from time to time,
constitutes the additional instructions.
The attached World Bank Disbursement Guidelines for Projects, dated May 1, 2006,
(“Disbursement Guidelines”) (Attachment 1), are an integral part of the Disbursement Letter. The
manner in which the provisions in the Disbursement Guidelines apply to the Loan is specified below.
Sections and subsections in parentheses below refer to the relevant sections and subsections in the
Disbursement Guidelines and, unless otherwise defined in this letter, the capitalized terms used have the
meanings ascribed to them in the Disbursement Guidelines.
I. Disbursement Arrangements
(i) Disbursement Methods (section 2). The following Disbursement Methods may be used
under the Grant:
Reimbursement
Advance
Direct Payment
20
(ii) Disbursement Deadline Date (subsection 3.7). The Disbursement Deadline Date is 4
months after the Closing Date specified in the Grant Agreement. Any changes to this date will be
notified by the Bank.
(iii) Disbursement Conditions (subsection 3.8). Please refer to the Disbursement Condition(s) in the
Grant Agreement.
II. Withdrawal of Loan Proceeds
(i) Authorized Signatures (subsection 3.1).
A letter in the Form attached (Attachment 2) should be furnished to the Bank at the address indicated
below providing the name(s) and specimen signature(s) of the official(s) authorized to sign Applications:
The World Bank
23/F, The Taipan Place Building
F. Ortigas Jr. Road, Ortigas Center
Pasig City, Metro Manila, Philippines
Attention: Bert Hofman
Country Director
(ii) Applications (subsections 3.2 - 3.3). Please provide completed and signed (a) applications for
withdrawal, together with supporting documents, to the address indicated below:
The World Bank
23/F, The Taipan Place Building
F. Ortigas Jr. Road, Ortigas Center
Pasig City, Metro Manila, Philippines
Attention: Loan Department
(iii) Minimum Value of Applications (subsection 3.5). The Minimum Value of Applications is
$200,000
(iv) Advances (sections 5 and 6).
Type of Designated Accounts (subsection 5.3): Segregated
Currency of Designated Accounts (subsection 5.4): USDollars
Financial Institution at which the Designated Accounts Will Be Opened (subsection
5.5): Land Bank of the Philippines.
Ceiling (subsection 6.1): USDollars 1,000,000
III. Reporting on Use of Loan Proceeds
(i) Supporting Documentation (section 4). Supporting documentation should be provided with
each application for withdrawal as set out below:
21
For requests for Reimbursement:
o List of payments against contracts that are subject to the Bank‟s prior review, in
the form attached (Attachment 4)
o Statement of Expenditure in the form attached (Attachment 3) for (a) each
consultant services contract by firms valued at less than $100,000 equivalent (b)
each consultant services contract by individuals valued at less than $50,000
equivalent (c) each goods contract valued at less than $200,000 equivalent (d)
Training and workshops (e) school grants
o Records evidencing eligible expenditures (e.g., copies of receipts, supplier
invoices) for all other contracts
For reporting eligible expenditures paid from the Designated Account:
o List of payments against contracts that are subject to the Bank‟s prior review, in
the form attached (Attachment 4)
o Statement of Expenditure in the form attached (Attachment 3) for (a) each
consultant services contract by firms valued at less than $100,000 equivalent (b)
each consultant services contract by individuals valued at less than $50,000
equivalent (c) each goods contract valued at less than $200,000 equivalent (d)
Training and workshops (e) school grants
o Records evidencing eligible expenditures (e.g., copies of receipts, supplier
invoices) for all other contracts
For requests for Direct Payment: records evidencing eligible expenditures, e.g., copies
of receipts, supplier invoices
(ii) Frequency of Reporting Eligible Expenditures Paid from the Designated Account (subsection 6.3):
monthly
IV. Other Important Information
For additional information on disbursement arrangements, please refer to the Disbursement
Handbook available on the Bank‟s public website at http://www.worldbank.org and its secure website
“Client Connection” at http://clientconnection.worldbank.org. Print copies are available upon request.
From the Client Connection website, you will be able to download Applications, monitor the near
real-time status of the Loan, and retrieve related policy, financial, and procurement information.
If you have not already done so, the Bank recommends that you register as a user of the
Client Connection website (http://clientconnection.worldbank.org). From this website you will
be able to download Applications, monitor the near real-time status of the Loan, and retrieve
related policy, financial, and procurement information. For more information about the website
22
and registration arrangements, please contact the Bank by email at
If you have any queries in relation to the above, please contact Edward Daoud, Senior
Finance Officer at [email protected] using the above reference.
.
Yours sincerely,
[Name]
[RVP / CD]
[Region]
Attachments
1. World Bank Disbursement Guidelines for Projects, dated May 1, 2006
2. Form for Authorized Signatures
3. Form of “Statement of Expenditure”
4. Form of Payments Against Contracts Subject to the Bank‟s Prior Review
Prepared by Edward Daoud
Cleared with and cc: Minneh Kane (LEGES)
Dingyong Hou (EASHD)
Cc with copies: Department of Education
Meralco Avenue
Pasig City, Philippines
23
Attachment [2]
[Letterhead]
Ministry of Finance
[Street address]
[City] [Country]
[DATE]
The World Bank
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Attention: [Country Director]
Dear [Country Director]:
Re: Grant No. ____-___ (____________ Project)
I refer to the Grant Agreement (“Agreement”) between the [International Bank for
Reconstruction and Development/International Development Association] (“World Bank”)],
acting as administrator of the funds provided by Australia, and [name of recipient] (the
“Recipient”), dated _______, providing the above Grant. For the purposes of Section 3.04 (b) of
the Standard Conditions, as defined in the Agreement, any [2one] of the persons whose
authenticated specimen signatures appear below is authorized on behalf of the Recipient to sign
applications for withdrawal under this Grant:
[Name], [position] Specimen Signature: ____________________
[Name], [position] Specimen Signature: ____________________
[Name], [position] Specimen Signature: ____________________
Yours truly,
/ signed /
_________________________
[Position]
2 Instruction to the recipient when sending this letter to the World Bank: Stipulate if more than one person needs to
sign Applications, and how many or which positions, and if any thresholds apply.
24
Attachment 4
Payments Made during Reporting Period
Against Contracts Subject to the Bank’s Prior Review
Contract
Number Supplier
Contract
Date
Contract
Amount
Date of
WB’s Non
Objection
to Contract
Amount Paid to
Supplier during
Period
WB’s Share of
Amt Paid to
Supplier during
Period
25
Annex 4
INTEGRATED SAFEGUARDS DATASHEET
APPRAISAL STAGE
I. Basic Information Date prepared/updated: 12/13/2007 Report No.:
1. Basic Project Data
Country: Philippines Project ID: TF070813
Project Name: SUPPORT TO PHILIPPINE BASIC EDUCATION REFORMS
(SPHERE)
Task Team Leader: Dingyong Hou
Estimated Appraisal Date: Estimated Board Date:
Managing Unit: EASHD Lending Instrument:
Sector: Education
Theme: Education system performance
IBRD Amount (US$m.): 0.00
IDA Amount (US$m.): 0.00
GEF Amount (US$m.): 0.00
PCF Amount (US$m.): 0.00
Other financing amounts by source:
BORROWER/RECIPIENT 0.00
AUSTRALIA:
Australian Agency for International Development AUS$ 41,000,000.00
Financing Gap 0.00
AUS$ 41,000,000.00
Environmental Category: C - Not Required
Simplified Processing Simple [X] Repeater []
Is this project processed under OP 8.50 (Emergency Recovery)
or OP 8.00 (Rapid Response to Crises and Emergencies) Yes [] No [X ]
2. Project Objectives
The objective of the Grant is to support implementation of the basic education sector reform
agenda (BESRA) that contributes to the achievement of improved quality and equity in learning
outcomes for all Filipinos. The specific and measurable outputs to be produced through the
SPHERE are as follows: (1) a functioning Quality Assurance system established with
stakeholder participation at regional level, (2) Action Plans developed for key reform thrusts of
BESRA, (3) increased number of schools implementing school based management in targeted
divisions; and (4) increased number of functional classrooms in targeted schools; (5) increased
utilization rate of DepEd budget allocation.
26
3. Project Description
The World Bank has agreed to manage a grant from the Government of Australia, represented by
the Australian Agency for International Development (AusAid) through a Trust Fund. The Trust
Fund will support the implementation of the Philippines‟ Basic Education Sector Reform Agenda
(BESRA) which will complement the World Bank‟s support through the National Program
Support for Basic Education (NPSBE) Project.
The Support to Philippine Basic Education Reforms (SPHERE) will provide additional financing
and technical support for a subset of activities and expenditures distinct of NPSBE in the
implementation of BESRA. The SPHERE will cover the activities and expenditures that are not
covered in the ongoing programs and or areas with additional needs where the gaps are clearly
identified to support the essential building blocks of the reform agenda. The proposed
partnership subscribes to the World Bank‟s move towards increased support to and strengthened
reliance on country systems. It includes the following three components:
Component 1: Translation of system-level policies into actions (AUD21.15m.) through
(A1) providing funding for short to medium term technical assistance (TA), to translate
policy ideas on reform into action plans and to build the capacity of key DepEd managers to
implement and manage change in line with DepEd reforms (AUD0.52m);
(A2) capacity building in regional offices by supporting them to undertake their quality
assurance functions of monitoring progress in divisions and schools, delivering support as
required, and enhancing feedback on their performance. Support could include training
programs for regional managers to enhance their role as change agents and assisting them to put
in place strategies for monitoring and supporting divisions and schools (AUD4.0 m);
(A3) funding the construction and/or refurbishment of teaching and learning resource
centers across the country (estimated 150), including ICT support, managed by regions as part of
their QA work to enhance monitoring and to improve teaching, learning and assessment, and
with satellite hubs constructed at a division level (AUD8.33m); and
(A4) funding the provision of teaching and learning materials (except textbooks) and
training programs, many derived from products of previous AusAID, WB and ADB-funded
projects and linked to systematic in-service training for managers and teachers, and teacher
upgrading (AUD8.3 m).
Component 2: Support for School-Based Management (SBM) through grants for school
improvement plan targeting disadvantaged elementary schools (AUD4.48m.). Grants will be provided to public elementary schools which have installed the basic elements of School-Based
Management (SBM) (with well-developed school improvement plans, established school-
community partnerships, transparent reporting and accountability mechanisms at the school-
level). The purpose of the grants is to accelerate SBM even in the most difficult situations. The
grants will be provided over 5 years to eligible schools with year 3 funding allocated on the basis
of demonstrated performance.
Component 3: Classroom construction in high need locations in Southern Philippines (AUD$ 13.82m.). This will involve the construction of classrooms in identified priority schools under
the DepEd-managed School building Program in Southern Philippines. This will be
27
implemented by DepEd with extensive community partnership. This could serve as a forerunner
to policy reform on cost sharing between the national government and other partners such as the
private sector and local government units as a strategy in improved resource mobilization.
4. Project Location and salient physical characteristics relevant to the safeguard analysis
SPHERE will support the school improvement plan (SIP) of disadvantaged elementary schools
from all over the country. Specific target elementary schools will be selected on the basis of the
results of school mapping to be completed by January 2008. With regard the
rehabilitation/construction of classrooms, SPHERE will cover schools in Southern Philippines,
the selection of which will be based also on the school mapping results.
5. Environmental and Social Safeguards Specialists
Josefo Tuyor (EASRE)
Maria Loreto Padua (EASSO)
Safeguard Policies Triggered Yes No TBD
Environmental Assessment (OP/BP 4.01) X
Natural Habitats (OP/BP 4.04) X
Forests (OP/BP 4.36) X
Pest Management (OP 4.09) X
Cultural Property (OPN 11.03) X
Indigenous Peoples (OD 4.20) X
Involuntary Resettlement (OP/BP 4.12) X
Safety of Dams (OP/BP 4.37) X
Projects on International Waterways (OP/BP 7.50) X
Projects in Disputed Areas (OP/BP 7.60) X
II. Key Safeguard Policy Issues and Their Management
A. Summary of Key Safeguard Issues
1. Describe any safeguard issues and impacts associated with the proposed project. Identify and
describe any potential large scale, significant and/or irreversible impacts:
Civil works: The grant will finance upgrading and construction of new classrooms. These types
of activities are assessed to have minor and localized environmental impacts, i.e., normally
during construction phase only. To address construction impacts, civil works contract will have
environmental provisions that will require contractors to (i) strictly practice proper
housekeeping; (ii) implement dust suppression measures and (iii) properly store, manage and
dispose excavated earth materials.
Classroom construction and rehabilitation that would impact on critical natural habitats and
protected areas would not be financed.
28
Social Issues:
Indigenous peoples: The DepEd has adopted an Indigenous People Planning Framework (IPPF)
which provides the mechanisms to ensure participation of indigenous people during the
implementation of the National Program Support for Basic Education (NPSBE) Project and to
address the IP needs, including the integration of their concerns in school improvement plans (
Annex 10 to the PAD). The IPPF ensures compliance of the NPSBE to the Philippines
Indigenous People‟s Rights Act or IPRA (Republic Act No. 8371) as well as to the World Bank
Revised Operational Policy On Indigenous Peoples (OP 4.10). Since a lot areas in Southern
Philippines would have the presence of indigenous people, the same IPPF will be used by DepEd
in ensuring safeguards as well as ensuring benefits for IPs under the SPHERE.
Land acquisition: The grant will support upgrading and construction of classrooms in Southern
Philippines. Involuntary resettlement is not likely to occur as most of the upgrading and new
construction will take place in existing facilities. There will be no land acquisition.
2. Describe any potential indirect and/or long term impacts due to anticipated future activities in
the project area:
None
3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse
impacts.
None
4. Describe measures taken by the borrower to address safeguard policy issues. Provide an
assessment of borrower capacity to plan and implement the measures described.
The DepEd has adopted an Indigenous People Planning Framework (IPPF) which provides the
mechanisms to ensure participation of indigenous people during the implementation of the
NPSBE Project and to address the IP needs, including the integration of their concerns in school
improvement plans
5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on
safeguard policies, with an emphasis on potentially affected people.
The preparation of the education reform program involved a series of consultative workshops
with a range of stakeholders at all levels including LGU officials, teachers, PTCAs, student
organizations, indigenous peoples organizations, agencies for corporate social responsibility, and
civil society organizations. The DepED incorporated feedback from these consultations into the
design of the reform program.
B. Disclosure Requirements Date
Environmental Assessment/Audit/Management Plan/Other: Indigenous Peoples
Planning Framework (IPPF) for the National Program Support for Basic Education
(NPSBE).
Was the document disclosed prior to appraisal? IPPF Yes
29
Date of receipt by the Bank 02/02/2006
Date of "in-country" disclosure 02/02/2006
Date of submission to InfoShop 04/06/2006
For category A projects, date of distributing the Executive
Summary of the EA to the Executive Directors
* If the project triggers the Pest Management and/or Physical Cultural Resources,
the respective issues are to be addressed and disclosed as part of the Environmental
Assessment/Audit/or EMP.
If in-country disclosure of any of the above documents is not expected, please
explain why:
C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is
finalized by the project decision meeting)
OP/BP/GP 4.01 - Environment Assessment
Does the project require a stand-alone EA (including EMP) report? No
If yes, then did the Regional Environment Unit or Sector Manager (SM)
review and approve the EA report?
N/A
Are the cost and the accountabilities for the EMP incorporated in the
credit/loan?
N/A
The World Bank Policy on Disclosure of Information
Have relevant safeguard policies documents been sent to the World Bank's
Infoshop? IPPF
YES
Have relevant documents been disclosed in-country in a public place in a
form and language that are understandable and accessible to project-affected
groups and local NGOs? IPPF
YES
All Safeguard Policies
Have satisfactory calendar, budget and clear institutional responsibilities
been prepared for the implementation of measures related to safeguard
policies?
Yes
Have costs related to safeguard policy measures been included in the project
cost?
Yes
Does the Monitoring and Evaluation system of the project include the
monitoring of safeguard impacts and measures related to safeguard policies?
Yes
Have satisfactory implementation arrangements been agreed with the
borrower and the same been adequately reflected in the project legal
documents?
Yes
30
D. Approvals
Signed and submitted by: Name Date
Task Team Leader: Dingyong Hou 12/13/07
Environmental Specialist: Josefo Tuyor 10/29/07
Social Development Specialist Ma. Loreto N. Padua 10/29/07
Approved by:
Sector Manager: Christopher Tomas
Comments:
31
Annex 5
Financial Management Assessment
Philippines: Support to Philippine Basic Education Reforms
Executive Summary
1. Overall conclusion - A Financial Management Assessment (FMA) for the Support to
Philippines Basic Education Reforms (SPHERE) was carried out in accordance with the World
Bank‟s guidelines under the Financial Management Practices in World Bank-Financed
Investment Operations dated November 3, 2005. The objective of FMA was to determine
whether the Department of Education (DepED), as the implementing agency of the SPHERE,
has acceptable financial management arrangements. As the Department of Education (DepED)
is the implementing agency of the SPHERE, the conclusion was that overall, DepEd's FM
arrangements do not meet the minimum Bank financial management requirements as stipulated
in BP/OP 10.02 because the (a) FM system are only partially adequate; the books of accounts of
the agency are still maintained manually because the eNGAS has still to be implemented; (b)
Number of FM staff to implement the project is not adequate considering that the current staffs
are also handling other tasks; and (c) Commission on Audit (COA) reported several instances of
non-compliance with internal controls and rules and regulations. It is only after the
implementation of the suggested actions and COA recommendations that the FM arrangement
would meet the minimum requirements of the Bank. The assessed financial management risk for
SPHERE before the proposed mitigating measures is considered substantial. The residual risk
could be moderate after the proposed mitigating measures described below are implemented and
have shown effective impact. The factors supporting this conclusion and significant
observations and related existing and proposed mitigating measures are summarized below.
2. NGAS and eNGAS - The budgetary controls, accounting procedures and internal controls
prescribed by COA under the New Government Accounting System (NGAS) are not considered
adequate because there are certain internal controls that are found only in various COA
memoranda and circulars, and laws and regulations. The Australian Agency for International
Development (AusAID) with its grant to the Philippine Government is working with the
Department of Budget and Management (DBM) for the improvement on the government‟s
internal controls through the development of a comprehensive internal controls manual. COA, in
its audit of the agency‟s financial statements, reported certain instances of non-compliance with
the internal controls as described below. The bookkeeping segment of NGAS is computerized
and is referred to as electronic NGAS (eNGAS). DepED was one of the three pilot agencies in
the implementation of eNGAS. However, DepED has implemented the eNGAS in less than 5%
of its central and regional offices. This computerized segment is now currently being used by
two small offices at the Central Office and two regional offices of the DepED (See the action
plan below on the eNGAS roll-out). There are delays in financial reporting and consolidated
financial reports are only done once a year due to the absence of a functioning computerized
accounting system. DepED should demonstrate its firm commitment to roll-out the
implementation of eNGAS at the central and regional level. The action plan to address this issue
needs to be more specific with a specific timeframe and actions needed for all central and
regional offices. Adoption of the roll out plan for the implementation of eNGAS and the hiring
32
of adequate number of contractual staff to assist in the encoding of the initial data should be a
condition for effectiveness.
3. COA’s reports on DepED’s 2006 and 2005 financial statements - There are serious
concerns in term of noncompliance with prescribed accounting policies and internal controls
among other issues raised in COA reports. COA in its audit of the 2005 and 2006 financial
statements of DepED rendered an adverse opinion due to significant questionable account
balances resulting from non-compliance on prescribed accounting policies and internal
accounting controls such as the following: (a) property and equipment - understated due to
unrecorded equipment acquisitions/donations & school buildings, unreconciled difference
between accounting and property records/results of physical inventory count, etc.; (b) cash in
bank – discrepancy between book and bank balances remained unadjusted due to absence of
bank reconciliation statements, undocumented adjustments in the books, cash collections without
official receipts, unrecorded collections and deposits, etc; (c) cash advances to officers and
employees and disbursing officers - delays in liquidation of cash advances with balances
outstanding over two years; (d) receivables from national government agencies and non-profit
and people organizations – unreconciled balances between DepED and Department of Budget
and Management (DBM) Procurement Service, long outstanding balances, doubtful balance of
certain accounts due to absence of detailed information; and (e) inventory accounts – doubtful
validity and accuracy of the balances due to unrecorded transactions, error in recording,
unreconciled difference between accounting and inventory records.
DepED should demonstrate a firm commitment to resolve these issues and provide an update of
progress made in resolving these issues. Hiring qualified contractual staff to assist in addressing
these issues and adoption of a specific time bound action plan should be a condition for
effectiveness.
For the project, separate books of accounts and accounting records will be maintained to
generate the project financial statements. The preparation of unaudited interim financial reports
on a quarterly basis together with the supporting schedules such as schedule of advances, bank
reconciliation statements, in addition to the basic reports (balance sheet, statement of receipts
and disbursements, physical progress report and procurement status reports) will help monitor
proper compliance with internal controls.
4. Internal controls and Internal Audit (IA) – DepEd has no IA unit. IA function is a key
activity to help improve the control environment and facilitate greater reliance on financial
management systems. The internal audit function was authorized under the Internal Audit Code
and under Administrative Order No 70 of April 2003 requiring all government offices, local
government units, and government corporation to organize an IA service in their respective
organizations. At present, the effective coverage of IA throughout the national government is
minimal. Currently, most of the IA units of the agencies are understaffed with inadequate skills
and resources to perform its mandate. Besides, IA methods and focus require major upgrading in
line with modern practices. Internal control systems remain weak and relatively ineffective,
which leaves the system open to leakages/fraud. Technical Assistance funded by the Bank is
being provided to the presidential Anti-Graft Commission (PAGC) through IDF Grant to help
expedite this process by developing appropriate audit methodologies. Part of the activities in this
33
area is the strengthening of internal controls in each agency and the creation of an IA unit.
DepED is one of the 15 agencies that would customize and pilot the IA manual that is currently
being developed under the Bank‟s IDF grant to the government. An effective IA unit should be
in place during project implementation of the project. Therefore, creation of an IA unit and the
initiation of the recruitment of an IA firm to provide DepEd with the IA services and also
provide on the job-training to the newly designated IA staff for at least a year, with a term of
reference acceptable to the Bank, should be a condition for effectiveness.
5. Experience in implementing Bank-assisted project - DepED has adequate experience in
implementing Bank-assisted projects such as the First and Second Social Expenditure
Management Projects (SEMP 1 and 2), and the Third Elementary Education Projects and other
trust funds. There are some successful practices in these projects in the area of FM especially at
the school level that should be replicated under this Project.
The Project
Implementing Entity
6. The overall responsibility for project management and implementation will be within
DepED and its organizations at the national and regional levels. The DepED has a supervisory
role in relation to all education-related organizations in the country and thus operates all over the
country with a Central Office, regional offices, division offices, and the lowest is the school
level.
Country Financial Management Issues
7. Public Financial Management (PFM) - PFM weaknesses in Philippines are the
fundamental factors responsible for the country‟s poor growth performance of the last decades.
Analytical studies carried out by the government and its development partners (including a
CFAA completed in year 2002 and the Public Expenditure, Procurement and Financial
Management Review (PPEFMR) in 2003) have identified weaknesses in the current public
financial management system. Among the key areas that were identified as needing immediate
attention include weak internal control environment in some national agencies and local
government where financial management skills are low, leadership is lacking, and there is poor
oversight by central government agencies. The perception of weakening governance could
become the Achilles heel of the Philippine government and could hold back development
progress more broadly. The government would need to focus on improving the quality of public
expenditure and address chronic corruption issues.
8. A PEFA PFM Assessment was carried out in respect of fiscal year 2003 to 2006. It is
intended to serve as an objective measure for benchmarking countries PFM capacities and
facilitate tracking of improvements in specific areas of PFM over time. The PEFA report
indicates that progress in implementing PFM reforms has been somewhat limited.
9. CFAA rated the risk of waste, diversion and misuse of funds in Philippines as high.
These weaknesses have been well documented in a number of reports, including the CFAA in
2002, the Public Expenditure, Procurement and Financial Management Review in 2003, and the
34
most recent PEFA PFM Assessment report that was carried out in respect of fiscal year 2003 to
2006. It is intended to serve as an objective measure for benchmarking countries PFM capacities
and facilitate tracking of improvements in specific areas of PFM over time. The PEFA report
indicates that progress in implementing PFM reforms has been somewhat limited. Relative to
FM some of the most important problematic areas include (i) Inadequate budget formulation,
expenditure prioritization and expenditure control systems; (ii) Absence of accountability
mechanisms that fueled large scale corruption and misuse of public funds within the budget
execution process, and (iii) Weak oversight functions.
10. In general, Philippines’ fiduciary environment remains weak. The summary of the
country‟s PFM performance presented above highlights outstanding weaknesses in spite of some
major achievement during the past few years and described in this document which demonstrates
that some progress is being made. The Government has committed to continue implementing an
adequate program of PFM reform, which is being supported by the Development Policy
Lending.
11. The GOP in its fight against corruption - Governance and anti-corruption are part of the
government‟s agenda – the government has completed, with various stakeholder inputs, a
National Anti-Corruption Program of Action, and there is a working group under the PDF on
Governance and Anti-Corruption. Yet, many observers have noted increased politicization of
decision making in Government and increased risks to good governance and the effective control
of corruption. Specifically, the concerns include: (i) large political discretion over special budget
funds; (ii) politicization of senior civil servant appointments; (iii) risks to the due process in
public procurement; and (iv) weak follow-through on corruption cases. Clearly, these less
favorable developments create substantial risks for the country and challenges for us as we
implement our programs and are becoming more central to our country engagement. The
Government has also made some moves on the anti-corruption front. A National Anti-Corruption
Program of Action has been completed with inputs a range of stakeholders, and action taken in
some key areas, such as strengthening the Office of the Ombudsman, the establishment of anti-
graft units a number of agencies and life style checks on civil servants. However, the impact of
these measures on the governance environment and perception so far is only modest.
12. The Anti-corruption and Governance Working Group (WG) of the PDF has met only once
formally since the main PDF event in March 2007. An informal planning meeting was also
organized. With the infrequent meetings, the WG has not served as an effective forum for
raising and discussing reform issues yet. But with the support of the AusAID-funded secretariat,
the WG has begun to be active through three sub-WGs on Governance (covering the DBM-led
Good Governance and Management Reforms), Procurement, and Anti-corruption. The
Governance sub-WG has met once, whereas the Procurement sub-WG twice. The Anti-
corruption sub-WG is still in the concept stage and has not started its own process of
deliberations.
13. Anti-corruption action plan. The DepED has adopted some innovative approaches for
project's monitoring and to mitigate corruption such as parent-teacher community association,
NGOs, Boy Scouts to observe delivery of textbooks. However, some additional measures should
35
also be considered, such as public announcement, publication within the community, complaints
handling mechanism at the community level as well as at the regional and central levels.
14. Internal Controls/Internal Audit – IA function is a key activity to help improve the
control environment and facilitate greater reliance on financial management systems. The IA
function was authorized under the Internal Audit Code and under Administrative Order No 70 of
April 2003 requiring all government offices, local government units, and government
corporation to organize an IA service in their respective organizations. At present, the effective
coverage of IA throughout the national government is minimal. Only a few agencies have IA
units and they are understaffed with inadequate skills and resources to perform its mandate.
Besides, IA methods and focus require major upgrading in line with modern practices. Internal
control systems remain weak and relatively ineffective, which leaves the system open to
leakages/fraud. Technical Assistance funded by the Bank is being provided to the presidential
Anti-Graft Commission (PAGC) through IDF Grant to help expedite this process by developing
appropriate audit methodologies.
Risk Analysis
A summary of the financial management assessment ratings is provided in the table below. The
detailed discussion of each subject immediately follows hereunder.
Categories of Risk
(Issues/Factors)
Risk
Rating
Comments and Mitigating Measures Residual
Risk
Condition of
Negotiation, Board
or Effectiveness
Inherent Risk
Country level
1. Perceived high corruption in
the country
2. Minimal IA coverage across
all government offices
3. PFM weaknesses identified
in the 2002 CFAA and 2003
PPEFMR as discussed above.
4. PEFA PFM Assessment
conducted in 2003 to 2006
reported somewhat limited
progress in implementing PFM
reforms.
5. CFAA rated the risk of waste,
diversion and misuse of funds
in the country as high.
6. In general, fiduciary
environment remains weak.
H
H
1. Strengthening of the IA functions in
government agencies is currently in
progress. Please see detailed discussion
under country financial issues above.
2. Based on the Bank-led Country
Procurement Assessment Review
(CPAR), the Government has developed a
clear and detailed reform action plan with
input from stakeholders from within the
public sector, civil society and
development partner community. The
priorities as identified through multi-
stakeholder engagements include: (i)
ensuring agencies‟ compliance with key
aspects of the Government Procurement
Reform Act (GPRA); (ii) strengthening
capacities of procuring entities, including
the Local Government Units (LGUs); and
(iii) developing and implementing a
strategic communication plan to ensure
there is adequate understanding of the key
provisions of the GPRA by both
government officials involved in
procurement and nongovernmental actors
interested in participating in public
oversight.
H
H
36
Categories of Risk
(Issues/Factors)
Risk
Rating
Comments and Mitigating Measures Residual
Risk
Condition of
Negotiation, Board
or Effectiveness
2. To deal with corruption in the
government, the Procurement
Transparency Group (PTG) was created
by the President that will monitor
procurement for public projects and
report irregularities to agency head
concerned. The PTG is chaired by the
DBM with member from the Department
of Justice, Department of Interior and
Local Governments, other economic
planning departments and representatives
from civil society.
Entity
1. DepED is one of the biggest
government agencies operating
nationwide with the schools as
the lowest level in the agency
that is involved in financial
management.
2. Perception of corruption of
the country also affects DepED
and weak internal control
compliance in the agency.
S
1. On-going trainings on financial
management are conducted, which aim to
cover all levels in the agency and
especially to school principals. The
processing of project transactions will be
mainstreamed but a project management
unit at the central office will oversee the
coordination of all offices at DepED for
the project implementation. DepED has
experience in handling Bank-assisted
projects.
2. Establishment of an IA unit. Please see
discussion below.
3. DepED continues its partnership with
civil society organizations (CSOs) and the
private sector to ensure fair and
transparent process in the procurement
and delivery of goods. This has proved to
be effective in the case of textbooks
where 41 CSOs nationwide have
volunteered to be the textbook watchers.
With this network of CSOs helping
monitor the textbook deliveries
nationwide, textbooks and teachers
manuals procured are ensured of delivery
to and receipt by the intended recipients
in the exact quantities with the right
quality and at the scheduled time.
4. Under the project, the implementation
responsibility of procurement and
supervision of the construction and/or
rehabilitation of classrooms is given to
the principals, along with the active
participation from the Parent-Teacher
Community Association that helps in
S
37
Categories of Risk
(Issues/Factors)
Risk
Rating
Comments and Mitigating Measures Residual
Risk
Condition of
Negotiation, Board
or Effectiveness
monitoring and evaluating
implementation.
Project
1. The project activities will be
carried out at various levels of
the agency spread nationwide.
2. Weak control environment as
described above also affects the
project.
H
1. DepED shall establish an IA unit by
designating qualified staff to this unit
through the issuance of a Department
Memorandum. DepED shall furnish the
Bank a copy of department‟s endorsement
to DBM for the creation of the IA unit
using scrap and build approach (from
internal staff). These staff shall be (a)
trained and (b) involved in the
customization of the IA manual
developed under the IDF grant
implemented by PAGC, DepEd being one
of the selected pilot agencies under the
IDF grant on strengthening of the IA
function in government.
2. DepED shall initiate the process of
hiring of an IA firm, with terms of
reference acceptable to the Bank, to
provide IA services for the Bank-assisted
projects and on the job training to the
staff of the newly created staff for at least
a year. The private firm shall be hired no
later than 6 months after grant signing.
3. Regular financial reports required for
submission to the Central Office on project
transactions shall strengthen the controls
over project activities/transactions.
S
1.Effectiveness
condition
.
2.a. Effectiveness
Condition (initiate
hiring of IA firm &
TOR acceptable to
the Bank)
2.b. Dated
Covenant - Hiring
of IA firm
Control risk
H S
Planning & Budgeting
1. The government treats grants
as additional resources funding
activities not included in the
government‟s annual approved
budget or the Government
Appropriations Act. Risk that
budget for the grant activities
may not undergo the same level
of scrutiny as the regular
operating activities exist. Budget
for grant activities are covered
with “Automatic
Appropriations” issued by the
DBM.
M
1. Annual work and financial plan shall
be prepared in sufficient detail by DepED
each year and submitted to the Bank for
review and comments three months
before year end. Such plan shall be
supported with the annual procurement
plan and disbursement plan.
L
No.
Part of project
implementation
arrangements
Accounting H
S
38
Categories of Risk
(Issues/Factors)
Risk
Rating
Comments and Mitigating Measures Residual
Risk
Condition of
Negotiation, Board
or Effectiveness
1. Accounting policies &
procedures contained in NGAS
not fully adhered to by DepED
as reported by COA in its
observation and
recommendations memoranda.
COA issued an adverse opinion
on the agency‟s 2006 and 2005
financial statements due to
significant reservations on
several account balances such as
cash, property, plant &
equipment, receivables,
inventories, etc. presented in the
financial statements as discussed
above.
2. Accounting staff may not be
adequate in terms of number
because DepED still has not
computerized its accounting
system. eNGAS has been
implemented in less than 5% of
the agency‟s offices.
1. Part of the action plan under this
project is to create a team from the
financial services unit to supervise and
monitor the various regional/division
offices on their compliance with the
accounting and internal controls of the
project transactions.
2. DepED shall adopt a time bound action
plan (complete with staff requirement,
schedule of start and completion for all
central and regional offices, hardware and
training costs, etc) to roll out eNGAS,
acceptable to the Bank. To implement
such action plan, DepED shall (a) hire
adequate number of contractual staff to
assist in the implementation of the said
action plan and (b) shall issue a
department memorandum designating a
team of at least three organic staff and an
IT specialist to oversee the
implementation of eNGAS.
3. Separate books of accounts shall be
maintained for the project consisting of the
general ledger, cash receipts and
disbursements book, journal vouchers
ledger, and related subsidiary ledgers.
Effectives
conditions
(adoption of the
time bound plan
acceptable to the
Bank and the hiring
of adequate
number of
qualified
contractual staff)
Internal controls
1. Non-compliance with internal
controls and procedures were
reported by COA in its audit of
the 2006 and 2005 financial
statements of DepED and issued
an adverse opinion thereon.
Non-compliance in internal
controls were the following
among others: (a) non-
preparation of bank
reconciliation statements for a
number of bank accounts; (b)
unreconciled subsidiary ledgers
and general ledger balances for
property, plant and equipment,
inventories, etc.; (c) no physical
inventory count conducted or
where conducted results not yet
reconciled with accounting and
property records; and (d) long
outstanding unliquidated cash
advances to cash disbursing
officers, officers and employees,
H
1. The DepED has adopted some
innovative approaches to mitigate
corruption. For instance, the Boy Scouts
of the Philippines and other civil society
organizations have been enlisted to
observe delivery of textbooks and tables
and chairs to the schools. Also, planned
deliveries of textbooks to schools are
being published in order to eliminate
diversion of deliveries. For school funds,
the school is required to publish the
statement of sources and uses of funds on
a regular basis and put the information in
the public domain for the parents,
teachers and community.
2. Please see discussion above on the
establishment of an IA unit, hiring of IA
firm, and the roll out of eNGAS.
3. DepED shall hire additional qualified
contractual staff to implement a time
bound action plan, acceptable to the
Bank, to resolve the issues raised by COA
S
No. See other
sections.
Effectiveness
conditions (hiring
of qualified
39
Categories of Risk
(Issues/Factors)
Risk
Rating
Comments and Mitigating Measures Residual
Risk
Condition of
Negotiation, Board
or Effectiveness
other government agencies, etc.
2. No IA unit.
in its audit report of 2006 and 2005
(showing details of issues,
strategies/procedures to resolve the
issues, timetable, etc.) before the grant
becomes effective. In addition, a
department memorandum shall be issued
designating a team of at least three
organic staff to supervise the
implementation of the action plan.
contractual staff,
adoption of the
time bound
implementation
plan acceptable to
the Bank and
issuance of
department
memorandum
designating the
staff to supervise
the
implementation.)
Funds flow
1. Long delays in the liquidation
of funds transferred to the
regions and divisions.
2. Weaknesses in the
implementation of internal
controls affect funds flow.
S
1. Policy on “no liquidation, no cash
advance” shall be strictly enforced.
2. The Interim Financial Report (IFR) to
be submitted to the Bank shall include an
aging schedule of the outstanding fund
transfers to monitor the compliance of
such policy. IFR format to be agreed with
the Bank before grant effectiveness.
3. Please see discussions above on other
mitigating measures.
S
IFR format grant
effectiveness
condition
Financial reporting
1. Books of accounts still
maintained manually and thus
consolidated financial statements
are prepared only annually.
2. Inaccurate balances in the
financial statements reported by
COA due to the non-compliance
with accounting policies and
internal controls and procedures.
H
1. Please see discussions above on
eNGAS roll out, measures to address
COA issues in the audit of the agency‟s
accounts, and creation of IA unit.
2. For the project, unaudited quarterly
interim financial reports consisting of the
following: (i) statement of sources and
uses of funds which should include the
current and cumulative amounts
compared with budget; (iii) bank
reconciliation statements of all project
bank accounts at the central and regional
level; (iii) balance sheet; and (iv)
schedule of funds released to the regional
and division offices & schools and the
aging analysis of unliquidated fund
transfers/advances; (b) physical progress
S
Condition of
effectiveness
(format of the
IFRs)
40
Categories of Risk
(Issues/Factors)
Risk
Rating
Comments and Mitigating Measures Residual
Risk
Condition of
Negotiation, Board
or Effectiveness
report and (e) procurement status report
shall be submitted to the Bank no later
than 60 days after the end of each
calendar quarter. The physical
accomplishment report must be linked to
the financial report. Formats of these
IFRs will be finally agreed before grant
effectiveness.
3. Annual audited project financial
statements (balance sheet and statement
of sources and uses of funds) together
with the notes to the financial statements
shall be submitted to the Bank no later
than 6 months after the end of each fiscal
year.
External audit L Interaction with the auditors and review
of the 2006 and 2005 audit reports on
DepED‟s financial statements and the
management letter indicate that the audit
was carried adequately.
L
Overall risk
High Substantial (This could be
reduced to moderate when the
mitigating measures discussed
above are implemented and have
shown effective impact).
Risk Rating: H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk)
Strengths and Weaknesses. The strength in financial management is the familiarity of DepED‟s
officials and staff with the Bank‟s policies, procedures and reporting requirements. Such
familiarity was acquired during the implementation of the Third Elementary School Project, a
specific investment loan and the Social Expenditure Management Projects 1 and 2, Bank-assisted
projects.
The weaknesses and the corresponding corrective actions are as summarized below. For the
agreed corrective actions, refer to the summary of action plans below.
Significant Weaknesses Corrective Action
1. Books of account are still maintained
manually except for two small bureaus in
the central office and two regional offices
that have implemented eNGAS. This
situation results to delays in reporting, less
frequent preparation of consolidated
reports, unreliable financial reports as
reported by COA in its audit of the
department‟s annual financial statements,
1. DepED is committed to the roll out of eNGAS to all
central and regional offices in the next two years.
See discussion above and as summarized in the
action plan below.
41
etc.
2. Inadequate financial management capacity
at the regional and division levels.
2. Increase the FM staff complement to an adequate
level, where assessed to be necessary. Conduct of
appropriate trainings has been started for the FM
staff at the regional and division level under NPSBE.
Trainings on FM need to be offered also to
operations staff and especially the school principals
during the first 6 months after grant effectiveness
(see related discussion below).
3. Absence of simple record keeping and
reporting system at the school level for all
schools, except those covered under the
Third Elementary Education Project, a
Bank assisted project.
3. Implement the recommended action under NPSBE
which is to design and implement a simple record
keeping and reporting system for schools; design a
training program and conduct training afterwards.
The record keeping and reporting under the TEEP at
school level can be adopted. This is one of the
criteria on the eligibility of School Grant.
4. Non-compliance with some internal
control procedures required under the
NGAS (Details are discussed in Internal
Controls above) and accounting policies as
reported by COA and absence of IA unit.
5. In addition to the roll out of eNGAS, DepEd
committed to the (a) hiring of contractual staff for
the implementation of the action to address the COA
issues, (b) creation of an IA unit, and hiring of firm
to provide IA services and provide training to the
newly created IA unit. See detailed discussion above
and also as summarized in the action plan below.
Financial Management Arrangements
The financial management arrangements under the project shall be as follows:
FM organization and staffing – The FM functions of the project shall be mainstreamed and
thus shall be performed by the existing Financial Management Services (FMS) department of
DepED at the Central Office and the regional and division offices and schools. The FMS is
composed of six (6) divisions namely: Budget Division, Accounting Division, Management
Division, Payroll Services Division, Systems Division and Cash Division. The Undersecretary
for Finance and Administration shall be the ultimate responsible person for the Project‟s FM,
who will be supported by the Assistant Secretary for Finance and the Controller. The current
staff consists of a combination of graduate and undergraduate employees whose length of service
ranges from 5 to 35 years. Computer literacy is average. The adequacy of the FM staff is
currently being addressed by the rationalization program. All agencies are required to evaluate
their organization as a whole to include the adequacy of human resources complement and
submit to DBM proposed changes. The rationalization plan submitted by the agency is currently
under review by DBM. With the current workload of the department including the activities on
the implementation of the eNGAS and addressing the COA issues, there is a need to hire
contractual staff to assist the department in these two activities. For SPHERE, the same team
handling the National Program Support Basic Education Project at the Central office shall be
designated to handle the project with at least two additional qualified accountants from its
existing manpower or by hiring contractual staff.
42
Budgeting – Annual work and financial plan with annual procurement plan and disbursement
projection shall be prepared each year and submitted to the Bank for review and comments no
later than three months before the start of each fiscal year.
Accounting – The project shall be using the NGAS for its accounting system. The chart of
accounts of the project shall however still classify the transactions as to project components and
categories.
Internal controls – The project shall be governed by the government‟s internal controls and
procedures as defined in NGAS, other COA memoranda and circulars, laws and regulations
together with the mitigating measures described above under the risk analyses. Basic internal
controls such as separation of conflicting functions, segregation of bookkeeping functions from
custodianship of assets, reconciliation of subsidiary records with the corresponding general
ledger control account, and a multilevel system of review and approval of transactions before
their execution are required under the government‟s internal control system.
The DepED itself has adopted some innovative approaches to mitigate corruption. For instance,
the Boy Scouts of the Philippines has been enlisted to observe delivery of textbooks and tables
and chairs to the schools. Also, planned deliveries of textbooks to schools are being published in
order to eliminate diversion of deliveries. For school funds, the school shall be required to
publish the statement of sources and uses of funds on a regular basis and place this information
in the public domain for the information of the parents, teachers and community.
DepED has committed to the establishment of the IA unit before grant effectiveness and once
established shall cover the project in its annual scope of work. The staff of the newly created IA
unit shall undergo training under the IDF grant on the strengthening of the IA in government
implemented by PAGC and also shall be involved in the customization of the IA manual
developed under the said IDF grant, DepED being one of the selected pilot agencies. To further
improve the capacity of the IA unit, DepED is committed to hire a private firm, with TOR
acceptable to the Bank, to provide the IA services for the project and on the job training for the
newly to the staff of the newly created IA unit for at least a year. IA review of the project shall
be conducted semi-annually with copy of the report submitted to the Bank 60 days after the end
of each calendar semester.
External audit - COA is the external auditor of DepED‟s financial reports. This supreme audit
institution is an independent office which was given the mandate under the Philippine
Constitution to audit all accounts pertaining to all government revenues and expenditures, uses of
government resources and to prescribe accounting and auditing rules. The COA‟s audit is
substantially in accordance with the international auditing standards. COA‟s audit of the
financial statements also included physical inspection of sub-projects. The physical inspection is
carried out by a technical team (other than the team looking at the financial records) that has
engineers as members. Review covers not only the physical construction but also the
compliance with the procurement procedures.
Financial reporting – For the project, the following reports shall be submitted:
43
a. Unaudited Interim Financial Reports (IFRs) within 60 days after the end of each calendar
quarter, which shall consist of the: (a) financial reports consisting of the following: (i) statement
of sources and uses of funds which should include the current and cumulative amounts compared
against budget; (iii) bank reconciliation statements of all project bank accounts at the central and
regional level; (iii) balance sheet; and (iv) schedule of funds released to the regional and division
offices & schools and the aging analysis of unliquidated fund transfers/advances; (b) physical
progress report and (e) procurement status report. The physical accomplishment report must be
linked to the financial report. Formats of these IFRs will be finally agreed before grant
effectiveness.
b. Annual audited project financial statements, which shall consist of the balance sheet and
statement of sources and funds together with a copy of the management letter reflecting the
auditor‟s findings and recommendations, shall be submitted to the Bank no later than 6 months
after the end of each fiscal year. The auditor for this project is COA. The Audit Certificate to be
issued shall be the based on the Bank‟s pro forma audit certificate.
c. In addition, annual independent validation report will be submitted to the Bank no later than
3 months after the end of each fiscal year, in scope and detail, and under terms of reference,
satisfactory to the Bank, including an opinion as to whether the School Grants have been
awarded according to the criteria set forth in the Operations Manual.
d. Copy of the internal audit report shall be submitted to the Bank 60 days after the end of each
calendar semester.
Funds flow and disbursement arrangements – The funds of the project come from grant
proceeds. Funds from the World Bank flow to the Philippine Treasury‟s account at the Central
Bank of the Philippines and then to the Designated Account (DA) of the Project maintained by
DepED. The Bureau of Treasury issues an advice for the receipt of funds from the World Bank.
DBM then issues the Special Allotment Release Order (SARO) and the Notice of Cash
Allocation (NCA) to the DepED equivalent to the funds received from the World Bank.
DepED shall open and maintain a DA in US dollars, in a commercial bank acceptable to the
Bank, with a maximum allocation of US$4 million. Management of the DA shall be under the
FMS of the Central Office. Withdrawal of grant funds from the Bank shall be through the
submission of duly signed Withdrawal Application and Statement of Expenditures (SOEs).
Disbursements under the Project shall comply with the Bank policies and procedures on
disbursements and financial management as reflected in the Bank‟s Disbursements Handbook
and Financial Monitoring Report Monitoring Guidelines. All reimbursements to the DA shall
only be for eligible expenditures based on the agreed eligibility/financing percentage in the Grant
Agreement and shall have adequate supporting documents. Attachments of supporting
documents to the SOEs for withdrawal applications shall be based on threshold limit of SOEs. .
In addition, other disbursement mechanism such as direct payments and special commitments
shall also be available for this Project.
For the funding requirements of the regional and division offices and schools with FM unit,
funds shall be drawn from the DA and transferred to the regional and division offices‟ and
44
schools‟ project bank accounts based on the forecasted cash requirement for the project for one
quarter and the approved work and financial plan. These offices shall submit to the central office
of DepED monthly SOEs to liquidate the funds transferred. Maintenance of second generation
accounts or project bank accounts at the regional and division offices and schools with FM unit
is necessary for the following reasons: (i) there is a logistical problem in making all payments
centralized at DepED Central Office where the DA will be maintained because some
expenditures are entered into or incurred at these offices and therefore the funds should be
available to the nearest office; and (b) the Philippine government is unable to provide working
capital to the Project to refinance the project‟s expenses. The regional and division offices and
schools with FM unit shall be required to submit a copy of the bank reconciliation statements of
the project bank accounts to the Central Office FMS before any fund transfer is made.
Allocation of Loan Proceeds
Category
Amount of the Grant
(Expressed in Australian
Dollars)
% of Expenditures
to be Financed
(1) Goods, consultants‟ services,
trainings and workshops
12,619,069
100%
(2) Civil works (this includes
construction of classrooms and the
teaching and learning centers)
22,154,247 100%
a. Sub-grants
4,477,709 100% of amounts of
School Grants disbursed
b. Incremental operating costs 200,000
TOTAL 39,451,025
Proposed Action Plan: The overall residual risk of the financial management controls is
considered substantial but could be reduced to moderate after the following mitigating measures
are implemented and have shown effective impact.
Actions Commitments Due Dates
1 Internal controls/internal audit
i.Establish an IA unit in DepED and designate
initially at least 4 qualified internal staff to the
IA unit
a-1. DepED has endorsed to
DBM the creation of the IA unit
which shall be initially staffed
using the scrap and build
approach (from internal staff).
a-2. DepEd shall issue a
memorandum designating the
selected qualified staff to the IA
a-1. Condition
for grant
effectiveness
a-2. Condition
for grant
effectiveness
45
ii. Initiate the process of hiring a consulting
firm to provide IA services for the Bank
assisted projects and also on the job the IA
unit for at least one year
unit.
b-1. DepEd shall prepare the
TOR, acceptable to the Bank,
for the consulting firm.
b-2. DepED secretary or his
designate shall approve the
engagement of an IA consulting
firm.
b-3. Consulting firm already
hired
b-1. Condition
for grant
effectiveness
b-2. Condition
for grant
effectiveness
6 months after
grant signing.
2 COA issues
1. Adopt a time bound plan (showing the
issues, strategies/procedures to be carried out,
timetable, location, etc., progress reporting to
FM head) to complete addressing the issues
reported by COA in its audit of the
department‟s 2006 and 2005 annual financial
statements no later than December 31, 2010.
2. Hire qualified contractual staff to work
on the implementation plan above.
3. Designate a team of three organic staff to
supervise/review the work of the contractual
staff.
a-1. DepED shall complete the
implementation plan and the
TOR of the contractual staff
and submit copies to the Bank.
b-1. DepEd shall hire the
contractual staff initially around
12 to assist in the
implementation of the said plan.
TOR shall also be prepared and
submitted to the Bank together
with copies of the signed
contracts.
c-1. DepED shall issue a
DepED memorandum
designating the staff that will
provide supervision over the
work of the contractual staff.
a-1. Condition
for grant
effectiveness
b-1. Condition
for grant
effectiveness
c-1. Condition
for grant
effectiveness
3 eNGAS implementation
a. Adopt a time bound plan (schedule of
start and completion of the implementation of
eNGAS for all central and regional offices,
training and hardware cost, progress reporting
timetable, etc.) to roll out eNGAS in all
central and regional offices with target
completion by December 31, 2009.
b. Hire contractual staff (initially around
15) to assist in the implementation of eNGAS.
a-1. DepED shall adopt and
submit to the Bank the time
bound implementation plan and
shall issue a TOR for the
contractual staff.
b-1. DepED shall hire the
required contractual staff and
furnish to the Bank copies of
a-1. Condition
for grant
effectiveness
b-1. Condition
for grant
effectiveness
46
c. Designating a team of organic FM staff and
an IT specialist to supervise the
implementation of the said plan.
the signed contracts together
with the copy of the TOR.
c-1. DepEd shall issue a
memorandum designating a
team FM staff and an IT
specialist to supervise the
eNGAS roll out.
4 Staffing of the FM Function
a. Create a team (preferably consisting of
three staff) in financial management services
responsible for monitoring internal control
and financial reporting compliance by the
regional, division and school levels on
established FM arrangements under the Bank-
assisted projects. This task force will
eventually dissolve once the roll out of
eNGAS is completed.
a-1. DepED shall issue a
memorandum to designate this
team who will focus on the
project‟s compliance with the
FM reporting requirements.
a-1. Condition
for grant
effectiveness
5 Capacity Building :
i. Include in the DepED Program of Work
sufficient resources to finance the following
capacity-building measures:
a. Adoption/Issuance of a revised simple
record keeping and reporting for school
levels with no FM unit after consultation
within DepED and with COA
b. Preparation of an FM Training
Program for the Central Office, and at
regional, division and school levels
i. Training needs assessment conducted
ii. Development of the training
design/program
b. Completion of the basic FM orientation to
operations and other units of DepEd‟s central
office, and to the regional heads and division
superintendents and school principals
DepED shall include these
activities in the allocation of the
agency‟s budget or in the
annual work and financial plan
under the grant.
During project
implementation.
Condition for
disbursement of
funds to the
schools without
fiscal autonomy
Before the end
of the first year
of the project
implementation
During the end
quarter of 2008
Financial Covenants: The financial reports that shall be submitted to the Bank are as follows:
47
a. Unaudited Interim Financial Reports (IFRs) within 60 days after the end of each
calendar quarter, which shall consist of the: (a) financial reports consisting of the
following: (i) statement of sources and uses of funds which should include the current
and cumulative amounts; (iii) bank reconciliation statements; (iv) balance sheet; and (v)
schedule of funds released to the regional and division offices & schools and the aging
analysis of unliquidated fund transfers/advances; (b) physical progress report and (e)
procurement status report. The physical accomplishment report must be linked to the
financial report. Formats of these IFRs will be finally agreed before grant negotiation.
b. Annual audited project financial statements, which shall consist of the balance sheet and
statement of sources and funds together with a copy of the management letter reflecting
the auditor‟s findings and recommendations, shall be submitted to the Bank no later than
6 months after the end of each fiscal year. The auditor for this project is COA. The Audit
Certificate to be issued shall be the based on the Bank‟s pro forma audit certificate.
Condition for grant effectiveness:
a. Report - Final IFR format agreed with the Bank
b. IA unit/function- Establishment of an IA unit by designating qualified internal staff.
Initiate the hiring of a consulting firm, with TOR acceptable to the Bank, to provide the
IA services for the Bank-assisted projects and on the job training to the IA unit for at
least one year.
c. COA issues – Adoption of a time bound plan to address the COA issues, hiring of
adequate number of contractual staff for the implementation of the plans to address the
COA issues reported in the audit of the department‟s annual financial statements, and
designating a team from the internal staff to supervise and review the work of the
contractual staff
d. eNGAS – Adoption of a time bound implementation plan to roll out eNGAS to all central
and regional offices, hiring of adequate number of contractual staff to assist in the
implementation of the roll out of eNGAS and designating a team composed of internal
FM staff and an IT specialist to supervise the implementation of eNGAS.
e. FM staffing for the project – Designating a team of three FM staff who will supervise and
review the various regional, division and school offices on the compliance with the FM
reporting requirements of the project.
f. Revised Operations Manual of NPSBE to address SPHERE
Dated covenant
a. Hiring of the consulting firm for IA services 6 months after grant signing.
Other reporting requirement: Annual independent validation report will be submitted to the
Bank no later than 3 months after the end of each fiscal year, in scope and detail, and under
terms of reference satisfactory to the Bank, including an opinion as to whether the School Grants
have been awarded according to the criteria set forth in the Operations Manual.
48
Supervision Plan: FM implementation review mission visit shall be undertaken twice a year
during project implementation to ensure that the grant proceeds are used for the purpose it was
granted, which may take at the most five weeks. FM supervision can also be performed by
telephone and emails in cases of follow up of certain issues. The scope of the supervision is left
to the professional judgment of the FM specialist. It may cover any of the following: (1) review
of the continuous maintenance of adequate FM system by DepED; (2) review of selected
transactions, where deemed necessary; (3) follow up of timeliness of FM reporting and actions
taken on issues raised by external auditors; (4) review of financials reports of the project; (4)
follow up of the status of the agreed action plan as summarized above; and (5) review of
compliance with the financial covenants. In addition, the FM implementation review should
include desk review of the quarterly FMRs and audited financial statements and management
letter submitted to the Bank.
49
Annex 6: Procurement Arrangements
PHILIPPINES: SUPPORT TO PHILIPPINE BASIC EDUCATION REFORMS
A. General
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 revised October
2006, and “Guidelines: Selection and Employment of Consultants by World Bank Borrowers”
dated May 2004 revised October 2006, and the provisions stipulated in the Legal Agreement.
While the new Philippine Procurement Law (RA 9184) is sufficiently in harmony with the
Guidelines at the NCB level, the Procurement Schedule of the Grant Agreement will include an
annex detailing the procedures under the national law that are not acceptable to the Bank. Other
than that, NCB procurement will be carried out in accordance with the country‟s law. The
general description of various items under different expenditure categories for the first 18
months are described below and summarized in the attached Procurement Plan. For each
contract to be financed by the Trust Fund, the different procurement methods, estimated costs,
prior review requirements, and time frame are agreed between the Borrower and the Bank task
team in the Procurement Plan. The Procurement Plan will be a rolling plan that will be updated
at least annually or as required to reflect the actual project implementation needs and
improvements in the institutional capacity of the implementing units.
Procurement of Works (AUD22.15million). Works procured under this project would include
construction and/or refurbishment of teaching and learning centers across the country, and
construction of classrooms in identified priority schools in Southern Philippines. No
international competitive bidding (ICB) is expected under the proposed project due to the small
size and dispersed nature of the contracts. Contracts estimated to cost US$100,000 or more will
be procured following national competitive bidding (NCB) procedures using the Philippine
Bidding Document (PBD) as harmonized with the Bank. There will be very few contracts, if
any, that will be procured through NCB as it is not efficient and economically justified to
package small and widely dispersed works of this nature. Procurement of very small works
costing below US$100,000 will be awarded based on shopping procedures, by comparing price
quotations obtained from several contractors, usually at least three, as defined in Para. 3.5 of the
Guidelines.
Procurement of Goods (AUD8.30million). Goods procured under this project would include
teaching and learning, and training and other educational support materials, and information and
communication technology goods. The procurement for contracts costing US$500,000 or more
will be done through ICB using the Bank‟s standard bidding document (SBD). Contracts
estimated to cost US$100,000 up to less than US$500,000 will be procured following national
competitive bidding (NCB) procedures using the Philippine Bidding Document (PBD) as
harmonized with the Bank. Procurement for off-the-shelf goods and small value contracts
costing below US$100,000 will be awarded based on shopping procedures, by comparing price
quotations obtained from several suppliers, usually at least three, as defined in Para. 3.5 of the
Guidelines.
Selection of Consultants (AUD4.32million). Consultancy services to support technical
assistance to translate policy ideas on reform into action plans and to build capacity of key
personnel to implement and manage change in line with the reform agenda will be financed
50
under the program. Quality and cost based selection (QCBS) procedures will be followed in the
hiring of consulting firms with contracts estimated to cost the equivalent of US$100,000 or more.
Contracts estimated to cost less than US$100,000 equivalent may be procured through selection
based on consultants‟ qualifications (CQ) or through single source selection (SSS), with the
Bank‟s prior agreement, in accordance with the provisions of the Consultant Guidelines.
Government research and training institutions with exceptional expertise for the assignment may
also be tapped under the program. Individual Consultants necessary to support the program,
meeting the requirements set forth in Section 5 of the Consultant Guidelines, will be selected
under contracts awarded on the basis of competition in accordance with the provisions of the
Consultant Guidelines.
Incremental Operating Cost (AUD0.20million). Activities relating to managing the project,
including staff travel and office utilities and supporting the project operations will be provided in
accordance with existing government prescribed limits and procedures acceptable to the Bank.
School Grants (AUD4.48 million). Activities to accelerate the implementation of school-based
management, through operationalization of the approved School Improvement Plans would be
procured using government administrative procedures, which were reviewed and found
acceptable to the Bank.
B. Assessment of the agency’s capacity to implement procurement
Procurement activities will be carried out by the Department of Education‟s (DepEd) central
office, regional and division offices and schools. The agency has a Procurement Service office,
which functions as a one-stop-shop responsible for overseeing procurement undertakings in the
central office and providing policy guidance and support to sub-national offices. The Department
has a procurement manual which is generally applicable for the project.
Assessment is based on the findings of the recently approved NPSBE and actual experiences
from the World Bank-assisted First and Second Social Expenditure Management Projects
(SEMP 1 and 2) and the Third Elementary Education Project (TEEP). The agency has been
implementing these projects financed by the Bank in the last ten years. The assessment reviewed
the organizational structure for implementing the project and the interaction among the project‟s
staff responsible for procurement. The assessment took into consideration various studies,
including the updated Country Procurement Assessment Report (CPAR) and the baseline
indicator system (BIS) assessment in which an independent consultant determined that the
country, in general, was substantially achieving the desirable standards for reliance on its public
procurement system. Based on the DepEd‟s procurement performance indicators, adopted and
customized from the DAC/OECD developed indicators, the agency has been diagnosed as
generally acceptable in adopting the country system for its procurement undertakings. The
DepEd has greatly benefited from the procurement and implementation reforms initiated and
mainstreamed under previous Bank- financed activities.
Issues/risks concerning the procurement aspects for implementation of the project have been
identified, and these include interim problems associated with newly created organizations such
as the Procurement Service (PS), unclear procurement processing/arrangements at the school
level, and documentation and record keeping of division and school level procurements. The
corrective measures which have been agreed upon include: further training and orientation of
procurement and implementing staff on the procurement manual; capacity building in the area of
procurement planning and monitoring within the PS; and orientation of guidelines for simplified
51
procurement and record keeping procedures with community participation at the school level
(Principal-led School Building Program). The overall project risk for procurement is average.
C. Procurement Plan
The DepEd developed a Procurement Plan for the first 18 months of project implementation,
which provides the basis for the procurement methods. The Borrower and the Project Team both
agreed upon this plan on December 3, 2007; it is available at the EDPITAF and Procurement
Service of DepEd. It will also be available through the Project‟s database and on the Bank‟s
external website. The Procurement Plan will be updated in agreement with the Project Team
annually or as required to reflect the actual project implementation needs and improvements in
institutional capacity. The Procurement Plan is found in Annex 7.
D. Frequency of Procurement Supervision
Based on the overall risk assessment, twice a year field supervision missions including post
review of procurement action is to be implemented in addition to the prior review to be carried
out from the Bank‟s Manila office. With respect to each contract not subject to prior review, the
procedures set forth in paragraph 4 of Appendix 1 to the Procurement and Consultant Guidelines
will apply at an initial ratio of not less than one (1) in ten (10) contracts. This ratio may be
adjusted based on the performance of the implementing units.
E. Details of the Procurement Arrangements Involving International Competition
(The procurement plan, agreed upon by DepEd and the Bank, covers the first 18 months of the
activities that will be financed under the project; See Annex 8A).
1 Goods and Works
(a) List of contract package(s) to be procured following ICB:
1 2 3 4 5 6 7 8 9
Ref
.
No.
Contract
(Description)
Estim
ated
Cost
(US$
M)
Procureme
nt
Method
P-Q
Domestic
Preferen
ce
(yes/no)
Review
by Bank
(Prior /
Post)
Expected
Bid-
Opening
Date
Commen
ts
Teaching and
Learning
Materials
6.40 ICB Non
e
Yes prior 22 Apr
„08
Teaching and
Learning
Materials
3.00 ICB Non
e
Yes prior 10 Oct „08
(b) The first contract to be awarded following a particular procurement method, and
subsequent contracts estimated to cost US$500,000 and above per contract will be subject
to prior review by the Bank.
2 Consulting Services
52
(a) List of consulting assignment(s) with shortlist of international firms
1 2 3 4 5 6 7
Ref.
No.
Description of
Assignment
Estimate
d Cost
(US$ M)
Selection
Method
Review
by Bank
(Prior /
Post)
Expected
Proposals
Submissio
n
Date
Comments
Support to TWG:
Policy and
Implementation
2.25 QCBS Yes 16 Apr
„08
(b) The first contract to be awarded following a particular selection method, and
subsequent contracts estimated to cost US$100,000 and above for firm, and
US$50,000 and above for individual consultants, per contract will be subject to
prior review by the Bank.
(c) Shortlists of consultants for services estimated to cost less than US$200,000
equivalent per contract may be composed entirely of national consultants in
accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.
53
Annex 7
Procurement Plan
54
55
56
57
58
59
60
61