project appraisal document ona proposed ......document of the world bank report no: 19228-br project...

Document ofThe World Bank

Report No: 19228-BR

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED LOAN

IN THE AMOUNT OF US$202.03 MILLION EQUIVALENT TO THE

FEDERATIVE REPUBLIC OF BRAZIL

FOR THE

SECOND SCHOOL IMPROVEMENT PROJECT - FUNDESCOLA II

JUNE 8, 1999

Human and Social Development GroupBrazil Country DepartmentLatin American and the Caribbean Region

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CURRENCY EQUIVALENTS(Exchange Rate Effective 312/1999)

Currency Unit = RealR$1.71 =US$ 1.00

FISCAL YEAR (FY) SCHOOL YEAR (SY)January 1-December 31 February-December

ABBREVIATIONS AND ACRONYMS

COEP State-based Project Executive Coordination (Coordena,do Estadual Executiva do Projeto)CONSED National Council of State Education Secretaries (Conselho Nacional de Secretdrios Estaduais de Educaqdo)CW Center-West region of Brazil, Comprising the states of Goias (GO), Mato Grosso (MT), and Mato Grosso do

Sul (MS), but excluding the Federal DistrictDGP Central Project Coordination Unit (Dire,do Geral do Projeto)FNDE National Education Development Fund (Fundo Nacional de Desenvolvimento da Educa,cdo)FUNDESCOLA School Improvement Program (Programa Fundo de Fortalecimento da Escola)FUNDEF Fund for the Development and Maintenance of Basic Education and Teacher Valorization (Fundo de

Desenvolvimento e Manutenrdo do Ensino Fundamental e ValorizaMao do Magisterio)GDE School Development Group (Grupo de Desenvolvimento Escolar)GT Technical Group (Grupo Tecnico)IBGE Brazilian Census Bureau (Instituto Brasileiro de Geografia'e Estatistica)ICB International Competitive BiddingICR Implementation Completion ReportINEP National Institute for Educational Research and Studies, a MEC-based agency (Instituto Nacional de Estudos e

Pesquisas Educacionais).LDB National Education Law (Lei de Diretrizes e Bases de Educacao Nacional)MEC Brazilian Ministry of EducationMOS Minimum Operational StandardsMOIP Project Operations and Implementation Manual (Manual de Opera,coes e Implementa,do do Projeto)N North region of Brazil, comprising the states of Acre (AC), Amazonas (AM), Amapa (AP), Para (PA),

Rond6nia (RO), Roraima (RR), and Tocantins (TO)NCB National Competitive BiddingNE Northeast region of Brazil, comprising the states of Alagoas (AL), Bahia (BA), Ceara (CE), Maranhao (MA),

Pemambuco (PB), Parafba (PE), Piaui (PI), Rio Grande do Norte (RN), and Sergipe (SE)NEBE Northeast Basic Education Project (I and II)OECD Organization for Economic Cooperation and DevelopmentPAE State Action Program (Programa de A ,do do Estado)PAM Municipal Action Program (Programa de A,co Municipal)PAZ Microregion Action Plan (Programa de AqJo Zonal)PDE School Development Plan (Projeto de Desenvolvimento Escolar)PGS Secretariat Business and Management Plan (Plano de Gestao da Secretaria)PME School Improvement Project (Projeto de Melhoria da Escola) initiated under PDEPNLD National Textbook Program (Programa Nacional do Livro Dideitico)PPO Research and Operationalization Program of Education Policies (Programa de Pesquisa e Operacionliza,do)PRASEM Municipal Education Secretariats Support Program (Program de Apoio aos Secretarias Municipais de

Educa,co)PTA Annual Work Plan (Plano de Trabalho Anual)SAEB National System for Basic Education Evaluation (Sistema Nacional de Avalia,do da Educa,do Bdsica)SEED Secretariat of Distance Education (Secretaria de Educa,co a Distdncia)SIED Integrated Education Information System (Sistema Integrado de Infoma,coes Educacionais)SPA Planning and Monitoring System (Sistema de Planejamento e Acompanamento)SEF Secretariat of Fundamental Education (Secretaria de Educa,do Fundamental)SEE State Education Secretariat (Secretaria Estadual de Educacao)SME Municipal Education Secretariat (Secretaria Municipal de Educa,do)UE School Council (Unidade Executora)UNDIME National Association of Municipal Education Managers (Unido Nacional dos Dirigentes Municipais de

Educa,do)

Vice President: S. Javed BurkiCountry Manager/Director: Gobind T. Nankani

Sector Manager/Director: Xavier CollTask Team Leader: Robin S. Horn

Federative Republic of BrazilSecond School Improvement Project-FUNDESCOLA II

Table of Contents

I. PROJECT DEVELOPMENT OBJECTIVES .................................................. 2

II. STRATEGIC CONTEXT .................................................. 3

A. SECTOR-RELATED COUNTRY ASSISTANCE STRATEGY (CAS) GOAL ......................................... 3........3B. MAIN SECTOR ISSUES ................................................. 3

1. Repetition .................................................. 42. Student achievement ................................................. 43. Teacher skills, qualifications and perceptions .................................................. 44. Poverty-relatedfactors .................................................. 55. Parent and community participation ................................................. 56. Lack offocus on the school .................................................. 67. Weak municipal-state system coordination .................................................. 6

C. GOVERNMENT STRATEGY .6D. KEY POLICY AND INSTITUTIONAL REFORMS SUPPORTED BY THE PROJECT .7

III. PROJECT DESCRIPTION SUMMARY .8

A. STRATEGY FOR STRENGTHENING SCHOOLS, SECRETARIATS AND PUBLIC PARTICIPATION . 81. School-Based Development - the First Level of Intervention .82. Institutional Support for School Development: the Second Level of Intervention .113. Social Mobilization and Public Accountability: the Third Level of Intervention .12

B. PROJECT COMPONENTS. 1 4C. PROJECT COST SUMMARY .17D. BENEFITS AND TARGET POPULATION .18E. INSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS:. 1 8

1. Central level coordination .182. State level coordination .193. Microregion level coordination .194. Municipal level coordination .19S. School level coordination .20

IV. PROJECT RATIONALE .20

A. PROJECT ALTERNATIVES CONSIDERED AND REASONS FOR REJECTION .201. Alternatives to working in Microregions .202. Alternative project designs .213. Alternative education levels .22

B. MAJOR RELATED PROJECTS FINANCED BY THE BANK OR OTHER DEVELOPMENT AGENCIES(COMPLETED, ONGOING, AND PLANNED) ............................................ 23

C. LESSONS LEARNED AND REFLECTED IN THE PROJECT DESIGN ............................................ 24D. INDICATIONS OF BORROWER COMMITMENT AND OWNERSHIP ............................................ 25E. VALUE ADDED OF BANK SUPPORT ............................................ 26

V. SUMMARY PROJECT ANALYSIS ............................................ 27

A. ECONOMIC ASSESSMENT ............................................ 27B. FINANCIAL ASSESSMENT ............................................ 28C. TECHNICAL ASSESSMENT ............................................ 28D. INSTITUTIONAL ASSESSMENT ............................................ 29E. SOCIAL ASSESSMENT ............................................ 30F. ENVIRONMENTAL ASSESSMENT ............................................ 32G. PARTICIPATORY APPROACH ............................................ 32

Identification/Preparation ............................................ . 32

V I. SUSTAINABILITY AND RISKS ............................... 33

A. SUSTAINABILITY ............................... 33B. CRITICAL RISKS ..................................... 34

VII. MAIN LOAN CONDITIONS ............................... 35

A. EFFECTIVENESS CONDITIONS ............................... 35

VIII. READINESS FOR IMPLEMENTATION ............................... 36

IX. COMPLIANCE WITH BANK POLICIES ............................... 36

X. ANNEXES

ANNEX 1 PROJECT LOGFRAME 37ANNEX 2 DETAILED PROJECT DESCRIPTION 41ANNEX 3 PROJECT COSTS 57ANNEX 4 ECONOMIC ANALYSIS 58ANNEX 5 FINANCIAL ANALYSIS 69ANNEX 6 PROCUREMENT, DISBURSEMENT AND FINANCIAL MANAGEMENT 73ARRANGEMENTS

ANNEX 7 POVERTY ANALYSIS 81ANNEX 8 SOCIAL AND BENEFICIARY ASSESSMENT 91ANNEX 9 TECHNICAL ANNEX 99ANNEX 10 INSTITUTIONAL ANNEX 105ANNEX 11 PROJECT PROCESSING BUDGET AND SCHEDULE 111ANNEX 12 DOCUMENTS IN THE PROJECT FILES 112-ANNEX 13 STATUS OF BANK GROUP OPERATIONS IN BRAZIL 113ANNEX 14 BRAZIL AT A GLANCE 115

Document ofThe World Bank

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

Latin American and the Caribbean Regional OfficeCountry Department 5

Project Appraisal DocumentFederative Republic of Brazil

Second School Improvement Project -- FUNDESCOLA II

Date: June 8, 1999 Task Team Leader: Robin S. HornCountry Director: Gobind T. Nankani Sector Director: Xavier CollProject ID: 50763 | Sector: Education Program Objective Category: Poverty ReductionLending Instrument: Specific Investment Loan Program of Targeted Intervention: [X] Yes []NoProject Financing Data [X] Loan []Credit [ Guarantee []Other [Specify]

For Loans:

Amount: US$202.03 millionProposed terms: [X] Multicurrency [ ] Single currency, US DollarGrace period (years): 5 [X] Standard Variable [ ] Fixed [] LIBOR-basedYears to maturity: 15Commitment fee: 0.75%Front end fee: 1.0%

Financing plan (US$m):Source Local Foreign TotalGovernment of Brazil 200.00 0.0 200.00IBRD 140.00 62.03 202.03Total 340.00 62.03 402.03

Borrower: Federative Republic of BrazilGuarantor: n.a.Implementing Agency: Ministry of Education (MEC)

Estimated disbursements--Bank FY/US$M 2000 2001 2002 2003 2004Annual 32.03 50.00 60.00 50.00 10.00Cumulative 32.03 82.03 142.03 192.03 202.03

Project Implementation Period July 1999 - June 2004

Expected effectiveness date: August 15, 1999 Closing date: December 31, 2004

1

FUNDESCOLA II Project Appraisal Document

I. Project Development Objectives

FUNDESCOLA II is the second in a series of projects designed to improve theperforrnance of public primary' education in selected areas of the North (N), Northeast (NE)and Center-West (CW) regions. The overall FUNDESCOLA Program2 has been agreed to inprinciple by the World Bank (Bank) and the Government of Brazil (Borrower),3 and will befinanced through a series of loans. Like its sister projects, FUNDESCOLA II will contribute toachieving the overall sector goal of ensuring that children from the poorest regions of Brazilsuccessfully complete a basic eight-grade education. This will help guarantee that thesechildren are better prepared to participate as active and productive citizens in a democraticsociety, and will aid in reducing the stark inter-regional disparities in educationalachievement.

A. Project mission, development objective, andperformance indicators

The Project mission is to improve the performance of the public education systems inthe poorest regions of Brazil by strengthening primary schools4 and the public institutionsresponsible for them in a coordinated management framework. FUNDESCOLA II'sdevelopment objective is to improve the educational outcomes of children enrolled in publicprimary schools in the Project's targeted areas, as measured by promotion and achievementrates.

Key performance indicators for this development objective (to be achieved by June2007) are to:

* increase the proportion of fourth grade students meeting acceptable learning standardsfrom 28.3% (N), 32.8% (NE) and 36.7% (CW) in 1997 to 50% in 2007 in the Project'stargeted areas';

e increase the proportion of eighth grade students meeting acceptable learning standardsfrom 43.6% (N), 43.8% (NE) and 54.9% (CW) in 1997 to 60% in 2007 in the Project'stargeted areas.

Leading performance indicator. The key performance indicators will be tracked andanalyzed on an ongoing basis. Because FUNDESCOLA II will be completed before its results asjudged by these indicators can be fully assessed, project monitoring will rely on a leadingindicator (to be achieved by June 2004):

* increase the average promotion rates in primary school from 64.2% (N), 64.7% (NE)and 71.5% (CW) in 1997 to 85% in 2003 in the Project's targeted areas.

1"Primary education" throughout this document is defined as grades one through eight of basiceducation, for children aged 7-14 years, and referred to as educacao fundamental regular in Brazil.

2 From this point forward, reference to "FUNDESCOLA" refers to the program as a whole, wh.lereference to the "Project" or "FUNDESCOLA II " refers to the project appraised in this document.FUNDESCOLA I was approved by the Board on April 2, 1998.

3 See Project Concept Document dated October 16, 1997 (for FUNDESCOLA I), and December 4,1998 (for FUNDESCOLA 11).

4 A "primary school" provides "primary education" in grades 1 - 8, or any combination thereof5 The "acceptable learning standards" are defined by the National System for Basic Education

Evaluation. (SAEB). These percentages are for Portuguese only as comparable indicators for mathematicsare unavailable.

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In addition to these overall measures of system performance, the effectiveness ofindividual activities and reforms supported under FUNDESCOLA I and II will be monitored andevaluated under the research component.

FUNDESCOLA I and II share the same overall approach and structure, and will finance manyof the same activities.6 The primary difference between the two projects is one of time andgeography. Whereas FUNDESCOLA I funded the start-up of program activities in ten capital-citymicroregions in the North and Center-West, FuNDESCOLA II will initiate activities in the ninecapital microregions of the Northeast and eight additional microregions in the North and Center-West. It will also continue financing activities begun in the first group of microregions underFUNDESCOLA I.7 Although all of the 16.5 million public primary school children in the threeregions served by the project will benefit from several of the components, project activities willbe primarily directed toward 4.7 million children, enrolled in 13,500 schools in 247municipalities located in 27 microregions. (For further discussion of the microregion concept,see IIIA and fVA below as well as Annex 7; for a summary of differences between FUNDESCOLAI and II see Annex 2.)

II. Strategic Context

A. Sector-related Country Assistance Strategy (CAS) goalCAS document number: 16852-BR. Date of latest CAS discussion: June 2, 1998

The education sector goal of the CAS is to provide the opportunity for all children tocomplete the eight-year fundamental schooling cycle by 2007, and to improve educationalattainment and academic performance in basic subjects, particularly Portuguese and mathematics.FUNDESCOLA will directly contribute to attain these goals by improving primary school qualityand educational outcomes, and by monitoring progress toward obtaining these goals throughproject performance indicators. By targeting the three poorest regions of Brazil, and by reducingregional disparities in student achievement, FUNDESCOLA will also contribute to achieving theoverall objective of poverty reduction as stated in the CAS. Given the extensive coverage of thisproject (target population comprises approximately 29 percent of total sector beneficiaries) aswell as the ongoing fiscal crisis in Brazil, it is likely that without the successful implementationof FUNDESCOLA, the education sector goal of the CAS would not be within reach. FUNDESCOLA,now more than ever, represents the cornerstone of federal efforts in education.

B. Main sector issues

Since 1995, improved education system performance has been the central social policyobjective in Brazil. The government has introduced major reforms aimed at helping to ensure thatby 2007 every Brazilian child will complete his or her primary education at an acceptable level ofacademic achievement.

These system performance gains can best be seen over the last decade in which Brazildemonstrated impressive improvements in system efficiency (as indicated by promotion rates)and coverage (as measured by enrollment rates). The primary school promotion rate has increasedby 10 percentage points (from 57 to 67 percent) over the past ten years. The improvement in

6 For a description of the differences between FUNDESCOLA I and FUNDESCOLA 1i, see Table 1("Project Components"), and Annex 2 ("Detailed Project Description").

7For a listing of microregions covered by the project, please see Annex 7.

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FUNDESCOLA 11 Project Appraisal Document

coverage is even more striking: while the net primary school enrollment rate increased by 15percent nationally, a significant gain in itself, the poorer Northeast states experienced a gain of 30percent. Consequently, today only eight percent of children aged 7 - 14 years are out of school inthe Northeast and North regions, and 6 percent of 7 - 14 year olds are out of school in the Center-West states.

Despite this substantial progress and the political and societal commitment shown toeducation during the past ten years, previous decades of inequality in funding and low prioritygiven to education mean that these gains have been made from a relatively low base. Currentindicators reflect the need for continuing attention to the sector. The sector issues outlined belowpose a particular challenge for reform in the North, Northeast and Center-West regions.

1. Repetition

Brazil has some of the highest repetition rates in Latin America, presenting a formidablechallenge to education reformers. Even though primary school completion rates doublednationally between 1985 and 1997, and significant improvements in aggregate repetition rateswere achieved, the failure rates in the North (over 42 percent), Northeast (approximately 45percent) and Center-West (over 35 percent) regions remain extremely high - especially incomparison with the South (approximately 25 percent). The main consequences of these poorindicators are twofold: first, enormous resources are spent in producing one eighth gradegraduate, some 18 years on average; and second, faced with the prospect of having to repeat thesame grade level over and over, many children choose to drop out.

2. Student achievement

According to the Brazil's National System for Basic Education Evaluation (SAEB),student achievement in the North, Northeast and Center-West states falls below the nationalaverage and substantially below that of wealthier states in the South and Southeast. MEC's state-of-the-art SAEB assessment system classifies learning achievement with respect to a uniformscale of proficiency. The 1997 SAEB assessment results find that less than 25 percent of fourth-grade pupils in the Project's three regions surpass the lowest performance level on the scale. Thismeans that in mathematics, three out of four children are unable to demonstrate understanding ofplace value, multiply and divide numbers, add fractions with the same denominator, or solveproblems that require more than one step. In terms of literacy, this means they are unable torecognize that authors use language to express different emotions, or that context can be used toanalyze meanings of words in a text passage. In the sciences, these children have nocomprehension of basic natural science concepts such as gravity and the transport of oxygen bythe blood; they are also unfamiliar with the use of scientific language to describe phenomena.

3. Teacher skills, qualifications and perceptions

In the North, Northeast and Center-West regions, out of a total of 572 thousand primaryschool teachers, approximately 41,000 have not completed primary school and about 96,000 havean incomplete secondary school education or are not certified. Municipal and state schoolscompete for uncertified teachers who are underpaid and who often work two or three shifts. Thelack of an attractive career plan, with salaries adequate to attract and maintain qualified andeducated teachers, affects the entire system. Low content knowledge and poor teaching skills areimportant contributing factors to high repetition and dropout rates and low student achievement.

Equally important is the lack of focus on student leaming achievement. Few teachersinterviewed as part of a beneficiary assessment study evaluated their own performance in terms of

4


student leaming and most attributed student failure to the students themselves. A 1990 studyfound that a majority of school principals placed student learning in fourth place in order ofimportance, behind: (1) the relationship between school teachers and other employees; (2)administrative performance; and (3) teacher performance. The items considered least importantwere: (1) dropping out; (2) repeating; and (3) passing to the next grade. The same study alsofound that student achievement was higher in those schools where it was ranked higher in priorityby school principals.8

4. Poverty-related factors

In 1996, at least 23 percent of all Brazilians were poor, where the poor are defined asindividuals living in households with per capita monthly incomes below R$65.07.9 TheNortheast, North and, to a lesser extent Center-West are the poorest of Brazil's five geographicregions, with poverty headcount ratios of 30, 48 and 16 percent, respectively. Using a higherpoverty line of R$131.97 (which allows for the non-food expenditures made by people whoseincomes just allow them to purchase the minimum food basket) results in a poverty headcountindex of 45 percent for Brazil as a whole, and regional poverty rates calculated at 60, 75 and 45percent, respectively, for the North, Northeast and Center-West.

Poverty affects children's chances of successfully completing an eight-grade education.Studies have shown that parents' demand for schooling for their children depends in part on theirown level of education. Since low education level of the household head is strongly correlatedwith poverty, and most poor households are headed by someone with less than four years ofschooling,'0 it follows that poor children are at a disadvantage: they are less likely to live in afamily that values education highly. Moreover, parents' lack of experience with the school systemhinders their ability to participate in their children's education and to advocate on behalf of theirchildren with teachers and other school authorities. Finally, poor children generally have accessto poorer quality schools than others, whether quality is measured by the adequacy of the facilityitself, availability of textbooks and other learning materials, or teacher qualifications. Poor schoolquality is linked with both repetition rates and non-attendance, particularly low attendance amongolder children. One of the consequences of low quality schooling is that about one in four poor 7to 14 year olds (and 40 percent of poor 15 to 17 year olds) who are out of school report that "lackof interest" is their main reason for not attending school.

5. Parent and community participation

There is a strong relationship between student performance and the establishment of aschool council or similar school-linked associations with parental participation."1 Schoolperformance is higher in schools that routinely inform parents about their children's progress.Active school councils or associations have not traditionally been part of the education tradition,particularly in the North, Northeast and Center-West, where school authorities do not routinelyseek community involvement and views.

' 1990 SAEB study.9 The poverty rates provided here were calculated by Ferreira, Lanjouw and Neri from the 1996

PNAD, for the Brazil Urban Poverty Strategy Paper (in process). R$65.07 is an "indigence line" equal tothe cost of a "minimum food basket."

10 ibid."A Call to Action."

5


6. Lack of focus on the school

Most medium or large-sized municipal and state secretariats have archaic or bureaucraticstructures that do not treat the school as their primary client.12 Consequently, they have greatdifficulty in supporting school autonomy, establishing school accountability systems, orpromoting and supervising school improvement programs. This lack of focus on the school hasthree main causes: a very large number of schools and students that have stretched thesupervisory resources of these secretariat offices beyond their limits; poor education planning andscarce information on local needs; and historical patterns, including patronage relationshipswhich run parallel to (and often at odds with) actual educational needs.

7. Weak municipal-state system coordination

The presence of a state education system and hundreds of municipal education systemswithin the states, functioning in parallel but without coordination, makes the administration ofpublic schooling complex.13 The result is an aggregation of educational activities, patchedtogether by a jumble of agreements and conflicting interests, without sufficient regulationregarding the interaction of the participating agents, and without either level of governmenttaking full responsibility for assuring quality education for all. The overlapping of administrativesystems makes it difficult to optimize resources, engenders inequality of opportunity and pavesthe way for political patronage.

C. Government strategy

FUNDESCOLA implementation occurs at a propitious moment for improving primaryeducation in Brazil. The federal government has given highest priority to primary education,initiating a number of significant reforms including: (a) amendment of the constitution andapproval of a law redefining the roles and responsibilities of each government level to ensure aminimum per student expenditure; (b) direct transfer of funds to the schools, in an effort toincrease school autonomy and effectiveness; and (c) improvement of education quality, through anational assessment system (SAEB), a textbook quality and distribution improvement program,and national standards for curriculum development. These reforms, designed to decentralize thefunding of primary education, diminish regional disparities, and increase coordination among thevarious systems, should have a profound impact on school quality, particularly to the degree thatstates, municipalities and schools effectively use these resources, and to the degree that the publichas efficient mechanisms to monitor the application of these finances.

The Government's strategies and goals for the education sector are further outlined in theMinistry of Education's adoption of the National Education Council's "1998 National Plan forEducation."14 The National Education Council's initiatives for the primary education sectorspecify a number of goals that FUNDESCOLA II will support, including: increasing the number ofgraduates by 70 percent, which will require an annual 5 percent reduction in repetition anddropout rates, increased student performance as measured by the national assessment system(SAEB); elimination of the category of uncertified teacher; definition of minimum operationalstandards; a guarantee that new schools meet these minimum operational standards; an increase

12 ibid.13 Ibid14 The National Education Council is an association of education leaders from municipal, state,

and national governments, universities, labor groups, and other non-government organizations. The Councilhas statutory responsibilities for the formulation of education policy under mandates in the constitution andspecific legislation.

6


in the community's participation in education; and the promotion of school autonomy. In short,those issues which are at the heart of the design of FUNDESCOLA have been taken up as thestandard of the federal government, in its efforts as champion of educational improvement.

D. Key policy and institutional reforms supported by the project

FUNDEF. With the objective of reducing the disparities in the financing of primaryeducation across states and municipalities, Congress approved Constitutional Amendment No.14/96 on December 9, 1996. This amendment, along with Federal Law No. 9.424/96 ofDecember 24, 1996, established the Fund for the Development and Maintenance of BasicEducation and Teacher Valorization (FUNDEF), requiring that fifteen percent of total municipaland state revenues be used to finance an education fund in each state. This fund guarantees thatevery primary school student, whether enrolled in a state or municipal school, benefits from aspending floor of R$300 (raised to R$315 for calendar year 1998). Amendment No. 14/96 alsorequires that the federal government top up with federal funds any state's FUNDEF that fallsbelow the spending floor.

FUNDESCOLA II supports FUNDEF in two major ways. First, FUNDESCOLA will promotelocal accountability by: (i) training municipal secretaries of education and members of thelegally-mandated municipal FUNDEF council in the project's targeted areas; and (ii) bycollecting and analyzing local financial data and by publishing information on FUNDEF revenuesand expenditures in each municipality and state participating in the FUNDEScOLA II project.Second, FUNDESCOLA will develop tools and programs for municipal and state governments touse to meet several of FUNDEF's mandates including: (i) guidelines and software for municipalgovemments to create cost-efficient and quality-promoting career systems for their teachingforce; (ii) instruments and software for systematic monitoring of educational finance; and (iii) thedevelopment and financing of the PROFORMACAO distance education program for training andcertifying teachers (described below).

School Autonomy. The National Education Development Fund (FNDE)-sponsored "MoneyDirect to the School Program," which was designed to increase school autonomy and reduceinequalities, has expanded rapidly since its inception in 1995, transferring resources on the basisof school size and community participation."5 FUNDESCOLA's design, promoting thedevelopment of school-based planning skills, should help ensure that these new resources areused to the greatest advantage.

The 1996 National Education Law (LDB) stimulates innovation and initiative on the part ofeducational agents in order to avoid excessive bureaucratization, give priority to primaryeducation and strengthen the role of the municipality in the provision of grades one through eight.The LDB also guarantees that every public school in Brazil must meet acceptable minimumoperational standards. Still needed, however, is an operational definition of minimum operationalstandards and its incorporation into the daily life and culture of school and system management.FUNDESCOLA'S activities in this area are a direct attempt to meet this need.

" On January 13 1999, Congress approved a provisional law (Medida Provisoria 1784-1) toinstitutionalize this federal transfer of resources to schools.

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III. Project Description Summary

A. Strategy for strengthening schools, secretariats and public participation

The FUNDESCOLA program starts from the premise that children's educationalperformance is largely determined by the quality of the schools they attend. At the school level itis a function of three sets of interrelated factors: (a) the knowledge, practices and commitment ofthe school's principal and staff; (b) the school's learning conditions; and (c) parent support forschooling and their own children's learning. A second and related proposition is that these factorsare dynamic and can be affected by government policy and programs. Finally, publicunderstanding of and support for school-based development is an essential ingredient in assuringthe political climate and resource base to sustain and expand the education development process.Consequently, in order to improve children's learning performance in the public elementaryeducation system within the North, Northeast and Center-West regions of Brazil, theFUNDESCOLA program will work at three levels of intervention: the school, the educationsecretariat and the broader public.

FUNDESCOLA STRATEGY

2 : a~~~~~~~~~ ~ ~~~~~~. .... ... ... .... .. iSO;A MOAb;11BILZATION, COMMUNIC:ATIO3N AND PUBIC ACCONTABILIY(Level 3)

IN900STITUTIONA SUPPORT lO ChO flEV)LOPMEN (Leel 2)i 000903}ji

1. School-Based Development - the First Level of Intervention

School improvement is grounded in the notion of a school-based development strategy.The ultimate objective of this strategy is to transform thousands of poorly performing schools,

which enroll the majority of children in the project's targeted regions, into effective, high quality

institutions in which student learning is prioritized and the elusive goal of success for all students

8


is increasingly within reach. This strategy is based upon the proposition that school reform canand does take place when the school principal and staff are given greater responsibility for schoolimprovement, offered well-structured guidance in the process of self-diagnosis and strategicplanning, and are supported by a regular technical assistance and follow-up program. In addition,the institutional and local political environment must be rest--uctured to support these types ofchanges.

FUNDESCOLA's school-based development strategy is designed to be phased in over timefor two reasons. First, this type of transformation requires fundamental changes in theknowledge, attitudes, and behaviors of school principals, teachers and parents, as well the staffand management of the secretariat of education. It takes time for these stakeholders to recognizetheir responsibility and ability to make school reform happen. Second, experience and researchdemonstrate that it is not possible to motivate and support school reform simultaneously in a largenumber of schools. Consequently, whereas all schools in the region will immediately benefit fromthe direct transfer of resources, fewer schools will undertake a development plan or continue withthe strategic planning process (please see also Section IVA, Project Rationale, and Annex 2 formore detailed information on inputs and school selection criteria).

Step 1: Schools given resources to manage

The first step in the school-based development strategy is that schools must be givensome autonomy over financial resources. This autonomy helps the school staff and communitymake decisions that materially affect the school and helps them assume greater responsibility forresults. Under the FUNDESCOLA program, therefore, all municipal and state schools in theNortheast, North and Center-West Regions will receive a small discretionary budget (enough, forexample, to purchase two books per student) through direct transfer from the federal government.The project will deposit these funds into a school bank account managed by the school executingunit or council, composed of parents and school staff. This council will be responsible for makingdecisions about how to spend the funds, carrying out comparison shopping, ordering andreceiving the goods and services, and keeping the accounting records up-to-date.

Step 2: Helaing schools attain Minimum ODerational Standards.

In order to improve educational outcomes, schools must be capable of functioning at leastat a minimally acceptable level. Within the three target regions, decades of inadequate educationfinancing have yielded thousands of schools in which teaching-learning conditions are so poorthat they cannot be properly termed "schools." In addition, because state and municipalgovernments have consistently allocated system resources without planning or targeting theworse-off schools, nearly every municipality in the targeted area suffers from tremendousdifferences in learning conditions across schools and neighborhoods.

The second step in the school development strategy is to improve conditions in theseschools so that all children have the opportunity to learn. The minimum operational standardsmodel is a checklist that specifies the essential inputs and human resources needed for schools tofunction and offer children the opportunity to learn. Each and every school in the targetedmicroregions is visited and examined by local education secretariat staff trained in the applicationof the minimum operational standards instruments. Schools found to be incomplete in any one ofthe essential elements, from qualified teachers to basic educational materials, are consideredbelow standard. The investments needed to bring each school up to standard are carefullyspecified and costed out. This information is then used in the development of municipal and statestrategies to bring all schools up to standard within an agreed timeframe. In addition to helpingthese secretariats of education identify substandard schools and develop an investment strategy,

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FUNDESCOLA will finance the classroom module of minimum operational standards for 25percent of schools (serving approximately 1,120,000 students) in the targeted areas. FuNDESCOLAwill also finance PROFORMAQAO, a distance-education teacher qualification program to train andcertify teachers in the 19 states served by the project (see section V(C)).

Step 3: Schools prepare own "School Develovment Plan "

The FUNDESCOLA strategy recognizes that once schools are on the road to attainingminimum operational standards, the school team can more effectively focus on its primarymission -- improving student learning. Importantly, the strategy accounts for the fact that havingthese minimum conditions alone will not lead to improved educational outcomes. Within a subsetof schools receiving the classroom module for minimum operational standards, therefore,FUNDESCOLA will support an intensive school-based institutional development and strategicplanning process culminating in a school development plan.

The school development plan is both the result of one process (diagnosis and strategyformulation) and the starting point of another (school improvement implementation andmonitoring). School principals initially undergo an intense training program in strategic planning,addressing such issues as community mobilization, resource management, and teacher careerplanning. These skills are immediately applied in the design of their own school developmentplans. The entire school community (including parents, teachers, and school staff) meets toidentify, analyze and prioritize the problems at the school, establish and quantify specific schoolimprovement objectives, and agree on an action plan. The expression of this overall diagnosis andagreement on actions and targets is the school development plan. Equally important is theprocess of cooperation, in which students, parents, teachers and school directors work together atevery stage of the plan's development to reach concrete goals for their school. Initial experienceshave shown that this participatory process not only results in increased loyalty and support to theschool on the part of parents and staff, but serves as a rich and highly practical professionaldevelopment program for the school principal.

Step 4: Schools receive financing to execute their School ImDrovement Project

The school development plan includes a section called the school improvement project(PME). This is a specification of an action plan the school stakeholders have identified asnecessary for the school to achieve its agreed targets. It also estimates the financial support theschool needs to carry out their school improvement project. Schools use their schoolimprovement projects to inform municipal and state education authorities on which inputs ortraining they need help in financing. Schools then purchase services and activities that theydetermine are important for achieving their school development plan goals, i.e. upgrading libraryor lab equipment, or improving teacher practice in math. FUNDESCOLA will finance these schoolimprovement projects and will promote their financial sustainability. In addition, after the firstround of school improvement projects is completed, FUNDESCOLA II will finance, through acompetition, additional rounds of school improvement projects from the same schools thatelaborated school development plans during the first year. Finally, to promote the expansion ofthe process to other schools in the microregion, FUNDESCOLA II will also offer a matching fund:municipalities or states will be able to match their own resources to those of this fund to financeschool improvement projects developed by schools not included in the project's initial selection.

Step 5: Schools adapt and implant teachi,w/learning models and desions.

The final step in the strategy is based on the proposition that even when schools havesome autonomy over their budgets, have attained minimum operational standards, have gone

10


through the process of creating a school development plan, and are implementing schoolimprovement projects in a sustainable way, efforts to improve educational outcomes may behampered by a lack of knowledge of effective pedagogical and managerial strategies.Accordingly, FUNDESCOLA will support the further development and pilot testing of a range ofpedagogical and managerial models that have been used successfully in Brazil and othercountries. One of these designs, Escola Ativa, was developed and pilot-tested by the Second andThird Northeast Basic Education Projects as an innovative whole-school design for rural multi-grade (1st through 4h grade) schools. It is currently being implemented by 178 schools underFUNDESCOLA I financing and will be expanded, under FUNDESCOLA II, to over 1,200 schools.FUNDESCOLA II will develop, test, and disseminate other models that schools or school systemsmay adopt in order to improve classroom instruction, content knowledge, and content-relatedpedagogy. This may include: (a) intensive professional development models centered around therecently approved National Curriculum Parameters; and (b) models designed around theclassroom application of learning assessment tools coupled with a targeted teacher developmentand support program.

2. Institutional Support for School Development: the Second Level of Intervention

While the major emphasis of the FUNDESCOLA design is to improve conditions at theschool in order to raise student attainment and achievement, the approach also recognizes thatschools do not exist within an institutional vacuum, but in fact depend on other entities forguidance and resources. These are the state or municipal secretariats of education responsible formanaging the schools under their administration. In order for the school-based developmentstrategy to be effective and self-sustaining, local education managers and their institutions need tounderstand and accept the rationale behind the strategy and command the know-how to supportand promote school-based development. Consequently, the project design includes a program ofsecretariat-based institutional strengthening. This program centers around two elements: (a) amanagement instrument-the Secretariat Management and Business Plan; and (b) software anddatabases for resource planning-the Microplanning Geographic Information System and theIntegrated Management Information System.

(a) Helping Secretariats Develop Management and Business Plans

FUNDESCOLA II will help secretariats of education, both at the municipal and state level,integrate the key elements of the FUNDESCOLA program into their administrative structurethrough the use of a new instrument, the Management and Business Plan (PGS). In partnershipwith FUNDESCOLA, Secretariats of Education will develop a management plan to re-orient theirprograms and organizational structure to focus on schools-promoting equity, effectiveness, andefficiency within their systems. For example they will develop their own investment strategy touse the minimum operational standards both to target the least endowed schools and tosystematically coordinate the delivery of complete packages of inputs and teacher certificationsupport to assure that all children have an equal opportunity to learn. The Plan will also help thesecretariat enhance their supervisory function, making it both technically competent and orientedto support schools' efforts to prepare and implement school development plans and schoolimprovement projects. In addition, secretariats will be able to access information on revenues andexpenditures, both from FUNDEF and other sources in order to budget effectively. They willacquire the legal instruments needed to transfer their own resources to schools. Finally, they willuse the Management and Business Plan to design and institutionalize a career plan for educationprofessionals emphasizing continuous improvement and incentives for better classroomperformance of teachers. Finally, FUNDESCOLA I will promote transparency, joint planning, andintegrated commitment for municipal and state governments to coordinate their delivery of

11


education in every municipality and to assure that all children have access to school. (see alsoAnnex 10)

(b) Usinz New Software and Databases for Planning and Monitorin'

Under the Northeast Basic Education Projects and FUNDESCOLA I, two new informationsystems have been developed for use by Education Secretariats: the Education MicroplanningGeographic Information System and the Integrated Management Information System. These arehighly sophisticated computer applications, developed for and fully tested in the Brazilianeducation context, designed to help secretariats of education undertake school system planning,resource allocation, personnel management and promote accountability. Under FUNDESCOLA II,these software applications will be incorporated into the Secretariat Management and BusinessPlan so that installation, training and utilization of the instruments can be integrated into a singleinstitutional development program.

3. Social Mobilization and Public Accountability: the Third Level of Intervention

Turning education development upside-down in Brazil by putting the school rather thanthe government in the driver's seat will require a substantial shift in perceptions, attitudes, andbehavior on the part of politicians, administrators, teachers, principals and parents. Influencingthese attitudes, encouraging participation, and disseminating the results of these changes arecrucial to FUNDESCOLA project implementation success as well as the institutional sustainabilityand expansion of these new approaches across the region.

(a) Communication and Social Mobilization

To generate widespread support for the school-based development process, therefore,FUNDESCOLA II will undertake a major social marketing campaign to: (a) generate understandingand support among parents, teachers, students, politicians and the community at large of theimportance of schooling for personal and social growth and economic development; (b) stimulatesupport for the school-based development strategy among these stakeholders and beneficiaries;and (c) encourage specific behaviors, such as participation by parents and community members inschool councils and holding schools accountable for educating and promoting all children.

(b) Accountability

In addition, a final element of the FUNDESCOLA strategy is ensuring that stakeholdershave sufficient information to be able to set educational goals and be held accountable for theirpart in achieving them. This will be done largely through support to existing national-level effortsto improve the reliability and availability of educational information. National assessment resultswill be categorized by school characteristics and disseminated to schools and school systems;performance indicators from each school will be reported to each school and system in the sameyear; standardized criterion-referenced test packages will be developed and made available toschool systems, and the results of FUNDESCOLA implementation and impact studies will bedisseminated. Under FUNDESCOLA II, much attention will be focused on: (a) the effectivedissemination of relevant information to different education system actors for use in educationalplanning; and (b) the process of institutionalization of the National Institute for EducationalResearch. This institute is in charge of the management of the National Education InformationSystem and the National System for Basic Education Evaluation (SAEB). As these systems are

12


relatively new, it is imperative to mainstream procedures and support strategic development inorder to guarantee sustainability.

(c) Research. piloting, analysis, and dissemination

In collaboration with World Bank technical staff and other national and internationalexperts, FUNDESCOLA n1 will undertake a longitudinal study of project implementation andimpact, with a special focus on the school-based development strategy. The design of this studywill incorporate random assignment, multiple data sources and methodologies, and state of the artanalytic approaches. Results of this study will be widely disseminated in Brazil to stimulate theexpansion of project activities and increase the potential impact of the project.

13


B. Project components'6Components and Description Level/Focus of Relation toSub-components Activity FUNDESCOLA II. Raising Schools to Ensuring schools have Statewide andMinimum conditions minimally microregionsOperational adequate for learningStandardsA. Promoting School Direct provision of All schools statewide FUNDESCOLA II willAutonomy funds to schools for will receive financing finance NE region,

minor school repair, and continueas well as purchase of, financing of N andinter alia, supplies, CW begun underinstructional material FUNDESCOLA I& equipment

B. Educating and Training for All schools with FUNDESCOLA I isCertifying Teachers approximately 69,000 uncertified teachers, funding program

uncertified teachers in statewide. development;grades 1-4 through FUNDESCOLA II willsupport for national fund implementationdistance learning in all three regionsprograms

C. Supplying Basic Purchase of school Within selected FUNDESCOLA II willFurniture and furniture and microregions, only fund capitalEquipment equipment necessary those schools with microregions in NE

to bring schools up to physical conditions states and 8 newminimum operating adequate to receive microregions in N andstandards these inputs CW

D. Financing School- Major renovation for Within selected FUNDESCOLA II willManaged Physical schools in too poor of microregions, those fund capitalRehabilitation shape to receive schools with more microregions in NEProjects furniture and than 100 students in states and 8 new

materials need of major microregions in N andrehabilitation to be CWbrought up tominimum standards

E. Implementing the Construction of new Within selected FUNDESCOLA I doesModel School model primary microregions, those not coverProgram schools. Priority schools proposed by construction;

given to replacing the Forum and FUNDESCOLA II willschool that are unsafe, approved by DGP as cover construction inunsalvageable, or per microplanning N, NE and CWincapable of meeting technicaldemand as identified specifications andby microplanning priorities.priorities

16 See Annex 2 for a detailed description.

14


Components and Description Level/Focus of Relation toSub-components Activity FUNDESCOLA III. Establishing a School-based Those schools withinSchool Development initiative to improve microregions thatProcess school quality and approach minimum

student learning operating standards

A. Designing and Consensus-building All schools that FUNDESCOLA II willImplementing School process on part of approach minimum finance capitalDevelopment Plans school and operating standards microregions in NE;(PDE) community focussing with more than 200 18 additional

on school students in selected microregions in N andimprovement microregions CW

B. Financing School School Development Phase 1: All schools FUNDESCOLA II willImprovement Projects Plans will include with completed school cover Phase I in N,(PME) specific proposal for development plans; NE and CW; as well

financing school Phase 2: For as Phase 2 in N andimprovement participating schools' CW

2nd year, 2/3 of Planswill be financed on acompetitive basis.Phase 3: Incentivesfor jurisdictions toexpand to additionalnumbers of schools

C. Developing, Pilot different A subset of schools New to FUNDESCOLATesting and approaches and having completed a IIImplementing materials aimed at School DevelopmentPedagogic Models improving pedagogy Plan

and student learningIII. Promoting Efforts to stimulate National/state/Communication and demand and support MicroregionsSocial Mobilization for the school-based

development approachand disseminateresults

A. Supporting Dissemination of National/State/ New to theFUNDESCOLA through strategy and results of Microregions FUNDESCOLA IICommunication and FUNDESCOLA projectDissemination programB. Carrying out Social Building a network of States/ Some activitiesMobilization social communicators Microregions included underCampaigns to mobilize the public FUNDESCOLA I; higher

around FUNDESCOLA priority inobjectives FUNDESCOLA II

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Components and Description Level/Focus of Relation toSub-components Activity FuNDESCOLA I

IV. Strengthening Support for existing Primarily national, but Continued financingNational Education efforts to improve with state and school under FUNDESCOLA IIInformation Systems reliability of and linkages with additionaland Programs access to information activitiesA. Improving Efforts to improve Primarily national, but Continued financingEducational national assessment with state and school under FUNDESCOLA IIAssessment and integrate national linkages with additional

and international best activitiespractice

B. Improving and Support for Integrated Primarily national, but Continued financingDisseminating Education Information with state and school under FUNDESCOLA IIEducational System (SIED), linkages with additionalInformation school census and activities

other activitiesC. Developing Studies Evaluation studies for Primarily national, but Continued financingand Research in FUNDESCOLA, as well with state, school and under FUNDESCOLA IIEducation as other issues project linkages with additional

activitiesV. Management and Support for various State/Microregions Continued financingInstitutional institutions involved under FUNDESCOLA IIDevelopment of in supporting schools with additionalEducation Systems and program activities

im lementationA. Strengthening Training, workshops, State/Microregions Increased emphasisState and Municipal and programs to under FUNDESCOLA IICollaboration promote transparency, with additional

commitment, and activitiesintegration ofplanning for state &municipal government

B. Institutional Developing new States/Municipalities FUNDESCOLA II willDevelopment for management models introduce this newSecretariats of for state & municipal subcomponentEducation Secretariats of

Education to promoteequity, efficiency, andeffectiveness

C. Implementing Development of Microregions/ FUNDESCOLA II willMicroplanning surveys & geographic Municipalities finance NE capital

information database microregions and 8to increase ability of new microregions inEducation Secretariats N, CWto promote access,equity and quality

C. Project National/State Continued financingManagement & Pilot under FUNDESCOLA 11Activities

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C. Project Cost SummaryComponent Category Costs- % of Bank- % of Bank

includes Total financing FinancingContin- (US$M)genciesW (US$M) W l

1. Raising Schools to Minimum Physical & 355.5 88% 165 82%Operational Standards Institution

Buildinga. Promoting School Autonomyb. Educating and Certifying Teachersc. Supplying Basic Furniture & Equipmentd. Financing School-Managed PhysicalRehabilitation Projects

e. Implementing the Model SchoolProgram2. Establishing a School Development Institution 17 4.3% 9.5 5%Process Buildinga. Designing and Implementing SchoolDevelopment Plans (PDE)b. Financing School Improvement Projects(PME)c. Developing, Testing and ImplementingPedagogic Models3. Promoting Communication and Communication 4 1% 4 2%Social Mobilization & Community

Strengthening

a. Supporting FUNDESCOLA throughCommunication and Disseminationb. Carrying Out Social MobilizationCampaigns _

4. Strengthening National Education Institution 10 2.5% 8 4%Information Systems and Programs Buildinga. Improving Educational Assessmentb. Improving and DisseminatingEducational Informationc. Developing Studies and Research inEducation5. Management and Institutional Institution 13.5 3.4% 13.5 7%Development of Education Systems Buildinga. Strengthening State and MunicipalCollaboration

b. Institutional Development forSecretariats of Educationc. Implementing Microplanning

d. Financing Project Management and ProjectPilot Activities ManagementBank Administrative Fee 2.03 0.5% 2.03 0.9%

TOTAL _ 402.03 100% 202.03 100%

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D. Benefits and target population

The direct beneficiary of FUNDESCOLA II is the primary school-age population currentlyenrolled in public primary education or entering school in the near future in the 19 states servedby the project in the North, Northeast and Center-West (a total of 16.5 million children). Withinthe 27 microregions, program activities will be targeted, to varying degrees, toward 4.7 millionschool children enrolled in 13,500 public primary schools. While the project does not specificallytarget benefits to poor children, its geographic focus, concentration of inputs to worse-off schools,and emphasis on addressing many of the systemic causes of school failure shoulddisproportionately benefit poor children (who suffer disproportionately from low quality schools,high dropout and failure rates). Please see Annex 7 for additional poverty targeting information.

The most important stakeholders for the FUNDESCOLA program are the educationdecision-makers, teachers, and other education specialists who manage and direct the primaryeducation schools and system. In the context of decentralization, it is important that educationmanagers at all levels be qualified in managing the education process and making effective andinformed decisions across a wide range of issues. By providing management tools and training insuch areas as school development processes, minimum operational standards, secretariatmanagement and business plans, teacher career planning, and school mapping, the project willprovide a large number of education professionals with the managerial capabilities they need torun a more autonomous local system (see Summary of Social Assessment, below).

E. Institutional and implementation arrangements:

Implementation period: 5 years, July 1999 through June 2004ExecutingAgency. Brazilian Ministry of Education and Sports (MEC)

FUNDESCOLA II is expected to be implemented over a five year period. A MidtermEvaluation of the FUNDESCOLA program as a whole will be carried out when 50 percent of theloan is disbursed. This is expected to occur on or about March 2001, which would be 18 monthsinto the implementation of FUNDESCOLA II and near the completion of FUNDESCOLA I. A detailedproject Operational Manual is already in use under FUNDESCOLA I and will be adapted underFUNDESCOLA II. Project management arrangements are described below.

1. Centrai level coordination

At the federal level, the Central Project Coordination Unit (DGP) within the FederalMinistry of Education has been responsible for the preparation and will be charged with theadministration of FUNDESCOLA II. The DGP has already demonstrated, through its capableperformance of similar duties under FUNDESCOLA I, that it is institutionally and technically readyto: (a) serve as principal project counterpart to the World Bank and key government andinternational agencies; (b) rely on the state-based Project Executive Coordination (COEP) and onmonitors/supervisors hired to support project implementation at the microregion level; (c) analyzeand approve state, intra-state, and microregion projects and annual work plans; (d) establish andsign agreements with states, municipalities, and other government and international agencies;(e) determine, together with the states, the definition of minimum operational standards;(f) elaborate the annual implementation program based on the microregion programs; (g) conductproject-related regional, state, and micro-planning studies; (h) analyze and submit to the WorldBank the relevant documentation for the acquisition of goods and services and expenditurereceipts; (i) update FUNDESCOLA's Project Operational and Implementation Manual (MOIP); and

18


(j) prepare the progress reports and participate in the mid-term and final review according toWorld Bank procedures.

2. State level coordination

At the state level, FUNDESCOLA operates by means of the Project Executive CoordinationUnit (COEP) within each state education secretariat, which: (a) serves as the key administrativeproject unit at the state level; (b) prepares the Annual Work Plan with the participation of themunicipalities in that state and submits this plan to DGP for approval and registration in the SPA;(c) coordinates project execution across municipalities and state school systems; (d) houses theDGP monitors and supervisors; (e) coordinates communication and cooperation among the localgovernment agencies involved in project-related activities; (f) coordinates teacher certificationprograms; (g) procures goods and services according to the guidelines of the World Bank;(h) records and certifies expenditures; (i) prepares progress reports; and () monitors andevaluates the outputs and outcomes of FUNDESCOLA in each state. As an executive agency COEPwill be established and its members selected and trained at the initiation of the projectimplementation period (states with participating microregions under FUNDESCOLA I already havetheir COEPs in place).

3. Microregion level coordination

At the microregion level, FUNDESCOLA has adopted the IBGE microregion as the bestway to promote collaboration and coordination between municipal and state educationmanagement personnel in each of the municipalities involved, and to maximize efforts andresources within a microregion. The mayors, or their representatives, in conjunction with the statesecretary of education and the state president of National Association of Municipal EducationManagers (UNDIME) are members of the microregion forum which operates as a local planninginstance of the project to: (a) negotiate the priorities within and across the municipal and the stateeducation systems in the microregion; (b) agree on the consolidation of the various municipalaction programs into a single, prioritized microregion action program (PAZ), (c) agree oncommon targets for the microregion action program; (d) plan and monitor the implementation ofthe microregion action program; and (e) and propose the annual implementation program to beapproved by the federal project coordination unit (DGP) and financed by FUNDESCOLA. Themicroregion forum is assisted and advised by a technical group, whose role is to complete therequisite surveys, the preliminary microregion action program, its implementation schedule, andother technical documents. The microregion forums have undergone extensive training by thefederal project coordination unit (DGP) and are well established in each of the project states.

4. Municipal level coordination

At the municipal level, each municipality already participating in the microregion forumis responsible for: (a) designing the municipal action program and schedule, and the municipalannual implementation schedule; (b) assisting schools in designing their own school developmentplan and school improvement projects; (c) fostering the operation of school councils andcommunity participation; (d) actively participating in their microregion forums; (e) developinginter-municipal cooperation within the microregion; and (f) monitoring the delivery of goods andservices procured by the state Project Executive Coordination Units (COEP). Finally, guidanceand training for school leadership in the creation of a school development plan and schoolimprovement project will be offered through municipal-based School Development Teams(GDE). These teams will be composed of municipal education professionals who will themselvesbe trained by the federal (DGP) and state (COEP) level coordination units.

19


5. School level coordination

At the school level, a leadership team composed of the principal and the pedagogicalcoordinator or other lead staff at the school will be responsible for: (a) participating inFUNDESCOLA's school development training program; (b) involving the entire staff of the schoolas well as parents in the creation and implementation of a school development plan andcorresponding school improvement projects; (c) accepting visits and technical assistance fromDGP-contracted monitor/supervisors; (d) taking advantage of the ongoing school developmentsupport offered by the school's respective GDE or COEP; (e) managing the use of FUNDESCOLA-transferred funds for implementing the school improvement project, including purchasing goodsand services, maintaining accounting records for these purchases, and providing accountinginformation to DGP during routine audits and review. A more detailed description of theimplementation arrangements, as well as indicators and targets for each subcomponent, can befound in the Project Operations and Implementation Manual (MOIP).

IV. Project Rationale

A. Project alternatives considered and reasons for rejection

A number of alternatives associated with primary education quality, access, andmanagement as well as other education levels were considered. The program strategy,components, and implementation arrangements chosen are those believed to be the most suited tomaximize project effectiveness, educational impact, and sustainability.

1. Alternatives to working in Microregions

Vastly complicating the educational picture in Brazil is the fact that there is no singleeducation system operating in any state or municipality. Instead each state is home to a stateeducation system and hundreds of municipal-run education systems, functioning in parallel in thevast majority of towns and cities, but without coordination or cooperation, and competing forlimited resources. Faced with this situation, most previous education projects and programs inBrazil, whether supported by the World Bank or otherwise, have chosen one of four strategies: (a)projects for municipal education systems, executed by one or more of the 5500 or somunicipalities, either directly or with the Federal Government as coordinator (e.g., the FirstNortheast Basic Education Project-EDURURAL); (b) projects for state education systems,executed by one or more state governments, either directly or with the coordination of the FederalGovernment (e.g., Proqualidade in Minas Gerais); (c) working directly with state governments toexecute projects for state and municipal systems, with obligations and expectations that the stategovernment would assist or influence municipal education systems (e.g., multi-state projects suchas the Second Northeast Basic Education Project); and finally (d) projects executed by NonGovernment Organizations, including the private sector, to assist an extremely limited clientele,but without the involvement of government execution (e.g., UNICEF projects, AmericanChamber of Commerce's education quality projects, and Bradesco Bank projects). None of theseapproaches thus far has proven particularly effective in addressing issues of competition andoverlapping areas of responsibility.

The FUNDESCOLA program is distinct in its approach to these institutional issues. Ratherthan choosing between state and municipal systems, the program works directly with both stateand municipal secretariats of education within a limited geographic area, defined through use of a

20

FUNDESCOLA 1I Project Appraisal Document

microregion planning model. While some of the FUNDESCOLA program activities will be state-wide and involve all municipalities (for example, resource transfer to schools to promoteautonomy, or the PROFORMAQAO program to qualify all uncertified teachers), most programactivities will be directed to selected microregions, and are designed to support the school-baseddevelopment strategy described in section III.A. 1, above. The microregions are defined by theBrazilian Census Bureau's (IBGE's) microregion grouping, and consist of from about five to asmany as 20 or more adjacent municipalities that share many socio-economic interests andcharacteristics.

While the microregion does not constitute an administrative division, it provides a focusfor planning and negotiation among several municipal governments and the state government.Within the boundaries of the microregion, for example, the state and municipal secretariats ofeducation will need to collaborate in the implementation of a survey and planning process to raisea subset of schools (both state and municipal) to minimum operational standards. Administratorsfrom both the state and municipal systems within the microregion will also be trained to supportthe initiation of school development plans in these schools. Social mobilization activities withinthe microregion are designed to create interest in and demand for the school-based developmentapproach. By encouraging states and clusters of municipalities to work together, the programseeks to increase accountability and transparency in the use of resources, as well as facilitatedialogue and learning regarding student results and the school development process.

Also central to the FUNDESCOLA strategy is the decision to concentrate efforts in selected,rather than all microregions. Thus rather than work with all 2,682 municipalities forming part ofthe Northeast, North and Center-West regions, FUNDESCOLA II will work primarily in the 19capital-city microregions of the North, Northeast and Center-West states (covering 146municipalities), and 18 additional microregions in the North and Center-West states (covering anadditional 101 municipalities). The decision to limit the number of microregions, municipalitiesand schools was a pragmatic one: given the project's emphasis on in-depth support for school-level reform, to take on more would seriously strain current implementation capacity.

With regard to the choice of microregions, the inclusion of the capital city microregionswas based on three factors: (a) these regions have the highest concentration of poor familieswithin each state, the greatest degrees of inequality, and levels of extreme poverty comparable toany other microregion; (b) physical proximity between state and municipal education secretariatteams is likely to facilitate collaboration (and project supervision) efforts; and (c) municipaleducation secretariats within the capital cities tend to be better organized than many others,giving the project the opportunity to experiment with reforms within a range of institutionalsettings, including some which from the outset are considered "easier." Although the capital cityand additional microregions selected under the project include both rural and urban areas, theproject's geographic targeting means it is not specifically aimed at solving the problems of theregions' poorest rural schools. Lessons learned from the implementation of the FUNDESCOLAprogram, however, may help address some of these problems in the future. For more informationregarding the use of the microregion concept and program poverty targeting, please see Annex 7.

2. Alternative project designs

Top-down versus bottom-up design. Alternatives for improving the quality of primaryschooling included: (a) implementation of an entirely top-down model in order to ensure greaterconsistency across schools and more effective control at the national level; and (b) establishmentof a completely bottom-up school-driven method for determining needs and resources. The firstalternative was discarded as prior project experience and education sector evaluations havedemonstrated that local interests need to be considered in order to ensure effective

21


implementation and greater sustainability. Time and time again, top-down, input-orientedstrategies have failed to substantially affect the teaching-learning process in the classroom. Such atop-down strategy would also have run counter to recent government commitment todecentralization through such programs as direct school transfer programs, school lunch programsand textbook selection.

The fully bottom-up alternative was rejected based on the evaluation of capacity at theschool level that indicated that school principals are not yet politically or technically capable ofadequately expressing and rapidly attaining their needs for school inputs within the structure ofthe current system. Moreover, without appropriate public demand and accountability, municipaleducation secretariats have not assumed their responsibility for strengthening schools andsupporting quality improvements. In addition, the slow pace of a fully bottom-up approach woulddampen political support for the project in particular and increased school autonomy in general.Furthermore, project components such as coordination of teacher certification and qualityassurance of selected inputs were found to be more cost-effective if carried out at a higher levelthan the school. For these reasons, a more integrated form of project implementation that includesboth top-down and bottom-up methods was selected.

With regard to demand for schooling, an approach similar to the federally funded BolsaEscola program, which gives a minimum salary to needy families provided that they enroll andmaintain their children in school, was considered. However further analysis demonstrates that thistype of program has better chances of success in high quality school systems. Beneficiaryassessment analysis and classroom observation studies (carried out under the "Call to Action"program) demonstrated that children's persistence in school and their parents' expectations abouteducational attainment are low when they believe that the school offers a low quality education.Consequently, this alternative was rejected in favor of a project that attacks the supply-basedproblems of the project's participating microregions, namely the lack of planning, low schoolquality and insufficient school places.

3. Alternative education levels

Preschool programs. The option of including preschool education in the project wasrejected as it would have diverted scarce resources and diluted the impact on primary education.The importance of preschool education programs and their impact on future student success hasbeen examined in Brazil and other countries. Preschool education is currently under investigationby the government as an area for future investment.

Secondary Education: Rates of return to primary education were found to be high, withan average of 13 percent for each additional year of primary school completed. While rates ofreturn to secondary education in Brazil are also very high (in excess of 20 percent), the mainproblem plaguing Brazilian education, particularly in the project's targeted regions, continues tobe how few students manage to satisfactorily complete primary education and move on to thesecondary level. On the other hand, investment in secondary education is being pursued by anumber of state governments, as well as by the federal government, since expansion andimprovement of secondary school places may well serve as an extra incentive for students tofinish the final years of primary school. Given that low completion rates are particularly markedin the Northeast, North and Center-West regions, investment in primary education is stillconsidered to be the most equitable or cost-effective investment.

22


B. Major relatedprojects financed by the Bank or other developmentagencies (completed, ongoing, and planned)

Latest SupervisionSector issue Project (Form 590) Ratings

(Bank-financed proects only)Implementation Development

Bank-financed - Progress (IP) Objective (DO)Primary education access and quality Northeast Basic Completed completed

Education

Primary education quality Urban Basic Education Completed completedProject, "Monhangara"

Primary education access and quality Northeast Basic Completed completedEducation II

Primary education quality Northeast Basic S SEducation III

Primary education quality Innovations in Basic Completed completedEducation

Primary education quality Parana Education S SQuality

Primary education quality Minas Gerais Pro- S Squality

Primary education quality FUNDESCOLA I S SPrimary education quality Bahia Basic Education In preparationPrimary education quality Ceara Integrated In preparation

Education

Early Childhood Development Rio Early Childhood In preparation_ Development

Economic & Sector Work --primary Primary Education in Completed 1997education the Northeast

Economic & Sector Work - early Early Childhood In preparationchildhood education DevelopmentEconomic & Sector Work-secondary Secondary Education In preparationeducationEconomic & Sector Work --teacher Teacher Development In preparationtraining and remuneration

Economic & Sector Work - higher Higher Education In preparationeducation I

Sector Issue Activities StatusOther development agenciesUNICEF Complementary to Bank Projects;

Child Rights focus Support to non-govermnent sector

Ford Foundation Ceara Early Child Development not startedProject

IDB Parana Secondary Education Just startedProfessional Education Just startedSecondary Education not started

Notes: IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory),HU (Highly Unsatisfactory)

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C Lessons learned and reflected in the project design

Following the lessons learned from the design and implementation process ofFUNDESCOLA I (FY1998, Loan 4311-BR)the Northeast Basic Education Project (NEBE ii, FY1993, Loan 3604-BR and NEBE III, FY1994, Loan 3663-BR), and prior Bank experience inBrazil (including EDURURAL), FY1980, Loan 1867-BR), FUNDESCOLA II will incorporate thoseproject aspects that were successful in achieving their intended objectives, avoiding those aspectsthat, upon evaluation, were deemed incomplete or unattainable. These lessons primarily include:(a) a fund design concept for project disbursement; (b) development of specialized trainingmodules for targeted areas, with emphasis on the school; (c) the National Textbook Program(PNLD) evaluation and distribution processes; (d) training programs for education managers; and(e) increased emphasis on communication and social mobilization and the use of incentives tosupport project objectives.

The design of FUNDESCOLA was heavily influenced by the fund design of the NortheastBasic Education Project, which allows for more efficient institutions to draw upon availableresources. This process was found to be very effective in reducing waste, promoting effectiveresource management, and ensuring the arrival of funds to those using them to the greatestadvantage. As proved in the experience of the Northeast Basic Education Project, each state,municipality, and school will be accountable to and coordinate with existing systems managers toensure successful implementation of the project.

International project experience has also influenced the formation of the FUNDESCOLAprogram, including (a) the lessons from Chile, Uruguay, and other Latin American countries inpromoting school improvement projects (PME) for the procurement of context-appropriatematerials and increasing stakeholder input; and (b) the Colombian Escuela Nueva program, whichachieved effective results in the modular use of textbooks, capacity-building of teachers, student-centered learning, evaluation of student attainment, and community participation for multi-gradeschools.

The current nationwide evaluation process of textbooks (PNLD) was adopted anddeveloped by MEC based on the previous experience of the NEBE II and III, which introducedinnovative procurement procedures. The purchase of textbooks is now made through the teachers'choice based on a guide containing titles recommended by education specialists and teachers.This guide classifies the books according to content and pedagogical quality, promotingimprovement by the publishers. Textbook distribution for the entire country has improvedsignificantly since the first delivery made under the Northeast Basic Education projects. Thebooks now arrive at the start of the school year, their arrival in the school is being monitoredthrough a special operation introduced by MEC, and a new delivery system is being implementedby the post office. The selection and delivery of basic school supplies to schools under theFUNDESCOLA projects is modeled after this successful example of local selection combined withcentral procurement and oversight.

To promote effective personnel management in basic education, the project deriveslessons from the positive experience of the Northeast Basic Education Project in the training andcapacity-building of municipal and state secretaries in the Northeast (Municipal EducationSecretaries Support Program [PRASEM]). The project coordination unit will continue to buildupon the success of the Northeast Basic Education Project, especially in termns of effectivemanagement techniques and built-in accountability requirements.

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Finally, the design of FUNDESCOLA II has benefited from the implementation experienceof its sister project, FUNDESCOLA I. Lessons include the need to give higher priority to socialmobilization and communication efforts in promoting the school-based development approach;the benefits to funding a second group of school improvement projects, providing an incentive forschools to stay focussed on the issue of quality improvement and practice the planning skills theyhave learned; and providing incentives for municipalities to expand the school-baseddevelopment approach to additional schools.

D. Indications of borrower commitment and ownership

Government commitment to the FUNDESCOLA program is manifest in: (a) the origins,context and content of the project design; (b) the very good implementation record ofFUNDESCOLA I; and (c) the state of preparedness of FUNDESCOLA II.

The FUNDESCOLA program has its origins in a series of 13 studies of the causes of schoolfailure in the Northeast region of Brazil which formed the basis for the sector study, "Brazil: ACall to Action" published in 1997. The process of conducting and reviewing both the researchand recommendations for this study was a broadly collaborative one, involving the federalgovernment, the World Bank, UNICEF, representatives from federal universities in the Northeast,representatives from political groups concerned with education, including the NationalAssociation of Municipal Education Managers (UNDIME), and state Secretaries of Education.The recommendations contained in the report were widely discussed and agreed, and they formthe basis of the design of many of the FUNDESCOLA activities and strategies. As discussed earlier(see key policy and institutional reforms supported by the project), the FUNDESCOLA programalso directly supports the implementation of a number of important recent changes in the legal,financial and operational framework governing the education sector. Government commitment tothe policy reforms supported through the FUNDESCOLA program has already been demonstrated.

FUNDESCOLA II implementation will benefit directly from the advanced execution of theFUNDESCOLA I project. The fact that 50 percent of the loan has already been disbursed from theFUNDESCOLA I loan demonstrates clearly the high implementation capacity of the project teamand the local executing agencies. More specifically, all of the schools selected to prepare SchoolDevelopment Plans have completed their analysis, established their targets, and detailed theirSchool Improvement Projects. All ten microregion forums have prepared detailed planning andprogramming documents. Detailed classroom-by-classroom school surveys have been completedby the local secretariats of education for all of the schools in the ten microregions of theFUNDESCOLA I project, and the information from these surveys has already been encoded in theeducation microplanning geographic information system. The project management infrastructureat the state and central level is already in place and fully trained. And finally, bidding documentsfor minimum operational standards for the classroom modules have been publishedinternationally.

The status of preparation of FUNDESCOLA II is well advanced. In preparation forFUNDESCOLA II, the DGP has already: (a) discussed the project's proposed design through severalmeetings with state and municipal education staff from all of the capital-city microregions in thenine Northeast states; (b) conducted training for state and municipal govemment staff in theapplication of key instruments for the program; (c) held at least thirty meetings with state andmunicipal representatives to discuss the project's framework and reach agreements on: theparticipation of executors, the creation of the microregion forum, the naming of the project teamin each state, and the time-frame for project execution. In addition FUNDESCOLA was formallypresented and discussed by participating municipal and state secretaries in the three regions

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through Municipal Education Secretariat's Support Program (PRASEM) seminars, as well asmeetings with the National Council of State Education Secretaries (CONSED).

E. Value Added of Bank Support

Informed Cooperation: As the chief external financing institution in the area of basiceducation over the past ten years, the Bank has had the opportunity to develop a well-informedand close familiarity with the key education challenges in Brazil and has come to recognizewindows of opportunity. More importantly, over the last few years it has built up a fluentdialogue with the leading education authorities and institutions of Brazil. This dialogue has growndespite the presence of ideological differences between a number of the key actors, and acrosschanges in the political landscape. "A Call the Action" and the "PRASEM" workshops areexcellent examples of the Bank's ability to facilitate dialogue and generate consensus aroundcritical issues in the sector. The Bank has also been actively promoting, for Brazilian Ministry,State, and Municipal education leaders and technical staff, the sharing and exchange of ideas oninternational education sector experience. Consequently, the Bank has been able to play the roleof the "honest broker" in policy dialogue, has provided continuity, has promoted the exchange ofinternational experience, and has served as a critical friend in supporting the implementation ofdevelopment projects and policy ref

project appraisal document ona proposed ......document of the world bank report no: 19228-br project...

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