Project Paper Data Sheet CROATIA Social Welfare Development Project

Sector Managermirector: Kathy Lindert/Tamar Manuelyan Atinc Country Director: Theodore Ahlers

Project Name: Social Welfare Development Project

SWEDISH INTN’L DEVEL. AGENCY

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PROJECT PAPER

PROPOSAL TO RESTRUCTURE CROATIA SOCIAL WELFARE DEVELOPMENT PROJECT

(Loan No. 7307-HR)

Introduction 1. T h i s Project Paper seeks the approval o f the World Bank Executive Directors for the introduction o f changes in the Croatia Social Welfare Development Project (SWDP), Loan 7307-HR (P069937), and o f the accompanying amendments to the project legal documents. The proposed changes have been discussed and agreed on with the Republic o f Croatia (the Borrower) and reflect the findings o f the Joint Portfolio Review carried out in 2009 which recommended that the Project Development Objective (PDO) and the Project Results Framework (RF) be revised to better reflect the original project activities o f the project and to better capture the project’s expected impact. A formal letter from the Borrower’s Ministry o f Finance dated June 24, 2009 formally requests the following changes.

2. The key proposed changes are:

(a) The revision o f the PDO and the RF. The original PDO i s adjusted to better reflect the original project activities which aim to improve social services with only a very limited impact on social benefits. Hence, it i s proposed to remove the reference to “social benefits” in the original PDO, which refers to “strengthening the quality, targeting and administration o f social benefits and services to those most in need.” Whi le the project would continue to support enhancing the quality o f social services, there would be increased focus on improving administration, planning and policy making o f the overall social welfare system. With respect to the RF, three PDO indicators are proposed to be dropped and four new added to reflect the change in the PDO and project activities. Furthermore, it i s proposed to drop four Intermediate Outcome Indicators, revise four indicators and add seven new indicators, again to better reflect original project intentions.

(b) The reallocation o f Loan proceeds between expenditure categories to increase the allocation for c iv i l works from EUR 17 mi l l ion to EUR 21.1 mi l l ion and decrease the allocation for goods, consultant services and grants from EUR 8 million, EUR 1.5 mi l l ion and EUR 4 mi l l ion to EUR 5.45 million, EUR 0.25 mi l l ion and EUR 3.7 mi l l ion respectively.

Background and Reasons for Restructuring 3. The EUR 31 mi l l ion IBRD loan for the SWDP was approved on June 14, 2005. The Swedish International Development Agency contributed to the project with a SEK 14.7 mi l l ion (EUR 1.4 million) grant. The project became effective on January 30, 2006. In February 2009, the original closing date o f September 30, 2009 was extended to June 15, 2010, to allow the nation-wide roll-out o f a new social welfare management and information system (MIS) and the completion o f upgrade and construction o f several centers for social welfare and upgrade o f social welfare homes.

4. The original PDO was “to strengthen the quality, targeting and administration o f social benefits and services to those most in need.” The project includes three components: (i) Improving Social Services Delivery by developing a sustainable spectrum o f social programs across prevention, service delivery, and client re-integration into the community; (ii) Strengthening Social Welfare Management by improving the reliability and timeliness o f social benefit administrative information used for cash benefit system oversight and individual claims processing, and implementing ‘one-stop shop’ administrative services for clients; and (iii) Upgrading Social Services Facilities by upgrading

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or constructing new county centers for social welfare and enhancing the safety o f older residential social service facilities by investing in hygienic upgrades.

5. Progress to Date. The project i s performing satisfactorily although it had a slow start, due to creation o f complex implementation structures, including three working groups at the ministry level and three working groups at the pilot counties. Project implementation particularly improved in 2008, with government's increased budget allocation, bringing the disbursement to the current 8 1 % (92% committed).

6. Most activities related to improving social service delivery have been completed and the following important tools have been developed, including: (i) a new county-level social planning methodology; (ii) methodological centers, which are best-practice social institutions equipped to provide practical training to practitioners from others social welfare institutions; (iii) quality standards in social service provision; (iv) and a new business model in the centers for social welfare according to the one-stop-office principle to allow social workers to spend more time on direct work with the clients. Social service provision has been strengthened through the project's Innovation and Learning Program which successfully implements 34 innovative community-based projects, focused on prevention o f institutionalization, deinstitutionalization or provision o f alternative social care across country. In addition, physical upgrades o f 45 residential institutions are underway improving the living conditions o f clients, while 15 centers for social welfare will be upgraded or built by the end o f the project. Finally, the creation o f software for the MIS, which i s currently in the final stage o f development, and establishment o f data exchange model with other systems will allow for improved administration and efficiency o f the overall social welfare system.

7. Reasons for Restructuring. The proposed restructuring would correct the original mismatch between the PDO, the RF and the project activities which have been under implementation during the last three years. Firstly, the PDO makes reference to improved targeting and administrative simplicity o f social benefits, and there are two corresponding outcome indicators, one aiming at 5- 10% increase in all targeted social benefits that reaches the bottom quintile o f the population, and the other referring to improved targeting and administrative simplicity through streamlined benefit entitlements in the Social Welfare Act. However, the project activities, with the exception o f one small consultancy, have had no direct impact on achieving improved targeting and administrative efficiency o f social benefits. This objective was intended to be achieved through the Second Programmatic Adjustment Loan (PAL II), which had one specific condition on improving targeting o f social benefits, and was not achieved under that operation. Secondly, the outcome indicator on annual reduction o f referrals to resident institutions by lo%, starting from 2008, i s not attributable to the project, as the project activities did not foresee any transformation o f and reduction in the capacity o f social welfare residential institutions.' Also, several Intermediate Results Indicators related to inappropriate outcome indicators needed to be dropped, revised, and/or replaced by new indicators to reflect the intended project results.

8. Part o f the reason for the misalignment, as described above, lies in the fact that the project was designed to be implemented in parallel with the P A L series, which among others focused on rationalization and improved targeting o f social benefits. This explains why the PDO refers to strengthening o f the quality, targeting and administration o f social benefits, in addition to social services, while the project components in fact relate to improvements in social services and strengthening o f administration and policy-making in the social welfare system. The Joint Portfolio

' In addition, this indicator also did not take into account long waiting l ists for some types of residential institutions such as homes for elderly.

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Review carried out in 2009 also noted this discrepancy and recommended that the PDO and the RF be reformulated to better capture the results o f the project.

9. In sum, while the project has been implementing i t s original activities in al l three components, the PDO and the majority o f outcome and intermediate indicators have either been misaligned, mis-designed or difficult to monitor. Therefore, the Borrower and the Bank agreed to reformulate the PDO and to revise the Outcome Indicators and Intermediate Results indicators in a way that will align them with the originally planned project activities and capture project outcomes.

Proposed Changes 10. Revision o f PDO and RF’. For the reasons mentioned above, it is proposed to revise PDO by deleting the o ld objective o f strengthening the targeting o f social benefits. The original objective o f strengthening the quality o f social services would be maintained and the objective o f improving administration would be reformulated so that improvements in administration are linked with the overall performance o f the social welfare system. In addition, the proposal is to add a new objective o f improving planning and policy making o f the social welfare system which the project has supported. The RF i s revised in l ine with the proposed revisions in the PDO. A thorough assessment o f all outcomes and intermediate results indicators was made during the RF restructuring mission in March 2009 and a set o f new indicators has been proposed to ensure that the RF more closely reflects the project activities. Annex 1 shows details o f the original RF in the Project Appraisal Document alongside the proposed changes to the RF. Annex 2 provides the revised Results Framework with the baseline data and annual targets until project completion in June 2010.

11. The revised PDO are as follows: “to strengthen the quality o f social services and to improve administration, planning and policy making o f the social welfare system.”

Objective (PDO) Strengthen Quality of Social Services

12. The main outcome indicators to measure the success o f the project are as follows:

Improve Planning and Policy Making

Increased capacity o f the MHSW and social welfare institutions to manage the system as demonstrated by development and operationalization o f new social pol icy planning and system development tools such as Social Planning, Methodological Centers and Quality Standards

Improve Administration

Improved variety and quality o f social services as evidenced by increased number o f beneficiaries receiving alternative community- based services generated by ILP. Improved quality o f services in public residential social welfare homes (for children and adults) demonstrated by an increase in the number o f public homes that meet public health standards. Improved social care services as measured by an increase in the number o f clients receiving community-based home care services. Reduction by at least 15% o f social worker time spent on administration.

13. Reallocation o f Loan Proceeds. The originally allocated loan amount for planned c iv i l works was underestimated by EUR 4.1 million, while the expenditures for planned goods,

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consultants’ services and grants were overestimated by EUR 2.55 million, EUR 1.25 mill ion and EUR 0.3 mi l l ion respectively. Reallocations proposed are as follows:

Expenditure Category

(1) Works

Current Allocations Proposed Allocations (Euro) (Euro)

17.000.000 21.1 00.000 (2) Goods (3) Consultant’s Services,

including audit for the project

(4) Training (5) Grants under Part A.2(c)

TOTAL o f the Project

Analysis 14. Wh i le good progress has been achieved in implementing al l three project components, per the original project descriptions in the PAD, the PDO and the RF were designed in a way that would make it difficult for the project to meet the original objectives because the project did not focus on social benefits, as described earlier.

15. The proposed changes in the PDO and associated RF do not affect the original economic, social and institutional aspects o f the project. In terms o f project implementation and financial arrangements, the existing arrangements would continue to be used under the restructured project. The proposed changes in the project do not involve any exception to Bank policies. The proposed changes do not raise the environmental category o f the project or trigger any new safeguard policies.

Expected Outcomes 16. The RF i s revised and now includes a total o f five Outcome Indicators and eleven Intermediate Outcome Indicators which fully reflect the revised PDO and project activities. The revisions have been developed together with the counterparts in the Borrower’s Ministry o f Health and Social Welfare and have undergone a thorough internal review.

Benefits and R i s k s 17. The benefit o f the proposed changes i s that the PDO now fully reflects the project’s original intentions and the revised RF i s closely aligned with the PDO, and with the project activities and their objectives. This allows for effective measurement o f the project’s impact. There are no external risks that could jeopardize the achievement o f the revised PDO.

8,000,000 5,450,000 1,500,000 250,000

500,000 500,000 4,000,000 3,700,000

31.000.000 31.000.000

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Annex 1. Proposed Changes in the Results Framework

Original Project Development Objective (PAD): The Social Welfare Development Project wil l strengthen the quality, targeting and administration o f social benefits and services to those most in need. Revised Project Development Objective: The Social Welfare Development Project wil l strengthen the quality o f social services and wil l improve administration, planning and policy making o f the social welfare system.

Original Indicators (from PAD)

5 - 10 % increase in a l l targeted social benefits that reaches the bottom quintile o f the population

Reduction o f referrals to resident institutions by lo%, yearly f i om 2008 in pi lot areas.

Project supervision shows improved targeting and administrative simplicity through streamlined benefit entitlements in the Social Welfare Act.

Reduction by at least 15% o f social worker time spent on social benefit administration.

Outcome Indicators

Revised or New Indicators (in Project Paper)

Increased number o f beneficiaries receiving alternative community-based services generated by ILP

Proposed Changes Dropped. Th is indicator i s dropped because the project has no direct implication on this indicator. It is not appropriate indicator to monitor project outcome Dropped. Th is indicator i s inadequate because the project activities have not been expected to tackle the transformation o f and reduction in the capacity o f residential institutions. Dropped. T h i s indicator i s dropped because o f i t s irrelevance vis-a-vis the project activities. Streamlined benefit entitlements in the Social Welfare Ac t should have been implemented as a result o f the PAL program, which in the end did not achieve the planned reforms in social benefits. Kept as original.

New

Targets

Original (from PAD)

55%

Revised or New

(from PP)

55%

6,840

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Intermediate Results I n

I

N e w I

Increased share o f public residential institutions for children and adults that meet public health standards Increased number o f clients receiving community-based home care services

73%

No t less than 4,300

Increased capacity o f M H S W and social welfare institutions as demonstrated by development and operationalization o f the new tools for pol icy planning and system development such as Social Planning, Methodological Centers and Quality Standards icators

New

New

I Al l tools applied either in pilot counties or

Component 1: Improving Social Service Delivery

Original Indicators (from PAD)

At least 15 % more clients served in programs that prevent institutionalization and help integration at the end o f the project.

N e w service purchasing model introduced in x

# clients deinstitutionalized and returned to families or independent living

Revised or New Indicators (in Project Paper) Proposed Changes

Dropped. Th is indicator i s impossible to measure due to the lack o f national statistics on prevention programs and number o f their beneficiaries. More appropriate indicator has been introduced that measures the number o f beneficiaries o f the prevention programs under ILP. Dropped. The idea o f introducing new social services fmancing model has been postponed because o f the lack o f progress in decentralization at the country level. Dropped. More appropriate indicators have been introduced that measure the number o f persons receiving communitv-based

Targets

Original Revised or (from PAD)

(from PP)

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Financial management and procurement procedures increasingly professionalized, and conducted increasingly in l i ne with EU standards

with seed fmancing that i s pooled with local funds and other donor resources

outputs) Revised to better # clients provided with

new services under Social Services Grant Facility

120

overseen by M H S W and i ts subsidiary agencies either meet standards, or are implementing a satisfactory plan to achieve minimum standards

F

Number o f ILP projects implemented

Number o f ILP persons included in prevention programs under ILP

Quality standards for social care developed and implemented

Creation o f Department for Social Welfare Development within the Social Welfare Directorate o f M H S W to carry out reform agenda and monitor progress, including EU accession mogress New social planning methodology developed and piloted in three pi lot counties

Concept o f methodological centers (MCs) developed and M C s created

One-stop-shop model for CSWs developed

home care services and children without adequate parental care living outside family. I Dropped. This indicator i s irrelevant because the project activities have not covered fiduciary issues.

Revised to better reflect the actual process o f quality standards development, including their expected implementation by the end o f the project N e w

6

0

N e w N e w

N e w

N e w

N e w

N e w

I Targets of the Social Welfare Management

Information Svstem

34

2,781

Standards approved and implemented

Department operational

N e w SP methodology legislated and implemented M C s operational

Mode l adopted

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I Original Indicators I Revised o r New Indicators I I Original I Revised o r

c

(from PAD)

Introduction o f a management information system, and case management system, for a l l social assistance clients.

Proposed Changes

Dropped. The idea o f establishing County CSWs has been dropped.

Component 3: Upgradi

Original (from PAD)

(in Project Paper)

M I S designed and implemented

Data exchange system that w i l l reduce application burden on clients and social workers established

g o f Social Services Facilities

Proposed Changes (from PAD) I Revised to better define the indicator. N e w M I S w i l l in addition to social assistance also cover social services.

Software developed (2007 target) and equipment installed in 30% o f offices (2008 target)

New (from PP) M I S operational

Data exchange system with the key agencies in place in three pi lot counties

I Targets

Original Indicators (from PAD)

Number o f County CSWs with functioning one stop shop model

Revised or New Indicators (in Project Paper)

Number o f public social welfare homes for children and adults that improved hygienic standards Number o f newly constructed and upgraded CSWs

Revised o r New (from PP)

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Annex 2: Revised Results Framework and Monitoring

CROATIA: Social Welfare Development Project

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The Social Welfare Development Project wil l strengthen the quality o f social services and improve administration, planning and policy making o f the social welfare system.

nte

Component One: Improving Social Service Delivery

Improved social policy planning and decision-making in the Ministry o f Health and Social Welfare and social welfare institutions.

Increased capacity o f social welfare institutions to plan and prioritize their

Improved variety and quality o f social services as evidenced by increased number o f beneficiaries receiving alternative community- based services generated by ILP. Baseline: N o beneficiaries o f I L P projects

Improved quality o f services in public residential social welfare homes (for children and adults) demonstrated by an increase in the number o f public homes that meet public health standards. Baseline: 30% o f residential institutions met public health standards in 2005

Improved social care outcomes as measured by an increase in the number o f clients receiving community-based home care services. Baseline: 3,113 in 2005;

Reduction by at least 15 % o f social worker t ime spent on administration. Baseline: 70% o f social worker time spent on administration

Increased capacity o f the M H S W and social welfare institutions to manage the system as demonstrated by development and operationalization o f the new tools for pol icy planning and system development such as Social Planning, Methodological Centers and Quality Standards. Baseline: no pol icy tools

Component One: Improving Social Service Delivery

Creation o f a Department for Social Welfare Development within the Social Welfare Directorate o f the MHSW. Baseline: Department for Social Welfare Development not in place

New social planning methodology developed and piloted in three pilot

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The potential o f prevention, reintegration and cost effectiveness o f community services vis a vis residential services demonstrated to al l stakeholders

Determine the extent to which the project i s resulting in better quality o f institutional social care provision

Monitor the impact o f the project on social care outcomes

More t ime available for direct client service

Monitor (i) allocative efficiency wi thin social welfare system; (ii) fraud and eirors in providing social benefits and services; (iii) progress in implementing EU Joint Inclusion Memorandum and other issues related to EU accession

Use o f Results Monitoring

Component One: Improving Social Service Delivery

Monitor progress on establishing the Department within the Ministry

Monitor progress on amending Social Welfare Act to institutionalize SP

service provision

Increased capacity o f the Ministry o f Health and Social Welfare to disseminate good and innovative practice in social care provision

Improved capacity o f the Ministry and local governments to arrange provision of alternative community based services

Improved quality of social care services

Improved client services in CSWs

Component Two: Social Welfare Management Information System

Improved CSWs’ client services through integrated service provision and reduction o f application process burden on clients and social workers

Component Three: Upgrading of Social Services Facilities

Al l CSWs are physically able to incorporate I T upgrades under component 2

Public health standards met in the majority of social welfare homes

counties and Social Planning became a new function of CSWs. Baseline: Methodology for Social Planning not in place

Concept of Methodological Centers (MCs) developed and MCs created. Baseline: Concept of Methodological Centers not in place

Number o f ILP projects implemented and number of persons included in prevention programs under ILP. Baseline: 0 ILP projects and 0 persons included in ILP prevention programs

Quality standards for social care developed and implemented. Baseline: Quality standards do not exist

One-stop-shop model for CSWs developed. Baseline: One-stop-shop model not developed Component Two: Social Welfare Management Information System

MIS designed and implemented Baseline: MIS not in place

Data exchange system that wi l l reduce application burden on clients and social workers established Baseline: No data exchange

Burden o f benefitdservices application process on clients and social workers reduced as measured by increase in the documents that are obtained in electronic form from other agencies. Baseline: all documents are supplied by the applicant Component Three: Upgrading o f Social Services Facilities

Number o f newly constructed and upgraded CSWs

Number of public social welfare homes for children and adults that improved hygienic standards Baseline: 0 in 2005

function in CSWs

Monitor progress on establishing the MCs

Assess the demand for community based services and their costs

Monitor compliance with new standards, which guides decisions o f the Ministry to close down some sub-quality services and promote those services in l i ne with policy goals.

Monitor progress on model development

Component Two: Social Welfare Management Information System

Delays or problems in implementing MIS and reorganizing the office procedures wil l provide information for designing remedial actions

Determine the extent to which the MIS and business automation i s resulting in the better client services

Component Three: Upgrading o f Social Services Facilities

This information wil l feed into the overall social service standards and monitoring systems.

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