Document of The World Bank FOR OFFICIAL USE ONLY Report No: RES23295 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF A SCHOOL BASED MANAGEMENT PROJECT LOAN 8446-MX APPROVED BY THE BOARD ON OCTOBER 24, 2014 TO THE UNITED MEXICAN STATES July 13, 2017 Education Global Practice Latin America and the Caribbean Region ABBREVIATIONS AND ACRONYMS AEL Local Education Authority (Autoridad Educativa Local) AGE School Based Management Questionnaire (Cuestionario de Autonomía de Gestión Escolar) CLC Certified Accounts to be Liquidated (Cuentas por Liquidar Certificadas) CTE Technical School Council (Consejo Técnico Escolar) DGDGE General Directorate of School Management and Education (Dirección General de Desarrollo de la Gestión Educativa) FM Financial Management FPRE Education Reform Program Trust Fund (Fideicomiso del Programa de la Reforma Educativa). FY Fiscal Year GDP Gross Domestic Product GoM Government of Mexico IBRD International Bank for Reconstruction and Development LA Loan Agreement NAFIN Nacional Financiera, S.N.C., I.B.D. PAD Project Appraisal Document PDO Project Development Objective PEC Quality Schools Program (Programa Escuelas de Calidad) PED Honorable Schools Program (Programa Escuelas Dignas) PEEARE Schools of Excellence to End Educational Delay Program (Programa Escuelas de Excelencia para Abatir el Rezago Educativo) PETC Full Time Schools Program (Programa Escuelas de Tiempo Completo) PRE Education Reform Program (Programa de la Reforma Educativa) SBM School Based Management SEB Subsecretariat of Basic Education (Subsecretaría de Educación Básica) SEP Secretariat of Public Education (Secretaría de Educación Pública) SHCP Secretariat of Finance and Public Credit (Secretaría de Hacienda y Crédito Público) SisAT School-based Management Dashboard (Sistema de Alerta Temprana) STA Single Treasury Account WMS World Management Survey 1 Regional Vice President: Jorge Familiar Country Director: Gerardo M. Corrochano Senior Global Practice Director: Jaime Saavedra Chanduvi Practice Manager: Reema Nayar Task Team Leader: Rafael E. de Hoyos Navarro 2 UNITED MEXICAN STATES School Based Management Project CONTENTS A. SUMMARY OF PROPOSED CHANGES.................................................................... 5 B. PROJECT STATUS ....................................................................................................... 6 C. PROPOSED CHANGES ............................................................................................... 7 ANNEX 1: RESULTS FRAMEWORK AND MONITORING ....................................... 20 3 DATA SHEET Mexico School Based Management Project (P147185) LATIN AMERICA AND CARIBBEAN Education Report No: RES23295 Basic Information Investment Project Project ID: P147185 Financing Instrument: Financing Regional Vice President: Jorge Familiar Original EA Category: Not Required (C) Country Director: Gerardo M. Corrochano Current EA Category: Not Required (C) Senior Global Practice Amit Dar Original Approval Date: 24-Oct-2014 Director: Practice Reema Nayar Current Closing Date: 31-Dec-2018 Manager/Manager: Rafael E. De Hoyos Team Leader(s): Navarro Borrower: United Mexican States Responsible Secretaría de Educación Pública Agency: Restructuring Type Form Type: Full Restructuring Paper Decision Authority: Board Restructuring Level: Level 1 Financing ( as of 15-Apr-2016 ) Key Dates Stat Effectiveness Original Revised Project Ln/Cr/TF Approval Date Signing Date us Date Closing Date Closing Date Effe P147185 IBRD-84460 ctiv 24-Oct-2014 13-Mar-2015 09-Jul-2015 31-Dec-2018 31-Dec-2018 e Disbursements (in Millions) % Stat Cancelle Disburse Undisbur Project Ln/Cr/TF Currency Original Revised Disburse us d d sed d Effe P147185 IBRD-84460 ctiv USD 350.00 350.00 0.00 123.43 226.57 35 e 4 Policy Waivers Does the project depart from the CAS/CPF in content or in other significant Yes [ ] No [ X ] respects? Does the project require any policy waiver(s)? Yes [ ] No [ X ] A. Summary of Proposed Changes The proposed restructuring is needed to respond to the consolidation of current programs to strengthen school-based management (SBM) in Mexico. Until June 2016 (end of the 2015-16 school year), SBM in Mexico was implemented through the following four programs: (i) the Schools of Excellence to End Educational Delay Program (Programa Escuelas de Excelencia para Abatir el Rezago Educativo, PEEARE), (ii) the Honorable Schools Program (Programa Escuelas Dignas, PED), (iii) the Quality Schools Program (Programa Escuelas de Calidad, PEC), and (iv) the Full Time Schools Program (Programa de Escuelas de Tiempo Completo, PETC). Under this framework, the World Bank-financed Project supports the implementation of PEC and PETC programs. Effective at the beginning of the 2016- 17 school year (August 2016), the Secretariat of Public Education (Secretaría de Educación Pública, SEP) has consolidated PEEARE, PED and PEC into a meta-program called the Education Reform Program (Programa de la Reforma Educativa, PRE). To align with this change, Project restructuring is proposed to support PRE instead of PEC (the Project will continue to support PETC which remains unchanged). The Bank-financed Project will support the two components of PRE that are related to SBM (school autonomy and managerial practices). Both of these PRE Components follow the same approach as the former PEC program: (i) PRE's School Autonomy component continues to provide direct support to schools to implement school improvement plans; and (ii) PRE's Managerial Practices component supports the development and implementation of capacity building activsities for supervisors and school directors. Specifically, the following changes to the Project are needed to reflect the substitution of PEC with PRE schools: - First, the reference to "PEC" will be removed from the Project Development Objective (PDO), the Project Components and some indicators. For consistency, reference to PEC and PETC will be replaced throughout the Project by "Participating Schools." Moving forward, "Participating Schools" will jointly refer to PRE and PETC Schools. However, the description of the PDO, components and key activities will mostly remain unchanged. - Second, the Results Framework needs to be adjusted to reflect data availability, as well as baseline conditions and progress among PRE beneficiaries. Starting this school year (2016-17) new baselines and targets have been set for PRE schools for all the Project indicators. - Third, the Project Component 1 will be revised to include direct support to foster school autonomy in "Participating Schools". Previously, the Bank-financed Project only provided direct support to PEC schools. The Government of Mexico has now decided to include direct support to both PRE and PETC schools under Component 1. - Fourth, the Project's Financial Management (FM), including flow of funds, has been modified to reflect PRE arrangements, which differ from those under PEC. In addition, FM will now include the flow of funds to support school-based management at PETC schools. The Loan Agreement will be amended to reflect these changes. 5 - Fifth, there will be a reallocation between disbursement categories to provide more financing for Direct Support to Participating Schools as described under Component 1: Increasing School Autonomy and Parent Participation. - Sixth, the Loan Agreement will also be amended to make eligible expenses for the PETC retroactive as of January 2016. Change in Implementing Agency Yes [ ] No [ X ] Change in Project's Development Objectives Yes [ X ] No [ ] Change in Results Framework Yes [ X ] No [ ] Change in Safeguard Policies Triggered Yes [ ] No [ X ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [ X ] No [ ] Change in Loan Closing Date(s) Yes [ ] No [ X ] Cancellations Proposed Yes [ ] No [ X ] Change to Financing Plan Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ X ] No [ ] Change in Disbursement Estimates Yes [ X ] No [ ] Change to Components and Cost Yes [ X ] No [ ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ X ] No [ ] Change in Procurement Yes [ ] No [ X ] Change in Implementation Schedule Yes [ ] No [ X ] Other Change(s) Yes [ X ] No [ ] Appraisal Summary Change in Economic and Financial Analysis Yes [ ] No [ X ] Appraisal Summary Change in Technical Analysis Yes [ ] No [ X ] Appraisal Summary Change in Social Analysis Yes [ ] No [ X ] Appraisal Summary Change in Environmental Analysis Yes [ ] No [ X ] Appraisal Summary Change in Risk Assessment Yes [ ] No [ X ] B. Project Status The Project was approved on October 24, 2014 and became effective on July 9, 2015. Progress towards achievement of the PDO had been rated Satisfactory in all ISRs prior to June 30, 2017 when it was downgraded to Moderately Satisfactory. The ratings have been Satisfactory/Moderately Satisfactory despite a halt in disbursements during the restructuring process because the Project has contributed satisfactorily toward the Bank’s broader education program in Mexico. Because of the continued progress of the Project, achievement of the PDO is expected once disbursements resume. Outcome indicators are showing good progress: 6 -Data from the international instrument, the World Management Survey (WMS), an instrument to measure managerial capacity, shows a baseline of 10.50 percent of schools nationwide having a director with a "sufficient" level of managerial capacity. Based on this baseline, a 40 percent target was set, to be achieved by Participating Schools at the end of the Project. -The proportion of PEC schools with parents' associations participating in the design, monitoring and adjustment of the school improvement plan has increased from 72.70 in June 2015 to 84.01 in December 2015, already surpassing the end target of 78 percent. -The dropout rates for participating primary schools (PEC and PETC) have decreased from 3.83 in the baseline year to 3.70 in school year 2014-15. In the same period of time, dropout rates at secondary participating schools have also decreased from 5.44 to 5.24 percent. -The gross failure rates for primary and secondary participating schools have improved from 1.30 and 9.64 from the baseline year to 0.84 and 9.32 in 2014-15, respectively. -Repetition rates in secondary schools have also improved, decreasing from 0.87 to 0.82 from the baseline year to 2014-15. The Project's overall implementation progress is Moderately Satisfactory. Schools in programs to strengthen School Based Management (SBM) have experienced slight delays in receiving the direct support to undertake their annual school improvement plans. However, the Secretariat of Public Education (SEP) has now designed the school-based management dashboard (Sistema de Alerta Temprana, SisAT) and has started training supervisors and directors in the use of this dashboard. Moving forward, the main intervention strategy to improve schools' managerial capacity will be to consolidate all capacity building efforts through the adequate use of the SisAT. In addition, the activities under the Impact Evaluation are advancing as originally planned. The seven States participating in the impact evaluation have finalized the intervention design and are currently receiving their school management diagnosis based on the concluded WMS baseline data collection. The interventions on treatment schools in five States were implemented between October 2015 and June 2016; one State implemented a two-year program which finished in February 2017, and two States initiated during the first semester of school year 2016-2017. The treatment schools participating in the impact evaluation (previously under PEC) will continue to receive support on School Autonomy and Managerial Practices, but now under the PRE program. This will allow the impact evaluation's design to remain intact despite the change in the Government programs. Disbursements have been smaller than originally planned due to the changes in the exchange rate and budget reductions for the supported Programs. However, more than a third of the total credit has already been disbursed, and the loan is expected to disburse fully by the closing date. C. Proposed Changes Development Objectives/Results Project Development Objectives Original PDO The objective of the Project is to improve schools' managerial capacity and parental participation to reduce dropout, repetition and failure rates among PEC Schools and PETC Schools. 7 Change in Project's Development Objectives Explanation The overall objective of the Bank-financed Project remains the same. The only change in the PDO is the replacement of "PEC Schools and PETC Schools" with "Participating Schools." Participating Schools will be clearly defined in the Loan Agreement (LA) and other relevant Project documents as schools that are part of PRE or PETC. Proposed New PDO The objective of the Project is to improve schools' managerial capacity and parental participation to reduce dropout, repetition and failure rates among Participating Schools. Change in Results Framework Explanation: Changes in the Results Framework have been made to reflect the change in the Project beneficiaries from "PEC and PETC Schools" to "Participating Schools." Starting with the 2014-15 academic year onwards, data will be collected for PRE schools for all Project indicators and the revised Results Framework includes baseline data (2014-15), progress, and end of Project targets for PRE schools. The changes to the Results Framework and its rationale are explained in detail below: Original PDO-level indicator 1. Dropped. Original wording: Proportion of basic education schools in programs to strengthen SBM (PEC and PETC) with a director that has a "sufficient" level of managerial capacity. Original Baseline: 10.5 % Original End-of-Project Target: 40% (set when the baseline was collected) Actual value: Not available Rationale: The original PDO-level indicator 1 has been dropped as part of this Project restructuring since: (i) The "sufficient level of managerial capacity" was not defined and could not be measured appropriately and the lack of a clear benchmark to measure managerial capacity can compromise the quality of the data collection, analysis and comparability. (ii) It is not possible to measure progress against the set baseline. The Project Appraisal Document (PAD) dated October 2, 2014 specified that the baseline for this indicator was not available at the time of the Project design, but should have been collected in November 2014. A 10.5% baseline was only reported in December 2015. The baseline reflects a representative sample of schools at the national level, including schools in programs to strengthen SBM as well as schools not benefiting from these programs. Therefore, the baseline provided is not measuring the impact of the Project, as the indicator intended and only provides a picture of schools' managerial capacity nationwide. In addition, the baseline is based on the piloting of the WMS and should be taken with caution since the piloting exercise reflected the need to adapt the WMS to the Mexican context. For all the reasons mentioned above, it will not be feasible/desirable to conduct a data collection exercise to compare the 2015 baseline with the actual value. Revised PDO-level indicator 1. Added to replace original PDO-level indicator 1. Wording: Proportion of a representative sample of Participating Schools with a director that scores 3 or above in the World Management Survey. Baseline: 21% End of Project Target: 25% Rationale: 8 This indicator has been added to measure more accurately the impact of Project activities on improving Participating Schools' managerial capacity. To do so, the indicator uses a survey (the WMS) with 5 managerial capacity scores, with 1 being the lowest and 5 being the highest score for managerial capacity (in the case of Mexico, and some other countries, there are two more intermediate scores 1.5 and 2.5). School directors who score 3 or more in the WMS have a sufficient level of managerial capacity. Thus, an increase in the share of Participating Schools with directors scoring 3, 4 or 5 in the WMS will reflect improvements in Participating Schools' managerial capacity. As part of the impact evaluation of the Project, the baseline for this indicator was collected in a representative sample of 1,665 Participating Schools (PRE schools) in 7 (out of 32) states using the contextualized WMS. The follow-up exercise to update data for this indicator was conducted between October 2016 and May 2017. The impact evaluation will show the causal effect of the activities designed to improve managerial capacities and managerial practices. PDO-level indicator 2. Dropped. Original wording: Proportion of PEC schools with parents' associations participating in the design, monitoring, and adjustment of the school improvement plan. Original Baseline: 72.70% Original End-of-Project Target: 78.00% Actual value: 84.01 % in December 2015. Rationale: The original PDO-level indicator 2 has been dropped as part of this Project restructuring because the methodologies used to measure parental participation have been costly and problematic. Comparability of the data collected in different years is questionable as the increment in the proportion of PEC schools with parents' associations participating in the design, monitoring and adjustment of the school improvement plan went from 72.70 in June 2015 to 84.01 in December 2015. Therefore, it is deemed necessary to find alternative options to measure the parental participation aspect of the PDO. Revised PDO-level indicator 2. Added to replace original PDO-level indicator 2. Wording: Proportion of a sample of Participating Schools that increase parental participation (score more than 1 in the AGE). Baseline: 83.9 % End-of-Project Target: 90.0% Rationale: This indicator has been added through the proposed restructuring to measure more accurately the impact of Project activities on parents' engagement. To do so, the indicator uses a survey ( Cuestionario de Autonomía de Gestión Escolar, AGE) with 5 modules. The indicator reflects the proportion of schools where at least 50% of the surveyed parents answer positively to 15 questions used to measure parental participation under the school autonomy model. Thus, an increase in the share of Participating Schools scoring above 1 in the AGE will reflect improvements in parental participation. The baseline for this indicator was collected in a representative sample of 1,091 Participating Schools (PRE schools) in 6 (out of 32) states using the AGE questionnaire. The follow-up exercise to update data for this indicator was conducted between October 2016 and March 2017. PDO-level indicator 3. Revised Original wording: Dropout rate among (primary and secondary) basic education schools in programs to strengthen SBM (PEC, PETC). Original Baseline: Primary 3.83%, Secondary 5.44% (2012-13). Actual (current): Primary 3.70%, Secondary 5.24% (2014-15). Will be updated with 2015-16 school year data (when available in the first trimester of 2017). Original End-of-Project Target: Primary 3.48%, Secondary 5.04% 9 Revised wording: Dropout rate among (primary and secondary) Participating Schools. Revised Baseline: Primary 3.18%, Secondary 5.31% (2014-15 school year). Revised End-of-Project Target: Primary 2.91%, Secondary 4.80% (2017-18 School year). Rationale: The wording for indicator 3 has been adjusted to reflect the revised PDO. Therefore, "basic education schools in programs to strengthen SBM" has been replaced with "Participating Schools." In addition, data for this indicator will be added for PRE and PETC schools as of the 2014-15 school year to reflect the change in the Project beneficiaries. PDO-level indicator 4. Revised Original wording: Gross failure rate among basic education schools (primary and secondary) in programs to strengthen SBM (PEC, PETC). Original Baseline: Primary 1.30%, Secondary 9.64% Actual (current): Primary 0.84%, Secondary 9.32% (2014-15). Will be updated with 2015-16 school year data (when available in the first trimester of 2017). Original End-of-Project Target: Primary 0.09%, Secondary 8.50% Revised wording: Primary and Secondary school gross failure rate among Participating Schools. Revised Baseline: Primary 1.10%, Secondary 3.49 (2014-15 school year). Revised End-of-Project Target: Primary 1.00%, Secondary 3.26% (2017-18 school year). Rationale: The wording for indicator 3 has been adjusted to reflect the revised PDO. Therefore, "basic education schools in programs to strengthen SBM" has been replaced with "Participating Schools." In addition, data for this indicator will be added for PRE and PETC schools as of the 2014-15 school year to reflect the change in the Project beneficiaries. PDO-level indicator 5. Revised. Original wording: Repetition rate among secondary schools in programs to strengthen SBM (PEC, PETC). Original Baseline: 0.87% Actual (current): 0.82% Original End-of-Project Target: 0.67% Revised wording: Secondary school repetition rate among Participating Schools. Revised Baseline: 0.63% (2014-15 school year) Revised End-of-Project Target: 0.60% (2017-18 school year) Rationale. The wording for indicator 3 has been adjusted to reflect the revised PDO. Therefore, "basic education schools in programs to strengthen SBM" has been replaced with "Participating Schools." In addition, data for this indicator will be added for PRE and PETC schools as of the 2014-15 school year to reflect the change in the Project beneficiaries. Intermediate Results Indicators The wording for all intermediate results indicators has been adjusted to reflect the revised PDO. Therefore, reference to "basic education schools in programs to strengthen "SBM" or "PEC" have been replaced with "Participating Schools" or PRE. In addition, data for these indicators will be added to data for PRE and PETC schools as of the 2014-15 school year to reflect the change in the Project beneficiaries. 10 In addition, the indicator measuring the proportion of school directors that receive capacity building on the use of the SBM dashboard in schools in programs to strengthen SBM (PEC and PETC) has been dropped because (as explained in the Components Section), the explicit mention of the school dashboards has been deleted. This will allow stakeholders greater flexibility/autonomy to choose the most relevant capacity building activities to improve managerial capacity at the school level. Change in Legal Covenants Explanation: The direct support to PRE schools will be provided by the Federal Government to the schools without the States' involvement. The legal covenants related to the legal agreements between the Federal Government and the States describe the changes on the flow of funds directly from SEP, through a federal trust fund, to the PRE Schools for Component 1 of the Project. As a result, the implementation arrangements in the LA will be slightly adjusted to reflect this proposed change in the flow of funds. Except for how the funds would flow, all other obligations by the States and PRE Schools remain unchanged. Finance Ln/Cr/T Date Recurre Frequen Agreement Description of Covenant Status Action F Due nt cy Reference Loan Agreement: Coordination Agreement | Description: The Borrower, through SEP, shall enter into a separate Coordination Agreement, satisfactory to the Bank, for purposes of the IBRD- carrying out of the Complie No 84460 Project, with each of the d with Change States. The Borrower, through SEP, shall exercise its rights and carry out its obligations under each Coordination Agreement. Schedule 2, I.A.2 | Frequency: CONTINUOUS Loan Agreement: States Obligations | Description: The Borrower, through SEP, shall cause each State to abide by all applicable Project IBRD- Complie No provisions laid out in the 84460 d with Change Loan Agreement, including the carrying out of the Project in accordance to the Operational Manual (including the IPP and 11 the Anti-Corruption Guidelines). Schedule 2, I.A.3 | Frequency: CONTINUOUS Loan Agreement: Direct Support | Description: In order for a PEC School to receive a Direct Support: (i) the PEC School shall have entered into, and be in compliance with, an IBRD- Complie agreement with the Revised 84460 d with relevant State (through its AEL) under terms and conditions set forthin the Operational Manual. Schedule 2, I.A. 4.(b) | Frequency: CONTINUOUS Loan Agreement: Direct Support | Description: In order for a Participating School to receive a Direct Support: (i) the Participating School shall have entered into, and be IBRD- in compliance with, an Complie Proposed 84460 agreement with the d with relevant State (through its AEL) under terms and conditions set forth in the Operational Manual. Schedule 2, I.A. 4.(b) | Frequency: CONTINUOUS Loan Agreement: Organizational Structure | Description: The Borrower, through SEP, shall maintain and operate at all times IBRD- Complie No during Project 84460 d with Change implementation an organizational structure acceptable to the Bank. Schedule 2, I.A.6.(a) | Frequency: CONTINUOUS 12 Loan Agreement: Contrato de Mandato | Description: The Borrower, through SHCP and SEP, shall enter into a contract, satisfactory to the Bank, with NAFIN. The Borrower shall exercise its rights and IBRD- Complie No carry out its obligations 84460 d with Change under the Contrato de Mandato in such a manner as to protect the interests of the Bank and to accomplish the purposes of the Loan. Schedule 2, I.B. | Frequency: CONTINUOUS Finance Agreement: Trust Agreements | Description: The Borrower, through SEP, shall transfer the funds to finance Part 1 of the Project through the FNEC and through the relevant FEEC. The Borrower, through SEP, IBRD- Complie shall exercise its rights Revised 84460 d with and carry out its obligations under the FNEC and under the FEECs in such a manner as to protect the interests of the Bank and to accomplish the purposes of the Loan. Schedule 2, I.C. | Frequency: CONTINUOUS Loan Agreement: Trust Agreements | Description: The Borrower, through SEP, IBRD- Complie shall transfer the funds to Proposed 84460 d with finance Part 1 of the Project through the FPEEARE to the Participating Schools. 13 Schedule 2, I.C. | Frequency: CONTINUOUS Loan Agreement: Anti- Corruption | Description: The Borrower shall ensure that the Project is IBRD- carried out in accordance Complie No 84460 with the provisions of the d with Change Anti-Corruption Guidelines. Schedule 2, I.D.1 | Frequency: CONTINUOUS Finance Agreement: Anti-Corruption Notice to States | Description: The Borrower, through SEP, shall issue a notice (Oficio) acceptable to the Bank asking the States to comply with transparency and anti-corruption IBRD- provisions, and stating Complie Revised 84460 that once the States have d with deposited funds in the relevant FEEC, such deposit will be interpreted as a tacit acceptance of the Oficio's transparency provisions. Schedule 2, I.D.2 | Frequency: CONTINUOUS Loan Agreement: Anti- Corruption Notice to States | Description: The Borrower, through SEP, shall ensure that each State complies with the terms and conditions of IBRD- the respective written Complie Proposed 84460 commitment letters to d with comply with the Anticorruption Guidelines, as each commitment letter is included in the Operational Manual, in response to the 14 Borrower's notice Schedule 2, I.D.2 | Frequency: CONTINUOUS Finance Agreement: Anti-Corruption Notice to FNECs and FEECs | Description: The Borrower, through SEP, shall issue a notice to the financial institutions that IBRD- Complie administer the funds Revised 84460 d with under the FNEC and FEECs informing them of the existence of the Anti-Corruption Guidelines. Schedule 2, I.D.3 | Frequency: CONTINUOUS Loan Agreement: Anti- Corruption Notice to FPEEARE | Description: The Borrower, through SEP, shall issue a notice to the financial institution IBRD- that administers the funds Complie Proposed 84460 under the FPEEARE d with informing them of the existence of the Anti- Corruption Guidelines. Schedule 2, I.D.3 | Frequency: CONTINUOUS Finance Agreement: Trust Agreements (cont.) | Description: The Borrower, through SEP, shall ensure, and shall cause the States to ensure, through the IBRD- exercise of the Complie Revised 84460 Borrower's voice and d with voting rights and the exercise of the State's voice and voting rights in the technical committees of the FNEC or the FEECs, as it may correspond, that Part 1 of 15 the Project is carried out in accordance with the provisions of this Agreement. Schedule 2, I.C.(b) | Frequency: CONTINUOUS Loan Agreement: Trust Agreements (cont.) | Description: The Borrower, through SEP, shall ensure, through the exercise of the Borrower's voice and IBRD- voting rights in the Complie Proposed 84460 technical committee of d with the FPEEARE, that Part 1 of the Project is carried out in accordance with the provisions of this Agreement. Schedule 2, I.C.(b) | Frequency: CONTINUOUS Loan Agreement: Trust Agreements (cont. 2) | Description: (including IBRD- the Anti-Corruption Complie No 84460 Guidelines provisions d with Change and the IPP). Schedule 2, I.C.(b) | Frequency: CONTINUOUS Loan Agreement: Trust Agreements (cont. 3) | Description: The Borrower, through SEP, shall exercise its rights and carry out its obligations under the IBRD- Not yet FPEEARE in such a New 84460 due manner as to protect the interests of the Bank and to accomplish the purposes of the Loan. Schedule 2, I.C.(c) | Frequency: CONTINUOUS Loan Agreement: Anti- IBRD- Corruption Notice to Not yet New 84460 States (cont.) | due Description: (Oficio) 16 acceptable to the Bank, asking the States to comply with transparency and anticorruption provisions. Schedule 2, I.D.2 | Frequency: CONTINUOUS Financing Reallocations Explanation: The Government of Mexico requested the proposed reallocation between disbursement categories as detailed in the Legal Amendment letter and in this Restructuring Paper. A combined total of US$5,975,000 has been reduced from two categories: (i) Project Incremental Costs, which refers to the allocation agreed upon by the Bank and SEP for incremental operating expenditures, and (ii) Consultants’ services, non - consulting services, and Capacity Building which refers to expenditures incurred for such services and for capacity building activities such as workshops, conferences, and seminars related to the Project. This total has been reallocated to Category 1 which provides for all goods and services related to Direct Support for Participating Schools relevant to the Project as described under Component 1: Increasing School Autonomy and Parent Participation. Current Actual Pending Ln/Cr/T Currenc Cat. Allocatio Allocatio Disbursement % Category of Disburse Commit F y No. n n (Type Total) Expenditure ments ments Propose Propose Current Current d d GO, CW, CS IBRD- Relevant 342,000, 122,558, 347,975, 84460- USD 1 0.00 100.00 100.00 Direct 000.00 490.84 000.00 001 Support Incremental 2,000,00 150,000. 2 0.00 0.00 100.00 100.00 Costs (OP) 0.00 00 CS, NCS and 5,125,00 1,000,00 3 Capacity 0.00 0.00 100.00 100.00 0.00 0.00 Building PREMIUM FOR 5 0.00 0.00 0.00 0.00 0.00 0.00 CAPS/COLL ARS 349,125, 122,558, 349,125, Total: 0.00 000.00 490.84 000.00 Disbursement Estimates Change in Disbursement Estimates Explanation: Disbursement estimates have been changed to reflect actual disbursements to date and estimates for the 17 remaining loan balance. Fiscal Year Current (USD) Proposed (USD) 2015 875,000.00 875,000.00 2016 161,500,000.00 122,558,490.84 2017 75,000,000.00 0.00 2018 75,000,000.00 192,816,509.16 2019 37,625,000.00 33,750,000.00 2020 0.00 0.00 Total 350,000,000.00 350,000,000.00 Components Change to Components and Cost Explanation: Project Component 1. Increasing School Autonomy and Parent Participation. Component 1 will now support the provision of Direct Support to foster school autonomy and implement Improvement Plans in 'Participating Schools' instead of in PEC schools. The description and activities under Project Component 1 will only experience minor changes related to the school eligibility criteria and criteria for resource allocation to schools. Eligibility criteria will change since 'Participating Schools' will now be selected in two different ways: (i) PRE schools will be selected by the Federal Government and ratified by the States, and (ii) PETC schools will be selected by the Local Education Authority (AEL) and approved by the Federal Government. Previously, schools applied voluntarily to the program and were selected by the States. Priority will continue to be given to schools serving marginalized and vulnerable populations and those with low achievement levels in the national standardized test and with high dropout rates. The Government has decided to change the eligibility criteria to ensure that schools in greatest need benefit from program participation regardless of whether they apply or not. One of the lessons learned with PEC was that the poorest schools (usually with the lowest capacity and human and social capital) opt out of the program whereas the relatively better off schools self-selected into the program. The amounts of the direct support to PRE schools will now be defined by a resource allocation formula using only one criterion: exogenous conditions as opposed to the two criteria (exogenous conditions and performance in quality indicators) used previously under PEC. The Government has decided to only use exogenous conditions (for the moment), since PRE is a new program and finding reliable and fair proxies to measure school performance in quality indicators starting from the outset is not feasible. However, the Government is considering reintegrating the quality criteria once PRE matures. In the case of PETC, the direct support is allocated by fixed payments considering equity criteria and the financial availability of resources assigned to the school autonomy component of the PETC. The Government is also considering integrating quality criteria into this aspect of PETC. Project Component 2. Improving Schools' Managerial Capacity. Component 2 will now support the provision of technical assistance to 'Participating Schools' to strengthen school-based management. The explicit reference to the school dashboards will be deleted because the Government has now decided that it is better to have each state decide which interventions make the most sense depending on their specific context and challenges. This does not exclude the possibility of using the dashboards to strengthen SBM 18 and will allow incorporation of other capacity building strategies to improve managerial skills of school directors and communities. At least 6 out of the 32 states have already been selected and are implementing concrete capacity building activities to improve school management practices. Project Component 3 Research and Innovation. The activities of Component 3 remain the same, but now support the provision of support to States to improve adherence to Operational Rules of "Participating Schools" instead of PEC's Operational Rules through the carrying out of workshops and knowledge exchange activities. As such the description under Project Component 3 will remain unchanged. Current Component Proposed Component Current Cost Proposed Action Name Name (US$M) Cost (US$M) Increasing School Increasing School Autonomy and Parent Autonomy and Parent 342.00 342.00 Participation Participation Improving Schools' Improving Schools' 3.50 3.50 Managerial Capacity Managerial Capacity Research and Innovation Research and Innovation 3.62 3.62 Total: 349.12 349.12 Other Change(s) Change in Financial Management Explanation: Financial Management arrangements will be simplified. Before the restructuring, funds were transferred from PEC's National Trust Fund to a number of State Trust Funds only after States participating in the program transferred their contribution into the State Trust Funds. The funds were then transferred to eligible schools as per the instructions of the Local Education Authority ( Autoridad Educativa Local, AEL). With the proposed restructuring, the flow of funds will operate as follows: Under PRE, every school cycle, the Program's funds will be transferred to a National Trust Fund (Fideicomiso del PRE) and from the National Trust Fund directly to the schools. Under PETC, every school cycle, the Program's funds will be transferred to the State Finance Secretariats. Then, funds will be transferred to the State Education Secretariats and from there, funds will be transferred to Eligible Schools under the PETC Program. Accountability and eligibility of expenditures will be mostly the same under both Programs, PRE and PETC, with minor differences, which will be detailed in the operational manual. Other Change(s) Explanation: The Loan Agreement will be amended to make the PETC eligible expenses retroactive as of January 2016. This action is needed since the Government decided to include, as part of the Project Component 1, direct support to foster school autonomy in PETC schools. The only activities that will be paid for retroactively with the Bank Loan will be those activities considered in the original Project design, namely direct support to implement Improvement Plans for increasing School Autonomy and Parent Participation. The Loan Agreement will be amended to reflect these changes. All PETC expenditures followed the original implementation arrangements, making them eligible for retroactive financing. 19 Annex 1: Results Framework and Monitoring Project Project Mexico School Based Management Project (P147185) Restructuring Status: FINAL Name: Stage: Team Requesting Leader(s) Rafael E. De Hoyos Navarro LCC1C Created by: Antonella Novali on 13-Apr-2016 Unit: : Product Responsible IBRD/IDA GED04 Modified by: Antonella Novali on 07-Jul-2017 Line: Unit: Country: Mexico Approval FY: 2015 LATIN AMERICA AND Financing Region: Investment Project Financing CARIBBEAN Instrument: Project Development Objectives Original Project Development Objective: The objective of the Project is to improve schools' managerial capacity and parental participation to reduce dropout, repetition and failure rates among PEC Schools and PETC Schools. Proposed Project Development Objective (from Restructuring Paper): The objective of the Project is to improve schools' managerial capacity and parental participation to reduce dropout, repetition and failure rates among Participating Schools. Results Core sector indicators are considered: Yes Results reporting level: Project Level Project Development Objective Indicators Corpor Status Indicator Name Unit of Measure Baseline Actual(Current) End Target ate 20 Marked for Proportion of basic education Percentage Value 10.50 10.50 40.00 Deletion schools in programs to Date 01-Aug-2014 30-Apr-2016 31-Dec-2018 strengthen SBM (PEC and PETC) with a director that has Comment a ?sufficient? level of managerial capacity New Proportion of a representative Percentage Value 21.00 21.00 25.00 sample of Participating Schools Date 01-Aug-2014 16-Dec-2016 31-Dec-2018 with a director that scores 3 or above in the World Comment Management Survey Marked for Proportion of PEC schools with Percentage Value 72.70 84.01 78.00 Deletion parents' associations Date 01-Aug-2014 30-Apr-2016 31-Dec-2018 participating in the design, monitoring, and adjustment of Comment the school improvement plan New Proportion of a sample of Percentage Value 83.90 83.90 90.00 Participating Schools that Date 01-Aug-2014 16-Dec-2016 31-Dec-2018 increase parental participation (score more than 1 in the AGE) Comment Revised Dropout rate among Percentage Value 3.18 3.18 2.91 Participating Schools (primary) Date 01-Aug-2014 16-Dec-2016 31-Dec-2018 Comment Revised Dropout rate among Percentage Value 5.31 5.31 4.80 Participating Schools Sub Type Date 01-Aug-2014 16-Dec-2016 31-Dec-2018 (secondary) Breakdown Comment Revised Gross failure rate among Percentage Value 1.10 1.10 1.00 Participating Schools (primary) Date 01-Aug-2014 16-Dec-2016 31-Dec-2018 21 Comment Revised Gross failure rate among Percentage Value 3.49 3.49 3.26 Participating Schools Sub Type Date 01-Aug-2014 16-Dec-2016 31-Dec-2018 (secondary) Breakdown Comment Revised Repetition rate among Percentage Value 0.63 0.63 0.60 Participating Schools Date 01-Aug-2014 16-Dec-2016 31-Dec-2018 (secondary) Comment Intermediate Results Indicators Corpor Status Indicator Name Unit of Measure Baseline Actual(Current) End Target ate No Change General national criteria for the Yes/No Value No No Yes application of the formula to Date 01-Aug-2014 16-Dec-2016 31-Dec-2018 allocate direct transfers to schools adopted by all States Comment No Change Design of capacity building Yes/No Value No Yes Yes activities on SBM for school Date 01-Aug-2014 30-Apr-2016 31-Dec-2018 supervisors Comment Revised Percentage of supervisors of Percentage Value 0.00 62.03 80.00 Participating Schools that Date 01-Aug-2014 30-Apr-2016 31-Dec-2018 receive capacity building activities in SBM Comment No Change Design of capacity building Yes/No Value No Yes Yes activities on SBM for school Date 01-Aug-2014 16-Dec-2016 31-Dec-2018 directors Comment 22 Marked for Proportion of school directors Percentage Value 0.00 0.00 80.00 Deletion that receive capacity building Date 01-Aug-2014 30-Apr-2016 31-Dec-2018 on the use of the SBM dashboard in schools in Comment programs to strengthen SBM (PEC and PETC) No Change Design of capacity building Yes/No Value No No Yes activities on SBM for parents Date 01-Aug-2014 30-Apr-2016 31-Dec-2018 Comment Revised Proportion of Participating Percentage Value 0.00 46.13 90.00 Schools that provide capacity Date 01-Aug-2014 30-Apr-2016 31-Dec-2018 building activities to parents on SBM Comment No Change Direct project beneficiaries Number Value 6900000.00 9656040.00 8900000.00 Date 01-Aug-2014 30-Apr-2016 31-Dec-2018 Comment No Change Female beneficiaries Percentage Value 48.63 49.10 48.70 Sub Type Supplemental No Change New instrument to measure Yes/No Value No Yes Yes schools' managerial capacities Date 01-Aug-2014 30-Apr-2016 31-Dec-2018 designed and implemented Comment Revised Baseline data collected, Yes/No Value No Yes Yes analyzed, and presented to Date 01-Aug-2014 16-Dec-2016 31-Dec-2018 education authorities (for the assessment of interventions on Comment 23 Participating Schools) Revised First follow-up data collected, Yes/No Value No No Yes analyzed, and presented to the Date 01-Aug-2014 30-Apr-2016 31-Dec-2018 education authorities for policy adaptation/re-design (for the Comment assessment of interventions on Participating Schools) Revised Second follow-up data Yes/No Value No No Yes collected, analyzed, and Date 01-Aug-2014 30-Apr-2016 31-Dec-2018 presented to the education authorities for policy Comment adaptation/redesign (for the assessment of interventions on Participating Schools) 24