The World Bank Inclusive Early Childhood Education and Care (P157117) REPORT NO.: RES38064 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF INCLUSIVE EARLY CHILDHOOD EDUCATION AND CARE APPROVED ON FEBRUARY 21, 2017 TO REPUBLIC OF SERBIA EDUCATION EUROPE AND CENTRAL ASIA Regional Vice President: Cyril E Muller Country Director: Linda Van Gelder Regional Director: Fadia M. Saadah Practice Manager/Manager: Harry Anthony Patrinos Task Team Leader: Bojana Naceva, Marijana Jasarevic The World Bank Inclusive Early Childhood Education and Care (P157117) ABBREVIATIONS AND ACRONYMS ECEC Early Childhood Education and Care ICECE Inclusive Childhood Education and Care Project IEQE Institute for the Education Quality and Evaluation MoESTD Ministry of Education, Science and Technological Development MoLEVSA Ministry of Labor, Employment, Veterans and Social Affairs PDO Project Development Objective The World Bank Inclusive Early Childhood Education and Care (P157117) BASIC DATA Product Information Project ID Financing Instrument P157117 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 21-Feb-2017 30-Dec-2022 Organizations Borrower Responsible Agency Minister of Education, Science and Technological Ministry of Finance Development Project Development Objective (PDO) Original PDO The PDO is to improve access to quality Early Childhood Education and Care (ECEC) services, in particular for children from socially disadvantaged backgrounds. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-86930 21-Feb-2017 12-May-2017 13-Feb-2018 30-Dec-2022 50.00 6.18 44.18 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Inclusive Early Childhood Education and Care (P157117) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. This restructuring comprises: 1) reallocation of the EUR 4 million of loan proceeds; 2) change of the third component and its cost; and 3) revision of the Result Framework. Specifically, the restructuring will allow the Client to ensure quality implementation of the project by reallocating EUR 4 million towards activities critical to achieving the PDO but currently under-funded, i.e. implementation of quality improvements of the learning environment, infrastructure works, and the grants program. Reallocation of these funds would allow for quality implementation of several important quality/inclusion related activities to be achieved. This would be the first restructuring of the project. 2. The Inclusive Childhood Education and Care Project focuses on improving access, quality, and equity in ECEC. The project contributes to outcomes of the current Country Partnership Framework related to building human capital to increase labor productivity and enhance social inclusion through closing education enrollment gaps for low-income and Roma students starting in pre-primary. Progress towards the PDO and overall implementation progress are rated moderately satisfactory. Since its effectiveness in February 2018, project implementation has proceeded unevenly, with quality and inclusion Components progressing fairly well, whereas the activities within Component 1 (infrastructure work) have encountered delays. However, the recent employment of several technical staff has led to considerable progress in establishing an appropriate structure for stable implementation of the infrastructure works. Thus far, 11 construction sites have been identified, whereas infrastructure works on the three pilot sites are expected to start in September 2019. The Preschool Curriculum Framework (Years of Ascent) was adopted by the Ministry of Education, Science and Technological Development (MoESTD) recently along with the several important strategic documents. The rollout of the curriculum beyond the pilot kindergartens will start as of September 2019. A communication consultant firm was hired to work along with the government on a communication strategy with the aim to improve early stimulation, parenting skills/care at home, and registration for and enrollment in preschools and other services. Moreover, the grant program was launched, and 35 selected municipalities received technical assistance to develop proposals aimed at improving coordination and cooperation among relevant actors in providing holistic and high-quality ECEC services to parents and children. Implementation of the grant projects is expected to start in September 2019. 3. Implementation status per component: (a) Component 1: Expanding the supply of preschool spaces. There is considerable progress in implementing activities under Component 1 lately. Site visits were conducted in all envisaged locations. The infrastructure works on the three pilot sites are expected to start in September 2019. The PMU is currently working on finalizing the next tender for the second batch of sites and the bidding documents are expected to be ready for publishing by September 2019. In addition, the PMU has identified suitable sites in the several other municipalities and has started the groundwork to make sure that the bidding documents would be announced by January 2020. (b) Component 2: Strengthening the quality of preschool services. After the adoption of the new curriculum "Years of Ascent," the MoESTD has organized several public events to familiarize the preschool teachers and all interested parties about the content and the learning approaches The World Bank Inclusive Early Childhood Education and Care (P157117) promoted through the new curriculum. The implementation of the curriculum in selected municipalities will start as of September 1, 2019. In addition, the MoESTD started to work on quality assurance improvements and in cooperation with the Institute for the Education Quality and Evaluation (IEQE) developed a plan of future activities. Regarding the improvement of the institutional self-evaluation, the consultant has been working with the MoESTD on the evaluation of the current methodology and practices. The decision for future development will be made based on the evaluation findings. The self-evaluation process is expected to start in January 2020. (c) Component 3: Supporting young children and families. A communication consultant firm was recently hired to prepare a full-fledged communications strategy to include different outreach activities focused on empowering parents and families to support children’s holistic development through increased knowledge about the importance of the early years and to stimulate demand for relevant services for families with young children. In addition, the MoESTD has launched the grant program and organized training for the representatives of local stakeholders. The public request for proposal submission was recently closed. The implementation of the grants is expected to start in September 2019. (d) Component 4: Project management, technical assistance, and monitoring and evaluation. The Project Implementation Unit (PIU) and Central Fiduciary Unit (CFU) are fully staffed. In addition, the MOESTD has also appointed high government officials as Focal Points for each project component to strengthen the internal management structure, resulting in considerable progress in project implementation. 4. The current disbursement ratio is 12 percent. In terms of financial management and procurement arrangements, the project is rated satisfactory. There are no outstanding audits under the project. The financial project audit for 2018 had an unmodified (clean) opinion, and no internal controls issues have been mentioned in the related management letter. All legal covenants have been complied with. 5. Environmental Safeguards. The project rates satisfactorily under the category “B.” 6. The rationale for Restructuring. The project envisaged support in development and financing of a new subsidy to ensure that the most deprived families are given priority to enroll their children ages 3 to 5.5 years in preschool services free of charge. The Ministry of Labor, Veterans and Social Affairs (MoLEVSA) adopted recently a new Law on Financial Support to Families with Children that introduces a subsidy for preschool attendance of children whose parents are Financial Social Assistance beneficiaries. EUR 4 million from the loan proceeds were allocated to co-finance a portion of the annual expense for this subsidy. However, the World Bank was recently informed that the Budget System Law does not allow transferring funds between two direct budget beneficiaries. The government allocated sufficient funds for financing the preschool subsidy entitlement in its national budged and thus sought reallocation of the EUR 4 million towards other activities. The intended output and sustainability of this activity are achieved with financing of the subsidy guaranteed by the government. Therefore, the proposed reallocation of the EUR 4 million allocated in the disbursement category (3) within disbursement categories (1) and (2) would not have negative consequences to the achievement of the PDO. It would, however, contribute significantly to achieving the PDO. The national rollout of the new curriculum will exhaust the allocated funds for implementation of the quality assurance activities, so additional funds would be critical for achieving the quality related PDO’s outcome. Additional funds are also needed for furnishing new facilities with age appropriate furniture and didactics, as well as for infrastructure works since there is bigger demand for new facilities and less for extension and reconstruction of the existing facilities, as originally planned. The The World Bank Inclusive Early Childhood Education and Care (P157117) project committed to provide 17,000 additional preschool spaces, thus additional funds would be instrumental for achieving this outcome. II. DESCRIPTION OF PROPOSED CHANGES 1. The proposed restructuring seeks authorization for: (i) reallocation of the funds from disbursement category three within the first and second disbursement categories; (ii) revision of VAT exception of the second disbursement category, (iii) dropping out subcomponent 3.3 “subsidies to ensure free preschool participation among the most vulnerable children ages 3 to 5.5 years”; (iv) change in the first disbursement category’s specification of Eligible Expenditures that may be financed out of the loan proceeds; and (v) revision of the Results Framework. Specifically, this restructuring seeks approval for the following revisions to the project: (a) The government proposed reallocation of the EUR 4 million from the third disbursement category to the first and the second categories. Namely, the loan proceeds originally allocated for subsidies under Part 3.C of the Project will be provided through the state budget. Thus, the government suggest Category (3) Subsidies under Part 3.C of the Project to be removed, and the total sum amounting to EUR 4 million to be reallocated to categories (l) and (2) in the following manner: EUR 3,700,000 to Category (1) and EUR 300,000 to Category (2). The proposed reallocation within disbursement categories will also have impact on the current cost per components. The proposed change in reallocation between disbursement categories and allocations per component are provided below. (b) The Legal Agreement stipulates that the expenditures to be financed under the Category (2) -Grants under Part 3.B of the Project are exclusive of taxes. However, this provision cannot be implemented due to the articles 33 and 34 of the "Rulebook on the Method and Procedure for VAT Exemption" that do not allow local partners to be financed from the Grant Program proceeds to be excluded from VAT payments. Therefore, the percentage of expenditures to be financed for Eligible Expenditures in the Category (2) Grants under Part 3.B of the Project, needs to be changed from "exclusive of Taxes" to 100 % inclusive of Taxes". (c) Category 1(a) needs to be changed to specify that operating costs are eligible expenditures that may be financed out of the loan proceeds. This was omitted to be specified in the current table of categories of eligible expenditure. (d) The PDO remains unchanged, though change to the Results Framework is needed to reflect the proposed change to the scope of subcomponent 3.3. The revision includes dropping the intermediate indicator related to this subcomponent: “FSA beneficiary children ages 3 to 5.5 years enrolled in preschool free of charge.” The World Bank Inclusive Early Childhood Education and Care (P157117) III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) The World Bank Inclusive Early Childhood Education and Care (P157117) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Expanding the supply of Expanding the supply of 34.00 Revised 36.75 preschool spaces preschool spaces Strengthening the quality of Strengthening the quality of 5.00 Revised 5.95 preschool services preschool services Supporting young children and Supporting young children and 9.00 Revised 5.30 families families Project management, technical Project management, technical assistance, and monitoring and 2.00 No Change assistance, and monitoring and 2.00 evaluation evaluation TOTAL 50.00 50.00 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IBRD-86930-001 | Currency: EUR iLap Category Sequence No: 1(A) Current Expenditure Category: G,W,non-CS-except Parts 3.B ,3.C 36,000,000.00 34,493.50 38,750,000.00 100.00 100.00 iLap Category Sequence No: 1(B) Current Expenditure Category: CS- except Parts 3.B ,3.C 5,382,500.00 256,667.28 6,332,500.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: Grants under Part 3.B 1,500,000.00 0.00 1,800,000.00 100.00 100.00 iLap Category Sequence No: 3 Current Expenditure Category: Subsidies under Part 3.C 4,000,000.00 0.00 0.00 100.00 100.00 The World Bank Inclusive Early Childhood Education and Care (P157117) Total 46,882,500.00 291,160.78 46,882,500.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2017 0.00 0.00 2018 6,000,000.00 1,000,000.00 2019 8,000,000.04 6,000,000.00 2020 9,999,999.96 9,000,000.00 2021 9,999,999.96 9,000,000.00 2022 8,000,000.04 12,000,000.00 2023 8,000,000.04 9,882,500.00 . The World Bank Inclusive Early Childhood Education and Care (P157117) . Results framework COUNTRY: Serbia Inclusive Early Childhood Education and Care Project Development Objectives(s) The PDO is to improve access to quality Early Childhood Education and Care (ECEC) services, in particular for children from socially disadvantaged backgrounds. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Expanding the supply of preschools spaces National preschool enrollment rates for 52.00 52.00 52.00 58.00 60.00 62.00 62.00 children ages 3 and 5.5 years (Percentage) National preschool enrollment rates for children ages 3 and 5.5 19.00 19.00 19.00 21.00 23.00 25.00 25.00 years within the eligible municipalities (Percentage) Strengthening the quality of preschool services Preschools that undergo external evaluation and 44.00 44.00 44.00 50.00 50.00 55.00 55.00 rank 4 (on a scale of 1 to 4) (Percentage) Supporting young children and families The World Bank Inclusive Early Childhood Education and Care (P157117) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Children ages 12 to 59 months in the lowest quintile with whom an adult 85.00 85.00 85.00 90.00 92.00 92.00 92.00 has engaged in early stimulation activities at home (Percentage) Children ages 12 to 59 months from Roma families with whom an adult has engaged in 68.00 68.00 68.00 70.00 72.00 75.00 75.00 early stimulation activities at home (Percentage) PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Expanding the supply of preschool spaces Preschool construction and rehabilitation projects preceded by a community 0.00 0.00 100.00 100.00 100.00 100.00 100.00 stakeholder consultation (Percentage) Number of sub-projects with civil works for 0.00 20.00 which consultation The World Bank Inclusive Early Childhood Education and Care (P157117) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 summaries are produced and disseminated (Number) Additional classrooms built or rehabilitated at the preschool level resulting 0.00 0.00 100.00 340.00 630.00 779.00 779.00 from project interventions (Number) Additional classrooms built at the preschool level resulting from 0.00 0.00 0.00 60.00 150.00 193.00 193.00 project interventions (Number) Additional classrooms rehabilitated or re- purposed at the 0.00 0.00 100.00 280.00 480.00 586.00 586.00 preschool level resulting from project interventions (Number) Strengthening the quality of preschool services Additional qualified preschool teachers resulting 0.00 0.00 1,500.00 4,500.00 8,500.00 12,000.00 12,000.00 from project interventions (Number) Pre-service training institutions that reformed their study programs based 0.00 0.00 2.00 4.00 8.00 10.00 10.00 on the new preschool curriculum, and core The World Bank Inclusive Early Childhood Education and Care (P157117) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 competences required for preschool teachers (Number) Primary school pedagogical staff trained in new 0.00 0.00 350.00 700.00 1,000.00 1,300.00 1,300.00 preschool curriculum (Number) Preschools with self- evaluations completed 0.00 0.00 0.00 30.00 30.00 50.00 50.00 using updated instrument. (Percentage) Supporting young children and families Communication campaign Campaign rolled out developed and rolled out No campaign Firm recruited Materials developed Campaign rolled out Campaign rolled out nationally (Text) Grants awarded to eligible 0.00 0.00 15.00 15.00 30.00 30.00 30.00 municipalities (Number) Male participants (among benefiting families) in grant 0.00 0.00 5.00 10.00 15.00 20.00 20.00 activities (Percentage) FSA beneficiary children ages 3 to 5.5 years enrolled 0.00 0.00 2,000.00 4,000.00 6,000.00 8,000.00 8,000.00 in preschool free of charge (Number) Action: This indicator has been Marked for Deletion Project management, technical assistance, and monitoring and evaluation The World Bank Inclusive Early Childhood Education and Care (P157117) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Evaluation of first phase of 2nd round of grant grant program completed Evaluation of 15 Incorporation of program incorporates and lessons incorporated No report grants lessons into program lessons from into the second phase of evaluation the program (Text) IO Table SPACE The World Bank Inclusive Early Childhood Education and Care (P157117)