94057 Improving Quality and Equity through Accountable Public Funding April 16, 2012 Chile's Tertiary Education Experience Overview Tertiary education enrollment in Chile rose by 51 percent between 2005 and 2010, from 646,000 to 973,000 students. Chile was able to improve both quality and equity of education despite this massive expansion. With partial assistance from IBRD funding and expertise, Chile passed legislation on quality assurance and student financial aid, set up a tertiary education information system, increased the availability of advanced human capital and research capacity, and piloted four performance agreements with universities. The success of these agreements provided proof-of-concept for results-based financing. Challenge MULTIMEDIA In 2005, the quality of tertiary education in Chile varied Video: The University Andres considerably, data on the tertiary education sector was Bello is awarded funding for unreliable, and students from poor backgrounds faced an three projects for academic uphill battle to reach graduation. Internal inefficiencies innovation plagued the tertiary education system, with first year dropout rates upwards of 20 percent in even the best universities, and overly long degree programs that dragged on 3-4 semesters more than planned. There were virtually no More Results remedial classes to strengthen basic competencies. Chile was struggling to transform itself into a "knowledge economy", with a mere 220 PhDs graduating per year and Tertiary education enrollment in Chile rose by only one-third of professors qualified at the PhD level. Finally, there was insufficient accountability and transparency in the use of direct public funding for tertiary education: 95 percent was disbursed to institutions based on historical 51 % precedence and political negotiation, rather than on merit and results. Students enrolled in PhD programs increased Approach The project, "Mejoramiento de la Calidad y Equidad de la 74 % Educación Superior " or Mecesup2, used four mechanisms to increase equity, quality, coherence, and responsiveness in the Chilean tertiary education system, through stronger IBRD provided financing of accountability for performance. A competitively-allocated small grants program that US$25.1 million enabled tertiary education institutions to tactically address priorities in specific areas of need. Grants focused on stimulating innovation, advancing human capital, increasing student learning, and improving institutional management. The piloting of innovative performance agreements LEARN MORE with four universities. The agreements provided each Mece2 website university with an incentive to implement plans of Mece2 project file action in areas of high national priority, as financing depended on their performance measured against set Division of Higher Education in targets. Chile's Ministry of Education Higher Education Information Strengthened tertiary education policy formulation and System (SIES for its Spanish- transparency through the establishment of a language acronym) comprehensive information system, a labor market OECD-WB Report - Reviews of observatory, and a quality assurance system. National Policies for Education: Tertiary Education in Chile Seven in-depth sector studies to inform and guide Universidad de Tarapacá policy. Universidad de Chile Universidad del Bío-Bío Results Universidad de la Frontera The Mecesup2 lending program increased the effectiveness of public funding for tertiary education by enhancing equity, quality, coherence, and responsiveness in the system. Key outcomes include: Successful pilot of results-based financing agreements with four universities resulted in greater accountability and effectiveness of public funding. With the concept now proven by this trial experience, Chile will now roll-out these performance agreements across the tertiary education system. Increase in the production of advanced human capital. Students enrolled in PhD programs increased 74 percent (2005-2010) while graduates of PhD programs increased 65 percent (2005-2009). Exponential growth of enrollment in remedial classes to strengthen basic competencies, from 307 students in 2005 to more than 35,700 in 2010. This was a notable achievement given 43 percent of students enrolled in tertiary education in 2009 came from the lowest three income quintiles and typically had weak secondary education. Creation of the Tertiary Education Information System and the strengthening of the Ministry of Education's capacity to collect, process, validate and publish information. Passing of the 2006 Quality Assurance Law, which consolidated the quality assurance system. The number of accredited tertiary education institutions increased from 41 to 87 between 2005 and 2010. Bank Contribution IBRD provided financing of US$25.1 million, and the Government of Chile contributed an additional US$75 million. IBRD provided technical assistance continuously throughout supervision. Aspects of this technical assistance resulted in major joint policy studies by the World Bank and the Organization for Economic Cooperation and Development (OECD): Reviews of National Policies for Education: Tertiary Education in Chile, co-authored by the OECD and The World Bank, 2009 Human Capital Formation Abroad: A Review of Chile's Higher Education Scholarships Programme, co-authored by the OECD and the World Bank, June 2010 Higher Education in Regional and City Development: Bío Bío Region, Chile, co-authored by the OECD and the World Bank, 2010 Partners The partnership with the OECD in Chile has led to similar joint work in the Dominican Republic and in Colombia. Moving Forward Chile's government has requested a new US$40 million lending program to further advance the achievements of Mecesup2, and the World Bank Board approved the loan on March 13, 2012. The new initiative will roll out performance-based funding agreements, targeting quality and relevance in pedagogy programs, professional institutes, and technical training centers, among others. The Project Implementation Unit for Mecesup2 has been absorbed by the Ministry of Education and renamed the Department of Institutional Funding, giving it formal responsibilities for all public funding of tertiary education institutions. The performance agreements piloted in Chile have resulted in significant knowledge transfer among other countries. Chile has shared its experience and expertise in Tunisia, Bangladesh, India, Ghana, Mozambique, Lesotho, Montenegro, and Indonesia. Beneficiaries Andrea Arriagada is the first graduate of the Environmental Civil Engineering degree in the history of the Technical University Federico Santa María in Chile. Her excellent academic results provided her with the springboard to become an entrepreneur in environmental solutions. "For me this is a great personal achievement. I feel prepared academically and with the tools necessary to face the working world," Arriagada says. "The University gave me not only academic knowledge, but also the opportunity to be a student leader and to learn to speak in public. I am currently working with a start-up at the University's International Institute for Business Innovation, offering environmental solutions to industrial problems, specifically in agriculture and agribusiness, where we provide companies with sustainable waste management solutions."