Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No: RES22857

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING OF THE

LEARNING, EQUITY AND ACCOUNTABILITY PROGRAM SUPPORT PROJECT (LOAN 8344-PH)

18 March 2014

TO THE

REPUBLIC OF THE PHILIPPINES

May 4, 2016

GLOBAL PRACTICE EDUCATIONEAST ASIA AND PACIFIC

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

ABBREVIATIONS AND ACRONYMSALS Alternative Learning SystemDepEd Department of EducationDLI Disbursement Linked IndicatorDoF Department of FinanceEBEIS Enhanced Basic Education Information SystemEEP Eligible Expenditure ProgramELLN Early Language, Literacy and NumeracyPDO Project Development ObjectiveSLAC School Learning Action CellWA Withdrawal Application

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Regional Vice President: Victoria KwakwaCountry Director: Mara Warwick

Senior Global Practice Director: Claudia Costin Practice Manager/Manager: Harry Patrinos

Task Team Leader: Samer Al-Samarrai

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PHILIPPINESLearning, Equity and Accountability Program Support Project

CONTENTS

A. SUMMARY 5B. PROJECT STATUS 6C. PROPOSED CHANGES 7

ANNEX 1: RESULTS FRAMEWORK AND MONITORING 11

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DATA SHEET

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PhilippinesLearning, Equity and Accountability Program Support Project (P118904)

EAST ASIA AND PACIFICEducation

.

Report No: RES22857.

Basic Information

Project ID: P118904 Lending Instrument: Investment Project Financing

Regional Vice President: Victoria Kwakwa Original EA Category: Partial Assessment (B)

Country Director: Mara K. Warwick Current EA Category: Partial Assessment (B)Senior Global Practice Director: Claudia Maria Costin Original Approval Date: 18-Mar-2014

Practice Manager/Manager: Harry Anthony Patrinos Current Closing Date: 31-Aug-2018

Team Leader(s): Samer Al-Samarrai.

Borrower: Republic of the Philippines

Responsible Agency: Department of Education .

Restructuring TypeForm Type: Full Restructuring Paper Decision Authority: Country Director ApprovalRestructuring Level:

Level 2

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Financing ( as of 17-Dec-2015 )Key Dates

Project Ln/Cr/TF Status Approval Date Signing Date Effectiveness

DateOriginal Closing Date

Revised Closing Date

P118904 IBRD-83440 Effective 18-Mar-2014 10-Apr-2014 24-Jun-2014 31-Aug-2018 31-Aug-2018

Disbursements (in Millions)

Project Ln/Cr/TF Status Currency Original Revised Cancelled

Disbursed

Undisbursed

% Disbursed

P118904 IBRD-83440 Effective USD 300.00 300.00 0.00 29.00 271.00 10.

Policy WaiversDoes the project depart from the CAS/CPF in content or in other significant respects? Yes [ ] No [ X ]

Does the project require any policy waiver(s)? Yes [ ] No [ X ]

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A. Summary of Proposed ChangesThe following proposed changes were requested by the Government in a letter dated 29 April 2016:

1. Change the loan withdrawal conditions by removing the requirement for a minimum eligible expenditure period and allow withdrawals to be based on reimbursement of expenditure on Eligible Expenditure Programs (EEPs) since the date of signing of the Loan Agreement (April 10, 2014) to the date of submission of the withdrawal application;2. Change the withdrawal schedule to create a single withdrawal category for payment of achievement against remaining Disbursement Linked Indicators (DLIs);3. Adjust the description of Eligible Expenditure Programs (EEPs) to allow the use of any EEPs for payment of achievement against any DLI;4. Adjust disbursement estimates to align with the latest implementation progress; and 5. Reduce the target for the number of elementary school principals trained to reflect the actual number of school principals working in the project target regions.

The proposed restructuring is necessary to accommodate changes in the overall project implementation schedule and to ensure that the Borrower can seek reimbursement for achievements at the time they are made. The target number of elementary school principals trained will be adjusted based on the latest information available which has changed since project preparation.

The proposal is for a Level 2 restructuring as it does not propose any changes to the Project Development Objective or the safeguards categories.

Change in Implementing Agency Yes [ ] No [ X ]

Change in Project's Development Objectives Yes [ ] No [ X ]

Change in Results Framework Yes [ ] No [ X ]

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 [ ] No [ X ]

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 [ X ] No [ ]

Reallocation between Disbursement Categories Yes [ X ] No [ ]

Change in Disbursement Estimates Yes [ X ] No [ ]

Change to Components and Cost Yes [ ] No [ X ]

Change in Institutional Arrangements Yes [ ] No [ X ]

Change in Financial Management Yes [ ] No [ X ]

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 ]

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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 StatusOverall implementation progress has improved and key project related activities supporting the overall project development objective are well underway. The proposed restructuring will help ensure continued progress under the project and it is expected that the project objectives remain achievable.

Key achievements include:

1. A comprehensive Early Language, Literacy and Numeracy teacher training program has been developed and the training has been delivered to all School Principals and at least one teacher in all elementary schools in target regions. Training for the remaining early grade teachers is underway and has reestablished school learning action cells as a focus for teacher professional development efforts. The training represents the largest project component and now that it is underway is expected to contribute in a direct and significant way to achieving the PDO.2. Efforts have also been registered to raise the effectiveness of planning for mother tongue based multilingual education in the early grades. The Department of Education (DepEd) has issued a comprehensive policy on language mapping necessary to provide the information needed to match schools, teachers and students with the same mother tongue and to provide learning materials in the appropriate language. DepEd has also prepared a mother tongue language database/map for each of the targeted regions in accordance to the policy and in advance of the original implementation schedule. These maps will further support PDO achievement.3. Monitoring systems for mother tongue based early grade learning have been developed and a system level assessment has taken place in target regions in August 2015. A set of early grade reading and mathematics assessments have been developed in the major mother tongue languages of the targeted regions. A sub-set of these assessments were used in 2015 to collect information on early grade learning outcomes in the project target regions. The results show low absolute levels of learning and confirm the urgent need for the activities supported through the project. The assessment will be undertaken annually and will provide the PDO indicators.4. Significant progress has also been registered in project activities designed to raise early grade learning outcomes through the strengthening of school based management systems. In September 2015, DepEd issued a revised and simplified set of school improvement planning guidelines and a new format for school report cards. DepEd offices and schools have been oriented on the new tools in time for implementation in the upcoming school year. As part of the project, DepEd is also in the process of completing a comprehensive financial management and operations manual for all staff including school principals and teachers. It is expected that these activities will improve school level planning and financing of the Early Language, Literacy and Numeracy (ELLN) training as well as contribute to the PDO through improved resource use and accountability at the school level.5. Project activities designed to evaluate and reform government programs serving disadvantaged groups have shown less progress. DepEd has evaluated its open high school program and has a set of ongoing internal reviews of its major programs serving disadvantaged groups. However, it is not yet clear how these reviews are progressing and whether action plans to strengthen these programs have been developed and finalized.6. Project management has also improved with appointment in December 2015 of the Independent Disbursement Linked Indicator (DLI) Verification Agent and more regular and timely reporting of project progress. This will ensure that activities are monitored more closely and corrective actions can be taken more quickly to ensure the project remains on course to achieve its objectives.

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Recently, the Department of Education (DepEd) submitted evidence of the achievement of DLI targets, related to project activities and outputs, in the amount of US$42 million. The World Bank has verified these achievements but existing disbursement provisions permit a withdrawal of only US$21 million. DLIs associated with a further US$85 million have also been completed and independent verification of their achievement is expected in June/July 2016. However, existing disbursement provisions will prevent DepEd from applying to withdraw the full US$85 million at that time. The purpose of the current proposed restructuring is to allow the Borrower to seek reimbursement for achievements at the time they are verified and allow the disbursement of the amounts outlined..

C. Proposed Changes.

Development Objectives/ResultsProject Development Objectives

Original PDOThe project development objective is to improve the quality of grades 1 to 3 reading and math skills of children in Target Regions and Target Schools, with a special focus on those belonging to Target Disadvantaged Groups.

Change in Project's Development Objectives.

FinancingChange in Disbursement Arrangements

Explanation:Two key changes are being proposed to simplify the existing disbursement arrangements.

First, the requirement for a Minimum Eligible Expenditure Programs (EEP) Period will be removed. Currently, the Borrower is required to provide evidence that the Minimum EEPs have been incurred against a DLI within 15 months of the date of submission of the Withdrawal Application (WA). A Minimum EEP Period was included in the operation to incentivize stepped or progressive achievement of the DLIs over the course of the Loan. In reality, the inclusion of a Minimum EEP Period has been a barrier to disbursement because of untimely delivery of WAs as a result of lengthy internal procedures in submitting WAs.

Second, it is proposed that the withdrawal conditions are simplified to allow payment for achievement of DLIs with evidence of Minimum Eligible Expenditures incurred from the date of the Loan Agreement (April 10, 2014) to the date of submission of the WA. Currently, the Borrower must provide evidence of Minimum Eligible Expenditures from specific budget lines in a specified (and somewhat restrictive) time period. After amendment, the budget lines that make up the EEP would remain defined (in the Loan Agreement); however, the Borrower could provide evidence that the Minimum Eligible Expenditure has been met from any of the defined budget lines at any time from loan signing to submission of the WA, provided the EEP amounts have not been used for withdrawals for other DLI achievement, and provided that relevant IFRs were produced and are satisfactory to the Bank. For example, after a DLI target has been met and verified, the Borrower would be able to apply for a Loan withdrawal as long as the sum of all EEP spending since the signing of the loan agreement was equal to or greater than the sum of: (a) the DLI target values achieved; and (b) the sum of prior withdrawals.

The main reason for proposing these changes is that the existing disbursement conditions are preventing the Borrower from withdrawing the full loan amount associated with already achieved and verified DLIs.

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The withdrawal conditions were designed, initially, to incentivize a stepped or sequentially progressive achievement of the DLIs. In reality, given complex and sometimes lengthy Borrower approval processes, the Borrower has not been able to disburse successfully, even when DLIs are achieved and verified. Additionally, the stepped approach to disbursement is inconsistent with some implementation realities. For example, all school principals were trained at the same time (DLI 3 periods 2 and 3) rather than over a period of two years as originally envisaged. Under existing disbursement arrangements, it is unlikely that there would be sufficient EEP spending in the relevant period to cover a withdrawal of the Loan amount associated with achievement of this DLI (US$30 million).

The proposed changes will provide the Borrower with additional flexibility in meeting disbursement conditions and accommodate recent changes in the priorities of DepEd. In particular, spending on two of the defined budget lines - the Abot Alam Program and the Alternative Learning System (ALS) - has been relatively low since the beginning of the Project despite large budget allocations. DepEd informed the last supervision mission that much of the budgets under these programs had been shifted to cover other priority programs serving disadvantaged groups. Moreover, from 2016, there has not been any budget allocation for the Abot Alam Program. Allowing all EEPs to be used for reimbursement of all DLIs will avoid further unnecessary delays in disbursement.

These proposed changes were discussed and agreed with DepEd and the Department of Finance (DoF) during the implementation support mission conducted between February 15 and March 1, 2016 and recorded in the Aide Memoire, dated March 11, 2016.

Reallocations

Explanation:The proposal is to adjust the withdrawal schedule to create a single withdrawal category for payment of achievement against remaining DLIs. This is necessary to allow for the proposed changes in the disbursement provisions (outlined in a separate section) which change the loan withdrawal conditions by removing the requirement for a minimum eligible expenditure period and allow withdrawals to be based on reimbursement of expenditure on Eligible Expenditure Programs (EEPs) since the beginning of the date of the Loan Agreement (April 10, 2014) to the date of submission of the WA. Please note that the retention of existing categories and allocations reflects amounts already disbursed as part of previously-achieved DLIs and need to be retained in the revised withdrawal schedule for historical reporting purposes.

Ln/Cr/TF Currency Current Category of Expenditure Allocation Disbursement % (Type

Total)

Current Proposed Current Proposed

IBRD-83440 USD 1st sched disb 20,650,000.00

4,650,000.00 100.00 100.00

2nd&3rd sched disb 11,000,000.00

5,000,000.00 100.00 100.00

4th&5th sched disb 123,350,000.00

18,600,000.00 100.00 100.00

6th & 7th sched disb 92,000,000.00 0.00 100.00 100.00

8th & 9th sched disb 52,250,000.00 0.00 100.00 100.00

FRONT END FEE 750,000.00 750,000.00 100.00 100.00

Payments under Eligible 0.00 271,000,000 0.00 100.00

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Expenditure Programs under Parts 1,2 and 3 of project

.00

Total: 300,000,000.00

300,000,000.00

Disbursement Estimates

Change in Disbursement Estimates

Explanation:

The disbursement estimates have changed largely due to the late appointment of the independent verification agent. The new estimates are based on an agreed timetable for the independent verification of the relevant DLIs and an update on implementation progress drawn from discussions and agreements in the Implementation Support Mission in February-March 2016 reflected in the Aide Memoire of March 11, 2016.

Fiscal Year Current (USD) Proposed (USD)

2014 0.00 0.00

2015 7,325,000.00 7,325,000.00

2016 102,925,000.00 62,925,000.00

2017 151,750,000.00 189,750,000.00

2018 37,250,000.00 39,250,000.00

Total 299,250,000.00 299,250,000.00.

Other Change(s)Other Change(s)

Explanation:

The DepEd has completed the School principal/head teacher training on early grade literacy and numeracy outlined in DLI 3 for Periods 2 (January 1 – December 31, 2015) and 3 (January 1 – December 31, 2016). The training was designed to ensure that all school principals in all elementary schools in the 5 LEAPS regions were trained. There were 11,998 elementary schools in the 5 LEAPS regions at the time of project design and it was assumed that all of these schools had a school principal. However, many schools in the LEAPS regions do not have their own school principal. For example, some schools are annexes and share their principal with the mother school. The latest and most up-to-date information from DepEd’s Enhanced Basic Education Information System (EBEIS) shows that there are a total of 10,103 school principals and acting school principals in the 5 LEAPS regions. It is therefore not possible for DepEd to train the initial estimate of 11,998 elementary school principals outlined in the DLI targets.

DepEd has requested an adjustment to the indicator target wording under DLI 3 (School principals/head teachers from identified schools trained to strengthen field-level support system for improved early grade reading and math teaching) to account for the lower number of school principals in LEAPS target regions.

In particular, the proposed change to the targets for DLI 3 are:

DLI 3 Period 2 (1 January 2015 -31 December 2015): Original wording: 5,999 principals/head teachers trained on effective early grade reading and math teaching strategiesProposed new wording: 5,051 principals/head teachers trained

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DLI 3 Period 3 (1 January 2016 -31 December 2016): Original wording: 5,999 principals/head teachers trained on effective early grade reading and math teaching strategiesProposed new wording: 5,051 principals/head teachers trained

This change does not alter the overall objective of this DLI to reach all schools and their principals with the proposed training.

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ANNEX 1: RESULTS FRAMEWORK AND MONITORING

Project Name:

Learning, Equity and Accountability Program Support Project (P118904)

Project Stage: Restructuring Status: DRAFT

Team Leader(s):

Samer Al-Samarrai Requesting Unit: EACPF Created by: Samer Al-Samarrai on 29-Feb-2016

Product Line: IBRD/IDA Responsible

Unit: GED02 Modified by: Samer Al-Samarrai on 09-Mar-2016

Country: Philippines Approval FY: 2014

Region: EAST ASIA AND PACIFIC Lending Instrument: Investment Project Financing

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Project Development ObjectivesOriginal Project Development Objective:The project development objective is to improve the quality of grades 1 to 3 reading and math skills of children in Target Regions and Target Schools, with a special focus on those belonging to Target Disadvantaged Groups.

ResultsCore sector indicators are considered: Yes Results reporting level: Project Level.

Project Development Objective IndicatorsIndicator Name Core Unit of Measure Baseline Actual(Current) End TargetDecrease of students with scores of zero in the Comprehension domain subtest of the relevant EGRA-mother tongue tool

Percentage Value 0.00 81.00 -15.00

Date 30-Jun-2015 16-Sep-2015 31-Aug-2018

Comment preliminary

Increase of students with at least 60% scores in the relevant EGMA-mother tongue tool

Percentage Value 0.00 36.00 15.00

Date 30-Jun-2015 16-Sep-2015 31-Aug-2018

Comment preliminary

Decrease of students from disadvantaged groups with scores of zero in the Comprehension domain subtest of the relevant EGRA-mother tongue tool

Percentage Value 0.00 92.00 -9.00

Date 30-Jun-2015 16-Sep-2015 31-Aug-2018

Comment preliminary

Increase of students from disadvantaged groups with at least 60% scores in the relevant EGMA-mother tongue tool

Percentage Value 0.00 12.00 9.00

Date 30-Jun-2015 02-Dec-2015 31-Aug-2018

Comment preliminary

Direct project beneficiaries Number Value 0.00 4484800.00 4038780.00

Date 01-Jul-2013 01-Jan-2015 31-Aug-2018

Comment elementary and high school enrollment in SY2014/15

Female beneficiaries Percentage Value 0.00 48.40 48.61

Sub TypeSupplemental

Intermediate Results Indicators

Indicator Name Core Unit of Measure Baseline Actual(Current) End TargetVersions of EGRA and EGMA tools developed for each selected Mother Tongue in each Target Region

Number Value 0.00 50.00 50.00

Date 01-Jul-2013 01-Jul-2015 31-Aug-2018

Comment

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CARAGA Number Value 0.00 10.00 10.00

Sub Type Date 01-Jul-2013 01-Jul-2015 31-Aug-2018

Breakdown CommentRegion 9 Number Value 0.00 10.00 10.00

Sub Type Date 01-Jul-2013 01-Jul-2015 31-Aug-2018

Breakdown CommentRegion 5 Number Value 0.00 10.00 10.00

Sub Type Date 01-Jul-2013 01-Jul-2015 31-Aug-2018

Breakdown CommentCAR Number Value 0.00 10.00 10.00

Sub Type Date 01-Jul-2013 01-Jul-2015 31-Aug-2018

Breakdown CommentRegion 8 Number Value 0.00 10.00 10.00

Sub Type Date 01-Jul-2013 01-Jul-2015 31-Aug-2018

Breakdown CommentTeachers from identified schools trained to improve their capability to effectively teach grades 1 to 3 reading and math

Number Value 0.00 15010.00 35994.00

Date 01-Jul-2013 09-Mar-2016 31-Aug-2018

CommentSchool principals/head teachers from identified schools trained to strengthen the field level support system for improved early grade reading and math teaching.

Number Value 0.00 10103.00 10103.00

Date 01-Jul-2013 09-Mar-2016 31-Aug-2018

Comment

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Development of an enabling environment for the effective implementation of the grades 1 to 3 reading and math programs in the Target Regions

Text Value 0 Policy on: (i) EGRA and EGMA utilization adopted.

Policy on: (i) EGRA and EGMA utilization and (ii) the inclusion of early literacy and numeracy courses in DepEd's teacher induction program adopted.

Date 01-Jul-2013 31-Dec-2015 31-Aug-2018

CommentLinguistic map for each Target Region developed for improved targeting and implementation of the grades 1 to 3 reading and math programs

Number Value 0.00 5.00 5.00

Date 01-Jul-2013 31-Dec-2015 31-Aug-2018

CommentCapability of DepEd to implement its Performance Incentive Scheme improved

Text Value 0 PMS developed and DepEd reports that all orientation has taken place and is awaiting independent verification.

PMS developed and 14,173 staff oriented

Date 01-Jul-2013 02-Dec-2015 31-Aug-2018

CommentDevelopment of enabling policy environment for the use of school report cards (SRC) in the Target

Text Value 0 Policy on SRC adopted in

Policy on SRC adopted and

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Regions September 2015. 13,415 target schools use refined SRC

Date 01-Jul-2013 30-Sep-2015 31-Aug-2018

CommentFinancial management capacity of DepEd central, regional and division offices improved

Text Value 0 Manual and training design in final draft stage

FM manual adopted and relevant staff trained

Date 01-Jul-2013 09-Mar-2016 31-Aug-2018

CommentImprovement of data management for educational programs serving the Target Disadvantaged Groups in the Target Regions.

Text Value 0 While many of the elements of an information system to track disadvantaged children have been developed there is a need to develop an overall strategy to fill remaining data gaps, determine how to report information to programs and provide information on out-of-school children.

Information strategy developed and information system implemented

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Date 01-Jul-2013 02-Dec-2015 31-Aug-2018

CommentComprehensive review completed on selected DepEd programs serving the Target Disadvantaged Groups in the Target Regions

Text Value 0 1 4

Date 01-Jul-2013 31-Dec-2015 31-Aug-2018

Comment.

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