Pakistan Tracing the Flow of Public Money - World Bank€¦ · Government of Pakistan Fiscal Year: July 1-June 30 Currency Equivalents Currency Unit: Pakistani Rupees (PKRs. or Rs.)

Tracing the Flow of Public MoneyPunjab: Expenditure and Quantity of Service Delivery Survey (EQSDS) in Primary School Sector2015

Pakistan

Macro Economics & Fiscal Management Global Practice

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PakistanTracing the Flow of Public MoneyPunjab: Expenditure and Quantity of Service Delivery Survey (EQSDS) in Primary School Sector2015

Report No: ACS14224

STANDARD DISCLAIMER

This volume is a product of the staff of the International Bank for Reconstruction and Development/The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries.

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Government of Pakistan Fiscal Year:July 1-June 30

Currency Equivalents Currency Unit: Pakistani Rupees (PKRs. or Rs.)

US$1=104.86 PKR as of May 31, 2016

Regional Vice President :Country Director :Senior Director :Practice Manager :Task Team Leaders :

Annette Dixon Patchamuthu IllangovanCarlos Felipe JaramilloShubham ChaudhuriMuhammad Waheed / Syed Waseem Abbas Kazmi

ACKNOWLEDGEMENT i

EXECUTIVE SUMMARY iii

INTRODUCTION ix

CHAPTER 1

SURVEY DESIGN AND SAMPLING METHODOLOGY 3 1.1 Survey Design 3 1.2 Sampling Methodology 5 1.3 EQSDS Instruments, Respondents and Sample Size 7 1.4 Implementation of Survey 8

CHAPTER 2

PUNJAB EDUCATION SECTOR

INSTITUTIONAL AND FUND FLOW ARRANGEMENT 11 2.1 Punjab Education Sector Institutional Arrangement 11 2.2 Punjab Education Sector Fund Flow Arrangement 15

CHAPTER 3

PUBLIC EXPENDITURE TRACKING SURVEY 29 3.1 Introduction 29 3.2 Dimension 1: Resource Allocation in the Sector 30 3.3 Dimension 2: Funds Reaching School (Primary Education Sub-Sector) 34 3.4 Dimension 3: Fiscal Decentralization and Budget Usage 42 3.5 Dimension 4: Equity and Discretionary Funds 44 3.6 Dimension 5: Employees Related Cost 47 3.7 Process Analysis 48 3.8 Conclusion and Recommendations 52

CHAPTER 4

QUANTITY OF SERVICE DELIVERY SURVEY 57 4.1 Introduction 57 4.2 Access to Primary Education Relatively Better fromOfficialStatistics 58 4.3 Quality of Infrastructure and Missing Facilities 59 4.4 Quality of Education 67 4.5 Conclusions and Recommendations 68

Contents

CHAPTER 5

UNDERSTANDING THE DEMAND SIDE CONSTRAINTS 73 5.1 Introduction 73 5.2 Enrollments 74 5.3 Out of School Children 78 5.4 Conclusions and Recommendations 85

ANNEXURE I: Structural Points of Sampling Methodology 89

ANNEXURE II: Sample Intended & Achieved by Instruments 97

ANNEXURE III: Public Financial Management in Pakistan 102

ANNEXURE IV: Overview of Public Financial Management in Punjab 109

ANNEXURE V: District Government Overview 111

ACRONYMS AND ABBREVIATIONSADP Annual Development Plan

AEDO Assistant Education District Officer

AEO Assistant Education Officer

AG Accountant General

AGP Accountant General Pakistan

AGPR Accountant General Pakistan Revenue

BCC Budget Call Circular

CCI Council of Common Interest

CGA Controller General Accounts

CoA Chart of Accounts

COFOG Classification of Functions of Government

DAO District Account Officer

DCO District Coordination Officer

DDC District Development Committee

DDEO Deputy District Education Officer

DDM Deputy Director Monitoring and &E Evaluation

DDO Drawing and Disbursement Officer

DEO District Education Officer

DFID Department for International Development

DMO District Monitoring Officer

DO District Officer

DSD Directorate of Staff Development

EDO Executive District Officer

EDO Executive District Officer (Edu) (Education)

EDO Executive District Officer (F&P) (Finance & Planning)

EMIS Education Management Information System

EQSDS Expenditure and Quantity of Service Delivery Survey

ERS Education Sector Roadmap

FD Finance Division

FM Financial Management

FMIS Financial Management Information System

FTB Free Textbooks

FTF Farogh-e-Taleem Fund

FY Fiscal Year

GDP Gross Domestic Product

GFMIS Government Financial Management Information System

GFR General Financial Rule

GMFDR Global Practice for Macroeconomics and Fiscal Management

GoPb Government of the Punjab

GoP Government of Pakistan

HH Household

HHS Household Survey

INTOSAI International Organization of Supreme Audit Institutions

IPSAS International Public Sector Accounting Standards

ISR Inventory Status Report

KII Key Informant Interviews

LGA Local Government Act

LGO Local Government Ordinance

MDA Ministries Department Autonomous Bodies

MDG Millennium Development Goal

MEA Monitoring and Evaluation Assistant

MEO Monitoring and Evaluation Officer

MoF Ministry of Finance

MoM Minutes of Meeting

MoS Measurement of Size

MTBF Mid-Term Budgetary Framework

NAM New Accounting Model

NFC National Finance Commission

NSB Non-Salary Budget

OAGP Office of Auditor General of Pakistan

OOSC Out of School Children

P&DD Planning and Development Department

PAC Public Accounts Committee

PAO Provincial Account Officer

PEFA Public Expenditure and Financial Accountability

PER Public Expenditure Review

PERSP Punjab Education Sector Reform Program

PETS Public Expenditure Tracking Survey

PFC Provincial Finance Commission

PFM Public Financial Management

PIFRA Project to Improve Financial Reporting and Auditing

PLGA Punjab Local Government Act

PLGO Punjab Local Government Ordinance

PMF Provision of Missing Facilities

PMIU Program Monitoring and Implementation Unit

PPS Probability Proportional to Size

PSC Poverty Score Card

PSLM Pakistan Social and Living Standards Measurement

PSSPER Punjab Social Sector Public Expenditure Review

PSU Primary Sampling Unit

QSDS Quantity of Service Delivery Survey

SC School Council

SDA Special Deposit Account

SED School Education Department

SRS Simple Random Sampling

SSPER Social Sector Public Expenditure Review

STR Student-teacher Ratio

TWH Tehsil Warehouse

UID Unique Identification

WB World Bank

Tracing the Flow of Public Money

iPunjab: Expenditure and Quantity of Service Delivery Survey (EQSDS) in Primary School Sector

ACKNOWLEDGEMENTSThis Report was prepared under a joint collaboration between the Government of Punjab, the World Bank, and the UK’s Department for International Development (DfID). The task was led by Muhammad Waheed (Senior Economist, GMFDR), and the report was prepared under the guidance of Shubham Chaudhuri (Practice Manager, GMFDR), Jose R Lopez Calix (Lead Economist) and Vinaya Swaroop (Lead Economist, GMFDR). It drew upon technical contributions from Minhaj ul Haque (Consultant, GMFDR), Hammad Younus (Consultant, GMFDR), and Amna Sehar (Consultant, GMFDR).

The report benefited greatly from the valuable comments and advice from many colleagues in the World Bank especially Hanid Mukhtar (Senior Economist, SASEP), Scherezad Joya Monami Latif (Senior Education Specialist, GEDDR), Umbreen Arif (Senior Education Specialist, GEDDR), Huma Ali Waheed (Senior Operations Officer, GEDDR), Syed Waseem Abbas Kazmi (Senior Financial Management Specialist, GGODR), and Khalid Bin Anjum (Senior Procurement Specialist, GGODR). Nikhat Ambreen (Consultant, GMFDR), Mirza Omer Baig (Consultant, GGODR) and Danish Butt (Consultant, GMFDR) provided valuable support. Laura Norris, Omer Mukhtar Khan, Javed Malik and Taimoor Baig, from DfID remained engaged and provided valuable inputs and insights, throughout the process. The report also benefited from the detailed comments and suggestions of peer reviewers Deon Filmer (Lead Economist, DECHD) and Jishnu Das (Lead Economist, DECHD). This task would have been impossible without the administrative support of Shabnam Naz (Program Assistant, SACPK), Amna W. Mir (Senior Program Assistant, SACPK) and Anwer Ali (GMFDR). The editorial support was provided by Ahmed Mukhtar and Agha Yasir (Consultant, GMFDR). The team would like to thank colleagues in CMU and VMU, especially Qamber Abbas (Security Specialist, GSDRS), for their untiring support during field work.

The team is grateful to Mr. Abdul Jabbar Shaheen, Secretary, School Education Department, Government of Punjab, for his guidance. Under his leadership, the province is striving to radically improve the governance of the education system. The team is thankful to Mr. Asim Iqbal, Project Director, Program Monitoring and Implementation Unit (PMIU) for providing guidance and intellectual direction during the course of this task. His unwavering commitment to this complex task at every step was instrumental in successfully gathering data, managing logistics, and gaining traction at various levels of governance. Special mention and thanks for Mr. Qaiser Rashid (Deputy Secretary, Planning and Budgeting, SED) and Rana Obaid Ullah Anwar (Deputy Director, Finance, PMIU) for their generous


ii Punjab: Expenditure and Quantity of Service Delivery Survey (EQSDS) in Primary School Sector

support and time. In addition, this task could not have been completed without the enormous support from the numerous officials of PMIU, School Education Department, Punjab, Directorate of Staff Development, Punjab, and office of Accountant General who aided the efforts of the team. The gratitude of the team also goes to the respondents of this survey.

Finally, the team would like to thank the DfID for its generous grant to undertake this ambitious study.


iiiPunjab: Expenditure and Quantity of Service Delivery Survey (EQSDS) in Primary School Sector

EXECUTIVE SUMMARY1. The main objective of the report is to provide recommendations for policy makers and sector managers to help improve service delivery and the resultant outcomes in primary education. The fundamental premise of this analysis stems from Punjab Social Sector Public Expenditure Review conducted in FY2013.1 It was found that despite greatly increased public expenditures, progress on social sector outcomes was less than desired. The Government of Punjab requested the World Bank to undertake a survey-based study which could shed light on the service delivery issues impacting the primary education sector2. For this purpose, the Bank employed a globally recognized analytical tool Expenditure and Quantity of Service Delivery Survey (EQSDS) which has three inter-linked components3, designed to capture both demand and supply side concerns, collected primary and secondary data using qualitative and quantitative instruments.

2. Central to the analysis is the comparison of data sources that cover several facets of primary education to provide insights into governance, institutional and operational challenges. The study employs a wide-ranging approach to identify and capture the hidden linkages between primary education, its financial flows, governance structures and service delivery mechanisms with a specific focus on highlighting numerous constraints hindering the success of primary education interventions despite large financial expenditure.

3. The study is based on findings from primary data collected through three integrated surveys at provincial, district, primary school and household levels. The study employed probability based 4-staged

1 The Punjab Social Sector Public Expenditure Review (PSSPER), undertaken by the World Bank and the Government of Punjab in FY13, analyzed some of the factors responsible for the relatively subdued progress in social sectors of the province, despite higher budgetary outlays. While making a broad analysis it concluded that inherent weaknesses in the planning, budgeting and execution hinder the provincial government from receiving the best returns on its expenditure.2 A working group comprising officials from Program Monitoring and Implementation Unit (PMIU) of the Punjab Education Department, UK Government’s Department for International Development (DfID) and World Bank was formed to guide the survey. This working group was involved for six months of thorough up-stream work on design of the survey and customizing it to the government and local needs.3 The three inter-linked components are;

(i) Public Expenditure Tracking Survey (PETS) - traces the flow of resources (financial and in kind) through various hierarchical levels of government down to service provider level i.e. primary schools;

(ii) Quantity of Service Delivery Survey (QSDS) - assesses the equity and efficiency, and performance in resource use at service delivery level; and

(iii) Household Survey (HHS) - provides the demand-side perspective of the parents of school-going and out-of-school children and their perception about service delivery at primary school level.


iv Punjab: Expenditure and Quantity of Service Delivery Survey (EQSDS) in Primary School Sector

sample design using multiple data gathering survey instruments [for detail of sampling design, please see Chapter 1]. It covered 12 districts (stratified geographically in to three regions), 450 schools and 7000 households across Punjab. Secondary data from the Government Financial Management Information System (GFMIS), Annual Schools Census, departmental execution reports, and numerous other sources are also used in this study.

4. The results of this report have been categorized in to three broad areas:

•The impact of increased spending to date on primary education infrastructure in terms of the equity and efficiency, and perfor-mance in resource use-the quantity of service delivery part.

•The effectiveness of the system in managing public spending in transparent and efficient ways-the public expenditure tracking part.

•The level of existing service utilization and reasons for out of school children-the household/demand part.

5. The study results showed that the government’s efforts have produced tangible results in addressing basic the infrastructure needs of primary schools. In keeping with the Education Sector Road Map, the government focus has been on improving facilities at primary schools. Major strides have been made in school infrastructure. More than 90 percent of surveyed/index schools have proper boundary walls, drinking water facilities, and functional toilets equally distributed in girls’ and boys’ schools. This is also true for rural and urban schools, however schools where Non-salary budget (NSB) has been increased recently rate higher in all elements of infrastructure than schools in non-NSB districts. The study also gathered details of parental views regarding the index school (surveyed school in their community). Parents responded to the availability and quality of infrastructure with a higher number of children attending index schools with better infrastructure. However, their perception of teaching quality in index school was not always accurate. The survey administered an abbreviated version of a standardised test to grade five students in index schools, and found that school enrollment from the community had no statistical correlation to test results.

6. The availability of public primary schools is equitable by gender, and allowing the opposite gender to single-gender schools has also improved access to school. The survey reveals that the government policy to reduce the gender gap in resource allocation has started to yield positive results. Overall, 57 percent of primary school in the sample are


vPunjab: Expenditure and Quantity of Service Delivery Survey (EQSDS) in Primary School Sector

for girls but school observation showed that girls are also admitted in boy’s school (and vice versa). As a direct result of this, 84 percent of public primary schools are now accessible to girls, and 82 percent to boys. This policy increased school availability for both genders significantly in all regions. Equally impressive is the teacher attendance, which was about 88 percent on the day of the unannounced visits of survey teams. Overall, the household survey found that 77 percent of children in the age group of 5 to 16 years are currently attending a school. The benefit incidence of public primary schools is 52 percent, with results varying by region (43 percent in northern, 58 percent in central and 51 percent in southern district).

7. Out-of-school-children (OOSC) represent a significant portion of school-age children, with their parents showing varied reasons by region. Parents were asked about their willingness to send the OOSC to any school in the near future. This analysis divided parents of 5-16 year olds into three groups: A) Parents of children currently attending school (77 percent); B) parents of children who want to send their OOSC to school (17 percent) in future; C) parents of OOSC who do not want to send their OOSC to school in the near future (5 percent). Poverty is the main obstacle for group B, and social disapproval is the main barrier for group C. Alarmingly, group C is against conventional education, in particular for girls, and a majority of them reside in rural communities in the southern districts.

8. At the system level, the government efforts have been found wanting. The survey found that existing institutional arrangements in the education sector, more specifically the public financial management (PFM) system, are not capable of supporting the prudent and quality management of the sector. The prominent gaps include; lack of transparency in the budgeting process, blurred accountability arrangements, and a budget classification system that does not allow fund tracking to the service delivery unit (i.e., primary school) through GFMIS. For detailed discussion regarding these challenges, please see Chapter 3 of the main report. The survey has exposed the inability of the current public financial management system to detect and report budget leakages, and has observed considerable delays in the disbursement of funds. About 22.6 percent of leakages4 of the total funds spent on Provision of Missing Facilities (PMF) were observed. The local/district authorities are not represented at the policy table, and have no effective role in the planning process, despite the fact that they are the closest to service delivery units and have best knowledge of local needs.

4 Leakage is defined as the proportion of resources intended for identified beneficiaries that does not reach them. There are multiple modes of gathering and dissemination of financial information. Some of these modes are informal and ad hoc, thus may results in misclassification and misreporting.


vi Punjab: Expenditure and Quantity of Service Delivery Survey (EQSDS) in Primary School Sector

9. The establishment of Program Monitoring and Implementation Unit (PMIU) is one of the key interventions, which has reaped dividend. PMIU has been central in creating an information system and extensive monitoring network across districts within the education sector. The establishment of management information system is a commendable effort, which feeds upon data gathered through Annual School Census and monthly surveys conducted by Monitoring Education Assistants (MEAs). But this system is yet to be evolved into a well-functioning decision support system as it is not utilized to its full potential.

10. The achievements in education sectors without the well-oiled system, undoubtedly demonstrate strong political will to improve education outcomes. The establishment of parallel system such as PMIU stemmed from the belief that the existing system is outdated and plagued with pervert practices to the extent that it is difficult to achieve results through it. Not surprisingly, government had little incentive to invest upfront on the systems and building institutions. As a ready solution, the government implemented reforms through establishing PMIU with significant initial returns. However, the benefits of the reform program would eventually lose against the cost of carrying it in to long run. The road to sustainability hinges upon government’s commitment towards strengthening mainstream system. Therefore, the real challenge for the government is to institutionalize and mainstream these reforms for effective use of resources and sustainability of outcomes.

11. The key message for the government is to consolidate gains and develop a strategy to mainstream reforms. For future sustainable progress, the time is ripe for the government to focus on issues that emanate from the gaps and weaknesses in the governance mechanism, which may require sector-specific and province-wide reforms [See Chapter 3 for detailed recommendations]. The foremost decision is to determine the timing and cost to exit from program mode and integrate PMIU functions into regular education delivery system. But this must be preceded by functional/organizational review of School Education Department to realign or restructure it, ensuring that it is remodeled to achieve education sector road map goals. It is important to have clear job descriptions with effective accountability mechanisms, goal congruency, and participatory planning.

12. Demand side frictions needs to be taken care of while formulating sector strategy. It is recommended to include social determinants of education in developing policy continuum, which should be comprehensive, focused and based on evidence. The effective use of GFMIS is critical to implement education sector policies. The cost of policy is reflected in the annual budget, which is in turn executed through GFMIS. It is recommended to extend the use of GFMIS for budgeting and expenditure


viiPunjab: Expenditure and Quantity of Service Delivery Survey (EQSDS) in Primary School Sector

recording to the service delivery level especially for primary education. It is also important that the system should cater to social factors to enhancing citizen participation, which is critical to improving education sector outcomes and would generate demand for higher quality and quantity of service delivery. The study highlights that there are pockets of resistance including social disapproval to girls’ education in Southern Punjab, rural areas and poor households that need an immediate and differentiated (across regions) policy response. It is important to note that out-of-school children are not one group; therefore, local needs and social issues must be incorporated in any policy response.


ixPunjab: Expenditure and Quantity of Service Delivery Survey (EQSDS) in Primary School Sector

INTRODUCTION1. Areas, like Health and Education, which are long term undertakings are often overlooked in favour of shorter term development projects. The service delivery aspect of the public sector is often marred by inefficiency, poor performance and therefore by inevitably poor outcomes. Generally, more visible interventions are preferred as an indication of current development priorities. This emphasis on the development side has often led to service delivery sectors, like health and education, being overlooked. Health and education outcomes, by their very nature, cannot be improved overnight and require continuous focus and sustained investment from public resources.

2. Measuring and sharing social indicators is a vital part of ensuring accountability and success in service delivery. One of the many factors spurring changes in the situation is the effective role played by international and regional organizations in regularly publishing reports on social indicators. These have helped in establishing tangible benchmarks for local media and the public to measure government performance in all facets. Service delivery sectors are human resource intensive and require consistently meeting certain recurrent costs, to maintain service delivery quality. The government delivers these essential services through a network of public facilities spread all across the region. This makes it challenging not only to allocate sufficient funds, but also to track those resources right to frontline service delivery units, as their ultimate beneficiaries.

3. Current and accurate statistics on both the supply and demand sides are essential to service delivery efforts. It has been unequivocally proven that the provision of up-to-date statistics improve performance at every level. Thus it is unsurprising that information requirements have increased across the board. The policy makers require analytical information to help them identify institutional, operational and governance issues that are slowing down the progress made on service delivery outcomes. The Expenditure and Quantity of Service Delivery Survey (EQSDS) is a combination of a Public Expenditure Tracking Survey (PETS) and a Quantity of Service Delivery Survey (QSDS), complemented by a Household Survey (HHS), to help in understanding the demand side. The EQSDS is a tool that delivers information on public expenditure and provider performance with a view to strengthening accountability in service delivery.

4. The need for the EQSDS became clear as progress on MDGs, particularly in primary education, did not match the increase in government spending in this area. It is a follow-up of the WB-DfID’s joint work, titled “Punjab: Social Sector Public Expenditure Review (SSPER)”,


x Punjab: Expenditure and Quantity of Service Delivery Survey (EQSDS) in Primary School Sector

conducted during FY2012-13. The SSPER emphasised the increased flow of resources into the education sector over the years. It went on to highlight the fact that despite the increase, progress in achieving the MDGs in general and in school education in particular, has slowed considerably. It specifically drew attention to both the upstream (fiscal and financial management) and downstream (i.e. in the education sector etc.) levels of the expenditure management system. It went on to identify the causes of anaemic progress, and the inadequacy and/or inefficiency of funds. Beyond these ‘macro’ issues, there are a number of possible issues at the ‘micro’ level which are at least as important as ‘macro’ ones, if not more so.

5. The Government Financial Management Information System (GFMIS) provides feedback on government policy and is directly responsible for the government’s ability to track and report on resources delivered and consumed, without providing detail down to the service delivery level. It often contains information at the aggregate level without showing reports of the status at the provider level. Unfortunately however, the information reported through GFMIS is often incomplete, with certain biases which can result in misreporting. For instance, in the case of education, the information available in the GFMIS is recorded at the DDO level. This effectively means that the GFMIS does not capture budget and expenditure data at the service delivery level, for primary and elementary schools.

6. The EQSDS aims to address the challenges of optimal allocation of resources as well as the current leakages that prevent these from having the desired impact. The governance challenges adding to the complexity of the situation are the absenteeism of teachers; leakages of resources, both cash and in kind; and issues surrounding the efficiency and effectiveness of resource utilization and service provision at the service delivery point. Collectively, these challenges naturally impact the performance of the sector. There is a broad realization that budget allocations alone, are a poor indicator of the quality and quantity of public services delivered in countries with weak institutions. While the shifting of budgetary resources to priority sectors, like education, is vital as a first step to addressing this, it is just as crucial to ascertain where and how the allocated sum is spent and the corresponding quantity of services generated. The EQSDS has been designed to verify and validate that allocated resources, both financial and in kind, reach their intended destination and are used wholly and solely for the intended purpose. It is also used in measuring whether the commensurate quantity and quality of services has been delivered. It is, however, important to note that this is not an audit as it is not designed to reconcile the use of funds, and does not try to find missing resources or identify the persons responsible.


xiPunjab: Expenditure and Quantity of Service Delivery Survey (EQSDS) in Primary School Sector

7. The main objective of the EQSDS is to understand the system from an outside perspective, to help the government improve service delivery outcomes and ultimately to strengthen and provide safeguards for the existing systems as well. According to the PETS-QSDS guidelines, “the ultimate objective of these diagnostic and analytic tools is to improve the efficiency of public expenditures and quality of services, and their impact on the wellbeing of the population.”5 This tool enables policy makers to effectively and accurately allocate funds, to reconfigure the relationships between different government functionaries, strengthen the accountability mechanism, and ultimately improve government recording, reporting and monitoring systems. Moreover, it aims to help examine the efficiency of funds utilization and quality and equity of service delivery. Thus, PETS and QSDS take information directly from the provider and compare it with the records available at various administrative tiers, ensuring that the two match. In this context it complements other public expenditure monitoring tools, like Public Expenditure Reviews (PER) and Public Expenditure and Financial Accountability (PEFA) assessments.

8. This study approaches these issues by first developing a contextual framework to better understand the overall environment. One of its key features is to be on the alert for situations where the time is ripe for change, while remaining cognizant of the constraints. This has helped to direct efforts in a way that maximises returns. In its first step, the study identified the governance framework for the education sector in Punjab and the key players in the system. Its objective was to evaluate the adequacy of the legal framework in establishing an effective incentive-accountability relationship within the sector. By drawing a complete picture, the institutional contour of the educational sector and alignment of the institutional arrangements, along with the intended sector outcomes are made clear. To this end, established studies and benchmark ratings/scorecard reports have been used, to fully comprehend the political setting and prevalent public financial management fragilities.6

9. As the next step for microanalysis, the fund flow arrangements for all interventions, from province to districts, district to Tehsil, and Tehsil to school have been constructed. For the purpose of this study, a few of the relevant streams of funding have been chosen for close review. Based on these fund flows, questionnaires were developed to cover as many attributes as possible of the planning and execution. The Budget & Planning

5 Gauthier, B. and Ahmed, Z. (2012). Public Expenditure Tracking Surveys (PETS and Quantitative Service Delivery Survey (QSDS). 1st ed. [ebook] Washington, DC: World Bank. Available at: http://pets.prognoz.com/prod/GetGuidlinesDocFile.ashx?data=16 i) Democracy and legislative strengthening, PILDAT Publications; (ii) Education for All, SDPI; (iii) Report on Punjab assembly’s performance, FAFEN, (iv) Punjab School Education Sector Plan, 2013-17, SED, (v) Punjab PEFA assessment etc.

http://pets.prognoz.com/prod/GetGuidlinesDocFile.ashx?data=1


xii Punjab: Expenditure and Quantity of Service Delivery Survey (EQSDS) in Primary School Sector

Wing SED at the provincial level; the EDO Education and the EDO F&P Offices at the District level; the DDEO Office at the Tehsil level; and last in the chain, the primary school all contributed to the analysis for the PETS portion. During fieldwork, the questionnaires were turned around three times in each office. Interviewees, with a wide range of views, identified the need for very robust and centralized information management at the provincial level.

10. The school inventory questionnaire was, in effect, a precursor to the EQSDS survey, and collected detailed information about both physical learning environment and infrastructure. The results of this questionnaire were compared with fund flow numbers to explore the correlations between different variables. The aim was to explore the extent to which financial management gaps were translated into inadequacies in service delivery. It helped to provide the most complete picture possible of the supply side. Ultimately, the PETS indicator set was applied, although constrained by limited information about primary education, and further supported by process analysis.

11. Additional information has been collected, to help determine the effectiveness of service delivery at primary schools. This information covered teachers, student enrollment, school attendance and the interventions of non-government organizations. At the school level, teacher interviews have been conducted to assess teacher motivation. This included several questions regarding the teacher’s qualifications (both academic and professional), salaries, residential status, training and development, to enable the drawing of conclusions about the quality of learning outcomes. Moreover, at the school level, a Child Assessment was conducted, using an abridged version of the Directorate of Staff Development (DSD) test papers, to assess child learning outcomes as a product of the quality of service delivery.

12. The final aim of the study was simply to create the most complete picture and to understand the demand side perception of service delivery at the primary school level. To this end, the study compared the flow of resources to service centres, with the demand side constraints, such as parental perceptions about child schooling and the reasons for drop outs. Additionally, it also explored parental preferences regarding the issue of sending their out-of-school children to school. The study aimed to complement and enhance in-depth knowledge of resource flow, and allocation challenges, as well as utilization at service delivery points, and the role of community participation. This was accomplished through conducting key informant interviews with district and Tehsil level officials and School Council members.


xiiiPunjab: Expenditure and Quantity of Service Delivery Survey (EQSDS) in Primary School Sector

13. The results of the survey attempted to provide answers to certain key public policy questions. Chief among these were the reasons for public expenditures on average, having limited impact in improving education sector outcomes; and the ways in which to increase public expenditure efficiency in improving educational outcomes. Keeping in mind the influence of these factors on primary education, the study explored the ways in which the viewpoints of parents with out-of-school-children affected their decisions to enroll those children in school.

14. This report presents the main findings of the survey and is organized as follows: Chapter I details the sampling procedure and survey methodology employed. Chapter II gives an overview of the flow mechanism of primary education in Punjab. Chapter III reports the findings of the expenditure tracking survey, overall resource allocation and process analysis etc. Chapter IV presents the findings of QSDS on access, physical amenities, teachers, and learning outcomes. Chapter V provides demand side analysis and parents’ perceptions about educating their out-of-school children (OOSC). The report ends with a conclusion and recommendations for policy makers to adopt an action-oriented and targeted approach towards improving service delivery and education outcomes.


1Punjab: Expenditure and Quantity of Service Delivery Survey (EQSDS) in Primary School Sector

Survey Design and Sampling Methodology


2 Punjab: Expenditure and Quantity of Service Delivery Survey (EQSDS) in Primary School Sector



CHAPTER 1

Survey Design and Sampling MethodologyThe EQSDS is a diagnostic, multi-dimensional, cross-sectional survey and this section provides an explanation of survey and sampling design adopted for this survey. There are 36,549 standalone primary schools in Punjab.7 The education delivery system and its sub-systems, along with complexity of resource flows, required a survey design that is comprehensive enough to capture both supply and demand side issues. Thus a cross-sectional survey design, employing both quantitative and qualitative techniques of data collection, was adopted. The main feature of this design is the detailed exploration of the flow of funds from the provincial level to districts and to schools, and to match the supply side issues with demand side issues captured through a household survey.

SURVEY DESIGN

The design phase of the EQSDS was guided by a comprehensive working group comprised of members from the PMIU, SED, DfID, and the finance department. The design phase started with the listing of flow domains and initial field visits to a district for preparing fund flow

7 Government of Punjab, (2013). Annual School Census.

Tehsils



charts. Later, the initial findings were discussed with the working group to seek their comments and guidance.

The survey design comprises three inter-linked surveys: the Public Expenditure Tracking Survey (PETS) to trace the flow of resources through various hierarchies of government down to service provider i.e., primary school; the Quantity of Service Delivery Survey (QSDS) to assess the quality and performance in resource usage at primary school; and a Household survey (HHS) to understand the household perspective. The qualitative survey consists of Key Informant Interviews (KII) with both district and Tehsil-level officials to gain in-depth knowledge on resource flow and allocation challenges. The KII were also conducted with school council members to help in fully comprehending issues of utilization at service delivery points as well as the role of community participation in education delivery. The comparison of data sources and analysis provided a comprehensive picture of public financial management systems, governance issues and barriers to education. Figure 1 presents the design framework of EQSDS.

Figure 1. The EQSDS Design Framework

Source: Expenditure and Quantity of Service Delivery Survey

HH Survey Find Demand Side Constraints

Probability-based sample of schools and HHs near school link demand and supply issues via school ID and HH community code

Access, cost, choice and quality ←→ Allocative efficiency, service delivery and utilizationValue for Public Money

Universal Primary Education

PETS & QSDS Surveys Find Supply Side Constraints



The questionnaires developed in this survey follow the principles provided in the PETS/ QSDS guide8 and the analysis also follows the same pattern in preparing indicators. The main area of enquiry was the comparison public expenditure with its outcomes, particularly student learning, quality and quantity of service delivery and utilization. Reviews of public financial management systems and their weaknesses, delays and allocation principles were addressed under the theme of ‘how much money is buying how much quantity and quality of education’.

SAMPLING METHODOLOGY

Public Expenditure Tracking Survey (PETS)

The PETS requires multi-stage sampling of districts and administrative tiers that need to be selected in consultation with program managers to ensure the most accurate results from which a pattern can be extrapolated. In the PETS, 12 districts from 3 regions were sampled after stratifying all districts of Punjab by program/initiative (NSB versus Non-NSB districts), and based on the socio-economic, demographic and geographic characteristics of each district [See Annexure I for a full description]. In the second stage, a fixed number of Tehsils (i.e. two) were taken from each sample district, adopting a simple random sampling scheme (SRS). Expenditure tracking was done at the provincial, district, Tehsil (sub-district) and school level. The 12 district offices including the EDO (Education), EDO (F&P), DO Building and DMO were also selected for KII. Moreover, other secondary sources like the ADP schemes and PIFRA databases were consulted. Additionally, key informant interviews were conducted with the DCOs, EDOs, and AEDOs/DDEOs based on purposive sampling, maintaining a gender balance wherever possible.

Quantity of Service Delivery Survey (QSDS)

The primary school sample of QSDS was drawn on the basis of the Probability Proportional to Size(PPS) method using a four-stage sample design, so as to include both locations and elements of service delivery available. The PMIU’s annual school census database was used as the sampling frame. The school frame was stratified on the basis of the urban and rural locations of three regions. In addition, schools with missing facilities and those that incurred development expenditure were sampled to compare PETS and QSDS. The total enrollment in each public primary school

8 Gauthier, B. and Ahmed, Z. (2012). Public Expenditure Tracking Surveys (PETS) and Quantitative Service Delivery Survey (QSDS). 1st ed. [ebook] Washington, DC: World Bank. Available at: http://pets.prognoz.com/prod/GetGuidlinesDocFile.ashx?data=1

pets.prognoz.com/prod/GetGuidlinesDocFile.ashx?data=1



was used as a measure of size for sample selection purposes. In total, 450 schools were selected for a facilities-based survey with an equal number of boys and girls schools to ensure equitable representation of both genders.

Additionally, two sub-samples were also drawn from the selected schools. The first sub-sample involved teachers. All teachers (male and female) who were present on the day of an unannounced visit were selected for individual interviews. A total of 1,524 teachers were interviewed. The second sub-sample concerned students, who were required to take a small student test. To test a maximum of 30 students, all grade-five students who were present in the school were selected and wherever the number exceeded 30 students, simple random sampling was used to select 30. A total of 4,357 boys and girls currently enrolled in grade five at the sample school took the test in their classrooms.

Household Survey (HHS)

The primary objective of the Household Survey (HHS) was to capture the demand side issues pertaining to access, cost, quality and choice of schooling and match them with the supply side. The HHS was carried out in 12 Districts, 24 Tehsil and 450 purposively chosen communities. The HHS was conducted only in communities where a QSDS School was located or in communities in close proximity to the sampled school, therefore it allocated communities by region, in a manner similar to the QSDS survey. The aim was to establish linkages between the QSDS and HHS. The communities for the HHS were identified after selecting the school sample. In rural areas, these communities were adjacent to the sample school and it was easy to identify them. In urban areas, however, the survey team asked school teachers to identify the community from where the most students, whether currently or in the past, had attended the sample school. The survey teams then demarcated the area within one kilometre of the urban school. Subsequently, the survey teams proceeded to prepare a quick-count listing of all households.

In the HHS, 7200 households were selected using systematic sampling with a random start. Within the selected communities, 16 HHs were sampled per community. While the communities were identified purposively (near the school), the household sample was probability-based and was independent of both schooling status and presence of children in the HH. In cases where there was a child (boy or girl), aged 4 to 16 years old, parents or a responsible adult in the household was interviewed. In cases where there was no child, the HH questionnaire was filled for all other sections (roster, economic activity and education status of adults). Out of the 7,200 contacted HHs, 81 percent (5,743 HHs) had one 4 to 16 year old child. These included children who were in or out of school as well as those who had never attended any school.



EQSDS INSTRUMENTS, RESPONDENTS AND SAMPLE SIZE

Table 1: EQSDS Instruments, Respondents and Sample Size

Data & Information Gathering Instruments

Data Source (person, place, official records, databases) Sample Size

1 PETS-Provincial questionnaireSED, PMIU Officials, Annual School Census and PIFRA databases, official records

1 P + 36 D

2 PETS-District questionnaire District level official, official records

12 D + All Tehsils

3 PETS-Tehsil questionnaire DDEO/AEDO, official records 24 T + 19-20 school sheets

4 zz school inventory questionnaire Headmaster/mistress of boys and girls school, school records 450 schools

5 QSDS-Teacher’s questionnaire Male/female teachers. All present on the day of team visit 1,524 teaches

6 QSDS- Students’ test Male/female students. All grade 5 students present in school. 4,357 students

7 HH-Household questionnaireHH Head/responsible adult living in the community nearest to sampled school.

7,200 households

8 HH-Community questionnaireCommunity notables. Communities where HH and school are located.

450 Schools

9 HH-SC member key informant interview (KII)

Male/female community members of SC 36 members

10 PETS-Officials KII Male and female District level official 12 officials

11 PETS-Officials KII Male and Female Tehsil officials 24 officials

Note: P = Provincial, D = District, T = Tehsil Source: Expenditure and Quantity of Service Delivery Survey



IMPLEMENTATION OF SURVEY

The survey was carried out in 24 Tehsils of 12 districts of Punjab. A 12 member team was formed to conduct the PETS, a 24 member team was allotted 450 schools, and a 120 member HH team worked in coordination with the school team to correctly identify index school and index child9 [See details in Annexure].

9 For this report index school means the school visited by the school team where QSDS was done. Index child means a child who ever or *currently attending the index school. The word index and sampled school is used interchangeably in this report. Also the term school community means the 450 communities where HH survey was done and where the school is located.



Punjab Education Sector Institutional And Fund Flow Arrangement

Punjab Education Sector Institutional and Fund Flow Arrangement





CHAPTER 2

Punjab Education Sector Institutional and Fund Flow Arrangement

PUNJAB EDUCATION SECTOR: INSTITUTIONAL ARRANGEMENT

School Education Department—Context

The School Education Department (SED) is responsible for education from pre-school to 12th grade in the public sector. It is headed by the Secretary, and supported by three Additional Secretaries and a number of other officers and staff functioning at the Secretariat. SED has a number of attached departments and autonomous bodies functioning under it. The Executive District Officers (EDO) for Education, who are part of their respective

Province

Districits

Tehsil

Frontline Facility

Allocation Disbursement Execution

Funding Streams of Primay

Education in Punjab i. Recurrent Budget

ii. Development Budget

iii. School Council

iv. Free Textbooks

v. Farogh-e-Taleem Fund

Source: Adapted from: V. Doris & K. Kaiser (2009), “Follow the Money: Public Expenditure Tracking Surverys (PETS) for Impact” Public Sector Governance Group, PREM, The World Bank.



district government, are responsible for primary, elementary and secondary schools in their own districts.

The main functions performed by School Education Department (SED) are the enforcing of regulations, policy formulation and planning for Primary, Elementary and Secondary & Higher Secondary education. The SED has the following 11 departments attached to it:

1. Autonomous Institutionsi. Punjab Education Foundationii. Punjab Textbook Boardiii. Punjab Examination Commissioniv. Punjab Teacher Foundationv. The Punjab Danish School and Centre of Excellence

2. Attached Departmenti. Directorate of Staff Developmentii. Punjab Education Assessment Systemiii. Children Library Complexiv. Directorate of Instruction (Secondary Schools)

v. Directorate of Instruction (Primary Schools)3. Special Institutions

i. Sadiq Public School Bahawalpur

The total provincial budget for FY 2013-14 of the SED was Rs. 41.7 billion. The Development budget accounted for Rs. 26 billion and Rs. 15.7 billion was allocated to the Non-Development Budget. The provincial government has continued to allocate funds to education facilities/initiatives, for which the districts are directly responsible.

FUNDING STREAMS OF PRIMARY EDUCATION IN PUNJAB

The focus of this Expenditure and Quantity of Service Delivery Survey (EQSDS) is primary education in the province of Punjab, which is financed by both provincial and district governments. Additionally, the provincial government has begun certain initiatives for improving education outcomes under the Punjab Education Sector Reform Program (PESRP). Although the GoPb provides funding for these initiative, they are implemented by the district governments. The PESRP portfolio includes the following initiatives:



1. School Non-Salary Budget2. Teachers’ Recruitment3. Improver’s Program4. School Council5. Monitoring & Evaluation6. Stipend to Girls School7. Free Textbook



Tabl

e 2:

Bud

geta

ry F

ram

ewor

k fo

r Prim

ary

Edu

catio

n

Fund

ing

Stre

amFi

nanc

ed

Thr

ough

Gov

ernm

ent

Tie

rD

isbu

rsed

T

hrou

ghTr

ansa

cted

Thr

ough

Gra

nt N

o.

Func

tiona

l C

lass

ifica

tion

(as

per b

udge

t bo

ok)

DD

O

Des

crip

tion

Non

-D

evel

opm

ent

(Sal

arie

s &

Adm

inist

rativ

e)

Cur

rent

Bu

dget

Dist

rict

Acc

ount

IVA

ccou

nt IV

by

way

of

issua

nce

of c

hequ

e.

Pre-

Prim

ary

& P

rimar

y E

duca

tion

091

DD

EO

Dev

elop

men

t Bu

dget

(Miss

ing

Faci

litie

s)A

DP

Prov

inci

al

SDA

A

ccou

nt I

& D

istric

t A

ccou

nt IV

SDA

Acc

ount

-1 b

y w

ay o

f iss

uanc

e of

che

que

By w

ay o

f tra

nsfe

rs to

dist

rict

Build

ing

& W

orks

dep

artm

ent.

By w

ay o

f tra

nsfe

r to

SC b

ank

acco

unt

Gra

nt 3

6Se

cond

ary

Edu

catio

n 09

2

Scho

ol C

ounc

ilC

urre

nt

Budg

etPr

ovin

cial

SDA

A

ccou

nt I

Com

mer

cial

ban

k ac

coun

t of

SCG

rant

15

Seco

ndar

y E

duca

tion

092

PMIU

Free

Tex

tboo

kC

urre

nt

Budg

etPr

ovin

cial

Acc

ount

IIn

kin

dG

rant

15

Seco

ndar

y E

duca

tion

092

PMIU

Faro

gh-e

-Tal

eem

Stud

ent

Fees

N/A

N/A

Com

mer

cial

ban

k A

ccou

nt o

f sc

hool

N/A

N/A

N/A

Sour

ce: E

xpen

ditu

re a

nd Q

uant

ity o

f Se

rvic

e D

eliv

ery

Surv

ey, A

utho

rs’ d

epic

tion



PUNJAB EDUCATION SECTOR: FUND FLOW ARRANGEMENT

The District Government’s Non-Development Budget

The non-development budget for primary education is financed by the district government’s budget with the Provincial Governments transferring a single-line budget, from the Provincial Consolidated Fund (Account-I) to the Provincial Account in District (Account-IV), in accordance with the formula devised by the district’s Provincial Finance Commission. The District Provincial Account is monitored and controlled by the Executive District Officer, Finance & Planning. The district government’s accounts of their receipts and expenditure are maintained by a District Accounts Officer (DAO)-the treasurer of District. The DAO performs a pre-audit of all payments from Account-IV before approving fund disbursement.10

All major development expenditure at the district level is financed through the provincial budget, with the district governments chiefly being responsible for non-development expenditure. Consequently, in the case of primary education, the district budget, mainly including salary costs, are both derived from and constitute the lion’s share of the non-development budget.

The EDO for Education prepares the annual budget for the district education department in consultation with Tehsil level formations. In these formations, Drawing and Disbursement Officers (DDOs) submit their budgeting requirement to EDO Education, who after consolidation submits the budget proposal, in turn, to EDO F&P. The EDO F&P reviews the budget and, in keeping with the available fiscal space, recommends adjustments. The final budget proposal is submitted to the District Coordination Officer (DCO) for approval. The budget is entered into the PIFRA system (country financial management information system) by EDO F&P at the detailed object level.

The non-development budget for primary education is prepared by the Deputy District Education Officer (DDEO). This official is the DDO of all Tehsil level primary (or elementary) schools. Similarly, the functional classification for ‘pre-primary and primary school education’ includes the salary expenditure for primary as well as middle schools teachers.

10 For complete understanding of public financial management arrangement in Pakistan, please refer to Annexure III.



The Provincial Government makes a monthly disbursement into Account IV according to the Public Finance Commission (PFC) share. The EDO F&P in each district then enters the budget releases for each department into the PIFRA system, in keeping with the available budget in the system (ex-ante budget control). In the case of salary, which forms a major portion of the non-development budget, it is processed through the PIFRA system11. Each DDO is responsible for submitting a reconciled payroll sheet of their cost centre to the respective DAO. The payroll controls are adequately provided in the system with a complete payroll record (not including human resources) of the each employee. The salary is paid either through direct transfer into the employee’s bank account or by issuance of cheque.

The non-salary budget consists mainly of administrative expenditure for the DDEO office and, in some cases, is used to reimburse utilities bills of schools. Each DDEO maintains a separate bank account where non-salary funds are disbursed by the DAO, against the approved bills submitted by the DDEO office. The DAO issues a cheque in the name of the DDO for the requested amount. The DDEO office maintains complete records of the fund utilization and the bank account.

11 Project to Improve Financial Reporting and Auditing (PIFRA) system is the Government Financial Management Information System (GFMIS). Monthly payroll of all government employees is generated through this system.



Figure 2: Non-Development Fund Flow of District Education Department

Source: Expenditure and Quantity of Service Delivery Survey, Authors’ depiction

Key Budget ShareElected Officials & Civil Servants

Bank Account or Accounts

Provincial Budget

PFC Share

District Budget

Account -IV EDO Education

EDO F&P

Non- Salary

DDO Bank Account Employees

Salary

2. Budget allocation for district grant.

1. Passes annual budget law

3. Calculates share for each district based on pre-determined formula

5. Approves budget as administrator

4. District prepares budget according to allocated share

6. Provincial FD makes Quarterly / Monthly releases to District Account IV

8.1 Consists of office expenditure of EDO Edu., DEO & AEO

8.2 Monthly processing of Salary through PIFRA system.

9. Cheque issued

Provincial Assembly

PFC Secretariat

DCO

7. Enters department-wise budget and also makes releases in the PIFRA system



THE PROVINCIAL GOVERNMENT’S DEVELOPMENT BUDGET

The entire development budget for primary education is financed through the provincial Annual Development Plan (ADP) and involves the provision of missing facilities under the Punjab Education Sector Reform Program (PERSP). The development planning, firmed up each year, is based on the Annual School Census conducted on 31st October 2014. The Program Monitoring and Implementation Unit (PMIU), which is an attached department of School Education Department, has a key role in implementation of PERSP. The Annual School Census, aids the PMIU in collecting and compiling complete data for missing facilities. PMIU has a network of District Monitoring Officer (DMO) spanning all of Punjab’s districts.

After the school census conducted by PMIU, the SED identifies priority schemes, and prepares budget estimates accordingly on the basis of census results. The scheme, after approval from the Planning and Development Department (P&DD), becomes a part of the Annual Development Plan (ADP). The development budget for primary education (091) is functionally classified under Secondary Education (092)12.

The PMIU in conjunction with the EDO Education initiates the joint survey of the sites and work requirement for the priority schemes, and based on this survey DDC may change the scheme if it is not technically feasible. PC-1s are required for all schemes exceeding Rs. 1.5 Million. The Sub-Engineer of Building Department, the Monitoring and Evaluation Officer (MEO) of PMIU, and the Assistant Education Officer (AEO) of EDO Education Office, conduct the joint survey. The joint survey is used to develop rough cost estimates for the development of PC-1s. The EDO education office is responsible for preparing the PC-1 and it is placed before the EDO F&P, before its submission to the District Development Committee (DDC). The DDC is chaired by the DCO and its members includes the EDO F&P and the EDO of the relevant department. The DDC may approve the PC-1 or recommend changes in any scheme which lacks viability.

The development budget in each district is spent through the Special Drawing Account (SDA) which is especially maintained for development projects. Although the SDA is opened in Provincial Account-I, the EDO F&P and DCO of the relevant districts have the authority to operate it, and

12 091 and 092 are the functional classification for Primary and Elementary Education and Secondary Education respectively in budget charts of accounts.



to utilize funds from their respective SDAs. The EDO Education and the EDO F&P send requests to the Provincial Finance Department, to release development funds into the SDA. The Provincial Finance Department, keeping in view the fiscal space and provincial priorities, releases funds into the SDA. The SDA is a ring-fenced arrangement where funds are released for each budget item. The operators of the SDA are required to submit detailed object expenditure classification along with the cheque, to the Treasury Officer/DAO, for endorsement. The release pattern for development projects is determined by the FD, and as such may vary from one year to another. The SDA is lapsable and before the year’s end, the remaining balance is required to be surrendered. However, with the approval of the provincial FD, this unutilized balance of SDA may be transferred into district Account-IV, which is non-lapsable.

The expenditure is recorded in the PIFRA system at scheme level, rather than for each primary education facility. The PC-1 contains the list of schools included in the given scheme; however, this information is not recorded at time of entering the budget or booking of the actual expenditure. Thus, development expenditure at the service delivery level cannot be tracked through the national FMIS, and information can only be sought from the EDO F&P office in each district.

The development work regarding missing facilities is executed through the district Building and Works department, or in a small number of cases, the School Council is allowed to carry out civil works with the approval of the provincial government. In the case of Schools Council carrying out civil works, funds are transferred into the commercial bank account of the SC and all payments are then made through this bank account. The School Council transactions are not recorded in the country FMIS. The SED monitors development schemes and maintains a financial reporting mechanism on fund utilization for each scheme, however this mechanism is outside the purview of the country FMIS and reports.



Figure 3: Development Fund Flow District Education Department


Account-IV

FD

SDA EDO F&P, &

DCOContractor

1. Annual School Census on 31st October

9. Joint Survey by AEO, MEA and Sub eng. of BD

10. Rough cost estimates prepared by Building

Department sub engineer

13. DDC may approve or if required change scheme based on the information

on ground

14. PC-1 approved

15. EDO Edu./EDO F&P send request to provincial

FD for release of fund against approved project

11. Prepares & sends PC-1 back for EDO Edu review

2. Compilation of information and entry into

PMIU system

3. District-wise list of schools missing facilities

developed

17. FD releases development funds against ADP as per provincial fiscal position

18. Before the year end funds may be transfered to Account-

IV to avoid surrender

4. Priority list of work is generated

5. Identification of Scheme and budget estimate for year

6. Scheme entered into ADP as per available budget ceilings for education sector

ADP

DMO

EDO Edu.

EDO Edu.

DEO

SED

DMO

DDC

EDO F&PPMIU

PMIU

8. Schemes send to DMO

office for joint survey

7. Shares scheme with

PMIU

16. P&DD issuessanctions fordevelopment budget release

19. Payment through cheque

12. Sends toEDO F&P

ContractorDepartment Elected Officials and Civil Servants

PMIU Bank Account ContractorKey



THE SCHOOL COUNCIL FUNDS

Under the Punjab Education Sector Reform Program, almost 56,000 School Councils (SC) have been constituted, which are at work in public sector schools in every district of Punjab. The school councils are being provided annual grants to meet the needs of the schools at the local level. These grants amount to Rs. 20,000 each for Primary Schools, Rs. 40,000 each for Model Primary Schools and Rs. 50,000 each for Elementary Schools.

The School Council budget is financed through the provincial current budget, under PMIU. At the planning stage, the Deputy Director of Monitoring and Evaluation (DDM&E) at the PMIU of each district submits complete information about Schools Councils to the SED. This information is based on monthly inspections carried out by the DMO. The SED determines the total budget requirement for the year and submits a corresponding budget request to the FD.

The EDO Education is the one who is largely responsible for the formation and monitoring of the School Council. The formation process starts with the AEO supervising the election process of the School Council. The AEO notifies the School Council members and enters their particulars into the School Council register, which is maintained at the DDEO’s office. The School Council communicates any change in membership to the AEO, who, upon verification, updates School Council membership register. For monitoring purposes, each SC submits its financial report to a circle (a primary school heading a group of 5 to 6 schools) on a monthly basis. The circle reports to the AEO, who in turn consolidates and submits reports to the DDEO. In addition, the DDM&E Officer of PMIU also monitors SC accounts during monthly inspection visits.

Around October-November each year, the FD makes lump-sum transfer for the School Council budget into the SDA of the relevant district. The SDA is operated by the EDO Education, and based on the approved list of School Councils in a district, disburses funds into the bank accounts of School Councils. The government has issued financial management and procurement guidelines for School Council expenditure management. The head teacher of the school is the chairman of the School Council and is also responsible for maintaining books of accounts. The head teacher and one of the council members are signatories of the bank account. The expenditure details of School Council funds are not recorded in the country FMIS and thus not traceable in the system. In some districts, donations received by the school have also been deposited into the School Council bank account.



Similarly, in some selected schools, caregiver funds provided by the Directorate of Staff Development (DSD) were also transferred to School Council. Thus, the SC bank balances vary to a great degree across schools.

Figure 4: School Council Formation and Monitoring Process


AEO monitors the SC formation process

School Council notified by AEO

Communicates details of members to AEO

Makes call to SC members for feedback

Monitors expenditures by SC during monthly visit

Cancellation and new entrant. SMC database maintained at DDEO office on manual registers

School Council

DDEO

SC submit expenditure report

to Circle

Circle is a group of 5-6

schools

Prepares MER and submit to

DDEO

Conductstechnical

audit of SC

AEO DDEO DEO EDO Education

AEO

Abacus

Assistant Education

Officer

District Education

Officer

SC notification

SC notification Register Form-1

SC member Registrar DDEO

office

Feedback Report

Membership Change Form- 2



Figure 5: School Council Fund Flow


Key

SED EDO Education

SC Bank Account

School Council

Head Teacher

Directorate of Staff

Development

FD

SDA

Government Departments or Sections of Departments

Bank Accounts

Elected Officials and Civil Servants

1. Demand for Grant for SC is sent by SED

4. Funds are disbursed via cross-cheque in the name of SC

5. SC authorises each expenditure. Each decision is documented in the minutes of the meeting register.

6. Chairman SC (head teacher) & one other SC member are cheque signatories

7. Payments are processed by head teacher

4.1 Funds for caregiver disbursed into SC bank account @Rs. 3800 pm2. Budget allocation

for SC under current budget Secondary Schools (0092)

3. FD releases 100% of funds in September

3.2 SDA maintained by EDO Edu.

3.1 Releases are made in SDA on the basis of updated school data

On the basis of monthly inspection, data is collected by DDM&E of PMIU

Expenditure is first incurred by head teacher

Expenditure includes uniforms, minor repairs, temporary teachers.

Audit conducted by OAGP but with varied frequency

Head Teacher writes the Cash Book

Funds are then drawn out of SC Bank Account

At PMIU, school data is updated and communicated to SED

For each district, SED sends a request to FD for release of funds



FREE TEXTBOOK

The Free Textbook initiative is financed through the provincial current budget provided under PMIU. Each year the School Education Department is responsible for the printing of textbooks from its attached department, the Punjab Textbook Board. The printed books are received at a central warehouse in Lahore13 from where they are distributed to districts. The textbooks are allocated to each district based on the annual census with an addition of 10 percent. The Tehsil warehouse receives books from the central warehouse in December, to distribute onward to schools. Each School collects books from the Tehsil warehouse as per the distribution plan prepared by the DDM&E. This distribution plan is based on the enrollment figures obtained through the annual census.

The movement of books is documented right from the central warehouse to the students through the creation of various forms (D1-Receipt by Tehsil warehouse, D2-Return by school, D3-Receipt by school and D4-Receipt by student). The Tehsil warehouse maintains an inventory of the textbooks and prepares the inventory status report (ISR) at the end of each month. The ISR indicates the number of books received and issued during a particular period, along with the opening and closing balance for each class of books.

One of the issues highlighted is the frequent change in syllabus, which results in recalling the already distributed books and subsequently redistributing the new ones. The stocks of outdated books are maintained at the Tehsil warehouse with no clear policy on their disposal. Redistribution, too, requires timely documentation and updating of the ISR, so that books can be tracked from the central warehouse to the students in schools.

13 Capital city of the province of Punjab.



10. Supplementary demand for books sent DMO office due to short supply in early delivery

13. School report shortage directly to TWH

Figure 6: Free Textbook Inventory Flow and Management


FD

DMO

PTB Central warehouse

Lahore PMIU

Higher Secondary Tehsil

Warehouse

Book Receipt

Text Books Issuance

Role of DMO Office in Distribution Role of Store In-charge

1. Allocation under current budget (092)

2. SED send order for printing

12. Return excess book on D2 form

11. Books received from other warehouse on basis of re-allocation

3. Books are bound into jackets for each class comprising different subjects

4. Books are allocated to each district based on annual survey + 10%. Books are distributed to districts around December each year for the next year’s course.

5.1 Books are received on D1 form. Form is handed over to district warehouse person in Lahore

6.1 DMO Office prepares schedule for distribution, as direction from PMIU is to make disbursement by 31st March

8. Monthly ISR report sent by 5th of each month.

7. On D4 form schools receiving from parents. This D4 remains at the school and is checked by ME&A upon school visits.

Additional Requirement6.5 If enrollment figures disagree with ME&A, then school person will present the enrollment account duly signed by the Head Teacher and AEO.

Inventory Status Report6.6 Four copies sent to (i) DEO Elementary, (ii) ADE, (iii) DMO Office, (iv) Retained by Store In-charge.

9. At DMO Office inter-Tehsil warehouse position is reviewed & books are re-allocated against excess and short supply

6.3 School Person brings latest enrollment figure and signed D3 form along to Store In-charge

6.2 At the time of distribution ME&A is present at warehouse. ME&A also bring Annual Census proforma for cross check.

6.4 Inventory Status report maintained in Excel.

5.2 Afterwards, books are dispatched via NLC with a voucher stating the stock of the books

5.3 Books received are entered into ISR by the person in-charge of the store (generally a teacher) ISR is maintained in Excel

SED

Schools

Schools

Other District Higher Secondary School warehouse

in Tehsil

Tehsil Warehouse

Students



THE FAROGH-E-TALEEM FUND (FTF)

The FTF is generated from schools’ own resources, such as student fees to be spent on the non-salary operating expenses of the school. The schools have separate bank accounts for the FTF; however, in some districts there is a single bank account for both FTF and SC funds. The head teacher is authorized to incur expenditure from the FTF and is required to maintain a separate cashbook for FTF funds.

The general control over the FTF is weak as there is a lack of guidance, and poor financial management arrangements for the use of the FTF. There are instances where funds are transferred from the SC bank account to the FTF and vice versa. The bank balances are reported on a monthly basis, to the AEO, along with the transaction movements. The MEA of PMIU also monitors the FTF funds during the monthly inspection visit.

Figure 7: Farogh-e-Taleem Fund Flow

Head teacher collects fees and deposits them into a separate bank

account

Expenditure originally borne by teacher and then claimed from FTF

bank account

Separate books maintained for FTF-cash book register

Annual Census Survey also

captures details regarding FTF at

school level

Monthly report sent to Circle

along with bank statements

From Circle to ADE Office

DDE consolidate at Tehsil level and send

report to DEO

These reports include movements of FTF

funds

35 items in a list issued by SED for FTF expenditure

ME&A monthly inspection / survey

Audit by OAGP

Student Monthly fee of Rs. 20 to teacher




Public Expenditure Tracking SurveyPETSistotracetheflowofresources(financialand in-kind) through various hierarchical levels of government down to service provider i.e., primary school, (Leakages, delays, information asymmetry)





CHAPTER 3

Public Expenditure Tracking Survey

INTRODUCTION

While the government of Punjab has been successful in implementing an extensive information collection system through a network of monitoring officers in each district, this information database is not used for analytical purposes and all reporting is on an ad hoc basis. In the case of financial information, at best, reports are prepared on excel and communicated to the reporting authorities via email. No record of these reports is maintained, nor are any versions retained. One of the major issues faced in this tracking survey was the information management at each tier of government. For the purpose of the PETS, several sources including PIFRA; PMIU School Census data; DO building progress reports; EDO F&P budget execution reports; EDO Education ad-hoc reports; and SED informal reports have been used to prepare the analysis. This study is constrained by highly fragmented and largely aggregated financial information, particularly at the level of primary education. Wherever possible, however, the survey has constructed indicators for primary education.



Five major dimensions of the education sector have been analyzed using PETS indicators in keeping with standard World Bank methodology: (i) resource allocation; (ii) funds reaching schools; (iii) fiscal decentralization; (iv) equity; and (v) employee related costs. According to the budgetary framework of the SED, there are six different fund flow streams for each type of budget category14. For the purpose of this survey, four streams have been tracked: (i) development budget; (ii) non-development budget; (iii) School Council funds and (iv) non-salary budget. The selection is based on availability of information, the amount of the budget involved and the criticality of the program in the future plan of the government. The selection process was discussed and agreed upon with the government, at the time of launching of the PETS.

DIMENSION 1: RESOURCE ALLOCATION IN THE SECTOR

Resource allocation in the education sector has become more complicated with transition to a system of devolved provincial. The education sector is the country’s single largest service delivery network. The 18th Amendment to the constitution has not only devolved responsibility for the education sector to the province but has also made it mandatory for the state to provide free education from the age of 5 to 16 years. Out of 54,760 public schools delivering education, 36,549 are stand alone primary schools15 with almost 105,000 primary school teachers16. This makes primary education service delivery one of the largest networks of facilities across the province. Although, several studies noted the province’s improvement in primary education performance, apparent in enrollment, accessibility and survival rate; at the same time gaps in gender parity, missing facilities and equity have also been noted.17

14 Cost elements are Non-development budget, Development Budget, Free Text Book, School Council funds, Non-salary Budget and Farogh-e-Taleem Fund.15 Primary education is also imparted in elementary and high schools. For the purpose of this survey only those primary schools are considered which go up to grade 5. 16 Authors’ calculation based on Annual School Census 2013 database.17 Education Sector Operational Strategy 2013-17, Government of Punjab

Source: Data from CGA, Authors’ calculation

Figure 8: Education Sector Budgetary Allocation

15.5%16.0%16.5%17.0%17.5%18.0%18.5%19.0%19.5%

FY 2011-12 FY 2012-13 FY 2013-14

Proportion of Planned BudgetProportion of Executed Budget



Overall Budget Allocation (Analysis at the Sectoral Level)

Allocations for the education sector have been increasing in keeping with its declared priority. The incumbent government in Punjab is now in its second consecutive term in office. Over the past decade, the Punjab government has identified education as one of its high-priority sectors. The government launched the School Education Reform roadmap in 2011 and has developed an Operational Strategy (2013-17) for its implementation. The annual allocation for the education sector has been around 17 percent of Punjab’s total budget for the last three years. The government manifesto before the March 2013 General Election clearly identified education as its single highest priority and has committed itself to declaring an education emergency in the coming years. The sector has witnessed a budget execution rate of more than 90 percent, in the last three years, which is a notable performance across all sectors in the province.

Primary education does not have separate a functional classification in the GFMIS even though it accounts for 48 percent of budgetary allocation within the education sector. Additionally, development expenditures in the area of primary education are wrongly classified under secondary education, making it even more difficult to analyse the primary budget and expenditure. Given its size and importance in the provincial government’s declared strategy, there should be separate classification for this sub-sector in the existing GFMIS18. As a result of this shortcoming, despite the preference to build indicators exclusively for primary education, the study sometimes had to use the overall education sector budget.

Overall, 84 percent of the total sector budget is recurrent, including personnel cost, which are about 78 percent of the total sector budget. The education budget is a mix of different funding streams financed from both the development and the current budget of the province. Except for missing facilities, which are financed from the development budget, all other streams are funded from current side of the budget to ensure uninterrupted fund releases during the year. The district government plays an important part in the provision of primary education and a significant portion of primary education expenditure is accounted for against the district budget appropriations.

Personnel costs are about 92 percent of the total recurrent budget, leaving behind only a paltry amount for the non-salary recurrent budget. The district government was made responsible for the provision of education services by the Punjab Local Government Act 2013. As a result,

18 Operation Strategic Plan 2013-17 has separate output and outcome indicators for primary education and has distinct action plan for primary education outcome.



funding streams flow through different administrative tiers and bureaucratic layers. The administrative expenditures, other than payroll, account for whatever that is left of the recurrent budget, naturally leaving behind almost nothing for the schools’ operational requirements.

Significant increases in payroll expenditures over last few years have greatly squeezed the operation and maintenance expenditures. These expenditures are crucial in terms of service delivery and the maintenance of existing infrastructure. Consequently, the inadequacy of the operational budget may negatively impact service delivery. During the last three years, the government has increased salary of government employees by 15-20 percent per annum. Like the other Pakistani provinces, Punjab primarily relies on fiscal transfers from the Federal Government, while the proportion of its own revenue is only about 16 percent. With the existing fiscal space, the government has not been able to proportionately increase the non-salary budget in line with increases in salaries, thus further diminishing resources for operational expenditures.

One of the mitigating strategies adopted by provincial government to address the dearth of space in the operational budget, under Punjab Education Sector Reform Program (PESRP), was to provide fixed grants to schools on account of their non-salary recurrent cost. These funds were in addition to the student fee collected by the school and are retained in a separate bank account. Schools are allowed to use these funds for their non-salary recurrent cost. During 1990s, the government first introduced School Council with the twin objectives of enhancing capacity of schools and empowering communities to manage school affairs. Under PERSP, the government issued financial management and procurement guidelines, and revived school councils. These fixed grants are transferred directly into School Council bank account to be used for operational expenditure items.


Figure 9: Budget Application

0%10%20%30%40%50%60%70%80%90%

100%

FY 2011-12 FY 2012-13 FY 2013-14

Investments (Development)Recurrent (Non-Development)Personnel (Non-Development)



The overall budgetary allocations in terms of the provincial GDP are not very healthy. The governing political party, before coming to office, had committed to a particular target in its manifesto, which would allocate 4 percent of GDP to education by 2018. The current sector budget to provincial GDP ratio stands at a meagre 1.9 percent, which is lower than national average of 2.49 percent and significantly less than that of other developing nations.19

The Education Sector Budget is growing but at a declining rate. Since the 7th National Financial Commission (NFC) Award in 2010, the fiscal space for provinces has expanded in which vertical distribution of resources from the Federal to the Provincial level was increased. The FY 2012-13, which was also an election year, witnessed a 24 percent growth in the total provincial budget (inclusive of districts). During the last three years, government budget allocation for education has shown positive growth. The growth rate of 11 percent and 8 percent during FY2011-12 and FY2012-13 respectively are less than the annual salary increase of 15-20 percent during the same years. Given that 78 percent of the total sector budget is personnel cost20, these growth increments have barely covered the additional salary expenditure in these years. During the same period, the government has successfully completed massive infrastructure projects, which have implications for the future recurrent budget. Except for the FY2012-13, the annual growth in total provincial budget is between 1-3 percent; consequently further squeezing the already narrow fiscal space available to other sectors like education.

19 Source: Institute of Statistics 2013, UNESCO and Authors’ calculation.20 Personnel cost as percent of Total Sector Budget 78 percent; Personnel cost as percent of Total Recurrent Budget 92 percent, Personnel cost as percent of District Total Budget 94 percent, Personnel cost as percent of District Recurrent Budget 95 percent.


Figure 10: Education Sector Budget

50

100

150

200

250

0%2%4%6%8%

10%12%14%16%18%20%

FY 2011-12 FY 2012-13 FY 2013-14

Total Education BudgetGrowth Rate



DIMENSION 2: FUNDS REACHING SCHOOLS (PRIMARY EDUCATION SUB-SECTOR)

The following section presents an analysis of Provision of Missing Facilities (PMF), SCs and non-salary budget in terms of leakages and delays in ‘Funds Reaching Schools’.

Provision of Missing Facilities (PMF)

The disconnect between planning (provincial) and execution (district) of the development budget makes it difficult to monitor the funds spent. As part of the survey, the study compared PMF budget executed (FY2013-14) at sample primary schools with the available facilities at those schools (survey questionnaire for schools). The information regarding budget executed at school level was not available in the country’s financial management system. Hence, the data for PETS is obtained from the District Education, Finance and Building Offices.

‘Leakages’21 are found in the execution of PMF and it is important to detect their cause as well as the areas where they are most common. Within a sample of 450 schools, expenditure relating to the ‘Provision of Missing Facilities scheme’ was incurred in 52 schools. Out of these schools, 29 did not have one or more of the following facilities: (i) electricity, (ii) toilet blocks, (iii) boundary wall, and (iv) drinking water, although funds have been utilized in these schools according to government record. The total amount spent on these 29 schools (under PMF) was Rs. 46.2 million; the survey revealed that 39.7 percent of this amount (i.e. Rs. 18.3 million), spent on missing facilities, could not be traced in these 29 schools. It was ensured that these schools did not suffer from any flood or natural disaster during the period between surveys conducted and budget executed (the gap was around 12 months). The amount of total leakage or loss could not be determined as the ‘monthly progress report’ is prepared

21 Leakage is defined as the proportion of resources intended for identified beneficiaries that does not reach them.

Source: Survey data, Authors’ calculation

Figure 11: Fund spent on Missing Facilities of Primary Schools -Leakage

- 2.00 4.00 6.00 8.00

10.00 12.00 14.00 16.00 18.00 20.00

A B C D E F

Mill

ion

(Rs.)

Districts

Facility Missing Facility Exist



in varied ways and contains different levels of information.22 To illustrate this, we examine the case of schools in district ‘A’. The total budget executed was Rs. 10.4 million but the survey validated the existence of facilities with expenditure amounting to Rs. 5.1 million only. The remaining Rs. 5.3 million was spent as shown in government records but no actual facilities could be found corresponding to that expenditure. Similarly, in district ‘C’, out of a total expenditure of Rs. 11 million only facilities worth Rs. 4.84 million were verified. Therefore, the darker area in Figure 11 represents the risk portion of expenditure, which was not converted into the provision of facilities/services.

The links between planning and actual requirements of the school needs to be strengthened. Further category-wise analysis of missing facilities has helped to reveal the extent of ‘provision of missing facility’ funding in line with the verifiable needs of the school. Referring to district ’A’ again, we find that after spending Rs. 5.35 million on 25 schools in one year, 11 schools do not have a boundary wall, 9 schools lack toilet facilities, and 5 schools are without electricity23. Figure 12 represents the district-wise funds spent, along with survey results for key categories of facilities missing at the time of the survey. The survey teams were unable to obtain evidence on allocation and spending at the primary school level where a rule-based

22 District Officer (DO) Building monthly progress reports on civil works may or may not contain information about exact purpose of the funds utilized. In most cases, it only has school name, funds issued and funds utilized with percentage of utilization. The report varies across districts.23 Rs. 5.3 million only relates to 25 schools, which have reported lack of facilities on the day of survey. The total expenditure incurred on 29 school of district ‘A’ was Rs. 10.4 million. Source: Progress report of DO Building of relevant district. In case of district ‘A’, categories of missing facilities are not mutually exclusive i.e. a school can appear in two categories at the same time and is counted twice here.

Source: Survey data, Authors’ calculation

Figure 12: PMF Expenditure (Rs. million) vs Category of Facility Missing (No. of Schools)

5.35

0.75

6.16

0.21

1.20

4.70

0

2

4

6

8

10

12

A B C D E FDistricts

Electricity ToiletsBoundary Wall Expenditure



planning process was employed. Although the government has introduced a system to collect data on the availability of resources at the primary school level, the information is actually used for financial planning and cannot be empirically verified. In a nutshell, there is still no clear definition of how resources are distributed among primary schools. It is important to note that the PMIU school database, which is based on the annual school census and monthly MEA data, is a comprehensive repository of multi-dimensional data on school education24. This issue is discussed in greater detail later in this section.

The interviews with provincial and district education authorities indicated that there are no fixed criteria or rules for the selection of schools for PMF which are, at times, also influenced by political consideration. Planning for PMF is carried out on the basis of this PMIU School database, however, in view of sector budget constraints; schools are identified by the SED and after deliberation approved by District Development Committee (DDC)25.

Here, it is also pertinent to mention that none of the school or school management committees knew about the amount of PMF budget allocated to them and how much was actually spent. Enhancing district ownership in planning and execution, and adopting simple information dissemination, such as better public knowledge of the allocated funds for schools, may improve transparency and deter leakages.

School Council Funds

The survey results showed that schools have received, on average, 87-88 percent of the funds released, except for in FY 2012-13 where the quantity of funds received was much less than funds released (28 percent).26 This percentage varies across districts depending upon the quality of school data available for each district. The DEO carries out regular reporting on the School Council bank balance, but no reconciliation is carried out at the time of disbursement. The Provincial Finance Department places funds into a specially designated account operated for each district according to the requirement communicated by the School Education Department (SED). The DEO authorised to operate the account then disburses funds into each School Council’s bank account in its respective district. The process

24 Annual Census is carried out in October each year. Monitoring & Evaluation Assistant (MEA) carries out school-to-school visit each month with a coverage of almost 90 percent in a given district. Both these databases are with PMIU.25 DDC is the district committee including DCO as its chairman, EDO F&P, EDO of the sector and representative of national and provincial assembly of the constituency. 26 SC disbursement data is based on reports provided by EDO Education.



is completed after going through a multiple layer of approval process involving interplay between various government officials.

Based on interviews with head teachers and SC members, key constraints regarding effective functioning of school councils are discussed below:

1. School improvement plans are not prepared and funds are utilized on the basis of arising needs. At the school level, execution is not based on planned decisions as the head teacher identifies the needs as they emerge. The minutes of the School Council meetings are prepared and requirements are agreed upon, but these are not prioritised or translated into concrete plans. The SED has issued guidelines for financial management and procurement in relation to School Council funds, but the School Council members need training to understand and discharge their responsibilities. At present, even head teachers are not sure about the issued guidelines for financial management requirements.

2. The annual utilization rate of School Council funds is poor, due to a fear of multiple audits and excessive monitoring protocols. The School Council funds are generally utilized in the procurement of schools supplies, small repairs and transportation costs. In a rural economy, suppliers generally do not provide printed invoices. Thus, sales invoices, if any, are in the form of non-printed plain paper, which, from the perspective of an audit, does not qualify as credible evidence. The FM guidelines for schools require that supplies comprising items of furniture and fixtures be purchased from a sales tax registered supplier, which are scarce in rural areas. The head teacher has to go to a main city and accept price quotations only from sales tax registered suppliers. They are, therefore, in a quandary, either being penalised by higher prices, or for procuring from non-sales tax registered supplier.

Source: Survey data, Authors’ calculations

Figure 13: Rate of Leakage of SC fund (% diff between received & released funds)

13%

28%

12%

0%

5%

10%

15%

20%

25%

30%

FY 2011-12 FY 2012-13 FY 2013-14



3. The School Council neither knows the amount of budgeted funds, nor has any idea about the timing of fund releases. Instead of multiple audits for accountability purposes, the government could rely on citizen-based monitoring, which could be a highly efficient tool in districts and schools. Effective accountability by citizens depends on the availability of credible information which is easily understandable. The PLGA 2013 requires that financial information be displayed in prominent places so that it is accessible to citizens.

4. Delays in disbursement occur due a failure to update School Council data with the DEO and the SED. The district monitoring officers regularly collect information from schools, which also includes data on School Councils and a more detailed census is annually carried out in October. Despite this regular monitoring and data collection exercise, information about the School Council and their bank account is outdated at the time of disbursement, which causes delays in districts dispensing funds to schools. Most of the information is centralized with the PMIU. Due to the fact that there are no regular data sharing protocols between the PMIU and the districts, the information management at district level is weak. The survey data in Figure 14 reveals that disbursement time varies from 5-140 days among the sample districts. Annually, this is a one-time exercise as the School Council funds are disbursed in one tranche; therefore the delays in disbursement of funds among districts, cannot be only due to lack of preparedness.

5. In the case of one district, it was alarming that funds could not be disbursed from the district to schools, after being received from the province. As it happened, this was because one of the district signatories positions (the DMO) remained vacant until after the funds lapsed, without ever having been disbursed to schools (Box 1). At the provincial level, the time taken from budget approval to the transfer of funds is 166-177 days. This is the amount of time taken by PMIU to prepare a list of schools for each district, along with the total amount to which they are entitled, as well as the approval required from the SED. The finance department then processes requests and releases funds through PIFRA system into the designated account of each district. When combined with the delays at district


Figure 14: Delays in School Council Funds Disbursement from Province to Districts

- 50 100 150 200

FY 2011-12

FY 2012-13

FY 2013-14

No. of Days



level, the total time taken by funds, from budget approval to actually reaching schools, may be 8-10 months.

Box 1: Delay in Disbursement

School Council funds were not disbursed in one of the sample districts due to non-availability of the second signatory. Under Punjab Education Sector Reform Program almost 56,000 School Councils have been constituted which are working in public sector schools in every district of Punjab. The School Council budget is financed through the provincial current budget under the PMIU. At the planning stage, the Deputy Director Monitoring and Evaluation (DDM&E) of PMIU posted at each district submits complete information about Schools Councils to the SED. This information is based on monthly inspections carried out by the DMO. The SED determines the total budget requirement for the year and submits a budget request to the FD. Around September each year, the FD makes a lump-sum transfer for the school council budget into the SDA of the relevant district. The SDA is operated by EDO education and the DMO, who based on the approved list of School Councils in the district, disburse funds into the bank account of School Councils. In case of one district, a DMO was not appointed for some time, despite repeated requests by the district education authorities. At the end of the year i.e. FY 2012-13, the provincial government asked the district to surrender all funds back to the province, as they were unable to utilise the funds in time. It is important to note that the provincial government appoints a DMO in each district and thus, funds could not reach the schools due to a delay in the appointment decision.

6. The amount of funds allocated to each school is very small, i.e. Rs.20,000 for each primary school annually. Increasing inflation and the associated increase in utility bills, repairs and maintenance, and other school supplies have by far exceeded the current level of Rs. 20,000. The schools have to wait for two to three years to accumulate sufficient funds to carry out overall repair works.


Figure 15: Delays in Disbursement from District to Schools (School Council Funds)

0 20 40 60 80 100 120 140 160

Gujrat

MandiBahaudin

Bhakkar

Jhang

BahawalpurD

istri

cts

FY 2011-12 FY 2012-13 FY 2013-14



7. The School Council election process has not yet taken root, and school head teachers have to work to convince people to become part of the School Council, as members have do not fully comprehend the functions of the council and are largely unaware of their roles and responsibilities. No government campaigns have been carried to encourage community representatives to become part of the School Council. The head teacher is the Chairman of the School Council and usually dominates the proceedings of the School Council meetings. The size of SC funds has also been cited as one of the reasons that fail to motivate the community members to opt for the School Council membership.

Non-Salary Budget Funds

Financial management arrangements for NSB have not been developed or implemented. During FY 2013-14, the government restructured the design of the School Council grant and thus, moved from fixed grant to capitation grant model27. Non–Salary School Budget (NSB) grants were piloted in 6 districts for their first year (FY 2013-14). This has resulted in a significant increase in the amount available for the School Councils. Currently, financial management rules issued for SC grants, are being used for utilization of NSB grants.

Though, it is too early to comment on the impact of the NSB on the quality of service delivery, significantly increasing the amount and making it part of recurrent budget, reflects positively on the government policy of encouraging community participation in improving service delivery28. Decisions, when taken at the lowest level, largely incorporate ground realities. Greater participation, on the part of the population, in government affairs leads to managers of service delivery having a greater degree of accountability. However, access to information is equally critical in improving the desired accountability mechanism. The systemic weaknesses relating to NSB have been discussed in later sections. The following are some of the key issues identified during the survey:

1. The design of the NSB grant and the rules of allocation are not made public; it is widely believed to be based on enrollment rate. The school survey revealed that none of the schools had any information about their share in the NSB funds and did not know beforehand about how much NSB funds they were entitled to receive. Simply improving the public dissemination of information can act as a powerful deterrent against misappropriation and

27 This is widely believed by officials to be a capitation grant model but no public disclosure is made about the actual formula. 28 As per government financial management procedures, the allocation from current budget provides greater degree of certainty in release patterns.



leakages of funds, thereby enhancing the effectiveness of this very useful intervention.

2. On the same token, the lack of participation in NSB interventions at the district level erodes ownership. Like schools, districts do not know about the allocation rules for the NSB, which is distributed to primary schools under their administrative jurisdiction. Funds are received from the province are simply forwarded to primary school according to the allocation provided by the provincial SED. This has not only resulted in a lack of ownership by the district governments but has also caused confusion about the districts’ role in primary education and their subsequent accountability for the outcomes.

3. NSB fund disbursement delays are observed, which may impede planning by School Councils, at the school level. The survey results have identified delays in disbursement of the NSB funds to Schools. The time taken for disbursement by the EDO office, from the receipt of funds from province, can be as long as 147 days. Figure 3.9 represents the disbursement timelines for the first tranche in the FY 2013-14. There were a total of 24 transactions (4x6 districts) and the survey teams were able to obtain dates for 16 transactions. In 7 instances funds were disbursed in 30-40 days, two transactions were processed in 40-50 days, 1 time each for 71 days and 24 days, 3 were processed within 5-10 days and on two occasions it took more than 100 days for the EDO education to disburse funds to schools. According to the rules of the fund flow, the province transfers funds into the SDA, which is operated by the EDO education (executive district officer–head of district education department in each district). The SDA is a designated account opened for a specific purpose and can only be used for that purpose. The government has issued stringent guidelines for its operation and the EDO office can only withdraw funds from this account and cannot deposit them back into it. From the SDA, the EDO disburses funds to school bank accounts by way of electronic transfer. Along with the funds, the EDO also receives list of schools with the allocated amount for each one of them. The PMIU–a monitoring wing of provincial school education department, prepares this list. It is important to note that the EDO education office receives four quarterly tranches in a year for NSB funds.


Figure 16: Delay in Disbursements from Regional to Service Provider NSB Stream - FY 2013-14

0 10 20 30 40 50 60 70

Chakwal

Sialkot

Nankana Sahib

Okara

Rahim Yar Khan

Days



DIMENSION 3: FISCAL DECENTRALIZATION AND BUDGET USAGE

The development of an education reform roadmap and operational strategy underscores the government’s efforts to improve education outcomes. Over the years, the government has used a programmatic approach to implement reforms under tight provincial control. These programs included the establishment of the PMIU for effective monitoring, providing missing facilities, free textbooks, school councils, non-salary budget and the use of technology for real-time monitoring.

During this entire period, the governance structure of the education sector has not been changed, and has remained aligned with the traditional system. Decentralization involves redefining the role of the government and bringing it closer to the people. No efforts have been made to reconfigure the governance arrangements to help them to meet the emerging requirements. Additionally, the province controls the education sector reforms with little or no input from the local governments. Although, primary, elementary and secondary education functions have been devolved to districts under the PLGA 2013, provincial departments have continued to set policies, allocate resources and perform all oversight functions29.

About 70 percent of the education sector budget is part of the district budget while 72 percent of the actual expenditure is executed at the district level indicating that there is not a great deal of difference between the original and the executed budget, and the government follows their plans relating to fiscal transfers. About 98 percent of the district budget is payroll costs, which are processed through the centralized automated GFMIS system, ensuring that the district budget is essentially limited to the salary budget of the sector. The development budget,

29 PLGA 2013 has devolved the policymaking, implementation and monitoring of primary, elementary and secondary education to district government.


Figure 17: Education Budget at Each Level

0%10%20%30%40%50%60%70%80%90%

FY 2011-12 FY 2012-13 FY 2013-14

At Provincial Level Executed at Provincial LevelAt District Level Executed at District Level


Figure 18: Non-Development Budget at Each Level

0%10%20%30%40%50%60%70%80%90%

FY 2011-12 FY 2012-13 FY 2013-14




non-salary component and administrative costs are all part of provincial budget, which effectively reduces the district authorities’ ability to be actively involved in decision-making in the education sector.

Roughly 94 percent of the development budget is planned and executed at the provincial level. The district governments have no budgetary discretion in relation to operational aspects, including the hiring of teachers and contracting of civil works. In Punjab, this discretion is often absent due to the non-discretionary nature of teachers’ salaries and the outsourcing of civil works to external engineering departments. The issue of fiscal decentralization is not specific to the education sector and has been explained in detail in the Annexure III.

The survey revealed that district education officers are unsure about the future of their role and sceptical about the prevalent accountability mechanism. The efficient delivery of services at the grassroots level requires a predictable flow of resources, the linking of budgets with plans and priorities, transparent budget execution and accountability for results. Accountability is key to the success of service delivery. For this purpose the government has introduced an indicator-led approach for the evaluation of district performance. At their existing level of autonomy available to district, the DEOs have very little incentive to perform. The objective accountability can only work with a greater level of autonomy.

Tide grants like NSB, although beneficial to achieve certain objectives, lessen the district government’s ability to set their own priorities. The aim of decentralization is to enable local governments to set their own priorities in response to local needs. Rule-based inter-government fiscal transfers can ensure a certain level of resource allocation to a district while enabling districts to set their own priorities. However, they may not ensure that these grants are spent on activities that promote the ultimate objectives of the provincial government. These objectives can be more particularly


Figure 19: Development Budget at Each Level

0%

20%

40%

60%

80%

100%

FY 2011-12 FY 2012-13 FY 2013-14




achieved through specific purpose grant like NSB, but as discussed these types of tied grants simultaneously reduce the flexibility available to the local government to set their own priorities. Despite the liabilities of each option, the only way to ensure that the districts’ on-the-ground needs are met is if fiscal transfers to districts have a larger proportion of unconditional grants and a smaller proportion of tied grants.

DIMENSION 4: EQUITY AND DISCRETIONARY FUNDS

The survey revealed that a district with one of the highest levels of per-capita development expenditure for primary education in FY 2013-14, was also home to the largest number of missing facilities in all the sample schools at the time of the survey. Our sample of 450 schools covered 36-37 schools in each of the 12 districts. From the school inventory survey results, a profile was constructed for each district, keeping in mind the number of missing facilities per school, and then linked with per capita development expenditure for each district. The key reasons for the gaps were identified as ineffective monitoring of development budget, inefficient procurement capacity, and a weak accountability mechanism. Another important factor is the quality of data available at the district office. As previously touched upon, for primary education the teams extracted data from government record and then structured it for analysis. The study observed that progress monitoring reports of the DO Building, which were the basis of analysis for development expenditure, are not consistently presented across districts


Figure 20: Dispersion of Per Capita Development Budget Executed (Primary Schools-Sample Districts)

-

20.00 40.00 60.00 80.00

100.00 120.00 140.00 160.00



According to the progress reports of 12 districts, the PMF budget was executed in 2,582 schools and out of these 144 schools were not found in school census data30 underscoring concerns on accuracy and reliability of up-to-date information. Whether it is due to erroneous coding or errors of omission, no official reason has been provided for this anomaly. Lastly, although great care has been taken in the selection of sample schools there is always a risk that the sample might be biased towards schools, which were not part of the development budget in the observed financial year. The ratio of the most financed district in terms of per capita expenditure to the least financed one is 8:1. This is a glaring reflection of disparities in the allocation of the development budget. During the observed year i.e. FY 2013-14, southern and central region districts had 3 times the per capita development expenditure of the northern region.

This disparity reveals that government planning is reactive rather than responsive, with only sporadic focus on any particular district in a given year. The allocation process does not follow a methodical approach of any description, and for the study, the question of the reasons for certain districts getting preference over others remained unresolved.

The study was unable to identify any policy guidelines, rules, criteria or any other instrument that could provide a definite outline of the planning process. With the focus on planning rather than analyses of actual requirements, the study found out that 202 schools out of 450 were without one or more facilities but no expenditure was incurred on them during observed year.31 During the survey, the study did not find any reasons for exclusion of these 202 schools from the annual PMF allocations. The government has set output targets with corresponding financial allocations in the Medium Term Budgetary Framework (MTBF) but realization of these targets is dependent upon an effective allocation process, and analytical use of information to inform strategy32. Currently, the SED issues policy guidelines for PMF with one-line allocations for the purpose of budgeting like: (i) Provision of toilets; (ii) Construction of boundary walls in girls’ schools; (iii) Provision of IT labs etc. The mechanism that would realize these policies has remained elusive. During the survey, no answers were found to questions like: (i) how is district share determined for each policy?; and (ii)How are schools selected in each district for each policy? It is possible that each policy decision would be made for entirely different reasons. An example of this

30 Schools Census data is the most comprehensive data set of the schools across Punjab. It has EMIS code (a unique identification number) for every school listed in its database.31 Total sample size was 450 and out of these in 52 schools PMF expenditure was incurred. Out of the remaining 400 schools where no PMF expenditure was incurred, 202 schools did not have one or more facilities.32 PMIU has vast database on schools. The next step is to use this database effectively planning purposes.



is that during FY 2013-14, government focus was on Southern Punjab as additional grants on account of PMF were disbursed to the districts in the southern region33. The survey, which was carried out 8 months after the end of said financial year, divulged that the southern region had the highest number of schools with missing facilities in all categories, but no PMF expenditure was incurred on these particular schools during that year. Thus, even though extra funds were provided to Southern Punjab, this region still had the most ‘needy schools’. This poses a serious question, about whether the purpose which additional funds were released for, was even in line with the requirement of the region, district and school. Schools in the southern region needed boundary walls the most but the additional funds released by the government were for the ‘construction of new classrooms’. Figure 21 shows number of schools, region-wise, against each category of missing facility. The number of schools without boundary walls and with no PMF expenditure incurred, was the highest, followed by absence of electricity.34

There is significant discretion exercised during budget preparation; during the last three fiscal years, on average, about 40 percent of the development budget (16 percent of the overall budget) was in the form of block allocation, where the purpose for allocation is identified but the district-wise share is not mentioned in the Annual Development Plan (ADP)35. Reform initiatives introduced by the finance department, like the introduction of MTBF and the preparation of sector plans, explain part of the declining trend in block allocation in the education sector (49 percent, 41 percent and 31 percent in FY 2011-12, FY 2012-13 and FY 2013-14 respectively).

33 These additional grants were on top of Annual Development Plan. Source: Provincial budget execution reports.34 As no PMF funds were released for these schools, it can be safely inferred that these 202 schools, although they had missing facilities, were not part of government plans in FY 2013-14 35 Annual Development Plan is the approved development budget of the province. For details refer to Annexure III.


Figure 21: Number of Schools without any Expenditure on Missing Facilities

05

1015202530354045

Electicity Toilet BoundaryWall

DrinkingWater

North Centeral South



The School Council funds were disbursed as a fixed amount, Rs. 20,000 to each school, without any regards to needs and dynamics of district or schools. In Punjab disparity exists in terms of fiscal capacity, female enrollment, the number of children who are out of school, and the provision of school infrastructure within districts and Tehsils. In addition, the population distribution and geographic size of districts also determines the cost of service delivery. For example, the provision of education facilities for 1,000 children in Bahawalpur is different to that in Rawalpindi district, which has a much greater population density.

The government has attempted to improve this by introducing NSB for schools but its formula is not public and it thereby weakens the financial controls. Without equitable and transparent distribution the differences between education outcomes in districts are naturally bound to increase.

DIMENSION 5: EMPLOYEES RELATED COST

Salaries of staff are centrally processed on a timely basis in the last week of each month through the PIFRA SAP/R3 system, and thus directly transferred to the employees’ bank account. At the time of processing, the DAO confirms the payroll through (i) the number of total posts authorized within each scale; and (ii) the amount of salary drawn in each scale. The payment of salary is counter-checked on the bank statement. The report extracted from the system is reconciled with ‘Authentic Schedule of Establishment’, which contains the basic pay and other emoluments to which a particular scale is authorized. The employee data is maintained in the PIFRA SAP R/3 through Unique Identification for each employee.

In case of any change, the officer is informed via pay slip containing the information about salary and other emoluments to which the relevant officer is entitled. For transferring in, a Source 1 form containing basic information about the employee is updated in the SAP R/3 system. Similarly in case of Transferring Out, the information is updated in the manual as well as SAP R/3 system. Furthermore, the process of change in payroll involves updating the cost centre for the employee in the system. The Unique Identification (UID) for each employee, against which the payroll is processed, can only be activated from one cost centre at a time. On transfer to a new station, the employee ID is deactivated from the leaving station and only then can it be activated from the joining station.



PROCESS ANALYSIS

The process analysis highlights the systemic issues that need to be addressed on priority basis. The achievement of education outcomes is directly dependent on the strength of the underlying PFM system, which, in turn, is born of the existing governance structure. Therefore, the process analysis starts with issues in existing governance arrangements that have critical impact on the establishment of a robust PFM system. This is followed by the assessment of effective planning processes, a budget classification system, fund flow mechanisms, and finally financial management arrangements for special initiatives in the education sector.

Centralized Governance Structure Lacks Clarity about the Future, Resulting in a Lack of Ownership at the Local Level

The district government’s current role in education service delivery can be best described as the provision of implementation support for the provincial governments. It is important to note that under Punjab Local Government Ordinance 2001, the local governments had a mandate for primary and secondary education but after the lapse of said ordinance, in 2009, the government has continued with the district setup without having a local government in place, thus, controlling the district directly from the centre. This has multiple implications for the relationships between provincial and district governments. These implications are discussed in next paragraphs.

Local governments have been made wholly dependent upon the financial flows received as part of fiscal transfers from the provincial government. Without any legislative cover (PLGA 2013 is yet to be implemented), district governments cannot raise revenue from their own sources. In the case of the education sector, it remains the provincial government’s decision whether to charge primary school fees, how much to charge, and the identification of budget heads for its utilization. Secondly, the rules or formula for inter-government fiscal transfer from province to districts has not been made clear and public.36 The evidence suggests that during the last three years, funds transferred barely covered the payroll cost of the districts. Thus, this dependency on provincial transfers of resources has, over the years, not only undermined the mandate of the local government, but has also diluted its role in planning, execution and monitoring.

The government enacted the Punjab Local Government Act in 2013, but it has yet to be implemented. Under the PLGA 2013, the government

36 Punjab government has not revised the Provincial Finance Commission (PFC) award rule since its first application in 2002.



plans to establish District Education Authorities, which will be responsible for management, planning, execution and monitoring of primary and secondary education.

This seemingly never-ending transitional period has created a great deal of uncertainty about the governance structure in the education sector. All development programs for primary and secondary education are planned and budgeted by the province. Public Financial Management follows the governance arrangement, and when the contours of the governance structures are not yet visible, it is easy to see why effective PFM arrangements are exceedingly challenging to identify and establish. This is one of the reasons why primary education currently has different fund flow arrangements for each budget stream and it explains why those too, have been frequently changed over the last three years.

Non Participatory Planning Process Causes Delays in the Allocation Process

Unlike the perceived mandate of districts on the provision of primary education, their role in budgeting, planning and subsequent accountability of outcomes is not clear. According to the Punjab Local Government Ordinance (PLGO) 2001 and Punjab Local Government Act (PLGA) 2013, primary education has been devolved to the districts. However, the provincial government controls the planning and budgeting, and funds are part of the provincial budget instead of the district budget. Thus, districts have very limited participation in the planning process. The provincial School Education Department (SED) identifies development schemes for PMF and forwards it to the district to carry out joint surveys for cost estimates. The district development committee (actually mandated for the purpose) has been functioning as per PLGO 2001, but its role has been reduced to simply according approval of schemes on the SED’s list. They are only permitted to replace schemes, which are not feasible due to technical reasons. Consequently, development schemes are budgeted in the form of block allocations in the provincial annual development plan.

In FY 2013-14, 16 percent of the overall education budget was in the form of block allocations and 31 percent of the development budget was allocated in blocks. The detailed cost estimates are determined after the joint survey conducted by the district. This survey is carried out after the start of the financial year. Even if schemes are appropriated accordingly, these become



part of the annual development plan without requiring a PC-137. These schemes are identified as ‘unapproved schemes’ in the ADP.

Together with block allocations (naturally, all block allocations are unapproved), 37 percent of the total schemes for primary and elementary schools were unapproved in FY 2013-14 (it was 71 percent in FY 2012-13). This whole process results in delays in the commencement of any scheme and the survey revealed that this delay ranges from 4-6 months from the approval of ADP to the start of the schemes.

CurrentBudgetandExpenditureClassificationSystemdoesnot Support Expenditure Tracking at Service Delivery Level

In the education sector reform roadmap and the operational strategy, the government has recognized the fact that the delivery of primary education is its single largest challenge with separate reform output and outcomes. Despite this recognition, it remains impossible to infer official priorities from budget allocations. This is because of the fact that no separate budget classification is available in the budget chart of accounts (the only relevant functional classification is 091 for Primary and Elementary Education). In fact primary education budget allocations are made under 092 Secondary Education38. The budget, which is a policy tool, does not provide information on funds committed for primary education service delivery, making the tracking of these funds even more complicated. Given the current classification in charts of accounts, primary school sector is accounted jointly with elementary sector under one code.

In the existing charts of accounts, primary school (frontline service delivery unit) is not identified, as a separate cost centre therefore cannot be tracked through the Government Financial Management Information System (GFMIS). A cost centre is known as a Drawing and Disbursement Officer (DDO) in the government budgetary system. It is centralized at the Tehsil level for primary education, which means that the budget for all schools in a certain Tehsil (4th tier of government administrative unit) is lumped under one cost centre code. Each Tehsil typically has 60 to 70 primary schools. The existing GFMIS does not provide information on the availability of resources to these frontline service delivery units separately.

37 Approved Planning Commission-1 (PC-1) is a mandatory requirement for execution of a scheme. It entails detailed costs estimates and comprehensive information about the scheme.38 091 and 092 are functional classification for Primary & Elementary Education, and Sector Education respectively in budget charts of accounts.



Budget Execution Suffers Delays due to Multiple Fund Flow Mechanisms and Overlapping Responsibilities

There is no single mechanism for budget execution when it comes to special development schemes such as PMF, causing great confusion among districts. The flow of funds from the province to the districts and from districts to service delivery units is critical for the efficient execution of public services. Delays in fund transfers can occur at many stages. The Finance Department plays a fiduciary role, and where there is evidence that resources are not being used for the intended purposes, the Department may refuse to authorise the release of funds. During the last three years, the provincial government has frequently changed fund flow mechanism for the disbursement of development funds on the PMF’s account. At times it has disbursed funds into District Account IV (a separate treasury account for each district, similar to the concept of central treasury accounts at federal and provincial levels). On other occasions, it has disbursed funds into the Special Deposit Account (SDA)—a designated account under provincial treasury. Each mode of fund flow has different budgeting, accounting and reporting implications, which causes a considerable amount of confusion in districts, and complicates reporting on consolidated financial results.

Weak Financial Management Arrangements for the Non-Salary Recurrent Budget

The government has issued financial management guidelines for the use of NSB grants and imparted training for head teachers, for the development of school improvement plans and bookkeeping. The survey interviews with school council members, head teachers and the EDO education office reveal that the implementation of FM guidelines for the use of NSB funds are still not fully understood and are yet to be fully absorbed by these key players. A significant number of interview participants did not mention issuance of any training or guidelines for use of NSB funds. It is critical that all efforts at the PMIU level to build capacity at service delivery level should translate into tangible results.

The strengthening of record management and of the reconciliation process about fund disbursements and expenditures, especially in new initiatives such as NSB grants is important. The survey results highlighted the issue of non-reconciliation of NSB funds disbursed to schools. NSB funds were provided to 12 districts in 2013-14 and out of these 12, 6 were part of our school survey (the survey was carried out in a total of 12 districts grouped into three regions—North, Central and South). The study has cross-tabbed the results of the school survey with the official record of funds disbursed available which was at the district education office. In one of



the districts (where NSB funds were given to schools) 19 percent of the schools have received less funds than the official record reflects. Almost 78 percent have received more funds than official disbursement figures show, and one school did not receive any funds at all. The net difference (positive and negative differences), after accounting for bank charges, between funds disbursed and funds received comes out to be 6 percent. Although, 94 percent of the funds had been received, they are nowhere close to being in line with the official record of funds disbursed.39

CONCLUSION AND RECOMMENDATIONS

The leakage of funds is significant in the utilization of the development budget for PMF. Some leakages are also identified in funds to the School Councils, including those receiving a Non-Salary Budget (NSB). The Primary Education sub sector is vast in terms of numbers as well as geographical area involved. The monitoring and reporting on fund utilization is a big challenge and survey evidence has revealed that though informal and ad hoc reporting exists, there is no systematic reporting framework to detect leakages in timely manner. In the case of provision of missing facilities, the government’s building department is primarily responsibility for the execution of work with no input from the SED. The department receives its share of criticism regarding expensive construction costs and less than desired quality of construction. The sole source of information on fund utilization is the monthly progress reports which are generated by the building department. It is abundantly clear that the risk of bias in reporting good progress is high.

The survey has also identified the erroneous classification of schools in different data sets at the SED and building departments, making it difficult to match budgeted figures with execution. The government has implemented the network of monitoring offices in districts under the PMIU but the focus has been on taking stock of the missing facility inventory. No further analysis is carried out to match the previous year’s executed budget against the facilities still missing in those school. It is, undoubtedly, difficult task to link financial information with physical progress, and will require a separate interface specifically for the SED where the GFMIS data can be combined with physical progress data from the monthly progress reports of Building department. Fortunately the PMIU already possesses the basic IT tools to download data from the GFMIS system. More importantly, the SED also has access to the GFMIS interface enabling them to download data themselves. However, protocols need to be developed for information sharing between the PMIU/SED and the Building department. Currently,

39 This district contained 37 Sample Schools (the number of sample school ranges from 36 to 38 in each of 12 districts; the total is 450).



information sharing is carried out downstream between the EDO office and district office of the Building department but a standard reporting format and timing are still lacking.

The leakages in special initiatives like the school council and NSB varies across districts and are around 13 percent and 6 percent respectively. These initiatives also suffer from delays in disbursement due to poor record keeping and outdated data on primary schools. The SC funds grant, now restructured as the NSB grant is a key intervention for improving education outcomes. The challenge here is to augment the existing financial management system that is efficient with low fiduciary risk. The current financial management arrangement needs to be strengthened, in terms of transparency, in allocation rules at the provincial level; financial recording and reporting at the school level; and reconciliations when funds are transferred from the districts to the schools.

Another challenge is the use of the GFMIS for tracking resources from their origin to frontline service delivery units. The existing system has the capacity and capability to track the funds at school level. Its implementation would require (i) recognizing each school as a cost centre in the GFMIS; (ii) budget guidelines for the preparation of an annual budget at the school level; (iii) entering it into the PIFRA system, which will be a time consuming task due to a large quantity entries (but various tools are available for direct uploading of budget from Microsoft applications); (iv) a mechanism for the submission of bills/expenditure statements from schools to District Account Offices (DAO) through the Deputy District Education Officer (DDEO)40; and (v) recording of expenditure by the DAO.

It is important for the government to identify primary education as a distinct policy domain, separate from elementary and secondary education. An encouraging development is that the Operation Strategy for Education Sector 2013-17 has set discrete targets for primary education. The annual budget is the policy statement of the government. Therefore, the annual budget should include individual estimates for each domain of the education sector to discern the outcomes of every policy sphere. The budget classification system should be reconfigured to develop separate budget estimates for primary education. This would require introducing a new functional classification for primary education and the separate preparation of a development and non-development budget for each sub sector (primary, elementary and secondary).

40 DDEO is the cost centre in GFMIS for all schools under its jurisdiction. Therefore, currently schools budget is aggregated under this DDO code in GFMIS.



It is imperative to have a rule-based fiscal transfer mechanism from province to district. The provincial government shoulders the primary responsibility for setting policies. To this end, the government has developed a strategy for improving education outcomes, but its execution remains a challenge. This would require the implementation of the PLGA 2013 and a rule-based fiscal transfer mechanism from province to districts. Predictable and regular flow of resources is critical for districts to plan and execute their mandate. In addition to financial sustainability, for the accountability mechanism to work, a certain degree of autonomy and clear distinction in provincial and district responsibilities are also required. In keeping with the existing arrangements, policymaking, priority setting, planning, budgeting and monitoring roles are with the province. As a positive step, government has introduced an indicator-led performance system for district education outcomes. However, with little or no autonomy for districts to set their priorities and to plan in line with meeting local needs, the accountability mechanism remains deficient in the districts.

It is important to connect the information system with all the decision points in the hierarchy. The government has put considerable effort into establishing information systems in the education sector, that provide an environment which enables evidence-based decision making. The system is still evolving and its analytical capacity has yet to achieve the optimal level for the greatest dividends. Downstream capacity to use and analyse system reports is as important as it is at the topmost echelon. The information system was developed as a part of the WB PESRP and is still being administered as a separate project under the program. It is important to internalise this information system in the SED preferably by setting up an IT wing. There is no doubt that this system will grow, as more and more nodes will be connected to expand its usage. The development of IT policy and strategy and a separate budget head for IT expenditures are vital requirements at this stage, if we wish to ensure the future benefits of the information system.



Quantity of Service Delivery SurveyQSDS is to assess the quality and performance in resource usage at service delivery level in terms of effectiveness, equity and efficiency(Provider survey for service utilization)





CHAPTER 4

QUANTITY OF SERVICE DELIVERY SURVEY

INTRODUCTION

The QSDS, the second component of EQSDS, presents an analysis of selected indicators of service utilization and the quantity of services provided at primary schools. These include students’ access to school by gender; teacher presence; teachers’ workload; provision of a boundary wall; classroom infrastructure; and the availability of other amenities for students. Additionally, the quality of classroom learning was assessed by conducting a test, consisting of the abridged version of one which is routinely administered by the Directorate of Staff Development to Grade 5 students.

The analysis is further supported with data from the HHS (the third component of EQSDS survey). This was performed in the vicinity of sampled schools to capture the influence of the availability of amenities and the quality of infrastructure on service utilization. Although, the sampled communities had a public primary school (by definition), the household survey revealed that the option of private schools was also available to the community (Table 3). The household survey asked questions exploring



the reasons for enrolling or not enrolling a child to the index school, or any other school. Results from the comparison of QSDS and HHS are presented here as an attempt to answer a key policy question—‘Does spending on infrastructure influence enrollment; and if so, to what extent?’ Finally, this chapter highlights the barriers found to hinder enrollment, as identified by the HHS.

Table 3: Number of Communities Reporting a 5-9 year old is Currently Attending Private School

RegionTotal

North Central South

Communities where no current private school attendance

N 7 38 24 69

% 4.7 25.3 16.0 15.3

Communities reported 1 child in private school

N 16 20 22 58

% 10.7 13.3 14.7 12.9Communities reported 2 or more child in private school

N 127 92 104 323

% 84.7 61.3 69.3 71.8

TotalN = Communities 150 150 150 450

% 100.0 100.0 100.0 100.0

Source: Survey Data, Authors’ calculation

ACCESS TO PRIMARY EDUCATION BETTER THAN OFFICIAL STATISTICS

The accessibility of education facilities is fundamental in achieving the education sector target of universal primary education for all children of school going age. There are 36,549 standalone public primary schools educating 4.18 million students in Punjab.41 Official statistics show that 52 percent are girls’ primary schools and 52 percent of teachers in all primary schools are female. It is worth mentioning that the Government of Punjab, through the Punjab Education Foundation, also provides support to low cost, private primary schools, to increase overall school enrollment. However, this survey covered only public sector schools.

41 Schools that offer education only till grade five are labelled as ‘standalone’ primary school. They are labelled to distinguish from all other schools such as elementary or high—who run primary grades in addition to higher grades. There are 36,549 standalone primary school in Punjab (Annual School Census, October 2013).



Public primary schools are far more accessible than the official classification portrays. The official classification of schools (boys and girls) does not fully reflect the government’s efforts to make primary education facilities available to both genders. This greater degree of accessibility is shown in Table 4. Survey results indicate that substantial numbers of students of the opposite gender are enrolled in visited schools (schools classified as boys or girls schools). For practical reasons, this study classifies a school as ‘accessible to the opposite gender’ only if more than 10 percent of students of the opposite gender are enrolled in an (officially) single-sex school. This has significantly increased the availability of schools to both genders; overall, 84 percent of sampled schools are accessible to girls while 82 percent are accessible to boys. A regional comparison indicates that in the Northern and Central regions, there are now more schools available to girls than to boys. However, in the Southern district, more schools are accessible to boys than to girls. In the rural areas, 84 percent of primary schools are accessible to girls. This report proposes that this classification should be added to reports, in the future, to fully reflect the de facto situation of access to schooling.

Table 4: School Accessibility, Official vs. Actual Accessibility in Sampled School

Location RegionTotal

Urban Rural North Central South

Sample School (Official)

Girls (%) 51.8 56.9 47.4 55.9 61.1 56.5

Boys (%) 48.2 43.1 52.6 44.1 38.9 43.5

Total (official) 100 100 100 100 100 100School Accessibility Measured by Presence of Boys and Girls

School Accessible to girls (%) 78.7 84.4 87.4 82.0 83.9 84.0

School Accessible to Boys (%) 88.2 81.6 77.5 79.9 85.6 82.1

N 29 382 85 134 192 411


QUALITY OF INFRASTRUCTURE AND MISSING FACILITIES

The classroom condition score is comprised of the condition of the roof, walls and floor of each classroom. It shows that nearly 50 percent of sampled schools have classrooms in very good condition. However, boys’ schools appear more neglected with regard to classroom condition score42. Schools located in urban areas have reported the lowest classroom (infrastructure) quality. The overall condition of the classroom is also poorly rated in Southern districts, while central districts are slightly better in this regard (Table 5).

42 The condition of roof, walls and floor of each classroom were assessed on a six category ordinal scale. The score is developed on the basis, if all three (roof, walls and floor) were either in a very good condition, built freshly, or needed no repair at all.



The school survey shows that a very high number of schools have their own building with an adequate supply of basic facilities, like boundary walls, water, and functional toilets. Table 5 shows data from the QSDS school inventory. More than 90 percent of schools have a proper boundary wall, drinking water and functional toilets. Girls’ schools appear better in terms of amenities and environment than boys’ schools in categories measuring physical facilities. There has been a greater demand for a girls’ schools to have a fully protected environment. Boys’ schools, as a whole, are less likely to report having fully enclosed boundary walls and functional fans. The infrastructure of primary schools varies with their location. Interestingly, rural schools are marginally higher in reporting drinking water. This is a clear reflection of greater levels of investment in rural infrastructure. However, the provision of boundary walls and functional toilets is comparable in urban and rural schools. Urban schools are 15 percentage points more likely to report functional electric ceiling-fans. A region-wise comparison portrays a mixed picture. Schools in the Northern districts fare slightly better in the provision of toilets and those in the Southern districts lead in the provision of boundary walls. The NSB districts are more likely to have better ratings in all of the desired elements of infrastructure, than non-NSB districts (with the exception of electric ceiling fans).

Table 5: School Infrastructure and Missing Facilities43

Boundary Wall Fully Enclosed

Water Supply

Functional toilet for student

Functional Fans in

Classroom

Classroom Condition

Score

% % % % % N=School*

School typeGirl 98 99 93 65 53 242Boy 85 96 88 53 41 189

School LocationUrban 93 94 92 73 32 30Rural 92 98 90 58 48 400

RegionNorth 90 98 98 69 48 91Central 89 100 87 56 51 150South 95 95 89 57 44 189

Program DistrictNSB 95 99 92 58 49 242Non-NSB 88 95 88 61 46 189

Total 92 97 90 59 47 431

Source: Survey Data, Authors’ calculation *Weighted N

43 Missing facilities constitute lack of boundary wall, water supply, electrification and toilet.



Overall, school buildings and the availability of proper classrooms influence the current enrollment in index schools, particularly in the case of girls. The HHS shows that when a school operates in its own building, it can attract 19 percentage points more students than schools that don’t have their own building (Table 6). If the index school has proper classrooms, it is also likely to be attended by more students from the community. Looking at the gender of the children, the differentials are even higher. The current attendance of girls is tripled when school has proper classrooms (17 to 57), while it has no effect on boys. When a school operates in its own building, boys’ enrollment is doubled. Provision of a water supply is responsible for the second largest difference in overall attendance. Availability of water can increase girls’ enrollment by 13 percentage points (from 38 to 51 percent) and 10 percentage points for boys (37 to 47 percent).

Table 6: Percentage Currently Attending from School Community by Features of Index School

Amenities AvailableGender

TotalBoy Girl

Functional Toilet for StudentNo 45 48 47Yes 47 51 49

Own BuildingNo 22 40 30

Yes 47 50 49

Boundary Wall Fully EnclosedNo 48 40 44

Yes 46 52 49

Schools With ClassroomsNo 47 17 34

Yes 47 52 50

Water SupplyNo 37 38 37

Yes 47 51 49

Number of Teachers Available in Index SchoolUp to 3 teacher 44 47 45

4 or more 50 54 52


Overall, 88 percent of teachers were present in sampled schools on the day of an unannounced visit by survey teams. The teachers’ 88 percent attendance is close to the official target of 90 percent (Table 7). Northern districts are an exception, and here the presence of teachers is at its lowest (82 percent), while their southern counterparts meet the target of 90 percent attendance. The attendance presence/ availability of teachers, quality of their teaching and their motivation are perhaps the most important thread in the tapestry of the education system. One of the respondents, an EDO (Education), remarked on the quality of education, “If there is a teacher who is willing to teach, a student and a tree’s shadow, you can impart education”.



While teacher presence is lowest in the Northern districts, their professional qualifications are well up to the mark. More than 50 percent hold a Masters in Education (M.Ed.) or a Bachelors in Education (B.Ed.) (Table 7). Teachers in girls’ schools are relatively less qualified than those in boys’ schools. It is important to note that this is the largest differential noted by type of school (i.e. girls’ schools versus boys’ schools) where girls’ schools garner poorer ratings than boys’ school.

Table 7: Teachers’ Availability and Qualification

Present on day of visit Teacher with M.Ed./ B.Ed. (professional qualification)

% %

Type of SchoolGirls 88 37

Boys 88 53

Location

Urban 89 40

Rural 88 43

RegionNorth 82 51

Central 89 42

South 90 41

GenderMale Teacher 88 46

Female Teacher 88 41

Program DistrictNSB 89 39

Non-NSB 87 49

Total 88 43


Primary school teachers have substantial teaching experience backing up their professional qualifications. Public primary schools in Punjab have very experienced teachers with an average of 17.6 years of experience. This holds true for teachers of both genders and across all three regions. According to Figure 22, the majority of teachers, overall have more than 15 years of teaching experience. Female teachers, however, are more likely (20 percent) to report 0-4 years of teaching experience in comparison with their male counterparts (13 percent) with 0-4 years of experience.



In terms of the ratio of students to teachers, teacher workload appears small. Keeping in mind the size of schools and number of teachers per school, the student-teacher ratio (STR) reflects a favourable picture (Table 8).The shortage of teachers, although marginally different, is more pronounced in boys’ schools than in girls’ ones, which have a similar size of student population. The teacher workload when measured through STR is lowest in Northern and urban districts. The second lowest STR is in Girl schools and NSB districts (each having 23 students per teacher),whereas in Central districts, the STR is highest. The distribution of the student teacher ratio also paints a favourable picture with about 45 percent of schools reporting this ratio at less than 20 students per teacher.

Table 8: Number of Students and Teachers

Total Number of Students present on the day visit

Number of Teachers

Student-Teacher Ratio N=Number

of School*Mean students Mean teachers Mean ratio

Type of SchoolGirl 66 2.97 23 237Boy 67 2.54 27 172

LocationUrban 92 4.49 21 27Rural 64 2.66 25 382

RegionNorth 61 2.86 21 88Central 71 2.44 30 133South 65 3.02 23 189

Program DistrictNSB 64 2.87 23 235Non-NSB 70 2.67 27 174

Total 66 2.78 25 409

Source: Survey Data, Authors’ calculation * Weighted N

Figure 22: Percent Distribution of Teaching Experience (in years) by Gender

20%

12%

11%57%

Fe m a le Tea che r Expe rience

0-4 years 5-9 years10-14 years 15 or more years

Male Tea che r Expe rience

13%

9%

15%63%

0-4 years 5-9 years10-14 years 15 or more years




Primary schools face teacher shortages, particularly in rural locations. The maximum number of teachers reported in a school in this survey is 12 (in three schools). Overall, 75 percent of primary schools have 3 or fewer teachers per school (Figure 23). Table 8 shows that on average there are 2.78 teachers per school. While the difference between girls’ and boys’ schools is negligible, girls’ schools, on average, employ more teachers than boys’ schools. At the disaggregated level between urban and rural areas, this average is higher in urban schools. Urban schools have 2 more teachers per school than rural schools. This difference is smaller between NSB and Non-NSB districts. This variation is most common among central districts which report three or less teachers for all five primary level grades.

Girls’ schools are at par with boys’ schools in terms of the number of enrolled students. The average number of students in a girls’ school is only one less than boys’ school (66 and 67 students respectively). The surveyed schools are small in size with a median of 52 students per school and the largest surveyed school had 368 students (data not shown). Urban schools are larger than rural schools (Table 8). With an average of 92 students, they enroll 28 more students (on average) than rural school. Schools located in the Central region reported an average of 71 students. In districts where the NSB program is launched, school enrollment is 6 students less than non-NSB districts.

‘Standalone’ primary schools are small in size44 and lack the adequate number of teachers. It emerges from the data on school size and teacher distribution, that primary-only schools are small in size. With 2.78 teachers per school, for six grades (including pre-primary grades), it becomes difficult to ensure teaching quality and the levels of attention paid to student learning.

Teachers’ workload is high when measured taking multi-grade teaching into account. A large number of teachers are teaching more than one subject to more than one grade (Figure 24). With less than 3 teachers per school, multi-grade teaching is inevitable and is a common feature of primary schooling. It is an obvious indicator of teachers’ workload and the resulting teaching quality. This, in fact, overshadows the favourable STR discussed

44 Schools that offer education only till grade five are labelled as ‘standalone’ primary schools. They are labelled to distinguish from all other schools such as elementary or high that also have primary grades in addition to higher grades. There are more than 36,549 standalone primary schools in Punjab (Annual School Census, October 2013).


Figure 23: Percentage Distribution of Number of Teachers per School

10

47

18

9 84 1 1 0.03 0.02 0.2

05

101520253035404550

1 2 3 4 5 6 7 8 9 10 12Number of teachers in school



above. Districts in the North, followed by districts in Central Punjab, show higher percentages of teachers who practice multi-grade teaching. In Northern districts, 77 percent of teachers are teaching more than one subject to more than one grade in comparison to only 33 percent in the Southern region. There is a variation across school type, but multi-grade, multi-subject teaching does not vary much by the gender of the teacher (53 percent of males versus 51 of females).

The majority of teachers in urban areas reside in or near the community where the school is located. Their rural counterparts are less likely to report the same. The survey asked a question about where each teacher lives and whether they live inside the school community45 or outside but near the village or neighbourhood. Teachers in girls’ schools are more likely than teachers of boys’ schools to live in or near the school community (Figure 25). Overall, one-third of all teachers reside near the index school.


Figure 25: Percent of Teachers Residing in or Near the Community of Index School

010203040506070

Girls Boys Urban Rural North Central South MaleTeacher

FemaleTeacher

NSB Non-NSB

Type of School Location Region Gender of Teacher

Program District

45 School community means the village or Mohalla (neighbourhood) where the sample school is located. Near the index school also refers to the same.


Figure 24: Percentage of Teachers who Teaches More than 1 Subject to More than 1 Grade

4956

3753

7761

3353

5154

49

GirlsBoys

UrbanRuralNorth

CentralSouth

Male TeacherFemale Teacher

NSBNon-NSB

Type ofSchool

Location

Region

Gender

Programdistrict



Teachers residing in or near the school community influences the enrollment of 5-9 year-olds. Table 9 combines the current (actual) enrollment of children from the household survey with the residential status of teachers at sample schools. The table further clarifies the number of teachers, by gender, who reside in or near the school community. The current attendance of girls aged 5-9 years is higher, if one or more female teacher resides in or near the school community. In case of boys, if a male teacher resides inside or near school/ community, 58 percent of boys attend the index school, compared to 33 percent when there is no local male teacher residing inside the school community. The influence of the teacher’s residence does not hold any weight when the teacher’s gender is the opposite of the students’.

Table 9: Current and Desired Enrollment in Index School By Residence of Teachers

Number of Female Teachers Reside

In or Near School Community

Number of Male Teachers Reside

In or Near School Community

Total

None 1 or more None 1 or more

Currently Enrolled in Index School

Boy 51 42 33 58 46

Girl 47 54 52 49 50

Total 49 48 42 54 48

Want to Admit OOSC in Index School

Boy 82 78 76 88 81

Girl 66 88 83 71 75

Total 73 85 80 76 77


Evidently, if the residence of at least one female teacher is inside or near the school community, the desire to send an out-of-school girl to the index school increases from 66 percent to 88 percent. The survey asked parents about their desire to enroll an OOSC in the index school. In the case of boys, if a male teacher resides within the community, the ‘desired enrollment’ increases from 76 percent to 88 percent. There are two findings that emerge from Table 9 Firstly, when at least one teacher resides within the local community with the students of same gender, current enrollment increases. Secondly, similar results appear for desired enrollment of OOSC as well. Perhaps one reason is that parents feel they can trust and influence a teacher who resides in or near their community.



QUALITY OF EDUCATION

Girls fare better in quality of education indicators, across all domains of primary schools46. Overall, girls score 6 percentage points higher than boys, with the exception of schools located in urban areas. They score 7 percentage points higher than boys even when they study in an officially declared boys’ school. Similarly, in the northern and central districts, the girls score around 7 percentage points higher than boys. This trend appears to become neutralized in the southern districts where girls score 2 percentage points higher than boys. The NSB district area also shows that girls’ scores are higher than boys’.

Table 10: Quality of Education

Boy Score Girl Score Overall Score TotalMean % Mean % Mean % N= School*

Type of SchoolGirl 58.2 63.8 63.5 226

Boy 60.9 67.8 61.9 180

LocationUrban 70.0 69.1 69.3 27

Rural 59.1 64.4 62.3 379

RegionNorth 58.2 65.3 61.1 88

Central 58.6 65.5 61.9 139

South 61.8 63.7 64.3 179

Program DistrictNSB 55.1 61.8 59.4 230

Non-NSB 65.4 69.7 67.1 176Total 59.9 64.7 62.8 406

Source: Survey Data, student test administer to grade 5 students, Authors’ calculation * Weighted N * in a few schools, no test was administered

Parents are not as aware of learning quality as they are of the physical qualities of the index school. Table 11 shows the current enrollment in the index school keeping in view the quality of education provided by the school. The observed pattern does not show any increase of enrollment in index schools where students of grade five secured 60 percent or more marks in the test. As seen in the case of physical features of the index school (Table 6), the effects of education quality are not tangible.

46 All boys and girls of 5th grade present in sample school on the day of visit, were given an abridged version of Department of Staff Development (DSD)—a sub-department of SED—test, to develop an indicator of quality of learning/education. Test was administered to 4,357 boys and girls to have a proxy of outcome at school level.



Table 11: Percent of 5-9 Year-Olds, Currently Attending Index School By Learning

Quality of Education in index school Total

Student Scored up to 60%

Student Scored More than 60% % N=Children*

% %

GenderBoy 50 46 47 3337Girl 49 52 51 3260

Based on PSC

q1 low 25% 52 52 52 2074q2 53 50 51 1457q3 50 44 47 1896

q4 top 25% 40 49 45 1104

ResidenceUrban 28 34 32 545Rural 51 51 51 6052

RegionNorth 42 40 41 985Central 54 53 53 1301South 50 50 50 4312

Total 49 49 49 6598


CONCLUSIONS AND RECOMMENDATIONS

The distribution and access to public primary schools is equitable in terms of gender. However, there are regional variations that need attention. Nearly, 84 percent of public primary schools are accessible to girls and 82 percent accessible to boys. Allowing students of the opposite gender in schools meant for one, has created a greater capacity for girls’ schooling and has had a remarkable effect on gender equity. This is visible in the northern and central districts, where there are now more schools available to girls than to boys. Southern districts, where girls face social sanctions, need attention. There is, however, a caveat in the policy some parents (less than 3 percent in HH sample) may object to mixed schooling, as is visible in the HHS.

The government should continue with the policy of consolidation and mergers of small schools which are close to each other, to improve their functionality. The public primary schools are relatively small in terms of student enrollment, with an average enrollment of 66 students per school. In the recent past, the Government of Punjab has adopted a policy of school consolidation and mergers of small and nearby schools. Given that there are more than 36,549 primary-only schools, combining nearby primary schools appears to be the better option. This effort is expected to result in an increase in the overall efficiency of teaching and particularly in improving classrooms and teachers’ availability. While small school size may make a



school manageable with ease, having a teacher who teaches more than one subject to more than one grade undermines any effort to improve learning quality. This policy increases teachers’ capacity to fully concentrate on teaching specialized subjects and assigns one teacher to each grade.

Government must invest more in PMF, general and classroom infrastructure. Survey results confirm that provision of proper infrastructure improves overall attendance in public primary schools. However, there are regional variations in terms of infrastructure. Investment in classroom infrastructure and drinking water supply has the highest effect on school enrollment.

Teacher presence was at about 88 percent on the day of an unannounced visit of survey teams but improved monitoring of teacher presence is required in the Northern district. The quarterly monitoring reports of PMIU set the target for teachers’ presence at 90 percent (for schools of all levels). The QSDS found that teacher’s presence was highest in the Southern districts (90 percent) and lowest in Northern districts (82 percent) on the day of the unannounced survey visit.

There are less than 3 teachers per school on average and multi-grade teaching is high. In 57 percent of surveyed schools there are less than 3 teachers. Nearly 60 percent report having 15 or more years of teaching experience. The student teacher ratio is 25, yet due to 2 to 3 teachers available for teaching all five grades, there is very high percentage of teachers who are teaching more than one subject to more than one grade. The Northern districts report that 77 percent of teachers follow this practice. There is an immediate need to increase the number of teachers either through new recruitment or further implementing the policy of consolidation and mergers of nearby schools. The latter is more cost effective and will show more improvements in teaching quality in a short time. This clearly lends support to Punjab government’s initiative of consolidating primary schools. Pooling teachers of nearby schools can significantly reduce teaching load and ensure subject specialization.

There exists some regional-wise disparity in the quality of education. On average girls scored 5 percentage points higher than boys in the test conducted by survey teams. This gap was higher in the northern districts (65 percent for girls versus 58 percent for boys) than in southern districts (64 percent versus 62 percent respectively). Interestingly, in urban areas, girls score one percentage point lower than boys (69 percent versus 70 percent respectively). Schools in the southern districts fare poorly in nearly all dimensions of school quality.


71Punjab: Expenditure and Quantity of Service Delivery Survey

(EQSDS) in Primary School Sector

Understanding the Demand Side ConstraintsHousehold survey was conducted to understand the demand side picture/ perception about service delivery at primary school level and public expenditure benefit-incidence by gender, region, and income group






CHAPTER 5

UNDERSTANDING THE DEMAND SIDE CONSTRAINTS

INTRODUCTION

A separate household survey was conducted in the communities where sample schools were situated. The primary objective of this HH survey was to get a clearer demand side picture and explore the views of parents regarding access, cost, choice (public versus private), equity and perception of quality of public schools. The household survey was conducted in the 450 communities adjacent to the sampled schools (interchangeably called index school in this report). The survey was conducted in 7,200 households after conducting a quick count of the community, and later survey teams used systematic sampling with a random start to select any household (with or without children).

The survey gathered information on all children between the ages of 4 and 16 years, their socioeconomic and demographic background along with the details of the last two schools that the children had attended. Out of 7,200 surveyed households, there are 5,743 HHs with children aged 4 to 16 years. The total number of children in these HHs was 15,563 (in or out of school). Since sample schools were already known to interviewers, they asked



questions regarding index schools after prompting the interviewee with the name of school and location. The results matching HH responses to school data are presented in the later part of the chapter.

Table 12: Percentage Currently Attending School Among 5 to 16 Year Olds

Gender TotalBoy Girl % N=Children*% %

Age of child (in years)

5-9 year 89 80 85 7135

10-15 year 75 65 70 6717

5-16 year 81 72 77 14505

Based on PSC

q1 low 25% 75 64 69 4410

q2 82 76 79 3043

q3 78 69 73 4479

q4 top 25% 93 90 92 2397

ResidenceUrban 83 82 83 1415

Rural 81 71 76 13090

Region

North 91 91 91 2269

Central 83 72 78 3113

South 77 67 73 9123

Program DistrictNSB 81 72 77 5321

Non-NSB 81 72 76 9185

Total 81 72 77 14,505


ENROLLMENTS

Overall, 77 percent of children aged 5 to 16 years are currently attending school. The Northern districts have the highest enrollment (91 percent) followed by central (78 percent) and southern (73 percent). The attendance also varies by age of children, economic status and residence of families (Table 12). Among 5 to 9 year olds, school attendance is at 85 percent, compared to 70 percent of 10 to 15 year olds. Children living in poorer HHs are less likely to currently be attending school than children of richer HHs (69 versus 92 percent respectively). In rural areas 76 percent of children aged 5 to 16 years are in school.

Levels of poverty and region of residence affect current enrollment of girls disproportionately. Given the overall higher enrollment rates in northern districts and richer families, there are variations when girls and boys are analyzed separately by region and economic status (measured by poverty score card ) (Table 12). Regional disparity in girls’ enrollment becomes visible in the Southern region




where around 67 percent of girls aged 5 to 16 years are in school as compared to 91 percent in northern districts. The disparity in girls’ enrollment by economic status of HH is even higher than regional disparity. Girls in poorer HHs are less likely to be in school than their richer counterparts (64 percent versus 90 percent respectively).

Poverty and region also affect enrollment in the case of boys, albeit to a lower degree than girls. Boys living in the southern districts have lower enrollment than boys in the northern districts (77 percent versus 91 percent respectively). There is an 18 percentage point difference between boys living in poorer and richer families (75 percent versus 93 percent respectively). Data shows that the effect of regional and economic disparities are greater than those of gender disparity in school enrollment.

While girls are less likely to attend school than boys, when they attend they are more likely to be enrolled in public schools, across all income groups and regions. This trend is stronger among the lowest income groups and in the Southern region where nearly 78 percent of girls are attending or have attended public school, compared with northern districts where only 65 percent attend public school. Although girls’ access to schools particularly in the south is already a priority for government, other socioeconomic conditions also need to be improved to increase girls’ enrollment in public schools. Children from poor HHs are more likely to attend public schools than their affluent counterparts. Public schools are more likely to serve poorer and more marginalised segments of society.

Table 13: Percentage Ever Attended Government School

Gender Total

Boy Girl % N= Children*

% %

Age of child (in year)

5-9 year 68 76 72 630910-15 year 76 77 77 61235-16 year 72 77 74 12997

Based on PSC

q1 low 25% 82 87 85 3907q2 74 78 76 2848q3 69 75 72 4120

q4 top 25% 58 61 59 2533

Residence Urban 56 63 59 1383Rural 74 78 76 12196

RegionNorth 61 65 63 2361Central 79 81 80 2919South 72 78 75 8299

Program District

NSB 70 73 72 4971Non-NSB 73 79 75 8608

Total 72 76 74 13579




A significant number of children of school-going age are not currently attending school. Figure 26 shows the percentage distribution of education status by current age (in single years) to demonstrate existing patterns of dropping out, by age. Current school enrollment is more than 50 percent at age 4; it peaks at the age of 8 years and then starts to fall. The average dropout rate at the age of 10 to 15 years is 15 percent, for both boys and girls. The government’s focus on primary schooling, must expand to take into consideration this phenomenon of school dropouts that is impacting boys and girls equally.

Retention rate in public school is low compared with private schools; poverty and region of residence have visible implications for school dropout age. Children in public school dropped out one grade earlier than students of private schools, where children usually complete their primary grades. This phenomenon is evenly found with both genders (Table 14). Similar to other trends such as enrollment etc., southern districts are performing more poorly than other regions in this area as well. More specifically, far fewer students in this region complete third grade, compared to those in the northern and central regions—where students, particularly girls, are more likely to complete primary grades before dropping out. The situation is even more serious for girls when it comes to the lowest 25 percent income bracket where girls tend to dropout before the third grade, triggering visible gender differentials.


Figure 26: Percentage Distribution of Education Status by Age

51%

76%85%

87%90%

85%86%

84%74% 62% 57% 53% 53%

1%

2%2% 2% 4% 8% 8% 9%

18%33%

31% 31% 33%

48% 22% 14% 11% 6% 7% 6% 8% 9% 6% 13% 16% 14%

0%10%20%30%40%50%60%70%80%90%

100%

4 5 6 7 8 9 10 11 12 13 14 15 16

Currently in School Drop-outs Never attended school




Table 14: Grade and Age of Leaving School (Among 5-16 year old who Dropped Out)

School Leaving Grade(Mean grade)

School Leaving Age(Mean years)

Boy Girl Boy GirlSchool Type Ever Attended

Private school 4.45 4.40 11.20 10.08

Govt. 3.94 3.58 10.39 10.12

Based on PSC

q1 low 25% 3.56 2.90 9.98 9.66q2 3.26 3.43 10.19 9.69q3 4.83 4.29 11.10 10.61q4 top 25% 4.83 5.10 11.61 10.89

Residence Urban 3.73 4.68 10.43 10.37Rural 4.03 3.61 10.50 10.10

RegionNorth 4.60 5.13 11.09 11.48Central 4.42 4.02 11.18 10.26South 3.88 3.43 10.30 9.96

Program District

NSB 3.94 4.09 10.46 10.10Non-NSB 4.05 3.39 10.51 10.13


For the children attending a sample school, low cost and proximity are two main considerations for school selection. By analyzing the parents’ views when choosing the Index School for their children, this study found that nearly 80 percent of parents identified school proximity to home as an important factor, while 12 percent preferred the school in question due to its low cost. However, for parents of 44 percent of the children who were attending schools other than the sample school, quality appears to be a main reason for their choice of school.

According to parents, all sample schools have sufficient resources in terms of the availability of basic facilities. The survey asked parents numerous questions about the Indexed School to see how much they knew about the school in question (Table 15). Its purpose was to ascertain their views about indexed schools in terms of infrastructure, teachers, amenities and quality of education. Across all regions, parents of more than 90 percent of children who are attending indexed schools, on average, report that schools are well equipped with basic facilities including boundary walls, toilets, drinking water etc. However, parents of children in urban households


Figure 27: Reasons of Selecting Current School

0%

20%

40%

60%

80%

100%

Close toHome

Low Cost High Quality Others

Index School Non Index School



are less likely to report functional toilets in the index school. This perception matches with the data collected through the school survey as depicted in Table 15.

Table 15: Perception of Facilities in School (Among Currently Enrolled in Index School)

Received Books from

Govt.

Drinking Water

Functional Toilets

Boundary Wall

% % % % N=Children*

GenderBoy 97 96 92 89 2615

Girl 96 92 95 97 2622

ResidenceUrban 96 90 86 93 330

Rural 97 94 94 93 4908

Region

North 96 95 92 97 634

Central 96 97 90 85 1225

South 97 93 96 95 3379

Program District

NSB 96 94 94 97 1530

Non-NSB 96 94 94 91 3707

Total 96 94 94 93 5,238


OUT OF SCHOOL CHILDREN

The Government of Punjab has introduced significant reforms in the education sector to achieve MDG targets and therefore Punjab is performing better than other provinces in the education sector. However, according to this survey, 23 percent of children, ages 5 to 16 years, are still out of school (never attended or dropped out). They are more likely to be living in low income families, reside in rural areas, and belong to the southern and central districts.

Figure 28 shows that with the exception of urban areas and the Northern districts, girls are mostly disadvantaged and likely to be out of school. The following section is devoted to the analysis of out-of-school children (OOSC) and requirements for admitting them into the education stream.





Figure 28: Percent of Out of School Children (Among 5-16 year)

05

10152025303540

q1 lo

w 25

%

q4 to

p 25

%

Urb

an

Rura

l

Nor

th

Cent

ral

Sout

h

NSB

Non

-NSB

Based on PSC Residence Region Program District

Boys Girls

In this survey, a series of questions were asked to capture parents’ preferences and the possibility of enrolling their OOSC in school. The survey asked a battery of questions on whether parents wanted to enroll OOSC in school in the near future. Based on their answers, this analysis divides children, aged 5 to 16 years, into three groups (Figure 29). Group 1 consists of those who are currently attending school (77 percent). Group 2 is comprised of those who are currently out of school but their parents want them to get an education (17.5 percent) and the third group is those who are out of school and their parents do not want to enroll them in any school (5 percent). Group 2 and Group 3 were asked follow-up questions to determine the reason for their child still not being in school. And those who were not willing to send their child to school were asked why they would not enroll their child in school (Figure 30).


Figure 29: Three Groups for Analysis

GROUP - 1: In school

77%

GROUP -2: Want

Education18%

GROUP -3: Don't want 5%

Other23%

GROUP-1, In School GROUP-2, Want EducationGROUP-3, Don't want



Figure 30: Parents’ Preferences about their Out of School Children

Children aged 5-16 years

Group I : Currently going to school (77%)

Why have you not sent / re-admitted

your child to school?

Group II : Do want to send

children to school (17.5%)

Reasons for Unmet Needs

1. Poverty Related Reasons.2. Child Too Young.3. School Related Reasons.4.Child Not Willing.5. . All kinds of disabilities (Mental, Physical, Speech Impairment, etc.)6. Social Disapproval against Education.7. Child related, Family Choice ‘Hafiz’ etc.

Reasons for Not Educating Children

1. Social Disapproval against Education2. Child related, Family Choice ‘Hafiz’ etc.3. Poverty related reasons4. School related reasons5. All kinds of disabilities (Mental, Physical, Speech Impairment, etc.)

Reasons for Not Sending to Public School

1. Social Disapproval against Education2. Child related, Family Choice ‘Hafiz’ etc.3. Poverty Related Reasons4. School Related Reasons5. All Kinds of Disabilities (Mental, Physical, Speech Impairment, etc.)

Group III : Do not want to send children to

school(5%)

If the Government pays would you

send your child to public school?

How much would the Government

have to pay you to send your child to

public school?

Currently not going to school (23%)

Parents Preferences of Sending OOS Children to School

No (4%)Yes (1%)

Source: Expenditure and Quantity of Service Delivery Survey, Authors’ Depiction




For some parents who want to enroll their child in school, poverty is a barrier. Group 2 consists of those who want to enroll their children, aged 5 to 16 years, yet their child is not in school, naturally suggesting that these children could be enrolled with some effort. The data shows that poverty is still a major constraint for these parents. This situation gets more serious in case of girls, who are living in Southern district, and naturally children who belong to poor families (Figure 31).

Nearly 90 percent of 5 to 9 year-old OOSCs can be brought back to schools if poverty related causes are addressed. Since poverty is reportedly one of the major reasons keeping children away from school, a substantial number of OOSCs will attend school if subsidized schooling is offered. Figure 32 shows the response of parents in Group 2, regarding their 5 to 9 year olds, who want to send their children to any school (not necessarily Index School), if they get a stipend to cover school related expenses. This conditional willingness is lowest among households with relatively highest socioeconomic status and families from northern districts, where enrollment is higher. Overall, 87 percent would like to send their OOSC to any public school.


Figure 31: Percentage Who Report Poverty as a Reason for not Attending School

0

10

20

30

40

50

60

Male Female Total North Central South q1 low25%

q2 q3 q4 top25%

Gender Region Based on PSC




Figure 32: Percent Willing to Admit 5-9 year Old OOSC to Public School if Subsidized

88 86 89 87 8474

88 8782

88 87

q1 low25%

q2 q3 q4 top25%

Based on PSC

Urban Rural

Residence

North Central South

Region

Boy Girl

Gender

The quality and gender of schools is also an issue. About 24 percent of parents in Group 2 revealed that they did not send their child because they consider (perceive) the quality of education in sample schools to be poor. Further exploration of their reasons revealed that nearly 37 percent of parents in Group 2 complained that the school is not available to a particular gender. Combining the above categories reveals that parental preferences and requirements are not being met i.e. parents want to send their child to school, but the desired school quality/gender is not available. Finally, social disapproval (20 percent in Group 2) particularly in the case of girls, in the Southern districts, has emerged as a worrisome response requiring the urgent attention of the policy makers.

Table 16: Distribution of Reasons for Not Sending Out of School Children to Index School

Child Related, Family Choice ‘Hifz47 etc.’

Poverty Related Reasons

Social Disapproval

Against Education

All Type of Disabilities

(Mental, Body, Speech Impairment

etc.)

School Quality

No Boys/Girls

School

Total

% % % % % % % N

GenderMale 10 4 4 10 34 36 100 272

Female 7 0 28 5 20 37 100 514

Total 8 1 19 7 25 36 100 786

Region

North 9 4 3 60 24 100 48

Central 11 3 16 7 25 37 100 163

South 7 1 22 7 22 37 100 575

47 The one getting religious education.




Based on PSC

q1 5 2 24 5 16 43 100 269

q2 12 2 11 12 23 37 100 160

q3 9 0 19 6 32 31 100 305

q4 6 3 22 5 21 38 100 47

Total 8 1 20 7 24 37 100 782


For a small minority, the lack of available single-sex schools is also a barrier. While the policy of allowing the opposite gender in public schools has increased access for both genders significantly, it features as a cause for concern for some parents in Group 2. This perplexing situation can be addressed through the provision of separate classrooms for boys and girls and better allocation of teachers of the same gender. The effect of a teacher of the same gender appears strong in bivariate analysis.

It is imperative to find appropriate ways to deal with social and cultural barriers to ensure improvement in education outcomes. Around 5 percent of the children in our sample have parents who are not willing to send them to school (Group 3). The reasons cited are social disapproval and a belief that education is not relevant or beneficial. In the southern districts, particularly in the case of girls and in the lowest 25 percent income bracket, social disapproval emerges as a significant reason. Even if the government pays to get these OOSCs admitted into public school, nearly 75 percent of the parents in Group 3 would not enroll their children48. This issue merits immediate consideration from province managers as this Group will prove a hindrance to achieving universal primary education in general and reaching gender parity, in particular.

Household annual expenditure49 per child on education varies across regions for both public and private schooling. Average cost in public schools is Rs. 3,000 to Rs. 4,000 per annum per child, whereas it is around Rs. 10,000 to Rs. 14,000 in private schools, which is three times that of public schools. Moreover, private schooling on average is more expensive for girls than it is for boys. While, comparing across different income groups, an increasing trend has emerged: people in the top 25 percent income bracket have spent more compared with lowest income group, where cost is at lowest in both public and private school. Examining a higher income group, the gap between public and private school cost also widens. Similarly private education

48 In the entire HH sample, all three groups combine, this percentage is about 4 percent. 49 These annual expenditures per child are incurred on school fee, uniform,books, stationery and transportation.



costs are highest in the Northern regions, compared to other regions, for both public and private schools.

Table 17: Annual Expenditure on Education 2013-2014 (Mean Rs. per Annum per Child)

School Type Ever Attended Govt. School

Private School Govt. School

Rs./Annum Rs./Annum

GenderBoy 10,315 3,536

Girl 11,313 3,227

Based on PSC

q1 low 25% 7,232 2,804

q2 9,291 3,202

q3 10,826 3,754

q4 top 25% 14,057 4,235

ResidenceUrban 9,907 4,239

Rural 10,888 3,316

Region

North 15,371 5,015

Central 11,461 3,333

South 8,672 3,023

Program DistrictNSB 14,430 4,050

Non-NSB 8,324 3,045


Enrollment can be increased by nearly 13 percentage-points in index schools, with minimal effort. Table 18 shows the distribution of the schooling status of the entire sample of 5 to 16 year olds in the HHS. It reveals that overall, 13 percent of the sample is ready to go to school with a minimal amount of effort by administrators, particularly in the south and in poorer households. The table shows the existing and additional load on school resources in case OOSCs join index schools. Since QSDS has shown that standalone primary schools are in fact small in student population, with a teacher-student ratio of 1 to 25, additional enrollment can be absorbed without increasing many resources. Managing the issues of social barriers and ‘quality conscious parents’, whose children are not currently attending school, requires a separate combination of strategies.




Table 18: Distribution of Schooling Status of the Entire Sample of 5-9 year old

Currently Enrolled in

Other School

Currently Enrolled in Index School

OOSC, Want Admission in

Index

OOSC-Others Total

% % % % %

GenderBoy 46 35 11 8 100

Girl 34 38 15 13 100

Based on PSC

q1 low 25% 30 40 18 13 100

q2 40 39 12 8 100

q3 40 33 14 13 100

q4 top 25% 60 32 3 5 100

ResidenceUrban 59 23 10 8 100

Rural 38 38 13 11 100

Region

North 63 28 4 5 100

Central 38 40 10 12 100

South 35 37 16 12 100

Total 40 36 13 11 100


CONCLUSIONS AND RECOMMENDATIONS

The effect of poverty and region on school attendance is high. Among poorer households, 69 percent attend school, compared to 92 percent from richer households. Girls and boys from urban areas and northern districts are at parity in current enrollment (81 percent and 91 percent each, respectively). In southern districts 77 percent of boys and 67 percent of girls are attending school. Girls from poorer families, residing in rural areas and belonging to southern districts are at a disadvantage.

Comparing information garnered from households with school availability, shows that even with an ample number of schools, the percentage of out-of-school children is a challenge to program managers aiming to increase enrollment. Combining children who have never attended school with those who have dropped out, shows that 28 percent of girls and 19 percent of boys (aged 5 to 16 years) are out of school. The schooling situation is worse for poorer families, where 36 percent of girls and 25 percent of boys are out of school.

The choice between public and private schools vary by the type and region of the household, but the public sector is a dominant choice. The survey shows that among children aged 5 to 16 years, girls are more likely (77 percent)



to attend a government primary school than boys (72 percent). Among 5 to 9 year-olds, 68 percent of boys and 76 percent of girls attend a public school. The highest differential in choice of school is found by residence of respondents. In urban areas, 56 percent of boys attend public school, compared to 74 percent in rural areas; whereas 63 percent of urban and 78 percent of rural girls attend public school. As private schools are the choice for a larger share of children only in urban areas, the public sector may focus more on rural areas, and central and southern districts.

Among the 5 to 16 year-olds, 13 percent dropped out of school. After enrollment in a school, 14 percent of girls and 11 percent of boys drop out. This is particularly the case for economically-constrained households, where 17 percent of school-age children have dropped out compared to only 7 percent from richer households. Among dropouts, 47 percent of girls and 44 percent of boys dropped out at the age of 10 or earlier. Both girls and boys in public schools left school one grade earlier that those who dropped out of private school.

Another area that needs policy makers’ attention is perception of parents regarding school quality in public schools. Parents are unable to perceive the true quality of education/learning in index schools. Parents correctly perceive physical qualities of index schools but either fail to take into account or are unable to judge the quality of learning at index schools. Even with an accurate perception of school (infrastructure) they fail to enroll OOSCs. The survey also found a group of parents (Group 1), whose children are currently attending school, and who have paid less attention to quality. There is a clear and present need to communicate how well the school is performing, through school council members and the public sector must dispel the notion of bad quality of education being tied to public schools.

The following three sub-groups of children need immediate attention: a) girls living in poorer households, b) children in rural areas, and c) the southern and central districts. The HH and QSDS surveys found that although girls fare better in terms of test scores, they face social disapproval for seeking an education and drop out earlier than boys. In many cases they never go to school at all. Increasing and improving infrastructure will not attract these three groups.

Infrastructure matters, but in the face of social disapproval and the devaluing attitude of parents towards education, investment alone will not increase enrollment in this group. The government needs to put in extra effort to overcome the barriers posed by ingrained social disapproval. The school enrollment among 5 to 9 year-olds can be increased by 13 percentage points with minimal effort. The final steps toward universal primary education can be accomplished by addressing the concerns faced by OOSCs.




percent respectively). Schools in the southern districts fare poorly in nearly all dimensions of school quality.

Annexures






ANNEXURE I

STRUCTURAL POINTS OF SAMPLING METHODOLOGY

A1. PUBLIC EXPENDITURE TRACKING SURVEY

Universe of PETS

The universe of PETS is comprised of Punjab province and 36 districts (both NSB and Non-NSB) of Punjab. The School Education Department and its associated department at the provincial level, as well as district and Tehsil level education and finance offices are the eligible population for PETS.

Sampling Frame

For expenditure tracking, a purposive sample of 12 districts stratified by program/initiative i.e. equal number of districts has been selected from non-salary budgets (NSB) intervention and Non-NSB districts in conjunction with program managers. Further, to ensure geographical representation of sample, four districts from each zone/stratum that divides Punjab in three zones based on geographical location, socio-economic, demographic characteristics, literacy ratio and lingual dialect, have been selected using a subjective approach through purposive sampling method. At the second stage, a fixed number of Tehsils, i.e. two, have been taken from each sample district adopting a simple random sampling scheme (SRS).

Coverage of PETS

Expenditure tracking has been done at SED and PMIU at the provincial level, 12 district offices with multiple visits at each (EDO Education, EDO F&P, DO Building, DMO). Moreover, other sources like ADP schemes and PIFRA databases have been consulted. In addition, KII interviews of DCOs, EDOs, and AEDOs/DDOs have also been conducted.



A2.QUANTITY OF SERVICE DELIVERY AND HOUSEHOLD SURVEY

Universe of QSDS and HH Survey

The Universe of QSDS & HHS consists of 36 districts of Punjab province. The cantonments and other military restricted areas of these districts are out of the scope of this survey. All public primary schools and their adjoining communities (called school communities in this survey) located in urban and rural areas of the 36 districts are in the scope of this survey. For the household survey, children of the age group (4 to 16 years) and their parents residing in the school community, while for school survey, school children of age group 4 to16 years and their teachers are the studied population.

Sampling Frame

For designing sample survey, a complete, updated and potential sampling frame is an essential pre-requisite for drawing a robust and representative sample. The sampling units need to be properly identified, accessible and free of omission and duplication.

For this survey, lists of public standalone primary schools have been prepared using PMIU EMIS School data as a sampling frame for rural and urban areas of all districts. The school list contains potential information including the type of school by gender, status of areas/ location in term of village/mouzas and community. The enrollment by gender, and number of teachers at each public primary school was also available in this frame. Total enrollment in each public primary school has been used as measure of size for sample selection purpose. Moreover, information regarding missing facilities in public schools with expenditure incurred during FY 2013-14 was also available and has been used for sub-stratification. Details of public primary schools and school communities are as under.

Table A1: Number of Standalone Public Primary Schools

Domain Female Schools Male School Total Schools

Rural 17158 16311 33469

Urban 1674 1406 3080

Total 18832 17717 36549





Table A2: Number of Public Primary Schools Communities

Domain Total School Communities Remarks

Rural 33469

There is at least one main community around primary public school.

Urban 3080

Total 36549


Type of Sample Design

A stratified four-stage sample design has been adopted for EQSDS and HHS, whereas for EQSDS School Survey, a stratified three-stage sample design has been adopted.

Figure A1: EQSDS Sample Design

HH and Community Survery

First Stage Sampling Units (PSUs)

Administrative districts with zones (strata) have been treated as PSUs

PETS

Second Stage Sampling Units (SSUs)

Tehsil within sample districts have been treated as SSUs.

Third Stage Sampling Units (TSUs)

The community comprising villages/mouzas in the vicinity of sample public

primary schools in sample tehsils of selected districts have been considered as

thrid stage sampling units (TSUs).

QSDS

Third Stage Sampling Units (TSUs)

The community comprising villages/mou-zas in the vicinity of sample public primary

schools in sample tehsils of selected dis-tricts have been considered as third stage

sampling units (TSUs).

Fourth Stage Sampling Units (FSUs)

Households of the school community are taken as fourth FSUs.

Source: Expenditure and Quantity of Service Delivery Survey, Authors’ Depiction



StratificationPlan

A Stratification scheme was formulated to control variation in order to enhance the precision of survey estimates. Keeping in view geographical location, socio-economic, demographic characteristics, literacy ratio, and lingual dialect, Punjab province has been divided into three zones/strata namely the south, north and central zones. Administrative districts have been grouped together within zones. The zones are internally homogeneous and different from each other as pertains to key survey characteristics. Thus, each zone is called an independent stratum as shown below

S. No. Zone/Stratum Name of Districts in the Zone No. of Districts

1 South

Bahawalpur, Bahawalnager, R.Y.Khan , D.G.Khan, Layyah, Mianwali, Pakpattan, Vehari, Lodhran, Muzaffergar, Rajanpur, Khanewal, Multan

13

2 NorthChakwal, Jhelum, Hafizabad, M.B.Din, Attock, Narowal, Gujrat, Rawalpindi, Gujranwala, Sialkot

10

3 Central

Bhakkar, Sahiwal, Khushab, Nankana sahib, Sheikhupura, Jhang, Kasur, Lahore, Faisalabad, Chniot, T.T.Singh, Sargodha, Okara

13


Sub-StratificationPlan

From each sample district, two Tehsils have been taken. Within each sample Tehsil, schools have been grouped together within urban/rural areas with boys/girls schools into three groups called sub-strata. The criteria of sub-stratification is missing facilities in public primary schools with expenditure incurred during FY 2013-14 as explained below.

Substrata I: Schools having missing facilities with expenditure during FY 2013-14.

Substrata II: Schools having missing facilities with no expenditure during FY 2013-14.




Substrata III: Other remaining schools i.e. schools having no missing facilities with no expenditure during FY 2013-14.

SAMPLE SELECTION PROCEDURE

Primary Sampling Units (PSUs)

Districts are called first stage sampling units. Four districts from each zone (stratum) have been selected. The districts have been drawn from zones using a subjective approach through a purposive sampling method. Consequently, 12 districts have been selected in the survey from three zones as shown below.

Table A3: Name of Districts Selected from Three Zones in EQSDs Survey

S.No. ZoneNo. of

Districts in Zone

No. of Sample Districts

District Remarks

1 Centre 13 4 Nankana sb. Jhang, Bhakkar, Okara

2 North 10 4 Chakwal, M.Bahaudin, Gujrat, Sialkot

3 South 13 4 Khanewal, DG Khan, Bahawalpur, RY Khan

Total 36 12


Selection of Secondary Sampling Units (SSUs)

All administrative Tehsils within sample districts have been taken as second-stage sampling units (SSUs). A fixed number of Tehsils, i.e. two, have been taken from each sample district adopting a Simple Random Sampling (SRS) scheme.

Selection of Third Stage Sampling Units (TSUs)

Household and Community survey

Public primary schools communities are considered third stage sampling units (TSUs). The schools communities in the vicinity of 450 sample public primary schools have been selected from three sub-strata of selected Tehsils of each sample district. The fixed number of public primary has been drawn using Probability Proportional to size method (PPS) sampling scheme. The



enrollment in boys/girls schools by three sub-strata have been taken as a Measure of Size (MOS) to select schools from three sub-strata of sample Tehsil(s). Hence, school communities have been taken on the basis of 450 public primary schools already selected in school part of EQSDS.

School Survey

Public primary schools are considered as third-stage sampling Units (TSUs). A fixed number of allocated sample public primary schools have been selected from three sub-strata of selected Tehsils of each sample district, using Probability Proportional to size method (PPS) sampling scheme. The enrollment in boys’/girls’ schools by three sub-strata have been taken as measure of size (MOS) to select schools from three sub-strata of sample Tehsil(s).

Selection of Fourth Stage Sampling Units (FSUs)

Initially, a community/mouza/village in the vicinity of sample primary schools has been identified. This is termed a school community. The community of sample primary school means mouza/ward; from which the majority of children have been enrolled in the sample school. Furthermore, to ensure the proper and accurate identification of the concerned school community, the headmaster of the sample school has been consulted. In the case of two or more communities, the nearest one was selected. The size of community ranges 150 to 400 households.

A peripheral visit of selected community was made by the supervisor/team leader to ensure the exact identification of the community. A sketch map indicating muhalas/abadies/galis (neighbourhood, settlements and lanes) showing four directions i.e. east, west, north and south was developed. The starting point, preferably the North-West Corner was taken. A Quick Count Record survey was undertaken to count number of households of the school community adopting a clock-wise movement. The number of households counted by muhalas/lane was recorded on a sheet.

On the basis of the total counted households of the school community, 16 households have been selected through a systematic sampling technique. In case of refusal/non-cooperation from sample household, replacement/substitution was not allowed. In case of migration/temporary closed/permanently closed household, the next household has been selected for survey.




SAMPLE SIZE AND ITS ALLOCATION

Household Sample

Keeping in view the objectives of the study, variability in the examined variables, cost and reliability constraints, a sample size of 7,200 households of 450 public primary schools communities has been worked out. This sample size has been considered sufficient to produce the desirable result at the provincial level by regions. The level of confidence and margin of error are taken as 90 percent and 5 percent respectively. The following algorithm has been used for computing sample size.

where n is the sample size, p is the prevalence rate of key variable (net enrollment rate at primary level in government primary schools derived from PSLM survey has been used as p), q=1 p and t is the table value at 90 percent level of confidence with 5 percent permissible margin of error. Deff is the design effect and is taken as 1.5. Non-response rate has also been taken as 2 percent.

Table A4: Sample Size and Allocation of Sampled School Communities and Households

Domain No. of Sample Schools

Sample Schools Communities

Sample Community Households

Urban 121 121 1,936

Rural 329 329 5,264

Total 450 450 7,200


School Sample

Keeping in view the objectives of the study, variability in the examined variables, cost and reliability constraints, a sample size of 450 public primary schools has been worked out. This sample size has been considered sufficient to produce the desirable result at the provincial level by regions. The level of confidence and margin of error are taken as 90 percent and 5 percent respectively. The allocation of sample size by type of area and gender is as follows:



Table A5: Sample Size and Allocation of Sampled Schools

Domain No. of sample schools Sample Boys Schools Sample Girls

Schools

Urban 121 60 61

Rural 329 168 161

Total 450 228 222


The number of public primary schools and school communities by Tehsils/districts/urban/rural and gender has been allocated using compromised allocation methods.

APPLICATION OF WEIGHTS

HH and Community Sampling Weights

Based on four-stage stratified sample design, sampling weights for each of four stages have been computed. Consequently, overall sampling weights for each of 450 public primary school communities have been drafted for generating estimates of survey variables.

School Sampling Weights

Based on a three-stage stratified sample design, sampling weights for each of three stages have been computed. Consequently, overall sampling weights for each of 447 public primary schools have been worked for generating estimates of survey variables.

Coverage of Sample Public Primary Schools & School Communities

Twenty seven sample households from four school communities and three public primary schools have not been enumerated due to certain reasons. Hence, the response rate for household survey has been recorded as 99.63 percent whereas 99.33 percent has been recorded for school survey.




ANNEXURE II

SAMPLE INTENDED & ACHIEVED BY INSTRUMENTS

DEMAND SIDE SAMPLE: INTENDED AND ACHIEVED BY INSTRUMENTS

Household Sample

The EQSDS was conducted in 12 districts of Punjab. The sample was drawn on a regional basis by dividing Punjab into three regions of south, centre and north. Four districts were selected from each of the three regions. The total sample for EQSDS was 450 Schools (both urban and rural, boys’ and girls’). The household sample for EQSDS was 7,200 households in adjacent communities of sampled schools. The region-wise data shows that a total of 2,400 Households were intended in central region and out of these households 1,664 were rural households and 736 were urban. The achieved sample for centre is 2,397, including 1,661 rural and 736 urban households; similarly, in northern region there were a total of 2,400 households to be covered according to the sample drawn. Out of these 2,395 were covered in the sample (1,851 rural and 544 urban). In the southern region the intended sample was of 2,480 households. The achieved sample is of 2,477 households in the south (1,744 rural, 653 urban). Thus total achieved sample for households was 7,189.

Community Survey

For the community survey, the intended sample was 450 (337 rural, 113 urban communities). The achieved sample remains the same as all 450 communities were covered during the survey. However, the achieved sample shows that a total of 49 School Councils were covered in all three regions. The region-wise break up is shown in Table A6.



Table A6: Demand Side: Intended and Achieved Sample by Instruments

Intended Sample (N) Achieved Sample (N)Disposition overall (%)

Cen

tre

Nor

th

Sout

h

Tota

l

Cen

tre

Nor

th

Sout

h

Tota

l

Demand Side

Household

Rural 1664 1856 1744 5264 1661 1851 1744 5256

Urban 736 544 656 1936 736 544 653 1933

Total 2400 2400 2400 7200 2397 2395 2477 7189

Community

Rural 104 117 116 337 104 117 116 337

Urban 46 33 34 113 46 33 34 113

School Council

Rural 12 12 14 38

Urban 3 5 3 11


SUPPLY SIDE SAMPLE: INTENDED AND ACHIEVED BY INSTRUMENTS

School Sample

In the school sample there were total 450 schools in 12 districts. The intended sample for girls’ schools was 238 and boys’ schools were 212. However, the achieved sample for girls’ schools is 236 as two girls’ schools from the southern region were not covered, being permanently closed. Similarly, for boys’ schools the achieved sample is 211 as one boys’ school in the central region could not be covered due to refusal to participate. The urban-rural breakup is shown in Table A6.

Fund Flow Part

There were a total of 12 districts in the sample for collecting supply side information from districts. The information regarding fund flows was to be collected from district, Tehsil and schools levels. The sample allocation was made taking four districts from each region. In 12 districts 24 Tehsils were sampled to collect Tehsil level information thus 2 Tehsils from each district were sampled




for this purpose. All 12 districts and 24 Tehsils were covered during the survey to collect information from district, Tehsils and sampled schools.

For school inventory there were a total of 450 schools sampled from three regions. Thus 150 schools from each region were sampled. However, the achieved sample was 447 as three schools from two regions, one from central and two from south could not be covered as two were permanently closed and one refused to participate. The sample information is based on EMIS official data.

For Key Informant Interviews there were two main categories to be covered: one was district and tehsil level officials of Education and Finance and Planning Departments, and DCOs, and the other was for the members of School Councils. In total 72 Key Informant Interviews were to be conducted.

The achieved sample shows that 23 Key Informant Interviews were conducted at the district and Tehsil level. Out of these 23 KIIs 7 were from central, 11 from northern and 5 from southern region. The second category was of School Council. A total of 49 interviews were conducted with school council members. Out of these 15 were from central and 17 each were from the southern and northern regions.

Table A7: Supply Side: Intended and Achieved Sample by Instruments

Intended Sample (N) Achieved Sample (N)

Dis

posi

tion

over

all (

%)

Cen

tre

Nor

th

Sout

h

Tota

l

Cen

tre

Nor

th

Sout

h

Tota

l

Supply SideGirls School InventoryRural 57 58 63 178 56 58 62 176Urban 25 17 18 60 25 17 17 60Total 82 75 81 238 81 75 79 236Boys School InventoryRural 47 59 53 159 47 59 52 158Urban 21 16 16 53 21 16 16 53Total 68 75 69 212 68 75 68 211Total School Inventory

150 150 150 450 149 150 147 447

Fund FlowProvinceDistrict 4 4 4 12 4 4 4 12Tehsil 8 8 8 24 8 8 8 24School Inventory



Rural 104 117 116 337 102 117 114 334Urban 46 33 34 113 46 33 34 113KII

Type One (Officials) 7 11 5 23Type Two (School Council) 15 17 17 49


Sample Obtained by Instrument and Gender

Table A8 deals with unit of analysis by gender and instrument. The household data of 7,189 households shows that a total of 4,953(2,576 males, 2,377 females) children of aged 4 to 16 years were in central region, 4,729 (males 2,417, 2,312 females) in the north, and 5,956 (males 3,104, females 2,852) in the south. Out of these children the number of school going children in the central region are 3,810, 4,208 in the north and 4126 in the south. The number of index schools in each region is 150. Total number of index children (children ever attended sampled school) in household data are 6,850. Out of these 2,428 are from centre, 2,023 are from north and 2,399 are from south region.

The student tests’ data shows that there were 1,503 children tested in central, 1,840 in north and 1,014 in south region (gender-wise data is shown in Table A8). The total teachers in the sampled schools according to School Inventory data are 1,756. Out of these 746 (240 males, 264 females) are in central, 548 (223 males, 325 females) in north and 462 (206 males, 256 females) in the south region. While, the number of classes observed during the school visits were 923 in the centre, 899 in North and 884 in South region.

Table A8: Unit of Analysis Obtained by Gender &Instrument (Number Distribution)

Zone

Centre North South Total

Children aged (4-16) years

GenderMale 2576 2417 3104 8097Female 2377 2312 2852 7541

School GoingMale 2075 2163 2345 6583Female 1735 2045 1781 5561

Index School 150 150 150 450

Index Children 2428 2023 2399 6850

Student Test Boy 845 957 554 2356Girl 658 883 460 2001

TeacherMale 240 223 206 669Female 264 325 256 845

Number of Classes Observed 923 899 884 2706





Key Informant Interviews

Key Informant Interviews were a part of the EQSDS, to supplement the quantitative data collected through structured interviews. The main Key Informant categories at district level included interviews with DCOs, DMOs and EDOs. The data available for KIIs conducted at district level shows that DMOs KIIs are 4, EDO Education KIIs are 3, EDO F&P is 1 and DSD In-charge is 1. However, due to unavailability of DCOs throughout the sample field, no DCO interview could be conducted. At Tehsil level, 13 Key Informant Interviews were conducted with various Tehsil level officials. For the School Council category, a total of 49 KIIs were conducted. Out of these 28 were with male members and 21 with female members. Table A9 shows the region and gender-wise breakup of Key Informant Interviews.

Table A9: Key Informant Interviews by Type and Region

Centre North South TotalKey Informant Interview

Type

DCO 0 0 0 0DMO 1 2 1 4EDO (Edu) 1 2 0 3EDO (F&P) 0 1 0 1DSD In Charge 1 1 0 2DDEOs 4 5 4 13

Gender Male 5 10 3 18Female 2 1 2 5

Total 7 11 5 23School Council Member

Male 10 10 8 28Female 5 7 9 21

Total 15 17 17 49




ANNEXURE III

PUBLIC FINANCIAL MANAGEMENT IN PAKISTAN

The central idea of PFM is to deal with all aspects of resource mobilization and expenditure management in government. Thus, PFM includes resource mobilization, prioritization of programs, the budgetary process, efficient management of resources and exercising controls. PFM is often narrowly expressed in terms of the stages of the budget cycle. The objective of efficient and effective public service, however, is lost in this expression. PFM can be defined as the system by which the financial aspects of the public services business are directed, controlled and influenced, to support the delivery of the sector’s goals. It is, however, imperative to mention objectives or budgetary outcomes that are to be achieved through a sound PFM system in practice. These objectives or budgetary outcomes are:

1. Maintaining aggregate fiscal discipline2. Allocating resources in line with strategic priorities, and 3. Economy, efficiency and effectiveness in use of resources.

These objectives are adopted at large by international development committee as envisaged in PFM literature worldwide e.g. PEFA Framework. PFM encompasses elements of budgeting, execution, accounting, recording and reporting, internal controls and monitoring and external scrutiny and audit. It is important to give a brief background of the constitutional framework in Pakistan to have better understanding of PFM in overall context of the governance and how authority flows from political leadership to public finance managers. Before highlighting the points, it is important to indicate the definitions from the constitution of land, providing clear roles of the subject under review.

The constitution of the Islamic Republic of Pakistan is the supreme law of the country. Pakistan’s 1973 Constitution provides for a parliamentary system of government with the President of Pakistan representing the unity as head of state. The state is comprised of Federal Government, Parliament with its two houses; Senate (Upper House) and National Assembly (Lower House), Provincial Government, Provincial Assembly, and local authority empowered to impose tax or cess. The state governance structure is divided in three tiers of administration; federal, provincial and district, with both




houses and provincial assembly serving as a platform for legislation and drawing of administrative authority. The President entrusts the functions of the federation to the Prime Minister, who is elected by members of the national assembly, as the head of the federal government. The Prime Minister is conferred with the power to exercise the executive authority on behalf of President through Article 90 of the Constitution. The Prime Minister discharges his duties through the cabinet of ministers. The ministers are given a portfolio for which they are directly responsible for reporting to the Prime Minister. The ministries are run through secretaries (principal accounting officers) who are delegated functions at the discretion of the Federal Government under Article 98. The provincial government is headed by the Governor appointed by the President under Article 101, on the advice of the Prime Minister. The provincial executive setup runs through a cabinet headed by the Chief Minister of the province.

The parliament makes laws or legislates for the whole of Pakistan, while provincial assembly legislates only for their respective province. The Constitution provides for a federal legislative list which includes matters/subjects on which the parliament can legislate or make laws accordingly. The matters/subjects not enumerated in the federal legislative list are devolved to the provincial assembly for legislation. The parliament cannot legislate on any subject/matter that is outside the ambit of federal legislative list unless one or more provincial assemblies pass resolutions to allow parliament to regulate on the subject/matter.

PFM LEGAL FRAMEWORK

The entities responsible for transacting the business of government, in relation to PFM components, draw their powers from the Constitution. The Constitution provides a basis for comprehensive PFM elements to enable the setting up of a hierarchical legal framework. Legislation is made for the PFM components to authorize and give powers to respective entities, and to supervise and be accountable for the PFM element. Rules and regulations have been framed to govern the PFM area, covering each aspect at more detailed level. The Federal Government through the cabinet secretariat has framed the Rules of Business 1973, by virtue of Articles 90 and 99, to allocate business to the line ministries to execute its functions. The allocation of business made to the Finance Division, with respect to PFM elements, is outlined in Article 25 of the Rules of Business 1973.

The Federal Government and provincial governments are separate entities as regards financial accounting and reporting. The provinces are further divided among districts with local government systems in place. The money streams



of Federal and provincial governments are required to be pooled in their respective consolidated fund as outlined in Articles 78 and 118.

Internal Controls (Financial)

The budget execution is largely carried out through the General Financial Rules (GFR) issued by the Federal Government and provinces. The GFR are the executive orders of the President that describe primarily the financial powers of different authorities subordinate to the Federal Government, or in the case of provinces, to the provincial government. The GFR coupled with the System of Financial Control and Budgeting outlines the system of financial management and control that is adopted by all departments in the way of discharging their respective functions.

Treasury

Under Article 17 of the State Bank Act 1956, State Bank of Pakistan amongst other responsibilities, acts as the Treasurer for the federal/provincial/local authorities with National Bank of Pakistan as its agent.

Accountability

Articles 169 and 170 place responsibility on the Auditor General to stipulate the mode and format of accounting and reporting of government accounts. The President has appointed the Auditor General under Article 168 to audit the accounts of the entire state, including federal, provincial and district governments. The AGP Ordinance 2001 outlines the functions and powers of the Auditor General to audit the accounts of state. The CGA Ordinance, 2001 confers responsibility on the Controller General Accounts to prepare and maintain accounts of federation, provinces, and district governments, to authorize payments and withdrawals from consolidated funds of respective governments against approved budgetary provisions after pre-audited checks, and to lay down the principles governing the internal financial control for government departments in consultation with the MoF and the provincial finance departments.

Accounting System

The Government of Pakistan operates its budgeting and accounting classification system under the New Accounting Model (NAM) introduced in FY 2004-05 that complies with international classification standards, namely the United Nations Classification of Functions of Government (COFOG). This enables more accurate, detailed, adequate and transparent accounting, reporting and effective budget monitoring.




The responsibilities in NAM follow a scheme of delegation of authority, which is structured as a hierarchy with four responsibility levels with the Controller General of Accounts responsible for overall accounting. In the second level, the Accountant General Pakistan Revenues (AGPR) and Accountant Generals (one for each province) are responsible for the reporting of federal and provincial transactions respectively. The Principal Accounting Officer in each ministry/division/department has the authority to control the financial management of the entity.

At the third level, the District Accounts Officer (DAO) is responsible for the accounting functions of the districts. The DAO has the authority to pre-audit bills and record transactions. The DAO also performs this function for transactions relating to provincial and federal governments within his/her districts. Lastly, the Drawing and Disbursing Officer (DDO) is the spending unit responsible for the accounting, cash and personnel functions of specific entities within departments. Each service delivery unit has its own DDO, who is responsible for the functioning of the unit and is authorized to submit bills for pre-audit and payment to the DAO.

Planning and Budgeting

Although the Annual Budget Law (Finance Act) has a life of one year as per the Constitution, a Medium Term Budgetary Framework (MTBF) based on a three-year rolling basis has been introduced and adopted in FY 2009-10 at the Federal and provincial government. This promotes efficiency and effectiveness in the allocation and use of public sector resources. MTBF takes a multi-year approach to budgeting and aligns spending plans with the resources available to the government and its policy objectives.

Inter Government Fiscal Transfers

The Constitution has laid provision for transfer of revenues between federation and provinces. The NFC pool of revenue includes taxes raised under the authority of the Parliament namely: taxes on income, general sales tax, wealth taxes, capital gains taxes and custom duties. The NFC award decides the horizontal and vertical allocation of revenue among Federation and provinces, and among provinces. The provinces were allocated 56 percent in the first year of NFC (2010–11) and 57.5 per cent in the remaining years of the award under the vertical distribution of resources.

Ministry of Finance

The federal and provincial Finance Departments are responsible for the financial management of their respective government tier, such as preparation



of annual budget statements, supplementary (excess) budget statements, cash management, releases and setting financial compliance standards/codes. Moreover, the Finance Department maintains financial discipline through financial advisors attached to each MDA. The budget process is directed overall by the Finance Division (FD), which oversees budget preparation and implementation by MDAs.

PFM Cycle in Pakistan

The Financial Year in Pakistan starts on July 1st and ends on June 30th every year. The PFM cycle starts with budget formulation and planning of resources, in the month of October each year.

Budget Formulation

It is the responsibility allocated to Ministry of Finance (MoF) under the Rules of Business 1973 framed by the Cabinet Secretariat. MoF in the form of Budget Call Circular (BCC) solicits estimates for current and development expenditure from all departments. The budget is divided into two main sectors; Revenue and Capital. The development projects for the year are outlined in the Annual Development Plan (ADP), which starts in November. The Planning Commission, in consultation with the Ministry of Finance and the provincial governments, prepares it. These allocations are then considered, first by the Priorities Committee in March/April and then by the Annual Plan Coordination Committee in April/May. The National Economic Committee gives final approval to the plan. The Government of Pakistan (GoP) is using the Chart of Accounts (CoA) under the New Accounting Model (NAM) for the formulation and reporting of the budget under detailed object and functional classification. The budget formulation process envisages MTBF framework, which requires budget making on three year rolling basis focusing more on objectives and targets of government.

Approval of Budget

Upon receipt of estimates from departments, MoF prepares the budget proposal, which is presented before the National Assembly for discussion and approval. After the approval of budget and authentication of schedule of expenditure by Prime Minister, fiscal transfers are made by NFC Secretariat, according to the prevalent (now 7th) NFC Award agreed between federation and provinces in every five years (the 7th being last was agreed in 2010). The seventh NFC is still operational as next one is still not yet agreed. The revenues are horizontally and vertically distributed between the Federation and provinces according to percentages outlined in the Award. The allocation of revenues within the provinces is carried out according to the Provincial




Finance Commission setup under the Local Government Ordinance, 2001 in each province.

Budget Release

Upon authentication of the schedule of authorized expenditure, the MoF sends a release letter to ministries, departments and agencies and their respective offices of the Accountant General of Pakistan Revenue (AGPR) or Accountant General (AG) advising that funds are being made available against their budgets. AGPR/AG offices in turn inform district accounting/treasury offices of the availability of their funds. Side by side, the budget is entered in PIFRA SAP R/3 online system, which is implemented at all information processing levels, making budget information available on a timely basis. The Federal Government releases funds at specific intervals according to specific formulae and percentages. The provinces release allocations to district governments on the first of every month so that the funds are available for the coming month. The funds are released through PIFRA SAP R/3 in each budget head, up to the object level, according to the authenticated schedule of expenditures restricting excess release of funds other than salaries, which are automated at the start of each month.

Budget Execution

Drawing and Disbursing Officers execute the budget through the utilization of funds made available to them through release from PIFRA SAP R/3 system. The payments are made through the AG office, which records expenditure at the time of payment, checking the availability of funds in the specific head and thereafter pre-auditing the transaction.

Reporting

Ministries/divisions are required to send a monthly statement of expenditure to the MoF through financial advisors. Expenditures are recorded in GFMIS by AGPR, AG, PAO and DAO for the transactions in their respective jurisdictions. Monthly bank reconciliations are carried out between the responsible accounting officers and banks. Apart from bank reconciliations, expenditure reconciliations among departments are carried out for effective monitoring. Monthly Fiscal Reports are generated from the AGPR’s accounting system (GFMIS) giving detailed information on the budget and actual spending on the same classification commonly known as civil accounts.



Annual Financial Statement

Financial Statements of the Federal Government are prepared by CGA annually on a cash basis, which contains a statement of cash receipts and payments, cash flow, comparison of budget and actual expenditure by function, comparison of budget and actual expenditure by division and statement of appropriation of grants by object for the year. These financial statements are only compliant with IPSAS cash basis prescribed format.

Audit

The financial statements of federation and provinces are subject to audit by the Auditor General of Pakistan in accordance with Auditor General Ordinance, 2001. Office of AGP performs functions such as: inspection of any accounts office or treasury of the Federation, Province or District; requisition accounts, books, papers and other documents for audit; and enquire or make such observations considered necessary for audit. Audit is conducted adhering to international standards of auditing issued by INTOSAI. The audited financial statements along with audit reports are presented to the Public Accounts Committee (PAC) of National Assembly for legislative scrutiny within six months from the close of financial year. The PAC examines the accounts and reports of AGP. The observations and recommendations of PAC are presented to the National Assembly.




ANNEXURE IV

OVERVIEW OF PUBLIC FINANCIAL MANAGEMENT IN PUNJABThis overview was based on the Punjab PEFA assessment that was undertaken in 2012 and subsequent fiduciary reports. The assessment revealed that Government of Punjab has made progress since the last PEFA assessment in 2007. Though, the process of improvement is spread over the whole PFM cycle the rate of increment varies among different PFM elements.

ASSESSMENT HIGHLIGHTS

The most significant development includes moving from incremental budgeting to a policy-driven resource allocation process. The ongoing reforms in realm of financial planning have had a positive impact on PEFA ratings measuring the performance of the budgeting process. However, these reforms have yet to take root as evident from low PEFA scores for budget credibility due to weak allocation efficiency at the sector level. The sustainability of budgetary reforms depends upon the government’s resolve to replace traditional centralized financial management system with a more effective decentralized arrangement.

Predictability and Control in budget execution demonstrated a decline. The latest PEFA assessment highlights difficulties faced by the government of Punjab in budget execution marked by weak provincial tax regime, lack of procurement guidelines and absence of internal audit functions. Budget execution is further hampered by the use of poor cash management techniques. Although, efforts are underway to strengthen the treasury management, they are generally limited to developing quarterly cash forecast on predefined format. The poor PEFA scores for accounting of arrears and commitments, lack of coverage in execution report, long standing unreconciled cash balances, and inability to consolidate different cash balances into single account, have all contributed towards unkempt budget execution and less than desired service delivery levels.

The accounting and reporting of the fiscal information by the Punjab Government has shown some minor improvements with timely presentation of financial statements to the legislature. Also, an improvement is observed in the accounting standards employed. Overall, positive impacts are observed



in the external scrutiny and audit of the financial statements of the Punjab Government. The reforms introduced in the AGP have improved the timeliness of submission of audit reports, of the entities representing expenditure up to 75 percent (2007 PEFA: 50 percent). However, there is a significant delay in the review of the external audit reports by the Public Accounts Committee (PAC) and a backlog remains on compliance with instructions.

SUMMARY OF KEY RECOMMENDATIONS

The provincial government is in the third year of it its electorate term. Contrary to the Federal government, the province of Punjab has given its mandate to the last incumbent political party. To put things in perspective; the reform process initiated in previous five-years terms will most likely witness a continued level of ownership. The analysis of the latest PEFA assessment reveals that budgetary reforms needs to be supplemented by realigning roles and responsibilities in public financial management. This rearrangement has become imminent, particularly since the introduction of the 18th Amendment to the constitution. As a result, provinces have more resources at their disposal since major service delivery functions have been devolved.

This is the time for the government to revisit the prevailing PFM framework in the province and develop a new policy set, taking into account the changed environment. The foremost policy decision is to decentralize financial management to the Ministries/Departments/Autonomous bodies (MDA). In the new PFM paradigm, the Finance Department has to focus on maintaining overall fiscal discipline which would be a challenge with the advent of more provincial autonomy. On the other hand, for effective service delivery it is important that MDA should have enhanced responsibilities in budget management. MDAs not only have pivotal role in execution but are accountable to the legislature for results.

For smooth in-year budget execution, control over cash flow is required ensuring that the right amount of cash is available at the right time and place. The cash flow management is a multi-faceted challenge entailing coordination for cash planning, daily consolidation of cash balances, reconciliations and development of realistic and timely forecasts. The latest PEFA assessment has identified gaps in existing PFM, which are impeding government ability to efficiently manage cash flows. The policy decisions to establish a cash management committee, use of single treasury account and resolution of time barred un-reconciled items will provide the government with the required leverage to improve budget credibility, thus, returning to fiscal discipline and better service delivery.




ANNEXURE V

DISTRICT GOVERNMENT OVERVIEW

DECENTRALIZATION

The Local Government Ordinances (LGO) of August 2001 essentially created three levels of sub-provincial government, i.e. district, Tehsil and union levels. District governments were given functional responsibility for provision of services in primary and secondary health care, all levels of education up to high school, agriculture, and intra-district roads. District governments were administered through 11 departments, with the District Coordination Officer (DCO) being the highest ranked civil servant in the district. In addition to the DCO, each district government department, including Health, Education, Agriculture, Finance and Planning, Communications and Works etc., is headed by an Executive District Officer (EDO). As is the case with federal to provincial fiscal transfers, provincial governments were required to make ‘one-line’ or unconditional transfers to local governments from the Provincial Consolidated Fund. Fund allocation across districts was effected through formulae defined separately in each province through their respective Provincial Finance Commissions.

Implementation of the devolution framework was a complex task requiring a host of legislative, policy and administrative interventions, and the system continued to evolve for some time after the promulgation of the Ordinance in 2001. A second set of local bodies elections were held in 2005, and a smooth transfer of power took place at the lowest rung of elected government. When the tenure of the second set of local governments ended in 2009, along with the temporary constitutional guarantee introduced in 2001, the federal and provincial governments made no move to hold fresh local bodies’ elections.

The debate on local government re-ignited, however, when the 18th Amendment to the Constitution kept the provision relating to local government in Article 140(A) intact, specifying “Each Province shall, by law, establish a local government system and devolve political, administrative and financial responsibility and authority to the elected representatives of the local governments.” Essentially, the provincial governments were given the



mandate to configure a local government system according to their needs and requirements. The federal government was to have no say in the matter.

The Punjab Assembly passed its Local Government Act (LGA) on 22nd August 2013. The defining features of the Punjab LGA are its reversion, for the most part, to the Local Government Ordinance of 1979, which heavily circumscribed the powers of elected local governments. Nevertheless, an important innovation in the LGA, is the creation of Health and Education Authorities at the local level, which, though managed by non-elected personnel, will allow a degree of local representation in decision making on these key social sectors. There is no local government in Punjab since 2009, as the provincial government did not hold fresh local body elections. The Punjab government did not opt for local elections under the LGO 2001 and continued to directly control districts through DCOs appointed under the same law. The same arrangements are in place under the same law despite the government had passed the Punjab LGA 2013. The new law would become effective only after fresh local elections are held under it.

IMPACT OF 18TH AMENDMENT IN THE CONSTITUTION

The 18th Amendment has re-demarcated the jurisdictions of Pakistan’s multi-level governance at the federal, inter-provincial and provincial levels by revising the Federal Legislative List Part I and Part II. Subsequently, assigning the exclusivity of 53 subjects to the Federal Government, 18 subjects to the Council of Common Interests (CCI) and all residual subjects to the provincial governments has delineated the legislative and executive authorities of the federal and provincial governments. Further redistribution of functions at the district, Tehsil and union council levels has been vested with the provincial governments in accordance with the policy framework enunciated in Article 140 (A) of the Constitution. Under the 18th Amendment, the education sector is primarily the responsibility of the provincial government.

Implementation of the 18th Amendment required substantial changes in the existing legal, regulatory and policy frameworks on devolved and shared subjects. Rules of Business at federal and provincial levels have been amended and a number of critical issues have been resolved. However, even after 5 years, some issues still remained unsettled because of the lack of political will, policy disconnects and the absence of evidence-based strategies hampering the pace and process of transition management.

The Government of Pakistan through the 18th Amendment has made it obligatory for the government to provide free quality education to every child




from 5 to 16 years.50 Similarly with abolition of the concurrent legislative list51, the responsibility for curriculum, syllabus, planning, policy, centres of excellence and standard of education have all been devolved to provinces.

FISCAL FRAMEWORK FOR LOCAL GOVERNMENTS

For decentralization to meet its objectives, the fiscal empowerment of local governments is a necessary, though perhaps not sufficient in its current condition. In Pakistan, where the Federal Government collects the bulk of the lucrative taxes, and provincial governments generate, on an average, barely 15 percent of their total revenue, the fiscal empowerment of the lowest tier of government is currently a major challenge.

The LGO 2001 devolved significant powers to local governments, but their ability to raise revenue remained restricted, not only by the relatively narrow base of taxes and fees which they were eligible to raise, but also by capacity issues in local tax administration. Local governments thus remained largely dependent on fiscal transfers from Provincial Finance Commissions, which were first constituted in May 2002. The PFCs mandated systems for vertical (determination of total amount to be transferred to district governments) as well as horizontal (allocation across districts in a province) distribution of funds. Since no credible estimates were available for the delivery of social services per unit of population, the estimation of vertical transfers to districts continued to be made in accordance with historical shares. This proportion of transfers was just enough to meet staff salaries for personnel posted in local government departments and facilities.

50 Constitution Article 25-A introduced through 18th Amendment.51 The concurrent legislative list included the subjects in the shared legislative jurisdiction of Federation and Provinces.

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