PROGRAM INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB7407 Operation Name Region Country Sector Operation ID Lending Instrument Borrower(s) Implementing Agency Date PID Updated Estimated Date of Appraisal Estimated Date of Board Approval Corporate Review Decision I. Third Upper Secondary Education Development Policy Loan LATIN AMERICA AND CARIBBEAN Mexico Secondary education (70%); Vocational training (30%) P147244 Development Policy Lending United Mexican States Secretariat of Public Education October 23, 2013 October 16, 2013 December 19, 2013 Following the corporate review, the decision was taken to proceed with the appraisal and negotiation of the operation. Country and Sector Background 1. Mexico is an upper middle income country with one of the highest per capita incomes in Latin America and the Caribbean. A member of the OECD and the G20, Mexico has maintained economic stability through times of recent crisis, and increased economic and social well-being over the last two decades. Still, Mexico faces challenges of poverty and inequality, due in part to stagnant productivity. As such, one of the pillars of the new Country Partnership Strategy between Mexico and the World Bank, Increasing Social Prosperity, aims to improve social prosperity and alleviate poverty through improving education outcomes, thereby enhancing labor market productivity, especially for the poorest. 2. Enhancing skills through improved education quality is a core part of increasing labor force productivity, long term economic growth, shared prosperity and alleviating poverty. The Bank’s education portfolio therefore supports the Government of Mexico’s efforts to improve the quality at all levels of education, throughout the lifecycle (see Figure 1). A critical tool in enhancing labor market productivity is through upper secondary education (Educación Media Superior, EMS), where the Bank has supported Mexico’s Secretariat of Public Education (Secretaría de Educación Pública, SEP) since 2008 through a tailored suite of services. The suite has consisted of financial (programmatic series of Development Policy Loans), knowledge and convening services, such as benchmarking the reform with other regional experiences, providing ‘just in time’ technical assistance and organizing workshops and south-south activities in priority topics for SEP such as teacher training and policies and strategies for reducing dropouts. 3. This proposed Upper Secondary Education Development Policy Loan would be the third loan to support the Government’s Integral Upper Secondary Education Reform (Reforma Integral de la Educación Media Superior, RIEMS). The Reform, implemented by the Under Secretariat for Upper Secondary Education (Subsecretaría de 1 Educación Media Superior, SEMS) of SEP, aims to improve the internal efficiency and quality of upper secondary education. The programmatic series supports actions in the following three areas addressing the key constraints of the EMS system: (i) improving flexibility of upper secondary education; (ii) enhancing quality of education; and (iii) reducing the opportunity cost of upper secondary education. The expected long-term outcomes of the reform include a reduction in dropout rates and an increase in learning outcomes, both effects linked to labor market productivity and long term economic growth. There is growing consensus that productivity and economic growth depend on the quantity and quality of a society’s human capital, which are necessary both to fuel innovation and to absorb and adapt technologies developed in other countries (Hanushek and Woessmann, 2008). And education yields a host of other development benefits as well, such as improving the health of learners and the education of their children (Lleras-Muney, 2005). 4. RIEMS is a long-term process, built upon evidence and consensus. The first Development Policy Loan (DPL) supported the establishment of the National Upper Secondary Education System (Sistema Nacional de Bachillerato, SNB), including the development of minimum standards for students, a student assessment system, a teacher training program, and a school accreditation system, as well as the consolidation of the EMS scholarship program. The second Loan further strengthened RIEMS during an important political transition, focusing on the approval of technical programs, the operation of the student assessment and school accreditation systems, the governance of the teacher training program, and the expansion of services for youth at risk. To support this next phase of the Government’s reform, this proposed DPL would support policy actions around recognizing the equivalencies necessary for transferring from school to school (irrespective of system), the establishment of an autonomous evaluation agency for the education system, a new policy for teacher training, innovations around supporting youth at risk of dropping out of school and enacting legislative changes to declare EMS mandatory. The proposed amount for the Third Upper Secondary Education Development Policy Loan is US$300 million. 2 Figure 1: Stages of Engagement in Upper Secondary Education in Mexico: Skills for Shared Growth Foundations and early support [1995–2003] Expanding support [2009-2013] Knowledge Services Enhancing Productivity, PSIA: Support for Knowledge, and Improving Equity in Competitiveness in the Mexico Upper Mexico (P084566, Secondary Education 2006) Reform (TF011538, Secondary Education 2014) (P106567, 2008) Higher Education Financing Project (P049895, US$180.2 million, 1998) Knowledge and Innovation Project (P044531, US$300 million, 1998) Innovation for Competitiveness (P089865, US$250 million, 2005) Tertiary Education Student Assistance Project (P085593, US$171 million, 2005) CAS 95-97, 97-99, 99-02, 02-05 II. Upper Secondary Education DPL (P112262, US$700 million, 2010) Upper Secondary Education DPL II (P126297, US$300,751,879.70, 2012) Dissemination of study: “Educación Superior y Desarrollo en Oaxaca” (IO 2074684) (February 2013) Presentation to SEMS: “La Educación Media Superior Después de 5 años de Reforma” (April 2013) Learning exchange on Upper Secondary Education during a visit of SEMS authorities to World Bank Headquarters (May 2013) Convening Services Financial Services Broadening engagement [2004–2009] FY03-07 CPS FY08-13 CPS Consolidation [2013-beyond] Improving Skills for Enhanced Labor Market Productivity PKS (P128775, 2014) Upper Secondary Education DPL III (P147244, US$300 million, 2013) Workshop on and presentation of a Policy Note offering a disaggregated analysis of dropout determinants in Mexico (July 2013) FY14-19 CPS Operation Objectives 5. The proposed Development Policy Loan is the third in a programmatic series that supports the Government in the implementation of RIEMS to improve the internal efficiency and quality of EMS. The programmatic series supports actions in the following three areas addressing the key constraints of EMS: (i) improving flexibility of upper secondary education; (ii) enhancing quality of education; and (iii) reducing the opportunity 3 cost of upper secondary education. Actions supported by the DPL series will contribute to the internal efficiency of upper secondary education and lead to a reduction in the dropout rate. Graduates will be better prepared with the necessary skills for a modern workforce. 6. The first DPL supported the establishment of the National Upper Secondary Education System (SNB). Under the DPL, the World Bank supported the legal steps to formalize the reform and the definition of the first set of minimum standards needed for upper secondary graduates. The DPL also supported actions to establish a national evaluation system and a school accreditation system for EMS, as well as the establishment of the teacher training program (PROFORDEMS) and the consolidation of the EMS scholarship program. 7. The second DPL helped maintain the continuity of the reform and strengthening key institutions. With regards to the SNB, DPL II supported the completion of CompetencyBased Curriculum. In terms of quality, it furthered the EMS evaluation agenda, and endorsed actions that consolidated the institutional governance over the flagship teacher training program PROFORDEMS and that fortified the quality assurance system through COPEEMS. With regards to the opportunity cost of EMS, it supported actions related to targeted approaches to attracting and keeping poor students in school, such as the scholarship program. The second operation of the DPL was accompanied by technical assistance on a wide variety of issues, and will end in November 2013. 8. With this third DPL, the series addresses the most important reform to date for EMS, together with remaining critical actions to help consolidate the reform. Most important among the policy actions supported under this operation is the constitutional amendment rendering upper secondary education mandatory. The enactment of the associated law represents the most influential policy action for all those reaching the age for upper secondary education (15 to 18 years old). The prior actions flow directly from the indicative triggers and have been selected to reflect high priority policy and institutional measures central to RIEMS. Table 2 presents the indicative triggers and prior actions for DPL III. 9. Still, the reform is young, and will require more time to achieve the DPL series results indicators. As per Table 1, five of six results indicators are on-track, with the exception of the percentage of students scoring good or excellent on ENLACE for Spanish. Among the elements contributing to the results are a number of important gains across Reform areas. There are 668 schools evaluated for accreditation, of which 658 have gained entrance to the National Upper Secondary Education System (Sistema Nacional de Bachillerato). The government continues with the timely publication of student assessment results, including EXCALE, a detailed exam applied to representative samples of the school population. Agreements between the federal and state authorities have also been reached to implement programs combating student dropouts (previously clustered under SIGUELE). Progress has been slower with respect to enrolling, graduating and certifying teachers in the national teacher training program (Programa de Formación Docente de Educación Media Superior, PROFORDEMS) and in the adoption of the complete competency-based curriculum (CBC) by all the systems of the four service providers. With regards to PROFORDEMS, the new administration slowed the expansion of the program while it updated its design and relevance, a decision endorsed by the Bank, as reflected in prior action number 4. For the CBC, a considerable number of systems within the four types of providers accounting for 3,497,146 students (equivalent to 80.7 percent of the total EMS population) have adopted the 4 CBC. However, since this aspect of the reform is voluntary, it will be some time before all systems have adopted the new curriculum. Yet, it is important to mention that most state and autonomous systems (apart from the autonomous system operated by Universidad Nacional Autónoma de México, UNAM1) have joined the reform and actively participate in the reform’s activities. Table 1: Results of the RIEMS (as of August, 2013)2 Baseline (2008) 1. Improving Flexibility of Upper Secondary Education Upper secondary public schools that accept student transfers and validate 0% equivalencies, as share of total public schools in EMS 2. Enhancing Quality of Upper Secondary Education Completion rate in upper secondary education 58.3% Current (2013) End of DPL III (June 2015) 10.4% 12% 63.8% 65.0% Spanish: 52.3% 50.0% 53.0% Math: 15.6% 36.3% 37.0% Program Outcome Percentage of students scoring “good” or “excellent” on the ENLACE assessment in Spanish/Math Percentage of students attending Spanish: 26.6% 30.5% schools in very highly marginalized localities scoring “good” or “excellent” on the ENLACE Math: 6% 27% assessment Spanish/Math 3. Reducing Opportunity Cost of Upper Secondary Education Completion rates in EMS for the 47% 49% lowest income quintile Transition rate from lower to upper secondary school for the lowest income quintile 57% 1 63% 31.0% 29% 50% 64% UNAM is considered to have the highest quality of any public EMS system. Already having a well-recognized system UNAM sees few benefits on joining the reform for the institution or its students. 2 Years represent end of school year. For example, 2008 refers to school year 2007-2008, ending in June. 5 Table 2: Triggers and Prior Actions Indicative Triggers DPL III prior actions Comments 1. Improving Flexibility of Upper Secondary Education SEP issues rules (through acuerdo secretarial or other instrument) for the Certificado Nacional de Bachillerato. Dropped. The new Government has delayed the introduction of the Certificado Nacional de Bachillerato, instead using accreditation of schools as basis for establishing coherence system-wide. The Borrower has recognized equivalences of subjects across schools to facilitate the transfer of students between systems, as evidenced by: (i) the Borrower’s Decrees (which modified the General Education Law) duly published in the Official Gazette on June 10 and September 11, 2013; and (ii) Resolution No._______, dated June 14, 2013 issued by CONAEDU. New. This prior action is the last element required to render the EMS system more flexible for students. Having developed the Competency-Based Curriculum, the pending element to facilitate transfers of students between systems is the agreement among state and federal education authorities, as represented by CONAEDU, on the recognition of equivalencies, through the student registry. 2. Enhancing Quality of Upper Secondary Education SEP and INEE entered into partnership agreements with some states to disseminate results from the National Evaluation System. The Borrower has: (i) established INEE's mandate, functions and responsibilities and internal organization; and (ii) granted INEE full legal, technical and financial autonomy and new responsibilities, including those related to the evaluation of Upper Secondary Education, as evidenced by the Borrower’s Law (Ley del Instituto Nacional para la Evaluación de la Educación) duly published in the Official Gazette on September 11, 2013. 6 Reformulated to reflect new law. The prior action is stronger than the trigger. The trigger focused on dissemination of evaluation results while the prior action grants INEE full autonomy (including budgetary) from SEP to carry out all evaluation functions, hereby removing any possible conflicts of interest. This includes using evaluation results for informing education policy, thus creating a link between the Institute’s new legal attributions and the quality of education services. Indicative Triggers DPL III prior actions SEP has developed a policy for training part-time public teachers. SEP has developed a mechanism to officially recognize alternative teacher training programs. Comments Dropped. The new law establishing the professionalization of the teaching career (Ley del Servicio Profesional Docente) requires that all teachers (including part-time teachers) participate in professional development and training activities. The policy for training part-time teachers at the upper secondary level is still being developed. The Borrower has issued regulations to officially recognize alternative teacher training programs under the National Upper Secondary Education System, as evidenced by ACUERDO 15 issued by the Comité Directivo del Sistema Nacional de Bachillerato Sectorial, published in _____ on June 13, 2013. Reformulated to strengthen wording. This prior action builds on the indicative trigger of DPL II. 3. Reducing Opportunity Cost of Upper Secondary Education SEP carries out an evaluation of SIGUELE. The Borrower, through SEP, has introduced a new modality to award scholarships under SEP scholarship program in order to improve the targeting of students at risk of dropping out, as evidenced by SEP’s Acuerdo No. 690, published in the Official Gazette on August 19, 2013. 7 Reformulated to focus on government priority. Thus far, the new Government has focused on improving the largest element of SIGUELE, the scholarship program, using recent evaluations to inform the new directions of the program. Indicative Triggers Mexico has developed a policy framework that assures universal EMS. DPL III prior actions The Borrower has made Upper Secondary Education compulsory, as evidenced by the Borrower’s Decree (which modified the General Education Law) published in the Official Gazette on June 6, 2013. 8 Comments Reformulated to strengthen wording. This prior action flows directly from the indicative trigger. III. Rationale for Bank Involvement 10. This operation fits squarely under the “Increasing Social Prosperity” pillar of Mexico’s Country Program Strategy with the World Bank. The pillar aims to improve social prosperity and alleviate poverty through enhancing labor market productivity and improving education outcomes, especially for the poorest. This operation will contribute to more people completing upper secondary and with the right skills, thereby increasing productivity and boosting shared prosperity. What is more, both have a strong focus on equity: the pillar aims to reduce poverty and increase prosperity through increasing wages of those at the bottom of the income distribution. To do so, this operation focuses on improving the skills and preparedness for young Mexicans entering the labor market, with activities aimed at reducing the dropout rate of those in the bottom quintile. 11. The tailored suite of Bank services in the education sector is also well aligned to the CPS. This operation, the third in a programmatic series, is part of a larger package of services which include: i) knowledge services, especially with regards to policies for reducing dropouts, ii) convening services, featuring south-south activities with other recent experiences of secondary education reform (Brazil, Chile), and iii) financial services, including this and previous Development Policy Loans. IV. Tentative financing Source: Borrower International Bank for Reconstruction and Development Borrower/Recipient ($m.) 0.00 300.00 Total V. 300.00 Institutional and Implementation Arrangements 12. The Secretariat of Public Education (SEP), through its Under Secretariat for Upper Secondary Education (Subsecretaría de Educación Media Superior, SEMS), is responsible for the implementation of the DPL series. Although the reform represents a joint effort of many actors in the education sector, SEMS is the lead agency coordinating and supporting the reform. Together with the Secretariat of Finance and Public Credit (Secretaría de Hacienda y Crédito Público, SHCP), SEMS will collect the necessary data to assess the implementation of the program, including evidence on the achievement of prior actions, and reporting on progress toward output and outcome indicators. This implementation arrangement worked well for the previous operations of the DPL series. 13. Evaluation of the quality of EMS is at the heart of the reform, as well as the accompanying technical cooperation agenda between SEMS and the Bank. Specifically, this operation supports the establishment of a new autonomous agency that will be responsible for evaluating the performance of schools, teachers, and students throughout Mexico’s education system, and the technical assistance program that accompanies the DPL is heavily focused on evaluation. With regards to monitoring, the Information System for Education Management of EMS (Sistema de Información para la Gestión Escolar de la Educación Media Superior, 9 SIGEEMS) is a system operating in all federal schools issuing a clear diagnosis of the most important challenges in each school and the evolution of basic indicators over time, improving the effectiveness of schools’ improvement plans.3 SEMS is in a dialogue with States and other upper secondary education providers to develop a unitary information system for the schools, offering the SIGEEMS as the initial platform. Several systems have accepted this expanded system. In addition, many of the institutions created under RIEMS also have monitoring functions. COPEEMS, for instance, which systematically gathers data to evaluate the quality of individual schools for the purposes of accreditation, makes this data available to stakeholders. Fiduciary Aspects Public Financial Management 14. The public financial management (PFM) systems at the Federal level are adequate to support development policy lending in the country. This has been documented in several Bank reports (i.e. the Country Financial Accountability Assessment (CFAA), the Country Procurement Assessment Report (CPAR), and other analytical work, including knowledge services products and other DPLs approved in 2012. As envisioned in the last CPS, the Bank has been collaborating with the Government at the federal and sub-national level in strategic PFM areas aimed at modernizing and reforming public finances, and improving transparency and accountability of public expenditures. This has been supported through a flexible and tailored package of financial, knowledge and convening services. 15. During prior administrations, the Government introduced a number of laws and policy reforms in public finances aimed at improving fiscal responsibility and transparency by modernizing the budget process and creating a more efficient and transparent fiscal framework in line with international good practices. The current administration has launched a reform program and is working towards achieving various PFM reforms in areas such as budgeting, accounting, financial reporting, transparency, and modernization of its treasury operations, amongst others. The funding from this DPL will support the Federal Expenditure Budget (Presupuesto de Egresos de la Federación, PEF) and, accordingly, will be subject to provisions of the annual PEF Law, the Federal Budget and Fiscal Responsibility Law, the Government Accounting Law, and the Manual of Budget Procedures among others. The PEF is published in a timely manner and is available in the SHCP’s website4 for the current and prior years. 16. The set of legal and regulatory arrangements, together with the country financial management operating systems, provides for sound budget formulation, execution and internal control arrangements for execution of public expenditures. The Federal Government has implemented a financial information management system (Sistema de Contabilidad y Presupuesto, SICOP) at the federal level, and there are relevant advances regarding accounting harmonization at the Federal level. The newly created Evaluation Unit in 3 The SIGEEMS complements the existing Formato 911 monitoring system in the federal schools. The 911 system, which operates in all schools at both the basic and upper secondary levels, contains over 300 indicators. In addition to the school based indicators, SIGEEMS includes information on students, learning outcomes and annual goals set by the school principals. 4 http://www.apartados.hacienda.gob.mx/presupuesto/temas/pef/2013/index.html 10 SHCP in coordination with CONEVAL has been developing a system to measure program performance and consolidating evaluations. There is evidence that this program performance information is used during budget preparation between SHCP and line ministries. On treasury operations, the Government has made significant advances in modernizing its treasury operations and implementing a Single Treasury Account system. On internal control, the Government is undergoing a reform aimed at eliminating the Ministry of Public Administration (Secretaria de la Función Pública, SFP) and transferring some of its functions to the SHCP, which will eliminate the dependency of the Heads of the Internal Control Units to the SFP, establishing a line of reporting to the Head of each public entity. In parallel, there is an initiative for creating an Anti-Corruption Agency. Both proposals are related and are being discussed in Congress. 17. Notwithstanding the reform progress, there are important challenges in the implementation of some of these reforms. For example, regarding accounting harmonization, the overall implementation process at subnational level has faced major challenges, such as the lack of information systems to implement the accounting harmonization regulations; the SICOP only processes and consolidates information at an aggregated level, which entails that entities usually need to maintain their own information systems for keeping detailed accounting registries, and, it is still pending the issuance of a modernized Treasury Law. 18. As for external oversight, the Federal Supreme Audit Institution conducts, on a regular basis, a number of audits (i.e. financial, performance and compliance audits) on federal Government programs. The annual public accounts are prepared and sent to Congress within four months of the end of each fiscal year. The external audit of these accounts is undertaken by the Auditor General’s office and submitted to the legislature fourteen months after the end of each fiscal year in accordance with national legislation. Audit reports are comprehensive and there is a system in place to follow up on audit findings and recommendations, in coordination with the SFP. The results of audits by the Auditor General’s office are made public in the Annual Audit Report on the Federal Public Accounts. Recent amendments to the Federal Constitution and a new Law on Supreme Auditing and Accountability have contributed to the overall strengthening of country fiscal transparency and accountability. 19. The current Government has the objective to align public procurement more closely with economic expenditure policy, aimed at producing value for money, ensuring transparency, economy and efficiency, while improving the overall quality of the goods and services. In addition, operational changes as well as amendments to the legal and regulatory framework advanced in 2009 and 2010 have taken several important steps towards addressing the issues identified in previous World Bank assessments of the federal procurement system in Mexico (2007,5 2010,6 and 20117). As envisioned in the Country Procurement Strategy, the World Bank is collaborating with the Mexican Government in modernizing its public procurement and other 5 The World Bank Country Procurement Assessment Review (CPAR) of 2007 (prepared jointly with the IDB) identified issues in the public procurement system including excessive regulatory complexity and need for more effective governance and coordination. 6 Relevant aspects of the legal, operational and institutional structures of the federal procurement system in Mexico was reviewed as part of the Strengthening the Business Environment for Enhanced Economic Growth Development Policy Loan, November 2010. 7 World Bank Knowledge Services, November 2011 11 aspects of the PFM. This support is being provided by a number of knowledge services as well as lending instruments. 20. Mexico’s external sector has operated successfully under a foreign exchange rate regime. The exchange rate flexibility has been a key shock absorber of repeated bouts of global risk aversion, allowing sovereign and financial markets to remain stable. Although the exchange rate has fluctuated significantly, no major balance sheet or pass-through effects have occurred. In pursuing the reduction of excessive currency volatility, the central bank introduced a new Foreign Exchange rule last November, selling U.S. Dollars when the peso depreciates more than 2 percent in any given day. This has been considered to have an important signaling effect. Mexico has significant foreign exchange buffers to deploy if necessary to limit potential overshooting and dysfunctional market conditions. Mexico’s external position and real exchange rate are consistent with underlying fundamentals and desirable policy settings.8 Disbursement and Auditing 21. The SHCP has informed the Bank that Nacional Financiera (NAFIN) will be the financial agent of the Borrower with regard to this operation. Under this arrangement, upon effectiveness of the loan, the Bank will deposit the single tranche disbursement to a designated account in US Dollars of the financial agent9for subsequent credit by the financial agent to an account of the National Treasury (SHCP/Tesorería de la Federación, or TESOFE) used for budgeted expenditures. Based on the review of the financial agent’s 2011 and 2012 audit reports and the extensive experience between the Bank and the financial agent regarding funds flow from Bank-financed projects, there is no evidence that the banking control environment into which the loan proceeds would flow is other than adequate. 22. Based on the overall assessment of the borrower’s current PFM and the conclusion that the fiduciary arrangements for this DPL are adequate, the Bank will not require an audit of the designated account. During implementation, and after funds are disbursed, NAFIN would provide the Bank with a written confirmation supporting the described funds flow transaction in the above paragraph, and no additional fiduciary arrangements are deemed necessary. VI. Risks and Risk Mitigation 23. The overall Risk Rating is Moderate. The operation is subject to three sets of risks: i) macroeconomic risks; ii) political, governance and stakeholder risks, and iii) sector policies and institutions risks.10 With regards to macroeconomic risks, an economic slowdown could make it difficult for the Mexican Government and state governments to finance the reform program and provide additional resources. However, as explained in a previous section, the fundamentals of the Mexican economy do not lead to foresee a slowdown in coming years 2014 to 2016. Furthermore, the strong consensus on the importance of the reform makes it unlikely that the 8 Source: IMF Staff Report for the 2012 Article IV Consultation on Mexico. November 2012. The use of a financial agent and designated account is a local standard procedure established by the Government of Mexico, and the fiduciary roles and responsibilities of the financial agent are included in a legal agreement between the SHCP and the financial agent, called “Contrato de Mandato”. 10 For a more complete discussion of risks to the DPL series, see DPL II Program Document 9 12 macroeconomic situation will prevent the Government from implementing the reforms described in the MUSE DPL series. With regards to political risk, the new government has endorsed and even furthered the upper secondary education reform, and is unlikely to change course significantly, allowing the reform to consolidate gains and achieve its goals. However, the recent Constitutional Reform which aims to improve quality of education has caused a series of protests by the Coordinadora Nacional de Trabajadores de la Educación (CNTE), a Union which controls a small fraction of the basic education teachers in Mexico (100 thousand affiliated out of a total 1.3 million teachers). While some concessions have been made to CNTE through these negotiations, it is not expected that the overall program proposed under this DPL would be affected by this situation since upper secondary education (Educación Media Superior, EMS) teachers are not affiliated to CNTE. The teachers unions that do include EMS teachers, such as the Sindicato Nacional de Trabajadores en Educación, have generally supported the RIEMS. With respect to the institutional risk, there is a risk that the complex nature of the upper secondary education system could impact effective and timely implementation of the RIEMS. Currently, the system is characterized by more than thirty separate systems, with uneven technical capacity across federal, state, autonomous universities and private establishments that deliver EMS, a complexity that is compounded by the multi-institutional nature of the reform. This risk is mitigated by the creation of SEMS, which has strengthened the coordination of the system, and has placed the responsibility of the reform under the purview of one entity. The RIEMS has fostered collaboration and consensus among different actors, and introduced incentives for the different EMS education establishments to implement the reform, such as financial and technical support to keep pace with the reform, which also serves to mitigate the risk. VII. Poverty and Social Impacts and Environment Aspects Poverty and Social Impacts 24. The Reform will have only positive impacts on the poor, and is closing the gaps in both coverage and quality, helping the bottom 40 percent rise up. When fully implemented, the reform will lead to higher enrollment and graduation rates for the two poorest quintiles, bringing them closer to the national average. The Reform primarily targets public schools, where the great majority of disadvantage students are enrolled. Therefore, while the Reform should bring higher quality services to all students, students from public schools, with relatively more disadvantaged backgrounds, will benefit more than their peers in private schools. 25. The increase in coverage and graduation rates in recent years has been decidedly pro-poor. According to the ENLACE test, between 2008 and 2013, the proportion of students enrolled in the final year of EMS that attended a school located in a locality with a very high or high marginality index increased steadily from 8 percent to 10.5 percent (Table 4). 11 The change in the composition of students enrolled in EMS favoring disadvantaged students took place in a 11 The National Population Council (Consejo Nacional de Población, CONAPO) ranks all localities according to their marginality index, a weighted average of literacy, access to basic public utilities, household infrastructure and average wages. All localities are ranked with ratings from very high marginalization, high marginalization, medium marginalization, low marginalization, and very low marginalization. While there are a range of people living in each of these localities, there are few non-poor living in areas with high and very high marginalization. For all the methodological details see: http://www.conapo.gob.mx/ 13 context of increasing overall enrollment rates from 3.6 million in 2006 to 4.2 million students in 2011. Table 3: Percent of students in the final year of EMS, by marginality level Very High High Medium Low Very Low 2008 0.4% 7.6% 8.4% 17.7% 65.9% 2009 0.4% 8.1% 8.3% 17.8% 65.4% 2010 0.5% 8.5% 8.5% 17.7% 64.8% 2011 0.6% 8.6% 8.5% 17.5% 64.8% 2012 0.7% 9.2% 8.6% 18.0% 63.5% 2013 0.7% 9.8% 8.7% 18.1% 62.8% Source: ENLACE EMS 26. The evidence shows that education quality (as measured by learning outcomes of a standardized test) is improving for all, particularly the poor. Despite the fact that recent improvements in enrollment rates have provided access to more marginalized students who were typically excluded from EMS, ENLACE results show significant improvements in learning outcomes in mathematics and constant results in language. In 2008, 73 percent of students in the poorest localities (very high marginality) had unsatisfactory results in math compared to 42 percent in the richest localities (very low marginality). In 2013 these percentages fell to 45 and 25 percent, respectively, reducing the gap from an initial level of 31 percentage points to 20 percentage points, in a context of an overall improvement in math learning outcomes (Figure 2). As is shown by Figure 3, trends in learning outcomes in Spanish had shown a long term constant trend, however, the poor to rich gap in the proportion of students with an unsatisfactory result in Spanish decreased between 2008 and 2013. The improved access to EMS among poor students coupled with a disproportionate increase in learning for this same group suggests that the Reform had a profound effect on the system’s ability to provide equality of opportunities in Mexico. 14 Figure 2: Percent of students with an unsatisfactory result, math, by marginality 80 70 60 50 40 30 20 10 0 2008 2009 Very High 2010 High 2011 Medium 2012 2013 Low Very Low Source: ENLACE EMS 2008, 09, 10, 11, 12, 13 Figure 3: Percent of students in an unsatisfactory level of learning, Spanish, by marginality 50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 2008 2009 Very High 2010 High 2011 Medium 2012 Low 2013 Very Low Source: ENLACE EMS 2008, 09, 10, 11, 12, 13 27. There do not appear to be significant differences in coverage by gender, but learning outcomes vary. Traditionally, men received more education on average than women. This disparity has largely disappeared; among youth aged 15 to 17 years old, the enrollment rate 15 is 76 percent for both males and females. Overall, male students are significantly more likely to drop out of upper secondary before graduation, due to the higher opportunity cost of studying versus entering the labor market.12 In terms of learning outcomes, in Mexico as is the case in most developing countries, men do better in math and women in language.13 According to ENLACE, while the men-to-women gap in math has remained largely constant between 2008 and 2013, with men scoring 27 points higher than women (581 to 554), the gap in Spanish has increased over time, with women now scoring on average 30 points higher than men (506 to 476). Environmental Aspects 28. None of the elements under the proposed program are likely to have adverse effects on the environment. The program does not support actions linked to the construction or rehabilitation of schools, or other civil works that would likely impact the environment. No effect is expected on forest and other natural resources as per OP/BP 8.60 (Development Policy Lending). VIII. Contact point World Bank Contact: Peter Anthony Holland Title: Senior Education Specialist Tel: (202) 473-8095 Fax: Email: pholland@worldbank.org Borrower Contact: Juan Bosco Martí Ascencio Title: Titular de la Unidad de Asuntos Internacionales, Secretaría de Hacienda y Crédito Público Tel: +52 (55) 3688-1228 Email: bosco_marti@hacienda.gob.mx IX. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop 12 Instituto Nacional para Evaluación de Educación. 2011. La Educación Media Superior en México. For an explanation of gender differences in learning outcomes and their evolution overtime, see Guiso, Monte, Sapienza and Zingales (2008) “Culture, gender and math”, Science, vol, 320, May 2008. 13 16