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PROJECT INFORMATION DOCUMENT (PID) 
CONCEPT STAGE 
Report No.:  AB5258 
Project Name 
Education System Performance Project 
Region 
EUROPE AND CENTRAL ASIA 
Sector 
Primary education (50%);Secondary education (50%) 
Project ID 
P120305 
Borrower(s) 
THE REPUBLIC OF BULGARIA 
Implementing Agency 
Ministry of Education, Republic of Bulgaria 
Environment Category 
[
]
A
[
]
B
[X] C   [ ] FI   [ ] TBD (to be determined) 
Date PID Prepared 
November 25, 2009 
Estimated Date of 
Appraisal Authorization 
April 17, 2010 
Estimated Date of Board 
Approval 
July 20, 2010 
1. 
Key development issues and rationale for Bank involvement 
 
a. Context 
 
Bulgaria has recently introduced sweeping reforms of its education system to promote more 
autonomy and accountability of schools for better learning outcomes and improved efficiency of 
public spending.  
Per-student-financing and delegated budgets have led to a wave of school closures that 
had become essential in the wake of a dramatic decline in student numbers.  More than 300 schools have 
been closed in the past two years. Their closure has resulted in larger schools, with more opportunities to 
pool education resources (e.g. to provide students with better facilities), create larger class sizes and, in 
the future, attract and retain higher quality teachers. As opposed to the previous centralized system, 
school-based management with a considerable degree of decision-making power of the school principal 
has set the stage for schools to better adjust to local needs and opportunities for a better education. 
External student assessments are now routinely conducted and have substantially improved the evidence 
base for education policy-making, although the assessment system needs to be improved and made 
sustainable. Concerns remain as to the accountability of schools to the local community. While principals 
are accountable to the municipal authorities for the use of financial resources, parents have little formal 
ways of holding principals accountable for learning outcomes. 
 
The reform was launched in the face of dramatic challenges in terms of unsatisfactory learning 
outcomes, early school leaving and considerable inequities in the education system.
 
Bulgaria’s 
participation in international student assessments on the eve of the reform has laid out the extent of the 
challenge. For example, the OECD international assessment (PISA) revealed that more than 50 percent of 
Bulgarian 15-year-olds can barely read, while too many young Bulgarians are leaving the education 
system early.  This will have dramatic effects on productivity of labor in Bulgaria in view of the 
unfavorable demographics. Achieving the same standard of income with the advanced economies in the 
EU and supporting a growing number of retired people will fall on the shoulders of fewer Bulgarians. 
Creating more productive workers for the future implies investing in heightening the quality of the 
education that every child receives today. Bulgaria simply cannot afford to have as many socio-
economically disadvantaged children drop out of school as is currently the case.  
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The reform has achieved impressive outcomes in terms of improved efficiency of public spending; 
the Government intends now to take the next step in this ongoing reform effort: improvement of 
quality and equity by improvement of the accountability elements of the reform.
 
b. 
Key development issues 
 
Focus on quality
:
Many Bulgarian secondary school students leave education insufficiently 
prepared for the knowledge economy.  
While too few young Bulgarians are staying on in education, 
especially at higher levels, many who do stay in education do not acquire the necessary skills and 
competencies to compete in the knowledge economy and meet skill needs from employers 
–
marketable, 
often vocational, qualifications which would guarantee a job. But this also holds for generic, transferable 
skills increasingly needed nowadays where learning to learn competencies becomes crucial. As indicated 
earlier, more than 50 percent of Bulgarian 15 year olds scored very low on the PISA 2006 reading test – a 
significantly higher share than elsewhere in the EU – new and old Member States alike – and other 
developed economies. Other international tests, like TIMSS, also showed worsening of quality of 
education over time. 
Increased accountability for learning outcomes and results in schools is critical to the ultimate 
success of reform
.
Policy makers in the Ministry of Education need new instruments to hold school 
principals and mayors accountable for the added value of schools, particularly for student learning 
outcomes. The challenge is to build up the role of municipal authorities and school principals as active 
partners in identifying and implementing innovative solutions to improve the quality of education for all 
Bulgarians.
 
The system for student assessments that has been recently launched needs to be sustained to track 
performance at individual school level.  
Bulgaria has been building up systems of data collection, 
including on external student assessments. The challenge now is to (a) make the student assessment 
system sustainable, (b) ensure that all students in the grades assessed actually take the test, and (c) ensure 
that the system is effectively used to provide timely feedback on the education system overall, but also on 
how individual schools are doing and guide school improvement plans. The new, decentralized Bulgarian 
education system with school-by-school student assessment allows easier identification of poorly 
performing schools and, therefore, could tackle their problems in a targeted manner. This would also 
enable schools to become more accountable for their results, not just to Regional Inspectorates and to 
municipal authorities but to parents, employers and other stakeholders in civil society. 
 
Performance incentives for teachers and a renewed offer of professional development opportunities 
are key for improving quality of primary and secondary education
.
Over the last two years, important 
efforts have been made to attract, train, retain and reward effective teachers. Furthermore, a parallel 
initiative has been successfully implemented with regard to school directors. It is urgent now to finish this 
agenda, first by consolidating the role of the Institute of Directors and the career development system of 
school directors; and second by monitoring the initial outcomes of the differentiated payment scheme 
introduced a year ago by the Ministry of Education. The closure of the National Pedagogical Center, 
anticipated by a Ministerial Decree in June 2009, clearly leaves a vacuum in the teacher policy framework 
of Bulgaria that needs to be addressed immediately.    
Focus on equity
:
Bulgaria has an unusually wide dispersion in student performance.  
There is a high 
achievement gap between the top and bottom 20 percent of the student population and, as importantly, a 
large between-schools variation in student performance. In other words, there are many high quality 
schools but also many failing schools. This is consistent with anecdotal knowledge of vast 
underperformance of schools in socially excluded Roma localities. Although socioeconomic variables are 
obviously accounting for this dispersion, there are of course school and classroom factors which also 
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contribute to its explanation. A study on the determinants of learning carried out by the World Bank in 
2008 shows that the performance of students does not seem to be determined by the qualifications of 
teachers but rather by the size of schools (with smaller schools doing worse, controlling for other factors) 
and the instructional time students spend at learn
ing a particular subject, as well as students’ time spent on 
working on assignments.
1
Too many young Bulgarians drop out of school early without enrolling in training or joining the 
labor market
.
Close to 25% of the 15-24 year old were neither in employment, education nor training in 
2005 (Figure 1). Early school leaving has been particular pronounced among the Roma minority, with a 
considerable drop-out risk already at the primary level, often owing to inadequate learning environments 
in schools and at home.
2
In addition, the drop-out rates after the 7
th
 grade of 70% are staggering 
suggesting that the existing exams could be reconsidered to provide incentives for more inclusive 
education.  
Figure 1: Youth participation in education and employment 
education and employment status of 15-24 year olds, 2005
-30
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Source: Eurostat 
 
Rationale for Bank involvement  
 
The Bulgaria ESPP is in line with the priorities of the Country Partnership Strategy (CPS) for FY10-12
3
,
which focuses on improving the well-being of Bulgarians by fostering greater equity, sustainability, 
competitiveness and sound macroeconomic management.  
 
Additionally, the Bulgaria ESPP project design follows Bank/IEG recommendations for Bank investment 
in middle-income countries (MICs), including by: 
 
ƒ
Supporting and strengthening MIC own programs. This type of project is possible because the Bank 
operation is built on the client’s own reform agenda, programs and indicators. 
ƒ
Demonstrating and sharing best practices, and transferring knowledge. The ESPP design benefits 
from inputs from other performance-based projects, and lessons learned from this project may be 
useful to other Bank clients in ECA and elsewhere. 
1
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Bulgaria: Living Conditions before and after EU Accession.
 
3
Currently under preparation. 
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ƒ
Being more agile. The Project’s approach follows the government’s agenda and systems, which 
allows for more efficient preparation and implementation, while reinforcing the government’s agenda 
of strengthening the results orientation of its sectoral program.   
 
The World Bank as a long-term partner
:
The Bank’s support in the first stage of the education reform 
program (through the Social Sector Institutional Reform DPL series)  demonstrated the substantial value 
the Bank can bring to help align different levels of government in pursue of more efficient use of 
resources, more integrated services and, ultimately, better services.   Thus, the Bank’s support in the new 
stage of the reform program is a natural continuation of a successful partnership.  Bank support would 
help the Government of Bulgaria deepen the implementation and impact of the education reform program, 
which after successfully focusing on school network consolidation, now focuses on improving the quality 
of education at all levels and adoption of school-based management strategies.  Finally, the education 
sector would benefit from the Bank’s role in facilitating articulation of central-level, municipal-level, and 
school-level policies and programs. As a result, during the implementation period for this loan, we 
propose that MOE benefits from a non-reimbursable Technical Assistance focused on supporting the 
progress towards achieving the DLIs and leveraging world-class knowledge and information on relevant 
policy issues in the education sector. 
 
The choice of instrument:
 
The Bulgaria ESPP would be the first one in the Region that follows an 
approach with disbursements linked to measurable results. Due to its design, this project does not bring 
any “additionality” to the Bulgarian budget, thus eliminating the fiscal pressures frequently generated by 
Specific Investment Loans. For the Ministry of Finance, this is an important feature of this performance-
based design. On the other hand, for the MOE the main value-added lies in the Bank’s support to sharpen 
their results-focus and the ongoing supportive role that the Bank teams bring through their regular visits 
and accompanying technical assistance. The proposed approach directly responds to the Ministry of 
Education’s demand for continuous technical assistance from the Bank in the next stage of education 
reforms, while respecting the Ministry of Finance’s request that the loan does not generate additionality. 
 
2. Proposed 
objective(s) 
 
The proposed project would deepen the implementation and impact of ongoing education reforms by 
focusing on improvement of the quality of education. In particular, the specific project development 
objective is the following: 
 
1.  Improve the quality of basic education, through strengthening the education accountability 
framework. 
 
Proposed Project Development Indicators (PDIs). 
The proposed project development indicators are the 
following: 
ƒ
Percentage of schools with an operating School Board that sets performance goals for the 
school. 
ƒ
Percentage of schools led by a certified director. 
ƒ
Decrease in the number of students in the 4
th
 and 7
th
 grade excluded from taking the 
external student assessment 
ƒ
Percentage of schools with yearly gains in student performance, as measured by the 
external student assessments in grades 4
th
 and 7
th
.
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3. Preliminary 
description 
 
The project is to be implemented in three years between July 2010 and June 2013, and will be financed by 
a
World Bank loan in an amount of 

200 million.  These resources would be disbursed to the Treasury 
against budgeted and actual expenditures on an Eligible Expenditure Program (EEP) that has been 
identified as the per-student transfers to municipalities to finance 
school budgets known as “Single 
Standard”. These transfers finance recurrent costs paid at the school level (estimated 76% in salaries and 
24% in other recurrent costs). The project will not finance any civil works because no 
construction/rehabilitation is needed to achieve the PDOs. 
 
The project will follow a performance-based approach, and as such, project disbursements will be 
triggered by the achievement of agreed specific results that can include actions, outputs or outcomes. All 
these results gradually lead to the completion of the project development objective and each result will be 
linked to the disbursement of a specified loan amount.  The project will rely on Bulgaria’s public financial 
management (including budget and treasury), monitoring and reporting systems. 
 
The expected components are: 
 
Component 1
:
Strengthen accountability of schools
:
This component is aimed at creating school-based 
mechanisms by which communities and parents can participate in school decisions, provide support to the 
school leadership and staff, and press for improvement of service delivery and outcomes. The estimated 
disbursement linked to achievement of results in this component is 
50
million.
 
Component 2
:
Strengthen school leadership
:
This component is aimed at building the capacity of existing 
school leaders and creating a transparent mechanism for certification of school directors that guarantees 
the quality and effectiveness of school leaders, a critical element for the long-term success of a school 
autonomy reform. The estimated disbursement linked to achievement of results in this component is 
45
million. 
 
Component 3
:
Establish performance incentives for teachers and schools
.
This component is aimed at 
establishing incentives within the system for high-performing teachers and schools, while creating 
support and improvement mechanisms for municipalities with high numbers of failing schools. The 
estimated disbursement linked to achievement of results in this component is 
40 million.  
 
Component 4
:
Sustainable and improved external assessment system
:
This component is aimed at 
improving the technical design, data analysis, use, and dissemination of results of the external assessment 
system. It also intends to provide a scheme of operation that can make the external assessment system 
financially and institutionally sustainable. The estimated disbursement linked to achievement of results in 
this component is 
65 million.
 
4. 
Safeguard policies that might apply 
[Guideline:  Refer to section 5 of the PCN.  Which safeguard policies might apply to the project and in 
what ways?  What actions might be needed during project preparation to assess safeguard issues and 
prepare to mitigate them?] 
 
This project is rated an environmental Category C. No safeguard policies are triggered. The 
Environmental Assessment OP/BP 4.01 is not triggered as the project will include only financing schools 
staff salaries and recurrent costs which will not have environmental impacts.  
 
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5. Tentative 
financing 
 
Source: ($m.) 
Borrower 0 
International Bank for Reconstruction and Development 
200 
 Total 
200 
 
6. Contact 
point 
Contact: Alberto Rodriguez 
Title: Country Sector Coordinator 
Tel: (202) 458-8234 
Fax:  
Email: arodriguez@worldbank.org