$ Report No: RES00070 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF FSM Skills and Employability Enhancement Project APPROVED ON 02-May-2022 TO Federated States of Micronesia Social Protection & Jobs East Asia And Pacific Regional Vice President: Manuela V. Ferro Regional Director: Alberto Rodriguez Country Director: Stephen N. Ndegwa Practice Manager: Yasser Aabdel-Aleem Awny El-Gammal Task Team Leader(s): Sandor I. Karacsony The World Bank FSM Skills and Employability Enhancement Project (P176965) The World Bank FSM Skills and Employability Enhancement Project (P176965) @#&OPS~Doctype~OPS^dynamics@restrhybridbasicdata#doctemplate BASIC DATA Product Information Operation ID Operation Name P176965 FSM Skills and Employability Enhancement Project Product/Financing Instrument Geographical Identifier Investment Project Financing (IPF) Micronesia, Federated States of Approval Date Current Closing Date 02-May-2022 30-Jun-2027 Environmental and Social Risk Classification (ESRC) Moderate Organizations Borrower Responsible Agency Federated States of Micronesia FSM National Department of Education @#&OPS~Doctype~OPS^dynamics@restrhybridoperationstatus#doctemplate OPERATION STATUS Project Development Objective (DO) Original Development Objective To improve the quality of and equitable access to vocational education and skills trainings, to improve access to employment, and in case of an Eligible Crisis or Emergency, respond promptly and effectively to it. Disbursement Summary (in USD million) Source of Funds Net Commitment Disbursed Undisbursed % Disbursed IBRD -- -- -- 0 i The World Bank FSM Skills and Employability Enhancement Project (P176965) IDA 17.70 1.33 15.61 7.54 Grants -- -- -- 0 Policy Waivers Does this restructuring trigger the need for any policy waiver(s)? No @#&OPS~Doctype~OPS^dynamics@restrhybridmpa#doctemplate @#&OPS~Doctype~OPS^dynamics@restrhybridmpa#doctemplate ii The World Bank FSM Skills and Employability Enhancement Project (P176965) TABLE OF CONTENTS I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING ........................................................................................1 II. DESCRIPTION OF PROPOSED CHANGES ....................................................................................................................3 III. PROPOSED CHANGES ................................................................................................................................................7 IV. DETAILED CHANGE(S) ...............................................................................................................................................8 The World Bank FSM Skills and Employability Enhancement Project (P176965) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. This paper seeks the approval of the Country Director to restructure the FSM Skills and Employability Enhancement (“FSM SEE“) Project (Project, P176965). The proposed Level 2 restructuring is necessitated by significant changes in government counterparts’ priorities: first, to transform a major project deliverable, the FSM Skills Academy (FSA) from a single institution into a network of high-quality TVET centers throughout Micronesia; and second, the need to respond to increased demand for project-financed activities by local stakeholders. These imply (a) a reprogramming of Component 2 activities and corresponding financing, and (b) adjustments in the results matrix to reflect the reprogramming. The restructuring has been requested by the Government of FSM through a letter by the Secretary of Finance (MoF), dated September 13, 2024. The revised project implementation plan and budget presented by NDOE’s s Project Implementation Unit (PIU) has been found acceptable. 2. To achieve its development objective, the Project has been frontloading its investments in state-level TVET delivery capacity through performance grants as well as in labor market information. The implementation of performance grants, which are financed under Component 1 and supported through a state-of-the-art management information system developed with technical support by the Bank, is underway and on track in all four states. The relevant PDO-level indicators (“Number of participants of TVET programs who completed at least one year of market relevant TVET programs”; and “Number of TVET institutions successfully implementing performance grants for at least one year, awarded on the basis of equity criteria”) are on track to be achieved. The Project has also conducted an in-depth labor market assessment (“LMA”) – meeting one of the intermediate results indicators – yielding a long list of priority occupations in seven sectors that were prioritized by each state through a structured consultative approach involving private sector and government stakeholders, along with students and teachers / educators. 3. Due to delays in its establishment as well as a change in policy priorities, the government has changed the scope and operational approach of the FSM Skills Academy. Progress towards the flagship activity of the project, the reconstruction, rehabilitation, and inauguration of the FSM Skills Academy (FSA) –originally planned for rebuilding on the grounds of the (now-defunct) Pohnpei Agricultural and Trade School (PATS) – has been stalling since effectiveness. This is largely due to the inability of the College of Micronesia (COM-FSM, designated as the prospective manager of FSA by the Government) to resolve concerns related to the use of project funds within the project’s fiduciary framework. As a result, the Government has been unable to establish FSA as a public legal entity enacted by law to perform education services within the 12 months period following project effectiveness, leading to non-compliance with Paragraph 4.01 of the Grant Agreement. At the same time, the government has shifted its policy priorities, and instead of financing the construction of a single, Pohnpei-based institution, it is now envisioning a significant scale-up of project investments towards all TVET institutions in FSM, designating them as “state-level FSAs”. These include additional institutions not originally foreseen to be covered by the project and cover a higher number of beneficiary students. 4. The proposed restructuring will enhance the accessibility of TVET as well as quality and relevance of skills development at the foundational level throughout the country. Against this background, the rationale for the proposed restructuring is driven by the following priorities: a. Increased Access: i. TVET programs will be more inclusive by expanding the capacity of the local schools, and by offering opportunities to students from other, non-grant recipient (and / or non-TVET) schools. State-level FSAs will be equipped with renovated facilities and modern equipment tailored to the new CTE programs, ensuring that students have access to hands-on learning experiences essential for their skill development. This approach will foster collaboration between schools and will also ensures that students across and within the states have more equitable access to high-quality TVET education. Page 1 The World Bank FSM Skills and Employability Enhancement Project (P176965) ii. As a new project deliverable, NDOE is proposing to finance the provision of summer training bootcamps (including student financial support) which will further increase access to training opportunities for students and high school dropouts. b. Improved Quality and Relevance: i. The restructuring will enable the development and delivery of an increased number of new, market relevant TVET programs based on the 30 occupations identified by the LMA, significantly increasing the number of occupations (originally envisioned as seven), as well as soft skills training, ensuring that all participating schools offer high-quality education and training aligned with industry needs. ii. The restructuring will further allow for the integration of summer bootcamps linked to in-school youth apprenticeship programs and will ensure that students are well-prepared with essential soft skills and technical skills, improving their readiness for apprenticeships and the job market. Furthermore, the design, piloting, and refinement of apprenticeship programs will create structured pathways for students to smooth transition from education to employment. iii. The restructuring will increase the capacity for career counseling: at each of the FSAs, students and boot camp participants will receive personalized career guidance and support. This targeted approach will increase the number of beneficiaries receiving job search assistance and will empower youth to to make informed career decisions and successfully transition into the workforce. 5. The project’s procurement performance has been overall moderately satisfactory. Between October 2023 and April 2024, USD 1.1m (approx. 8%) disbursement has been made from a $17.7 million total envelope. There have been eight contracts signed for USD 250 thousand over 12 months. The disbursement lag is due to the cancellation of the FSA civil works, and while key contracts were signed in the latest reporting period, the rate of disbursement comparatively with the revised commitment amount will need to increase to upgrade the procurement rating. In this respect, the last implementation support mission highlighted the need to effectively reprogram funds that go unused due to FSA cancellations. Simultaneously, procurement activities related to key consultancies on curriculum development and training have yet to start. The RFQ goods activities for each high school contain many different types of goods and have mostly been developed with some payment delays associated. The works activities require further engagement from the Department of Transportation, Communications and Infrastructure (DTCI) on building inspector verification agents to supervise high school buildings, which risk delaying the processing of RFQs. Additionally, BOQs will need to be prepared by DTCI to avoid errors with priced BOQ’s delaying procurement activity launch. 6. The FM performance has been satisfactory, and the FM residual risk remains substantial. This is mainly due to (i) the implementation of the expanded performance grants for schools, (ii) student stipend disbursement mechanisms, and (iii) continued delay in the submission of the audit reports. The proposed mitigation measures are the following: a. To update the performance grants manual, including students' stipend, to update the eligible institutions and costs and the disbursements mechanisms. A pilot apprenticeship stipend program implemented between March and May 2024, with participation of 6 students has been successfully completed and the total costs of USD 750 has been paid for stipend and fuel costs. There was good coordination been national and state government to facilitate payments. The payments were made using checks with a three-months delay due the delay in the submission and verification of required documents. b. Project audit arrangements have been undertaken starting FY23, and audit fees have been reflected in the FY25 AWPB. The project disbursement rate is at 7.54%. The IFRs have been timely and acceptable, and withdrawal applications have been regularly submitted. The AWPB is prepared in a timely manner and is being closely monitored to inform Page 2 The World Bank FSM Skills and Employability Enhancement Project (P176965) project implementation. The project’s contract and fixed asset register are well-maintained. There is good coordination between the CIU FO and the PIU team. II. DESCRIPTION OF PROPOSED CHANGES 7. The restructuring will establish the network of designated TVET centers – “FSAs” – in all FSM states. This restructuring will lead to the transformation of the first-year recipient schools of the performance grants (i.e., Pohnpei Island Central School, Chuuk High School, Kosrae High School, Yap High School) into designated “FSM Skills Academies” (FSAs)1. Each of these FSAs will strategically focus on specific sectors and occupations, allowing for tailored high school- level TVET offerings and workforce readiness programs, which will also be open to high school dropouts. The coordination mechanism of FSAs will allow for improved collaboration within and between states, thereby maximizing the impact of skills training. A summary of the revised structure of performance grants has been included as Table A.1 in the Annex. A summary of all envisioned changes to the project’s results framework and corresponding budget revisions have been provided as Annex Tables A.2 and A.3 respectively. NDOE’s updated work plan of key project activities is presented in Figure A.3 of the Annex. Component 1: Improving equitable access to vocational education and training 8. Component 1 will receive an additional investment of USD 5,140,100 to (i) finance performance grants for an increased number of state schools; (ii) provide grant resources for (public and private) schools in beneficiary states outside of the regular grantee schools; and (iii) increase the number of stipend recipient students. This additional investment will increase total allocation in this component from USD 3,330,000 to USD 8,470,100. 9. The performance grants will be scaled up for FSAs and will also be provided for more schools – increasing the number of beneficiary institutions. The restructuring will enable (i) additional investments in performance grants; and (ii) increased access to high-quality TVET programs by incorporating two private high schools into the performance grant program2. The current four grantee schools (PICS, CHS, YHS, KHS) will receive larger grants starting from the upcoming grant cycle (November 2024): specific grant amounts will be determined following a joint (NDOE / WB) review of the first- year grant cycle. Based on the implementation experience of the first cycle of the performance grants, funds will continue to be available for small renovation works to be conducted in grantee schools. In selected, exceptional cases, grants may also be used to finance new construction of school buildings and other facilities as well. These expanded investments will increase the number of schools benefiting from the performance grant program nationwide from five to seven. 10. Additional investments will be delivered for schools outside of the performance grant program as well – increasing the number of beneficiary students. FSAs in Pohnpei, Chuuk and Yap will include a specific budget allocation within their performance grant envelope to support at least two non-grant recipient high schools in each state. These investments will allow for the training of master instructors and instructors, curriculum adoption and delivery, as well as financial support for student participation in TVET programs at FSAs or workforce readiness programs. These additional activities will be reflected in the schools’ yearly performance grant implementation plans. This approach will ensure that non-grant recipient high schools can also benefit from the revised performance grant schemes, thereby expanding the project’s scope and impact. This expansion will increase the outreach of the program towards students that are still 1 This decentralized, state-centered approach is a return to the government’s original vision for the project, which – at the time of project preparation – it had departed from in favor of centralizing investments into a single institution. 2 These new recipients will be expected to already have TVET programs or electives in place, or to have the capacity to deliver such programs as grant recipients. They will start receiving their first-year allocation of US$125,000 from October 2025 onwards. The selection of these two new grantee schools will be led by the respective State Departments of Education (SDOEs) and this consultation process will be held via the FSM Association of Chief State School Officers (FACSSO – chaired by NDOE) meetings planned for the remainder of 2024 and in 2025. Page 3 The World Bank FSM Skills and Employability Enhancement Project (P176965) considering their pathways and is expected to improve conditions and skills development opportunities in general education classes as well. 11. The restructuring will finance the provision of student financial support to a higher number of beneficiaries. In order to strengthen equitable access to TVET, the restructuring will allow the expansion of financial support to a wider pool of students. Such students will be those who successfully complete the bootcamp or those seeking allowances for selected apprenticeships. Payment mechanisms will follow operational and institutional procedures set out in the Student Financial Support Manual. These investments will increase financial assistance from its current target of 80 to 200 students. Component 2: Improving the relevance and quality of TVET 12. Investments in Component 2 of the project will decrease by USD 5,225,100. This decrease is largely driven by the government’s decision to change the scope of the FSA. Instead of financing the construction of a single, Pohnpei-based institution through the rehabilitation of PATS, it is now planning for a significant scale-up of project investments towards all TVET institutions in FSM, designating them as a network of state-level FSAs. This change in scope brings total allocation in this component from the original USD 11,560,000 down to USD 6,334,900. 13. FSAs will offer courses in vocations most in demand as indicated by private sector stakeholders and these will be supported by more investments in in curriculum and teacher training. In the course of the recently completed LMA, a total of 36 priority occupations in seven different sectors – tourism, energy, construction, automotive, agriculture, IT, and creative industries – have been collectively identified by government and private sector stakeholders as well as students and educators in all four states3, with each state strategically focusing on one key sector at the initial stage. Against this background, curricula will be developed or adapted from existing ones from other institutions and delivered for at least six industries. With the restructuring, NDOE proposes to reallocate more resources to Subcomponent 2.2 (curriculum development) and Subcomponent 2.3 (training of master instructors and instructors). The selected industries and occupations are outlined in Figure A.1 in the Annex. 14. Through the restructuring, FSAs will also receive additional investments to strengthen soft skills among their student cohort. During the LMA, stakeholders have also identified missing soft skills as a critical barrier for TVET students’ job prospects. In response to this demand, NDOE is using the restructuring to unlock additional investments towards the development of soft skills training programs, to be delivered as part of the main curriculum. Programs will be piloted during the first summer bootcamp (planned for the summer of 2025, discussed further under 10.b). Once the piloting of soft skills training is successfully completed, it will be gradually incorporated as part of new TVET programs (and, if schools so choose, in academic programs as well) starting from September 2025. 15. The restructuring will further allow more investments in TVET students’ workforce readiness. The restructuring will enable NDOE to place a stronger emphasis on providing technical support to the states in building or enhancing workforce readiness programs for high school students. This will be achieved through the following two sets of activities (also summarized in Figure A.2 in the Annex): a. Design and piloting of apprenticeship programs. In response to strong demand indicated in the LMA by stakeholders, the project will finance the development of standard operating procedures (SOP) and toolkits / materials in order to support apprenticeship programs and school-level career support for TVET students. Training will be provided to schools and industries across all four states to ensure the effective development and implementation of these programs. This comprehensive approach will involve designing an 3The labor market assessment was carried out in the spring and summer of 2024 and involved desk research on relevant policies and programs in each state, as well as a series of interviews with about 160 respondents followed by a participatory consultation workshop for the identification of priority occupations, involving all relevant stakeholders. Page 4 The World Bank FSM Skills and Employability Enhancement Project (P176965) apprenticeship framework, piloting it in selected schools and industries, gathering feedback, and refining the programs to ensure their effectiveness and close alignment with industry needs. b. Summer bootcamps linked to apprenticeship programs. Through the restructuring, NDOE will finance the development and piloting of summer bootcamps where selected high school students from all four FSM states will be trained on a wide range of soft skills and technical skills in selected industries. Those who successfully complete the programs will be eligible for apprenticeship programs in their own states. This initiative aims to ensure that in-school youth apprentices are equipped with essential soft skills so that during on-the-job learning, they can further refine these skills while gaining hands-on work experience. Linking a summer bootcamp to apprenticeship programs aims to address this issue and facilitates the development of a skilled workforce in the FSM. This proposal may be closely aligned with another potential nation-wide policy initiative with the NDOE's upcoming workforce development program targeting out-of-school youth aged 18- 24. By closely aligning the NDOE program with the project’s resources, these efforts will create a cohesive environment that not only supports in-school apprenticeships but can also directly help out-of-school youth to reengage in skills development and (re)enter the labor market. Component 3 – Improving labor market information and employment services 16. Investments in Component 3 of the project will remain at its current level of USD 520,000. However, performance grant resources towards tailored career guidance and support will be increased through this restructuring. Recognizing the importance of career guidance in facilitating successful transition from school to work, the project will provide tailored support for TVET students and participants in training programs at FSAs. This includes the recruitment and training of career counselors designated specifically for FSAs, ensuring that students receive personalized guidance tailored to their career aspirations and market demands. This investment will increase the number of students benefiting from job search assistance from its current target of 800 to 1000. Component 4 – Project Management 17. Allocation for Component 4 of the project will increase by USD 85,000 to reflect increased costs of NDOE staff travel to states, given the need for continued local-level implementation support for the FSAs. Furthermore, the PIU can benefit from additional resources4, specifically, dedicated support to the project in procurement and safeguards, to be provided as part of the ongoing CIU reorganization efforts. Total allocation in this component will increase from its original allocation of USD 2,290,000 up to USD 2,375,000.5 Implementation Arrangements 18. Informed by lessons learned of the first stage of project implementation, this restructuring will introduce changes in implementation arrangements. The FSM Association of Chief State School Officers (FACSSO, chaired by NDOE) and the State Departments of Education (SDOEs) will play a vital role in ensuring the successful implementation of the newly proposed performance grant strategy. a. The FACSSO will serve as a crucial platform to ensure high-level coordination and decision-making (such as the selection of new performance grantee schools). By regularly convening the NDOE and Directors of the four SDOEs, FACSSO meetings will provide a structured collaborative forum for identifying and discussing high- level opportunities, issues and challenges. 4The proposed component allocation does not reflect these potential additional resources. 5While the client request had included a proposal for significant budget reallocations towards this component – in the amount of USD 1,175,000 – this budget scenario was linked to the client’s proposed extension of the closing date, which would have necessitated an 18-month extension of PIU operations. However, as discussed in Paragraph 19, this extension request is not being considered at this time. Page 5 The World Bank FSM Skills and Employability Enhancement Project (P176965) b. SDOEs will play a vital role in coordinating efforts at the state level, ensuring the smooth implementation of the performance grants program. The development process of the yearly implementation plans will be led by the grantee schools, with support and oversight from the respective SDOEs and the PIU. The SDOEs will facilitate communication between the FSAs and non-grant recipient schools, ensuring that state schools will continue benefiting from training of instructors, adopting and delivering curricula, and/or providing financial support to student participation in TVET programs. Other responsibilities will include ensuring budget allocations to engage selected non-grant recipient schools in the FSAs’ implementation plans. c. The current Performance Grant Agreement – adopted by NDOE in November 2023 – will be revised to reflect changes in the implementation of the performance grant programs. 19. The PDO remains to be achievable with the changes proposed and within the current project timeframe. NDOE remains to be committed to achieving all PDO targets within the existing project timeline. The foundational elements of the project, including the implementation of Performance Grants and the preparation for developing TVET programs, are already in place and are operational. Leveraging the upcoming cycle of Performance Grants will maximize the number of students and schools involved in the project. This approach can ensure that targets are met – and some indicators slightly exceeded – within the current timeframe. The Bank team’s assessment found these underlying elements to be robust and the revised disbursement projections to be credible. The team is further satisfied with the outcomes of NDOE’s ongoing efforts to review progress and build on operational and fiduciary lessons learned from the first 18 months of project implementation following project effectiveness. While NDOE has indicated that an additional 18 months of project operations past the current closing date of June 2027 would offer the opportunity to exceed the current targets6, the Bank team is of the view that the proposed changes of this restructuring do not warrant an extension at this time. Summary of Performance of E&S Risk Compliance Environmental and social performance is currently rated as moderately satisfactory. The project is being implemented under the Environmental and Social Framework (ESF), and an Environmental and Social Commitment Plan (ESCP), Stakeholder Engagement Plan (SEP) and Labor Management Procedures (LMP) were prepared during project preparation, which are being implemented. Whilst there have been some delays in implementing broader E&S activities, efforts are being made by the CIU and PIU to undertake required due diligence work, including continuous stakeholder engagement, screening of E&S risks of performance grant activities related to small scale renovation in schools, as well as the establishment of a functional grievance mechanism which is accessible on the DoFA website. Activities to be financed under the restructuring comprise small-scale renovation works, including some potential new small-scale construction in exceptional cases, financing of the summer training bootcamp and apprenticeships. These activities pose potential environmental and social risks including risks related to worker and labor protection and health and safety, community health and safety, and sexual exploitation and abuse and sexual harassment (SEA/SH). However these can be readily managed through project design and effective risk management measures. Activities under the proposed restructuring will not involve any large scale, significant and/or irreversible impacts, nor are there any potential indirect and/or long- term impacts due to anticipated future activities in project areas. As such, the E&S rating will remain Moderate. Minor revisions will be required to the ESCP, SEP and LMP for these additional activities, as well as to remove measures associated with the PATS refurbishment which will no longer be financed under the project. Activities will be screened for environmental and social risks and impacts, and screening will recommend management tools to be prepared proportionate to the scope and risk of the activity. The CIU is staffed with an International Social Specialist, and an International Environmental Specialist. Recruitment for a local Social Safeguards Officer is underway following the departure of the local CIU Safeguards Officer in June 2024. The CIU E&S staffing arrangement will provide sufficient capacity to continue to effectively manage the E&S risks and impacts of the project. 6 The potential targets of a possible future project extension are elaborated in the right-hand column of Table A.2 in the Annex. Page 6 The World Bank FSM Skills and Employability Enhancement Project (P176965) Describe any E&S issues and impacts associated with the change in project design. Identify and describe any potential large scale, significant and/or irreversible impacts. Describe any potential indirect and/or long-term impacts due to anticipated future activities in the project areas. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. Describe measures taken by the borrower to address E&S policy issues. Provide an assessment of borrower capacity to plan and implement the measure described. Identify key stakeholders and describe the mechanism for consultation and disclosure on E&S policies, with an emphasis of potentially affected people. @#&OPS~Doctype~OPS^dynamics@restrhybridsummarychanges#doctemplate Summary changes III. PROPOSED CHANGES Operation Information Proposed Changes Operation Information Proposed Changes Results Yes Reallocations Yes Legal Covenants Yes Institutional Arrangement Yes Conditions Yes Implementation Schedule Yes Disbursements Estimates Yes Loan Closing Date Extension No Appraisal Summary Yes Loan Cancellations No Components Yes Financial Management No Development Objective No Procurement No Summary Description No (Operation Abstract) Legal Operational Policies No MFD/PCE No Page 7 The World Bank FSM Skills and Employability Enhancement Project (P176965) Risks No Implementation Modalities No Disbursements Arrangements No DDO No Clients No @#&OPS~Doctype~OPS^dynamics@restrhybriddetailedchanges-disclose#doctemplate IV. DETAILED CHANGE(S) COMPONENTS Current Current Proposed Proposed Cost Action Component Name Cost (USD) Component Name (USD) Component 1: Improving Component 1: Improving equitable access to 3,330,000.00 Revised equitable access to vocational 8,470,100.00 vocational education and education and training training Component 2: Improving the Component 2: Improving the relevance and quality of 11,570,000.00 Revised 6,334,900.00 relevance and quality of TVET TVET Component 3: Improving Component 3: Improving labor labor market information 520,000.00 Revised market information and 520,000.00 and employment services employment services Component 4: Project Component 4: Project 2,290,000.00 Revised 2,375,000.00 Management Management Component 5: Contingent Component 5: Contingent Emergency Response 0.00 No Change Emergency Response 0.00 Component Component TOTAL 17,710,000.00 17,700,000.00 COSTS & FINANCING Private Capital Facilitation Is this an MFD-Enabling Project (MFD-EP)? Is this project Private Capital Enabling (PCE)? Page 8 The World Bank FSM Skills and Employability Enhancement Project (P176965) LOANS Reallocations IDA-D9870-001 Cancellations (if any): New Allocation: Currency: XDR 0.00 0.00 Financing % (Type Total) Category Expenditure Current Actuals + Proposed No. Category Allocation Committed Allocation Current Proposed 1 Gds Wrks NCS CS Trng 3,300,000.00 248,332.21 6,694,074.38 100.00 100.00 IOC; 2 Gds Wrks CS NCS 6,710,000.00 0.00 344,212.00 100.00 100.00 Insurance Stipends; 3 Performance Grants 2,045,000.00 0.00 5,658,062.00 100.00 100.00 Pt 1.2a and Pt.2.1a; 4 Sub-Grants under Pt 470,000.00 0.00 0.00 100.00 100.00 2.1b; 5 PPF REFINANCING; 175,000.00 3,651.62 3,651.62 0.00 0.00 6 Emergency 0.00 0.00 0.00 100.00 100.00 Expenditures; Total 12,700,000.00 12,700,000.00 DISBURSEMENTS Operation Dates & Projection Details Reasons to change the full Disbursement date and/or the projection Restructuring Implementation Start Date Operation Closing Date 02-May-2022 30-Jun-2027 Projected Date for Full Disbursement 31-Oct-2027 Expected Disbursements (in US $) (Absolute) Original Estimation at Preparation Actual Year Revised Estimation (Approval Package – 02 May 2022) FY2022 560,000.00 0.00 0.00 FY2023 2,760,000.00 0.00 0.00 Page 9 The World Bank FSM Skills and Employability Enhancement Project (P176965) FY2024 3,560,000.00 0.00 1,229,371.91 FY2025 4,300,000.00 3,900,000.00 105,534.14 FY2026 4,750,000.00 6,750,000.00 0.00 FY2027 1,770,000.00 6,050,000.00 0.00 FY2028 0.00 1,000,000.00 0.00 ENVIRONMENTAL & SOCIAL Environmental & Social Assessment According to the E/S Specialist are there changes proposed to the operation’s design that Yes would impact the Bank’s E&S assessment?” LEGAL Legal Covenants Loan/Credit/TF Description Status Action The Recipient shall prepare and furnish to the Association by not later than four (4) months after the Effective Date and August 1 of each year for every subsequent IDA-D9870 Complied with No Change year during the implementation of the Project for the Association’s review and no- objection, an annual work plan and budget. (Schedule 2, Section I.F.1) The Recipient shall prepare and adopt by not later than three (3) months after the Effective Date (or such other date IDA-D9870 Complied with No Change as may be agreed with the Association in writing), a Project Operations Manual. (Schedule 2, Section I.E.1) Without limitation to the provisions of Section 5.03 of the General Conditions, the Recipient shall ensure that IDA-D9870 sufficient budget is allocated for the FSA in Not yet due Mark for Deletion accordance with the amounts and timelines set out in the Annual Work Plans and Budgets. (Schedule 2, Section I.B.4) The Recipient shall establish the IDA-D9870 Not complied with Mark for Deletion FSA as a public legal entity enacted by law to Page 10 The World Bank FSM Skills and Employability Enhancement Project (P176965) perform education services in accordance with the laws and regulations of the Recipient, such that the FSA has the capacity to carry out the objectives, functions and obligations assigned to it under the Project; and thereafter maintain the FSA for the duration of the Project in a form and with functions and management satisfactory to the Association, for the purposes of meeting the objectives of the Project (Schedule 2, Section I.B.1) For the implementation of Part 2.1(b) of the Project, the Recipient, through NDOE, shall make Sub-Grants to the FSA in accordance with criteria and procedures acceptable to the Association and as set IDA-D9870 forth in the POM (Schedule 2 I.D.1). The Not yet due Mark for Deletion Recipient, through NDOE, shall make the Sub-Grants to the FSA under a Sub-Grant Agreement with the FSA on terms and conditions approved by the Association (Schedule 2 I.D.2) For the implementation of Part 1.2(a) of the Project, the Recipient, through NDOE, shall make Performance Grants to Eligible TVET Institutions in accordance with the minimum conditions, performance criteria and disbursement arrangements acceptable to the Association and set forth in IDA-D9870 Complied with No Change the PGOM (Schedule 2 I.C.3). The Recipient, through NDOE, shall make each Performance Grant under a Performance Grant Agreement with the respective Eligible TVET Institution, on terms and conditions approved by the Association (Schedule 2 I.C.4) For the implementation of Part 1.1(a)(i) of the Project, the Recipient, through NDOE, shall ensure that the IDA-D9870 Not yet due No Change selection and enrolment of Eligible Students and the provision of Stipends are conducted in accordance with the provisions of the Page 11 The World Bank FSM Skills and Employability Enhancement Project (P176965) Financing Agreement and the POM, all in a manner satisfactory to the Association (Schedule 2 I.C.1) The Recipient shall prepare and adopt, by no later than December 31 of the fourth year of the Project implementation period (expected to be 2026), a costed, IDA-D9870 Not yet due Mark for Deletion multi-year institutional development plan for the inclusion of the FSA into the Recipient’s budgetary and administrative structure following the Closing Date (Schedule 2 I.B.3.) Without limitation to the generality of the foregoing, the Recipient shall: (a) ensure that it acquires and thereafter retains adequate title and rights to the land upon which the FSA campus is located and to FSA assets for the purposes of meeting the objectives of the Project, in a manner consistent with the ESS Instruments, and in form and substance satisfactory to the Association; (b) through NDOE and in accordance with the criteria and timeline set IDA-D9870 out in the POM, establish and thereafter Not complied with Mark for Deletion maintain a Board of Directors for the oversight of the FSA in form, composition and with functions satisfactory to the Association; and (c) in accordance with the criteria and timeline established in the POM, enter into and thereafter maintain an agreement with a FSA Manager, with terms of reference and qualifications satisfactory to the Association, to manage the day-to-day operations and administration of the FSA in accordance with the POM. (Schedule 2 I.B.2.) The following memoranda of understanding (MOU) are entered into no later than 3 months after project effectiveness (or such other date as may be IDA-D9870 Not complied with Mark for Deletion agreed in writing): (a) an MOU between NDOE and DTC&I setting forth the objectives, scope and details of the cooperation, roles and responsibilities and expected Page 12 The World Bank FSM Skills and Employability Enhancement Project (P176965) achievements of each respective party with respect to the implementation of subcomponent 2.1(a). (b) an MOU between NDOE and DRD setting forth the objectives, scope and details of the cooperation, roles and responsibilities and expected achievements of each respective party for the purposes of facilitating subcomponents 2.4 and, 3.1 and 3.2. (Schedule 2 I.A.5) The Recipient shall maintain, throughout the Project implementation period, the Central Implementation Unit, with mandate, composition and resources satisfactory to the Association, which shall IDA-D9870 Complied with No Change be responsible for, inter alia, providing environmental and social, procurement, financial management, monitoring and evaluation and communications support for the Project (Schedule 2 I.A.4) The Recipient shall, by not later than three (3) months after the Effective Date, establish and thereafter maintain throughout the Project implementation period, a Project Implementation Unit within IDA-D9870 Complied with No Change the NDOE, with mandate, composition and resources satisfactory to the Association, which shall be responsible for day-to-day management and implementation of the Project (Schedule 2 I.A.3.) The Recipient shall, by not later than three (3) months after the Effective Date, establish and thereafter maintain throughout the Project implementation period, a Project Steering Committee, chaired by the Secretary of the NDOE (or IDA-D9870 their representative), comprised of, inter Complied with No Change alia, the Secretary of the DOFA (or their representative), Directors (or their representatives) responsible for education from the State Governments appointed by the respective state governor, representatives from DRD and DTC&I, and Page 13 The World Bank FSM Skills and Employability Enhancement Project (P176965) other members identified in the POM; and with an institutional framework, functions, and resources required for the implementation of the Project, all in form and substance satisfactory to the Association (Schedule 2 I.A.2) Conditions Type Description of Conditions Action Under Category (2) unless and until the Association has received evidence to its satisfaction that the Recipient has: (i) adopted the POM, in form and substance satisfactory to the Association; (ii) established the FSA as a public legal entity enacted by law to perform education services in accordance with the laws and regulations of the Recipient, such that the FSA has the capacity to Disbursement perform the objectives, functions and obligations Marked for Deletion assigned to it under the Project; and (iii) acquired adequate title and rights to the land upon which the FSA campus is to be located and to FSA assets for the purposes of meeting the objectives of the Project, in a manner consistent with the ESS Instruments, and in form and substance satisfactory to the Association (Schedule 2. III.B.1 (b)). For Performance Grants under Category (3) unless and until the Recipient has adopted the PGOM in form and Disbursement No Change substance satisfactory to the Association (Schedule 2. III.B.1 (c)). For Sub-Grants under Category (4) unless and until the Association has received evidence to its satisfaction that the Recipient has: (i) met the conditions set out under Disbursement Schedule 2. III.B.1(b); and (ii) through NDOE, entered Marked for Deletion into a Sub-Grant Agreement with the FSA in form and substance satisfactory to the Association (Schedule 2. III.B.1(d)). For Emergency Expenditures under Category (6), unless and until all of the following conditions have been met in respect of said expenditures: (i) (A) the Recipient has Disbursement determined that an Eligible Crisis or Emergency has No Change occurred, and has furnished to the Association a request to withdraw Financing amounts under Category (6); and (B) the Association has agreed with such determination, Page 14 The World Bank FSM Skills and Employability Enhancement Project (P176965) accepted said request and notified the Recipient thereof; and (ii) the Recipient has adopted the CERC Manual and Emergency Action Plan, in form and substance acceptable to the Association (Schedule 2. III.B.1(e)). Page 15 The World Bank FSM Skills and Employability Enhancement Project (P176965) RESULTS COUNTRY: FSM Skills and Employability Enhancement Project @#&OPS~Doctype~OPS^dynamics@restrannexpolicyandresult#doctemplate PDO Indicators by PDO Outcomes To improve quality of and equitable access to vocational education and skills trainings Indicator Name Baseline Actual (Previous) Actual (Current) Closing Period Result Month/Year Result Date Result Date Result Month/Year Revise Number of participants of TVET 0.00 Dec/2021 0.00 13-Jun-2024 0.00 13-Jun-2024 4,000 Jun/2027 programs who completed at least one year of market relevant TVET programs (disaggregated by gender and disability status) (Number) Revise Share of female 0.00 0.00 0.00 35.00 participants (Percentage) Revise Number of participants 0.00 0.00 0.00 320.00 with disabilities (Number) ReviseNumber of TVET institutions 0.00 Dec/2021 0.00 13-Jun-2024 0.00 13-Jun-2024 7.00 Jun/2027 successfully implementing Comments on achieving targets This indicator captures the outcome of the performance grant to enhance access and equity for students from performance grants for at least one socioeconomically disadvantaged families and students with disabilities. The successful implementation means year, awarded on the basis of equity the disbursement took place, expenditures were in compliance, and results were achieved. The performance criteria (socio-economic and / or indicators will be defined in the Performance Grant Operational Manual (t be developed) and included in the disability status of students) grant agreement between the TVET institution and NDOE during the implementation. The TVET institutions will (Number) participate in a phased approach: 4 schools in the first 3 years, 5 in the 4th year and 6 in the 5th year. Targeted proportion of participants No Dec/2021 No 13-Jun-2024 No 13-Jun-2024 Yes Jun/2027 of TVET programs who passed the Comments on achieving targets This indicator measures the quality of the TVET training. YES means the percentage of assessment participants skills assessment and received who passed and received certification is within 20 percent of the global average pass rate of the specific trade certification (Yes/No) and / or age cohort. The denominator is the total number of participants of TVET program that took the skills Page 16 The World Bank FSM Skills and Employability Enhancement Project (P176965) assessment conducted by the skills certification agency (to be established), and the numerator is the total number of TVET program participants who passed the skills tests and received certificaion. This indicator is disaggregated by gender. female (Yes/No) No No No Yes male (Yes/No) No No No Yes to improve access to employment Indicator Name Baseline Actual (Previous) Actual (Current) Closing Period Result Month/Year Result Date Result Date Result Month/Year 0.00 Dec/2021 0.00 19-Feb-2023 0.00 19-Feb-2023 1,000.00 Jun/2027 Revise Number of beneficiaries of job Comments on achieving targets This indicator measures the number of jobseekers who received comprehensive job search assistance (i.e. job search assistance (disaggregated by matching, career counselling, mentoring) to improve their employability offered by TVET institution staff. The gender) (Number) disaggregated data by male, female and person with disabilities are collected and reported. share of female 0.00 0.00 0.00 50.00 (Percentage) Percentage of beneficiaries who 0.00 Dec/2021 0.00 19-Feb-2023 0.00 19-Feb-2023 50.00 Jun/2027 completed TVET courses and / or Comments on achieving targets This indicator measures the divergence of career and study pathways out of high school and TVET program (i.e, received employment services that job placement, enrolled in tertiary education). The denominator is the total beneficiaries who completed TVET found jobs or enrolled in tertiary courses, and the numerator is those who found jobs or who enrolled in tertiary education within six months of education within six months of graduation. graduation (disaggregated by gender) (Percentage) female (Percentage) 0.00 0.00 0.00 55.00 male (Percentage) 0.00 0.00 0.00 45.00 Intermediate Results Indicators by Components Component 1: Improving equitable access to vocational education and training Revised Indicator Name Baseline Actual (Previous) Actual (Current) Closing Period Result Month/Year Result Date Result Date Result Month/Year Page 17 The World Bank FSM Skills and Employability Enhancement Project (P176965) New or better jobs (Number of 0 0 22-Aug-2024 1,500 people) CRI New or better jobs for youth 0 0 22-Aug-2024 1,500 (Number of people) CRI New or better jobs for women 0 0 22-Aug-2024 750 (Number of people) CRI Percentage of project beneficiaries of 0.00 Dec/2021 0.00 13-Jun-2024 0.00 13-Jun-2024 80.00 Jun/2027 TVET programs under the project Comments on achieving targets This indicator measures the number of participants of TVET programs who are from the climate vulnerable in/from communities vulnerable to communities, especially from the coastal zones, low-lying atoll islets facing the threats of sea-level rise and climate change (i.e. sea-level rise and flooding. flooding) (Percentage) 0.00 Dec/2021 0.00 13-Jun-2024 0.00 13-Jun-2024 75.00 Jun/2027 Percentage of TVET institutions eligible for performance-based grant Comments on achieving targets This indicator measures the implementation progress of the performance-based grant by monitoring the which received the maximum annual achievement of the performance indicators (i.e., milestone, condition, output, or result) by the beneficiary grant amount allocated to them institutions as defined in the PGOM. The numerator i the number of institutions that received the maximum (Percentage) amount of annual performance grant allocated to them, and the denominator is the total number of institutions eligible to receive performance grants that year. 0.00 Dec/2021 0.00 13-Jun-2024 0.00 13-Jun-2024 10.00 Jun/2027 Comments on achieving targets This indicator measures the number of communication campaigns on TVET opportunities carried out under the Number of outreach and information project targeting the vulnerable groups - low-income families, families residing on outer islands of FSM, families campaigns carried out targeting of students with IEPs. The information provision includes (i) the availability and benefits of attending TVET in vulnerable groups (Number) targeted trades at FSA as well as state schools; and (ii) the provision of financial support for TVET students; (iii) the eligibility and procedures for application, and others as designed in te outreach and communications strategy. Component 2: Improving the relevance and quality of TVET Revised Indicator Name Baseline Actual (Previous) Actual (Current) Closing Period Result Month/Year Result Date Result Date Result Month/Year 0.00 Dec/2021 0.00 13-Jun-2024 0.00 13-Jun-2024 7.00 Jun/2027 Number of market relevant curricula Comments on achieving targets This indicator monitors the development of the market relevant curricula in the target occupations in high developed or upgraded for target priority sectors (at least one in each priority sector) based on the updated curriculum standards and the new occupations in high priority sectors occupational standards developed under the project. The priority sectors initially identified (to be adjusted (Number) based on the market needs): agriculture, business, carpentry, electrical, hospitality, mechanical, and IT. A typical developmental process involves discussions, design, piloting, and validation/finalization. Page 18 The World Bank FSM Skills and Employability Enhancement Project (P176965) 0.00 Dec/2021 0.00 13-Jun-2024 0.00 13-Jun-2024 120.00 Jun/2027 Number of TVET teachers across the Comments on achieving targets This indicator measures the number of TVET teacher across the country who completed the TOTs offered in the country completed ToTs (Number) project which will focus on equipping TVET teachers with the basic skills, knowledge, tools and techniques to deliver high quality TVET instruction. The TOTs will start in the 2nd year of project implementation. Component 3: Improving labor market information and employment services Revised Indicator Name Baseline Actual (Previous) Actual (Current) Closing Period Result Month/Year Result Date Result Date Result Month/Year People with enhanced resilience to 0 0 22-Aug-2024 False climate risks (Number of people) CRI People with enhanced 0 0 22-Aug-2024 False resilience to climate risks – Youth (Number of people) CRI People with enhanced False 0 22-Aug-2024 False resilience to climate risks – Female (Number of people) CRI No Dec/2021 Yes 13-Jun-2024 Yes 13-Jun-2024 Yes Jun/2027 Comments on achieving targets This indicator measures the development of a labor market assessment report accompanying technical analysis, Update of LM assessment completed led by NDOE in partnership with FSM Statistics and other stakeholders. The report includes sex-disaggregated (Yes/No) employment information. NDOE will regularly (annually) update this analysis to meet the changing needs of the labor market, with findings to be regularly published. While the first report will be based on a comprehensive survey, the subsequent annual updates can utilize qualitative research methods such as focus group discussions and key informant interview to gather relevant information. Number of relevant government 0.00 Dec/2021 0.00 13-Jun-2024 0.00 13-Jun-2024 10.00 Jun/2027 officers and TVET institution staff Comments on achieving targets This indicator measures capacity building provided for government and TVET institution staff on how to engage trained to provide job search with jobseekers on effective strategies and practices in job matching, career counseling and mentoring of assistance (Number) vulnerable jobseekers. Component 4: Project Management Revised Indicator Name Baseline Actual (Previous) Actual (Current) Closing Period Result Month/Year Result Date Result Date Result Month/Year Page 19 The World Bank FSM Skills and Employability Enhancement Project (P176965) No Dec/2021 No 13-Jun-2024 No 13-Jun-2024 Yes Jun/2027 Results of the beneficiary Comments on achieving targets The project supports the beneficiary engagement survey applied to the beneficiaries (TVET program engagement survey and plans for participants, including those from outer islands and students with disabilities, jobseekers, teachers) under course-corrections and Component 1, 2 and 3. The project M&E officer will design, implement and analyze the beneficiary engagement improvements of services under the survey with a view to improving project implementation overall. The feedback received will inform NDOE, TVET project shared publicly (Yes/No) institutions, and other implementation entities to prepare plans for course corrections and improvements during the implementation. This indicator reports the survey results and the corresponding plans are shared among the stakeholders and publicly disclosed (at NDOE’s website). Page 20 The World Bank FSM Skills and Employability Enhancement Project (P176965) Annex I. Supplementary Information to the Restructuring Paper Figure A.1. Prioritization of vocations in the FSM labor market assessment. (Source: NDOE) The World Bank FSM Skills and Employability Enhancement Project (P176965) Table A.1. Proposed revisions to support state-level schools in FSM (Source: NDOE) Current Performance New Performance Extending Benefits to Additional Grantee Schools Grantee Schools Schools (curriculum, training, (FSAs) (Grant recipients) and/or student financial support) Pohnpei Pohnpei Island Central 2 high schools 2 high schools High School (PICS) Chuuk Chuuk High School 2 high schools Yap • Yap High School 2 high schools • Yap Catholic High School Kosrae Kosrae High School No other high school No other high school available available Total 5 2 6 Figure A.2. Pathway to workforce-readiness in FSM through bootcamps and apprenticeship programs. (Source: NDOE) The World Bank FSM Skills and Employability Enhancement Project (P176965) Table A.2. Proposed revisions to the project results framework (Source: NDOE)7 Indicator Baseline Post-restructuring targets Targets under a potential (June 2027) extension (December 2028) To improve quality of and equitable access to vocational education and skills training Number of participants ofTVET programs whocompleted a tleast one year of market relevant 0.00 4,000 6,750 TVET programs (disaggregated by gender and disability status) (Number) Share of female participants (Percentage) 0.00 35.00 35.00 Number of participants with disabilities (Number) 0.00 320.00 320.00 Number of TVET institutions successfully implementing performance grants for at least one 0.00 7.00 (up from 5) 7.00 year, awarded on the basis of equity criteria (socio-economic and / or disability status of students) (Number) Targeted proportion o fparticipants of TVETprograms w hopassed the skills assessment and No Yes Yes received certification (Yes/No) female (Yes/No) No Yes Yes male (Yes/No) No Yes Yes To improve access to employment Number of b enei c f i a i e r sofjob search assistance(disaggregated by gender) (Number) 1000 (up from 800) 1,500 share of female (Percentage) 0.00 50.00 50.00 Percentage of beneficiarieswho completed TVET courses and /or received employment services 0.00 50.00 50.00 that found jobs or enrolled in tertiary education within six months of graduation (disaggregated by gender) (Percentage) female (Percentage) 0.00 55.00 55.00 male (Percentage) 0.00 45.00 45.00 7The table includes a scenario for an 18-month extension of project closing date. In line with the discussion provided in Paragraph 19, the Bank team does not support the extension proposal at this time. Page 23 The World Bank FSM Skills and Employability Enhancement Project (P176965) Table A.3. Proposed revisions to project budgets (Source: NDOE) Component Original total Revised total Difference Subcomponent 1.1: Student financial support 380,000.00 480,000.00 100,000.00 Subcomponent 1.2: Performance grant 2,850,000.00 7,890,100.00 5,040,100.00 Subcomponent 1.3: Communication and outreach campaigns 100,000.00 100,000.00 0.00 Subcomponent 2.1: FSA establishment 10,010,000.00 0.00 (10,010,000.00) Subcomponent 2.2: Curriculum development 550,000.00 5,784,900.00 4,784,900.00 Subcomponent 2.3: Training of master trainers and trainers 450,000.00 Subcomponent 2.4: Skills certification unit 550,000.00 550,000.00 0.00 Subcomponent 3.1: Labor market information 230,000.00 230,000.00 0.00 Subcomponent 3.2: Job search assistance 290,000.00 290,000.00 0.00 Component 4: Project Management 2,290,000.00 2,375,000.00 85,000.00 Total 17,700,000.00 17,700,000.00 0.00 Page 24 The World Bank FSM Skills and Employability Enhancement Project (P176965) Figure A.3. Proposed timeline of key project activities (Source: NDOE)8 CURRENT TIMELINE 18 MONTHS EXTENSION FY 25 (Oct 2024-Sept 2025) FY 26 (Oct 2025-Sept 2026) FY 27 (Oct 2026-Sept 2027) FY 28 (Oct 2027-Sept 2028) FY 29 1 1 1 1 2 3 4 5 6 7 8 9 1 1 1 1 2 3 4 5 6 7 8 9 1 1 1 1 2 3 4 5 6 7 8 9 1 1 1 1 2 3 4 5 6 7 8 9 1 1 1 0 1 2 0 1 2 0 1 2 0 1 2 0 1 2 Component 1. Improving equitable access to vocational education and skills training Subcomponent 1.1 Provision of financial support for students Development of Student Financial Support Operations Manual Student financial support Subcomponent 1.2. Provision of grants to TVET institutions Grants to schools Monitoring Subcomponent 1.3. Targeted outreach and information campaigns to vulnerable groups on TVET opportunities Roll-out of communication campaigns (state-level) Component 2. Improving the relevance and quality of TVET Subcomponent 2.2. Developing TVET training curricula Development of 30 occupational profiles Development of Soft skills, IT, Soft skills, IT, Monitoring & Revisions Construction, Monitoring & Construction, Monitoring & Revisions programs for soft skills, Creative Industry, Agriculutre, Engergy, IT Revisions Engergy, IT IT and creative industry Agriculture, Automotive, Automotive, Tourism Tourism (Pilot) summer bootcamp Development of in- school youth apprenticeship program Training in apprenticeship Piloting of the apprenticeship program Monitoring and improvement of apprenticeship programs Subcomponent 2.3 Designing and implementing high-quality training of TVET master trainers and trainers Needs assessment MToT ToT Subcomponent 2.4. Making provisions for independent assessment and certification of skills TA for the establishment of the 8The figure includes a scenario for an 18-month extension of project closing date. In line with the discussion provided in Paragraph 19, the Bank team does not support the extension proposal at this time. Page 25 The World Bank FSM Skills and Employability Enhancement Project (P176965) national skills certification unit Deployment of assessors Component 3. Improving labor market information and employment services Subcomponent 3.2 Supporting job search assistance Operational procedures for a career counseling function Training to Govn’t and school staff on career counseling and mentoring strategies Job fairs Component 4. Project Management PIU IT & Design support Travels Project Completion Meeting Page 26