Page 2 4. Doctors and teachers paid by line ministries are really accountable to national authorities only, even if on paper they should also be accountable to local government, communities and the end-users of services. While governments have a primary role in setting the rules and responsibilities of service provision through formal institutional arrangements, monitoring and penalty-enforcement cannot be supplied only by governments. Conflicts of interest and the risk of collusion between the monitors and the monitored call for a more participatory approach to accountability - an approach that directly involves service recipients.

5. This is the rationale for shortening the “route of accountability” by establishing robust participatory mechanisms that engage citizens in holding service providers accountable. Under the participatory approach, governments put institutions in place to allow citizens to play an active role in monitoring and sanctioning providers when their performance is unsatisfactory. Yet in most developing and transition countries, these mechanisms are still missing, or where they exist, they work poorly.

# **I.b. Improving Governance through Stronger Accountability in Albania’s Education Sector**

6. The Government of Albania is making rapid progress in strengthening governance across the public sector, particularly in education. Considerable advances have been made in the education sector in particular, with reforms to the service compact and how education services are supplied (represented in the right-hand side of Figure 1). These measures have reduced the room for discretion and collusive practices, increased fairness, and have brought to bear the disciplining forces of the market and greater transparency to improve the performance of the sector. The education sector reforms have been positively assessed, including in a recent World Bank country report (World Bank 2011) which presents data from a specially designed education governance module that was deployed with the 2008 wave of the Albania Living Standards Measurement Survey (LSMS).

7. The Ministry of Education and Science (MoES) is seeking to further improve governance by strengthening parent and community engagement in participatory accountability structures (the lefthand side of Figure 1). The Ministry has implemented reforms designed to strengthen the independence of school boards and parent committees, and is considering measures to increase school autonomy as well as make education financing more responsive to the priorities of stakeholders. Currently there is little autonomy or flexibility given to school-stakeholders to determine their needs and to make investments decisions. “Conditional transfers” from the national budget are channelled to Regional Education Departments (REDs to finance major inputs like teacher salaries, training, teaching materials and a textbook subsidy scheme. Local governments have discretion over the resources they receive as “unconditional transfers” from Ministry of Finance , which cover the costs of utilities and maintenance. Local governments also manage funds to finance investments which they receive on a competitive basis from MoES. These resources are used for improvements to schools such as rehabilitations, extentions, new buildings, and furniture for classrooms. Figure 2 presents a sylized representation of the _de jure_ service delivery and accountability relationships in Albania‟s pre-university education sector. However, until recently, parents and other community members did not have strong incentives nor effective structures to interact with school directors and teachers, in order to identify their particular issues and come up with solutions.

8. To create an enabling environment for greater parent and community engagement in school governance, the Ministry has given school boards greater responsibilities. The composition of these boards has been changed so that school principals should no longer be part of the boards, to give more representation to parents and community members (see Figure 2). The boards have been given greater responsibility for monitoring the actions of school administrators, and could eventually play a role in the selection of head teachers. There is some interest in providing block