This report presents findings of a study carried out to assess capacity issues in the context of the increasing incidence of disease in general and HIV/AIDS in particular on the public education sector. The first part of the report presents findings from the systems level. Here, economic conditions, the policy and institutional framework and human resource development as they relate to sector capacity are discussed. Thereafter, a sector review on the morbidity and mortality situation is outlined. The latter part of the report presents information on disease and capacity at the operational basic school level.