EDUCATION FINANCE :

Indonesian Experiences

MINISTRY OF EDUCATION AND CULTURE

Republic of Indonesia
Bangkok, Thailand, 23 – 26 April 2012

1
 OUTLINE
A. EDUCATION DECENTRALIZATION IN
INDONESIA
B. FINANCE SITUATION FOR
DECENTRALIZED EDUCATION
C. RESULT OF FINANCE IN WEI
QUESTIONNAIRE 2010
 A
EDUCATION DECENTRALIZATION
IN INDONESIA
 Overall Government Management
Decentralization in Indonesia
Central Government Authority:
• Foreign Politics,
• Defence & Security,
• Justice,
• Monetary & Fiscal,
• Religion
• National Planning, National Standardization

Other Matters (including Education)

• decentralized to district/municipality level
 RULES AND REGULATIONS
• LAW 32/2004 (Revision of Law
22/1999): LOCAL GOVERNMENT
• LAW 33/2004 (Revision of Law 25/1999):
BALANCED FUND BETWEEN CENTRAL AND LOCAL
GOVERNMENT
• GOVERNMENT REGULATION 38/2007
DISTRIBUTION OF RESPONSIBILITIES
• GOVERNMENT REGULATION 48/2008
EDUCATION FUNDING
 Rational for Decentralization
in Indonesia
1. Geographical condition :
Indonesia is an archipelago nations with more than 6,000
islands
2. Diversity in cultures :
There are more than 200 ethnic groups and local languages
3. Population :
Based on 2010 census, population of Indonesia is 237,641,326
4. Education
Number of schools (>330 thousands incl madrasah 67
thousands), number of students (> 59 millions incl madrasah
8 millions), number of teachers (> 4 millions incl madrasah
900thousands)
 General concept of Education
Decentralization
• Transfer of authority of educational policies from
central government:
delegate discretion of education policies & money
needed to finance the responsibility

• Shifting of various educational decisions from government

to people
It is the people who benefit from education being offered
they should be in a better position to make decisions
in their own behalf
 Sharing of Responsibility Between Central
Government and Local Government in Education
• CENTRAL GOV:
National standard (curriculum, examination, minimum service
standard);
Requirement for admission, transfer, certification; organization &
development of higher education
• PROV GOV:
Equitable student selection and acceptance, provision of learning
materials, assisting in Higer Education management
• DISTRICT/MUNICIPALITY GOV: all other aspects.
ARRANGEMENT IN EDUCATION DECENTRALIZATION

– Junior Secondary Schools and Senior Secondary Schools which

were previously administered by Ministry of Education and Culture
are now administered through the District Government along with
Primary School

– Funding for Basic Education (Primary and Junior Secondary)

and Senior Secondary Education is shared by Central
Government, Provincial Governments, District Governments,
Parent , and Communities

HOWEVER :
Primary, Junior Secondary, and Senior Secondary Schools
under Ministry of Religious Affairs remain unchanged (in
term of administration and financing)  One of the
peculiarity in Education System in Indonesia
 DISTRIBUTION OF MAJOR RESPONSIBILITY AMONG
CENTRAL, PROVINCE, AND DISTRICT GOVERNMENTS BASED ON
GOVERNMENT REGULATION N0. 38/2007

CENTRAL GOVT. PROVINCE GOVT. DISTRICT GOVT

Financing 1.Determination Provision of Provision of

of guideline for financial aid for financial aid for
education school school
financing organization organization and
2.Provision of and quality quality assurance
financial aid for assurance in line in line with its
school with its authority
implementation authority
and quality
assurance in line
with its
authority
 RESPONSIBILITY DISTRIBUTION BETWEEN
CENTRAL AND LOCAL GOVERNMENT BASED ON
GOVERNMENT REGULATION N0. 48/2007
Responsible government level
No. Cost Type
Basic education Senior Sec and Higher Educ
I Investment cost for schools
1. Investment cost for land
a. National Standard School Central/Local government
b. International Standard School Central/Local government/Community/Foreign Aid
2 Investment cost for infrastructure
a. National Standard School Central/Local government Central/Local government/
community
b. International Standard School Central/Local government/Community/Foreign Aid
II Investment cost for education organization
and management
1. Investment cost for land Central/Local government
2. Other costs Central/Local government
III Operational cost with in schools
1. Personnel cost
a. National Standard School Central/Local government
b. International Standard School Central/Local government/Community/Foreign Aid
2. Non-personnel cost
a. National Standard School Central/Local government Central/Local government/
community
b. International Standard School Central/Local government/Community/Foreign Aid
IV Operational cost for education organization
and management
1. Personnel cost Central/Local government
2. Non-personnel cost Central/Local government
V Aid for education cost and scholarship Central/Local government
VI Education cost abroad Central government
 NEW APPROACH IN EDUCATION DECENTRALIZATION

Given the diversity of Indonesian regions

 blanket approach is not suitable
 decentralization is a must
Strategy for education decentralization:
– More independent & autonomous management at school level
– How to support school?
 strengthen school committee
 improve school finance & management system
 SOME BENEFITS OF DECENTRALIZATION
 Improvement of school management with
the implementation of SCHOOL BASED
MANAGEMENT
 Increasing of community participation
through the establishment of Education Board
(at Province and District levels) and School
Committees (at School level)
 Increasing of industry and bussiness
community in education through their
Corporate Social Responsibility (CSR)
engagement
 MAJOR ISSUES IN EDUCATION DECENTRALIZATION
 Lack of alignment between responsibilities and
provision of finance served by Central Government,
Provincial Government, and District Governments

 Insufficient capacity of education leadership and stafs in

Province and District Education Offices, for example in
understanding of Education National Standard

 Uncertain career development of education staffs in

Province and District Education Offices due to the
high frequency of personnel transfers between local
government offices, according to the willingness of
Governor or Head of District
 B
FINANCE SITUATION FOR
DECENTRALISED EDUCATION
 PLANNING AND BUDGETING REFORM
• Unified budget:
Integration of Routine Budget and Development Budget

• Medium Term Expenditure Framework (MTEF):

– Rolling Plan Budgeting for 3 – 5 years to come using baseline
– Based on resources envelope to ensure the budget availability
for priority programs and activities

• Performance Based Budgeting (PBB):

– Based on performance using definite outcomes and outputs
– Accountability for each level of management

• Gender Responsive Budgeting

– Clear budget allocation based on gender
 Political Will and Financial Support
Constitution*
• Every citizen is entitle to education
• Every citizen should enroll in basic education and the government
should finance it (art 31:2)

Law 20/2003 on National Education System

• Financing ed: shared responsibility of national gov, local gov, and
community (art 46:1)
• Ed. funds** are allocated at a minimum of
20% of national gov. budget
20% of local gov budget (art 49:1)
* IVth amendment of the 1945 Constitution
** excluding salary of educators & service ed. expenditure
TREND IN EDUCATION FINANCE BY LOCAL GOVERNMENT
IN DECENTRALIZATION ERA

 The percentage of budget for education from

Provincial Government tends to decline
 The percentage of education budget from
District Governments remain stagnant
and even declining
 The majority of funds are used for
teacher salary
 Budget for improvement of access and quality
of education mostly coming from central
government
 BREAKTHROUGHS IN FUNDS DELIVERY TO SCHOOLS,
STUDENTS, AND TEACHERS

a. School Operational Assistance

(Bantuan Operasional Sekolah - BOS).
b. Operational Assistance for Quality
Management (Biaya Operasional
Manajemen Mutu – BOMM)
c. Scholarship for Students from Poor Families
d. Teacher Profesion Grant
 POLICY INITIATIVES FOR 2011
1. Establishment of Education Committee
chaired by Vice President of the
Republic of Indonesia
2. Tranfers of responsibility of BOS
delivery from Central to Provincial
Governments
3. Completion of school rehabilitation
(primary and junior secondary
schools)
4. Acceleration of teacher certification
 PRIORITY OF EDUCATION BUDGET ADMINISTERED
BY MOEC FOR 2011
 Increasing of access and quality of early childhood
education
 Acceleration of the completion of nine years
universal basic education
 Improvement of vocational education
 Acceleration and improvement of academic
qualification of teachers, teacher certification,
and development of special education for teacher
 Acceleration of percentage of university faculty with
doctorate degree
 C
RESULT OF FINANCE
WEI QUESTIONNAIRE 2010
 BACKGROUND (1)
Difficulty in having a comprehensive nation-wide
data on education financing due to:
1. Multiple public expenditure service
providers (20 ministries)
2. Highly decentralized system of educational
services provision and absence of coherent
accounting system between central and
district government
3. Difficulty of tracking private spending
and expenditures at private institutions
 BACKGROUND (2)
4. Limitation of data on public education
expenditure by each of approximately
500 districts
5. The district government use a different
accounting method from MOF because they
use an accounting system that is designed by
the MOHA which is not compatible with the
accounting system of the MOF.
6. Since 2009, Bureau of Planning is responsible
for collecting data on educational services
provided by all ministries.
 AIM
• To document data sources, estimations,
assumptions, and compilation of finance
education data and report to UIS using WEI
(World Education Indicators) questionnaire
• To provide the template data to enter
national data and convert them into the WEI
data format
 RESULT
• Template Education Finance
• Questionnaire WEI (World Education
Indicator) can be fill in
• Analysis of Education Expenditure
 MINISTRIES
WHICH ARE HELD EDUCATION

1. Ministry of Education & Culture 11. Ministry of Health

2. Ministry of Religious Affair 12. Ministry of Finance
3. Climatology Meteorology 13. Ministry of Agriculture
and Geophysics Board 14. Ministry of Marine and Fishery
4. National Land Board 15. Ministry of Industry
5. Central Board of Statistics 16. Ministry of Transportation
6. National Nuclear Energy Board 17. Ministry of Social Affair
7. Ministry of Home Affair 18. Ministry of Communication and
8. Ministry of Energy and Mineral Information
Resources 19. Institution of State Code
9. Ministry of Law and Human Right 20. National Library
10. Ministry of Culture and Tourism
 DATA SOURCE
1. Ministry of Education and Culture: Bureau
of Planning, MOEC
2. Office of Education at Province and District:
Ministry of Finance
3. Ministry of Religious Affair: Bureau of Planning,
MORA
4. Other Ministries: Bureau of Planning, MOEC
5. Foreign Aid: No data
6. Household: Survey of Central Board of Statistics
 Share of Education Expenditure of
the Total Government Expenditure, 2010

Public education
expenditure 17%

Non-education public
expenditure
83%
 Total Education Expenditure by Level of Education, 2010
100,000 Billion Rupiah

90,000
85,797

80,000

70,000

60,000

50,000

40,000

30,990
30,000 27,378 27,936

19,570
20,000
14,776

10,000
4,795
1,368
0
Pre-primary Primary J.Sec S.Sec S.Sec gen S.Sec.voc Tertiary Not
allocated
 Breakdown of Educational
Expenditure By Current and
100% Capital, 2010 3%
12%
6% 90% 16%
11% 10% 9%
13%
80% 2
8
%

70%

60%

50%
97
94%90%91%
8 % 8
40% 84
9 8
% 87 %
% % 72%
30%

20%

10%

0%
Pre-primary

J.Sec
S.Sec gen

Tertiary
 allo
cat
ed

Tot
al

Current Capital
 Distribution of Educational Expenditure
by Level of Education, 2010

Total 1% 44% 14% 10% 16% 14%

Current 1% 45% 15% 10% 13% 16%

Capital 1% 41% 8% 8% 38% 4%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Pre-primary Primary J.Sec S.Sec Tertiary Not allocated

 Breakdown of Current Expenditure (by Salary and Non-Salary)
public schools, 2010

100%

90%
21
% 30% 28%
80% 40% 40% 39% 38%
52%
70% 60%

60%

50%

40%
79
% 70% 72%
30% 60% 60% 61% 62%
48%
20% 40%

10%

0%
Pre-primary Primary J.Sec S.Sec S.Sec gen S.Sec.voc Tertiary Not allocated Total

Salary Non-Salary Current

 Distribution of educational expenditure
by levels of government, 2010
100% 0%

90%
32%
80%
47% 45%
54% 52%
70% 61%
63%
68% 4%
60%

50% 6%
6%
7% 100%
40% 7%
8%
30% 8% 63%
9%
46% 49%
20% 41%
39%
29% 31%
10% 23%

0%
Pre-primary Primary J.Sec S.Sec S.Sec gen S.Sec.voc Tertiary Not allocated Total

Central Province District

 Distribution of education expenditure by Ministries, 2010

100%
4%
5%
90% 3% 18% 12%
12%
18% 16%
80%
9% 35%
70%

60%

50% 100%
97% 95%
88% 84%
40% 82% 84%
73%
30% 60%

20%

10%

0%
Pre-primary Primary J.Sec S.Sec S.Sec gen S.Sec.voc Tertiary Not allocated Total

MONE MORA Other Ministries

 Contribution of resources by the government and
household (share), 2010

100%

90%
30%
80% 40%
44%
54% 54%
70%
62%
74% 75%
60%

50%

40%
70%
30% 60%
56%
46% 46%
20%
38%
26% 25%
10%

0%
Pre-primary Primary J.Sec S.Sec S.Sec gen S.Sec.voc Tertiary Not allocated Total

Public Private
 Breakdown of household expenditures on education, 2010

100%

90%
29%
80% 35% 35%
42% 42% 42% 39%
50%
70%

60%

50%
38% 38% 22% 22% 22%
54% 33%
40% 18%

30%

20%
36% 36% 36%
32%
27% 27% 28%
10%
18%

0%
Pre-primary Primary J.Sec S.Sec S.Sec gen S.Sec.voc Tertiary Not allocated Total

HH spending to schools HH spending to school goods HH spending for non mandatory education goods
 Recurrent expenditure per student at public schools, 2010
Thousand Rupiah

14,000

12,000 11,751

10,000

8,052
8,000

6,000
4,695
4,278
4,000
3,192 3,370
2,710

2,000

0
Pre-primary Primary J.Sec S.Sec S.Sec gen S.Sec.voc Tertiary
 Expenditure per student at public schools
salary and non-salary current expenditures, 2010
14,000

12,000

10,000

8,000 7,028

1,724

6,000

4,000
1,891
1,705
6,328
899 1,301
2,000 813 4,723

2,573 2,804
1,897 2,293 2,069

0
Pre-primary Primary J.Sec S.Sec S.Sec gen S.Sec.voc Tertiary

Salary Non-Salary Current

39
THANK YOU
FOR YOUR ATTENTION