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Financing Education in Indonesia

Financing Education in Indonesia. Presentation for International Conference on Governance & Accountability in Social Sector Decentralization Intergovernmental Finance of Education Thursday, 19 th February 2004 (Session 5a) Kai Kaiser, PRMPS. Context. Diverse Archipelago

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Financing Education in Indonesia

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  1. Financing Education in Indonesia Presentation for International Conference on Governance & Accountability in Social Sector Decentralization Intergovernmental Finance of Education Thursday, 19th February 2004 (Session 5a) Kai Kaiser, PRMPS Financing Education in Indonesia

  2. Context • Diverse Archipelago • 171,000 public primary schools / 1.4 million teachers • 31,000 secondary schools / 0.68 million teachers • 1997/8 Economic Crisis • 2001 “Big Bang” Decentralization • 400+ Districts • 30 Provinces Financing Education in Indonesia

  3. Challenges • Equity • Inter-regional • Quality Issues • Governance & Accountability • “Leakages” • Expenditure Assignments Financing Education in Indonesia

  4. Pre-Decentralization Financing Flows • Decentralized “Earmarked” Transfers • Recurrent Subsidies (SDOs) • Capital Grants (Inpres) • Deconcentrated Expenditures • Kanwil DIP/DIK-DAs Financing Education in Indonesia

  5. Post-Decentralization Funding • Decentralized Expenditures • Block Grant (DAU) • Revenue Sharing (Natural Resource/Other) • Own Revenues • Conditional Grant (DAK) • Central Expenditures • DIPs • Deconcentrated Agencies (Kanwil’s) Abolished Financing Education in Indonesia

  6. Post-DecentralizationMultiple Flows Source: WB Education Sector Review 2004 Financing Education in Indonesia

  7. Post-Decentralization: Center and Regions Finance Source: WB Education Sector Review 2004 Financing Education in Indonesia

  8. District Wage Pressures versus Expenditure Levels Financing Education in Indonesia

  9. Challenges for Equitable Service Delivery • District/Provincial Funding • DAU Equalization • Design versus Political/Transitional Constraints • Decentralized Education Allocations • Local Preferences/Accountability • Minimum Standards/Obligatory Functions • Deconcentrated Expenditures • Equalization vis-à-vis Decentralized Expenditures • Parental Contribution Financing Education in Indonesia

  10. Challenges for Financing Instruments • Minimum Standards • Definition/Proliferation • Affordability • Implementability • Earmarked/Conditional Financing • DAK (Capital Grant versus Conditional Grant) • “Decentralizing” Deconcentrated Financing • Central Teachers • 196K Central Teachers for Regions 2003/4 Financing Education in Indonesia

  11. Challenges of Decentralization M&E • Central M&E Systems • Collapse as regions no longer have incentives to report • Local Budget Reporting • APBD-SIKD • Central Budget Allocations • Limited Transparency Financing Education in Indonesia

  12. Conclusion • Continued tensions between decentralized and centralized financing models • Uncertainly about resource composition and accountability at the facility level • Too early to determine decentralization impacts on service delivery outcomes • Increased heterogeneity Financing Education in Indonesia

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