Local Innovations on Program Spending Management in Indonesia

1. Local Innovations on Program Spending Management in Indonesia By Alwin Khafidhoh & Markus Christian Bandung Institute of Governance Studies(BIGS) Indonesia

2. BIGS Research Advocacy • To analyze specifically program spending in health and education (non salary) • Reason: Cost of education and health remains high despite the fact • that allocations for both are the largest. So what really happens? • 2. Process behind the number • 3. To analyze the components of direct spending in education and health Desk Study, Depth Interview, Focus Group Discusion, Participatory Observation Policy Analysis Recomendation for improving program spending in education and health for stakeholders (government, parliament, CSO)

3. Research Areas

4. Bandung Municipality Population: 2.228.268 Area:16.767 ha Total spending in 2007 : Rp 1,6 Trillion Condition: Urban with economic inequality

5. Most of education budget spent for physical infrastructure, but...

6. Health sector is second priority, but....

7. Maternal Mortality Rate in Bandung still high

8. Banjar Municipality Population: 167.000 Area:113,59 km² Total spending in 2007 : 367 billions Condition: newly established city, border city

9. Free primary health services for all citizens

10. Free primary education for all children

11. Sumedang Municipality Population: 1.043.000 (2003) Area:1.522,21 km² Total spending in 2007: 498 billions Condition: newly established city

12. Active civil society and responsive parliaments

13. Sumedang provides free primary health services

14. Sumedang provides free primary education for the poor

15. CONTEXT • In post-autonomy Indonesia since 2001 there’ve been expansion of authority for the province/district/municipality to manage their own budget • Constitution requires 20% budget for education • Health Ministry and Regional Chiefs agree to alocate 15% of local budget for health (health office and hospitals)

16. BUDGET FLOWS NationalBudget Public Spending of National Government Public Spending of National Government to local government Education Health Education Health Public Spending of Regional Government Deconcentration Fund Regional Budget Education Health Education Health DistrictBudget Education Health

17. Preliminary Findings

18. Excluding salary of teachers, education budget is still below 20%, and health budget is also below 15%. Program spending is actually left over of bureaucracy spending. It is not based on the actual needs.

19. Actual Program Spending For Education (total budget)

20. Actual Program Spending For Health (total budget)

21. Education budget at national level is mostly spent for buildings Health budget is mostly spent for hospitals

22. National Budget Per Capita Thousands Rupiah/capita 1$ = 10000

23. West Java has relatively large budget but they don’t have clear authority to do programs.

24. West Java BudgetPer Capita Thausands Rupiah/kapita 1$=10000 rupiah

25. Banjar has the highest budget per capita sotheycan provide free primary health and education

26. Education Budget Per Capita in Three Municipalities Thousands Rupiah/capita 1$ = 10000

27. Health Budget in Three Municipalities Thousands Rupiah/capita 1$ = 10000

28. Priority program in health is still for individual services (hospitals)Most spending for public health is for buildingsPrevention gets the least priority

29. Distribution of Health Budget in National & West Java (Priority)

30. Distribution of Health Budget in three Municipalities (Priority)

31. Budget for Education Program in Bandung 2007

32. Problems of Budgeting in Bandung • Complex political situation • Parliament cares only its own and political party’s interests • Budget allocation is determined by political interest of the public decision-makers rather than by needs assessment of the people.

33. Keys Success of Local Inovation in Sumedang • Highly active civil society • Parliament welcome public partisipation • Media (radio) puts health and education issues as top agenda • Political momentum (election 2008)

34. Keys Success of Local Inovation in Banjar • Leadership of the Mayor • Creativity of Head of Municipal Health Office • Planning by need assesment provided by Puskesmas (Community Health Center) • Small areas and population allow effective public spending management

35. Other Preliminary Findings • Local Government finds that Rule of Budget Administration (Permendagri 13) as too rigid and inhibits inovation • No correspondence between problems and budget policies

36. Recomendation • Budget planning should involve needs assessment and public participation • It is found that leadership is quite a determining factor in budget innovation for education and health. Then, election for mayor or governor is very important to push for the issues during the campaign and afterward. • To reform the budget in the regions, advocacy is needed. When the chief of the regions (mayor or governor) is cooperative and responsive to reform, what’s needed then is technical assistance. If otherwise, empowerment of the local parliament, the media, and civil society is the effective alternative.

37. Plan For Advocacy • We plan to provide inputs to decision and policy makers at the national level to revise Permendagri 13. • We are to push budget reform as main issues in local election campaign and afterward. • We plan to provide technical assistance in needs assessment forlocal governments to help them better in making policy. • We plan to providetechnical assistance for Banjar and Sumedang government. While for Bandung, we push for the enpowermen of local parliament, civil society, and media.

38. Not how muchbut what for