The Impacts of Proposed Education Minimum Service Standards on a Sample of Districts in Indonesia Stephen Dunn January 1

1. The Impacts of Proposed Education Minimum Service Standards on a Sample of Districts in Indonesia Stephen Dunn January 13, 2005

2. Overview • “Snapshot” of Indonesia and Districts • “Pre-History” of Decentralization in Indonesia • The Era of Decentralization • Motivation for Minimum Service Standards • Overview of Proposed Minimum Service Standards • Study and Results • Conclusions, Issues, Looking Forward

3. Snapshot of Indonesia • Population 214.5 million (WB, 2003) • 14,000 islands • 3,000 miles east-to-west • 43% urban (WB, 2002) • Life expectancy at birth 66.7 Years, (WB, 2002) • GDP per capita $971 (WB, 2003) • Poverty Headcount Index 16% (WB, 2002)

4. Snapshot of Districts • 420 Districts • District Populations from <25,000 to Over 4 Million • Environments from “Metro” to isolated, agricultural • Poverty Headcount Index from >90% to <2% (SUSENAS, 2002) • Annual Per Capita Own-Source Revenues from nearly Rp 1 million to below Rp 5,000 (WB, 2001)

5. Snapshot of District Education • Primary NER: 91% for lowest-income districts 91% for highest-income districts • Sen. Sec. NER: 18% for lowest-income districts 62% for highest-income districts (WB, 2002) • Per-Student APBD Education Expenditure Range: minimum < Rp 50,000 maximum > Rp 300,000 (author’s data)

6. “Pre-History” of Decentralization in Indonesia • Prior to 1999 Laws, Highly Centralized Government • Low Control of Own-Resources • Deconcentrated Sectoral Offices in Districts • Limited District Autonomy • Little Scope for Local Choice in Service Delivery

7. The Era of DecentralizationOverview • Motivations for Decentralization • Decentralization to District Level • Laws 22, 25 of 1999 and “Big Bang” in 2001 • Assets Transferred to Districts • Local Planning and Budgeting • New Revenue Streams: DAU and DAK • Share of Sub-National Spending Doubled

8. The Era of DecentralizationFinance and Management of Education • Education managed at district and school level • DAU is primary source of district funds • Education competes for district resources with other sectors • There are numerous other funding streams • Large amount of district autonomy, emerging school autonomy

9. Motivation forEducation Minimum Service Standards • Education is a national concern • Desire to increase equity across districts • Indonesia has low achievement relative to peers • Political-Economic Aspects

10. Overview of ProposedEducation Minimum Service Standards SPM cover: • formal education (grades 1-12) • equivalent out-of-school education • pre-school • sports • “youth participation” / “social participation” • special education • teacher/school development and management

11. Overview of ProposedEducation Minimum Service Standards • Large number of SPM (297) • Some SPM are conflicting or internally inconsistent • “Education” SPM cover many non-education areas • Districts do not collect much of the data needed

12. PERFORM StudyOverview • Goal: understand expenditure implications of SPM • Team: PERFORM staff, MOF, RTI • SPM focus: formal education (grades 1-12) • * Districts: 15 districts from 10 provinces • * Model: policy options projection model • * Results: projections from 2002-2017, “lower bound”

13. PERFORM StudyDistricts

14. PERFORM Studypolicy options projection model • User can set policy/functional parameters (SPM) and examine impacts • A “what if?” model to examine policy impacts • Single district focus, output for 15 districts • District base data • Projections over 2002-2017 • Results for many variables/indicators

15. ResultsOverview • Interpretation of Results • Total Expenditure • Expenditure by Level • Expenditure by Type • Enrollment Indicators, Teachers, Classrooms, Books, Teacher and Classroom Upgrading

16. ResultsExpenditure • Proposed SPM result in a 54% increase in district expenditure on education by the year 2007 (“lower bound” estimate of SPM impact) • Expenditure impact varies significantly across districts • Within districts, expenditure impact varies dramatically for different levels of education

17. ResultsExpenditure

18. ResultsTotal Education Expenditure: Kab. Batang

19. ResultsSD/MI Expenditure: Kab. Batang

20. ResultsSMA/MA Expenditure: Kab. Batang

21. ResultsSD/MI Enrollment: Kab. Batang

22. ResultsSMA/MA Enrollment: Kab. Batang

23. ResultsSD/MI and SMA/MA Teacher Demand: Kab. Batang

24. Conclusions • If implemented, the proposed SPM would result in large expenditure increases for many districts • Achievement of SPM would require substantial level-specific actions/changes for each district • Time as well as money will be required

25. Issues/Questions • Are the proposed SPM Affordable? • Are the SPM really “minimum service standards”? • Should all districts be subject to the same SPM? • Should SPM apply to all of education or to particular aspects? • What about empowerment of schools, school committees, and district education boards? • Why are the enrollment SPM not met? • How to finance SPM? • How to hold districts accountable for meeting SPM?

26. Looking Forward • Before promulgation, more analysis: financial and educationist perspectives • Definition of obligatory functions within education • Tsunami Impacts? focus, spending priorities, timeframe