Indonesia - Spending More or Spending Better : Improving Education Financing in Indonesia

Abstract

The report is divided into two parts.
 The first three chapters show that the vast increase in
 education resources has not been accompanied by a similar
 increase in learning outcomes, and thus highlight the urgent
 need to improve the quality of spending. Chapter one starts
 by describing the complex financing and governance systems.
 With this policy framework in mind, Chapter two focuses on
 the 20 percent rule, analyzing its consequences for budget
 planning and management and examining where resources went
 after this vast increase in spending. The chapter also
 provides some estimates of the cost of meeting future
 government objectives, in the context of discussions on
 expanding compulsory education, and broadening teacher
 certification. Chapter three looks at education outcomes,
 reviewing the significant improvements in access and equity,
 as well as the worrisome trends in learning outcomes. It
 points to improving the quality of education and expanding
 access to secondary and above (especially for the poor) as
 the main challenges in the sector. Given the cost of
 achieving these goals, and the fact that current expenditure
 patterns are unlikely to lead to improvements in learning
 outcomes, the chapter concludes that improving the quality
 of spending in education is now critical. The second part of
 the report focuses on how to improve the quality of spending
 in order to continue expansion and improve learning
 outcomes. In chapter four, the quality of spending issue is
 divided into two areas: i) reassigning or improving programs
 at the central level, and ii) improving management at the
 district and school levels. At the central level, this
 chapter analyzes the Scholarships for the Poor program (BSM)
 and recommends that it be expanded and improved. At the
 sub-national level, the report explores how a combination of
 more efficient teacher management and stronger support for
 schools can improve efficiency and learning outcomes, and
 what the central government s role should be in ensuring
 that these changes occur. Finally, chapter five summarizes
 these recommendations, providing a framework for improving
 the quality of spending and, ultimately, ensuring that this
 spending leads to an improvement in the quality of the
 Indonesian education system.