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Spending More or Spending Better: Improving education financing in Indonesia

Pedro, Cerdan-Infantes and et, all (2013) Spending More or Spending Better: Improving education financing in Indonesia. The World Bank, Jakarta.

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ABSTRAK

Indonesia has made a clear commitment to education - passing a constitutional mandate to allocate at least 20 percent of the total government budget to education (the "20 percent rule"). This has led to a large increase in resources, more than doubling education spending in real terms since the passage of the constitutional amendment in 2002. The rule's mandate was fully met for the first time in 2009, when the government allocated more than 20 percent of the state budget to education. The goal of this report is to understand how these additional resources were spent and the extent to which they have translated into educational outcomes.The report provides recommendations to improve the quality of spending by improving the education financing system. The"20 percent rule" has resulted in a rapid increase in the education budget, but has also complicated budget management. One of the biggest drawbacks of the 20 percent rule isthat earmarking funds reduces the incentives to optimize their use.The link between policy planning and resources isbroken; large exogenous increases to the budget (regardless of results and independent of planning) can create inefficiencies in spending. Earmarking funds also creates rigidities in the budget and limits the capacity of the government to optimize the allocation of resources across sectors. Lastly, because the rule applies to both the planned and the revised budgets, it makes the education budget unpredictable and creates large budget "windfalls": with the budget highly dependent on the price of oil due to fuel subsidies, every adjustment to oil prices results in large fluctuations in total government spending. These windfalls have proven difficult to manage, despite Government of Indonesia (GOI)'s creation of the National Education Development Fund. The biggest payoff for this increase in spending has been in terms of access and equity, but access to senior secondary and tertiary education still remains extremely low for the poor. There has been rapid progress in access and equity, with children from poor families enrolling earlier and staying in school longer. The share of 15 year olds from the poorest consumption quintile who are enrolled in school increased from 60 to 80 percent between 2006 and 2010. However, beyond the age of 15, enrollment from this quintile drops dramatically, and by higher education, falls to less than 2 percent. Learning outcomes are still poor and show some worrisome trends in math and science. Meanwhile, the share of top performers is extremely low. Indonesia generally scores on the bottom on international tests (TIMMS, PIRLS and PISA), including compared with other countries in the region. On the PISA, the test with the most recent result and the longest time trend, the scores are mixed: while reading scores have shown steady improvement since 2000, math and science scores have not. In math, a promising increase in scores between 2000 and 2006 was set back in 2009, when scores declined for all socioeconomic deciles. In science, the trend has been flat since 2000. Equally alarming isthe small number of top performers on both the TIMSS and the PIRLS, while on PISA, no student in the sample performed at level 6 (the highest) in math or science in 2009. Given recent evidence linking PISA scores and the share of top performers with GDP growth, it isevident that increasing quality of education must be apriority.

Item Type: Book
Subjects: L Education > L Education (General)
Depositing User: Juhaidi Ahmad AJ
Date Deposited: 13 Jul 2015 22:06
Last Modified: 13 Jul 2015 22:06
URI: http://idr.iain-antasari.ac.id/id/eprint/351

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