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 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 Decentralization Overview  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 Decentralization Finance 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 for Education 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 Proposed Education 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 Proposed Education 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 Study Overview  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 Study Districts

14. PERFORM Study policy 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. Results Overview  Interpretation of Results  Total Expenditure  Expenditure by Level  Expenditure by Type  Enrollment Indicators, Teachers, Classrooms, Books, Teacher and Classroom Upgrading

16. Results Expenditure  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. Results Expenditure District Total Education Expenditure (base case): 2002 Total Education Expenditure (SPM-implied): 2007 % Difference (2007-2002) Kab. Probolinggo122,752,000,000151,102,565,528 23% Kab. Batang102,377,837,970197,195,090,673 93% Kab. Pati149,207,000,000224,659,939,789 51% Kab. Banyuwangi185,661,000,000212,301,335,884 14% Kab. Badung101,122,289,895144,902,914,201 43% Kota Jayapura74,440,544,100133,860,163,672 80% Kab. Kupang74,936,298,168116,248,371,089 55% Kab. Solok27,605,015,55532,039,358,546 20% Kab. Lombok Timur181,724,956,236348,186,081,662 92% Kab. Maros39,741,218,53286,371,462,551 117% Kab. Sleman207,587,848,558342,713,028,721 65% Kota Pangkal Pinang43,272,567,00060,123,203,441 39% Kota Banjarmasin113,830,723,000234,181,568,246 106% Kab. Gowa120,061,272,688291,091,309,546 157% TOTAL1,610,753,101,2092,475,614,366,237 54%

18. Results Total Education Expenditure: Kab. Batang

19. Results SD/MI Expenditure: Kab. Batang

20. Results SMA/MA Expenditure: Kab. Batang

21. Results SD/MI Enrollment: Kab. Batang

22. Results SMA/MA Enrollment: Kab. Batang

23. Results SD/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